Mea Corporation Ltd, Re; Secretary of State for Trade and Industry v Aviss
| Jurisdiction | England & Wales |
| Judge | Mr Justice Lewison,Mea |
| Judgment Date | 20 July 2006 |
| Neutral Citation | [2006] EWHC 1846 (Ch) |
| Docket Number | Case No: 4875 OF 2003 |
| Court | Chancery Division |
| Date | 20 July 2006 |
[2006] EWHC 1846 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Justice Lewison
In the Matter of Mea Corporation Limited
And in the Matter of the Company Directors Disqualification Act 1986
Case No: 4875 OF 2003
Mr Andrew Westwood (instructed by Wragge & Co) for the Claimant
Mr John Aviss in person (on 10 July only)
Hearing dates: 10 and 11 July 2006
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction 3
Background 3
Mr Aviss 3
Mr Berry 4
Procedural matters 4
Directions for hearing 4
Adjournment application 5
Abuse of process? 6
Witnesses 7
Mr David Bartley 7
Mr Simon Bartley 7
Mr Robert Evans 7
Mr John Fitzpatrick 7
Mr Ian Rennison 8
Mr David Walker 8
The acquisition of subsidiaries 8
Projects 8
CJB 8
A hole in the accounts? 9
Centralisation 9
Wolverstone 11
Pressure from creditors 12
Mea 12
Projects 12
CJB 12
Mr Berry 13
Mr Aviss 13
Inter-company support 14
The decisions to cease trading 18
Conclusion 18
Responsibility of Mr Aviss and Mr Berry 19
Mr Aviss as formal director of Mea 19
Director in fact or shadow director 20
Director in fact 20
Shadow directors 21
The evidence of the directors and company secretary 23
Mr David Walker 23
Mr Robert Evans 24
Mr David Bartley 24
Mr Simon Bartley 25
Mr Ian Rennison 25
Mr Philip Tonkin 25
Mr Aviss and Mr Berry act together 26
The key allegation 26
Unfitness 27
Period of disqualification 28
Introduction
Mea Corporation Ltd was incorporated on 21 May 198It traded as heating and maintenance engineers. It is referred to in some of the contemporaneous documents under its former name of Total Environmental & Maintenance Services Ltd, or TEMS. I refer to it as "Mea". On 3 August 2001 Barclays Bank appointed administrative receivers over the company under powers contained in a debenture. The statement of affairs prepared as at that date showed a deficiency as regards creditors of just under £5 million. An order for its compulsory winding up was made on 3 October 200Mea Projects Ltd was incorporated on 12 May 1989. By the time that it comes into the story it was called Rotrax Engineering Services Ltd. It traded as mechanical and heating engineers. In June 2000 it became a wholly owned subsidiary of Mea, and changed its name to Mea Projects Ltd. I refer to it as "Projects". On 31 July 2001 it went into creditors' voluntary liquidation. The statement of affairs prepared as at that date showed an estimated deficiency as regards creditors in excess of £10.7 million. Brightchance Ltd was incorporated on 24 March 1930. It was then known as CJ Bartley & Co Ltd. It was a long-established electrical contractor. In October 2000 it became a wholly owned subsidiary of Mea. I refer to it as "CJB". On 17 July 2001 it went into creditors' voluntary liquidation. The statement of affairs prepared as at that date showed an estimated deficiency as regards creditors of approximately £3.7 million. The total deficiency of all three companies is nearly £19.5 million.
In this action the Secretary of State seeks an order for disqualification under section 6 of the Company Directors Disqualification Act 1986 ("the 1986 Act") against two men: Mr John Aviss and Mr William ("Bill") Berry. The case against them is that they have been directors of all three companies; and that their conduct as directors has made them unfit to be concerned in the management of a company. Mea is the lead company. Projects and CJB are the collateral companies. The period on which the Secretary of State has concentrated is that between the beginning of 2000 in relation to Mea; June 2000 in relation to Projects and October 2000 in relation to CJB and the entry into insolvency of each of those companies. Mr Aviss accepts that, technically, he was recorded as a director of Mea between 1 November 1999 and 1 June 2001; but he says that he did not realise that he had been appointed. He has never been formally appointed as a director of either Projects or CJB. Mr Berry was never formally appointed as a director of any of the three companies. The Secretary of State says that that does not matter, because both Mr Aviss and Mr Berry were either directors in fact or shadow directors of all three companies during the relevant period. Mr Aviss and Mr Berry dispute this.
