Mr Tim Evoy v Key Choice Financial Planning Ltd
| Jurisdiction | England & Wales |
| Judge | Rawlings |
| Judgment Date | 22 May 2020 |
| Neutral Citation | [2020] EWHC 3772 (Ch) |
| Court | Chancery Division |
| Docket Number | Case number CR-2019-BHM-000313 |
| Date | 22 May 2020 |
[2020] EWHC 3772 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN BIRMINGHAM
Birmingham Civil and Family Justice Centre
33 Bull Street
Birmingham B4 6DS
HIS HONOUR JUDGE Rawlings
(Sitting as a Judge of the High Court)
Case number CR-2019-BHM-000313
Mr Berragan appeared on behalf of the Defendant
The Claimant, Mr Evoy, appeared in person
BACKGROUND
By way of background to this matter, the Respondent to the petition that has been presented is Key Choice Financial Planning Limited (“The Company”). It was incorporated on 31 October 2014. The Company's business, since incorporation has been the giving of financial advice to individuals (known as retail customers).
On incorporation, the Company's issued share capital was 57 shares issued to Mr Tim Evoy, who is the petitioner in this case (“Tim”), 57 shares to his then wife, Dorothy Evoy (“Dorothy”) 57 shares to Karl Dickinson, who is Dorothy's son by her first marriage, and 19 shares to Stuart Dickinson, who is also Dorothy's son by her first marriage. On 1 January 2017, the Company issued further shares: (a) 65 A ordinary shares to Karl; and (b) 35 A ordinary shares to Stuart. Following the issue of the A Ordinary shares to Karl and Stuart, dividends were only paid on the A Ordinary shares.
The directors of the Company from incorporation on 14 January 2019 were Tim, that is the petitioner, and Karl, his stepson. On 14 January 2019 Tim was removed as a director of the Company at a shareholders meeting leaving Karl as the sole director. The company secretary has at all times been Stuart. On 2 April 2019 Tim presented a winding up petition as contributory (that is shareholder) against the Company seeking a winding up order against it under Section 122(1)(g) of the Insolvency Act 1986 (“Section 122 (1) (g)”) on the basis that it was just and equitable that it was wound up.
Prior to incorporation of the Company, Tim and Dorothy were directors of another company named Direct Financial Services UK Limited (“DFS”). They held all of the shares in DFS. Karl was invited to join DFS in 2008 and that invitation was, at least in part, connected to the Financial Conduct Authority (“FCA”) introducing a retail distribution review programme (“RDR”) which provided that individuals who wanted to continue giving financial advice to retail customers would need to achieve certain qualifications by 31 December 2012. Tim, who had been giving financial advice to DFS's retail customers up to that point, decided not to attempt to obtain those qualifications and Karl was invited to join DFS, on the basis that he would take the exams with a view to obtaining the necessary qualifications. It was therefore recognised at an early stage that from 31 December 2012, if Karl was successful in passing the examinations, it was he who would have to give any financial advice to DFS's retail customers and Tim would be unable to do so, if the FCA regulations were to be complied with.
The way that the Company arrived on the scene was that in October 2014 DFS ceased to trade. Its clients were taken over by the Company and the Company effectively took over the business of DFS. DFS was subsequently wound up.
In May 2016, an arrangement was entered into between the Company and TE Consulting Limited (“TEC”). The shares in TEC were owned by Tim and Dorothy. Under that arrangement, the Company made payments at the rate of £6,666.67 per month to TEC which were recorded as consultancy fees. Payments were stopped in November 2018 and, as I have already noted, on 14 January 2019, Tim was removed as a director of the Company by the other shareholders.
The facts I have set out so far are agreed, but I now turn to describe those matters that Tim says make it just and equitable that the Company should be wound up. Those matters are set out in a witness statement that Tim signed in support of the petition on 29 March 2019. In due course it was directed that that witness statement would stand as points of claim. Points of defence were filed by the Company on 30 August 2019 and points of response in due course by Tim, dealing with the points of defence.
In Tim's witness statement he refers to matters which he says demonstrate that the Company was a quasi-partnership involving a relationship of mutual trust and confidence between the shareholders. He refers to the contributions he made towards the Company's business and to the lack of contributions, he says, by his step sons Karl and Stuart. He refers to misconduct by Karl and to a lesser extent Stuart, and he says that the affairs of the Company have in various ways been conducted in a way unfairly prejudicial to him.
In its points of defence, the Company denies that there was a quasi-partnership. It responds to the allegations made in Tim's witness statement and makes its own allegations that there has been misconduct by Tim which it says justifies the action that was taken against Tim, including his removal as a director.
In summary, Tim says that the following amounts to unfairly prejudicial conduct:
(a) his relationship with Karl and Stuart started to deteriorate in 2016. He pointed out to Karl and Stuart, he says, that they were not pulling their weight in the business, they were not carrying out appropriate marketing activities or complying with FCA rules;
(b) Tim had a disagreement with Karl about a particular customer and this resulted in a deterioration in their relationship. Tim says that in around May 2016 it was agreed that, rather than he and Dorothy receiving any dividends from the Company, they should receive an income by way of consultancy fees paid to Tim and Dorothy's company, TEC at a rate of £80,400 per annum. This was done, Tim says because of a change in tax treatment which made receipt of monies via a company in that way more tax efficient. Tim says that “trail payments” received by the Company in 2016/2017 from past financial services provided to Tim's client's base were between £125,000 and £130,000 per annum. He worked out that TEC should receive £80,400 based upon those receipts and allowing for some of that income to be used by the Company as working capital;
(c) in 2017, Tim says he stepped back from the business and gave an opportunity to Stuart and Karl to run the business for a year. He says that, having given Karl and Stuart a full opportunity, he insisted on taking back control of the business, when it became apparent to him that they were not running the company properly, they were not advising clients properly, they were not building the Company's business, they were not making a success of the business. He therefore came back in, to take control, in September 2017, this led to considerable friction;
(d) a mediation which took place with a Chris Hemmings to try and resolve the conflict between Tim on the one hand and Karl and Stuart on the other. Tim complains that Karl and Stuart failed to act in the Company's best interests in relation to that mediation and after it;
(e) Tim was unfairly denied access to the Company's customer management system, financial records and bank account;
(f) Tim complains of a failure by Karl and Stuart to comply with FCA regulations as set out in the report of Ms Farrell of SimplyBiz of 11 September 2018;
(g) The Company wrongly reduced the payments it made to TEC in 2018 and ceased making them altogether in November 2018
(h) Karl engendered a lack of trust in the Company's clients which caused them to leave;
(i) Karl and Stuart have used the Company's funds to finance legal representation to deal with a dispute which, in reality is a dispute is between him and Karl (and to a lesser extent, Stuart);
(j) Company monies were abused by employing Stuart on a self-employed basis; and
(k) he complains about his removal as a director in January 2019,
The Company accepts that there has been a breakdown in trust and confidence between Tim and in particular Karl, but it says that that breakdown in trust and confidence is principally attributable to misconduct on the part of Tim as demonstrated by the following facts:
(a) Tim approach Karl in 2007 asking him to join DFS on the basis that Tim intended to step back from the business at some point after RDR was implemented on 31 December 2012;
(b) Any advice given by Tim to individuals after 31 December 2012 would breach FCA regulations and he should only have been at most promulgating advice which was formulated by Karl;
(c) when the...
To continue reading
Request your trial