BL-2020-CDF-000003 - [2025] EWHC 2226 (Ch)

In 2009 RHP engaged Lambert Smith Hampton and Cooke & Arkwright as joint agents to market units at SA1. In November 2009 Mr Lloyd met a representative of Lambert Smith Hampton at SA1 and made a proposal to take a lease of the Site, which comprised a large and partially derelict building there. His intention was to divide the building (Unit A) into small units, which he would then sub-let. He had carried out similar projects at other sites previously. Originally, he intended to carry out the project along with two other people, Mr Mark Collings and Mr Graham Craig, though by the time things came to fruition they had decided not to proceed.

On 12 January 2010 Lambert Smith Hampton produced Heads of Terms for a proposed lease of Unit A between Sirocco and a new company to be called SA1 Business Park Limited (“SA1 Ltd”), which they had been informed would be incorporated for the purpose of taking the lease. The Heads of Terms recorded that the lease was to be for a 15-year term. The first six months of the term were to be rent-free; thereafter the rent would be £25,000 for months 7 to 12, £98,000 in year 2, £120,556 p.a. in years 3, 4 and 5, £144,667 p.a. in years 6, 7, 8, 9 and 10, and £168,778 p.a. in years 11, 12, 13, 14 and 15.

Mr Lloyd procured the incorporation of SA1 Ltd on 14 January 2010 and was appointed its first director on that date. On 3 February 2010 Mr Collings and Mr Craig were appointed as additional directors, though they resigned as directors in March 2010 after deciding not to proceed with the project. Mr Lloyd instructed Morgan LaRoche to act as SA1 Ltd’s solicitors. RHP instructed an employee called Mr Christopher Coates to act for it; he was a solicitor though he did not have a current practising certificate. The Heads of Terms were sent to Morgan LaRoche no later than 19 January 2010.

After further discussions, Lambert Smith Hampton produced Revised Heads of Terms dated 24 February 2010. These showed revised provisions for rent: the first six months of the term were to be rent-free; the rent for months 7 to 12 would be £12,500; the rent for months 13 to 18 would be £12,500; the rent for months 19 to 24 would be £49,000; the annual rent in years 3, 4 and 5 would be £128,556; the annual rents thereafter would be as shown in the original Heads of Terms. On 24 February 2010 Lambert Smith Hampton sent the Revised Heads of Terms to Morgan LaRoche and to Mr Lloyd, confirming that the terms were agreed. In the first week of March 2010 Mr Lloyd instructed Peter Lynn & Partners to act for SA1 Ltd in place of Morgan LaRoche, and Mr Coates sent a copy of the Revised Heads of Terms and a draft lease to those newly instructed solicitors.

The solicitors then dealt with the preparation of contractual documentation, including an Agreement for Lease and a draft Lease. On 13 April 2010 Mr Coates wrote to Peter Lynn & Partners by fax:

“I enclose draft side letter for your approval.

I understand that Richard [Hayward] released keys to Craig [Lloyd] yesterday and so the term commencement date in the documentation should be 12 April 2010.”

The side letter was headed in Sirocco’s name and addressed to SA1 Ltd and provided for signature on behalf of each of those companies. On 14 April 2010 Peter Lynn & Partners wrote to Mr Coates, confirming that Mr Lloyd had signed the Agreement for Lease and that, subject to one point of collateral agreement between Mr Lloyd and Mr Hayward, the side letter was acceptable. Under cover of a letter dated 20 April 2010 Peter Lynn & Partners sent the Agreement for Lease to Mr Coates. It was signed in two places—neither of them the correct place—by Mr Lloyd. I have not seen a copy signed on behalf of Sirocco, but I am satisfied that a copy was signed and, more importantly, that both sides regarded themselves as bound by the Agreement for Lease. (I refer to, but need not quote from, correspondence between the solicitors in October 2010.) Both the Agreement for Lease and the draft Lease annexed to it showed the parties as Sirocco and SA1 Ltd. I shall say a little more about the terms of the draft Lease below.

On 27 April 2010 Lambert Smith Hampton sent to Mr Lloyd, for his approval, a draft press release concerning the letting of Unit A. The draft referred to “landlord Richard Hayward Properties”. The description of RHP as landlord originated in an internal email to Lambert Smith Hampton’s marketing executive from a director, Mr Thorne, who certainly knew the true identity of the landlord, namely Sirocco.

