victorstone judgement - damning judgment on victorstone head honchos

Case No: 2 IR 62019

IN THE CENTRAL LONDON

COUNTY COURT

26 Park Crescent

London W1N 4HT

Date: Thursday, 21st November 2013

Before:

MR RECORDER ALDOUS QC

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Between:

FORID MIAH

Claimant

- and

(1) SOFKUL ISLAM (2) SYED ALI

Defendants

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Mr Tiran Nersessian (instructed by Messrs OGR Stock Denton LLP)

appeared on behalf of the Claimant.

Mr David Lewis (instructed by Messrs Ronald Fletcher Baker LLP)

appeared on behalf of the Defendants.

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APPROVED JUDGMENT

MR RECORDER ALDOUS QC

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Approved Judgment

Mr Recorder Aldous QC Miah v Islam

APPROVED JGMT 21.11.13

Mr Recorder Aldous QC:

1. This case concerns the transfer of shares in 2008 in two companies,

Victorstone Limited and Victorstone Financial Limited. The transfers in

question are of 500 shares in Victorstone Limited and 160 shares in

Victorstone Financial Limited that were, it is agreed, held by the Claimant at

least until 2008. Those shareholdings represented 20% shareholdings in the

respective companies.

The Issues

2. The issue in this case is whether, in 2008, the Claimant authorised the transfer

of his shares to a group of other people or not. The Defendants were both

parties to a transfer of the shares in 2008 and say that the Claimant, in a

meeting on 10th

November 2008, consented to the transfers and subsequently

signed the transfer forms that they dealt with, in order to give effect to the

transfer. The Claimant says that he never consented to the transfer of his

shares and that he did not sign any transfer forms.

3. In the interests of expediting a judgment in this matter, I have been invited to

give an extempore judgment this afternoon and I do so. A large number of

issues have been raised during the course of the trial and, in the course of this

judgment, it seems to me that it is unlikely that I can do justice to all the

nuances and all the issues that have been raised. However, many of the issues

are of peripheral benefit in assessing this matter and I will deal with the main

issues as I see them, both in terms of legal issues and the evidence that I deem

to be useful to consider.

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4. The matter comes before me for the trial of a preliminary issue, as a result of

an order of a deputy district judge, dated 8th

May 2013. It was ordered that

there be a determination of liability and appropriate remedy. Unfortunately,

the issues that were to be the subject of a preliminary issue were not fully

identified in that order. In my experience, such an event is not unusual, but it

is regrettable that a little more thought was not given, when it was ordered in

May 2013, as to how the preliminary issue should be defined.

5. The Claimant does not seek to rectify the Register, nor does the Claimant seek

to trace the shares that were transferred. The Claimant only seeks a remedy in

damages and, if liability for an unlawful transfer of the shares on the part of

the Defendants is established, then the second half of the preliminary issue

ordered by the deputy district judge simply follows, i.e. that there needs to be

an assessment of damages arising out of that unlawful transfer of shares.

Burdon and Standard of Proof

6. It is common ground that the burden of proof is on the Claimant to establish

that the transfer of shares was unlawful, on the basis that it was unauthorised

by him and that he had neither consented to nor signed the transfer forms back

in 2008. The standard that I need to apply to that burden of proof is the

balance of probabilities. A large number of serious allegations have been made

by both parties during the course of these proceedings; allegations of fraud and

of attempting to mislead the court in various ways. Whilst those issues require

serious consideration, they do not alter the standard of proof to be applied, as

has been clearly declared by the House of Lords in the case of Re B {2008]

UKHL 35.

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7. However, where serious allegations are involved, when I consider the

evidence I do need to take into account the fact that the evidence is being

adduced in order to determine issues where serious allegations have been

made. The nature of the allegations is something that I take into account when

considering the evidence; both when considering the documents and the

legitimacy of any of the documents and when weighing up the evidence that I

have heard from the witnesses. I do so, however, in applying that standard of

proof to that burden of proof I have mentioned above.

Chronology

8. The basic chronology of this dispute is that, by May 2006, an agreement had

been entered into between a number of people to start a letting agency. By

May 2006, that group of people had identified suitable premises at 90-93

Plender Street, London. The agreement was between at least the Claimant, Mr

Forid Miah, the First Defendant, Mr Sofkul Islam, Mr Anar Mossobir, who is

not a defendant, and a Mr Bilal Miah, who has since changed his name and is

now known as Mr Bilal Shaista, under which name he gave evidence in the

case before me. The Second Defendant in the case, Mr Ali, claims to have

been involved from the outset in the parties reaching an agreement, but that is

in issue. I shall return to that in due course.

9. In May 2006, Mr Babitch, an architect, was instructed by the Claimant to

prepare plans to convert 90-93 Plender Street from its existing shop use into a

letting agency. I heard from Mr Babitch from the witness box and he produced

some documents to me that he had prepared in 2006, including a drawing of

the premises, with Mr Miah identified as his client and the project identified as

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an estate agency. I accept Mr Babitchs evidence and I draw conclusions from

that evidence and from the documents that, in May 2006, it was Mr Miah who

instructed Mr Babitch to prepare plans for planning permission to convert the

premises for the purposes of the agreement that the parties had reached.

