England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MANCHESTER DISTRICT REGISTRY

		Claim No: 1MA30311 Manchester Civil Justice Centre 1 Bridge Street West Manchester M60 9DJ
		17 December 2012

HIS HONOUR JUDGE HODGE QC:

1. This is my extemporary judgment on a claim by the Official Receiver (as claimant) against David James Wild (as defendant), claim number 1MA30311.
2. This is the hearing of a director's disqualification claim brought by the Official Receiver against Mr David Wild in his capacity as the sole director of three companies. The first is APD Leisure & Marketing Limited, which was incorporated on 15 December 2003 and was ordered to be wound up on the petition of the Secretary of State for Business, Innovation and Skills on public interest grounds on 24 March 2010. I shall refer to that company as "Leisure & Marketing". The second company is APD Leisure Group Limited, to which I shall refer as "Group". That company was incorporated on 16 March 2009 and was ordered to be wound up, again on the petition of the Secretary of State on public interest grounds, on 5 May 2010. The third company is APD Leisure & Marketing Group Europe Limited, to which I shall refer as "Group Europe". That company was incorporated on 3 August 2009. In that regard, I think that there may be an error in the date of incorporation in paragraph 37 of the report of the Official Receiver, Mr Beasley. I think the date of incorporation given there, July 2009, was for another connected company. Group Europe was also wound up on 5 May 2010, again pursuant to a petition presented on public interest grounds by the Secretary of State.
3. On this claim the Official Receiver is represented by Mr David Mohyuddin of counsel, who has prepared a detailed written skeleton argument dated 10 December 2012. Mr Wild appears as a litigant in person. At no time during the course of this litigation has he had the benefit of legal advice and representation.
4. All three companies carried on the same business, either consecutively or concurrently, selling memberships of a holiday club which gave access to unused weeks in time-share resorts. These unused weeks were the unpopular, and so unsold, weeks, falling outside such periods as school holidays. The Official Receiver's case is that the sales techniques used by all three companies were aggressive. The companies are said to have organised themselves so as to avoid conferring on their customers the benefit of consumer protection regimes, and then to have failed to provide customers with what they had bargained for. Provisional liquidators were appointed over all three companies, and they were thereafter wound up on petitions presented by the Secretary of State on public interest grounds. It is common ground that at all times relevant to the present litigation Mr Wild was the sole director and shareholder of the three companies.
5. The relevant chronology can be summarised as follows: Until 18 October 2008 Leisure & Marketing operated as a distributor for the sale of the products of a company which formerly operated as Sunterra Europe Limited and which, following a company takeover, was then rebranded as Diamond Resorts Europe Limited. On 18 October 2008, Diamond Resorts Europe Limited terminated the distribution agreement for the sale of Diamond's Sunterra products. In the course of his evidence before me, Mr Wild told me that he and his company had fallen out with Diamond Resorts totally. Thereafter, it is apparent that trading became very difficult for Leisure & Marketing. Mr Wild told me that once he and his company had fallen out with Diamond Resorts, that entity made it awkward for Leisure & Marketing to continue in business. Other companies refused to deal with Leisure & Marketing as a result. Mr Wild told me, and I have no reason to disbelieve him, that he and his company had never had any visits from Trading Standards until the fall-out with Diamond Resorts.
6. This afternoon, Mr Wild produced three awards which his company had received from Club Sunterra. One was for the best Voyager Sales for Sunterra between January and June 2004. The second was an award for Mr Wild's previous company, APD Leisure Limited, according to which it was awarded the accolade of Sunterra's Distributor of the Year for 2004. The third award was an award conferred in 2008 at the Learning Agreement Pilot Celebration for Most Innovative Employer, APD Leisure.
7. The fall-out with Diamond Resorts led to litigation between that company and Leisure & Marketing, Mr Wild, and other companies which he had caused to be incorporated. That resulted in a default judgment made by Floyd J in those proceedings (under claim number HC09C02367) in the Chancery Division in London in which relief was granted against Leisure & Marketing, Mr Wild and other companies (but not including Group and Group Europe) for trademark infringement and the tort of passing-off.
8. In the meantime, on 17 June 2009, authorities had been conferred upon Miss Davies and Mr Crighton by the Secretary of State to investigate the affairs of Leisure & Marketing. That investigation, which began, as I say, on 17 June 2009, led, on 16 October 2009, to the presentation of a winding up petition against Leisure & Marketing, seeking its winding up on public interest grounds. On 21 October 2009, at a hearing made without notice to Leisure & Marketing, His Honour Judge Raynor QC, sitting as a judge of the Chancery Division, appointed a provisional liquidator over Leisure & Marketing. The winding up petition against that company came on for first hearing before District Judge Smith on 16 December 2009. Mr Bird (of counsel) appeared for the Secretary of State and Mr Wild appeared on behalf of the company, assisted by a business consultant, a Mr England, who was allowed to address the court on behalf of Leisure & Marketing. District Judge Smith adjourned the hearing of the winding up petition and joined Mr Wild as second respondent, reserving the costs.
9. On 2 January 2010 an article appeared in the Mail on Sunday. That article is exhibited to the witness statement of Mr Wild. The article was headed "The Swindle Inspector" and was by Dan Atkinson, the Mail on Sunday's economics editor. It was primarily directed to the work of Companies Investigations, a branch of the Insolvency Service, and part of the regulatory arm of the Department for Business, Innovation and Skills. The article recorded that when an investigation exposed what it described as unsavoury corporate activity, the Company Investigations branch could ask the High Court to wind up the company in the public interest. The article then went on:

"Businesses wound up in this way recently have included discount goods dealer Zorta, burglar alarm company Sure Shield Security, and holiday club operator APD Marketing & Leisure."

