Maresca v Brookfield Development & Construction & Anor

The Petitioner (Mrs Maresca) and the Second Respondent (Mr Pursall) had a personal relationship which started in 1997 and ended at the beginning of 2011. This present Petition seeking the winding up of Brookfield Development and Construction Limited (“BDC”) is part of the fall out of that breakup.

Mrs Maresca and Mr Pursall each held one share in BDC and both were originally Directors. Mrs Maresca seeks the winding up of BDC because she says that, of late, its affairs have been conducted in a way which is unfairly prejudicial to her; or alternatively, that the personal relationship between herself and Mr Pursall that was reflected in the constitution of BDC has now gone, and that it is just and equitable that the company be wound up.

Petitions founded upon allegations of unfair prejudice or the assertion that it is just and equitable that the company be wound up are not suitable vehicles for sorting out quasi-matrimonial property. By their nature such petitions are sprawling proceedings which are already difficult to confine within reasonable bounds. But when treated as part of a broader adjustment of the parties’ rights they become expensive, diffuse, burdensome to the parties and excessively demanding of court resources. I therefore intend to focus upon the “unfair prejudice” and “just and equitable” issues and to refer to broader matters only so far as strictly necessary.

When the parties came to the relationship each was already involved in business. Mrs Maresca was a tour guide who also gave language lessons, and ran a mobile catering business. She already owned a tenanted property. She did not put those assets “into the pot”: but she used the income from them to contribute to the household expenses and to support the common business ventures on which she and Mr Pursall embarked. Mr Pursall owned a shop fitting company, Shopposition Specialist Shelving Fitters Limited (“Shopposition”) and an associated company. He gave Mrs Maresca a 20% share in his companies and he made her a director. Beyond that, he did not put those assets “into the pot”. He, too, used his salary and dividends to fund household expenditure and to support the common ventures.

Thus, whilst the parties pooled their income from various sources, they retained their assets separately. This continued to be the case during the relationship. For example, Mrs Maresca bought a rental property (called “Balmoral”) on mortgage in her own name: Mr Pursall renovated it at no charge and without the expectation of earning any interest in it. Mrs Maresca paid the mortgage on it, but used the rental income for household bills. Mr Pursall also had his own property.

In 2001 Mrs Maresca and Mr Pursall agreed a lifestyle change and moved to the country to run a bed and breakfast establishment with riding facilities and with language tuition available. The income from these businesses was to be supplemented by income from the rental properties so far as was necessary. The parties brought Brookfield Farm, Llanfechian. Mrs Maresca acknowledged in evidence that the conveyancing documents recorded that Brookfield Farm was held in the shares of 80/20 reflecting her ownership of the shares in Shopposition, whose sale was intended ultimately to fund the purchase of Brookfield: she said however that she had not read the conveyancing documents and that the shares had never been explained to her. In fact, because the sale of the company stalled the actual purchase had to be funded by cash and a mortgage in joint names. That mortgage was paid off by Mr Pursall personally with money derived from the sale of patents relating to the Shopposition business. But that did not alter the ownership of Brookfield Farm. As part of the business Mrs Maresca bought a horsebox for £2500.00.

After the move to Brookfield Farm and until the sale of Shopposition Mr Pursall continued to work for the company. But after the sale he did occasional work as a jobbing builder trading under the mane “Brookfield Builders”. His accounts start at the 1 September 2003. Mr Pursall treated this as his income which he could chose to put “into the pot”. This appears to have upset Mrs Maresca. She was in the habit of writing notes (addressed to Mr Pursall, but rarely if ever shown to him) to relieve her emotions. In one dated 3 March 2004 she wrote:

“I have never dared to ask you to transfer money to the joint account because you are impossible to approach. There was a bit of Easons money, which helped for a while. I suppose you’ll say that’s your money, but in fact I got the work and I’d say it was “ours!”.. recently I knew the joint account was empty again (as it would be. Just normal day to day living!) You went mad because I asked you for two grand!!... so obviously I have only a little savings left. I didn’t mind up till recently because I thought it was irrelevant where the money was. I didn’t think of it as “my money”. But now you’ve gone into this mode of “you work… its your money”… … all the money you earn is yours… how am I now to proceed?...”

