England and Wales High Court (Queen's Bench Division) Decisions
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Cite as: [2017] EWHC 2799 (QB)
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Neutral Citation Number: [2017] EWHC 2799 (QB)
Case No: HQ16X02217
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
MR JUSTICE FOSKETT
(1) BFS GROUP LIMITED (t/a BIDVEST LOGISTICS)
(2) BIDCORP (UK) LIMITED
(3) BIDVEST LOGISTICS LIMITED
(4) BIDCORP FOODSERVICE (EUROPE) LIMITED
- and –
(1) SHAUN FOLEY
(2) GARY RICHARD TAYLOR
(3) GIUSEPPE RICOTTA
(4) GIUSEPPINA RICOTTA
(5) PAOLINA RICOTTA
(6) CRISTINA RICOTTA
(7) WYCHWOOD FACILITIES MANAGEMENT LIMITED
(8) PREMIUM ASSET LEASING LIMITED
(9) COTTON (UK) LIMITED
(10) PREMIUM ASSET FINANCE LIMITED
(11) G.R. TAYLOR ACCOUNTANTS LIMITED (t/a G.R. TAYLOR & CO)
(12) PCL TRANSPORT LIMITED
(13) ACCESSIBLE CONSTRUCTION LIMITED
(14) ACCESSIBLE HIRE AND REFRIGERATION LIMITED
(15) MR DOMINIC DRISCOLL
(16) MRS ANNABELLA BURTON
(17) PARTNERS IN LOGISTICS LIMITED
(18) MR MICHAEL NEVILLE
(19) SOLARCROWN COMMERCIAL LIMITED
(20) MR ANDREW MIKHAIL
Anthony Peto QC and Victoria Windle (instructed by Baker & Mackenzie LLP) for the Claimants
The First Defendant in person.
Lance Ashworth QC and Sophia Hurst (instructed by Weightmans LLP) for the 13th-16th Defendants
Charles Dougherty QC and Joseph Sullivan (instructed by Gateley plc) for the 17th-18th Defendants
All other defendants did not appear on this application.
Hearing dates: 16-19 October 2017
HTML VERSION OF JUDGMENT APPROVED
Crown Copyright ©
MR JUSTICE FOSKETT:
For convenience, I will refer to Mr Shaun Foley, the First Defendant, Mr Dominic Driscoll, the 15th Defendant, Mrs Annabella Burton, the 16th Defendant, and Mr Michael Neville, the 18th Defendant, as 'D1', 'D15', 'D16' and 'D18' respectively. No discourtesy is intended. Equally, for convenience I will refer to the Claimant companies (which comprise the Bidvest Group) as 'C' unless it becomes necessary to differentiate between them. C is the well-known group of distribution and service companies.
Until his resignation in October 2015, D1 was C1's Managing Director. Prior to joining the group in July 2007 he had been involved in logistics for a good number of years. When he joined the group, he was first Director of Operations, Logistics, and then became Chief Operating Officer in August 2011. He moved eventually to the position of Managing Director in July 2014. He became a statutory director on 19 December 2014.
At the time of the material events, the person to whom D1 reported was Mr Andrew Selley, the Chairman, now the CEO. The Finance Director was Mr Colin Jones and Mr Stephen Bender was (and remains) Chief Financial Officer.
In the Agreed Case Memorandum, the various parties and the broad nature of the allegations made by C are described in summary as follows:
1.	… The claim is made in respect of a number of allegedly fraudulent schemes involving Mr Foley and the other Defendants, which Bidvest claim Mr Foley devised in order to extract secret profits, and in respect of some of which Bidvest claims Mr Foley received bribes.
2.	The Defendants are related to each other, as follows:
3.	The 7th, 8th and 9th Defendants (Wychwood, PAL and Cotton) are companies in which Mr Foley has a direct or indirect shareholding.
4.	The 2nd Defendant (Mr Taylor) is an accountant, who is also an indirect shareholder in PAL. The 10th and 11th Defendants (PAF and GRT) are companies of which Mr Taylor is a director and shareholder.
5.	PAL and PAF are alleged to have been used in many of the impugned transactions to extract secret profits for Mr Foley and others, including Wychwood, Cotton and GRT.
6.	The 3rd to 6th Defendants are members of the Ricotta family, which owned the shares in PCL Transport 24/7 Limited (PCL), which Bidvest purchased pursuant to two SPAs it claims to have rescinded or alternatively now seeks to rescind as a result of the alleged bribery of Mr Foley by Mr Ricotta. The 12th Defendant, PCL Transport Limited, is another company owned by Mr Ricotta, through which various payments have been made to Mr Foley.
7.	The 15th and 16th Defendants (Mr Driscoll and Mrs Burton) are directors of the 13th and 14th Defendants (Accessible), companies which Bidvest claims were used to extract secret profits from transactions involving Bidvest. Collectively they are "the Accessible Defendants".
8.	The 18th Defendant (Mr Neville) is director of the 17th Defendant (PIL), a company Bidvest claims was used to extract secret profits from Bidvest. [They are known collectively as "the Neville Defendants".]
9.	The 20th Defendant (Mr Mikhail) is director of the 19th Defendant, a company with which Bidvest entered into a transaction which Bidvest claims was used to extract secret profits (collectively the Solar Defendants). Mr Mikhail was also a shareholder of a company (now dissolved) in which Mr Foley had an indirect interest."
It is, of course, important to appreciate that the allegations against the defendants who are parties to the present application are vigorously contested and even in respect of those defendants where settlements have been concluded (see paragraph 6 below), it must not be assumed that there was any acceptance of liability on their part.
Subject to the issue of summary judgment that is the focus of the present application, the trial of the issues that remain (the claims against the other defendants having been settled on confidential terms) is set down for 30 days in June 2018, some 8 months hence. Since a trial on those issues has to be anticipated whatever the outcome of the present application, it will be necessary not to reach conclusions that may have an impact on that trial.
It is clear that D1 has had the benefit of some legal advice because the Defence he has served to the personal claim against him bears some hallmarks of legal drafting (although not obviously drafted by a lawyer), as indeed does the Amended Defence he has served on behalf of himself and D7 to D9 pursuant to an order of Master Yoxall. That is no criticism at all, merely an observation, but nonetheless one that it is necessary to make given the reliance placed by Mr Anthony Peto QC for C on matters that D1 has either expressly pleaded or apparently not pleaded. It needs also to be borne in mind that the Re-Re-Amended Particulars of Claim ('RRAPOC'), to which these pleadings are intended to be a response, run to 94 pages inclusive of the Appendices.
D1 also represented himself at the hearing. I understand that he had tried to discharge the freezing order obtained against him in June 2016 so that he could have been represented, but that was not achieved. Sensibly, he allowed Mr Lance Ashworth QC and Mr Charles Dougherty QC to respond to C's application first although there may at some stage be a divergence of interest between his position and that of their clients, but he made some well-articulated, measured and helpful oral submissions thereafter on his own behalf. However, the caution I must adopt at this stage arises from the fact that D1 will not have been able to answer the points made by Mr Peto with the same level of expertise and sophistication as Mr Ashworth and Mr Dougherty did for their respective clients. At present, he is responding personally to a claim brought by a large corporation with multi-national connections, advanced by a leading City firm of solicitors and experienced Leading and Junior Counsel. I will, of course, return to what D1 said in his submissions in due course and, if only in passing, to the position concerning legal advice and representation for him in the future trial irrespective of the outcome of this application, but I cannot ignore the fact that the playing field is not level at this stage of the proceedings and, whilst there is only so far that I can go in endeavouring to level it, I am not comfortable with the fact that he has apparently not had the ability to obtain proper advice. In the Amended Defence, he asserts that he has no funds with which to obtain legal assistance. I am told by C that he was permitted an initial sum of £15,000 plus "a reasonable sum" for legal advice provided that the source of the funds was not proprietary assets and that no non-proprietary assets have been identified. Given the scale of the case he must answer, it is questionable whether he has available to him at the moment the resources to obtain adequate advice and representation.
