Neutral Citation Number : [2015] EWHC 2983 (Ch) 
IN THE HIGH COURT OF JUSTICE Case No. 8091 of 2015 
CHANCERY DIVISION 
 
BIRMINGHAM DISTRICT REGISTRY 
The Priory Courts 33 Bull Street Birmingham B4 6DS 
Friday, 23 October 2015 
Before: HIS HONOUR JUDGE SIMON BAKER QC (sitting as a Judge of the High Court) 
BETWEEN 
(1) DERMOT POWER
(2) PATRICK ALEXANDER LANNAGAN 
(3) CHRISTOPHER KIM RAYMENT (in their capacity as Joint Liquidators of Nixon & Hope Limited) Applicants -and
(1) RICHARD JOSEPH HODGES
(2) ROBERT ADRIAN HODGES 
(3) PARJINDER SINGH SANGHA 
(4) DAVID JOHN VIZOR
(5) BENCHER LIMITED (formerly Floors 2 Go Limited) 
(6) F2G RETAIL SALES LIMITED 
(7) N & H IP LIMITED
(8) CLEAT AMALGAMATED HOLDINGS LIMITED 

(formerly Floors 2 Go Amalgamated Holdings Limited) Respondents 
Representation : Mr James Morgan instructed by Gateley plc appeared for the Applicants Mr Andrew Maguire instructed by direct access appeared for the First Respondent Mr Robert Hodges appeared in person and for the Fifth and Eighth Respondents Mr Parjinder Sangha appeared in person Mr David Vizor appeared in person Mr Richard Hodges appeared for the Seventh Respondent 
Hearing Dates : 30 July 2015 and 23-24 September 2015 
JUDGMENT (2)ON SUMMARY JUDGMENT APPLICATION AGAINST (1) RICHARD JOSEPH HODGES (2) ROBERT ADRIAN HODGES (3) PARJINDER SINGH SANGHA (4) DAVID JOHN VIZOR 
(5) BENCHER LIMITED (6) N & H IP LIMITED
(7) CLEAT AMALGAMATED HOLDINGS LIMITED 
I direct that pursuant to CPR APD.6 paragraph 6.1 no tape recording shall be made of this judgment and that copies of this version shall stand as authentic and be treated as the official transcript 
HIS HONOUR JUDGE SIMON BARKER QC: 
Introduction 
1 The Applicants on this summary judgment application, which was issued on 13 July 2015, and in these proceedings are the liquidators of Nixon & Hope Limited (‘N&H’). 
2 All the Respondents except for F2G Retail Sales Limited are respondents to this application in respect of different aspects of the Applicants’ claim. Mr Richard Joseph Hodges (‘RJH’), Mr Robert Adrian Hodges (‘RAH’), Mr Parjinder Singh Sangha (‘PSS’), and Mr David Vizor (‘DV’) were, at all material times, the directors of N&H (they are referred to collectively as ‘the Directors’). They were involved in the transfer of the business and assets of N&H to the other Respondents (respectively referred to as ‘Bencher’, ‘F2GRS’, ‘NHIP’ and ‘Amalgamated’ and collectively as ‘the Corporate Respondents’). Each of Bencher, NHIP and Amalgamated was represented by one of the Directors as a director of the particular company. 
3 In summary, the allegations the subject of this application are that after the onset of N&H’s insolvency the Directors (1) wrongfully paid themselves money and (2) wrongfully transferred assets to the Corporate Respondents for no or an illusory consideration or at an undervalue. 
4 The court may only give summary judgment if it is satisfied that a respondent’s case has no real prospect of success and there is no other compelling reason for a trial. The overall burden of proof rests on the party applying for summary judgment; if an applicant adduces credible evidence for the judgment sought, the respondent to the application bears the evidential burden of identifying a case with a real prospect of success or some other compelling reason for a trial. The court may consider the respondent’s case to be improbable, but that is not the same as lacking a real prospect of success. The court may not endeavour to decide the question of whether the respondent’s case has a real prospect of success by embarking on a summary or ‘mini’ trial. CPR 24 is aimed at providing a providing a machinery for resolving clear cut cases and issues. If the court does consider a respondent’s case to be weak and improbable (which is an improvement over lacking any real prospect of success), it may make a conditional order. The condition may require a payment into court, provided the effect will not be to stifle the respondent’s ability to present its case at trial, and, if there is some further reason (such as a history of disobedience of orders) order security for costs. 
