Equitable Law Capital, Re

Equitable Law Capital, Re

David Clarkson was a de facto director of ELC, centrally involved in its fraudulent operation, and knowingly participated in fraudulent trading, wrongful trading, breach of duty, and receipt of payments at an undervalue, making him liable for those claims. The claims against Mr Flaton, Mr Arnison, and Belmonte failed as the court found no dishonesty or blind-eye knowledge on their part. The Milner Settlement Agreement did not preclude claims against the remaining respondents, as a term permitting continuation of those claims was implied by necessity and context. Payments to David Clarkson were at an undervalue as he provided no real consideration for the sums received.

Parties
Applicant: Lloyd Christopher Biscoe; Applicant: Louise Donna Baxter; Applicant: Equitable Law Capital Limited; Respondent: Graham William Milner; Respondent: Lillian Marie Milner; Respondent: William David Clarkson; Respondent: Paul Clarkson; Respondent: Anthony Flaton; Respondent: Belmonte Limited; Respondent: Richard Arnison; Respondent: Eiger Litigation Management Limited; Respondent: Carole Clarkson
Jurisdiction
England and Wales
Judgment Date
30 March 2021
Procedural Posture
Insolvency/company Law Application / Post Trial Judgment (liability and Findings, Relief to Be Determined at Further Hearing)
Outcome
Claims against David Clarkson succeed; claims against Mr Flaton, Mr Arnison, and Belmonte fail; Milner Settlement Agreement does not bar claims against remaining respondents; relief to be determined at further hearing.
Legal Topics
Fraudulent Trading, Wrongful Trading, Breach of Fiduciary Duty, Dishonest Assistance, Transactions at an Undervalue, Constructive Trust, Settlement Agreements, Directors' Duties
Insolvency Law Company Law Equity and Trusts Civil Procedure Fraudulent Trading Wrongful Trading Breach of Fiduciary Duty Dishonest Assistance +4 more

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Parties

Lloyd Christopher Biscoe

Applicant

Louise Donna Baxter

Applicant

Equitable Law Capital Limited

Applicant

Graham William Milner

Respondent

Lillian Marie Milner

Respondent

William David Clarkson

Respondent

Paul Clarkson

Respondent

Anthony Flaton

Respondent

Belmonte Limited

Respondent

Richard Arnison

Respondent

Eiger Litigation Management Limited

Respondent

Carole Clarkson

Respondent

Procedural Posture

Insolvency/company Law Application / Post Trial Judgment (liability and Findings, Relief to Be Determined at Further Hearing)

Legal Issues

  1. 1 Whether David Clarkson was a de facto director of ELC and liable for fraudulent trading, wrongful trading, breach of duty, transactions at an undervalue, and as a constructive trustee; Whether Mr Flaton, Mr Arnison, and Belmonte were liable for dishonest assistance, fraudulent trading, or transactions at an undervalue; Whether the Milner Settlement Agreement precluded claims against remaining respondents; Whether payments to respondents were transactions at an undervalue; Whether the Scheme was fraudulent from inception; Whether the Brochure contained fraudulent misrepresentations and who was responsible

Ratio Decidendi

David Clarkson was a de facto director of ELC, centrally involved in its fraudulent operation, and knowingly participated in fraudulent trading, wrongful trading, breach of duty, and receipt of payments at an undervalue, making him liable for those claims. The claims against Mr Flaton, Mr Arnison, and Belmonte failed as the court found no dishonesty or blind-eye knowledge on their part. The Milner Settlement Agreement did not preclude claims against the remaining respondents, as a term permitting continuation of those claims was implied by necessity and context. Payments to David Clarkson were at an undervalue as he provided no real consideration for the sums received.

Court Disposition

Claims against David Clarkson succeed; claims against Mr Flaton, Mr Arnison, and Belmonte fail; Milner Settlement Agreement does not bar claims against remaining respondents; relief to be determined at further hearing.