[2025] EWHC 2294 (Ch)

Background

The Applicant is a well-known litigation and claims acquisition company.

The Company was incorporated on 11 September 2012. It was granted an ABS (Alternative Business Structure) licence in July 2013 and traded in the provision of legal services, predominantly criminal legal aid work.

The Respondent was at all material times a director and CEO of the Company, earning an annual salary of £200,000 gross from the Company, the equivalent of £16,666 gross per month. He has been involved in the provision of legal services for over 40 years. Until February of this year, he was an SRA approved manager and held a Bar Standards Board Licence. From about January 2019, he was also sole shareholder of the Company. On the evidence which I have heard and read, it is clear (and I so find) that at all material times the Respondent took the lead role in the Company and was its directing mind.

In March 2016, the Company acquired the practice of Kaim Todner Solicitors Limited (‘KTS’). The principal of that practice was Karen Todner. By his evidence the Respondent maintained that, after the acquisition, the Company discovered that KTS had numerous undisclosed liabilities (which as successor practice the Company then had to meet) and that the work in progress of KTS had been overstated, factors which he maintained caused serious financial issues for the Company. Ms Todner has always denied any wrongdoing, however, and these contested issues form no part of the issues before me to determine. Accordingly I make no finding on whether or not KTS had undisclosed liabilities and overstated WIP at the time of its acquisition by the Company. Ms Todner was not a party to (and did not give evidence in) these proceedings and the cause of the Company’s insolvency is in any event not an issue before me to determine. For present purposes (of simply setting out in broadly chronological order the background to this application) it suffices to state that following the Company’s acquisition of KTS, the Company suffered serious cashflow difficulties.

To help with the Company’s cashflow difficulties, the Respondent loaned it the sum of £75,000. Contractual interest on that loan was payable at 8% per annum.

In September 2017, Mr Andrew Tinkler became a major investor in the Company’s business, investing sums totalling £2.9m. Mr Tinkler was a person of significant personal wealth, involved in several large multi-national companies throughout the United Kingdom and Europe. As a matter of transactional mechanics, Mr Tinkler’s investments in the Company were provided indirectly, via the Respondent, as the Respondent had SRA approval.

Despite such assistance, by 2018, the Company had serious cash flow difficulties. These led to it accruing significant Crown debts, principally PAYE/NIC, totalling £833,379. HMRC was threatening to enforce the debt.

In or around August 2018, Mr Tinkler recommended that the Respondent seek advice from Mr Robert Adamson of AW. AW were already instructed by Mr Tinkler on other projects. Mr Tinkler knew Mr Adamson and met with him regularly.

In August 2018, the Respondent sought insolvency advice on behalf of the Company from Mr Adamson. AW was initially retained by the Company to undertake a review of the Company’s affairs with a view to exploring (inter alia) the feasibility of proposing a CVA to its creditors. By late September 2018 it had been concluded that a CVA would be the best way forward.

The Company agreed two engagement letters with AW. The initial engagement letter of 24 August 2018 stated that the AW engagement team would be led by Mr Adamson. The second, dated 27 September 2018, enlisted AW’s services in preparation for a CVA and stated that Mr Adamson would lead the AW team, assisted by Ms Heather Bamforth.

Over the period August 2018 to December 2018, the Respondent had a number of meetings with Mr Adamson. These took place at nearby hotels and were usually attended by the Respondent, Mr Richard Botting, (a chartered accountant of 32 years’ standing who was the Company’s CFO), and Mr Adamson and Ms Bamforth of AW.

It was at one of these meetings, on 20 December 2018, that the issue of the Respondent’s director’s loan was discussed. The Respondent maintains that it was at that meeting that Mr Adamson first raised the possibility of excluding the Respondent’s director’s loan from the proposed CVA and of the director’s loan being repaid to the Respondent on a monthly basis at a rate consistent with the monthly salary he usually received in place of salary, as a means of saving the Company the additional PAYE and NIC liabilities which it would ordinarily have to pay on the Respondent’s salary.

The Company’s CFO, Mr Botting, took notes at the meeting of 20 December 2018. The attendance notes state, inter alia, as follows (with emphasis added):

‘Rob still to advise (from Jim Meakin) re tax issues

-corporation tax for KT (£36k)

-write off/write back of Andrew’s loan

In addition Andrew’s tax position re £600k (loan premium or share premium?)

HMRC need to receive some form of proposal tomorrow (21/12/18)

If Andrew Tinkler’s £600k not included he has less than 75% (of HMRC + AT liabilities) but more than 75% if it is included*

Creditors to be included? Need to have good reason for non-inclusion

-All chambers and disbursements not to be included (when paid for by LAA/HMCTS)

-Mazars – general consensus is to include

*Trevor [the Respondent] can / can not be included depending upon argument

-included – [part] of bank covenant

-not included – paid instead of payroll’

On 25 January 2019, the Company’s directors filed a CVA proposal at Companies House. This proposed a trading CVA, with monthly contributions of £2,400 per month from trading profits over a period of 18 months. In addition, any damages recovered from proceedings which by then had been instigated by the Company against a number of individuals (‘the Proceedings’) net of costs were to be paid into the Arrangement.

The CVA proposal was signed by the Respondent and his co-director, Jason Lartey, with a statement of truth. The statement of affairs included within the proposal showed an estimated deficiency to creditors of £3,842,130.

