England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY

		Courtroom No.22 The Priory Courts 33 Bull Street Birmingham West Midlands England B4 6DU
		24th January 2012

HHJ SIMON BARKER QC :

1. These two actions, 8BM30517 and 0BM30052, principally concern disputes between three brothers, Kamal Uddin, the claimant in both actions, Abdul Bashir, who is the first defendant in both actions, and Abdul Mukith, who is the second defendant in the first action, but is not a party to the second action. The other parties are Hosoun Miah and Nanu Miah, who are respectively third and fourth defendants in the first action, and Monowar Hussain, who is the second defendant in the second action. The two Mr Miahs have effectively dropped out of the proceedings after agreeing to be bound by any order the court may make concerning the claimant's claim to the first defendant's interest in the restaurant business known as Lloyds Restaurant and to an interest in the property at 3 - 7 Station Road, Knowle, from which the Lloyds operates.
2. Monowar Hussain remains an involved party, as he joins with the first defendant in denying that the claimant has any legal or beneficial interest in the freehold property known as 6A Hill Village Road, Mere Green, Sutton Coldfield, and further that the claimant is entitled to a share in the Mango Spice Restaurant, which has traded from that address since the 14^th March 2005. That being said, when giving his evidence, Mr Hussain took the position that he has no objection to the claimant having a beneficial interest in any property to which the first defendant may be entitled, provided the claimant would not thereby become a partner in the Mango Spice Restaurant business. Of course, Mr Hussain could hardly maintain otherwise.
3. The parties' representatives, who are also brothers, but unrelated to the parties, are Mr Kamar Uddin, who represents the claimant, and Mr Sham Uddin, who represents the defendants. Both are solicitor advocates and they have prepared a list of issues by reference to the pleadings which is agreed and was promulgated on the basis that the final outcome of this litigation is to be decided by reference to the list.
4. The actions have been hotly contested throughout. The trial bundle includes almost 40 orders in the first action and almost 20 orders in the second action. My impression, based on the few procedural matters that I have heard, is that a failure to cooperate has been a constant feature running through disclosure, including the provision by the claimant and his witnesses of specimen signatures to the single joint handwriting expert engaged to report on his challenge to the authenticity of a document dated the 10^th February 2005, and the defendants' failure to provide documents to assist the single joint expert in accountancy. In addition, the claimant's lawyer appears to have spent considerable effort in the immediate run up to the trial preparing a summary judgment application, which itself was founded upon material available as from December 2010, for which delay no explanation is available.
5. Now, in this judgment, is not the time to delve into the procedural history in detail, but I am bound to observe that the level of procedural activity before the court in these two actions suggests to me a failure by the parties to adhere to the duty to further the overriding objective, which includes both the saving of expense and cooperation. That being said, I start this judgment with a brief outline of the family background and the events which appear uncontroversial from the evidence and documents to which I have been referred and which I have heard or read.
6. The claimant, the first defendant and the second defendant came to England in 1976 with their parents, who are now both dead, and with two older brothers, who are not parties to or involved in this litigation. Their oldest sibling is a sister who has remained in Bangladesh. During the course of 1976, the claimant turned 14 years; the first defendant was some 4 years old and the second defendant had turned 16 years. A further brother, Abdul Khair, was born in about 1979. Mr Khair was called as a witness by the defendants but, as he sees it, he is neutral as between the claimant and the defendants, and he wishes to remain on good terms with all his siblings.
7. It is common ground that from the time the family arrived in England the second defendant went out to work in order to contribute to the family's welfare. For the first year or so the second defendant worked part-time in restaurants; and then, upon leaving school, restaurant work became his full-time occupation.
8. By the mid-1980s, the second defendant had acquired a 50% share in a restaurant, the Jalalabad at 33 Etnam Street, Leominster, and the lease thereof. By 1989, the second defendant had acquired the freehold and had bought out his business partner. The freehold was purchased in the joint names of the second defendant and the claimant. This was evidently under pressure from their parents. The claimant was also, at least formally, an equal partner with the second defendant in the Jalalabad business. The second defendant says that this was based on tax advice he had received from an accountant.
9. When the claimant left school, he went to work at a factory; however, he worked part-time, that is Friday evenings and at weekends, at the Jalalabad. At some point, in the early 1990s at the latest, the claimant left his factory work and went to work full-time at the Jalalabad. He had a good command of English and so he managed the restaurant and front of house while the second defendant was the chef and responsible for the kitchen.
10. When the first defendant left school, he progressed to college and then to employment as an accountant at the NEC. During at least part of this period, he also worked part-time at the Jalalabad. Until the mid-1990s, the claimant, the first defendant and the second defendant were living under their parents' roof at 54 Havelock Road. However, in or about 1995, the claimant, who was by then married, and the first defendant, left the family home and bought a house together nearby, a few streets away, which was transferred into the joint names of the claimant's wife and the first defendant. This was the property at 4 Heath Way, Hodgehill.
11. Also in about 1994 or 1995, the first defendant left his employment and went to work full-time at the Jalalabad also. The second defendant says that the business was put formally into the first defendant's name and certainly the first defendant was granted a three-year lease in 1995. However, the factual position as between themselves was that the claimant, the first defendant and the second defendant were partners.
12. Moving on from the common ground, there is a disagreement as to the basis of their partnership. The claimant says that they were equal partners at all times, however, the second defendant says that at some point his parents suggested that all four brothers then living at home, that is the claimant, the first and second defendants and Mr Khair, should be equal partners to which the second defendant, Mr Mukith, responded that that would be unfair. The second defendant says that he proposed that he should receive a 50% share of the partnership, that the claimant should have a 25% share and that the first defendant and Mr Khair should split the remaining 25% equally.
13. The first defendant confirms this and Mr Khair does not disagree, although his lack of involvement then was such that he could not give reliable evidence on the point at trial.
14. The claimant, the first defendant and the second defendant gave oral evidence of weekly Sunday afternoon meetings at which they would sit down together and share out the Jalalabad's cash takings insofar as they were surplus to whatever was required for expenses.
15. The claimant described an equal division between the three parties. The second defendant, however, maintained that at these meetings the cash was always shared out in the ratio 50% to him, 25% to the claimant and 12.5% to each of the first defendant and Mr Khair. However, it was the claimant and not the second defendant who was responsible for the sharing out. I bear in mind that in the early to mid-1990s Mr Khair would have been in his early to mid-teens and would still have been at school. I therefore think it probable that during at least the earlier part of the 1990s the division of cash takings was in fact as the claimant described, subject to Mr Khair being paid something in respect of any part-time work he undertook.
