England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT

		Royal Courts of Justice Strand London WC2A 2LL
		29 July 2011

JUDGE HODGE QC:

1. This judgment, delivered orally on the last sitting day of the Trinity Term 2011, is divided into eight chapters as follows: (1) Introduction, (2) The trial, (3) The witnesses, (4) The chronology of events, (5) The ownership of Annacott, (6) The Tobian petition, (7) The Annacott petition, and (8) Conclusion. I would emphasise that, although structured in this way, the contents of each chapter have informed the terms of the entire judgment.

Chapter 1 - Introduction

2. This is the hearing of two petitions presented under section 994 of the Companies Act 2006. That section, contained within Part 30 of the 2006 Act, enables a member of a company to apply to the Court for an order under Part 30 of the 2006 Act on the ground that the company's affairs have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least the petitioner).
3. By section 996 of the 2006 Act, if the Court is satisfied that such a petition is well-founded, it may make such order as it thinks fit for giving relief in respect of the matters complained of. That may include authorising a derivative action to be brought in the name and on behalf of the company, or providing for the purchase of the shares of any members of the company by other members.
4. This judgment is confined to the issue of whether there has been unfair prejudice in relation to the affairs of either of the two subject companies. The question of what relief will flow from any finding of unfair prejudice will be reserved to a further hearing before me.
5. The first petition was presented in respect of Annacott Holdings Ltd ("Annacott") on 22 December 2008. The petitioner is Mr Allan Attwood, who is, or was, an estate agent. He is now 39 years of age. He is the registered holder of 2,500 shares in Annacott, representing 50 per cent of its issued share capital.
6. The first respondent is Mr Geoffrey Maidment. He was a banking officer and is now 42 years of age. He holds 2,499 shares in Annacott and is its sole director.
7. The second respondent is Ms Sarah Maidment, who is Mr Maidment's sister. She holds the remaining one issued share in Annacott.
8. The principal complaint in the Annacott petition is that Annacott was formed to invest in residential properties on a buy-to-let basis, primarily in the east of London, yet Mr Maidment has sold its investment properties (46 in number) to himself at what is said to be an undervalue, alleged to be in the order of just under £2 million (after adjusting for the short length of certain unexpired leases).
9. It is further said that Mr Maidment claims to have invested sums totalling over £1.35 million in a company incorporated in the Turkish Republic of North Cyprus called MLP (Cyprus) Limited (to which I shall refer as "MLP"), with a view to developing a complex of flats in North Cyprus, which investment Mr Maidment says is now worthless.
10. It is said by Mr Attwood that, in fact, there was no investment in MLP, and that Mr Maidment has misappropriated the sale proceeds, or some part of them, whilst concealing the misappropriation as an investment in MLP. If that is wrong, Mr Attwood's alternative case is that Mr Maidment made the investment in MLP recklessly, and in breach of the agreement that Annacott's business was to be residential property investment, primarily in East London.
11. The second petition was presented in respect of Tobian Properties Limited ("Tobian") on 16 November 2009. The petitioner is Mr Maidment and the individual respondents are Mr Attwood and Ms Nicola Heard, who is Mr Attwood's former partner and the mother of his child. Mr Maidment owns 25 per cent of the issued share capital of Tobian and Mr Attwood owns the remaining 75 per cent, less one share held by Ms Heard.
12. Tobian formerly carried on the business of an estate agency in East London, trading under the style of Oliver Jaques. Tobian entered into creditors' voluntary liquidation on 20 October 2008, and the liquidator has only deferred proceeding to dissolve Tobian because of this pending petition.
13. Tobian's former business is now carried on by a company called Epyc Limited, to which I shall refer as "Epyc". That is a company owned equally by Mr Attwood and Ms Heard. Ms Heard is now the sole director.
14. Mr Maidment's principal complaints in relation to Tobian are that Mr Attwood permitted Epyc to trade as Oliver Jaques between June 2005 and April 2008, whilst Tobian was also trading under that name or style, and without requiring any payment from Epyc for the use of the Oliver Jaques name.
15. Mr Maidment also complains that Mr Attwood caused Tobian to pay Mr Attwood excessive sums by way of remuneration. He further complains that when Tobian was known to be proceeding towards insolvent liquidation, Mr Attwood caused Tobian to transfer its business and its goodwill in the name Oliver Jaques to Epyc for nothing more than the £5,000 which was paid to the liquidator in order to fund her putting Tobian into liquidation.
16. Mr Maidment accepted, in the course of his evidence to the Court, that the Tobian petition was presented as a response to the Annacott petition present by Mr Attwood.

Chapter 2 - The trial

17. Both petitions were directed to be heard together by an order of Registrar Derrett dated 19 January 2010. Since that date both petitions have proceeded in tandem.
18. In November 2010 the petitions were listed for hearing in July 2011 with an estimated length of hearing of seven days. It is now the twelfth day of that trial. The hearing was listed to start before me on Tuesday, 12 July, with the previous day being set aside for my pre-reading. Originally there had been ten trial bundles but a bundle of supplemental documents (bundle G) was added shortly before the trial began as a result of very late further disclosure by Mr Maidment during the course of the week before the trial began.
19. During the course of the trial further documents were disclosed, and were added to the trial bundles, as Mr Maidment continued to give further disclosure.
20. On the morning of what proved to be day 11, oral submissions had to be delayed by a little over an hour because Mr Maidment had produced still further documentation, together with a further witness statement (his sixth) dated 26 July 2011.
21. A further document (in the form of an email from Ms Pinar Ocal, a senior conveyancing solicitor with a law firm apparently in Turkey, summarising the results of an attached and incomplete company search against MLP, and timed at 2.36pm that afternoon) was provided only during the course of closing submissions from Mr Maidment's counsel, responding to the submissions of Mr Attwood's counsel.
22. Mr Maidment's counsel expressly accepted in closing that there had been what he referred to as "drip drip disclosure" on the part of Mr Maidment. I am satisfied that this has seriously impacted upon the integrity and the fairness of the trial process, although not ultimately the result.
23. In relation to Mr Maidment's sixth witness statement, and the late disclosure of documentation on day 11 of the trial, it was accepted that I should proceed on the footing that I should place such reliance upon them as I should think fit, bearing in mind that the witness statement and documentation had not been the subject of cross-examination. It was also agreed that Mr Attwood should be allowed to challenge the late documentation, and to impugn Mr Maidment's sixth witness statement, even though they had not been the subject of cross-examination. Mr Attwood's counsel expressly disclaimed any wish to seek an adjournment of the trial in view of the late further disclosure and evidence.
24. During the course of the trial, two further trial bundles have been produced. One (bundle H) contained documentation which had been filed at Companies House and which was, therefore, in the public domain. The other bundle (bundle I) contains the report of the single joint expert valuer, Mr Philip Costa of Strettons, which had only been produced by him on 11 July 2011.
25. By the time the trial began, on Tuesday 12 July, I had pre-read the skeleton argument of Mr Andrew Clutterbuck of counsel, who appears for Mr Attwood and Ms Heard. I had also read the written note of opening on behalf of Mr Maidment and his sister, prepared by Mr Thomas Grant and Mr James Sheehan of counsel. I had also read the documents in the reading lists identified by trial counsel.
26. The first day of the trial was taken up with various preliminary matters which I addressed in an extemporary interim judgment delivered on the afternoon of the first day of the trial.
27. The second day of the trial was taken up with opening speeches from Mr Clutterbuck and, more shortly, from Mr Grant. Mr Attwood then entered the witness box shortly before 3.00pm. His evidence continued over the next two court days, concluding at about 4.30pm on the afternoon of day 4 (Friday, 15 July).
28. On Monday 18 July, I heard Ms Heard's evidence. That concluded the factual evidence adduced by Mr Clutterbuck.
29. Mr Maidment entered the witness box at about 3.45pm on day 5 and he remained there for the whole of days 6 and 7 of the trial. His evidence concluded at about 2.35pm on day 8. The rest of that afternoon was taken up with three relatively short witnesses: Mr Stuart Plastow, Mr Michael Parker and Ms Sarah Maidment.
30. On Friday 22 July I heard from Ms Anne Hastings (for about 55 minutes) and then from Mr Melvin Crutchley, who gave evidence for about four and a half hours, concluding at about 5.00pm on that day. Mr Crutchley was the last witness of fact to be called.
31. The court did not sit on Monday 25 July 2011 in order to enable counsel to prepare written closing submissions, and also to enable the Court to read through its notes of evidence, which by then amounted to some 300 pages of manuscript.
32. Day 10 of the trial (Tuesday, 26 July 2011) was taken up with cross-examination, principally by Mr Grant, of Mr Costa, the single joint expert valuer.
33. I received the written submissions from counsel by email early on the morning of Wednesday 27 July (day 11 of the trial), although it is fair to say that Mr Clutterbuck's had actually been transmitted by email the previous evening.
34. Day 11 of the trial had been the day set aside for time-limited oral submissions from counsel although, in the event, a little over an hour at the beginning of that day was taken up in addressing Mr Maidment's further disclosure and his sixth witness statement and how to deal with them. Day 11 concluded at about 4.50pm, when I indicated that I would deliver judgment at 10.00am today (Friday, 29 July), which is the last day of my sittings in London.
35. Due to the state of my list in the North-West, Thursday 28 July was the only day available to me to consider my judgment. Had this trial not exceeded its original estimate by a factor in excess of 50 per cent, more time would have been available to me to do so; and this judgment would have been more polished as a result. It might also have been available to be handed down in written form.