In the definition section at paragraph 2.1 of the proposal, ‘Excluded Creditors’ were defined as:

‘an Unsecured Creditor, whose debt has arisen through their instruction by KTS and relates to professional fees for which payment has been requested from the Legal Services Commission’.

‘Unsecured Creditors’ were defined in the proposal as:

‘any person other than a Secured Creditor and a Preferential Creditor who has or claims to have any claim against the Company arising out of or having its origin in any matter occurring prior to the Effective Date or arising out of any transaction, act or omission of the Company or any person on or before the Effective Date whether the claim may be present, future or contingent or prospective or whether liquidated or for damages and whether in contract or tort howsoever arising’.

Paragraph 3.4 of the proposal provided:

‘This Arrangement is in full and final settlement of all claims by creditors against the Company, with the exception of the Excluded Creditors. The Excluded Creditors are not included as pursuant to the Solicitors Accounts Rules 2011 payments received from the Legal Services Commission in respect of unpaid Professional Fees relating to a client matter must be treated as client money. Any breach incurs a duty to remedy, which is personal to the Director and must be remedied in full and in the circumstances, will not form part of the Unsecured Creditors for the purposes of the Company Voluntary Arrangement.’

The Respondent was listed as a creditor of the Company in respect of his director’s loan to the Company. In the statement of affairs forming part of the proposal, his director’s loan was stated to stand at £97,445 plus ongoing statutory interest at 8%.

Paragraph 15.1 of the proposal provided that the Respondent’s claim in respect of his director’s loan was to be ‘excluded from the Arrangement, to assist with costs savings to the Company.’

Paragraph 33 of the proposal provided that:

‘The Supervisor shall observe the requirements of Rule 2.41 [IR 2016] with regard to the records kept by them, and records to be issued from time to time to the various persons set out in that Rule.’

The CVA proposal was not accepted in its original form, although no changes were made to Paragraph 15.1 of the proposal. In the run-up to the meeting of creditors, Mr Adamson had been confident that Mr Tinkler (who had lodged a proof for £2.9m) carried 75% or more of the voting power, but in the event, Mr Tinkler’s proof was rejected. The reason for this (in very broad terms) was that following a last-minute review by AW’s lawyers of the underlying transactional documentation said to support Mr Tinkler’s proof, AW’s lawyers advised that Mr Tinkler had invested money into the Company indirectly, via the Respondent (who had SRA approval), rather than directly, and so could not vote. No-one had been prepared for this development.

The result was that HMRC’s vote had far more sway on the day than anticipated. HMRC insisted on significant modifications which at the time the Respondent felt he had no option but to accept.

The Company’s creditors approved the CVA with modifications on 22 February 2019. Mr Adamson and Mr Kienlen of AW were appointed as supervisors.

The modified CVA as approved was a trading CVA which provided for monthly payments of £4000 into the arrangement over a period of 5 years. This was in marked contrast to the original proposal, which provided for monthly contributions of £2400 over a period of 18 months. HMRC also insisted on a modification which provided that the CVA could not be treated as successfully concluded unless all unsecured creditors had received a minimum of 80 pence in the pound.

The Respondent was shocked by these developments and pressed Mr Adamson for a ‘post-mortem’ meeting shortly after the creditors’ decision procedure. He says that it was at that ‘post-mortem’ meeting, which took place in late February 2019 following the Company’s entry into the CVA, that Mr Adamson again raised the issue of the salary/loan swap arrangement mentioned in the earlier pre-CVA meeting on 20 December 2018. He says that by the time of the post-mortem meeting, Mr Adamson’s firm advice was that the salary/loan swap arrangement now had to be put in place, in order to save the Company the additional PAYE/NIC which it would otherwise have to pay in respect of the Respondent’s salary if he remained on the payroll. The Respondent says that Mr Adamson also told him not to come off the payroll immediately but instead to take £10 in salary in March, to trigger a tax rebate; and thereafter to come off the payroll and put the salary/loan swap arrangement in place.

The Respondent says that he followed that advice, taking only £10 in salary in March 2019 and then coming off the payroll completely from April 2019 onwards.

The Respondent’s co-director (who was not owed any money by the Company by way of director’s loan) remained on the payroll and continued to be paid his salary at all material times, as did the Company’s other employees.

It was common ground that between 25 April 2019 and 18 November 2019, the Company made 8 payments to the Respondent totalling £101,000 (‘the Payments’). The Payments comprised the sum of £20,000 on 25 April 2019, £20,000 on 3 June 2019, £10,000 on 26 July 2019, £10,000 on 23 August 2019, £10,000 on 7 October 2019, £10,000 on 4 November 2019, £11,000 on 18 November 2019 and £10,000 on 2 December 2019.

On 17 December 2019, the CVA was terminated due to the Company’s failure to meet the monthly contributions promised under the CVA proposal.

In the run-up to its formal termination, Mr Adamson wrote off approximately £35,000 in work in progress/unpaid fees. Mr Adamson also explored possible next steps with the Respondent. Initially a CVL was discussed, but ultimately (following service of a statutory demand on the Company) an administration was decided upon.

On 8 December 2019 (prior to termination of the CVA on 17 December 2019), Mr Adamson asked the Respondent to transfer the Company’s cash funds, which at that stage stood at approximately £77,000, to AW. The Respondent has produced in evidence contemporaneous text messages exchanged with Mr Adamson on Sunday 8 December 2019 which support his account of this request being made.

