Suraj Bhatia v Kulwant Singh Toor

Facts

The appellant (T) appealed against a decision ordering him to repay a sum of money to the respondent (B).

B had paid £40,000 to T. B contended that the money was a loan but T argued that it was an investment in his company, which he ran with his two brothers. It was T's case that B had invested the money in the expectation of receiving a 25 per cent shareholding in his company and, whilst no shares were granted, B was treated as a shareholder. T further argued that a discharge agreement entered into with B, which was intended as a compromise in respect of a dispute about the alleged provision of services, had wider effect and meant that B had agreed to give up all claims including claims to the loan. The judge held that no shares were ever allocated and there was no evidence to support T's assertion that B had been treated as a shareholder.

Held

(1) The judge's approach to the evidence and the credibility of the parties could not be faulted and her finding that the payment was a loan was correct (see para.25-26 of judgment). (2) The proper construction of the discharge agreement was that it was not intended to cover the loan. The loan was to T in his personal capacity whereas the agreement referred to T, his company and the other shareholders as a group. Whilst the agreement was drafted in wide terms and included phrases theoretically capable of covering many types of claims unassociated with B's services to the business, it contained a number of indications that it was also focussed on claims relating to such services (paras 33-34).

Appeal dismissed.

Comment

A judge had correctly held that a sum of money paid by the claimant to the defendant was a loan and not an investment and had to be repaid.

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