CLAIM NO: HQ07X00702
Neutral Citation Number: [2008] EWHC 492 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
Date: 12 March 2008
Before Mr. N. Strauss Q.C.
sitting as a deputy judge
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B E T W E E N :

RAZMIK GHARIBIAN-SAKI
Claimant
and

PATRICK MURRAY TRANT
Defendant

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Mr. Andrew George, instructed by Bond Pearce LLP, appeared for the claimant.
Mr. Louis Weston, instructed by Messrs. Paris Smith & Randall, appeared for the defendant.
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Judgment

1.	This claim relates to a company called Harbour House Casino Limited (“the Company”), which the claimant (“Mr. Gharibian”) and the defendant (“Mr. Trant”) formed in October 1999 to operate a casino in Southampton, and which was sold in June 2006 to Stanley Casinos Ltd for £6 million, subject to certain adjustments.
2.	Mr. Trant held 60% of the shares and Mr. Gharibian 40%.  The proceeds of sale were distributed accordingly. Mr. Gharibian however alleges that it was orally agreed at the outset, in 1999, and on later occasions, that the shares should be beneficially held equally.  Mr. Trant denies this. 10% of the proceeds of sale is £545,589.78, which is the amount in dispute. 
3.	Much of the background to the setting up of the company is common ground.  Between 1977 and 1988, Mr. Gharibian worked for the Silhouette Club in Southampton, which was owned by Mr. Brian Adamson.  From 1981, he was the gaming manager of the casino at the Silhouette Club, and as such was responsible for all its day to day activities including compliance with legal and regulatory requirements. He was granted his ‘Grey Licence’ by the Gaming Board in 1981, entitling him to act as manager of a casino.
4.	During his time at the Silhouette Club, Mr. Gharibian became acquainted with Mr. Trant, who was an occasional client.  He is the chairman of, and a substantial shareholder in, a group of companies bearing his name in the construction industry. It is the largest private employer in the Southampton area, with a staff of some 700 people and a turnover of £600 million. Mr. Trant was impressed by Mr. Gharibian, who held his own in a club owned by Mr. Adamson, who Mr. Trant knew to be a demanding employer.
5.	Mr. Adamson retired in 1988 and went to live in Spain. The Silhouette Club was closed down, and Mr. Gharibian became involved in other ventures, including a chain of high class menswear shops. Mr. Trant was a customer and he and Mr. Gharibian met by chance on other occasions. A topic of conversation between them was the existence of an opportunity in Southampton for a third casino, in addition to those operated by Stanley Casinos and Grosvenor Casinos, which would cater for the former clientele of the Silhouette Club, at the top end of the market.
6.	There is some dispute as to what precisely led to the project getting off the ground in 1999, and whether the driving force was Mr. Gharibian or Mr. Trant, but I do not think that it matters. I find that a conversation between them led to both becoming determined to do something about it, to Mr. Trant making some enquiries as to suitable premises in early 1999 and to Mr. Gharibian deciding at about the same time to proceed and asking Mr. Adamson to participate.
7.	At all events, it is clear from the documents that Mr. Trant asked his architects to prepare a preliminary layout drawing in early March 1999, that he and Mr. Gharibian met the architects on 3rd March 1999, that they and Mr. Gharibian went to Stanley’s Casino on 8th March 1999, and that there was a meeting between Mr. Gharibian, Mr. Trant and Mr. Adamson on 21st March 1999.
8.	The dispute as to what was agreed at the meeting on 21st March 1999 is central to this case. Mr. Gharibian’s evidence is that it was agreed that a company would be incorporated for the purposes of establishing a club and that Mr. Trant would fund the application for the gaming licence, which would be held by the company once granted. Mr. Gharibian would act as the operations manager of the casino (as he had the Silhouette Club), Mr. Trant would find suitable premises for the venture and Mr. Adamson would contribute his previous industry experience and knowledge of the rules and regulations applicable to a casino. It was specifically agreed that Mr. Gharibian, Mr. Adamson and Mr. Trant “each would have a third share in the company going forward”. His evidence is supported in the witness statement of Mr. Adamson. Each of them confirmed his evidence as to the agreement relating to the shares in the Company in cross-examination, although Mr. Adamson was slightly hesitant when asked whether he might have assumed a three way split because there were three partners going forward together, as opposed to there having been an express agreement. 
9.	Mr. Trant’s evidence was that the discussion was a much vaguer one. It was agreed that the concept was worth pursuing, and that it might be possible to work together in some way, but there was no hard and fast agreement and in particular no agreement that each of them would own one third of the company which would pursue the project. In cross-examination, he accepted that it was agreed at the meeting that they would pursue the project and that there would be a company in which they would all be shareholders, but denied that there was any agreement as to the proportion of shares to which each would be entitled.
10.	Shortly after the meeting, Mr. Trant asked Mr. Horgan, the Company Secretary of the Trant Group of Companies, to prepare an outline business plan and draft shareholders’ agreement for the project.  The Business Plan is dated 26th March 1999, and it is very much an outline, in parts skeletal, document. Under the heading “Management and Ownership” the management team is identified as Mr. Trant, Mr. Adamson and Mr. Gharibian and it is then said:-
“Initially, these three would establish a limited company on an equity basis. The limited company will be the vehicle for the project, limiting the personal liability of the three participants. The first goal will be to obtain the necessary licence. Thereafter, the licence is highly marketable, and will be an asset which will assist the financing of the casino and its fitting out, after the commencement of trade and the gaming operations.”

