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Corporate dispute specialists Morgan Rees and George Gwynn successfully represented our clients in a four-year company ownership dispute, culminating in a three week trial and the High Court dismissing all the claims against our clients and awarding them their costs of the trial on the indemnity basis.
The High Court yesterday made an award of costs on the indemnity basis and dismissed appeals against its judgment in Gill v Thind [2022] EWHC 2872 (Ch). The dispute concerned the ownership of three companies. George Green LLP acted for the individuals who had worked hard to establish and build up profitable care home businesses and a property investment company. The defendants had transferred some of the shares into trusts for the benefit of their children, nieces and nephews. The claimant was appointed as trustee but alleged that he was personally entitled to the shares, saying that sums he had lent to the defendants represented investments and not loans. The claimant sought declarations that he beneficially owned shares in three companies.
The litigation was hard fought. The defendants had previously successfully resisted an application seeking to freeze their assets, an application to bring derivative claims and an application for specific disclosure. By the time of the trial, the defendants had 16 costs orders in their favour.
Two years into the litigation, the claimant issued unfair prejudice petitions alleging mismanagement of the companies.
After a three-week trial, Mr David Halpern KC, sitting as a Deputy High Court Judge, dismissed the claims. He accepted the defendants’ case that the claimant had agreed to hold the shares on trust. The judge also dismissed the unfair prejudice petitions. John Randall KC and Robert Mundy of St Philips Chambers appeared as advocates at the trial on behalf of the successful defendants.
The case featured some interesting points. Practical takeaways might include:
- Always record in writing, and ideally in a properly drafted legal document, the nature of any shareholders’ agreement or trust arrangement that you have agreed. We repeatedly emphasise this point in our blogs and case updates. It applies even if you are borrowing from family members – a small degree of awkwardness agreeing documents with solicitors at the outset is better than a full breakdown later.
- Instructing the right professionals is also crucial to the health of a business. Both parties had been let down by professional advisors who failed to keep sufficient records and adequately document the agreement the parties had reached.
As for legal takeaways:
- Ensure that the drafting of witness statements always complies to the spirit and letter of the new Practice Direction 57AC. In this case, the court had concern about the drafting of the claimant’s witness statement and considered it to be a “very unsatisfactory document”. The judge was concerned that the solicitors and the claimant’s son had had a significant role in the drafting of it. This, in addition to other concerns, led the court to conclude that it could not rely on the claimant’s oral evidence unless it was consistent with contemporaneous documents or inherently probable.
- Negative handwriting expert evidence and the finding of forgery does not necessarily mean that the entirety of a witness’s narrative is untrue. The court disregarded written trust documents which the defendants relied on as forgeries, but still found there to be trusts in place and ultimately found in the defendants’ favour.
The dispute resolution team at George Green LLP are experienced in a wide variety of corporate disputes, including earn-out disputes and shareholder disputes, unfair prejudice petitions and allegations of fraud. Family corporate disputes (sometimes involving as ‘quasi-partnerships’) are also unfortunately common.
We can help. If you have concerns about your business partners or fellow shareholders and want confidential expert advice, please contact Morgan (mrees@georgegreen.co.uk) and George (ggwynn@georgegreen.co.uk).