Indeed, in June 2006, a planning application was submitted to Camden

Council and on 18th

July 2006 planning permission was granted.

10. In the meantime, on 5th June 2006, Victorstone Limited was incorporated and

on 20th

June 2006 shares were allotted, including the 500 shares to the

Claimant that I have already referred to. On 3rd

August 2006, a lease was

entered into for the premises. There were two guarantors to that lease, one of

whom was the Claimant. Indeed, Mr Miah, the Claimant, remains a guarantor

under that lease.

11. At the same time, a Partnership Agreement was entered into. The Partnership

Agreement purported to evidence an agreement between the people who were

setting up the letting agency. It is common ground, however, that the

Partnership Agreement is of no legal effect. It is common ground that the

parties did not, in fact, intend to have a partnership at law, but, at all times

from the incorporation of Victorstone Limited, intended to trade through the

company Victorstone Limited and, subsequently, through a further company

dealing with the financial side of the proposed business. I will return later to

what, if any, assistance can be gleaned from the fact that the parties,

nevertheless, entered into a Partnership Agreement at the same time as

entering into the lease.

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12. On 2nd February 2007, Victorstone Financial Limited was incorporated. It is

common ground that at the time of incorporation it was intended that shares

should be allocated on the basis that the four individuals that I have named,

together with Mr Ali, would become equal shareholders in the company, by

this time the intention of the parties having been that Mr Ali would also be a

shareholder in Victorstone Limited. Whether or not that was the intention right

from the outset, as contended by the Defendants, or whether it is something

that came later with Mr Alis later involvement, it seems to me, is one of the

peripheral matters that is not of great assistance in determining the issues that I

need to consider.

13. What matters is that, in February 2007, it was intended that the Claimant

should have 160 shares, representing a 20% shareholding, in Victorstone

Financial Limited. That distribution of shares was not given effect to

immediately and it appears from the papers in the bundle that it was not given

effect to until a year later when, on 4th

February 2008, there was a share

allocation, which included an allocation of 160 shares to the Claimant. That is

the allocation of shares in the Victorstone Financial Limited company that the

Claimant now makes the subject of these proceedings and is the second lot of

shares that it is contended the Defendants transferred without his consent or

authorisation.

14. That was in February of 2008. It appears, from returns to Companies House,

that notice of resignation of Mr Miah, the Claimant, as a director of

Victorstone Limited, was given in respect of an alleged resignation on 13th

June 2008. One of the issues that I have been asked to consider is whether or

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not that resignation as a director was, in fact, a resignation given by the

Claimant, or whether it was something done unilaterally by the Defendants

and the others involved in the company, in order to remove Mr Miah, the

Claimant, from his directorship. Again, I will return to that in due course.

15. In November 2008, the Defendants contend that there was a meeting to

consider Mr Miahs continued involvement with the companies as a

shareholder. It is alleged that on 10th

November 2008, there was a meeting

attended by directors and shareholders and the people involved in the

companies, in order to discuss Mr Miahs continued involvement in the

company, there being an issue as to whether he was being involved enough in

order to justify a continued role as shareholder.

16. The Defendants assert that, at that meeting, Mr Miah gave his consent to the

transfer of the shares as the remaining directors saw fit, and that he no longer

wished to be involved in the company and was content to back out of it. The

Claimant does not accept that there was such a meeting or that he gave any

such indication. He does, however, accept that, by the end of 2008, there was a

discontent with his involvement in the company and he asserts that, at some

time towards the end of 2008, but not necessarily 10th

November 2008, he was

given an ultimatum by the remaining people concerned in the company either

to get involved as a full-time employee of Victorstone Limited or to sell out

for 20,000 the shareholdings that he had in the two companies. He asserts

that he accepted neither of those options but that matters continued as they

were. He does accept that he had only a limited contact with any of the people

involved thereafter for a significant period.

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17. It appears that, following that meeting, a return was made to Companies

House, indicating that there had been a transfer of the Claimants shares. It is

those transfers of the shares in the two companies that are now the subject of

this action.

18. One other relevant date is 23rd January 2010. On that date, a burglary was

reported to the Police at the premises in 90-93 Plender Street, the offices of

Victorstone Limited. The Defendants contend that one morning the premises

were found to have been opened, although there was no sign of forced entry,

and that files of papers had been spread around the office and that this was

reported to the Police. Again, I will return to the significance of the burglary in

due course, but suffice it to say at this stage that both sides rely on that

burglary, saying that it is evidence of wrongdoing on the part of the other.

19. A letter before action was sent on 2nd November 2010 by the Claimants

solicitors to various parties and enquiries were made with the accountants for

Victorstone Limited, a firm by the name of Howlader & Co. Again, I will

come back to those matters in due course.

The Witnesses

20. I will deal now with the witnesses that I have heard from. I will not attempt to

reiterate the evidence that I have heard from them; if needs be, that evidence is

available on the transcripts. However, I need to give, in this judgment, my

assessment of the various witnesses that I have heard from.

