Mohammed Arshad Alam v Pervez Alam
| Jurisdiction | England & Wales |
| Judge | Halliwell |
| Judgment Date | 15 June 2023 |
| Neutral Citation | [2023] EWHC 1460 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CR-2020-MAN-000606 (Lead Action) |
[2023] EWHC 1460 (Ch)
His Honour Judge Halliwell sitting as a Judge of the High Court at Manchester
Case No: CR-2020-MAN-000606 (Lead Action)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN MANCHESTER
INSOLVENCY AND COMPANIES LIST (ChD)
IN THE MATTER OF ALAM INVESTMENTS LIMITED
AND IN THE MATTER OF THE COMPANIES ACT 2006
Mr Ian Croxford KC and Mr James Walmsley (instructed by Kuits solicitors) for the Petitioner and associated parties
Mr Paul Chaisty KC and Mr Richard Tetlow (instructed by Gateley Legal) for the Respondents and associated parties
Hearing dates: 9–13, 16–20, 23–27 May, 30 May-1 June, 9–10 June, 13–17 June, 20–24 June, 31 August-2 September, 5–8 September, 21–22 September, 21–23 November 2022.
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 15 June 2023 at 10:30am.
HHJ
Contents
| Para | |
| (1) Introduction | 1 |
| (2) Background | 7 |
| (3) The Claims | 105 |
| (4) The Preliminary Issues | 158 |
| (5) Witnesses | 160 |
| (6) Expert evidence | 416 |
| (7) Share Ownership | |
| (i) Legal title | 441 |
| (ii) Beneficial Ownership | 452 |
| (a) Origins | 457 |
| (b) WWF Birmingham | 487 |
| (c) The 2004 Watershed | 503 |
| (d) WWF Manchester | 536 |
| (e) The Cheetham Hill store | 543 |
| (f) The 5 December 2017 Transfer | 578 |
| (g) Constructive trusts and proprietary estoppel | 585 |
| (h) Conclusions on beneficial ownership | 631 |
| (8) The putative share allotments | 633 |
| (9) Determination and disposal of claims | |
| (a) Unfair Prejudice Petition | 654 |
| (b) The Possession Claim | 669 |
| (c) The Birmingham Claim | 694 |
| (d) The Longsight Claim | 698 |
| (e) The Cheetham Hill Claim | 704 |
| (10) Summary of Main Conclusions | 712 |
| (11) Appendix | A |
(1) Introduction
These proceedings arise from a family dispute relating to the ownership and control of businesses in Greater Manchester, Birmingham and Bradford. Although historically styled “cash and carry” businesses for the sale of food, the businesses are generally conducted from retail shops or stores. For each business, there is a corporate trading vehicle. There is also a property holding company, Alam Investments Limited (“ AIL”). Share ownership in AIL is itself in dispute.
The dispute is between four brothers, Pervez Alam (“ Pervez”), Arshad Alam (“ Arshad”), Shahid Iqbal (“ Shahid”) and Zahid Iqbal (“ Zahid”) each of whom are party to the proceedings. There are another two surviving brothers, Javaid Kashif (“ Kashif”) and Mohammed Asif (“ Asif”), but no sisters. Kashif and Asif are not party to the proceedings. Some of the companies under the respective control of Pervez and Arshad have been joined as parties.
Before me, there are five separate sets of proceedings. On 28 September 2021, I made an order providing for the determination, as a preliminary issue, of all questions in each claim save questions pertaining to relief (“ the Preliminary Issue”). This includes the underlying issues in respect of an unfair prejudice petition in respect of AIL, personal claims as to ownership of shares in associated companies and claims for damages for breach of fiduciary duty, conspiracy and dishonest assistance in respect of the diversion of company assets and business. In relation to one of the trading companies, Worldwide Foods (Birmingham) Limited (“ WWF Birmingham”), the proceedings encompass personal and derivative claims. Since permission has not yet been given, I am not invited to determine issues in the derivative claim, at least to the extent such issues have no bearing on the personal claim.
The trial of the preliminary issue took place, before me, in May–June, August–September and November 2022. This is my judgment following trial.
Throughout the trial, Messrs Ian Croxford KC and James Walmsley, of counsel, have appeared on behalf of Arshad and the companies under his control. Messrs Paul Chaisty KC and Richard Tetlow, of counsel, have appeared on behalf of Pervez and the companies under his control. They also appeared on behalf Shahid and Zahid who are fully aligned with Pervez. The advocacy was uncompromising. It was also to a high standard and ensured most issues were addressed in considerable detail although, inevitably, some issues evolved and assumed greater significance than originally envisaged as the evidence was explored.
