Signia Wealth Ltd v Marlborough Trust Company Ltd (as Trustee of the Cap Ferret Trust) and Another Nathalie Dauriac-Stoebe (acting on behalf of Marlborough Trust Company Ltd as trustee of the Cap Ferret Trust and for the benefit of the beneficiaries of the Cap Ferret Trust) (Third Party) Grecco Ltd (Fourth Party) John Caudwell (Fifth Party)
| Jurisdiction | England & Wales |
| Judge | Chief Master Marsh |
| Judgment Date | 06 February 2017 |
| Neutral Citation | [2017] EWHC 363 (Ch) |
| Court | Chancery Division |
| Docket Number | No. HC-2015-003085 |
| Date | 06 February 2017 |
[2017] EWHC 363 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building
Chief Master Marsh
No. HC-2015-003085
and
and
and
APPEARANCES
Miss M. Carss-Frisk QC and Mr. E. Brown (instructed by Mishcon de Reya) appeared on behalf of the Claimant and the Fourth and Fifth Parties.
Mr. J. Cohen QC (instructed by Rosenblatt) appeared on behalf of the Defendants and the Third Party.
This judgment arises from a hearing which took place on 31 st January 2017 of the second defendant's application to re-amend the particulars of her additional claim and for consequential directions. Mr. Jonathan Cohen QC appeared for the second defendant, who is also the Third Party, and Miss Monica Carss-Frisk QC and Mr. Edward Brown appeared for the claimant and the defendants to the additional claim, the Fourth and Fifth Parties.
In this judgment, for convenience, I will refer to the claimant as "Signia", the second defendant and Third Party as "NDS", because that is how she has been referred to in the statements of case, and to the Fifth Party as "Mr. Caudwell." I am going to summarise the issues in the claim as it stands at present by referring, largely unadapted, to Mr. Cohen QC's summary in his skeleton argument.
There are three principal features of the claim. First, NDS was an employee, director and, indirectly, through a trust, a 49 per cent shareholder in Signia. Mr. Caudwell was, indirectly, the other 51 per cent shareholder in Signia. Signia and Mr. Caudwell claim that NDS was lawfully terminated as an employee and director because she had dishonestly claimed expenses to which she was not entitled. She was therefore, as the claim is put against her, a "bad leaver" as defined in Signia's Articles and her shareholding in Signia was properly the subject, it is said, of a compulsory transfer, pursuant to the Articles, for a minimal consideration.
The second element is that NDS says her expense claims were not dishonest and that she accepted a repudiatory breach of contract on the part of Signia so as to terminate her directorship and employment. She claims the fair value of her transferred shares by way of a claim in these proceedings.
The third element is that NDS claims, alternatively, that Signia and Mr. Caudwell, acting together, unlawfully excluded her. She advances that claim in two ways. First, she claims the termination was a breach either of express terms of good faith and fairness in the Shareholders' Agreement or that there was an implied term in the service agreement that her service would not be terminated if the object of doing so was to deprive her of a valuable benefit because, in each case, the true reason for termination was that Mr. Caudwell was seeking to procure her shares from her at a low value. Mr. Cohen QC has characterised that part of the claim as the "deprivation claim". The second part of her additional claim is that she says she was a victim of a conspiracy to injure between Signia and Mr. Caudwell because her treatment by them was the result of her raising queries about a transaction in which Mr. Caudwell had engaged with Signia concerning the payment of certain fees which she believed was unlawful.
It is necessary to highlight, in addition to those features of the claim, four additional points: (i) NDS's additional claim is not, as has been suggested by Signia, parasitical on the primary claims between Signia and her in the main action; it stands alone and its success is not contingent upon the success or failure by her in the main claim; (ii) the two elements of the additional claim are both capable of succeeding, regardless of the outcome of Signia's assertion about expenses; (iii) both elements of the additional claim require NDS to show that Signia and Mr. Caudwell's intention was to harm her. In the case of what Mr. Cohen QC has characterised as the deprivation claim, she has to show that Signia and Mr. Caudwell's actions were designed to deprive her of her shares on a bad leaver basis. In the conspiracy to injure claim she has to establish that Signia and Mr. Caudwell acted so as to punish her for querying the lawfulness of financial transactions with which Mr. Caudwell was involved. She has to show, as a minimum, the predominant motive was to do her harm; (iv) the value of the additional claim is hotly contested. However, NDS's case is that her losses are in the region of £20 million.