I find as a fact that Mr Lloyd knew that Mr Hayward was not the owner of SA1 and that he was the managing agent for the owner, Sirocco. In his oral evidence at trial, Mr Lloyd said that he had known nothing of Sirocco until 2011, when he saw it named on a bank statement. (In a witness statement made in support of an application for pre-action disclosure, he identified the date when he saw the bank statement as 7 September 2011.) He said that he had not read the legal documentation concerning the Agreement for Lease but had left such matters to his solicitors; so far as he was concerned, he was dealing with Mr Hayward. Although that is possible, I do not consider it at all likely. The documents showed clearly that the landlord was Sirocco, and it is improbable that Mr Lloyd failed to see this, especially as the terms of the draft Lease had been the subject of revision. It is also probable that solicitors acting for SA1 Ltd on Mr Lloyd’s instructions will have gone through the terms of the Agreement for Lease, the draft Lease and the side letter with him and, in doing so, will have drawn his attention to the parties. Again, although Mr Lloyd has identified 7 September 2011 as the date when a bank statement brought Sirocco to his attention, the documents show that in January 2011 he had acted in connection with the grant of a tenancy at will of a unit at SA1 by Sirocco; and in cross-examination Mr Lloyd accepted that he had known of Sirocco by that date. He points, fairly enough, to the mention of RHP as the “landlord” in the Press Release. I do not doubt that Mr Lloyd knew of Richard Hayward Properties or that he also knew that Mr Hayward was the man with effective day-to-day control of SA1. But I find that he knew that SA1 was owned by Sirocco. Mr Lloyd was well able to understand the distinction between companies and those who run them, as demonstrated by the fact that he was proposing to operate through SA1 Ltd.

Lambert Smith Hampton had issued an invoice to Sirocco in March 2010 for £9,662.33 plus VAT for their work in negotiating the letting of Unit A to SA1 Ltd. Six months later, that invoice remained unpaid. (Apparently, Cooke & Arkwright, who were joint agents, never issued an invoice.) On 1 October 2010 Mr Thorne wrote to Mr Kane Athay, Mr Hayward’s stepson, who worked at RHP, reminding him that he had stated that he was approving a payment of half of the invoice. Mr Athay replied to the effect that the lease had not yet been signed but should be signed soon and that he would do his best to get payment of half of the invoice shortly afterwards.

In fact, the lease was never finalised. It was agreed instead to proceed on the basis of a Joint Venture between Mr Lloyd personally and one or other of the defendants. (SA1 Ltd has no further part in the story and was dissolved on 18 November 2014.) The parties are agreed that the Joint Venture began to operate in the late part of 2010. However, there are issues as to the parties to the Joint Venture and the terms of the Joint Venture. The Joint Venture was never reduced to a written agreement, and there is no joint document of the parties that sheds light on these issues, though there are a number of documents emanating from the defendants’ side, none of them sent to Mr Lloyd, to which I shall refer presently.

The Joint Venture was first discussed in October 2010. I find as a fact that the first relevant meeting was at RHP’s offices on 21 October 2010 and was between Mr Lloyd and Mr Athay. (Mr Athay has been able to verify the date and place of the meeting by reference to his Outlook calendar.) Mr Athay stated (witness statement, paragraph 23): “At the meeting, Craig said he didn't have enough money to continue doing the pods. That was a complete surprise to us.” This meeting is referred to in a letter dated 22 October 2010 from Mr Coates to Peter Lynn & Partners concerning the Agreement for Lease, in which Mr Coates wrote: “Craig was in the office yesterday to discuss the project generally and he is due to meet Richard again to consider different ways in which the project may proceed. So we may in due course agree to ditch the existing contract anyway!”

Mr Athay has confirmed, by reference to his Outlook calendar, that a follow-up meeting took place at Swansea on 25 October 2010. Mr Hayward’s evidence was to the following effect. The meeting took place at the Site and was attended only by himself, Mr Lloyd and Mr Athay. It was arranged because Mr Lloyd had told Mr Athay on 21 October that he was having problems funding the works. At the meeting, Mr Lloyd said that he had run out of money and could not proceed further. He said that he had already spent £80,000, but Mr Hayward was sceptical of this and thought that what had been done would have cost about £40,000. In the course of the discussion it was agreed that the parties would proceed by way of a joint venture instead of a lease. “There was no suggestion that anyone other than Sirocco would be party to the agreement—it was definitely Sirocco. There was no discussion that I recall of whether SA1 Ltd or Craig Lloyd personally would be the other party” (witness statement, paragraph 40). The gist of the agreement was that Sirocco would pay £20,000 for materials, Mr Lloyd would pay for labour, build the units and collect the rent, and (witness statement, paragraph 45) would have a “priority return” of £20,000 p.a. All expenditure would be deducted before the profits were divided equally. “There was no limit to the relevant expenditure discussed, and in particular it was not agreed that mortgage interest would be excluded” (witness statement, paragraph 40). Mr Hayward’s evidence was that there were two other stipulations: Mr Lloyd would carry out the management of the site personally and would not delegate those duties; and Mr Hayward said that he would not “do [the] deal” unless Mr Lloyd could demonstrate that he had spent £80,000 as he claimed to have done (witness statement, paragraphs 42 and 43). I shall say more about those stipulations later.