At all events, in short, C submits that there are some narrowly confined features of the overall claim to which there is no realistic prospect of maintaining a defence and it seeks summary judgment on the issue of liability only against the defendants to this application, the court being invited to adjourn the issue of the appropriate financial redress for further consideration. Mr Peto contends that the case on the selected issues is simple and that summary judgment is justified. All defendants disagree and resist the application vigorously, contending that all issues should go to trial after disclosure is complete (or, perhaps, more accurately, a review, at least in the first instance, of some 20,000 documents disclosed in September has been completed) so that C's evidence can be fully and properly tested and the defendants' evidence deployed.
Mr Peto said that the motivation for the application is to encourage the defendants to take a realistic approach to this litigation in the hope that it might result in a settlement. It will come as no surprise that the defendants do not see the application in that light. Mr Ashworth, for example, drew attention to the potential financial value of the summary judgment claim if it succeeds by comparison with the value of the overall claim as advanced, and asked rhetorically how a judgment even for the claimed financial value of the summary judgment (which in fact, as indicated, is at this stage restricted to a "liability only" claim) could possibly obviate the need for a trial. Whatever the validity of either stated position, I must, of course, address the issues by reference to the established approach to summary judgment applications.
The approach to a summary judgment application
The principles and practice are well-known and well-established, but a brief reminder is rarely misplaced. The starting point for present purposes is Three Rivers DC v Bank of England (No.3) [2003] 2 AC 1. The broad approach (in that case concerning the claim advanced) was said by Lord Hope of Craighead to be as follows:
"94. … I think that the question is whether the claim has no real prospect of succeeding at trial and that it has to be answered having regard to the overriding objective of dealing with the case justly. But the point which is of crucial importance lies in the answer to the further question that then needs to be asked, which is - what is to be the scope of that inquiry?
95. I would approach that further question in this way. The method by which issues of fact are tried in our courts is well settled. After the normal processes of discovery and interrogatories have been completed, the parties are allowed to lead their evidence so that the trial judge can determine where the truth lies in the light of that evidence. To that rule there are some well-recognised exceptions. For example, it may be clear as a matter of law at the outset that even if a party were to succeed in proving all the facts that he offers to prove he will not be entitled to the remedy that he seeks. In that event a trial of the facts would be a waste of time and money, and it is proper that the action should be taken out of court as soon as possible. In other cases it may be possible to say with confidence before trial that the factual basis for the claim is fanciful because it is entirely without substance. It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based. The simpler the case the easier it is likely to be to take that view and resort to what is properly called summary judgment. But more complex cases are unlikely to be capable of being resolved in that way without conducting a mini-trial on the documents without discovery and without oral evidence. As Lord Woolf said in Swain v Hillman … that is not the object of the rule. It is designed to deal with cases that are not fit for trial at all."
The pithy words towards the end of [158] of the speech of Lord Hobhouse of Woodborough, referring to "absence of reality", are often quoted, but the whole of that paragraph is, with respect, worthy of quotation:
"This leads me back to the CPR. As previously noted, Part 1 adopts a philosophy similar to that enunciated in Ashmore v Corpn of Lloyd's [1992] 1 WLR 446. It is followed through into the new version of RSC Ord 14. It is Part 24. It authorises the court to decide a claim (or a particular issue) without a trial. Unlike Order 14, it applies to both plaintiffs (claimants) and the defendants. It therefore can be used in cases such as the present where the application for judgment without trial is being made by the defendant. The court may exercise the power where it considers that the "claimant has no real prospect of succeeding on the claim" and "there is no other reason why the case or issue should be disposed of at a trial". The concluding phrase corresponds to the similar phrase used in RSC Ord 14, r 3(1) and has not been relied upon in the present case. The important words are "no real prospect of succeeding". It requires the judge to undertake an exercise of judgment. He must decide whether to exercise the power to decide the case without a trial and give a summary judgment. It is a "discretionary" power, i.e. one where the choice whether to exercise the power lies within the jurisdiction of the judge. Secondly, he must carry out the necessary exercise of assessing the prospects of success of the relevant party. If he concludes that there is "no real prospect", he may decide the case accordingly. I stress this aspect because in the course of argument counsel referred to the relevant judgment of Clarke J as if he had made "findings" of fact. He did not do so. Under RSC Ord 14 as under CPR Part 24, the judge is making an assessment not conducting a trial or fact-finding exercise. Whilst it must be remembered that the wood is composed of trees some of which may need to be looked at individually, it is the assessment of the whole that is called for. A measure of analysis may be necessary but the "bottom line" is what ultimately matters. Part 24 includes provisions covering various ancillary matters, at what stage the application can be made (24.4), the filing of evidence (24.5) and supplementary powers of the court (24.6). The Practice Direction which was originally appended filled out some of what is in the rules.
"4.2 Where a defendant applies for judgment in his favour on the claimant's claim, the court will give that judgment if either: (1) the claimant has failed to show a case which, if unanswered, would entitle him to judgment, or (2) the defendant has shown that the claim would be bound to be dismissed at trial. 4.3 Where it appears to the court possible that a claim or defence may succeed but improbable that it will do so, the court may make a conditional order as described below."
The criterion which the judge has to apply under Part 24 is not one of probability; it is absence of reality. The majority in the Court of Appeal used the phrases "no realistic possibility" and distinguished between a practical possibility and "what is fanciful or inconceivable" (ante, p 83h). Although used in a slightly different context these phrases appropriately express the same idea. Part 3 of the CPR contains similar provisions in relation to the court's case management powers. These include explicit powers to strike out claims and defences on the ground, among others, that the statement of case discloses no reasonable ground for bringing or defending the claim."
The need to avoid a mini-trial on the pleadings and documents is a well-established proposition: see White Book 2017, Volume I, at 24.2.3 - 24.2.5.
My attention was also drawn to the decision of the Court of Appeal (Potter and Peter Gibson LJJ) in ED&F Man Liquid Products Ltd v Patel & another [2003] CP Rep 51, where Potter LJ said this:
"8. I regard the distinction between a realistic and fanciful prospect of success as appropriately reflecting the observation … that the defence sought to be argued must carry some degree of conviction. Both approaches require the defendant to have a case which is better than merely arguable, as was formerly the case under R.S.C. Order 14. Furthermore, both CPR 13.3(1) and 24.2 have provisions whereby, for the purposes of doing justice between the parties, the court can order that judgment be set aside under 13.3.1(b) if it appears to the court that there is some other good reason to do so, and, under 24.2(b) that summary judgment be withheld on the ground that there is some compelling reason why the case or issue should be disposed of at trial.
9. In my view, the only significant difference between the provisions of CPR 24.2 and 13.3(1), is that under the former the overall burden of proof rests upon the claimant to establish that there are grounds for his belief that the respondent has no real prospect of success whereas, under the latter, the burden rests upon the defendant to satisfy the court that there is good reason why a judgment regularly obtained should be set aside. That being so, although generally the burden of proof is in practice of only marginal importance in relation to the assessment of evidence, it seems almost inevitable that, in particular cases, a defendant applying under CPR 13.3(1) may encounter a court less receptive to applying the test in his favour than if he were a defendant advancing a timely ground of resistance to summary judgment under CPR 24.2."
Furthermore, where questions of law are raised that may be the subject of uncertainty, those questions should ordinarily be determined at trial on the basis of actual findings of fact that raise those issues of law rather than "on hypothetical facts assumed (possibly wrongly) to be true for the purpose of the strike out" (per Lord Browne-Wilkinson in Barrett v Enfield London Borough Council [2001] 2 AC 550, 557).
I am, therefore, required to assess the pleadings and evidence at this stage to decide whether C has established as against each of the defendants to this application that there is no real prospect of succeeding in their defence at trial in relation to the particular claims identified in the application. In doing that I should avoid conducting a mini-trial and avoid deciding uncertain propositions of law on assumed facts. At the end of the day, the question of whether to grant summary judgment is a discretionary one: see per Lord Hobhouse of Woodborough, quoted at paragraph 12 above.
This was served towards the end of the Summer Term in July 2017.
The application confines itself to seeking judgment on liability (i) in relation to what are said to be bribes paid to or for the benefit of D1 and (ii) in respect of four payments made to the Accessible Defendants (see paragraph 4 above) against invoices issued by them containing alleged fraudulent misrepresentations, the basis of the allegation being that the work claimed in each invoice to have been done was not done. Other claims for breach of contract and duty, dishonest assistance and conspiracy are not the subject of the summary judgment application.
