Ultraframe (UK) Ltd v Fielding
| Jurisdiction | England & Wales |
| Court | Chancery Division |
| Judge | Mr. Justice Lewison |
| Judgment Date | 27 July 2005 |
| Neutral Citation | [2005] EWHC 1638 (Ch) |
| Docket Number | Case No: HC03C03199 Case No: HC03C0992 |
| Date | 27 July 2005 |
WAS MR FIELDING A SHADOW OR DE FACTO DIRECTOR OF NORTHSTAR OR SEAQUEST AND, IF SO, WHEN?
427
The pleaded case
427
General statements
428
Cumulative effect
429
The factors
429
Meetings
429
Mr Hindley
430
Seaquest's registered office
430
Separation of the businesses and the move of the accounts
430
The Seaquest and Northstar debentures
431
Seaquest's bank account
431
Accounts
431
Component stock and distribution
432
Company secretaryship
432
Supply of products
432
The leases
432
Sale of assets
432
Supply of components by TBG
432
Conclusions
432
Northstar
433
Seaquest
433
THE IMPUGNED TRANSACTIONS
434
The Northstar and Seaquest debentures
434
The pleaded case
434
The Northstar debenture
435
Conclusion
437
The Seaquest debenture
437
Conclusion
438
The change of components supplier
438
The pleaded case
438
Northstar's position
438
Seaquest's position
439
Conclusion
440
The sale of stock
440
Conclusion
440
Administration charges
440
Aluminium
440
Relief
441
Conclusion
442
Supplies of uPVC
442
Conclusion
442
The sale by the receiver
442
The pleaded case
442
Sale at undervalue
442
Section 320
443
The no profit rule
443
Conclusion
443
Supply contracts
443
The pleaded case
443
Kesterwood Extrusions
444
Dearward
444
Dearward Profiles
444
Management charges
445
The pleaded case
445
The charge
446
Mr Sheffield
447
Mr Naden
448
Mr Gray
448
Mr Read
448
Other employees
448
Conclusion
448
Consequences
449
Rent and service charges
449
The complaints
450
Conflict of interest
450
Section 320: approval in general meeting
450
Rent unreasonably high
451
Lack of need
451
Unit G3
451
Unit LG3
452
Unit G1
452
Service charges
452
Relief of Mr Fielding
453
Mr Naden
453
Conclusion
453
The loan agreement
453
The pleaded case
453
Why the loan agreement was made
454
Conclusion
454
The intellectual property rights licence to BCP
454
The pleaded case
454
Improper purpose
455
Non-cash asset
455
Contract with a director
455
Affirmation
456
Accounting for gain
456
Relief
456
Conclusion
457
Failure to require payment of commission
457
The pleaded case
457
April 1999 to November 1999
457
After November 1999
458
Failure to require payment of licence fee
458
The pleaded case
458
The correct legal analysis
459
The facts
459
Conclusion
459
Tooling
459
The pleaded case
459
Conclusion
460
THE CASE AGAINST MRS FIELDING
460
The pleaded case
460
Dishonest assistance
461
Assistance
462
Sharing business decisions
462
Dearward and Kesterwood
463
Burnden Works and investment in TBG
463
The letter of 16 November
463
Management of Northstar and Seaquest
463
Misleading evidence
464
BCP
464
Dishonesty
464
Conclusion
465
THE CASE AGAINST MR NADEN
465
Conclusion
466
THE CASE AGAINST MR CLAYTON
466
Conclusion
467
THE CASE AGAINST BCP AND TBG
467
The pleaded case
467
The licence agreement
468
Non arms length transactions
468
Sale by the receiver
468
Tooling and intellectual property rights
468
Transfer of the component business
469
The roof fabrication business
469
Seaquest's business
469
THE CASE AGAINST THE REMAINING CORPORATE DEFENDANTS
470
The pleaded case
470
Diversion of business
471
Tracing profits
471
Distribution of property
471
Business held on trust
471
Conclusion
471
THE CONTRIBUTION CLAIM AGAINST MR BIRKETT
471
HOW MUCH DOES NORTHSTAR OWE MR FIELDING?
472
Mr Fielding's claim
472
The cash loan
472
The aluminium purchase
472
Conclusion
473
HOW MUCH DOES SEAQUEST OWE MR FIELDING?
