Karen Elizabeth Mcilroy v Deon Minaar & Ors

Neutral Citation Number: [2026] EWHC 2281 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS IN BRISTOL INSOLVENCY AND COMPANIES LIST (ChD) Case No: CR-2024-BRS-000149 Bristol Civil Justice Centre 2 Redcliff Street, Bristol, BS1 6GR Date: 4 September 2026 Before :

HHJ PAUL MATTHEWS (sitting as a Judge of the High Court) - - - - - - - - - - - - - - - - - - - - - Between :

KAREN ELIZABETH MCILROY - and - 1. DEON MINAAR 2. DIGIOPIA LIMITED 3. DMMT LIMITED 4. LIBERAS SOLUTIONS LIMITED - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Petitioner Respondents James Wibberley (instructed by gunnercooke LLP) for the Petitioner Timothy Foot (instructed by Keystone Law Ltd) for the Respondents Hearing dates: 23-27 March 2026 - - - - - - - - - - - - - - - - - - - - - This judgment was handed down remotely at 4:00 pm on 4 September 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archive. HHJ Paul Matthews Approved Judgment HHJ Paul Matthews : Re Liberas Solutions Ltd, CR-2024-BRS-000149 1.

2. This is my judgment on the trial of a petition under section 994 of the Companies Act 2006, presented on 20 December 2024, alleging that the first to third respondents (whom I shall call “the Active Respondents”) have been guilty of unfairly prejudicial conduct against the petitioner in relation to the affairs of the fourth respondent (“the Company”), an IT consultancy services company. The trial took place before me between 22 and 27 March 2026, when it was adjourned to allow the parties serially to file and serve written closing submissions. The final such submission was filed and served on 22 May 2026. I am sorry for the delay in producing my judgment since then, but I have been dealing with other matters which had to take priority. I have also been away on annual leave. The Company was incorporated on 12 November 2014 by the petitioner’s husband, Michael McIlroy, and the first respondent, both of whom were themselves IT consultants. They had met whilst both employed by a company called HCL Technologies Ltd (“HCL”) on IT projects for Vodafone. By 2014, when he became a 50% shareholder in the Company, the first respondent had already left HCL and become self-employed (although he still worked on Vodafone projects through intermediary companies). Mr McIlroy, on the other hand, was still employed by HCL, and so he did not become a shareholder in the Company. Instead, his

wife, the petitioner, took up 50% of the shares as his nominee. The Company’s business model was to monetise their own networks of IT consultants by introducing such consultants to, and placing them with, businesses that needed their services, charging a commission or profit (which they called “margin”) on the fees charged by the consultants to the businesses concerned. How English judges decide civil cases 3. For the benefit of the lay parties concerned in this case, I will say something about how English judges decide civil cases like this one. I borrow the following words largely from other judgments of mine in which I have made similar comments. First of all, judges do not possess supernatural powers that enable them to divine when someone is mistaken, or not telling the truth. Instead, they take note of the witnesses giving live evidence before them, look carefully at all the material presented (witness statements and all the other documents), listen to the arguments made to them, and then make up their minds. The point is that there are a number of important procedural rules which govern the decision-making of judges, and which are not as well-known as they might be. I shall briefly mention some of them here, because non-lawyer readers of this judgment may not be aware of them. The burden of proof 4. The first is the question of the burden of proof. Where there is an

issue in dispute between the parties in a civil case (like this one), one party or the other will bear the burden of proving it. In general, the person who asserts something bears the burden of proving it. Here the petitioner bears the burden of proving her case, ie that the respondents’ conduct was unfairly prejudicial to the petitioner in her capacity as a shareholder. This will include, for example, the allegations made in this case (i) that the agreement between the first respondent and Mr McIlroy was as alleged by the petitioner, (ii) that the first respondent paid himself for work which he had not carried HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 out, and (iii) that the first respondent paid Couture PR for services which were not provided. The importance of the burden of proof is that, if the person who bears that burden satisfies the court, after considering the material that has been placed before the court, that something happened, then, for the purposes of deciding the case, it did happen. But if that person does not so satisfy the court, then for those purposes it did not happen. The decision is binary. Either something happened, or it did not, and there is no room for maybe. That may mean that, in some cases, the result depends on who has the burden of proof. The standard of proof 5. Secondly, the standard of proof in a civil

case is very different from that in a criminal case. In a civil case like this, it is merely the balance of probabilities, even where there are allegations of fraud. This means that, if the judge considers that something in issue in the case is more likely to have happened than not, then for the purposes of the decision it did happen. If on the other hand the judge does not consider that that thing is more likely than not to have happened, then for the purposes of the decision it did not happen. It is not necessary for the court to go further than this. There is certainly no need for any scientific certainty, such as (say) medical or scientific experts might be used to. The role of judges 6. Thirdly, in our system, judges are not investigators. They do not go looking for evidence. Instead, they decide cases on the basis of the material and arguments put before them by the parties. They are umpires, or referees, and not detectives. So, it is the responsibility of each party to find and put before the court the evidence and other material which each wishes to adduce, and formulate their legal arguments, in order to convince the judge to find in that party’s favour. There are a few limited exceptions to this, but I need not deal with those here. I have accordingly dealt with this case on the basis of what was put before me, in both documentary and oral form. I have not dealt with

it (nor could have dealt with it) on the basis that there might be other relevant material available, except to the limited extent (described below) when the court is able to draw an inference from the absence of evidence. The fallibility of memory 7. Fourthly, more is understood today than previously about the fallibility of memory. In commercial cases, at least, where there are many documents available, and witnesses give evidence as to what happened based on their memories, which may be faulty, civil judges nowadays often prefer to rely on the documents in the case, as being more objective: see Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm), [22], restated more recently in Kinled Investments Ltd v Zopa Group Ltd [2022] EWHC 1194 (Comm), [131]-[134]. As the judge said in that case, “a trial judge should test a witness's assertions against the contemporaneous documents and probabilities and, when weighing all the evidence, should give real weight to those documents and probabilities”. In the present case, there are a number of useful documents available, including print- outs of texts and WhatsApp messages. This is important in particular where, as here, HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 the relevant facts have occurred over a period of time, and further time has elapsed since they took place. These messages enable dates and times of various events to be fixed with accuracy.

8. In deciding the facts of this case, I have therefore had regard to the more objective contents of the documents in the case. In addition to this, and as usual, in the present case I have heard witnesses (who made witness statements in advance) give oral evidence while they were subject to questioning. This process enables the court to reach a decision on questions such as who is telling the truth, who is trying to tell the truth but is mistaken, and (in an appropriate case) who is deliberately not telling the truth. I will therefore give appropriate weight to both the documentary evidence and the witness evidence, both oral and written, bearing in mind both the fallibility of memory and the relative objectivity of the documentary evidence available. Reasons for decision 9. Fifthly, a court must give reasons for its decisions. That is the point of this judgment. But judges are not obliged to deal in their judgments with every single point that is argued, or every piece of evidence tendered. Judges deal with the points which matter most. Put shortly, judgments do not explain all aspects of a judge’s reasoning, and are always capable of being better expressed. But they should at least set out the main points, and enable the parties to see how and why the judge reached the decision given. Failure to call evidence or disclose documents 10. Sixth, there is the question (adverted

to above) whether a party’s failure to call a relevant witness or put in relevant evidence which is available should have any effect on a party’s case. The former question arose in Royal Mail Group Ltd v Efobi [2021] 1 WLR 3893, SC. In his judgment, Lord Leggatt (with whom all the other members of the court agreed) said: “41. The question whether an adverse inference may be drawn from the absence of a witness is sometimes treated as a matter governed by legal criteria, for which the decision of the Court of Appeal in Wisniewski v Central Manchester Health Authority [1998] PIQR P324 is often cited as authority. Without intending to disparage the sensible statements made in that case, I think there is a risk of making overly legal and technical what really is or ought to be just a matter of ordinary rationality. So far as possible, tribunals should be free to draw, or to decline to draw, inferences from the facts of the case before them using their common sense without the need to consult law books when doing so. Whether any positive significance should be attached to the fact that a person has not given evidence depends entirely on the context and particular circumstances. Relevant considerations will naturally include such matters as whether the witness was available to give evidence, what relevant evidence it is reasonable to expect that the witness would have been able to

give, what other relevant evidence there was bearing on the point(s) on which the witness could potentially have given relevant evidence, and the significance of those points in the context of the case as a whole. All these matters are inter-related and how these and any other relevant considerations should be assessed cannot be encapsulated in a set of legal rules.” HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 11. But the principle goes further, in that there may be things or documents, for example, which are (or were) available to a party and would be or contain evidence relevant to an issue before the court, but are never produced to the court by that party. Thus, in Armory v Delamirie (1722) Str 505, the plaintiff was held entitled as against the defendant to a jewel that he had found, but the defendant refused to produce the jewel in order to be valued. The judge directed the jury “that unless the defendant did produce the jewel, and shew it not to be of the finest water, they should presume the strongest against him, and make the value of the best jewels the measure of their damages: which they accordingly did.” Thus, if a party fails to disclose relevant documents in accordance with a disclosure obligation, the court may draw an appropriate inference against the party on the issue to which it was relevant. Cross-examination 12. There

is another point which I should mention in this case. This is not so much about how judges decide, but instead about how to cross-examine a witness whose honesty is challenged. That may well affect a judge’s decision. In Howlett v Davies [2018] 1 WLR 948, CA, Newey LJ (with whom Lewison and Beatson LJJ agreed) at the end of his judgment in that case said: “39. It is perhaps worth adding two comments. First, where a witness' honesty is to be challenged, it will always be best if that is explicitly put to the witness. There can then be no doubt that honesty is in issue. But what ultimately matters is that the witness has had fair notice of a challenge to his or her honesty and an opportunity to deal with it. It may be that in a particular context a cross-examination which does not use the words ‘dishonest’ or ‘lying’ will give a witness fair warning. That will be a matter for the trial judge to decide. Secondly, the fact that a party has not alleged fraud in his pleading may not preclude him from suggesting to a witness in cross-examination that he is lying. That must, in fact, be a common occurrence.” The evidence 13. The evidence before me fell into a number of different categories. First, there was the evidence of witnesses of fact who were cross-examined on their witness statements. Secondly, there was the expert evidence, both written and oral, of forensic

accountants. Thirdly there were the documents in the bundles before me. These last are admissible evidence by virtue of paragraph 27.2 of the Practice Direction to CPR Part 32, which provides that: “All documents contained in bundles which have been agreed for use at a hearing shall be admissible at that hearing as evidence of their contents, unless – (1) the court orders otherwise; or (2) a party gives written notice of objection to the admissibility of particular documents.” HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 I made no order under paragraph 27.1(1). So far as I am aware, no notice was given under paragraph 27.2(2). Witnesses 14. 15. 16.

