Hasan Dalkilic v Metin Pekin
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Bacon |
| Judgment Date | 08 February 2021 |
| Neutral Citation | [2021] EWHC 219 (Ch) |
| Date | 08 February 2021 |
| Docket Number | Case No: BL-2018-000509 |
| Court | Chancery Division |
[2021] EWHC 219 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Rolls Building
Fetter Lane
London
EC4A 1NL
Mrs Justice Bacon
Case No: BL-2018-000509
Michael McParland QC and Bobby Friedman (instructed by Trowers & Hamlins LLP) for the Claimants
James Ayliffe QC and Tim Matthewson (instructed by Freeths LLP) for the Defendants
Hearing dates: 19–20, 23–27, 30 November, 1–3, 10–11 December 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.
| Introduction | 3 |
| Preliminary comments on the evidence | 4 |
| The witnesses on both sides | 4 |
| General comments on the approach to the evidence | 5 |
| Specific comments on the witness evidence | 7 |
| The issues in dispute | 9 |
| The facts | 10 |
| Events prior to the establishment of Paragon | 10 |
| The establishment and ownership of Paragon | 12 |
| Ali and Sevim's divorce | 21 |
| The sale of Falcon | 28 |
| Transfer of shares to PPIL | 32 |
| Ali, Hasan and Cafer's activities in the years prior to 2012 | 32 |
| The March 2012 meetings | 33 |
| Sevim's dealings with Metin in 2012 and thereafter | 64 |
| Issues in the claim | 65 |
| Issue (i): the initial ownership of Paragon | 65 |
| Issue (ii): Ali and Sevim's divorce settlement | 66 |
| Issue (iii): whether Hasan settled his claim and received payment under that settlement | 69 |
| Issue (iv): whether Ali's settlement with Metin also released Sevim's claim | 69 |
| Issue (v): laches and estoppel | 69 |
| Issue (vi): limitation in relation to PPIL | 73 |
| Interest on dividends | 76 |
| The counterclaims | 76 |
| Conclusion | 76 |
INTRODUCTION
This is a dispute about the ownership of a burger manufacturing business, Paragon Quality Foods Limited ( Paragon), the shares of which are now held by the second Defendant ( PPIL). The Claimants and first Defendant are all members of two closely connected Turkish Alevi families, and numerous members of both families have given evidence in these proceedings. The dispute has been ongoing for some years, and it has torn the families apart. It is a tragedy that this has now resulted in a four-week trial before me.
The Claimants' case is that Paragon was founded in 1995–96 by four family members together: the first Claimant Hasan Dalkilic ( Hasan, generally referred to by family and friends as Hayri), Ali Pekin ( Ali), Ali's younger brother Cafer Pekin ( Cafer), and the first Defendant Metin Pekin ( Metin) who is Ali's nephew. While legal ownership of the company eventually rested with Metin, the Claimants say that the company was in fact beneficially owned by all four “founders” in equal shares. The second Claimant Sevim Pekin ( Sevim) is Ali's ex-wife. She says that she acquired part of Ali's share, amounting to 10% of the total beneficial interest in Paragon, at the time of her divorce from Ali, following an agreement reached at a family meeting in September 2000. It is accepted that Ali settled his claim with Metin at some point in 2012 as set out further below, although the circumstances of that are disputed and will be the subject of some of my factual findings. Cafer brought proceedings against Metin in 2015, which were eventually settled in February 2020. Hasan and Sevim say, however, that their claims have not been settled and remain outstanding.
On that basis, the Claimants seek (i) declarations that Hasan and Sevim were and are the beneficial owners of, respectively, 25% and 10% of the shares in Paragon, and that PPIL (and/or Metin) hold those shares on trust for them; (ii) orders for the transfer of the relevant shares to Hasan and Sevim, or alternatively an account by Metin for the value of the shares transferred to PPIL in breach of trust; and (iii) an account of profits and monies received by the Defendants from Paragon, and/or equitable compensation.
The Defendants' case is that all of the claims are groundless, since Paragon is and always was Metin's company alone. While various family members were employed by the company from time to time, Metin says that neither the Claimants nor any of the other family members ever had any beneficial entitlement to the shares. In any event, Metin says that he entered into an agreement with Hasan, Ali and Cafer at the second of two meetings in March 2012 (the March 2012 meetings), which he says settled any claims they might have had against him. In Ali's case, the Defendants say that also released Sevim's claim as Metin was unaware of any prior transfer of part of Ali's interest to Sevim, and in any event Ali's purported transfer to Sevim was ineffective as it was not in writing. The Defendants also say that Hasan and Sevim are barred from pursuing their claims on the grounds of laches and/or estoppel, and that the claims against PPIL are statute barred under the Limitation Act 1980.
