HEATING TRADE SUPPLIES GROUP LIMITED & Anor v MARK MATTEO & Anor

The judge resolved a multi‑fact dispute arising from a falling out between two quasi‑partners in a small trading company. Central findings were that the sums introduced by Mr Baldudak into HTS were loans, not an investment of £1 million in return for a 50% share, and that Mr Matteo is the beneficial owner of 50% of the issued shares of HTS. The court found that two of the share transfers (44 and 5 shares) were nominal transfers intended to keep legal title out of the reach of matrimonial proceedings and therefore the transferee held those shares on trust for Mr Matteo; the single 1‑share transfer was also held on resulting trust for Mr Matteo.

On fiduciary and statutory duty claims against Mr Matteo (including alleged diversion to a new company, interference with online accounts and misappropriation of cash) the court rejected the claimant’s primary allegations except that a proved shortfall on the director’s loan account remained. The judge found that Mr Matteo owed HTS £58,956.11 on his director’s loan account.

The court held that Mr Matteo’s removal as director was unlawful and voidable; he was unfairly prejudiced by exclusion from management and is entitled to relief under section 994 Companies Act 2006. The appropriate practical remedy ordered in principle was that Mr Baldudak should purchase Mr Matteo’s shares; valuation and terms were to be determined at a further hearing. The court also found that Mr Matteo had been assaulted by agents of the claimants on 12 November 2020, ordered return of £210 taken from him, and refused HTS’s application for a perpetual injunction against Mr Matteo.

Background and parties: HTS was run as a quasi‑partnership by Messrs Baldudak and Matteo. A dispute arose over whether sums introduced by Mr Baldudak were loans or payment for shares, the beneficial ownership of HTS shares, alleged misuse of company funds, the creation of a rival company and the lawfulness of Mr Matteo’s removal as director. The claim and a section 994 petition were tried together.

Nature of the proceedings and relief sought: Claimants sought declarations, repayment of alleged misapplied company monies, injunctive relief preventing interference with HTS, and other relief. Mr Matteo counterclaimed under section 994 and sought remedies for unlawful removal and for assault.

Issues for determination: The court framed discrete questions including whether the £1 million was a loan or investment; the extent of Matteo’s beneficial interest in HTS shares; whether Matteo breached fiduciary/statutory duties (ss. 170–175 Companies Act 2006) by misappropriating funds, setting up a competing company and interfering with online/banking accounts; the balance of the director’s loan account; lawfulness of Matteo’s removal as director; entitlement to deferred salary, dividends or rent; unfairly prejudicial conduct; and whether Matteo was assaulted on 12 November 2020.

Reasoning and findings: The judge compared oral testimony to contemporaneous documents (accounts, emails, business plan, messages, accountants’ records, CCTV). Key points of reasoning were:

• The 2015–2016 business plan and communications used the term “investment” in contexts (visa applications, optimistic forecasts) that did not prove legal character of the sums; the ledger entries and accountant’s working papers consistently treated the money as loans. Absence of evidence that HTS received capital and the use of funds (payment to PCB, property purchase in directors’ names) supported a finding of loan.
• The transfer of 44 and 5 shares was primarily intended to defeat or delay matrimonial claims and thus was a nominal transfer: the transfers were therefore held on trust for Matteo. The 1‑share transfer was also held to give rise to a resulting trust in Matteo’s favour.
• Allegations that Matteo set up a competing company and diverted eBay receipts were not proved: the new company did not trade and there was no reliable proof of successful diversion. Accounts and staff evidence supported Matteo’s explanation that the new company related to a planned branch. Similarly, evidence of cash taken from the till did not establish liability given records were in the claimants’ control and there were plausible explanations for cash purchases; the judge rejected the larger cash‑misappropriation allegations.
• Accountant Duffy’s working papers provided the most reliable loan balance; the court accepted a reduced proven director’s loan indebtedness of £58,956.11 rather than the larger schedule relied upon by the claimants.
• Matteo’s removal as a director was procedurally defective (notice, quorum, section 169) and therefore voidable; he was unlawfully excluded and had standing under s. 994; the court found unfair prejudice and ordered, in principle, that Baldudak purchase Matteo’s shares with valuation and terms to be fixed on further directions.
• On 12 November 2020 Matteo was assaulted by agents acting for the claimants; he is entitled to damages and the return of £210 taken from him. HTS’s application for a perpetual injunction preventing interference by Matteo was refused.

The court allowed parts of the petition/claim and dismissed others. Key operative findings: (1) The monies supplied by Mr Baldudak to HTS were loans; (2) Mr Matteo is the beneficial owner of 50% of HTS shares and the transfers of 44 and 5 shares (and the single 1 share) are held on trust for him; (3) the principal allegations of breach of fiduciary and statutory duties by Mr Matteo were not made out; (4) Mr Matteo owes HTS £58,956.11 on his director’s loan account; (5) Matteo’s removal as a director was unlawful and he has been unfairly prejudiced; the court ordered that Mr Baldudak should buy Matteo’s shares (valuation and terms to be determined on further directions); (6) Matteo was assaulted by agents of the claimants, is entitled to damages and the return of £210; (7) HTS’s application for a perpetual injunction was refused. The court’s reasoning rested on documentary contemporaneous evidence, accountants’ records and credibility assessments of witnesses.