Facts:
In October 2014, Mr Munim and Mr Rahman developed an online restaurant ordering system with the trading name Chefonline and Le Chef was incorporated on 21 October 2014. Its share capital at incorporation comprised 100 shares of £1 each. Initially, Mr Munim held 65 shares and was named sole director, Mr Rahman had 25 and Mr Ahmed the remaining 10. It became soon clear that the business needed more investment. Mr. Munim agreed to provide such funding on the condition that Mr Rahman transferred 20 of his 25 shares to him and Mr Ahmed transferred all of his shares. While Mr Munim argued that an agreement was reached and stock transfer forms were signed in October 2014, both Mr Rahman and Mr Ahmed denied that the transfers had been made. The initial dispute related to the transfer of those shares and the ownership of copyright in a logo and trophy.
Mr Ahmed was not in direct contract with Mr Munim. He also emailed Mr Munim on 2 November 2014 asking to be informed about shares when ready, to which he did not receive any reply. He also emailed both Mr Munim and Mr Rahman on the 8th of November, letting them know he could not travel to Bangladesh but would work from the USA. After Mr Ahmed did not engage with Mr Munim or Le Chef. He believed that Mr Rahman was looking after his interest as he had phone calls with him to discuss the business. Mr Rahman filed an unfair prejudice petition based on an alleged breach of Le Chef's articles of association and Mr Munim's duties as a director in registering the transfers.
Decision:
The Court of Appeal dismissed the appeal. The four grounds of appeal were: “(i) the judge’s findings in relation to the stock transfer forms were contrary to the evidence and had failed to take critical evidence into account; (ii) the judge’s findings that the first respondent signed the resolutions were contrary to the evidence and failed to take critical evidence into account; (iii) the judge had failed to take into account critical evidence in making findings about the first respondent’s credibility; and (iv) the judge had failed to understand and consider the relevance of an email sent in which the appellant made clear that he was not aware that his 25% shareholding had been diluted.”
The Court held that the judge’s conclusion was justified based on the adequacy test. The Court of Appeal agreed with the judge that Mr Rahman had signed the stock transfer forms and as such it was evidence. It was supported by the evidence of the handwriting expert, the existence of shareholder resolutions, and a shareholders’ agreement. Accordingly, the court could not identify a lack of fairness or prejudice to the appellant that would justify interfering with the judge’s conclusions in respect of him.
Implications:
This judgment confirms that first-instance courts have discretion to assess the evidence put forward as long as the conclusions are fair. Judges have to consider the relevant evidence properly. The Court also reiterated the importance of a balanced assessment of facts and making a judgement supported by the evidence presented.