Van Collem & Ors v Van Collem & Ors
[2015] EWHC 2258 (Ch)
Case details
Case summary
This Chancery claim concerned alleged misappropriation of about
Key legal principles: directors and nominee directors owe fiduciary duties and statutory duties under the Companies Act 2006 (in particular sections 172, 173 and 175); transfers procured by forgery or without the signors informed consent are voidable (including on non est factum grounds); Civil Procedure Rule 39.3 permits striking out defences for failure to attend and the court may admit hearsay evidence under appropriate provision.
Material grounds of decision: the defendants defence was struck out for non-attendance; the claimants proved that the 7 March 2007 document effecting a share transfer was not signed by, or with the informed consent of, the claimant shareholder and was procured by fraud or otherwise voidable; expert evidence under Seychelles law supported that such a transfer would be voidable for fraud; accountancy and witness evidence established substantial transfers from Socrates through the defendant companies to Belgian companies and that those companies were run for the defendants benefit; the judge concluded the claimants proved misappropriation and were entitled to declaratory relief and equitable compensation.
Case abstract
This is a first-instance Chancery hearing between a father and two sons (the claimants) and the elder son and companies associated with him (the defendants). The claim arose from alleged misappropriation of approximately from offshore accounts held in the name of a Seychelles nominee company, Socrates Management Corporation, and from Helios Finance Corporation.
Nature of the claim and relief sought: The claimants sought declarations that a 7 March 2007 letter purportedly transferring shares in Socrates to the defendant was procured by fraud or signed without knowledge of its contents and therefore of no effect; that purported resignations and share issues effected by the defendant were void; that control of Socrates properly vested in the claimants (or in the claimant son Peter); declarations that the defendant had misappropriated funds between 2006 and 2011; and equitable compensation with interest for the sums taken (specific sums identified in expert accountancy evidence).
Procedural posture and evidential approach: The defendant failed to attend trial and his defence was struck out under CPR 39.3. The claimants therefore had to prove their case by their pleaded case, sworn oral evidence from present witnesses, and hearsay statements which the court admitted by permission. Civil Evidence Act notices were permitted out of time in the circumstances.
Issues framed by the court: (i) whether the 2007 Letter effecting a share transfer was genuine or procured by forgery/fraud or was unsigned in substance (non est factum); (ii) whether the defendant, as director of Helios (a director of Socrates), breached fiduciary and statutory duties under the Companies Act 2006 (including sections 172, 173 and 175); (iii) whether funds were misappropriated and traced through the defendant companies and into Belgian companies; and (iv) the legal effect under Seychelles law of any voidable transfers.
Courts reasoning and conclusions: The judge accepted that the defence had been validly struck out and that admitting hearsay evidence was proportionate. The claimantsuncontradicted evidence, together with hearsay witness statements and expert reports, established that (a) the 2007 Letter was produced fraudulently or signed without knowledge of its contents and so was voidable; (b) expert opinion on Seychelles law showed such a transfer would be voidable for fraud and that later transfers and resolutions appointing the claimant son as director/shareholder were effective when made; (c) accountancy analysis traced substantial sums from Socrates into the defendant companies and onward to Belgian companies and established the likely dissipation of around . The judge also accepted evidence that the Belgian companies were run by the defendant for his own benefit rather than for the claimants. On that basis the court held that the claimants had proved their case and were entitled to the declaratory and equitable relief claimed.
Held
Cited cases
- Foster v Mackinnon, (1869) L.R. 4 C.P. 704 neutral
- Bristol and West Building Society v Mothew, [1998] Ch 1 positive
Legislation cited
- Civil Procedure Rules: Rule 39.3
- Companies Act 2006: Section 172(1)
- Companies Act 2006: Section 173
- Companies Act 2006: section 175(1)