CR-2018-009110 - [2025] EWHC 2115 (Ch)

Mr O’Connell’s emails dated 28 March, 9 April, 11 April and 14 April 2025 are extraordinary. I note that towards the end of 2024 Mr O’Connell had had an extended period of sickness, and it may be legitimate to speculate that he was not fully recovered when he wrote them.

In the 28 March email, Mr O’Connell gave as one of “[a] few examples of BAT/BTI’s strategising, positioning and highly commercial approach” that Mr Lloyd had attempted to “blackmail” him. After Hogan Lovells responded to that statement identifying it as an accusation of blackmail and in response to a perceived invitation to weigh up “which of us has the best lawyers”, in the 9 April 2025 email, Mr O’Connell stated:

“That Kevin Lloyd raised the spectre in paragraph 68 that Hogan Lovells, a firm of solicitors, might have been accused of ‘attempted to blackmail the Administrators into agreeing to admit the BAT Proof for c. £20m-£25 million’ is ridiculous and I imagine that his compliance partner and indeed all his partners have gone berserk at him writing that. He will have to have reported to the Hogan Lovells partnership that he believes he and Hogan Lovells (as he was not there as a private citizen) have been accused of blackmail when he is not even a legal party to any of the relevant matters. What possible reason would Kevin Lloyd esq. have for blackmailing anyone?”.

Whatever the email is intended to mean, it is clearly a poor reflection on Mr O’Connell’s judgement. More recently, Mr O’Connell has maintained that Mr Lloyd “was trying to get me to act against my duties”; but he is no longer sure “whether blackmail was the correct word”. This approach is deeply concerning.

In his 14 April 2025 email, Mr O’Connell stated that he had been working with “[t]he HMRC civil fraud team” to investigate the discovery of the conflict problem by Mr Lloyd of Hogan Lovells (solicitors for the Applicants)he Company’s undeclared tax liabilities and suggested that BAT had been involved in tax avoidance schemes, may not properly have declared them to HMRC and might be guilty of “some type of a money laundering scheme as well”. I address the position surrounding this claim at 176-183 below. Suffice it to say here that it is difficult to avoid the conclusion that the Administrator’s primary objective in pursuing this point was to create negotiating leverage against BAT.

The e-mails also contain vituperative attacks on the Applicants, asserting that: (a) BAT is in “the business of selling deadly tobacco products to the public”; (b) BAT/BTI has had “multifaceted involvements” in “this massive environmental disaster since 1978”; (c) BAT wishes to pay “the least cleanup costs”; and (d) BAT is financially unviable, suggesting that Mr O’Connell has “major cause for concern about the financial viability of BAT group and the risks to [the Company], and its creditors, of BAT group holding on to its funds. The fact that President Donald Trump has never smoked, in my view, adds another very serious risk to the group’s current viability and future. It might only take a whim for Donald Trump to take against this deadly business.”

There is a curious point here about the rancour which Mr O’Connell seems to have developed towards BAT’s solicitors, Hogan Lovells, and in particular towards Mr Lloyd, who has had conduct of the various part of the litigation surrounding the Fox River claims for BAT since 2011. Mr O’Connell, when appointed, instructed as his advisors a small firm called KaurMaxwell. This is uncontroversial. The problems seem to have arisen when Mr O’Connell decided that he was going to instruct KaurMaxwell to conduct the Director Claims. It is easy to understand the angry frustration which must have been felt by BAT (and Hogan Lovells) when they discovered that Mr O’Connell intended to pay out of the Company’s assets the very substantial costs which would be involved in KaurMaxwell getting up to speed on an issue which Hogan Lovells and BAT were already on top of. This, combined with the low regard which BAT and Hogan Lovells had for the work which KaurMaxwell was providing in other areas, seems to have turned a dispute between principals into a dispute between principals and law firms. One of the mysteries of this case – and a mystery which I am neither able nor required to unravel – is the connection between Mr O’Connell and KaurMaxwell. I note in this regard that the Applicants also raise questions as to whether there are conflict of interests issues in relation to KaurMaxwell, since they do not appear to have properly identified and dealt with the Administrators’ conflict issue in respect of the Director Claims at the time that they first became apparent, and that they do not appear to have identified and investigated potential claims that the Company may have against the Administrators and their firm in relation to the conflict of interest issues identified above. However I do not think that I need to address these issues here.

Taken together, I think that the Applicants have shown that there are good grounds for them to suspect that the Administrators’ conduct of the Administration going forward will be affected by considerations other than those of the best interests of the creditors. I emphasise that this is absolutely not a finding of wrongdoing in the past, nor is it a finding that there is a likelihood of wrongdoing in the future. However, I think that the Administrators’ conduct has been sufficiently far outside what might ordinarily be expected as to justify the Applicant’s concerns. This takes me to the conclusion that, since the majority of creditors have legitimate concerns about the Administrators’ conduct of the administration, there is a good prima facie case that that Administrators should be replaced.