473
Mr Fielding's claim
473
Conclusions on the claim
473
Conclusion
474
Deduction of the payment of 28 January 1999
474
THE BIG PICTURE
475
THE NEW IP ACTION
476
The pleaded case
476
Mr and Mrs Fielding's personal liability
476
Redesigns
477
After the expiry of the licences
478
Result
478
Counterclaim
478
THE BURNDEN ACTION
479
The pleaded case
479
Passing off
479
Conversion of tooling
480
Conversion of design drawings
480
Knowing receipt
480
Goodwill and passing off
481
The law
481
Conversion of tooling
482
Conversion of design documents
483
Knowing receipt
483
Limitation
484
Infringement of design right
484
Common ground
484
Consent
484
SUMMARY
485
The New Action
485
The New IP Action
486
The Burnden Action
486
ENVOI
487
INTRODUCTION
Preamble
This is (for the moment) the culmination of a long war of attrition in which the real combatants are Ultraframe (UK) Ltd ("Ultraframe") on one side and The Burnden Group plc ("Burnden") on the other. The
trial alone, on liability only, occupied 95 days of court time. Both Ultraframe and Burnden are competitors in the market for the manufacture and supply of conservatories, and conservatory roofs in particular. Burnden's principal brand of conservatory roof is called "K2". Mr Gary Fielding, and his wife Sally, are the majority shareholders in Burnden. The war has been bitterly fought. There have been accusations and counter-accusations of forgery, theft, false accounting, blackmail and arson, not to mention the widespread allegations that many of the principal witnesses are lying. At the heart of the litigation is a dispute about the ownership of businesses in the field of conservatory roof design and manufacture originally developed by Mr Howard Davies. The brand name of Mr Davies' system was "Quickfit". I shall call it by that name although the brand name was later changed. Mr Davies operated through a number of companies, all of which became insolvent. He was also adjudicated bankrupt. While Mr Davies' empire was collapsing in ruins, two companies were incorporated or acquired. These companies were Northstar Systems Ltd ("Northstar") and Seaquest Systems Ltd ("Seaquest"). These two companies, in their turn, became insolvent, and they are now effectively controlled by Ultraframe. Although the principal actions with which I am now concerned are actions nominally brought by the liquidator of Northstar and Seaquest respectively, there is no doubt that Ultraframe is the driving force behind him. Except where it matters, I shall call the claimants "Ultraframe"Ultraframe is represented by Mr Andrew Hochhauser QC, leading Mr Christopher Parker, Mr Martin Griffiths, Mr Adrian Speck and Mr Henry Ward. Burnden, Mr and Mrs Fielding and other companies in the Burnden Group are represented by Mr Richard Snowden QC, leading Mr Iain Purvis, Mr Nigel Dougherty and Ms Kathryn Pickard. Their clients have been called "the Burnden Defendants". Mr Naden is represented by Mr Giles Maynard-Connor; and Mr Clayton by Mrs Lisa Walmisley. Due to funding difficulties, both Mr Maynard-Connor and Mrs Walmisley were unable personally to attend the whole of the trial after the end of Day 33. However, they were able to attend for such parts of the trial thereafter as had most impact on their respective clients; and, I understand, were supplied with daily transcripts of the evidence. They also attended the closing submissions; and each made submissions on behalf of their respective clients. Mr Birkett (who is the defendant to a claim for contribution by Mr Naden) attended the trial to give evidence on Ultraframe's behalf; but otherwise did not attend, and was not represented. Short written submissions were put in on his behalf.
In a nutshell, Ultraframe claims that Mr Fielding and his companies have stolen the business and assets of Northstar and Seaquest. Ultraframe's case is that this came about as a result of:
i) the dishonest story advanced by Mr Davies and his associates, including Mr Birkett, Mr Naden and Mr Clayton, that Northstar and Seaquest belonged to Mr Naden and Mr Clayton, when in fact Mr Davies was the sole beneficial shareholder, which prevented Mr Davies' trustee in bankruptcy from realising those assets for the benefit of Mr Davies' creditors;
ii) the dishonest story advanced by Mr Fielding, Mr Birkett, Mr Naden, Mr Clayton, Mr Roche and others in response to litigation by Mr Davies' trustee to the effect that Mr Fielding owned the shares in Northstar and Seaquest and was a secured creditor for monies claimed to have been lent by him, which prevented Ultraframe from taking control of those companies until after Mr Fielding had stripped them of their value and taken over all their assets and business through his own companies.
Burnden says that Ultraframe has been engaged in a long campaign to stamp out its competitors. It says that Ultraframe hounded Mr Davies and his companies by persistent litigation, forcing them into insolvency. Having done so, it bought the claims of Mr Davies' trustee in bankruptcy. It says that Mr Fielding, a businessman with an interest in Kesterwood Ltd, a company which was one of Northstar's suppliers, had provided finance to both Northstar and Seaquest; and had (so he thought) agreed to buy a majority shareholding in Northstar and Seaquest. During the period when Ultraframe was pursuing Mr Davies and his companies, Mr Fielding continued to support the businesses of Northstar and Seaquest by the provision of further cash and credit, and he provided the services of a management accountant to assist them to get their accounting records, which were a shambles, into some kind of order. Mr Fielding sought and was granted debentures to secure his loans by Northstar and Seaquest in November 1998. In October and November 1998 it was also agreed that in the light, among other things, of the continuing problems with the businesses, customer complaints about service, and the uncertainties of tenure at their existing premises, a part of the business of Northstar and the marketing...