On the eve of the trial, Mr Croxford's clients sought to obtain documentation from RSM UK, previously RSM Tenon, in relation to files held by them as accountants and auditors for some of the relevant companies. They also sought documentation from two firms of solicitors, Enoch Evans and Molesworths. In the case of Molesworths, this encompassed files held by them in respect of professional advice historically provided to the family during the 1990s and early 2000s. In this way a substantial amount of documentation was obtained during the course of the trial itself, some of which was only produced, upon compulsion, following the issue of a witness summons. As it happens, for different reasons, the documentation produced by RSM UK, Enoch Evans and Molesworths ultimately proved to be of real significance. I pay tribute to counsel for their skill and discretion in accommodating the issues to which this gave rise during the trial.
(2) Background
The brothers' parents were Mohammed Alam (“ Mohammed”) and, his wife, Roquiya Khatoon (“ Roquiya”). Mohammed was born in Jalandhar, India. Together, they moved to Kenya where Mohammed was employed as a welder or electrician on the Railways. In December 1963, Kenya obtained independence. At about this time, Mohammed and Roquiya moved, with their growing family to a village, near Haroonabad in Pakistan.
Pervez, Arshad and Shahid were respectively born in 1956, 1960 and 1963 before the family moved to Pakistan. Zahid, Asif and Kashif were born afterwards, in 1968, 1970 and 1973. There was another brother, also called Javaid, who died at a young age during this period.
They remained in Pakistan until early 1977 when Mohammed, Pervez and Arshad moved to Nottingham, in the UK, leaving the rest of the family behind. Pervez and Arshad then found work at a small textile factory nearby at Long Eaton. They remained in Nottingham for several months and were soon joined there by the rest of the family. During this period, Pervez obtained a job with Turner Brothers Asbestos in Rochdale, residing locally during the week and returning to Nottingham to stay with the family at weekends. However, later in the year, Pervez found rented accommodation for the whole family at 11 Mellor Street, Rochdale and the family moved in.
Pervez soon concluded that it would make more sense to buy than rent. The following year, he identified a suitable house at 7 Pullman Street, Rochdale and was able to borrow sufficient amounts to fund the purchase. The house was bought for use as a family home. However, shortly afterwards, he bought as an investment, a house nearby at Ventnor Street utilising the proceeds of an insurance claim in respect of a stolen car.
The family continued to reside at 7 Pullman Street until September 1984 when Pervez bought a more substantial property at Deeplish Road, Rochdale. This property was purchased in Pervez's sole name but there is an issue as to beneficial ownership. It was ultimately transferred into the name of Zahid in October 1995.
For some time, Pervez and Arshad were both remunerated as employees. At an early stage, Arshad joined Pervez as an employee at Turner Brothers Asbestos. Later, in 1979 or 1980, they obtained work at the Vauxhall factory in Luton, and then at the Bedford factory in Dunstable. Together, they worked at these factories for upwards of a year until made redundant, travelling there each week to and from Rochdale.
Pervez clearly had an entrepreneurial streak. Utilising funds paid to him when he was made redundant, he returned to Rochdale and set up, with an acquaintance called Sajid Butt, a textile manufacturing business called Haroon Fashion. Arshad maintains that, in addition to Pervez, he was also involved in this business.
Pervez did not remain long in business with Mr Butt. A point was soon reached when they decided to bring the manufacturing business to an end and go their own separate ways dividing the manufactured stock between them. So far as he could, Pervez marketed and sold the stock on a Saturday and Sunday in markets at Stalybridge, Ashton and Liverpool.
During this period, Pervez set up a grocery business from a shop at 95 Coleridge Street, on the Sholver Estate in Oldham. Shortly afterwards, he set up a laundrette nearby at 91 Coleridge Street. Again, there is an issue between Pervez and Arshad about the extent of Arshad's role in these businesses. Pervez maintains he was sole proprietor. Arshad contends they conducted the businesses together in partnership.
Pervez then set up another grocery business from premises at 74A Tweedale Street, Rochdale. This was on the corner of Tweedale Street and Castlemere Street. Business was conducted in the name of “Alam Brothers” or “Choudhury Alam Brothers”. During the hearing, a set of accounts, in the name of “Choudhury Alam Brothers”, was obtained and admitted in evidence. This incorporated a trading and profit and loss account for the year ending on 31 October 1982 and a balance sheet at the year end. A balance sheet for Choudhury Alam Brothers, as at 31 October 1985, was also admitted. Both balance sheets were signed by M Salim & Co.
Pervez accepts that he brought Arshad into the business but maintains that Arshad was no more than an employee. Arshad disputes...
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