England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY

		Birmingham Civil Justice Centre Priory Courts 33 Bull Street BIRMINGHAM B4 6DS
		25th June 2010

Judge Purle QC:

1. The Claimant ("Mr Miah") and the Defendant ("Mr Islam") were equal partners in the restaurant business known as Karma Cuisine (formerly Neel Akash). There is now a partnership dispute in which I am called on to resolve certain issues following a prolonged hearing before me earlier this year. The parties were represented by twin brothers who are Solicitor-Advocates: Mr Kamar Uddin of Res Ipsa (for Mr Miah) and Mr Sham Uddin of Hamstead Law Practice (for Mr Islam).
2. Mr Miah and Mr Islam agreed in principle to purchase the restaurant business from Mr Mohammed Muzibur Rahman ("Mr Rahman") on 6^th December 2005. Mr Miah paid the sum of £2,000 to Mr Rahman by cheque on that date, said to be a "deposit". The purchase was not finalised until 27^th June 2006. The stated purchase price was £30,000. £28,000 was apportioned to goodwill, £100 for a lease (for a 20 year term from 24^th March 2005) and £1,000 to fixtures, equipment and stock in trade. Refurbishment works were carried out and the restaurant re-opened under its new name on 17^th July 2006.
3. Mr Miah was a senior member of the Bangladesh community who already had a restaurant business of his own called Khusboo Balti International Restaurant. Mr Islam was a young man who was keen to get started in a business of his own, though recognising the need for an experienced business partner such as Mr Islam, and someone to share the risk and help provide the necessary capital. Mr Islam spoke better English than Mr Miah. He was already working in the restaurant trade as an employee. Given that experience and Mr Miah's existing restaurant business, it was always envisaged that Mr Islam would be working in the new restaurant (once up and running) full time, whereas Mr Miah would not be involved in the day-to-day running. He would however be involved as a partner in all important decisions, in providing capital, and in giving general business guidance and administrative help.
4. The relationship between the partners proved to be an unhappy one and the partnership (which was a partnership at will) was formally dissolved by written notice given by Mr Miah in October 2006 to Mr Islam with effect from 14^th November 2006. He had in fact effectively left the business in August 2006. Mr Islam's case is that there was an agreement sometime in August 2006 (though in his oral evidence he appeared originally to date this after the notice of dissolution) whereby Mr Islam agreed that he should buy Mr Miah out by paying him the sums he (Mr Miah) had put into the business, subject to the production of receipts by Mr Miah. Mr Miah denies this agreement. He says however that he delivered a number of receipts to Mr Islam and his wife, not however for the purpose of a buy-out, but so that his contributions and that of Mr Islam should be determined and then equalised. He says he was expecting the receipts to be taken by Mr Islam or his wife to the partnership accountant. Mr Islam denies that receipts were ever delivered, which is why the agreement upon which he now relies has not to date been concluded.
5. The following preliminary issues have been ordered to be tried:-

(i) What were Mr Islam's and Mr Miah's respective financial contributions to the partnership business?

(ii) Whether there was a conclusive and enforceable agreement between Mr Miah and Mr Islam in August 2006 whereby Mr Miah agreed to leave the business; if so, the terms of that agreement.

6. So far as the first of these issues is concerned, I have proceeded (in common with the parties) on the basis that what I am called upon to decide is what sums were paid by each of the parties in respect of partnership expenditure or liabilities incurred down to the dissolution date. If the expenditure or liability was incurred before the dissolution date, it does not matter if it was paid after the dissolution date, so long as it was paid by one of the partners otherwise than out of the proceeds of the restaurant business itself.
7. A point on illegality also arises. Mr Miah's case is that the purchase price of £30,000 for the restaurant business was deliberately understated as the seller wanted additional cash under the table, and that an additional £16,000 was paid in this way - £11,000 by himself, and £5,000 by Mr Islam. Mr Islam denies these additional cash payments. In any event, he says that these particular payments (if made) were tainted by illegality, as they amounted to a money laundering offence and had as their purpose the evasion by the seller of tax on the sale. They should therefore be ignored in any accounting exercise.
8. In addition to the 2 defined issues, a third came to be added during the course of the trial, namely:-

(iii) Was Mr Islam entitled to any and if so what salary from the partnership?

