“[3.] ……….. The Company has a staff of about 30 personnel, including the equipment operators, maintenance staff, sales and clerical staff. ……. [4.] A winding up petition dated7 October 2004 ….. is due to come before the Court for hearing on19 January 2005 ….. ….. [7.] I have been advised that in view of the winding up petition… the Company is no longer competent to arrange a sale of its assets on its own. However I believe such a sale (on appropriate terms) would be in the best interests of creditors. A sale of the business as a whole would enable the business of the Company to continue and is likely to achieve a substantially higher price than if the assets are sold piece-meal on a break-up basis. Much of the Company’s stock of equipment for hire is relatively old, although still serviceable, and would (so I am advised) attract little interest or value if not sold as a package which includes the business itself. If the Company goes into liquidation its business will have to cease immediately and this will effectively eliminate the possibility of achieving a sale of the business as a whole. [8.] Through my contacts in the plant hire industry and with the assistance of my advisers I have been successful in procuring an offer for the purchase of the Company’s assets as a whole from an unconnected third party. Included at page 9 of exhibit.. is the heads of terms in respect of the sale of assets…. I am told by the proposed purchaser that the current offer would not be extended if the Company goes into liquidation and its business is consequently impaired or interrupted by the liquidation process…..”
“[60.] Therefore, it is plain that an allegation of fraud, in particular the allegation of fraud in this case, requires the proof of extra facts concerning the state of mind of the defendant than was previously pleaded and therefore on the face of it does not arise out of the same facts as the matters already pleaded. That indeed is confirmed by an examination of the pleadings. No previous allegation of intent or state of mind was made when it was previously limited to negligence.”
"It is important that you understand that neither I nor Chard Wallis are Solicitors or Insolvency Practitioners. The advice given is mine/ours unless stated otherwise in correspondence."
"Thank you for instructing us to act for you."
“[74.] …………… 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.”
“[19.] The process of civil litigation itself subjects the memories of witnesses to powerful biases. The nature of litigation is such that witnesses often have a stake in a particular version of events. This is obvious where the witness is a party or has a tie of loyalty (such as an employment relationship) to a party to the proceedings. Other, more subtle influences include allegiances created by the process of preparing a witness statement and of coming to court to give evidence for one side in the dispute. A desire to assist, or at least not to prejudice, the party who has called the witness or that party’s lawyers, as well as a natural desire to give a good impression in a public forum, can be significant motivating forces. [20.] Considerable interference with memory is also introduced in civil litigation by the procedure of preparing for trial. A witness is asked to make a statement, often (as in the present case) when a long time has already elapsed since the relevant events. The statement is usually drafted for the witness by a lawyer who is inevitably conscious of the significance for the issues in the case of what the witness does nor does not say. The statement is made after the witness's memory has been "refreshed" by reading documents. The documents considered often include statements of case and other argumentative material as well as documents which the witness did not see at the time or which came into existence after the events which he or she is being asked to recall. The statement may go through several iterations before it is finalised. Then, usually months later, the witness will be asked to re-read his or her statement and review documents again before giving evidence in court. The effect of this process is to establish in the mind of the witness the matters recorded in his or her own statement and other written material, whether they be true or false, and to cause the witness’s memory of events to be based increasingly on this material and later interpretations of it rather than on the original experience of the events.”
“[57.] ………….. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses’ motives, and to the overall probabilities, can be of very great assistance to a Judge in ascertaining the truth.”
“[22.] In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”
“2. Fiduciary Relationships The relationship of express trustee and beneficiary is one of a number of relationships generally described as fiduciary. A fiduciary relationship arises where one person has undertaken to act for another in a particular matter in circumstances giving rise to a relationship of trust and confidence. Some of the common categories of fiduciary relationship are agent and principal, solicitor and client, and director and company. The distinguishing feature of such a relationship is the fiduciary’s duty of loyalty to this principal. He must act in good faith, not profit from his position, and not place himself in a position where his duty and his interest may conflict. But not all fiduciary relationships can properly be described as trusts. A fiduciary is a trustee only if he has vested in him a fund of property or a power of disposal over it…..”
“[3.9] I may have told the various parties what to do with the proceeds of sale from the Land and Equipment, but I have never held the money as a trustee or otherwise..”