Mr Peto has been anxious to emphasise that fraud, corruption and dishonesty are not necessary ingredients of the causes of action upon which C relies for the purpose of this application and that it is unnecessary to question the motives of anyone involved. That may be so, but it is difficult to imagine that C is not alleging some kind of dishonest plot on D1's behalf to divert monies properly belonging to C from them to him or to companies with which he has a connection. Indeed, Mr Bender's First Affidavit, sworn in support of the application for a freezing injunction, referred to "dishonest transactions with connected third parties, with a view to fraudulently lining [D1's] own pockets and those of connected third parties." Mr Ashworth drew my attention to some very strongly worded correspondence from C's solicitors, Baker & Mackenzie LLP, to his instructing solicitors (Weightmans LLP) in which a criminal context is mentioned. In a letter dated 12 April 2016, C's solicitors suggest that "if [Weightman's clients] want to avoid and/or minimise their criminal and civil exposure" arising from the transaction referred to in the letter they should "fully cooperate with our clients on an open basis, both in relation to this transaction and more broadly with our client's investigation." The letter concludes with the proposition that if they "choose not to cooperate, they will have to face the legal consequences that will flow from their failure to cooperate, including any sentencing process that may follow from a criminal prosecution." There were some robust exchanges of correspondence thereafter.
It may be necessary to return to this in due course, but I am mindful of the need for the court at this stage not to reach any conclusion that might be seen to prejudge any issue as to the alleged dishonesty of any of the parties which plainly is a matter that can only fairly be dealt with at trial.
Disclosure of transactions and/or interest
It seems to me that one theme that is common to the claims made by C against all the defendants to this application is the issue of what disclosure the law of bribery requires to be made to a principal either by the agent or the third party or both in order for the transaction not to be regarded in law as a bribe. It would, I think, be helpful to look at this issue first. Mr Peto submits that there is no positive assertion by any of the defendants that they told any person at C about the various payments concerned and, accordingly, there is no pleaded basis on which it could be found that there was disclosure sufficient to negate liability for paying or receiving secret commissions.
For this purpose only, I will assume that all the normal incidents of a bribe have been established in relation to the transactions the subject of this application: see, e.g., Hovenden and Sons v Millhoff (1900) 83 LT 31, Industries and General Mortgage Co Ltd v Lewis [1949] 2 All ER 573, Fiona Trust & Holding Corp v Privalov [2010] EWHC 3199 (Comm) and Daraydan Holdings Ltd v Solland International Ltd [2005] Ch 119.
The RRAPOC is an extremely lengthy document (see paragraph 7 above) and I cannot pretend that my review of it has been comprehensive, but generally it appears to be the case that any relevant alleged failure to disclose to C by D1 is framed as a failure to disclose the relevant matter "to other senior officers of Bidvest". Occasionally, there is an alleged failure to disclose "to Bidvest" or "to any other senior representatives of Bidvest". This review was prompted by Mr Dougherty's submission that there was no pleaded allegation that disclosure had to be "to the board". He made that submission in reply to Mr Peto's argument, based upon what Briggs J, as he then was, said in Ross River Limited, Blue River LP v Cambridge City Football Club Limited [2007] EWHC 2115 (Ch), namely, that so far as D1 as managing director was concerned, for disclosure to be effective it had to be made to all the directors or to a properly convened board meeting attended by a sufficient quorum. It was not enough, he submitted, on the basis of what Briggs J said, that the managing director had told one other director. This appears now to be the way in which the case on behalf of C is put even though it is not pleaded in that way.
I will return to this argument below, but the question of the mechanics of disclosure by D1 was not essentially a matter for either Mr Ashworth or Mr Dougherty to deal with: their clients effectively dealt with D1 (though not exclusively in some cases, it is contended) and, accordingly, answering this case was not truly a matter for them. However, as I have said, Mr Dougherty reminded me that the claim in this regard had not been pleaded by C as a requirement to inform every director or the whole board at a properly convened board meeting. That is indeed true and I am bound to say that I would be very reluctant to enter judgment against a litigant in person who at face value has not yet had the opportunity to obtain the level of advice he needs in a case of this nature when the true case, as now alleged, is not clear on the pleadings, the more so when the process of disclosure/inspection may not yet have run its course.
However, there is another dimension to this. Mr Ashworth submitted that on closer analysis, what Briggs J said did not represent the clear-cut principle for which Mr Peto contended and it left open the possibility of a more informal means of disclosure. The Ross River case concerned alleged secret payments made by a purchaser of a football ground and stadium in Cambridge to the then chief executive of the Club that owned the premises who was involved in the negotiations. One payment made during the negotiations was for £10,000. The issue arose as to whether the disclosure by the chief executive to another director (but not to the whole board) of this payment was sufficient to remove from it the status of a bribe.
On this issue Briggs J was referred to Jafari-Fini v Skillglass Ltd (In Administration) [2007] EWCA Civ 261. In relation to that case Briggs J said this:
"209. … the question was whether the payment of a bribe to an agent of the defendant had come to the attention of a limited company [X] so as to trigger [X's] obligation as the borrower under a debenture to make disclosure of it to its lender Skillglass. It was proved that one of [X's] directors, a Mr Webster, knew of the bribe, but the evidence showed that he did not communicate it to his colleagues on [X's] board.
210. At paragraph 98, Moore-Bick LJ (with whom the other members of the court agreed) said this:
"The question in the present case is whether information in the case which comes to the attention of one director, but which he has not shared with the rest of the board, is to be treated as information in the possession of the company. In MAN v Freightliner I expressed the view that where the board of directors is properly to be regarded as the directing mind and will of the company in relation to a particular transaction the knowledge of each is to be attributed to the company. That case, however, was concerned with the liability of the company for a false statement made in a written contract which the board as a whole had resolved that the company should enter into. The present case differs in as much as it is concerned with the acquisition by the company of information, but there are nonetheless certain similarities arising from the fact that the members of the board can generally be regarded as collectively representing the company. In general, therefore, I think that where information relevant to the company's affairs comes into the possession of one director, however that may occur, it can property be regarded as information in the possession of the company itself. In my view that presumption informs the present contract and points to the conclusion that information in the possession of Mr Webster relating to the bribe is to be regarded as information in the possession of PAL itself."
Briggs J held that that case was distinguishable from the case before him because of the different purpose for which the company needed the information. In Jafari-Fini the information was "needed" only in the sense that it triggered the company's obligation to report it to its lender under the debenture whereas the information was required in the case before him in the context of the chief executive being paid by the intending purchaser while leading the Club's negotiations for the sale. He characterised this approach as invoking the "purposive principle". Of that he said the following:
"212. The application of that purposive principle to the question whether a payment to the agent of a limited company has been sufficiently disclosed to deprive it of the character of a bribe is confirmed by the following passage in the judgment of Tuckey LJ in Wilson v Hurstanger …:
"What amounts to sufficient disclosure for these purposes? Bowstead says: Consent of the principal is not uncommon. But it must be positively shown. The burden of proving full disclosure lies on the agent and it is not sufficient for him merely to disclose that he has an interest or to make such statements as to what could put the principal on enquiry: nor is it a defence to prove that had he asked for permission it would have been given. I think this is an accurate statement of the law. Whether there has been sufficient disclosure must depend upon the facts of each case given that the requirement is for the principal's informed consent to his agent acting with a potential conflict of interest."
213. Tuckey LJ's analysis was concerned not with the question whether disclosure to one director rather than to the whole board was sufficient, but with the quantity or quality of the information communicated. Accordingly, Wilson v Hurstanger Ltd does not in terms answer the question in issue in this case. But in my judgment it points the way to the answer. A payment to the agent of a company is by the law relating to bribery required to be disclosed to the company so as to enable it to make an informed decision whether to permit the agent to do something giving rise to a potential conflict of interest. Such an informed decision can in general be made only by the company's board. Contrary therefore to the general rule propounded by Moore Bick LJ in Jafari-Fini … I conclude therefore that a payment by a person dealing with a company to a managing director of the company charged with the negotiation on the company's behalf is only disclosed to the company by the director if that disclosure is made to all its directors or to a properly convened board meeting attended by a sufficient quorum.
