GUMBATOV v ARAKELIAN [2016] NZHC 2582

GUMBATOV v ARAKELIAN [2016] NZHC 2582 [28 October 2016]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2013-004-1263[2016] NZHC 2582BETWEEN VALERIY GUMBATOVPlaintiffAND IGOR ARAKELIANDefendantHearing: 22, 23, 24, 25 and 26 February 2016Appearances: M G Locke for the PlaintiffE J Werry for the DefendantJudgment: 28 October 2016JUDGMENT OF WOODHOUSE JThis judgment was delivered by me on 28 October 2016 at 1:00 p.m. pursuant to r 11.5 of the High Court Rules 1985.Registrar/Deputy RegistrarSolicitors / Counsel: Mr M G Locke, Barrister, Auckland Mr G Stewart (plaintiff's instructing solicitor), Stewart & Associates Equity Law, Auckland Mr E J Werry, Barrister, Auckland Mr S McDonald (defendant's instructing solicitor), AucklandOutline of claims and issues[1] The plaintiff, Mr Gumbatov, has brought two claims against the defendant,Mr Arakelian. One arises out of a loan agreement and the other out of an agreementfor sale and purchase of shares. Mr Arakelian has a counterclaim arising out of theagreement for sale and purchase of shares. I will summarise the claims in the orderin which they were made.[2] Mr Gumbatov's first claim is pursuant to a loan agreement made in October 2010 (the loan agreement). Mr Gumbatov lent DVK Roofing Ltd (Roofing) $100,000, with guarantees from Mr Arakelian and DVK Group Ltd (Group). The claim against Mr Arakelian is for $80,000 plus interest. Mr Arakelian admits that he had become liable for the sum of $80,000, but says that it is not owing because of an agreed set-off in the subsequent share sale agreement.[3] Mr Arakelian's counterclaim is for $300,000 pursuant to what he says is a mainly written share sale agreement made on 7 April 2011. Mr Arakelian says that the essential terms were that he agreed to sell to Mr Gumbatov 33% of the shares in Roofing, Group and DVK Roofing Services Ltd (Services) at a price of $380,000, with $80,000 being met by set-off against Mr Arakelian's acknowledged debt of$80,000.1[4] Mr Gumbatov's second claim has varied. As recorded in his current statement of claim, the essence is that "in or about April 2011" there was an entirely oral agreement between him and Mr Arakelian on the following terms: (1) 100% of the shares in Group and Services were to be transferred to Mr Gumbatov in consideration of his making loans to the companies to meet debt; (2) once the loans from Mr Gumbatov had been repaid to him, together with the total owing on the loan agreement, 50% of the shares would be transferred back to Mr Arakelian; and (3) 100% of the shares were transferred to Mr Gumbatov, but at a later date Mr Arakelian, wrongfully transferred 50% of the shares back to himself. Mr Gumbatov seeks an order for transfer of those shares back to Mr Gumbatov.1 Until April 2011 DVK Roofing Services Ltd was known as DVK Roofing Commercial Ltd. Forconvenience the abbreviation "Services" will generally be used in this judgment.[5] Although this litigation commenced with Mr Gumbatov's claim for debt onthe loan agreement, the issues requiring consideration are the parties' markedly different contentions as to what was agreed in respect of the shares. Mr Gumbatov and Mr Arakelian both agree that Mr Arakelian agreed to sell shares in Group and in Services to Mr Gumbatov. Beyond that nothing of consequence is agreed.[6] A document central to the case is dated 7 April 2011. On the face of it, this isan agreement for sale by Mr Arakelian and purchase by Mr Gumbatov of 33% of theshares in Group, Services and Roofing for $380,000. The document is signed byboth men. Although Mr Gumbatov contends, amongst other things, that thedocument does not record a contract between the parties, it will be convenient torefer to this as the "7 April agreement".[7] The main issues relating to the 7 April agreement are:(a) Does it record the terms of an agreement intended by the parties to be contractually binding on them?(b) Are the terms on essential matters sufficiently certain, either as recorded in the document, or established by an oral collateralagreement or oral variation?(c) If the answer to both of the preceding questions is "yes", what are theterms of the agreement, including the meaning of some decidedly unclear provisions?[8] Further issues are the following:(a) The 7 April agreement is silent as to how the consideration was to be met by Mr Gumbatov. The issue is whether the 7 April agreement, or a related oral agreement, required Mr Gumbatov to pay Mr Arakelian $380,000, or whether consideration of $380,000 was to be met by MrGumbatov's making loans to the companies of no less than $380,000.(b) The 7 April agreement does not make provision for a set-off of the $80,000 due on the loan agreement. Did the parties orally agree, as Mr Arakelian contends, that the $80,000 otherwise due from Mr Arakelian to Mr Gumbatov would be set-off against, or applied towards, the consideration of $380,000 for the shares?(c) Was the percentage of the shares to go to Mr Gumbatov orally agreed at 50%, rather than 33% as recorded in the 7 April agreement?(d) Was there an oral agreement that a further 50% of the shares were to be transferred to Mr Gumbatov as security?[9] The summary of issues to this point is, in large measure, on assumptions that the 7 April agreement is a binding agreement subject to some oral variations, or an oral collateral agreement. There is a further broad issue, arising from MrGumbatov's contentions, as to whether the agreement for the sale and purchase ofshares was entirely oral and made, as he pleads, in or about April 2011.Conclusions in summary[10] I am satisfied, as Mr Arakelian contended, that the parties intended to be contractually bound by the 7 April agreement, and that the 7 April agreement is sufficiently certain to be capable of having effect as a contract, but there were some effective oral variations of terms in the 7 April agreement, or what amounts to an oral collateral contract.[11] Mr Arakelian contended that the consideration of $380,000 was payable by Mr Gumbatov to Mr Arakelian, but $80,000 was to be met by the set-off, leaving $300,000 to be paid to Mr Arakelian. I have concluded that the parties agreed thatconsideration due from Mr Gumbatov of $380,000 would be met by Mr Gumbatov'smaking advances to meet company debt in a sum of not less than $380,000, $80,000 of which came from the balance otherwise due under the loan agreement. The evidence establishes that payment in this way was effected. In consequence, Mr Gumbatov's claim for $80,000 and Mr Arakelian's claim for $300,000 both fail.[12] The 7 April agreement provides for transfer of 33% of the shares. I am satisfied that the parties orally agreed, and therefore varied a term of the written agreement, that 50% of the shares were to go to Mr Gumbatov, not 33%.[13] On the remaining issue, arising out of Mr Gumbatov's second claim, I have concluded that Mr Gumbatov is not entitled to an order that Mr Arakelian transfer to him the remaining 50% of the shares.The facts[14] In 2010 Mr Arakelian was the sole shareholder and director of Group. He held 1,000 shares in Group. Group was a holding company. Two of the companies in the group are the two other companies already referred to, Services and Roofing. In 2010 Roofing was the main operating company of the group.