England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		19/03/2008

The Hon. Mr Justice David Richards:

1. This case concerns a block of 33,309,940 ordinary shares in a listed company, Stanelco plc, representing just under 5 per cent of its share capital. The case for the claimant William Hurndell is that these shares (the shares) were given to him in December 1996 as the means by which the combined holdings of the two controlling shareholders were reduced from 80 per cent to 75 per cent as a necessary precondition to the admission of Stanelco's shares to a full listing on the Stock Exchange. These shares were, he says, stolen from him in a scheme orchestrated by the first defendant Barrie Hozier (Mr Hozier) with the agreement of one of the controlling shareholders, Howard White. The case for the defendants is that the shares were parked with Mr Hurndell but remained in the ownership of Mr White.
2. All except 1.5 million of the shares were in February 2002 transferred to two companies incorporated in the British Virgin Islands and owned through a trust by the second defendant David Hozier. Those shares were sold in May 2004 at a net price of £3,165,144. Mr Hurndell claims an account and payment of the highest value of those shares between February 2002 and the date when the account is taken, which he asserts was in May 2005 when their total value based on a market price of 31.75 p per share was £10,099,655. Alternatively, he claims the net proceeds of sale.
3. The two controlling shareholders in Stanelco were Mr White and Ian Davis, who each held interests of 40 per cent through family trusts established in Jersey. They had jointly owned a private company manufacturing induction heating equipment, which in 1991 they reversed into a company traded on the Unlisted Securities Market (USM) of the Stock Exchange and which was re-named Stanelco plc. Both became directors of Stanelco, Mr Davis remaining a director until June 2003 and Mr White until November 2006. Mr Hozier, who had worked for them in their various businesses as financial controller since July 1987, was appointed as the secretary in 1991 and as a director in 1992. He remained secretary until 2002 and a director until April 2005.
4. The principal witnesses were Mr Hurndell and Mr Davis for the claimant and Mr Hozier and Mr White for the defendants. David Hozier and his wife Karen gave important evidence on an alleged meeting in August 2001 at which it is said that Mr Hurndell signed an acknowledgment that he would transfer the shares as directed by Mr White. Mr Hurndell also called Christopher Mills, who was chairman of Stanelco in 1996, and Robert Withers, a friend of Mr Hurndell. Rather than adducing their witness statements as evidence in chief, I directed that the witnesses should give their evidence in chief orally.
5. The resolution of the issues of fact is difficult for two reasons. First, there are documents which on their face strongly support each side's case. Secondly, the evidence of Mr Hurndell and Mr Hozier was highly unsatisfactory. I am satisfied that on a number of important questions they gave false evidence.
6. Determining where, on the balance of probabilities, the truth lies requires the court to examine the quality of the evidence on all the important issues. Ultimately the central issue is what was agreed in December 1996 or perhaps early 1997 but that can be decided only by examining the other issues. A provisional conclusion on one issue must be examined in the light of the evidence and conclusions on other issues.
7. After saying something about each of the principal witnesses, I will set out a narrative of the background and relevant events, indicating where the main issues of fact lie. I will then review the evidence and reach my conclusions on those issues.
8. The principal witnesses are strikingly different. Mr Hurndell is 64 years old and has lived in St Tropez in the South of France since 1973. He also has a home in Thailand where he spends several months a year. Most of his working life has been in the theatre, films and television. For many years he worked with James Bailey, a well-known set and costume designer, from whom he received a substantial legacy in 1980. He also trained as an actor and had a career as an actor in theatre, films and television. As everyone, above all himself, is agreed, he is no businessman. He said in evidence that playboy was a good word to describe him, and Mr Davis called him flamboyant. People would, Mr Hurndell said, ask him where the good parties were and Mr White said that he was the life and soul of a party. His evidence was frequently unreliable. It was often vague or almost incoherent on issues of difficulty to him. I am also satisfied that in some instances he claimed to give details of events of which he had no recollection. In assessing Mr Hurndell's evidence, I have made allowance for concerns expressed by him or on his behalf in the course of giving evidence that he was tired and muddled.
9. It would be hard to think of a greater contrast to Mr Hurndell than Mr Hozier, and both would I think take comfort from that. Mr Hozier qualified as a chartered accountant in 1969 and after a year or so in the profession he has since worked on the financial side for a number of companies. He joined Mr Davis and Mr White in 1987 as financial controller of their principal holding company. He became finance director and continued in that role for Mr Davis' holding company after he and Mr White brought their partnership to an end in 1991. Mr Hozier had extensive responsibilities, owing to the large number of companies (40 to 50 spread over the country, he said) owned by Mr Davis and Mr White. The only listed company under their control during the period relevant to this case was Stanelco. Mr Hozier's employment with Mr Davis ceased in March 2002 in acrimonious circumstances and his subsequent claim in the Employment Tribunal was compromised.
10. Mr Hozier is very precise and financially acute. He said that he tries to be meticulous. I have concluded that, when he came to deal with statements in Stanelco's accounts which support Mr Hurndell's case, he gave untruthful evidence. He claimed to have been sloppy and not to have read them properly. I am satisfied that this is untrue.
11. Mr Davis and Mr White are both entrepreneurs. They are able businessmen, quite different from Mr Hurndell but also without the detailed focus of Mr Hozier. Mr Davis seemed ill at ease giving his evidence, while Mr White was generally relaxed and confident. The evidence of neither was entirely satisfactory. There are a number of matters on which I cannot accept Mr Davis' evidence, while Mr White was in considerable difficulty in reconciling his account of the events of December 1996 and early 1997 with a memorandum prepared on his instructions in March 2005.
12. The result is that I must approach the evidence of all four principal witnesses with great caution. It was said on behalf of Mr Hurndell that the defendants were motivated to give false evidence by a desire to retain over £3 million which did not belong to them. But the same point might equally be made against Mr Hurndell that he is seeking to obtain over £3 million from the defendants to which he is not entitled.
13. It is necessary to say a word about the relations between these parties and witnesses. Mr Davis is 51 years old and Mr White is 54. They met in their teens and went into business together in their twenties. Their main business involved buying loss-making engineering businesses, turning them round and then selling them. Mr Hozier's evidence was that they were very good at this. Most of the business was conducted through a jointly-owned holding company, Winemanor Holdings Limited. Mr White became more interested in doing business in the United States and their active collaboration ended in late 1991. They concluded terms of separation in about 1993 but both retained their interests in Stanelco. While Mr White concentrated for a number of years on business in the United States, Mr Davis has pursued his own interests in England and Israel, in a variety of different businesses including in particular casinos in this country. Mr Davis and Mr White remained good friends until late 2000 when, for reasons not connected with the events relevant to this action, their relations became difficult. Relations broke down completely in about March 2002 in relation to an investment by Stanelco in a company in which Mr Davis held the majority shareholding. Apart from a brief rapprochement in mid-2002, their relationship appears since then to have been one of mutual hostility.
14. Mr Davis first met Mr Hurndell when he was 11 or 12. His uncle and Mr Hurndell were very close friends. Mr Davis introduced Mr White to Mr Hurndell in St Tropez a few years later. They were all good friends and, no doubt, Mr Hurndell made sure they had a good time. Through working for Mr Davis and Mr White, Mr Hozier met Mr Hurndell. They were no more than acquaintances, although Mr Hurndell helped David Hozier get a vacation job with a law firm in France and in 1999 introduced Mr Hozier to an English couple who were selling a flat near Nice which Mr Hozier bought in 2000.
15. Mr Hozier's relationship with Mr Davis and Mr White has always been on a business footing. He enjoyed a very good and close working relationship with Mr Davis until they quite rapidly fell out in 2001/2002. From then on Mr Hozier was on closer terms with Mr White until their relations soured in the first half of 2005. There was a short period of contact between Mr Hozier and Mr Davis in about May and June 2005 as each tried to obtain assistance from the other. Thereafter, relations have been bad between them and better between Mr Hozier and Mr White. I have the clear impression that in recent years the changing relations between these three men have depended on the view of each as to the advantages to be obtained from the others.
16. I turn to a narrative of the relevant events. In about 1989 Mr Hurndell suggested to Mr Davis and Mr White that the Ile du Levant, an island off the coast of the South of France about an hour's boat trip from La Lavandou, might have development potential. A significant part of the island was owned by the French military authorities and the rest of it had a variety of houses, small hotels, shops and restaurants, all in a rundown state. Mr Davis and Mr White were enthusiastic and considered that the island might be developed as a holiday or medical resort. They decided in the first instance to buy or take options over properties and to negotiate with the French military authorities whose cooperation was essential. Mr Hurndell, with the considerable assistance of his then partner Helen Robertson, helped them by entering into discussions and correspondence with local property owners.
17. These plans came to an abrupt halt in August 1990. With the Iraqi invasion of Kuwait, the French military authorities lost any interest in the proposals and were not prepared to consider them further. By this time, Mr Davis and Mr White had completed the purchase of one property, a small hotel called Le Minimum, and had either contracted to buy or take options over a number of others. They now were concerned only to extricate themselves from these transactions and in this they were again assisted by Mr Hurndell and Miss Robertson. The hotel was kept open until October 2002 and Mr Hurndell and Miss Robertson provided some help in its running, for which he was paid 13,168 French francs (about £1,300) per month from April to September 1990 and 6,291 French francs per month until October 1992 when the payments stopped. Mr Hurndell and Miss Robertson continued to have some involvement with the island for Mr Davis and Mr White but the documents in evidence suggest very little involvement after March 1994.
18. The project on the Ile du Levant was not a major venture for Mr Davis and Mr White. Mr White said that they invested about £600,000 in it but, by way of comparison, said that they had spent about £450,000 on two cars at much the same time.
19. It is part of Mr Hurndell's case that the alleged gift of the shares to him was in recognition of his work in connection with the Ile du Levant. His pleaded case is that the work was undertaken on the understanding that he would receive a share of the profits of the development. One of the many unsatisfactory features of Mr Hurndell's evidence concerned the reward which he anticipated from his suggestion of the Ile du Levant project and his involvement in it. At different times in his evidence he said that he had been expressly promised a reward and at others that it was just an assumption on his part. Once the project failed, he expected that he would receive a handshake in the form of a cash payment. I am satisfied that there was no discussion, certainly no significant discussion, about a reward for Mr Hurndell. Although Mr Davis said that if the project had been a success, Mr Hurndell would have received a percentage share of the profit, say 10-15 per cent, he could recall no discussion of it with Mr White and did not suggest it had been discussed with Mr Hurndell. Although some litigation with property owners remained pending in France for a considerable time, I am satisfied that Mr Hurndell had no significant involvement in the project or its aftermath for a considerable time before December 1996 and could by then have had no expectation of any reward for it.
20. Mr Hurndell also at some stage did some work for another of the joint interests of Mr Davis and Mr White, John White Footwear. This work took the form of visiting shoe shops in France which were late in settling their debts and encouraging them to pay. The evidence was very vague as to the extent or time of this work, but there is no evidence that it was continuing by 1996. From the documents in evidence it appears that the work was in a period from 1992 to March 1994. I am satisfied that by December 1996 Mr Hurndell had no expectation of recompense for it. Nor, more importantly, do I consider that by December 1996 Mr Davis or Mr White believed that Mr Hurndell should receive some recompense for his earlier involvement in either the Ile du Levant or John White Footwear. I do not accept Mr Davis' evidence that he considered that there was an obligation to Mr Hurndell.
21. In 1996 the Stock Exchange decided to close the USM and offered USM-traded companies the opportunity either to have a full listing on the main market or to be traded on AIM, the new Alternative Investment Market. Mr Davis described this as an amazing opportunity. There would not otherwise have been any opportunity for a company as small as Stanelco to be admitted to a full listing. It was not an opportunity he wished to miss. At that time, although Mr White remained a director of Stanelco, he took no part in its affairs. His business activities were by then in the United States where he was living. He was content to leave everything to Mr Davis and when Mr Davis telephoned him about a listing, he was content to go along with Mr Davis' view.
22. At this time and throughout most of the 1990's Stanelco shares were a penny stock, trading literally at less than 1p. There were later some sharp movements in the share price, often coinciding with significant events in this case. There was a steep rise in late 1999 to over 6p but the price had halved by the end of 2000. The shares then traded in a range of 2 to 4p until a steep rise to nearly 6p in the second half of 2003. It stayed at approximately that level until a very steep and short-lived rise to 25p or more in the first half of 2005. Since 2006 the shares have traded again at less than 1p.
23. It was a requirement for a full listing that at least 25 per cent of the shares should be in public hands, i.e. not owned by the controllers and their associates. In order to comply with this requirement, the aggregate holdings of the family trusts of Mr Davis and Mr White had to be reduced from 80 per cent to no more than 75 per cent.
24. There was a meeting on 5 December 1996 with representatives of Stanelco's auditors, stockbrokers and solicitors at that time, to discuss the steps required for the listing. Mr Hozier was present. It is possible that Mr Davis was present but Mr Hozier does not remember him being there and thinks it unlikely because Mr Davis was generally averse to meetings with advisors. Various matters were raised, including the need to reduce the trusts' 80 per cent holding.
25. There was a further meeting on 18 December 1996, for which minutes exist. It was a board meeting of Stanelco and the minutes record the presence of Mr Hozier, Mrs Shepherd and representatives of the advisors. The accounts for the year to 31 October 1996 and various documents required for the listing were approved.
26. Following the meeting on 5 December 1996, Mr Hozier discussed with Mr Davis the need to reduce the trusts' 80 per cent shareholding. According to Mr Hozier, Mr Davis told him that it would not be a problem and that he had discussed it with Mr Mills, the chairman of Stanelco. Mr Davis told him that 5 per cent could be put in Mr Hurndell's name as a nominee, and that the shares should come out of Mr White's trust. Mr Hozier says that he did not give much thought to whether this would satisfy the regulatory requirements but accepted what Mr Davis had told him. Mr Davis denies that he said any of this. I should say here that I reject Mr Hozier's evidence that he was told by Mr Davis that Mr Mills approved the proposal for Mr Hurndell to hold the shares as a nominee. First, there is no evidence that Mr Mills gave such approval or that any such proposal was ever mentioned to him. Having heard him give evidence, I am entirely satisfied that he would immediately have rejected it. Secondly, this was new evidence given by Mr Hozier for the first time in the witness box. It did not feature in his witness statement and it was not put to Mr Davis or Mr Mills. It was in my judgment an attempt by Mr Hozier to provide protection to him as regards the plan, on his case, that Mr Hurndell was to be a nominee.
27. Mr Hozier says that at Mr Davis' request he gave one or perhaps two stock transfer forms to Mr Davis so that he could get Mr Hurndell to sign them as transferor, fairly common procedure where shares are to be held by a nominee, but did not see the transfer forms again. Mr Davis could not recall that he was given any forms for this purpose.
28. After the number of shares to be transferred to Mr Hurndell had been fixed, Mr Hozier realised that there was a slight error in the calculation and that it was short by 101,878. This is a good illustration of his attention to detail. Mr Hozier says that Mr Davis told him to arrange the transfer of those shares as a gift to Mr Sharland.
29. Mr White was in the United States at this time and did not attend any meetings as regards the listing. There is no suggestion that Mr Hozier discussed the reduction in shareholdings with him and it is common ground that it was Mr Davis who spoke to him about it.
30. Mr Davis was vague in his evidence in chief as to when he discussed with Mr White the listing and the transfer of shares to Mr Hurndell. He thought they were then speaking regularly, particularly about the directors' loans, but Mr White may have come over to England or Mr Davis may have been in the United States. But his evidence was that before the full listing, he agreed with Mr White that the full 5 per cent reduction would come from Mr White's trust and would be a gift to Mr Hurndell. In his witness statement, Mr Davis had said that he recalled attending a completion meeting at which it became apparent that the full 5 per cent reduction required the transfer of an additional 101,000 shares. It was agreed that they should go from Mr White's trust to Mr Sharland. Mr Davis rang Mr White in the United States who had to be woken up to take the call. Mr Davis handed the telephone to Mr White's advisors. This account was put to Mr Davis in cross-examination, but his oral evidence was again very vague. He is not recorded as present in the minutes of the completion meeting on 18 December 1996. He may have been at the meeting on 5 December 1996. If so, it is very unlikely that, if called, Mr White had to be woken up, as the meeting did not begin until 2.30 pm London time. Nor in view of the arrangement which Mr Davis said he had already made with Mr White for the transfer of 5 per cent to Mr Hurndell, is it very likely that he would need to speak to Mr White about the transfer of a small number of shares to Mr Sharland. Mr White denied that any such call took place. I find that Mr Davis did not wake up Mr White for a call with respect to Stanelco and that there was no discussion with him about a transfer of shares to Mr Sharland.
31. Mr White's evidence is that in a telephone conversation before the listing Mr Davis told him that they needed to reduce their holdings by a total of 5 per cent. He says that they did not discuss how this would be done, but he assumed that each of their trusts would sell half the required number of shares. Shortly after the listing, in January or February 1997, Mr Davis told him that all the shares had come from Mr White's trust but would be held by Mr Hurndell as nominee. Mr Davis told him that this was effective as a means of dealing with the point.
32. As part of the preparations required for the listing, the audited accounts and directors' report for the year ended 31 October 1996 were approved at the meeting on 18 December 1996.The report of the directors' contains the following statement:

