Trustees of Beardsley Theobalds Retirement Benefit Scheme v Mr Joshua Yardley
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Anthony Thornton QC,HH Judge Anthony Thornton QC |
| Judgment Date | 30 September 2011 |
| Neutral Citation | [2011] EWHC 1380 (QB) |
| Court | Queen's Bench Division |
| Date | 30 September 2011 |
| Docket Number | Case No: HQ09Z05383 |
[2011] EWHC 1380 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Hh Judge Anthony Thornton QC
Case No: HQ09Z05383
Mr Philip Fellows (instructed by Fraser Brown) for the Claimants
Mr Howard Lederman (instructed by West London Law) for the Defendant
Hearing dates: 26 and 27 October 2010 and 27 May 2011 with further written submissions thereafter
Introduction
The claimants are the trustees of a retirement benefit scheme and are the registered freehold owners of a commercial premises whose address is 22–24 Market Street Nottingham. This property is an asset of the scheme. The trustees entered into a lease for this premises dated 9 September 2005 with Body Care International Limited ("BCIL") as tenant for a term of fifteen years from 1 November 2003 with an initial rent of £32,500.00 per annum. The defendant, Mr Joshua Yardley, has signed this lease as a guarantor of the rent and the other obligations of the tenant. BCIL went into administration on 15 August 2006 and into liquidation on 13 November 2007. The claimants are now claiming unrecovered rent, damages for breach of the repairing obligations and other unrecovered expenses from Mr Yardley by seeking to enforce the guarantee. They first attempted to recover their claim by issuing a statutory demand and then a bankruptcy petition against Mr Yardley but the petition was dismissed because there was a substantial dispute about the debt. On 25 August 2009, this claim was issued. The sum claimed in the claim form is for £79,049.46 for arrears of rent and insurance rent, £3,602.75 for the cost of repairing the roof and interest of £30,682.50 up to the date of the date on which the claim form was issued with further interest continuing until judgment. The claimant has applied to amend the claim so as to claim additional arrears of rent up to the date of the trial. The claim is disputed in full. The basis of the defence is that Mr Yardley never signed the lease as a guarantor because, although he added his signature to the document, he thought he was signing it as a witness. Thus, a series of defences are raised, any of which would, if successful, provide him with a complete defence. He also opposes the claimants' application to amend the claim on the grounds of delay and of it being too late to amend to add a substantial additional sum to the claim at the trial.
The factual background falls within a narrow compass but it is crucial for the defences that are advanced that I first decide precisely when, where and in what circumstances Mr Yardley signed BCIL's copy of the lease. At the trial, there were seven witnesses of fact. However, the three crucial witnesses were Mr Ciaran Mooney, a director of BCIL who signed the lease on behalf of the company, Mr Yardley and Ms Emma Ryan, who was called by Mr Yardley and who witnessed Mr Yardley's signature in the lease. The claimants also called Mr Anthony Palfreman, who was the conveyancing solicitor in Fraser Brown, the claimants' solicitors based in Nottingham who acted for the claimants in the conveyancing transaction for the grant of the lease, and Mr Stephen Littlewood, the senior partner in Littlewood & Company, the claimants' managing agents. He gave evidence about the nature and extent of the arrears being claimed. Mr Yardley called two other witnesses, Mr Ian Hallam and Mr Benjamin Davies who gave brief evidence about Mr Yardley's relationship with Mr Ciaran Mooney and Mr Mooney's brother and co-director, Mr Adam Mooney.
Factual background
Initial period. In 1990, Mr Adam Mooney started The Tanning Shop Limited ("TSL"), a company that operated a chain of tanning salons that traded as The Tanning Shop. TSL opened its first tanning salon in Dublin and within 18 months it had opened another four salons and it rapidly expanded its operations throughout the United Kingdom. Most of the salons were franchised and run by franchisees and the remainder were run by TSL. This business secured an exclusive distributorship agreement to market the California Tan Sunless range of tanning skin care products in the United Kingdom. These products were used in and sold from the Tanning Shop chain of salons and they were also marketed to other commercial users.
Mr Yardley was born in December 1968. On leaving school, he worked briefly as a pub licensee and then worked for a menswear retail group in its buying department before becoming a sales representative working for a company that was importing skincare products from the USA. In March 1993, Mr Yardley was recruited by Mr A. Mooney to work for the Tanning Shop sales department which marketed the specialist tanning products that the Tanning Shop was importing under licence from the USA. Marketing was undertaken through a related company, The Tanning Shop (Retail) Limited ("TSR"). Mr A. Mooney's brother, Mr Ciaren Mooney, started with TSL soon afterwards. He was appointed a director of TSL with particular responsibility for franchising.