Chapter 3 - The witnesses

36. (a) Mr Attwood. Mr Attwood had provided two witness statements, dated 14 March and 28 June 2011. He was in the witness box for some 11 hours and 15 minutes, beginning just before 3.00pm on day 2 and concluding at about 4.30pm on day 4. Of this time, some 10 hours and 30 minutes was taken up with cross-examination by Mr Grant.
37. I find Mr Attwood to be an unreliable witness. Parts of his pleaded case and his written evidence were simply wrong, although Mr Attwood was prepared to acknowledge his errors in cross-examination. For example, in paragraph 9 of his amended points of defence to the Tobian petition, Mr Attwood had asserted that he was to continue to run Annacott on a full-time basis whilst working at Tobian's estate agency business after the acquisition by himself and Mr Maidment of the original 50 per cent shareholding in that company. That was a clear error on Mr Attwood's part, and was accepted as such by him in cross-examination.
38. In paragraph 27 of his first witness statement, Mr Attwood was in error about the date of the purchase of the remaining 50 per cent shareholding in Tobian, putting it in or around November 2001, when, in fact, it had taken place on 28 June 2001.
39. I am satisfied that Mr Attwood consciously and deliberately exaggerated his own role, and that he minimised the role of Ms Maidment, in the management of Annacott's properties, although he readily accepted in cross-examination that he had been, as he described it, "unfair to Sarah". I am satisfied that in his written evidence, Mr Attwood had been deliberately seeking to exaggerate his role in Annacott in order to answer Mr Maidment's "fluctuating share ownership" case (of which more later).
40. That view is consistent with the fact that Mr Attwood acknowledged allowing himself to be influenced by others in the way he had expressed the circumstances in which he had departed from Castles Estate Agents in 1997. In paragraph 16 of his first witness statement, he said that he had "lost" his job. In paragraph 17 of his second witness statement he said that he had "resigned". In cross-examination he accepted that he had been "fired" because Castles had found out that Annacott had been purchasing properties from clients without Mr Attwood having declared his interest in Annacott.
41. Early in his cross-examination, Mr Attwood accepted that the word "resigned" was what he had been "advised" to put in his witness statement. He emphasised that he had been honest and had explained in cross-examination why he had said this; and he asserted that he had done this, not in order to mislead, but in order to avoid what he described as "opening up another can of worms".
42. In fairness to Mr Attwood, it should be recorded that in paragraph 25 of Mr Maidment's first trial witness statement (served between Mr Attwood's first and second witness statements), Mr Maidment had also referred to Mr Attwood as having "resigned around the summer of 1997".
43. I find that Mr Attwood had a tendency to embellish his written evidence under cross-examination, as when he expanded upon paragraph 19 of his first witness statement, regarding the way in which the purchase of the first 50 per cent shareholding in Tobian had been financed.
44. I find that Mr Attwood also tended to answer questions from Mr Grant with questions of his own, although I accept that this was often because he disagreed with the assumption implicit within Mr Grant's question.
45. In summary, I consider that I must approach Mr Attwood's recollection and evidence with a considerable degree of scepticism and reserve, although I do not think that he has been deliberately lying to the court.
46. I am satisfied that Mr Attwood is mistaken in his recollection that he was registered as a shareholder in Annacott from the outset of his joint venture with Mr Maidment. I am also satisfied that he is mistaken when he says that he never resigned as a director of Annacott, after his initial appointment, and until the acquisition of an interest in Tobian in the year 2000.
47. Even before the late production (on day 11 of the trial) from Littlejohn Frazer's files of a letter produced on 28 February 1996, and bearing Mr Attwood's purported signature and a date of 3 March 2006, I had already concluded that Mr Attwood had indeed resigned as a director of Annacott in 1996 because (as he acknowledged) he had never been asked to sign any papers as a director or to give any guarantees in respect of mortgage advances in connection with Annacott's property purchases.
48. I also reject Mr Attwood's denial (communicated to the court on instructions by Mr Clutterbuck on the afternoon of day 11) that the signature on this resignation letter is not Mr Attwood's signature. At this early (and happy) stage in their relationship, in 1996, I see no reason why anyone should have been forging Mr Attwood's signature on company documentation.
49. Despite Mr Attwood's denial of the fact in answer to a question from the Bench, I am also satisfied that in 1996 Mr Maidment and Mr Attwood deliberately set out to conceal Mr Attwood's interest and involvement in Annacott because they appreciated that Mr Attwood's intended role was inconsistent with his employment by Castles. That conclusion is entirely consistent with the later treatment of Mr Maidment's own shareholding in Tobian (by way of a nominee holding) and his non-appointment as a director of that company, in which he had a 25 per cent interest.
50. I also find that Mr Attwood treated Tobian as his own company, determining the level of his director's remuneration entirely by reference to his own needs, and with no regard to either the company's ability to pay remuneration at the level he had determined, or the extent of his personal contribution to the company's business, and with no consideration to Mr Maidment as the other 25 per cent shareholder.
51. I also find that Mr Attwood deliberately waited to issue his petition in respect of Annacott until after the liquidation of Tobian. His expressed reason for not having taken matters any further after December 2003 was Mr Attwood's lack of funds to do so. I see no reason to think that this was any different after the liquidation of Tobian, and by the time of the issue of his petition in December 2008. In the absence of any other satisfactory explanation for the timing of the issue of the Annacott petition, I conclude that it was issued at the time it was because of the liquidation of Tobian, thereby terminating Mr Maidment's involvement, for all practical purposes, in that company with Mr Attwood.
52. (b) Ms Heard. Ms Heard's witness statement, dated March 2011, runs to little more than three pages, and was directed to the history of the Oliver Jaques estate agency, the use of its name, and the acquisition of its Surrey Quays branch by Tobian. She did, however, in her witness statement, adopt Mr Attwood's own witness statement because, as she explained, she agreed with it and saw no need to repeat his evidence.
53. Ms Heard gave evidence for three and a half hours during the course of day 5. I find Ms Heard to be a bright, personable, and honest individual. From my observations of Ms Heard in the witness box, I find her to be more intelligent and businesslike than Mr Attwood. From my observations of her in Court outside the witness box, she clearly took a keen interest in this litigation (although I note that she is not present for the delivery of judgment today), and it seemed to me that it might be her, rather than Mr Attwood, who was providing the substantial input to Mr Attwood's legal team.
54. Ms Heard was subjected to a probing cross-examination by Mr Grant. In particular, he challenged Ms Heard's response, dated February 2010, to paragraph 7.1 of the request for further information (at bundle A1, divider 11, page 71), and her assertions that she and Mr Attwood had co-operated fully with the investigations undertaken by the liquidator of Tobian, and had responded to the liquidator's inquiries. I accept that Ms Heard's response was misleading in that it appeared to accept the liquidator's view that a further £8,774.88 was payable to the liquidator from Epyc for the acquisition of Tobian's business.
55. But I reject, as inconsistent with Ms Heard's email of 12 November 2010, and her two emails of 9 December 2010 (see bundle E2 at pages 455, 458 and 481), any suggestion that she had consciously sought to mislead the liquidator about the value of Tobian's assets. Ms Heard knew that no value had been attributed to Tobian's business beyond the initial payment to the liquidator of £5,000. I am satisfied that Ms Heard genuinely believed that, in the market conditions affecting estate agencies at that time (in 2008), the business and assets of Tobian did not have much of a value. I acquit her of any conscious dishonesty or intention to mislead; although I acknowledge that, in her evidence to the Court, she could have expressed herself more clearly.
56. I also find that Ms Heard's concern during the period July to October 2008 had been focussed upon saving the business of Tobian for the benefit of its employees, rather than doing Mr Maidment out of his shares in the company (which Ms Heard believed to have no value). I accept Ms Heard's evidence that the people who lost out in the liquidation of Tobian were that company's creditors. I also find that Ms Heard had no sinister motive when she informed the liquidator (in her email of 26 September 2008 at bundle E2, page 365) that Mr Maidment's contact address was 107A Shacklewell Lane, London E8. Ms Heard understood that to be Mr Maidment's business address, and she had no other address for him. That had been the address which Littlejohn Frazer had supplied as a contact address for Mr Maidment on 25 January 2002; and that contact address had never been countermanded or corrected by Mr Maidment. It was also the address from which Mr Maidment had been corresponding with Kingsley Napley, Mr Attwood's solicitors, in September 2002, just before he first instructed Macfarlanes to act as solicitors on his behalf. I find that Ms Heard had no reason to think that notices or correspondence addressed to Mr Maidment at the Shacklewell Lane address would not reach him.
57. In any event, neither Mr Attwood nor Ms Heard had any reason to fear that Mr Maidment could prevent Tobian from entering into liquidation, or that he would seek to do so. Tobian was by then hopelessly insolvent; and, unless Mr Maidment were to inject substantial monies into it, the only alternative to a creditors' voluntary liquidation would have been a compulsory winding-up order following the presentation of a second winding-up petition by Her Majesty's Revenue and Customs. Neither Mr Attwood nor Ms Heard had any reason to think that Mr Maidment would be prepared to inject any monies into Tobian. He had declined to provide any further monies in 2001, which had resulted in the initial falling out between Mr Maidment and Mr Attwood.
58. (c) Mr Maidment. Mr Maidment's principal witness statement at trial was his statement of 1 June 2011 (which was an amended version of an earlier witness statement dated 11 May, following an order made by Briggs J on 13 May 2011). Mr Maidment also relied, and was cross-examined, upon witness statements dated 24 May and 7 July 2011. As I have already mentioned, on the last day of the trial he produced a sixth witness statement, dated 26 July 2011, on which he was not cross-examined.
59. Mr Maidment gave evidence for some 13 hours and 40 minutes in total, beginning at 3.45pm on day 5 and concluding at 2.35pm on day 8. About 12 hours of his evidence was taken up with cross-examination. Like Mr Attwood, I find Mr Maidment to be an unsatisfactory witness. I agree with Mr Grant that Mr Maidment was not at ease in the witness box. Indeed, I found him to be hesitant in his evidence. He was clearly puzzled by, and unable to answer, certain of the questions put to him by Mr Clutterbuck. Certain of his answers demonstrated a degree of naivety which I find to be surprising in a man with a first class degree in Computer Science, and who had worked in the City at Chase Manhattan Bank (later JP Morgan Chase) for 14 years between 1992 and 2006, and who, by the age of 28, had been promoted to the position of Vice President and was earning between, as he told me, £300,000 and £500,000 a year.
60. Mr Maidment was visibly uncomfortable, and at times apologetic, in his evidence; and I find him to be an unconvincing witness. His evidence and case on the "fluctuating share ownership" issue was deeply flawed. He accepted that the 50 per cent shareholding held in his name under account number 1181 represented Mr Attwood's interest in Annacott; but he would not accept that it represented a 50 per cent shareholding in the company held by Mr Attwood. He could not explain why the matter had been structured in that particular way. He acknowledged that it "sounded weak", but he said that he genuinely could not recall the reason why the two equal shareholdings had been treated differently from the start. Mr Maidment was also unable to explain how the "fluctuating share ownership" arrangement was to operate in practice.
61. Insofar as Mr Maidment sought to explain the transfer of the shareholding to Mr Attwood in 1998, its retransfer in 2000, and its (reluctant) restoration to Mr Attwood in 2003, at a time when Mr Maidment was being represented by Macfarlanes as his solicitors, I find his explanations to be patently false. Mr Maidment's evidence and case was wholly inconsistent both with his conduct at the time, and with all of the contemporaneous documentation, I find his attempts to reconcile the two to be entirely unsatisfactory, and wholly unconvincing.
62. I find it impossible to understand why, if Mr Maidment had perceived Mr Attwood's contribution to Annacott to be "negligible" (as he maintained in paragraph 38 of his first trial witness statement), or to be accurately reflected by a 10 per cent stake in Annacott (as he conceded in evidence in answer to a question from the Bench), he should have been prepared to invest with Mr Attwood in the purchase of a 50 per cent shareholding in Tobian, and should have been prepared to allow all of those shares to be placed in Mr Attwood's name, albeit as to half in a nominee account.
63. I do not accept Mr Grant's submission that Mr Maidment did not seek to embellish his evidence in the witness box. Mr Maidment's pleaded case on the "fluctuating share ownership" issue was set out at paragraph 3(ii) of his amended points of defence to the Annacott petition. I quote:

"Annacott's affairs were at all times ordered and conducted on the basis of an undocumented agreement between Mr Maidment and the Petitioner to the effect that they would own Annacott's assets in a proportion reflecting (a) their respective financial contributions and (b) their respective contributions in terms of time and effort to Annacott's affairs."

That was something that was never clearly articulated in Mr Maidment's written evidence; and in cross-examination he seemed to introduce a third factor into the equation, namely the quality of the properties being sourced by Mr Attwood which, he said, became a subject of complaint in relation to later property purchases.

