Nicholas John Clwyd Griffith and another (Petitioners) v Maurice Saleh Gourgey and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Simon |
| Judgment Date | 23 April 2015 |
| Neutral Citation | [2015] EWHC 1080 (Ch) |
| Docket Number | Case Nos: 1805/2013, 1806/2013, and 1807/2013 |
| Court | Chancery Division |
| Date | 23 April 2015 |
[2015] EWHC 1080 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
In the matter of Bankside Hotels Limited
In the matter of Pedersen (Thameside) Limited, and
In the matter of G&G Properties Limited
The Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Simon
Case Nos: 1805/2013, 1806/2013, and 1807/2013
Mr Christopher R Parker QC and Mr Oliver Phillips (instructed by Blake Morgan LLP) for the Petitioners
Mr John Brisby QC, Mr Andrew Marsden and Mr Tom Gentleman (instructed by The Robert Davies Partnership LLP) for the Respondents
Hearing dates: 23 and 24 March 2015
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
These applications relate to the sufficiency of further information which has been ordered to be given by the Respondents.
There are two applications. The first is an application by the Petitioners for final relief on their petitions, on the basis that the Respondents have failed to comply with an order requiring them to answer the Petitioners' Part 18 Request for Information. The second is an application by the Respondents for relief against sanctions under CPR Part 3.9 in the event that they are found not to have complied with the order.
The procedural background
The proceedings involve three unfair prejudice petitions under s.994 of the Companies Act 2006, concerning three companies: Bankside Hotels Ltd ('Bankside'), Pedersen (Thameside) Ltd ('PTL') and G&G Properties Ltd ('G&G'), (compendiously referred to as the 'Companies'). The Petitioners are shareholders in the Companies, which operate in the business of property investment and, in particular, investment in hotels.
Although the three petitions have not been formally consolidated, they are being case managed and tried together, and there is a single set of pleadings.
The Petitions cover four areas of complaint.
First, an allegation that Mr Gourgey (who is a director of the Companies) caused Bankside, its subsidiary Riverbank Hotels Ltd, and G&G to transfer substantial sums of money to other companies in which he (or others connected with him) had an interest and the Petitioners did not. It is said that the payments were not made in the interest of Bankside, Riverbank Hotels Ltd and G&G, were made without the Petitioners' consent and approval, and were used for the personal benefit of Mr Gourgey and others.
As to this complaint, the Respondents contend that the businesses of the Companies and their subsidiaries were run as though they were a corporate group, which included various other companies owned by the Petitioners. These companies would routinely assist each other with funding requirements by the granting of loans. This was an arrangement of which Mr Griffith was aware, to which he consented and which did not prejudice the Petitioners since the loans were made on commercial terms and in many cases to companies in which Mr Griffith was directly or indirectly interested. It is also said that it was understood and agreed that management charges would be charged in respect of services provided to the group, payable to companies associated with them.
The second area of complaint relates to what is said to be the diversion of the opportunity to construct and fit out a hotel from PTL to Brentford Hotels Limited ('BHL'), a company in which Mr Griffith had no interest.
This is denied by the Respondents who maintain that, due to difficulties in obtaining funding, it was not viable for PTL to take the project forward, and that it was consequently agreed that Mr Gourgey and his sons could pursue the project through BHL.
The third of the Petitioners' complaints relates to the manner in which the Respondents have treated the proceeds from the sale of the Riverbank Plaza Hotel. They allege that a company associated with Mr Gourgey (Watchcourt Ltd) has been paid more than its fair share of the proceeds.
This too is not accepted by the Respondents. Their case is that the company which owned the hotel (Riverbank Hotels Limited) has not made a final distribution of the proceeds.
Fourthly, the Petitioners claim that the Respondents have refused to provide them with information to which they say they are entitled.
This too is denied by the Respondents, who contend that the Petitioners have not identified or established any right to the information and that, in any event, the Petitioners have been provided with the information to which they are entitled or have requested.
