England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		27 September 2007

MR D PHILLIPS:

Introduction

1. In many ways this is a very sad case. The parties were once friends and had very sound personal relationships but because of the differences that have arisen over their joint involvement in the property speculation, which forms the subject matter of this action, that relationship has been destroyed.
2. Mr Awoderu and Mr Griffins' families were very close. Their wives and children were friends and they socialised together. Mr Awoderu and Mr Cole had been at school together. Mr Awoderu introduced Mr Cole to Mr Griffin, and they too subsequently became friends.
3. I have to deal with two separate claims. The first is a claim by Mr Griffin against Mr Awoderu. It is a claim for damages for breach of two separate contracts. The second action which I have to deal with is a Part 20 claim by Mr Awoderu against Mr Cole. By that claim Mr Awoderu seeks recovery from Mr Cole of a contribution towards whatever sum I may find he has to pay Mr Griffin by way of damages for breach of either or both of the contracts.
4. There is a substantial degree of common ground as to the facts between the parties, but there remain fundamental differences in respect of a number of crucial issues, in respect of each of which I will have to make findings of fact.
5. This litigation arises out of a speculative purchase of two separate properties. The hope and expectation was they would be sold in the short term realising a substantial capital gain. In the event that did not happen. The properties were not sold as expected and amongst the financial casualties was the destruction of the friendship between the three parties to these two separate claims.

Facts

6. The relevant history begins in May 2002. On 17 May 2002 Mr Awoderu and Mr Cole agreed, subject to contract, to purchase 86 Portman Tower for the sum of £1,130,000. Their intention was to sell the property at what they hoped and expected to be a substantial profit.
7. Blenheim Bishop's letter dated 21 May 2002 estimated that after being refurbished to an exceptional standard 86 Portman Tower would realise £2 million. Mr Awoderu and Mr Cole instructed solicitors, Philip Ross, to act for them on the purchase.
8. On 20 May 2002 Philip Ross wrote advising Mr Awoderu and Mr Cole of the likely legal and other costs of purchase, including stamp duty of £45,200. At a meeting with Philip Ross, held on 31 May 2002, Mr Awoderu and Mr Cole agreed that they would purchase 86 Portman Tower as tenants in common. In paragraph 8 of his witness statement Mr Cole gives his understanding of the effect of that agreement in the following terms:

"We discussed with the solicitors the different ways in which property could be owned by more than one person, and had decided that we wanted to be tenants in common in equal shares. I understood that to mean that whatever net equity was left once the mortgage had been paid would be split between us 50:50."

9. On 10 September 2002 Mr Awoderu and Mr Cole exchanged contracts for the purchase of 86 Portman Tower. A deposit of £113,000 was paid. The completion date was set for 22 October 2002. Philip Ross's client account records show how the deposit, the balance of the purchase price, and the other sums needed to complete the purchase were raised. On 10 June 2002 £48,800 was paid into the account by Mr Cole. On 10 June 2002 £64,200 was paid into the account by Mr Awoderu. On 8 August 2002 £70,000 was paid out as the deposit for the purchase of another property, 24 Portman Tower. On the following day, 9 August 2002, Mr Awoderu paid a further £70,000 into the account. The effect of those transactions was to leave the account in credit in the sum of £113,000, the exact amount that was paid by way of deposit on 10 September 2002.
10. On 20 September 2002 the purchase of 24 Portman Tower was completed. The bulk of the purchase price was provided by a mortgage from the Bank of Scotland in the sum of £627,905. Although the intention was that the investment in 24 Portman Tower should be joint, the property was transferred into the sole name of Mr Cole because that was thought to be fiscally advantageous. The property would become Mr Cole's principal private residence.
11. The majority of the monies invested at this stage by Mr Awoderu and Mr Cole had come from Mr Awoderu. Mr Awoderu had provided £134,000 odd against Mr Cole's £49,000. It was quite apparent from Mr Awoderu's evidence that this became a cause of unhappiness. Mr Awoderu had expected that as the purchases were joint enterprises the parties' investments would be the same. In the event, however, Mr Cole did not have available, or did not choose to advance, as much as Mr Awoderu.
12. After contracts for the purchase of 86 Portman Tower had been exchanged Mr Awoderu and Mr Cole came under increasing pressure to raise the funds necessary to enable them to complete the purchase. If the purchase were to fall through not only would they lose what they believed to be the prospect of a substantial capital gain, but they would also lose the deposit of £113,000. On 4 October 2002 they attended a meeting with Philip Ross at which the position was made explicit.
13. On the same day, 4 October 2002, Mr Awoderu and Mr Cole had their first discussion with Mr Griffin about the possibility of Mr Griffin joining them in the investment in 86 Portman Tower. A further meeting took place on 6 October 2002. On 16 October 2002 there was another meeting during which Mr Griffin agreed to advance £170,000. There is a dispute as to the terms of that agreement.
14. Mr Griffin and Mr Cole maintain that the unsigned letter addressed to Mr Griffin dated 16 October 2002 sets out the terms of what was agreed. That letter in part reads as follows:

"Dear Alexander, Firstly, thank you for our meeting last week regarding the above property. We would like to state here formally that for an investment of £170,000 in the above property we guarantee a return of £100,000 secured as a charge on the property post completion.

There will be a further bonus of 20% of the realised consideration over £1.8 million pounds ie for a sale of £2 million pounds we would forward £330,000 to you for an initial investment of £170,000.

Your capital and return on the property is to be payable before any consideration will be forwarded to ourselves and only Birmingham & Midshires mortgage lender will have a prior claim to yourself, effectively using our own equity to underwrite your investment.

We anticipate selling the property by September 30^th 2003 at the latest and your capital and return will be payable at this date or earlier.

The responsibility for all debt servicing on the property will be Mr Cole's and Mr Awoderu's and you will be given reports on the property as required.

Both Michael and I are really pleased to be able to offer this to you and we hope it will be the first of many transactions."

The letter ends "Yours sincerely, AI Cole, MF Awoderu". However, it is not signed by any of the parties.