21. I have already mentioned Mr Babitch, the architect. He was one witness who,

it seemed to me, was trying to do his best to assist me in any way that he

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could. Unfortunately, that was limited, because his involvement with the

premises was limited. Moreover, the events were some time ago and, as he

explained to me, this was not a particularly big or significant project and,

whilst he had some recollection of it, his recollection was limited and a little

bit vague. Nevertheless, I am perfectly satisfied that he was an honest witness

who was attempting to do his best to assist me. Unfortunately, it is my view

that he is the only witness that I heard from of whom that can be said. All of

the other witnesses, it seemed to me, were unreliable witnesses, whose

evidence I should be very cautious about accepting.

22. I heard from Mr Forid Miah, the Claimant, and from Mr Bilal Shaista,

formerly Mr Bilal Miah, who was one of those involved in Victorstone

Limited, but has now fallen out with the other people at Victorstone Limited

and has his own grievances with them. I also heard from a Mr Panchal, who

purported to tell me about evidence that he claimed to have overheard about

the circumstances of the burglary in January 2010.

23. Moreover, I heard from the First Defendant, Mr Sofkul Islam, who was

remarkable in the number of times in which he said that he could not recall

anything that he was asked to give evidence about. I heard from Mr Syed Ali,

the Second Defendant and also from Mr Mossobir, who was a party to much

of the history of this case, but is not a defendant to the proceedings.

24. Mr Ali and Mr Mossobir, in particular, gave evidence about the purpose of the

Partnership Agreement that was entered into in 2008. Their evidence went

beyond the assertion that the Partnership Agreement was not intended to be

the true legal expression of the relationship between the parties. Their

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evidence was that the reason why it was entered into was that it was a

deliberate sham intended to hoodwink Mortgage Network and the Financial

Services Authority, in order to deal with the compliance regulations of both.

Their evidence was that they wanted a document to hand to the authorities that

purported to show that Mr Ali was quite separate from and independent of

Victorstone Limited and that their intentions behind the Partnership

Agreement was that it should serve that purpose.

25. Neither Mr Ali nor Mr Mossobir seems to have the slightest concern about

giving me that explanation. It appears that they do not believe that they were

doing anything wrong or that they should feel ashamed or embarrassed about

that, since their evidence was that that is how things are done and that is the

appropriate way to deal with compliance authorities. I have to say that I find

that evidence quite remarkable. It is one of the aspects that leads me to believe

that I should be cautious when considering their evidence.

26. However, the evidence of all the witnesses that I have mentioned up until now,

apart from Mr Babitch, falls into the same category. It seems to me that all of

those witnesses were evasive under questioning, were prepared and over ready

to give self-serving answers and did not want to deal with points that were

contrary to the case that they were seeking to advance. There were numerous

times when it appeared to me that they were making things up as they went

along and there were internal inconsistencies. I am entirely satisfied that each

side and all of those witnesses have tried to bolster their case by evidence that

is unreliable and unbelievable.

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27. I heard from one other witness, Mr Matthew Stickles. I have to confess that I

had some high hopes of Mr Sticklesas the last witness to give evidence.

However, I am afraid that those hopes were dashed. Mr Stickles gave

evidence, again about an allegation in relation to the burglary and who was to

blame for it and why it was done. It is remarkable, in Mr Stickles case, that he

first alleged that his signature had been forged by the Defendants at a time

when he was friendly with Mr Miah, the Claimant, and Mr Bilal Shaista. He

now says that he was misled by the Claimant and Mr Shaista into reporting

that allegation of forgery to the Police and that he only did it because he could

not recall signing the document that appeared to bear his signature. He now

says that he does recognise that signature as his and that he was mistaken in

thinking that the Defendants had forged his signature and signed the document

purporting to have come from him.

28. I was wholly unconvinced by Mr Stickles change in his evidence and the

overwhelming impression that I was left with was that, like a number of the

other witnesses, indeed all of the other witnesses apart from Mr Babitch, Mr

Stickles was, unfortunately, only too willing to give evidence to support

whichever side he happened to be supporting at that particular moment and

wherever he saw his own particular personal interests to lie. Therefore,

regrettably, I add Mr Stickles to the list of witnesses whose evidence I should

treat with the very greatest of caution and reserve.

The Burglary

29. I have mentioned the burglary a few times and I will now deal with the

allegations in relation to that. There is no doubt that something happened in

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January 2010 and that it was reported to the Police; there is a Police report.

The Police report indicates that they did not find any evidence of a break in,

or, indeed, anything that they considered worth investigating as a burglary.

They did not have any report of anything significant missing and no one, it

appears from the Police report, identified to the Police, at the time, that

company documents were missing. Nor did anybody, at any time, according to

the records that have been available from the Police, indicate that the Claimant

might have had anything to do with the events that the Police witnessed in

January 2010.

30. It is a strange incident, but does it have anything to do with the matters that are

before me now? The Defendants contend that it was the Claimant who broke

into the office in Plender Street in January 2010 or, if not him, he put

somebody up to it. The Defendants also say that the purpose of this was to

steal key documents, being all the company records, including the transfer

forms signed by the Claimant back in 2008, which give effect to the transfer

that he had agreed to on 10th

November 2008. The Defendants case, therefore,

is that this is all the Claimants doing and that it is something that reflects

badly upon the Claimant.

31. The Claimants case is that the Defendants must have staged this burglary for

their own purposes, in order to get Mr Miah into difficulties and to explain

how they no longer have the documents that they would otherwise seek to rely

on as evidencing his consent to the transfer in 2008. It is in support of those

two mutual allegations that Mr Panchal and Mr Stickles have been called to

give evidence.

