Claim No: BL-2022-001936 - [2025] EWHC 2280 (Ch)

The claims in this action relate to the alleged dishonest misappropriation by the first defendant, Mr Dewsall, between 2010-2018, of a net amount of approximately £12m belonging to the claimant, Gable Insurance AG (“GIAG”), a company which was placed into bankruptcy in November 2016 but which, at the time, was the largest insurance company in Liechtenstein.

The second defendant, Mr Hirschfield, is said to have assisted, or facilitated, the misappropriations during his time as a director of GIAG (6 February 2014 – 10 October 2016) in breach of his duties as a director.

GIAG believes that some of the misappropriations can be traced into improvements to Mr Dewsall’s family home, Weald Hall, beneficially owned by his wife, the third defendant, Mrs Dewsall, and to the part repayment of a loan taken out to purchase Weald Hall, entitling GIAG to a proprietary interest in Weald Hall. Weald Hall has in fact now been sold and the net proceeds of sale of approximately £850,000 are held in Court pending the outcome of these proceedings.

No personal claims have been brought against Mrs Dewsall. She was only added as a party as a result of the proprietary claims in respect of Weald Hall.

The fourth defendant, Horatio Risk Consulting LLP (“Horatio”) is a limited liability partnership established by Mr and Mrs Dewsall at around the time GIAG went into liquidation. It is said to have received approximately £280,000 of the funds which GIAG believes have been misappropriated.

Mr Dewsall had legal representatives until the end of 2024. Since then, he has been representing himself. Perhaps not surprisingly, he was unable to deal at the hearing with much of the detail of what is a complex claim.

Many of the points made by Mr Heath, representing Mr Hirschfield, apply equally to Mr Dewsall. It is however important to note (as emphasised by Mr Heath) that Mr Dewsall and Mr Hirschfield are in different positions and that the claims against them need to be considered separately.

Shortly before the hearing, a bankruptcy order was made against Mr Dewsall. However, Mr Dewsall did not seek a stay of these proceedings and the bankruptcy order has not therefore had any impact on them.

During the course of these proceedings, freezing orders have been made against Mr Dewsall and Mrs Dewsall (amongst others). I do not need to go into the detail of those freezing orders as they are not relevant to the issues I have to decide. I mention them only because actions taken by Mr Dewsall said to be in breach of the freezing orders are relied on by GIAG as showing a propensity for dishonesty.

Similarly, the circumstances surrounding the obtaining and implementation of a search order made by the Court in these proceedings in July 2024 are relied on as evidence of concealment and dishonesty on the part of Mr Dewsall.

I should mention in passing that, on 11 July 2025, the Court of Appeal handed down its judgment in respect of Mrs Dewsall’s appeal against various orders in these proceedings made by Caroline Shea KC, sitting as a Deputy Judge of the High Court, in February and March 2025. Other than the question as to whether Mrs Dewsall should be permitted to rely on forensic accountancy evidence (in respect of which I gave permission at the pre-trial review), none of the decisions made by the Court of Appeal have any impact on the issues to be determined at trial.

Many of the facts giving rise to the claims in these proceedings are undisputed. It is helpful to summarise the background here.

Mr Dewsall has been involved in the insurance industry for many years. In 1999, he established an underwriting agency in England called Hogarth Underwriting Agency Limited (“Hogarth”). At all material times, Mr Dewsall was the sole shareholder and director of Hogarth.

Hogarth was not itself an insurance company and it placed business with other insurers. It was regulated in the UK by what is now the Finance Conduct Authority (“FCA”).

Mr Hirschfield is an English accountant. In 2005, he was working for an investment business called Corvus Capital Inc as its Chief Financial Officer. Corvus specialised in establishing companies listed on the Alternative Investment Market (“AIM”) and then acquiring businesses through a reverse takeover.

Corvus approached Mr Dewsall in 2005 with a proposal to establish a European insurance business. This resulted in the establishment of GIAG in Liechtenstein which was in turn owned by a Cayman Islands company, Gable Holdings Inc. (“GHI”), which was listed on AIM. Mr Dewsall was the largest individual shareholder of GHI. His shareholding fluctuated but was in the region of 20%.

As part of these arrangements, it was agreed that Hogarth would provide underwriting, claims handling, marketing and other administrative support services to GIAG. Under the terms of this agreement, Hogarth operated trust accounts on behalf of GIAG to receive premiums and pay claims, commissions and other insurance related costs. The money in the trust accounts belonged beneficially to GIAG. Hogarth also had its own corporate bank accounts which held its own money.

Mr Dewsall was the CEO of the Gable Group and was a member of the board of directors of both GHI and GIAG.

These initial arrangements gave rise to a conflict of interest for Mr Dewsall as he was, on the one hand, the CEO and a director of GIAG but also had sole control and ownership of Hogarth which was, to a large extent, carrying on GIAG’s business on its behalf in accordance with the claims handling and underwriting agreement which was put in place and, under the terms of which, Hogarth was entitled to be paid for its services. However, given that this was all part of the way in which the Gable Group and its business was established, it must in my view be inferred that all relevant parties were aware of, and approved, this conflict of interest.

There is little doubt that, as the Chief Executive of the Gable Group, Mr Dewsall had day-to-day control over the operation and management of GIAG. He was not however the only member of the board of directors of that company during the relevant period (2010-2016). Other members of the board of directors were as follows:

The directors who served on the board of GHI between 2010-2016 were as follows:

It can therefore be seen that, although Mr Dewsall had effective day-to-day control over GIAG’s business there were, throughout the period, a number of non-executive directors on the boards of GHI and GIAG.

At the outset, although Mr Hirschfield worked for Corvus, he did not have any significant involvement with the Gable Group. His only role was through his service company, Kitwell Consultants Limited (Kitwell”), which acted as assistant company secretary to GHI to assist with issues relating to GHI’s listing on AIM and was paid a fee for doing so.

GIAG’s business grew significantly over the years, writing business in a number of European countries as well as the UK. Its premium income increased from £10m in 2009 to £91m in 2015.

In 2010, which is the beginning of the period for which GIAG’s claims relating to misappropriations are made, the arrangements between GIAG and Hogarth were restructured. GHI established a new subsidiary, Gable Services (London) Limited (“GSLL”) which agreed to provide certain office facilities to Hogarth and administration services to GIAG. GSLL was entitled to a monthly fee which was initially £68,000 but then increased to £78,000 in September 2014 and further increased to £92,000 in January 2015. It was also entitled to an additional fee to ensure that it achieved a pre-tax profit in each financial year of not less than 5% of its turnover.

This is all set out in a facilities agreement between GSLL and GIAG dated 28 November 2013 (but expressed to take effect from 1 January 2013). I infer from the GHI financial statements for 2010 that GSLL was providing similar services to GIAG between 2010-2013 although there is no evidence of the terms on which such services were provided.

As part of the 2010 changes, a new underwriting and claims handling agreement was put in place between GIAG and Hogarth. This agreement was dated 29 June 2010 but was expressed to take effect from 23 December 2005, superseding and replacing the previous agreements.

The 2010 agreement was similar to the previous agreements except that it no longer included the office, administrative and commercial support services now being provided by GSLL. One significant difference however was that Hogarth’s remuneration for its services, instead of being based on expenses, was changed so that Hogarth was entitled to a commission of 5% of premiums paid on UK construction liability insurance.

As before, the only payments which Hogarth was permitted to make out of the trust accounts were the payment of claims and other insurance costs (such as reinsurance premiums or insurance premium tax) and the payment of Hogarth’s commission or commissions due to third party brokers.

Between 2010-2013 almost £12m was paid out of the Hogarth trust accounts to the Hogarth corporate accounts. It is clear from the Gable Group financial statements that this significantly exceeded Hogarth’s entitlement to commission during the period. Beyond this there is however little evidence as to the extent to which the payments were ones which were permitted under the terms of the underwriting and claims handling agreement (for example the payment of claims) or were payments made for other purposes.