15. Mr Awoderu maintains that that document is a later creation and does not reflect what was agreed at the time. It was, in other words, a forgery. His case on the proper terms of the agreement has not been wholly consistent. For the purposes of this section of my judgment they can be summarised as an assertion that all three parties became equal partners in the venture. I shall, of course, return to that issue later.
16. What is clear is that Mr Griffin agreed to provide £170,000 towards the enterprise. That sum is shown reaching Mr Awoderu and Mr Cole's account with Philip Ross on 17 October 2002. However, this did not give Mr Awoderu and Mr Cole sufficient funds to complete the purchase.
17. On 24 October 2002 Philip Ross wrote to them providing a detailed statement of the completion of the purchase of 24 Portman Tower and of the sums required to complete the purchase of 86 Portman Tower. That letter was written two days after the contractual completion date. It makes clear that even after the £170,000 paid by Mr Griffin and after receipt of a mortgage advance of £904,000 odd a further £25,726.64 was required if the contract was to be completed on that day, and an additional £223.56 for each successive day the completion was delayed.
18. Neither Mr Awoderu nor Mr Cole had sufficient funds to provide the required funds. Accordingly, they arranged to borrow £26,000 from Mr Abdurachman Atta. That loan is shown in the written agreement dated 28 October 2002, the relevant part of which reads as follows:

"Further to our extensive conversation today, I, Abdurachman Atta undertake to pay you the sum of £25,000.00 (Twenty Five Thousand Pounds) [that was subsequently varied to £26,000] towards the completion of the flats stated above.

As agreed upon selling the first of either of the flats 2% (Two percent) of the profit realised will be paid back to me in addition to the principal of £25,000.00 [amended in manuscript to £26,000]. The interest and repayment will also be paid by yourself in order to the loan bestowed on me. The total sum will be notified to you in due course, but for clarity it will be in the region of between £280-£400 per calendar month.

It is also agreed that I (Mr Atta) will have no debts or obligations whatsoever with regard to the mortgage obtained to purchase the flats.

I (Mr Atta) will have no obligations as set out in both mortgage offers. I (Mr Atta) will have no obligations with regard to service charges or any other associated costs.

It is also agreed that I (Mr Atta) will be paid the principal in addition to 2% of the capital growth. The principal loan and 2% must be paid to Mr Atta regardless of the sales being achieved or not by 15^th August 2002 [should be 2003] with the assistance of a qualified valuer."

19. Philip Ross's client account record shows payments of £4,000, £13,500 and £8,500 being made on 29 October 2002. They total £26,000 and I am satisfied that they together make up the loan from Mr Atta.
20. Armed with this final injection of funds, Mr Awoderu and Mr Cole were in the position to complete the purchase of 86 Portman Tower. That was done on 29 October 2002, the same day that Mr Atta's loan had reached Philip Ross. On 12 December 2002 Mr Atta protected his loan by registering cautions against both 24 and 86 Portman Tower.
21. The documents show that by late October 2002 Mr Awoderu was already investigating in the purchase of another property, Flat 1, Fursecroft, George Street, London W1. On 21 October 2002 his solicitors, Ingram Winter Green, wrote to Mr Awoderu in relation to a mortgage offer. On 18 November 2002 they provided him with a report on title. In contrast with Philip Ross's correspondence about 86 Portman Tower, which was addressed to Mr Awoderu and Mr Cole jointly, Ingram Winter Green's correspondence about Fursecroft is addressed to Mr Awoderu alone.
22. In February 2003 there began what was to prove to be extended correspondence in relation to a debt that Mr Awoderu owed to Helene Hort. Miss Hort's solicitors, Clintons, wrote to Mr and Mrs Awoderu asserting that they owed Miss Hort £112,000 odd and that debt was due for payment in November 2003. Meanwhile, Mr Awoderu was pursuing the potential purchase of Fursecroft. By this time neither 24 nor 86 Portman Tower had been sold and neither Mr Awoderu nor Mr Cole had sufficient funds to enable them to finance the purchase of Fursecroft from their resources. Indeed, as I have said, Mr Cole had not had sufficient funds to enable him to contribute equally to the purchase of the Portman Tower properties.
23. Accordingly, in early May 2003 Mr Cole approached Mr Griffin to see if he would be willing to provide funds to enable the purchase of Fursecroft to proceed. Once again there is a dispute as to what was eventually agreed. Mr Griffin and Mr Cole maintain that the operative terms of the agreement were the same as those of the October 2002 agreement. Again, Mr Awoderu's case has not been wholly consistent, but in general terms it is that it was agreed that the venture should be a joint enterprise in which each member of the group would share the risk or profit equally. I shall return to that issue later.
24. What is common ground is that after some initial reluctance Mr Griffin agreed to provide funding in the sum of £120,000. That payment was made on 27 May 2003.
25. The documentation concerning the purchase of Fursecroft is incomplete. The Land Registry official copy shows that the property was registered in Mr Awoderu's sole name on 1 August 2003. The invoice to Mr Awoderu alone, from London International Properties Limited, dated 23 June 2003, records the sale price to have been £450,000. While plans for the purchase of Fursecroft had been proceeding, and while they were negotiating the second advance from Mr Griffin, Mr Awoderu and Mr Cole had re-mortgaged 86 Portman Tower. The mortgagee was The Mortgage Business Plc. The charge was executed on 16 May 2003. The proceeds of that mortgage were used to repay the sums due to Mr Atta under the agreement made on 28 October 2002. Mr Atta was paid the sum of £35,000 on 19 May 2003. Neither Mr Awoderu nor Mr Cole told Mr Griffin of the re-mortgage when negotiating the second agreement with him. I am satisfied that that must have been a deliberate decision by both Mr Awoderu and Mr Cole.
26. In November 2003 Clintons resumed correspondence on the subject of the monies owed by Mr and Mrs Awoderu to Miss Hort. That correspondence continued for many months. Mr Awoderu initially disputed the extent of the indebtedness to Miss Hort but eventually in the spring of 2005 agreed that as at 15 February 2005 he and his wife owed Miss Hort the sum of £162,477.07.
27. During that period of 18 months other things had been happening. Mr Griffin had a number of meetings with Mr Awoderu and/or Mr Cole in which the progress of the ventures was discussed. Those meetings are recorded briefly in Mr Griffin's private diaries which have featured extensively during the course of the evidence. The entries between July 2003 and September 2004 record that the sale of the properties was not proceeding as had been hoped and expected. As time passed Mr Griffin became increasingly disenchanted with his involvement with Mr Awoderu and Mr Cole. Mr Awoderu offered a variety of different explanations of the progress of the sale.
28. During this period Mr Awoderu was under increasing financial pressure. During 2004 he had borrowed £35,000 from Mrs Williams, as recorded in the charge dated 15 March 2005. The purpose of that loan I find was to prevent his property at 14 Thornhill Houses being repossessed.
29. In October 2004 Mr Awoderu sold his 14 Thornhill Houses property. Approximately £28,000 of the proceeds of sale was paid to the mortgagees of 86 Portman Tower. It is unclear how the balance of the proceeds of sale, £25,000 odd, was used. It was not used to reduce Mr Awoderu's indebtedness to Miss Hort or to Mrs Williams.
30. On 30 November 2004 Mr Awoderu told Philip Ross that he had "ample equity in 86 Portman Tower". I have no doubt that he approved Philip Ross's letter, dated 2 December 2004, which asserted: "Our clients have no liquid assets with which to discharge this sum."

