Neutral Citation Number: [2008] EWHC 1973 (Ch)
Case No: 9567/2006
 
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 7 August 2008

Before :
RICHARD SHELDON QC (sitting as a Deputy Judge of the High Court)

In the matter of Allied Business and Financial Consultants Ltd
And
In the matter of the Companies Act 1985
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Between :

	Mary O'Donnell	Petitioner	
	- and -		
	(1) John Joseph Shanahan
(2) James Anthony Leonard
(3) Edward Paul Murtagh
(4) Allied Business & Financial Consultants Limited	Respondents	
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Andrew Clutterbuck (instructed by Cripps Harries Hall LLP) for the Petitioner
Max Mallin (instructed by Butcher Burns) for the First and Second Respondents

Hearing dates : 19-23 May, 3-6, 12-13 June
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JUDGMENT
Richard Sheldon QC (sitting as a Deputy Judge of the High Court): 

1.	This is the trial of a petition presented under the Companies Act 1985 s 459 (now the Companies Act 2006 s 994) by the Petitioner, Mary O'Donnell ("MOD"). She seeks an order that the First and Second Respondents, respectively John Joseph Shanahan ("JJS") and James Anthony Leonard ("JAL"), her fellow shareholders and directors in the Fourth Respondent, Allied Business & Financial Consultants Ltd ("the Company"), buy her shares in the Company at a price calculated on the basis that certain alleged diversions of income and business opportunity and/or that other alleged wrongdoing had not occurred and/or that the Company should be treated as having the benefit thereof. 
2.	The evidence and argument at trial was directed towards the issue of whether the Company's affairs had been conducted in a manner that was unfairly prejudicial to the interests of MOD as a member of the Company, leaving the question of what relief should be granted, if such unfairly prejudicial conduct be established, to be determined at a later stage.
3.	As is unfortunately all too common with unfair prejudice petitions, the breakdown of relations in a small company has generated a good deal of bitterness and recrimination, resulting in broad ranging allegations made against each other by the principal parties. Those parties in their written and oral evidence made allegations which go beyond the issues pleaded and which, for the most part, are irrelevant to the pleaded issues which I have to decide. Before summarising those issues, I should set out briefly the relevant factual background by reference to matters which are not controversial.
Factual setting
4.	In the late 1980's, MOD, JJS, JAL and the Third Respondent, Paul Murtagh ("PM") were all employees of the Bank of Ireland ("BOI"). JJS was the manager of the Finchley branch of BOI, JAL was the manager of the Croydon branch and PM the manager of the Cardiff branch of BOI. MOD was an officer at BOI working latterly at the Croydon branch. PM left BOI in January 1988 and the others resigned from their positions at later dates to work for the Company.
5.	The Company was originally set up at the instigation of JJS, JAL and PM in late 1988. It was incorporated on 6 October 1988 under the name Allied Business and Financial Services Limited (it changed its name to its current name on 4 September 1990). The business of the Company was to provide clients with financial advice and assistance, including in particular arranging bank loans, mortgages and insurance. By its Memorandum of Association, the Company's objects were stated to be:
		"(A) To carry on the business of financiers, bankers, financial 			agents…. financial, investment, industrial and non-industrial 			consultants, business advisers, office organisers, personnel and 			management consultants, business efficiency experts, insurance, 			mortgage and finance brokers;….
		(B) To carry on any other trade or business which can, in the opinion of 		the Board of Directors, be advantageously be carried on by the 			Company…."
6.	MOD was invited to join the Company in about May 1989. She resigned from BOI in the summer of 1989, at about the same time as JJS. By the beginning of October 1989, MOD, JJS, JAL and PM were equal shareholders in the Company (each owning 25 ordinary shares with a nominal value of £1 each) and were all appointed directors.
7.	It is common ground that the Company operated as a quasi-partnership between MOD, JJS and JAL on the basis of a relationship of trust and confidence. It is not in dispute that each of them was entitled to, and received, a pro rata share of the profits of the Company's business. There is otherwise a dispute about the understandings which were reached between the participants at the time when the venture was set up, with which I deal below.
8.	The Company originally operated an office in High St, Penge and in October 1989 moved to an office at 25 North Audley Street, London W1. In the early 1990's, the Company's Pension Fund acquired a property at Suite 3, Scott's Sufferance Wharf, 1 Mill Street London SE1 ("Scott's Sufferance Wharf") from which the Company operated for a while. In about 1997, the Company's office moved to a space above the Charles Dickens pub at 160, Union Street, London SE 1 ("Union Street") from where it continued to operate until relatively recently. Union Street was rented by the Company from a property partnership between JJS, JAL and Denis and John McCarthy which had acquired the Charles Dickens pub in 1997. In 1998 JJS and JAL acquired the shares of Denis and John McCarthy in the property partnership.
9.	Initially, JJS and JAL concentrated on the arrangement of larger commercial loans but also had some involvement in residential mortgages. They were the "rain makers", getting in the clients and spending much of their time out of the office, while MOD was responsible for administration and the back office. MOD also handled residential mortgages and general insurance queries. PM concentrated on the writing of life and term assurance in connection with loan proposals. PM tendered his resignation in February 1990 in acrimonious circumstances and had no further involvement in the Company's business. After PM's departure, MOD took over PM's role as regards life and term assurance. 
10.	In September 1990, the Company issued a further 2,500 shares to each of MOD, JJS and JAL, leaving them each holding 2525 shares with PM retaining his original 25 shares. It is for this reason that PM has been joined as a Respondent. However no relief is sought against him and he has played no part in these proceedings other than to give evidence on behalf of MOD.
11.	Not long after the Company commenced business, the UK economy went into recession for about three years which adversely impacted on the Company's then business. In response, the activities of the Company (and in particular those of JJS and JAL) were broadened to include arranging the purchase and sale of businesses, acting as agents for banks and building societies, placing investments and deposits for clients and providing advice on financial and business restructuring.
12.	The accounts of the Company show that its turnover between 1990 and 2007 was as follows:
Year	£	
1990	 79,538	
1991	155,429	
1992	123,239	
1993	118,536	
1994	148,482	
1995	155,864	
1996	144,211	
1997	167,106	
1998	142,782	
1999	189,926	
2000	163,502	
2001	204,577	
2002	165,456	
2003	126,678	
2004	116,289	
2005	139,076	
2006	92,840	
2007	57,903	

13.	After PM's departure, the profits from the business were shared equally between JJS, JAL and MOD. In addition to drawings from the Company by way of directors' remuneration, cash payments made in respect of the Company's business was on occasion divided up between the three of them without being passed through the Company's books. The Company never built up capital to any material extent: the profits were generally shared out at the time they were made.
14.	The causes of the decline of the business raise matters of controversy which I deal with below. What is not in dispute is that the Company's activities are now in substance dormant and that it is insolvent.
The allegations of unfairly prejudicial conduct
15.	In the Amended Points of Claim ("APOC"), MOD alleges that JJS and JAL have conducted the Company's affairs in an unfairly prejudicial manner in relation to four transactions or types of activity. (A fifth, relating to properties in Orlando, Florida was not pursued at trial). Each of these transactions or types of activity is alleged to have been in breach of the understandings reached between the parties at the time the Company was established, in breach of the fiduciary duties owed by JJS and JAL as directors of the Company and in betrayal of the relationship of trust and confidence. The transactions or types of activity complained of are, in very broad terms, as follows:
(1)  JJS and JAL acquiring an interest in the freehold and lease of 5th floor Aria House, 23 Craven Street, London WC2 ("Aria House") in 1999 and in so doing diverting a business opportunity belonging to the Company to themselves and in the course of so doing perpetrating a number of frauds on the Company's clients ("the Aria House Transaction");
(2) JJS and JAL personally providing services to, and making profits from, Eugene Harrington Marketing Ltd ("EHM") from about August 1996 onwards as directors of and shareholders in EHM ("the EHM relationship");
(3) JJS and JAL personally providing services to, and receiving payments from, Mr John Holleran ("Mr Holleran") and companies associated with Mr Holleran ("the Holleran relationship"); and
(4) JJS and JAL obtaining for themselves the free services of a firm of solicitors, GH Law, in return for the Company referring clients to GH Law ("the GH Law relationship").
16.	JJS and JAL deny all the allegations of unfairly prejudicial conduct and of wrongdoing. Further, they rely on the alleged consent or acquiescence on the part of MOD in the conduct complained of.
The witnesses
17.	MOD, JJS and JAL gave evidence at the trial. Although I shall have to comment in more detail on the reliability of the evidence each of them gave, there are certain features which are common to all of them as witnesses. The matters upon which they gave evidence related to events which in the main occurred many years ago, in some instances as long as some 19 years ago. It became apparent to me that the evidence each of them gave, both orally and in writing in their witness statements, was greatly influenced by the documents which they had pored over in the course of these proceedings. Their evidence as to purported recollection and explanation for events was, I consider, tailored to a significant extent by what they perceived to be their best case in the light of the many documents which they had examined. As such much of the evidence they gave was reconstituted knowledge which I have to treat with considerable caution. All the more caution is required in considering their evidence in the light of the obvious bitterness and recrimination which the current dispute has generated, spanning the history since 1989 of their relationship within the Company.
18.	The bitterness and recrimination was particularly evident in the evidence given by MOD. She left her secure job with BOI in 1989 to take up an opportunity with the Company which she believed offered her the prospects of a better future. Her expectations have been sorely disappointed. Having devoted a substantial part of her working life to the Company, she now finds herself in a much worse position financially than she would have been in had she stayed with BOI, not only in terms of remuneration over that period but also significantly in terms of a comparatively much lower pension entitlement. So much, it might be said, is inherent in the risk of embarking on a new business venture. But what she finds particularly galling is that her co-venturers, JJS and JAL, have, far from suffering in the way she has, emerged as well off with a secure financial future. This bitterness has led her to make wide ranging allegations against JJS and JAL in her written and oral evidence with little or no evidence to support those allegations. I do not in this judgment have to deal with all those allegations because Mr Clutterbuck, who appeared for MOD, sensibly restricted his argument to the allegations which have been pleaded. Nevertheless, her evidence was imbued with a sense of recrimination in that she repeatedly sought to attribute the financial wellbeing of JJS and JAL to wrongs which had been committed on her. Further, it was apparent that she has staked much of her limited wealth on bringing these proceedings and that for her, these proceedings are, so far as her future financially is concerned, the "last roll of the dice". That, of course, does not mean that her grievances are not genuine but I consider that, for all these reasons and the problem of reconstituted recollection to which I have already referred, I have to treat her evidence with great caution. 
19.	Mr Clutterbuck suggested that JJS and JAL had dominant personalities which overwhelmed MOD which would explain the failure of MOD to complain at an earlier stage about at least some of the activities of JJS and JAL which are now challenged. I find that there is an element of truth in this suggestion, but at the same time I need to bear in mind that MOD clearly has, and had, an inquisitive mind and is, and was, far from naïve in matters of business. She is not quite the innocent which Mr Clutterbuck sought to suggest.
20.	I consider that I also have to treat the evidence of JJS and JAL with great caution. The problem of reconstituted recollection was particularly stark in the evidence given by JJS. In recollecting events and giving explanations for evidence, there were many examples which emerged in JJS' cross examination of selective reliance on documents and ex post facto rationalisation of events which had occurred in the light of documents which he had examined (or at least disclosed - see below). There are other reasons which cast doubt on the reliability of JJS as a witness.  Certain aspects of the Aria House transaction involved elements of impropriety, which JJS accepted, at least to a limited extent. JJS' recollection of events occurring as recently as in the past year was shown at times to be poor. An example is when he was asked when he last spoke to Mr Bailey of ECS (who features in the Aria House transaction): the answer initially given by JJS was shown to be wrong when a letter written by Mr Bailey showed that there had been such a conversation only relatively recently.
21.	JAL's evidence was also tainted by reconstituted recollection. Further, I consider that JAL's attempt, when giving oral evidence, to distance himself from the Aria House transaction was far from convincing. In particular, his evidence about the initial instructions given to Jacobsens, solicitors, namely that this would have been dealt with by JJS, was contradicted by two file notes prepared in early April 1999 by Jacobsens which in my judgment clearly show that the initial instructions were given by JAL and that he knew more about the transaction than he was prepared to admit when giving evidence. This is also borne out by later documents in the Jacobsens file which indicate JAL's continued involvement. 
22.	In his closing submissions, Mr Clutterbuck submitted that JJS and JAL had deployed "every possible means of hiding the truth". I reject that submission. In support of his submission, Mr Clutterbuck asserted that JJS and JAL had procured third parties to conceal matters and in particular ECS, Irish Permanent Building Society (Isle of Man branch) and Jacobsens in response to Mr Walsh's requests for information. I am not satisfied that this assertion was made out on the evidence. Mr Clutterbuck also asserted that JJS and JAL were in some way responsible for the limited disclosure given by Mr Holleran's companies of correspondence between them and JJS and JAL. However, I am quite satisfied in the light of the evidence given by Mr Holleran that this was not the case and I am also satisfied that the disclosure given by Mr Holleran's companies complied with the order for third party disclosure which had been made by the court. Mr Clutterbuck also relied on the lack of full and frank disclosure by JJS and JAL of all their bank statements. However, Mr Clutterbuck was unable to point to any respects in which such disclosure as has been given by JJS and JAL of their bank statements does not comply with disclosure orders which have been made (other than, in the case of JJS, being disclosed late). Mr Clutterbuck's criticism of the reliance by JJS and JAL on their tax returns to disclose their full income seems to me to be misplaced: on analysis their reliance in their written evidence on the tax returns is limited to dealing with specific income from certain sources (eg in relation to EHM) and not relied upon as giving the full picture as regards their income generally.
23.	There is more force in Mr Clutterbuck's criticisms of the performance of JJS and JAL in respect of disclosure generally. It is clear that the first list of documents produced by JJS and JAL was inadequate.  Their second list, comprising 4 boxes of documents, was said by Mr Clutterbuck, with some justification, to have been oppressive in that it contained much irrelevant documentation. But it was still in some respects inadequate in that MOD had to apply for further orders for specific disclosure, which were granted by the court (in one case with indemnity costs awarded against JJS and JAL). The disclosure of documents from Jacobsen's files by JJS and JAL was selective and incomplete, a fault which was only remedied shortly before trial in the face of an application for specific disclosure. JJS and JAL sought to blame their former solicitors for the problems on disclosure but I am not persuaded that they were entirely to blame and I consider that JJS and JAL must bear at least some responsibility for the inadequacies of disclosure. It is nevertheless important to record that by the time of the trial the inadequacies on disclosure had apparently been remedied, albeit at a late stage which put extra pressure on MOD and her advisers, and MOD was unable to establish that the orders for disclosure had not been complied with. However, the performance of JJS and JAL in respect of their disclosure obligations is one of the reasons why I treat their evidence generally with considerable caution.
24.	For all these reasons, I have to treat the evidence of the principal protagonists with great caution. I also heard evidence from the following third parties.
25.	MOD relied on evidence given by PM. In the event, the evidence given by PM is largely irrelevant to the issues I have to decide, save as to the understandings which were reached when the Company was first established. I consider that I also have to treat the evidence given by PM with considerable caution. The circumstances in which he left the Company were clearly acrimonious but PM was not prepared to accept this when he gave evidence. I gained the impression that he had an axe to grind against JAL, in particular, arising from the fact that JAL refused to give him a reference following his departure from the Company. It is unnecessary for me to go into the detail of the circumstances in this judgment although they did feature in the evidence which I heard. Whilst PM does not appear to stand to benefit from this litigation, the reliability of his evidence is in my view undermined by his vindictiveness and antagonism against JAL.
26.	MOD also relied on the evidence of Matthew Walsh, a client of the Company in connection with the Aria House transaction. Whilst I have little doubt that Mr Walsh was genuine in his effort to recollect what took place, I believe that the reliability of his evidence is undermined by the fact that, as he candidly admitted, he had put the matter out of his mind for some 8 years following his withdrawal as prospective purchaser of Aria House (the reasons for that withdrawal are a matter of dispute). The matter only returned to his attention last year in the context of these proceedings and he then had to recollect matters after a lengthy period of inattention. The evidence given by Mr Walsh has to be viewed against the backdrop that he considered that he had been "shafted" by JJS and JAL, (although in certain limited respects, as will appear below, there was good reason for this) and that he might himself have a claim against JJS and JAL, particularly if all the evidence he gave were to be accepted. For all these reasons, I exercise caution before accepting the reliability of the evidence given by Mr Walsh.
27.	The witnesses who gave evidence in support of JJS and JAL were Mr John Holleran and Mr Peter Christopher Way. Mr Holleran is the managing director of the Holleran group of companies which includes the family company M. Holleran Ltd. Mr Holleran gave evidence relevant to the Aria House transaction and the Holleran relationship. Mr Holleran was an impressive witness. Prior to giving his written and oral evidence, Mr Holleran had not examined the underlying documents and I formed the clear view that the evidence he gave was his genuine recollection of events without being tainted by reconstituted knowledge. He frankly accepted on occasion that he could not recollect particular matters. Although he continues to be a co-venturer with JJS and JAL in relation to Aria House, and has occasionally sought advice from them in recent years (as appears below), I do not consider the evidence he gave to have been tainted by feelings of loyalty towards JJS and JAL. In certain, albeit limited respects, he gave answers which on their face could be considered harmful to the case put forward by JJS and JAL in these proceedings. I accept the evidence given by Mr Holleran and, where this conflicted with evidence given by other witnesses, prefer the evidence given by him.
28.	Mr Way is a partner in GH Law, solicitors. The evidence he gave was only relevant to the GH Law relationship. He was an impressive and reliable witness and I accept the evidence which he gave.
The understandings when the Company was established
29.	I have already mentioned that it is common ground that the Company operated as a quasi-partnership between MOD, JJS and JAL on the basis of a relationship of trust and confidence. In Paragraph 10 of APOC it is pleaded that:
10.	The Petitioner gave up her secure employment with the Bank of Ireland and joined the Company as shareholder and director in 1989 on the basis of the following express, alternatively implied, understandings:

(1)	The Company would be the vehicle for the Petitioner and the First, Second and Third Respondents to earn money from their respective business expertises: in the case of the First and Second Respondents, in particular their expertise in providing business and financial advice and services, and in the case of the Third Respondent in running and organising the insurance and residential mortgages side of the business.

(2)	The First, Second and Third Respondents would not deploy their said business expertise, in particular in providing business and financial advice and services, other than for the purposes of the Company’s business.

(3)	Each of the Petitioner and the First, Second and Third Respondents would work for the Company full time, alternatively substantially full time.

