GE Commercial Finance Ltd v Gee & Ors, Court of Appeal - Queen's Bench Division, September 28, 2005, [2005] EWHC 2056 (QB)

Reporting Judge: [2005] EWHC 2056 (QB)

President: GE Commercial Finance Ltd v Gee & Ors

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Extract

GE Commercial Finance Ltd v Gee & Ors, Court of Appeal - Queen's Bench Division, September 28, 2005, [2005] EWHC 2056 (QB)

Case No: HQ02X02622

Neutral Citation Number: [2005] EWHC 2056 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 28th September 2005

Before :

MR JUSTICE TUGENDHAT

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Between :

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Mr Nigel Tozzi QC and James Bowling (instructed by Hammonds) for the Claimant

Mr Steven Thompson (instructed by Max Engel & Co) for the 1st Defendant

Mr Smedley and Mr Ritchie appeared in person

Hearing dates: 4th May - 13th July

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Judgment

Mr Justice Tugendhat :

1. City Truck Group Ltd (``CTG'') is a company that until January 2002 carried on a very substantial business operating more than 1000 trucks and associated activities. David Gee had built the business up since the late 1970s. He owned 80 per cent of the share capital of CTG, the balance being held by 3i. He was described in the accounts as the Group Executive Chairman, and in large measure he managed the business himself.

2. On 10 January 2002 Administrators were appointed on the application of the Claimant (``GE''). For the preceding period of about eleven months companies in the group had received funds for the business from GE under agreements entered into on 1st February 2001. Under these agreements GE discounted debts from debtors of the three trading companies up to a maximum of £25m. GE is a finance company. It is a subsidiary of The General Electric Company, incorporated in the USA. It was formerly called GE Capital Commercial Finance Ltd. Its offices are in Tunbridge Wells. As a result of information obtained in the two weeks preceding 10th January 2002, GE declined to make further payments under those agreements, with the result that the CTG companies were unable to pay their debts.

3. The companies in the CTG group ceased trading in March 2002, and parts of the business were sold. The Administrators anticipate a shortfall on sums advanced by GE before costs of administration of about £14 million. After allowing for the costs of the administration, GE claim that they will have suffered losses between £16 and £16.3 million in connection with their agreements with companies in the CTG group.

4. This is a claim by GE for damages for the tort of deceit or fraudulent misrepresentation and, or in the alternative, the tort of conspiracy, against Mr Gee, Mr Smedley and Mr Ritchie. A claim on the basis of a breach of trust is not pursued on the footing that GE consider that it adds nothing to the other claims. Mr Smedley is described in the accounts as Group Finance Director. He is a chartered accountant and was from 1991 the finance director and company secretary of the main companies in the CTG group. Mr Gee and Mr Smedley met at university and are nearing retirement age. Mr Ritchie is a young man who was appointed a Financial Controller to City Trucks Ltd (``CTL'' or ``Trucks'') in 1996 and who describes his own role as ``a general factotum'' to Mr Smedley (Mr Gee describes him as Mr Smedley's assistant). He obtained no formal qualifications after leaving school. The third defendant was Mr Steel. He was a director of City Truck Group Services Ltd (``CTGSL'') with responsibility for arranging the finance on assets purchased. Following an agreement between GE and the Third Defendant, the claim formerly advanced against him has been discontinued.

5. Mr Tozzi QC represented GE. Mr Thompson has represented Mr Gee. Mr Smedley and Mr Ritchie have appeared in person at the hearing. There are other pending proceedings, both criminal and civil, relating to the events the subject of this action. The lack of representation and the existence of the other proceedings have given rise to submissions as to how these proceedings should be conducted. I shall refer to these at the end of this judgment.

THE BUSINESS OF THE CTG COMPANIES

6. GE entered into funding agreements with three trading subsidiaries of CTG, namely City Logistics Ltd (``CLL'' or ``Logistics''), CTL and City Truck Rentals Ltd (``CTRL'' or ``Rentals''). It did not enter into any agreement with the fourth subsidiary, CTGSL. Mr Gee was Managing Director and Mr Smedley the Finance Director of all four. There were two non-executive directors of CTG, Mr Andrew and Mr King. Mr Andrew's background is in accounting and Mr King's in banking.

7. The business of CTL, CTRL and CLL is as follows:

i) CTL provided workshop facilities, contract maintenance, parts, service, and breakdown control. It accounted for about 15% of CTG's annual turnover. Frank Andrew was the Chairman of CTL, and in addition to Mr Gee and Smedley, Peter Banwell, Allan McKee and Nigel Bailey were directors of CTL.

ii) CTRL, as its name suggests, was a truck rental business. It also accounted for about 15% of CTG's annual turnover. In addition to Mr Gee and Mr Smedley, CTRL had one other director, Gary Lowther....

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