That is a reference to the indebtedness to Miss Hort in the sum at that stage of £128,000-odd. The letter continues:

"But Mr Awoderu is marketing one of his properties, namely 86 Portman Tower, of which he owns approximately £500,000 worth of equity. Mr and Mrs Awoderu are not insolvent and are attempting to release this equity in order to discharge the debt owed to your client."

31. As Mr Awoderu accepted in cross-examination, that assertion was not true. The explanation which he advanced in evidence for giving false information was:

"I needed to say something. I was not intending to mislead anyone. I did the best that I could. It was too much. It was just too much. I had to say something."

It is clear that by this time Mr Awoderu's creditors were, as he put it in evidence, "Closing in". It is equally clear that Mr Awoderu was prepared to lie in order to keep them at bay.

32. On 15 March 2005 Mr Awoderu and Mr Cole executed a further charge over 86 Portman Tower to secure Mr Awoderu's liability of £35,000 to Mrs Williams. On 17 March 2005 they executed another charge over 86 Portman Tower to secure Mr Awoderu's liability, £163,000-odd, to Miss Hort. With the benefit of hindsight it is clear that the enterprise was foundering.
33. On 31 October 2005 Mr Cole telephoned Mr Griffin to say that the mortgagee was shortly to obtain a possession order for 86 Portman Tower. Mr Griffin agreed to write a letter in an attempt to prevent the possession order being made. That letter is dated 1 November 2005 and reads as follows:

"I have authorized ABI Investments access to £1.1 million to fund the proposed purchase of 86 Portman Towers, 95 George Street, London, W1. Please find attached a faxed letter from my bankers, HSBC International Jersey, dated 1 November to the effect that there are more than sufficient funds to cover the proposed purchase. Yours faithfully."

It is signed above his typed name "Alexander Griffin".

34. The letter was accompanied by a fax from HSBC Bank International Limited confirming the availability of the funds. However, the statement made in the first sentence of that letter by Mr Griffin was not true. It was a lie. The letter did not, in the event, have its desired effect. The possession order was made in favour of the Bank of Scotland.
35. Attempts were made to set aside and suspend the possession order. In due course it was enforced. 86 Portman Tower was sold on 16 June 2006 for the sum of £1,600,000. The distribution of the proceeds of sale is detailed in Eversheds letter, dated 18 August 2006. It is summarised on the second page of that letter in the following terms:

"Available balance for distribution £133,148.89 split between Mr Cole and Mr Awoderu.

Current division as follows:

Surplus received £405,586.45.

Redemption value of joint debts: £265,136.50.

Balance net proceeds: £140,449.95 split 50/50 between joint owners: £70,224.97available for each.

Further deductions for Mr Awoderu's share.

Legal cost: £5,000.

Weekly allowance payments: £4,000.

Eversheds costs in maintaining weekly payment schedule £176.25. Mr Awoderu's share of net proceeds currently stand at £61,048.69."

36. On 13 June 2006, that is three days before 86 Portman Tower had been sold, Mr Griffin's solicitors asked Mr Awoderu and Mr Cole to agree that those balances should be paid to Mr Griffin in part settlement of the sums due to him. In the alternative, that they should be held by Eversheds pending the termination of the sums due. Mr Cole immediately agreed to this proposal. Mr Awoderu rejected it. That rejection led to Mr Griffin obtaining a freezing order against Mr Awoderu. There have been a number of hearings subsequent to the original without notice order, including committal proceedings, all of which are detailed in the documents in the trial bundle. I do not consider it necessary for me to refer to them in any greater detail at this stage.
37. Before concluding this factual résumé I must deal briefly with the position of Fursecroft. Due very largely to Mr Awoderu's failure to make available the relevant documentation, the position is far from clear. No doubt it will become clearer during the Section 423 Insolvency Act 1986 trial that is due to commence on 15 October. The documents show a number of apparent or purported dealings by Mr Awoderu in Fursecroft. There is an agreement dated 28 March 2006 by which Mr Awoderu agreed to sell Fursecroft to Synchroweb (an entity in which Mr Awoderu himself has an interest) for £695,000 with a completion date of 19 May 2006. There is a further agreement dated 12 May 2006 by which Mr Awoderu agreed to sell Fursecroft to Synchroweb for £695,000, this time with a completion date of 30 June 2006. There is a yet further agreement, dated 12 May 2006, by which Mr Awoderu agreed to sell Fursecroft to Synchroweb for £695,000 with a completion date of 28 July 2006. Foxtons' website was advertising Fursecroft for sale on 28 September 2006 for the sum of £1,350,000. There is a transfer dated 21 December 2006 by which Mr Awoderu transferred Fursecroft to Mrs Williams. The consideration is expressed to be £1,150,000 of which £695,000 was paid to Mr Awoderu and £455,000 to Mr Oluyede Fulabi trading as Synchroweb. There is a trust deed that seems to have been completed on 23 April 2007. Its effect is not immediately clear. It appears to be a device by which Mrs Williams has agreed, subject to repayment to her of her financial outlay, to transfer Fursecroft to a nominee of Mr Oluyede. I shall say no more about these purported transactions because they will need to be examined in the subsequent proceedings. All I say is this: there is a very strong inference that Mr Awoderu was party to an attempt to conceal the actual dealings in Fursecroft.

