IN THE BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY DIVISION
7 Rolls Building, Fetter Lane London, EC4A 1NL |
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B e f o r e :
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TRACEY DAVID STANDISH TRISTAN STANDISH VERNA ELLA STANDISH SOPHIE CHARLOTTE STANDISH TIFFANY DEBRA STANDISH TROY STANDISH TALITA ESTER ROWLAND HENRY JAMES STANDISH-HUNT ALEX RICHARD MCQUIN |
Appellants/ Claimants |
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- and - |
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THE ROYAL BANK OF SCOTLAND PLC SIG NUMBER 2 LTD (formerly WEST REGISTER NUMBER 2 LTD) |
Respondents/ Defendants |
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Paul Casey (instructed by Addleshaw Goddard LLP) for the Respondents/defendants
Hearing dates: 29TH OCTOBER 2019
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Crown Copyright ©
MR JUSTICE TROWER:
(1) Mr Sondhi demanded to see board meeting agendas in advance and added items to the said agendas;
(2) Mr Sondhi intervened during board meetings to require information and explanation to his satisfaction with regard to each item;
(3) Mr Sondhi imposed new and onerous contracts of employment on Tracy and Mr Cullaney as part of the First Restructuring;
(4) in around October 2011, required the instruction of KPMG, in lieu of MCR to advise the company as to the terms of the CVA;
(5) in around November 2011, decided, on behalf of the company, that the company would engage a turnaround consultant;
(6) In around November 2011, decided, on behalf of the company, the terms on which a turnaround consultant would be engaged by the company;
(7) Mr Sondhi insisted, in around December 2011, that the company appoint a turnaround consultant from a shortlist of three candidates identified by RBS;
(8) in around January 2012, Mr Sondhi insisted that the company appoint Mr Cooper, the turnaround consultant who had been selected, as the chairman of the company;
(9) in around May 2012, Mr Sondhi instructed Mr Cooper to dismiss Tracy as managing director of the company.
"47. Mr Sondhi attended the Company's board meetings on behalf of West Register and gave directions and/or instructions to the board that the directors were accustomed to follow".
"48. Accordingly, West Register (acting through Mr Sondhi) became a shadow director of the Company. Alternatively, Mr Sondhi became a shadow director and West Register (alternatively RBS) is vicariously liable for his actions."
>i) a breach by the Bank of its duty of good faith based on an implied term in both the overall customer agreement and the individual facility agreements between the Bank and the company;
ii) a breach of certain equitable duties said to be owed by the Bank and derived from the principles set out in Medforth v. Blake [1999] EWCA Civ 1482; and
iii) a breach by West Register and/or Mr Sondhi of their fiduciary duties as a shadow director of the company.
i) that the unlawful means was a breach by the Bank of an implied term by which it was said to owe a duty of good faith under the individual facility agreements; andii) that the unlawful means was a breach by the Bank of an equitable duty in relation to the exercise of its rights as mortgagee - he concluded that the claimants had no real prospect of establishing that there should be the necessary development of the principles in Medforth v. Blake to make such a case arguable.
(1) In breach of the duty to promote the success of the company, West Register (acting together with RBS):
a. refused reasonable proposals made by the company which would have allowed it to trade through its difficulties while adequately protecting West Register and RBS's position;
b. imposed unnecessarily high rates of interest and additional charges on the company, which led to a further deterioration in its financial position;
c. made excessive demands on management time, which distracted management from taking additional steps to improve the company's position.
(2) In breach of the no conflict duty, West Register (alternatively Mr Sondhi) allowed itself to assume a position where the board were accustomed to acting in accordance with its instructions, in circumstances where West Register (and Mr Sondhi) was improperly influence by the Unconscionable Purpose.
(3) In breach of both the duty to promote the success of the company and of the no conflict duty, Mr Sondhi, acting as the employee of West Register and/or as the agent of RBS, who are therefore vicariously liable for his actions:
a. promoted the Second Restructure;
b. refused to agree to alternatives to the Second Restructure.
"the overall difficulty for the claimants is that they agreed to, and the company entered into through its board of de jure directors, the First and Second Restructures of their own free will. Neither the claimants, nor the company, were directed or instructed by Mr Sondhi or West Register to do so."
"It seems to me that a shadow director will typically owe such duties in relation at least to the directions or instructions that he gives to the de jure directors. More particularly, I consider that a shadow director will normally owe the duty of good faith (or loyalty) discussed below ... when giving such directions or instructions. A shadow director can, I think, reasonably be expected to act in the company's interests rather than his own separate interests when giving such directions and instructions.":