Raymani Zaloumis v Paul Martin Steele [2025] EWHC 1858 (KB)

[2025] EWHC 1858 (KB)

Case No KB-2023-002992

IN THE HIGH COURT OF JUSTICE

KING'S BENCH DIVISION

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 22/07/2025

Before

MR JUSTICE MARTIN SPENCER

Between

MR RAYMANI ZALOUMISClaimant

MR PAUL MARTIN STEELEDefendant

The Claimant in person for in person

Hugh Jory K.C.(instructed by Harcourt Stirling Solicitors Ltd) for Defendant

Hearing Hearing dates: 30 April 2025, 1, 2 May 2025

Approved Judgment

This judgment was handed down remotely at 10.00am on Tuesday, 22 nd July 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

.............................

THE HONOURABLE MR JUSTICE MARTIN SPENCER

Introduction

[1]By this action, the Claimant, Raymani Zaloumis, seeks damages for breach of contract from his father, Mr Paul Martin Steele. The action arises out of an agreement reached between the parties pursuant to a mediation that took place in December 2021/January 2022 following which the Defendant agreed to pay the sum of £200,000 to the Claimant. Background

[2]The background is that the Claimant, who was born on 25 October 1988, has developed a speciality in the production of haircare products and between 2018 and 2020 he entered into discussions with a Ms Reprudentia Sonkey, a US citizen and the CEO of a company incorporated in the State of California, USA, called Buluwa Inc, for a collaboration in respect of the development of a range of haircare products.

[3]It is understood that a number of expenses are involved in the development of haircare products, including the licensing of the use of some of the ingredients, in particular the “active” ingredients, and the validation of the end product including, in some cases, the payment of clinical trials, to show both the efficacy and the safety of the products being marketed. See, further, paragraphs 1-4 of the Particulars of Claim, set out at paragraph 23 of this judgment below. In the course of 2020 significant sums were paid by the Claimant to recipients for their part in the development of haircare products, funded, it would seem, by the Defendant who, by 8 July 2021, had transferred sums by way of gift to the Claimant totalling £677,235. The Defendant is a man of wealth and substance and, until the events with which this action is concerned, was significantly generous to his son.

[4]Unfortunately, in 2021, the Defendant and his wife (the Claimant’s mother) divorced and, for reasons which were not explained in the trial, the Claimant fell out with the Defendant and became involved in a legal dispute with him. This led to solicitors in Zambia sending to the Defendant on 26 October 2021 (this is the date pleaded in paragraph 6 of the Particulars of Claim, the letter itself is dated 19 October 2021) a Letter of Claim arising out of the dispute. At that time, the Claimant was known as Chongwe Steele. The Letter of Claim of 26 October 2021

[5]The Letter of Claim stated:

“Dear Sir, Demand for £2 198 250.47 owed to Chongwe Steele and further actions to be taken. We act for Chongwe Steele, kindly note our interest. 1. Background 1.1 We are informed that our Client is one of two children of the marriage between yourself and Ms Maureen Crystal Steele that was recently dissolved by a decree absolute dated 19 May 2021 issued under cause number 2020/HK/D31 (the “Divorce Action”). Despite our client having attained the age of majority, we understand certain arrangements were made in the Divorce Action for the maintenance of our Client and Samantha Steele. 1.2 We are advised that pursuant to a consent order dated 17 May 2021 obtained in the Divorce Action between yourself and Ms Maureen Crystal Steele (the “Consent Order”), you undertook to cater for the needs of the children of the marriage financial or otherwise, in the event that the children are not able to meet their own needs. 1.3 You and Ms Maureen Crystal Steele further undertook to transfer the ownership of Plot 5445 Kaminda Drive Kitwe and Plot 1783 Limulunga Crescent Kitwe (the “Properties”) to our client and Samantha Steele. 1.4 Our Client further advises that he is a beneficiary of C&S Investments Limited, a company named after him and Samantha Steele. We understand that the shares you hold in the said company are held in trust for our Client and Samantha Steele, as the company was incorporated for his and his sister’s benefit. 1.5 In addition, our client is one of the beneficiaries of the Paul Martin Steele Family Trust Fund (the “Trust Fund”) created in South Africa and registered under IT 15/2001. 1.6 We are instructed that in or around 2018, our Client was coerced into signing multiple documents and granting you a power of attorney over his affairs relating to among other things, the Trust Fund. 1.7 Our Client advises that when the divorce was finalised, you abruptly stopped meeting his expenses without further recourse to him following a telephone discussion in which you gave him an ultimatum to choose between yourself and his mother Maureen Crystal Steele. 1.8 Our Client informs us that he has not been able to meet his own financial or medical needs and that this is a situation you have been made aware of. Despite your knowledge of his financial struggles, you have not provided for his needs as set out in the Consent Order. 1.9 Furthermore, the Properties have to date not been transferred to our Client and Samantha Steele.”

[6]Section 2 of the Letter of Claim dealt with the Claimant’s monthly upkeep and expenses. Section 3 of the letter addressed the renovation and transfer of properties. Section 4 of the letter raised matters relating to the Claimant’s share of the Trust Fund, section 5 sought the renaming of C&S Investments Limited and section 6 made a proposal for the Claimant to sell to the Defendant his share in their jointly owned company, Euphrates Trading Ltd. For the purposes of this action, it is section 7 which is principally relevant. This stated:

“7. Lost business opportunities 7.1 We understand that you undertook to provide our Client with the sum of £380 000 to fund the development and manufacturing of our Client’s haircare products which products were scheduled to be launched in September 2021. This was after you advised our Client to turn down an investment offer of USD 500 000 made to our Client by a third party. 7.2 We are further advised that following your undertaking, you made payments of £100 000 and £50 000 on 5 and 17 February 2020 respectively and agreed to pay the balance as soon as further expenses were incurred. However, no further payments were made after [that]. 7.3 We are informed that our Client on several occasions followed up with you on payment of the balance and informed you of a second investment offer of USD 500 000 which would have enabled our Client to expand into the manufacture of skincare products. This investment offer was dependent on his haircare products line being launched and distributed in September 2021. 7.4 That subsequently, between October and December 2020 you made further payments amounting to £50 000 at which point our Client made you aware of a job offer he had received in the United States of America under which he was to receive USD 150 000 per year which he turned down because you undertook to fund his business. 7.5 We are advised that sometime in February 2021 our Client informed you of the effects that the delays in payment had on his business. Particularly, that he had lost a wholesale deal with a global hotel chain valued at a net of £900 000 and that he had incurred £34 000 in legal fees and product development to secure the hotel deal. 7.6 We are further advised that later in February 2021, you informed our Client that you could not pay him the balance until you return to the United Kingdom, but stated that you would pay all the additional expenses he had incurred and agreed to pay him the sum of £20 000 in the interim. As a result, £20 000 was paid in two equal instalments on 26 February and 6 April 2021. A further payment of £100 000 was made by you on 8 April 2021. 7.7 We are informed that on or about 2 July 2021, you informed our Client that you would pay him the sum of £65 000 which was the balance of the agreed £380 000 to the exclusion of the additional charges incurred. However, the same remains unpaid. We are further informed that as a result of the non-payment our Client incurred additional costs which you agreed to pay in February 2021. 7.8 As a result of the delays, our Client has lost the benefit of his contract with his manufacturer and chemist. Additionally, our Client has lost his licensing agreements and has lost out on employment, distribution and investment opportunities. Moreover, the product formulations and data from clinic trials and focus groups have also been compromised, resulting in further loss to our Client.”

The contents of paragraph 7.8 are of particular significance in the context of the present claim.

[7]Having addressed an issue arising over a Power of Attorney, the Claimant’s demands of the Defendant were set out in section 9:

“9. Our Client’s Demands 9.1 Our instructions are to demand, as we now do, that within 7 days from the date of service on you of this letter, you: 9.1.1 pay to our Client the sum of £65 545.47 towards his monthly upkeep and additionally continue to pay for his medical insurance policy with AXA PPP indefinitely; 9.1.2 facilitate the transfer of ownership of the Properties to our Client and Samantha Steele at no expense to our Client and complete the renovations to the Properties; 9.1.3 relinquish all rights over the Properties to our Client and Samantha Steele and have no authority over their use; 9.1.4 provide our Client with an account of how the Trust Fund has been managed, the complete terms of the Trust Fund inclusive of any changes made subsequent to its creation; 9.1.5 disclose to our Client what he is entitled to from the Trust Fund and that the same be handed over to him. Should we not have a response within 7 days of this letter being served on you, we have instructions to commence an action to compel you to provide an account of all the property that was held by the Trust Fund, how it was disposed of, including all bank accounts associated with, inclusive and especially account number 02 042 619 4 held with Standard Bank South Africa; 9.1.6 make payment to our Client of the sum of £2 000 000 being a fair settlement in line with what you agreed as owing to him following the consent order executed between C&S Investments Limited and the Zambian Government; 9.1.7 ensure that C&S Investments Limited be renamed and particularly, that the “C” in C&S Investments Limited be deleted as our Client no longer wishes to be associated with this company; 9.1.8 purchase our Client’s shares in Euphrates Trading at a reasonable rate, which rate should take into account the fact that our Client is being forced out of the company due to your hostility towards our Client which has severely affected his mental health; 9.1.9 pay the sum of £132 750 being costs and expenses incurred as a result of the cancellation of our Client’s contracts with third parties; 9.1.10 complete indemnification for loss and expenses incurred; 9.1.11 assurance that you will forthwith assume all legal responsibility in the event that any problems arise from any of the documents signed by our Client at your instance including but not limited to the power of attorney and complete responsibility for the legal fees incurred by our Client for the aforesaid, payable to our Client’s attorney of choice; and 9.1.12 damages for inconvenience, loss of potential earnings and investment opportunities, injury to his reputation and loss of endorsement deals. 9.2 If within 30 days of service on you of this letter a fair settlement in relation to the sums owed following the settlement between C&S Investments Limited and the Zambian Government is not agreed, be informed that we have instructions to reach out to the Zambian Government regarding our Client’s claims and we will demand that the Government withholds any further payments to C&S Investments Limited pending resolution of our Client’s claims; 9.3 Where a reasonable offer is not presented for the purchase of our Client’s shares in Euphrates Trading within 30 days of this letter of demand being sent to our Client’s United Kingdom lawyers, our Client will commence court proceedings in the United Kingdom without further recourse to you. 9.4 The amounts payable per our Client’s demands are to be made directly to his personal bank account the details of which you are aware of. 9.5 We are instructed to demand that any communication with our Client only be made through ourselves as direct contact with yourself takes a toll on our client’s health as you will note from the letter from his therapist which is enclosed for your ease of reference. Should you not adhere to this demand, be informed that our Client will obtain a non-molestation order against you in the United Kingdom. 9.6 Kindly be advised that if you fail to comply with our legal demand, we have instructions to commence legal proceedings against you without further notice to you.”

[8]As the letter both states and implies, there had been a fundamental – and, it would appear, terminal – breakdown in the relationship between father and son, a breakdown which continued to manifest itself in the trial before me. Thus, for example, on the final day of the trial, in closing submissions, the Claimant stated that it was his desire that 2 May 2025 be the last day on which he would ever see his father.

[9]The Defendant, through his solicitors, sent a Letter of Response on 9 November 2021 disputing the claim. Mediation

[10]The dispute between the parties led to their agreement to engage in alternative dispute resolution by way of mediation, the mediator being Mr Jeremy Reeve. On 6 December 2021 the Claimant signed a mediation agreement and although it is not clear that this was ever signed by the Defendant or was agreed to represent the terms of the mediation, it is relevant to record that the mediation agreement included the following terms: “2. MEDIATOR:2.1 The Mediator will:2.1.1 Assist the Parties to compromise and resolve the dispute

2.1.2 Determine the procedure at the mediation in consultation with the Parties

2.1.3 Assist (if requested) in drawing up any settlement agreement

2.1.4 Decline hereafter to act for any party in any capacity in connection with the dispute

2.2 The Parties and the Mediator recognize that the Mediator is an independent contractor and is not an agent (in any capacity) of either of the Parties or their representatives and that the Mediator has no personal financial interest in the subject matter of the dispute. … 5. PRIVATE SESSIONS

5.1 The Mediator may hold private sessions with one party at a time. These private sessions are designed to improve the Mediators understanding of the Parties position and to facilitate the Mediator in expressing each Parties viewpoint to the other side.

