Balber Kaur Takhar v Gracefield Developments Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Steven Gasztowicz |
| Judgment Date | 23 October 2020 |
| Neutral Citation | [2020] EWHC 2791 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: B30BM297 |
| Date | 23 October 2020 |
[2020] EWHC 2791 (Ch)
Mr Steven Gasztowicz QC
sitting as a Deputy High Court Judge
Case No: B30BM297
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES (ChD)
BIRMINGHAM DISTRICT REGISTRY
Birmingham Civil Justice Centre
The Priory Courts, 33 Bull Street
Birmingham B4 6DS
Mr John Wardell QC and Mr Lee Jia Wei (instructed by Tanners Solicitors LLP) for the Claimant
Mr Joseph Sullivan (instructed by Gowling WLG (UK) LLP) for the Defendants
Hearing dates: 9–11 September 2020, 29 September 2020, 1 October 2020
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic
Mr Steven Gasztowicz QC:
Background
In this action the Claimant seeks to set aside a judgment obtained against her by the Defendants in 2010 in an earlier action in this court (in case number 8BM30468), which I shall call ‘the original action’. The background is as follows.
I: The Parties to the Actions
The Third Defendant is the cousin of the Claimant. The Second Defendant is the husband of the Third Defendant.
The First Defendant (‘Gracefield’) is a company that was incorporated in November 2005. The Second and Third Defendants, and initially the Claimant, were directors and shareholders. The Claimant initially held 50% of the issued share capital and the Second and Third Defendants 25% each.
II: The Claimant's case in the Original Action
In February 2009 the Claimant served on the Defendants Particulars of Claim in the original action.
In them, the Claimant alleged, in essence, that five commercial properties in Coventry of which she was the registered proprietor had been transferred by her to Gracefield on trust for her (or Takhar Trading Company, a partnership on whose behalf she herself was said to hold them) on the basis that the Defendants would, through Gracefield, manage and renovate them, with reimbursement for monies spent by them being made out of rentals from the properties. Alternatively, she pleaded that the Defendants had procured the transfer of the properties to Gracefield by undue influence or that they represented unconscionable bargains. She also alleged that she had at some point been removed as a director as Gracefield and her shares transferred to the Second and Third Defendants without her knowledge.
The relief sought included declarations, the setting aside of the transfers, and damages, with allowance to be given to the Defendants for any monies spent on the properties.
III: The Defendants' Case in the Original Action
The Defence in the action was served on 27 th March 2009.
The Defendants' case was that the properties had been transferred to Gracefield, both legally and beneficially, pursuant to an agreement with the Claimant in 2005 that the Second and Third Defendants would through Gracefield manage and renovate them with any expenses incurred by them coming back to them out of the company. Under it, the Claimant was to receive a purchase price of £100,000 by way of a credit for such sum being placed on a loan account in her favour with Gracefield, of which she was initially a director and a shareholder, with this amount and a further £100,000 (which was subsequently clarified to be £200,000) by way of deferred consideration being paid to her out of the proceeds of sale of the properties in due course. The net sale proceeds after the payment of this sum and all expenses were (via the company) to be split 50% to the Claimant and 50% to the First and Second Defendants. They denied any wrongdoing in relation to any aspect of the matter and contended the Claimant was always fully aware of what was going on. They stated that the Claimant had agreed to resign as a director and to transfer her shareholding to the Third Defendant because the bank was reluctant to give Gracefield finance with her involvement shown as she had a poor credit rating, although her agreed entitlement to 50% of the net proceeds was unaffected.
IV: The ‘Profit Sharing Agreement’ Document before the court at the trial of the Original Action
Having set out what the Defendants contended were the terms of the agreement between themselves and the Claimant, the Defendants said in paragraph 29 of the Defence,
“An agreement was drafted by [X – the Defendants' firm of accountants], which was signed. Whilst the draft contained some of the terms of the agreement set out above [in the Particulars of Claim], it did not in any event comprehensively deal with all that had been agreed as set out. This agreement is headed Profit Sharing Agreement and is purportedly dated 1st April 2006”.
The document in question began, “THIS PROFT SHARING AGREEMENT is made on 1 April 2006 BETWEEN Balber Takhar….of one part and Gracefield Developments Limited…of the other part”. After stating that the Claimant had sold the properties to Gracefield, the document in summary stated in clause 1(a) that “the company covenants that” the sum of £100,000 purchase price would be placed on a loan account within the company and paid to the Claimant on the sale of the properties as there set out; in clause 1(b) that a further £200,000 would be paid to the Claimant as deferred consideration “for an uplifted value of the properties at the time they were transferred to the company”; and in clause 1(c) (the final clause) that the Claimant “shall also receive 50% of the profits on the sale of each site. The treatment of the payment of these profits will be discussed at the relevant time and take into account Mrs Takhar's personal taxation position”.