64. Certain of Mr Maidment's evidence was clearly wrong. For example, paragraph 61 of his witness statement, which ignores Mr Attwood's email to Mr Maidment of 9 August 2001 at bundle F page 277. I am satisfied that Mr Maidment has been prepared to make statements in his written evidence which he thought might help him to win the case, regardless of their truth. He wrongly asserted (in paragraph 39 of his witness statement) that the Tobian Declaration of Trust (a copy of which was only produced by Mr Maidment in the week before the trial began) was produced by Mr Attwood's solicitor when, in fact, it was drafted by the company secretarial department of Littlejohn Frazer. Mr Maidment also said it was Mr Attwood who had produced the Annacott Declaration of Trust. It is now known (from documents produced from Littlejohn Frazer's files) that it was they who had drafted both declarations of trust. I find that both declarations of trust were drafted on the instructions of Mr Maidment rather than Mr Attwood.
65. In paragraph 39 of his first trial witness statement, Mr Maidment referred to his belief that he was the "sole proprietor" of Annacott; but in cross-examination he said he did not see himself as sole proprietor, and said that he had been using the term "loosely". In oral evidence, Mr Maidment said that he had not known about any suggestion that he should provide £30,000 to finance the fit-out of a Hackney branch of Tobian at the time of the initial purchase of shares in that company, but he had to accept that that was inconsistent with paragraph 6 of the points of reply to the Tobian petition at page 65.02 of divider 10A of bundle 1A.
66. Mr Maidment has clearly been prepared to sign and predate company documentation provided to him by Littlejohn Frazer. That practice extended to documentation such as the notice convening the Annual General Meeting to consider and approve Annacott's 2002 report and accounts, and waiving short notice thereof, which was signed after the Annual General Meeting had purportedly taken place. That practice also extended to altering the year on the letter to Mr Attwood at G25, purporting to enclose Annacott's filed accounts for the year ending 28 February 2008. That letter had been sent to Mr Maidment by Mr Crutchley under cover of the latter's letter of 13 January 2009 at G63. Mr Maidment did this even though the Annacott unfair prejudice petition had been served at Littlejohn Frazer's offices the previous Tuesday, 6 January 2009.
67. I am also satisfied that Mr Maidment has not been honest in his evidence generally. I am satisfied that in late 2005 and during 2006 Mr Maidment was selling properties and remortgaging them in order to raise money to invest over £1 million in MLP, and not to assist Annacott's cash flow. That view was supported by the evidence in cross-examination of Mr Crutchley. He said that at the time Mr Maidment had talked about investing in MLP, he had already addressed the solvency position of Annacott and had surplus cash. It is also supported by the terms of paragraph 8 (read in conjunction with paragraphs 4.4 and 4.6) of Mr Maidment's sixth witness statement, produced on the morning of day 11 of the trial. In paragraph 8, Mr Maidment said that rental income from the properties he had purchased from Annacott was usually higher than the monthly payment on the relevant mortgage, giving rise to a need for balancing payments to be made to him. In paragraph 4.4 he explained that for the financial year of Annacott ending on 28 February 2007, the surplus had been a little over £12,000; and in paragraph 4.6 he said that in the following financial year, the surplus had been just over £10,000.
68. I am also satisfied that Mr Maidment continued selling properties in order to effectively wind up Annacott. That was effectively confirmed in paragraph 7 of Macfarlanes' letter, written in response to the service of the Annacott petition, of 12 February 2009. In that letter Macfarlanes said:

"Our clients have commenced a winding-up of Annacott. Annacott now holds five properties, all of which are in the process of being sold. All of the properties will be sold at a fair market price. Our clients anticipate completing this process within the next three months or so."

