Case No. CR-2019-LDS-000669

497.There are three key matters relied upon by the Petitioner as amounting to unfair prejudice in connection with the Pre-Pack Sale to Remet:(1)that the Pre-Pack Sale was a situation engineered by the Relevant Respondents to prejudice Lisa by removing her from any interest in the business of the Companies which thereafter was carried on in the new home of Remet Processing, whilst John and James were in a position to continue benefitting from the same as shareholders and directors of Remet Processing;(2)that stock of the Companies was sold by the Administrators at a price of £1 on the basis that stock had been reduced to nil or had minimal value, when in fact LWC owned stock with considerable value. That stock was effectively stolen and diverted by the Relevant Respondents either to Remet Processing or to some third party;(3)that plant/machinery belonging to LWC was taken and sold by John to Remet Processing for his own benefit. 498.I deal with the allegations regarding stock and plant and machinery in more detail later in this judgment. As matters stand they do not feature in the Petition and permission to amend is needed and is sought. However, at this stage, I focus on the allegations more centrally directed at the Pre-Pack Sale itself, both as set out in the Petition and as sought to be introduced by late amendment.499.In the Petition itself, the allegations are:(1)“…the administration of the companies was a device employed by the First to Third Respondents to ensure that the Petitioner would be excluded from receiving any benefit from the companies’ business and assets while the First and Second Respondents could continue to control and benefit from them. The means used to achieve that aim was a pre-pack sale of the companies’ business and assets, and other connected properties, to a company in which 95% of the shares are held by the First Respondent (but none by the Petitioner), with the First and Second Respondents (but not the Petitioner) being appointed as directors” (paragraph 34B) [the reference to 95% was later sought to be amended to 45%];(2)It is the Petitioner’s case that the cause (or at least the predominant cause) of any financial difficulty experienced by the companies was the First to Third Respondents’ misconduct and mismanagement of the companies’ affairs, including the misconduct and mismanagement pleaded in this Petition (paragraph 34D);(3)Having cited the Pre-Pack Sale agreement selling the Companies’ businesses and assets with a price of £5,775,000; the sale by the receivers of the Kilnhurst Site “for just £800,000” when prior to their appointment it had “been valued at between £3,475,000 and £5,000,000”; and the sale by John of the Disputed Strip, the overall result of such transactions is pleaded as being that the entire business and assets of the Companies “in which the Petitioner and First Respondent each had a 50% interest as shareholder”, the Kilnhurst Site and the Disputed Strip have been sold to Remet Processing, in which John holds 45% of the shares and the Petitioner none, and of which John and James were appointed directors but the petitioner was not (paragraph 34H and 34J).(4)The value of all the property acquired by Remet Processing had a value of at least £27 million whereas Remet paid only £6,575,000 in cash.(5)The Relevant Respondents conduct “in connection with the decision to appoint administrators” amounts to unfairly prejudicial conduct (paragraph 34K).500.These amended provisions in the Petition were introduced following the first raising of a similar case by way of the Points of Reply and a subsequent decision of HH Judge Jackson to strike out that part of the Points of Reply on the basis that, as substantive allegations of unfair prejudice they should be pleaded in the Petition, but to permit amendments to the Petition itself so as properly to raise the case.501.The paragraph numbering in the proposed re-amended petition does not marry with the paragraph numbering in the Petition. I turn to the draft re-amended petition and use the paragraph numbering of that document. The amendments sought to be made regarding the Pre-Pack sale are as follows:(1)A deletion of the allegation that Remet Processing paid £6.5 million (as rounded by me) for assets with a value of £27 million.(2)The insertion of an allegation that the appointment of administrators was made in breach of duty by the Relevant Respondents in that (a) they did not consider in good faith that it would be most likely to promote the success of the companies for the benefit of their members or that it was in the interests of creditors but rather (b) it was made to advance their own personal ends (in summary to continue to derive benefit from the Companies’ business whilst excluding Lisa from any benefit).502.As regards these proposed amendments I permit them to be made. 503.There can be no prejudice in reducing the case (though that may have costs consequences) and therefore the deletion of the allegation regarding the value of what Remet Processing paid compared with what it received can cause no prejudice. In any event, the allegation was misconceived. If there is a complaint in this respect (and I am wholly unsatisfied on the evidence that there is) then the complaint would be (a) about the conduct of the administrators who effected the sale of the company’s assets, to the extent that that could be shown to be at an undervalue and (b) about the conduct of the receivers of the Kilnhurst Site, to the extent that the sale of that site could be established to be at an undervalue and which sale was not an act or omission of the Companies nor did it involve the conduct of their affairs and (c) a complaint about the conduct of John as (on Lisa’s case) trustee of the Disputed Strip for her and him, but again which was not an act or omission of the Companies nor amounting to the conduct of their affairs. 504.As regards the new allegation of breach of duty, that is largely (though not entirely) a matter of law and otherwise depends on the intentions, knowledge and motives of the Relevant Respondents, all of which was in issue in the proceedings in any event.