“Therefore, in this unhappy dispute, in this unhappy family, very little progress I am afraid is being made because although, as I said, I think twice already, that what seems to me to be required is for the substantive issues to be decided between the two brothers or their respective trusts and companies.”
“the rights to manage the resort including by way of commercial exploitation of its restaurants and bars, to be paid all the maintenance fees payable in respect of sold occupation rights, and to re-sell any recovered occupation rights.”
“24. During the course of 1998 and 1999, the 1st Defendant fraudulently and in breach of his fiduciary duty to Casterbridge took for the benefit of Mars Trust or himself, or some other entity or entities controlled by him, all the available cash in Casterbridge, amounting to not less than£4,194,397 . Of that sum, the 1st Defendant caused£3,676,480 to be paid by Casterbridge to the credit of Mars Trust in the pretence that (1) Casterbridge had become indebted to Long Beach Gibraltar in that amount on1 December 1997 (2) Long Beach Gibraltar was wholly owned by the 1st Defendant, rather [than] Casterbridge (3) the 1st Defendant was entitled to assign and had assigned that debt to Mars Trust (4) the diversion by the 1st Defendant of£3,676,480 of Casterbridge’s money to the credit of Mars Trust was a proper application of that money, by way of discharge of its supposed debt to Long Beach Gibraltar. In addition the 1st Defendant: - caused a further£238,997 of Casterbridge’s money to be diverted to the credit of Mars Trust - used a further£279,000 of Casterbridge’s money to pay a private debt of his owed to [John Snr].” - caused a further£238,997 of Casterbridge’s money to be diverted to the credit of Mars Trust - used a further£279,000 of Casterbridge’s money to pay a private debt of his owed to [John Snr].”
“For: 2005 Weeks at Long Beach as fully described 100 Weeks at Passage House UK as fully described 53. 25 Weeks at Peablo Canerio, Spain as fully described 54. To include the assignment of the Vendor rights at Long Beach TRNC 55. For the sum of£3,676,480 ”
“The main source of funds into the bank account of Ayton Ltd is the sum of£239,000 from Casterbridge Ltd, and£40,000 from Mars Trust. Casterbridge Ltd is a company owned by the Mars Trust (a trust set up for my brother Ron Popely) and the Blue Ridge Trust. I had disposed of hotel rights to Casterbridge Ltd, and the£239,000 I received was payment for those rights. The£40,000 received from Mars Trust was a payment made by the Mars Trust on behalf of Casterbridge, as payment to me by Casterbridge for those hotel rights.”
“[33] Lord Collins JSC sensibly held that there was no one definitive test for a de facto director. The question is whether he was part of the corporate governance system of the company and whether he assumed the status and function of a director so as to make himself responsible as if he were a director. However, a number of points arise out of Holland's case and the previous cases which are of general practical importance in determining who is a de facto director. I note these points in the following paragraphs. [34] The concepts of shadow director and de facto [director] are different but there is some overlap. [35] A person may be de facto director even if there was no invalid appointment. The question is whether he has assumed responsibility to act as a director. [36] To answer that question, the court may have to determine in what capacity the director was acting (as in Holland's case). [37] The court will in general also have to determine the corporate governance structure of the company so as to decide in relation to the company's business whether the defendant's acts were directorial in nature. [38] The court is required to look at what the director actually did and not any job title actually given to him. [39] A defendant does not avoid liability if he shows that he in good faith thought he was not acting as a director. The question whether or not he acted as a director is to be determined objectively and irrespective of the defendant's motivation or belief. [40] The court must look at the cumulative effect of the activities relied on. The court should look at all the circumstances ‘in the round’ (per Jonathan Parker J in Secretary of State for Trade and Industry v Jones[1999] BCC 336 ). [41] It is also important to look at the acts in their context. A single act might lead to liability in an exceptional case. [42] Relevant factors include: (i) whether the company considered him to be a director and held him out as such; (ii) whether third parties considered that he was a director. [43] The fact that a person is consulted about directorial decisions or his approval does not in general make him a director because he is not making the decision. [44] Acts outside the period when he is said to have been a de facto director may throw light on whether he was a de facto director in the relevant period. [45] In my judgment, the question whether a director is a de facto or shadow director is a question of fact and degree.”
“[731] … the entire Supreme Court [in Holland] plainly felt it right to reject, as an acceptable basis for the imposition of liability, an impressionistic ‘broad brush’ argument that Mr Holland was ‘really’ a director of the subject company, in the sense that he was its directing mind in a generalised way. All members tested the position by a principled legal analysis of the corporate structures which had been set up, and the position, authority and pertinent acts of the defendant which were claimed to have made him a de facto director.”
“[725] … the qualification noted by Millett J in Hydrodan remains; the test requires the finding of actual ‘directorial’ acts on the part of the defendant and merely being involved in the management of the company, or exercising a degree of influence over it decision making, is not in itself enough, although in the former case it may become enough if there is no other person involved in the management of the company in practice. … “[736] … the relevant act within the subject company must be an act required to be done by someone with the capacity of a director. If the defendant could have carried out the acts in question in some other capacity, either because they were not acts which only a director could carry out (Hydrodan) or because the defendant enjoyed some other capacity in which he could properly do them (Holland), then the defendant is not a de facto director.”
