Carey Street Investments Limited (in liquidation) & Anor v Grant Timothy Brown & Anor
[2024] EWCA Civ 571
Manolete Partners PLC v Ebrahim Dalal
14 March 2023
[2023] EWCA Civ 269
Court of Appeal
A company sued a director for hiding money. Even though there were hints something was wrong, the court said there wasn't enough clear evidence to prove the director was guilty. The appeal court agreed because important documents were missing, making it hard to know what really happened.
Key Facts
- •Manolete Partners PLC (Manolete) appealed a High Court decision dismissing its claim against Ebrahim Dalal for misappropriation of funds from Bolton Poultry Ltd (the Company).
- •The Company, a halal chicken wholesaler, went into liquidation in 2015. HMRC investigated its tax returns, suspecting underreporting of sales.
- •Manolete, as assignee of the Company's claims, alleged significant underreporting of sales by Mr. Dalal.
- •The High Court judge found insufficient evidence to prove underreporting despite incomplete company records and discrepancies identified in the HMRC investigation and subsequent analyses.
- •The appeal focused on the reliability of the evidence and the judge's application of the burden of proof.
Legal Principles
Where a company's records are inadequate due to director negligence, directors cannot claim that better records would disprove liability.
Re Mumtaz Properties Ltd [2011] EWCA Civ 610
In civil cases, the balance of probabilities means the court must be satisfied on rational and objective grounds that the case for believing the suggested causation is stronger than the case for not so believing.
Milton Keynes Borough Council v McNulty [2013] EWCA Civ 15
Judges should only decide a case based solely on the burden of proof when driven to it due to unsatisfactory evidence. The court considers the whole picture, including gaps in evidence and alternative explanations.
Re A (Children) (Care Proceedings: Burden of Proof) [2018] EWCA Civ 1718
Outcomes
The appeal was dismissed.
The Court of Appeal held that the High Court judge's decision was justified despite incomplete records. While discrepancies existed, the evidence was insufficient to prove, on the balance of probabilities, that Mr. Dalal had misappropriated funds through unreported sales. The judge's careful analysis of the flawed evidence and his application of the burden of proof were deemed appropriate.