CHANCERY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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WILLIAM HURNDELL | Claimant | |
and | ||
1) BARRIE HOZIER 2) 3) 4) 5) DAVID HOZIER |
Defendants |
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Mr Michael Booth QC and Mr Robert Bourne (instructed by Bevans) for the First and Fifth Defendants
Hearing dates: 15, 18 – 21, 25 – 29 October and 1 - 3 and 5 November 2010
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Crown Copyright ©
Mr Justice Morgan:
Heading | Para |
The case in outline | 1 |
The structure of this judgment | 4 |
The procedural history | 5 |
My approach to the evidence | 13 |
The pleaded cases | 16 |
How matters appear from the documents | 22 |
My assessment of the witnesses: general remarks | 131 |
The Metco transaction | 136 |
The St Tropez note | 140 |
My assessment of the individual witnesses | 173 |
---Mr Davis | 175 |
---Mr Hurndell | 181 |
---Mr Mills | 188 |
---Mr White | 190 |
---Mr Hozier | 198 |
---David Hozier | 204 |
---Karen Hozier | 205 |
---Other witnesses | 206 |
The relevant surrounding circumstances | 221 |
The evidence which I accept | 229 |
My findings of fact | 254 |
The result of the above findings | 266 |
The overall result | 274 |
The case in outline
The structure of this judgment
The procedural history
My approach to the evidence
"Speaking from my own experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses' motives, and to the overall probabilities, can be of very great assistance to a Judge in ascertaining the truth. I have been driven to the conclusion that the judge did not pay sufficient regard to these matters in making his findings of fact in the present case."
The pleaded cases
How matters appear from the documents
"There have been no changes in the directors interests in the share capital of the company as set out above from the end of the financial period to the date of approving the financial statements. However to enable the company to comply with Stock Exchange regulations the holdings of H White and I N Davis must reduce and so following announcement of the results for the period and prior to 31st December 1996 the former will sell at least 5% of his holding."
"Howard White (1991) Trust
Howard White has asked me to write to you, regarding his Stanelco shares.
In December 1996, as part of the arrangements for Stanelco to move from the USM to a full listing, there was a requirement for Ian Davis and Howard White to dispose of 5% of their shares to a third party in order to keep below the 75% limit imposed by the Stock Exchange.
Howard agreed that 5% of his holding would be transferred to William Hurndell with a small number going to Denis Sharland. In addition, he arranged for the balance of his shares to be transferred to three companies jointly owned by Ian and himself.
The following transactions took place –
Majorgraph Limited | 75,687,000 |
Warrington Wireworks Limited | 131,277,413 |
Homebeam Limited | 26,113,709 |
William Hurndell | 33,309,940 |
Denis Sharland | 101,878 |
Total | 266,489,940 |
The shares transferred to Majorgraph Limited, Warrington Wireworks Limited and Homebeam Limited were subsequently transferred into a Liechtenstein Foundation set up for the benefit of his son Ben. Copies of those share transfers are attached.
The registrar is unable to put these transactions through the share register, without transfers signed by yourselves as Trustees. It would be appreciated if you could sign the original transfers, as set out above, and return them to me for forwarding onto the company's Registrar.
I am enclosing a copy of the Stanelco Plc accounts which reflects the above transactions."
"I, WILLIAM HURNDELL CONFIRM THAT HOWARD WHITE HAS AUTHORISED ME TO TRANSFER APPROXIMATELY THIRTY TWO MILLION SHARES IN STANELCO PLC TO DAVID HOZIER AT THE APPROPRIATE TIME IN THE NEAR FUTURE.
SIGNED"
"Disposal by substantial shareholder
The Company has today been notified that Mr William Hurndell has today sold 31,809,940 ordinary shares of 0.1p each (4.63% of the issued share capital), reducing his holding from 33,309,940 ordinary shares (4.85%) to 1,500,000 ordinary shares (0.22%)."