Issues

38. It is against that factual summary that the issues must be seen. In essence, the questions which I must resolve are the terms upon which Mr Griffin advanced the first and second loans and, in light of those findings, what sums, if any, are due to him and from whom.

Issue 1. The terms of the first agreement, 16 October 2002, 86 Portman Tower

39. The parties' cases on the terms of the agreement made on 16 October 2002 are diametrically opposed. Mr Griffin and Mr Cole advanced the same case. Mr Awoderu's case is materially different. Mr Cole's evidence is that before the meeting he had prepared the letter dated 16 October 2002 and had discussed and agreed its terms with Mr Awoderu before the meeting took place. Both Mr Cole and Mr Griffin gave evidence that that letter was produced and discussed at the meeting and was orally agreed by all three parties. Their evidence was that Mr Griffin's advance of the sum of £170,000 was made on the terms set out in that letter.
40. Mr Griffin explained that the letter was not signed by the fact that the three parties were friends who trusted each other and that there was, therefore, no need for it to be signed. He said that they shook hands on the deal which, to his mind, made it wholly binding - an agreement between friends.
41. Mr Griffin and Mr Cole's description of what was agreed is supported by Mr Griffin's contemporaneous private diary. The entry for 6 October 2002, 10 days before the agreement was made, records the proposal being offered to him by Mr Awoderu and Mr Cole as containing a return of £100,000 for £170,000 investment. That is wholly consistent with paragraph 1 of the letter dated 16 October 2002. The entry for 16 October 2002 records: "We shook on the deal for £170,000."
42. The description of the handshake is consistent with Mr Griffin's evidence and, perhaps more significantly, because the diaries had not been disclosed at the time it was made, with the description given by Mr Cole in paragraph 19 of his witness statement. Further, Mr Griffin and Mr Cole's description of what was agreed has remained consistent and unaltered at all material times.
43. By contrast, the fine detail of Mr Awoderu's case has altered with the passage of time. What has remained consistent, however, is his insistence that the agreement was not as described by Mr Griffin and Mr Cole. His case has always been that Mr Griffin was an equity investor and was not someone who had just made a loan. The first formalised version of Mr Awoderu's case appears in paragraph 3 of the Defence. In summary, that case is that the three parties would share the profits (that is the sum that remained after payment of expenses and repayment of the parties' financial contributions) of the venture in the proportion to the contributions that they had made.
44. However, in his oral evidence Mr Awoderu gave a different version of how the profits were agreed to be shared. His oral evidence was that the three parties were partners who, after payment of expenses and repayment of contributions, would share the profits equally. Mr Awoderu had no explanation for the difference between this version of the profit-sharing arrangement and that which had been pleaded in his defence.
45. My determination of this issue depends in part upon my interpretation of the documentary evidence, but also upon the view that I have formed of the three principal witnesses, each of whom gave evidence over an extended period. Of course, that view would also affect my determination of the other issues, in particular determination of the terms of the second May 2003 agreement. Therefore, it is appropriate that I should express my view of the general credibility of those witnesses.
46. Mr Griffin came across as a straightforward, on occasions, nervous, witness. On one occasion he was unable to perform a straightforward mathematical calculation which, for a fund manager, I found surprising. I find that difficulty to have been an example of the nervousness that he felt when giving evidence. I consider that on occasions that nervousness prevented him from doing full justice to the evidence that he had to give. Overall, the evidence that he gave was consistent, both with what may be described as commercial reality and, subject to some exceptions, with his contemporaneous diary entries. On the other hand, he had been prepared to write a dishonest letter on 1 November 2005 in an attempt to stave off the making of a possession order against 86 Portman Tower. On that occasion at least he demonstrated himself to be someone who was prepared to be dishonest in order to further his own ends. That is something that I have to bear in mind when determining the disputed issues of fact.
47. For much of the evidence Mr Cole presented as a model of balanced reason. He answered questions in what appeared to be a modest, self-effacing, uncomplicated way. On the face of it he was wholly credible. His credibility is enhanced by the fact that in supporting Mr Griffin's description of the making of 16 October 2002 agreement he was giving evidence against what may be thought, and may fairly be described, to have been his own interests. Further, it can only be to his credit that he responded so quickly and so reasonably to Mr Griffin's solicitors' request on 13 June 2006 that he should agree to the balances realised by the sale of 86 Portman Tower being paid to Mr Griffin in part settlement of the sums due to him.
48. However, I find that when asked by Mr Awoderu about the assertion in paragraph 34 of his witness statement that he had not appreciated that Mr Griffin had not been granted the charge over 86 Portman Tower Mr Cole's response was deliberately disingenuous. The reality is that, as Mr Cole accepted in the succeeding part of his cross-examination, he knew full well what a charge was. He knew that one could not be granted over the commonly owned 86 Portman Tower without his active participation and, therefore, knew that one had not been granted to Mr Griffin. The second sentence of paragraph 34 of his witness statement was, therefore, misleading, as was his initial attempt to justify it in answer to Mr Awoderu's sensible and focused questioning. I will return later to other passages of Mr Cole's witness statement that call for specific comment.
49. By contrast to Mr Griffin and Mr Cole, Mr Awoderu's appearance in the witness box was far more passionate. There is no doubt that he feels strongly let down by Mr Cole's failure to match his contribution to the purchase of the Portman Tower properties. He feels that if Mr Cole had made a greater financial contribution the enterprise would have fared better. It is also clear that Mr Awoderu regrets the destruction of his friendship with Mr Griffin and that to a great extent he regards Mr Cole's apparent present collaboration with Mr Griffin as at least a partial cause of that destruction.
50. However, Mr Awoderu was repeatedly evasive when confronted by difficult questions in cross-examination. Further, on occasions his evidence was inexplicably at variance with the documents. Further, significant parts of his pleaded case in relation to quantum were, as he accepted during the course of his detailed cross-examination by Miss Benbow, unsustainable and/or simply false. In his closing submissions, Mr Awoderu said of his pleaded case on quantum:

"My pleaded case on contributions is wrong. I am so sorry for that. I have been through so much."

