BRYAN EDWARD EVANS v GEOFFREY WILLIAM MUXWORTHY

In these proceedings, the claimant, formerly an entertainer and latterly a businessman and company director, seeks damages and equitable compensation from the first defendant, an accountant, and the second defendant, an accountant and insolvency practitioner in the same accountancy practice. In briefest summary, he makes two complaints against them: first, that they negligently failed to advise him to challenge the lawfulness of a creditor’s decision to place companies of which he was a director and co-owner into administration; second, that thereafter, in breach of agreements and of fiduciary duty, they acted so as to take largely for themselves the benefit of transactions with the creditor to acquire the assets of the companies in administration. In words that he repeated like a refrain throughout his written and oral evidence and submissions, he was “the victim of a confidence trick.” The defendants deny both parts of the claim.

I reject the claim in its entirety. My reasons for reaching this decision are based on the facts of the case as I find them to be.

The principal evidence at trial was given by the parties themselves; the claimant called evidence from his wife and also relied on two witness statements from other persons, but that evidence was not central to the case. The particular reasons for the various findings of fact will appear from the narrative below. In general, those findings rest on an assessment of the probabilities inherent in the circumstances and appearing from the documents, rather than from subjective evaluations of the oral evidence. At this stage I make only some broad remarks about the parties as witnesses.

In the rest of this judgment, I shall adopt the practice used at the trial and refer to the parties by their forenames: the claimant is “Bryan”, the first defendant is “Geoff”, and the second defendant is “Mark”. I do this for convenience, not least because two of the parties have the same surname, and it is not intended to show disrespect.

There was originally a third defendant in these proceedings, Mr Stephen Quinn (“Mr Quinn”). By a Tomlin Order dated 15 March 2022 Bryan’s claim against him was compromised on the terms of a confidential settlement agreement, which I have not seen. He has played no further part in the proceedings, and therefore I shall not discuss the allegations formerly made against him, but he does loom large in the story that follows.

As this case turns on the facts, I shall set out an extensive narrative, which however will omit a lot of matters referred to in the evidence but of little or no relevance to my conclusions. The narrative will contain a great deal of quotation from the documents, which are the most assured way of following events. After setting out the narrative, I shall address the component parts of the claim in turn.

Bryan was the sole director of Listmark Limited (“Listmark”). He also owned 50% of the shares. The other 50% of the shares were owned by Mr Robert Sullivan; he has no part in the issues in the case and I shall not explore the references to him in the documents.

Listmark owned 100% of the shares in two companies: E.P. Leisure (Blackpill) Limited (“EPL Blackpill”) and E.P. Leisure (Mumbles) Limited (“EPL Mumbles”) (together, “the EPL Companies”). Bryan was a director of each of the EPL Companies and, from October 2013, its sole director. Each of the EPL Companies was formed to hold a single piece of land in or near Swansea, the former a piece of land in Blackpill (“the Blackpill Land”) and the latter a piece of land at Oystermouth Square in Mumbles (“the Mumbles Land”) (together, “the Properties”). The Blackpill Land was a vacant site with planning permission for development, but its location on a floodplain made it doubtful whether development was feasible. The Mumbles Land was the site of a former bus station and had since around the turn of the century been operated as a car park generating significant income. It was considered to have development potential.

From about 2008, the accountants to Listmark and the EPL Companies were a Swansea practice trading as HR Harris & Partners (“HRH”). Geoff and Mark were members and directors of HRH. Geoff had the main dealings with the companies and he and Bryan got to know each other and developed cordial relations. Bryan describes their relationship as one of friendship and, although Geoff has been reluctant in these proceedings to accept that description, there is an email in which he refers to them in those terms. Geoff was never Bryan’s personal accountant. Mark had no dealings personally with the companies or with Bryan until October 2013, as described below.

In July 2009 Barclays Bank demanded repayment by the EPL Companies of a little over £2,000,000 due under a loan facility. No repayment was made, and in November 2009 Barclays Bank appointed two members of the Cardiff office of Lambert Smith Hampton (“LSH”) as Law of Property Act receivers under fixed charges that it held over the Properties. According to Bryan, the bank’s decision to appoint receivers was due to the receipt of a valuation from LSH, which valued the Properties at about £1,000,000, whereas they had previously been valued at £4,000,000 to £6,000,000. (The evidence at trial indicates that the former valuation is more likely to have been accurate than the latter ones.) In his witness statement Bryan says that the receivership “was based on a tissue of lies motivated by LSH wanting to ‘get their hands on the site’ to receive a commission from the bank”. He makes little of the fact that the EPL Companies had defaulted on a loan from the bank and that the bank was entitled to enforce its security, though he says that “it could be argued” that the true level of the debt was only £350,000. (In view of the terms of settlement subsequently reached, as to which see below, it appears that it could be argued with more conviction that the true level of the debt was very much more than £350,000.) Bryan made a complaint to the police of fraud on the part of LSH, Barclays Bank and even the bank’s solicitors; this is typical behaviour on his part. He was later to rely on the supposedly ongoing police investigation to explain his actions in 2013, and at trial he referred to the investigation as still ongoing. Even so, after thirteen years nothing has come of it. (Bryan says that he has made a formal complaint against the police for their failure in carrying out their duties properly, and I do not doubt that he has.) That is not to say, however, that Bryan’s manner of dealing with the bank did not bear fruit; it seems to have led to an impasse of some years and eventually to the negotiation of quite favourable terms.

By a Settlement Agreement dated 31 May 2012 and made between (1) Barclays Bank, (2) the Law of Property Act receivers, (3) EPL Mumbles, (4) EPL Blackpill and (5) Bryan, Barclays Bank agreed to waive about £1,000,000 of the outstanding debt on condition that the EPL Companies paid £1,300,000 by 30 April 2013 (later extended until 30 June 2013) and monthly interest in the meantime. In the event of default of those payments, the bank was to be entitled to claim payment of the full debt. Clause 3 provided for the resignation of the receivers. Clause 10.1 of the Settlement Agreement provided:

The EPL Companies continued to make the monthly interest payments to Barclays Bank, but they failed to repay the debt by 30 June 2013. Bryan and, in support of him, Geoff wrote to the bank explaining that the ongoing fraud investigations by the police into Bryan’s original matter of complaint made it difficult to obtain the refinancing that would be necessary in order to repay the bank. I am sceptical of this explanation. The allegations of fraud had been made by, not against, the EPL Companies, and it is much more likely that normal commercial considerations made the refinancing problematic, as they were later to do in 2014.

