[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Microleve Ace Ltd v Joynt & Ors [2005] EWHC 1685 (Ch) (27 July 2005) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2005/1685.html Cite as: [2005] EWHC 1685 (Ch)

[New search] [Help]

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		27/07/2005

Mr Justice Warren

Introduction

1. This action concerns the ownership and exploitation of the assets previously owned by a company called Microleve International Ltd ("MIL") and which were disposed of by the administrators of MIL in the course of administration. The principal asset with which the action is concerned is a patent ("the Patent") in respect of a medical device for the treatment of arthritis. Serious allegations of fraud and dishonesty are made by the Claimant, Microleve Ace Ltd ("MAL") against the first Defendant (now Mrs Heptinstall) and the second Defendant Mr Heptinstall. There are serious allegations in the other direction, too, Mrs Heptinstall alleging that :NIT Bielecki did not inform her properly of his own history or that he faced disciplinary process by the Law Society (as a result of which he was struck off the Roll, effectively for his dishonesty). For reasons which I will come to, the rights and wrongs of these serious allegations are not ones which I need to decide.
2. Before me is a question which was ordered to be tried as a preliminary issue by Master Price on 17 February 2003 namely

"whether the Claimant is entitled to the assets purportedly sold by Microleve International Limited and its administrators dated the 3^rd day of August 2001".

3. The Company appears by Mr Jacek Bielecki. For reasons which I gave at the commencement of this hearing, I allowed Mr Bielecki to represent MAL: I was satisfied that, by the time of the hearing, Mr Bielecki had been effectively constituted a director of MAL and was a shareholder. Indeed, he is now the sole shareholder, having acquired Mrs Heptinstall' s shareholding from her trustee in bankruptcy pursuant to a contract made shortly before the hearing. It seemed to me that, unless I permitted Mr Bielecki to act for MAL, its claim would effectively go by default since it had inadequate assets to pursue the claim and since Mr Bielecki was either unable or unwilling to sink more of his assets into the claim in obtaining legal representation for MAL.
4. I have read and heard a considerable amount of evidence in this case. For reasons which I will come to, the issue which I actually have to decide turns on a small part of that evidence. There are large areas of dispute on the facts which, in the event, I do not need to decide. I will come to the critical areas which I do have to decide in due course. The following paragraphs set out the background facts as I find them without needing to go into detail.
5. Mrs Heptinstall (I shall refer to her by that name although she did not meet Mr Heptinstall until the summer of 2001). Her unmarried name, by which she was known at material times and by which she is named in these proceedings, was Jo Joynt) has been involved with the development of the device for several years. The vehicle through which she did so was MIL. In circumstances which I do not need to go into, MIL acquired the Patent and also carried out the development and marketing of the device. Facing cash-flow problems, MIL went into administration in November 2000. It had been hoped that investors would be found to take the business forward. Unfortunately for Mrs Heptinstall, the administrators decided to sell the Patent and to wind up MIL. She stood to lose everything which she had strived for over the previous years.
6. Mrs Heptinstall had a friend, Simon Rye, to whom she explained her financial problems sometime in 2000. Mr Rye told Mrs Heptinstall that he had a friend, Mr Bielecki, a solicitor, who might be able to help her. Mrs Heptinstall met Mr Bielecki in January 2001. She explained her predicament and he agreed to help .. But what was agreed between them and what information Mr Bielecki gave to. Mrs Heptinstall at that time is a matter of some disagreement. These areas of disagreement may, in due course, in the settling of disputes between them, be important. However, I do not need to decide them in the context of the question with which I am dealing, namely 'whether MAL is or is not the owner of the Patent. The areas of dispute ~bout their dealings include (no exhaustively) the following:

a. Whether Mr Bielecki told Mrs Heptinstall that he was subject to disciplinary proceedings by the Law Society of a most serious nature involving dishonesty and when he subsequently told her that he had been struck off the roll on 6 March 2001.