10. It is incorrect for the article to have reported that APD Marketing & Leisure (which I understand to be a reference to Leisure & Marketing) had been wound up at that stage. The true position was that a provisional liquidator had been appointed in respect of that company, but the winding up petition had been adjourned for further hearing. Mr Wild says that the publication of that article caused untold damage to Leisure & Marketing, and to other companies bearing the APD Leisure & Marketing, or similar, labels. He said that the phones never stopped ringing with expressions of concern and complaints.
11. On 5 February 2010 winding up petitions were presented on public interest grounds against three more companies bearing the appellation APD Leisure. One of those was Group and another was Group Europe Limited. On 11 February 2010 a hearing took place, again before His Honour Judge Raynor QC, sitting as a judge of the Chancery Division in Manchester, at which he appointed provisional liquidators over both Group and Group Europe. A transcript of the extemporary judgment delivered by Judge Raynor on that occasion is to be found in the hearing bundle beginning at page 81. Judge Raynor began his judgment by stating that the case was unusual because, as would become clear from the facts as he recited them, there had been, on the face of it, a flagrant disregard, and attempt to circumvent the effect, of an order for the appointment of a provisional liquidator that he had made in respect of Leisure & Marketing on 21 October the previous year.
12. At paragraph 11, Judge Raynor said that it was perfectly plain from the evidence before him that Mr Wild, through a company which he named as APD Leisure & Marketing Europe Limited, had, from the date of the order for a provisional liquidator, carried on business in effectively the same manner as was being carried on by Leisure & Marketing, and that there had thus been the circumvention of the order for the appointment of a provisional liquidator by means of continuing the same business, but through a different limited company, a company which had a confusingly similar name. At paragraph 15 Judge Raynor said this:

"The simple position is this: these trading methods should never have been continued in the name of a new company or at all, given the appointment of the provisional liquidator. Commitments of the original company should never have been taken up by the new company. It had no business to do that. The provisional liquidator was concerned with winding up the original company and dealing with any outstanding obligations and the money should have been accounted for properly and proper records kept. It seems to me that the case for an appointment of a provisional liquidator is overwhelming."

13. At paragraph 18 Judge Raynor said that he had already made clear the lack of proper accounting records, the flagrant continuation of a business that should have stopped once there had been an appointment of the provisional liquidator, and it was said to be apparent that claims that Mr Wild had made had been inaccurate. At paragraph 19 he referred in particular to one, namely, that on 16 November Mr Wild told Miss Merriman, one of the new company's investigators, that the company had stopped selling packages not long after the appointment of a provisional liquidator on 21 October. Judge Raynor said that what they now knew to be the case was that the Europe company was selling packages the day before Mr Wild spoke to Miss Merriman in exactly the same manner as the company that had had a provisional liquidator appointed to it had been doing. I should emphasise, and I bear in mind, that those observations were made in the course of an extemporary judgment on an application made without notice to the respondent companies or to Mr Wild, and in relation to which, therefore, none of them had had any opportunity to respond or to make any representations.
14. On 24 March 2010 District Judge Smith made an order for the winding up of Leisure & Marketing on the Secretary of State's petition. On 5 May 2010 District Judge Obodai made winding up orders in respect of both Group and Group Europe Limited. On 6 May 2011, and thus a year later, the Official Receiver gave notice, pursuant to section 16 of the Company Directors Disqualification Act, that a period of disqualification of 12 years, if offered by way of undertaking, was considered to be appropriate.
15. On 20 June 2011, the present Part 8 claim seeking Mr Wild's disqualification was issued by the Official Receiver in respect of Leisure & Marketing, Group and Group Europe. Those proceedings were served by post on 21 June 2011. The application was supported by the first report of Mr Kenneth David Beasley, dated 14 June 2011, with an extensive exhibit, KDB1. On 7 March 2012 Mr Wild made a witness statement in opposition to the directors disqualification claim. There was a request by the Official Receiver for further information from Mr Wild; and his response to that request, in the form of further information, was provided by Mr Wild on 18 April 2012. Mr Beasley made a second report in answer to Mr Wild's evidence on 28 May 2012. That further report was accompanied by a second exhibit of much more modest size, KB2.
16. On 16 July 2012 notice of the trial date was served by post on Mr Wild. The matter was listed for six days commencing on Thursday, 13 December. The day before had been set aside for the court's pre-reading. Due to other matters in the list, the case was not called on until about 11.40 last Thursday morning. As I have indicated, Mr Wild appeared as a litigant in person. He made it clear that he did not agree with various matters stated in affidavits made by various customers of the three companies; but he told me that he could not afford to contest the proceedings, or to incur the expense of those witnesses coming along to give evidence at trial. He indicated that he did not wish Mr Beasley, or any of the ten customers of the company who had made affidavits, to attend court to be cross-examined. Mr Wild maintained that position even after the court pointed out to him that the evidence of Mr Beasley and the ten customers would therefore be treated as not having been challenged.