16. However, by 2000, the first defendant had become involved in the running of another restaurant, then known as the Noor and now Lloyds Restaurant at 3 – 7 Station Road, Knowle. At that time, the Noor was not profitable and the first defendant would have had no profit to contribute to the Sunday afternoon cash distributions. I think it probable that at or by this time the profit-sharing ratio had changed to that stated by the second defendant. Mr Khair gave evidence of receiving a cash distribution on Sunday afternoons, although he was not clear as to how it was calculated, but that does emphasise that in all probability there was a four-way split by the year 2000, at the latest.
17. Mr Khair also gave evidence that this stopped in 2005 and that he tackled the second defendant about this, who replied that he, the second defendant, had taken over the entire business at the Jalalabad. The first defendant and the claimant were also involved in a similar discussion with Mr Khair and evidently the first defendant said that he would sort Mr Khair out one way or another in the future but, according to Mr Khair, this has not happened. I accept Mr Khair's evidence. It tends to reinforce the second defendant's evidence and I therefore reject the claimant's contention that he continued to have a one-third interest in the Jalalabad business.
18. All of this evidence is about the sharing of unrecorded cash rather than turnover or profits recorded in the books and records of the Jalalabad or any other business. To the world at large, that is by reference to accounts as prepared by Rahman & Co and by reference to tax returns, the position was very different. According to 1996, 1997 and 1998 accounts, and the first defendant's 1999 and 2000 tax return, the first defendant, Mr Bashir, was the sole proprietor of the Jalalabad, and then from 2001 to 2005 the Jalalabad was run by a company, Bijan Corporation Ltd, which was incorporated on the advice of another accountant, Mr Mike Bodkin, and which formally accounted for the business of both the Jalalabad and the Noor, which later became Lloyds.
19. The first defendant and a Mr Abdul Karim were the directors and shareholders of Bijan and the claimant and the second defendant, on the face of it, had no interest in Bijan or the Jalalabad. Also during this period, in around 2000, the claimant, the first defendant and the second defendant agreed to purchase another business, the Solihull Balti, at 763 Old Lode Lane, Sollihull. This property was purchased in the first defendant's sole name and with the assistance of a loan from NatWest Bank. It seems, at least it is the first defendant's evidence which is not contradicted by either the claimant or the second defendant, that the Noor was not a profitable restaurant. Accordingly, in February 2003, Mr Hosoun Miah and Mr Nanu Miah and a Mrs Nurim Nessa, who is not a party to these proceedings, but whose husband has been a witness, became equal partners with the first defendant and the business changed its name to Lloyds Restaurant. A formal partnership deed was executed, recording that each of the two Mr Miahs and Mrs Nessa had paid £26,666 odd, that is £80,000 in total, to the first defendant upon becoming partners with him in the Lloyds Restaurant.
20. The claimant contends that this payment was in fact £90,000. In addition, the first defendant as freeholder, granted a 20-year lease to the two Mr Miahs running from the 14^th February 2003 to the 24^th December 2023, at an initial rental, according to the lease, of £20,000 per annum with rent reviews at intervals of 3 years. The claimant contends in these proceedings that the initial rent was in fact £27,000 per annum. It seems to be admitted by the first and second defendants that rent reviews have taken place, but over the past two years at least they have been annual rather than once every 3 years.
21. It also appears that Mrs Nessa was not added as a tenant and it is the case that the accounts of the Lloyds Restaurant are prepared on the basis that there are only two partners, the two brothers Miah, that is Hosoun and Nanu Miah.
22. As must by now be evident, the claimant, the first defendant and the second defendant conduct their business affairs as between themselves in ways which are not necessarily consistent with or recorded in either the books and records of the businesses in which they have interests or the legal documents concerning their property, interests and businesses. This has led to disagreements at different times. Moreover, the use of the first defendant as a nominee owner of property has provided him with opportunities which he admits he has taken to raise finance without first consulting his brothers.
23. On at least two previous occasions, the various differences between the partners have been resolved within the family, albeit after resorting to members of the community as mediators. One such occasion was later embodied in a legal document dated the 11^th July 2004. Even the making of this document has not been free from controversy.
24. It seems that after a community mediation to resolve disputes, the second defendant approached McGrath & Co, a firm of solicitors, to have this agreement embodied in a legal document. The second defendant and one of the mediators, Mr Ebrahim Ali, evidently saw Mr Kamar Uddin, who is now the claimant's advocate and principal of Res Ipsa solicitors. However, at that time, Mr Kamar Uddin was an employee or partner at McGrath & Co. Evidently, he arranged with the second defendant that he would draft the required document on a private basis, which he did, taking instructions from Mr Ali, and for which he was directly paid some £400 by the second defendant.
25. When proceedings began, solicitors then acting for the defendants, took exception to Mr Kamar Uddin representing the claimant, but this objection appears to have been resolved in correspondence. It resurfaced in the evidence prepared for the second defendant by Mr Sham Uddin who was not aware, at least not at the time when he drafted the second defendant's witness statement, that the question of whether Mr Kamar Uddin could or should continue to act for the claimant had been resolved by agreement. Further, when giving oral evidence, the claimant, Mr Kamar Uddin's client, took issue with the accuracy of one aspect of the deed, notwithstanding that he had executed it and his representative had drafted it. However, this does not appear to have caused representation difficulties.
26. Digressing for a moment longer, against the background referred to above, it was plainly unwise for Mr Kamar Uddin to represent any party in these proceedings. However, the witnesses to the parties' signatures on the 11^th July 2004 deed include the relevant community mediators and the terms of the deed are not at the heart of this dispute between the parties, so for those reasons I decided that it was not necessary to raise the matter during the trial. Before continuing with this judgment though, I do pause to express my concern that a solicitor should have undertaken work which had been brought to his firm on a private basis.
27. I now turned to the document dated the 11^th July 2004. This is drafted as a deed and records an agreement between the claimant, the first defendant and the second defendant as follows: (1) as to the Jalalabad at 33 Etnam Street, Leominster, (a) the claimant and the second defendant are the joint legal owners of the freehold at 33 Etnam Street; (b) each has a 50% beneficial interest in the property; (c) the claimant and the first defendant are equal partners in the Jalalabad business; and, (d) the claimant is the trustee of his beneficial interest in the freehold and in the Jalalabad business for himself and for the first defendant and for Mr Khair in the following ratio: 25:50 for himself 12.5:50 for the first defendant and 12.5:50 for Mr Khair. This again confirms the second defendant's evidence as to the profit-sharing arrangement in relation to the Jalalabad;