69. I find Mr Maidment's approach to the investment in MLP so staggeringly naïve that it raises real questions as to the genuineness of this investment and Mr Maidment's evidence about it. Mr Maidment failed to obtain appropriate documentation (such as a full prospectus) or to undertake any proper research or effective due diligence (such as investigating the legal position in the Turkish Republic of North Cyprus, or investigating whether MLP would be sufficiently capitalised so that his investment in MLP stood any prospect of bearing fruit). In cross-examination, Mr Maidment was completely unable to explain properly how his return from the investment would be quantified. Indeed, he likened it to investing in a "hedge fund".
70. Mr Maidment made cheques out to Mr Parker personally and not to the UK company through which the investment purported to be made, European Property Investments Cyprus (Off-Plan) Limited, to which I shall refer as "EPICOL". He obtained two different sets of receipts, one from EPICOL and the other from MLP. The EPICOL receipts can be found in bundle C1 at divider 14. By way of example, the first receipt is headed "Receipt for Investment," and reads, "Received with thanks from Annacott Holdings Limited", of a Post Office Box address in London E10, "the sum of £200,000 Sterling for investment in shares" in a company which is identified as MLP (Cyprus) Off Plan Limited. That was dated 14 November 2005 and was signed by Michael Parker as Director. In fact, the cheque had been made out to Mr Parker personally; and the company is not MLP (Cyprus) Off Plan Limited but simply MLP (Cyprus) Limited.
71. The second set of receipts, disclosed apparently from the files of Littlejohn Frazer only shortly before the trial began, can be found at bundle G, divider 15 and following. They purport to be from MLP (Cyprus) Limited with an address in Lefkosa. The document is headed, "Receipt" and reads, "Received from Annacott Holdings Limited" of the Post Office box number in London E10, "the sum of £200,000 Sterling for investment in shares in MLP (Cyprus) Limited". The document is dated 14 November 2005 and purports to bear a signature of Ismet Izzer as Director, and of Michael John Parker as Secretary, and to bear a company stamp for MLP (Cyprus) Limited.
72. Those receipts are, in some respects, anomalous. The second MLP receipt (at Bundle G divider 16, page 68) for £300,000 was dated 13 December 2005. That was actually the date that the cheque itself for that sum was written in favour of Mr Parker, and before the cheque had cleared Annacott's bank account. On the first three receipts, Mr Izer's signature appears to be a reproduction rather than an original signature. The third MLP receipt, for £262,500, appears even to have predated the cheque written out for that sum, again in favour of Mr Parker, by two days. In total, Mr Maidment invested in excess of £1.35 million in MLP at a time when the net assets of Annacott were (as at 28 February 2006) some £1.9 million, and (as at 28 February 2007) some £1.65 million. Mr Maidment did not obtain any proof that Mr Parker was remitting the monies represented by the cheques that were being made out to him to Cyprus. Mr Maidment made no due diligence in relation to EPICOL. According to documents filed at Companies House, EPICOL was, in fact, a dormant company at all material times.
73. Until the afternoon of day 11 there was no independent evidence that MLP ever existed as a company in the Turkish Republic of North Cyprus. Mr Maidment had obtained evidence (in the form of a letter from Ms Ocal at bundle G, divider 64, page 252, dated 14 July 2011) confirming, amongst other things, that the law of North Cyprus did not require a share certificate to be issued to shareholders in a company incorporated there, but he had not instructed Ms Ocal to undertake any company search in North Cyprus to establish the status of MLP. That omission was rectified during the course of the afternoon of day 11 of the trial, when Mr Grant was addressing the court in response to Mr Clutterbuck's submissions. An email timed at 2.36pm that afternoon was produced, purporting to attach the results of a company search (although the attachment was incomplete), and giving a brief description of each page in order. The brief description indicated the company's registered address to be in Lefkosa. It indicated that a certificate of incorporation was enclosed. It indicated that the director of the company was Ismet Izer and the company secretary Michael John Parker. Details of the shareholders were given as being Mr Izer, holding 51 per cent of the shares, Mr Parker holding 24.5 per cent of the shares, and a Robert Benjamin Henry Ansell as holding 24.5 per cent of the shares. Mr Ansell appears to have been dead for some six years. What would have been apparent, had Mr Maidment instructed a company lawyer to undertake a search against MLP in the Turkish Republic of North Cyprus, is that Annacott in fact had no shareholding in MLP at all.
74. It is worth recording that Mr Maidment had resisted disclosure of the cheques evidencing the payments made for the investment purportedly in MLP. Those cheques, in the event, showed that the cheques had been made out, not to EPICOL, but to Mr Parker personally; and they also indicated that certain of the receipts could not be fitted in, in terms of chronology, with the actual payments by cheque.
75. I am satisfied, on the evidence, that MLP exists as a company incorporated in the Turkish Republic of North Cyprus. The question is whether Annacott's monies were, in fact, invested in MLP, as Mr Maidment maintains. On the evidence, I find myself faced with a stark choice. Either: (1) Mr Maidment was so grossly and wilfully neglectful of Annacott's, and thus of his own, financial interests as to invest over £1.3 million in the way I have indicated; or (2) he is lying about his investment being in MLP. With regret, and fully bearing in mind the standard of proof which it is appropriate for me to apply in relation to such an issue, I have come to the conclusion that the latter is the case, and that Mr Maidment is lying about his investment in MLP. I have no doubt that in doing so, Mr Maidment was motivated by the considerable enmity which he feels towards Mr Attwood. He genuinely believes that Mr Attwood has no valid moral claim to any share in Annacott's present or former assets. He genuinely believes that Mr Attwood was responsible for the serious assault to which he, Mr Maidment, fell victim at Rainham Railway Station on 28 April 2003. The depth of his feeling at that time is evidenced by his email of 8 July 2003, to which I will refer in the chronology of events later.
76. I have no doubt that after the correspondence between solicitors ended in December 2003, Mr Maidment felt that Mr Attwood had been sufficiently remunerated for his earlier contribution to Annacott by his investment in Tobian, and that he was entitled to nothing further from Annacott. I conclude that Mr Maidment therefore set about engineering a situation in which he would divest Annacott of its assets, leaving nothing against which Mr Attwood could assert a claim. It was probably as a result of his discussions with a former colleague, Mr Ben Ansell, who unfortunately died on 27 July 2005, that Mr Maidment came up with the idea of using a corporate vehicle operated by Mr Parker (EPICOL) to effectively appear to move the funds within Annacott overseas to an offshore company conveniently incorporated in the relatively opaque jurisdiction of the Turkish Republic of North Cyprus, so as effectively to "lose" Annacott's money. Mr Parker's reward was to be, at the very least, the management charges which purported to be paid by Annacott and which, over the period February 2006 to March 2008, amounted in total to £139,875. Mr Parker may, in addition, have received a "cut" of the purported investment.
77. In the course of his closing submissions, Mr Grant invited the court to conclude that Mr Maidment would never have defended this case, or allowed it to go to trial so as to become the subject of extensive cross-examination, if the investment in MLP were not a genuine one. He posed the question why Mr Maidment would have proceeded in this way if he had known that this was not a genuine investment. I have borne that in mind. It seems to me that the answer is that Mr Maidment simply did not think that he would be found out. Having embarked upon this course, he simply decided that he would brazen the matter out.
78. I am supported in the conclusion at which I have arrived in relation to the alleged investment in MLP by my assessment of Mr Maidment's claims to have paid sums from Annacott's bank account in financing works of repair and refurbishment to the properties owned by Annacott prior to their transfer to him from that company. Mr Maidment has produced various invoices and receipts for work purporting to have been carried out to those properties, in some cases by persons related to Ms Hastings. There are undoubtedly anomalies in the dates of certain of the invoices, and the cheques in payment of them. Perhaps the most notable example is an invoice in February 2009 for works purportedly carried out a year earlier. Certain of the cheques were made out not to the person supplying the invoice but to third parties. What I find staggering is that Mr Maidment has produced no similar invoices or receipts, or any proof of any payments, for works carried out after the transfer of the properties into his own name. That was an omission that was clearly flagged up by me on the first day of the trial in the course of discussion about whether Mr Maidment should be allowed to adduce evidence in relation to the condition of the properties at the time of their transfer.
79. The omission becomes even more staggering in the light of the cross-examination of Mr Maidment by Mr Clutterbuck, who made it abundantly clear that he was accusing Mr Maidment (and, indeed, Ms Hastings) of lying about the genuineness of the payments made in response to the various invoices produced for works allegedly carried out to properties prior to their disposal by Annacott. Indeed, on the morning of day 8 of the trial, during the course of his cross-examination of Mr Maidment, Mr Clutterbuck made it clear that he would welcome sight of invoices, receipts and any cheque stubs evidencing payments for works to the properties carried out after their transfer to Mr Maidment personally; and Mr Clutterbuck made it clear that he would rely on the non-production of such evidence in support of a submission that, after the transfer, no works were being carried out. No such evidence was ever produced. In the course of his closing submissions, Mr Grant indicated that no such documentation had been retained. He contrasted this with the situation prior to transfer on the footing that such documentation had been retained for the purposes of Annacott's accountants. It seems to me that after the transfer of the properties to Mr Maidment, as an experienced banking officer he would have wanted to keep adequate records for the purposes of his own personal tax affairs, and in order to minimise the amount of tax he would have to pay on rental income from the properties.
80. Finally, in relation to Mr Maidment's evidence, I should record that during the period covered by the financial years ended 29 February 2000 to 29 February 2003, Mr Maidment, as sole director of Annacott, caused that company to make payments by way of sponsorship to a company, Trumpet Motorsport Limited (of which he was the sole director and shareholder), totalling just over £90,000. I am satisfied that, despite what Mr Maidment maintained in evidence, there was no genuine commercial reason for that level of sponsorship. It was done merely in order to finance Mr Maidment's personal interest in motor sports.
81. (d) Mr Stuart Plastow. Mr Plastow's witness statement was produced just before the trial began and is dated 5 July 2011. He gave evidence for about 20 minutes on day 8. He was the person who produced certain invoices and receipts, and he was also the person who had drafted invoices submitted by his brother, Mark Plastow, in terms of producing the template for the invoices which recorded an incorrect address for his brother. He sought to explain the inaccuracy of that address. I found his explanation unconvincing, and his evidence to be unreliable. On his own admission, Mr Stuart Plastow instructed Ms Hastings to make cheques out for works which he had invoiced to Annacott in favour of third parties expressly in order, as he put it, "to lose the cheque", so that it did not go through his own bank account. Such a practice was clearly dishonest; and I find that Mr Plastow is not a man I can treat as a reliable witness.
82. (e) Mr Michael Parker. He is 38 years of age and is the sole director of EPICOL. He is also the company secretary of MLP. His witness statement is dated 6 July 2011 and was produced just before the trial began. He gave evidence on the afternoon of day 8 for about an hour and 10 minutes. I found him to be a truculent witness who was unconvincing in his evidence. He could not even remember the name of the law firm in Cyprus to which he had transferred £1.3 million of Annacott's money, despite the fact that he claimed that his investment in MLP had led to him facing bankruptcy and the breakdown of his marriage. I did not find him to be a reliable witness.
83. (f) Ms Sarah Maidment. Her witness statement is dated 6 July 2011. She gave evidence, also on the afternoon of day 8, for about 20 minutes. Mr Attwood had attempted to exclude Ms Maidment's evidence on day 1 of the trial due to its lateness and what was said to be its peripheral relevance to the real issues in the case. In the event, having failed to exclude her evidence, Mr Attwood accepted most of it, and he apologised to her for the unfairness of his ever challenging the amount of work she had done for Annacott. In consequence, there was no real challenge to Ms Maidment's evidence. I find her to be an honest and a reliable witness; but she was of limited assistance to me. She dealt only with property management issues within Annacott and had not involved herself in the decision-making process or even attended directors' meetings. She had left Annacott at about Christmas 2005 when her mother was diagnosed with a terminal illness and she had moved from London to Hampshire to assist in caring for her.
84. In paragraph 3 (vi) of the amended points of defence to the Annacott petition, it had been pleaded that Ms Maidment had become involved in Annacott's business in about July 1998, with the agreement and approval of the petitioner, undertaking Annacott's property management work. It was pleaded that although Ms Maidment had not invested financially in Annacott, she had at all material times understood herself to have a limited interest in Annacott's business, reflecting her contribution in terms of time and effort to Annacott's affairs. In cross-examination, Ms Maidment accepted that she had no interest in Annacott. I note that although there is a counterclaim for relief by Mr Maidment, there is no counterclaim for any relief by Ms Maidment herself.
85. (g) Ms Anne Hastings. Her witness statement is dated 13 July 2011 and was produced during the early part of the trial. She gave evidence on day 9 for about 55 minutes. I find her to be a bright individual; but I also find parts of her evidence difficult to accept. For example, she said that she could not recall when the conversation had taken place at which Mr Maidment had first told her that he wanted her to keep a photographic record of the condition of the properties being transferred from Annacott to him. As an intelligent woman, I find it difficult to accept that it never occurred to her that Mark Plastow (and other alleged contractors) were instructing her to make cheques out to third parties because they wanted to avoid money going through their own bank accounts. I am satisfied that, contrary to Ms Hastings's evidence, some of this money at least was paid back to Mr Maidment. I am satisfied that Ms Hastings allowed herself to become involved in this practice because (as she said in evidence) in 2006 and 2007 she thought that Mr Maidment owned Annacott and, therefore, she would not have considered that he was involved in defrauding any particular individual rather than, perhaps, the Revenue authorities.
86. Even apart from that, and in the light of Mr Attwood's perceived involvement in the April 2003 assault upon Mr Maidment (as a result of which Ms Hastings said that she had effectively been exiled to Spain for about a year), I am satisfied that Ms Hastings would not have considered Mr Attwood to have had any real claim upon any of Annacott's assets. I am satisfied that it is that that explains the way in which she has given evidence in this case.
87. (h) Mr Melvin Crutchley. He produced two witness statements dated 10 May and 7 July 2011; and he gave evidence for four and a half hours on day 9. He is a chartered accountant and is presently a consultant to Littlejohn LLP, the successor practice to Littlejohn Frazer, of which Mr Crutchley was formerly a partner. He was measured and careful in his oral evidence. I find, contrary to Mr Crutchley's evidence, that after differences emerged between Mr Maidment and Mr Attwood, Mr Crutchley regarded Mr Maidment as his client and assisted him in his dispute with Mr Attwood. I regard him as partisan in his evidence, although I do not consider that he was deliberately dishonest. I accept Mr Crutchley's evidence that the delay in registering Mr Attwood as a shareholder in Annacott in February and March 2003 was not motivated by any desire to enable Mr Maidment alone to approve Annacott's report and accounts for the year ended 28 February 2002, without the opportunity for any challenge from Mr Attwood, and so as to assist Mr Maidment in the settlement negotiations which, it was anticipated, would be based upon the 2002 accounts. I simply cannot see any reason why Mr Crutchley should have arranged for Mr Maidment to execute the share transfer, and should have caused a share certificate in Annacott to be issued, before the accounts were approved if Mr Maidment, and through him Mr Crutchley, were motivated by a desire deliberately, and improperly, to exclude Mr Attwood from the approval process. They had already delayed considerably in responding to Mr Attwood's requests, even though later requests were communicated by his solicitors, to produce a share transfer; and I simply see no reason why they would not have had the accounts approved before effecting the share transfer.
88. I accept that the delay in registering the share transfer was because of a misapprehension on the part of someone within Littlejohn Frazer's corporate secretary's department, admittedly contrary to their previous practice, that the share transfer had to be stamped before registration. That view is supported by the lately disclosed email of 12 December 2003 from Lorraine Nixon to Mr Crutchley.
89. I also accept that it was Mr Crutchley who advised that there was no need for Annacott's accounts for the years ended 28 February 2007 and following to be audited. I accept that that was not done in order to prevent any investigation into Annacott's investment in MLP. Indeed, Littlejohn Frazer had already investigated that investment as part of the audit process which had been undertaken in relation to Annacott's accounts for the year ending 28 February 2006. I also accept Mr Crutchley's evidence that Mr Attwood was removed as a director of Annacott in 1996 because of a patent conflict of interest. However, I do find that Mr Crutchley did nothing to protect Mr Attwood's interests in Annacott, and that Mr Crutchley acted in disregard of Mr Attwood's interests as a shareholder in producing backdated company documents for Mr Maidment to sign.
90. Nevertheless, I do accept Mr Crutchley's evidence on the following matters, which are of assistance to Mr Attwood's case. First, that Mr Crutchley believed Mr Maidment held half of his shares in Annacott as a nominee for Mr Attwood. Secondly, that initially the intention on the part of Mr Maidment had been to sell Annacott's properties to third parties rather than to himself. Mr Crutchley said that he could not recall why this intention later changed to one of selling properties to Mr Maidment. Thirdly, I accept Mr Crutchley's evidence that his practice was to tell clients to obtain three valuations when selling properties to an associate, and to take the middle valuation and not the lowest. Mr Crutchley said that he adopted that approach so as to satisfy the Inland Revenue that properties were being sold at a fair market price. Mr Crutchley said that he may well have suggested that approach to Mr Maidment, although he could not specifically recall. The probability, as I find, is that Mr Crutchley would have communicated that advice to Mr Maidment because he would have wanted to ensure that Mr Maidment achieved a fair market price for the properties, and was able to demonstrate that he had done so. Fourthly, I accept Mr Crutchley's evidence that Mr Maidment had not told him precisely how much he was proposing to invest in MLP in advance of the investment, although Mr Crutchley said that he appreciated that MLP was a Cypriot company. Mr Crutchley said that prior to the investment being made, Mr Maidment had simply talked about investing in MLP. Fifthly, I find, as I have already mentioned, that at the time Mr Maidment was talking about investing in MLP, he had already addressed the solvency position within Annacott and that the company had surplus cash. Sixthly, I accept that Mr Crutchley did not advise on the merits of the investment in MLP which, as Mr Crutchley said, was outside his remit and ability to do so. Seventhly, I accept Mr Crutchley's evidence that he had no instructions from Mr Maidment to send the full version of Annacott's accounts to Mr Attwood.
91. (i) Mr Philip Costa. Mr Costa's single joint expert valuation report is dated 11 July 2011. He was cross-examined, principally by Mr Grant, for a little under five hours on day 10 of the trial. After adjusting for the length of certain unexpired leases, Mr Costa effectively valued the property portfolio of 46 properties acquired by Mr Maidment from Annacott at some £1.998 million more than the aggregate of the transfer prices actually paid by Mr Maidment.
92. I accept Mr Costa's evidence that the Base Property Specialists Ltd's sales valuations, which were obtained in respect of 23 of the 46 properties acquired by Mr Maidment, were too low. I also accept his evidence that it was inappropriate for that entity to value properties within some seven or eight of the ten postal districts in which those properties were situated. However, I do have difficulty in accepting Mr Costa's actual retrospective valuations of Annacott's properties. I have no doubt that Mr Costa was considerably hampered, as he accepted, by the shortness of the time which he had been given to undertake the valuation task; but, as I say, I have difficulty in accepting the reliability of his historic valuations. Only ten of Mr Costa's historic valuations were supported by identified historic comparables. Four more were said to be supported by limited, but unidentified, comparable evidence. For the remaining 32 properties, Mr Costa had no historic comparable evidence which he identified in his report. He supported his valuations simply by reference to the "general tone".
93. In my judgment, whilst acknowledging, as Mr Costa said, that house price increase indices can present a distorted picture, even if produced on an individual London borough basis, because of the disparity in house price changes within individual London boroughs, nevertheless it does seem to me that, in cases where Mr Costa's historic valuations were unsupported by historic comparables, he should have had regard to changes in the house price indices for relevant boroughs, even if only as a cross check upon his own feel for the historic market.
94. In one of the cases (and there were only ten) where historic comparable evidence was relied upon by Mr Costa, namely number 2 (which was 12 Downs Road), I find considerable difficulty in reconciling Mr Costa's base valuation of £195,000 with the first of his historic comparables, 4 Downs Road, which sold shortly after the valuation date at £130,000. I accept that this was only a two-bedroom property; but even allowing for that, and even allowing for the fact that the £130,000 sale price was discounted because only 67 years remained unexpired on the lease, I nevertheless find it difficult to see how Mr Costa could justify the base valuation at which he arrived of £195,000 before he then discounted for the short length of unexpired lease for 12 Downs Road.
95. My conclusion on the expert evidence is that Mr Maidment did purchase the properties from Annacott for less than market value; but on the evidence (and no doubt due to the time constraints under which Mr Costa was required to operate) I cannot be satisfied as to the precise, and exact, degree of undervalue.