17. The following witnesses gave evidence before me. For the petitioner there were the petitioner herself, the director and shareholder of the Company, her husband Michael McIlroy, and Sally Longworth, forensic accountant. For the respondents there were the first respondent himself, Matthew Durrant, who was the Company’s accountant, and Geoff Mesher, forensic accountant. I give here my impressions of them. The petitioner was, I am afraid, a weak witness with a poor memory. She had a limited understanding of business, and was inclined to be pedantic. She found it hard to see where a conflict of interest might arise. But I do not think she was trying to mislead the court or tell any lies. Where she got things wrong, it was because she really did not know, and was imagining what the answer was, or was simply mistaken. In any event, it was clear that it was her husband who made all the decisions. Mr McIlroy, on the other hand, was a fluent witness, with (on the surface, at least) an answer for everything. It was clear that he was the businessman on the petitioner’s side of the fence, with very much an eye to the main chance, but unfortunately suffused with a high degree of over- optimism. I think he had convinced himself that he was in the right, and that the facts must follow. He certainly “spun” parts of his evidence, glossing over points that did not fit his narrative. For

example, in cross-examination he said that, although he had worked hard to get candidates into contracts with Ascential, initially their attempts came to nothing because his contact “said that she didn't have −− she just realised that she didn't actually have the procurement power.” But in an email to colleagues on 22 April 2022 Mr McIlroy gave a different explanation: “After all our hard work just had a call from Ascential and their strategy has been completely up ended and they are pausing ALL recruitment.” The petitioner says that the first respondent was a liar. I may observe that, in contrast to the statement of Newey LJ in in Howlett v Davies [2018] 1 WLR 948, [39], set out above, this was not specifically put to the witness, except by way of passing references. But in any event I reject this submission. The first respondent was a softly spoken witness who in his own evidence was very fair to the petitioner and her husband. His evidence at the outset of cross examination was hesitant, but it grew stronger as time went on. In my judgment, his evidence was palpably honest and telling what he thought to be the truth, if sometimes rather drawn out, indeed circumlocutory. As a result, it reads less well in the transcript than it sounded at the time. The alternative submission of the petitioner is that he was an unreliable witness. I reject this submission also. The first

respondent had on the whole a good memory, and was generally very good at details and on technical points. He was however less good at dates; on these he was sometimes confused. I do not blame him for this. The events of this case range over a number of years, and mostly happened several years ago. Overall, I considered that he was a witness who could be relied upon for the most part. Where his evidence differs from that of the petitioner and her husband, and there is no objective documentary evidence to contradict it, I tend to prefer the evidence of the first respondent. HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 18.

19. The other witness of fact for the first respondent, Matthew Durrant, was a straightforward and honest witness, who clearly had no axe to grind, and who did not stray beyond what he knew, and as to which was clearly telling the truth. I accept his evidence without reservation. The two experts, Sally Longworth and Geoff Mesher, were both very professional, and transparently honest. Ms Longworth was softly spoken and somewhat diffident in her answers. She may perhaps have been a little nervous, and I make allowance for that. Mr Mesher was clear and straightforward in his answers. He appeared to me to be more the master of the material in the case than Ms Longworth. Overall, I found him to be the more convincing witness. Where they differed in their expert evidence, I tended to prefer that of Mr Mesher. Facts found The agreements between the first respondent and Mr McIlroy 20. On the evidence before me, I find the following facts. So far as concerns the formation of the Company, I have already set this out above (above, at [2]), and will not repeat it. The petition pleads that Mr McIlroy (“MM”) and the first respondent (“DM”) formed the Company to carry out the terms of a joint venture agreement between them: “10. In or around 2014, DM and MM conceived the terms of a joint venture whereby they would utilise MM’s network of contacts within the IT industry to secure large

contracts for the provision of IT consultancy services. Contracts would be secured by a joint venture company owned by the parties, which would then subcontract it to a team of individual subcontractors (themselves trading via PSCs). This would allow the joint venture company to secure (far) larger contracts than either MM and/or DM would be able to secure on their own behalf. The joint venture company would generate a profit by charging end-clients a substantial margin on the day-rates payable by it to the individual subcontractors. The Petitioner refers to this agreement as ‘the JV Agreement’.

11. On 12 November 2014, the Company was incorporated as the corporate vehicle through which the JV Agreement would be carried out. As at the date of incorporation, MM was undertaking an employed role at HCL Technologies Limited and under the terms of his contract of employment was not able to serve as a director of another company. It was therefore decided and agreed that KM [ie the petitioner] would be appointed as a director of, and shareholder in, the Company in MM’s stead. This remained the position throughout, save for a period between May 2018 and January 2021 when MM replaced KM as a director of the Company whilst he was between periods of full-time employment.” 21. The defence (at [6]) disputes Mr McIlroy’s version of the terms of the agreement between them: “6,2 It was not part of the JV Agreement between the MM and DM that the Company would charge a margin on every item of work or that any retained margin would be split 50:50 between them. Each of MM and DM negotiated the margin on the projects he brought in. Moreover, where MM and DM had performed the work themselves, it was the Company’s common practice (with MM and DM’s HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 22. 23. 24. common agreement) either to pay the whole of the margin to the party who had earned it (or, where the margin was paid by the client to one of the parties

directly, not to charge them for it) … ” I find that Mr McIlroy and the first respondent were indeed business partners in forming the Company and carrying on its business. At least at the outset, the Company facilitated the contracts entered into between clients and consultants, but was not a party to them. Contrary to the case pleaded by the petition, it did not contract to supply the consultants’ services to the clients. Margins to be paid to Liberas were separately negotiated for each client, and, at least at first, they were billed separately from the fees of the consultant. Having seen and heard the parties, and read the documents available, I find that the original agreement between them was that margin paid to Liberas would be left in the Company to support its progress to become a “preferred supplier” of services to end-clients, and also to enable it to pay consultants before end-clients paid it. But I also find that within a short time Mr McIlroy and the first respondent had agreed to distinguish between the margins paid in respect of their own contracts and those of other consultants (for example in August 2017, in setting new consultant day rates with 7 Principles GmbH (“7P”), where the margin for Mr McIlroy was in fact zero). Indeed, and as set out in more detail below, both Mr McIlroy’s and the first respondent’s work for Vodafone was not put through Liberas at

all. Moreover, in some cases, pre-sales work might be done without any margin at all, to facilitate “pitching” for bigger contracts. (This did not prevent Mr McIlroy from claiming to be paid by the Company for his work in such cases.) In other cases, a consultant might be placed with an end- client without any margin for Liberas, in order to “get [the consultant] through the door” and “open opportunities for us”. In addition, Mr McIlroy did not abide by the agreement to leave margin in the Company, and started to take money out of the Company without the first respondent’s knowledge or approval (as set out below). These examples demonstrate that any stricter form of agreement had soon been abandoned. It was very much ad hoc. As a result, certainly by 2020, the version of the agreement put forward by the first respondent in the defence became the more accurate account. From about 2019 onwards, the Company started to earn fees on so-called “milestone” contracts, rather than margin on day rates. “Milestone” contracts were contracts where the work was paid for by achieving particular objectives (so-called “milestones”), rather than simply sending a consultant to work on a daily rate basis. In fact, however, the milestones were often simply delivering a certain amount of work by month end. In answer to a question about risk, in cross-examination, Mr McIlroy said: “when you go to

milestone billing … the vast majority of those milestones −− in fact, I don't think I 've seen many milestones that are more than a month in length. So the risk was pretty low … The vast majority of projects that I’ve seen, even with the milestones, the milestone just has to be month end. So you get to the end of the month, you can build.1 And that is essentially the same principle with the time and material.” The position of the consultant sub-contractors 1 I assume that this is a transcription error for “bill”. HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 25. The terms on which Liberas contracted with the PSCs of its sub-contractors included the following: “23. The Company [ie the PSC of the sub-contractor] warrants that for the duration of this Agreement and for a period of six (6) months following the termination of this Agreement the Company, any Representative(s) and/or the Consultant(s), including but not limited to Other Personnel, shall not directly or indirectly solicit or induce any employee, staff, Company or any representative to terminate its engagement with LIBERAS or the Client and/or the Client's customers or any company which is part of the corporate group of the Client.” The petitioner and her husband 26. The petitioner was nominally a director of the Company at all material times, except between 14 May 2018 and 1 January

2021. However, during that time, she played little or no part in the running of the Company. She did not even have a Company email account until October 2023, and she was not copied into the several thousand emails between her husband and the first respondent before that date. She accepted in cross- examination that, although she would like to have been involved in the administration of the Company, in fact she never was. Her role was pure window-dressing, as demonstrated by Mr McIlroy’s own actions and words throughout. Essentially, she was a nominee for Mr McIlroy. On the other hand, Mr McIlroy’s role in the Company during that time was that of a shadow director who actually ran the Company for the first few years, with input from his business partner, the first respondent. In particular, until 2018, the Company’s bank account was controlled by Mr McIlroy alone, to the exclusion of the first respondent. I find that Mr McIlroy was not acting on behalf of the petitioner or as her agent, but instead acted on his own initiative and as he thought fit. Mr McIlroy was formally a director of the Company only during the period of just under 20 months between 14 May 2018 and 1 January 2021, when, being between fulltime employments with other companies, he replaced the petitioner. The circumstances in which this happened are more particularly set out below. The Company’s business, and

the payments to Mr McIlroy 27. Throughout its life, the Company’s principal end-client remained Vodafone. From its formation in 2014 until about 2016, the Company did little or no other business, despite approaches made to potential clients and consultants. The first respondent was still working on Vodafone projects, but not through the Company. Mr McIlroy was still working for HCL. One problem was that the Company did not have “approved supplier” status with Vodafone, and so had to work with other companies that did. In 2016 the company began to place consultants with Vodafone via a German company called Comebis GmbH. The consultants were paid directly by Comebis, and Liberas was paid its margin separately. In the same year Mr McIlroy left HCL, and set up his own professional services company, Standle Ltd. Through this vehicle he continued to work on Vodafone projects. Notwithstanding the joint venture agreement pleaded by the petitioner, Liberas was not involved.

28. During 2017, Comebis was replaced by another German company, 7 Principles GmbH (already referred to above). Between them those two companies paid £30,780 to Liberas in 2017. This was all paid out to Mr McIlroy in that year, although he also paid in some £8,000 in June 2017. So he received about £22,000 net. The first respondent received HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 29. 30. nothing. In 2018 Mr McIlroy caused Liberas to pay out a further £22,551 to himself. The first respondent did not know how much had been paid out to Mr McIlroy until he obtained paper bank statements in early 2018. He taxed Mr McIlroy with this. In cross- examination, Mr McIlroy said his conduct had been “cavalier and selfish”. Following his discovery, the first respondent sought radical changes to the management of the Company. These included a shareholder agreement on what to do with profits, replacing the petitioner as a director with Mr McIlroy, access to the online bank account to be provided to both of them, and agreement by both “on any invoices/payments/expenses to ensure we are both agree with any transaction”. Ultimately, although there was no shareholder’s agreement entered into, online banking access was provided to the first respondent, and they agreed that the payments to Mr McIlroy would be regularised by declaring a dividend to each

shareholder of £14,000, and creating a director’s loan account for Mr McIlroy in the sum of £17,250. Unfortunately, Mr McIlroy continued to take money from the Company without the agreement of the first respondent. In July 2019, he admitted to the first respondent that he “had to take a short term loan from the account to pay for some building work before [he] went away.” Thereafter, Mr McIlroy agreed to leave management of the Company’s bank account to the first respondent. In cross-examination, he said of the fact that the first respondent “took control of the bank” that he “was very comfortable and very happy that he did that.” However, the petitioner remained on the bank mandate, and could have exercised her rights as a mandatory had she wished to.