9. This third issue came to be added because one of Mr Miah's objections to a number of Mr Islam's alleged contributions was that the contributions came not out of Mr Islam's resources but out of restaurant receipts which were therefore partnership monies. Mr Islam in turn riposted that he was entitled to a salary, and that the payments he was claiming should be regarded as payments of, or on account of, salary, and therefore as his contributions It seemed to me that this confused 2 separate issues, and that the proper course (as to which full evidence was heard) was to decide the salary issue separately. Hence the third preliminary issue.
10. It may seem odd that the first preliminary issue requires me to determine each party's contributions whereas, if I resolve the second preliminary issue in Mr Islam's favour, only Mr Miah's contributions are relevant. That however is how the preliminary issues were framed. Likewise, what has become the third preliminary issue is irrelevant if I find, as Mr Islam contends, that there was a binding agreement under which Mr Miah was merely to be repaid his contributions. Again, only Mr Miah's contributions will on that hypothesis be relevant, and any salary entitlement of Mr Islam will be irrelevant. It is not suggested that any obligation on Mr Miah's part to contribute to Mr Islam's expenditure or his salary survived the agreement which Mr Islam contends was made in August 2006. On the contrary, the purport of the alleged agreement was that Mr Miah should no longer benefit or be liable as a partner but should be repaid his own contributions.
11. I did initially consider that the second preliminary issue should be tried first, as the other issues would become irrelevant (except as regards Mr Miah's contributions) if that issue was decided in Mr Islam's favour. It also seemed to me (correctly, as events turned out) that the original 3-day estimate was inadequate for a trial of all issues. Nevertheless, it soon became clear that the contributions issue could not be readily separated evidentially from the issue as to whether or not there was a binding agreement in August 2006. I accordingly tried all of the preliminary issues, though this took far more days than originally estimated. This in turn led to a disjointed series of hearings which with some difficulty I was able to accommodate owing to other court commitments falling away.
12. As regards contributions generally, a Scott Schedule was prepared in accordance with the District Judge's directions.
13. Column A of the Scott Schedule itemised Mr Miah's contributions which were accepted by Mr Islam. These totalled £26,484.40.
14. Column B of the Scott Schedule itemised Mr Islam's contributions which were accepted by Mr Miah. These totalled £18,100.
15. Column C itemised Mr Miah's alleged contributions which were not accepted by Mr Islam. Column D itemised Mr Islam's alleged contributions which were not accepted by Mr Miah.
16. The Scott Schedule had columns for the parties' comments on the disputed items, but these columns were unfortunately left blank. I required their completion during one of the adjournments.
17. I resolved many of the disputed items by going through the schedule item by item during closing submissions. The result of that exercise was marked up by me on my copy of the Schedule which was then released to Mr Kamar Uddin for copying. I am not going to repeat the reasoning for each item I have already ruled upon, as I gave my reasons at the time (on 28^th January 2010). I confirm my provisional rulings on that date as final rulings.
18. The remainder of this judgment deals with amongst other matters the Scott Schedule items that I could not rule upon on an ad hoc basis, not even provisionally, as they depended for their resolution upon a fuller consideration of the evidence, and to an extent overlapped with the illegality point and the second preliminary issue. All sums that I have allowed (both on 28^th January and in this judgment) are summarised in the Appendix attached to this judgment.
19. I now turn to consider specifically the disputed items of account that I did not rule upon during the course of the trial.
20. The first issue is: were there cash payments of £11,000 by Mr Miah and £5,000 by Mr Islam which were in addition to the stated purchase price of £30,000. If so, the question then arises whether the parties are prevented from bringing these matters into account on illegality grounds.
21. The principal witness in favour of the alleged payments was Mr Miah, supported to an extent by Abdul Moyeed, a senior member of the Bangladesh community. In Mr Moyeed's witness statement, he verified both payments, though in his oral evidence he said that £11,000 was paid by Mr Miah in cash but denied the payment by Mr Islam of £5,000.
22. The payments were said to have been made at the house of Mr Rahman's mother on 21^st June 2006. Mr Islam not only denied the payments, but denied that there ever was a meeting at that location at which he was present on that or any other date.