5.2 Information gained by the Mediator through such sessions is confidential unless

(a) it is any event publicly available or

(b) the Mediator is specifically authorized by that Party to disclose it. This clause is subject to clause 6. Clause 6 was a Confidentiality clause in standard terms.

[11]In the meantime, on 12 December 2021, the Claimant entered into a fresh licensing agreement with Envydia Cosmetics, a US company based in Thousand Oaks, California which is near Los Angeles. By this agreement, an original licensing agreement dated 20 February 2020 in which the Claimant had been granted an exclusive licence to use and purchase certain active ingredients (referred to in the agreement as the “Licensed Ingredients”) for the purpose of formulating and manufacturing the Claimant’s proprietary hair care products (referred to in the agreement as the “Licensed Products”), and which had expired on 1 December 2021, was extended “to allow [the Claimant] additional time to manufacture the Licensed Products and purchase the agreed-upon amount of Licensed Ingredients as per the original agreement”. Thus, contrary to what had been set out in the Letter of Claim at section 7.8 (see paragraph 6 above), the licensing agreements had not in fact been lost as at the date of that letter. Whether this misinformation was ever corrected by the Claimant may be an important matter in resolving this claim. The licensing term was extended to 28 February 2022 during which time the Claimant was granted the right to continue using the Licensed Ingredients in accordance with the terms of the original agreement. The Claimant was under an obligation to notify Envydia in writing if he failed to manufacture the Licensed Products within the extension period and Envydia retained the right to revoke the licence extension at any time during the extension period if the Claimant failed to manufacture the Licensed Products or to purchase the minimum quantity of Licensed Ingredients as stipulated in the original agreement. The agreement provided for the purchase by the Claimant of minimum amounts of the Licensed Ingredients. The consequence was that the Claimant thereby came under time pressure to secure the necessary funding for him to buy the Licensed Ingredients and commence the manufacture of the Licensed Products. It would appear that the Claimant was relying upon the outcome of the mediation agreement for the necessary funding.

[12]The Claimant asserts that, through the mediator, he relayed the necessary information to the Defendant for the Defendant to be aware that any agreement reached pursuant to the mediation agreement for the payment of monies would be time critical. The Settlement Agreement

[13]In early 2022, agreement was reached whereby the Claimant’s claim against the Defendant would be settled by the Defendant paying the sum of £200,000. The Claimant asserts that, by 4 January 2022, the Defendant knew that he, the Claimant, had agreed a date whereby the manufacturing needed to be completed by the end of February 2022 and, failing this date being met, the validation process would need to be re-undertaken with all the costs that would involve. On 8 January 2022, the Defendant paid to the Claimant the sum of £10,000 which the Claimant says was the first instalment of an immediate sum of £25,000 promised by the Defendant although the balance of £15,000 was not paid at that time. A financial settlement document was compiled dated 10 January 2022 which provided for the payment of the £200,000 within 7 days. However, that agreement was never finalised or signed and a new Settlement Agreement was drafted, dated 26 January 2022. This was the agreement entered into by the parties.

[14]The provisions of the new Settlement Agreement were, in part, as follows:

“26th January 2022 SETTLEMENT AGREEMENT AND RELEASE between (1) PAUL MARTIN STEELE of Flat 118, Stafford Court, 178 Kensington High Street, London W8 7DR (Mr Paul Steele) (2) CHONGWE STEELE of Flat 6, 81 Chandos Way, London NW11 7JH (Mr Chongwe Steele) BACKGROUND (A) A dispute has arisen between the parties relating to monies alleged to be due from Mr Paul Steele to Mr Chongwe Steele and obligations alleged to be owing by Mr Paul Steele to Mr Chongwe Steele, details of which were set out in a letter of claim (Letter of Claim) sent on behalf of Mr Chongwe Steele to Mr Paul Steele by Musa Dudhia & Co on 21 October 2021, to which a response was sent on behalf of Mr Paul Steele by Messrs ECB on 9 November 2021 (Dispute). A copy of the said letters is Annexed to this agreement. (B) With the assistance of qualified mediators, Cambridge ADR, the parties have settled their differences and have agreed terms for the full and final settlement of the Dispute and wish to record those terms of settlement, on a binding basis, in this agreement. Mr Paul Steele records that, for his part, the settlement is motivated by his natural love and affection for Chongwe, his son, and in no way constitutes admissions of the various matters contained in the Letter of Claim. Agreed terms 1. Definitions and interpretation In this agreement, unless the context otherwise requires, the following words and expressions have the following meanings: Related Parties: a party's parent, subsidiaries, assigns, transferees, representatives, principals, agents, officers or directors. In the case of Mr Paul Steele, his Related Parties shall include, without limitation, Euphrates Trading Limited and C&S Investments Limited and the Paul Martin Steele Family Trust Fund referred to in the Letter of Claim. 2. Effect of this agreement The parties hereby agree that this agreement shall immediately be fully and effectively binding on them. 3. Transfer of Shares and Resignation Mr Chongwe Steele shall within 30 days of the date of this agreement (a) transfer to Mr Paul Steele for the consideration of £100 all of his shares in Euphrates Trading Limited (Shares), Mr Chongwe Steele warranting by this agreement that he is the legal owner of the Shares which are not encumbered or charged in any way and (b) send to Mr Paul Steele written resignation as a director of Euphrates Trading Limited with immediate effect and with no claims. 4. Payment 4.1 Within 30 days of the date of this agreement and subject to Mr Chongwe Steele complying with the requirements of clause 3 above, Mr Paul Steele will pay to Mr Chongwe Steele the total sum of £200,000 by way of bank transfer to Mr Chongwe Steele’s bank account. 5. The Properties The Properties referred to in the Letter of Claim shall be dealt with by Mr Paul Steele in accordance with the terms of the Consent Order referred to in the Letter of Claim as soon as Mr Paul Steele can practically and reasonably do so and the matter will be handled and concluded by Messrs ECB Legal Practitioners and Ms Samantha Steele. 6. Release This agreement is in full and final settlement of, and each party hereby releases and forever discharges, all and/or any actions, claims, rights, demands and set-offs, whether in this jurisdiction or any other, whether or not presently known to the parties or to the law, and whether in law or equity, that it, its Related Parties or any of them ever had, may have or hereafter can, shall or may have against the other party or any of its Related Parties arising out of or connected with: (a) the Dispute and all allegations made by Mr Chongwe Steele in the Letter of Claim; (b) the underlying facts relating to the Dispute; (c) the Consent Order, subject only to Mr Paul Steele’s compliance with clause 5 above; (d) any other matter arising out of or connected with the relationship between the parties. (Collectively the Released Claims) 7. Agreement not to sue 7.1 Each party agrees, on behalf of itself and on behalf of its Related Parties not to sue, commence, voluntarily aid in any way, prosecute or cause to be commenced or prosecuted against the other party or its Related Parties any action, suit or other proceeding concerning the Released Claims, in this jurisdiction or any other. 7.2 clause 6 and clause 7.1 shall not apply to, and the Released Claims shall not include, any claims in respect of any breach of this agreement. 8. Costs 8.1 The parties shall each bear their own legal costs in relation to the Dispute and this agreement. 8.2 This clause 8 supersedes and overrides any and all previous agreements between the parties and any court order regarding the legal costs in relation to the Dispute and in relation to this agreement (including the implementation of all matters provided by this agreement). … 11. No admission This agreement is entered into in connection with the compromise of disputed matters and in the light of other considerations. It is not, and shall not be represented or construed by the parties as, an admission of liability or wrongdoing on the part of either party to this agreement or any other person or entity.”

SETTLEMENT AGREEMENT AND RELEASE between BACKGROUND

Agreed terms

[15]The Settlement Agreement was signed by the Defendant on 8 February 2022 and by the Claimant on 11 February 2022. As the agreement makes clear, the date of the agreement is the date at the top, 26 January 2022, and not the date on which it was signed. Hence, under the terms of the agreement, payment of the sum of £200,000 by the Defendant pursuant to clause 4 was due within 30 days of 26 January 2022, namely by 25 February 2022.

[16]On the same day that he signed the agreement, 11 February 2022, the Claimant resigned as a Director of Euphrates Trading and transferred his shares to the Defendant, in accordance with clause 3 of the agreement.

[17]Despite the finalisation of the agreement, no payments were initially made by the Defendant to the Claimant and there was an exchange of emails about this on 22 February 2022. Thus, at 07:25 on 22 February, the Claimant sent to the mediator an email in the following terms:

“Hi Jeremy, I have not received the payment from Paul and I have been informed he is in Africa. This is relevant because he always uses being abroad as an excuse not to make payments. Can you remind him that as per the agreement the money is meant to be sent in full by this Friday; and if it is not in my account on Friday then I will require verifiable proof of payment. The agreement is dated 26th January 2022 and clearly states that the payment is to be sent within 30 days of the date of the agreement. As I have already transferred the Euphrates shares to Paul, if the payment is late then not only will he be in breach of the agreement but I will be fully within my rights to report him for defrauding me out of the shares by luring me into a contract he has failed to honour. This process has been an enormous waste of my time and resources to date [and] if the payment is not received in full by this Friday then my lawyer has been instructed to move forward with further action against Paul.”

At 08:49, Mr Reeve replied stating that he would “remind Paul of his obligations”. Mr Reeve immediately sent to the Defendant an email in the following terms:

“Dear Paul, I hope you are well? I just wanted to remind you that this Friday sees a month since the agreement was signed - I just wanted to check you are still on track to make the payment?”

It is to be noted that this email was somewhat misleading: Friday did not represent a month since the agreement was signed but a month from the date of the agreement (26 January 2022). This may in part have been responsible for the Defendant’s reply which was as follows:

“Dear Jeremy, I trust you are well. Please note that you sent the 1st draft on the 26th of January and after several amendments I signed the document on the 8th of February. You ought to have changed the original date to reflect the date on which it was signed. By the 8th of March he will have received the money. …”

I hope you are well?

[18]On 24 February 2022 the mediator’s administrative assistant Shauna Pilsworth emailed the Claimant stating that the mediator had chased up the Defendant for payment and the Defendant had said that he would pay the Settlement Sum by 8 March 2022. The Claimant says that he agreed a further oral extension to the Licensing Agreement to 10 March 2022. The “Buluwa Agreement”

[19]On 2 March 2022, the Claimant entered into a partnership agreement with a successor company to Buluwa Inc, called Nankoung Inc, but referred to as “the Buluwa Agreement”, the CEO still being Reprudentia Sonkey, referred to above at paragraph 2 of this judgment. The version of the partnership agreement originally provided to the Defendant and to the Court was heavily redacted (the Claimant misguidedly said that this was on account of it containing sensitive commercial information): an unredacted version was disclosed in the course of the trial. The salient parts of the agreement from the Claimant’s point of view were as follows:

“PARTNERSHIP AGREEMENT THIS PARTNERSHIP AGREEMENT (the "Agreement") made and entered into this 2nd day of March 2022 (the "Execution Date"), BETWEEN: Nankoung Inc of 8 The Green Suite 4000 Dover DE 19901, United States of America and C. Steele of Flat 6, 81 Chandos Way, London, NW11 7JH, United Kingdom (individually the "Partner" and collectively the "Partners"). BACKGROUND: A. The Partners wish to associate themselves as partners in business. B. This Agreement sets out the terms and conditions that govern the Partners within the Partnership. Formation 1. By this Agreement the Partners enter into a general partnership (the "Partnership") Name 2. The firm name of the Partnership will be: Raymani London. Purpose 3. The purpose of the Partnership will be: Beauty and Cosmetics Production, Hair Care Production, Retail & Marketing. Term 4. The Partnership will begin on March 2nd, 2022, and will continue until terminated as provided in this Agreement. Initial Capital Contributions 6. Each of the Partners has contributed or will contribute to the capital of the Partnership, in cash or property or in non-monetary contributions in agreed upon value, as follows (the “Initial Capital Contribution"): Partner Contribution Description Agreed Value Nankoung Inc C. Steele - Nankoung Inc. shall make a Payment of $150,000.00 to C. Steele by bank wire within 7 business days of both parties signing this agreement. This payment of $150,000.00 is non- recoupable and is to be spent at the discretion of C. Steele. - Nankoung Inc shall make a payment of $200,000.00 to C. Steele by bank wire within 7 business days of both parties signing this agreement. This payment is to be spent solely on the Marketing and Promotion of Raymani London. • Market and Promote Raymani London as needed. • Provide 7 bespoke, fully packaged hair care products which C. Steele fully owns the rights and formulations to. These products will be sold by under Raymani London. • Manufacture 7 different fully packaged hair care products which C. Steele fully owns the rights and formulations to, the quantities of which must be agreed to by The Partners in writing. Each of these 7 products must be pre-approved by Nankoung Inc. • Package and ship all orders, PR packages and promotional efforts associated with Raymani London. • Enlist suitable celebrities and social media influencers to promote Raymani London. • Create a Shopify website on which Raymani London products will be sold. • Regularly post videos and pictures on all social media $350,000 7. All Partners must contribute their respective Initial Capital Contributions fully by March 10, 2022. Profit and Loss 14. … PARTNER NET PROFIT/LOSS PERCENT Nankoung Inc 30% C. Steele 70% Additional Clause 71. The payment of $150,000 paid to C. Steele by Nankoung Inc within 7 days of both parties signing this agreement is entirely non recoupable. IN WITNESS WHEREOF the Partners have duly affixed their signatures under hand and seal on this 2nd day of March 2022.”