31. Mr McIlroy’s work for Vodafone through 7P ended in early 2018. It however continued through another intermediary called Lorien, though without any margin being paid to Liberas. In early 2019, Mr McIlroy started to work for Serco. An email in May 2019 from Mr McIlroy to the Company’s accountants, told them that “I myself am about to start a new contract under the banner of Liberas and not my own limited company with Liberas paying me directly.” 32. But that did not happen. As Liberas was not on Serco’s list of approved suppliers, the contract was placed through another intermediary, Alexander Mann Solutions Ltd, and Liberas got nothing, either from Mr McIlroy’s contract with Serco, or from anyone else that may have been placed there. Mr McIlroy could have agreed a margin for Liberas out of his rate, but he did not do so. In cross-examination, he said that “that would have been a gift because Liberas were not −− was not part of the commercial relationship.” The economic reality however is that any services have an objective economic value to an end-client, which has to be shared between all those involved in their provision. Or, in other words, Mr McIlroy was keeping for himself any margin that could have been obtained for Liberas. And, as for Liberas not being part of the relationship, in an email in August 2019 to the first respondent, Mr McIlroy described Serco as one of

Liberas’s “Existing Clients”. Couture PR HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 33. A firm called Couture PR assisted with the creation of the Liberas website, and later with pre-sales, work presentations, documentation, and business plans for various opportunities. Sometimes it assisted with creating the invoices for Liberas, looking at contracts and helping to set up DocuSign. Its first invoice was rendered in October 2018. It was authorised for payment by Mr McIlroy, as he then controlled the Company’s bank account. The second invoice was rendered in May 2019, at a time when Mr McIlroy was still in control of the bank account. The 2020 discussion about margins 34. Mr McIlroy and the first respondent discussed the question of margins. The first respondent could not remember the exact timing, but placed it at about the time that Mr McIlroy took money out of the Delaware contract, which was in February 2020. I find that that is when the discussion took place. The first respondent’s evidence (which I accept) was that Mr McIlroy told him, “I’m taking all my margins out, you should do the same”. I find that this was repeated by Mr McIlroy to the first respondent in other discussions between them. Essentially, they agreed that each of them could be paid the whole of the fees paid by the end client in respect of their own contracts, without

any margin going to the Company. Thereafter the first respondent began to take out his margins. The first respondent’s further evidence (which I also accept) was that he put more contracts through the Company in order to boost turnover. I accept that this conversation is not specifically referred to in the first respondent’s witness statement. However, I observed the first respondent closely in giving his evidence, and it is consistent with what is in the statement, and also with other findings I have made, for example that relating to Serco, where Liberas also received nothing.

35. Mr McIlroy had no work of his own during much of 2020, but by October he was busy again. However, he put none of this new work through Liberas, except some “pre-sales” work (at no margin) for Proservartner, an international consulting firm. His PSC (Standle Ltd) was paid for this work by Liberas, but Liberas was not paid by Proservartner. Indeed, Mr McIlroy left all the active management of the Company to the first respondent, including dealing with the subcontractors and the end clients. So, Mr McIlroy got on with his own contracts, and the Company earned nothing from them at this time. Nevertheless, he continued to borrow from Liberas – though now with the first respondent’s consent. By the end of 2021, he owed the Company nearly £39,000. In addition, he owed Standle Ltd about £100,000. Couture PR again 36. The third invoice from Couture PR was rendered in January 2021, the fourth in August 2021, and the fifth on 1 January 2022. By this time, the first respondent was in control of the Company’s bank account, and he settled the invoices. Mr McIlroy’s “troubles” 37. In a conversation with the first respondent in early 2022 Mr McIlroy “expressed frustrations with his marriage”, following an argument with his wife. (This is confirmed by the petitioner’s own pleaded Reply at [9].) As a result, the first respondent thought that Mr McIlroy and the petitioner might be heading for

divorce (though in the event that did not happen). On 15 February 2022, he wrote to Mr McIlroy: HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 38. 39. “I have not heard from you for sometime and hope you have overcome all your troubles. I have purposely not contacted you, as requested, but we definitely need to discuss Liberas. As stated before I am not happy to continue with Karen as Director or shareholder of Liberas. It is causing me issues now as she is also a director and shareholder of JV with SDMC.” Just over a week later, on 24 February, they exchanged a number of emails. The first respondent had proposed that the petitioner transfer her shares to him, in order to deal with the outstanding director’s loan. He explained that putting all his revenues through the Company had caused him to be unable to obtain a mortgage loan, and that having the petitioner as a shareholder when “she puts no effort into the company” made no sense to him. On the other hand, he had “no problem you being part of the company but for a long time now it has just been me and having silent shareholders has not helped … ” Mr McIlroy replied that he had been unaware that the first respondent was putting all his revenue through the Company. He went on to say: “I want to support you in any way like you've done for me so let's discuss. The company is still registered to

my address and if I have no ownership that will also have to change”. On 2 March 2022, the Company’s accountant Matthew Durrant explained to the first respondent (who passed it on by email the same day to Mr McIlroy) that loans made by a company to a director over £10,000 had to be declared, and attracted a corporation tax liability of 32.5% of loan value. Moreover, he said that prospective mortgage lenders did not allow company accounts containing directors’ loans to be used to obtain a mortgage loan (and hence the first respondent’s problem). There were other issues too, including the possibility of an investigation by HMRC. Discussions between the first respondent and Mr McIlroy 40. In his email to Mr McIlroy of 2 March, the first respondent summarised the position as he saw it, and then said this: “Where to go from here. • I really need this directors loan paid off as soon as possible. • I need to know what you are going to bring in to Liberas and how you want to move forward. • As I see it, I will continue to manage my contracts, consultants, invoices and payments, but we need to understand Margin split. So far, the work I have done has generated all the revenue, so would like to know your expectation. • I would like Karen to return her shareholding, as soon as possible, as I am now applying for another mortgage and they will want to see the shareholding and loans.” 41. In

my judgment, the reference to needing to “understand Margin split” is not a suggestion by the first respondent that there should be a new agreement between them for the future. Instead, it is a reflection of the first respondent’s unhappiness at what he HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 saw as Mr McIlroy’s taking out from the Company more than he brought in, and of the need for them to agree margin splits on particular contracts, in line with the more ad hoc approach adopted from about 2020.

42. Mr McIlroy replied to the first respondent on 7 March 2022. He said he was not prepared for the petitioner “to sign over her shares” to the first respondent. He said he had “made a lot of effort in building the Liberas brand, including the Company formation, website logo, engagement across our associate network and connects to external partners”. He said he was “still confused” about the first respondent’s mortgage issue. He also said that he wanted “the Directors Loan situation sorted out asap … ” He concluded that what he needed “to decide next steps” were the following: “Access codes and passwords to the Natwest business account both GBP and EUR accounts. • A summary sheet of all associates currently placed and the margin for each. • Copies of the contracts we have with our associates and partners. • An updated sheet of the customer/partner table (below) that we can both work from and update and use for a regular status meeting for you and I • An agreed schedule for sale and ops meeting between us both to have regular touchbase sessions on pipeline and operational performance”.

43. On the same day the first respondent replied, dealing with the points raised by Mr McIlroy. As for bank access, he said that Mr McIlroy should already have the access codes for the NatWest sterling business account. On the other hand, the first respondent said that he himself had “no visibility” of the euro account, although he was now applying for this. As for the “summary sheet of all associates” showing “the margin for each”, he attached a spreadsheet showing all the consultants put through Liberas and the margins that they were earning for the Company. As for associates’ contracts, he said he would “zip them from different folders which will take some time”. The final two matters requested by Mr McIlroy were “an updated sheet of the customer/partner table” and “an agreed schedule for sale and ops meeting”. The first respondent said that they needed to agree on how to manage both of these.

44. Turning back to the “summary sheet of all associates”, sent as a spreadsheet, the first respondent said this in his email: “I have attached a summary sheet with expected margins for all, some of them change as I negotiated deals and also baked in my rate in some of them, but to give you some indication, there is around 66k plus margin.” This makes clear that the first respondent had negotiated these deals, and had “baked in” his own rate on some of them. But there was margin being earned for the company on contracts he was not working on.

45. Looking at the spreadsheet itself, it is notable that all the entries for the first respondent working alone showed a margin of zero. Mr McIlroy cannot have failed to understand from this that the first respondent was proposing to take all his own margins out of the HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 Company. Mr McIlroy in cross-examination said that he did not understand that the first respondent was being treated differently from other consultants. I do not accept this, and find that (i) he already knew that both of them could take their own margins out, and that (ii) from that point on he knew that the first respondent was taking his margins out, just as he (Mr McIlroy) had himself earlier said. And he did not object. I also find that, at about this time, they spoke on the telephone, and to the same effect, ie that the first respondent should take out all his margins. I do not need to rely on this for my finding, but it confirms the point. Ascential and after 46. Also in March 2022, Liberas was offered the opportunity to place consultants at Ascential, an information services business. The first attempt came to nothing (I dealt with the reasons for this earlier, at [15]). However, in July there was a further opportunity, although both the candidates put forward by Mr McIlroy were rejected at interview. Then, in August, Mr

McIlroy put forward the first respondent for a specific contract, and he was successful. Moreover, the first respondent persuaded an apparently reluctant Ascential to allow the contract to go through Liberas. Mr McIlroy evidently regarded the first respondent as a bridgehead for Liberas into Ascential. On 26 August 2022, he said he would “draw up a sheet of all associates and their PSC’s; margins etc … ” He asked the first respondent for some details, which the latter supplied the same day. In October 2022, Mr McIlroy once again asked the first respondent for similar information. The first respondent replied, sending Mr McIlroy a list of consultants and their margins. There was no mention in this list of any margin for the first respondent, or indeed for Mr McIlroy.

47. Within a few days, on 22 October 2022, Mr McIlroy sent the first respondent a spreadsheet showing consultants’ margins. In the accompanying email he said: “Based on what we have in our active pool we would get £50k revenue per year … ” This is Mr McIlroy’s own document. It clearly shows the first respondent engaged as consultant for both Vodafone and Ascential, but (unlike the other consultants shown) as earning no margin for Liberas.

48. In cross-examination, Mr McIlroy said he sent the list to invite the first respondent to complete the spreadsheet by adding his margin. But the email and spreadsheet do not say that. Indeed, they imply the opposite. First, the email says that the margins add up to about £50,000 per annum. There is no suggestion that it might be more depending on the first respondent’s margins. Second, the spreadsheet does not leave any room for inserting a figure for the first respondent. Instead, in both places where he is mentioned, it positively states a margin of “0”. I find that Mr McIlroy was well aware that the first respondent was not leaving any margin in Liberas, and I also find that he did not object to this. I do not accept that he was inviting the first respondent to complete the spreadsheet by adding his margin. The spreadsheet says nothing about who would be entitled to the margin once paid to the Company.

49. In relation to the 7P and Ascential invoices, the petitioner in her closing submissions says that these amount to retrospective window-dressing. The petitioner relies on the fact that the dates of the documents as shown by the metadata are later than the dates HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 shown on the invoices, and that they represent more work than the first respondent could actually do. I do not accept either submission (the former of which was in any event never put to the first respondent in cross-examination). It is clear, on the evidence of the first respondent, that the invoices were produced subsequently, because the first respondent was too busy managing the business itself to produce them on his own time. Indeed, I said as much at the time of the cross examination. Secondly, the documents were not going to be sent outside the Company. They were being produced – after the event – simply to record what had been done, rather than the exact times that the work had been done. I do not consider that there is anything in this allegation. Final Couture PR invoices 50. The sixth and seventh invoices from Couture PR were rendered in July 2022 and July 2023. Once again, the first respondent settled these invoices from the Company’s bank account. Tax credits 51. Also in 2022, the first respondent was informed that HMRC were

offering companies tax credits for research and development. With Mr McIlroy’s agreement, Liberas made a claim, on a self-assessment basis, and was paid £225,000 as a tax rebate. Mr McIlroy’s financial position deteriorated over the next several months. In July 2023, the Company’s accountant Matthew Durrant wrote to Mr McIlroy to tell him that he owed Standle Ltd (his own PSC) about £220,000, and that Standle’s corporation tax bill had been increased by £75,000 as a result. He advised Mr McIlroy to repay the debt to Standle, because that would correspondingly reduce the tax owed to HMRC.

52. Mr McIlroy was keen to use the research and development tax rebate money to pay off some of his debt to Standle. He asked the first respondent to agree to a £100,000 dividend being paid to him by Liberas out of that money. But the first respondent was advised by Matthew Durrant to leave the money in the Company, because HMRC might ask for it back (I assume after investigation of the self-assessment on the basis of which it was calculated). Eventually, in August 2023 the first respondent agreed to a payment of £25,000 out of Liberas to Mr McIlroy, ostensibly as a “management fee”.