Mr Lloyd’s evidence has, I think, conflated the meeting on 21 October and the meeting on 25 October. He said that he attended at RHP’s offices after receiving an invitation to meet with Mr Hayward. Mr Athay was also present; so too was Mr Coates, who was taking notes throughout the meeting. Mr Hayward showed him an invoice from Lambert Smith Hampton for a sum of nearly £20,000 and said that he did not want to pay it, as he did not feel the agents had earned it, and he would rather use the money in a joint venture with Mr Lloyd. This, said Mr Hayward, would be more advantageous to Mr Lloyd than the proposed lease: “You’ve got no landlord worries, with no bills, no rent. All we have to pay is the utilities.” The profits would be split 50:50. Mr Hayward would put the £20,000 that would otherwise have gone to the agents into the joint venture as a contribution to the costs of the works. “Because the lease I had been discussing with LSH [Lambert Smith Hampton] was for 15 years, Richard said that the JV would be for longer than the lease; he didn’t say an exact term, but [he] said that it would be more advantageous to do the deal with him than signing the lease” (witness statement, paragraph 29). In oral evidence Mr Lloyd said that Sirocco had not been mentioned and that the proposed joint venture was to be between himself and Mr Hayward personally. His evidence was that he had confirmed agreement to the proposal by a telephone call a few days later—he did not recollect a second meeting—and that Mr Hayward had said that he would get Mr Coates to get something drawn up. Mr Lloyd’s evidence regarding the Lambert Smith Hampton invoice is inconsistent. In his witness statement he describes being shown the invoice, looking at it and seeing the logo and the amount. However, the invoice was for £11,353.24, not for nearly £20,000, and does not correspond to the promised investment that was said to replace it. In cross-examination, Mr Lloyd said that he had been told that the invoice was £20,000. That is materially different from his written evidence, in which he had made a point of having seen the logo. Further, the suggestion that £20,000 might have been the total sum of two invoices—the other being from Cooke & Arkwright—, though in itself plausible, is problematic because the uncontradicted evidence is that Cooke & Arkwright never submitted an invoice.

On 26 October 2010 Mr Coates made a manuscript note, which was headed “SA1” and read as follows (I mark the two parts I cannot decipher):

“Cancel Agreement for Lease

Replace with a JV Agreement

We pay £20,000

He finishes off 10 units → (Kane has it all written down)

He will manage the old [?] unit and old SW Windows unit (F1 and F2) → so all expenditure (rates utilities etc) covered by JV

Pay £5,000 in to advertising

50% of profit after deduction of expenditure etc security guard

Sirocco to invoice

[?]”

In examination-in-chief at trial, Mr Coates said that he would have made the note after either a meeting with or an instruction from Mr Hayward or Mr Athay or both, and he confirmed that “We” referred to Sirocco and “He” to Mr Lloyd. Mr Hayward said in evidence that he believed the note was made to reflect what had been said in a meeting between himself and Mr Coates; I accept that as being probably correct.

Mr Coates made a number of preliminary efforts at drafting a formal agreement for the Joint Venture.

A further document from RHP’s files was created by Nicola Crickmore, now Nicola Smith, who was an accountant employed by Mr Hayward between 2005 and 2013 and who gave evidence at trial. It is headed as a Joint Venture Agreement dated in 2011 between Mr Lloyd and Sirocco. The material text is mainly typed but in part (shown here in italics) in manuscript.

“It is agreed that the JV covers the buildings marked with a red border on the attached plan.

It is agreed that the first £80,000 per annum (ex VAT) of rent produced by these buildings is paid to Sirrocco [sic] Holdings Ltd to cover interest.

It is agreed that all costs such as rates, utilities, insurance and service charge and any maintenance will then be paid.

It is agreed that Craig Lloyd will then keep £20,000 per annum.

It is then agreed that the [sic] any further monies will be split 50/50 between the parties.

It is also agreed that Craig Lloyd’s next of kin will receive his share of the income for 5 years if he were to die.

SA1 Business Park

Share of rental income per annum

Level 1 – 1^st £80,000 – allocated to loan interest

Level 2 – Then next level of rent – allocated to rates/utilities/insurance/service charge

Level 3 – Then next level of rent - £20,000 allocated to Craig Lloyd

Level 4 – Then next level of rent – split 50/50”.

There are several disputed issues regarding the terms of the Joint Venture. I shall discuss these below but identify them here. (1) Was Sirocco or was Mr Hayward the party to the Joint Venture? (2) What was agreed regarding the allocation of £80,000 to mortgage interest payments before the profits were divided? (3) When was it agreed that £20,000 would be allocated to Mr Lloyd before the profits were divided? (4) What if anything was agreed about the term of the Joint Venture?