My assessment of the witnesses: general remarks
The Metco transaction
The St Tropez note
"William was certainly there for the vast majority of the evening, but I can't remember whether William was with us for the entire evening. That being said, I am certain that he never went off for more than ¾ hour – if he left the campsite at all, it would have been to go and get some supper at his home or my mobile home or something else very quick – he would not have gone away for any extended period of time, and certainly not for a dinner with friends because I knew that he did not leave me alone to look after Anne for any extended period of time. William was definitely with Anne when I left."
My assessment of the individual witnesses
Mr Davis
Mr Hurndell
Mr Mills
Mr White
Mr Hozier
David Hozier
Karen Hozier
Other witnesses
The relevant surrounding circumstances
The evidence which I accept
"I am aware that in 1996 the USM was abolished and Stanelco wished to achieve a full listing as a public company. By this time I had separated my business interests from Ian Davis. A parting of the ways took place in 1993. In 1996 I was living in the United States. I did not actively participate in the running of Stanelco. Day to day management was delegated to Ian Davis and Barrie Hozier. I was kept informed from time to time of what was going on mainly by Barrie Hozier. I recall being told by Ian Davis, and this was subsequently confirmed to me by Barrie, that it was necessary that the shareholding owned by the H White (1991) Trust and the shareholding held by a similar trust for Ian Davis had to be reduced from an aggregate of 80% to 75%. I accepted what they said. I assumed that 2.5% would be coming from Ian Davis trust holding and 2.5% from my trust holding. In fact I subsequently discovered that all 5% came from my trust holdings. I did not give any instructions to Abacus Nominees Ltd to effect this. I later understood from them that they received instructions from Barrie Hozier. Apparently Ian Davis decided that the 5% of the shares should be transferred to William Hurndell solely from my trust.
I was assured by Ian Davis that the shares were held on trust for me by William Hurndell. Ian Davis also confirmed to me that this arrangement would comply with the listing regulations. I therefore did not object to the whole 5% coming out of my trust. At no time has anybody told me that the shares were being transferred to William Hurndell in exchange for any work that he had done for anybody let alone work done in connection with the failed development of a golf course in the south of France. I am aware that a company called Winemanor Holdings Ltd, of which I owned 50% at the time, was interested in developing a golf course in the south of France and looked at an island called Ile du Levant. William Hurndell did do some work for Ian Davis and myself in this regard and was paid by Winemanor Holdings Ltd for doing it. I never agreed that any of the shares held in the H White (1991) Trust could be transferred to him in part payment or recognition of his work. If I had been asked to agree to this I would have refused."
"Some time later (around 2000/2001), Barrie Hozier's expectations had still not been met. Feeling at that time that it was not in the interests of either the Company or shareholders to have an ongoing dispute between the executive management, I therefore agreed to give to Barrie Hozier the 5.00% interest in the Shares allegedly promised by Ian Davis and to meet this from the shares held by William Hurndell. It also helped Barrie Hozier to enable him to identify more closely with the interests of shareholders generally. As a result, the shares were from that time under the beneficial ownership of Barrie Hozier or connected persons of Barrie Hozier. However I am advised that legal ownership of the shares remained with Abacus Nominees Ltd pending registration of the transfer in 2001."
"In about mid 2001 I spoke to William Hurndell and told him that I was transferring my interest in my shares to Barrie Hozier or whomever he specified and that Barrie would now own them instead of me. Barrie may have been present when I spoke to William Hurndell, I cannot recall. I would have communicated the contents of the conversation to him anyway. I also told William Hurndell that I was giving him 1.5 million of the shares. They were his to do what he liked with. This was a thank you to him for having held all the shares. He thanked me for doing this. He was very grateful. At no time did he claim that the shares had always belonged to him."
"Q. Was anything more said to you at this stage about the nature or the form in which that reduction would be carried out? A.Um, I don't believe that it was actually expressly spoken about. I think I took the implication, that if we were going to have to reduce our holdings by 5%, then it would obviously come 2.5% from Mr Davis's holdings and 2.5% from mine. I think I probably assumed that."
"I was told after the event. So I don't know if discussing, did I agree that they would be, no I didn't agree. Was I told afterwards that they had been transferred? Yes.
