Zavarco Plc v Tan Sri Syed Mohd Yusof Bin Tun Syed Nasir

The central dispute in this case is whether Tan Sri Syed Mohd Yusof Bin Tun Syed Nasir (“Mr Nasir”) is or was obliged to pay up the 360 million shares he received on the incorporation of Zavarco Plc (“Z”) in cash, or whether it was agreed or arranged that the par value would be satisfied by the transfer to Z of shares in another company (“ZB”) and, if it was, what the legal consequences of that might be. The par value was 10 Euro-cents per Z share, and so the total amount in dispute is 36 million Euros in respect of Mr Nasir’s 360 million shares in Z.

It is common ground that Mr Nasir’s shares were never paid up in cash. Z served a call notice on Mr Nasir on 5 June 2015 for payment. Mr Nasir has not paid, disputing his liability to do so, and Z served a Notice of Intended Forfeiture on 15 June 2016. No action has been taken on that, pending the outcome of these proceedings.

Both parties have brought claims submitting their dispute to this Court. The first action in time is a Part 8 claim by Mr Nasir against Z but, since the matter was clearly unsuited to summary proceedings, another action was brought under Part 7 by Z (as Claimant) against Mr Nasir (as Defendant). Both actions are listed before me, but the trial has proceeded on the second action, which encompasses the issues in the first action. This judgment will decide both.

The bundles contain over 1,500 pages of documents in 5 lever arch files, and I have heard evidence from 5 witnesses who were cross examined, in addition to hearsay evidence.

Z was incorporated in England and Wales on 29 June 2011. On incorporation, Mr Nasir had 30% of the shares and Mr Ranjeet Singh Sidhu (“Mr Sidhu”) held 70% of the shares. Z was originally called Vasseti (UK) plc, and changed its name to Zavarco plc in 2014, but I will refer to it as Z throughout for simplicity.

ZB is a Malaysian company. It was originally called Vasseti Berhad, and subsequently renamed Zavarco Berhad, but I will refer to it as ZB throughout. ZB’s principal business was in a subsidiary called V Telecoms Berhad (“VTel”) which had licences to develop a fibre optic telecommunications network in Malaysia. ZB had acquired 91% of VTel from another Malaysian company called Open Fibre Sdn Berhad (“OFSB”) in December 2010. The projected fibre optic telecommunications network in Malaysia could not be established without major capital investment. Mr Nasir’s case is that Z was incorporated in England with a view to flotation on the Frankfurt Stock Exchange so as to attract shareholder investment for the VTel business. The whole of the ordinary share capital in ZB was transferred to Z on 25 July 2011. Z was listed on the Frankfurt Stock Exchange on 23 August 2011.

The ordinary issued shareholders of ZB (“the ZB Shareholders”), before it was taken over by Z, were OFSB (the majority shareholder by value), Mr Sidhu, Mr Nasir (who had 4 million ordinary shares which were paid for by Mr Sidhu), Dato M Harisharan Pal Singh (“Dato Singh”, who gave evidence and said that he was merely a nominee for Mr Sidhu) and General Dato Sri Suleiman Bin Mahmud (“the General”, who did not give evidence because he could not be found, but who was also a nominee for Mr Sidhu according to paragraph 3(1)(ii) of Mr Nasir’s Amended Reply to Defence to Part 20 Counterclaim).

Mr Shailen Popatlal (“Shailen”) did not give evidence and did not appear as a registered shareholder of ZB or of Z. However, the evidence before me was that Shailen and Mr Sidhu were the beneficial owners of ZB (possibly with Mr Nasir, but that was disputed, and I will come back to that dispute). Whether or not Mr Nasir’s interest in ZB was a beneficial interest, as opposed to a nominee interest like Dato Singh’s, Mr Nasir left Shailen and Mr Sidhu to run ZB as they thought fit. The contemporaneous emails and Blackberry Messenger chats and other documents show that Shailen and Mr Sidhu made the decisions for ZB throughout, and no document records them suggesting that they would or needed to consult Mr Nasir about anything. Dato Singh’s evidence was that, although he was a director of ZB, he understood that he was a nominee director as well as a nominee shareholder for Mr Sidhu, and he never went against Mr Sidhu’s wishes. I am satisfied that ZB had no independent management or control apart from Shailen and Mr Sidhu. Shailen and Mr Sidhu controlled and decided everything. This is a point to which I return below.

The issues I have to decide are:-

On what terms did Mr Nasir take his shares in Z?

The question of the terms on which Mr Nasir took his shares in Z is fact sensitive; a point particularly emphasised by his Leading Counsel in her closing submissions. Z is now controlled by people who were not in charge when Z was incorporated on 29 June 2011 and Z has called no witnesses who were involved at that time. Z has denied Mr Nasir’s case as to what happened but argues its own case on the basis of the contemporaneous documents and on challenges to Mr Nasir’s witnesses in cross examination. Some of those challenges are specific, and some were designed to undermine the credibility of the witnesses generally, by pointing to contradictions and implausibilities between what they said to me, what they said when compared with each other, and what they said compared with the contemporaneous documents.

I will begin with an examination of exactly how Mr Nasir’s case is pleaded, before turning to the evidence.

The Defendant’s Leading Counsel in closing relied on paragraphs 22, 23, 31 and 32 of the Re-Re-Amended Defence for Mr Nasir’s case on issue (1). Paragraph 22 contends that the Z shares were allotted to Mr Nasir on 29 June 2011, when it was first incorporated, ‘pursuant to an “arrangement” (within the meaning of... section 594(6) [of the Act] to which... section 594(1) and 594(2) apply)’. Section 594(6) covers “any agreement, scheme or arrangement”. The more specific examples referred to in section 594(6)(i) or (ii) are not alleged to apply and so this plea does not give details of what the arrangement was in this case. Section 594(1) does not help either. But section 594(2) refers to ‘an arrangement for the allotment of shares in company A on terms that the whole or part of the consideration for the shares allotted is to be provided by - (a) the transfer to that company, or (b) the cancellation, of all or some of the shares, or of all or some of the shares of a particular class, in another company (“company B”)’. Paragraph 24 explains that, for these purposes, Z was company A and a ZB was company B.

Paragraph 23 then pleads this:-

I do not need to set out paragraphs 30 to 35 of the Re-Re-Amended Defence, but I will set out paragraph 31, which pleads:-

Paragraph 49A of Mr Nasir’s Re-Re-Amended Defence and Part 20 Counterclaim pleads:-

The 2011 Share Purchase Agreement (“the SPA”) is a written document dated 29 June 2011 and, in his original Defence dated 17 October 2016, Mr Nasir’s case was that the SPA was executed on the date that it bears (paragraph 31 first two lines, and sub-paragraph (5), of the Defence). It is now clear, however, from the contemporaneous documents that the SPA had not been executed or even drawn up on 29 June 2011. It is now accepted by Mr Nasir and Mr Sidhu (who signed it, with others) that the SPA was backdated, and was not executed until 8 August 2011.

