Yusuf v Yusuf & Anor

The court examined a family dispute about ownership and management of Pekalp Properties Limited (PPL) and associated Cyprus investments. Key legal principles applied included the requirements for a valid declaration of trust, the formalities for share transfers, the Duomatic principle, directors' duties (including duties under the Companies Act 2006), and the statutory unfair prejudice jurisdiction under section 994 CA 2006.

The judge held that the claimant, Sueda Yusuf, remains beneficially entitled to 25% of PPL. A 17 January 2009 letter was found more likely than not to have been signed by her but was not an effective transfer of shares. A one‑page 2003 Trust Document relating to Cypriot assets did not create a valid trust (and, if one had existed, it had been effectively abandoned); funds sent to Cyprus were predominantly loans/expenditures rather than equity investments by PPL and therefore not held on trust for PPL. PPL was owed £1,249,284 by Pekalp Cyprus at the date of sale; Tanju and Askin must account for the unpaid balance and Tanju must account further for other sums improperly applied.

The judge found that Sueda and Tanju reached a binding settlement agreement on 27 February 2015; specific performance was ordered in relation to transfer of the Catalkoy villa and damages were to be assessed for other breaches. The petition under section 994 CA 2006 was well founded: PPL’s affairs were conducted in a manner unfairly prejudicial to Sueda and Askin, warranting an order for an accounting and a sale process to obtain the best price for Church Road (with consequential arrangements for share transfers or buyouts).

Background and parties: The dispute concerned a family property company, Pekalp Properties Limited (PPL). The claimant and petitioner, Sueda Yusuf, her daughter Askin Ozerin and the first defendant/respondent, Tanju Yusuf, are family members with intertwined business and personal dealings. The litigation combined a Chancery claim (seeking declaration of beneficial entitlement to shares, rectification or specific performance) and a Companies Court petition for unfair prejudice under section 994 Companies Act 2006. The defendants raised Part 20 claims alleging constructive trusts and claims for accounts.

Nature of the applications: (i) Declaration that Sueda beneficially owned 25% of PPL and transfer/rectification of the register; (ii) specific performance/damages for an alleged February 2015 settlement; (iii) Part 20 claims seeking accounting and repayment of monies said to be held on trust or due to PPL arising from Cyprus investments; (iv) Companies Act petition for unfair prejudice and consequential relief including buy‑out or winding up.

Issues framed:

• Whether Sueda was beneficially entitled to 25% of PPL or whether those shares had been held on trust for Tanju.
• Whether Askin held funds or profits on account for PPL (including in relation to Mortgage Express / a £630,000 offer and other development profits) or had borrowed £200,000 from PPL.
• Whether the 2003 Trust Document effected a trust over Pekalp Cyprus or any land/shares and whether proceeds of the Cyprus sale were held for PPL.
• Whether a binding settlement was reached on 27 February 2015 and the scope of any enforceable obligations.
• Whether the conduct of PPL’s affairs was unfairly prejudicial and what relief should follow, including whether Church Road should be sold.

Court’s reasoning and findings: The judge made multi‑aspect factual findings after assessing witness credibility and expert evidence. On shares: the court concluded Sueda had always been beneficially entitled to 25% of PPL; the 17 January 2009 letter was likely signed by her but was merely an instruction to transfer and not a completed/formal transfer. On Askin: she was not obliged to account for profits from her private development projects and did not receive or retain Mortgage Express funds. On Cyprus: the 2003 Trust Document was defective and, even if it could have been construed as evidencing an intention, no continuing trust remained by the time of the 2014 sale; substantial sums sent to Cyprus were loans/expenditure, and Pekalp Cyprus owed PPL £1,249,284 at sale, for which tanju and askin must account in part; further sums appropriated require accounting by Tanju as the person who controlled transfers. On the February 2015 document: the court found a binding agreement dated 27 February 2015; it ordered specific performance in respect of transfer of the Catalkoy villa and awarded damages or assessment for other failures (including mortgage contribution and ongoing utilities/dividend arrangements).

Relief and broader implications: The petition under section 994 CA 2006 succeeded: the affairs of PPL had been conducted in a manner unfairly prejudicial to Sueda and Askin, principally by failures of corporate housekeeping, by diversion/mis‑accounting of funds (notably the Cyprus investments) and by the director’s conflicted conduct over Church Road. The court directed an accounting and concluded that the appropriate relief will include a process to test and, if necessary, secure a sale of Church Road at the best obtainable price followed by share‑sale or buy‑out arrangements (with further directions to be determined). The judge emphasised the need for proper accounting, rectification of the register to show the determined shareholdings and that minority discounts would be inappropriate if a clean sale process followed.

This was a first instance judgment. The court: (i) held that Sueda Yusuf is beneficially entitled to 25% of PPL and that a 17 January 2009 letter did not effect a valid transfer; (ii) rejected the claim that Askin must account for profits from her personal developments or that she received Mortgage Express funds; (iii) held that the 2003 Trust Document did not create (or in any event did not preserve) a trust over Pekalp Cyprus shares and that the Cyprus sale proceeds are not held on trust for PPL; (iv) found that Pekalp Cyprus owed PPL £1,249,284 at sale and that Tanju and Askin must account for the unpaid balance and that Tanju must account further for sums misapplied from PPL; (v) found there was a binding settlement on 27 February 2015 and ordered specific performance as to transfer of the Catalkoy villa and damages to be assessed for other breaches; and (vi) allowed the section 994 petition as the company’s affairs had been conducted unfairly prejudicially, directing an account and a sale process for Church Road to obtain best value with consequential share remedies. The rationale combined findings on documentary formalities, witness credibility, trust law certainties, the Duomatic principle, directors’ duties and the unfair prejudice jurisdiction under CA 2006 s994.