"to enable the company to comply with the Stock Exchange regulations the holdings of H White and IN Davis must reduce and so following announcement of the results for the period and prior to 31 December 1996 the former will sell at least 5 per cent of his holding."

This statement does not accurately reflect either version of events, because it is common ground that the 5 per cent reduction was not achieved, or intended to be achieved, by a sale. The directors' report was signed by Mr Hozier.

33. The listing document issued in accordance with the Listing Rules included the following statement:

"Ian Davis has a 40% interest in the issued share capital of the Company and Ian Davis and Howard White jointly own companies which have a further 34.9% interest in the issued share capital of the Company."

No mention is made of any further interest of Mr White, whether in the shares or otherwise.

34. It is clear that the position as stated in the public documents was that the shares had been disposed of completely without the retention by Mr White of any interest in them. This was also the understanding of the professional advisors: it is not suggested that they knew of any proposal for Mr White to be or remain the true owner of the shares and, if they had known, they would not have permitted the issue of these documents.
35. The statement in the listing document reflects an arrangement which was made in late 1996 for a reorganisation of the ownership of the shares in Stanelco held by Mr White's family trust. The shares were to be transferred to and owned by three companies owned in equal parts by Mr White and Mr Davis. This was apparently designed to discharge loans by the companies to Mr White and Mr Davis and thereby avoid adverse tax consequences of the loans. In fact none of the requisite transfers was made in Stanelco's register until early 2001, but the effect of this arrangement was reflected in the statement of directors' interests in Stanelco's accounts for 1997 and subsequent years.
36. Certain documents needed for the listing were faxed to Mr White for his signature but it appears from a fax dated 17 December 1996 from Mr Hozier to Stanelco's solicitors that Mr White was not sent a copy of the directors' report or that part of the listing document quoted above and his evidence, which I accept, is that he did not see it.
37. It was left to Mr Hozier to organise the transfer of shares from Mr White's trust to Mr Hurndell and Mr Sharland. For reasons which are unclear but do not matter, Mr Hozier failed to do so. No-one suggests this omission was sinister or significant.
38. On 9 April 1997, Abacus (CI) Limited as the trustee of Mr White's trust resolved in writing to appoint its entire holding of 266,489,940 shares in Stanelco to Mr White. This represented the full 40 per cent holding and made no allowance for any transfer to Mr Hurndell. There is no evidence to indicate why Abacus took this step or who requested it. The likelihood is that it was done so that Mr White could give effect to the arrangements made in December 1996 for transfers of the trust's holding of Stanelco shares to the three companies jointly owned with Mr Davis.
39. Although the directors' reports published with Stanelco's accounts for 1997 and 1998 showed a total of 233,078,062 shares (35 per cent) held by the three companies, no-one was shown as owning the balance of 5 per cent. It was disclosable as a substantial shareholding if beneficially owned by Mr Hurndell or both as a substantial shareholding and under directors' interests if beneficially owned by Mr White. Mr Hozier signed the directors' reports for both years. Mr White remained in the United States throughout this period and I accept his evidence that he did not at that time concern himself with Stanelco at all and did not read the directors' reports.
40. In 1999 Stanelco patented a process which it had discovered by chance for using a starch-based product instead of gelatine in the manufacture of cod-liver oil capsules. Stanelco entered into a joint venture for the appraisal and, if appropriate, development of this process. This led to investment interest in Stanelco's shares and the market price rose accordingly.
41. In January 2000 Mr White and Mr Davis were considering a proposal for a disposal of the 35 per cent stake in Stanelco held by their three nominee companies to Mr White's adult son Ben. On 31 January 2000, Mr Hozier sought advice on this proposal from Lovells, who were Stanelco's solicitors. One of the partners in Lovells had a longstanding and close professional relationship with Mr Davis. Lovells advised that the disposal of a 35 per cent interest would trigger a requirement on Mr White's son under the City Code on Takeovers and Mergers to make a bid for the remaining shares, unless the Panel was persuaded that it was a disposal between associates. It may be noted that the proposal did not include the 5 per cent thought to be held in Mr Hurndell's name. Lovells' note of their discussion with Mr Hozier refers to the illiquid market in Stanelco's shares "due to 80 per cent being held by three shareholders", which is clearly reference to Mr Davis, Mr White and Mr Hurndell, and continues: "were one of these shareholders to dispose of their holding, the price would fall to a more appropriate level". Lovells spoke also to Mr White, and an internal note of 4 February 2000 describes the proposal as involving the transfer of the Stanelco shares owned by the three companies to an offshore foundation of which Mr White's son was the sole beneficiary.
42. There is in evidence a fax dated 4 February 2000 from Mr Hozier to Mr White, setting out the holdings of the shares originally held by Mr White's trust. As well as the three nominee companies, it lists Mr Hurndell as holding 33,309,940 shares and Mr Sharland as holding 101,878 shares, said to be worth £291,461.98 and £891.43 respectively. The fax numbers suggest that it was faxed, or intended to be faxed, from one fax machine in the offices in Barnet at which Mr Hozier (and Mr Davis) worked to another fax machine in the same office. Mr White says that he does not recall receiving it and does not think that he did so, given that he was not then working at the Barnet office.
43. Mr White evidently raised with Lovells whether he had to declare the transfer of "his shares" from the three nominee companies to the offshore foundation, because in a fax dated 14 February 2000 Mr Hozier chased this request and added "you may recall that Howard holds 40 per cent of Stanelco PLC", i.e. including, as Mr Hozier confirmed in oral evidence, the 5 per cent thought to be registered in Mr Hurndell's name.
44. On 17 February 2000 Mr Hozier wrote again to Lovells, informing them that Mr Davis and Mr White had sold the three nominee companies to The Heart of Darkness Foundation in Liechtenstein, the foundation owned by Mr White's son, and that two of the companies had transferred just over 155.5 million shares to the foundation. Mr Hozier explained:

"Howard White originally owned 40% of Stanelco PLC shares through a Jersey trust. The shares were transferred to three UK companies jointly owned by Howard and Ian a couple of years ago, and 5% of those shares were transferred to a third party when Stanelco went to a full listing, leaving the three companies with 35% of Stanelco's issued share capital."