It seems from the evolution of Mr Nasir’s pleadings that, when the backdating of the SPA was exposed, he enlarged his case about the terms of the “arrangement” so that, in its present form, it goes well beyond the terms agreed and contained in the SPA. There is no document which contains the terms of the “arrangement” as pleaded in its present form. Mr Nasir’s latest case depends heavily on the evidence of his witnesses to support it.

In his original Defence, Mr Nasir’s case was that a number of key elements of the alleged arrangement “all... took place simultaneously on 29 June 2011, as was intended” (paragraph 31 of the Defence), including that:-

“Ari & Co (Malaysian statutory auditors appointed by ZB) valued ZB and its subsidiaries (including [VTel]) at €2.328 billion.”

“The shareholders and directors of the Claimant (including [Mr Nasir] separately resolved that the Claimant should acquire 100% of the shares in ZB, in exchange for 1.5 billion €0.10 shares in the Claimant, in accordance with the 2011 Share Purchase Agreement.”

“The 2011 Share Purchase Agreement was executed, with a contractual completion date of 23 July 2011, although it was open to the parties to complete before that date (see clause 5.1 of the 2011 Share Purchase Agreement).”

All of these quoted passages were abandoned in paragraph 31 of the Amended Defence served in February 2017. No Ari & Co valuation existed even in draft on 29 June 2011. A valuation document from Ari & Co dated 29 June 2011 was created and backdated later. The alleged meetings of directors and of shareholders did not take place on 29 June 2011 and their alleged resolutions were not passed on that date, as demonstrated by the contemporaneous documents and admitted by Mr Nasir in evidence. Both the shareholders’ resolution and the directors’ resolution purportedly dated 29 June 2011 were drawn up at a later date and executed on 8 August 2011. The backdated shareholders’ resolution was signed by Mr Sidhu and Mr Nasir (the sole registered shareholders). The backdated directors’ resolution was signed by Mr Sidhu, Mr Nasir, and the three other directors on the record. I have already mentioned that the SPA document did not exist on 29 June and was backdated.

Mr Nasir served a pleading responsive to the Claimant’s Re-Amended Reply and Defence to Counterclaim (as it ultimately became), and that responsive pleading was entitled Amended Reply to Defence to Part 20 Counterclaim. To avoid confusion between the Claimant’s Reply (as Amended and Re-Amended) and the Defendant’s Reply (as Amended), I will refer to the Defendant’s final pleading as his “Rejoinder”. Paragraph 3 of the Rejoinder (which is incorporated into Mr Nasir’s latest case about the arrangement by paragraph 31(6) of the Re-Re-Amended Defence which I have quoted above) pleads (in part):

Mr Nasir’s Leading Counsel made it clear that his case stands or falls on proving that the agreement or arrangement he relies upon was in place on 29 June 2011 and no later. That is the date of Z’s incorporation, and the date on which Mr Nasir got his shares.

She also agreed in her oral closing submissions that in this case the burden of proof is on Mr Nasir (given that he accepts he did not pay for the shares in cash) to prove an agreement or arrangement whereby they were to be paid for in some form other than cash. That is, in my view, correct. It is to be contrasted with the position in Blomqvist v Zavarco plc and Another [2016] EWHC 1143 (Ch), which concerned a person who acquired shares subsequently, when they were already listed and with the benefit of a share certificate which said that they were fully paid, neither of which are arguments open to Mr Nasir (see paragraphs 84-90 and paragraph 97 of the judgment).

Pausing there, my consideration of Mr Nasir’s pleaded case suggests to me that he is already in difficulties. His formulation of the arrangement he alleges has been inconsistent. To that extent, it is already implausible. Moreover, it is critical to his case that the transfer of the ZB shares was the consideration for his 360 million Z shares, as well as for all the Z shares going to Mr Sidhu. Yet the SPA does not say that. The SPA deals with consideration in clause 4 as follows:-

Clause 4 is explicit that the consideration for the sale of the Assets (which Schedule 1 defines as ZB) is “by way of the issuance of 1.5 billion ordinary shares” of Z, and that the Z shares issued “shall rank pari passu in all respects to the existing ordinary shares of [Z].” This points to the consideration being shares yet to be issued or allotted, and the last phrase I have quoted distinguishes them from the existing ordinary shares.

Clause 4 also says that “Schedule 2 shall consist of detailed particulars of the names and allotment of the Consideration for the 1.5 billion [Z] Shares.” But Schedule 2 did not contain those particulars, and Mr Nasir’s case is that Schedule 2 was never finalised in 2011 or even 2012. (I saw no document showing that it was ever finalised, although Edmund thought the final shareholders were ultimately decided upon “somewhere in 2013 I think” and Mr Sidhu said “the shareholders list didn’t get finalised until the very last late 2013-2014 when I did a final transfer of shares to Shailen”). The version attached to the executed (albeit backdated) SPA said “To be provided to the Purchaser by 23 July 2011 or such other dates to be agreed by the Parties.” By the time the backdated SPA was executed, which is agreed to have been on 8 August 2011, the deadline of 23 July 2011 had already passed. The unresolved question of who would and who would not be getting the Z shares in exchange for the ZB shares seems to me to be fundamental to any agreement or arrangement on 29 June 2011 and the evidence is all one way that on 29 June 2011 and on 23 July and still on 8 August 2011 that question could not be answered.

I look therefore to the pleaded elements of the arrangement that go beyond the terms of the SPA. However, the fact that even backdated documents did not embody the arrangement now alleged is further evidence suggesting that no such arrangement had been formulated, not only by 29 June 2011, but even by the date the backdated documents were completed and executed on 8 August 2011. I also observe that the SPA included an entire agreement clause (clause 13.4).

Paragraph 31 of the Re-Re-Amended Defence, which I have quoted above, alleges that the arrangement included (a) the incorporation of the Claimant and (b) Mr Nasir and Mr Sidhu signing the Claimant’s Memorandum of Association as subscribers and agreeing to take “at least one share” in it. I find that these points were not agreed with the Claimant. They were integral to the Claimant’s original incorporation, and were already achieved and could not be undone by the time the Claimant was in a position to agree anything.

Paragraph 31 also includes “[Mr Nasir] (among others) was appointed as a director of the Claimant”. However, the SPA did not include the appointment of Mr Nasir as a director, either as a condition precedent (clause 2) or as a subsequent obligation. The SPA made no provision about who had been, or would be, appointed as directors. No contemporaneous document supports an allegation that Mr Nasir was appointed as a director as a condition of him agreeing to transfer of the ZB shares. He was one of the directors of Z on incorporation, being the fifth of the five named as such in the initial filing, the others being Mr Sidhu, Mr Pushpan Murugiah, Mr Loo Seng Kit (the witness referred to at the trial as “Edmund”) and Mr Simon Marriott.

