Neutral Citation Number: [2013] EWHC 3957 (Ch)
Case No: 2877 of 2011
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT

IN THE MATTER OF LCM WEALTH MANAGEMENT LIMITED
AND IN THE MATTER OF THE COMPANIES ACT 2006

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 12 December 2013 

Before :

THE HONOURABLE MR JUSTICE HILDYARD
- - - - - - - - - - - - - - - - - - - - -
Between :

	RICHARD ANTHONY MOXON	Petitioner	
	- and -		
	(1) JAMES RAYMOND LITCHFIELD
(2) PETER HARTLEY COOK
(3) WOJCIECH TADEUSZ KULESZA
(4) SHIRLEY CROPPER
(5) HERITAGE CORPORATE TRUSTEES LIMITED
(6) LCM WEALTH MANAGEMENT LIMITED	

Respondents	

- - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - -

Timothy Collingwood (instructed by Pinsent Masons LLP) for the Petitioner
Geoffrey Zelin (instructed by Shakespeares at trial and by DWF LLP thereafter) for the Respondents
- - - - - - - - - - - - - - - - - - - - -
Judgment
Mr Justice Hildyard : 
Introduction
1.	The Petitioner, Richard Anthony Moxon (“Mr Moxon”), seeks redress in respect of (a) his removal from office as a director and his exclusion from management of the sixth respondent, LCM Wealth Management Limited (“the Company” or “LCM”) and (b) the implementation (or purported implementation) of provisions in the Company’s Articles of Association and in an agreement between the Company’s shareholders which compel the transfer of Mr Moxon’s shares at par value if (as the other shareholders contend) he is to be characterised as a “Bad Leaver” within the meaning of those provisions.
2.	Mr Moxon’s Petition (“the Petition”) is brought pursuant to section 994 of the Companies Act 2006 (“section 994”) on the grounds that his exclusion and the threatened expropriation of his shares (as he characterises it) are or would be unfairly prejudicial to his interests as a member of the Company.  He seeks to invoke the broad powers conferred on the court by section 996 of that act (“the Companies Act”) for giving relief in respect of the matters complained of if the court is satisfied that his petition is well founded.
3.	As is not untypical of such proceedings, the Petition has been hard fought and contested between the real protagonists, namely Mr Moxon on the one hand and Messrs James Raymond Litchfield (“Mr Litchfield”) and Peter Hartley Cook (“Mr Cook”) on the other. To explain and justify their treatment of Mr Moxon, Mr Litchfield and Mr Cook have made very serious allegations against Mr Moxon, including allegations of forgery and dishonesty. Mr Moxon, for his part, seeks to depict these allegations as orchestrated and contrived to perfect a long standing plan, born out of personal antipathy between him and Mr Cook and which came to infect his relationship with Mr Litchfield, to find fault in all that he did, freeze him out of any real say in the company and force him to leave.
4.	Put very summarily, it is Mr Moxon’s case that:
(1)	the Company was founded on the basis of personal relationships, trust and confidence giving rise to equitable obligations which qualify or override the contractual agreements established between the shareholders;
(2)	the Company was intended to be run as a partnership, with each of the three key original founder shareholders being entitled to Board participation, and with Mr Moxon and Mr Litchfield as executive directors and Mr Cook as chairman; (Mr Wojciech Tadeusz Kulesza (“Mr Kulesza”), who was introduced by Mr Cook and was one of the original shareholders, was an investor only, and was never intended to become, and never became, a director);
(3)	at Mr Cook’s insistence, in order to qualify for beneficial tax relief, the original shareholdings were divided so that no one shareholder had more than 30% of the shares; but it was always agreed that after a minimum period Mr Moxon and Mr Litchfield would have the right to acquire some of Mr Cook’s and Mr Kulesza’s shares to take their combined shareholdings up to 76% (as Mr Moxon and Mr Litchfield had originally proposed before the issue of tax relief arose);
(4)	the refusal of Mr Cook and Mr Kulesza, following a dispute as to expenditure by the Company on a marketing event, to abide by their agreement to sell part of their shareholding to Mr Moxon and Mr Litchfield was the beginning of a collapse in mutual confidence amongst the quasi-partners: (to quote a later letter from Mr Moxon) this “set in motion a train of hostility” between (in particular) Mr Moxon and Mr Cook;
(5)	this hostility was exacerbated by a falling-out over the way the Company dealt with a Mr Steve Rynton, who was paid to introduce clients to the Company pursuant to an Introducer Contract;
(6)	it was further worsened by Mr Cook making allegations that Mr Moxon was wasting Company money on (a) extravagant marketing and (b) personal expenses;
(7)	Mr Cook then gradually persuaded Mr Litchfield to side with him and devise a plan “to take Mr Moxon out” by engineering breaches of the shareholders agreements of a nature that justified his dismissal and mandated (under their terms) the transfer to them of Mr Moxon’s shares;
(8)	Mr Cook and Mr Litchfield found an opportunity in consequence of Mr Moxon becoming involved in a venture arguably in competition with the Company: they said he did so without authority or proper disclosure, though Mr Moxon has throughout denied this, referring in that regard to a letter said to have been signed by Mr Litchfield and authorising Mr Moxon’s activities (referred to below and defined as “the June letter”);
(9)	on the basis of Mr Moxon’s allegedly unauthorised involvement in that venture, and in the context of further allegations they made as to the misuse of confidential material belonging to the Company, Mr Cook and Mr Litchfield, with the agreement or acquiescence of the only other ordinary shareholder in the Company, Mr Kulesza, first suspended Mr Moxon and then removed him; and they then characterised him as a “Bad Leaver” (defined later) so as to require him to transfer his shares to them at a nominal consideration; and
(10)	faced with the loss of the substantial value of his shareholding and the loss of his directorship and employment, Mr Moxon felt he had no option but to petition the court for relief.
5.	The trial, though confined (pursuant to an order of David Richards J made on 22 January 2013) to issues of liability, and ultimately focused on the question whether or not Mr Moxon was properly characterised as a “Bad Leaver”, occupied some 14 days. 11 witnesses were called and cross-examined. A further witness statement made by Mr Robert Balfour McCulloch (“Mr McCulloch”, a figure of some importance in the story) was adduced on behalf of the Respondents under a Civil Evidence Act notice after the death of its maker. Another witness statement, made by Claire Lucy Campbell (“Ms Campbell”), who worked at the Company for both Mr Moxon and Mr Litchfield, was also put forward under a Civil Evidence Act notice on grounds of her inability to attend after giving birth by caesarean section.   
6.	Mr Timothy Collingwood of Counsel appeared for Mr Moxon; Mr Geoffrey Zelin appeared for Mr Litchfield and Mr Cook; both assisted me greatly. Compendious written submissions were filed in opening and closing. The costs have no doubt been very considerable.
Summary of conclusions and disposition
7.	In the circumstances, and for the reasons I seek to set out below, I have concluded that the Petition is not well founded. I consider that Mr Moxon was guilty of gross misconduct and justifiably characterised as a “Bad Leaver”, and there is no basis for the Court’s intervention to modify the consequences provided for in the contractual agreements the parties made when the Company was formed.  
8.	I am very conscious that this produces a harsh, even draconian, result for Mr Moxon under the provisions for him to transfer his shares for a nominal consideration which I have adumbrated. But he agreed to those provisions: and, in my judgment, he has not demonstrated any sufficient basis for relief from or modification of their effect. 
9.	I turn to set out in more detail the factual context, the issues that arise, and the reasons for my conclusions.
Details in relation to the Company
10.	The business of the Company, which was incorporated on 24 March 2003 and began trading early in 2004, has at all times been that of independent financial advice and wealth management. It offers services similar to a family office company, offering financial advice to high net worth individuals.
11.	It is not substantially disputed that the Company was conceived initially by Mr Moxon and Mr Litchfield, but that Mr Cook and, at Mr Cook’s suggestion and invitation, Mr Kulesza, provided essential initial funding on terms that qualified each shareholder’s investment for tax relief under the government’s Enterprise Investment Scheme (“EIS”).  
12.	Mr Moxon and Mr Litchfield had met whilst employed (though in different divisions) by a financial services company in the north west of England called Scott Lang & Co. (“Scott Lang”). Mr Cook had been a client of Scott Lang.
13.	Mr Cook also introduced the third respondent, Mr Kulesza, as a largely passive investor.  Mr Cook also brought in his own ex-wife and Mr Kulesza’s wife as entirely passive preference shareholders.
Shareholdings
14.	In their original business plan, Mr Moxon and Mr Litchfield had proposed that they would own 76% of the shares in LCM, with other shareholders holding an aggregate of 24%. Again it is not disputed that Mr Cook’s need to ensure (as a condition of his investment) that EIS relief was available not only for his but also other shareholders’ fiscal benefit, necessitated a change to this, with Mr Moxon and Mr Litchfield being confined to an aggregate shareholding of 60%.  
15.	The ordinary shares in LCM have always been held as follows: 
Mr Moxon		15,000 shares of £1 each
Mr Litchfield		15,000 shares of £1 each
Mr Cook			12,000 shares of £1 each
Mr Kulesza		8,000 shares of £1 each
16.	There were also two original 10% preference shareholders, namely Ms Carnell (Mr Cook’s ex-wife) and Mrs Kulesza. On 30 September 2009, their 10% Preference Shares were redeemed and cancelled, and new 8% Preference Shares were created and issued to Shirley Cropper and Heritage Corporate Trustees Limited, who are the Fourth and Fifth Respondents to the petition. Neither took part in the proceedings and since the end of the hearing Mrs Cropper’s shares have been redeemed, and she has by express agreement relinquished any further right or entitlement which the shares may have conferred. However, as I explain later, the remaining preference shareholder may have an interest in the result.
17.	There were only three directors: Mr Moxon and Mr Litchfield as executive directors, and Mr Cook as a non-executive director. The current directors are Mr Litchfield and Mr Cook, the latter being a non-executive Chairman of the Board. 
18.	As indicated above, Mr Moxon was a director until October 2010, but his executive employment was terminated on 5 October 2010, and a letter of resignation as a director was signed on his behalf on 5 October or 6 October 2010 by Mr Litchfield on a basis that I will later describe more fully. 
Contractual relationships
19.	Although originally founded on personal relationships, and although Mr Moxon contends that the Company was a “quasi-partnership”, the relations between the shareholders and the Company, and between the shareholders as such, were governed by bespoke and detailed legal agreements. 
20.	Mr Cook emphasised in his evidence that he and Mr Kulesza were primarily investors rather than participants; they required contractual agreements for their protection as such; and they had Board representation simply to monitor their investment.
21.	The agreements between them all included:
(1)	A Shareholders’ Agreement dated 4 July 2003 (“the original Shareholders’ Agreement”), which was varied by deeds of variation dated 31 May 2007 and 30 September 2009 (“the Shareholders’ Agreement as varied”);
(2)	Articles of Association (“the Articles”) which were adopted on 4 July 2003 pursuant to the Shareholders’ Agreement, and revised Articles, which were adopted in September 2009 (“the revised Articles”);
(3)	Service Agreements (“the Service Agreement(s)”) between the Company and (a) Mr Moxon and (b) Mr Litchfield, each of which contained an Appendix setting out specific compliance obligations to satisfy the Financial Services Authority (“the FSA”) and the provisions of the Financial Services and Markets Act 2000 (“FSMA”), which was requisite having regard to the regulated nature of the Company’s business.
22.	It was not disputed that each of the above agreements falls within the definition of “Relevant Agreement” in Article 3.2 of the Articles. That Article reads as follows:
“any agreement relating (in whole or in part) to the management and affairs (or either of them) of the Company which is binding from time to time on the Company and the shareholders and which (expressly or by implication) supplements or prevails over any provisions of these Articles.”
23.	However, it is disputed whether a further letter of agreement, referred to as “the Side Agreement”, addressed to Mr Moxon and Mr Litchfield, signed by Mr Cook and Mr Kulesza, dated 26 June 2003 and purporting to record an earlier agreement between them all, falls within that definition.  The relevance of the dispute is this: if it is a “Relevant Agreement”, that both enhances the argument that it was intended to be enforceable (which the Respondents dispute) and requires all shareholders to amend the Articles to enable it to be given effect; and if not, not. 
24.	Again, I address this issue of construction, and also a question as to the legal enforceability of the Side Agreement, more fully later; but in point of fact the letter reads as follows:
“Dear James/Richard,
		LCM Wealth Management Ltd
We refer to the formation of the above company on 13th June, 2003.
This letter is to confirm that at any time after 31st December, 2006 we would be prepared to sell to you or your nominees the following Ordinary Shares in the Company at the original subscription price of £2.00 per share
From P.H. Cook to you or your nominees up to 4,502 shares
From W.T. Kulesza to you or your nominees up to 3,000 shares
In the event of any dispute between yourselves the individual entitlement to the above shares would be pro-rata to your holdings of Ordinary shares in the Company.
We trust this letter covers the issues that we have agreed.”
25.	The key provisions of the Shareholders’ Agreement include the following:
(1)	restrictions concerning certain aspects of management of LCM without the written approval of shareholders holding not less than 80% of voting rights (cl.6.1), including:
(a)		entering into any death, retirement, profit sharing, bonus, share 	option or other scheme for the benefit of the officers or employees 	of LCM or making any material valuation thereof (cl.6.1.7);
(b)	paying the aggregate emoluments of directors in excess of £116,400 p.a., increased by 10% p.a. (cl.6.1.18);
(2)	an obligation to co-operate, act in fairness and in good faith in order to enable other parties to discharge their duties and LCM’s objects to be attained (cl.6.4);
(3)	Messrs Moxon and Litchfield always to have the right to appoint two directors and Messrs Cook and Kulesza and Mrs Carnell (a preference shareholder originally) always to have the right to appoint one director, with a maximum number of three directors in all unless otherwise agreed by the shareholders (cl.7.1);
(4)	a provision for dividends of at least 50% of distributable reserves (cl.8.1);
(5)	an undertaking by the shareholders to remain sole legal and beneficial owner of their shares and not to seek to dispose of or create an interest in such shares and not to declare a trust in respect of such shares (cl.9.1);
(6)	restrictive covenants restricting shareholders (while a shareholder or for one year thereafter) from being concerned or interested in a business that competes directly or indirectly with that of LCM as carried on at the date the shareholder ceases to be a shareholder, from supplying services to LCM clients or from soliciting or employing LCM staff (cl.11.1);
(7)	a provision for a shareholder who is also a director who inter alia:
   (a)	resigns at any time within three years following the adoption of the Articles; or
(b)	is “dismissed in circumstances where he has committed an act of fraud or serious or repeated breach of his obligations under his contract of employment” (cl.1.1)
to be characterised as a “Bad Leaver”;
(8)	a provision that an event of default is committed by a shareholder if (inter alia) his conduct is such that he is characterised as a “Bad Leaver” (cl.12.2);
(9)	a provision that if a shareholder commits an event of default then he “shall be deemed to be an Early Leaver under the terms of the Articles and all Shareholders shall procure that the provision of Article 8 shall apply and the Defaulter issue a transfer notice in accordance with regulation 8 of the Articles” (cl.12.1);
(10)	agreement that if there is any conflict between the provisions of the Shareholders’ Agreement and the Articles (being those initially adopted as amended from time to time) then the former prevails (cl.14.1); and 
(11)	a stipulation that “Nothing contained in this agreement shall be deemed to constitute an amendment of the Articles” (cl.14.3).
26.	The first variation to the Shareholders’ Agreement dated 31 May 2007 varied the annual increase of the aggregate emoluments of the directors such that after 5 July 2008 it would increase by 2% over RPI p.a., provided that Mr Cook or his replacement would receive 13.4% of that total, and provided further for the increase of the dividend to at least 75% of distributable profits after the Preference Shares had been redeemed.
27.	The second variation to the Shareholders’ Agreement dated 30 September 2009 (the same date as the adoption of the revised Articles) provided for dividends of at least 75% of distributable profits.
28.	The key provisions of the Articles, apart from the definition of “Relevant Agreement” as set out above, are as follows:
(1)	“Bad Leaver” means an Early Leaver and a Gross Misconduct Leaver 	(Art.3.2);
(2)	“Early Leaver” means a director who ceases to be an employee and/or 	director within three years of 4 July 2003 (other than by reason of death, 	illness or agreement in writing between all directors) (Art.3.2);
(3)	“Good Leaver” means a director who leaves the employment of LCM and is 	not a Bad Leaver (Art.3.2);
(4)	“Gross Misconduct Leaver” means any director 
“dismissed for gross misconduct and such dismissal is not wrongful dismissal or unfair dismissal” (Art.3.2);
(5)	restrictions upon the transfer of shares and provisions for the valuation of 	shares for the purposes of transfer (Art.8), including that the sale price for 	shares shall be agreed or determined by an expert on the basis of a fair value 	as a going concern between a willing seller and a willing buyer with no 	discount for minority and on the assumption that there is no restriction on 	transferability (“the Fair Market Value”). The shares are then offered to the 	other members at that valuation.
 (6)	“Relevant Event” means (inter alia) a shareholder becoming a Good 	Leaver or a Bad Leaver (Art.9.1);
 (7)	after a Relevant Event, LCM’s Board “must if required by the New Investor 	Director serve written notice (“Requirement Notice”)” on the shareholder 	within three months of the members becoming aware of the Relevant Event 	requiring the shareholder to serve a sale notice in respect of all his shares 	(Art.9.3);
 (8)	if the shareholder fails to serve a sale notice within 14 days he shall be 	deemed to have done so and the Fair Market Value of the shares shall be 	agreed or determined by an expert. The sale price shall be:
(a)	“in the case of a Gross Misconduct Leaver or an Early Leaver who becomes an Early Leaver within the period of thirty six months from [4.7.03] their par value”;
(b)	“in the case of anyone other than a Bad Leaver (including, for the avoidance of doubt, a Good Leaver) the Fair Market Value of the shares” (Art.9.4);
(9)	every shareholder shall be entitled during normal business hours to 	inspect and 	take copies of the books of account and all other records and documents of 	LCM on 48 hours’ notice (Art.16.1);
(10)	notwithstanding the Articles, the directors shall be obliged, so far as     	permitted by law, to act in accordance with and given effect to any 	“Relevant 	Agreement” (Art.19.1); and
(11)	 	the rights of the preference shareholders, which essentially consisted of a fixed 	cumulative preferential dividend and redemption on 31 December 2006 	(Art.4.2).
29.	The revised Articles were adopted by written resolution dated 29 September 2009 (registered at Companies House on 1 October 2009). These revised Articles were stated to be adopted “in substitution for, and to the exclusion of, the existing articles of association”. The only relevant changes for present purposes, however, were as follows:
(1)	the definition of “Bad Leaver” was altered to read:
“any Director of the Company who is dismissed for gross misconduct (and such dismissal is not wrongful dismissal or unfair dismissal) at any time after the adoption of these Articles”; and
(2)	a definition of “Good Leaver” was introduced which reads as follows:
“any Director who leaves the employment of the company and is not a Bad Leaver”
(3)	the rights attached to the Preference Shares were varied: it is not for the present necessary to go into the details.
30.	Mr Moxon’s Service Agreement provides in relevant part as follows:
(1)	Mr Moxon’s employment commenced on 7 July 2003 (cl.3.1);
(2)	Mr Moxon would be employed as a director and was responsible for the sales and marketing and financial planning functions within LCM (cl.6.1);
(3)	Mr Moxon must not do anything likely to result in damage to LCM’s interests or business or to bring LCM into disrepute or which is prejudicial to LCM (cl.7.2.1);
(4)	Mr Moxon must immediately disclose a breach of the Service Agreement to LCM (cl.7.3);
(5)	Mr Moxon controlled his own working hours (cl.9.1);
(6)	Mr Moxon must devote the whole of his time to LCM and use his best endeavours to promote LCM’s interests (cl.22.1);
(7)	Mr Moxon must not be engaged in any activity which LCM reasonably considers may be harmful to LCM’s interests, interfere with the performance of his duties or be or become in competition with LCM (cl.22.2);
(8)	LCM’s documents must not be used for an unauthorised purpose (cl.23.2);
(9)	restrictions were imposed upon unauthorised disclosure or use by Mr Moxon of confidential information, including customer lists (cl.25);
(10)	it was stipulated that unauthorised and inappropriate disclosure of confidential information is likely to amount to a disciplinary offence (cl.25.7);
(11)	a disciplinary procedure was provided; if Mr Moxon commits any act of misconduct, appears incapable of performing his work or commits an act of gross misconduct or gross negligence then “another director will investigate the matter and meet [Mr Moxon] to discuss it before deciding on any action to be taken. Mr Moxon’s own views as expressed at the meeting will be taken into account”. Mr Moxon may be accompanied by a legal representative at any disciplinary meeting (cl.28);
(12)	there were also several termination provisions, including that LCM may terminate Mr Moxon’s employment without notice and without further liability to him if he commits any act of gross misconduct or is guilty of dishonesty to LCM, its officers, employees, suppliers, clients or agents, or if he commits any serious or persistent breach of the provisions of the Service Agreement (cl.29.2);
(13)	Mr Moxon agreed that termination for any reason in cl.29.2 “will be	potentially 	fair” (cl.29.3); and
(14)	it was provided that the Services Agreement constitutes the entire agreement between the parties and that the rules, regulations, policies, statements and procedures to which it refers have no contractual force (cl.44.1).
Statutory and fiduciary obligations
31.	In parallel with these contractual obligations and provisions (including those in the Articles and Revised Articles) it was common ground that as directors of the Company each of Messrs Moxon, Litchfield and Cook owed duties to the Company:
(1)	to exercise their powers for proper purposes (and see section 171 of the Companies Act);
(2)	to act in a way he considered in good faith would be most likely to promote the success of the Company for the benefit of its members (and see section 172 of the Companies Act) ;
(3)	to avoid a situation in which he has, or could have, an interest that conflicts or might possibly conflict with the interests of the Company (and see section 175 of the Companies Act), there being provision for the directors to authorise such a conflict in accordance with sections 175(5) and (6).
Issues of status, interpretation and enforceability
32.	There were various issues as to the validity, interpretation and cohesiveness of these contractual agreements and also (as previously indicated) a dispute as to the legal status and enforceability of the Side Agreement. Mr Moxon sought to sideline the contractual arrangements; the Respondents sought to treat them as determinative.
Status of agreements
33.	As to their status, it was first floated on behalf of Mr Moxon that he had been confronted with documentation which he was not given time to and did not understand. 
34.	The thrust of this suggestion was that the documentation was drafted by Mr Cook’s solicitors, presented to him on a “take it or leave it” basis without an opportunity for full consideration and reflection, and understood by him to be devised to secure EIS relief, but not to introduce terms of such draconian effect. 
35.	In my judgment, the argument is flawed and fails, not least in light of Mr Moxon’s own evidence that he was given the opportunity for further consideration, and draft documentation was circulated in advance at least to Mr Litchfield from whom he could easily have obtained copies if he was not himself provided them. I reject the suggestion accordingly.
Whether the agreements are subject to overriding equitable considerations
36.	Again as is typical in petitions under section 994, the Petitioner, Mr Moxon, stressed the personal relationships and expectations that he considered underlay the venture, by way of emphasising the harshness of his treatment and the draconian nature of the result for which the Respondents contend.
37.	Further, it was submitted on behalf of Mr Moxon that such arrangements, so far as they related to the termination of employment and/or removal of a shareholder director, should be (to quote Counsel for Mr Moxon’s written Closing Submissions) “tempered in their application by:
(1)	the other terms of the contractual infrastructure;
(2)	the duties of the members of the Board as directors;
(3)	expectations and understandings arising from the contractual infrastructure and equitable constraints upon exercise of rights; and/or
(4)	expectations and understandings arising from the dealings and relationship between the shareholders and equitable constraints upon the exercise of rights.”
38.	Put more broadly, it is submitted on behalf of Mr Moxon that all these agreements and arrangements must be viewed and construed in the context of an overarching “quasi-partnership” importing equitable obligations between the quasi-partners collateral to their legal relationships and to which the court should give effect by restraining the exercise of strict legal rights and instead providing for a fair and equitable separation. 
39.	In particular, Mr Collingwood (who appeared for Mr Moxon) submitted that the equitable obligations between the parties included an obligation to honour the understanding between them of “continued enjoyment and involvement in management”, and that the suspension and then dismissal and enforced resignation of Mr Moxon was a breach both of that understanding and indeed of the parties’ obligations under the Shareholders’ Agreement.
