Sanders v Gregson
| Jurisdiction | England & Wales |
| Judge | Robin Vos |
| Judgment Date | 21 November 2022 |
| Neutral Citation | [2022] EWHC 2947 (Ch) |
| Docket Number | Claim No: BL-2020-000569 |
| Court | Chancery Division |
[2022] EWHC 2947 (Ch)
Robin Vos
(SITTING AS A DEPUTY JUDGE OF THE HIGH COURT)
Claim No: BL-2020-000569
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES
BUSINESS LIST (ChD)
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Patrick Green KC AND Ben Norton (instructed by Croft Solicitors) appeared for the Claimants
Paul Sinclair KC (instructed by Keystone Law) appeared for the Defendants
Hearing dates: 3–7 October 2022
Approved Judgment
This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Monday 21 November 2022 at 10:30am
Introduction
Michael Sanders, who was the first claimant in this action until he sadly passed away in July this year, believed that, between 2005 and 2008, he had invested £150,000 by way of subscription for a total of 80,000 shares in All Star Leisure Limited (“ASL”) and All Star Leisure (Group) Limited (“ASLG”), both of which formed part of a group of companies (“the ASL Group”) run by his son-in-law, Mark Von Westenholz (“Mark”).
Mr Sanders intended that the shares would benefit the other claimants, being Mr Sanders' wife, Thalia Sanders, his son, Rupert Sanders (“Rupert”) and his daughter, Melissa Von Westenholz (“Milly”). However, no shares were ever issued to any of the claimants. It is suggested that, instead, the shares ended up in Mark's name.
It subsequently transpired (in 2014) that Mark suffered from a gambling addiction and had withdrawn significant sums from the ASL Group without authorisation. The two defendants, Mr Gregson and Mr Evans were, at this stage, non-executive directors of ASLG and they worked hard to deal with the fallout from Mark's actions.
In 2018, ASLG paid a dividend of £5 per share, representing a total of £400,000 in respect of the 80,000 shares which Mr Sanders thought he had acquired for the benefit of his family (for convenience, I shall refer to these shares as the disputed shares). However, the dividend in respect of the disputed shares was retained by ASLG in reduction of the amounts which, at that time, Mark still owed to that company.
In September 2019, ASLG was placed into administration.
Although it might be thought that the main culprit is Mark for failing to arrange for the shares to be issued to the Sanders family, the claimants are seeking to recover the loss which they believe they have suffered (being the dividend of £400,000 in respect of the disputed shares) from Mr Gregson and Mr Evans personally.
The nature of the claims
The claimants rely on a number of different causes of action but they can be broadly grouped under two headings. The first group are claims which are trust related. The second group are claims which rely on what are commonly known as the economic torts. The summary below gives a flavour of the issues which I will need to determine. Given the number of different causes of action, I will deal in more detail with the issues when I come to consider each one.
Trust related claims
The claimants say that Mark held 80,000 shares in ASLG for the benefit of one or more of them based on either an express trust, a resulting trust or a constructive trust. If this is right, they say that the defendants are liable as they have dishonestly assisted Mark to act in breach of that trust.
In July 2015, the disputed shares were transferred to the defendants to hold as trustees. Based on this, the claimants put forward three further causes of action:
9.1 the defendants allowed the dividend to be retained by or paid to ASLG in circumstances where they knew that the Sanders family claimed an interest in the shares (referred to by the parties as the Guardian Trust principle following the decision of the Privy Council in Guardian Trust and Executors Company of New Zealand Limited v Public Trustee of New Zealand [1942] AC 115);
9.2 the defendants dealt with the dividend in a way which they knew was inconsistent with the terms of the trust on which Mark had held the shares; and
9.3 the defendants were in breach of their fiduciary duties, in particular putting themselves in a position of conflict as between their duties as directors of ASLG and their duties as trustees.