51. When his creditors were closing in, in late 2004, Mr Awoderu was willing to lie about the value of his interest in 86 Portman Tower in an attempt to keep them at bay. Similarly, when from 2004 Mr Griffin was pressing him to explain what was being done to sell the properties Mr Awoderu was evasive and untruthful. His failure to cooperate properly with the legal process may in part be due to the fact that he is now appearing in person. However, I find that in part it was also a deliberate attempt to frustrate the legal process. I did not find Mr Awoderu to be an obviously reliable witness. The approach that I take to his evidence is that it should be approached with caution, particularly where it is in conflict with the contemporaneous documents.
52. I turn now to my findings in relation to the terms of the first, 16 October 2002, agreement. I take into account the fact that Mr Griffin has shown that he is willing to mislead in order to further his own ends and the fact that the impressive manner of Mr Cole's evidence may contain and may conceal inaccuracies. However, I have no doubt that their evidence of the circumstances of the making and, therefore, the terms of 16 October 2002 agreement is correct. I reject Mr Awoderu's assertion that the letter of that date is a subsequent forgery. I am confident that it was produced and agreed during the meeting on 16 October 2002. I find that the terms of the first agreement are as set out in that letter.
53. I reach that conclusion for the following reasons, in addition to what I have

already said about my findings as to the general credibility of the three parties.

(1) It is consistent with commercial reality. I accept Mr Griffin's evidence that he was interested in a guaranteed return. He was not interested in a speculative property investment. Given his success in other fields there was no need for him to have been. Mr Awoderu and Mr Cole were in a desperate position at the time the agreement was made. Without Mr Griffin's involvement the purchase of 86 Portman Tower and the deposit of £113,000 would have been lost. Mr Griffin was in the position to hold out for advantageous terms. Mr Awoderu and Mr Cole were simply not in a position to refuse.

(2) The contemporaneous diary entries are consistent with the evidence of Mr Griffin and Mr Cole. They are inconsistent with the evidence of Mr Awoderu. I take into account that in some subsequent entries Mr Griffin characterised his interest in different terms, particularly on occasion referring to the three parties as "Investors". For example, on 30 October 2002 Mr Griffin recorded that he was not sure if he would make money, which is not consistent with the guaranteed return provided for by the 16 October 2002 letter. On 19 March 2004 Mr Griffin described himself as part owning 86 Portman Tower. However, having seen the witnesses and considered all the available material I find that the earlier immediately contemporaneous entries more accurately record what was being negotiated and what was agreed.

(3) Mr Griffin was never treated as a partner. He was at all stages treated as a banker. 86 Portman Tower was registered in the names of Mr Awoderu and Mr Cole only. If Mr Awoderu were right the property would have been registered in the names of all three parties. Mr Griffin was not consulted about or even informed of the subsequent charges that were registered over 86 Portman Tower. If Mr Awoderu were right, he should and would have been. Mr Griffin was not involved or in any real sense consulted about the management of or the attempts to sell 86 Portman Tower. If Mr Awoderu were right, he would have been involved and/or consulted.

(4) Mr Cole's evidence about the making and terms of the agreement is, on the face of it, contrary to his own interest. Mr Awoderu has been unable to advance any reason why Mr Cole should fabricate such evidence.

54. Therefore, I reject Mr Awoderu's case that Mr Griffin and Mr Cole have dishonestly concocted a case. I find that their evidence is reliable and that that of Mr Awoderu is not. Further, I find that no matter how strongly Mr Awoderu may feel about this case, and no matter how much he may have reconstructed events in his own mind, he must know that the case that he has advanced is false. Therefore, I find his evidence to be knowingly untrue. He has lied in an attempt to further his case. The terms of the first agreement are as recorded in 16 October 2002 letter which is genuine and which was discussed by the parties on that day.

Issue 2. The terms of the second agreement mid/late May 2002 Fursecroft

55. It is common ground between the parties that on 27 May 2003 Mr Griffin paid the sum of £120,000 to be used towards the purchase of Fursecroft. Unlike the first agreement the terms under which that payment were made are not documented. Mr Awoderu's case in relation to the second agreement is similar to his case on the first, namely that Mr Griffin was a co-investor, a sleeping partner, who would share in the profits of the enterprise along with Mr Awoderu and Mr Cole.
56. Similarly, Mr Griffin and Mr Cole's case is that the terms of the second agreement were similar to those of the first. In exchange for the loan of £120,000 Mr Griffin would receive, in addition to the return of the principal, a sum of £30,000. Those sums would be paid to Mr Griffin by 30 September 2003 which is both the date specified in the 16 October 2002 agreement and also the date by which it was intended that the short term Fursecroft investment would have been realised. If those monies had not been paid by the end of September 2003 Mr Griffin would in addition receive a sum equivalent to the market rent of the property in lieu of any additional interest or return on his capital for so long as the sum of £150,000 remained unpaid.
57. Once again, I consider Mr Griffin and Mr Cole's description of events to be more reliable than that given by Mr Awoderu. My reasons for so finding are as follows.

(1) and (2) It is consistent with commercial reality and consistent with Mr Griffin's contemporaneous diary entries. As with 86 Portman Tower, Mr Awoderu's attempts to raise the necessary finance from other sources had failed. In evidence he said that his wife had property in St John's Wood that could have supported a loan but that he had not approached her about it before May 2003. He said that he had tried to raise finance from other quarters but had not succeeded in doing so before he approached Mr Griffin in May 2003. The lack of available funds is further demonstrated by the fact that Mr Awoderu and Mr Cole had had to remortgage 86 Portman Tower in mid-May 2003 in order to raise the money to repay Mr Atta. The commercial reality is that Mr Griffin was in a strong negotiating position. Further, his diary entries, which I find accurately reflect his state of mind at the time, show that he was not particularly interested in becoming involved in the purchase of Fursecroft. His diary entry for 20 May 2003 records:

"I always like seeing Awo and Michael. I find it very stimulating to be in their company, always discussing interesting topics. They have proposed another property deal which looks v appealing. It looks too good to be true. I was initially adamant that I would not get involved, but I am taking a closer look."

The reference to an offer that was "too good to be true" can only have been that described by Mr Griffin and Mr Cole: a short term loan with a generous return. The investor/sleeping partner relationship described by Mr Awoderu is not one that would have persuaded Mr Griffin to abandon his initial reluctance to become involved.