As I have said, no documentation was ever finalised. Mr Lloyd implies that Mr Hayward had no intention of putting anything in writing, because he was “playing the long game”, but I find no adequate basis for such a conclusion and it is clear that Mr Coates did work on producing a form of agreement. I think it more probable that Mr Coates became overburdened by other work and that, as the Joint Venture was actually operating well enough in practice, the question of a written agreement was simply put to one side and then overlooked. (That was the explanation that Mr Coates thought most likely when he gave evidence at trial.)

At all events, the Joint Venture was put into effect in November or December 2010. Mr Hayward, who was involved in many other developments, had little practical involvement with it; the day-to-day affairs of the Site were dealt with by Mr Lloyd and Mr Athay. The £20,000 investment mentioned in the meeting on 25 October 2010 was paid, and Mr Lloyd’s recollection is that by the summer of 2011 ten or eleven units at the Site had been completed and let. The rent invoices were in the name of Sirocco. The rent was paid into an account in the name RHP Sirocco. Mr Lloyd says that he did not know why the account had that name or, in particular, what the reference to Sirocco was. As I have indicated, I do not accept that evidence. The rental income was “going straight back in” (Mr Lloyd’s witness statement, paragraph 39): that is, it was being used to fund the ongoing works to develop the Site.

Until 2013 the Joint Venture continued to operate smoothly, on the whole. (An issue concerning mortgage interest payments will be considered separately below.) Then in June 2013 Mr Lloyd was arrested on suspicion of theft. He was again arrested on suspicion of further offences several times over the following weeks. The details of the arrests and the alleged offences do not matter. Mr Lloyd was in due course acquitted of such charges as had not already been dropped, except for one charge of perverting the course of justice (giving false information about a speeding offence), for which he received a custodial sentence that, after taking account of time spent on remand, allowed his immediate release. One of the arrests related to Mr Lloyd’s possession of money that he said he had collected as rent from tenants at SA1. On 25 June 2013 Ms Crickmore wrote by email to South Wales Police:

“Mr Lloyd has asked me to e-mail you about his relationship with us at the Awco building in Swansea.

We are the managing agent appointed by the landlord (Sirocco Holdings) and Mr Lloyd has entered into a joint venture with the landlord on part of the building.

He is authorised by us to collect rents on behalf of the joint venture which may be paid by cash, cheque or by direct transfer in the bank. He then accounts to us for rents collected. In addition as part of the jv arrangement he is responsible for the building and maintenance works carried out.”

Immediately after sending that email to the police, Ms Crickmore forwarded it to Mr Lloyd.

On or about 10 October 2013, having been arrested again, Mr Lloyd was remanded in custody, where he remained until about 6 May 2024. In the meantime he was unable to perform any of his duties under the Joint Venture. His evidence was that construction work at the Site had stopped in that month for unrelated reasons and that the only job that would have been left for him to do under the Joint Venture was the collection of rent. He said that his father, Mr George Lloyd, took over the rent-collection duties and was able to do most of this by telephone, as the majority of the tenants at the Site paid their rent through BACS. Mr Lloyd said in evidence that the arrangement with his father had worked out well and that Mr Athay had not undertaken any additional tasks but merely liaised with George Lloyd as he had previously liaised with him (Mr Lloyd). Mr George Lloyd’s evidence was to similar effect: he had agreed with his son to collect the rent and make any necessary payments; he personally dealt only with the paperwork but got one of his employees to do the “legwork”; he had no contact directly with Mr Hayward but did have some contact with Mr Athay; at no time did Mr Athay express any dissatisfaction with the way his role was working out. Mr George Lloyd was insistent that Mr Hayward did not tell him that the Joint Venture was at an end.

Mr Hayward’s evidence was to this effect. Mr Lloyd rang him after being remanded in custody and told him that there was no need to worry about the Site, because he would not be in custody for long and in the meantime his father would be able to take over his duties. A few days later he met with Mr George Lloyd and, despite having misgivings about the latter’s ability to attend to the Site as well as to his own business (Mr George Lloyd had a motor repair business, and even in retirement he still works six days in each week), agreed to let him stand in for his son. It very quickly became apparent that the arrangement was not working out, because there was no one in attendance at the Site. Mr Hayward had a further meeting with Mr George Lloyd one or two weeks after the initial meeting. Mr Hayward said that the position could not continue, because he did not know what was going to happen to Mr Lloyd and Mr Lloyd was not in a position to continue in the Joint Venture. “He acknowledged that we couldn’t have uncertainty and said he agreed. He asked whether, when things with Craig were resolved, we would be prepared to work with him in another capacity, to which I said firstly we would have to terminate the current arrangement [and] find someone else to take over the role, and then, when Craig does reappear, we can look at what work we have available and may be able to offer him. It was all quite amicable, we didn’t fall out and I felt sorry for them” (witness statement, paragraph 70). After that meeting, Mr Hayward spoke to Mr Lloyd again by telephone: “I said we have to terminate the joint venture because you cannot be here and there’s no certainty as to when you can. I said that his father had agreed that the situation is hopeless at the moment and he concurred that the joint venture was at an end, but there was the possibility of us offering appropriate work, which is what happened later. Craig did not argue about or contest it, but was grateful at that stage for the possibility of future work” (witness statement, paragraph 72).

