Neville & Anor v Krikorian & Ors

There are before the Court (i) an appeal from an order made on 10 December 2004 by His Honour Judge Havelock-Allan QC, sitting as a Deputy Judge of the High Court in the Bristol District Registry of the Chancery Division, on an application for summary judgment in proceedings in the administration of Unigreg Ltd brought by its administrator against two former directors, (ii) an application by notice filed on 30 December 2004 for leave to adduce further evidence (subsequently set out in a witness statement dated 28 January 2005) and (iii) a further application by notice filed on 3 April 2006 to adduce evidence set out in a witness statement dated 30 March 2006.

Summary judgment was given against each of the two former directors for the amount standing to the credit of the company on his own loan account. It is not, now, in dispute that each former director was liable to repay that amount. The question raised by the appeal is whether the judge was right, in the circumstances of this case, to go further (as he did) and give summary judgment against the appellant (one of the two former directors) for an amount standing to the credit of the company on the loan account of the other former director; or, to put the point another way, whether the judge was right to hold one former director jointly and severally liable for the indebtedness of the other.

That question arises in the circumstances that it is not in dispute that, in operating the loan accounts, the company was in breach of section 330(2)(a) of the Companies Act 1985, which provides that a company shall not make a loan to a director of the company. Section 341(2) of the 1985 Act is in these terms (so far as material):

The judge refused permission to appeal. The appeal is brought with permission granted in this Court on 31 March 2005 by Lady Justice Arden.

Unigreg Ltd (“the company”) is a company incorporated in England and Wales under the Companies Acts 1948-1967 for the purpose of carrying on business as distributors and dealers of pharmaceutical products. At all relevant times until 18 July 2001 its issued shares were held as to 68% by Mr Avo Krikor Krikorian (“Avo Krikorian”), as to 30% by his son, Mr Krikor Avo Krikorian (“Krikor Krikorian”), and as to the remaining 2% by Seta Krikorian Nutrition Foundation. For convenience I will refer to Avo Krikorian and Krikor Krikorian together as “the Krikorians”. It is said on behalf of the Krikorians (but not accepted by the administrator) that, on 18 July 2001, all the issued shares in the company were transferred to Unigreg Group Limited, a company which they owned and controlled.

Until 18 July 2001, the Krikorians were, together, the only directors of the company. On 18 July 2001 they resigned that office and two others, Mr Alan Rutland and Mr Alan Booth, were appointed in their stead.

The financial statements for the company in respect of the years to 31 July 1995 and 31 July 1996 showed a position of solvency. They disclosed no loans to directors. The auditors’ reports were unqualified. The position changed, however, during the next accounting period: a period of 17 months to 31 December 1997. The balance sheet as at 31 December 1997 disclosed shareholders’ funds of £981,997; but, of that sum, £867,111 was represented by monies lent to Krikor Krikorian. The former auditors had resigned. The report of the newly appointed auditors, dated 29 July 1999, was qualified: “Because of the possible effect of the limitation in evidence available to us in respect of the director’s loan”. The notes to the accounts (at note 21) attributed the balance due from Krikor Krikorian “to cash drawings and payment of personal expenses by the company”; and recorded that the loan was interest free and repayable on demand. It was further noted that: “Loans to the directors are in contravention of Schedule 330 (sic) of the Companies Act.”

The balance sheet at the end of the next accounting period, 31 December 1998, disclosed shareholders’ funds of £746,704; but assets included debtors of which £1,324,434 were monies lent to Krikor Krikorian and £109,719 monies lent to Avo Krikorian. There had been another change of auditors. The newly appointed auditors qualified their report, dated 21 June 2000, in much the same terms: “Because of the possible effect of the limitation in evidence available to us in respect of the directors’ loans . . .”. Note 21 to the accounts, again, drew attention to the apparent contravention of section 330 of the 1985 Act.

That pattern was continued in the financial statements for the accounting period to 31 December 1999. The balance sheet as at the year end showed shareholders’ funds of £552,230; but, again, assets included debtors of which amounts of £1,692,174 and £399,148, respectively, were monies advanced to Krikor Krikorian and Avo Krikorian on their loan accounts. The auditors’ report, dated 21 April 2001, was qualified as before; and, again, note 21 to the accounts drew attention to the apparent contravention of section 330 of the 1985 Act.

