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Wilson v Dunne and others

Contract – Offer and acceptance – Determination of terms of agreement – Parties running business of cab firm – Whether claimant entitled to 50% shareholding in business

[2006] EWHC

CHANCERY DIVISION

JUDGE KIRKHAM

5 DECEMBER 2006

P Staddon for the Claimant

J Titmuss for the Defendants

Hatten Asplin Gnenny, Grays; Lyndales

JUDGE KIRKHAM:

[1] This is in some senses a most unusual case, namely, that the Claimant on one hand and the Defendants on the other hand give completely different accounts of relevant events.

[2] The Claimant is Mr Wilson. His case is that immediately before December 2003 he and Mr James Pastfield traded in partnership, running a cab firm from premises at number 1 Civic Square, Tilbury in Essex and that this partnership was called Civic Cars. Mr Wilson says that Mr Pastfield agreed to sell his share of that partnership to the three Defendants, Mr Phillip Dunne, Mr Anthony Dunne and Mr John Marriott. Shortly thereafter the Claimant and the Defendants agreed that they would trade together in partnership through a company, TLB Transport Ltd, the shares of which were owned by the Defendants. It was Mr Wilson's understanding that he would have 50% of the interest in that new business. It would appear that no shares had been issued or transferred to Mr Wilson. Mr Wilson was in fact appointed a director of the company and in February 2005 the Defendants voted him out as a director and excluded him from the business.

[3] The Defendants' case, on the other hand, is that they established in December 2003 an entirely new cab firm business from premises at number 1 Civic Square. They purchased nothing from Mr Pastfield. They entered into no agreement with Mr Wilson. They say that some time after they had established their business Mr Wilson approached them, seeking to join their new enterprise and it was agreed that he should do so. He was appointed as a director but was in truth, they say, no more than a senior driver. They say that he was voted out of office because of misconduct on his part.

[4] Proceedings having been commenced, Master Teverson ordered on 9 March this year that there be a trial of preliminary issues as follows. Firstly, whether Mr Wilson is entitled to a 50% shareholding, or any other shareholding, in TLB Transport Ltd, secondly, to determine the terms of the agreement reached between Mr Wilson and the Defendants in December 2003, thirdly, whether the Defendants breached the agreement by their actions in February 2005 and, fourthly, what if any remedies Mr Wilson is entitled to against the Defendants. Included in that order listing the matters to be tried as preliminary issues is the question whether, if successful, Mr Wilson would be entitled to aggravated damages. Mr Stadden, for Mr Wilson, confirmed at the beginning of the trial that a claim for aggravated damages was not being maintained.

[5] Mr Stadden for Mr Wilson and Mr Titmus for the three Defendants agreed that at the heart of the dispute is the question whether Mr Wilson and Mr Pastfield were operating a cab business from number 1 Civic Square up to December 2003. They agree that the answer to that question will effectively determine whether or not an agreement as to a share in the business as alleged by the Claimant is established.

[6] I have heard evidence from a number of witnesses. I have heard evidence from Mr Wilson and from each of the three Defendants. I should explain that Mr Phillip Dunne and Mr Anthony Dunne, the first and second Defendants, are brothers and that Mr John Marriott is a long‑standing friend of theirs. It would appear from their evidence that they operate a number of businesses together. I have heard evidence from Mr Kansagra, a pharmacist who owns properties in Civic Square, Tilbury. I have heard evidence from Mr Patel, a former licensing officer for Thurrock Council, and from Mr Pastfield.

[7] Witness statements were prepared for two witnesses who did not give evidence. One was Miss Sharon Ponder, who is described as a cousin of Mr Pastfield but is in fact no family relation but a long‑standing family friend. She was unwell and unable to give evidence at trial. The second is Mr Michael Johnson, who was due to have a surgical operation on the day of the trial of these issues and was unable to attend. Mr Stadden has made it clear that he is not placing any significant reliance on the statement prepared by Miss Ponder and her evidence has not been tested so, whilst it would be possible to deal with her evidence on the basis of hearsay, I do not find myself needing to make any reference to her statement at all.