The cash funds of c.£77,000 held by the Company at that time included legal aid monies which had to be applied in payment of given disbursements. The Respondent maintains that he sought confirmation from Mr Adamson that any funds which the Company sent to AW at that stage (December 2019) would be ring-fenced to pay any legal aid disbursements. His evidence was that Mr Adamson confirmed to him by telephone in December 2019 that the funds sent across would be ring fenced as requested.

On 10 December 2019, the Company transferred funds totalling £77,000 to AW in accordance with Mr Adamson’s request (‘the Transferred Funds’).

By email from Ms Bamforth to the Respondent dated 11 December 2019 (timed at 15:10 and ‘cc’d’ to Mr Botting, Ann Probert of AW and Mr Adamson), Ms Bamforth wrote (with emphasis added):

‘Whilst writing, please can you let me have a copy of the latest remittance advice from the LAA as we need to understand what disbursements were included in that payment’.

The Respondent maintains that Ms Bamforth’s reference to ‘that payment’ in her email of 11 December 2019 was a reference to the payment of sums totalling c.£77,000 transferred by the Company to AW the previous day, on 10 December 2019.

On 3 January 2020, the Company entered administration via directors’ appointment, with Mr Adamson and Mr Kienlen appointed as joint administrators. Mr Adamson took the lead role in the administration until his sudden death on 23 June 2022. Mr Kienlen’s only involvement in the administration relates to the period after Mr Adamson’s death.

The Respondent later discovered that the Transferred Funds were not ring fenced for payment of legal aid disbursements but were instead applied in payment of fees charged by AW. This caused the SRA to open an investigation into the Respondent in respect of the non-payment of legal aid disbursements.

In the spring of 2020, access to the Company’s server (including the Company’s media and cloud account and in particular the Company email account) was terminated. This was a consequence of the Administrators failing to keep up payments for the service. This would later prove to be particularly detrimental to the Respondent, as all written communications between the Respondent as director of the Company and Mr Adamson were (in respect of the Respondent) facilitated via the Company’s email account.

On 23 June 2021 a meeting took place between Mr Adamson, Ms Jo Smith (then acting as solicitor for AW) and the Respondent by MS Teams. Mr Adamson took handwritten notes at the meeting. Those notes are in evidence. The Respondent contends that at that meeting, Ms Jo Smith asked why in April 2019, during the course of the CVA, the Respondent had come off the payroll and had drawn monies in repayment of his loan account instead. Mr Adamson’s notes of the meeting (which refer to the Respondent as ‘TH’ and Mr Adamson as ‘RDA’) record the following exchange (with emphasis added):

‘Repayment of directors loan – why did Mr Howarth come off the P.A.Y.E in April and start make [sic] payments to reduce his directors loan account. TH stated it was on the advice of RDA and Richard Botting had a note of the conversation and when did the conversation take place T.H. could not provide this information.'

Mr Adamson’s note stops abruptly there, although the Respondent maintains that the meeting continued for some time thereafter.

The Respondent’s evidence was that at no time after that meeting of 23 June 2021 prior to Mr Adamson’s death in June 2022 did Mr Adamson, or anyone else from AW, or Ms Jo Smith (who was at the meeting of 23 June 2021), or anyone else from AW’s solicitors, ever raise with him, in correspondence or otherwise, any questions regarding the salary/loan swap arrangement put in place in April 2019 or intimate a claim against him in respect of that arrangement. He says that he met Mr Adamson in person again at a meeting at Mr Tinkler’s offices in October 2021 and that no mention was made of the salary/loan swap arrangement at that meeting.

Shortly after Mr Adamson’s death in June 2022, the SRA contacted AW for further information regarding the Transferred Funds. By email dated 20 July 2022 from Ms Lindsay Barrowclough, a forensic investigation officer at the SRA, to Ms Ann Probert, a senior manager at AW, Ms Barrowclough wrote as follows:

‘Dear Ann

‘You will remember when I attended your offices last week, I asked whether Armstrong Watson would be willing to provide a witness statement in respect of payments made to them as part of the administration.

My investigation into the [Company] has been to review whether monies paid to the [Company] by the Legal Aid Agency (LAA) for professional disbursements incurred prior to the administration were paid out. The investigation has identified that monies from the LAA to the value of £57K were paid into the [Company’s] office account but were not paid out to the third parties to which they were owed.

I have had limited contact with Mr Howarth via email to try to obtain his comments on the findings of the investigation. In an email to me dated 17 November 2021, he wrote:

“I was instructed by Mr Robert Adamson to transfer to him £80,000 that was in the office account in order as he called [it] “to ring fence those funds”. Those funds should have been applied to the disbursements.”

In a further email dated 24 November 2021, he wrote:

“In respect of the payments to Armstrong Watson they were on the explicit instruction of Robert Adamson. That instruction specified the reason being “those funds would be ring fenced”.

I have reviewed the Nat West bank statements I hold for various accounts held for the [Company] and have identified a bill payment of £51,000.00 made from One Legal’s “tax account” to Armstrong Watson on 10 December 2019 (01-10-01-65381122) and the Nat West bank account statements for the [Company’s] main office account (01-10-01- 65381114) recorded a bill payment to Armstrong Watson for £26,000 on the same date.

