Frenkel v Lyampert & Ors

A claimant seeking specific performance of an alleged oral agreement must prove the agreement and its material terms on the balance of probabilities. Where negotiations are conducted by an individual on behalf of a company, the evidence must establish whether the company or the individual was the contracting party. A remedy cannot ordinarily be introduced under CPR Part 16.2(5) to advance an unpleaded case, particularly where it would deprive the defendants of a fair opportunity to meet it. Evidence given long after the events, including post-contract conduct, must be assessed cautiously and in the context of the whole evidence.

The claimant sought specific performance of an alleged 2004 oral agreement concerning the ownership, dividend entitlement and directorship of LA Micro Group (UK) Limited. He alleged that the agreement was made between himself, the first defendant and the second defendant, giving him a 25.5% shareholding.

The defendants disputed the alleged agreement. The central issues were the identity of the parties to the agreement and whether the 51% interest was to belong personally to the claimant and first defendant or to LA Micro Group Inc. The claimant also sought alternative relief, including rectification under section 125 of the Companies Act 2006.

1. Claim dismissed. The claimant failed to prove that there was an agreement under which he was personally entitled to shares, dividends or a directorship in the UK company.
2. The agreement reached in August 2004 was between the second defendant and LA Micro Group Inc. The first defendant and Mr Gorban attended the United Kingdom on Inc’s behalf. The agreement provided for a 51% interest for Inc and a 49% interest for the second defendant. The profits were to be divided equally between Inc and the second defendant.
3. The court preferred the evidence of the second defendant, who was treated as a neutral and reliable witness. The evidence of the claimant, first defendant and Mr Gorban was approached with caution because of defects in recollection, reliability and corroboration. The court considered the parties’ subsequent conduct, while recognising that post-contract conduct must be treated cautiously, applying the approach in Brian Royal Maggs v Marsh [2006] EWCA Civ 1051.
4. The court had regard to the evidential guidance summarised in EPI Environmental Technologies Inc v Symphony Plastic Technologies plc [2005] 1 WLR 3456. A witness’s lies or mistakes did not require wholesale rejection of that witness’s evidence; the evidence had to be assessed as a whole and against the other evidence.
5. The claimant could not obtain relief for Inc under CPR Part 16.2(5). The claim that the agreement was between Inc and the second defendant had not been pleaded or advanced in the claimant’s evidence. It could not be introduced as an afterthought because the defendants had not had a proper opportunity to meet it. In any event, the claimant’s delay, his disavowal of any interest in the UK company in March 2010, and the defendants’ reliance on that position made such a claim unlikely to succeed.

The claim was dismissed.

not stated in the judgment.