On 14 October 2013 Barclays Bank made a formal demand for repayment of £2,190,732.49.

In his witness statement Bryan states, “The letter [of demand] seemed fairly standard and did not raise any alarm bells at that time as they were fully aware of all the circumstances.” That is untrue. Bryan was very alarmed. Upon receipt of the demand he wrote to Mr Kevin Reed, Senior Recoveries Manager at Barclays Bank, and for good measure to the bank’s Chief Executive. Geoff, too, wrote to TLT Solicitors, who were acting for the bank, stating that EPL Mumbles “believe the demands are on the [settlement] agreement which is fundamentally flawed.” His (not entirely coherent) letter complained of certain actions taken by the receivers, of which EPL Mumbles had been unaware, and said that, if it had been aware, the Settlement Agreement would not have been signed. Bryan now says that he knew nothing of Geoff’s letter before it was sent and suggests that it worsened the position of the EPL Companies vis-à-vis the bank. However, I accept Geoff’s evidence that Bryan not only knew of the letter but asked him to write it.

On 17 October 2013 Barclays Bank appointed two partners in Begbies Traynor as administrators of each of the EPL Companies. Later that day, Mr Irvin Cohen, a director of Begbies Traynor, met with Bryan and Geoff by prior arrangement at the offices of HRH. At the meeting, Mr Cohen informed them for the first time that the EPL Companies had been put into administration. Bryan protested that the companies had not missed a payment. He repeated this point at trial and maintained that the bank had no justification at all for appointing administrators. It is typical of Bryan to ignore the point that although the companies had continued to make the interest payments they had failed to repay the principal amount either in June 2013 or in response to the demand.

In the course of the meeting with Mr Cohen Geoff left the room, and he returned some minutes later with Mark. Mr Cohen began asking questions of Bryan as a director of the EPL Companies and Bryan began to give answers. There is some difference of evidence as to what then happened. According to Bryan, Mark told him not to cooperate or answer; Mr Cohen asked why he was giving that advice, and Mark replied that they were going to challenge the administration; Mr Cohen enquired as to the grounds of the challenge, and Mark replied, “That’s for us to know.” However, Mark says that he simply advised Bryan to seek advice before providing information in response to Mr Cohen’s questions, because he was concerned that Bryan’s efforts to give answers off the cuff were putting him at risk of providing misleading or inaccurate information to the administrators; he said nothing in the meeting concerning a challenge to the administration. Geoff’s recollection of Mark’s involvement was vague but consistent with Mark’s account. His brief manuscript note of the meeting, which I find was written up in or shortly after the meeting, does not record what Mark said.

I accept Mark’s account of what happened during the meeting with Mr Cohen. It is inherently unlikely that an insolvency practitioner would advise a director not to cooperate with an administrator, but it makes sense that he should advise the director to take steps to minimise the risk of misleading the administrator. It is also inherently unlikely that Mark should have told Mr Cohen that the administration would be challenged, in circumstances where Mark had had no prior involvement in the affairs of the EPL Companies, did not have any documents and had never spoken to Bryan, far less discussed with him the possibility of a legal challenge to the administration. (See below for Mark’s more plausible account of the circumstances and nature of the conversation regarding a challenge.) On a generous view, Bryan has permitted his recollection to be clouded by emotion (his own evidence was that, on hearing that the companies had been put into administration, he was “in shock”) and by a tendency to adjust events so as to make them more patient of an advantageous interpretation.

The meeting with Mr Cohen ended with an agreement that they would meet against on the following day. However, after Mr Cohen had left, Bryan, Geoff and Mark continued to discuss matters among themselves. The various accounts of the discussions differ in some details.

I make the following findings of fact. Nothing was said in the presence of Mr Cohen about challenging the administrations. The only discussion about a challenge came afterwards when, in response to Bryan’s question as to whether the administrations could be challenged, Mark found that paragraph 81 provided a legal route to challenge an administration on the grounds of improper purpose. He did not advise that those grounds could be made out; he had been given no documentation or information relevant to such a challenge and had no personal knowledge of the case and no relevant experience of making such a challenge. He simply identified the legal basis on which a challenge could in principle be made and advised Bryan to get legal advice. Bryan could not reasonably have believed that Mark was in any position to give advice that a challenge to the administration would have merit, as he had not had any prior involvement in the affairs of the EPL Companies. Bryan’s written accounts regarding a legal challenge, in the particulars of claim and his own witness statement, have the same complexion as his evidence regarding cooperation with the administrators: the advice that he take advice before providing information has been turned into advice not to cooperate; the information that paragraph 81 provided for a challenge on the grounds of improper motive has been turned into advice that there was merit in challenging the administrations on the grounds of improper motive.

In fact, there is not a shred of evidence that would indicate any basis for challenging the administration or alleging any improper purpose on behalf of Barclays Bank. When I asked Bryan about this at the trial, he insisted that the bank’s appointment of administrators was improper because the EPL Companies were still making the interest payments and because the fact that they had been in receivership so recently meant that it was proving impossible for them to obtain finance with which to repay the bank. These answers do not disclose any arguable case that the administration was liable to be impeached on the grounds of improper motive. When cross-examined by Mark, Bryan said that the administrators were appointed “to silence [him].” There is no evidence to support that statement; it is typical of the wild way in which Bryan throws allegations around.