17. There were affidavits from the following customers: Mr Brian Cooper, who had attended a presentation at Holmfirth Hall near Carnforth on 24 January 2009; Mr John Carson and Mrs Elisa Ward, who had attended presentations on 14 June 2009; Ms Anita Margaret Seddon, who had attended a presentation on 20 June 2009; Mr John Tuer, who had attended a presentation on 21 June 2009; Mrs Olive Mary Weir, who had attended a presentation on 28 June 2009; Mr John Edward Filby, who had attended a presentation on 5 September 2009; Mrs Brenda Hargreaves, who had attended a presentation on either 7 or 14 November 2009 (different dates appear at different points in her evidence); and, finally, Mr David Last, a retired solicitor, and Mr Paul Colin Speakman, who had both attended presentations on 5 December 2009. It should be noted that the last three mentioned presentations had postdated Judge Raynor's appointment of a provisional liquidator in respect of Leisure & Marketing.
18. Mr Mohyuddin opened the case after Mr Wild had indicated his position that he did not require any of the witnesses to be called by the Official Receiver to attend for cross-examination. Mr Mohyuddin finished opening the case at just before 12.50 on Thursday, and the court therefore rose early for lunch, with a view to making a fresh start after the luncheon adjournment with Mr Wild's cross-examination. Mr Wild duly entered the witness box at about 1.50 on the afternoon of Thursday, 13 December. He confirmed his witness statement and the further information he had given, although he spontaneously indicated that the response to the first of the questions that had been put to him, in which he said that he had never been a director of a company that traded as Sunterra, or otherwise whose name contained the word "Sunterra", was clearly wrong.
19. Mr Wild expanded upon the contents of his witness statement and his further information. He emphasised that the Mail on Sunday article had done an awful lot of harm, as had letters addressed to the company's clients and bearing the heading "Insolvency Services". Such letters, together with the article, had left, he said, a lot of bad feeling. He also said that the questions from the Insolvency Service had been leading ones. He said that the companies had been trading for nine or ten years and had obviously got things wrong after they had fallen out with Diamond Resorts. It had made it awkward for him and his companies because, as I have mentioned, other companies would refuse to deal with Mr Wild and his companies. He explained that matters had gone downhill from then on. He said that the companies had obviously received complaints, but much of it had been blown out of all proportion.
20. He complained that representatives of the Department for Business, Innovation and Skills had told what he described as "fibs" in court. The companies had received complaints and might not have handled matters correctly; but Mr Wild emphasised that the companies' contracts had been identical to those of other holiday club providers, and, in particular, Sunterra and Diamond Resorts. They were not required by law to give cooling off periods to customers. He said that the complaints had only started once a representative of Trading Standards had come to see the companies. It was clear that Mr Wild had no recent knowledge of his replies to the request for further information; but he indicated that, subject to the correction to the response to question 1, if he had signed those replies they would have been correct.
21. Mr Wild was then cross-examined by Mr Mohyuddin. After that cross-examination had concluded, I asked a few questions of Mr Wild; and he was then given an opportunity, by way effectively of re-examination of himself, to make any points he wished to make arising out of Mr Mohyuddin's cross-examination. In total, Mr Wild was in the witness box for a little under two hours. He then addressed me very briefly by way of argument, and Mr Mohyuddin then addressed me for about 25 minutes. It was by then about 4.30. It was obviously too late to deliver judgment that afternoon; and, in any event, I indicated that I wished to revisit the affidavits of the ten customers who had, contrary to my expectation, not been required to be cross-examined before me. I also indicated that I wished to refamiliarise myself with Mr Wild's witness statement and further information, and that I wished to read my notes of Mr Wild's evidence. Since the court was taking the applications list the following day, and another trial was already listed to start on the following Monday, I indicated that I would reserve judgment until 2 o'clock today, Monday 17 December, but that I would be unable to hand down a written judgment and would deliver an oral extemporary judgment. That I am now doing.
22. On Friday of last week, as Mr Mohyuddin had anticipated, he sent me an e-mail, attached to which was a copy of another authority which he had not placed before me. I will return to that authority shortly, but I should indicate the terms of the e-mail response. Mr Mohyuddin sent me a short e-mail at 9.56 on the morning of Friday, 14 December. That was copied in to the Official Receiver's solicitors, Howes Percival, who forwarded that e-mail to Mr Wild at 9.59 that morning, some three minutes after the e-mail was sent to me, with a copy to Howes Percival. The e-mail to Mr Wild simply said:

"Please see the following e-mail which Mr Mohyuddin of counsel sent to the judge this morning, as requested during the hearing yesterday."

23. Mr Wild's response to Howes Percival at 11.59 was:

"Hi, I was told that I would be copied with this e-mail to the judge. Under the circumstances of the lies that have been told throughout the case, how do I know this is the same as he has received? Yours faithfully, Dave Wild."

24. Howes Percival responded at 12.50 stating that they had provided Mr Wild with a copy of their counsel's e-mail to me. They refuted Mr Wild's assertion that the e-mail had been amended in any particular. However, should he wish to continue to assert that position, they suggested that the matter was one that he could raise with the court at the hearing on Monday, or by e-mail to the court. They said that they had copied in the court to the e-mail so that the court was aware of Mr Wild's concerns; and they had also provided details of the claim number so that the court could identify the matter that the e-mail related to. A copy of that e-mail was forwarded to me by the court at 2.13 that afternoon. For Mr Wild's benefit, I record that the version of the e-mail that he had received from Howes Percival is in exactly the format in which it was sent to me by Mr Mohyuddin of counsel. I suspect that the reason why Mr Wild was not copied in to the e-mail directly to me was because Mr Mohyuddin had not wished to disclose the judge's personal e-mail address; but I make it quite clear that Mr Wild has seen everything that Mr Mohyuddin has said in his e-mail to me.
25. That is the chronology of the matter and the history of the proceedings and the trial. I should record that I found Mr Wild to be voluble, combative, and at times a little evasive in his evidence to the court.
26. Section 6(1) of the Company Directors Disqualification Act 1986 provides that:

"The court shall make a disqualification order against a person in any case where, on an application under this section, it is satisfied --

(a) that he is or has been a director of a company which has at any time become insolvent (whether while he was a director or subsequently), and

(b) that his conduct as a director of that company (either taken alone or taken together with his conduct as a director of any other company or companies) makes him unfit to be concerned in the management of a company."

27. By section 6(2):

"For the purposes of this section ... a company becomes insolvent if --

(a) the company goes into liquidation at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up…"