5 The Applicants seek summary judgment on four aspects of their claim: 
(1) payments to each of the directors after N&H’s insolvency (29.5.14 for the purposes of this issue); 
(2) unexplained and unjustifiable payments to RAH in the period 12.9.12 to 28.5.14; 
(3) transfer of N&H’s intellectual property rights (‘IP rights’) to NHIP; and, 
(4) transfer of N&H’s tangible assets to Bencher and its stock to F2GRS. 

6 A summarised history of the short life of N&H is essential background to this application. N&H was incorporated on 10.8.11 to acquire the business and assets, including IP rights, of a failed flooring business (Floor My Home Limited (‘FMH’)) of RAH and RJH by way of a pre-pack acquisition from FMH’s administrators. DV and PSS became the initial directors of N&H and RAH and RJH became directors on 1.12.12, however they were involved in N&H’s business from the outset. RAH and RJH between them were at all material times the ultimate controllers of N&H through indirect shareholdings (32.5% each) and DV and PSS have held indirect minority interests (2.5% each) with a further ultimate significant minority holding being beneficially owned by RAH’s and RJH’s father. 
7 N&H produced one set of audited financial statements, made up for the period 24.8.11 to 31.1.13 and signed off on 2.3.13 by RAH on behalf of the Directors. The accounts show turnover for the 17 month period at £29.6million generating a modest, on that turnover, net profit of some £137k. In abbreviated form, N&H’s balance sheet as at 31.1.13 shows : 

£m 	£m 	
Intangible Assets 	0.5 		
Tangible Fixed Assets 	1.3 		
Total Fixed Assets 		1.8 	

Stock 1.4 Debtors and Cash 4.0 
5.4 Creditors (6.0) Net Current Liabilities (0.6) Other Liabilities (0.4) Net Assets 0.8. 
The Intangible Assets comprise the goodwill and IP rights acquired from FMH at cost less amortisation. The Tangible Fixed Assets include the upwards revaluation from cost on acquisition from FMH by more than £0.6m of plant and machinery and motor vehicles. 
8 Even before the balance sheet as at 31.1.13 was drawn up there were clear indicators of impending insolvency. One key indicator was that in August 2012 N&H ceased making payments to HMRC as they fell due. The Net Current Liabilities revealed by N&H’s Balance Sheet indicate cash flow insolvency. As from January 2014 unpaid creditors were resorting to entering county court judgments against N&H. On 1.4.14 the Directors resolved that N&H was insolvent and unable to pay its debts as they fell due. This was repeated with further notices of intention to appoint administrators on 29.5.14, 12.6.14 and 26.6.14. N&H entered administration on 4.7.14 and, following the administrator’s petition, N&H was wound up and the Applicants were appointed its liquidators on 
24.9.14. 
9 The Directors are also directors of the Corporate Respondents as follows: RJH and RAH of Bencher, PSS and DV of NHIP, and RJH and RAH of Amalgamated. That RJH and RAH are connected to F2GRS has been admitted in the course of very recent committal proceedings1 and this 
1 [2015] EWHC 2931 (Ch) 
summary judgment hearing. Accordingly, the Corporate Respondents are fixed with knowledge of N&H’s insolvency for the purposes of the summary judgment claims against them. 
Payments to each of the directors after N&H’s 29.5.14 
10 This claim for summary judgment, founded in misfeasance under s.212 of the Insolvency Act 1986 (‘IA86’), to recover salary paid to the Directors after N&H became insolvent was opened on 30.7.15. However, time did not permit a full hearing on that day. On 23.9.15 the Directors informed the court that they conceded the claim subject only to arguing or agreeing interest. Implicit in this admission is acknowledgment by each of the Directors of breaches of their duties as directors of N&H by failing to have regard to the interests of N&H’s creditors, failing to exercise their powers for proper purposes as required by s.171(b) of the Companies Act 2006 (‘CA06’) and their duties as fiduciaries. By 24.9.15 the Applicants and the Directors had agreed the following terms for judgment on this claim : judgment against RJH in the sum of £61,792.02 plus interest of £2,352.22 to be paid by 12 equal monthly instalments of £5,345.55 commencing on 23.10.15; judgment against RAH in the sum of £69,163.02 plus interest of £2,632.83 to be paid by 12 equal monthly instalments of £5,982.99 commencing on 23.10.15; judgment against PSS in the sum of £8,200.00 plus interest of £312.15 to be paid by 24 equal monthly instalments of £354.67 commencing on 23.10.15; and, judgment against DV in the sum of £4,327.00 plus interest of £164.71 to be paid by 4.00pm on 23.10.15. In the event of any failure to pay instalments, the Directors become jointly and severally liable for the outstanding balance of the full debt. 