[£51,000 + £26,000=£77,000].

I presume these are the payments to which Mr Howarth is referring as I have been unable to find any other around the time the [Company] went into administration. In order for me to try to draft a statement for you to consider with regard to this issue, would you be able to provide me with some further information as follows:

The reason for those payments being made to Armstrong Watson;

Whether those monies have been “ring fenced” as stated by Mr Howarth, and if so, what they have been ring fenced for;

Whether those monies have been used to make payments as part of the administration to date and if so, what they have been used for.

If you have any documentary evidence which could assist me in verifying Mr Howarth’s statement in respect of those monies and the instructions of Mr Adamson. I am obviously aware that Mr Adamson is now sadly deceased so am not sure whether you have any access to records of communications between him and Mr Howarth. (I did ask Mr Howarth if he was able to provide anything to evidence Mr Adamson’s request, but he said he was unable to do so as he did not have access to the One Legal server).

Many thanks for your assistance. I enclose a copy of Mr Howarth’s email of 17 November 2021 in which he referred to the payment, for your information.’

By email dated 21 July 2022, Ms Probert of AW responded to Ms Barraclough, copying in Mr Kienlen, as follows:

‘Lindsey,

Thank you for your email and providing details of your investigation to me.

Following our discussion last week, I discussed your query in relation to whether a witness statement could be provided by the Administrator, Mike Kienlen, who is now in sole office and also the Administrator’s legal advisers, Knights Plc.

Unfortunately Mike Kienlen was not party to the communications between Rob [Adamson] and Mr Howarth and therefore would not be able to provide the witness statement you require.

I can confirm that the sum of £77,013.14 was transferred to the Armstrong Watson client account. Following the commencement of the Administration this was subsequently transferred into the Company’s Administration bank account so that it was held for the benefit of the creditors as a whole and to defray the costs of the Administration.

In addition unfortunately I do not have any documentary evidence in relation to Mr Howarth’s statement.

I have copied in my colleagues Liz and Whitney as I am on leave from today.

With kind regards

Ann’

No reference was made in Ms Probert’s email of 21 July 2022 to Ms Bamforth’s email of 11 December 2019 (see [43]-[44] above), or the chain of correspondence around that email.

A few months later, in October 2022, Mr Kienlen (as sole administrator of the Company) acting by his solicitor Ms Jo Smith intimated a claim against the Respondent in respect of the Payments.

The letter before claim dated 21 October 2022 sent by Ms Jo Smith on Mr Kienlen’s behalf stated that it was sent in accordance with the Practice Direction on Pre-Action Conduct and Protocols. The letter briefly summarised a proposed claim based on ss 238 and 239 IA 1986 in respect of the Payments but contrary to paragraph 6(c) of the practice direction did not enclose any key documents relating to the proposed claim.

The Respondent replied by letter dated 17 November 2022, stating inter alia as follows:

‘It is clear that you have not considered the notes of the meetings which took place with Mr Robert Adamson and Ms Heather Bamforth. The sums which you refer, were paid to me on the specific instruction of Mr Adamson.

Also present at the meetings was Mr Botting. I have contacted Mr Botting since receipt of your letter. Mr Botting confirmed that he has retained his contemporaneous notes of each meeting, specifically the instruction given by Mr Adamson.

It is for these reasons that CPR make it clear that the relevant documents should be disclosed.

Furthermore, had you bothered to provide a copy of the [Company’s] bank statements you will have noted that during this period I received no salary. It was on the specific instruction of Mr Adamson, that in order to save the Company the PAYE and N.I. that instead of me receiving my salary through payroll, that Mr Botting arranged my outstanding loan be discharged on a monthly basis.

Mr Adamson’s instructions were then followed.

I look forward to receiving your letter of apology.

Should your client still instruct that proceedings are to be issued, I confirm that the proceedings will be strenuously defended.

I also place your clients on notice that having failed to comply with CPR in order to obtain an unfair advantage in the failure to disclose the relevant documents, I will bring this communication to the attention of the court in support of any application for costs.’

By letter dated 23 November 2022, Ms Jo Smith replied, stating:

‘We note that you make reference to meetings which took place with yourself, Mr Adamson and Mr Botting and you assert that Mr Adamson instructed you to make the payments. Please can you provide all supporting evidence of the meetings in your possession and the contemporaneous notes taken by Mr Botting.’

Ms Jo Smith repeated this request by letter dated 15 December 2022, demanding a response in 7 days.

On 12 January 2023, Mr Kienlen and the Company assigned all rights of action regarding the Respondent to the Applicant.

By letter dated 9 February 2023, Ms Jo Smith (still at that stage of Knights solicitors) wrote to the Respondent confirming that she now acted for the Applicant. The letter again described itself as a letter before claim drafted in accordance with the practice direction but did not enclose any documents.

This second letter before claim related to the Payments, but this time was not based upon ss238 and 239 but rather ss171-175 of the Companies Act 2006. The letter claimed that the transactions could not be said to have been in the best interests of the Company and that the Respondent had benefited to the detriment of the creditors. The letter demanded copies of any documentation relied upon by the Respondent within 30 days.

At the time the second letter before claim was sent, on behalf of the Applicant, Ms Jo Smith had not withdrawn her first letter before claim, sent on behalf of Mr Kienlen.