Paragraph 31(6) of the Re-Re-Amended Defence is the allegation (quoted in full above) that Mr Sidhu and Mr Nasir got the Z shares in the proportions 70:30 “on the footing... that these shares would be held by them, pending transfer (less any shares retained by either or both of them) to the other Original ZB Shareholders, or to such other persons as might be agreed”. This is echoed in paragraph 3 of the Rejoinder (quoted more fully above) which pleads that it was agreed “that [Mr Sidhu] and [Mr Nasir] would receive the allotment of shares in the Claimant in the proportions 70:30 and would hold them on behalf of the Original ZB Shareholders pending their transfer (less any shares retained by either [Mr Nasir] and/or [Mr Sidhu]) to the remaining Original ZB Shareholders, or to such other person as might be agreed.”

This is very vague. On its face, it clearly suggests that Mr Nasir might have to transfer his Z shares, in whole or in part, to other people. That would be odd if he had specifically given up his ZB shares in exchange for his Z shares. It is especially odd when both the identity of the recipients and the number, if any, of the Z shares registered to Mr Nasir they would get, had not been settled.

Both Mr Nasir and Mr Sidhu said in cross examination something quite different; namely, that it was only Mr Sidhu’s shares that were at risk of transfer or, at least, that transfer of Mr Nasir’s shares would only occur as a last resort and if Mr Sidhu’s shares had first been exhausted.

I reject that evidence, which is not consistent with the pleading and has no basis in any contemporaneous document. On the contrary, there is a version of Schedule 2, which Mr Sidhu said he suspected was “fake” but which Mr Nasir agreed he had seen in August 2011 (although it was not attached to the backdated SPA executed on 8 August 2011), which listed 35 prospective recipients of Z shares as “Purchase Consideration” (35 apparently being a minimum number of shareholders required by the Frankfurt Stock Exchange) and reduced Mr Nasir’s Z shareholding to 17,598,540 (instead of 360 million) and 1.17% (instead of 30%).

My conclusion is also supported by Mr Nasir’s evidence (Day 1 p 109 line 14 to p 110 line 12) upon being shown an email from Shailen to Edmund dated 1 August 2011, which said

Another factor mentioned by Mr Nasir and Mr Sidhu was the “Bumiputra” requirement, which meant that at least 30% of the shares in ZB (and in Z) had at least to appear to belong to a qualifying indigenous Malay, which Mr Nasir was, whereas no-one else involved (such as Mr Sidhu, or Shailen, or Dato Singh) was. The evidence does not suggest that those involved thought this required anything more than Mr Nasir’s name (or the name, subsequently, of another qualifying Malay) on the share register, and so it does not affect issues about their beneficial ownership and control.

I now turn to the witness evidence on the other disputed aspects of the case and, before I do, I should say something about my general impression of the Defendant’s principal witnesses.

Mr Nasir is now (according to the Companies House filings) approaching his 70th birthday and was being asked to recall events over 6 years ago. He took responsibility for the original pleadings which alleged that the SPA, and the supporting resolutions, all of which he signed, had been executed on the date they bore, contrary to what he now accepts which is that they were all backdated.

He was interviewed by The Star in Malaysia which ran the story under the headline “Syed Yusof buys into Vasseti [ZB], which is launching its broadband service today” and began: “Kuala Lumpur: Businessman Tan Sri Dyed Yusof Syed Nasir has bought a 30% stake in Vasseti Berhad [ZB]...” This was in line with evidence given to me by Dato Singh who said “I think Tan Sri invested a lot of money in the company”. Dato Singh said this was what he was told at the time (Day 3 p 49 line 12 to p 50 line 23). But Mr Nasir’s evidence was that he invested no money in ZB; his 4 million ZB shares were paid for by Mr Sidhu (Day 1 p 32 lines 10-19). When it was put to him that the journalist at The Star had been misled into thinking that he had such confidence in ZB that he had put his own money into it, Mr Nasir said “Well, you know, I mean, it’s fully paid, of course it’s like your own money, you know, but there is an arrangement of course, you know, will come. This is part of the exercise that for the company to move on.” He was asked if it was “part of the image” and said “Image, yes.” This seemed to me to show a willingness to allow people to be misled on an important point which damaged his credibility as a witness.

In his witness statement, Mr Nasir said that it was “Since the issue of these proceedings and in the course of disclosure” that he had “become aware” of the Ari & Co valuation of ZB dated 29 June 2011 (paragraph 30). But in oral evidence he said he was told about it before 8 August 2011 (Day 1 p 68 lines 3-22). When the inconsistency was put to him he at first said “Well, maybe, this is some time ago, maybe I, you know, maybe I’ve seen it, but I forget ... okay” (Day 1 p 69 lines 15-16), then equivocated (p 69 line 19 to p 70 line 2) and, finally, confirmed that his witness statement was wrong (p 70 lines 5-14).

Mr Nasir gave evidence that he sold his Z shares to a company called New Asia Telecom and that, as a consequence, he has ceased to be the beneficial owner of them (witness statement paragraph 28). However, it was clear from the cross examination of a director of New Asia Telecom, Mr Caplain, that no sale to New Asia Telecom was ever completed, because the conditions precedent for it were never fulfilled.

I conclude that Mr Nasir is not a reliable witness and that where he makes assertions which are not corroborated by contemporaneous documents or other more reliable witnesses I should treat them with care. I conclude from the evidence that he took very little interest in any of the details of the matters he is asked to give evidence upon; that his recollection is unreliable; and that his evidence is not a truly independent recollection but coloured by the context in which he is talking.

Mr Sidhu had a stronger grasp of the documents and the issues in the case than Mr Nasir. But he did not appear to be honest. He was particularly brazen about the wholesale backdating of documents to 29 June 2011, for which he was responsible, and said that “In Malaysia... it is the norm”. No real attempt was made to argue that the backdating was or could be honest; and I am satisfied that in this case it was not. Mr Sidhu’s involvement in it, and lack of contrition for it, casts a poor light on him and his credibility as a witness of truth. I did not find him convincing as a witness.

The witness known and referred to as “Edmund” (Loo Seng Kit) was also instrumental in the backdating of the documents in 2011, but he was junior to Mr Sidhu and reported to him. His witness statement purported to “confirm that the valuation of the company and group assets set out in the balance sheet in [the ZB accounts for the period ending 31 December 2012] was accurate at the time I signed the relevant certificate”. However, in cross examination, he was unable to support that evidence, and abandoned it. Edmund was first asked to provide his recollection of events only weeks before the trial and his evidence of what had been arranged or agreed with Mr Nasir was based only on what he could remember about being told at the time, since he was not personally involved in any relevant meeting or conversation with Mr Nasir. Those recollections, such as they were, being given so long after the event, provided me with no real assistance about Mr Nasir’s discussions with Mr Sidhu before 29 June 2011.

Dato Singh seemed to me to be a partisan but slightly more reliable witness than Mr Nasir or Mr Sidhu. However, he was not party to the discussions between Mr Nasir and Mr Sidhu. He made no independent decisions, and did only whatever Mr Sidhu asked him to do. He was first asked to give his evidence a month before the trial, by Mr Sidhu.