What the parties decided to do was to purchase and renovate properties for sale. They identified a project at Fron Haul. On the advice of their accountant, Mr Jakeman they decided (since Fron Haul was intended to be the first of several such projects) to conduct the venture using a limited company in which they were equal participants. This was BDC. It is important to see what Mrs Maresca says about the formation of BDC. In paragraphs 4 and 5 of the petition she alleges:-

“The principal objects for which the company was established [were] to carry on a property development company.. The company was formed to purchase, renovate and sell property…”

In her witness statement of the 19 January 2012 Mrs Maresca explains it in these terms:-

“In October 2004 with the building business underway it was decided between us to purchase Fron Haul… we put this idea to the accountant and discussed the best way to proceed. It was decided that Fron Haul should be bought as a Company Purchase. We took his advice and [BDC] was formed. It was formed to purchase, renovate and sell property. The discussions were along the lines that we would be running the company together, participating as equals in the conduct of the business. We would own it equally and that the profit of the company would be “ours” and used for our mutual benefit”.

That account was not challenged by Mr Pursall.

At trial Mrs Maresca ran a different case. Although a business called “Brookfield Builders” continued to advertise its services, and although BDC never advertised for business, Mrs Maresca’s case was that BDC had been established to carry on the jobbing building business (as well as the business of purchasing and renovating properties). This case had not been foreshadowed in the petition or in the evidence in support: but it featured in Mrs Maresca’s second witness statement of the 4 June 2013 where she simply said:-

“I always understood that the building jobs were being done by the Company, I did not know of a separate business being run by [Mr Pursall] in relation to building work…”.

It is common ground:-

Mrs Maresca hoped at trial to reconstruct the accounts of BDC so as to incorporate the profit that had been earned by Brookfield Builders and (by and examination of individual invoices) to remove from the accounts of BDC expenditure that was not on Fron Haul that Mr Jakeman had failed to pick up. I ruled that this was not a proper exercise to be undertaken at trial (given a two day trial allocation and the absence of any expert evidence). I shall accordingly take BDC’s accounts and Brookfield Builders accounts as they stand.

It is common ground that BDC was a quasi-partnership. It had a share capital of £2.00. The working capital had to be injected. The purchase price of Fron Haul was £117.000.00. The deposit came from Mr Pursall (who injected that sum into BDC by way of loan). A mortgage for the balance was raised on the security of Brookfield Farm: and that was also injected into the company, though apparently treated as a separate identifiable loan. BDC later purchased some adjoining land: Mr Pursall injected another £10,000 to achieve this. Substantial works were undertaken on Fron Haul: Mr Pursall described it as “a very large renovation job”. All of the plaster was stripped out. The property was re-wired and re-plumbed. The bathroom and kitchen were re-fitted. There were new windows and internal doors. Significant ground works were undertaken outside. A conservatory (albeit second hand) was purchased and erected. The property was painted and decorated throughout. An adjoining large barn was re-roofed and re-clad and new doors were fitted.

The working capital to fund these renovations came from the parties. Mrs Maresca had a mortgage on “Balmoral” and she increased this by £10,000 in June 2006 (which in effect funded transfers which she had made out of other accounts as her contribution to the renovation costs). Mrs Maresca was quite clear that she did not intend to make a gift to BDC of this sum explaining:-

“It was money I had loaned to the business, not directly but it had gone into the business”.

As I have indicated, Mr Pursall was also doing the same thing. His payments to the company were likewise not gifts but loans.

Mr Jakeman (who acted as accountant to BDC) created a directors’ loan account. To this he credited direct loans made by Mr Pursall and Mrs Maresca to BDC: and he also credited monies unconnected with BDC which they had paid into BDC’s bank account, or payments they had made on behalf of BDC out of their personal accounts. To it he debited any drawings they had made from BDC and any payments made from BDC’s bank account in respect of personal expenditure, or expenditure on properties in their personal ownership. Because he could not be sure which of the two of them had actually paid in or drawn out or had company money applied for their benefit, he created a single “directors’ loan account”. Mrs Maresca said that the idea of a directors’ loan account had never been discussed with her, that she did not see BDC’s accounts (although she was a director and duty bound to consider them). Mr Joshua Shields (Counsel for Mrs Maresca) argued that the existence of the director’s loan account should therefore be ignored as a liability of the company. He cross-examined Mr Pursall at some length seeking to establish that the parties simply contributed out of their respective incomes, and to a lesser extent out of their capital, to a “common pot” which they never intended should be equalised or accounted for as between them, and that since this was the way they ran their affairs it was unfair to treat their respective contributions to the company any differently. He established that at the start of BDC’s operations, Mr Pursall had transferred money into the company, but Mrs Maresca had transferred money into the parties’ joint account to fund their living expenses. It culminated in this exchange:-

“Counsel: It is not fair to take a strict account of company money when it just depended who had money available to pay into what account?