BETWEEN: Nankoung Inc of 8 The Green Suite 4000 Dover DE 19901, United States of America and C. Steele of Flat 6, 81 Chandos Way, London, NW11 7JH, United Kingdom BACKGROUND: Formation Name Purpose Term Initial Capital Contributions Profit and Loss Additional Clause Payments under the Settlement Agreement

Additional Clause

[20]On 7 March 2022, the Defendant set up a standing order for the payment to the Claimant of £10,000/day. Thus, by the new deadline which the Claimant asserts he agreed orally with the licensee (10 March 2022) a total of £50,000 had been paid. As the Claimant had been unable to complete the terms of the licensing agreement by the date specified, the licensee withdrew its permission for the Claimant to use the active ingredients on 12 March 2022.

[21]At paragraph 11(iii) of the Particulars of Claim, it is pleaded:

“The Company providing the Licensing Agreements for some of the ‘actives’ needed by the Claimant to manufacture the Haircare Products withdrew permission for the Claimant to use these. The Licensing Company confirmed that it was allocating the formulations needed by the Claimant to another customer and would not be able to provide access for the Claimant in the foreseeable future.”

The Claimant says that this had a knock-on effect on the partnership agreement between Nankoung Inc and himself and led to the withdrawal of Nankoung Inc from the Buluwa agreement and thus the withdrawal of the funding which Nankoung Inc had agreed to provide.

[22]The daily payments of £10,000 continued to be made by the Defendant to the Claimant, the final instalment being made on 30 March 2022 by which time the total of £200,000 had been paid. However, on whatever interpretation of the Settlement Agreement is appropriate, the Defendant accepts that the payments were late and that there was, therefore, a breach of contract by reason of the deadline set out in the contract not being met. These Proceedings

[23]The Claim Form arising out of the Breach of Contract was issued on 7 July 2023 and Particulars of Claim dated 28 July 2023 particularised the damages flowing from the breach of contract in the sum of £1,401,907.17 plus interest. The Particulars of Claim, settled by Counsel, alleged, inter alia, as follows:

“1. The Claimant is a businessman whose business includes the marketing and sales of haircare products designed and developed by the Claimant, (‘the Haircare Products’). The business model that the Claimant intended to operate to sell the Haircare Products, (‘the Haircare Business’), was that all intellectual property including trademarks and formulations in the Haircare Products would remain with the Claimant as well as the URL for the Haircare Business. The sales of the Haircare Products would be made via a limited company called Raymani Ltd. Raymani Ltd was incorporated on 12" January 2022 under Company Number 13844366 and is wholly owned by the Claimant. The business model was for the Claimant to derive his income from the Haircare Business by taking dividends from Raymani Ltd as set out in paragraph 20 below. 2. The development of the Haircare Products and getting them to market requires a validation process, (‘the Validation Process’), that ensures the Haircare Products and their various ‘actives and ingredients’ comply with strict regulatory requirements in order for the seller to obtain a registration to sell them in each intended sales territory. Some ‘actives and ingredients’ had to be procured by the Claimant on licence both for testing/development and later for manufacturing. By the date of the registration being obtained and all the Validation Process being completed, the product has to be in a form that is ready for market and cannot be altered after validation without going back into the validation process. Such validation and licences last only a finite time and may become invalid and/or revoked past the contractual manufacturing date due to changing regulations and/or other matters. The Validation Process takes about 18 months and costs a considerable amount of money. 3. For the Haircare Products, this process costs approximately £250,000.00. 4. Further, the manufacturers of such products need advance notice and agreement as to when production is to commence and the developer/seller has to ensure that the product is fully compliant and ready to be manufactured on the agreed date. If the product is not ready to be manufactured at the agreed date the manufacturer is likely to allocate its manufacturing capacity to another customer and the developer will have to wait for a new manufacturing date to become available. If, by the new manufacturing date, the licence to manufacture and/or sell has expired then the developer may have to go through the entire Validation Process again if regulatory and/or other requirements have changed. … 8. The Defendant gained knowledge of the way that Claimant’s business was dependent on licences, registration and manufacturing agreements etc and the time-sensitive nature of the various stages of obtaining development approvals and manufacturing agreements including those referred to above. The Defendant already had some knowledge of the Claimant’s haircare business prior to 2021 but that knowledge increased and deepened during 2021 as a result of the Original Dispute. 9. The Claimant will refer to the Original Dispute Letter of Claim at trial for its full meaning and effect. At its highest, the Original Claim had a value of some £2.2Million. The Claimant, however, was in urgent need of funds to continue with the development of his haircare products. 10. The Original Dispute went to formal mediation, (‘the Mediation’), wherein the Parties engaged a Mr. Jeremy Reeve of Cambridge ADR as their mediator, (‘the Mediator’) under a mediation agreement signed by the Claimant on 6" December 2021 which resulted in a settlement agreement, (the Settlement Agreement’) for £200,000 (‘the Settlement Sum’) dated 2th January 2022. 11. The following matters pertained to the Claimant’s business that directly impacted the Mediation and its outcome together with matters that occurred during the Mediation that were known to the Parties: i. By September 2021 the Claimant had spent c£246,699.96 and about 12-13 months of work on the Validation Process. The Defendant was aware before the Mediation started that the Claimant had spent a considerable sum of money (over £200,000) and about 12-13 months on the Validation Process. ii. By 1 December 2021 the licences for the actives and validations needed to manufacture and take the Haircare Products to market had expired and the Claimant was having to negotiate with the owner of the licences for the actives to extend these to the end of February 2022 which was a new manufacturing date which the Claimant had managed to secure with a manufacturer. If the new manufacturing date was not met then the Validation Process would have to be done again with a likely cost similar to the amount that it had cost before. By 4" January 2022 the Defendant knew that the Claimant had agreed a new manufacturing date of end February and that this date had to be met by the Claimant failing which the Validation Process would need to be undertaken again at a similar sum that it had cost before. This information was relayed to the Defendant by the Mediator. iii. On 12 March 2022, the company providing the licencing agreements for some of the ‘actives’ needed by the Claimant to manufacture the Haircare Products withdrew permissions for the Claimant to use these. The licencing company confirmed that it was allocating the formulations needed by the Claimant to another customer and would not be able to provide access for the Claimant in the foreseeable future. iv. The Claimant was developing the Haircare Products with the aim of getting a first batch manufactured in February/March 2022 and to market between May and July 2022. The Defendant was aware of this by 8 January 2022, at the latest, when the Mediator told him of the Claimant’s intentions in this regard and that the Settlement Payment would be required to enable this. The Claimant needed c£20,000 as a deposit to secure the manufacturing dates with the manufacturer. In response to this, the Defendant offered to pay the Claimant £25,000 with the balance of the Settlement Sum to be paid later after the Settlement Agreement had been signed by both parties. On 8" January 2022 the Defendant paid £10,000 of that £25,000 with a promise that the balance would be paid on 10" January 2022. The Defendant failed to pay the balance of £15,000 on 10" January 2022. v. The Claimant had a business relationship with an American company called Buluwa Inc. which started in 2016. Buluwa Inc. is a cosmetics, beauty and haircare company. The Defendant was aware of this relationship prior to the Mediation having previously offered the Claimant £380,000 of funding for his products if the Claimant did not enter into an investment agreement with Buluwa Inc. In early 2020 with that forming part of the Original Dispute. vi. In December 2021, Buluwa and the Claimant started negotiations for a new collaboration and investment by Buluwa relating to the Haircare Products. The collaboration/investment included a payment by Buluwa to the Claimant of a non-refundable signing bonus of $150,000 and $200,000 for marketing and promotions of the Haircare Products in return for 30% of net profits on sales of the Haircare Products, (‘the 2022 Buluwa Deal’). This deal was dependent upon manufacturing of the Haircare Products starting in March 2022. vii. The Defendant was aware of the 2022 Buluwa Deal to the extent that it was an investment into the Claimant’s business of $350,000 from a least 4" January 2022 when the Mediator informed him of this. viii. The Claimant needed between £105,000 and £120,000 to pay the manufacturer in advance to secure the manufacturing date and he also needed c£17,000 for packaging and storage costs. ix. On 4 January 2022 the Claimant told the Mediator that he would accept the Defendant’s settlement offer of £200,000 for various reasons including: i) That he needed this £200,000 in order to finance and enter into the manufacturing stage for the Haircare Products as that was a prerequisite for securing the investment from Buluwa and to avoid the costs that would be incurred if the manufacturing date of end February 2022 was missed. ii) That a portion of the 2022 Buluwa deal was non-recoupable and would keep him afloat financially until the Haircare Product range brought in regular income. x. On 6" and 7" January the Claimant told the Mediator that he needed to come to a signed settlement agreement with the Defendant and needed to be paid as soon as possible as he was finalising the terms of 2022 Buluwa Deal. The Claimant made it clear to the Mediator that Buluwa Inc. would not release the investment to him until he had a manufacturing date, which the Claimant could not secure until he had paid the manufacturer. The Mediator relayed that position to the Defendant. xi. In January 2022, the Claimant managed to negotiate an extension to the manufacturing date from 28" February 2022 to 10 March 2022. That latter date was the latest date by which the manufacturer would still accept the Claimant’s order to manufacture the Haircare Products after which the Claimant would have to recommence the Validation Process and find a new manufacturer once that new Validation Process had been completed: 12. The Defendant knew or ought to have known about the matters set out in paragraph 11 above. 13. Salient dates during the Mediation additional to the matters set out in paragraph 11 above include: i. 20th December 2021 - The Defendant made an initial offer to the Claimant to settle all matters in the Original Dispute for the sum of £200,000. ii. 11th January 2022 - The Claimant received a draft settlement agreement from the Mediator. The Claimant told the Mediator that he would sign the agreement as he needed to move forward with securing the 2022 Buluwa Deal. However, the Defendant would not sign the agreement and stated that he would have new agreements drafted by his lawyers in the U.K. and Zambia. iii. 26th January 2022 - The Mediator sent the Claimant the Settlement Agreement which was drafted by the Defendant’s lawyers to be signed via DocuSign. The Claimant contacted the Mediator and said waiting for the Defendant to sign the agreement and then waiting a further 30 days for payment would be enormously inconvenient as the Claimant needed to secure the manufacturing date as soon as possible in order to meet the terms of the 2022 Buluwa Deal. The Mediator assured the Claimant that the terms of the settlement were clear and he would be paid within 30 days of the date of the agreement regardless of whether the Defendant took a day or 2 to sign the agreement as this was basic contract law/procedure. The Mediator also contacted the Defendant on the Claimant’s behalf to make sure he understood that payment was to be made within 30 days of the date of the Agreement. iv. Late January/early February 2022: The Mediator also confirmed that the Defendant was aware of the 2022 Buluwa Deal and that the Defendant was aware that the Claimant needed the settlement money in order to manufacture the Haircare Product range which would in turn result in Buluwa Inc investing in the Claimant’s business. v. 8 February 2022 — The Defendant signed the Settlement Agreement. vi. 11 February 2022 - The Claimant signed the Settlement Agreement by Docusign as agreed between the Parties. The Claimant waited until the 11th to sign the agreement because the Defendant had to authorise David Hoxha at Rapid Formations to proceed with the filings needed for the Claimant to be able to resign as a director and assign his shares to the Defendant. The Defendant is, and was at all material times, the Rapid Formations account holder and, therefore, he needed to approve this. David Hoxha contacted the Defendant by email on Feb 8th and 10th 2022 and The Mediator also contacted the Defendant to get this done. The Claimant knew that assigning his shares to the Defendant and resigning as a Director was part of the settlement terms and he didn’t want to be in violation of that which is why he waited until this was done to sign the settlement agreement. The Defendant, in fact, never paid the £100 due for this assignment. The Defendant was aware of this on the same day as he was notified automatically by the Docusign process and, accordingly, had actual or constructive knowledge of the Claimant’s signature. The Claimant told the Mediator that he had resigned as a Director of Euphrates Trading, and attached his resignation letter to email, for the Mediator to forward onto the Defendant. The Claimant also sent a copy of his resignation letter to the Defendant by post. The Claimant also notified the Mediator that he had assigned his share in Euphrates Trading to the Defendant as per the terms of the Settlement Agreement. The Claimant stated in that email to the Mediator that “I expect a payment of £100 for my shares and a payment of £200,0000 to be sent to my bank account by February 25% 2022. As per the agreement the payment will be sent within 30 days of the date of the agreement. For the purpose of clarity the date of the agreement is 26"" January 2022.”