[8] Mr Johnson, however, is another matter. Mr Johnson had been a driver working for Mr Pastfield and Mr Wilson. At material times his sister had been living with or was the girlfriend of Mr Tony Dunne, one of the Defendants. The Claimant's case is that Mr Johnson knew that Mr Pastfield wanted to sell his share in the Pastfield/Wilson partnership (that is the Civic Cars partnership) and that Mr Johnson passed that information on to Mr Tony Dunne. That is denied by the Defendants.

[9] Mr Wilson tried hard to obtain a statement from Mr Johnson and indeed tried hard to get him to come to trial to give evidence, including the issue of a witness summons. Mr Mills, (Mr Wilson's solicitor), has prepared a statement which describes the meeting which Mr Mills had with Mr Johnson in September this year, sets out the details of the matters discussed and which exhibits the drafts of the witness statement for Mr Johnson which Mr Mills prepared. Mr Mills explains that Mr Johnson was unwilling to sign his statement but when discussing the content with Mr Johnson, Mr Johnson told Mr Mills of the corrections that he wanted to make and these were of minor matters and not going to the substance of his evidence. Mr Mills was not asked to be put forward for cross-examination by the Defendants. Mr Johnson's statement is not signed and of course he has not attended at trial to give evidence so I approach his evidence with some caution. But nevertheless it seems to me that his evidence is such that I should afford it some weight.

[10] This is a case where there are relatively few documents to assist me. Disclosure has been thin, to say the least, on both sides. But some of the documents which have been disclosed are significant and, as I explain shortly, do assist.

[11] The Claimant, Mr Wilson, has been described by the Defendants as a man of the world. He had managed a warehouse, he had been a driver (either employed or self‑employed) for some years before 2003. I hope that he finds this no disrespect when I say I found him to be rather naive in his approach. He had, for example, no real idea about the different vehicles available for running a business, whether a company, whether of limited liability, whether a partnership, and he had no insight into the role and duties of a director. He said that he considered it to have been an honour to have been appointed a director of TLB Transport Ltd and it was plain that this was from the heart and I accept that evidence.

[12] It seems to me that Mr Wilson relied heavily on Mr Pastfield and that it was Mr Pastfield that looked after the commercial side of matters during the time that he and Mr Wilson were working together. For example, although the British Telecom phone bills were addressed to and delivered to Mr Wilson's home address, he passed these straight on to Mr Pastfield to deal with. It was Mr Pastfield who dealt with the accountant who helped the business with its bookkeeping, and so on. It was not surprising to me that Mr Pastfield said in evidence that, when he decided to sell his share to the Defendants, it was time for Mr Wilson to pull his socks up and learn about the business. When the Defendants took over, Mr Wilson was content to let them run the commercial side of things. He took a pride in running the operational side of the business and there is no doubt that he worked extremely hard in this respect. As I say, I found Mr Wilson's approach to business affairs to be naive and he struck me as being somewhat gullible in this arena. I found him to be generally straightforward in his evidence, though inclined to try to rush to explain away inconsistencies without giving matters careful thought.

[13] Mr Pastfield is a long‑standing friend of Mr Wilson and Mr Titmus quite rightly urges me to bear that in mind when considering the evidence which Mr Pastfield was able to give. I found Mr Pastfield to be a fairly straightforward witness and had confidence in most of his evidence. I found his evidence as to matters concerning a conviction and loss of an operator's licence not to be so straightforward, but even in that regard it seemed to me that Mr Pastfield was rather trying to fool himself than to fool the court.

[14] I have referred already to Mr Kansagra. Mr Kansagra was plainly very anxious not to upset either the Claimant, who is still around in that area, or the Defendants, and there appears to be some ongoing business between the Defendants and Mr Kansagra unrelated to this case. As a consequence of that anxiety, some of Mr Kansagra's evidence was a little unclear, but I did, however, have full confidence in some parts of his evidence and he is plainly a helpful independent observer of some significant parts of this case.

[15] Mr Patel, who as I said was a former licensing officer at Thurrock Council, gave helpful and objective evidence about the various licences needed for a cab business. First, an operator's licence for the business itself, secondly, plates, described as green plates, for each car to be used and the licences for individual drivers.

[16] I am bound to say that I had little confidence in the evidence given by the three Defendants. Mr Tony Dunne has a criminal conviction for theft at about the time of the events that we are concerned with. Of course, that of itself is not sufficient simply to condemn all of his evidence, but the court does have that at the back of its mind when considering the evidence which he can give.