(4)	Each of the Petitioner and the First, Second and Third Respondents would receive, whether by salary or dividend, the same share of the Company’s profits.
30.	In the Amended Points of Defence ("APOD"), JJS and JAL deny paragraphs 10(1), (2) and (3) and admit Paragraph 10(4) of APOC. In Paragraph 10 of APOD, alternative express or implied understandings are pleaded which I take into account but I need not set out in this judgment, the central issue being whether MOD's pleaded case has been made out.
31.	As regards Paragraph 10(3) of APOC, in the light of the evidence which I have heard, I find that there was an implicit understanding that JJS, JAL and MOD (and also PM for the short time he participated) would work substantially full time for the Company. This was accepted by JJS when he gave evidence orally. It seems to me implicit in the circumstances in which JJS, JAL and MOD gave up their secure jobs with BOI in order to set up or join the new business venture. But I also accept JJS' evidence that the working environment at the Company was very different from working with a large organisation such as BOI and that there was flexibility in the working arrangements so that nobody would have cause to complain if time off was occasionally taken, or business activities undertaken which were not in competition with, or detrimental to, the Company's business, provided that the work which was required for the Company's business was indeed done. 
32.	The understanding pleaded in Paragraph 10(2) of APOC is a little more controversial. MOD accepted that there was no such express understanding: there was no discussion to the effect that JJS and JAL (or MOD for that matter) would use their business expertise wholly and exclusively for the purposes of the Company. But it again seems to me implicit in the circumstances in which the business of the Company was established that none of the participants would use their business expertise (namely, in the case of JJS and JAL, in providing business and financial advice and services, and in the case of MOD organising the insurance and residential mortgages) to the Company's detriment in carrying out work which realistically could have been carried out in practice through the Company. This implicit understanding would in my view permit the participants doing work which was not in competition with the Company or doing work which would not otherwise come to the Company, provided that this did not involve a breach of the understanding to work substantially full time for the Company. 
33.	I find that it was also implicit in the circumstances that JJS, JAL and MOD set up or joined the Company that there was an understanding to the effect pleaded in Paragraph 10(1) of APOC, subject to the caveats referred to above.
Property investment and development
34.	Before I deal with the pleaded issues, I need to do a little ground clearing. JJS and JAL throughout the period in question were involved in property investment and development. They commenced trading in property together in 1986, whilst they were at BOI, through Kerwick Properties Ltd ("Kerwick"). By the time the Company was established, Kerwick had acquired three properties, two of which were later sold at a profit, and the third retained for letting. Kerwick acquired a further three properties between 1989 and 1994, which were developed and either sold or let, and a further two properties in 2000 and 2004. Kerwick's current annual rental income is of the order of £57,000.
35.	In 1993, JJS and JAL formed a property partnership with Denis & John McCarthy which purchased the Trolley House Pub in 1993 and the Charles Dickens Pub (above which the Company had an office) in 1997. In 1998, the McCarthys left the UK and JJS and JAL acquired their partnership shares. The partnership purchased a warehouse in 2000 from the EHM pension fund which is let to EHM. The current annual rental income of the partnership is of the order of £250,000.
36.	JJS's and JAL's property investment and development activities formed no part of the original pleaded case in APOC. However, these were referred to in APOD and MOD joined issue with a number of matters in the Amended Points of Reply. When giving her evidence about these activities, MOD levelled a number of complaints against JJS and JAL to the effect that these activities over time distracted JJS and JAL from their work for the Company and that certain property acquisitions should have been channelled through the Company. However, both in his opening and closing submissions, Mr Clutterbuck for MOD did not seek to advance a case of unfairly prejudicial conduct on the part of JJS and JAL in relation to these activities and made clear that the heads of complaint were those pleaded in APOC (which I have summarised above). It is therefore unnecessary for me to deal in any great detail with the many issues which arose in the course of the evidence.
37.	However, there are certain matters to which I should refer which do impact on the issues I have to decide. First, it is an important backdrop to the Aria House transaction that JJS and JAL were undertaking these property development and investment opportunities on their own account. Second, I find that MOD was aware of these activities, at least in part by reason of her being responsible for arranging the insurance on most of the properties. When giving her evidence, she was anxious to give the impression that she only became aware of the property acquisitions after they had been completed: I found this evidence not to be wholly convincing but nothing turns on that in this context.  Third, I find that MOD did not complain to JJS and JAL about their property investment activities at any material time, and in particular did not seek to suggest prior to the time shortly before the current proceedings were contemplated that any of those activities were in some way incompatible with their role in the Company or that any of the acquisitions should have been channelled through the Company. Finally, the property and investment activities of JJS and JAL did not constitute a breach of the understandings when the Company was established.
38.	I have so far dealt with the property investment and development activities of JJS and JAL on their own account (or with third parties). I should at this stage also mention the dealings in property of the Company and the Pension Fund.
39.	In 1988, before MOD was approached to join the Company, the Company acquired 150, High Street, Penge ("the Penge property") for £65,000. JJS and JAL say, and I accept, that the Penge property was acquired with the intention that it be used as permanent offices for the Company. It was used for that purpose for a short time but found to be unsuitable because of its location which was inconvenient for clients, and because JJS lived, and had his client base, in North London. At about the time MOD joined the Company, the Company relocated to rented premises in North Audley Street in central London. The Penge property was retained by the Company with a view to collecting rent from tenants. It proved troublesome to manage and there were difficulties in obtaining the rents. It was eventually sold in 1999 for £65,000 back to the original seller, P Ewings, solicitors, who had offices next door. The Penge property was the only activity of the Company which could be described as property investment: it was not bought as an investment but was retained as one.
40.	At an early stage, it was proposed that a self administered pension fund scheme be established by transferring into it the pension rights which each of JJS, JAL, PM and MOD had individually acquired whilst at BOI. Leaving to one side PM who soon dropped out of the picture, JAL had a substantially larger pension entitlement from BOI than JS and MOD. In about 1990, commercial office property at Scott's Sufferance Wharf was purchased by the pension fund with a view to it being used by the Company. It was agreed in about September 1990 between JJS, JAL and MOD that JJS and MOD would have a period of two years to make additional contributions to equalise entitlements under the pension scheme (the amounts required to achieve parity were £5,323 for JJS and £14,087 for MOD). If such contributions were not made within that period, the entitlement of each member in the pension fund would be in proportion to the amount invested by them individually in proportion to the overall total. The terms of that agreement were recorded in a written agreement dated 6 March 1991. JJS paid the requisite sum (plus interest) within the two year period. MOD did not: having taken independent advice she chose to take out a separate investment saving plan. 
41.	JJS and JAL said that the value of Scott's Sufferance Wharf decreased significantly as a result of the downturn in the fortunes of the property market in the early 1990's. JJS says that MOD said to him at some point that the only properties in which she had been involved, Scott's Sufferance Wharf and the Penge property, had lost money. Even if she did say this, I attach little weight to it. What is however clear to me from the evidence MOD gave is that, in contrast to the entrepreneurial spirit of JJS and JAL, MOD had little interest in, or inclination towards, undertaking risky property ventures.
The Aria House transaction
42.	The issues which arise in connection with the Aria House transaction are the most complex, factually and legally, of the complaints made by MOD of unfairly prejudicial conduct. In this section of the judgment, I set out my findings of fact in some detail.
43.	In about early 1999, JJS received a telephone call on his mobile phone from a Mr Patrick Sulaiman ("Mr Sulaiman"). Mr Sulaiman explained that he had a property which he wished to sell and understood that JJS might have clients who would be interested in buying. At the stage of that initial call, Mr Sulaiman did not mention the Company and there is nothing to suggest that he was aware if it.
44.	The property in question was the fifth floor of Aria House, above the Players Theatre. JJS went to visit the property and thought he might have clients who might be interested. In referring to clients, JJS meant clients of the Company. It is clear that, whatever the contents of the original call, Mr Sulaiman shortly afterwards himself became a client of the Company.
45.	Following the initial telephone call, JJS thought that Mr Sulaiman himself owned the property. It soon transpired that this was not the case and, after a later meeting or meetings with Mr Sulaiman the following picture emerged. Aria House was owned by two offshore companies, Cordelia Holdings Ltd and Sulaiman Trading Ltd. (Sulaiman Trading Ltd owned the freehold and the head lease; Cordelia Holdings Ltd owned the lease of the 5th floor which was by far the more valuable interest). Mr Sulaiman was in the process of being divorced from his wife who came from a wealthy Indonesian family. As part of the divorce settlement, Mr Sulaiman was going to receive a payment out of the proceeds of sale of Aria House. Mr Sulaiman had instructed Richard Peat & Co, solicitors, to act for the vendors. Taylor Joynson Garrett were instructed to act on behalf of Mr Sulaiman's wife and Indonesian family or their interests (which included Diant Utama Ltd which held a charge over Aria House). There appears to have been some confusion initially when it was thought that Taylor Joynson Garrett were going to be acting for the vendors but this was soon clarified.
46.	Even though JJS accepts that he became aware that the owners of the relevant interests in Aria House were the two offshore companies, and not Mr Sulaiman personally, he says that he believed that Mr Sulaiman was authorised to give instructions on behalf of those companies. I accept his evidence in this respect and there is nothing in the materials which I have seen to suggest that Mr Sulaiman was not so authorised. Taylor Joynson Garrett were copied in on much of the correspondence, apparently so that they could keep an eye on the position to protect their clients' interests.
47.	JJS believed that Mr Walsh might be interested in purchasing Aria House. JJS had first been introduced to Mr Walsh in about 1993 by his brother in law, a client of the Company, in connection with an earlier property acquisition when Mr Walsh sought JJS' advice as to whether the terms and conditions of a proposed loan to acquire the property could be improved. In the course of that contact, Mr Walsh had mentioned to JJS that he might be interested in buying properties. Accordingly, in about March 1999, JJS approached Mr Walsh (described by JJS as a client of the Company (see para 48 of his first witness statement)) about the opportunity of buying Aria House. Mr Walsh repeatedly stated in evidence, which I accept, that he was only really interested if the fifth floor at Aria House could be converted to residential use. I also find that he made JJS aware of his interest in converting the property to residential use, although I also find that he did not make it clear to JJS that the acquisition would be of no interest to him if this could not be attained. As will appear, some of the contemporaneous documents (and in particular the loan proposals, Matthews & Goodman report and the Turner manuscript notes,) consider residential and commercial use in the alternative, and there is no suggestion in the documents that there should be a condition of purchase that planning permission for residential use be obtained.
48.	Mr Walsh instigated initial inquiries about planning which did not give rise to any cause for concern. Mr Walsh went to look at the property with Jeremy Turner ("Mr Turner"), whom he described as his "right hand man" at his UK trading company, Brentford Commercials Ltd (whose business was break-down recovery, repairs and servicing of heavy commercial vehicles). Mr Walsh says that Mr Turner was positive about the opportunity and that the figures added up. (Mr Turner has subsequently died.)
49.	Mr Walsh met Mr Sulaiman and they shook hands on the transaction for a sum of £1.35 million. On 31 March 1999, JJS wrote to Mr Sulaiman on Company headed paper confirming the offer in that sum from Mr Walsh (described as "the Company's client"). The letter also states that the offer would only proceed if the freehold and leasehold of the Property could be purchased simultaneously for the sum stated. Mr Walsh says that he has no recollection of the freehold being mentioned and JJS could not remember mentioning this to Mr Walsh. But little turns on this as the freehold interest had no real commercial value and was subsequently acquired for £1.
50.	At about this time there were discussions between Mr Walsh and JJS about how the purchase would be financed. JJS was given a list of Mr Walsh's assets, including those held offshore which were substantial. JJS explained that the offshore assets could be used to purchase the property and suggested that they should meet a representative of ECS International Ltd, Isle of Man, ("ECS") who would explain the appropriate structure. ECS was well known to JJS and in particular its director, Mr Bailey, whom JJS had consulted on earlier occasions. A meeting took place at the Company's offices in early April 1999 attended by Mr Walsh and his wife, JJS, MOD and Mr Bailey. MOD denied being present at this meeting but she was contradicted by Mr Walsh and JJS whose evidence I accept. Mr Bailey explained how the property could be acquired through an Isle of Man company whose shares would be held by an Isle of Man trust. I find that Mr Walsh gave the go ahead to this structure but left the detail to be arranged by JJS and Mr Bailey. A US relative of Mr Walsh, a Mrs Bridget O'Sullivan was to be the settlor of the trust. Harlequin Resources Ltd was incorporated in the Isle of Man ("Harlequin IOM") as the vehicle for the purchase.
51.	In the meantime, also in early April 1999, JJS was taking other steps on behalf of Mr Walsh to progress the transaction. A solicitor was needed to act for Mr Walsh. Aria House was a big transaction relating to a property in central London which JJS believed was too large for GH Law to handle (GH Law had acted on the acquisition of Scott's Sufferance Wharf and in connection with the acquisitions of property by Kerwick and the property partnership). JJS discussed the matter with JAL who recommended Jacobsens, with whom JAL had dealt whilst he was a manager at BOI. I have seen two Jacobsens file notes which bear the initials SJK, a reference to Stephanie Kirwan of Jacobsens. One is dated 8 April 1999 which in fact appears to be a file note prepared by Neil Jacobsen, a partner. The other appears to be a note dated 6 April 1999 prepared by Ms Kirwan herself. It seems to be clear that there was a meeting attended by JAL (and probably also JJS), Mr Jacobsen and Ms Kirwan at which Jacobsens were given background information and alerted to the prospect of being formally instructed by Mr Walsh shortly. JAL in his evidence denied being present at this meeting but I find he was present and that he knew more about the background than he was prepared to admit. I do however find that from that point onwards it was JJS who generally gave Jacobsens instructions on behalf of Mr Walsh, although the file note of Mr Jacobsen dated 19 April 1999 shows that JAL was still involved.
52.	By this stage, JJS was acting for Mr Walsh in dealing with Jacobsens and ECS and it is clear that Mr Walsh had authorised, and relied upon JJS, to sort out the mechanics of the transaction. Mr Walsh went further and asserted that JJS would take care of everything and, in particular, suggested that JJS had authority to deal with money transfers from Mr Walsh's bankers. I find that this was not so: I accept JJS evidence that he was not authorised by Mr Walsh to deal with money transfers.
53.	When asked in cross examination about the fee the Company would charge Mr Walsh if the transaction went ahead, JJS said that he could not recall the figure but believed it would be about £30,000: it is not clear that this was ever finally agreed.
54.	The next step in the chronology is a letter dated 12 April 1999 from JJS on Company notepaper to Richard Peat & Co, copied to Jacobsens, Taylor Joynson and Garrett, Mr Bailey and Mr Sulaiman. The letter repeats the terms of the offer made in the letter of 31 March 1999 to Mr Sulaiman but now identifies the purchaser as Harlequin IOM.
55.	By a letter dated 14 April 1999 from JJS to Mr Sulaiman on Company notepaper, which was not copied to anyone, the following was stated:
Further to our telephone conversation today, I confirm that the offer for the long leasehold of the 5th Floor to also include the freehold of The Playhouse on behalf of our client Harlequin Resources Limited is £1,350,000 plus £100,000 payment for fixtures and fittings.
Our commission for arranging the sale will be £30,000 which will be payable from the £100,000 which will be payable on exchange of contracts.
56.	There are two features of this letter which require further explanation: first, the £100,000 payment for fixtures and fittings and second, the £30,000 commission payable.
57.	JJS explained that these two features had been agreed with Mr Sulaiman "pretty much from the outset". When asked why there was no mention of the £100,000 payment for fixtures and fittings in the letter dated 12 April to Richard Peat & Co and copied to others interested, JJS said that Mr Sulaiman had maintained that he owned what was in Aria House, namely the office equipment and partitioning (and, according to Mr Holleran there was studio equipment lying around), for which he had himself paid for which he wanted payment personally. JJS considered that the value of the equipment was "a bit over the top" and JAL considered it a "generous price". JJS was nevertheless unable to recall why this payment was not mentioned to Richard Peat & Co.
58.	The second feature of the letter is the reference to the £30,000 commission payable to the Company on exchange of contracts out of the £100,000. There is nothing prima facie objectionable to the fact that Mr Sulaiman was to pay the Company a fee for the services which he had asked it to provide, namely to find a purchaser for Aria House. In cross examination of JJS, it was not suggested that Mr Walsh was unaware of the additional payment of £100,000 but JJS did accept that Mr Walsh was not told of the £30,000 fee payable by Mr Sulaiman: JJS saw no reason why Mr Walsh should be told as he considered that this was a matter which only concerned Mr Sulaiman.
59.	JJS said that it was always contemplated that the £100,000 payable on completion would be paid in cash or by bankers' draft. It seems to have been envisaged that the £30,000 commission to the Company to be paid by Mr Sulaiman out of the £100,000 would be paid in cash. The evidence of MOD, JJS and JAL was to the effect that cash received by the Company would on occasion be equally distributed between them without being passed through the Company's books. The evidence of JJS and JAL was clear that it was contemplated that the £30,000 would be so distributed if the transaction went ahead.
60.	Returning to the chronology of events, conveyancing matters progressed between the solicitors and it is unnecessary for me to describe these in any detail, save to say that by mid April it had been agreed that completion of the purchase of the freehold would be delayed by a year.
61.	The next matter I should mention concerns the financing of the purchase. JJS advised Mr Walsh that it would be advantageous from a tax point of view for Harlequin IOM to borrow funds for the purchase in that the interest payable on the loan could be set off against any tax liability which might arise. Accordingly JJS prepared two loan proposals on behalf of Harlequin IOM, one which was submitted to Anglo Irish Bank on 23 April 1999 for a loan of £700,000 and one which was submitted to National Westminster Bank plc on 26 April 1999 for a loan of £600,000. The latter referred to cash deposits held by Mr Walsh of Ir £ 940,000 and £ sterling 300,000, in addition to substantial property interests. It also referred to a report to be prepared by Matthews & Goodman on valuation and feasibility study on the basis of refurbishment with a view to  commercial letting, alternatively conversion into 4/5 residential flats.
62.	On 28 April 1999, Matthews & Goodman wrote to JJS at the Company's address, referring to an agreed fee of £3,000 (plus disbursements) for a valuation report. The Matthews & Goodman report was produced on 6 May 1999. It is 18 pages long but for present purposes I need only refer to certain of their conclusions:
8.6 In overview we consider that it would be reasonable to assume in the first instance that a scheme could be drawn up by architects experienced in dealing with Westminster and buildings of this nature which would achieve planning consent and LBC for residential development but it is likely that the number of flats would be limited…
10.4 We are of the view that the property lends itself well to refurbishment for office use…
10.5 The initial ideas for residential refurbishment indicating 5 units will not in our view work as we consider that the property does not sub-divide well…. We consider that at best 4 units could be created but that it would probably be more advisable to develop 3 larger units with a good quality reception area on the 5th floor itself. These factors indicate that the net to gross ratio is likely to be low and therefore the area to be considered to be "valued" is less than under the commercial option.
Matthews & Goodman valued the property on various bases (i) in its existing condition on the basis of office use at between £1.3 million and £1.6 million; (ii) once refurbished and with vacant possession at between £2 million and £2.2 million; and (iii) once refurbished and let as offices at £2.15 million.
63.	The Matthews & Goodman report refers to outline plans which they had seen to convert the property into five residential flats. These had been provided to Matthews & Goodman by JJS. JJS had received these from Mr Walsh. Mr Walsh explained that Mr Turner had looked into planning issues and was in contact with Westminster Council. He had arranged for plans to be drawn up by builders they had used (HM Marks) to show how the 5th floor of Aria House could be split into apartments. The builders had confirmed that there should be no major problems with what was proposed. Mr Walsh accepted that JJS was not dealing with this aspect of the matter.
64.	JJS read the Matthews & Goodman report and considered that it showed that the proposed purchase was a good investment opportunity. I think it likely that he would have conveyed that view to Mr Walsh. Mr Walsh did not remember reading the report but accepted that it was likely that he would have received it. He also could not remember whether Mr Turner read the report but I think it likely that he did in view of the latter's involvement on behalf of Mr Walsh in the proposed purchase.
65.	On 12 May 1999, there was a meeting between Mr Jacobsen, JJS, JAL and Mr and Mrs Walsh. The file note of the meeting does not disclose precisely what was discussed but matters appeared to be progressing satisfactorily.
66.	On 13 May 1999, Anglo Irish Bank sent a letter to JJS referring to a meeting the previous day and setting out the bank's indicative terms and conditions for a facility of £1 million to be utilised as to £630,000 as a purchase facility, £70,000 interest roll-up facility and £300,000 refurbishment facility. 
67.	Also on 13 May 1999, Mr Jacobsen spoke to JJS and indicated that exchange of contracts was likely to take place the following week. He sent a fax to JJS giving details of Jacobsen's client account so that the funds required for the 10% deposit (£135,000) payable on exchange could be transferred to Jacobsens. There was some urgency in the matter since it appeared that somebody else had expressed interest in Aria House and, to ward off this threat, Mr Jacobsen thought it would be helpful for him to be in a position to say that the funds were in place. There was still an outstanding query in relation to service charges and the information required appears to have been sent by fax from Richard Peat & Co to Jacobsens later that day. Drafts of the contracts to be exchanged had already been produced
68.	On 14 May 1999, JJS sent a fax to Mr Jacobsen stating that:
Arrangements have been made today to TT the sum of £140,000 stg (10% of PP + £5,000 towards costs/disbursements) to your clients account.."
The letter goes on to indicate that JJS was still awaiting information about the service charges. JJS asked Mr Jacobsen to call him once the funds had arrived.
69.	It is common ground that the funds did not arrive at Jacobsens. JJS gave evidence to the effect that he tried to contact Mr Walsh by telephone on Friday 14 May and over the following weekend without success and later discovered that Mr Walsh had been in Ireland. He found difficulty in explaining how he could have written to Mr Jacobsen saying that "arrangements have been made today" to transfer the funds when he had also been unable to contact Mr Walsh. It was put to JJS in cross examination that he had control over Mr Walsh's bank accounts so that he himself was in a position to make the necessary arrangements. This was denied by JJS and I accept his denial. I find that what probably happened is that JJS had spoken to Mr Turner either late on Thursday 13 May or early Friday 14 May to pass on to Mr Walsh the need to put in place the arrangements to transfer the funds and given him details of Jacobsens' client account. When Mr Shanahan did not receive the confirmation from Mr Jacobsen that the funds had arrived he attempted to contact Mr Walsh without success.
70.	Nothing seems to have been done by this stage about arranging for the £100,000 to be raised by Mr Walsh. JJS said that he believed that Mr Walsh would have no difficulty in obtaining this money at short notice, a belief which is supported by the substantial cash deposits shown in the loan proposal. Exchange of contracts was at this stage being contemplated in the middle of the following week and JJS thought the £100,000 would not be a problem for Mr Walsh.
71.	Late on Friday 14 May, JJS received from Mr Jacobsen information about the service charges. JJS sent a fax to Mr Walsh late on Sunday 16 May enclosing that information.
72.	What followed on Monday 17 May 1999 is hotly disputed but on any view came as something of a bombshell. It is common ground that Mr Walsh pulled out of the transaction in a telephone conversation between himself and JJS on that day. The reasons are a matter of great controversy. It is also common ground that in the course of that conversation, after Mr Walsh pulled out, JJS asked Mr Walsh, and Mr Walsh agreed, to pay the fees which had been incurred by the Company, Matthews & Goodman and Jacobsens.
73.	Mr Walsh says that he pulled out because he received a telephone from Mr Turner who said that JJS had called him to say that there was a big problem in that planning consent for residential use would not be given. Mr Walsh says he telephoned JJS who confirmed that this was the case. Mr Walsh says that he lost his temper and said that if residential planning consent could not be obtained he was not interested.
74.	JJS denies Mr Walsh's version of events. He says that Mr Walsh rang him on the morning of Monday 17 May and announced he was pulling out of the purchase. This came as a complete shock to him (he described it as his "9/11"). JJS could not remember specifically any reasons given by Mr Walsh during this telephone call as to why he had pulled out but was left with the impression that Mr Walsh had cold feet about the purchase.
75.	Mr Clutterbuck submitted that I should accept Mr Walsh's evidence on this aspect. He pointed to evidence given by JJS to the effect that he was unaware that Mr Walsh wanted to acquire Aria House for residential development which JJS retracted when he was shown documents showing that he must have known that residential development was being contemplated by Mr Walsh. Mr Clutterbuck suggested that the original answer was given in order to undermine Mr Walsh's explanation for pulling out (namely if JJS had not known of Mr Walsh's plans for residential development, he would not have told Mr Walsh that planning consent for residential development could not be obtained). However, this seems to me to be an example of the unreliability of JJS' evidence rather than an elaborate attempt to shore up JJS' case. Mr Clutterbuck also pointed to the inconsistent stories told by JJS since the event to explain Mr Walsh's withdrawal. He refers to a file note dated 21 June 1999 of a conversation between JJS and Ms Kirwan where JJS is recorded as saying that Mr Walsh pulled out of the deal because he wanted to take over the freehold throughout and wanted to use his money for another purpose (for which there is no evidential support). He also refers to APOD paragraph 27 where it is suggested that Mr Walsh pulled out of the deal because of the Matthews & Goodman valuation. I find that these explanations are attempts by JJS to rationalise ex post facto why Mr Walsh pulled out and are speculation on his part. The suggested explanations do not in any event stand up to scrutiny: from an early stage the freehold was to be acquired as part of the deal; there is no evidence to support the suggestion that Mr Walsh wanted to use the money for another purpose; and JJS himself did not consider that the Matthews & Goodman report affected the soundness of the deal. I nevertheless take these matters into account in deciding whose evidence to prefer.
76.	MOD's case is that JJS and JAL formed the plan to take over the purchase of Aria House on 12 or 13 May 1999. It is more logical for me to consider this later in this judgment once I have described how events unfolded. For reasons which will later appear I reject that case. Had I accepted it, it would have lent support to Mr Walsh's explanation for his pulling out. Certain of the evidence relied upon in support of that case has a bearing on whether I should accept Mr Walsh's explanation and I take this into account for that purpose even though I deal with this later in the judgment.
77.	Despite my considerable doubts generally as to the reliability of the evidence given by JJS, I accept his evidence in preference to that of Mr Walsh as to the content of the telephone conversation between them on 17 May 1999. My reasons are as follows:
i)	First, if JJS had told Mr Walsh that residential planning consent could not be obtained, it would have been obviously untrue and, if challenged, JJS would have been unable to support his statement. The Matthews & Goodman report clearly shows that such consent was likely to be forthcoming, albeit for 3 rather than 5 apartments.  Mr Walsh accepted that JJS' role did not include dealing with planning issues. On the contrary, Mr Turner was dealing with planning issues for Mr Walsh and had been in contact with Westminster Council; and the builders instructed by Mr Walsh to draw up plans did not foresee a major problem. In cross examination, Mr Walsh did not suggest that he sought an explanation from JJS as to the reasons for the problem he says was relayed to him by JJS: he says this was because he was "not the type of person to shoot a man when he is down". This evidence is wholly unconvincing in the light of the time and money (see further below) which, on Mr Walsh's case, had been wasted, and in the light of his evidence of the inquiries which he had himself instigated into planning issues.
ii)	Second, there is one piece of evidence which I have so far not mentioned. There are ten pages of undated notes and calculations produced by Mr Turner relating to Aria House. Mr Turner has since died. It is not easy to follow all that appears in these notes and calculations. There is however a summary which is clear. The summary starts by describing the deal as originally introduced as being a "potential profit-maker of £1,000,000". It goes on to explain why this potential profit has been considerably reduced. The conclusion is stark: "This deal cannot reasonably, in our opinion, be considered viable." In cross examination Mr Walsh maintained that Mr Turner remained positive about the deal throughout and that he, Mr Walsh, was not made aware of the conclusion which appears in Mr Turner's notes. Mr Walsh said that Mr Turner's notes and calculations were not a formal report and sought to dismiss them as "office scribblings". I find this evidence to be incredible. Mr Walsh described Mr Turner as his "right hand" man who would regularly report to him informally. Mr Turner was clearly closely involved in the Aria House deal. I find it inconceivable that Mr Turner did not report his conclusions to Mr Walsh. It seems clear that Mr Turner's notes and calculations must have been prepared before Mr Walsh pulled out of the deal on 17 May 1999 - there would have been no point in him producing them afterwards. I reject Mr Walsh's assertion that he believed even after 17 May 1999 that the deal was salvageable which is both inconsistent with other evidence he gave and the events which followed. I find that, knowing as he did of Mr Turner's conclusions, Mr Walsh did have cold feet about the deal. 
iii)	Third the evidence of Mr Holleran to which I refer below.
78.	I now return to the chronology of events. After the telephone call between JJS and Mr Walsh, JJS immediately phoned JAL and a meeting was held at the Company's offices to discuss whether it might be possible to salvage the deal by finding another client of the Company who might be interested in acquiring Aria House. There is a dispute whether MOD attended this meeting. I find that she was present in the sense that she was in the office and would have been aware of the problem which had arisen, but the discussion would have been between JJS and JAL who were the main contact for the Company's clients at least in the context of the problem that had arisen. The only client who JJS and JAL could identify who might be interested was Mr Holleran, who was then contacted by JAL.
79.	Mr Holleran said that he had a clear recollection of the events of 17 May 1999 because that was his wedding anniversary. He says that JAL phoned him and informed him that JJS was involved in a property deal which had been offered to a client of the Company who had got cold feet and lost confidence in the deal. Mr Holleran was given details of Aria House and told that there was considerable urgency in the matter as the client had pulled out at the eleventh hour. He was also told that the purchase price was £1.35 million plus £100,000 for fixtures and fittings and that the Company was to receive £30,000 from the £100,000 for fixtures and fittings by way of commission from the vendor. 
80.	Mr Holleran went to view Aria House later in the day accompanied by JJS. It may well be that some of the details of the deal which I have described above were imparted to Mr Holleran during this visit. Mr Holleran considered the matter overnight and the following morning and came up with a proposal which he presented to JJS and JAL at a meeting at the Company's offices on Tuesday 18 May 1999.
81.	For Mr Holleran, the proposed purchase of Aria House was of a magnitude with which he had not previously been involved. He, via his companies, had considerable cash resources at his disposal but he was not prepared to go along with the deal on his own, particularly in view of the urgency of the matter and his lack of experience in dealing with property of this size. He knew that JJS and JAL had experience in property dealings. Accordingly the proposal which he put together and presented to JJS and JAL at the meeting was that he would only proceed with the deal if JJS and JAL took a 50% stake in the venture, with himself and his brother (Joseph Holleran) taking the other 50% share. He was not willing to pay for the £30,000 commission due to the Company. Thus, he was only prepared to proceed on the basis that the purchase price would remain at £1.35 million and the payment for fixtures and fittings, to be funded by the four co-venturers in equal shares, reduced to £70,000. When JJS and JAL pointed out that they did not have enough resources of their own available to fund the completion of the purchase, Mr Holleran said that he was prepared to provide £600,000 by way of loan from resources available to him, with the balance to be provided by bank borrowing.
82.	Mr Holleran's recollection was that MOD was present at the Company's office at the time of the meeting at which he presented his proposals, although  he accepted that she did not participate in the discussion. The office comprised a small room and Mr Holleran said that MOD would have had to be asleep not to have heard what was being discussed. I shall have to deal with the question of MOD's knowledge further below.
83.	JJS and JAL were prepared to go along with the proposal put by Mr Holleran. JJS had throughout thought that the purchase of Aria House represented a good investment opportunity although for reasons which I give below I find that he had not given any consideration to buying it himself before Mr Holleran presented his proposal. I find that the first occasion on which JJS and JAL considered that they might themselves be involved in the purchase was when Mr Holleran presented his proposal.
84.	In deciding to go along with Mr Holleran's proposal, JJS accepted that he relied on the Matthews & Goodman report and the feedback which had already been received from the banks in connection with the financing of the purchase. JJS said these matters were also discussed with Mr Holleran at the meeting on Tuesday 18 May.
85.	Another matter which was discussed at the meeting on Tuesday 18 May was how the purchase could proceed without delaying matters or otherwise putting off the vendor. JJS came up with the idea of seeing whether there was an English company incorporated with the name Harlequin Resources Ltd. He rang his accountant and quickly established that there was not. JJS gave instructions to his accountant on the same day for an English company to be incorporated under that name. An English company, Harlequin Resources Limited ("Harlequin UK") was incorporated in accordance with those instructions on the following day, Wednesday 19 May 1999: JJS, JAL, Mr Holleran and his brother became the directors and each a holder of 25 ordinary shares of £1 each. I accept this explanation of why Harlequin UK was formed notwithstanding at least one other explanation which JJS and JAL have proffered in the past (eg in APOD they suggested that this was done was to save legal costs: JJS did not seek to support this suggestion with any conviction when he gave evidence and it does not in any event, on analysis, stand up to scrutiny.)
86.	Jacobsens must have been told that Harlequin UK would be the vehicle for the purchase because the draft contracts were amended to show the English registered address. In his closing submissions, Mr Clutterbuck said that the vendors knew, and must have been told by Jacobsens, that the purchaser was changing from an offshore company to an English company. This was the line taken by Mr Clutterbuck in his cross examination of JJS, JAL and Mr Holleran in seeking to undermine the suggestion made by them that the purpose of the name swap was to give the impression to Mr Sulaiman that the purchaser had not changed. If that had been the purpose, it was not achieved, and it was suggested by Mr Clutterbuck that the real purpose was that this was part of a plan hatched by JJS and JAL on 12 or 13 May 1999 to take over the deal. I now address that contention.
87.	In further support of this contention, Mr Clutterbuck relied on the following matters:
i)	The difficulties which JJS had in explaining the letter of 14 May 1999 that arrangements had been made for the transfer of funds on that day. It was suggested that JJS had intentionally refrained from causing Mr Walsh's money to be sent to Jacobsen's on 14 May 1999. I have already made my findings of fact in relation to this letter and consider that there is nothing sinister that should be read into the fact that the arrangements were not in fact made. In this connection, I repeat my finding that I reject the contention that JJS himself had authority to transfer funds on behalf of Mr Walsh. 
ii)	The fact that JJS took no steps on 17 May 1999 to ascertain whether the £135,000 had in fact been transferred to Jacobsens. But I do not see anything sinister in this either: JJS had not received the confirmation which he had requested from Mr Jacobsen that the funds had arrived. JJS said that he assumed after his conversation with Mr Walsh on 17 May 1999 that the money had not been transferred which in the circumstances seems a reasonable assumption to have been made.
iii)	The fact that JJS had made no arrangements with Mr Walsh for the £100,000 cash/ bankers' drafts to be raised. However, I accept JJS' evidence that he did not think this would be a problem as Mr Walsh had substantial cash deposits at his disposal and these monies could have been provided at relatively short notice early in the week of 17 May 1999 should the deal involving Mr Walsh have gone ahead.
iv)	An undated manuscript note which (i) summarises details of the lease on Aria House and mentions Mr Holleran and M Holleran & Sons Ltd in writing which nobody was able to identify; and (ii) has five numbered points in JJS' writing including "Cash/drafts of £70k". It would certainly appear that this was created at a time before exchange of contracts when Mr Holleran's participation was envisaged and after the reduction in the payment to Mr Sulaiman to £70,000. Mr Clutterbuck sought to suggest that the fourth entry, which referred to access to the 5th floor and the roof, when read alongside a Jacobsen's file note dated 12 May 1999 and a letter from Richard Peat & Co dated 13 May 1999, showed that the manuscript note must have been prepared on about those dates. This, so it was said, followed from the fact that access to the roof was required to look into the question of installing air conditioning but by 13 May it had been ascertained that Aria House already enjoyed air conditioning so that the problem had been resolved. On the other hand, as Mr Mallin pointed out, most of the five numbered points in the manuscript are picked up in a letter dated 20 May 1999 from Jacobsens. In all the circumstances, I consider that the evidential value of these manuscript notes to support the contention that JJS and JAL had formulated a plan to take over the deal before 17 May 1999 to be tenuous in the extreme. 
v)	JJS' acceptance that he never told Jacobsens to stop work between his conversation with Mr Walsh on 17 May 1999 and the agreement which was reached between JJS, JAL and Mr Holleran on 18 May 1999. However, I do not find this surprising, let alone sinister. In this short period, JJS was attempting to salvage the deal. He was aware of the risk of losing the deal if there was delay and did not want to alert Mr Sulaiman to the problems which had arisen. It therefore made sense for the Jacobsens to continue working and not down tools over this short period.
vi)	The evidence of Mr Walsh on 17 May that he was told by JJS that residential use would not be possible which JJS knew was a deal breaker: the suggestion being that this was a concoction by JJS to get Mr Walsh to pull out of the deal so that the plan already formulated by JJS and JAL to take over the deal could be consummated. However, I have rejected Mr Walsh's evidence and accepted the evidence of JJS as to that conversation.
88.	That leaves very little to support the contention that JJS and JAL had formed a plan to take over the deal on 12 or 13 May 1999. There is, moreover, a fundamental obstacle in the way of this contention. It seems clear to me that JJS and JAL never had sufficient finances available to go ahead with the deal on their own. If they had formulated this plan they would have needed a third party to be involved. There is no hint of any third party being involved other than Mr Holleran. I have no hesitation in accepting his evidence that he only became involved on 17 May 1999. Accordingly, and in view of the other findings of fact which I have already made, I reject the contention that JJS and JAL had formed a plan to take over the deal on 12 or 13 May 1999. I repeat my finding that the first occasion on which JJS and JAL considered that they might themselves be involved in the purchase was when Mr Holleran presented his proposal on 18 May 1999.
89.	Returning to the chronology of events, in the week of 17 May 1999 Jacobsens continued work in preparation for exchange of contracts, including revising drafts of the contracts. Mr Clutterbuck suggested that Jacobsens were not told until much later that Mr Walsh was no longer involved in the contract to acquire Aria House. He suggested that, although they knew the purchaser had changed (as a result of the change to Harlequin UK), they did not know that Mr Walsh was no longer involved. He referred to a later file note of 21 June 1999 prepared by Ms Kirwan and draft reports on title which she prepared. However, it seems to me clear that, apart from some initial involvement, there was a period leading to exchange of contracts and some time thereafter when she was not involved: the matter was dealt with by Mr Jacobsen himself. Such confusion as appears in the file note and in the draft reports on title is in my judgment of little significance and reflects the difficulty which she faced in reacquainting herself with the matter and the events which had occurred. There is more force in the point made by Mr Clutterbuck that there appears to be no contemporaneous note on Jacobsens file showing that Mr Walsh was no longer involved in the contract to purchase Aria House, and no evidence of money laundering checks on at least Mr Holleran and his brother. 
90.	However, Mr Clutterbuck's point, it seems to me, falls away in the light of the following. I have already mentioned that in the telephone conversation between JJS and Mr Walsh on 17 May 1999 JJS asked Mr Walsh, and Mr Walsh agreed, to pay the fees which had been incurred by the Company, Matthews & Goodman and Jacobsens. (It is to be noted that at the time of this conversation there was clearly a question mark whether the transaction could proceed.) JJS asked Jacobsens to produce an invoice for their fees to date. The invoice in question is dated 18 May 1999 and addressed to Mr Walsh's company, Brentford Commercials Ltd. It is headed: "To professional services in connection with the abortive acquisition of property" (my emphasis). It follows that Jacobsens must have been aware that Mr Walsh was no longer involved.
91.	Jacobsens' invoice was for a total of £10,398.71 (including VAT) comprising professional charges of £8,500 (excluding VAT and which appears to be a sum less than the full charges incurred) and disbursements consisting of search fees of some £367 (excluding VAT).
92.	JJS arranged with Mr Walsh to call at the latter's home on the evening of Friday 21 May 1999 with the invoices from Jacobsens, Matthews & Goodman and the Company. At the meeting JJS was handed three cheques by Mr Walsh drawn on Brentford Commercial Ltd in respect of each invoice. The amount of the cheque drawn in favour of the Company was £3,000. The invoice from Matthews & Goodman totalled £3,566.13 (including VAT) comprising the fee for the report (£3,000) and disbursements of £35.
93.	At the meeting on Friday 21 May 1999, JJS did not mention to Mr Walsh that the purchase of Aria House was going ahead (though contracts had not yet been exchanged) or that he (JJS) and JAL had agreed to take a share in the purchase. JJS did not mention that the work Mr Walsh was paying for (or at least much of it) would be used for the purpose of the purchase. JJS accepted that the reason he did not tell Mr Walsh was because he thought Mr Walsh would object. 
94.	When it was put to JJS in cross examination that his use or reliance on the Matthews & Goodman report in these circumstances for the purposes of the Aria House purchase was improper, JJS answered: "Yes - slightly". He accepted that the fact that they derived a benefit from the work done by Jacobsens (for which Mr Walsh had paid) and hid that fact from Mr Walsh was "slightly improper". JAL (who became aware from discussions with JJS shortly after 21 May 1999 of what had transpired) accepted that it was improper to get Mr Walsh to pay for the fee for the Matthews & Goodman report without telling him of their involvement in the purchase. JAL did not consider that there was anything improper in getting Mr Walsh to pay for Jacobsens fees or in deriving benefit from the work done by Jacobsens which Mr Walsh had paid for. JAL said that he saw nothing wrong in benefiting from work done by a solicitor where a client had pulled out of a deal.
95.	I shall have to return to these matters later in this judgment.
96.	It was also suggested to JAL in cross examination (but not to JJS) that it was improper for JJS and JAL in the circumstances to get Mr Walsh to pay £3,000 to the Company and/or to benefit from the work done by the Company. JAL vigorously denied this suggestion, pointing out that the fee charged was modest when viewed against the wasted work which JJS had undertaken. There is in my view considerable force in this denial. There clearly was work undertaken by JJS for Mr Walsh which was wasted (eg in setting up the arrangements in the Isle of Man). I am not persuaded that the fee charged by the Company was in all the circumstances improper.
97.	However, matters do not end there and there is a further feature of the work done by the Company which may become more relevant. I have already mentioned that JJS accepted that, in deciding to go ahead with Mr Holleran's proposal, some comfort was derived by him from the feedback which had already been received from the banks in connection with the financing of the purchase (which was part of the work undertaken by the Company for Mr Walsh). JAL said he relied on his partner's judgment on this aspect and was neither encouraged nor discouraged by the response of the banks to the loan proposals (see further below in relation to the lack of financing in place at the time of exchange).
98.	From this point onwards, Mr Walsh drops out of the picture in the chronology of events concerning the purchase of Aria House. The funds required for exchange of contracts, namely £135,000 as the deposit and the £70,000 for Mr Sulaiman had to be obtained. Jacobsens received the £135,000 by 21 May 1999 - £67,500 from JJS/ JAL and £67,500 from Mr Holleran and his brother via M Holleran Ltd. JJS temporarily had to rely on JAL to fund part of his share: JJS said that although he had funds available he did not have the time to organise putting his share of the funding together, but he said he repaid JAL shortly thereafter. Each of the four participants equally contributed to the provision of the £70,000 in the form of cash and banker's drafts.
99.	The payments contributed equally by the four co-venturers towards the £135,000 deposit were later recorded in the books of Harlequin UK as directors' loans. Their equal contributions towards the payment of £70,000 were not passed through the books of Harlequin UK.
100.	Exchange of contracts had been contemplated to take place on 25 May 1999 but was in the event delayed until 1.45 pm on 26 May 1999, with completion fixed for 8 July 1999. There are certain aspects of the facts surrounding exchange which need to be considered in a little more detail.
101.	In particular, there are certain oddities surrounding the payment of £70,000 to Mr Sulaiman. It will be recalled that originally it had been proposed that the purchaser (then Mr Walsh) would pay £100,000 to Mr Sulaiman for fixtures and fittings out of which Mr Sulaiman would pay £30,000 to the Company as its fee for effecting the sale and purchase. Mr Sulaiman would thus retain a net sum of £70,000. Mr Holleran was not prepared to fund the £30,000 fee payable to the Company and his proposal was that £70,000 be paid to Mr Sulaiman for the fixtures and fittings fee. So far as Mr Sulaiman was concerned he would still receive £70,000 as long as he was not required to pay the Company a fee.
102.	I have already mentioned that it was envisaged that exchange of contracts would take place on 25 May 1999 and the £70,000 in cash/ bankers' drafts was ready to be handed over to Mr Sulaiman on that date immediately upon exchange. Amongst the documents disclosed from the Company's files is an unsigned copy letter dated 25 May 1999 addressed to Mr Sulaiman from the Company in the following terms:
"We acknowledge receipt from you of the sum of £30,000 …. in respect of Agency Sales Commission re the sale of [Aria House]."
There is also an original invoice on the Company's file also dated 25 May 1999 addressed to Mr Sulaiman referring to an agreed fee of £30,000 for professional fees in connection with the sale of Aria House. The invoice has written in manuscript on it "Paid 25/5/99 J Shanahan". JJS denied that this was his writing and JAL denied that he had written this on the invoice: in the absence of any evidence to the contrary I accept those denials.
103.	However, JJS accepted that the letter and invoice dated 25 May 1999 had been prepared "by us" and that they do not reflect the transaction which took place in that no sum of £30,000 was paid by Mr Sulaiman on that date (or the following day). JJS accepted that he was a party to the creation of a false document. However, he says that nothing came of it, his explanation for the document being as follows. He says that when Mr Sulaiman was told that only the net amount of £70,000 would be paid over, Mr Sulaiman nevertheless wanted a receipt for £30,000. The above two documents were accordingly prepared to be handed over to Mr Sulaiman at the same time as the £70,000 was to be handed over, originally thought to be 25 May 1999. JJS, JAL and Mr Sulaiman convened at the Company's offices on that day awaiting confirmation that exchange had taken place. Since exchange did not take place on that day, nothing was handed over. Mr Sulaiman returned to the Company's office the following day when only JAL was present. Upon confirmation that exchange had taken place, Mr Sulaiman was handed the £70,000. When JJS returned to the Company's office later that day he noticed that the letter and invoice had not been handed over. According to JJS, Mr Sulaiman had left the offices without asking for the letter/ receipt: that, he says, is why the original invoice is still on file. JAL denied all knowledge of these documents, saying that he had not seen them until they were disclosed. I do not accept his denial. I consider that he knew far more about the 25 May letter and invoice than he was prepared to admit. JAL's denial is inconsistent with the evidence given by JJS explaining these documents.
104.	In general I accept JJS's explanation save that I have considerable doubt about the rationale he gave for producing the documents, which first emerged when he gave evidence (notwithstanding an earlier request for further information arising from Para 35 of APOD which was not fully answered). It will be recalled that JJS (and JAL) had been anxious not to draw Mr Sulaiman's attention to the change of purchaser, hence the formation of Harlequin UK. JAL was also aware of the reason for the formation of Harlequin UK. It would have been problematic for them to explain why the Company was waiving its £30,000 fee without alluding to the involvement of Mr Holleran and indeed themselves in place of Mr Walsh. Mr Sulaiman would have been aware that he would only retain £70,000. But if JJS and JAL had been asked about the Company's fee by Mr Sulaiman, they could have handed over the 25 May invoice and letter without having to explain to him the changed arrangements. I think this is the more likely explanation for producing these documents: in other words they were not produced at the request of Mr Sulaiman but as a precaution in the event Mr Sulaiman raised the matter of the Company's fee. As events turned out, namely that Mr Sulaiman neither raised the matter nor requested these documents, it probably does not matter why they were produced. But the fact that JJS and JAL were prepared to create, and if necessary hand over, false documents does them no credit.
105.	There is another aspect of the £70,000 payment which does JAL no credit. He accepted that at the meeting with Mr Sulaiman on 26 May 1999 he drafted in manuscript a receipt addressed to Harlequin UK in the following terms:
		Dear Sirs,
		I acknowledge receipt of £70,000 (seventy thousand pounds), 			consultancy fee.
		PATRICK SULAIMAN
This was signed by Mr Sulaiman in his presence. JAL explained that he wanted a receipt to evidence that the £70,000 had been paid over. JAL said that Mr Sulaiman had asked him to describe the payment as a "consultancy fee" and he was prepared to go along with this (even though he knew that the payment was purportedly for fixtures and fittings).
106.	It is to be noted that the effect of these arrangements was that the Company would lose out on the £30,000 fee which it had originally been contemplated would have been payable by Mr Sulaiman to the Company on completion of the deal. I have already mentioned that it had been envisaged that this cash amount was to be divided up equally between JJS, JAL and MOD without being passed through the Company's books. JJS and JAL appreciated that what had occurred was in some way unfair on MOD. They had benefited in the sense that £30,000 had been knocked off the sums which the purchaser would have had to pay to Mr Sulaiman. In monetary terms, they had each been obliged to pay £7,500 less towards the price payable under the terms of the transaction as originally contemplated. Had Mr Sulaiman paid £30,000 each of JJS, JAL and MOD would have benefited to the tune of £10,000. JJS and JAL perceived that this resulted in unfairness to MOD at an early stage after the Holleran proposal was accepted and agreed to provide recompense to MOD. I deal with how this was done later in this judgment.
107.	There is one other aspect of the circumstances existing as at the date of exchange with which I need to deal. As at exchange, on 26 May 1999, Harlequin UK did not have financing in place to complete the purchase. By this stage Mr Holleran had offered to provide a loan of £600,000 but the bank borrowing to fund the balance had yet to be arranged. It was suggested to JAL in cross examination that this was risky but JAL said, with some justification, that he did not regard this as an issue because the bank funding required was only some 50% of the value of the property. And as I have mentioned, he said he relied on JJS who had in turn been reassured by the fact that banks had offered indicative terms for a substantial loan to assist the purchase in response to the loan proposals prepared on behalf of Mr Walsh.
108.	Harlequin UK changed its name to SLH Properties Ltd on 11 June 1999 ("SLH"). On 18 June 1999, Nat West offered SLH a £1 million facility, £700,000 to assist with the purchase and £300,000 for refurbishment, secured inter alia by a legal mortgage of Aria House and guarantees from JJS, JAL and John Holleran Ltd limited to £200,000 each. The terms of the loan of £600,000 to SLH from M Holleran Ltd were recorded in a written agreement dated 7 July 1999. The loan was to be repaid at the same time as the Nat West loan. If for any reason there was a shortfall in repayment of the loan plus interest it was agreed that each of the "joint parties", who were respectively identified as Mr Holleran and his brother Joseph on the one hand and JJS and JAL on the other, would make up the shortfall on a 50/50 basis. The agreement was signed by all four individuals.
109.	Completion took place on 8 July 1999. On 26 September 2003, SLH acquired the freehold of the whole of Aria House for £1. It was not suggested that the freehold had any real value.
110.	There is one matter with which I should deal in relation to the Aria House transaction which, as it transpires, I consider to be of only marginal relevance. On 27 September 1999, Jacobsens sent an invoice to SLH for a total of £4,935.00 (including VAT) representing the balance of their professional charges in connection with the acquisition of Aria House over and above those already paid by Mr Walsh's company. It will be recalled that Jacobsens had prepared an invoice addressed to Brentford Commercials Ltd, dated 18 May 1999 for a total of £10,398.71 (including VAT). Amongst the documents disclosed by JJS and JAL, apparently from the Company's files, is a copy invoice in identical terms to the invoice dated 18 May 1999 save that the addressee of the invoice is shown as SLH. JJS and JAL accepted that this copy invoice is a forgery. JAL accepted that it had been forged by copying the details of SLH from the invoice dated 27 September 1999 on to a copy of the 18 May invoice in lieu of the details of Brentford Commercials Ltd. Whoever forged the document must, it seems, have had access to SLH's files, to obtain a copy of the 27 September 1999 invoice, and also had access to a copy of the 18 May 1999 invoice (either from Jacobsens' files or the Company's own files). The finger of suspicion points strongly towards JJS and/or JAL who seemingly were the only individuals who had such access. But what was the purpose of the forgery?
111.	Mr Clutterbuck submitted this constituted an attempted deception on the part of JJS and JAL as follows. When the petition was presented, MOD did not know that Mr Walsh had paid the Jacobsens 18 May 1999 invoice nor the circumstances in which he had paid it. JJS and JAL were conscious of the impropriety in getting Mr Walsh to pay this invoice without disclosing their involvement in the purchase. In their second list of documents dated 7 September 2007, JJS and JAL disclosed the forged invoice. Mr Clutterbuck suggests that this was done to conceal the fact that they had got Mr Walsh to pay for Jacobsens' costs - the reader of the forged invoice would have gained the impression these had been paid by SLH.  It was only later in March 2008 in their third list that the genuine invoices dated 18 May 1999 and 27 September 1999 were disclosed, following orders made on applications for specific disclosure. By this stage, it is said, the "cat was out of the bag" in the sense that Mr Walsh had produced a witness statement (dated 19 October 2007 but only served in December 2007 on exchange) which made it clear that he had paid the invoice and there was documentation to support this. Once this had happened the forged 18 May 1999 invoice could no longer serve its purpose. But, it was suggested, if Mr Walsh had not come forward as a witness, it might have served its purpose. Mr Clutterbuck's theory appeared to have much to support it but in the end collapsed like a pack of cards. The theory is premised on JJS and JAL hiding the fact that Mr Walsh paid the 18 May 1999 invoice. However, in the original Points of Defence served on 21 February 2007 (well before the forged invoice was disclosed), it is specifically pleaded at para 27(2) that Mr Walsh paid Jacobsens for their work up to the time he pulled out. The premise for Mr Clutterbuck's theory therefore falls away. 
112.	JJS and JAL denied all knowledge of, or involvement in creating, the false invoice. I do not think they were being candid in so doing. However, on the basis of the evidence I have heard, I can make no findings other than the fact that it is forged. The purpose of the forgery is wholly unclear and remains a mystery. In these circumstances I cannot say precisely who created the forgery. I accordingly propose to say no more about it in this judgment, other than to say that it merely reinforces my view that I have to treat the evidence of JJS and JAL with great caution.
113.	An important aspect of the Aria House transaction which remains to be considered is MOD's knowledge of the events which occurred. MOD when giving her evidence sought to distance herself from what occurred in a manner which I found to be unconvincing. She was, after all, generally present at the Company's office during working hours. The office was small and I consider it inconceivable, in view of her inquisitive mind, that she was oblivious to what took place there. In addition, one of her roles was to deal with the post. It is clear that such correspondence relating to the Aria House transaction as was sent to JJS was generally sent to him at the Company's address, including correspondence addressed to SLH. It does not follow that she read and understood what was in these letters, but this does show to my mind that there was no attempt by JJS (or JAL) generally to conceal matters from MOD, and in particular their involvement in the transaction after Mr Walsh pulled out.
114.	On the other side of the coin, I found that the evidence given by JJS and JAL as to MOD's knowledge and involvement was unbalanced and exaggerated. Documents which they asserted showed MOD's knowledge and involvement (such as certain Jacobsens' file notes and correspondence) were demonstrated in cross examination to show no such thing.
115.	In this state of the evidence, the task of deciding what MOD knew and when is a difficult one. I find she was present at a meeting at the Company's offices attended by Mr Walsh when the Isle of Man structure was discussed: although she denied being present, Mr Walsh himself said she was. I find that MOD knew all the essentials of the transaction before Mr Walsh pulled out of the deal: in contrast with the position after 17 May 1999, this was not seriously disputed by MOD. Since I do not think that anything turns on her state of knowledge before 17 May 1999, I shall proceed on this basis without further analysis.
116.	MOD's knowledge of what occurred on and after 17 May 1999 is more controversial. MOD maintained that she did not know of the personal involvement of JJS and JAL in the Aria House transaction until after completion on 8 July 1999. MOD accepted that she had become aware that Mr Walsh had pulled out of the transaction and of Mr Holleran's involvement a few days after 17 May 1999 but she says she only became aware of the involvement of JJS and JAL after she saw a copy of the shareholder agreement recording the terms of the £600,000 loan which was lying on the table at the office. She says she raised the matter with JJS who explained that Mr Holleran had only agreed to go ahead with the purchase if JJS and JAL were involved. She says she was shocked to learn of this and queried the fee which MOD, JJS and JAL were supposed to get. This is the essential thrust of her evidence, although in the course of her cross examination, she gave answers which were not entirely consistent.
117.	I find that MOD knew of the involvement of JJS and JAL shortly after 17 May 1999. The evidence of Mr Holleran, which I accept, was that MOD was present at the Company's office at the meeting on 18 May 1999. Although she took no part in the discussion, the office was a small one and she must have been aware, at least in general terms, that JJS and JAL were to become involved. I find that there was no attempt by JJS and JAL to conceal their involvement. There were several subsequent meetings between them and Mr Holleran at the Company's offices before completion. According to Mr Holleran, whose evidence I accept, MOD was usually present at the office when these meetings took place. In making this finding, I attach little weight to the correspondence which was sent by post and fax to the Company's offices. MOD denied having seen them but I found her denial unconvincing, particularly in relation to faxes which in the normal course she would have picked up as part of her office duties. But the reason I attach little weight to this aspect is that the correspondence which I have seen which was sent to the Company's offices prior to completion does not clearly show that JJS and JAL personally had an interest in acquiring Aria House.
118.	Even though MOD, as I find, knew of the involvement of JJS and JAL at an early stage after 17 May 1999, there were aspects of the transaction of which she was unaware. I accept that she did not know that Mr Walsh had paid the Jacobsens and Matthews & Goodman invoices or the circumstances in which such payments were obtained. She was not aware of the benefit being derived by JJS and JAL from the work carried out by Jacobsens and Matthews & Goodman which had been paid for by Mr Walsh, nor the reliance by JJS and JAL on such information (and the responses from the banks) in connection with the acquisition. I also find that she did not know of the steps which were taken which were intended to prevent the change of purchaser from coming to the attention of Mr Sulaiman and in particular the formation of Harlequin UK.
119.	As MOD herself said in evidence, the loss of the £30,000 commission payable to the Company by Mr Sulaiman, which she described as a substantial fee, was discussed. JJS and JAL said that this was discussed on or about 18 May 1999; MOD said that it was after completion. It is probably immaterial when it was discussed, but in case it is material, I find on balance that the loss of the commission was discussed before the time of completion. MOD would have been aware that the Company was due to receive the £30,000 commission from Mr Sulaiman on exchange of contracts under the arrangements reached whilst Mr Walsh was involved. Even if the matter had not been raised in the week of 17 May 1999, I consider it probable that MOD would have queried the fee payable by Mr Sulaiman once contracts had in fact been exchanged on 26 May 1999. JJS and JAL agreed to compensate MOD for the loss of her share of the fee (which as I have found would have been paid in cash and not passed through the Company's books). Mr Holleran says he first heard of this assurance after completion. There was a delay in making any payment and MOD complained. Mr Holleran heard of her complaints through his sister and raised the matter with JJS and JAL.
120.	It is not in dispute that a total of £9,000 was paid to MOD in cash in 2000, one payment of £2,000 in May and a second payment of £7,000 in October. These payments were derived from cash payments received by the Company which were not passed through its books. 
121.	JJS and JAL maintain that the payments totalling £9,000 represented the compensation which they had agreed to provide MOD for her loss of the share of the commission payable by Mr Sulaiman. This was disputed by MOD in her Amended Reply where such payments were said to have been "on account of overdue expenses and unpaid salary" (Para 25(7) and 25(8)). MOD did not seek to maintain this case when being cross examined, but she did continue to maintain that these payments did not represent compensation for loss of the commission and were not accepted by her as such. I have no hesitation in finding that the payments totalling £9,000 were made to MOD, and accepted by her, as compensation in respect of her loss of her share of the commission. This is in accordance with the original Points of Claim where MOD stated (at para 26): "When the absence of commission was later raised by the Petitioner in 2000, she was paid some £9,000 in two instalments". 
122.	There was an issue whether £9,000 was adequate compensation. JJS and JAL said that MOD complained that she was due a further £1,000. JJS's explanation in para 75 of his first witness statement that the £9,000 was "scrupulously fair" because this equated to a gross sum of £15,590 before tax and that had the £30,000 commission been paid it would have been taxable does not withstand scrutiny. It was always envisaged that the £30,000 would be divided up without being passed through the Company's books. Nor do I find JAL's explanation convincing: he said that he and JJS had only received a benefit of £7,500 resulting from the reduction of the sum payable to Mr Sulaiman by £30,000. But the loss to MOD from the loss of commission was £10,000. 
123.	In any event, the matter was not pursued by MOD until shortly before the presentation of the present petition in November 2006. It is also to be noted that MOD also levelled no complaint prior to that time about the fact of the involvement of JJS and JAL in the purchase of Aria House or suggested that the Company should have been involved in the purchase, even though on her own case she had known of the involvement of JJS and JAL since July 1999.
124.	Before leaving the Aria House transaction, there is one other factual aspect with which I should deal, namely the financial capacity of the Company and MOD at the relevant time. Whether these matters are properly to be taken into account as a matter of law is a question to which I return below. I have already mentioned that the affairs of the Company were conducted in such a way that profits were distributed as and when they were made such that the Company never built up any substantial reserves. The Company's audited accounts for the years ending 31 March 1999 and 31 March 2000 show that the Company had bank balances of £1,555 credit on 31 March 1999 and £1,972 on 31 March 2000. The balance sheet showed a negative net worth of £34,006 in March 1999 and £56,151 in March 2000. I find that in 1999, when the Aria House transaction was being undertaken, the Company could not as a matter of fact have participated in the transaction without funding from its shareholders. Mr Holleran candidly acknowledged that had the question been raised, he would have had no objection to the Company (as opposed to JJS and JAL) being involved as co-venturer or co-shareholder in the purchasing vehicle, as long as everyone put up suitable guarantees. 
125.	When giving evidence, MOD suggested that she could have raised sufficient money to participate in the transaction. She pointed out that the sums actually provided by each of JJS and JAL personally were not large (they were in fact £51,125 representing one quarter of £205,000 paid on exchange - although after the lending from Nat West and M Holleran Ltd was in place - this fell to £42,500 being contributed from their own resources - see APOD para 36(1)). She said when giving evidence that she could have raised this by remortgaging her home (which she said had equity of around £40,000 in the early 1990s) and borrowing sums from her brother. This is to be contrasted with what is recorded by MOD in her notes of a meeting between JJS, JAL and MOD on 10 January 2006. MOD records (on p 1) that: "I pointed out that I felt that I should have been included in the deals that came through [the Company] eg EHM Ltd and Aria House…" 10 lines further down she records: "They [i.e. JJS and JAL] felt that I should have got involved in property over the years and I pointed out that I didn't have the money" (my emphasis). In the course of cross examination about the finances required to purchase Aria House, she accepted that she had never herself taken on the sort of financial burden it would have involved. Having heard MOD give evidence, I have no doubt that she would not in fact have been prepared to take on the risk to herself personally which the acquisition of Aria House would have entailed. She had no appetite for property investment and was generally conservative in her approach to risk. More specifically I find that she would not have been prepared to put her home at risk or been willing to undertake the significant guarantee liabilities involved in enabling the Aria House transaction to go ahead. 
126.	For these reasons, if relevant to the issues I have to decide, I find as a fact that had the opportunity of being involved in the acquisition of Aria House been presented to the Company or to MOD personally, the Company and/or MOD would not have been willing or able to accept that opportunity. The Company clearly could not have proceeded with acquisition without the participation of Mr Holleran (and his brother). For the Company to have become involved as the co-venturer with Mr Holleran and his brother under the proposal made by Mr Holleran, (i) MOD would have had to undertake guarantee liabilities which I find she would not have been prepared to enter into; and/or (ii) shareholder funding would have been required which would have involved MOD putting up one third of the funds which the Company would have to provide and I find that she would not have been willing to do this. 
The EHM relationship
127.	The background to the complaints levelled against JJS and JAL regarding the EHM relationship is as follows.
128.	Mr Eugene Harrington had been a personal friend of JAL since 1973 and had been a client of JAL when he worked at the Balham branch of BOI. MOD also knew Mr Harrington from the time she worked at BOI.
129.	Murray Harrington & McNamee Ltd, a company of which Mr Harrington was a director and shareholder, had also been a client of BOI Balham branch until they moved their account to Barclays in 1984. Murray Harrington and McNamee Ltd went into receivership in 1996 as a result of which Mr Harrington lost most of his personal wealth and his personal residence was heavily mortgaged.
130.	Mr Harrington was at no stage a client of the Company. All his financial and mortgage insurance business was at all material times dealt with by Noel McGinn, an insurance broker who was a personal friend of his. 
131.	After Murray Harrington & McNamee collapsed, Mr Harrington approached various banks to provide financial support to start a new company. These approaches were fruitless because Mr Harrington was unable to provide any meaningful security. 
132.	Having exhausted his other contacts, Mr Harrington approached JAL to see if he would assist. I accept JAL's evidence that this approach was made to JAL in his personal capacity as a friend of Mr Harrington and not in his capacity as director of the Company. JAL had resources at his disposal, mainly through his property interests owned jointly with JJS, and accordingly introduced JJS to Mr Harrington. JAL and JJS agreed to participate in the formation of the new company. Eugene Harrington Marketing Ltd ("EHM") was incorporated on 15 August 1996. Its share capital comprised 100,000 shares with a nominal value of £1 each which was issued, fully paid, as to 51% to Mr Harrington, 19.5% to each of JAL and JJS and 10% to Anthony O'Mara (who became the managing director). They all became directors of EHM. A shareholders' agreement dated 25 October 1996 recorded the arrangements agreed between the four shareholders.
133.	I find that JAL and JJS did each provide initial capital of £19,500. EHM also required bank finance for the purpose of its business. Facilities were arranged with Allied Irish Bank ("AIB"). JJS and JAL provided personal guarantees to support those facilities. JJS and JAL have asserted at various times that EHM's overdraft facility was £500,000 and that they put up their joint property portfolio as security. I find that these assertions are grossly exaggerated, caused partly by confusion over dates and partly because they were keen to emphasise their financial commitment towards EHM. In the absence of contemporaneous documentation it is not easy to establish the precise position. JJS and JAL relied on a letter from AIB dated 24 August 2006 offering EHM facilities of £1.258m (£500,000 by way of overdraft and a loan facility of £750,000). The letter shows that AIB held existing security in the form of a guarantee from JJS, JAL and Mr Harrington in the sum of £500,000 plus interest. It is by no means clear that a guarantee in this sum had been provided by JJS and JAL in 1996. I note from EHM's accounts that its bank borrowings were as follows: £54,927 (as at 31 October 1996), £170,775 (as at 31 October 1997), £160,825 (as at 31 October 1998) and £143,631 (as at 31 October 1999). On any view, it would seem that JJS and JAL were not as exposed under their personal guarantees to the extent they sought to suggest (i.e. £500,000). 
134.	In cross examination of JJS and JAL, it became apparent that they had not provided any new security to AIB to support their guarantee liability. In 1996 AIB already had security over property acquired by the property partnership (i.e. the partnership between JJS, JAL and the McCarthy Brothers). Even if this security (the documentation relating to which I have not seen) extended to all sums owed by JJS and JAL to AIB (including liability under the EHM guarantee), the extent of the security provided as at the time AIB extended facilities to EHM in late 1996 was shown to be limited to the Trolley House Pub. But it does appear from AIB's letter dated 24 August 2006 (and another letter from AIB dated 4 April 2001) that properties acquired by JJS and JAL after 1996 were charged in favour of AIB to support their liability under the EHM guarantee.
135.	EHM's business was that of retail distribution of construction tools and equipment. Its business was not in any sense in competition with that of the Company.
136.	Although MOD, when giving evidence, suggested that she had been unfairly denied the opportunity of participating in EHM, that was not her pleaded case and Mr Clutterbuck did not seek to pursue it. The essential thrust of the case advanced by MOD is twofold: (i) that the amount of time devoted by JJS and JAL to the affairs of EHM was detrimental to the Company's interests and in breach of the original understandings; and (ii) the type of work which they did for EHM was work which should have been provided under the aegis of the Company, thereby earning fees for the Company: instead they themselves earned a significant salary and enjoyed the enhanced capital value of their shares in EHM - this was said to be in breach of the original understandings and a breach of fiduciary duty on the part of JJS and JAL. I next make my findings of fact relevant to the issues so raised.
137.	There are agendas of meetings relating to the setting up of EHM's business held on 9 October 1996, 15 October 1996 and 11 December 1996 to which JJS and JAL were referred in cross examination. These show, as was accepted by JJS and JAL, that one or both of them were responsible for a number of matters including arranging credit terms from suppliers, pursuing their contacts in promoting the business of EHM, carrying out credit checks and setting credit limits on customers, setting up a computer system for accounting information and providing monthly profit and loss reports and weekly cash flow reports and break even analysis.
138.	When cross examined about these matters, JJS said, and I accept, that he and JAL had been asked by Mr Harrington as ex bankers to try to negotiate better credit terms to avoid the problems which Mr Harrington had faced with his former company which had collapsed because of substantial bad debts. This was not something that JJS and JAL had done before, but they were able to introduce themselves to financial controllers as ex bankers and talk the same language. As for pursuing contacts in promoting the business of EHM, the vast majority of such contacts as they had in the construction industry were former clients from their banking days. There were only "a sprinkling" of clients of the Company in the construction industry who might be interested in purchasing goods from EHM. As for setting up the computer system and producing financial reports as described above, JJS said that once the computer was up and running (which, it would seem occurred in the first half of 1997), he had a modem link to his home and was able to produce the financial reports at home from information which had been inputted into the computer or from information provided by email sent to his home by EHM's financial controller. 
139.	MOD has asserted that Mr Harrington was a "major potential client" of the Company. I reject that assertion. Mr Harrington had his own insurance broker, Noel McGinn. In 2000 JAL did introduce Mr Harrington to Mr Brudenall, the life and pensions consultant used by the Company in return for a commission where transactions were undertaken. But the introduction came to nothing and instead Mr Harrington used Noel McGinn. 
140.	JJS and JAL accepted that there were aspects of the work which he and JAL did for EHM which might have been done for a client of the Company, such as producing financial and business reports and arranging bank finance. However, it does not follow that this type of work could realistically have been passed through the Company. Neither EHM, nor Murray Harrington & McNamee, were ever clients of the Company. I find that EHM was never a potential client of the Company and it is wholly unrealistic to suggest that EHM would have engaged the Company to do that type of work. In this respect, it is perhaps not without significance that MOD in cross examination, and shortly after having been shown the agendas to which I have referred above, accepted that the activities of JJS and JAL as directors of EHM were not the same business as that of the Company.
141.	JJS accepted in cross examination that in the first six months or so his role in EHM was that of an executive director. Both he and JAL said, and I accept, that thereafter their involvement substantially diminished and their roles were more akin to those of a non executive director. They continued to attend directors' meetings of which there were 7 in 1997, 8 in 1998, 10 in 1999, 6 in 2000 and 9 in 2001. JJS said that after the initial 6 month period, he would typically spend a maximum of 7 hours a week on EHM business of which about 5 hours would involve work at home and no more than 2 - 3 hours at EHM's premises (and more recently the amount of time spent there diminished further). He described himself as a "workaholic" and said, which I accept, that he would often work in the evenings on EHM matters. JAL, who lives closer than JJS to EHM's premises, said that he would typically visit EHM's premises once or twice a week for about half an hour. He repeatedly emphasised that once EHM's business had been established, apart from JJS's continuing role in producing financial reports, they had very limited involvement as the business was being run by Mr Harrington and Mr O'Mara the managing director. I accept this evidence as to their involvement in EHM.
142.	MOD relied on the significant remuneration received by JJS and JAL as directors of EHM to suggest that their involvement was greater than they were prepared to admit. According to their tax returns, JJS and JAL each received the following from EHM:
Tax year	£	
2000-1	26,765	
2001-2	15,000	
2002-3	45,756	
2003-4	33,505	
2004-5	40,536	
2005-6	45,438	
143.	The accounts of EHM show that no dividends were declared on its shares in this period. JJS and JAL maintain that the relatively large sums received by them as directors of EHM do not reflect the limited work they have carried out as such but are mainly attributable to the investment and continued financial support which they are giving to EHM. In this regard I note that the facilities granted by AIB in 2006 to which I have already referred required a new guarantee from JJS and JAL of £700,000 plus interest (supported by security over their jointly owned properties). I accept their explanation. The fact that they have received substantial sums from EHM as directors does not alter my findings as to their involvement which I have made above.
144.	There is one further matter which I should mention involving EHM. In 2000, JJS and JAL purchased in their own names from EHM's pension scheme the premises of EHM at Unit 10, Greenlea Park Industrial Estate, London SW19 2JD for £756,000 (financed by a bank loan). The premises are let to EHM in return for rent (in the last few years of the order of £93,000). MOD's pleaded case raises a complaint against JJS and JAL in relation to this transaction but this was not pursued by Mr Clutterbuck in his closing submissions.
145.	There is an issue as to MOD's knowledge of the involvement of JJS and JAL in EHM. In the course of her cross examination, she accepted the following.  MOD accepted that she knew that Mr Harrington had got into financial trouble and approached JAL for assistance. She also knew in 1996 that JAL and JJS had become directors of EHM. Her evidence of the time at which she became aware of the following matters was not consistent: in preliminary questions she suggested it was 1999/2000 but later said that it was in 1996: I find that it was the latter (as MOD said the Irish community was a close one). She said that she was aware that JJS and JAL were "spending a lot of time at EHM". She was so aware because sometimes JJS and JAL told her they were there and because others also told her: in particular, Eileen Sullivan (MOD's close friend), whose husband Frank Sullivan was a good friend of Mr Harrington, told her that JJS and JAL were spending time there to set up the business. By about 1999 at the latest she became aware that they were receiving large salaries as directors. Although she knew of these matters, I find that she did not know in any detail of the types of activity which JJS and JAL were undertaking as directors. But she must have known that the assistance which they were providing involved the use of their general business expertise.
146.	When asked in cross examination why she did not complain, MOD said she had made "noises" to JJS and JAL about the amount of time they were spending at EHM. I find that at no time until shortly prior to the presentation of the petition did MOD make any serious complaint to JJS and JAL about this matter. MOD sought to attribute the decline of the Company's business to JJS and JAL's involvement with EHM. When she was shown the Company's results showing an increase in turnover in the years after 1996, her response was the results would have been better if JJS and JAL had devoted all their energies to the Company's business.
The Holleran relationship
147.	The thrust of MOD's complaint in APOC in relation to the Holleran relationship is that JJS and JAL carried out Company work outside the Company for Mr Holleran and his companies for their personal benefit, in particular in relation to matters occurring from about 2000 onwards. In a supplemental witness statement served shortly before the trial MOD sought to expand the scope of this complaint by suggesting that JJS and JAL had similarly carried on Company work in other respects for Mr Holleran and his group of companies and for other persons for their own personal benefit. I do not think it unfair to say that what formed the basis of these complaints is that MOD believed that the apparent wealth of JJS and JAL could not otherwise be explained.
148.	Mr Holleran and his companies were longstanding clients of the Company. JJS and JAL on behalf of the Company regularly provided business and financial advice and services to Mr Holleran and his companies in return for which the Company received fees which were on occasion substantial. For example, in 1999/2000 the Company earned a fee of around £65,000 in connection with assistance provided to Mr Holleran in connection with the purchase of contracts from Eade Pipelines Ltd (in liquidation).
149.	There is no doubt that the relationship changed in 2000 and that the fees received by the Company from Mr Holleran and his companies substantially decreased. The reasons for this are a matter of some controversy, but first I must do a little ground clearing.
150.	In response to the allegations pleaded in APOC concerning the Holleran relationship, JJS and JAL in APOD (para 40) asserted, in summary, that in May 2000, there was an agreement between JAL on behalf of the Company and Mr Holleran that:

i)	Mr Holleran would make a final one-off payment to the Company of £10,000 for future consultancy fees;
ii)	Mr Holleran would introduce clients to the Company;
iii)	Where the introduced clients were companies in which Mr Holleran had a personal stake, the Company would receive 50% of any introduction fees paid by banks on any financing that the Company arranged;
iv)	In consideration of the above, there would be no further charge to Mr Holleran and his associated business for financial and business advice once the payment of the £10,000 had been exhausted.
I shall refer to this alleged agreement as the "Holleran Agreement".
151.	The plea in APOD relating to the Holleran Agreement perhaps unsurprisingly, in view of its apparent uncommerciality, set a hare running in this litigation and no doubt fuelled MOD's suspicions about JJS and JAL. But the evidence at trial eventually showed that the position was nowhere near as sinister as MOD might have been led to believe. It is clear on the basis of that evidence that there was no such thing as the Holleran Agreement. My findings, which are derived principally from the evidence of Mr Holleran, are as follows.
152.	As the Holleran group of companies (the "Holleran Group") grew in size, the services provided by the Company were no longer required. In particular, the Holleran Group employed in-house accountants who provided the Holleran Group with the type of advice which had formerly been provided by the Company. In about 2000, the Holleran Group acquired Fabricon Ltd who employed chartered accountants in Luton with whom they had a good relationship. The Holleran Group was in a strong financial position and had ample banking facilities.
153.	There was a payment of £10,000 in about 2000. This was paid by the Holleran Group to settle outstanding fees due to the Company. As Mr Holleran said, this payment brought the matter of outstanding fees for small areas of work carried out by the Company to closure.
154.	From about 2000 onwards, Mr Holleran did on occasion turn to JJS and JAL for advice. Where facilities were required for the occasional property transactions undertaken by the Holleran Group, Mr Holleran did turn to JJS and JAL for advice in raising finance. In particular, they assisted in raising finance (a) in about 2005 for the acquisition and development by Brooke Homes Ltd (part of the Holleran Group) of land at St Richards Rd, Deal, Kent and land adjacent to the Wigmore Reservoir, Rainham, Kent; and (b) in about 2005/6 for the acquisition and development of land by Brooke Homes Development Ltd (also part of the Holleran Group). In each case, the Company received an introduction fee from the bank in question of 50% of the facility fee paid by the relevant Holleran company. No separate fee was charged by the Company to the relevant Holleran company, but Mr Holleran said this was not untypical of the arrangements that had existed with the Company before 2000. Mr Holleran emphasised that he considered that the Company received a fair price for the work which JJS had undertaken in connection with these transactions as there was not much work involved - particularly in relation to the Brooke Homes Development Ltd transaction, for which the Company received £8,050, because the managing director at Investec (the bank in question) had been managing the Holleran Group for 10 years and there was never going to be any difficulty in obtaining the loan. In cross examination, MOD accepted that she had no complaint in relation to these transactions.
155.	Mr Holleran also said that had a substantial piece of work been done by JJS and JAL, he would have expected them to charge for their work. There were one or two occasions when Mr Holleran asked JJS to review offers of banking facilities to check whether the rates being offered were reasonable. One example was a loan offer from AIB in June 2004 upon which JJS provided his views in writing as to the terms and conditions being proposed. No fee was charged for this advice, but Mr Holleran said that he would not have expected to be charged for this type of advice before 2000 as little work was involved on the part of JJS.
156.	Prior to 2000, Mr Holleran would refer clients to the Company. That did not change after 2000 and was part of the good working relationship between Mr Holleran and JJS and JAL. The Company benefited from these referrals after 2000 in the form of fees received from the referred clients: examples are Jeremy Browne (£20,000) together with an associated fee received from Butterfield Bank (£18,000), Pat Keary (£7,500) and SOS Ltd (£10,000).
157.	Accordingly, I find that, as regards the relationship with Mr Holleran, nothing really changed in 2000 other than that the services previously provided by the Company were largely no longer required. 
158.	MOD was clearly aware that the Company was not necessarily charging the Holleran Group for such services as JJS did provide. A manuscript note she prepared as part of her record of events for 27 July 2005 shows that she thought that Mr Holleran "didn't need us" and that JJS explained that the Company would receive a fee from the bank (for the Brooke Homes Ltd transaction) but would not charge Mr Holleran separately in view of his referral to the Company of Jeremy Brown.
159.	I have already mentioned that the thrust of MOD's complaint is that JJS and JAL were providing services to Mr Holleran and the Holleran Group in return for which they received substantial benefits. I have no hesitation in rejecting that complaint. The services provided by JJS and JAL to Mr Holleran and the Holleran Group after 2000 were limited as I have described above. In her latest witness statement, MOD provided a litany of other examples of alleged involvement by JJS and JAL with companies in the Holleran Group other than those I have already mentioned, including Fabricon Ltd, Pegasus Pipeline Ltd and DVS Pipelines Ltd. This was mere speculation on her own part and not supported by any documentation. It was said that the Holleran Group had not disclosed relevant documents. However, Mr Holleran denied (as did JJS and JAL) that there had been any such involvement. I accept that denial. 
160.	I also accept Mr Holleran's evidence in this context that no payments or other benefits were given to JJS and JAL personally (directly or indirectly) by himself or companies in the Holleran Group. 
161.	JJS and JAL were cross examined at length about their personal resources with a view to establishing that their wealth could only be explained by having derived personal benefits from Mr Holleran or companies in the Holleran Group or indeed from others in respect of work of the type they carried out for the Company. There is not a shred of actual evidence to support this suggestion, other than the circumstantial evidence that their wealth can be explained in no other way.
162.	Mr Clutterbuck suggested that JJS and JAL relied on their tax returns to establish that they had no income undisclosed in these proceedings, but was unable to show me where such reliance was in fact placed (cf paras 121 and 124 of the first witness statement of JJS). The tax returns were required to be disclosed in response to orders for specific disclosure and were only relied on by JJS and JAL to show their income from EHM. It would appear from other evidence I heard that the tax returns do not disclose their full income, although it is not an issue for me to decide whether they should have made such disclosure in their tax returns: there are the cash payments made to JJS and JAL (as well as MOD) which were not passed through the Company's books and there were receipts offshore which do not appear on their returns.
163.	But even taking these matters into account, I reject the suggestion that the wealth of JJS and JAL can only be explained by their having derived personal benefits from Mr Holleran or companies in the Holleran Group or indeed from others in respect of work of the type they carried out for the Company. As regards the latter, the evidence in MOD's latest witness statement to the effect that JJS and JAL did such work for others for which they must have been paid is mere speculation and not supported by a shred of actual evidence. I accept JJS and JAL's denial that they received any personal benefits from such minimal involvement as they may have had in such matters, none of which in any event amounted to work of any substance or assisted towards any effective outcome.
164.	I consider it unnecessary for me to analyse in detail the evidence as to the wealth of JJS and JAL and the sources of that wealth. Suffice it to say that the evidence I have heard satisfies me that their accumulated wealth can be explained from sources other than those suggested by MOD. Whilst they worked with BOI, JJS and JAL were in more senior positions than MOD earning a higher salary than her. JJS and JAL were married to doctors who earned a substantial salary throughout the relevant period. The property interests of JJS and JAL were in general successful and provided a substantial rental return. They received the substantial sums by way of directors' remuneration from EHM. These explain the substantial difference between the comparative wealth of JJS and JAL as compared with MOD.
165.	JJS and JAL were questioned at length about was described as their affluent lifestyle, including the purchase by each of them of a property in Florida, and in the case of JJS a yacht for US$ 268,455, and the funding of their children's education. Their lifestyles were not in fact as affluent as MOD sought to portray. There was nothing in the evidence which could lead me to find that their wealth could only be explained by their having received personal benefits from sources other than those described above and in particular from other persons in respect of work of the type they carried out for the Company.

