Miranda Investments Limited & Ors v Abraham (Avi) A Dodi & Ors

1. In this matter, the Claimant is represented by Mr Kamar Uddin of Counsel. The 1 st and 3 rd Defendants were represented by Mr David Mayall of Counsel. The 2 nd and 4 th Defendants were represented by Mr Andrew Barns-Graham of Counsel. The Application

2. The application before me is dated 21 st February 2025. It is brought by all four Defendants against the Claimant and it seeks: “An Order requesting that the Claimants’ Statement of Case be struck out in its entirety pursuant to CPR 3.4 (2). Alternatively, that part of the Particulars of Claim be struck out pursuant to CPR 3.4 (2). Further and/or in the further alternative that the Court grant summary judgement against the Claimants on the entirety of their claim pursuant to CPR 24.2 (a). Further and/or in the further alternative that the Court grant summary judgement against the Claimants on part of the Particulars of Claim pursuant to CPR 24.2 (a).” The legal tests

3. The requirements for striking out are set out in CPR 3.4(2), and the parties did not elucidate its terms significantly. The test for Summary Judgement is familiar to the Court. The Defendants Counsel’s joint Skeleton argument helpfully set out passages from the judgment of Lewison J (as he then was) in easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15] and a further paragraph from On the Beach Ltd v Ryannair [2023] EWHC 2694 (Comm) . Mr Uddin relied on similar authorities. The Scheme

4. This application arises in the context of claim arising out of a scheme to purchase and develop a property known as 36C Harrington gardens, which I shall call, the “Property”. The scheme was to purchase a long lease of the Property, redevelop it and sell it at a significant profit. The purchase and development were to be carried out using a single purpose vehicle company called 36C Harrington gardens Ltd, which I shall refer to as, “the Company”. Sadly, in the event, the scheme was not a success. The Company first went into administration and then went into voluntary liquidation. I was told that the Company’s creditors were given a dividend of 30p in the pound and there is no prosect of any return to shareholders. The Parties

5. The Claimants are persons who invested in the Company by means of crowdfunding. The 1st and 2nd Defendants are the individuals behind the scheme. The 3 rd and 4th Defendants are the 1 st and 2 nd Defendants’ respective companies. Background

6. On 16 th December 2016, a long lease of the Property was acquired by the Third Defendant, (“ORD”) for £2,050,000. ORD was a company, of which the First Defendant was a Director and he owned its entire share capital. It is common ground that the long lease was held by ORD on bare trust for the Company. After the purchase of the long lease, there also had to be a purchase of an extension to the lease and a long lease of a balcony. When the property was sold, the proceeds of sale were paid to the Company’s mortgagees, with the balance paid to the Company.

7. When the Claimants became involved, they were provided with a brochure which was referred to as the “Investment Prospectus”. This was updated with a second Investment Prospectus. Each Investment Prospectus, (“IP”), was a brochure giving details of the scheme. It included a worked example of the possible return on investment and attractive pictures of the proposed development and layout plans.

8. The core contractual document for the scheme was in the form of a Deed dated 10 th February 2017. It was made between the Company and the 3 rd and 4 th Defendants. At the hearing, it was referred to as the “Shareholders’ Agreement”. I shall refer to it as the “SA”. The SA contained provisions about the implementation of the scheme by the parties. The way in which the Claimants joined the scheme was curious. They were each invited to, and did, sign a Deed of Adherence, (“the DA”). The DA was set out as Schedule 6 to the SA. Under clause 1.1 of the SA, (the clause which set out the words defined in the SA), the Claimants, by signing the DA, were brought within the definition of “Parties” and were stated to become bound by the SA.

9. The Claimants became shareholders in the Company. They acquired shares, at £500 a share, up to the value of their respective contributions.