The Respondent replied by letter dated 10 February 2023. Insofar as material, his letter (which includes square brackets in the original) read as follows:

‘Re: Client 1. Messrs Armstrong Watson. Client 2 Manolete Partners Plc

I write further to your [client 1] purported letter before action dated 21 October 2022, and to my response 17 November 2022. It can be seen in compliance with the pre-action protocol, I requested copies of Mr Adamson’s and Ms Bamforth’s meeting notes, in respect of all the meetings they attended, [and charged], for their attendance.

I received no notes, or explanation of your clients failure, to provide copies of the notes with the purported letter before action.

In addition, I directed you to the company’s payroll for the periods to which you refer.

I also refer to your letter sent on behalf of [client 1] 23 November 2022 in which you wrote:

“can you provide all supporting evidence of the meetings in your possession and the contemporaneous notes taken by Mr Botting”.

It can be seen from my letter, the notes of the meetings were taken by Mr Botting, I am unaware that I am required to provide copies of material that is not in my possession, or under my control. Furthermore, I am also unaware that having received a purported letter before action, that the burden is reversed.

I refer to your letter dated 9 February 2023 sent on behalf of [Client 2].

There cannot be a clearer example of a “conflict of interest”. I therefore should be grateful if you would ensure your compliance partner is on notice of this correspondence.

I refer to the scandalous statement you make in this letter:

“In the circumstances, by authorising the Company to make the payments totalling £101,000 to yourself, was in breach of your duties as a director of the Company. The transaction cannot be said to have been in the best interests of the Company. Indeed you [benefited] to the detriment of the creditors .”

Firstly, I did not authorise the Company. Mr Botting, acting on the instruction of Mr Adamson, arranged for the payments to be made to me in place of salary payments. It was Mr Adamson’s position, that contrary to your assertion, this was in the “best interests of the Company”. Mr Adamson explained that in not paying salary the Company would save the P.A.Y.E and N.I.

I cannot make my position any clearer.

In the event your client intends to proceed with this matter, I confirm that I intend to rely upon this and all previous correspondence, in support of my claim for costs.’

By letter dated 3 March 2023, Ms Smith replied as follows:

‘We refer to the above matter and write in response to your letter dated 10 February 2023.

Our client has fully particularised its claim against you for the payments you received prior to the Company going into administration in the sum of £101,000 (Payments).

You state that you attended meetings with Robert Adamson and Heather Bamforth, both [formerly] of Armstrong Watson and Richard Botting. You state that you were advised by Mr Adamson at those meetings to make the Payments.

Given that you rely on those conversations at those meetings and you have referred to contemporaneous notes [taken] by Richard Botting it is for you to provide copies of the notes.

Please also confirm the dates of the meeting [sic] and we will ask Armstrong Watson to check their files accordingly.

In our letter dated 9 February 2023 we explained that we now act for Manolete in relation to this matter…

In the circumstances we no longer act for the Administrator in connection with the Claims and our letter dated 21 October 2022 can be disregarded.

We look forward to receiving the following from you within 14 days:

. The contemporaneous notes of Richard Botting, and

. Confirmation of the dates of the meetings to which you refer.

In the alternative you can make payment of the sum of £101,000…

We look forward to hearing from you.’

By letter of reply dated 15 March 2023, the Respondent noted the unconventional withdrawal of a letter before claim for one client when writing on behalf of another client and again alleged that Ms Jo Smith was in a position of conflict. He also expressed concerns (a) that no evidence had been provided with the first letter before claim contrary to the practice direction (b) that copies of the Company’s bank statements, which by his letter of 17 November 2022 he had stated would confirm that he received no salary during the period April to December 2019, had not been provided and (c) that no copies of Mr Adamson’s and Ms Bamforth’s notes of their meetings with the Respondent and Mr Botting had been provided.

The Respondent went on by his letter of 15 March 2023:

‘I am more than content to provide you with details of the meetings with Mr Adamson and Ms Bamforth. In order to assist I should be grateful if you would provide copies of Messrs Armstrong Watson’s invoices with the narratives confirming the dates, which will assist my investigation.

Furthermore, I should be grateful to receive details of the access to the One Legal server.’

By letter dated 28 April 2023, Ms Smith responded on behalf of the Applicant. The letter did not provide any of the documentation requested by the Respondent or access to the Company’s server. Insofar as material, the letter read as follows:

‘You state that you attended meetings with Robert Adamson and Heather Bamforth, both [formerly] of Armstrong Watson and Richard Botting. You state that you were advised by Mr Adamson at those meetings to make the Payments.

Given that you rely on those conversations at those meetings and you have referred to contemporaneous notes taken by Richard Botting it is for you to provide copies of the notes.

Please also confirm the dates of the meeting and we will ask Armstrong Watson to check their files accordingly.

In our letter dated 9 February 2023, we explained that we now act for Manolete in relation to this matter. …

We have not acted for Manolete and the Administrator at the same time in relation to the Claims against you and therefore no conflict has arisen…

You have requested copies of invoices to assist you. We do not consider that any invoices raised by the Administrator will provide the dates of the meetings, but we will ask the Administrator to confirm…

We believe that the Administrator no longer has access to the server of the Company, but we will confirm that to you.

In your letter dated 17 November 2022 you did not request copies of the bank statement or the notes of the meetings – you simply made reference to them. If you require copies of the bank statements these can be provided.

