18th Mar 2024


Nicholas Leah (instructed by Rix & Kay Solicitors LLP) for the First Respondent

Chief ICC Judge Briggs:

By an application dated 5 March 2024 (“Application”), the First Respondent seeks a stay of proceedings alternatively an adjournment of a trial listed on 11 March 2024. The ground relied upon is that the First Respondent is unable to engage in the trial process as he is currently suffering from mental health issues. The Application is supported by a witness statement of Mr Richard Ludlow, a solicitor at Rix & Kay Solicitors LLP, acting on behalf the First Respondent. The Application is resisted.

The trial concerns an application dated 3 August 2022 made by the Applicants (the “Liquidators”) against the directors of Westcountrytruffles Ltd (the “Company”). The Liquidators seek the balance of overdrawn directors’ loan accounts (a debt action), alternatively they claim against the directors for causing the Company to pay unlawful dividends, losses arising from breaches of directors’ duties, and equitable compensation for loss caused to the Company.

The Company is alleged to have been part of a scheme involving the marketing and sale of tree saplings inoculated with truffle spores to members of the public as an investment opportunity. The plantation of trees is in the UK, Spain and South Africa. The company managed the UK plantation only. Viceroy Jones New Tech Limited (“VJ”) marketed the investment opportunity to potential investors using a combination of websites brochures and introducers. On 7 April 2017 the Secretary of State presented 5 linked public interest winding up petitions that included the Company and VJ. The Company and VJ were wound up on 12 October 2018 following trial. Judge Barber found that the allegations in the petition had been made out. In short, investment monies raised from the public were rapidly and unlawfully dissipated, and the Company’s payment banking and contractual arrangements were contrived so that investors could have no or limited recourse in respect of their investments. The Company was left with no means to support the plantations which were to mature after 15 years. The Judge found that the Company and the First Respondent had been involved in the scheme.

The claim made by the Liquidators is that the Company was always insolvent and its bank account was used as a conduit to provide approximately £408,000 to the First Respondent.

The First Respondent defends the claim on the following notable grounds:

1. The First Respondent resigned as a director more than 6 years before the Application was issued and any claim in debt is statute barred;

2. The Company was not involved in the marketing of the scheme;

3. Although the Directors’ loan account figures produced by the Liquidators is admitted the Liquidators are put to proof: “It is necessary to substantially revise [the Company’s] accounts to properly record the…business”;

4. The claim made pursuant to the Companies Act 2006 (s 197) is denied, and the claim of unlawful distributions is denied;

5. The First Respondent claims relief if found liable for any sum claimed, pursuant to section 1157 of the Companies Act 2006.

The reply pleads:

1. a standstill agreement had been entered. The agremeent suspended time from running;

2. in any event section 21(1)(b) of the Limitation Act 1980 applies;

3. the Company was always insolvent and the Duomatic principles will not save the First Respondent; and

4. the honest and reasonable defence (s1157 of the 2006 Act) does not apply in fact or law: the First Respondent cannot rely on his own wrongdoing and in any event his actions were not reasonable.

Continue reading this Judgment here.


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