b. Whether· he was frank and honest with her about his financial standing and in particular about his IV A (which had been running for some time and in relation to which he was in arrears on his contributions to the arrangement) or his later bankruptcy (subsequently annulled) on 10 March 2001.

c. Whether he acted as her solicitor or whether there was simply a commercial agreement between them. If he was her solicitor, questions arise whether his dealings with her were in accordance with his duties as a solicitor acting for her.

d. Whether he refused to transfer to her any shares in a company called Pristine Projects Ltd ("PPL") or MAL and whether, indeed, he was able to do so in relation to PPL, it appearing that other persons (eg Mr Bielecki's brother in Poland) might have shares in PPL.

e. Whose responsibility, pursuant to their agreement, it was to produce the finance for the ongoing business. Each says that it was the responsibility of the other and that their failure to acquire the Patent as envisaged was the fault of the other.

f. Whether the agreement which they reached was terminated by Mrs Heptinstall or. whether Mr Bielecki was entitled to hold her to that agreement in the events which subsequently occurred and which I will deal with later.

7. It is fair to say that if Mr Bielecki acted as· Mrs Heptinstall says he did, his conduct was quite disgraceful and it is hardly surprising that she would not wish to continue in business with him.
8. What they apparently did agree was that the assets of MIL including the Patent would be acquired from the administrators. The Patent itself (and the other assets to be acquired from the administrator) would be put into one company and the business exploiting the Patent would be carried on by another company. Mrs Heptinstall says, and I accept this, that Mr Bielecki had said to her that it was crazy to have the Patent and the business in the same company and that, accordingly, he advised a structure which separated these two elements. It had been the failure to separate these two aspects in MIL which had caused Mrs Heptinstall the trouble she had experienced in the first place. They agreed to proceed on that basis.
9. The initial agreement was that the shares in the two companies would be split 75% to Mrs Heptinstall and 25% to Mr Bielecki (although I have to say that on the evidence I have seen, I do not know what it is suggested that Mr Bielecki brought to the business to justify his share). Mr Bielecki negotiated a purchase of MIL's assets, including the Patent, from the administrators at the end of March 2001. The purchase price was to be £50,000, of which £10,000 was payable immediately, and two instalments of £20,000 were to follow in April and May. Mr Bielecki put up the initial £10,000 which it had not proved possible to raise from other sources but as a condition of doing so required that his stake be increased. In the event it was agreed - and the validity of that agreement may be one of the issues between Mrs Heptinstall and Mr Bielecki -. that the shareholdings should be altered from 75/25 to 65/35.
10. The company which was to hold the MIL assets was PPL, a shelf company which Mr Bielecki told Mrs Heptinstall he had available for the purpose, and the trading company, to exploit those assets was MAL. Contracts were exchanged with the administrators for the purchase of the assets by PPL on 30 March 2001; Mr Bielecki joined as guarantor.
11. Thereafter, with the consent of PPL and/or the administrators of MIL, MAL traded with the MIL assets which PPL had contracted to purchase. There is no formal agreement as to the terms on which it was allowed to do so.
12. Mrs Heptinstall never received her shares in either PPL or MAL in spite of repeated requests made to Mr Bielecki. He has maintained before me that there was never any question that she was entitled to 65%. It is easy for him to say that now; but his actions at the time suggest reluctance to acknowledge that position. The allegation by Mrs Heptinstall that he refused to transfer shares to her when asked to do so forms part of the dispute between the individuals which I do not need to resolve in this part of the case. But what is clear is that Mr Bielecki always had a share in MAL. It cannot be maintained on the facts, and indeed this was not suggested on behalf of Mrs Heptinstall, that she was entitled to the beneficial ownership of the entirety of the shares in PPL or in MAL at any time. This, from Mrs Heptinstall's point of view, is a very great difficulty which she has to face. For, as will be seen in a moment, the eventual acquisition of the MIL assets, including the Patent, may have been by MAL itself. If that is the true position, Mr Bielecki will have acquired an indirect interest in the MIL assets through his shareholding in MAL; and even though his initial shareholding may have been only 35%, he has now acquired, as I have said, the balance of the shareholding from Mrs Heptinstall's trustee in bankruptcy. It is no part of the case before me to determine what, if any, rights Mrs Heptinstall might have in respect of that acquisition in the light of any previous solicitor/client relationship between them or in the light of the agreement which they entered into in 2001.