Chapter 4 - The Chronology of Events

96. Much of this chronology is common ground; but insofar as it is not, the following chronology represents my findings of fact on matters in dispute.
97. In 1995, Mr Maidment and Mr Attwood met and they became friends. Mr Attwood was then 23 years of age, and he was working as an estate agent for Castles, based in Hackney. Mr Maidment was then aged 26 and he was working as a banking officer in the City earning between £300,000 and £500,000 a year, depending on the bonus awarded to him in each individual year. On 16 January 1996 Annacott was incorporated. The company was set up in order to invest in residential properties, primarily in the east of London, but anywhere where Mr Attwood might develop expertise and contacts. In this connection, so far as Mr Maidment is concerned, reference can be made to paragraph 12 of the amended points of defence to the Annacott petition, and to paragraph 11 of Mr Maidment's first witness statement.
98. Annacott's accountants were Littlejohn Frazer, who maintained the company's records. The connection with Littlejohn Frazer was one of Mr Maidment's rather than Mr Attwood's. The share register shows that 2,500 of the 5,000 shares were held by Mr Maidment and that 2,500 shares were held by Mr Maidment under the designation account 1181. Initially, both Mr Maidment and Mr Attwood were the company's two directors, but on 3 March 1996 Mr Attwood signed a letter, drafted by Littlejohn Frazer on, and dated, 28 February 2003 resigning as a director. I find that this was because of a perceived conflict of interest since Mr Attwood was to be sourcing properties for Annacott through Castles, his employers, who would have been acting on behalf of the sellers. In 1997 Castles fired Mr Attwood because of his undisclosed conflict of interest. Initially, it was thought that this would enable Mr Attwood to devote more time to the management of Annacott's developing property portfolio; but Mr Attwood was a dealer, and he was not interested in the detailed, and hard, work involved in the day-to-day management of a property portfolio of residential lettings.
99. Thus, in or about the spring of 1998, Mr Maidment's sister, Sarah, was brought in to deal with this unwelcome aspect of Annacott's business. Initially, she was retained on a part-time basis. After some initial training from Nicola Heard, she was thrown in at the deep end, and by the summer of 1998 she was working full-time for the business. She continued to do so, working very hard, until the Christmas of 1995, when she left to look after her mother, who had been diagnosed with a terminal illness (ultimately passing away in March 2006). Sarah Maidment never returned to Annacott, and her management role was assumed by Anne Hastings, who is Mr Maidment's long-term partner and the mother of his child.
100. On 6 May 1998, the 2,500 shares in Annacott held in Mr Maidment's name under account number 1181 were transferred to Mr Attwood for no consideration. I am satisfied that (as the share transfer form expressly states) this was a transfer from Mr Maidment, as nominee, to Mr Attwood as beneficial owner of the shares. The reason for the transfer was nothing to do with Ms Maidment's employment by the company (as Mr Maidment asserted in his witness statement) but was rather because, with Mr Attwood's dismissal from Castles, there was no longer any need to conceal his shareholding in Annacott.
101. At the end of 1999, Annacott declared a dividend of £4,500 in favour of Mr Attwood (with Mr Maidment waiving his own entitlement to any dividend). On 25 February 2000, the 2,500 shares in Annacott held by Mr Attwood were transferred back to Mr Maidment, again under the designation account number 1181. A declaration of trust in favour of Mr Attwood was executed by Mr Maidment. This document was drafted on Mr Maidment's instructions by staff in the company secretarial department of Littlejohn Frazer. The reason for the transfer was because of Mr Attwood and Mr Maidment's impending purchase of an interest in the estate agency business being carried on by Tobian under the Oliver Jaques name. Since it was intended that Annacott should source properties through Oliver Jaques, it was necessary (as it had been in the case of Castles) for Mr Attwood (who was to be involved in running Oliver Jaques) to conceal his shareholding in Annacott in order to conceal the potential conflict of interest in his acting for sellers of property to be purchased by Annacott through the agency of Oliver Jaques.
102. On 2 March 2000, Mr Simon Harris bought out Mr Andrew Bench's 50 per cent shareholding in Tobian of 500 shares for £180,000. This was with a view to the onward sale of those shares to Mr Attwood and Mr Maidment.
103. On the following day, 3 March 2000, a firm of solicitors called Traymans wrote to Mr Attwood confirming his acquisition of 250 shares in Tobian for himself and 250 shares under account number 2302. I am satisfied that this latter shareholding was acquired as nominee for Mr Maidment. Mr Attwood has never disputed that. The total purchase price was £195,000, resulting in a profit of £15,000 to Mr Harris.
104. At this time, Mr Attwood became a director of Tobian with Mr Harris; and Ms Heard, who had been working for Tobian's Surrey Quays office for a number of years, became Tobian's company secretary. Thereafter, Mr Attwood was involved in Tobian's Oliver Jaques estate agency business; and Mr Maidment (assisted until the beginning of 2006 by his sister, and thereafter by Ms Hastings) was involved in running Annacott. For reasons which are not apparent, the form transferring the 250 shares in Tobian to Mr Attwood personally, and the remaining 250 shares into his name under account number 2302, was not, in fact, executed until 23 June 2000. On the same day, Mr Attwood executed a declaration of trust in a form drafted by Littlejohn Frazer, and in terms similar in all material respects to the declaration of trust which had been executed by Mr Maidment in favour of Mr Attwood in respect of his beneficial shareholding in Annacott. That declaration of trust related to the 250 shares in Tobian, and confirmed that they were held by Mr Attwood in trust for Mr Maidment beneficially.
105. On 25 September 2000, Mr Harris offered to sell his remaining 50 per cent shareholding in Tobian to Mr Attwood. This shareholding was eventually acquired by Mr Attwood on 28 June 2001 for £100,000. By this time, Mr Attwood and Mr Maidment had fallen out over what was perceived by Mr Attwood as Mr Maidment's refusal to invest further monies to develop Tobian's estate agency business. It is unnecessary for the purposes of this judgment for me to determine the rights and wrongs of this dispute. It is also unnecessary for me to determine the reason why Mr Maidment did not participate in the purchase of the outstanding 50 per cent shareholding in Tobian. However, I find that there had never been any agreement or understanding that the outstanding shareholding in Tobian would be acquired equally by Mr Attwood and Mr Maidment if it ever became available.
106. In the meantime, on 25 March 2001, Mr Attwood had first instructed Mr Maidment to transfer his 50 per cent shareholding in Annacott to himself. It was not until about two years later that this was done; and even then the share certificate was not handed over to Mr Attwood.
107. In January 2002, Mr Attwood first instructed solicitors to act for him in relation to his dealings with Mr Maidment. The solicitors' firm in question was Kingsley Napley. By this time, and in or about August 2001, Mr Attwood and Mr Maidment had irrevocably fallen out over their involvement in a property development known as The Pump House in Surrey Quays. They had found themselves unable to sell on individual units in the course of construction in advance of their completion. As a result, Mr Maidment and Mr Attwood were no longer on speaking terms.
108. On 25 January 2002, Littlejohn Frazer provided a contact address for Mr Maidment at 107A Shacklewell Lane, Hackney, E8. This was Annacott's business address, and was the address which Ms Heard later notified to the proposed liquidator of Tobian (in September 2008) for the purposes of sending out the notice convening the meeting of Tobian's shareholders with a view to putting that company into insolvent liquidation. Although Mr Maidment says he moved from that address in or about 2003, no new contact address was ever supplied to Mr Attwood or his representatives.
109. On 5 August 2002, Mr Attwood transferred Mr Maidment's 25 per cent shareholding in Tobian to Mr Maidment. The share certificate is dated 16 August 2002.
110. On 13 September 2002, Mr Maidment instructed Macfarlanes to act as his solicitors. They are his solicitors for the purposes of the instant litigation.
111. On 11 October 2002, Kingsley Napley sent Mr Maidment's share certificate in Tobian to Macfarlanes.
112. On 15 October 2002, Macfarlanes wrote a letter in which they referred to Mr Attwood's interest in Annacott as being "of limited value." That letter (at Bundle F, page 366) was the first (and the only real) documented suggestion that Mr Atwood's interest in Annacott was anything other than 50 per cent.
113. By the end of 2002, Mr Attwood had closed two of Tobian's four Oliver Jaques offices (the offices at Wapping and Borough High Street); and only two offices remained (those at Surrey Quays and the Bow Quarter).
114. At a board meeting, purportedly held on 13 February 2003, Mr Maidment, as Annacott's sole director, approved the transfer to Mr Attwood of his 2,500 shares in Annacott. On the same day, the share certificate was dated. However, the share transfer was not stamped until 25 March 2003; and that was the date that Mr Attwood's name was entered by Littlejohn Frazer in Annacott's register of members. As I have indicated, I find that this was not due to any deliberate decision on the part of Mr Maidment or Mr Crutchley to delay the registration of Mr Attwood as a member of Annacott; rather it was due to a genuine misapprehension on the part of someone in Littlejohn Frazer's company secretarial department that a transfer of shares should not be registered until it was duly stamped. However, this delay in registration meant that Mr Attwood was not involved in the approval of the annual report and Annacott's accounts for the year ending 28 February 2002.
115. The resolution of Mr Maidment, as the sole director of Annacott, to approve the report and accounts bears the date 19 February 2003. That is also the date of a notice purporting to convene an Annual General Meeting of Annacott to approve the report and accounts. That notice incorporated a notice signed by Mr Maidment, as the sole shareholder, waiving the required 21 days' notice to shareholders. The minutes of the Annual General Meeting also purport to record that it took place on 19 February 2003. All of these documents were drafted by Littlejohn Frazer on 19 March 2003, and thus after the date they purport to bear, but before Mr Attwood was entered in the register of members of Annacott.
116. The significance of the company's approval of Annacott's report and accounts for the year ended 28 February 2002 is that, in the correspondence passing between the parties' solicitors, it had been proposed that these should form the basis of determining the value to be attributed to Mr Atwood's 50 per cent shareholding in Annacott. The accounts also recorded the fact that Mr Maidment was now to charge interest on his loans to Annacott, backdated by two years to 28 February 2000.
117. On 10 March 2003, Macfarlanes sent a copy of the full accounts for the year ended 28 February 2002 to Kingsley Napley. They purported to have been approved by the company on 19 February, although on their face they were only signed by Littlejohn Frazer (as auditors) on 24 February 2003. Neither Mr Attwood nor Kingsley Napley ever presented any challenge to the validity of these accounts.
118. On 24 April 2003, Kingsley Napley wrote to Macfarlanes complaining of instructions apparently given by Mr Maidment to hold on to Mr Attwood's share certificate in relation to his shareholding in Annacott. Macfarlanes responded on 4 May 2003, asserting that it was appropriate for the share certificate to remain with Macfarlanes in view of the dispute in regard to the shareholdings in both Annacott and Tobian. I find it difficult to see what the dispute was in relation to Mr Maidment's shareholding in Tobian since he had been supplied with his share certificate in that company on 11 October 2002.
119. In the course of this exchange of letters, on 28 April 2003, Mr Maidment had been subjected to a violent assault at about 7.00am in the car park of Rainham Railway Station: see paragraph 66 of Mr Maidment's principal witness statement. It was this that led to the final, and irrevocable, breakdown in relations between Mr Maidment and Mr Attwood, since Mr Maidment attributed the responsibility for this assault to Mr Attwood. This led to a bitter exchange of emails between the two men on 30 June 2003 and 8 July 2003.
120. In his email, Mr Attwood had said that he had instructed David Moss to request Mr Maidment and his solicitor to meet at a convenient place and time in order to discuss a sensible way forward in the divorce of the two companies. He continued:

"It seems to me that nothing will ever be achieved going through Solicitors, except costly legal bills which is not in anybody's interest. I just want to get on with my life as I am sure you do. Please think carefully and agree to this meeting."

121. Mr Maidment's response on 8 July was as follows:

"The only decision I have to make is whether to fully pursue the police prosecution route or not. The legal proceedings you started are no more than a thinly veiled attempt to extort a substantial sum of money out of me and have merely served to force me to employ a solicitor who has made it very clear to me what is rightfully mine. By continuing to pursue it you will end up both paying me money and bankrupt. Your actions are a disgrace and are so clearly fuelled by greed, not by what is right and wrong. You will only 'get on with your life' when you realise this. Any moral right you might think you have to anything disappeared the moment you employed physical intimidation tactics involving death threats. Your use of intimidation may well have worked with Simon Harris but it will not work with me. If I ever pay out any money it would only be towards the costs of the divorce."