Mr Athay gave evidence that he had been present at two meetings at which Mr Hayward and Mr George Lloyd had been present, but he was unable to disentangle them clearly: one was while Mr Lloyd was in prison, and the other was the meeting on 14 May 2014, which is described below. He stated (witness statement, paragraph 49) in connection with the first meeting: “There was some suggestion that his father might get involved in the management of the Site but I didn't take it seriously because I didn't think he had the necessary experience.” In oral evidence he said that he had no particular issue with the suggestion that Mr George Lloyd should stand in for his son, but he knew that he (Mr Athay) would end up doing the work, as Mr George Lloyd did not know the tenants and was not a property manager. He stated (witness statement, paragraph 50) of one or other of the meetings (he could not say which): “Richard said we cannot be associated with criminals and therefore the joint venture is at an end. I think it was also discussed that the joint venture wasn't making any money anyway.” In his oral evidence, however, he said that he believed that the reason for the termination of the Joint Venture was that Mr Lloyd was unable to carry out his duties, not that he was a criminal.

On 14 May 2014 a meeting took place between Mr Hayward, Mr Lloyd and Mr George Lloyd. It is common ground that both in the meeting and subsequently there were discussions concerning the financial consequences of terminating the Joint Venture. However, the parties give different accounts of the nature of those discussions: Mr Lloyd says that they were discussing the terms on which the Joint Venture might be brought to an end by agreement; Mr Hayward says that they were discussing the financial consequences of the fact that he had terminated the Joint Venture.

Mr Lloyd’s evidence is that he was probably released from custody on 6 May 2014 and that he returned to work on the Site after having two days at home with his children. On that basis, he would have been back at work when the meeting took place on 14 May, but I find that that was not the case. Mr Lloyd’s written evidence regarding the meeting, which was substantially the same as his oral evidence, was as follows:

“117.

We had a meeting in May 2014, after I got out of prison, with my dad and Richard. I went to the meeting and I hoped that Richard try and sort everything out, but that never happened. Richard was really rude to us; he just ‘pooh-poohed’ everything we said. My father after the meeting that he didn’t seek how it could keep carrying on like it was if he was treating me like this. There was no discussion in the meeting about the JV having ended, or going to end, or that there were any issues with what my father had been doing in my absence.

118.

I had no correspondence with Richard at that point. There was no discussion about the joint venture ending at that point. …”

In context, the reference to “sort[ing] everything out” is to issues that Mr Lloyd raised concerning what he said were excessive drawings made from the Joint Venture by Mr Hayward and inadequate payments made to Mr Lloyd.

Mr Hayward’s account was different:

“78.

Craig accepted that the joint venture was over, but by then he was somewhat aggrieved by this and suggested it might be renewed, which was rejected. He also suggested he was entitled to sums due to him up to the date of termination and was asking what was the value of the joint venture. I said I would write to him and set out what I thought the value was, and I think Kane and said it was worth nothing. The meeting was civil, we didn't fall out, and next day I wrote the letter.”

On 15 May 2014 Mr Hayward wrote to Mr Lloyd as follows.

“I refer to our meeting yesterday and I fully endorse the position that your Father put forward.

He said there was no point in continuing to talk about the Joint Venture going forward and the only issue is what if any compensation you should receive. I am not convinced that we should pay you any monies as I keep asking both you and our Accountant to show me receipts for the money you have paid which amounts to £80,000. I have not seen that evidence and therefore cannot accept your claim that the money has been paid.

Notwithstanding this issue I also understand that I have a continuing liability to pay approximately £24,000 in monthly payments and £28,000 in a balloon payment. The option is available to pay the balloon payment by returning the vehicles.

I make the point that on our figures you have received from the Joint Venture a sum vastly greater than you were entitled to. This is largely a matter of record.

I find it very difficult to reconcile any payment to you under all the circumstances.

For me to consider an offer I need from you:

1.

Proof that you paid out £80,000 for the cost of the units. This has to be in the form of receipts or other legitimate payment forms which will be acceptable to our audit Accountants.

2.

Your proposals for settling the finance on the cars.

3.

How you suggest we deal with the issue of inequality of drawings

You should be able to resolve the first issue by production of the paperwork. The issue on finance you may be able to resolve by either selling the vehicles or placing them in part exchange against new cars. The problem on the drawings could be resolved by adding back your total drawings and working out your actual entitlement.

Once I have answers to these questions we will ask our Accountants to give us advice on the value of your interest.”