Q. Who told you?
A. Ian Davis.
Q. And you said "after they had been transferred". Can you try and give My Lord some date of that?
A. Well, I would assume some time in early 1997. There had been a phone call. I mean, we didn't speak every day, or every week for that matter, but on occasions we would speak, and on this occasion, Ian reported to me that the move from the USM had taken place… and he advised me that 5% of the shares had been put in William's name. And he said they had come out of my trust. I enquired as to why they had come out of my trust and they hadn't come out of both of our trusts and he said - I can't really recall exactly verbatim the phone call but the gist of it was because these were shares having, I thought, been sold. But they weren't being sold according to Ian, they were being parked with William who was holding them as nominee for me. Therefore it doesn't matter that they came out of my trust because we were still equal, we were still 40/40. And I asked him if that was okay? If that was in order? I- again it wasn't, it was a pretty short conferring. Yes, he had checked it out and that was fine. So I didn't think any more of it. I mean, I trusted Ian and I trusted that, if he thought something was okay, it was okay."
Q. What did you understand was going to happen in terms of
how the 5% would be disposed of?
A. I assumed as we both owned the shares equally, 2.5%
would out of my trust and 2.5% out of his, and I assumed
they would be sold on the market. Again, I want to
contextualise this, it may be an assumption, I may not have
even bothered thinking about it, but in logical terms, if we
are 50/50 and we are partners, and we sit side by side, I
would have expected both of them to come out of each of our
holdings.
Q. When was the first time that you knew that 5% had come
out of your holding - and what were you told about the basis
on which it had come out?
A. Some time after it happening. Again, you know, we are
trying to put this into context. It would have been part of
the conversation, I may have been having a one hour
conversation with Ian and he said to me - I don't even know
whether it was Ian or Barrie who told me. But I sort of
expressed surprise, it may have been Barrie telling me and
then me talking to Ian, or talking to Ian and then to
Barrie. I don't know what the - I was made aware of the
fact it had come out of my holding, which I was surprised
about, and when I questioned it, it was told the shares were
going to William, they had been put in William's name, and
he was holding them as nominee for me. I said, again, I
think you have got to remember that I am in the States doing
something which is engaging me completely, and I am just
hearing this and going, does that meet the requirements?
Have you checked it? Yes, they are fine. You are dealing
with a relationship that you know - if Ian had said we are
putting everything on black and I said are you sure and he
said yes I would have gone along with it, we had that sort
of level of trust still between each other. I did not
spend an inordinate amount of time actually considering the
position I just said well if that is fine, that is fine.
Q. Mr Hurndell says that in 1996 you telephoned him and
said words to the effect of:
"We have decided to give you Stanelco shares for all the
work you have been doing."
And he thinks you said 33 million and used the word
beneficially. Did you have that conversation with Mr
Hurndell?
A. No, I mean with great respect to William I don't think
he would know what the word beneficial meant. Those
conversations never occurred, William was never - no no that
is fantasy.
Q. And in terms of the position as it stood, you say you
were told that Mr Hurndell was a nominee, was it ever during
that period - first of all if we can identify when these
conversations with Mr Davis took place. Would they be at
the time of the listing or after the listing?
A. The conversations took place and I am not going to give
any sort of attempt at guessing the timeline but they
certainly took place after everything had been done. To me
when I was advised of these things they were historical
events.
Q. You can tell us what you recollect as the substance of
what happened.