In our letter dated 3 March we asked you to provide the following:

. The contemporaneous notes of Richard Botting and

. Confirmation of the dates of the meetings to which you refer.

You have failed to do so. You are relying on the notes of the meeting in support of your position and as such it is your responsibility to provide the notes….

..

In the event that the documentation referred to above is not received within 7 days we will advise our client passed the papers to Counsel for proceedings to be drafted.’

By letter dated 12 May 2023, the Respondent again pressed for relevant documents to be provided, including copies of the meeting notes made by Mr Adamson. The letter also reminded Ms Smith that he had requested access to the One Legal server, to assist him in his search for relevant meeting dates and other information, and that she had initially responded ‘we believe that the Administrator no longer has access to the server of the Company, but we will confirm’, yet had not gone on to provide any such confirmation. The letter ended by stating that the Respondent did not propose to litigate the matter any further in correspondence and stated that should the Applicant wish to issue proceedings, all correspondence and the failings to comply with CPR would be brought to the attention of the court.

On 31 May 2023 the Respondent attended a meeting at AW to discuss a potential claim against the SRA. This meeting was attended by the Respondent, Ms Smith, Mr Kienlen and Ann Probert of AW.

There then appears to have been a period of silence in correspondence on the part of Ms Smith’s firm, then Knights solicitors. That silence was broken by letter from Ms Smith to the Respondent dated 25 September 2023, enclosing draft particulars of claim together with documents described as ‘Exhibit PO1’ and ‘Exhibit PO2’. The draft particulars of claim (relating to the Payments) were based on a range of claims, including alleged breaches of directors’ duties, alleged breaches of the CVA, s 238 and s 239, and unlawful return of capital under CA 2006. Exhibit PO1 comprised simply the CVA proposal with its various appendices. Exhibit PO2 comprised simply the assignment agreement between the Company, Mr Kienlen and Manolete. None of the documents flagged by the Respondent in earlier correspondence were provided. The letter warned that unless a satisfactory offer of settlement was received within 14 days, proceedings would be issued.

By letter dated 26 September 2023, the Respondent replied, complaining of the lack of disclosure of documents previously requested. The letter provided inter alia as follows (with emphasis added):

‘I also draw your attention to the following [going on to quote from Ms Smith’s earlier correspondence]:

“You have requested copies of invoices to assist you. We do not consider that any invoices raised by the Administrator will provide the dates of the meetings, but we will ask the Administrator to confirm”.

No confirmation was provided.

You further wrote-

“We believe that the Administrator no longer has access to the server of the Company, but we will confirm that to you”.

No confirmation was ever received.

You have previously requested a copy of Mr Botting’s contemporaneous note.

I have now had a meeting with Mr Botting who handed me a copy of his contemporaneous note which I now serve.

I draw [your] attention to Trevor- paid instead of payroll. This I am informed was written in respect of the discussion of how I received repayment of my directors loan.

This contemporaneous note taken at a meeting with Mr Adamson and recorded Mr Adamson’s instruction.

In addition, you will be aware that on a number of occasions I have requested copies of Mr Adamson’s notes of the many meetings. No such notes have ever been served.

I have now spoken to Heather Bamforth who always accompanied Robert Adamson. She has confirmed to me that notes were taken at every meeting.

I do not intend to repeat the failure to comply with CPR and the disclosure provisions. At no time has your client provided disclosure of the documents that they seek to rely upon. On the contrary, I have requested on numerous occasions, copies of the payroll for each of the months which your client alleges a fraudulent payment was made to me.

The requests remain unanswered….’

Enclosed with the letter of 26 September 2023 was a copy of Mr Botting’s attendance note of the meeting of 20 December 2018.

I was not taken to any response to the Respondent’s letter of 26 September 2023 in the bundle.

Behind the scenes, however, it would appear that AW was reviewing its files. AW’s detailed WIP summary contains the following entries logged by Ms Ann Probert, senior manager for AW:

28/9/2023: ‘Checking files for evidence docs re Trevor Howarth claims’

4/10/2023: ‘One Legal – copies of Rob’s notes from various meetings. [email protected]. Notes to Jo Smith’.

In the event, following a pause of several months and a change of solicitors on the Applicant’s part, the current proceedings were issued by way of an Insolvency Act application notice on 30 January 2024, based simply on sections 238 and 239 IA 1986. By this stage the Applicant had changed solicitors, moving from Knights to Schofield Sweeney. Ms Jo Smith moved to Schofield Sweeney as well and continues to act for the Applicant.

Whilst the run of correspondence included in the bundles is not complete, it is clear that the Respondent continued to press thereafter for access to contemporary notes, narrative and records.

In April 2024, the Respondent issued a strike out application on the grounds that the claim was unfair and an abuse of process, contending that it was not possible for him to have a fair trial given the absence of and inability to cross-examine Mr Adamson, the lack of access to the Company’s server, the absence of contemporary notes, narrative and records, the procedure engaged by the Applicant in pursuing the claim (which avoided formal disclosure); and the substantial delay in bringing the proceedings. The Respondent was briefly represented by Counsel for the purposes of the strike out application.

