Chambi v Aristodemou Guest Supplies Ltd - Unfair Prejudice Petition

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  Chambi v Aristodemou & Anor (Re Guest Supplies Intl Ltd) [2026] EWHC 599 (Ch) (20 March 2026)

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| | | Neutral Citation Number: [2026] EWHC 599 (Ch) |
| | | Case No: CR-2022-003280 |
**IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)

RE: GUEST SUPPLIES INTL LIMITED (CRN.07136485)
AND RE: THE COMPANIES ACT 2006**

| | | Royal Courts of Justice
Rolls Building
Fetter Lane
London EC4A 1NL |
| | | 20/03/2026 |
B e f o r e :

ICC JUDGE PRENTIS

Between:
| | MR YIANNAKIS CHAMBI (also known as John Chambi) | Petitioner |
| | - and - | |
| | (1) MR ARISTOS ARISTODEMOU (also known as Ari Aristodemou)
(2) GUEST SUPPLIES INTL LIMITED | Respondents |

**Gabriel Buttimore (instructed by Hill Dickinson LLP) for the Petitioner
Aristos Aristodemou appeared in person

Hearing dates: 7-9, 12-13 January 2026**

HTML VERSION OF JUDGMENT ____________________

Crown Copyright ©

1. ICC JUDGE PRENTIS:
2. Introduction
4. John Chambi presented this unfair prejudice petition under s.994 Companies Act 2006 (the "Act") on 26 September 2022 (the "Petition").
6. By order of 6 March 2023 I permitted Aristos Aristodemou to withdraw an admission that Mr Chambi was a member of Guest Supplies Intl Limited (the "Company"), and directed a preliminary issue as to his status.
8. By judgment handed down on 4 July 2024, [2024] EWHC 1610 (Ch), I determined that Mr Aristodemou had transferred two shares in the Company to Mr Chambi on 14 November 2013, Mr Aristodemou holding the other two in issue; that was pursuant to an agreement made in 2011, when Mr Chambi joined him at the Company; they remained the holders of those shares; and the Company's register of members should be reconstituted accordingly.
10. The preliminary issue judgment must be read into this, which unless specified does not affect its factual findings.
12. I made there considerable criticism of Mr Aristodemou as a witness, and of his approach to the Petition. He was, as recorded at [18],
14. "a witness who had no regard for the compass of truth. Instead, he simply wanted to do Mr Chambi down in any way he could, rejecting anything which he perceived might help Mr Chambi, and pouring forth his latest factual creations guided only by what he thought would be most detrimental to his opponent".
15. By the consequentials order of 23 July 2024 Mr Aristodemou was ordered to pay ?132,000 on account of Mr Chambi's costs, against which payments have been made.
17. On 9 August 2024 he filed notice that his long-term solicitors, Fahri LLP, had ceased to act for him; and he has since then been mostly in person.
19. At the CCMC on 20 November 2024 this trial was ordered, being, by paragraph 1, "of the issues of liability and remedy only with any directions for any valuation of the shares in issue being given at the conclusion of the trial". It was listed on 10 December 2024.
21. Among the other CCMC directions were that by 4 December 2024 Mr Aristodemou was to verify his Part 18 response; by 19 December 2024 Mr Chambi was to file and serve Revised Annexes, in specified form, these being the basis of his claims that Mr Aristodemou misapplied Company funds; there was to be extended disclosure by 14 February 2025; and Mr Aristodemou was to give his responses to the Annexes by 11 April 2025, which was also the date for exchange of the first round of witness statements.
23. Mr Aristodemou did not verify his Part 18 response, or give disclosure.
25. On 25 February 2025 Mr Chambi issued an application for an unless order, which resulted in a consent order, approved on 6 June 2025 by ICC Judge Greenwood, extending time for those to 4pm on 4 July 2025, and failing which his "Re-Amended Points of Defence dated 30 July 2024? shall be automatically struck out"; were he to comply, then time for the initial witness statements, and therefore his responses to the Annexes, was extended to 15 August 2025.
27. Mr Aristodemou did not comply; nor did he then, or later, respond to the details of the Annexes. There is no witness evidence from him.
29. On 20 November 2025 ICC Judge Mullen dismissed Mr Aristodemou's application for relief from sanction in respect of the 6 June order, at which he was represented.
31. At the outset of trial I gave a short judgment addressing what role Mr Aristodemou could play, guided in particular by Foxton J's summary of the law in MMD Mining Machinery Developments Limited v Lang [2021] EWHC 3264 (Comm) at [9]-[13]. While having no positive case, he was permitted to open, and to close; and to cross-examine, subject to the blurry boundary of not putting a positive case. Pragmatically, Mr Buttimore did not object to questions founded on trial bundle documents (whether in this, or the preliminary issue), and in the event Mr Aristodemou spent two days asking assuredly questions of Mr Chambi and his witness, Chrisafis Papacharalambous. After closing, Mr Aristodemou also filed written notes, covering 49 pages, which reflected what he had submitted; and then additional, and often repetitive, "Supplementary Submissions", for which there was no permission, and on which no response has been invited from Mr Buttimore.
33. One aspect of those I should address, though, as it featured many times over during the cross-examination. Mr Aristodemou has in his possession what seems to be a modest sheaf of documents which he says disprove what he considers critical aspects of Mr Chambi's case. He regards it as unjust that he has been prevented from relying on them.
35. I disagree. As Foxton J in MMD at [11] drew from Byers v Samba Financial Group [2020] EWHC 853 (Ch), to permit a positive case to be put by the defaulter in cross-examination is to risk "an obvious unfairness" where the defaulter has "failed to provide the disclosure necessary to allow any such case to be fairly adjudicated". Disclosure is a formal obligation, conducted under the aegis of the disclosure review document, which here was approved at the CCMC. To permit last-moment disclosure rabbits to run around the trial is an abuse of that process, and unfair to the other side, not least in making it practically impossible for them to identify other relevant documents, whether already disclosed or not, which would tell the complete story in accordance with the relevant disclosure regime. That unfairness is the greater here, where there have been allegations on both sides of faked documents, and where Mr Aristodemou has failed to provide any assurance of raising any defence in good faith. Moreover, as will be seen below, on every topic in issue Mr Aristodemou must have, or have had, disclosure to give; yet, for whatever reasons, has provided none. That is despite ICC Judge Agnello KC giving him a further opportunity at the PTR on 11 December 2025 to file and serve a supplemental bundle by 4pm on 22 December "which identifies in its index which documents have been previously disclosed and when"; and despite my permitting him, on the first day of trial, overnight to provide supplemental documents so long as they were each accompanied by identification of when they had been disclosed previously. Nothing came of that; which did not hinder his continued attempts to introduce them. Again, commendably, insofar as Mr Buttimore was able during the cross-examination to confirm previous disclosure, or other non-objection, he raised no issue.
37. This seems to me another example of Mr Aristodemou wishing to play by no-one's rules but his own.
39. Witnesses
40. As before, Mr Chambi was a methodical witness. This time, not knowing what case Mr Aristodemou would put, he cannot have been prepared for all of his questions. He answered carefully, explaining the genesis of and alterations to the Annexes; and he made an appropriate concession as to the cheques. Also as before, I did not consider his evidence unqualified: he may not have known that Mr Aristodemou had a director's loan account, but must have suspected as much; and it seemed unlikely that having taken Mr Papacharalambous under his wing after the latter had been removed from Mr Aristodemou's accommodation in fraught circumstances, the two would not then and thereafter compare their experiences. Mr Aristodemou draws attention to Gestmin principles, and this is a case in which much time has elapsed since the original events. Mr Chambi's account, though, is one which has been consistent since the original correspondence from his solicitor in April 2019, which is close to events; and in assessing his evidence that consistency is in very marked distinction to Mr Aristodemou's supposed defences. Overall, Mr Chambi remains a generally reliable witness.
42. As indicated, there is considerable personal history between Mr Aristodemou and Mr Papacharalambous, and the cross-examination trespassed into irrelevant score-settling territory. With that history, Mr Papacharalambous was not going to give Mr Aristodemou anything which he did not have to. His key evidence was as to the mechanics of the nightly cashing up at the Kingfisher fish and chip shop and its turnover. On that, Mr Papacharalambous gave vivid evidence from what I consider genuine recollection, supported by documents both as to procedure and amounts. His concession that he tended to watch, rather than, as indicated in his statement, carry out, the countings and reconciliations, was to his credit.
44. Law
45. Both sides have dealt with this shortly.
47. By s.994(1) of the Act:
49. "A member of a company may apply to court by petition for an order under this Part on the ground (a) that the company's affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its member (including at least himself), or (b) that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial".