[15] In 2010 Mr Gumbatov came from Russia to settle in New Zealand. He had worked in the construction industry in Russia and was looking for employment in the construction industry in Auckland. He was referred to Mr Arakelian through other members of the Russian community and began working for the DVK group.The loan agreement[16] In or about October 2010, Mr Gumbatov agreed to lend $100,000 to Roofing.Mr Gumbatov said that this arose from Mr Arakelian's telling him that the businesswas struggling with cashflow and Mr Arakelian asked if Mr Gumbatov could lend $150,000. Mr Arakelian did not dispute this in any material way. The result was the loan agreement. The terms of relevance were: Mr Gumbatov lent $100,000 to Roofing; there was a capitalised interest sum of $20,000; the total of $120,000 was to be paid in monthly instalments of $20,000 commencing on 14 November 2010; the final payment was due on 14 April 2011; and Mr Arakelian and Groupguaranteed performance of Roofing's obligations.[17] Roofing made two payments of $20,000; one on 30 November 2010 and the other on 4 February 2011. No further payments were made.The share sale agreement – competing contentions[18] There were conflicts of evidence on almost all major issues. The positions ofthe parties on most matters are irreconcilable. What follows from this point recordsmy findings of a number of primary facts, with reasons for my findings. This caseturns almost entirely on questions of fact. For that reason, on a number of issues Ihave recorded the evidence in some detail, but not on all. For the avoidance ofdoubt, in respect of matters not referred to, I record that I have taken into account therelevant conflicting contentions of Mr Gumbatov and Mr Arakelian, the relevantevidence of other witnesses called by Mr Gumbatov and Mr Arakelian, andsubmissions of counsel.The reason for the share sale agreement[19] By February 2011 the DVK companies and Mr Arakelian personally were in serious financial difficulty. This is demonstrated to a reasonable extent by the default on the loan agreement. There was immediate default in payment of the first instalment. By February 2011 four instalments of $20,000 should have been paid, but only two had been paid. Mr Arakelian and the companies could not pay the balance of $80,000 due to Mr Gumbatov. Mr Arakelian personally was desperate for funds. He had sold a personal investment and borrowed money against his home to put funds into the companies. Although there is insufficient evidence to conclude that the companies were insolvent, the evidence does indicate that, by early 2011, liabilities of the companies may have exceeded the realisable value of assets, and current debts could not be met from cashflow, quite apart from the debt to Mr Gumbatov which by then was due in full.[20] Mr Arakelian was looking for substantially more money than he had already borrowed from Mr Gumbatov and that he had himself more recently put into the companies. He explored various possibilities, both with Mr Gumbatov and with others. After considering possible arrangements with third parties, Mr Arakelian decided to enter into an agreement with Mr Gumbatov for sale of the shares to him.[21] Mr Gumbatov said that what may be described as a provisional or indicativedocument was signed in February 2011, but it was not intended to create a contract.The 7 April agreement is a six page document. Mr Gumbatov said that three of thosepages recorded the indicative arrangement made in February. In respect of the 7April agreement relied on by Mr Arakelian, Mr Gumbatov said, in effect, that thiswas fabricated by Mr Arakelian by adding the three pages from the Februaryarrangement to three further pages. Mr Gumbatov said that the agreement hereached with Mr Arakelian was an entirely oral agreement entered into after 7 April.[22] Contrary to Mr Gumbatov's evidence, I am satisfied that the entire document– the six pages – was put together on 7 April by agreement, that it was intended byboth of them to record some of the essential agreed terms, and both of them signedthe document on 7 April.Analysis of the 7 April agreement[23] The determinative evidence, which I accept, was the evidence of Mr JerryHong. From June 2008 until June 2011 Mr Hong was the office manager andadministrator for DVK group. I accept Mr Hong's evidence, in preference to that ofMr Gumbatov. It was clear, it was straightforward, it was consistent with the form ofthe document itself, and it was consistent with the essence of Mr Arakelian'sevidence. Mr Hong had clear recollection of preparing the document for both menand the circumstances in which it was prepared. There were some handwrittennotations on the document, including a handwritten change of a date on the sixthpage, which change Mr Hong remembered having been made by Mr Arakelian whenMr Gumbatov was present and also signed. Mr Hong's evidence supports aconclusion that the 7 April agreement does record essential terms agreed at the time.And his evidence is consistent with other evidence, to which I will come, relating towhat occurred on and immediately after 7 April.[24] Mr Hong witnessed the signatures of Mr Arakelian and Mr Gumbatov on the7 April agreement. Mr Hong also typed some of the pages. The entire agreementhas six pages. Mr Hong said that these pages were produced in two ways. Pages 2,3 and 4 were downloaded from the internet and printed. The remaining pages, apartfrom handwriting on then, were typed by Mr Hong. This includes page 5, althoughthe original template for part of the content of page 5 also appears to have come from the internet.[25] It is necessary to describe the 7 April agreement in some detail because of the significance of the issue whether the 7 April agreement does record essential terms agreed between the parties, or whether it was fabricated by Mr Arakelian and Mr Gumbatov's totally oral agreement argument is correct.[26] Page 1 was typed by Mr Hong. There is a typed date "07 Apr. 11". Belowthe date, and typed, are the names of the three companies: DVK RoofingCommercial Ltd, DVK Group Ltd and DVK Roofing Ltd. Below this is the typeddescription of the document – "AGREEMENT FOR SALE AND PURCHASE OFSHARE". The word as typed is "SHARE" rather than "SHARES". This is one of anumber of errors made in the document typed by Mr Hong for whom, I assumed,English was not his first language, and prepared for the two parties whose firstlanguage is Russian. This insignificant error on the cover sheet is a precursor to adegree of uncertainty as to the meaning of more important provisions, but which Iam satisfied comes from errors of expression. None of the infelicities of language,when put into context, leaves material uncertainty as to intention.[27] Page 2 is a table of contents. This is the first of the pages downloaded fromthe internet. The last entry in the contents is a reference to clause 9 at page 4. Thereis no reference to pages 5 or 6. This does not raise doubt as to intention, but lendssupport to Mr Hong's evidence about the pages he typed and the pages that weredownloaded and printed.[28] Pages 3 and 4, also downloaded from the internet, contain standard formclauses with some handwritten amendments and the signatures of Mr Arakelian andMr Gumbatov beside each of the handwritten amendments. The basic template hasnot been altered. For example, the vendor is described as "A of Auckland, CompanyDirectors" and the purchaser is described as "B of Auckland, Company Director".Nowhere in the agreement is there an express statement that the vendor is MrArakelian and the purchaser Mr Gumbatov.[29] Clause 8.1 records, amongst other things: "The Purchaser enters into thisagreement as trustees [sic] of the D trust and not in any personal capacity".Irrelevant provisions, such as clause 8.1, have not been deleted. Mr Locke, for MrGumbatov, referred to matters of this nature (and there were others) in support of asubmission that the agreement is too uncertain to be effective as a contract. I do notagree. I record my reasons below. But it may be noted in relation to clause 8.1 that,although it has not been deleted, a recital that the purchaser is the trustee of a trusthas been deleted.