The GH Law relationship
166.	Mr Way of GH Law has known JAL, JJS and MOD for many years. It is common ground that GH Law provided legal services to them and the Company without charge (save for disbursements) in return for client introductions to GH Law. The essential thrust of MOD's complaint (as it emerged at trial) is that JAL and JJS have benefited personally or through Kerwick from this arrangement out of all proportion to the benefits which she has directly or indirectly obtained.
167.	It is not possible to say with precision what work GH Law did carry out under these arrangements. There are print outs from GH Law of transaction reports which identify disbursements incurred in relation to a number of matters, but not the time spent on these matters. These print outs show that GH Law carried out work for JAL and JJS' benefit principally in relation to conveyancing transactions for Kerwick and the property partnership. Of benefit to MOD, JJS and JAL was the work carried out by GH Law for the Company's pension fund, in particular in connection with Scott's Sufferance Wharf and more recently a warehouse at Tait Rd, Croydon which was acquired by the Pension Fund. On occasion GH Law acted for the Company, one example being to chase an outstanding debtor. MOD accepted that she had the benefit of GH Law's services in relation to an issue that had arisen in connection with her credit card.
168.	When cross examined, Mr Way said that not a lot of work was involved on the part of GH Law and it covered a long period of time. When asked for a rough figure which GH Law might have normally charged for all the services provided by GH Law under these arrangements, Mr Way suggested it was of the order of £5,000 to £6,000.
169.	Overall, it would certainly appear that JJS and JAL benefited more, directly or indirectly, from the GH Law relationship than did MOD. MOD was aware that GH Law did not charge for the work relating to the Pension Fund or for the work they did for her personally. MOD was also aware from the early 1990's that GH Law was carrying out conveyancing work for Kerwick and the property partnership free of charge, but she says she was not aware of the extent of that work. She did not complain about these matters until shortly before the commencement of these proceedings.
170.	In paragraph 44 of APOC MOD makes a separate complaint relating to GH Law about the purchase of a flat by JJS and JAL in Kensington. This was not pursued at trial.
The decline in the Company's business
171.	It is apparent from the Company's turnover that its business declined from about 2002 onwards. Other than the matters which I have already mentioned above, no allegations are made by MOD against JJS and JAL in APOC concerning the causes of the decline. I have already dealt with the factual question of whether JJS and JAL were doing Company work for others outside the aegis of the Company. The causes of the decline in the business may be of relevance to that issue. MOD accepted that the residential mortgage business (for which she was largely responsible) declined in this period. The life assurance side of the business could not be expanded because MOD had been unable to obtain the requisite qualification to enable the Company to sell such business in the early 1990's and this work had to be passed to an outside consultant, a Mr Brudenall, in return for a referral fee. JJS and JAL said that the banking and commercial contacts which they had built up during their working lives were starting to retire and that they no longer had the influence they enjoyed when the Company was set up. JAL said that the decline was also attributable to the fact that the type of loans which they had organised were freely available without a client needing to involve a broker. JJS said that banks and insurance providers were marketing their products directly to clients, effectively cutting out the role of brokers and consultants such as the Company. Once the current dispute had broken out, it seems that word of it spread quickly around the close knit Irish community with the result that the business effectively dried up. In 2006 MOD found employment elsewhere.
The law
172.	The petition seeks relief under s 459(1) of the Companies Act 1985 (now s 994 of the Companies Act 2006):