The only other witness, Mr Caplain, gave evidence which was not consistent with the case advanced on the basis of his letter (signed in a former name of his) dated 1 December 2014 that Mr Nasir’s shares had been sold to his company, New Asia Telecom Limited. He had no involvement before December 2014 and his evidence was not otherwise relevant to the case.

I now turn to the evidence given by the Defendant’s witnesses about the alleged agreement or arrangement. Z’s witness was not there at the material times and was not cross examined; his evidence merely introduced and commented upon the documents.

According to his witness statement, Mr Nasir’s first contact about possible involvement in the VTel business was from Mr Sidhu and he thought it was in February 2010. The business was described to him as a partnership between Mr Sidhu and Shailen. Mr Nasir said “Mr Sidhu told me that he thought that I could help to attract the right level of investment if I was willing to hold some shares and become a director.” He was introduced to Shailen, but could not remember when. The use of the phrase “hold some shares” is striking; he certainly did not pay for them. He was given 4 million paid up RM1 ordinary ZB shares. In saying this he acknowledged (paragraph 11 of his witness statement) that he contradicted the statement he made in support of his Part 8 claim, which said that his ZB shares had been paid for, not by Mr Sidhu (which was his evidence before me), but in exchange for ZB’s acquisition of OFSB’s 91% shareholding in VTel in December 2010, much later than Mr Nasir in fact got his ZB shares on 23 July 2010.

Mr Nasir said that, although he could not remember “the precise detail”, the raising of investment proceeded satisfactorily, by a combination of loan finance (which he said he was principally involved in arranging) and equity investment in preference shares, in which he said he had some role, but which was mainly handled by Mr Sidhu. I was shown no documents evidencing any active involvement by Mr Nasir in VTel or ZB, and no documents (in particular) in connection with any work he did in raising investment. My impression from Mr Nasir’s evidence and from Mr Sidhu’s evidence was that Mr Nasir’s contribution was his name, his contacts, and his prestige. He was given shares and a directorship so that he appeared to the outside world to be a major shareholder and director but only the appearance of this mattered; it was not necessary that he should actually be an investor and, in reality, everything was done and decided by Shailen and Mr Sidhu. This ties in with the news report and the (wrong) information given to Dato Singh that Mr Nasir had been willing to pay for his own shares in the business. It was all about appearances, but the appearances did not have to reflect the reality.

All of this explains Mr Nasir’s ZB shareholding and directorship without him being expected to play an active role, or being a joint venturer. It is also directly comparable with the evidence and position of Dato Singh, who was a ZB shareholder and director (like Mr Nasir), brought in by Mr Sidhu (like Mr Nasir), understood that his shares had been paid for in cash by Mr Sidhu (like Mr Nasir, after he changed his evidence on this) and was content to do what Mr Sidhu asked without ever contradicting him (like Mr Nasir, as I find). Dato Singh frankly accepted that he was no more than Mr Sidhu’s nominee, both as a shareholder and (he even said) as a director, and, indeed, when the ZB shares were folded into Z, Dato Singh was told his services were no longer required, and meekly surrendered his shares and his directorship, with only his director’s fees and payment for services to show for his involvement.

Whilst I accept that Mr Nasir was a more distinguished figure than Dato Singh, both were brought on board to lend their names and reputations to the business. Mr Nasir gave no evidence that he negotiated his stake, or asked for anything more than he was offered, or that he had anything put in writing. I also noted that he repeatedly referred to taking things on trust when leaving matters to others such as Shailen and Mr Sidhu: Day 1 p 30 lines 15-16; p 40 lines 18-20; Day 1 p 88 lines 20-24; Day 1 p 114 lines 15-19. I conclude that he thought it would be good for him to be involved, but did not much care, still less stipulate, how it should turn out for him. He left it all on trust to Mr Sidhu and went along with whatever he was told from time to time.

I accept Mr Nasir’s evidence that Mr Sidhu gave him oral reports from time to time, but that evidence did not suggest to me that Mr Nasir was being consulted rather than informed, or that he was ever considered, by himself or Mr Sidhu or Shailen, to have a right to be part of the decision making, as a true beneficial owner and partner would. In my judgment, Mr Nasir was content to be and was Mr Sidhu’s ambassador to the outside world; happy to let Mr Sidhu do whatever he wanted, and never interfering in any decisions. No witness - including Mr Nasir himself - pointed to a single occasion on which Mr Nasir made an independent decision or expressed an independent view about the business. That is not, in my judgment, the same as having authority which he delegated to Mr Sidhu; rather, I find, Mr Nasir, while much respected, and treated with deference, had no power and no say in ZB or (later) in Z.

Edmund was on the Board of ZB and then of Z, but gave evidence that: “Even from the beginning Shailen and [Mr Sidhu] were always the mastermind of the company”. He agreed that Zavarco was “their company and it was up to them to decide what to do with it.” Even after Z was set up, and he was a director, Edmund gave evidence that he accepted the wording of draft resolutions to increase the number of shares by 300 million without question, simply because he had been told to get signatures (and to backdate them) by Mr Sidhu, both of which he did. He agreed that it was irrelevant whether the other directors had agreed or not, “because whatever [Mr Sidhu] and Shailen decide is what will happen”. He could not give any reason for that particular backdating, which was to 3 August and not even to the now-crucial date of 29 June 2011; but he did it anyway, when Mr Sidhu told him to.

The evidence shows that Shailen and Mr Sidhu acted as the sole controllers of the business, both before and after 29 June 2011, and in ZB as well as Z.

Mr Nasir’s witness statement describes the acquisition of VTel shares by ZB from OFSB on 13 December 2010. He explicitly alters the evidence in his Part 8 witness statement about the size and voting rights of the OFSB interest in VTel. Mr Nasir then says this about the arrangement or agreement now relied upon (paragraphs 15-16):-

I note that Mr Nasir does not claim to have been part of that decision, or to have been asked for his agreement to it. I am satisfied that it was an idea being pursued without reference to him, and he was simply being kept informed, as usual. I do not think that he gave Mr Sidhu any authority to take decisions on his behalf because I do not think that Mr Nasir was regarded as having any authority to take any decisions. I conclude that Mr Nasir was giving Mr Sidhu carte blanche only in the context that it was already the position that both Mr Nasir and Mr Sidhu knew, like Edmund, that authority lay with Mr Sidhu and Shailen alone, as it always had. Dato Singh’s evidence, too, was that Mr Sidhu and Shailen made the decisions on this without needing to have permission from anyone else (Day 3 p 42 line 16 to p 44 line 16). I reject Mr Nasir’s claim in cross examination that ZB was a partnership between the three of them (and I note that this oral evidence based itself on alleged conversations with Shailen which Mr Nasir did not mention in his witness statement).