Unexplained payments to RAH in the period 12.9.12 to 28.5.14 
11 The thrust of this claim, which is also founded on s.212 IA86, is that over the period 12.9.12 to 28.5.14 RAH’s salary and benefits entitlement was £132k per annum (rather generously calculated by the Applicants as £237k for the period) but N&H paid him almost £700k. The Applicants rely on RJH’s statement to the Official Receiver (‘OR’) as to his and RAH’s salary and benefits entitlement over this period. The amount claimed, after giving credit for salary and benefits and any other possible defences (none being conceded save for the purposes of this application) is £339k, in fact £339,034.51 but the round sum suffices for the purposes of this application because a further sum remains live as a claim at trial. 
12 RAH’s initial response was that on 1.2.13 he lodged £856,250 from the proceeds of sale of a property to which he was entitled via NHV Properties Ltd (‘NHVP’), a sister company of N&H. Mr Morgan, the Applicants’ counsel, submitted that there are two difficulties with that proposition. The first difficulty is that some £270k odd was paid by N&H to RAH between 12.9.12 and 31.1.13, i.e before this sum was lodged at N&H’s bank. The second difficulty is that by 15.4.13 that sum was exhausted and N&H’s bank account became overdrawn. Accordingly, payments between 15.4.13 and 28.5.14, some £306k, cannot have been drawn from those monies. The Applicants contended that there is thus a sum of £576k which unquestionably falls outside the scope of RAH’s claimed entitlement (which the Applicants will dispute at trial) to draw from £856,250 paid into N&H’s bank account. 
13 The Applicants arrived at their claimed figure of £339k by deducting their allowance for salary and benefits, £237k, from £576k. The Applicants claimed that at least £339k was paid to RAH without explanation or entitlement. They have made clear that they intend to claim a further sum at trial. 
14 In his Points of Defence dated 30.6.15, RAH stated that he proposed to provide a breakdown of all monies drawn by him from N&H before 
30.7.15. 
15 In the event, RAH’s further explanation was provided by a witness statement dated 4.9.15. RAH’s asserted entitlement to £856,250 was explained on the basis that NHVP had sold a property in Glasgow for £1.5million; that sum could have been paid out by way of dividend; he has a 32.5% indirect interest in NHVP (via N&H’s holding company and an initially undisclosed offshore company which RAH says has since been struck off the relevant offshore register); he could have benefited accordingly. 
16 At trial, the payments to RAH over the period 1.2.13 to 14.4.13 may not be saved by this line of defence; however, that is an issue for the future. 
17 RAH exhibited to his statement an accountant’s letter and a schedule to support his contention that he has a real prospect of demonstrating at trial that he was entitled to all payments he received from N&H. The accountant’s letter, which was dated 13.9.12 and written to a mortgage lender under the subject heading NHVP, gave figures for net earned income in the preceding year of £240k for RAH and £40.8k for PSS and stated that they “are privately wealthy with significant incomes and capital”. 
18 RAH also exhibited to his statement a schedule, drawn on a monthly basis for the period September 2012 to July 2014. This shows payments by N&H to him totalling £739,886.35 and income entitlement (fees at £30k per month from September 2012 to December 2013 and at £10k per month thereafter and car allowance at £1k per month) totalling £562k; this leaves a shortfall of £173,886.35 of which £157,169.46 is stated, without any particulars, to be payment for expenses (whether by way of advance or reimbursement is also not stated). If accepted as not fanciful or without foundation, and ignoring the time period difference, this would leave only some £15k unaccounted for. On that basis, the summary judgment application should fail, or be confined to judgment in the sum of £15k at most. 
19 In his submissions RAH said that he would appeal any summary judgment because “there is a lot more depth to this” and because he had found himself let down by solicitors and problems with legal insurance resulting in him being “dropped into” being a litigant in person. 
20 Turning to his income and expenses entitlement, he said that the accountant knew his financial position both from dealing with his own tax affairs for many years and from being accountant for Floors 2 Go’s businesses. RAH’s original consultancy agreement and original records to support the expenses figure, together with all N&Hs records and some of N&H’s computer equipment, had been in a N&H van which had been stolen on 9.12.13 when parked overnight before delivery to a new head office in Glasgow. RAH did have a copy of a detailed schedule relating to the expenses, but not with him at court; the schedule would show that the expenses were all bona fide to do with N&H’s business going forward. RAH challenged the proposition that N&H’s bank account went into overdraft on the basis that N&H never had an overdraft facility and its current account was maintained in credit by automatic transfers from a credit card funds account and a currency account. 