The Mediator later confirmed that the content of the email had been relayed to the Defendant. vii. 24 February 2022 — The Mediator’s Administrative Assistant, Shauna Pilsworth, emailed the Claimant stating that the Mediator had chased up the Defendant for payment and that the Defendant said that he would pay Settlement Sum by March 8" 2022. The Claimant updated the Mediator on the situation he was in with the manufacturer, Buluwa Inc and various suppliers and that these parties all needed to know exactly when the Claimant would have the funds needed to begin manufacturing the Haircare products. The Claimant told the Mediator again that if the manufacturing date or any licensing agreement for the actives/ingredients were lost then the Claimant would need to reformulate the Haircare Products and the costs incurred would be greater than the Settlement Sum. The Mediator confirmed that he had already made the Defendant aware of this. The Mediator said he would speak with the Defendant again in this regard. viii. February 24 to March 8 2022 - The Claimant spoke with the Mediator by telephone and told the Mediator that he was able to move his manufacturing date to 10 March 2022 and that all payments to the manufacturer had to be made by that date in order for the manufacturing to go ahead. The Mediator confirmed again that he had spoken with the Defendant and that the Defendant had promised to make full payment by 8 March 2022. … 15. The effective date of the Settlement agreement for the purposes of calculating the start of the 30-day payment period was 26 January 2022. Accordingly, the Settlement Sum was due to be paid to the Claimant by 25 February 2022 at the latest. In the alternative, and without prejudice to the Claimant’s primary claim that all sums under the Settlement Agreement were due by 25 February 2022, if the effective start date of the Settlement Agreement was when it had been signed and delivered by each party that would be 11 February 2022 when the Defendant was made aware of the Claimant’s signature by via the Docusign process (as set out above). In those premises, the last date for full payment of the Settlement Sum was 13 March 2022. The Claimant will rely on the Settlement Agreement at trial for its full terms and effects. … 18. In breach of Clause 4.1 of the Settlement Agreement, the Defendant failed to make payment of the Settlement Sum by 25 February 2022 or by 13 March 2022. … 19. The Defendant knew or ought to have known about the matters set out at paragraphs 11 and 13 above and of the likely and/or foreseeable consequences of late payment of the Settlement Sum including the matters set out in paragraph 20 below. It was in the reasonable contemplation/knowledge of the Defendant that late payment would likely result in the losses claimed in this matter by the Claimant. 20. It was reasonably foreseeable that late payment of the Settlement Sum, was likely to cause the following effects and detriments to the Claimant’s business which, in fact, the Claimant’s business did suffer: i. The loss of the licences and validations for actives needed for the formulations of the Haircare Products. This includes the fact that the Validation Process was now wasted and no longer valid. ii. The inability to obtain registration of the Haircare Products for sale in each sales territory intended for the Haircare Products in 2022 which included the European Union, the United Kingdom, the USA, Canada, Australia, United Arab Emirates, South Africa and other Africa territories. iii. The loss of the manufacturing date of 28 February 2022 and the extended date of 10 March 2022. iv. The loss of the 2022 Buluwa Deal and the loss of opportunities to collaborate further with Buluwa and other celebrities and social media influencers who could generate sales of the Haircare Products. v. The consequent loss of sales and revenue-as set out below. vi. The loss of further marketing and collaborations that would have happened had the Haircare Products begun manufacture in February/March 2022. 21. By reason of the Defendants’ breach of contract the Claimant has suffered loss and damage: PARTICULARS OF LOSS The Claimant refers to the expert accounting report of Mr Dipak Shah dated 22nd June 2023 attached hereto. This shows that, but for the defaults of the Defendant as set out above, the Claimant would have taken dividends from Raymani Ltd of £488,800.21 net of tax in the period from March 2022 to August 2023. The background and explanation of this loss is as set out below: i. By 10 March 2022, Buluwa Inc would have invested $350,000 USD into the project within 7 business days of the Claimant securing the manufacturing date referred above. $150,000 of this cash injection had been agreed with Buluwa to be non-recuperable and the Claimant would have used that $150,000 as personal remuneration for himself. The remainder would have gone into marketing including promotions, collaborations and advertising such as virtual advertisements, photography and videography. For the avoidance of doubt the $150,000 referred to here forms part of the loss claimed in sub- paragraph 21.vi below. ii Historically, the Claimant can show that he had previously generated orders for 12,793 units of skin care products in a 13 month period. This is shown at Appendix A of the expert report which has been redacted of commercially sensitive third party information. The sales were generated using the same marketing techniques as proposed for the Haircare Products save that these previous sales were generated without the benefit of endorsements by celebrities and influencers which would have boosted sales of the Haircare Products. iii Had the deal with Buluwa gone ahead then Buluwa were to get 30% of the net profits from sales after all costs. Additionally, there were certain milestones that, if they were reached, then Raymani Ltd would expand into other products. iv Because of the late payment of the settlement monies, the Claimant had to go through an entirely new validation process estimated at £265,000.00. v The Claimant is claiming, inter alia, 1.5 years of lost manufacturing and profit from sales: The calculations of the net profits (before tax and under the original formulations) for each product are set out in the report of Mr Shah and Buluwa’s 30% have been deducted from these. vi The net income that the Claimant would have derived personally from the sales of the Haircare Products had the Defendant made payment of the Settlement on time is £488,800.21. vii The Claimant further claims the cost of the Validation Process which became wasted as explained above due to the delay and default of the Defendant. The wasted Validation Process costs were £246,699.96. viii. Additionally, the Claimant claims for lost dividend income that he would have been able to obtain from sales derived from the collaboration with Buluwa and from endorsements and collaborations etc from deals with celebrities and social media influencers. The dividend income net of tax from such sales is currently estimated at £666,307. This figure will be subject to adjustment upon further evidence being obtained by the Claimant but it is stated as being a reasonable estimate on what is known at present. ix. The Claimant further claims the sum of £100 not paid by the Defendant for the Claimant assigning his shares in Euphrates Ltd and resigning as a director as set out above. The Claimant therefore claims: (1) Damages in the sum of £1,401,907.17 (2) Interest …” PARTICULARS OF LOSS

The Claimant therefore claims:

[24]It was agreed at trial that the Buluwa Deal (or Buluwa Agreement) referred to in the Particulars of Claim was the agreement between the Claimant and Nankoung Inc referred to at paragraph 19 above.

[25]A defence and counterclaim was served on 20 September 2023. The defence pleaded that: i) the complaints and matters relied upon by the Claimant formed part of the original dispute between the parties which was compromised by the settlement agreement and formed part of the “release clause” (clause 6); ii) each of the alleged Heads of Loss were too remote to be claimable as a consequence of breach of the settlement agreement; iii) the Defendant had no substantial knowledge as to the operation of the Claimant’s purported business save that he understood that the Claimant proposed to develop a business centred upon the sale of haircare products: in particular he had no knowledge of the licensing or regulatory requirements or objectives of the Claimant’s purported business, nor of the manufacturing date referred to in paragraph 11ii of the Particulars of Claim, nor of the product to which that date referred; iv) the Defendant generally had no knowledge of the various matters alleged in paragraph 11 of the Particulars of Claim; v) The Claimant could not rely on anything relayed to the Defendant by the Mediator as the contents of such communications are subject to privilege and confidentiality; vi) The date for payment of the £200,000 under the settlement agreement was 30 days from the date when the Defendant was provided with the Claimant’s signed counterpart of the agreement (25 February 2022), ie 27 March 2022, by when all but £30,000 had been paid, with the balance paid by 30 March 2022; vii) The damages claimed were disputed in that they were not incurred, they were not caused by any breach of contract on the part of the Defendant and were too remote, not being in the actual or reasonable contemplation of the parties; viii) The counterclaim related to the legal costs incurred by the Defendant in having to defend claims which had been part of the release clause and for which the Claimant was liable to indemnify the Defendant pursuant to clause 10 of the settlement agreement.

[26]A reply and defence to counterclaim was served on 31 October 2023.

[27]On 13 June 2024 the matter came before Master Armstrong who made a Directions Order providing for service by the Claimant of an updated schedule of loss by 13 December 2024 and service of a counter-schedule by the Defendant by 3 January 2025. It is to be observed that the Master was not invited to make any provision for the giving of expert evidence.

[28]The Claimant served a Schedule of Loss on 20 December 2024: by now, the damages claimed had risen to £8 million (including interest). This consisted of: Past Losses i) Loss of the $150,000 to have been paid to, and retained by, the Claimant under the Buluwa Agreement; ii) Costs of approximately £50,000 incurred under a renewed revalidation process in 2022/2023. The previous licences and validations having lapsed; iii) Manufacturing costs of £11,082 for a sample sale; iv) Past loss of income by way of dividends from Raymani Limited in the period to 18 December 2024 in the sum of £2,682,893.38; Future Losses v) £200,000 being the cost of further validations and trials between January 2025 and September 2026; vi) Loss of future income until 2030 (when it is said that the Claimant would have revisited his collaboration with Buluwa) in the sum of £4,719,740.18 by way of dividends from Raymani Limited. The above figures for past loss are net of interest.

[29]No counter-schedule was served, on the basis that the Defendant disputed the claim made in the schedule in its entirety, and had no positive case to put forward by way of alternative figures. The Trial

[30]The matter came before me for trial starting on 30 April 2025. The Claimant was unrepresented. In advance of the trial, the Claimant served a skeleton argument which was critical of the Defendant’s failure to serve a counter-schedule in accordance with the Order of Master Armstong (see paragraph 23 above). It was asserted that the Claimant had relied on the Defendant’s failure to challenge the losses at the appropriate time by not applying to have expert evidence “because, in the absence of any challenge to C’s figures and calculations there was no need for expert evidence.” However, this assertion was plainly wrong. At the time of Master Armstrong’s order, the Claimant could not have known that no counter-schedule would be served – indeed, the Order provided for service of such – and yet he had not sought permission to rely on expert evidence. The non-service of a counter-schedule could not therefore have been the reason for the Claimant not to have sought permission for expert evidence. The skeleton otherwise repeated the allegations in the Particulars of Claim.

[31]An expert report from a Mr Dipak Shah had been served by the Claimant on the Defendant in advance of the trial. In his skeleton argument, the Defendant referred to the report of Mr Shah being neither CPR compliant, nor being the subject of permission from the court and submitted that no reliance could be placed on it, nor should it be included in the trial bundle. The Claimant stated, in a supplementary skeleton, that it had been served “only to show the basis and methodology of the Claimant’s calculations in the Schedule of Loss. It demonstrates that the figures were not arbitrary or speculative.” Thus, at trial, it appeared to be agreed that the Claimant could not rely on Mr Shah’s report as expert evidence, it was not in the trial bundle and I did not read it. I could see no basis upon which it could be relied upon in the manner sought by the Claimant, namely to show that the basis and methodology for the calculations in the schedule and to demonstrate that the figure were not arbitrary or speculative: it was simply inadmissible and the Claimant had no support from an expert for the amounts claimed.