45. Mr Hozier expanded on this in a fax to Lovells sent the next day, in which he stated that on 18 December 1996 "Abacus Trustees transferred the following shares from the Trust", setting out the transfers to the three nominee companies and to Mr Hurndell and Mr Sharland. He gave details of the original trust holding and the later transfers by the nominee companies. This was, he stated at the start of the fax, "the full history of Howard White's shares in Stanelco PLC", because as he accepted in cross examination Lovells needed full instructions. His evidence was that he knew at the time that Mr Hurndell held the shares as nominee for Mr White. He stressed that in those faxes he had said that the shares had been "transferred" to Mr Hurndell, in contrast to a full disposal. The same word, "transferred", is used in a draft note for the Takeover Panel sent by Lovells to Mr Hozier on 18 February 2000:

"The shares held by the trust in which Mr Howard [White] is interested were subsequently transferred to various parties (including the three companies referred to above)."

46. On 18 February 2000 Mr Hozier also wrote to Stanelco's registrars, informing them of the recent transfers by two of the nominee companies to the foundation and "in order to update your records" asked them to note the transfers of shares in December 1996 from Mr White's trust to the nominee companies, Mr Hurndell and Mr Sharland.
47. Stanelco's accounts for the year to 31 October 1999 were approved and published in April 2000. Once again, in the directors' report, Mr White's beneficial interest as at the year end did not include the shares held by Mr Hurndell. For the first time, the list of substantial beneficial interests included Mr Hurndell in respect of 33,309,940 shares. The directors' report was, as in previous years, signed by Mr Hozier. When asked in cross examination why he signed the directors report when, on his case, he knew that Mr Hurndell was holding the shares as nominee for Mr White, Mr Hozier replied:

"because, my Lord, I didn't really check the accounts properly, I was sloppy and, as I said before, I had a busy job, I had 40 or more companies to look after, or their accounts to look after; I didn't prepare these accounts, I signed a lot of things. My main task for Ian Davis was to run his businesses and I was for ever under pressure from Ian Davis to keep the companies performing. This was a diversion."

I should say here that I do not believe this evidence. Having observed Mr Hozier giving evidence, I am clear that he is very precise and certainly would not have been sloppy when it came to the directors' report of the only listed company in which he was involved. He relied on a number of matters to distance himself from the accounts and directors reports: the reports were drafted by the auditors; the figures for directors' interests were provided by members of his staff although he forwarded them to the auditors; Stanelco was only one of a large number of companies for which he had responsibility on accounting and financial matters. I am satisfied that notwithstanding these points he was fully aware of the report's contents. Whether he signed the report because it was true and accurate or because it was designed to conceal the truth is an issue to which I shall return.

48. An e-mail on 13 June 2000 from Grant Thornton to Mr Hozier shows that consideration was by then being given to a transfer of a 4.99 per cent stake in Stanelco to David Hozier. This is clearly a reference to the shareholding thought to be in Mr Hurndell's name. Mr Hozier's evidence as to the background to this is that at a much earlier stage, around 1993, Mr Davis made a vague promise to him that if Stanelco ever became "useful" Mr Hozier could have a 5 per cent shareholding when he retired. It was not in writing and Mr Hozier was not sure whether or not Mr Davis really meant it. Mr Davis denied that he had ever made this promise. Mr Hozier says that the rise in Stanelco's share price in early 2000 led him to remind Mr Davis of his promise. Mr Hozier says that Mr Davis was agreeable to Mr Hozier having the 5 per cent stake but said that it had to be approved by the regulatory authorities. Hence the e-mail from Grant Thornton giving advice on the implications under the Listing Rules and the Takeover Code, indicating that David Hozier could probably have the shares, but not Mr Hozier.
49. Mr Hozier and Mr White both gave evidence that in 2000 they discussed the possibility of Mr Hozier receiving these shares. Mr White was quite happy for Mr Hozier to have the shares. Mr White's evidence was that he understood Mr Davis' earlier promise of shares for Mr Hozier to be serious.
50. Mr Hozier's evidence is that he discussed Grant Thornton's advice with Mr Davis who was not very happy with it and thought he should get advice from Lovells.
51. Mr Hozier discussed the matter with Lovells who sent him a letter dated 20 July 2000 and headed "Shares in public hands", which starts as follows:

"I refer to our recent discussions regarding Stanelco PLC and the need for it, as a listed public company, to maintain 25% of its shares in public hands. Our understanding is that, currently, approximately 75% of the shares in the Company are held by the directors and related trusts, with the remaining 25% held by members of the public (including a holding of just under 5% by one individual).

Our understanding of the proposals is that either 5% of the shares which it is proposed to transfer to you will come from the large individual shareholder constantly forming part of the public or they will be transferred to you from one of the directors' existing holdings."

Reference is made to the Listing Rules and the letter continues:

"It is clear from the Listing Rules that, should the 5% transfer be from a current member of the public, once those shares were in your hands, they could cease to be "shares in public hands" for the purposes of the Listing Rules and the UK Listing Authority could seek to suspend or cancel the listing of the company.

Should the shares be transferred to you from one of the directors' existing holdings, there should not be a problem under the Listing Rules as this transfer would not affect the percentage holding in public hands. There would, however, be a theoretical risk of triggering a Rule 9 bid under the Takeover Code because you would be adjudged as being in concert with the other directors in the Company. It would be necessary for a Rule 9 bid to be made. We wrote a similar letter when it was proposed to transfer shares to Ben White's foundation and the Panel gave the clearance in that event."

52. Lovells referred also to the possibility of Mr Hozier acquiring 5 per cent through the issue of new shares. Mr Hozier's evidence is that he discussed Lovell's letter with Mr Davis. The upshot was that Mr Hozier could not have a 5 per cent shareholding, because of difficulties under the Listing Rules with a transfer of the holding in Mr Hurndell's name and because Mr Davis did not want the trouble of an increase in share capital.
53. The idea of a transfer of the 5 per cent holding was later revived and was the subject of a letter dated 16 November 2000 from Lovells. While Lovells' letter in July 2000 dealt with a transfer to Mr Hozier, their letter in November referred to a proposed transfer to David Hozier. Lovells stated:

"We spoke again earlier this week regarding Stanelco PLC and the need for it, as a listed public company, to maintain 25% of its shares in public hands. You explained that, currently, approximately 75% of the shares in the Company are held by the directors and related trusts, with the remaining 25% held by members of the public (including a holding of just under 5% by one individual).

Our understanding of the current proposal is that 5% of the shares will be transferred to your son from the large individual shareholder constantly forming part of the public by way of a gift in consideration of marriage. One of the directors has offered to resign in connection with the proposal (it is his related trust which holds 35% of the shares in the Company).

…

I cannot recall if you are a director of the company or any of its subsidiaries. If you are, it is likely under the Listing Rules that once the shares are in your son's hands, (even if held in trust pending his marriage), they would cease to be "shares in public hands" for the purposes of the Listing Rules since your son is "a person connected with a director". As a result, the UK Listing Authority could seek to suspend or cancel the listing of the company."

54. Again, according to Mr Hozier's evidence, Mr Davis' reaction to this advice was that Mr Hozier or his son could not have the shares. Mr Davis' evidence was that he never saw any of the correspondence with Lovells during 1990 and knew nothing about it. He denied the conversations which Mr Hozier says he had with Mr Davis.
55. There were difficulties in arranging the transfers of shares to the Heart of Darkness Foundation and solicitors for Mr White and his family were pressing Mr Hozier to sort them out. As well as his duties as secretary of Stanelco, Mr Hozier seems to have acted as the main point of contact with Abacus Trustees as trustees of the family trusts of Mr Davis and Mr White.
56. On 15 December 2000 Mr Hozier wrote as follows to Abacus:

"Howard White has asked me to write to you, regarding his Stanelco shares.

In December 1996, as part of the arrangements for Stanelco to move from the USM to a full listing, there was a requirement for Ian Davis and Howard White to dispose of 5% of their shares to a third party in order to keep below the 75% limit imposed by the Stock Exchange.

Howard agreed that 5% of his holding would be transferred to William Hurndell with a small number going to Denis Sharland. In addition, he arranged for the balance of his shares to be transferred to three companies jointly owned by Ian and himself.

The following transactions took place-

Majorgraph Ltd 75,687,000

Warrington Wireworks Ltd 131,277,413

Homebeam Ltd 26,113,709

William Hurndell 33,309,940

Denis Sharland 101,878

Total 266,489,940"

He ended the letter by saying:

"I am enclosing a copy of the Stanelco PLC accounts which reflect the above transactions."

57. So far as Mr Hurndell's holding was concerned, the accounts showed him to be the beneficial owner of the shares. Mr Hozier was reluctant to accept in evidence that he would have read the relevant parts of the 1999 accounts but I am satisfied that he had read them and knew what they contained.
58. Mr White denied that he had asked Mr Hozier to write the letter or that he had seen it – he was then still in the United States – but he was content that Mr Hozier had authority to write it on his behalf as part of his general function of dealing with the trust. I accept this evidence.
59. On 9 January 2001 Abacus sent executed stock transfer forms to Mr Hozier for each of the transfers listed in his letter. They were sent on to Stanelco's registrars who issued share certificates and sent them to Mr Hozier. He arranged for the transfers to the Heart of Darkness (now re-named Age of Reason) Foundation to be made and an appropriate certificate to be sent to Mr White's solicitors. He sent the certificate for Mr Sharland to him. He retained the certificate for Mr Hurndell's holding at the Barnet office. Mr Hozier's evidence was that this would be unusual if the shares were beneficially owned by Mr Hurndell and that he was instructed by Mr Davis to retain it.
60. The accounts and directors' report for the year to 31 October 2000 were approved by the board of Stanelco in April or early May 2001. Again, under substantial shareholdings, Mr Hurndell was listed as the beneficial owner of his shares. Mr Hozier again said that he had been sloppy in signing the directors' report without properly reading it. On 6 April 2001 he had written to the registrars asking for a schedule of all shareholders holding more than 3 per cent of the shares. On 12 April 2001 he had written to the auditors, with a number of detailed points on the draft accounts, including "Please see my amendments regarding Directors' interests". I am entirely satisfied that Mr Hozier knew exactly what was stated in the directors' report.
61. Mr Davis and Mr White fell out towards the end of 2000. Mr Hozier's evidence is that early in 2001 Mr White told him that if he wanted the shares held in Mr Hurndell's name he should act quickly because Mr Hurndell was close to Mr Davis who might otherwise move the shares to someone else. Mr Hozier told Mr White that the advice received was that neither he nor his son could take the shares and the matter was left there.
62. Mr Hozier's evidence is that in about mid-2001 he had another discussion about the shares with Mr White. Mr White told him that he would ring Mr Hurndell and tell him that the shares were at some stage to be transferred to Mr Hozier or a member of his family and that he would give 1.5 million shares to Mr Hurndell. Mr Hozier says that he was present when Mr White made this call from Stanelco's offices at Fareham. Mr White's evidence was that this conversation with Mr Hozier and his telephone call to Mr Hurndell occurred in 2000, rather than 2001. If it took place, it is more likely to have been in 2001, given the course of events in 2000 and 2001. I do not regard this particular difference of itself as significant.
63. Both Mr Hozier and Mr White gave evidence that Mr Hozier asked Mr White to put something in writing to confirm that Mr Hozier was to receive these shares and that Mr White refused. Mr White's refusal seems odd. Mr White said in evidence that he was not "big into documents or letters" – this appears to be borne out by the documents in the case – and that he told Mr Hozier that if he said he would do something, he would do it. Mr Hozier's evidence was that he was not surprised by Mr White's refusal, although he had a more cynical explanation: neither Mr Davis nor Mr White liked putting things in writing, because in effect it inhibited their freedom of action in the future.
64. As to Mr White's motive in letting Mr Hozier have these shares, Mr White disagreed with Mr Hozier's evidence that it was intended to secure Mr Hozier's support in Stanelco. If Mr Hozier's case is correct in its essentials, I am sure that Mr White had a commercial motive and the most obvious by 2001 is that, having fallen out with Mr Davis at the end of 2000 and decided to become more involved in Stanelco, he wished to have Mr Hozier on his side. Even Mr White stated that "I felt that it was certainly not in my interest to have a Barrie Hozier not having met his expectations."
65. A critical event is said by the defendants to have occurred in August 2001. Their case is that Mr Hozier thought that one way of securing his position as regards the shares would be to get Mr Hurndell to sign an acknowledgment that the shares were to be transferred to Mr Hozier or his family. David Hozier and Karen were staying in the family's flat near Nice in August 2001. At Mr Hozier's suggestion, David Hozier contacted Mr Hurndell and arranged to meet him at a restaurant in St Tropez. He and Karen Hozier took with them a hand-written document which Mr Hurndell signed. The document is headed St Tropez 13 August 2001 and reads as follows:

"I, William Hurndell, confirm that Howard White has authorised me to transfer approximately thirty-two million shares in Stanelco PLC to David Hozier at the appropriate time in the near future."