Mr Pursall: I agree”.

However, I am not concerned with a distribution of BDC’s assets according to some general notion of fairness. A winding up petition is not a suitable vehicle for a property adjustment order. I must focus on the affairs of the company and (whilst not losing sight of the point which Mr Shields was making) must consider whether those affairs had been conducted in an unfairly prejudicial way or in a way which wounds a winding up on the “just and equitable” ground, and (if so) look at the assets and liabilities of the company and not at some balance sheet of the relationship overall during the dozen or so years that it existed.

Fron Haul was sold for £229,950.00 in August 2007. This represented a gross profit of £112,950.00 (ignoring the costs of renovation and the tax that had to be paid on the profit made). A two bedroom house in need of renovation at 11 Lime Grove Oswestry was purchased by BDC for £107,000.00 as the next project. This acquisition (and the costs of purchase) were entered into BDC’s accounts as “work in progress” valued at £109,000.00: and the sale of Fron Haul meant that (for the first time in its life) BDC had a positive balance sheet (with shareholders funds shown at £1617.00).

Lime Grove was itself then renovated, though the renovation was not as extensive as had been required for Fron Haul. The work was funded by further contributions from Mrs Maresca and Mr Pursall. Mrs Maresca’s mortage on “Balmoral” grew to £82,000. But during the renovation process the property market crash intervened. Instead of selling the property on the parties decided that Lime Grove should be retained and rented out. A desk top valuation in May 2008 suggested an initial asking price of £125,000 (but stressed that that should not be considered as its value). At that level BDC would probably have suffered a loss on the transaction.

Buying and holding a single property for rental purposes was not really in accord with the original vision, for it had been intended to buy a succession of properties to be renovated, keeping Mr Pursall employed in that process. The absence of any renovation work meant that he continued to trade as a jobbing builder.

As a jobbing builder he continued to use the BDC account both to pay the expenses of his building business and to receive the payment for his building work (unless some other account needed to be brought into credit). The BDC account continued to be used for the personal expenditure of the parties. It also continued to be used to pay for repairs to and renovations of the rental properties in the individual ownership of Mrs Maresca and Mr Pursall. The whole position became very muddled and was dependant upon Mr Jakeman’s skills at the year end to do some sorting out. Mr Joshua Shields submitted that the whole position was so confused (and was part and parcel of the “common pot” which the parties operated) that the parties should be taken to have agreed that they would ignore the loan account. But whilst the parties can agree that they would use each others’ money and not call one another individually to account, they cannot agree that they will use the company’s money as their own and that the company should not hold them to account: nor can they agree not to keep a record of the dealings of the company. Mr Jakeman was quite right to create and (to the best of his ability) to run a single directors’ loan account showing how matters stood as between the company and the directors. Mrs Maresca asserted (and to a certain extent Mr Pursall agreed) that it had never been envisaged by either of them that the position would be sorted out (because, as Mr Pursall explained, no-one gave any thought to what would happen on a termination). But shareholders cannot simply agree that they will use company money as if it were their own and there is no need for them to account to the company. Equally, once it is clear that when they are putting substantial sums of money into the company they are not making gifts to the company, some record has to be kept of what they can claim from the company. The absence of any positive agreement between the participators in the company is not determinative of the position. The matter does not depend upon agreement, but is a matter of legal obligation: it is part of the fiduciary obligation of a director not to treat the property of the company as his or her own: and it is part of the duty of a director to keep such records of the transactions of the company as it will give a true and fair view of its affairs at any given moment.