21 As to the accountant’s reference, the income stated related to a period that had ended before the relevant period (12.9.12 to 28.5.14) began and gave no indication of the amount, if any, of the “net earned income” derived from N&H. Further, on RAH’s evidence as to means filed in these proceedings in response to a freezing order, it is far from evident that he is “privately wealthy” with “significant … capital”. 
22 RAH’s schedule, which covers the period September 2012 to July 2014 does not match the period the subject of the application. Extracting the figures for the relevant period, the payments to RAH total £670k and his fees and car allowance total £551k. There is no indication when expenses said to total more than £157k were incurred or what comprises that total. 
23 On 30.6.15 RAH asserted in his Points of Defence that by 30.7.15 he would provide “a detailed breakdown of all monies drawn by me from [N&H]”. As at 24.9.15 all that RAH had provided was the schedule which included a total figure for expenses and an assurance that he did have a copy of a detailed schedule relating to the expenses, but not with him at court. Quite apart from the fact that in these proceedings RAH has demonstrated that he is not a man of his word, and even if such a schedule exists, it is an altogether different question whether it presents even an improbable defence to this aspect of the Applicants’ summary judgment claim. 
24 As to RAH’s fees income, monthly fees of £30k obviously equate to an annual income of £360k. There is no documentary evidence to support either this level of income payable by N&H to RAH or of any entitlement to fees, as distinct from salary, pursuant to a consultancy agreement with N&H. RJH, who was RAH’s co-director at N&H made a statutory declaration to the OR that their respective incomes from N&H were £120k 
p.a. plus £12k allowance p.a.. 
25 As to RAH’s assertion that N&H’s bank account did not go into overdraft, 
(1) the key point is that by 15.4.13 the £856k odd paid into N&H’s bank account by or via NHVP had been expended, and (2) that the account was overdrawn on 15.4.13, or at any rate short of funds, is borne out by evidence that on 16.4.13 N&H’s cheque to HMRC for a month’s PAYE and NI was dishonoured on presentation. The unchallenged evidence is that there were significant cash flow problems at N&H from, at the latest, August 2012. 
26 On the material before me, it is not possible to classify RAH’s answer to this claim as highly as ‘improbable’. It is in the territory of fancy and has no real prospect of succeeding at trial. There is no other compelling reason why this issue should go to trial. The Applicants have established their right to summary judgment against RAH in the sum of £339k. 
Transfer of N&H’s intellectual property rights (‘IP rights’) 
27 On 2.3.13, RAH, on behalf of the Directors, signed the Directors Report to and balance sheet of N&H’s financial statements for the period from incorporation to 31.1.13. The fixed assets shown on the balance sheet included Intangible Fixed Assets at a value of £520,198. The notes to the balance sheet explain this asset as the cost of purchasing the goodwill and IP Rights of FMH, £558,800, on 24.8.11 less an amortisation charge for the period, £38,602. 
28 The agreement for the pre-pack sale by FMH’s administrator to N&H of FMH’s business and assets provided for the sale of “Goodwill” and “Intellectual Property” as defined in that agreement. Goodwill was defined as including the grant by FMH of such rights as it had to use the Name (defined as “Floors2Go”, “Tiles2Go” and “Floor My Home” or any of them) and to represent itself as successor to FMH’s business. Intellectual Property was defined widely by reference to conventional IP rights and included any trade marks and trade names held and used by FMH in connection with its business. 
29 NHIP was incorporated on 18.4.12 with N&H as the initial owner of its two issued shares and DV and PSS as its officers. 
30 On 22.4.13, DV, acting for both N&H and NHIP, executed an assignment of all property in certain trade marks and all common law rights therein including goodwill. The assigned trade marks included the UK trade mark 2286548, which is a device depicting a man striding with a bag or tool in his right hand and using his left hand to support a stack of flooring carried on his head. UK trade mark 2293321 comprises the words “FLOORS 2 GO” and “FLOORS2GO”. The marks are not renewable until 2021-2. The registration relates to classes 27 and 37, wood floor coverings and installation, maintenance and repair services relating to floor coverings. The assignment includes a warranty that N&H is the sole legal and beneficial owner of the assigned IP rights and that they are not subject to existing licences or any security interest or other encumbrance. On 25.5.13, the assignment was notified to the Intellectual Property Office, which maintains the register of trade marks, and NHIP was formally recorded as the owner. 