The arrangement between GIAG and Hogarth was exclusive in the sense that Hogarth was required to refer all opportunities to GIAG. However, if GIAG declined any proposal, Hogarth was permitted to place such business with another insurer. There is an issue as to whether Hogarth in fact placed business with other insurers and/or received any income for doing so. I address this below.

Under the terms of these arrangements, activities took place both in Liechtenstein and in London. GIAG had a number of members of staff in Liechtenstein dealing principally with accounting and bookkeeping. The insurance business itself was run on behalf of GIAG by Hogarth from London where Hogarth and GSLL shared an office with GSLL occupying a physically separate space in the office to Hogarth.

There was however clearly some crossover between Gable and Hogarth. Mr Dewsall of course worked for both Hogarth and GIAG. In addition, a number of other individuals had both Gable and Hogarth email addresses. On top of this, an internal accountant at Hogarth, Phil Foot, was a signatory on some of the Gable Group bank accounts.

Mr Hirschfield became more involved with Gable in 2012 after the previous Chief Financial Officer of the Gable Group had been dismissed for theft. Through his service company, Kitwell, Mr Hirschfield agreed to act as Head of Gable Group Finance. Following Mr Hirschfield’s appointment, he was involved in preparing group financial statements for 2012. This coincided with EY being appointed as auditors to the Gable Group.

At around this time (the first half of 2013), GIAG’s external actuaries (Grant Thornton) produced a report indicating that the provision in GIAG’s accounts for its insurance liabilities was £15.2m below the best estimate of such liabilities. Making this additional provision would have rendered GIAG’s balance sheet insolvent and would mean that it did not comply with the required regulatory insolvency capital requirements.

This was discussed with the Liechtenstein regulator (the FMA) in June 2013 which required GIAG to put together a three year recovery plan. Mr Hirschfield was significantly involved in preparing the three year plan which was approved by the FMA in summer 2013.

Mr Hirschfield was appointed as the Finance Director of the Gable Group in September 2013 to help implement the three year plan as well as continuing his role in relation to the preparation for the Gable Group accounts. The implementation of the three year plan included a requirement to improve corporate governance. Mr Hirschfield took a number of measures in relation to this including:

I have already mentioned the 2013 agreement between GIAG and GSLL. The agreement between GIAG and GHI involved GHI providing certain services to GIAG in return for a monthly payment of £120,000 (subsequently increased to £125,000 in January 2015).

The new underwriting and claims handling agreement between GIAG and Hogarth was similar to the 2010 agreement except that, in addition to the 5% commission, Hogarth was also entitled to a fee and reimbursement of expenses relating to any marketing activities.

In addition, a new clause (11.6) was inserted which was clearly intended to deal with Mr Dewsall’s conflict of interest due to his position as CEO of the Gable Group and the sole shareholder of Hogarth. This clause noted that Hogarth should not be making profits in excess of what might be expected in the context of an arm’s length relationship and provided that, to the extent that Hogarth’s pre-tax profits relating to its business with the Gable Group exceeded £100,000 in any financial year, Hogarth would issue a credit note to GIAG for the excess.

Another important difference between the 2013 agreement and the 2010 agreement is that Hogarth was no longer entitled to pay its own commissions out of the trust accounts although it was expressly provided that the premiums to be paid into the trust accounts would be net of any relevant commissions.

The agreement was dated 28 November 2013 although was expressed to take effect from 1 January 2013.

It is notable that the previous practice of making substantial payments out of the Hogarth trust accounts to the Hogarth corporate accounts largely ceased after 2013 with only just under £400,000 being transferred between 2014 and the date GIAG went into bankruptcy in November 2016. It can, in my view be inferred that this was as a result of the new agreement put in place between GIAG and Hogarth and the other improvements to corporate governance introduced by Mr Hirschfield after his appointment.

Throughout the period from 2010-2018, significant payments were made to or for the benefit of Mr Dewsall. These came primarily from the Hogarth corporate accounts although there were also payments made directly by GIAG, GHI and GSLL.

Although Mr Hirschfield was a signatory on some Gable Group bank accounts, he was not actually involved in making or authorising any payments, which were carried out by Mr Dewsall with the assistance of Mr Foot.

Mr Hirschfield would however help ensure that any payments made out of the Gable Group were allocated correctly if the bookkeepers were unsure as to how a particular payment should be dealt with. If a payment made out of Gable Group funds was for the personal benefit of Mr Dewsall or if payments were made to Hogarth in excess of the amounts to which Hogarth was entitled, these amounts would be treated as a debt due from Hogarth to the relevant Gable Group company.

The debts due from Hogarth to the Gable Group were discussed by Mr Hirschfield with EY in the course of preparing the 2012 Gable Group accounts. It is clear that EY had concerns about the recoverability of the loans, a concern which Mr Hirschfield shared. As a result of this, it was agreed that Mr Dewsall should give a personal guarantee in respect of these loans which he signed in 2013 prior to the 2012 accounts being signed off by EY.

The guarantee was very brief. Mr Hirschfield’s evidence, which I accept, is that the form of the guarantee was provided to him by the audit partner in London at EY. No legal advice was taken at the time in relation to the form of the guarantee.

Mr Dewsall signed and updated the guarantee in 2014 (presumably in the context of the 2013 audit). However, the only material difference between this guarantee and the previous guarantee is that the new guarantee made it clear that it only covered the loans due from Hogarth to the Gable Group and not the amounts held in the Hogarth trust accounts.

Mr Hirschfield had greater visibility over payments being made from GSLL given that the company was operated from London and so endeavoured to ensure that no payments were made directly from GSLL for Mr Dewsall’s personal benefit and that, if this happened, GSLL was reimbursed. This can be seen from the fact that three payments relating to Weald Hall made from GSLL in 2014 were reimbursed by Hogarth shortly after the payments were made.

In order to assist with the solvency concerns identified in 2013, GHI raised £10.75m by way of an issue of shares in 2013.

Nonetheless, GIAG’s solvency position deteriorated, partly as a result of the rapid expansion of its business. Steps were taken to deal with this in 2015 through a combination of reinsurance and an issue of £4m of convertible loan notes in December 2015 (of which Mr Dewsall contributed £1m).

However, despite this, in the events which happened, GIAG did not meet the relevant solvency capital requirements. In addition, at the start of 2016, new solvency regulations were introduced which required greater regulatory capital.

The Gable Group investigated various solutions to these issues and ongoing discussions took place with the FMA in Liechtenstein.

On 8 July 2016, the FMA issued an administrative order prohibiting GIAG from making any payments to associated companies, direct shareholders or companies associated with such shareholders (which would include payments to GHI, GSLL and Hogarth) other than customary market fees for services provided. It was also ordered to take steps to recover any amounts owing by GHI and GSLL.

Prompted by the solvency concerns, the Gable Group audit committee met on 24 August 2016 to review the Hogarth debts. The result of this was that the audit committee instructed Mr Hirschfield to ensure that no payments were made to Hogarth by any of the Gable Group companies other than the £100,000 monthly service and marketing fee which had been agreed under the terms of the 2013 agreement without the express authorisation of the audit committee which would require a valid invoice and supporting documentation.

In response to GIAG’s deteriorating financial situation, the lack of any solution to the solvency issue and concerns that GIAG was continuing to write new policies contrary to the terms of the order made on 8 July 2016, the FMA made a further order on 7 September 2016 making broadly similar provisions prohibiting payments to associated companies. Again, market standard fees for services provided to Gable continued to be permitted but only on condition that the FMA should give express prior consent to the payment of such fees.

This was followed by an order made by the FMA on 10 October 2016 appointing PricewaterhouseCoopers as administrator of GIAG. PwC opened bankruptcy proceedings at the Liechtenstein Court on 17 November 2016 and, on that date, a firm of Liechtenstein lawyers, Batliner Wanger Batliner (“BWB”) was appointed as the trustee in bankruptcy.