I have outlined the process by which Mr Jakeman arrived at the figures to be put in BDC’s accounts. Mrs Maresca attempted to distance herself from this process and to portray herself as the brow-beaten little woman unschooled in the ways of the world and from whom everything was concealed. This attempt was unimpressive. Mrs Maresca was a business woman. Mr Jakeman was in fact her accountant who prepared her separate accounts for her businesses. He became Mr Pursall’s account and the accountant to BDC. She attended the annual meetings with Mr Jakeman. I am reluctant to accept that she chose to disregard her legal obligations as a director, paid no attention to what went on at the meetings, left the meetings because she felt unwelcome, and never thereafter looked at the accounts. I consider that she overplayed the degree of her ignorance.

At the end of 2009 Brookfield Farm was sold (with completion due on 15 February 2010). The sale price was £517,000 and yielded approximately £500,000 net. The bulk of the proceeds of sale were paid into Mr Pursall’s personal bank account. £100,000.00 (or 20% of the net proceeds) was used to purchase a house at Chestnut Avenue in the name of Mrs Maresca. It is common ground that Mrs Maresca is the beneficial owner of it. Mrs Maresca complains (a) that the proceeds of Brookfield Farm were not paid into a joint account where she could see what happened to it: (b) that she was not really given any choice over the purchase of Chestnut Avenue (which it was intended that the parties should live in together) and that she might have preferred a payment in cash; (c) that only getting 20% of the proceeds was not fair and that she never understood that she only had a 20% interest in Brookfield Farm whatever the deeds might say. It is beyond the scope of the winding up petition to resolve these complaints. But they form an important part of the background.

The way that the sale of Brookfield was handled caused real tension between the parties. The period of tension resulted in the production of two cheques, each drawn on Mr Pursall’s personal account. The sale of Brookfield Farm completed on the 17 February 2010. On the 26 February 2010 Mr Pursall wrote a cheque in favour of Mrs Merasca for £3257.00. This represented one half of the balance sheet value of BDC on the accounts which Mr Jakeman had prepared for BDC on 22 February 2010 for the year ending 31 October 2009. The second cheque was drawn on the 3 March 2010 in the sum of £40,000. Mr Jakeman has written on the chequebook stub “loan repayment”. The central questions arising in these proceedings relate to the circumstances in which those two cheques were produced.

Mrs Maresca’s account was that in November 2007 she had discovered the Mr Pursall was having an affair with another woman. She regarded this (understandably) as a breach of trust and confided her fears to Mr Jakeman (whom she described as “a family accountant and friend”) in February 2008. She wanted to be sure that nothing was being done to push her out of BDC and the property ownership because she felt very insecure. She says that Mr Jakeman reassured her that she was secure in her ownership of BDC: and she did not thereafter consult him or communicate with him about such ownership. She says that following the tension over the sale of Brookfield Farm she complained to Mr Pursall over what she saw as her unfair treatment. Amongst the matters of complaint was that Mr Pursall had sold her horsebox trailer along with the property itself. She says that Mr Pursall’s assumption of control over the proceeds of sale of Brookfield Farm made her anxious for her future, particularly since she had a mortgage secured on “Balmoral”, and she wanted to pay off that loan or alternatively to be in a position to buy another rental property. So she asked Mr Pursall to give her £80,000: but he refused to do so, eventually providing her with £40,000 as a gift (though she acknowledges that Mr Pursall did not describe it in those terms, and its status as a gift is a matter of assumption on her part). But in cross-examination she did acknowledge that she understood that in asking Mr Pursall for money she was asking him to repay the money she had given him which had gone into the business.

So far as the cheque for £3257.00 is concerned, Mrs Maresca’s evidence is that she complained at the sale of the horsebox trailer, that she asked for a replacement (which she priced at £3500.00), that she then received the cheque for £3257.00, and that when she queried the amount Mr Pursall said that an odd figure “would look better for accounting purposes”.

Mr Pursall had a different account of events. In the Points of Defence which he prepared himself he said that in early 2010 Mrs Maresca had requested to be removed as a director of the BDC stating that as she had no involvement in running the business she was concerned that financial liabilities be incurred for which she would be responsible. He said that the balance sheet showed the net asset value of the company at the time to be £6514.00 and that the cheque for £3257.00 represented this. He went on to say that on receiving this payment Mrs Maresca had asked if her share of the director’s loan account could also be repaid and that she identified £25,000 of payments by her on the company bank statements. Mr Pursall said that he agreed to repay this sum, but that Mrs Maresca had said that it was not enough for her to purchase a house so he gave her £40,000 with the intention and the belief that Mrs Maresca would no longer have any interest in BDC.

