Pantiles Investments Ltd & Anor v Winckler (Rev 1)

This application is brought by Mr James Dowers, the liquidator of Pantiles Investments Limited (‘Pantiles’ or ‘the Company’), against its former director, Ms Sabine Winckler.

Pantiles was incorporated on 14^th October 2009 and its sole de jure director and shareholder was at all times Ms Winckler. It did not engage in any activity until it purchased a property known as 656 Finchley Road, London NW11 6XX (‘the

Ms Winckler did not contribute any monies to the purchase, and nor did Pantiles have any monies of its own. The monies to effect the purchase are said to have been provided by way of loans to it as follows –

Mr Goldbart and Ms Iwamoto did not move out of the Property but entered into a tenancy agreement with Pantiles on or about 17^th December 2010. Mr Goldbart was adjudged bankrupt on 5^th October 2011 on a creditor’s petition presented on 8^th July 2011. On 5^th January 2012, Mr Stephen Hunt of Griffins, a firm of insolvency practitioners, was appointed as his trustee in bankruptcy. Mr Peter Murray and Mr Andrew Foster of Griffins interviewed Ms Winckler on 31^st May 2012 in connection with Mr Goldbart’s bankruptcy.

The Property was then sold by the Company to a third party. Completion took place on 12^th June 2012 for £899,000. The proceeds were paid away as follows:

Following the settlement of Mr Hunt’s transaction at an undervalue claim, he came into possession of a letter from Mr Goldbart to Suzette Newman of Newman Law, dated 9^th February 2010. Mr Goldbart referred to an opinion of Mr Joshua Swirsky of counsel and said:

Mr Goldbart contended that this letter refers only to a scheme to mitigate stamp duty but, on the basis of it, Mr Hunt formed the view that the sale of the Property to the Company, and the subsequent sale and distribution of the proceeds of sale by the

Pantiles was wound up on 3^rd August 2015 on the petition of HM Revenue and

Mr Dowers issued an application in this court on 18^th May 2018 by which he brings two claims against Ms Winckler –

In summary, Mr Dowers’ case is that Ms Winckler was a knowing front for Mr Goldbart, who was the real controlling mind behind the Company. He says that there is no evidence that Goldbeck (2009) made any payment towards the purchase of the Property. His primary case is that the repayment of this loan, and the repayment of the Second Steckelmacher Loan, were no more than devices to cause the sale proceeds of sale to be paid to Mr Goldbart’s associates for his benefit. In entering into the Second Steckelmacher Loan she caused the Company to enter into a transaction that created a liability and conferred no benefit upon it. In paying the monies said to be due to Goldbeck (2009), she left the Company without assets to meet its liabilities. There was an inevitable tax liability, which was subsequently crystallised in the sum of £112,489.95. There is also a liability for costs of Mr Hunt incurred in the proceedings for a declaration as to the trusts on which the shares in Pantiles were held. This totals £54,882.35.

As to Ms Winckler’s knowledge of this, he relies on the improbability of, and inconsistencies in, Ms Winckler’s account of the circumstances in which she came to purchase the Property, the fact that Mr Goldbart gave instructions for the sale, using the Company’s email address, to which Ms Winckler had access, and that Ms Winckler approved his instructions for the distribution of the sale proceeds. He further points to letters apparently sent by Mr Goldbart to Ms Winckler at the end of 2011, acknowledging her past and continuing help in his financial affairs. He relies on an email from Mr Goldbart giving instructions to Ms Winckler not to cooperate with Mr Hunt and actual non-cooperation by Ms Winckler in relation to the provision of her personal email address when asked for it at interview on 31^st May 2012.