Background
Mr Aviss
Something of Mr Aviss' background is given in a draft report prepared in March 2000 with a view to the flotation of Mea on AIM:
"John Aviss joined his father's electrical contracting business from school, and completed an electrician's apprenticeship. He began running the business from the age of 20. He developed a specialism in heating systems and acquired a heating company, Davis & Rutherford … He set up [Mea] in 1981 (as Aviss Heating Limited) and transferred Davis & Rutherford's business into the new company. He diversified into pet product distribution in 1981, with the acquisition of Woodpecker Pet Products Ltd … and is now Chairman and majority shareholder of companies with turnover totalling in excess of £50 million. In November 1999 Woodpecker was demerged into Zoa Corporation plc, which was admitted to … [AIM]."
Mr Aviss was interested in a number of different companies. These included:
i) Woodpecker Pet Products Ltd, whose holding company was Zoa and which was floated in November 1999;
ii) Aviss Holdings Ltd;
iii) Plantagenet Press Ltd;
iv) Holcot Press Ltd and
v) Bau Corporation.
In addition Mr Aviss owned the entire issued share capital in Mea, consisting of 10,000 shares of £1 each.
Mr Berry
I know little about Mr Berry's background. However, what is significant for present purposes is that on 16 March 1999 he pleaded guilty in the Crown Court at Nottingham to an offence of trading with intent to defraud creditors and to another offence of being concerned in the management of a company while an undischarged bankrupt. He was sentenced to two years' concurrent imprisonment on each count (in each case suspended for two years) and disqualified for five years under the 1986 Act. The period of disqualification was still running during the events with which I am concerned.
Procedural matters
Directions for hearing
The claim form was issued on 28 July 2003, together with a lengthy affirmation of Mr Mark Bruce in support of the Secretary of State's case. At that stage there were four defendants. On 29 September 2003 the Defendants were ordered to file evidence in answer by 10 November 2003. They did not comply with that order. Mr Berry filed a witness statement on 14 January 2004. On 19 January 2004 an order was made that unless Mr Aviss filed and served evidence by 16 February 2004 he be debarred from adducing any evidence. On 13 February 2004 time was extended to 26 March 2004. Mr Aviss served an affidavit on 20 March 2004. The other two defendants also served evidence; and all defendants were given liberty to comment on each other's evidence provided that they did so by 21 June 2004. Neither Mr Aviss nor Mr Berry took up that permission. After a number of extensions of time, the Secretary of State served evidence in reply by the summer of 2005. On 25 July 2005 Chief Registrar Baister gave directions for trial. Those directions included:
i) A time estimate for trial of 10 days and an order to attend the Listing Office by 25 August 2005;
ii) An order that all deponents attend for cross-examination on 21 days notice, in default of which their evidence should not be read out or used at trial without the permission of the Court.
A listing appointment took place on 14 September 2005. On 20 September 2005 the listing office notified the parties that the trial would take place in a three day window from 10 July 2006. At that stage Mr Aviss was represented by solicitors, to whom the notification was sent (although it may not have been received by them). Mr Berry was then representing himself.
Mr Aviss and Mr Berry were duly notified that they were required for cross-examination.
Adjournment application
On the first day of the trial (10 July 2006) Mr Aviss appeared in person and asked for an adjournment. His application was supported by Mr Berry, who did not attend, but who wrote a letter. The grounds on which the application was based can be summarised as follows:
i) Mr Aviss had ceased to be represented by solicitors about a month before the trial date (by which time he knew that the trial date was fixed for 10 July 2006);
ii) He wished to call a large number of witnesses (some twelve in all), four of whom he was able to name, in support of his defence;
iii) Mr Berry was medically unfit to attend court;
iv) Even if fit, Mr Berry could not afford the train fare to travel from the Midlands to court each day.
I refused the application for the following reasons:
i) Within the month available to him, it did not appear to me that Mr Aviss had made any serious effort to prepare for trial. Mr Berry (with whom he had been in contact at least three times during that period) did not suggest that he himself was unaware of the trial date and indeed appears to have been notified of it when it was fixed, over nine months earlier;
ii) Neither Mr Berry nor Mr Aviss had taken any step to obtain the witnesses they said they wished to call; and had not referred to the possibility of calling them in their own evidence. There were no...
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