In a further statement made on the 18 September 2012 Mr Pursall elaborated upon this. He said that early in 2010 Mr Jakeman had contacted him to tell him that Mrs Maresca had asked Mr Jakeman how she could withdraw her investment from BDC, and that Mr Jakeman had advised that Mr Pursall should write a cheque for exactly half the net asset value of the company shown in the 2009 accounts. He advised that the effect of this would be to purchase from Mrs Maresca her one share in the company. He says that when he handed the cheque over Mrs Maresca asked for the repayment of her loans to the company, which she quantified as being £40,000. Mr Pursall said that he had no reason to disagree with this, and issued a further cheque.

In cross-examination he said that he could not see any significant difference between the two accounts, because he was always aware that she was owed more than £25,000, and that when she asked for £40,000 he knew that she was probably owed at least that. He maintained that there was a lot of discussion between them springing from her stated wish that she wished to carry on business independently from him.

Mr Jakeman’s evidence as to these events was that in late 2009 and early 2010 he had a number of telephone calls from Mrs Maresca; she was distressed because she had discovered that Mr Pursall was still seeing another woman and was very disappointed that she had only received a 20% share in Brookfield Farm. His evidence was that she said that she no longer trusted Mr Pursall, feared that he was going to run up debts in BDC, and wanted to get her money out of BDC as soon as possible. Mr Jakeman said he got a very clear impression that she wanted to resign (although he acknowledged in cross-examination that she probably did not use that word). Mr Jakeman says that he advised Mrs Maresca to talk to Mr Pursall about the matter. Shortly thereafter he received a call from Mr Pursall who informed him that Mrs Maresca had said that she wanted to get out of the company (and Mr Jakeman acknowledged that she had said the same to him). Mr Pursall asked how he should repay Mrs Maresca and how her shareholding should be valued. Mr Jakeman says that he repeated to Mr Pursall what he had already told Mrs Maresca, namely, that the accounts had only ever shown the existence of a single director’s loan account and that they needed to agree how much each of them had contributed to it in order to ascertain how much Mrs Maresca should be paid. As to the shareholding, Mr Jakeman advised that the company had no real value over and above its balance sheet value. Mr Jakeman says that shortly after that he received from Mrs Maresca a schedule showing that she had contributed £44,000: and that when he discussed this with Mr Pursall, Mr Pursall thought she had contributed £48,000 but withdrawn £6,000. Mr Jakeman advised the giving of two cheques, one for the value of the shareholding and one for Mrs Maresca’s share of the loan account. He subsequently received two copy cheques from Mr Pursall (for £3257.00 and for £40,000) he did not receive any share transfer or any formal resignation as a director, and simply put the file away and thought no more about it. He did not deal with what he understood to be Mrs Maresca’s resignation as a director until the 16 December 2010. He says that he subsequently had further conversations with Mrs Maresca in which she asked how she could obtain half of the value of Lime Grove (apparently not understanding that this belonged to BDC and not to herself and Mr Pursall personally).

The documentary material against which to test these varying accounts is sparse. First, there is a note (apparently for the attention of Mr Pursall) in Mrs Maresca’s handwriting which reads:-

“I would like you to pay £80k mortgage off at Balmoral to make this arrangement fairer and to give me security of some income. If not, I need a cash payment to invest so that I can pay it off in 4 years time! Will not continue loan as short term!”

Second, there is a typed note addressed to Mr Pursall listing all of the direct debits and standing orders then being paid by Mrs Maresca (in the context of her seeking a direct debit from Mr Pursall to cover all such outgoings). Included on the list is a monthly payment against the narrative “HSBC Loan (50%)” against which is recorded:-

“Re: £40,000 loaned to RWP”.

To this entry there is a footnote in these terms:-

“I would prefer repayment of £40k loan to me so that I could put it towards another rental house which is what I want to do”.

Thirdly, there is a further and later version of this schedule and against the footnote relating to “Re: payment of £40k loan to me” is put the entry:-

“Paid back to me March 2010 and used towards Llwyn Road”.