53. Mr McIlroy was also becoming confused about the difference between dividends from his company Standle and loans to him from that company. He insisted to Matthew Durrant in early September that the £47,000 he had taken out of Standle in August was “dividend not loan”. But the accountant pointed out to him that Standle did not have sufficient profits to pay out a dividend of that level. Hence payments out to Mr McIlroy had to be classified as loans. Nevertheless, Mr McIIlroy said there was a realistic chance of his being able to reply the Standle loan, “because I can [obtain] a second mortgage and that is going through …” 54. On 22 September 2023, Mr McIlroy emailed the first respondent to say: “I don't know how you feel about Liberas overall and when we get this second payment whether you want to call it a day or not and cash in … HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 … now about the R&D funds. As I mentioned I desperately need some cash to keep HMRC off my back and we had initially discussed taking the first tranche of R&D money in January – is that still in your mind? I certainly need it asap so Jan is on my radar – l guess if we're both ok with it we just decide how we take it out i.e. Management fee or Dividend … ” Possible sale of the petitioner’s shares 55. So, he had the tax rebate money in his sights. In the meantime, the

second mortgage loan hoped for by Mr McIlroy did not “go through”. Instead, he told Matthew Durrant on 5 October 2023 that Nationwide would lend him only £10,000. Mr McIlroy told the accountant that he had two other options. One was a second charge against his house. The other was to take funds out of the Company. Matthew Durrant’s reply was that in fact there was another option as well: “You could sell your shares in Liberas – back to Liberas. That's an option. I say Mike – I mean Karen, the shares are in her name. If you pay the monies to Karen as a dividend, then Deon needs to take a dividend as well, so it all gets a bit complicated.” 56. Mr McIlroy replied a few minutes later: “Ok that's interesting So Karen sells her stake in Liberas ? How would that work ?” 57. Matthew Durrant answered as follows: “You and Deon agree a price Liberas gives money to Karen (or pays it straight into Standle) Standle pays off the debt to HMRC as it goes into Standle as a loan repayment from Mike.” 58. Mr McIlroy was attracted by the idea, and immediately pressed the first respondent by text to discuss the question of price. The first respondent replied to say that he was working through figures. He asked the first respondent, “What’s the name of the banking front end thing again for Liberas?” The first respondent told him it was “FreeAgent”. Mr McIlroy texted within a minute to say that he had found it. In a text the following day (6 October) he told the first respondent “We need to have sometime to discuss things with Liberas and how quick we can turn this thing”. The first respondent asked Mr McIlroy “Mike when do you need this sorted by”. The reply was “Asap mate”. Matters were self-evidently urgent.

59. The same day Mr McIlroy emailed Matthew Durrant: “As you know Deon and I are coming up with an agreed price for Liberas at the moment – is there a way of calculating a valuation on FreeAgent? HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 Anyway, in terms of the monies once we've agreed - what is the most tax efficient way of getting it into Standle to pay off HMRC?” Matthew Durrant replied: “Once you have agreed a price, the money will be paid to Karen .. Karen needs to put aside 20% of it for tax You pay the balance to Standle, reducing your loan Standle pays the corporation tax bill. If you want a basic valuation figure, log in to Freeagent and look at the overview screen. Go to the very bottom right hand corner, there is a figure labelled as ‘carried forward/distributable’. This is the basic value of the company on a certain day Currently showing as £284,475”. Also on the same day, the first respondent emailed Matthew Durrant to say: “I have floated the idea of a 140k settlement figure to Mike and seems reasonable, but I am concerned about any future payback I need to be covered for … ” Due diligence 60. The next day, 7 October 2023, Mr McIlroy texted the first respondent at 1117, saying “Going to take longer to do my analysis on the numbers. Have to speak to Matt on Monday regarding the accounts but also there's a number of things I

don't understand from the numbers I'm looking at.” 61. When the first respondent said at 1120 that he would also speak to the accountant, Mr McIlroy said (at 1122) “Yes that's probably a good idea”. The first respondent answered (at 1123) “What does that mean Mike? Sounds like we have more to talk about?” But Mr McIlroy replied at 1126 “Not [sic] it's all good I just need to go through things myself obviously to understand the numbers and it's not all clear yet mate”. To which the first respondent answered (at 1146: “Ok just feels like I'm being audited as I don't have visibility of your accounts and all my accounts go through liberas.” 62. However, about two hours later the same day (at 1356), Mr McIlroy wrote to the first respondent, attaching an email from the Company’s accountant in August 2023, itself attaching draft accounts for Liberas for the financial year 2022. Instead of urgency about reaching an agreed price for the petitioner’s shares, the tone was suddenly one of concern about the Company’s past management. Mr McIlroy wrote: “This is the sort of things [sic] I'm worried about mate HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 We appear to [sic] paying a fortune for advertising, travel and training? Also we've made 200k this year but profit went down by 80k so our staff costs have gone up early [sic] 400k?? Just some of the stuff I need to understand These are our accounts and anything we do personally goes through our PCS companies that's how it should be”.

63. Within a few minutes (at 1411), the first respondent replied to these questions. As part of that he said: “I am not sure about advertising I’ll need to check that with Matt, I did pay courtierpr [sic] which is the deal we spoke about, and I them paid myself less, along time ago.” (In an email to Matthew Durrant, copied to Mr McIlroy, on 29 September 2020, the first respondent had told Mr Durrant that “CourturePR provided us marketing and Public relation services. They are not VAT registered.” Mr McIlroy did not complain that this was not true.) 64. Then, after discussing profits, the first respondent said: “My big concern is this hangover from hmrc which we either manage or just give back if there are major concerns. At the moment given the effort I have put in to get the accounts to where they are now and considering all my personal contracts go through Liberas I feel exposed and don’t want lose everything.” 65. I understand the “hangover from hmrc” to be a reference to the tax rebate payment. The first respondent went on to propose three options. First, Liberas would buy the petitioner’s shares for £140,000 (“quick payout”). Second, everything would be left “as is” until a “fair settlement” could be evaluated, and then Liberas could be closed down. Thirdly, they could leave everything “as is” and then work out how to grow the business. He closed his email in this

way: “Let’s try and close this, this weekend if possible, let me know what you want to do or which option you prefer or if you see another option.” 66. The next day (8 October) Mr McIlroy emailed Matthew Durrant at 1409 as follows: “As part of the valuation of Liberas obviously I'm going through the bank account statements and trying to trace some of the charges and expenditure for example looks like we have incurred accommodation expenses, IT and training costs which I don't recognise but these are just some examples. Also looking at FreeAgent I can't seem to get the detail behind the currency bank account and it says the balance on the screen is only as at July '23 HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 Deon and I will continue our discussions on a fair price because I don't accept the first valuation he has given to me currently”. It is clear from this email that Mr McIlroy’s focus at this stage was on costs and charges, rather than on amounts paid to the first respondent. The first respondent replied the next day about those costs and charges.

67. On 9 October 2023, at 1524, Mr McIlroy texted the first respondent to ask for copies of the Company’s bank statements. The first respondent sent them less than half an hour later, at 1548. He also tried to set up access to a NatWest digital platform called “Bankline” for Mr McIlroy, but apparently his attempt was “not helpful”, and he informed Mr McIlroy that he would speak to Bankline staff about it. The following day (10 October 2023), having spoken to Bankline staff, he reported to Mr McIlroy at 0913 that he would have to ask customer services, which would take several days. Mr McIlroy responded at 0914, “no worries I can wait”. In an email the same day Mr McIlroy also said, “I'll wait for the card and card reader”.

68. The first respondent in an email at 1430 on 10 October 2023 offered to go through everything with Mr McIlroy on a Teams call in the meantime: “Mike the card reader will take between 5-7 working days at least. I think the easiest thing is if we have a teams call, I can setup I can logon with my card and show you everything. Let me know a time and I can go through this, then you can see if bankline is helpful”. But it was not a good time for Mr McIlroy, as he was busy with redundancy meetings at TCS (as shown by a text at 1222 on 10 October 2023).

69. Also on 10 October (at 1136), the first respondent set out in an email to Mr McIlroy (copied to Matthew Durrant) what he thought the options were: “Following on some of the conversations we have been having over the last week or so I would like to list the options I have been thinking about. I would like to get a view of the preferred option, by the end of the week in order to work out the best way forward. The options are: 1. Karen sells her shareholding back to the company and we work out a reasonable settlement figure. Taking into account, I am then left with the total liability for any HMRC request on the R&D claim.

2. Liberas stops trading and we liquidate the company This would mean a simple split of the retained profit, but it could prompt an HMRC review into the R&D claim once they receive the liquidation,.

3. Continue as a going concern. For this to happen we both need to win more contracts and decide how to grow the company. Please let me know which option suits you. or if you have any other options If we choose option 2 I need to be fair to the consultants and let them know the situation HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 to give them the option to move all contracts to 7P as soon as possible.” 70. Mr McIlroy replied within the hour, at 1219: “Thanks for the mail Deon Currently we have not decided on our next steps with Liberas and won't until we have completed due diligence on the valuation and future risk profile of the company.” The first respondent replied about 40 minutes later, at 1300: “Thanks completely understand, I will take that as the offer of 140k has not been accepted. Lets go through the due diligence, I will get you the missing bank information from Bankline and we see how to progress. I must have the paper statements somewhere and will also send them a mail and copy you in.” 71. At 1805 the same day Mr McIlroy emailed the first respondent to raise some new issues: “I know we need to talk things through - regardless of the all the access rights and ownership discussion I've just gone through the bank statements I hope I'm wrong or there is a simple explanation I really do. We are mates so please take a couple of days

to review your own paperwork. Again I'm not auditing you I am trying to assess the practice and risk profile of our joint company 1. Looks like you've been paying money into Couture PR for the past 5 years and most recently July of this year. You had previously told me is was just the two payments I saw from last year 2. Every year you have spent on average a couple of grand on IT equipment from the Liberas Account 3. But it's the billing that really worries me For the 22/23 year this is what you've billed through two companies and given your clients are Ascential and Vodafone this would make your rate(s) astronomical or your double billing …” 72. The first respondent emailed back (at 1831): “Yes lets please talk we will need to go through these individually. I would rather do this tonight as don't want this hanging over us. We can have a teams call do go through it.” 73. He sent further emails at 1941 and 2016. The first of these said: “Again see below we can go through this as have invoices, on Vodafone I invoiced on the contracts and left the margin in for the consultants. I really have minimal HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 time during the day so would prefer a call to sort this out. I have a meeting with the consultants on thursday so really need to sort this out before. I have put alot of effort into all contracts, managing clients. people and payments and working to deliver and worked 24/7 to get the company where it is”. The email continued by setting out details of various payments.

74. The second email said “See below first lot. Again lets discuss this and I can show you invoices if required as I tried to keep all records to keep track, but sometimes very busy, there are a few I still need to check, Understand you want to check everything bul I am not shafting you. Please answer my calls. On courtier we did discuss this. but it was over calls.” This too was followed by further details of other payments. The breakdown 75. But Mr McIlroy was not interested. At 2018 he sent a message to the first respondent: “Until I'm treated as an equal partner in Liberas there is nothing to discuss. Tomorrow I need you to arrange with Natwest that Karen gets full and equal access to both sterling and euro accounts. With associated card readers etc”. (In passing, Mr McIlroy’s use of the word “I” in the first line is realistic. It recognises that the petitioner was clearly no more than his nominee and alter ego. It was he and the first respondent that were business partners.) 76. The first respondent replied to Mr McIlroy’s message: “Really are you sure you don't want to discuss as I'm going through your payments as well. I think there is no other way then to liquidate company, I'll let consultants know tomorrow as they will need to get paid and they can get payments through 7p. Probably we need to give back hmrc credit as well. Really think we should discuss first as we had many conversations but if you don't then let's just stop now”. He sent a further message a few minutes later to say that the card readers had been ordered.