[32]At the trial, I heard live evidence only from the Claimant and the Defendant. In addition, there were statements from Ms Amanda Isom and Ms Reprudentia Sonkey, who were not required to attend for cross-examination. The Claimant’s Evidence

[33]The Claimant relied upon his witness statement as his evidence in chief. He also affirmed the truth of the Particulars of Claim, the Reply and Defence to Counterclaim, and the schedule of loss. The witness statement was largely repetition of the matters pleaded in the Particulars of Claim. The Claimant stated that the original dispute which had prompted the Letter of Claim of 19 October 2021 (see paragraph 5 above) increased the Defendant’s knowledge of how the Claimant’s business worked including its dependence on licences, registration and manufacturing agreements, and in particular the time-sensitive nature of the various stages of obtaining developmental approvals and manufacturing agreements if the business was to succeed: this was, he said, the position in 2021, as made clear in the letter of claim of 19 October 2021, and the situation was repeated in 2022 when the Defendant was in breach of the settlement agreement. He said:

“The current claim is a further example of the same type of loss; i.e. Paul [the Defendant] promising a sum of money that I needed to get production going for my products and then failing to pay the sums promised on time leading to me losing a manufacturing date and having to start all over again. … I can say with full conviction that Paul knew full well the vital importance of making payment on time for the sums agreed in the Settlement Agreement.”

The Claimant explained that in December 2021, he had agreed a new manufacturing date of end February 2022 for the products, and that in January 2022, he had managed to negotiate an extension to 10 March 2022, this being the latest date that the manufacturer would still accept his order to manufacture the Haircare Products. Failing that, he would need to re-start the validation process once more, and find a new manufacturer. He says that this was all relayed to the Defendant and known to the Defendant by early January 2022. He needed a deposit of £20,000 to secure the manufacturing dates with the manufacturer, and between £105,000 and £120,000 to pay the manufacturer in advance of the manufacturing date. Furthermore, the Buluwa deal was dependent on the manufacturing agreement proceeding.

[34]Dealing with mitigation, the Claimant stated that, with the loss of the manufacturing date and ability to proceed with the Haircare Products, he set about developing new formulations for a fresh set of some seven products, but lack of funding restricted him to development of only three products (hair oil, hair drops and hair serum). He sets out the work done on developing these products and the expenses involved. It would appear from the Claimant’s statement that this work has borne fruit: thus, although he has paid £70,203.49 to a company for testing the three products (he does not reveal the source of this funding, but I assume it is at least in part from the payments by the Defendant under the settlement agreement), he earned £76,113.83 from sample sales between 30 January 2024 and 8 April 2024, £2,836.24 from sample sales between 9 April 2024 and 13 April 2024 and £77,330.23 from sample sales between 1 January 2024 and 23 May 2024, a total of £156,280.30. He asserts that these sales show “that the sums I am claiming in terms of lost sales revenue are entirely realistic and supported by this small and limited market to which I can sell at present.” However, what the Claimant fails to appreciate is that, on the basis of these figures, he shows that he is in a position to mitigate his loss. This is underlined by the Claimant stating “If the testing goes smoothly without issues arising, I expect the products to be fully ready for marketing as hair care products by January 2026. I then expect that my projected sales, upon which the losses set out in my Schedule of Loss are based will be realised.” Of course, if the losses are realised, they will no longer be losses.

[35]In cross-examination, Mr Jory KC started by questioning the Claimant about the 2022 Buluwa agreement. Although it is true that, by that time, Buluwa had become Nankoung, I was satisfied by the Claimant’s answers that Ms Sonkey remained the point of contact and that everyone simply continued to refer to her company as Buluwa even though the name had changed. He said:

“The Defendant knew that the company had been Buluwa Inc and I didn’t want to confuse him. I don’t know when the name change occurred: Ms Sonkey made all the decisions and all dealings were through her.”

[36]Mr Jory then questioned the Claimant about the Partnership Agreement with Nankoung and the Claimant agreed that sales are not equivalent to profit and that the cost of sales needs to be deducted. He agreed that, in the redacted document before the court, there is no indication of how net profit or loss is calculated. He disagreed that the agreement provided for him to be liable for 70% of any losses made, saying that if there had been losses, they would have lain where they fell, this being a “low-ball agreement” with each bearing their own losses. Although the sum of £246,699.96 had been claimed in the Particulars of Claim as wasted expenditure caused by the Defendant’s delay and default in paying on time, this was not included in the schedule of loss as he had been advise that it could not be claimed. Mr Jory took the Claimant to paragraph 9 of his witness statement where he referred to documents supporting his projected sales and the Claimant agreed that the documents supported sales figures for Raymani International Ltd, a company which had been dissolved, but the documents did not show that the sales would have been profitable. The Claimant asserted that the profits could be worked out by deducting the sums which had been paid to the manufacturer, as shown in the bank statements, but he accepted that none of this is contained in his witness statement.

[37]Mr Jory then asked the Claimant about the Memorandum of Agreement with Envydia Inc (see paragraph 11 above) and the Claimant said that the Agreement was drawn up by his manufacturer and related only to the active ingredients, not the product itself. He said that originally he needed to have completed the manufacturing by 28 February 2022, but he had then negotiated an extension. Mr Jory asked if he had told that to the mediator and he replied:

“I told the mediator I needed the money as soon as possible,” referring to an email he sent to the mediator on 6 January 2022 where he said, among other things: “As I mentioned previously time is of the essence. I need the funds from Paul asap to meet the terms of Buluwa’s offer; as you know I need to begin manufacturing asap to qualify for the investment.”

Mr Jory pointed out that this email doesn’t mention a deadline of 28 February and the Claimant said that he told the mediator this in a telephone call. However, he had not mentioned this telephone call in his witness statement.

[38]Mr Jory asked the Claimant about the apparent inconsistency between the Letter of Claim of October 2021 where it was stated at paragraph 7.8 that “as a result of the delays, our Client has lost the benefit of his contract with his manufacturer and chemist. Additionally, our Client has lost his licensing agreements …” and the fact that he was relying on the deadline contained in the licensing agreement of 12 December. The Claimant said:

“I agree that a person reading the letter of October 2021 would understand that the licensing agreements had been lost. I told the Defendant about the new agreement in a telephone conversation and by text.”

. The Claimant then said that he didn’t in fact tell the Defendant, he told the mediator but he was unable to find the text in which he had done so. He denied that he was relying on a conversation with the Defendant’s lawyer to show the Defendant’s knowledge of the new licensing agreement. He agreed that he needed a licence in order to manufacture the products. He said that the mediator was told that he needed the money for the Buluwa deal but not for the licensing agreement. Mr Jory asked if the Claimant accepted that it was no part of his case that the Defendant knew of the new licensing agreement and he said he disagreed with that. Mr Jory therefore asked how he asserts that the Defendant was told and he replied:

“I told the mediator in one of my long conversations with him, probably in December 2021.”

He agreed that a mediator needs to be authorised to relay to one party anything said to him by the other party. Mr Jory then referred the Claimant to his email to the mediator on 22 February 2022 where he referred to not having received the payment from the Defendant and stating:

“Can you remind him that as per the agreement the money is meant to be sent in full by this Friday, and if it is not in my account on Friday then I will require verifiable proof of payment. The agreement is dated 26 January 2022 and clearly states that the payment is to be sent within 30 days of the date of the agreement.”

Mr Jory pointed out that there is no mention there of the Buluwa agreement and the Claimant agreed stating that he had not reached agreement with Buluwa at that stage although they were in conversation. He said:

“I needed to give Buluwa a certain date for manufacture.”

[39]The evidence of the Claimant spanned 30 April 2025 and 1 May 2025, and, overnight between these dates, the Claimant disclosed an unredacted copy of the Partnership Agreement with Nankoung Inc. Referring to this, Mr Jory asked where the Agreement provides for the profits from the partnership to go to Raymani Ltd as pleaded and the Claimant accepted that it doesn’t but said that that was the way he intended to conduct his business. The $200,000 to be invested by Nankoung Inc was to go towards marketing and promotion, not manufacturing. He agreed that he had told the Court the previous day that there was a confidentiality clause but conceded that in fact there isn’t one.

[40]Mr Jory then referred the Claimant to his various WhatsApp messages with the mediator on 4 January 2022 and asked if he accepted he was telling the mediator that he wanted part of the money for back rent and expenses and not for the Buluwa deal and he agreed that it was nothing to do with the Buluwa deal at that point. He agreed that the WhatsApp messages do not show him telling the mediator that he needed the money for manufacturing saying:

“there was no agreement for manufacturing and I wouldn’t have told him something that was not yet confirmed. There was no discussion about anything that was not concrete.”

Mr Jory referred to paragraph 23 of the Claimant’s witness statement where he had said:

“I was developing the Haircare Products with the aim of getting a first batch manufactured in February/March 2022 and to market between May and July 2022. Paul was aware of this by 8th January 2022, at the latest, when the Mediator told him of the Claimant’s intentions in this regard and that the Settlement Payment would be required to enable this …”

He said:

“I told the mediator I was not comfortable with doing anything if I didn’t have the funds. I explained to the mediator what I was trying to do. At this point my plans were a pipedream. I should have said in my statement that I referred to what I was attempting to do.”

Mr Jory asked again: Do you agree that the mediator was not told you needed the money for manufacturing and the Claimant then said that he did tell the mediator this, by telephone. He agreed it is not reflected in the documents. At that point the Court asked the Claimant questions arising out of what he had said at paragraph 20 of his witness statement where he said: By 4th January 2022 Paul knew that I had agreed a new manufacturing date of the end of February 2022 and that this date had to be met, failing which the Validation Process would need to be undertaken again at a similar sum that it had cost before. This information was relayed to the Defendant by the Mediator The Claimant replied that the manufacturer was Envydia and the agreements with them were oral agreements. Mr Jory asked the Claimant where he refers to either licencing or manufacturing in any of the documents and he said: I relayed Buluwa to the mediator over and over again. All three things (licensing, manufacturing and the Buluwa deal) had to exist together for it to happen. The Partnership Agreement was never in fact executed. The Claimant agreed that Ms Sonkey had signed the Partnership Agreement on 2 March 2022 and Mr Jory asked where we can see him telling the mediator that he needed the settlement money by a specific date. He said:

“I did relay the dates to the mediator. I explained what I was trying to do to the mediator. I don’t understand why he could not have passed on the dates.”

[41]On the morning of 18 January 2022, there was a series of messages between the Claimant and the mediator, Mr Reeve, in which the Claimant was getting increasingly emotional and critical of the mediator’s role. In one such message the Claimant said:

“I told you £200k means nothing to me and yet I’ve been waiting for 2 months with no movement for money that will make barely no difference to my life at all.”

Mr Jory suggested to the Claimant that this message would have suggested to the mediator that the Buluwa deal was no longer an issue or of any relevance. The Claimant said that he sent the message out of emotion because he can be highly strung. Mr Jory asked if the Claimant accepted that the mediator would have been given the impression that if the agreement was not signed by Friday, the mediation had failed and that the £200,000 was therefore not important for the purposes of any deal and the Claimant replied that he was still jeopardising his important relationship with Ms Sonkey. He said he didn’t know how Mr Reeve would have interpreted the WhatsApp. He had asked for a failed mediation report several times but the mediator had remained patient with him.

[42]In relation to the 30-day time for payment under the agreement, the Claimant said that he understood this was from the date of the Settlement Agreement not from the date it was signed. When it was signed he felt he was now in a position to commit in relation to Buluwa. Mr Jory pointed out that in the email of 22 February, there was no mention of the failure to pay jeopardising the deal with Buluwa.

[43]Mr Jory put the Defendant’s case to the Claimant:• First that he had never told the mediator that there were critical dates (he insisted he did);

• secondly there was no supportive documentary evidence (he said that there was);

• thirdly there was no evidence that critical dates or details of the Buluwa deal were transmitted by the mediator to the Defendant (the Claimant disagreed).

[44]Mr Jory then referred the Claimant to the payments made by the Defendant and the Claimant said that after three or four payments it became obvious to him that the Defendant was paying at the rate of £10,000/day. Mr Jory asked what he did about it and he said:

“I didn’t do anything because the deal was dead by this time.”

