Mehul Devani v Amir Sharon

A court determining historical facts should use reliable contemporaneous documents, known or probable facts and properly drawn inferences as the platform for assessing oral testimony. Confidence, honesty and demeanour are not sufficient indicators of accuracy.

Whether an agreement is legally binding depends objectively on the parties’ communications and conduct. An agreement may be subject to contract, or may leave essential matters for later agreement, so that no binding contract arises. Subsequent conduct and the parties’ established practice are relevant. A person cannot declare an immediate trust over property which they do not own.

Mehul Devani claimed that Amir Sharon held 50% of the issued shares in Hermes House NW2 Limited on trust for him and was obliged to transfer that interest. Sharon counterclaimed for declarations that Devani beneficially owned 33.33% and Sharon 66.67% of the shares, together with related relief concerning transfer and development costs.

The parties had originally agreed to develop Hermes House as equal one-third partners. The central dispute was whether, at a meeting on 25 June 2021, they agreed that Sharon would buy out Hussein Lalani and that Devani and Sharon would thereafter own the Company equally. The court also considered whether any such agreement would have been legally binding.

1. Factual assessment. The court applied the approach identified in Peter Glenn and others v Adam Walker and others, using contemporaneous documents, known or probable facts and proper inferences as the platform for assessing recollections of events many years earlier. The court attached limited weight to reconstructed and partisan evidence.
2. The original arrangement. The agreement was that Sharon would not contribute to the purchase price of Hermes House. Devani and Lalani would fund that cost equally, while the partners would share development costs equally and Sharon would contribute expertise and project management.
3. The 25 June 2021 meeting. On the balance of probabilities, no agreement was made that Devani would receive 50% of the issued shares, that Sharon would pay Devani £20,000, or that Devani would waive the Warspite debt. The absence of contemporaneous confirmation was significant because the parties had developed a practice of recording important agreements in writing. The documents instead supported Sharon’s case that Lalani’s exit and the purchase of his interest remained to be negotiated.
4. Contractual intention. The alleged tripartite arrangement was, in any event, not intended to create immediate contractual relations. Objectively, it was subject to further without-prejudice negotiations and a formal settlement agreement. Essential matters remained unresolved, including payment terms, transfer of Lalani’s interest, settlement of claims and future development funding. The court applied the principles collected in Rotam Agrochemical Co Ltd v GAT Microencapsulation GmbH, including the objective approach to intention, certainty and subject-to-contract negotiations.
5. Trust and consideration. The proposed declaration of trust could not operate over shares Sharon did not yet own. Had a binding agreement otherwise been established, Devani’s agreement to forgo the £85,000 debt would have been sufficient consideration, even though the benefit would have accrued to Lalani.
6. Disposition. Devani’s claim was dismissed. Sharon was entitled to a declaration that he beneficially owned 66.67% and Devani 33.33% of the issued shares. Sharon had no valid reason to refuse transfer of Devani’s 33.33% interest, although that relief was no longer sought. The proposed declaration concerning Devani’s liability for one third of development costs was unnecessary.

First-instance judgment. No appellate history was stated in the judgment.