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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Burke & Ors v Giumba & Ors [2002] EWCA Civ 1003 (21 June 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/1003.html Cite as: [2002] EWCA Civ 1003

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
APPLICATION FOR PERMISSION TO APPEAL
AND AN EXTENSION OF TIME WITH APPEAL
TO FOLLOW IF GRANTED

		Royal Courts of Justice Strand London WC2 Friday, 21st June 2002

1. MR JUSTICE COLLINS: Mr Ian Giumba was the first defendant in proceedings brought in the Central London County Court by Mr Trevor Burke, Mr Thomas Derbyshire, who are practising members of the Bar, and Mr Kyriacos Karallis. The proceedings related to a business venture which had taken place between the parties including the other defendants - two companies, Global Holidays Ltd, AMPM Ltd and Mr Giumba's wife, Mrs Rose Giumba. Mr Giumba himself had been involved in Global Holidays Ltd, effectively a travel agent business focussed towards Romanians because Mr Giumba himself is Romanian by origin. Mr Karallis is a Greek Cypriot by origin. He was a close friend of the other two claimants, Mr Burke and Mr Derbyshire. He had been involved in a business running a restaurant in Cyprus; unfortunately, in 1996 that had burned down. But he also had a substantial holding of land in Cyprus which he hoped to develop into some sort of a holiday village. That venture, in due course, he hoped to bring to fruition helped perhaps, in part, by the insurance monies payable as a result of the destruction of his restaurant.
2. The relationship between Mr Burke, Mr Derbyshire and Mr Karallis was a relatively close one. Mr Karallis's daughter had been called to the Bar and had, I think, been a fellow pupil in chambers with Mr Derbyshire, Mr Burke being a senior member.
3. Mr Karallis was interested in joining in business with Mr Giumba, the idea being that the travel business, Global Holidays, would assist in the development that he proposed in relation to the holiday homes. In 1998 Mr Karallis came to this country and Mr Derbyshire permitted him to have use of his, Mr Derbyshire's, flat. Mr Karallis found details of a wine bar for sale in Goodge Street, London, called Flutes. He thought that that would be a good proposition, and he got Mr Derbyshire and Mr Burke to be interested in it. AMPM Ltd, the third defendant, was formed in order to run that business.
4. There were thereafter a number of meetings and negotiations between the parties and an agreement was reached. That agreement was at the centre of the matters which were eventually in dispute and had to be decided by Judge Cowell at the Central London County Court because, sadly, after a relatively short period the relationship between the parties broke down and difficulties arose.
5. It was realised in early 1999 by both Mr Karallis and Mr Giumba that there was a need to raise relatively substantial sums by way of capital to get the businesses going. Mr Burke lent a total of £5,000 in two amounts - £2,000 and £3,000 - £2,000 being repaid relatively quickly. He also provided £10,000 which, on his evidence, was specifically to enable Mr Giumba to obtain for the travel business an ATOL bond, that is a bond that is necessary to provide security for those who contract with the business. Without it, it was obvious that the business would not be able to succeed properly. It is said there were oral agreements. Eventually, on 15th February, a written agreement was produced. It is not necessary to go into details. Suffice it to say, it provides for various sums to be invested by the first and second claimants and for repayments to be made and for various provisions as to distribution of profits. What is not in the written agreement is any provision as to the allotment of shares in the two companies.
6. The case for Mr Karallis - supported by the other two claimants - was that it was part and parcel of the agreement entered into before 15th February that Mr Giumba would transfer 35 per cent of the shareholding in both those companies to Mr Karallis. Mr Burke and Mr Derbyshire were to receive 10 and 20 per cent respectively. That arrangement was not specifically recorded in writing. Shortly thereafter there were further discussions between, particularly, Mr Karallis and Mr Giumba and these resulted, first, in a draft agreement produced by Mr Karallis dated 18th February 1999 which referred to the proposal that the land Mr Karallis had in Cyprus to be developed would be shared - - the company would be formed and shares would be issued on a 50-50 split between Mr Giumba and Mr Karallis and the same split would result from the investment of monies to be obtained from the restaurant, that is the insurance money, and it provided the remaining shares in AMPM Ltd and Global Holidays would be issued equally to Mr Giumba and Mr Karallis. That would have amounted to 35 per cent because 10 and 20 per cent had already been allocated to Mr Burke and Mr Derbyshire. That agreement was put to Mr Burke and he, as a lawyer, after discussions, put it into sensible legal terms. That was done on 7th March. Those did not refer specifically to the 35 per cent; that is the balance of the shares in AMPM Ltd and Global Holidays. In the result there is nothing in writing which specifically deals with the suggestion that is the foundation of Mr Giumba's case that the allocation of the 35 per cent of shares depended upon the entering into the arrangement in relation to the holiday village in Cyprus.