Mr Lloyd replied to that letter by an email on 27 May 2014, as follows.

“Hello Richard thank you for your letter dated 15th May.

Firstly can I assure you that I do not want to fall out over this situation as I feel there are still other ventures similar in the future that can be done together. I have done what you asked and got invoices for SA1 totalling well over 80,000 so far which I spent in the time frame of March 2010 to Oct 2010 when you came on board and joined the venture. I think the final figure of invoices will come to well over 100k that I’ve spent sole[l]y in that period, I can also can show the remortgage and loans where this came from as you requested. I'm hoping that you can rethink this whole thing through as you and I know SA1 was created solely by me and the other several hundred thousand investment has all come from rents paid to our venture, by several tenants who were with me before. I would like you to come back to me with a sensible fair offer seeing as if I’d not taken you up on your offer of the jv and carried on alone I would be now 100% shareholder in the units with an income of around gross 400k with a rent to RHP of £ 120,000. and in years 11-15 £168'000.

However this is in the past now and the future must go on and to do the other projects I have in mind to make up for you ejecting me out of the SA1 venture once it was finished I’m going to need money and that is where I hope you can find a sensible and fair figure to come back to me with and obviously it can be subject to me providing the invoices which I do have.

Also the drawings figures you have are extremely wrong the cash withdrawals I took from the bank were for wages paid to LK Installations for the works carried out.

So if we are not able to go forward on the figures we know exist for the 8 units I built sole[l]y then I will need all the accounts that have been filed copys [sic] of all invoices since 2010 and also all the bank statements for Barclays RHP Scirocco [sic] sent to me as soon as possible please.

I hope your [sic] in good health !!!”

At the end of May 2014, after that exchange of correspondence, there was a further meeting between Mr Lloyd, Mr Hayward and Mr Athay. Unbeknown to Mr Hayward and Mr Athay, Mr Lloyd recorded the meeting. Two transcripts are in evidence, though very little reference was made to them at the trial. I have mainly used the one made by Marten Walsh Cherer Ltd, though the other is at times a useful supplement. It seems to me that the conversation can be read in more than one way; it does not unequivocally support one party’s case over the other’s, though I have a view as to its most natural interpretation.

The transcript of the meeting is perhaps, when read alone, capable of more than one interpretation; it does not by itself conclusively support any party’s case on the issues. However, I make a few observations arising from my own interpretation of the meeting. First, the entire conversation seems premised on the Joint Venture having come to an end. There was much discussion about future collaboration between the parties, but none of it seems to me to have been to do with the continuation of the Joint Venture. Indeed, the discussion about financial matters for the future seems, on my reading, to have been based on the understanding that the Joint Venture was over. This is also consistent with Mr Lloyd’s email of 27 May 2014, which is clearly premised on the Joint Venture having ended and refers in terms to making up “for you [Mr Hayward] ejecting me [Mr Lloyd] out of the SA1 venture once it was finished”. Second, Mr Hayward had not received invoices to prove Mr Lloyd’s expenditure. Third, I do not think that the transcript gives much support to Mr Lloyd’s contention that the idea for the Joint Venture came from Mr Hayward as a device for avoiding having to pay Lambert Smith Hampton’s invoice. Certainly, Mr Lloyd made that allegation in the meeting. But Mr Hayward and Mr Athay, who did not know that the meeting was being recorded, purported not to have any such recollection. Fourth, Mr Lloyd accepted that he had agreed that the Joint Venture should bear the interest payments (I discuss this matter below). Fifth, there was some sort of accepted position regarding the leased vehicles, which are the subject matter of the counterclaims.

There was further correspondence after this meeting, which I set out at length as it has some bearing on the parties’ understanding at the time. On 15 July 2014 Mr Lloyd wrote to Mr Hayward in the following terms.

“Further to your letter of the 15th May and our recent meeting, I would like to firstly thank you for agreeing to see me to discuss the joint venture, its progress and the future. I am very pleased that you wish to continue working with me on future projects and I am actively looking at those, but as indicated I do have some financial difficulties in that the JV Partnership is not producing any income for me at the current time.

You have indicated that the car payments will continue to be made and you will no doubt recall that this was originally a part of our agreement in any event. What is more disconcerting is that I am not receiving any proper accounts for our partnership for the significant income that has been received. As you are aware under the partnership I have grown the income up to a figure in excess of £38,000.00 per month and receivable from the tenants at the Awco site for Scirocco Holdings Limited. You have said in your letter and indeed in our recent meeting that there are significant outgoings and that you also believe that I have received more than my share of the profits due to me, however I have received no proper accounts or Bank statements in respect of the same. Perhaps you can let me have a copy of the draft accounts, the management accounts and the Bank statements for the past 12 months for our joint venture partnership.

