Pradeep Morjaria & Ors v Camran Mirza & Ors

TABLE OF CONTENTS

INTRODUCTION

It’s a tale as old as time. A venture that started with high hopes and expressions of brotherhood between the participants has ended in bitter acrimony and blame on all sides.

This case relates to a property joint venture (the “JV”) formed to develop a property in Ealing, London. The purpose of the JV was to purchase land and develop commercial property in London at 22-24 Uxbridge Road, Ealing (the “Property”).

The original idea was to develop the Property into an office complex and hotel. The part of the Property at 24 Uxbridge Road (“the “Hotel”) was developed into a hotel and was let to Premier Inn. Later, the plan to develop the part of the Property at 22 Uxbridge Rd (“No. 22”) into offices was modified in favour of an alternative proposal to develop it into a data centre (the “Data Centre”), and one floor and part of the basement of No. 22 were fitted out and equipped accordingly. Later, when the Data Centre proved unsuccessful, the JV adopted a proposal to use the remaining floors at No. 22 as serviced offices.

The main parties to the JV were or are the First Claimant (“Mr Morjaria”) and the First Defendant (“Mr Mirza”). These parties, along with the Second Claimant (“Mrs Morjaria”), became shareholders in the Eighth Defendant (“Otaki”), being the holding company through which the JV was to be conducted. All these parties entered into a joint venture agreement (the “JVA”) on 14 December 2007.

Otaki operated through two subsidiaries. One of these was a company called Krugar Limited (“Krugar”). Krugar held a long lease of the Hotel and let this to Premier Inn. The other was the Fourth Claimant (“Viper”), which held a long lease of No. 22. I will call Otaki, Viper and Krugar the “JV Entities”.

It is common ground that Mr Mirza was the driving force behind the JV, operating through his company, the Second Defendant (“Tydwell”). Later, some of the operations of the JV relating to the Data Centre were operated by the Seventh Defendant (“Redwire”). The shares of Redwire were originally all owned by Mr Mirza, but later 50% of them were transferred to the Morjarias’ company Trafalgar Limited (“Trafalgar”). As events unfolded, various other companies became involved that were in the ownership of Mr Mirza or his family. These included the Sixth Defendant (“Boomzone”), the Ninth Defendant, (“Wolverine”) and the Tenth Defendant (“LMH”), although it is the Defendants’ case that it was Mr Mirza’s children that controlled the latter two companies. Other members of Mr Mirza’s family were involved at various times within these companies including the Fourth Defendant, his wife (“Mrs Mirza”) and the Fifth Defendant, his son, Mr Ameer Mirza. To distinguish him clearly from his father, and without meaning any disrespect, I shall refer to the Fifth Defendant by his first name as “Ameer”. Similarly, and again meaning no disrespect, I will refer to Mr & Mrs Mirza’s younger son, Mr Osman Mirza, as “Osman” and to Mr & Mrs Mirza’s daughter, originally Miss Shaima Mirza, but after her marriage, Mrs Shaima Sibtain, as “Shaima”. Likewise, I will refer to Mr Morjaria’s son (who has only a minor role in these events) as “Shamick”, again, meaning no disrespect.

The other parties to this action are the Third Claimant, Summerhill Trust Company (Isle of Man) Limited, acting as trustee of the Wentworth Capital Trust, as the assignee of claims that the JV Entities had against the Defendants, and the Third Defendant (“Mr John”), who was an accountant acting for Mr Mirza or his family companies.

Mr John has taken no part in these proceedings and has not filed an Acknowledgement of Service or a Defence. He has retired from working for Mr Mirza and it is understood that he is living abroad, probably in India. I have determined to hear the case without him, as the court has power to do under CPR rule 39.3, on the basis that he has been duly served in accordance with the order for service out of the jurisdiction by Order of Deputy Master Arkush dated 16 May 2022. I do remain concerned, however, that these attempts may have been ineffective as they have involved using two email addresses that are associated with companies that he no longer works for and one email address that he had not used for 14 years prior to the Deputy Master’s Order. The Claimants have made an application dated 7 March 2025 (served on Mr John in the same manner) for judgment to be entered against him pursuant to CPR rule 12, and with the request that this matter be dealt with at the main trial. This application was mentioned during the trial, but the ramifications of it were not discussed. It was merely requested that I deal with the application summarily within my judgment. I will discuss this further when I get to the question of remedies at the end of my judgment.

This is a complicated case, with many claims made in relation to many causes of action. Depending on how you count it, there is something like 8 separate sets of facts that are alleged to give rise to claims or counterclaims, and many of these facts have given rise to several different claims so that there are something like 25 separately pleaded claims in contract, tort and for breaches of fiduciary duty and for relief in equity. The case has been heard over 30 sitting days, nearly all of them involving extensions to the usual court day. The evidence has included over 9,000 documents comprising 90,000 pages of evidence (of which over 1,300 documents were expressly referred to at trial or in submissions); some 37 witness statements; oral evidence from some 11 witnesses; 16 expert reports (plus various joint statements) from 7 separate experts; and authorities bundles including more than 350 cases or textbook extracts. I must express the court’s gratitude to the legal teams for their presentation of the case and to Opus2, which provided technological backup in the form of well-indexed and hyperlinked online documents, real-time transcripts and daily hyperlinked transcripts, as well as presenting documents on screen as they were referred to. Without their assistance it would have been impossible to deal with the case in the time allotted.

With such a dense case involving many interrelated claims and counterclaims and causes of action, it is difficult to know where to start. I will deal with this as follows:

OVERVIEW OF THE PROGRESS OF THE JV

The Inception of the JV

It is helpful, before diving into the detail, to begin with an overview of the progress of the JV.

The main protagonists in this story are Mr Mirza and Mr Morjaria. They met when they were both living in London during the late 1980s or early 1990s and got to know one another. Mr Morjaria emphasises that there was a friendship at this time, whereas Mr Mirza (now) sees the relationship as being more one of acquaintances or business colleagues, although his early correspondence suggests more than this.

During late 2006 and early 2007 Mr Mirza, having identified a site at 22-24 Uxbridge Road, made arrangements in preparation for its purchase and development, including arranging planning permission and bank finance from Clydesdale Bank plc (“Clydesdale”).

Mr Morjaria had left the United Kingdom in 1998 to live in Dubai. The two individuals resumed contact in July 2007. It is disputed how this came about. Mr Mirza suggests that this was through their being re-introduced by a third-party, a Mr Duncan Austin, who had been working with Mr Morjaria on a hotel project and to whom Mr Mirza had been introduced by his contact at Clydesdale, Mr Tim Jones, and that possibly the reintroduction was then effected via Mr Morjaria’s solicitors, Bowling & Co. Mr Jones corroborates the involvement of Mr Austin. Mr Morjaria remembers nothing of the involvement of Mr Austin and recalls only being contacted by Mr Mirza via Bowling & Co. I do not see that anything turns on which account is correct.

The Defendants suggest that Mr Morjaria’s lack of memory on this point demonstrates a wider lack of memory of the events at that time, but I do not think I can draw that conclusion. There is nothing to suggest that Mr Austin did anything more to reintroduce the parties than to provide (probably through Mr Jones) contact details for Mr Morjaria and his solicitors. From the documentary record it appears that Mr Mirza did attempt to write to Mr Morjaria in March 2007 to resume contact, mentioning the name of Mr Austin. However, this was to a generic email address not including Mr Morjaria’s name and different to the one at which he wrote to Mr Morjaria on 16 July 2007 and there is no reply to this email within the Court Bundle. It is possible therefore that Mr Morjaria did not receive this. It is quite possible then that Mr Morjaria was reached only via his solicitors and was not aware that Mr Mirza had found their name through the good offices of Mr Austin.

The two parties met and negotiated terms for the JV. It is disputed whether they met at Mr Mirza’s home in Ealing (as is contended by Mr and Mrs Mirza) or in Dubai (as is contended by Mr Morjaria). In my view, based on evidence in the form of a contemporary email, it is most likely that the account of Mr and Mrs Mirza is correct.

The precise course of the negotiations regarding the major terms of the JV is disputed.

Mr Mirza says that he originally proposed that the two parties would put in similar amounts of funding, but he (with his wife) would receive 70% of the profits, reflecting the fact that he had already put in a great deal of effort which had been successful and was having success in securing the property, finance and a potential tenant for part of the property, Premier Inn. He later relented and agreed that they would receive only 55% of the profits but this was on the basis of having secured both an agreement that he would also get the benefit of any VAT refunds obtained by the JV companies and, according to his evidence, that he, through his company Tydwell, could make a profit on undertaking work.

Mr Morjaria disputes this account. He agrees that there was an arrangement that Mr Mirza (with his wife) was to receive 55% of the profits of the JV (despite putting in slightly less cash by way of equity). He considered that that was sufficient recompense to Mr Mirza for the work done by him to date. He agrees that there was an arrangement relating to VAT, but he says that the arrangement relating to VAT was to be merely a funding arrangement – i.e. Mr Mirza would receive amounts equal to the VAT refunds as the project went along but at the termination of the joint venture such amounts would be taken into account so that Mr Mirza’s 55% will include the amounts already received in respect of VAT refunds. This matter is discussed in more detail below.

Whether or not there was a misunderstanding over some of the terms, an agreement in principle was reached. On 8 August 2007, Mr Mirza (on behalf of himself and his wife) wrote an email to Mr Morjaria confirming the arrangements that there would be 50-50 shareholdings, providing for a 55/45% split of profits “based on our long-standing relationship and trust” and emphasising that Mr Mirza would manage, handle and make decisions on the project. Mr Morjaria replied the same day confirming that he was happy that Mr Mirza would be “responsible and totally in control” and would “manage, handle and make decisions”.

The JV Entities were formed as Jersey companies. Tax advice was received with a view to avoiding these companies being regarded as having a permanent establishment in the United Kingdom. This advice suggested that it was important to have decisions being made by directors outside the United Kingdom (originally directors provided by a corporate services firm in Jersey) and that the JV Entities should contract with those involved in the development on an arm’s-length basis.

Although the JVA was signed only on 14 December 2007 (at the same time as the original Facility Agreement provided to Otaki by Clydesdale, guaranteed by Mr Mirza and Mr Morjaria), there had been a sufficient understanding between the parties before then for them to continue with the project and to exchange contracts on the Property in late August 2007 and to develop a Development Appraisal as the basis on which the funding arrangements with Clydesdale would be undertaken.

The Appointment of IQEQ

Another event that is of some consequence for this action is that, on 1 August 2008, an Isle of Man professional services company (eventually renamed “IQEQ”, and which I will refer to by that name), was appointed as corporate services provider to the JV Entities, and representatives of that firm took over as the directors of the JV Entities. Some of these directors are the subject of a Part 20 claim by Mr Mirza. They are Mr Mark Lewin (“Mr Lewin”), Mr Oliver Webster (“Mr Webster”) and Ms Dawn Yates (“Ms Yates”). I refer to these individuals collectively as “the Directors”.

The Progress of the Construction

Planning permission was obtained on 7 February 2008 for construction of a 165-bed hotel and office accommodation.

Work began on the project in May 2008, starting with design planning and finalising funding, then preliminary works and demolition in June 2008 and construction starting in September 2010.

The construction experts have divided the development of the Property (the “Project”) into five phases and for convenience I will refer to these phases in this judgment. The five phases are:

During the autumn of 2008, a decision was taken to make a substantial redesign to No. 22, so that it would be designed and fitted out with equipment to become a data centre. This was partly in response to the global financial crisis in 2008 and partly in response to a valuation suggesting that, if redeveloped as a data centre, the property might have a substantially greater value. This valuation, received on 5 December 2008 and prepared by DTZ Debenham Tie Leung, suggested that, if developed as a hotel and data centre, the Property might have a gross development value of up to £110 million.

A revised Facility Agreement with Clydesdale was signed on 15 June 2009 to allow funding of the revised proposals. This was revised further on 1 September 2010.

In October 2010, Tydwell entered into what is referred to as the “Procurement Contract” with Viper and into a building contract with Mace, which had been appointed as the main contractor to undertake the building work.

By June 2012 Mace had completed its work. Premier Inn took occupation of the Hotel. At this point, the Data Centre was finished to a “shell and core” state.

At around October 2012 (according to the Defendants) Redwire (of which Mr Mirza, and later also Mrs Mirza, became a director) began to provide management services relating to the Data Centre.

In July 2012, Mr Mirza was informed that Clydesdale’s parent company, National Australia Bank had decided to exit the UK and wished to terminate the Clydesdale Facility. Mr Mirza was able to use this development to negotiate with Clydesdale to reduce very substantially Viper’s liability under the Clydesdale Facility, resulting in Clydesdale agreeing to write-off approximately £15.7 million of the outstanding debt through a Settlement Deed entered into on 20 June 2013. This figure was reflected in Viper’s financial accounts for the year ended April 2014.

A Certificate of Practical Completion was issued in respect of the partial fit-out of the Data Centre on 25 April 2016.

The Involvement of Boomzone

By early 2016 it was clear that the Data Centre was not attracting sufficient business. Mr Morjaria and Mr Mirza agreed to change the use of much of No. 22 to provide serviced offices.

In April 2016 Boomzone was incorporated by Mr Mirza. Originally Mr Mirza was the director of Boomzone and two days later, his daughter Shaima was appointed as director. Mrs Mirza was appointed as the company secretary. Shaima resigned as director on 20 April 2023.

On 1 April 2017 we see the first of a number of leases granted by Viper in favour of Boomzone (the “First Boomzone Lease”). This related to the sixth floor of the building and provided a five-year lease at an annual rent of £12,000.

Later, in May 2018, there followed what has been referred to as the “Second Boomzone Lease”, also between Boomzone and Viper. This was in fact a Deed of Variation to the First Boomzone Lease, pursuant to which the demise was changed to include the entirety of No. 22 (the Basement, Ground, First to Sixth Floors) for an annual rent of £60,000, and the length of the lease was extended to run for five years from the date of the variation.

Later still came what has been referred to as the “Third Boomzone Lease”. A version of this was first signed on behalf of Viper on 18 December 2020. A final version was signed on 8 March 2021. It covered the entirety of No. 22, and the term of the lease was to run to 31 March 2032 again at an annual rent of £60,000 per year.

The First, Second and Third Boomzone Leases are referred to collectively as the “Boomzone Leases”.

A change in JV parties?

In September 2016, Mr Mirza was notified that the shares held by Mr and Mrs Morjaria in Otaki had been transferred to their family trust, the Wentworth Capital Trust.

On 19 October 2016, at Mr Morjaria’s request, Mr Mirza signed an Addendum to the JVA reflecting and purporting to be by the parties to the JVA that:

“all references made to Pradeep Kanitlal Morjaria and Sangita Morjaria within the Joint Venture Agreement is to be referred to as the Wentworth Capital Trust”.

The Addendum is signed by Mr Lewin on behalf of Wentworth Limited, as Trustee of the Wentworth Capital Trust (of which members of the Morjaria family are beneficiaries) and on behalf of Otaki. Later, in December 2017, the Third Claimant (“Summerhill”) replaced Wentworth Ltd as trustee of the Wentworth Capital Trust.

The Addendum cannot have been effective as a contractual novation of the JVA as it was not signed by Mr and Mrs Morjaria. Nevertheless, it may be considered to have some legal effect as Mr and Mrs Morjaria, having allowed this to be put forward to the other parties of the JVA, would, I consider, be estopped from complaining of any action taken by the other parties in reliance on it.

The BOS Facility

On 14 February 2018, Viper entered into an agreement (the “BOS Facility Agreement”) with Bank of Singapore (“BOS”) providing for three tranches of borrowing totalling US $4.2 million plus £8 million (the “BOS Facility”). This had been used, not to further the business of the JV, but rather to fund investments – for the most part, indirect investments in companies owned by Mr Mirza and Mr Morjaria that were undertaking other ventures. The BOS Facility Agreement was guaranteed by Mr Mirza and Mr Morjaria. It was secured by a legal charge (the “BOS Charge”) over Viper’s leasehold interest in the Data Centre.

This was a highly uncommercial transaction for Viper as it took on the liability of an on-demand facility and in return obtained what were, for the most part highly illiquid investments, although a relatively small part of the facility was used to purchase liquid, income-yielding investments that would provide income to pay the interest under the BOS Facility Agreement. The arrangements were regarded by all parties as providing a form of equity release for the Morjarias and Mr Mirza.

A similarly uncommercial transaction occurred later in November 2020 when Krugar borrowed £800,000 under the Coronavirus Business Interruption Loan Scheme from NatWest (the “CBILS Loan”) and then lent this sum to Otaki, when then lent £750,000 of this to Tydwell and £50,000 to Chevin Limited, another Mirza family company.

The Cladding Claim

The Claimants make specific claims (the “Cladding Claims”) centred on deceit said to arise in relation to amounts received by Tydwell under a Design & Build Contract (the “Cladding D&B Contract”) between Tydwell and Otaki for cladding.

The need for this contract arose because of the Grenfell Tower fire in June 2017, which had increased regulatory focus on ensuring that cladding on buildings was not combustible. Initially, what was identified was a need to replace the cladding on the parts of the Property where cladding had been used. It became apparent later that it was also necessary to replace the render on this building since this included a combustible membrane.

The Termination of the BOS Loan

Under the BOS Facility Agreement, BOS had reserved the right to request further information to enable it to satisfy its obligations in relation to anti-money laundering and countering the financing of terrorism (“AML”), including its regulatory obligation to obtain information to meet its “Know your Client” (“KYC”) requirement. On 25 October 2019, Mr Sen at BOS requested KYC information “based on queries from the compliance team as part of a periodic review of the account”. The information sought included information in relation to both Mr Mirza and Mr Morjaria.

Mr Mirza satisfied BOS in relation to these enquiries, but Mr Morjaria did not. The Defendants claim that Mr Morjaria failed to use his reasonable endeavours to do so in breach of his obligations under clause 2.1 the JVA. This claim is discussed in more detail below.

In mid-January, the compliance committee of BOS took a decision that it was unhappy with Mr Morjaria’s compliance with its AML requirements. Whilst Mr Morjaria and Mr Lewin stepped up their efforts to find more to answer BOS’s requirements for information, it appears that this was too little too late. By early February 2021 BOS made it clear that it wished to exit the Viper account.

The Morjarias’ civil and criminal suits against the Mirzas

It appears that Mr Morjaria began considering action against the Mirzas at some point in the latter part of 2020. Originally, he considered suing Mr Mirza but his instructions later developed so that the case was extended to Mrs Mirza and to Ameer. I will refer to Mr and Mrs Mirza and Ameer together as the “Mirzas”.

By 23 April 2021, he had developed his case sufficiently that his solicitors in relation to the civil claim at that point, Jones Day, were able to send a letter before action (the “Letter Before Action”). The claims were based around alleged false invoices and requests for payment (“Requests for Payment”) which, it was said, were passing off amounts being paid to and retained by Tydwell as third-party costs, through various representations referred to and regarded as the “Invoice Representations”.

Mr Morjaria and his family also developed a plan during 2021 to bring a criminal action against Mr Mirza. In October 2021 Mr and Mrs Morjaria instructed a second law firm specialising in criminal law, Edmunds Marshall McMahan (“EMM”) to initiate a private criminal prosecution (the “Private Prosecution”) initially against the Mirzas.

The Private Prosecution related only to the invoices and Requests for Payment relating to the cladding work. To a large extent, the claims regarding cladding may be regarded as a subset of the claims made in respect of the Invoice Representations. Some £2,697,339 (including VAT) of the payments sought by way of the Requests for Payment and Invoices were in respect of the cladding works. However, the Cladding Claims are slightly different, both because they are based on the slightly different contractual background and also because they are based on further alleged misrepresentations.

Essentially it was (and still is) alleged that the JV Entities and Mr Morjaria were the victims of a deception that the increased price quoted by Mr Mirza in his email of 11 June 2020 (£2.54m), and the further increases reflected in spreadsheets (the “Valuation Spreadsheets”) accompanying Requests for Payment and Cladding Invoices (up to, in total £2.69m) arose because of the need to replace render as well as cladding and represented the cost to Tydwell (i.e. what Tydwell was required to pay to its subcontractors).

On 20 January 2023, DJ Sternberg set aside the Summonses on the basis that the primary and dominant motive of the Private Prosecution, which was to threaten the Mirzas with imprisonment in order to exert pressure on them and extract a settlement from them in the civil proceedings, was improper, and the proceedings were an abuse of the court’s process.

The May 2022 Transactions

By the spring of 2022 there was a high degree of urgency to find a way to repay BOS. In order to find cash to make repayment under the BOS Facility Agreement, the Directors considered that it would be necessary to sell the 999-year lease of No. 22 held by Viper (the “Viper Lease”) or the shares in Viper. Mr Mirza made a series of offers to make such a purchase through an unspecified Isle of Man company. It is understood that the company he had in mind was Bane Solutions Limited (“Bane Solutions”), which had been formed by Mr Mirza in the Isle of Man and which had professional offshore directors.

At the same time that the Directors were in discussion with Mr Mirza, they were also in discussion with Mr Morjaria. Mr Morjaria had shared with the Directors his concern that the JV Entities had been cheated by the Mirzas/Tydwell and, through his lawyers, Jones Day, sought to negotiate arrangements to obtain the cooperation of the JV Entities and of the Directors to bring a lawsuit. Mr Morjaria also, at a point when Mr Mirza’s negotiations were well advanced, made his own offer to acquire the shares of Viper.

These negotiations led to a series of agreements (the “May 2022 Agreements”) signed on 5 May 2022 that included:

Mr Mirza claims that in entering into these arrangements, the Morjarias and Otaki acted in breach of clause 12.2.1 of the JVA (duty to act in good faith towards the other party and use all reasonable endeavours to ensure that the JVA is observed), and/or clause 12.2.2 (duty to do all things necessary and desirable to give effect to the spirit and intention of the JVA). Mr Mirza also brings the Part 20 claim against the Directors for procuring such a breach.

Otaki goes into liquidation

Otaki went into liquidation on 31 October 2022.

On 29 March 2023, the liquidators of Otaki assigned to the Morjarias and Summerhill Otaki’s claim to recover the VAT advances on similar terms to those in the Deed of Assignment.

The Wolverine Transactions

Wolverine was originally incorporated on 13 October 2022 with Mrs Mirza as its sole director. However, by the time that it enters the story, Ameer was its sole director and its shares were owned equally between Ameer, Osman and Shaima.

On 16 May 2024, Mr Mirza and BOS entered into a settlement agreement (the “BOS Settlement Agreement”) whereby Mr Mirza agreed to repay the BOS Facility (which had then risen to an amount of more than £8,546,500) and BOS agreed to assign the BOS Charge to Mr Mirza after receipt of certain payments.

On 20 May 2024, the following transactions took place at the same time:

OVERVIEW OF THE CLAIMS BEING MADE

The various claims that are at the heart of the disputes under consideration may be summarised as follows:

Depending on the context, I will use the term the “Defendants” sometimes to refer to all the Defendants, but generally to refer to all the Defendants other than Otaki (which has been included as a Defendant largely for technical reasons) and, where I am referring to submissions made on behalf of the Defendants, solely to the Defendants that have been represented in this action: Mr and Mrs Mirza, Ameer, Tydwell, Boomzone, LMH and Wolverine.

The Defendants are pursuing three counterclaims against Mr Morjaria which may be summarised as follows:

Finally, Mr Mirza is pursuing a Part 20 claim against the Directors for inducing what is said to be the breach of contract by Otaki referred to in the previous paragraph (the “Part 20 Claim”).

WITNESS EVIDENCE

The court has benefited from witness evidence, both in the form of witness statements from the main persons involved in matters under consideration, in many cases including multiple witness statements, and from oral evidence given at trial.

In considering witness evidence, particularly in a case like this where the events in question go back as far as some 17 years, the court needs to keep in mind the nature and fallibility of human memory. This point was famously emphasised in the judgment of Leggatt J (as he then was) in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm) at [15]-[22]. In that judgment, he provided salutary warnings concerning the unreliability of memory when it comes to recalling past beliefs, the considerable interference with memory that may be introduced in civil litigation by the process of preparing for trial and the potential for powerful biases where witnesses have a stake in a particular version of events. His observations have been adopted and expanded upon in many other judgments.

Accordingly, I have kept in mind the point that the passage of time can cloud or distort memory and that it is unlikely to be the case that individual witnesses will be consistently reliable or unreliable. I also bear in mind that some witnesses may, for whatever reason, have better (or less fallible) recollections than others. In that regard, it is appropriate to record my observations on the witnesses who gave oral evidence.

The Claimants’ witnesses of fact

In giving his oral evidence, Mr Morjaria appeared to be comfortable in the witness box and to be enjoying what no doubt he saw as an opportunity to make his case. He was generally relaxed in giving his evidence, although at times he showed a degree of passion when recording instances where he considers that he had been betrayed by Mr Mirza or was being pressed by Mr Mirza’s counsel to answer questions in a particular way. He took every opportunity to argue his case, often giving answers which were not directly related to the particular question that he had been asked.

As far as I can tell, Mr Morjaria appeared to be answering questions honestly and to have a good memory of many events, recalling specific dates, emails and numbers. However, it is difficult to assess how far his memory was based on his own recollections of the events at the time, or on a more recent study of the court bundle. Certainly, it was apparent that he had a good knowledge of the contents of the bundle.

There was only one answer that he gave that appeared to cast serious doubt on the reliability of his memory. This was when he recalled the first, or an early, meeting that he had with Mr Mirza, and recalled it being in Dubai, whereas a contemporaneous email appears to suggest that that meeting was in London.

Overall, Mr Morjaria was quite impressive as a witness, but having in mind the warnings in Gestmin, I have been cautious in accepting everything he now says as to what he meant in emails that he sent out many years ago and what he originally understood in relation to emails and documents that he received many years ago. I must also take account of the fact that Mr Morjaria clearly has developed a strong animus against Mr Mirza and has demonstrated, particularly through the criminal prosecution, a determination to get his way by whatever means possible.

Mr Lewin was the Client Services Director for the JV Entities. As such, he was the director with responsibility for the negotiations and communications with Mr Mirza, Mr Morjaria, BOS, NatWest, and other parties dealing with the JV Entities.

He was appearing both as a witness on behalf of the Claimants and as a witness in his own right to defend himself in relation to the Part 20 Claim.

Mr Lewin appeared slightly uncomfortable in the witness box. In my view this was not because he was seeking to hide anything, or to give misleading answers. Rather, I think it was because he was not on top of his subject as much as Mr Morjaria. Whilst he had been a director of Otaki, Viper and Krugar, I accept that he relied largely on other members of the IQEQ team to deal with day-to-day detail and was only really brought in when there were major decisions. Also, as a professional trustee and director handling the affairs of many trusts and businesses, it is understandable that he would not many years later have a detailed recollection of one particular company.

During cross-examination, Mr Rees did his best to paint a portrait that Mr Lewin was closely aligned to Mr Morjaria, pointing out that they had been working together for many years prior to the inception of the JV. Mr Lewin stoutly denied this, and pointed out that he had also accepted Mr and Mrs Mirza directly as clients and that when it became clear that there was a falling out between the JV partners, he had seen his role as being a mediator/neutral party, to seek to act for the benefit of the JV Entities as a whole, and had attempted not to side with one JV party or the other. I accept that this was his intention at the time.

Mr Rees also sought to bring to the court’s attention the arrangements whereby Mr Lewin and the other IQEQ directors benefited from indemnification and exculpation clauses under the Deed of Co-operation and suggested that from that point, Mr Lewin was working hand-in-hand with Mr Morjaria and against the interests of Mr Mirza. Mr Lewin pointed out that he was already covered by multiple levels of indemnification and professional negligence insurance. In my view the existence of this Deed of Indemnity does not cause me to doubt Mr Lewin’s testimony to any greater extent than I would anyway, given the points alluded to in Gestmin. I saw no evidence that this caused him to be untruthful or to dissemble in giving his answers. In any case, there was very little in Mr Lewin’s testimony that added to the documentary record available to the court.

Mr Shamick Morjaria worked for Mr Mirza’s companies at the Property between June 2018 around December 2019.

In giving his oral evidence, Shamick, like his father, appeared to be comfortable in the witness box and to be generally relaxed in giving his evidence.

As far as I can tell, Shamick appeared to be answering questions honestly, albeit that he, understandably, saw events through the same prism as his father.

Shamick had no complaints about the way he had been treated by Mr Mirza, but he considered that Mr Mirza had gone out of his way to keep him in the dark about the details of financial matters relating to the JV. He denied having been placed with Mr Mirza in order to spy on him on behalf of his father, but certainly he was taking opportunities to pass interesting titbits of information to his father, including where these did not relate to the JV.

Shamick was involved in the briefings of Jones Day in relation to the Private Prosecution and also was asked about this.

Mr Stobart was part of the IQEQ team with day-to-day management of the JV Entities, although he would defer to Mr Lewin in relation to strategic matters and it seems he largely relied on Mr Lewin to know the details of the JV Entities’ contracts with Tydwell or specifically anything about the tax advice that had been received that the JV Entities should contract at arm’s length with suppliers.

He could not recall forming a view whether Boomzone was regarded as being part of the JV or not and could not recall whether the ownership of Boomzone had been considered in relation to the Second Boomzone Lease in May 2018 (he had not been part of the team at the time of the First Boomzone Lease – the most he could say was that he thought (based on discussions with Mr Morjaria) in 2019 that there was an intention for Boomzone to be partly owned by Mr Morjaria). On 1 September 2019, he emailed Mr Mirza about transferring 50% of the shares in Boomzone to Trafalgar.

He was able to speak to the urgency of sorting out the cladding problem after a deal had been done with Mace.

He was also asked about what he understood about the basis of Tydwell’s charges under the Design and Build Agreement relating to cladding. It was clear that he had not considered this to be a matter on which he needed to have a view, although at one point in internal correspondence with Mr Lewin he had formed a view that Mr Mirza’s £2.545 million quote for the cladding work was not unreasonable (on the basis of what he had been given to understand by Mr Mirza).

The Defendants’ witnesses of fact

Mr Jones was a banker who originally worked for Clydesdale at the time that it was making loans to the JV Entities but later left that bank. After he left, he worked for a period for his own financial advisory firm (and in that guise provided advice to Tydwell, at least some of which was billed to the JV). He later worked for another financial advisory firm and after that joined Al Rayan Bank, and was involved in providing loans to companies in the ownership of the Mirza family, including Wolverine.