50. By s.996(1):
52. "If the court is satisfied that a petition under this Part is well founded, it may make such order as it thinks fit for giving relief in respect of the matters complained of".
53. Examples are then given of types of relief.
54. As Mr Aristodemou says, it is for Mr Chambi to prove affairs of the Company; conducted in an unfair manner; prejudicial at least to himself as member. He stresses that that is an exercise to be undertaken against the whole background of the parties' relationship; which is right, subject to the boundaries of the statements of case, the substantiating witness evidence, and court practice and procedure including orders made within the litigation.
56. Mr Aristodemou points out the discretionary nature of relief, and its need to be a "proportionate response" to proven unfairly prejudicial conduct. He also relies (strictly, analogously, as relief under s.996 is not equitable but statutory) on the clean hands doctrine, by which, if the petitioner's acts or omissions can be characterised as a form of misconduct, even if short of criminal, relief which would otherwise be granted may be qualified where such misconduct has an "immediate and necessary relation" (to put it in the language used by the Court of Appeal in UBS v Kommunale Wasserwerke Leipzig GmbH [2017] EWCA Civ 1567 at [171]) to the relief, such that it is unjust to grant it in part or, in an appropriate case, at all.
58. Facts and findings
59. Quasi-partnership
60. As set out in my earlier judgment, in 2011 Mr Chambi came to the Company in unusual circumstances. It was owned 50:50 by Mr Aristodemou and Reynolds Ofori-Koree, who were its directors, as the continuation of their equal partnership through Corporate Leisure Supplies LLP. Trading through the Company had commenced earlier that year, but in September 2011 Mr Aristodemou returned from Mr Chambi's wedding to find the "Company's warehouse had been denuded, and its funds withdrawn from its account". Mr Ofori-Koree had taken advantage of his absence. At the same time, Mr Aristodemou was under considerable personal pressure, being subject to a criminal trial for conspiracy to handle stolen goods.
62. He turned to Mr Chambi. At their meeting on 12 September 2011 he told him "he needed someone trustworthy to run the Company in his absence if [he] received a custodial sentence and to look after his family financially with the earnings of the Company". He invited Mr Chambi to join him as director and 50% shareholder, with the warning that "in return [he] would need to provide some funding as and when necessary subject to his financial ability to pay and that if there were insufficient funds in the business, then neither of them would be paid any wages and/ or salary nor would any dividends be declared for at least 3 years. [Mr Chambi] was told that he may have to sacrifice not having any or any regular income for the next 3 years until the Company could afford to pay a regular salary". As a lure, Mr Aristodemou also told Mr Chambi that "another company in the same line of business recently sold for ?9m and that this would be what we would aim to do also- sell the company in 3 to 5 years as our exit strategy".
64. So they agreed orally that Mr Chambi would join the Company; would receive 50% of the shares "which would not be diluted save by mutual agreement"; would be a director; and that they would "work together to build up the Company's business with a view to looking for an exit strategy in order to sell the Company (or its business)". Such agreement was based on "mutual trust and understanding"; which is clear enough given that they had for many years been part of the same group of friends, and that Mr Aristodemou was turning to Mr Chambi at a time of crisis; while, for his part, Mr Chambi was giving up his existing safe employment when just married, without any immediate prospect of income, and perhaps obliged to cover shortfalls in the Company's finances. "I only agreed to become involved with the Company because of the offer to become a 50% shareholder", said Mr Chambi. "It was a company which had little or no stock at the time and was worth next to nothing? It would have made absolutely no sense for me to become involved unless I would be a 50% shareholder and had a significant interest in the Company's future". He joined the Company in the second or third week of September 2011; formally became a director on 11 October 2011; and eventually received his equal shareholding on 14 November 2013. On that last date the Memorandum of Understanding was created, which obliged Mr Trypatsas to return to "the Company (to Shareholders 1 & 2) the 2 issued shares" once the Company had repaid his proposed ?150,000 loan, and prevented him from selling those shares to "any other person or entity": a contemporaneous demonstration of the equality of Mr Chambi and Mr Aristodemou.
66. Equality did not extend to their roles: this had been Mr Aristodemou's business to which Mr Chambi was an incomer, and Mr Chambi was sensitive as to that and conscious that he needed to learn the ropes. He "was given more of an administrative role? cold calling hotels to create meetings for new business and attending meetings with clients by himself to gain experience"; the points of defence had averred that Mr Chambi "also became responsible for credit control? and was tasked with collecting debts owed". It is not controversial that Mr Aristodemou remained "responsible for all financial matters? and he retained sole charge of online banking transactions and was the sole signatory on the Company's account"; he dealt with the Company's accountants, who were until 2020 LessTax2Pay ("LessTax), and in particular its Ray Fagan and his daughter Nicola Sorrell; and he "signed all the accounts and/ or returns which had to be filed? and primarily instructed a solicitor? Mr Fariz Uvais, who from time to time provided legal services". Mr Chambi said orally that he was content for Mr Aristodemou to have sole mandate, and deal with these matters, as he respected that he was coming into his company, without his background, and wanted to "appease" him. Mr Chambi might be characterised as the equal, but junior, partner. Although planned to go on the mandate should Mr Aristodemou be convicted, that did not have to happen.
68. As set out in the earlier judgment at [54], Mr Chambi received little from the Company, and did indeed have to introduce money. "Between November 2011 and January 2013 he introduced ?30,180, and was paid salary or remuneration of ?21,619. Until a dividend, or at least payment, of ?5,000 in September 2014, he received no salary or remuneration in the intervening period; another ?10,000 was paid, as dividend or otherwise, in December 2014". In 2012 he paid the Company's rent to its landlady, Mrs Tina Papakyriacou: "I would not have done this if I was not a shareholder and had no interest in the business". That he was repaid swiftly, and that, later, Mr Aristodemou possibly put in more while Mr Chambi was unable to do so, does not draw from the point that on joining the Company Mr Chambi was expected to provide funds, and did when he could.
70. Salary began to be paid in June 2015. Mr Chambi and Mr Aristodemou agreed that they would receive ?3,000 a month each. They also agreed Christmas bonuses of ?5,000 each for 2015, ?6,000 in 2016 and ?10,000 in 2017. From January 2018 they agreed a salary increase to ?5,000 a month. As he was in sole control of the online banking, Mr Aristodemou caused those sums to be paid; or, at least, caused Mr Chambi to be paid those sums. Mr Aristodemou's pleaded prevarications over agreement of those sums will be addressed in the context of his alleged misapplications. For his part, Mr Chambi took Mr Aristodemou "at his word and believed that he was causing the Company to make identical payments? on the basis of the Agreement [which was the agreement for a non-dilutable 50% shareholding and directorship, and building the Company with a view to sale] and understanding that they were equal shareholders".
72. The Agreement and that understanding, and the equality of remuneration, and Mr Chambi's injections of capital, as well as the evidence that Mr Aristodemou would at times refer to Mr Chambi as his "partner" and "equal partner", all indicate that this was a quasi-partnership company. Critically, the relationship between the two of them was one of trust and confidence, or "mutual trust and understanding" as put in the points of claim, maintained as they sat opposite each other in the office for some six years; and they had management rights inextricably associated with their shareholdings. While Aquapoint LP v Fan [2025] UKPC 56 provides the salutary reminder that the analysis under Ebrahimi v Westbourne Galleries Ltd [1973] AC 360, endorsed as of application to unfair prejudice petitions in O'Neill v Phillips [1999] 1 WLR 1092, is of the equitable considerations additional to or modificatory of the legal agreements, and at [83] that "'quasi-partnership' is itself a term of somewhat uncertain scope, and is certainly not a term of art", those understandings and agreements do here amount to what may conveniently be termed a quasi-partnership; but, whatever, are founded in trust and confidence and, as to rights within and benefits from the Company, equality.
74. Mr Chambi's knowledge of the Company's affairs
75. Their roles meant that Mr Chambi's knowledge of the Company's affairs was limited, both on a day-to-day and on an oversight basis. Mr Aristodemou was by agreement running the bank account and dealing with the accountants; Mr Chambi had "no involvement" in the filings at Companies House, "and was not aware of what [Mr Aristodemou] and [LessTax] were stating on the filings. I trusted [Mr Aristodemou] as my friend and business partner to ensure these were correct". His trust extended, as he accepted, to not asking for copies of these documents, nor requesting that he too be on the bank mandate, or even be granted online access; and, as Mr Aristodemou pointed out, he did not therefore refuse Mr Chambi this information.
