Mohammed Sarwar & Ors v Bilal Sarwar & Anor

An unfair-prejudice petition cannot be used to advance a positive case of forgery through a bare non-admission of authenticity. The allegation must be pleaded or clearly notified in sufficient time for the opposing party to meet it. A valid voluntary share transfer ordinarily removes the transferor’s membership basis for relief under Companies Act 2006, s.994. In a former shareholder’s separate claim, the flexible equitable jurisdiction does not itself create a right to reverse a signed transfer; a substantive legal basis is required. The court found that the parents had signed documents implementing a division of the family business and that their daughter’s earlier transfer was permanent. The petition therefore failed, with declaratory relief in principle for the son.

The three petitioners brought an unfair-prejudice petition concerning a family-owned hotel company. The parents alleged that their son had wrongfully obtained their shares, removed them as directors and excluded them from management. Their daughter alleged that a 2022 transfer of her shareholding to the son’s wife was temporary and should be reversed. The son denied wrongdoing, relied on a Share Swap Agreement and stock transfer form, and sought declaratory relief. The court had to determine the authenticity and effect of those documents, whether the daughter’s transfer was conditional, and whether the petitioners had standing and a substantive basis for relief under the Companies Act 2006.

1. Disposition. The petition was dismissed. The parents failed to establish that their shares had been wrongfully appropriated, and the daughter failed to establish any right to the return of her shareholding.
2. Forgery and authenticity. A positive allegation that a document or signature was forged is distinct from a non-admission of authenticity. Relying on Lemos v Church Bay Trust Company Limited [2023] EWHC 2384 (Ch) and Redstone Mortgages Ltd v B Legal Ltd [2014] EWHC 3398, the court held that such a case must be pleaded or clearly notified in sufficient time to permit a fair response. The late amendment was therefore refused, and the petitioners could not advance forgery in cross-examination or submissions through a non-admission. The court found the Share Swap Agreement and J30 form authentic and concluded that Mohammed and Robina had signed them. It also reached the same conclusion on the wider evidential analysis, without making a positive finding of forgery.
3. Standing and the parents’ petition. The court inferred that the petitioners had previously been members despite the absence of a register of members, applying Re I Fit Global Limited [2013] EWHC 2090 (Ch). Effective transfers nevertheless removed the parents’ membership basis for complaining under ss.994 and 996 of the Companies Act 2006. Their later complaints about the company’s operation could not cure failure on the essential transfer issue.
4. Shahelah’s claim. The court accepted in principle, following Grace v Biagioli & Others [2005] EWCA Civ 1222, that unfairness may arise from inequitable conduct without breach of an enforceable agreement. But an informal family understanding was insufficient to establish a substantive right to reverse a signed transfer. No properly pleaded or evidenced collateral agreement, misrepresentation or other legal basis was shown.
5. Evidence and orders. The court adopted the importance of contemporaneous documents, while qualifying the commercial-memory approach for a family dispute, referring to Jaffe v Greybull Capital LLP [2024] EWHC 2534 (Comm), Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm), Simetra Global Assets Ltd v Ikon Finance Ltd [2019] EWCA Civ 1413 and Martin v Kogan [2019] EWCA Civ 1645. Declaratory relief for Bilal was indicated in principle, subject to consequential submissions. A wider declaration concerning beneficial ownership was not made because Ainy was not a party. Consequential matters were reserved.

not stated in the judgment.