Raj Kumari Passi & Ors v Roshan Lal Hansrani
[2024] EWHC 2062 (Ch)
Mohammed Arshad Alam v Pervez Alam & Anor
15 June 2023
[2023] EWHC 1460 (Ch)
High Court
Imagine a family running several stores together, but arguing over who really owns what. A judge looked at all their paperwork and conversations for many years. The judge decided some shares and stores belonged to certain brothers, and that one brother had acted unfairly. It's all very complicated, but the judge sorted out who truly owns what.
Key Facts
- •Family dispute over ownership and control of businesses in Greater Manchester, Birmingham, and Bradford.
- •Dispute involves four brothers: Pervez, Arshad, Shahid, and Zahid.
- •Alam Investments Limited (AIL) is a property holding company, its share ownership is disputed.
- •Five separate sets of proceedings: unfair prejudice petition (AIL), possession claim, Birmingham claim, Longsight claim, and Cheetham Hill claim.
- •Extensive trial with 29 witnesses of fact and expert evidence on forensic accounting, handwriting, and cultural norms.
- •Significant business expansion and company formations between 1999 and 2017.
- •Disputes over share allotments, property ownership, and breaches of fiduciary duty.
- •Key documents: Acknowledgment, 2004 Trust Deed, company returns, and accounting records.
- •Issues of detrimental reliance, constructive trusts, and proprietary estoppel.
Legal Principles
Shares are not issued until registered; allotment creates an enforceable contract.
National Westminster Bank plc v IRC [1995] 1 AC 111
Extrinsic evidence admissible to identify shareholders if register is defective.
Portal v Emmins (1875) 1 CPD 201
Unfair prejudice petition can succeed even without a register of members.
re I Fit Global Ltd [2014] BCLC 116 (Ch)
Common intention constructive trust based on express or inferred intention.
Stack v Dowden [2007] UKHL 17, Jones v Kernott [2011] UKSC 53, Hudson v Hathway [2022] EWCA Civ 1648
Proprietary estoppel can apply to shares and business assets.
Pinfield v Eagles [2005] EWHC 477 (Ch), A v B [2008] EWHC 2687 (Ch), Gee v Gee [2018] 1393 (Ch)
Directors' powers of allotment must be exercised for proper purposes.
Hogg v Cramphorn [1967] Ch 254, Howard Smith v Ampol Petroleum [1974] AC 821, Companies Act 2006 s 171
Duomatic principle: unanimous consent of members validates informalities.
Ciban Management Corporation v Citro (BVI) Ltd [2020] UKPC 21
Unfair prejudice under s.994 requires conduct unfairly prejudicial to members' interests.
Ebrahimi v Westbourne Galleries [1973] AC 360, re Baltic Real Estate Ltd (No. 2) [1993] BCLC 503, re Legal Costs Negotiators Ltd [1999] 2 BCLC 171
Periodic tenancy can arise from payment of rent and possession.
Javad v Aqil [1991] 1 WLR 1007, Hagee v Erikson [1976] QB 209, Westminster CC v Basson (1990) 62 P&CR 57, Brent LBC v O’Bryan (1992) 65 P&CR 258, Vaughan-Armatrading v Sarsah (1995) 27 HLR 631, Mattey Securities v Ervin [1998] 2 EGLR 66, Richardson v Langridge (1811) 4 Taunt. 128, Oxley v James (1844) 13 M&W 209
Claims for knowing receipt, dishonest assistance, and breach of fiduciary duty.
El Ajou v Dollar Land Holdings plc [1994] 2 AER 685, Royal Brunei v Tan [1995] 2 AC 378, Ivey v Genting Casinos (UK) Ltd [1995] 2 AC 378
Five probanda for estoppel by acquiescence (guide only).
Willmott v Barber (1880) 15 ChD 96, Taylors Fashions v Liverpool Trustees [1982] QB 133, Cobbe v Yeomans Row [2008] UKHL 55, Thorner v Major [2009] UKHL 18, Sutcliffe v Lloyd [2007] EWCA Civ 153, Pennington v Waine [2002] 1 WLR 2075, Guest v Guest [2022] UKSC 27
Pallant v Morgan equity: pre-acquisition agreement implies trust.
Pallant v Morgan [1953] Ch 43, Banner Homes Group plc v Luff Developments Ltd [2000] Ch 372
Estoppel by convention requires a shared assumption.
Tinkler v HMRC [2021] UKSC 39, HMRC V Benchdollar [2009] EWHC 1310
Insolvency considerations: directors' duties to creditors.
BTI 2014 LLC v Sequana SA [2022] UKSC 25
Outcomes
AIL share ownership: Arshad holds his share on trust for himself and four brothers equally.
AIL was a family asset; no agreement for Arshad and Pervez to share 50%. Subsequent share allotments were void.
WWF Birmingham share ownership: Five brothers are equal beneficial owners.
Initial allotment was valid; subsequent allotment to Arshad was void. Kashif transferred his shares to Arshad.
WWF Manchester share ownership: Arshad is the sole beneficial owner.
Common intention to sever ownership in 2004; estoppel applies if not.
WWF Rusholme share ownership: Pervez is the sole beneficial owner.
Common intention to sever ownership in 2004; Kashif's transfer to Pervez.
Cheetham Hill possession claim: WWF Cheetham Hill has a yearly tenancy.
WWF Rusholme had a periodic tenancy, informally sublet to WWF Cheetham Hill; Arshad's estoppel claim failed.
Birmingham claim (personal): August 2014 share allotment to Arshad is void.
Invalid meeting; no proper notice or consent.
Longsight claim: Arshad is the sole beneficial owner of WWF Manchester.
Common intention; estoppel applies.
Cheetham Hill claim: WWF Rusholme's claims for breach of fiduciary duty, knowing receipt, and dishonest assistance succeed.
Arshad breached his duties by transferring the business to his own company without consent.