40.	Mr Collingwood further submitted that the formal documentation was “drawn up to prevent the two key men from leaving and in order to comply formally with the requirements of a tax scheme (“the EIS“).  It was not contemplated or understood that either of Mr Litchfield or Mr Moxon could be dispensed with and stripped of their equity share (which formed part of the reward for their substantial efforts). It was a small company and it was operated informally on the basis of trust and cooperation.”
41.	Mr Zelin, on the other hand, submitted that the parties deliberately and advisedly chose to define their relationship with the Company and inter se in carefully drafted and bespoke Articles of Association and Shareholders’ Agreements, and that if Mr Moxon is properly characterised as a “Bad Leaver” there is no proper basis for relieving him from the consequences that he contractually agreed. Further, and in the language of section 994 of the Companies Act, no unfairly prejudicial conduct of the Company’s affairs, nor any act or omission of the Company or on its behalf, can be shown such as would trigger the jurisdiction of the court under that section to supplant the contractually agreed basis of separation.
42.	The approach of the court in determining the interplay between contractual rights and equitable obligations in such a context is well established and familiar. That approach was explained by Lord Hoffmann in O’Neill v Phillips [1999] 1 WLR 1092 and further expanded upon by the Court of Appeal in Grace v Biagioli [2006] 2 BCLC 70 at 92 as follows (with my emphasis added):
“(1) The concept of unfairness, although objective in its focus, is not to be considered in a vacuum. An assessment that conduct is unfair has to be made against the legal background of the corporate structure under consideration. This will usually take the form of the articles of association and any collateral agreements between shareholders which identify their rights and obligations as members of the company. Both are subject to established equitable principles which may moderate the exercise of strict legal rights when insistence on the enforcement of such rights would be unconscionable;
(2) It follows that it will not ordinarily be unfair for the affairs of a company to be conducted in accordance with the provisions of its articles or any other relevant and legally enforceable agreement, unless it would be inequitable for those agreements to be enforced in the particular circumstances under consideration. Unfairness may, to use Lord Hoffmann's words, ‘consist in a breach of the rules or in using the rules in a manner which equity would regard as contrary to good faith’ …; the conduct need not therefore be unlawful, but it must be inequitable;
(3) Although it is impossible to provide an exhaustive definition of the circumstances in which the application of equitable principles would render it unjust for a party to insist on his strict legal rights, those principles are to be applied according to settled and established equitable rules and not by reference to some indefinite notion of fairness;
(4) To be unfair, the conduct complained of need not be such as would have justified the making of a winding-up order on just and equitable grounds as formerly required under s 210 of the Companies Act 1948;
(5) A useful test is always to ask whether the exercise of the power or rights in question would involve a breach of an agreement or understanding between the parties which it would be unfair to allow a member to ignore. Such agreements do not have to be contractually binding in order to found the equity;
(6) It is not enough merely to show that the relationship between the parties has irretrievably broken down. There is no right of unilateral withdrawal for a shareholder when trust and confidence between shareholders no longer exist. It is, however, different if that breakdown in relations then causes the majority to exclude the petitioner from the management of the company or otherwise to cause him prejudice in his capacity as a shareholder.”
43.	I did not understand this guidance to be in issue; nor realistically could it be. In light of that, I do not consider that this case turns or even requires detailed consideration of whether or not the parties were bound by understandings collateral to their contractual arrangements, whether or not described as giving rise to a “quasi-partnership” (a somewhat over-used phrase). 
44.	For it seems to me that if as a matter of fact Mr Moxon so conducted himself as properly to be characterised for the purposes of the contractual arrangements as a “Bad Leaver” then even if there was an understanding between the parties of continued management participation it must have had some limit, and the contractual limit is an entirely fair and reasonable one. 
45.	In my view, neither equity nor the jurisdiction under section 994 sweeps away contractual arrangements; at most, the exercise of contractual rights is subjected to equitable restraint if it would be unconscionable, or unfairly prejudicial. If the exercise of the legal right would not be unconscionable, the consequences of its exercise must be permitted to follow.  
46.	Furthermore, in the particular circumstances of the case, I am not persuaded that there is anything inconsistent between the understandings invoked by Mr Collingwood and the provisions of the contractual documentation: Mr Moxon’s real complaint (so it seems to me) is not so much as to the provisions but as to the harshness of their effect. 
47.	Mr Collingwood put to each of Mr Cook, Mr Litchfield and Mr Kulesza in cross-examination that the following understandings were shared between all the participants and were fundamental to their business relationship:
(1)	both Mr Litchfield and Mr Moxon were to be executive directors;
(2)	both were to be remunerated by salary;
(3)	both were to be shareholders and to receive dividends
(4)	both were in it for the long term;
(5)	neither could properly be removed arbitrarily, or on a whim, or for self-seeking collateral reasons;
(6)	each could expect to be given a chance to be heard if any allegation was made against them as to their conduct as executive directors and shareholders; and
(7)	only if serious grounds were demonstrated was either to be removed as an executive director.
48.	But none of these understandings proved controversial: all three accepted them. Further, I accept Mr Zelin’s submission that none is necessarily inconsistent with the terms of the written agreements; in particular:
(1)	the Shareholders’ Agreement	 expressly required (by clause 6.4) each party to co-	operate with the other and act in fairness and in good faith to enable the other 	to discharge its duties and the Company’s objects to be attained;
(2)	the Service Agreement provided a disciplinary procedure which included a right 	to be heard, except as provided in clause 29.2 (which expressly provided for 	immediate dismissal at any time for gross misconduct or dishonesty toward the 	Company, or its officers, or its employees, or its suppliers, or its clients or its 	agents
49.	Mr Moxon did not ultimately dispute this, and his case in substance came to be confined to the contention that the real vice in the arrangements, and that which was inconsistent with a relationship based on trust and fair dealing, was the provision for what he regarded as expropriation of his shares at nominal value in the event of dismissal for conduct such as to fall within the definition of “Bad Leaver”.  
50.	Unsurprisingly, perhaps, Mr Collingwood on behalf of Mr Moxon submitted that the test of a “Bad Leaver” should in all contexts be treated as the same and always require proof of gross (rather than, for example, repeat) misconduct, and satisfaction of the condition that the dismissal should not be either wrongful or unfair.
51.	In my view, the documentation, in defining the parties’ relationship, provided not unreasonable or inequitable deterrence against both its careless destruction and its gross abuse, and represented a readily understandable balance between the reasonable expectations of Mr Litchfield and Mr Moxon as founders and executives and the protections required by Mr Cook and Mr Kulesza (on behalf of themselves and the preference shareholders). 
52.	More particularly, the provisions for removal of a director and the deemed transfer of his shares at a price depending on the circumstances of his removal, do not seem to me to be offensive to the nature of the Company as a small body corporate based on personal relationships, nor indeed inconsistent with the understandings which Mr Moxon asserts.  That is especially so where, as in this case, there has been provision made and satisfied for distributions of distributable profit in each year, so that it is not a situation where the deemed transferor loses all the intermediate benefit of his participation.
53.	I have not been persuaded that Mr Moxon was entitled, or even can reasonably have expected to be entitled, to remain in executive office even if  in good faith found guilty of gross misconduct; and I am not persuaded either that there was any intention or understanding (whether express or implicit) that the contractually agreed consequences should not follow.   
54.	I do not see the need to determine whether or not there was a “quasi-partnership”. The label is apt to be misused, and I doubt it is apposite in this case, given the choice of a body corporate ab initio, the commercial nature of the investments by Mr Cook and Mr Kulesza and the preference shareholders, and the careful, bespoke documentation as to the relevant relationships. But in any event, as indicated above, in my judgment, the provisions I have adumbrated are not inconsistent with partnership, provided they are invoked in good faith (which is expressly required by the Shareholders’ Agreement as previously stated): see Kelly v Denman [Unreported, Chancery Division, Rimer J 15 May 1996]. 
55.	Put shortly, in my judgment, there is no overriding reason not to give effect to the arrangements, including those for dismissal and removal of a director and the sale of his shares, comprised in the agreements (to the extent valid in law), albeit they should be strictly interpreted, exercised in good faith and not permitted to be used “for unworthy purposes” “on account of the abuse which may be made of them, and of the hardship of expulsion”: see by analogy Lindley & Banks on Partnership (19th ed. para 10-124), and also (emphasising the concern of the court to see that powers of expulsion are not used for improper purposes) Blisset v Daniel (1853) 10 Hare, 493.
56.	I accept, therefore, Mr Zelin’s basic premise that the real issue determinative of the case is whether Mr Moxon was a “Bad Leaver”. If he was, the effect of the application of the contractually agreed arrangements is harsh; but once it is accepted (as in my judgment it should be accepted) that if the circumstances were such that Mr Moxon falls to be characterised as a “Bad Leaver” his dismissal and enforced resignation could not be said to be unfair, there is no jurisdiction under section 994 to interfere with the consequences contractually prescribed.  
 Interpretation
57.	The principal issue of interpretation concerns the meaning to be given to the provisions in (a) the Shareholders Agreement and (b) the two sets of Articles for the compulsory transfer of shares at par value upon an ‘event of default’ (the phrase in the Shareholders Agreement) or upon a “Relevant Event” (the phrase in regulation 9 of both sets of Articles). There are inconsistencies in the drafting between the Shareholders Agreement and the Articles, and indeed even between the two sets of Articles, the phrase “Bad Leaver” being slightly differently defined in (a) the original Articles (b) the Revised Articles and (c) the Shareholders’ Agreement. 
58.	The difference in the two sets of Articles, which is minor, is as to the definition of “Bad Leaver”. This reflects the fact that in the original Articles, the phrase covered both (i) an “Early Leaver” and (ii) a “Gross Misconduct Leaver”, and by the time of the Revised Articles there was no longer any need to provide a sanction for “Early Leavers”: the minimum period of three years necessary for EIS relief, which I accept was the driver for that provision, had elapsed.  The definition of “Gross Misconduct Leaver” in the original Articles is the same as the definition of “Bad Leaver” in the Revised Articles .  
59.	The more substantial difference is between the Articles (in whichever version) and the Shareholders’ Agreement: and in that regard there are a number of points of difference, apart from the obvious one that the Shareholders’ Agreement applies only to a director who is a shareholder.  
60.	The first point of difference is that the Shareholders’ Agreement does not contain any separate definition of “Early Leaver”: it treats an “Early Leaver” as a subset of “Bad Leaver” in that its definition of “Bad Leaver” also extends to a director who resigned within three years of the adoption of the original Articles. That said, however, the Shareholders’ Agreement then (in clause 12.1) adopts the phrase “Early Leaver” by providing that a shareholder who becomes a “Bad Leaver” thereby (a) commits an “event of default” and is defined as a “Defaulter”; (b) is deemed to be in consequence an “Early Leaver under the terms of the Articles”; and (c) is mandated to “issue a transfer notice in accordance with regulation 8 of the Articles…in respect of all the shares then registered in his or her name.” As noted above, although the original Articles did provide a separate definition for “Early Leavers”, the revised Articles did not: so the provision in the Shareholders’ Agreement deeming a Defaulter to be an “Early Leaver” within the terms of the Articles no longer strictly makes sense. Furthermore, the reference in the Shareholders’ Agreement to the application of Article 8 in the case of a “Defaulter” does not make sense either: Article 8 sets out transfer pre-emption provisions applicable in the case of (a) (put summarily) transfers to family trusts and (b) transfers by members who “desire to transfer shares”.  It is Article 9 (in both sets of Articles) that applies to “Deemed Transfers” upon the occurrence of “Relevant Events”.  
61.	The second point of difference or inconsistency is that whilst the Articles refer to “gross misconduct” as the test of a “Bad Leaver”, in the Shareholders’ Agreement the definition of “Bad Leaver” applies to dismissal for (a) an act of fraud (which is more specific than “gross misconduct”); (b) “serious” breach of his obligations under his contract of employment (which may be broader than “gross misconduct”, which is usually confined to extremely serious breaches) and (c) “repeated” breach of his contract of employment (which appears to encompass less serious but more numerous breaches). (The definition also applies if the director becomes bankrupt, or is disqualified from acting as a director pursuant to the Company Directors Disqualification Act 1986.)
62.	The third point of difference is that in the Shareholders’ Agreement there is no reference in the definition of “Bad Leaver” to any further condition that the dismissal should not have been “wrongful dismissal or unfair dismissal”; whereas both sets of Articles contain that further condition.
63.	These provisions are not easily reconcilable.  The instruments were plainly intended to mesh together; but the fact is, in my view, that something has gone wrong with the drafting and a process of purposive interpretation is required to discern their combined intended effect. I am not persuaded that the answer lies in the provision (clause 19.1) in the Shareholders’ Agreement for the directors to be obliged to give effect to all ”Relevant Agreements” (though that would include the Shareholders’ Agreement itself): for the inconsistencies lie just as much (if not more so) in the Shareholders’ Agreement. 
64.	I bear in mind that provisions such as these, which restrict the rights of shareholders and (in the particular context) prescribe a value likely to be greatly less than the true value of the shares to be transferred, should not be given a meaning that they cannot fairly bear, and that if a restrictive interpretation which would be favourable to the transferor is fairly available, and may have been intended, that should ordinarily be preferred. Nevertheless, the court must, if possible, by a process of construction supply consistency of meaning of two or more instruments which were intended to mesh together.
65.	 I have concluded that, notwithstanding the inconsistencies and infelicities, and bearing in mind what might be termed the presumption in favour of a restrictive interpretation, the plain intention of the Shareholders’ Agreement, the two sets of Articles and the Service Agreement prescribed in the case of Mr Moxon taken together was that 
(1)	a shareholder who is a director becomes a “Bad Leaver” if he falls within the definition of that term in either the Shareholders’ Agreement or the Articles, his breach of his service contract being such as to entitle the Company to terminate his employment without notice or further liability to him; and
(2)	upon becoming a “Bad Leaver” that shareholder is required (failing which, deemed) to serve a Sale Notice in respect of all his shares at a sale price equal to their par value in accordance with the provisions of regulation 9 in the then current version of the Articles. 
66.	By way of further explanation of those conclusions:
(1)	the common theme of the Shareholders’ Agreement, the Articles and the Service Agreement is that fraud, dishonesty or gross misconduct should all merit termination of employment without notice or liability;
(2)	“gross misconduct” fairly extends either to a single act or serious or persistent breach;
(3)	 if gross misconduct is established, in almost all circumstances that will mean that the dismissal was both not unfair and not wrongful: that is endorsed by clause 29.3 of the Service Agreement; so that even if the additional conditions prescribed by the Articles (which are not in the Shareholders’ Agreement) apply, they will be fulfilled for the purposes of determining whether the director/shareholder is a Bad Leaver;
(4)	the reference in the Shareholders’ Agreement to an Early Leaver should be construed, once that expression was no longer current in the Revised Articles, as a reference to a Defaulter who is a “Bad Leaver”; and
(5)	the further reference in the Shareholders’ Agreement to a Defaulter/Bad Leaver being required to issue a transfer notice “in accordance with regulation 8 of the Articles” must be taken to be a mistaken reference to or false description of the Article plainly intended to be triggered upon an “event of default” or “Relevant Event”, that is regulation 9.
67.	Accordingly, and in any event, I accept Mr Zelin’s submission that the ultimate question is, in effect, whether the facts as revealed and tested after a three week trial (including some 10 full days of evidence) demonstrate that Mr Moxon was indeed guilty of such misconduct as to become a “Bad Leaver” in the sense above. 
Factual issues
68.	As is often the case in proceedings by way of section 994 petition the parties resorted to a fairly minute exegesis of the origin of their relationship, the understandings (both stated and unexpressed) on which it was based and the reasons for its deterioration and collapse, and a detailed analysis of the various points of disagreement which developed along the way after a consensual and harmonious start. 
69.	Having briefly set out already the parameters of the dispute, such a minute analysis does not seem to me to be necessary or appropriate in order to determine the crucial point. Instead, I turn to address particular issues that seem to me to define the dispute and determine the ultimate question which is (as stated above) whether Mr Moxon deserved dismissal and merited his characterisation as a Bad Leaver, and if so whether there is any basis for modifying the contractual consequences that the parties together agreed.
The Side Agreement: relevance and whether legally enforceable
70.	I start with the Side Agreement, not least because Mr Moxon traces the breakdown of the relationship between the parties back to the issue which arose as to its enforceability, and to Mr Cook’s refusal (as Mr Moxon perceived it) to abide by its terms (which he attributes to Mr Cook’s desire to retain shares of increasing value in light of the Company’s success). Furthermore, if it was and remains enforceable, Mr Moxon would have the contractual right even now to acquire shares from Mr Cook and Mr Kulesza at the specified price of £2 per share.
71.	As to the dispute as to its legal enforceability, it was contended on behalf of Mr Moxon that the witness statements of Messrs Litchfield, Cook and Kulesza used the formal language of contract (such as “entering”, “option” and “exercised” in describing the formation, character and potential implementation of the transactions described in the Side Agreement), and that it was always intended to be legally enforceable and required to be given effect as a “Relevant Agreement”. Mr Collingwood also relied especially on e-mails from Mr Cook on 6 December 2007 and 8 December 2007 which (he submitted) “speak in terms of a binding obligation” when (at the same time) advising Messrs Litchfield and Moxon that he and Mr Kulesza “no longer feel obligated under our original understanding on individual shareholdings.” 
72.	Against that, Mr Litchfield, who might logically be regarded as personally interested in asserting its enforceability, regarded the Side Agreement as a comfort that could be withdrawn. Mr Cook and Mr Kulesza described it as a “gentleman’s agreement”, which they intended to honour until events occurred which they considered meant that their investment would be unsafe if they did (as I describe more fully later).  Mr Zelin accepted that the likelihood is that none really gave the issue of its contractual status much, if any, thought. 
73.	The subjective views of the parties cannot, however, determine the matter. In deciding issues of contractual intention, including intention to create legal relations, the court will normally apply an objective test. In the case of ordinary commercial transactions for which there is plainly consideration an intention to create legal relations will ordinarily be assumed and the burden is on the party who asserts that no legal effect was intended; though, as Lord Bingham CJ observed in Edmonds v Lawson [2000] QB 501, “the context is all-important”.
74.	The Side Agreement was plainly designed with a view to the re-balancing of the parties’ shareholdings at the end of the three-year EIS relief period so as to bring Mr Moxon and Mr Litchfield to increase their holdings to 75% (as had originally been proposed before Mr Cook insisted on EIS compliance as a condition of his involvement). (It will be recalled that under EIS rules no shareholder was entitled to more than 30% of the votes.)
75.	It was, as I understood it, not disputed between the parties that the Side Agreement was in the form of a letter, and was not a formal option, because a formal and enforceable option agreement (whether “put” or “call”) would have (or likely have) constituted a breach of EIS rules.
76.	That factor, its concomitant that the parties recognised that a binding agreement would not comply with EIS rules, and the further detail that alone amongst the documents setting out the parties’ relationships the Side Letter was not included in the bundle or “bible” of documents assembled (and, for example, presented to Mr Kulesza) militates against treating the Side Letter as a legally enforceable agreement.
77.	In my judgment, the Side Agreement was not itself constructed or worded in terms intended to give rise to a legally enforceable contract, and despite the wording at its end referring to a previous agreement, was not intended to evidence any prior binding agreement either. It was a statement of willingness and intent to sell upon request; and it was expected at the time that the intention would be fulfilled; but it needed to and, in my judgment, did fall short of the certainty and language of legal commitment to establish a legally enforceable contract. It is also debateable whether consideration was given; but I do not base my conclusion on that ground.
78.	Next, Mr Collingwood submitted that even if the Side Agreement is not legally binding and enforceable as such it was intended and understood to be so by the parties, such as to give rise to an estoppel by convention.
79.	I do not accept this. I agree with Mr Zelin that the likelihood is that the parties expected that it would be honoured, but did not focus on its enforceability or proceed on the basis of it. Indeed, I consider that the parties were probably aware that something short of an enforceable option was necessary in order not to fall foul of EIS rules. I do not consider any estoppel by convention or otherwise arises.
80.	It is strictly unnecessary on that basis to determine whether the Side Agreement should be treated as falling within the definition of a Relevant Agreement for the purposes of regulation 3.2 of the Articles. However, in my judgment it should not be so treated in any event, even if otherwise legally enforceable; and some of the reasons why not reinforce, to my mind, my conclusion that it was not intended to be legally enforceable as a contract.
81.	The principal reason why, in my judgment, the Side Agreement does not fall within regulation 3.2 is that it was not an agreement relating (whether in whole or in part) to the management and affairs of the Company; it was an arrangement personal to Messrs Moxon, Litchfield, Cook and Kulesza with respect to their personal property (shares). 
82.	A further consideration is the difficulty of implementing the Side Agreement without excluding the application of various regulations, and especially the transfer pre-emption provisions that the Articles contain. These provisions required the service of a transfer notice (see regulation 8.9) which constituted the Company as agent for offering the shares the subject of the notice to all other holders of Shares (including Preference Shares). That would potentially undo the implementation of the objectives of the Side Letter unless the Articles were altered; and alteration would require class meetings as well as special resolutions. It may be that none of this was thought about; but I cannot think it was intended.
83.	However, even if not contractually enforceable, the Side Agreement undoubtedly gave rise to expectations of a share redistribution that I would accept probably was part of the incentive to both Mr Moxon and Mr Litchfield in proceeding with the venture and working for its success. As I have mentioned previously, the denial of those expectations is singled out on behalf of Mr Moxon as the trigger for the erosion and later collapse of the relationships that underlay the corporate form. The circumstances leading to Mr Cook and Mr Kulesza refusing to implement what they acknowledge was at least a gentleman’s agreement are thus an important aspect of the case, to which I now turn.
Renunciation of the Side Agreement
84.	Mr Moxon’s case is that (a) both he and Mr Litchfield wished, and had the money, to purchase the shares the subject of the Side Agreement, and said so; (b) in about June 2007, when (and because) the Company became successful Mr Cook (and, at Mr Cook’s instance, Mr Kulesza) became unwilling to sell at what Mr Moxon regarded as the prescribed price of £2 per share; (c) although Mr Moxon and Mr Litchfield at first shared a common cause, at some point Mr Litchfield shifted his allegiance to Mr Cook, leaving Mr Moxon sidelined; and (d) the ultimate result of the realignment was Mr Moxon’s marginalisation, isolation, suspension and removal.
85.	Mr Cook’s case (now supported by Mr Litchfield and Mr Kulesza), on the other hand, is that (a) until the autumn of 2007 Mr Cook and Mr Kulesza were quite happy to sell shares in accordance with the Side Agreement; (b) indeed until then, and once the EIS rules would not be infringed thereby, Mr Cook had been pressing both Mr Litchfield and Mr Moxon to buy the shares; but (c) their (Mr Cook and Mr Kulesza’s) attitude changed following what they regarded as a breach of trust surrounding an incident known at trial as “the K-Club incident” (which I describe more fully below). They took the view that the incident demonstrated the need for them to retain sufficient shareholdings to exercise at least some measure of negative control (a sale would reduce their holdings beneath 25%), and that both the breach and the need it demonstrated released them from their obligations under what they considered to be a gentleman’s agreement.
86.	There was also an issue as to the aggregate consideration to be paid for any purchase pursuant to the Side Agreement, relating (in effect) to whether the headline price of £2 (as to which there was no dispute) was ex-dividend or cum-dividend.  The Side Agreement was silent as to this, just as it was silent on how the “option” was to be exercised, and at what stage the price had to be tendered (uncertainties which, to my mind, further support the conclusion that it was not intended to be a legally enforceable arrangement). Mr Cook considered that there was an understanding that the consideration would be the aggregate of £2 per share and any rolled up, unpaid, dividends; Mr Moxon considered that the price was £2 per share, and he refused to pay more. 
87.	Thus, Mr Moxon and Mr Cook each thought the other’s position in relation to the Side Agreement contrived and contrary to their duties of good faith: their mistrust grew from this point onwards. 
88.	Whilst the dispute is not determinative of the ultimate question, and deeper disagreement and division opened up later, its rights and wrongs are obviously a relevant factor in determining the overall picture of what went wrong.  I should therefore address the three matters in issue in relation to the Side Agreement in addition to its legal status (which issue I have already addressed).  
89.	These are: (1) what the “option” price really was intended to be; (2) whether Mr Moxon was ever in a position to pay the purchase price; and (3) whether Mr Cook was entitled to feel sufficiently aggrieved by the K-Club incident to renounce any obligations under the gentleman’s agreement.