The document thus supported the essence of the Defendants' case, namely that there was a profit sharing agreement and referred to the Claimant getting 50% of the net proceeds, in accordance with the agreement the Defendants said had been reached.
However, it did not spell out that the other 50% when received by Gracefield was to be passed to the Second and Third Defendants. As the Claimant was to have 50% of the net proceeds and Gracefield would have the other 50%, given that the Claimant held half the shares in Gracefield, this looked at alone could effectively give her half of that 50% as well, leaving just 25% of the net proceeds to the Second and Third Defendants.
The Defendants were careful to make clear in the Defence, however, that what was stated in the document was merely intended to be reflective in part of an oral agreement that had been reached, and they referred to it as a “draft” (para 29) which had “not been completed” (para 19), though they said it had been signed.
The document was said by the Defendants at the trial of the action to have been drafted by Mrs A, as I shall call her, a member of a firm of accountants I shall call “X”, acting for them, following a meeting with the Claimant and the Second and Third Defendants on the basis of her understanding of the arrangement but omitting reference to the 50% of the net proceeds of sale left in Gracefield, after the Claimant had received her 50%, being intended to be passed on to the Defendants.
At the time the document was drawn up, because the Claimant then held half the shares in Gracefield, the omission of the agreement that the 50% left in the company was to belong to the Defendants would obviously not have assisted them, even if it could be argued they should receive that other 50% based on the reference to the Claimant receiving 50%. By the time the Defence in the original action was filed, however, the shareholding in Gracefield had in fact been altered, so that all the shares were held by the Defendants. Accordingly, the 50% of the net proceeds left in Gracefield would go to them even if the strict wording of the document was followed.
The Profit Sharing Agreement document was referred to by the Defendants in support of their case in pre-action correspondence.
In paragraph 24 of the Particulars of Claim the Claimant denied having entered into the Profit Sharing Agreement document as alleged in correspondence and noted that only an unexecuted draft of it had been produced.
A photocopied/scanned copy of the document purportedly bearing the Claimant's signature (as well as a separate copy bearing the Defendants' signatures) was produced by the Defendants' side only after the action had been commenced, in circumstances which I shall later describe. No original has ever been produced.
V: The Trial of the Action
Shortly before trial of the action in June 2010, the Claimant sought permission to instruct and call a handwriting expert to give evidence on the question of whether her purported signature on the copy of the Profit Sharing Agreement document which had emerged was truly hers. This application was made at a late stage and was refused on 9 th April 2010. No appeal was made against that decision.
In her evidence in the original action, the Claimant said that she had not signed the Profit Sharing Agreement document and had never seen it until the dispute arose. However, without expert evidence she could not go as far as alleging and proving forgery.
The trial was held before HH Judge Purle QC sitting as a High Court Judge over several days in June and July 2010. On 28 th July 2010 he gave judgment for the Defendants and dismissed the claim. A transcript of his judgment is before this court. I shall refer to parts of it in due course.
Subsequent Handwriting Evidence
Subsequently, the Claimant, through new solicitors, instructed a handwriting expert, Mr Robert W Radley. On 4 th October 2013 he provided his report that is now before me. In it, he reported that there was conclusive evidence that the Claimant's signature on the Profit...
To continue reading
Request your trial
-
Balber Kaur Takhar v Gracefield Developments Ltd
...of the First Defendant company (‘Gracefield’). In 2020 before Mr Gasztowicz QC sitting as a High Court Judge ( Takhar v Gracefield [2020] EWHC 2791 (Ch), ‘the Gasztowicz Judgment’)) the Claimant did prove fraud and the Purle Judgment was set aside. (Mr Gasztowicz QC's costs judgment is rep......
-
Ras Al Khaimah Investment Authority v Farhad Azima
...have said that they are not different tests, but two ways of expressing the same test – see Takhar v Gracefield Developments LLP [2020] EWHC 2791 (Ch) ( Takhar 2) at [59] – [60], a decision of Mr Steven Gasztowicz QC, sitting as a deputy Judge of the Chancery Division, in the trial followi......
-
Anthony King v DWF LLP
...in the open and public administration of justice and the fundamental principle of equality before the law.” ii) Takhar v Gracefield [2020] EWHC 2791 (Ch): “I should add that the point was made by Mr Sullivan in submissions that the Defendants as professional people would not have forged th......
-
Kevin Taylor v Mohammed Khodabakhsh
...was to avoid or set aside the transfers of the properties. Following the Supreme Court decision the original judgment was set aside ( [2020] EWHC 2791 (Ch)) because the judge at the original trial had heavily relied on the profit share agreement in reaching his decision not to grant the re......