77. That does not mean that such reports as he gave to Mr Chambi and, as we shall see, the outside world, were full or honest. While Mr Chambi perceived himself and Mr Aristodemou as working "closely together as friends running GSI for many years", so far as he knew the Company's income consisted of its product sales as recorded in the QuickBooks records of its invoices, which he maintained. "I was largely kept in the dark about the state of the Company's finances. I always had to go by what [Mr Aristodemou] told me verbally". He denied Mr Aristodemou's suggestion that he had at least partial access to banking records, through hard copies kept at the office: there were no such, he said; and there would not be, as Mr Aristodemou wanted control "so that he could choose what information" to give him. The plainest corroborative evidence of this is Mr Chambi's vehement anger, recorded by himself at the meetings of 27 December 2017 and 14 August 2018, after his obtaining of bank statements from May 2017, and the years of his consequent investigations. It was after the latter meeting, when he demanded payment of ?750,000, which was refused, that he left the Company, albeit remaining as director. The trust and confidence was gone.
79. Mr Aristodemou's approval of false Company accounts
80. The discoveries made by Mr Chambi from May 2017, now reflected in the Annexes, can usefully be put into context by looking at what the Company's filed accounts said.
82. The first trading accounts filed by the Company were those to 31 January 2012. They were in abbreviated form, and showed net current liabilities of ?58,466 and a negative balance sheet of ?58,220. Tangible fixed assets, which must include any stock at that date as well as computers and fixtures and fittings, were valued at ?245; debtors were ?13,149.
84. The next year's, said to have been approved by the board on 29 January 2014, showed an improvement to respective negatives of ?33,350 and ?33,228; fixed assets were ?122 and debtors ?10,989.
86. Those to 31 January 2014, said to be approved on 30 April 2015, had respective negatives of ?68,587 and ?67,481, fixed assets of ?1,106 and debtors of ?17,378; they also included another asset, cash, of ?32,322.
88. 31 January 2015's, with an approval date of 18 November 2015, had negatives of ?43,294 and ?42,741, fixed assets of ?2,027, debtors now of ?80,719 and cash ?7,815.
90. Those to 31 January 2016, said to be approved on that date, were still abbreviated, and disclosed negatives on both measures of ?27,798, no fixed assets, debtors of ?106,620, and cash ?9,946.
92. For 31 January 2017 abridged financial statements were filed, approved on 31 October 2017, and with a negative on both counts of ?19,609, no fixed assets, debtors at ?115,536, and cash of ?6,748.
94. Stock appears as a specific figure in the 2018 balance sheet, approved on 14 August 2019, at ?30,000; debtors were ?131,511, and cash ?41,485. For the first time, there were net current assets, and a positive balance sheet, of ?31,495.
96. That continued into 2019's, said to be approved on 17 December 2019: stock ?32,000, debtors ?162,665, cash ?5,343; positives of ?46,783.
98. There is no doubt that these accounts were utterly inaccurate, for which Mr Aristodemou is responsible. His defence would have admitted that he was responsible for providing the information to the accountants for the preparation of the year-end accounts; and he chose to sign them off.
100. They were prepared by LessTax. As remarked in the earlier judgment, Mr Aristodemou has failed to provide disclosure of any LessTax documents; and that remains so. Nor has he provided any from Pronumero, who were appointed accountants to the Company on 14 August 2019, specifically to revise the filed accounts for 2015-2019, and prepare those for 2020.
102. There is a story behind their appointment, recorded in a judgment of Murray J of 3 December 2020, [2020] EWHC 3307 (QB), following a hearing on 3 and 6 July 2020 within the claim brought by the Company against South Place Hotel Limited ("South Place") on 1 July 2019, to which D&D London Limited ("D&D") was added as a defendant on 18 April 2020. Among the applications before him was the defendants' of 24 April 2020 for further security for costs; and the Company's of 19 May 2020 for the release of the security which it had already provided under a consent order of 18 August 2019, through a ?50,000 undertaking by Fahri, given after Mr Aristodemou had paid that sum to them. On each, to maintain its position the Company would necessarily have to prove adequate solvency.
104. At [44] Murray J said this:
106. "GSIL's evidence, in summary, was that its financial position had been misreported in its financial accounts prepared and submitted to Companies House by its previous accountants, [LessTax], and that it had more recently corrected the position. In this regard, GSIL relied in particular on the evidence of Mr Georgiou", of Pronumero.
107. Mr Georgiou's evidence was that he had met Mr Aristodemou on 13 August 2019 for a financial review of the Company's filed accounts for 2012-2016.
109. "I was advised by [Mr Aristodemou] that the business generated turnover of between ?500,000 to ?700,000 annually from key hotel chains throughout the UK. This appeared to be at odds with the level of turnover disclosed within the various sets of financial statements prepared by [LessTax]. The financial statements reflected [an] average annual turnover of below ?200,000".
110. Those financial statements have never been disclosed; but must have formed the detailed bases for the filed accounts for those years and, probably, subsequent. It appears that Mr Aristodemou did not give them, or at least all of them, to Mr Georgiou at that meeting: he told him that Mr Fagan had died the week before, but he would try to obtain from LessTax the Company's files, as they might shed light on "the difference in disclosed turnover and potentially other differences". Mr Georgiou advised Mr Aristodemou that the Company should file amended financial statements with HMRC and Companies House, with which he would assist.
112. This account is inherently flawed. The accounts filed at Companies House were abbreviated, so made no reference to turnover. It may be that Mr Aristodemou produced to Mr Georgiou, the new accountant, some accounting documents which "disclosed turnover"; or, rather less likely, it may be that he just told him the turnover figures and Mr Georgiou somehow worked out that the filed balance sheets could not be accurate. We do not know; but it will be noted that, either way, Mr Aristodemou knew the Company's turnover.
114. When on the same day Mr Aristodemou contacted LessTax, Mrs Sorrell told him that, as Murray J put it, "unfortunately the files relating to [the Company] could not be found" (whether that was Mr Georgiou's evidence, or Mr Aristodemou's, is not apparent).
116. Mr Aristodemou's statement said that LessTax's unique selling point was just that; that he had signed off the accounts on the assumption they had done their job properly; was "pleased that we didn't have a lot of corporation tax to pay"; but now believed that Mr Fagan "must have achieved this by cutting a corner too many". He said that when on 13 December 2019 he contacted Mrs Sorrell again, she confirmed the disappearance of the files, but also that the accounts her company had created were incorrect.
118. As Mr Buttimore says, it is in the circumstances curious that after August 2019 Mr Aristodemou continued to instruct LessTax to prepare the accounts for Mastre Costa Trading Ltd ("Mastre Costa").
120. It is also curious that the revelation of the inaccuracies of the Company's accounts on 13 August 2019 led to Mr Aristodemou's immediate reaction, recorded by Mr Georgiou, of "surprise and shock". On 5 April 2019 Mr Chambi's then solicitors, CP Christou, had written Mr Aristodemou a 20-page letter containing his findings and grievances, and at its end recording the break down in trust and confidence; that Mr Chambi was considering liquidation, or a derivative claim or unfair prejudice petition; and inviting a response within seven days, which never came. Among the matters it had raised were Mr Aristodemou's defalcations, and the need to "Co-operate for the accounts for the period January 2015 to January 2017", which was as far as Mr Chambi's investigations had then got, "to be restated to Companies House".
122. In fact, it appears that the account given to Murray J about the non-availability of more detailed accounts from LessTax was untrue. There is an email from Mrs Sorrell to Mr Aristodemou of 10 September 2019 with five attachments, being accounts for years 2012-2016 each described as "full accounts". The message was "Hi Ari, I believe this is what you are looking for- I assume this is what the phone call was for. Thanks Nicola". So, they were at least by then available.
124. On 11 December 2019 Mr Aristodemou sent Mrs Sorrell a letter from the Company dated the day before, giving LessTax "formal authority to disclose all accounting and tax documentation" to Pronumero. The next day, Mr Georgiou wrote to her, asking to attend the LessTax offices "to discuss this case" and review various requested information pursuant to its instructions from Mr Aristodemou "to undertake a forensic review of the company accounting records" by way of "Examination of the accounting records underpinning the accounts submitted to companies house for the last six years? [and those] used for the preparation and submission of VAT returns for the last 6 years", and "Examination of corporation tax returns for the last 6 years including the information used as a basis of preparation", and of "Any other documentation which may be relevant".
126. What was produced to, discussed at, or resolved at any such meeting is not known, as there has been no disclosure of either accountant's files; but there is no email from Mrs Sorrell saying "but we do not have any of those documents".
128. In any event, and critical to this case, the evidence is that Mr Aristodemou knew that any accounting documents were wrong.
130. Ince Gordon Dadds LLP were the Company's solicitors in the South Place litigation. The detailed assessment of twelve of its bills delivered between February and October 2020 came before Costs Judge Leonard on 8 July 2022. His judgment [2022] EWHC 2562 (SCCO) was handed down on 10 October 2022.
