Ceredigion not for profit company wins Court of Appeal battle

A former director of a not-for-profit business in Aberystwyth has failed in his bid to re-open a rejected request to appeal a judgment which found him and his fellow director both in “breach of their duties” to the company as a result of taking the store’s grant-funded premises and placing it into a pension scheme to benefit themselves.

The decision comes as a huge relief to the current directors of Ceredigion Recycling and Furniture Team (CRAFT), who were represented by specialist solicitors at Wales’s largest law firm, Hugh James. It means the business can now take steps to recover its assets and continue to serve the local community by providing furniture to people in need.

The CRAFT premises at Aberystwyth Railway Station was transformed in 2006 using over £2 million of funding from public bodies, such as the Welsh Government, Welsh European Funding Office (WEFO) and the local authority. The shop receives donations of unwanted second-hand furniture and other domestic items and sells them at low affordable prices to enable access for all and reduce environmental impact of waste. It also donates goods to charities to help furnish homes for vulnerable people.

In June last year, the two former directors of the business in Aberystwyth were found liable for losses suffered by CRAFT as a result of them breaching their fiduciary duties. Those directors had transferred ownership of the store’s only premises, which had benefitted from millions of pounds of publicly funded grants to themselves leaving the not-for-profit company facing large rent bills and not owning it largest asset.

Hugh James successfully represented CRAFT, instructed by its current directors Sharon and Scott Thomas, at the original trial. One of the Defendants, Mr Derek Clifford Pope, sought permission first from the High Court and then from the Court of Appeal to bring an appeal against that decision. Both courts declined, finding there was no real prospect of an appeal succeeding.

In a rare move, Mr Pope tried to re-open his attempts to get permission to bring his appeal, having failed twice already. The Court of Appeal hearing, which took place in November, was selected for live streaming on YouTube, because of its ‘high profile and legal significance’.

Mr Pope’s team sought to argue, in an unusual and novel point, that the earlier refusals of the Judges of the Court of Appeal to hear an appeal were a denial of his substantive right to an appeal, and that no single Lord or Lady Justice ought to be able to decline a request to appeal on his or her own in any but the rarest of circumstances. Such an argument would, if accepted, have exposed the Court of Appeal to a potential flood of meritless applications that it would be forced to hear.

Handing down judgment at the High Court on Friday 14 January, Sir Julian Flaux giving the lead judgment, and with the unanimous agreement of Lord Justice Newey and Lord Justice Edis, dismissed the application. Referring to the advocate for Mr Pope, the court said that “ingenious” though the arguments may be, they proceeded on a fundamental misapprehension and were plainly wrong. The only way in which a decision to refuse permission to appeal can be re-opened was in accordance with the existing court rules.

Speaking of the ruling, Hugh James Senior Associate, Abigail Flanagan, said today:

“The decision of the Court of Appeal is a welcome relief to our client, CRAFT, and its directors who have been forced to pursue the wrongfully taken assets of the company in an effort to save its future. We are delighted that the decision of the High Court has been upheld, and moreover that the challenge mounted by Mr Pope’s legal team to the appeals permission system was outrightly rejected. In circumstances where the court has been clear that there were strong indicators of dishonesty here, it is only right and proper that justice has been served. Our client is looking forward to closure and returning its efforts to serving the local community once again.”

Responding to the judgment, Sharon Thomas, the Director of CRAFT said:

“We are delighted that the Court of Appeal so clearly rejected this further attempt by Mr Pope to re-open this appeal. CRAFT has suffered for many years as a result of the wrongdoing of the former directors, losing significant sums of money that we could have put towards projects for those in need. We are looking forward to a much brighter future as a result of the hard work of our team at CRAFT and our solicitors, Hugh James, who have supported us every step of the way.”