[45]The Claimant was permitted to “re-examine himself” to give evidence of matters arising out of the cross-examination. He first contested the suggestion that he would not have been capable of running a profitable business. He referred to an article from the Daily Mail where his opinion had been sought on the return of Megan Markle to social media and referred to other articles which showed that he was capable of running a profitable business: he said that he would not have got these accolades from the papers were it not true. Next he said that he had not wished to rely on Mr Shah’s report but rather that his calculations were based on his workings which in turn were based on the production which would have occurred if he had received the money when he should from the Defendant. He said that he had the appropriate connections and industry knowledge. He said that his calculations were based on two things: first, his track record and secondly his ability to offer cheaper products because they were not properly licensed. He said that he admitted that there was an element of speculation in the figures but that the claim was based on industry knowledge and experience and the figures he had put forward were conservative. He said that within this field, there is in fact no-one who is qualified to speak about the field as a whole because it is done differently in different places such as California, Europe and Korea and therefore there is no appropriately qualified expert who could be called. The Defendant’s Evidence

[46]The Defendant relied on his witness statement for his evidence in chief. In that statement, he confirmed having given the Claimant by way of gift £677,235 in the period May 2017 to April 2021. He referred to the Claimant’s profligacy since leaving school, stating:

“It seems to me, that no matter how large the sums of money I have advanced to him that money sees to disappear within a short period of time and the Claimant then comes back to me demanding more money. This claim is just a ruse and is really just an unjustified demand for £1.4m from me.”

That statement was written at a time when the claim was for £1.4m: it has since risen to one for £8m.

[47]Referring to the underlying dispute that led to the mediation in 2021/22, the Defendant states that he considers that there was nothing that warranted mediation as the underlying dispute lacked any foundation He explains settling the mediation for £200,000 as follows:

“I settled with him because I just wanted to end the dispute, not have to pay lawyers a huge amount of fees (which I knew that I would never get back) and bring an end to the family nonsense that [he] was determined to place before me. I am a successful and extremely busy businessman, and I really did not have the time or inclination to be involved in a protected legal dispute with my own son.”

The Defendant then set out his views on the merits of the underlying dispute (or lack of them), which it is unnecessary to repeat for the purposes of this judgment.

[48]With regard to the settlement agreement which is the subject-matter of this claim, the Defendant states that he received the agreement on 26 January 2022, and having looked at it, signed it on 8 February 2022. He says:

“I sent the mediator an email asking him to amend the date as what was showing was the date of the draft. I did not then hear back for a considerable period of time. Around the 25 February 2022, I sent the mediator an email asking for a completed document showing the signatures of both parties. He sent a complete document the following day and it showed that the Claimant had signed it a few days after I had done so. So much for urgency. As far as I was concerned, the effective date was when I had received a fully signed copy which was 25 February 2022 by email.”

[49]So far as payment of the settlement sum is concerned, the Defendant states: “It was only after I was made aware that the settlement agreement had been signed on 25 February 2022, that I started making regular payments to the Claimant in order to discharge the sum. The next transfer that I made was on 7 March 2022 of £10,000. I had decided to make payments to the Claimant in smaller tranches because I did not want to give it to him all at once, as I was concerned that he would simply waste it all quickly. I do[not] understand how the Claimant can say that time was of the essence of the payments when he took ages to sign the settlement agreement. This is the same person who insists on the importance of time and yet he did not know for nearly a month that £100,000 was sitting in his account. The Claimant did not show any urgency with regards to the Settlement Agreement. Had it been urgent he would have signed it earlier. After he signed the Settlement Agreement he did not bother to ask his mediator if he had forwarded the complete document to me. I received the signed document nearly 3 weeks after I had signed it and only after I asked for it.

[50]In relation to the allegation of loss alleged in the Particulars of Claim, £1.4m at the time the Defendant made his statement, he denied having any detailed knowledge of the Claimant’s business at the time of the mediation or how it operated. He stated:

“The Claimant says that I “gained knowledge of the way that Claimant’s business was dependent on licences, registration and manufacturing agreements etc and the time-sensitive nature of the various stages of obtaining development approvals and manufacturing agreements”

. Yet he does not say how I gained such knowledge. I had no such knowledge of his business and a. I certainly had no idea that by September 2021 the Claimant had spent around £246,699.96 and about 12-13 months of work on the Validation Process; b. I was not aware that the Claimant had spent a considerable amount of money on Validation Work; c. I was not aware that the Licenses had expired. I had no idea that the Claimant had agreed a new manufacturing date. There was no need for me to know this information. He says this information was relayed to me by the Mediator. If the Mediator had this information it would have been in documentary form and he would have passed it on to me. However, even if it had been in documentary form it would not have mattered to me. d. I was not aware that the Claimant was developing the Haircare Products with the aim of getting a first batch manufactured in February/March 2022 and to market between May and July 2022. The Claimant says that he needed about £20,000 as a deposit to secure the manufacturing dates with the manufacturer. He claims that I offered to pay the Claimant £25,000 with the balance of the Settlement Sum to be paid later after the Settlement Agreement had been signed by both parties. No such thing happened and if this was the agreement this would have been recorded in the written agreement. … He claims that because of the late payment of the settlement monies, the Claimant had to go through an entirely new validation process estimated at £265,000.00. If this is true, I knew nothing about it at the time and I had no means of knowing that the settlement money was to be used on an extremely time sensitive matter.”

[51]So far as the Buluwa deal is concerned, the Defendant asserts that he was unaware of the Claimant’s relationship with Buluwa and had no reason no know, not being a partner in the business, He states:

“The whole claim in relation to Buluwa is completely speculative and is not something I knew or could have foreseen at all. I don't know anything about Buluwa, as I was never party to those discussions or agreements. In any case that was not my role. I am not a shareholder or in any way connected to his business. The running and management of his company is exclusively the prerogative of the Claimant.”

[52]In particular, the Defendant denied that the mediator passed on to him the information claimed by the Claimant. Thus, the Defendant denies that he was told by the mediator:• That the Claimant needed to secure the manufacturing date as soon as possible in order to meet the terms of the 2022 Buluwa Deal;

• The Claimant’s situation vis a vis the manufacturer, Buluwa and the various suppliers who all need to know exactly when the Claimant would have the funds needed to begin manufacturing the Haircare Products;

• That if the manufacturing date or any licensing agreement for the actives/ingredients were lost then the Claimant would need to reformulate the Haircare Products and the costs incurred would be greater than the Settlement Sum;

• That the Claimant had been able to move his manufacturing date to 10 March 2022 and that all payments to the manufacturer had to be made by that date in order for the manufacturing to go ahead. Accordingly, he denies that the mediator would ever have confirmed to the Claimant that he had made the Defendant aware of these matters as there had been no such conversation between the mediator and the Defendant. The Defendant repeated his denial that he knew that the Claimant would suffer losses of the order claimed if the full settlement monies were not paid by 26 February 2022, alternatively by 13 March 2022. He denies having the necessary knowledge for him to be liable for the losses alleged by the Claimant as arising from the alleged breach of contract, which he also denies.

[53]In cross-examination, the Defendant started by confirming that paragraph 7(a) of the Defence was true where it was claimed that the Defendant had given the Claimant £670,000 between May 2017 and April 2021. He said he didn’t know what the money was used for: it went into the Claimant’s account.

[54]The Claimant put that payment under the settlement agreement had been due by either 25 February or 13 March 2022 and the Defendant repeated that he thought payment was due 30 days from when he received the signed agreement, which wasn’t until it was sent to him by the mediator.

[55]In view of the Defendant’s denial of any knowledge of the licensing of the Haircare Products, the Claimant drew to his attention an exchange of messages in July 2021 in which, when asking the Defendant for further money, he had written:

“My business has been on hold since March. These are the latest fees which need to be addressed … £13,000 licensing fees.”

In response, the Defendant had written:

“I have given you 85% of the money I promised and yet your business seems to have no direction. If you knew what you were doing the balance of 15% would have been for contingencies. You do not have a proper business plan and that is why after spending £320,000 out of a budget of US$500,000 you have nothing to show for it. I am doubtful you spent the money on your business. It appears you do not even have a business bank account even after I gave you money to sort so called tax issues you never should have had in the first place. Grow up and get your act together.”

To this, the Claimant responded:

“We agreed to £380k. I was given £150k initially and told I would be given additional funds as soon as further costs needed to be covered, until the £380k was paid in full. • When the hotel deal fell through because I didn't have the money to produce the products you said you would cover the £33k spent on lawyers to negotiate the distribution deal. I lost almost £900 net profit which I was guaranteed to make from this deal. • When I failed to meet payment deadlines for my licensing agreement with the stem cell research company in Switzerland and had to renegotiate my contract you said you would cover these additional costs. • While my products are being developed I pay a licensing fee to pharmaceutical companies to license 4 different patented medical grade ingredients used in my products. Once the products go to market I am only paying a % for every unit produced. Extending the licensing fees for research and development is an additional cost incurred due to not having the funds to go to market c time. I was already negotiated a 6 month extension free of charge which has now expired.”

The Claimant pointed to these messages as showing that the Defendant had some knowledge of his business and his need to pay licensing fees. The Defendant said that he was never part of the Claimant’s business and had no idea about it. He couldn’t recall being sent photos of the results of the clinical trials. He said that how the Claimant used his money was none of his concern.

[56]The Claimant then questioned the Defendant about the knowledge he had gained through the mediator. He referred the Defendant to the email the Claimant had sent to the mediator on 6 January (see paragraph 34 above) and the Defendant denied that the mediator had told him the terms of that email and that the Claimant needed the funds in order to meet the terms of Buluwa’s offer. The Defendant said:

“He did not put across to me “all the points regarding your agreements and deadlines several times.”

I know absolutely nothing about the Claimant’s relationship with Ms Sonkey and very little about Buluwa – only in passing, I just knew he was setting up a business. At the time of the mediation, I was not aware that [the Claimant’s] career would be developing haircare products. I asked the Claimant for a business plan and cash projection. He refused to give them, saying I had no understanding of how the beauty industry worked. I knew that it would cause friction to pursue this. I said I would help him start his business with money and that I hoped he would make the right decisions, but otherwise I detached myself. He is my son, and I loved him so I wanted to help him. I maintain that I was not aware that the Claimant was reliant on the funds from the settlement to re-start his haircare products business. I executed the settlement in the way I understood it. I accept that I was in breach of contract in that I did not pay the full amount within the 30 days provided for by the contract: I was late by 2-3 payments. I didn’t notify Mr Reeve that the payments would be late. I thought that public holidays would not count.” The Parties’ Submissions Submissions of Mr Jory KC for the Defendant

[57]For the Defendant, Mr Jory KC relied on, and reiterated, his written opening skeleton argument. In this, he submitted that:(i) If there is a claim at all, at its highest it would be a claim for loss of opportunity to make a product from the Haircare Products, but the claim is fatally flawed by the lack of appropriate evidence to assist the court in determining the value of that opportunity;

(ii) The claim for wasted costs of the validation process amount to double-recovery: if the Claimant’s claim holds good, the costs are not wasted;

(iii) There is no evidence upon which the court can rely in relation to causation/remoteness: the damages claimed were not within the actual or reasonable contemplation of the Defendant;

(iv) In reality, the claim is no more than an opportunistic attempt by the Claimant to pressurise his father into handing over yet further money to avoid “the deeply upsetting and unpleasant spectre of being dragged to court by his own son”;

(v) The law on a claim for damages based upon non-payment of money is set out in Sempra Metals Ltd v Inland Revenue Commissioners

[2007] 1 AC 561

, 600 where Lord Nicholls stated:

“To be recoverable the losses suffered by a claimant must satisfy the usual remoteness tests. The losses must have been reasonably foreseeable at the time of the contract as liable to result from the breach … Whatever form the loss takes the court will, here as elsewhere, draw from the proved or admitted facts such inferences as are appropriate. That is a matter for the trial judge. There are no special rules for the proof of facts in this area of the law. … But an unparticularised and unproved claim simply for 'damages' will not suffice. General damages are not recoverable. The common law does not assume that delay in payment of a debt will of itself cause damage. Loss must be proved.”