28. It is common ground that Mr Wild was indeed a director of all three companies. The Official Receiver submits, in reliance on a table at paragraph 20 of Mr Beasley's report (page 107 of the hearing bundle), that the three companies are insolvent. That is disputed by Mr Wild at paragraph 20 (pages 185 to 186 of the hearing bundle). Mr Beasley's table shows nil assets for each of the three companies. For each of the three companies it shows potential claims by customers: for Leisure & Marketing of £323,360, for Group of £118,175, and for Group Europe of £100,000. Those figures are said to represent the amounts paid by customers of the APD companies for trial membership portfolios, and are considered as potential claims on the basis that the customers did not receive any, or any substantial, benefits from the monies paid to the APD companies.
29. In addition, in the case of Leisure & Marketing alone, there are other claims by Revenue & Customs, by Diamond Resorts, by Lloyds TSB, by Lancaster City Council and by a firm of accountants, Melville and Co, totalling just over £100,000. There are deficiencies to creditors: in the case of Leisure & Marketing of £436,000 odd and, in the case of the other two companies, of the amount corresponding to the potential claims by customers.
30. At paragraph 20 of his witness statement, Mr Wild says that he does not accept that the liabilities are as indicated. Whilst it is correct that none of the APD companies has, or had at the time of liquidation, assets, the liabilities are said to be grossly misstated. He says that the figure for potential claims by customers is a gross misrepresentation of the actual position of each of the companies. He considers that while the companies were extant, they were each solvent in that all of them could have met obligations as and when they fell due in the ordinary course of business. He says that, to his knowledge, none of the customers had made any claims at the date of liquidation and, had they done so, and a liability had been found, properly, and after appropriate inquiry or legal process had been taken, the company in question would have been funded by him by way of introduction of capital to meet that obligation. He says that neither Group nor Group Europe had any liability other than those potential, but nonexistent, claims. Leisure & Marketing had other liabilities, but as to those he says that, to the extent necessary, he would have funded Leisure & Marketing so that any liabilities which were established could have been met.
31. It was on this issue that Mr Mohyuddin provided an authority with his e-mail of 14 December. The authority is the decision of the Court of Appeal in the case of BNY Corporate Trustee Services Limited v Eurosail-UK 2007-3BL Plc. The neutral citation number of the case is [2011] EWCA Civ 227 and it is reported at [2011] 1 WLR 2524. Mr Mohyuddin drew my particular attention to the leading judgment of Lord Neuberger (then Master of the Rolls) at paragraphs 48 to 62. It is sufficient for me to refer to the first part of the headnote. That reads that:

"The purpose of section 123(2) of the Insolvency Act 1986 is to identify a company deemed to be unable to pay its debts because of an incurable deficiency in its assets which has resulted in its inability to meet future or contingent liabilities. Section 123(2) does not prescribe in what way a company's contingent and prospective liabilities are to be taken into account. It requires the court, not to treat a prospective liability in the same way as an immediate one, but to make a judgment whether, looking at the company's assets and making proper allowance for its prospective and contingent liabilities, it could not reasonably be expected to be able to meet those liabilities, even though it was currently able to pay its debts as they fell due."

32. In his e-mail Mr Mohyuddin says that:

"An assessment needs to be made as to whether the company has passed the point of no return and to assess the likelihood of the contingency activating the contingent liability."

33. I am satisfied that the threshold condition that each of the three companies was insolvent has been satisfied. I am satisfied that at the time when each company entered into liquidation, its assets were insufficient for the payment of its debts and other liabilities and the expenses of the winding up. It would be enough to say that, since each company had no assets, then, of necessity, those nonexistent assets were insufficient to bear the expenses of the winding up. But, in my judgment, it is quite clear that, at the time when each company went into liquidation, its assets were insufficient also for the payment of its debts and other liabilities. In the case of Leisure & Marketing, without any injection by Mr Wild of further monies, the identified debts and liabilities, even excluding the potential claims by customers, could not be met. In the case of all three companies, the liquidation of each company clearly triggered liabilities to the holiday club customers because, with the onset of liquidation, each company would be unable to fulfil, and discharge, its obligations to those customers.
34. There is a further consideration: In the case of three of the ten customers who had provided affidavits, Mr Filby, Ms Seddon and Mr Speakman, each of them makes reference to the fact that they had sought, and obtained, refunds from the credit card providers who had financed their holiday club membership subscriptions. In the case of Mr Last, he indicates that he had made no complaint against the company because he knew that the company had been placed into liquidation. Mrs Ward says that she did not take her complaint forward because she knew that the company had been placed into liquidation. Mr Turner and Mrs Hargreaves both say that they tried to obtain recompense from the companies. I am quite satisfied that there were, with the onset of insolvency, potential claims by customers which rendered each company insolvent for the purposes of section 6 of the 2006 Act.
35. I then have to consider whether Mr Wild is unfit to be concerned in the management of a company. In that regard the court is required by section 9(1) to have regard in particular, but not on an exhaustive basis, to the matters set out in Schedule 1 to the Company Directors Disqualification Act. At paragraphs 16 through to 19 of his written skeleton argument, Mr Mohyuddin summarised the guidance to be derived from the authorities on the meaning and effect of section 6. He pointed out, by reference to observations of Dillon LJ in Re Sevenoaks Stationers (Retail) Limited [1991] Ch 164 at page 176C, that the words of section 6 are ordinary words of the English language and they should be simple to apply in most cases. It is important to hold to those words in each case.
36. Mr Mohyuddin pointed out that the question is not a pure question of fact but a mixed question of law and fact. The judge has to apply the standard laid down by the courts as to the conduct appropriate to a person fit to be a director to the facts of the individual case. The court is required to take a broad brush approach. It is for the court to exercise a value judgment. That requires no more than for the court to come to a commonsense decision about whether the facts of the case, when applied to the standard of conduct laid down by the courts, should result in a finding of unfitness being made against the particular defendant. Whilst the test is mainly objective, it also has subjective elements. That is because it comes from the Companies Act 2006, section 174(1), which is in materially identical terms to the predecessor section, section 214(4) of the Insolvency Act 1986. That provides that the duty of care, skill and diligence which a director owes to a company is that of:

"... a reasonably diligent person with --

(a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by that director in relation to the company, and

(b) the general knowledge, skill and experience that the director has."

37. Mr Mohyuddin quotes an observation by the editors of Mithani: Directors' Disqualification, division 3, chapter 2, part B, at paragraph 348:

"The relevant standard is more frequently described as a standard of probity and competence than stated in the tradition terms of care, skill and diligence. However described, it is a standard that has both statutory authority and judicial basis and will form the starting point upon which the court will decide whether the director's conduct has fallen short of the standards expected from him.

"The court will also need to bear in mind the purposes of the disqualification legislation when it considers the question of the fitness of the director against whom disqualification proceedings are taken to be concerned in the management of a company."