On 18 October 2013 there was a second meeting with Mr Cohen, who told Bryan that, if he intended making an offer for the Properties, he ought to do so quickly, as they were to be marketed the following week. Bryan says that this was the first mention of the possibility either of a sale of the Properties or that he might make an offer for them. He says that he was shocked that the administrators should intend selling the assets of the EPL Companies. In fact, Geoff’s manuscript note of the meeting on 17 October recorded, “Offer for property from B. Evans awaited.” That is probably an accurate record of what was said. Even so, it is quite likely that Bryan was shocked that the Properties were to be marketed, because it seems to me that his nature was to be shocked that any creditor of those companies could envisage taking action to protect its position, whether by demanding repayment or by appointing receivers or administrators or by seeking to realise security.

After this second meeting with Mr Cohen, there was a further discussion between Bryan, Geoff and Mark. Bryan was keen to acquire the Properties and prevent them being sold to third parties. I do not have confidence in the detailed recollections of the witnesses as to the contents of this discussion; in my view the parties have tended to conflate things discussed on different occasions. Some things that were certainly discussed on Monday 21 October may perhaps have been mentioned on this earlier occasion on Friday 18 October. However, I find that on the earlier date Bryan expressed to Geoff and Mark a wish to buy the EPL Companies in their entirety, because he thought that they owned valuable rights of action against LSH and, possibly, against Barclays Bank, and that he was told that this would be difficult to achieve and that his better course was to seek to purchase the Properties immediately and, later, to ask for an assignment of the causes of action. Bryan’s evidence at trial was that on 18 October there was no discussion about Geoff or Mark coming in with him on the purchase of the Properties. It seems to me to be likely that anything said at that time was in the broadest of terms; there was probably no discussion of the details of property ownership, but the possibility that Geoff would assist in obtaining, or even providing, finance was doubtless in the parties’ minds and was probably mentioned. (The parties’ agreed position at trial was that no suggestion of Mark’s involvement arose until later.)

After the second meeting with Mr Cohen, Bryan quickly made contact with Mr Reed, who indicated that, although the decision rested with the administrators, it might be possible to do a deal if there were payment of a substantial non-refundable deposit.

Bryan and Geoff met to discuss the matter on 21 October 2013. (Mark was not directly involved in the discussions, but I find that Geoff spoke to him about the matter later on the same day.) Bryan said that he could not come up with the money for the deposit, which was then anticipated to be £150,000, and Geoff said that he could do so. In trying to work out the further details of the discussion on that day, the most convenient starting point is an HRH file note dated 21 October 2013, which will have been prepared by Geoff (GWM) or Mark (JME) or both of them together. It reads in part:

I make the following observations and findings.

After speaking to Geoff, Bryan approached Mr Alun Williams, the Chief Executive of the Swansea Building Society, to act as intermediary in negotiations with the administrators. Mr Williams made an offer of £1,250,000 for the Properties, with a non-refundable deposit of £150,000. Mr Cohen rejected that offer and indicated that he would be minded to accept an offer of £1,500,000 with a non-refundable deposit of £200,000.

Owing to personal commitments, Mr Williams was unable to take any further part in negotiations. Bryan and Geoff agreed that Geoff would take over negotiations. He attempted to persuade Mr Cohen to accept the terms proposed by Mr Williams, but to no avail.

On 24 October 2013 Geoff wrote to Mr Cohen by email with an offer that he, Bryan and Mark would purchase the Properties for £1,400,000 with a non-refundable deposit of £150,000. “Part of this offer is that Bryan Evans will not take legal action against the Barclays bank [sic] plc or the named receivers and Barclays bank [sic] will release all claims against EP Leisure (Mumbles) Limited and EP Leisure (Blackpill) Limited.” Further communications took place throughout the day, and at 5.15 p.m. Geoff wrote to Mr Cohen by email, saying that “we increase the offer to £1,500,000 with a non refundable deposit of £200,000. All other points per my previous emails.” Shortly afterwards Mr Cohen confirmed acceptance of the offer. As I understand it, the non-refundable deposit operated as the price of an option to purchase the Properties; the option had to be exercised by notice by 3 March 2014, and completion of the purchase was required by 31 March 2014.

In cross-examination of Geoff, Bryan put it that Mr Cohen believed that the offers for the Properties were on behalf of him alone; however, the emails on 24 October confirm Geoff’s evidence that Mr Cohen knew that the offer came from Bryan, Geoff and Mark. They also confirm, therefore, that by that date not only Geoff but also Mark was to be involved on an equity basis.

Bryan’s evidence was that, at a date which he does not specify but cannot have been later than 24 October, Geoff told him that he intended “to give 15% of his 50%” to Mark (by which is to be understood that the shareholdings would be 50% to Bryan, 35% to Geoff and 15% to Mark), though he went on to express second thoughts about letting Mark have such a large share. Geoff denied that specific figures were discussed for shareholdings. I accept that at this point in time no specific figures were discussed; Geoff had merely mentioned that Mark would be involved on a lesser basis. Bryan also gave evidence that on 24 October, after the offer for the Properties had been accepted, Geoff told him that the new company, called BGM Leisure Limited (“BGM”: the initials stand for Bryan, Geoff and Mark) had been incorporated with the shares held in the proportions 50:35:15. I do not accept that evidence, as regards what Geoff said either as to the fact of incorporation or as to the shareholdings. I also find that, as at that date, it was intended that the non-refundable deposit be provided as to £136,000 by Geoff and as to £64,000 by Mark.

Another event on 24 October 2013 was unconnected with the acquisition of the Properties. Geoff, who in 2012 had made a personal loan to Bryan of £25,000 to assist him in the face of financial problems arising out of a wine bar that he owned in Mumbles, lent him a further £55,000 for the same purpose. As the principal of the first loan had not been repaid, the total debt now stood at £80,000. The documentation in respect of the further advance was signed on 25 October 2013, when Bryan and his wife, Tracy Evans (“Mrs Evans”), attended on Geoff at HRH’s offices and signed a Loan Agreement bearing the date 24 October 2013. By clause 2 Geoff agreed to lend to Bryan £55,000 at a rate of interest of 10% p.a. Repayment was due “[w]hen the refinancing of [the Properties] takes place”, though the agreement appeared to countenance regular payments in the meantime. By clause 7, Bryan agreed to secure the repayment of the loan “by executing those Security documents attached hereto as Schedule 2 and [to] deliver the security Documents on the commencement date” (the date of the agreement). Schedule 2 identified only one Security Document, namely, “An option to place a fixed charge over the property known as 72 Higher Lane …” There is no evidence that any such option was exercised, and I infer that it never was. The agreement was signed by Bryan and Mrs Evans, purportedly in the presence of a witness who worked at HRH and who also signed it, though it is common ground that the “witness” was not present and signed later.

