Templeton Insurance Ltd v 1. Motorcare Warranties Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Eder |
| Judgment Date | 28 March 2012 |
| Neutral Citation | [2012] EWHC 795 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2009 FOLIO 915 |
| Date | 28 March 2012 |
[2012] EWHC 795 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Eder
Case No: 2009 FOLIO 915
Mr Matthew Cook (instructed by Nelsons) for the Claimant
Mr Quiney (instructed by Peter Davies Solicitors) for the 2 nd Defendant
Mr Gadsden (instructed by Vale Solicitors) for the 3 rd Defendant
Hearing dates: 22, 23 and 29 March 2012
Introduction
The original trial in this action was heard by Simon J. He delivered judgment on 3 December 2010: [2010] EWHC 3113 (Comm). The Claimant ("Templeton") now seeks an order for committal against the 2 nd Defendant (Mr Anthony Thomas) and the 3 rd Defendant (Mr Panesar). In essence, the basis of the application is that both these parties are in contempt of court by reason of alleged breaches (or involvement in alleged breaches) of a freezing injunction granted by Nelson J on 8 July 2008. (I should mention that originally Templeton sought in addition an order for committal against the 4 th, 5 th and 6 th Defendants; but this was abandoned by Templeton at the commencement of the hearing before me, Templeton agreeing to pay a contribution of £1000 to these parties' costs.) In summary, the factual background is as follows.
The Defendants
The Second to Sixth Defendants are members of the same family. Mr Anthony Thomas and Mrs Christine Thomas are husband and wife. Mrs Caroline Thomas and Mr James Thomas are their adult children. Mr Harbinder Panesar is Caroline Thomas' husband. Thus, Mr Anthony Thomas is Mr Panesar's father-in-law.
Motorcare Warranties Limited
Motorcare Warranties Limited ("Motorcare") was established in the 1990s by Mr Anthony Thomas. During the relevant period, Mr Anthony Thomas and his wife each owned 50% of the shares in Motorcare; Mr Panesar was the Managing Director; Mr James Thomas was another director; and Mrs Caroline Thomas was company secretary. Motorcare's business was primarily in the sale of Mechanical Breakdown Insurance ("MBI") policies which were sold through a network of several hundred appointed representatives (mainly car dealers) to their customers. In addition, Motorcare had agency arrangements with a number of self-employed sales agents who worked with the appointed representatives. There was some uncertainty as to the precise number of such agents but for present purposes I assume that there were, as stated in Mr Panesar's affidavit, about 35 agents immediately prior to the grant of the injunction. The policies would either be sold to the customer by the dealer or given away "free" at the time the vehicle was sold. The business had been developed over the years by Mr Anthony Thomas who had been involved in the insurance industry for over 40 years. It was at all material times authorised by the FSA to conduct insurance business and continued to have that status until such authorisation was withdrawn on or about 25 May 2010. Motorcare is now in liquidation.
In about 2003 or 2004 Mr Anthony Thomas was looking to retire. An offer was received from one of the sales managers to buy the business for £1.2m but in the event Mr Anthony Thomas handed over the running of the business to Mr Panesar. Although Mr Anthony Thomas claimed to have little ongoing involvement in Motorcare thereafter, Simon J held, at the trial, that he "continued to play a major role in the running of the company, particularly in relation to the agreements with Templeton".
A Thomas Associates Ltd
A Thomas Associates Ltd ("ATA") was a separate company which performed all the administration for Motorcare. There were virtually no documents to explain the precise nature of the role played by ATA. However, for present purposes, I am content to proceed on the basis (as stated by Mr Panesar) that the office staff and the agents were in fact contracted with ATA and all wages and commissions were paid from ATA's bank account.
Templeton
Templeton is an insurance company incorporated in the Isle of Man and authorised to write insurance business in the United Kingdom. Between July 2004 and July 2008, Motorcare acted as Templeton's agent in selling MBI policies. The majority of Motorcare's business consisted of selling these types of insurance policies and, prior to the termination of Motorcare's relationship with Templeton in July 2008, the majority of Motorcare's business consisted of selling insurance policies underwritten by Templeton.