10. The Fourth Schedule to the SA was headed “Capital Investment in the Company”. Under this, there was sub-heading “Initial Contributions” and then a list, as follows:- “The Investors: £732,000 ORD: £1,000,000 RTR: £1,000,000 Total: £2,732,000

11. The “Investors” were those who invested in the scheme by crowdfunding. Of that total, the Claimants contributed some £411,000. “ORD” is the 3 rd Defendant and “RTR” is the 4 th Defendant. The Pleadings

12. The pleading comprise the Particulars of Claim and a Defence on behalf the First and Third Defendants and a Defence on behalf the Second and Fourth Defendants. There is no Reply. There has been no Request for Further Information. The Particulars of Claim start with setting out the background facts. There are then groups of paragraphs with headings which provide a road map. Counsel for the 1st and 3rd Defendants criticised the pleading, for the way it was set out. I do not consider that criticism was well placed as it starts in chronological order and moves on to the claims. That said, the Particulars of Claim are confusing, and do lack particularity, in important respects. When I asked why the Defendants had not sought further information, Counsel for the Second and Fourth Defendants told me that it was not their place to strengthen the Claimants’ case. I should say, however, that his Defence left no doubt that he was complaining about the lack of clarity and particularity in the Defence. The Claims

13. The claims, as set out in the Particulars of Claim read as follows: “And the Claimants claim:

1. Damages for misrepresentation which induced them to invest into the project known as 36C Harrington Gardens Ltd, and/or damages for breach of contract as per the Shareholders’ Agreement in respect to the project known as 36C Harrington Gardens Ltd and return of their investments mentioned at paragraph 12 above with interest namely profit share of 24% per invested amount by the Claimants.

2. Accounts and enquiry of rent received which have not been accounted for.

3. Rescission and/or repudiation of the shareholders agreement dated 10 February 2017.

4. In the alternative damages in lieu of recission and/or repudiation of the shareholders agreement dated 10 February 2017.

5. In the alternative, the Claimants seek sums which were agreed to be paid back to the Claimants under the buyback agreement by the Defendants referred to at paragraphs 73, 74, and 77 above.

6. Any other order the court thinks fit.

7. Interest under section 35 A of the Senior Courts Act 1981 .

8. Costs”

14. All these claims appear to be made against all the Defendants, without distinction. The arguments of the Defendants’ Counsel were wide ranging. The Claimants’ Counsel explained the Claimants’ case and their claims in his response to the Defendants’ application, albeit that he did not respond to all the points raised by the Defendants.

15. At the end of the hearing, I asked the Claimants’ Counsel to identify and summarise his clients’ the core claims. From what the Claimants’ Counsel then told me, the core claims boiled down to the following, namely:- (1) There was a claim for damages for misrepresentation and/or breach of contract and/or “non-disclosure” relating to the alleged investments by the 2 nd and 3 rd Defendants of £1m each. I shall refer to this as “The million pound investment claims”. (2) A claim relating to the withdrawal of £500,000 from the Company, to repay moneys allegedly loaned to the Company by one the Defendants, the “£500,000 withdrawal”. (3) A claim in relation to a promise of a 24% return arising from the first or second Investment Prospectus, the “24% Claim”. (4) There was a claim for rescission of the SA, the “Rescission Claim”. (5) There was a claim for damages in lieu of rescission of the SA, the “Damages in lieu of Rescission Claim”. (6) There was a claim for misrepresentation in relation to a bank loan to pay back investors, “the Bank Loan”. (7) There was a claim for repayment of the Claimants’ contributions under two alleged “buy back” agreements, the “Buy-back agreement claims”. The million pound investments claim – based on Misrepresentation

16. Unusually, although there were claims in relation to this, no-where in the Particulars of Claim did it state where, when, or how, the alleged representation as to this was made, nor where a term relating to it could be found in the SA. Mr Mayall kindly enlightened me, when I asked him. He said he thought the Genesis was in the terms of the Fourth Schedule to the SA. Essentially, what is being alleged by Mr Uddin, on behalf of the Claimants, is that the 4 th Schedule (taken with the IPs) amounted to a representation that the Third and Fourth Defendants had each invested £1m. When he said “invested”, he meant that those Defendants had money at risk, and the sums were not just third-party loans. The Company’s own accountant, Jim Baker, gave the actual funding position, in an email dated 4 th March 2021. The initial purchase of the Property was funded by transfers from Englefield Road Ltd of £1,111,240 (a company linked to the Defendants) and the provision of bank funding from Aldermore of £1,147,933, with a small balance from sums held on account. The alleged representation was made at the time when the Claimants each read the SA, before signing their Deeds of Adherence and becoming parties to the SA.