Mr Dewsall makes significant criticisms of the FMA decisions and the way BWB have handled the bankruptcy. He views the present claims as an attempt to apportion blame. I make no comment on these allegations however as they are not relevant to the questions I have to determine.

Following the administration/bankruptcy of GIAG, GSLL and Hogarth continued to operate. It appears that GSLL continued to provide some services to the administrators and that Mr Hirschfield was involved as, on 26 October 2016, Mr Hirschfield wrote on behalf of GSLL to the administrators requesting a payment to GSLL to cover its costs.

The evidence shows that, following the bankruptcy of GIAG, Hogarth was now placing business with a Bermuda insurer, Argo.

Mr Dewsall’s evidence is that Horatio was established at this time in order to provide Mr Dewsall’s services to Argo to enable him to assist Argo with the business which was now being directed its way and in respect of which Horatio received a fee from Argo of £50,000 a month.

Following the collapse of GIAG, the FMA brought an action against Mr Dewsall and Mr Hirschfield. They were each fined CHF30,000 although this was reduced on appeal to CHF5,000. Criminal proceedings in Liechtenstein have also been brought against Mr Hirschfield and Mr Dewsall. These proceedings have not been concluded and remain outstanding.

In England, Mr Alcock (who, together with various associated entities, was a significant investor in GHI and who was also on the board of GHI between 2015-2016) and a number of other investors brought an action in deceit against Mr Dewsall in 2019 (the “Deceit Claim”).

Those proceedings were settled by Mr Dewsall making a payment in the region of £2m to the claimants but without any admission of liability. GIAG was given permission to use witness statements prepared in those proceedings by Mr Alcock and by an accountant acting for Hogarth, Gary Wyatt in these proceedings (as to which, see further below).

Before leaving this background section, I should say a little about Mrs Dewsall and Weald Hall.

Mr and Mrs Dewsall first met in 2006 and started living together in 2007. They married in 2017.

Weald Hall was purchased in October 2012 with the assistance of a mortgage of £1.7m from Investec. The purchase price was £3.15m. At the time Weald Hall was purchased, Mr Dewsall executed a declaration of trust in favour of Mrs Dewsall so that she was the beneficial owner of the property from the outset.

It is common ground that significant payments have been made by Hogarth which relate to Weald Hall. The precise amount is disputed but, in round figures, the total is somewhere between £1.5m - £1.7m. This includes a payment of £600,000 made in February 2014 to repay part of the Investec mortgage. The remaining payments relate to improvements, furnishings or maintenance.

As mentioned above, three of the payments relating to Weald Hall originally came from GSLL. However, these were subsequently reimbursed to GSLL by Hogarth.

The primary claim against Mr Dewsall and Mr Hirschfield is that they acted in breach of their Liechtenstein law duties as directors of GIAG in arranging for, permitting or failing to prevent GIAG’s funds to be used for the personal benefit of Mr Dewsall. Based on the expert evidence, I will make findings in relation to the law in Liechtenstein on breaches of director’s duties although it is fair to say that there is no real disagreement as to the principles to be applied.

It will be necessary to make findings as to whether Mr Dewsall and/or Mr Hirschfield acted in breach of their duties and, if so, the extent to which those breaches caused loss which can be recovered.

As well as the ongoing payments made for the benefit of Mr Dewsall, there are three categories of payment which I will need to consider separately:

It should be noted that liability for breach of duty will arise whether or not Mr Dewsall or Mr Hirschfield acted dishonestly. However, as the claim has been pleaded on the basis that both Mr Hirschfield and Mr Dewsall were dishonest, I will consider this aspect. As pointed out by GIAG, it may, in particular, be relevant to Mr Dewsall as liability for fraudulent breach of duty will survive his bankruptcy.

In their pleadings, both Mr Dewsall and Mr Hirschfield took the position that GIAG was out of time for bringing a claim under Liechtenstein law based on a breach of director’s duties. Mr Hirschfield now accepts that this claim has been brought in time.

At the trial, Mr Dewsall was not clear whether he would continue to rely on this point. However, he made no submissions in relation to it, despite the point having specifically been raised by the Court. In my view, Mr Dewsall is therefore no longer relying on the Liechtenstein limitation period as a defence. In any event, as I mentioned briefly below, I consider that a limitation defence under Liechtenstein law would not succeed.

Turning to the English law claims, the first is a claim against Mr Dewsall for breach of trust in respect of the payments said to be made out of the Hogarth trust accounts which were not authorised by the claims handling and underwriting agreements. The key issue here is the extent to which Mr Dewsall, as a director of Hogarth, can be liable for a breach of trust by Hogarth as trustee.

Turning to dishonest assistance, the claim is against both Mr Dewsall and Mr Hirschfield and relates to the payments out of the Hogarth trust accounts and payments made by GIAG to GHI and GSLL after the September 2016 FMA Order. Mr Hirschfield takes issue with whether such claim can be made based on a breach of Liechtenstein law duties. Assuming it can, it will be necessary to consider the extent to which Mr Dewsall or Mr Hirschfield assisted any breach (without themselves being in breach of their duties) and, if they did so, whether they acted dishonestly.

Mr Dewsall is said to be liable as a knowing recipient of all of the funds which he received or which were used for his benefit, the breach of which he had knowledge being either Hogarth’s breach of trust in respect of payments out of the Hogarth trust accounts or Mr Dewsall’s own breach of duty as a director of GIAG.

This claim will only be relevant to the extent that Mr Dewsall is not already liable for the sums claimed as a result of any breach of duty by him. The main issue which is likely to arise (to the extent it is relevant) is whether Mr Dewsall knew that the funds he received or which were used for his benefit represented the traceable proceeds of any breach of duty or breach of trust.

In relation to Mr Hirschfield, the claim in knowing receipt is limited to payments received by Mr Hirschfield which were potentially funded from payments made by GIAG which may have been in breach of the September 2016 FMA Order. The claim will therefore only be relevant if Mr Hirschfield was not in breach of his duties in respect of those payments. The issue will be whether Mr Hirschfield knew that his receipt was traceable to a breach of duty by Mr Dewsall.

It will also be necessary to consider whether such a claim can be maintained based on a breach of Liechtenstein law duties.

As far as Horatio is concerned, GIAG only maintains a claim based on knowing receipt and so the same point arises. Horatio will only be liable if GIAG can show Horatio knew that the funds it received were traceable to a breach of duty by Mr Dewsall.

Although GIAG has pleaded that Mr Dewsall and Mr Hirschfield were also in breach of their English law duties as directors, it did not pursue that claim at trial and I do not therefore address it in this judgment.

In relation to the English Law claims, Mr Dewsall and Mr Hirschfield rely on limitation defences under s 21 and s 32 Limitation Act 1980. In relation to s 21, there is a legal issue as to whether the limitation period is removed in respect of a claim for dishonest assistance or knowing receipt where the claim is made against as a director who acted in breach of their duties.

As far as s 32 Limitation Act 1980 is concerned, there is a question as to what has been concealed but the main issue is whether GIAG could, with reasonable diligence, have discovered any facts which are said to have been concealed sooner than it did.

Turning to the claim based on tracing GIAG’s funds into Weald Hall, there are two significant legal issues to deal with. The first is the extent to which tracing is possible where funds have been used to improve/maintain a property rather than to purchase the property. The second is whether, in circumstances where traceable proceeds have been used to pay off a debt secured on the property, the remedy of subrogation is available so that GIAG is entitled to a charge over the property if the only claim is proprietary.

Separately, there is a factual issue as to whether GIAG is able to show that the funds used in relation to Weald Hall are in fact the traceable proceeds of any breach of trust or breach of duty and do not come from some other source.

GIAG called two witnesses of fact. The first was Hansjörg Lingg, a partner at BWB, the trustee in bankruptcy of GIAG. Mr Lingg was clearly an honest witness and his evidence should, in my view, be accepted. Towards the end of his evidence, there were one or two points where he was not as forthcoming as he might have been, for example, in response to questions relating to evidence of the debts owed by Hogarth to the Gable Group. This did not however cast any doubt in my mind on the credibility of his other evidence. Mr Lingg referred on occasion to an interpreter but it was clear that he had a good grasp of English, and I have no concerns on that front.

