Alison Beard and Stuart Turner acted for Graisley Investments Limited (“Graisley”) and its directors in defending proceedings brought by the Liquidators of Guardian Care Homes (West) Limited (In Creditors’ Voluntary Liquidation) (“the Company”), Kevin Hellard and Amanda Wade of Grant Thornton.
The Company was placed into voluntary liquidation on 27 April 2010 but Mr Hellard and Ms Wade were appointed only in November 2015 when the original Liquidator resigned. In April 2016 the Liquidators issued claims for transaction at an undervalue against Graisley and misfeasance against the directors based on journal entries made in the Company’s books and records by a bookkeeper between October 2009 and February 2010. The Liquidators sought repayment of more than £3.3 million.
The matter came to a five-day trial before Insolvency and Companies Court Judge Sally Barber in June 2018. On the first day of the trial the Judge directed that the witness statement supporting the claim by Ms Wade should be excluded from evidence. The Judge decided that the witness statement was of no real probative value because Ms Wade had no real involvement in the liquidation until 2017, having only been added as a party to the claim upon the application of our clients, and that the statement comprised only her interpretation of documents and events as a matter of opinion. It was not a witness statement of fact.
Judgment dismissing the Liquidators’ claims entirely was handed down on 12 October 2018. The Liquidators had failed properly to plead or to define the ‘transaction’ complained about and had failed to properly state the value of the alleged undervalue claim. As the misfeasance claims were based upon the alleged transaction at an undervalue, those claims also failed. Further, the Liquidators had failed even to prove that the transactions they objected to took place as the journals they relied on were entered and corrected in error and bore no relation to what in fact happened to the company’s assets. Plainly the Liquidators didn’t understand the journals.
In concluding her judgment and awarding costs against the Liquidators on the indemnity basis, the Judge stated that the Liquidators’ case was “misconceived, vexatious and irresponsible”. There had been have been a wholesale failure on the part of the Liquidators to properly analyse, interrogate and vouch the journal entries. The Judge cautioned Mr Hellard and Ms Wade to take greater care as to the way their investigations are conducted, and cases presented in the future.
The outcome of the case reflects the extensive experience possessed by Alison Beard and Stuart Turner in conducting defences on behalf of directors faced by claims brought by Insolvency Practitioners. Please feel free to contact them for advice and assistance if you are in such an unfortunate position.
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