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32. It seems to me that neither the accounts of Mr Stickles nor Mr Panchal, as to

what they allege they overheard about other peoples motivations for the

burglary, forms any reliable basis for a finding as to what actually happened in

any burglary in January 2010. I do not find myself in a position to place any

reliance on any of the matters that they sought to tell me about.

33. January 2010 is too early for the Defendants, realistically, to be trying to set

up the Claimant. Additionally, it is too far after 2008 and too far before the

resurrection of this matter for it to be the Claimant trying to steal documents in

order to overcome consent that he gave in 2008, with a view to making a claim

at the end of 2010 or, as we see, later on in 2011 and the issue of proceedings

following.

34. In my view, the incident in January 2010, whilst something that happened and

was reported to the Police as a burglary, is wholly irrelevant to the issues

before me. What is relevant is that both parties have tried to jump on the

bandwagon of that incident in order to try and persuade me that it is an

explanation for the misconduct of the other side. I am not satisfied that

company documents were taken in a burglary in January 2010 or that whatever

happened on that day has any relevant connection to these events at all.

The Involvement of the Claimant in the Business

35. Returning to the chronology, as I have said, by May 2006 there was an

agreement to start a letting agency. I have indicated that the Claimant was

involved in the process of guaranteeing the lease and the process of obtaining

the planning permission for the premises. One of the key issues in this case is

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what participation the Claimant really had in the business and, for that reason,

I need to consider a little further the extent of his involvement.

36. I am satisfied that, from early in 2006, the parties had come to the view that

they would like to start a letting agency and that events gathered momentum

during the spring of 2006, including looking for suitable premises. I am also

satisfied that Mr Miah was involved in identifying those premises and

involved in the changes that would be necessary in order to convert them for

the purposes of a letting agency.

37. I accept Mr Miahs evidence, because it is supported by Mr Babitch, that Mr

Miah had had previous involvement with Mr Babitch and that it was Mr Miah

who contacted Mr Babitch and instructed him to draw up the plans and make

the necessary application to Camden for a change of planning permission. I

also accept that the reason why Mr Miah did that was because he had more

experience than the others about acquiring premises for a business and setting

up businesses. Indeed, I am satisfied that the reason for Mr Miahs

involvement in this business at all was nothing to do with any experience that

he might have had about setting up letting agencies, but because Mr Miah had

experience of setting up and running businesses. They were restaurant

business, but, nevertheless, they were businesses. What the others sought from

Mr Miah and, I am satisfied, obtained from Mr Miah, was the confidence and

support of somebody who had business experience and that, when the business

was set up, they felt the need for that confidence and support and that it was of

assistance to them in a new venture.

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38. Furthermore, I am of the view that Mr Miah was involved in the procuring of

the Partnership Agreement. It may well be that Mr Ali and Mr Mossobir saw

that Partnership Agreement as something that they could use in order to keep

the compliance authorities happy, even though it was inappropriate for them to

do so. Given the timings involved, and given the way that things were

evolving, it seems likely to me that the Partnership Agreement actually started

life as an attempt to set out the way the parties were intending to carry on their

business. It was not a very good way of setting out the way the parties

intended to carry out their business, because there is a distinct legal difference

between the parties acting in partnership and the parties acting as shareholders

through a corporate vehicle. However, it seems plain to me, from the evidence

that have heard from all of them, that none of them really appreciated that

difference back in 2006.

39. Therefore, it seems to me that the Partnership Agreement does, to an extent,

evidence the involvement of the parties as joint and equal participants in the

setting up of the business. It does not, to my mind, evidence any agreement

that Mr Miah was going to sell his existing businesses and become a full-time

employee of Victorstone Limited, in the way that the others intended to

become employees of the business. It does show that when things were being

set up Mr Miah was closely involved in the activities of the group of people in

setting up the business.

40. An issue has been debated at length as to what financial contribution, if any,

Mr Miah made at the time of the setting up of the business. The Partnership

Agreement purported to record that they were going to contribute 10,000

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each, as set up capital. The Defendants contend that it was to be 15,000. Mr

Miah says that he in fact contributed about 12,000, but that the agreement

was only ever for 10,000. The only evidence as to what the contributions

were to be, it seems to me, is in the Partnership Agreement and, in so far as it

matters, I would find that the agreement was that the contribution should be

10,000 each. However, it is plain that none of the parties ever thought of or

intended to have proper accounts as to who had contributed to what.

41. The Claimant has produced diaries to me. There are photocopies in the bundle

and I have been shown and have had a chance to inspect the original diaries.

There are a number of entries in the diaries referring to the Victorstone

Limited project. Some have sums of money recorded in relation to the

Victorstone Limited project. It is contended, on behalf of the Defendants, that

some of those entries are entries made after the event.

42. Having heard Mr Miah and having considered the diaries, I am not satisfied

that any of the entries are wholly made up after the event and inserted

retrospectively. I think each entry had an original purpose at the time when it

was entered into it. I cannot rule out, however, the idea that some of the entries

have been augmented in a different pen at a different time. It may be that the

augmentation is entirely innocent and that it was undertaken at the time for an

entirely legitimate purpose. I cannot rule out, however, that there may have

been an element of deliberate augmentation for the purposes of these

proceedings.