77. The petitioner invites me to find that the first respondent’s suggestion of liquidation was made in order to prevent Mr McIlroy from investigating what the first respondent had paid himself. I do not accept this. The first respondent’s communications that day were concerned with giving the petitioner and Mr McIlroy access to the bank information. The final message about card readers simply confirms this. Liquidation would not have prevented any enquiry into what the first respondent had paid himself. Indeed, it would probably accelerate it. In my judgment Mr McIlroy thought he could get a deal from the first respondent, and was simply playing “hardball” in order to put pressure on the first respondent to increase his offer for the petitioner’s shares. HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 78. The next day (11 October 2023) the first respondent and Mr McIlroy corresponded in more conciliatory terms than the day before. At 0720 the first respondent wrote to Mr McIlroy as follows: “Firstly I would like to say, of course you need to be treated like a 50% shareholder and apologise if I have not made you feel like that, that was not my intension. I have reread your messages and was focusing on you not wanting to talk rather than how you did not feel like a 50% shareholder, so again apologies on that. I am also having a stressful personal

time with lots going on. Reviewing everything that went out last night I think we need to sit down and go through all the details first. I think it is having a discussion before going to Matt and jump to conclusion, I think we owe it to each other. There is also alot to lose for both of us if we don't resolve this, but also alot to gain if we sort this out. I have reviewed all my payments again and there are differences which do not fit with our 50% rule. I want to go through these with you as will hold my hands up and return anything that does not fit. We have been in this position before and now its my turn, but we are both fair and I am sure we can sort this out. Let me know when you want go through this.” 79. In cross-examination, the first respondent was asked about the words in his email “there are differences which do not fit with our 50% rule”: “Q Do you agree that the 50 per cent rule is the agreement that you split the profits generated by the company equally? A I got to be honest, I was trying to get Mike to the table, I really, really was. At that point, I was thinking, you know, I put an offer on the table, he should have profits of 50 per cent. Q And do you agree that the payments you were making to yourself did not reflect an equal split of the profits ? A No, I completely disagree with that. I mean, I worked for those payments, and it wasn't −− No, I disagree

with that.” 80. At 0736 Mr McIlroy replied: “It'll be a couple of days Deon as I need to concentrate on TCS for the next few days - I am staring at a repeat of 2020 for myself as I also have no potential contract work In the next few days please do what I have done and review the expenditure you've made against the Liberas account over the last 5 years But let's not go into the detail as I could go on and on. I am upset and I need to calm down and focus on me and my family for the next few days then I will contact you. HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 Please don't forget my request and get Karen access to both bank accounts only you can request that. We will talk and we will get this resolved”.

81. At 0918 the first respondent replied to this, saying he would wait to be contacted, and confirming that the card reader and bank statements had been ordered. (In fact, they did not arrive for some time, and the first respondent had to chase the bank for them.) Mr McIlroy emailed again that morning, saying: “And we need Karen as an authorised signatory on the bank account not just bank line access So please sort that out with Natwest”. The first respondent’s reply was: “Hi Mike, 82. 83. in the meantime I will not make any payments without sending you all the Information, but I do need to know what we are doing as soon as possible please.” However, later on the same day the first respondent received a notification from the company’s bank (National Westminster Bank plc) that an application had been made by the petitioner for access to the ordinary online banking portal, rather than to “Bankline”, and asking the first respondent to authorise this, by clicking on a link. As I understand the evidence, the online portal gave the user the power to make payments out of the account, whereas Bankline did not, and merely gave visibility of transactions and statements. Given the history of Mr McIlroy’s use of company funds for his own purposes, I find that the first respondent was anxious not to put Mr McIlroy in a position to be able to do this again, and especially when he owed such

large sums to his own PSC and to the company. In her pleading, the petitioner says (Reply, [12(6)(ii)]) that “it would or should have been obvious from the email that it was [the petitioner] who had contacted NatWest, and that NatWest had verified the request as having been made by [the petitioner]”. By this time the first respondent suspected that the petitioner had access to his email account, because she and Mr McIlroy controlled the Liberas internet domain. The petitioner in fact admits (Reply, [36(2)]) that on 11 March 2024 an email was sent from the first respondent’s email account in the petitioner’s name. So, at that date at least the petitioner could access the first respondent’s email account. And on day 1 of the trial the petitioner admitted in cross-examination that she had gone into the first respondent’s email account “mainly to check on any new emails”, but that her husband had also accessed it. At all events, the first respondent deleted the email of 11 October 2023 containing the authorisation link. I find that he did so because he was concerned not to give Mr McIlroy the power on his own to move funds out of the Company’s bank accounts. I find also that he did not see why in those circumstances he should continue with his volunteered undertaking not to make further payments to himself without Mr McIlroy’s knowledge. HHJ Paul Matthews Approved Judgment Re

Liberas Solutions Ltd, CR-2024-BRS-000149 84. On 12 October 2023, at 1035, Mr McIlroy wrote to the first respondent as follows: “So while we continue our analysis and decide next steps let's keep the status quo and not disrupt business. So please don't contact the associates anymore, telling them to contract with 7p directly. Liberas is contracted to complete the works orders and this will just complicate things for them and us. Additionally just so we're clear and there is no further confusion on Vodafone and Ascential can you please complete the below sheet. Please add the commercial details and also any associates missed off as I don't have full sight of who is there and who has now finished. For example, are we still employing Patsauve to do work - please see my previous emails regarding them and their work also You should already have this information anyway so hopefully it can be done today Cheers”. The attached sheet had the following headings across eight columns: “Client Associates Works order Total Days on Works order Day rate Margin to Liberas Days Billed to date Days outstanding”.

85. On 17 October 2023, Mr McIlroy wrote individually to the consultants and asked them for information about their work: “As part of our accounts or audit I am trying to reconcile all past works orders and outstanding invoices Hope it’s not a massive overhead but could you please forward the information to me”. He signed himself off as “managing director” of the Company, though he was not even a director. In any event, many of the consultants did not know who he was. One of the consultants who received the email, Peter Sullivan, forwarded it to the first respondent, and commented “Just got this curious email? I do not intend to reply”. HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 86. Later on 17 October, the first respondent sent Matthew Durrant an email attaching a copy of the emails sent by Mr McIlroy to the consultants. The first respondent told Mr Durrant: “Each one has contacted me separately and I have advised them of the current situation and to proceed as they wish, and not to worry. Mike is saying he is the managing director on some of these emails, when in actual fact he is not even a shareholder. I am now really concerned he will take the money out of the company if given any bank details. To safeguard this, I have asked consultants if they mind all contracts to be moved to 7p which is the company that holds the vendor procurement to the client. They have all agreed. I have also moved all my personal contracts where I am the only consultant working on the project. These are the steps I have taken so far.

1. Paid all consultants invoices up to end of September ( 1 invoice prepaid to October ), ensuring they will not lose out on work already performed.

2. Advised the client that there is no change to deliverables and consultants will be working as before through 7p individually without Lberas.

3. I have invoiced all remaining Liberas Milestones to 7p. We are waiting for about 120K. This should reconcile back to the consultants invoiced milestones. It will take about 1 month to receive the income. In effect all I am waiting for now are the incoming payments. This will leave around 350K in Liberas which reconciles to the margins received.

4. The consultants will receive new contracts through 7p ( hopefully by 18/10/23 ) which will be better for me as I will not have to manage the bank, payments or invoices.” 87. I accept the factual matters set out in that email. The first respondent caused Liberas to enter into contracts with 7P on 16 October 2023, effectively terminating the existing relationship. During the next few days, all the consultants signed new contracts with 7P. Mr McIlroy’s complaints 88. On the other side, Mr McIlroy in an email to the first respondent dated 19 October 2023 accused him of carrying out “activities in Liberas with the express purpose of enriching your own limited companies and yourself personally”, which was “in contravention of your fiduciary obligations”. However, no particulars were given of what these “activities” were. Mr McIlroy said that he was “on the cusp of taking legal action”, and that if there was any withdrawal from the Company’s bank accounts “there will be no other option but to notify the police”. He concluded by saying that his and the petitioner’s “counter offer is that you give back your shares in the Liberas immediately”.

89. The first respondent forwarded this email to Mr Durrant, saying that he was on an aeroplane at the time but wanted to speak to him when he (the first respondent) landed. HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 A few hours later (in fact early the next morning), the first respondent sent an email to Mr Durrant, saying (in part): “The email threatening legal action if I don’t give him back my 50% constitute [sic] blackmail. I have no issue going through all transactions with any legal authority as I have acted in good faith to promote the company. I cannot believe he is sending these emails and thanks to him I have lost all consultants … Really apologise for the late mail but I just want to move on now. As I cannot send emails from liberas as he owns the account, I cannot see how this company can continue. All consultants have now left and I am waiting for remaining invoices (about 120k). This will close all transactions then I have no other option but to liquidate and let the authorities make the decision.” The first respondent’s concerns 90.

91. On 30 October 2023, the first respondent sent another email to Mr Durrant expressing his concern about Mr McIlroy’s attempts to access the Company’s bank account, in saying that he believed that Mr McIlroy “has been trying to access the accounts to empty them where he has no reason to make any payments”. On 7 and 8 November 2023, the first respondent had an email exchange with Matt Durrant, in which the first respondent told Mr Durrant that Mr McIlroy was chasing him for the card reader and statements. He then said: “Seems he has not listened and is still emailing me and wants access to accounts. I think he thinks he can still make payments to himself. The paper statements should come over next few days and I'll send them to you. I will not reply to him.” 92. He sent a further email to Mr Durrant as follows: “I am slightly concerned I still have a large payment to come in and really don't trust Natwest. Could this card reader be sent to his solicitor? He should have full visibility of the accounts through Freeagent and he should have the paper statements for EUR from the beginning to around 2022 as they were sent to his address. He also has paper statements from GBP account which I sent via email”.

93. Mr Durrant made a number of suggestions as to how to minimise the risk that Mr McIlroy might wrongfully pay himself funds from the Company. After making enquiries with the bank the first respondent said: “Then I think its ok to send him bankline readers as I am sure he cannot make payments without me approving.” 94. The petitioner says that it was not true that Mr McIlroy was attempting to pay himself out of the Company’s funds, as Mr McIlroy did not then have access to the bank accounts. Nor, she says, was there any risk of this happening, as it would have been “an HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 95. 96. 97. act of perverse self-harm”. I do not accept that submission. Mr McIlroy was in great need of cash at the time. In any event, it is the first respondent’s belief that matters in considering the actions that he took to prevent Mr McIlroy from being able to operate the bank accounts (as opposed to giving him information about banking transactions). On the evidence before me, I find that the first respondent, in deleting the 11 October authorisation link, and thus refusing Mr McIlroy full access to the Company’s bank account, was indeed concerned to protect the assets of the Company, which would be needed to pay the consultants who were doing the work, from Mr McIlroy’s immediate need for money to pay his pressing debts. He

thought it was in the best interests of the Company to do what he did. The petitioner criticises the first respondent for failing to call evidence in support of his case. She asks the court to draw an inference adverse to the first respondent, because the first respondent did not call any of the consultants, or any witnesses from end clients. On the other hand, the petitioner has not identified any particular evidence that any of them might give over and above the evidence given by Mr Durrant and contained in the documents before the court. Nor has she indicated what the particular inference is that the court is invited to draw. In these circumstances it is impossible to for me to evaluate the effect that any such further evidence might have had, or to identify the appropriate inference. I am not therefore in a position to draw any inference adverse to the first respondent on these grounds. But, in any event, even if the petitioner had identified the evidence and inference to be drawn, the court is not obliged to draw such an inference. Parties are entitled to present their cases as they think fit, and for this purpose to limit the evidence which they call to that which they think will best assist the court. The court will not thank a party who seeks to call every last piece of evidence, however trivial, in support of its case. Proportionality has a place here, too. The value

of the Company 98. Expert evidence of the value of the Company was given by Ms Longworth for the petitioner and Mr Mesher for the respondents. They were agreed that, if there were no material unauthorised payments out of the Company, it would be appropriate to value it on a “net asset” basis. Mr Mesher considered that that was also appropriate even if there were material unauthorised payments, because, in all the circumstances, 2 no hypothetical willing buyer would be prepared to pay over the net asset value for the business.

