Masood & Ors v Zahoor & Ors

A court must resolve a dispute where possible even when all principal parties have used forged documents or given perjured evidence. The court should identify reliable, independent evidence, approach contaminated documents with extreme caution and determine unresolved issues by the burden of proof. Forgery may justify striking out a party’s case where it creates a substantial risk that a fair trial cannot be held, but striking out one side alone may produce injustice where the opposing side has engaged in comparable misconduct. A wrongfully terminated employment contract ordinarily gives rise to damages, not a claim in debt for continuing salary. Deliberately altering a judgment so that it conveys a dishonest finding may constitute malicious falsehood; proof of special damage is unnecessary where section 3 of the Defamation Act 1952 applies.

The claim arose from a long-running dispute between former business associates concerning consultancy remuneration, share entitlements, employment, the conduct of related litigation and an allegedly malicious alteration of a judgment published on a company website.

The court considered claims for contractual bonuses and shares, beneficial ownership of shares registered in nominees’ names, damages for summary termination of employment, liability for costs incurred in related proceedings, and malicious falsehood. The parties alleged extensive forgery and perjury against one another. The central procedural issue was how the court should decide the substantive claims when much of the documentary and testimonial evidence was contaminated.

1. Approach to contaminated evidence. The court found that the principal witnesses on both sides had lied and that forged documents had been deployed to support their cases. It therefore accepted evidence from the principal parties only where corroborated by independent documents of incontrovertible authenticity or by reliable witnesses. Where the untarnished evidence was insufficient, the issue was determined by the burden of proof.
2. Effect of earlier judgments. Findings in earlier proceedings were not admissible as establishing facts or issue estoppels against a person who had not been a party. They were, however, relevant to the assessment of credibility. The court applied the distinction identified in Secretary of State for Trade and Industry v Bairstow.
3. Forgery and fair trial. The principles in Arrow Nominees Inc v Blackledge showed that proceedings may be stopped where a litigant’s conduct creates a substantial risk that a fair trial is impossible or makes any judgment in that litigant’s favour unsafe. The court declined to strike out the claims here because striking out the claim while leaving the defendants in possession of the disputed shares would itself create an injustice. The court instead decided the issues on the reliable material that remained.
4. Substantive claims. The alleged bonus documents and share transfers were forged and the contractual bonus claims failed. Nevertheless, uncontaminated evidence established that money provided by the first claimant funded the acquisition of shares registered in the names of two nominees. The first claimant was declared beneficial owner of those shares. The employment was summarily terminated without lawful justification. The remedy was damages for breach, including the unpaid salary balance, rather than a debt claim for salary accruing after termination.
5. Related proceedings and malicious falsehood. No order was made requiring the first claimant personally to pay costs in the related Reventox proceedings. The deliberate alteration of the earlier judgment on the website was malicious and calculated to cause pecuniary harm. The elements of malicious falsehood were established, but the evidence did not prove substantial loss. Damages were therefore assessed at £1.
6. The court reserved consequential submissions concerning the precise declaratory and other orders.