(2) as to the Lloyds Restaurant at 3 – 7 Station Road, (a) the first defendant is the sole legal owner of 3 – 7 Station Road; (b) the beneficial interest belongs equally to the claimant, the first and the second defendant; (c) 3 – 7 Station Road is acknowledged to be subject to a 20-year lease; (d) the first defendant has a 25% share as partner in Lloyds Restaurant; and, (e) that share is declared to be held on trust for the claimant and the first and second defendant equally. In other words, they each have an equal 1/3 beneficial interest in the profits of the partnership attributable to the claimant's 25% partnership share (equivalent to an interest in the profits of some 8.33% each);

(3) as to 763 Old Lode Lane, (a) the first defendant is the sole legal owner of that property; and, (b) the beneficial interest to belong equally to the claimant and the first and second defendants, which interest includes an entitlement to share equally in any rental income from 763 Old Lode Lane.

28. By this time, July 2004, the first defendant had identified another restaurant venture carried on at 6A Hill Village Road, Mere Green, Sutton Coldfield, which was then a Chinese restaurant. He informed his brothers about his interest, but was unable to agree terms with the second defendant to progress the purchase of that restaurant or property. Accordingly, and without reference to the claimant or the second defendant, he raised some £54,000 by mortgaging 763 Old Lode Lane. The first defendant intended to carry on this venture in partnership with Mr Hussain and they entered into a partnership agreement as equal partners under the terms of a deed dated the 8^th September 2004, which had been prepared for them by a firm of solicitors Messrs Tyndallwoods.
29. By December 2004, the first defendant was anxious to complete the purchase of the Mere Green property and the restaurant business, but was still short of funds. The second defendant had sold his home. He had taken over what had been the family home at 54 Havelock Road and was awaiting the completion of building work on a new home then under construction. He agreed to lend some £78,000, according to the second defendant, or £68,000 according to the first defendant to the first defendant on a very short-term basis. The first defendant then completed the purchase of the Mere Green property in mid-December 2004.
30. During January 2005, the second defendant sought repayment from the first defendant. Discussions turned to arguments as the first defendant was unable to raise funds. Unilaterally, in the sense of without any discussion or notice to the others involved, the first defendant instructed a Mr Martin Dyke at Tyndallwoods to draw up a partnership agreement for the Mango Spice Restaurant on the basis that the first defendant, Mr Monowar Hussain, the second defendant and the claimant would be equal partners. The draft was ready by the 2^nd February 2005 and the first defendant arranged for Mr Hussain to go to Tyndallwoods on the following day. The first and second defendants agreed that they travel together to a meeting on the 3^rd February at Tyndallwoods, travelling in the first defendant's car, and they say, but the claimant denies, that he joined them travelling in the car and attended at the meeting.
31. In giving oral evidence, Mr Dyke also confirmed that the claimant was, in his words, "undoubtedly present" at the meeting. In addition, Mr Dyke gave a clear explanation of an attendance note, which the claimant contends established that he, the claimant, was not present at that meeting.
32. I find that the claimant was in fact present at the meeting on the 3^rd February 2005 at Tyndallwoods. Again accepting Mr Dyke's oral evidence, I find that the meeting was short lived and, as soon as Mr Dyke tabled the partnership agreement, Mr Hussain became very angry and left. Matters thus came to a head and a meeting was arranged by the second defendant to be a form of mediation in the presence of three members of the community : Mr Habib Rahman, who is the husband of the Mrs Nessa who is a partner in the Lloyds Restaurant; Mr Ebrahim Ali, who had mediated what became the 11^th July 2004 agreement and deed; and, Mr Azir Uddin, who had also mediated what became the 11^th July 2004 agreement and deed.
33. The meeting took place at Mr Rahman's house on the afternoon of Thursday the 10^th February 2005. It lasted several hours. The product of that meeting is a matter of disagreement between the claimant on the one hand and the first and second defendants on the other. The first and second defendants have put forward a one-page manuscript document, which all parties agree was written by the first defendant and which the first defendant, the second defendant and Mr Rahman say bears the signature of those present, including the claimant and Mr Azir Uddin and Mr Ebrahim Ali. The claimant and Mr Azir Uddin and Mr Ali deny that they signed this document. Mr Azir Uddin said that the signature that is said to be his looks like but is not his signature. He said that although it is not in his written evidence, he did in fact sign a different document written over two pages or two sides of one page with figures and crossings out. Mr Ebrahim Ali said that he did not sign the document either, and that what is said to be his signature is an expert copy and was not made by his hand. Mr Ali had evidently come to court expecting to make a statement about the matters in dispute and was somewhat nonplussed by the adversarial process and the role of a person called as a witness.
34. Unsurprisingly, these signatures are the subject of an expert's report; Dr Audrey Giles, a well-known handwriting expert, was instructed as a single joint expert. After some delay, the claimant produced a sufficient number of comparable signatures for an expert opinion to be given. After noting differences, and by reference to both observation and other tests, Dr Giles opines that the evidence indicates, to a weak level of confidence, that C's signature is probably genuine. As neither Mr Ali nor Mr Azir Uddin provided comparable signatures, at least not sufficient for an expert opinion, Dr Giles' evidence in relation to their signatures is confined to observing that they are written fluently, contain complex structures, and do not appear to be the product of either tracing or laborious freehand copying. As guidance, Dr Giles observed that writing such signatures would present significant challenges to anyone attempting simulation.
35. Mr Kamar Uddin submits, in support of the claimant's contention that the document was not signed by the claimant, Mr Ali or Mr Azir Uddin, the following points:

(1) Numerous independent professional people had no knowledge of, in the sense that they had not seen or been told of, that document. The list is said to include Mr Dyke at Tyndallwoods, Mr Mike Bodkin and Mr Saleem Akhtar, who are accountants, Wildings Solicitors, and the London Scottish Bank Ltd, who dealt with a subsequent mortgage, Mr Monowar Hussain, Mr Khair, and also the Land Registry;

(2) the first defendant gave evidence that he had the original document and even said, possibly flippantly, that he ironed it in answer to a question as to why it was not creased, but the second defendant also said that he had kept the original, keeping it in his safe and had given copies to others;

(3) neither Mr Azir Uddin nor Mr Ebrahim Ali would have anything to gain by lying;

(4) Mr Rahman gave confused evidence, apparently thinking the document was dated the 15^th February 2005 and signing against the name Habib Miah instead of Habib Rahman;

(5) the real document was written on two sides or two pages and the second defendant confirmed that there was such a document; and,

(6) Dr Giles' report points only to a weak level of confidence in favour of the claimant's signature as genuine.

