PSV 1982 Ltd v Sean Anthony Edward Langdon
| Jurisdiction | England & Wales |
| Judge | Robin Vos |
| Judgment Date | 08 September 2021 |
| Neutral Citation | [2021] EWHC 2475 (Ch) |
| Docket Number | Claim No: BL-2020-001040 |
| Year | 2021 |
| Court | Chancery Division |
[2021] EWHC 2475 (Ch)
Robin Vos
(SITTING AS A DEPUTY JUDGE OF THE HIGH COURT)
Claim No: BL-2020-001040
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES
BUSINESS LIST (ChD)
IN THE MATTER OF DISCOVERY YACHTS LIMITED (04520591)
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Andrew Grantham QC (instructed by MFB Solicitors) appeared for the Claimant
Adam Chichester-Clark (instructed by Clarke Willmott LLP) appeared for the Defendant
Hearing date: 20–21 July 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. This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to BAILII. The date and time for hand-down is deemed to be Wednesday, 8 September at 10:30am.
Introduction
The Defendant, Mr Langdon was a shareholder and director of Discovery Yachts Group Limited (DYGL), a company now in liquidation. The Claimant, PSV 1982 Limited (PSV), is the assignee of amounts awarded to a Mr Andrew France and his company, Elusive Yachting Limited, against DYGL by way of damages for breach of contract, interest and costs in a claim made against DYGL and an associated company, Discovery Yachts Sales Limited (DYSL), in the Commercial Court under reference number CL-2018-000288 (the Commercial Court proceedings).
PSV seeks to recover this sum from Mr Langdon on the basis that, as a result of Sections 216 and 217 Insolvency Act 1986, he is personally responsible for the debts and liabilities of DYGL. The total amount claimed is £1,125,824.67.
Subject to certain exceptions (which are not relevant in this case), section 216 Insolvency Act 1986 prohibits a person who has been a director of a company which has gone into insolvent liquidation from being involved in the management of a company with a similar name. A breach of Section 216 Insolvency Act 1986 is a criminal offence. It also results in the individual being personally responsible under Section 217 Insolvency Act 1986 for any debts and liabilities of the new company which are incurred during the period of the breach.
The current proceedings were commenced on 31 March 2020. On 30 March 2021, Deputy Master Bowles ordered that a number of issues be tried as preliminary issues based on an agreed statement of facts.
Background facts
As the preliminary issues are to be determined based on an agreed statement of facts, I do not make any findings of fact. Where relevant, I will refer to the assumed facts. However, before considering the issues which I need to determine, it is helpful to say a little bit more about the background.
Mr France entered into a contract with DYSL in October 2015 for the purchase of a yacht to be known as Elusive. At the time, DYSL was owned by a Mr John Charnley. He also owned Discovery Yachts Limited (DYL). DYL built the yachts and supplied them to DYSL for onward sale to DYSL's customers. Mr Langdon was a director of DYL between August 2016 and April 2017.
Elusive was delivered in January 2017. Following delivery, Mr France complained about a number of alleged defects.
In early April 2017, DYGL (then known as Tradewinds Marine Limited) purchased the shares in DYSL, two other companies owned by Mr Charnley and the business of (but not the shares in) DYL. At the time, Mr Langdon owned 40,000 shares in DYGL out of a total issued share capital of 46,000 shares.
The change of name from Tradewinds Marine Limited to Discovery Yachts Group Limited took place on 21 April 2017.
By September 2017, Mr Langdon was one of three directors of DYGL, describing himself as managing director. A fourth director was appointed in November 2017.
DYL was placed into insolvent liquidation on 12 October 2017 with the result that Mr Langdon was then in breach of Section 216 Insolvency Act 1986. He was not however aware that one consequence of this was that he would be personally responsible for the debts and liabilities of the Discovery Yacht Group companies.
The Commercial Court proceedings were commenced by Mr France and Elusive Yachting in April 2018.
In May or June 2018, a German company, Binti Holding GmbH (Binti) acquired shares in DYGL. Binti was owned and controlled by a Mr Werner Schnaeble. By August 2018, Binti was DYGL's largest shareholder, owning approximately 34% of the shares. Mr Langdon then held approximately 21% of the shares. At this point, DYGL had six directors including Mr Schnaeble and Mr Langdon.