214. In the present case the question is as to the disclosure required to be made by the director himself, where the payer took no steps to make the disclosure, leaving it to the payee director. It may be that a less stringent rule is to be applied where the payer makes the disclosure. For example, Mr Davidson conceded that disclosure by Ross River to the company's solicitors would have sufficed. But where (as here) the only disclosure made by the payee director was to one of his colleagues on the board, that was in my judgment insufficient to bring the existence of the payment to the knowledge of the company.
215. It may also be that where the payee is not the managing director or (as here) the chief executive, the payee may make sufficient disclosure by telling the MD or CEO. As Mr Davidson put it in closing: "If you disclose to someone who is the leader, that is good enough. But if you are the leader, merely disclosing in a vague way to a follower is not good enough"."
Mr Ashworth submitted that it would be unwise on a summary judgment application to adopt as a clear statement of legal principle the conclusion on the particular facts of an individual case by a first instance judge, no matter how distinguished that judge might be. I agree. Since the person receiving the payment in the Ross River case was the chief executive, it is not, with respect, difficult to see why the knowledge of that payment ought to have been shared with the whole board of what was a small company for it to affirm the validity of the payment in a fully informed way. It would, in my view, be difficult to say that Briggs J was doing anything more than reaching a conclusion on the particular facts of that case and not seeking to enunciate some all-embracing principle that governed every case. The issue of the standing and relevance of the general rule propounded in Jafari-Fini is a matter that might, one supposes, be an issue for consideration in the present case.
However, Mr Ashworth made another point which was further developed by Mr Dougherty. He drew attention to paragraph 215 and the acceptance by Briggs J of the proposition that if disclosure by someone who is not "the leader" to someone who is, that is sufficient. In this case, if I understand D1's position correctly, it is that Mr Selley (who was his "boss") knew, at least in broad terms, what arrangements he was making with third parties such as the other defendants to this application. (I should say that he also says that several other directors had similar knowledge, including Mr Jones, but I need not refer to that for present purposes.) If that is so, it is at least arguable, on the basis of the position accepted by Briggs J in paragraph 215, that D1 had at least chosen an acceptable avenue for disclosure.
That would not necessarily mean that sufficient disclosure was given, but as Tuckey LJ said in Wilson v Hurstanger (see paragraph 27 above), that will "depend upon the facts of each case given that the requirement is for the principal's informed consent to his agent acting with a potential conflict of interest". As things stand in the present case, there is a general assertion from D1 that Mr Selley (and others) knew of his activities, albeit an assertion without the detail that might have been advanced if D1 had been fully and properly advised about how to respond to the case against him. D1 says that he and Mr Selley shared a PA and were near neighbours in the Head Office and there is some evidence from some documentary disclosure that Mr Selley signed certain documents in connection with some of the transactions that form the subject-matter of this case. In response there is a general denial (through Mr Bender's witness statement) that anyone at Bidvest knew anything about any payments made to or for the benefit of D1 (as it is alleged in these proceedings was the case), although it is accepted that some people within C knew something of the transactions between C and the defendants. However, at this stage, there are no statements from, for example, Mr Selley and Mr Jones. All this is, of course, before documentary disclosure/inspection has necessarily run its course.
D1 has raised concerns about disclosure generally, and about the deletion of emails by C for a year after his departure in particular, that might throw light on issues relating to what was known and by whom at the material times. The issue is not before me as such, but the prospect of disputes about disclosure was mentioned in the hearing before me. D1 was able to point to one aspect of the background (not directly related to the transactions the subject of this application) that raises an issue about disclosure and indeed the credibility of one feature of C's claim. It relates to what is known in the proceedings as "the PCL claim" (see paragraph 6 of the Case Summary quoted in paragraph 4 above).
For this purpose it is unnecessary to spell out the full details of the allegations save to record that under an agreement entered into with Mr Ricotta C agreed to purchase his company, PCL. In short, the deal was that Mr Ricotta would be paid £30 million immediately for 75% of his shares and certain further sums over a period of about 13 years provided that certain conditions were met for the remaining 25%. About 6 months after the deal was concluded, C considered it would be desirable, if possible, to "buy out" Mr Ricotta immediately and release itself from the continuing obligations. This indeed occurred and D1 played a significant role in the negotiations that led to the final deal. However, what has been alleged by C in the present proceedings is that "[D1] specifically encouraged [C] to purchase the remainder of Mr Ricotta's shares by way of the Second [Share Purchase Agreement]" (see paragraph 19.5 of the Reply). In addition to that pleading, the following is pleaded by way of response to something alleged by D1 in the Defence:
"The allegation in respect of the PCL transaction … that "Mr Foley was instructed to convince Mr Ricotta to take an early buy out which was agreed in early 2015 on the instruction of Mr Bernard Berson Chief Executive Food service Bidvest Group" is denied. Paragraph 19.5 above is repeated."
At face value, the allegation on behalf of C (being made in March/April 2017) is that the "buy out" idea was D1's and that any initiative to achieve it in discussions with Mr Ricotta was also his.
Apparently provided by the solicitors for another party to the proceedings (and thus not by C's solicitors), D1 has drawn my attention to some email exchanges in December 2014 (to which he was not a party) involving, in the first instance, Mr Bender and Mr Jones and then Mr Selley and Mr Bernard Berson (Group Chief Executive and Executive Director of C), in which it was plain that they (particularly Mr Berson) were considering and then advocating an attempt to buy out Mr Ricotta. Mr Berson asked in one email to Mr Selley whether there is "any point talking to [Mr Ricotta] and doing a lump sum settlement of all future monies owed" and Mr Selley replied saying that he and D1 had had "the same discussion" and asked whether he (Mr Berson) "had a ballpark before we start discussions". In due course, on 29 December 2014, Mr Selley asked D1 whether he thinks that "we can achieve £15 million or less", the maximum that Mr Berson had in mind.
It is not for me to reach a final conclusion about what happened (and I have only this limited email exchange to consider), but D1 is, in my view, justified in saying that those emails present a different picture from that painted in the Reply. It may only go to one feature of C's case (and, of course, not one raised specifically at this stage), but it does raise a question about the credibility of some of the instructions being given by C to its lawyers. As indicated, the material only emerged from some disclosure given by solicitors acting for other parties in the proceedings.
In relation to the issue of documentary disclosure, Baker & Mackenzie informed D1 in a letter dated 7 July 2017 that the cost of disclosure would, they estimated, be "in excess of £1 million", a sum that would be wasted if the exercise was unnecessary and which, they asserted, would be recoverable from him. The emailed letter was sent to him on Friday, 7 July, and he was asked to confirm by "close of business on Wednesday, 12 July 2017" that the proposal that disclosure should be postponed until after the summary judgment application had been heard was agreed. I do not know the full details of what occurred thereafter, but C and the other defendants did exchange lists of documents on or around 8 September. Whether this means that the threat of a bill in excess of £1 million has now been removed is unknown, but I am troubled that D1 should have received an ultimatum such as this when he is subject to a stringent freezing order and apparently has no significant access to legal advice (see paragraphs 7-8 above). However, I do note that D1 sent an email to Baker & Mackenzie on 14 September 2017 asking for access to the relevant disclosure platform which was to be on the basis of the payment of a monthly fee. I was told by Mr Ashworth and Mr Dougherty that the material in the disclosure list from C was "huge" (which reflects the message of Baker & Mackenzie's letter to D1) and that their teams had not had time to digest it. If that is so, I am quite happy to accept that D1, who has described the disclosure as "vast", has not had the opportunity to do so either. As indicated previously (see paragraph 9 above), apparently some 20,000 documents have been disclosed so far in a list running to 118 pages.