11.	Under the heading “Funding”, two stages are identified, the first obtaining the licence and securing the premises and planning consents and the second fitting out the premises, staff recruitment, publicity and operations. The funding for Stage 1 was to be provided by a loan by Mr. Trant, the funding for Stage 2 was to be “negotiated against the assets generated by stage one, and [was] likely to consist solely of loan finance”. 
12.	In this section, it is also stated that the three participants would pay for their equity holdings in the limited company which would be formed for the project and in the later section headed “Participants’ Return”, one finds the following important sentence:-
“It is proposed that PM Trant be allotted the larger share of the issued share capital in return for providing the initial loan capital and financial backing for the project”.

13.	Mr. Horgan’s evidence is that he did not understand that this reflected what had been agreed or discussed with Mr. Gharibian and Mr. Adamson at the meeting; it was what Mr. Trant had indicated to him he would want.  Mr. Horwell also drafted the outline of a shareholders agreement, but the proportions in which the shareholdings were to be held were left blank, and the document sheds no additional light on the dispute.
14.	It is common ground that, shortly after this, Mr. Adamson decided that he did not wish to participate in the project, and Mr. Gharibian’s case is that it was then orally agreed with Mr. Trant on the telephone that they would proceed together with each holding a 50% interest in the company which was to be formed for the project; the words used were “we’ll go 50/50”. Mr. Adamson’s evidence is that this is what Mr. Gharibian told him at the time. Mr. Trant’s denies that there was any agreement to “go 50/50”.  His evidence is that it was agreed that they would carry on together, but that nothing was said as to their respective shares.
15.	Mr. Trant and Mr. Gharibian then engaged the services of Mr. A.G. Jackson F.C.A., who acted as a consultant in the casino industry, specialising in the setting up of casino operations, including the preparation of licence applications. He had been recommenced by Mr. Adamson. Mr. Trant met him on 29th March 1999.
16.	Mr. Jackson wrote to Mr. Gharibian on 5th April 1999 and to Mr. Brian Harris, a chartered accountant who was then a partner in a firm called Weeks Green which acted for Mr. Trant and his companies, on 25th May 1999. He advised, amongst other things, that a new company should be formed for the project which was not a subsidiary of any existing group, so as to reduce the scope of the Gaming Board’s investigations. The Company, then called Sidekick Ltd., was formed on 11th May 1999. It changed its name to Kingdom Casinos Ltd. on 9th September 1999. By July 1999, Mr. Trant had found what he regarded as suitable, if not ideal, premises at Salisbury House in Salisbury Street, Southampton, which had been used as offices by British Telecom.
17.	On 15th September 1999, Mr. Jackson sent Mr. Trant a partly completed application form for a Gaming Board licence for Mr. Gharibian to complete, showing his interest in the business as “Equity holder 30%”. This was signed by Mr. Gharibian and, consistently with it, he was allotted 30 out of the 100 issued shares in the Company on 5th October 1999.
18.	According to Mr. Gharibian, this was done in accordance with advice given by Mr. Jackson that it would assist with the presentation of the venture to the Gaming Board for Mr. Trant, with his larger financial resources, to be shown as the main shareholder, and that up to 15% of the share capital in any year could be transferred later on to achieve the 50/50 split; he and Mr. Trant had therefore agreed to proceed on this basis. The underlying agreement that he and Mr. Trant would each be entitled to a 50% share in the Company remained in place, whatever was said to the Gaming Board.
19.	Mr. Trant did not deal with how the initial allotment of shares was agreed in his witness statement. In his oral evidence, he confirmed that Mr. Jackson had advised on the appropriate shareholding for Mr. Gharibian, both from the point of view of the application to the Gaming Board and from the point of view of their respective contributions to the project. Mr. Trant said that Mr. Jackson’s advice was that Mr. Gharibian’s shareholding should be 10%, but that he had not thought this fair and decided on 30%. He told Mr. Gharibian this; Mr. Gharibian looked disappointed, but accepted it.
20.	Thereafter, matters proceeded slowly. The application to the Gaming Board for a Certificate of Consent was lodged on 10th October 1999 and was granted on 3rd August 2000, albeit subject to a number of warnings. However, in the meantime major planning difficulties had been encountered at Salisbury House and this led to it being abandoned. In June 2001, Mr. Trant’s family trust bought the former Associated British Ports headquarters, Harbour House, The Quay, Southampton, for £500,000.  The application for its use as gaming premises was submitted on 15th October 2001; the premises were to be leased to the Company on commercial terms.
21.	There was then a period of more than 2 years in which this application, applications for a justices’ licence and an entertainment licence which would enable the building to be used as a restaurant and nightclub and the necessary planning and listed building applications were all pursued, followed by extensive construction work carried out by Mr. Trant’s company. These were in part funded by the trust, in part by a bank loan guaranteed by Mr. Trant. The casino was eventually opened on 4th December 2003. Mr. Adamson was present.
