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England and Wales High Court (Chancery Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Secretary of State for Business, Innovation & Skills v Potiwal (Rev 4) [2012] EWHC 3723 (Ch) (21 December 2012) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2012/3723.html Cite as: [2012] EWHC 3723 (Ch) |
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CHANCERY DIVISION
MANCHESTER DISTRICT REGISTRY
IN THE MATTER OF THE COMPANY DIRECTORS DISQUALIFICATION ACT 1986
B e f o r e :
____________________
THE SECRETARY OF STATE FOR BUSINESS, INNOVATION & SKILLS |
Claimant |
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- and - |
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MR NADHAN SINGH POTIWAL |
Defendant |
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Miss Alison Graham-Wells (instructed by Mackrell Turner Garrett Solicitors) for the Defendant
Hearing dates: 11 December 2012
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Crown Copyright ©
Mr Justice Briggs :
Introduction
(a) Between February and August 2006 he caused Red 12 Trading Limited ("Red 12"), a company of which he was then the sole director, to participate in transactions which were connected with the fraudulent evasion of VAT, such connections being something which Mr Potiwal either knew or should have known about; and,
(b) That he caused Red 12 wrongfully to claim more than £2m by way of VAT refund from HMRC in respect of trading during that period.
The Law
(a) "A collateral attack on an earlier decision of a court of competent jurisdiction may be but is not necessarily an abuse of the process of the court.
(b) If the earlier decision is that of a court exercising a criminal jurisdiction then, because of the terms of ss. 11 to 13 Civil Evidence Act 1968, the conviction will be conclusive in the case of later defamation proceedings but will constitute prima facie evidence only in the case of other civil proceedings. …
(c) If the earlier decision is that of a court exercising a civil jurisdiction then it is binding on the parties to that action and their privies in any later civil proceedings.
(d) If the parties to the later civil proceedings were not parties to or privies of those who were parties to the earlier proceedings then it will only be an abuse of the process of the court to challenge the factual findings and conclusions of the judge or jury in the earlier action if (i) it would be manifestly unfair to a party to the later proceedings that the same issues should be relitigated or (ii) to permit such relitigation would bring the administration of justice into disrepute."
"It has always been said that there must be privity of blood, title or interest: here it would have to be privity of interest. That can arise in many ways, but it seems to me to be essential that the person now to be estopped from defending himself must have had some kind of interest in the previous litigation or its subject-matter. I have found no English case to the contrary."
At page 936 G Lord Guest said:
" "Privies" have been described as those who are "privy to [the party] in estate or interest." (Spencer Bower on Res Judicata, p.130). Before a person can be privy to a party there must be community or privity of interest between them."
"…it seems to me that the substratum of the doctrine is that a man ought not to be allowed to litigate a second time what has already been decided between himself and the other party to the litigation. This is in the interest both of the successful party and of the public. But I cannot see that this provides any basis for a successful defendant to say that the successful defence is a bar to the plaintiff suing some third party, or for that third party to say that the successful defence prevents the plaintiff from suing him, unless there is a sufficient degree of identity between the successful defendant and the third party. I do not say that one must be the alter ego of the other: but it does seem to me that, having due regard to the subject matter of the dispute, there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party. It is in that sense that I would regard the phrase "privity of interest." Thus in relation to trust property I think there will normally be a sufficient privity between the trustees and their beneficiary to make a decision that is binding on the trustees also binding on the beneficiaries, and vice versa."
He continued, at page 516 A:
"… it appears that for privity with a party to the proceedings to take effect, it must take effect whether that party wins or loses. As was said by Buckley J in Zeiss No. 3 [1970] Ch. 506, 541 (where the question was rather different) "The relationship cannot be conditional upon the character of the decision.""
"This all goes to illustrate that the question whether one person is privy on another is highly fact-dependent. The fact that a particular relationship (e.g. solicitor/client or director/company) exists in one case, where the circumstances are such that there is no privity, does not mean that, judged against the facts of another case, that same relationship might not be a very important factor in establishing that there is privity."
He referred to the analysis in Gleeson v Wippell as having been "criticised as being circuitous and not helpful in identifying when the necessary degree of identification is present." But at paragraph 723 he concluded that it was, nonetheless, the test to be applied.
Analysis
Privity
"The doctrine of privity for these purposes is somewhat narrow."
Unfairness
Bringing the administration of justice into disrepute
"The Companies Court of the Chancery Division of the High Court has found, after a full trial, Mr Manson guilty of the five wrongful acts specified above. To allow relitigation of those before the self-same court would seem absurd to Joe Citizen who through his taxes pays for the courts and whose own access to justice is impeded by court congestion. Doing a case twice over would make no sense to him: all the more so if he was told that the costs of this would in all likelihood be borne by innocent creditors of the company which Mr Manson ran."
"The court therefore has to consider, by an intense focus on the facts of the particular case, whether in broad terms the proceedings that it is sought to strike out can be characterised as falling under one or other, or both, of the broad rubrics of unfairness or the bringing of the administration of justice into disrepute."
Conclusion