D1's, apparently frank, Defence contains the assertion that on many occasions the way C's business was conducted at the time "stepped very close to the edge of acceptability under business guidelines" and "without doubt turned a blind eye to maverick commercial deals which on some occasions was the only profit the business delivered in that year." He recognises that some of the deals would appear to be "odd" to an outsider, but claims that they were merely reflections of the dealings culture of the Group at the time when it was seeking to turn around the fortunes of its logistics division from a non- or minimal-profit-making venture to one making a substantial profit. He has said that, supported by the Board, suppliers were favoured if they cooperated in paying out large sums of money to the logistics division "either through inflating invoices or paying other debts direct on behalf of the Bidvest business – this was creative accounting at all times." He asserts that "[the] business used complex methods to ensure these benefits were "hidden" from auditors and [D1] was party to this culture which was highly pressured." He gives more details of what he is alleging in this regard in the Amended Defence under the heading "Culture of trading".
Assertions of this kind will be most unwelcome to C and may, of course, prove to be wholly unfounded. I am in no position, nor am I called upon, to make any kind of assessment about them – I must merely decide for present purposes whether there is a realistic prospect of the trial judge concluding that enough was known by those in superior positions to D1's position and more generally within C, whether by direct knowledge, by simply turning a blind eye to any unconventional dealings of which they had some knowledge and/or condoning the kind of culture to which D1 makes reference, such that C is to be attributed with sufficient knowledge of D1's dealings with third parties that something that otherwise would have the characteristics of a bribe in law is not to be so regarded. Related to this is the question of whether what D1 did in any of the situations to which this application relates actually put him into a potential conflict with C.
These issues are, at first blush, obviously matters for decision on the basis of the evidence adduced at trial, inference from circumstantial evidence being as relevant as direct evidence: c.f. Anangel Atlas Compania Naviera SA v Ishikawajima-Harima Heavy Industries Company Ltd [1990] 1 Lloyd's Rep 167, 171, per Leggatt J, as he then was. However, if the evidence is incontrovertible, then there is scope, subject to the ultimate discretion of the court, to grant summary judgment.
Unless, for reasons that will become apparent, I am persuaded that the evidence at this stage is so overwhelmingly to the contrary, my provisional view is that it is not unrealistic to suppose that the court at trial may conclude that sufficient disclosure was given by D1 in the circumstances that obtain in the present case.
There is another issue, which was articulated fully by Mr Ashworth, but mentioned also by D1 in his submissions, relating to the corporate structures in which he (D1) had an interest and the question of whether payment to such a structure constituted a payment to him or for his benefit. For convenience I will deal with this at a later stage (see paragraphs 96-99 below).
I have dealt with the general position concerning D1 and the issue of whether there is a realistic prospect of the court of trial deciding that the transactions targeted in this application were not to be treated as bribes because the knowledge of C about them was sufficient to remove that status from them. As indicated, for the reasons given, I am inclined at this stage of the analysis to say that there is such a realistic prospect.
However, I will reserve my final decision on the matter until I have reviewed the application as it relates to the Defendants represented by Mr Ashworth and Mr Dougherty. Plainly, I have to determine each aspect of the application on its own merits, but there is a degree of overlap between the considerations that apply to each and, of course, D1 is part of the picture in each case and it is, therefore, sensible to see whether any feature of that picture either tends to confirm or tends to undermine the provisional conclusion reached above.
The specific claims the subject of the application
The specific claims relate to payments made by "the Accessible Defendants" and by "the Neville Defendants".
The payments made by the Accessible Defendants
Mrs Burton (D16) explains the background to the companies in which she and her husband (D15) have interests in her witness statement. She says this:
"[D15] is my husband and business partner, and ACL (D13) and AHR (D14) are companies of which he and I are directors and shareholders. ACL's business is the design, project management and construction of custom cold store solutions. AHR hires cold store refrigeration equipment. We are a small, family business and AHR has been operating over 23 years."
She also explains the way in which these companies did business with C (primarily, though not exclusively, through the agency of D1) in the period from 2012 to 2015. In relation to financial dealings she says this:
"From the very beginning of our working relationship with [C], it became normal practice for us to invoice other suppliers in lieu of [C], and likewise for us to pay other suppliers on their behalf. Sometimes we were also paid by companies that were financing the work via a third party lease or similar. It was therefore completely normal for payments to be made to and by other entities in respect of work done for [C]."
She gives some examples and then says:
"… there were occasions when ACL would invoice [C] directly and other occasions when it would invoice a different entity. If the latter, it was always at the instruction of [D1] and, at least on some occasions, with the agreement or knowledge of [C1's] finance director, Colin Jones. Likewise ACL sometimes received payments directly from [C], sometimes from other entities; often where a third party lease was being used to finance the project. On all occasions to the best of my recollection, there was a prior discussion via telephone or email with [D1]; it was on [his] instructions that payments were arranged. [He] often asked ACL to pay [C's] contractors on [C's] behalf. Sometimes we were asked to invoice [C] for the money using a different narrative. We understood [D1] to be acting with the full authority of [C]. We always knew our relationship to be with [C], and we expected to be paid by [C]; but payments were sometimes arranged from or to other entities on [C's] behalf and for its convenience."
She added this:
"At no point did we make a payment on [C's] behalf in the belief or with the knowledge that it was to benefit [D1] personally."
She repeats the substance of that last assertion in relation to the transactions to which this application relates and concludes in this way:
"I do not accept that making a payment on the instructions of [D1] meant that that payment was made for his benefit as Stephen Bender seems to say in … his statement. I made very many payments on [D1's] instructions during the course of our business relationship and always believed that they were for the benefit of and in the course of [C's] business. Over a 3½ year period we carried out something like £6m of business on [C's] behalf. At no time did we believe or suspect that [D1] was acting contrary to [C's] interests if indeed this ever was the case."
The basis upon which payments were made on behalf of C and/or were received from C, as described by Mrs Burton, does broadly coincide with what D1 says about the way he conducted business on C's behalf during the period it was turning around its logistics business (see paragraph 37 above). In a nutshell, it was, he says, the way cash flow was handled, suppliers like ACL and AHR on occasions effectively being conduits for the discharge of C's liabilities to other parties and indeed bankers to C on other occasions.
Mrs Burton also said that there were some payments (for example, to a company called 'Cotton') which, so far as she and her companies were concerned, had nothing at all to do with C.
Mr Peto submits that these protestations of innocent dealing cannot be right and should be rejected. In the first instance, he submits these defendants provided D1 with a benefit by paying sums where he directed, without query, and must, therefore, be taken to have known that they were conferring a benefit upon him. Second, he draws attention to what Mrs Burton says in her witness statement about the questioned transactions (namely, the payment of £192,000 to Wychwood, the total payment of £532,560 to PAF, the payment of £68,280 to Cotton and other payments to a company called for this purpose 'ZZT') and asserts that what she says is inconsistent with the denial that they were intended to benefit (or had the effect of benefiting) D1.
I could go into some detail about each transaction, as Mr Bender does in his witness statements and as Mrs Burton does in reply and as the respective Skeleton Arguments do, but I am quite satisfied it is not necessary to do so. Indeed, each time I have read the argument and counter-argument concerning each transaction, I have sensed that I am effectively being asked to conduct a mini-trial and am thus in forbidden territory. There is no doubt that some, if not all, of these transactions are unusual (Mr Ashworth accepts that they are "not straightforward"), but that is entirely different from saying that the explanations given about them are plainly and obviously incorrect or untrue such that judgment for C can effectively be guaranteed at trial and thus be entered now. It would in essence mean the rejection of Mrs Burton's account as wholly unworthy of credence, itself an account given before all the documentary material has been examined (and, perhaps, even revealed). If this case is not resolved beforehand, the only arena in which this account can be tested, along with the protestations of ignorance of the circumstances on the part of C, is at trial.
As I have said, in my view it is unnecessary to go into detail about each of the transactions. In relation to each, however, I would simply highlight the following features that might be taken to be supportive of the defendants' case. Whether, ultimately, they are will be a matter for the trial judge:
(a)	£192,000 to Wychwood
Mr Peto says that the loan to Wychwood was "manifestly a payment which benefited [D1]". Mr Ashworth contends that (a) this was an entirely separate commercial transaction that had nothing to do with C and (b) that, whilst D1 may be the sole shareholder in Wychwood, there is no suggestion or evidence that it is an alter ego of D1 or a sham company acting as D1's agent to receive bribes. Mrs Burton supports (a) as a matter of fact and asserts that the arrangement had nothing to do with the ongoing relationship between ACL and C. The proposition in (b) is part of Mr Ashworth's more general proposition concerning the legal effect of payments to various corporate entities (see paragraphs 96-99 below).