“(1) In the Companies Acts ‘shadow director’, in relation to a company, means a person in accordance with whose directions or instructions the directors of the company are accustomed to act.”
“[88] It has been suggested, notably by Millett J. in Re Hydrodan (Corby) Ltd that the two concepts of de facto director and shadow director are mutually exclusive. In Re Kaytech International Plc [[1999] 2 BCLC 351 ] at p.402 Robert Walker L.J. said that while this is so in most cases the two concepts do have in common: “that an individual who was not a de jure director is alleged to have exercised real influence (otherwise than as a professional adviser) in the corporate governance of a company. Sometimes that influence may be concealed and sometimes it may be open. Sometimes it may be something of a mixture, as the facts of the present case show.” [89] Now that Morritt L.J. has explained that the role of a shadow director does not necessarily extend over the whole range of the company's activities, it seems to me that there is no conceptual difficulty in concluding that a person can be both a shadow director and a de facto director simultaneously. He may, for example, assume the functions of a director as regards one part of the company's activities (say, marketing) and give directions to the board as regards another (say, manufacturing and finance). In each case, it is necessary to examine the facts, bearing in mind that, as Morritt L.J. explained, the purpose of the legislation is to ‘identify those, other than professional advisers, with real influence in the corporate affairs of the company.’” “that an individual who was not a de jure director is alleged to have exercised real influence (otherwise than as a professional adviser) in the corporate governance of a company. Sometimes that influence may be concealed and sometimes it may be open. Sometimes it may be something of a mixture, as the facts of the present case show.”
“[743] … liability as a de facto director of a company applies because the office of a ‘director’ in company law has been held, by judicial interpretation of that term (in English law but with Guernsey law reasonably following suit), to extend to a person who acts as a director or a company in actual fact, even though not as of right. However, liability as a shadow director is not the result of judicial interpretation, but of legislative enactment. It is therefore confined to cases stipulated by the enactment. [744] It consequently seems to me, that it is only if the concept of de facto directorship itself could be extended to include the shadow directorship situation that this would enable a finding of liability for breach of fiduciary duty or of duty of skill and care to be made against a shadow director. … … [746] … It seems to me that the terms of the Companies Laws … treat the concept of shadow directorship and the situation giving rise to it as being a separate and distinct concept in its own right. The legislature has then prescribed the situations in which the situation of a person falling within that concept is to be taken to impose a director’s liabilities or duties … . That being the case, it seems to me that the legislature has to be taken to have intended those situations to be exhaustive with regard to shadow directorship, and that in enacting those express provisions it was implicitly ruling that the term ‘director’ did not, itself, extend to them. The consequence is that the legislation seems to me to have ruled out any permissible judicial extension of the principles of de facto directorship to include shadow directorship.”
“Two questions have been argued. The first is whether section 21(1)(a)is limited to cases of fraud or fraudulent breach of trust properly so called, that is to say to cases involving dishonesty. The judge held that it is. In my judgment, he was plainly right for the reasons which he gave. I have explained the meaning of the word ‘fraud’ in a trustee exemption clause, and there is no reason to ascribe a different meaning to the word where it appears insection 21(1)(a) of the Limitation Act 1980 . Moreover, the meaning of the subsection is not free from authority. Its predecessor,section 26 of the Limitation Act 1939 , was held to ‘mean what it says’ and to be limited to cases where fraud was an ingredient of the wrong: see Beaman v. A.R.T.S. Ltd.[1949] 1 K.B. 550, 558, per Lord Greene M.R.”
‘… connotes at the minimum an intention on the part of the trustee to pursue a particular course of action, either knowing that it is contrary to the interests of the company or being recklessly indifferent whether it is contrary to their interests or not.’
“It is the duty of a trustee to manage the trust property and deal with it in the interests of the beneficiaries. If he acts in a way which he does not honestly believe is in the interests of the beneficiaries then he is acting dishonestly.”
“When dishonesty is in question the fact-finding tribunal must first ascertain (subjectively) the actual state of the individual's knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.”
“26. By letter dated4 January 2005 from P R Campbell & Co. to Hutchinson & Co. Trust Company Limited (then holding not less than 99.88% of the share capital of Long Beach Cyprus as trustee), the 1st Defendant caused Casterbridge to re-assert its entitlement to manage the Long Beach Resort in exercise of its ‘Vendor rights’, and thereafter caused Casterbridge to exploit those rights from January 2005 until, on a date unknown to the Claimants but in or before 2011 the 1st Defendant fraudulently and in breach of his fiduciary duty to Casterbridge caused it to transfer or terminate its ‘Vendor rights’ to or in favour of an entity beneficially owned by him or members of his family, for no consideration.”
“27. In further breach of his fiduciary duty to Casterbridge, the 1st Defendant has fraudulently taken for himself or for the benefit of members of his family or of Mars Trust or some other entity or entities controlled or beneficially owned by him or them: i all the profits made by Casterbridge (being or including the profits of its exploitation since January 2005 of the ‘Vendor rights’ applicable to the Long Beach Resort and estimated by the BRT beneficiaries to have been some£400,000 a year) ii the value of Casterbridge’s ‘Vendor rights’ in respect of Long Beach Resort when transferred or terminated as above.”