In cross examination, Mr Nasir was shown to have put forward different accounts of his knowledge of a future flotation, in his Part 8 statement and in the Part 7 witness statement quoted above. His Part 8 statement suggested that the flotation had been discussed in 2010 and not raised for the first time in May 2011. This confirmed my impression that Mr Nasir’s evidence about exactly what he was told and when cannot be relied upon. I do not accept that Mr Nasir was told in May 2011 anything that went beyond the terms of clause 4 of the SPA and, as I have already observed, clause 4 of the SPA did not cover the shares issued at incorporation as opposed to shares to be issued after the date of the SPA. In any event, I find on the evidence as a whole that Mr Nasir was never going to hold Mr Sidhu to anything he said in May 2011, because Mr Sidhu could do what he liked as matters progressed as long as he and Shailen were happy with it. Mr Nasir was not going to rely on anything he was told in May 2011 and Mr Sidhu would not expect him too: everything was in flux and open-ended.

Paragraphs 17-18 of Mr Nasir’s witness statement continue:-

This continues to be imprecise. The number of shares was left entirely open. Mr Nasir was not promised anything and was not demanding anything in particular. There was nothing to rely on at this stage, in my judgment. This was a more-or-less informed speculation about what might happen in the future, without tying anyone’s hands. Time will tell. It is all up to Mr Sidhu. Nothing is guaranteed. The subsequent cavalier treatment of Mr Nasir’s shareholding proposed in the version of Schedule 2 which he saw not many weeks later, in August 2011, and which he did not object to, shows that Mr Nasir’s shareholding could be shrunk without protest to less than 2% of Z. This conversation did not discuss or agree who would pay for the par value of Mr Nasir’s shareholding, or whether the payment would be in cash or not. It is consistent with the par value being required in cash, since it was intended that the market price would be ten times the par value (according to Mr Sidhu’s evidence) so being required to pay only the par value was a very good deal. Mr Nasir’s answers to questions about these paragraphs in cross examination were confused and hesitant (Day 1 p 49 line 2 to p 50 line 18).

Mr Nasir’s witness statement then says (paragraphs 19-20):-

Whilst this part of Mr Nasir’s evidence introduces references to the 70:30 split of the shares issued in their names on incorporation (amounting to 360 million shares on Mr Nasir’s side), it continues to be vague about how many shares either of them will end up with and it does not revisit the question of how they will be paid for. It makes it clear that everything discussed is subject to contract, that is, to documentation which has, not only not yet been drafted, but whose terms are not yet known. This passage of Mr Nasir’s statement is ambiguous about whether Mr Nasir’s shares, as well as Mr Sidhu’s, were up for distribution to Shailen or anyone else. In cross examination, Mr Nasir and Mr Sidhu said that Mr Nasir’s shares would only be drawn on if Mr Sidhu’s shares were not enough to cover allocations elsewhere. However, as I have discussed above, that is not how this aspect is pleaded and I reject the new line taken on it in the evidence. The pleadings have been amended a good deal, most recently on the first day of the trial, and a self-serving change of account about an undocumented meeting over six years ago carries no conviction. It is also not consistent with the version of Schedule 2 that Mr Nasir said he saw in August 2011 (document 44 in the trial bundle) and, since I accept that he did see it, I reject Mr Sidhu’s explanation that it must be a fake.

Although Mr Nasir says “It was agreed” and “we agreed” in the passage quoted above, I am satisfied, for reasons I have already given, that Mr Nasir was simply being informed of how things were being done by Mr Sidhu and Shailen and was not in a position to agree or disagree. He went along with whatever Mr Sidhu told him, as he always did, and Mr Sidhu was free to change course in future just as he and Shailen thought fit.

Finally (bearing in mind that Mr Nasir’s case is put on the basis that it stands or falls on agreement or arrangements concluded by no later than 29 June 2011), Mr Nasir’s witness statement says this (at paragraph 21, before proceeding to later dates):-

I am prepared to believe that there was a meeting at which Mr Nasir was, as usual, informed about what was going on by Mr Sidhu and that Mr Nasir, as usual, raised no objection, and that he was told that the incorporation was imminent. I reject the evidence that Mr Nasir told Mr Sidhu that he agreed to proceed in any particular way, or that he gave him authority to take any formal steps, let alone formal steps necessary to implement any particular arrangement, or that any arrangement had been agreed. I reject the evidence that Mr Nasir understood that the acquisition of ZB by Z (which did not take place at incorporation, but subsequently, on the terms of the backdated SPA) would represent full payment for Mr Nasir’s initial holding of Z shares, which he took at incorporation.

Mr Nasir was not treated, ever, as a decision maker. He always did what he was asked to do. He was treated with respect, because of his status, but that did not give him authority in the companies. He was a figurehead. He signed every document, even if backdated, and his witness statement continues to state (paragraph 23) that he read the SPA before signing it, and it “reflected what I had agreed to on 29 June”, although it does not contain the terms of the arrangement now alleged (which is different from the arrangement originally pleaded). I therefore reject his evidence that, at this final meeting, his agreement or authority were sought or given on anything. My finding is that it was a courtesy meeting for information. There was no agreement, no arrangement and no commitment.

I doubt Mr Nasir’s ability to remember precisely what he expected in relation to the settlement of the par value of the shares being put into his name at incorporation, since this never seems to have been identified as a live issue. Even the backdated documents prepared after 29 June 2011 did not address it, concerning themselves only with the Schedule 2 investors and the shares to be issued to them in accordance with clause 4. I also do not accept that Mr Nasir would have objected if he had been told that the par value of the shares would have to be paid in cash. His ZB shares had been paid in cash, although not by him. It was hoped that investors would be brought on board to buy shares, and investors were paying 1 Euro per share (according to Mr Sidhu at the end of his evidence) - i.e. 10 times par value - even before the successful flotation. The listing, as planned, also priced them at this level, which was sustained in subsequent trading. Although the documents show that Shailen was conscious that none of the companies were making any money, and Shailen was telling Mr Sidhu that the share price assumed that the business would go on a Google-style trajectory (evidence which I consider in more detail, below), there is no evidence that Mr Nasir was told, or thought, that the share price was built on sand, or that he predicted the crash in the price which eventually took place in 2012. If Mr Nasir ended up having to provide cash for the par value of the shares himself (which might be borrowed, of course), he would still be getting shares changing hands at ten times what he was paying for them. Mr Nasir was never going to stop the flotation. He had no part in negotiating or drafting the SPA or other documents. He made no suggestions about their terms. He was a passenger. He was not going to object to anything, and I do not accept that his agreement was required, or sought, or that it would have been withheld if he had been told that the par value had to be paid in cash. That would have been out of character, and contrary to his conduct and role in the business both before and after 29 June 2011.