Ms Winckler accepts that the business of Company was carried on with intent to defraud Mr Goldbart’s creditors but she says that, far from being a knowing party to that fraud, she is not a financially experienced individual and was also duped by him. Her case is that, in 2009, she had intended to purchase a property worth about £500,000 and let it in order to provide her with retirement income. Entirely by coincidence, the estate agent she visited first gave her the details of the Property and Mr Goldbart thereafter offered to help her with her project. He recommended the setting up of the Company. When she was unable to obtain a mortgage, he arranged the finance to enable the Company to buy the Property. She has produced documents relating to the loan made by Goldbeck (2009) and maintains that the loan was in fact made. When tenants could not be found, he and Ms Iwamoto agreed to take a lease of the Property. The project having turned into a ‘nightmare’ she wanted to sell the Property and, while she had hoped to make a £100,000 profit, she was happy with breaking even. She says that she did not know of Mr Goldbart’s bankruptcy, or impending bankruptcy, until she was told of it by Mr Hunt.

She accepts that she allowed Mr Goldbart to have access to the Company’s email account and to write letters on its behalf, providing that she knew about these. She contends that she looked to him for advice but took decisions as to what Pantiles should do herself. She accepts that she should not have allowed the Company to enter into a loan for Ms Iwamoto’s benefit but submits that a claim in respect of this transaction is time-barred on the basis that the breach lay in entering into the loan agreement and granting the charge, which took place more than six years before issue of the application. On her case, the repayment of the loan in June 2012 is simply the inevitable consequence of having entered into the loan and granted the charge, not a separate breach.

It is further accepted that the payment to Goldbeck (2009) of the sums said to have been loaned by it was in breach of duty at a time when Pantiles was insolvent. Ms Winckler says, however, that she acted honestly and reasonably and ought fairly to be excused pursuant to section 1157 of the Companies Act 2006. In particular, she complains that Segens should have alerted her to the fraud but, instead, they treated Mr Goldbart as their client. She points to a number of emails written by Mr David Isaacs of Segens to Mr Goldbart alone. She rarely accessed the Company’s own email and did not see some of the correspondence sent to that address. Moreover, she states that she was suffering from anxiety and depression in 2012, which inhibited her ability to understand the contents of emails and participate in decision-making. She denies that she agreed to settle Mr Hunt’s claim for £250,000 and was not consulted as to this. She maintains that Mr Isaacs should have prevented the Company from paying monies to Goldbart (2009) as an unsecured creditor and should have told her to seek separate advice.

Having summarised the parties’ cases I shall set out the applicable law.

Section 212 provides as follows, insofar as it is material –

Section 172 is headed ‘Duty to promote the success of the company’ and provides:

In Re Regentcrest Plc v Cohen [2001] BCC 494 at [120] Jonathan Parker J (as he then was) described the nature of the duty as follows:

Section 173 of the 2006 Act further provides that a director is under a duty to exercise independent judgment. It states:

Finally for the purposes of this judgment, the duty to adhere to proper standards of care, skill and diligence is set out in section 174 of the 2006 Act as follows:

Section 213 provides:

For some years, dishonesty was considered to have two elements – the first element being objective and the second being subjective. In R v Ghosh [1982] QB 1053 the Court of Appeal considered the meaning of dishonesty in the context of the Theft Act 1968 and held that a jury had, first of all, to decide whether according to the ordinary standards of reasonable and honest people the defendant’s conduct was dishonest. If it was not dishonest according to those standards, the matter proceeded no further. If, however, the defendant’s conduct was dishonest by those standards, then the jury was required consider whether the defendant himself had realised that what he was doing was, by those standards, dishonest. The test was similarly applied to accessory liability in the civil context (see, for example, Twinsectra Ltd v Yardley [2002] 2 AC 164).

The test for dishonesty in the criminal context was recently considered by the Supreme Court in Ivey v Genting Casinos (UK) Ltd(trading as Crockfords Club) [2018] AC 391.

Having set out the tests I should apply I turn to the evidence. The application is supported by the statement of Mr Dowers dated 17^th May 2018. Ms Winckler made a statement in answer, which is undated, and Mr Dowers has made a further statement in reply, dated 22^nd October 2018. Mr Dowers was excused from attending for crossexamination. His statements simply set before the court the information he has gathered in the course of the liquidation of the Company. The only witness who gave live evidence was Ms Winckler.

