In a ruling which vividly illustrates the power of cross-examination to uncover the truth, the High Court has found that a property developer misappropriated large sums in the course of a luxury flats project and has ordered him to pay hundreds of thousands of pounds in compensation to his former business partners.
The developer and his partners in the joint venture (the partners) had, through a single purpose company, bought a substantial property in central London and converted it into high-end apartments. Flats worth more than £14 million were sold; however the project did not achieve the returns hoped for by the partners.
Relations between the developer and the partners nevertheless remained good until the former’s personal assistant ceased to work for him and informed his partners that they had been defrauded. Court proceedings were swiftly launched and an asset- freezing order was issued against the developer.
The Court found that the developer had misappropriated various sums, both large and small, during the project without accounting for them to his partners. Following cross-examination, the Court found him neither a reliable nor a truthful witness.
His evasive evidence was at variance with that of other witnesses as well as the available documents and the inherent probabilities and was in some respects ‘utterly implausible’. He was also found to have relied upon a number of documents which he must have known to have been fabricated.
The Court itemised sums totalling over £950,000 which should have been accounted for to the partners. However, the developer’s liability will be much greater than that after other sums, interest and substantial legal costs bills are added. It was left to the parties precisely to calculate the financial consequences of the Court’s ruling.