23. Mr Tattar Uddin was also said by Mr Miah and Mr Moyeed to have been present. Tattar Uddin is a distant (though not a blood) relative of Mr Islam, originating from the same village in Bangladesh. He is not related to either of the Solicitor-Advocates in this case, despite the name "Uddin". It is on the face of it a matter of surprise that he was not called by Mr Islam to support his denial. Mr Islam's explanation in the witness box was that he had not seen him for many years (8 were mentioned) following a family fall-out. This however did not square with what his solicitors told Mr Miah's solicitors when they enquired as to his whereabouts in the course of preparing for trial. The answer was that there had been no contact since 2007. Crucially, this was after June 2006, when the meeting was alleged to have taken place. Mr Islam was unable to explain this discrepancy. He must in all probability have been the source of the information which his solicitors gave. Regrettably, I have reached the conclusion that his evidence in the witness box was untrue and that he invented the 8 year period because he knew that Tattar Uddin, if asked, would confirm that he was at the meeting, and what occurred there.
24. Moreover, Mr Moyeed was cross-examined on the basis that there was indeed a meeting at Mr Rahman's mother's house attended by himself and Tattar Uddin amongst others and that cash passed hands at that meeting. He remembered the £11,000 being counted out and handed over to Mr Rahman's mother, but not the £5,000, which he said in cross-examination (in marked contrast to his signed witness statement, which said the opposite) was not handed over. As his oral evidence was not challenged, no motive for lying was put to him, and I can think of none. I assumed at the time (he was the last witness) that Mr Sham Uddin for Mr Islam was going to focus his attack thereafter on the illegality point, which had by then been mentioned. To my surprise, he invited me in closing submissions to conclude that no cash passed hands, and that the meeting did not take place. It is manifestly unsatisfactory that I should be invited to reject evidence which could have been but was not challenged. This is not a meaningless formality but an essential requirement of a fair trial. If the trial advocate intends to invite the Judge to conclude that a witness is lying, that must in fairness be put to the witness so that he can comment.
25. Nevertheless, unsatisfactory though this state of affairs is, I must decide this issue on the evidence as a whole, which consists of amongst other evidence Mr Islam's denial. I should say straightaway that I found Mr Islam to be a most unsatisfactory witness, whose recollection was fragile on any point of importance, who hid behind his wife's knowledge when he could (she kept such records as there were) and appeared more than a little evasive through much of his evidence. There were parts of his witness statement that he clearly did not understand, yet he signed it. He also clung to what became obvious was the unsustainable contention that the parties reached a binding agreement in August 2006 under which Mr Miah was to leave the business in return for the repayment of his contributions. He also procured references for the landlord of the partnership premises from people who (in 2 cases) hardly knew him, pretending not to know what they said, and untruthfully claimed not to know of an electricity bill which Mr Miah had to pay. I have approached the whole of his evidence with caution for these reasons. Similar observations apply also to the evidence of his wife, Syeda Ashidun Nessa ("Ms Nessa") who also espoused the binding agreement hypothesis, adopted the pretence of not knowing of the electricity bill, and gave evidence which on the crucial points lacked conviction.
26. Mr Miah's evidence was not without its difficulties either. There are inherent credibility problems associated with someone who asserts that "under the table" cash payments were made for tax purposes, which he then concealed (on his version of events) from his solicitors and accountants at the time. Also, he gave evidence which initially appeared evasive as to the source of the £11,000 (which eventually turned out to be a combination of his own savings, his daughter and an unnamed acquaintance for whom he was apparently holding cash), and gave unsatisfactory evidence as to the provenance of 2 important documents which emerged during the trial itself – a list of expenditure and a draft receipt (of which there are 2 versions) relevant to the alleged meeting of 21^st June 2006. He gave his evidence through an interpreter (though occasionally speaking English) but his first witness statement was in English and he signed it without fully understanding it. I have therefore approached his evidence with caution also. Nevertheless, of the principal protagonists, I felt that he was in the main doing his best to help me. I did not think that of Mr Islam and Ms Nessa.