[30] Relevant provisions on pages 3 and 4, and some arguments for Mr Gumbatovin that regard, are noted in the following paragraphs.[31] Recital A records: "The Vendor is the beneficial owner of 1,000 voting sharesin C Enterprises Ltd ("the company")". The number "1,000" has been handwritten,and a printed number "10,000" has been deleted. The signatures of Mr Gumbatovand Mr Arakelian are beside the amendment. C Enterprises Ltd is not identified asany one of the companies recorded on page 1. Mr Locke submitted that this alsomade the document too uncertain for a contract to arise; identity of the shares to betransferred was plainly essential. There is no merit in that submission. It was asubmission directed to an isolated part of the entire document and removed from therelevant contextual evidence. The entire document makes clear that Mr Gumbatovand Mr Arakelian were dealing with the shares in the three companies named on thecover sheet. Other evidence, to which I will come, removes any residual doubt, andalso establishes the Roofing shares were in the end not to be transferred to MrGumbatov.[32] The word "Shares" is defined as meaning "333 voting shares in theCompany". The number "333" is handwritten. A printed number "3,333" has beendeleted and the signatures of Mr Gumbatov and Mr Arakelian are beside theamendment. The total of issued shares in Group and in Services was 1,000 shares ineach.[33] Clause 3.1 states: "The purchase price for the shares is 380000.00". Thisclause originally contained a printed notation "$XXX". That notation has beendeleted and the number "380000.00" handwritten in its place. Again the signatures of Mr Gumbatov and Mr Arakelian have been written beside the amendment.[34] Clause 4 makes provision for "Documentary completion". This expression isdefined as "completion of the transfer of the legal ownership of the shares" and isrequired to occur on the date of the agreement. Clause 4 imposed obligations on MrArakelian, as the vendor, to deliver a transfer of the shares to Mr Gumbatov and takeother formal steps. There is no evidence that these formal steps were taken. For MrGumbatov there was an extended argument that this in some way invalidated thetransactions or rendered the 7 April agreement unenforceable. I am satisfied thatnothing turns on those arguments. The reality is that Mr Gumbatov and MrArakelian were happy to proceed in a less formal way, and primarily by jointinstructions given to Ms Megan Goh, a company employee, to lodge transferparticulars with the Companies Office. These joint instructions related to directorshipchanges as well as share transfers for Group and Services, a topic dealt with below.[35] In contrast to the reasonably detailed provisions in clause 4, in favour of MrGumbatov as purchaser, there is no clear provision in the 7 April agreement as tohow the consideration of $380,000 was to be provided by Mr Gumbatov. Inparticular, there is no provision that $380,000 is to be paid by Mr Gumbatov to MrArakelian. An obligation on Mr Gumbatov to make payment to Mr Arakelian mighthave been implied from the substance of the transaction: Mr Arakelian agreed to sellshares to Mr Gumbatov and Mr Gumbatov agreed to purchase those shares from MrArakelian for $380,000. But, as a matter of law, consideration due from a party to acontract does not have to go to the other party to the contract if the agreementprovides otherwise. The absence of a provision recording what Mr Gumbatov wasrequired to do in relation to the consideration due from him, compared with expressprovisions in respect of what Mr Arakelian was required to do, at least raises aquestion whether Mr Gumbatov was required to pay Mr Arakelian. The answer tothe issue is found in part in pages 5 and 6 of the agreement, and in part in evidenceoutside the agreement to which I will come.[36] Page 5 is one of the pages Mr Hong said he typed, although part of it appears to have first been downloaded from the internet. The heading is: "Schedule 1(Clause 5.1) Warranties and Undertakings". This appears to have come from theinternet because it relates back to clause 5.1 which is on page 4. There are then six fully typed clauses. Clauses 1, 2, 3 and, probably, part of clause 4, all appear to be standard form clauses taken from the internet template. The second part of clause 4, which is of considerable importance on the consideration issue, is directed to matters quite specific to the circumstances of the DVK companies, as are clauses 5 and 6. Clauses 4, 5 and 6 are recorded below. I have italicised the last two sentences of clause 4 because of their importance, notwithstanding obscure expression. What follows is verbatim, including errors of expression as well as spelling mistakes.4. All insurance premiums, PAYE tax, sales tax, income tax, land tax, Goods and Services tax, local authority taxes, levis and rates, customs levies, charges and taxes and all other taxes, levis and charges of any kind assessed or levied on or payable by the Company, have not been paid, list attached and acknowledged by purchaser. All outstanding amounts will be paid by the company owed by new owners after settlement and transactions completed. Purchaser not liable for any amounts owed by the company not included in the list above.5. All the properties owed by Group of DVK Companies are part of this sale.6. All receivable are part of this sale[37] For reasons I come to later, I am satisfied that clause 4 supports MrGumbatov's contention on consideration.[38] Following clause 6 on page 5 there is a typed notation "Executed as an agreement" and a further notation "Executed by A as vendor in the presence of:".Both Mr Arakelian and Mr Gumbatov have signed the document at this point, andMr Hong has signed as witness and handwritten his name, occupation and address.The signatures and the additional detail relating to Mr Hong are all in blue. This isin contrast to the fact that the signatures of Mr Gumbatov and Mr Arakelian on pages3 and 4 which are black and appear to be photocopied. The difference in the colourof the signatures might have supported Mr Gumbatov's argument that some of thesepages had been signed back in February. This apparent discrepancy was explained inMr Hong's evidence that the six pages were put together in two parts, separated bytime during the morning. But if Mr Hong's recollection was wrong, and three of thepages had been used by Mr Arakelian and Mr Gumbatov as some form of non-binding draft at an earlier date, this does not assist Mr Gumbatov's argument. As Ihave already recorded, the evidence does establish that the entire document was puttogether as an agreement on 7 April 2011. On the other hand, the decidedlyunorthodox way in which the agreement was documented, with a mixture of standardform provisions, as on pages 3 and 4, and bespoke provisions, as on pages 5 and 6,lends weight to the arguments of both parties, albeit on different points, that therewere further oral variations or collateral agreements.[39] Page 6 was in part typed by Mr Hong and in part handwritten. The typed portion is as follows, and reproduced verbatim:Amount due as at 06 April 2011Account payable $ 118,481.61Wages Roofing $ 92,686.94Wages Group $ 30,569.42Viking $ 66,217.29PAYE $ 49,764.45David Kim $ 12,968.74Cheque issue and off acc payable list $ 11,801.64Total $ 382,490.09A further item was added in handwriting:IRD core tax for DVK Roofing Waterproofing Ltd = 87000.