[17] Having set that out by way of background, I now set out what, in my judgment, is on balance of probabilities likely to have occurred. The story begins, so far as we are concerned, in about January 1997 when Mr Pastfield and his then wife purchased the lease of premises at number 8 Civic Square, Tilbury and also purchased with the lease goodwill, some motor vehicles, radio equipment and office equipment. By that transaction Mr and Mrs Pastfield took over from Miss Sharon Ponder the running of a cab business. Some time after that Mr and Mrs Pastfield split up and, as becomes apparent later, the split was somewhat acrimonious.

[18] On 1 April 2002 Mr Pastfield sold a 50% share of his interest in Civic Cars, that is the cab business then being run from 8 Civic Square. By then Mr Pastfield owned the whole of the business of Civic Cars. I have been shown a document dated 1 April 2002, which is described as the sale agreement and which records that transaction. The 50% share in Civic Cars was sold by Mr Pastfield to Mr Wilson for £15,000 payable in cash.

[19] The Defendants' case is that no such agreement was reached. Mr Titmus has identified what he submits are shortcomings in this April 2002 document. He makes the point that it has not been signed by Mr Wilson and suggests that it is a document which might not have been enforceable. I have no hesitation in saying that I have no reason at all to doubt the truth of the arrangement made between Mr Wilson and Mr Pastfield in April 2002. The document recording this is indeed an informal document, but it is plain throughout this case that that is how Mr Wilson and Mr Pastfield arranged matters. The 1997 document transferring the business from Miss Ponder to Mr Pastfield had itself been somewhat informal in the sense that the document concerned was a Law Society agreement for sale of land. The document was concerned primarily with the transfer of land and only peripherally with the sale of the cab business.

[20] I conclude, therefore, that Mr Wilson and Mr Pastfield were in partnership from 1 April 2002, running a cab business and trading under the name Civic Cars and they were initially operating this business from number 8 Civic Square. Pursuant to that, in May and June 2002 Mr Wilson entered into hire purchase agreements for the purchase of two Ford Galaxy cars which were used as cabs in that business. Mr Patel said in evidence that sometime during 2002 he was informed that Mr Pastfield had taken on a partner, namely, Mr Wilson.

[21] On 29 January 2003 Mr Pastfield was convicted at Gray's Magistrates' Court for, it would appear, "taking a booking for a private hire vehicle without the appropriate licence" and using an unlicensed vehicle. Mr Wilson says that he did not know about that. That does seem to be rather strange and it is not clear to me whether Mr Wilson really did not know or whether he did know but shut his mind to it.

[22] During 2003 Mr Pastfield experienced real difficulties in his personal life. His marriage had broken up, he was facing the loss of his home and he plainly had financial problems. By July 2003 he had decided to get rid of his share of the Civic Cars business. I accept his evidence when he said that he let it be known that he was looking to sell. It is curious that Mr Wilson appears not to have known at this stage that Mr Pastfield was looking to sell. But, as Mr Pastfield said, Mr Wilson could not afford to buy him out so it was not relevant to tell him. Given that the relationship between Mr Wilson and Mr Pastfield was one in which Mr Pastfield was playing very much the dominant role, it is perhaps not quite so surprising that Mr Wilson did not know what was on the cards.

[23] In the summer of 2002 Civic Cars moved out of number 8 Civic Square. That property was owned by Mr Kansagra. They moved temporarily into number 4 Civic Square and remained there for about four weeks. Mr Kansagra was completing the purchase of number 1 Civic Square and in about August 2002 Mr Wilson and Mr Pastfield moved Civic Cars into number 1 Civic Square. I accept that from number 1 Civic Square they ran the business with some 10 drivers (some daytime drivers, some night-time drivers, some weekend drivers) and two controllers-cum-radio operators, with Mr Pastfield and Mr Wilson lending a hand whenever necessary. These staff were self-employed.