It is clear from this brief summary that a number of areas of enquiry are likely to be of crucial significance in the proper determination of the issues which arise on the Petitions: these include the purposes for which the relevant companies made payments, the identification of any express or implied agreement as to the making of loans and payments, how such payments were accounted for in contemporary documents and whether the Respondents have failed to provide material information.
The Petitioners served Points of Claim on 24 May 2013, and on 2 August 2013 the Respondents served their consolidated Points of Defence. This was followed by the Petitioners' Points of Reply which was served on 3 September 2013. The statements of case presently consist of a Re-Amended Combined Points of Claim (dated 7 March 2014), an Amended Consolidated Points of Defence (dated 24 March 2014) and an Amended Reply (dated 9 January 2015).
On 3 September 2013, on the same date as the original Points of Reply, the Petitioners served a Request for Further Information ('the Request').
The Request contained questions in relation to 44 paragraphs or sub-paragraphs of the Amended Defence. After an assurance that the Respondents would answer the Request was withdrawn, the Petitioners applied on 3 November 2013 for an order from the Court under CPR Part 18.1(b) that the Respondents should provide the information requested.
On 3 March 2014, some 6 months after the service of the Request, the Respondents consented to an order made by Mr Robin Hollington QC (sitting as a Deputy High Court Judge), which required a full response to the Request by 4 pm on 21 March 2014.
The Respondents failed to comply with this order and, at a case management hearing before Rose J on 4 April 2014, an order was made which provided:
(3) The Respondents do file and serve their response to the Petitioners' [Request] by 4 pm on 22 April 2014.
(4) Unless the Respondents comply with paragraph 3 within the time specified, the Points of Defence [by this stage the Amended Points of Defence] be struck out.
The Respondents filed and served a response to the Request in purported compliance with the 4 April order shortly before the deadline on 22 April 2014. This document ran to some 28 pages.
The Petitioners took the view that this document failed to answer many of the questions in the Request and took issue with the way in which some of them were worded. On 27 May 2014, they sought directions for the future conduct of the proceedings on the basis that the Respondents had failed to comply with the 4 April order and that consequently the Amended Points of Defence was to be treated as struck out.
On 5 June the Respondents made an application for relief against sanctions under CPR Part 3.9, 'if needed.'
The two applications came on for hearing in November 2014 before Mr Simon Monty QC (sitting as Deputy High Court Judge). In a full and clear judgment, see In the matter of Bankside Hotels Ltd and others, Griffith and another v. Gourgey and others [2014] EWHC 4440 (Ch), he ruled at [34] that the Respondents' Response to the Request served on 22 April 2014 was,
plainly incomplete and insufficient and thus the Respondents were in breach of the unless order [of Rose J].
He was, however, prepared to grant relief against sanctions (see [63]) on the basis that the Respondents complied with two conditions: first, that they pay the Petitioners' costs of both applications on an indemnity basis; and secondly:
… that there should be a further Unless Order requiring the Respondents to provide a full response to the request within a specified period of time, which I suggest should be no longer than 21 days, failing which the Particulars of Defence will be struck out. Without wishing to fetter the discretion of the court in the future, it should be noted that, barring something extraordinary, the court would expect complete compliance with such order and would not look kindly upon any further application for relief under either limb.
A Minute of Order was agreed following the judgment, dated 17 November ('the Relief Order'). This reflected the content of the judgment and provided for relief against sanctions in terms of the reinstatement of the Amended Points of Defence, provided the Respondents complied with the two conditions set out in paragraph 4 of the order (the 'two limbs' referred to in [63] of Mr Monty QC's judgment). Paragraph 4(a) was the condition that the Respondents pay the costs order in favour of the Petitioners by 4 pm on 27 November 2014; and paragraph 4(b) was a condition that the Respondents:
by 4 pm on 4 December 2014 file with the Court and serve on the Petitioners a full and complete response to (1) the [Request] and (2) any request made under paragraph 1 of this order.
Paragraph 5 was in similarly emphatic terms:
For the avoidance of all doubt, the response to be provided by the Respondents under paragraph 4(b) of this Order shall:
(a) be verified with a statement of truth in...
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