WITNESS STATEMENT OF JAMES ALBERT BAKER

Transcription

1 J Baker First 18 th April 2014 IN THE HIGH COURT OF JUSTICE QUEEN S BENCH DIVISION BETWEEN: Claim No: HQ13X CONRAD DAVIES 2. PAUL FEEHAN 3. JOHN EVANS 4. JONATHAN THOMAS 5. JOHN EYRE 6. RACHEL BROIDO 7. TRUSHANT BODANI 8. GRAHAM MURRAY 9. DAVID NORRIS 10. COLIN PARKINSON 11. CHRISTINE BLOOMFIELD 12. CARLOS GUTIERREZ 13. MARC DAVID THOMAS 14. YIANNAKIS KADIS 15. ROBERT LAWLEY 16. GLENDA YEARWOOD 17. NEIL MAYOR 18. MICHAEL STEWART MROWIEC 19. DAVID WAYNE ROSSITER 20. ANN WILTON 21. JOY ANDERSON 22. BRIJ MOHINI AHLUWALIA 23. CAROL VITALI 24. ERICA BROUGHTON 25. TOM CROWLEY -and- Claimants 1. DAVID AMES 2. CAROL AMES Defendants WITNESS STATEMENT OF JAMES ALBERT BAKER

2 I, JAMES ALBERT BAKER, of Swiss House, Beckingham Street, Tolleshunt Major, Essex, CM9 8LZ, SAY AS FOLLOWS: 1. I am make this witness statement in accordance with paragraph 10 of the Order of Mr Justice Tugendhat dated 10 th March The facts and matters set out in this witness statement are from my own knowledge and are true, save, where otherwise stated. Where matters are not within my own knowledge, they are true to the best of my knowledge, information and belief and I will set out the source of such information and belief. 2. I set out below my best estimate of the valuations of the Defendants interests in the various companies listed on the latest Schedule of Assets filed by the Defendants in these proceedings. I have, where possible, to a) identify the information and exhibit relevant documentation, 2) provide a summary of my methodology and 3) explain the value of the assets owned by each company and the liabilities of each company. 3. In Many of the Companies Accounts they have been prepared recording the costs including agents commissions charges as being part of the historical cost of the Development. This often results in the assets exceeding the liabilities by only 1. On the accounts themselves. The accounting policy is adopted uniformly throughout. However, in many cases the physical value of the asset appears less than that shown in the accounts as is demonstrated by valuations and thus, if the value of the asset is adjusted to the valuation then the liabilities exceed the value of the assets. The effect of this being that the shareholder funds ranking after the creditors of the business have no value. The vast majority of the liabilites of the various Companies are the

3 investor deposits shown as liabilities until such time as the Company in question delivers the property that it contracted with the investors to deliver. Harlequin Management Services (South East) Limited 4. The Company Harlequin Management Services (South East) Limited has the company number and is registered in the UK. This company entered into Administration in May of The statement of affairs filed at Companies House by the Administrators records an estimated total deficiency to members of a sum in excess of 89,000,000. On this basis it is not thought the shareholding within this Company has any value. I exhibit the Administrators Statement of Affairs filed at Companies house as JAB1 Harlequin Property (SVG) Ltd 5. The Company Harlequin Property SVG Ltd is a Company registered in St Vincent. I exhibit as JAB 2 the Accounts for this Company to 30 th April The Accounts for the subsequent period are still under construction. These accounts record a value of 1 by virtue of the quantum of the investor deposits recorded as liabilities until such time as this company satisfies its obligations and transfers title on respective units to the investors in same. The asset within this Company is valued at 163,350,386. I attach at JAB 3 a copy of a BCQS valuation undertaken recording a value of $240m. The report makes various assumptions, however leaving that aside, at 30 th April 2011 the USD rate to GBP was in the region of $1.65 to 1 and thus would indicate 145m which is less than the historical cost figure shown within the exhibited accounts of 163m. Thus with doubtless further development at the property since April 2011 I