132. The Judge outlined the facts (which will be relevant as well to what is said later about the South Place litigation) lying behind an initial meeting of 21 November 2019 between Mr Aristodemou for the Company and the solicitors, "his current solicitors Fahri LLP having advised Mr Aristodemou that a conflict of interest had arisen and that they could no longer act": [19]. There was available to the Judge the attendance note of Ince Gordon Dadds'. I have added emphasis.
134. "[24] ?The Claimant's case was that a 2-year supply contract between the Claimant and SPH had been replaced by a 5-year exclusive supply contract. That contract was not in writing, but according to Mr Cohen", who was the lead solicitor at Ince Gordon Dadds, "there was documentation supporting the existence of such an agreement.
135. [25] The Claimant's case as set out in the original, unamended Particulars of Claim was however that there was a written contract. SPH's solicitor, Mr Emmerson, demanded a copy of the document and Mr Aristodemou produced a 5-year contract, apparently signed by SPH. That signature however had been cut and pasted from the 2-year contract. The Claimant's position, as set out in its application for amendment, was that the document had been created only for the purposes of illustration and that Fahri LLP had incorrectly treated it as the substantive contract. Further, the PC upon which the document had been created had according to Mr Aristodemou been stolen without the theft being reported to the police. One of the concerns expressed by Mr Cohen at the meeting on 21 November 2019 was that this might be characterised as 'a bit incredible and convenient'.
136. [26] Mr Cohen asked if Mr Aristodemou was sure that he wanted to go ahead with the action, observing that the damages claim, which amounted to about four times the Claimant's gross turnover, seemed improbable. Mr Aristodemou said that not all of the Claimant's turnover was going through the books and Mr Cohen said it wouldn't be a good idea seeking to justify the disparity to the court on that basis. He advised that it was going to cost hundreds of thousands of pounds to pursue a claim for ?400,000, during which Mr Aristodemou would be constantly called upon to put more security (which Mr Cohen put at several hundreds of thousands of pounds, with Mr Aristodemou facing personal liability for any shortfall) into the pot. The odds for a reward and the possibility that SPH didn't have the money to meet an award anyway, looked no better than going into the casino.
137. [27] Mr Aristodemou said that he had started this off and he had to finish. Mr Cohen said that he didn't have to finish. He could 'chuck his hand in' now, kiss goodbye to what was probably an exaggerated damages claim that SPH probably couldn't meet, and lose his ?50,000. Mr Aristodemou wasn't interested, saying it was personal. When asked, Mr Cohen said that he had not [seen] enough of what was evidently a very large file of papers to offer an opinion on the prospects of winning the action, which appeared [to] arise from some improbable contractual arrangements. It could be about 50/50, but said that he hoped to improve on that".
138. That was before he had seen the defence.
139. Much can be taken from this excerpt, in ten points.
141. 60.1: In November 2019 Mr Aristodemou had put the Company's proposed solicitors in possession of documents which showed its turnover. These were, perhaps, the full accounts sent through by Mrs Sorrell.
142. 60.2: Mr Aristodemou knew that those accounting documents were wrong.
143. 60.3: He had not told the proposed new solicitors that.
144. 60.4: He knew that they were wrong deliberately.
145. 60.5: The inference must be (and it is one borne out by all the evidence in this case) that these accounts were created at his behest. There is no other candidate; and he did not tell Ince Gordon Dadds that there was.
146. 60.6: The deliberate drawing up of these false records was in order to hide the Company's true turnover.
147. 60.7: There is nothing to suggest anyone else, in particular Mr Chambi but also LessTax, knew of this.
148. 60.8: There was therefore an ongoing pattern of deception.
149. 60.9: This was propagated by Mr Aristodemou alone; dishonestly.
150. 60.10: Were Mr Aristodemou's reaction at the supposedly revelatory meeting on 13 August 2019 "surprise and shock", that was either at his ruse being discovered, or a piece of theatre.
151. On 5 May 2020, the Pronumero-prepared amended accounts were filed at Companies House for the years 2015-2019, at the same time as the 2020 accounts. Their contents are radically different from those they corrected. They now had separate categories for tangible fixed assets and stock, and each now discloses significant net current assets and positive balance sheets.
153. The 31 January 2014 figures are within the 2015 accounts, which were filed on an abbreviated basis so show the balance sheet figures only. Tangible fixed assets were in 2014 ?131,677, and stock ?141,831 (as against the original tangible fixed assets of ?1,106); debtors were ?48,253 (?17,378); cash ?32,322 (identical, although not true for all the amended years); debtors ?48,253 (?17,378); net current assets ?185,422 (net current liabilities ?68,587); balance sheet ?10,239 (negative ?67,481).
155. The 2015 accounts showed tangible fixed assets of ?123,732 and stocks of ?180,281 (as against what had been just fixed assets of ?2,027); debtors ?90,362 (?80,719); cash again the same at ?7,815. ?43,294 of net current liabilities were now ?205,609 net current assets. The balance sheet negative of ?42,741 was now a positive ?67,441.
157. For 2016 tangible fixed assets were ?115,962 and stocks ?134,863, opposed to none. Debtors were ?244,357 (?106,620) and cash ?24,453 (?9,946). The net current liabilities and negative balance sheets of ?27,798 were now net current assets of ?278,858 and a ?4,027 positive balance sheet.
159. For 2017's unaudited and abridged financial statements, tangible fixed assets were the same as the year before's at ?115,962, and stocks were ?101,482; previously, there were said to be no fixed assets. Debtors were ?312,067 as against ?115,536; and cash ?3,604, actually less than before, which was ?6,748. The negatives of ?19,609 had become net current assets of ?302,091 and a balance sheet of ?78,885.
161. 2018's stock of ?30,000 was now ?185,443, with tangible assets of ?118,548; debtors from ?131,511 to ?340,376; cash almost the same, ?41,485 to 42,687. The positive net current assets and balance sheet of ?31,495 were now, respectively, ?361,605 and ?153,878.
163. For 2019, stock of ?32,000 became ?230,492 and tangible assets of ?118,076; debtors of ?162,665 were now ?332,158; and cash of ?5,343 was up to ?8,769. Net current assets were now ?294,590 and balance sheet ?229,606, as against ?46,783 for each.
165. The 2020 accounts showed net current assets of ?278,805, and a positive balance sheet of ?326,647.
167. The defence would have averred, boldly, that the filing by a director quasi-partner of annual accounts which he knew to be dishonest and false, without informing his co-director and quasi-partner of the same, could not be unfairly prejudicial; and, as Mr Chambi was not contemporaneously aware of them, could not be here.
169. I disagree. The filed accounts were a historic and statutory record for Mr Chambi or indeed anyone else when they came to look at the Companies House entries. They were obligated to be true and fair. They were neither. In fact, although the reader would not until the amended accounts know this, they were (save, it turns out, on occasion as to cash) a testament to inaccuracy, literally designed to mislead the reader. The filing of such accounts was in no manner a performance by Mr Aristodemou of his duties as a director, or a recognition of the trust and confidence which governed his relationship with Mr Chambi. Once he had discovered inaccuracies, Mr Chambi spent years trying, occasionally with the assistance of accountants for whom he paid, to understand the true position. What that position is will be unknown even at the end of trial, because of Mr Aristodemou's failure to produce the underlying documents. What the effect has been on the Company's liabilities to HMRC is again unknown, because undisclosed. Each filing was an abuse of, and jeopardised, the relationship of Mr Chambi and Mr Aristodemou; and each also jeopardised the future of the Company, and its perception as an honestly-trading vehicle.
171. Each filing was therefore causative of unfair prejudice to Mr Chambi.
173. The above treats the Pronumero accounts as more accurate than those originally filed (as do both sides). It is worth emphasising that it does no more. This court is not in a position to determine whether these balance sheets are definitive; nor is that at this stage material. But the variances and their reasons may help to inform the misapplication of funds head, and also the contents of any valuation exercise.
175. To repeat a theme, the difficulty is that Mr Aristodemou has not disclosed the Pronumero file which would show its foundational information and calculations for each year. It is known that it prepared full accounts, at least in draft, for the years 2017 to 2020 because they were sent to Mr Aristodemou's work email account; and as until 6 April 2020 Mr Chambi had access to it (in, Mr Aristodemou says, objectionable circumstances), they have been disclosed. (They would, of course, anyway have been subject to disclosure by Mr Aristodemou; and as a director, Mr Chambi was entitled to see them).
177. Those draft accounts showed turnover of ?609,601 for 2017, then ?620,685, ?583,316 and ?573,133.
179. For 2017 to 2019, Mr Buttimore calculates turnover in the bank statements at ?592,688, ?577,635 and ?547,869, although those are figures net of 20% VAT.