[40] The signatures of Mr Arakelian and Mr Gumbatov appear below the typed table and the handwritten reference to the other debt. Mr Arakelian's signature, andhis handwritten name, are in black, with Mr Gumbatov's signature in blue. This does not assist Mr Gumbatov's contentions. This page must have been producedeither on 6 April or 7 April because of the typed words "amount due as at 06 April 2011". In addition, Mr Arakelian has handwritten his name beside a date. The original handwritten date was "8.04.11". The figure "7" has been handwritten over the top of the figure "8". Mr Hong remembered this alteration. He confirmed that this amendment was made by Mr Arakelian in his presence. This is one of the specific items that assisted Mr Hong in recalling the detail of the document and thefact that the entire document was signed by both men on 7 April. Mr Arakelian andMr Gumbatov signed this page below the date.Share transfers and changes of directorsShares and directors of Group[41] Company records for Group record the following:(a) 8 April: Mr Gumbatov consented to be a director of Group. Mr Arakelian remained as a director.(b) 11 April: Registration of transfer of 500 of 1,000 shares in Group from Mr Arakelian to Mr Gumbatov.(c) 10 June: The 500 shares in Group still registered in Mr Arakelian'sname were recorded as transferred to Mr Gumbatov.(d) 10 June: Mr Arakelian recorded as having ceased to act as a director of Group.(e) March 2012: The annual return for Group for the 2012 year records Mr Gumbatov as the sole shareholder, holding 1,000 shares, and the sole director.(f) 6 March 2013: 500 of the 1,000 shares in Group held by Mr Gumbatov were transferred to Mr Arakelian.Shares and directors of Services[42] Company records for Services record the following:(a) 8 April: Registration of transfer of all 1,000 shares in Services (then called DVK Roofing Commercial Ltd) from Mr Arakelian to Group.(b) 8 April: Mr Arakelian ceased acting as a director.(c) 11 April: Registration of transfer of 500 of the 1,000 shares in Services held by Group to Mr Gumbatov. In consequence MrGumbatov held 50% of the shares in Services and Group held the other 50%.(d) 11 April: Mr Gumbatov consented to be a director of Services.(e) 11 April: The name of DVK Roofing Commercial Ltd was changed to DVK Roofing Services Ltd. As had been proposed by Mr Gumbatov, Services became the main operating company, replacing Roofing.(f) March 2012: The annual return for Services for the 2012 year records Mr Gumbatov as sole director and the holder of 500 of the 1,000 shares. Group held the remaining 500 shares.(g) 6 March 2013: The 500 shares (50%) in Services held by Group were transferred to Mr Arakelian.[43] All of the documents from which this information comes were prepared andfiled with the Companies Office by Ms Megan Goh, apart from particulars of the twotransfers presented on 6 March 2013. The 6 March 2013 particulars were presentedby Mr Arakelian.[44] Ms Goh was the office accountant for the DVK group and assisted with office administration. She said that, with two exceptions, all of the documents shepresented were prepared and presented on instructions from Mr Arakelian and MrGumbatov. The exceptions were the documents lodged on 10 June 2011 whichresulted in Mr Gumbatov holding all of the shares in Group and becoming the soledirector of Group. Her recollection was that the filing of particulars recording atransfer of the remaining 500 shares in Group from Mr Gumbatov to Mr Arakelianwas done solely on instructions from Mr Arakelian. I accept Ms Goh's evidence onthis point.Shares and directors of Roofing[45] Although Roofing is one of the three companies referred to in the 7 April agreement, there were no changes of directors or shareholders. This is consistent with the evidence that Services was to take over as the main operating company, and my conclusion that, although Roofing is referred to on the cover sheet of the 7 April agreement, the parties in the end did not intend that any shares in Roofing would be transferred to Mr Gumbatov. In the annual return for the 2012 year all of the shares were still held by Group and Mr Arakelian was the sole director. This was an annual return presented by Ms Goh. The annual return for the 2013 year, presented by Mr Arakelian, recorded the same particulars for the shareholder and director.Mr Gumbatov's spreadsheet[46] On 8 April 2011, Mr Gumbatov began maintaining a computerised spreadsheet which he continued to maintain up to April 2013.2 The detailed entriesin the spreadsheet record drawings from the companies by Mr Gumbatov and MrArakelian, and a running balance indicating whether more had been drawn by one orthe other. Mr Arakelian acknowledged that Mr Gumbatov gave the updatedspreadsheet to him once a month or so.[47] There were ongoing issues between Mr Gumbatov and Mr Arakelian as to whether one or the other was taking excessive drawings from the company. There was a body of evidence directed to the issue, including contentions that Mr Gumbatov had taken excessive drawings and not adequately accounted for cash drawings. There was fairly extensive cross-examination of Mr Gumbatov on this, and closing submissions for Mr Arakelian on the point. Those issues are not relevant to the matters I have to decide. For that reason it is unnecessary to give further consideration to that part of the spreadsheet recording drawings by the two men, or to the contentions on these issues.2 The spreadsheet may have been maintained after April 2013, but the copy of the spreadsheet produced in evidence finishes in April 2013.[48] Other information recorded on the spreadsheet is of central importance. This is a short table produced by Mr Gumbatov on one side of the monthly particulars of drawings and balances. The table is as follows, including the highlighting:7/04/2011 173943.63 14/04/2011 50000.00 15/04/2011 30000.00 Jan-12 10000.00263943.6380000.00343943.37agreed 380000.00sent 343943.37 owed 36056.37[49] Mr Gumbatov and Mr Arakelian each contended that this table supports his argument as to the terms of the agreement. Mr Gumbatov contended that the figuresrelate to his argument on consideration; that the share sale agreement required him toput in funds to pay company debt. The 7 April agreement has the summary on page6 of company debt totalling $382,490.09. Mr Gumbatov said that he agreed with MrArakelian that he, Mr Gumbatov, would put funds into the company to meet at leastthat amount. He said that the payments in the table from 7 April 2011 to January2012, totalling $263,943.63, recorded payments into the companies he had madeconsistently with the agreement he said had been reached. Mr Gumbatov appearedto contend that the next figure of $80,000 was a further payment into the companymade by him. He also said that the "agreed" sum of $380,000 was the figure onpage 6 of the 7 April agreement of $382,490.09 rounded down to a whole number,not the $380,000 price for the shares.[50] In closing submissions Mr Werry, for Mr Arakelian, confirmed that Mr Arakelian accepted that $263,943.63 had been advanced to the companies by Mr Gumbatov, but it was not accepted that this was in consideration for the shares. What it was in consideration of was not adequately explained. Mr Arakelian also contended that the figures of $80,000 and $380,000 were consistent with his contentions; the agreed price for the shares was $380,000 and there was an agreed set-off of the $80,000 owing on the loan agreement.