Secretary of State for Trade and Industry v Hollier

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr Justice Etherton
Judgment Date17 July 2006
Neutral Citation[2006] EWHC 1804 (Ch)
Docket NumberCase No: 1755 of 2002
Date17 July 2006

[2006] EWHC 1804 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Before:

Mr Justice Etherton

Case No: 1755 of 2002

Between:
The Secretary of State for Trade and Industry
Claimant
and
(1) Dennis George Hollier
(2) Jayson Wayne Hollier
(3) Adrian Dennis Hollier
(4) Barbara Ann Hollier (Aka Annie Hollier)
(5) David Clarkson
(5) Robert Anthony Bell
Defendants

Mr Nicholas Caddick (instructed by Treasury Solicitors) for the Claimants

Mr Tim Carlisle (instructed by Chadwick Healy & Co) for Jayson Hollier

Mr Mark Watson-Gandy (instructed by Keoghs) for the 5 th Defendant

Dennis Hollier, Barbara Ann Hollier represented themselves

Hearing dates: 3, 4, 5, 8, 9, 10,11, 15, 16, 17, 18, 22, 23, 24, 25 May, 6, 9, 12 June

INDEX

Introduction

1

–8

Amba

9

–21

Nextime

22

–29

The trial

30

–44

Representation

30

–36

Evidence

37

–44

The Law

45

–83

The 1986 Act

45

–60

De facto director

61

–81

The burden and standard of proof

82

-83

Jayson

84

–146

Amba

84

–146

Was Jayson an investor in Amba?

84

–115

Did Jayson act as a de facto director?

116

–146

Nextime

147

–157

Was Jayson a de facto director of Nextime?

147

–157

Mrs Hollier

158

–169

Was Mrs Hollier a de facto director of Nextime?

158

–159

Unfitness

160

–169

Adrian

170

–193

Was Adrian a de facto director of Amba?

173

–183

Unfitness

184

–193

Decision

194

–196

Mr Justice Etherton

Introduction

1

These are proceedings by the Secretary of State for Trade and Industry ("the SoS") for disqualification orders against the Defendants pursuant to section 8 of the Company Directors Disqualification Act 1986 ("the 1986 Act"), on the basis of information and documents obtained pursuant to the Companies Act 1985 ("CA 1985") s.447.

2

The proceedings concern the management of Amba Rescue Limited ("Rescue"), Amba Claims Services Limited ("ACS"), Amba Group International plc ("Amba plc") (together "Amba" or the "Amba companies"), and Nextime. com plc ("Nextime").

3

An administration order was made on 6 June 2000 in respect of Rescue. On 8 August 2000 that order was discharged, and a compulsory winding up order was made in respect of Rescue on the petition of the joint administrators. ACS and Amba plc were wound up on 4 April 2001 following public interest petitions presented by the SoS. A winding up order was made against Nextime on 30 November 2000 on a creditor's petition.

4

The First Defendant, Dennis George Hollier ("Dennis") is the father of the Second Defendant, Jayson Wayne Hollier ("Jayson") and the Third Defendant, Adrian Dennis Hollier ("Adrian"), and is the husband of the Fourth Defendant, Barbara Ann Hollier ("Mrs Hollier").

5

Dennis was registered as a director of Rescue. The SoS's case is that, although never formally appointed and registered as directors of Rescue, Jayson in fact acted as a director ("a de facto director") of Rescue until January 2000, Adrian was a de facto director of Rescue from July 1999 to March 2000, and the Fifth Defendant, David Clarkson ("Mr Clarkson"), was a de facto director of Rescue throughout.

6

The SoS claims that Dennis, Jayson, Adrian and Mr Clarkson were at all relevant times de facto directors of ACS and Amba plc.

7

The Sixth Defendant, Robert Anthony Bell ("Mr Bell"), was registered as a director of Nextime. The SoS's case is that Dennis was a de facto director of Nextime until April 2000, Jayson was a de facto director of Nextime from July 2000, and Mrs Hollier was a de facto director of Nextime throughout.

8

Dennis, Mr Clarkson and Mr Bell have given disqualification undertakings to the SoS pursuant to ss.1A and 8(2A) of the 1986 Act. The disqualification undertaking given by Mr Clarkson was for 8 years, and that of Mr Bell was for 5 years. The disqualification undertaking of Dennis, which was given during the course of the trial, after the conclusion of the evidence, was for 12 years. Accordingly, this judgment is in respect of Jayson, Adrian and Mrs Hollier and the SoS's case that Jayson and Adrian were de facto directors of Rescue, ACS and Amba plc, and Jayson and Mrs Hollier were de facto directors of Nextime.