66. Mr Hurndell denies meeting David and Karen Hozier and denies that he signed this document. He accepts that it is his signature but says that in the 1980s and 1990s he signed some blank pieces of paper which were left at the Barnet office for use as formal business letters, the text being added as and when necessary. His case is that the document is in effect a forgery. Mr Hozier and David Hozier used one of the signed blank papers and wrote the text above the signature. It is alleged that this was done between 17 May 2005, the date of Mr Hurndell's letter before action, and 25 July 2005 when a copy of the note was sent by the defendants' solicitors to Mr Hurndell's solicitors. This is obviously a crucial issue, to which I shall return later. I should mention that although Mr Hurndell is dyslexic, as shown by his own and medical evidence, it was not suggested that he might have signed the note without understanding its contents. His case is that he never signed it at all.
67. Mr Hozier's evidence is that in a further conversation with Mr White later in the year, Mr White again warned him to do something about the shares held by Mr Hurndell. Mr Hozier again explained the difficulty that he was a director and Mr White suggested that he could set up an offshore vehicle to hold the shares. He introduced Mr Hozier to Globe Trust in Switzerland, which had set up the Heart of Darkness Foundation. In January 2002, Mr Hozier and his son had a meeting with Globe Trust which then arranged the incorporation of two companies in the British Virgin Islands with names chosen by David Hozier, Khaki Investment Limited (Khaki) and Finale Finance Limited (Finale). David Hozier was made a discretionary object of a trust established to own Khaki and Finale.
68. In February 2002 31,809,940 of the shares held by Mr Hurndell were transferred to and registered in the names of Khaki and Finale. Two stock transfer forms were used, each signed by Mr Hurndell. Mr Hurndell accepts that the signatures are his but denies that he ever agreed to transfer the shares. He was not able to give any account of how he came to sign the stock transfer forms, save to say that it might have been as security for a loan made to him by Mr Davis in late 2000. Mr Hozier's evidence is that Mr Hurndell signed the transfer forms when he was at the Barnet office in around October 2001. Mr Hozier took out the two forms, wrote Stanelco PLC in the box marked "Name of Undertaking" and "ordinary shares of 0.1p each fully paid" in the box marked Description of Security, leaving the rest of the forms blank.
69. The circumstances in which Mr Hurndell signed these stock transfer forms is another crucial issue to which I shall return.
70. The stock transfer forms, signed by Mr Hurndell, were submitted to Stanelco's registrars in mid-February 2002. They were dated 14 February 2002. The transfer to Finale is of 11,309,940 shares at a total consideration stated to be £395,847.90, and the transfer to Khaki is of 20,500,000 shares at total stated consideration of £717,500. The shareholding was split between Khaki and Finale to ensure that each holding was less than 3 per cent and therefore did not require to be disclosed in the accounts or to the Stock Exchange. Ad valorem stamp duty was paid on each transfer by reference to the stated consideration. No part of the stated purchase price was paid to Mr Hurndell or anyone else. The stated consideration was calculated by reference to the market price and Mr Hozier's explanation for inserting a consideration at all was that a figure was needed in order to calculate the stamp duty. It is not a convincing explanation.
71. On 15 February 2002 an announcement to the Stock Exchange was made by Stanelco as follows:

"The Company has today been notified that Mr William Hurndell has today sold 31,809,940 ordinary shares of 0.1p each (4.63% of the issued share capital), reducing his holding from 33,309,940 ordinary shares (4.85%) to 1,500,000 ordinary shares (0.22%)."

Mr Hozier was given as a contact for enquiries.

72. On any footing it was an entirely misleading announcement. Mr Hurndell had not "sold" any shares. Mr Hozier's evidence was that he informed Stanelco's PR agency, which was responsible for providing the information to the Stock Exchange, that the shares had been "transferred", not that they had been "sold". This was not challenged.
73. Stanelco's registrars issued a certificate for Mr Hurndell's remaining holding of 1.5 million shares which, unlike the previous certificate, was sent to Mr Hurndell in France. Mr Hurndell received it and his evidence is that he thought it was for a bonus issue and so added to his existing holding. It was also on 14 February 2002 that the accounts for the year to 31 October 2001 were approved. The directors' report, again signed by Mr Hozier, continued to show Mr Hurndell as the beneficial owner of 33,309,940 shares. Again Mr Hozier said in evidence that he was sloppy over this and had not given his attention to the statements in the report. Again I reject this evidence as untrue.
74. Mr Hozier's evidence was that the stock transfer forms were completed in favour of Khaki and Finale on the evening of 14 February, after the accounts were approved. Contrary to Mr Hozier's evidence I am satisfied that he deliberately waited until after the accounts were approved, so that there could be no possible question of referring to the new owner(s) of the shares in the accounts.
75. Mr Davis' evidence is that he became aware of the disposal of these shares in April 2002 and rang Mr Hurndell to ask him why he had sold them. Mr Hurndell said that he knew nothing about it. Mr Davis told him that he would look into it and asked Mr Hurndell to leave it with him. No complaint was made by or on behalf of Mr Hurndell with regard to the disposal of the shares until his solicitors' letters in April 2005. This delay is relied on by the defendants and I will return to it.
76. Mr Hozier's employment with Mr Davis' companies ceased in March 2002. On 18 March 2002, Mr Hozier left a letter alleging that he had been constructively dismissed by Mr Davis. Mr Hozier commenced proceedings in the Employment Tribunal in June 2002 to which a response was filed. The claim was settled in February 2003 on terms involving the transfer to Mr Hozier of 13.33 million shares in Stanelco indirectly from Mr Davis' trust. The breakdown in relations between the two men started during 2001. In his claim to the tribunal, Mr Hozier dated it to October 2001 as a result of the failure of one of the businesses to achieve forecasted results by that time. His evidence in the present case was that the failure to meet the forecasts was the cause of the breakdown, but suggested that relations were very strained by mid-2001. I do not regard this as a significant inconsistency. Equally I do not regard it as significant that Mr Davis did not use the transfer of Mr Hurndell's shares to Hozier family interests as a ground of defence in the tribunal proceedings. I accept that Mr Davis may well have had insufficient evidence to rely on it as a defence; in any event, as it formed no part of the reasons leading to his dismissal, it was probably not available as a response to a claim for unfair dismissal.
77. In August 2003 Mr Davis was interviewed in Israel by the authorities in connection with his involvement in an Israeli company called Middle East Tube Co Limited (Metco). Mr Davis or his interests had built up a large shareholding and the investigation centred on the approval of a management services contract in which he had an interest. One of the issues under investigation was whether some shares in Metco bought by Mr Hurndell or in his name were held by him as a nominee for Mr Davis. In August 2004 Mr Hurndell was questioned by the French and Israeli authorities in connection with this investigation.
78. Mr Hozier remained the secretary of Stanelco until July 2002 and a director until 22 April 2005. As a result of matters connected with Stanelco but irrelevant to this case, relations between Mr Hozier and Mr White became strained during 2004. In early 2005, following sales of shares by Khaki and Finance, the question was raised in Stanelco as to who was behind those companies. Mr White, of course, knew that they were connected with Mr Hozier and his family. He informed Ian Balchin, the chief executive, and other directors. Mr White was told by Mr Balchin that, when asked, Mr Hozier denied any knowledge of the companies and implied that they might be owned by Mr Davis or Mr White. Mr White requested the board to investigate the position and, as a means of flushing out Mr Hozier, it was agreed between Mr Balchin and Mr White that Mr White, Mr Hozier and perhaps other directors would be asked to send a letter in agreed form to Globe Trust. The letter asked for Globe Trust's cooperation in helping to clear up "unsubstantiated allegations…that one of its directors, past or present, in some way connected with" Khaki and Finale. The letter stated that Stanelco was taking the allegations seriously "since if they were accurate they could cause significant reputational damage to Stanelco." The letter authorised Globe Trust to disclose to Stanelco any information it had relating to the writer's involvement with Khaki or Finale, including any information relating to the setting up of the companies. Mr Hozier and Mr White sent letters in this form but, predictably perhaps, no reply came from Globe Trust.
79. This exercise was a charade. Mr Hozier knew for certain all the relevant facts and could simply have disclosed them to Stanelco.
80. By a note dated 6 March 2005, Mr Balchin "formally" requested Mr White's assistance as regards the allegations of links between a director and Khaki and Finale. This note was drafted by Mr Balchin and Mr White so that Mr White, assisted by Stanelco's solicitors, could provide a formal response for presentation to the board. The solicitors undertook an investigation, obtaining documentation relating to the shares once owned by Mr White's trust. Based on the documentation and on information provided by Mr White, a lengthy response was prepared. Dated 18 April 2005, it was signed or at least approved by Mr White and provided to Stanelco.
81. I will refer later to this memorandum for what it says about the events of 1996 and the transfer of shares to Mr Hurndell. So far as events concerning the shares from about 2000 it is substantially consistent with the oral evidence given by Mr Hozier and Mr White. It recorded that Mr White agreed in 2000/2001 to give the shares to Mr Hozier and that Mr White introduced Mr Hozier to Globe Trust in about January 2002 and assisted in the establishment of Khaki and Finale to which the shares were transferred. Paragraph 4.2 read as follows:

"Sometime later (around 2000/2001), BH's expectations had still not been met. Again feeling at the time that it was not in the interests of either the Company or shareholders to have an ongoing dispute between the executive management, I therefore agreed to give to BH the 5.00% interest in the Share allegedly promised by ID and to meet this from the Relevant Shares held by WH (held at that time for my account). The reasons for this are similar to those set out under sub-paragraphs 2.4 (a) and (b) above. It also helped to incentivise BH and to enable him to identify more closely with the interests of shareholders generally. As a result, the Relevant Shares were from that time under the beneficial ownership of BH or connected persons of BH. However, legal ownership of the Relevant Shares remained with Abacus pending registration of the transfer in 2001, as previously set out under paragraph 3.2"

82. This memorandum was provided to Mr Hozier for his comments. He replied in a memorandum dated 28 April 2005. As regards the intended transfer of the shares from Mr White's trust to Mr Hurndell, he wrote:

"Collins Stewart, the broker advised that, between them, the ID and HW family trusts could not hold more than 75% of the issued shares in Stanelco. ID agreed with HW that 5% of HW's family trust shares would be transferred to William Hurndell (WH). WH was a friend of both HW and ID and was also an employee of ID. I was not privy to why the 5% came entirely from HW. I can only speculate that it was part of an arrangement regarding ID's investment in HW's US operation.