[51] This table, which is Mr Gumbatov's contemporaneous record sent to Mr Arakelian, and a record to which there was no contemporaneous challenge from Mr Arakelian, is evidence to which I attach considerable weight on the main issues, as discussed later.Mr Arakelian's evidential statement to the Employment Relations Authority[52] In 2011 a claim was brought in the Employment Relations Authority by a former employee against Group and another DVK company for arrears of wages and unjustified dismissal. An employment adviser and advocate, Mr Philip Kotze, acted for the DVK companies on instructions from Mr Gumbatov and Mr Arakelian. Mr Kotze prepared a statement in reply to the employee's claim, and witness statementsof Mr Gumbatov and Mr Arakelian, on instructions from both men. The witnessstatements were sent separately to Mr Arakelian and Mr Gumbatov for signature,sent back to Mr Kotze with what he understood to be the signatures of each of them,and the statements were filed.[53] The witness statement apparently signed by Mr Arakelian confirmedevidence in the statement in reply as true and correct. The statement in replyincludes the following:In an effort to better manage its cashflow, the group started paying all wages from DVK Group Limited from March 2010.Despite concerted efforts, the situation continued to deteriorate and in thefirst quarter of 2011 the group sought and found an investor who was willingto take on 50% of the business immediately provided that it was restructuredto cease trading with the loss making companies and to concentrate on DVKRoofing Services Limited.Valerij [sic] Gumbatov, the new investor, acquired the shares of DVK Roofing Services Limited as well as the remaining 50% of the DVK Group Limited that he did not yet own.[54] Mr Arakelian alleged that his apparent signature, and the date, had been forged. He did not expressly allege that his signature had been forged by Mr Gumbatov, or that Mr Gumbatov had procured a forgery, but there was no suggestionin Mr Arakelian's evidence that it could have been anyone else.[55] Mr Arakelian called Mr Michael Maran as a witness. Mr Maran is a handwriting and document examiner. In his brief of evidence he expressed anopinion that "it is more probable than not that the signature attributed to MrArakelian is an attempted simulation by another author". He was unable to expressan opinion whether the date was written by the same person who had written thesignature, but he did conclude that "it is highly probable" that the author of the datewas different from the author of two comparative specimen dates said to be writtenby Mr Arakelian.[56] The onus was on Mr Arakelian to satisfy me on the balance of probabilities that he had not signed the document. Given the nature of the allegation strong proof,on the balance of probabilities, was required. I am not persuaded that the signatureis a forgery. I am in fact satisfied that Mr Arakelian did sign the witness statement.There are two principal reasons. The first is that, in cross-examination, Mr Maranacknowledged that, because he had never seen the original signatures, it was possiblethat the signature on the witness statement was that of Mr Arakelian. Thatresponsible acknowledgement from an expert, of itself, means that the evidence fellmaterially short of what would be enough to conclude that the signature is not that ofMr Arakelian. The second main consideration is the evidence of Mr Kotze. Like MrMaran, Mr Kotze was an independent witness, and I was satisfied that he gave hisevidence impartially. He was clear and consistent in his evidence under cross-examination without being in any way dogmatic. On the central issue I am satisfied,based on Mr Kotze's evidence as to his invariable practice, that he sent the statementto Mr Arakelian and that he got it back from Mr Arakelian duly signed. That it wasMr Arakelian's genuine evidence is also confirmed by Mr Kotze's clear evidence ofthe instructions he got directly from Mr Arakelian for the content of the statement inreply; not simply that Mr Arakelian agreed with the statement in reply, but that MrArakelian had given instructions for the statement in reply.[57] On this question the following points also support my conclusion. First, there was no evidence of any material issues between Mr Gumbatov and Mr Arakelian in November 2011 and nothing to indicate why at that time Mr Gumbatov would haveforged, or procured a forgery of, Mr Arakelian's signature. Second, in cross-examination of Mr Gumbatov, Mr Werry did not put it to Mr Gumbatov that MrGumbatov had forged Mr Arakelian's signature, or procured a forgery. And as earlier noted, if it was a forgery, there was no-one else likely to have been responsible. Third, I do not consider that there is anything in Mr Maran's evidenceon the authorship of the date which is adverse to Mr Gumbatov. It would not beunusual if the date was added by someone other than Mr Arakelian. Mr Maran'sopinion on the date actually points away from forgery of the signature. The critical issue is the signature, and forgery of the signature has not been established.Negotiations in June and July 2013[58] In June and July 2013 there were negotiations between Mr Gumbatov and Mr Arakelian for a possible purchase by Mr Gumbatov of the 50% of the shares inGroup and Services then in Mr Arakelian's name. There was an email from Mr Arakelian on 27 June and a reply from Mr Gumbatov on 3 July. This had been preceded by a conversation at the company office, at least part of which had been recorded, and in respect of which there was some evidence from witnesses called for Mr Arakelian. I will come back to that evidence after noting the content of the emails.[59] The relevant part of Mr Arakelian's email of 27 June 2013 is as follows:Hi Valeriy, thank you for talking to me today again with regards to my offer to buy 50% of shares in DVK Group LTD and DVK Roofing Services LTD. The offer I made to you at our meeting that was held at our company office on 10 of June 2013 was: you would buy 50% shares I own in the companiesas listed above for the amount of $120,000 The word "buy" in the phrase "my offer to buy" is obviously an error and should be "sell". This is made quite clear by the next sentence. Mr Arakelian also proposed that a company car be transferred to him, but the remaining assets of the companies would be included in the sale.[60] Mr Gumbatov's reply on 3 July was directed to the 50% shareholding.Against Mr Arakelian's offer to sell for $120,000, there was an offer to buy for$50,000, "within 24 hours from the time of agreement engagement for the shares belonging to you".[61] The primary relevance of this documented exchange is twofold: (1) it wasdirected solely to 50% of the shares, not 67%; and (2) there was no suggestion by MrArakelian that Mr Gumbatov owed him money for other shares in the DVK group.And there was no suggestion that Mr Gumbatov owed Mr Arakelian money for theother shares notwithstanding contemporaneous evidence that Mr Arakelian was keento get as much money as he could because he had new plans.[62] The meeting between Mr Gumbatov and Mr Arakelian at the company office was on 10 June. Mr Gumbatov made a recording which he said recorded the entire conversation. There was a dispute as to whether the entire conversation was recorded and Mr Arakelian called a witness on that point. I am satisfied nothingturns on the point.[63] Part of what was recorded was transcribed into English. These pages are consistent with the emails: Mr Arakelian was seeking "120 and the car" and it isapparent from comments made by Mr Arakelian that Mr Gumbatov was offering no more than $50,000.[64] Witnesses were called for Mr Arakelian who said, in essence, that they heard the conversation, or at least part of it, and that Mr Arakelian was seeking payment for the shares sold to Mr Gumbatov in 2011. One of the witnesses, Mr Alexey Boiko, also said that "many times before this meeting I heard Mr Arakelian requesting payment from Mr Gumbatov" for the shares sold in 2011. The other witness, Mr Serguei Fomine, said that he "heard a few times" Mr Arakelian ask MrGumbatov for payment of the shares sold in 2011. However, in cross-examination, Mr Fomine acknowledged, in effect, that he simply assumed that a payment was due directly from Mr Gumbatov to Mr Arakelian.