Peter Dooley v Anthony Carmelos Norris
| Jurisdiction | England & Wales |
| Judge | Jones |
| Judgment Date | 31 March 2021 |
| Neutral Citation | [2021] EWHC 765 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CR-2018-002807 |
| Date | 31 March 2021 |
[2021] EWHC 765 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
INSOLVENCY AND COMPANIES COURT LIST (Ch)
In The Matter Of GALLIUM FUNDS SOLUTIONS GROUP LIMITED
And In The Matter Of THE COMPANIES ACT 2006
INSOLVENCY AND COMPANIES COURT JUDGE Jones
Case No: CR-2018-002807
Ms Wendy Parker (instructed by direct access) for the Petitioner
Ms Catherine Roberts (instructed by Rix & Kay Solicitors LLP) for the Respondents
Hearing dates: 8–12 and 15–17 February 2021
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.
CHJ 31/3/21
INSOLVENCY AND COMPANIES COURT JUDGE Jones
I.C.C. Judge
A) Introduction
Mr Dooley and Mr Norris are equal shareholders of the holding company, Gallium Funds Solutions Group Limited. Mr Dooley seeks an order for the purchase of his shares claiming unfair prejudice resulting from Mr Norris's conduct and, to a lesser degree, the conduct of Mrs Norris. He relies upon sections 994–996 of the Companies Act 2006 (“ section 994”, “section 996” and “the 2006 Act” respectively).
This judgment will refer to Gallium Funds Solutions Group Limited as “the Company”. For convenience that term will also be used to refer to it and/or its subsidiaries either together or individually when the context requires and it is unnecessary for the issues of the case to draw a distinction between them, even if it would be more accurate to do so. This reflects the fact that the case concerns the group and mirrors the approach taken by the parties at trial. The subsidiaries are listed in Appendix 1 to this judgment. Gallium Finance Services Limited (“GFSL”), was the first company formed by Mr Dooley and Mr Norris in July 2008. Their shareholding in GFSL were in effect swapped for their shares in the new holding company when the Company was formed in September 2009.
Mr Dooley's primary case, as identified in the skeleton argument of his counsel, Ms Parker, is that Mr Norris has accepted that he should purchase Mr Dooley's shares and that the only issue is the price to be paid. The Respondents, represented by Ms Roberts, dispute there is an agreement or has been any concession removing the requirement upon Mr Dooley to establish on the balance of probability that the Company's affairs are being or have been conducted in a manner that is unfairly prejudicial to his interests as a member of the Company.
The existence of that dispute only really became apparent to the court at a hearing attended by both sides when raised during the pre-trial review. It appears to have first become an issue in a letter from Mr Norris's solicitors following a hearing on 28 October 2020 at which the single issue of valuation at trial was mentioned by Ms Parker. Importantly, it was established at the pre-trial review that both sides were able to continue to trial on the basis that all allegations and issues within the statements of case concerning the existence or otherwise of unfair prejudice could be presented at trial in evidence and addressed in submissions, albeit subject to determination of Mr Dooley's primary case.
I decided at the beginning of the trial that this part of the dispute should not be decided as a preliminary issue. Instead, the trial proceeded on the basis that final judgment will resolve whether the court should be satisfied that there has been unfair prejudice either because of its acceptance by Mr Norris and/or because of the evidence before the court. If unfair prejudice is established, it is agreed that the appropriate remedy will be an order for the purchase of Mr Dooley's shares, valued as at 31 October 2018.
Sadly, the dispute concerning Mr Dooley's primary case typifies the simmering, divergence of views between the parties. It is a divergence which has resulted in difficulties for the smooth running of this acrimonious litigation. It has affected, for example, disclosure, the dialogue between experts and even the preparation of trial bundles. These matters will need to be identified to the extent that they have a bearing on the trial and this judgment. However, the appropriate course is to do so having first set the scene within the context of describing the parties, their statements of case and the law to be applied.