90.	As to (1), and the expected option price, the deficiencies in the Side Agreement make it very difficult to determine: the fact is that the terms of the gentleman’s agreement leave the matter unstated and uncertain. However, Mr Moxon’s insistence that for £2 per share he was entitled not only to the shares but also unpaid accrued dividends exceeding that amount is difficult to square with the likely intentions of commercial parties. Indeed, I felt that Mr Moxon’s argument had only got off the ground because Mr Cook, for his own tax benefit (since a capital receipt would be taxed at a lower rate), had requested to be paid an aggregate capital sum rather than the agreed sum plus accrued dividends: that was more easily presented as contrary to the express terms of the Side Agreement. However, and given my conclusion that the Side Agreement was not intended to be or capable of being legally enforceable, I do not think I need say more than that this aspect of the dispute does not really assist me in determining the ultimate issue.
91.	Similarly as to issue (2), although there was extensive evidence (including cross-examination) on the issue of whether Mr Moxon ever had the money to fund a purchase, I do not think I need or indeed can resolve it. Suffice it to say that, as I understood his evidence, Mr Moxon expected to fund the purchase out of dividends on the shares, and would have been stretched to find money for a purchase of all his “entitlement” if his purchase for £2 per share was ex-dividend, but might have been able to borrow against the future income stream. Again, the issue does not, in my judgment, weigh substantially in the balance in determining the ultimate issue, though I have to say that the evidence, though not conclusive, appeared to me to indicate that Mr Moxon would have been hard put to find the money.
92.	It is issue (3) and the K-Club incident which is, to my mind at least, of most significance in the story, although Mr Moxon sought to present it as not only misrepresented by Mr Cook but also “completely unrelated” to the other issues in relation to the Side Agreement.
The K-Club Incident
93.	The K-Club incident was a marketing event.  It took place in June 2007 and involved a golf trip to Ireland, staying at a luxury resort called the K Club, with a number of clients of the Company.  The Company’s original budget was £12,000, later revised to £16,000.  The eventual total spend was in the region of £40,000. It is unclear who was responsible for this underestimate and overspend: Mr Moxon or Mr Litchfield, who blame each other. But as much as the overspend itself, two inter-related matters especially infuriated Mr Cook. 
94.	One was that Mr Cook deprecated the fact that at the same time as what he regarded as unnecessary overspend, he was, at Mr Moxon’s request, injecting funds into the Company to provide cash to fund the actual payment of dividends to Mr Moxon and Mr Kulesza (though not to Mr Cook himself, nor to Mr Litchfield).   Mr Cook stated that he had done this in recognition of the work that Mr Moxon and Mr Litchfield were doing for the Company, and because Mr Moxon in particular had pleaded with him to do so to enable him to pay for his children’s school fees out of the dividends which could in consequence be paid.  Mr Cook struck me as someone who very much takes against anyone who he considers is taking advantage of him, as he plainly felt Mr Moxon was doing.
95.	The second was that Mr Cook considered that the full costs of the K-Club incident were kept from him at the time and were only revealed some time after the event, and only then after Mr Cook had had to press at Board meetings on 17 July 2007, 21 August 2007, 27 September 2007 and finally on 24 October 2007. Mr Cook’s perception was and is that the amounts spent were intentionally obscured by Mr Moxon putting certain items on his own credit card and seeking reimbursement after some delay. Mr Cook also struck me as someone who insists on straightforwardness and transparency in others: and he plainly felt that Mr Moxon’s conduct was consistent with neither.
96.	Mr Moxon, for his part, blamed the overspend on Mr Litchfield (whom he depicted as habitually extravagant in spending other people’s money). Moreover, Mr Moxon’s evidence was that the idea of putting the excess on his personal credit card was in reality Mr Litchfield’s, who had said that he simply could not put the additional amounts from the Company’s own accounts “as going over budget would upset Peter”, leaving Mr Moxon with no choice but to fund them himself “as it was [his] client relationships that would be put at risk” if the marketing event collapsed.
97.	Mr Kulesza’s evidence was more balanced in this regard. As he saw it (albeit based on what was relayed to him by Mr Cook) both Mr Moxon and Mr Litchfield were at fault, in substantially equal measure. Mr Kulesza struck me as someone less insistent on his expectation of moral rectitude in others than Mr Cook, and perhaps more objective in consequence. In his view, both executives had behaved irresponsibly in allowing the Company to incur such a large unbudgeted liability that it was not (in cash terms) in a position to meet.  He felt that his investment had been put at risk unnecessarily; and that the failure properly to account for and explain what they had done was a breach of the trust placed in them as managers of the business by its investors.  I accept that analysis and conclusion; but it is to be noted that it does not discriminate between Mr Litchfield and Mr Moxon. 
98.	It appears to me that Mr Cook was too quick to blame Mr Moxon in circumstances where the likelihood appears to me to be that both Mr Moxon and Mr Litchfield became rather carried away, and then together devised a means of dealing with the problems this caused. Mr Litchfield was adroit in shifting the blame to Mr Moxon; but he was as much at fault. I sensed that Mr Litchfield appreciated this, and decided his best tactic was to cosy up to Mr Cook. Further, that tactic was consistent with a natural alliance between Mr Litchfield and Mr Cook which formed in relation to the Company’s relationship with Mr Rynton.
Dispute relating to Mr Rynton
99.	There are three aspects of the Company’s relationship with Mr Rynton which are relevant to the Petition and its ultimate disposition. One aspect is the falling out between Mr Moxon and Mr Litchfield with regard to the treatment of Mr Rynton, and the strengthening of an anti-Mr Moxon alliance which this occasioned: this is the aspect I deal with next. The other two aspects are first, that Mr Moxon seeks to rely on the incident as demonstrating mismanagement of the Company’s affairs; and secondly that the Respondents rely on Mr Moxon’s dealings with Mr Rynton in relation to another venture (through a company called RM Squared Asset Management Ltd or “RM2”, see paragraph 122 below) as constituting a breach of his obligations under the Shareholders’ Agreement; I deal with those aspects later. 
100.	The importance attached by Mr Moxon to the fact and consequences of the disagreement that developed over the treatment of Mr Rynton is illustrated both by the amount of his main (his second) witness statement (some 12 pages and 40 paragraphs) devoted to the topic and by the repeated applications on behalf of Mr Moxon for further disclosure in relation to the issue on the grounds of its centrality to the case.
101.	The disagreement related to the proper calculation of amounts payable by the Company to Mr Rynton under agreements (there were various versions) between Mr Rynton and the Company for Mr Rynton to receive a commission of 20% of all “initial fees” received by LCM. It is not necessary to travel into the details of the various agreements, nor the technicalities of the dispute which arose as to what the phrase “initial fees” meant. Suffice it to say that it is Mr Moxon’s case that as (on one construction) the amounts payable soared (described by Mr Moxon as “running into hundreds of thousands of pounds”) Mr Litchfield and Mr Cook “took it upon themselves to exclude” fees on a variety of grounds, and to deny him fees in respect of various introductions where there was any doubt as to whether they were really due to Mr Rynton’s work as an introducer. Mr Moxon suggested also that Mr Litchfield deliberately miscalculated the amounts payable.
102.	Put very shortly, Mr Moxon contends that (a) Mr Rynton was deprived of sums properly due; (b) that Mr Rynton was eventually forced into agreeing a cessation agreement on the basis of what Mr Moxon says were manipulated or trumped up figures showing previous overpayments of commission; and that to compound Mr Moxon’s discomfort, it was he (Mr Moxon) who was tasked with the task of terminating the Company’s relationship with Mr Rynton deliberately causing friction between the two of them. Mr Moxon’s position is summarised in his second witness statement as follows:
“Overall, I consider that the treatment of Steve prejudiced the way LCM was run (and so my interests as a shareholder) as it worsened the relationship with a valuable contact in Steve [Rynton], it put the company at significant risk of litigation (which has now been brought) and thus financial risk, and again damaged the relationships between the directors. It was bad business practice, motivated by selfish concerns.”
103.	More particularly in relation to the particular aspect I am now addressing Mr Moxon states that the dispute resulted in an alliance between Mr Litchfield, who personally disliked and mistrusted Mr Rynton from the outset, and Mr Cook, who was turned against an old friend by what he regarded as “distasteful” conduct. As to this, Mr Moxon stated in his second witness statement:
“I think Peter was put out because Steve introduced people whom Peter knew and Peter could have introduced had he wanted to…and that Steve shouldn’t really be getting paid for the introductions…Peter also became increasingly intense  about what he saw as Steve putting himself across to potential clients as almost an employee of LCM.  Peter was getting very annoyed with his friend, although they continued to enjoy a social life together.  Behind Steve’s back though, Peter started to side with James. Together James and Peter discussed ways in which they could curtail Steve’s activities and thus any payments to him.  I think this was a catalyst for James siding against me on several issues, which ultimately led to my exclusion from LCM.”
104.	Mr Litchfield (whose evidence in relation to Mr Rynton Mr Cook adopted with very little elaboration) dismissed the suggestion that he and Mr Cook had “cooked the books” or otherwise sought to deny Mr Rynton proper disclosure or any fees to which he was entitled. He was open about his dislike of Mr Rynton, and critical of Mr Cook and Mr Moxon for them (as he perceived it) pandering to him. 
105.	It is not necessary for me to determine the rights and wrongs of the dispute with Mr Rynton; but there is no doubt that Mr Rynton proved divisive; and there is no doubt either that Mr Cook’s change of mind about him, and his conclusion that Mr Litchfield had been right did bring him into alignment with Mr Litchfield more generally. I accept that the combined effect of (a) the K-Club incident (b) the renunciation of the Side Agreement by Mr Cook and Mr Kulesza and (c) Mr Cook’s conclusion that Mr Litchfield had been right about Mr Rynton (and Mr Moxon thus wrong) was to encourage an axis between Mr Cook and Mr Litchfield, and loosen considerably Mr Litchfield’s relationship with Mr Moxon.  The natural majority had been Mr Litchfield and Mr Moxon together as executives; it became Mr Litchfield and Mr Cook, with the latter playing an increasing role.
The December 2007 email exchanges
106.	This is illustrated by an exchange of e-mails between Mr Litchfield and Mr Cook (circulated to Mr Kulesza but intentionally not to Mr Moxon) in December 2007, stating the subject as being “‘Way Forward’ Meeting”. 
107.	The emails are long; but I think they are worth quoting in full since they provide a contemporaneously taken picture of the state of the relationship between the parties as of the end of 2007 and following the K-Club incident, as well as foreshadowing the disagreement with Mr Rynton and shedding light on the erosion of the relationship between Mr Moxon and Mr Cook.
108.	On 10 December 2007 Mr Litchfield sent to Mr Cook (cc Mr Kulesza) the following email: 
“Dear Peter & Voytek
Please note this is an e-mail from myself. Richard is not copied in and does not know I have written it.
Further to our conversation on Saturday Peter, I believe the key issue that has to be clarified and removed is the perceived linkage of the issues over the marketing spend in June and the share sales.
At present it looks like the two are ‘hand in glove’. The ‘problem’ is that the offer to sell the shares to Rick and I that was put in writing in 2003 has no time frame on it to expire and no caveats or criteria; there now appears to be some which obviously should not be the case. I say this because it is blurring the issues at hand and escalating matters, particularly with Rick who is very upset and I cannot really understate this. You already know Peter how upsetting and stressful I find this whole matter.
Judgement calls were made in June about the golf event and other marketing, specifically relating to Ian Godfrey in the heat of the moment. Rick chose to handle those matters in his way, which may not be mine or yours but as an executive director and 30% shareholder he is entitled to some discretion and he exercised it. Whether with hindsight or foresight the decisions taken were good is for conversation and for us all to learn from in how we deal with each other. As a young director you can only learn by trying and I strongly feel that the perceived linkage of the apparent changing of the terms of your letter as some kind of punishment because you feel he should have consulted with you first is not right or fair and from gauging Rick’s feelings on this will lead to a complete breakdown of the effective running of the company if that perception is not altered. In so far as whether the contentious spend was worthwhile; we have underway some £80,000 of business that was directly linked to the golf and Rick has been introduced to a multi millionaire client from the boxing event who will have some £5m to £6m to invest over the next couple of years as he unwinds his business. We have already written some £16,000 of business from the golf event. The return on this total spend will be at least double within 9 months of the spend.
To try and balance the scales a bit in terms of context, I am as aggrieved, as appear to be with your issues Peter, about the money that has been sanctioned to Steve Rynton over the last six and the next three months that amounts to £18,000 (on top of the £12,000 we had already given him) which by your own admission we will just about wash our face on at best. I have strongly objected to this at every stage and the actions of Steve Rynton have been exactly as I forecast many years ago, to take the money and run. But I have respected the decisions made by you and Rick at your meetings with him even though they have made me very upset and angry and I have not disrupted the running of company or effectiveness of the board by throwing my toys out of my pram. I have toed the line as he has also not been taken to task for breaching the terms of our agreement on many occasions, a matter which has had far greater ramifications for LCM than anything involved in the issue you have with the marketing budget. We now have to actively anti-market our relationship with him and still he gets paid £2,000 a month because you and Rick consider it necessary to pay him this so he doesn’t start ‘howling at the moon’ in the pub. A decision communicated to me after the fact.
With regard to the issue of the purchase of the shares, this has in my view which I have said to all many times, become unhelpful and divisive. Rick and I are not flush with cash, we live pretty much hand to mouth as our salaries just cover our every day outgoings, we have full sized mortgages and have to have loans to buy cars and furniture etc. The constant turning up of the pressure for Rick and I to buy these shares over the Summer and Autumn has been unhelpful and confusing. 
How Rick and I have handled the communication of this partly comes down to our personal pride in that it does not come easily for either of us to say we cannot straightforwardly afford the shares and that the prospect of putting ourselves in debt to the extent that one slip and we could lose our homes and everything else does not come easy. It is also to be blunt none of anyone else’s business and to be forced to have to make such admissions has been, in my personal experience embarrassing. I personally think that until very recently this has been completely ignored and washed over when we have tried to talk about it and the admissions by us of our situation at the end of last month have been treated with further aggression in accusation that we have been in some way plotting. Plotting what I do don’t know but those are the terms that have been used. The only reply has been that if we do not buy them soon then the price will go up and up which has only increased the stress of the situation.
Why this aggressive manner has been taken is something I would like to know the answer to as I have, as said found it confusing and stressful.
If it has been your intention to go back on the offer you made in 2003 and that you are wanting to use these issues with the marketing June as your lever then I will very disappointedly have to side with Rick. However, I am of the confident opinion, and I have told Rick this, that this is not your intention and the second tranche of the agreed share sale will happen as soon as possible and the matters at hand on marketing have become accidentally entwined.
As you pointed out Peter, the bottom line is Rick and I have, from a starting figure of -£80,000 at the start of 2004 built a business that with income to be confirmed from the Jones’ could have reached nearly £1m of turnover in only 3½ years of trading and paid some £275,000 of ordinary dividends. As both Rick and I have said we are very much on track for hitting this year’s budget of over £1.6m turnover. For investors who all invested at a net price of 80p a share (assuming IT and CGT relief) to have received dividends of £3.72 per share (net of higher rate tax) in four years plus whatever the shares are worth is an excellent return built on the back of Rick and mines personal and financial sacrifices (and Peter’s to an extent financially for a short period this Summer) in working average weeks in excess of 60 hours for nearly 5 years, foregoing many holidays (I have taken about 6 weeks in 4 years) and taking on extra responsibilities saving the Company the tens of thousands of pounds.
We have willingly done all of this in good faith on the basis of the agreements we had about our financial remuneration and incentives that we were offered and you put in place in June 2003.
I want this matter putting in the past and the status quo in place asap that has created such a profitable company for us all to have and continue to benefit from but that does not mean I or Rick are accepting of a ‘compromise’ where the financial impact into the future on us of what is a disagreement over the protocol of the Board speaking to each other about issues (it is only this, there has not been any or can there be any suggestion of anything else) runs into the many tens of thousands of pounds of future potential value on the two executive directors who are putting all of the work in to try and generate that value.
As a finishing point I would remind you of the issues Peter has raised:
(1)	Rick used his discretion to sponsor a local boxing tournament for £2,000. Only expenditure over £5,000 has to get prior Board agreement. Peter feels embarrassed that he found this out after the event from Steve Rynton making him look in his words ‘an idiot’. Peter also feels that Ian Godfrey, a Steve Rynton introduction is a time waster.
(2)	Rick chose under the threat of the cancellation of this year’s golf event by the event management company to pay personally an invoice for just under £15,000 in June which was repaid to him in December. Peter feels that he should have been explicitly told this and that he has been kept in the dark over the cost of the golf. Rick does not believe this to be the case except for Peter being told Rick had covered the position from his own account. The final cost of the golf has only been finalised this morning after clarification of the issue from the VAT office. We were correct but it is after the fact so cannot be altered.
(3)	Peter feels that he has been misled about the share purchases and whether Rick and I had the money. Peter feels we should have told him earlier.”
109.	Mr Cook replied as follows to Mr Litchfield (again not copying Mr Moxon): 
“Dear James
Responding to your email and copying Voytek in – will not send a copy to Richard as you requested.
The marketing cost issues relate not to the payback but to the way in which I was deliberately misled over the Golf costs. Both you & Richard were aware of the extra £15,000 but dealt with it in such a way as to hide it from me. Why couldn’t Richard have simply made a loan to LCM of the £15,000 if there was no attempt at concealment? If you or Richard believe I was aware I would simply refer you to the various Board Minutes which clearly set out the position formally reported to the Board.
As far as the Share Sales are concerned I though that we were all in agreement that to sell at £2 per share and not attract Revenue attention it was vital to sell before the 2006/7 Dividends (of £3 per share) were paid. Rolling up the 2006/7 dividends into the strike price was more justifiable to the Revenue at £5 per share & suited Voytek & I as well as it turned revenue into capital.
Given the 2007/8 Budgets & projected dividends in excess of £8 per share Voytek & I were/are quite happy to retain the shares. I am sure that you will recollect I have pointed out to both you & Richard on a number of occasions this year that it is monumentally to your disadvantage not to transact the share sales. As you are aware I was even prepared to offer Richard a loan on identical terms to your BOS credit line to assist the purchase of the shares but he declined. My gripe is that you & Richard colluded to mislead me as to the availability of funding and I in turn inadvertently misled Voytek on the timing of the sales.
These attempts to mislead have unsettled me and hence the desire for the Non-executive shareholders combined to retain shares that are equal to the individual Executive holdings.
The donation to CABC is within Richards authority but I feel that it was deliberately withheld from me – I can’t prove it but I have a strong belief that this was the case. When I raised the issue with Richard in the summer (having seen the local press) he said ‘a few hundred pounds’ had been donated. It was only on last weeks examination of the year end Ledger prints that I was made aware of the true figure of £2,000. Given that at the time the payment was made I had injected an interest free unsecured loan into the business of £30,000 because of liquidity problems I now feel somewhat disgusted at this payment to CABC. I pointed out to you both at the beginning of the Godfrey story that if asked for funding up front we should treat him as a scam operator & that is still my view.
Please don’t link the current Godfrey connection with Steve Rynton. He simply introduced Godfrey as a potential client – oil money from the Middle East and all that. The current Godfrey situation has been created by Richard and deliberately withheld from Steve by both Richard & Ian.
You may disagree with the current Rynton situation but you have been aware of it and it has been reported at Board Meetings.
Richard & I were instrumental in setting up on account payments earlier this year of £2,000 per month against an agreed SHR/RAM ‘soft’ Budget target of £35/40,000 for the year. The shortfall has come as a surprise and disappointment to me. As you feel so strongly about it I think we should discuss the issue with Richard and stop the payments now if we all agree.
For Voytek’s benefit I would like to highlight the historical value of the connection £46,000 of commission paid for presumably £230,000 of commissions earned by LCM and a significant amount of investment management business on which no commission is payable. If you contrast that with the Steve Lavell situation (as an employee rather than agent) where similar costs were paid & nil commission earned the Rynton route has been very cost effective. My view is the Rynton situation has been good for the business (particularly in the early days when it was vital) but is now past it’s sell by date & needs rationalizing. The Agreement we have with him expires at the end of this month & presents a perfect opportunity to rationalize the situation.
I am sure there are many other issues on which we have differences and I have responded on the Rynton situation as you raised it. The issue of misleading the Chairman & major Shareholders is all together different & MUST be addressed.
Nobody doubts that a very successful business has been established it could not have happened without your executive input. Equally it could not have happened without the risk capital that Voytek & I invested. I look forward to our discussions next week to put these issues behind us.”
110.	Each of the protagonists (and also Mr Kulesza) was cross-examined in relation to this exchange of emails. What struck me most were two aspects of Mr Cook’s reaction to Mr Litchfield’s email. First was Mr Cook’s continuing indignation about what he regarded as deliberate concealment on the part of Mr Litchfield and especially Mr Moxon in relation not only to the K-Club incident but also a donation of £2,000 out of Company funds arranged by Mr Moxon (which, he wrote, “disgusted” him), and their “collusion” in misleading him as to whether they could afford  a purchase of shares under the Side Agreement, and more generally their “misleading [of] the Chairman [himself] and major shareholders [himself and Mr Kulesza]”. 
111.	For someone who presented himself as an elder statesman (as well as a Chartered Accountant with considerable business experience) this struck me as somewhat highly coloured.  Mr Cook’s abiding concerns, as it seems to me, were that his position (as Chairman and lead investor) was not being sufficiently respected; that he was being deliberately kept in the dark; and that he was repeatedly being taken advantage of. My sense remains that in relation to the events addressed the explanation of the matters he complained of was lack of communication, perhaps an excessive fondness on the part of both Mr Litchfield and Mr Moxon to “make a splash” to mark the Company’s growing success, and a feeling of being at a financial disadvantage personally, rather than collusion or deliberate concealment or any attempt to mislead.  
112.	But, as Mr Litchfield predicted, Mr Cook’s somewhat self-important and indignant approach was corrosive: it caused both Mr Litchfield and Mr Cook distress and stress, but in the case of Mr Moxon it led to a feeling of growing isolation. 
113.	Further, although to some extent sharing a common cause (the enforcement of the Side Agreement) it also seems to me that Mr Litchfield, wary of Mr Cook and sometimes dismissive of Mr Moxon, moved closer to Mr Cook (especially in light of Mr Litchfield’s understanding that neither could afford immediate purchases of shares and therefore both needed to appease Mr Cook).  
114.	There is, in my view, something in Mr Moxon’s case that from January 2008 onwards, an axis began to develop between Mr Cook and Mr Litchfield: and although I do not accept Mr Moxon’s suggestion to the effect that Mr Cook and Mr Litchfield were in 2008 becoming a “board within a board” (my phrase not his, but I think it captures Mr Moxon’s complaint), I do accept that as Mr Moxon’s relationship with Mr Cook worsened, the rapprochement between Mr Cook and Mr Litchfield made him feel side-lined.
115.	In that context, there was some considerable focus in the evidence on a pre-meeting between Mr Cook and Mr Litchfield held over lunch at Mr Litchfield’s home on 5 February 2008 in preparation for a Board meeting on 26 March 2008. An email from Mr Cook to Mr Litchfield dated 6 February 2008 records that they had a “long, uninterrupted, constructive discussion” ranging over a number of topics for which Mr Moxon had or shared responsibility. There was a dispute as to whether or not Mr Moxon had been invited; Mr Moxon was adamant that he had not been; Mr Cook thought he had been; Mr Litchfield could not remember. Certainly he was not there. 
116.	Yet even proceeding on the basis that Mr Moxon was not invited, I do not consider that the fact of a pre-meeting demonstrates exclusion or a “board within a board”.  Mr Zelin pointed out that Mr Litchfield and Mr Moxon often met in such a way without Mr Cook, and continued to do so. Thus (for example) in July 2008 they discussed between them the instruction of new accountants without involving Mr Cook; and some time later, in September 2009 Mr Cook admonished them in an email dated 23 September 2009 for failing to consult with him. It is also right to note that in the email of 6 February 2008 Mr Cook referred to a “follow-up meeting” planned for 11 March 2008 “including Richard”.  
117.	More generally, I do not consider that the evidence supported Mr Moxon’s suggestion that during 2008 and 2009 he was effectively excluded from management, and was merely (as he put it, “faced with decisions that had already been made”). A passage from his second Witness Statement illustrates, to my mind, both Mr Moxon’s tendency to exaggeration in order ostensibly to jam his case into established categories of unfair prejudice, and a basic misunderstanding of what “exclusion” really means. He stated as follows:
“During 2008 and 2009, I was increasingly isolated within LCM and continued to be excluded from management…As I was outnumbered two to one, I had no say at all in the direction of LCM from 2008 onwards as a result.”
