Peter Raymond Henrikson v Charles Riley Constant
| Jurisdiction | England & Wales |
| Judge | Burton |
| Judgment Date | 07 June 2023 |
| Neutral Citation | [2023] EWHC 1373 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CR-2021-001443 and CR-2021-001658 |
[2023] EWHC 1373 (Ch)
INSOLVENCY AND COMPANIES COURT JUDGE Burton
Case No: CR-2021-001443 and CR-2021-001658
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
Royal Courts of Justice
The Rolls Building London, EC4A 2NL
Roger Laville (instructed by Kelly Owen Limited) for the Henrikson Parties
Ben Shaw KC (instructed by Capital Law Limited) for the Constant Parties
Hearing date: 11 November 2022
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.
INSOLVENCY AND COMPANIES COURT JUDGE Burton
ICC Judge
The applications before the court all concern Truth Data Insights (Holdings) Limited (the “Company”). Their background lies in a dispute between Mr Henrikson and Mr Constant as to whether Mr Constant's family trust has an indirect equity interest in a limited liability company incorporated in Texas, USA, known as Truth Data Insights LLC (“TDI LLC”).
The Company was incorporated on 10 May 2016 together with Truth Data Insights (Group) Limited (“TDI Group”). TDI Group held the Company's sole issued share (the “Share”).
In 2015, Mr Henrikson agreed with Mr Constant to set up TDI LLC as a new business venture involved in analysing helicopter flight data. It is said that the Company and TDI Group were incorporated in order to provide a tax-efficient structure for the ownership by (i) Mr Henrikson or his family trust (the “HF Trust”) and (ii) Mr Constant, or his family trust (the “SR Trust”) of TDI LLC. Mr Henrikson acquired 800 shares and Mr Constant the remaining 200 shares in TDI Group and they were each appointed directors of both the Company and TDI Group. Shortly after incorporation, their shares in TDI Group were transferred to their respective family trusts. They also incorporated an Australian subsidiary, TDI Australia PTY Ltd (“TDI Australia”), the entire share capital of which was held by the Company.
On the same date that the Company was incorporated, 10 May 2016, the Company and TDI LLC entered into a share subscription agreement governed by Texan law (the “Subscription Agreement”) pursuant to which TDI LLC agreed to issue to the Company a Series B Preferred Share of US$0.01 in TDI LLC. As consideration for that share, the Company issued a promissory note to TDI LLC in the sum of US$10. Mr Henrikson has said that there is no provision in TDI LLC's constitution for Series B Preferred Shares to be issued and my understanding is that the Series B Preferred Share which formed the basis of the Subscription Agreement has not been issued.
There is a factual dispute between the parties regarding events taking place in late 2017 and 2018. Mr Constant claims that in January 2018, Mr Henrikson proposed that the shares held by the Company in TDI Australia should be transferred to TDI LLC and that he agreed to this relatively straightforward reorganisation as he understood it would not affect his indirect 20% interest in TDI LLC and TDI Australia. In February 2018, Mr Henrikson proposed to rationalise the group structure further by dissolving the English companies. Mr Constant claims that he was amenable to this, provided that he would retain his/his family trust's 20% interest in TDI LLC.
On 21 June 2018, Mr Constant signed forms for the English companies to be voluntarily struck off the register under section 1003 of the Companies Act 2006 (the “Act”). He states that he believed that they would only be filed with the Registrar of Companies after the proposed corporate restructuring, which would preserve his interest in TDI LLC, had taken place.
Mr Henrikson's case is that it was Mr Constant, a former banker and investment professional, who recommended establishing the English companies to hold TDI LLC's shares to enable TDI LLC to operate in a tax-efficient manner and that Mr Constant received a 20% interest to compensate him for managing the tax scheme. However, as the intended tax savings were not realised, in December 2017, he and Mr Constant agreed to bring an end to their business relationship by dissolving the English companies and letting the Subscription Agreement fall away at the same time. Board resolutions to dissolve the Company were signed on 4 January 2018 and also on 23 May 2018. He claims that it was during an exchange of emails in July 2018 that Mr Constant started to assert that he was entitled to a share in TDI LLC in exchange for his interest in TDI Group.