The financial statements for the accounting period to 31 December 2000 were signed off on 20 December 2001. By that date, as I have said, the Krikorians had resigned office as directors. But they were directors during the whole of the accounting period and outstanding loans to them were shown in the accounts in the amounts of £2,149,670 (Krikor Krikorian) and £63,815 (Avo Krikorian).

On 11 June 2002, on the company’s own petition presented on 7 June 2002, it was ordered that the affairs of the company be administered under Part I of the Insolvency Act 1986. Mr Richard Neville, an insolvency practitioner, was appointed administrator of the company.

By an originating application in the administration, dated 15 October 2003, the administrator sought extensive relief against the Krikorians under section 212 of the Insolvency Act 1986 and under sections 151 and 322 of the Companies Act 1985. Relief was sought, also, against Unigreg Group Limited; but nothing turns on that. For the purpose of the present appeal it is sufficient to refer to the relief claimed in the following paragraphs of the originating application:

to create and operate their directors’ loan accounts through which they caused or allowed Unigreg Limited to loan moneys to them in contravention of section 330 of the 1985 Act;

A declaration that the sum due to Unigreg Limited on the directors’ loan account from Avo Krikorian as at 30 June 2001, namely £227,423 remains outstanding as a debt due to Unigreg Limited.

An order that Avo Krikorian do pay the sum of £227,423 to Unigreg Limited, together with interest thereon.

A declaration that the sum due to Unigreg Limited on the directors’ loan account from Krikor Krikorian as at 30 June 2001, namely £2,253,336 remains outstanding as a debt due to Unigreg Limited.

An order that Krikor Krikorian do pay the sum of £2, 253,336 to Unigreg Limited, together with interest thereon.

Points of defence were filed on behalf of both Avo Krikorian and Krikor Krikorian. The allegation in paragraph 4.1 of the originating application was denied. But it was accepted (at paragraph 28 of each defence) that monies properly standing to the credit of the company in the two loan accounts (if any) were loans made in contravention of section 330 of the Companies Act 1985.

On 8 October 2004 the administrator applied for summary judgment under CPR Pt 24 against both Avo Krikorian and Krikor Krikorian. Again, it is sufficient to refer to the relief claimed under paragraph 5.1 (which repeats paragraph 4.1 of the originating application), paragraphs 14 and 15 (which repeat paragraphs 6.1 and 6.2 of the originating application) and paragraphs 7 and 8 (which repeat paragraphs 7.1 and 7.2 of the originating application).

The application for summary judgment was supported by a witness statement (his sixth witness statement) made by Mr Matthew Wald, a partner in the firm of solicitors instructed by the administrator. Mr Wald referred, in that witness statement, to a bundle of documents which included the financial statements of the company for the accounting period 1 August 1996 to 31 December 1997 and for the financial years to 31 December 1998, 1999 and 2000.

In response to the application for summary judgment, Krikor Krikorian made and filed a witness statement (his seventh witness statement) dated 26 November 2004. At paragraphs 13 and 14 of that statement he said this:

Avo Krikorian, also, made and filed a witness statement (his second witness statement, dated 29 November 2004) in response to the application for summary judgment. That witness statement contains the following paragraph:

The application for summary judgment came before the judge for hearing on 10 December 2004. Avo Krikorian – and, I think, Krikor Krikorian – were represented by counsel. The hearing proceeded on the basis that the only live issue between the parties was that identified by the judge in the second paragraph of his judgment:

It is said – and I accept for the purposes of this appeal – that counsel for the Krikorians applied, at the commencement of the hearing, for an adjournment for the purpose of putting evidence before the court to meet the claim that Avo Krikorian was liable not only for the monies on his own loan account but also for the monies on Krikor Krikorian’s loan account. The judge did not refer to that application in his judgment. It is, I think, plain either that he had not appreciated that he had been asked to adjourn the hearing or, perhaps, that he thought that he had already disposed of that application. Whatever the true position, the judge proceeded to judgment on the basis that there was to be no adjournment.

