Case No. CR-2019-LDS-000669

131.To some extent, the cases of the parties developed or were “explained” during the course of the trial. At the start of the trial, I was presented with proposed re-amendments to the Petition relating to sums said to have been wrongly expended on or for the Relevant Respondents and/or their spouses. After evidence had closed, and in closing, Lisa sought to further re-amend the Petition to bring in further substantive grounds of unfair prejudice.132.The original amendments to the Petition were made pursuant to an Order dated 7 May 2021 and primarily raise a case in relation to the entry into administration of the Companies. The amendments were made primarily to remove allegations of unfair prejudice from the points of reply into the original petition.133.In brief the allegations of unfair prejudice in the Petition can be summarised as flowing from the following alleged breaches of duty:(1)Over a period prior to and including the removal of Lisa and Charlie, John, Charles and James misappropriated the proceeds of cash sales of stock belonging to LWC.(2)John and Charles wrongly and in breach of duty caused the dismissal of Lisa from her employment by the Company and her removal as a director of each of the Companies.(3)John and Charles caused the Companies to commission an “investigation” by the auditors targeted at Lisa only. The manner of the instruction was in breach of their duties to the Companies as they supplied false information to “set up Lisa” and they failed to cause the auditors to investigate their own conduct to hide the same. Further, in breach of their duties they did not report their own alleged breaches to Lisa and Nora who would then have ensured that it was investigated by the auditors. (4)Charles, John and James caused the Companies to bring the Recovery Proceedings against Lisa. The claims were false and known to be false by Charles and John. Further, they were brought not in the best interests of the Companies but in John’s own interests to cause harm to Lisa. Part of the reason underlying the commencement and prosecution of the Recovery Proceedings was to bring improper pressure on Lisa to obtain her shares. The other directors are also in breach of duty in acquiescing in such conduct.(5)In May 2018, the employment of Charlie Pickering by LWC was terminated. This termination involved one or more breaches of duty by the directors as the dismissal was not decided upon bona fide in the best interests of the company and/or was for a collateral purpose of concealing on-going breaches of duty from Lisa. (6)Charles, John and James, in breach of their duties as directors, improperly took benefits from the Companies by way of causing LWC:(a) to discharge their personal expenses and liabilities; (b) to spend sums on their personal hobbies; (c) to provide John with more than one luxury car at a time. By way of proposed re-amendment, the matters already being set out within the points of reply, the following matters, some of which overlap with or repeat in more detail the matters referred to in (a) to (c) above are also relied upon: (d) causing John’s wife, Lorraine, to receive excessive remuneration, not justified by any work that she carried out; (e) providing two luxury cars at a time for John’s use; (f) providing the benefit of racehorses, show jumpers and associated grooms, vet bills, horsebox services, race sponsorship, stabling, livery and training costs and other expenses; (g) the employment of grooms, with such expenditure being wrongly accounted for as “research and development”; (h) payment of child support agency payments in respect of one or more of John’s children; (i) payments by LWC to James for investment in his property business (especially by way of 4 cheques between October 2016 and January 2017). The above matters pre-date and post-date the rift in 2015. In an Agreed Case Summary for Trial, it is said that, as regards John, the relevant benefits also amount to a disguised dividend or unlawful return of capital.(7)In respect of financial years after that ending 31 October 2015, the Relevant Respondents failed to cause Portbond to pay dividends (and so far as necessary LWC to pay dividends) whilst at the same time they continued to take benefits from the Companies. 134.As regards the administration and connected pre-pack sale, the allegation of unfair prejudice, so far as I understand it, was as follows:(1)The administrations of the Companies were a “device” 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. Put another way, the Relevant Respondents placed the Companies into administration in order to achieve a pre-pack sale to Remet Processing of the Companies’ businesses and assets so that they can continue to benefit from the businesses while the Petitioner was excluded from the business entirely (see paragraphs 34B and 34J, 34K of the Amended Petition).(2)Further, any financial difficulty that the Companies experienced was caused by the Relevant Respondents’ misconduct and mismanagement (see paragraph 34D). It was not clear to me from the Petition whether this was asserted to be a separate free-standing ground of unfair prejudice, namely that misconduct and mismanagement had caused the insolvencies and administrations or whether it was said that misconduct and mismanagement had been effected with the purpose of bringing about the administrations so as to achieve the overall “aim” referred to in (1).135.Further amendments were sought to be made to the Petition during the trial and at the time of closing submissions. The draft re-amended petition put before me at the time of closing submissions and which was then the subject of an oral application to re-amend involved the following.136.First, various “tidying up” amendments. So far as concerns proposed amendments to paragraphs (I cite the paragraph numbers in the proposed re-amended petition) 5B, 27, 33B, 33E, 33H, 33H (including its sub-paragraphs), 33J, 33K and 33M, these are, in my assessment, tidying up matters. Amendments causes no prejudice to the Relevant Respondents and I give permission for them to be made. 137.Secondly, a series of proposed amendments which I will consider in connection with my consideration of the issues in question. They are:(1)amendments to provide further examples of alleged misapplication of funds for the benefit of the Relevant Respondents and/or their partners: see paragraph 27A;(2)an amendment to bring in an allegation that, at the time of the Companies entering administration, stock with a value of £1.54 million was removed from the Companies by or with the permission of the Relevant Respondents, without any proper accounting to the Companies and without the Companies receiving consideration for the same (paragraph 33F);(3)an amendment to bring in an allegation that John had misappropriated plant and machinery belonging to the Companies in breach of duty and that he used the same as part consideration for shares in Remet Processing (paragraph 33I);(4)an allegation that in breach of duty the Relevant Respondents did not consider in good faith that the appointment of administrators 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. Rather it was made to advance their personal ends of excluding the Petitioner from any enjoyment in the Companies’ businesses and assets as thereafter owned by Remet Processing (paragraph 33L).138.I deal with those proposed amendments later in this judgment.139.It was common ground that the most important allegations (which I take it to mean are the most serious and significant if made out) are those which Lisa introduced in amending the petition, and particularly with regard to the administrations of the Companies.