31 Following Amalgamated’s incorporation on 21.2.14, NHIP’s two issued shares were transferred to it. There is no evidence of any consideration moving from Amalgamated, or any other person on Amalgamated’s behalf, to N&H for these shares. This arrangement was part of a corporate restructuring arrangement by which Amalgamated acquired eight subsidiary companies. The purpose was to create a corporate structure unfettered by N&H’s financial problems into which N&H’s assets would be transferred and to sell 60% of the holding company’s shares, that is Amalgamated’s shares, for £5.4 million to two interested buyers. The term sheet outlining the transaction under negotiation, which was signed on 15.2.14 by RAH on behalf of N&H’s holding company as vendor of 60% of Amalgamated (at that point not incorporated), listed the assets to be owned by Amalgamated after incorporation and by the date of the proposed transaction as including “The brand “Floors-2-Go”, a trade mark registered in the UK with registration numberUK00002293321”. 
32 Mr Morgan submitted that when viewed against this background, which he derived from documents approved by the Directors and signed on their behalf by RAH or DV, the court should have no hesitation in either restoring N&H as shareholder in NHIP by directing Amalgamated to execute a transfer back or restoring the rights directly to N&H by directing that the IP rights assigned to NHIP be transferred to N&H. The Applicants’ preference is for the first of the alternatives with the claim against NHIP for restoration of the rights being adjourned generally with permission to restore. 
33 Mr Morgan referred to s.238 and s.240 IA86. Having regard to the timing of the share transfer, it was within two years of the onset of N&H’s insolvency. As to consideration, there was no evidence known to the Applicants and none was adduced by the Directors to suggest that any consideration had in fact been paid for the transfer to Amalgamated of NHIP’s shares. Accordingly, Mr Morgan submitted that the share transfer fell squarely within the definition of transactions at an undervalue under s.238(4)(a) IA86 : 
“… a company enters into a transaction with a person at an undervalue if
(a) the company makes a gift to that person or otherwise enters into a transaction with that person on terms that provide for the company to receive no consideration … ”. 
34 The court’s power under s.238(3) IA86 is to make a restorative order. However, s.238(5) prohibits the court from so doing if it is satisfied“(a) that the company which entered into the transaction did so in good faith 
and for the purpose of carrying on its business, and 
(b) that at the time it did so there were reasonable grounds for believing that the transaction would benefit the company”. 
35 RAH’s response was that it is the case -and, therefore, is at least arguable -that when the UK trade mark was originally registered there were insufficient funds available to register a community trade mark (‘CTM’); however, by 2004 the position had changed and it was decided to form a special purpose vehicle, Mega Floors Limited, to register “Floors 2 Go” as a full CTM including the UK trade mark; Megafloors then issued a perpetual licence to use “Floors 2 Go” to N&H which was subject to an insolvency clause rendering the licence null and void; accordingly, N&H never owned the UK trade mark or the brand name; full ownership rests with Mega Floors Limited, which is owned by RJH and Mr Hodges senior. The assignment executed by DV must be wrong because N&H was only ever a licensee and the licence fell away upon N&H’s insolvency. 
36 RAH also drew attention to a trade mark co-existence agreement dated 
25.3.04 signed for both parties by R J Hodges (it is unclear whether this is RJH or his father). The parties are Broomco (3397) Limited and Anglo Baltic Limited, an English company2. The essence of that agreement is that Anglo Baltic, as then owner of the UK trade mark Floors 2 Go, would continue to trade within the UK under that mark and Broomco, as assignee from Anglo Baltic of a CTM application for the same mark, would be free to do the same outside the UK. RJH exhibited this agreement to an affidavit dated 27.3.15 but he provided no explanation of what had become of either company or the rights referred to or the agreement’s relevance. 
37 RAH did not address – nor could he – the term sheet which he personally signed on behalf of Nixon & Hope Ventures Limited (‘NHV’), which company was N&H’s direct holding company and became Amalgamated’s indirect holding company on the latter’s incorporation. The detail of the term sheet is unequivocal that what is being transferred is the UK registered trademark for Floors 2 Go, not a licence thereunder or of the brand name. 
38 When viewed in the context of N&H’s financial statements at 31.1.13, the term sheet signed by RAH, the assignment executed by DV, and the steps taken to bring about the registration at the IPO of NHIP as the trade mark owner, the counter contention that N&H was only ever a licensee and that Mega Floors limited is the true rights owner is unarguable. There is no other compelling reason for a trial of this issue. 