38. The allegations against Mr Wild are summarised at paragraphs 16 to 18 of Mr Beasley's first report. In relation to Leisure & Marketing, it is said that from November 2008 until June 2009 Mr Wild caused Leisure & Marketing to carry on business by selling holiday club memberships to members of the public in a manner which lacked commercial probity in that: (1) members of the public paid between £400 and £3,295 for membership of a holiday club whereby they were entitled to receive some or all of specified benefits for a period of 35 months; (2) Leisure & Marketing used high pressure sales techniques to induce customers to sign agreements and to make payments; (3) Leisure & Marketing arranged its affairs in such a way as to ensure that customers had no statutory cooling off period or cancellation rights; and (4) Leisure & Marketing did not permit all customers to cancel arrangements upon receipt of requests to do so.
39. Those allegations are repeated in relation to each of Group and Group Europe. In the case of Group, the period is said to be from March 2009 until October 2009. In the case of Group Europe, the period is said to be from August 2009 until December 2009. I note, however, that it is acknowledged, in relation to both Group and Group Europe, that the date of the last sale in each case is said to be October 2009: see paragraph 37 of Mr Beasley's first report at page 114. In the case of Leisure & Marketing alone it is also said that that company used logos and promotional material of a third party, Diamond Resorts and Sunterra, without the entitlement to do so.
40. In the case of Leisure & Management, it is said that it received at least £323,360 from 176 known customers, of which at least 121 have expressed dissatisfaction with the service provided. In the case of Group, it is said that it has received at least £118,175 from 64 known customers, of which at least 27 have expressed dissatisfaction with the service provided. In the case of Group Europe, it is said that it has received at least £100,000 from 62 known customers, of which at least 21 have expressed dissatisfaction with the service provided.
41. Mr Mohyuddin summarises the allegations against Mr Wild, at paragraph 20 of his skeleton argument, as falling into four broad categories. (1) In the case of Leisure & Marketing only, the use of intellectual property in the form of logos and promotional material with no right to do so. (2) The continuation of the business and its practices from Leisure & Marketing to Group, and then to Group Europe. (3) The use of high pressure sales techniques at the weekend presentations at Holmfirth Hall, Carnforth, and (4) the failure to give customers what they had bargained for. I propose to consider each of those allegations in turn.
42. First, the use of intellectual property in the form of logos and promotional materials relating to Sunterra. That allegation is made only in respect of Leisure & Marketing. It is developed at paragraphs 53 to 56 and paragraphs 155 to 172 of Mr Beasley's first report; and Mr Wild's response to it is to be found addressed at paragraphs 7 to 21 of Mr Beasley's second report. Mr Wild says that Leisure & Marketing found that the logo, name and trademark of Sunterra were available for purchase, and he agreed for that company to buy them. He believed then that the availability arose because Diamond had elected, following its acquisition of Sunterra, to cease the use of that logo and of Sunterra's name. He goes on to explain that he had bought the logo, name and trademark through Third Party Formations Limited, trading as "The Company Warehouse". He gives further evidence about that at paragraphs 20 through to 32 and paragraphs 155 to 172.
43. Mr Mohyuddin says that it is of particular note that Third Party Formations Limited, upon receiving objection to the trademark application made by them on Mr Wild's behalf, sent the relevant paperwork to Mr Wild by recorded delivery post, which they say was confirmed as delivered. Mr Wild disputes that. The consequence, according to Mr Mohyuddin, was that the application for registration of trademarks was withdrawn and discontinued. This was because the owner of the mark, Diamond Resorts, had opposed Mr Wild's application to register the trademark. In that regard, Mr Mohyuddin refers to letters forming part of exhibit KDB2 to Mr Beasley's second report. He refers first of all (at pages 880 to 881) to a letter from The Company Warehouse to the claimant's solicitors, Howes Percival, of 12 April 2012. He refers also to a letter from Diamond Resorts of 20 April, again to Howes Percival (at page 885).
44. It is clear, and Mr Wild does not dispute, despite the incorrect response to question number 1 of the Official Receiver's request for further information, that he had incorporated a number of limited companies which included the name "Sunterra" or "Diamond" in their name. On 3 November 2008, Mr Wild had incorporated Club Sunterra Limited. On 17 February 2009 he incorporated Club Sunterra Europe Limited. On 18 March 2009 he incorporated Diamond Resorts Limited. On 28 July 2008 he had incorporated Sunterra Limited; and on 9 January 2008 he had incorporated Sunterra Europe Limited. On 13 October 2008, a limited company was incorporated under the name of Diamond Resorts Corporation Limited, with a registered office at Holmfirth Hall.
45. At paragraph 76 of his witness statement, Mr Wild says that he does not consider that it was reasonable or proper for a customer to form the view, from their promotional documentation, that the APD companies were Sunterra or Diamond. That some may have done so is to be regretted; but he says that it was made quite clear to them, at the time of them entering into the contract for membership, that the companies would arrange five weeks in one or other of the resorts named in their brochure. It was clear that, whilst some of those resorts were Diamond Resorts, others were not.
46. Mr Mohyuddin invites the court to reject Mr Wild's evidence that he thought he had purchased the intellectual property in the trademark Sunterra. He did not attempt to purchase it, but rather to register it, having declined to search the Patent Office database for existing marks. Mr Mohyuddin submits that the suggestion, contained at paragraph 164 of Mr Wild's witness statement (at page 201 of the trial bundle), that it was not his intention to create the impression that Diamond and Sunterra were part of the APD companies or their group, but rather it was Mr Wild's intention to say that they had access to the Diamond and Sunterra resorts, is to be rejected.
47. I accept Mr Mohyuddin submissions. I reject Mr Wild's evidence and case on this point. In the course of his evidence, Mr Wild said that the use of the Sunterra and Diamond names was because they just wanted to make their company look bigger. They wanted the Sunterra name because it made the APD companies look bigger companies. It was done to make the company look bigger and better. Those observations were made both during the course of cross-examination, and in Mr Wild's further evidence, after the conclusion of Mr Mohyuddin's cross-examination of him. I am entirely satisfied that the use of the Sunterra name, and the incorporation of companies bearing that name and the name of Diamond, was done with a view to misleading customers into thinking that Mr Wild's companies were bigger, and better connected, than in fact was the reality.
48. The second category of allegations is the continuation of the business and practices from Leisure & Marketing through to Group and Group Europe. Mr Wild himself accepted that his response to the proceedings brought by Diamond for infringement of the trademark in respect of Club Sunterra had been to abandon Leisure & Marketing, moving its business into Group, and Group Europe. At paragraph 24 and following of his witness statement (at pages 179 to 180), Mr Wild says that when Diamond - and the personnel involved were not known to him personally - took its injunction action against him and Leisure & Marketing, Mr Wild took what he now knows was an inappropriate and arrogant approach. He says that he did not wish Leisure & Marketing to become embroiled in acrimonious, hostile and expensive legal action. So he took what he describes as an avoidant course. He decided that Leisure & Marketing could be left behind, and allowed to be sued, as it was effectively an asset- and liability-free entity. He says that he would form one or more other companies, as he had back in 2003 when he had allowed a previous company to cease to trade and be dissolved, and had formed Leisure & Marketing, and that he would continue to trade through such company or companies.
49. He says that he therefore incorporated Group and Group Europe, choosing the names not only because they were available, but also because they clearly showed an association with the APD name, and because they were intended to show a large resource and backing. He says that he did not believe that he was personally bound by any restrictions against the use of the name Sunterra; and he says - although I reject his evidence on this point - that he knew that they had bought the name and trading logo through Third Party Formations Limited. He says that because neither Group nor Group Europe were bound by the restrictions that bound Leisure & Marketing, he was confident, and satisfied, that Group, and Group Europe, could use the name and logo of Sunterra.
50. The effect of all that was, according to Mr Mohyuddin, threefold. First, Mr Wild circumvented the litigation brought by Diamond, and the satisfaction of the judgment obtained by that company from Floyd J on 7 October 2009. Secondly, the appointment of a provisional liquidator over Leisure & Marketing was circumvented because the business was simply shifted forwards to Group, and Group Europe. Mr Mohyuddin points to the respects in which Judge Raynor QC had found this to be unattractive in his judgment on 11 February 2010. Finally, Mr Mohyuddin says that it is worth observing that the succession of companies which traded the business perpetrated the inappropriate trading methods about which complaint is now made.
51. In evidence, Mr Wild said that, as far as he was aware, the companies had not continued trading after the appointment of the provisional liquidator on 21 October 2009. This afternoon, before I began to deliver judgment, Mr Wild produced two further documents which he said supported that. The first was said to be a tenancy agreement of office premises at 8 Cocker Avenue, Poulton-le-Fylde. In fact, the tenancy agreement is, in terms, one for the letting of an unfurnished dwelling house, on an assured shorthold tenancy, and the property is described as a dwelling house. The document is dated 27 July 2009 between Sean Lynden as landlord and Dave Wild as tenant. Mr Wild tells me that he had not noticed that it was a residential tenancy agreement; and he says that that does not reflect the reality of the matter. Mr Wild also produced a letter dated 3 December 2009 on APD Leisure & Marketing Europe paper, addressed, he told me, to the landlord of Holmfirth Hall, Carnforth. He says:

"Please accept this as confirmation that due to the investigation by the DTI [he has] had to close APD Leisure & Marketing. This has now been taken over by Premier Vacations of FP1 Limited."

52. He asks the addressee to forward all correspondence and invoices to the care of Mr Wayne Bray, Premier Vacations. It is, however, clear from the unchallenged evidence of three of the customers that presentations continued to be given after the appointment of the provisional liquidator in respect of Leisure & Marketing. Presentations were attended on either 7 or 14 November by Mrs Hargreaves, and by Mr Last and Mr Speakman on 5 December 2009. That was after a provisional liquidator had first been appointed by Judge Raynor on 21 October 2009. I bear in mind, as I have mentioned, that Mr Beasley describes the date of the last sale for each of Group and Group Europe as October 2009. Nevertheless, it is clear that presentations were still being made after the appointment of the provisional liquidator in respect of Leisure & Marketing. Again I find that allegation made out.
53. The third matter of complaint is said to be high pressure sales techniques. These commenced with one or more cold calls to would-be customers, inviting them to attend a presentation at Holmfirth Hall. There is an issue between the Official Receiver and Mr Wild as to whether customers were told that they had "won" a free holiday, as the Official Receiver asserts, or whether they had been "awarded" a holiday, as Mr Wild asserts, having to attend a presentation in order to claim it. From the terms of the letter to Mr and Mrs Jolliffe of 21 January 2009 (at page 575 of the trial bundle), which refers to the fact that they had been "awarded" a luxury European holiday, on this point I prefer the evidence of Mr Wild. But, in my judgment, as Mr Mohyuddin submits, little (if anything) turns on the difference between the "winning" or the "award" of a free holiday. In either event there was an inducement to prospective customers to attend at Holmfirth Hall for a sales presentation. Mr Mohyuddin rightly submits that it is what went on at the presentations that the court should be significantly more concerned about.
54. I find that upon attending at the presentations, customers were indeed subjected to aggressive sales techniques, and were put under extreme pressure to sign agreements, and to pay money over. Those techniques included, first, customers being informed that the offer was only available whilst they were at the presentation itself. There was no reason for any time limit being imposed on any objective basis; yet customers were told that if they left the presentation room, they would not be given any further opportunity to purchase from the companies for the next three years. That had the consequence of requiring customers to make a "there and then" decision. Should they choose to enter into a contract, they would do so at the company's premises, thus depriving them of the consumer protection which they would have otherwise enjoyed had they signed the contract elsewhere. It also deprived them of any opportunity to reflect on the contract being offered, or to take legal advice about it.
55. When customers were told that they had this "once only" opportunity to enter into the contract, the pressure on the customers was increased. Mr Wild addresses this at paragraphs 58 through to 70 (at page 191 of the trial bundle). He says that it is acknowledged that the APD staff at the presentations told customers that the price offered was only available on the day; but he says that that was because it was company practice not to re-invite customers who declined to sign with the company at the presentation. He says it is therefore correct to say that the offer was only available to customers on that day. He also says that the companies did not offer reductions, discounts or refunds. That was said to be a practice from which they did not diverge. He says that it is correct that the customers did not have any statutory cancellation rights; but that was common throughout the whole industry, and was because the contracts were signed at the company's own business premises, and therefore fell outside the area where Parliament felt that consumers should be protected. It was not appropriate for Mr Wild to be castigated for having set up a business model which complied with statutory constraints, so far as they then applied to the business then transacted.
56. In the course of his evidence, Mr Wild said that if customers needed to go away, they were never going to buy a holiday. I asked about that at the end of Mr Wild's evidence, and he said that that was because people would go away and speak to people in the local pub. That would discourage them from taking up a holiday club membership of the present kind because of the bad reputation that time-share deals generally had amongst the general public. Mr Wild also said that the reason why customers were not allowed to leave without signing up there and then, at the price of not being able to sign up in the future, was that customers would have, in any event, to be given the awarded holiday before they left. He said that everyone who attended a presentation was awarded a holiday.
57. I am satisfied, from the reactions from the customers from whom affidavits have been obtained, that these were aggressive sales techniques, informing customers that the offer was only available whilst they were at the presentation. I reject Mr Wild's evidence that customers were not offered discounts. Mr Wild qualified that evidence in the course of his cross-examination. He said that, whilst customers were not offered discounts, the price was reflected in the number of weeks that would be given as part of a holiday club membership, or in the locations in which holidays might be taken. What he accepted that the companies did give was less than the originally stipulated number of weeks, or weeks only outside the UK. He said that the companies never gave anything away.
58. I am quite satisfied from the evidence that the offering of discounts against price, albeit perhaps reflected in a reduction in the number of weeks available, or the location where those weeks could be taken, coupled with the fact that customers were told that there was but the one opportunity to take up the company's offer, increased the pressure on those attending the sales presentations to sign up to contracts with the customers. I am satisfied that misrepresentations were made as to the availability of holidays during peak periods, such as school holidays. That is clear from the affidavits of Olive Weir, Anita Seddon and Mr Tuer. In the case of both Mrs Weir and Anita Seddon, at paragraphs 138 and following of his witness statement, Mr Wild accepted that if they were told that there was good availability in the school holidays, then that was to be regretted.
59. I accept Mr Mohyuddin's submission that weeks in school holidays were inevitably the most popular weeks, which would be sold off first, and therefore for them to be unsold (and thus available) it was unlikely that weeks would be available outside school holidays. The nature of the defendant's business model was such that holidays were inherently unlikely to be available in school holiday periods. I am satisfied that customers were misled in that regard.
60. It is appropriate, as Mr Mohyuddin submits, for the court to look, by way of analogy only, at the protection and guidance afforded by schedule 1 to the Consumer Protection from Unfair Trading Regulations 2008, identifying commercial practices which are in all circumstances considered unfair. Amongst those, at paragraph 7, is identified:

"Falsely stating that a product will only be available for a very limited time, or that it will only be available on particular terms for a very limited time, in order to elicit an immediate decision and deprive customers of sufficient opportunity or time to make an informed choice."

61. That is reiterated in paragraph 24, which identifies as an unfair commercial practice creating the impression that the customer cannot leave the premises until the contract is formed.
62. At paragraph 93 (at page 195 of the trial bundle) Mr Wild states that, whilst it is correct to say that there were no cooling off periods or cancellation rights, it is not correct to say that cancellation was refused in the case of a change of circumstances due to ill health or financial difficulty. However, that falls to be read against the experience of Mr Carson. At paragraph 100 of his first report, Mr Beasley quotes from a statement by Mr and Mrs Carson in their response to a questionnaire:

"We joined at approximately 4pm on Sunday, 14 June 2009. On Monday I was informed I was being made redundant. I phoned Leisure & Marketing at 10.30am to inquire if I could cancel my agreement. This was refused."