Bryan and Mrs Evans gave evidence that they believed the document they were signing on 25 October 2013 was the security he had offered to give in respect of the non-refundable deposit. I reject their evidence on this point. First, it was clear from the document itself that it related to the separate loan of £55,000. Second, evidence of subsequent events, mentioned below, shows clearly that Bryan was well aware that he had not given a charge over 72 Higher Lane to secure the non-refundable deposit or any other moneys relating to the acquisition of the Properties. Third, the evidence at trial indicates that Bryan was well aware that there was insufficient equity in 72 Higher Lane to secure payment of the amount of the non-refundable deposit. Fourth, Bryan’s own witness statement had made clear that the document he signed related to the personal loans made to him by Geoff: see paragraphs 154 to 157. (He goes on, in paragraphs 158 to 162, to assert that the document he signed was not the one now produced. I reject that assertion. For present purposes, however, the important point is that the statement makes clear that Bryan’s own understanding was that the document he was executing related not to the non-refundable deposit but to personal loans given by Geoff.)

There is a lack of detailed information as to what was taking place over the next fortnight. It is clear, though, that Geoff sought advice from Rosemary Morgan, a partner in the solicitors’ firm of Morgan LaRoche in Swansea.

On 7 November 2013 Geoff, Mark and Bryan met; there is a manuscript file note of the meeting in Geoff’s hand:

Geoff and Mark say that this file note accurately reflects their discussions and agreement with Bryan after Geoff had taken advice from Rosemary Morgan: Bryan would have a 10% shareholding and, provided he gave security for the non-refundable deposit, would be the beneficial owner of a further 40% of the shares; those further shares would, however, be held on trust for him, because BGM would find it harder to raise finance if he were shown as a person with significant control. Bryan says that he was not given a copy of the file note at the time (this is not disputed) and that it does not represent anything discussed or agreed by him. According to him, the agreement was simply that he would be a 50% shareholder in BGM. I find that the file note accurately reflects the gist of the preliminary advice that Geoff had received from Rosemary Morgan and the basis on which Geoff and Mark said they would be willing to proceed. I find that Bryan reluctantly accepted the proposal. His reluctance did not concern the condition on which his shareholding was to rise to 50% but rather the facts that the greater part of his shareholding (that is, after provision of security) would be held in trust and that he was not to be a director; he saw both of these features of the proposal as an unjustified slur on his business reputation. I also find that the discussion on 7 November shows that Bryan was perfectly well aware that he had not executed security for the non-refundable deposit (which, of course, had not yet been paid).

On 11 November 2013 Bryan, Geoff and Mark met Rosemary Morgan. The meeting had been arranged by Geoff. Rosemary Morgan’s file note of the meeting was obtained by those acting for Geoff in the course of these proceedings and has been disclosed. It records the client as BGM Leisure Limited and those in attendance as Rosemary Morgan (RM), Geoff (GM), Mark (ME) and Bryan (BE). Because it is a particularly important document in this case, I shall set out most of its terms:

There is also a brief note of that meeting in Geoff’s handwriting. It refers to “Security – BE house” and, next to the initials “BGM”, as the figures 75, 15 and 10; presumably those are the intended shareholdings recorded by Rosemary Morgan. A further entry reads, “B. Ev. sceptical of having his shares held in trust. Subject to security.”

Bryan did not serve a notice challenging the authenticity of either of these notes of the meeting on 11 November 2013 pursuant to CPR r. 32.19. However, at trial he suggested that Rosemary Morgan’s file note was probably written up much later on the basis of instructions given by Geoff, and that Geoff’s file note was a deliberate falsification of what had been said at the meeting. In fact, the scope of dispute is narrow. Bryan’s evidence was that he had made it clear at the meeting that he did not agree to the proposal as to his shareholding and that the meeting had accordingly broken up.

In my judgment, the file notes are the best evidence of what was said at the meeting. It is likely that Bryan did express unhappiness at the proposal, for the reasons already stated. But the simple fact was that he was not in a position to proceed with the deal that had been struck with the administrators, because he had no money and was heavily in debt; he was dependent on Geoff and Mark providing the non-refundable deposit. If he wanted to pursue the option to acquire the Properties, he had no practical alternative. I am satisfied that the agreed position on 11 November was as recorded in the file notes.

BGM was incorporated on 11 November 2013. Geoff was the sole director (Mark was appointed as a director the following month) and the 100 issued shares were allotted in accordance with the record in Rosemary Morgan’s file note: 75 to Geoff, 10 to Bryan, and 15 to Mark.

Rosemary Morgan did subsequently prepare a Call Option Agreement, which provided for Bryan to have an option to acquire 40 of Geoff’s shares for nominal consideration. That document was never executed. By email on 22 November 2013, Geoff informed Bryan, “Rosemary has contacted me this afternoon re security and your agreement for the shares which means she is working on it today.” Under cross-examination, Bryan accepted that he had never responded to that email. He said that the reason for his failure to respond was that he knew he had already provided the security, namely the charge over his home to secure the non-refundable deposit. Even on its own terms that is an unconvincing reason. However, the reason given is false, because Bryan well knew that he had not given any security in respect of the non-refundable deposit or otherwise in respect of the acquisition of the Properties.

Efforts were then made to raise the necessary finance to complete the purchase of the Properties. Geoff and Mark instructed Mr Gary Cosgrove, a financial planner with expertise in arranging corporate finance, to assist in raising the moneys required for completion. They and Bryan had a meeting with him on 25 November 2013. Geoff’s note of the meeting shows that they were discussing the need for a bridging loan for an 18-month term and that it was thought (perhaps by Mr Cosgrove) that it would be “preferable” (presumably, advantageous) to be able to provide additional security for £750,000, being half of the purchase price.

