“The Judge notes that an Order was made in this case on13 November 2023 by Master Pester, which stipulated at paragraph 3 the medical evidence which would be required ‘[i]f there is to be any further application for any further adjournment of the trial or a stay of the proceedings on the grounds of any of the Defendant’s ill health’. The Judge has been informed that the First Defendant was sent an electronic version of the trial bundle by email dated22 March 2024 (with later iterations being sent thereafter) and the relevant Order is at pages 241-243 of that bundle. The letter from the First Defendant does not comply with that stipulation, and in any event provides an insufficient basis for an adjournment (of uncertain duration) of this trial which has been fixed to be tried within the current trial window for some time and is currently in progress. The application for an adjournment is therefore refused.” (4) On18 April 2024 Jawed renewed his application for an adjournment. He acknowledged the effect of the Order of Master Pester dated13 November 2023 , and “the importance of adhering to procedural requirements” but nevertheless “implore[d] the court to reconsider the exceptional recent challenges posed by my health condition”
“A director of a company must (a) act in accordance with the company’s constitution, and (b) only exercise powers for the purposes for which they are conferred.”
“The duty imposed on directors to act bona fide in the interests of the company is a subjective one (see Palmer’s Company Law (Sweet & Maxwell) para.8.508). The question is not whether, viewed objectively by the court, the particular act or omission which is challenged was in fact in the interests of the company; still less is the question whether the court, had it been in the position of the director at the relevant time, might have acted differently. Rather, the question is whether the director honestly believed that his act or omission was in the interests of the company. The issue is as to the director’s state of mind. No doubt, where it is clear that the act or omission under challenge resulted in substantial detriment to the company, the director will have a harder task persuading the court that he honestly believed it to be in the company’s interest; but that does not detract from the subjective nature of the test.”
“(a) Where the duty extends to consideration of the interests of creditors, their interests must be considered as ‘paramount’ when taken into account in the directors’ exercise of discretion … (b) … the subjective test only applies where there is evidence of actual consideration of the best interests of the company. Where there is no such evidence, the proper test is objective, namely whether an intelligent and honest man in the position of a director of the company concerned could, in the circumstances, have reasonably believed that the transaction was for the benefit of the company … (c) … it also follows that where a very material interest, such as that of a large creditor (in a company of doubtful solvency, where creditors’ interests must be taken into account), is unreasonably (i.e. without objective justification) overlooked and not taken into account, the objective test must equally be applied. Failing to take into account a material factor is something which goes to the validity of the directors’ decision-making process. This is not the court substituting its own judgment on the relevant facts (with the inevitable element of hindsight) for that of the directors made at the time; rather it is the court making an (objective) judgment taking into account all the relevant facts known or which ought to have been known at the time, the directors not having made such a judgment in the first place …”
“(1) A director of a company must exercise independent judgment. (2) This duty is not infringed by his acting (a) in accordance with an agreement duly entered into by the company that restricts the future exercise of discretion by its directors, or (b) in a way authorised by the company’s constitution.”
“It seemed counterintuitive that a company that managed to stave off cash-flow insolvency by going deeper and deeper into long-term debt was not insolvent. It may be able to trade its way out of insolvency, and thus avoid going into insolvent liquidation, but that was a different matter. If, as Warren J held, Casa UK was only able to continue to pay its debts as they fell due by taking new deposits and using them to pay off old debts, in any commercial sense it was insolvent, whether on a cash-flow or a balance-sheet basis.”
