Frederic Uchechukwu Achom and Others v Tihomir Lalic and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Newey |
| Judgment Date | 10 June 2014 |
| Neutral Citation | [2014] EWHC 1888 (Ch) |
| Docket Number | Case No: HC12F04721 |
| Court | Chancery Division |
| Date | 10 June 2014 |
[2014] EWHC 1888 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building, Royal Courts of Justice
7 Rolls Buildings, Fetter Lane
London, EC4A 1NL
Mr Justice Newey
Case No: HC12F04721
Mr Richard Fowler (instructed by Keystone Law Ltd) for the Claimants
Mr Jerome Wilcox (direct access) for the First and Second Defendants
Mr Lawrence Power (direct access) for the Third Defendant
Hearing dates: 7–9 & 12–16 May 2014
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This case concerns a nightclub ("the Scotch") at 13 Masons Yard in London of which a company called Great Club Limited ("Great Club") held an underlease until last year. In 2011, Great Club's shares were bought in the name of the third defendant, Alula Leisure Limited ("Alula"), from a Mr Nick Smart. Alula's shares are held by the first and second defendants, Mr Tihomir (or "Tim") Lalic and Mr Vahram Papazyan.
When Mr Smart owned Great Club, the Scotch was known as "Director's Lodge". In earlier years, however, the site had housed a fashionable club called "The Scotch of St James". Once Alula had acquired Great Club, the Scotch was re-opened under that name.
In the present proceedings, the claimants maintain that they are entitled to 50% of the shares in Great Club (and of the Scotch venture more generally). More specifically, it is alleged that Alula holds 33% of the shares in Great Club (and the Scotch venture) on trust for the first claimant, Mr Frederic Achom, and 17% on trust for the second claimant, Mr Alex Nicholl. In turn, Mr Achom is said to hold part of his 33% (representing 6% of Great Club's shares) as nominee or trustee for the third claimant, Mr Anthony Grant.
The claimants assert that they are entitled to a 50% interest in Great Club (and the Scotch venture) as a matter of contract or, failing that, because there was a partnership or on the strength of a " Pallant v Morgan equity" or proprietary estoppel. The claimants' fallback position is that they have restitutionary claims in respect of money and effort they put into the Scotch venture. Economic torts (viz. procuring breach of contract and conspiracy) are also alleged.
The parties
Mr Achom and Mr Grant both have chequered pasts. In 2000, they were convicted of conspiracy to defraud and sentenced to a year's imprisonment on the strength of their involvement in a wine business. Their conduct in that company also led the Secretary of State for Trade and Industry to bring proceedings against them, as a result of which they were each the subject of a lengthy order under the Company Directors Disqualification Act 1986: they were barred from being directors of a company or involved in the management of one until July of last year. Early in 2002, the Secretary of State had further obtained, on public interest grounds, an order for the winding-up of Boington & Fredericks of London Limited, a company dealing in wine that was run by Mr Achom and Mr Grant.
In subsequent years, however, Mr Achom and Mr Grant both seem to have enjoyed considerable success. In 2010, when he was aged 36, Mr Achom was listed as one of London's 1,000 most influential people. By then, he was well-known as an owner and operator of nightclubs: in particular, for his involvement in the Jalouse club in Mayfair. When giving evidence, Mr Achom said that he might be worth £10 million. He evidently, moreover, has a wide network of celebrity friends and acquaintances. For his part, Mr Grant is an investor and managing partner in a wine broking business and has also had an interest in, among other things, Jalouse. By his own account, the £56,500 he spent in relation to the Scotch was relatively small by his standards: he described his investment as "really quite minimal".
Mr Nicholl, who is in his thirties, has worked in the nightclub industry for some eight years. He first met Mr Achom in 2008 and has worked with him in the period since then. He became the manager of Jalouse and was given a 5% interest in it for his work there.
Mr Lalic came to the United Kingdom from Croatia aged 11 in 1994. After leaving school, he became involved in managing bars in Oxford. He also, in 2004, entered Oxford Brookes University, and it was there that he met Mr Papazyan. Mr Papazyan, who is three years younger than Mr Lalic, is Armenian, but his family has been based in Dubai for some time. He was educated in the United Kingdom from 2000.
While still at Oxford Brookes University, Mr Papazyan set up Oxford Martial Arts Academy (OMAA) Limited to operate a martial arts club. At Mr Papazyan's suggestion, Mr Lalic became involved in the venture as well. In time, the company changed its name to FeelFit Gym Limited and acquired new premises in Oxford. Funding was provided by a company called Arempa International Limited ("Arempa"), which is owned by Mr Papazyan's family.