39 The Applicants are entitled to judgment on this claim for summary judgment. 
2 There appears also to be a BVI company of the same name under the control of RJH and RAH 
Transfer of N&H’s tangible assets to Bencher and its stock to F2GRS 
40 The Applicants make this claim for summary judgment on two bases. First, they claim against the Directors, jointly and severally, pursuant to 
s.212 IA86. Secondly, they claim against Bencher pursuant to s.238 IA86. On this application the Applicants do not seek summary judgment against F2GRS in relation to the transfer of N&H’s stock; that is at least in part because of delayed disclosure by the Directors in breach of a series of disclosure orders, for the breach of one of which the Directors have admitted being in contempt of court and punished accordingly. 
41 As against the Directors, the Applicants seek an order for repayment of £250k as representing the lowest possible value of the tangible assets transferred, £150k, and the lowest possible value of the stock transferred, £100k. As against Bencher, the Applicants seek an order for payment of £150k as an interim payment in respect of the transfer of tangible assets. The claims are quantified for summary judgment by reference to (1) the lowest valuations given by the Directors in the context of transfer or disposal of assets and (2) the Applicants’ contention that no, or only illusory, consideration was received for the assets. 
42 N&H’s financial statements for the period from incorporation to 31.1.13 valued the tangible fixed assets at £1.3 million. The detail of these assets was explained in a note to the balance sheet. The net book value ascribed to different classes of asset as at 3.1.13 was : £k Leasehold land and buildings 42 Plant and Machinery 912 Computer equipment 98 Fixtures, fittings and equipment 194 Motor Vehicles 59 1,305. The note explained that Plant and Machinery which had originally cost £15k had been revalued upwards by £600k to reflect market value based on the Directors’ “knowledge and experience of the sector”. Motor vehicles costing £36k had been revalued upwards by £20k for the same reason. 
43 What the above shows is that prior to the signing off of the financial statements by RAH on behalf of the Directors on 2.3.13, the Directors had applied their minds to the market value of N&H’s tangible fixed assets and represented that they had taken steps to ascertain the true market values of N&H’s tangible fixed assets. 
44 These assets will have been depleted to some extent on 9.12.13 by the theft of the N&H van loaded with N&H’s records and unspecified computer equipment. However, there remained substantial tangible fixed assets for continuance of N&H’s trade. 
45 On 1.4.14 and over the period 3-5.6.14 a series of agreements were made pursuant to which N&H’s assets, stock and business were transferred or disposed of to other entities connected with the Directors and RJH and RAH in particular. On 1.4.14 the Directors unanimously resolved that N&H was insolvent and unable to pay its debts as they fell due and they filed the first of several notices of intention to appoint an administrator. A further unanimous resolution and notice of intention to like effect followed before 3.6.14, on 29.5.14. An administrator was appointed by the court on 4.7.14 and the administrator has reported that in late June 2014 the Directors informed him that the assets of N&H had been transferred and that N&H had ceased trading “some months previously”. 
46 In the early part of 2014 there were discussions between the Directors and representatives of a possible buyer in China. The intention was to separate N&H’s assets from its liabilities by transferring the assets into new corporate ownership and then sell up to 60% of the new corporate owner’s share capital for in excess of £5 million. To put this in context, it is to be remembered that N&H was unable to pay ongoing payroll tax liabilities to HMRC from mid-2012 and creditors were entering judgments from January 2014. The negotiation for the possible sale ended without agreement in May 2014. 
47 Preliminary inspection by the Applicants of the Directors’ belated disclosure, ordered for 15.5.15 and given on 15.9.15, which was the subject of contempt proceedings, has revealed that in May 2015 a Mr Michael Coleman was circulating drafts of the agreements relating to the transfer of N&H’s assets to RJH, RAH and DV as attachments to emails containing summary explanations of those agreements. Further, on 
28.5.14 RAH and DV met with a Mr Taylor of Anbo International Limited (‘Anbo’) (whose wife became the shareholder of F2GRS in order to separate it, ostensibly, from the structure being created for the transfer of N&H’s assets) and discussed the practical steps to be taken in order to render operational the structure to be created by these agreements. This discussion is recorded as notes of a meeting at Anbo on 28.5.14 with an action list and allocation of responsibility for each step. 