 "(1) A member of a company may apply to the court by petition for an order under this Part on the ground that the company's affairs are being or have been conducted in a manner which is unfairly prejudicial to the interests of its members generally or of some part of its members (including at least himself), or that any actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial."
173.	In the present case, the unfair prejudice complained of includes, in summary: (i) the acquisition by JJS and JAL of their interest in Aria House rather than through the Company; (ii) the receipt of benefits by JJS and JAL from their involvement in EHM in respect of work which should have been passed through the Company; (iii) a similar complaint as (ii) in relation to their involvement with Mr Holleran and his group of Companies; and (iii) JJS and JAL obtaining for themselves the free services of GH Law in return for the Company referring clients to GH Law. MOD claims that in respect of these matters JJS and JAL acted in breach of the fiduciary duties they owed to the Company as directors. The alleged breaches of duty are of central importance to the unfair prejudice claim, although MOD also complains that certain aspects of the involvement of JJS and JAL in such matters also gave rise to unfair prejudice in that it constituted a breach of the understandings between the participants at the time the Company was established. MOD also relies on certain alleged "frauds" on the part of JJS and JAL as giving rise to unfairly prejudicial conduct.
174.	The law on unfair prejudice and breach of fiduciary duty in this sort of context has recently been comprehensively reviewed by Warren J in Wilkinson v West Coast Capital and others [2005] EWHC 3009 (Ch): see in particular at paras 230 - 303. In the light of that review, it is unnecessary for me to address the legal position in anything like the same level of detail in this judgment. However, the arguments which have been addressed to me on breaches of fiduciary duty on the facts of this case are far from straight forward and it is therefore necessary for me to summarise the salient legal principles and address certain aspects of the law in a little more detail where these are relevant to the issues raised in the present case.  
175.	The two strands of fiduciary duties of directors which are relevant in the present case are the "no conflict rule" and the "no profit rule". In Ultraframe (UK) Ltd v Fielding [2005] EWHC 1638, Lewison J described the two strands as follows:
1305. In Chan v. Zacharia (1984) 154 CLR 178, 198 (cited with approval in Don King Productions Inc v. Warren [2000] Ch 291) Deane J said that the fundamental rule that obliged fiduciaries to account for personal benefit or gain had two separate themes:

"The first is that which appropriates for the benefit of the person to whom the fiduciary duty is owed any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict: the objective is to preclude the fiduciary from being swayed by considerations of personal interest. The second is that which requires the fiduciary to account for any benefit or gain obtained or received by reason of or by use of his fiduciary position or of opportunity or knowledge resulting from it: the objective is to preclude the fiduciary from actually misusing his position for his personal advantage."

