Nicholas William Nicholson v Mark Gregory Hardy
| Jurisdiction | England & Wales |
| Judge | Barnett |
| Judgment Date | 21 May 2021 |
| Neutral Citation | [2021] EWHC 1311 (Ch) |
| Court | Chancery Division |
| Docket Number | Case Number CR-2014-010913 |
| Date | 21 May 2021 |
[2021] EWHC 1311 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (Ch D)
IN THE MATTER OF JEB RECOVERIES LLP
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Royal Courts of Justice
7 The Rolls Building
Fetter Lane
London
EC4A 1NL
DEPUTY ICC JUDGE Barnett
Case Number CR-2014-010913
Christopher Brockman (instructed by Gateley PLC) for the Applicant
The Respondent appeared in person
Hearing date: 27 April 2021
DEPUTY ICC JUDGE Barnett
By an application dated 25 August 2020 (the “s.212 Application”) Mr Mark Hardy (“Mr Hardy”) has sought relief pursuant to section 212 of the Insolvency Act 1986 against Mr Nicholas Nicholson “(Mr Nicholson” or “the Liquidator”) who was previously the liquidator of JEB Recoveries LLP (“JEB”). The relief sought is that:
“The court examine into the conduct of the Respondent and compel him to contribute such sum to the company's assets by way of compensation in respect of his misfeasance, breach of fiduciary duty and/or other statutory and common law duty is as the court thinks just”.
The principal grounds stated in the s.212 Application are:
“(e)… The Respondent has stated to the Applicant at a meeting of creditors, that the commencement of any proceedings to collect the assets would be vexatious notwithstanding the finding of HH Judge Simon Barker QC – [2015] EWHC 1063 (Ch) – at para 49 that one of the claims is “realistically arguable… entirely logical and inherently credible”
(f) The claim of the Petitioning Creditor is for an amount of legal costs that the Respondent has refused all requests to value or have subject to detailed assessment by the Court
(g) The Respondent has also refused all requests to apply mandatory set off of assets and rights vested in JEB Recoveries LLP against the value (if any) of the claim of the Petitioning Creditor, and has at all relevant times valued it in full for voting purposes including in his failed attempt to achieve a fee sanction based on hourly rates for his own enrichment…
(i) The Respondent has refused all requests and demands to collect simple debts evidenced in writing and due to JEB Recoveries LLP from a Spanish company with significant assets, but which debts are expressly stated to be subject to the exclusive jurisdiction of England and of this court. Such debts have a value in excess of €1,000,000 and have likely become statute barred as a result of the Respondents misfeasance and/or breach of duty and should be the subject of a compensation order against the Respondent.”
By the present application issued on 6 November 2020 Mr Nicholson seeks the following orders:
1. An order pursuant to CPR rule 3.4(2) striking out the entirety of the s.212 Application on the grounds that (i) it discloses no reasonable grounds for bringing the claim and/or (ii) it is an abuse of the process of the court or otherwise likely to obstruct the just disposal of the proceedings
2. Alternatively an order giving summary judgment in favour of Mr Nicholson on the grounds that pursuant to CPR rule 24.2 (i) the applicant has no real prospect of succeeding on the claim and (ii) there is no other compelling reason why the case should be disposed of at trial.
Mr Nicholson is represented by Mr Christopher Brockman of counsel. Mr Hardy has appeared in person. Although Mr Hardy is a litigant in person, he does have substantial experience of litigation before the English courts.
Background
JEB was incorporated on 21 March 2014 by Mr Hardy and others. Its purpose was to acquire and pursue claims against Mr Judah Binstock, a wealthy businessman, and parties connected with him. Mr Binstock has subsequently died.
The pursuit of some claims by JEB appears to have been unsuccessful and has led to adverse costs orders being made against JEB and in favour of Mr Binstock. Relying on those costs orders, Mr Binstock petitioned for, and secured, the winding up of JEB.
The only creditors in the estate are the estate of Mr Binstock for a sum of £260,858.80, Mr Hardy for £100,513 and a third party whose claim has yet to be quantified.
On 29 th November 2017 Mr Nicholson and Mr Dumville of Haslers were appointed as joint liquidators of JEB. Mr Dumville ceased office on 16 January 2020 and Mr Nicholson continued as sole liquidator until 27 November 2020.
At the outset of the appointment of the liquidators there were no funds in the insolvent estate. The only assets were alleged potential claims against parties connected with Mr Binstock. Notwithstanding the lack of funds, the liquidators undertook work on a speculative basis to investigate the viability of the potential claims. They also engaged the law firm, Gateley PLC, on a conditional fee basis to assist them.