48 The first agreement, which is dated 1.4.14 and was signed by all the Directors, provided for the transfer of N&H’s tangible assets, excluding stock, to Bencher for a deferred consideration payable by N&H’s own holding company, NHV, on 1.10.14 in the sum of £385,723. No security was provided for payment of the deferred consideration. There is no evidence to support that valuation. In any event, NHV has not made any payment. I note from a group structure chart prepared by the Applicants that NHV holds a significant indirect minority interest in NHIP but that is of no assistance in explaining the commercial purpose of this agreement. 
49 The second agreement, which is dated 3.6.14, concerned shares in Floors2Go Holdings Limited, a BVI company incorporated in February 2014, (‘F2GHbvi’) as Amalgamated’s holding company and, indirectly, the holding company of the companies formed to be transferees of N&H’s assets. This agreement was predicated on the basis that N&H owed Anbo, a company with total exemption from filing accounts, £900k. The purpose was to bring about the transfer of a 15% shareholding in F2GHbvi to a company, Epic Holdings Limited a company said to be registered in Hong Kong (‘Epic’), owned or controlled by one of Anbo’s two shareholders. This was achieved by Anbo assigning the benefit of £810k of the debt to the Epic and NHV accepting the debt in exchange for a 15% shareholding in F2GHbvi. Put more shortly, NHV ceded a 15% indirect interest in the companies in receipt of N&H’s assets under these agreements in exchange for £810k of debt said to be owed by N&H to Anbo. Responsibility for the balance of the debt, £90k, was assumed by Bencher. 
50 The third agreement, also dated 3.6.14, exists in at least two versions but, like the second agreement, no fully executed version is in evidence. By one of the versions, it was recited that (1) N&H owed Anbo £1 million in respect of which NHV accepted liability for £810k and Bencher for £190k and (2) Bencher owned the tangible assets transferred by N&H under the first agreement. By this agreement, (1) Bencher agreed to transfer its assets to F2GRS in exchange for F2GRS taking over Bencher’s £190k liability and (2) N&H confirmed its liability to NHV in the sum of £810k and agreed to transfer its stock to F2GRS (ostensibly nothing to do with NHV or any NHV group company) in exchange for NHV releasing N&H from its £810k liability. 
51 So, at this point N&H had been divested of its tangible assets, including stock. N&H’s intangible assets had already been transferred via a transfer of NHIP’s shares 
52 By the fourth agreement, also dated 3.6.14, which was executed by DV for NHV, PSS for N&H, and RAH for Bencher, it was recited that (1) N&H was indebted to Anbo in the sum of £890k and that NHV assumed responsibility for £810k and Bencher for the balance (£80k under this agreement) and (2) the parties acknowledged that the price attributed to tangible assets excluding stock in the first agreement exceeded the true market value, which was £150k. This agreement provided that the lesser sum of £150,000 was to be set off against N&H’s £810k debt leaving net indebtedness of £660k to NHV. 
53 The fifth agreement, dated 5.6.14, was executed by DV for NHV and RJH for N&H. It purported to correct an error in the third agreement to the extent that it had provided for N&H to be released entirely from the debt of £810k to NHV and to correct the release to £100k on the basis that that is the true value of the stock transferred to F2GRS. 
54 The fourth and fifth agreements provide the basis for the Applicants’ valuation of tangible fixed assets at £150k and stock at £100k. They also provide the basis for the contentions that (1) these assets were disposed of by the Directors for no, or only illusory, consideration, (2) the Directors conduct in so doing was misfeasant, and (3) Bencher received N&H’s tangible fixed assets at an undervalue – in the circumstances as a gift. The Applicants make an alternative claim that, if any sum was owing by N&H to Anbo (as to which there is no evidence beyond the recitals and terms of the agreements), the underlying structure of the agreements was to prefer Anbo. Either way, the Directors are saddled with misfeasance. 
55 In response, each of the Directors made submissions on behalf of themselves and RAH, as a director of Bencher, made submissions on behalf of the claim against Bencher. 
56 Each of the Directors submitted that he had acted honestly and reasonably and had not benefited personally from the transfers or disposals of N&H’s assets and stock. They all said that the agreements were complex and were devised by Mr Coleman, who was described by RAH as an international lawyer with a high profile client list including the former MP Mr Neil Hamilton. DV and PSS said that the agreements were not properly explained and were certainly not understood by them; further, they had not had time to address the summary judgment application in any detail. RJH and RAH submitted that the Applicants’ claims cry out for a trial so that all parties can be joined (a reference to the Respondents joining at least Anbo, albeit that no basis for joinder was explained) and Mr Coleman may give evidence and explain the agreements. RAH also submitted that if there had not been an agreement with Anbo, the various landlords would have repossessed the store sites and jobs would have been lost. Each of the Directors stressed that he had had good intentions at the time and sought to achieve the best outcome for N&H’s creditors. 