In his closing submissions, Mr Jory also referred to Koufos v C Czarnikow Ltd (The Heron II)

[1969] AC 350

and Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas)

[2009] 1 AC 61

. (vi) If the Claimant wishes to rely on what he claims the mediator said when he was not present to the Defendant, then the mediator should have been called as a witness and been made available to be cross-examined. That is all the more so where as here, there is no written record of any of the alleged matters being told by the mediator to the Defendant at all, just interpretations the Claimant puts on emails from the mediator to him. Accordingly, the court should reject or place no weight on any allegation based on what the Claimant claims the Defendant was told by the mediator. (vii) Without the losses claimed being in the actual or reasonable contemplation of the parties, all that could have been foreseeable would have been the cost of borrowing the money elsewhere: Victoria Laundry (Windsor) v Newman Industries

[1949] 2 KB 528

. However, that is not claimed and would be unsuitable for High Court proceedings. (viii) In the absence of expert accountancy evidence, the Claimant is unable to prove the losses claimed. It is pleaded that Buluwa Inc would have invested $350,000 when in fact Buluwa had been dissolved, and the Partnership Agreement refers to Nankoung Inc: there has been no application to amend. The evidence of the sales which the Haircare Products would have generated is purely speculative and amounts to little more than the Claimant’s aspirations.

[58]In closing, Mr Jory KC characterised the key issue not as being whether there was a Buluwa deal, but whether special notice of such commitments was known or within the reasonable contemplation of the parties so that, in law, the Defendant is taken to have assumed the risks arising from failure of the Buluwa deal if he failed to pay the full amount in time. He submitted that the authorities show that there is an importance difference between non-payment of money and non-delivery or late delivery of goods, for example a boiler as in Victoria Laundry. Failure to pay money on time does not make a party liable for whatever loss and damage follow. He referred to the decision of the Court of Appeal in Wellesley Partners LLP v Withers LLP

[2016] Ch 529

, discussed below at paragraph 72 of this judgment. He posed the question: what assumption of liability was the Defendant taking when he signed the Settlement Agreement?

[59]In relation to the relevant date for payment, relying on the Victoria Laundry case, he submitted that the date on which a contract is made is usually when it is signed and the court is therefore not concerned with anything said by the mediator after 8 February 2022

[60]Referring to the evidence of the Defendant’s knowledge, Mr Jory conceded that the court can give appropriate weight to hearsay evidence, but the evidence as to what was said, for example in relation to deadlines, needs to be clear: here, the date for payment was not aligned clearly to the Buluwa deal. He submitted that any lack of clarity should be resolved in favour of the Defendant where there has been no opportunity to cross-examine the mediator. The court’s focus should be not just on what the Claimant told the mediator but on those critical matters which would give the Defendant the necessary knowledge for this kind of damage to be within the reasonable contemplation of the parties. In this regard, he relied on the Defendant’s evidence of his lack of knowledge of the details of the Claimant’s business and his deal with Ms Sonkey. Mr Jory submitted that the mediator would have been likely to have erred on the side of caution in disclosing information to the Defendant where that information had commercial sensitivity. As the Defendant said in evidence, he realised that any interest on his part in the details of the venture was unwelcome. The Claimant’s submissions

[61]The Claimant’s submissions were a mixture of submissions and further evidence, but I gave him a degree of latitude as a litigant in person. He began by explaining that he suffers from “huge trepidation” whenever he has dealing with his father. He submitted that he had held off from signing the Partnership Agreement because of the delay in payment: Ms Sonkey had been ready to proceed since January. He stated that Ms Sonkey had been very successful in the “beauty” industry for 10 years, making $550m in a decade. He stated that he had communicated the deadline to the mediator on several occasions and had had to re-negotiate the deadline every time the Defendant pushed back the payment date. He asserted that, contrary to the Defendant’s evidence, he would have been notified by Docusign when the Claimant signed the Settlement Agreement.

[62]The Claimant said that, in relation to his venture, any separation of licensing, manufacture and the Buluwa deal is unrealistic as they were all inter-dependent. He referred to the lack of evidence from the Defendant as to what was said between him and the mediator, but he relied on his exchange of email with the mediator in June 2022. Thus, on 29 June 2022, the Claimant stated to the mediator:

“You and I also had discussions about how a late payment from Paul would cause things to fall through with my manufacturer and that I would incur further losses if Paul didn’t pay me on time. I did ask you to inform Paul of this and of my need for the settlement to be paid in full and on time. Was this actually relayed to Paul?”

On 30 June 2022, the mediator replied:

“I am not able to comment on this closed mediation, save to say that all the points you asked to communicate to the other side were done.”

In answer to a request for clarification from the Claimant, the mediator further wrote:

“ I did indeed mean I put across all of the points raised by both parties - I didn’t withhold any information from either party.”

The Claimant relied on this exchange of emails with the mediator as showing that, contrary to the Defendant’s evidence, the Defendant was aware of the importance of paying on time and that, if he did so, the Claimant’s business venture would be jeopardised. He further relied on the history of communications between himself and the Defendant as showing that their relationship, and therefore the Defendant’s knowledge of his business ventures, was much closer than the Defendant was suggesting.

[63]The Claimant reiterated that he had reached agreement with Ms Sonkey in January 2022 and that she was very patient in waiting for the Claimant to put everything in place. Given his position, it makes complete sense, and was the fact, that he told the mediator that he not just wanted but needed payment as soon as possible in order for the Buluwa deal to progress.

[64]Referring to his relationship with Envydia Cosmetics, the Claimant said that he had a history of being inconsistent and unreliable in his dealings with them, and that explains why he needed the full amount and not payment in instalments. He drew to my attention the email from Envydia Cosmetics to himself of 3 March 2022 as supporting his submission that he needed the full payment, and that he would therefore have imparted this to the Defendant through the mediator. In that email, they stated:

“ Dear Raymani, I trust you are well. Please confirm immediately that you will make a payment of £105,000.00 no later than close of business on March 10th. We have made every effort to accommodate your new manufacturing date, but if this payment is not received by the specified deadline, we will be unable to accommodate any further requests for rescheduling, given the significant backlog of orders from other clients due to the ongoing global situation. Additionally, you are required to make a payment of £17,000.00 to Envydia by close of business on March 10th for bottles, packaging pallets, and warehouse costs. It is imperative that this payment is made on time. Should there be any delay, even by a day or two, we will be unable to proceed with your order, as we have already provided multiple extensions and have been extremely lenient. Furthermore, due to increases in the price of certain raw material and ingredients, which I anticipate to be no more than £15,000.00. I will confirm the final pricing from our supplier in the next day or two. Please treat this matter with the utmost urgency.”

Please treat this matter with the utmost urgency.”

[65]The Claimant said that the Defendant had a history of using money to control him. He was relying on the Defendant because his sales would not alone have been enough to attract an investor, those sales being limited to his own circle of contacts.

[66]Referring to the prospects of success of the venture, he submitted that his success would have been based on his abilities, combined with Ms Sonkey’s experience and success. The existing history from his sales and examples demonstrated the huge profit margin he was able to command. He relied upon the fact that payment under the Settlement Agreement was clearly late, that he has shown clearly what he intended to do with the settlement payment and that his evidence was more reliable than that of the Defendant because he had been consistent and unswerving.

[67]Turning to remoteness, the Claimant submitted that the Defendant was well aware that he would suffer loss of the kind claimed if he paid late: he knew this from both their previous dealings and from what he was told by the mediator. Referring to the caselaw through Hadley v Baxendale, Victoria Laundry, The Heron II and The Achilleas, he submitted that these cases collectively provide a comprehensive legal basis for his claim. His evidence, and the emails from the mediator formed a sufficient basis for the court to rule in his favour.

[68]He then made submissions on the quantum of loss, accepting that, in principle, tax at the higher rate should be deducted from his lost earnings. The Relevant Law

[69]The starting point for any claim for loss of profit based upon breach of contract is Hadley v Baxendale (1854) 9 Exch 341 and the time-honoured “rule” espoused in that case: “Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered as either arising naturally, i.e. according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it."

[70]In relation to a claim for loss of profits, the rule was considered authoritatively by the Court of Appeal in Victoria Laundry (Windsor) Ltd v Newman Industries Ltd

[1949] 2 KB 528

;

[1949] 1 All ER 997

where a boiler had been delivered late by an engineering company which had knowledge of the nature of the Plaintiff’s business. Giving the judgment of the court, Asquith LJ said:

“The short point is whether … the plaintiffs were entitled to claim in respect of loss of profits which they say they would have made if the boiler had been delivered punctually. Seeing that the issue is as to the measure of recoverable damage and the application of the rules in Hadley v. Baxendale, it is important to inquire what information the defendants possessed at the time when the contract was made, as to such matters as the time at which, and the purpose for which, the plaintiffs required the boiler.”

Asquith LJ, having considered the previous authorities, derived from them the following propositions:

“(i.) It is well settled that the governing purpose of damages is to put the party whose rights have been violated in the same position, so far as money can do so, as if his rights had been observed .. This purpose, if relentlessly pursued, would provide him with a complete indemnity for all loss de facto resulting from a particular breach, however improbable, however unpredictable. This, in contract at least, is recognized as too harsh a rule. Hence, (2.) In cases of breach of contract the aggrieved party is only entitled to recover such part of the loss actually resulting as was at the time of the contract reasonably foreseeable as liable to result from the breach. (3.) What was at that time reasonably so foreseeable depends on the knowledge then possessed by the parties or, at all events, by the party who later commits the breach. (4.) For this purpose, knowledge "possessed" is of two kinds ; one imputed, the other actual. Everyone, as a reasonable person, is taken to know the "ordinary course of things" and consequently what loss is liable to result from a breach of contract in that ordinary course. This is the subject matter of the " first rule " in Hadley v. Baxendale. But to this knowledge, which a contract-breaker is assumed to possess whether he actually possesses it or not, there may have to be added in a particular case knowledge which he actually possesses, of special circumstances outside the "ordinary course of things," of such a kind that a breach in those special circumstances would be liable to cause more loss. Such a case attracts the operation of the "second rule" so as to make additional loss also recoverable. (5.) In order to make the contract-breaker liable under either rule it is not necessary that he should actually have asked himself what loss is liable to result from a breach. As has often been pointed out, parties at the time of contracting contemplate not the breach of the contract, but its performance. It suffices that, if he had considered the question, he would as a reasonable man have concluded that the loss in question was liable to result. (6.) Nor, finally, to make a particular loss recoverable, need it be proved that upon a given state of knowledge the defendant could, as a reasonable man, foresee that a breach must necessarily result in that loss. It is enough if he could foresee it was likely so to result. It is indeed enough … if the loss (or some factor without which it would not have occurred) is a "serious possibility" or a "real danger." For short, we have used the word "liable" to result. Possibly the colloquialism " on the cards" indicates the shade of meaning with some approach to accuracy.” (ix) In The Heron II [1969] 1 AC 350 the House of Lords considered the difference between claims arising out of contract and claims in tort. The terms in which their Lordships expressed themselves may be considered to be relevant to the issues in the present case. Thus, for example, Lord Pearce explained the rationale of the distinction in the following terms (at 413): “In the case of contract two parties, usually with some knowledge of one another, deliberately undertake mutual duties. They have the opportunity to define clearly in respect of what they shall and shall not be liable. The law has to say what shall be the boundaries of their liability where this is not expressed, defining that boundary in relation to what has been expressed and implied. In tort two persons, usually unknown to one another, find that the acts or utterances of one have collided with the rights of the other, and the court has to define what is the liability for the ensuing damage, whether it shall be shared and how far it extends.”

Thus, in a case, such as the present, where the damages (here the loss of profits) would not be considered to arise naturally from the breach of contract (the failure to pay money on time) and reliance is thus placed upon the actual knowledge of the contract-breaker, it is appropriate to bear in mind that the Claimant had the opportunity “to define clearly in respect of what [the Defendant] shall and shall not be liable.” On any view, he did not do so in this case where he is reliant upon presumed knowledge on the part of the Defendant derived from what it is asserted he was told, or more accurately would have been told, by the mediator. (x) So far as a claim for damages based upon the non-payment of money is concerned, the leading case is, as Mr Jory submitted, Sempra Metals Ltd v Inland Revenue Commissioners

[2007] 1 AC 561

, 600 where Lord Nicholls stated:

“To be recoverable the losses suffered by a claimant must satisfy the usual remoteness tests. The losses must have been reasonably foreseeable at the time of the contract as liable to result from the breach … Whatever form the loss takes the court will, here as elsewhere, draw from the proved or admitted facts such inferences as are appropriate. That is a matter for the trial judge. There are no special rules for the proof of facts in this area of the law. … But an unparticularised and unproved claim simply for 'damages' will not suffice. General damages are not recoverable. The common law does not assume that delay in payment of a debt will of itself cause damage. Loss must be proved.”

