Mastermailer Stationery Ltd v Christopher Ronald Sandison and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Vos |
| Judgment Date | 20 April 2011 |
| Neutral Citation | [2013] EWHC 4304 (Ch) |
| Docket Number | Claim No: HC09CO0041 |
| Date | 20 April 2011 |
| Court | Chancery Division |
[2011] EWHC 4304 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand,
London WC2A 2LL
Mr Justice Vos
Claim No: HC09CO0041
MR J DAVIES (instructed by Bower & Bailey) appeared on behalf of the Claimant.
MR R MALLALIEU (instructed by Michael Little & Co) appeared on behalf of the First Defendant.
The Second and Third Defendants did not appear.
Approved Judgment
Wednesday, 20 th April, 2011
Introduction
This is the oral hearing of Mastermailer Stationery Limited's four applications which were directed to be heard by Mann J in his order of 16 th December 2010 as follows:
(1) for an extension of time for appealing from the order of the Chief Master dated 27 th May 2010;
(2) if granted, for permission to appeal against the Chief Master's decision on 27 th May 2010 (with appeal to follow if granted), by which he ordered Mastermailer Stationery Limited ("Mastermailer" or the "claimant") to pay £80,000 by way of security for the costs of the first defendant, Mr Christopher Ronald Sandison trading as Sandison & Co ("Mr Sandison") in two equal instalments on 30 th July 2010 and 30 th September 2010;
(3) for permission to appeal against the Chief Master's decision on 29 th June 2010 (with appeal to follow if granted), whereby he ordered Mastermailer to pay £40,000 by way of security for the costs of the second and third defendants, Mr Stephen Paul Black and Mrs Claudia Mary Black (respectively "Mr Black" and "Mrs Black") in two equal instalments on 27 th August 2010 and 14 th October 2010;
(4) for permission to adduce further evidence from Mr Rogers in relation to both those appeals.
The substantive appeals are effectively brought on three grounds, namely;
(1) that the Master failed to take adequately into account that the claimant's lack of means was allegedly brought about by the conduct of the defendants;
(2) that the Master failed to take adequately into account that the orders for the security would stifle the claim; and
(3) that the Master undertook the balancing exercise required by the Court of Appeal in the case of Sir Lyndsay Parkinson incorrectly and came down on the wrong side of the line.
Chronological background.
Mastermailer is a wholly-owned subsidiary of Mastermailer Holdings plc, a publicly listed company. On 24 th September 2008 Mr Sandison alleges that a board meeting of Mastermailer, attended by the three defendants, varied the terms of his engagement from a fixed annual fee to an hourly rate backdated to 1 st July 2007. This is apparently evidenced by a letter dated 21 st September 2008.
On 8 th December 2008 Mr Sandison allegedly invoiced Mastermailer for a sum of £307,909 in respect of such fees.
On 18 th December 2008 Mr and Mrs Black were dismissed as directors of Mastermailer. I am not quite sure of the date upon which Mr Sandison parted company with Mastermailer, but I believe it may have been exactly the same time.
On about 6 th January 2009 Mastermailer issued proceedings against Mr Sandison for breach of fiduciary duty as a director of Mastermailer for sums in excess of £550,000. On 26 th February 2009 Mr Sandison filed a Defence and Counterclaim, claiming that all the payments were legitimately due by way of fees or for legitimate expenses, and counterclaiming £105,000-odd by way of unpaid fees.
In April 2009 Mastermailer raised £462,743 by way of additional investment from its shareholders.
On 7 th December 2009 Mr Sandison applied for security for costs on the grounds that Mastermailer was a company and there was reason to believe it would be unable to pay the defendants' costs, if so ordered, under CPR 25.13(2)(c). As at 31 st December 2009, the published interim accounts exhibited to Mr Rogers' original statement showed net liabilities of Mastermailer in the sum of approximately £299,000. On 3 rd February 2010 Mr and Mrs Black (who had by that time been joined as second and third defendants in the action) also applied for security for costs.
On 4 th March 2010 Mr and Mrs Black filed Defences and Counterclaim, the Counterclaim being for approximately £4 million by way of damages for wrongful dismissal.