After the judge had delivered his judgment – which he did ex tempore – counsel for the Krikorians drew attention to the fact that (as he saw the position) the judge had not ruled on the application for an adjournment. He explained – perhaps at greater length than he had done at the outset of the hearing – that he sought an adjournment so that Avo Krikorian could consider whether to put in evidence to the effect that he did not know of Krikor Krikorian’s loan account. The judge refused to re-open the matter. He said this:

It is the judge’s refusal to grant an adjournment to enable Avo Krikorian to consider whether to put in evidence to the effect that he did not know of Krikor Krikorian’s loan account that has led to the applications of 29 December 2004 and 3 April 2006 which are now before this Court.

The application for an adjournment of the hearing on 10 December 2004 arose from, and was linked to, the contention that joint and several liability on the part of the former directors – and, in particular, joint and several liability under section 341(2) of the Companies Act 1985 – had not been raised in the originating application, nor in the application for summary judgment, nor in the evidential material filed in support of that application. Whether or not that contention can be made out on a strict analysis of the documents, it is, I think, fair to say that those advising the Krikorians first became aware that the administrator was seeking to make each former director liable for the loan account of the other on or about 6 December 2004. The primary submission made to the judge on behalf of the Krikorians was that it was not open to the administrator to seek a finding of joint and several liability on the basis of the material which he had put before the court on the application for summary judgment.

I have set out the relevant paragraphs of the originating application and of the notice of application for summary judgment. It is striking that there is nothing in paragraphs 6.1 and 6.2, nor in paragraphs in 7.1 and 7.2 of the originating application, nor in the equivalent paragraphs of the notice of application for summary judgment, which suggests that the administrator was seeking an order against each former director that he pay all or any part of the indebtedness of the other. The only indication that the administrator was seeking to hold each liable for the indebtedness of the other is found in paragraph 4.1 of the original application and paragraph 5.1 of the notice of application for summary judgment – which contain the allegation that both directors were guilty of misfeasance “by causing or allowing [the company] to create and operate their directors’ loan accounts . . . in contravention of section 330 of the 1985 Act”.

Nevertheless, as I have said, the point had emerged by the time of the hearing before the judge on 10 December 2004. In advance of that hearing the administrator had lodged a written note (extending over 29 pages of close type) of the outline submissions that were to be made on his behalf. Section 5 of that note is headed “Joint and several liability for s.330 loans”. It includes the following paragraphs:

The assertion that Avo Krikorian was jointly and severally liable for the amount standing to the credit of the company on Krikor Krikorian’s loan account – alternatively, was liable to contribute to any shortfall which could not be recovered from Krikor Krikorian as primary debtor – was made, also, in a letter dated 6 December 2004 from the administrator’s solicitors to those acting for the Krikorians. The letter contains these paragraphs:

A skeleton argument was lodged on behalf of Avo Krikorian at or very shortly before the hearing on 10 December 2004. It was said, in paragraph 10 of that skeleton, that it was not open to the administrator to advance a case on the basis of joint and several liability:

That was the position when the matter came before HH Judge Havelock-Allan QC on 10 December 2004. In addressing the contention that it was not open to the administrator to advance a case on the basis of joint and several liability the judge noted that the originating application had sought a declaration in the terms of paragraph 4.1. He went on to say this:

The judge held that (subject to one qualification) the substance of the claim to joint and several liability had been made out by the administrator. He set out the argument advanced on behalf of the Krikorians:

The judge pointed out that: “No case has been raised either in the defences served or in the evidence that has been filed by the First and Second Respondent which says in terms that they did not cause or allow, as it is put in the application notice, these illegal loans to be made”. He referred to the company’s financial statements to 31 December 1997, 1998 and 1999 which, as he said: “On each occasion . . . stated that there were balances owed to the company on directors’ loan accounts” and “recorded . . . the opinion of the auditors [that] these loans have been made in contravention of section 330”. He said that he regarded it as unarguable that Krikor Krikorian – who had signed the accounts and “was at all material times until July 2001 the managing director of the company” - did not authorise the loans which were outstanding on his father’s account. He accepted that it was less clear that Avo Krikorian “would have known of the amount of the loans that were being made to his son”. And he went on to say this:

The judge gave effect to his decision by the order which he made on the 10 December 2004. He ordered that Krikor Krikorian pay the outstanding balances (as at 18 July 2001) both on his own loan account and on Avo Krikorian’s loan account, with interest; and he ordered that Avo Krikorian pay the outstanding balance (as at 18 July 2001) on his own loan account and £1,692,174 “(being the sum due to Unigreg on Krikor Krikorian’s director’s loan account as at 31 December 1999)”, with interest. 18 July 2001 was, of course, the date on which the Krikorians ceased to be directors of the company.