27. Returning now to the question of whether the additional cash payments were made, Mr Kamar Uddin for Mr Miah also called Mr Rahman, the seller of Neel Akash restaurant. This was a bold step as Mr Miah's evidence was that Mr Rahman refused to give a receipt for the £16,000 for tax reasons. He was therefore unlikely to confirm the payment and Mr Rahman (though his evidence was not helpful to Mr Miah) was not hostile and could not be cross-examined by Mr Kamar Uddin. A witness summary which Mr Rahman had seen was prepared for him which spelt out the alleged additional cash consideration. He knew therefore what he was going to be asked about. He attended under a witness summons and expressed himself to be reluctant to give evidence. I explained that he could claim privilege against self-incrimination. He did not do so, instead giving evidence that the true price was £30,000. However, he could not have looked more shifty and uncomfortable, and his discomfort increased when the 21^st June 2006 meeting was mentioned (which he denied) and when asked about what profits the business had been making. Demeanour is a notoriously unreliable guide but on this occasion I gained the clear impression that Mr Rahman was hiding something and was in all probability lying. When I add to that Mr Miah's evidence, Mr Moyeed's unchallenged evidence, and the failure to call Mr Tattar Uddin or credibly to explain his unavailability, I am satisfied on a balance of probabilities that the meeting took place, and that £11,000 was paid by Mr Miah in cash. Subject to the illegality defence, therefore, Mr Miah is entitled to credit for this contribution.
28. I also find on balance that £5,000 was contributed in cash by Mr Islam. Although this aspect of the evidence was not supported by Mr Moyeed in his oral evidence, Mr Miah's evidence was that this sum was also paid, and I can safely rely on that part of his evidence as it is adverse to his interest. In addition, I take into account the failure to call Mr Tattar Uddin. He was at the meeting as a distant family member of Mr Islam and could therefore be expected to remember this contribution. I am troubled by Mr Moyeed's failure to recall this in his oral evidence, but as he was not pressed on why his witness statement and oral evidence differed, do not find this a sufficient reason for rejecting the rest of his evidence, or for requiring me to conclude that Mr Islam paid nothing on this occasion.
29. Subject again to the illegality point, therefore, Mr Islam is entitled to credit for his contribution of £5,000. I should add that Mr Islam's evidence was to the effect that he did not have £5,000 at the time. However, he had resources available to him from his wife's family, as the other payments he in fact made, as well as accounts subsequently prepared on his and his wife's instructions, demonstrate. It seems entirely credible to me that this additional sum of £5,000 was available to him also. He said his wife and her family would not have done this, as they are very straight. However, the giving of financial help would not require them to be other than straight. How Mr Islam might then deal with it would be for him.
30. Mr Sham Uddin for Mr Islam pointed to the unsatisfactory way in which 2 versions of a draft invoice, which Mr Miah claimed he produced at the 21^st June meeting, came into being. He produced one during the course of the trial though it appeared (but only when Mr Kamar Uddin came to address me in closing) that a different version had previously been sent by Mr Miah to his then solicitors, which was then passed on to Mr Kamar Uddin's firm (Res Ipsa) when they came on the record, though inexplicably not disclosed to Mr Islam's solicitors either by Res Ipsa or the previous solicitors. Mr Miah insisted that he produced this invoice (the version he produced during the trial) at the June 2006 meeting for signature but Mr Rahman refused to give a receipt for tax reasons. Mr Moyeed in his witness statement and (eventually) in his oral evidence appeared to support the fact that a receipt was sought. However, his evidence was not terribly convincing on this point, as he also explained in his oral evidence that the purpose of his being at the meeting was to bear witness to the payment of monies as there would be no receipt, he acknowledging that he was aware (as must have been everyone else) that illegality (which I took to mean tax evasion) was involved.
31. Mr Sham Uddin also made the point that when the £2,000 "deposit" was paid by Mr Miah in December 2005, Mr Miah noted on the cheque stub that the purchase price was £30,000. However, Mr Miah explained that, as the additional £16,000 was to be "under the table", he needed to conceal this from his accountant, who would get to see his cheque stubs, the cheque being written on his business account. This was a credible, albeit unattractive, answer to the point. Mr Miah did claim that he got a receipt from Mr Rahman at the time of this initial payment, but did not produce it, which he said was lost, having fallen off the dashboard of his car.