…

HW says in para 2.2 that he did not know why he transferred shares to WH.

The transfers, which settled the overdrawn accounts benefited ID as well as HW, yet all the shares, came from HW. Why didn't ID not [sic] transfer some of his shares to settle his share of the overdrawn accounts?

Maybe it was all part of the same deal. I can only speculate."

There is no suggestion that Mr Hurndell was to hold the shares as nominee for Mr White. Mr Hozier's explanation was that by then he realised that he may have broken the Listing Rules and he was very nervous about it.

83. In response to paragraph 4.2 of Mr White's memorandum quoted above, Mr Hozier wrote "Not true". This denial is of course entirely inconsistent with his case and Mr Hozier accepted that it was very misleading. He denied that Mr White had introduced him to Globe Trust or assisted with the establishment of Khaki and Finale. This denial was untrue. He provided no information about those companies or their ownership of Stanelco shares, leaving the clear impression through silence that he knew nothing about them.
84. Mr Hurndell's solicitors sent letters dated 20 April 2005 in similar form to three officers of Stanelco. These represent the first occasion on which Mr Hurndell raised any questions as to the disposal of the shares in February 2002. They wrote that they had been asked "to investigate the alleged sales of his holding" of shares to Khaki and Finale, continuing:

"Our client had had no dealings at all with either of these alleged purchases, having dealt exclusively and at all times with Mr Barrie C Hozier."

They added that the alleged consideration for the sales had never been received by Mr Hurndell and that:

"These sales are now the subject of an investigation by the French Tax Authorities who have already interviewed our client and are seeking tax in respect of the alleged sales."

This last sentence was untrue. The French tax authorities have never investigated the sales nor interviewed him about them nor sought tax in respect of them. The letters ended by asking for full cooperation and by advising that Mr Hurndell intended "to pursue this matter through the Courts, if necessary". It was suggested for the defendants that these letters show only concern about French tax, not that shares belonging to Mr Hurndell had been sold without his authority. This is not, in my view, a fair reading of the letters.

85. Mr Hurndell's solicitors sent a letter before action dated 17 May 2005 to Mr Hozier. The letter asserted that Mr Hurndell was the owner of the shares, that Mr Hozier had completed the stock transfer forms for the transfer of the shares from Mr Hurndell to Khaki and Finale and that they had been told by Mr White that the shares had been transferred to vehicles under Mr Hozier's control. Mr Hozier's reply dated 24 May 2005 was brief. He stated that he had not completed the stock transfer forms but as secretary of Stanelco he had filed the forms with the registrars. This was misleading. Mr Hozier had completed most of each stock transfer form and, contrary to the impression deliberately conveyed by the letters, his involvement was not confined to filing the forms with the registrars. It is striking that he does not state the defence as later put forward but says only that he is "unable to help you further in this matter": "unwilling" would be the accurate word. He does, however, refer to a statement said to have been given by Mr Hurndell to the French police regarding the Stanelco shares, suggesting that they investigate the contents of the statement "and compare it with the information provided by Mr White and Mr Hurndell."
86. The explanation for this reference to a statement by Mr Hurndell lies in a meeting between Mr Hozier and Mr Davis. Following receipt of the letter before action, and because it stated that Mr Hurndell's solicitors were receiving information from Mr White, Mr Hozier contacted Mr Davis. They met at the South Mimms service station. Mr Davis told him about Mr Hurndell's interview in France the previous year in connection with Metco. According to Mr Hozier, Mr Davis told him that Mr Hurndell had :

"signed a statement admitting that he was holding his Metco shares and his Stanelco shares as nominee and Ian told me, really dropped him in it and he was angry about it…so I said to him, well, what can I do about it? He said, give William the shares back."

87. Mr Hurndell's statement to the French (or Israeli) police is not in evidence, so I do not know what is said in it. In view of what Mr Hozier said in his reply to the letter before action, it is likely and I find that Mr Davis did tell Mr Hozier that Mr Hurndell had made a statement in which he said that he held his Stanelco shares as a nominee.
88. On 26 May 2005 Mr Davis and others were the subject of an indictment in Israel. The indictment charges him with a total of 27 offences, including two of fraud. The remaining charges involve misleading items in reports or notifications, with the intention in two cases of misleading the investing public. The indictment alleges that Metco shares were registered in Mr Hurndell's name as a secret nominee for Mr Davis' interests.
89. Mr Davis sought Mr Hozier's assistance in relation to the criminal proceedings in Israel. Mr Hozier provided a one-page draft letter for Mr Davis. In evidence Mr Hozier claimed that it was a draft of what Mr Davis wanted him to say, not a draft of what he was prepared to say. This is an implausible suggestion which I reject. The draft stated that an opportunity arose to buy some shares in Metco at a time when Mr Davis was not allowed to purchase further shares for regulatory reasons and that Mr Davis agreed to finance the purchase of shares by Mr Hurndell. It stated that Mr Davis assured Mr Hozier that he had taken legal advice that there were no regulatory restrictions on him doing so. He continued:

"I can be certain that Ian Davis would not have done anything improper in Israel which would in any way have jeopardised [his] position in the UK. He was always very careful to comply with UK regulations."

On behalf of Mr Hurndell, some reliance was placed on this passage, particularly the statement that Mr Davis was always very careful to comply with UK regulations. In my judgment, no weight can be placed on it in the light of the view which I have reached as regards Mr Hozier's willingness to mislead.

90. At the time of the trial, the criminal proceedings in Israel against Mr Davis were still outstanding. I made clear that I was not prepared to make findings on issues relating to Metco, save to the extent necessary to deal with the execution by Mr Hurndell of the stock transfers forms later used to transfer shares to Khaki and Finale.
91. The central issue of fact is whether Mr White intended in December 1996, or possibly in the early months of 1997, to make a gift of the shares to Mr Hurndell or whether alternatively, Mr Hurndell was to hold the shares as a nominee. No steps were taken to transfer the shares to Mr Hurndell until February 2001, but it is not contended on behalf of Mr Hurndell that the transfer then did any more than give effect to Mr White's earlier intention to make a gift.
92. There are documents which on their face strongly support each party's case. The public statements, made principally in Stanelco's directors reports, support Mr Hurndell's case. The director's report for the year ended 31 October 1996, issued at the time of Stanelco's full listing in December 1996, stated that to enable Stanelco to comply with Stock Exchange requirements Mr White would before 31 December 1996 sell at least 5 per cent of his holding. While not consistent with either side's case, it is at least consistent with an outright disposal by Mr White.
93. Consistently with that statement, the listing document and the directors' reports for the years ended 31 October 1997 and 1998 showed a corresponding reduction in Mr White's beneficial interests, which were disclosable both as a director's interests in shares and as a substantial shareholder, i.e. as a person with an interest in 3 per cent or more of the issued shares. His interests were shown as further reduced as a result of the reorganisation of the ownership of the shares which had been held by his Jersey trust. They did not however disclose Mr Hurndell or anyone else as beneficially interested in the shares.
94. The position changed with the directors' reports for the year ended 31 October 1999 and for the next two years. Under substantial shareholdings, Mr Hurndell was now shown as having a beneficial interest in the shares.
95. Mr White's evidence, which I have accepted, was that he did not see, or at any rate did not read, the directors reports' for any of the years 1996 to 1999. Mr White accepts that he did read the directors' reports for the years ended 31 October 2000 and 2001. He saw that Mr Hurndell was disclosed as a substantial shareholder, with a beneficial interest in the shares. He approved the accounts, or at least did not protest. His evidence was that he was told by Mr Hozier, who had responsibility for these matters, that it was in order for these statements to be made.
96. The directors' reports for all these years were signed by Mr Hozier. I have already rejected his evidence that he was sloppy in relation to these reports and found that he knew what they contained.
97. Other documents which support Mr Hurndell's case are those generated when Mr Hozier took advice from Lovells in 2000. While it is true that in a letter dated 14 February 2000 to Lovells, Mr Hozier wrote that Mr White "holds 40% of Stanelco PLC", he wrote in a letter three days later that 5 per cent of the shares held by Mr White's Jersey trust "were transferred to a third party when Stanelco went to a full listing." Lovells were clearly anxious to have a clear picture, so in a letter dated 18 February 2000 Mr Hozier stated that he was "setting out below the full history of Howard White's shares in Stanelco PLC". In giving "the full history" he stated that on 18 December 1996 the trustee had "transferred the following shares from the Trust" which included the transfer of the shares to Mr Hurndell as well as of shares to the three companies and to Mr Sharland. Nothing is said about beneficial ownership following the transfer, but there is certainly no indication that Mr Hurndell was to hold the shares as nominee for Mr White or anyone else. The information about the full history of Mr White's shareholding was required for the preparation of a paper for submission to the Takeover Panel. Lovells told Mr Hozier in their covering letter for the draft that "it is vitally important that the factual details set out in [the paper] are strictly correct and accurate". The paper was not, it is fair to say, directed at the shares and it simply stated that the shares by the trust "were subsequently transferred to various parties."
98. Other letters from Lovells evidence Mr Hozier's instructions to them. For example, their letter dated 19 November 2000, quoted above, refers to Mr Hozier's explanation that 75 per cent of Stanelco's shares were held by the directors and related trusts and the remaining 25 per cent were held by members of the public. Mr Hurndell, although not named, is referred to as "the large individual shareholder constantly forming part of the public". If the shares in his name were transferred to Mr Hozier's son, they would cease to be shares in public hands for the purposes of the Listing Rules. Clearly, Lovells had no inkling of any suggestion that the shares held in Mr Hurndell's name were beneficially owned by Mr White, a director. If they had known, the letter would have read quite differently.
99. Mr Hozier's explanations for not telling Lovells that Mr Hurndell was a nominee for Mr White are not convincing. In cross-examination, when asked why he did not include it in "the full history of Howard White's shares in Stanelco PLC" in his letter dated 18 February 2000, he said that it was because he understood at the time that it was in order for Mr Hurndell to be a nominee. If that was his understanding, there was no reason not to tell Lovells. Without that information, Mr Hozier had not provided the full history. In re-examination Mr Hozier said that in the course of his correspondence with Lovells in 2000 it did not even cross his mind to tell them that Mr Hurndell was a nominee for Mr White. I am satisfied this evidence is untrue.
100. Further documents providing some, but by no means total, support for Mr Hurndell's case are the memoranda prepared for the board of Stanelco by Mr White and Mr Hozier in April 2005. Mr White's memorandum proceeds on the basis that from the appointment of the shares to Mr White in April 1997 he was their beneficial owner, so that the reference in the 1999 accounts to Mr Hurndell as the beneficial owner "may have been incorrect". Paragraph 2 of the memorandum sets out in some detail the events of 1996. While it does not unequivocally support Mr Hurndell's case (it does not state that the shares were given to Mr Hurndell and several times uses the word "transfer" which may of course refer only to legal title) detailed reasons are set out in paragraph 2.4 as to why Mr White did not object to the transfer of shares to Mr Hurndell. Mr White insisted in his evidence that he linked this paragraph with the later paragraph which stated that Mr Hurndell was his nominee. I have considerable difficulty in reading paragraph 2 as consistent with an intention in 1996/97 that Mr Hurndell should be a nominee. Although it is perhaps possible to read paragraph 2.4 as the reasons why Mr White did not object to all the nominee shares coming from his trust alone, they much more naturally read as reasons why he did not object to an outright disposal.
101. I have already referred to the memorandum prepared by Mr Hozier in response to Mr White's memorandum. There is no suggestion in Mr Hozier's account of the events of 1996 that Mr Hurndell was a nominee and his denial of paragraph 4.2 of Mr White's memorandum is totally at odds with his case as presented to the court.
102. Equally, there are documents which on their face strongly support the defendants' case. These are the handwritten note, which bears the genuine signature of Mr Hurndell and is said by the defendants to have been signed by him in St Tropez in August 2001, and the stock transfer forms signed by Mr Hurndell which were used to transfer all except 1.5 million of the shares in his name to Khaki and Finale.
103. In resolving the central factual issue, the oral evidence is therefore critical, both on the documents themselves and on events between 1996 and 2005. A final conclusion can be reached only after a consideration of all this evidence. Conclusions on one issue if regard is had only to the evidence directly in point to that issue may need revision in the light of evidence on other issues. As I have already explained, simple recourse to the credibility of any particular witness is not generally an option in this case, having regard to the flawed quality of the evidence of all four principal witnesses.
104. Apart from the listing document and the directors' report approved on 18 December 1996, there are no relevant contemporaneous documents concerning the critical events of December 1996 and early 1997. There is only the evidence of the principal witnesses. Before considering and reaching conclusions on that evidence, I will consider the other principal issues which arise. These are: first, the note allegedly signed by Mr Hurndell in August 2001; secondly, the stock transfer forms used to transfer shares from Mr Hurndell to Khaki and Finale; thirdly, the delay by Mr Hurndell in making a claim; fourthly, the events of 2000/2001.
105. Dealing first with the note alleged to have been signed by Mr Hurndell in August 2001, there is no reason to doubt that David Hozier and Karen Hozier were on holiday in August 2001, staying at the family's flat near Nice. It is also not in dispute that Mr Hurndell was at the same time in St Tropez.
106. Mr Hurndell denies that he either met or arranged to meet David and Karen Hozier in August 2001. Mr Hurndell's own engagement diary, which he kept at home in St Tropez, contains the entry in green ink "David Hezzen [or, possibly, Hezzer] 8 pm Café de Paris," for Thursday 16 August.(It was accepted that this was a reference to David Hozier). Mr Hurndell said that only he wrote in this diary and that this entry, like all the others on the page for that week, was in his handwriting. When asked in examination-in-chief why he made this entry, he said:

"I do have many phone calls, and it is a possibility that he, David Hozier, may have telephoned me and said, let's meet for a coffee, just to find out where parties are, or something like that. But I didn't keep, I am sure, I didn't keep that appointment".

107. The Café de Paris is a café and snack bar on the waterfront at St Tropez. There is a further entry written mainly on the space for 16 August in blue ink, "Café 0494974469". This number is the telephone number for a restaurant called Le Café in the Place des Lices, a well known square in St Tropez.
108. Mr Hurndell gave a clear account of his activities on Monday, Tuesday and Wednesday 13 – 15 August 2001 by reference to the entries in his diary. He was certain that he had not in fact met the Hoziers, whatever arrangements might have been made, because, a friend, Ian McKenzie, who recently had undergone an operation, was taken very badly ill on the evening of Wednesday, 15 August and taken by ambulance to a nearby clinic.
109. Mrs McKenzie called Mr Hurndell that evening and he drove her to the clinic. He stayed with her at the clinic while Mr McKenzie underwent an emergency operation and drove her back home at 2.30 in the morning on 16 August. At about 11 am on 16 August he took Mrs McKenzie to the clinic and stayed with her there until about 2.30 p.m., which is when visitors have to leave. He took her back to her house and probably had lunch with her. When asked about the evening of 16 August, he replied:

"In the evening, I probably stayed with her I would think. She was in a terrible state and indeed the next day, I went and collected her at 11 o'clock again to take her to the clinic".

He has an entry for 11 a.m. on Friday 17^th August to take Mrs McKenzie to the clinic.

110. In an affidavit sworn on 27 March 2007 Mr Hurndell stated that he had reviewed his diary and, as regards the entry for David Hozier on 16 August 2001, he stated that he did not remember seeing him. He made no mention of Mr and Mrs McKenzie or that he might have spent the evening of 16 August with her. In his oral evidence his explanation for this omission was that it had all been a shocking experience and "I think I put those things out of my head, bad things".
111. When asked about the entry for David Hozier for 16 August in cross examination, there were the following exchanges:

"A. There was no meeting between David Hozier and me on that day. And I possibly think that I did obviously, must have received a phone call amongst all my, my other phone calls are not written down here, right, and I must have very quickly put it in that he was going to be at the Café de Paris at 8 o'clock. It doesn't mean to say that I am going to be there.

Q. Why else would you write that down?

A. Hmm.

Q. Why should you bother to write that down?

A. The fact that I know that if I was passing, I might go in and say hello. You know, its, its-

Q. You thought he was holding court there and people could come along and say hello?

A. I don't know what he was doing there.

MR JUSTICE DAVID RICHARDS: Mr Hurndell, are you sort of speculating now?

A. Yes.

Q. Or are you actually remembering why you wrote this in your diary?

A. Um, I wrote this in my diary because he is going to be there, I think.

Q. Is that – you remember that is why you wrote it in your diary?

A. I would imagine that is why, yes.

Q. But you don't remember?

A. I-

Q. Do you remember that that is why you wrote it in your diary?

A. Yes, I have to say, yes.

Q. You don't have to say yes. Do you actually remember writing it in your diary because he was going to be there at 8 o'clock and you might pop in to see him?

A. No.

Q. Or did you write it in your diary because you arranged to meet him there? Do you remember which of it it is?

A. I wouldn't have remembered – I wouldn't have written in to meet him there, I don't think."

112. A bill and credit card receipt from Le Café restaurant were put in evidence by Mr Hurndell. They establish that David Hozier paid for dinner for three people at Le Café on the evening of 16 August. David and Karen Hozier gave unequivocal evidence that they had dinner with Mr Hurndell and that it was at the restaurant that he signed the handwritten note. It was suggested for Mr Hurndell that the third diner might well have been Mr Hozier, but he was able to establish by reference to his diary that he was in England at the time.
113. Mr Hurndell was very definite in his evidence that he did not have dinner with David and Karen Hozier, for example:

"A. I wasn't there.

Q. You weren't there?

A. No, certainly not."

114. The defendants' case originally was that David and Karen Hozier met Mr Hurndell for lunch at Le Café on (or just before) 16 August 2001. This information was given in February 2006 in response to a request for further information in respect of a number of matters in the defence. The same account was given by David Hozier in a witness statement made in April 2007. He was extensively cross-examined on the change from lunch to dinner. His explanation, given in chief, was:

"When I was first recalling the meeting, I remembered it was lunch and I discussed it with my father, and he also recalled that I met Mr Hurndell for lunch. I believe that was because the original intention was to meet him for lunch and that was fixed in my head. Subsequently it has been shown through my Barclaycard bill et cetera that it was in fact the evening, and I have no reason to doubt that that is correct. "

115. Mr Hurndell's case was that the evidence of both David and Karen Hozier was deliberately untruthful. They never met Mr Hurndell in August 2001, whether for lunch or dinner, they never produced a note for him to sign and he did not sign any note. If his evidence is correct, I agree that there is no room for honest mistakes in recollection on the part of David and Karen Hozier.
116. It was submitted that they both had a good motive for lying because their evidence, if accepted, would enable David Hozier to keep over £3 million. As I have pointed out, Mr Hurndell can equally be said to have the same motive, because he stands to gain over £3 million.
117. Much was made of the inconsistency as to whether the alleged meeting was for lunch or dinner. Other inconsistencies were noted: for example, whether any wine was drunk with the meal, and David Hozier saying in his witness statement that he and Karen did not want to wait in St Tropez for the rest of the afternoon and the evening before a night club opened. It was submitted also that it was significant that David Hozier had Karen's input when drafting his statement and she therefore shared in his errors. However, both David and Karen Hozier gave evidence that at some point (they differed to a limited extent on timing) Karen Hozier had said that she thought the meeting had been over dinner, but David Hozier had disagreed with her.
118. I do not regard any of these inconsistencies as significant in determining whether David and Karen Hozier were telling the truth in their evidence. I do not find it surprising that a mistake over whether they met for lunch or dinner would be made in recollecting a day four years before proceedings were commenced, especially as it would still have been light when they met for dinner. Nor do I find the other inconsistencies telling. The substance of the oral and written evidence was largely the same.
119. I am in no doubt that Mr Hurndell had dinner with David and Karen Hozier on the evening of 16 August. Even without their evidence, the combination of the bill, the credit card receipt and Mr Hurndell's diary entries establish it. Mr Hurndell's own evidence was not satisfactory. His evidence that he probably spent the evening with Mrs Mckenzie was not only late, but was plainly based on some sort of inference rather than any recollection.
120. My assessment is that Mr Hurndell was desperate to avoid admitting that he met David and Karen Hozier on 16 August, because it greatly strengthens their case that he signed the note on that day. It would be one thing if his case had all along been that he met them, but he did not sign the note. But his steadfast denial of the meeting is itself telling against his case that he did not sign the note.
121. The evidence given for the defendants as to the note signed by Mr Hurndell is that it was drafted by David Hozier in the flat near Nice in August 2001. Mr Hozier thought it would be a good idea to obtain a written acknowledgment from Mr Hurndell. He rang David with the idea and suggested that David and Karen should meet Mr Hurndell for a meal. He said he would ring Mr Hurndell but leave David to make the exact arrangements. David Hozier said that he already knew the position as regards the shares held by Mr Hurndell: that they were held for Mr White and that Mr White wanted him to have the shares except for 1.5 million which he would leave with Mr Hurndell as a thank you. He was therefore able to draft the note, and he put in 32 million shares because he knew that was about right, but he did not know the exact number. The note is dated 13 August 2001 because he drafted it on that day. When he and Karen met Mr Hurndell on 16 August 2001, Karen had the note in her handbag. After dinner was finished, David Hozier started to talk about the business in which his father worked with Mr Davies. He brought up the telephone conversation which Mr Hurndell had recently had with Mr White concerning the shares. Mr Hurndell confirmed that he had spoken to Mr White. David Hozier asked Karen for the note which he passed to Mr Hurndell. Mr Hurndell read it. David Hozier asked him if he would be happy to sign something similar to the note and Mr Hurndell said that he was happy to sign the note as it was, which he then did. There was discussion that Mr Hurndell would retain 1.5 million shares and David Hozier's impression was that he already knew. In her evidence, Karen Hozier confirmed that she had a note in her handbag, that she and David Hozier met Mr Hurndell for dinner at Le Café and that he read and signed the note. This was the first time she had met Mr Hurndell.
122. While Mr Hurndell accepts that the signature on the note is his, he denies that it had any of the present writing on it when he signed it. His case is that the note in its present form was concocted between 20 April 2005 when his solicitors' letter before action was sent and 25 July 2005 when the defendants' solicitors sent a copy of the note to his solicitors. The explanation for his signature is, he says, that during the time that he was dealing with various matters, including the Ile du Levant, on behalf of Mr White and Mr Davies, he signed a number of blank pieces of paper, which were left at the Barnet office. If a formal letter needed to be sent by him, he could request the Barnet office to type it on one of these signed blanks. His evidence was that on three occasions he left six to twelve signed blanks at the Barnet office: in about 1985, in 1986–1987 and in about 1991.
123. A forensic examination of the paper on which the signed note is written, which is not challenged by the defendants, establishes that it was made before 1994. It is from the Conqueror range of paper made by Wiggins Teape at a number of different mills in the UK. A specimen piece of Winemanor–headed paper was also pre-1994 Conqueror paper, which appeared to be made at the same mill but was probably from a different batch.
124. David Hozier's evidence was that in the Nice flat there were several sheets of paper and he used one for the note in August 1991. He confirmed his father's evidence that when they bought the flat in January 2000 it was full of the previous owners' personal effects. An English couple had owned it. Mr Hozier had been told that the wife did not like the flat but the husband spent a lot of time there until about 1996 when he had a stroke in England and never returned to the flat. By "full of his personal effects" Mr Hozier meant:

"Everything, wardrobe full of clothes, cupboard full of drink…Food, stationery, scissors, cutlery, as if someone had just done it."