(3) Mr Griffin was never treated as a partner. He was at all stages treated as a banker. If he had been an equity investor he would have wanted to have and would have had a significantly greater involvement in the management of the enterprise, particularly as the expectation in May 2003 was that the investment in Fursecroft would have been realised by the end of September 2003.

58. I have no doubt that the second May 2003 agreement was made on the terms described by Mr Griffin and Mr Cole. I reject Mr Awoderu's case that Mr Griffin was an investor/sleeping partner. I find that Mr Griffin made what was intended to be a short term loan with a generous financial return. Again, I am driven to the conclusion that Mr Awoderu knew his evidence to be false and that he has attempted to deceive me in order to escape the consequences of the agreement.

Liability under the first agreement

59. Insofar as is relevant for the purposes of quantifying Mr Awoderu's liability under the first agreement, the 16 October 2002 agreement provided for

(1) repayment of the capital of £170,000;

(2) payment of a return of £100,000;

(3) both sums were to be paid by no later than 30 September 2003.

No such payments have been made. Mr Awoderu is, therefore, in breach of contract. The measure of Mr Griffin's loss if the sums that would have been received by him if the contract had been performed. In that event Mr Griffin would have received £270,000 by the end of September 2003 and would thereafter have enjoyed interest on that sum. The measure of loss is therefore:

(1) payment of damages in the sum of £270,000;

(2) I will hear both Mr Awoderu and Miss Benbow as to the appropriate rate of interest and the period for which it should be paid. If it were to be at an annual rate of 8 per cent from 30 September 2003, a period of four years less three days, the interest comes to £86,222.

On that basis the damages, inclusive of interest for breach of the first agreement come to £356,222.

Liability under the second agreement

60. Insofar as is relevant, the second May 2003 provided for

(1) payment of the sum of £150,000 by 30 September 2003;

(2) if that sum had not been paid by the due date payment of sums equivalent to the market rent of the property from 1 October 2003 until it was paid.

61. No payments have been made. Therefore, Mr Awoderu is in breach of contact. The measure of Mr Griffin's loss is the sum that would have been paid if the contract had been performed. The measure of loss is therefore

(1) payment of the sum of £150,000;

(2) payment of the sum equivalent to the rental value of Fursecroft from 1 October 2003 until today's date. Plainly the rental value of Fursecroft over that period is something about which I need to make a finding of fact.

62. Bundle G contains expert's reports from Mr Adams-Cairns, a Director of Savills. For the purposes of this action those reports are relevant only to the rental market value of Fursecroft. There is no other evidence addressed to that issue. Mr Adams-Cairns was not called and his evidence has not seriously been put in issue. Therefore, I accept the figures he has given and find that they accurately represent the rental value of Fursecroft over the material period.
63. Accordingly, the sums that should have been paid under the second agreement are as follows.

1 October 2003 to 31 December 2005: £52,000;

1 January 2005 to 31 December 2005: £48,000;

1 January 2006 to 31 December 2006: £51,000;

1 January 2007 to 27 September 2007: £48,208.27.

Those sums should have been paid at the end of each calendar month. Mr Griffin is entitled to interest on each unpaid sum from the date it was due at 8 per cent - subject to submissions to the contrary from either Miss Benbow or Mr Awoderu. Once the percentage rate has been agreed, or determined by me, I shall ask Miss Benbow to calculate the total of those interest payments.

Mr Awoderu's calculation of loss

64. In his Defence Mr Awoderu advanced an alternative calculation of the sums due to Mr Griffin based upon his version of the two agreements. Those calculations were expanded in Mr Awoderu's schedule, Tab E, page 391 and following. They were further dealt with by Mr Awoderu in evidence when he accepted that large parts of those calculations were inaccurate and false. In view of my findings of fact it is not strictly necessary for me to deal with the case advanced by Mr Awoderu as to quantum based upon his now rejected version of the agreements. However, in deference to Miss Benbow's request in her closing submissions I shall make a number of very brief observations so as to make clear my findings in relation to that now irrelevant case.
65. First, as Mr Awoderu accepted in cross-examination, the calculations involved repeated double counting, each of which is favourable to Mr Awoderu. Second, as Mr Awoderu also accepted in cross-examination, a large number of the contributions that Mr Awoderu had pleaded are factually incorrect. To a very great extent when being cross-examined by Miss Benbow about this, Mr Awoderu readily accepted the inaccuracies in his schedule. To the extent that it is material, my finding is that he simply did not understand parts of the schedule or what it advanced. It had been pleaded by his solicitors at a time that Mr Awoderu had had the advantage of legal representation. No doubt it was pleaded by them on the basis of what they understood to have been Mr Awoderu's instructions. I doubt that Mr Awoderu ever completely understood the case which was being advanced on his behalf. As I have said, when being cross-examined by Miss Benbow, Mr Awoderu readily and realistically accepted that much of the schedule was either factually false or was wholly unsupported by any relevant evidence.

The Part 20 claim

66. Mr Awoderu's part 20 claim against Mr Cole is based upon the assertion in paragraph 2(a) that the contracts detailed in the Particulars of Claim were entered into with the claimant jointly by the part 20 claimant [Mr Awoderu] and the part 20 defendant [Mr Cole]. On the strength of that assertion Mr Awoderu claims a 50 per cent contribution to whatever he has to pay to Mr Griffin. He claims in the alternative a contribution in whatever amount is just and equitable. Therefore, I have to determine whether both Mr Awoderu and Mr Cole were parties to the first agreement and to the second agreement and, if they were, whether Mr Cole should contribute to Mr Awoderu's liability to Mr Griffin and, if he should, in what amount.

