Zenith Logistics Services (UK) Ltd v Peter James Keates
| Jurisdiction | England & Wales |
| Judge | Keyser |
| Judgment Date | 17 June 2022 |
| Neutral Citation | [2022] EWHC 1496 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CC-2019-CDF-000006 |
[2022] EWHC 1496 (Comm)
HIS HONOUR JUDGE Keyser QC
sitting as a Judge of the High Court
Case No: CC-2019-CDF-000006
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN WALES
CIRCUIT COMMERCIAL COURT (QBD)
Cardiff Civil Justice Centre
2 Park Street, Cardiff, CF10 1ET
Michael Duggan QC and Nicholas Goodfellow (instructed by Holman Fenwick Willan LLP) for the Claimants
Patrick Clarke (instructed by W. Parry & Co) for the Seventh and Eighth Defendants
The First, Second, Third and Sixth Defendants in person
The First Defendant on behalf of the Ninth and Tenth Defendants
Hearing dates: 9, 10, 11, 14, 15, 16, 23 March 2022
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HIS HONOUR JUDGE Keyser QC
This judgment was handed down remotely by circulation to the parties or their representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10.30 am on Friday 17 June 2022.
JUDGE Keyser QC:
Introduction and Overview
This is my judgment after the single trial of three claims that were commenced in London and, after case management, were transferred into this court for trial together. Those claims have been called “the Main Claim”, “the Biosol Claim” and “the Read Claim”. In that order, which is not their chronological order, they are respectively the big claim (>£3million), the medium-sized claim (>£300,000) and the little claim (>£30,000). Although there is some interconnection among the issues in the three claims, the duration of the proceedings, the length of the trial, the formidable size of the trial bundles and the written submissions, and the expense incurred in the litigation are overwhelmingly attributable to the Main Claim.
In this introductory section of the judgment I shall introduce the parties and the main actors, say something about their connections and relationships and explain in general terms how the claims arise and what they are about. I shall also say something about the trial and the witness evidence. In the next section, I shall provide a narrative. After that, I shall discuss the issues on each claim, dealing with the Biosol Claim, then the Read Claim, and finally the Main Claim.
The parties and their relationships
The claimants are members of the Uniserve Group of companies (“the Uniserve Group”), which was founded by Mr Iain Liddell in 1984. Mr Liddell is the Managing Director of the Uniserve Group and its ultimate beneficial owner.
• The second claimant (“Uniserve UK”) was incorporated in 1985. It is in the business of supplying a range of distribution, logistics and trade management services.
• The first claimant (“Zenith”) was incorporated in April 2010 by the first defendant (“Mr Keates”), who was its sole member. On 9 October 2015, when Zenith was in financial difficulties, Mr Keates sold his entire shareholding in Zenith to Uniserve UK for a nominal consideration. Zenith is in the business of providing distribution, logistics and trade management services; its business complements that of Uniserve UK.
• The third claimant (“Kemball”) was incorporated in 1973 but became part of the Uniserve Group only in April 2016. It supplies shipping containers to the freight transport industry. Kemball has featured very little in these proceedings; it is concerned only with one or two discrete parts of the Main Claim.
From time to time I shall simply refer to “Uniserve”. This deliberately vague reference will indicate that the matter in question falls somewhere within the scope or interest of one or more of the companies in the Uniserve Group and that further precision is either impossible or unnecessary.
The central character in these proceedings is Mr Keates. From 14 October 2015 until his dismissal on 8 May 2018 Mr Keates was employed by Zenith as Managing Director of both Zenith and Uniserve UK and was a director of all three claimants. He reported directly to Mr Liddell and the Uniserve Group Board but had day-to-day operational and financial control of Zenith and was responsible for all of the transport and warehousing for the Uniserve Group.
All of the claims made in these proceedings revolve around the claimants' allegation that, during the course of his employment and the term of his office as a director, Mr Keates dishonestly misappropriated their assets to his own use and the use of friends and colleagues and conspired with others, including most of the other defendants, to use the assets and staff of the claimants to exploit business opportunities for the gain of himself and the others instead of the claimants.
