Gharibian-Saki v Trant

An alleged oral agreement concerning the beneficial ownership of company shares must be proved on the balance of probabilities by evaluating the whole evidential picture. Subsequent conduct may assist in determining the terms of an earlier oral agreement, but it may not displace strong contemporaneous evidence pointing to a different arrangement. Where an alleged equal-sharing agreement is not proved, the claimant is entitled only to the shareholding established by the company’s records and the proved agreement.

The claimant and defendant formed a casino company. The claimant was registered as holding 40% of the shares and the defendant 60%. After the company was sold, the claimant alleged that they had orally agreed that the shares, and therefore the sale proceeds, would ultimately be held equally. The defendant denied any such agreement and contended that the claimant’s entitlement was limited to 40%. The central issue was whether the alleged oral agreement had been proved.

1. The claim was dismissed. The claimant had not proved, on the balance of probabilities, an agreement that the parties would hold the company equally or that the defendant would account for a further 10% of the sale proceeds.
2. The court considered the evidence from the inception of the project. The early business plan, the initial allotment of shares, the later discussions about share transfers and the company records strongly supported a 70:30 arrangement, later amended so that the claimant held 40%.
3. The court accepted that subsequent conduct may be considered when determining the terms of a prior oral agreement, as recognised in Maggs v Marsh [2006] EWCA Civ 1058. However, the later conversations, calculations and note prepared by Mr Parsons did not establish the alleged agreement. They were consistent with an attempt to resolve a dispute or calculate the consequences of a possible 50:50 entitlement.
4. The claimant’s failure to seek transfer of the additional shares over several years, and the absence of contemporaneous documentary evidence supporting equal ownership, materially weakened his case. The registered 40% shareholding therefore represented his entitlement to the sale proceeds.