The first agreement

67. There is no dispute that, together with Mr Awoderu, Mr Cole was a party to the first agreement with Mr Griffin. It is common ground that 86 Portman Tower was bought by Mr Awoderu and Mr Cole as tenants in common and that in order to do so they entered into the 16 October 2002 agreement with Mr Griffin. The issue that I have to determine is the extent to which, if any, Mr Cole should contribute to the sums that I have found Mr Awoderu must pay Mr Griffin by way of damages for breach of the first agreement.
68. Mr Griffin has claimed against Mr Awoderu not in debt, but for breach of contract. The award that will follow from the decisions that I have already expressed will be one of damages for breach of contract. It follows that Mr Awoderu's claim against Mr Cole arises under the Civil Liability Contributions Act 1978. I am satisfied that both Mr Awoderu and Mr Cole are liable in respect of the same damage and that I, therefore, have power to order Mr Cole to contribute to the extent that I consider to be just and equitable. The power confers on me a wide discretion to make an award in accordance with what I determine to be the comparative responsibility in the liability to Mr Griffin, as well as Mr Awoderu and Mr Cole's comparative blame worthiness.
69. I start from the proposition that as both Mr Awoderu and Mr Cole were parties to the first agreement it is proper that they should share equally any liability under it. I proceed to consider whether there are any factual issues that should cause me to exercise my discretion so as to depart from that equal liability. I consider that there are two such features that need to be considered.
70. The first feature is that the monies available to Mr Awoderu and Mr Cole on the sale of 86 Portman Tower were significantly reduced by the payments made to redeem the charges in favour of Miss Hort and Mrs Williams. Had it not been for those charges both Mr Awoderu and Mr Cole would have received significantly greater sums from the proceeds of sale of 86 Portman Tower. As I have already said, those charges were created not to secure debts incurred in relation to 86 Portman Tower, but for the benefit of Mr and Mrs Awoderu. The question that I have to determine is whether that fact should operate to reduce the contribution payable by Mr Cole to Mr Awoderu.
71. I have come to the conclusion that it should not. I have reached that conclusion for the following reasons. Although the liabilities were not 86 Portman Tower liabilities Mr Cole knew very well what he was doing. In relation to the charge in favour of Miss Hort, Mr Cole said in evidence:

"I agreed to the Hort charge because I was not prepared to see you made bankrupt."

Having seen him give evidence, I am satisfied that Mr Cole is not an unsophisticated man. He was aware of the consequences of agreeing to the charges. He said in evidence that he had been reluctant to execute them but given Mr Awoderu's extreme financial predicament he felt that he had no alternative but to agree. I consider that it would not be proper now for me to relieve Mr Cole of that obligation which, although taken reluctantly, was taken on an informed basis. Having then agreed to assume that obligation, Mr Cole must accept the consequences of that decision.

72. The second feature is that if Mr Awoderu had not been obstructive Mr Cole's share of the proceeds of sale 86 Portman Tower would have been paid to Mr Griffin in June 2006. If that had been done Mr Cole's liability would have been reduced, both as to the capital element and as to interest. However, I have again reached the conclusion that this is not a good reason for reducing Mr Cole's contribution.
73. I have done so for the following reasons. First, the capital sum that would have been paid in June 2006 remains in an account and can now be paid in partial satisfaction of Mr Cole's liability to contribute. Second, that sum will have been attracting interest since June 2006. In the absence of any evidence to enable me to compare the interest that Mr Cole will receive on that sum with the relevant interest element of the damages payable to Mr Griffin, of which Mr Cole is liable for half, there is no sensible way that I can make any adjustment of apportionment. Given the comparatively short period of time over which interest is payable, approximately 15 months, I have come to the conclusion that it would not be right for Mr Cole's contribution to be reduced.
74. The consequence is that Mr Cole must pay Mr Awoderu a contribution in the sum of £178,111 towards Mr Awoderu's liability to Mr Griffin. No doubt Mr Cole's share of the proceeds of sale of 86 Portman Tower, together with whatever interest is accrued, can be applied in part satisfaction of that liability, perhaps by way of a payment made directly to Mr Griffin's solicitors.

The second agreement

75. There is a dispute between Mr Awoderu and Mr Cole whether Mr Cole is a party to the second agreement with Mr Griffin. Mr Awoderu's case is that the Fursecroft venture was the same as the 86 and 24 Portman Tower ventures, namely that it was a joint venture between Mr Cole and him. He explains the fact that the property was registered in his name alone on the ground that that was the most tax efficient method of the purchase being effected. He points to the fact that 24 Portman Tower had been registered in Mr Cole's name for similar reasons. Mr Awoderu maintains that the financial arrangement with Mr Griffin was the same as the first agreement, namely that Mr Griffin made the second agreement with both Mr Awoderu and Mr Cole.
76. Mr Cole disagrees. His case is that Fursecroft was Mr Awoderu's venture alone. Mr Cole points to the facts that he had not contributed as much finance in the purchase of the Portman Tower properties as Mr Awoderu had hoped; that Fursecroft had always been Mr Awoderu's project; and that Mr Awoderu alone was putting money into the purchase. For these reasons Mr Cole argues it was agreed with Mr Awoderu that the investment would be that of Mr Awoderu alone. Mr Cole's role became that of a broker who facilitated the negotiation of the loan from Mr Griffin. Mr Cole expected that Mr Awoderu would give him some monetary return when Fursecroft was sold, but that was not because he was involved in the venture, but because of his role as a broker.
77. In determining this issue I must have regard to all the relevant evidence, as well as my view of the witnesses' general credibility, which I have already expressed, and make my finding based on what I make of all that evidence taken together. I am inevitably influenced by what I have already said about Mr Awoderu's credibility. But the fact that he was knowingly wrong in relation to the terms of the agreements does not mean that I must of necessity disbelieve whatever he says in relation to this issue. Therefore, I turn to look at the detail of the evidence that is relevant to my determination of the issue.
78. Mr Griffin deals with the matter in his witness statement at paragraph 10 in the following terms:

"It was a great opportunity and the proposal was put to me on the basis that it would be structured in the same way as the Portman Tower flat deal had been. In other words, Flat 1 Fursecroft would be bought in the names of Mr Cole and Mr Awoderu and I would advance them a sum of money for a short term, be granted a second legal charge, and receive a further lump sum on resale of the flat in the near future. This time, I was asked to advance £120,000 on terms that the flat would be sold and I would be repaid £150,000 after 3 months and would be protected by a legal charge in the meantime. The additional factor in this case was that Flat 1 Fursecroft was let to staff of the Embassy of Brunei at a yield of about 6 to 7% per annum. We agreed that, in the event that Flat 1 Fursecroft was not resold within 3 months for any reason, it would be sold as soon as reasonably practicable thereafter and I would be paid the equivalent of the rental income by Mr Awoderu and Mr Cole until such time as the sale occurred and I was paid my £150,000."