“6. The Company was well-structured, with its finances professionally managed by an accounts department and guided by their long-standing financial advisor, Fintan Crowley of Crowley Young. The absence of any wrongdoing on my part is evident considering these circumstances. I played no role in the management of the company; my role was limited to the extent of supplying services. 7. It is concerning that my inclusion in this claim seems to be primarily due to my familial relationship with the First Defendant. I firmly believe that this inclusion is unjust and improper. The Claimant has unfairly and improperly joined me in these proceedings, and I believe this has only been done to apply pressure on me and the remaining Defendants. I am married to the First Defendant, Mohammad Jawed Karim, who is my husband. It is crucial to highlight that personal relationships should not automatically invalidate the legitimate services I provided to the company in a professional capacity. The claim should be assessed based on the facts and merits of the case, rather than personal associations. 8. In October 2017, after the collapse of the family business, I returned to Chanel, where my role is as a Team Manager. We needed to support our living expenses, especially given that the First Defendant had no employment since the collapse of the business to contribute to ongoing expenses. 9. Leveraging my previous experience and qualifications, my gross earnings for the year ending April 2023 were£52,596.18 . I anticipate a further increase to over£60,000 in the next year. Regarding Alleged Payments of the£58,100 13. With regard to the Claimant’s first allegation, I concede that from January 17, 2012 to April 24, 2015, I received payments from the Company totalling£58,100 , equivalent to an annual sum of£14,750 , in exchange for bona fide consultancy services rendered to the Company. These payments were made in return for legitimate consultancy services I provided, forming a valid and professional engagement. For further details pertaining to my role within the company [16/1025-1082/5397]. 14. I want to make it absolutely clear that I strongly deny any insinuation that I failed to provide services that matched the payments I received. The services I rendered were entirely legitimate, and the company processed my invoices through its accounting system, methodically recording each invoice number. I diligently submitted these invoices to the company. However, due to the passage of time, I no longer have my copy, but they unquestionably show that I was fairly compensated for my work. This documentary evidence leaves no room for doubt, as it underscores the legitimacy of my services with the company, all in strict accordance with established industry standard. 15. I understand the Company's accounting ledger substantiates the fact that payments were made in accordance with the invoices I submitted, as evidenced in [15/953-11024/5029]. This was paid because I have tendered services to the company. 16. It is important to highlight that there was no written contract governing my role as a freelance consultant with the Company. Our association was predominantly familial, typical of family owned businesses, characterised by trust and mutual respect, which obviated the necessity for written contracts. Therefore, the absence of a written contract should not be interpreted as a lapse in the provision of my services. I understand that oral contracts are equally enforceable. 17. Additionally, in response to a questionnaire received from the administrator, namely Deloitte, I accurately stated that the invoices were held by the Company. This not only affirms my claims of providing legitimate services but also indicates the Company's awareness and acknowledgment of the services rendered, as evidenced in [16/1025-1082/5119]. I sent invoices that the company checked, approved, and paid for. This was done by their accounting team. 18. Given that the First, Second, and Third Defendants were the sole owners of the Company during the relevant period, their interests were closely aligned with those of the Company.”
“Regarding Alleged Payments of the£250,000 26. According to my defence, I disputed the initial statement in the Claimant’s allegation in paragraph 85 of their claim. As set out in paragraph 62.1 of the Particulars of Claim and acknowledged in paragraph 52 of the First Defendant’s defence, the£250,000 payment on March 21, 2016, was indeed a bonus disbursed to the First Defendant, although it was deposited into my bank account [11/611-688/3596]. 27. The Claimant further alleges that on March 21, 2016, the Company paid me£250,000 , which they claim was a gratuitous payment and not in the best interests of the Company or its creditors. 28. I deny these allegations and would like to highlight that the£250,000 payment was indeed a bonus intended for the First Defendant. The Claimant’s decision to include me in this claim, solely based on our family relationship, appears improper and serves to exaggerate their claim while unfairly pressuring all Defendants. 29. I firmly deny any wrongdoing in connection with the£250,000 payment. The Claimant has failed to prove that this payment was made to me in breach of any legal obligations or without a legitimate reason. 30. The funds transferred to me by the Company were done so at the direction of the First, Second, and Third Defendants, without my full knowledge or consent. 31. On Friday, the 18th of March, I received an email from the First Defendant advising me to go to the bank in the morning and transfer the money to Ward Gethin Solicitors. I assured him I would do so and requested that he confirm when the funds were in my account and the amount. On Monday, the 21st of March, I visited the bank as I had been informed that the funds were available in my account and was advised to arrange a transfer of£245,139 by way of text, which I promptly followed that instruction. Additionally, on the 22nd of March, I received further instructions to transfer an additional sum of£347 to the same solicitors, which I promptly acted upon, as exhibited in[11/611-688/3594]. 