99. Ms Longworth however considered that, if there were such payments, then the “earnings method” of valuation would be appropriate, with an earnings multiplier of 3.5 to 4.0, but (in either case) adding back such unauthorised payments to the valuation. She would fix the valuation date as at 31 October 2025 on the basis that there has been minimal trading by the Company since 30 November 2023. Mr Mesher’s view was that, 2 The nature of the company, the lack of a shareholders’ agreement, the reliance on key individuals, the size of the business, the reliance on one key customer, the reliance on subcontractors, and the short term project nature of the company's contracts. HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 100. 101. 102. 103. if he were wrong and it were appropriate to value on the basis of net assets, 4.0 was too high a multiplier for a company such as this.3 The experts were agreed that, if a minority discount or premium were required, this would probably be in the region of 15% to 25%, as set out in the ACCA Technical Fact Sheet 167 – Valuing Trading Companies. The experts disagreed about the effect on the accounts and on profit margins of adding back to the balance sheet any material unauthorised payments. The petitioner’s pleaded case is that unauthorised payments in the year to end November 2022 amounted to £98,000, and that

unauthorised payments in the year to end November 2023 amounted to £303,000. Ms Longworth was of the view that adding back the £98,000 in 2022 would result in a gross profit margin of 7.6%, in line with Mr McIlroy’s evidence that the Company operated on a profit margin of between 5% and 8%. She was also of the view that adding back the £303,000 in 2023 would result in a gross profit margin of 23.5%, though she accepted that she was unable to explain why it would have been so large. Mr Mesher took issue with this approach, and in particular the large increase in gross profit margin from one year to another. But he also said that the Company’s revenue and cost of sales were recorded on a cash basis, and therefore income and expenditure would not be matched year-on-year, leading to misstatements of profit. In her report of 8 November 2025, Ms Longworth valued the Company on an earnings basis, with a multiple of 4.0, at £1,100,000 as at 30 November 2023, and therefore the value of the petitioner’s shareholding, on an undiscounted basis, was £550,000. However, she subsequently revised her valuation for various reasons, including that the monies paid to the first respondent included VAT. The alleged overpayments to the first respondent were therefore reduced in 2022 from £98,000 to £49,000 and in 2023 from £303,000 to £220,000. Ultimately, her calculation of the value of the

petitioner’s 50% shareholding was reduced from £550,000 to £347,000. In his report of 19 November 2025, Mr Mesher considered that the net assets of the Company as at 30 November 2023 amounted to £47,000. He later corrected this to £68,000, having mistakenly deducted one creditor’s debt twice. Accordingly, each shareholder’s shareholding should be valued at £34,000. He considered that the net assets of the Company as at 30 October 2025 amounted to £41,000 (some £6,000 having been paid out in the meantime in respect of accountancy charges and insurance). He later corrected this to £62,000 (for the same reason). Accordingly, each shareholder’s shareholding should be valued as at that date at £31,000. However, the petitioner had a director’s loan outstanding at both valuation dates in the sum of £9,000, and accordingly that sum would have to be deducted from the value of the petitioner’s shareholding.

104. Having considered the very different approaches of the two experts, and having seen them give evidence and be cross-examined on their reports, I am satisfied that the correct approach is that taken by Mr Mesher. On the material that I have seen, and for the reasons given by Mr Mesher, I cannot conceive of any willing purchaser wishing to buy this company on an earnings basis. The business of the Company depended entirely on the personal networks of its two principals. The Company had no valuable intellectual property, was not a preferred supplier to any end client, had no long-term contracts, and no transferable goodwill. Its assets were its name, website and email 3 Referring to the same matters as in the previous note. HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 domain, together with any cash at bank. To the extent that the first respondent could be regarded as a special purchaser, that would only be because of what he himself could bring to the company. By this time, Mr McIlroy was contributing nothing. Of course, to the extent that the first respondent must account to the Company for any unauthorised payments to him, they must be added back to the net asset value. But, subject to that, I find that the value of the Company at the two valuation dates of 30 November 2023 and 30 October 2025 was as set out in Mr Mesher’s report. The

allegations of unfair prejudice 105. In the Petition, at [59], the petitioner has pleaded as follows (where “KM refers to the petitioner, “DM” to the first respondent, “MM” to Mr McIlroy, and “7P” to 7 Principles GmbH): “It is KM’s case that DM has breached the terms of the JV Agreement, breached the Statutory Duties, wrongfully excluded KM from oversight of the Company’s financial affairs and/or otherwise acted in a manner unfairly prejudicial to her interests as a shareholder in the Company. In particular, DM has: (1) Failed to provide KM (or her agent MM) with access to the Company’s full financial records as and when requested to do so. As a director of the Company, KM has an absolute entitlement to see such information and is unable to properly perform her duties as a director without it. (2) Failed to provide any or any sufficient response to the queries raised within MM’s emails of 13:56 on 7 October 2023 or 18:05 on 10 October 2023. As a director, KM is entitled to information about how the Company’s funds have been spent. (3) Failed to provide KM with access to the Company’s sterling bank account. As a director of the Company, KM has an absolute entitlement to such access. (4) Failed to make KM a signatory on the Company’s bank accounts as and when requested to do so. As a director of the Company, KM is entitled to require that payments are not made by the Company

without her consent. (5) Made payments from the Company’s bank accounts (including in particular making payments to himself and/or the DM PSCs) against the wishes of his co-director and/or when he knew he did not have his co-director’s (and thus the Company’s) authority to do so. (6) Instructed the Company’s subcontractors to break their contracts with the Company and to become engaged directly by the Company’s end-clients, thus effectively destroying the Company’s business. (7) Cause the Company to terminate or shorten its contracts with 7P, thus depriving the Company of both: (i) present business which it was able to service; and (ii) the possibility of winning future business from 7P. (8) Paid himself (via the DM PSCs) for work which had not been undertaken. HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 (9) Wrongfully and in breach of the terms of the JV Agreement, failed to allow the Company to retain any margin on the work undertaken by the DM PSCs. Further or alternatively, DM has exposed himself to a conflict of interest and has subcontracted work to the DM PSCs (as opposed to third-party subcontractors) thereby causing a loss to the Company. (10) On his own case, diverted profits which could have been earned through the Company to the DM PSCs. If the DM PSCs are or have been operating as consultancies (as opposed to PSCs), then they

are deriving profits that should have been derived by the Company. (11) Made payments to Couture PR Limited for services that were not provided, thus causing a loss to the Company. Further or alternatively, DM has recklessly exposed the Company to the risk of being investigated for tax avoidance. (12) Made payment to Forbes Young for services which: (i) were not for the benefit of the Company; and/or (ii) DM did not have his co-director’s (and thus the Company’s) authority to commission.” 106. This paragraph summarises allegations which are in fact set out in more detail in earlier paragraphs of the petition. In paragraph 69 of the Points of Defence, paragraph 59 is denied “[f]or the reasons set out above”. Earlier paragraphs of those Points of Defence deal with the particularised allegations in the Petition. It is not necessary for present purposes for me to set these out in detail. The petitioner’s reply simply says that the first respondent “is put to proof of paragraphs 69 to 73”, and issue is joined. The law Directors’ powers: statute 107. In this section of my judgment, I deal with the applicable law. First, I deal with the powers of directors of a company to access the books, records and other information belonging to the company. As is well known, the general rules is that the management of the company’ affairs, and the exercise of the company’s powers, is in the hands of the directors collectively: see eg the Model Article 7 for each of private share companies and public companies, in the Companies (Model Articles) Regulations 2008, and Mohamed v The Egyptian Association in Great Britain [2018] Bus LR 1354, [30].

108. However, each director needs information in order to make proper decisions in the company’s interests. Thus, section 388 of the Companies Act 2006 relevantly provides: “(1) A company's accounting records– … (b) must at all times be open to inspection by the company's officers.” A director is, of course, an officer of the company. Directors’ powers: caselaw HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 109. But the statutory right is a relative novelty. Company directors have long had a right at common law to information of the company needed to enable them to carry out their duties. I need refer to only three cases. The first is Conway v Petronius Clothing Co Ltd [1978] 1 WLR 72, where Slade J examined the caselaw, and concluded (at 89G-91A): “I reach the following conclusions in relation to the nature of the right of a director to inspect the books of account of a company: (1) The right exists but it is a right conferred by the common law and not by statute. Though the legislature in section 147 of the Companies Act 1948, and its predecessors, implicitly recognised the existence of this right at common law, it conferred no new right; the purpose of that section and its predecessors was to impose criminal sanctions in the event of proper books of account not being kept or not being made available for inspection or in the event of a breach

of any of the other duties imposed by the section. (2) The right of a director to see his company's books of account, which is exercisable both at and outside meetings, is conferred by the common law in order to enable the director to carry out his duties as a director: see the Burns case, 7 TLR 118. I leave open the question whether this right conferred on him at common law is to be regarded on the one hand as a right incident to his office and independent of contract or, on the other hand, as a right dependent on the express or implied terms of his contract of employment with the company, so that it may be excluded by express provision to the contrary; no such express provision to the contrary appears in the present case and Mr. Chadwick, on behalf of the defendants accepts that the right at common law exists. (3) The right of a director to inspect the company's books of account must determine upon removal of the director from office. (4) The right not being a statutory right, the court is left with a residue of discretion as to whether or not to order inspection. However, in the case where there is no reason to suppose that the director is about C to be removed from office, the discretion to withhold an order for inspection will be very sparingly exercised. Though a director will not in general be called upon to furnish his reasons before being allowed to exercise his right

of inspection the court would in my judgment in such a case restrain him in the exercise of the right, if satisfied affirmatively that his intention was to abuse the confidence reposed in him as director and materially to injure the company. In my judgment, however, in the absence of clear proof to the contrary, the court would in such a case assume that he was exercising it for the benefit of his company. It will be seen that the proposition contained in this present paragraph is derived from the passage from Street J's judgment in Edman v Ross, 22 SR (NSW) 351 which has already been cited. The passage seems to me, if I may say so, consistent with both principle and common sense. If the position were otherwise, a director's rights of inspection could be rendered more or less nugatory, at least for many months, by specious allegations that he was exercising them with intent to injure the company or for other improper motives. (5) Principles rather different from those just stated in my judgment apply in a case, such as the present, where an interlocutory application for inspection is made to the HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 court by a director who is alleged to have been misconducting himself as a director and, at the time when the application comes before the court, a general meeting of his company has been convened for the

purpose of removing him from office. In such a case the court would, in my judgment, normally intervene to assist him on an interlocutory application for inspection, before the wishes of the company had been made known at the general meeting, only if it considered such intervention necessary for the protection of the company. The right of inspection is in my judgment one given to him to exercise for the benefit of the company. He can claim the right as a personal right only in the sense that he may invoke it so as to enable him to discharge his personal obligations to the company and his statutory obligations. If the evidence shows that at least some members of the company no longer have confidence in him as a director, because of alleged misconduct, and have indicated that lack of confidence by causing a general meeting to be convened for the purpose of his removal, the balance of convenience will, in my judgment, normally require postponement of consideration of his interlocutory application for inspection until the meeting has been held: compare Harben v Phillips (1883) 23 Ch D 14 and Bainbridge v Smith (1889) 41 Ch D 462. Each case, however, must depend on its special facts. In particular circumstances, the court may consider it essential for the protection of the company or indeed for the personal protection of the director that he be allowed to inspect the company's books

even though a resolution for his removal as a director is shortly thereafter to be considered by the company's members.” 110. The limits of the right to inspect the company’s books and records are illustrated by the decision in Kang v Kang [2013] EWHC 2828 (Ch). This case arose out of a refusal by the company to answer questions about documents which had been produced to a director for inspection. As to this, Norris J said: “16. … The statutory right under section 388(1)(b) and the common law right to inspect the company's books and accounting records do not, in my judgment, extend to compelling directors to answer what are in effect interrogatories arising out of the documents they have produced. The obligation is to permit inspection of documents, not to provide a narrative account of the events which the documents record … ” 111. The third decision is that of the Court of Appeal in Oxford Legal Group Ltd v Sibbasbridge Services Ltd [2008] Bus LR 1244. In that case a corporate director of a company sued the company for access to its accounting records. The company alleged that access was being sought for an improper purpose, and refused to provide it. The director applied for summary judgment on the claim. Both the judge at first instance and the Court of Appeal dismissed the application, on the basis that there was a serious issue as to whether inspection was sought for a proper or an improper purpose, and the claim would instead have to go to trial.