13. Mrs Heptinstall and Mr Bielecki were unable to raise the finance to meet the instalments due in April and May. Each blames the other for this. They fell out in a serious way. Mrs Heptinstall's case is that, since about that time, May 2001, the agreement between them was at an end. Her position is that she was free to acquire the MIL assets for herself or any other investors whom she might find and that she was under no obligation to ensure that Mr Bielecki received a 35% share in any acquiring vehicle. Although Mr Bielecki hotly contests that Mrs Heptinstall was entitled to do this, I do not understand him to dispute that it had become her own position possibly since May but certainly by the end of July 2001, that she was entitled to do so. In any event, whatever Mrs Heptinstall may or may not have told Mr Bielecki after May 2001, and in particular in the period leading up to the sale of the MIL assets by the administrators at the beginning of August 2001, I find as a fact that Mrs Heptinstall considered (rightly or wrongly) that she was entitled to treat the agreement between them was at an end and that she was entitled to acquire the MIL assets with other investors and that Mr Bielecki would not be entitled to insist on receiving any share, let alone a 35% share.
14. On 30 April 2001, the administrators rescinded the agreement with PPL for non-payment of the April instalment, forfeiting the initial £10,000 payment. Although PPL objected to this, there can be little doubt that the administrators were entitled to do so; and, indeed, matters have since proceeded without any challenge being made by PPL.
15. This left Mr Bielecki out of pocket by £10,000 and subject to claims on his guarantee. Jumping ahead, the MIL assets were in fact resold as I shall explain and Mr Bielecki was not obliged to pay under his guarantee in the purchase agreement.
16. I have left out of this brief account a number of matters including (i) the efforts of Mrs Heptinstall to find alternative finance for the development and exploitation of the Patent (ii) Mr Bielecki's own financial difficulties including a bankruptcy (which was subsequently annulled) and a further bankruptcy notice arising out of his failure to meet his guarantee in the purchase agreement and (iii)the details of the deterioration in the relationship between Mrs Heptinstall and Mr Bielecki. These matters would be of great importance were I deciding, in the present case, the rights and obligations of Mrs Heptinstall and Mr Bielecki between themselves. Were I doing so, I would need to determine a number of serious disputes of fact and issues of law arising out of those facts, but I am not and do not need to do so.
17. Meanwhile, Mrs Heptinstall had been seeking finance to enable to the continuing exploitation by MAL of the Patent. I will need to return to this in some detail when considering the evidence of those involved.
18. The administrators then offered the MIL assets including the Patent for sale again. None of Mrs Heptinstall, Mr Bielecki, PPL or MAL could afford to purchase. Nonetheless, the administrators were willing to sell to Mrs Heptinstall (or one of her companies) if she could find someone willing to invest. Mrs Heptinstall spoke to an investor she knew, a Mr Stephen Scholefield; Mrs Heptinstall explains in her evidence the discussions which she. had with Mr Scholefield for acquiring and exploiting the MIL assets together. However, that came to nothing in the end. It appears that Mr Scholefield nonetheless made an offer on his own account of £45,000 for the MIL assets to the administrators of MIL.
19. Mrs Heptinstall says that, on 31 July 2001, she had a phone call with the administrators. They informed her of Mr Schofield's offer. She says that she explained to them that Mr Scholefield was in fact not seeking to invest on behalf of her and that the administrators said that if she could pay to them £46,000 the following day, they could bring to an end the deal with Mr Scholefield.
20. Mrs Heptinstall was, not unsurprisingly, very worried indeed about this development and losing what she regarded as hers to Mr Schofield. She became desperate to find the necessary finance to acquire the assets from the administrators. She had only 24 hours in which to do so.
21. In the meantime, Mr David Daniels had been retained by Mrs Heptinstall, either on behalf of MAL or herself (an important aspect which I will come to later) to help find financial backing for MAL; he also became involved in finding funding for the purchase of the MIL assets including the Patent.
22. Mr Daniels made contact with a friend of his, Mr Heptinstall, and asked him whether he would be prepared to make a loan of £50,000. I deliberately say no more for the moment about it than that because there is a dispute about what was said between Mr Heptinstall about the duration of the loan and, indeed, about who the loan was to be made to. Mr Heptinstall had considerable trust in his friend and agreed to make the loan effectively to help his friend and without making the sort of enquiries that a businessman lending that amount of money would ordinarily make.
23. Mr Heptinstall in fact provided the £50,000 which he had promised. It was paid, on 1 August 2001, into the bank account of MAL and on the same day £46,000 was transferred to an account with Hammond Suddards Edge, the solicitors acting for the administrators. There is no loan documentation of any sort recording the terms on which Mr Heptinstall was providing the £50,000 or to whom it was being loaned. The evidence of Mr Daniels and Mrs Heptinstall on this aspect, to which I will come, is central. I will need to decide to whom the loan was in fact made.
24. The sale and purchase agreement was eventually signed on 3 August 2001 at Hammond Suddards Edge's offices. The purchaser named in the agreement was Mr Daniels. It is quite clear that he was not purchasing for himself beneficially. I will need to decide on . whose behalf the purchase was made, a question closely linked to the question of the identity of the borrower of the £50,000.
25. Mrs Heptinstall had not met Mr Heptinstall by the time he had made his loan.