That was a reference to a further rental property bought by Mrs Maresca in her own name.

Fourth, there is a schedule in Mrs Maresca’s handwriting headed “Notes (ref. large sums) from JSM personal account”. This shows total loans in the period 2007 to 2008 inclusive of £44,000. It was plainly prepared after August 2009 since it contains a note to ring or email Mr Jakeman about the bank statements for July 2008 to August 2009.

In resolving these conflicting versions of events I give the greatest weight to the independent evidence of Mr Jakeman and to the terms of the documents (and the inferences which may properly be drawn from them). I find as follows:-

For that last finding I rely on a document which Mr Pursall sent to the Land Registry in response to Mrs Maresca’s attempt (plainly hopeless) to enter a restriction upon Lime Grove to protect her interest as a shareholder. Mr Pursall wrote:-

“The applicant is no longer a director of [BDC] but still a shareholder and retains a minor financial interest as stated in the last accounts filed 31.10.2010 in directors loans. It is the intention of the company to agree the proportion of that interest by mutual examination of the bank statements, and repay it forthwith. Provision for funds to do so have already been made”.

That response was made without legal advice. But it was, in my judgment, entirely open and honest and represented the position as Mr Pursall saw it.

The personal relationship between Mrs Maresca and Mr Pursall struggled on, though they appear to have paid much more attention to who was paying for what. Mrs Maresca bought two further rental properties, on both of which BDC undertook work for which it did not charge. Towards the end of 2010 Mrs Maresca asked Mr Pursall to pay certain third party bills relating to these properties out of BDC’s bank account. But he refused to do so. Mrs Maresca was still a signatory on BDC’s bank account: and so she drew the funds (£920) herself (thereby emptying the account). This prompted Mr Pursall to close the account and to open a fresh one (with a contribution of £10,000 from his personal funds) at Santander.

With those findings of fact I can now address the petition.

By her petition Mrs Maresca seeks an order that Mr Pursall should be ordered to sell his shares in BDC to Mrs Maresca at a fair value determined by the court “taking into account payments made from company funds for his private purposes”: or alternatively for an order that BDC be wound up. The grounds for seeking that relief are:-

The claim that Mrs Maresca should be able to buy Mr Pursall’s shares has simply been abandoned. The case advanced at trial was that Mr Pursall should pay for Mrs Maresca’s share. At its most extensive Mrs Maresca’s claim was that the value of her share represented one half of the value of Lime Grove plus one half of the accumulated rents from Lime Grove. This involved (a) deleting the directors loan account from the companies accounts: and (b) treating the £43,257 paid to her as a gift (or reimbursement) unconnected with any interest in the company. In my judgment this claim was (and always was) unsustainable. It treats Lime Grove as if it belonged to Mrs Maresca and Mr Pursall jointly (instead of belonging to BDC), the misconception that underlay the attempt to register a restriction.

The first question is whether Mrs Maresca has suffered “unfair prejudice” in any of the respects alleged. In my judgment she has not.

In my judgment the jurisdictional threshold established by section 994 Companies Act 2006 has not been crossed.

I do, however, consider that on Mrs Maresca’s contributories’ petition she is entitled to relief by the winding up of the company and (in the absence of any other remedy) it would be just and equitable that the company should be wound up. However I consider that there is another remedy available to her and that she would be acting unreasonably in seeking to have BDC wound up instead of pursuing that other remedy: section 125(2) Insolvency Act 1986.

The first step is to take a snapshot of the company at the time when the personal relationship between Mrs Maresca and Mr Pursall (out of which BDC sprang and on which its operation depended) ceased. For practical purposes one can take the figures as at 31 October 2009 (since no others are available). I have already noted that the balance sheet depended upon a valuation of the WIP which was, in fact, in excess of the realisable value of the work itself. The expert valuation of 11 Lime Grove is £100,000.00. It is agreed that for the purposes of assessing the respective interests of the parties in BDC this figure should be substituted in the balance sheet for the value of the work in progress. If that is done the company is insolvent.