[24] The Defendants' case is that the Civic Cars partnership came to an end in August or September 2003 and they rely in particular on a number of documents and on lack of documents. They rely, for example, on the lack of any documents which evidence the running of a partnership. There are no partnership accounts, there are no tax returns for either Mr Pastfield or Mr Wilson; for example, no fuel receipts have been disclosed. No documents at all of this nature showing how the partnership operated financially have been disclosed. Mr Pastfield explains that he gave papers to his accountant every so often. The accountant returned these papers after a couple of weeks and Mr Pastfield put them into filing cabinets at the business. Those filing cabinets were eventually transferred into number 1 Civic Square and were used for those receipts, and so on. When Mr Pastfield left the business during the course of 2003, he left the paperwork, in those filing cabinets at number 1 Civic Square. That evidence seems to me to have the ring of truth and I accept it. The Defendants also rely on bank statements for Barclays Bank which, Mr Pastfield confirmed, was the only banking account for Civic Cars. There are no effective entries on this account after the end of August 2003.

[25] The Defendants also rely on the telephone bills which have been disclosed. Bills have been disclosed dated 22 December 2003 for each of the three lines at number 1 Civic Square. Two of those lines were lines for use of the controllers-cum-radio operators and there was one line for a telephone in the back office. The calls listed on those bills include calls made during November and December 2003 and I find it difficult to see how those telephones could have been used in those months when on the Defendants' case Civic Cars had ceased to operate. Mr Kansagra's evidence is that he walked past number 1 regularly and he confirmed that, so far as he was aware, Civic Cars was an ongoing business during the autumn of 2003 and operating from number 1 Civic Square.

[26] A document which is significant is an application made initially in August 2003 by Mr Wilson for an operator's licence. This document shows that the application form was initially completed on 24 August 2003. That date has been crossed out and a manuscript date put in its place of 2 December 2003. Mr Patel confirmed in evidence that he was the one who had crossed out the original date and replaced it with 2 December 2003. By that application Mr Wilson was applying for a private hire vehicle operator's licence. The form contains a provision for a description of the person who has made the application (for example, owner, director, partner, and so on). Mr Wilson had completed that by describing himself as owner. The trade name for the business is shown as Civic Cars.

[27] In answer to question 4 on that application: “Have you or any of your partners or directors had any previous experience in operating Hackney carriages or private hire vehicles”, Mr Wilson answers yes. Then he goes on to answer question 5, which asks in those circumstances for the name of the firm and he has shown that as Civic Cars. The form asks for information about the period or periods during which all partners or directors were connected with the firm. Mr Wilson completed that in these words: “Manager from October 2002 to April 2003.” That is, he does not in that document describe himself as a director.

[28] The impression I gained from Mr Wilson is that he has a strong sense of hierarchy and, despite his partnership relationship with Mr Pastfield, he nevertheless saw Mr Pastfield as the governor. Mr Pastfield was not holding the operator's licence at that stage and Mr Wilson was the person who was effectively running the operational side of the business and it seems to me that in those circumstances it is not altogether surprising that he described himself as a manager because he saw himself as managing the business.

[29] Mr Wilson has produced a letter dated 18 September 2003 addressed to him at 1 Civic Square. This is a letter from John Williamson, a licensing officer at Thurrock and in that letter Mr Williamson deals with a complaint about other cabs displaying unauthorised advertising and it seems to me that that is an indication of an ongoing business from that address at that time.

[30] By August 2003 Mr Pastfield had certainly lost interest in the business. He explained the closure of the Barclays Bank account by saying that he wanted to reduce his outgoings. He wanted to stop paying bank charges and hitherto he would deal with payments needed from the business by cash. I am not altogether surprised at his approach here, given that he was in financial difficulties and given the emotional pressures that he was under at the time. One can understand that someone might well take the view that simply to close a bank account and to stop further difficulties arising would be the answer, however foolish, objectively, that might appear to be.

[31] Mr Kansagra said in evidence that the premises at number 1 Civic Square had been occupied by Mr Wilson and Mr Pastfield as a taxi office from August 2002 and that that was still an operating business when the Defendants came onto the scene in December 2003 and I accept his evidence in that regard.

[32] In all the circumstances I conclude that Mr Pastfield and Mr Wilson were still operating Civic Cars in partnership as a business as at November 2003.