The judge refused permission to appeal from his order of 10 December 2004. He noted, as his reasons:

Avo Krikorian – but not, so far as I am aware, Krikor Krikorian – sought permission to appeal to this Court. As I have said permission was granted by Lady Justice Arden on 31 March 2005. Her reasons, after consideration on the papers, were noted in these terms:

Avo Krikorian appeals from so much of the order of 10 December 2004 as (i) refused his application to adjourn the hearing on that date and (ii) declared that he was liable for the sum of £1,692,174, being the amount outstanding on Krikor Krikorian’s loan account as at 31 December 1999. His grounds of appeal (after amendment) are set out under three heads and may fairly be summarised as follows: (i) that the judge was wrong to hold that the claim to joint and several liability in relation to Krikor Krikorian’s loan account was pleaded (or sufficiently pleaded) in the originating application of 15 October 2003; (ii) that the judge was wrong to hold that the claim to joint and several liability was the subject of the application for summary judgment or was established by the evidence filed in support of that application; and (iii) that, if the question of joint and several liability in relation to Krikor Krikorian’s loan account was adequately pleaded, or was raised in the application for summary judgment or by the evidence, the judge was wrong to refuse Avo Krikorian’s request for that aspect of the summary judgment application to be adjourned “pending his consideration and filing of evidence in response to the allegations made against him.”

Although it might be said that a strict approach should require the court to consider whether the judge was wrong to refuse an adjournment of the hearing of 10 December 2004 (in so far as it related to the claim that Avo Krikorian was jointly and severally liable for Krikor Krikorian’s loan account) before considering the further evidence which, as Avo Krikorian contends, he would have wished to put before the judge if the adjournment had been granted, it is, I think, convenient – in the circumstances of this case – to set out, at this stage, what that evidence would have been. The following paragraphs – in Avo Krikorian’s third witness statement (28 January 2005) – are relevant:

The administrator’s response to the evidence on which Avo Krikorian seeks to rely is set out in a further witness statement of Mr Wald, made on 4 May 2005.The assertion that Avo Krikorian did not discover the loan accounts until February 2001 is challenged as “not credible” having regard to “the nature and extent of the contemporaneous documentary evidence and his conduct of this litigation”. The administrator relies on material which was in the bundle of documents put before the judge at the hearing on 10 December 2004; although the judge’s attention was not, I think, drawn to that material at that hearing. In addition he relies on the copy of a minute of a board meeting held on 27 July 1999.

The minute, which is signed by Mr Booth as company secretary and was entered in the company’s minute book, records that the meeting was conducted by telephone conference call between Avo Krikorian, Krikor Krikorian and Mr Booth. It is in these terms:

Avo Krikorian has addressed that minute in a further witness statement made on 30 March 2006, which is the subject of the application notice filed on 3 April 2006 to which I referred at the beginning of this judgment. He says this:

The material in the bundle of documents before the judge on 10 December 2004 – and to which Mr Wald drew attention in his witness statement of 4 May 2005 – included an exchange of letters between Avo Krikorian and Barclays Bank plc in March, April and May 2000. On 3 May 2000, following a meeting with Krikor Krikorian on 28 April 2000, the bank wrote to Avo Krikorian to explain why it was unwilling to provide loan facilities of £1 million. The letter includes the following paragraph:

In his witness statement of 30 March 2006, Avo Krikorian refers to that correspondence in these terms:

I have set out the further evidence in some detail because it explains the circumstances in which the administrator sought summary judgment in this case in a way which is, perhaps, rather fuller than that which was presented to the judge. But it is of importance, also, to have in mind the statutory obligations imposed on the Krikorians as directors of the company. They are to be found in Part VII of the Companies Act 1985.

Section 221(1) of the 1985 Act requires that every company shall keep accounts which are sufficient to show and explain the company’s transactions and to enable the directors to ensure that accounts prepared under Part VII comply with the requirements of the Act. Section 226 of the Act requires the directors to prepare accounts which comply with the provisions in schedule 4 to the Act. Section 232 requires that the information specified in schedule 6 must be given in notes to the accounts. Paragraph 16(a) in Part II of schedule 6 requires that the accounts must contain particulars of any transaction or arrangement described in section 330 of the Act. Section 233 requires that a company’s annual accounts shall be approved by the board of directors and signed on behalf of the board by a director of the company. If annual accounts are approved which do not comply with the requirements of the Act, every director of the company who is party to their approval and who knows that they do not comply or is reckless as to whether they comply is guilty of an offence; and, for that purpose, every director of the company at the time that the accounts are approved shall be taken to be a party to their approval unless he shows that he took all reasonable steps to prevent their being approved. – section 233(5) of the Act.