22.	Throughout this period, the shareholdings in the Company remained the same, but there was correspondence between Mr. Horgan and Mr. Trant and between Mr. Horgan and the Company’s accountants about a transfer of 20% of the shares from Mr. Gharibian to Mr. Trant, so that they would hold them in the proportions 90:10. According to Mr. Trant, this had been suggested by Mr. Jackson, because of his very substantially increased financial contribution and risk. In a memo to Mr. Trant dated 2nd August 2002, enclosing a share transfer form, Mr. Horgan explained the procedure and added “This is the only way to achieve the split you require”. However this was not pursued with Mr. Gharibian and when the accountants wrote to remind Mr. Horgan of it in July 2003; Mr. Horgan noted on the letter “Stays @ 70/30”.
23.	According to Mr. Trant, he said to Mr. Gharibian at some point before the casino opened that he would review their shareholdings once it had opened and he could see how things were going, and once it had been open for some months he offered him an additional 10% of the shares, which Mr. Gharibian accepted with pleasure. This evidence was supported by the evidence of Mr. Harris, who was by this stage an independent consultant who had responsibility for some aspects of the project accounting, and also the compliance officer for the casino. He said that he was present when the offer was made, on 22nd April 2004.
24.	However, in June 2004 there was a share allocation of a further 5970 shares to Mr. Gharibian and 13930 shares to Mr. Trant, which left them as before at 70:30. According to Mr. Trant and Mr. Harris, this was due to an oversight on the part of Mr. Harris. By a stock transfer form dated 1st August 2004, Mr. Trant transferred 2000 shares to Mr. Gharibian. Mr. Trant said in his evidence that the form had been backdated. The annual return submitted on 4th June 2005 referred to the transfer, so it must have been effected before that date.
25.	Mr. Gharibian’s evidence was that there was no such conversation in April 2004, and that there was no gift of the shares.  He simply assumed that the transfer was effected in accordance with the original agreement to transfer further shares, until his shareholding reached 50%.
26.	In July 2005, Stanley Casinos expressed an interest in acquiring an interest in the Company or in the Harbour House site, and there was a discussion between Mr. Trant, Mr. Gharibian and Stanley’s Director of Development, Mr. Myers. However, initially nothing came of these discussions. Stanley was not in a hurry because it was concerned about its monopoly position, and did not want to complete until the next financial year, and on the Harbour House side it was necessary for capital gains tax purposes that the Company should have been trading for 2 years. In a letter to Stanley dated 17th November 2005, Mr. Trant confirmed, on his own behalf and on behalf of his “business partners” an agreement in principle to sell the shares at an agreed price, which was £6 million.  This was confirmed by Stanley on 6th January 2006. Stanley’s due diligence began in March 2006 and proceeded at a leisurely pace. Stanley’s solicitors, Ashursts, produced the first draft of the Share Purchase Agreement on 11th April 2006, and it was signed on 16th June 2006. When Trethowans sent the draft to Mr. Trant and Mr. Gharibian on 11th April 2006, they specifically drew attention to the shareholdings, shown as 60% to Mr. Trant and 40% to Mr. Gharibian, and asked to be notified if there were any changes.  No change was notified.
27.	The documents prepared for the sale include a draft board resolution, unsigned and dated 11th April 2006, probably prepared by Trethowans, in the following terms:-
“1	Ratification
A meeting of the Shareholders was convened in order to ensure that the minute book of the Company was accurate and up to date.  IT WAS RESOLVED that the following actions be ratified:-
(1)	On the 5 October 1999 689[69] ordinary shares of £1.00 were allotted to Mr Trant and 30 ordinary shares of £1.00 were allotted to Mr Gharibian-Saki.
(2)	It was noted that the Board minutes of the Director’s Meeting held on the 1 June 2004 were incorrect.  The authorised share capital of the Company had been increased from £100 to £50,000 by the creation of a further 49,900 ordinary shares of £1.00 as authorized by special resolution on the 14 June 1999.  Following such increase, 19[it should be 13], 930 ordinary shares of £1.00 were issued to Mr Trant and 5,970 ordinary shares of £1.00 were issued to Mr Gharibian-Saki.
(3)	It was noted that at a management meeting held on the 20 April 2004 it had been acknowledged by the shareholders and their advisers that the allocation of the shares between Mr Trant and Mr Gharibian-Saki had been reflected incorrectly in the Company’s records.  It had been intended that the shares should be held by Mr Trant and Mr Gharibian-Saki in the proportions 3:2.
	It was agreed at the meeting that this should immediately be rectified by the transfer of 2,000 ordinary shares of £1.00 from Mr Trant to Mr Gharibian-Saki.  The shares were duly transferred but, as the result of an administrative error, the Company Secretary noted on the next Annual Return that the transfer had taken place on 1 August, rather than 20 April 2004.  It was confirmed that the transfer had taken effect as at 20 April 2004.”