43. One of the aspects that leads me to query whether there has been any

augmentation is that the augmentation does not seem to me to be very great or

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of any great assistance to the Claimant because even the entries that have been

produced make no effort to justify any particular figure in any rational way, or

to justify either 10,000, 12,000 or 15,000 or any other figure that it is said

the Claimant should have contributed or did contribute.

44. However, whilst perhaps only to a limited extent, it does seem to me that the

diaries do evidence an involvement by Mr Miah in the affairs of Victorstone

Limited back in 2006. Moreover, they do evidence that he was making some

financial contribution. I accept that it was he who paid Mr Babitch for Mr

Babitchs services, since it seems logical that it would have been he who did

so and nobody else has given any evidence to contend that they did so.

Therefore, on the balance of probabilities, I do think that one of the

contributions that Mr Miah made was the payment of Mr Babitch. I am also

satisfied that there were other contributions that Mr Miah made, but I am not

in a position to make a finding as to what each of those contributions was or

what it amounted to in financial terms.

45. To a certain extent, the major contribution that Mr Miah made was by signing

as a guarantor. This is because, as I have already indicated, his signature as a

guarantor gave the landlord confidence in granting the lease and, I believe,

gave the other parties confidence and belief in themselves in setting up the

business.

46. There is one additional document that is relied upon as evidencing Mr Miahs

contribution and that is a document that is described as an invoice. The invoice

is a curious document. It is dated in March 2006 and it is said to evidence a

payment of 7,000 from Mr Forid Miah to Mr Bilal Miah, otherwise known as

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Bilal Shaista. It is a curious document because it is not actually an invoice and

it is not actually a receipt. It appears to be a confirmation that Mr Miah has

paid 7,000 to Mr Shaista, as I will call him, in respect of the works to the

premises at Plender Street.

47. However, the timing simply does not work. There is no rational reason why

Mr Forid Miah should have been giving Mr Bilal Shaista 7,000 towards the

premises so early in the events. Mr Babitch was not producing his plans until

May, the application for planning permission was not made until June, the

planning permission was not granted until July and the lease was not granted

until August. I accept that access to the premises was given in advance of the

lease being granted, but not so early as to justify the sort of payment that the

invoice document purports to evidence.

48. The format of the document is also suspicious. It does not read, in any way, as

a logical document that one would prepare for any rational purpose. Mr Bilal

Miah says that he put it away amongst his fruit and vegetable documentations

of his other business and it was only there that he came across it later, but why

he should have done that was wholly unexplained, or not, to my mind, in any

credible way. The post code is wrong on the document and, whilst in many

circumstances one would dismiss that as having no suspicious nature

whatsoever, I am afraid that is not a benefit that I feel able to give the parties

in the circumstances of this case. I do not consider that invoice to be credible,

nor do I consider it to be genuine.

49. The fact that I am not satisfied that that invoice can be genuine could be put

down, simply, to Mr Shaistas attempt, as part of his ongoing dispute with the

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Defendants himself, to come to the aid of Mr Miah and support Mr Miahs

case against the Defendants. That document purports to be signed by Mr Miah,

however, and it seems to me that, if that invoice is itself a sham, as I find that

it is, then Mr Miah must have been a knowing party to that sham. Again, that

is not something that I can leave out of account when assessing the evidence

overall.

50. I am satisfied that Mr Miah did not agree that he would work as an employee

once the business was set up. Additionally, I accept that it was not his

intention to sell up his businesses and go and work as a letting agent at the

letting agency. I am not satisfied that any of the other parties ever expected

him to do so or that that was a realistic part of any agreement that was

reached. That was not why they wanted Mr Miah involved and that was not

the intention. The reason for Mr Miah being involved, as I have indicated, I

am satisfied, was to get the benefit of his experience as a business man of

setting up businesses and acquiring premises.

51. I find that Mr Miah did not become an employee and that his involvement,

once the business was up and running, was fairly limited. I am not satisfied

that that lack of involvement amounted to a breach of any agreement that he

had entered into. Nor am I satisfied that it was a controversial matter with the

other parties, including the Defendants. Had it been, then I would have

expected that to come to a head very soon and for the Defendants to make a

very great complaint about his failure to come and work in the business. The

fact that Mr Miah was not drawing a salary, unlike the others, would not, it

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seems to me, remove the mischief of him failing to honour that part of the

bargain.

52. However, things did not come to a head. Complaint was not made about Mr

Miahs lack of involvement and, indeed, as I have indicated in the chronology,

the agreed intention in early 2007, to allot shares to the Claimant, was given

effect to in February 2008. It seems to me that it would be most unlikely that

that allotment of shares would have been carried out had there been an

ongoing dispute at that time about either Mr Miahs financial contribution to

the company or his day to day involvement in the company.

53. I am satisfied that, as of February 2008, all of the parties were satisfied that

Mr Miah had made the financial contribution that he was meant to make,

whatever it was, and that he had given the support in the setting up of the

business that the parties had expected. Had there been a dispute about that, as

at February 2008, then things would have come to a head at that point and the

share allocation would not have been carried out without the parties at least

raising that issue, even if not resolving it.