Ultimately, Mr Nicholson in consultation with his legal advisers concluded that the potential claims were not worth pursuing. Accordingly, there have been no realisations in the liquidation and neither Mr Nicholson nor his legal advisers have received any payment for their labours.
Mr Hardy does not accept Mr Nicholson's conclusions with regard to the viability of the potential claims and thus issued the s.212 Application which Mr Nicholson now seeks to strike out.
The potential claims identified by Mr Hardy are summarised in his sixth witness statement. They are:
1. Unpaid invoices originally due to Michael Stannard from Mr Binstock.
2. Unpaid invoices originally due to Peter Wilson from Mr Binstock.
3. A Bentley motor car in the possession of Mr Binstock at the date of his death and the value derived from its use by Mr Binstock and subsequently by Mrs Binstock.
4. A liability of Mr Binstock, Mrs Binstock and their daughter for a “£320,000 debt due by Indus investments Ltd (a Northern Ireland company that was dissolved in 2013) that was prima facie to be included in the assets assigned to JEB Recoveries by Michael Stannard”.
5. Two unpaid promissory notes for monies due to Isdell Rudich by Corporacion de Nueva Andalucia (“CNM”).
6. Mr Hardy's claim for the value of shares in CNM said to be improperly transferred to Mrs Binstock and/or her daughter as a result of fraud and misrepresentation.
7. An accounting and damages for assets stolen by Mr and Mrs Binstock from a Costa Rican company owned by Mr Hardy.
With regard to the invoice claim of Mr Wilson, Mr Hardy referred me to a decision of His Honour Judge Simon Barker QC, sitting as a judge of the High Court, in JEB Recoveries LLP v Judah Eleazar Binstock [2015] EWHC 1063 (Ch). That case concerned an application by Mr Binstock to strike out the claim of JEB in respect of the debt assigned to it by Mr Wilson (which I infer is the second claim referred to above).
Mr Hardy referred me to paragraph 49 of the judgment which states with regard to the claim of Mr Wilson:
“… Agreement as to consideration in the form of a monthly retainer plus reimbursement of expenses payable over the duration of the alleged contract is entirely logical and inherently credible.”
Mr Hardy relies upon that comment as judicial endorsement of the validity of the claim although that reliance is somewhat undermined by the balance of the paragraph which states:
“Revival by acknowledgement of an alleged debt of £10 million which, on the material previously before me, seemed arguably to be both long since time-barred under English law and a high price for the services allegedly rendered, is less logical and less inherently likely. However, on an application such as this, I am not in a position or entitled to reject that element of the claim as unarguable or take it into account other than at face value.”
Save for the above, I was not taken by Mr Hardy to any underlying documentary material which might cast further light on the above potential claims. In his fifth witness statement, Mr Nicholson offers some explanation of the promissory note claim derived from his interview of Mr Hardy. Rather than being a simple debt claim, Mr Nicholson summarises the claim as being an illegal scheme to launder money for a casino owned by Mr Binstock for the purposes of defrauding the Spanish tax authorities. That explanation is strongly refuted by Mr Hardy
I observe that claims 6 and 7 appear to be personal claims of Mr Hardy and not claims vested in JEB. I should also record one further point. Mr Hardy does not accept that Mrs Binstock is the lawful representative of Mr Binstock's estate. At paragraph 13 onwards of his sixth witness statement, he records that there is no grant of probate in any UK probate registry in respect of Mr Binstock's estate. Mr Hardy considers the point to be significant because, he asserts, Spanish law does not recognise the concept of the estate of the deceased. He asserts that if there is a valid Will registered in Spain, then the debts of the deceased attach to the assets passed to the beneficiaries and are to be recovered directly from those beneficiaries.
In addition to the above alleged potential claims, Mr Hardy claims that a separate identifiable claim would have arisen had the liquidators applied mandatory set off at the outset of the liquidation. I comment further on that claim when addressing Mr Hardy's submissions.
Strike Out Applications: Legal Principles .
Mr Christopher Brockman has helpfully set out the relevant legal principles in his skeleton argument.
CPR 3.4(2) (so far as material) provides that the court may strike out a statement of case if it appears to the court:
“(a) that the statement of case discloses no reasonable grounds for bringing or defending the claim;
(b) that the statement of case is an abuse of the court process or is otherwise likely to obstruct the just disposal of the proceedings…”
Grounds (a) and (b) cover statements of case which are unreasonably vague,...
To continue reading
Request your trial