118.	I accept that exclusion may embrace a situation where the board meetings become a charade, with the discussion a foregone conclusion: but I do not consider that Mr Moxon has demonstrated that to have been the case here. Mr Moxon’s contention that being outnumbered meant he had no say at all in the direction of LCM is, however, misconceived: a director cannot expect to control, but only to participate in, the direction of the company. Being in a minority does not, of itself at least, connote exclusion.
119.	What to my mind the evidence does illustrate over the course of 2008 and 2009, however, is a loosening of the axis between the executive directors with which Mr Moxon had been more comfortable, and a rapprochement and growing trust between Mr Cook and Mr Litchfield, without a corresponding rapprochement between Mr Cook and Mr Moxon. This not unnaturally made Mr Moxon feel uncomfortable; and I would accept that it manifested a gradual process of re-alignment that did ultimately lead to him actually being, as well as feeling, side-lined. 
120.	That said, Mr Moxon’s search for evidence of a long standing plan to exclude him led him to place weight on matters that could not bear it.   Mr Moxon’s complaints about increases in staff salaries authorised by Mr Litchfield are, to my mind, an example. It is likely that Mr Litchfield did propose and agree increases in salary in the case of staff, including Claire Heaton, without consultation; but Mr Moxon was kept informed, and did not object at the time; and in any event, I do not think any of this demonstrated any concerted plan.
121.	Further, Mr Moxon’s attempt to present his eventual removal as the culmination of events stretching back to 2007/2008 smacks, in my view, of a distraction, not to say artificial construction.  The reality is that there are clear signs that Mr Moxon got on the wrong side of Mr Cook, who was always apt to assume that Mr Moxon was behaving both badly and covertly, and who (to take a further illustration of this) quite mistakenly accused him of fiddling his car expenses. There are clear signs also of Mr Cook and Mr Litchfield becoming the natural majority on the Board. There are clear signs, thirdly, that Mr Litchfield was something of a false friend to Mr Moxon: he went behind Mr Moxon’s back on at least two documented occasions. But the real rift between Mr Moxon and Mr Litchfield came much later: not, in my judgment, until late summer of 2010. 
122.	That was when Mr Litchfield became aware of the true nature of certain outside interests of Mr Moxon, and especially his involvement with a Mr McCulloch in a company called RM Squared Asset Management Ltd (“RM2”), which was set up to exploit land at Barwell, in Leicestershire (“the Barwell Land project”).  It was that involvement, and (it is alleged against him) his efforts to disguise it, which is chiefly relied on by the Respondents as constituting gross misconduct on the part of Mr Moxon such as to justify his dismissal as director and to trigger the “draconian” transfer provisions in relation to his shares. 
123.	Thus the crux of this case is whether Mr Moxon’s involvement in RM2 and the Barwell Land project was consistent with the obligations he owed to the Company, and/or approved by the shareholders (as Mr Moxon contends it was): Mr Collingwood described it as “a prism through which the removal of Mr Moxon ought to be viewed”; I turn to paint in the factual context in some detail, both because of the importance of the subject in all parties’ perception of the case, and because the background is important in determining which to accept of the parties’ very different views as to the nature of Mr Moxon’s involvement and whether it merited his dismissal.
RM2 and the Barwell Land Project
124.	Although the nature of Mr Moxon’s participation at the various stages of the Barwell Land project is hotly contested, the background history was not substantially disputed. I take it largely from Mr Moxon’s second witness statement, with some qualifications in light both of Mr Litchfield’s own account in his witness statement, and the cross-examination of them both.
125.	In 2008 Mr Moxon was introduced to a farmer called Mr Barry Foster (“Mr Foster”) who owned a large piece of land in Leicestershire.  The introduction was effected by Mr Foster’s accountant (a Mr George Walton, who had in fact been introduced to LCM initially by Mr Rynton). It was perceived that the land might well be earmarked for future residential development, and this had prompted various developers and house-builders to approach Mr Foster with a view to persuading him to enter into option contracts with them.  
126.	Mr Walton was seeking advice on how best to avoid or mitigate capital gains tax on any potential sale of the land. In addition, though he had a planning consultant working for him, he explained to Mr Moxon that he would like some higher level advice on the planning process. Mr Moxon says he mentioned this to Mr Litchfield and a number of solutions came to mind. One  was to enlist the assistance of a client of LCM, namely Mr McCulloch. After a successful career in business, Mr McCulloch had become involved in property development in his retirement: Mr Litchfield suggested he might be able to help and that Mr Moxon should recommend his involvement.
127.	Mr Litchfield was, according to Mr Moxon, less keen on Mr Moxon’s own involvement, which he saw as a waste of time, it being his opinion that it would be years before anyone actually got any money. Mr Moxon took the different view that it was worthwhile keeping an eye on it “to see what developed in the future” and to help Mr Walton who “had some potential LCM clients within his accountancy practice”.
128.	In the event, Mr McCulloch’s involvement with Mr Foster’s land, did not really come to anything; it was found on further investigation to be designated as “green wedge” land that could not be developed.  According to Mr Litchfield, who had had a couple of meetings on the project in April 2008, that conclusion marked the end of LCM’s involvement as far as he was concerned. 
129.	More generally, Mr Litchfield confirmed that in his view there was no merit in Mr Moxon and his assistant Graeme Crozier (“Mr Crozier”, who had also become involved in relation to the potential development of Mr Foster’s land) continuing to be involved with property projects, as “the economic conditions and our lack of experience meant we had been involved in a number of property related avenues that had gone nowhere”.
130.	Nevertheless, Mr Moxon continued to dabble in association with Mr McCulloch in potential land development projects, and most particularly, the potential for development of the Barwell land, which was within the Hinckley & Bosworth Borough Council.  
131.	The accounts of Mr Moxon and Mr Litchfield differ markedly on the question of Mr Litchfield’s knowledge of what became the Barwell (or Hinckley) Land project. Mr Litchfield’s evidence, which he adhered to under cross-examination, was that his “only knowledge was that Moxon was ‘sort of hanging around’ Bob [McCulloch] and a farmer called Mr Clive Vero [who owned part of the Barwell land] to pick up any tax and financial planning work that might ensue.”  Mr Moxon’s evidence, on the other hand, was that not only was he himself closely involved in, and had a number of meetings about, strategic direction and financial projections in respect of the project, but that so too (though not quite to the same extent) was Mr Litchfield (whom Mr Moxon described as having “known the Barwell land as well as anybody”). 
132.	The conflict of evidence is of relevance primarily to the question of whether Mr Litchfield (and through him, Mr Cook) were aware of Mr Moxon’s interest in the Barwell Land project. I do not accept that Mr Litchfield was as far removed and ignorant of the project as he continued to suggest to me under cross-examination. 
133.	I found Mr Litchfield to be something of a curate’s egg as a witness. He is not a man to take the blame; he was quite irascible if doubted or contradicted; as noted previously, he could be a false friend if his perception of his personal interests required it. I did not find him credible in his evidence that he knew nothing of Mr Moxon’s “outside” activities in relation to the Barwell Land project, even though (as I later elaborate) I do not consider that he knew or even suspected the true nature of Mr Moxon’s “outside interests” until they were gradually and somewhat tortuously revealed in August 2010 (as I explain later).
134.	The contemporaneous emails appear to me to confirm that Mr McCulloch, at least during 2008, kept Mr Litchfield in the loop about “Hinckley”. I consider it more likely than not, on the basis of the emails, that Mr Litchfield did know that the Barwell land was part of the Hinckley land, and that Mr Vero was part of what came to be called “the coalition” of landowners who agreed to act in concert or coalition in order to seek to establish a “Sustainable Urban Extension” (“SUE”) for some 2,500 residential dwellings to be constructed around the villages of Barwell and Earl Shilton and thus to obtain the requisite planning permissions. 
135.	Indeed, as it seems to me, the emails fairly clearly demonstrate active engagement on Mr Litchfield’s part, including carrying the project forward during Mr Moxon’s absence for 2 weeks in August 2008. Thus, for example, in an email dated 31 July 2008 Mr Litchfield wrote to Mr McCulloch:
“Hi Bob
Rick is now away for the next couple of weeks.
I know he spoke with Clive at length last week.  Clive has got several personal issues to deal with before he can commit to the land possibilities.  He has asked Rick to assist him on his return in these matters which will take some time.
I would therefore recommend that you go no further on anything to do with Clive’s land until we can advise that Clive is clear of these issues.
Sorry to cool your jets but Clive is not in a position to co-operate at this time.
I am planning on reviewing all the goings on with the Hinkley [sic] projects whilst Rick is away so perhaps we can meet up.”
136.	I do not think it is possible to reconcile that (and other) emails with the almost complete ignorance claimed by Mr Litchfield of the Barwell Land project. Equally, however, I do not accept the suggestion made (or at least floated) by Mr Moxon that Mr Litchfield appreciated at that time (or for some time afterwards) that there was a possibility of Mr Moxon (or, for that matter, Mr McCulloch) acquiring any property interest in any of the land itself.  
137.	Thus, for example, though Mr Collingwood sought to suggest that references in an email from Mr McCulloch to Mr Moxon and Mr Litchfield dated 2 September 2008 to “our future level of interest” were to his and Mr Moxon’s prospective proprietary interest, I do not think the suggestion is well-founded. I accept Mr Zelin’s submission that Mr McCulloch was writing not as a prospective owner but as the leader of a group of professional advisers, and that the reference to an interest was to Mr Vero’s interest in the planning consultation process upon his being lately included in the coalition of landowners all seeking planning permissions. 
138.	Similarly, I accept the contention that the reference in an email dated 8 August 2008 from Mr Moxon to Mr Litchfield on the subject of “Bob’s email on Hinckley”, to “Topham only needs 25% leaving the other 25% for us – something like that” was a reference to division of fees or profit share (Richard Topham being another adviser whom Mr Litchfield had introduced), and not to some future property stake; and Mr Litchfield confirmed in re-examination that that is what he understood at the time.
139.	It is not, I think, necessary to chronicle the efforts to obtain development permission led by Mr McCulloch, together with Richard Topham and Mr Bell (clients of LCM who had extensive knowledge of development) and others.  Suffice it to say that they had by early 2009 reached a point where Mr McCulloch felt sure that the Barwell Land would get a designation for residential development.
140.	From about March 2009 onwards, and separately from the Barwell project, LCM was advising another client, Mr Gwynn Furlong (“Mr Furlong”), who had been a director of property for Close Brothers before retiring, and had extensive knowledge of development as well as being a surveyor, on various possible fund structures, including the establishment of an offshore fund as a vehicle for a fund aimed at buying and leasing back land owned by the Homes and Communities Agency (“the HCA”). The idea was to provide the HCA with liquidity that might stimulate house-building. To this end, for example, LCM prepared an outline paper for the HCA to set out in more detail the suggested scheme. The proposal was on the notepaper of LCM Wealth Management (which was of course authorised and regulated by the FSA): it appeared then and appears now to be a LCM project, and it seems clear that Mr Litchfield was involved, as well as Mr Moxon, on behalf of LCM. Thus, for example, when reporting on progress in taking the matter forward to the HCA, Mr Furlong did so by email dated 3 March 2008 which he sent to Mr Crozier, Mr Moxon and Mr Litchfield.
141.	In the event, the HCA declined to engage unless and until Mr Furlong and LCM could show that they had raised the required capital; but LCM (including Mr Litchfield) continued to explore ways whereby to raise funds, and was still advising on the HCA proposal on 28 May 2009, as is evident from an email from Mr Furlong to Messrs Crozier, Moxon and Litchfield of that date suggesting adaptations of the proposals to fit in with the HCA. 
142.	In short, although Mr Litchfield was against LCM itself recommending or participating in commercial property investment (in an email in March 2010 to Messrs Moxon and Crozier he said of such an “opportunity” “Not bloody interested. Next person who says commercial property investment opportunity to me gets the crap kicked out of them!”), he was not against LCM advising on structures for funds and other vehicles to be used for that purpose. Even in June 2010 he was still advising Mr Furlong in respect of such a fund (referred to as the “CHIP” fund). Although the evidence suggests that Mr Litchfield was doubtful that real profits were to be had from funds for property investment (doubts which appear to have been well founded) I do not accept the submission made on behalf of Mr Moxon that Mr Litchfield disclaimed any interest in LCM being involved in property projects generally.
143.	In the meantime, with success in achieving redevelopment now a real prospect, Mr Moxon and Mr McCulloch, who did not yet have any formal agreement with the coalition and especially Mr Vero, turned their attention to how they would manage and formalise their relationship with Mr Vero and the other landowners, and as to what upside there might be for them.
144.	The structure they had in mind, although it was not implemented until later (in 2010), was a series of option contracts under which, if successful in obtaining an allocation for development, Mr McCulloch would (through a company) receive the right to buy the land in question on a discounted cashflow basis.  Mr Moxon told me that it was he who advised that a corporate vehicle be used “rather than take on a personal liability”. It was his evidence that the suggestion that he should also be a shareholder (on, moreover, a 50:50 basis) came from Mr McCulloch.  The company (“RM2”) adopted the name “RMSquared Asset Management” in recognition of both having the initials “RM”.
145.	Mr Moxon at all times recognised that he would need consent and permission of the directors and shareholders of LCM before taking up such a shareholding and directorship (as was also proposed).  He maintains that he obtained it. He is adamant that Mr Litchfield, and through him Mr Cook, were well aware of the nature of his collaboration with Mr McCulloch; and about RM2 and his involvement in it; and about its prospective interest in the Barwell land; and that with such knowledge they authorised his participation as an “outside interest”. He especially relies in this latter context on what came to be referred to as “the June letter”. 
146.	Mr Litchfield denies having known about RM2, or about its interest in the Barwell land, still less Mr Moxon’s interest in it, until some time after 12 August 2010. Mr Cook is more precise; his evidence was that he had “no knowledge whatsoever about the RM2 project until 21 August 2010”.  Both deny emphatically having ever authorised Mr Moxon’s participation in the project, whether by the June letter or otherwise.
The June Letter: background and provenance
147.	The provenance, authenticity, construction and effect of the June letter are all hotly contested, although by the time of the trial and after expert evidence, it was not any longer in dispute, whereas previously it had been, that the signature on the last page of the June letter was that of Mr Litchfield (though he was adamant that whatever he had signed had not the same text as was put forward to him as the June letter).
148.	Mr Moxon’s case is that the June letter represented the culmination of a number of discussions involving himself, Mr Litchfield, Mr Cook and Mr Kulesza about outside interests, including at Board meetings of LCM held in April and May 2009.
149.	So far as I am aware, Mr Moxon first suggested that there had been discussion of outside interests at the Board meeting held in April 2009 in the course of brief oral examination in chief which I permitted at the outset of what proved to be some three days in the witness box. He went so far as to say that he thought those present (who included not only himself, Mr Cook and Mr Litchfield but also Mr Kulesza) had reached a “consensus”.  He made no such suggestion in any of his (three) witness statements. There is no record of any such discussion in the minutes, or any mention of it in the agenda. There is no other documentary evidence to support the suggestion. None of the others present accept that any such discussion took place. Mr Zelin submitted that Mr Moxon invented the discussion late in the day having noted that Mr Kulesza was present at the April Board meeting, and because Mr Moxon needs to show the agreement of Mr Kulesza. Whether for that reason or not, I do not accept Mr Moxon’s late suggestion: I find that there was no such discussion about outside interests at the board meeting in April 2009. This does bear on Mr Moxon’s reliability: I return to that later.
150.	There is no dispute about the fact that the matter of outside interests was raised by Mr Moxon at the Company’s Board meeting held on 26 May 2009, at which were present Messrs Cook, Litchfield and Moxon, but not Mr Kulesza. Mr Moxon claimed that the discussion took some two hours: none of the others present accepted there was so long a discussion.  
151.	The minutes of the meeting (which not unnaturally Mr Moxon emphasised he did not draft, and were drafted by Mr Cook) do not mention any discussion of outside interests, but record discussion of a wide range of other matters. There was general agreement that usually Board meetings did not last longer than two hours in all; and the others did not remember the May meeting having been an exception: if outside interests had taken two hours the focus of the minutes is very odd and it is hard to see how there would have been time for anything else.
152.	There was also a difference of view as to what the discussion of outside interests in fact covered. Mr Moxon sought to convey the impression of detailed discussion of his outside interests in property related transactions that “LCM did not want to be party to”.  Mr Litchfield and Mr Cook depicted the discussion as short, and focused not upon Mr Moxon’s prospective property interests but upon his activities as a trustee for outside investors, and in particular, as a trustee of a trust called the Margaret Cropper Settlement.
153.	As Mr Moxon explained in his second witness statement, he was at that time doing increasing amounts of (unpaid) work as a trustee for client families who wanted assistance with matters that did not fall under the financial services offered by LCM. One such trust was the Margaret Cropper Trust.  As a trustee Mr Moxon was being asked to authorise investments and also to enter into formal deeds such as for mortgages. Mr Cook and Mr Litchfield had apparently become concerned that LCM might become exposed to prospective liabilities in respect of that trustee work which they were concerned might well not fall under LCM’s professional indemnity insurance; they wanted Mr Moxon to undertake such work through a separate company. Their more immediate concern, apparently, was that Mr Moxon was about to execute a mortgage as trustee to secure a substantial sum.
154.	Mr Cook and Mr Litchfield contended that the discussion related to the Cropper trust and other similar trusts, and not to wider issues. Mr Zelin pointed out that Mr Moxon’s own account in his second witness statement itself focuses on these trust services issues, though there is also a short reference to Mr Moxon having become involved in a number of “property related transactions that LCM didn’t want to be party to, in particular a project with Bob McCulloch”.  Both Mr Cook and Mr Litchfield acknowledged that there was some general discussion after the formal close of the meeting about other outside interests, but in an unfocused and informal way: Mr Cook was adamant it was restricted to the trust issue; Mr Litchfield thought it might have ranged wider; neither considered that it was part of the meeting, nor that it was appropriate to be included in the minutes.  
155.	Mr Moxon received a draft of the minutes on 28 May 2009. He did not raise any suggestion for amendment until nearly 3 weeks later. By email of 17 June 2009 from Mr Moxon to Mr Cook, circulated to Mr Litchfield, Mr Moxon wrote this:
“Dear Peter
Just checking through the minutes of the last Board meeting and I think we should make mention of the discussions on outside interests and specifically my separating the trustee work etc from LCM. Please let me know if you want me to make the amend.
Kind regards
Richard”
156.	Mr Cook’s response was:
“Dear Richard,
I agree it needs recording in the Minutes when the situation is clarified. I think it should be an Agenda item at our 14th July Meeting, discussed and recorded in the Minutes of that meeting.
Hope this resolves the issue.
Regards
Peter”
157.	In the meantime, Mr Moxon was consulting Mr James Sheridan (“Mr Sheridan”) at Halliwells, Solicitors, on his own behalf, with a view to putting before the Board and shareholders of LCM a letter to be sent to him by LCM authorising a menu of “outside interests”.  This was in due course to become the June letter. The timing and terms of the exchanges (some of which had a message “quoted text hidden”, apparently because the software used to access the emails automatically deleted previous emails in the “string”) are of some interest.
158.	It appears that Mr Moxon started the process of seeking advice on 15 May 2009 when he emailed Mr Sheridan wondering whether they could meet up and stating (amongst other things) as follows: 
“I need to go through where I see my future interests lying and what I want to happen about that in terms of getting the agreement sorted with LCM…”
159.	Mr Moxon had by then received Mr McCulloch’s proposal for the incorporation of RM2 (put forward on 8 April 2009) and his shareholding in it, and was no doubt considering whether or not to take it up.
160.	Mr Sheridan’s reply to Mr Moxon’s email of 15 May 2009 does not appear to have been sent (again by email) until 20 May 2009, when Mr Sheridan asked for “your other interests information and we can get things moving”.
161.	The next email in the thread is one from Mr Moxon to Mr Sheridan dated 8 June 2009, attaching a draft of “the sort of wording I would like to come from LCM” and asking him to “let me know if there are any glaringly obvious problems with such a letter”. He added: 
“I think I could get James to sign something along these lines as long as I signed one for him.”
162.	On 11 June 2009 Mr Sheridan emailed Mr Moxon as follows:
“Some ideas on the letter attached.  My preference would be to make it specific, but I know why you want it generic.  If you can get them to sign this, great – as it is pretty wide and vague.  I am concerned that they will not sign because it is so wide, but your call on giving it a try!
You do need the shareholders to sign if the letter is to work to vary the shareholders’ agreement – which is the one with the most teeth.”
163.	There followed various emails, some with text hidden for the same reason as stated in paragraph 157 above, over the period 17 June to 22 June, in the course of which Mr Moxon provided greater detail of his proposed ventures, and Mr Sheridan confirmed that the shareholders’ agreement could only be varied by unanimous agreement and not (as Mr Moxon had hoped) by majority voting power.
164.	The exchanges are interesting for the frailties in the June letter which they expose and acknowledge, as I come on to discuss later. For present purposes they are also interesting for what they seem to me to reveal as to the nature and progress of Mr Moxon’s plans to obtain authorisation for his outside interests (both actual and proposed). In not one of these exchanges does Mr Moxon ever refer to the fact or content of any previous discussion at Board level except in the recitation at the commencement of each version of the drafts as follows:
“Further to the Board meeting on Tuesday 26th May 2009, I can confirm that the following consents were agreed by the Board of Directors of LCM…”     
	What then follows differs substantively in the various drafts, indicating that the draft is not in reality a confirmation of what had in fact happened but a statement of what Mr Moxon wanted to have authorised, if only he could (in the future) persuade his co-directors and co-shareholders. 
165.	Taking this and the other evidence (or lack of it) into account, I have concluded that, contrary to Mr Moxon’s assertion, there was no formal or focused discussion at the May Board meeting about authorising any of his outside interests other than his position as trustee of the Cropper settlements (and possibly similar trusts).  There may have been desultory discussion between himself and Mr Litchfield: but nothing such as to justify Mr Moxon’s contention. 
166.	I accept Mr Cook’s evidence that he himself was not involved in any discussion, desultory or otherwise, about such outside interests (other than as trustee). I reject Mr Moxon’s contention that he specifically raised the RM2 opportunity at the meeting, that Messrs Litchfield and Cook were not interested in it, and that they were quite content for Mr Moxon to progress it himself, which also seems to me inherently unlikely as well as unsupported by the evidence. I reject also the suggestion that Mr Litchfield gave his approval: neither of the emails I have referred to above were sent or circulated to him, and I accept Mr Litchfield’s own oral evidence on the point.
June Letter: signature
167.	Those conclusions cast something of a doubt over the June letter and the reliability of Mr Moxon’s evidence in relation to it; but there are difficulties with Mr Litchfield’s evidence also. I turn to the dispute as to whether it was signed by Mr Litchfield and approved by or on behalf of Messrs Cook and Kulesza. Mr Zelin described this all as “something of a mystery”: I agree.  
168.	Mr Moxon’s position on the narrow point as to whether or not Mr Litchfield signed what is now known as the June letter does have the merit of consistency: that has been his unequivocal assertion since he first relied on the June letter and set out its key aspects in his written submissions to LCM dated 5 October 2010 in response to the allegations against him.  Mr Litchfield’s stance and evidence in relation to the June letter have been far from consistent; Mr Cook’s position has varied also.
169.	Messes Litchfield and Cook at first denied the existence of the June letter; and then, after receipt of a copy, denied its authenticity: their Solicitors, Shakespeares, wrote on 21 January 2011:
“Our instructions are clear.  The letter is a forgery.”
170.	They later refined this; and in the Defence on behalf of both Messrs Litchfield and Cook it is pleaded, more restrictively (and more equivocally):
“…the Respondents do not accept that the letter of 18 June 2009 was signed by Mr Litchfield.”
171.	 Both sides instructed handwriting experts. Dr Audrey Giles was instructed on behalf of Mr Moxon; Mr Stephen Coslett BSc was instructed on behalf of Messrs Litchfield and Cook.  Having compared the signature on the June letter with examples of signatures accepted by Mr Litchfield to be his own the two experts provided a joint statement dated 10 January 2013 as follows:
“We are agreed that there is strong positive evidence that this is a genuine signature of Mr Litchfield.”
172.	Faced with that joint statement, Mr Litchfield changed tack to maintain that even if the signature was his, the letter was a forgery.  This is not altogether easy to understand; but I took and take Mr Litchfield’s case to be that his signature was not placed on the two page document now known as the June letter: he maintained that he would never have signed anything as wide as the June letter.
173.	Indeed, as is implicit from his original denial of its existence, Mr Litchfield initially appeared to deny (as did Mr Cook) ever having seen the June letter until it was disclosed by Mr Moxon’s then solicitors in January 2011. However, in an email to Mr Moxon dated 30 June 2009 Mr Litchield stated as follows: 
“I have had another read of the ‘outside activities’ letter and I think there needs to be some changes to it as it is a bit too one-sided.” 