32. Furthermore, I initially believed these funds were from the First Defendant’s personal account. Upon inquiry, it became clear that this was, in fact, the First Defendant’s bonus payment from the Company. 33. The funds transferred to me by the Company at the direction of the First, Second, and Third Defendants were provided with the authority to be used as they were and were received with the understanding that they would be accounted for in the manner described. 34. In essence, my position underscores that I did not initiate the payment but acted in accordance with the instructions received from the First Defendant after the payment transfer without my knowledge. This indicates that my involvement in the transaction was largely passive, as I executed the transfer as directed. 35. As mentioned earlier, the sum I received was transferred per Jawed Karim’s instructions to a third party. I have no rightful claim to this money. Any dispute the Claimant has with Jawed Karim remains unresolved. There is no valid reason for my involvement in these proceedings. Furthermore, there is no evidence to suggest that the Claimant can establish that I ever had an interest in, or that the money was paid to me for my benefit. As previously stated, this is a matter for the Claimant to resolve with Jawed Karim, not involving me. 36. [I would] like to highlight that the administrator was also informed by the First Defendant regarding the receipt of a£250,000 bonus. This bonus coincided with a joint property purchase by the First and Fourth Defendants, and our combined personal funds exceeded£550,000 . Of this amount,£245,000 was earmarked for the property acquisition. Importantly, the£250,000 bonus was not retained for my personal benefit; rather, it was transferred to a third party at the direction of the First Defendant. I direct the court’s attention to my bank statement and the First Defendant's bank statement, both displaying a combined balance of£361,951 prior to the£250,000 transfer, as evidenced in [11/1611-688/3600]. (emphasis added) 37. The payment did not cause any financial hardship to the Company, as evidenced by the substantial liquid cash in the Company's multiple bank accounts during the relevant period.”
“So it’s right, then, that you were not involved indeciding what payments the company should make or forwhat reason; is that also right?”
“As far as I know, I was working for the company, andI was giving my invoices, and then I can briefly talk about my roles and then what I was doing. And I waslooking after monitoring the review centre, which wasvery important that they didn't have anyone to reviewthe centre. There was hundreds of reviews was coming up, it was bad ones and good ones, and from my knowledgethat I was looking into, concentrating in the badreviews and giving feedback to Joe. I found that --during that time I was studying my business managementdegree, and then I found that that will help thebusiness, it was a family business, that will help, my skills putting it, and then trying to make the companywork better. And my contribution was reading thereviews, and making notes of the feedbacks and passingit to Joe, and also looking at some of the positivereviews as well, and giving it to Joe to reward thestaff of doing well. And because these days I rememberthat reviews very important, that if somebody's tryingto purchase something or do something, the first thingthey were going to look at the company's reviews to getfeedback, how it is and everything. And if -- I'mrecalling that it was many of reviews, negative ones whereas it was consist of frustrations of the clientswaiting for hours in the queue and how that could beimproved for the next time; and also the wrong vehiclewas given to the client and the frustrations. All ofthis that I was spending time to read, understand thereview and give my feedback to Joe. And then I thoughtthat was very beneficial in terms of the service,customer service of the company. And beside that I was doing some administration workfor Joe, because he was -- he didn't have any PA. So hewas coming home with a lot of letters that he didn'thave time to open them, and I was trying to organisethese letters and help him to put it in the file so hecould then go through. I was dealing with that as well. And then I was social media, it was the Facebook and Twitter. And that was -- social media is like, at thattime in 2012, it was start getting really big intoday's -- in the world. And then I was monitoringFacebook page, reading the reviews, and then again, samething, making notes and then giving the feedback to Joewhat needs to be done, the errors, everything. So I was spending quite time of the -- that side ofthe business part because nobody was looking into it. And again, because I was studying business and then --and that -- during that time that I've gained from mystudies that it is very important for the image of thebusiness to look into this media side and all that. So -- and then apart from that, I was one of the keyholders, and sometimes I had to open and close theoffice. And that was when Joe and his brothers, theywere all going in the meeting, and they were not able toopen the office, I was making sure that I arrive ontime, open the office, and to make sure that theoperation started on time and everybody -- all the staffis inside and they are starting the job on time. And beside that as well I've been taking part inhousekeeping, and that's something that when thehousekeeper was on holiday or call in sick, I mean, itwas a job I was -- I understand that I was wife of the first defendant, Joe, but it didn't mean I dideverything. Even I did cleaning, taking part, going tothe office, big office, taking the rubbish out from thebin, and hoovering the floor and cleaning while thehousekeeper was away, call in sick or on holiday. And then I also participated in the painting as wellin the office, and then I spent all day painting theoffice and helping out with everything, so I have –I have taken a lot of part in that sort of thing.”
