Sotiris Christophi & Ors v RP Design and Construction Limited & Ors

Where parties fund a property development informally, the court identifies the agreement objectively from the available evidence. A loan arrangement is not converted into a beneficial shareholding merely because the lender expects a share of development profits. Contractual terms may be implied only where necessary to give business efficacy or so obvious that they go without saying; commercial prudence is insufficient. A later agreement may supersede the original arrangement where the parties objectively manifested assent, even if one party was dissatisfied. Trust-based claims fail where no trust of the shares is established.

The claimants alleged that funds provided to acquire and develop the Tower were advanced under an agreement giving Mr Sotiris Christophi and Dr Sanjay Kaushal equal beneficial ownership of shares in RP Design and Construction Limited. They sought proprietary relief and equitable remedies against the company, its directors and connected parties.

The defendants maintained that the funds were loans repayable with a return linked to profits, and that a later March 2023 arrangement gave Mr Christophi 25 per cent of the shares together with repayment of his capital. The central issues were the nature of the original agreement, whether any trust arose, whether the later arrangement was binding, and whether any loan terms were necessarily implied.

1. The claim was dismissed. The original arrangement was a loan, not an agreement giving Mr Christophi shares. The court relied on the parties’ wider business dealings, the earlier bridging loan, the absence of contemporary evidence of a share entitlement, and Mr Christophi’s own evidence.
2. An informal oral business arrangement may be binding where the parties intended to contract and acted on it. The court considered the surrounding circumstances and subsequent conduct, while treating recollection cautiously where contemporary evidence was sparse.
3. Additional loan terms could not be implied. Under Wells v Devani and Marks & Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd, implication requires necessity to give business efficacy or obviousness in the sense that the term goes without saying. Commercial prudence is insufficient.
4. A binding compromise was reached on 24 March 2023. Mr Christophi accepted 25 per cent of the shares for Dawson Brown together with repayment of his capital, although he was dissatisfied. The shares constituted consideration.
5. No express trust was established. A constructive trust was also not made out because Mr Punj lacked the necessary knowledge of the alleged beneficial ownership arrangement.
6. There was consequently no breach of trust. The claims for knowing receipt and dishonest assistance, which depended on a trust, also failed.

First-instance decision. No prior or appellate decision is stated in the judgment.