[2025] EWHC 2294 (Ch)

The Respondent

The Respondent’s written evidence contained timeline errors in certain respects. Paragraphs 47 and 57 of his first witness statement, for example, referred to Mr Botting’s contemporaneous attendance note of the meeting of 20 December 2018 and stated that it was at that meeting that Mr Adamson (variously) ‘suggested’ the loan/salary swap arrangement or ‘instructed’ the Respondent to put it in place. This conflating of events occurred in the second witness statement too; at paragraph 17 of the second witness statement, for example, the Respondent stated that it was at the meeting in December 2018 that Mr Adamson advised him to put in place the salary/loan swap arrangement and (by paragraphs 18 and 25) that Mr Adamson had ‘reiterated’ that advice, or ‘re-advised’ to the same effect, at a ‘post-mortem’ meeting following the Company’s entry into CVA. Similar conflating occurs in the third witness statement at paragraphs 5, 15-17, and 24-25.

The Respondent was also a little confused in his written evidence as to when the post-mortem meeting with Mr Adamson took place. In his third witness statement at paragraph 23, he said that it was on or about 29February 2019, but 2019 was not a leap year.

In my judgment these timeline errors are completely understandable when considered in context. No witness has perfect recollection of all material events. Events leading up to the meeting of creditors and the course that the CVA then took were a stressful time for the Respondent and Mr Botting and there were numerous meetings with Mr Adamson.

The Respondent and Mr Botting have had no access to the Company’s server since the spring of 2020 and so were without ready access to records (including emails) from which to chart out the timeline with greater precision. The Respondent’s requests for copies of the attendance notes of Mr Adamson and Ms Bamforth had not been complied with, save to the limited extent of the belated production of Mr Adamson’s hand-written note relating to the meeting on 23 June 2021.

These difficulties in accessing documentation relevant to the proceedings also serve to explain the difference between the Respondent’s account of the meeting he had with Mr Adamson and Ms Smith on 23 June 2021 in his first witness statement and his account of that meeting in his second witness statement. In the first statement he said that no questions had been raised about the salary/loan swap arrangement at that meeting. In the second he confirmed that a question had been raised.

As in any case, the recollection of a witness must be considered against the backdrop of available documentation. In this case the attendance note of Mr Adamson for the meeting of 23 June 2021 was only made available to the Respondent after he had prepared his first witness statement. On production of the attendance note (which was only produced at the Respondent’s request and was not exhibited to Mr Kienlen’s first, but rather his second, witness statement), it was clear that a question had been raised at that meeting regarding the fact that the Respondent had come off the PAYE payroll in April 2019 and had started receiving repayments in respect of his director’s loan instead. The attendance note also recorded the Respondent’s answer, which was that it was done on the advice of Mr Adamson. The Respondent’s memory having been prompted by sight of that attendance note, he very properly gave a corrected account of that meeting in his second witness statement.

Overall, I am satisfied that the Respondent’s written evidence was prepared honestly, to the best of his knowledge and recollection of material events.

In closing, Mr Arumugam argued that the Respondent was ‘evasive’ in oral testimony. I reject that contention. The Respondent was entirely transparent in his responses in cross examination. He readily accepted that he had conflated the timeline in his written evidence in certain respects and very properly corrected such errors in oral testimony. The corrections he volunteered made sense when considered in context and against the documentary evidence available.

The Respondent was refreshingly frank about the limits of his own knowledge and recollection on given issues. He accepted that he had no actual recollection of the meeting of 20 December 2018, for example, and that he was reliant on Mr Botting’s attendance note as to what was discussed at that meeting, explaining that there had been numerous meetings. When questioned on given figures and certain accounting related points, he made clear that such questions were better addressed to Mr Botting, as the chartered accountant tasked with running the finance department of the Company, which was an entirely reasonable response in context.

When questioned on matters which did fall within his knowledge and recollection, however, the Respondent answered freely and fully. Whilst some of his responses were a little argumentative, this was unsurprising given the range of questions that were being put. The Respondent was questioned at length in somewhat granular detail on the terms of AW’s two engagement letters with the Company, for example, in a line of questioning that at times appeared designed to establish that any advice given by Mr Adamson and/or AW was given to the Company and not to the Respondent personally; given the pendency of the Part 7 claim, the Respondent expressed understandable concerns that such questions had an alternative agenda, although Counsel maintained that this was not the case. At other points in the cross examination, it was put to the Respondent that he had taken advantage of the CVA route to ‘escape the liabilities’ of the Company, that he had caused the Company to ‘abuse’ the CVA process to avoid Crown debts, that paragraph 3.1 of the original CVA proposal was ‘pulling a fast one on HMRC’, that it was ‘[his] fault that the CVA went off the rails’, and that the loan/salary swap arrangement was variously ‘a way of cheating HMRC out of taxes due’, ‘avoiding tax’, and ‘disguised salary’. He was also pressed repeatedly on whether the original plan had been to repay Mr Tinkler in full whilst leaving HMRC with 19 pence in the pound. These unheralded and aggressive lines of questioning formed no part of the s238/239 case being brought. Mr Howarth unhesitatingly denied these allegations with some feeling, pointing out that he had been taking the advice of specialist insolvency practitioners for over four months (from August 2018) prior to the Company’s entry into a CVA. In my judgment it was entirely understandable in the circumstances that the Respondent felt the need to ‘push back’ at times. Overall, I am satisfied that he did his best in oral testimony to answer questions put to him truthfully and to the best of his knowledge and recollection. He was plainly an honest witness.