His evidence mostly related to the way that Clydesdale dealt with loans to the JV Entities, and in particular the way that drawdown requests were dealt with. He also dealt with the arrangements much later for financing the acquisition of the freehold.

In giving his witness evidence, Mr Jones generally appeared relaxed. He had something of a tendency to go off topic in giving long answers to questions that could have been dealt with more shortly. Generally he was doing so to make a point that favoured Mr Mirza. His memory of the events in question was patchy at best, which is not surprising having regard to the role that he was undertaking in the Project and that the JV Entities were only some amongst very many companies for which he acted as banker. Some of his explanations were confused and self-contradictory. It is clear that some of the source for his understanding of how the JV was to work derived from what he was told by Mr Mirza.

It is also clear that Mr Jones was generally highly sympathetic to Mr Mirza, who was the party with whom he had had most dealings. He had had a business relationship with Mr Mirza for some 20 years, and indeed had been paid by Mr Mirza (or one of the companies that he controlled) during a period when Mr Jones operated as a one-man consultancy.

Mr Mirza, whilst unfailingly polite to the bench, presented in the witness box as a somewhat pugnacious figure. He was prone to deny everything, however unlikely some of his answers seemed in the face of the contemporaneous documentation in front of him. In some cases, he contradicted in his oral evidence statements that he had made earlier in witness statements. Often, rather than answering questions directly, he chose instead to engage in argument with the counsel cross-examining him, with the consequence that many of his answers appeared to be evasive. Like Mr Morjaria, in many cases he answered questions with a degree of passion and took opportunities to go off the topic under question to make statements reiterating other parts of his case.

I found a number of the answers given by Mr Mirza to be unbelievable. I have also seen in the evidence examples of where Mr Mirza was giving one story to the JV Entities (for example in relation to the occupancy of the building) and another to potential lenders. As a result, I am particularly hesitant about relying on his testimony where it is uncorroborated.

Since 2011, Mr Homan has been (and still is) the external accountant to Mr and Mrs Mirza and the Mirza family companies. He has been working with Mr Mirza for nearly 13 years. He estimated that since the Letter Before Action the Mirzas and their companies have accounted for something like 10% of his practice and before that something like 7%. Mr Lloyd (acting for the Directors) has described him as “Mr Mirza’s man of affairs” and I consider this an apt description. As such, he had good first-hand knowledge of the operations of those companies.

Mr Homan was generally quite combative in the witness box. He often talked over counsel and over the judge. It was clear from the tone and content of his answers that he was a partisan witness. He clearly was anxious to get across points that were favourable to the Defendants.

In my view, Mr Homan’s clear wish to do the best in the witness box for his client at times clouded his instincts as to what was commercial or accountancy good practice. For example, he could not bring himself to accept that Mr Mirza’s case, that Tydwell had been withholding invoices on £1.4 million of work allegedly done for more than 11 years in order to defer VAT, was improper; or that it was not proper accountancy practice to present accounts as if a dividend had occurred which had not occurred, even if there was a contractual obligation for that dividend to have been declared. I remind myself that Mr Homan was there as a witness of fact and not as an expert witness on accountancy and I place no reliance on his assertions as to what proper accountancy practice would be.

It appears that he had been a party to the efforts made by the Mirza family to justify retrospectively the invoices that Tydwell have provided to Viper and Otaki. There had been 154 such invoices. 88 of them specifically referred to “Project Management”, or “Project Management & OH” (which was taken to be a reference to overheads) although none of them specifically identified that this was a charge being levied by Tydwell. The total of these charges came to a number of around £580,000. Other charges mentioned on the invoices appeared to relate to third-party charges.

One particular exchange is notable as it goes to the heart of the invoices issue. It was put to Mr Homan that these invoices were misleading. They were misleading because despite there being (at least in many cases) a separate charge for management and overheads (if one accepts that that charge was one being levied by Tydwell) the total amounts charged by Tydwell were very substantially in excess of the amounts paid to third parties. This was said to be justified by Tydwell invoicing the third-party charges at a higher amount to reflect Tydwell’s management and overhead. However, there was no way of telling that, and the fact that there was a separate charge for management and overheads would lead one to think otherwise.

Mr Homan disagreed with this analysis. He gave an example that when one has one’s car serviced, one is charged for labour and parts and these items are marked up from the cost price to the garage to include the garage’s overheads in supervising and arranging for this work. He therefore did not consider that it was misleading that third-party costs were being marked up before being passed on to Viper. He did agree, however, that whether or not this was misleading would depend on the nature of the service provided. In relation to that point, he considered that it was relevant that the parties to the JV had received tax advice that the JV Entities would need to pay proper arm’s-length third-party costs.

Mrs Mirza gave her oral evidence carefully. Initially, she looked a little nervous in the witness box, but this soon passed. At times she appeared to be angry, which is perhaps understandable having regard to the Private Prosecution made against her and her family.

It was clear that she was extremely loyal to her husband and family and that this was a close-knit family that worked harmoniously together.

She had been in court during the entirety of the previous proceedings, and sometimes it was difficult to judge whether her answers were based on her own recollections or on matters that she had heard discussed in the proceedings, for example when she adopted wholesale Mr Homan’s analysis about the appropriateness of including a profit or overheads margin when rendering invoices apparently relating to third-party costs.

Whilst she had played an increasingly important role in the venture, for example writing cheques, and had been regarded as a key person by Clydesdale, which had required key man insurance in respect of her, it is clear, and she agreed, that her husband was the principal decision-maker in relation to the construction business.

When it came to discussion of the arrangement concerning the Boomzone Leases, Mrs Mirza was unable to be of great assistance to the court as it was others within her family who had been leading on this point.

Ameer began working for Tydwell and more generally in his father’s business on 1 July 2019, having trained and worked as a chartered accountant with EY from October 2016. He confirmed that he was generally aware of the provisions of the JVA and was also aware of the addendum to the JVA dated 19 October 2016 which purported to change the parties to the JVA.

Ameer was generally at ease in providing his evidence. He answered questions intelligently, and clearly had a good grasp of the things he was being asked about.

Ameer made one very interesting point regarding the knowledge of the Directors as to whether Tydwell had charged a mark-up. He pointed out that at one point, before it was known that the render would need to be replaced as well as the cladding, the Directors had been provided with fee quotes from contractors, including in one case a fee quote for £528,000 (plus VAT) and at more or less the same time were being told by Tydwell that the expected outturn costs, assuming that render did not need to be replaced, were between £750,000 and £1 million. They must have been aware, therefore, that Tydwell was assuming a substantial mark-up.

In his cross-examination, Mr Vinall sought to establish that Ameer had been involved in putting forward measurements for the total area to be re-rendered which he knew to be untrue to cover up the fact that Tydwell was overcharging. This was denied by Ameer. The Claimants allege in their written closing that:

“Ameer provided knowingly inflated measurements of the cladding and render to IQEQ (via Mr John), for the purpose of putting any independent expert off the scent.”

This allegation is not pleaded and therefore it would be inappropriate to rely on it in respect of any cause of action against him.

If I considered that the point had been established that Ameer was deliberately misleading IQEQ, I could, however, take account of this when considering the reliability of Ameer’s evidence, but I do not consider that this would be appropriate. There were various figures being talked about at this time of this communication. It is by no means clear that Ameer got this wrong by reference to the figures known at the time, and even if he did, it is more likely, or at least just as likely, to be the result of a mistake than the result of deliberate fraud.

Ameer was able to explain the arrangements by which LMH was funded – essentially through profits that he and his sister had made in acquiring from his father’s company, Chevin, and Mr Morjaria’s company, Nilsson, an interest in the project at Surbiton (conducted via an entity called Kingmead Homes (Newlands Limited), funded by Al Ryan Bank. He confirmed that the funding and purchase arrangements involved an element of gift on the part of his father.

Ameer was also questioned about Wolverine. He denied that it was his father who was leading on the Wolverine project, although there was clear evidence of his father being given the power of attorney and in acting as a contact with Al Rayan Bank, which was funding this acquisition.

He provided a partial explanation as to why LMH and Boomzone were willing to support, through giving security over their own interests in the Property, Wolverine’s proposed borrowing from the bank to allow it to acquire the Viper Lease. Their support was necessary to secure funding as the Viper Lease by itself had a much lower value than the borrowing proposed. Ameer explained that there were essentially side arrangements (not fully documented) to reward Boomzone and LMH for providing this support, although he was a little hazy on the details of this.

The Part 20 Defendants’ witnesses of fact

Mr Webster was an employee of and minor shareholder in IQEQ and acted as one of the directors of Otaki, Krugar and Viper from 12 April 2019 until 5 May 2022 (in the case of Viper); and until October 2022 (when Otaki went into liquidation) in the case of Otaki and Krugar. He was also a director of Summerhill but had taken no part in Summerhill’s activities on behalf of the Wentworth Capital Trust.

Mr Webster gave his answers in a straightforward manner.

Mr Webster confirmed the arrangements whereby the JV Entities appointed Mr Ekanyake as their solicitor in relation to dealings with Mace and the dealings with Tydwell, and that as far as he was aware in doing so, the solicitor reported to and took his instructions from Mr Mirza.

He explained that whilst he was part of a management and administration team comprising around six people, it was Mr Lewin who was the lead contact for these clients. Mr Webster attended board meetings but had no substantial involvement in between those meetings. He also explained that from February 2022 he knew he had a bowel cancer issue and was diagnosed with stage 3 cancer on 28 April 2022 and so, as he put it “my focus during this time, with the best will in the world, is not on the detail of this”.

Mr Webster was in cross-examination frequently presented with emails or letters which he had not seen at the time they were sent and asked to comment. He made his position clear that he had not been involved in the negotiations, but on occasion, he could not resist the temptation to express his forthright views on particular issues in the case. In doing so, he was not giving factual evidence but offering comment based on material he had seen in the course of the proceedings (for example, his references to Timeline Television Limited (‘Timeline’) and valuations carried out in 2023/24, which he did not know about at the material time).

In considering the testimony of Mr Webster (as well as that of Mr Lewin and of Ms Yates), I must bear in mind that, through the indemnification provisions in their various dealings with Mr Morjaria and Trafalgar, IQEQ was being paid for their presence in court.

Ms Yates was another of the Directors. She attended board meetings of the JV Entities but had no real involvement in between those meetings and she was open and honest in her lack of recollection of these meetings. Like Mr Webster, she placed reliance on Mr Lewin as the lead director.

Ms Yates was a somewhat nervous witness. This is unsurprising as she was often being asked about events or documents in which she had no involvement or which she could not honestly remember.

THE JVA

The JVA was a key document for the operation of the JV and is relied on extensively by the Claimants in relation to certain of their arguments and by Mr Mirza in relation to one of his counterclaims and his Part 20 Claim.

The JVA is not the best drafted document I have ever seen. Some of its terms are less than clear and it does not deal with a number of the issues that a joint venture agreement might normally include, such as a list of shareholders’ reserved matters. It appears that it was drafted by Mr Morjaria’s then solicitors and commented on by solicitors for Mr Mirza. No doubt it was produced in a hurry.

The JVA was entered into on 14 December 2007 between Mr and Mrs Morjaria, Mr Mirza and Otaki. The JVA recorded the objectives of the JV (defined as the “Joint Venture Objectives”) as being Otaki’s acquisition of the Property and the enhancement of the Property’s value. It defined the “Joint Venturers” as being Mr and Mrs Morjaria and Mr Mirza and any lawful assignee of shares in Otaki. The Joint Venturers were obliged each to use their reasonable endeavours towards achieving the Joint Venture Objectives.

The JVA included provisions relating to contributions of capital. Mr and Mrs Morjaria were to make contributions to capital jointly of £1,750,000. Mr Mirza was to make a contribution of £1,250,000.

The provisions relating to capital contributions included a provision requiring Otaki to refund “all third-party costs properly incurred by Mr Mirza in the promotion of the Joint Venture Objectives” up to the date of the agreement “having received invoices for each item of expenditure” and subject to a maximum refund of £350,000. There was a similar (and similarly capped) provision relating to any such expenditure by Mr Morjaria. Such refunds were to be offset against the obligation to make initial capital contributions.

After the initial contributions, Mr and Mrs Morjaria, acting jointly, and Mr Mirza agreed to contribute 50% each to any Further Capital Requirement up to a maximum of £150,000 on each side. The Joint Venturers and the Company were obliged to use reasonable endeavours to secure bank funding to satisfy the “Further Capital Requirements”. “Further Capital Requirement” is defined as:

“the fixed and working capital requirements of [Otaki] including working capital [Otaki] requires from time to time to meet Expenditure but excluding any item included within the Initial Capital Requirement and subject to a maximum total amount of £300,000”.

“Expenditure” used in this definition is defined as:

“all liabilities, outgoings and expenses of [Otaki] of every description”.

I believe it is accepted on all sides that references to expenses etc. of “the Company” (i.e. Otaki) include those of its subsidiaries.

Clause 3.4 provided that the capital contributions paid by the Joint Venturers on completion should be applied only towards the payment by the Subsidiaries (i.e. at this point, Viper and Krugar) for the Purchase Price of the Property (defined as £15,823,400) and:

“all reasonable proper and incidental costs of the purchase including any relevant purchase taxes, statutory levies or registration fees and/or professional charges incurred in connection with the acquisition as set out in a development appraisal attached as Appendix 1.”

Mr Morjaria and Mr Lewin each deny ever having seen this Appendix. However, there is good evidence that Mr Morjaria at least did see the Development Appraisal a few days before he was sent the JVA for signature. In any case, the Development Appraisal is referenced in the JVA, and it is appropriate to regard it as being part and parcel of the JVA.

Clause 5.1 dealt with the appointment of directors and named three professional offshore directors and provided that should any of them die or resign then the remaining directors shall appoint a replacement director or directors. As there was a clause giving primacy to the JVA over the articles of association, this seems to overturn the usual arrangement whereby shareholders can appoint directors, although there may be provisions in Jersey law which might nevertheless override this. Nothing turns on this point for the present case since no one is challenging the appointment of any of the directors at any point.

Clause 5.2 dealt with project management. It provided that Mr Mirza:

“shall manage the daily operation of the Joint Venture and make decisions (including the appointment of all contractors) through his UK construction company in the best interest of the Joint Venture”. The clause also obliged him to keep Mr and Mrs Morjaria “fully informed on the progress of the Joint Venture at all times”.

Clause 5.4 restricted the shareholders of Otaki from:

“assigning, charging, pledging or otherwise disposing of any interest in any of the rights or interests arising pursuant to this Agreement or any interest in any of the shares of the Company”.

It appears that clause 5.4 was breached when Mr and Mrs Morjaria transferred their shares to the trustee of the Wentworth Capital Trust. Any such breach would have been cured if the Deed of Assignment had been valid, but as I have explained above, it was not. Nothing really turns on this point, however, as no party has based any case on it.

Clause 7 dealt with termination. It has been drafted in slightly confusing terms, but it seems it was intended that this right would apply only up to the point that Otaki entered into a bona fide building contract for the development of any part of the Property or after practical completion of the development of the Property. At any point when this right applied either party could terminate the JV by requiring that the Company sell the Property on the open market and that the Company thereafter be liquidated. Service of a notice requiring this entitled any other Joint Venturer who was not one of the terminating shareholders to confirm an interest in purchasing the terminating holders’ shares by serving what is referred to as a “Transfer Notice”. If a price could be agreed, then the relevant sale would take place. If a transfer pursuant to these arrangements was not to take place within 42 days of the Transfer Notice, then the parties will proceed to seek a buyer for the Property and cooperate in a sale and liquidation of the Company. It is not clear what happens if there is a Termination Notice, but there is no Transfer Notice.

Clause 8 states that:

“Nothing in this Agreement shall be deemed to constitute a partnership or relationship of principal and agent between any of the Joint Venturers who are independent contractors”.

I deal below with the arrangements for sharing profits and for rebates of VAT.

THE DUTY OF GOOD FAITH AND FIDUCIARY DUTIES

The nature of the duty of good faith

Both the Claimants and the Defendants make a great deal of the duty of good faith contained in clause 12.2 of the JVA. This provides as follows:

“12.2

Good Faith

12.2.1

Each party shall at all times act in good faith towards the other and shall use all reasonable endeavours to ensure that this Agreement is observed.

Clause 12.2.2 each party shall do all things necessary and desirable to give effect to the spirit and intention of this Agreement.”

It is common ground that on a proper construction of clause 12.2.1, the duty of good faith prohibited the Morjarias, Mr Mirza or Otaki from acting in a way that was improper, commercially unacceptable or unconscionable, or in a way that would be regarded as commercially unacceptable by reasonable and honest people.

Beyond that, however, the meaning of an express term requiring a party to act in good faith is to be determined by an objective process of construction, having regard to the language of the relevant term, the other provisions of the contract, and the overall context (see for example the dicta of Jackson LJ (as he then was) in Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd [2013] EWCA Civ 200 at [109], and of Beatson LJ in the same case at [151]). This point, and particularly the importance of context, was emphasised by Snowden LJ in Faulkner v Vollin Holdings Ltd [2022] EWCA Civ 1371 at [147]-[151]. He held that this gave rise to a related point that:

“when considering the interpretation and meaning of an express good faith clause in context, cases from other areas of law or commerce, which turn upon their own particular facts, may be of limited value and must be treated with considerable caution.”

I must, therefore, take full account of the context as I deal with each of the allegations of a breach of clause 12.2.1.

Do Mr Mirza and Tydwell have fiduciary duties?

In the context that under clause 5.2.1 of the JVA Mr Mirza accepts a duty to:

“manage the daily operation of the Joint Venture and make decisions (including the appointment of all contractors) to his UK construction company in the best interests of the Joint Venture”.

The Claimants argue that, in addition to the contractual duty of good faith, the position and role of Mr Mirza imposes on him fiduciary duties.

The point is argued in the Claimants’ closing skeleton argument as follows:

The Claimants accepted that the summary of legal principles outlined by the Defendants in their skeleton argument was broadly accurate, subject to certain reservations and further arguments mentioned further below. As it is the Defendants who have offered the most detailed exposition of the relevant law, I will turn to this first.

The Defendants’ summary of the relevant law in relation to fiduciary duties begins with the point that the law recognises certain settled categories of fiduciary relationship such as trustee/beneficiary; director/company; agent/principal; solicitor/client; and partners. Outside such settled categories, fiduciary duties are only held to arise if the particular facts warrant it, though this is unusual in commercial relationships because it is normally inappropriate to expect a commercial party to subordinate his own interests to that of another commercial party. The Defendants cite here Snell’s Equity (35th Ed.) (“Snell”) at paragraphs 7-004 – 7-007 as well as Civil Fraud (First Edition) (“Civil Fraud”) at paragraph 11-043.

It is worthwhile quoting one or two points from Snell at paragraph 7-006:

“The circumstances in which fiduciary duties arise have therefore also been described in the following way:

“The concept encaptures a situation where one person is in a relationship with another which gives rise to a legitimate expectation, which equity will recognise, that the fiduciary will not utilise his or her position in such a way which is adverse to the interests of the principal.”

While the concept of legitimate or reasonable expectations may not be appropriate in every case, this description is useful in emphasizing the requirement that the fiduciary eschew self-interest, which is thus consistent with the duty of single- minded loyalty. The expectation is assessed objectively, and so it is not necessary for the principal subjectively to harbour the expectation. Nor is it relevant whether the person who is alleged to be a fiduciary subjectively considered himself to be undertaking fiduciary duties.

…

It has been said to be “of the first importance not to impose fiduciary obligations on parties to a purely commercial relationship”. However, “it is altogether too simplistic, if not superficial, to suggest that commercial transactions stand outside the fiduciary regime”. It is clear that it is possible for fiduciary duties to arise in commercial settings.”

Also, some pertinent points are made at paragraph 7-008:

“Mortgagees, tenants in common, banks, employees, doctors and professional advisers do not ordinarily owe fiduciary duties. In other words, these are not settled categories of fiduciaries. But it is possible for the circumstances of the relationship between such a person and the other party to the relationship to justify the imposition of fiduciary duties, provided those circumstances are such that it is reasonable to expect that the first person (the fiduciary) will subordinate his interests and act solely in the interests of the other (the principal).

Thus, for example, a local branch manager of a bank has been held to have acted in a way that led his customer reasonably to expect that the bank was providing advice as to the wisdom of a proposed transaction in the customer’s interests, rather than in the interests of the bank. A manager has been held to owe fiduciary duties.

….

Joint venturers have been held to owe fiduciary duties to one another, but not all joint ventures necessarily involve such duties. While it has been suggested that joint ventures may be “inherently fiduciary” because of their similarity to partnership, the term “joint venture” is a business term “which does not have a precise legal meaning”. Indeed, it has been said not even to be a term of art in business. It is unwise for such an ill-defined term to be the trigger for a category of fiduciary relationship. Instead, it is preferable for joint ventures not to be treated as a settled category of fiduciary relationship.

…

However, an individual joint venture may appropriately be treated as a fiduciary relationship if, “after a meticulous examination of its own facts”, the fiduciary expectation is found to be appropriate in the circumstances of the relationship between the joint venturers, bearing in mind the points made above regarding the appropriateness of that expectation between commercial actors. Such could involve one joint venturer owing fiduciary duties to the other, or it may involve each of the joint venturers owing fiduciary duties to the collective group of venturers (similar to a partnership).”

The Defendants go on to say that the leading case on the circumstances in which fiduciary duties might arise in a joint venture is Al Nehayan v Kent [2018] 1 CLC 216 (“Al Nehayan”). They say that these duties arise only “exceptionally”, basing this on a dictum of Etherton LJ (as he then was) at [88] in Crossco No. 4 Unlimited v Jolan Ltd [2011] EWCA Civ 1619, that:

“in the absence of agency or partnership, it would require particular and special features for such fiduciary duties to arise between commercial coventurers”.

In Al Nehayan, Leggatt LJ found that no fiduciary duties arose and found that the prior case law had established principles as follows:

The Defendants point out further that Nugee J (as he then was) carried out a similar analysis in Glenn v Watson [2018] EWHC 2016 (“Glenn”), in which he (also finding no fiduciary duties) summarised the relevant principles (at [131]), and stated that “so far as joint ventures are concerned, fiduciary duties may in particular be found to arise where one party has control of the assets which are to be exploited for the joint benefit of both” ([131(9)]). The Judge, like Leggatt LJ, added that what is meant by “a relationship of trust and confidence” in the context of fiduciary relationships is “where one party places himself, or is placed, in the position where he trusts and confides that the other party will act exclusively in the first party’s interests” ([134]).

The Defendants mention also that Al Nehayan and Glenn were applied by Falk J (as she then was) in Russell v Cartwright [2020] EWHC 41 (Ch). This was another joint venture case in which fiduciary duties were held not to be applicable. The judge held that the high level of trust between the parties did not establish a fiduciary relationship, because “the key question is whether the nature of the relationship was such that Mr Russell could trust in the loyalty of the Defendants to put Mr Russell’s interests first, and act in what they perceived to be his interests rather than their own”. That was not the case, because “each principal was looking after his own interests throughout the life of the joint venture” (see at [79]).

The Defendants referred also to two more recent cases. One was O’Brien v Phipps [2023] EWHC 1153(Ch) where HHJ Cadwallader (sitting as a judge of the High Court), dealing with a case where two businessman had worked together extensively and were subject to a profit and loss sharing agreement, refused (at [39]) to infer a conclusion that:

“…it follows, from my having found that they were likely to have trusted each other, that there was any general obligation to be trustworthy to each other, still less to subordinate the interests of each to that of the other”.

The other was Connoisseur Developments Ltd v Koumis [2023] EWHC 855 (Ch) (¶236-242), where HHJ Davis-White KC (sitting as a judge of the Chancery Division) found (at [255]) that no fiduciary duties were owed in respect of a joint venture and added (at [241]) that:

“the fact that there is an express good faith clause suggests, at the least, that there are no fiduciary duties owed over and above that contractual duty”.

This finding, as I note further below, is contrary to the finding of the Court of Appeal in Ross River (CA), and I consider that I should follow the Court of Appeal on this point. The finding is also contradicted in Henderson v Merrett Syndicates Ltd (“Merrett”) [1995] 2 AC 145 at 206:

“… the extent and nature of the fiduciary duties owed in any particular case fall to be determined by reference to any underlying contractual relationship between the parties. … The existence of a contract does not exclude the co-existence of concurrent fiduciary duties (indeed, the contract may well be their source); but the contract can and does modify the extent and nature of the general duty that would otherwise arise.”

In the case before me I see no conflict between the contractual duties created by the JVA and the fiduciary duties arising from the nature of the relationship. Both of them imparted a duty on Mr Mirza to be honest and open in his dealings with the JV Entities and the Morjarias.

Finally, the Defendants make the point that even if, very exceptionally, fiduciary duties do arise in the context of a joint venture, their content depends upon the particular relationship between the parties (and here they refer to Glenn at [139(10)] and Civil Fraud at [11-027] and they quote Sir Anthony Mann in Fisher v Dinwoodie [2023] EWHC 1279 (Ch), at [50] where he states that fiduciary duties are not “some sort of universally applicable homogenous mass”.

In this regard, the Defendants note that the Directors had their own fiduciary duties and were ultimately the persons responsible for managing the JV Entities; and also that they sometimes accepted instructions from Mr Morjaria as to how to deal with particular issues. These points do not seem to me to negate the fact that the Directors were relying very substantially on Mr Mirza for his recommendations as to how to deal with the Property and that he had invited them, indeed required them, to do so.

The Claimants accept that the Defendants’ exposition of the law, as I have summarised it above, is broadly accurate so far as it goes, although the Claimants do not accept that the rhetorical use of “very exceptionally” to describe the circumstances in which fiduciary duties arise in a joint venture is either accurate or adds anything to the fact-sensitive inquiry required to be undertaken in each case.

The Claimants back their asserted case as regards fiduciary duties by reference to the following further references to case law.

First, they cite the first instance decision of Morgan J in Ross River Limited and another v Waverley Commercial Ltd and others [2012] EWHC 81 (Ch) (“Ross River (HC)”) at [235] to establish the proposition that the settled categories of fiduciaries (such as agent, director or solicitor) do not exhaust the field of possible situations in which fiduciary duties will arise. He says:

“The categories of fiduciary relationship are not closed. There may be such a relationship where all the circumstances justify a finding that fiduciary obligations are owed. Identifying the kind of circumstances that produce that result is difficult. The decisions of the courts have sought to retain flexibility as to the approach to be adopted. Numerous academic commentators have offered suggestions but none has gathered universal support. There is said to be growing judicial support for the following two propositions:

(1)

a fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence;

(2)

the concept encaptures a situation where one person is in a relationship with another which gives rise to a legitimate expectation, which equity will recognise, that the fiduciary will not utilise his or her position in such a way which is adverse to the interests of the principal.”

The finding of a fiduciary relationship by Morgan J in Ross River (HC) was approved in Ross River (CA) when this case came to the Court of Appeal.

Although Ross River concerned a joint venture where the joint venture was being managed by a company owned by the Defendant, the case is by no means on all fours with the case currently before me. An important distinction is that in that case the company owned by the defendant owned the joint venture assets. Nevertheless, the case is useful as authority for the following points:

Secondly, the Claimants cite the Court of Appeal in Farrar v Miller [2018] EWCA Civ 172 (“Farrar v Miller”), which provides further authority that fiduciary duties may arise as between joint venturers even where they do not fall into a settled category of relationship (such as partnership or agency). At [75] Kitchin LJ found as follows:

“I recognise that joint venturers may or may not have a relationship in which one of them owes fiduciary duties to the other. The question, to my mind, is whether the circumstances of their relationship justify the imposition of such duties, and in answering that question it is often helpful to consider whether, to adopt the words of Millett LJ in Bristol and West Building Society v Mothew [1998] Ch 1 at 18, one joint venturer has undertaken to act for or on behalf of the other in a particular matter or circumstances which have given rise to a relationship of trust and confidence.”

Whilst in that case it appears that the defendant had been a director of a joint venture company, the court did not find a fiduciary duty on that basis, instead holding (at [77]):

“The basis of this aspect of the claim is not simply the fact that Mr Miller and Mr Farrar were shareholders in Saxon or Artillery; nor simply the fact that Mr Miller was a director of Artillery. It is that the parties had been in business together as property developers for very many years and it was in that context that Mr Miller was entrusted with the corporate aspects of the parties’ joint ventures and was specifically given or assumed the responsibility of transferring Long Stratton from Saxon to Artillery and then from Artillery to the Joint Venture entity. It was only as a result of that relationship of trust that Mr Miller was able to transfer Long Stratton out of Artillery to Edged Red, the means by which he thereafter denied Mr Farrar any interest in Long Stratton or its traceable proceeds. I appreciate that these allegations are heavily contested by Mr Miller but Mr Sibbel submits and I agree that, if made good at trial, it is arguable that they did indeed give rise to the fiduciary relationship for which Mr Farrar contends.”

Thirdly, the Claimants also cite Murad v Al-Saraj [2004] EWHC 1235(Ch) (“Murad v Al-Saraj”) at [328] and [332].

This case also concerned a joint venture to acquire a hotel. The claimants lived abroad, had no relevant experience, were wholly dependent on the defendant and reposed trust and confidence in him. The defendant was responsible for instructing professionals and was entrusted with extensive discretion. Fiduciary duties (including a duty to disclose his private dealings in relation to the purchase price of the hotel) were held to arise.

There is a distinction in this case in that the defendant in that case was a director of the joint venture company, and as such directly had control (although not ownership) of the joint venture assets. However, the judge, Etherton J (as he then was) found (at [332]) that this fact did not preclude the defendant also having fiduciary obligations to his co-venturers, including a duty to disclose his private dealings in relation to the purchase price of the hotel.