[71]In Transfield Shipping Inc v Mercator Shipping Inc

[2009] 1 AC 61

(“The Achilleas”) the House of Lords affirmed the basic rule that a contract-breaker is liable for damage resulting from his breach if, at the time of making the contract, a reasonable person in his shoes would have had damage of that kind in mind as not unlikely to result from the breach, this principle being founded on the notion that the parties, in the absence of special provision in the contract, would normally expect a contract-breaker to be assuming responsibility for the damage which would reasonably be contemplated to result from a breach. However, there may be cases where, based on the individual circumstances surrounding the making of the contract, this assumed expectation is not well-founded. In The Achilleas, charterers of a ship were held not to be liable for all the consequences of a late redelivery of the vessel, which had forced the owners to renegotiate a more favourable rate for a follow-on charter. The commercial pressure to renegotiate had arisen because of unusually and highly volatile market rates. According to Lord Hoffmann (see paragraph 23), with whom Lord Hope agreed, departure from the ordinary test was justified because the loss claimed would have been “completely unquantifiable at the date of the contract” and because the general understanding of the market was that the claimed loss was not recoverable. Thus, the charterer could not reasonably be taken to have assumed responsibility for the particular loss claimed. Lord Hoffman recognised that the mere fact that losses were unforeseeably large did not exclude recovery if loss of that type would fall within one or other of the rules in Hadley v Baxendale (see paragraph 21). Nevertheless there was also what he called an “exclusive principle” which meant that there could be some foreseeable losses for which the contract breaker would not be liable because they were not the kind or type of loss for which he can be treated as having assumed responsibility. Whether a type of loss was different is determined by asking whether it reflects what would reasonably have been regarded as significant for the purpose of the risk being undertaken.

[72]Finally, so far as the authorities are concerned, Mr Jory relied upon the decision of the Court of Appeal in Wellesley Partners LLP v Withers LLP

[2016] Ch 529

where the Defendant solicitors were found to have been negligent in drafting an option clause in the Claimant’s partnership agreement which allowed a new investor making a large capital contribution in return for an interest in the partnership to withdraw half its capital contribution at any time within the first 4`1 months of the agreement. At first instance, Nugee J awarded damages for lost profits inter alia on the basis that if the investor had not withdrawn, the claimant would have opened an office in the United States of America and then had a 60% chance of obtaining business with a particular bank. In relation to the “loss of a chance” basis of assessment, Nugee J’s analysis was upheld by the Court of Appeal. Floyd LJ referred to the argument of Mr Michael Pooles KC on behalf of Withers:

“Mr Pooles supported the judge’s analysis of the loss of a chance principle as it applied to the assessment of the US losses. The judge had not been confronted with a claim based on evidence of profitable trading over a period of years which could form a basis for a calculation of what was lost. The claim was based on the prospects of obtaining the Nomura contract. It was anomalous to decide such a case other than by reference to the chance that it would be obtained. If it were not so, a claimant who established only a 51% chance of obtaining the mandates would get a full award, whereas if he only established a 49% chance he would get nothing.”

It seem to me that this reasoning applies analogously to the present case and that, if the Claimant otherwise succeeds, his damages should be based on his lost chance of securing the profits which he claims would have been secured, this being a new business venture, and not, as claimed, on the basis of more than 50% being equivalent to a certainty. Discussion

[73]As the parties recognised during the trial, the question of fact that lies at the heart of this claim is what the Defendant knew about the purpose to which the Claimant intended to put the settlement monies, and in particular whether his state of knowledge was such that he can reasonably be taken to have assumed responsibility for the resulting loss should he not pay in time. As Asquith LJ set out in the Victori Laundry case, in cases of breach of contract the aggrieved party is only entitled to recover such part of the loss actually resulting as was at the time of the contract reasonably foreseeable as liable to result from the breach and what is reasonably so foreseeable depends on the knowledge then possessed by the parties or, at all events, by the party who later commits the breach.

[74]In my judgment, the Claimant has failed to establish that the Defendant possessed the necessary knowledge at the time that the contract was made for him to be liable in law for the loss of profits and other losses claimed by the Claimant in this action. The Claimant’s case depends on him establishing that the Defendant knew that, if he did not pay within the time provided for by the contract, the Claimant would lose the benefit of the Buluwa deal and the loss of profits associated with it. However, there are a number of problems for the Claimant with this proposition: i) First, although the Buluwa deal was entered into on 2 March 2022 and, on the Claimant’s case, this was in anticipation of receiving the settlement monies in time to pay Envydia for the manufacturing of the Haircare Products, the Claimant does not assert that he told the Claimant this, either directly or through the mediator: indeed, when the contract was signed by the Claimant on 11 February 2022, the Buluwa deal was not yet in place. ii) Next, the evidence suggest that, when the settlement agreement was entered into, the Defendant did not know, and could not have known, that a new licensing agreement was in place: as far as the Defendant was concerned, the Letter of Claim of October 2021 had said that the licensing agreement had been lost and that the Claimant had lost out on the employment, distribution and investment opportunities deriving therefrom. In this respect, the cross-examination of the Claimant by Mr Jory KC was devastating (see paragraph 38 above): the Claimant said he told the mediator that he needed the money for the Buluwa deal (although there was no such deal in place) but not for the licensing agreement (and, by extension, for manufacturing). Although the Claimant then asserted that he did in fact tell the mediator of the new licensing agreement, his evidence of how he did so (“I told the mediator in one of my long conversation with him, probably in December 2021”) was wholly unconvincing and I did not believe it. I preferred the evidence of the Defendant in this regard. iii) The Defendant’s lack of knowledge is consistent with the surrounding circumstances. The Claimant’s desire to keep his father at arm’s length was a recurring theme. The Claimant wanted to make a success of his life by his own efforts, and did not want to involve the Defendant, save in relation to the necessary funding. As the Defendant said, he was not provided with a business plan by the Claimant and the Claimant did not confide in him any details of what he planned to do: this evidence by the Defendant was convincing and I believed it. Although the Defendant was provided with some knowledge by the Letter of Claim, this was by way of what had been lost and the Claimant’s past unsuccessful endeavours. However, I find that so far as the Claimant’s plans for the future were concerned, he deliberately kept the Defendant in the dark, with the result that the Defendant did not know of the licensing agreement, the manufacturing agreement, the deadline for payment for manufacturing, or the Buluwa agreement. This was all essential information for the Defendant to know if he is to be held liable for the losses claimed by the Claimant. iv) An additional wholly unsatisfactory aspect of the claim is that the Claimant needs to rely upon an inference that the mediator relayed to the Defendant information given to him by the Claimant. With a written settlement agreement, the Claimant had the opportunity to set out in terms not only a date for payment, but also the consequences of late payment and the parameters of the Defendant’s responsibility. See the comments at paragraph 70(ix) above in the discussion of The Heron II and in particular the dictum of Lord Pearce cited there. v) Furthermore, the Claimant’s own approach was inconsistent and confusing at the time of the mediation. Thus, in the original draft agreement dated 10 January 2022, provision was made for payment of the £200,000 within 7 days. This was not entered into, and in the subsequent agreement, provision was made for payment within 30 days. The relaxation of the date for payment would not have imparted a sense of great urgency in the mind of the Defendant. Even then, the Claimant did not sign the agreement until 11 February, implying a lack of urgency on his part. I accept he told the mediator that he wanted the money as soon as possible, but I also accept the Defendant’s evidence that this was all at one with the Claimant’s history of demanding money from him which was then, so far as the Defendant was concerned, frittered away. There may be some truth in the Claimant’s evidence that the Defendant used his money as a way of controlling him, or at least that was the Claimant’s perception of the Defendant’s behaviour (when, in fact, the Defendant was only trying to help the Claimant and act in his best interests), and this led to the Defendant paying late, even on his own interpretation of the agreement, but the history of the parties’ relationship, so far as the court caught glimpses of it, contaminates the position so far as the Defendant’s crucial knowledge is concerned at the time that the contract was entered into. vi) An additional evidential gap relates to one of the critical planks in the Claimant’s case, and that is in respect of the alleged manufacturing agreement. It is a critical part of the Claimant’s case that he agreed with the manufacturer of the haircare products that manufacturing had to commence (and thus be paid for) by, initially, 28 February, then 10 March. However, although the Claimant produced the Memorandum dated 12 December 2021 for the use and purchase of the Licensed Ingredients for the purpose of formulating and manufacturing his haircare products, no manufacturing agreement was ever produced. His evidence about the manufacturing agreement even included, at one stage, a concession that “there was no agreement for manufacturing and I wouldn’t have told [the Defendant] something that was not yet confirmed”: see paragraph 40 above. The cross-examination of the Claimant reflected in paragraph 40 exposed the fatal lacunae in the Claimant’s evidence in relation to the Defendant’s knowledge of both the licensing and manufacturing agreements and deadlines. vii) A further evidential anomaly relates to the reaction of the Claimant when the Defendant started paying the £200,000 by instalments. If he needed the full amount by either the end of February or 10 March so that he could pay for the manufacturing which the licences remained in place, I would have expected him to have reacted accordingly, protesting to both the mediator and the Defendant that payment by instalments was unacceptable, and that the whole deal was off and the settlement agreement was null and void because its purpose, namely to pay for the manufacturing, had been thwarted. However, this was not the Claimant’s reaction: he continued to receive, and accept, the payments until he had received the full amount, thereby impliedly endorsing that the settlement agreement remained valid. His reaction was, in my view, inconsistent with his case that the Defendant knew full well that he needed to pay by a certain date, and why.

[75]For the above reasons, I have no hesitation in preferring the evidence of the Defendant to that of the Claimant and I accept his evidence as reflected in paragraphs 48-52 above. My acceptance of that evidence is fatal to the claim for loss of profits. Within the rules of remoteness of damage in contract, as laid down by the authorities cited from paragraph 69 above, the claim for loss of profits was not within the actual or reasonable contemplation of the parties and therefore fails.

[76]In any event, as submitted by Mr Jory KC and as I accept, the claim for loss of profits has not been proved. It is wholly inadequate and unsatisfactory that the Claimant has relied upon his own assertions as to the profits that would have been generated from the Buluwa agreement. As the Particulars of Claim recognised, there was a need for, and in those Particulars a reliance upon, expert evidence, but no such evidence was produced. As I have indicated (see paragraph 30 above) the Claimant’s explanation for his failure to seek permission to rely upon the evidence of an expert cannot be correct, and in the absence of expert evidence, the claim for loss of profits simply does not get off the ground. In any event, as indicated in the discussion of Wellesley Partners v Withers at paragraph 72 above, at its highest the claim would be for the loss of a chance, but there is a dearth of evidence which would enable the court to evaluate that chance. An additional problem with the claim for damages was highlighted by Mr Jory KC in his cross-examination of the Claimant: the claim is dependent on the profits which Raymani Ltd would have generated and the dividends which the Claimant would have received, but the Buluwa agreement gives no indication of how net profit or loss is to be calculated. The Claimant refusal to accept that the agreement provided for him to be liable for 70% of any losses suffered flew in the face of the written terms of the agreement itself.

[77]Furthermore, as I observe at paragraph 34 above, no credit has been given by the Claimant for the effects of mitigation although, on his own evidence, he is in a position to mitigate his losses.

[78]In the circumstances the only viable claim that the Claimant might have had arising from late payment would have been the cost of borrowing the money elsewhere, as Mr Jory KC submitted (see paragraph 57(viii) above). However, no such claim is made and, in the absence thereof, this claim must be dismissed. Although there was a breach of contract in that the monies payable under the settlement agreement were paid late, no damage arising from such late payment has been proved.

[79]Although there was a counter-claim by the Defendant, this was not actively pursued at trial and I have assumed that, given the outcome in relation to the claim by the Claimant, the Defendant would not wish to pursue any counter-claim.