Nicholas John Clwyd Griffith v Neil Joseph Gourgey
| Jurisdiction | England & Wales |
| Judge | Newey LJ,Lord Justice David Richards |
| Judgment Date | 22 November 2019 |
| Neutral Citation | [2019] EWCA Civ 2046 |
| Date | 22 November 2019 |
| Docket Number | Case No: A3/2018/2972 and 2973 |
| Court | Court of Appeal (Civil Division) |
[2019] EWCA Civ 2046
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
COMPANIES COURT (ChD)
Sir Nicholas Warren
CR-2013-003502 and 003499 (Nos 1807 and 1805/2013)
Royal Courts of Justice
Strand, London, WC2A 2LL
THE MASTER OF THE ROLLS
Lord Justice David Richards
and
Lord Justice Newey
Case No: A3/2018/2972 and 2973
In the Matter of G&G Properties Limited
and
In the Matter of the Companies Act 2006
In the Matter of Bankside Hotels Limited
and
In the Matter of the Companies Act 2006
Christopher Parker QC and Emily Gailey (instructed by Blake Morgan LLP) for the Appellant
Daniel Lightman QC, Adil Mohamedbhai and Emma Hargreaves (instructed by Olephant Solicitors) for the Respondents Maurice Gourgey, Neil Joseph Gourgey and Charles Duncan Gourgey
The other Respondents did not appear and were not represented
Hearing date: 5 November 2019
Approved Judgment
These appeals are brought against orders made by Sir Nicholas Warren, sitting as a High Court judge, in two petitions under section 994 of the Companies Act 2006, alleging unfair prejudice in the conduct of the affairs of two companies, G&G Properties Limited (G&G) and Bankside Hotels Limited (Bankside). It is a remarkable and highly regrettable feature of the appeals that they concern amendments to the pleadings in petitions presented as long ago as March 2013.
G&G and Bankside are two of a large number of companies established to carry on hotel and property businesses by Mr Griffith (the appellant and petitioner), Maurice Gourgey (the first respondent in the Bankside petition) and Robert Hodge who was declared bankrupt in 2010. The shares in Bankside were issued to Mr Griffith and Mr Hodge (25 shares each) and to the trustees of a family trust established by Mr Gourgey (50 shares). The shares in G&G were issued to Mr Griffith and Mr Hodge (25 shares each) and to Mr Gourgey's sons, Neil and Charles (the Sons) (25 shares each).
The directors of G&G at the material times were Mr Gourgey, the Sons, Mr Griffith until May 2010 and Mr Hodge until his bankruptcy. The directors of Bankside at the material times were Mr Gourgey, his wife, Mr Griffith until May 2010 and Mr Hodge until his bankruptcy.
The principal allegation made by Mr Griffith in each petition is that Mr Gourgey has caused G&G, Bankside and its subsidiary Riverbank Hotels Limited to transfer substantial sums to companies in which Mr Gourgey and others connected with him were interested. It is said that the payments were not made in the interests of the companies concerned but were made for the personal benefit of Mr Gourgey and others and without the knowledge and approval of Mr Griffith. Mr Gourgey and the other respondents say that the various companies concerned were run as a corporate group and routinely assisted each other with loans. Mr Griffith had consented to this arrangement, which caused no prejudice to him because the loans were made on commercial terms and, in many cases, to companies in which Mr Griffith was directly or indirectly interested. Other payments were made under arrangements, agreed by Mr Griffith, for management charges. A third petition in relation to Pedersen (Thameside) Limited, based principally on the alleged diversion of a corporate opportunity, was presented at the same time and is being pursued but is not directly relevant to these appeals.
The main relief sought by Mr Griffith in the two petitions relevant to this appeal is an order that Mr Gourgey purchase his shares in Bankside and that the Sons purchase his shares in G&G.
In their early stages, the conduct of the petitions was marked by commendable speed by all parties. Following service of the petitions in March 2013, Mr Griffith acceded to the respondents' suggestion that there should be combined pleadings in the three petitions. Combined points of claim were served on 24 May 2013, combined points of defence on 2 August 2013 and combined points of reply on 3 September 2013.
The state of the pleadings in the G&G case in 2013 is of central importance on the present appeal in that petition and I will return to them when dealing with it.