Amba

9

Rescue was incorporated on 27 October 1998. At the material times, the principal shareholders were Dennis, CJ Enterprises Limited (a company owned and controlled by Mr Clarkson) and Elliot Blundell ("Mr Blundell"). Each of them had 290 shares.

10

ACS was incorporated on 30 June 1999. The sole share issued on incorporation was at all material times held by Keith Lewington ("Mr Lewington") of Shoosmiths, the solicitors retained to incorporate the company.

11

Dennis's intention was that Rescue and ACS would provide a vehicle accident management and breakdown recovery service for those who became Amba "members".

12

It was also the intention that in due course Amba plc, which was incorporated on 10 August 1999, would become the parent company of the Amba group of companies. That never in fact occurred. The two shares issued on the incorporation of Amba plc were held at all material times by Mr Lewington and Marcus Edward Reynolds ("Mr Reynolds") of Shoosmiths.

13

Rescue published a brochure in about August 1999 ("the Brochure"), in which it described itself as "the only Vehicle Rescue company to offer a full Breakdown and Accident Management Service in one simple all-in, low price membership". The Brochure stated that for £9.95 per month Amba membership would provide, throughout the whole of the United Kingdom and Europe, home breakdown cover, roadside repairs and roadside recovery, as well as certain additional benefits such as replacement car hire, overnight accommodation, chauffeur provision and public transport costs. The Brochure also stated that membership would include accident management services such as handling "the claims process from start to finish", completing all necessary documentation and claims forms, introducing the member to a specialist legal team to handle any potential litigation and liaising with the member's own insurance company to ensure the claim would be processed quickly.

14

Rescue commenced business in April 1999, providing recovery and rescue services to commercial clients using a sub-contractor called React 24 Limited ("React"). React sub-contracted the recovery and rescue work to local operators.

15

From about August 1999 Rescue offered recovery and rescue services and accident claims management services to the general public. It continued to use React for the recovery and rescue services. In September 1999 Dean Cox ("Mr Cox") joined Rescue as operations manager in charge of day to day administration. Members were recruited through independent sales agencies operating on a commission basis

16

Almost from the outset until about the end of 1999, Rescue's accounting and banking functions were performed by personnel at CIA Insurance ("CIA") at CIA's offices at 24 Warwick Street, Rugby. CIA Insurance was the name under which Jayson carried on business as an insurance broker.

17

Rescue's cheques were being dishonoured as early as August 1999. By late 1999 Rescue was in very severe financial difficulty, as appears from two reports prepared by Mr Cox in December 1999 and January 2000 respectively. It seems that by January 2000 Rescue was at least £245,000 in debt. Two offices used for the business, in Romford ("the Romford premises") and Sittingbourne ("the Sittingbourne premises") were closed, and staff based there were made redundant. ACS ceased to trade at about that time. Also during January 2000 Rescue's relationship with React broke down, and Rescue decided to deal with local operators directly. At the same time, Rescue was experiencing problems with its sales agencies, including disputes over claims by agents for payment of their commissions, and problems reconciling the agencies' figures with the number of membership applications and other information received by Rescue. On 5 February 2000 Mr Cox left Rescue.

18

Notwithstanding those matters, Rescue continued to sell memberships, and used the Brochure for that purpose.

19

Rescue was placed in administration on 6 June 2000 on the basis of an estimated deficiency of £865,000. It was wound up on 8 August 2000. I have not been provided with any up to date details of the conduct of the liquidation, including, in particular, the amount of any deficiency as regards its creditors.

20

There is no evidence that Amba plc carried on any significant active trading. It did not have its own bank account. Its principal function appears to have been limited to holding the tenancy of the Romford premises and the Sittingbourne premises.

21

As I have said, ACS and Amba plc were wound up on 4 April 2001.

Nextime

22

Nextime was incorporated as a public limited company on 4 February 2000. The only shares it ever issued were the two subscriber shares.

23

On 16 March 2000 Nextime entered into an agreement ("the FMC Supply Agreement") with UKnetclubs plc ("UKNC"). UKNC was owned as to 31 per cent by Internet Trading Clubs plc, as to 20 per cent by Internet Trading Clubs (Isle of Man) Limited, and 49 per cent by Freeserve (Investments) Limited, which was part of the quoted Freeserve plc group. UKNC traded as the Freeserve Motorist Club ("FMC"). Under the FMC Supply Agreement Nextime agreed to locate and supply members of FMC with "person imported" ("PI") vehicles, nearly new and pre-registered vehicles, and "scoop" purchases of cars and other vehicles.

24

Nextime sub-contracted its obligations for the supply of PI vehicles to a dealer network of, initially, 5 suppliers ("Brokers"). An FMC member wishing to buy a vehicle would pay Nextime a deposit of between 5 per cent and 30 per cent, depending on the manufacturer, which would be paid into Nextime's account for onward transmission to the...

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