Mr Sidhu’s evidence referred to some meetings with Mr Nasir but was less full than Mr Nasir’s. It is less explicit about an agreement or arrangement reached specifically with Mr Nasir and, like Mr Nasir’s statement, it glosses over differences between the arrangement now alleged and the terms of the SPA which were drawn up so soon after it is said to have been concluded. It also agrees with Mr Nasir, as the documents show (including the uncompleted Schedule 2 annexed to the SPA executed on 8 August and dated 29 June), that the details of the SPA had not been finalised at the meetings prior to 29 June. I have already mentioned my doubts about Mr Sidhu as a witness. I do not find myself persuaded of Mr Nasir’s case by the evidence given by Mr Sidhu.

Edmund’s witness statement (paragraph 8) says this:-

Edmund’s understanding that the plan had been “agreed” by Mr Sidhu and Shailen, and that the directors “knew” of it, is in line with my finding that Mr Sidhu and Shailen made the decisions and merely informed the directors what was going to happen. Edmund does not distinguish between Mr Nasir and the directors and shareholders who are admitted to have been nominees for Mr Sidhu and Shailen.

Dato Singh’s evidence did not deal with conversations or agreements between Mr Nasir and Mr Sidhu. The only reason he was required for cross examination was because he said in his witness statement “The shares in the English company [Z] were to be transferred as directed by the beneficial owners of [ZB], that is, [Mr Nasir], Mr Sidhu and Shailen.” The Claimant does not accept that Mr Nasir was a beneficial owner of ZB. Dato Singh said in cross examination that he had been told that Mr Nasir “had invested a lot of money” in ZB. This was not correct, as shown by the evidence including the evidence of Mr Nasir: Mr Nasir invested no money in ZB, and Mr Sidhu paid for Mr Nasir’s ZB shares. Dato Singh did not provide any reason apart from Mr Nasir’s shareholding and what he understood to have been Mr Nasir’s personal investments for seeing Mr Nasir as a beneficial owner and in other parts of his cross examination he confirmed that it was only Mr Sidhu and Shailen who made the decision to get the business listed so far as he was aware (Day 3 p 42 line 16 to p 44 line 16).

Paragraphs 13-16 of Dato Singh’s witness statement give evidence about what Mr Sidhu told him “at some point during the first half of 2011” in relation to a decision by Mr Sidhu and Shailen alone (paragraph 13) to seek a listing of the business, although he was not sure if Frankfurt was mentioned. Paragraph 14 says “Mr Sidhu told me that the listing would involve the transfer of all the ordinary shares in [ZB] to a new entity incorporated in England which would in turn be the entity that was listed on the Exchange. The consideration for that transfer would be the issue of shares in the English company.” This is consistent with clause 4 of the SPA, which does not relate to the original allocation of Z shares to Mr Nasir at incorporation. Dato Singh did not give evidence that he knew how Mr Nasir’s original 360 million (30%) shareholding in Z at incorporation would be paid for. I do not think that was discussed with him.

Dato Singh’s evidence was that he knew that ZB shares, like all shares in Malaysia, had to be paid for, although he did not pay for them himself, and he assumed that Mr Sidhu paid for the ZB shares in Dato Singh’s name, because “Who else was going to pay it?... I would definitely think that a third party is not going to come and pay for him. Definitely he is going to pay.” (Day 3 p 40 lines 11-25). That is consistent with a general understanding that the question of whether one would oneself pay for shares in one’s name was separate from the question of whether the shares would be paid for at all.

Of course Mr Nasir’s Z shares had to be paid for: not only is that a requirement of company law, but it is recorded as a fact that they had been paid for. The question is whether they were to be paid for in cash, or traded for the ZB shares. But, although Mr Nasir obviously knew that he himself had not paid cash for them, that does not mean he thought that cash did not have to be paid. I find that, like Dato Singh in respect of his ZB shares, Mr Nasir simply did not concern himself with the question of payment for his Z shares, assuming that it would be sorted out by others (just as Mr Sidhu had paid for Mr Nasir’s shares in ZB) but without receiving or relying upon any promise or assurance about it.

I see no basis in the evidence for implying a term that Mr Nasir’s shares would be paid for otherwise than in cash. No implied term was pleaded, but a case based on implied terms was argued in closing, citing Marks and Spencer plc v BNP Paribas Securities Trust Co (Jersey) Ltd [2016] AC 742 [2015] UKSC 71. There was no contract between Mr Nasir and Mr Sidhu or Z about who would pay for his Z shares, as I have found. If there had been such a contract, it was not necessary to give it business efficacy that the par value should be paid otherwise than in cash. Nor was it so obvious that it went without saying that the par value of the shares should not be paid in cash.

I conclude that Mr Nasir took his shares in Z at incorporation on the terms of the Memorandum and Articles of Association which were genuinely dated 29 June 2011 (and not backdated), and on no other terms. He did not take them on the terms of the SPA, which was drawn up later and did not refer to those shares. He did not take them on the basis of any agreement or arrangement with Mr Sidhu that the par value of those shares would not have to be paid in cash, or that the par value would be attributed to the consideration for the SPA or the transfer of the ZB shares to Z. He took them as a nominee, and waited to see what he would be told to do with them later. He expected to retain the benefit of at least some, but how many was not yet known, and certainly not agreed or assured. The terms on which he would retain the shares which he did retain were also yet to be determined.

A letter from Crilly & Co, Chartered Accountants, dated 26 July 2011 and addressed to the Frankfurt Stock Exchange, said that all the Z shares had “been paid by cash contribution” and that Crilly had “been presented with evidence to support the above statement”. Mr Sidhu gave evidence that he saw the Crilly & Co letter after its date on 26 July 2011 and told Shailen he disagreed with it. He said he thought it was not sent, although he was not sure whether it was sent or not. I think that it probably was sent. It was dated 26 July 2011, and is signed and has all the appearance of a letter that was complete, and to be sent on the date that it bore. Since Mr Sidhu’s evidence is that he did not see the letter until after 26 July, I think it is more likely than not that it had already been sent by the time he spoke to Shailen about it. Whoever wrote or authorised the letter made it clear, from the terms of the letter, that the shares were not understood by that person to have been paid for by the proposed transfer of ZB to Z. That is in line with my conclusion, although I have not based my conclusion upon it.

Reliance is placed on the 2014 and 2015 Annual Returns, both of which state the total number of allotted shares (1.5 billion in 2014), and state their class (Ordinary €0.10), and that the “Amount paid per share” is €0.10 and the “Amount unpaid per share” is 0, before naming shareholders, including Mr Nasir. I do not think that these are reliable evidence that it had been agreed no later than 29 June 2011 that Mr Nasir’s shares were to be paid for otherwise than in cash. They are consistent with a belief or an assertion such as that in the Crilly letter to the Frankfurt Stock Exchange that all the Z shares had “been paid by cash contribution”, which is now agreed by everyone not to have been the case.

Section 584 of the Companies Act provides:-

Mr Sidhu and Mr Nasir were the subscribers to the Memorandum of Association of Z, dated 29 June 2011. They undertook in the following terms:-

Mr Nasir complied with his undertaking. He did take “at least one share”. He took 360 million shares.