The relationship between Templeton and Motorcare
The framework of the relationship between Templeton and Motorcare was set out in annual contracts referred to as "Slips". Under the Slips, Motorcare was authorised to sell certain kinds of insurance policies underwritten by Templeton. Subject to the policies sold complying with the terms of the Slip, Motorcare was entitled to determine who to sell policies to and at what price, with Templeton only being entitled to the premium agreed with Motorcare as specified in the Slip — with the premium varying as a result of duration, claims limit, type of cover and type of vehicle. Motorcare also acted as claims administrator and, therefore, administered all claims received from customers, including making payments to customers in respect of valid claims, with these sums being offset against the sums due to Templeton. As a result, each month, Templeton was notified of the premium due on policies sold that month and claims paid, with a balance then being due from either Templeton or Motorcare. If the business was profitable, the payment should, of course, generally have been from Motorcare to Templeton.
The breakdown of the relationship
The relationship between the parties started to fall apart in late 2007 (over three years into the relationship), when substantial losses started to be generated. As a result of this breakdown, Templeton began to demand and eventually managed to obtain more detailed information from Motorcare. This information led Templeton to conclude that Motorcare:
a. had not been accounting to Templeton for the full premiums which were due under the Slips;
b. had been selling policies which were expressly excluded by the terms of the Slips and/or selling policies which did not have premiums specified in the Slips;
c. had been providing false information to Motorcare, including in particular false information about losses which induced Templeton to extend the relationship for a further year in July 2007. Given the other matters and the nature of the errors, Templeton concluded that this information must have been deliberately false.
As the relationship between the parties broke down, there were a number of meetings between the parties at which Templeton sought explanations from Motorcare (via Mr Panesar and Mr Anthony Thomas) about these matters. Following one of these meetings, Templeton received a fax from Mr Anthony Thomas which purported to attach a letter from Templeton dated 5 November 2004 which appeared to authorise departures from the strict terms of the Slips. [There had been a change of management at Templeton, so the individuals dealing with the relationship in 2008 were not the same as those which dealt with the relationship in 2004]. This document was an obvious and poor forgery.
The freezing injunction
Against that background, Templeton commenced the current proceedings and on 8 July 2008 applied for and obtained the freezing injunction against Motorcare (and also against Mr Anthony Thomas and Mr Panesar). The freezing injunction against Motorcare – contained in paragraph 5 of the order — ordered Motorcare until the return date or further order not to "remove from England and Wales or in any way dispose of, deal with or diminish the value of, other than by payment to the Applicant, any of its assets in England and Wales". This prohibition was stated to include in particular: "the property and assets of [Motorcare's] business." The freezing injunction contained the usual penal notice. The order also contained separate freezing injunctions in respect of the personal assets of Mr Anthony Thomas and Mr Panesar but there is no suggestion of any breach of those injunctions. Under the heading "Parties other than the Applicant and Respondent", the order further provided as follows: "22. Effect of this Order: It is a Contempt of Court for any person notified of this Order knowingly to assist in or permit a breach of this Order. Any person doing so may be sent to prison, fined or have his assets seized." There is no dispute that the order was duly served on both Mr Anthony Thomas and Mr Panesar shortly after it was made. Thereafter, by consent or at least without objection, the freezing injunction was continued beyond the return date.
The proceedings
In these proceedings, Templeton claimed, inter alia, payment of the full premium due under its contracts with Motorcare and damages for fraudulent misrepresentation in relation to the representations made to Templeton which induced it to renew the relationship in July 2007 ie Slip 4. In relation to the other Defendants, Templeton contended that Motorcare's wrongs were orchestrated by the other Defendants and pursued claims against them for deceit, knowing assistance and knowing receipt.
Motorcare defended the proceedings on the basis that it had paid Templeton all sums properly due, since, to the extent that it had not complied with the terms of the Slips, these departures were known to and/or agreed by either Templeton or its agent. Motorcare also denied that the representations which...
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