57 On behalf of Bencher, RAH said that his recollection was that Mr Coleman had been the architect of and had advised on the agreements and that if he (RAH) signed any of the agreements he had done so in good faith relying on Mr Coleman’s advice. 
58 In reply, Mr Morgan addressed the Directors’ case and submitted that whether or not the Directors acted honestly is not in issue on this application, rather what the Applicants contend is that it is not realistically arguable that their actions were reasonable. 
59 Standing back from the detail of the agreements, the outcome was : (1) N&H’s tangible fixed assets and stock were transferred to Bencher and F2GRS respectively; (2) N&H’s business is now being carried on by F2GRS and/or under the umbrella of Amalgamated and its subsidiaries including Bencher; (3) the Directors no longer persist with the fantasy that F2GRS is not a connected company (nor could they in the light of the recently disclosed 28.5.14 meeting notes); (4) N&H received nothing in return, rather it was left as a shell with creditors in the order of £5 million; 
(5) the absolute minimum loss to N&H was £250k; and, (6) the only issue for trial is how much more than £250k is (a) the Directors’ liability for this misfeasance and (b) Bencher’s and F2GRS’s liability for transactions at an undervalue. 
60 The agreements have only to be summarised for the Applicants’ contention that N&H was divested of assets for no, or illusory, consideration to be understood and made good. 
61 As to Mr Coleman not having an opportunity to give evidence, the summary judgment application was issued on 13.7.15 and opened by Mr Morgan on 30.7.15. It was then adjourned until 23.9.15. It is unrealistic to suggest that a trial is necessary or desirable so the Directors may have an opportunity to call Mr Coleman to explain the agreements. The agreements are very short and the Directors had more than two months to obtain a statement from Mr Coleman. 
62 It is also to be noted that the Directors had in mind, on several occasions, placing N&H in administration which would have given rise to a moratorium during which the administrator(s) would have been able to trade N&H’s business thereby potentially preventing the repossession of store sites and preserving jobs pending the achievement of the appropriate purpose of administration. 
63 In my judgment, the Applicants’ case against the Directors as advanced by Mr Morgan is compelling and has not been answered by the identification of a defence with a real prospect of success. For the purposes of this judgment it is not necessary to attempt to restate in my own words Mr Morgan’s analysis and submissions, which I accept. No director acting reasonably could have authorised or made agreements which had the effect of giving away N&H’s assets for no actual consideration. There is no prospect of a defence based on s.1157 CA06, which is the only line of defence raised by the Directors, succeeding. There is no proper basis for any further examination by the court into the conduct of the Directors or any of them, which would effectively jusitfy refusal of the summary judgment application in the exercise of the discretion under s.212 IA86. Further, the Directors have not identified any other compelling reason for a trial of this issue. 
64 The only order which can sensibly be made in relation to the Directors is 
(1) to order the Directors, jointly and severally, to contribute £250k to the assets of N&H by way of payment on account of, or interim payment in respect of, the compensation due by them for their misfeasance and (2) to direct that there be an enquiry as to the full sum to be contributed by them to N&H’s assets by way of compensation for their misfeasance in connection with the transfer or disposal of N&H’s tangible assets including stock. 
65 As to the position of Bencher and the transaction resulting in the transfer to it of N&H’s tangible fixed assets for no actual consideration, there is no realistic basis on which it may be argued either that it was entered into for the purpose of N&H carrying on its business (see s.238(5)(a) IA86) or that, at that time, there were reasonable grounds for believing that the transaction would benefit N&H (see s.238(5)(b) IA86). There is no other compelling reason for a trial of this issue. Accordingly, the appropriate order to make to restore N&H to the position that it would have been in if N&H had not entered into that transaction is to order Bencher to pay the equivalent of the open market value between a willing buyer and a willing seller for the assets it received from N&H. That will involve (1) an order for an interim payment in the sum of £150k and (2) an order for an enquiry as to the value of the tangible assets transferred from N&H to Bencher and payment by Bencher of the balance of that value. 
66 Of course, any order as drawn up is to ensure that there is no double recovery by N&H as a result of the judgment against both the Directors, jointly and severally, and Bencher.