28.	According to Mr. Trant, this was signed by himself and Mr. Gharibian at Trethowans’ offices, and was intended to record the position for the purposes of ensuring that Mr. Gharibian would be seen to have been the beneficial owner of the shares for 2 years, so that he would benefit from the lower rate of corporation tax. Mr. Gharibian’s evidence is that there was no such management meeting and that he had no recollection of signing the resolution.
29.	The Company’s annual return dated 11th May 2006 showed Mr. Trant’s and Mr. Gharibian’s shareholdings at 12,000 and 8,000 shares respectively, and on completion the purchase price was paid to them in these proportions.
30.	Mr. Gharibian’s evidence was that he did not object to this, because it had been agreed between him and Mr. Trant at a management meeting in March 2006, in the presence of Mr. Harris, that Mr. Trant would account to him for the additional 10% of the proceeds of the sale after completion. This was at Mr. Trant’s suggestion and the reasons he gave were that it would be better for Mr. Gharibian’s capital gains tax position, and that it would complicate the deal if Stanley had to be told to alter the shareholdings in the agreement which was being drafted.
31.	This is denied by Mr. Trant and Mr. Harris, who both say that Mr. Gharibian did not suggest that he was entitled to more than 40% until after completion; Mr. Trant’s evidence is that Mr. Gharibian raised it on a car journey back to Southampton on the way back from London on the day of completion. However, there is evidence from Mr. Parsons that, at a meeting at Trethowans a day or two earlier, Mr. Gharibian said that he thought that he should have 50% of the proceeds. Mr. Trant did not agree with this, and said something to the effect that any difference between them would have to be dealt with after completion.
32.	Mr. Gharibian disputed Mr. Trant’s evidence about the journey back to Southampton. His evidence was that there was no sharp disagreement on the way back from completion. All that happened was that he said that the remaining 10% would have to be dealt with; Mr. Trant replied that there were some expenses to be calculated, to which Mr. Gharibian did not respond at the time.
33.	According to Mr. Gharibian, he then received an undated note from Mr. Parsons (in fact written around 10th-12th July 2006) which read as follows:-
“Raz
Sorry to cancel but cannot drive.  I will call to rearrange when I can drive again.  In essence, as the building was not sold the trustees have asked Brian to look @ the overall position.  If the building had been sold this would not be the case.
My take on this is that there appears to be nothing “signed” to back this but a gentleman’s agreement between you & Patrick.
Legally you only hold 40% of the shares and thus are entitled to that share of the proceeds.  I know that there is a verbal agreement in place re another 10%
Have a look and I will call later this week.
Regards
Darryl”