That does not necessarily establish that Mr Litchfield saw the actual June letter, still less that he signed it: indeed it suggests that whatever he had done by 30 June 2009 was not such as he considered to be binding; but it does show that Mr Litchfield must have been aware of the fact that Mr Moxon was proposing such a letter.
174.	It is not easy, or even possible, to be sure quite what the sequence and substance of events truly was, nor to be certain what was the document to which Mr Litchfield put his signature on the last page.  In his written closing submissions, Mr Zelin catalogued a number of reasons for doubting that Mr Litchfield placed his signature on the second page of a document of which both pages were in the form of the June letter. He stressed the following:
(1)	the fact that despite its obvious importance, if valid, no trace of it or any copy was found at LCM or by any of the other shareholders/directors;
(2)	the fact that Mr Moxon never showed the signed letter itself to anyone until it was finally disclosed in January 2011; before then, Mr Moxon sent incomplete quotations (the extract sent to the Company being, interestingly, incomplete in that it did not contain any caveat about non-competition or disclosure of potential conflicts of interest);
(3)	the fact that in his letter to Mr Litchfield of 5 October 2010, written “to remind you of some of our history together”  Mr Moxon explicitly stated that the letter had been “signed on the 18th June 2009 by the Company and by me as an Executive”, whereas the letter he now relies on is signed only by Mr Litchfield (albeit as Managing Director), and not by Mr Moxon (or anyone else);
(4)	the fact that according to the letter dated 11 January 2011 from Hill Dickinson, who were then acting for Mr Moxon, to Berryman, which for the first time enclosed what was said to be a copy of the letter in its signed form, the letter is described as having been “drafted up and signed by Mr Litchfield”, suggesting that Mr Litchfield had had a hand in its drafting or finalisation: but there is no record of the letter on any LCM server; Mr Moxon said that it was produced on his computer but that the computer had been wiped;
(5)	the likelihood that it was Mr Moxon who chose to wipe his own computer, since the evidence demonstrated (as I accept it did, having heard an IT consultant responsible for maintaining the LCM network, Mr Gary Strickland, a witness called by the Respondents, on the issue of remote access, and it not having been suggested that anyone else at LCM had done it) that only Mr Moxon could have installed the software used to wipe the computer;
(6)	the doubts expressed by Dr Giles in her expert report, by reference to an Electronic Detection (ESDA) test which tended to suggest a possibility that pages 1 and 2 of the June letter were not together when Mr Litchfield placed his signature on the second page;
(7)	the unexplained fact, which was not disputed, that within three months of the June letter, if correctly dated (as to which neither expert felt able to express a view), LCM adopted new articles of association and raised new preference share capital (in the aggregate of £300,000) under terms which require the new preference shareholders to execute deeds of adherence to the Shareholders’ Agreement.  Given the obvious relevance to the new shareholders of the contents of the June letter, which cut across the Shareholders’ Agreement they were, in effect, signing up to, Mr Zelin summarised the only three possibilities as being (a) that both Mr Moxon and Mr Litchfield had forgotten the June letter; (b) that Mr Moxon and Mr Litchfield (and possibly Messrs Cook and Kulesza) conspired to conceal it and its effect from these new investors; or (c) there simply was no such letter. Mr Zelin described, with some force, (a) and (b) as being inherently unlikely, leaving (c) as the rational explanation; and
(8)	the more general unlikelihood that Mr Litchfield would have signed such a letter, especially if there was any question of it binding Mr Cook and Mr Kulesza, knowing it had not (contrary to what it stated) been approved at a Board meeting on 26 May 2009 in the form in which it is relied on by Mr Moxon (since the draft had at least twice been altered materially after that date) and without any of those three filing or keeping any copy or record of it.
175.	These points have given me considerable concern; and I have been left with serious and abiding doubts as to whether the document to which Mr Litchfield put his signature comprised all the pages of the June letter in its entirety, and indeed as to whether the June letter in its present form was ever provided to Mr Litchfield and Mr Cook until their solicitors provided a copy. Even allowing for the gravity of a plea of forgery, I must admit that I have wavered on the point.
176.	In the event, however, I have concluded that it is not necessary to decide it; and that in such circumstances, and the evidence being inconclusive, I should not draw any inferences from the issue as to the credibility of either Mr Moxon or Mr Litchfield. The reason why it seems to me to be unnecessary to decide the point as a matter of substance is that even if Mr Litchfield did sign the June letter with all its pages as it is now presented, the fact is that by no later than 30 June 2009 he had decided that it should be changed; and he had notified Mr Moxon to that effect. The real issue arising if Mr Litchfield did sign some form of the letter is whether Mr Moxon was justified in relying on it as constituting at least Mr Litchfield’s consent: in my judgment, at least from 30 June 2009, he was not.
177.	I should add in this context, especially since the point was queried by Mr Collingwood when an earlier draft of this judgment was (as is usual) circulated to the parties, that Mr Litchfield was cross-examined with a view to establishing that he had signed or at least returned the signed version to Mr Moxon after 30 June 2009, signifying (it was suggested) his agreement to its terms notwithstanding his email of that date, and Mr Moxon’s reliance on it. 
178.	I accept that Mr Litchfield’s evidence under cross-examination on this point was not impressive. I gained the strong feeling that Mr Litchfield felt discomforted in relation to the June letter by the expert evidence that it was his signature on what was presented as its last page; and his evidence tended to be defensive, to the point of giving an appearance of evasiveness, which tended to be reinforced by the contrast between his initial confident assertion that he had not signed any such letter and his subsequent uncertainties and refuge in his lack of reliable recollection.
179.	However, having carefully re-read the documentation, Mr Collingwood’s supplemental submissions on the point, and the notes provided to me of Mr Litchfield’s cross-examination, I have reached the conclusion that if Mr Litchfield did sign the June letter, or some version of it, his email of 30 June 2009 must have post-dated its signature and return. That seems to me inherently more likely; and I take into account also that Mr Moxon and his solicitors had before the hearing insisted that the letter was signed on 18th June 2009. 
June letter: did Mr Cook and Mr Kulesza agree to it?
180.	Further, and in any event, I reject the suggestion that Mr Moxon relied on whatever version of the letter Mr Litchfield signed as constituting proper and reliable authority or consent for him to pursue his outside interests as he has claimed. As Mr Sheridan had advised him, Mr Moxon knew that Mr Litchfield’s signature was insufficient to permit “outside interests” without the concurrence of both Mr Cook and Mr Kulesza. 
181.	I have already noted that Mr Kulesza was not at the May meeting, and I have held that the question of “outside interests” was not discussed at all at the April board meeting (at which Mr Kulesza was present), and was not formally discussed at the May meeting either. Thus a further difficulty in the way of Mr Moxon’s case that his outside interests, and especially RM2, were authorised is that of showing that they agreed or at least acquiesced.  
182.	Mr Moxon’s case in this regard was somewhat general. It was to the effect that Mr Litchfield, when signing the June letter, told him that he had obtained Mr Cook’s agreement on behalf of himself and Mr Kulesza; and that in any case, the terms of the June letter were discussed with and agreed by Mr Litchfield “to reflect the agreement reached between the directors and the Shareholders”.
183.	Mr Cook and Mr Kulesza did not accept this. They both denied that any such conversation took place, and Mr Kulesza was clear that Mr Cook did not represent him and certainly had no general proxy (contrary to a suggestion made by Mr Moxon). 
184.	Mr Cook was pressed hard in cross-examination to accept that he had agreed to the June letter, and had so informed Mr Litchfield.  He was quite clear that he had not. I accept his evidence, which struck me then, as it strikes me now, as entirely credible. 
185.	Mr Kulesza was equally clear: he was not party to or aware of any discussions about “outside interests” in 2009 (leaving aside trustee interests, with which he was content); he had not seen the June letter at the time, and would not have agreed and did not agree its contents or substance, and considered that Mr Moxon, as a full time executive director, was correctly required to devote all his time to LCM (except for limited trustee work, which was an adjunct); and Mr Cook was not authorised to speak or agree on his behalf, then or at all. His evidence on the point, and indeed generally, was clear and convincing: I accept it.
186.	 It follows that, in my judgment, the June letter was not signed by, on behalf, or with the authority of either Mr Cook or Mr Kulesza, who at the time (I so find) knew nothing about it; and I find further that neither Mr Cook nor Mr Kulesza was party to or aware of any agreement such as the June letter purported (falsely) to confirm. 
187.	To my mind this also tends to be more supported than not by the minutes of the meeting of 14 July 2009 which recorded the discussion and decision on ‘outside interests’ under the heading “Outside Trustee Interests” as follows:
“the Board agreed that RAM was now acting independently and not as an LCM employee in his trusteeship of the Margaret Cropper Settlement.  RAM agreed to keep the Board appraised of any relevant developments in this matter.”
In his closing submissions, Mr Collingwoood sought to make the best of a difficult facet of the matter, pointing out that Mr Moxon was agreed to be acting “not as an LCM employee”; but there was little traction for him. If the June letter had been discussed and agreed by all concerned it is extraordinary that it should not also have been referred to; and even more extraordinary that the discussion should focus only on the trusteeship issue.
188.	I should add that, in my judgment, Mr Moxon must have been aware that Mr Cook and Mr Kulesza had not given him authority, and that the June letter was purporting to confirm events which in truth had not occurred. He was also aware, and had been so advised and warned, that without the authority of all the shareholders he would be acting in breach of duty and of the Shareholders’ Agreement.  I note also in this regard what I regard as a significant difference in the form of the letter that Mr Sheridan approved (which provided in tracked changes for signature by all the shareholders) and the form of it as now relied upon by Mr Moxon, which describes the shareholders as having “signified their consent”. I consider, and so find, that Mr Moxon knew full well that he needed, but had not, and probably could never have, obtained the signatures of Mr Cook and Mr Kulesza. Moreover, as previously noted, the form of the letter had changed materially after the Board meeting on 26 May 2009 to which it refers: he cannot have thought that the Board had agreed a letter in the form of the June letter Mr Moxon now relies on at that meeting. In proceeding nonetheless, he knowingly took a considerable risk, and deliberately breached obligations both in equity and contract. 
June letter: could it in law have been effective to authorise RM2?
189.	Thus far, I have focused on the context of the June letter and the dispute in that regard as to its authenticity and genesis. It is necessary also to consider its content, the extent of the authorisation it sought to give, and its effect.
190.	The June letter reads as follows:
“Dear Richard
Re: Activities Outside of LCM Wealth Management Limited
Further to the Board meeting on Tuesday 26th May 2009, I can confirm that the following consents were agreed by the Board of Directors of LCM Wealth Management Limited.
The Board agrees that you:
May act as a Trustee, Executor or Personal Representative with existing or new clients whether or not those clients are associated with LCM Wealth Management Limited
May, on your own personal account or for that of any entity in which you hold an office or interest, consult with or use contacts developed from your role with LCM Wealth Management Limited
May be a director or other officer of, employed by, or a party to any transaction or arrangement, including holding an equity interest or otherwise be interested in, any body corporate whether or not the body corporate is promoted by LCM Wealth Management Limited or is a body corporate in which LCM Wealth Management Limited is otherwise interested PROVIDED that this does not compete with the business of LCM Wealth Management Limited as it is carried on today
Shall not, by reason of your office with any third party, be accountable to LCM Wealth Management Limited for any benefit which you derive from any such office or employment or from any such transactions or arrangement or from any interest in any such body corporate and no such transaction or arrangement shall be liable to be avoided on the ground of any such interest or benefit
The Board has agreed that the above activities shall not adversely affect the terms and conditions of the LCM Wealth Management Limited Shareholders Agreement or your Service Agreement with LCM Wealth Management Limited.
The shareholders of LCM Wealth Management Limited (other than yourself) have signified their agreement to the terms of this letter and the resultant variation to the provisions of the Shareholder’s Agreement entered into between us in respect of our shareholdings in LCM Wealth Management Limited.
The above consents are given on the understanding that you continue to perform your role as a Director and employee of LCM Wealth Management Limited, that you endeavour to promote the success of LCM Wealth Management Limited and that you agree to inform the Board of any potential conflicts of interest arising from any outside interests.”
191.	A number of points in respect of the June letter merit emphasis:
(1)	Mr Moxon was expressly not permitted to hold any interest in any body corporate competing with the business of LCM as carried out in June 2009;
(2)	Mr Moxon agreed to inform the Board of any potential conflicts of interest arising from any outside interest;
(3)	Mr Moxon was required to continue to perform his role as a (full time) director and employee of LCM (thereby impliedly limiting his executive participation in any other enterprise);
(4)	Mr Moxon recognised that the terms of the letter required a variation to the Shareholders’ Agreement; and
(5)	Mr Moxon was not released from any duties to LCM, and the letter did not permit any breach of client confidentiality.
192.	Further:
(1)	board authorisation of conflicts of interest (actual or possible) was not permissible or effective prior to the introduction of section 175 Companies Act 2006 (before then only shareholders could give such authorisation);
(2)	under section 175, board authorisation is only permissible in advance of the opportunity giving rise to the conflict: subsequent ratification requires a decision of the shareholders (under the common law);
(3)	the vote of an “interested director” is to be disregarded in determining whether board approval has been given (section 176(5));
(4)	section 175 does not contemplate a general declaration of interest, but only authorisation of an identified situation: the opportunity giving rise to the actual or possible conflict must be particularised; and
(5)	nothing in the section absolves a director from his obligation of single-minded loyalty  to his company.
193.	In my judgment, the letter of 18 June 2009 cannot lawfully have had effect under section 175 on the basis, as I have held, that (a) there was no formal discussion of ‘outside interests’ other than trusteeships and (b) Mr Cook did not participate in any such discussion; the strict requirements of the section were not fulfilled; and in any event the purported general authorisation was not within the scope of the provision. 
194.	No authorisation was validly given by the shareholders either. The shareholders could only modify the Shareholders’ Agreement by unanimous consent. The shareholders were not unanimous, and the restrictions in the agreement continued to bind them all, including Mr Moxon. 
195.	In these circumstances, in my judgment, there is no room for the application of the “Duomatic principle”, which requires informed, unequivocal and ordinarily unanimous consent of the shareholders.  Nor, in my judgment, is Mr Collingwood’s last ditch argument in his written closing that, even if not all the shareholders validly agreed to the authority purportedly conferred on the terms of the June letter, that letter “did provide valid and effective authorisation on behalf of LCM”, sustainable. Mr Litchfield did not have actual authority to bind LCM; Mr Moxon, as an insider, cannot have relied on any implied or ostensible authority on his part; and in any event, Mr Litchfield subsequently in effect withdrew his consent.
196.	Thus, the June Letter, even if authentic and signed by Mr Litchfield, cannot, in my judgment, validly have authorised Mr Moxon to participate in RM2 or any other company if that participation would or might give rise to a conflict between his interest and his duty or between conflicting duties, or if otherwise precluded under the terms of the Articles or of the Shareholders’ Agreement (and especially the restrictive covenants detailed in its clause 11). 
Was RM2 in competition with LCM?  Was Mr Moxon conflicted?
197.	It is Mr Moxon’s case that RM2 was never a competitor, and the opportunity that it was incorporated with a view to exploiting was a land deal (the Barwell Land deal) of no interest to LCM and which did not create any conflict for Mr Moxon.  
198.	Mr Moxon further contends that he was never intended to have an onerous operational role that would or could distract him from the performance of his obligations to LCM (the primary driver being Mr McCulloch); and that remained so when he and Mr McCulloch agreed to set up a fund in Guernsey (the RMSquared UK Land & Opportunities Fund Limited or “RM2 Fund”) with a view to it holding the Barwell Land and inviting investment participation in it.
199.	Mr Moxon relies, apart from the June letter and the discussions he maintains preceded it, on both (a) Mr Litchfield’s awareness of the Barwell Land opportunity and (b) Mr Litchfield’s lack of interest in property investment opportunities (as exemplified in the colourful emails from Mr Litchfield to which I have previously referred). 
200.	There is, in my view, something in all these points. However, to my mind they provide a simplistic and incomplete overall picture; and the depiction also raises the inevitable question as to why it was, as it seems to me that it was, that Mr Moxon was so anxious to keep the nature and extent of his interest in RM2 and the RM Fund secret. I elaborate on that summary below.
201.	As to the issue of whether RM2 and LCM were or might become competitors, the fact is, as it appears to me, that LCM’s business model and client base meant that it would be and was involved both in property projects and in competing for investment funds and fees.  
202.	LCM had, throughout, a number of clients with property interests, and was involved accordingly in giving them advice on structures and on ways of developing those interests. I have already mentioned previously the advice LCM gave to Mr Furlong on various property fund structures. There are numerous other examples. Thus:
(1) Mr Moxon agreed under cross-examination that the idea of an offshore fund (the RM2 Fund) for the exploitation of the Barwell Land project was based on funds (including property funds) in which he and Mr Litchfield had previously been involved as directors of LCM in structuring and setting up for clients of LCM; 
(2) Indeed it was through a contact of Mr Litchfield’s (a Mr Pattimore) at the Guernsey fund managers and advisers, Heritage International Fund Managers Limited (“Heritage”), that Mr Moxon came into contact with Mr Mark Huntley (“Mr Huntley”), who was the prime mover in assisting Mr Moxon and Mr McCulloch in setting up the RM2 Fund. I note also that when first approaching Mr Huntley (by email dated 18 February 2010) Mr Moxon wrote as Managing Director of LCM;
(3) LCM, through Mr Litchfield and Mr Moxon, was involved in advising Mr Simon Parker of UK Land and Property (“UKL”) as from Spring 2009; and Mr Litchfield stated in re-examination that LCM was hoping to earn good fees restructuring Mr Parker’s property empire;
(4) In October 2009 Mr Litchfield was emailing a Mr Vincenzo Fagiuoli (a director of a company called Entoria Group Limited) with respect to property development projects in Manchester and “prime assets in London”; and
(5) Both Mr Moxon and Mr Litchfield were still involved with Mr Furlong in the possible purchase of the Close High Income Property Fund (“CHIP Fund”) as at June 2010.
203.	The cross-over and potential for competition (and conflict) between projects that had been initiated, and in some case were being implemented, by LCM, and projects which Mr Moxon sought to present to Mr Huntley of Heritage in an email dated 9 March 2010 as funds he was working for on behalf of “Moxon Group International” is further illustrated by a list of “funds we are working on the following pipelines”.  That list entirely failed to discriminate between LCM funds and projects and others; and whilst there was in some instances more of a pipedream than a pipeline about them, the potential for conflict, competition and breach of obligations is clear.
204.	The secrecy with which Mr Moxon proceeded in relation to his plans for RM2, the RM Fund and Moxon Group International, and in relation to Mr Huntley and Heritage, is also difficult to reconcile with his case now that he had all necessary approvals and was not doing anything that might be thought by his co-directors and shareholders to be contrary to his obligations to them and LCM.
205.	There are numerous examples of his attempts at secrecy, and Mr Moxon was cross-examined at length about them. I adumbrate some below:
(1)	as he confirmed in cross-examination, Mr Moxon did not tell anyone about his meeting with Mr McCulloch and Mr Robbins on 14 or 15 May 2009 (10 days before the May 2009 board meeting of LCM); and though he said he saw no reason why he should have done so, his diary not only makes no mention of them but rather records meetings with other clients (and his son’s tennis lesson);
(2)	Mr Moxon did not mention RM2 to Mr Litchfield or Mr Cook after it was incorporated, as they might have expected him to do if open and authorised;
(3)	when in August 2009 (a sensitive period) he went on holiday, he sent an email timed early in the morning to an employee at LCM, Ms Claire Campbell, which evinces considerable anxiety to keep things under wraps, saying:
“I need you to keep my post with you – I don’t think anything unusual will arrive I just want to reduce the opportunity for light fingers to be rummaging. Also, if you could keep any Moxon Trustees post completely separate as he isn’t fully on board with that yet and the last thing I want is for him to kick off whilst I am away…I have locked the door but you have the keys anyway…”
(Ms Campbell did not attend for cross-examination: but her evidence does not contradict this account, though it is fair to record that she depicted Mr Moxon’s wish to lock his drawers as “normal for him” and thus (by inference) not signifying any especial concern in 2010);
(4)	Mr Moxon was far from candid and open about a meeting of MIPIM (Le Marché International des Professionnels de l’Immobilier), an international property event hosted each year in Cannes, which he attended with Mr Huntley and Mr McCulloch in March 2010. In his second witness statement (made on 16 November 2012) Mr Moxon stated that he attended only after an email from Mr Litchfield to the effect that some other LCM clients would be there prompted him to do so; and in his Reply it was pleaded that it was all arranged at the last minute. In fact:
a)	the only email that might be interpreted as being that from Mr Litchfield was actually dated March 2009 not March 2010. It was suggested by Mr Zelin that at some point Mr Moxon fixed on this as offering his alibi but failed to pay attention to the date;
b)	this flight was not fixed at the last minute: the clear evidence (of a statement from BMI Baby) is that it was fixed a week in advance;
c)	his diary does not mention the meeting but instead shows him as (on the days in question) working at home or “Keep Clear”, with a “Root Canal” dentist appointment diarised for one day and “Funeral in Beverly” diarised for the next day: these entries are impossible to reconcile with his actual attendance in Cannes: and although Mr Moxon told me that he simply neglected to change these entries, I did not find this convincing, especially taking into account the fact that something of a pattern emerged of Mr Moxon’s diary entries incorrectly describing his true engagement (and see sub-paragraph (5) below);
d)	Mr Moxon depicted the meeting between himself and Mr McCulloch and Mr Huntley as nothing more than a wine and cheese meeting; but Mr Huntley had flown out there specially, stayed two days and there was a lunch meeting between the three of them. 
The evidence is equivocal as to whether Mr Moxon sought to and did keep his visit to MIPIM in 2010 secret: it is clear from an email dated 8 March 2010 from Mr Litchfield to Mr Moxon headed “Fyi – MPIM  [sic]is next week” that Mr Litchfield had the meeting in mind, and it may be that Mr Crozier came to know of Mr Moxon’s attendance from an email mentioning that which was circulated to him. But I have concluded and hold that Mr Moxon did take steps to keep secret the fact and nature of his meetings with Mr McCulloch and Mr Huntley at MIPIM; 
(5)	Mr Moxon’s diary entries on a number of occasions showed him as “working from home” when in fact he was having meetings relating to RM2; and
(6)	Mr Moxon encouraged Mr Huntley to call him on his (Mr Moxon’s) mobile line even though he was in the office; and he asked Mr Huntley to use his SKY email address rather than the LCM office email or his LCM Hotmail address, even though the latter was specifically set up for ease of internet access when Mr Moxon was travelling. I accept, of course, that this may conceivably have been to ensure no crossing of the line between different ventures and interests; but my impression of Mr Moxon overall was such that I doubt that: I consider that it is more likely that it was all part of his efforts to keep RM2 and the RM2 Fund, and the nature of his interest in them, secret for as long as possible: he struck me as a man for somewhat clumsy, almost unthinking, subterfuge, not sophisticated sensibilities.
206.	In the end, of course, his involvement had to be revealed: not least because the RM2 fund required a prospectus, and its directors, advisers and property/investment managers had to be disclosed.  But even then (and this does suggest more sophistication) it was never made clear in the documents (a “Teaser” and a fuller prospectus), as was the fact, that RM2 would be the entity that was buying the land and selling it to the RM2 fund: and it was therefore never made clear or even hinted that (as again was the fact) RM2 stood to make a profit of some £8 million in which Mr Moxon would have a 50% share. 
207.	Further, and for whatever reason, be it the excitement of the project, his anxiety that it should succeed, or otherwise, Mr Moxon appears to me to have abandoned truth in favour of expediency in his dealings with Mr Huntley and even on one occasion in dealings with his own solicitor, Mr Chapman, about RM2 and the RM2 Fund.  
208.	Mr Moxon gave Mr Huntley a very misleading picture of the context of his proposal to establish the RM2 fund. Mr Huntley told me, and I accept, that until the impression was corrected by Mr Litchfield in August 2010 (as to which see paragraph 248 below) he gained the impression that LCM would be the “umbrella” and Mr Moxon was making the proposal as Managing Director of LCM and on its behalf, or at least with its approval. I have little doubt that this was to enhance the proposal’s viability, as coming from an established stable. 