Subsequently, later in August, Mr Heptinstall's name was substituted on the agreement with the administrators and the Patent became vested in him. Again, I will need to review the evidence on this in some detail.

26. Throughout this period, Mrs Heptinstall was a director of MAL and, indeed, had primary control of its activities.
27. In their pleadings, the principal case of Mr and Mrs Heptinstall was that, as a result of the transactions which took place in August 200 I and the agreements made between them, Mr Heptinstall became the owner of the Patent. Alternative pleas were made that there was a loan (secured on the Patent or alternatively unsecured) to MAL or Mrs Heptinstall. During her cross-examination, Mrs Heptinstall gave some answers which suggested very strongly indeed that the case concerning ownership could not sensibly be maintained and that Mr Heptinstall was simply a creditor in relation to the £50,000. A short adjournment then took place as a result of which a concession was made - which was confirmed the next morning - by counsel on behalf of both Mr and Mrs Heptinstall and which resulted in significant curtailment of cross-examination which was, in effect, no longer needed. There were two parts of the concession. The first was that Mr Heptinstall was not the owner of the Patent but was only a creditor albeit that he claimed security over the Patent. If I may say so, it appears to me that that concession was entirely correctly made. The second part of the concession was that the loan by Mr Heptinstall was made to MAL and that MAL was the owner, subject to Mr Heptinstall's alleged security interests, of the Patent having paid for it. In preparing the first draft of my judgment, I became extremely concerned that the second part of the concession was incorrect on the evidence which I had seen and heard. In the quite exceptional circumstances of the way in which the concession came to be made, I considered that the overriding objective required me to call the parties back.
28. The upshot at the adjourned hearing was that, after submissions from both sides, I allowed the second part of the concession to be withdrawn. Mr Bielecki was then, of course, entitled to cross-examine both Mr and Mrs Heptinstall further which he did.
29. The central issues for me to decide are therefore, I consider, to whom Mr Heptinstall made his loan; who was the beneficial owner of the MIL assets including the Patent as a result of the purchase agreement with the administrators entered into by Mr Daniels; and what was the effect of the Patent being put into the name of Mr Heptinstall, in particular whether he thereby acquired or perfected a security interest. There is a secondary, and discrete, issue which is whether Mr Heptinstall's loan was converted into equity of MAL.
30. The answer to those questions turns on the evidence of Mrs Heptinstall, Mr Heptinstall and Mr Daniels. Mr Bielecki himself was not actually involved on the ground in relation to the events at the end of July and beginning of August 200 1. That makes it unnecessary for me to say anything about my views of the reliability of Mr Bielecki and the truth of what he says.
31. David Daniels made a witness statement in August 2002 in connection with Mrs Heptinstall's bankruptcy proceedings in the Kingston County Court. He confirmed, for the purposes of these proceedings, what he said there. It was to the following effects so far as relevant:

a. He was "hired as a consultant by [Mrs Heptinstall] and was charged with the responsibility and had authority to find funds for her and her company [MAL]". In that regard he refers to a letter dated 8 June 2001 on MAL's headed notepaper signed by Mrs Heptinstall as managing director and Janice John (her PA) as company secretary giving Mr Daniels full authority "to act as our agent in seeking funds to grow the business of [MAL]". The authority "includes material of a confidential and financial nature" and Mr Daniels would be "responsible for obtaining confidentiality agreements from any prospective investor before divulging the Company's business". That letter was clearly an authority to· act on behalf of MAL and not on behalf of Mrs Heptinstall or Janice John personally (although he may separately have had authority on behalf of Mrs Heptinstall).

b. He found two investors, Mr Lee and Mr Heptinstall. On his say so, the latter, his friend, "lent MAL £50,000 immediately. I made the request to him on 31st July 2001 and the money was in the account of MAL the following day. It was as simple as that. I explained the background and urgency to him, he agreed to put up the money. He had never heard of or met [Mrs Heptinstall]. As I say, he was my friend and he put up the money solely on my say so."

c. He recorded the deal in an email dated 31 July 2001. He repeats that the payment was a loan to MAL. The email is of some significance and I set out the relevant parts:

"Thanks for your help today. I owe you one.

Just to let you know that you have an option on the loan which we can either repay or you can translate into equity .... ,

Anyway I digress, The proposal we have put to a couple of other short term funders is £150k until our long term money is sorted out as a loan repaid with interest at 15% or leave it in for 5% of the equity....

For your existing £50k we could do either repayment or equity .....If you want just to leave your 50k in place then we could convert at an optimum ratio ....

If you only wanted [something is missing: but it obviously means to continue the loan] we could provide security by putting into escrow the patent [once it is out of administration]

Our bank details are [he goes on to give MAL's name and bank address and account details]"

d. Mr Daniels says that the interest rate -of 15% was agreed and that the conversion to equity was a matter of choice for Mr Heptinstall. He says, although this is not agreed, that a repayment date or period for the loan was not discussed. The reference to escrow was intended by Mr Daniels as creating a security for the loan. Since the Patent was still in the hands of the administrators of MIL, it could not be given as security for the £50,000 until the deal with the administrators had been completed.

e. Mr Daniels says that it is completely untrue that Mr Heptinstall bought the MIL assets for himself. It is now accepted that he did not do so, either at that time or by a later agreement.

f. He says that the agreement, dated 3 August 2001, with the administrators was put into his name instead of MAL's because Mrs Heptinstall wanted to avoid Mr Bielecki having any involvement or rights. She did not want the MIL assets, including the Patent, in her own name because of her personal financial circumstances. These two assertions a very important. The first assertion recognises that Mrs Heptinstall did, indeed, wish to proceed in a way which avoided Mr Bielecki having any interest. A purchase by MAL would have resulted in just that (by reason of an indirect interest as shareholder) whereas a purchase in her own name or that of another of her companies would avoid that result (subject, of course, to Mr Bielecki's continuing rights, if any, under the agreement which they had made earlier in the year). The second assertion is not accepted by Mrs Heptinstall. Perhaps it is more accurate to put it as Mr Daniels himself did in a letter dated 20 August 2001 to Mrs Heptinstall " ... .I could have asked [Mr Heptinstall] to lend me the money and acquired the T and A [trade and assets] or I could have refused to reassign the contract and was it not me that your name pulled off for protection from any comeback" [my emphasis] - "comeback" in this context, it seems to me, to be much more likely to refer to comeback from Mr Bielecki than a general exposure to creditors.

g. Having referred to the letter of 8 June 2001 in order to show that he acted for MAL, and having said that the loan was clearly made to MAL, Mr Daniels, later in his witness statement, refers to unpaid invoices for which he alleges that Mrs Heptinstall is personally liable including charges for time spent in June, July and August 2001.