GIAG’s second witness was Ingrid Boldt. Ms Boldt was also an honest witness. However, there was much that she could not remember and, based on the documentary evidence, some of the evidence she gave (for example in relation to the £1.4 million payment by Mr Dewsall) could not be correct. For the most part, she gave evidence through an interpreter and did not always appear to understand the questions being put to her. All of this has affected the weight which I can give to Ms Boldt’s evidence. However, it is fair to say that the evidence given by Ms Boldt was not, in any event, central to the issues which I have to decide.

As I have mentioned, GIAG was also given permission to rely on witness statements made by Kevin Alcock and Gary Wyatt, in the Deceit Claim. Hearsay notices were given and these individuals were not called to give evidence. GIAG’s reason for this is that it would be disproportionate.

In Mr Wyatt’s case, that may be fair enough as his witness statement only covered two pages and its only relevance was the extent to which Mr Hirschfield may have been involved in helping to prepare Hogarth’s accounts. Whilst I note the comments Mr Wyatt makes, I cannot give them a great deal of weight as this was not the focus of his witness statement and Mr Wyatt was not of course available to be cross-examined in more detail about those comments.

Mr Alcock’s witness statement is a different matter. This is over 40 pages long and contains some serious allegations against Mr Dewsall. In the absence of cross-examination, I am unable to give much weight to the assertions made by Mr Alcock in his witness statement. I suspect that this will not come as a surprise to GIAG given Mr Auld’s suggestion in closing that the Court might find Mr Alcock’s witness statement a useful cross-check in relation to findings that might be made based on other evidence.

Each of the three individual defendants also gave evidence but none of the defendants called any other witnesses. GIAG invites the Court to draw adverse inferences from the fact that no other witnesses were called. However, no submissions were made as to what relevant evidence any other witnesses might have or how that evidence would supplement the evidence being given by Mr Dewsall and Mr Hirschfield (for example from others involved in the management of Hogarth and/or GIAG). In these circumstances, I decline to draw any adverse inferences from the lack of any other witnesses on behalf of the defendants.

Mr Dewsall was very combative in his evidence. He frequently failed to answer the questions put to him and instead embarked on lengthy explanations as to why, in his view, the Gable Group and the relationship with Hogarth had been properly and appropriately managed. When faced with questions which could potentially elicit an unhelpful answer, his stock answer was that he left all of the detail to the accountants and so could not answer the question.

More worryingly, on a number of occasions, Mr Dewsall gave answers to questions which clearly could not be correct. One example of this related to a simple question about the purpose of clause 11.6 of the 2013 agreement between GIAG and Hogarth. Mr Dewsall refused to accept that the purpose of the clause was to deal with the conflict of interest which existed as a result of Mr Dewsall both being the Chief Executive of GIAG and the owner of Hogarth.

Given the terms of the clause, that is, in my view, the only possible explanation for its existence. In fairness to Mr Dewsall, when asked about this again later in his evidence on the following day, he did accept that this was the purpose of the clause. However, the fact that he did not acknowledge this straight away when first asked about it is damaging to the credibility of his evidence.

Similarly, when asked whether he considered that a payment from the Hogarth trust accounts to the Hogarth corporate accounts with an onward payment then being made to Mr Dewsall (or for his benefit) would be a breach of clause 7 of the agreement between GIAG and Hogarth, Mr Dewsall’s response was that he did not believe that this had ever happened. However, it is clear from a schedule produced by GIAG that this in fact happened on numerous occasions.

In the light of all of this, it is in my view right to treat Mr Dewsall’s evidence with caution where it is not supported by the documentary evidence.

Mr Hirschfield made two witness statements in these proceedings. The second witness statement commented in some detail on the report prepared by GIAG’s forensic accountancy expert. GIAG objected to this section of Mr Hirschfield’s second witness statement. It was, however, agreed at the start of the trial that this would be held over until closing submissions.

In the event, Mr Auld did not make any further objection to the witness statement in his closing submissions. No doubt the reason for this is that the points made by Mr Hirschfield in his second witness statement were essentially the same as the points made by Mr Hirschfield’s own forensic accountancy expert, in somewhat more detail, in his report and so, although technically inadmissible, has no real impact.

Mr Hirschfield was much more measured in his evidence than Mr Dewsall. For the most part, he was a straightforward witness, giving concise answers to the questions asked but also supplementing this with an appropriate level of explanation of the background to particular actions and events.

There were however some occasions where there was potential for straying into difficult territory where he sidestepped the questions being asked and fell back on the core elements of his defence that everything had been properly recorded or that he had no ability to stop payments being made. Having said this, my general impression is that Mr Hirschfield’s evidence should be accepted at face value.

Mrs Dewsall was a somewhat nervous witness. It was clear that she had very little involvement in financial matters and so was not able to answer many of the questions put to her. In addition, some of her answers did not make sense taking into account the questions asked. However, this appeared to be more as a result of misunderstanding or lack of financial awareness rather than evasiveness. Nonetheless, it does however affect the weight which can be given to Mrs Dewsall’s evidence.

Expert evidence on Liechtenstein Law was obtained by GIAG from Hilmar Hoch, a senior lawyer in Liechtenstein and the Chief Justice of the Constitutional Court of Liechtenstein. Mr Dewsall did not provide any Liechtenstein law evidence. However, Mr Hirschfeld obtained an expert report from Florian Zechberger, a lawyer with around 20 years experience who is currently the managing partner of a law firm in Liechtenstein.

Unfortunately, Mr Zechberger was unavailable to be cross-examined. However, there were few areas where the experts disagreed and I have been able to make findings based on the reports produced by the experts together with the evidence given by Mr Hoch in cross-examination. Mr Hoch knew his subject and was clearly doing his best to assist the Court in an impartial manner.

Expert accountancy evidence was given by Mr Roger Isaacs on behalf of GIAG, Mr Jeffrey Davidson on behalf of Mr Hirschfield and Mr Philip Allister on behalf of Mrs Dewsall. There was no expert evidence put forward by Mr Dewsall.

There is a significant difference of opinion between Mr Isaacs and Mr Davidson as to the correct approach the Court should take in determining whether there have been any misappropriations. However, whilst both of them justify their own approach, they each recognise that this is ultimately a matter for the Court to determine.

There is also significant disagreement between Mr Isaacs and Mr Davidson as to the categorisation of payments as either business or personal. Again, however, they both recognise that this is a question of fact for the Court to determine based on the evidence.

In contrast, whilst Mr Allister supports Mr Davidson’s approach to the question of identifying misappropriations, there is no real difference of opinion between Mr Isaacs and Mr Allister as to the extent to which the payments in question relate to Weald Hall. As both accept, any differences are matters of fact for the Court to determine.

Mr Allister notes that the existence of unidentified payments into Hogarth’s accounts may prevent the tracing of any misappropriated funds into Weald Hall but, once more, both experts recognise that this is a point for the Court to determine.

Whilst I have no hesitation in accepting Mr Allister’s evidence, there is therefore little he says which assists the court in reaching a conclusion on the relevant issues.

Mr Isaacs was straightforward in the answers to the questions put to him. It was however clear that his report was heavily influenced by the way in which GIAG’s claim has been pleaded and his defence of that approach must be seen in that light. It may partly be as a result of this that the justifications given by Mr Isaacs in cross-examination for the approach which he had taken were not all that convincing with the result that he accepted that one of the justifications he put forward could not be sustained and should be withdrawn.

Initially, Mr Davidson had a tendency to given long narrative answers, apparently with a view to reinforcing his position rather than answering specific questions. However, with occasional lapses, this improved after it was drawn to his attention. Some of his answers were evasive where a direct answer might be seen as undermining his position (for example as to whether he had found any evidence of a commercial justification for payments being made to Horatio).