[65] This evidence bears, most directly, on the issue as to how the consideration due from Mr Gumbatov for the April 2011 share sale was to be met. The evidence ofthese two witnesses, weighed together with Mr Arakelian's own evidence, does notpersuade me against a conclusion that the consideration was to be provided by loans to the companies to meet company debt. It is doubtful that Mr Boiko and Mr Fomine would have had a clear recollection of the discussion. And they were notindependent witnesses. Mr Boiko acknowledged that he got approximately 20% of his contracting work from a new company established by Mr Arakelian. Mr Fomine had been employed by the DVK group from 2005 until November 2015. He acknowledged that he had a falling out with Mr Gumbatov and left the group in late2015 because his pay had been reduced substantially and he remained unhappy withMr Gumbatov.[66] It is clear, from that part of the conversation that was transcribed, that Mr Arakelian was pressing, with some urgency, for money by selling the 50% of the shares he held and that he was meeting substantial resistance from Mr Gumbatov as to the amount and how it would be paid. There is no indication that any of this related to the 2011 agreement. It was a partial transcription only, but it was open to Mr Arakelian to get a full transcription.Mr Gumbatov's changing contentions[67] Mr Gumbatov's contentions in this proceeding changed significantly overtime. On 5 June 2014 Mr Gumbatov filed a statement of defence to thecounterclaim. At that time there was no claim that the 50% of the shares that MrArakelian had transferred to himself in March 2013 should be transferred back to MrGumbatov.[68] In addition, Mr Gumbatov filed an affidavit, sworn on 4 June 2014, in response to a summary judgment application by Mr Arakelian on his counterclaim. In this affidavit Mr Gumbatov made the following statements of present relevance:4. A written agreement was entered into on the 7th of April 2011 regarding the transfer of shares. This was an initial agreement, however the agreement was never completed because after conducting due diligence I found that the businesses were on the verge of bankruptcy. As a result, the Defendant [Mr Arakelian] and I cancelled the agreement.5. However, the Defendant was in debt and the businesses were close to being closed down. That was when we came to the agreement that the Defendant would transfer all shares to me in return for me paying off all the debts due and owing from the companies.7. After becoming appointed as a director in both companies, the Defendant directed me to make the payments to pay off the debt which amounted to $382,499.09 into the company accounts.At that point Mr Gumbatov referred to and produced what is page 6 of the 7 April agreement, although he did not state that it was page 6 of that agreement. Hecontinued:13. Furthermore, a later oral agreement between the Defendant and I specified I was to pay off the debts of DVK Group Limited and DVK Roofing Services Limited in return for 100% of the shares of both companies.14. it was never orally agreed that the $80,000 of debt due and owing to me would ever be set-off.[69] Mr Gumbatov filed a second amended statement of defence to Mr Arakelian'scounterclaim on 28 November 2014. This included an allegation, referring to the 7April agreement, that "the contract was not executed by the plaintiff [Mr Gumbatov]but certain preliminary amendments to the contract were initialled".[70] The first formal claim for transfer back of the 50% of the shares in MrArakelian's name was contained in an amended statement of claim filed on the same date.[71] The current pleading is in a second amended statement of claim andstatement of defence to the counterclaim filed on 5 February 2016. There is anallegation that an oral agreement was made, "in or about April 2011". Particulars ofthat agreement include the following:In consideration for the payment by way of loan to the companies of various existing debts and future financial obligations of the company [sic] (thatultimately proved to amount to approximately $427,995) ('the loans') thedefendant would transfer 100% of the shares in the company.The defendant would transfer or procure the transfer of 100% of the sharesin the companies to the plaintiff or an entity he controlled The agreement would be without prejudice to the parties' rights andobligations under the loan agreement At such time as the loans were repaid in full to the plaintiff and the amountof the loan plus interest under the loan agreement [of 2010] were repaid,the plaintiff would re-transfer 50% of the shares in the companies to thedefendant.[72] The amended statement of defence to the counterclaim, contained in thesecond amended statement of claim, includes the following pleadings in relation tothe 7 April agreement:The document was never intended to give rise to legal relations between theparties.The document was only an initial statement of intention in principle that wassuperseded by the oral agreement between the parties referred to under thesecond cause of action.Evaluation[73] The reasons for most of my conclusions on the main issues, recorded in the introduction, have to a considerable extent been set out, or at least indicated, in the preceding analysis of the evidence and conclusions on some of the disputed matters of fact. The purpose of this section is to draw these matters together under five headings directed to the primary issues: Was the 7 April agreement intended to be binding and is it sufficiently clear on essential matters? How was the consideration of $380,000 to be met by Mr Gumbatov? Was the $80,000 owing under the loan agreement to be set-off? Was Mr Gumbatov to get 33% of the shares or 50%? Is Mr Gumbatov entitled to an order that the 500 shares in Group and in Services held by Mr Arakelian be transferred to Mr Gumbatov?Was the 7 April agreement intended to be binding and is it sufficiently clear on essential matters?[74] I am satisfied that the 7 April agreement was intended to be contractually, binding, subject to the oral variations or collateral agreements already referred to. I am also satisfied that the 7 April agreement is sufficiently clear on essential matters to constitute a contract, again allowing for the matters orally agreed. Some of the reasons for both conclusions – on contractual intention and certainty – are the same, but there are some additional reasons applying to one only of the primary issues. The reasons for the conclusions, without identifying those that apply only to one issue, may be summarised as follows:(a) I accept Mr Hong's evidence as to the creation of the document andthe circumstances of its completion, and that evidence confirms MrArakelian's evidence.(b) When regard is had to the oral variations of the written agreement, and some additional essential terms orally agreed, what is recorded in the 7 April agreement is clear on other essential matters. This includes the meaning of clause 4 on page 5, which I discuss below when dealing with the consideration issue.(c) The share transfer for the holding company, Group, in practical terms occurred immediately after the agreement was signed. Particulars of the transfer were registered on 8 April. At that point Mr Gumbatov controlled 50% of the shares in the holding company and therefore shared control of Services with Mr Arakelian. This is consistent with a binding agreement having been entered into on 7 April and notconsistent with Mr Gumbatov's evidence of an entirely oral agreementwhich was worked out over several days after 7 April, or that the 7 April agreement was fabricated by Mr Arakelian using three pages from an indicative arrangement made much earlier.