A. Thank you. Essentially the relationship with Ian had
sort of somewhat disappeared - no, it had not, it was before
that - I was feeling very disconnected from what was going
on and I figured that the - and I think this is another
aspect of the whole thing - I figured that the shares that
were allegedly being held by William on my behalf, the
reality of it was that they had actually gone to William so
that Ian could get them later and I had come to the
conclusion I was never going to see those shares again so I
took a view that it would be in my best interest because
Barrie was the person who was doing anything for me and was
actually my lifeline into the company where Stanelco was,
and that he was doing the work on Stanelco, it was in my
interest that Barrie should have an interest in it. Now,
there was allegedly a conversation between Barrie and Ian
that Barrie related to me saying that Ian had promised him
5% of Stanelco, which I was not party to, but again, it was
quite normal for Ian to take these executive decisions and
not actually consult me. And Barrie was - told me this and
I put two and two together and said, Ian is never going to
give them to him, I am never going to see that 5% again, I
may as well give them to Barrie, because at least he will
have an interest in Stanelco and I have still got 35%. So
better 35% with someone doing something about it than
arguing about the other 5% and arguing about nothing.
Q. --did you ever talk to Mr Hurndell?
A. Yes, I told Ian - I told William what I was doing, and
William's view was, well, they are your shares, do whatever
you want with them. You know, he was just the - I will do
as I am told. I think this was still a stage where William
and I were still friends and he would still come over to my
house, and it may have been mentioned, I am sure it was
mentioned in passing. There was nothing, anything, you
know, again, we are having to relate to what later on became
of significant value, at this time was still paper and not
of any significant tradable value.
Q. And when you eventually spoke to Mr Hurndell about this
was there any conversation about him getting anything?
A. No that came about by me saying to Barrie - Barrie had
- I frankly don't know what went on there but it was a
disaster, shares not being registered, shares not being
transferred, within two or three years - and this all stuff
I learnt in the first court hearing. I wasn't aware of the
majority of this - actually no I would have been made aware
of it when I did the Eversheds documents. I think that is
when the revelations as to the complete mess that the public
companies books were in and in terms of transfers etc etc.
When I said - because Barrie had started falling out with
Ian and I said to Barrie you had better transfer these
shares because if you don't Ian will put a block on William
transferring them and you won't get them. And he
procrastinated as normal and finally sort of when it was
coming down to the wire a number of conversations were had
with William and William at that became part of - because I
wasn't - I think at this time my relationship with Ian had
disappeared and he had become, yeah I would say, hostile.
Relations were not good or in fact they just did not exist.
So there was a little bit of - I don't really want to use
the word conspiracy, but William was quite happy to comply
with all of the necessary arrangements in order to get the
shares transferred to Barrie. And at the time I said to
Barrie that Barrie was going to leave one and a half million
shares with William as a thank you because you know you have
got to take a lot of flak for this.
MR JUSTICE MORGAN: A thank you for what?
A. For holding the shares. So you know he was getting one
and a half million shares----
Q. Who was getting flak for what?
A. William was going to get flak from Ian Davis when he
found out that he'd transferred the share into Barrie's
name.
Q. Was the one and a half million to incentivise Mr
Hurndell to cooperate?
A. No he was not expecting it. He was just going to do it
anyway. He was going to do it anyway. He would have done
the whole lot. But I - because Barrie was saying that he
did not think he should get that much I insisted we leave
him one and a half million because it would make a big
different[ce] to William because at the time William had nothing
and so one and a half million shares because they were now
starting to trade - I think it might have been 6p at the
time or 5p so for someone who has got nothing one and a half
million 6ps is a lot of money.
MR BOOTH: And in terms of the - you talked about what Mr
Davis might do in respect of the shares held as nominee by
Mr Hurndell?
A. Hmm-mm.
Q. First of all just running through, who was Mr Hurndell
holding as nominee?
A. For me supposedly.
Q. Yes. And so did you consider that Mr Davis had any
entitlement to do anything with those shares?
A. None, none whatsoever.
Q. You are giving away valuable shares to Barrie Hozier in
return for very little?
A. I am sorry, you know, you do the lawyering, I will do
the business, and the fact is I was giving it away for very,
very good reason. Because I was getting some - and Ian
Davis was of course to a certain extent right that I was
splitting Barrie's loyalty, because rather than Barrie being
the hound dog to Ian and doing essentially whatever was in
Ian's best interest, suddenly he was doing what was in his
own best interest which happened to be in my best interest,
so to suggest it was just a giveaway, is ridiculous.
My findings of fact
The result of the above findings
The overall result