36. In response, Mr Sham Uddin relies most heavily on what happened after the meeting and compares and contrasts that to the terms of the document.
37. In my judgment, that may confirm a finding that the document is genuine, but it does not suffice to establish that it is genuine in a case where, as here: (1) both sides accept that there was another document, albeit that both sides do not accept that it was signed; and, (2) the course of dealings of these parties, the claimant, the first and second defendant, over more than 25 years, tends to establish that what happens in fact is not to be expected to be in accordance with what has been documented.
38. I therefore turn to consider the points relied on by Mr Kamar Uddin. As to (1), in my judgment it is at least as likely as not that the professionals, including in particular accountants, would have been and were kept in the dark as to what had been formally documented as between the claimant, the first defendant and the second defendant because that is a matter of habitual practice on those parties' part.
39. As to (2), the second defendant's evidence as to how he kept the original document, placing it first in a plastic wallet and then in an A4 envelope to keep it flat, was given unfalteringly and with a ring of truth about it. In contrast, the first defendant's evidence was undoubtedly given in disregard of his oath.
40. As to (3), whether or not Mr Ali and Mr Azir Uddin have anything to gain from lying about the authenticity of their signatures, their failures to provide specimen signatures for comparison speaks volumes. I also find that Mr Azir Uddin's evidence was at times confused and that when Mr Ali commented that the signature said to be his was an expert copy, I observed that he had an impish grin on his face. They are, in my judgment, unreliable on the question of the authenticity of the 2005 document.
41. As to (4), my observation of Mr Rahman, having listened to him and observed him, is that he did give reliable evidence.
42. As to (5), I accept and find that there was another document which contained notes and workings as the meeting progressed and which recorded points as they were discussed and agreed. I have no reason to doubt that the other document contained figures and crossings out. No one has given evidence that the two documents are to be read together and I am therefore driven to the conclusion that the document now before the court supersedes and encapsulates the content of the other document so far as material to the parties; at least in relation to the matters the subject of that document.
43. Finally, as to Dr Giles' level of confidence, it is weak but it favours authenticity.
44. It is my task to reach a conclusion on the balance of probability by reference to the evidence before me and doing that, in my judgment, the pointers are, as noted by me and, after considering the reasons given by Mr Kamar Uddin for disputing the document, against such a contention. Instead tend to corroborate and reinforce Dr Giles' expert opinion.
45. I find on the balance of probabilities that the document dated the 10^th February 2005 is genuine in the sense that it was signed by the claimant, the first and the second defendant and it reflects an agreement between them as set out in the body of that document.
46. I turn next to the terms and meaning and effect of that document. The document addresses the property and/or businesses of the Jalalabad at 33 Etnam Street, Lloyds Restaurant at 3 – 7 Station Road, and the Solihull Balti. It also refers to liabilities. In relation to the Jalalabad at 33 Etnam Street, the document provides that the claimant and the first defendant have no share in the business of the Jalalabad or the freehold of 33 Etnam Street. The document does not refer to Mr Khair's 12.5% beneficial interest in the business and the property held pursuant to the 11^th July 2004 document on trust for Mr Khair, and Mr Khair was not a party to the 10^th February 2005 document.
47. In relation to Lloyds Restaurant and the property at Station Road, referred to in that document as 7 Station Road but obviously intended to embrace also 3 and 5 Station Road, the document provides that the lease of Lloyds Restaurant belongs only to the second defendant and that the claimant and the first defendant have no share in the lease and that the freehold belongs equally to all three, that is to the claimant, the first defendant and the second defendant. The reference to the lease must be to that between the first defendant, as landlord, and Mr Hosoun Miah and Mr Nanu Miah, as tenants, running for 20 years from the 14^th February 2003 to December 2023. No reference is made to the business at Lloyds Restaurant on the face of the10^th February 2005 document.
48. The document also refers to the Solihull Balti, but not to the property at 763 Old Lode Lane, which is the property from which the Solihull Balti operates, and the document provides that the Solihull Balti belongs to the first defendant and the claimant and that the second defendant 'has no share in it'. No express reference is made to the freehold title for 763 Old Lode Lane, which is in the first defendant's sole name and is held on trust by him for himself, the claimant, and the second defendant in equal shares.
49. In addition, the document provides that "no debt or outstanding bills, loans etc. KU and AB^[1] had not been responsible for".
50. As is apparent no reference is made in this document to the Mango Spice Restaurant or to the Mere Green property. The Mango Spice was then refurbished and opened for business a few days later, on the 14^th February in that year.
51. In addition, evidence was adduced at trial to support the proposition that the 10^th February document was not a comprehensive record of the parties' agreement. First, there was oral evidence about figures on another document, but I have already held that that document was superseded. In addition, there was evidence that the agreement made on the 10^th February 2005 included a term that the first defendant would transfer his joint interest in the property at 4 Heath Way, Hodgehill, which is now the claimant's family home and was then jointly owned by the first defendant and the claimant's wife, to the claimant or to the claimant's wife. In fact, the transfer to that effect was executed on the 20^th December 2006.
52. Looking at the transfer, in relation to any consideration for that transaction, that was identified at panel nine as 'Other' and cross-referenced to the continuation sheet on the transfer, where it was stated that the transfer is subject to an existing charge to the Abbey National in the sum of £81,462 odd. The transfer of 4 Heath Way to the claimant's wife was then registered on or about the 20^th January 2007. Thus, to the world at large the 10^th February 2005 agreement and the transfer of 4 Heath Way are unconnected and I intend to proceed on that basis.
53. I now turn to the meaning and effect of the 10^th February 2005 document. The document was plainly made by the claimant, the first defendant and the second defendant on the basis that it was an agreement intended to affect their legal rights, interests and obligations. It is common ground, in the sense that there is no contradictory evidence - at least none that has been drawn to my attention, that the claimant, the first defendant and the second defendant did not take the document to a solicitor either for advice as to its meaning and effect or for guidance as to implementation of its terms.
54. I pause here to note that there is no claim by any party, and in particular not by the first or second defendant, for rectification; nevertheless, the defendant's representative, Mr Sham Uddin, sought to persuade me to consider the document by reference to what he contended were the parties' subjective intentions. Such an approach would, as I made clear in the course of argument, be misconceived.
55. I must consider under that document the provisions in relation to Lloyds Restaurant and the Station Road property and lease. However, I note that very shortly after the 10^th February 2005, the claimant, the first defendant and the second defendant did execute a formal declaration of trust as a deed dated the 24^th March 2005 – that is within a matter of weeks – and that document concerned the property at 3 – 7 Station Road, that is the property from which Lloyds Restaurant operates.
56. The document was prepared at a firm of solicitors, Tyndallwoods, by Mr Martin Dyke who has given evidence and who, as I have already made clear, I regard as an honest and reliable witness. The 24^th March 2005 deed bears the signature of each of the claimant, the first defendant and the second defendant. All signatures are witnessed by Mr Dyke. By this deed the first defendant declares himself trustee of that property, that is the Station Road property, and this reference to the property is to the freehold, subject to and with the benefit of the 20-year lease to the two Miah brothers, held on trust for himself, the claimant and the second defendant in equal shares.