As per your request I am putting together the invoices, payment schedules and evidence showing the sums in excess of £110,000.00 that I have paid in out of my own money into the joint venture. I am very pleased that we are discussing matters amicably and looking at a way forward for the future and I trust that I am able to receive this information showing the current position of the accounts, the partnership and current drawings, profit share etc. as it would appear from our meeting that you felt that there was insufficient funds to pay any further drawings to either of us. I am of course confused by this as I am aware of the significant income but I am perhaps not fully aware of all of the outgoings, some of which you explained during our meeting.

To this end it would be very helpful if the accountants could send me the full information through as I am also concerned regarding the tax position, in particular my own personal tax position in having to account for profits and losses in this joint venture partnership.

I will revert to you as soon as I have a further project going forward based on the information that you suggested, but in the meantime I look forward to receiving the documentation as requested above.”

On 17 July 2014 Mr Hayward replied:

“Thank you for the letter.

Your invoices would be helpful and I suggest when you are ready, come and see me and we can look at them. In the meantime I am asking Kane to have a Surveyor look at the work and give us a costing.

I enclose a summary of the figures which is helpful. Kane has all the back-up figures and, again, we can go through these when we meet.”

It is unclear what document the “summary of the figures” enclosed with that letter was, though its nature appears from the next correspondence.

On 27 August 2014 (the letter is mis-dated 2015) Mr Lloyd replied:

“Thank you very much for your letter of 17th July enclosing the summary of figures for the accounts for 10 months ending April 2014.

I am still putting together all of the invoices to show the £110,000.00 plus which I have paid into the joint venture and I am pleased that Kane is also arranging for a surveyor to confirm verify those figures and costing. Please ask the surveyor to contact me if he needs any information with regard to the building works or the costings themselves, as I am happy to help.

Although the summary figures that you sent through are a great help, they of course do not give the full income and expenditure in the period from the start of the joint venture in June 2011, when we varied our agreement from a formal lease through LSH to this joint venture. From that time under our joint venture I have built out the units, found tenants and they have obviously been paying rent. For my own tax purposes I need to have accounts in respect of this joint venture partnership from that period up to date.

I will also need to have a breakdown of the figures as I do not understand the £74,481.00 of direct property costs relating to the joint venture in that 10 month period to April 2014. Similarly I do not understand ‘general costs’ at all as these were never discussed or agreed as being deductable (sic) from the joint venture proceeds, neither was the company’s ‘interest charges’ and finance payments part of our deal. Those finance costs had already been incurred prior to the joint venture and were never to form part of the joint venture deductions.

You will recall we varied our agreement on my lease on the basis that I would build out the unit, find tenants and other than direct costs in respect of that project and the units themselves the proceeds would be split 50/50. As you recall I have an e-mail in September 2011 confirming this, including at that time a Bank statement for the joint venture showing a significant credit balance to be divided between us.

I am under some pressure to produce proper accounts and do tax returns and therefore it is really important that I do have the full accountancy information for this joint venture showing the full income and a full breakdown of any costs that are to be deducted. Clearly, I need to agree those costs as at the current time I have no idea what ‘general costs’ and ‘finance costs’ are which you have deducted from our joint venture income.

If it is easier I am happy to speak directly with Peter [Symons] the accountant to provide this information but I do need it going back to the start date of 2011 for the joint venture.

I am pleased that the Kings Dock project has been concluded and that you are happy with it and I shall send my invoice for this over to you shortly as discussed. If you need any additional help on the Kings Dock at all I have told Richard Pretty to contact me, I would be delighted to help.

Finally, as you are aware I am also looking at further future projects for our joint investment and I hope to have good news with this in the next few weeks.

I really do now need to hear from the accountants with regard to documentation and as I say I am happy to speak directly with Peter the accountant on this if it saves your time.”

Mr Hayward replied on 1 September 2014:

“I received your letter of the 27^th August 2014 and I best send you a copy of the letter sent to you on the 15^th May 2014 setting out what we required to look into the value of the JV (if any).

I have accounts but these are incomplete until such time as we have the requested invoices etc.

I have also asked why we would owe you money at Kings Dock and I cannot recollect you doing any work for me. If you have worked on the instruction of anyone else then let me know. It is not a problem.

Finally am anxious to resolve these issues as I have other big potential purchases in hand and they would suit your skills.”

The following day, 2 September 2014, Mr Peter Symons, an accountant employed by RHP, sent to Mr Hayward and Mr Athay an email with the subject line “Sirocco – Joint Venture P+L” and an attachment called “Joint Venture P+L accounts as at Apr 14”. The email said: “I have added contingency amortisation of £25000 into the accounts for the period 10mths accounts to April 2014.” The following points may be noted in respect of these accounts.

There was renewed correspondence concerning the Joint Venture in 2015. In my view, none of it tends to indicate that the Joint Venture was continuing. On 6 February 2015 Mr Lloyd wrote “without prejudice”:

“I am writing with regards to the monies due and still outstanding from Jv at alco.