The Claimants argue that management of another’s affairs and/or property, and situations in which a person has control (including de facto control) over the affairs of a company, are the paradigm cases in which fiduciary duties are owed. Obviously, this would apply to de jure directors, but fiduciary duties would also apply to a shadow director, at least in relation to the directions he gives to the de jure directors (see Vivendi SA v Richards [2013] EWHC 3006 (Ch) at [143]). Whilst it is sufficient for fiduciary duties to arise that a person has control over another person’s affairs or assets, absolute control is not a necessary requirement for such duties to arise. Fiduciary duties may also arise where P is entrusted to recommend the best course of action to C, but without P having the authority to bind C to that course of action. If P has undertaken to perform that role, and has accepted a duty to do so in the best interests of C then the starting point is that he must do so on a disinterested basis, and his duty to do so is a fiduciary one.

They go on to argue that that principle has been explained by the Court of Appeal in a number of recent cases dealing with commissions paid to credit brokers tasked with recommending credit products to their customers: Wood v Commercial First Business Ltd [2022] Ch 123 (“Wood”) and Johnson v FirstRand Bank Ltd [2024] EWCA Civ 1282 (“Johnson”). In those cases, the credit broker’s function was to provide the customer with information about available credit products. Absent the informed consent of the customer, they were under a duty to advise on a disinterested basis. That duty was held to be fiduciary in nature.

The principal question in Wood was whether it was necessary for that “disinterested duty” to be a fiduciary duty before the claimant could have access to equitable remedies in respect of bribery or secret commissions. The court found that it was not: see at [94] where it is said that the authorities make it clear:

“… that bribery is an actionable wrong at common law, as well as in equity, for which common law remedies, as well as equitable remedies, are available.”

At [50], it was held that for a claimant wishing to claim the range of remedies associated with breach of fiduciary duty (accounts of profits, compensation for loss and rescission of transactions), on the basis that the defendant had received a secret commission or bribe, it was not an essential pre-condition to obtaining such remedies that the label “fiduciary relationship” should be applicable:

“While it may sometimes be appropriate to describe a duty to give disinterested advice or information as “fiduciary”, it is not necessary to do so. It is the content of the duty, not the label attached to it, that matters.”

At [110], the Court of Appeal found that the trial judge had been:

“unquestionably correct to hold that, on the basis of the broker’s terms and conditions and on the basis of the findings of fact at first instance, the broker owed duties which engaged the law applicable to bribes and secret commissions. It was under a duty to make a disinterested selection of mortgage product to put to its client in each case. To the extent that it is necessary, they were also correct to hold that the broker owed a fiduciary duty of loyalty to Mrs Wood and Mr Pengelly in the performance of its duties. As I have indicated in relation to the first issue, it matters not whether that duty is characterised as “fiduciary”, either in a loose sense or at all.”

After considering the terms and conditions and the acceptance form (which imparted a duty to act on behalf of the customer, to advise on the selection of a mortgage product to meet individual circumstances and confirmed full authority to negotiate on behalf of the customer), the court found (at [111]) that:

“they contained a number of provisions that are consistent only with such duties”.

The Defendants point out that Wood was essentially about what circumstances would engage the law of bribery to apply to secret commissions. It cannot, therefore, they argue, be relied upon to establish a proposition that someone in the position of Mr Mirza giving recommendations or passing on information to the JV Entities was in the position of a fiduciary. I do not agree. It is true that Wood did not find it necessary to engage the whole panoply of fiduciary duties, but the finding was that the circumstances did create a duty to make a disinterested selection of mortgage products and not to make secret profits.

In Johnson, the question was whether equitable remedies were likewise available in the case of “half-secret” commissions without a finding of fiduciary duties. The Court of Appeal held that those remedies were available only if the broker owed fiduciary duties, since the “half-secret” commission cases fell outside the scope of the law of bribery: see at [77]-[82]. The courts found in this case a duty to provide disinterested advice was a fiduciary one:

“87.

… it was part of the credit broker’s role in these cases to provide information to the lenders on the customer’s behalf, and to the customer about the available finance. The very nature of the duties which the credit broker undertook gave rise to a “disinterested duty” unless the broker made it clear to the consumer that they could not act impartially because they had a financial incentive to put forward an offer from a particular lender or lenders. The broker could do this, for example, by saying: “I may offer you a product which may be chosen because it benefits me directly, even though it may not be the best product for you. Are you happy with that?” Of course, in most cases the disclosure would be more subtle than that; but it must be sufficient to bring home to the customer the fact that the person he is engaging to find an offer of finance is free to promote his own self-interest at the customer’s expense.

...

95.

These relatively financially unsophisticated individuals undoubtedly placed trust and confidence in the brokers to secure an agreement which was affordable and which was, at the very least, competitive.

…

100.

It is precisely because the brokers were in a position to take advantage of their vulnerable customers and there was a reasonable and understandable expectation that they would act in their best interests, that they owed them fiduciary duties.”

As the Defendants point out, the cases where a participant in a joint venture has been found to owe fiduciary duties have largely been confined to the circumstances where the defendant participant has had full control and ownership over the assets. The Defendants argue that at all times the assets of the JV were under the ownership and ultimate control of the Directors rather than Mr Mirza.

Nevertheless, the question arises whether in the case before me, the circumstances are sufficiently similar such that a fiduciary duty of some kind can be found despite the difference in circumstances. In my view it can, and should be, if one considers the following circumstances.

First, it is a key point that, under clause 5.2.1 of the JVA, Mr Mirza accepted a duty to manage the daily operation of the JV and make decisions (including the appointment of all contractors) through his UK construction company (Tydwell) in the best interests of the JV.

Whilst it is true that the assets were vested in the JV Entities and thus, were ultimately within the control of the Directors, the Directors did in fact repose an enormous amount of trust and confidence in Mr Mirza and his company Tydwell. This was understandable and necessary. It was Mr Mirza, not the Directors, who conducted all negotiations with the various banks, planning authorities and other counterparties that the JV Entities dealt with.

The JV Entities had been set up offshore largely for tax reasons and offshore directors were chosen also for tax reasons. The Directors knew that they were not expected by the Joint Venturers (who ultimately were their employers) to second-guess the recommendations of Mr Mirza (one of the owners), especially where they had been instructed early on by Mr Morjaria, the other owner, not to do so. They knew that instead they were expected to accept recommendations except where it was clear that there was some reason why they should not. Whilst, for tax reasons, the Directors needed to be the ones signing off on agreements and payments, they understood that (to the largest extent possible without their breaching their fiduciary duties to the JV Entities) they should do so in a way that reflected the common understanding, reflected in the provision in the JVA giving to Mr Mirza the day-to-day management of the JV, that Mr Mirza would remain the driving force behind the JV. Time and time again the Directors showed themselves to be content to accept recommendations made by Mr Mirza or Tydwell, for example to pay invoices or to enter into agreements generally without making any thorough investigation of the circumstances behind such recommendations.

Examples of this include the Directors allowing the JV Entities:

These points strongly suggest that Mr Mirza was de facto controlling the JV. Whilst this was subject to the oversight of the Directors, they allowed him a very long leash.

The Defendants rely heavily on the point that the JV parties had received tax advice that they should arrange matters so that the JV Entities would be managed from outside the United Kingdom; the JV assets were not held in the United Kingdom; and that the formal decisions to enter into agreements and to approve invoices should be made by the Directors outside the United Kingdom.

This does not, however, negate the fact that Mr Mirza was entrusted with all or virtually all dealings with counterparties and the Directors (encouraged by Mr Morjaria) were accustomed to complying with recommendations made by Mr Mirza or by Tydwell.

There has been no pleading that Mr Mirza or Tydwell was a shadow director, and so I will not reach any finding on that point. Nevertheless, I consider that in reality Mr Mirza exercised a decisive influence on what decisions were taken by the Directors. I agree with Mr Peto KC, arguing on behalf of the Claimants, when he suggested that Mr Mirza and/or Tydwell performed a role more like that of a steward in the Middle Ages, who makes decisions on behalf of his Lord, even if it is his Lord who signed the necessary paperwork, than that of an occasional adviser.

Secondly, Mr Mirza went out of his way to insist that the Morjarias and Directors should repose this trust in him. To take three examples:

These points, in my view, are sufficient to bring the circumstances within those mentioned by Morgan J in Ross River (HC) at [235] (which I have reproduced above). Mr Mirza did undertake to act on behalf of the parties to the JVA in circumstances which gave rise to a relationship of trust and confidence and to a legitimate expectation on behalf of Mr and Mrs Morjaria and Otaki that Mr Mirza would not utilise his position in such a way as to be adverse to the interests of the JV.

My finding that Mr Mirza owed fiduciary duties is also, I consider, consonant with the principles outlined by Leggatt LJ in Al Nehayan as I set these out at [154] above. In particular:

Principle 6 cannot mean that to be subject to fiduciary duties one must be absolutely precluded from making a profit. There are many cases where a fiduciary is allowed to have profitable dealings with his/her or its principal. For example directors may take a salary or may be permitted under the articles of a company to act where they have a conflict of interests. What Principle 6 requires (at a minimum) is that the putative fiduciary must be obliged to act in the best interests of the principal and, if the fiduciary is making a profit, to obtain fully-informed consent for that profit. This reading is consistent with Bristol & West Building Society v Mothew [1998] Ch 1 (“Mothew”) (as I mention further below), as well as being consonant with the decisions in Glenn, Ross River (HC) and Ross River (CA), Farrar v Miller, Murad v Al-Saraj, and Johnson.

The Defendants’ argument that the court should be slow to find fiduciary duties outside the established categories (which largely encompass positions where the putative fiduciary has some sort of power of agency) has some force. Certainly it is not the case that all persons who give advice or recommendations thereby take on the obligations of a fiduciary. However, Wood demonstrates that duties traditionally thought to arise only where there is a fiduciary relationship may arise in broader categories. Johnson demonstrates that where it is clear that someone has accepted an obligation to act in the interests of another and in so doing has put himself in a position to take advantage of that other person and there was a reasonable and understandable expectation that he would act in that other person’s best interests, the person in that position would owe fiduciary duties and if he does not make it clear that he is on a particular occasion acting in his own interests, for example by making a secret profit, then he is in breach of those duties.

I have dealt with my basic finding in relation to fiduciary duties relatively early on in this judgment as it colours how various claims are to be considered. However, I will leave working out the consequences of this finding as regards those claims as I tackle them.

The Claimants suggest that, as Mr Mirza had these fiduciary obligations, and as he was operating in accordance with the JVA through his company, Tydwell also had those fiduciary obligations.

I accept the proposition put forward by the Claimants that a joint venturer will still personally owe fiduciary duties even if the business of the JV is carried out through a company. This was evident in Ross River (CA) – see at [36]. The duty of the fiduciary not to favour himself at the expense of the joint venturer to whom the duties are owed includes a duty not to favour companies controlled by him or in which he has a substantial interest: (see Ross River (HC), at [263]).

I do not believe I have been taken to any case, however, to establish the contention argued for by the Claimants that the company itself (Tydwell in our current case) necessarily becomes subject to the same fiduciary obligations as its principal.

The authorities bundle included a copy of Prest v Petrodel [2013] 2 AC 415, which includes the masterly exposition by Lord Sumption JSC as to the circumstances in which the court will pierce the corporate veil. However, I have been unable to conclude from that anything which fixes a genuine commercial company like Tydwell, and not one merely interposed for some nefarious reason, with the fiduciary obligations of its principal.

Nevertheless, I consider that Tydwell did accept fiduciary duties. Although Tydwell was not a party to the JVA (and not subject to the contractual duty of good faith found within that agreement), within the scheme of the JVA, Tydwell (being the company which all parties acknowledge Mr Mirza would operate “through” in accordance with clause 5.2.1 of the JVA) was placed within the same position of trust, and subject to the same expectations as Mr Mirza. It willingly assumed those responsibilities and it was relied upon, for example, when it presented invoices and requests for payment by the Directors of Otaki. The reasons for regarding Mr Mirza as a fiduciary apply equally to Tydwell.

However, there is no reason to think that these duties apply to Redwire, Boomzone or Wolverine.

I therefore conclude that Mr Mirza was subject to fiduciary duties, both when acting in his own right and when acting on behalf of Tydwell. Tydwell also was subject to fiduciary duties, but Redwire was not. Neither was Boomzone or Wolverine.

As the nature of those duties, the “core” duties owed by a fiduciary according to the leading case of Mothew, at page 18, have been found by Millet LJ (as he then was) as follows:

The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single- minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations.”

The Claimants accept that where fiduciary duties arise outside of the settled categories, the duties may be attenuated depending on the nature of the relationship giving rise to them: see the comments of Lord Browne-Wilkinson in Merrett on page 206:

“The phrase "fiduciary duties" is a dangerous one, giving rise to a mistaken assumption that all fiduciaries owe the same duties in all circumstances. That is not the case. Although, so far as I am aware, every fiduciary is under a duty not to make a profit from his position (unless such profit is authorised), the fiduciary duties owed, for example, by an express trustee are not the same as those owed by an agent. Moreover, and more relevantly, the extent and nature of the fiduciary duties owed in any particular case fall to be determined by reference to any underlying contractual relationship between the parties.

The Claimants submit that the “irreducible minimum” is the duty of the fiduciary not to act so as to favour his interests at the expense of the joint venturer to whom the duty is owed, at least in relation to the business of the JV. This they say is essentially the result that was reached by Morgan J in Ross River (HC), at [259], when he held (in circumstances not that dissimilar to the case before me) that the corporate and individual joint venturers were under a fiduciary obligation not to handle the JV’s revenues in a way that favoured themselves to the disadvantage of their joint venturers.

The finding of Morgan J that fiduciary duties were owed in that case was upheld when the case came to the Court of Appeal. If anything, the Court of Appeal found a stricter duty. Lloyd LJ, after considering the terms of the relevant agreements, considered that the agreements in that case as well as the “normal principles of fiduciary obligations” prohibited the putative fiduciary in that case from paying itself, or using for its own benefit, any part of the proceeds of the development (any joint venture assets, as the judge described them) otherwise than (a) in payment of proper expenses of the development or (b) as agreed with Ross River, whether generally or on an ad hoc basis.

I will return to the question of the precise scope of the fiduciary duties assumed by Mr Mirza as I go on to consider the various elements of this case.

THE VAT ADVANCES

The Claimants claim repayment of amounts advanced to or at the order of Mr Mirza in respect of VAT or in the alternative a declaration as to the treatment of such amounts. To understand this claim it is necessary to understand the terms relating to this in the JVA. These terms form part of the provisions dealing with the sharing of profits and are in the following terms:

“4.

PROFITS AND LOSSES

4.1

Apportionment

4.1.1

If the Company or the Subsidiaries receive any VAT refunds from HM Revenue and Customs which are not charged, pledged or otherwise due to be repaid to the Company's lender or to any other person the Company shall distribute the whole amount of such refunds at the direction of the holders of the Company's "B" shares and such distributions shall be treated as dividends to the extent permitted by Jersey Company Law, any excess being treated as short-term advances to the holders of the "B" shares to be set off against future dividends or future capital distributions on liquidation to which the holders of the "B" shares may become entitled and the holders of the Companies "B" shares shall indemnify all other shareholders in respect of any claim by HMRC for such VAT refunds.

4.1.2

The amount remaining of the Net Profits or Net Losses of the Company after deducting or accounting for all amounts treated as dividends, advances or capital distributions pursuant to clause 4.1.1 shall be apportioned between the shareholders of the Company in the following ratios:

4.1.2.1 The holders of the "A" shares in the Company shall be entitled to forty five per centum (45%) of the said amount apportioned to each shareholder in the same proportion as the number of each shareholder's shares bears to the number of issued "A" shares in the Company.

4.1.2.2 The holders of the "B" shares in the Company shall be entitled to fifty five per centum (55%) of the said amount apportioned to each shareholder in the same proportion as the number of each shareholder's shares bears to the number of issued "B" shares in the Company.

4.1.3

All amounts apportioned pursuant to clause 4.1.2 shall be distributed to the Joint Venturers as dividends or capital distribution on liquidation.”

In my view the intent and meaning of these provisions as regards the treatment of VAT receipts is tolerably clear. If Otaki and any of its subsidiaries (that is Viper and Krugar) were to receive any VAT refunds (that are not charged to a lender or some other person – and it is common ground that no such amount was so charged), the holder of the B shares (that is, Mr and Mrs Mirza) would have a right to require these to be paid to him (or, it may be assumed, to his order). If Jersey law allows these payments to be made by way of dividend, they will be paid as such, if not they will be made as a short-term advance (a “VAT advance”). To the extent that they are made as a VAT advance this advance will be set off against future dividends or future capital distributions by Otaki on liquidation to which the holders of the "B" shares may become entitled. This much I think is common ground between the parties.

In fact, all of these payments (amounting to somewhere around £5 million) were paid as advances rather than dividends. This I think reflected the position that Otaki had not, at the point that VAT advances were due to be made, realised any profits. Even when profits were being recognised in one of its subsidiaries, these profits were never distributed to Otaki so as to put Otaki itself into profit. Jersey company law is similar to that of English law in generally requiring dividends to be made out of realised profits, although it is more liberal in allowing exceptions to this rule.

The Defendants and Mr Homan, the accountant acting for the Mirza family companies, have suggested that, even though no dividend was declared by Otaki, dividends should be treated as having been declared because there was a period during which there were distributable reserves within Viper or Krugar out of which such dividends could have been, and should have been declared, and had these been distributed to Otaki, Otaki could have, and should have, used these to declare a dividend rather than making an advance to the benefit of the B shareholder. I disagree for two reasons.

First, these profits were in Viper, but were not represented by cash so Viper could not have declared a cash dividend. Mr Homan suggests it could have declared a dividend and left it unpaid, creating a liability on intercompany account and thereby transferring profits from Viper to Otaki. Mr Homan argues that the wording of the JVA obliged Viper to do this.

I disagree. The Directors as directors of Viper, when considering whether to declare a dividend, needed to act in the interests of Viper, and it is difficult to see why it was in the interests of Viper (which for most of its life was highly indebted) to create a further cash liability, supported only by a highly illiquid asset. Viper was not bound by the JVA and Otaki was not bound by the JVA to take all possible steps to create distributable reserves so as to be in a position to be able to declare a dividend. Further, the obligation on Otaki in the JVA to allow the short-term advances to be “set off against future dividends or future capital distributions on liquidation” included no indication of timing for the dividends – it clearly envisaged that the set-off might only be on liquidation.

Secondly, it is clear that no dividends were ever declared. Even if I am wrong in my finding that Otaki was not in breach of the JVA in failing to procure Viper to declare dividends so that Otaki would have distributable reserves to declare dividends at the time that any particular VAT advance was made, that does not mean that dividends can be backdated. At most, the B shareholders have an unsecured claim for breach of contract against Otaki. I understand that Otaki is now in liquidation. The liquidators will need to determine whether any such claim is a good one. For the reasons given above, I consider it is not. However, even if I had concluded that there is a valid claim, it would have been an unsecured claim and, unless the relevant insolvency rules would have allowed a set-off in all these circumstances (on which I have received no argument and make no ruling), any such claim would be paid in full only if creditors generally are being paid in full.

The other matters where the Claimants and the Defendants disagree are:

Underlying these two points there is the question whether these arrangements regarding VAT were intended (as the Claimants contend) to provide a cash flow benefit only to Mr Mirza or whether (as the Defendants contend) they were intended to provide him with a permanently increased share in the allocation of profits.

Both parties have referred me to contemporaneous communications which they say support their side of the argument, and both parties make the point that the other’s argument leads to uncommercial results. I have not found any of this discussion particularly helpful. Whilst the court can consider the surrounding circumstances when construing a provision that is ambiguous, I do not see any ambiguity here as regards the first two questions.

To my mind it is clear from the drafting in clause 4.1.2 Net Profits or Net Losses for the two classes of shareholder are to be calculated “after deducting or accounting for all amounts treated as dividends, advances or capital insurance pursuant to clause 4.1.1” (emphasis added). In other words, the 45%/55% split occurs only after the advances have been taken into account as a charge on profits in the same way that a dividend would have been. There is only one way of achieving this in the context of liquidation. This is to find that, for the purpose of apportioning between the two classes of shareholder, the assets of Otaki in liquidation include the right to be repaid the VAT advances, but that this asset, to the extent possible, is to be set off against any Net Profits that are available for shareholders in the liquidation, with the effect that this set-off is to operate as a prior capital distribution to the holders of the “B” shares and ranking ahead of the entitlements of the holders of the two classes of share under the 45%/55% arrangements.

In summary, the holders of the “B” shares were to have (at least) the cashflow benefit of the VAT refunds received by Otaki as they arise. These amounts were to be paid out on request and in the form of a dividend if possible. If a dividend were not to be possible, then there was to be a VAT advance. VAT advances become repayable following liquidation of Otaki (if not repaid before, for example through set off against a dividend during the interim period). If in the liquidation there were to be profits available to shareholders, these should be used to set off the amount repayable in respect of VAT advances before any other distribution to shareholders. If there are no such profits available to shareholders, or to the extent that there is a shortfall in such profits, the VAT advances cannot be set off and will be an asset that the liquidator can use to satisfy the claims of creditors.

WAS IT UNDERSTOOD THAT MR MIRZA OR TYDWELL WOULD NOT CHARGE FOR SERVICES?

In this next section, I consider another important element to the background to the remaining claims, which is the question as to whether there was any understanding or agreement between the parties as to whether or not Tydwell would charge for its services.

The terms of the JVA

The Claimants aver that the provisions of clause 5.2.1 of the JVA demonstrated that Mr Mirza had accepted that he and his management company (Tydwell) had accepted an obligation to undertake the management of the “daily operation of the Joint Venture” and the appointment of contractors and this was alongside Mr Mirza’s duty under clause 2.1 of the JVA to use his “reasonable endeavours towards achieving the Joint Venture Objectives”. The Claimants argue that the JVA included no provision for Mr Mirza or Tydwell to receive any recompense for his or its involvement in the development and management of the Property, beyond the recompense afforded to Mr Mirza in his capacity as the holder of the B shares through the VAT provisions and through the 55% of any profits Otaki might make which accrued to the holders of the B shares (notwithstanding that the holders of the A shares have provided more initial capital than the holders of the B shares).

They point out further that clause 15 expressly stated that “Unless otherwise provided, all costs in connection with the negotiation, preparation, execution and performance of this Agreement, shall be borne by the party that incurred the costs”. Clause 3.1.4 provided for Otaki to refund “third party costs properly incurred” by Mr Mirza prior to the date of the JVA in the promotion of the JV objectives but did not provide for him to receive any fees for pre-JVA work.

The Defendants argue, conversely, that there was nothing in the JVA that prevented Tydwell from charging. Tydwell was not a party to the JVA, and it was unreasonable to think that it would be providing the very substantial services which it did provide without even a charge to cover its overheads.

The original oral discussions

The Claimants go on to say that the proposition that Tydwell could not charge for its services is also consistent with Mr Morjaria’s witness evidence about the parties’ original oral discussions. This witness evidence is contradicted by Mr Mirza in his witness statements and his evidence on this point was developed further in his oral evidence when he said:

“I do remember [Mr Morjaria] saying, ‘Possibly, if you can, below slightly market rate, but it must not be above what the valuation - the bank's valuer quote, then I don't care whether you build the building for a pound, or you build it for whatever, whatever you make in there I'll just leave it up to you’. That is what we actually said.”

I find it very difficult to believe Mr Mirza’s sudden memory of this conversation (which goes much further than anything said in any of his witness statements). In particular, it is difficult to believe that if this proposition had been put to Mr Morjaria this way, he would have been happy to rely on the Bank’s surveyor to approve the level of fees or mark-up, especially if he had just given way on the VAT point which anyway gave Mr Mirza a very substantial percentage of the costs of the development.

The Defendants argue that I should prefer Mr Mirza’s account as it appears that Mr Morjaria was incorrect as to the location of these original discussions (thinking that they took place in Dubai, whereas there is contemporary evidence that they took place in London).

In my view it is not appropriate to place any reliance on either party’s recollection (or professed recollection) as to what was agreed in the negotiations leading to the JVA. This is appropriate in the context of my comments concerning Gestmin, and having regard also to the fact that the JVA contains, at clause 13, an entire agreement clause to the effect that:

“13.1

This Agreement, and any documents referred to in it or executed contemporaneously with it, constitute the whole agreement between the parties and supersede any previous arrangement, understanding or agreement between them relating to the subject matter they cover.

13.2

Each party acknowledges that in entering into this Agreement, and any documents referred to in it or executed contemporaneously with it, does not rely on, and shall have no remedy in respect of, any statement, representation, assurance or warranty of any person other than as expressly set out in this agreement [sic] or those documents.”

Mr Mirza also refers to an email he sent to Mr Morjaria on 23 October 2007 where he described the “basic structure of the company”. He regards it as being clear that Tydwell would be charging for its own work when it was said in this email that:

“The development will be carried out by Tydwell Ltd (UK Company) who will invoice Krugar and Viper in proportion to the work carried out.”

There are a few points that may be made about this communication:

The relevance of the Development Appraisal

Mr Mirza also asserts that a document referred to as the “Development Appraisal” formed part of the JVA and that it “makes entirely clear that Tydwell would be charging for its services”.

I think it is clear from the content and layout of the Development Appraisal that it had originally been produced by, or for the purposes of, Clydesdale to assist with that bank’s evaluation and monitoring of the project. Nevertheless, it was given a significant role within the JVA. The Development Appraisal is referred to within the JVA within the definition of “Purchase Price”. That definition is as follows:

“fifteen million eight hundred twenty three pounds and four hundred pounds (£15,823,400), the price payable by the Company for the Property and all reasonable proper and incidental costs of the purchase including any relevant purchase taxes, statutory levies or registration fees and all professional charges incurred in connection with the acquisition as set out on the development appraisal attached as Appendix 1”.

There is some question whether the Development Appraisal was attached to the version of the JVA that Mr and Mrs Morjaria were sent for signature, and whether Mr Lewin (for Otaki) was ever given a version of the JVA that included the Development Appraisal as an attachment. Nevertheless, it is clear that Mr Morjaria had earlier been sent a copy of the Development Appraisal, and in my view the reference to it in the definition of “Purchase Price” is sufficient for the court to conclude that this document was incorporated into the JVA by reference.

The Defendants argue that the fact that the Development Appraisal contained a reference within a list of categories of “Construction & Professional” costs, to £350,000 to be allowed in respect of “Project Management” was a clear reference to Tydwell, as it was clear to everyone that Tydwell was providing the overall management of the project. As it turned out, some 88 invoices covering a total of £589,673.75 (excluding VAT) specifically mentioned project management fees.

Mr Mirza in his Sixth Witness Statement goes on to suggest that the reference to a Project Management cost of £350,000 was there because Clydesdale Bank insisted upon Tydwell receiving this sum as it was important to have Mr Mirza’s company being there, and incentivised, throughout the period.

His evidence on this point is supported by Mr Jones who states within his First Witness Statement that:

“…the bank was in agreement that Tydwell could receive £350,000 during the course of the project as it considered that Tydwell should be entitled to a profit and charge fees for its services and thereby ensure that there was continued engagement from Mr Mirza in managing the project. The bank wanted to make sure that Tydwell as the developer/builder would remain solvent and profitable as its failure could potentially affect the delivery of the project and, as Mr Mirza and Tydwell were central to the success of the project, this was of paramount importance.”

The Claimants object that it is by no means clear that the £350,000 earmarked for Project Management was intended for Tydwell. Project management services could have been provided by other professionals. Indeed subsequently the Procurement Agreement identified Christopher Smith Associates (“CSA”) as the “Project Manager”. CSA was also appointed under the Procurement Agreement as the “Employer’s Agent” (Viper was the Employer under this Agreement).

The Defendants argue that CSA was not undertaking an overall project management role: its role was a lower-level role, primarily based on providing the services of a quantity surveyor and checking the invoices and requests for payment provided by the other professionals.

The evidence available as to what CSA charged is not that helpful in resolving the difference of opinion on this point. The Trial Bundle includes various examples of invoices and requests for payment from CSA to Tydwell. These appear to show that a total of £111,500 plus VAT was charged by that firm during the period to 31 May 2013. This is substantially less than the £350,000 originally allowed in the Development Appraisal for “Project Management” and the more so when one considers that at the time of the Development Appraisal the development was forecast to last only for around 18 months but in fact what was referred to as Phase 1 of the development lasted until May 2012, and this invoice was even later. The evidence of the CSA invoices therefore suggests that the allowance of £350,000 for project management was not earmarked for CSA, or at least that not all of it was so earmarked.

On the other hand, it is difficult to see elsewhere on the Development Appraisal where the fees of CSA would have been covered. The £410,000 allowed in the Development Appraisal for professional fees appears to cover architects, structural engineers, mechanical engineers and party wall surveyor and not the type of lower-level project management and quantity surveying services that CSA provided. This suggests that, at least some of the £350,000 must have been intended for someone undertaking the role that was in fact undertaken by CSA.

If one turns to the applications for drawdown of the Clydesdale Facility prepared by CSA (each an “Application Notice”), the evidence remains inconclusive but, if anything, supports the proposition that Clydesdale was expecting Tydwell to charge fees, albeit at a much lower level than £350,000.

The Application Notices were used to draw down stage payments from Clydesdale. They operated by defining an “Element Cost” for each element of the build and professional services at a fixed amount. Each Application Notice then explained what percentage of that cost had accrued by the date of that Application Notice, and where this percentage had increased from the previous Application Notice, the difference was the amount to be drawn down from Clydesdale. VAT was added to the summaries of the increases in costs shown in the particular Application Notice.

The Application Notices included both an Element Cost for “Project Management (Tydwell)” at £73,419 and separately a line for “Quantity Surveyor/Employers Agent (Christopher Smith Associates)” at £84,000. The same figures appear in both the first Application Notice and in later Application Notices up to Application No 19 on 10 May 2012, which was the latest Application Notice that I could find within the court bundle.

It is difficult to align the Element Costs for consultants and project management given within the Application Notices with those given within the Development Appraisal, even if it is to be assumed that the figures in the Development Appraisal are inclusive of VAT whereas those itemised in the Application Notices are exclusive of VAT:

I draw the following conclusions from my consideration of the Application Notices:

Tim Jones in oral evidence suggested that the £350,000 was paid to Tydwell outside the amounts requested in the Application Notices through a monthly fee that was allowed by the Bank’s quantity surveyor over and above the amounts applied for through the Application Notices. He also suggested that the Development Appraisal the court was looking at was not the one used by Clydesdale to monitor the agreement. His evidence on these points was somewhat confused and was not at all convincing.