57. So far as the lease is concerned, the terms of the deed are inconsistent with the terms of the 10^th February 2005 document, which provides that the claimant and the first defendant had no share in the lease of Lloyds. Bearing in mind the formality of the 24^th March 2005 deed and its proximity in time to the 10^th February 2005 manuscript document, I am not prepared to find or hold that the terms of the 10^th February 2005 document addressing the Station Road lease are (or even between the 10^th February 2005 and the 24^th March were) of any legal effect. It therefore follows of course that the provisions relating to that property are governed by the 11^th July 2004 deed and then the 24^th March 2005 deed.
58. It was suggested during the trial that the reference to the lease in the context of this property and the businesses being carried on was intended to be in fact to the business, that is to Lloyds Restaurant. Bearing in mind that the business and property rights relating to the Jalalabad at 33 Etnam Street are separately and distinctly referred to in the10^th February 2005 document in the preceding line, I do not accept the submission that the word 'lease' in the context of Lloyds at 7 Station Road should be construed as a reference to the business carried on at that property.
59. My conclusion is fortified by the following words in the 10^th February 2005 document which distinguish the lease from the freehold, namely: "But the freehold of 7 Station Road belongs to all three in equal shares".
60. The interests of the claimant, the first defendant and the second defendant in the Lloyds Restaurant business were dealt with January 2006 by two deeds prepared by another firm of solicitors, the Wilkes Partnership. By these deeds, the first defendant retired from and the second defendant was admitted to the partnership carried on by the two Mr Miahs and Mrs Nessa as Lloyds Restaurant as from the 23^rd January 2006. Thus, as from the 23^rd January 2006 the second defendant became a partner in that business with an equal 25% share in place of the first defendant.
61. During the trial, no deed was drawn to my attention providing for the second defendant to hold his share on trust for the first defendant, the claimant and himself, thereby continuing the terms of the first defendant's trust under the 11^th July 2004 document.
62. The claimant's evidence is that he was unaware of these deeds, that is the 23^rd January 2006 deeds, until the proceedings had commenced. I accept that it is quite possible that the parties' subjective intentions in 2005 were that the second defendant was to take over, for his own benefit, the first defendant's partnership interest in Lloyds Restaurant; however, that is not how I have construed the 10^th February 2005 document. In the absence of other evidence pointing to the claimant's probable concurrence in that arrangement, my conclusion is that the second defendant, pursuant to the January 2006 deed, holds one third of any net profit from his 25% share as a partner in Lloyds Restaurant on trust for the claimant. That would of course be subject to a right of offset in respect of any losses before accounting for any profit.
63. I now turn to the Jalalabad at 33 Etnam Street. As to the Jalalabad Restaurant business and the freehold property at 33 Etnam Street, both the first defendant and the claimant express their agreement in the 10^th February 2005 document that the same belongs to the second defendant. Of course, none of these parties had or have any authority to deal with Mr Khair's 12.5% beneficial interest as declared by the deed dated the 11^th July 2004. However, Mr Khair is not a party to these proceedings and the claimant has not made any claim as trustee for Mr Khair. Accordingly, it is not for me to make findings in these proceedings as to Mr Khair's position or any entitlement.
64. In relation to the 10^th February 2005 document, its meaning is that as between the claimant, the first defendant and the second defendant, the claimant ceased to be interested in the business of the Jalalabad. Moreover, as the claimant, the first defendant and the second defendant agreed that all "debt or outstanding bills, loans etc", that is all liabilities, fall on the second defendant, the logical conclusion is that the claimant had ceased to be a partner and the first defendant had ceased to be entitled to any part of the claimant's share to the Jalalabad's profits. The parties' conduct after the 10^th February 2005 is consistent with such a conclusion; in particular, the claimant ceased to work at the Jalalabad, he signed on for Jobseekers Allowance, and he then obtained full-time employment at Birmingham airport.
65. The first defendant instructed Mr Bodkin to cease accounting for the Jalalabad and Lloyds Restaurant through Bijan Corporation as from the 30^th April 2005, and the second defendant, Mr Mukith, registered himself as the sole proprietor of the Jalalabad for VAT purposes. The second defendant also instructed other accountants, who prepared accounts for the Jalalabad as from the 30^th April 2005 on the basis that the second defendant was a sole trader and sole proprietor of that business. Consistent with all of that, Mr Mukith also filed tax returns as proprietor of the Jalalabad.
66. As to the freehold title of 33 Etnam Street, the 10^th February 2005 document is phrased as an agreement addressing the legal title and beneficial interests. 33 Etnam Street belongs to the second defendant.
67. However, shortly after the 10^th February 2005, the claimant and the second defendant dealt with 33 Etnam Street in a manner not provided for in the terms of the 10^th February 2005 document, but explained by the fact that the second defendant was in urgent need of funds to complete the purchase of what was then plot 17, College Hill, College Road, which is his new home.
68. To this end 33 Etnam Street was remortgaged and the claimant expressly authorised the solicitors dealing with the transaction, Messrs Wildings, whom both he and the second defendant had instructed, to transfer his, that is the claimant's, share of the net re-mortgaged proceeds of 33 Etnam Street to the second defendant.
69. By this transaction, the existing mortgage, which was then a balance of some £6,000, was redeemed out of a new £135,000 loan from the London Scottish Bank. The claimant and the second defendant executed a legal charge on the 12^th May 2005. This charge was registered on or about the 29^th September 2005 on the basis that the claimant and the second defendant were joint owners of 33 Etnam Street. No beneficial interests are recorded on the registered title.
70. Mr Kamar Uddin has referred me to the House of Lords decision in the well-known case of Stack v Dowden [2007] UKHL 17. However, that case concerned the beneficial interests of a couple purchasing a property as their home. The position is quite different where a property is purchased for investment or in connection with a business, see for example the Court of Appeal decision in Laskar v Laskar [2008] EWCA Civ 347. In such a case, the presumption of equal ownership does not apply. Instead, there is a presumption that the beneficial shares reflect the size of contributions towards the purchase price. In either case, the parties may of course expressly declare to the contrary.
71. The difficulty here in the matters before me is that in and after May 2005 there was an opportunity for the claimant and the second defendant to address the question of beneficial interest in 33 Etnam Street and to transfer the legal title in accordance with the terms of the 10^th February 2005 document. They did not do so. Evidently, the claimant did not wish to do so because there would be, or might be, Capital Gains Tax consequence for him. The result is that the claimant and the second defendant remained joint owners of the freehold subject to a charge in favour of the London Scottish Bank, from which the second defendant has benefited in connection with the purchase of his new home.
72. The delaying of the crystallisation of a tax liability was obviously regarded as a valuable consideration or outcome by the claimant and explains his readiness to agree to the net proceeds of the loan made by the London Scottish Bank being advanced solely to the second defendant without any further transfer of interest. It also reflects his and the second defendant's formalised agreement to an arrangement inconsistent with the terms of the 10^th February 2005 document.
73. I now turn to the Solihull Balti at 763 Old Lode Lane. Under the 10^th February 2005 document, no reference is made to the property at 763 Old Lode Lane. Reference is made only to the Solihull Balti; in other words, to the business carried on at that address. As at the 10^th February 2005, the freehold title to 763 Old Lode Lane was in the first defendant's sole name and the property was subject to a charge in favour of AIB Group UK Plc, following a loan obtained by the first defendant in December 2004 to assist him in the purchase of the Mango Spice Restaurant and the Mere Green property.