Before dealing with the amendment, and the grounds for opposing the grant of permission, it is necessary to summarise the current procedural position because part of Signia's opposition to the amendment is founded on this being a very late amendment and, in any event, the application has to be seen in its proper context. The trial of this claim is in a window commencing 16 th October 2017, with a time estimate of 12 days, including one day of judicial pre-reading and one non-sitting day. So, from today, there are more than eight months until the trial commences. The parties have completed disclosure, subject to some relatively minor specific disclosure issues. They are due to exchange witness statements about now. Expert evidence on share valuation has reached an advanced stage. NDS, as directed, has served her report first and Signia has served its report in response. The experts were due to meet by 20 th January 2017 and to produce a joint statement.
It can be seen from the summary that the application for permission to amend is not made in the context of a timetable which has gone awry, or a matter of weeks before the trial is due to commence. Furthermore, the application itself was issued on 13 th September 2016, some 13 months before the opening of the trial window.
Notwithstanding these periods of time (a little more than 8 months or 13 months as the case may be), the application is said to be very late and thus falls within the recent jurisprudence relating to such applications. There are two reasons for this. First, Signia relies on dicta from Henderson J in Davidson & Anor. v Seelig & Ors. [2016] EWHC 549 (Ch), where he suggested that whether an application for permission to amend is to be regarded late falls to be considered at the time the application is heard, not the date of issue of the application. Secondly, Signia also says the amendment, if granted, will put the trial date in jeopardy, or at least there will be a significant risk of losing the trial date. That, it is said, has the effect of making the application very late, regardless of what might be regarded as a more intuitive approach, of measuring lateness by assessing the proximity to trial. It will be necessary to consider the authorities briefly later in this judgment.
I need only add two further matters at this stage:
(i) that the unacceptably long period of time between issue of the application and the hearing last week was largely a function of the lack of space in counsel's diaries, not a lack of time in the court's diary;
(ii) I need to explain briefly NDS's reasons for making the application at this stage. Put shortly, it is said that it was only after the press publicity arising from the CMC in July 2016 that new information emerged. Ms. Tracy Gehlan approached NDS's legal team. Ms. Gehlan was the Chief Executive Officer of a company called Pure Health and Fitness, a Polish company. I am going to refer to that company by its trading name, "Jatomi". Jatomi operates German fitness centres in a number of countries. Ms. Gehlan has made a statement for the purposes of the application – I say in passing it does not purport to be her trial statement – which sets out her experience at Jatomi, leading to her dismissal as CEO on 24 th February 2016. She says she came forward because, based on reports in the press, her experience at Jatomi was similar to that of NDS. She is willing to be a witness at the trial of this claim, along with a Ms. Suzette Burger, who was a colleague of hers at Jatomi. NDS seeks to introduce elements of Ms. Gehlan's evidence on a similar fact basis. I will come to her story shortly. I need only add that Ms. Gehlan is pursuing a claim against Jatomi in Poland, under Polish labour laws, and one of the issues I will have to consider is whether it is right for a court in England to try factual issues that will be determined by a court in Poland.
The Amendment
The amendment relates to para.92A of NDS's additional claim and seeks to add a new para.92AA. The amendments themselves run to just two and a half pages. As a matter of convenience, and to avoid the need to read the whole of the new paragraphs into this judgment, they are to be attached as an appendix if this judgment is transcribed. It is necessary, however, to make some observations about the claim, both in its current form and as it is proposed to be. Currently, the claim includes a conspiracy to injure claim which relies on three matters from which it is said Mr. Caudwell and Signia acted with the predominant motive to injure. These elements are contained, at the present, in para.92A of the claim.
The principal allegation concerns the elements already pleaded in the defence and they are, in summary: (i) that Signia invoiced Mr. Caudwell for...
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