32. Mr Islam accepts that the question of a cash payment "under the table" was raised but claimed that this was a proposal which related to part of the £30,000, and which was rejected upon legal advice. Although the solicitors' file was produced, there is no record of such advice, and the solicitor was not called to confirm the conversation Mr Islam claimed to have had with him. There are other attendance notes of conversations between the solicitors and Mr Islam. I consider it to be improbable that Mr Islam raised the matter with the solicitors, as I have no doubt that he would have appreciated that tax evasion was involved, and that no solicitor could be a party to such an arrangement. Mr Sham Uddin portrayed Mr Islam as a naïve innocent, but that was not the impression he gave me in the witness box. He did not have great business experience at the time, but he was certainly worldly-wise. Mr Miah told me that the solicitors were not told of the "under the table" payments, which seems much more likely to me, but that is not necessarily inconsistent with their having been made.
33. I am however troubled by the unsatisfactory evidence regarding the receipts. As it happens, neither version of the receipt said to have been produced for the June meeting was signed, so in a sense it does not matter. However, Mr Miah's unsatisfactory evidence may be demonstrative of general untruthfulness, especially as I was told that the receipt he provided to his solicitors (apparently as the genuine draft) was not the one in fact produced at the meeting. At the end of the day, however, these considerations do not persuade me to reach a different conclusion from that which I have already expressed as to whether or not the payments in question were made. I consider it likely that Mr Miah would have asked for a receipt at some stage, but he cannot have been surprised that it was declined. I am not however persuaded that an earlier document was given, in December 2005, mentioning the extra £16,000. The only receipt as such that could have been sought at that stage would have related to the £2,000 payment then made. I do not know which (if either) version of the receipt was produced in June 2006, and place no reliance at all on the existence of draft receipts, but I think it likely that the need for a receipt would have been raised by Mr Miah, and immediately dismissed by Mr Rahman. Everyone there knew that tax evasion was contemplated. The elder members of the community present were there to vouch for Mr Rahman's good faith and he would, having accepted the cash, have found it impossible to renege on the deal (contracts were still to be exchanged) in the face of the community pressure that would be brought to bear. It is also not a matter of great surprise to me that no-one else (i.e., not just Mr Rahman) did not sign the document, as everyone must have known that tax evasion was the reason for the cash payments.
34. Mr Sham Uddin also pointed to the fact that the alleged cash contributions were unequal, whereas Mr Miah was instructing his solicitor at the time to ensure that the contributions to the £30,000 were equal. I do not think there is anything in this point. The contributions to the £30,000 were separate from the £16,000. Moreover, Mr Miah's evidence (which I accept) was that he was told by Mr Islam at an early stage that he was anticipating help from amongst others his mother, who was going to receive a home loss payment, from which Mr Islam would be able to equalise his contributions. Although the monies in question (which eventually amounted to some £4,000) did not materialise until November 2006, the prospect of such monies coming in was known in June 2006. I find that the cash contributions were expected to be equalised as soon as that could be arranged.
35. Another point made by Mr Sham Uddin was that on Mr Moyeed's evidence, the cash was paid not to Mr Rahman but to his mother. However, it was clear from his evidence that the reason for this was that the community elders present took the view that Mr Rahman had not been dealing fairly with his mother, and should account to her for these proceeds. That did not affect the character of the cash paid, which was for the purchase of the business.
36. In summary, therefore, I find that Mr Miah and Mr Islam contributed £11,000 and £5,000 respectively in cash towards the purchase of the business. I consider the illegality issue later.
37. There is another issue concerning the contributions made to the purchase price of the business. These are in the main agreed, and include £600 paid by Mr Miah to Mr Rahman's solicitors direct. Mr Islam claims that he paid half of this sum (£300) to Mr Miah in cash, to ensure equality of contributions. Mr Miah denies this. I find that Mr Islam made no such contribution and that the whole of the £600 was provided by Mr Miah alone. Mr Islam's claim arose late in the day, and was not supported by Ms Nessa, who appeared to know nothing about it. This is surprising as Mr Islam and his wife are very close. Although holding themselves out as living in separate accommodation, I formed the clear impression that they are together much more often than they are apart. Mr Islam graciously attributed much of his business success to the encouragement and support of Ms Nessa. I would therefore have expected Mr Islam to have mentioned this payment to Ms Nessa.