Pending the hearing of his strike out application, the Respondent continued to press for disclosure of documents. His requests included a request by email dated 24 May 2024 to Ms Jo Smith (by then of Schofield Sweeney). That email, together with the response to it dated 28 May 2024, do not appear to be included in the bundle. They are however referred to in a further letter dated 31 May 2024 from the Respondent to Ms Smith, the material parts of which provide as follows (with emphasis added):

‘I refer to my email dated 24 May 2024 timed 1:32pm in which I set out my further request for disclosure. I also refer to your letter in response dated 28 May 2024.

It is clear that you are conflating two distinct separate issues. It is your suggestion that I await your client serving the evidence in response to then see if the disclosure requested is provided.

You are aware from the correspondence that has passed between us over the years since your first Letter of Claim, which I was later instructed by you to disregard, that I have been requesting disclosure, and the requests have simply been ignored.

It is therefore unrealistic to await as you suggest, to then find that disclosure is not provided, and an application is required at that time.

In the circumstances I should be grateful to receive disclosure within the next 7 days of the following;

Copies of all documents/information that Michael Christian Kienlen refers to in paragraph 3 of his witness statement dated 24 January 2024, that was provided to him by your firm.

Copies of all meeting notes of Robert Adamson and Heather Bamforth including text messages throughout the period 10 August 2018 until the death of Robert Adamson in respect of One Legal and/or Trevor Howarth.

Copies of the Armstrong Watson invoice along with the narrative which Robert Adamson stated he had written off in the sum of £35,000.

Copies of the One Legal Armstrong Watson Client Account Ledger.

A copy of the Teams video and meeting notes of Robert Adamson and Ms Smith of the meeting dated 23 June 2021, and

A copy of the payroll records of One Legal in respect of Trevor Howarth.’

Ms Smith responded by letter dated 2 July 2024. In so far as material, her responses were as follows (with emphasis added):

‘1. In his witness statement at paragraph 3 Mr Kienlen states “My knowledge of the matters to which I depose is derived either from my own knowledge gained during my conduct of the Company’s affairs as one of the joint administrators, my consideration of the books and records of the Company, and publicly available information in relation to the Company, or from information supplied to me by my current solicitors, Schofield Sweeney (who are also instructed by the Claimant) or my former solicitors Knights Professional Services Limited (“Knights”) (who were also instructed by the Claimant), or from the Claimant. Accordingly, I am able to confirm that the contents of this Witness Statement are true to the best of my knowledge, information and belief.” Information supplied to Mr Kienlen by this firm, Knights or Keebles is covered by legal privilege and as such we are unable to provide that.

You request copies of all meeting notes of Robert Adamson and Heather Bamforth. This request is too wide. We are prepared to use our best endeavours to obtain copies of any notes taken by Heather Bamforth and Robert Adamson in the meetings held on 11 and 20 December 2018 which are in the possession of the Administrator, by requesting the Administrator to search for and provide copies of the same. These are the meetings referred to in the evidence. We can confirm that the Administrator does not have access to the text messages sent by Robert Adamson.

We confirm that we will request and provide copies of the invoices raised by Armstrong Watson to the Company and confirmation of any time which was written off.

We confirm that we will request and provide a copy of the One Legal client account ledger from Armstrong Watson.

The MS teams meeting on 23 June 2021 was not recorded. The meeting notes taken by the writer are covered by legal privilege and therefore we are unable to disclose those.

We confirm that we will request and provide copies of the payroll records of One Legal relating to you which are in the possession of the Administrator’.

By letter dated 2 July 2024, the Respondent replied inter alia as follows (with emphasis added):

‘2. It is not accepted that the request is too wide. It can be seen from my witness statement the first meeting with Robert Adamson was 15 August 2018. The second meeting being 21 August 2018. There were numerous meetings in which Robert Adamson provided advice and which that advice was acted upon without question. It is therefore important, that in order to participate in a fair trial, I can demonstrate the advice being provided throughout the period, not simply restricted to two meetings. Armstrong Watson will have time records of those meetings, which they used to bill the attendances. They therefore must have the meeting notes to support such time records….

I therefore should be grateful if you would review your position on this matter and confirm that [ALL] meeting notes will be provided.

To be clear, I request a copy of the invoice in the sum of £35,000 along with the narrative which Robert Adamson stated he had written off, in addition to all other invoices with narratives.

No comment

I accept that the writer claims legal privilege on the notes taken. However, my request is for the meeting notes of Robert Adamson taken during my interview on the Teams Call. There is no privilege that can be attached to those.

No comment.

In addition, I should be grateful for a copy of the meeting notes of Robert Adamson of the meeting that took place in the offices of Andrew Tinkler in Carlisle in around October 2021. Present at that meeting was Andrew Tinkler, Robert Adamson and myself. Robert Adamson made notes of the meeting in my presence. I have been reminded of this meeting by Andrew Tinkler, in which [at] no point when discussing One Legal, and the events prior and post CVA relating to Mr Tinkler investments, and the closure of One Legal, did Robert Adamson raise any issue with the directors loan….

The requests I have made for disclosure are proportionate and are all documents within the control of Armstrong Watson. I therefore look forward to receiving full disclosure.

By letter dated 17 July 2024, Ms Smith replied into alia as follows (with emphasis added):

‘2. Our client’s position is unchanged. This request is too wide. We are prepared to use our best endeavours to obtain copies of any notes taken by Heather Bamforth and Robert Adamson in the meetings held on 11 and 20 December 2018 which are in the possession of the Administrator, by requesting the Administrator to search for and provide copies of the same. These are the meetings referred to in the evidence.