Overall, Mr Davidson was more persuasive than Mr Isaacs in defending his own position and explaining why Mr Isaacs’ approach was not the right one. Having said this, it is of course a legal question for the Court to determine the right approach to be taken to the question as to whether any misappropriations have taken place.

Mr Davidson was frank about disciplinary action which had been taken against him by ICAEW and also action taken against him by the Charity Commission which has led to him being barred from acting as a charity trustee. Whilst neither of these incidents reflect well on Mr Davidson there is no evidence that they have affected his expert opinion in this matter and there is, in my view, no reason why they should reduce the weight which can be given to his report.

After the hearing, Mr Auld referred me to the comments made about Mr Davidson by Trower J in JSC Commercial Bank Privatbank v Kolomoisky [2025] EWHC 1987 (Ch) at [311-314], in a judgment handed down after the hearing concluded. Whilst I note those comments, it does not change my view of Mr Davidson’s evidence in this case. In particular, I would note that, whilst Mr Davidson did not himself disclose details of the actions taken against him by ICAEW and the Charity Commission, he did not suggest that he was a member of ICAEW.

The experts are broadly agreed as to the duties of a director under Liechtenstein law and the circumstances in which they may be liable for breach of those duties. I therefore summarise below the principles to be applied:

Liability arises if the breach is intentional or negligent. A breach of duty is treated as a breach of contract and gives rise to contractual liability.

If there is a culpable breach of duty by more than one director, each of them is liable for the whole of the damage.

The directors of GIAG were obliged to ensure compliance with the orders made by the FMA. However, a breach of the order does not automatically lead to liability as all the other requirements for liability must also be proved.

In terms of causation, the test is whether the damage would have occurred if there had been no breach of duty. The breach need not however be the sole cause of the damage, with all factors contributing to the damage being treated as equally significant. However, the breach of duty must typically and foreseeably lead to the damage in question.

GIAG has the burden of proving that it has suffered a loss which has been caused by a breach of duty. This means that GIAG must show that the actions of Mr Dewsall and/or Mr Hirschfield fell below the standard of an average director of an insurance company. If it is able to do so, the burden shifts to the director to show that they did not act intentionally or negligently.

As Mr Hoch pointed out in his oral evidence, once it is shown that a director has acted in breach of duty, it would only be in an exceptional case (he gave the example of incapacity) that the director would be able to show that they were not negligent.

Where there has been a culpable breach of duty, the company is able to recover the entire financial loss. It is up to the company to prove and quantify the amount of the damage.

Given that Mr Dewsall was somewhat equivocal in his position in relation to Liechtenstein limitation periods, I should mention this briefly.

The normal limitation period is three years from the time when the injured party becomes aware of the damage and the identity of the injuring party. If it was established that GIAG had this information at the time it was placed into administration or bankruptcy, the limitation period would run from October/November 2016 and would expire in October/November 2019. The claim was brought in November 2022 and so would be outside the limitation period.

The limitation period is extended to ten years if the breach is intentional. In addition, the limitation period is suspended where the claimant asserts a claim in criminal proceedings and such claim has not been rejected.

Criminal proceedings were brought against Mr Dewsall and Mr Hirschfield in September 2017. GIAG asserted a civil claim in those proceedings on 3 April 2019 (and so within the normal three year limitation period). It is Mr Hoch’s view that the criminal proceedings and the civil claim were sufficiently similar to suspend the limitation period.

Mr Zechberger notes that there is an alternative view to the effect that the civil claim will only suspend the limitation period if the civil law claim can be derived from the criminal charges which have been brought. He suggests that this is not the case as the criminal charges related to the protection of GIAG’s creditors as opposed to GIAG itself. Although Mr Zechberger concludes that this approach is “justifiable and correct”, he concedes that the Liechtenstein courts will probably follow Mr Hoch’s approach.

In the light of this, it seems to me that Mr Hirschfield was correct to accept that the limitation period has been suspended and that the claim has therefore been brought within the relevant limitation period. Given that finding, it follows that the claim against Mr Dewsall has been brought within the relevant time limit.

GIAG’s primary claim relates to what it calls the “excessive payments”. Its approach involves looking at all payments received by or for the benefit of Mr Dewsall or Mr Hirschfield out of any of the Gable Group or Hogarth bank accounts and then giving credit for amounts due to Mr Dewsall and to Mr Hirschfield by way of salary, bonus and expenses and also giving credit for the £100,000 profit which Hogarth was entitled to retain each year under the terms of the 2013 agreement between GIAG and Hogarth. Anything in excess of this is said to be a misappropriation.

In its pleadings and in Mr Isaacs’ expert report, credit is also given for the amounts due to GSLL under the agreement between GIAG and GSLL. When Mr Hirschfield’s accountancy expert, Mr Davidson, pointed out that, if credit is to be given for the amounts due from GIAG to GSLL, credit should also be given for the amounts due from GIAG to GHI under the terms of the agreement between those two companies, the response of Mr Isaacs (and GIAG) was to accept that there was an inconsistency but, instead of making an allowance for the sums due to GHI, the allowance previously given for the sums due to GSLL was withdrawn.

There is some logic to this. The basis for GIAG’s approach is that, as Hogarth has no customers other than GIAG (a point which is disputed), all of the money within the Gable Group and Hogarth derives from GIAG and so the simplest way of working out what has been misappropriated is to treat all of the Gable entities and Hogarth as one and to simply see what has come out of them in excess of any entitlements. On this basis, it is arguably correct to ignore payments passing between Gable Group companies as this has no bearing on the entitlement of Mr Dewsall or Mr Hirschfield to receive payments or benefits.

In addition, GIAG says that, if this approach is not taken, it would enable Mr Dewsall to funnel GIAG funds through GSLL, GHI and Hogarth, all of which were under his control, to create a smokescreen of legitimacy and to obscure the true purpose and effect of the payments.

A further objection made by GIAG to taking any other approach is that, given the passage of time and the lack of reliable accounting records, the true nature of transactions between Gable Group companies and/or Hogarth cannot be known.

In support of GIAG’s approach, Mr Auld referred to the decision of the Privy Council in Federal Republic of Brazil v Durant International Corpn [2015] UKPC 35 (“Durant”). In that case, there had been a misappropriation of funds from Brazil by way of the payment of bribes. The question was whether the funds which had been misappropriated could be traced into accounts held by the defendants. The Privy Council observed [at 38] that:

“The development of increasingly sophisticated and elaborate methods of money laundering, often involving a web of credits and debits between intermediaries, makes it particularly important that a court should not allow a camouflage of interconnected transactions to obscure its vision of their true overall purpose and effect. If the court is satisfied that the various steps are part of a co-ordinated scheme, it should not matter that, either as a deliberate part of the choreography or possibly because of the incidents of the banking system, a debit appears in the bank account of an intermediary before a reciprocal credit entry. The board agrees with Sir Richard Scott V-C’s observation in Foskett v McKeown [1998] Ch 265, 283 that the availability of equitable remedies ought to depend on the substance of the transaction in question and not on the strict order in which associated events occur.”

Based on this, Mr Auld submits that it is proper for the Court to look at the economic reality rather than allowing wrongdoers to escape liability by routing funds through other entities under their control.

Mr Heath however notes that the comments of the Privy Council were dealing with the question of tracing rather than an investigation as to whether there had been a misappropriation in the first place and does not therefore provide any support for GIAG’s approach.

In any event, Mr Heath submits that Durant does not suggest that apparently lawful contracts can be disregarded unless they have been put in place from the outset as part of a sophisticated and co-ordinated camouflage. In this case (as accepted by Mr Auld in closing submissions) the agreements between GIAG and GSLL/GHI/Hogarth were genuine commercial arrangements. There is no suggestion that they were put in place as part of a co-ordinated scheme to enable Mr Dewsall and/or Mr Hirschfield to extract funds from GIAG for their personal benefit.