38. In addition, a contemporary attendance note of the parties' solicitors of 6^th June 2006 records that Mr Miah's contributions totalled £18,100. This included the £600 now in dispute. The solicitors collected £18,100 on 12^th June 2006 from Mr Islam to equalise the contributions. As it happens, Mr Miah subsequently paid a further £300 on 27^th June 2006 so that his contribution became £18,400, as shown in a cash statement of the solicitors dated 17^th July 2006. Mr Sham Uddin, founding himself upon the total of £18,400 paid, suggested that the reason for the additional £300 was to equalise the contributions, thus supporting his client's case that he previously paid £300 of the £600. However, on that footing, Mr Islam would have paid £18,400 in total, and Mr Miah £18,100. So on any footing, the contributions were not precisely equal. Mr Sham Uddin's point is therefore at best neutral and of no real assistance. In my judgment, reading the 6^th June 2006 attendance note in its temporal context more naturally supports Mr Miah's case. He was asking the solicitors to obtain £18,100 from Mr Islam because that is what he was contributing at that date. Mr Islam can only have been persuaded to part with the same amount, on the footing that the £600 was paid by Mr Miah alone.
39. Apart from contributions to the purchase price, I need to consider a number of disputed items of alleged expenditure, said to have been made by Mr Miah for the business. These are not supported by extant invoices or receipts. This ordinarily represents a significant hurdle, unless the payments are admitted or proved by other evidence. However, Mr Miah's case is that he delivered a number of invoices and receipts to Mr Islam who has suppressed them. If correct, this would explain why the documents are no longer available, and it would not be fair on Mr Miah to disallow the expenditure on that ground.
40. Mr Miah's evidence was that he delivered the receipts when Mr Islam's mother was present, as well as Mr Islam and Ms Nessa. Mr Islam was to deliver them to the partnership accountants, with his own receipts, who would draw up an opening account. Mr Miah was expecting some equalisation of contributions to occur. Mr Islam's mother was, he said, the expected source of monies for the equalisation process. He did not keep copies of the invoices and receipts but did keep a list of them. However, the list (which he produced at the trial) included one item (albeit crossed out) post-dating the occasion of the meeting. So the list cannot have been in that form then. Moreover, although the list down to an initial total of £10,186.11 was in blue ink, additional items included items in black ink, suggesting to me that they were added later. In addition, not all the items in blue ink are in the same shade of blue. I do not think therefore that the list can have been prepared at one and the same time, though Mr Miah said it was. The list was produced only at the trial and was for unexplained reasons not previously disclosed, but the witness statement evidence of Mr Miah was consistent with the list and a number of items (where cheques existed) were not disputed.
41. The list was detailed and contained items which could well have been purchased for the restaurant business, as Mr Miah said was the case in his witness statement. Moreover, he was not cross-examined on the basis that the expenditure was not genuine or proper. He was cross-examined on the basis that there were no receipts or invoices. Mr Islam and Ms Nessa both denied that any were delivered to them. Mr Islam's mother did not give evidence.
42. Mr Miah's evidence on this point came across in general terms as credible, despite his failure to give a coherent explanation as to how the list embodying the alleged invoices came to be compiled. The meeting according to him took place around the end of July or at some time in August 2006 (precise dates were not a strong point for any of the witnesses). He said he trusted Mr Islam at the time and only wished he had foreseen this dispute and taken a video to the meeting. It certainly made sense for all the invoices to be collated at that stage as the parties needed to know where they stood, and the contributions, on Mr Miah's evidence, needed to be equalised, for which purpose invoices were needed. Moreover, the list (if invented) is an exercise in creativity, for little purpose, as Mr Miah's disputed "unreceipted" items in the Scott Schedule totalled the relatively modest sum of £1121.04.
43. Mr Sham Uddin, for Mr Islam, also made the point that his client could hardly be expected to have suppressed receipts for such a relatively modest amount. This is a serious point. However, the disclosure of receipts even for Mr Islam's own expenditure was haphazard and continued through the trial, including attempted further disclosure during Mr Sham Uddin's closing submissions. I am not persuaded that full disclosure has ever been given on Mr Islam's side, and the fact that all of the papers at the accountants instructed by Mr Islam and Ms Nessa were available for inspection does not meet this point, as the accounts that firm produced were regarded even by Mr Sham Uddin as wholly unreliable, and appear to have been disavowed now by the accountants themselves. I am not prepared to assume that the accountants had all material information, and, if Mr Islam and Ms Nessa were suppressing invoices, they would hardly be expected to have delivered them to the accountants in question.