Metin has also brought counterclaims against both Hasan and Sevim. Against Hasan, if there was no valid agreement in March 2012, Metin seeks restitution of the sums said to have been paid to Hasan pursuant to that agreement. Metin also seeks recovery of the sums paid to Sevim by Paragon to assist her following her divorce from Ali, which he says were a loan repayable on demand.
The Claimants were represented at the hearing by Mr Michael McParland QC and Mr Bobby Friedman, and the Defendants were represented by Mr James Ayliffe QC and Mr Tim Matthewson. Since the trial commenced during the second national lockdown due to the Covid pandemic, it was conducted entirely remotely using Microsoft Teams.
PRELIMINARY COMMENTS ON THE EVIDENCE The witnesses on both sides
On the Claimants' side, apart from Hasan and Sevim themselves, evidence was given by seven other members of the Pekin and Dalkilic families: Ali, Cafer's wife Neslihan Pekin ( Neslihan) who is also Metin's second cousin, Hasan's sister Medine Sadikoglu ( Medine), Hasan's nephew Muslum Dalkilic ( Muslum), Muslum's wife Gulay Dalkilic ( Gulay), Ali and Sevim's oldest son Zulfikar Pekin ( Zulfikar), and Ali's youngest sister Rojin Dersimli ( Rojin). In addition the Claimants relied on the evidence of five further witnesses who had worked at or were customers of Paragon and/or Falcon, which was a previous business venture of Hasan and Metin: Alan Large, Stephen Gelder, Erdogan Ceviz, Taner Cakmak and Haydar Koc. The evidence of Hasan, Sevim and Medine was given entirely in Turkish with the assistance of a translator. Ali gave his evidence in a mixture of English and Turkish. The remaining witnesses gave their evidence in English, albeit that for some of them that was not their mother tongue.
Cafer did not give evidence for the Claimants, the reason being that his settlement agreement with Metin precluded him from providing a witness statement or otherwise assisting the Claimants in these proceedings.
For the Defendants, the principal witness was Metin himself. In addition, evidence on particular points was given by Metin's wife Zohre Pekin ( Zohre), Zohre's brother Ali Cemal Baran, two older family friends of Metin from the Turkish community, Abbas Duzgun and Ali Yilmaz, three present and former employees of Paragon, Rebecca Taylor, Sarah Fletcher and John Healy, and finally Mustafa Kiamil, whose company JJ purchased Falcon and was a major wholesale customer of Paragon. All of those were cross-examined at trial, save for Mrs Fletcher who was at short notice unable to attend due to a family bereavement. The parties agreed that her evidence could be relied upon as hearsay. The evidence of Zohre, Mr Baran, Mr Duzgun and Mr Yilmaz was given entirely in Turkish with the assistance of a translator. Metin, Mrs Taylor, Mr Healy and Mr Kiamil gave their evidence in English.
The Defendants had also intended to rely on the evidence of two further family witnesses: Zeynel Pekin, who is the brother of Ali and Cafer, and Zeynel's wife Kiymet. They had provided witness statements covering a specific event in November 2015 in which they (together with Rojin) had tried to negotiate an agreement between Metin and Cafer to settle Cafer's claim. During the course of the trial I was informed that they had decided that they no longer wished to attend to give evidence for the Defendants, and their witness statements were therefore withdrawn. In any event the evidence of that event is in my view of very limited relevance to these proceedings.
General comments on the approach to the evidence
Given the large number of witnesses and the nature of their evidence, both Mr McParland and Mr Ayliffe made submissions as to the approach to be followed in assessing the reliability of witness testimony. Both relied on, in particular, the comments of Leggatt J (as he then was) in Gestmin v Credit Suisse [2013] EWHC 3560 (Comm), §§15–22. Those comments are well-known and I do not need to set them out in full here. It suffices to say that the judge drew attention to the fallibility of memory, in light of the fact that memories are fluid and vulnerable to interference and alteration when a person is presented with new information or suggestions about an event. He also commented that the process of civil litigation itself subjects the memories of witnesses to powerful biases, particularly where witnesses have ties to a party in the proceedings (which may include an employment relationship). The judge concluded at §22 that the best approach in the trial of a commercial case is to place little if any reliance on witness recollections of what was said in meetings and conversations, but rather to base factual findings on inferences drawn from the documentary evidence...
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