Bryan is highly critical of the efforts not only of Geoff and Mark but of Mr Cosgrove. He says that it was eventually on his initiative that an approach was made to Lloyds Bank, which agreed to provide funding (see below): “The point being, I could have gone to Lloyds Bank and obtained that loan myself, therefore introducing that revenue into BGM, along with the ability to buy back the land with an instant £1 million profit” (witness statement, paragraph 104). That assertion is clearly false: from the fact that a bank was willing to lend money to BGM, it does not at all follow that it would have been willing to make to Bryan a personal loan with which he could either purchase the Properties himself or make an equity investment in BGM. All the evidence indicates that Bryan had no borrowing power but was dependent on loans from friends (such as Geoff) or family (notably his father-in-law). Some of the difficulties encountered by the EPL Companies in obtaining finance are mentioned below.

Meanwhile, an email dated 3 December 2013 from Bryan to his constituency MP shows that he was actively pursuing his complaint against, among others, Barclays Bank. This was not a case of merely cooperating with a police investigation. The context shows that Bryan had asked his MP to get an explanation from the police of why they had not investigated, or investigated adequately, his complaint of fraud.

On 6 December 2013 the joint administrators of the EPL Companies produced their Statement of proposals. It recorded that the directors had failed to deliver up a statement of affairs in relation to each of the companies and that the joint administrators were continuing to chase them in that regard. The joint administrators said that they considered that the most appropriate statutory objective to achieve was the realisation of the companies’ property in order to make distributions to creditors. Page 10 of the proposals said that, in furtherance of that objective, the joint administrators had entered into an Option Agreement with BGM, “in which Mr Bryan Evans is a 10% shareholder”, for the sale of the Properties. Bryan received this Statement of proposals and I am sure that he read it.

There are several emails from Geoff to Bryan on 6 December 2013. If there were any written responses, they are missing, though it is more likely that the responses were oral. Anyway, the tenor of the communications is fairly clear. Geoff invited Bryan to a meeting with Mr Cosgrove the following week. It may be that there was a telephone conversation, and a little later Geoff emailed again:

It appears, therefore, that Bryan was now expressing reluctance to execute the documents prepared by Rosemary Morgan and to give security over 72 Higher Lane. At this stage the security was, I think, only to have been in respect of the non-refundable deposit, though within a few days more extensive security was being discussed.

On 13 December 2013 Mr Terry Melia, FRICS, of E.J. Hales produced for the directors of BGM a valuation of the Mumbles Land in the amounts of £2,000,000 on the basis of its existing use and £2,500,000 on the basis of development potential for a major regeneration project. I find that both Bryan and Geoff asked Mr Melia if he might produce a higher valuation, but that he said that the figures he had given were sufficiently generous.

On 16 December 2013 Mr Cosgrove sent to Geoff an email, copied to Bryan, with the subject line “Bridging Finance”: “Have you received the report back from the surveyor [Mr Melia] yet? I also still have no details from Bryan so I cannot move any further forward.” Geoff replied that he had received the report: “maybe ok for lenders however we think it can be approved [improved?], as not all adjustments have been made. Are we within the lending criteria that Voltaire prescribe, presuming Bryan’s house goes in.” This is perhaps the first express indication in the documents that Bryan’s house was envisaged to be security for bridging finance. Bryan acknowledged in cross-examination that he had received this email and that he had not responded to it, though he said that he had told Mr Cosgrove and Geoff orally that he was not willing to give security over his house. In my judgment, that cannot be right. Although Bryan expressed misgivings, he must have led the others to believe that security over his house would be available; that was the basis on which funding was sought. (See further below.) It is important to note that, at this stage, Geoff, Mark and Mr Cosgrove all believed that there was a large amount of equity in 72 Higher Lane—a belief in which Bryan had encouraged them.

Also on 16 December 2013, Bryan emailed Geoff with an urgent request for a further loan of £20,000. That loan was forthcoming; the total debt was thereby increased to £100,000.

On 23 January 2014 a prospective lender with whom Mr Cosgrove had been in discussions indicated that it was not prepared to proceed.

On 29 January 2014 Mr Cosgrove received an offer of finance for BGM from Enterprise Finance. The gross amount of the loan was £1,305,000. On the following day he forwarded the offer to Geoff, Mark and Bryan and explained the basis on which Enterprise Finance had arrived at its figures:

The documents show that on 30 January 2014 Bryan spoke to Bank Park, with a view to obtaining finance through them. In cross-examination he said that this was because he feared that time was running out for the exercise of the option. In my view, the reality was that he was reluctant to give security over 72 Higher Lane.

On 31 January 2014 Mr Cosgrove spoke to someone at Lloyds Bank (as I have already mentioned, Bryan says that it was he who suggested an approach to the bank), and he was promised a decision by Monday 3 February 2014. In fact, not until 5 February did the bank respond that the transaction was “too speculative for [them] to fund, primarily on the basis [that their] appetite for Property Development is very Low Risk with definitive exit routes and timeframes for repayment.” However, efforts to get Lloyds Bank to provide funding continued; the tactic was to persuade the bank that the Blackpill Land had significant value for residential development.

An indication of where things stood on 10 February 2014 is provided by an email that Mark sent to Bryan on that date:

On the following day, Mark asked Bryan to advise on his “concrete proposals” for “moving forward.”

In mid-February 2014 Bryan again asked to borrow a further £10,000 from Geoff in respect of the wine bar. On 15 February Geoff sent him an email, implying agreement but making proposals regarding the future of the wine bar. The email continued:

The further £10,000 was advanced on the following day. Bryan’s debt to Geoff then stood at £110,000.

An offer of funding was received from Lloyds Bank, but it was insufficient to enable BGM to exercise the option. On 21 February 2014 Mark wrote to Bryan by email: “Unfortunately Lloyds are not prepared to offer all of what we asked for. As a consequence we need to look at the alternative offers. We need to know ASAP (by 2.30 today if possible) if you are prepared to offer part of your house as security. If you are not prepared, then the remining options will probably involve diluting our equity in the development.”