4 believe it is a reasonable conclusion to believe that the liabilities of this company are in excess of its assets and thus render any shareholder funds of zero value. Buccament Bay Resort Ltd 6. Buccament Bay Resort Ltd is a Company registered in St Vincent. In this respect I exhibit at JAB 4 being the management accounts of this Company indicating that its liabilities exceed its assets. I was not provided with formal filed accounts in this case but the management figures to 31 st March Given the fact that liabilities exceed assets in this case I do not believe that any value can be placed upon the value of the shareholding in this Company. Two Rivers Beach Resort SA 7. I exhibit at JAB 5 the accounts to 31 st December 2011 of Two Rivers Beach Resort SA. These accounts show at that date recorded liabilities of some 14,529,444 RD$ ( 248,000 Approx.) in excess of assets. The recorded exchange rate I have used is RD$ to GBP. The real estate development costs in these accounts at that date would suggest a value of in excess of 24m. is shown. I attach JAB 21 which appears to be a valuation of the Two Rivers property. I do not speak Spanish which seems to show the value of the property in the region of 17.3m USD. Or around 11m which is clearly less than the figure shown within the accounts for historical cost. Thus believe that the liabilities of this Company exceed its asset value and thus no value can be attributed to the shareholding.

5 Waters Meet Beach Resort SRL 8. I exhibit at JAB 6 the Accounts of Waters Meet Beach Resort SRL for the period to 31 st December These accounts record the fact that the liabilities of the Company exceed the asset value by some RD$ 16,597,717. ( 279,752) I attach at JAB 7 what appears to be a valuation of the Waters Meet property. I do not speak Spanish but the valuation would suggest from what I can see is an RD$ 89M. The value of the property assets shown in the accounts is more than RD$ 333M and thus I feel quite confident that the likelihood of the liabilities exceeding the assets by a greater sum than that shown in the accounts is high and that the shareholding in the Company has a zero value. Las Canas Beach Resort SA 9. I attach at JAB 8 the accounts of Las Canas Beach Resort SA to 31 st December These accounts show an excess of liabilities over assets. I attach at JAB 9 a copy of what appears to be a valuation of Las Canas. I do not speak Spanish but it appears to suggest a valuation in the region of RD$ 319m at December The accounts record a historical cost value of some RD$ 1,787m and thus I feel confident that the liabilities of this company are greater than its assets thus rendering the value of the shareholding in this Company as zero. Harlequin Developments (SVG) Ltd 10. I attach herewith at JAB 10 the accounts to 31 st March 2011 for Harlequin Developments ( SVG) Ltd. These accounts show an excess of liabilities over assets

6 of some EC$ 16,597,717. I believe this to be in the region of 3.6m at the time. Thus in such a position I do not believe that the shares in this company have any value. Harlequin Boutique Hotel Ltd (St Lucia) 11. I attach at JAB 11 the accounts of Harlequin Boutique Hotel Ltd. For the period to 31 st March This Company is incorporated on St Lucia. The Company shows an excess of liabilities over assets of a modest 582. Thus with liabilities exceeding assets I have formed the view that the shares would have no value. Harlequin Boutique Hotel Ltd (Barbados) 12. I attach at JAB 12 the Accounts of Harlequin Boutique Hotel Ltd.for the period to 31 st March 2012 This company is separate to the one mentioned at 8 above and is incorporated on Barbados. These accounts do show a surplus of assets over liabilities by a sum of 46,124. However, there is due a sum of 291,642 due from related parties. Given the position of the related parties and available assets I think it prudent to provision the recoverability of this sum and as such would not deem the shares to have any value in this case. HQ Worldwide Ltd 13. I attach at JAB 13 the accounts of HQ Worldwide Ltd to 30 th September These accounts show accumulated trading losses. However, they do show that the assets are in excess of the liabilities by some 92,932. Given the loss position for the last two years shown to me I do not believe it is appropriate to consider any goodwill value and thus a simple asset value is considered. As Carol Ames holds 50% of the share

7 capital of this company, as evidenced by JAB 14, then 50% of the above net asset value is attributed to Carol Ames 46,466. Harlequin Travel Ltd 14. I attach at JAB 15 the accounts of Harlequin Travel Ltd to 31 st October These accounts show a modest profit of 22,505 for the Year. The accounts show that the assets are in excess of the liabilities by some 65,490. I do not believe it is appropriate to consider any goodwill value as there is no Directors Remuneration shown within the accounts and the profits are modest. Thus a simple asset value is considered. As Carol Ames holds 50% of the share capital of this company, as evidenced by JAB 16, then 50% of the above net asset value is attributed to Carol Ames 32,745. Blu Hotel Ltd 15. I attach herewith at JAB 17 the accounts from the management system that were produced to me for Blu Hotel Ltd. This company is incorporated in St Lucia and the accounts are for the period to 30 th June 2013 and reported in USD. The accounts demonstrate that the liabilities are greater than the assets by more than $1.1m. as a direct result of accumulated losses. As a result I do not believe that any value can be placed upon the shareholding within this Company. Harlequin Resorts (St Lucia) Ltd 16. I attach at JAB 18 the accounts of Harlequin Resorts (St Lucia) Ltd to 31 st March These accounts show that the liabilities are greater than the assets by some 150,389. The asset value shown in the accounts for the project in development I