They threw out 36 rubbish bins of clothes, food and so on.

125. If accepted, this evidence provides a plausible explanation as to why the note was written on pre-1994 Conqueror paper. Only Mr Davis gave evidence to support Mr Hurndell's account that he had signed blank pieces of paper and left them at the Barnet office but he was unable to recall any occasion on which Mr Hurndell requested the use of a signed blank paper or any occasion on which one was used, nor was he able to say where the signed blanks were kept. No signed blank has been found, although Mr Davis searched for one for the purposes of these proceedings. There is no letter, or copy of a letter, in evidence that was prepared in England over his signature, nor is there any draft of such a letter, notwithstanding the disclosure by Mr Hurndell of several boxes of documents relating to the Ile du Levant. On the other hand, there is a translation of a letter in French sent by Mr Hurndell to the French Ministry of Defence: there is no suggestion that letters in French were sent from the Barnet office on paper pre-signed by Mr Hurndell. As Mr Hurndell tried to explain the use made of the signed blank pieces of paper, his evidence became increasingly fanciful: see transcript day 2 pp 158-167.
126. Moreover when a letter signed by Mr Hurndell needed to be sent in April 1996, a pre-signed blank was not used. If there ever were pre-signed blanks, it appears very unlikely that any were left in April 1996, and Mr Hurndell did not suggest that he had signed any blank pieces of paper after that date.
127. The allegation that Mr Hozier concocted the document arises partly because of his delay in sending it to Mr Hurndell's solicitors once they had raised his claim in their letter before action dated 17 May 2005. He did not mention it in his short reply dated 24 May 2005 which I have already said was untrue or misleading in important respects. He did, however, refer to the statement which, as he understood from Mr Davis, Mr Hurndell had given to the French police and contained an admission that Mr Hurndell held the shares as a nominee. It is certainly striking that Mr Hozier did not refer to the August note, but it is consistent with Mr Hozier saying as little as possible in his reply. The next communication to him was service of the claim form some time after 13 June 2005 and a copy of the note was sent five or so weeks later on 25 July 2005. Concoction of the note is no more than a possible inference from this sequence.
128. In my judgment the evidence establishes that Mr Hurndell did have dinner with David and Karen Hozier on 16 August 2001 and did sign the handwritten note. Mr Hurndell was entirely unconvincing in his evidence that he did not have dinner with them. This is itself significant, as showing a need to distance himself from the note. His case that he did not sign it was dependent on establishing that he had signed blanks at the Barnet office and that Mr Hozier had one available in 2005. Again his evidence was unconvincing and, in any event, it is highly unlikely that if there had ever been signed blanks, any were still available in 2005. It is not clear to me how Mr Hozier would have had access to a surviving signed blank in May-July 2005, long after he ceased to work for Mr Davis at Barnet. It would have been a remarkable coincidence or a piece of extraordinary prescience if he had taken one when he removed the Stanelco files from the Barnet office in March 2003.
129. As against the evidence of Mr Hurndell, there is the evidence of David and Karen Hozier. The principal challenge to David Hozier's evidence related to the change in his case from meeting for lunch to meeting for dinner, and also to other inconsistencies in his account of the day. I have addressed these points and concluded that they do not justify a rejection of his evidence. Karen Hozier gave evidence which carried conviction, although her strong personal dislike of Mr Hurndell revealed by some answers at the end of her evidence means that I have approached her evidence with some caution. Nevertheless, the evidence of David and Karen Hozier was convincing, while Mr Hurndell's evidence was the opposite.
130. I turn to the stock transfer forms signed by Mr Hurndell. I have referred above to the evidence of Mr Hurndell and Mr Hozier on this issue. Mr Hozier's evidence is that Mr Hurndell visited the Barnet office in about October 2001 to see Mr Davis. While he was there, Mr Hozier referred to the alleged conversation with Mr White about the shares earlier in the year and asked him to sign the transfer forms, having first filled in the name of the company and the class of shares. Mr Hurndell willingly signed and did not ask any questions.
131. This was not the account originally given in Mr Hozier's defence. His pleaded case originally did not refer to Mr Hurndell signing transfer forms in October 2001 but stated that Mr Hurndell had already executed the necessary stock transfer forms in or about December 1996 and that at the end of February 2002 Mr Hozier arranged for them to be stamped. His amended defence signed by him in August 2006 pleaded that the relevant stock transfer forms were signed by Mr Hurndell in October 2001 and that he never again saw the blank form or forms which he gave to Mr Davis in 1996 for Mr Hurndell to sign. He had already stated in a witness statement signed on 1 June 2006 that the relevant stock transfer forms were signed by Mr Hurndell in London in late 2001.
132. Mr Hozier's explanation for this obvious inconsistency is that his solicitors at the time of the first defence had misunderstood his instructions or had been confused between the two lots of stock transfer forms. He told me that he had read the defence before signing that it was true but did not pick up on this point although he accepted that he should have done.
133. Mr Hurndell had no recollection of signing the stock transfer forms in the circumstances suggested by Mr Hozier. He thought that if anyone was going to ask him to sign transfer forms it would be Mr White or Mr Davies, not Mr Hozier. He was, however, unable to give any real explanation as to how he came to sign the transfer forms. In his points of claim, in their original and amended forms, he accepted that the signatures were genuine but pleaded that he had no knowledge or recollection of ever having signed any blank stock transfer forms in respect of Stanelco shares. Similarly, in his reply, in its original, amended and re-amended (May 2007) forms, he admitted that the stock transfer forms bear his signature but pleaded that he had no recollection of executing them and that, if insofar as he did, they were to be held to his order.
134. In cross-examination he suggested that they might have been signed towards the end of 2000 in connection with a loan from Mr Davis for the purchase of shares in Metco. He readily accepted that he had no specific recollection of this. It was something he had thought about over the weekend during his evidence. It was, he thought, the only time he could have signed them. He plainly had little recollection of this loan or the documents which he had signed, and his evidence was confused: see transcript day 3 pp 135-140 and 142-159.
135. Mr Davis gave evidence that he suggested a purchase of shares in Metco to Mr Hurndell and provided half the requisite finance, the rest being provided by an Israeli bank. As to security for the loan, Mr Davis said:

"I understood that Mr Hozier who made the preparations for that loan would have taken some form of security on whatever assets he thought were appropriate."

His evidence in cross examination showed that he had not understood that there was any charge as such on the Stanelco shares, although in his witness statement he had said that security had been taken over the shares.

