Stuart Wells v Paul Hornshaw & Ors
[2024] EWHC 970 (Ch)
The Witz Company LLC & Anor v Edmund Truell
17 November 2023
[2023] EWHC 2877 (Comm)
High Court
Two men had a complicated investment agreement. One man didn't provide all the necessary information, making it hard to determine how much he owed the other. The court ruled that he had to pay, and that the payment included extra shares awarded as a bonus, resulting in a total payment of over £130,000 plus interest.
Key Facts
- •Dispute between Mr. Truell and Mr. Hurwitz regarding a contract for difference (CFD) concerning shares in a Guernsey-based protected cell company (Zedra).
- •The CFD was intended to mirror a direct investment in Zedra, acting as an indirect route due to Mr. Hurwitz's US citizenship restrictions.
- •Mr. Truell initially denied the CFD's legally binding nature, a defense later struck out.
- •Summary judgment was granted to TWC (Mr. Hurwitz's investment vehicle), leaving only the payment amount in dispute.
- •Mr. Truell was debarred from giving evidence due to non-compliance with disclosure orders.
- •A bonus share issue by Zedra occurred during the CFD's term, creating a central point of contention.
- •The court had to determine the appropriate valuation date and method for the shares, hampered by Mr. Truell's lack of disclosure.
Legal Principles
Contract interpretation principles from cases like *Investors Compensation Scheme Ltd v West Bromwich Building Society*, *Chartbrook Ltd v Persimmon Homes Ltd*, *Rainy Sky SA v Kookmin Bank*, *Arnold v Britton*, and *Wood v Capita Insurance Services Ltd*. Emphasis on objective meaning, considering the contract as a whole, and using commercial common sense.
Various cases cited in paragraph 25, summarized in paragraph 25 and 26.
The nature and effect of a bonus share issue under English law, treating bonus shares as a capital benefit rather than income.
*EIC Services v Phipps* [2005] 1 WLR 1377, discussed in paragraphs 35 and 36.
Interpretation of 'payment' in a contract can include 'payment in kind'.
*White v Elmdene Estates Ltd* [1960] 1 QB, cited in paragraph 40.
Inferences can be drawn from a party's failure to disclose relevant documents.
*Bahia v Sidhu* [2022] EWHC 875 (Ch), cited in paragraph 57.
Outcomes
The court determined the sum due to TWC under the CFD.
Based on the interpretation of the CFD's clauses, particularly Clause 3.2.1 regarding 'payments', the bonus share issue was included in the calculation, mirroring the benefits of a direct shareholding. The valuation date was set at 31 January 2019, and the court used available evidence to determine the share value despite incomplete disclosure by Mr. Truell.
The court found that the value of the Class A shares on 31 January 2019 was £360 per share.
This was based on the available evidence and considering the impact of the bonus share issue, which increased the number of shares held. This determination was made despite the lack of complete documentation due to the defendant's failure to provide full disclosure.
The total sum due to TWC was calculated as £130,427.55 plus interest.
This was the result of multiplying the determined share value (£360) by the number of shares (362.298752) after accounting for the bonus share issue and interest was calculated from March 2, 2019 at 3 percentage points above the Bank of England base rate.