It is impossible to say, on the evidence as it now stands, that the arrangement constituted a bribe. A full examination of the circumstances at trial may prove it to be so, but not at this stage.
(b)	£532,560 to PAF
Although there is some inconsistency of description in the papers before the court, I will term the first of the two payments made to PAF as the payment of £429,000.
This sum is described by Mrs Burton from her perspective as a payment in respect of a commercial project that D1 had conceived relating to renewable energy. It was, she said, suggested by him that she and her husband should set up a power company that would become a supplier to C (and to others). As she put it, "the solar investment had nothing to do with [C] apart from the fact that they may have been a potential customer." The payment of £429,000 was made against an invoice from PAF with the narrative "commission charges in regard to assessments conducted around usage of lithium batteries to support existing installations and project start up costs".
On the basis of her account, as it stands, there may be some issues between the Accessible Defendants and D1 about what happened to the money, although there is common ground between them that it was paid in support of an energy project. However, the issue for present purposes is whether the Accessible Defendants should, by reason of the circumstances mentioned, be obliged to "repay" that sum to C because it was (so it is alleged by C) to have been paid to D1 or for his benefit in circumstances that put him into conflict with his duties to C.
Mr Ashworth submits that, from the perspective of the Accessible Defendants, this is another instance of where the evidence as it stands does not support the conclusion that the payment to PAF (of which D1 was neither a shareholder nor an office holder) constituted a payment to or for the benefit of D1. As things stand, that appears to be a reasonably arguable position. It does seem abundantly clear, on Mrs Burton's evidence as it stands, that, in addition to this consideration, the money was never intended for C either. It follows that it was not diverted by D1 or someone or some company associated with him such that it ought in principle to be disgorged.
The second payment to PAF (of £102,960) was, according to Mrs Burton, to be utilised for the payment of certain early termination charges (payable to a company called Stillers) that were the liability of C. It related to the termination of what was known as the out-bases project, the dismantling of the Darlington out-base (where Stillers had provided services) being a matter dealt with by ACL. It follows that, from her perspective, there was nothing particularly unusual about being asked to discharge the liabilities of C given the way that the Accessible Defendants were asked to act from time to time by D1 (see paragraphs 46-48 above). D1 himself has confirmed that this was what was intended.
Again, it is, at this stage, impossible to say that this is not a credible explanation for what occurred and, as things stand, it undermines any suggestion of a bribe.
(c)	payment of £68,280 to Cotton
I have already alluded to what Mrs Burton has said about this (see paragraph 51 above). Mr Peto dismisses this assertion by saying that the "services" provided to ACL by Cotton (said by Mrs Burton to justify the payment to a company that "belonged" to D1's "romantic partner", Ms Winser) were "clearly a sham" and did not justify the amounts spent on them.
It is really quite impossible for that view to be taken on the material currently available. I cannot say what an examination of the whole of the evidence, perhaps informed by what occurred in respect of other transactions, might reveal, but it is, in my judgment, only in that context that a fair and proper evaluation of this issue can be resolved.
(d)	payments of £787,212 to ZZT
ZZT is short for ZZT Suisse Ltd, a company registered in England. Mr Taylor (D2) was the sole director and shareholder of ZZT. The RRAPOC allege that he was a "personal friend" of D1. D1 has not denied those allegations, nor has he denied that certain payments were made by the Accessible Defendants to ZZT – this is acknowledged by the Accessible Defendants also. However, D1 denies that "secret profits" were made out of the arrangement: he says that the arrangement was made to meet C's legitimate operating costs in relation to the out-base project (see paragraph 61 above).
So far as the Accessible Defendants are concerned, Mr Ashworth repeats his submission (referred to in more detail at paragraphs 96-99 below) that, since D1 has no shareholding or directorship in ZZT, it cannot be regarded as his alter ego or as an agent for him without further evidence to establish that.
Mrs Burton says this in her witness statement as a general proposition:
"We understood from [D1] that ZZT was an employment agency or HR function, responsible for personnel on a number of Bidvest's projects. We did not at any point believe that ZZT was a company controlled by [D1] or in which he had any shareholding, nor do I now believe that to be the case. I do not understand Stephen Bender's assertion that payments to ZZT pursuant to genuine transactions were in any way for [D1's] benefit."
She then deals with each of the constituent invoices from ZZT which ACL paid and the reasons and background to meeting the required payments from ACL's perspective. As I have said, I do not consider it necessary to descend into detail about each of these transactions because to do so would have the effect of conducting an inappropriate mini-trial.
(e)	"fraudulent" invoices
C makes a claim based on alleged fraudulent misrepresentation in respect of four invoices issued by ACL to C against which C made payments. Each invoice is said to contain a false and inaccurate narrative in the sense that the work specified in the invoice was not carried out and, accordingly, the sums should not, it is said, have been paid.
Mrs Burton says that getting paid by C for work done was often difficult and that ACL acted as a main contractor on nearly all of C's projects and incurred liabilities to a number of sub-contractors in the process. Getting paid by C to pay these sub-contractors was important. She goes on to say this:
"… the invoices … were raised in accordance with [D1's] specific instructions. [He] provided us with the narrative for each invoice. The narratives that he provided did not actually reflect the work that ACL had done and was seeking payment for. All four invoices related to genuine work that was done by ACL for [C] across a number of projects. [D1] knew precisely what work each invoice related to and there was no intention to mislead [C]. Quite the contrary, we only did what we were told in order to get paid."
Mr Ashworth raises a number of points that, he submits, undermine the cause of action relied upon for this purpose. For example, any knowledge of the alleged falsity of the narrative would have been known to C through the agency of D1. In that connection he draws attention also to the fact that, on the basis of documentation available thus far, there is evidence that Mr Jones was aware of at least some of the arrangements being made. Mr Ashworth, of course, says that more may be revealed once the investigation of the existing disclosure is complete and possibly further disclosure pursued. There is also the need, he submits, for C to be able to establish loss, a crucial part of the cause of action relied upon, something he suggests that has not yet been established. Indeed he contends that C knows well that work to the value of the invoices has been done for which C is liable and that any order requiring the repayment of the amounts on the invoices would be met by a counterclaim for unjust enrichment.
Yet again, as it seems to me, this is the kind of issue that cannot be determined at this stage. There are, on any view, some unusual features about the way D1 conducted business, ostensibly on C's behalf, but if his case about the "culture" in which dealings with third parties at the relevant time took place are established, the arguments foreshadowed cannot be dismissed as fanciful.
There are other features of the present situation in this case that add additional grounds for rejecting the summary judgment applications concerning the Accessible Defendants, but I will turn to those when I have considered the application as it applies to the "Neville (or "PIL") Defendants".
The payments made by the Neville (or PIL) Defendants
The targeted transactions in the summary judgment application are (i) payments to a company called 'Tolcarne' amounting to £68,232.50 and (ii) payments to PAF (see paragraph 4, sub-paragraph 4, above) and PAL (see paragraph 4, sub-paragraphs 3-5 above), amounting to £800,923. C contends that the payments to Tolcarne amounted to a bribe and that any payment from PCL to D1 (or a company with which he is associated) was a bribe.
Mr Neville (D18) describes himself in his witness statement as a director of and shareholder in Partners in Logistics Ltd ('PIL') – D17. PIL is based in Ireland. It is a logistics company that employs 50 staff and owns two warehouses used as storage bases for clients' goods to be transported around Europe. His summary of his position and that of PIL was encapsulated thus in his witness statement:
"3.	I was shocked when I discovered that [C] wished to sue me and PIL. I will go into detail regarding my and PIL's dealings with [C] below, however in summary, PIL's involvement with [C] has been limited to providing financing to it in entirely above-board transactions that were mutually beneficial to both companies. I have met several [C] executives (including at a golf day) who have discussed the deals PIL did with it and never gave any hint that there were any concerns regarding the probity of the deals.
