The former director of a private equity firm took more than £12m from the company and used it to buy an £8.5m Cotswolds manor house, a judge has found.
Judge David Mackie QC granted summary judgment to Fern Advisers on its claim to recover the sums from its former executive director Adrian Burford.
He found that payments made to companies in which Burford had a close personal interest could not have been bona fide loans, and rejected Burford’s claim that the money to buy the Grade II listed property in Gloucestershire was an advance on his salary.
He said that Burford had no prospect of successfully defending the case at trial.
Fern alleged that between April 2012 and March 2013, Burford used his position as Fern’s executive director to take more than £12m from its bank account.
The judge said: “Fern says that he used this money to keep various ailing businesses afloat, to fund an extravagant lifestyle and to buy Broadwell Manor, an estate in Gloucestershire. Mr Burford admits that he took the money and used most of it as Fern alleges but he says that the money was either lent to him by Fern or otherwise spent in good faith for the company’s purposes.
“He also says that any liabilities he owes are more than offset by a counterclaim for lost future earnings.”
But the judge ruled that Burford had no real prospect of successfully defending the claim against him of fraudulent misappropriation and breach of his position as officer and director.
He said: “The documents produced demonstrate a disgraceful pattern of fraud and forgery.
“Mr Burford admits that he acted dishonestly and was in some way involved in forging documents in obtaining funding for Fern, whatever his motive. It is common ground that Fern received money for particular purposes only but that Mr Burford caused it to be spent on his own new home, his failing businesses and personal expenditure.
“Mr Burford claims, very improbably, that he did this as part of some scheme with a fellow director but, if he did, this makes no legal or practical difference.
“As a director of Fern Mr Burford misappropriated funds, applying them for an improper purpose. He held the funds as a trustee and is liable to pay them back and Fern has a right to trace, even if, which is very unlikely, Mr Burford did not do all this alone.”
He said that the counterclaim, for around £18m in lost earnings, was “hopeless and lacks any legal basis”.
He concluded: “In short Fern has established that Mr Burford has no real prospect of successfully defending this case at trial.
“The claims succeed without it being necessary to prove that the fraud in this case is as serious as it appears to be. If it had been necessary to reach more conclusive findings about some aspects I would have done so.
He added: “The court does not always require a trial to be sure that a serious allegation of fraud is true. There is no purpose in a trial when a defence is preposterous and defies commercial, or indeed any, common sense.”
A freezing order was made against Burford in April 2013, and in July 2013, a receiver was appointed to sell Broadwell Manor, on Fern’s application. The judge said that the proceeds will all go to Fern.
Burford was made bankrupt in January 2014, but the judge refused to stay the action against him on that basis.
Fern Advisers Ltd v Burford and others Queen’s Bench (Judge Mackie QC) 1 April 2014
Anthony de Garr Robinson QC and Clare Reffin (instructed by Herbert Smith Freehills) for the Claimant
The first defendant appeared in person