I should add for the sake of completeness that Ms Winckler’s witness statement says that she had ‘summoned’ Mr David Isaacs, a partner in Segens. She confirmed in her

Ms Winkler is a German citizen. She has lived in the United Kingdom for some years and her written and spoken English are fluent. It was not submitted on her behalf that she would have been unable to understand the terms of the documents signed or seen by her during the Company’s life. It was, however, submitted that she was an unsophisticated person when it came to business affairs.

At the outset of the hearing I was provided with a letter from a Dr Kaufman, a physician, dated 14^th March 2019. Dr Kaufman’s letter stated that Ms Winkler was diagnosed with ‘anxiety and depression in 2012 following meetings with trustees and bankruptcy issues.’ The letter explained that she has been treated with antidepressant medication and that her condition means that she can become very anxious and struggle to recall events. It noted that Ms Winkler was anxious about the forthcoming trial and that Dr Kaufman was ‘sure this will affect her ability to give a full and frank account of the issues and could affect her testimony.’ Mr Ingham rightly did not ask me to adjourn the trial on the basis of this letter but instead asked me to take Dr Kaufman’s opinion into account when considering Ms Winckler’s evidence. The letter is not admissible opinion evidence and it does not suggest that the medication that Ms Winckler has been taking of itself has any impact on her ability to recall events or that her depressive illness would have impaired her ability to understand the transactions she entered into which are now the subject of this application.

I do, however, bear in mind that the stress of litigation and of giving evidence may well have an adverse effect on a witness’s recollection and I accept that this might be particularly acute in witnesses with underlying anxiety and depression. I similarly accept that Ms Winckler is suffering from those conditions. Ms Winckler did not appear to be particularly anxious in the witness box. Her evidence was calmly expressed. She did, however, repeatedly state that she was unable to recall the advice given to her by Mr Goldbart, on which she says that she relied. I shall return to that later in this judgment.

With that in mind, I shall now turn to Ms Winkler’s evidence in relation to the transactions on which the claim is founded.

Ms Winckler’s evidence was that she had known Mr Goldbart for some years prior to the formation of the Company and the purchase of the Property. She had worked as his typist on occasion and this had included visiting the Property. Though she had not worked for him for some time, she continued to see him every two to three weeks or so. On her account, in 2009 she wished to purchase a property with a value of around £500,000 that she could let out in order to provide her with an income. She visited the estate agency that had negotiated the sale of her own flat. The agent, Mr Lee, told her of the Property. There is an inconsistency in Ms Winkler’s account as to when she realised that it was Mr Goldbart’s house. She does not refer to this in her witness statement but, when interviewed in connection with Mr Goldbart’s bankruptcy on 31^st May 2012, she stated:

Ms Winckler did not know whether Mr Goldbart had taken the Property off the market. The purchase was not completed until some 16 months later but there is no evidence that Mr Goldbart tested the market any further. It was put to Ms Winckler that the reason for this was that the transaction was a sham. She said that, looking at it now, that might well be the case but that she did not think that it was at the time. Contracts for sale were exchanged on 18^th August 2010 with a completion date of 18^th December 2010 but these contracts show the vendor as Goldbeck Investments Limited. It seems that both parties were content to allow this completion date to pass.

Ms Winckler’s evidence was that she had intended to purchase a property with a mortgage loan and about £220,000 that was to be given to her by her parents. In the event, her mother became ill and her parents were unable to part with the money. It is common ground that Ms Winckler did not use any of her own money, or money derived from her family, to fund the Company’s purchase of the Property. Nor is there any evidence of a proposal by Ms Winckler’s parents to make a substantial gift to her. Ms Winckler accepts that the Company was unable to obtain a conventional buy-to-let mortgage in the period between the Company agreeing in principle to buy the Property and completion of the sale. She said that three mortgage brokers had been approached, without success. This is not surprising as Ms Winckler said her annual income was around £17,000. It was therefore quite unlikely that she would be able to obtain a mortgage loan to fund a purchase for some £600,000. Instead, the purchase monies came from three short-term loans.

BM Samuels offered to provide a loan facility of £345,000 to the Company by a letter dated 28^th October 2010. Ms Winckler accepted the loan on and signed each page of the agreement on behalf of Pantiles on 23^rd November 2010. The purpose of the loan was expressed to be to assist in the purchase of the Property. The facility was granted for a period of up to six months from the date of initial drawdown and was repayable on demand. The interest payable was £26,910 payable in six monthly instalments, or £4,485 a month, though the payment of some of this interest was rolled up into the total debt on advance.