181. Using the figures in the Annexes, Mr Chambi employed accountants to draw up restated accounts, which he sent to HMRC in August 2019. Those had turnover of ?777,588 in 2016, ?754,086 in 2017, and ?726,301 in 2018.
183. The QuickBooks figures for 2017 and 2018 are ?632,422 and ?675,949, those the 2019 being incomplete. Mr Chambi compiled these as part of his credit control work; they comprised the Company's invoicing; and, so far as he was then aware, therefore constituted its income stream. He would also see what monies were being paid on those invoices, as the remittance confirmations would be sent to his email. In cross-examination he agreed that there would be credit notes to be applied, and entries to be tidied, such as those for ?21,569 in 2013 for Palms Hotel, which never completed as the hotel never opened. He and Mr Aristodemou could not agree on whether 2012 entries for Eric Asire and Bovey Castle ought also to be removed, as Mr Chambi recalled they had been subject to invoice finance, and thereby been met.
185. So, even turnover is here a slippery figure; although Mr Chambi and Mr Aristodemou agreed that the bank statements would be the best guide.
187. The draft Pronumero accounts also show a director's loan account, by which Mr Aristodemou is said to have made large lending to the Company. Contrary to Mr Chambi, I see nothing unfairly prejudicial in the creation of such an account, or reasons to say it was a "fabrication": it is simply an entry used here by the accountants revisiting the Company's accounts to which certain movements can be allocated. What is unknown is the basis for the figures.
189. The first entries for the director's loan account are in the 2017 figures within the 2018 draft. It opens with the Company owing Mr Aristodemou ?343,914, which increases by the year end to ?355,310 because of ?294,712 said to be "Advances/ credits to the directors" [sic], and ?306,117 in "Amounts repaid", which actually means monies paid by Mr Aristodemou to the Company or otherwise credited in his favour. By 31 January 2018 the balance is down to ?326,275, with ?308,505 transferring in his favour, and ?279,740 the other way. Over the next year ?518,305 passes to him, and ?375,090 from him, leaving a balance in his favour of ?183,060. Following substantial payments or credits to him of ?573,623, and ?397,990 from him, the 31 January 2020 balance was reduced to ?7,427.
191. Striking is the size of these transactions. What were they? We do not know; nor did Mr Chambi, contemporaneously or now.
193. What they do show is that the Company's monies did not derive solely from its invoices; which accords with not all its monies going through its books.
195. There is also doubt about the accuracy of its expenses.
197. On 16 September 2020, deeper into the South Place security for costs applications, Mr Aristodemou had another meeting with his solicitors, at which, according to their notes, they
199. "put to him incongruity between his incoming invoices from Chinese supplier, Justin, and the corresponding invoices he seemed to be creating himself on supplier's letterhead. Ari says he does this so as to underdeclare the value of the goods and pay less customs duty? we can't conceal these invoices from o/s or any funder or counsel required to advise funders on prospects, and if it went to trial, the judge would probably refer the case to the CPS and Ari would go to jail. Emphasise need to settle urgently before things get out of hand".
200. Again, the perpetrator is Mr Aristodemou. Nothing shows that Mr Chambi was aware of it. Nor was that suggested.
202. The Pronumero drafts also contain markedly high figures for other expenses. Those for 31 January 2018 have wages and salaries at ?115,744 together with ?117,272 directors' remuneration; yet, aside from the occasional use of such as Mr Papacharalambous as casual labour unloading supplies, the Company's staff consisted of Mr Chambi and Mr Aristodemou; and their agreed remuneration (and what Mr Chambi received) was ?3,000 a month until then. It must follow that if these drafts are accurate, then on their face Mr Aristodemou has received monies substantially in excess of Mr Chambi, and contrary to their agreement.
204. To take another striking figure, advertising for that year was ?56,263, and more the year before: what can that represent?
206. The remuneration and advertising figures were among those questioned by Mr Chambi's then solicitors, Teacher Stern, by letter to Fahri of 18 May 2022; a 7-day response was invited; there was none; and is none.
208. Mr Aristodemou's misapplication of Company monies
209. This is the head on which the evidence at trial has concentrated.
211. It derives from the Annexes. These started as Mr Chambi's workings of movements from the Company's HSBC account. We have his annotated copies recording the purpose of each transaction, or if it was unknown. He was aided in that by the accounting entries, for example "A Aristodemou Loan Payment", which would be made by Mr Aristodemou; by Google searches; and by keyword searches of Mr Aristodemou's email. He said he would complete one month's analysis before moving to the next.
213. By closing, the Annex figures were, in overview, these.
215. Between 27 September 2011 and 1 November 2020 outgoings of ?3,959,953 appeared not to be in the Company's interests. Credit was given for identifiable credits of ?580,636 from Mr Aristodemou, and ?714,560, probably being from Mastre Costa; a further ?11,700 from Mr Aristodemou; and a further ?50,703 credit from monies provided by Mr Trypatsas to acquire the Kingfisher business (which was traded through Mastre Costa). Allowance was made for the ?135,000 which Mr Aristodemou was entitled to receive over the period as salary. Finally, there were the cheques which during cross-examination Mr Chambi agreed could be treated as identified outgoing for the benefit of the Company.
217. The total of alleged misapplications is therefore ?2,271,248.
219. Mr Aristodemou did not challenge the mathematics of the figure. Instead, he said it was as a matter of "commercial arithmetic" impossible.
221. "According to industry benchmarks for the guest amenity and hospitality supply sector (sourced from IBISWorld 2024 and Statista 2024), the average gross profit margin typically ranges between 20% to 35%, and net profit margins range from 6% to 12%. Based on these margins, the required turnover to generate ?2.3 million in profit would be" ?9.2 million, even at 25% gross margin.
222. This is not expert evidence, for which there is no order; indeed, Mr Aristodemou has no evidence at all. Further, the Pronumero draft accounts have gross profit for 2018 at 74% and for 2017 at 63.7%; with operating profit at 16.5% and 16.3%.
224. This margin point also assumes that all payments into the Company's bank account derived from its hotel supplies business. Given what Mr Aristodemou told Ince Gordon Dadds that would be unlikely; and it is clear from the Pronumero draft accounts and Mr Aristodemou's own apparently sizeable lending to the Company that it was wrong.
226. But the short point is that his margin arguments are irrelevant: whatever typical margins may be, the Annexes derive from actual payments made from the Company's account; even if some of those monies derived from loans, they were its; and Mr Aristodemou has no challenge to the payments themselves. Thus, the payments themselves stand established; and that is so despite the origin of all incoming monies not being known: that uncertainty derives from Mr Aristodemou's failure to disclose.
228. The disputed ground is their purpose, as to which Mr Aristodemou has failed to engage, save as to some of the cheques.
230. Mr Buttimore has provided summarised breakdowns for categories of payments. The original "Queried cheques" figure was ?323,782, and is now ?129,975. The ?196,104 reattribution derived from a document introduced by Mr Aristodemou in cross-examination, a 21 August 2012 email from Mr Chambi to Mrs Sorrell saying that he had left a cheque book for her at her office, and identifying payees of six cheques from January 2012, including T-Mobile, FedEx and BT. On investigation, those names were also inserted into the bank statements by Mr Chambi; yet he had continued to treat them as unknown. Working through those entries gave rise to the reduction, but not elimination, of the cheque figure.
232. Mr Aristodemou seized on this as evidence of a general failure in the care taken by Mr Chambi with his figures, such that none should be taken as reliable. It is, certainly, a blemish; but it is a specific one, in that it derives from annotations to cheque entries which might have been thought in their own descriptions to demonstrate propriety. It also needs putting in context.
234. The cheques were first raised with Mr Aristodemou in a 28 June 2022 Teacher Stern letter, within the Central London County Court claim brought by the Company against George Christoforou and Mr Chambi (the "CLCC Claim").
236. "We enclose with this letter a spreadsheet listing a number of cheque payments made by your client to parties which Mr Chambi is unable to identify. In the absence of disclosure from your client (in particular of copy cheques) showing the identity of the payees, [this] will form part of the sum which Mr Chambi will argue in these proceedings have been misappropriated by Mr Aristodemou".
237. Mr Chambi was presenting these payments anticipating that explanations would be provided. Nothing was forthcoming. In those circumstances, it is harsh to criticise him too severely for alleging in the Petition that these monies had been misappropriated, especially when in it he explained that "Such payments have been included in the sums misappropriated? on the basis that the payments are unexplained"; further, in his skeleton Mr Buttimore specifically distinguished between the cheques and the other categories, as the "only item which P has not been able to show positively was not for the benefit of the Company". It may also be noted that while Mr Chambi has revised his position, that is in consideration of his own annotations rather than of anything positive from Mr Aristodemou.