4.	It is surprising, to say the least, that now that [C] have taken the benefit of the financing PIL has provided to it, it seeks not only to resile from those transactions but also to extract substantial additional sums from PIL in circumstances in which, insofar as I can see, PIL has done nothing wrong.
5.	I am aware that [C's] case rests largely upon allegations that PIL (and I) paid bribes to [D1], one of its former directors. I reject this allegation in the strongest possible terms.
6.	Neither I nor PIL have ever paid any bribes to [D1] or any of his companies. Indeed I, personally, have not made any payments whatsoever. All of the payments [C] complains of were made by PIL and so I cannot understand the basis upon which it seeks summary judgment against me personally.
7.	The payments PIL made were legitimate payments which fell into two categories. First, there were payments PIL made to a company called Tolcarne, which [D1] owned, for vehicle storage in the UK. Secondly, there were payments PIL made to PAL and PAF, companies [D1] owned or had an interest in, on behalf of PCL Transport Ltd ('PCL'), as payment for a fridge unit in Ireland PCL Transport had purchased from [D1]."
The payments made to Tolcarne arose from an agreement entered into between PIL and C for the hire by C of various vehicles (referred to generally as "the Mothball Fleet") that had hitherto been leased by C from Lloyds. According to Mr Neville, towards the beginning of 2012, D1 contacted him to ask if PIL would be interested in assisting C with a financing arrangement concerning the fleet of vehicles. The fleet was then leased from Lloyds, but the lease was due to expire that year and C did not wish to incur the capital cost of purchasing the fleet. PIL agreed to the proposal, Mr Neville having seen the vehicles at a site in Skelmersdale (which he knew did not belong to C), and PIL paid a total of £720,000 to Lloyds for the fleet having secured funds from the Bank of Ireland for the purchase. A formal leasing agreement was drawn up between C and PIL. It is plain that people other than just D1 within C were involved in these arrangements.
Mr Neville explains that at the outset of PIL's involvement with the Mothball Fleet, D1 told him that Tolcarne, which he owned or part-owned, arranged for parking/storage of the Fleet at the site at Skelmersdale and that PIL would need to pay for the parking/storage of its vehicles during the course of the lease arrangement. Mr Neville accepted that the £68,000 odd (net of VAT) related to those payments.
Mr Peto contends that since PIL admits that it knew D1 had an interest in Tolcarne, it knew that the payments it made to Tolcarne would benefit him, thus raising a real possibility of a conflict of interest. Therefore, he submits, the payments to Tolcarne amount to a bribe, whether or not any services were provided in return for them. In any event, he submits that there is no real prospect of a court being satisfied that Tolcarne provided services because it is "wholly incredible that PIL would pay for storage of vehicles which it asserts were leased to [C], and PIL has not disclosed any agreement to that effect, or other document to support that such an arrangement existed, save invoices for "transport and distribution charges for freight movements", which do not refer to parking services."
It is on that general basis that C seeks summary judgment against the Neville Defendants in respect of this particular transaction.
Mr Dougherty raises an issue of law about "net benefit" to which I will return below (see paragraphs 90-95), but Mr Neville's layman's observation is as follows:
"I would also be extremely surprised if other senior executives at [C] were unaware of the payments PIL was making to Tolcarne. They must have known that the Mothball Fleet, or part of it, was being stored at a site not owned by [C] (or else, where did they think the fleet was?). They must also have known that [C] was not paying for the parking/storage of the fleet. I simply cannot believe that the parking/storage of such valuable assets would not have been the subject of some monitoring or control by [C] and, assuming it was, [C] must have known that parking/storage was being provided by Tolcarne, paid for by PIL. This is an issue I would certainly wish my legal team to explore with [C's] witnesses at trial, as well as their knowledge of [D1's] link with Tolcarne."
In an 8th witness statement dated 11 October 2017 (and thus effectively two working days before the hearing), Mr Bender replies to this in the following manner:
"… Mr Neville's assumption is wrong. The Mothball Fleet represents a tiny fraction of [C's] overall fleet, and a large number of vehicles are stored at Skelmersdale. Payment for this storage is made (by [C], not the companies from which it hires vehicles) to a Mr Richard Tapper who owns the site. No one at [C] knew [PIL], was making payments, purportedly in respect of the cost of storing the Mothball Fleet at Skelmersdale, but even if it had, there is no reason that anyone at [C] would have thought that such payments would benefit [D1]."
Mr Dougherty observes that Mr Bender does not exhibit any documents to support this assertion and he does not say whether the payments made by C were for all of its vehicles parked at the site, including those it did not own but were leased. His submission is that clear findings on the basis of this evidence cannot be made on an application such as this.
It would be idle to pretend that Mr Bender's statement does not raise the index of suspicion about the nature of the payments made (though not necessarily an index of suspicion concerning PIL's role in making them), but a much higher evidential threshold must be surmounted for it to be acted upon to enter summary judgment. Again, the unspoken invitation to the court is to treat this as a mini-trial "on the papers", an invitation that must be resisted. His contribution does not, in any event, address the "culture issue" raised by D1 to which I referred in paragraph 37 above.
The other transaction identified in the application is one of the fridge transactions. It is not the Hoddesdon Fridge transaction (which figures in the overall case), but one relating to the sale of an industrial fridge unit in Ireland.
Mr Neville's account of this is that in or around late 2014 D1 asked him whether PIL could assist him in a sale of a fridge unit in Ireland to PCL. He told him that the transaction could not be undertaken directly and he asked if PIL could act as a middle man in return for payment of 15% of the agreed price. He explains that the arrangement was a good deal for PIL since it would earn a 15% commission for acting as a middle man. This was agreed and PCL paid PIL £950,000 plus VAT for the fridge unit on 7 January 2015. PIL agreed to pay on £807,500 (being the total received less 15% VAT) to PAL or PAF. The payments were made between February and October 2015.
Mr Neville does not deny that he knew that PAL and PAF were companies in which D1 had an interest. However, his perspective was that the transaction in which he was asked to involve PIL as a middle man was wholly unconnected with C notwithstanding that it was D1 who asked if his company would become involved and, of course, D1 was associated with C. However, his view is that "PIL merely passed on funds it had received from PCL, subject to a deduction of 15%, and so PIL was simply acting as a conduit for PCL's payments."
He also rejects the suggestion that Mr Bender makes, namely, that the arrangement whereby PIL earned a substantial commission simply for acting as a conduit was a bribe to D1 to facilitate further work or deals with C because, as Mr Neville puts it, "[neither] myself nor PIL did (or had any intention of doing) any further deals with Bidvest after the PAL/PAF payments started in February 2015." There is obviously a factual issue there if the issue is relevant.
Mr Peto submits that the Neville Defendants have not disclosed any documentary evidence "demonstrating the existence of any fridge, or any agreement as to how it should be disposed of, or the monies paid." It would seem that he is suggesting that the whole transaction is a sham. At all events, he submits that payments were made by PIL for D1's benefit by enabling him to receive money PCL could not otherwise pay to him and that it did so in circumstances where a potential conflict of interest between D1 and C existed, principally because of the potential for future business between PIL and C. He also submits that PIL "never questioned why [the] money could not be paid directly to [D1], and that they never questioned why [D1] would be willing to permit [PIL] to retain such a large sum merely for acting as a conduit."
It is, of course, entirely reasonable to raise these questions, but the issue is whether they take the case sought to be advanced in this summary judgment application any further. If there is an issue about whether it was unlawful for PIL to act as it did (because it was either knowingly providing D1 with a bribe or affording him a means of dishonestly siphoning C's money for his own purposes), that does seem to me to be a matter that can only be determined at trial. There is at least a prima facie credible case for PIL to assert that it was unaware of any possible conflict of interest between D1 and C and, in relation to this transaction, that it was simply facilitating a deal between two companies that are independent of C.
Net benefit?
Mr Dougherty has raised an argument that for a payment to constitute a bribe it must confer a net benefit on the beneficiary of the payment. His homely example to demonstrate the proposition was that if PIL agreed to pay D1 £10 in return for D1 paying it £12, PIL's payment would not be a bribe because D1 would not benefit from the transaction (he would lose £2) and such a payment would not give rise to a realistic prospect of a conflict between D1's personal interests and those of C since he would have no reason to favour PIL.