The position taken by Mr Dewsall and Mr Hirschfield is that GIAG and Mr Isaacs have got things the wrong way round by starting with what payments have been made to or for the benefit of Mr Dewsall or Mr Hirschfield. Instead, they say that the starting point should be to look at what has gone out of GIAG (or the funds held for its benefit in the Hogarth trust accounts) and to identify whether those payments were legitimate (or were paid in breach of duty). Only then can the payments to or for the benefit of Mr Dewsall or Mr Hirschfield be analysed in order to determine whether they were paid out of funds belonging to GIAG and are therefore misappropriations to the extent that they exceed any funds to which Mr Dewsall or Mr Hirschfield were entitled (for example by way of salary).

Applying this approach, Mr Dewsall’s and Mr Hirschfield’s position is that all of the payments made by GIAG were legitimate. In the case of payments to GSLL and GHI, both experts agree that the amounts to which those companies were entitled under the terms of the agreements with GIAG exceeded the amounts paid by GIAG.

In relation to Hogarth, it is accepted that Hogarth received more than it was entitled to under its agreement with GIAG either directly from GIAG or from the Hogarth trust accounts. However, it is submitted that the excess was properly accounted for by way of the Hogarth loan. Similarly, any amounts received by (or for the benefit of) Mr Dewsall from GIAG or from the Hogarth trust accounts in excess of his entitlements were also added to the Hogarth loan and therefore represented legitimate payments.

On the basis that all payments to GSLL, GHI and Hogarth were proper payments, Mr Heath submits that the funds no longer belonged to GIAG and so whatever those companies chose to do with the money which they had received could not be a misappropriation as far as GIAG is concerned.

In my view, on the facts of this case, the approach adopted by Mr Dewsall and Mr Hirschfield (and Mr Davidson) is to be preferred. As Mr Heath submits, GIAG’s approach involves ignoring genuine commercial agreements where there is no suggestion that the agreements were put in place with the intention of facilitating the misappropriation of GIAG’s funds.

On this basis, it is difficult to see how (for example) the payment of the monthly fee due from GIAG to GSLL can be a misappropriation from GIAG. Of course, if GSLL uses its money for an unauthorised purpose, that may be a misappropriation from GSLL but it cannot, in my judgment, be a misappropriation from GIAG. The position might be different if an agreement was put in place between GIAG and GSLL which provided for payments in return for services which everybody knew were never going to be provided and where the real purpose was to provide funds to GSLL which it could then use to confer personal benefits on Mr Dewsall. However, that is not the case here.

Mr Isaacs acknowledges in the joint experts report with Mr Davidson that his approach allows a payment for the benefit of Mr Dewsall made by GSLL “to be included as an alleged misappropriation despite it having been made by GSLL from funds to which GSLL was entitled”. There is however no explanation as to how this justifies treating the payment by GSLL as a misappropriation from GIAG.

In addition, as Mr Heath points out, GIAG’s approach takes no account of the fact that, during the relevant period, £14.5 million was invested into GHI by way of a subscription for shares in 2013 and a subscription for loan notes in 2015. GIAG’s underlying premise that all of the payments to or for the benefit of Mr Dewsall and/or Mr Hirschfield must have been funded from GIAG’s money is not therefore correct.

Payments from GHI to Hogarth, to Mr Dewsall, Mr Hirschfield or other recipients for the benefit of Mr Dewsall or Mr Hirschfield may well have been funded out of these investments and not out of money provided by GIAG. Again, it is possible that such payments may have involved misappropriations from GHI, but they would not be misappropriations from GIAG.

I appreciate that my conclusion might be seen as giving wrongdoers the ability to misappropriate funds with impunity. However, as I have said, this is not the case where agreements are put in place as part of a co-ordinated scheme to misappropriate funds. In this case, if funds have been misappropriated from entities other than GIAG, it is up to the liquidators of those entities to bring the necessary claims. It is not a reason for artificially treating funds as having been misappropriated from GIAG.

In its closing submissions, GIAG notes that the bank accounts of the various companies have been used interchangeably and without any real formality. One example given is the fact that Mr Dewsall’s salary has been paid variously from the HUAL trust accounts, the HUAL corporate accounts, GIAG’s bank account and GHI’s bank account.

However, it is difficult to see how this justifies treating a payment made to or for the benefit of Mr Dewsall or Mr Hirschfield from an entity other than GIAG out of funds legitimately paid to that entity as a misappropriation from GIAG. As GIAG acknowledges, it is likely that, in relation to the salary payments, appropriate adjustments will have been made to intercompany balances to reflect where the true liability for Mr Dewsall’s salary lay.

I should note at this point that GIAG suggests that the audited GHI consolidated financial statements for the Gable Group cannot be taken as an accurate reflection of the true financial position. Three points put forward in support of this are:

Although it is of course possible that auditors may be misled, there is, in my view, no real evidence in this case that the audited accounts do not contain a fair reflection of the transactions taking place between the Gable Group and Hogarth.

As far as the excessive payments are concerned, both parties acknowledge in their closing submissions that, if the approach advocated by Mr Dewsall and Mr Hirschfield is accepted (as I have) the focus turns to the Hogarth loan (being the loan due from Hogarth to GIAG and not any loans due from Hogarth to GSLL or GHI) as, in substance, this represents the payments made by GIAG (from its own bank accounts or from the Hogarth trust accounts) to Hogarth or to or for the benefit of Mr Dewsall or Mr Hirschfield in excess of their entitlements.

The question which needs to be addressed therefore is whether Mr Dewsall and/or Mr Hirschfield were in breach of their duties to GIAG in allowing the Hogarth loan to come into existence, to remain in existence and to continue to increase over the relevant period. However, before going on to consider this, I need to deal with a point raised by Mr Heath in relation to GIAG’s pleadings.

Mr Heath submits that it is not open to GIAG to challenge the Hogarth loan as it is nowhere mentioned in its pleadings. He observes that GIAG could have pleaded breaches of duty in connection with the Hogarth loan but has failed to do so.

Mr Heath notes that, in his defence, Mr Hirschfield refers to the Hogarth loan and to the guarantee which was put in place to support the loan. He submits that, at the very least, if GIAG wished to challenge the propriety of the loan, it should have served a reply (which it did not).

As a result of all of this, Mr Heath suggests that Mr Hirschfield has been ambushed by allegations such as failure to prevent the Hogarth loan building up as well as criticisms relating to the guarantee and that he has therefore been unable to deal with these issues in his own pleadings and evidence.

Whilst I acknowledge that GIAG’s pleadings should ideally have been more detailed, I do not accept the criticisms made by Mr Heath.

Paragraph 28 of the Re-amended Particulars of Claim states:

“Large amounts of GIAG’s money were paid to or for the direct or indirect benefit of the defendants or to or for persons unknown. They were made by direct payment from GIAG’s accounts (either the Trust Accounts or GIAG’s Name Accounts) … or via a payment to the [Hogarth] Corporate Accounts …”

In response to this, Mr Hirschfield pleads in his amended Defence (paragraph 40.4.3.3):

“Where payments transferred to [Hogarth] exceeded the amounts due under the 2013 [Hogarth] Agreement, they were accounted for as a recoverable balance from [Hogarth]. When Mr Hirschfield was appointed, this recoverable balance stood at approximately £2 million. Mr Hirschfield discussed this balance with the auditor, EY. To address this issue, EY drafted a letter of guarantee dated 28 June 2013 from Mr Dewsall pursuant to which he guaranteed in full the repayment of debts of [Hogarth] to GIAG and all Gable Group companies.”

Mr Hirschfield addresses the Hogarth loan further in his First Witness Statement (paragraphs 45 and 47-50). Those paragraphs explain why, in Mr Hirschfield’s view, it was proper to account for the excessive payments in this way.