63. That was reiterated at paragraph 10 of Mr Carson's own affidavit. Mr Wild's response to that, at paragraph 100 of his witness statement (on page 196), was simply to say: "This is again merely confirmation of the non-cancellable nature of the contract." Mr Wild was asked about that in cross-examination. He was first asked: what if someone was made redundant? He made no answer to that question. He then said that buyer's remorse, as he described it, "happens a lot in our industry, but once they have had their holiday it is great." Mr Wild was then taken specifically to paragraphs 9 and 10 of Mr Carson's affidavit (at page 1390) and he said, "We would have asked him for proof. We had to protect ourselves as well. There would have been a reason why we would not let him cancel." He then repeated what had become a constant refrain: "We did nothing illegal." He said that customers would use any excuse they could to try and cancel. That itself seems to me to demonstrate the aggressive sales tactics that had been employed in order to get customers to sign up to holiday club memberships in the first place.
64. The final head of complaint is the failure to give customers what they had bargained for. Having persuaded customers to sign contracts for holiday club memberships for 35 months (and I interpose to say that the reason for that period was that, as a result, the contracts would fall outside the scope of consumer protection legislation), the companies failed to give customers what they had bargained for. I accept that very many customers found themselves unable to book holidays at a time suitable to them, and in particular at times of high demand, such as school holidays. But even customers such as Mr Cooper, who attempted to book at periods of lower demand, were sometimes also unable to book holidays. Mr Cooper used the phrase "not at peak times" when referring to his attempts to book a holiday without success. Customers who thought that they had made confirmed bookings were then told that there was in fact no availability (see Mr Filby's affidavit), or discovered upon their arrival at their destination that they did not in fact have a booking (see the affidavit of Elisa Ward). Some customers were required to pay additional fees upon arrival at their destination (see, for example, the affidavit of Brenda Hargreaves). There were some customers, such as Mr Last, who were able to book some holidays, but, as Mr Mohyuddin says, it would be surprising had no customer at all been able successfully to book a holiday.
65. In considering this allegation, I have borne in mind the point made by Mr Wild at paragraphs 74 and 75 of his witness statement (at page 192). The information obtained from customers was, it would seem to Mr Wild, obtained after the companies were no longer in a position to address any concerns from customers which would ordinarily have been made to the company, and which would have been handled by the in-house customer department. Nevertheless, I am satisfied that there was a considerable measure of customer dissatisfaction. Indeed, it was this that led to the original winding up petition against Leisure & Marketing, and the application, in the event successful, to appoint a provisional liquidator in respect of that company.
66. On the evidence, and for the reasons I have given, I do find that Mr Wild's conduct as a director of all three companies, whether viewed individually or collectively, makes him unfit, within the meaning of section 6 of the 2006 Act, to be concerned in the management of a company.
67. I therefore turn to consider the period of disqualification. This must be between two and 15 years: see section 6(4) of the 2006 Act. The period of disqualification is, as Mr Mohyuddin submits, in the judge's discretion, although some attempt at consistency is to be encouraged. In Sevenoaks Stationers (Retail) Limited (previously cited) Dillon LJ endorsed the tripartite division of the two to 15-year range which had been suggested by counsel for the Official Receiver in that case: see page 174 E to G. The top bracket of periods over ten years should be reserved for particularly serious cases. That would include cases of deceit and fraud. The minimum bracket of two to five years' disqualification should be applied where, though disqualification is mandatory, the case is relatively not very serious. The middle bracket of disqualification, from six to ten years, should apply for serious cases which do not merit the top bracket.
68. Mr Mohyuddin submits that in this case, bearing in mind the circumstances, and in particular the use of high pressure sales techniques, the failure to give customers what they had bargained for, and the unauthorised use of another's intellectual property, and the fact that the Secretary of State was obliged to step in on two occasions to curtail the companies' activities, the Official Receiver says that this case falls into the top bracket. Alternatively, Mr Mohyuddin submitted that the case was at the top end of the middle bracket.
69. Mr Wild's mitigation is to be found throughout his witness statement, but particularly in his conclusion at paragraphs 204 and following (at pages 205 to 206 of the trial bundle). There he says that, whilst he sincerely and deeply regrets the circumstances that have brought about the present application, he believes that the same has been greatly brought about by his own inaction and inappropriate response to the intervention of the authorities, in particular his response to the initial approaches made to him, and Leisure & Marketing, by a representative of Lancaster Trading Standards. He says that he then believed that that representative was acting with a personal agenda, designed to the detriment of Leisure & Marketing, and that the intervention and involvement were at the behest of Diamond Resorts. He says that he has no specific information which led him to that view, but his response, which was to rebut, and then refuse to co-operate with, the representative of Trading Standards, was said to be founded on that belief.
70. Mr Wild says that he knows now that his actions were not appropriate to the service owed to the Leisure & Marketing customers, but he is willing, if so allowed by the court, to continue to offer and to deliver the service then agreed to be provided. He is willing for the APD companies to revalidate the agreements entered into in the period in question, so that they will run from the conclusion of these proceedings, and to deliver the services at the request of those customers in accordance with the terms of the existing agreements. He says that he appreciates and accepts his responsibilities for proper management and control, and will discharge them. In all the circumstances, he prays and asks that this court will refuse the claimant's application, and will reinstate the APD companies so that they may discharge their obligations to the customers.
71. Mr Mohyuddin emphasised what he describes as aggravating features of the present case. First, the attempt by Mr Wild to contest the allegations in relation to the use of the Sunterra name with a view to misleading customers, and in particular the attempt by Mr Wild, initially at least, to distance himself from the clear evidence contained within the Third Party Formations Limited letter. Mr Mohyuddin also submitted that the response to request number 1 in the requests for further information, denying that Mr Wild had ever been a director of any company that traded as Sunterra, or otherwise whose name contained the word "Sunterra", had been an attempt by Mr Wild to distance himself from companies which he had clearly incorporated himself with a view to effectively misleading customers as to the instant companies' connection with Sunterra and its resorts.
72. Secondly, Mr Mohyuddin emphasises the carrying forward of the business into Group and Group Europe after Floyd J's order, and after the appointment of a provisional liquidator in respect of Leisure & Marketing. Mr Mohyuddin emphasised that a shift in memberships from Leisure & Marketing to Group and Group Europe had not been done after any consultation, either with members of the holiday club or with the provisional liquidator. He says that the companies continued to sell club memberships to members of the public even after the appointment of the provisional liquidator. That is an allegation of fact which, as I say, I have found to be well-founded.
73. In my judgment, this is not a case which falls within the top bracket. In my judgment, this is a case that falls at the top end of the middle bracket. Had this been a case where Mr Wild had set out from the outset to engage in these unacceptable and aggressive sales tactics, then I would have acceded to Mr Mohyuddin's submission that this was a top bracket case. However, the view I have formed on the evidence - and when I put this to Mr Wild he did not dissent from it - is that everything went wrong from the time when Diamond Resorts terminated the existing distributorship agreement with Leisure & Marketing. Up to then, almost the end of 2008, I am satisfied that Mr Wild and his companies were seeking to provide a good business service for customers. There is no evidence of any complaints prior to the earliest of the three periods relied upon by Mr Beasley, namely November 2008.
74. What then happened was that Mr Wild, and Leisure & Marketing, found themselves effectively without much of a business, and they tried to keep their business afloat. In so doing, they resorted to unacceptable and overly aggressive sales practices. But this is not a case where Mr Wild embarked upon that sort of conduct from the inception of his business. He should not have done it, and the fact that he did merits disqualification; but the circumstances in which he was driven to adopt that course seem to me to bring the case within the middle bracket, albeit, as I say, at the top end of the range.
75. Bearing all the factors, including the mitigating features identified by Mr Wild, in mind, it seems to me that the appropriate disqualification period is one of nine years. So I will make a disqualification order for nine years.