122. On 26 November 2003, Mr Attwood changed his solicitors from Kingsley Napley to Dale R Walker, based in Bromley in Kent. The communications between solicitors came to an abrupt end with a letter from Macfarlanes on 18 December 2003. That reiterated the position maintained in their earlier letter to Kingsley Napley of 6 May 2003. Macfarlanes indicated that they had nothing to add to that letter. There were no further communications between, or on behalf of, Mr Maidment and Mr Attwood until the issue (on 22 December 2008) and the service, at Littlejohn Frazer's offices (on 6 February 2009), of the Annacott petition. This had been presented on behalf of Mr Attwood by a new firm of solicitors, Cliftons. There had been no pre-litigation correspondence from Mr Attwood.
123. Epyc was incorporated on 13 February 2004. On 19 November 2004, Mr Attwood and Ms Heard were appointed to act as its directors; and Ms Heard was appointed the company secretary. Ms Heard is shown as the sole shareholder in Epyc's accounts for the years up to 28 February 2007, when Mr Attwood and Ms Heard were shown as equal 50 per cent shareholders.
124. Mr Attwood accepted, in cross-examination, that he could have transferred some of his shares in Tobian to Ms Heard, but that he had been looking to expand the Oliver Jaques estate agency business, and he did not want to do so through a corporate vehicle in part owned by Mr Maidment. In the event, Epyc did not start to trade until 1 June 2005, when it opened an Oliver Jaques estate agency office in Hayes, Kent. That office closed in June 2007.
125. In June 2006, Epyc opened a second estate agency office, trading under the Oliver Jaques name, at London Bridge. That office in turn closed in April 2008.
126. I accept that the reason for the closure of these two offices was that they were simply not profitable. Epyc was not trading from April 2008 until it took over Tobian's business and assets on or about 31 August 2008, at which point Tobian ceased to trade. The reason for the closure of Tobian's business was because it was insolvent.
127. On 24 July 2007, Her Majesty's Revenue & Customs had presented a petition to wind up Tobian for non-payment of, amongst other things, income tax, PAYE and VAT. On 17 October 2007, that petition had been dismissed, with costs to be paid by Tobian to Her Majesty's Revenue & Customs. Ms Heard had in fact paid Her Majesty's Revenue & Customs just under £37,000 to stave off Tobian's liquidation.
128. By early July 2008, however, Tobian was again in serious financial difficulties. Mr Attwood and Ms Heard could see no way of avoiding a further winding-up petition from Her Majesty's Revenue & Customs otherwise than by entering into a creditors' voluntary liquidation. They therefore set about, in July 2008, obtaining valuations of Tobian's assets. On 29 July 2008, Mr Attwood transferred one share in Tobian to Ms Heard in order to enable the liquidation of Tobian to proceed.
129. Epyc paid £5,000 to Tobian in order to finance its liquidation; and, on 20 October 2008, Tobian entered into creditors' voluntary liquidation, without any knowledge on the part of Mr Maidment. By then there had been a seamless transfer of the Oliver Jaques estate agency business from Tobian to Epyc, without any real formality, and with the only consideration passing being the £5,000 which had been paid to the liquidator in order to cover her fees in liquidating Tobian.
130. On 22 December 2008, Mr Attwood presented his unfair prejudice petition in respect of Annacott. As I have already indicated, I am satisfied that the petition was presented at this time because, by then, Tobian was already in liquidation and there was nothing, so Mr Attwood thought, against which Mr Maidment could assert a claim. Mr Maidment's own response to the Annacott petition, on 16 November 2009, was to present his own unfair prejudice petition in respect of Tobian.
131. In the meantime, there had been major changes in the nature of Annacott's business and assets. On 25 August 2005, Mr Maidment had transferred one of his 2,500 shares in Annacott to his sister. This had been done to address a difficulty perceived to be presented by article 5 of Annacott's Articles of Association. With the perfected transfer of 2,500 shares to Mr Attwood, Mr Maidment was no longer the sole member of Annacott, and he therefore needed a second shareholder if company meetings were to be quorate. Clearly, he did not want to involve Mr Attwood in Annacott's affairs, so he alighted upon transferring the share to his sister so that she would become a member of the company.
132. Ms Maidment did not pay for her share, and she told me (and I accept) that she did not even know at the time that the share had been transferred to her.
133. On 14 October 2005, the first of the 46 properties (15 Oriel Road, E9) was transferred from Annacott to Mr Maidment personally. On 11 November 2005, Annacott's bank account was debited with the first of the series of cheques made out to Mr Parker personally. Mr Maidment asserts that these comprised the investments which he was making into MLP, a company incorporated in the Turkish Republic of North Cyprus. In total, no less than £1,355,975 was debited to Annacott's bank account between 11 November 2005 and 2 January 2007, with the last of the cheques being dated in December 2006.
134. The sums debited to Annacott's bank account are as follows: 11 November 2005, £200,000; 16 December 2005, £300,000; 17 January 2006, £262,500; 3 March 2006, £227,500; 23 June 2006, £227,500; 13 September 2006, £63,473 and 2 January 2007, £75,000.
135. In addition, Annacott paid sums totalling £139,875 on account of what were declared as "management fees," as follows: 2 February 2006, £22,000; 26 June 2006, £36,525; 28 April 2007, £40,675 and 19 March 2008, £40,675.
136. In return for his alleged investment in MLP, Mr Maidment received no share certificates, but simply the two sets of receipts, one from EPICOL and the other from MLP to which I have already made reference. The anomalies presented by these two sets of receipts were fully explored in Mr Maidment's cross-examination.
137. On 21 March 2007, Annacott's audited accounts for the year ending 28 February 2006 were filed. They indicated tangible assets reduced in value from £5,867,374 in 2005 to £3,270,555 in 2006. They also recorded investments in 2006 of £784,500 against nothing in 2005. The filed accounts did not indicate that all of those investments had been made into a company incorporated in the Turkish Republic of North Cyprus. That was only apparent from the full accounts, which were not supplied to Mr Attwood.
138. Annacott's unaudited accounts for the year ending 28 February 2007 showed that tangible assets had fallen from £3.27 million in 2006 to £1.267 million in 2007 and that investments had increased from £784,500 in 2006 to £1,355,975 in 2007. Again, the nature of the investments was not specified.
139. On 26 May 2008, Annacott changed its registered office from 107A Shacklewell Lane, Hackney, E8 to Littlejohn Frazer's offices at Canary Wharf. Mr Maidment was still recorded as living at 11 Spinney Close, Rainham, Essex.

Chapter 5 - The Ownership of Annacott

140. I have already set out the terms of paragraph 3(ii) of the amended points of defence to the Annacott petition, which sets out Mr Maidment's pleaded case. To repeat, that is that Annacott's affairs were at all times ordered and conducted on the basis of an undocumented agreement between Mr Maidment and the petitioner to the effect that they would own Annacott's assets in a proportion reflecting (a) their respective financial contributions and (b) their respective contributions in terms of time and effort to Annacott's affairs.
141. I reject this case, essentially for the reasons which are to be found at paragraphs 2 to 5 and paragraphs 52 to 54 of Mr Clutterbuck's written closing submissions. Mr Maidment's pleaded case is not merely not supported by any of the contemporaneous documents; it is actually contradicted by them. It is also contradicted by Mr Maidment's own conduct over a period of many years. Mr Maidment himself was unable to provide any explanation as to why, right from Annacott's inception, the two equal 2,500 shareholdings should have been treated differently from each other. The movements in the 2,500 shareholding designated under account 1181 are consistent and, in my view, consistent only, with them being owned by Mr Attwood beneficially in their entirety.
142. The creation of a nominee holding at the outset is readily explicable by the proposed nature of Annacott's business, which was to be investment in buy to let properties, and the source of those properties, which was to be the estate agency for which Mr Attwood was then working.
143. In 1998 the shares were transferred into Mr Attwood's name after he had been fired by Castles, without any qualification. In 2000, with the acquisition of Tobian, there was every reason to conceal Mr Attwood's ownership of these shares in Annacott. They were therefore transferred back to Mr Maidment under the account 1181 designation; and Mr Maidment executed a Declaration of Trust in Mr Attwood's favour. That was a document drafted by Littlejohn Frazer who, I am satisfied, regarded themselves as acting principally for Mr Maidment, rather than Mr Attwood, whenever their interests diverged.
144. Mr Attwood's accounts, signed by Mr Maidment as sole director, are consistent only with Mr Maidment holding his 2,500 shares beneficially, and a further 2,500 shares (representing 50 per cent of the issued share capital of Annacott) as trustee, from the year 2000 until March 2003, when he disposed of those 2,500 shares in favour of Mr Attwood. The accounts thereafter are consistent, and consistent only, with the shareholding being as to 50 per cent in favour of Mr Maidment beneficially and the remaining 50 per cent in favour of Mr Attwood beneficially.
145. In my view, the inter-party correspondence from 25 March 2001 until it terminated at the end of December 2003 is consistent, and consistent only, with Mr Attwood being the beneficial owner of 50 per cent of the shares in Attwood. That view was clearly entertained by Mr Crutchley in August 2001 (see F278) and in March 2002 (see F316). Mr Crutchley confirmed that was his view in his evidence and I accept that.
146. Mr Attwood's beneficial ownership of 50 per cent of the shares in Annacott was not challenged by Mr Maidment in correspondence at the time. See, for example, his letters of 30 April 2002 (at F326), 13 June 2002 (at G, divider 49, page 148) and 31 July 2002 (at F344).
147. The first suggestion that Mr Attwood's interest in Annacott was of limited value is to be found in Macfarlanes' letter of 15 October 2002 (at F366). Even then, Macfarlanes do not suggest that there was any express understanding of the kind now alleged by Mr Maidment. Mr Maidment denied in cross-examination that the existence of such an understanding had not occurred to him by this time, but I find such denial to be unconvincing. Even when Macfarlanes came to respond to the Annacott petition on 12 February 2009, there was no suggestion of any understanding of the kind now relied upon by Mr Maidment.
148. Further, I consider that Mr Maidment's case is conceptually unsound, as demonstrated by the fact that he himself, in evidence, was unable to express any clearly developed understanding of how the alleged understanding was to work in practice. In his written opening, Mr Grant sought to invoke the concepts of constructive trust and proprietary estoppel in the face of his acceptance that there had been no express agreement as to the fluctuating share ownership. However, I am satisfied that Mr Grant's case under this head completely fails because of the lack of any evidential foundation for it.

Chapter 6 - The Tobian Petition

149. I can deal with this quite shortly. In his written opening (at paragraph 108) Mr Grant addressed the concept of unfairness, albeit in the context of the various allegations that Mr Attwood had raised in the Annacott petition. Mr Grant's observations, with which I agree, also have relevance in relation to the Tobian petition. Mr Grant wrote that it was important not to lose sight of the proposition, albeit trite, that on a petition under section 994, the conduct complained of must be not only prejudicial but also unfair. As Mr George Bompas QC, sitting as a Deputy Judge of the Chancery Division, put it in Re Baumler (U K) Limited [2004] EWHC 7673 (Ch), reported at [2005] 1 BCLC 92, at paragraph 180:

"The Court should only make a finding of unfair prejudice or grant relief in its discretion under section 461 [as the relevant statutory provision then was] if it is satisfied that the conduct complained of was unfairly prejudicial taking into account all relevant factors."

