HEATING TRADE SUPPLIES GROUP LIMITED & Anor v MARK MATTEO & Anor

Money introduced into a company may be characterised as a loan despite being described informally as an investment. The court determines the parties’ objective agreement from the whole evidential picture, including the company’s accounts and subsequent conduct.

A gratuitous share transfer gives rise to a rebuttable presumption of resulting trust where beneficial ownership is otherwise unexplained. Where the transferor’s intention is established, the court gives effect to that intention without relying on the presumption.

The illegality defence requires a proportionate public-policy assessment. A director unlawfully excluded from a quasi-partnership may retain fiduciary obligations in appropriate circumstances, but an ousted director is not ordinarily required to assist those who have deprived him of control. Unfair exclusion may justify a share buy-out by the other participant.

The claim concerned the ownership and management of Heating Trade Supplies Group Ltd, a company established as a quasi-partnership by Mr Baldudak and Mr Matteo.

Mr Baldudak contended that money paid into or for the company was a loan and that Mr Matteo had transferred all his shares beneficially. Mr Matteo alleged that £1 million was investment capital for a 50% shareholding, that he retained a beneficial interest in 50% of the shares, and that his removal from management was unfairly prejudicial.

The court also determined claims concerning fiduciary and statutory duties, a director’s loan account, alleged salary, dividends and rent, the lawfulness of the removal, an assault, and an injunction against interference with the company.

1. Loan and share ownership. The money introduced by Mr Baldudak was repayable as a loan. The evidence as a whole, particularly the accounts and Mr Matteo’s instructions describing the sums as loans, outweighed the use of the word investment in the business plan. Mr Baldudak held 50% of the shares on trust for Mr Matteo. The first transfer was subject to the resulting-trust presumption, which was not rebutted. The later transfers were intended to be nominal and to conceal the shares from Mr Matteo’s former wife, so the beneficial interest was never intended to pass.
2. Illegality. Applying Patel v Mirza, the court considered the purpose of the prohibition, other relevant public policy and proportionality. Refusing to recognise the trusts would thwart rather than advance the policy of ensuring accurate disclosure in matrimonial proceedings, reward Mr Baldudak’s complicity and produce a disproportionate result. Relief was therefore available.
3. Duties. The allegations that Mr Matteo misappropriated company money, set up a competing business, diverted eBay payments, changed passwords or deliberately damaged the company were not proved. The cash withdrawals and house-deposit payments were treated as legitimate company drawings or were insufficiently established as breaches. After his de facto exclusion, Mr Matteo was not acting as the company’s fiduciary in the ordinary sense and was entitled to withhold consent to the proposed bank mandate as legitimate self-help.
4. Other claims. Mr Matteo owed HTS £58,956.11 on his director’s loan account. His removal as director was unlawful because the meetings were not properly convened or quorate and he was not given the statutory opportunity to be heard. Employment, deferred salary, dividend, rent and contractual-guarantee claims failed. His exclusion from the quasi-partnership was unfairly prejudicial, and Mr Baldudak was ordered to purchase his shares, with price and terms to be determined later.
5. Mr Matteo was assaulted by Mr Baldudak’s and HTS’s agents when his phone was taken and he was restrained. The claimants were liable, including for £210 taken from his bag. HTS’s application for a perpetual injunction was refused.

The judgment was a first-instance determination following interlocutory injunction hearings and case-management directions. The court consolidated the original claim with Mr Matteo’s petition under section 994 of the Companies Act 2006.