74. By the deed dated the 11^th July 2004, the first defendant had declared himself trustee of 763 Old Lode Lane for himself, the claimant and the second defendant in equal shares. The loan from AIB had been obtained in flagrant breach of that trust. It is clear from the single joint expert report of Mr Andrew Bower FRICS of Christie & Co, dated the 11^th November 2011, that this property is let on a 10-year lease, running to the 30^th July 2012 to Mr Miah and a Mr Uddin, a different Mr Uddin; the initial rent was £13,750p.a.; the current rent is £15,250 p.a.; the tenants may serve a notice to renew for a further 15 years; and, the lease is described in the valuation report as a typical commercial lease. Thus, as between the claimant, the first defendant and the second defendant, any distinction to be drawn between the Solihull Balti and the property at 763 Old Lode Lane would have to reflect the distinction between the right to enjoy or share in the rental income and the right to share in the value of the freehold at the conclusion of the lease, that is the reversion.
75. In relation to the other two properties, Station Road and Etnam Street, the parties distinguished in the 10^th February 2005 document between businesses, leases and freehold titles. In the case of the Solihull Balti and 763 Old Lode Lane, the parties did not carry on a business from that property themselves and the term 'Solihull Balti' must refer to or represent only a stream of income under the lease.
76. In my judgment, neither the freehold title nor the loan raised secretly by the first defendant is embraced within the reference to the Solihull Balti in the 10^th February 2005 document. I arrive at this conclusion is for two principal reasons. First, in February 2005, the Solihull Balti represented an entitlement to rental income which was then to last for at least a further seven years; and, secondly, the unqualified provision that the claimant and the first defendant would not be responsible for any debt or outstanding bills or loans provided for in the 10^th February 2005 document would not make commercial sense if it was to be applied to the debt at 763 Old Lode Lane raised by the first defendant and was to give rise to the consequence that the second defendant would become liable for that loan, in respect of which £54,000 had been raised to assist the first defendant in the purchase of the Mere Green property. That would make no commercial sense.
77. It follows from this that so far as the Solihull Balti and 763 Old Lode Lane are concerned the 10^th February 2005 document has no effect on the 11^th July 2004 declaration of trust as to beneficial interests in 763 Old Lode Lane, but it does affect the right to share in the rental income in respect of the Solihull Balti's occupation of that property. If this construction is at odds with the parties' (that is the claimant, the first and second defendants') own subjective intentions as to legal and beneficial ownership of 763 Old Lode Lane, they may of course go to solicitors and give instructions for a deed reflecting their joint common intention to be drawn up and cause the same to be registered against the title. That is entirely a matter for them but it is not, in my judgment, the true construction of the document they executed on the 10^th February 2005.
78. Next, I must address what appear to be a number of dissolution notices referred to in the correspondence in the trial bundle. I note that the trial bundle includes a letter dated the 24^th July 2008 from Mr Kamar Uddin to Sydney Mitchell Solicitors, who were then the solicitors acting for the first and second defendants. That letter refers to four enclosed documents which are described as partnership dissolution notices by which notice was purportedly given dissolving the following partnerships : (1) that between the claimant and the second defendant in respect of the Jalalabad property and the property situated at 33 Etnam Street; (2) that between the claimant, the first defendant and the second defendant holding the property at 3 – 7 Station Road; (3) that between the claimant, the second defendant, the first defendant, the two Mr Miahs and Mrs Nessa in respect of the Lloyds Restaurant business; and, (4) that between the claimant, the first defendant and the second defendant relating to the property at 763 Old Lode Lane.
79. The actual dissolution notices do not appear to be in the trial bundle. However, the correspondence and notices were met by a holding letter from Sydney Mitchell and a response from the two Mr Miahs that the claimant is not a partner in the Lloyds Restaurant. Lest there be any doubt, it follows from the judgment that I have given so far, that: (1) in respect of the alleged partnership between the claimant and the second defendant in respect of the Jalalabad Restaurant and the property situated at 33 Etnam Street, the claimant had ceased to be a partner in the Jalalabad and the property at 33 Etnam Street was the subject of a trust, not a partnership; (2) the property at 3 – 7 Station Road was held on trust and was not an asset of a partnership; (3) the partners in the Lloyds Restaurant business did not include the claimant or the first defendant, and the claimant had no locus to dissolve that partnership; and, (4) the property at 763 Old Lode Lane was not an asset of a partnership.
80. Thus, all of these notices were utterly misconceived and reveal a fundamental inability or failure on the part of the claimant's legal representative to distinguish between trust property on the one hand and partnership property on the other.
81. I now turn to the Mango Spice and 6A Hill Village Road, Mere Green. Self-evidently, neither the business carried on under the name Mango Spice nor the property at Mere Green were the subject of the 10^th February 2005 document. That, in all probability, is because the Mango Spice business was then still in gestation.
82. Based on my findings as to what happened in Mr Dyke's presence at Tyndallwoods offices on the 23^rd February 2005, it is clear that the first defendant's proposal that the claimant and the second defendant would become partners in the Mango Spice business was rejected by Mr Hussain. Accordingly, the claimant's claim to an account of the profits due to the claimant from his share, said to be 16.33%, of the partnership business trading as Mango Spice, is misconceived.
83. Whether the first defendant holds either his interest in the Mere Green property or his share of the partnership profit in trust partly for the claimant is another matter altogether.
84. Certainly the first defendant has raised unauthorised loans secured on 763 Old Lode Lane and 3 – 7 Station Road and in so doing he acted in breach of trust and is accountable to the claimant for such breach but, if and to the extent that such an account is given and payment made, the claimant could not resist the transfer to the first defendant of a corresponding share in the beneficial interest in the properties charged. To do otherwise would be to enable the claimant to have his cake and eat it. The alternative would of course be to require the first defendant to account for any gain made from or to make good any loss caused to the trust property by the first defendant's unauthorised borrowing and breach of trust.
85. I now come to the agreed list of issues. I naturally approach this list against the background of the findings I have already made and in so doing I must keep in mind that: (1) none of the principal parties (the claimant, the first defendant and the second defendant) has impressed me as being reliable as a witness; and, (2) it has not been in the habit of these parties to put their professional advisers fully in the picture.
86. Accordingly, what follows is the best that can be done in the circumstances by reference to the evidence to which I have been referred and the helpful submissions, including written submissions, made by the parties' advocates.
87. The detailed issues are raised under four main topics: (1) the Station Road property, (2) the Solihull property, that is 763 Old Lode Lane, (3) the 10^th February 2005 document, and (4) the Mango Spice Restaurant and the Mere Green property. In the light of the emphasis placed on the 10^th February 2005 document, I start with the detailed issues raised by reference to it. There are a total of 14 issues.
88. Issue (1) : Is the 10^th February 2005 document a true or false document? For the reasons already given, I have found that it is a true document.
89. Five further issues arise from this. They are issues (2) to (6).
90. Issue (2) : Did the 10^th February 2005 document validly and conclusively deal with the ownership and disposal of the claimant's and the first defendant's interest in the business known as Lloyds Restaurant operating from 3 – 7 Station Road? For reasons already given, it did not.
91. It did not address the Lloyds Restaurant business at all. The partnership share of the first defendant was governed by the 11^th July 2004 deed until the first defendant was replaced by the second defendant on the 23^rd February 2006, from which point the second defendant's 25% share of the partnership is held on trust for himself as to 16.67% and for the claimant as to 8.33%.