Ms Winckler was asked how this loan was to be paid off and she stated that she anticipated that a mortgage would be obtained. She was unable to explain quite how a mortgage was to be obtained when attempts over the previous year or so had failed. The Property was let to Mr Goldbart and Ms Iwamoto for £2,000 a month and the rent would not have been sufficient to cover the interest. Ms Winckler, when taken to the interest provisions of this loan document said that, looking at it now, it was ‘unbelievable’. She accepted that she would have read the loan agreement before signing it and that she had ‘probably’ asked Mr Goldbart for an explanation and that he had ‘probably’ given her an answer which satisfied her. She did not recall what that answer might have been. She described the loan agreement as ‘a joke’, in the sense of an absurdity, and that she now ‘couldn’t find words for it’.

Ms Winckler was asked why she did not simply wait to see if mortgage finance could be arranged. The purchase had not taken place for some 16 months after the Company agreed to buy the Property. She said that ‘time was running out’ to complete the transaction.

Goldbeck (2009) is said to have lent the Company £270,000 on 15^th February 2011 for the purposes of assisting the Company to purchase the Property. The documents that Ms Winckler has provided to support her contention that this loan was made is an unexecuted deed of that date, by which the Company agreed to repay the debt within five years and a letter to Newman Law from Goldbeck (2009). It purports to have been written by Ms Iwamoto but stylistically has the hallmarks of a document prepared by Mr Goldbart, in particular his idiosyncratic use of quotation marks. Ms Winckler accepts that this company was in fact controlled by Mr Goldbart.

Ms Winckler’s written evidence states that the loan monies were derived from the proceeds of sale of 4 Chandos Way, which was owned by Goldbeck Investments Limited, another company ultimately controlled by Mr Goldbart. It is not clear why the proceeds of sale of a property owned by Goldbeck Investments Limited came to be channelled through Goldbeck (2009), although the letter of 15^th February states that, in fact, this property was owned by Goldbeck (2009).

There is no evidence that these monies were actually paid either to Pantiles or to Mr Goldbart. There is a reference in the completion statement prepared on or around 15^th February 2011 by Newman Law showing the proceeds of sale of 4 Chandos Way in the sum of £163,844.89 to be ‘held on behalf of Pantiles’ but there is no reference in this document to these monies having been provided by Goldbeck (2009). Nor does the sum shown in the completion statement accord with the amount set out in the unexecuted deed. The letter suggests that the loan will also be used to discharge Mr Steckelmacher’s first loan but, again, this does not accord with the total loan claimed to have been made.

Mr Steckelmacher is the husband of Ms Newman, Mr Goldbart’s solicitor. He lent the Company £70,000 in December 2010. This was repaid in March 2011 from the proceeds of sale of 1A Maida Avenue, which was owned by another ‘Goldbeck’ company.

On 10^th December 2011 a deed was executed by Mr Steckelmacher as lender, the Company as borrower and Reiko Iwamoto as ‘second borrower’. Under the terms of this deed. Mr Steckelmacher agreed to lend £70,000 to the Company for the purpose of assisting Ms Iwamoto ‘to partially finance the purchase of 68, Abercorn Road, London, NW7 1JT’, secured by a charge on the Property. This loan was to be repaid by 30^th June 2012 and was subject to an interest rate of 18%. Ms Winckler said that she had not understood this loan and now accepted that she should not have signed it. At the time it was ‘a muddle’. When asked to explain why she had signed it she said that Ms Iwamoto had probably said that it was necessary and that she had probably said that the interest rate was common practice. She agreed that paragraph 1 of the deed, setting out the purpose of the loan, was quite clear but that Mr Goldbart and Ms Iwamoto must