“[17-01] The modern development of the tort of deceit (sometimes called simply “fraud”) dates from Pasley v Freemanin 1789. There, the defendant falsely represented to the claimant that a third party was creditworthy when he knew he was not; the claimant suffered loss as a result of extending credit to him. The claimant was held to have an action.The tort involves a perfectly general principle: where a defendant makes a false representation, knowing it to be untrue, or being reckless as to whether it is true, and intends that the claimant should act in reliance on it, then in so far as the latter does so and suffers loss the defendant is liable. Although most cases concern claimants duped into entering into commercial transactions, deceit extends well beyond this. …….. [17-05] To found an action in deceit the claimant must show a misrepresentation of present fact or law (or, at the very least, something done which was aimed at inducing action on the basis of false information). However, a representation may be either express or implied from conduct; furthermore, adopting the representation of a third party can be sufficient. ……. [17-06] The representation must of course be false. Where an issue arises as to whether a representation is true or not, the court normally looks to the reasonable meaning of what the defendant said; indeed, this is often decisive……. ……. [17-10] In certain cases, notably where there is a fiduciary relation between the parties, there may be a duty to reveal information so that (for example) non-disclosure will make any resulting transaction voidable. It now seems accepted that in such cases non-disclosure may equally be capable of amounting to fraud at common law. Thus in Conlon v Simms, a solicitor who in partnership negotiations failed to mention a number of shady dealings in which he had previously been involved was held liable in deceit to his co-partner……”
“Officer: Is that correct… you work from your office [is that] your home address in Maidstone Defendant: I do yes …… Defendant: My letters come to a mailing address currently at 5 Liberty Square, Kingshill, West Mailing in Kent, previously to that they came to Coal Port House, which is Sir Thomas Longley road, in Medway, they are purely postal addresses, letters go there, I go and pick them up, bring them back. ….. Officer: Ok. And those addresses you have just given are purely for postal mail? Defendant: They’re post boxes. Officer: Post boxes. Ok they don’t take any phone calls? Defendant: No. …… Officer: Ok. Your business as such, works from two, works from a postal address in Kingshill. Defendant: Ye ……. Officer: On your letter head and what have you you talk about Monaco is also mentioned on there and USA Defendant: I did have an apartment in Monaco up until 2004, May 2004, and I gave that up then and nothing else happened. Officer: And that apartment, what was that, rented owned, owned? Defendant: Rented…. Two bedroom….1,600 Euros a month….we used it for holidays and we just used it as an apartment for the Grand Prix etc. Officer: Mmm ok. And the USA? Defendant: The USA I did a lot of work, 4, 5 years ago now, I run a carting centre in Indianapolis for a particular F1 racing driver…. And whilst there, I set up a mailing box address again. I have recently moved that mailing box address… to a cheaper one in New York…”
“As long ago as May you indicated to me that you were actively collecting the debtors of the company having previously received instructions from my former partner, Mr Gautier. Would you please therefore explain to me why you appear not to have been proactively pursuing the debtors.”
“ I am surprised to say the least at the tone of your letters, the inaccuracies they contain and the omission of any-thing discussed or agreed at our meetings, these include; 1. The fact that we have written to each and every- [Company] debtor at least 4 times, plus numerous telephone calls — yet you ask us to explain why we have not been proactively pursuing the debtors? Please explain to me what more you could have expected us to do. We also bought to your attention the fact that your office has been instructing debtors who telephone your office NOT to pay!”