(d) Mr Gumbatov's own table in the spreadsheet effectively confirms anagreement made on 7 April 2011 and is not consistent with hisevidence. The first date in the table is 7 April 2011. And the first entry in the detailed part of the spreadsheet, recording drawings, is 8 April.(e) That first line in the spreadsheet table indicates that on 7 April 2011 Mr Gumbatov lent to, or paid into, the companies $173,943.63. Thatis consistent with Mr Arakelian's contention that the agreement was made on 7 April. It is not consistent with Mr Gumbatov's contention that it was "several" days after 7 April before an oral agreement wasreached.(f) Mr Gumbatov's own notations on the spreadsheet table include"agreed 380000.00". Mr Gumbatov said this was a reference in a rounded sum to the precise sum of $382,490.09 recorded on page 6 of the 7 April agreement. I am unpersuaded by that contention. It is disingenuous. There are very precise figures in the rest of the table.The word "agreed" and the precise sum in my judgment relate to the figure recorded in the agreement as the consideration. That figure, in the agreement, may very well have been rounded down from the precise figure which was recorded at page 6 of the 7 April agreement. But the significance of the word Mr Gumbatov used is confirmation of the 7 April agreement having been made with the intention that itwould be contractually binding. The word "owed" in the spreadsheettable, two lines down, supports a similar conclusion.(g) Mr Gumbatov's contentions in his current pleadings, and in hisevidence, are not consistent with earlier pleadings and the affidavit filed in July 2014. These inconsistencies bear on more than one of the main issues. On the present issue, they disclose substantial changes on the question whether any form of written agreement was entered into on 7 April.[75] Given these conclusions I reject Mr Gumbatov's contention that an entirely oral agreement, on the terms he alleged, was entered into "in or about April 2011" oron some unspecified date after 7 April 2011.How was the consideration of $380,000 to be met by Mr Gumbatov[76] As earlier recorded, my conclusion is that the parties agreed that consideration due from Mr Gumbatov of $380,000 would be met by Mr Gumbatov'sproviding funds to pay company debt in a sum of not less than $380,000, $80,000 of which came from the balance otherwise due under the loan agreement. Also as earlier recorded, the reasons for this conclusion arise in part by interpretation of the 7 April agreement, and in part from other evidence.The 7 April agreement: page 5, clause 4: meaning of the italicised sentences[77] In my opinion the two italicised sentences in clause 4 on page 5 mean, in essence, that Mr Gumbatov, as the new owner, will pay the debts of the companies of which he becomes the new owner, but his liability is capped at the amount recorded on page 6. The first of the two italicised sentences includes the words "will be paid by the company owed by the new owners ". The word "owed" means "owned". It was a simple misspelling, with the same error occurring in clause 5 which refers to"all the properties owed by Group".3[78] Page 6 has the total of $382,490.09, and the handwritten reference to a debt of DVK Roofing Waterproofing Ltd of $87,000. The total of relevance is the first sum – $382,490.09. This, when assessed in conjunction with other evidence, satisfies me that the intention of the parties was that the recorded consideration of $380,000 was a rounded sum based on the $382,490.09, and that it was the intention of the parties that the consideration required from Mr Gumbatov of $380,000 was to be met by his providing funds to pay debts of the companies up to that sum.3 There are further drafting errors, which create some difficulties for interpretation, but the nature of the mistake becomes reasonably apparent on closer examination. The preceding sentence in clause 4 is a long sentence which appears to have come from the template because it contains awarranty that the companies have paid a wide range of taxes and levies (spelt "levis") but ends with a statement that all of these taxes "have not been paid" as recorded in the list attached. Thisis the list on page 6. There is a PAYE liability, but none of the other liabilities, at least asrecorded, are of the type listed in clause 4 on page 5.Other reasons for the consideration conclusion[79] Mr Gumbatov's table on the spreadsheet, although against him on some points, firmly supports his contention about consideration. There was no challenge from Mr Arakelian in relation to the details recorded in the table; the words or the figures. The arguments were directed to the inferences to be drawn from what was recorded. I have already touched on this. The table reflects important parts of the 7 April agreement and is consistent with it. In closing, Mr Werry acknowledged, on behalf of Mr Arakelian, that Mr Arakelian agreed that Mr Gumbatov did advance the total of $343,943.37 recorded in the table. But the proposition that this wasconsistent with Mr Gumbatov's argument on consideration was rejected by Mr Arakelian. Mr Arakelian's arguments in relation to the spreadsheet table, as with those of Mr Gumbatov, were selective. Each sought to draw from the table only those aspects which favoured his contention. The table needs to be construed in its entirety and in its context. On the question of consideration, the entry in thespreadsheet table "agreed 380000.00" also supports Mr Gumbatov, although not inthe way he argued. It is consistent with my interpretation of clause 4 on page 5 of the agreement and the relationship of clause 4 to the itemised debts on page 6.[80] The evidence establishes that Mr Gumbatov advanced a total well in excess of $380,000. The fact that Mr Gumbatov also drew money from the company, raised by Mr Arakelian as a point of contention in relation to quantum, is not relevant. There was no suggestion that Mr Gumbatov was not entitled to take drawings. And Mr Arakelian also took drawings.[81] The immediate share transfers and director changes support Mr Gumbatov'sargument on consideration. For all practical purposes, the changes were immediate. (I am not here referring to the contentious transfer of a further 50% of the shares to Mr Gumbatov in June 2011.) There was no adequate explanation from Mr Arakelian as to why these immediate changes would be made, giving Mr Gumbatov a substantial degree of control, without Mr Arakelian's being paid, if the intention was that Mr Gumbatov had to pay Mr Arakelian.[82] Mr Gumbatov's argument on consideration is consistent with the commercial realities. Mr Arakelian's argument is removed from the commercial realities. The point here relates to the fact that the companies were in serious financial difficulties and Mr Arakelian personally was in serious financial difficulty. The negotiating power was with Mr Gumbatov. And it would not have been commercially prudent for Mr Gumbatov to pay Mr Arakelian for shares in companies in financial straits, unless there was some assurance that the money going to Mr Arakelian would in turn go into the companies. There was no provision to that effect. The financial circumstances did provide a commercial rationale for an agreement whereby MrArakelian transferred shares he owned in consideration of Mr Gumbatov's lending asubstantial amount of money to pay company debt.