239. Mr Aristodemou's silence has been dogged. The lengthy CP Christou letter of 5 April 2019 raised, it said, "a number of serious concerns relating to substantial irregularities? in particular the financial affairs", based on Mr Chambi's bank statement investigations: "significant unauthorised sums of money had been withdrawn? It seemed that contrary to the impression you created, there had been surplus funds available in the Account on various occasions; however, the more funds that had been available in the Account, the more you had spent on transactions which were wholly unconnected with the Company or the Company's business... Our client was shocked and astonished by what he discovered". The first category identified was payments for Kingfisher: "The actual running of the Kingfisher Business is conducted through the company Mastre Costa? You are not a director nor are you shown as a shareholder of that company. There was no legitimate basis that we are aware of upon which funds ought to have been transferred from the Company's Account for the benefit of the Kingfisher Business". It then went on to raise, among other things, what it described as Mr Aristodemou's loan account, overdrawn at 31 January 2018, by ?767,137 on Mr Chambi's calculation. Mr Chambi said his accountant had aided in the completion of the schedule, which was an earlier version of the Annexes, being a compilation of misapplied monies.
241. There was no answer.
243. On 5 September 2022 Mr Chambi wrote to Mr Aristodemou and Fahri, enclosing a schedule of unauthorised payments. "If AA rejects that any or all of the payments are unauthorised then I suggest he prepares a schedule or by adding a column to the attached and providing an explanation". "If it is AA's position that during 2014 to the end of 2020 GSI owed a director's loan to him so as to justify some or all of the payments to third parties which I consider to be unauthorised then please provide bank statements and any other available evidence". By this stage Pronumero had done its work and some figures at least were susceptible to easy answer. As with the CP Christou letter, nothing came back.
245. Mr Buttimore's breakdown of the figures shows ?1,550,679 to have been paid for the benefit of Mastre Costa's Kingfisher business. As above, credits have also been applied for monies in for Kingfisher; and so too for Mr Trypatsas's transfers for the acquisition of the business, which was, as Mr Aristodemou's defence admitted, "an entirely separate business to that of the Company and the Petitioner had no involvement therein".
247. As recorded in the earlier judgment, Mastre Costa was incorporated on 13 December 2013 to run the Kingfisher fish and chip shop; and although Mr Trypatsas was listed as director from incorporation, and also as shareholder, his evidence was that actually he and Mr Aristodemou were 50: 50 partners, and as he was in Cyprus he was the silent partner. (In correction of the earlier judgment, the shareholder on incorporation was not Mr Trypatsas but his wife, who transferred her holding to him on 14 December 2019). Mr Aristodemou formally became a director on 14 August 2020; by 25 October 2020 he held 2 shares, and Mr Trypatsas one; and on 11 March 2021 he became sole shareholder. Mastre Costa was dissolved on 26 December 2023.
249. Mr Chambi knew that Mr Trypatsas had in around 2013 loaned monies to the Company for its business (which he believed to have been repaid by April 2016); and that Mr Aristodemou was helping Mr Trypatsas to invest in a UK business, which in the event was Kingfisher. He did not know of any other loan by Mr Trypatsas to the Company; nor that Mr Aristodemou was transferring its funds "for the acquisition of and/ or for the benefit of? Kingfisher"; nor that Mr Aristodemou was using the Company's account to fund Mastre Costa. He admitted in cross-examination that he had become aware that some Kingfisher monies had been paid to the Company: the transcript of his secretly-recorded 27 December 2017 meeting with Mr Aristodemou had an exchange beginning with the latter's "you know that Kingfisher is run through Guest Supplies", to which the response is "Not at twenty grand a fucking month, geezer!". Mr Chambi said he thought it was about ?200 a month.
251. Also within that recording is Mr Aristodemou's statement that the Company's bank account was also a "Kingfisher business account, because it doesn't have one. So it's shared with Guest Supplies". No doubt that was news to Mr Chambi.
253. Mr Aristodemou's recorded comments confirm that monies originating from Kingfisher were swirling through the Company's account. Mr Aristodemou's defence would have admitted "that payments were used from the Company's account to fund expenses relating to the Kingfisher business"; that was because Mr Trypatsas was unable to open a UK account in the name of Mastre Costa, as he was resident in Cyprus and lacked sufficient UK connections; so, Mr Aristodemou "was informed by his then accountant", presumably Mr Fagan, "that he could use the Company's bank account to conduct banking on behalf of Kingfisher, provided that proper records were kept that allowed a distinction to be drawn between funds paid into and out of the Company's account which belonged to the Company and those which belonged to Mastre Costa and/ or" Mr Aristodemou.
255. Why Mr Aristodemou should have any interest in the monies of either company is not enunciated. To the extent that this was intended to indicate that the Company held monies on trust for him, there is no positive evidence at all; and his holding a loan account with the Company would tell against any trust arrangement.
257. There are no records which treat specifically of Mastre Costa's funds within, or dealings through, the Company's bank account; nor any evidence that any were ever created, for the Company, or for Mastre Costa.
259. A competing alternative vision, though also within Mr Aristodemou's defence, would have been that he agreed with Mr Trypatsas a "revolving working capital facility" for the Company to a maximum level at any time of ?400,000; and the payments into and out of the Company's account were referable to this. This version speaks to further loans from Mr Trypatsas, the monies of which would be the Company's rather than their title retained by Mr Trypatsas or, perhaps, if funnelled through Mr Aristodemou, then by him.
261. There is again no accounting evidence of such facility.
263. More seriously, the ?714,500 cash, for which credit has been given in the Annexes, derived from Mastre Costa: the payments started only after it commenced business, and the Company had no cash business itself. Mr Aristodemou would have said that the cash was either his or Mastre Costa's, without divulging where he would separately have obtained such sums.
265. The matter is serious because in the preliminary issue trial Mr Aristodemou agreed that he was responsible for the filing of Mastre Costa's accounts, and his defence here would have agreed that he managed its business, "including recording and collecting daily cash takings", instructing LessTax, and making payment of wages.
267. Mastre Costa's filed accounts to 31 December 2014 showed debtors of ?4,000, and no other current asset; net current liabilities of ?394,782, and a negative balance sheet of ?133,032.
269. Curiously for a trading company, the next year's accounts also had debtors of ?4,000; and net current liabilities of ?384,761 and a balance sheet negative of ?153,261.
271. The 2016 accounts continued the ?4,000 debtors; net current liabilities were ?362,276 and the balance sheet negative ?161,026.
273. For 2017 the ?4,000 remained, and the negatives were respectively ?338,015 and ?167,015.
275. The 2018 accounts achieved net current assets of ?4,000 by shifting all its current creditors, of ?342,015, to being due after more than one year; the balance sheet was negative ?167,015: exactly the same figure as the year earlier: remarkable for a chippie.
277. Perhaps as a result, these accounts also contain a note being that "These financial statements include estimates. The financial statements will be revised in due course once further information is made available".
279. What that information was is unknown. The 2019 accounts were for the first time formally approved by Mr Aristodemou. They contain the same qualification as to their accuracy. They revise the 2018 figures by now amortising the intangible fixed assets from ?171,000 to ?142,500; flipping the creditor figure, which is now ?318,510, back into current liabilities; so moving net current liabilities to ?314,510, as the ?4,000 remains constant; and the balance sheet to ?172,010. The 2019 negatives are, respectively, ?283,910 and ?169,910.
281. The 2020 accounts record no employees, and contain the same statement to inaccuracy. The 2019 accounts are unmodified in them. Their negatives are ?274,338 and ?188,838.
283. There is therefore little to reassure that these are true and fair.
285. Through Mr Aristodemou's email account, Mr Chambi gained access to turnover figures for Mastre Costa, being part of unabridged accounts prepared by accountants. For 2014 turnover was ?54,422; for 2015, ?80,498; for 2016, ?84,194; and for 2017 a very consistent ?82,102.
287. It may be, as Mr Buttimore suggests, that these turnover figures have been capped by reference to the VAT level; I do not know. But it is apparent from the evidence that they are false. Mr Papacharalambous worked at Kingfisher from 2016 to 2019 at the request of Mr Aristodemou, as his parents had run a fish and chip shop. He would occasionally assist with, but usually watch, the nightly cashing up. Mr Aristodemou insisted that each night he be sent pictures of the takings, both cash and card. Mr Papacharalambous said these were about ?5,000 per week in 2016; and, because of his own skills, between ?11,500 and ?13,500 by the time he left. The balance was around 60% cash and 40% card. Mr Aristodemou would come most nights to collect the cash, or send another member of his family.