It is argued on his behalf that, because he undertook to take “at least one share”, his undertaking extended only to one share. I reject that. He undertook to take “at least one share” and he complied with the undertaking by taking 360 million shares. All those shares were taken by him as a subscriber to the Memorandum of Association and pursuant to his undertaking. Consequently, section 584 of the Act required that all the shares be paid up in cash.

Mr Nasir’s case in closing was that section 584 “does not create any debt or any civil liability which Z can invoke” and that it has no effect except to make a prosecution possible because it does create a criminal offence.

However, in my judgment section 584 supports my finding of fact that it was never envisaged or agreed or represented that the par value of Mr Nasir’s initial shareholding of 360 million subscriber shares would be paid otherwise than in cash. It is fanciful to suggest that it was agreed, expressly or impliedly, that the shares would be paid for in a manner that did not comply with the Act. The Act required them to be paid for in cash.

Section 593 of the Act provides, so far as material:-

There was no independent valuation in this case satisfying the requirements of section 593(1). Therefore, Mr Nasir relies on section 594 to which, by section 593(4), section 593 is expressly subject.

Section 594 of the Act provides (with the roles of Z and ZB indicated):-

Section 594(6) shows that, whilst Part 26 arrangements and reconstructions, and section 110 Insolvency Act schemes, are included in the reference to “arrangement”, a relevant “arrangement” is not limited to those situations (which do not apply in this case). The definition of “arrangement” is broad; it means “any agreement, scheme or arrangement”. Moreover, although an agreement can be such an arrangement, as can a scheme, it is possible for there to be an arrangement which is not an agreement or a scheme - that also follows from the definition “any agreement, scheme or arrangement” in section 594(6).

In Mr Nasir’s case, I find as a fact that the consideration for his initial 30% shareholding was not the transfer of the ZB shares to Z, which took place subsequently, and on the terms of clause 4 of the SPA. Clause 4 of the SPA provided that the consideration for the transfer of the ZB shares would be “by way of the issuance of 1.5 billion ordinary shares of the Purchaser”, i.e. Z (clause 4.1), and clause 4.2 provided that the consideration shares would be:

I also consider that any “arrangement” within the meaning of section 594 has to be a settled arrangement. Even if the “arrangement” is not an “agreement”, its terms must have been finalised if it is to be an “arrangement” for the purposes of section 594. It must be possible to say what the terms of the arrangement were at the material time, which in this case is agreed to be 29 June 2011.

In this case, the whole position was in flux on and before 29 June 2011. On 29 June 2011, if Mr Nasir or Mr Sidhu had been asked what the terms of the arrangement were, they would not have been able to say. It was still a work in progress, and nothing was settled. In my judgment, there was nothing that can properly be called an arrangement at all. The identity of the persons who would be included in Schedule 2 was not yet known on 29 June, and nor was the number of the shares to be issued to them. No documents had been executed, and none had been drawn up. I do not accept the submission made to me that the SPA was “A clumsy attempt to document what had already happened.” The agreement for the acquisition of the ZB shares by Z had not been finalised, and had not happened, on 29 June. When the SPA was executed on 8 August, it represented the intention of the parties, who signed it, that it should be a binding agreement in accordance with its terms, containing the entire consideration for the acquisition of the ZB shares by Z, albeit that they had been transferred already, in July. No ZB shares had been transferred on 29 June, and the consideration for that transfer had not been finalised on 29 June. The initial allotment of Z shares was separate from the subsequent transfer of ZB shares.

I find as a fact that there was no agreement, scheme or arrangement on 29 June 2011 pursuant to which Mr Nasir’s initial 30% shareholding of 360 million shares in Z was allotted to him in consideration of the subsequent transfer to Z of shares in ZB.

I am also not satisfied that, if there had been any such arrangement, it would have been open to all the ordinary shareholders in ZB, as required by section 594(4) of the Act. Dato Singh was not offered shares in Z at all, ever. He was simply told to give up his ZB shares, which he did. He was not given the option of trading them for Z shares, whether as Mr Sidhu’s nominee or on any other basis.

It follows that section 593 applied to Mr Nasir’s Z shares. He did not receive a valuer’s report, and he knew or ought to have known that there was no agreement, scheme or arrangement exempting his shares from the section 593(1) requirement that his shares should not be paid for otherwise than in cash. Mr Nasir is bound to pay Z the nominal value of the shares, with interest at the appropriate rate, under section 593(3) of the Act.

Articles 69 of Z’s Articles of Association entitled the directors of Z to send

Article 73 then provides for a notice of intended forfeiture to be sent in respect of any share in respect of which a call has not been paid as required by a call notice. Such a notice has been sent to Mr Nasir. A technical objection to it based upon an internal discrepancy about dates has been abandoned.

Article 74 provides:

It follows from my findings above that the call notice and notice of forfeiture were properly sent, and Z is entitled to forfeit Mr Nasir’s shares accordingly.

Two estoppels are alleged: an estoppel by convention and an estoppel by representation.

The estoppel by convention is pleaded in paragraphs 50-51 of the Re-Re-Amended Defence and Counterclaim and is based upon Mr Nasir’s personal position; an alternative case based on the position of New Asia Telecom Limited (in paragraphs 56-57) has not been pursued. Paragraph 51 of the Re-Re-Amended Defence and Counterclaim incorporates, also paragraphs 45 and 46.

The factual basis for the estoppel by convention is said to be that both sides were proceeding on a shared assumption that no cash was required (Defendant’s closing submissions, paragraph 56).

I do not accept that there was any such shared assumption. The evidence does not establish it.

Reliance is placed on incorporation documents (showing the amount unpaid on each share to be nil), annual returns dated 29 June 2012 and subsequently, annual reports and financial statements for the periods 2011-2013, and the listing of Z on the Frankfurt Stock Exchange, it being pleaded that the rules of the Frankfurt Stock Exchange and the German financial regulatory authority require all shares listed for trading to be fully paid up. I do not believe that Mr Nasir relied on any of those documents. He trusted Mr Sidhu and did not concern himself with any matters of detail, including how his initial shareholding of 360 million would be paid for, and by whom. Mr Sidhu never told him that his shares would not have to be paid for; and he never told him that Mr Sidhu or anyone other than Mr Nasir would pay for them. As long as Mr Nasir retained the shares, he was the person legally obliged to pay for them, given that they had not yet been paid for. Nothing in his discussions with Mr Sidhu, and nothing subsequently, entitled him to assume otherwise.

It follows from my findings of fact that I reject the case pleaded in paragraph 51 of the Re-Re-Amended Defence and Counterclaim. The alleged “common shared assumption, understanding, intention and belief as to the operation of the 2011 Arrangement... that the Defendant’s Shares were not unpaid and were or should be treated as fully paid” did not exist.

It is also not in my judgment unconscionable for Z to call upon Mr Nasir to pay for his shares. I also reject the assertion that Z has been unjustly enriched. Z did not receive the ZB shares in consideration of the initial allotment of shares to Mr Nasir.