The Clydesdale Facility Agreements and the Procurement Agreement

Under the Clydesdale Facility Agreement was a process for drawing down the facility. This process remained more or less unchanged on the two occasions when the Facility Agreement was restated.

The borrower (Viper) could draw down under the facility by making a Utilisation Request in a form required by the Facility Agreement accompanied by certain documents. These were to include in relation to the part of the facility used for completion of the Development:

“evidence from the Building Contractor that all amounts to be funded by the Utilisation have been incurred and paid pursuant to the Building Contract”.

The Defendants rely on the Procurement Agreement entered into between Viper (as “Employer”) and Tydwell (as “Developer”) under which Tydwell agreed to procure the development of the Property. The Claimants point out that Mr Morjaria was not told about this agreement before it was signed (and indeed say the same about later agreements signed between JV Entities and Tydwell). The Defendants accept that they did not provide any of these agreements to Mr Morjaria before they were signed, although they deny that they were under any obligation to inform the Morjarias of the terms or existence of any of the agreements and they reserve their position as to whether and when Mr Morjaria might have been told of these agreements by anyone else.

The Procurement Agreement made a distinction between payments of “Project Costs” and of a “Fee”. Project Costs were defined as amounts properly falling due under the Building Contract (that is the contract with Mace as the design and build contractor) and/or any appointments of a consultant/designer member of the Project Team”. “Fee” was defined as:

“any sums to be paid by the Employer to the Developer in respect of the Developer's costs in properly performing its obligations under this Contract, provided that any such sums have been previously approved in writing by the Funder's Surveyor.”

The Claimants argue that this provision appears to have been a compromise after Clydesdale refused to include a figure sought by Tydwell of £574,379 plus VAT proposed in an email from Mr John on 1 October 2010 to Mr Ekanyake (the solicitor drafting the Procurement Agreement) copied to Mr Jones. It appears from the email records that shortly after this was sent there was a conversation between Mr Ekanyake and Mr Jones, and possibly also Mr Mirza, in which Mr Ekanayake agreed to replace having a figure in respect of the Fee payable to Tydwell and instead to use the definition I have reproduced above.

Mr Jones was unwilling to accept this proposition under cross-examination, giving the unconvincing alternative explanation that the sum related to the recoupment of past expenditure, but I agree with the Claimants’ submission that the document speaks for itself.

Under clause 18 of the Procurement Agreement, Project Costs were to be paid no more than monthly against an application made by Tydwell which needed to be accompanied by invoices or such other available evidence of entitlement as the Funder’s Surveyor may reasonably require together with (if so, required by the Funder’s Surveyor) evidence in the form of receipts.

The Fee was payable in accordance with clause 19 of the Procurement Agreement. Under clause 19, the Fee was payable in instalments. The agreement was that:

“The Developer on such dates as agreed between the parties present to the Employer an application for payment of an instalment of the Fee commensurate with the services carried out in that month.”

Payment then became due upon receipt of that application.

There is no suggestion that any specific amount earmarked as the “Fee” was the subject of any application under clause 19. Neither is there any evidence that any claim for fees were specifically drawn to the attention of the Directors or the administration team at IQEQ, except through the provision of invoices by Tydwell where these specifically mentioned “Project Management”. This point of course again depends on accepting the Defendants’ argument that the references to “Project Management” would have been accepted as being references to project management charges by Tydwell. Importantly there is no evidence that the Directors or the IQEQ administration team saw the Application Notices drafted by CSA which more clearly identified payments charges being made by Tydwell.

In practice, it appears that these agreements were operated as follows. Mr John, on behalf of Tydwell, would send an email to IQEQ (on behalf of the relevant JV Entity) setting out the sums to be paid to Tydwell and the purported justification for the payment (the “Requests”). Invoices (the “Invoices”) from Tydwell raised to one of the JV Entities for the sum of the Request would either accompany the Request or, more often, would be sent subsequently. IQEQ would then pass on the request for funds to Mr Morjaria and Mr Mirza. Mr Morjaria would approve the payment of his 50% contribution by Trafalgar (also administered by IQEQ) to Otaki, which would then be transferred to Viper or Krugar as appropriate. Viper/Krugar would then pay Tydwell. Nothing in the Requests or Invoices referred expressly to Tydwell’s own fees. The Requests generally either set out a breakdown of purported third-party costs due to a named third party, or referred to the “costs” and “expenses” in respect of particular goods or services.

At one point Mr Mirza suggested in oral evidence that Mr John would disclose any fees or mark-ups for Tydwell orally to IQEQ. He says that “John was constantly talking to the offshore directors” and in the course of those conversations, or conversations with Robin McCauley or Chris Stobart on the IQEQ team, would have disclosed where Tydwell was taking a mark-up on professional fees or making a charge. This oral evidence was offered tentatively. It is contradicted by the evidence of Mr Lewin, and I do not find it believable. I consider that if Mr John had been making it clear that there was a mark-up on third party invoices to the team at IQEQ they would have passed this information on to Mr Morjaria and there would be a record of this.

Mr Morjaria complains that he was never sent a copy of the Procurement Contract by Mr Mirza. However, I find it far more likely than not that he knew about the Procurement Contract, even if he had not troubled to obtain a copy of its terms. It was signed by Mark Lewin, as a director of Viper, who was advising Mr Morjaria throughout on a regular basis. Mr Lewin emailed him two months before the Procurement Contract was entered into stating: “… Viper will enter into a procurement contract with Tydwell who will be the Building Contractor subcontracting the various aspects of the project to subcontractors (including Mace) and the Professionals…”. Mr Morjaria was a signatory to the Amended Clydesdale Facility Agreement dated 1 September 2010 and this refers extensively to the Procurement Contract.

The later Project Agreements

The Procurement Agreement dealt with the period of the original build. The fitting out of the Data Centre and installation of a PDMC was dealt with under a second agreement, referred to as the “Development Contract”. The copy of the Development Contract in the court bundle is undated, but there is a stamp on the front of it suggesting that it was filed by somebody (probably someone at IQEQ) on 10 December 2015.

This agreement also was between Viper and Tydwell. Although this was termed a “Development Contract”, rather than a “Procurement Contract,” it was in fairly similar terms to the Procurement Contract.

Clause 18 dealt with the payment of “Project Costs” and clause 19 dealt with instalment payment of a Fee. The agreement employed similar definitions of “Project Costs” and of “Fee”, except that in this case there was no reference in either definition to costs needing to be approved by the Funder’s Surveyor. Clause 18.4, however, required the Developer (Tydwell) to procure that demands for Project Costs would be evidenced by “the relevant Project Managers’ interim payment certificate” to enable such costs to be properly identified as a Project Cost and confirmation from the Project Manager that in his view the same are properly Project Costs due and payable under this Contract”. In this case, the Project Manager was identified as Robert Thorogood of Hurley Palmer Flatt.

These provisions provide no way of assessing what was the proper amount of the “Fee”. I agree that in order to give meaning to the clearly intended agreement that there would be a Fee, the provisions must be read as providing for a fee to be assessed on quantum meruit principles either as a term implied by common law to give the contract business efficacy (as per the discussion in Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] AC 742) or as implied under the Supply of Goods and Services Act 1982 (“SGSA 1982”).

The final contract relating to construction was the Cladding D&B Contract. This dealt with the work to be undertaken in respect of cladding and the replacement of render. This agreement was between Otaki and Tydwell and was dated 9 March 2020. I will deal with this agreement in more detail when I come to the cladding claims, but suffice it to say that this operated in a slightly different manner in that it envisaged Tydwell being paid a “Contract Sum” for completing the cladding project. The “Contract Sum” was payable “as set out in the Cost Plan”. This was defined as the agreed cost plan for the Project as set out in the Appendix, as may be revised from time to time by agreement between the parties. The Appendix defined the cost plan as follows:

“• Advance payment of £750,000 (exclusive of VAT).

• Then payments to cover any further additional costs and expenses as may reasonably become necessary to complete the Project.”

The only other written agreement between Tydwell and the JV Entities was titled the “Property Management Agreement”. It was dated 3 August 2012 and was between Viper and Tydwell. Tydwell’s obligations under this agreement were limited. Under clause 1.2 it was to act:

“only as agent for the Owner [Viper] on and in accordance with the instructions of the Owner consistent with this Agreement and issued at periodic management meetings”.

Although described as an agent, Tydwell was to have no authority to enter into any binding agreement in any form with a Tenant or any other party. The services to be provided were defined as “Property Management Services” and were enumerated in clause 3 to include (in summary):

This list of particular “Property Management Services” responsibilities is said to be “without limitation”, but as there is no other definition of the term “Property Management Services” it is difficult to see what else would be covered. In my view if there are any services to be undertaken under this agreement that are not within the list enumerated in clause 3, they would need to fall within the same sort of category as those listed (i.e. services that could be read eiusdem generis with those listed).

Under clause 4.1 the Property Manager is obliged not to incur any expenditure in connection with the Property without the prior written consent of the Owner.

Under clause 6 the Owner accepts responsibility to pay the Property Manager the “Management Fee”. The amount and method of calculation of this fee is left completely undefined. As there is no fee specified, but it is clear that a fee was anticipated, again I consider that must be a term implied by common law or as implied under SGSA 1982 that the fee would accrue on a quantum meruit basis.

The Defendants argue that in addition to these written contracts there were two contracts formed by conduct.

First, they aver that what they refer to as a “Preliminary Works Agreement” was created by conduct between Viper and Tydwell on or around 9 May 2008 for Tydwell to carry out planning, demolition and associated works on the Property before the development could begin. The conduct giving rise to the agreement comprised the rendering of services by Tydwell to Viper between around 9 May 2008 and 10 August 2010 and the payment for such services by Viper (in the total sum of £2,090,854.50 excluding VAT). They say that the nature of the services provided by Tydwell under such agreement is evidenced by the narratives in the invoices rendered by Tydwell between 9 May 2008 and 10 August 2010, including:

They aver further that it was an implied term of such agreement (pursuant to section 15(1) of the Supply of Goods and Services Act 1982) that Tydwell was entitled to a reasonable charge for the services provided.

Secondly, they plead that what they refer to as the “Redwire Contract” was created by conduct between Viper and Redwire in or around October 2012 for Redwire to manage the Data Centre. Similarly, they plead that it was an implied term of such agreement that Redwire was entitled to a reasonable charge for the services provided.

The relevance of later communications

The Claimants and the Defendants also seek to draw the court’s attention to communications between the parties after the JVA had been entered into.

First, they note that in August 2010, when IQEQ asked Mr John for “backup invoices in relation to expenditure on Uxbridge Road”, Mr Mirza complained about this to Mr Morjaria by text, and followed this up with an email saying that

“they had most of this information about a year ago and we have more important things to deal with at the moment rather than locate emails and correspondence sent previously” and that “they will receive everything on Tuesday”

This email was untrue. The back-up invoices had not been received previously and they were not received later.

It seems that, not having been supported by Mr Morjaria in asking for back-up invoices at this early stage, the team at IQEQ made few if any further attempts to seek such information until we get to the time of the cladding issue, which I will discuss further below.

In what has been come known as the “Concerned Brother” email, an email to Mr Mirza on 11 October 2018, at a point when things were going badly for the JV as it was having difficulty finding users for the Data Centre, Mr Morjaria wrote:

“… you have said so many times that we both are paying equally and that ‘I (Tydwel) [sic] am not charging anything am I’ Everything on Tydwell Invoice is what we have been billed. When I asked whether John sends all the backup invoices from all the suppliers, your immediate answer was, of course all back up invoices are sent to First Names, I hope this is the case. I need your reassurance that is the case so at least I don't rely on John and I take your word for it, we have always been totally honest with each other.”

Although Mr Mirza provided a detailed, point-by-point response (in red text added into the body of the email) to other points in the email he said nothing to contradict that statement. When Mr Mirza was shown this email during cross-examination, he described this statement as “complete lies” that “shocked” him. His explanation as to why he did not challenge Mr Morjaria’s understanding at this point was feeble and unconvincing.

Similarly, on a telephone call with Mr Lewin and others on 17 June 2020, Mr Mirza said that he was not billing in relation to his negotiations with Mace.

Against this, the Defendants argue that the email exchange between Mr Mirza and Mr Morjaria of 9 December 2015 (the “December 15 Email Exchange”) is evidence that there was no concealment. This relates to the point when Mr Morjaria was asking Mr Mirza whether he had given correct information to his tax adviser. The Defendants put this forward as an email written by Mr Morjaria where he had said:

“I presume Tydwell charged arm's length fees for the provision of development work and under contract? I also presume the directors of Otaki were inextricably involved in the negotiation and management of the process?

Is Redwiredc [sic] Limited a connected company?”

In fact, it is fairly clear from the context and typefaces used that this part of the email was a cut-and-paste by Mr Morjaria of questions and comments made by the tax adviser.

Mr Mirza’s response, the same day, however, does appear to amount to a disclosure that Tydwell was charging. Mr Mirza answers the tax adviser’s question about whether “Tydwell charged arm’s length fees for the provision of development work” as follows:

“Tydwell was project managing the initial build and also carried out building work later…Tydwell has invoiced for these works and have paid UK tax on any profits it has made this is all up to date”.

Mr Morjaria responded:

“I have told him exactly the same about Tydwell”.

The question answered

Taking account of all of the points made above, I return then to the question posed as the heading to this section: was there an understanding that Mr Mirza or Tydwell would not charge for services?

First, I consider that this question cannot be answered merely by looking at clause 5.2.1 of the JVA, and disregarding the further written agreements that were later entered into between Tydwell and JV Entities (the “Written Project Agreements”). First, the JVA was largely silent on the question of whether Tydwell could charge fees for its involvement, but there is in clause 12.1 a strong indication that there could be future dealings:

“If not provided for in this Agreement, as may be agreed by the parties and, in the absence of such Agreement, on an arm's length basis.”

Secondly, Tydwell was not a party to the JVA.

Thirdly, the duties assumed by Mr Mirza were limited to managing the daily operation of the JV and making decisions in the best interests of the JV, and it is arguable that these duties were narrower than the wider services provided by Tydwell (and Redwire).

I consider that it was not clear from the £350,000 mentioned in the Development Appraisal that any or all of this amount was earmarked for Tydwell. This was not clear on the face of the Development Appraisal. Neither is it clear by looking at the pattern of invoicing by the person named as “Project Manager” under the Procurement Agreement (CSA). I do consider, however, that there was some understanding between Tydwell and Clydesdale to this effect.

It is clear that CSA (which was supposed to be fulfilling a role as the Employer’s Agent, as well as the role of Project Manager) did consider it appropriate to request drawings from Clydesdale partly justified by line items with the description “Project Management (Tydwell)”. However, there is no suggestion that they did this in consultation with or on instructions from the Directors, and it seems overwhelmingly likely that they did this in reliance on instructions from Mr Mirza and by reference to the Clydesdale Facility Agreement and without giving any attention to the costs and fees provisions within the Procurement Agreement, and still less any relevant provisions in the JVA.

I consider that there was likely a common intention between Mr Mirza/Tydwell and Clydesdale that the amounts to be drawn down from Clydesdale could include amounts that would cover fees and a profit element for Tydwell.

The JV Entities (as represented by the Directors and IQEQ) were put on notice when they received and agreed the Written Project Agreements that there were provisions in these agreements that Tydwell could charge a fee for its services under these agreements. I do not accept the argument that the reference to “Fees” in the Procurement Agreement (and in the later Development Agreement) referred to fees suffered by Tydwell, rather than fees that Tydwell would charge. That makes no sense in the context that there was a separate provision for “Project Costs”.

The fact that the JV Entities were aware that Tydwell was receiving fees cannot really be separately deduced from contemporary correspondence. Generally, this correspondence involving the JV Entities does not make it clear that Tydwell was claiming fees for itself. By contrast, there is correspondence between Tydwell and Clydesdale to show that Clydesdale was aware that Tydwell was charging, such as when:

The fact that the JV Entities were not copied into these types of exchange could be seen as evidence that Tydwell was seeking to hide or at least not to highlight the fact that it was earning fees.

Whether Tydwell ever correctly followed the procedure to receive a fee under the Procurement Agreement is open to doubt, as it did not separately present Viper with an application for payment of an instalment of the fee commensurate with the procedure envisaged by clause 19 of the Procurement Agreement. However, I would be prepared to give Tydwell the benefit of the doubt to the extent that I would accept that during the period where it was operating under the Procurement Agreement or the Development Agreement or the Property Management Agreement, when it presented invoices that mentioned “Project Management” or “Project Management and OH” (even where this was alongside other things that fell within the category “Project Costs”), this amounted to such an application.

The amounts identified in Application Notices that are said to be justified by references to “Project Management” covered only some £73,419 plus VAT. No more than this can be attributed to payments properly made to Tydwell for management services under the Procurement Agreement or the Development Agreement. Also, because of the definition of “Fee” in the Procurement Agreement, Tydwell’s entitlement relied on the sums it was to be paid being approved in writing by the Funder’s Surveyor. Insofar as Project Management costs were specifically attributed to Tydwell within the Application Notices prepared by CSA, it is fair to assume that this requirement was met. However, if these costs were not specifically itemised by CSA then it is difficult to see how they could have been approved as a “Fee” by the Funder’s Surveyor. At most, then, the amounts allowed to Tydwell under the Procurement Agreement or the Development Agreement (or the Property Management Agreement) for its project management or overheads must be limited to the amounts identified in the Application Notices as payable as management fees (or management fees and overheads).

The total value of invoice items that expressly related to Project Management Fees taking account of those delivered under all contracts came to some £589,673.75. As I will discuss further below I consider that any such items relating to the Cladding D&B Contract need to be taken aside and viewed differently. Nevertheless, it appears that Tydwell has received and kept considerably more than this in respect of fees apparently levied under the Procurement Agreement or the Development Agreement (or the Property Management Agreement).

Whilst the Procurement Agreement and the later agreements may have defined Tydwell’s rights to receive fees from the JV Entities as a matter of contract, this does not mean that Mr Morjaria must have had any good understanding of the nature and extent of these fees. The likelihood is that he was aware at least of the Procurement Contract but this does not mean that he understood its detailed terms.

On the other hand, the December 15 Email Exchange suggests that he may have had some awareness that Tydwell had been charging on an arm’s length basis.

It is important also to realise that the case the Defendants are facing is not one of breach of contract, but rather one based most fundamentally on fraudulent misrepresentation, and so the analysis of the contractual position is relevant only as part of the factual matrix.

This then brings us to the case pleaded by the Claimant in relation to the Invoice Misrepresentations Claim.

THE INVOICE MISREPRESENTATIONS CLAIM

The Claimants allege that the Mirzas and Tydwell made fraudulent misrepresentations in relation to (a) the requests for payment by Tydwell to the JV Entities between 2007 and 2021 (referred to as the “Invoice Representations”) and (b) (as a subset of the Invoice Representations) spreadsheets and invoices provided by Tydwell to Otaki in 2020 in respect of the replacement of the cladding (referred to as the “Cladding Representations”). They claim that, as a result of those misrepresentations, the Mirzas and Tydwell wrongfully extracted from the JV Entities and Mr Morjaria an amount of money, referred to as the “Misappropriated Sum” (being, in essence, the amounts by which the Claimants say the JV Entities overpaid Tydwell).

The Cladding Claims raise distinct issues and are addressed in section 10 below. This section 9 addresses the Invoicing Claims as they relate to the invoices from Tydwell to Viper, Krugar and Otaki from May 2008 to June 2020 and from Redwire to Viper from May 2016 to December 2017, although the legal principles summarised below will apply also to the Cladding Claims. This period was defined as Phases 1-4 in the Further Information provided by the Defendants pursuant to an order of Master Brightwell dated 24 November 2023 the “Further Information”) - the same Phases as are discussed at [26] above.

Before considering these claims in more detail, it is useful to set out what it is that the Claimants need to show.

The Requirements of a Misrepresentation Claim

The requirements are put succinctly by the authors of Civil Fraud (first edition) at 1-003. In order for a claimant to succeed in the tort of deceit he must establish that:

Clerk & Lindsell on Torts (24^th edition) (“Clerk & Lindsell”) at Chapter 17 provides a more detailed summary of the requirements of an action in deceit:

The test for determining whether, and if so what, representation was made by a defendant was explained in Cassai di Risparmio della Reppublica di San Marino SpA v Barclays Bank Ltd [2011] EWHC 484 (Comm) by Hamblen J (as he then was) at [215]. He stated that this requires:

Representations need not be express, but in respect of implied representations:

Where fraud is alleged, (a) it must be adequately particularised, and (b) cogent evidence is required by a claimant to prove it.

The following guidance is provided by the authorities, as summarised by Calver J in ED & F Man Capital Markets Limited v Come Harvest Holdings Limited [2022] EWHC 229 (Comm) at [69] to [71]:

The Invoice Representations

The Claimants allege that by emails from Mr John to the JV Entities (via the Directors), Tydwell made “Requests” for payment, with a justification for such payments, and that by “Invoices” from Tydwell to the JV Entities, Tydwell sought payment, with narrative explanations for the sums sought. They say that by the justifications in the Requests, and the narrative explanations in the Invoices, the following Invoice Representations were made expressly or impliedly by Tydwell and/or the Mirzas to the JV Entities and Mr Morjaria (see the PoC at paragraphs 54-59):

The sums sought were required to defray costs that had been properly incurred by Tydwell to third parties in furtherance of the JV (or it was honestly believed would be required to defray such costs) (“Invoice Representation 1”).

The sums sought in respect of specified costs honestly and accurately reflected the sums which Tydwell had incurred (or which it honestly believed it would incur) in respect of those costs (“Invoice Representation 2”).

Tydwell honestly intended to use the sums sought in order to defray costs incurred by it to third parties in furtherance of the JV (“Invoice Representation 3”).

The Claimants allege that the Invoice Representations were made falsely by Tydwell and/or Mr Mirza, Mr John, Mrs Mirza and/or Ameer, who knew they were false or were reckless to their truth, were made with the intention of inducing the JV Entities to make payments pursuant to the Invoices, and Mr Morjaria to make contributions to the JV, to fund those payments, and were relied upon by the JV Entities and Mr Morjaria in that way.

These allegations are all denied by the Defendants (see the Re-Re-Re Amended Defence and Counterclaim of the First, Second, Fourth to Seventh and Ninth to Tenth Defendants (the “Defence and Counterclaim”) at paragraphs 64-66).

The Claimants’ Pleadings

As it is part of the Defendants’ case that the Claimants have inadequately pleaded their claim, I will deal with the pleadings in some detail.

In their Re-Re-Amended Particulars of Claim (the “PoC”) at paragraph 14, the Claimants summarise what I am calling the “Invoice Misrepresentations Claim” as follows:

“The Claimants seek damages and other remedies in respect of wrongdoing carried out during the course of the joint venture by Mr Mirza, acting through and in concert with companies owned and controlled by him and certain family members and employees engaged by those companies. That wrongdoing included:

“a.

Dishonestly causing the joint venture vehicles to make payments totalling at least £6.8 million to Mr Mirza’s company, Tydwell, on the false basis that those payments were necessary to defray costs and expenses incurred (or to be incurred) by those companies in respect of legitimate goods and services obtained in pursuit of the joint venture, when in fact they have been simply misappropriated by those companies (or passed on to other companies wholly owned by Mr Mirza). £4,876,232 of the sum is now said by the Mirza Defendants to have comprised previously undisclosed “fees”, to which Tydwell was not entitled.”

After the PoC was drafted, more invoices have come to light which the Claimants accept were costs incurred in respect of legitimate goods and services obtained in pursuance of the JV, and so the amount claimed will be less. I discuss this later.

The Claimants particularise this claim at paragraph 51 onwards of the PoC in more detail. I will refer to this as necessary.

The claim is introduced at paragraph 52 as follows:

“52.

The process for requesting payment and the payment of invoices raised by Tydwell was routinely as follows:

a.

Mr John would send an email to one or more of the directors or employees of IQEQ (acting on behalf of the relevant JV Entity) setting out the sums required to be paid to Tydwell and the purported justification for the payment (the “Requests”). The email making the Requests would almost always copy in Mr Mirza and, in many instances, Mr Morjaria. The Requests would often also copy Mr Ameer Mirza and Mrs Mirza.

b.

An invoice from Tydwell raised to one of the JV Entities for the sum of the Request would either be attached to the email with the Request or, more often, would be sent by Mr John subsequently (the “Invoices”).

c.

The Requests would specify the total amount that would be required by way of contribution from the Joint Venturers to meet the sum sought from the relevant JV Entity.

d.

The representative of IQEQ would then pass on the request for funds to Mr Morjaria and Mr Mirza, usually by forwarding on the email received from Mr John and simply repeating his request for a contribution (on a 50/50 basis) in the amount stated.

e.

Mr Morjaria would then make the payment of the sum sought from Trafalgar to Otaki, which would then be transferred to Viper or Krugar as appropriate. Mr Mirza would, purportedly, make an equivalent contribution. Those contributions were recorded in the accounts of Otaki as shareholder loans. In the circumstances of the wrongdoing set out herein, the true quantum and source of any contribution made by Mr Mirza is a matter for which the Claimants seek an account (and appropriate injunctive relief) as set out below.

f.

The relevant JV Entity would then pay that sum (and any contribution from Mr Mirza or his companies) to Tydwell.

53.

As to the Requests and Invoices, by way of summary, and without prejudice to the full terms of each of them:

a.

The Requests generally either set out a breakdown of the purported third-party costs and named the third parties to whom those sums were due or explained the nature of the third- party good or service purportedly provided and referred to the “costs” and “expenses” that Tydwell had incurred (or would incur) in respect of those goods or services. The following explanations (or terms to similar effect) were routinely used: “Tydwell has been incurring legal and design fees”; “building works/legal & Professional costs”; “costs incurred for the consultants and builders”; “fit out costs”; “funds for the Cabinets, Power Cables and IT equipment etc”; “expenses for the fit out”; “monthly operating costs”; “monthly operational expenses”; “ongoing expenses”; “monthly running costs”.

b.

The substantial majority of the Invoices raised by Tydwell were headed “Re: Professional/Consultants & Development Costs”; “Re: Professional/Consultants & Development Costs”; “Re-Fit out” or “Re: Operational cost”. The substance of the narratives then generally itemised the “costs” for which payment was sought by reference to descriptions of the services that were purportedly provided by third parties.

c.

The explanations provided for the payments sought by way of the Requests and the narrative explanations for the sums sought by way of the Invoices did not at any time state that payments were sought by way of payment of fees to Tydwell.

d.

Further, the explanations did not state that the payments were sought pursuant to any of the Procurement Contract, Property Management Contract or Development Contract and no request for prior approval for “costs” incurred by Tydwell in performing any obligations under the Procurement Contract or Development Agreement was sought.”

The heart of this claim is at paragraphs 54, 55 and 60 of the PoC:

“54.

… the justifications provided for the sums sought by way of the Requests and the narrative explanations for the sums sought by way of the Invoices were such as to represent (expressly and/or impliedly) that:

a.

The sums sought were required in order to defray costs that had been properly incurred by Tydwell to third parties in furtherance of the JV (or, it was honestly believed, would be required to defray such costs); and/or

b.

The sums sought in respect of specified costs honestly and accurately reflected the sum which Tydwell had incurred (or which it honestly believed it would incur) in respect of those costs; and/or

c.

Tydwell honestly intended to use the sums sought in order to defray costs incurred by Tydwell to third parties in furtherance of the JV (collectively, the “Invoice Representations”).

55.

The Invoice Representations were made on the face of the relevant Requests and/or Invoices.

Alternatively, to the extent that any of the Requests or Invoices were ambiguous or silent as to the purported justification for the sums sought, the representations were made by implication that later Requests or Invoices were made/raised on the same basis as previously (and were thus also in respect of costs and expenses and not in respect of Tydwell’s fees).

….

60.

The Invoice Representations were false and were made by the relevant Defendants knowing that they were false or reckless to whether they were true or false. As to this:

a.

By the Letter of Response, the Mirza Defendants have stated that £4,876,232 of the Misappropriated Sum, was not required to defray costs that had been properly incurred by Tydwell/Redwire to third parties in furtherance of the JV but instead was retained by Tydwell as “charges” or “fees” (the “Purported Fees”).

b.

The sum of the Purported Fees was calculated by the Mirza Defendants retrospectively by simply subtracting the total of the invoices said to have been raised against Tydwell purportedly in respect of the JV (the “Purported Underlying Invoices”), from the total amount paid by the JV Entities to Tydwell.

c.

Tydwell had no entitlement to charge “fees” to the JV Entities, whether pursuant to the JV/Tydwell Contracts or otherwise. Further and in any event, at no time did any of the Defendants inform the Morjarias or the JV Entities of the intention to charge such fees or seek their consent to do so, and no consent was ever provided.

d.

The Mirza Defendants have (contrary to their duties under the JVA) and despite requests to do so, failed to explain how the £4,876,232 of “fees” was charged, what of the sums sought by way of the Requests and Invoices represented those fees, or the basis on which these “fees” were calculated at the time they were purportedly charged. … Without prejudice to this it is averred that a proportion of the sums wrongfully extracted were extracted by inflating invoices purporting to defray specific third-party costs, as set out in respect of cladding below, and as follows [and examples are given]

…

62.

The Invoice Representations were made with the intention of inducing the JV Entities to make payments pursuant to the Invoices and Mr Morjaria to make financial contributions to the JV to fund those payments. The JV Entities and Mr Morjaria did rely on the Invoice Representations in that way.”

The Defendants complain that this insufficiently particularises the representations which the Claimants say are misrepresentations and invite the court to dismiss this claim on that basis. I do not consider that this complaint is fair or that the Claimants’ pleadings are defective in outlining the representations on which they rely.

The background here is as follows. The Claimants believed, and it is now clear that in fact it was true, that Tydwell was paid substantially in excess of the amounts that were paid out to third parties (how substantially, I will consider below). Importantly, this remains the case even if it is accepted that references to “Project Management” in the Requests or Invoices issued by Tydwell could not be regarded as a representation that these amounts were payable to third parties rather than to Tydwell.