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Anthony John Page and Another v Hewetts Solicitors and Another
...it, an account is not simply an assessment of loss or a claim for money; it is a procedure: or in other words, as stated in Ultraframe (UK) Ltd v Fielding & Ors [2005] EWHC 1638 (Ch) at paragraph 513: "The taking of an account is the means by which a beneficiary requires a trustee to justi......
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Smithton Ltd v Naggar
...not be made conditionally on shareholder approval subsequently being obtained. 95 As Lewison J held in Ultraframe (UK) Ltd v Fielding [2005] EWHC 1638 Ch, [1392] with respect to the predecessor section (section 320 of the Companies Act 1985), the question whether an arrangement falls within......
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[1] Zorin Sachak Khan [2] Afaque Ahmed Khan [3] Sasheen Anwar Appellants v [1] Gany Holdings (PTC) SA [2] Asif Rangoonwala Respondents
...the validity of what a trustee has done or omitted to do with trust assets. Mr. Tidmarsh, QC submitted the case of Ultraframe (UK) Ltd v Fielding and others; Northstar Systems Ltd and another v Fielding and others26 in support. Accordingly, beneficiaries cannot claim that a trustee should a......
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Kerr and Others v Conduit Enterprises Ltd
...ACT 1990 S25(4)(C) COMPANIES ACT 1990 S25(5) COMPANIES ACT 1990 S29(3)(B) COMPANIES ACT 1990 PART III ULTRAFRAME (UK) LTD v FIELDING 2005 EWHC 1638 CH 2006 FSR 17 COMPANIES ACT 1985 S320 (UK) COMPANIES ACT 1990 S29(2) BUCHANAN LTD v MCVEY LTD 1954 IR 89 GREENDALE DEV, IN RE NO 2 1998 1 IR......
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Court Of Appeal Summaries (November 29 ' December 3)
...28, Hodgkinson v. Simms, [1994] 3 S.C.R. 377, Air Canada v. M & L Travel Ltd., [1993] 3 S.C.R. 787, Ultraframe (UK) Ltd. v. Fielding, [2005] EWHC 1638 (Ch.), Vyse v. Foster (1872) LR 8 Ch App 309, Enbridge Gas Distribution Inc. v. Marinaccio, 2012 ONCA 650, Imperial Parking Canada Corporati......
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Court Of Appeal Summaries (November 29 ' December 3)
...28, Hodgkinson v. Simms, [1994] 3 S.C.R. 377, Air Canada v. M & L Travel Ltd., [1993] 3 S.C.R. 787, Ultraframe (UK) Ltd. v. Fielding, [2005] EWHC 1638 (Ch.), Vyse v. Foster (1872) LR 8 Ch App 309, Enbridge Gas Distribution Inc. v. Marinaccio, 2012 ONCA 650, Imperial Parking Canada Corporati......
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Shadow Directors In The BVI: Who Are They, What Duties Do They Owe And What Are Their Risks?
...question. However, some assistance may be derived from considering the English decision, Ultraframe (UK) Ltd v Gary Fielding and Ors [2005] EWHC 1638 (Ch) in which Lewison J (as he then was) took the view that a shadow director does not usually owe any fiduciary duties to the company, unles......
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'The receipt of what?': Questions concerning third party recipient liability in equity and unjust enrichment.
...Court of Appeal in Bank of Credit & Commerce International (Overseas) Ltd v Akindele [2001] Ch 437; Ultraframe (UK) Ltd v Fielding [2005] EWHC 1638 (Unreported, Lewison J, 27 July 2005) ('Ultraframe'); Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (19......
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RECONFIGURING THE NO CONFLICT RULE
...also Parker v McKenna(1874) 10 Ch App 96; Boardman v PhippsELR[1967] 2 AC 46, HL. 4 See Ultraframe (UK) Ltd v Fielding[2005] EWHC 1638, [2006] FSR 17 at [1306]; Quarter Master UK v PykeUNK[2005] 1 BCLC 245 at [55]. 5Bristol and West BS v MothewELR[1998] Ch 1 at 18. 6(1984) 154 CLR 178 at 19......
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Litigation
...give evidence in a manner that does not represent the witness’s independent and honest recollection: Ultraframe (UK) Ltd v Fielding [2005] EWHC 1638 (Ch) at [22]–[31], per Lewison J. A witness statement may be virtually worthless where the witness grossly exaggerates the positive aspects of......
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Table of cases
...Association of WA in Perth (Inc) v Squire Constructions Pty Ltd [2004] WASC 4 I.3.15, III.25.259 Ultraframe (UK) Ltd v Fielding [2005] EWHC 1638 (Ch) III.26.114 Ultraframe (UK) Ltd v Tailored Rooing Systems Ltd [2004] BLR 341 (CA) I.3.140 Ultramares Corporation v Touche, 174 N.E. 441 (1931)......