Timothy Fulstow v Jeremy Francis

Hearing dates: 10, 11, 12, 14 and 19 June 2024

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 judgment is to be handed down by the deputy judge remotely by circulation to the parties' representatives by email and release to Bailii. The date for hand-down is deemed to be 14 August 2024.

David Stone (sitting as Deputy High Court Judge):

The Claimants, Mr Timothy Fulstow and Mr Robert Woods, claim declarations as to their beneficial interest in shares in Capital Land (EDA) Swindon Limited ( Capital Land) held by the Defendant, Mr Jeremy Francis. Capital Land owns development land near Swindon known as New Eastern Villages ( NEV). The NEV project is described as “the largest and most important urban regeneration development within the UK” – it is intended to include up to 12,000 homes.

It is not contested that Mr Fulstow organised a payment of £35,000 on 30 November 2015. It is also not contested that Mr Woods paid £25,000 on 30 November 2015. What is hotly contested is what those payments were for (and, in the case of Mr Fulstow, by whom the payment was made). This case is therefore largely about the events leading up to and following those two payments.

Mr James Petts instructed by Murray Hay Solicitors appeared for the Claimants. Ms Georgia Purnell instructed by DAC Beachcroft appeared for the Defendant.

The Parties' Positions in Outline

The Claimants' position at trial was that following a number of meetings and telephone calls in the days prior to 30 November 2015, Mr Francis made declarations of trust in the Claimants' favour in consideration of the sums they invested in Capital Land. The Claimants say that these declarations of trust were made in two emails from Mr Francis on 29 November 2015, in terms that differed only as to the amounts to be paid, and the percentage shareholding to be granted (Mr Fulstow's email included the higher payment and the higher percentage shareholding). The emails read:

“Further to our telephone conversation and various discussions concerning the above I can confirm that I have agreed to provide you with a 25%/7% shareholding (or other such arrangements as may be agreed between us in lieu of this) in [Capital Land].

I can confirm that upon receipt of £35,000/£25,000 into the account of Capital Land Property Group Limited I will hold 25%/7% of the shares in [Capital Land] on Trust for you or your nominee and prepare the relevant share transfer form to be held to your order, a copy of which will be emailed to you upon receipt of the funds.”

The email to Mr Woods was copied to Mr Fulstow, but the email to Mr Fulstow was not copied to Mr Woods.

The Claimants seek declarations of their respective beneficial interests in the shares of Capital Land and an order that Mr Francis execute a stock transfer form transferring to them the shares in which they claim beneficial ownership. In addition to the 25% and 7% of the shares in Capital Land, the Claimants also claim 25% and 7% respectively of B preferred ordinary shares issued in Capital Land to Mr Francis on 10 June 2016 based on Mr Francis' duties as a trustee of the shares and the rule against self-dealing.

Mr Francis denies the claim on the following bases:

i) There was no intention to create legal relations between the parties until such time as the position in relation to a series of connected property investments had been resolved. This did not happen, and so no binding agreement was ever reached. The email of 29 November 2015 was intended to mean that Mr Francis would not dispose of or encumber his shares without notice to the Claimants;

ii) Even if there was an intention to create legal relations, any agreement would be void for uncertainty because none of the primary terms had been agreed. Alternatively, any interest which the Claimants may have obtained was conditional on Mr Fulstow's bringing further investment to Capital Land, which he never did;

iii) Mr Fulstow has no standing to bring the claim, since he was acting on behalf of a Marshall Islands company, Carina Limited ( Carina), which has been dissolved, its assets having been transferred to PH Gold Limited ( PH Gold), a company based in Cyprus;

iv) In the alternative, Mr Francis relies on the doctrine of laches as debarring an order for specific performance;

v) In any event, the shares cannot now be transferred to the Claimants because Capital Land's articles of association have since been amended to require the consent of subsequent investors before any shares can be transferred; and

vi) Mr Francis also says that the £35,000 provided at the behest of Mr Fulstow included £10,000 as a loan in connection with a valuation to be undertaken on a different project, referred to in the evidence as the Blunsdon project.

The claim was initially issued, without the benefit of any pre-action correspondence, against Mr Francis and Capital Land. The Claim was wrongly issued by the Claimants under Part 8, and then moved to Part 7. On 3 February 2022, the (then) Defendants issued an application:

i) to strike out the claim against Capital Land on the basis that no cause of action was pleaded against Capital Land; and

ii) to strike out the claim advanced by Mr Fulstow against Mr Francis on the basis that in November 2015, Mr Fulstow was acting for and on behalf of Carina and hence Mr Fulstow did not have standing to bring the proceedings.

The Claimants discontinued the claim against Capital Land on 13 April 2022. The Defendant's strike out application against Mr Fulstow failed.

I was told by the Claimants that the shares in issue are now worth approximately £8,000,000.

Applications

There were several applications made on the first day of the trial:

i) The Claimants sought relief from sanctions for a late filed disclosure certificate – this was not resisted, and I granted relief from sanctions;

ii) The Claimants sought relief from sanctions for the late filing of a fifth witness statement of each of Mr Fulstow and Mr Woods – this was resisted, and, having heard from the parties, I denied relief from sanctions and declined to admit the witness statements – I discuss these witness statements further below;

iii) The Claimants sought relief from sanctions for the late filing of the trial bundle – again, this was not resisted, and I granted relief from sanctions;

iv) The Defendant applied, without the benefit of an application notice, for a determination by the Court in relation to Mr Fulstow's agency on behalf of Carina – after addresses from both counsel, this application was not pressed; and

v) The Defendant applied, again without the benefit of an application notice, for a declaration that privilege had been waived in certain documents relating to advice given by one of the Claimants' former barristers, Mr Erol Topal. Whilst it was not contested that privilege in some documents had been waived, waiver was resisted in relation to others. On this application, it took several days for the potentially relevant documents to be identified. When they were, I determined that privilege had been waived for the reasons I gave at the time, and the documents were provided by the Claimants to the Defendant on the third day of the trial.

Thus, as the first day of the trial was occupied with applications, evidence was unable to start until the second day. In the end, the trial ran over, and the court needed to reconvene the following week for a full day for closing speeches.

Further, during the trial, Mr Francis found in his home office a series of books referred to in the proceedings as “day books”. These included notes of Mr Francis' meetings and thoughts in roughly date order – although not comprising a diary in the traditional sense of that word as the pages were not printed with dates. Mr Francis described them as like scrapbooks and as common practice in his industry. Having discovered these documents, Mr Francis disclosed copies which were redacted for relevance and privilege.

I was asked to deal with several procedural issues concerning the redactions. To provide time for counsel for the Claimants to review the entries, cross-examination of Mr Francis was delayed. In the end, Mr Francis was taken to various pages of the day books, and counsel for the Claimants made submissions in relation to them.

It is, of course, regrettable that the day books were not located earlier. However, I accept Mr Francis' explanation that he had thought they were lost. Thus, whilst they ought to have been noted as such in Mr Francis' disclosure as irretrievable documents, I do not consider that omission to be worthy of sanction, and, indeed, I was not asked by counsel for the Claimants to sanction Mr Francis.

Counsel for the Claimants noted that a page of one of the day books had been removed – he asked Mr Francis if he had removed it, and Mr Francis replied that he had not. Having watched and heard Mr Francis give his answer under cross-examination, I accept his answer.

Following their review of the day books, the Claimants sought to adduce a sixth witness statement of Mr Fulstow. I admitted it for the reasons I gave at the time.

The Evidence

In addition to Mr Fulstow's sixth witness statement, the Claimants relied...