The Claimants were in a position to make a claim that the body of Invoices as a whole made a series of representations that monies were being claimed for payments made or to be made to third parties and that somewhere within this series of representations there must be untrue representations since Tydwell did not pass all of this money on to third parties.

The Claimants, however, did not have the information to know which particular invoices included the misrepresentations. Only Tydwell and those involved with it were in a position to match the Requests and Invoices issued by Tydwell to invoices or payments made to third parties. In these circumstances, and particularly given that the Claimants did not have the relevant information because Mr Mirza and Tydwell was withholding this information, despite Mr Mirza’s duties under the JVA and Tydwell’s duties under the Written Project Agreements, it is perfectly reasonable for the Claimants to have pleaded their case in the way that they have. The Defendants can be in no doubt of what the case is against them as to the false representations they are alleged to have made.

The Defendants have raised a further issue in relation to the Claimants’ pleadings: they have put forward an argument that, if I were to find that there was any entitlement for Tydwell or Redwire to receive fees, this destroys the basis of the Claimants’ case.

I understand this point to be based in relation to Redwire on the pleadings at paragraph 51 of the PoC which states as follows:

“51.

Between 2007 and 2021, Tydwell sought and received payments from the JV Entities in the total sum of £32,498,099. £27,932,964 of that sum was paid by Viper, £392,182 by Krugar and £2,697,339 by Otaki. Further, over the course of 2016 and 2017 Viper made, or was requested to make, payments directly to Redwire, pursuant to invoices raised by Redwire, in the total sum of £246,699. Those sums were sought and paid (to the extent they were paid, which is a matter of expert evidence) notwithstanding that there was no contractual or other legal basis for payment of costs to Redwire.”

In relation to Tydwell, I understand this point to be based on paragraph 60(c) where it says that:

“c.

Tydwell had no entitlement to charge “fees” to the JV Entities, whether pursuant to the JV/Tydwell Contracts or otherwise. Further and in any event, at no time did any of the Defendants inform the Morjarias or the JV Entities of the intention to charge such fees or seek their consent to do so, and no consent was ever provided.”

Whilst the question that I have considered above as to whether Tydwell or Redwire had any entitlement to be paid fees is relevant to the surrounding circumstances (as is the question whether Mr Mirza and/or Tydwell had any obligations to disclose relevant matters or any fiduciary duties), I do not accept that the Claimants’ case in relation to the Invoice Representations collapses if I accept (as I do) that Tydwell or Redwire had some right to charge fees. They can still be relevant for misrepresentation if they did not invoice honestly, but instead hid the amounts that they were taking by presenting these as being paid to others. The Claimants’ central claim is that they were misled in paying out amounts to Tydwell believing them to be amounts payable to third parties. The question of whether Tydwell had any right to fees is not central to that claim.

A third complaint that the Defendants make of the Claimants’ pleadings is that they do not adequately plead who is said to have made the representations. The question of who was making representations and the involvement of other defendants is dealt with at paragraphs 56 onwards in the PoC as follows:

“56.

The representations were made by Mr John acting on behalf of Tydwell and/or the Mirzas. Further or alternatively, it is to be inferred that Mr Mirza and/or Mrs Mirza and/or Mr Ameer Mirza, authorised, procured or directed the Invoice Representations and/or manifestly adopted and/or approved those representations.

57.

As to Mrs Mirza, she:

a.

Was a director of each of Tydwell, Boomzone and Redwire and a shareholder of both Tydwell and Otaki;

b.

Actively participated in the financial management of Tydwell, Boomzone and Redwire and was responsible for making payments from those companies.

c.

Was named as the relevant contact or customer on third party invoices raised to Tydwell and relied upon by the Mirza Defendants as constituting third party costs incurred by Tydwell in furtherance of the JV; and

d.

Was copied in to emails by which the Requests were made.

58.

As to Mr Ameer Mirza he:

a.

From 2016, worked for each of Tydwell, Boomzone and Redwire and was a director of Tydwell from 20 February 2019 to 9 September 2019;

b.

Was a qualified accountant, and participated in the financial management of Tydwell, Boomzone and Redwire; and

c.

From October 2016, was copied in to emails by which the Requests were made.

59.

The Invoice Representations were made to the JV Entities. They were also made to Mr Morjaria, by virtue of Mr Morjaria being copied into the Requests and/or in that they were made with the intention and expectation that they would be passed on to Mr Morjaria such that he would make contributions into the JV necessary to cover the sums requested.”

I consider this to be a clear enough pleading. I will consider below how far a case is made out against each of the individual Defendants on this basis.

The Defence

In the Defence and Counterclaim, the Defendants pleaded to these matters. They denied the figures. They asserted that Redwire acted as the manager of the Data Centre from in or around October 2012 and invoiced and was paid for such services; that this gave rise to an unwritten agreement arising by conduct between Redwire and Viper (“the Redwire Contract”) for Redwire to act as the property manager in relation to the Data Centre and that it was an implied term of such agreement (to be implied as a matter of custom) that the fee to be charged by Redwire was a reasonable fee at ordinary market rates and commensurate with the services provided. They accepted that:

“Paragraph 52 is admitted as a generalised summary of the methodology by which payment of invoices was sought by Tydwell subject to the following qualifications”.

These qualifications included that:

“56.1

During the construction phase of the development, additional capital contributions were not required from Mr Mirza or Mr Morjaria as funding for the development was provided by Clydesdale.

56.2

Requests for payment by Tydwell were not invariably agreed to by IQEQ but would be the subject of discussion in relation to amount between Tydwell and representatives of IQEQ.

56.3

Ameer Mirza and Mrs Mirza were rarely (rather than often, as alleged in Subparagraph (a)) copied into Requests. Ameer Mirza only commenced as an employee of Tydwell on 1 July 2019 and was not copied into emails before then.”

56.4

As to Subparagraph (e):

(a)

The first sentence is not admitted. Further, Mr Morjaria did not always provide the contributions requested of him. On such occasions, Mr Mirza made the contributions on his behalf (and on one occasion in 2009, accepted the transfer of a property in Cannes in lieu of payment).

(b)

The second sentence is admitted save for the word “purportedly”. The contributions made by Mr Mirza to Otaki were monitored by the Directors who at no time raised any issue with the sums being contributed by him.

(c)

The third sentence is admitted. The Defendants’ position on whether the accounts of Otaki are accurate is reserved pending disclosure.

(d)

As to the fourth sentence, the alleged wrongdoing and entitlement to an account are denied.

56.5

Subparagraph (f) is admitted save that certain of the payments were also made to Chevin.

Did the Invoice Representations include misrepresentations?

Notwithstanding any right that Tydwell might have had contractually to receive management fees, it is clear that the body of requests for payment and invoices issued on behalf of Tydwell did misrepresent what was being claimed.

Even though I accept that Tydwell as against the Project Entities did have some rights to be paid fees, those fees needed to be honestly invoiced. I am prepared to give the Defendants the benefit of the doubt in relation to any fees that were claimed in relation to “Project Management” or “Project Management or OH”. Even if it was not clear to Mr Morjaria or to the JV Entities that these line items should be understood as referring to fees that Tydwell was charging, I accept that in including these line items more likely than not these would have been understood by Mr John and by Mr Mirza (and therefore by Tydwell) as disclosing a fee that Tydwell was levying. I am fortified in my conclusion that this is the case when I consider the background of the exchanges in 2015 that I refer to at [283] to [284] above where there appears to have been acceptance by Mr Morjaria that Tydwell was making charges for its own account.

However, to the extent that the Requests or Invoices included any charges that were not labelled as being for Project Management or Project Management and Overheads, and the amounts claimed were not justified by third-party invoices, those Requests and/or Invoices must be considered to include misrepresentations.

The background facts that I have referred to above also strengthen these conclusions. Mr Mirza had in the JVA accepted an obligation to manage the daily operation of the JV in the best interests of the JV and to keep Mr and Mrs Morjaria “fully informed on the progress of the Joint Venture at all times”. He had accepted a contractual duty of good faith. I have found that Mr Mirza had assumed fiduciary duties. Tydwell, when it was charging fees under the Procurement Agreement or under the Development Contract was supposed to do so by means of a specific application for payment of an instalment of a “Fee”. The Property Management Agreement also distinguishes reimbursement of expenses from the payment of a “Management Fee”. In the light of all of this background, there can be no question that it would have been the expectation of all parties that if Tydwell was charging a fee, it would do so specifically and not by marking up costs that it had received from third parties. Therefore, whenever there was a claim for money by reference to what on its face appeared to be a third-party cost in an amount that was in excess of that third-party cost, the person or persons making that claim were knowingly misrepresenting the position.

Who made the Representations?

The invoices and demands for payment were routinely sent by Mr John on behalf of Tydwell to IQEQ. They may, therefore, be regarded as including representations made by him and by Tydwell.

There is documentary evidence that Mr Mirza was involved in compiling these documents and, given the high levels of involvement that he had in Tydwell, I have no doubt that he was intimately involved in compiling these documents and certainly was aware of their content and he may be considered to have authorised and procured their being sent.

Mr Mirza certainly would have been aware of the terms of the JVA, of the trust that he had asked the JV Entities and Mr and Mrs Morjaria to repose in him and of the terms of the Written Project Agreements. He was the architect of the scheme to avoid the JV Entities and Mr Morjaria knowing the full extent of the monies that Tydwell was extracting from the JV. Mrs Mirza gave evidence that Mr John and Mr Mirza would need to decide the drawdowns and would discuss the matter in Urdu. As he must be reckoned to be the controlling mind of Tydwell, Tydwell must be regarded as having the same knowledge and intentions. Both Mr Mirza and Tydwell must have understood that it was misleading for Tydwell to make charges without properly disclosing them on the face of the invoices and payment requests.

I will except from this any amounts where there was a disclosure of fees for “Project Management” as I consider that it is more likely than not that Mr Mirza (and Tydwell) would have understood this to have been a properly disclosed request for a management fee for Tydwell, but to the extent that there are any other amounts where Tydwell has invoiced for amounts that are in excess of properly recouped costs expended for the benefit of the JV, such excess amounts must be regarded as having been obtained by fraudulent misrepresentation.

There is no evidence (and no pleading) that Mrs Mirza or Ameer were directly engaged in communicating any misrepresentations. The pleading as regards them is that they, along with Mr Mirza, “authorised, procured or directed the Invoice Representations and/or manifestly adopted or approved those representations”.

There is no direct evidence for any of these propositions. The Claimants have not been able to find a single instance during the period that we are dealing with here where Mrs Mirza or Ameer directed or otherwise procured Mr John to send out an invoice or request for payment containing a misrepresentation. Neither is there any evidence that either of them “manifestly adopted or approved those representations”.

The concept of adopting a representation is a relatively narrow one. Civil Fraud (at 1-072) explains it as follows:

“Where a false statement is made by a third person and passed by the defendant on to the claimant representee, the defendant may adopt and approve the statement and so make it his own. In such a case there is no difficulty with treating the defendant as a representor.”

This concept was said to be engaged in Bradford Building Society v Borders [1941] 2 All E.R. 205, but the House of Lords overturned a finding by the Court of Appeal on the facts, and on the lack of congruence between the argument being pursued in the House of Lords and that pleaded by the claimant in that case.

In Libyan Investment Authority v King [2020] EWHC 440 (Ch); [2020] 2 WLUK 550 the claimants applied to re-amend their particulars of claim alleging deceit, breach of duty of honesty as agent, dishonest assistance and conspiracy, and then made a further application to amend their application. The court found, amongst many other things, that the claimants had a real prospect of success in pursuing allegations that the defendants had controlled the sending of a letter by a valuer giving a valuation containing misrepresentations and therefore made the representations or caused them to be made to one of the claimants and that the defendants knew that the valuations were excessive or false. In this case the alleged adoption of the false statements was by sending the document containing them on, knowing them to be false.

In ED&F Man Capital Markets Ltd v Come Harvest Holdings Ltd [2022] EWHC 229 (Comm) at [427], a commodity sale contract incorporating a master agreement was held to embody representations contained in the latter.

In all these cases, the parties said to have adopted a misrepresentation were alleged to have done something positive to pass on or affirm the representation that the claimant in some sense was relying on so that the claimant would have thought that the defendant was standing behind the representation. Nothing has been shown in evidence to suggest that this was the case in relation to Mrs Mirza or Ameer.

As we have seen, the Claimants particularise further their claim in this regard against Mrs Mirza.

First, they aver that she was a director of each of Tydwell, Boomzone and Redwire and was a shareholder of both Tydwell and Otaki.

Her position as shareholder to Otaki is in my view irrelevant to whether she was sufficiently proximate to any misrepresentations to be regarded as adopting them.

She was in fact not a director of Boomzone or Redwire but was the company secretary of each such firm, a position that does not of itself make her responsible for the Invoicing Claim.

She was both company secretary and director of Tydwell during the relevant period. It appears that she was involved in dealing with third party suppliers. According to her witness statement she was not aware of the amounts that Tydwell was charging on any given invoice for its fees. She says that she had no involvement in drafting invoices or the emails to IQEQ. She admits that she was copied into emails sent by Mr John or by Mr Mirza to the directors or employees of IQEQ, but her evidence is that she largely ignored them because she trusted her husband. She acknowledges that it was obvious to her that Tydwell was charging for services, but she never knew what the figures were or how they were calculated.

It appears that she was sent a copy of the JVA but denies paying attention to it, although she did in her oral evidence agree that she knew that her husband was under an obligation to act in the best interests of the JV.

She was not asked about her knowledge of the Development Contract or of the Project Management Agreement. There is nothing in evidence that suggests she was materially involved in the invoicing to the JV Entities prior to the Cladding D&B Contract. I will deal with her evidence concerning invoicing under the Design & Build Contract when I consider the Cladding Claim in more detail.

Secondly, it is claimed that she “actively participated in the financial management of Tydwell, Boomzone and Redwire and was responsible for making payments for those companies”.

Thirdly, it is said that she was named as the relevant contact on third-party invoices.

Finally, it is said that she was copied into emails by which the Requests were made.

The fact that she was a director (and company secretary) of Tydwell and was involved in paying third party contractors does not provide sufficient grounds either to demonstrate that she authorised, procured or directed the Invoice Representations or that she adopted and/or approved them (manifestly or otherwise).

I will consider separately the other ways in which the Claimants pursue their claim against Mrs Mirza, but I can say at this point that they have not established that she authorised, procured or directed the Invoice Representations and/or has adopted or approved any of them (during this period) in the sense necessary for her to have direct liability in deceit.

As regards Ameer:

Clearly, nothing in this pleading is capable of fixing Ameer with responsibility for any Invoice Representations made before he joined the business in 2016.

Again, the fact that he was involved in the financial management of Tydwell from 2016 (at a junior level to start with, but with increasing responsibility as time went on) does not provide sufficient grounds either to demonstrate that he authorised, procured or directed the Invoice Representations or that he adopted and/or approved them (manifestly or otherwise).

Ameer also was not asked about his knowledge of the Development Contract or of the Project Management Agreement. Again, there is nothing in evidence that suggests he was involved in the invoicing to the JV Entities prior to the Cladding D&B Contract. I will deal with the evidence concerning invoicing under the Cladding D & B Contract when I consider the cladding claim in more detail.

As with Mrs Mirza, I will consider separately the other ways in which the Claimants pursue their claim against Ameer, but I can say at this point that they have not established that he authorised, procured or directed the Invoice Representations and/or has adopted or approved any of them (during this period) in the sense necessary for him to have direct liability in deceit.

Are the other requirements for deceit present?

Having found that Tydwell, Mr John and Mr Mirza (together, the “Representing Parties”) were all responsible for misrepresentations contained in Invoices and Requests, I need next to consider the other elements of the tort.

First, I think it is clear that Mr Mirza and Mr John, and therefore Tydwell, knew that the Invoices and Requests that they were presenting would be understood as including a representation that the monies sought had been or were to be paid to third parties except, I will allow, to the extent that these specifically asked for monies for “Project Management” or “Project Management & OH”. They further understood that, to the extent that they intended to keep a portion of such monies, such representations were false.

That the Representing Parties would have understood this is clear, firstly from the circumstances (including the fact that the Procurement Agreement, the Development Contract and the Property Management Agreement all made separate provision for the recovery of third-party costs to the arrangements for provision of fees) and text of the invoices and Requests. Secondly, it is clear from the surrounding circumstances that on the few occasions when IQEQ asked Mr Mirza for backup information, this was not forthcoming. This is a strong indication that Mr Mirza was looking to obfuscate as to whether and how much Tydwell was keeping for itself.

Secondly, it is obvious that the Representing Parties intended that the Project Entities to which the Invoices and Requests were addressed would act on these matters.

Thirdly, the JV Entities were induced to make payments that were kept by Tydwell and thereby suffered loss, in that they paid amounts that were kept by Tydwell that they would not have paid absent the misrepresentations. I will deal with the quantum of that loss after I have considered the Cladding Claim.

I consider therefore that all the elements of deceit are made out as regards a deceit practised by these three Defendants on whichever JV Entity on which they served such Invoices or Requests.

As regards a deceit on Mr and Mrs Morjaria, this is not as straightforward. The representations were not directly made to them, and they did not rely directly on these representations. The most that can be said is that the false Invoice Representations led to the JV Entities requesting further capital from the Morjarias on the basis that such capital was needed to pay legitimate expenses of the JV. The JV Entities were induced to make these requests by the Invoice Representations, and in doing so falsely (but innocently) themselves made an express or implied representation to Mr or Mrs Morjaria (in practice I think this was just to Mr Morjaria) that such further capital was all required for legitimate expenses of the JV, whereas some of it was for a secret profit being made by Tydwell.

Chitty on Contracts (35^th edition) at 10-38 identifies three types of person entitled to relief in respect of misrepresentation:

“There may be said to be three types of representees: first, persons to whom the representation is directly made and their principals; secondly, persons to whom the representor intended or expected the representation to be passed on; and thirdly, members of a class at which the representation was directed.”

An earlier version of this section in similar terms was approved and followed by Flaux J in OMV Petrom SA v Glencore International AG [2015] EWHC 666 (Comm); [2015] 3 WLUK 395 (see at [139]).

Whilst these principles are discussed in relation to claims for relief from liability in contract arising out of misrepresentation, I think they are valid also in considering who could be said to be a representee for the purposes of the tort of deceit.

Whilst I can see that there is a case for saying that the Representing Parties knew and intended that the false Invoice Representations would (in some cases) cause Mr Morjaria and/or Mrs Morjaria to be asked to advance further funds, that is not the same as saying that the Representing Parties intended or expected that Invoice Representations would be passed on to them; or that Viper or Otaki were receiving the representations as their agents; or that they were a class of person who would rely on the Invoice Representations. Accordingly, the Morjarias did not receive, and cannot be deemed to have received, the Invoice Representations and so cannot be said to have relied on them.

The Claimants have not referred me to any authority to the effect that someone who did not receive a representation (in one of the three ways described in Chitty) has succeeded in an action based on fraudulent misrepresentation.

I consider, therefore, that the case in deceit has been successfully established against Mr Mirza, Mr John and Tydwell in relation to the Invoice Misrepresentations in favour of the JV Entities that received the Requests and Invoices which misrepresented the extent to which Tydwell was claiming third party expenses, but no similar case has been successfully established against Mrs Mirza or Ameer.

THE CLADDING CLAIM

The Background to the Cladding Claim

Before considering the details of the Cladding Claim it is useful to expand further on the details of the events to which it relates.

In June 2017 following the Grenfell Tower fire, discussions began concerning the need to replace cladding and other combustible building materials on the Property. This led to Mr Mirza being appointed as agent for the JV Entities to negotiate a settlement with Mace and to instruct a construction lawyer, Mr Mads Ekanayake (“Mr Ekanyake”) to represent the JV Entities for this purpose.

The efforts of Mr Mirza and Mr Ekanyake eventually led to a settlement completed on 9 March 2020 whereby Mace agreed to pay £2.75 million to Otaki in return for being released from its warranty as it relates to combustible materials (and therefore its own liability to replace the existing cladding and any other combustible materials).

On the same date the Cladding D&B Contract was entered into between Tydwell and Otaki for cladding works. The cost to Otaki of this work was defined by a “Cost Plan” which provided for an advance payment of £750,000 (exclusive of VAT) and then payments to cover any “further additional costs and expenses as may reasonably become necessary to complete the Project”.

The Cladding D&B Contract had been drafted by Mr Ekanyake. He was acting for Otaki in relation to this, but it appears that he was introduced by Mr Mirza and was obtaining his instructions from Mr Mirza, and I think it likely also that he was also acting for Tydwell in relation to this as there is no record of Tydwell involving any other law firm. In another contemporaneous email, Mr Morjaria refers to Mr Ekanyake as being “Mr Mirza’s lawyer”.

In sending the final draft of the contract to Mr Lewin for signature, Mr Ekanyake commented on the “Cost Plan” as follows:

“… please note that Tydwell would only be able to claim for further costs/expenses "as may reasonably become necessary to complete the Project".

So this clause does not represent an open cheque book for Tydwell to claim for monies as they please.”

Mr Morjaria was unhappy about this agreement as he had not seen underlying quotations and did not see why what had been represented to him earlier as being the likely entire cost of the cladding replacement was being paid upfront.

Mr Lewin or Mr Stobart must have discussed this with Mr Mirza as Mr Mirza emailed Mr Morjaria on 9 March 2020 having spoken to IQEQ and stating that he (Mr Mirza) is:

“just shocked that you are challenging this agreement when it is the “best deal you’ve ever had” as you will earn circa £1m for putting in no money and sitting in Dubai”.

Mr Mirza went on in that email to state that he estimated that a cost of £750,000 for all the required works should be achievable, although this could go up for several factors. He enumerated a number of potential factors that might increase costs, although he did not mention that this might include a requirement to replace the render.

On the next day, 10 March 2020, Mr Mirza following a telephone conversation with Mr Morjaria, emailed Mr Morjaria, copied to Mr Lewin and Mr Stobart, stating that “we are on notice to replace the combustible render although this is very debatable and time will tell”. He also went on to say that “he would hope” to get the cladding replacement done “within £750,000-£,1,000,000 all in” and that “Our biggest problem will be to try to get professional indemnity in place as insurance companies are not prepared to provide cover and if they are it is proving to be expensive.”

Originally the arrangement with Mace had been thought by all parties to be highly beneficial as Mr Mirza had obtained quotations from other contractors suggesting they could replace the cladding on the building for a sum that was a fraction of the sum paid by Mace. Quotations were received in August 2019 from a firm called Harley Facades and another called Argonaut Cladding.

Harley Facades quoted to do the work replacing the cladding for £528,550 plus VAT, although it is not clear whether the quotation also included design and site surveys. Whilst Harley Facades noted that there may be a requirement also to replace the areas of insulated render, the quotation did not cover this point.

Argonaut Cladding quoted £736,368.42 (I assume plus VAT) to replace the cladding. Their quotation included design and site surveys. It did not cover (or consider) replacement of any render.

A quotation relating to cladding only was also received in mid-February 2020 from the contractor that was eventually used, Teampol Ltd (“Teampol”). This quoted £418,000 (presumably plus VAT) to replace the cladding only and confirmed that Teampol could also help in other areas such as render.

On 12 March 2020 Mr Stobart wrote to Mr Ekanyake and Mr Mirza, copying this to Mr Morjaria and Mr Lewin to confirm that Otaki had received the funds from Mace and asking him to supply cladding removal quotes when available.

This almost immediately gave rise to an email from Mr Mirza to Mr Stobart (the “12 March Email”), copied to Mr Lewin and Mr Ekanyake attaching the quotations received from Harley Facades and Argonaut Cladding (but not the cheapest estimate, which had been received from Teampol) and stating that Mr Ekanyake “has got nothing to do with this”. Mr Mirza went on in the same email to write:

“The next you hear from us on this will be when Tydwell has negotiated a full contract with the sub-contractor and all the relevant consultants. You will then be able to circulate this with the various stakeholders.”

Mr Mirza’s 12 March Email is of relevance to one of the arguments made by the Defendants in their Closing Submissions: that Otaki should be considered to know all about the terms of the arrangements with Teampol as their lawyer, Mr Ekanyake, knew about it.

This communication, coupled with the fact that it was clear that Mr Ekanyake was obtaining his instructions from Mr Mirza (even if on occasion he did communicate directly with Mr Lewin and Mr Stobart when he needed them to sign something or to pay his bill), fortifies my decision to dismiss this point.

This point is argued in the Defendants’ Closing Submissions by reference to the case of Strover v Harrington [1988] Ch. 390, [1988] WLR 572.

In that case, a misrepresentation was made in relation to negotiations for the sale of a house, which was subsequently corrected by the vendor’s agent in a letter to the purchaser’s solicitor. The solicitor did not pass on the information, but the purchaser was deemed to have notice of it for the purposes of an action by him under s.2(1) of the Misrepresentation Act 1967 based on the original misrepresentation. Sir Nicolas Browne-Wilkinson V-C held that his loss was not caused by any reliance on a continuing representation but by his solicitor’s failure to communicate the correction to him.

The Defendants argue that if Mr Ekanyake knew that Tydwell was charging well in excess of the price agreed with Teampol, Otaki must be treated as having that knowledge, and Otaki therefore could not have been deceived about the fact that Tydwell’s liability to Teampol was significantly less than the price which Tydwell had quoted to Otaki.

This argument, which was not put forward within the Defence and Counterclaim, relies on reading far too much into the decision of Sir Nicolas Browne-Wilkinson V-C. The ratio of his judgment is not that a principal is deemed to have knowledge of everything of which his solicitor has knowledge. Indeed he quoted a leading textbook, Spencer, Bower & Turner (now Spencer, Bower & Handley): Actionable Misrepresentation which at the time stated that for the purpose of deciding whether a representee knows the representation to be false, and knows the truth of the matter, the knowledge of the agents cannot be imputed to the principal: actual and personal knowledge must be proved; constructive, or imputed, notice was entirely out of the question. Sir Nicholas Browne-Wilkinson VC did not find that this statement was completely wrong, but merely that it was not “right in its full width”. The ratio of his case was that he considered that:

“it ought to be sufficient if in a transaction for the sale of land a vendor who has made an innocent misrepresentation corrects that misrepresentation by informing the purchaser's solicitors of the true facts.”

The judge acknowledged that there was precedent, in the form of Wells v. Smith [1914] 3 K.B. 722, where the defendant made a fraudulent statement to the plaintiff's agent, who communicated it to the plaintiff and where the crucial fact was that the plaintiff's agent himself knew the fact to be untrue and was himself a party to the defendant's fraud. It was therefore hardly surprising in that case that the court held that the knowledge of the true facts by the fraudulent agent of the plaintiff could not be imputed to the plaintiff and that the case was “a 100 miles away” from the case before him in Strover.

In my view the case before me is a 100 miles away from that in Strover. This was not a routine conveyancing matter where Mr Ekanyake was acting as the conduit for information between buyer and seller. Mr Ekanyake had in fact found himself in a position where he had a conflict of interests since, in effect, he was representing both Otaki and Tydwell (even if his engagement with Otaki extended to drafting sub-contracts) and had obtained the information about the Teampol quotation in the course of drafting an agreement between Tydwell and Teampol, following instructions from Mr Mirza and Ameer. Mr Mirza had made it clear in the 12 March Email that Mr Ekanyake should not pass information to Otaki. In these circumstances it would be a nonsense to impute the knowledge of Mr Ekanyake to Otaki.

It had already been known at least from 9 March 2020 that there was a possibility that there would be a need to replace the render on the Property. A recital to the Mace Settlement Agreement records that the cladding subcontractor’s drawings indicate “a render build-up that may not be compliant with applicable Building Regulations”. It became increasingly apparent that the scope of the remedial work would need to be increased to include the removal and replacement of render (which covered some 72% of the exterior wall surface of the Property), as this render had been placed on top of a membrane that was deemed not to meet combustibility requirements.

Teampol quoted on 13 May 2020 to undertake the work on the render as well as the cladding originally for a price of £867,681.16 (plus VAT), of which £361,993.84 was for render, but stated that this may be subject to a discount to be negotiated. By 3 June 2020 this figure had been negotiated down to £850,000.

By an email on 13 May 2020, Ameer informed Mr Ekanyake that Teampol had agreed to what Ameer (correctly) described as “a Design and Build Contract for which they will have full design and build responsibility for all the works” and asked Mr Ekanyake to draft that contract and collateral warranties. Ameer attached a bill of quantities (the “Teampol Bill of Quantities”) to be used for valuation payments during the contract with Teampol.

The sub-contract (the “Teampol Sub-contract”) was finally concluded between Tydwell and Teampol on 27 June 2020 for a contract sum of £842,500 plus VAT (£1,011,000) although this price later was increased very slightly as a result of further necessary works being identified.

On 17 May 2020, Mr Mirza emailed Mr Lewin referring to the difficulties with obtaining buildings insurance and informing Mr Lewin that:

“prior to this, we were only looking to remove the ACM Cladding and Trespa which is circa 1000 sq m and the estimated cost for this is circa £1.1m+, over and above this we need to do the total render of the building which is approx. 2,200 sqm. I have been speaking to various contractors and the numbers are unacceptable to me as I am trying to work within what we have”.

On 11 June 2020, Mr Mirza emailed Mr Lewin (the “11 June Email”) copying Mr Morjaria and Mr Stobart and attaching an Excel spreadsheet described in the covering email as a “breakdown of costs for the cladding and render works”, estimating a “total cost to Otaki” of £2,545,763.70 including VAT, providing a breakdown of that figure in the spreadsheet (the “Tydwell Costs Breakdown”). The breakdown was in the form of an Excel spreadsheet that was in an almost identical format to the Teampol Bill of Quantities, except that all the figures had been adjusted upward to increase the total sum to £2,121,469.75 excluding VAT, and a line was added to say that this amounted to £2,545,763.70 including VAT.

In the 11 June Email, Mr Mirza refers to:

“using a combination of Tydwell’s workers and using a specialist external wall sub- contractor we now have a solution that will meet our requirements and therefore satisfy ourselves, the ministry for housing communities and local government, Premier Inn, our future insurers and potential purchasers”.

It is relevant that a draft of this email in almost identical form had been sent earlier in the day from Ameer to Mr Mirza and Mr John with the heading “Final Draft please review”. Ameer’s evidence is that he had been helping his father by taking dictation and typing. Mr John emailed back to say that it “Looks fine”.