54. I do accept, however, that even Mr Miahs limited involvement, from 2006 to

2008, declined for various personal reasons during 2008 and that the others,

including the Defendants and Mr Shaista, began to feel that Mr Forid Miahs

involvement as a shareholder and as a director was not justified. It may be that

that was, to a certain extent, because they had enjoyed the benefit of his input

in setting up the business, but felt that it was no longer required and that they

could manage without him. Whether that was justified or not, I am satisfied

that there was a tailing off of his already limited involvement in 2008. I also

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believe that there was an increase in the level of grievance and disappointment

on the part of the others, to the extent that there came a point in 2008 when

they wanted him out. The issue is whether Mr Miah responded to this by

resigning both his directorship and by transferring his shares, or whether the

Defendants took matters into their own hands.

The Claimants Directorship

55. That brings me to the resignation as a director in June 2008. Strictly speaking,

this is not an issue in the case. Nothing turns on it and no relief is sought in

relation to it. However, it is a part of the history. The Claimant says that the

Defendants started acting behind his back without telling him in June 2008, by

removing him as a director without his agreement, and that that was the

precursor to them doing the same in relation to his shares in November. The

Defendants say that he did resign in June 2008 and that that was the precursor

to him giving up his shares in November 2008. Therefore, both parties rely on

the resignation in 2008.

56. It is to be noted that in the letter before action, including the letter dated 19th

July 2011 sent to a number of parties, it was said on the Claimants behalf, in

paragraph 5 at page 323(iii) in bundle 1:

On 13th June 2008, our client [i.e. the Claimant] received notice that he had been removed as a director

of Victorstone Limited. He is unaware of a directors meeting or EGM being called to remove him, as

required under the Articles of Association.

On the face of it, that letter appears to suggest that Mr Miah was aware, from

13th

June 2008 onwards, that he had been removed as a director of Victorstone

Limited. That is the sort of document that, in a case such as this, I would

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ordinarily look to in order to find some kind of documentation that I could put

some kind of confidence in.

57. However, I am not even sure that I can have any confidence in that document

because it is difficult to see what paragraph 5 is intended to mean. The

suggestion is that there was a resignation on 13th

June 2008. If that is right,

then to say that he received notice of it on that date, when he was unaware of

any meeting, simply does not make sense in any way that would be admitting

or accepting what the Defendants now say about the resignation. The letter

goes on to say that the Claimant is unaware of a directors meeting or EGM

being called to remove him. Therefore, whilst, on the face of it, one might be

tempted to think that that letter supports the Defendants case on resignation, I

am not satisfied that it does anything of the sort. It merely muddies the water,

the water already being very well muddied by a lot of other documents and

allegations.

58. Indeed, looking at that letter in the context in which it was written, it seems to

me that it is more consistent with the Claimants case that he did not resign,

rather than with any admission that he did or that he knew about it. My finding

is that the Claimant did not resign in June 2008. I note that another director

was appointed at that time and I have not heard that that formed part of any of

the discussions that are said to have lead to Mr Miahs resignation in June

2008. It seems to me that the evidence from the Defendants about Mr Miah

resigning in 2008 is wholly unreliable and it does not seem to fit in to the

natural pattern of events that would be consistent with their evidence.

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Therefore, whilst I am not sure that it matters terribly, my finding is that, on

the balance of probabilities, I am not satisfied that he did actually resign.

59. It seems to be more likely that the Defendants, by then, were displeased with

Mr Forid Miah and his involvement in the company and that they took matters

into their own hands. Although that is my finding on the balance of

probabilities, I do not find that that finding or the history of June 2008 assists

me greatly in coming to a conclusion about the transfer of shares in November

2008.

60. One of the issues relied upon on behalf of the Defendants in the skeleton

argument prepared by Mr Lewis of counsel, in relation to the directorship, was

whether the Defendants would have been entitled to remove Mr Miah as a

director, in any event, under the Articles of Association, by reason of the fact

that he had failed to attend board meetings. It may well be the case that the

board would have been entitled to resolve that Mr Miah should be removed

from his directorship by reason of his failure to attend meetings. It seems to

me unlikely that the necessary formal notices of meetings had been given. Had

they been given, and had proper procedures been followed, it may be the case

that Mr Miahs lack of involvement in the business may have entitled the

board to resolve to remove him.

61. However, there is no evidence that they did any such thing. I am of the

opinion that that idea betrays the real nub of what was going on here, which

was that the Defendants wanted Mr Miah erased from the business and felt

that there was no reason stopping them from simply actioning it.

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The Transfer of Shares

62. That brings me to what is very much in issue in this case, namely the meeting

on 10th

November 2008 and the alleged consent by Mr Miah to the transfer of

his shares, which, it is said, was actioned thereafter by the Defendants

contacting the companys accountants, Howlader & Co, who assisted in giving

effect to it.

63. The Defendants rely on two minutes of a meeting on 10th November 2008; one

minute is simply in relation to Victorstone Limited and the other is in relation

to Victorstone Financial Limited. They are in bundle 2 at pages 488 and 489.

The one in relation to Victorstone Limited purports to be signed by Mr Ali, as

chairman, although he was not a director of the company and, as secretary, by

Mr Islam, who was a director. The one in relation to Victorstone Financial

Limited purports to be signed by Mr Mossobir, as chairman, although he was a

shareholder and not a director, and by Mr Ali, he being a director and

shareholder.