112. Sir John Chadwick (with whom Hughes and Toulson LJJ agreed) summarised the principles set out in Conway by Slade J, above (in which he had appeared as counsel). At [23], he said: “To my mind the proposition that the right to inspect the company’s books of account is conferred ‘in order to enable the director to carry out his duties as a HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 director’ is not in doubt. Nor is it in doubt, as it seems to me, that a right which is conferred for one purpose is not intended for use for some other purpose: for a director to invoke the right to inspect for some purpose other than that of carrying out his duties as a director is to seek to use the right for an improper purpose … [I]f it were clearly shown that a director was using the right to inspect for an improper purpose then the court had no power to assist him. The court could not aid the use of the right for a purpose for which it was not conferred … It follows, in my view, that it is not open to the court to refuse its assistance in a case where it has no reason to think that the director is using the right to inspect for an improper purpose.” 113. He then discussed the question whether it was necessary to show that the director desired access in order to injure the company. He concluded (at [33]): “The right to inspect is conferred in order to

enable the director to carry out his role as such: that role clearly includes the protection of the interests of the company and its shareholders. There is nothing in the decision in Welch v Britannia Industries [[1993] 1 SLR 673] to support the view that the right to inspect can be invoked for a purpose which goes beyond enabling the director to carry out his role as such; and nothing which supports the proposition that the circumstances in which the court will refuse to enforce the right to inspect are confined to those in which the purpose for which the director sought inspection is to injure the company.” 114.

115. I make the point that the statute and the authorities deal only with access to the books and records of the company (as indeed emphasised by Kang v Kang). There is no authority that I am aware of, and none was cited to me, for the proposition that a director must (for example) be entitled individually to operate the company’s bank account. As I have said, the company’s powers are generally to be exercised collectively. Nevertheless, such matters may be specifically provided for by the company’s articles of association, or even by shareholders’ agreement. But it was not suggested that either of these possibilities applied in the present case. Indeed, it seems that, where a director is allowed by the other director or directors to have unfettered access to the company’s bank account or other assets, and then misapplies the funds or other assets, that other director or directors will breach the statutory duty under section 172 of the Companies Act 2006, where he, she or they did not honestly believe that allowing such access was in the company’s interests: see Re Solid Homes Ltd [2020] EWHC 2913 (Ch), [49]-[72] (where the liquidators’ claim failed on the facts). That also militates against any general individual right to operate the bank account. Director’s duty to account 116. A director of a company is not strictly a trustee of the company’s assets for the company. This is

because the director does not own the assets. But a director is treated in much the same way as a trustee, at least for some purposes, because the director is the agent of the company, able to deal with the company’s affairs and assets on its behalf, and (subject to limited exceptions) owes it fiduciary duties to promote the interests of the company and to subordinate the director’s own interests to those of the company: see eg Aberdeen Railway Co v Blaikie Brothers (1854) 1 Macq 461, 471, per Lord Cranworth LC; Sharma v Sharma [2014] BCC 73 [40]-[51], CA; Recovery Partners GP Ltd v Rukhadze [2026] AC 209, [3], per Lord Briggs. HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 117. These fiduciary duties, the results of judicial decisions, have now been largely reproduced in sections 171 to 177 of the Companies Act 2006. They include a duty to “act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole” (section 172), a duty to “avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company” (section 175), and, where the director “is in any way, directly or indirectly, interested in a proposed transaction or arrangement with the company”, a duty to “declare the nature and extent of that interest to the other directors” (section 177). It is not necessary for me to decide whether, and to what extent, the fiduciary duties derived from the caselaw have been replaced by the statutory duties, but the example of the rights to access to the company's books and accounting records would suggest that they continue to co-exist.

118. As a result of both the fiduciary and the statutory duties, and like a trustee, a director can be required to account for what he or she has done with the company’s assets: GHLM Trading Ltd v Maroo [2012] EWHC 61 (Ch), [148]. Indeed, a director may be required to disclose his or her own misconduct to the company: Item Software (UK) Ltd v Fassihi [2005] 2 BCLC 91, CA. Unlike a trustee, however, the duty imposed on directors to act in good faith in the interests of the company is a subjective one. The question is whether the director honestly believed that his or her act or omission was in the interests of the company: Regentcrest plc v Cohen [2001] 2 BCLC 80, [120].

119. On the other hand, and as mentioned briefly above, there are exceptions to these fiduciary duties. In Sharma v Sharma [2014] BCC 73 Jackson LJ, with whom McCombe and Floyd LJJ agreed, said: “52. … ii) If the shareholders with full knowledge of the relevant facts consent to the director exploiting those opportunities for his own personal gain, then that conduct is not a breach of the fiduciary or statutory duty. iii) If the shareholders with full knowledge of the relevant facts acquiesce in the director's proposed conduct, then that may constitute consent. However, consent cannot be inferred from silence unless: a) the shareholders know that their consent is required, or b) the circumstances are such that it would be unconscionable for the shareholders to remain silent at the time and object after the event. iv) For the purposes of propositions (ii) and (iii) full knowledge of the relevant facts does not entail an understanding of their legal incidents. In other words the shareholders need not appreciate that the proposed action would be characterised as a breach of fiduciary or statutory duty.” 120. The duty of a director to account for assets of the company includes a duty to account for assets which belong in equity to the company even though they may belong at law to the director. Such assets may arise because, in breach of duty, the director has made or received an

unauthorised profit out of company property or company information, or derived from his or her directorship: Recovery Partners GP Ltd v Rukhadze [2026] AC HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 209, [4], per Lord Briggs. But that does not mean that the director has the legal burden of proving that a sum of money received by him or her is not an asset of the company. It still needs to be shown, by the person so alleging, that the director has made an unauthorised profit in breach of duty. Then, and only then, the director must account for what he or she has done with it. Accordingly, I do not accept the petitioner’s submission in closing that “all [she] needs to do is to demonstrate the fact of payments made by [the first respondent] to himself”.

121. Where an account is taken, then, as McCombe LJ (with whom Jackson and Gloster LJJ agreed) said in Exsus Travel Ltd v Turner [2014] EWCA Civ 1331: “42. … There is indeed a legal burden on an accounting party to justify what has happened to sums received and to justify payments made as being for the benefit of the beneficiary, in accordance with the principles set out above. How that burden is discharged will vary from case to case.” In that particular case, McCombe LJ said that the master taking the account: “58. … was entitled to take the view that, while the legal burden of proof lay on the Respondents, that burden had been discharged on this evidence as a whole, even without every single paper voucher being placed upon her table as might have been done if a similar account was being taken in the far less complex world of the 19th century … ” 122. Of course, this is not an action by the company for an account, or a derivative claim on behalf of the company. It is a claim by the petitioner as a member of the company that her interests have been unfairly prejudiced by the respondents’ conduct of the company’s affairs. Unfair prejudice: statute 123. Accordingly, I turn to the statutory provisions under which this petition is presented. Section 994 of the Companies Act 2006 relevantly provides: “(1) A member of a company may apply to the court by petition for an order

under this Part on the ground— (a) that the company's affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least himself), or (b) that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial. [ … ] (2) The provisions of this Part apply to a person who is not a member of a company but to whom shares in the company have been transferred or transmitted by operation of law as they apply to a member of a company. HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 (3) In this section, and so far as applicable for the purposes of this section in the other provisions of this Part, ‘company’ means— (a) a company within the meaning of this Act, or [ … ]” 124. And section 996 provides: “(1) If the court is satisfied that a petition under this Part is well founded, it may make such order as it thinks fit for giving relief in respect of the matters complained of. (2) Without prejudice to the generality of subsection (1), the court's order may— (a) regulate the conduct of the company's affairs in the future; (b) require the company— (i) to refrain from doing or continuing an act complained of, or (ii) to do an act that the petitioner has complained it has omitted to do; (c)

authorise civil proceedings to be brought in the name and on behalf of the company by such person or persons and on such terms as the court may direct; (d) require the company not to make any, or any specified, alterations in its articles without the leave of the court; (e) provide for the purchase of the shares of any members of the company by other members or by the company itself and, in the case of a purchase by the company itself, the reduction of the company's capital accordingly.” Unfair prejudice: caselaw 125. The cause of action in sections 994 and 996 was first introduced into English law 46 years ago, by section 75 of the Companies Act 1980. It has been the subject of a great deal of litigation, and there are many decided cases discussing it. But most of these cases turn on their individual facts, or are examples of what the court may do in particular circumstances. Since there was not much dispute between the parties as to the applicable law, I will deal with the relevant caselaw fairly shortly.

126. In Hawkes v Cuddy [2008] BCC 390, Lewison J (as he then was), said: “202. … for a petition to be well-founded the petitioner must establish that: i) The acts or omissions of which he complains consist of the management of the affairs of the company; HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 ii) That the conduct of those affairs has caused prejudice to his interests as a member of the company and iii) The prejudice is unfair.” 127. In Re Southern Fresh Foods Ltd [2008] EWHC 2810 (Ch), Warren J cited the words set out above from Hawkes v Cuddy, and went on to say: “41. … a shareholder generally needs to establish one of the following: a. A breach of the terms on which he agreed that the affairs of the company should be conducted; b. That equitable considerations (those referred to by Lord Wilberforce in Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 at 379) arising at the time of the commencement of the relationship or subsequently, make it unfair for those conducting the affairs of the company to rely on their strict legal rights; c. That the board of directors has exceeded the powers vested in them or have exercised their powers for an illegitimate or ulterior purpose; or d. Some event putting an end to the basis on which the parties have entered into association with each other, making it unfair that one shareholder should insist

on the continuance of the association.” 128. In Re Tobian Properties Ltd [2013] Bus LR 753, Arden LJ (as she then was), with whom Aikens and Kitchin LJJ agreed, said: “21. The key phrase in section 994(1), ‘unfairly prejudicial’, comprises two elements, unfairness and prejudice but both of these must be understood in the context of company law. The concept of fairness inherent in this phrase is flexible and open-textured but it is not unbounded. The courts must act on a principled basis even though the concept is to be approached flexibly. They cannot decide whether to grant or refuse relief from unfair prejudice on the basis of palm-tree justice.” 129. In Grace v Biagioli [2006] 2 BCLC 70, Patten J (as he then was), giving the judgment of the Court of Appeal (Mummery and Mance LJJ and himself), said: “73. Once unfair prejudice is established, the court is given a wide discretion as to the relief which should be granted. Although s.461(1) speaks in terms of relief being granted ‘in respect of the matters complained of’, the court has to look at all the relevant circumstances in deciding what kind of order it is fair to make. It is not limited merely to reversing or putting right the immediate conduct which has justified the making of the order. In Re Bird Precision Bellows [1986] Ch.658, Oliver LJ described the appropriate remedy as one which would ‘put right and cure for the

future the unfair prejudice which the petitioner has suffered at the hands of the other shareholders of the company.’ The prospective nature of the jurisdiction is reflected in the fact that the court must assess the appropriateness of any particular remedy as at the date of the hearing and not at the date of presentation of the petition; and may even take into account conduct which has occurred between HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 those two dates. The court is entitled to look at the reality and practicalities of the overall situation, past, present and future.” 130. In Hawkes v Cuddy, Lewison J, after referring to Grace v Biagioli, said: “246. Where unfair prejudice has been established, the remedy must also be proportionate to the unfair prejudice found. It may be disproportionate to order a buy-out of one shareholder's shareholding where the unfair prejudice is relatively modest: Re Phoenix Office Supplies Ltd [2003] 1 BCLC 76, per Jonathan Parker LJ. By the same token, the exercise of jurisdiction under section 996 is not a punishment for bad behaviour.” Discussion 131. 132. 133. 134.