On the next day, 12 June, Mr Morjaria wrote to Mr Lewin and Mr Stobart, complaining that Mr Mirza had not provided any estimates for the job and noting that Tydwell did not employ any permanent workers. He asked Mr Lewin to request all the invoices from absolutely anyone who will be involved in doing this job. He was clearly suspicious of Mr Mirza, noting that the estimate of £750,000 had now increased to £2.5 million and stating that he “knew this would happen”.

Accordingly, the same day, Mr Stobart requested “the range of quotes that were received for the subcontract work”.

Mr Mirza responded by writing almost immediately an email to Mr Morjaria and Mr Lewin (the “12 June Email”) to say that he was not prepared to provide full breakdowns of the cladding quotations and that:

“I have done the best I can – when I negotiated with Mace to get £2.75M at that stage we were hoping to only remove the ACM cladding and this would obviously have cost less but the fact of the matter is that we need to remove the ACM, the Trespa and the Render otherwise we will not be able to get insurance on the building and will not be able to sell. You are asking for full breakdowns of the quotations – I’m afraid I am not prepared to do this. Mark accepted that he has seen all sorts of prices and what we have managed to negotiate is very reasonable… This has been an ongoing battle on all fronts. It has been difficult to get into a position where we don’t need to use our own monies to rectify the defects”.

On the next day, 13 June 2020, Mirza emailed Mr Lewin, copying this to Mr Stobart (the “13 June Email”) about the request he had had from Mr Stobart saying:

“In keeping with how I've operated in the best interest of Otaki (since 2007 when we agreed the arrangement) I've kept you and your colleagues (on behalf of Otaki) fully informed with the development decisions/management (clause 5.2.2) that I am authorised by the joint venture to take through my development company (clause 5.2.1). Pursuant to this (and as I have always done) I've given you full information on the cladding (as I did on the 11th June 2020) which resulted in the approval of the development arrangements with Tydwell (my development company). I have therefore fulfilled the requirements of the joint venture and followed the pattern of approval we have done many times in the past. I trust that this deals with your points and I look forward to Otaki honouring the terms of the agreement signed with Tydwell. As you'll note Tydwell has now incurred significant expense for the benefit of Otaki which it will be invoicing shortly for prompt payment by Otaki.”

Mr Mirza then involved his accountant, Mr Homan, in the discussion. On 16 June 2020 Mr Homan emailed Mr Lewin to summarise a call they had had, stating:

“In accordance with the contract between Otaki Holdings Ltd and Tydwell Ltd dated 9 March 2020 and the subsequent email from Camran on 11 June 2020 stating the ‘costs to Otaki will be £2,545,763 inclusive of VAT. The work is to be carried out by Tydwell Ltd in accordance with the JV agreement. The work on site is scheduled to start on Monday 22nd June 2020. Tydwell Ltd have received £750,000 on account of the work in accordance with the contract of the 9th March 2020. Tydwell Ltd will be issuing invoices throughout the project as staged payments as work is completed up to the £2,545,763. You confirm that Otaki will settle these Tydwell Ltd invoices in accordance with the 9th March 2020 contract.”

After discussing a response with Mr Morjaria, Mr Lewin, on 17 June 2020 agreed with Mr Homan’s summary of the call but added that:

“As Trustees of the Wentworth Capital Trust we as IQEQ have a duty of care to our beneficiaries and will, in the absence of transparency on sub-contractor quotes in relation to the removal and replacement of render, instruct our own independent expert to report to us with a view to verifying that the amount contracted is aligned to market”.

The Defendants in their submissions refer to this exchange as “an agreement”, I think with the intended implication that this exchange of emails amounted to a variation of the Cost Plan agreed within the Cladding D&B Contract. I do not think that this is a correct interpretation of the exchange. I consider that the better interpretation of the communications is that Mr Mirza/Tydwell notified (originally by means of the 11 June Email) that there would be additional costs – this was operating the original Costs Plan, not replacing it. He was, in effect, notifying that there were additional necessary costs and expenses that needed to be claimed under the Cost Plan. It is, in my view, clear from the response to Mr Homan’s email, which was not purporting to vary the Cladding D&B Contract or to adopt a revised Cost Plan providing for a new fixed fee, but rather was merely confirming that Mr Lewin accepted that additional costs and expenses were being claimed and that he would pay them subject to undertaking further checks.

Also on 17 June 2020 (although I cannot be sure whether this was received by Mr Lewin before or after Mr Lewin had given this response as a result of their writing in different time zones), Mr Morjaria sent to Mr Lewin an email headed “My confidential thoughts” (the “Confidential Thoughts email”). In this email Mr Morjaria states that:

“As it stands I can tell you for sure that the cost of the job is a lot less than what is quoted by Tydwell. As you know the original quote was GBP750,000-00 and the new quote is over 2.5M so full details MUST be provided together with at least two more quotes for comparison. To be honest even if Tydwell was putting a margin on this job as long as this was agreed I would have no problem with that and I would have no problem even if the job was even going to cost 2.75M provided this was tendered out properly and all estimates were provided to us fully.

I know Mace has given 2.75M for the job but as I have said before this was to wipe the collateral warranties to 2025 with Otaki so there is no future come back it was not just for doing the cladding. CM [i.e. Mr Mirza] is responsible to negotiate the best deal since he is running this business, but that does not mean he can divert all this money to his personal company and do the job and not provide any details, total conflict of interest and fraudulent in my opinion.

….

Otaki can now only agree very reluctantly which is what you need to say to Camran (I need this window open so I can challenge Tydwell's estimate if I need to). CM needs to know that Otaki has to perform its duty and hence will need to get 2/3 estimates so it can compare Tydwell quote and make sure it is very competitive since Tydwell is refusing to provide full details at the last minute despite promise made Otaki who now has been put in a very difficult position especially due to the Insurance timeline which is number one priority. This needs to be made VERY CLEAR so I can deal with this later.”

On 5 August 2020, Mr John sent an email to Mr Stobart and Katrina Young, copying Mr Mirza attaching a spreadsheet referred to as “Valuation 1”, which may be regarded as what I am calling the first of the “Tydwell Valuation Spreadsheets”. The Tydwell Valuation Spreadsheets set out an assessment of how much of the works identified in the Tydwell Costs Breakdown (as the same was revised from time to time as further costs were identified, as also shown in the Tydwell Valuation Spreadsheets) had been carried out as at the date of that Tydwell Valuation Spreadsheet. The email represented that the value of the works that had been carried out as at that date amounted to £582,822 (excluding VAT) and the total costs of the project (incurred and future) was £2,120,400 (excluding VAT).

That Tydwell Valuation Spreadsheet was, and all future Tydwell Valuation Spreadsheets were, in the same form (or substantially the same form) as spreadsheet costs breakdowns and assessments of the amount of work done to date received from Teampol except that certain figures had been increased.

Similar emails with similar Tydwell Valuation Spreadsheets and, once the initial £750,000 had been used up, accompanied by requests for payment, were produced in a similar manner and were sent by Mr John to Mr Stobart, copying in Mr Mirza and Ameer on 27 August 2020; 24 September 2020; 2 November 2020; 27 November 2020; and 16 December 2020 respectively. The emails were in each case forwarded on to Mr Morjaria by Mr Stobart. These were routinely followed up by invoices issued by Tydwell to Otaki (the “Cladding Invoices”).

The Cladding Claim as pleaded

Again, as it is part of the Defendants’ case that the Claimants have inadequately pleaded their claim, I will deal with the pleadings in some detail.

The Cladding Claim may be seen as an important subset of the Invoice Misrepresentations Claim but it is based on what has been referred to as the Cladding Representations, said by the Claimants to be express or implied representations made in correspondence by Mr Mirza or Mr John to the effect (according to the Claimants) that (and I paraphrase using the definitions I have coined above):

These representations are said to have been made (expressly or impliedly) in:

The Claimants plead that the Cladding Representations were made by Mr Mirza or Mr John (as applicable) on behalf of Tydwell and/or the Mirzas. Further or alternatively, they plead that it is to be inferred that Mr Mirza and/or Mrs Mirza and/or Mr Ameer Mirza, authorised, procured or directed the Cladding Representations and/or manifestly adopted and/or approved those representations.

The Claimants plead that:

The Claimants go on to plead that the Tydwell Costs Breakdown and the Tydwell Valuation Spreadsheets provided to Otaki and Mr Morjaria were simply amended versions of the Teampol Valuation Spreadsheets with the costs dishonestly inflated by multiples of between 2.5 and 3.5. In addition, they plead that the higher figures in respect of incurred costs in most instances represented that a different (and almost always greater) percentage of the work in respect of that line item had been completed than in fact was the case and that in a number of instances, sums were claimed in respect of an element of work for which no work had been carried out at all. They give the example that in the Tydwell Valuation Spreadsheet for end of August, sums were sought representing 45% of the total (inflated) costs of installation of Type 2 cladding when in fact, as set out in the Teampol Valuation Spreadsheet for the same period, that work had not commenced.

The Defence and Counterclaim as pleaded

I will not seek to summarise the entirety of the Defence and Counterclaim as it is much too long. However, I will mention some of the main points made.

In their Defence and Counterclaim, the Defendants aver that the total amount paid to Tydwell under the Cladding D&B Contract was £2,247,782.59. Of that sum, £946,937.66 represented the minimum amount of the subcontractor costs (Teampol and other subcontractors and suppliers). The balance of £1,300,844.93 represented the maximum amount of the fee charged by Tydwell for the services provided by it. I understand that these sums were described as a “minimum” and “maximum” to make allowance for the fact that further third-party invoices might turn up, which would have the effect of reducing the margin retained by Tydwell.

The Defendants go on to plead that the fee charged by Tydwell:

The Defendants further plead that the “costs and expenses” which Tydwell intended to incur included not only contractor and supplier costs (principally to Teampol) but also Tydwell’s own fees under the Cladding D&B Contract. There was no representation that Tydwell was merely passing through third-party costs incurred by it. They plead also that at most, the matters referred to in paragraphs 66-69 of the PoC (i.e. the paragraphs of the PoC that I have summarised above) gave rise only to an implied representation that the sums sought were contractually due (and that it was true that these costs were due).

The Defendants plead also that if, which is denied, the Cladding Representations were made, they were made by Mr Mirza or Mr John acting on behalf of Tydwell. It is denied that they were made on behalf of the Mirzas given that it was Tydwell that was seeking payment for its services and Mr Mirza and Mr John were acting on Tydwell’s behalf.

They plead further that if the Cladding Representations were made, they were made to Otaki. There was no intention or expectation that the alleged representations would be passed to Mr Morjaria, and the emails relied upon said to be copied to Mr Morjaria have not been identified.

It is denied that any of the Defendants made any false representations or that they knew or were reckless that any representation was false.

The Defendants accept that the Tydwell Valuation Spreadsheets were based on the Teampol Valuation Spreadsheets but plead that the increases in prices for the different line items were increased because Tydwell built in costs for its own work and overheads and for taking the risk that it took on its warranties.

The Defendants plead that Otaki will have relied on Tydwell’s entitlement to payment rather than on any of the Cladding Representations and that Mr Morjaria’s allegation that he relied on the Cladding Representations is inconsistent with the evidence given by him in the Private Prosecution where he said in a witness statement:

“I did not believe that the work was actually costing as much as documents such as this made out, but as previously stated I did not have access to the documents that would prove it one way or the other”.

Did the Cladding Representations include misrepresentations?

The analysis regarding the Cladding Representations needs to be considered in the light of a context that is different to that relating to the Invoice Representations made at the earlier stages. That context is different in the following ways:

In the light of these changed circumstances, I do not consider that anything communicated by the Defendants would support Cladding Representation 2. The relevant communications would have been intended to convey what Tydwell was charging, not what third party expenses it would be covering, and they were understood in that way.

As regards Cladding Representation 3, the differences between the extent of work done that Teampol was reporting and that which Tydwell was claiming does suggest a prima facie case that Tydwell was inflating its reports of the progress made. However, this might be explained by Tydwell reporting differences in the extent that it had made its own contribution (or that of any subcontractors other than Teampol and its subcontractors), a point on which there was really no evidence. In any case it is common ground that the work required was all done in the end and so the case based on Cladding Representation 3 (taken by itself) is at most a complaint that as a result of Cladding Representation 3, Tydwell was paid earlier than it should have been giving rise possibly to a claim for interest on being misled into paying too early for work that was eventually done. For these reasons and in view of what I am going to say about Cladding Representation 1, which gives rise to far greater consequences, I am not proposing to reach a conclusion at this stage on Cladding Representation 3. If the Claimants wish to pursue this further this can be done as alongside or as part of the trial on quantum.

When we turn to Cladding Representation 1, I see much more consequential case for a misrepresentation claims. In considering Cladding Representation 1, it is important to consider the terms of the Cladding D&B Contract, and in particular the basis of charging for Tydwell agreed within it. As we have seen, the “Cost Plan” provided for an advance payment of £750,000 (exclusive of VAT) and then payments to cover any “further additional costs and expenses as may reasonably become necessary to complete the Project”.

The “Project” was defined as “the replacement of the ACM Panels, Trespa Panels and the Kingspan Kooltherm K15 insulation on the external walls of the Property”. This definition did not include replacement of the render, but there was a definition of “Works” which included “the design and works required to complete the Project and such other works as are instructed by the Employer under this Contract” and there was provision both in clause 12 for the Employer (Otaki) to issue instructions.

It would have been more satisfactory if there had been provisions in the Cladding D&B Contract that set out formal procedures for varying the Contract and if there had been a formal request to vary the Contract to include the replacement for the render. However, even in the absence of such provisions and such a request, I consider that it is clear that Otaki and Tydwell agreed that replacement of the render was brought within the terms of the D&B Contract and was covered by the same “Cost Plan” which had built into it the flexibility to deal with any increases in costs occurring.

Against this background, the natural interpretation (and the intended meaning) of the 11 June Email and the 12 June Email, was that the increase (over and above £750,000) arose because of “further additional costs and expenses” that had “reasonably become necessary to complete the Project”.

A natural implication would be that the cost had risen chiefly (but by no means exclusively) because of the change to include the render. However, the idea that the increased cost was entirely due to the need to replace the render, would be dispelled if one considered the detail of the Tydwell Costs Breakdown, which showed cost of render being £187,328.81 for removal of render and £742,711.54 for the new render whilst the cost of the remaining elements of the Project had increased (from the initial £750,000 allowed in the Cost Plan) to £1,746,812.13, suggesting that the costs and expenses of the elements originally anticipated to be covered within the Project had gone up by almost £1 million (all the above figures exclude VAT). Nevertheless, anyone reading the 11 June Email and its attachment would have understood that there had been a substantial increase in the costs under the Cladding D&B Contract (i.e. the representation matched the representation I am calling “Cladding Representation 1a”) and that this was owing to additional costs relating to the render and to other elements of the cladding including the Trespa cladding. This is close to what I have described within the Claimants’ pleading as Cladding Representation 1b, although not completely full square within it, in that there was a possibility that some of the costs related to the other sort of cladding used on the building (the ACM cladding). Nevertheless, it is fair to hold that the representation overall should be seen as falling within what has been pleaded as Cladding Representation 1.

In fact, the costs and expenses to be incurred by Tydwell had not increased by anything like this amount. As we have seen, as at 9 March 2020 when the Cladding D&B contract was being entered into, Tydwell had received quotes to replace the cladding that included £528,550 (Harley Facades); £736,368.42 (Argonaut Cladding) and Teampol (£418,000). As the Claimants aver, accordingly the initial £750,000 (exclusive of VAT) advance payment was expected to cover all or substantially all the costs of the Works, and indeed would do so even allowing for some charges by Tydwell.

Accordingly, at the point when the 11 June Email was being sent, Tydwell must have realised that adding in the work to remove and replace the render had increased the costs that Tydwell would pay to Teampol only from the £418,000 that Tydwell originally proposed to charge to £842,500. There might also have been some slight increases in other professional costs, but there was nothing in the costs and expenses to be borne by Tydwell to justify anything like the £1.5 million or so increase in costs and expenses that Mr Mirza was saying had become due.

The Defendants seek to explain this by reference to the responsibility that Tydwell was taking as the main contractor, and have pointed out the difficulty and high cost of obtaining professional indemnity insurance that would cover risks relating to combustibility at this time.

I do not accept that this was the real reason at the time why they increased their price. I think there is something in Mr Morjaria’s suspicion that Mr Mirza, was looking to obtain the lion’s share of the benefit of the Mace Settlement for Tydwell. He might quite understandably have thought that he deserved it, having done all the work to deal with the settlement and I expect there was some sincerity when in his email of 9 March 2020, responding to the news that Mr Morjaria had challenged the Cladding D&B Contract, at a point when it looked like the JV partners would be able to profit from Mace, he pronounced himself to be “shocked” at this challenge “when it is the “best deal you’ve ever had” as “you will earn circa £1 million for putting in no money and sitting in Dubai”. There was a pronounced tone of resentment in this communication.

Whilst there were discussions regarding insurance at this time (as early as 10 March 2020, Mr Ekanyake wrote to Mr Mirza saying that another of his clients had received a 50x increase in its professional indemnity insurance), it seems to me most likely that this justification was arrived at only later when the 2020 accounts were filed at Companies House in September 2021, well after the Letter Before Action.

It is relevant to consider the response (the “October 2023 RFI”) of the Defendants (other than Mr John and Otaki) to an order of Master Brightwell dated 13 July 2023. When explaining what was provided under the Cladding D&B Contract and the basis of charging, the Defendants did not refer to the responsibility they would be taking under the D&B Contract either as an item of work undertaken. They do mention as one element of making a determination as to whether to seek to arrange specific insurance against cladding risk or to self-insure against that risk, but that is different to stating that they were regarding the taking on of that risk as some kind of separate service.

Neither do the Defendants say within the October 2023 RFI that this responsibility was a factor in the determination as to what was a fair and reasonable level of charge for the services provided. Instead, they explain the basis on which all the charges made by Tydwell were determined (including those under the Cladding D&B Contract) as follows:

“2.

The determination as to what was a fair and reasonable level of charge for the services provided by Tydwell and Redwire was made:

2.1.

on an ad hoc basis at the time that each particular invoice was raised by either Tydwell or Redwire;

2.2.

by Mr John and Mr Mirza;

2.3.

taking into account the value of services and/or goods supplied by third parties;

2.4.

on the basis of, and commensurate with, the services provided by Tydwell or Redwire in respect of the matters set out in each invoice; and

2.5.

using their experience in, and knowledge of (in Mr Mirza's case) property development and business, and (in Mr John's case) accountancy and business.”

These points were to some extent amended by the response (the “January 2024 RFI”) of the Defendants to an order of Master Brightwell dated 24 November 2023 which provided a table in which the Defendants attempted to elucidate what was being charged for and by Tydwell under different contracts. This included in relation to “Phase 5” – the period under which cladding was undertaken as one of the Services said to be provided:

“Carrying the risk of a claim by Otaki in relation to fire combustibility of the materials used in the construction works (i.e. self-insuring) after having been informed by its insurance broker that such a risk (i.e. relating to the fire combustibility of the materials) was effectively uninsurable;”

Nevertheless, it seems relevant that this thought was a late addition to the Defendants’ pleadings and the new wording does not amend the Defendants’ explanation of the basis on which all the charges made by Tydwell were determined to suggest that this basis included a consideration of the risk involved.

However the pleadings are interpreted, it remains the case that the fact that Tydwell gave warranties did not provide a good reason for increasing what was due under the Cost Plan under the terms of the Cladding D&B Contract,.

First, Tydwell knew that it was taking on this responsibility when it signed the Cladding D&B Contract, so this responsibility was not a change justifying an additional charge. The most that can be said is that between the Cladding D&B Contract and the 11 June Email, Tydwell had discovered that it was difficult, if not impossible, and expensive for it to obtain professional indemnity insurance that covered combustibility and that its subcontractor, Teampol, whilst it did have professional indemnity insurance, this excluded combustibility. Teampol, however, did itself give a warranty that did not exclude combustibility.

Secondly, this issue did not give rise to any additional cost or expense justifying a further payment under the Cost Plan. In fact, Tydwell did not purchase insurance so there was no cost or expense. Neither did it put aside any amount to provide any kind of self-insurance in respect of this matter. It merely took this as additional profit. It did provide a note in its accounts to disclose a £1.5 million contingent liability, but this was not a cost or expense.

Thirdly, the idea that anything like this figure was a reasonable estimate of the risk that Tydwell was taking is highly unlikely. As we have seen, the actual cost to Tydwell of replacing all of the cladding and all of the render was only a little over £800,000. Tydwell would be responsible for replacing this only if it was in breach of its warranty which was essentially that it would comply with applicable regulations. As it had received advice that the replacement cladding and render did meet regulations, the risk would appear low, even taking account of the heightened sensibilities relating to building regulations following the Grenfell disaster. Furthermore, it had a matching warranty from Teampol. Teampol, unlike Tydwell, did carry professional indemnity insurance, although this did not cover the one element of combustibility. The Defendants try to make something of the fact that Teampol required them to sign off on design choices, but the agreement that it had with Teampol expressly provided that this would not allow Teampol to escape its warranty obligations on this ground.

The Defendants put forward one justification on the basis that Tydwell had spoken to an insurance professional and had been given an estimate of £120,000 a year for professional indemnity insurance that would include combustibility, and therefore it was reasonable to multiply this by the 12 years for which the warranty would subsist. This is not at all persuasive. Firstly, this figure was quoted not for insurance for this particular project and still less for the combustibility responsibilities relating to this project, but to cover the entire business of a professional firm undertaking a business involving cladding work. Secondly, there was no reason to believe that premiums would continue at this rate throughout the entire period in which the warranty was subsisting unless Tydwell was undertaking other work for which such a professional indemnity insurance was needed. It seems likely that the risk of a claim on this particular project for combustibility would decrease over time.

Even if Tydwell had genuinely assessed the value of its warranty at this time and had decided commercially that it wanted to charge for this, there is no excuse for it not explaining this to Otaki, so that Otaki could have made the choice itself to self-insure on this point or to have sought other insurance, and to have amended Otaki’s warranty to exclude responsibility for combustibility, rather than handing over £1.2 or £1.4 million to Tydwell for it to take that obligation.

In considering Cladding Representation 1 and whether there has been any breach of it, it is also necessary to consider the background that:

In refusing to provide details of the subcontractor costs, Mr Mirza was acting in breach of these obligations.

Also, Tydwell was acting in breach of its obligations under the Design & Build Contract, which included obligations:

The fact that Mr Mirza and Tydwell chose to ignore these obligations and refused point-blank to explain the basis on which they were claiming additional costs and expenses underlines that this was, and Mr Mirza and Tydwell knew that it was, a deliberate attempt to mislead Otaki into paying Tydwell a level of fees that they would not have agreed to had it known the full facts and to induce Mr Morjaria to go along with this.

The point is underlined when one considers the terms of the 12 June Email referring to the prices “we have managed to negotiate” when the vast majority of the price rise had come not from the third parties but from Tydwell itself – there was no negotiation.

Taking account of all of the points made above, I consider that Cladding Representation 1 was made to Otaki and to Mr Morjaria initially by means of the 11 June Email and was repeated in the 12 June Email and was repeated to Otaki in the form of the Tydwell Valuation Spreadsheets and Cladding Invoices.

Who made the Representations?

The initial and key instances of a misrepresentation being made in the form of Cladding Representation 1 were the 11 June Email and the 12 June Email. The misrepresentation was effectively repeated in the 13 June Email, but I note that this is not covered by the Claimants’ pleadings.

These representations were made by Mr Mirza. There is perhaps some small doubt whether he was making these representations on behalf of Tydwell since he did not use a Tydwell email address (he used a “Kingmead” email address) and did not sign himself off as acting as a director of Tydwell. However, as essentially these emails were seeking to justify contractual claims being made by Tydwell, I consider that he was intending to write, and was understood to have written, on behalf of Tydwell as well as himself. I do not accept that because he may be understood to have been writing on behalf of Tydwell he is not to be regarded as giving the representations in his own right. Clearly, he was.

Mr John also may be considered to have been involved in the representations made in the 11 June Email since he signed off a draft of it.

The same representation was essentially adopted by Mr John and by Tydwell when the Tydwell Valuation Spreadsheets and invoices and demands for payment were routinely sent by Mr John on behalf of Tydwell to IQEQ. These documents may, therefore, be regarded as including representations made by him and by Tydwell. These documents each effectively repeated Cladding Representation 1 since they must be considered to be expressly or impliedly representing that the amount being claimed were properly due under the Cladding D&B Contract whereas they included amounts that were in excess of the original £750,000 in the Cost Plan and were not further costs or expenses that had recently become necessary to complete the Project.

The considerations that I outline at [340] and [341] above also apply in relation to these documents. We have evidence that Mr Mirza monitored closely what went out and made suggestions for changes. There can be no doubt that Mr Mirza caused these documents to be sent and approved their contents.

There is no evidence (and no pleading) that Mrs Mirza or Ameer were directly engaged in communicating any misrepresentations. In a similar manner to their pleading in relation to the Invoice Representations, the Claimants plead in relation to the Cladding Representations that they, along with Mr Mirza, “authorised, procured or directed the Cladding Representations and/or manifestly adopted or approved those representations”.

Again, there is no direct evidence for either of these propositions. The Claimants have not been able to find a single instance during the period that we are dealing with here where Mrs Mirza directed or otherwise procured Mr John to send out an invoice or request for payment containing a misrepresentation. Neither is there any evidence that either of them “manifestly adopted or approved those representations”. The analysis made at [345] to [349] applies equally in relation to the Cladding Claims.

The Claimants particularise further their claim in this regard against Mrs Mirza, in addition to the matters that I have already dealt with at [350] to [361] above, to include allegations (at paragraph 72 of the PoC) that:

I note that Mrs Mirza confirms that she did discuss aspects of the Cladding D&B Contract. She had been involved, along with other members of the family, in obtaining quotes from subcontractors. However, she denies any involvement in the discussions with IQEQ concerning the price for cladding.

There is no pleading and nothing in evidence that suggests she was involved in or aware of the 11 June Email or the 12 June Email before they were sent.

There was some evidence within the metadata relating to one of the Tydwell Valuation Spreadsheets that Mrs Mirza had been the last one to amend it. She explained in oral examination that she had put into evidence her submission that she had been in Surbiton at the time that this spreadsheet was allegedly amended and sent out and so could not have amended it. She considered the most likely explanation was that she had left her computer open, and someone had used it to make the final modifications.

In the Defence and Counterclaim it was said that:

"... Tydwell Valuation Spreadsheet was created by Mr John. Mrs Mirza may have helped with the formatting or editing of the figures in the spreadsheet under Mr Mirza's guidance."

Mrs Mirza resiled from this statement to a certain extent in her oral evidence, describing this as “speculation of how it could have happened at the time”.

In my view, the most likely interpretation of events was that Mrs Mirza was not involved in compiling the numbers that went into the Tydwell Valuation Spreadsheets. She may have had a role in assisting with formatting. This is not sufficient to make her responsible for the contents of these documents.

She was copied into the emails attaching Tydwell Valuation Spreadsheets on 2 November 2020, 27 November 2020 and 16 December 2020, but this again of itself is not any reason to regard her as directing or procuring to adopting or approving those emails or their attachments.

The Claimants also particularise further their claim in this regard against Ameer. They refer to the matters I have already dealt with at [362] to [366] above and in addition plead (at paragraph 73 of the PoC) that he:

a.

Drafted (or contributed to the drafting of) the Tydwell Costs Breakdown and each of the Tydwell Valuation Spreadsheets;

b.

Was copied-in to emails by which the Cladding Representations were made (including the emails above sent on 27 August 2020, 24 September 2020, 2 November 2020, 27 November 2020 and 16 December 2020); and

c.

Was the (or, at least, a) representative of Tydwell liaising with Teampol at the material time.

Ameer within his First Witness Statement describes his role within Tydwell, as being a low-level role supervised closely by his father. He claims that he had no involvement with the invoices raised to the JV Entities or the emails that went to Mr Morjaria or the Directors attaching them. His role was on the ground, at an operational level. He did not join in the meetings between Mr Mirza and Mr John where Mr John would have a breakdown of items from which he would produce the invoices. He did not concern himself with the Tydwell invoices, except that he would sometimes get involved in confirming the work that had been done by subcontractors. He accepts that he was copied into emails but says that he did not give a thought or attention. He says that:

“… given my lack of business experience and lack of knowledge concerning the JV arrangement/relationship, notwithstanding that this was an unprecedented situation, I was in no place to question my Father or Mr John’s work and left it to them.”

As regards his knowledge of the JVA, he accepted in giving his oral evidence that he saw it in connection with dealing with KYC matters in 2017 or 2018 that he was helping with, where he would have had to pass this onto a funder but did not review it in detail. Since 23 April 2021, when the Defendants received the Letter Before Action, he had become familiar with it, including clause 5.2, but I accept his evidence that he would not have reviewed the JVA in any detail before that time.

He agrees that he was aware of what Teampol were charging.

His evidence is that he did not work on the Cladding Invoices but was copied in to them. He agrees that he did get involved in formatting drafts of the Tydwell Valuation Spreadsheets, and as a result appeared as author within the meta data. He provides an example where the figures in the spreadsheet that was sent to him were not changed after he worked on the spreadsheet and sent it back to Mr John.

In fact, it appears that on at least one occasion he went rather further than this. In August 2020, he reviewed a proposed draft of a Tydwell Valuation Spreadsheet that had been prepared by Mr John and replied to Mr John, copying his father and his mother and his brother, Mr Osman Mirza, making two comments. One was to remove his workings at one place, and the other was to suggest adding another variation for additional preliminaries.

He was asked about this in cross examination and in particular it was put to him that he had suggested deleting a figure which showed what percentage of the project was now being stated to be complete in order to disguise the way the figures for percentage works completed had been arrived at. The percentages involved had been presented in a more straightforward manner in the matching spreadsheets received from Teampol.