B) The Parties
As mentioned, the Company was formed by Mr Dooley and Mr Norris to be the holding company of GFSL and of all future “Gallium companies”. There are now five active and seven dormant wholly-owned subsidiaries. Those currently carrying on business are: GFSL, Gallium PE Depositary Limited, GFS Trustee Limited, Gallium Fund Solutions Administration Limited and Gallium Capital Limited. GFSL started business after Mr Dooley and then Mr Norris left Partnership Incorporations Limited (“PIL”) where they had both worked.
A brief description of their businesses derived from the Respondents' expert's report is included in Appendix 1. Overall, the businesses provide accounting, administration, reporting and regulatory services to a portfolio of investment vehicles. Collective property investments schemes were launched and managed until regulatory changes in 2014 resulted in alternative investment funds (“AIF”) being used and managed instead. An AIF is a collective investment which raises capital from a number of investors for intended investment for their benefit in accordance with a defined investment policy. The businesses are regulated by the Financial Conduct Authority (“FCA”), holding the necessary permissions and since February 2015 have principally been carried on at Borough Green, Sevenoaks in Kent.
Mr Dooley became a director of GFSL on its incorporation, 1 July 2008. He became a full time, executive director in November 2008. He was appointed a director of the Company from 28 September 2009. He is recorded as having resigned as a director of the Company on 23 February 2016. Whether that resulted from his exclusion or voluntary resignation is a matter for resolution in this judgment. He is also a dentist and his dental practice, “Oakmead Dental Care” is in Chislehurst, Kent. In addition, he is the Chief Executive Officer of Saratoga Technologies Limited, which is described on its website as a “…one of the World's leading experts in sandbag technology and flood prevention methods”.
There is no dispute that in 2010 Mr Dooley stopped working full time for the Company and instead worked at his dental practice whilst remaining a director. This was by agreement, although the terms will need to be considered. There is a dispute as to the extent to which he continued to provide his unpaid services as a director and compliance officer of the Company from 2010. However, there is a question as to the extent to which this is important bearing in mind that the fundamental issue is whether Mr Norris rightly or wrongly acted on the basis that Mr Dooley resigned or agreed to resign as a director of the Company at a meeting in a public house on 15 February 2016. In any event, there is no dispute that from that date Mr Norris treated Mr Dooley as though he was not a director. He registered that change of status at Companies House and he appointed Mrs Norris a director.
Mr Norris became a director of GFSL on 4 August 2008. He began working for that company full time in about March 2009. He has been a full time, executive director of the Company since 28 September 2008. He is a chartered accountant and has worked for many years in the financial services industry. He describes his expertise as including fund management services, refinancing distressed businesses and property development. He is adamant that Mr Dooley resigned as a director of the Company on 15 February 2016.
From June 2016 Mr Norris was also an executive director of Oaksmore Portfolios AIFM Limited (“Oaksmore”, a term which will also be used to refer to it and/or its subsidiaries either together or individually when the context requires and it is unnecessary for the issues of the case to draw a distinction between them, even if it would be more accurate to do so). Its subsidiaries are listed in Appendix 1 to this judgment.
Oaksmore was incorporated on 15 June 2016 and the majority of its issued share capital is held by Mr and Mrs Norris. Mr Norris asserts that its business is different from the Company's and that he has not acted in breach of any fiduciary duty he owes as a director to the Company. Insofar as he, wearing his hat as director of the Company, and/or the Company's employees have provided services for Oaksmore, which has no employees, they have acted on arms' length terms. Mr Norris's position with regard to fiduciary duty also applies to his dealings with his service company, Jagan Limited, and when receiving commission for work for which he had been contracted by a third party. These are matters in issue.
Oaksmore is joined as a Respondent on the basis of the allegation that it was formed by Mr Norris to divert business from the Company. However, no relief is sought against it in the Petition. Mr and Mrs Norris describe its business as creating and administering its own property development vehicles. They distinguish that as being fundamentally different from the Company's business of providing a variety of financial services in respect of property backed investment schemes to third party asset managers.
Mrs Norris is joined as a result of her having been purportedly appointed a director of the Company by Mr Norris on 17 February 2016. She resigned as a director of the Company itself on 1 December 2016 but her responsibilities and decisions as a...
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