Ms Winckler told Griffins in 2012 that she was aware that the reason that Mr Goldbart was selling the Property was because he had financial problems and needed to sell it. In evidence she said that she had not known this at the time of the Company’s purchase but had been made aware of the reasons for sale since then. She denied being aware of Mr Goldbart’s bankruptcy itself until she received a letter from his trustee in bankruptcy in January 2012. She was asked if she was quite sure that that was the earliest that she had been aware of it and she confirmed that is was. She was taken to a number of documents addressed to her in which reference is made to Mr Goldbart’s impending or extant bankruptcy. The first of these in the evidence is a letter dated 30^th September 2011 from Mr Goldbart to Ms Winckler on the Company’s letter paper. He said:

On 5^th October 2011 Mr Goldbart again wrote to Ms Winckler on the Company’s letter paper and stated:

On 19^th January 2012 Mr Goldbart emailed Ms Winckler, using her personal email address, and said:

When interviewed by Peter Murray on behalf of Mr Goldbart’s trustee, Ms Winckler was asked about whether she had a personal email address. Mr Murray said that he was aware that the trustee’s correspondence to Ms Winkler was being handled by Mr Goldbart. She was asked whether she had a direct email address at which she could be contacted. She replied ‘No, I haven’t got any time to look at it. I can set up a new one if you want?’ Asked again, directly, whether she had a personal email she said, ‘Not for myself, no’.

That was untrue. Ms Winkler did indeed have a personal email address. It was the address to which Mr Goldbart had sent the 11^th January 2012 email. In crossexamination, Ms Winkler said that it was her private address and was only used by her friends. It was put to her that the reason that she had withheld her personal email from the trustee was so that he would not find out about her correspondence with Mr Goldbart. This she denied. It is notable that Ms Winckler was content to provide her private email address when interviewed by Mr Dowers in 2015. Similarly, she used that email in correspondence with Mr Isaacs of Segens, who were acting on the sale of the Property.

On 17^th April 2012 an email was sent from the company account to Mr Hunt, apparently by Ms Winkler. It was not however written by Ms Winckler but by Mr Goldbart and it employs his idiosyncratic use of quotation marks. It purports to answer enquiries made of Ms Winkler and states ‘I am the sole director and 100% Beneficial Shareholder of

Ms Winckler was asked whether she thought there was something very improper about Mr Goldbart impersonating her in this email and whether it made her suspicious. She said that it made her angry that he had sent the email without telling her but that she did not think that it was improper. She regarded him as her friend.

Mr Curl put to Ms Winckler that, by 31^st May 2012 at the latest, she must have been aware that Mr Goldbart was doing something improper. She said that she had not really ‘got it’ and that Mr Goldbart kept saying that things would be ‘okay’ and ‘there will be a happy ending’. She said that, knowing what she now knew, she should have realised. Griffins had told her that the Company was being used for an improper purpose but she didn’t want to believe it because it made her seem stupid.

On 4^th May 2012 Mr Isaacs emailed Ms Winckler, copying the email to the Company’s email address, Mr Goldbart and Ms Iwamoto. He stated:

On 18^th May 2012, Ms Winckler wrote on behalf of the Company to direct that £350,000 from the anticipated sale of the Property should be held to abide the settlement of Mr Hunt’s claim. The net proceeds were to be remitted to Goldbeck Investments, less £50,000 that was to be paid to Mrs Iwamoto. The letter appears to have been drafted by Mr Goldbart but it is signed by Ms Winckler. Ms Winckler could not recall why £50,000 was to be paid to Ms Iwamoto. She said that there was a list of people who were to be paid and Mr Goldbart had explained it to her and the explanation made sense. Again, Ms Winckler did not offer an account of what that explanation might have been. In re-examination she merely repeated that Mr Goldbart had told her that the Company had to repay certain people.