By August 2019, Mr Langdon only held about 5% of the shares in DYGL. Binti had increased its shareholding to approximately 57%. Mr Langdon and Mr Schnaeble remained directors along with three other individuals.
In October 2019, the solicitors acting in the Commercial Court proceedings for DYGL and DYSL came off the record as DYGL and DYSL were unable to pay their fees. From that point on, DYGL and DYSL were unrepresented.
The hearing of the Commercial Court proceedings was listed before Teare J on 11 December 2019. On 5 December 2019, the board of DYGL (chaired by Mr Langdon) resolved to place DYGL into administration. Mr Schnaeble had decided that Binti would not provide any further funding to DYGL. Notice of intention to appoint an administrator was filed with the Court on 6 December 2019. The administrator, Mr Christopher Moore, was appointed as administrator on 19 December 2019. Mr Moore's solicitors indicated on 10 December 2019 that he would respect the Court's decision at the trial of the Commercial Court proceedings.
On 11 December 2019 (the first day of the trial), Teare J lifted the stay of the claim imposed by the statutory moratorium triggered by the notice of intention to appoint an administrator and adjourned the trial to the following day to allow DYGL's and DYSL's witnesses to attend. However, DYGL and DYSL decided not to defend the claim at trial and that neither they nor their witnesses therefore needed to attend Court. As a result of this, Teare J struck out the defence. However, he did not enter judgment in default but proceeded with the trial, hearing witness evidence on behalf of the Claimants and reviewing the relevant documentary evidence.
Judgment was handed down on 19 December 2019 which concluded that DYGL had, in September 2017, agreed to assume liability for ensuring that various repairs to Elusive would be completed and that DYGL had breached that agreement in January 2018. An order made by Teare J on the same date contained the following provisions:-
18.1 Judgment was entered against DYGL in the sum of £262,957 together with interest up to 2 January 2020 of £22,867.67 and interest thereafter at 8% per annum.
18.2 DYGL was required to indemnify Mr France in respect of the reasonable costs of certain further repairs.
18.3 DYGL and DYSL were ordered to pay the claimants' costs, to be assessed on the indemnity basis if not agreed with a payment on account of £283,000.
DYGL has not appealed against the order.
At the request of DYGL's administrator, Mr Langdon, in his capacity as a director of DYGL, signed a statement of affairs showing a liability to Mr France and Elusive Yachting Limited of £568,824. This comprised the damages of £262,957, interest of £22,867.67 and the payment on account of costs of £283,000.
The claims of Mr France and Elusive Yachting Limited were assigned to PSV on 18 March 2020.
By a consent ordered dated 26 June 2020, DYGL and DYSL (by then, both in liquidation) agreed to pay a total of £575,000 in relation to the claimants' costs of the Commercial Court proceedings (which included the £283,000 which they had already been ordered to pay on account of costs by Teare J on 19 December 2019).
The sum of £1,125,824.67, which PSV now claims, comprises the judgment debt of £262,957, interest of £22,867.67, estimated costs of further repairs of £240,000 and costs which, at the time the claim was issued, were estimated to be £600,000.
The Preliminary issues
The first issue is whether the liabilities of DYGL for which Mr Langdon is now said to be liable have, for the purposes of Section 217 Insolvency Act 1986, been established by the Commercial Court proceedings (despite the fact that Mr Langdon was not a party to those proceedings) either on the basis that the judgment and the consequential orders made in those proceedings are, in themselves, sufficient to establish the liabilities or that Mr Langdon is a privy of DYGL and is therefore bound by the judgment and the consequential orders or that he is otherwise estopped or precluded from denying that they establish the liabilities in question. There is a separate reference in the order made by Deputy Master Bowles as to whether the liabilities may be established by reference to a statement of affairs signed by Mr Langdon as a director of DYGL when the company was placed into administration. However, it was accepted by Mr Grantham during the course of the hearing that this was, in reality, a fact to be taken into account in determining whether Mr Langdon was a privy of DYGL rather than a separate basis on which the existence of the liabilities could be established.
The second preliminary issue is whether, if the judgment and the consequential orders in the Commercial Court proceedings do not establish the relevant liabilities, they are nonetheless admissible in evidence in the current proceedings. It is however accepted by PSV that, in these circumstances, the judgment and the consequential orders would not be admissible and so this point falls away.
The third preliminary issue is...
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