He derives this argument from the manner in which Christopher Clarke J, as he then was, expressed himself in Novoship (UK) Ltd v Mikhaylyuk [2012] EWHC 3586 (Comm):
"106.	The essential character of a bribe is … that it is a secret payment or inducement that gives rise to a realistic prospect of a conflict between the agent's personal interest and that of his principal. The bribe may have been offered by the payer or sought by the agent. There is no need to establish dishonesty or corrupt motives. This is irrebuttably presumed …. A bribe encompasses not just a payment of money but the conferring of any advantage or benefit, and may be an actual benefit or merely the promise of a benefit held out by the payer or an expectation of one. The motive for the payment or inducement (be it a gift, payment for services or otherwise) is irrelevant. In Fiona Trust v Privalov [2010] EWHC (Comm) at para 73 Andrew Smith J contemplated that moonlighting for a person engaged in transactions with the principal might well give rise to a conflict between the agent's interest and duty and that the reward for his services might count as a bribe.
107.	The payments (or other benefits) do not have to be made directly to the fiduciary. Bribes may be paid to third parties close to the agent, such as family members or discretionary trusts, or simply to those whom the agent wishes to benefit. The test is whether the payment (or other benefit) puts the fiduciary in a real (as opposed to a fanciful) position of potential conflict between interest and duty."
Mr Dougherty emphasises that the payment must be such as to put the fiduciary in a real (as opposed to a fanciful) position of potential conflict between interest and duty. If he receives no net benefit from the payment, the suggestion of a potential conflict would, he submits, be fanciful.
There is a superficial attraction to the argument which might, one supposes, be translated into more than just an argument in an appropriate case, but it runs close to undermining the policy underlying the approach to bribery and secret commissions helpfully summarised in Airbus Operations Ltd v Withey and others [2014] EWHC 1126 (QB) by HHJ Havelock-Allan QC at [92]. I would not wish to comment upon it at this stage of any case, save to observe that in the present case C has taken what seems to me to be an unusual course, namely, to seek summary judgment on liability only, reserving the quantification of the claim until later. If the law is so clear that the amount of any sum held to be a bribe or secret commission should be paid to the party irrespective of whether it truly constitutes its loss, it is surprising that judgment in the sums identified in the evidence has not been sought.
Mr Dougherty says that, on the facts of the present case, if, for example, the cost to Tolcarne of providing the parking/storage services to PIL was equal to or exceeded the sums PIL paid for those services, then D1 (or, more accurately, the company in which he had an interest) would not have received any net benefit from the payments. In those circumstances, the payments to Tolcarne would, he submits, not be bribes. If market rates were being paid, it would make a potential net benefit even more unlikely. Since so little is known at this stage about the figures involved, it is, he contends, difficult to know whether, in reality, D1 was truly benefitting from the arrangements or was not. He has put forward various calculations designed to show that if what PIL paid out were truly bribes, the amounts paid out far exceeded any benefit PIL obtained from having done so.
As I have said, a clear conclusion on submissions and arguments of this nature is not appropriate at the summary judgment stage, but it is certainly possible to see that where the payee of what may at first sight appear to be a bribe derives no benefit from the payment, and perhaps more particularly where, objectively speaking, none was apparently intended, there would be a basis for concluding that the payment was not a bribe at all.
Corporate status
Both Mr Dougherty and Mr Ashworth raised the question of the extent to which payments made to companies in which D1 had an interest or with which he had an association should be treated as payments to him. Mr Dougherty emphasised that the claim against Mr Neville is misconceived because it was PIL that made all relevant payments.
Mr Ashworth's developed argument, in summary, is that the circumstances in which the court may "pierce the corporate veil" remain extremely limited: see Petrodel v Prest [2013] 2 AC 415, at [35]. There was prior to the Petrodel case, he says, a limited category of cases in which the courts were prepared to look behind the corporate veil and hold a company liable to account for a bribe on the basis that the company was an "alter ego" or "mere cloak" for the agent, but in Petrodel it was said that these cases were not true instances of the piercing of the veil, but a reflection of the normal principles of agency law. As he put it, "the alter ego company is, in reality, receiving the payments as agent for the fiduciary as principal." Although Ultraframe (UK) Ltd v Fielding [2005] EWHC 1638 (Ch) and National Grid Electricity Transmission PLC v MacKenzie [2009] EWHC 1817 (Ch) have to be viewed in the light of Petrodel, they support the proposition that a fiduciary cannot be liable for receipt by a company which is not his alter ego or agent and a substantial interest in that company is not necessarily sufficient to render it so. A fortiori, he argues, a fiduciary cannot be liable for receipt by a company in which he has no interest at all.
Mr Ashworth submits that C has not alleged that any of the companies are a "mere cloak" or "alter ego" of D1 and have put no evidence before the court on this issue nor have they established that D1 deliberately interposed a company under his control for the purpose of evading his liability. On that basis, he submits there is no warrant for looking behind the corporate veil.
I cannot, of course, say what the outcome of arguments such as these may be at trial on the basis of the evidence deployed there, but I cannot say that Mr Ashworth's argument has no realistic prospect of success. Equally, even assuming other hurdles are overcome, similar considerations may apply to the personal claim against Mr Neville and, one supposes, to the other personal claims made against the Accessible Defendants.
Conclusion on the merits of the application and the discretion element
I have indicated already why I consider that, in relation to the individual claims for summary judgment made in this application, no such judgment should be entered. There are a few wider considerations that are probably more appropriately characterised as issues for the residual discretion that exists in this jurisdiction (see paragraphs 12 and 16 above).
Whilst the issue does not arise inexorably in all cases of this nature where a litigant in person is the target of the application, I have indicated my concern about D1's position in this case (see paragraphs 24 and 36 above). Whilst, as is clear from what I have said in a number of places in this judgment, there are issues that he must face, I would be troubled about reaching a conclusion that might (unintentionally) be taken as a finding that impacts adversely on D1 in respect of any of the large number of other transactions referred to in the RRAPOC. Indeed, conversely it must be borne in mind that a finding by the trial judge on one or other of those other transactions adverse to C could have a bearing on the findings in relation to the transactions the subject of the present application. This can hardly be described as an irrelevant consideration when a large number of other transactions pleaded in the RRAPOC are not pursued in the present application. They must be treated as claims in respect of which C recognises that there is a realistic prospect of a successful defence being advanced. It follows that there is, as it seems to me, a risk of injustice to D1 and the other defendants if the whole picture, as C chooses to present it, is not before the trial judge.
I have alluded on several occasions to the fact that a full review of C's disclosure thus far has not been completed and that there is the possibility of further applications for specific disclosure. It would, in my view, be unwise and potentially unfair if the process of reasonable and proportionate disclosure was not allowed to run its course before reaching any conclusions on the merits of this case.
Finally, I consider that the proper and efficient case management of this case (currently scheduled for trial in June 2018) would risk being impeded by a judgment on liability only in respect of any of the transactions identified in this application because of what would be the next procedural step of trying to determine an appropriate interim payment. That would not necessarily be a straightforward process and it would interrupt the significant preparations the parties will need to engage in in order to be ready for that trial. Since any lawyers D1 may be in a position to instruct in the next month or so are going to be stretched in terms of getting to grips with the issues, that is an added potential issue of unfairness.
My principal grounds for rejecting this application are set out in the main body of the judgment, but had I arrived at the position where I was minded to grant summary judgment in respect of one or other of the targeted transactions, the foregoing matters would have persuaded me to exercise the residual discretion against doing so.
The application is, therefore, dismissed.
I agreed at the conclusion of the hearing to give the parties some time to consider the implications of the decision I made and then to come back to me, either at a hearing or on the basis of some written submissions.
For my part, I would be anxious to consider before long any application by D1 to be released from the terms of the freezing order sufficiently to enable him to obtain advice and/or representation at an appropriate level. I think also that there may be scope for cost-budgeting in this case. I can imagine that the costs are already very significant for the represented parties (and there has been reference to £1 million for C's disclosure exercise) and my current view is that the court may need to exercise some control over the costs dimension.
However, I will await hearing from the parties before taking matters any further.