209.	Mr Moxon (presumably with the intention of further enhancing his own credibility and that of his proposals) also gave Mr Huntley the clear impression that he was the majority shareholder of LCM and its main or key man. Thus, in the business plan and draft prospectus he produced for Mr Huntley, he described himself as “a majority shareholder”, and LCM as “his own ‘family office’ financial services company, which he set up in July 2003.” At trial, Mr Moxon sought to pass over this as regrettable but not culpable exaggeration, and the description of himself as a majority shareholder being a slip for “major” shareholder.  I consider, however, that Mr Moxon exaggerated for a purpose, and not without culpability.   
210.	As to his misrepresentation (actually he accepted they were lies) to his own solicitor, in an email dated 19 March 2010, sent also to Mr McCulloch, and relating to such matters as money laundering requirements for RM2 and the RM2 Fund, Mr Moxon represented to Mr Chapman that 
“The initial shareholder(s) are existing clients of Heritage and have been through the full know your client process including money laundering. All are certified as sophisticated investors…The clients, before heading to Guernsey, have all been money laundered by LCM Wealth Management Limited…” 
211.	But there were no investors, and LCM had not been, and was not going to be, involved at all.  As indicated, Mr Moxon admitted the lies; he said he had wanted to give Mr Chapman some comfort. He appeared also to accept that the false depiction was intended to furnish Mr Chapman with something concrete and positive to say to the vendors of the investment land in order to negotiate extensions or new options if necessary (as it seemed then, and in the event proved, to be).
212.	As an example of misconduct specifically demonstrative of a conflict of interest that he sought to disguise, it was alleged against Mr Moxon that he took on the task of obtaining investment in the RM2 fund from LCM’s clients. Mr Moxon denied this in his third witness statement, and under cross-examination, and contended that the meeting in Guernsey on 2 March 2010 at which Mr Huntley said he had undertaken “cornerstone commitments” for funding was a short introductory one at which there was no time for that sort of discussion. I did not find that convincing: it seems to me that this was just the sort of thing that would be discussed, even if briefly, where the object is to interest a fund manager in taking the project on. Further, an email dated 2 March 2010 from Mr Moxon to Mr Huntley (circulated to Mr Pattimore) after the meeting and timed at 17:02, in which Mr Moxon referred to there having been “a lot to take in” and thanked “for all of your time” suggests more than a cursory meeting – as perhaps does a receipt demonstrating that they had lunch together.  
213.	I accept Mr Huntley’s evidence that Mr Moxon did say something to the effect that he would be able to get “cornerstone commitments”, rather than Mr Moxon’s assertion that he did not, at least on that particular date (it being notable that in his third witness statement he does not deny the suggestion altogether, simply that he made no such commitment on 2 March 2010).
214.	That also explains what I perceived to be real, as distinct from fabricated, irritation on Mr Huntley’s part that in the event it seems that Mr Moxon did very little by way of solicitation, and went off on holiday in August 2010 without having advanced the matter much at all.
215.	Further, Mr Huntley’s evidence was that Mr Moxon, by way of demonstrating the solid prospects of successfully soliciting investments to establish the RM2 Fund, had shown Mr Huntley a list of LCM clients. Mr Moxon denied this also, both in his third witness statement and under cross-examination; and he maintained that none of the persons he did in the end approach was a client of LCM. Mr Huntley, on the other hand, told me that he clearly remembers seeing such a list, that it was on two pages, that he remembers the pages being turned, and that it was an impressive list. 
216.	Once again, I accept Mr Huntley’s evidence in this regard. It does not seem to me that he had any reason to claim to remember in this regard that which he did not; and generally I should record that my impression of him was of a genial, honest, though rather glib, person with no particular wish or reason to tell other than the truth as he recalled it. Mr Moxon, on the other hand, was not convincing in his denial that he had never mentioned or shown an LCM client list to Mr Huntley; given that the impression he gave Mr Huntley was that RM2 was under “the umbrella” of LCM, it is just as I would have expected him to do; and he had every reason to try to squash any suggestion that he had contemplated using, and may in fact have used, such a confidential item for his or RM2’s prospective advantage. 
217.	As to Mr Moxon’s evidence that he only approached investors who were not LCM clients, I cannot accept that: and Mr Moxon was constrained to accept that he had approached both Mr Copper and Mr Rynton who were undoubted clients of LCM (though Mr Moxon sought to justify his approach to them on the basis that they were personal friends). There may well have been others; but other individuals too were, if not actual, then potential clients nonetheless, and he was seeking to divert them away from LCM.
Mr Moxon’s removal
218.	The success for them of the Barwell Land project and the viability of RM2 and the RM2 Fund depended on Mr Moxon and Mr McCulloch being able to raise sufficient funds to enable the exercise of the options over the Barwell Land before the options expired. In the event, it was Mr Moxon’s failure to raise much interest amongst potential investors, and his departure nevertheless on holiday in August 2010, just as the options were about to expire, that precipitated the sequence of events that fairly swiftly culminated in his dismissal (though Mr Moxon contends that Mr Litchfield and Mr Cook had plotted this and what he regards as the expropriation of his shares for some time previously). 
219.	Mr Moxon relates in his second witness statement the immense pressure that he and Mr McCulloch came under from the landowners in July 2010, after a change in the CGT rate, to pay out on the option contracts. He refers to his hope, which he understood to be shared by Mr McCulloch, that the option deadlines could be deferred as part of what he says was “our strategic plan to defer the purchase of the land for as long as possible in order to get a firm decision on the allocation from the master plan” (for development, which had not yet been given). However, the deadline set for raising funds was 14 September 2010.
220.	Although Mr Moxon had, according to Mr McCulloch’s witness statement (relied on by the Respondents pursuant to a Civil Evidence Act notice after his death on 26 July 2012), given assurances “that he could raise a substantial (at least £20 million) fund from the LCM client list in time to get the lead asset acquired by the Fund”, and through July and early August Mr Moxon continued to express confidence in that regard, Mr Moxon never provided any confirmed details regarding source, amounts or dates.  Mr McCulloch had had no success either in raising funds (which was difficult, if not impossible, without a Red Book valuation of the investment property, which had never been obtained). Each blamed the other: but the fact remained that they were in urgent need of funds if they were to salvage the project.
221.	According to Mr McCulloch’s witness statement, it was at about this time that Mr Moxon made him “aware for the first time that he needed to have James Litchfield’s support to secure the acquisition funding from a number of planned LCM Client sources”. I did not understand Mr Moxon to contradict this. Where, however, their accounts do materially differ is as to the context in which Mr McCulloch came to know for the first time that Mr Litchfield was unaware of the true nature of Mr Moxon’s interests in RM2 and the RM Fund. 
222.	Mr Moxon’s case is that whether or not Mr Litchfield knew of the details he (Mr Moxon) had “full permission from the June letter” and that Mr Litchfield pretended otherwise, and told Mr McCulloch that he did not have such permissions as it conflicted with LCM, because he “simply saw this as a way to get me out of LCM”.  
223.	Mr Moxon was unspecific as to what, on his case, was Mr Litchfield’s actual knowledge of RM2 and Mr Moxon’s involvement in it and the RM2 Fund prior to Mr Moxon having no real alternative but to approach him for his and LCM’s support on 12 August 2012 just before Mr Moxon’s family holiday. Sometimes he appeared to me to be saying that Mr Litchfield was aware of Mr Moxon’s dealings with Mr McCulloch, and sometimes not. Ultimately, it does not seem to me really to matter: for it is clear as can be that Mr Moxon fell far short of full disclosure, and continued to disguise the true extent of his interests in RM2 and the RM Fund even after he had promised Mr Litchfield full transparency at their meeting on 12 August 2010, when Mr Moxon sought his and “Team LCM”’s help.
224.	How Mr Moxon initially presented the situation and his appeal for help is apparent from an email from Mr Moxon to Mr Litchfield under the subject “Bob!” dated 12 August 2010 (and presumably prepared and sent shortly after their meeting). The email attached a briefing on the Barwell Land project. In the email, Mr Moxon purported to give an “outline of Bob’s current situation” which departs starkly and startlingly from the truth. It is a long email and a longer attachment, and I do not think I need quote either in full despite their importance. The following summary is intended to illustrate the tenor and content of the documents:
(1) Mr Moxon’s overall summary is that “Bob has been let down by amongst others Richard Topham, who promised to provide the money to complete this deal, only to then try and make an offer himself i.e. extremely canny”;
(2) he refers to others interested and who tried to take advantage of the situation, including Martin Ainscough and John Bloor and “even Eugene at Bootes (who were Bob’s original lawyers) tried to take it from him”;
(3) he presents an attractive picture of the project: “The agreed acquisition costs amount to a 75% discount to the 2007 price.  Even I know land hasn’t fallen by that much!”
(4) he presents the benefit to LCM as being a fee of £50,000 “agreed with Bob earlier in the year for structural advice”, together with 
“1% of any money raised coming from Bob’s side i.e. not a reduction from the investor’s money. The 1% represents 20% of Bob’s net profit, which is fair for bring investors to the table.  If the fund option is chosen and the deal completes then there is a further 2% payable from the difference between the acquisition cost and the current NAV. Effectively a marketing allowance…”
(5) he adds:
“There is also the option to cover Bob’s position on a short term basis, whilst a fund is raised on a pre-determined buy-out i.e. the Savills valuation v acquisition cost.  This would give a short term (max 6 months) 25% return…”
(6) he mentions a further potential upside in the shape of gravel sales;
(7) he ends the email as follows:
“I really want to help with this, not just for the money payable to LCM, but because on reputation I introduced Bob to Richard, Martin and some of the others and this fact alone is getting me down badly.  I known you asked me some time ago if I was getting myself in the shit. The answer is no because we (LCM) have no risk in this, but it sure feels like shit to me!!! I desperately wish I wasn’t going away.
I am sure that team LCM could help make this happen. Sorry I haven’t come to you earlier but I wanted you to believe that I can be useful again, by showing you the finished results (communication not being a strong point at the moment - that and you are probably right with your loss of confidence analogy!) Getting Bob over the line means everything to me now, not least because he was relying on my reputation and assistance when he was making choices about whether or not to spend his money. All he is asking for is the opportunity to be put in front of interested parties, either to book build or to find a Kevin Fryer type backer who could take a larger view….”;
and
(8) there was no mention of Mr Moxon’s own interest: the depiction was woefully deficient and misleading. It was also clumsy: is not easy to understand how Mr Moxon thought that the true state of things would not swiftly be revealed as soon as Mr McCulloch contacted Mr Litchfield directly, as was intended, and as he did on 18 August 2010.
225.	Unaware of Mr Moxon’s personal participation in the project, Mr Litchfield’s response was notably low-key, if a little sarcastic:
“Perhaps team LCM should have been involved a lot earlier given it what you have described below and the amount of time you must have devoted to it.
So how long before he is jobbed off and loses everything? And also can this be broken up at all into smaller parcels?
Who else have you spoken to amongst our professional contacts and relationships so I don’t look a twat?”
226.	To which Mr Moxon replied (in relevant part):
“I’m sorry – you deserved better from me! You can hold it against me for the rest of our relationship – seriously I have been a twat and I apologise!
…
I have not spoken with any clients…”
The first part of the response evinces, to my mind, a characteristic propensity to seek to pass off even obvious breaches of obligation and trust with an almost flippant apology and a couple of exclamation marks.  The second part was simply not true.
227.	The unveiling of the true nature of Mr Moxon’s personal interest and participation in what he sought to present as Mr McCulloch’s own venture which might be of benefit to LCM and its clients occurred over the course of the next 10 days, all while Mr Moxon remained away on holiday. 
228.	On 12 August Mr Litchfield, still unaware of the RM2 Fund, still less Mr Moxon’s interest and participation in it, wrote 
“It is going to have to be a partnership to start as there is no way of getting a fund set up in time…”
	Of course, there was already a fund set up; and Mr Moxon answered on Monday 16 August 2010:
“James, Further to your email re partnership/investment club. Part of the structuring I have been working on for Bob was a Guernsey registered Closed-ended Investment Company listed on the CISX.  This is on the shelf pending an initial investment of 500k (minimum listing value of shares), which would allow it to list proper.  The window is open. All the paperwork is ready….Heritage are the fund managers.  Bob’s company is the promoter… The lead asset is a sweet deal…”
229.	Still Mr Moxon did not reveal his interest in either “Bob’s company” or RM2 Fund; but even in ignorance of that Mr Litchfield responded on 16 August 2010 with (understandable) anger to this revelation of the involvement of Heritage (whom he had introduced):
“So, despite me asking you to disclose everything last Thursday and us speaking on Friday you present another contact of ours you have been dealing with for several months without disclosure.
Not sure where this leaves LCM as at this time I really think you are a two-faced fraud.”
230.	Some 20 minutes later Mr Litchfield added (by a further email):
“And now I know the real reason why you went to Guernsey earlier this whilst [sic] I was away don’t I, not the lie that you told me when I asked about it.”
231.	Mr Moxon (who was still on holiday) replied later the same day:
“I know how it looks and maybe you’re right. I have my reasons though and maybe one day we can talk them through.”
232.	Despite these expressions of regret, and every opportunity to make a clean breast of things, Mr Moxon still had not disclosed his true interests: in an email to Mr McCulloch of 17 August 2010 he said “just RM2 shares off table now” and admitted “and James doesn’t know director role – will sort tomorrow”.  
233.	But before Mr Moxon had sorted anything of the sort, and after Mr McCulloch had pre-advised Mr Moxon of his intention to do so, on 18 August 2010 Mr McCulloch emailed Mr Litchfield with more detail of the project, which he described as “entirely my idea, originated in my mind after you guys at LCM introduced me to Barry and Lola Foster and asked me to evaluate their land offer…back in April 2008”.  Mr McCulloch explained the genesis of the project and the incorporation of RM2 and the RM Fund, and disclosed that Mr Moxon had become a non-executive director of RM2 Fund, earning £20,000 pa for 4 Board meetings a year. He extolled the prospects of the project and the “very strong business case for Investors on this lead asset”; he concluded as follows:
“I want LCM Clients and contacts to be the benefitting Investors and I want LCM and associates to reasonably max out on the fees (I have set aside 3% of raising as a marketing fee, funded by RMSQUARED Asset Management Limited [RM2] from within the acquisition financials, this would be £600,000 on £20 million if we get it away).
Having the contract fall over and fall into the hands of other Investors would be for us a commercial tragedy of epic proportions.”
234.	It appears from references in emails to telephone conversations between Mr Moxon and Mr McCulloch at about this time (the date is uncertain) that Mr McCulloch deliberately (and with Mr Moxon’s agreement) did not initially reveal to Mr Litchfield the fact of Mr Moxon’s shareholdings in RM2 and the RM2 Fund. However, later on the same day as the email I have quoted from above (18 August 2010), and after a call from Mr Litchfield requesting further details, Mr McCulloch sent him a further email, which included the following:
“So that we may get to an acceptable level of openness and full disclosure, I went through the key issues to see if anything of import might be missing.  It may be that you are not currently aware that Richard is a shareholder in both the Property Manager [(RM2)] and the Property Adviser (RM2 Guernsey Limited, as shareholder in the Fund) , I suggested in the first instance that this would be good for both companies and their credibility with Guernsey technical and regulated type link to fundraising. It is not a fact that has been hidden as it is written large and explicit in the offer document, something you and the potential LCM investors will need to have available prior to book building.  Importantly, he is not a Director or employee of either entity, all operations are under my complete control, which is right because I do all the work.
It is my view and understanding that Richards [sic] intention was to deliver all benefits financial into the LCM coffers...”
235.	To these revelations Mr Litchfield replied on the same day late in the evening as follows: 
“Thank you Bob
No, I was not aware that Richard has shareholdings or in what proportion. I was unhappy at Richard being a director of the fund but this extra disclosure I find extremely upsetting.
It also raises some wider issues on conflicts of interest for LCM. I am going to have to tell our chairman and a shareholder about all of this as it is actually LCM policy that all of these issues, shareholders, directorships etc have to be agreed to in advance and none has.
The problem is Richard has completely misled me last week as to the extent of his fiduciary and financial involvement. I appreciate the impression he has left you with but a shareholding in his name or a directorship in his name for which he is paid cannot be ‘given over to LCM’ as we were not party to it and he has never disclosed it.
At present given the layers of lying Richard has undertaken I have to take the stance that he had no intention of anything other than keeping it for himself and if he hadn’t failed in his private efforts to raise funds he would never have disclosed any of this as I would have had no knowledge whatsoever of the entities’ existence.
This puts me in an extremely difficult position as I want to help you out of professional responsibility but in doing so I will be enriching someone who it seems deliberately deceived me on several occasions in the last week alone and only you have given me any clarity and honesty.
I find this all very hard to reconcile.
Even if I can find any way of resolving this it actually will prevent me from speaking to several potential investors as they will not invest in anything where a wider financial benefit accrues to anyone connected to LCM without being compensated in full for it by LCM.”
236.	Mr McCulloch having died some time before the trial, his evidence could not be tested by cross-examination; but the assertion that Mr McCulloch understood that all financial benefit was to go into LCM coffers is not readily understandable; and I find it was not the case.
237.	In point of fact, the position may have been even more unsettling than Mr Litchfield by now recognised it was. Neither of the above emails of 18 August from Mr McCulloch reveals that RM2 was to be buying and selling the Barwell Land and potentially scooping a considerable profit, far in excess of the fees to be had, to the benefit of Mr McCulloch and Mr Moxon in equal shares. 
238.	Despite that omission Mr McCulloch explained to Mr Moxon by email dated 19 August 2010 that: 
(1)	full disclosure had been inevitable and had been made to Mr Litchfield;
(2)	it was clear that Mr Moxon’s funding strategy and plan, without LCM, had failed;
(3)	he intended to entrust funding to LCM; but that to enable that
(4)	Mr Moxon had to “personally disengage from the total RM2 model”, and 
“your Directorship of the Fund and shareholding within RM2 UK and Guernsey have to go as a pre-condition to fund raising. This is not debatable rather a compliance mandate…bottom line is that…the conflict of interest created by your Directorship and shareholding was deemed to be an obstruction to the normal fund raising rules of engagement between the firm and its clients…”
(5) he concluded:
“LCM requires the changes outlined above to be executed with all reasonable haste…so that ‘the full fundraising power of the firm [LCM] across its full range of Clients can be realised at the earliest opportunity.’ My sense is that you will not be surprised that the above changes are necessary. Your ongoing sensitivity and personal discomfort on these specific issues, your reluctance on disclosure to James, provides compelling evidence of your recognition of the problem and likely need for change.”
239.	Mr Moxon (still away on holiday) replied by email the next day (20 August 2010). He sought to dismiss the suggestion that he should sever links with RM2 and the RM2 Fund as “a James request pure and simple”. He went on:
“I am sure James was very convincing to you but he has only played on your lack of financial services industry experience. I am very disappointed that after all this time you have decided to dump me in favour of a rescue bid from James. I have not headed off expecting this to happen, regardless of what he has said to you. My failure to disclose earlier was exactly because this is what I would expect. He has taken the opportunity to control matters with me not there, which is outrageous. It says a lot he has not taken any time to talk to me or make contact with me after 10 years together – because I would never let him walk over me like this. You have also presupposed that it is not my LCM directorship that needs to go to avoid any conflicts!! I understand fully your need to get the fund raising started and be on the front foot with Barwell, not least to protect your position with HIFIM et al but also to protect RM2. The compliance ‘issue’ and my involvement with the Fund is also a compelling excuse for Mark as to why no funds are in yet and I can understand you wanting to use this. You are in danger of costing me everything though (do you really think that removal from RM2 is going to stop LCM from removing me?) We talked about this before I went away. You said not to worry as we have a great little business in RM2, so that’s the worst that can happen…James does not know anything about the people I have been talking to about the fund, and whilst I can understand he would wish to rubbish any effort made so far, that is just James’s normal M.O. You need to know that every single significant client at LCM was brought in by me. James knows how to spend the money that I have brought to the table. The fundraising effort was never just about LCM and unless you are telling me we are through, the strategy has far from unravelled. For now you just need to tell me how far you have gone – does James know the purchase price for Barwell for example? – so that I can think about what you have said. Best R.”
There is not a word of contrition. He seeks to place the blame on Mr Litchfield, Mr McCulloch and unaccountable misfortune: never on himself.
240.	In his reply at midday on 20 August 2010, Mr McCulloch stressed that his position was “not a knee-jerk reaction, or timed to exploit your absence”. He said that his considered view was that (a) Mr Moxon had in reality secured nothing tangible by way of funding for the RM2 Fund and (b) had been heavily reliant on Mr Litchfield coming to his aid but yet (c) had made no proper disclosure to him. He challenged Mr Moxon to provide evidence (letters of commitment) from investors, and details of what else he had done. He continued:
“You asked James directly, and invited me to get him on board to progress the fund raising. For reasons that are obvious or only known to yourself you have deliberately withheld from full disclosure on the full extent of your engagement with RM2. I am sure you knew that full disclosure (inevitable and transparent from the fund materials) would prevent James from supporting the fund raising.
Can you tell me that raising from LCM Clients for RM2 should be exempt from the normal transparency and elimination of related party interests or conflicts that govern LCM/Client behavioural protocols (operational if not legal compliance). I could be accused of being naïve for not thinking this through, but I cannot find an acceptable reason for your thinking your directorship and beneficial share holding interests would not be unacceptable to LCM…
The changes I outlined in the first e-mail are compelled by a combination of unacceptable performance (fund raising to target), working practices and protocols, and finally your disconnect at the LCM interface. You can look at all of these and blame me or others, but essentially I hold you responsible for the current situation…”
241.	By a further email sent shortly after that, Mr McCulloch added, with reference to Mr Moxon’s enquiry as to what Mr Litchfield had been told or knew:
“ps of course he knows the financials on Barwell
We are into full disclosure
How could he assess the detail of the fund raising challenge without timing and pricing…”
242.	Mr Moxon asserted his total disagreement with Mr McCulloch’s analysis. He found it more difficult to rationalise why; and in particular he offered no explanation either (a) as to his failure, even in August 2010 to make anything approaching adequate disclosure of his interests to Mr Litchfield whilst seeking his and LCM’s assistance or (b) how Mr Litchfield and LCM could properly have acted as independent financial advisers in recommending to clients investment in the RM2 Fund in which one of LCM’s directors had a substantial shareholding and directorship.
243.	I have quoted at length from these emails because, in my view, they provide an insight into the case which, taken together with my conclusions on the June letter, substantially determines its outcome. They demonstrate, in my view, that Mr Moxon:
(1)	never properly disclosed to Mr Litchfield the nature of his interests in RM2 and 	RM Fund
 (2)	was aware that Mr Litchfield was not conscious of those interests, and 	would not have agreed to authorise them;
(3)	was unable to disentangle his own interests and objectives from those of LCM or 	for that matter RM2 and the RM Fund;
(4)	was entirely unrealistic about his own ability to raise funds without Mr Litchfield 		and LCM
(5)	even when exposed, was still seeking to keep from Mr Litchfield the full 	extent of that conflict and his prospective profit from the purchase and sale of the 	Barwell land through RM2;
(6)	was unable to face up to his failings and breaches of duty, to the point of 	being in denial about both;
(7)	envisaged in advance having to abandon and leave LCM, and would have been 	quite prepared to do so in favour of RM2 had Mr McCulloch been prepared to 	support him;
(8)	was in obvious breach of his duty of loyalty to LCM and his obligations 	under the Shareholders’ Agreement; and
(9)	was plainly and obviously engaged in activities that had not been disclosed, had 	not been approved, and distracted him from his duties to LCM so that he failed to 	devote his time to the business of LCM as required.
244.	Remarkably, after his exchanges with Mr McCulloch as above described, Mr Moxon embarked on frenzied efforts to raise funds before the deadline without Mr Litchfield’s assistance, as if that were the only impediment to his continuing to ride both horses (RM2 and LCM). These approaches were mostly, if not exclusively, to fund managers, inviting interest and assistance.  They were sent from Mr Moxon’s LCM email address. They were neither complete nor accurate. Thus, for example:
(1) it was not in every case made clear whether the fund/investment opportunity was being offered by or through LCM; 
(2) he told at least two fund managers he approached (as well as Mr Litchfield) that the valuations were supported by a full Red Book valuation by Savills (which was untrue); and
(3) he told at least one such fund manager that it was RM2 Fund that was purchasing the Barwell Land from individual landowners, without disclosing that in truth it was intended that RM2 should purchase and sell on the land (thus disguising that material element of his own substantial personal interest).
Under cross-examination, Mr Moxon described these inaccuracies as designed to “open channels of communication”. This is not an impressive defence.
Mr Moxon’s attempt to justify his actions
245.	One of Mr Moxon’s complaints is that he was not given any proper opportunity to put forward a full defence before being suspended and then removed. It is submitted on his behalf that by the time he arrived back from holiday it had already been decided that Mr Moxon would be sacked for gross misconduct; and that this outcome “was pre-ordained and the subsequent ‘investigation’ was little more than a fig-leaf”. 