Again, on 12^th June 2012 Mr Isaac sought Ms Winckler’s express confirmation of the distributions of the net proceeds of sale that Mr Goldbart had set out. He emailed her alone, using her personal email address, and said:

Mr Hunt then sought information as to where the monies had been sent. Mr Isaacs sought Ms Winkler’s consent, again emailing her alone and using her personal email address. Her reply on 1^st July 2012 stated:

Again, the response was negative. Ms Winkler replied on 5^th July 2012

Ms Winckler was shown an internal memorandum between Mr Isaacs and Michael Sagen, dated 28^th June 2012, in which Mr Sagen anticipated that Mr Goldbart’s trustee would seek information as to the recipients of the sale proceeds. He wrote:

I am satisfied on the balance of probabilities that Ms Winckler was a knowing party to an attempt to conceal the Property and the proceeds of its sale from Mr Goldbart’s creditors from the outset. I say this for the following reasons –

Standing back and looking at the way in which the purchase and sale of the Property proceeded as a whole, one can see that it is entirely at odds with the explanation given by Ms Winckler for purchasing it. The purchase could never have worked as an investment. I am satisfied that Ms Winckler’s account of her intention to buy an investment property and the circumstances in which she came to discover the Property and to incorporate Pantiles is untrue. Instead, in my judgment, she was aware at the time of the sale, as she told Griffins on 31^st May 2012, that Mr Goldbart was in financial difficulties in 2009 and needed to sell the Property. She agreed to assist him.

I acknowledge that Mr Sagen, in the memorandum that I have quoted above, formed the view that Ms Winckler was ‘pretty much unknowing’ in her role in the scheme. He of course expressed that view without access to the material which formed the trial bundle and without having heard Ms Winckler’s oral evidence. Similarly, Mr Goldbart told Griffins at interview that she was ‘naïve’. I also bear in mind that the more inherently improbable the allegation, the stronger the evidence required to establish it. It is less likely that a person will commit a breach of duty dishonestly than through inadvertence.

On the basis of the evidence that I have seen and heard, however, it appears to me that, while Ms Winkler might lack commercial experience, she is an intelligent woman who was able to, and did, appreciate the nature and effect of the documents that she signed on behalf of the Company and the lack of commercial reality behind them at the time. Similarly, she chose to mislead Mr Goldbart’s trustee and to refuse to provide him with information.

While she might not have known every detail of Mr Goldbart’s scheme, she knew that Pantiles was being operated to keep the value of the Property out of the hands of Mr

Mr Ingham invited me to accept that Ms Winckler too has been the victim of a ‘pernicious and clever deception’ on the part of Mr Goldbart. That submission might have force if Ms Winckler had been able to set out, even in broad terms and with the benefit of hindsight, what Mr Goldbart said, or might have said, by way of a explanation as to why the Company should purchase the Property, enter into ruinous loans or refuse to cooperate with his trustee in bankruptcy. Similarly, while Mr Ingham contends that Ms Winckler had nothing to gain by allowing the Company to be used by Mr Goldbart this overlooks Ms Winckler’s evidence that she had hoped to realise £100,000 from the onward sale of the Property. That is a remarkable profit to make from a property into the purchase of which she had put not a single penny.

In short, I am satisfied that Ms Winkler was knowingly a party to the use of the Company for the purposes of defrauding Mr Goldbart’s creditors.

Even if I am wrong that Ms Winckler was knowingly a party to the Company’s scheme, it is undoubtedly the case that she was at least in breach of her duty to act in such a way as she considered bona fide to promote the success of the Company in entering into a loan for the benefit of Ms Iwamoto. That much is admitted. There is nothing to suggest that Ms Winckler considered the interests of the Company at all when entering into the Second Steckelmacher Loan. This court thus has to look at the matter objectively. No explanation has been offered as to how it could possibly have been in the Company’s interests to secure a debt for the benefit of Ms Iwamoto on the Company’s only asset. It is impossible to see what benefit to the Company there could conceivably have been in the circumstances. Plainly it was in breach of her duty to promote the success of the

Similarly, the distribution of the sale proceeds of the Property to pay an unsecured creditor, Goldbeck (2009), (even assuming that Goldbeck (2009) did indeed make a loan to the Company to enable it to purchase the Property) was plainly in breach of the duty that Ms Winckler owed to creditors at the time of the distribution of the proceeds of sale. That too is admitted. The Company was not only likely to become insolvent as a result of paying away the sum of £181,818.51 – insolvency was inevitable. It left the Company without assets to meet the tax liability on the sale, or any other liability. Ms Winckler accepted that she knew that there were taxes to be paid on a profit, but there is nothing to suggest that the interests of creditors were considered at all. It is accepted on Ms Winckler’s behalf that the Goldbeck (2009) loan was not secured and should not therefore have been discharged in preference to the Company’s other liabilities. Again, that was a breach of her duty, preserved by section 172 of the 2006 Act, to consider properly the interests of the creditors. An intelligent and honest director would not have made the payment.