150. In the present case, relevant factors include the fact that effectively from the acquisition of the first transfer of shares in Tobian in 2000, Mr Attwood had carried on the business of Tobian, until it entered into creditors' voluntary liquidation, and Mr Maidment has carried on the business of Annacott.
151. It is also relevant that since December 2003, and until the service of the Annacott petition, there was no contact at all between Mr Attwood and Mr Maidment.
152. It is also a relevant factor that whilst Tobian was a trading company, Annacott was a company investing in residential property.
153. For Mr Maidment, Mr Grant relies essentially upon five heads of unfair prejudice. The first was Mr Attwood's acquisition of the outstanding 50 per cent shareholding in Tobian. That took place ten years ago. No complaint was raised about it at the time; and no agreement was alleged or proved that there was any understanding that, if the outstanding shares became available for purchase, they should be purchased equally by Mr Attwood and Mr Maidment. I see nothing unfair in Mr Attwood's purchase of those shares given the way in which the two men had divided their responsibility for running the two companies.
154. Secondly, Mr Grant relied upon Mr Attwood's alleged failure to provide information concerning Tobian to Mr Maidment. Again, in the light of the lack of any communication between them from the end of 2003 onwards, it seems to me that there is no unfair prejudice in that complaint. Indeed, Mr Maidment accepted in evidence that he had never even asked for any accounts for Tobian.
155. The third ground of unfair prejudice alleged is what is said to be excessive remuneration paid to Mr Attwood. This was addressed at paragraph 89 of Mr Clutterbuck's written closing submissions. He submitted that the court was unable to form any view on whether the salary drawn by Mr Attwood was excessive for a director of a company with the estate agency business that Tobian was conducting. He submits that the comparison should be between the aggregate remuneration of the executive management team of Tobian, comprising not only Mr Attwood but also Ms Heard, and the market rate for such an executive management team. He submits that there is no evidence upon which the court can conclude that that combined remuneration was excessive.
156. In my judgment, Mr Attwood's remuneration was indeed excessive. It was excessive when regard is had to the remuneration being drawn by Ms Heard, who on the evidence was contributing far more in terms of time and work to Tobian's business. It was excessive also having regard to the overall level of operating profit within Tobian. The reality, as Mr Attwood frankly acknowledged, was that his director's remuneration was determined solely by reference to his own personal financial circumstances and needs, and not by reference to any consideration of Tobian's ability to fund such remuneration, or the impact that drawing such remuneration would have upon Tobian's financial status and solvency.
157. I am satisfied that Mr Attwood treated Tobian as his own company from which he could draw whatever remuneration he needed, irrespective of whether the company could afford it, and irrespective of the limited contribution he was making to the company. It was clearly excessive by reference to the remuneration being drawn by Ms Heard.
158. Having said all that, however, the remuneration being drawn by Mr Attwood as the sole director was clearly disclosed on the face of the accounts of Tobian filed at Companies House. It would have been clearly apparent to Mr Maidment had he chosen to consider those accounts. As I have indicated, Mr Maidment accepted that he never even asked for the accounts, and he did not consult them. The excessive remuneration went unchallenged. It does not seem to me that the excessive remuneration should properly be treated as unfairly prejudicial in the particular circumstances of the present case.
159. The fourth ground of unfair prejudice asserted by Mr Maidment is the fact that Epyc traded as Oliver Jaques from 2005 to 2008. Mr Clutterbuck's short answer to that is that the two estate agency branches operated by Epyc under the Oliver Jaques name at Hayes and London Bridge never made any profit and were closed because they were unprofitable. Therefore, he says, there can be no unfair prejudice capable of being asserted by Mr Maidment in relation to such trading. Mr Grant, in his closing submissions, sought to meet this argument by submitting, for the first time, that the establishment of the two Oliver Jaques offices operated through the medium of Epyc involved a diversion of a business opportunity for which Epyc could have been charged by Tobian. Therefore, he submitted, Tobian suffered a loss in the form of the entitlement to a fee for the use of the Oliver Jaques name. As Mr Clutterbuck responded, that is not a case that has ever been pleaded. In any event, it seems to me that the argument is fundamentally unsound. I have no doubt that in setting up Epyc in order to open branches trading under the Oliver Jaques name, Mr Attwood was acting in breach of the duties he owed to Tobian as a director. The fact is that he should not have done it. It is not that he should have charged for doing it; he simply should not have done it. The offices were unprofitable, no loss was suffered by Tobian as a result, and I cannot see that this could constitute a ground of unfair prejudice.
160. The final ground of unfair prejudice asserted by Mr Maidment was the transfer of Tobian's business to Epyc immediately prior to its liquidation, and for no consideration other than the £5,000 that was paid to fund the liquidation of Tobian. Mr Clutterbuck's answer to this is that the uncontroverted evidence was that the sale of Tobian's assets to Epyc was at a price to be determined by the liquidator; and that from the liquidator's letter of 14 December 2010 (at E486) she has determined that the appropriate price was £5,000 (which has been paid). He says that if £5,000 was too little, the complaint should be made to the liquidator. It was not the result of any decision made by Mr Attwood or Ms Heard.
161. In my judgment that is too simplistic an approach. The fact is the liquidator was effectively presented by Mr Attwood and Ms Heard with a fait accompli. She lacked the necessary funding to take the matter any further. In my judgment, the acquisition by Epyc of the business name, trade connections, and other assets of Tobian was a matter of prejudice. The real issue here, however, is whether it was unfairly prejudicial to the only other shareholder in Tobian beyond Mr Attwood and Ms Heard, namely Mr Maidment. Given the financial state of Tobian in July 2008 and following months, I agree entirely with Ms Heard's evidence that the only people who lost out were Tobian's creditors. After adjusting the Tobian statement of affairs to reflect an admitted overstatement of the amount owed to Mr Attwood, and with that corrected debt taken into account, the deficiency as regards creditors was in the order of £259,000. Even if Mr Attwood's own debt is excluded, the deficiency as regards creditors, principally Revenue & Customs and the bank, was in the order of £199,000. Mr Maidment has not demonstrated on the evidence that the goodwill and business of Tobian in the Oliver Jaques Estate Agency business was worth anything anywhere near approaching those figures. In those circumstances, I cannot see that there was any unfair prejudice, for the purposes of section 994, in Epyc's acquisition of these assets from Tobian.
162. The case of Gamlestaden Fastigheter AB v Baltic Partners Limited [2007] UKPC 26, reported at [2007] 4 All ER 164, in the Privy Council, on appeal from the decision of the Court of Appeal of Jersey, is clearly distinguishable. That was a case where a petitioner was allowed to pursue unfair prejudice relief notwithstanding the company's insolvency, but only because it was also a creditor and stood to gain from the relief sought in that capacity. I accept Mr Clutterbuck's submission that since Mr Maidment cannot prove that Mr Attwood's improper conduct has cost Tobian in excess of the deficiency as regards creditors, then he has suffered no relevant unfair prejudice for the purposes of section 994. There is no valuation evidence as to the value of the goodwill attaching to the Oliver Jaques name. It would appear that Tobian paid some £12,515 for it in 1997. There is no suggestion that the goodwill (or other assets) of the business were worth anything approaching £199,000 in July 2008 or thereafter. In those circumstances, I am satisfied that the Tobian petition should fall to be dismissed.
163. I am now about to move on to chapter 7, addressing the Annacott petition, so I think this would be an appropriate point in time for me to adjourn for lunch. I will resume at 2.05pm.
(The short adjournment)

Chapter 7 - The Annacott Petition

164. Mr Clutterbuck contends that Annacott's affairs have been conducted in a manner which was unfairly prejudicial to Mr Attwood's interests as a member in the following respects. First, he says that Mr Maidment sold to himself Annacott's property portfolio at an undervalue in order to benefit himself, and in breach of the agreement that the company's business was to be residential property investment, primarily in East London. Secondly, he says that Mr Maidment either (a) misappropriated the sale proceeds (or some of them) while concealing the misappropriation as an investment in MLP and/or (b) made that investment recklessly and, in any case, in breach of the agreement that Annacott's business was to be residential property investment, primarily in East London. Thirdly, he says that Mr Maidment has effected an informal liquidation of Annacott, paying the value of its net assets to himself and nothing to his fellow shareholder. Fourthly, he says that Mr Maidment has failed to account for substantial payments of Annacott's money. Fifthly, he says that Mr Maidment created false records of board minutes and general meeting minutes designed to assist him in his dispute with Mr Attwood. Sixthly, and finally, he says that Mr Maidment denied Mr Attwood's entitlement to a 50 per cent equity interest in Annacott, asserting that his interest was minimal.
165. In relation to the sales of Annacott's properties to Mr Maidment, I have already indicated that, whilst I cannot quantify the precise extent of the undervaluation, I am satisfied that the properties were sold by Mr Maidment, in his capacity as the sole director of Annacott, to himself in his personal capacity for less than their full market value. On the balance of probabilities I am satisfied that Mr Crutchley advised Mr Maidment that he should obtain more than a single sales valuation of each property.
166. What Mr Maidment did in relation to no less than 23 of the 46 properties was to obtain a series of letters from An Deckers of Base Property Specialists Ltd. An Deckers does not purport to have any valuation qualification. Base Property Specialists are a company with offices in Shoreditch in EC2. Their notepaper proclaims that their activities extend not simply to lettings, sales, and management, but also to matters such as interior design, furni-packs, garden design, cleaning and advice. They produced valuation letters over the period 13 October 2005 to 15 July 2006.
167. The properties in respect of which they provided sales valuations were located within the following London postal districts: E2, E5, E8, E9, E10, E16, E17, N1, N16 and SE1. In relation to seven, and possibly eight, of those postal districts, Mr Costa indicated that he would not expect property specialists based in Shoreditch to have any local knowledge or to be appropriate sales agents for those properties. He himself said that he had never heard of Base Property Specialists or of An Deckers.
168. The letters all formed a similar form. I can take as an example that in respect of 15 Oriel Road, London E9, which was the first of the properties to be sold to Mr Maidment. I note that the letter is dated the day before the property was in fact transferred from Annacott to Mr Maidment. The letter is headed "Re sales valuation" and the address of the property is then given. The body of the letter reads:

"Further to our visit to the above-mentioned property, I am pleased to confirm that in our professional opinion and looking at what is available on the market at this precise moment in your area, the property in its current condition should be put on the market for sale at a price in the region of £150,000 with a view of securing offers."

169. The transfer date was 14 October 2005 and the transfer price was £139,467.88. The reason for that odd figure was that the property was sold subject to the existing mortgage in favour of the Skipton Building Society, and the amount outstanding under the charge, as at the date of the transfer, was £90,467.88. In round terms, Mr Maidment transferred the property to himself for roughly £10,000 less than the sales valuation from Base Property Specialists. In my judgment, it was inappropriate to rely upon a single sales valuation of this kind. It was not a proper market valuation by an apparently qualified valuer. A single sales valuation was obtained and not more than one.
170. Twenty-two further similar letters were obtained from the same individual at Base Property Specialists Ltd over a period extending from October 2005 to July 2006. When I asked Mr Grant during his closing how Ms Deckers must have perceived the instructions to provide no less than 23 sales valuations over a period of some 9 months without any sales instruction materialising, I was told that Base Property Specialists Ltd was used by Annacott for the purpose of letting properties to tenants as part of its business of renting the properties out. It does not seem to me that that was a proper way of approaching the task of obtaining a proper open market valuation on which to base the transfer price in circumstances where Mr Maidment was effectively selling to himself.
171. Moreover, on his own evidence, one of the reasons for applying a discount in the order of around 10 per cent to each of the properties was because they were being sold, not with vacant possession, but on a tenanted basis. Another factor justifying the application of a discount was said to be that Annacott would be saving the costs of estate agents acting on the sales of properties, and also professional fees that would have been incurred in connection with the sales to independent third parties. Insofar as any part of the discount is attributable to such savings, it does not seem to me that they should enure in any way for the benefit of Mr Maidment.
172. Insofar as the discount is attributed to the let state of the properties, it does not seem to me that it was appropriate for Mr Maidment to apply such a discount. He wished to acquire the properties as buy-to-let investments. It was actually of benefit to him to have a continuing income stream from the existing tenants rather than to take the properties with vacant possession and then incur the delay and letting agent's expenses involved in finding new tenants for the properties. He could always, in the case of any individual property, have waited until it was vacant before selling to himself. These were properties that were occupied pursuant to assured short-hold tenancy agreements and therefore there would have been no problem in selling properties to himself as and when they fell vacant if vacant possession was what he required. Of course, vacant possession was not what he required.
173. In those circumstances, it seems to me that it was inappropriate for him to apply any discount for the lack of vacant possession. Even if one were to accept the Base Property Specialists' valuations at face value, Mr Maidment purchased at a discount to those sales valuations; but, as I have said, I accept Mr Costa's evidence that they were below the value he would have expected to have seen placed on these properties.
174. Mr Clutterbuck submits that the sales of these properties by Mr Maidment as sole director of Annacott to himself in his personal capacity were director's self-dealings. As such, they should not have been permitted unless both Article 85 of Table A (which applied to Annacott) and the provisions of the Companies Act 1985 were complied with. Mr Clutterbuck relies on the failure to comply with section 317 of the 1985 Act, which requires formal disclosure of his interest in the transaction by way of declaration to the company's board, even where there is a sole director. No such declarations were made when Mr Maidment resolved to sell each of the properties to himself. Thus, during the currency of the 1985 Act, that is to say until 1 October 2008, it is said that Mr Maidment did not comply with the Act, and cannot claim the protection of Article 85. Mr Clutterbuck acknowledges that the Companies Act 2006, which applied after 1 October 2008, does not replicate that requirement.
175. Mr Clutterbuck acknowledges that a breach of section 317 does not give rise to any independent cause of action; but it is his submission that non-compliance with the requirements of the section engages the general equitable principle that dealings by a director with himself are not allowed without full disclosure to all of the company's shareholders. I reject that aspect of Mr Clutterbuck's submissions. It seems to me that the non-compliance with section 317 was a purely technical defect. Had Mr Maidment made disclosure to himself, the transactions would still of necessity have gone ahead. In those circumstances I cannot see that non-compliance with section 317 is capable of constituting any prejudice, still less any unfair prejudice, to Mr Attwood as Annacott's other shareholder.
176. Mr Clutterbuck's next submission is that the transfers were substantial property transactions for the purposes of section 320 of the 1985 Act, which applied until 1 October 2007, and section 190 of the 2006 Act, which replaced it. He submits that the transfers were not made following Annacott's approval in general meeting and therefore contravened the provisions of section 320. As a result, he says, Mr Maidment cannot claim the protection of section 320 of the Act. Section 320 is headed "Substantial property transactions involving directors, etc". So far as material, it provides that:

"A company shall not enter into an arrangement whereby a director of the company acquires or is to acquire one or more non-cash assets of the requisite value from the company unless the arrangement is first approved by resolution of the company in general meeting."

