Martin Hague & Anor v David Hague & Ors
[2024] EWHC 1469 (Ch)
Neil Worsley v Benjamin Gould & Ors
14 December 2023
[2023] EWHC 3181 (Ch)
High Court
Two business partners had a falling out. One partner (Mr. Gould) was found to have done some shady things with the company's money and assets, benefiting himself and his other company at the expense of the joint venture. His wife wasn't involved. The judge will decide what he has to pay later.
Key Facts
- •Neil Worsley (Petitioner) alleged that the affairs of Drop The Hammer Limited (the Company) were conducted unfairly prejudicial to him under s. 994 of the Companies Act 2006.
- •Respondents were Benjamin Gould (Mr. Gould), Gas Monkeys Ltd (GML), the Company, and Laura Gould (Mrs. Gould).
- •The Company was a joint venture between Mr. Worsley and Mr. Gould, each holding one share and serving as a director.
- •Mr. Worsley claimed an agreement that GML's business and assets would transfer to the Company, with GML ceasing trade.
- •Mr. Gould denied this agreement, claiming GML continued trading due to liabilities and specific circumstances.
- •The trial focused solely on liability, with remedy to be decided later.
- •The Company is in insolvent liquidation.
Legal Principles
Assessment of witness credibility involves weighing evidence, considering supporting documentation, and acknowledging memory's unreliability.
Re Mumtaz Properties Ltd [2012] 2 BCLC 109; Gestmin SGPS S.A. v Credit Suisse Limited [2013] EWHC 3560 (Comm)
Serious allegations require stronger evidence in civil litigation.
Phipson on Evidence, 20th edition; H (Minors) [1996] AC 563; Bank St Petersburg PJSC v Arkhangelsky [2020] EWCA Civ 408
S. 994 CA 2006 requires proving that company affairs' management caused prejudicial and unfair harm to a member's interests.
Companies Act 2006, s. 994; Re Neath Rugby Ltd, Hawkes v Cuddy (No 2) [2008] BCC 390
Directors have a duty to act in good faith to promote the success of the company (s. 172 CA 2006).
Companies Act 2006, s. 172
Directors must exercise their powers for proper purposes (s. 171 CA 2006) and avoid conflicts of interest (s. 175 CA 2006).
Companies Act 2006, ss. 171, 175
Company liquidation doesn't automatically bar s. 994 relief; a shareholder's interests as a creditor can be considered.
Gamlestaden Fastigeheter AB v Baltic Partners Limited [2008] 1 BCLC 468; Seneschall v Trisant Food Limited (In Liquidation) [2023] EWHC 1029 (Ch)
Outcomes
Petition against Mrs. Gould dismissed.
Insufficient evidence to show she assisted Mr. Gould's wrongdoing or knowingly received company funds.
Several allegations of unfairly prejudicial conduct against Mr. Gould were upheld.
Mr. Gould breached his fiduciary duties by creating false documentation, causing GML to continue trading in competition with the Company, inflating the value of the VW Van transfer, and causing the Company to enter into the DFC Cross-Guarantee without Mr. Worsley’s knowledge. Specific instances of misappropriation of company assets were also found.
Remedy against Mr. Gould to be determined in a subsequent trial.
The court needs further evidence to assess the impact of Mr. Gould's actions on the Company's failure and the value of Mr. Worsley's shares.