17. It was also alleged that the second IP became part of the SA, as it was referred to several times in the SA and was therefore argued to be “set out” in the SA. In my judgment, that part of the Claimants’ argument has no realistic prospect of success at trial.

18. It was alleged by the Claimants that the 3 rd and 4 th Defendants had not each made £1m investments. In my judgment, it is probable that they did invest about £1.1m via the company linked to them, which had made a profit on other ventures. As to the balance, this appears to have been a loan, albeit (as Mr Mayall informed me) a loan secured by a guarantee from the First Defendant. In my judgment that is not the same as an investment. In my judgment the Claimants, as investors, were likely to be encouraged to invest on the basis of the promoters having £2m “invested”, much more than if the Fourth Schedule had said £1.1m came from the Third and Fourth Defendants and the balance from a bank loan.

19. The background to this claim in misrepresentation against the Third and Fourth Defendants is not at all well pleaded but, in my judgment, it has realistic chances of success, and is not appropriate for summary judgment against the Claimant. Likewise, I do not consider it is appropriate for striking out.

20. As regards the Claim against the First and Second Defendants, they were not parties to the SA, and I do not consider the claim against them stands a realistic chance of success. Accordingly, I propose to give summary judgement against the Claimants on that part of the claim against the First and Second Defendants. An arguable claim might be able to be made out in negligent misstatement. I suggested this to Mr Uddin, during his submissions, but he did not voice a wish to seek to amend to include such a claim. The million pound investments claim – based on Breach of Contract

21. The ground for this is again the Fourth Schedule. It is alleged that there was a term of the SA that the Defendants put in an “investment” of £2m and this had been broken. This is a more difficult argument to run but, in my judgement, not one that is so hopeless it should lead to summary judgment or strike out. The £500,000 withdrawal

22. It is remarkable that, within less than two weeks of the investors putting £732,000 into the Company, the sum of £500,000 was withdrawn, allegedly to repay loans to the Company by one or more of the Defendants. I can see how this looked very suspicious to the Claimants, when they later found out about it. That said, I can find no contractual provision that prevented them from doing this. Given the ultimate plight of the Company, it might have been a preference, or even a misfeasance, but any such claims are now vested in the liquidators of the Company and not the Claimants. The Claimants thought the £500,000 related to a “buy back” of the Defendants’ shares but that does not seem to have been factually correct. The £500,000 withdrawal claim is in my judgment appropriate for summary judgment against the Claimants. The “24% Claim”.

23. This claim is based on the IP being incorporated into the SA and the fact that the Claimants made a loss, not a profit. There are numerous reasons why this claim is bad. To mention but a few: (1) the wording of the IP showed that this was an example of how things might work out, not a promise of a return that should be relied upon. (2) I do not consider that the terms of the IP became terms of the contract. (3) there simply was no term to this effect. In my judgment, this part of the claim is suitable for summary judgment against the Claimants. The “Rescission Claim”.

24. There are serious problems with this claim. The Company is in liquidation. The First and Second Defendant were not the parties to the SA. It would not be possible to restore the parties to their position before the SA was entered into. Mr Mayall used the well-known Latin phrase, saying restitutio ad integrum is not possible. One cannot undo the issue of shares. In my judgment, this part of the claim is suitable for summary judgment against the Claimants. “Damages in lieu of Rescission Claim”

25. In my judgement, this claim falls with the claim for recission. In my judgment, this part of the claim is suitable for summary judgment against the Claimants. The loan to pay back investors

26. At one point the Defendants proposed that the Company would borrow money to pay Company debts and pay back the Claimants’ investments. There was an initial proposal from the lender, which included provision for the latter. The second proposal by the lender was for less money to be lent and there was no mention of repaying the Claimants. It appears that the Claimants were sent these proposals. It is alleged that they amounted to representations that the loan would be taken and the Claimants repaid. Mr Mayall unkindly referred to this as a misrepresentation, “in the wind”. It is hard to see that the provision of the proposals could be construed as any of the Defendants making a representation. It was made long after any contract and could not have induced the SA. There is also no plea in the Particulars of Claim of reliance detriment or damage. In my judgment, there can be no claim in relation to this alleged misrepresentation. The Buy-back agreement claims

27. This is perhaps the most unfortunate part of the sad history for the Claimants. They thought that they had entered contracts with the Defendants, under which the Defendants agreed that all the Claimants’ investments would be repaid. The Defendants, however, claimed the documents, which the Claimants were sent and some of the Claimants signed, did not amount to a binding agreement. On the one hand, the Claimants received the document containing an offer, which seemed to be capable of acceptance and they accepted it. On the other hand, the Defendants claim that what was sent was a mere “invitation to treat”. I need to turn to these documents and consider them in detail.