136. It was not put to Mr Hozier in cross-examination that he had arranged for Mr Hurndell to sign the stock transfer forms as part of the arrangements for the loan to purchase shares in Metco.
137. Mr Hozier's account that the stock transfer forms were signed by Mr Hurndell in October 2001 is the only plausible explanation before the court.
138. Thirdly, it is a striking feature of the case, on which the defendants justifiably lay emphasis, that although Mr Hurndell knew by April 2002 that all except 1.5 million of his shares had been "sold", he made no enquires nor intimated any claim until the letters from his solicitors to officers of Stanelco in April 2005.
139. Mr Hurndell's evidence in chief was that Mr Davis rang him in early 2002 to ask him why he had sold the shares. Mr Hurndell told him that he had done nothing with them. Mr Davis said that he would look into it but asked Mr Hurndell to do nothing for the moment. Later Mr Davis rang to request that Mr Hurndell should do nothing until he had got himself "out of a position" with his business partners. He said he would handle it and Mr Hurndell trusted him. Mr Hurndell believed the business partners in question to be Mr White and Mr Hozier.
140. In August 2004 Mr Hurndell was interviewed by French and Israeli police or other investigators concerning the shares held by him in Metco. His evidence was that because the investigators had searched for papers and might have seen papers relating to Stanelco, he decided he would do something about the Stanelco shares. He says that Mr Davis advised him to see solicitors. I have heard no evidence as to why even then it took until April 2005 for any steps to be taken by solicitors acting for him. What did immediately happen is that in mid-September 2004 Mr Hurndell sold 750,000 shares from his registered holding of 1.5 million shares for £41,250.
141. Mr Davis gave a similar account, but added that he suspected from a remark made to him by Mr White in the summer of 2002 that Mr Hozier had the shares. So not only did Mr Davis know that the shares had gone from Mr Hurndell but he also had some idea where they had gone to.
142. I found the attempts of Mr Hurndell and Mr Davis to explain the delay unconvincing. Mr Davis relied on a variety of matters. These included Mr Hozier's claim for unfair dismissal and its settlement, the sale of his trust's shares in Stanelco which was achieved in 2003, his ventures in the gaming industry for which there was a tight regulatory environment, and his detention and questioning by the authorities in Israel in August 2003. If Mr Hurndell was the beneficial owner of the shares which had been registered in his name, I fail to see that any of the matters relied on by Mr Davis, individually or collectively, provide any plausible explanation for persuading Mr Hurndell not to seek redress. It was put to Mr Davis that the true motive for Mr Hurndell's present claim is that, if it can be established that Mr Hurndell was the beneficial owner of the Stanelco shares, this may help Mr Davis in the criminal proceedings in Israel. It would help to establish that Mr Hurndell simply borrowed money from Mr Davis or his companies to buy shares in Metco and that he is the beneficial owner of the Metco shares in his name, not a nominee as the indictment in Israel alleges. That allegation would require an investigation into the Metco affair. Whatever the truth of the allegation, I do not believe that the real explanation for the commencement of proceedings as late as June 2005 has been given in evidence. The delay is not of itself decisive against Mr Hurndell but it is a significant factor against his case.
143. Fourthly, the important events of 2000/2001 are to a significant extent a matter of the oral evidence of Mr Hozier, Mr Davis, Mr White and Mr Hurndell. The documents demonstrate a number of contradictory matters. First, Mr Hozier was active in effecting the transfer which it had been intended to make in December 1996. These included the transfer to Mr Hurndell, which is a point supporting Mr Hurndell's case. Secondly, and likewise supporting Mr Hurndell's case, Lovells were never told that Mr Hurndell was a nominee for Mr White. Thirdly, Mr Hozier was open with Stanelco's auditors and Lovells in discussing a proposal that he or David Hozier should receive the shares. This tends to support the defendants. It is highly unlikely that Mr Hozier would have discussed the proposal with Lovells or with Stanelco's auditors of it was to be kept secret from Mr Davis, particularly in view of Mr Davis' close links with Lovells. It is likely that Mr Davis knew of this proposal and that Mr Hozier's account of events in 2000 is to be preferred to that of Mr Davis. The retention by Mr Hozier of the certificate issued in February 2001 for the shares in Mr Hurndell's name, and the despatch to him a year later of the certificate for 1.5 million shares, is a point in favour of the defendant's case. I do not consider that it is possible to come to conclusions on the events of 2000/2001 except in the light of findings on the other issues.
144. Two further matters may conveniently be mentioned here. First, in 1992 Mr Hurndell was asked by Mr Davis and agreed to allow his bank account to be used to route monies needed to repay directors' loans owed by Mr Davis and Mr White to three of their companies. The purpose was to give the impression of a loan from an independent third party, Mr Hurndell, to Mr Davis and Mr White. Mr Davis was therefore prepared to ask Mr Hurndell to act as a nominee and Mr Hurndell was prepared to do so.
145. Secondly, Mr Hurndell called as a witness in support of his case Robert Michael Withers. Mr Withers, a stockbroker first in Canada and then in the Bahamas for many years, has for the last 41 years lived for part of the year in the South of France, where he met Mr Hurndell about 15 years ago. They have never had business dealings but became friends. He said in chief that Mr Hurndell had told him in France that he had an interest in Stanelco which he felt would be valuable one day. When asked when that was, he replied without qualification "12 years ago", i.e. in 1995. In cross-examination, he said that this was a guess and he could not rely on any particular matter to fix the period as 12 years. He also said that in 1999 he had seen a copy of Stanelco's annual report and accounts showing Mr Hurndell as a shareholders and that the accounts were then two or three years old. In fact, the first accounts showing Mr Hurndell as a shareholder did not appear until April 2000. I did not find Mr Withers to be a convincing witness and, in my judgment, I should disregard his evidence as unreliable.
146. I return to the events of 1996 and early 1997. There are a number of contemporaneous matters which provide some objective support for Mr Hurndell's case. First, it was a requirement for a full listing that at least 25 per cent of Stanelco's shares should be in public hands and therefore the combined holdings of the trusts of Mr Davis and Mr White had to be reduced by 5 per cent. This was known to Mr Davis, Mr White and Mr Hozier. Secondly, the directors' report approved in December 1996 stated that Mr White's trust had sold a holding of 5 per cent and the listing document stated that his interest was in 35 per cent of Stanelco's share capital. These circumstances and statements do not directly support a gift to Mr Hurndell, and in fact the directors' report is inconsistent with it. But they support an outright disposal by Mr White's trust. Thirdly, the intended transfer to Mr Sharland was to be by way of gift, but this is a point of minor significance in view of the small number of shares involved.
147. Some other factors tend to support the defendants' case. First, there was, as I have found, no reason arising from Mr Hurndell's activities with regard to the Ile du Levant or John White Footwear for Mr White and Mr Davis to make a gift to Mr Hurndell and I have found that they did not consider that there was any good reason for doing so. Secondly, it is surprising that if the shares were a gift to him, they were not provided equally by the two trusts. Although the market price was less than 1p in December 1996, and 33 million shares could only be sold at a discount, they were not valueless and the evidence suggests that they could have been sold for significantly more than a nominal sum. Mr Davis suggested two reasons. First, as he was resident for tax purposes in the UK, he was advised by the trustee through Mr Hozier that it would be disadvantageous from a tax point of view if any of the shares came from his trust. This would not apply to Mr White's trust because he was a non-resident but, as Mr White understood the position, it was only if the shares came back on-shore that a problem might arise and Mr Hurndell was not resident in the UK. I was not provided with any detail of the alleged tax problem and I do not accept Mr Davis' evidence on this. His second, and quite different, explanation was that following the separation of their business interests there was a running account between Mr Davis and Mr White and that Mr White was, as it were, overdrawn to the extent of £300-400,000. Mr Hozier and Mr White gave evidence that it was Mr Davis who was overdrawn, to the tune of about £200,000. I have no further evidence, documentary or otherwise, on this. I am not satisfied that Mr Davis was in effect owed money by Mr White.
148. The witnesses who gave evidence as to the intended disposal by Mr White's trust were Mr White, Mr Hozier, Mr Davis and Mr Hurndell. Mr Hurndell's evidence was unconvincing. He had said in an affidavit sworn on 27 March 2007 that he could not remember how he was informed about the gift to him of Stanelco shares. In his oral evidence, however, he said that he received "three jolly phone calls in one week saying that I had been given these shares for my work", from Mr White, Mr Davis and Mr Hozier. He said that he thought this was in the latter part of 1996. He also said that some weeks later he worked out that the 33 million odd shares would represent 5 per cent of Stanelco. His explanation as to how he did that completely fell apart, to be replaced by him saying that he must have been told by the London office. He later said that he got the 5 per cent from the accounts, but he was not shown as a shareholder in the accounts until the 1999 accounts appeared in April 2000 and it is highly unlikely that he would be sent the annual accounts until he was registered as a shareholder which was not until February 2001. My impression was that Mr Hurndell was making this evidence up as he went along and I regard his evidence on these events in 1996/1997 as entirely unreliable. There was no substantial evidence that Mr Hurndell was told that he was to receive the shares. Mr Hozier and Mr White denied doing so and Mr Davis was unable to recall how Mr Hurndell was told, although he said it may have been in one of the frequent calls he made to Mr Hurndell.
149. Mr Davis' firm evidence was that the shares were to be transferred to Mr Hurndell as a gift. It could not have been a transfer to him as a nominee because it would not have complied with the regulatory requirements. His recollection of events was generally vague. For him, as he explained, the listing was the important thing:

"All the other events surrounding it really were quite peripheral; they were not central to anybody's thoughts, I think."

150. Mr Hozier was closely involved in the arrangements for the listing. His evidence is that he was told by the advisors that the combined holdings of the trusts had to be reduced to 75 per cent. He reported this to Mr Davis who, he says, told him that 5 per cent could be put in Mr Hurndell's name as a nominee. He did not discuss these arrangements with Mr White.
151. Mr White's evidence is that he was told in December 1996 by Mr Davis about the need to reduce the combined holdings to 75 per cent and he assumed that there would be sales of equal numbers of shares from each trust. In early 1997 he says that he was told by Mr Davis that all the shares had come from his, Mr White's, trust but that Mr Hurndell held them as nominee. Mr Davis, he said, told him and he accepted that this worked to deal with the Stock Exchange requirement. A point which is fairly made against this last piece of evidence is that it is at least surprising that Mr White should think that it works if Mr Hurndell holds the shares as his nominee but it does not work if they are held by his Jersey trust. However, I am prepared to accept that Mr White was not giving much thought or attention to matters of this sort and that he would not be concerned to query this with Mr Davis, if that is what Mr Davis told him. Of more significance when assessing Mr White's evidence is what he said in his memorandum dated 18 April 2005. As I have already indicated, his account of the events of 1996 is more easily squared with an outright disposal to Mr Hurndell than with a transfer to him as nominee.
152. In reaching a conclusion on the issue of whether Mr Hurndell was to be a donee or a nominee of the shares, my conclusions on the August 2001 note and the stock transfer forms signed by Mr Hurndell are of central importance. I have reviewed my findings on those issues in the light of all the evidence in the case and in particular the highly unsatisfactory nature of Mr Hozier's evidence. I am nonetheless satisfied that the August 2001 note is not a later concoction but was read and signed by Mr Hurndell in the circumstances described by David and Karen Hozier, and that the stock transfer forms were signed by Mr Hurndell as described by Mr Hozier. Mr Hurndell may well have forgotten signing the stock transfer forms but I find that he was deliberately untruthful in his evidence concerning the meeting with David and Karen Hozier and signing the note. He appreciated, I believe, as was obvious, that the note in particular was entirely inconsistent with his case.
153. Other factors support the conclusion that Mr Hurndell was to be a nominee: the proposals in 2000, known to Mr Davis, that the shares should go to Mr Hozier or his son; the fact that Mr Hurndell had previously been used as a nominee or conduit in the cash routing exercise in 1992; the agreement of Mr White that Mr Hurndell should retain 1.5 million shares as his own in 2002; and, most significantly, the lengthy delay without adequate explanation in bringing or intimating any claim.
154. In the light of all these considerations, I accept the evidence of Mr Hozier and Mr White that at the time of the listing in 1996 it was agreed, and Mr White was later informed, that the shares would be transferred to Mr Hurndell as a nominee and that it was never intended that he should own them beneficially, apart from the 1.5 million shares given to him in 2002. I find also that the discussions in 2000-2001 of which Mr Hozier and Mr White gave evidence, involving at various times themselves, Mr Davis and Mr Hurndell, took place substantially as they described.
155. In coming to these findings, I have kept very much in mind the various public and other statements which contradict the defendants' case.
156. As I have already stated, I reject Mr Hozier's evidence as regards the statements of directors' interests and substantial shareholdings in the accounts from 1997 to 2001. He was not in my judgment sloppy. He read the directors' reports and knew exactly what they said. He also knew that if Mr Hurndell held the shares as a nominee, there would not be compliance with the Stock Exchange listing requirements nor with the statutory requirements for disclosure in Stanelco's accounts. I reject his evidence that he relied on Mr Davis' assurance that it was in order for Mr Hurndell to hold the shares as nominee for Mr White. To a person of Mr Hozier's training, intelligence and attention to detail, it would be obvious that it would not comply with Stock Exchange requirements and I find that Mr Hozier knew it did not comply.
157. If, as I find, Mr Hurndell was intended to be a nominee only, Mr Davis must have known it and he too must have realised that it did not comply with Stock Exchange requirements. In reaching this conclusion, I have taken account of the evidence of Christopher Mills, who was a non-executive director of Stanelco from 1991 to July 2003 and was for most of that time its chairman. He had no involvement in or knowledge of the true position as regards the ownership of the shares and believed, entirely reasonably, that Mr White had disposed of them in December 1996. Mr Mills gave evidence that in his dealings with Mr Davis, Mr Davis has been nothing but honourable and honest.
158. The explanation is, in my judgment that a decision was taken by Mr Davis and Mr Hozier to get round the Stock Exchange requirements by parking the shares with Mr Hurndell as nominee for Mr White. ("Parking" is the word which Mr White said was used by Mr Davis, evidence which I accept). For this reason, Stanelco's professional advisors were kept in the dark as to Mr Hurndell's nominee status. This is not of course something which either of them would wish to admit and I find that Mr Hozier gave untruthful evidence as regards the accounts to avoid the admission. Mr Davis' unchallenged evidence was that he had not read the directors' reports containing details of shareholdings. I have found that Mr White did not read or know the contents of the directors' reports for 1997 to 1999. He read the later directors' reports, but either was reassured by Mr Hozier or, as I consider more likely, realised that there were difficulties in revealing the true position. It is, in my judgment, this realisation which explains the terms of his memorandum of April 2005.
159. It was pointed out for Mr Hurndell that if he held his shares as nominee, and if Mr Hozier, Mr Davis or Mr White knew that false statements were being made, a variety of offences were committed under the Companies Act 1985, the Financial Services Act 1986 and the Financial Services and Markets Act 2000. This is undoubtedly so. It is precisely for that reason as well as to avoid more general reputational damage that, in my judgment, Mr Hozier in particular was so concerned in his evidence to deny knowledge of statements in the directors' reports and knowledge that there was anything wrong with Mr Hurndell's status as a nominee.
160. My findings of fact dispose of Mr Hurndell's case, subject to one legal argument advanced on his behalf.
161. Mr Melville QC for Mr Hurndell submitted that the illegality associated with the arrangement that Mr Hurndell should hold the shares as a nominee without disclosure of the true owner meant that, in accordance with the analysis in Tinsley v Milligan [1994] 1 AC 340, Mr White is not permitted to assert his own title to the shares. This would be arguable if Mr White were suing to recover the shares from Mr Hurndell. But the claim in this case is by Mr Hurndell to recover the value of shares of which he is not now the legal owner and of which he was never a beneficial owner. Principles of illegality may defeat a claim but they do not enable Mr Hurndell to obtain shares, or their value, which never beneficially belonged to him.
162. Accordingly, I dismiss the action.