Progress took a backward turn with the failure of the respondents to provide the further information as regards the points of defence requested in September 2013. Notwithstanding a consent order for the provision of the requested information, an unless order and an order made in November 2014 giving relief from sanctions and providing a final chance to provide the full information requested, the respondents failed to do so. By an order made in May 2015, Simon J declared that the points of defence had been struck out. In his judgment ( [2015] EWHC 1080 (Ch)), he said that the failures to provide adequate responses went to the heart of the allegations made against the respondents and that a significant number of responses were “not simply insufficient, they are evasive”. There had also been “a serious failure” to produce important documents by their due date, for which there was no sufficient explanation.
The respondents are not debarred from defending the petitions, but, as the judge said in his first judgment at [144], they “cannot put forward a case which is factually inconsistent with the [points of claim] or put forward any other factual material to support a case that the conduct complained of does not amount to unfairly prejudicial conduct”.
Further delay was caused by an appeal by the respondents against Simon J's order, which was dismissed in July 2017. A single lord justice gave permission to appeal on the basis of just one point but it transpired, as Longmore LJ noted, that it had already been considered and rejected in an earlier decision in November 2014, from which there had been no appeal: see [2017] EWCA Civ 926 at [17].
On 6 April 2018 the Sons issued an application for an order striking out the relief sought against them in the G&G petition, or, alternatively, for an order that Mr Griffith apply within 28 days for permission to amend the petition and the points of claim “so as properly to particularise a claim that [each of the Sons] has or have been concerned in conducting the affairs of [G&G] in an unfairly prejudicial manner”.
On 13 July 2018, Mr Griffith applied for permission to amend the Bankside petition to plead the uncontested fact that in October 2014 he had acquired an additional 8 shares in Bankside from Mr Hodge's trustees in bankruptcy, thus enabling him to seek a buy-out order against Mr Gourgey in respect of those shares as well as his original holding of 25 shares.
These applications were heard with a number of other applications. These included an application by Truchot Trustees Limited (Truchot), the trustee of a family trust set up by Mr Gourgey, to strike out the relief claimed against it in the Bankside petition and the points of claim on the grounds that they disclosed no reasonable grounds for the claim.
The applications were heard by Sir Nicholas Warren (the judge) over three days in April 2018. On 9 May 2018, the judge handed down a reserved judgment (the first judgment): see [2018] EWHC 1035 (Ch), [2019] 1 BCLC 434, [2018] BCC 617. He held that, in the absence of suitable amendments, the strike-out applications made by the Sons and Truchot succeeded. He gave Mr Griffith an opportunity to apply for permission to amend the petitions and the points of claim.
By applications issued on 13 July 2018, Mr Griffith applied for permission to amend the G&G and Bankside petitions and the points of claim.
The judge heard these applications on 30–31 July 2018 and handed down judgment on 25 October 2018 (the second judgment): see [2018] EWHC 2807 (Ch), [2019] 2 BCLC 174. He dismissed the application to amend the Bankside petition and the points of claim in so far as they related to Truchot. Permission to appeal the order as regards Truchot was refused by the judge and by this court. Truchot has therefore ceased to be a respondent against which relief is sought in these proceedings.
The judge gave permission for most of the amendments to the G&G petition and the points of claim as regards the claims against the Sons, but on condition that they be allowed to plead full defences to the points of claim as so amended. He also gave permission for amendments to the Bankside petition and the points of claim to plead the fact that Mr Griffith had acquired 8 shares from Mr Hodge's trustees in bankruptcy in October 2014, on condition that Mr Gourgey be permitted to plead a full defence to the points of claim as amended.
With permission granted by Floyd LJ, Mr Griffith appeals against the order striking out the relief against the Sons in the G&G petition unless the petition and the points of claim were amended. This therefore requires consideration of the first judgment given by the judge on 9 May 2018 (the first judgment). He also appeals against that part of the order in the Bankside petition by which the judge permitted Mr Gourgey to plead a full defence to the points of claim.
I deal first with the appeal as regards the G&G proceedings. The Sons submit, and the judge agreed, that neither the petition nor the points of claim contains a sufficient pleading of unfairly prejudicial conduct on the part of the Sons as to make it arguable that a buy-out order or other relief...
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