Muduroglu v Reddish LLP & Anor

A claimant who transfers shares under an oral agreement may recover the agreed consideration where the agreement is established on the evidence, even if the consideration was deferred and the transfer documentation was later completed inaccurately. A false entry on a stock transfer form does not itself establish actionable loss where the claimant was not deceived by it. Unlawful means conspiracy requires an arrangement between at least two parties and resulting loss or damage; the court left unresolved whether an individual and a company under his control can form such a conspiracy.

The claimant transferred 1,000 shares in Memorial Holdings Limited to Reddish LLP. He alleged that Reddish had agreed to pay £1.3 million, but had not paid it, and that the second defendant had caused £200,000 to be entered on the stock transfer form. He claimed the share price from Reddish, alternatively retransfers, and damages for unlawful means conspiracy against both defendants.

The defendants denied liability. They contended that the shares had been transferred as remuneration for the second defendant’s work, or for £200,000, and that the claimant’s brother had controlled the relevant arrangements. The central issues were the agreed consideration, whether it remained unpaid, and whether the conduct amounted to unlawful means conspiracy.

1. Share price and payment. The claim against Reddish succeeded. The court found that the claimant and his brother had agreed that Reddish would acquire the 10 per cent shareholding for £1.3 million, with payment deferred. The second defendant knew of and approved the arrangement. The evidence did not establish an above-board agreement for a free transfer.
2. The later insertion of £200,000 on the stock transfer form was false and was intended to support the defendants’ changing account of the transaction. It did not alter the agreement or discharge Reddish’s liability for the agreed consideration.
3. Conspiracy. The conspiracy claim failed because the claimant had not established loss caused by the entry of the false consideration. He was not deceived, and the stock transfer form episode produced no actionable damage. The court also indicated that it would have been inclined to doubt whether there was an arrangement between two parties, since the conduct complained of was that of the second defendant alone. That issue was left undecided.
4. The court gave judgment for the claimant against Reddish, dismissed the claim against the second defendant, and adjourned consequential matters including costs, interest and any application for permission to appeal.