[33] The Defendants then come into the picture and I have slightly differing versions of how this came about. One version is that Mr Johnson drove Mr Phillip Dunne and Mr John Marriott around Tilbury and pointed out number 1 Civic Square, saying that this would be a good place from which to run a taxi business. It was near a bus stop and there were shops, and so on. Mr Phillip Dunne and Mr Marriott then went to see Mr Kansagra who agreed that they could take a lease of number 1 Civic Square and from which they would operate a taxi firm. Their case is that Mr Johnson did not mention that a cab firm had been operating from those premises. Mr Tony Dunne, however, says that Mr Johnson contacted him to say that he had lost his job with a taxi firm and was looking for another job. As a businessman Mr Tony Dunne was interested and so the Defendants proceeded to start their business from number 1.

[34] I reject the Defendants' accounts of these events. They do not have the ring of truth. I accept Mr Pastfield's evidence, supported as it is by Mr Johnson (though Mr Johnson's evidence is untested), that Mr Johnson put Mr Pastfield and the Defendants in touch. I accept the evidence from Mr Pastfield that there were three meetings. On the first occasion Mr Pastfield met Mr Tony Dunne and Mr John Marriott. The possibility of a sale of Mr Pastfield's interest in Civic Cars was discussed and the two Defendants went away to consider matters.

[35] A meeting was then held at number 1 which was attended by all three Defendants and both Mr Pastfield and Mr Wilson, at which it was agreed that Mr Pastfield would sell his 50% interest in Civic Cars to the Defendants for £20,000. Of that £20,000, £5,000 was to be paid in cash and the Defendants agreed to take on responsibility for £15,000 worth of liabilities which Mr Pastfield had.

[36] Shortly after that Mr Pastfield and Mr Wilson met the Defendants at a Little Chef on the A13. Mr Pastfield got out of the car and went over to see the Defendants who handed him £5,000 in cash. I believe Mr Pastfield when he says that he was asked to sign a piece of paper confirming that he had no call on the things at number 1 Civic Square. He was promised a copy but was not given a copy of this document.

[37] The consequence of the matters discussed at the second meeting, therefore, is that the Claimant entered into a partnership with the three Defendants.

[38] The question has been put: why should Mr Pastfield have accepted the three Defendants? He did not know them from Adam and it is suggested that it makes no business sense for him to have agreed that they should take over liabilities of his totalling some £15,000. It seems to me that Mr Pastfield did know something of the Defendants because of the connection through Mr Johnson and Mr Dunne's sister. But, as Mr Pastfield said very colourfully in giving his evidence, at that stage he would have been happy if Father Christmas had made him an offer, he just wanted out. Why should the Claimant have agreed to go into business with three people that he did not know at all? Mr Wilson found himself in a position where Mr Pastfield had lost interest in the business and Mr Wilson, as he described it, saw the Defendants as a breath of fresh air, and as people who were dynamic and who would be able to take the business forward and grow it.

[39] The Claimant's version of events is supported by Mr Pastfield and Mr Johnson and it is plausible. The Defendants' is not. It is, in my judgment, absurd for the Defendants to suggest, as they do, that Mr Wilson turned up during December after the Defendants had started up their business and asked for a job as a driver without mentioning that he had in fact been operating a cab firm from number 1 Civic Square for some time before.

[40] The documents tend to support Mr Wilson's version of events. Understandably, given the passage of time, memories were not precise as to days, especially when one was looking at differences of a day or two here or there. I am obliged to Mr Stadden for his suggestion, which it seems to me is an appropriate one, that a helpful starting point is to consider a document which pinpoints the date on which the Defendants say that they took occupation of number 1 Civic Square. This is a letter from the council tax and rates manager at Thurrock Council to Mr Tony Dunne dated 12 May 2006. That letter concerns number 1 Civic Square and the author of the letter says this:

“Following your telephone call to this office on 4 May regarding business rates in respect of the above property, below is the sequence of events which determined liability for non‑domestic rates for the period commencing 3 June 2003. On 5 December 2003 we received a telephone call advising that with effect from 3 December 2003 Tony Dunne trading as Civic Cars was in occupation of the property. We have no record of the caller's name.”