28. The form of offer, or invitation to treat, is a page 591 of the hearing bundle and an example of an intended acceptance by one of the Claimants is at page 592. On the Claimants’ side it is argued that all that was needed after acceptance was a share transfer in return for payment. On the Defendants’ side, it was argued that there was much more left to agreed. Indeed, there had to be another agreement. In my Judgment, there is a realistic chance that the Claimants might succeed in these claims and they are not suitable for summary judgment against the Claimants or striking out. The claim for rent

29. In my judgment the claim for rent was vested in the Company and is now vested in the liquidator. The Claimants have no legal or beneficial claim to this money. Accordingly, the claim for an account for rent cannot succeed and should be the subect of summary judgment against the Claimants. Inconsistencies

30. The Defendants referred to inconsistencies in the Particulars of Claim. There were inconsistences but I consider they could be cured by amendment and they are not such as should lead to striking out. Limitation

31. The Defendants’ case is that there was a six-year limitation period applied to the SA, as it was a simple contract, under the Limitation Act 1980 . The Claimants’ case is that the SA and Deed of Adherence were deeds, so a 12-year limitation period applies. In my judgment, as to claims in contract, we are dealing with Deeds and the Claimants are correct - there is a 12-year limitation period. The claims for rescission are equitable claims and I do not consider they are barred by laches. A six-year limitation period, back from the date of issue of the claim on 12 th June 2024, gives one a cut-off date of 12 th June 2018. My provisional view is that any claim for misrepresentation arising before 12 th June 2018 is statute barred. I will, however, hear the parties further on this, if they wish. Contractual “exclusion” and other like clauses

32. The Defendants rely on the words excluding: (1) any liability for misrepresentation, (2) any reliance on any representation and (3) the existence of any representation at all, to be found in the IPs and the SA. In my judgment, as regards (1), the position is covered by the Unfair Contracts Terms Act 1977 , (“UCTA”). Exclusion clauses have to be reasonable, in the circumstances, under UCTA. In my judgment, in would not be reasonable to exclude liability in the circumstances of this case. As regards (2), as the Defendants’ Counsel accepted, there is active debate as to whether these types of clauses are covered by UCTA. Given that active debate, in my judgment it is not appropriate to give summary judgment, or strike out, here based on (2).

33. Turning to (3), the Defendants invite me to find that the wording of the IPs was such that I should find there was no representation to be relied on at all. In my judgment that is not correct. In my judgment, it is very probable that the IPs and the SA were actually heavily relied upon by the Claimants and that any terms to the contrary, however worded, do not override the reality of the way the IPS and SA were presented and how they persuaded the Claimants to proceed, in the circumstances of this case. In my judgment, it was not reasonable to exclude liability under UCTA. More evidence available

34. The Claimants’ Counsel argued that, if the case continues to trial, then documents may be disclosed in the process of Discovery that assist their case. As to claims in misrepresentation, I do not accept this argument. The essence of a claim in misrepresentation is that you were induced to enter the contract by a misrepresentation. Thus, if the Claimants can rely on it, it has to be known to them now. The chance that other matters may arise on disclosure, is not, on the authorities, a good ground for refusing summary judgement. Conclusions

35. I will give summary judgment against the Claimants on certain of parts the claims, to match of my conclusions above. I reserve all questions on striking out. My preliminary view is that no part of the body of the Particulars of Claim should be struck out, rather only parts of the formal claims should be struck out. There will a “consequentials hearing”, on an date to be fixed, as presaged at the end of the main hearing. At the “consequentials hearing”, I will hear submissions as to the form of order, costs and other matters. I direct that the parties shall file and exchange Skeleton Arguments (on consequentials) and their respective draft Orders, five clear days before the date fixed for the consequentials hearing. Time for Appeal

36. I shall extend time for appeal, so that time for appeal does not start running until immediately after the consequential hearing. Deputy Master Jefferis, 21 st November 2025.