“In addition, I do recall that they [i.e. Jawed and Mariam] bought a new flat sometime in 2016 and she was quite exciting (sic) when she moved there, and I do recall she mention[ed] that this was a gift from [Jawed] and remember that I made comment, you so lucky”
“The principles that apply to contested applications for permission to amend were not in dispute, and are so well known as not to require detailed citation. A helpful summary was provided by Coulson J (as he then was) in CIP Properties (AIPT) Limited v Galliford Try Infrastructure Limited[2015] EWHC 1345 (TCC) at [19], based on a consideration of a number of recent cases, most of which post-dated the Jackson reforms to the CPR . It is clear from that summary that the determination of such an application is a multi-factorial exercise, in which different considerations will assume different significance in different cases.”
“No, it hasn’t been mentioned”
“Yeah, that’s ... trying to think. Probably, I mean, asI mentioned, that I -- he did mention to me a bonus, soI don't remember the exact time, but yes, I rememberrecalling saying “bonus”, yes”
“75 If the£1.48m had been paid to Mrs Morris without having been required under the courts order (an unlikely hypothesis, of course, but useful to test the position) she would not have given value, and she would therefore have been a volunteer, albeit innocent. The beneficial title of the beneficiaries under the pension schemes would still have subsisted in the money after the payment to her. Therefore, she would not have had a defence to a proprietary claim by the trustee for the recovery of the money. Being innocent, she would not, on the other hand, be liable to a personal claim. 76 Thus, to the extent that she had any of the money, or its traceable product, in her hands at the time she received notice of the trustees claim, she could be ordered to pay it over to the trustee. On the other hand, to the extent that, before she had notice of the claim to the funds, she had disposed of any of the money without receiving traceable proceeds, she would not be liable to the trustee. That is shown by the decision of Millett J in Agip (Africa) Ltd v Jackson[1990] Ch 265 , 290-291, and by that of Megarry V-C in In re Montagu’s Settlement Trusts[1987] Ch 264 . Millett J held that a volunteer who has received trust property is not liable to account for the trust property if he has parted with it without having previously acquired knowledge of the existence of the trust. Thus, it is clear that, if the proprietary claim against the respondent is justified, it only extends to money (or its traceable proceeds) which was in her hands at the time she was given notice of the trustees claim. This could be significant as regards the relief to which the trustee would be entitled. (It is not necessary for present purposes to consider what amounts to sufficient notice to the holder of the assets in this context.) 77 So, in the case of an innocent volunteer recipient of money which is the product of a breach of trust, the legal title is in the recipient but the equitable title remains in the beneficiaries of the relevant trust throughout. Conventionally, in a situation where the legal title to an asset is held by A but the beneficial ownership is in B, A is regarded as holding the asset on trust for B. To say that, however, is only the beginning of the analysis because it does not tell you what duties A owes to B in respect of the asset. The fact that A is not liable to account to B for the asset if A has parted with it (without receiving traceable proceeds) at a time when he had no knowledge of B’s interest shows that this is not a case of a trustee who is subject to strict liability. 78 This situation is inherently unstable in two respects. For so long as A has no notice of B’s interest, B’s interest is fragile because A may dispose of the property in a way which leaves no traceable product. On the other hand A’s immunity from claims in respect of his dealings with the assets is also at risk because it can be brought to an end (for the future) if notice is given to him of B’s interest.”