Finally, it is plain in my judgment that Ms Winkler simply abrogated her decisionmaking to Mr Goldbart. I do not accept that she merely sought his advice and exercised her own independent judgment in considering whether to accept it. There is no instance of her declining to follow his advice and the fact that she cannot recall that advice, or even attempt retrospectively to reconstruct what it might have been, demonstrates in my judgment that no such advice was given. Ms Winckler simply followed his direction. It is quite clear that she was in breach of her duty under section 173 of the 2006 Act to exercise independent judgment.

The Second Steckelmacher Loan agreement is dated 10^th December 2011 and this claim was commenced on 18^th May 2018. Mr Ingham’s submission is that the claim for breach of duty in respect of this loan is time-barred. If Mr Ingham is correct that the relevant breach was the entry into the loan, and the repayment of it is not a separate breach of duty then, on the face of it, he is right that the claim is time-barred. Mr Curl however relies on sections 21 and 32 of the Limitation Act 1980 (‘the 1980 Act’) to preserve the limitation period.

Section 21 of the 1980 Act provides:

Mr Curl also referred me to section 32 of the 1980 Act. This provides:

In my judgment therefore, the effect of both section 21 and section 32 of the 1980 Act is to disapply the primary limitation period in relation to the claim in relation to the Second Steckelmacher Loan, whether that breach is characterised as fraudulent or negligent.

The power of the court to relieve a director from liability for breach of duty is set out in section 1157(1) of the 2006 Act as follows:

It is clear that the taking of advice does not automatically lead to relief (Coleman Taymar v Oakes [2001] 2 BCLC 749). It is however a factor which can be taken into account when considering reasonableness. In Marsden v Regan [1954] 1 WLR 423 at 434-435 it was said:

Ms Winckler essentially relies upon Segens’ failure to inform her of Mr Goldbart’s scheme or on the propriety of disposing of the proceeds of sale. Mr Ingham submits that Ms Winckler’s reliance upon solicitors is a strong starting point in establishing reasonableness. I reject this submission. Segens were asked to effect a conveyancing transaction. Ms Winckler had access to the relevant correspondence regarding this, either via the Company email address or her personal email address, and her failure to consider it was not reasonable. While it is true that there were emails where Mr Isaacs corresponds with Mr Goldbart using the latter’s email address, Ms Winckler was happy for Mr Goldbart to write on behalf of the Company and her authority was expressly sought for the distribution of the proceeds of sale. At no point were Segens asked by Ms Winckler to advise on the implications or propriety of the distribution. Nor did Ms Winckler contact Mr Isaacs to ask for advice when he expressly invited her to do so. Indeed, Ms Winckler declined to accept Mr Isaacs’ advice that she should provide Mr Hunt with the requested details of the destination of the proceeds of sale of the Property when he volunteered it, even in the face of his (undoubtedly correct) advice that Mr Hunt was entitled to an order requiring such disclosure. In my judgment the refusal to accept such advice is clear evidence that, far from relying upon Segens’ advice, Ms Winckler turned her face against such advice, on the basis that she was content to follow the direction of Mr Goldbart. As Mr Curl put to Ms Winckler, by the time she had been interviewed by Griffins on 31^st May 2012, she should have realised, and I find that she did realise, that Mr Goldbart was the very last person whose advice she should seek in relation to the sale of the Property. In my judgment, even if Ms Winckler was wholly unwitting in her involvement in Mr Goldbart’s scheme, by 31^st May 2012 it was entirely unreasonable for her to continue to go along with it without seeking express confirmation from Segens as to the propriety of the Company’s actions.

I will invite counsel to agree a form of order that reflects my judgment and provides for a hearing to consider the appropriate form of relief.