34.	With this note, Mr. Parsons, enclosed calculations showing Mr. Gharibian as being entitled to 50% of the proceeds, but subject to adjustments totalling £1,082,169 reflecting amounts due to the Trust for lost income and certain costs. The effect of the adjustments was that Mr. Gharibian was only entitled to approximately £45,000. Mr. Gharibian went to see Mr. Trant on 30th August 2006, and said that the adjustments were excessive; Mr. Trant said that Mr. Gharibian’s 10% was needed to repay the Trust.
35.	In his witness statement, Mr. Trant said that Mr. Gharibian’s claim had been made some time after completion, at a meeting in his office. In his oral evidence, as already noted, he said that it was made for the first time on the way back to Southampton or the day of completion. His response was that he had never agreed to equal shares, and that in any case Mr. Gharibian was forgetting the huge contribution made by the Trust and Mr. Trant’s company, of which no account had been taken.
36.	According to Mr. Trant, after the meeting, he asked Mr. Harris to prepare adjustments showing that Mr. Gharibian’s entitlement would be if these amounts were taken into account and Mr. Harris did so; the calculations showed a roughly even position if Mr. Gharibian was entitled to 50%, and that if he was entitled to 40%, he actually owed some £400,000. Mr. Parsons was asked to discuss the matter with Mr. Gharibian, because he had a good relationship with him. Mr. Harris said in his witness statement that he gave Mr. Parsons the sheets based on both a 40% and a 50% entitlement, but in cross-examination altered his evidence and said that the 40% sheets had not been used because Mr. Trant had wanted to remain on good terms with Mr. Gharibian and had thought that they were too antagonistic. He said that he had explained, both to Mr. Parsons and to Mr. Gharibian, that the purpose of the 50% calculations, was to show that, even if there had been a 50% entitlement, Mr. Gharibian and Mr. Trant were about all square.
37.	Mr. Parsons’ evidence is to be obtained from three sources.  First, in late July or early August 2006, Mr. Gharibian prepared a summary of events, which he sent to Mr. Parsons.  Amongst other things, this referred to the initial agreement to go 50/50, to the transfer of 10% of the shares “with another 10% to be transferred to me next year” and then to the following:
“A few days after the sale I enquired about my 10% of the shares.  I was told by Patrick that Brian Harris was doing the accounts for the trust and my 10% would have to go to the Trust.  I phoned Darryl Parsons and he could not believe what I was saying about my 10% and could not find any explanation for it, as it was never ever discussed or agreed that the casino would owe that much money to the Trust and it was never shown in our accounts”.

38.	Mr. Parsons responded with a long letter dated 7th August 2006 setting out his understanding of events, which included the following relevant passages:-
“Tax & Strategy Limited were not party to any events occurring prior to opening ... as per our terms of engagement, Tax & Strategy Limited dealt with all financial matters for the business including the production of bi-monthly management accounts for presentation at meetings…I initially only attended the meetings where the accounts were to be presented.  At one of the first meetings I was advised that 10% of Patrick Trant’s shares were to be gifted to you giving a 40%: 60% split in favour of Patrick Trant…

Tax & Strategy Limited advised that you should sell [to Stanley at £6 million less debt and adjustments for working capital] and this is very firmly still the view.  This was a business only 2½ years into trading, with an overall net trading loss position, restricted opportunities to boost gaming drop and costs that could not be significantly reduced.  The whole aim was to groom the business for sale and this had effectively been achieved.  

…

In the evening of the day of the sale you called me regarding a conversation that had taken place between yourself and Patrick Trant.  Essentially, there was to be a costing exercise regarding the building prior to funds being split.  I could not give a reason or foundation to this as I had not been party to the party renovation or to any paperwork catering for this.  I suggested that perhaps there was some “gentlemen’s agreement” in place but you stated there was not.  This was the reason for my surprise and thus I agreed to contact Brian Harris to establish the situation after that weekend…”

39.	In his witness statement, Mr. Parsons referred to Mr. Harris’ belief (see his witness statement at paragraph 17) that Mr. Parsons was present at the meeting on 22nd April at which Mr. Trant told Mr. Gharibian that he would transfer 10% of the shares, but says:-
“…I do not think I attended that meeting.  I think I simply gave the management accounts prepared for Mr. Harris to take to the meeting”.