Mr Hirschfield has not therefore been ambushed or put at a disadvantage. He was clearly aware that the Hogarth loan was an issue. For example, had he wanted to back up his assertions that everything was being done with the full knowledge and approval of EY by calling somebody from EY to give evidence, he could have done so. It is perhaps unsurprising that he did not consider it necessary to do so given that GIAG has the burden of proof.

As a general point, given the conclusion I have reached, I do not need to consider breach of duty generally in relation to the payments made by GIAG to GSLL and GHI given the agreement of the experts that those companies received less than they were entitled to. On this basis, there can be no loss.

For the avoidance of doubt, I will however still need to consider whether there is any liability as a result of breach of duty in respect of:

I also do not need to deal in general terms with specific payments made by GIAG (out of its own accounts or the Hogarth trust accounts) to Hogarth or directly to or for the benefit of Mr Dewsall or Mr Hirschfield as, to the extent that these exceed any entitlements, they will be reflected in the Hogarth loan.

In passing, I note that, given my conclusion, there is a separate point as to whether there is any breach of duty by Mr Dewsall or Mr Hirschfield in failing to ensure that Hogarth issued a credit note in any year in which its profits exceeded £100,000 as required by the 2013 claims handling and underwriting agreement. Mr Davidson suggest this could have been relevant in 2015 where a credit of about £350,000 might have been due. However, this has not been pursued by GIAG in its closing submissions as a separate claim, it was not explored with the witnesses and no submissions have been made by any of the parties in relation to it.

I therefore turn now to consider whether there have been any breaches of duty by Mr Dewsall or Mr Hirschfield in relation to the Hogarth loan.

Based on the Gable Group Consolidated Financial Statements, Hogarth did not owe anything to any of the Gable Group Companies at the end of 2010 and 2011. The amounts owed by Hogarth to GIAG at the end of the subsequent financial years was as follows:

By 30 June 2016, Hogarth owed GIAG £3,239,721.

Although, in 2012, Hogarth did not owe any money to GIAG, it did owe approximately £2m to GHI/GSLL.

It is clear that the Hogarth loan was somewhat informal. There was no loan agreement and therefore no fixed terms for repayment. The financial statements for the Gable Group refer to a “balance outstanding” from Hogarth rather than a loan.

The financial statements for the years ended 2012 and 2013 say nothing about the terms on which the relevant amounts remained outstanding. The financial statements for 2014 and 2015 noted that the outstanding balance was interest free.

The 2012 financial statements do not refer to the fact that Mr Dewsall had guaranteed the payment of the amounts due from Hogarth to the Gable Group, despite the guarantee having been given before the 2012 financial statements were signed off by the auditors. This is, however, referred to in the financial statements from 2013 onwards.

It is worth noting that, in 2010, Hogarth owed almost £4m to GIAG. This was set off (and therefore effectively repaid) against a similar amount due from GIAG to Hogarth which arose in the context of the 2010 underwriting and claims handling agreement put in place between GIAG and Hogarth. This shows that the practice of payments made by GIAG (whether directly or from Hogarth’s trust accounts) to or for the benefit of Mr Dewsall or to Hogarth in excess of their entitlements being recorded as a debt due from Hogarth to GIAG had been in existence for many years, even prior to 2010.

Although it is not a point raised by any of the parties, I note that one potential issue with the approach advocated by Mr Hirschfield and Mr Dewsall (which I have accepted) is that, based on the accounting records, there were no potential misappropriations between 2010-2012 as Hogarth is not shown as owing any money to GIAG before 2013.

This is however arguably consistent with the figures provided by GIAG. For example, of a total amount of just over £16m said to be paid to or for the benefit of Mr Dewsall and Mr Hirschfield (before giving credit for any entitlements), approximately £4m relates to the period prior to 2013 and £12m relates to the period from 2013 onwards.

Taking into account the fact that this does not allow for any payments to which Mr Dewsall and/or Mr Hirschfield were entitled and bearing in mind that GIAG have now accepted that just over £3m of these payments in fact related to business expenses and there is a further £4.5m where there is, as yet, no agreement as to whether the payments relate to business expenses or personal expenses it is plausible that there were no payments prior to 2013 in excess of entitlements. I do not therefore consider this to be an objection to the application of the approach which I have adopted.

I also note that there are a number of instances which GIAG have identified between July 2010-January 2014 where personal expenses of Mr Dewsall paid out of the Hogarth corporate accounts were clearly funded by transfers from the Hogarth trust accounts. By way of example, on 9 November 2010, £62,500 was transferred from the Hogarth trust account to the Hogarth corporate account. On the same day, just over £50,000 was sent from the Hogarth corporate account to Tauro Properties, a company owned by Mr Dewsall which held a property in Spain.

Similarly, on 4 May 2011, £20,000 was transferred from the Hogarth trust account to the Hogarth corporate account. On the same day, £20,000 was sent from the Hogarth corporate account to Mint 3, another company owned by Mr Dewsall. There are 28 other examples of transfers from the Hogarth trust account to the Hogarth corporate account followed by transfers out of the Hogarth corporate account either on the same day or shortly afterwards to or for the benefit of Mr Dewsall.

The final example of such a payment was a transfer from the Hogarth trust account to the Hogarth corporate account on 2 January 2014 of £26,000. On the same day, a payment of just under £20,000 was made from the Hogarth corporate account to Haileybury School, the purpose of which was to pay school fees on behalf of Mr Hirschfield. I will come back to this later in this judgment.

Between 2010-2012, the total of the payments to or for the benefit of Mr Dewsall from the Hogarth corporate accounts which had been funded by transfers from the Hogarth trust accounts in this way was about £450,000. However, in the absence of other evidence, it is impossible to infer from this that the payments to Hogarth during this period (when a total of around £8 million was transferred from the Hogarth trust accounts to the Hogarth corporate accounts) were in excess of its entitlements given the clear evidence that no loans built up during this period but that there had been loans both before and after this period.

The question therefore is whether Mr Dewsall and/or Mr Hirschfield were in breach of their duties as directors of GIAG in allowing a significant debt to build up between Hogarth and GIAG from 2013 onwards. In considering this, I need to look at each of Mr Dewsall and Mr Hirschfield separately.

GIAG’s case is that the excessive payments (and by extension, the payments making up the Hogarth loan), were not for the proper business purposes and needs of GIAG and were therefore in breach of Mr Dewsall’s duties as a director of GIAG. Indeed, GIAG goes further and says that, in the case of Mr Dewsall, the payments were knowingly improper in circumstances where he had effective control of all of the relevant companies and extracted much more than was due.

Whilst accepting that a debt exists from Hogarth to GIAG, in the sense that it is recorded as such in the Gable Group financial statements, Mr Auld, submits that, in reality, the loan is fictitious given that it is undocumented, interest free, that Mr Dewsall was unable to provide any legitimate reason for the excessive payments to Hogarth and that there are no GIAG board minutes formally considering the loan and any conflict of interest. Instead, Mr Auld suggests, the debt is simply an accounting explanation for the transfer of significant sums of money from GIAG to Hogarth, (or to or for the benefit of Mr Dewsall) in excess of their entitlements.

For similar reasons, Mr Auld argues that Mr Dewsall cannot rely on the fact that the Hogarth loan may have been authorised by the GIAG board in order to avoid liability for breach of duty given that there is no evidence of any formal consideration of the loan and any conflict of interest, even though all of the board members might have known about it.

In any event, Mr Auld notes that Mr Hoch’s, evidence is that, even if something (such as the Hogarth loan in this case) is apparently authorised by the company, it is nonetheless necessary to look at all of the surrounding circumstances, including the impact on the company and whether proper formalities have been observed in determining whether there has been a breach of duty.

Mr Auld also draws attention to issues relating to the recoverability of the Hogarth loan. It is common ground that Hogarth had little in the way of tangible assets. It was only solvent on a balance sheet basis as a result of an unidentified debtor of around £5.4m. The identity of the debtor is a matter of some contention. Mr Dewsall has made conflicting statements about this in the past. His position under cross-examination was that he did not know who the debtor was.