By 2011, Mr Lalic and Mr Papazyan were looking for investment opportunities in London. In July 2011, they acquired Alula as an investment vehicle. Mr Lalic and Mr Papazyan became the company's only directors and shareholders (with 50 shares each). The plan was again for Arempa to supply finance by way of loan.
Factual history
Events up to the acquisition of the Scotch
During July 2011, Mr Lalic and Mr Papazyan were put in touch with a Mr Jack Cardenas-Storey, a business consultant. Having been told that Mr Lalic and Mr Papazyan were interested in investing in nightclubs or bars in London, Mr Cardenas-Storey arranged for them to meet Mr Achom. The meeting took place at Home House in London on 1 August.
Mr Achom seems to have met Mr Cardenas-Storey again on 3 August 2011, but he was then away for a month or so. By the time he returned, Mr Lalic and Mr Papazyan had been told of a number of businesses that they could buy by a Mr Jonathan Moradoff, a commercial property agent employed by Davis Coffer Lyons to whom they had been introduced by a friend, Mr Vladimir Gelev. On 29 August, Mr Moradoff emailed Mr Gelev information about a bar in Soho called Amuse Bouche. On 31 August, Mr Moradoff sent Mr Lalic an email with details of three clubs in Mayfair of which Mr Smart was the ultimate owner: Director's Lodge (as the Scotch was then called), Gaslight and Portland Club.
By 2 September 2011, Mr Lalic and Mr Papazyan had decided to make an offer for Amuse Bouche. At much the same time, they completed the purchase of the Match Bar, a bar near Oxford Circus. The acquisition of the Match Bar had taken, I gather, no more than about ten days. The purchase of Amuse Bouche (which was renamed 52 North) also proceeded to completion, but somewhat less fast.
On 6 September 2011, Mr Cardenas-Storey met Mr Lalic and Mr Achom at 118 Piccadilly to view a possible site. It proved not to be of interest, but later that day Mr Lalic chased Mr Moradoff for further information about Director's Lodge. He explained to Mr Moradoff:
"The wrong file has been sent, we are not interested in the Gaslight. We are interested in the Directors Lodge."
Mr Achom first saw Director's Lodge the next day when he went there with Mr Lalic (and perhaps also Mr Papazyan). They appear to have visited together again on 13 September 2011. They (at least sometimes with Mr Papazyan as well) clearly also met on other occasions during September. Further, Mr Lalic would often forward information about Director's Lodge to Mr Achom. On 8 September, for example, Mr Lalic sent on to Mr Achom both lease documentation that he had received from Mr Moradoff and the licence for the premises that he had been sent by the solicitors instructed, Bower & Bailey.
A meeting with Mr Smart was arranged. This was to take place at Mr Moradoff's offices in Portland Place at 6pm on 13 September 2011. Mr Lalic and Mr Achom agreed to meet for lunch earlier in the day: as Mr Lalic had said in a text to Mr Achom, "to finalise the deal between us and to discuss the approach in closing the deal for 6pm". In the event, Mr Smart was taken ill and could not attend, but that does not appear to have emerged until the evening. Mr Lalic and Mr Papazyan did not remember Mr Achom being present at the meeting, but I think he probably was. That was Mr Moradoff's recollection, and, as it was not known that Mr Smart would not be able to be there, I cannot see why anyone would have told Mr Achom that he need not be present. Mr Papazyan was inclined to think that Mr Achom was out of the country, but, as I have indicated, he in fact appears to have met Mr Lalic in London that same day.
The meeting with Mr Smart was rearranged, seemingly for 20 September 2011. On 21 September, Mr Moradoff reported to Mr Lalic in a text, "Spoke with him [i.e. Mr Smart] at 300k to complete in a day". Mr Lalic told Mr Moradoff, "We can transfer the cash today." Mr Lalic explained in evidence that, in the event, money was put on deposit with Bower & Bailey so that Mr Smart could "smell" it. On 23 September (a Friday), Mr Lalic told Mr Achom in a text:
"Hey, we made an undertaking to exchange on Monday and complete by mid week subject to the search."
By the evening of 25 September 2011, however, Mr Lalic had become concerned about a licensing issue. He therefore asked Bower & Bailey to make sure that contracts were not exchanged without further discussion. On 26 September, Mr Lalic explained to Mr Achom that he had told Moradoff that the price needed to come down to approximately £275,000 because "it would cost around 50k minimum to remove the...
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