[83] There was no claim by Mr Arakelian for $300,000 until very long after the 7 April agreement was entered into. And the claim was then made, in May 2014, onlyin response to Mr Gumbatov's claim for the $80,000. This occurred after the parties had fallen out around the middle of 2013. There were numbers of occasions when it might be expected that Mr Arakelian would have made a formal demand, and then issue proceedings, but that did not happen until the counterclaim was issued. There is the evidence from some of Mr Arakelian's former employees of discussions between Mr Arakelian and Mr Gumbatov where the former was asking for payment. As already recorded, that evidence does not persuade me that my interpretation of the 7 April agreement is wrong on the issue as to how the consideration due from Mr Gumbatov was to be met. Also as earlier recorded, the partial transcript of the meeting in June 2013, and the subsequent email from Mr Arakelian and reply fromMr Gumbatov are not consistent with Mr Arakelian's contention that he was owed$300,000. In the context of this case it was a large sum of money. But the recorded debate between the two men over money was whether Mr Gumbatov would pay $50,000 or $120,000 for a different parcel of shares, at a time when, in light of the conversation, Mr Arakelian was again desperate for as much money as he could get.Was the $80,000 owing under the loan agreement to be set-off?[84] My conclusion, earlier recorded, is that it was agreed that the $80,000 that would otherwise have been recoverable by Mr Gumbatov was to be applied as part of the $380,000 consideration required from Mr Gumbatov.[85] The form of consideration and set-off are closely linked. The most tellingevidence is Mr Gumbatov's spreadsheet table. In this instance, unlike the issue of consideration, Mr Gumbatov's own contemporaneous record is against his argument that there was no set-off. The table records the sum of $80,000, but as a separate item without any date, unlike the funds introduced on and following 7 April 2011. In the absence of other evidence, given the existence of the debt of $80,000 from the loan agreement, it must have been a reference to that debt. And there is no other evidence which persuades me that it was not a reference, made by Mr Gumbatov, to the amount owed to him. In his table he has then applied it as a credit – a sum in his favour – against the total of $380,000 recorded in the 7 April agreement.[86] There are two other reasons for my conclusion. First, there was no claim by Mr Gumbatov until the parties had fallen out in 2013. The argument of delay against Mr Arakelian on the claim for $300,000 is the same as the argument now made against Mr Gumbatov on the set-off issue. Second, an agreed set-off, as part of the share sale agreement, and in particular the nature of the consideration, is anothermatter consistent with commercial reality. Mr Gumbatov's prospects of recoveringthe $80,000 by a proceeding against Mr Arakelian, or the liable companies, wouldhave been doubtful, and probably remote, and Mr Gumbatov's own evidenceindicates that he did make a similar assessment at the time. And it was not as if the $80,000 was not ultimately recoverable by Mr Gumbatov. The $380,000 he had to put into the companies, to enable the companies to repay debt, was not a gift. It was a loan. The claim now made by Mr Gumbatov, if he succeeded, would be a double recovery.Was Mr Gumbatov to get 33% of the shares or 50%?[87] This issue involves a seemingly stark conflict between what is expresslyrecorded in the 7 April agreement and Mr Gumbatov's contention. In the end, theanswer to the issue has no practical consequence. This is because, notwithstandingMr Arakelian's contention that Mr Gumbatov was only to get 33% of the shares,there is no claim by Mr Arakelian for transfer to him of 17% of the shares to reduceMr Gumbatov's holding from 50% to 33%. However, for the avoidance of doubt,and to remove this issue from any future litigation between the parties, I will record my main reasons for the conclusion that there was an oral agreement that 50% of theshares were to go to Mr Gumbatov absolutely. I use the word "absolutely" because of Mr Gumbatov's claim that he was entitled to a further 50% on terms which varied,but on the current pleading on the basis that the further 50% would be security.[88] The reasons for the conclusion on the 50% "absolutely" may be summarised as follows:(a) The share transfers and director changes that occurred between 8 and11 April 2011 are plainly consistent with Mr Gumbatov's contention.As earlier record, I am satisfied that these changes occurred on joint instructions to Ms Goh from Mr Arakelian and Mr Gumbatov.(b) Commercial reality dictated 50%, not 33%. The lower percentage would have meant, given the financial state of these companies andMr Arakelian's financial circumstances, that Mr Gumbatov would have been risking a substantial sum of money without material security.(c) Mr Arakelian's witness statement to the Employment RelationsAuthority confirms that the agreement was for 50%.(d) The negotiations in June 2013 are consistent with Mr Arakelian'srecognising that Mr Gumbatov was entitled to 50%.(e) A similar point may be made in relation to the fact that, in March 2013, Mr Arakelian transferred back to himself only 50% of the shares, not 67%.(f) On points (d) and (e) there was some evidence from Mr Arakelian that, at that time, he was unsure whether the agreement provided for transfer of 50% or 33%. He said he had been unable to find his copyof the 7 April agreement. I do not accept Mr Arakelian's evidencethat he would not have remembered the percentage agreed.Is Mr Gumbatov entitled to an order that the 500 shares in Group and in Services held by Mr Arakelian be transferred to Mr Gumbatov?[89] On this issue, the subject of Mr Gumbatov's second claim, the onus was onMr Gumbatov. I am not persuaded that Mr Gumbatov is entitled to the order he seeks. Again, I will record my main reasons in summary form:(a) There is no evidence, other than Mr Gumbatov's own evidence, whichsupports his contention.(b) The transfer of the additional 50% of shares in June 2011 does not support Mr Gumbatov. I am satisfied that this was a unilateral act of Mr Gumbatov, with the registration of the transfers having beeneffected by Ms Goh on Mr Gumbatov's instructions only.(c) The variations in Mr Gumbatov's pleaded contentions, and in his summary judgment affidavit, are against Mr Gumbatov.(d) Although Mr Arakelian transferred 50% of the shares back to himself in June 2011, Mr Gumbatov took no action of any sort to counter this until he filed his response to Mr Arakelian's counterclaim in thisproceeding.(e) Even if Mr Gumbatov was entitled to hold the additional 50% as security, which is the substance of the current pleading, he has not established what would be required for the order he seeks. The current statement of claim has the provision, earlier quoted, that the additional 50% would go back to Mr Arakelian once the loans from Mr Gumbatov had been repaid to him in full, plus interest. Apartfrom the fact that that is an alleged provision not earlier pleaded, Mr Gumbatov did not provide adequate evidence to establish that the loans have not been repaid.Result[90] Mr Gumbatov's claims are dismissed.[91] Mr Arakelian's counterclaim is dismissed.[92] Both parties sought costs. Given the result my provisional, but firm, view is that costs should lie where they fall. If either party nevertheless considers he is entitled to costs, a memorandum in support of the application must be filed within four weeks of the date of this judgment, with any response for the other party within a further two weeks.____________________________________Woodhouse J