He stated that he did not remember Mr. Gharibian raising the question of a 50% shareholding at any management meeting at which he was present, and did not repeat what he had said in his letter about his recollection of 10% being given to Mr. Gharibian.
40.	Mr. Parsons refers in his witness statement to the conversation which he had with Mr. Gharibian on the day of completion:-
“15.	On the last day of trading before completion of the sale of the casino, I was on the casino trading floor at 3.30am and by 9.00am there were a large number of people from Stanley Leisure who arrived to carry out various accountancy and due diligence checks on the casino’s operation at the point of takeover.  I was at the casino all day and left at about 5.30pm.  I had decided to go to a “hog roast” function in my local village where I live and although I was very elated at having completed a very large business deal, I was also extremely tired from having worked since the early hours of the morning.  I can recall that as I walking down to the “hog roast” in the village at about 6.30pm, I relieved a phone call on my mobile from Mr Gharibian-Saki, which I was somewhat surprised to receive.  He explained that he was very concerned that he was going to have to pay from his share of the proceeds towards repaying costs of the pension trust in the building and outfitting works which they borne.  I told him that I did not think that he would be asked to contribute but pointed out that that aspect was not my direct responsibility and I was aware that there was no written agreement about that aspect.”

41.	Mr. Parsons also describes the circumstances in which the note referred to at paragraph 33 above was written:-
“16.	Annexed to the Particulars of Claim which I have read is a handwritten note from Tax & Strategy Limited from myself to Mr Gharibian-Saki which he refers to in the Particulars of Claim.  The note is undated.  I confirm that it is in my handwriting.  I am quite certain it was written some months after the completion of the sale.  The circumstances in which the note was written were as follows.
17.	Some months after completion, on a date that I cannot now precisely recall, I was contacted by Brian Harris and asked if I was still in contact with Mr Gharibian-Saki.  Brian Harris explained to me that Mr. Gharibian-Saki seemed to be claiming that he should be entitled to some more money from the sale proceeds of the casino on the basis that he should have been allotted 50% of the shares, not the 40% that he was actually registered with.  Brian had prepared the set of figures entitled “Calculation of Sale Proceeds due to the shareholders” which is annexed to the Particulars of Claim, and also handed me 2 sheets entitled “Harbour House – Summary of Costs” and a further sheet with 4 adjustments on them. …
18.	… I had not been involved in any negotiations about the shareholdings between the shareholders.  The only time I can recall I had ever heard Mr Gharibian-Saki mention that he might be entitled to a greater shareholding of 50% was in the circumstances set out [at paragraph … above] …  I knew that Mr Gharibian-Saki was registered with 40% of the shares.  I did not know that other agreement there might have been between the parties.  At the time of writing the note I was under some stress as my daughter had managed to poke her finger in my eye and I was off work as a result, in and out of hospital for treatment for this and unable to drive.  I was in a great deal of discomfort and I must say that I did not think particularly carefully about what I was writing to Mr Gharibian-Saki and certainly did not think that he would allege it had any legal significance.  As I am not a shareholder or director of Harbour House Casino Limited with no authority on behalf of Mr Trant, I cannot see how my note can be of any legal significance at all. …
20.	As I was requested to do, I did see Mr Gharibian-Saki a short while after writing to him the note which is annexed to the Particulars of Claim.  Again I do not have a note of the date as I was not concerned to attach any importance to it.  I went through the account with him and also went through the 2 sheets referred to in exhibit “DP1”.  I do recall asking Mr Gharibian-Saki if he would accept the adjustments to the account and my only recollection is that he would not accept them and simply said that he did not feel that he should be contributing towards any repayment to the pension scheme.”

