Sze Ming Yeung v Jeckz Investment Ltd & Ors
[2024] EWCA Civ 1413
Shafiq Malik v Henley Homes PLC
27 June 2023
[2023] EWCA Civ 726
Court of Appeal
Three guys ran a company together, and one loaned it a lot of money. He later wanted it back, but the other two said they'd only agreed to repayment if everyone agreed, and nothing was written down. The judge said that wasn't good enough, and the Court of Appeal agreed.
Key Facts
- •Shafiq Malik (Claimant) loaned money to Henley Homes plc (Defendant), a company where he and the Usmani brothers were equal shareholders and directors.
- •The amount owed to Malik exceeded £2.3m.
- •Henley Homes argued the loans were not repayable on demand but only upon a sale, liquidity event, or unanimous shareholder consent.
- •Malik was removed as a director, demanded repayment, and obtained summary judgment at the High Court.
- •Henley Homes appealed the summary judgment.
- •The loans were recorded in HH’s nominal activity ledger under the title “Director Loan Account” starting in 2003.
- •The loans were shown as interest-free loans owing to the directors in HH’s annual accounts, each of which was signed off by Mr Tariq Usmani.
Legal Principles
Summary judgment should be granted if the defendant has no real prospect of successfully defending the claim.
CPR Part 24
A 'realistic' claim is one that carries some degree of conviction, more than merely arguable.
EasyAir Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15]
The absence of contemporaneous written records may count heavily against the existence of an oral contract, especially in the 21st century.
O’Neill v Avic International Corporation [2019] EWHC 165 (QB) at [78] and Edgeworth Capital (Luxembourg) S.À.R.L. v Aabar Investments PJS [2018] EWHC 1627 (Comm) at [34]
Practice Direction 16 paragraph 7.4 requires particulars of claim based on oral agreements to state who, to whom, when, and where the words were spoken, where possible.
Practice Direction 16 paragraph 7.4
Outcomes
Appeal dismissed.
The Court of Appeal found the High Court Judge's decision was open to him. Henley Homes' defence relied on an unusual term (requiring all three shareholders' consent for repayment) lacking sufficient evidence and documentation. The Court found the lack of contemporaneous documentation striking, considering the unusual nature of the alleged agreement.