1306. These two strands have been conveniently labelled the "no conflict rule" and the "no profit rule"; and must be considered separately: see Don King Productions Inc v. Warren and In Plus Group Ltd v. Pyke [2002] 2 BCLC 201, 220. 
176.	The distinction between the "no conflict rule" and the "no profit rule" is not always easy to identify and there are a number of reported decisions where the distinction has not been rigidly observed. In many cases (and the present case falls into this category) the two rules are capable of being applicable. As the above citation makes clear, I should consider them separately and argument has been addressed to me on this basis.
177.	The "no conflict rule" is encapsulated in the well-known passage from the speech of Lord Cranworth in Aberdeen Railway Co  v Blaikie Brothers(1894) 1 Macq 461 at 471:
"[It] is a rule of universal application, that no one, having [fiduciary] duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting, or which may conflict, with the interests of those whom he is bound to protect.

So strictly is this principle adhered to, that no question is allowed to be raised as to the fairness or unfairness of a contract so entered into."
178.	Lord Upjohn in Boardman v Phipps [1967] 2 AC 46 at 124B-D, having referred to the first paragraph of the above citation, added the following explanation:
The phrase 'possibly may conflict' requires consideration. In my view it means that the reasonable man looking at the relevant facts and circumstances of the particular case would think that there was a real sensible possibility of conflict; not that you could imagine some situation arising which might, in some conceivable possibility in events not contemplated as real sensible possibilities by any reasonable person, result in a conflict."
179.	Warren J in the Wilkinson case added the following further explanation:
[252] It is important to note that the "no conflict" rule can apply to a fiduciary in some situations where he neither makes a profit from trust property nor from his fiduciary position. This is because he has a duty to protect those to whom his duties are owed. He cannot prefer his own interests to those of his beneficiaries. His problem arises where he enters into a transaction inconsistent with his duty of loyalty to his beneficiaries. One of the difficulties, however, for the fiduciary (and for the court) may be in identifying, in any given situation, whether the relevant element of conflict is present.

[253] The last sentence of the citation from the judgment of Lord Upjohn [cited in the immediately preceding paragraph] above is of significance in that context. A company with a wide objects clause could, in theory, diversify its business in limitless ways if the necessary funding were available. But a director of a company selling fashion clothing for women could hardly be in breach of the "no conflict" rule if he took a stake in a company distributing farm machinery, even if the company did have such a wide objects clause. There would simply be no "real sensible possibility" of conflict. In contrast, if the board of the fashion clothing company had been actively considering diversification into the distribution of farm machinery, there would be a real sensible possibility of conflict in a director taking a stake in such a company. He could escape the conflict only by resigning as a director (although if he had by then learnt of a relevant business opportunity, at least if that was by virtue of his directorship, the "no profit" rule might apply).
180.	The "no profit rule" is discussed extensively in Ultraframe at paras 1318 to 1322 (cited in Wilkinson at para 255). In the latter case, Warren J referred to the following summary of the rule in Lewin on Trusts:
If a trustee or other fiduciary without authority makes a profit directly or indirectly from the use of property subject to the trust or other fiduciary relationship, or in the course of the fiduciary relationship and by reason of his fiduciary position, then he is not permitted to retain the profit.
181.	Mr Clutterbuck, though at times he wavered on the point, submitted that there is no requirement to consider the scope of the company's business in applying the "no profit rule". He accepted that the scope of the company's business was relevant in applying the "no conflict rule". In support of his submission that the scope of the company's business did not fall to be considered in applying the "no profit rule", Mr Clutterbuck relied on the speech of Lord Cohen in the well known case of Boardman v Phipps [1967] 2 AC 46. Lord Cohen, having referred at p101C to 102D to the decision in Regal (Hastings) v Gulliver [1967] 2 AC 134n, stated:
Mr. Bagnall argued that the present case is distinguishable. He puts his argument thus. The question you ask is whether the information could have been used by the principal for the purpose for which it was used by his agents. If the answer to that question is no, the information was not used in the course of their duty as agents. In the present case the information could never have been used by the trustees for the purpose of purchasing shares in the company; therefore purchase of the shares was outside the scope of the appellants' agency and they are not accountable.

This is an attractive argument, but it does not seem to me to give due weight to the fact that the appellants obtained both the information which satisfied them that the purchase of the shares would be a good investment and the opportunity of acquiring them as a result of acting for certain purposes on behalf of the trustees. Information is, of course, not property in the strict sense of that word and, as I have already stated, it does not necessarily follow that because an agent acquired information and opportunity while acting in a fiduciary capacity he is accountable to his principals for any profit that comes his way as the result of the use he makes of that information and opportunity. His liability to account must depend on the facts of the case. In the present case much of the information came the appellants' way when Mr Boardman was acting on behalf of the trustees on the instructions of Mr Fox and the opportunity of bidding for the shares came because he purported for all purposes except for making the bid to be acting on behalf of the owners of the 8000 shares in the company. In these circumstances it seems to me that that the principle of the Regal case applies…" (emphasis added).
182.	Mr Clutterbuck relies particularly on the passage I have emphasised, which he says encapsulates the test which is to be applied when considering the "no profit rule". He says that this statement was made by Lord Cohen in response to Mr Bagnall's argument which sought to limit the rule to the use of information within the scope of the agency.
183.	However, it is to be noted that in Boardman v Phipps, Lord Cohen had said at p 100:
As Wilberforce J said, the mere use of any knowledge or opportunity which comes to the trustee or agent in the course of his trusteeship or agency does not necessarily make him liable to account.
He goes on to say that had the company in that case been a public company and had the appellants bought the shares on the market they would not have been accountable. This does, I consider, indicate that Lord Cohen in the emphasised passage was not seeking to lay down any rigid test, and as he says, liability to account will depend on the facts of the case.
184.	One of the reasons which underlay Mr Clutterbuck's submission was to meet Mr Mallin's reliance on Aas v Benham [1891] 2 Ch 244 and Trimble v Goldberg [1906] AC 494. I gratefully adopt Warren J's summary in Wilkinson of the facts in Aas. The defendant (Mr Benham) was a partner in a ship-broking firm which hoped to act in negotiations between the Spanish and Portuguese Governments and ship builders. He had also been approached for advice by a shipbuilding company. He realised as a result of information he learnt while in Spain on behalf of the ship-broking firm that it would be advantageous for the ship-building company to reconstitute itself as a builder of warships and to acquire for this purpose a yard which he had discovered was available in Bilbao. He used that information to help write a prospectus for the ship-building company's reconstruction, and made profits for himself as a result of the reconstruction.
185.	Mr Mallin relied on the following passages in the judgments in Aas v Benham:
As regards the use by a partner of information obtained by him in the course of the transaction of partnership business, or by reason of his connection with the firm, the principle is that if he avails himself of it for any purpose which is within the scope of the partnership business, or of any competing business, the profits of which belong to the firm, he must account to the firm for any benefits which he may have derived from such information, but there is no principle or authority which entitles a firm to benefits derived by a partner from the use of information for purposes which are wholly without the scope of the firm's business, nor does the language of Cotton LJ in Dean v MacDowell warrant any such notion. By 'information which the partnership is entitled to' is meant information which can be used for the purposes of the partnership. It is not the source of the information, but the use to which it is applied, which is important in such matters. To hold that a partner can never derive any personal benefit from information which he obtains as a partner would be manifestly absurd. (per Lindley LJ at p 255 - 6)
(Earlier in his judgment at p255, Lindley LJ had said:
The answer, however, to this claim is short and conclusive. It was no part of the business of [the firm] to promote or reconstruct companies, nor to advise them how to improve the management of them. All such matters were quite foreign to the business of [the firm] . . . He never was in fact acting for his firm in this matter, nor did his partners ever suppose he was, or treat him as so acting . . .)
I think that when Lord Justice Cotton [in Dean v MacDowell] said that a partnership was entitled to the profits which arose out of information obtained by one of the partners as partner, he was speaking of information to which the partnership was entitled in the sense in which they are entitled to property. I think you can only read the sentence in which the expression occurs in that way. It is as follows: "Again, if he makes any profit by the use of any property of the partnership, including, I may say, information which the partnership is entitled to, there the profit is made out of the partnership property". The language, like all Lord Justice Cotton's language, is perfectly precise and neat. He is speaking of information which a partnership is entitled to in such a sense that it is information which is the property of the partnership - that is to say, information the use of which is valuable to them as a partnership, and to the use of which they have a vested interest. (per Bowen LJ at 257-8).
186.	Accordingly, Mr Benham was held not liable to account to his partners. It was no part of the firm's business to advise on corporate reconstructions or to build ships. Even though Mr Benham had learnt of the information whilst on the firm's business, he owed no fiduciary duty to his partners which prevented him from making use of the information as he did.
187.	In Trimble v Goldberg [1906] AC 494, the parties entered into a partnership to acquire "stands of land" for conversion into a township and subsequent re-sale. The land was acquired, along with shares in a company owning other stands in the same locality. One of the partners then bought that company's other stands himself, having been shown them while in Johannesburg for the purpose of finalising the terms of the partnership's acquisition. The partner was not liable to account because "the purchase was not within the scope of the partnership", even though he found out about the land while on partnership business and his personal purchase was an identical type of investment to that of the partnership (see at p499 per Lord Macnaghten).
188.	Even though Aas v Benham was not referred to by Lord Cohen in his speech in Boardman v Phipps, it was referred to by Lord Hodson and Lord Guest without any suggestion that it was wrongly decided. Lord Hodson first referred to Aas v Benham at p 107 and, having referred to the passage of the judgment of Lindley LJ in that case cited above , commented:
The case of partnership is special in the sense that a partner is the principal as well as the agent of the other partners and works within a defined area of business so that it can be determined whether the particular transaction is within or without the scope of the partnership. It is otherwise in the case of a general trusteeship or fiduciary position such as was occupied by Mr Boardman, the limits of which are not readily defined…
He returned to Aas v Benham at p 109G and, having referred to the passage in the judgment of Bowen LJ in Aas which I have cited, said (at p 110C-F):
Aas v Benham is an important case as showing that a partner may make a profit from information obtained in the course of the partnership business where he does so in a firm which is outside the scope of the partnership business. In that case the partnership business was ship-broking and the profit was made in a business which had no connection with that of the partnership. This shows the limitation which must be kept in mind in considering the sense in which each partner is agent of the partnership, but does not assist the appellants. Mr Boardman continued to be in a fiduciary position up to and including the time when the shares were purchased (March 1959), and the scope of the trust concerning which his fiduciary relationship existed was not limited in the same way as a partnership carrying on a particular business.

It cannot, in my opinion, be said that the purchase of shares in Lester & Harris was outside the scope of the fiduciary relationship in which Mr Boardman stood to the trust.
189.	Lord Guest, having cited passages from Regal (Hastings) Ltd v Gulliver to establish the general proposition that a fiduciary such as a trustee, director or agent, must (unless what he does is done with the full knowledge and consent of the other person i.e. beneficiaries, company, principal) account for profits acquired as a result of his fiduciary position and by reason of the opportunity and the knowledge resulting from it, had no hesitation in holding that the appellants held the shares as constructive trustees and were bound to account to the respondent. At p117E, Lord Guest said:

The appellants argued that as the shares were not acquired in the course of any agency undertaken by the appellants they were not liable to account. Analogy was sought to be obtained from the case of Aas v Benham where it was said that before an agent is to be accountable the profits must be made within the scope of the agency (see Lindley LJ at 255-6). That, however, was a case of partnership where the scope of the partners' power to bind the partnership can be closely defined in relation to the partnership deed. In the present case the knowledge and information obtained by Boardman was obtained in the course of the fiduciary position in which he had placed himself . . .
190.	In Wilkinson, Warren J commented as follows on the effect of these authorities: 
[281] So Aas v Benham is an illustration of the importance of defining the scope of the duty before being able to decide whether a person is in breach of it and in particular whether the "no conflict" rule or the "no profit" rule applies. In that case, the position was that Mr Benham's duty as a partner did not require him to treat the information and opportunity which he obtained and learned as acquired by him in his capacity as partner since that information and opportunity fell outside the scope of the partnership business…
[284] [Mr McCaughran] also says that there is nothing in the company law authorities "which in any way detracts from the principle in Aas v Benham". I am not sure that there is anything which warrants the epithet "principle" which can be derived from Aas v Benham. However, what it does establish, or reflect as existing law, is that the scope of the duty of a partner is circumscribed by the partnership agreement; and that the mere use of information or an opportunity obtained and acquired while acting in his fiduciary capacity does not necessarily mean that the partner cannot use that information or take advantage of that opportunity on his own account. The case possibly establishes, or re-affirms, a negative proposition, viz that there is no principle which entitles a firm to benefits derived from the use of information for purposes which are wholly outside the scope of the firm's activities.
[285] In applying that negative principle, one must act with care because the firm's activities may not be limited by the formal partnership agreement. For instance, if Mr Benham had been mandated, with a view to a possible extension of the firm's business, by his partners to investigate, on behalf of the firm, a possible investment in ship-building opportunities while in Spain and Portugal conducting business on behalf of the firm, the relevant activities might thereby have been extended to shipbuilding. Whilst the partners could not, in fact, have extended the scope of the business without Mr Benham's consent as a partner, and even though he might, on his return to England, refuse to agree to such an extension, it does not necessarily follow that he would have been entirely outside the constraints of the "no conflict" and "no profit" rules. Certainly, Aas v Benham is not authority for the proposition that he would have been free to act in his own interests in those circumstances.
191.	Warren J then went on to consider Regal Hastings v Gulliver. He comments (at para 287) that that was a case in which the directors came across the opportunity to acquire shares in Amalgamated in the course of carrying out their role as directors of Regal, "and in which the opportunity itself fell squarely within the scope of Regal's business". He referred [at para 290] to the speech of Lord Macmillan in Regal where he said (at p 153E-F):
The plaintiff company has to establish two things: (i) that what the directors did was so related to the affairs of the company that it can properly be said to have been done in the course of their management and in utilisation of their opportunities and special knowledge as directors; and (ii) that what they did resulted in a profit to themselves. (Emphasis added)
192.	Support for the view that the scope of the company's business is relevant to the application of the no profit rule is also to be found in Meagher Gummow & Lehane's Equity Doctrine and Remedies (4th Ed) at para 5-100 and in Finn on Fiduciary Obligations (1977) at paras 545 - 547. In the former, it is said:
Austin's suggestion ("Fiduciary Accountability for Business Opportunities" in PD Finn (ed) Equity and Commercial Relationships (1987) at 158ff) that the authorities permit the adoption of - and the courts should develop - an "expanded line of business" test (a director or officer may not take up an opportunity for profit if it is within the scope of the business of the company as currently planned and as planned to be carried on) has much to commend it. If the scope of a director's or officer's fiduciary obligation is defined by reference to what business does, and contemplates doing, nothing is to be gained by treating …. information acquired whilst acting as a director or officer of a company as property of the company….
193.	It follows from this somewhat lengthy citation of authority that I reject Mr Clutterbuck's submission that the scope of the company's business does not fall to be considered when applying the "no profit rule". I also reject his submission that the "principle" (or at least the negative proposition to be derived from Aas v Benham) should be confined to partnership cases and has no application to cases involving companies. I find that it is necessary to have regard to the scope of the company's business in applying the "no profit rule", although in so doing I recognise that I have to take into account at least the "expanded line of business" test. Where, as in the present case, the company operated as a quasi-partnership there seems to me all the more justification in reaching this conclusion.
194.	In reaching these conclusions, I have had regard to the "corporate opportunity" cases which are considered at length by Lewison J in Ultraframe (at paras 1332 - 1356) and Warren J in Wilkinson (at paras 256 - 269). It is unnecessary to refer to these in any detail in this judgment. I should however draw attention to the following phrases in the judgments in those cases, as attracting the application of the "no profit rule" (although on analysis some may more appropriately be identified as falling under the "no conflict rule") and which appear to me to support the conclusions I have reached:
[directors must not] "divert in their own favour business which should properly belong to the company they represent." (Cook v Deeks [1916] 1 AC 554) 
".. a director… is precluded from obtaining for himself … without the approval of the company… any property or business advantage either belonging to the company or for which it has been negotiating.." or "a maturing business opportunity which his company is actively pursuing" (Canadian Aero Services v O'Malley (1973) 40 DLR (3d) 371 at 382) (see also CMS Dolphin Ltd v Simonet [2001] 2 BCLC 704 at para 96)
195.	In Ultraframe, Lewison J concluded his review of these authorities at para 1355 as follows:
The law relating to the accountability of a director (or former director) for profits derived from the diversion of corporate opportunities is still developing. As the cases stand it is I think possible to draw the following conclusions:

If a person diverts to himself a business opportunity while in office, he may be liable to account for profits under the 'no conflict rule' or the 'no profit rule' or both;

The application of the 'no conflict rule' does not depend on establishing that the company has a proprietary interest in the business opportunity that has been diverted;

