Devani v Sharon: when an oral agreement to equalise shareholdings falls short of a binding contract

The High Court has dismissed a claim by Mehul Devani for a declaration that he was beneficially entitled to 50% of the issued share capital in Hermes House NW2 Limited, a property development vehicle set up in 2016 to acquire and convert a building in north-west London. Deputy Insolvency and Company Court Judge Kyriakides, sitting in the Business and Property Courts, found against Devani on both of the central factual issues and, for completeness, addressed the question of contractual formation even though it did not strictly arise.

The three-way joint venture between Devani, Amir Sharon and Hussein Lalani had been troubled almost from the outset. Disputes over development cost contributions, a failed side project at Warspite Road, and Sharon's reluctance to allot shares without a shareholders' agreement in place had corroded the relationship by 2020. By mid-2021, Lalani wished to exit. A meeting on 25 June 2021 at Devani's office — attended by all three — became the factual centrepiece of the litigation.

The purchase price issue

Devani's primary case was that the original joint venture agreement required each partner to contribute one third of the purchase price for Hermes House, that Sharon had admitted to cash-flow difficulties shortly before exchange in June 2016, and that it had therefore been agreed Sharon would defer his share and contribute his project management expertise in the interim. The judge rejected this.

Drawing on the principles in Gestmin and the approach endorsed in Peter Glenn v Adam Walker [2025] EWHC 1286 (Ch), the judge placed limited weight on oral recollection of events some nine years earlier and anchored her findings in the contemporaneous documents. A spreadsheet circulated by Sharon on 19 June 2016 showed Devani and Lalani splitting the purchase costs between them, with no obligation on Sharon to contribute. No email before 2022 contained any assertion that Sharon owed either partner a share of the purchase price — a striking omission given the parties' documented habit of raising even modest financial grievances in writing. Sharon's consistent policy of not contributing capital on first projects with new partners, reflected in his email of 15 June 2016 rejecting Lalani's counter-proposal, was accepted as credible.

The 25 June Meeting

The more significant issue was whether an agreement was reached at the June 2021 meeting for Devani to receive 50% of the shares once Lalani departed. Devani contended that Sharon offered to buy out Lalani for around £565,000, that both men would forgo their respective £85,000 Warspite claims, and that Sharon would then transfer 50% of the shares to Devani with a further £20,000 on completion to equalise contributions.

Sharon denied any concluded agreement, characterising the meeting as an exploratory discussion in which Lalani indicated he might wish to exit and Sharon said he would consider it — no figures were settled, no obligations assumed.

The judge preferred Sharon's account. The absence of any contemporaneous record of the alleged agreement was particularly telling, especially given that from 2020 onwards the parties had been scrupulous about memorialising significant discussions in writing. Devani's email of 19 October 2021 requesting transfer of 50% "as agreed" was sent four months after the meeting and attracted an immediate reply from Sharon disputing any concluded agreement — a reply to which Devani did not respond. The Settlement Deed eventually entered into between Sharon and Lalani in December 2021 made no reference to any tripartite agreement reached in June, and Devani was not a party to it.

The judge also found the alleged agreement inherently improbable. Sharon was being asked to pay Lalani the full value of his investment in exchange for acquiring only half of Lalani's interest, gifting the other half to Devani for nothing, and paying an additional £20,000. That framing ignored the contractual value of Sharon's time, expertise and project management — which formed the documented basis of his original third share. A payment of £20,000 would not, on the figures, have equalised contributions; it would have widened the gap.

Lalani's oral evidence ultimately undermined Devani's case. Under cross-examination, he conceded that no agreement had been reached and that the parties were to continue without prejudice discussions through their lawyers — precisely what happened.

Contractual formation

Although strictly academic given her findings, the judge considered whether any agreement made at the 25 June Meeting would have been legally binding. She concluded it would not. The agreement was, objectively, subject to contract: further negotiation between solicitors was anticipated, essential terms remained unresolved, and both Devani and Lalani themselves characterised the outcome as an "agreement in principle." The Settlement Deed's treatment of the Warspite sum was inconsistent with an immediate waiver having taken effect in June 2021.

The judge did, however, find that had consideration been in issue, Devani's agreement to forgo his £85,000 Warspite claim would have sufficed — the detriment to the promisee being sufficient even where the promisor receives no direct benefit.

Sharon's counterclaim succeeded. He is declared beneficial owner of 66.67% of the issued shares, with Devani holding 33.33%. The judge noted, in passing, that Sharon's long-running refusal to transfer Devani's uncontested one-third interest without preconditions had no proper legal basis.