The directors must lay a copy of the accounts before the company in general meeting – section 241 of the Act – and must deliver a copy to the registrar of companies – section 242. In the case of a private company the accounts must be delivered to the registrar within the period of 10 months after the end of the relevant accounting period.

In the present case, the accounts for the accounting periods ended 31 December 1997, 31 December 1998 and 31 December 1999 purport to have been approved by, and to be signed on behalf of, the board of directors. They disclose the information required by paragraph 16(a) of schedule 6 to the 1985 Act. Avo Krikorian asserts, in his witness statement of 28 January 2005, that he was not aware of the contents of those accounts. But he does not disclaim responsibility for the accounts delivered to the registrar by the company of which he was a director; nor suggest that he thought, at any stage, that the board was failing to comply with the obligations which the 1985 Act imposed in relation to the preparation, approval and delivery of accounts. In my view he must be taken to accept responsibility for those accounts. Section 233(5) of the Act – although not directly in point in this case – points to the intention of the legislature that a director cannot escape responsibility for the accounts of a company of which he was director at the time when they were approved by mere inactivity.

As I have said, Avo Krikorian has applied for permission to rely on the evidence contained in his witness statements dated 28 January 2005 and 30 March 2006. Although it could be said with force that – if Avo Krikorian intended to oppose the claim made in paragraph 4.1 of the originating application (paragraph 5.1 of the notice of application for summary judgment) - the evidence in the first of those statements could and should have been put before the judge at the hearing on 10 December 2004, I would treat that evidence as before this Court. I find it surprising that the administrator failed to identify – with appropriate specificity – that the claim made in paragraph 4.1 of the originating application was based on section 341(2)(b) of the 1985 Act until very shortly before that hearing; and, although it may be said that paragraph 4.1 is sufficient to embrace a claim under that section, I have some sympathy with the contention, advanced on behalf of Avo Krikorian, that paragraphs 6.1 and 6.2 of the originating application (read with paragraphs 7.1 and 7.2) deflected attention from the fact that the administrator was claiming the amounts outstanding on the two loan accounts on the basis of joint and several liability. In the particular circumstances of this case, it seems to me more satisfactory that, if summary judgment against Avo Krikorian in respect of any part of his son’s indebtedness is to be upheld, the evidence on which Avo Krikorian seeks to rely in defence of that claim should be before this Court.

If Avo Krikorian is to be allowed to rely upon the evidence contained in the witness statement of 28 January 2005, the administrator must be allowed to rely on Mr Wald’s further witness statement of 4 May 2005; which (as I have said) largely consists of a commentary on documents which were before the judge and which, accordingly, are already in evidence in this Court. The new material is the minute of 27 July 1999. That, as it seems to me, is properly admissible as a response to Avo Krikorian’s contention (in his witness statement of 28 January 2005) that he had not seen the 1997 accounts. And, if that minute is allowed in, Avo Krikorian’s explanation, in his witness statement of 30 March 2006 should be admitted also.

I should add, however, that – although the new evidence gives a fuller picture of the circumstances underlying the administrator’s claim – it does little, if anything, to advance Avo Krikorian’s defence to the claim that he is liable for his son’s indebtedness. He does not challenge the authenticity of the minute of 27 July 1999 – although the date of that minute is not easy to reconcile with the date (21 July 1999) on which the 1997 accounts purport to have been signed - and, as I have said, in the absence of contrary evidence, the provenance of the minute is proof of its contents. And, even if (straining credulity) his evidence that he knew nothing of his son’s indebtedness until February 2001 were accepted, he cannot escape responsibility for the accounts which were prepared, signed and delivered by the board of which he was a member.

The effect of treating the evidence upon which Avo Krikorian wishes to rely as before this Court is that the grounds of appeal set out in the appellant’s notice (as amended) fall away. The question for this Court, as it seems to me, is whether a finding of joint and several liability, under section 341(2)(b) of the 1985 Act or under the general law, can stand on the facts which have now been disclosed. To my mind, the answer to that question does not admit of much elaboration.