The claim of estoppel by representation is pleaded in paragraph 52A of the Re-Re-Amended Defence and Counterclaim, which states:-

I reject this also. There was no representation that the Defendant’s shares were not unpaid or should be treated as fully paid. Nor did Mr Nasir rely on any such representations to his detriment.

Section 606 of the Act provides, so far as material to this case:-

The researches of Counsel have not found any authority on section 606 of the Act, but I have been shown two authorities on section 113 of the Companies Act 1985 which was a similar although differently-worded provision for relief: Re Ossory Estates Plc [1988] BCLC 213 and Re Bradford Investments Plc (No 2) [1991] BCC 379. This is clearly a discretionary power, to be exercised only when it is just and equitable to do so, albeit one to be exercised in the circumstances specified in section 606(1), and on the basis of the considerations specified in section 606(2) and (3), and in accordance with the overriding principles laid down in section 606(4).

Section 606(1)(a) refers to a liability under any provision of Chapter 6 of the Act. That includes the liability of Mr Nasir which I have found under section 593 of the Act.

Running through the considerations in section 606(2): Mr Nasir has not paid and is not liable to pay anything else in relation to his shares. No-one else has paid or is likely to pay for them now. Mr Sidhu, in particular, has not suggested that he will do so and developments at the company in recent years make it extremely unlikely if not inconceivable that he would wish to do so. I have found that the transfer of ZB shares was not payment for Mr Nasir’s Z shares.

Section 606(4) requires me to have regard to the overriding principle that Z should receive money or money’s worth at least equal in value to the aggregate nominal value of Mr Nasir’s shares, which is €36 million (even if one puts aside the question of whether Mr Sidhu’s shares can be said to have been paid up in any shape or form, which is not before me). Mr Nasir’s shares were taken on the date of incorporation, and at the date of incorporation on 29 June 2011 Z had not received the ZB shares. Moreover, the agreement that it should do so had not been concluded. I reject the contention that the agreement was in existence on 29 June 2011. Such a contention has no support in the documents, once the backdating has been taken into account. On the contrary, the evolution of the terms of the ZB share sale, resulting in the SPA, is apparent on the documents and shows that the terms had not even been identified on 29 June 2011, let alone agreement reached upon such terms. When the SPA was eventually finalised, it expressly distinguished the shares to be issued in consideration for the ZB share transfer from “the existing ordinary shares of [Z]”, which included Mr Nasir’s shares (clause 4.2).

In any event, I am not satisfied that the ZB shares, even taken as a whole and not concentrating only on Mr Nasir’s part in them, had on 29 June 2011 a value of €36 million or more. The Ari & Co valuation of €2.382 billion is problematic on a number of counts. First, although purportedly dated 29 June 2011, an email from Shailen dated 17 July 2011 shows that it was not yet finalised on the date of the email, and (supported by Mr Sidhu’s evidence at paragraph 46), I am satisfied that it was written subsequently and backdated. Second, the same email shows that it was effectively being dictated by Shailen or others at ZB and was not an independent valuation. Third, the Defendant has declined to call Arikrishnan Dass, the author of the Ari valuation, as a witness, relying instead on a hearsay notice to put in the Ari & Co report. Although the Defendant is entitled to do this, and the document is admissible on a hearsay basis, its weight is reduced because the reason given for not calling the witness in the hearsay notice dated 7 September 2017 seems to me inadequate: “...because he is based in Malaysia and it would be disproportionate in terms of costs to require him to attend the trial of the Claim”. Since the sum of money at stake - €36 million - is large, the cost of flying Mr Dass to the trial would have been justified if he was going to be able to support and give substance to his valuation.

The fourth point goes to the substance of the Ari valuation, even if it is taken entirely at face value. It is

There are indications elsewhere in the papers that any projection of substantial earnings was not soundly based. An email from Shailen to Mr Sidhu dated 8 January 2011 says “Don’t anyone realise that NONE of our companies are actually making any money at all? Not even at the bosses level? What are we telling our staff?” A subsequent email from Shailen to Mr Sidhu on 28 June 2011 - the day before Z was incorporated and Mr Nasir got his shares - said:-

The phrase that jumps out from that candid assessment, at the crucial time, by one of the two men controlling the business to the other, is “Operations of our companies has to run better than Google to go on that ramp.” Despite the optimistic “we can do it” that follows, it seems to me that it was highly unlikely at that time that these fledgling companies would “run better than Google” and generate this level of profit this quickly. Nor did they do so; the share price collapsed before the end of the following year.

This business was being ramped, offering unrealistic hope of future profit based on very little, in order to get a short term listing which would not truly reflect the value that a detailed audit or careful valuation would produce. Whilst I accept that the Z shares began trading at Shailen’s target price of €1.1 per share, and held that value until the collapse at the end of 2012, I do not think that this means that the ZB business was, in fact, worth even €36 million, or anything like it, in June 2011. For the same reasons, I do not accept at face value a reference in the so-called “listing brochure” (which appears to be no more than a superficial 8-slide PowerPoint presentation) to “Market capitalisation - €1.65bil”, not least because it is immediately followed by “2012 Forecast - Earnings €100m-€150m” which were not, realistically, achievable and were not, in fact, achieved. This is a business that had no value unless it could secure substantial capital investment. I have been shown no evidence that this was in place on 29 June 2011.

Finally, I do not think that it would, in any event, be just and equitable to relieve Mr Nasir from all or part of his obligation to pay up the nominal value of his 360 million Z shares. It was never made clear to investors that his shares were not paid up in cash. I have also found that the Frankfurt Stock Exchange was probably informed by the Crilly letter that they were paid up in cash. If they were paid up in cash, that €36 million was a contribution towards the capital that the business needed to flourish if and when it acquired the ZB shares. It does not seem to me to be just and equitable that, Mr Nasir’s obligation being (as I have found) to pay them up in cash, he should not pay the whole amount.

I refuse the application for section 606 relief.

Finally, the Defendant claims restitution, assessed at the value of his shares in ZB (not Z) at the date of the transaction by which the ZB shares were transferred to Z, less any dividends and benefits that have accrued on his shares since then.

The legal basis of his claim for restitution is paragraphs 106-107 of the judgment of Lord Toulson JSC in Barnes v The Eastenders Group [2014] UKSC 26 [2015] AC 1:-

The factual basis for this claim is the allegation that Mr Nasir understood that the acquisition of the ZB shares by Z would represent full payment for the Z shares allotted to Mr Nasir at incorporation. I reject that allegation.

I also do not consider that Z would be unjustly enriched by receiving payment in cash for the shares allocated to Mr Nasir on 29 June 2011, in addition to its acquisition of the ZB shares after incorporation, on the terms subsequently agreed in the SPA, and on the basis of the consideration agreed in the SPA.

I therefore reject the claim for restitution.

The result is that the Claimant succeeds in its claim, and the Defendant fails in his Counterclaim. I will hear Counsel on the appropriate form of order, unless it can be agreed.