By now, time was running short. Bryan decided that it would be worth approaching a friend and former business associate of his, Mr Quinn. He did not tell Geoff or Mark that he was doing so, and he did not confirm his position regarding security over his house.

On 25 February 2014 Mr Cosgrove sent an email to Enterprise Finance, seeking their proposal for finance. Part of the email read:

On the evening of 25 February 2014 Geoff and Mark called on Bryan at his home, without prior arrangement, and spoke to him and Mrs Evans. The defendants have produced “minutes” of the meeting—I am not sure which of them produced the document—though it was not provided to Bryan and he does not accept its contents. Geoff and Mark’s evidence about the meeting was to the following effect (quotations are from the minutes). They referred Bryan to the email sent by Mark on 21 February, to which they had received no response, and asked whether Bryan and Mrs Evans were now prepared to offer their home as security for a bridge funder (that is, short-term lending to make up the shortfall left by the Lloyds Bank financing). “It had been assumed that he would offer his house as security as an offer in principle had already been received from Enterprise Finance on 29 January 2014.” There was discussion about the need to pay off the second charge on 72 Higher Lane, as a funder would not accept a third charge. Bryan then disclosed that the debt secured by the second charge was about £189,000 rather than the £120,000 that Geoff and Mark had understood it to be, and that the annual repayments on that charge were about £10,000 more than Bryan had led them to believe. Bryan agreed to provide a list of his business and personal debts so that a solution to the problem could be found. He also said that he believed that a deal could be done with Mr Quinn, although he had not discussed the matter with him. In broad terms, the suggested deal would be that, in return for a 12-month loan of £750,000 at a commercial rate of interest, Mr Quinn would receive the Blackpill Land, which (Bryan said) was just a distraction: the real profit was to be made on the Mumbles Land. This would leave BGM requiring a loan of £830,000 from Lloyds Bank over a 15-year term. Geoff and Mark thought that the suggested terms were unduly favourable to Mr Quinn; they thought that the Blackpill Land might have a value in excess of £800,000 in view of its development potential, and that the profit to be achieved from it might cover much of Bryan’s debt. “GWM and JME reminded BE that the option had to be exercised by 3 March 2014. If the option was not exercised, then the £200k non-refundable option fee paid by GWM and HRH would be lost.”

I find that the “minutes” are a substantially accurate record of the meeting on 25 February 2014. However, contrary to what Bryan told Geoff and Mark, he had already discussed the potential deal with Mr Quinn. Bryan’s witness statement makes clear that he had originally asked Steve Quinn for an interest-free loan to BGM of £1,500,000 for 12 months in return for receiving the Blackpill Land; the figure of £750,000 had actually been mentioned by Mr Quinn, who said it was all he could conveniently lend at that moment. I find that the different attitudes shown towards the Blackpill Land were explained by the fact that, whereas Bryan knew that the presence of a flood plain made it doubtful that the land had significant value, he had omitted to tell Geoff and Mark this but had left them with the belief that it had considerable value as a potential development site.

Bryan’s evidence was that the only offer he had ever made to give security over 72 Higher Lane related to the non-refundable deposit being advanced by Geoff and Mark: he had never agreed that he would give security for a bridging loan required to meet a shortfall in the Lloyds Bank lending. In his witness statement he stated: “The repayments for the loan to Lloyds for £830,000 were £2,275 per month. The repayments for the bridging loan of £142,905 were £2,025. This would have been financially unsustainable.” I find that, although the initial mention in October 2013 of a charge over 72 Higher Lane concerned only the giving of security for the non-refundable deposit, Mr Cosgrove’s efforts to obtain funding were premised on a belief that Bryan would be prepared to give security also for at least some of the further funding; that this understanding had been produced by Bryan’s expression of willingness to Geoff, Mark and Mr Cosgrove; but that Bryan never had any intention of giving such security and, as is shown by the communications already mentioned, ultimately refused to commit himself to giving a charge over his house. This is reflected in subsequent communications.

On 6 March 2014 Geoff sent an email to Bryan, copied to Mark, which read in part:

Bryan says that the contents of that email are untrue, in particular with regard to his alleged prior agreement to give security over his house and providing false information about the extent to which debts were already secured on his house. However, he accepts that he did not respond to the email. I find that the email is a substantially accurate record.

On 7 March 2014 Geoff wrote to Bryan by email: “Although you said when at your house you would not put your house in the pot, have you and Tracy now had a change of heart? Might be worth having a quick chat over the weekend.” Bryan did not reply to that email.

On 10 March 2014 Geoff wrote to Bryan by an email with the subject line “Declaration of Trust”:

Although it does not appear that Bryan replied to those emails, he and Geoff must have spoken at some point, because on 12 March 2014 they met Mr Quinn to discuss the terms of a potential deal. Bryan’s evidence as to the meeting was as follows (witness statement, paragraphs 124 to 127):

At this point, however, Bryan dropped “out of circulation for medical reasons” (email to Geoff on 17 March 2014); his evidence at trial was that he was suspected of having a heart attack, though this proved to be a false alarm. In his absence, Geoff and Mark held discussions with Mr Quinn on 14 and 17 March. The upshot of those meetings was that Mr Quinn changed his position and made the loan of £750,000 conditional on receiving shares in BGM, not on simply receiving the Blackpill Land. On 17 March Geoff wrote to Mr Quinn “to clarify matters” in the following terms:

Lengthy minutes of a board meeting of BGM held by Geoff and Mark on 17 March 2014 record the following position:

On 17 March 2014 Bryan wrote to Geoff and Mark by email, explained his lack of communication over the previous days, and asked them to contact him. Geoff replied: “We will email you in detail, been very busy trying to salvage the situation which you put us in and due to the lack of contact from you over the last few weeks.” That evening he wrote further on behalf of himself and Mark:

These exchanges did not make clear what agreement Geoff and Mark had reached with Mr Quinn. They did, however, indicate that it did not involve BGM parting with the Blackpill Land. Bryan’s evidence was that on the morning of 18 March he spoke by telephone to Mr Quinn “and agreed the previously discussed deal of a £750,000 interest free loan in exchange for Blackpill etc” (witness statement, paragraph 132). Although it is possible that that is what happened, I think it unlikely that any firm (even though non-binding) agreement was reached in those terms, because such an agreement would have been directly contrary to what had been agreed with Geoff and Mark. On the afternoon of 18 March Bryan sent an email to Geoff and Mark:

On 19 March 2014 Geoff, after speaking to Mr Quinn, sent an email to Bryan, in which he said:

However, on the following day Mr Quinn emailed Geoff in the following terms:

Any suggestion that there was understood to be a clear, let alone binding contractual, agreement on 19 March as to how to proceed would, apart from any other difficulties, be belied by the documentary evidence of what the parties were doing on 21 March. On that day, Bryan sent the following email to Mr Alan Seager, a local architect:

On the same day, Geoff and Mark had a meeting of the board of BGM. The minutes record that Lloyds Bank had obtained a valuation of the Mumbles Land at only £1,100,000, which meant that the funds likely to be forthcoming from Lloyds Bank would be reduced by about £150,000 and that as a result there were serious concerns over BGM’s ability to raise sufficient funds to complete the purchase. The minutes continued:

In fact, on 21 March 2014 Lloyds Bank made an offer to lend £830,000 for 15 years, secured by a first charge over the Mumbles Land, a charge over a nominated bank account with a minimum balance, a debenture over BGM’s assets, and personal guarantees from Geoff, Mark and Mr Quinn for £150,000. (See also the entry for 24 March, below.)

On 23 March 2014 Geoff wrote to Bryan by email (I have corrected the punctuation and spelling in a few instances to improve its intelligibility):

Bryan responded at length; the tone of his email is at least as significant as the content.

Minutes of a board meeting of BGM on 24 March 2014 record:

Minutes of a board meeting on 25 March 2014 record:

By emails on 25 and 26 March, Bryan said that he had taken legal advice and that there was a “serious problem looming”, which Mr Quinn would not want to be involved in, though the situation was “retrievable”. He complained of their silence and demanded that they speak to him urgently. He wrote:

Geoff and Bryan spoke by telephone on 27 March, and later that day Bryan sent an email to Geoff, complaining that he was being kept in the dark and setting out his case:

Geoff replied that evening:

There were further emails in each direction, to much the same effect, over the next couple of days. I need cite only the following passage in Geoff’s email on 29 March:

On 30 March Bryan responded; this is the first document in which he claims to have given security for the £200,000 non-refundable deposit.

On 31 March 2014 Geoff circulated to Mark, Steve Quinn and Bryan a motion for written ordinary resolutions and a special resolution of BGM. It is signed in approval by Geoff, Mark and Steve Quinn, but not by Bryan. I find that he received the document; he admitted as much in his witness statement, though in cross-examination he denied ever having seen it. The ordinary resolutions were that each of the ordinary shares held by Geoff and Mark (respectively, 35 and 10) was converted into one B Share, and that each of the 45 ordinary shares held by Steve Quinn was converted into one A Share. The special resolution was to adopt new articles of association in place of the previous ones. Bryan says that it was on receipt of this document that he realised he had been “deceived by [Geoff and Mark] for their own personal gain” (witness statement, paragraph 144).

I accept that it was on the strength of those resolutions and the shareholdings fixed by them that Steve Quinn advanced £750,000. The Properties were acquired by BGM.

On 1 April 2014 Geoff emailed Bryan, copying in Mark and Steve Quinn, to inform him that completion had taken place. Bryan replied:

That evening, Bryan sent an email to Geoff and Mark: “Would you please send immediately, by email and post, a copy of the documents which Tracy and I signed in your office in regard to the charge over the house for the non-refundable deposit paid to Barclays.” When Geoff sent him the document that had been signed on 25 October 2013 (see above), Bryan challenged its authenticity. Geoff’s response (in an email sent in the second week of April 2014) was forthright and, in my view, on point:

On 4 April 2014, in the course of acrimonious email exchanges, Geoff asked Bryan for proposals for the repayment of total loans of £100,000. He also wrote, “We would also welcome a meeting with you with regard [to] BGM.” Bryan responded by saying that, pending a comprehensive response, he “[felt] it appropriate to table the issue with the police”; he also threatened to report Geoff to his “governing [that is, professional] body” for breach of confidentiality.

Enough has been cited from the largely repetitious emails passing between the parties in March and April 2014. However, in April Bryan was attempting to get information from Rosemary Morgan, who reminded him that she acted for BGM, not for one of its shareholders, and required instructions from directors. Eventually she replied on 14 May, saying among other things:

There is no need to recite the lengthy post-completion communications any further. However, two matters concerning Bryan’s financial position have some relevance.

First, Bryan has disclosed a document dated 5 September 2014 and headed “E.B. Wiles claim against Bryan Evans of 72 Higher Lane, Langland, Swansea”, which showed a claim for repayment of advances in excess of £239,000 after allowing for modest repayments. E.B. Wiles is Bryan’s father-in-law, Mrs Evans’ father. The claim includes more than three years’ payments on Bryan’s mortgage, funded in part by equity release on the part of Mr Wiles. In cross-examination, Bryan admitted receiving financial assistance from Mr Wiles, though he denied that these included a full three years’ mortgage repayments. He said that the money was gift rather than loan, though of course he would have repaid it when able to do so. Whether it was gift or loan, it shows the extent of Bryan’s financial difficulties.