135. I deal first with the 12 points raised in the petition and set out earlier in this judgment at [105]: (1) It is said that the first respondent “failed to provide [the petitioner] (or her agent [Mr McIlroy]) with access to the Company’s full financial records as and when requested to do so.” I reject this complaint. The facts found at paragraphs 58, 63, 66, 69-73 above show the efforts made by the first respondent to satisfy the requests made. And the petitioner was also a signatory on the bank mandate, and so could herself have asked the bank for information. (2) It is said that the first respondent “failed to provide any or any sufficient response to the queries raised within [Mr McIlroy]’s emails of 13:56 on 7 October 2023 or 18:05 on 10 October 2023.” The petitioner accepts that this allegation would not be enough on its own to found a claim to relief. But in any event I reject this complaint. The facts found at paragraphs 63, 71, 72, and 73 above respond more than adequately to those emails. In any event, Mr McIlroy said he wanted to do his own investigation, and appears to have ignored the responses. (3) It is said that the first respondent “Failed to provide [the petitioner] with access to the Company’s sterling bank account.” I reject this complaint. The first respondent arranged visibility via Bankline, and she was a signatory on the bank account, and so had access

that way. But she as a director was not entitled to operate the bank account on her own, let alone Mr McIlroy, who was not even a director. (4) It is said that the first respondent “failed to make [the petitioner] a signatory on the Company’s bank accounts as and when requested to do so.” I reject this complaint: she was a signatory. However, the petitioner was not entitled to require the payments were not made without her consent. Control of the bank account was collective, so the board could decide who made payments. There is no evidence that I have seen that the board ever did so. The petitioner was not excluded from anything to which she was entitled by the first respondent’s deleting the authorisation link. There was no obligation on the first respondent to allow her (let alone Mr McIlroy) to transfer company funds on her (or his) own. 136. (5) It is said that the first respondent “made payments from the Company’s bank accounts (including in particular making payments to himself and/or the [first respondent’s] PSCs) against the wishes of his co-director and/or when he knew he did HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 not have his co-director’s (and thus the Company’s) authority to do so.” I reject this complaint. Historically, the first respondent’s entitlement to make payments to himself was agreed with Mr McIlroy, as set out in

paragraphs 34 and 45 above. So, in accordance with the Duomatic principle,4 he did have the company’s authority. Later on, when Mr McIlroy challenged payments made to the first respondent, the first respondent volunteered (on 11 October 2023) not to make further payments without Mr McIlroy’s knowledge; see at paragraph 81. I do not read this as an admission of any wrongdoing, but rather as a sensible temporary step to adopt in the meantime. However, the first respondent’s decision to volunteer this was then reversed because of the sending to him of an authorisation link for unfettered access to the account, and the thought (which turned out to be correct) that Mr McIlroy had access to his email account. In any event, I am not satisfied that the payments that he thereafter made to himself were of sums to which he was not entitled. (6) It is said that the first respondent “instructed the Company’s subcontractors to break their contracts with the Company and to become engaged directly by the Company’s end-clients, thus effectively destroying the Company’s business.” I reject this complaint. The first respondent did not instruct anybody. He feared that, if Mr McIlroy had access to the Company’s funds, he would misappropriate them. On the evidence, that was a reasonable fear for him to have. So, he explained the situation to the consultants, and let them choose. He wanted to keep a

good relationship with the consultants so that they would be available to the Company in future. He was entitled to take that view in the interests of the Company. (7) It is said that the first respondent caused “the Company to terminate or shorten its contracts with 7P, thus depriving the Company of both: (i) present business which it was able to service; and (ii) the possibility of winning future business from 7P.” I reject this complaint. The first respondent did facilitate the transfer of the consultants who had contracts with 7P through the Company to contracts directly with 7P, but he acted in what he honestly considered to be the best interests of the Company in doing so. He was concerned with the interests of creditors (the consultants) in circumstances where he feared for the safety of the Company’s funds, and also with reputational issues. He made it more likely that the Company would be trusted by consultants and end-clients alike in the future. This is not conduct prejudicial to the interests of the petitioner. On the contrary, it protects them, by avoiding damage to the Company’s reputation. (8) It is said that the first respondent “paid himself (via [his] PSCs) for work which had not been undertaken.” I reject this complaint. Essentially, this is a factual question. The evidence that the first respondent has provided (including the invoices rendered in respect of

7P/Vodafone work, and the email confirmation of his work at Ascential), and the absence of any evidence in rebuttal, satisfies me that he did indeed do the work claimed for. I reject the view that the first respondent was entitled to nothing, or at best a day rate. As I have already said, it was agreed with Mr McIlroy in 2020 and 2022, as set out in paragraphs 34 and 45 above, that the first respondent could keep his margins if he wished, as well as the fees he earned from the end-client as a contractor. This applied to “milestone” contracts as it did to “day rate” contracts, because, as Mr McIlroy said in cross-examination, the milestones were really dressed up rate payments, and the agreements were reached after milestone billing had been introduced. So, the 137. 138. 139. 4 See Re Duomatic Ltd [1969] 2 Ch 365. HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 140. 141. 142. first respondent was entitled to the whole of the milestone payments on his contracts. The amount of money that he received simply reflects the amount of work that he did. (9) It is said that the first respondent “wrongfully and in breach of the terms of the JV Agreement, failed to allow the Company to retain any margin on the work undertaken by the [first respondent’s] PSCs”, or “has exposed himself to a conflict of interest and has subcontracted work to the [first

respondent’s] PSCs (as opposed to third-party subcontractors) thereby causing a loss to the Company.” I reject this complaint, which is in substance the same as the previous one. As just stated, this was agreed with Mr McIlroy (the petitioner’s principal), as set out in paragraphs 34 and 45 above. The allegation of conflict of interest goes nowhere. It was plainly agreed between the parties that each of Mr McIlroy and the first respondent was free to put himself forward for a contract without the express consent of the other, as indeed had already happened. In any event, it was the end-client who selected the contractor to do the actual work, and not Liberas. The first respondent could not have forced the end-client to take whichever consultant Liberas chose. (10) It is said that the first respondent “diverted profits which could have been earned through the Company to the [first respondent’s] PSCs.” I reject this complaint, for the same reasons. (11) It is said that the first respondent “made payments to Couture PR Limited for services that were not provided, thus causing a loss to the Company” or “recklessly exposed the Company to the risk of being investigated for tax avoidance.” I reject this complaint. Once again, this is a factual point. All the services were invoiced. There is no proper basis for impugning the invoices. The evidence (both oral and documentary) satisfies me that the work was being done, and for the benefit of Liberas. Mr McIlroy himself authorised the payment of the first two invoices, and so he must have thought so too. The petitioner’s reliance on the email from the first respondent on 7 October 2023 at 1411 is misplaced. There is no implied admission that no services have been provided.

143. As for the “tax avoidance” point, I do not consider that the evidence said to support it (the first respondent’s email of 7 October 2023, at [62] above) does any such thing. I accept the first respondent’s pleading at paragraph 60 of the Defence, “The reason why DM paid himself less as a result is that, given KM and MM’s lack of engagement with the Company’s activity, he felt a moral obligation to perform the tasks on which Couture PR gave assistance. Accordingly, he agreed to reduce his drawings by an equivalent amount.” (In any event, the terminology of the allegation is inappropriate. Tax avoidance is lawful, in the sense that, where a person structures affairs so as properly to fall outside any taxing statute, the tax is simply avoided. It is tax evasion that is unlawful, as where affairs properly falling within the scope of tax legislation are concealed from, or misrepresented to, the tax authority. On the assumption therefore that this is an allegation of tax evasion, it is not clear to me what the alleged evasion was.) 144. (12) In the petitioner’s closing (at [103]), it is stated that this complaint (unauthorised payments to Forbes Young) is not pursued, and so I need not deal with it further. But, HHJ Paul Matthews Approved Judgment Re Liberas Solutions Ltd, CR-2024-BRS-000149 in fairness to the first respondent, I may say that on the evidence I was satisfied that these payments were properly made.

145. The petition alleged that the first respondent had between June 2018 and October 2021 unlawfully transferred five sums totalling £22,809.13 from the Company to his personal bank account. The first four of these payments were made in June and August 2018, at a time when Mr McIlroy controlled the Company’s bank account. So, they were made by him, and not by the first respondent. The fifth was for £258.43. On day 4 of the trial I was told by the petitioner’s counsel that this allegation of unlawful and unauthorised payments was no longer pursued. Again, I am satisfied on the evidence as to the first four payments. But the point was conceded before counsel’s cross-examination reached the fifth, and I therefore say nothing about it either way.

146. There were also allegations made in the petition that the first respondent had caused the Company to buy IT equipment for his personal use. The petition says that “it has always been the parties’ understanding that any IT equipment required by the directors to perform their duties will be provided by the directors personally … ” This is obviously not correct. For example, in an email to the first respondent on 16 November 2020, captioned “Laptops”, Mr McIlroy said: “I think we need to get two laptops for Liberas work. As well as the 365 account we should get something powerful and MS compatible - got a link below which has a review of the best ones around … ” 147. In any event, the first respondent was cross-examined about the circumstances in which this equipment came to be purchased, and I accept the explanations there given. As a result, I am not satisfied that they were purchased improperly. It is again fair to the respondent to record that it was suggested in closing by the petitioner that some of this equipment was bought for the purposes of bribery. This allegation was never put to the first respondent in cross-examination. I find that it is without substance.

148. My conclusion on the substance of the unfair prejudice allegations is that the petitioner has failed to make out her case. However, in case I am wrong about that, I will briefly consider the question of relief under the petition. The petitioner was a director of the Company in name only. She did not perform any of a director’s duties, as set out, for example, in section 173 of the 2006 Act. Indeed, her appointment (as with her shareholding) was taken merely in order to assist her husband to hide his own conflict of interest from end-clients. On the other hand, Mr McIlroy had first of all helped himself to the Company’s funds without authority, and indeed without pretence at having worked for it, then he had ignored the company for several years, then tried to plunder it again to pay off his own debts. Neither the petitioner nor her husband has any moral high ground in this case. It is not a case where, even had unfair prejudice been established, I would have been inclined to grant her relief at all. But, if I had concluded that the petitioner merited any relief, the most I would have ordered would have been that the first respondent should buy out the petitioner for £22,000 (that is, £31,000, less £9,000 director’s loan). In the circumstances, I would not apply any minority discount. HHJ Paul Matthews Approved Judgment Conclusion 149. For the reasons given above, this petition is dismissed. Re Liberas Solutions Ltd, CR-2024-BRS-000149 42