Case No. CR-2019-LDS-000669

423.As regards John’s and Lorraine’s combined salaries the sums complained about are as follows:424.As regards Lorraine’s salary looked at in isolation, the question was raised in the trial as to whether there could be unfair prejudice if it had been decided to split John’s salary between Lorraine and John in circumstances where the overall salary of the two was not significantly different from the salary previously received by John. This was the evidence in the case. I assume that it was in light of that issue that the complaint (not raised in even the proposed amendments to the petition) is raised on the basis of the combined salaries of Lorraine and John being excessive. As I understand the case finally brought by the petitioner it was simply with regard to the salaries of John and Lorraine taken on a combined or pooled basis. 425.As regards Lorraine’s salary that was raised expressly in the Points of Reply by amendment following the order of HH Judge Jackson based upon the proposition that substantive points of unfair prejudice should be pleaded in the Petition and not in the points of reply. I should note that as regards Lorraine’s salary, the issue raised in the re-amended Points of Reply was that payment of Lorraine’s salary was one of the matters damaging the cashflow and financial position of the Companies and pleading to paragraph 10A of the amended points of defence which, in relation to the overall case about the insolvency of the Companies, asserted, as party of the background to the financial difficulties, that in 2015 the Companies were experiencing cashflow difficulties. As such the point made by the Points of Reply was to the effect that the payments to Lorraine exacerbated the financial position of the Companies and brought about the insolvency and administrations of the Companies. As will be seen that case was subsequently not pursued.426.As regards salaries, reliance is placed on Mr Lacey’s report. That report identified from the available accounting records of the Companies what the salary payments were. No other relevant evidence is given.427.I would not allow the amendment to be made to raise a case as to the combined salaries of John and Lorraine. Quite simply it is too late to do so, as the history of the case brought in this respect demonstrates. To permit the amendment would unfairly prejudice the Relevant Respondents who have not had an opportunity to adduce evidence on the point. I would also not permit the amendment sought to enable a case to be brought as regards Lorraine’s salary in isolation. Again, it is too late and would prejudice the Relevant Respondents. 428.In any event, I am wholly unsatisfied that the remuneration was excessive. Looked at in isolation the salary paid to Lorraine cannot be justified. However, in reality, the evidence was that John “diverted” part of his salary to Lorraine and took a cut himself. In the family context, there was no significant change in salary overall. The allegation is (under Schedule 3) an allegation that the two salaries taken together were excessive (looking at the work that John and Lorraine did on a pooled basis of the pooled salaries). There is no objective evidence that the pooled salaries were excessive for the pooled work undertaken. Neither GT nor the Bank (who can be taken to have looking at the Companies’ financial positions in the period after 2015) apparently raised any issue.429.As regards any allegation that the salaries taken were taken whilst the petitioner (or Nora) was excluded from a salary, the answer is that neither Nora nor Lisa had any legitimate expectation that they would be employed. On the other hand the employment of John was obviously necessary and appropriate. Lorraine had been employed prior to 2015, with what must be assumed to be Nora’s acceptance. Although her salary went up considerably, John’s reduced and the salaries were looked at and justified on a pooled basis. Prior to 2015, the pooled salaries (according to Mr Lacey) were £236,195.21 (9 mths to 31.10.11); £283,984.54 (y/e 31.10.12); £273,375.32 (y/e 31.10.13); £270,243.90 (y/e 31.10.14). The salaries on a joint basis did not significantly increase after that as can be seen from the table set out earlier. I infer that joint salaries at this sort of level were acquiesced in by Nora (and in circumstances where she, Nora, was not employed and receiving a salary).430.Without any objective evidence that the salaries were excessive such that they amounted to a disguised distribution, there is no ground to find that the payment of these salaries amounted to unfair prejudice. For completeness, I should also say that I reject the submission on behalf of Lisa made in closing that the salaries should have been reduced when the Companies entered into financial difficulties. There is no evidence that the Bank or GT took this view. The same job had to be done. There is no evidence as to what sort of level the salaries should have been reduced to or why.431. As regards the salaries of James and Charles, similar points apply (mutatis mutandis).432.The salaries complained of as regards Charles are as follows:433.This compares with salary as follows in the preceding period: £31,426 (9 mths to 31.10.11); £32,396.45 (y/e 31.10.12); £32,316.84 (y/e 31.10.13); £39,363.32 (y/e 31.10.14); £41,449.33 (y/e 31.10.15).434.As regards James, the complaints are of the following remuneration from the Companies:435.This compares with salary as follows in the preceding period: £32,160.20 (9 mths to 31.10.11); £38,376.14 (y/e 31.10.12); £40,609.94 (y/e 31.10.13); £65,610.86 (y/e 31.10.14); £46,281.39 (y/e 31.10.15).436.First, as regards each of Charles and James, I would not allow the case to be raised: the matter being raised by Schedule 3 and not even by the proposed re-amended Petition. In any event the amendments are too late and if allowed would unfairly prejudice the Relevant Respondents by removing an opportunity for them to adduce relevant evidence.437.Further, and on the merits, for the same reasons, mutatis mutandis as apply to the combined salary of James and Lorraine, I do not consider that a case of excessive salaries is made out or that unfair prejudice is made out regarding the salary payments. As regards James, it is notable that his salary increased considerably in 2018 but it was still a £100,000 or so less than John and Lorraine’s combined salary and that at this point there may well have been more onerous duties falling upon him, particularly as the financial position deteriorated and later as his father became ill.