In March 1998, TSL was financially restructured and the Mooney brothers incorporated BCIL on 11 March 1998 to take over and run the Tanning Shop business and its chain of salons. There were four initial directors of BCIL. These were the two Mooney brothers, Mr Michael Llewelyn-Evans who was an accountant and Mr Justin Selig who was a solicitor and who was also appointed as BCIL's company secretary. Mr Selig undertook all BCIL's legal work including the legal work involved in its leases and he also provided legal advice to his fellow directors. BCIL also took over TSL's leases.
Mr Yardley's employment was transferred to BCIL and he was promoted to take responsibility for the sales and distribution division of BCIL. He was an employee of BCIL and he was paid a salary which was topped up by commission payments on the sales that he made. He was successful in this role and soon after he started with BCIL, he accepted an invitation to buy a 4.85% shareholding in BCIL. This acquisition cost him about £15,000. About a year later, on 3 March 1999, he accepted Mr A. Mooney's invitation to become a director and board member of BCIL. He was very much the junior member of the board whose driving force was largely Mr A. Mooney with, to a lesser extent, Mr C. Mooney. When Mr Yardley joined the board, it had five other directors. At the same time as he became a director of BCIL, Mr Yardley also became a director of Bodycare Direct Limited ("BDL"), which was TSR'S wholesale division and a subsidiary of BCIL.
Guarantors of underlease. Soon after Mr Yardley had become a director of BCIL, the board decided to acquire an underlease of a shop premises at 22—24 Market Street, Nottingham. When this underlease subsequently fell in, it was replaced by a new lease for the same premises for which Mr Yardley gave the guarantee that founds this action. The underlease was acquired by a licence granted by the claimants, the head landlords and freehold owners of these premises. This licence permitted the tenant, Halifax Estate Agencies Ltd, to underlet the premises to BCIL. The term of the head lease had been for 21 years expiring on 30 October 2003 and the underlease was for the remainder of that term less two days, being a period of just over 4 years 7 months. The underlease was therefore to run until the 28 October 2003. The underlease was not protected by the Landlord and Tenant Act 1954 whereas the head lease was protected by that Act. However, the Halifax had vacated these premises and had no intention to resume occupation in the two-day period between 29 and 30 October 2003 when possession would revert to it. The licence required BCIL to pay its rent directly to the claimants. Mr C. Mooney, as BCIL's franchising director, asked Mr Yardley to become one of the two guarantors that the licence required to be provided to provide security for BCIL's obligations to pay the rent and the required insurance premiums and to keep the premises in good repair. Mr Selig also became a guarantor.
No explanation was given as to why Mr Yardley and Mr Selig were asked to become guarantors of BCIL underlease obligations that it owed directly to the landlords. Mr C. Mooney stated in evidence that he had previously given a personal guarantee in support of BCIL's lease obligations in about six cases and that it was normal for him and his brother to give such guarantees since BCIL were invariably asked to provide guarantors to guarantee its payment obligations with regard to rent and repairs. He also stated that most of the tanning salon leases that had been entered into by BCIL had been completed in the period 1998–1999 following its acquisition of the Tanning Shop business.
I conclude that BCIL's practice was to provide personal guarantees for its tenancy obligations, when required, by persuading members of its board of directors to provide them. I also conclude that since this lease was entered into soon after Mr Yardley joined the board and after BCIL had already entered into a number of leases backed by personal guarantees, he was asked by Mr C. Mooney and Mr Selig to provide one of the required guarantees because, unlike the Mooney brothers, he had no other subsisting guarantee obligations.
Mr Yardley was vague as to the commitment he understood that he had taken on and it seems that Mr Selig, as BCIL's legal director and company secretary, advised Mr Yardley as to his obligations as a guarantor. Mr Yardley remembered that he had been advised by Mr...
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...is voidable. Chitty on Contracts (31st ed), Vol 2, §44-031; Trustees of Beardsley Theobalds Retirement Benefits Scheme v Yardley [2011] EWHC 1380 (QB), (2) Undue influence – the Defendant had reposed absolute trust and confidence in Madam Hung. Being a mere nominee of Madam Hung in the Comp......
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...28. For completeness, I should mention the authority of Trustees of Beardsley Theobalds Retirement Benefit Scheme v Yardley, unrep, [2011] EWHC 1380 (QB) on which Mr Kwong heavily relied. In that case, Mr Yardley was the victim of a fraud by which he was induced into signing (without readin......