79. It is clear from that paragraph in his witness statement that Mr Griffin considered that, as with the first agreement, he was dealing with both Mr Awoderu and Mr Cole. That is also how he recorded matter contemporaneously in his diary. In the passage, which I have already read from the entry, dated 20 May 2003 Mr Griffin says:

"I always like seeing Awo and Michael. I find it stimulating to be in their company, always discussing interesting topics. They have proposed another property deal which looks very appealing."

On the following day (21 May 2003) he says:

"I think I will also back Awo and Michael's deal. The numbers look too attractive. Maybe I'm being too greedy."

80. Mr Griffin's evidence in chief was to the same effect. He stated that he was contacted by Mr Cole who he describes as "Brokering the deal". He says that the arrangement was on the same lines as the arrangement in the first agreement. That, of course, was a loan to both Mr Awoderu and Mr Cole. Significantly, Mr Griffin said: "They needed rapid access to finance." Mr Griffin's contemporaneous diary entries, his witness statement and his oral evidence all suggest that the second agreement was made with both Mr Awoderu and Mr Cole.
81. Important parts of Mr Cole's witness statement are to the same effect. In paragraph 23 he says this:

"Originally the idea had been that Fursecroft would also be bought in joint names by Mr Awoderu and myself would be held as tenants in common in equal shares. However, at a later stage, I believe just before the purchase took place, Mr Awoderu suggested that we should handle the Fursecroft transaction in his sole name for the same reasons of tax efficiency that had previously led us to purchase flat 24 Portman Tower in my sole name. I was prepared to accept this so long as Mr Awoderu accepted and agreed, as he did, that no profit would be taken from Fursecroft by either of us until Mr Griffin had been paid all the sums due to him from that property in accordance with our agreement. Again this is a pressurised situation because other purchasers were waiting for any opportunity to get hold of Fursecroft in our place. Mr Awoderu was adamant that we would not take any personal gain from either Portman Tower or Fursecroft until Mr Griffin had been paid in full on both properties.

Thereafter I continued to be involved in Fursecroft transaction to a limited extent as a sort of broker between Mr Awoderu and Mr Griffin, but I did not take part in the actual completion of the purchase. However, I was aware from conversations with both of them that Mr Griffin had advanced £120,000 and that Mr Awoderu had used that money to buy Fursecroft and extend the lease as we had intended to."

Those passages are not consistent with Mr Cole's case that he was not a party to the second agreement.

82. On the face of it, Mr Cole's explanation for the reasons that he was not a party to the second agreement are plausible. But I do not accept them. Despite the findings that I have made earlier in my judgment about Mr Awoderu's veracity, I find that both he and Mr Cole were parties to the second agreement. I do so for the following reasons.

(1) That is what Mr Cole said in his witness statement.

(2) It is what Mr Griffin said both in his witness statement and in his oral evidence.

(3) It is what is suggested in Mr Griffin's contemporaneous diary entries.

(4) Fursecroft was put into Mr Awoderu's sole name for tax reasons similar to those that led 24 Portman Tower being put into Mr Cole's sole name.

(5) In May 2003 Mr Awoderu and Mr Cole were still on good terms. The fact that Mr Cole had not made the financial contribution Mr Awoderu had hoped for in relation to the Portman Tower properties had not at that stage destroyed their close relationship. Mr Awoderu would, of course, recover his contribution before the net profits from the Fursecroft enterprise were calculated and distributed. The two men were still friends and were in business together. They expected to realise gains from the several properties by the autumn of that year.

83. The consequence of my finding that both Mr Awoderu and Mr Cole were parties to the second agreement is that, as with the first agreement, I start with the proposition that in the absence of some particular reason they should share equally any liability arising under it. I can see no special features to justify departure from that equal liability. Therefore, I determine that Mr Cole must contribute to Mr Awoderu one half of the sum that I have ruled that Mr Awoderu must pay to Mr Griffin by way of damages for breach of the second agreement.
84. However, in the case of Fursecroft there is the added complication of the fact that no monies have yet been realised from its sale. It is implicit in my ruling that Mr Awoderu must account to Mr Cole for one half of the net profits of the sale of Fursecroft. The fact that the position regarding Fursecroft is largely shrouded in mystery is the responsibility of Mr Awoderu. He has not provided proper disclosure.
85. Accordingly, my present intention, subject to argument to the contrary, is to direct a stay of the execution of my judgment against Mr Cole in favour of Mr Awoderu insofar as it relates to Fursecroft. My present view is that that stay should remain in place until the final determination of the Section 423 Insolvency Act 1986 trial that is due to commence on 15 October 2007.

Other matters

86. For the sake of completeness, I should record my findings on the significance of Mr Griffin's diary entry, dated 11 November 2005, and the conversation that it records:

"I saw Michael and Awo at the O2 centre and really spoke my mind about the disgraceful way in which the assets were managed. Both the penthouse and Fursecroft will be repossessed I think. The only way I will get anything is by registering a charge against the assets. They will do this for me. I agreed to share to proceeds of them. I think it is only fair. They can't be left destitute."

87. I accept Miss Benbow's submission that this entry and the conversation that it records do not amount to a waiver or some other form of loss of Mr Griffin's contractual entitlement. Mr Griffin was already entitled to charges over both properties so the registration of a charge, even if it had been done, would not have provided him with any benefit that he was not already contractually entitled to. In the event, however, no charge was registered.
88. Even if it were possible to characterise this discussion as giving rise to an agreement, it is not one that was ever performed. I accept Mr Griffin's evidence and Miss Benbow's submission that the proper interpretation of what took place was that if he received a charge, and if he recovered the sums due to him, or some of them, Mr Griffin would consider volunteering part of those sums to Mr Awoderu and to Mr Cole to ease their financial distress. There was no commitment or obligation on him to do so. It is something that he had indicated that if the events turned out in a certain way he would consider doing. It goes no further than that.
89. In fact, in any event, the events did not turn out in that way. Even if they had Mr Griffin would have been free to retain the entirety of what was contractually due to him. The diary entry for 11 November 2005 and the conversation it records does not in any way disentitle him to the benefit of his already existing contractual rights.