42.	Although Mr. Parsons states in this passage that all this happened “some months after completion”, this is not correct.  This sequence of events, as he explained it in his oral evidence, and as I accept, was that Mr. Harris came to his house on about 30th June, with the sheets of paper showing 50% adjustments, and asked him to see Mr. Gharibian.  To the best of his recollection, Mr. Harris explained the adjustments, but not the reason for the 50/50 starting point.  The note to Mr. Gharibian was written, as is clear from its first paragraph, because he had had to cancel a meeting with him.  This was because of the injury to his eye.  This places the date between the 10th and 12th July 2006; he was in a lot of pain at the time, and he just wanted to get Mr. Harris’s schedules (copies of which were enclosed with the note) to Mr. Gharibian and get back to bed. The adjustments were prepared in order to show the position with Mr. Gharibian’s entitlement at 50%.  His belief that there was a gentlemen’s agreement or a verbal agreement for another 10% was based on Mr. Gharibian having told him that there had been such an agreement at the beginning and on the adjustments given to him by Mr. Harris.
43.	Mr. Parsons then met Mr. Gharibian on 14th July 2006.  Mr. Gharibian was not prepared to agree the figures and gave him his summary of the facts.  This was followed by Mr. Parsons’ letter of 7th August, which led to the meeting between Mr. Gharibian and Mr. Trant on 30th August 2006, to which I have already referred, and to these proceedings.
44.	I am satisfied, on a clear balance of probabilities, that there was no such agreement as Mr. Gharibian alleges.  My reasons are as follows:-
(1)	Mr. Gharibian’s case depends on there having been an agreement right at the beginning in early 1999.  The subsequent promises which he alleges were made make no sense unless it had always been agreed that they would go 50/50, having previously agreed on three equal shares when Mr. Adamson was included.  
(2)	It is inherently improbable that there would have been any hard and fast agreement at the first meeting with Mr. Adamson, essentially for the reason given by Mr. Trant, that the proposed project was at such an early stage. Although there was a discussion about the process of applying for a gaming licence, and the likely cost, it is common ground that there was no discussion about the eventual cost of setting up the casino once a licence was obtained, nor of how it was to be financed. Nor was there any discussion as to the extent of the services which Mr. Adamson, who was resident abroad, would be able to provide. It seems to me unlikely that the parties would have been able to address, let alone reach agreement as to, their respective shares in the venture, and even less likely that Mr. Trant, who would probably have had to provide or at least secure the finance for the project, would have been prepared to agree to do so on the basis of a one-third share.
(3)	Mr. Horgan’s draft Business Plan is an important piece of evidence.  It does not record anything that had been agreed as regards shares, but it does record Mr. Trant’s intentions very shortly after the first meeting.  It is hardly likely that Mr. Trant, having a few days earlier agreed a three way equal split, would have told Mr. Horgan something radically different. This document is therefore important contemporary evidence which strongly militates against Mr. Gharibian’s case.
(4)	It is equally unlikely that, Mr. Trant, having decided that he wanted a majority holding, would have changed his mind in the course of a telephone call and volunteered 50/50 when Mr. Adamson dropped out.  His evidence that he was aware of the dangers of deadlock in a company owned by two equal shareholders, and would never have proceeded, had that been the agreement, without detailed attention to the structure of the company, also carried conviction.
(5)	Making due allowance for Mr. Gharibian’s evidence that he trusted Mr. Trant to do what he had agreed to do, there is no satisfactory explanation, on his case, for the fact that only 10% of the shares had been transferred to him in the period between 1999 and April 2006, without his taking any action or even mentioning it. Given that Mr. Jackson had advised (whether correctly or not is irrelevant in this context) that 15% could be transferred in any one year, one would have expected him to press for his full 50% long before 2006.
(6)	The correspondence showing that a transfer of 20% to Mr. Trant, resulting in a 90:10 split, was considered, supports Mr. Trant’s case.  Mr. Trant did not in the end suggest this to Mr. Gharibian, but it is likely that a 50/50 agreement would have been known to Mr. Horgan, and probably to the Company’s accountants and Mr. Jackson, and it is difficult to see how a transfer of beneficial interest away from Mr. Gharibian could have been contemplated by anyone, if there had been an existing 50/50 agreement.
(7)	Mr. Gharibian’s account of the conversation which he says took place in March 2006 is unconvincing for two separate reasons.  First, he says that the promise to account for the additional 10% was made after Mr. Harris had advised acceptance of the offer and he had been persuaded to accept it.  But this must have taken place much earlier than February or March 2006, the date he puts on the conversation, since by that time the decision to sell had been taken.  Since Mr. Harris was in Australia between 12th November 2005 and 25th February 2006, the conversation must have taken place just before Mr. Trant’s letter of 17th November 2005 indicating acceptance in principle. Secondly, if it was that early, Mr. Trant could not, as Mr. Gharibian suggests, have given as one of his reasons for accounting for the additional 10% after completion the inconvenience of changing the draft agreement. This is not a credible reason anyhow, since an alteration in the percentages would hardly have required major drafting alterations.  