Second, Bryan did not repay Geoff for the loans made to him. (I calculated these in the sum of £110,000 but the parties have referred to a total outstanding of only £100,000.) On 14 December 2014 Geoff obtained judgment in the county court for a total sum in excess of £100,000. On 22 December 2014 Bryan made an application for the following relief: “Judgment set aside because paperwork presented to the court is forged. It has been given to South Wales Police.” The evidence in section 10 of the application notice in support of the application was:

The house at 72 Higher Lane was ultimately repossessed by National Westminster Bank as chargee. Geoff made an offer to buy the house from the bank. Bryan learned of this and intervened with the bank by making an allegation of fraud against Geoff; as a result, the transaction did not proceed and instead the house was sold at auction in December 2016. In an email to Mr Quinn at that time, Bryan wrote, “Muxworthy has conned me in order to obtain my house.” As Geoff had enabled him to keep afloat by lending him £100,000, which had not been repaid, and had a charging order on the house to secure that money, this is bold. When at trial I asked Bryan about his intervention, he made no real attempt to justify it. His position appeared to be that any steps were permissible to protect his own interests. The email to Mr Quinn is of further interest, because it records that debts of about £686,000 were secured against 72 Higher Lane (including only £80,000 attributed to Geoff) and states that the value of the house was £650,000 to £750,000.

It is right to record that neither the police nor Geoff and Mark’s respective professional bodies found grounds for taking any action against either of them. The police’s Economic Crime Unit explained its decision in a lengthy letter to Bryan in 2017. Part of that letter undermines Bryan’s claim to have made a real financial contribution to the acquisition of the Properties:

The first head of Bryan’s claim against Geoff and Mark appears in paragraphs 79 and 86(a) of the particulars of claim: that they owed him contractual and common law duties to act with the degree of skill and care reasonably to be expected of accountants specialising in accountancy and insolvency advice, and that they were negligent in breach of those duties by (a) advising him not to challenge the administration of the EPL Companies or (b) failing to advise him to seek legal advice on the prospects of challenging the administration or the underlying demands for payment. The particulars of claim aver that a challenge to the administration would have stood a realistic prospect of success and that “no reasonably competent firm of accountants would have advised the claimant to enter into negotiations with the administrators whilst there was a viable challenge to the administration.” The particulars of claim expressly rely upon “the advice given by [Geoff] and [Mark] at the time as to the prospects of such challenges.” That advice is alleged in paragraphs 18 and 20 of the particulars of claim: that on 17 October 2013 Mark advised Bryan “that there were good grounds to challenge the administration”, though he did not explain what they were; and that on 18 October 2013 Geoff and Mark “suddenly changed their advice and told the claimant that he should instead seek to purchase the Properties from the administrators.”

I reject the first head of claim, for the following short reasons.

Paragraph 87 of the particulars of claim alleges that “the reason the claimant was advised not to challenge the administration, but instead purchase the Properties from the administrators, was [Geoff’s] (and/or [Mark’s]) desire to acquire an interest in the Properties.” This allegation is relied on as the basis for an allegation of breach of fiduciary duty. As any advice regarding challenges to the administrations could only have come from Mark, and as there was no suggestion of him having an interest in the purchase of the Properties as at 18 October 2013, this allegation makes no sense. Anyway, in view of the reasons set out in the last foregoing paragraph, it is unnecessary here to say anything further, save that the allegation has no substance or basis in fact.

Paragraph 80 of the particulars of claim alleges that, “in agreeing to undertake and undertaking the task of seeking to arrange finance for the purchase of the Properties, [Geoff] and [Mark] assumed [to] the claimant a duty of care to act with reasonable care and skill in the performance of that task.” In paragraph 88, which itself sets out numerous different allegations of wrongdoing, it is alleged that Geoff and Mark were in breach of this duty of care by “[f]ailing to obtain funding for the purchase of the Properties either (i) generally or (ii) on terms that would allow the claimant to remain a 50% shareholder in BGM” or alternatively by “failing to exercise reasonable care and skill in obtaining such funding, in particular by failing to carry out reasonable enquiries with commercial lenders (who, it is averred, would have been prepared to lend the full £1.5 million required to purchase the Properties) or alternatively with investors who would not have sought such onerous terms as [Mr Quinn].”

This second head of claim is linked in the particulars of claim with a suite of wider allegations (see below), but it is analytically distinct and I deal with it separately. I reject it for the following short reasons.

Bryan’s complaint concerning funding is also advanced in a slightly different way. He alleges that Geoff and Mark had an absolute obligation to arrange the finance necessary to complete the purchase of the Properties, or alternatively that they had a duty to use their best endeavours to obtain such finance (particulars of claim, paragraph 28). He says that Mr Quinn offered to advance £750,000 interest-free for 9 months in return for the Blackpill Land, which would have enabled BGM to purchase the Properties (particulars of claim, paragraphs 56 and 57), that Geoff vetoed that proposal without reasonable commercial justification (paragraphs 58 and 59; and see the entry for 12 March 2014, above), and that Geoff thereby “breached his express obligation to obtain (alternatively, to use his best endeavours to obtain) [the necessary] funding” and/or put his own interests above those of BGM and the other interested persons. I reject this way of putting the complaint.

The main part of Bryan’s claim is that he has been the victim of what he has called “a premeditated fraud”, by which he was cheated out of his entitlement to either one half or one third of the shares in BGM. The particulars of claim do not in terms allege fraud; the pleaded allegations are of breach of contract, breach of fiduciary duty and breach of trust. But in his conduct of the trial Bryan was unequivocal in alleging dishonesty on the part of Geoff and Mark.

The basis of these allegations is one or other of two alleged agreements:

I reject this claim, in whatever precise manner it is formulated.

Bryan’s allegations are also framed in the particulars of claim in terms of the tort of unlawful means conspiracy. Perhaps understandably, this way of putting the case was not pursued at trial. Anyway, I cannot see that it would add anything to the other ways of putting the case, and on the facts as I have found them it does not fall for consideration.

For the reasons set out above, Bryan’s claims against Geoff and Mark are dismissed.

Geoff filed a counterclaim seeking rescission of the Joint Venture Agreement or any other agreement relied on by Bryan, if such were found to have existed, on the grounds of misrepresentation. In the circumstances, the counterclaim does not fall for consideration and will be dismissed.

If the parties cannot agree the appropriate terms of order consequent on this judgment, I shall hear them at a short hearing by Cloud Video Platform on a date to be fixed. I shall be grateful if Mr Hope will notify me of the position as soon as convenient, and in any event within 7 days.