This is, in my view, implausible, given the importance of this asset to the solvency of Hogarth which was regulated by the FCA. It appears that the FCA was told that the debt was due from “Old Hogarth/WAD”. There is no evidence as to what “Old Hogarth” is or was but “WAD” is clearly a reference to Mr Dewsall.

Mr Hirschfield’s evidence is that he assumed the debt was due from Mr Dewsall. This would, of course, be consistent with the fact that, as the evidence clearly shows, the funds within Hogarth have been used to make payments to Mr Dewsall or for his benefit, to a very significant extent. Although it is not directly relevant to the issues I have to decide, my tentative conclusion, based on the evidence I have, is that it is more likely than not that the debtor was Mr Dewsall. This is the case even though, as Mr Auld pointed out, if Mr Dewsall is in fact the debtor, this may well have required some sort of disclosure in the Hogarth financial statements and/or to the FCA.

Whatever the true position, it is clear that Mr Hirschfield and EY, when discussing the 2012 accounts, concluded that there were serious issues as to the recoverability of the Hogarth loan, hence EY’s insistence that Mr Dewsall should give a guarantee.

Mr Dewsall’s defence is that all of the payments to Hogarth have been properly accounted for, that any conflict of interest was recognised when the agreements between GIAG and Hogarth were put in place and that everything was transparent to the boards of GIAG and GHI, to the auditors and to the regulators given the clear disclosures in the Gable Group financial statements.

Mr Dewsall also suggests that it is implausible that he would breach his duties to GIAG in circumstances where he would be damaging his own interests as the largest individual shareholder of the Gable Group.

In addition, Mr Dewsall notes that the 2013 Hogarth agreement provides for alternative dispute resolution and arbitration. Mr Dewsall suggested in his defence that GIAG could not maintain its claims without having invoked these provisions. However, in his submissions, he accepted that this was not the case but instead makes the point that GIAG never challenged any of the payments being made to Hogarth or to or for the benefit of Mr Dewsall under the terms of these provisions, which suggests that all of the payments were properly due.

Having considered all of the evidence, I have no hesitation in concluding that Mr Dewsall acted in breach of his Liechtenstein law duties as a director of GIAG in relation to the payments and transactions represented by the Hogarth loan.

Mr Dewsall does not deny that he was in effective day-to-day control of GHI, GIAG, GSLL and Hogarth. Nor does he deny that, in that capacity, he authorised or procured the excessive payments which contributed to the Hogarth loan.

Although, in his defence and in his oral evidence, Mr Dewsall asserts that all of the payments were within the contractual entitlements of himself or Hogarth, he refers in his second witness statement to some of the payments being treated as a loan from GIAG to Hogarth. He also explained in his oral evidence that, although he considered that Hogarth could repay the debt to GIAG, “Hogarth is me” which is why he was willing to sign the guarantee that EY had asked for.

It must therefore be the case that Mr Dewsall was aware of the loans that were building up as a result of payments being made to Hogarth or to or for the benefit of Mr Dewsall in excess of their entitlements. Some support for this inference is also to be gained from the fact that this appears to have been a long standing practice as evidenced by the loans of almost £4 million due from Hogarth to GIAG that had built up by 2010.

Mr Dewsall was not able to identify any legitimate business purpose for GIAG in making the payments representing the Hogarth loan. In his witness statement in the Deceit Claim, he had suggested that Hogarth needed the money for working capital. However, in cross-examination, Mr Dewsall was unable to provide any explanation as to why this should be the case.

Indeed, the use of GIAG funds to make loans to Hogarth seems all the more surprising given Mr Dewsall’s observation in his defence that the three year plan agreed between GIAG and the FMA required GIAG not to pay any dividends, to transfer retained earnings to a non-distributable capital account and to seek to raise new capital.

In the light of all of this, there can be little doubt that Mr Hirschfield was right when he accepted in his oral evidence that there was no commercial benefit to GIAG in making the Hogarth loan.

Although Mr Dewsall had given a guarantee and was confident that he would be able to honour the guarantee, (given that he owned shares in GHI that were at one point worth £21m), this fails to take account of the fact that one situation (as has happened) in which his guarantee was likely to be called upon is if the Gable Group got into financial difficulties, which, of course, would be likely to have a significant impact on the value of his shareholding. In any event, the making of an unsecured, interest free loan to a company which, on the face of it, could not repay the loan clearly put GIAG’s assets at risk at a time when it was supposed to be strengthening its solvency position.

In addition, Mr Dewsall had a clear conflict of interest, given his capacity as CEO of the Gable Group as well as the sole shareholder and director of Hogarth. Although that conflict had been recognised when the 2013 claims handling and underwriting agreements had been put in place and the directors of GIAG and GHI had signed off accounts which clearly noted the existence of the Hogarth loan in the section dealing with related party transactions, there is no evidence that the boards of either of these companies were specifically asked to consider the issue in the light of the conflict of interest.

Indeed, Mr Hirschfield’s evidence was only that the other director of GIAG, Jost Pilgrim, would have been aware of the existence of the loans and therefore implicitly approved them. The fact that Mr Dewsall, during cross-examination, argued forcefully that he was not in a position of conflict of interest says much about the way in which Hogarth and GIAG operated their businesses.

Whilst I accept that the practice of making payments to or for the benefit of Mr Dewsall or to Hogarth was not concealed and, in one sense, was properly accounted for in a way which was approved by the auditors, this does not, of itself, prevent there being a breach of duty by Mr Dewsall, As both experts agreed, the auditor’s primary concern would be to ensure that they were satisfied that the loan was recoverable.

In my view, it is also not possible to rely on the Hogarth loan being “authorised”. I accept that all of the GIAG directors were aware of the Hogarth loan. However, the lack of any board minutes coupled with Mr Hirschfield’s evidence lead to the conclusion that the GIAG board, (and, in particular, the members of the GIAG board other than Mr Dewsall) were never asked to consider whether, bearing in mind the conflict of interest and GIAG’s solvency issues, it should be making significant interest free loans to a company wholly owned by its chief executive.

Even if it could be said that the Hogarth loan had been authorised (given that the GIAG board (and the board of its holding company, GHI) were aware of the loan and raised no objection) this would not, in my view, prevent a breach of duty by Mr Dewsall in circumstances where, as I have said, the loan was entirely informal, arose from payments where it could only be ascertained after the event whether they exceeded any entitlement of Hogarth and/or Mr Dewsall, was interest free, provided no benefit to GIAG and put its assets at risk at a time when it was vital that it improved its solvency position.

Bearing all of this in mind, judged by the standard of the average director of an insurance company, procuring or authorising the payments which resulted in the Hogarth loan is a breach of the general duty to promote the success of GIAG’s business. I note that this general duty of care should not be applied too strictly but the fact that there was no business justification for the payments is sufficient in my view to overcome this hurdle.

I also consider that these transactions were a breach by Mr Dewsall of his duty to prevent the use of GIAG’s funds for unauthorised purposes and to create a framework that protects the company’s resources from misallocation or misuse. Although there is no duty to monitor each individual transaction, the fact that Mr Dewsall had effective control on a day-to-day basis over both GIAG and Hogarth resulted in a situation where GIAG’s resources could be misallocated or misused.

In addition, it is possible that Mr Dewsall may have been in breach of his duty to avoid conflicts of interest. However, there was no evidence as to the position under Liechtenstein law where a conflict of interest has been recognised by the company, as is the case here. I do not therefore rely on this as a separate breach of duty although, as mentioned above, the fact that Mr Dewsall was in a position of conflict in relation to the Hogarth loan and that there is no evidence that this was specifically considered by the GIAG board (unlike the position, for example, in relation to the 2013 Underwriting and Claims Handling Agreement) is a relevant factor.

Given the circumstances, there is no doubt that GIAG suffered loss (to the extent that the Hogarth loan has not been recovered) as a result of Mr Dewsall’s actions and that the loss would not have occurred but for the breaches of duty.