8 believe will be in excess of any current valuation and thus believe that the liabilities of this company do exceed its assets such that no value can be attributable to the share capital held. Dormant UK companies 17. I produce as JAB 19, schedule 1 representing 10 UK registered Companies which have all filed Dormant accounts with a nominal share capital. The Dates of the filings and the shareholdings are shown on schedule 1 summary sheet. Supporting information of shareholding and filed accounts form part of the body of schedule 1. Given the inactivity of these companies negligible value has been attributed to all shareholdings in these Companies. Further companies 18. I produce as JAB 20 schedule 2 which shows 16 Companies for which I have not been shown Accounts. The Comments in the report of 15 November 2013 indicated There is a lack of financial information available because, we understand that very few, or no transactions have occurred within these Companies and therefore believe the equity value to be nil. Annexed to schedule 2 is the supporting information by way of e mail traffic and explanation from both David Ames as Director of these Companies and Daniel Abrams as a Solicitor for Harlequin Companies relating to the activity and circumstances of these Companies which forms the basis of my statement of the 15 th November As these are all overseas Companies the records of ownership of shares are something that was provided to me by Harlequins lawyer in an e mail attached to schedule 2.

9 Harlequin Hotels and Resorts Cayman Ltd 19. I exhibit at JAB 21 a schedule recording the Assets of the above company at 1,126,795 with liabilities of 4,679,353 as of 31 st March On this basis as the liabilities exceed the asset value there is no value attributable to the shareholding held in this Company. Harlequin Air Ltd 20. I exhibit at JAB 22 a schedule provided to me as an indication of the position of this Company. This schedule shows that the assets of the Company are less than $1m with liabilities in excess of $3m. Thus there is no value attributable to the shares held. I did carry out some research into the value of the two aircraft shown within the asset schedule of this Company and believe that the current value of the aircraft would be less than that recorded within these statements. Further enhancing the view that liabilities here exceed asset value. Harlequin Property Caribbean Ltd 21. This company held various properties in Dubai for which I enclose at JAB 23 a schedule showing same at I did not have accounts for this Company and thus converted the AED currency shown at the exchange rate applicable at the time of AED to GBP. This gave rise to an asset value of 4.79m. The Accounts of Harlequin Management Services South East Limited to March 2011 note 17 exhibit JAB 24 show the funds due to that company of 4.873m Thus giving rise to a position whereby the liabilities of the company exceed the assets. I am also aware from discussions with Mr Ames that some of these properties have been sold since these schedules were prepared and have been advised they were sold at a loss. The exact quantum was not known to me at the time of the statement of 15 th November 2013 as this was produced with only very limited time available. The conclusion that

10 I made was based upon the available information that I had that there was every indication that the shares in this company would have negligible value. Harlequin Hotels and Resorts UK Ltd 22. This Company is a UK Company no The company is owned 100% by Mr D Ames. At 31 st March 2013 it had filed dormant company accounts and was inactive. It had been active as of 15 th November 2013 for the recharge of expenses to the Hotel operation company only. I attach exhibit JAB 25 showing the information I had available reflecting the fact that the liabilities exceeded the assets of this company by 200,000 and thus showing that there was not any value attributable to the shares held in this company. This statement is not in balance but both figures show a negative position and thus feel that it would be prudent to consider the shares on negligible value. 23. With the exception of Waters Meet Beach Resort SRL, produced by my firm, and HQ Worldwide Ltd and Harlequin Travel Ltd, produced by a separate firm of Chartered Accountants, all accounts provided herewith are prepared internally by Harlequin staff and presented to me. None of the accounts exhibited to this statement have been the subject of any audit. Statement of Truth I confirm that the contents of the witness statement are true. Signed... JAMES ALBERT BAKER Dated...

11 IN THE HIGH COURT OF JUSTICE Claim No. HQ13X02764 QUEEN S BENCH DIVISION BETWEEN: 1. CONRAD DAVIES 2. PAUL FEEHAN 3. JOHN EVANS 4. JONATHAN THOMAS 5. JOHN EYRE