The dispute led, in June 2019, to Mr Henrikson causing TDI LLC to commence proceedings in Texas seeking a declaration that neither Mr Constant nor the SR Trust holds any membership interest in the LLC.
The signed forms to dissolve the Company were never filed. Instead, on 16 October 2018 and 6 November 2018 respectively, TDI Group and the Company were struck off the register by the Registrar of Companies pursuant to section 1000 of the Act. This resulted in the Share vesting bona vacantia in the Crown.
In June 2020, Mr Constant filed a form RT01 (the “Restoration Form”) in order, pursuant to section 1024(1) of the Act, to restore the Company to the register. He signed the Restoration Form in his capacity as a former director of the Company and among other things, stated (together, the “Restoration Statements”) that:
a) the Company “was carrying on business or was in operation at the time of strike off”; and
b) “Documents relating to the company to bring up to date the company record have been properly delivered to the Registrar”.
The Company was restored to the register and in September 2020, Mr Constant filed forms AP01 purporting to show that Mr Henrikson had resigned as a director of the Company and that the Second to Fourth Defendants, David Carlson, Christopher Hyland and Kendall Potter had been appointed as directors of the Company.
Although the Company had been restored to the register, as a result of the striking off of TDI Group, its Share remained vested bona vacantia. On 27 May 2021, the Crown transferred the Share to the SR Trust and the HF Trust as joint owners.
On 21 June 2021, Mr Constant wrote to Mr Henrikson purportedly on behalf of the Company, referring to the Subscription Agreement and seeking an account of TDI LLC's revenue. On 24 September 2021, the Company commenced proceedings in Texas against TDI LLC seeking to enforce its contractual rights as holder of the Series B Preferred Share under the Subscription Agreement.
Both sets of proceedings in Texas (the “Texas Litigation”) have been consolidated. On 20 July 2022, TDI LLC filed a voluntary petition under Chapter 11 of the US Bankruptcy Code resulting in the consolidated proceedings being transferred to the Bankruptcy Court.
Meanwhile, in England, the following applications have been issued and are now before the court (although as explained below, the injunction application may no longer be live):
i) an application by Mr Henrikson and the other claimants in case number CR-2021-001443 (the “Henrikson Parties”) by Part 8 claim form dated 9 August 2021, for, among other things, an order under section 1096 of the Act to rectify the register of companies by marking the Company as dissolved (the “Henrikson Dissolution Application”);
ii) a cross-application by Mr Constant, by Part 8 claim form dated 10 September 2021, for an order:
a) under section 1031 of the Act to restore the Company to the register of companies (the “Constant Restoration Application”); and
b) an order under section 125 of the Act rectifying the Company's register of members (the “Constant Rectification Application”); and
iii) an application for injunctive relief (the “Henrikson Injunction Application”) against Mr Constant and associated parties (the “Constant Parties”). Following a consent order made on 26 August 2022 which includes undertakings by the Constant Parties, I understand that urgent interim relief is no longer considered to be necessary.
The Henrikson Dissolution Application
The Henrikson Dissolution Application seeks declarations that:
i) the Restoration Form was “void, invalid and factually inaccurate because, at the time that [the Company] was struck off the register, it was neither carrying on business nor in operation, and the Crown representative had not signified to the [Registrar of Companies] consent to the restoration”;
ii) the consequent entry of the Company on the register as active as opposed to dissolved was, or was derived from, something that was similarly “void, invalid and factually inaccurate”; and
iii) [all] subsequent filings were void, invalid and done without the authority of the Company and were factually inaccurate.
The claim form further seeks orders removing the Restoration Form and subsequent filings from the register, removing Messrs Carlson, Hyland and Potter as directors from the register of directors, reinstating Mr Henrikson as an active director in the register of directors, deleting any reference to his resignation, and marking the Company as dissolved.
In his amended witness statement dated 9 August 2021, Mr Henrikson states that the continued existence of the Company under the control of Mr Constant and the SR Trust is likely to...
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