The second issue is whether, in those circumstances, Mrs Maresca can ask for the company to be wound up. She both the contributory and a major creditor. The company is in deadlock. The personal relationship out of which the company sprang and on the basis of which it operated has dissolved. In my judgment if some sensible way is not found of enabling Mrs Maresca to extricate herself then it will be just and equitable for the company to be wound up.

The third step is to consider whether there is any other remedy that is available. Plainly there is. The company is insolvent. Mrs Maresca’s real interest is as a creditor in respect of her interest in the director’s loan account. She could demand repayment of that: and that would give her everything to which she is entitled. It is therefore necessary to ascertain what (if she were to demand repayment) she would be repaid.

This leads to the question whether the overall loan account should be adjusted in some way. Mrs Maresca’s case is that there should be adjustments to the loan account and to the profit and loss figures because Brookfield Builders was simply a trading name of BDC and that Mr Pursall never had any separate business (part of the profits of which were paid into BDC and carried to the credit of the director’s loan account). I do not accept this submission. I consider that it was plain from at least March 2004 that Mrs Maresca understood that as regards the building work Mr Pursall’s attitude was “my work, my money”. That is why in her petition and in her witness statement she has from the outset alleged that BDC was formed to “purchase, renovate and sell property”, and not to carry on jobbing building work.

The next question to arise is whether any account at all should be taken of the director’s loan account. Mrs Maresca says that she did not know of its existence and that there never had been any intention of taking an account as between herself and Mr Pursall. Mr Pursall agrees that at the start of the company neither of them thought what would happen if the company terminated, and so neither of them thought how to sought matters out as between themselves. But quite plainly none of them thought to make gifts to the company: and each of them was under an obligation to the general body of creditors of the company to make sure that company money was only used for company purposes (and not for expenditure in their own businesses or on their own properties). Mr Jakeman was entirely right to create a directors loan account and (on the state of the documentary records to him) was wise to create a single joint directors’ loan account. It is a separate question how that joint director’s loan account should be treated as between the two directors.

That is the next question to be addressed. I hold that each of the directors understood and intended that if an account had to be taken then their significant cash injections into the company should be recoverable by the payer but all the minor adjustments by way of small credits and debits should not be sorted out. That is why Mrs Maresca refers to a £40,000 “loan” based on large transfers from her bank account, and why Mr Pursall accepted the claim and paid it.

I must now quantify what those payments were. Looking at what was agreed or was shown on schedules prepared for trial and not the subject of serious challenge at trial I would assess those figures as follows. As at March 2010 Mrs Maresca had paid in £51,000. Mr Pursall had paid in £43,440. Each had made withdrawals against these amounts and there had been sundry contributions and adjustments. These could not be examined or tested at trial. The director’s loan account as at the 31 October 2009 stood at £127,000 (in round figures). If one assumes that Mrs Maresca called for her payment of £51,000 and Mr Pursall called for his payment of (say) £43,440 there would be a balance of (say) £32,500 in respect of which the directors had decided there should not be strict accounting as between them. So each could ask for repayment of half. That would put Mrs Maresca’s claim as a creditor at £67250.

However, the company is insolvent and does not have enough money to pay every creditor 100 pence in the pound. It can only pay a dividend of 80p in the pound. This means, that Mrs Maresca could only recover £53,800. Moreover, she would have to give credit for £920 which she took from the Santander account for her own purposes after the split. So her claim would be £52880(in round figures).

The penultimate question is whether Mrs Maresca has to give credit for any money she received. I reject her claim that what she has received from Mr Pursall already constituted a gift and reimbursement for a horsebox. The £43257 which she received was paid on account of her interest in the company. She can only ask for another £9623.

The final question is whether any interest is payable on that. No interest was payable on the directors’ loan account. Mrs Maresca did not make any demand until early 2011. Allowing interest at 1.75% for about two and a half years I would order that if BDC pays Mrs Maresca £10,000 by 1 December 2013 then she is bound to transfer her share in BDC to Mr Pursall, and BDC is not to be wound up.

I would readily acknowledge that there is a degree of approximation in this. But I have seen my task as providing a just outcome according to law by the application of resources appropriate to the dispute. Further refinement would come at a cost that would be ruinous to the parties (who have probably devoted to this case more than it is worth). Those who present petitions of this sort for companies like BDC must understand that that is likely to be the approach adopted: and would be wise to adopt the same approach in settlement negotiations.