Where an arrangement or transaction is made by a company for a director of the company in contravention of section 330 of the Act, section 341(2)(b) imposes liability “to indemnify the company for any loss or damage resulting from the arrangement or transaction” on any other director of the company “who authorised the arrangement or transaction”. Sub-section (2) of section 341 must be read with sub-section (5):

The complaint in paragraph 4.1 of the originating application is that Avo Krikorian and Krikor Krikorian were in breach of duty in causing or allowing the company “to create and operate their directors’ loan accounts through which they caused or allowed [the company] to loan moneys to them in contravention of section 330 of the 1985 Act”. That, as it seems to me, goes beyond a complaint that individual payments were made to the directors by way of loan. Properly understood, it is a complaint that the Krikorians allowed a practice to arise and continue under which lending by the company to the directors was treated as acceptable. And, to my mind, it can properly be said that a director who knowingly allows a practice to continue under which lending by the company to his co-director is treated as acceptable has authorised the individual payments which are made in accordance with that practice notwithstanding that he did not have actual knowledge of each individual payment at the time that it was made.

I would accept that it has not been established in the present case – to the standard required to support an application for summary judgment – that Avo Krikorian had actual knowledge of each individual payment made to his son at the time that the payment was made. I would accept, also – although with some hesitation – that it has not been established to the standard required that Avo Krikorian knew, before 21 July 1999 (or, perhaps 27 July 1999) when the 1997 accounts were approved by the board, that the company was lending to Krikor Krikorian. But, as it seems to me, there can be no doubt that, from and after the relevant date in July 1999, Avo Krikorian did know of the practice, that he took no steps to bring it to an end, and (in particular) that he took no steps to cause the company to call in the outstanding loan. In that context it is relevant to have in mind (i) that the loans were described in the accounts as repayable on demand (and there is no reason to think that they were not) and (ii) that Avo Krikorian controlled the company.

It follows that I would hold that, for the purposes of section 341(2)(b) of the 1985 Act, Avo Krikorian authorised so much of the lending by the company to Krikor Krikorian as took place after 27 July 1999; with the consequence that he is liable to indemnify the company for loss resulting from that lending. It is impossible, on the material available, to quantify the amount of the lending to Krikor Krikorian which took place after 27 July 1999; but, as it seems to me, it must amount, at the least, to the difference between £2,253,336 (the amount outstanding as at 30 June 2001) and £1,692,174 (the amount outstanding as at 31 December 1999). For my part I would give summary judgment for an amount equal to that difference (£561,162) and for such further sum as can be shown to have been lent by the company to Krikor Krikorian between 27 July 1999 and 31 December 1999.

I would hold, also, that Avo Krikorian was in breach of duty in failing to take the steps which (plainly) were open to him to cause the company to call in the indebtedness outstanding at 27 July 1999. That goes beyond the amount shown in the accounts to December 1997. Having learnt on 27 July 1999 (if not before) of the practice which had been allowed to arise – and which inquiry would have shown to be continuing – his duty as a director required not only that he put a stop to that practice but also that he took steps to recover the indebtedness: a fortiori, in the circumstances that the auditors had qualified the accounts because, as they said, “of the possible effect of the limitation in evidence available to us in respect of the director’s loan”. I would make a declaration to that effect. The effect of the misfeasance, however, is not that Avo Krikorian is liable to repay the whole of Krikor Krikorian’s indebtedness as at 27 July 1999. He is liable to pay to the company the difference between what could have been recovered by the company if it had sought repayment of the indebtedness from Krikor Krikorian immediately after 27 July 1999 and the amount now recoverable in respect of that indebtedness. It seems to be common ground that the latter amount is nil.

I would allow the applications of 30 December 2004 and 3 April 2006. I would allow the appeal to the extent that I would set aside paragraph 3.2 of the order of 10 December 2004 and (in place of that paragraph) order that Avo Krikorian pay to the company the sum of £561,162 and such further sum as may be shown to have been lent by the company to Krikor Krikorian between 27 July 1999 and 31 December 1999, with interest on those sums. And I would make the declaration as to misfeasance that I have indicated.

I agree.

I also agree.