We have already confirmed that we will request and provide copies of the invoices raised by Armstrong Watson to the Company and confirmation of any time which was written off. We will ask Armstrong Watson to provide copies of all invoices.

No response required.

We confirm that we will request that Armstrong Watson search for and provide copies of the notes of the MS teams meeting on 23 June 2021.

No response required, and

We confirm that we will request that Armstrong Watson search for and provide copies of the notes of the meeting held in or around October 2021 in Carlisle’.

Some, but not all of the documentation which Ms Smith had agreed by her letter dated 17 July 2024 to provide was thereafter provided under cover of a letter of 31 July 2024. The letter of 31 July 2024 is not included in the bundle but is referenced in later correspondence. The documents provided under cover of the letter of 31 July 2024 included, at pages 50-53 of a paginated bundle enclosed with that letter, the handwritten notes of Mr Adamson relating to the meeting on 23 June 2021.

By letter to Ms Smith dated 5 August 2024, the Respondent acknowledged receipt of the letter of 31 July 2024 and asked:

‘For the avoidance of doubt, can your client confirm that throughout the entire period from the date of the first meeting 15 August 2018, throughout all the various meetings thereafter, these are the only notes of Mr Adamson.’

By letter dated 12 August 2024, Ms Smith responded:

‘It is not the case that the notes at pages 50-53 are the only notes. As stated in paragraph 26 of the second witness statement of Michael Kienlen we asked for a search to be undertaken for any notes in relation to the meeting dates which are referred to in your evidence, namely 11 December 2018, 20 December 2018, 23 June 2021, and October 2021. The notes at pages 50-53 are the only notes for those specific dates.’

By letter dated 21 August 2024, the Respondent (inter alia) wrote:

‘I am grateful for your confirmation that the notes disclosed of Mr Adamson, are not the only notes. I respectfully remind you of your duty under CPR 31.6 and I have previously set out, and repeat, the notes I require disclosure ….

In the event, having confirmed that you have located “other notes of Mr Adamson” that your client still refuses to disclose the same, I will invite the Court to draw an adverse inference that those documents must undermine your client’s case. Hence the refusal to provide disclosure of the same.

In addition, your client’s failure to comply with its disclosure obligations under CPR will be drawn to the attention of the court.’

By email dated 27 August 2024 (again, not included in the bundle but referred to in other correspondence), Ms Smith confirmed that she was taking instructions.

By a chasing letter dated 7 October 2024, the Respondent reminded Ms Smith of the foregoing exchange and asked if she would provide the disclosure sought by his letter of 21 August 2024.

By letter dated 22 October 2024, Ms Smith enclosed some estate account ledgers from Armstrong Watson in relation to the CVA and administration of the Company. The letter also confirmed that Mr Kienlen was prepared to grant the Respondent access to view the Company’s (hard copy) books and records, which were said to be located in a storage unit, but only for a fee, which Ms Smith estimated would be in the region of £500. The letter inter alia continued:

‘3. You refer to CPR 31.6 which concern standard disclosure. For the avoidance of doubt, the Court has not ordered standard disclosure under CPR 31.6 in this case. Instead, and as you are fully aware, the Court’s Order dated 24 May 2024 provided for the parties to exhibit to their witness evidence any documents upon which they intend to rely.

Your request for documents set out at number paragraphs 1 to 4 of your letter is plainly too wide and impermissible… Our client has complied with its duty of disclosure under CPR 31.14 by providing copies of documents in its possession or control which are referred to in its witness evidence. Our client is concerned that your piecemeal request for disclosure are unnecessarily escalating costs and amount to nothing more than a fishing expedition.

As stated in our letter dated 12 August 2024, our client has provided you with copies of the notes of Mr Adamson in respect of the four meeting dates referred to in your evidence. The “adverse inference” you see you will be inviting the Court to draw is not accepted…’

After several chasing letters, some further documents, including invoices and time records (requested by the Respondent inter alia to chart the timeline of given meetings attended and work undertaken by Mr Adamson in relation to the CVA and subsequent administration) were thereafter provided under cover of a letter from Ms Smith dated 21 January 2025. The documents provided did not include any further meeting notes of Mr Adamson or Ms Bamforth.

At a hearing on 2 February 2025, Deputy ICCJ Schaffer dismissed the Respondent’s strike out application but granted him permission to bring an ‘additional claim’ against AW within these proceedings. Pursuant to that permission, the Respondent served an additional claim on AW on 17 February 2025.

By application dated 17 March 2025, AW challenged the order of Deputy ICCJ Schaffer dated 2 February 2025 order. By order dated 7 May 2025, Deputy ICCJ Passfield set aside the parts of the 2 February Order permitting the Respondent to bring an additional claim against AW in these proceedings and directed that the additional claim should thereafter continue as separate proceedings under CPR 7 and be transferred to the business list within the Chancery Division (‘the Part 7 claim’).

The SRA investigation into the Transferred Funds culminated in the Respondent receiving notice from the SRA on 19 February 2025 that he is disqualified from working in the legal profession. The reason for his disqualification was a failure to pay legal aid disbursements of c.£55,000 from the Transferred Funds. The Respondent told the court that as sole breadwinner for his family, this development has had devastating consequences for him.

The Part 7 claim remains pending in another court. The issues arising in that claim are not before me.