7. The judge decided, having heard evidence from the three claimants and Mr Giumba, and looking at the documentary material produced, that he did not accept Mr Giumba's account but he did accept the account given by the three claimants that there was no direct connection between the arrangement in relation to AMPM Ltd, Global Holidays and the Cyprus venture. That being so, he took the view that notwithstanding there was nothing specific about the 35 per cent in the agreement of 15th February, nonetheless that was part of what had been decided upon in the oral arrangements and, accordingly, Mr Giumba was obliged to make the necessary transfer.
8. Apart from claims by Mr Derbyshire and Mr Burke for repayment of the sums they had invested, which were dealt with in the agreement and against which no appeal is brought, there were also two claims made by Mr Derbyshire for specific amounts said to be owing from Mr Giumba.
9. The first was a claim for some £4,193.81 in relation to an amount which Mr Derbyshire had paid on Mr Giumba's behalf. An arrangement had been entered into whereby Mr Derbyshire permitted Mr Giumba to use his, Mr Derbyshire's, Barclaycard to make payments on behalf of Global Holidays. The arrangement was that Mr Giumba would reimburse Mr Derbyshire either in cash or by way of a cheque. This system seems to have gone relatively smoothly subject to Mr Derbyshire being concerned at some stage that larger sums than he considered desirable were being paid by Mr Giumba through his account. But there came a time when the arrangement broke down, largely because of the general breakdown of trust between the various parties, and the final charge in the sum I have indicated was, according to Mr Derbyshire, not paid. What happened was that a cheque was made out on 24th June on the Global Holidays' account payable to the Barclaycard of Mr Derbyshire. Unfortunately, at about the material time it seems that Mr Derbyshire progressed from a gold to a platinum Barclaycard and the result was that the number of the card changed, that is the number of the account. In addition, for reasons which are not entirely clear, Mr Giumba decided to issue two cheques in the same amount for the same payment, one on 24th June and one on 1st July. It may be that one of those cheques was on his own account as opposed to Global Holidays' account. In any event, we have now seen the full Barclaycard account which was not available at the trial and it shows quite clearly that those two sums are credited but that on the following account one of them is removed. The result is that there was indeed payment. Mr Derbyshire now accepts that. However his evidence at trial was clearly that the amount had not been paid.
10. It is fair to say that Mr Giumba perhaps did not do his case as much justice as he should have done. He appeared in person and did not produce until the last minute the document on which he particularly relied. When I say the "last minute" I mean the last minute because it was apparently in the course of final submissions by which time Mr Derbyshire was not at court and was engaged in a case in some other court, he having given his evidence earlier on. But Mr Derbyshire's evidence had been that he was clear that the amount had not been paid, and that if there was a similar amount the only explanation could be that by chance that was the same amount which was payable to someone else by Mr Giumba. He indicated that it was his practice to destroy the Barclaycard sheets he received indicating the status of the account during each month and the only one that he had kept was that which showed that the cheque had apparently bounced.
11. The judge decided in favour of Mr Derbyshire on that point.
12. The other discrete matter was a sum of £2,800 odd which Mr Derbyshire claimed was owed by Mr Giumba in respect of rent of the flat which he had allowed Mr Giumba to use. Mr Karallis may have supported the contention that there was rent owing, but, as far as I can see, there was no evidence of the precise amount other than the say-so of Mr Derbyshire. Since it is now accepted that Mr Derbyshire's recollection was wrong and that Mr Giumba had paid the amount of £4,193.81, it is plain - and Mr Warwick has accepted - that that part of the judgment cannot stand. In those circumstances we have given leave to appeal out of time and we are therefore now hearing the appeal.