246.	Mr Litchfield denied this both at the hearing and at the time.  In an email dated 24 August 2010 he remonstrated with Mr Moxon that he had been left entirely in the dark, that he was more than willing to hear him out, but that “if you don’t actually tell me anything other than circuitous double talk about conspiracies there isn’t much I can do is there”.
247.	Mr Moxon’s reply (by email dated 25 August 2010) set out his stall. Having thanked Mr Litchfield for his help and acknowledged it was not his fault, Mr Moxon continued in this line that he had not done anything really wrong. In his own words:
“I am lost at LCM and you know it.  I want to make the fund work to give me back some sense of purpose.”
“There is no reason why I can’t sit on the fund board and be objective about what comes in. It’s a trustee role.”
“If there is a performance related fee, then it would come to LCM.”
“Plenty of company’s [sic] do that without a problem.”
“The UK company will be gone soon and replaced by Bob’s own company.”
“I was only there to protect John’s interests.”
“An LCM fund without external investors is a waste of time.  This is the perfect platform. Perhaps everything is ham-fisted in coming about but I needed to know it could be done.”
248.	As Mr Litchfield’s reply exposed, this did not hold water:
(1) Mr Moxon’s role in RM2 Fund could not be said to be a trusteeship: it was a directorship, for a fee of £20,000 p.a.;
(2) his shareholding was personal; there was nothing (and I have seen nothing) to support the suggestion it was held in trust or otherwise for John [Cropper];
(3) on that basis, and by reference to his shareholding, Mr Moxon (and not LCM) was in line to share a seven figure profit from the sale of the land by RM2 to RM2 Fund;
(4) no proper disclosure had ever been made, nor any approval given; and
(5) Mr Litchfield concluded by saying that if Mr Moxon had any documentary proof he should now produce it, and transfer his shareholdings to John.
249.	I am not aware of any written reply from Mr Moxon to that email. An email from Mr Litchfield to Mr Cook dated 28 August 2010 relates that Mr Moxon had not been in further contact either with him or Mr McCulloch. 
250.	It is clear from that email (of 28 August) and from Mr Cook’s reply to it (dated 29 August 2010) that by then Mr Cook and Mr Litchfield were agreed, and Mr Kulesza concurred, that they should make an offer to Mr Moxon to persuade him to leave. Mr Cook, in particular, was concerned to limit the amount offered, for fear of creating a well-funded competitor, assisted by a client of LCM, Mr Steve Rynton (as to whom see further later). He considered the “ABF (absolutely bloody final) offer from us to be £100,000” which would be subject to covenants to comply with the Shareholders’ Agreement but extended to 3 years.
251.	In the meantime, Mr McCulloch, Mr Litchfield and Mr Huntley met in Guernsey to discuss the future of the RM2 Fund, and (as Mr McCulloch stated in an email to Mr Moxon of 25 August 2010) had confirmed the need to remove Mr Moxon from the Board of RM2 Fund and to require him to exit all shareholding positions in RM2 companies.
252.	Matters then moved ahead quickly. By letter dated 1 September 2010, and on the advice of LCM’s compliance advisers, Bankhall, Mr Litchfield informed the Information Commission of a breach by Mr Moxon of the Data Protection Act (“the DTA”).  By letter dated 2 September 2010 Mr Litchfield advised Mr Moxon (who had taken more time off in light of a chest infection) of his suspension (on full pay) pending investigation of allegations of:
(1) serious breaches of the DPA in disclosing client details and sensitive information to Mr McCulloch without prior consent, thereby exposing LCM to potential regulatory breach, criminal process and fines;
(2) offering shares in LCM to a prospective client of RM2, Mr Steve Rynton, as security for loans without consent and in breach of the Shareholders’ Agreement;
(3) unprofessional dealings with Mr McCulloch;
(4) failure to disclose the conflict of interests inherent in being involved in the RM2 Channel Island entities;
(5) failure to give full disclosure of his interest in RM2 despite repeated requests by LCM;
(6) numerous breaches of his Service Agreement, including failing to keep LCM fully informed of his conduct and acting otherwise than in LCM’s interests;
(7) breaches of fiduciary duty and the statutory duties of a director; and
(8) fundamental breaches of the Shareholders’ Agreement.
253.	Also on 2 September 2009 LCM gave notice of Mr Moxon’s suspension to the FSA, with the effect of withdrawing his authority to undertake “controlled functions” pending investigation.
254.	In his reply dated 3 September 2010 Mr Moxon noted that it had not been possible to meet after his holiday because he had been unwell, stated that he completely refuted all the allegations and asked for the evidence on which they were based before he would feel able to undertake a meeting. Finally, he asked for confirmation in writing that neither Mr Litchfield nor LCM had ever had any “knowledge of any dealings connected with the allegations and that the alleged matters have never been disclosed in any way and that I have never sought permission to undertake such opportunities”. Mr Moxon repeated his request for such confirmation in a later email dated 15 September 2010.  This may have been a veiled reference to the June letter; but it is notable that Mr Moxon did not expressly refer to it.
255.	After exchanges with respect to the provision of evidence and the logistics for a meeting, on 2 September 2010 the Company’s employment law solicitors, Berryman (who advised the Company on this aspect of the matter throughout), stipulated that Mr Moxon should provide any written representations within 7 days, with a view to a meeting in the week commencing 4 October 2010. Mr Moxon then asked for a deferral on grounds of ill health, and though he did not produce any medical certificate and the Company had evidence (which was not contradicted) to the effect that Mr Moxon had in fact been attending the Ryder Cup in Wales, the Company through Berryman suggested instead a meeting on 8 October. Mr Moxon’s salary was stopped, however, in light of his failures to comply with the processes prescribed in his Service Agreement.
256.	Mr Moxon submitted detailed written submissions by an eight-page letter dated 5 October 2010, having taken legal advice. It is not necessary to set it out in full. In summary, it (1) ascribed to Mr Cook a desire and objective of finding some way, from as far back as early 2009, to “take [Mr Moxon] out” of the Company pursuant to the provisions of the Service Agreement and the Shareholders’ Agreement, and to require him to sell his shares at a nominal value as a “Bad Leaver”; (2) relied on and quoted in part from the June letter (which Mr Moxon described as having been “carefully drafted and signed on the 18th June 2009 by the Company and me as an Executive”) as  authorising his activities; and (3) denied (a) that any of his activities had ever interfered with his role within the Company; (b) that he was in breach of any duty, fiduciary, statutory or under any agreements; (c) that he had breached any duty of confidentiality; and (d) that he had ever caused or exposed the Company to any loss. Further, Mr Moxon complained that his dismissal was being treated as a foregone conclusion and was being advertised as such to clients to his detriment. He indicated he would be happy to attend any meeting, but not with Berryman in attendance. He concluded as follows:
“It is clear…that the Company, without any credible basis for doing so, is again attempting to remove an officer of the Company for the personal gain of other members. If this process does not stop immediately then I shall reserve the right to apply to the Courts for relief on the grounds of unfairly prejudicial conduct by the Company against the interests of its Shareholder members.
Please note that in the event that Court proceedings are necessary this letter will be brought to the attention of the Court.” 
257.	On the same date (5 October) the Company informed Mr Moxon by letter sent by email that his employment had been terminated forthwith pursuant to clause 29.2 of his Service Agreement on the grounds that he had been contacting clients and professional relationships of the Company after his suspension. He was also required (pursuant to clause 29.5 of his Service Agreement) to resign as a director.
258.	By a further letter dated 6 October 2010, prepared and sent by email after receipt of Mr Moxon’s letter of 5 October 2010, the Company stated that, as his employment had been terminated summarily, the proposed meeting in Manchester on 7 October would not proceed. The Company informed him that if he did not resign as a director he would be removed as such. In its last sentence the letter stated:
“With regard to your shareholding in LCM, you are a ‘Bad Leaver’ for the purposes of clause 9 of the Shareholders’ Agreement and LCM will proceed accordingly.”
259.	The Company, by a letter to Mr Moxon dated 8 October 2010 and signed by Mr Litchfield, gave formal notice of a Relevant Event in accordance with Article 9.2 of the Articles of Association on the basis that Mr Moxon had become a “Bad Leaver” whose Service Agreement had been terminated for gross misconduct. This was followed by service pursuant to article 9.4 of a Requirement Notice by letter dated 18 October 2010 requiring Mr Moxon to sell his shares at their par value (£1 each).
260.	By letter to Berryman dated 21 October 2010 and sent by fax and by post, Hill Dickinson LLP on behalf of Mr Moxon summarised his case and put forward two proposals, failing agreement on which (or acceptable counter-proposal) Mr Moxon (they stated) would have no option but to present a petition for relief under section 994, and make claims for breach of contract and unfair dismissal. The letter contains an admirable summary of Mr Moxon’s complaints; I need not recite these, since I have already addressed most of them; but I shall return to miscellaneous points shortly.
261.	As to Mr Moxon’s proposals for resolution of these complaints and claims without recourse to litigation, he put forward the following:
(1) he invited Mr Litchfield and Mr Cook to purchase his 15,000 shares in the Company for £40 each – totalling £600,000;
(2) alternatively, he proposed that all parties should jointly appoint an independent accountant to value the company and the pro rata price per ordinary share, subject to stated valuation criteria and with provision for submissions to the valuer, so as to “facilitate either a buy-out of Mr Moxon’s shares or, alternatively, a buy-out by Mr Moxon of Mr Litchfield and Mr Cook’s shares”; and
(3) in any event, a mutual release of all other claims.
262.	These proposals, and Mr Moxon’s basic contentions, were rejected by Berryman on behalf of the Company (and by implication Mr Moxon’s fellow shareholders). Berryman noted that neither the Company nor Mr Moxon himself appeared to wish him to remain a shareholder, and that the Shareholders’ Agreement provided the mechanism for their disassociation. Berryman further noted that LCM had already (on 18 October 2010) served a Requirement Notice on Mr Moxon, and that though he had elected not to serve a Sale Notice within the time stated under clause 9.4 of the Articles he was now deemed to have done so, and LCM would proceed to effect the transfer of Mr Moxon’s shares in accordance with the Articles. LCM reserved its rights to other relief, and the letter concluded with proposals for the return of property and destruction of files and data etc.
263.	After exchanges of correspondence between solicitors to the parties, including a dispute as to the authenticity of the June letter, a dispute as to the wiping clean of Mr Moxon’s computer, and also a disagreement as to whether LCM should engage in and incur any of the costs of the proceedings,  on 5 April 2011 LCM served on Mr Moxon a “Requirement to transfer shares” in accordance with article 8.13, and notified him that he was bound thereby to transfer his shares to purchasing members at the price of £1 each within 7 days.
264.	Mr Moxon issued the Petition on 11 April 2011, and on that same day obtained an injunction from Lewison J (as he then was) to prevent the transfer of his shares under the compulsory transfer provisions referred to above. This preserved the status quo and Mr Moxon’s standing to petition as a shareholder. That injunction has been continued pending final adjudication of the proceedings.
Fairness and propriety of dismissal process
265.	Although perhaps not clear in the Petition, Mr Collingwood relied on the method and circumstances of Mr Moxon’s suspension and dismissal as further evidence of a longstanding plot to achieve his ejection from the Company and the forced sale of his shares to existing members at nominal value. It is submitted on Mr Moxon’s behalf that the process that was adopted was flawed and unfair and that 
(1) Mr Cook and Mr Litchfield were not acting fairly or in good faith;
(2) there was no proper justification for not allowing Mr Moxon the opportunity to air his objections at a meeting; and
(3) the circumstances were not such as to warrant Mr Moxon’s summary dismissal and characterisation as a “Bad Leaver” and nor therefore to support the notices served on him requiring him to transfer his shares in the Company for a nominal value.
266.	Mr Collingwood also submitted, I think additionally to the above, that “It is not simply a matter of whether Mr Moxon was a Good Leaver or a Bad Leaver”: Messrs Litchfield and Cook were not permitted to dismiss him summarily (and, to quote Mr Collingwood’s written closing submissions, “thereby remove him at their whim and without proper grounds to do so”) at all. I think the premise of this was that Mr Moxon had a legitimate expectation, overriding the contractual agreements that I have concluded otherwise prevailed, that he would not be summarily dismissed, especially given the consequence of being required to sell his shares at nominal value. Mr Collingwood further contended that the result informed and revealed the purpose: being to remove Mr Moxon, both as a director and as a shareholder, without delay and at minimum cost.
267.	As to (1) in paragraph 265 above, I accept that Mr Cook had formed a mistrusting view of Mr Moxon from the time of the K-Club incident which was never entirely dissipated, and was liable to be reawakened easily. Mr Cook struck me as a proud and moralistic, judgemental, unforgiving and uncompromising man, whose views once formed are difficult to shift.   Having taken against Mr Moxon, it took little to persuade him that he had not satisfied his obligations and should be required to leave. I have already referred to Mr Cook’s view expressed in an email dated 29 August 2010 (and thus before Mr Moxon’s suspension on 2 September 2010) that the “absolutely bloody final” offer to Mr Moxon should be £100,000. 
268.	There is no doubt, to my mind, that from the moment that Mr Cook learned of Mr Moxon’s activities in respect of RM2 he was determined that Mr Moxon should be sacked. Mr Cook was fully persuaded that Mr Moxon had a propensity and ability to deceive his colleagues, his contacts, his family and even himself: as he wrote in an email on 28 September 2010, after a conversation on 16 September 2010 with Mr Rynton (by then perhaps Mr Moxon’s closest contact) when it became apparent that Mr Moxon had not disclosed his suspension to Mr Rynton, “I perceive RAM’s ability to deceive is growing by the day & doubt very much whether he has even told his family of the problems”. 
269.	But, in my judgment, these views, though harsh and uncompromising were honestly held, and I regret to say, largely justified. I do not consider that Mr Cook had his eye on the chance of enhancing his own shareholding: he wanted rid of Mr Moxon because he thought him untrustworthy, with good reason, and not for personal advantage. Nor do I consider that Mr Cook considered the process unfair: it was, to his mind, what they had all agreed.
270.	Mr Litchfield is, in my estimation, a less forthright individual, even though well capable of expressing himself in clear and definite terms. His relationship with Mr Moxon was much more complex. It was their friendship which was the original axis on which the Company was formed; and Mr Litchfield was, at least at the outset, and until at least late 2009, a confidant of Mr Moxon. What came to be referred to at the hearing as the “Stuff” email (because it was headed “Stuff!”) dated 2 September 2009 is illustrative of this. The email contains long and rambling discussion of his problems at home and with his wife, and makes clear Mr Moxon’s precarious financial situation, the pressure put on him by his wife complaining about “the ‘uncertainty and broken promises’ of money than never comes” and the possibility of him having to sell his shares in the Company. Mr Moxon’s wariness of Mr Cook is apparent also; as is a sense of isolation. 
271.	That sense of isolation was not misplaced: by contrast, Mr Moxon’s habit of confiding in Mr Litchfield was misplaced. Far from destroying the Stuff email, Mr Litchfield forwarded it to Mr Cook with a short message: “Please only speak to me about this Peter”. I have referred to the Stuff email, and what became of it, because it does illustrate both Mr Moxon’s frailty, and Mr Litchfield’s unreliability as a friend. Mr Litchfield thought nothing of letting his friend down as a means of building a closer relationship with Mr Cook, whom Mr Litchfield appreciated would hold the balance of power. An axis built up between Mr Litchfield and Mr Cook, which increasingly froze out Mr Moxon. I have little doubt that this, and Mr Moxon’s increasingly desperate money difficulties and his desire to overcome them, drove Mr Moxon into other ventures, and especially RM2, which had the potential of freeing him at a stroke.
272.	In the circumstances, I consider that Mr Litchfield’s protestations to Mr Moxon in August and September 2010 to the effect that (to quote from an email dated 24 August 2010) “I am probably the only person trying to understand things objectively and trying to see your point of view, although the shit you have written leaves me wondering why” must be read with a measure of scepticism. By now, Mr Litchfield and Mr Cook rarely (if ever) saw things differently so far as Mr Moxon’s activities were concerned, and I do not think that anything that Mr Moxon might have said would have avoided or even delayed his suspension and ultimate removal.
273.	That said, however, and as in the case of Mr Cook, Mr Litchfield’s views were honestly held, and his feeling that Mr Moxon had breached his obligations to the Company and was a danger to it were genuinely held and what prompted his response. In my judgment, Mr Litchfield was not motivated by the prospect of increasing his own shareholding and improving his own financial position, even though Mr Moxon’s characterisation as a “Bad Leaver” would have that result.
274.	Put shortly, therefore, although Mr Moxon’s conduct fed their preconceptions and may have been prompted in part by his sense of exclusion from their circle and the wish to prove himself to them and his family, I consider that both Mr Cook and Mr Litchfield reached their conclusions, first, that he should be suspended and, ultimately, that he should be removed, because they genuinely were minded to think, and in the end concluded (taking into account also his conduct post-suspension), that he was guilty of “gross misconduct”. 
275.	As to (2) in paragraph 265 above, which goes to the fairness of the process Mr Cook and Mr Litchfield adopted, at all times with the benefit of Berryman’s employment law advice, I approach the matter with some diffidence given the pending separate proceedings brought by Mr Moxon claiming unfair dismissal as an employee. But I do have to consider whether the termination of Mr Moxon’s employment and his characterisation as a “Bad Leaver” without hearing from him was (a) unjustified (b) such as to invalidate what was done or prevent reliance on the contractual provisions.
276.	It is common ground that it was Mr Moxon who, for one reason or another, declined to attend any meeting in August and September. The dispute relates to the termination of Mr Moxon’s service agreement, and the demand for his resignation as a director, by letter sent by email on 5 October 2010 just before a meeting which had been arranged with Mr Moxon to take place in Manchester on 8 October 2010, and which was cancelled.
277.	Mr Collingwood, on behalf of Mr Moxon, submitted especially that the process was hurried and botched: no Board meeting took place to authorise either the suspension or the termination, there was no written authorisation from LCM to dismiss Mr Moxon (contrary to clause 7.2.5 of his Service Agreement) and (so it was submitted) the allegations against him were inadequately particularised. Mr Collingwood further emphasised that the justification ultimately advanced on behalf of the Company for the decision to terminate before the scheduled meeting and the cancellation of that 8 October meeting, which was that Mr Litchfield discovered that Mr Moxon had been purporting to represent and bind LCM after and despite the fact of his suspension, was never put to him and was only suggested by Mr Litchfield under examination in chief and not in any witness statement.
278.	The apparent failures to hold Board meetings to authorise formally the removal of Mr Moxon do, in my view, further illustrate the fact that by then the Company was being run by Mr Cook and Mr Litchfield, with the passive acquiescence of Mr Kulesza, without much regard for corporate niceties in terms of formal procedure. They wrongly took their agreement to bind the Company. It is, of course, well established that if directors purport to act in accordance with the decisions of their majority, but without the prior authority of a board meeting, their acts are not those of either the board or the company: and see, for example, Municipal Mutual Insurance Ltd v Harrop and others [1998] 2 BCLC 540 at 551c per Rimer J (as he then was).
279.	Nevertheless, it is clear that the same result would have followed had the formalities been observed; and the decisions made could formally be ratified at any moment. I should add that it was not pleaded, suggested or submitted that what was done by Messrs Cook and Litchfield with the acquiescence of Mr Kulesza should be struck down as invalid as a matter of corporate law; nor was that relied on when an interlocutory injunction was sought and granted. Rather, Mr Moxon’s case throughout has been that what was done was unfair, contrary to the interests of LCM, and unfairly prejudicial conduct of the affairs of the Company within the meaning of section 994. In my judgment, it would be futile to treat what was done as void, in circumstances where the majority of the directors could, and would be certain to, validate what they agreed with retrospective effect (as to which see again Municipal Insurance Ltd v Harrop [supra]).
280.	Similarly, I do not think Mr Litchfield’s failure to obtain formal written consent of the Company for the dismissal in accordance with the provisions of clause 7.2.5 of his Service Agreement, means that what was done was invalid either; and again, it is not (as I understand it) so submitted. Clause 7.2.5 prohibits the employee subject to the Service Agreement in which the clause appears from engaging or dismissing any other employee on the Company’s behalf and without the Company’s written consent. But the prohibition seems to me to be referable to unilateral acts by the single employee, and this not to be directly referable to what happened in this case, especially since the decision was taken by Mr Cook (who had no service agreement and to whom no such clause applied) with the acquiescence and subsequent approval of Mr Kulesza (who had no service agreement either).  
281.	Even if I am wrong about that, it seems to me that upon the basis of the same principles I have referred to above as to ratification, it would be pointless to treat as invalid that which can and would be validated by subsequent resolution having retrospective effect.
282.	The decision made by Mr Cook and Mr Litchfield (with the acquiescence of Mr Kulesza) in effect to call an end to the process of investigation and suspension (as set out in clauses 27 and 28 of Mr Moxon’s Service Agreement) and deploy instead the provisions for termination without notice in the case of “gross misconduct or gross negligence” as provided for by clause 29.2.3 of the Service Agreement before the meeting which had been arranged for 8 October 2010 was undoubtedly hard headed, indeed aggressive. As Mr Collingwood submitted, Mr Litchfield was clearly unsettled when questioned on the point: he appreciated that there was a risk of it seeming and being deemed to be unfair.  
283.	As mentioned above, Mr Collingwood also submitted that Mr Moxon never had an opportunity to respond to Mr Litchfield’s justification for the summary termination process and the cancellation of the 8 October meeting, because it was never put to him and emerged only in Mr Litchfield’s oral evidence. That has caused me some anxiety; but in the end I have concluded that there is no material unfairness in taking the justification into account, not least because (a) Mr Moxon’s activities (especially his meetings with Messrs Parker and Ballard, and Rynton after his suspension) were in fact expressly mentioned as a specific concern in the Termination Letter itself and (b) Mr Moxon must have been aware of the point and had every opportunity to explain his position in his evidence (both written and oral).
284.	In that connection, but more generally, I should also add that I do not accept that the allegations against Mr Moxon were put in broad terms without proper particularisation. To my mind, they were adumbrated sufficiently for Mr Moxon to be in no doubt what the allegations were, and to what he should respond. Mr Moxon had every opportunity to put his case, and did so in writing and at length, and with the benefit of legal advice. An oral hearing would not, in all probability, have assisted him, whether or not accompanied by his legal adviser.
285.	Further, I share the view of Messrs Litchfield and Cook that Mr Moxon’s conduct after his suspension was inexcusable, and such as to amount in itself to repudiatory breach, and gross misconduct. As he must be taken to have been aware, his Service Agreement (by clause 28.6) prohibited him meeting suppliers, clients or agents during his suspension except at the Company’s request; and in any case the Suspension Letter expressly stated that he “should not contact any employee, supplier or client or prospective client or any other contact in relation to LCM’s business”. 
286.	It is, in my judgment, clear that in breach of these stipulations, and also after the suspension of his FSA authorisation, Mr Moxon continued to meet LCM contacts and clients, without any disclosure of his suspension and thus holding himself out as a director of LCM. 
287.	Thus, an email dated 29 September 2010 plainly confirms that Mr Moxon met with Mr Parker of UKLI “last week”; and its attachment makes clear that Mr Moxon was purporting to represent LCM in committing in principle to equity subscriptions to “all the required equity from a small group of high net worth individuals and…if required [from] LCM…through our own advisory funds under existing management…” The equity investment amounted to some £10.7 million. It was plainly of concern that Mr Moxon should, whilst suspended, purport to make such a commitment; and even though he belatedly (by an email to Mr Parker dated 4 October 2010) disclosed that he had been put “in full lockdown with no ability to talk to anyone who might be considered an LCM client” on the basis of “a lot of malicious stuff flying around”, that was too little and too late.
288.	There are other emails disclosing other meetings between Mr Moxon and other clients (including Mr Nelson, for whom he was acting as adviser); and, as mentioned above, Mr Moxon kept the fact of his suspension quiet even from Mr Rynton.
289.	Whilst I do not accept that thereby LCM was exposed to immediate or irremediable harm, I do accept that when taken together with the other evidence of misconduct, non-disclosure and evasion on the part of Mr Moxon, this conduct reinforced the conclusion that Mr Moxon could not be trusted to have any regard for his obligations to the Company.
