Trafalgar Multi Asset Trading Company Limited v James David Hadley & Ors
[2023] EWHC 2670 (Ch)
Aston Risk Management Ltd v Lee Jones & Ors
9 February 2024
[2024] EWHC 252 (Ch)
High Court
A company sued Lee Jones for breaking his promise to act in their best interest. The court said he had, and ordered him to pay for money he wrongly took, and for the value of the business he secretly moved to a new company. Other claims failed because it was unclear whether they were caused by Lee Jones' actions.
Key Facts
- •Aston Risk Management Ltd (ARM) sued Lee Jones and others for breach of fiduciary duty.
- •The liability trial concluded on March 20, 2023 ([2023] EWHC 603 (Ch)).
- •This judgment concerns quantum (damages) following the liability finding.
- •The main issue was the value of the business and undertaking transferred from ASS to AMR (a phoenix company).
- •Lee Jones acted in person, while ARM was represented by Louis Doyle KC.
- •The only witness was Mark Fairhurst, an expert forensic accountant for ARM.
- •Lee Jones raised various arguments challenging the liability judgment and the assignment to ARM.
- •The court rejected Lee Jones's attempts to challenge the liability judgment at the quantum trial.
Legal Principles
Equitable compensation differs from common law damages; common law principles of causation and remoteness do not apply.
Target Holdings Ltd v Redferns [1996] 1 AC 421; AIB Group (UK) Ltd v Mark Redler & Co [2015] AC 1503
The defendant's wrongful act must cause the damage; the claimant must be put in the position they would have been in without the wrong.
Target Holdings Ltd v Redferns [1996] 1 AC 421
Equitable compensation is assessed at the trial date, with the benefit of hindsight and a common-sense view of causation.
AIB Group (UK) Ltd v Mark Redler & Co [2015] AC 1503
Equitable remedies are fashioned to do what is practically just; neither party should be unjustly enriched.
Maguire v Makaronis [1997] 188 CLR 449
Outcomes
ARM was awarded equitable compensation against Lee Jones for payments to Neutrino (£130,418.95) and Cumulo (£33,900).
Breach of fiduciary duty established in the liability judgment.
ARM was awarded equitable compensation against Lee Jones for the transfer of the ASS Business and Undertaking to AMR (£1,235,285).
Based on expert evidence and the counterfactual scenario of ASS continuing to trade under renegotiated terms, considering the adjusted profits of AMR.
ARM's claims for loss of value of work in progress and administration/liquidation costs were dismissed.
These losses were not directly caused by the established breaches of fiduciary duty or were not adequately pleaded.
Neutrino was held liable to ARM as constructive trustee for knowing receipt in the sum of £130,418.95.
As a knowing recipient of the misapplied funds.