92. Issue (3) : Did the 10^th February 2005 document vary the deed of agreement dated the 11^th July 2004 in respect of the Lloyds Restaurant business and replace it with a new trust? This question, on analysis, resolves to the question just answered as issue (2).
93. Issue (4) : Did the 10^th February 2005 document extinguish the claimant's right to an 8.33% share in the Lloyds Restaurant? Again, this question resolves into the question asked and answered as issue (2). My understanding is that these issues, (2), (3) and (4) were raised as slight variations on a theme to cover possible answers that might be given.
94. Issue (5) : Did the 10^th February 2005 document validly and conclusively vary the claimant's, the first defendant's and the second defendant's beneficial interests in 763 Old Lode Lane? I have found that the 10^th February 2005 document makes no reference to 763 Old Lode Lane and therefore is not to be construed as so doing.
95. The reference in the 10^th February 2005 document is to the Solihull Balti, which properly construed is a reference to the lease and the trusts of the rental income. There is no reference to the freehold estate or the reversionary interest in that estate.
96. Issue (6) : Did the 10^th February 2005 document validly and conclusively vary the legal and beneficial ownership of the claimant's share in the business known as the Jalalabad Restaurant at the property known as the 33 Etnam Street? In relation to the partnership business, which of course is unaffected by Section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989 because the land was not a partnership asset; the 10^th February 2005 document provided for the claimant to cease to be a partner and that is what happened. The claimant therefore has no beneficial claim to any share of the profits of the Jalalabad business and neither does the first defendant. The position of Mr Khair does not arise for determination in these proceedings.
97. As to the legal and beneficial ownership of 33 Etnam Street, the 10^th February 2005 document was expressed as an agreement; however, the second defendant and the claimant have subsequently executed legal documents which, to the world at large, record that the claimant and the second defendant remain joint legal owners of 33 Etnam Street. The payment of the loan from London Scottish Bank to the second defendant with the claimant's express permission is consistent with the beneficial interests changing as provided for under the 10^th February 2005 document. In my judgment, the true position is that apparent from the March 2005 and the registered title.
98. Of course, however, the claimant may be entitled to an indemnity from the second defendant should there be a default in connection with the London Scottish loan. It by no means follows that the claimant has a present right to demand £61,224, which is half the balance of the net sum advanced by London Scottish or any sum from the second defendant. Bearing in mind the claimant's consent to the payment of that money to the second defendant, I consider such a claim to be misconceived.
99. Issue (7) : returning to the first topic, 3 – 7 Station Road, the next question is: Was the annual rental for 3 – 7 Station Road over the period the 11^th July 2003 to the rent review date in 2006, £27,000 or £20,000? For two main reasons, I find that the rent was £20,000.
100. First, and importantly, £20,000 is the annual rent provided for in the lease until the first review date which was set as the 14^th February 2006.
101. Secondly, that is consistent with analysis of the available accounts for the Lloyds business. The first set of accounts is for the period the 7^th February 2003 to the 31^st March 2004. In other words, these accounts are for a period in excess of 12 months and are less easy to analyse than the second set of accounts, which are for a one-year period. These accounts to the 31^st March 2005 showed the annual charge for rent, rates and insurance to be £33,486. Mr Kamar Uddin, for the claimant, relied in submissions on the first defendant's evidence obtained in cross-examination that the annual figure for rates and insurance was probably in the range of £10,000 to £15,000 and probably not more than £12,500. On that basis, the rent payable during the year to the 31^st March 2005 could only have been £20,000. A rental charge of £27,000 would leave far too little (less than £10,000) as the charge for rates and insurance. The charge in the first period for £37,766 is less easy to analyse, but it should include rates and insurance for more than one year and may even include, erroneously, a provision for rent over five quarter dates because five quarter dates fall within that accounting period. The point is that it is futile to speculate by reference to the first set of accounts, but sensible analysis may be made of the second accounts, which are for a full, and only for a full, calendar year.
102. I realise that in so finding I am at odds with the passage in the report of Mr Liddell of PKF, who is the single joint expert in accountancy. He records the parties' agreement that the initial 'rate', by which he means rent, was £27,000, but that appears to me to be a misunderstanding on his part.
103. Issue (8) : Has the first defendant as trustee truly and accurately accounted to the claimant as beneficiary for the claimant's share of the rent for 3 – 7 Station Road for the period from 2003 to date? If not, what sum is due to the claimant in damages? It is clear that the first defendant has not accounted to the claimant for rent over this period. It is also the case that damages are not the appropriate remedy for the trustee's failure to account. By reference to the 11^th July 2004 deed and the 24^th March 2005 deed, the first defendant is bound to account to the claimant for the net rent of any lease of 3 – 7 Station Road.
104. Mr Liddell has identified the rent actually received. It is also right that the cost of finance connected with the purchase or maintenance of the property or authorised by the beneficiaries as a charge on the property should be deducted, and that is common ground between the parties. As to rental income, Mr Liddell has identified receipts of £178,688. The lease started in July 2003 and the review dates were the 14^th February 2006 and the 14^th February 2009, and then, according to the lease, following at three-yearly intervals.
105. The claimant contends that the rent due or received to the 31^st October 2009 was £207,500. The defendants contend that the rent due was £183,000. It is agreed that the rent due from the 2006 review was £33,000 per annum and from 2009 it was £36,000 per annum. If the start date was July 2003, I calculate that the rent due was in fact £181,000, being £55,000 for the quarters while the rent was £20,000, £99,000 for the three-year period at £33,000 and £27,000 for the three-quarters of rent at an annual rate of £36,000.
106. However, I do not know the precise start date and therefore I accept Mr Sham Uddin's calculation on behalf of the defendants that the true rent receivable was £183,000. It is common ground that adjustment must be made for the mortgage payment. Mr Kamar Uddin proposes that adjustments should not be made for payments which Mr Liddell has been able to identify as payments, but for which no loan agreement has been produced. Mr Sham Uddin contends that deductions should be made for all known payments irrespective of the purpose. That cannot be correct. Mr Kamar Uddin has calculated that loan repayments totalling £135,565.38 have been made in respect of undisclosed loan agreements and he accepts that a deduction should be made for payments pursuant to disclosed loan agreements totalling £127,940.62.
107. On this basis, the sum accountable to the claimant as rent over the period 2003 to 2009 in respect of this property is 1/3 of the difference between £183,000 and £127,940.62. In other words, 1/3 of £55,059.38 which is £18,353.13, and I so find.
108. In this context, the claimant also seeks an account of what is said to be a premium of £90,000 paid in respect of 3 – 7 Station Road. In my judgment, this is misconceived. The premium was, in my judgment, £80,000 and was paid for the right to enter into a partnership in the Lloyds Restaurant business. That sum was paid in 2003 at a time when the parties were meeting on a weekly basis to account to each other; and, subsequently, the parties (that is the claimant, the first defendant and the second defendant) took part in a family mediation to resolve all their differences going forward and entered into the deed dated the 11^th July 2004.
109. Bearing in mind my reservations about the reliability of the claimant as well as the first defendant, I am not in a position to find on the balance of probabilities that after the 11^th July 2004 the first defendant remained liable to account to the claimant for any part of the £80,000 premium.