Having considered the spreadsheets, whilst the Tydwell Valuation Spreadsheets were less clearly presented than those from Teampol (and of course included higher figures), I do not think that the way in which the “works completed” figures were compiled could be said to be kept secret. Anyone looking at the spreadsheet would be able to see what percentages of the overall cost was said to have been completed merely by hovering over the relevant cells within the “works completed” column, which would then have shown the percentage by which each of the total figures had been multiplied. Given this, I accept Ameer’s explanation that he suggested deleting the cells that he did because he thought that they were merely a cross check and, in the way they have been presented (to include a long decimal number rather than a percentage figure) demonstrated that they were internal workings, rather than something that was intended to be conveyed to the customer. I therefore do not see anything sinister in Ameer’s comments, but the fact that he made them showed that he was at least on one occasion involved in considering how figures were presented, and not merely in formatting.

It is also relevant that Ameer, as we have seen, was involved in the creation of the 11 June Email, which I regard as being the first email where Cladding Representation 1 was made.

Ameer claims that his involvement was merely as a typist, taking dictation from his father.

Looking at the totality of the evidence, I consider that Ameer was involved in communications containing Cladding Representation 1, but I do not consider that it is established that he was sufficiently involved to be said to have been directing or otherwise procuring Mr John or Mr Mirza or to have “manifestly adopted or approved those representations” in the sense necessary for him to have direct liability in deceit.

Are the other requirements for deceit present?

I have found that Tydwell, Mr John and Mr Mirza (still “the “Representing Parties” in relation to the Cladding Representations) were all responsible for the communications containing misrepresentations in the 11 June Email and the Tydwell Costs Breakdown attached and the Tydwell Valuation Spreadsheets and the Cladding Invoices. There is, however, no evidence that Mr John was involved in the 12 June Email.

I need next to consider the other elements of the tort.

First, I think it is clear that Mr Mirza and Mr John, and therefore Tydwell, knew that the representations they were making would be understood as a representation that the monies then being requested resulted from a substantial increase in the costs of the cladding work owing to additional costs relating to the cladding and to the requirement to replace the render and that this representation was false, whereas they were in fact looking to achieve additional profit out of the Cladding D&B Design Contract beyond that envisaged in the original Cost Plan.

This point is clear, not only from the circumstances I enumerate at [461] to [465] above and also from the fact that great care that was taken to avoid disclosing what were the actual costs to Tydwell of completing the project and therefore how much money Tydwell was making out of this project.

Although I have found that Mrs Mirza and Ameer in any case were not involved, or not sufficiently involved, in making these representations to be regarded as representors, I should add that in my view the Claimants have not done enough to establish that they had the knowledge that a fraud was being committed. Whilst each of them may have had some passing knowledge of the JVA and of the Cladding D&B Contract, it is clear from their witness statements and oral evidence that it did not occur to either of them that Mr Mirza and Tydwell should not be regarded as being at arm’s length to Otaki and it is more plausible that they thought that Tydwell was entitled to charge in the amounts that were being charged. They clearly both deferred to Mr Mirza and considered that he was acting honestly. There is no evidence that they reached a conclusion that Tydwell was claiming amounts under the Cladding D&B Contract that went beyond what would be allowed under the Costs Plan. They were each, in fact, concentrating on other parts of the business rather than the contractual and invoicing arrangements with Otaki.

Secondly, it is obvious that the Representing Parties intended that Otaki would act on these matters.

Thirdly, Otaki was induced to make payments that were kept by Tydwell and thereby suffered loss, in that it paid amounts that were kept by Tydwell that it would not have paid absent the misrepresentations. There may be a question about how far the directors of Otaki actually believed that the amounts being claimed by Tydwell arose from increasing necessary costs and expenses. Mr Lewin was certainly aware of Mr Morjaria’s scepticism on this point and his response, where he reserved the right to seek further tenders, suggests that he shared some of Mr Morjaria’s suspicion. Nevertheless, the representations made did induce the payments to be made, whether there was scepticism about them or not.

I consider therefore that all the elements of deceit are made out as regards a deceit practised by the Representing Parties on Otaki.

As regards a deceit on Mr Morjaria, this is not as straightforward. The representations in the 12 June Email and the Tydwell Valuation Spreadsheets and Cladding Invoices were not directly made to him, although it more likely than not was in the contemplation of the Representing Defendants that the 12 June Email would be passed to him. However, the representation in the 11 June Email was directly made to Mr Morjaria.

Arguably, it was not predictable that these would lead to further capital requirements from Mr Morjaria since they were covered by the amounts received under the Mace settlement.

Nevertheless, it is fair to conclude that the Cladding Representation made in the 11 June Email was made with the intention of inducing Mr Morjaria to agree to the payments and not to prevent Otaki from making them and I consider that this was sufficient misrepresentation and intent to support the practice of a deceit on Mr Morjaria.

I do not think it can be said, however, that Mr Morjaria relied on the representations. Clearly, he did not believe them. He made a tactical decision not to challenge the payments at the point they were being made but reserved the right to do so later, and indeed did make a later challenge.

I consider, therefore, that Mr Morjaria’s case (and Mrs Morjaria’s case) as regards the Cladding Representations giving rise to deceit that is actionable by them is not made out.

THE OTHER BASES OF CLAIM PURSUED IN RELATION TO INVOICING AND CLADDING

The other pleadings in relation to this matter

The Claimants have been particularly wide-ranging in the way in which they have pleaded causes of action in relation to invoicing (including that relating to cladding) based on the facts that I have already summarised. In addition to the straightforward claims in deceit that I have already dealt with, they claim further or in the alternative:

I am obliged to consider each of these separate causes of action, and will do so in turn, starting with breach of the JV/Tydwell Contracts and the overpayment, as the position on this informs the other causes of action.

Breach of the of the JV/Tydwell Contracts and the overpayment

The claim for the JV/Tydwell Contracts and the overpayment is pleaded at paragraphs 79 - 81 of the PoC as follows:

“79.

Further or alternatively, Tydwell breached the JV/Tydwell Contracts by:

a.

Failing to provide the terms and conditions of contracts entered into with third parties (in breach of clause 2.5 of the Procurement Contract and Development Contract and clause 2.4 of the D&B Contract) or obtain written consent for engagement of third parties or the incurring of costs or the amount of those costs (in breach of clause 4.2 of the Property Management Contract).

b.

Failing at any time prior to the Letter of Response, to inform the JV Entities that the Requests, Invoices or Cladding Invoices included sums extracted by way of fees, or the level of those fees, or which part of the sums invoiced were in respect of those fees (in breach of clause 2.1.12 of the Procurement Contract and Development Contract and clause 2.10.1 of the D&B Contract).

c.

Failing, at any time prior to 2021, to provide invoices raised by third parties for which payment was sought or, at any time, to provide receipts for payments received by third parties (in breach of clause 18 of the Procurement Contract and Development Contract and clause 2.10.1 of the D&B Contract).

d.

Demanding sums in excess of those to which they were entitled under those agreements (in breach of the implied term of good faith in respect of each of the JV/Tydwell Contracts).

e.

If, which is denied, those agreements did allow for the charging of fees, demanding a fee that was in excess of a reasonable market rate for services provided (in breach of the implied term of good faith in respect of each of the JV/Tydwell Contracts).

80.

Further, or alternatively, any sum paid to Tydwell by the JV Entities in excess of that (a) used to defray third party costs properly incurred by Tydwell in furtherance of the JV; and (b) if, which is denied, such fees were payable, fees paid to Tydwell, was subject to an implied agreement (or agreement by conduct) that any part of the sum not used for these purposes would be repaid to the JV Entities on demand.

81.

The JV Entities hereby demand repayment of all such sums (being the Misappropriated Sum or, alternatively, the Misappropriated Sum minus the Purported Fees). Accordingly, that sum is claimed in debt, alternatively damages.

The Defendants’ response within the Defence and Counterclaim may be summarised as follows:

As is admitted by the Defendants, clause 2.5 of the Procurement Contract and the Development Contract and clause 2.4 of the Cladding D&B Contract each required the Developer (Tydwell), unless instructed otherwise in writing, to submit to the Employer (Viper or Otaki) for approval the proposed terms and conditions of sub-contracts. It is clear that these terms were not adhered to. It is also clear that there were breaches of clause 4.2 of the Property Management Agreement, which required written consent for the engagement of third parties or the incurring of costs.

The Defendants are right, however, that these breaches were not complained of at the time and that no separate claim has been made for losses arising from these breaches. These breaches, however, form an important part of the factual matrix to be considered when considering the other causes of action claimed, and indeed, I have already referred to them in relation to the claim for deceit.

In relation to the alleged breach of clause 2.1.12 of the Procurement Contract and of the Development Contract, the Defendants are correct that there is no such clause. There is, however, an obligation under clause 2.12.12 to:

“keep the Employer fully informed and provide the Employer with regular reports on all matters which would be of interest to a prudent employer together with such other information in regard to the Project as the Employer may require.”

I expect that this provision was the one that the Claimants intended to reference. It is, however, curious that they did not correct this incorrect reference in their Reply. In my view this provision was breached whenever there was a refusal to provide supporting invoices in relation to any amount claimed under these agreements, and more generally in that it is clear that a prudent employer would be interested in understanding subcontractor costs.

Clause 2.10.1 of the Cladding D&B Contract provides that:

“ when requested to do so by the Employer ensure that a revised Cost Plan to the Employer is issued for approval together with such information in relation to the revisions as the Employer may require”.

I consider that this particular provision of the Cladding D&B Contract was not engaged since there was no formal request issued by the Employer to revise the Cost Plan. However, there is still a breach of other obligations under the Cladding D&B Contract, as I have noted at [463.iii)] above.

In relation to the pleading at subparagraph 79(c) that a failure to produce invoices and receipts for payment was a breach of clause 18 of the Procurement Contract and Development Contract, there was a clear breach of these provisions. Under clause 18 of each of these agreements, applications for payment of Project Costs needed to be accompanied by invoices or such other available evidence of entitlement as the Funder’s Surveyor may reasonably require. In fact, in all or almost all cases where payments were made under these agreements, Viper was not provided with such invoices or other available evidence. As I have already noted, however, clause 2.10.1 of the Cladding D&B Contract was not, in my view, engaged, although other provisions of the Cladding D&B Contract were.

Again, I note that in relation to any breach of contract claimed, it is relevant that these breaches were not complained of at the time and that no separate claim has been made for losses arising from these breaches. These breaches, however, form an important part of the factual matrix to be considered when considering the other causes of action claimed, and indeed I have already referred to them in relation to the claim for deceit.

In relation to the pleading at subparagraph 79(d) of the PoC, that demands were made for sums in excess of those to which Tydwell was entitled under the JV/Tydwell agreements, I agree that this was the case. Tydwell was entitled under the Procurement Contract and the Development Contract to be paid for “Project Costs” and to be paid a Fee, which needed to be separately claimed. The Property Management Agreement again made a distinction between the recoupment of third-party costs and the charging of a fee. As I have already discussed, it appears that Tydwell invoiced for amounts that were not identified as being fees for its management and which were in excess of third-party costs. In relation to the Cladding D&B Agreement, as I have already discussed, amounts were claimed that were in excess of those which were legitimately claimed in accordance with the Cost Plan.

However, I part company with the Claimants in relation to the further pleading at subparagraph 79(d) of the PoC, that demanding sums in excess of those to which Tydwell was entitled under those agreements breached an implied term of good faith in respect of each of the JV/Tydwell Contracts. The reasoning for this is explained by the Claimants’ Closing submission on the basis that such a duty is necessary to give the contracts business efficacy, given the circumstances in which they were concluded: these were not ordinary building contracts between an employer and a contractor, they were contracts between a JV Entity and a company owned by one of the parties to that JV, who had a duty to act in good faith under clause 12 of the JVA. This in the Claimants’ submission brings it into the category of ‘relational’ contracts involving trust and confidence discussed in Al Nehayan at [167] where each party is entitled to trust “that the other party will act with integrity and in a spirit of co-operation”.

The Claimants argue that most of the elements of a “relational contract” identified by Fraser J in Bates v Post Office Ltd (No.3 Common Issues) [2019] EWHC 606 (QB) at [725] are present here. Such ‘relational’ contracts involve trust and confidence but of a different kind from that involved in fiduciary relationships.

The characteristics identified by Fraser J as being relevant in deciding whether a contract was relational include those in the following list:

This list was not intended by Fraser J to be exhaustive and, as was noted by Coulson LJ in Candey Ltd v Bosheh [2022] EWCA Civ 1103; [2022] 4 W.L.R. 84 at [41], it should be approached as “a sense check rather than a series of statutory requirements”.

Having considered that list in that light, whilst I agree that the JVA may, and should, be regarded as a relational contract, I do not share the Claimants’ conclusion that the JV/Tydwell Contracts or any of them fall into the same category. The individual JV/Tydwell Contracts were not long-term contracts: they were particular contracts to undertake particular tasks. There was no real mutuality of expectation: Tydwell was the service provider and the only material expectations of the JV Entities was that they would pay the amounts due from them. There was not an especially high degree of communication. There was no exclusivity in the relationship created by each of those contracts, even if there was a degree of exclusivity in the broader relationship involving Mr Mirza created by the JVA.

I therefore find against the Claimants in relation to this narrow point.

In relation to the pleading at subparagraph 79(e) of the PoC, that demanding a fee that was in excess of a reasonable market rate for services provided was in breach of an implied term of good faith in respect of each of the JV/Tydwell Contracts, as I have not found an implied term of good faith in any of the JV/Tydwell Contracts, this pleading must fail as well. Except in relation to the Cladding D&B Contract, the only amounts that I am accepting as having been invoiced by Tydwell for its own fees are those mentioning a “Project Management Fee”, and I do not think it has been established that the total of those Project Management Fees were in excess of a reasonable market rate. As regards fees under the Cladding D&B Contract, the issue is not whether a fee for Tydwell was reasonable, but is whether the increase in fees over and above the original £750,000 allowed within the Cost Plan was justified by additional costs and expenses that were reasonably necessary. I have ruled that they were not.

In relation to the pleading at paragraph 80 of the PoC, I consider that it follows from my findings so far that the circumstances bear out the Claimants’ contention.

Under the Procurement Contract and the Development Agreement, amounts were paid in anticipation of third-party costs and, where there was a reference to management fees in respect of invoices already delivered or to be delivered by Tydwell. If those third-party costs were not incurred, or if Tydwell did not invoice for management fees as anticipated, it is obvious that the advances would need to be repaid. Essentially, the same analysis applies under the Property Management Agreement. The point is so obvious that I am not sure that any implied term is necessary to reach such a conclusion, but if it is then I find that such a term exists as being obviously necessary in order to bring about business efficacy.

As regards payments made under the Cladding D&B Contract, a slightly different analysis applies. After payment of the initial sum of £750,000, the agreement provides for payments to be made as the project progresses and for an invoice to be submitted plus VAT following practical completion of the Project. In practice, invoices were issued as the project went along – five invoices were issued during Phase 5, although the Defendants have not been able to be clear as to which contracts these related. Insofar as amounts were received in respect of the Cladding D&B Contract but were not justified in accordance with the Cost Plan, so that Tydwell received more than it was entitled to under that agreement, then Tydwell must be obliged to return those amounts, but I do not think that this obligation arises as the result of an implied term.

It follows from my conclusions above that (looking at the allegations of breach of contract in relation to the JV Entity/Tydwell Agreements only and subject to any limitations issues), I accept the legitimacy of the Claimants’ demand at paragraph 81 to the extent that any payments were made to Tydwell that are in excess of the sums due to Tydwell under the JV Entity/Tydwell Agreements.

Conclusion

On the basis of the analysis above, I have found that there is a good claim against Tydwell and Mr Mirza for breach of the JV/Tydwell Contracts.

I discuss further the issues relating to the quantum of this claim (and including the effect of limitation) towards the end of this judgment.

Breach of the JVA and of fiduciary duty

The claim for breach of the JVA and of fiduciary duty is pleaded as follows:

“Further or alternatively, Mr Mirza has breached clauses 2.1, 5.2 and 12 of the JVA, and Mr Mirza and/or Tydwell have breached their fiduciary duties to the Morjarias and/or the JV Entities, as follows:

a.

By making the fraudulent Invoice Representations and Cladding Representations.

b.

By causing the JV Entities to make payments to Tydwell in excess of that required in order to defray costs that had been properly incurred (or which it was honestly believed would be incurred) by Tydwell to third parties in furtherance of the JV.

c.

By obtaining and/or refusing to repay the Misappropriated Sum (or any part of it) without having any entitlement to those monies.

d.

By charging “fees” to the JV without the informed consent of the Morjarias and/or the JV Entities.

e.

If which is denied, the JV/Tydwell Contracts did allow for the charging of fees, by entering into those contracts for profit with the JV Entities without the informed consent of the Morjarias and/or the JV Entities.

f.

By Mr Mirza causing his wholly owned company, Redwire to demand payments from the JV without having any entitlement to those monies and to thereby obtain a profit, without the informed consent of the Morjarias and/or the JV Entities.

g.

By causing the JV Entities to pay VAT on the payments (in (a) to (f) above) such that advances of VAT Refunds were payable to Mr Mirza (pursuant to clause 4.1.1 of the JVA).

h.

If, which is denied, the JV/Tydwell Contracts did allow for the charging of fees, charging fees that were excessive and without the informed consent of the Morjarias and/or the JV Entities.

i.

By failing to inform the Morjarias of matters material to the JV including the JV/Tydwell Contracts, the Teampol Contract, the Purported Fees or the true position as to the fees incurred by Tydwell to third parties in furtherance of the JV.

j.

By failing to disclose the wrongdoing as set out above.”

The Defendants’ response within the Defence and Counterclaim is summarised below, together with my findings on each of these matters.

In relation to the representations mentioned at 78(a) of the PoC, the Defendants plead that no such representations were made. I have already found against Mr Mirza, Mr John and Tydwell in relation to this point.

In relation to subparagraph 78(b) of the PoC, the Defendants deny that Mr Mirza or Tydwell caused the JV Entities to make any payments to Tydwell, on the basis that such payments were made as a result of their being approved by the Directors or individuals authorised by the Directors.

This is no answer to the claim. The point is that the Directors were induced to authorise the payments by misrepresentations which the Claimants say involve a breach of contract and breach of fiduciary duty.

The Defendants go on to plead that Tydwell did not charge for any sums in excess of those to which it was entitled.

This is not true. Insofar as sums were claimed during Phases 1- 4, the entitlement of Tydwell to charge was at most for amounts which were properly disclosed as being fees to it pursuant to the Written Project Agreements or as may have been agreed ad hoc as management fees. Any fees not being presented as project management fees were being represented as sums to reimburse third-party costs. Except in relation to fees under the Cladding D&B Contract, to the extent that Tydwell kept any other fees that were so presented and were in excess of third-party costs, Tydwell had no entitlement to those fees. In relation to fees under the Cladding D&B Contract, to the extent that Tydwell has kept amounts paid to it that are in excess of what it was allowed under the Cost Plan in the Cladding D&B Contract, Tydwell had no entitlement to those amounts.

In relation to subparagraph 78(c) of the PoC, the Defendants plead that Tydwell was entitled to receive the sums (they say “wrongly”) characterised as the ‘Misappropriated Sum’ and was under no obligation to repay them. I have already found this not to be so.

The Defence and Counterclaim goes on to say that the basis for the allegation that Mr Mirza received such sums is not understood. This is a pure, and not very meritorious, pleading point based on the construction of the Claimants’ pleading. I think it is eminently clear that the Claimants are alleging correctly that Tydwell has received monies in excess of that which it is entitled to, and that Mr Mirza has benefited from this.

In relation to subparagraphs 78(d) and (e) of the PoC, the Defendants plead that Tydwell had a contractual entitlement to charge for its services under the JV/Tydwell Contracts and what they claim to be a “Preliminary Works Agreement”. The ‘informed consent’ of the Morjarias or the JV Entities was not required; however, Otaki and Viper (as applicable) in fact gave such consent by entering into such agreements.

Insofar as amounts were properly claimed by Tydwell under these agreements or through an ad hoc request for reimbursement of sums genuinely disbursed for the benefit of the JV Entity, I agree that this is the case. However, insofar as Tydwell was making secret profits by obtaining advances or invoicing for amounts that appeared to be expenses to third parties but were in fact amounts that it intended to keep, then this was a breach of fiduciary duty by Mr Mirza in causing Tydwell, a company he controlled and of which he was the principal shareholder and director, to do this. This is also true insofar as he procured or caused Redwire to do the same. The position is a little more nuanced in relation to any claim for payment made in relation to the Cladding D&B Contract. I would consider that the Directors received sufficient information (or at least information that they considered to be sufficient) to make a decision to enter into the Cladding D&B Contract in that they had received some sub-contractors quotes and would, I think, have understood that Tydwell was proposed as the main contractor and was itself charging. However, insofar as they agreed to make payments at the increased amount following the 11 June Email, I do not think you can say that their consent was informed consent. They wanted more information but were denied it. Had they been given the true information, it is extremely doubtful that they would have agreed to this price. They were denied the ability to negotiate, for example, a lower price by restricting the warranty that Tydwell was giving. It was a breach of fiduciary duty for Mr Mirza and Tydwell to arrange for Tydwell to receive a profit that the JV Entities had not consented to with informed consent.

The Defendants plead as regards subparagraph 78(f) of the PoC by denying the contents of that paragraph and stating that Redwire was entitled to receive payment pursuant to the “Redwire Contract”. This is a contract they say arose by conduct because Redwire commenced doing work for the benefit of the JV and was paid for doing so.

I do not think that a case was made out that any such contract existed in the sense that there was ever a contract that one party or the other could enforce going forward, but I think that nothing turns on this. The fact is that the Directors agreed on behalf of the JV Entities to make payments to Redwire on an ad hoc basis of invoices or requests for payment being made. To the extent that these invoices appeared to be seeking recovery of third-party costs and were justified by third-party costs, then the Directors consented to these payments, and I do not think one can say that there was any failure of informed consent. To the extent that there were any that specifically mentioned management fees for Redwire, then as I have done with Tydwell I would give Redwire the benefit of the doubt that it consented to pay this as a fee to Redwire. In such circumstances I consider that the Directors must be presumed to have had whatever information they considered necessary to justify paying that fee, and I will regard them as having given informed consent.

There was, however, a failure to obtain informed consent, and a breach of fiduciary duty by Mr Mirza, to the extent that he procured that Redwire would obtain and keep sums that were not justified by a clear request for a management fee for Redwire’s own work, or wholly justified by third-party expenses.

As to subparagraph 78(g) of the PoC, the Defendants plead that they do not understand the basis for the allegation that Mr Mirza or Tydwell caused the JV Entities to pay VAT on the sums referred to in Subparagraphs (a) to (f). They deny that either of them did so, and plead that the sums paid by the JV Entities to Tydwell were paid as a result of being approved by the Directors or individuals authorised by them and were properly due.

This response combines two of the points that I have already dealt with. The fact that the Directors approved the VAT Payments is no defence to the extent that these payments were procured by misrepresentation, or indeed in the context of fiduciary duties, by a failure to obtain informed consent. I have already commented on the extent of the implications of this point. As to the point that they say these payments were properly due, I have already established that some of the amounts invoiced were not properly due, and to the extent that those amounts were improperly invoiced with VAT added, VAT advances were not properly due under the JVA either.

As to subparagraph 78(h) of the PoC, the Defendants deny that the fees charged were excessive and that there was a failure regarding informed consent. As I have already said, insofar as these were asked for as project management or management fees, these fees do not appear to be excessive, but this is no answer to the point that it appears that third-party costs were inflated. I have also dealt with the question of informed consent.

As to subparagraph 78(i) of the PoC, the Defendants plead that they cannot answer this claim except by way of a general denial to the vague assertion that they failed to inform the Morjarias of matters material to the JV including certain matters (non-exhaustively) listed, but without prejudice to this pleading deny that Mr Mirza or Tydwell were under any obligation to inform the Morjarias of the matters listed.

I agree that the Claimants’ general pleading relating to “matters material to the JV” is too wide to allow a defence to be pleaded. However, insofar as the PoC does list particular matters as being points on which the Morjarias should have been informed, the pleading is fairly made.

As to the denial that Mr Mirza or Tydwell were under any obligation in respect of the matters listed, I agree that Tydwell, which was not a party to the JVA or to any other contract where the Morjarias were a party, was under no such contractual obligation. However, Mr Mirza had accepted under the JVA an obligation to keep Mr and Mrs Mirza “fully informed on the progress of the Joint Venture at all times”; “to act in good faith”; and “to do all things necessary and desirable to give effect of the spirit and intention of [the JVA]”. This obligation would, in my view, at least extend to telling Mr and Mrs Morjaria when new agreements were entered into that would involve expense on behalf of the JV.

I think it is likely that Mr Mirza considered that the Directors were keeping Mr Morjaria up-to-date and this, coupled with emails from Mr Morjaria in the early years suggesting he was relaxed about not being provided with details of fees from subcontractors, perhaps provides a reasonable excuse for not disclosing these matters. They do not, however, provide any excuse for hiding profits that Tydwell was making by taking sums apparently for third-party costs whereas in fact they involved marking up those third-party costs.

As to subparagraph (j) of the PoC, the Defendants deny any wrongdoing and they deny that the contractual or alleged fiduciary duties pleaded at Paragraph 78 would require Mr Mirza or Tydwell to disclose their alleged wrongdoing.

I have found wrongdoing in relation to the Invoice Representations passing off profits that Tydwell intended to keep as third-party costs and in relation to the Cladding Representations passing off a decision to take an increased profit (whether or not Tydwell considered this justified by an increased perception of risk) as a claim for increased costs necessary to complete the project. These involved breaches of the contractual duties owed by Mr Mirza to the JV Entities and to Mr and Mrs Morjaria and a breach of the fiduciary duties I have found owing by Mr Mirza and Tydwell to the JV Entities.

Unjust Enrichment

The elements of a claim in unjust enrichment were recently considered by the Supreme Court in Barton v Morris [2023] UKSC 3; [2023] AC 684 (see at [77] and [228]). The case largely centred around the relationship between an unjust enrichment claim and the question of express or implied terms of contract. However, it provides a restatement of some well-established principles as to the elements of a claim for unjust enrichment.

The court first considers three questions: (i) has the defendant been enriched? (ii) was the enrichment at the claimant’s expense? (iii) was the enrichment unjust? If those three elements are established by the claimant, it is then for the defendant to prove that there is a defence, such as change of position.

A further helpful summary of the principles can be found in Terna Energy Trading doo v Revolut Ltd [2024] EWHC 1419 (Comm), [2024] Bus LR 1401 at [23] onwards. As noted in that case at [28], in Investment Trust Companies v HMRC [2018] AC 275 (SC), Lord Reed (with whom all the other judges agreed) stated at [42]:

“The structured approach provided by the four questions does not, therefore, dispense with the necessity for a careful legal analysis of individual cases. In carrying out that analysis, it is important to have at the forefront of one’s mind the purpose of the law of unjust enrichment. As was recognised in [Menelaou v Bank of Cyprus UK Ltd [2016] AC 176], para 23, it is designed to correct normatively defective transfers of value, usually by restoring the parties to their pre-transfer positions. It reflects an Aristotelian conception of justice as the restoration of a balance or equilibrium which has been disrupted. That is why restitution is usually the appropriate remedy”.

The claim for unjust enrichment is pleaded at paragraphs 82 to 83 of the PoC as follows:

“82.

By receipt of the Misappropriated Sum, Tydwell and Redwire (and any of the other Defendants that have received the proceeds of those sums) have been enriched at the expense of the relevant JV Entity that made each payment.

83.

The enrichment was unjust in that:

a.

Those sums were paid by the JV Entities pursuant to a mistake, being that the sums were required for and would be used to defray costs or expenses incurred by Tydwell; further or alternatively, that the sums were properly payable to Tydwell under the JVA or the JV/Tydwell Contracts or otherwise.

b.

Further or alternatively, the consideration for the payment of those sums has entirely failed. Redwire had no right to the payments. The right of Tydwell to retain the sums is conditional upon those sums being required and properly used to defray costs and expenses incurred by Tydwell.

c.

Further or alternatively, the enrichment was as a result of the wrongdoing, being the Invoice Representations and/or Cladding Representations and/or the breaches of fiduciary duty (and/or dishonest assistance in those breaches) as set out herein.”

In the Defence and Counterclaim, the Defendants pleaded that paragraph 82 of the PoC is denied for the reasons given in relation to paragraph 83 below. Further or alternatively, it is denied that any claim in unjust enrichment is available in circumstances where it would conflict with the terms of the contracts pursuant to which the sums were paid.

Paragraph 83 is denied. The denial is supported by the following reasoning:

“88.1

As to Subparagraph (a), it is to be inferred that the JV Entities made no such mistake but believed such sums to be properly payable under the terms of the JV/Tydwell Contracts and the Preliminary Works Agreement (as was the case). Further or alternatively it is denied that the alleged belief of the JV Entity as to the basis on which the sums were required is capable of constituting a mistake for the purposes of a claim in unjust enrichment.

As to Subparagraph (b):

(a)

As to the first and second sentences, the consideration was the performance by Tydwell and Redwire of their obligations under the JV/Tydwell Contracts, Preliminary Works Agreement and Redwire Contract.

(b)

The third sentence is denied. The basis for such alleged conditionality is not understood.

The wrongdoing alleged in Subparagraph (c) is denied for the reasons set out elsewhere within the Defence and Counterclaim.

Analysis

Standing back from the pleadings and considering the four elements of a claim in unjust enrichment, I find as follows.

In relation to the first question: has the defendant been enriched, it seems to me that the answer to this is clear. Tydwell and/or Redwire obtained amounts in excess of its contractual entitlement under the Tydwell/JV Contracts or the Redwire Contract. To that extent, Tydwell has been enriched. To the extent that Redwire received any such sums, it too has been enriched. Mr Mirza is enriched to the extent that his interest in Tydwell or Redwire was made more valuable or to the extent that he was able to withdraw money from Tydwell or Redwire as a result of Tydwell’s or Redwire’s enrichment.

In relation to the second question: was the enrichment at the claimant’s expense, it seems to me that the answer to this is equally clear - this enrichment came at the expense of the relevant JV Entity and, to the extent that it was funded by Mr Morjaria, at his expense also.

