Paralel Routs Ltd v Fedotov

In a civil claim based on allegedly executed loan documents, the claimant bears the burden of proving that the contracts were entered into and that the documents relied on are authentic. The defendant need not establish an alternative fraud theory merely because forgery or dishonest creation is alleged. The standard remains the balance of probabilities. Where originals are unavailable, the court must assess the available evidence with appropriate caution, particularly where authenticity is directly challenged. Procedural compliance, unredacted disclosure and effective cross-examination may be decisive in testing the claimant’s case.

The claimant sought nearly £12 million from the defendant under 17 alleged loan agreements and a deed of variation. The defendant denied entering into the agreements and alleged that the documents and signatures were fabricated or dishonestly obtained.

The claimant’s original documents were not produced. Expert handwriting evidence raised substantial concerns about the signatures, forensic evidence undermined the authenticity of disclosed emails, and the claimant’s evidence was materially weakened in cross-examination using unredacted bank statements. The central issues were whether the defendant entered into the loan agreements and whether the claimant had proved its pleaded case.

1. Burden and standard of proof. The claimant, relying on the alleged written loan agreements, bore the burden of proving that the defendant entered into them. The defendant was not required to establish that fraudulent creation of the documents was the inescapable conclusion. The applicable standard was the balance of probabilities.
2. Assessment of the evidence. The court could decide only whether the claimant had proved its positive case. It was unnecessary to determine affirmatively whether the defendant’s account was true. The claimant’s uncorroborated evidence was unreliable, and the untested witness statements carried limited weight. The handwriting evidence was significantly adverse to the claimant, while the forensic IT evidence indicated that the disclosed emails had been forged, manipulated or tampered with.
3. Original documents and disclosure. The claimant failed to produce the originals for inspection without a satisfactory explanation. The court declined to accept that the Deposit Insurance Agency held them. The court noted the possible relevance of an adverse inference from non-production, but found it unnecessary to draw one because the claim failed on the evidence otherwise. Unredacted bank statements were materially more probative than the redacted versions and exposed inconsistencies in the claimant’s case.
4. Deed of variation. The deed was not validly executed as a deed because the defendant’s signature was unwitnessed. Under the Law of Property (Miscellaneous Provisions) Act 1989, s 1, it could not qualify as a deed, although that did not necessarily deprive it of all possible legal effect.
5. Conclusion. The claimant failed to prove that the defendant entered into the alleged loan contracts or that he signed them at another time, or authorised any forgery or transposition. The claim was dismissed. The court directed that a draft minute of order be provided, including its effect on the freezing injunction.