Scenic International Group Limited v Richard Adenaike & Ors
[2024] EWHC 2791 (Ch)
L & S Accounting Firm Umbrella Limited (In liquidation) v Idusogie Laurel Oronsaye & Ors
26 July 2024
[2024] EWHC 1919 (Ch)
High Court
A company sued its directors for stealing millions in unpaid taxes. The judge ruled quickly against the directors because the evidence showed they'd knowingly cheated on taxes and lied about it. The company got its money back and the directors lost their properties.
Key Facts
- •L & S Accounting Firm Umbrella Limited (in liquidation) sued five defendants (two individuals and three companies) for alleged labour supply fraud, including failure to account for VAT, PAYE, and NICs.
- •The claimant sought summary judgment against all defendants.
- •The defendants, Mr and Mrs Oronsaye, owned and controlled the three corporate defendants.
- •The claimant alleged that the defendants misappropriated over £25 million in unpaid taxes.
- •The defendants claimed the discrepancies were due to oversight and not intentional fraud.
- •Defendants initially had legal representation but later appeared in person.
Legal Principles
Summary judgment may be granted if the defendant has no real prospect of successfully defending the claim and there is no other compelling reason for a trial.
CPR 24.3
The court must consider whether the defendant has a 'realistic' as opposed to a 'fanciful' prospect of success. A realistic defence is more than merely arguable. The court must not conduct a 'mini-trial'.
Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch)
In fraud cases, the court should be cautious in granting summary judgment, but it may do so in suitable circumstances.
King v Stiefel [2021] EWHC 1045 (Comm)
The test for dishonesty is whether the defendant's conduct was honest or dishonest by the standards of ordinary decent people.
Ivey v Genting Casinos (UK) Ltd [2017] UKSC 67
Directors have a fiduciary duty to act in good faith to promote the success of the company.
Companies Act 2006, s. 172
To establish knowing receipt, it must be shown that there was a disposal of assets in breach of fiduciary duty, beneficial receipt of traceable assets, and knowledge rendering retention unconscionable.
Bank of Credit and Commerce International (Overseas) Ltd v Akindele [2001] Ch 437
Outcomes
Summary judgment granted for the claimant.
The court found the defendants had no real prospect of successfully defending the claims due to overwhelming evidence of fraud and breach of fiduciary duty. The defendants' explanations were deemed incredible and lacked credible evidence.
Claims for breach of fiduciary and statutory duties, knowing receipt, and dishonest assistance were successful.
The court found that the defendants’ actions constituted a large-scale fraud involving misappropriation of company funds, perpetrated through the deliberate underpayment of taxes and misrepresentation of company accounts.
Declarations that certain properties were held on trust for the claimant were granted.
The court found that the purchase of these properties was financed by misappropriated company funds.
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