13. The question is what we should do in relation to the claim as a whole, that is to say, the matters under appeal which essentially amount to the 35 per cent, the allocation of the shares and the two sums to which I have referred.
14. The point that has persuaded me to take the view that this matter will have to go back for a retrial is the impact of the issue in relation to the £4,193.81 on the whole of the case. This was a case where credibility was very much in issue. The judge decided - and he gives his reasons for so doing - that he preferred the evidence of the three claimants generally to that of Mr Giumba. What might have been the effect if he had appreciated that Mr Derbyshire was not reliable in relation to the payment to which I have referred? It is not only of course the question as to whether it dents Mr Derbyshire's credibility but also one must bear in mind that the judge has found that Mr Giumba's evidence that he had made the payment was not to be accepted. This is a matter that would clearly affect the credibility of Mr Giumba.
15. It is perfectly true there are other matters on which the judge relies and to which Mr Warwick had referred us. That is an aspect we have to take into account. On the other side of the coin there is the fact that Mr Derbyshire's evidence was unreliable in that respect. I am far from saying that what has happened necessarily shows that Mr Derbyshire's evidence is not generally to be accepted. The matter, as it seems to me, needs to be tested and it needs to be decided what the impact of this mistake - I will use a meutral word - would be upon the matter as a whole.
16. The agreements, as I have indicated, are not entirely clear. I say that because the written document of 15th February does not say anything about the 35 per cent transfer of shares. That, on the face of it, could be said to be something which needs some investigation and is somewhat strange. Equally, it is fair to say, as Mr Warwick has pointed out, that the pleaded case raised on behalf of Mr Giumba and the documents on which he relies to support the connection between the Cyprus venture and the English venture are themselves not entirely supportive of Mr Giumba's case. So one does have to go to consider not only the documents but also the evidence as to what was said and what was agreed outside the documents. The point is that the documents do not and cannot be said to point only in one direction. Thus there are important matters that have to be decided in relation to them.
17. It is undesirable to go into any further detail since we are ordering a retrial.
18. I would not want anything I say to be taken as any indication to the judge who hears the matter on the retrial of any views I may or may not have formed. It was necessary to indicate why I take the view that the matter will have to be reconsidered and I hope that I have explained that sufficiently in what I have said.
19. I, for those reasons, take the view that this appeal will have to be allowed to the extent indicated and the matter to go back for a retrial on what I think are the only two outstanding matters, that is to say the 35 per cent and the rent payment of the £2,800 odd.
20. LORD JUSTICE PILL: I agree. The issue as to whether the sum of £4,193.81 was paid was a substantial issue in terms of the importance attached to it at the trial. The amount of money involved was not insubstantial. Each of the parties took a strong line on this question. The appellant appeared in person. The issue was investigated in detail and dealt with in considerable detail by the judge in his judgment. Mr Derbyshire was adamant, to use the judge's word, that he had never received the money. The judge found that he was right. New evidence shows that he was wrong. Mr Warwick, for the respondents, accepts that that part of the judgment cannot stand. He submits however that the issue can be compartmentalised and the rest of the judgment is not contaminated by the fresh evidence which has arisen. He submits, first, that Mr Derbyshire's credibility as to other issues is not affected and, second, that on the other issues, apart it seems from the issue as to the rent, there were other witnesses who the judge also heard and on whose evidence reliance can be placed in upholding the judgment and dismissing the appeal.
21. I do not accept that submission. In my judgment, the issues need to be reheard. I agree that a retrial should be ordered. For the reasons given by Miss Simmons QC in her skeleton argument, the credit card issues do raise a real question as to MrDerbyshire's reliability as a witness. I make no comment about it save to say that, in my judgment, the appellant is entitled to have the issue reheard. Moreover the circumstances are such that, given the close professional and personal relationship between Mr Derbyshire and Mr Burke, and given the nature of the transactions in issue and the circumstances that gave rise to them, the interests of justice require that all issues should be reheard. It would not be in the interests of justice to say that because of evidence, other than Mr Derbyshire's, existing on other issues that the judgment can stand.
22. Accordingly, the appeal is allowed and the appellant's application for a retrial is granted.
Order: Appeal allowed with the application granted