(8)	Generally, all the documents relating to the Company’s affairs support Mr. Trant’s case that there was originally an agreement for a 70:30 split, amended by 10% in Mr. Gharibian’s favour in 2004, and there is no documentary evidence to support the existence of the agreement for a 50:50 split.  Whilst Mr. Gharibian was not as experienced a businessman as Mr. Trant, he did not know him very well in 1999, and it is inherently unlikely that he would have proceeded without some form of written acknowledgement.  It is also inherently unlikely that he, Mr. Trant and Mr. Jackson would have all been prepared to lie to the Gaming Board, by saying that he had a 30% equity interest when in fact it was 50%.
45.	Mr. George frankly recognised that there was no contemporaneous evidence, or any other evidence coming into existence until just before completion, to support Mr. Gharibian’s case.  He nevertheless submitted, correctly, that the court is entitled to consider the subsequent conduct of the parties in determining the terms of a prior oral agreement (see Maggs v. Marsh [2006] EWCA Civ. 1058, paragraphs 25 and 26), and further submitted that the inference to be drawn from the conduct of the parties shortly before and after completion is that there was indeed an agreement that Mr. Trant should pay Mr. Gharibian 10% of the net proceeds of the sale after completion.  He submitted:-
(1)	that this is clear from Mr. Parsons’ evidence that Mr. Trant did not immediately refute Mr. Gharibian’s claim to be entitled to an additional 10% at a meeting before completion, but merely said that any differences would have to be sorted out after completion;
(2)	that the fact that, according to Mr. Trant, Mr. Gharibian “made his play” for 50% in the car on the way back from completion in a very brief “ten word” conversation is consistent with his having raised the matter not for the first time, but as something which had been agreed and was not in dispute, and now only needed implementation; further, Mr. Parsons’ letter shows that there was discussion on that occasion of the adjustments from 50/50 which Mr. Gharibian raised with him the same evening;
(3)	that the adjustments prepared by Mr. Harris, and given by Mr. Parsons to Mr. Gharibian, are on their face not adjustments to be made if there is a 50/50 split, they are headed “Calculation of sale proceeds due to the Shareholders” and state under the headings of ‘PT position’ and ‘RG position’ that each “is entitled to” equal amounts; anyone reading the documents would (and Mr. Parsons did) assume that there was an agreement to that effect; and
(4)	that Mr. Parsons’ note “I know that there is a verbal agreement in place re another 10%” is strong evidence which supports Mr. Gharibian’s case.
46.	These are substantial points, and Mr. George put them very forcefully.  Nevertheless, I am not persuaded. The evidence up to the time of completion strongly supports Mr. Trant’s case for the reasons set out above.  In my view, the later evidence does not displace it and support the opposite conclusion, for the following reasons (taking Mr. George’s points in the above order):-
(1)	Mr. Parsons’ evidence is not that Mr. Gharibian asserted a prior oral agreement at the meeting which took place shortly before completion. He merely said that he ought to receive 50%.  This suggests that Mr. Gharibian, feeling that he ought to have been an equal partner from the beginning, was tentatively putting forward that view or, as Mr. Trant put it in relation to the later conversation, was “making a play” for 50%. The fact that he said it briefly and in a low key way would account for Mr. Trant brushing it off as he did, and Mr. Trant and Mr. Jackson having no recollection of it.
(2)	The brevity of the conversation in the car, according to Mr. Trant, is consistent with this.
(3)	I accept Mr. Trant’s and Mr. Harris’ evidence that, however the 50/50 sheets were worded, they were not intended to acknowledge a 50/50 entitlement. This must follow from the fact that the 40% sheets were prepared as well, even though they were not given to Mr. Gharibian, unless I find (which I do not) that Mr. Trant’s and Mr. Harris’ evidence about the 40% sheets is false and that they were fabricated later to support it.
(4)	In assessing the weight to be attributed to Mr. Parsons’ note, as Mr. Weston submitted, I must remember that he never spoke to Mr. Trant about the point. His belief that there was an agreement for another 10% is based on a combination of (a) not having been given, or not having taken on board, an explanation of the purpose of the 50/50 sheets, without which anyone looking at them would take it that Mr. Gharibian was entitled to 50% and (b) having been told by Mr. Gharibian that there was an agreement that he should have another 10%, probably when they spoke to arrange the meeting which Mr. Parsons had to cancel. Therefore, Mr. Parsons’ note cannot be taken as reflecting a statement made by Mr. Trant or by Mr. Harris that there was any such agreement as Mr. Gharibian alleges, and it carries little weight.
47.	Accordingly, I find that Mr. Gharibian’s entitlement was 40%, and his claim is dismissed.

N. Strauss Q.C.
Deputy judge Q.B.D.

12th March 2008