After a person ceases to be in office, he may be liable for the diversion of a business opportunity either under the 'no profit rule'; or because the business opportunity itself is to be treated as the property of the company (in the sense of an intangible asset) and hence is treated for this purpose as trust property."
196.	There is another aspect of the "no profit rule" which I need to consider. In Aas v Benham, the information used by Mr Benham does not appear to have been received by him in confidence whilst acting on behalf of the partnership. In Wilkinson, at para 281, Warren J commented:
…There is nothing in [Aas], in contrast with, for instance, Regal (Hastings) Ltd v Gulliver or Boardman v Phipps, to suggest that Mr Benham received confidential information on behalf of the firm or that negotiations were being carried out with third parties who dealt with him in the belief that he acted for the firm. Suppose, for instance, that Mr Benham had been provided with confidential information because he was a partner in the firm and that the provider would not have provided it to him in any other capacity; and suppose that that information had been instrumental in putting him into a position which enabled him to bring to fruition his formation of the company. It is far from clear that the decision would have been in favour of Mr Benham in those circumstances.
197.	Thus, Warren J left open the question of whether, had Mr Benham used information provided to him in confidence, as a partner, to make a profit, he would have been in breach of the no profit rule. On the facts as I have found them to be, it is necessary for me to consider further the law on the misuse by a fiduciary of information provided to him as such, and in particular the misuse by a fiduciary of information provided to him in confidence. 
198.	 The type of information which has been said to attract the operation of the rule has been described in Lewin on Trusts (18th Ed) at paras 20-44 to 20-46 as follows (citations omitted, but referring extensively to Boardman v Phipps):
If a trustee by reason of his position as such obtains an opportunity to purchase or otherwise acquire property from a third party, or obtains special knowledge or information which indicates that such a purchase or acquisition might be worthwhile, then the trustee will be disabled from retaining any benefit resulting from the purchase…. Sometimes the principle is applied where the fiduciary diverts to himself property which should have been, or attempted to have been, acquired for the beneficiaries. In other cases… the principle has been applied even though there was no practical question of the acquisition being made for the beneficiaries and there was no detriment to the beneficiaries. [There is then a reference to Regal (Hastings) Ltd v Gulliver and Boardman v Phipps ]….. 
In order to found liability under the above rule it is necessary to establish that the trustee was enabled to purchase property as a result of an opportunity or special knowledge or information acquired by him by reason of the trusteeship. What counts for this purpose however is not altogether clear. It is certainly not all knowledge or information which counts, and in general terms a trustee is allowed to use knowledge or information acquired during the course of the trusteeship for his own purposes or for the purposes of other trusts. There are perhaps two circumstances in which a trustee may be liable. The first is where a trustee obtains knowledge or information which is not available to the general public, but is obtained by him as confidential information in the course of his fiduciary relationship, and has special value in that it enables the trustee to assess the commercial feasibility of a purchase by him and the appropriate terms of a purchase offer, and thereby substantially contributes to the successful purchase by the trustee ; liability then attaches whether or not other matters such as the skill of the trustee also contribute to the successful purchase, and even though the purchase involves risk taking by the trustee despite the knowledge and information gained by him. The second is where a trustee obtains confidential information in the course of his fiduciary relationship and then enters into a purchase for his own benefit in circumstances where his personal interest conflicts or may conflict with his fiduciary duties… A trustee who obtains confidential information as trustee and then uses it for his own purposes or for the purposes of another trust may be exposed not only to a claim at the instance of the beneficiaries but also be exposed to a claim by the person who provides the confidential information and to whom the duty of confidence is owed…
If the trustee acquires property without using knowledge or opportunity that he has obtained as trustee, but which he has obtained in his personal capacity, or in some other fiduciary capacity, then he will not be accountable for the profit under the profit rule, and can be made accountable, if at all, only under the conflict rule…
It is to be noted that in these passages, the authors of Lewin extensively cite Boardman v Phipps which involved the duties of a general trustee. As I have already stated, the duties of a partner may be more limited by virtue of the limitations in the partnership deed on the scope of the partnership business (as in Aas v Benham) and the duties of a company director have to be considered in the light of the scope of the company's business (actual or contemplated). 
199.	In Finn on Fiduciary Obligations at para 547, the following is stated in connection with Aas v Benham and Trimble v Goldberg:
As a general rule it is irrelevant that the profit-making opportunity arises as a result of information derived as a partner or venturer. The important matter is whether or not that opportunity relates to a transaction falling within the scope of the business of venture. But to this general rule… there is an ill-defined exception. If the partner or venturer actually misuses his fiduciary position to exploit the opportunity he will be liable therefor irrespective of whether the profit-making transaction is within or without the scope of the business of venture.
200.	The ill-defined exception is discussed in Finn at paras 568ff and the following passages show the difficulties of identifying the scope of that exception:
A quite indefinite liability is now imposed on fiduciaries, irrespective of whether they have deprived their beneficiaries of some profit-making advantage if, in deriving that profit on their own account, they have made use of their fiduciary position… The scope of the liability is by no means certain. As will be seen, while the bulk of the cases involves some unconscientious conduct by the fiduciary in his representative capacity, no single strand runs through them.
Following consideration of Aberdeen Town Council v Aberdeen University (1877) 2 App Cas 544, described as a "plain case", Finn continues (at para 570):
It was seen in the previous discussion on benefits derived within the scope of duty that a fiduciary is not liable for a profit simply because the opportunity to acquire it presented itself during, and as a result of the performance of his duties.
Following consideration of the Blackacre/ Whiteacre example given in the speech of Lord Upjohn in Boardman v Phipps, Finn continues:
The rule adopted seems to be that a fiduciary who not only derives a profit making opportunity from his representative position but also uses his position to secure or to assist in obtaining that profit must account to his beneficiary for it (Emphasis added)
Cook v Deeks and Regal (Hastings) v Gulliver are then referred to as examples of this rule. At para 573, Finn says:
In both cases the profits made resulted in a material way from action taken by the directors in the affairs of their respective companies. In Cook  the directors both lulled the company into a false sense of security about its hopes in the prospective contract, and accelerated work in progress to secure the favour of the C.P.R. In Regal the directors, in modifying the share purchase scheme, "framed resolutions by which they made a profit for themselves". The still uncertain question, though, is the degree of the connection which must exist between the action taken in the fiduciary position, and the profit finally secured.
I would add that in those two cases the opportunities and information acquired by the directors were clearly within the scope of the relevant company's business (actual or contemplated - even though in Regal it was said to be irrelevant that the company might not have been able to purchase all the shares in the subsidiary which, under the original scheme, would have been wholly owned by Regal).
201.	Finn goes on to consider at para 575 the "much more problematic case" where a fiduciary profits from some dealing with a third person, the opportunity for the dealing arising because the third person believes - initially at least - that he is dealing with the fiduciary in his representative capacity. This situation does not arise on the facts of the present case.
202.	I consider below whether the general rule enunciated by Finn applies to the facts of the present case or whether it falls within the exception.
203.	Before leaving this aspect, it is worth repeating the type of information to which the no profit rule was said to apply in Aas v Benham:
…information which can be used for the purposes of the partnership. It is not the source of the information, but the use to which it is applied, which is important in such matters. (per Lindley LJ )
information which a partnership is entitled to in such a sense that it is information which is the property of the partnership - that is to say, information the use of which is valuable to them as a partnership, and to the use of which they have a vested interest (per Bowen LJ)
Both these passages are cited with apparent approval in the speech of Lord Hodson in Boardman v Phipps. It is to be noted that in the passages at p 107 and p110, cited above, his apparent approval of these formulations is given in the context where he is considering the use of confidential information. It would seem that he considered the scope of the business relevant to the use of such information in a partnership context and it is perhaps significant that he did not feel the need to consider the source of the information in Aas v Benham beyond identifying it as "information obtained in the course of the partnership business".
204.	There is one caveat which I need to bear in mind when taking into account these two passages in Aas v Benham. When reference is made to information which "can be used for the purposes of the partnership" or "is valuable to.. a partnership" I need to take into account the strict principle of equity under the no conflicts rule and the no profits rule that no account is to be taken of whether the profit would or should have gone to those to whom the fiduciary duty is owed or of whether or not the latter has in fact been damaged (see Warren J in Wilkinson at para 255 and the cases there cited): these phrases have, I think, to be  read more generally as referring to information which is of use (or valuable) to the partnership (or company) within the scope of its business (under at least the "expanded line of business" test).
The law as applied to the facts - Aria House
205.	I have found the question of whether JJS and JAL breached their fiduciary duties in relation to the Aria House transaction far from straightforward. The application of the law to the facts as I have found them is complicated by the following:
i)	The application of the no conflicts rule (and to some extent the no profits rule) is complicated by the existence of no less than three duties owed in connection with the Aria House transaction. First, and critical to the question of the application of the no conflicts and no profits rule, is the duty owed by JJS and JAL to the Company as directors. Second, there is the duty owed by the Company (via its directors) to Mr Sulaiman for whom the Company acted as agent to find a purchaser for Aria House. Third, there is the duty owed by the Company (via its directors) to Mr Walsh for whom the Company acted as agent in connection with the purchase. These duties only need to be stated to show that the position was fraught with conflict. But it is important, when considering whether the no conflict rule or the no profit rule applies, to focus on the first of these duties. Whether breaches of the other two duties gives rise to unfairly prejudicial conduct is a question which I shall have to consider separately.
ii)	As I have found, there were elements of impropriety in the conduct of JJS and JAL. It does not follow that they are in breach of the fiduciary duties that they owed to the Company. More specifically, the fact that JJS and JAL may in some respects have deceived or sought to deceive third parties does not mean that they were in breach of the no conflict and no profit rules. It will be necessary to analyse the wrongful acts in order to ascertain whether these constitute breaches of fiduciary duty  owed to the Company when applying the no conflict and no profit rules.
iii)	A related question is the distinction between the fact of the acquisition by JJS and JAL of an interest in Aria House and the manner of such acquisition. When applying the relevant legal principles, it does seem to me that I have to bear this distinction in mind because it is possible that the fact of the acquisition may not involve breaches of fiduciary duty whereas the manner of the acquisition may do (or involve breaches of other duty). Clearly whether or not this is the case depends on the facts.
206.	I consider first the no conflict rule. Mr Clutterbuck submitted that JJS and JAL breached the rule.  He submitted that the reasonable man looking at the relevant facts and circumstances surrounding Harlequin UK's/ SLH’s acquisition of Aria House would think that there was a real sensible possibility of conflict between their interests and those of the Company. The opportunity to acquire Aria House came to JJS in his capacity as a director of the Company.  The opportunity to acquire Aria House came out of the opportunity to sell Aria House.  Mr Sulaiman, the seller, wanted someone who had access to buyers.  JJS had such access because of his business through the Company and indeed those buyers whom Mr Sulaiman wished to be put in touch with were the clients of the Company.  All then, so Mr Clutterbuck submitted, flowed thereafter from that.

207.	Mr Clutterbuck accepted that for the purpose of the “no-conflict” rule the scope of the Company’s business is relevant. As to this he did not suggest that the Company had an established business of buying or developing commercial property like Aria House.  As a matter of company law however its objects included any trade or business which could, in the directors’ opinion be advantageously carried on by the Company.  The evidence showed that the Company was in effect the joint venture vehicle by which the three quasi-partners would engage in business.  Mr Clutterbuck did not suggest that the essentially residential property businesses operated by JJS and JAL in partnership and through Kerwick were affected by this, but he said that in essence the three of them otherwise simply saw the Company as a vehicle.  If its existing business occupied their time sufficiently profitably that would be very well.  If however a more profitable method or a new attractive method of making money came to hand, or an entirely new business forced itself upon them, the Company would move into that too. As examples Mr Clutterbuck pointed to the fact that the Company held onto the Penge property for 10 years earning such rent as it could until it could make a sensible sale. He relied on the evidence of JAL to the effect that he considered expanding the business of the Company, when business was slack, to act as an estate agency – or even a plumbing staff supply agency (to take advantage of the influx of Polish plumbers) - although JAL did not suggest that he discussed these matters with the others; and the Company taking on the job of selling Aria House for Mr Sulaiman was in itself a new type of venture, not dissimilar to an estate agency function.
208.	I find that there was no breach by JJS and JAL of the no conflicts rule. As Mr Clutterbuck accepted, the scope of the Company's business is relevant to the application of the rule. The Company's business was, in essence, the provision of financial and business advice and assistance. I find that the acquisition of properties for investment was not in fact within the scope of the Company's business. MOD does not pursue any complaint to the effect that the property investment business carried on by JJS and JAL should have been channelled through the Company. It is true that the Company's objects clauses were sufficiently wide to allow the directors to diversify into property investment, but it does seem to me that the language used by Warren J in Wilkinson (at para 253 cited at para [179] above) is particularly relevant in this context. With one exception referred to below, there is no evidence to suggest that it was ever contemplated by the directors that the Company might diversify into property investment. I take into account that the Company was embarking on a novel estate agency function in agreeing to act for Mr Sulaiman in connection with the sale of Aria House. But this is some way removed from the directors of the Company contemplating diversification into property investment on the part of the Company itself. Nor do I think it correct for Mr Clutterbuck to submit that the Company was the vehicle for the participants to engage in any activity which might present an opportunity to make a profit. This is quite inconsistent with the property investment activities being pursued by JJS and JAL of which no complaint is made. It does seem to me that in these circumstances there was no "real sensible possibility" of a conflict in JJS and JAL acquiring an interest in Aria House as a property investment. 
209.	The only feature which has given rise to some doubt on my part is the Penge property. It is true that the Penge property was in the event retained as an investment by the Company but it was not acquired as such: the intention was to use the property as the Company's offices. In these circumstances, and in the absence of any evidence to suggest that the directors of the Company contemplated that the Company might, apart from the Penge property, diversify its business to include property investment, I do not consider that this feature should cause me to reach a different conclusion on the application of the no conflict rule.
210.	In support of his submissions, Mr Clutterbuck relied on Re Bhullar Bros [2003] EWCA Civ 424, [2003] BCLC 24. In that case, two directors of a company, Bhullar Bros Ltd, acquired, through the medium of another company they controlled (Silvercrest), a property adjacent to property already owned by Bhullar Bros Ltd. The Court of Appeal decided that the two directors were accountable for profits and also liable to transfer the newly acquired property to the company, on the basis that there was a breach of the no conflict rule. Jonathan Parker LJ stressed that each case turned on its own facts. He emphasised that in that case the brothers had one capacity only in which they carried on business, namely as directors of the company. One of the brothers accepted in cross examination that it would have been "worthwhile" for the company to have acquired the property in question: and it was obvious that the opportunity to acquire the property would have been commercially attractive to the Company as it already owned a property for investment adjacent to the property in question (see para 8, 41). Its objects included the acquisition of property for investment. The facts of that case are clearly distinguishable from the present.
211.	Mr Clutterbuck placed particular reliance on the last sentence of para 41 of the judgment of Jonathan Parker LJ:
The anxiety which the appellants felt as to the propriety of purchasing the property  through Silvercrest without first disclosing their intentions to their co-directors - anxiety which led Inderjit to seek legal advice from the company's solicitor - is, in my view, eloquent of the existence of a possible conflict of duty and interest.
He submitted that, by analogy, the strongest indicia that there was a conflict of interest was the evidence that JJS felt guilty about what had occurred. I disagree. What JJS felt "guilty" about was not the fact that he and JAL had acquired an interest in Aria House but the effect of the loss of the £30,000 commission payable as a result of Mr Holleran's proposal, and in particular the loss to MOD of her share of the commission. A feeling of guilt as to this aspect of the manner of the acquisition does not in my view support the inference that there was a conflict arising from the fact of acquiring an interest in Aria House. This conclusion can be tested on the hypothesis that the Holleran proposal had matched exactly the terms which had originally been acceptable to Mr Walsh, which would have resulted in the payment of the £30,000 commission.  If, under that hypothesis, there would have been no breach of the no conflict rule, I do not think that the loss of the commission brings the fact of JJS' and JAL's interest in the acquisition within the rule. In any event, once Mr Walsh withdrew, the Company (and MOD) faced the prospect of losing the commission unless the deal could be salvaged. The possible element of conflict in JJS and JAL agreeing to the loss of the Company's commission was remedied by MOD's acceptance of the payments of £9,000 as compensation for her share of the lost commission. As to other aspects of the manner of the acquisition which JJS and JAL accepted involved elements of impropriety (such as the obtaining of the cheques from Mr Walsh and the false invoice for £30,000), I do not consider, in the light of my findings concerning these matters, that these support the inference that JJS and JAL believed that they had a conflict as directors of the Company in acquiring an interest in Aria House.
212.	These considerations are sufficient for me to conclude that JAL and JJS were not in breach of the no conflict rule. But there is also one other matter which I should mention. Whilst the authorities make clear that, if a breach of the no conflict rule (and also the no profit rule) is made out, it does not matter if the company (or trust or partnership) could not of itself have proceeded with the transaction, it does appear to me permissible to take into account when determining the scope of the directors' duties and in deciding whether there is a "real sensible possibility of conflict" the inherent likelihood in fact of the company extending its existing scope of business into areas of business which might give rise to a conflict. (This also becomes relevant if the "expanded line of business test" is considered to be too narrow for the purposes of the no profit rule.) In this regard, I find that there was no realistic prospect that the Company would have diversified into property investment. As I have already mentioned, the Company never built up any substantial reserves. Diversification into property investment would have required significant funding from the shareholders/ directors. Having heard MOD give evidence, I think it highly improbable that she would have been prepared to take the risk of investing the limited resources at her disposal in property interests. In this respect, it is of some significance that she was aware of JJS' and JAL's property investments but at no relevant stage suggested that the Company should embark on this line of business. In her own notes made in early 2006 she records herself as saying in response to JJS and JAL saying that she should have got involved in property over the years that: "I didn't have the money". As I have already mentioned, I consider that MOD had no appetite for property investment and was generally conservative in her approach to risk..
213.	For all these reasons, I find that there was no breach of the no conflict rule.
214.	I now turn to consider the application of the no profit rule. This raises issues of considerable complexity and difficulty.
215.	I should at the outset state that I have to proceed on the basis that the acquisition of Aria House may have been profitable. The purchase price was £1,350,000. In addition £70,000 was paid to Mr Sulaiman for "fixtures and fittings" and there were also, relatively minor, costs of the acquisition. There has also been expenditure on the property although it was not necessary for the purposes of the hearing before me to explore precisely how much. The accounts for SLH disclose that Aria House was valued at its open market value by the directors on 31 May 2001 as £2,300,000. There has also been rental income. I cannot at this stage decide whether or not the acquisition of Aria House has resulted in a profit to JJS and JAL, but I have to consider the application of the no profit rule on the assumption that it has so resulted. 
216.	In his written closing submissions, Mr Clutterbuck put MOD's case on the no profit rule succinctly as follows:
The opportunity to buy Aria House was a maturing business opportunity and the M&G valuation and the responses from the banks were confidential information.  Mr Shanahan and Mr Leonard had access to these solely because and in their capacity as directors of the Company.  They made use of the opportunity and of the information.  The opportunity to make use of the Jacobsens work without payment was also an opportunity, albeit an improper opportunity, available to them only because they were directors of the Company.