Mr Keates had previously been involved in another road transport company by the name of Zenith Logistics Limited (“ZLL”). ZLL was incorporated in 2007, filed no accounts for any period after 2009, entered creditors' voluntary liquidation in 2011 and was dissolved in 2015. Mr Keates was a director of ZLL (as was Mr Paul Southern, mentioned below) and the annual returns show that he was the sole shareholder. ZLL had no part in the matters with which these proceedings are concerned but, as I shall explain, its existence has some relevance to part of the claim now advanced by Zenith against the sixth defendant.
On 19 July 2019 Mr Keates was adjudged bankrupt. At the case and costs management conference in the Main Claim on 6 December 2019, Master Davison stayed the proceedings against him pursuant to section 285(2) of the Insolvency Act 1986, save in respect of his obligation to give standard disclosure. That stay was lifted by an order made by Master Cook on 27 November 2020; at the same time, the claimants were given permission to amend the statements of case in the Main Claim for the purpose of averring that the breaches of contract and of fiduciary duty alleged against Mr Keates were committed fraudulently or dishonestly. The purpose of that order was to enable the claimants to pursue Mr Keates after his discharge from bankruptcy in respect of the consequences of his alleged fraud, pursuant to section 281(3) of the Insolvency Act 1986.
The second defendant (“Mr Read”) was employed by Uniserve UK as Southern Operations Director both of Uniserve UK and of Zenith from 11 January 2016; despite his job title, he was not a member of the board of directors (a “statutory director”) of either company. He was dismissed from his employment in May 2018 on the grounds of gross misconduct in connection both with his use of company cars to which (it was said) he was not, and knew he was not, entitled and with his alleged involvement with Mr Keates in the wrongful exploitation of business opportunities outside the Uniserve Group. Mr Read maintains that his use of the company car had been authorised by Mr Keates and that he believed it to be legitimate and above board. This dispute is the subject matter of the Read Claim, by which Zenith seeks to recover the costs it incurred in respect of the provision of the vehicles. In the Main Claim, Mr Read also denies any wrongdoing in respect of business ventures outside the Uniserve Group and maintains that he only ever acted in good faith in accordance with the instructions of his line manager, Mr Keates.
The third defendant (“Miss Horsley”) was employed by Zenith as an Accounts Administrator from the time of its incorporation until her dismissal in June 2018. She had previously worked for another company owned by Mr Keates and was for many years until late 2014 in a personal relationship with him. At Zenith, Miss Horsley's role involved raising invoices and dealing with staff expense claims. She was answerable to Mr Colin Newnes, Zenith's Finance Director. The claim against Miss Horsley is that she received payments and benefits to which she knew she was not entitled and that she was complicit in the making of illegitimate payments and the conferring of illegitimate benefits by Zenith on others on Mr Keates' instruction.
The fourth defendant (“Ms Coury”) has been in a personal relationship with Mr Keates since 2016. She was never employed by any of the claimants, but from August 2017 until October 2018 she was a director of the ninth defendant. She is a defendant to the Main Claim.
The fifth defendant (“Mr Davies”; he is known as Roger Davies) is a director of, and the majority shareholder in, W. G. Davies (Landore) Limited (“WG Davies”), which carries on the business of the maintenance and repair of vehicles and the retail sale of vehicle parts and accessories from premises at Cardiff, Swansea and Tenby. Between 2008 and 2018 WG Davies serviced and maintained vehicles owned by Uniserve UK and Zenith. He is a defendant to the Main Claim.
The claim against Ms Coury was compromised by a settlement agreement and Tomlin Order in April 2020. The claim against Mr Davies was compromised by a settlement agreement and Tomlin Order in March 2021. Neither Ms Coury nor Mr Davies took any part in the trial.
The sixth defendant (“Mr Claridge”; he is also known as “Blue” and is referred to in some documents by that name) is a business associate of Mr Keates and is the director and owner of a building company called Alfred Properties Limited. Mr Claridge is something of an outlier in these proceedings, because he played no part in the central narrative that will be set out below; but what brings him within the...
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Mr Nopporn Suppipat v Mr Nop Narongdej
...and his companies. Breach of contract and fiduciary duty constitute unlawful means: Zenith Logistics Services (UK) Ltd v Keates [2022] EWHC 1496 (Comm) at [175]. Where, as here, conspirators intentionally injure the claimant and use unlawful means to do so, it is no defence for them to sho......