110. Issue (9) : Has the first defendant, as trustee, accounted to the claimant, as beneficiary, for the claimant's share of all of the loans obtained on the security of 3 – 7 Station Road? This resolves itself into a claim for an account of three amounts. The first amount is £23,333.33, which is one third of a £70,000 loan described by Mr Kamar Uddin in his closing submissions as having been obtained sometime in February 2003; the second amount is the sum of £3,166.67, being one-third of a loan of £9,500 which was obtained by the first defendant on the 16^th August 2007; and, the third amount is £35,555.78, being one-third of £106,667.33, which itself was the balance of a £365,000 loan obtained by the first defendant on the 20^th March 2008 in excess of the sum required to repay the then existing borrowing.
111. The defendants submit that the claim for the first amount is misconceived because the £70,000 sum borrowed in 2003 was borrowed for the purchase of the property in the first place and the claimant, the first defendant and the second defendant are equal beneficial owners of 3-7 station Road pursuant to the 11^th July 2004 deed. I agree.
112. The first defendant's explanation of £9,500 loan is that it related to Bijan Corporation, which had outstanding loans of £20,000 when it ceased carrying on the business of the Jalalabad and by 2007 that loan had been reduced to £9,500, and that sum was raised to clear that debt. That may well be so, but under the terms of the 10^th February 2005 agreement, any such obligation to clear liabilities or debt fell upon or fell to the account of the second defendant. Accordingly, this loan remains unexplained by the first defendant.
113. That being said, I note from Mr Liddell's report that the loan of £9,500 had been repaid, barring a de minimis sum of £372, by the 31^st October 2009. Accordingly, there is no basis for contending that there has been a detriment to the beneficial interest of the claimant for which an account is due from the first defendant.
114. In relation to the third amount, the first defendant accepts that he received a net sum of £106,667.33 and contends that the claimant agreed that he should keep that amount as an adjustment for the transfer of 4 Heath Way into the claimant's or the claimant's wife's sole name. Any such agreement is undocumented and is inconsistent with the terms of the transfer executed by the parties.
115. Accordingly, in my judgment, whilst there is no substance to the claim for a third of £70,000 or any part of £9,500, the first defendant is liable to account to the claimant for the sum of £35,555.78; but, on such account being made, the claimant's and first defendant's respective beneficial interests in the property at 3 – 7 Station Road would have to be adjusted to reflect a proportionate transfer to the first defendant from the claimant's beneficial interest in that property and the claimant and the first defendant would have to execute a deed to such effect. That is for a reason already given, namely that a failure so to require would be to allow the claimant to have his cake and eat it.
116. Issue (10) : Does the first defendant hold the beneficial interest in the freehold of 763 Old Lode Lane on trust for himself, the claimant and the second defendant in equal shares? I have found that he does on the basis that the 10^th February 2005 document on its true construction does not affect the terms of the 11^th July 2004 deed concerning the freehold at 763 Old Lode Lane.
117. Issue (11) : Has the first defendant as trustee clearly and accurately accounted to the claimant as beneficiary for the claimant's share of the rent of the property at 763 Old Lode Lane, that is the Solihull Balti, since 2003 and, if not, what sums are due to the claimant in damages? Again, the formulation of a beneficiary's claim against the trustee in connection with a failure to account is not a claim in damages. It is clear that the first defendant has not so accounted.
118. Mr Sham Uddin for the first defendant refers to Mr Liddell's joint expert report and submits that upon the taking of an account there would be a shortfall. However, this submission is based upon Mr Liddell's analysis of rent identified as having been received.
119. Mr Kamar Uddin's analysis is based upon information provided by the first defendant and Mr Liddell's identification of a quarterly figure for rent, which Mr Kamar Uddin extrapolates to calculate rent receivable and from which he deducts payments in respect of loans.
120. Up to the 8^th December 2004, this, on Mr Kamar Uddin's calculations, produced a sum unaccounted for of £3,303.51 and at that time the claimant's beneficial entitlement was to a one-third share. In other words, to a sum of £1,101.17.
121. It is common ground that thereafter the cost of finance exceeded the rental income.
122. Mr Kamar Uddin's approach to this issue follows the approach properly to be taken. I find that the first defendant has failed to account to the claimant and that the sum due on the taking of an account would be and is £1,101.17 as at the 8^th December 2004.
123. Issue (12) : Has the first defendant as trustee accounted to the claimant as beneficiary for the claimant's share of all loans obtained and secured on 763 Old Lode Lane since 2003? If not, what sums are due to the claimant in damages? Again, the observation already made as to the misconception of finding a claim against the trustee in damages is repeated.
124. It is common ground that a loan of £130,000 from the AIB Group was secured on 763 Old Lode Lane and that £54,000 was applied towards the purchase of 6A Hill Village Road, Mere Green. A further £13,121.13 was available to the first defendant and has not been accounted for, although elsewhere the claimant appears to submit through Mr Kamar Uddin that it was applied in connection with working capital at the Mango Spice.
125. The claimant makes no claim in the first action for an account of £54,000 as such, but rolls this sum into his claims in the second action.
126. The claimant therefore claims one-third of the sum of £13,121.13. In other words, £4,373.71 and, in my judgment, is entitled to this sum upon the taking of an account. However, this is not a freestanding entitlement and the claimant must, if he requires that sum to be paid, accept an adjustment to his and the first defendant's respective interests in 763 Old Lode Lane upon payment of the sum, which adjustment is to be reflected in a duly executed deed. By reference to the Christie's valuation of that property at £172,500 that would represent a percentage adjustment in the sum of 2.54%.
127. Issue (13) : What, if anything, is the nature of the claimant's interest in the property the subject to trusts? This broad question concerning all of the properties has effectively been answered in the body of my judgment. As I have dealt with each in turn, it does not in my judgment arise as a separate freestanding issue.
128. The final issue, Issue (14) : Does the claimant have a 16.66% share in the business known as Mango Spice Restaurant and the property at 6A Hill Village Road, Mere Green? Whilst the first defendant may, in early February 2005, have been willing to admit the claimant and the second defendant into his partnership with Mr Monowar Hussain, Mr Hussain was not agreeable to this proposition. Accordingly, the claimant is not and has never been a partner in the Mango Spice business.
129. The provisions of Section 21 of the Partnership Act 1890 are not engaged in this case because neither the Mango Spice Restaurant nor the Mere Green property was bought with money taken from a partnership of which the claimant was the partner. What happened was that £54,000 was raised by way of a loan on property held pursuant to a trust.
130. Viewed from the other end of a telescope, however, the first defendant is liable as a trustee to account to the beneficiaries (here the claimant) for the trust property appropriated or misappropriated to his own use. The raising of an unauthorised loan would constitute such an appropriation.
131. Thus, the first defendant is liable to account to the claimant for any profit resulting from a one-third share of £54,000 borrowed and applied in the acquisition of 6A Hill Village Road. In reality, this represents, from the claimant's point of view, an account by reference to an investment of £18,000.
132. The cost of taking such an account is a factor to bear in mind and having regard to the claimant's other claims, the more appropriate course may be to order or direct that the first defendant accounts to the claimant for the sum of £18,000 as from the date when the loan was drawn down, together with accrued interest thereon; but, if that is the account that is ordered, it would be incumbent upon the claimant to transfer a value equivalent proportion of his beneficial interest in the property the subject of the security to the first defendant upon payment and for both the claimant and the first defendant to execute a deed reflecting the change in beneficial interests upon payment.
133. As neither the claimant nor the first defendant has addressed that point in any submission, I invite brief submissions before finally deciding that matter^[2].

Note 1   ie the claimant and the first defendant    [Back]

Note 2   The claimant elected to accept £18,000 plus interest    [Back]