My Solicitor has agreed to proceed under a no win no fee contract and is now pressing me to commence legal proceedings against you.

…

Therefore my question is, would you prefer to settle this out of court?

I would need to hear from you with your proposals by return.”

Mr Hayward replied:

“I am still awaiting to hear from you with the information that was requested.

If you were to instruct a lawyer we would do the same and we would immediately stop the payments for your vehicles.

It would also stop all further business between us and again I cannot think how that is helpful to you.”

And Mr Lloyd replied:

“Richard I do have the invoices for over 114k as I’ve previously discussed with you, but my position is that because I gave all paperwork and emails regarding Jv from day one to the solicitor in June 2014 they want to proceed on a no win no fee and if I do not then I have to pay for work done up to date which they say is around 3k. I also am struggling to raise finance myself on several things atm with lack of deposits. I would like a resolution and put it behind us so we can move forward with other things too, I've never been anything other than honest and true to you which is why I hope we can continue to do business.”

In further exchanges on 13 and 14 February 2015 Mr Lloyd pressed Mr Hayward for proposals to avoid legal action and made clear his determination to recover the “substantial amount of JV monies owing to [him]”. Mr Hayward replied:

“You must do what you feel is right for you and in the meantime we will now consider our position in relation to the finance agreements we are paying on your two vehicles.

As we are to have a fight then there is no reason for us to continue with that cost and I must ask you to return the vehicles to us within the next week and to remind you that any misappropriation will be considered as theft and criminal consequences will flow.

It is a pity that our relationship has fallen to this level but we have repeatedly asked you to let us have the information but despite your confirmation that you have them we are yet to receive the invoices.”

Mr Lloyd’s further response said in part:

“I brought copies of these invoices along to a meeting that I had with you, however you were not interested in them as you stated that you just valued the joint venture as the total of the cars.

You say you want the invoices, I hope this means that you are now prepared to pay me the money on receipt of these invoices.”

On 15 February 2015 Mr Lloyd wrote:

“Just to clarify one or two things, firstly I have not pursued the Jv money issue for the moment, because you assured me that last year I would have many more opportunities with you, however it was in fact the case that I've collected numerous debts all at no cost and also the jobs I was promised in Newport were never given to me for the sake of a couple of grand. Also I've sold numerous vehicles for you at no benefit to me.

…

I've already put every penny I had into the Alco Jv venture, and with the paperwork & statements I have, any jury will see what you have done to me and my family.

I did want to continue to work with you as I respected and liked you, but I know it's only business for you, but not fair business, you are cold and calculating and will obviously stop at nothing to avoid paying me. You are the one steering this towards the court by your complete denial of the monies you owe to me.”

Mr Hayward replied:

“Despite what you say about the invoices I have not seen any papers which substantiate your claim. I know what money we have introduced but I have no idea what your figures are. You did produce a pile of invoices when you came to the office but they could have related to any job you were doing at the time and were no conclusive evidence and further could have been paid by our money as opposed to yours.

The rest of what you write is not accepted. I had hoped that you would take up the offer and try to find other properties which we could have worked on together and which would have provided some income for you. So far you have not produced one property that we could buy. …

If you change your mind and want to be involved then I leave the door open for you to come back but other than that you must do what you want.”

I accept Mr Hayward’s evidence that, after his release from custody in May 2014, Mr Lloyd did no further work at SA1 for a considerable period. The probability, which gains some support from the evidence of Mr George Lloyd, is that Mr Lloyd was traumatised by his period in prison and took a while to recover. However, he did do further work from around the spring of 2015 until 2017. Mr Lloyd says that this was pursuant to the Joint Venture and that he continued to work on the Joint Venture until September 2017, when Mr Hayward told him it was at an end and Mr Athay would be taking over. He says that in around June 2015 it was agreed that he should receive the first £20,000 of the net profits of the Joint Venture, and that from July 2015 he was paid £1,000 per month in respect of his profit share. I find, however, that the agreement that Mr Lloyd should receive the first £20,000 of the net profits was part of the original agreement in 2010, not a post-2014 variation of the agreement. As for the payments of £1,000 per month, they were in fact made by Alymere to Topgrade and ADEL, two companies of which Mr Lloyd was a director and had significant control, upon invoices for property management services, works done at SA1, and commission fees for finding further tenants for units at SA1. I find that the work and the payments were not pursuant to the Joint Venture but, in accordance with what had been previously discussed as a possibility, were pursuant to subsequent contractual engagements of Mr Lloyd’s companies by Mr Hayward on behalf of Alymere, which had acquired SA1 in October 2014.

A number of issues arise for consideration on Mr Lloyd’s claim, and I shall address them in what I consider to be a convenient order.