64. The evidence of those two gentlemen was that they were nominated at a

meeting that included the people listed as being present and, indeed, Mr Bilal

Miah, now Bilal Shaista, to chair the respective meetings of the two

companies. Mr Shaista is not listed because they say he left early, but that he

was present at the beginning of these meetings. They say that Mr Ali was

nominated to chair the Victorstone one and to take the minutes, and that Mr

Mossobir was nominated to chair and take the minutes of the Victorstone

Financial Limited one. They told me that they took separate notes of the

meetings, each in their own notebook or on a piece of paper, as appropriate,

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and that they separately asked the administrator to type the minutes up and

that that would explain why the minutes are in common format, because they

were typed by the administrator in that format.

65. The notion that these minutes were typed by an administrator at the company

was only ever raised in oral evidence. Indeed, the history of these minutes has

been rather painful. There were issues about disclosure in this case, at an early

stage, and there were issues about where these documents came from. The

court ordered a joint statement to be prepared as to how they came to be

disclosed. That joint statement indicates that they were found on the one

remaining computer that had been in use at the time and that they were printed

off from that computer, a computer that has since been disposed of. These

documents, however, purport to be signed and, when that was raised in

evidence it was suggested for the first time that these were documents that had

been scanned and that is why they were on the computer in electronic form,

with signatures.

66. I have very grave doubts about that explanation. It appeared to me that it was

made up on the spot in the witness box, in order to get over the fact that these

documents could not simply have been printed off the computer with

signatures on. It was the first time that that explanation was given and it was

wholly unconvincing.

67. Equally, what is unconvincing is the explanation as to how these notes were

typed up by an administrator, who, it is said, was given separate notes by

separate people, and where the evidence suggested that there would have been

other bits and pieces in the notes. Yet it appears that the administrator chose

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only these conclusions to put in the minutes and expressed them in exactly the

same wording from different notes. It seems to me that the explanation that I

was offered, as to how these minutes came about, was wholly incredible.

Therefore, I am unable to accept that these are genuine minutes in relation to a

meeting on 10th

November 2008.

68. In many cases, that would seem a surprising conclusion to reach, because it is

not the ordinary experience that people running small businesses take the

trouble to fabricate documents. However, in the circumstances of this case,

and given the provenance of them, I am afraid I am unable to give either party

the benefit of that ordinary approach. It seems to me, with the sole exception

of Mr Babitch, all of the people that I have heard from in this case are

perfectly capable of making up a document if they think it serves their purpose

and are very content to do so in order to bolster their case.

69. Therefore, I need to look at the probabilities of there having been a meeting on

10th

November 2008, at which Mr Forid Miah indicated that he did not want to

invest any money in the company and that he does not think that the business

will succeed and consequently will not justify the investment. I need to

consider the probability of a meeting at which he requested that his shares in

the company be disposed of and transferred in any manner the directors shall

consider appropriate, as contended for by the Defendants and set out in the

minutes.

70. I have already indicated that, in my view, Mr Miah had made some financial

contribution to the setting up of the business. I am unable to find precisely

what that contribution was, but it does not seem to me to matter, because he

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had made some financial contribution. I have already indicated that he had put

his financial neck on the line as guarantor of the lease. He had provided the

confidence and support that the Defendants required when the business was

set up. He had, to a certain extent, done his bit in 2006, when the business was

set up. He may not have wanted to invest any more money in the company,

but then there was no suggestion by anybody that that is what he should be

doing.

71. It seems to me most unlikely that someone with Mr Miahs background would

have been content to walk away in the way that is suggested, whilst leaving

his name as guarantor on the lease. It may be that Mr Miah was given

something in the nature of an ultimatum that he contends for. It does not seem

to me to be necessary to make an express finding as to whether that ultimatum

was offered. If not in terms, it may well have been in the spirit of what was

being offered. However, it is my view that it is inherently unlikely that he

would have accepted either those ultimatums or the even worse position of

simply walking away from the company with no shares, no directorship and

leaving his name as guarantor on the lease.

72. Furthermore, the transfer that Companies House was told about was said to be

a transfer on 10th

November 2008. It is nobodys case, including the

Defendants, that there was in fact a transfer on 10th

November 2008 and these

minutes do not purport to evidence it. What is said is that, on 10th

November

2008, there was this agreement which was actioned thereafter by the

Defendants contacting Howlader & Co requesting them to sort out transfer

forms, Howlader & Co drafted transfer forms and sent them back to the

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Defendants, the Defendants sent them to the Claimant and the Claimant signed

them and sent them back to the Defendants. That process would have taken

some time. If there was a valid transfer, it would have been at some later date,

not 10th

November 2008. That may seem a rather minor point, but it is the sort

of point that matters when one is looking at the chronology of what is alleged

to have happened and whether it fits in with the meagre documentation that we

have, such as the Companies House documentation referring to a transfer on

10th

November 2008. To my mind, the whole story does not fit together to

support the existence of a transfer either on 10th

November 2008 or at a time

shortly thereafter.