290.	I should confirm that in reaching my conclusion I have had well in mind also Mr Collingwood’s argument that if the process adopted was in any event unfair, Mr Moxon cannot properly be characterised as a “Bad Leaver”. The legal basis of the argument is that under both versions of the Articles it is stipulated that to be a “Bad Leaver” the director in question must not only have been dismissed for gross misconduct but also not wrongfully or unfairly dismissed. The factual basis is that Mr Moxon was given to understand that he would have the opportunity to explain his case at a meeting on 5 October 2010, but was dismissed before then and the meeting was cancelled.
291.	As to the legal basis, I have explained earlier in the context of my analysis of the provisions and inter-relationship of the Shareholders’ Agreement, the two sets of Articles and Mr Moxon’s Service Agreement that if the dismissal was properly for gross misconduct, the condition must be taken as satisfied.
292.	In consequence, the only issue is whether, if (contrary to my inclination) the definition in the Articles applies, the express assurance that there would be a meeting, the provision in his Service Agreement to that effect also, and Mr Moxon’s dismissal before any meeting could take place distinguishes the case from all usual circumstances. 
293.	As to that, I have concluded and hold that the discovery by Mr Litchfield that Mr Moxon was purporting to deal with clients and contacts after his suspension, taken together with the gravity of Mr Moxon’s conduct and his repeated attempts to disguise the seriousness of his conflict, justified (a) abandoning the investigatory/disciplinary procedure provided for by clause 28 of the Service Agreement and (b) resorting instead to summary termination even before a meeting, in accordance with clause 29.2 of Mr Moxon’s Service Agreement. 
294.	In short, in my judgment, the summary termination and cancellation of the planned meeting were indeed aggressive; and that may (for all I know) be relevant in determining the other proceedings Mr Moxon has brought; but I do not regard either as constituting unfairly prejudicial conduct if otherwise it can be shown that Mr Moxon had been guilty of gross misconduct, or as preventing the application of the deemed transfer provisions as analysed previously. Nor, for completeness, do I consider that there was some equitable overlay precluding or restricting the use of the summary termination procedure even for gross misconduct.
295.	That brings me at last to sub-paragraph (3) of paragraph 265 above, and the ultimate question in issue: whether or not Mr Moxon was justifiably and fairly characterised as a “Bad Leaver”.
296.	Mr Collingwood urged on me that “gross misconduct” does not connote a universal or objective standard and that in determining whether Mr Moxon had been guilty of gross misconduct the court should construe the phrase  informed by the sense that the shareholders must have had in mind really exceptionally serious transgression to merit (i) exclusion from management (ii) denial of income and (iii) (in effect) expropriation of shares.
297.	The meaning of the adjective “gross” in the context of some standard of (mis)conduct or (lack of) care has long caused difficulty. In the context of negligence it has been almost discarded as merely a “vituperative epithet” (per Willes J in Grill v General Iron Screw Collier Co (1866) LR 1 CP 600 at 612). However, in the context of employment law it is a common-place, connoting exceptionally serious misconduct such as to merit summary dismissal. 
298.	In the particular circumstances of this case, “gross misconduct” means or extends to conduct on the part of the relevant person (here, Mr Moxon) of such seriousness and disrepute, or showing such disregard for the interests of the Company and the obligations owed to it and his fellow shareholders, as to make it quite unreasonable to expect his co-directors and those fellow shareholders to continue in business with him, or to account to him for any share of the success of their joint endeavours, and quite reasonable for him to be dismissed summarily.
299.	I consider that giving the phrase, in the context, that meaning takes into sufficient account also Mr Collingwood’s submission that, by analogy with partnership law and the case of Blisset v Daniel (1853) 10 Hare 493, a power of expulsion must be restrictively construed.
300.	In my judgment, Mr Moxon’s misconduct in this case was of such a nature: it was culpable to the requisite degree. That is not so much because of what Mr Zelin described as the “legion number of breaches he committed”. It is principally because I find that Mr Moxon consistently and repeatedly sought to disguise his involvement in businesses other than the Company’s in a way which is consistent only, in my view, with an appreciation on his part that what he was doing was wrong, or at least likely so to be considered by his fellow directors and shareholders. Even if he believed that the June letter had been approved (which, for reasons already stated, I do not accept) he plainly did not think its terms authorised what he was in fact doing, at least in the case of his interests in RM2 and the RM2 Fund.
301.	Indeed, although there were a number of other complaints, I consider that the undisclosed nature of those interests in RM2 and the RM2 Fund, and Mr Moxon’s continuing efforts even in August 2010 to disguise them, suffices to justify his exclusion and his characterisation as a “Bad Leaver”.
302.	Tracking the allegations against him in this regard, and Mr Moxon’s purported defence to them, all as summarised in Mr Collingwood’s written closing submissions, I find that:
(1) Contrary to the suggestion on his behalf that he did not have to contribute significant time to the RM2 project and it did not interfere with the performance of his obligations to LCM, Mr Moxon was seriously distracted from his duties to LCM by his efforts in relation to the RM2 project. 
Mr Cook told me that he felt Mr Moxon had not been working for LCM for 18 months: whilst that seems to me likely to be rather exaggerated, I accept the gist of the complaint. 
The fact is that Mr Moxon felt isolated and by his own admission wanted to prove himself to the others, and his wife, by success in relation to the RM2 project. 
The fact is also that from May 2009 he was considering his options, including with Mr Sheridan his solicitor, and I consider had in mind RM2 as his alternative career or exit route. 
Mr Moxon’s suggestion that he devoted time to meetings and work on RM2 only on Saturdays was lame, and disproved by records of meetings on other days of the week (including the MIPIM meeting). 
The RM2 project was a difficult, multi-faceted one: it took up a considerable amount of Mr Moxon’s time at the expense of LCM.
(2) The suggestion on behalf of Mr Moxon that LCM “knew about the opportunity” is incomplete and incorrect. 
I accept that Mr Litchfield knew about the Barwell Land project. I do not accept that any of Mr Moxon’s co-directors and shareholders knew of his personal interests in the project, still less his shareholdings in the RM2 bodies corporate and the prospect of him sharing in a profit of in the region of £8 million.
Mr Moxon’s omission to disclose to Messrs Litchfield and Cook (a) his meetings in May 2009 with Mr McCulloch about setting up RM2 (b) the incorporation of RM2 at the end of that month with him and Mr McCulloch each having a 50% shareholding, cannot be excused by Mr Moxon’s glib assertion that he saw no reason to do so. 
Further the assertion is belied by his efforts then and thereafter to keep what he was doing quiet (exemplified by diary entries for the days of those meetings which indicated that he was having meetings with clients, his later somewhat panicked efforts in August 2009 to ensure that the door to his room was locked and his post kept safe whilst he was on holiday, and his omission to make any reference to the RM2 project and his interest in it at any of the eight Board meetings of LCM between May 2009 and the revelation of those interests).
I accept the submission, and hold, that Mr Moxon sought to disguise his venture in RM2 and with Mr McCulloch and to that end used false diary entries to cover up meetings with Mr McCulloch, including their trip to MIPIM in Cannes in March 2010. 
I do not accept Mr Moxon’s explanation that he had simply failed to up-date his diary: there were too many examples of diary entries which did not reflect the reality for me to do so, and his evidence in relation to the MIPIM meeting was plainly incorrect (and see paragraph 179(4) above).
I accept the evidence of Mr Cook and Mr Kulesza (a fair and honest witness in my view) that neither knew anything about Mr Moxon’s personal interests in the RM2 project until (in the case of Mr Cook) being advised of it by Mr Litchfield on 21 August 2010. 
I accept the evidence of Mr Litchfield that although he was aware of the Barwell Land project, he was not aware until early August 2010 of Mr Moxon’s personal interest in it, or his shareholdings in any RM2 bodies corporate. 
(3) Furthermore, it is clear that even when his interests were disclosed Mr Moxon did not disclose that the RM2 Fund was not intended to be purchasing from the landowners of the Barwell Land, but rather to be purchasing from RM2 which was the intended purchaser from the landowners; and that RM2 stood to make a profit in the region of £8 million if the deals went through as planned.
(4) The submission on Mr Moxon’s behalf that “LCM had expressed an intention not to waste effort on such property investment opportunities” is, in my judgment, misplaced and in any event unrealistically generalised. 
It is true that Mr Litchfield had expressed himself colourfully on more than one occasion in respect of his aversion to investment in commercial property. But this did not exclude the Barwell Land project, which was (a) for residential development and (b) essentially an arbitrage on the value of development land. Further, any such aversion did not extend to the considerable fees to be gained from structuring and fund development.
In any event, Mr Moxon’s reliance on the June letter demonstrates that he has always understood that such assertions of lack of interest could not suffice to justify outside interests of the nature of the RM2 project.
(5) Contrary to Mr Moxon’s case, it seems to me plain that RM2 and the RM2 Fund were in competition for investors in the same pool as LCM, as well as being in competition for Mr Moxon’s time (which Mr Moxon had 	promised to LCM).
Further, even on Mr Moxon’s case the Barwell Land project arose out of an LCM opportunity to earn fees from advice to LCM clients (Mr Foster and Mr Vero): that opportunity was in effect diverted to RM2.
I accept Mr Huntley’s evidence and hold that Mr Moxon did disclose confidential LCM client lists to him, and further that in undertaking (as he did) the task of obtaining “cornerstone” investment in the RM2 project, Mr Moxon intended to approach and interest LCM clients and contacts.
Mr Moxon’s attempt to characterise his attempts to interest persons such as Mr Rynton, Mr Nelson and Mr Cropper as soliciting friends rather than clients of LCM is lame: they were also clients, and he knew it.
(6) Mr Moxon appeared to suggest that since his efforts to interest clients and contacts “met with disinterest due to the lack of outline planning or Red Book Valuation”, with the result that the “RM2 Fund…remained inchoate”, that somehow excused his efforts. 
I do not find the suggestion easy to follow; but I reject it as any sort of justification.
Furthermore, there is evidence to suggest that Mr Moxon was intending to, and possibly did, tell potential investors that there was “a full Red Book valuation”: certainly that is what he told Mr Litchfield and also Mr Riachy.
As to the suggestion that the RM2 Fund remained inchoate: the fund had been established, and I do not follow or accept the argument that somehow it should be ignored because it had not attracted investment prior to it being revealed to Mr Moxon’s co-directors and shareholders.
(7) The further, but similar, suggestion that Mr Moxon’s participation in and directorship of the RM2 Fund ought not to be held against him on the ground that his role was merely “a supervisory role which did not come into play in any event, since the RM2 Fund remained in an inchoate state” is disproved not only by Mr Moxon’s indirect shareholding but also by the terms agreed for his appointment as a non-executive director as of 14 July 2010 with responsibility, with his co-directors, “for the direction of the Company and for the monitoring of the performance of the Property Advisor, Development Manager and the other suppliers of services to the Company…”.
303.	As to the further breaches alleged, and with reference to the variety of breaches by Mr Moxon of his obligations under the Service Agreement, and of the stipulations in the Shareholders’ Agreement against offering to any third party an interest in his shares  as asserted by the Respondents, I accept that Mr Moxon was, in the circumstances I have set out, in breach of: 
(1) clause 7.1.3 of his Service Agreement, in not keeping the Company promptly and fully informed of his conduct of the Company’s business;
(2) clause 7.1.4 of his Service Agreement in not using his best endeavours to promote the Company’s business since he was deflected from that task by pursuit of his own interests;
(3) clause 7.2.1 of his Service Agreement, in causing damage to the Company’s reputation in associating it with the RM2 project, which failed and caused loss to clients and contacts of the Company;
(4) clause 7.2.2 of his Service Agreement, in taking steps to compete with the Company;
(5) clause 7.3 of his Service Agreement, in failing to disclose breaches of it;
(6) clause 16 of his Service Agreement in failing to comply with the Company’s absence notification procedures; 
(7) clause 22 of his Service Agreement, in failing to devote the whole of his time and attention to the Company’s business and in becoming engaged and concerned in another activity;
(8) clause 23.2 of his Service Agreement, in disclosing company documents (the client lists); 
(9) clause 25 of his Service Agreement, in divulging confidential Company information;
(10) clause 29 of his service agreement for committing acts amounting to gross misconduct;
(11) clause 37 of, and paragraph 2.0 of the Appendix to, his Service Agreement, by his conduct falsely representing himself to be entitled to act as a director of the Company after he had been suspended and his regulatory authority to act removed;
(12) his fiduciary and statutory duties as a director; 
(13) his obligations of good faith and honesty in his dealings with his co-directors and shareholders, and clients and contacts of the Company whom he invited to rely on his advice or regulated services; and
(14) his obligations as a shareholder under clause 9.1 of the Shareholders’ Agreements in offering Mr Rynton an interest in shares in the Company in persuading Mr Rynton to invest £70,000 in the RM2 Fund.
304.	These breaches plainly constitute “serious or repeated breach of his obligations under his contract of employment with the Company” within the meaning of the definition of “Bad Leaver” in the Shareholders’ Agreement. But further, in my judgment, they betray extremely serious indifference to and breach of his obligations to the Company and to his fellow directors and shareholders, and in the circumstances and in the round constitute gross misconduct within the meaning of the Articles, such as to justify his dismissal without notice.
305.	Lastly under this heading I should address Mr Collingwood’s further submission by analogy with partnership law and the case of Blisset v Daniel (1853) 10 Hare 493, that a power of expulsion must not be exercised with an ulterior motive (financial or otherwise).  
306.	This must necessarily be considered against the background of what I regard as cogent evidence of gross misconduct on the part of Mr Moxon. The greater the cogency of the evidence of gross misconduct the more difficult it is to persuade the court that the exercise of such a power (if the analogy fits) was for some “base and unworthy purpose” rather than in the interests of the partnership as a whole. I recognise, of course, that expulsion and, here, the consequences of Mr Moxon being characterised as a “Bad Leaver” result in something of a windfall in financial terms to the other partners (or here, shareholders). I accept that the court must be very wary of abuse.  
307.	Nevertheless, I am satisfied that even on the basis of applying and proceeding with such caution by analogy, the termination of Mr Moxon’s employment, his required resignation as a director and the consequential characterisation of him as  “Bad Leaver” with all the consequences that follow, were justified in the interests of LCM, and there is no sufficient ground for a conclusion that what was done was done “merely to enable the continuing [directors/shareholders] to appropriate for themselves the share of the expelled partner at a fixed value less than the true value” (cf  Blissett v Daniel).
308.	I should perhaps add that although I have been content to adopt the analogy for the purpose of testing Mr Collingwood’s submission, I am not persuaded that in the context of this case the analogy is apt.  For reasons I have already given, I do not think that the arrangements here constituted or were founded on the basis of a “quasi-partnership”. In the present context, though I would expect the parties to have contemplated the use of the relevant provisions only in exceptional circumstances, I think they would have also have expected the parameters to be those mandated by corporate law: that is that the power should be exercised for the proper purposes for which conferred, as explained in Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821. But since there would be no difference in result it is not necessary for me to pursue the point further.
309.	On that basis and on the view I take of the case, there would be no need to consider further the other allegations made by and against Mr Moxon: none can affect the characterisation of Mr Moxon as a “Bad Leaver” nor the consequences that follow. However, in case I am wrong in this view, and for comprehensiveness, I would summarise my views on those other allegations as follows.
Mr Moxon’s allegations of Mismanagement
310.	Mr Moxon complains that Messrs Litchfield and Cook have mismanaged LCM, made grossly uncommercial decisions for personal reasons that were not in the Company’s interests and have caused loss to LCM through the exclusion of Mr Moxon.  He contends that the conduct complained of constitutes a breach by Messrs Litchfield and Cook of their fiduciary and statutory duties as directors and a breach of the cooperation, fairness and good faith obligation set out in clause 6.4 of the Shareholders’ Agreement. Four areas of complaint can be identified.
(1) Dispute with Mr Rynton
311.	First, it is alleged that Messrs Litchfield and Cook unilaterally, and motivated purely by personal animosity to Mr Rynton and their resentment of the amounts he was earning, unfairly sought to change the terms of and depress the amount of commission payable by the Company to Mr Rynton and/or his company, Vital Connections Ltd (“VCL”) under agreements between LCM, Mr Rynton and VCL as consideration for the introduction of business to LCM (“the VCL Agreements”).
312.	As explained above, the allegation generated considerable disclosure on the issue as to whether the Company had withheld payments properly due and then complaints as to its adequacy; a considerable time was devoted at the hearing to the competing interpretations of the original provisions in the VCL Agreements, and the fairness of arrangements negotiated between the parties to replace them. But I can be brief: the allegation does not avail Mr Moxon because, in my judgment, it relates to matters of legal interpretation and commercial judgment which, as was pleaded in the Points of Defence, is not capable of supporting an allegation of unfairly prejudicial conduct within the meaning of section 994: and see Re Macro Ipswich Ltd  [1994] 2 BCLC 354 at 404i-406e.
313.	Beyond that it is not necessary or appropriate for me to wade into the details of the dispute, especially since it is the subject of other proceedings which (so I understand) have not yet been resolved, except to record that:
(1) Mr Rynton, who struck me as a taciturn person who may have enjoyed success in the past which was eluding him now, gave me the impression that he rather wished he had not become involved in this litigation (or indeed the litigation he is pursuing against LCM); 
(2) given that his claim against LCM involves an allegation by him of deceit, I asked him whether he still thought Mr Cook and Mr Litchfield had been dishonest; but the furthest he would go is that he thought they had acted unfairly;
(3) indeed he accepted that “they had their interpretation and I had mine”;
(4) the deal done to resolve the issue of interpretation is perfectly commercially understandable, and provided benefit to each side, even if (necessarily) not all they had wanted;
 (5) although I accept readily that there did develop real personal animosity between Mr Rynton and Messrs Litchfield and Cook the evidence was not such as to support the allegation that Messrs Litchfield and Cook sought to do down Mr Rynton because of that and at the expense of the Company;
(6) the dispute between the Company and Mr Rynton and VCL has indeed proved costly (I am told the Company’s costs so far exceed £40,000); but I accept Mr Zelin’s submission that Mr Rynton has been encouraged to pursue the litigation in large part by Mr Moxon making false claims and allegations: and under cross-examination Mr Rynton offered that it was Mr Moxon who had “rattled his cage”;
(7) Mr Rynton accepted that in surmising that he had been unfairly dealt with and underpaid commission due (as he alleges) he was almost entirely dependent on what he was told by Mr Moxon; and
(8) I was left with the firm impression that Mr Moxon had encouraged the proceedings, and Mr Rynton’s break with Messrs Litchfield and Cook with whom he had previously been friendly, as a means of strengthening his own ties with Mr Rynton, and persuading Mr Rynton that any claim he might have in consequence of having been (as he was) induced to invest £70,000 in RM2 (which was lost when RM2 was wound up) on a false basis lay against LCM and Mr McCulloch and not Mr Moxon personally. 
(2) Relationship with Mr Godfrey
314.	A second complaint of mismanagement advanced by Mr Moxon was to the effect that LCM lost out on the opportunity of significant business in consequence of an (allegedly) irrational reaction on the part of Mr Cook in demanding that all contact with Mr Ian Godfrey (a former boxer who had turned to business) should cease in the aftermath of Mr Godfrey’s success in persuading Mr Moxon to sponsor a boxer called Mr Steve Richardson. 
315.	It is pleaded on behalf of Mr Moxon that Mr Godfrey had and has strong links with Credit Suisse, Royal Bank of Canada, and various other high net worth individuals across Europe, and that the “decision to cease contact with Mr Godfrey was not commercial, but irrational, being based upon matters of Mr Cook’s ego and territorial influence and standing”.
316.	Again I can be brief. In my judgment, whatever may be the rights and wrongs of the sponsorship that Mr Moxon agreed, against the reservations of Mr Cook neither the sponsorship or its cancellation, nor the termination of LCM’s relationship with Mr Godfrey are matters that can support a claim of unfairly prejudicial conduct. Even if Mr Cook was (as I sensed he was) very untrusting of Mr Godfrey, and very against the Company becoming involved with him, that seems to me to be well within the bounds of ordinary management and activity in which the Court should not and will not intervene. 
317.	As it is, the objective facts (neither of which was disputed) that (a) no introductions ever resulted for the Company from the relationship with Mr Godfrey; (b) it was Mr Godfrey who terminated the relationship; and (c) that relationship has been successfully restored after Mr Moxon’s departure, tell strongly against Mr Moxon’s allegation. I note also that Mr Godfrey, whose recollection was admittedly not reliable after serious illness, told me that he terminated the relationship (later restored) because of what he saw as incompetence on behalf of Mr Moxon.
318.	The third strand of Mr Moxon’s case on mismanagement is based on an allegation that the wrongful removal of Mr Moxon has caused substantial loss of business to LCM. 
319.	In my judgment, this strand has no merit at all, given my conclusion that Mr Moxon’s removal was justified.
320.	The fourth complaint characterised by Mr Zelin as based on mismanagement is also depicted by Mr Collingwood as intended to depress the ability of the Company to pay more dividend and as the more pernicious and unfairly prejudicial accordingly: this is Mr Moxon’s allegation that Mr Litchfield consistently increased staff salaries without consultation with Mr Moxon and without any proper need or justification. 
321.	There is, in my judgment, nothing in this claim either. At its highest this allegation reveals nothing more than differences of opinion between the three directors. Mr Cook is clear that this was a matter for the executive directors and that Mr Moxon and Mr Litchfield presented a united front. There is no record at all of Mr Moxon ever raising any objection.
Conclusion
322.	Notwithstanding the length of this judgment, there are matters which, perhaps inevitably, I have either not expressly addressed or alluded to only in passing (like the dispute, which developed some heat between Mr Moxon and Mr Cook, in relation to Mr Cook’s exaggerated and probably misplaced criticisms of Mr Moxon’s choice of hire-car). I have, however, taken care to consider all the evidence after the case ended, and consider that I have taken all relevant matters into account.
323.	Further, I am conscious that I have not so far referred to the evidence of Mr Ballard (a chartered accountant, now involved in corporate finance, who was approached by Mr Moxon for investment funds), Ms Smith (who worked for LCM’s Compliance Consultant (now called Sesame Bankhall Group)) and Mr Sparrow (an IT Support technician employed by Shakespeares Solicitors), though all attended and each was cross-examined. As to their evidence, briefly:
(1)	I would accept Mr Collingwood’s assessment of Mr Ballard as appearing still to bear some animosity towards Mr Moxon: but equally, his evidence that he was misled by Mr Moxon into thinking that Mr Moxon had invested £300,000 into RM2 (which was untrue) seemed to me to have the ring of truth. Otherwise, I did not get reliable assistance from him in relation to the real points in issue.
(2)	Ms Smith gave evidence about her sense that in early 2010 Mr Moxon was consciously avoiding signing the required Annual Approved Person Declaration to confirm (amongst other matters) that he was only representing and undertaking financial or investment business on behalf of LCM and had no conflicting outside role or interest. I again accept Mr Collingwood’s depiction of her as a straightforward witness; but her evidence of her impressions has not affected my assessment of the facts materially.
(3)	 Mr Sparrow was straightforward also. I accept his evidence that when he searched Mr Moxon’s computer it appeared to have been entirely “wiped”; this was complementary to the evidence of Mr Strickland (an independent IT consultant with responsibility for maintaining the LCM network, to whose evidence I have referred to previously and which also I accept) that (a) the software used to “wipe” Mr Moxon’s computer was not one he (Mr Strickland) had ever used (b) Mr Moxon’s computer remained in Mr Moxon’s possession (c) he had not remotely accessed Mr Moxon’s computer at any relevant time (d) on that basis, it was likely that it was Mr Moxon who had “wiped” his own computer.
324.	I have not referred previously either to Mr Stephen Glyn Morris (“Mr Morris”, a solicitor and partner in the firm of DWF LLP), who provided a witness statement explaining the genesis and provenance of Mr McCulloch’s witness statement, and also attended and was briefly cross-examined. I accept his evidence. 
325.	In conclusion, I shall dismiss the Petition. The injunction will in due course fall away and the transfer provisions will thereafter take effect. However, I shall continue the injunction until after submissions on any ancillary matters, or further order in the meantime. 
326.	Further, and as discussed and provided for at the hearing, it has seemed to me that the Preference Shareholder(s) may wish to consider whether they may have rights in respect of the shares to be transferred.  In accordance with a letter so notifying the Preference Shareholders (and suggesting that they may wish to take legal advice) I gave time before handing down this judgment for them to be provided with a draft of this judgment on a strictly confidential basis, once a final draft had been approved.  I presently understand that the only remaining Preference Shareholder does not wish to contend that it has any option or pre-emption right: but this can be discussed, along with any other matters arising, after final hand-down of this judgment.
327.	Lastly, I regret and must apologise for the delay in providing this judgment to the parties, especially given the pendency of other proceedings and the fact of there being an interlocutory injunction in place.