Ahmed v Way2wine Ltd (2010)
A master was entitled to refuse an application by a director, who had allegedly breached his fiduciary duties and dishonestly and knowingly caused excise duty points to occur resulting in a company suffering loss and damage, to join the liquidator of the company and the Revenue and Customs Commissioners as third parties on the basis of an allegation of a conspiracy against the director, as the facts did not support such an allegation.
The appellant (X) appealed against an order refusing an application to join proposed third parties, the liquidator (L) of a company (W) and the Revenue and Customs Commissioners, as Pt 20 defendants in an action. X was a director of W which was involved in the alcoholic beverages trade. The proceedings concerned the alleged involvement of W in excise duty and VAT fraud. The Revenue and Customs Commissioners made assessments which showed that a sum of over £2 million was due from W in respect of VAT and excise duty. W was placed into provisional liquidation and L was appointed as the liquidator. L immediately applied for a freezing order against X, and claimed that X had been in breach of his fiduciary duties and had dishonestly and knowingly caused excise duty points to occur resulting in W suffering loss and damage, namely the assessment for excise duty and VAT. X claimed that if found liable he was entitled to an indemnity against the commissioners and L on the basis of an allegation of a conspiracy against him which allegedly involved a strategy to prevent him or W from challenging the assessments made against W. At the hearing in respect of the Pt 20 claim, X's counsel was late and the master had already heard the argument of the other side and was persuaded by it, and did not change his mind following an exchange between him and X's counsel. The master rejected the conspiracy allegation. X submitted that (1) L and the commissioners conspired to use lawful means but with the predominant purpose of inflicting harm on him, and they sought to prevent him from challenging the liability of W to pay the sums due; (2) the circumstances of the hearing were such that they gave rise to apparent bias.
(1) The master had been entitled to conclude that on the basis of the pleaded facts no valid claim of conspiracy existed. The facts simply did not support the conspiracy allegation. The timing of the litigation and L's actions were consistent with the robust approach to protecting W's creditors. None of the facts pleaded questioned the validity of the assessments made by the commissioners. Further, the allegation that the object of the conspiracy was to prevent X from challenging the assessments was absurd. X could have taken a variety of steps to ensure W challenged the assessments. None of the actions of the commissioners or L was inconsistent with the predominant purpose of carrying out their statutory obligations. (2) The master's conclusion was brief and focussed. In view of the nature of the hearing it would have been desirable for the hearing to have been conducted at some length. However, there was nothing to justify a conclusion that the master had closed his mind to the issues that he had to decide. There master had no pre-conceived views.