Economic torts
Pretty much the full suite of economic torts is relied on by the claimants. The claims can be summarised as follows:
10.1 procuring a breach of contract – the contract in question being either the agreement by ASLG to issue the shares or an agreement by Mark to transfer shares to the Sanders family;
10.2 causing loss by unlawful means – the unlawful means were originally said to be either deceit or breach of the defendants' duties to ASLG resulting in ASLG's failure to issue shares to the claimants. However, following the evidence, the claimants accept that a claim based on deceit cannot succeed as there is no evidence of reliance on any false representations;
10.3 conspiracy to cause loss by unlawful means – leaving aside deceit (which is not pursued) the unlawful means are said to include breach of contract, breach of trust (or procuring such breaches) or breach of director's duties; and
10.4 conspiracy to cause loss by lawful means – it is the claimants' case that the defendants were motivated by malice in that their predominant intention was to cause loss to Mr Sanders.
The defendants deny that any of these causes of action are made out. They also defend the claims on the basis that they are time barred. However, in his closing submissions, Mr Sinclair (appearing on behalf of the defendants) accepted that the trust claims are not time barred as the relevant events took place from July 2014 onwards, the original claim form being issued in March 2020.
The evidence and the witnesses
The documentary evidence derives from disclosure given by the claimants and the defendants. This does not include disclosure of documents in the possession of the ASL Group. This has resulted in some gaps in the evidence. For example, final signed copied of charges granted by Mark in July/August 2014 over the shares held in his name and the July 2015 declaration of trust in respect of the disputed shares are not available although there is no suggestion that they differ materially from the drafts which have been provided.
More significantly, there is limited evidence as to what bank statements the ASL Group had available to it in 2014. This question is important as the bank statements show a cheque received for £30,000 in August 2008 which, following recent correspondence from the bank, it is now accepted is likely to represent Mr Sanders' subscription money in respect of the final 10,000 shares he agreed to subscribe for. The court has therefore had to make findings based on the evidence available.
As far as the witnesses are concerned, the claimants, including Mr Sanders, have all provided witness statements. Mrs Sanders, Rupert and Milly all gave oral evidence. The claimants have two other witnesses, Mark and a close friend of Milly, Jemma Freeman. Both of them also provided witness statements and gave oral evidence. No witnesses gave evidence for the defendants other than Mr Gregson and Mr Evans themselves.
Looking at the weight which can be given to Mr Sanders' witness statement, the clear and consistent evidence of the witnesses (including the defendants) was that Mr Sanders was a man of integrity who was both decent and honest and who strove to do the right thing. In principle, I consider that his evidence should therefore be accepted even though it was not tested by cross-examination. However, I accept Mr Sinclair's suggestion that his evidence should be treated with some caution given that, as with any witness, Mr Sanders' recollection of events, some of which took place over 15 years earlier, could be faulty and that, given his closeness to the proceedings, there could be some element of reconstruction in his memory.
Milly, by her own admission, was not very involved in the investments which her father made in the ASL Group and could not therefore shed much light on the investments themselves. She was somewhat protective of Mark and was understandably economical in some of her responses when it was suggested to her that he had lied or was dishonest. She also had some difficulty recalling events where she did have some involvement which, again, is perhaps not surprising given that the key events took place around eight years ago. Having said that, to the extent that Milly was able and willing to answer questions, I am satisfied that she did so honestly.
Mrs Sanders also had little involvement in the investments made by her husband and, given the time which had elapsed, did not generally have a clear recollection of events. However, I have no hesitation in accepting the evidence she was able to give. The same can be said about Rupert's evidence.
As far as Mark is concerned, Mr Sinclair submits that his evidence should not be accepted unless it can be corroborated. Although he accepts that Mark appeared superficially to be honest in that he was very open about his previous wrongdoing, he observes that Mark clearly regrets not having transferred the disputed shares to Mr Sanders or his family and that he therefore has a strong motive to assist the claimants. Whilst I accept that there is some truth in this, I would not go as far as Mr Sinclair in restricting the weight to be put on Mark's evidence.
There is no doubt that, in his evidence, Mark was very candid...
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