“I'm laying out the details on a spreadsheet for you to see. I've called Valentine and he is taking advice and coming back to me on the VAT issue. When we spoke that was an estimate of what we expected, we hadn't got it and that was prior to Peter Rees holding back£47,000.00 for his fees, me receiving a credit note for County Leasing VAT of£8,750.00 , remembering that I paid them£50,000.00 and Robert asking me to account to him for the VAT element of the sale of the assets, that is£15,750.00 . In insolvency cases you have to account for the VAT on the asset sale UNLESS it is WIP (work in progress) in which case it is zero rated, the advice he is taking is if I can invoice as WIP. He is also asking for me to account for the fees meaning a full list of time, letters etc; I'm doing that as well now. The main problem there is that we used Clover Warren Limited to bill some of it and he is questioning that with Peter Rees. Currently we have not produced an invoice for fees on CW because I didn't want to pay the£11,407.87 Vat and then try to claim it back. Our main problem is that we agreed this with Philip Gautier and he has left. Whatever we cannot account for we will have to give back - it's as simple as that. I am trying to get him to challenge Rees bill as this would make the whole job look much better and relieve the pressure for us to account to him as it stands he has sold all the assets for about£210,000.00 and received about£40,000.00 after fees. I think Peters bill should be£5K at most giving RV another£42K and making his figures look much better. In quick figures (I'm doing a spreadsheet) that means;£90,000.00 Gross =£76,595.74 Net (if it as a break-up the agent uses the company's VAT number, so he will produce an invoice for£76,595.74 on MGPH paperwork and therefore Valentine have to account to the VAT for that element - if it is WIP we can 'keep' that 17.5% element.) -£50,000.00 CL£26,595.74 (the agreed kick-back) . - VAT CL of£8,750.00 =£17845.74 (I'd tried to hold onto that 17.5% if I could) I then have to invoice him for CW fees which would be£76,595.74 (£65,187.86 plus VAT) inc VAT so another£11,407.87 in VAT =£6,437 :87 ( I had tried to let me invoice him from Monaco but this cannot be done) Less of course monies that we have taken already; I'm going through those invoices as well now.”
“Following the liquidation of [the Company] and your appointment as Liquidator, [the Defendant] approached me to see if [CLL] were prepared to finance a deal at a lower figure of£200,000 . While this appeared to be a more realistic option, I was clearly conscious of the factors that had prevented [CLL] making an offer previously. At all material times, [the Defendant] represented to me that he was an authorised agent of Valentine & Co and therefore had the authority/consent of your firm to agree a deal. In this respect, I understand that [the Defendant] was liaising with Philip Gautier of your firm. I indicated to [the Defendant] that [CLL] was only prepared to enter into the transactions in respect of the Assets provided that a commission of£25,000 per transaction was paid, totalling£50,000 . This was to cover [CLL's] potential exposure in the event that the transactions defaulted, which was a significant possibility. It was therefore a matter for [the Defendant]/Valentine & Co as to whether they agreed to the proposed deal. I would, however, point out that, as far as I was aware, no other lenders were prepared to get involved in the proposed deal. [The Defendant] subsequently confirmed to me that the deal was acceptable and [CLL] therefore wrote the two transactions in respect of the Assets, details of which have previously been provided to you. I requested that the commission be paid to County Leasing Corporate Services ('CLCS") and CLCS issued the relevant invoice dated21 December 2004 to Chard Wallis in this respect. A copy of that invoice was enclosed with your letter of 14 November…”
“Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy.”
“The key part of it, which dates back to the 18th century, is that the misconduct or impropriety of the claimant must have “an immediate and necessary relation to the equity sued for”, and that it must be shown that the claimant is “seeking to derive advantage from his dishonest conduct in so direct a manner that it is considered unjust to grant him relief” . . . this is one of those multi-factorial assessments to be conducted by the trial judge, with which an appellate court will be slow to intervene, unless the judge’s conclusion was clearly wrong, or based upon some evident failure of analysis.”
“This deed is in full and final settlement of, and each party releases all or any Claims it has against the other party.” c. The language used in the Settlement Deed is of settlement/release as between the parties to the Settlement Deed rather than in satisfaction of the Company’s claims as a whole and against whomever. Indeed, the Settlement Agreement expressly stated that “a person who is not a party cannot enforce or enjoy the benefit of any terms of this deed under the contracts (Rights of Third Parties) Act 1999.” d. Some of the losses pursued in the Misfeasance Claim did mirror the losses pursued in the present claim e.g. in the Misfeasance Claim it was alleged that Mr Valentine authorised or allowed the Defendant to receive from CLL the balance of£80,750 due in respect of the Equipment when Mr Valentine knew there was no legitimate justification for payment of that sum to the Defendant. Mr Cook…”
“ASSIGNMENT OF CLAIMS Initial investigations led me to believe that there were possible claims against parties who were involved in the 'sale' and purchase of Company assets and certain transactions that took place during 2004 and 2005. Whilst there was certain evidence of claims, it was not considered cost effective to pursue in the liquidation. The claims were therefore sold via "blind auction", the winning offer being from the former director in the sum of£17,250 and as such the claims were assigned to him.” f. The Settlement Deed was a compromise expressed to be without “an admission of liability or wrongdoing from either party to this deed.”