73. If there had been a transfer, then the Defendants ought to have been in a

position to produce the transfer forms signed by Mr Miah. However, they have

not. Their explanation for it is that the copies at Plender Street were stolen in

the burglary in January 2010. For the reasons I have already indicated, I am

not satisfied that those documents were taken on that date and it does not seem

to me that any adequate explanation has been offered to the court as to why

the Plender Street copies of the signed transfers are not available to be

produced.

74. Further, the Defendants case is that they faxed the signed copies to Howlader

& Co in order that Howlader & Co could see them in order to complete the

company return to Companies House. Howlader & Co ceased acting for

Victorstone Limited in 2009. A letter from Howlader & Co suggests that the

company papers would have been returned to the client at that point and that

working papers would have been kept for no more than two years.

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75. However, the Claimant solicitors wrote on 20th April 2010 to Howlader & Co,

seeking an explanation and seeking to find out what information Howlader &

Co had. There is an important response at page 332(ii) in the bundle, dated

22nd

April 2010, two days after the letter that is being responded to. Howlader

& Co responded promptly to this request and in that letter they confirm that

they acted for Victorstone Limited and Victorstone Financial Limited, and

they say:

We can also confirm that both companies maintain their Register of Members and Officers themselves

from their registered office address. Periodically we

seek information about Members and Officers for

accounting purposes. As such, we received some faxed

copies of share transfer forms for Victorstone Limited,

which shows that Mr Forid Miah transferred shares to

others. These forms are enclosed for your information.

We are not holding any documents for Victorstone

Financial Limited, except for payroll records, as we

did not submit any accounts for them.

76. The enclosed forms are not transfer forms signed by Mr Miah. They are draft

forms which indicate where Mr Miah should sign. Had the Defendants case

been true, then not only should they have been in a position to produce the

Plender Street copies, but the faxed copies that Howlader & Co had would

have been the signed copies and they would still have been with Howlader &

Co in April 2010, amongst their working papers, because that was within the

two year period. Clearly, Howlader & Co were attempting to assist and

respond with the relevant documentation in April 2010, yet the documents

they sent were not signed copies, they were draft copies. I do not accept that

Howlader & Co ever saw signed copies of the stock transfer forms, because I

am not satisfied that Mr Miah ever signed stock transfer forms because I

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cannot accept that Mr Miah ever agreed to the transfer of his shares, whether

at a meeting on 10th

November 2008 or otherwise.

77. Doing the best I can, in a sea of misrepresentations, my conclusion is that, on

the balance of probabilities, Mr Miah did not authorise a transfer of his shares

in Victorstone Limited or Victorstone Financial Limited, but that the

Defendants took matters into their own hands and chose to transfer those

shares regardless. They may well have felt that they were justified in doing so,

and they may feel that, because they believed they were justified in doing so,

they have also been justified in trying to bolster their case before this court. I

do not agree with that, but I believe that is what happened.

Remedy

78. There are various causes of action that have been pleaded, but it seems to me

that it suffices for me to make a finding that these Defendants did conspire to

give effect to that unlawful transfer and that they are jointly and severally

responsible for any losses that are caused by it. The appropriate remedy sought

is in damages and, for those reasons, I will order that there be an assessment of

those damages, if that is deemed necessary.

79. Therefore, for those reasons, I find for the Claimant, although I cannot pretend

to be satisfied with the evidence that I have heard from, or on behalf of, the

Claimant any more than the evidence that I have heard from, or on behalf of,

the Defendants.

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80. In order to order an assessment of damages, directions will need to be given. I

will give counsel a few moments and then I shall hear them on any directions

that they want.

(Legal Argument)

81. On the evidence that I have got, the time when the transfer was actioned was

on the submission of the return, which was 3rd

July 2009. Until that point,

there is no evidence that there had been a transfer. Counsel is correct to query

this, but, on the balance of probabilities, the date on which the unlawful

transfer was given effect to was 3rd

July 2009 when that return was submitted

online.

(Legal Argument)

82. In this case, the Claimant asks for his costs on the basis that the Claimant has

won. In the course of my judgment, I have made very plain my dissatisfaction

with the evidence of the Claimant and, indeed, the evidence of Mr Shaista,

who the Claimant, Mr Miah, called as a supporting witness. This is not a case

where my criticisms of Mr Shaista do not impinge on Mr Miah, because this is

not a case where Mr Miah unknowingly called a witness who turned out not to

be wholly honest. As I have indicated in my judgment, Mr Miah must have

been a party to the fabrication of the document that is referred to, an invoice in

March 2006.

83. It seems to me that this is a case where the Claimant has knowingly sought to

bolster his case by false evidence. It is true that the Defendants have tried to

do exactly the same and both parties seem to be very much to blame for the

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way in which they have conducted themselves in this case. It is my view that I

have to take some action to reflect that in costs, particularly given that the

overriding objective requires me to consider that these parties have used up

four days of court time in a dispute trying evidence that, on both sides, was

fabricated, misleading and incredible.

84. I am now asked to make an order for costs which will use up more court time,

if needs be, to assess those costs. I am not prepared to do so. It seems to me

that, if a party brings a claim and bolsters it by dishonest evidence, then they

should not feel that they would be entitled to get the costs, even if they win. It

is my view that only the bare minimum of bringing the proceedings should be

awarded in costs. I will order the Defendants to pay the Claimant the issue fee

of 685. I will make no other order as to costs.

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