[41] There is a further document signed by Mr Marriott, who describes himself as a director of TLB Transport Ltd, dealing with non‑domestic rates and occupation of 1 Civic Square by TLB Transport Ltd. The date of occupation on that document is shown as 3 December 2003 and the contact telephone number on that form is the telephone number which Mr Pastfield and Mr Wilson were using for the business of Civic Cars prior to that date. These seem to me to be very helpful in indicating that the Defendants were in occupation of number 1 from 3 December 2003.

[42] That is significant, in my judgment, because it is plain that on 2 December 2003 Mr Patel was asked to amend the date of the application made by Mr Wilson for an operator's licence and the council in fact issued an operator's licence addressed to Mr Wilson, trading as Civic Cars, on 2 December 2003.

[43] On 9 December 2003, TLB Transport Ltd was incorporated and, as I have said, Mr Wilson was subsequently made a director. On 11 December 2003 Mr Wilson arranged for the green plate licences for his two Ford Galaxy cars to be transferred to TLB. It seems to me that Mr Wilson is highly unlikely to have taken these steps (that is, obtaining of the operator's licence in the name of Civic Cars on 2 December and transferring the plates) unless he was doing so pursuant to an agreement reached between himself and the Defendants as to how the business was to go forward. In December 2003 Mr Wilson took two of the Defendants to meet Mr Kansagra, that is Mr Marriott and Mr Phillip Dunne, and introduced them as his new partners in Civic Cars.

[44] Mr Wilson worked long hours and took no profit from the business. I believe him when he says that he was prepared to do this because he believed that he and the Defendants would build up the business and reap a reward after the first year of trading. Mr Wilson plainly himself believed that he was a partner with the Defendants; he told others that he was. I have mentioned his introducing two of the Defendants to Mr Kansagra. Mr Wilson's evidence, which I accept, is that when matters between him and the Defendants were not proceeding happily, as became the case, he reminded them that he had a 50% interest in the business and Mr Wilson's daughter even told the second Defendant that her father had a 50% share in the business. There was plainly a high level of belief that that was the arrangement that had been made. In summary, Mr Wilson's subsequent conduct clearly supports his version of events.

[45] The Defendants, however, treated Mr Wilson badly. In February 2005 they locked him out of the business, both literally and financially, and he had to begin again with a new cab business. The benefits which the Defendants gained from the transaction in late 2003 are obvious. They moved into premises, number 1 Civic Square, from which Civic Cars had traded and plainly there must have been some goodwill involved in that. They took over the three telephone lines which Civic Cars had used and there must be some goodwill in telephone numbers for a cab firm within the local community. They took over existing radio equipment which could be used to contact drivers. They took over a team of existing drivers and controllers. I have mentioned that Mr Wilson transferred his two green plates to the business. Mr Wilson had an operator's licence. None of the other three Defendants had one. Mr Tony Dunne could not have one because of his criminal conviction.

[46] None of the Defendants had any experience of running a cab firm. The experience which the Defendants have suggested was of some relevance seems to me to be somewhat far‑fetched by way of suggestion. The Claimant, on the other hand, did have that experience. The Defendants made him manager of operations. They needed his expertise and when they fell out with the Claimant in February 2005 the Defendants sold the cab business to a so‑called franchisee.

[47] The Defendants submit that it did not make business sense for them to pay £20,000 for a business where they had made no investigation into the business or its liabilities, and so on. I accept that there is some force in Mr Stadden's submission that £20,000, even if the Defendants had honoured their obligation to meet Mr Pastfield's liability (which they did not), or £5,000 was likely to have been a very low price for a business which was worth at least the £40,000 overall which Mr Pastfield had put as a price on the business in the autumn of 2003.

[48] In all the circumstances, therefore, it seems to me that the answers to the preliminary issues are follows. Firstly, the Claimant is entitled to a 50% shareholding in TLB Transport Ltd. Secondly, the terms of the agreement reached between the Claimant and the Defendants in December 2003 were that Mr Wilson be a 50% shareholder in the company and be a director of it. The answer to the third point is that by their actions in locking Mr Wilson out of the business in February 2005, dismissing him as a director (and, I should add, without giving him notice of the meeting at which that was decided) and denying him his rights as a 50% shareholder, the Defendants were in breach of the agreement which had been reached. I suggest that we deal in submissions with the question of the remedy.

Judgment accordingly.
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