289. Before he left the Company, Mr Chambi found Mr Aristodemou's diary, and took copies of some pages. They are not always easy to read, but it is perfectly apparent that the bottom entry for each day is a money sum; and at the end of the week is a total figure. Assuming it to record cash only, rather than cards as well, those figures are for early 2018 very close to Mr Papacharalambous's estimates: ?8,231 for the week ending 6 January; ?7,214 for 20 January; ?8,221 27 January; ?8,620 3 February; ?8,510 24 March; ?8,267 7 April; ?8,234 28 April. On the evidence, they can have derived only from the Kingfisher.
291. The turnover figures in the Mastre Costa accounts are a fiction.
293. It is a short step to concluding that some or all of the ?714,560 cash derived from the Kingfisher takings. There is no overt alternative, although in his questioning Mr Aristodemou did seem at one point to suggest his car sale business might be a source; but we have no details.
295. This cash forms a separate ground of claimed unfair prejudice, being that Mr Aristodemou's causing the Company's account to be used in this manner, including the failure properly to record the transactions or to seek Mr Chambi's agreement to such use, was in breach of his duty to act in good faith in the way most likely to promote its success; which it was; and that was prejudicial because of the reputational and financial risks it ran, "on the basis of actual or perceived risk of the Company's account being used for illegal money laundering purposes". That was, and remains, a serious risk; and the prejudice is not answered by Mr Chambi's having already reported the matter to HMRC and other authorities, and their having taken no action: they yet might.
297. For completeness, the other categories of payments in Mr Buttimore's overview are ?165,006 "Cyprus mortgage payments". These are averred to be in discharge of Mr Aristodemou's father's monthly mortgage payments in Cyprus, and the meeting of the final payment. There is no dispute as to that, although the defence would have posited that the total amount is different as the payments were through Indigo FX Ltd, through which the Company also used to pay for foreign currency purchases of goods and supplies; it gives no figures for such posit.
299. ?345,800 went on "25 Links Side purchase". This was transferred between 27 January 2016 and 23 December 2016, in which month Mr Aristodemou bought this property, a 2-bedroom bungalow which became a 5-bedroom two-storeyed house. There is another ?65,491 being "Works to 25 Links Side", paid over 2017 and 2018. The latter payments are admitted; the former were not subject to any positive case.
301. There is then a minor sum of ?3,718 for tiles at 13 Cadogan Gardens N21, which was admitted.
303. Mr Aristodemou's defence would have run a series of wishful, high-level, and occasionally conflicting general defences,
305. It admitted that he "used the Company's bank account to pay for certain items of personal expenditure" (not specified); but "it is not admitted that he did so using sums beneficially belonging to the Company. In particular, [he] paid into the Company's account sums beneficially belonging to him which were in many cases used to fund certain" of the alleged misappropriations. That is notably not a positive case; and does not suggest that the beneficial ownership continued on payment into the Company's account.
307. He would excuse his failure to address transactions in detail on the basis that he is "unable to determine in relation to each individual payment out of the Company's account.. whether such a payment was justified"; which shows a surprising loss of memory. He would say that an expert accountant would be necessary for the task; which is wrong, on these questions of fact.
309. There would then be the defence that "it was agreed and mutually understood" between the two of them "that monies belonging beneficially to the Company could be used in respect of certain personal expenses" of each of them. No details are given, although it is said that Mr Chambi "was aware of and acquiesced in all such payments at the time they were made"; or would be time-barred from raising them now. It is not clear how this line of defence aligns with the non-admission of the use of company monies.
311. Later, he provides a wider scenario: now, "all such payments were either made with monies beneficially belonging to him, and/ or with the approval or acquiescence of the Petitioner, and/ or using funds owed to [him] as remuneration for his work as director and/ or as part of the director's loan account". Aside from the inconsistency with his earlier pleading, the use of "and/ or" or just bare alternatives shows he has no proper recall, and that none of these strands has foundation.
313. The remuneration thesis is given another airing: Mr Chambi "was aware at all material times that [Mr Aristodemou] was entitled to and did receive a greater remuneration commensurate with the additional work and responsibility he undertook". In more elaborate form, although still without any identification of what payments this is meant to apply to, it is said that it was "agreed and mutually understood that, in recognition of his role as managing director performing the majority of services on behalf of the Company, [Mr Aristodemou] would be entitled to a greater degree of remuneration that [Mr Chambi], paid on an ad hoc basis in addition to any regular payments and commensurate with the fact that [he] performed most of the work of the Company": when was this agreement: when the understanding: what remuneration: payable when: with what consultation or disclosure? Or perhaps, as seems the reality, Mr Aristodemou could just help himself to the Company's monies when he wanted, and secretly.
315. It may incidentally be wondered why if any of these defences were valid Mr Aristodemou hid from Mr Chambi the dealings through the bank account; and continues to do so.
317. There was also a technical defence, now supplanted by the findings on the preliminary issue. It does not match any line which averred degrees of knowledge on Mr Chambi's part, because it was that Mr Aristodemou "was entitled to approve such payments in his capacity as sole or majority shareholder".
319. Mr Aristodemou's cross-examination and closing explored a further alternative line: Mr Chambi knew that Mr Aristodemou had a director's loan account; so nothing was concealed. As above, the evidence does not go so far: it is that if Mr Chambi thought about it he ought to have considered that Mr Aristodemou had a loan account, as he had one himself: when Mr Aristodemou agreed to the Company at short notice lending Mrs Chambi ?4,000 to enable a visit to Thorpe Park by her school, Mr Chambi instructed Joanna Zwolinska at LessTax to attribute the 16 July 2018 payment to his own loan account; and there is no reason why each would not have one. Even had Mr Aristodemou established knowledge it would not exonerate him, because knowledge that there were to be accounting entries of withdrawals is a distance from knowledge that there were to be particular withdrawals or classes of withdrawals.
321. The misappropriations ground therefore succeeds. They were a self-dealing abuse of Mr Aristodemou's powers as director, which have been obviously prejudicial to Mr Chambi as member.
323. How the removed ?2,271,248 ought to be treated will be a matter for the expert valuer; but to the extent it gives rise to tax liabilities on the Company then, as Mr Buttimore submits, while those will reduce its value, insofar as interest and penalties on those sums are concerned they ought to be laid entirely at the feet of the wrongdoer, Mr Aristodemou.
325. This ground has been determined on the evidence and without recourse to two devices suggested by Mr Buttimore.
327. First, he has relied on the oft-cited principle enunciated by Lesley Anderson QC sitting as a deputy High Court Judge in Re Idessa (UK) Limited [2011] EWHC 804 (Ch) at [28]:
329. "I am satisfied that whether it is to be viewed strictly as a shifting of the evidential burden or simply an example of the well-settled principle that a fiduciary is obliged to account for his dealings with the trust estate that Mr Aslett is correct to say that once the liquidator proves the relevant payment has been made the evidential burden is on the Respondents to explain the transactions in question. Depending on the other evidence, it may be that the absence of a satisfactory explanation drives the Court to conclude that there was no proper justification for the payment. However, it seems to me to be a step too far for Mr Aslett to say that, absent such an explanation, in all cases the default position is liability for the Respondent directors. In some cases, despite the absence of any adequate explanation, it may be clear from the other evidence that the payment was one which was made in good faith and for proper company purposes".
330. Without some procedural device, whether by pleading or by order, which we do not have, that could not apply directly here, as Mr Aristodemou is not being asked to account as fiduciary to the Company.
332. A closer analogy would be to the duties of partners to each other, in particular of honesty and good faith, and incorporating non-concealment to other partners of matters concerning the business; obligations justified here by the finding of their mutual trust and confidence. That is not, though, an aspect which has been aired fully at trial; and it can be left there.
334. Secondly, and with citation of Joanna Smith J's description of the principles behind making adverse inferences in Bahia v Sidhu [2022] EWHC 875 (Ch), [90-93], Mr Buttimore submitted it would be appropriate to do so here, founded on Mr Aristodemou's resolute non-disclosures. Nothing now turns on this, and I would observe that his silence may be indicative not of a lack of factual answers to this case, but concern about what further actions any disclosures might generate.
336. Diversion of monies from debt recovery cases
337. The remaining heads have not occupied much time.
339. Conveniently, the next concerns more diversions of assets of the Company by Mr Aristodemou, although not ones which went through its bank account.
341. Mr Aristodemou instructed Fahri to act on the Company's behalf in three cases: against the Macdonald Group in October 2018; the Lanesborough Hotel in December 2018; and the Chewton Glen Hotel in March 2019. These resulted in recoveries of, respectively, ?33,700, ?20,450 and ?50,000 (excluding VAT). Though there was some cross-examination on the issue, whether those were settlements commercially beneficial or not to the Company is irrelevant.
343. In the Macdonald Group case, on 4 December 2018 Mr Aristodemou emailed a paralegal, Charlie-Rose Castanheira, at Fahri to direct payment of the settlement monies of ?33,700 into his own account; which occurred.