217.	I reject the submission that the opportunity to buy Aria House was a maturing business opportunity of the Company. The Company's role was akin to that of an estate agent (acting for both buyer and seller). The Company was instructed by Mr Sulaiman to find a buyer and by Mr Walsh to make arrangements to purchase Aria House. There was at no material time any suggestion that the Company itself might acquire Aria House and this was never contemplated by any of the directors. The "corporate opportunity" cases have no direct application to the present case.
218.	On the other hand, it is the case that:
i)	the opportunity to buy Aria House came to the attention of JJS and JAL in their capacity as directors of the Company;
ii)	in proceeding with the acquisition of an interest in Aria House, JJS (and JAL, in some respects indirectly) relied on the Matthews & Goodman valuation, the response from the banks to enquiries made on Mr Walsh's behalf that financing was available, and the work carried out by Jacobsens on behalf of Mr Walsh; they were only able to do so because of their involvement in such matters as directors of the Company and constituted information which they had acquired in their capacity as directors;
iii)	the information upon which JJS and JAL relied referred to in (ii) was confidential information and used by them without the consent of Mr Walsh or the Company.
219.	It seems to me clear in these circumstances that, if the duties of JJS and JAL were to be equated with the duties of general trustees such as those found in Boardman v Phipps, JJS and JAL would be liable under the no profit rule. I refer in this respect to the passages from Boardman v Phipps and the discussion in Lewin on Trusts which I have cited above. 
220.	Mr Clutterbuck submitted that I should find that the principles in Boardman v Phipps do apply. In this context, he submitted that there is no requirement to consider the scope of the Company's business in applying the no profit rule. I have rejected that submission for the reasons given above. It follows that the scope of the duties of JJS and JAL as directors of the Company for the purposes of the no profit rule is more limited than the scope of the duties of a general trustee.
221.	I find that the fact that the opportunity to buy Aria House had come to the attention of JJS and JAL in their capacity as directors of the Company does not of itself give rise to a breach of the no profit rule. That opportunity fell outside the scope of the Company's business (in the sense described above).
222.	Had the information relied upon by JJS and JAL come to their attention in the course of transacting Company business, but not been confidential information, I consider that it would follow from my earlier findings that JJS and JAL would not have been in breach of the no profit rule. The information in question was of no "use" or no "value" to the Company having regard to the scope of its business.
223.	Does the fact that the information relied upon by JJS and JAL was confidential in the hands of the Company make any difference?  My mind has wavered as to the correct answer. Misuse of confidential information would undoubtedly expose the Company to a claim for breach of confidence on the part of the person to whom the relevant duty of confidence is owed (see eg Fraser v Evans [1969] 1 QB 349 at p 361). In this case, the person to whom the duty of confidence was owed was Mr Walsh. Misuse by directors of a company of information given by a third party to the company in confidence might well also constitute a breach of non-fiduciary duty owed by the directors to the company. But I do not think that it follows that such misuse of information necessarily involves a breach of the no profit rule which is owed by directors to the company.
224.	To take an extreme example, if a director of a company whose objects were limited to the production of newspapers received in his capacity as director information in confidence from a third party about a new medicine which he then sought to exploit for himself, the third party would have claims against the director and probably also the company, and the company would likely have a claim against the director for any losses to which it had thereby been exposed. The director might well have to account to the third party for any profits made as a result of the misuse of the confidential information. But I doubt whether the company would be able to claim an account of profits from the director: the information did not "belong" to the company but to the third party and the company was the repository of confidential information for the more limited use of its own business. It would seem odd for a director in these circumstances to be exposed to a liability to account for profits to both the third party and the company. 
225.	It is also worth considering the position in this example if the director of the company obtained the consent of the third party to use the information for the purpose of commercially exploiting the medicine, but made no such disclosure to the company. The third party would then have no claim against the director or the company. Even though the director had acquired the information in his capacity as such, I consider that there would have been no breach of the no profit rule because the use to which the information was put was wholly outside the scope of the company's business.
226.	Considerations such as these  tend to suggest  that  the scope of the  company's business is still highly relevant when considering misuse of confidential information in breach of a duty owed to a third party.  On the other hand, there is a powerful argument that a director who misuses such information which he has acquired in his capacity as a director should be held strictly liable even if used for purposes outside the scope of the company's business. This argument is supported by the formulation of the no-profit rule by Deane J in Chan v Zacharia, the speech of Lord Cohen, in particular, in Boardman v Phipps and the passages in Lewin which I have cited above. 
227.	As I have described above, the law on this aspect is unclear. I have concluded, not without hesitation, that the misuse of JJS and JAL of confidential information (without the consent of Mr Walsh or the Company) does not give rise to a breach of the no profit rule, although it may have other consequences. 
228.	I consider that the facts of the present case do not fall within the "ill-defined" exceptions to the general rule enunciated by Finn to which I have referred in paragraph [200] above. I am persuaded that the type of information used by JJS and JAL in connection with the acquisition of Aria House, even though confidential, on the facts of the present case falls to be considered by reference to the type of information to which the no profit rule was said to apply in Aas v Benham, namely:
…information which can be used for the purposes of the partnership. It is not the source of the information, but the use to which it is applied, which is important in such matters. (per Lindley LJ )
information which a partnership is entitled to in such a sense that it is information which is the property of the partnership - that is to say, information the use of which is valuable to them as a partnership, and to the use of which they have a vested interest (per Bowen LJ)
229.	The information which was used by JJS and JAL was confidential: but the duty of confidentiality was owed to Mr Walsh. The information "belonged" to him, not the Company. The use to which the information was put by JJS and JAL was outside the scope of the Company's business (in the sense described above). As Lindley LJ said, it is "not the source of the information, but the use to which it is applied which is important in such matters".
Acquiescence - the law
230.	Mr Mallin submitted that MOD's knowledge of and consent to all of the relevant matters (not limited to Aria House) amounted to acquiescence by the Petitioner in the matters complained of: see Knight v Frost [1999] 1 BCLC 364 in the analogous circumstance of a derivative action in which it was held that the general equitable principles of acquiescence by a beneficiary in a breach of trust by a trustee applied. As to what amounted to sufficient knowledge on the part of the beneficiary which would disentitle him from equitable relief, Hart J, in Knight v Frost (supra) (citing Wilberforce J in Re Pauling’s Settlement Trusts [1962] 1 WLR 86 at 108) said:

The result of these authorities appears to me to be that the court has to consider all of the circumstances in which the concurrence of the cestui que trust was given with a view to seeing whether it is fair and equitable that, having given his concurrence, he should afterwards turn around and sue the trustee: that, subject to this, it is not necessary that he should know that what he is concurring in is a breach of trust, and that it is not necessary that he should himself have directly benefited by the breach of trust.”

231.	Mr Clutterbuck accepted that this principle applied, but submitted that, in order to be effective to bar MOD's complaints, disclosure by JJS and JAL would have to be complete and frank: Boardman v Phipps [1967] 2 A.C. 46 at 109D, per Lord Hodson; New Zealand Netherland Society “Oranje” Incorporated v Laurentius Cornelis Kuys and another [1973] 1 W.L.R. 1126,  where Lord Wilberforce said at p.1131:
Their Lordships entirely accept, as a matter of law, that if an arrangement is to stand, whereby a particular transaction, which would otherwise come within a person’s fiduciary duty, is to be exempted from it, there must be full and frank disclosure of all material facts.”

Aria House - acquiescence
232.	In the light of my conclusion that JJS and JAL were not in breach of their fiduciary duties in acquiring an interest in Aria House, the question of MOD's acquiescence does not arise. But since that conclusion may be wrong and since I have heard evidence and argument on the issue of acquiescence I should attempt to deal with it so far as I am able.
233.	Mr Clutterbuck submitted that JJS and JAL at no stage made full and frank disclosure: they kept from MOD all along that while acquiring Aria House through their and Mr Holleran’s vehicle "they also were defrauding Mr Walsh; they also kept from her that they had cheated the Vendors."
234.	Mr Clutterbuck's reference to "defrauding Mr Walsh" is to the fact that JJS (with JAL's concurrence) procured Mr Walsh to pay for the Matthews & Goodman valuation, Jacobsens' work to date and work done by the Company without disclosing their interest in acquiring Aria House and more specifically the fact that in so doing they would be taking the benefit of the work done in particular by Matthews & Goodman and Jacobsens. (In the light of my findings of fact, Mr Clutterbuck cannot also rely, as he sought to do in his closing submissions, on any deception of Mr Walsh in connection with his withdrawal from the Aria House transaction). Mr Clutterbuck's reference to "cheating the Vendors" is a reference to (i) assisting Mr Sulaiman to "cheat" the vendor companies by concealing from them the payment of £100,000 (later £70,000) for "fixtures and fittings" and in this connection preparing the false invoice for the £30,000 commission and the handwritten receipt for £70,000 as a consultancy fee; (ii) deceiving Mr Sulaiman and the vendor companies about the identity of the purchaser. I shall have to consider these matters in more detail later.
235.	In my judgment, many of the matters upon which Mr Clutterbuck relies are not materially relevant to the issue of whether JJS and JAL were in breach of the no conflict or no profit rule. In this respect I note that in his submissions in support of the application of these rules, there is hardly any reference to these matters. 
236.	It seems to me that a central issue on the question of acquiescence is whether MOD knew that JJS and JAL were acquiring an interest in Aria House, when she knew, and what she then did. I have already found as a fact that she became aware of their involvement shortly after 17 May 1999. She raised no complaint about this until shortly before the present petition was issued. However, she did raise with JJS and JAL the loss of the £30,000 commission payable to the Company and specifically her share of that commission. She thereafter accepted certain cash payments as compensation in respect of her loss of her share of the commission.
237.	These matters would tend to suggest that MOD did acquiesce in the acquisition by JJS and JAL of an interest in Aria House. However, if contrary to my earlier findings, JJS and JAL were in breach of the no conflict or no profit rule the question of acquiescence in such breach will depend on the basis on which it be held that they were in such breach. If, for example, it were to be found that the misuse by JJS and JAL of confidential information gave rise to a breach, it does seem to me that MOD would be entitled to say that she did not acquiesce in such a breach without disclosure by JJS and JAL to her that they were making use of such information. My findings of fact are that no such disclosure had been made.
238.	In the circumstances, although not satisfactory from the parties' point of view, I am unable to reach any clear conclusion as to whether there has been acquiescence by MOD in connection with the acquisition by JJS and JAL of an interest in Aria House. It does not seem to me appropriate for me to consider all the ways in which an appellate court might hold that JJS and JAL were in breach of the no conflict and no profit rule with a view to determining whether there had been acquiescence in such breach. All I can hope for is that, if an appellate court were to take this view, my findings of fact are sufficient to enable a decision to be reached on the issue of acquiescence.
Fraud prejudicial in itself
239.	Mr Clutterbuck submitted that whether or not the acquisition by JJS and JAL of an interest in Aria House constituted a breach of the no conflict or no profit rules a number of wrongful acts (which he described as "frauds") on the part of JJS and JAL were in themselves breaches of fiduciary duty and/or constituted unfairly prejudicial conduct. 
240.	Mr Clutterbuck submitted as a general proposition that where in a quasi partnership the company is used "as an engine of fraud" by certain of the parties for their personal benefit the innocent shareholders could claim that such conduct is inherently prejudicial in breach of the parties' implicit understandings even if there is no loss to the company or more particularly specifically identifiable prejudice to the innocent shareholder. I accept that there may be cases where this is so such that the innocent shareholder may, for example, be entitled to be bought out in these circumstances where the company is continuing in business or otherwise of value and there is a risk of claims being made against the company.
241.	However, I have to consider the specific complaints made in this regard by MOD in the context of the reality of the Company's present position and the type of relief being sought by MOD. 
242.	The wrongful acts of JJS and JAL relied upon by MOD are:
i)	JJS (with JAL's concurrence) deceiving Mr Walsh in procuring him to pay for the Matthews & Goodman valuation, Jacobsens' work to date and work done by the Company without disclosing their interest in acquiring Aria House and more specifically the fact that in so doing they would be taking the benefit of the work done in particular by Matthews & Goodman and Jacobsens; 
ii)	Failing to disclose to Mr Walsh the arrangement with Mr Sulaiman that the Company would be receiving a £30,000 commission;
iii)	 Concealing from the vendor companies the payment of £100,000 (later £70,000) for "fixtures and fittings" and in this connection preparing the false invoice for the £30,000 commission and the handwritten receipt for £70,000 as a consultancy fee;
iv)	Deceiving Mr Sulaiman and the vendor companies about the identity of the purchaser.
243.	As regards (i), a claim by Mr Walsh against the Company is clearly possible. If Mr Walsh were to pursue such a claim, and succeed, and the Company were of value, I can see that this might give rise to a claim by MOD for unfairly prejudicial conduct in that she might thereby suffer prejudice. However, it seems to me clear that the Company has no value at present and is indeed insolvent. Even in the unlikely eventuality that Mr Walsh would seek to pursue a claim against the worthless Company, and succeed, I cannot see how this in the circumstances could be prejudicial as regards MOD as a shareholder in an insolvent company. Further, even if Mr Walsh were to succeed against the Company I find it difficult to see how JJS and JAL could resist a claim by the Company against them for an indemnity against any loss it thereby suffered.
244.	As regards (ii), in the circumstances that the Company was acting as agent for both the vendor (acting by Mr Sulaiman) and the proposed buyer (Mr Walsh) there might be a breach of duty on the part of the Company in failing to disclose the £30,000 commission arrangement with Mr Sulaiman to Mr Walsh. But it is difficult to discern, even if there were such breach, what loss has been caused to Mr Walsh in the light of his withdrawal for which the Company would be liable, let alone any prejudice to MOD (as to which I repeat my comments in the previous paragraph).
245.	As regards (iii), Mr Clutterbuck accepted that there is little risk of a claim now by the Vendors. Again there is no discernable prejudice to MOD in the current circumstances. I should also add that the basis of any such claim is not in my view as clear as Mr Clutterbuck sought to suggest. On the evidence which I have heard I am not satisfied that the payment of £100,000 (later £70,000) was a significant overvalue for fixtures and fittings: it is to be noted that both Mr Walsh and Mr Holleran inspected the property and were prepared to pay these respective sums. They were also aware that the payment was to be in the form of cash/ bankers' drafts. But I also accept that (i) in the absence of any satisfactory explanation by JJS as to why he wrote to Mr Sulaiman personally and did not inform Peat & Co of these arrangements; and (ii) the circumstances in which JAL drafted the receipt from Mr Sulaiman for £70,000 as a "consultancy fee", there is more force in the suggestion that they at least must have suspected that this payment was some form of backhander to Mr Sulaiman which had not been disclosed to the vendor companies. 
246.	As to (iv), it will be recalled that Mr Clutterbuck, in seeking to undermine the explanation given by JJS and JAL for the use of Harlequin UK, put MOD's case on the basis that Mr Sulaiman (and the vendors) would have known of the change of purchaser by reason of the changes to the draft contracts after 17 May 1999 showing a UK address. Thus, on his case, even if there had been an attempted deception, it did not succeed. In any event, as Mr Clutterbuck accepted there is little risk of a claim. There is therefore again no discernible prejudice to MOD.
247.	The reality of the present position is that MOD seeks relief in the form of a buy out of her shares not on the basis of the value of the Company as it now stands (which is nil) but on the basis that there should be notional adjustments to the value of the Company by JJS and JAL making some form of restitution to the Company in the form of an account of profits or other benefits they have received as a result of the acts complained of. None of the conduct of JAL and JJS described in the immediately preceding paragraphs falls within this category of complaint: they concern conduct which might give rise to claims against the Company. In the circumstances as they exist in this case, I find that such conduct is not unfairly prejudicial to MOD.
The EHM Relationship
248.	It will be recalled that the essential thrust of the case advanced by MOD against JJS and JAL in relation to EHM is twofold: (i) that the amount of time devoted by JJS and JAL to the affairs of EHM was detrimental to the Company's interests and in breach of the original understandings; and (ii) the type of work which they did for EHM was work which should have been provided under the aegis of the Company, thereby earning fees for the Company: instead they themselves earned a significant salary and enjoyed the enhanced capital value of their shares in EHM - this was said to be in breach of the original understandings and a breach of fiduciary duty on the part of JJS and JAL.
249.	It is to be noted that Mr Clutterbuck did not suggest that the mere fact that JJS and JAL took a stake in, and became directors of, EHM amounted to a breach of fiduciary duty or breached the original understandings between the parties. He was clearly right not to advance such a case (see Bell v Lever Brothers [1932] AC 161 at 195 ; Wilkinson at para 253). The business of EHM was very different from, and in no sense in competition with, that of the Company.
250.	I deal first with the amount of time devoted by JJS and JAL to the affairs of EHM, which MOD claims to have been detrimental to the Company's interests and in breach of the original understandings. I have no hesitation in rejecting these claims in relation to the period of JJS' and JAL's involvement in EHM after the initial period of 6 months or so. After those 6 months, the amount of time they devoted to EHM was relatively minor and not in breach of the original understanding that the parties would work substantially full time for the Company. There is no evidence which could lead me to the conclusion that such work as they did carry out in that period for EHM was detrimental to the Company's interests. The decline in the turnover of the Company did not, as MOD suggested in para 26 of her first witness statement, begin in 1996. Turnover in fact increased in the years 1996 to 2001.
251.	There is more force in MOD's claims in respect of the initial 6 month period of the involvement of JJS and JAL in EHM. I find that their involvement in that period did constitute a breach of the original understanding that the parties would work substantially full time for the Company. However, I am not satisfied that a case of unfairly prejudicial conduct is made out in that there is no evidence of loss to the Company or prejudice to MOD as a result of such breach. The figures for the turnover of the Company showed that it substantially increased between 1996 and 2001. There was no evidence that the Company lost any business as a result of the involvement of JJS and JAL in EHM in the initial six month period.
252.	There is another reason for rejecting MOD's claims under the first head. In the light of my findings of fact as to MOD's knowledge of these matters, she has known of them for some 10 years before presenting the petition without levelling any serious complaint. In applying by analogy the passage from Knight v Frost cited above, I consider that it would be unfair and inequitable to permit MOD to rely on such conduct now in support of her petition in circumstances where over a number of years when the Company was generating profits she was quite happy to take her share of the profits without complaint and only now raises a complaint when, for reasons unconnected with such conduct, the business of the Company has declined. (See also, by analogy, Hough v Hardcastle [2005] EWHC 1415 (Ch); 2006 BCC 73 at paras 19 and 20).
253.	I turn to the second head of complaint, namely that the type of work which JJS and JAL did for EHM was work which should have been provided under the aegis of the Company, thereby earning fees for the Company: instead they themselves earned a significant salary and enjoyed the enhanced capital value of their shares in EHM. It follows from my findings of fact that this head of complaint is not made out. The business of EHM was wholly different from that of the Company. Only limited aspects of the work which JJS and JAL did for EHM was work might have been done for a client of the Company. I have found that EHM was not a potential client of the Company and that it was wholly unrealistic to suggest that EHM would have engaged the Company to do that type of work. There was accordingly no detriment to the Company as a result of JJS and JAL doing that type of work for EHM as directors. The significant financial benefits received by JJS and JAL as directors of EHM do not reflect the work they carried out but are to a large measure attributable to the financial contribution they have made.
254.	It follows that I find that there was no breach of the original understandings between the parties under this head. I also find that there was no breach of fiduciary duty on the part of JAL and JJS. There was no breach of the no conflict rule because the business of EHM was wholly outside the scope of business of the Company and because there is clearly no bar to a director becoming a director (and shareholder) of a company whose business is not in competition and using his general business expertise for that purpose. There was no breach of the no profit rule because, inter alia, JJS and JAL did not use any special knowledge which they had acquired in their capacity as directors of the Company, and what they did for EHM could not be described as an opportunity of the Company. The other fiduciary duty pleaded in Para 15 of APOC which is said to have been breached is a duty to act in the best interests of the Company. I find that the work JJS and JAL did for EHM did not involve a breach of this duty.
255.	In view of these findings, it is unnecessary for me to deal with the question of acquiescence by MOD in the matters falling under the second head of complaint. This issue would only arise if my findings were wrong. Since the position on acquiescence is not in my view as clear as that which arises under the first head (eg in view of my finding of fact that MOD did not know the detail of the type of work carried out for EHM by JJS and JAL) I do not consider it appropriate for me to express a view on this aspect.
The Holleran relationship
256.	It will be recalled that the thrust of MOD's complaint in relation to the Holleran relationship is that JJS and JAL carried out Company work outside the Company for Mr Holleran and his companies for their personal benefit.
257.	In view of my findings of fact, the complaints made by MOD in respect of the Holleran relationship must fail. It is unnecessary for me to repeat my findings of fact in any detail. In short, in 2000, the services which the Company had previously provided to Mr Holleran and his group of companies were largely no longer required. JJS and JAL in this context received no payment or other benefits directly or indirectly from Mr Holleran or his group of companies (other than via payments to the Company). I find that the payments received by the Company for work done for Mr Holleran and his companies after 2000 was a reasonable sum for the services rendered and that MOD has failed by some margin to make out the contrary. Such limited work as JJS did for Mr Holleran after 2000 for which he did not charge was insignificant and this was typical of the arrangement which existed before 2000: and maintaining the good relationship with Mr Holleran was of benefit to the Company in that the Company continued to benefit from referrals he made.
258.	Mr Clutterbuck accepted that he was unable to point to any specific benefit received personally by JJS or JAL from Mr Holleran or his companies. He suggested that this was a problem of quantum which could be dealt with on an inquiry. I disagree. Liability must first be made out. The evidence falls far short of establishing liability.
The GH Law Relationship
259.	MOD claims that the acceptance of benefits by JJS and JAL from GH Law  free of charge outside the Company constitutes a breach of their fiduciary duty not to place themselves in a position of conflict of interest (see paras 43, 15(2) of APOC). They obtained such benefits in return for the Company referring clients to GH Law.
260.	I have already mentioned that the thrust of MOD's complaint as it emerged at trial is that JAL and JJS have benefited personally or through Kerwick from this arrangement out of all proportion to the benefits which she has directly or indirectly obtained. This is because she accepted that she had benefited from the arrangement to a very limited extent directly and to a greater extent indirectly from work GH Law did in particular in connection with the Pension Fund.
261.	Clearly the GH Law relationship does potentially raise a serious issue in connection with the application of the no conflict rule. An arrangement whereby directors personally receive benefits from a third party in return for the Company conferring a benefit on the third party raises a real possibility of conflict. But the phrase used by Lord Upjohn is a "real sensible possibility of conflict". In the context of a small quasi partnership company I think this does permit a consideration of the scale of the activity in question. The work carried out by GH Law for the various parties free of charge took place over a period of some 15 years and, according to Mr Way's rough estimate, was only worth some £5,000 to £6,000 in total. Although JJS and JAL benefited more from the arrangement, MOD also received some benefit. The benefits conferred by the Company on GH Law, namely the referral of clients, was not in itself of significant value to the Company: there seems to me some force in JAL's suggestion that the Company could not in the circumstances have charged GH Law for referrals. As is apparent from the Holleran relationship and in particular Mr Holleran's referral of clients to the Company, this sort of arrangement is not uncommon in the context of small businesses.
262.	For these reasons, and against the facts as I have found them, I am not satisfied that there was breach by JJS and JAL of the no conflict rule. But even if there were such a breach I have no hesitation in finding that MOD concurred in the breach in circumstances which would make it unfair and inequitable to allow her now to make such a claim against JJS and JAL. MOD was aware from the early 1990's that GH Law were providing conveyancing work for the benefit of JJS and JAL free of charge and she also herself received some benefit from the arrangement. Even though she may not have known the full extent of the work being done for JJS and JAL by GH Law she was clearly aware of much of it. Yet she did not make any complaint until shortly before the commencement of these proceedings.

Conclusion
263.	Accordingly, I dismiss the petition.