In relation to the third question: was the enrichment unjust? At first sight yes, since the enrichment arose out of misrepresentations as I have found and in the case of Mr Mirza in breach of contractual duties of good faith and/or to make disclosures and in the case of Mr Mirza and Tydwell, breach of fiduciary duty.

I must consider, however, the arguments put forward by the Defendants in their closing skeleton argument.

They argue that the potential “unjust” factors on which the Claimants rely comprise:

The Defendants argue that there is a fatal difficulty with the claim under this heading in its interaction with the relevant contracts between the parties. They argue that where a benefit has been transferred pursuant to a contract which is subsisting or which has been discharged by performance, there is simply no room for a claim in unjust enrichment, because that would subvert the parties’ own allocations of risk and valuation as expressed in the contract and quote Goff & Jones, The Law of Unjust Enrichment 10th Ed., at [3-12].

They also cite in support of this proposition, MacDonald Dickens & Macklin v Costello [2011] EWCA Civ 930, [2012] QB 244. The central finding of Etherton LJ at [30] was that “the general policy of refusing restitutionary relief for unjust enrichment against a defendant who has benefited from the plaintiff’s services rendered pursuant to a contract to which the defendant was not a party” to be a “sound legal policy”. Applied to our current case, I think this maxim provides a reason why Mr Mirza could not be the subject of a claim in unjust enrichment to the extent that this is seen to arise under a contract between one of the JV Entities and Tydwell.

The Defendants cite also, Dargamo Holdings Ltd v Avonwick Holdings Ltd [2021] EWCA Civ 1149, [2021] CLC 583, at [133], where Timothy Lloyd LJ states that:

“where the basis of the consideration is expressly and unconditionally spelt out on the face of a valid and subsisting contract, as here, there is no proper scope for inquiring into an alternative basis that is plainly contrary to the express basis freely agreed between the parties”.

Finally, they refer to Barton v Morris [2023] UKSC 3, [2023] AC 684, per Lady Rose JSC at [88]-[106]. Here, I consider the essential ratio of the case to be that stated at [96]:

“When parties stipulate in their contract the circumstances that must occur in order to impose a legal obligation on one party to pay, they necessarily exclude any obligation to pay in the absence of those circumstances; both any obligation to pay under the contract and any obligation to pay to avoid an enrichment they have received from the counterparty from being unjust. The “silence” of the contract as to what obligations arise on the happening of the particular event means that no obligations arise as Lord Hoffmann made clear in Belize cited earlier. This excludes not only an implied contractual term but a claim in unjust enrichment.”

On the basis of these various dicta, the Defendants argue that Tydwell’s entitlement to be paid in return for the provision of its services is governed by the contracts which it entered into with the JV Entities. Those contracts were never terminated for breach; they were discharged by performance. To seek to unwind payments made pursuant to those contracts would be to subvert them, which the law of unjust enrichment will not do.

The Defendants rightly point out that the unjust factors relied upon by the Claimants in their pleadings are mistake; failure of consideration/failure of basis; or wrongdoing.

The Defendants argue in their skeleton argument that there was no such mistake on the part of the JV Entities, who believed that the sums were properly payable to Tydwell under the terms of the contracts they concluded with Tydwell. In any event, the mistake sought to be relied upon by the Claimants is not an actionable mistake for the purposes of unjust enrichment, because that would cut across the contractual relationship between the parties. They refer here to Goff & Jones at [9-02] and at [9-98] where it is said:

“Where a benefit is mistakenly conferred by one party on another under a contract, a claim in unjust enrichment will commonly fail even if the mistake would otherwise support such a claim. As we explain in Ch.3, the contract will bar the claim, to the extent that it entitles the defendant to receive the relevant benefit. For the claim to succeed, the claimant will need to show that the contract is invalid, being either non-existent, void or voidable. This is not a matter for the law of unjust enrichment, but the law of contract.”

They point out that as Lord Sumption explained in Fairfield Sentry Ltd v Migani [2014] UKPC 9 at [18]:

“an enrichment is not unjust if the benefit was owed to the defendant by the claimant under a valid contractual, statutory or other legal obligation”.

I agree that a mistake by itself would not form the basis for an unjust enrichment claim.

The Defendants also argue that the Claimants’ ground based on failure of basis cannot succeed as the consideration for the payment was the provision of services by Tydwell, which did not fail, and the contracts provide the justifying grounds for the payments and thus rule out a claim in unjust enrichment. They cite Goff & Jones at [12-06].

I agree with the Defendants on this point.

I part company with the Defendants’ argument, however, when we come to consideration of the final “unjust” element pleaded by the Claimants - that of wrongdoing. I have already determined that the Claimants are correct that the enrichment was as a result of wrongdoing in relation to the Invoice Representations and/or Cladding Representations and/or the breaches of contract and fiduciary duty. It would be unjust for Tydwell, Redwire (to the extent that it received any of the Misappropriated Sum), or (to the extent that any of these monies were passed on by Tydwell or Redwire to Mr Mirza or for his benefit) Mr Mirza, to be able to retain amounts that they receive through deception. The fact that these amounts were paid purportedly under a contract is no defence to this to the extent that these amounts were not due under any of the relevant contracts as I have already found. This element of wrongdoing distinguishes the facts here from the cases mentioned above which were solely based on contract.

On the basis of the analysis above, I have found that there is a good claim in unjust enrichment against Tydwell and Mr Mirza ((and Redwire, to the extent that it received any of the Misappropriated Sum) in favour of the JV Entities to the extent that the JV Entities were presented with invoices that falsely represented that amounts were due that were not due.

Dishonest Assistance

The elements of a claim in dishonest assistance were summarised by Cockerill J in FM Capital Partners Ltd v Marino [2018] EWHC 1768 (Comm) at [82]:

The requirement of dishonesty in the context of a claim for dishonest assistance was recently considered by the Court of Appeal in Group Seven Ltd v Nasir [2019] EWCA Civ 614 (“Group Seven”), in the light of the Supreme Court’s decision in Ivey v Genting Casinos (UK) t/a Crockfords [2017] UKSC 67. At [58] of Group Seven, the Court summarised the test as follows:

“In the light of Ivey [2018] AC 391, it must in our view now be treated as settled law that the touchstone of accessory liability for breach of trust or fiduciary duty is indeed dishonesty, as Lord Nicholls so clearly explained in [Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378], and that there is no room in the application of that test for the now discredited subjective second limb of the Ghosh test. That is not to say, of course, that the subjective knowledge and state of mind of the defendant are unimportant. On the contrary, the defendant’s actual state of knowledge and belief as to the relevant facts forms a crucial part of the first stage of the test of dishonesty set out in Tan. But once the relevant facts have been ascertained, including the defendant’s state of knowledge or belief as to the facts, the standard of appraisal which must then be applied to those facts is a purely objective one. The court has to ask itself what is essentially a jury question, namely whether the defendant’s conduct was honest or dishonest according to the standards of ordinary decent people.”

The reference to Ghosh is referring to the test for dishonesty found in R v Ghosh [1982] QB 1053, which had earlier been held to apply in the criminal law, which required not only the application of an objective standard of honesty, but also (the now discredited second limb) subjective knowledge by the defendant that what he was doing would be regarded as dishonest by honest people.

There are therefore two stages to the test:

As to “blind-eye” knowledge, this can be imputed to the defendant, but only if two conditions are satisfied:

Where allegations of dishonesty are made against corporations, large or small, that must be evidenced by the dishonesty of one or more natural persons, because as Sir Geoffrey Vos MR explained in Stanford at [47]:

“the rules that have been laid down as to what amounts to dishonesty for the purposes of dishonest assistance cannot be circumvented…one cannot avoid the subjective dishonesty stage of the test in order to proceed directly to the objectively dishonest stage…The subjective dishonesty that needs to be established, after consideration of all the facts, must either be the dishonesty of a person within the corporate or the blind-eye knowledge of such a person”:

If the requirements are satisfied, the dishonest assistant is liable:

The Claimants plead this cause of action at paragraphs 84 and 85 of the PoC as follows:

“84.

The breaches of fiduciary duties by Mr Mirza and/or Tydwell set out in section IV(3)(ii) above were procured, induced or assisted by each other (by reason of Mr Mirza being the director, owner and controlling mind of Tydwell) and/or by Redwire and/or Boomzone and/or by Mr John and/or Mr Ameer Mirza and/or Mrs Mirza by reason of their positions within Tydwell and their involvement in the matters alleged as particularised above.

85.

The Defendants thereby acted dishonestly in that their knowledge of the relevant matters was such as to render their conduct contrary to normally acceptable standards of honest conduct.”

The reference to section IV(3)(ii) refers back to paragraph 78 of the PoC, which I have reproduced at [532] above (“Paragraph 78”).

These allegations are denied in the Defence and Counterclaim. In summary it is pleaded that:

The Claimants responded to some of these points in the Reply:

In summary, the relevant points within:

The Reply does not make any response to the Defendants’ point that paragraph 85 of the PoC fails to identify the “relevant matters” of which the Defendants are said to have had knowledge or the basis on which each of them is said to have had knowledge of the same.

I have already found that both Mr Mirza and Tydwell had fiduciary obligations towards the JV Entities and that Mr Mirza had contractual obligations towards Mr and Mrs Morjaria and that these obligations were breached.

The next question is whether the allegations are correct that the various parties who have been accused of this did indeed assist in, induce or procure the breach, in a manner that had some causative effect and played more than a minimal role in the breach being carried out.

In their closing written submissions, the Defendants repeat the point that there is no proper particularisation of what acts of assistance are alleged as against the alleged dishonest assistants. In view of the clarification given within the Reply, I consider that this point is misplaced. It is clear enough what is being alleged.

As to whether these matters had had some causative effect and played more than a minimal role in the breach being carried out, I find as follows:

Finally, I turn to the final, and in many ways the most crucial, element of the tort: whether the various parties have acted dishonestly.

As we have seen, paragraph 85 of the PoC pleads this matter in a very general way on the basis that the Defendants’ “knowledge of the relevant matters was such as to render their conduct contrary to normally acceptable standards of honest conduct”. The Defendants complained about this pleading within the Defence and Counterclaim and the pleading was not further particularised within the Reply.

Whether this pleading was sufficient needs to be considered separately in relation to each of the relevant Defendants.

As regards Mr Mirza and Tydwell and Redwire (each of which companies must be regarded as having the same knowledge as Mr Mirza as he was the controlling mind of each), I consider that it is obvious what is being referred to here. Mr Mirza was clearly aware of the provisions of the JVA and of the JV/Tydwell agreements and all the circumstances causing him and Tydwell to have fiduciary duties. He went out of his way to conceal the value of third-party invoices that underlined the demands for payment that he made. The allegations of dishonesty against him are made throughout the PoC. Accordingly, against him and against Tydwell and Redwire, the allegation of dishonesty has been adequately pleaded and has been proved.

As regards Mr John, I note that there is no evidence or pleading that he had a sufficiently intimate knowledge of the JVA or of the other circumstances creating fiduciary duties on the part of Mr Mirza or Tydwell. However, this of itself, does not protect him from the claim for dishonest assistance if he knew that he was assisting in a dishonest scheme: see Group Seven at [44] where the court quotes Lord Millett in Grupo Torras SA v Al-Sabah [1997] CLC 1553 at [135] where he says:

“It is obviously not necessary that he should know the details of the trust or the identity of the beneficiary. … It may be sufficient that he knows that he is assisting in a dishonest scheme.”

As to what knowledge Mr John had that rendered his part in these affairs obviously dishonest, I do not think it is established (or pleaded) that he was aware of any fiduciary duty. However, it is more likely than not that he was aware of the terms of the contracts between Tydwell and the JV Entities and that in presenting the invoices and requests for payment in the way that he did, he knew that he was part of an arrangement that was hiding from the JV Entities the true profit that Tydwell was taking. This I consider is sufficient to establish dishonesty and Mr John has put forward no defence to contradict this finding.

As regards Mrs Mirza and Ameer, as I have found that they had insufficient involvement to allow an accusation of dishonest assistance to succeed against them, I perhaps do not need to deal with the question of their dishonesty. However, the fact that there has been no particularisation of what knowledge they are said to have possessed that rendered their involvement (such as it was) dishonest provides an additional reason why the Claimants may not succeed in relation to this dishonest assistance against these defendants.

On the basis of the analysis above, I have found that there is a good claim against Tydwell, Redwire and Mr Mirza for dishonest assistance of one another in relation to each party’s breaches of fiduciary duty. I also find Mr John to be liable for dishonest assistance in relation to such breaches. However, I make no such finding against Mrs Mirza or Ameer.

Knowing Receipt

This cause of action was summarised by Lord Sumption in Williams v Central Bank of Nigeria [2014] UKSC 10, [2014] AC 1189 at [31], as follows:

“The essence of a liability to account on the footing of knowing receipt is that the defendant has accepted trust assets knowing that they were transferred to him in breach of trust and that he had no right to receive them. His possession is therefore at all times wrongful and adverse to the rights of both the true trustees and the beneficiaries. No trust has been reposed in him. He does not have the powers or duties of a trustee, for example with regard to investment or management. His sole obligation of any practical significance is to restore the assets immediately.”

A summary of the requirements for a claim in knowing receipt is set out in Iranian Offshore Engineering and Construction Co v Dean Investment Holdings SA [2019] EWHC 472 (Comm) at [175] (by reference to the summary made by Hoffmann LJ (as he then was) in El Ajou v Dollar Land Holdings [1994] 2 All E.R. 685 at 700). Three requirements are set out:

The nature of a claim in knowing receipt was recently considered in detail by the Supreme Court in Byers v Saudi National Bank [2024] AC 1191, in which it was held that a claim in knowing receipt depended upon the claimant having a continuing equitable proprietary interest in the property transferred to the defendant at the time it was received by the defendant, so that if, by the time the defendant received the property, the claimant’s equitable proprietary interest had been extinguished or overridden (by, for example, a transfer to “equity’s darling” - a bona fide purchaser for value without notice), a claim in knowing receipt would fail.

The knowledge of a person who has beneficially received money is to be evaluated at the time of the receipt. If at that time the recipient gave value and did not know of the circumstances relating to the provenance of the money, he will be a bona fide purchaser for value, with the consequence that the claim will fail: see Stafford QC et al., Fiduciary Duties, Directors and Employees, 2nd edition (“Stafford”), at section 7.136.

Where knowing receipt is established, the claimant may bring either a proprietary claim by following the trust property wrongly transferred or tracing its value into something else substituted for it, or a personal claim against the knowing recipient to account in equity. The latter is usually only necessary where following or tracing has been rendered impossible by dissipation or loss of the identifiable asset: Arthur v The Attorney-General of the Turks & Caicos Islands [2012] UKPC 30 at [34]. The proprietary claim arises because the knowing recipient is a constructive trustee, so that if he disposes of the money or property, he is liable to restore it or account for its value: see Stafford at section 7.100.

The Claimants plead this cause of action at paragraphs 86 and 87 as follows:

“The Misappropriated Sum was transferred in breach of the fiduciary duties set out above. In the premises, those sums were received by Tydwell and Redwire (and any of the Defendants that have received the proceeds of those sums) in circumstances in which it would be unconscionable to permit those parties to retain them.

87.

Further or alternatively, the Misappropriated Sum is held by Tydwell and Redwire (and/or any of the Defendants that have received the proceeds of those sums) on constructive trust.”

These allegations are denied in the Defence and Counterclaim. In summary:

No further pleading was made by the Claimants in relation to this cause of action within the Reply.

Again, it is relevant that I have already found that both Mr Mirza and Tydwell had fiduciary obligations towards the JV Entities and that these fiduciary obligations were breached. The first two requirements of this cause of action are therefore present. There has been:

As to the third requirement, knowledge on the part of the defendant that the assets received are traceable to a breach of fiduciary duty. It is clear from the circumstances I have already outlined that Mr Mirza would have had that knowledge. As Mr Mirza was the controlling mind of both Tydwell and Redwire I conclude that they also have that knowledge. Insofar, however, as the Claimants are making a claim for knowing receipt against any other of the Defendants, however, I do not think that the knowledge element of the claim has been sufficiently pleaded or proved.

In their written closing submissions the Defendants argued that Tydwell and Redwire were entitled to receive the sums that they did as consideration for the services provided, but I have already found in my analysis of the breach of contract claim that they received amounts that were in excess of what they were entitled to contractually, and that they obtained such amounts as a result of misrepresentations in circumstances of those misrepresentations involved breaches of fiduciary duties. I therefore reject this argument.

The Defendants make a pleading point that the Claimants have not adequately pleaded the necessary knowledge. In this case (where the cause of action is not dependent on fraud as such) I am not minded to take this point in favour of Tydwell, Redwire or Mr Mirza. The Claimants’ pleading refers to “circumstances in which it would be unconscionable to permit those parties to retain them” and this reference is sufficient for the Defendants to have understood sufficiently to have realised that the circumstances being referred to in this case must have included knowledge of receipt of a sum of money transferred in breach of fiduciary duties.

However, in relation to any other of the Defendants, I consider that some clearer pleading was necessary for them to have been able to understand the case made against them in this regard and that, together with the fact that I do not think the Claimant has done enough to show that any other of the Defendants had a sufficient understanding of the fiduciary duties arising as a result of the JVA and the relationship between the JV Entities on the one hand and Mr Mirza and Tydwell on the other hand, leads me not to make any finding of knowing receipt in respect of them.

In conclusion on this point, to the extent that Mr Mirza, Tydwell or Redwire have received any of the Misappropriated Sum arising from the breach of duty of the other of them, they are liable for knowing receipt.

Unlawful Means Conspiracy

The elements needed to establish an unlawful means conspiracy were summarised by Nourse LJ in Kuwait Oil Tanker SAK v Al Bader [2000] 2 All E.R. 271 (Comm) at [108] as follows:

“A conspiracy to injure by unlawful means is actionable where the claimant proves that he has suffered loss or damage as a result of unlawful action taken pursuant to a combination or agreement between the defendant and another person or persons to injure him by unlawful means, whether or not it is the predominant purpose of the defendant to do so.”

The principles applicable to different elements of the tort are set out in detail in Lakatamia Shipping Co Limited v. Su [2021] EWHC 1907 (Comm) at [76]-[106] and were briefly summarised by Henshaw J in Ivy Technology v Martin [2022] EWHC 1218 (Comm) as follows:

“(i)

Combination

582.

The following principles were set out in Lakatamia in relation to the nature of the combination required for a claim in conspiracy:

i)

The combination must be to the effect that at least one of the conspirators will use unlawful means (§ 830).

ii)

It is unnecessary, in order for a combination to exist, that it be contractual in nature or that it be an express or formal agreement (§ 83).

iii)

It is enough for liability to arise that a defendant be sufficiently aware of the surrounding circumstances and share the same object for it properly to be said that they were acting in concert at the time of the acts complained of. However, the conspirators do not need to have exactly the same aim in mind (§ 85).

iv)

Direct evidence of the combination is not essential. It is also unnecessary for the claimant to pinpoint precisely when or where it was formed (§ 86).

v)

Participation in a conspiracy is infinitely variable and may be active or passive. The courts recognise that it will be rare for there to be evidence of the agreement itself (§§ 86-87).

583.

It is necessary to look at all the particular facts of the case to establish whether there was a combination and whether someone participated, actively or passively, in the conspiracy. Being aware that someone was committing a potentially unlawful act, but (simply) not taking steps to stop it, may not suffice to demonstrate a combination, but it all depends on the circumstances, and in particular the position of the individual concerned: Lakatamia § 96.

584.

Counsel for Mr Bell added also referred to the principle that to establish a conspiracy to commit deceit it is necessary to establish that deceit was committed and that it was part of a concerted action taken pursuant to the agreement:

(ii)

Intention

585.

The intention to injure the claimant need not have been the defendant’s main or only purpose in order for liability to arise. This element will be satisfied simply where the gain to the conspirators is necessarily at the expense of loss to the victim: Lakatamia § 91.

(iii)

Knowledge

586.

The parties appeared to agree that, as found by Arnold and Phillips LJJ in The Racing Partnership Ltd v Sports Information Services Ltd [2020] EWCA Civ 1300 §§ 139 and 171, “knowledge of the unlawfulness of the means employed is not required for unlawful means conspiracy”.

587.

To this counsel for Mr Bell sought to add the proposition that the defendant must know all the facts which make the transaction unlawful (relying on The Racing Partnership), and that the requirement for knowledge of all the facts that make a transaction unlawful must necessarily include knowledge of any contractual provision the breach of which is alleged to constitute the unlawful means.

[Henshaw J went on to confirm and explain his agreement with this proposition]

…..

589.

“Blind-eye” knowledge will be sufficient: The Racing Partnership § 159. Blind-eye knowledge requires a suspicion that certain facts may exist, and a conscious decision to refrain from taking any step to confirm their existence: Group Seven & Ors v Nasir [2019] EWCA Civ 614; [2020] Ch 129 §§ 59-60.

(iv)

Unlawful means

590.

A breach of contract can constitute unlawful means: The Racing Partnership § 148. The tort of deceit may also constitute unlawful means.”

Cockerill J in FM Capital Partners Ltd v Marino [2018] EWHC 1768 (Comm) at [94] provided another summary, adopted in E D & F Man Capital Markets Ltd v Come Harvest Holdings Ltd [2022] EWHC 229 (Comm) at [466]. I need not repeat all that summary, but it is worthwhile adding to the summary given by Henshaw J that I have reproduced above, the following two points from her summary:

A person is not liable in conspiracy if the causative act is something which the party doing it believes he has a lawful right to do: Meretz Investments NV v ACP Ltd [2007] EWCA Civ 1303.

In the case before me, the unlawful means relied upon are the allegations of deceit and of dishonest assistance (see the PoC at paragraph 90). It is established that deceit can constitute unlawful means for the purposes of conspiracy. Whether equitable wrongs can constitute unlawful means is not settled, having been left open by the Supreme Court in JSC BTA Bank v Khrapunov [2018] UKSC 19; [2020] AC 727 (“Khrapunov”) (see at [15]). However, for present purposes I am informed that the Defendants accept that dishonest assistance can constitute unlawful means.

The Claimants plead this cause of action (at paragraphs 88 to 90 of the PoC) as follows:

“88.

By virtue of the facts and matters set out above, on a date or dates no earlier than the inception of the Joint Venture, it is to be inferred that two or more of the First to Seventh Defendants agreed and/or conspired and/or entered into a common design (“the Conspiracy”) to extract the Misappropriated Sum through the use of false and dishonest invoicing as set out above. Pending disclosure, the facts and matters set out above, from which the combination is to be inferred are as follows:

a.

The Mirzas and Mr Ameer Mirza being members of the same immediate family and being directors and/or shareholders of Tydwell, Redwire, Boomzone and Kingmead as pleaded at paragraphs 6, 8 to 11 and 60(f) above.

b.

Tydwell and Redwire being the entities which directly gained from the Misappropriated Sum as recipients and Mr Mirza (or, with regard to Tydwell, the Mirzas) being the natural persons who ultimately benefited from that sum as sole shareholders of Tydwell and Kingmead (at all material times) and Redwire (until 5 November 2019) as pleaded in paragraphs 6 and 11 and 60(f) above.

c.

The role of Mr Mirza, Mrs Mirza and Ameer Mirza with regard to the Invoice Representations and Cladding Representations as pleaded in paragraphs 56 to 58 and 71 to 73 above and the further paragraphs referred to in paragraph 35 of the Reply and Defence and Counterclaim to Counterclaim.

d.

The role of Mr John with regard to the Invoice Representations and Cladding Representations as pleaded in paragraphs 52, 56, 70 and 71 above.

e.

The knowledge and intention of Mr Mirza, Mrs Mirza, Ameer Mirza and Mr John being properly attributed to Redwire, Tydwell and Boomzone by reason of their respective roles at those companies as set out in paragraphs 6 to 11 above.

89.

The Conspiracy was first developed between the Mirzas, Tydwell and Mr John. Mr Ameer Mirza joined the conspiracy by no later than October 2016. Boomzone and Redwire became a conspirator from or shortly after the time of their incorporation.

89A. The Conspiracy was carried out with the intention to cause harm to the Claimants by the extraction of the Misappropriated Sum. Pending disclosure, the intention is to be inferred from the matters set out in sub-paragraphs 88(a) to (e) above.

90.

The Conspiracy involved the use of unlawful means as set out in paragraphs 77 to 81 and 84 to 85 above.”

The Defendants deny there was a conspiracy. They complain that the meaning of the expression “inception of the Joint Venture” is uncertain so that the Defendants cannot plead to it pending better particulars. They complain also that paragraph 88 of the PoC fails to identify when it is said that the alleged conspiracy came to an end.

They deny that any of the matters set out in subparagraphs 88(a) to (e) support an inference of conspiracy and (one detects a perhaps justified note of weariness creeping in at this point) that insofar as those subparagraphs cross refer to other paragraphs of the Claimants’ pleadings, the paragraphs of the Defendants’ pleadings which reply to those paragraphs are repeated here. They take a similar approach in relation to paragraph 90.

They also argue that the purported plea of conspiracy is defective and liable to be struck out because there is no plea of intention to cause the Claimants (or any of them) harm.

Again, it is relevant that I have already found that there were fraudulent representations and that both Mr Mirza and Tydwell had fiduciary obligations towards the JV Entities and that these fiduciary obligations were breached. One of the requirements is therefore present. At least one of the putative conspirators has used unlawful means.

The question whether there has been a combination is a difficult one.

The Defendants make a strong defence within their written closing submissions. They say that the basis on which the Claimants seek to infer a conspiracy is very weak. It is alleged to be founded on (a) the Mirzas being members of the same family, (b) Tydwell, Redwire and the Mirzas being the parties who ultimately benefited from the “Misappropriated Sum”, (c) the Mirzas’ respective roles in the Invoice Representations, (d) Mr John’s role in the Invoice Representations and (e) the knowledge and intention of the Mirzas and Mr John being “properly attributable to Redwire, Tydwell and Boomzone by reason of their respective roles at those companies”.

As to the involvement of Mrs Mirza and Ameer, I agree that the case here is very weak. I do not consider that the Claimants have shown that either of them had sufficient involvement to allow an accusation of dishonest assistance to succeed against them. Also, I do not think it has been established to the requisite standard that they knew that there were any misrepresentations going on in relation to the invoicing and therefore they do not know all the facts that rendered the transaction unlawful.

Neither do I think there are any circumstances that constituted blind-eye knowledge on their part. Most likely, to the extent that they thought about the invoicing arrangements, they considered that Tydwell and Redwire were doing things that they had a lawful right to do. In the absence of any findings on this point, the other matters concerning their being members of the same family and involved in the family business are not sufficient to make them participants in an unlawful means conspiracy.

As to the further points that the Defendants make as regards the pleadings, I am not troubled by the lack of specificity in the pleadings as regards the date of inception and termination of the JV. That can and has been a matter for evidence. However, the point made by the Defendants that the Claimants have not adequately pleaded the necessary knowledge does need to be taken seriously.

The question of the quality of pleadings required for an unlawful means conspiracy was considered in an earlier stage of the Ivy Technology proceedings, also before Henshaw J (although in this case before his becoming a full-time judge of the High Court). This was reported as Ivy Technology v Mr Barry Martin and others [2019] EWHC 2510 (Comm), [2019] 9 WLUK 324.

At [12] he finds (omitting his case references):

“12.

Conspiracy to injure must be pleaded to a high standard, particularly where the allegations include dishonesty:

i)

Allegations of conspiracy to injure "must be clearly pleaded and clearly proved by convincing evidence".

ii)

The more serious the allegations made, the more important it is for the case to be set out clearly and with adequate particularity … an allegation of dishonesty must be pleaded clearly and with particularity.

iii)

Unlawful means conspiracy is a grave allegation, which ought not to be lightly made, and like fraud must be clearly pleaded and requires a high standard of proof.

iv)

Where a conspiracy claim alleges dishonesty, then "all the strictures that apply to pleading fraud" are directly engaged, i.e. it is necessary to plead all the specific facts and circumstances supporting the inference of dishonesty by the defendants.”

At [16] he considers a particular issue relating to knowledge in that case where it was pleaded that a defendant “knew or should be taken to know” that a particular agreement contained certain provisions, and "was aware (or must be taken to have been aware)" that certain representations alleged to have been made were untrue. He regarded these as not being a clear and unequivocal allegation of knowledge that would support a finding of fraud, even if the court were to find that there was actual knowledge.

The Defendants argue that the pleading is defective because there is no clear pleading on behalf of the Claimants of an intention to cause the Claimants (or any of them) harm. As regards this argument, however, it is relevant to consider the point that, as I have explained, such an intention may be inferred from the primary facts. I do not think there is any doubt that the Claimants have pleaded that Mr Mirza, himself and through the companies that he controls had intended to profit from them by means of deceit, and as that point is pleaded, it follows that the Claimants have pleaded the necessary intention on the part of him and the companies that he controls.

As to what intention or knowledge Mr John had that rendered his part in these affairs dishonest, I have already found (on a balance of probabilities and in the absence of any defence) that it is more likely than not that he was aware of the terms of the contracts between Tydwell and the JV Entities and that he was part of an arrangement that was hiding from the JV Entities the true profit that Tydwell was taking. This I consider gives him sufficient knowledge of facts making the transaction unlawful for his participation to be regarded as the knowing participation in the conspiracy.

I consider that the Claimants have demonstrated that Mr Mirza, and therefore Tydwell, Redwire and Boomzone (to the extent that Boomzone is relevant at all to the claims relating to invoicing) were all participating in this deceit and that they must have had the knowledge that they were doing so as Mr Mirza had that knowledge and he was the controlling mind of those companies.

The Defendants argue that the attribution of knowledge is not a mere formality. Attribution is subject to complex rules of attribution which depend on the relationships between the individual whose knowledge is to be attributed and the company to whom such knowledge is to be attributed. They conclude from this proposition that the Claimants should have given particulars as to why and under what rules of attribution the Claimants claim the knowledge of any of the four different individuals who stand in different relationships to the three companies to whom the Claimants seek to attribute knowledge, is attributable. This is making heavy weather of the point. The basis of attribution is a point for legal argument, and not in my view one that needs to be described in detail within the pleadings. I do not think there is any doubt that these three companies should be attributed with the knowledge and intent of Mr Mirza.