345. The Lanesborough settlement was on the basis that monies were paid on an invoice for particular items. Nevertheless, and as confirmed by his email of 29 January 2019 to Ms Castanheira, the ?20,451 invoice monies together with a court fee of ?1,156 was sent to Mr Aristodemou. His email does say he had "already paid" the court fee; but we have no details, and as the settlement was with the Company these were prima facie company monies.
347. For Chewton Glen it is Mr Chambi's case, founded on very few documents, that while ?7,217 was paid to the Company, ?50,000 was paid direct to Mr Aristodemou. On what we have that must be rejected: on 13 August 2019 it paid ?51,339 into the Company's HSBC account.
349. The South Place claim
350. The allegations within this have been described above, within the excerpts from the judgment of Costs Judge Leonard. The claim was brought and maintained through a document which was Mr Aristodemou's fabrication: a purported 5-year exclusive dealings clause within a written agreement. While Mr Chambi had been copied into some pre-action correspondence, he was no part of the prosecution of the claim based, dishonestly, on the false document. The claim had been commenced on 1 July 2019 without authority of the board. It was plainly inappropriate to be initiated and continued, founded upon a document which Mr Aristodemou knew to be false.
352. There is a little complication here, in that the defence would have relied on Mr Chambi's actions as disqualifying him from complaint. He had informed Emmerson Law, who were acting for South Place and the other defendant, D&D, that the document on which the Company was relying was false. As Mr Chambi accepted, on 23 August 2019 he wrote to Simon Emmerson anonymously, "Insight from an anon Good Samaritan", to disclose that the document had been created by Mr Aristodemou from an online source only in February 2019, not, as was its date, in 2016. Mr Chambi had discovered this through his investigations. On 25 September 2019 he wrote, again anonymously: "Here is further guidance for you to finish off Aristos Aristodemou. He is determined to win by any means- he is a con man"; "you know what you are looking for now and you can make him pay". He recommended hiring at IT specialist, and even suggested search terms. "Hopefully he will go to jail. Make him pay. Over to you". He attached the generic PandaDoc used by Mr Aristodemou.
354. Those actions were a breach of Mr Chambi's duty to act in the best interests of the Company rather than for his own purpose of retribution. His undoubted proper course, at least initially, would have been to convene a board meeting. That said, this breach does not negate Mr Aristodemou's, whose reliance on the false document manifestly put the Company at reputational and financial risk, to the potential detriment of its members. Further, his own attitude, recorded by Ince Gordon Dadds, was that the continuation of the litigation was a "personal" rather than company matter.
356. The second complication is that despite the claim's false basis, it resulted in a substantial settlement, albeit that was also by payment for delivery of specified stock. As ever with Mr Aristodemou, there has not been disclosure of the solicitor's file so the precise details are unknown. It is therefore difficult to assess whether the Company ultimately suffered any detriment, or gained by receiving that which, but for the litigation, it would not have. Mr Buttimore pointed out that assuming the solicitors first to have met their costs, the ?96,724 received into the Company's account from them on 4 June 2021 was the same day paid out, as to ?50,000, under the rubric "Aristos Aristodemou Loan Repayment", and over the next few days was disbursed under the same rubric. That was also largely true of the next month's ?116,666; and August 2021's ?70,000.
358. However, the use of these settlement monies is a different issue. On this head, and despite the uncertainties deriving from Mr Aristodemou's non-disclosure, I consider that Mr Chambi can establish unfairness, but not prejudice. It therefore fails as a separate ground.
360. The CLCC claim
361. Mr Chambi says that the CLCC claim was issued without due authority of the Company's board as, though he was a defendant, he ought to have had the opportunity to approve the action as director; was without merit; and/ or was "not bona fide in the best interests of the Company".
363. The merits are not something which can conveniently be determined here, nor need be, although the case included Mr Chambi's disclosure to the South Place defendants of Mr Aristodemou's faked document. Nor are separate particulars given of the best interests aspect.
365. As to authority, this has been addressed by HHJ Monty KC in his judgment dated 27 June 2025 when striking out the claim, which takes into account the findings in the preliminary issue. He said at [38] that "it is plain that the present claim was issued without authority"; at [43] that the subsequent attempt to ratify (on which Mr Aristodemou's defence to the Petition also sought to rely) was following Mr Chambi's raising of the question of standing, and failed as Mr Aristodemou did not have majority control; at [50-51] that as Mr Aristodemou must have known he was an equal shareholder with Mr Chambi, so the issue of the claim was an abuse of process.
367. The CLCC claim was therefore unauthorised, caused the Company expenditure on legal services, and put it at risk of adverse costs. The last prejudice was curtailed by HHJ Monty's awarding indemnity costs to be paid by Mr Aristodemou himself, who had been joined for that purpose; but the former remains.
369. This head therefore succeeds.
371. Failure to record shareholding/ purported removal/ failure to call general meeting
372. As established by the preliminary issue, Mr Aristodemou caused the Company to fail to record Mr Chambi's shareholding; and to file successive erroneous returns referring to six issued shares.
374. He also instructed Mr Georgiou to make filings at Companies House removing Mr Chambi as a director as from 6 April 2020; that was corrected as from 26 August 2020 by a filing entered on 21 September 2020.
376. Both the above were an abuse of Mr Chambi's rights of member; and prejudicial until such time as corrected.
378. At a meeting on 17 December 2021 Mr Aristodemou, as purported majority shareholder, ratified the bringing of the CLCC claim, and removed Mr Chambi as director.
380. Again, that removal was unfairly prejudicial, Mr Chambi having the right to act as director.
382. On 10 January 2022 Mr Chambi gave notice requiring Mr Aristodemou to convene an EGM "in order for an explanation to be provided in respect of various matters" including a number of issues now in the Petition. He failed to do so. There does not seem any prejudice thereby, as s.305 of the Act gave Mr Chambi a remedy.
384. Remedy
385. The relief canvassed has been that Mr Aristodemou buy out Mr Chambi's shares in the Company. As he has been running it since Mr Chambi effectively left after the 14 August 2018 meeting, that would be appropriate. For the same reason, that ought to be the buyout date. What has gone on since is a matter for Mr Aristodemou. Given the nature of the relationship and the equality of shareholding, the valuation ought to be on a basis undiscounted for Mr Chambi's not being a controlling interest.
387. Clean hands?
388. Over the Petition's course there has been a listing of Mr Chambi's actions which are said to affect any relief he should be granted. Some of those are no more than areas where Mr Aristodemou has averred himself correct and Mr Chambi wrong: as to the existence of his director's loan account; and the misappropriations.
390. As to the others, the characterisation of Mr Chambi's demands for ?750,000 at the 14 August 2018 as blackmail were addressed in the earlier judgment at [124-126]. As there, I continue to reject Mr Buttimore's submission that this was a price for Mr Chambi's shares. Shares were not mentioned although a continued relationship was, were the sum forthcoming: "there may still be? only if you're a smart guy, you'll do what I'm gonna ask you to: ok?".
392. Mr Aristodemou's response is interesting: "if you take money from these ill-gotten gains, we are both going to prison"; and, later, "What's bugging me now is you're asking me now for legitimate money from ill-gotten gains and that's fucking wound me up".
394. For reasons already given, the origin of the misappropriated monies is unknown; and a finding that they were, as Mr Aristodemou then said, "ill-gotten gains", is not one even to be considered. Instead, what is happening between two angry and upset former friends and business partners is that Mr Chambi is asking to receive what he perceives as his share of profits disguised by Mr Aristodemou. That was accompanied by threats to damage his reputation, and by reportings of him to various bodies; but that does not convert the request into misconduct; nor would it have any relation to appropriate relief, which would be granted for that which Mr Aristodemou had already done over many years. It would be a remarkable result for those multiple dishonesties and breaches of duty to be wiped clean by a subsequent request for compensation, even when accompanied by threatened and actuated consequences which were not themselves illegal.
396. The meeting, and that of 27 December 2017, was secretly recorded. Again, that does not go to the fairness of relief; nor does Mr Chambi's secret accessing of Mr Aristodemou's work email until 6 April 2020, or copying his diaries. So far as those have resulted in documents used at trial, they would have been part of any disclosure which Mr Aristodemou deigned to give.
398. This is a case in which the proven dishonesties are those of Mr Aristodemou; in which at the preliminary issue trial his evidence was given without regard to the truth; and in which he has subsequently failed to comply with his duties of disclosure. The clean hands bar is thereby a very high one; and nothing he raises comes close to affecting the giving of relief, after all these years, to the deceived Mr Chambi.
400. Conclusion
401. Liability on the Petition is therefore established.
403. Directions for valuation will be given at the consequentials hearing, which will also address what role Mr Aristodemou may play at this next stage.
405. The parties are to seek to agree directions.

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