44. Moreover, it was an integral part of Mr Islam's case that he agreed with Mr Miah in August 2006 that Mr Miah would walk away for a return of his contributions, and that the only reason this did not occur was because Mr Miah did not deliver receipts, as promised. This allegation (which emerged relatively late in the day) would clearly be rebutted if the position was that receipts had already been delivered.
45. The agreement alleged by Mr Islam is flatly inconsistent with the position taken by Mr Islam in correspondence shortly following the service of the notice of dissolution, both from himself and his solicitors.
46. In a letter dated 26^th October 2006 from Messrs Hadens for Mr Miah, 3 choices were postulated, 2 of which were that Mr Islam purchased Mr Miah's interest or vice versa. The obvious riposte to this was that there was already an agreement in place, if that was Mr Islam's position. However, Mr Islam's reply on 1^st November 2006 was that he was happy to purchase Mr Miah's interest for the same amount he purchased it for and to ask Mr Miah's solicitors to consult their client "if he wishes to sell to me", not that he had already agreed to do so. Later, Hamstead Law Practice for Mr Islam on 17^th November 2006 asked Hadens to "let us know at what price your client intends to sell his share in the business". Again, that is inconsistent with an agreement having already been reached.
47. Mr Islam was unable satisfactorily to explain why the agreement he now alleged was not asserted at this stage. His wife wrote the first letter for him, but that is no answer. Moreover, Ms Nessa was unable satisfactorily to explain how she got it wrong (if she did) and her oral evidence at one point was to the effect that she was expecting both side's invoices to be examined, a point which was unnecessary if only Mr Miah's invoices were relevant. Moreover, each of Mr Islam and Ms Nessa appeared to contemplate that some further agreement was necessary once the invoices were produced. In my judgment, no binding agreement to the effect contended for was ever reached. I consider that Mr Islam and Ms Nessa each well knew that there was no such agreement and that their case to the contrary has not been advanced in good faith. Mr Miah, I should add, accepted that there was discussion (probably in August 2006) of one side or the other buying out the other's interest, but this was not dependent on receipts being delivered by him, as he had already delivered them (or most of them) for the purpose of the original account. I prefer this evidence to that of Mr Islam and Ms Nessa.
48. The question then is: what receipts did Mr Miah deliver to Mr Islam and Ms Nessa? In my judgment, it is likely that the receipts were those in Mr Miah's list, which was a contemporaneous document which he prepared, albeit on more than one occasion, for his own purposes and which was added to later. In those circumstances, I am satisfied that I ought to allow the additional expenditure claimed by Mr Miah of £1121.04. In reaching this conclusion, I am conscious that I am finding Mr Islam and Ms Nessa guilty of deliberate suppression of the invoices delivered to them. However, I must either find that or find that Mr Miah's evidence is a deliberate concoction. There is no half-way house. Faced with that unenviable choice, I much preferred Mr Miah's evidence to that of Mr Islam and Ms Nessa and accordingly find in his favour on this point.
49. I should add that Mr Sham Uddin for Mr Islam relied upon the change of the electricity bill (from, confusingly, British Gas) in August 2006 from Mr Miah's sole name to demonstrate that there must have been an agreement at that date. In my judgment, the name of the account holder was changed because it was not Mr Miah's sole account. It was a partnership account. I have not seen subsequent bills but, as Mr Kamar Uddin pointed out for Mr Miah, there was subsequent correspondence chasing payment in joint names. As it happens, Mr Islam exploited the designation of the account in Mr Miah's sole name by not paying it, claiming to know nothing about it, an assertion I did not believe. Ms Nessa, who kept the books, also claimed no knowledge, but I did not believe her either. As I said, there was subsequent correspondence in joint names, and the bill was expressly referred to and a copy enclosed in Hadens' letter of 22^nd November 2006, but still remained unpaid. In the event, Mr Miah paid it and I allowed it as a contribution when ruling on the Scott Schedule on 28^th January 2010. This episode does nothing for the credit of either Mr Islam or Ms Nessa.
50. I should also add that it was common ground before me that, even if Mr Islam had proved the agreement for the sale of Mr Miah's interest, that would be an agreement to which the statutory requirement of writing applied, and would be void, as it included an interest in land (the lease). Mr Islam's answer through Mr Sham Uddin was that a constructive trust arose as he spent money and incurred liability in reliance on the agreement and thereby acted to his detriment. His evidence was particularly poor at this point. Though using the word "detriment" in his witness statement, he clearly did not know what it meant and I heard nothing to persuade me that he acted any differently in the light of the alleged agreement, which he knew within 2 weeks Mr Miah did not recognise, as he heard that Mr Miah was discussing a sale of his interest to a third party. The point does not arise as I have rejected the case on any agreement, but the case would have failed on this additional ground also.