On 27 th May 2010 Mr Sandison's application came before the Chief Master, who awarded Mr Sandison security for costs in the sums that I have already mentioned. On 29 th June 2010 the Chief Master heard Mr and Mrs Black's application for security for costs and awarded them security in the sum of £40,000, as I have already indicated, but the Master refused permission to appeal on the grounds that there was no evidence that Mastermailer would not be able to pay the reduced amount, only that they would not be able to pay the full amount that had been requested, which was substantially greater.
On 22 nd July 2010 Mastermailer issued its notice of appeal against the Chief Master's decision of 27 th May 2010, and on 30 th July 2010 Mastermailer actually paid the first instalment of £40,000 due by way of security for costs. No further instalments have been paid, and a stay was later granted in Mastermailer's favour.
On 23 rd July 2010 Mastermailer issued its notice of appeal against the Chief Master's decision on 29 th June 2010 in respect of security to be awarded in favour of Mr and Mrs Black.
The July 2010 open offer document issued by Mastermailer shows that Mastermailer made a trading loss of £143,000-odd for the year to 30 th June 2010.
On 12 th August 2010 Mastermailer held an extraordinary general meeting to try to raise the funds it required, amounting, I believe, to something approaching £200,000. It appears that the shareholders in fact raised approximately £156,000 on that occasion. In the result, Mastermailer has continued to trade, albeit that it appears to be trading somewhat precariously. I am not in a position to make any comment on the evidence that I have seen as to the competing allegations of whether Mastermailer has at any point traded insolvently, or as to its likely future, but it certainly appears that the present directors of Mastermailer are hanging on tenaciously to its trading business and are making trading profits in the current year.
On 27 th August 2010 Warren J (as I have already indicated) stayed the orders made by the Chief Master on both 27 th May and 29 th June 2010. On 22 nd September 2010 Mastermailer applied to be allowed to rely on the new evidence in Mr Rogers' statement dated 14 th September 2010. On 16 th December 2010, again as I have already said, Mann J ordered all four applications to be adjourned for an oral hearing, and continued the stay of Master Winegarten's orders.
The matter then comes before me today, and I have been informed that 30 th April 2012, which is more than one year away from now, is the date fixed for a 5–7 day trial of these actions. I should also mention that the claimant made an application to the court (to a judge whose identity I have not been told) to stay these proceedings pending criminal proceedings or a criminal investigation that is under way against each of these three defendants in respect of the monies that are claimed in these actions. That application was unsuccessful, not I think surprisingly, since the police investigation has resulted in the arrest of the three defendants to this claim, but not in their being charged with any criminal offences. That investigation, I am told, has been under way now for some 18 months, and the defendants, perhaps surprisingly, remain on police bail, not knowing whether they are to be charged or not. I am told, however, that the investigation is active, in that the defendants have recently been interviewed again by the police.
The claims against the defendants.
The claims against Mr Sandison are as a director of Mastermailer and the accountant working and providing services for Mastermailer. The claims are, in broadest outline, as follows. First, a claim for £113,000-odd paid to Mr Sandison supposedly without contractual entitlement. Secondly, a claim of £10,000-odd paid to an entity called Bankswood LLP, of which Mr Sandison is said to be a partner. Thirdly, a claim for some £40,571 paid by way of several smaller payments to various third parties, each of which is said to have been a payment made without any proper explanation. And, fourthly, a claim for £341,446, which it is said was paid to a company called Data Securities Limited, in which Mr Sandison is alleged to have had an interest.
The claim against Mr Black, the second defendant, is also made as a director of Mastermailer and is as follows. First, that he allowed payments to Data Securities Limited in which he allegedly had an interest, again in the sum of £341,000-odd. Secondly, that he received a total of £132,000-odd to which he had no contractual entitlement from Mastermailer. Thirdly, a claim for £9,350-odd in respect of sales that he allegedly redirected, which would have otherwise gone to Mastermailer, to a company called Evrite Limited, which is said to be owned by Mr Black's brother. Fourthly, a claim for £170,000-odd, which is alleged to have been outstanding under Mr Black's director's loan account and which it is said he failed to repay. That sum takes into account a credit of £100,000 that was made to the director's loan account in November 2007. In relation to those claims, Mr Black admits his interest in Data Securities Limited, but he says that he disclosed that...
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