177. For present purposes, the relevant value is in excess of £100,000. Mr Maidment contends that most of the individual transfers fell below the £100,000 limit which applies under both sections 320 and 195. Mr Clutterbuck seeks to supply two answers to that. He says, first of all, that, individually, the transfers did not fall below the £100,000 limit. He submits that the relevant figure for assessing whether the transactions were substantial is the value of the property transferred regardless of any borrowings which may be secured upon it.
178. In relation to that submission, he invites me not to follow the decision of Lewison J in the case of Re Ultraframe (UK) Ltd v Fielding & Ors [2005] EWHC 1638 (Ch). In that case Lewison J, sitting at first instance, accepted the argument that where the transaction is the sale of a charged asset, it is the equity of redemption in the asset which has to be valued in order to see whether the value of the transaction exceeds the statutory limits for being "substantial". Mr Clutterbuck submits that, for the reasons detailed in paragraph 59 of his written closing submissions, the judge's reasoning was wrong and I should decline to follow his decision.
179. As I say, Mr Clutterbuck invites me to decline to follow Lewison J's decision. I am not prepared to accede to that invitation. In the present case, I think 35 of the 46 property transfers took place subject to the existing mortgage. In each of those cases, it seems to me quite clear that the value of the non-cash asset transferred was the value of the property subject to the mortgage to which the transfer was expressed to be subject. That being so, it seems to me that it would be anomalous if, in the cases where properties were transferred, and the mortgage was redeemed at the time of transfer, the requisite value of the property should be determined without reference to the repayment of the mortgage that was being effected out of the sale proceeds. Thus I reject Mr Clutterbuck's submission insofar as it relies upon taking a figure ignoring the value of the charge which applied to the property at the time of, or immediately prior to its redemption on, the transfer of the property to Mr Maidment.
180. However, Mr Clutterbuck has a second submission, which is that, for the purposes of both section 320 and the new section 195, the court should not take the transfers individually. He points to the wording of section 320 which applies to an "arrangement" whereby a director acquires or is to acquire one or more non-cash assets of the requisite value. He submits that it would be a rogue's charter to read section 320 as requiring individual transactions entered into pursuant to one arrangement to be valued individually. A director could, he says, with great ease evade the prohibition by splitting up his acquisition. Furthermore, he says that such a reading would render otiose the words "one or more" in section 320(1)(a). He also refers to the comments of Lewison J in Ultraframe when he accepted that what section 320 was aimed at was an arrangement and not, or not necessarily, the individual transactions entered into in pursuance of the arrangement. He also took me to a note at paragraph 8.3204 of Palmer's Company Law, volume 2, to the effect that an arrangement includes an agreement or understanding that does not have contractual effect.
181. Mr Clutterbuck makes the point that the wording of the 2006 Act, which applies as from 1 October 2007, is even clearer. Section 190(5) provides that:

"For the purposes of this section (a) an arrangement involving more than one non-cash asset, or (b) an arrangement that is one of a series involving non-cash assets, shall be treated as if they involved a non-cash asset of a value equal to the aggregate of all the non-cash assets involved in the arrangement or, as the case may be, the series."

182. Mr Clutterbuck submits that the intention of the change in wording in the 2006 Act was to resolve any doubt arising from the wording of the previous section. He submits that it was intended to clarify, and not to change, the law. Mr Grant submits that the law was indeed changed by the 2006 Act. He relies on a passage at paragraph 8.3205 of Palmer which states that:

"[Section 190 of the 2006 Act] introduces a change to the current law whereby the value of more than one cash asset or a series of cash assets will be their aggregate value. The purpose of this change is said to prevent abuse of the provisions and to further the general objective of preventing asset-stripping by directors."

183. I accept this aspect of Mr Clutterbuck's submissions. On my findings, Mr Maidment made a decision to sell all of Annacott's properties to himself at the outset. He made that decision both in his capacity as sole director of Annacott, and in his personal capacity as the prospective transferee and purchaser of the properties. I accept that that was an "arrangement whereby he was to acquire" one or more non-cash assets of the requisite value. The requisite value for the purposes of this arrangement was the requisite value of all of the properties in question.
184. Even if I am wrong on that, however, and section 320 is not engaged in respect of the pre-October 2007 transfers, it nevertheless seems to me that the transfers were unfairly prejudicial. That is because Mr Maidment took no sufficient steps to ascertain the true market value, and in fact proceeded to transfer the properties to himself at less than their true market value. On the evidence I am not in a position to ascertain the extent of the profit thereby made by Mr Maidment.
185. In my judgment, the property transfers were also unfairly prejudicial because they were not made in the best interests of Annacott, but rather in furtherance of Mr Maidment's aim of liquidating Annacott with a view to ridding himself of Mr Attwood. That was the fulfilment of the sentiments expressed in Mr Maidment's email in July 2003, the terms of which I have already recited. Moreover, I am satisfied that these property transfers were also unfairly prejudicial to Mr Attwood because they amounted to the termination of the business which it was the common understanding between Mr Attwood and Mr Maidment would be Annacott's business, and effectively its raison d'être, namely investment in residential properties, primarily in East London, for letting income and long-term capital gain.
186. I have already indicated that I accept Mr Attwood's case that Mr Maidment has effectively deliberately "lost" the sale proceeds to the extent that they have been purportedly invested in MLP. He has misappropriated them for his own gain while concealing the misappropriation as an investment in MLP; but even if I had not accepted that as a matter of fact, I would have accepted Mr Clutterbuck's alternative case that the investment in MLP, which Mr Maidment accepts has been lost, was made recklessly, for the reasons I have already given, and in breach of the two men's common understanding that Annacott's business was to be residential property investment, primarily in East London. In my judgment, it was prejudicial, and unfairly prejudicial, for Mr Maidment, unilaterally, to resolve to move out of investment in buy-to-let properties in London and to translate the proceeds of the sale of those investments, which he acquired in his personal capacity, into an investment in a company or property development in the Turkish Republic of Northern Cyprus.
187. Mr Grant relies upon the delay in bringing these proceedings. He relies upon the lack of contact between Mr Attwood and Mr Maidment from December 2003 until the Annacott petition was issued in December 2008. Even before December 2003, the only contact for many years had been correspondence between professional intermediaries engaged by Mr Maidment and Mr Attwood. He says that Mr Attwood gave no satisfactory explanation as to why he suddenly decided to bring proceedings in December 2008 without any form of pre-action correspondence. I have already indicated that I accept Mr Grant's submission that the only plausible explanation for this is the liquidation of Tobian.
188. Mr Grant submits that, effectively, from 2000 or 2001 Mr Attwood ran Tobian himself, and left Annacott to be run by Mr Maidment, showing no interest whatsoever in its affairs. It was only after Tobian's business had been successfully shunted over to Epyc, and Tobian had been put into liquidation, that Mr Attwood launched his proceedings, thinking that by this time Mr Maidment could make no further claim on Tobian for its business. In short, Mr Grant submits that Mr Attwood took the view that this would be a good moment to have a go at Mr Maidment. He says that that is not fair dealing.
189. In these circumstances, Mr Grant submits that the Annacott petition should be considered to be barred by laches. The parties acted on the basis that one company was being run by one of them and the other by the other. He says that it would be quite wrong to allow Mr Attwood now to be able to impugn the management of Annacott where he has effectively allowed Mr Maidment to run it as he saw fit. He submits that this is an important point. He says that the court's jurisdiction under section 994 should not be available to be invoked by shareholders who had effectively walked away from a company years later. He says that that is to abuse the jurisdiction and to render it a vehicle for harassment.
190. I can see that there may be some force in Mr Grant's submissions in relation to a company engaged in the carrying on of trading activities; but Annacott was not such a company. Its business was investment in residential property with a view to long-term gain in the form of capital appreciation. In my judgment, it is unfairly prejudicial to Mr Attwood, as a 50 per cent shareholder in Annacott, for Mr Maidment unilaterally, and for his own advantage and benefit, to transform the nature of Mr Attwood's investment from one in residential buy-to-let property in the east of London into one in an investment company in the Turkish Republic of Northern Cyprus. Even if I had not concluded that the investment in MLP is effectively a sham and an illusion, I would nevertheless have accepted Mr Clutterbuck's alternative case that making that investment constituted unfair prejudice to Mr Attwood. On the facts, I am satisfied that Mr Maidment has effected an informal liquidation of Annacott, paying the value of its net assets to himself and nothing to his equal co-shareholder. That also I regard as unfairly prejudicial.
191. I have already concluded that certain at least of the monies purportedly paid for works to Annacott's properties, prior to their transfer to Mr Maidment, was not expended for the purpose for which they were expressly made. I am satisfied that some at least of those monies were made for other purposes, either for Mr Maidment's own benefit, or for the benefit of members of Ms Hastings's family. Mr Clutterbuck submits that the production of false records for Annacott's books in the form of board resolutions, and resolutions of general meetings, and notices convening such meetings, is unfairly prejudicial in itself. He emphasises that this is not simply a backdating of documents. In the case of notices convening annual general meetings, they were backdated from a time postdating the meetings themselves.
192. It is not necessary for me to decide whether, had that been the only source of complaint, that of itself would have justified relief under section 994. I am satisfied that, in conjunction with the other matters to which I have referred, those actions do constitute unfair prejudice. I also accept Mr Clutterbuck's submission that it is unfairly prejudicial, for the purposes of section 994, for the sole director of a company to assert falsely that a shareholder with a 50 per cent interest in the company has only a lesser or minimal interest.
193. I am satisfied that had this petition not been brought, Annacott would effectively, and informally, have been wound up by Mr Maidment, as Macfarlanes threatened in their initial letter in response to the petition. Consistently with Mr Maidment's expressed case, he would have sought to ensure that Mr Attwood's dividend in the liquidation would have been minimal.
194. For all these reasons, therefore, I find that Annacott's affairs have indeed been conducted in a manner unfairly prejudicial to Mr Attwood, and that he is entitled to relief on the Annacott petition. I will hear submissions in the future on the precise form of relief. My provisional view is that the simplest, and most proportionate, approach to relief may be to order a buyout by Mr Maidment of Mr Attwood's 50 per cent shareholding on the basis of a valuation of Annacott on a particular date pre-dating the property transfers and/or on particular valuation assumptions to be specified; but, as I have indicated, I will hear submissions on that.

Chapter 8 - Conclusions

195. For the reasons that I have given, I dismiss the Tobian petition; but I grant relief to Mr Attwood, in a form to be determined hereafter, on the Annacott petition.