51. There is one final factual matter. Mr Islam claims to be entitled to credit in respect of a salary (before profit division) of £250 per week. This required an express agreement and I am not satisfied that it ever was agreed between Mr Islam and Mr Miah. Mr Miah got solicitors to prepare a draft partnership agreement which did not mention it. Mr Islam's wife prepared a draft agreement which did mention salary. Neither version was ever agreed. I accept that Mr Islam would need something to live on, but any drawings for that purpose would be on account of profits. Mr Islam was confident that the business would be profitable. Moreover, in books kept by Ms Nessa (produced only during the trial) unpaid wages for staff were mentioned, but this did not include Mr Islam, even though he was not initially drawing anything. I accordingly reject the case on an agreement for salary.
52. I come back to the illegality point. The question is: are the parties barred by illegality from bringing the cash payments of £11,000 and £5,000 respectively into account? Surprisingly, no authority was cited to me directly on point, perhaps because unreceipted cash contributions will usually fail for want of proof. Unusually in this case, I have found the contributions proved despite the lack of receipts. I must therefore approach the matter as one of principle. The defence is strictly one of ex turpi causa, to use a Latin phrase (which is I think still apposite). No-one is seeking to enforce an illegal contract as such, as the allegedly tainted contract (for the sale of the restaurant business) has been performed.
53. What Mr Miah relies upon is the fact of payment, which was not of itself illegal. There is no evidence that any of the monies used for that purpose were themselves tainted, so as to amount to criminal property within the meaning of the Proceeds of Crime Act 2002. I therefore reject Mr Sham Uddin's submission that an offence under section 328 of that Act was committed.
54. Mr Sham Uddin does however say that the apparent purpose on Mr Rahman's part of evading tax means that the contributions cannot be brought into account. The achievement or furtherance of that purpose was not, however, an essential element of the partners' right of indemnity. It merely explains why Mr Rahman asked for the payments to be made in cash "under the table". Whether he in fact evaded any and if so what tax is unknown for certain, but it must be likely that he did in fact evade some tax. The partners needed, however, only to establish the fact of payments for partnership purposes to be entitled to an indemnity from the partnership. That does not on the face of it require them to rely on any illegality. That being so, I do not consider that any question of ex turpi causa arises (compare Tinsley v Milligan [1994] 1 AC 340).
55. Another way of looking at the matter is that, whatever the position may have been as regards enforcement of the original contract of purchase, Mr Rahman's intention to evade tax by requiring cash payments was too remote to affect the partners' rights of indemnity (compare 21^st Century Logistic Solutions Ltd v Madysen Ltd [2004] 2 Lloyd's Rep 92). In the present case, evasion of tax was not and is not an integral part of the right of indemnity. The case is thus distinguishable from another decision cited to me (Piper v Kirk [2010] EWHC 23 (Ch)) where the monies which formed the subject of an alleged loan (which was not proved anyway) were brought into the country by instalments in cash to evade tax. In that sense, the monies were themselves tainted by the illegal purpose as their remission to fund a loan was itself an act of evasion. The resulting alleged contract was said obiter to be unenforceable, as tax evasion was an integral part of the transaction. It seems to me that that is a very different case from the relatively common situation of a partner expending cash legitimately obtained for the benefit of the partnership business.
56. I accordingly conclude that illegality, or the ex turpi causa principle, is no bar to the recovery within the partnership of the "under the table" cash payments totalling £16,000.
57. In the result, the preliminary issues fall to be determined as follows:-

(i) The respective contributions of Mr Miah and Mr Islam were as set out in the Appendix to this judgment;

(ii) There was no agreement in August 2006 or at any other time whereby Mr Miah agreed to leave the business;

(iii) Mr Islam was not entitled to any salary from the partnership.

APPENDIX

MR MIAH'S CONTRIBUTIONS

Column A contributions	26,484.40
Column C contributions as allowed	(includes 11,000 - 21 June cash) 16,552.56
TOTAL	43,036.96

MR ISLAM'S CONTRIBUTIONS

Column B contributions	18,100
Column D contributions as allowed	15,605.46
Additional cash contribution (21 June)	5,000
TOTAL	38,705.46