32. Mr Daniels was cross-examined about his role in finding finance for the project, with particular reference to whether he was acting for MAL or for Mrs Heptinstall or for both, as well as about what he told Mr Heptinstall in order to persuade him to provide the money at all.
33. He accepted that the Patent was, as counsel put it, really Mrs Heptinstall's baby and that he saw little if any distinction between her and MAL for this purpose. In relation to his invoices, he said that he claimed for the work done for Mrs Heptinstall it was, again, her baby and the distinction between ,her and MAL was not made.
34. Mr Daniels was asked about how he viewed the money which had come from Mr Heptinstall which, on 1 August 2001, went to Hammond Suddards Edge by way of MAL's account. He said that so far as he was concerned it was Mr Heptinstall's money. He was initially reluctant to accept that he had any responsibility to Mr Heptinstall but I think that, in the end, he did recognise that he did have some responsibility for looking after Mr Heptinstall's interests .. In other words, so far as he was concerned, the money remained Mr Heptinstall's even once it had reached Hammond Suddards Edge. These are not his words, but one could, on this approach, view the monies as a facility made available by Mr Heptinstall which could be drawn down to effect the purchase of the MIL assets.
35. I mention here that, at the completion of the agreement on 3 August 2001, a further £1,000 was paid in cash by Mr Daniels, a receipt being given to him by Hammond Suddards Edge. He acknowledges that that money came from Mrs Heptinstall although it should be noted that it actually represented part of the £50,000 provided by Mr Heptinstall.
36. It was put to Mr Daniels that, on signing the sale and purchase agreement on 3 August 2001, he became the owner. He agreed, but it is clear that he did not own beneficially so it leaves entirely open the question on whose behalf he held the benefit of the agreement to acquire the MIL assets.
37. On 14 August 2001, Mr Daniels wrote to Hammond Suddards Edge in these terms: "could you now please rescind this agreement in my name and replace a new one in the name of Jeremy Heptinstall & Co Ltd" (a company owned by Mr Heptinstall). Curiously, given that letter, Mr Daniels wrote again to Hammond Suddards Edge on 27 September 2001 referring to the agreement dated 3 August 2001 instructing them to assign the trade marks and patent listed in the agreement to Mr Heptinstall. On 30 September 2001, he . executed what purports to be an irrevocable transfer of "title to all goods named in that agreement without exception" to Mr Heptinstall for the sum of £1. He says that the reason he took this course was because he was asked to do so by Mrs Heptinstall. He acknowledged, of course, that he was not the beneficial owner and described himself as "holding on trust for MAL or [Mrs Heptinstall]".
38. Mr Daniels was also asked about what he told Mr Heptinstall about the reason for needing money and when it would be repaid. I have already referred to the email of 31 July 2001. It makes no reference at all to any repayment date and it is a fact that Mr Heptinstall did not contact Mr Daniels later in August when he discovered what was in fact happening to complain to Mr Daniels that he, Mr Daniels, had misled him. Nor does the email spell out who the individuals behind the venture are. It does, however, give a clear impression that Mr Daniels was intimately involved in it. He refers constantly to "we" and when giving the bank details states "Our bank details are ..... " .. Nonetheless, Mr Daniels denies that he told Mr Heptinstall that he needed the money for his own business and denies that he told Mr Heptinstall that MAL was his company, although he accepts that he made no mention of Mr Bielecki to him. It was put to Mr Daniels that he told Mr Heptinstall that the loan would be repaid in 7 to 10 days. Mr Daniels was unable in cross-examination to say for sure whether this was so although with more friendly questioning from Mr Bielecki he said that he did not say anything about the period for repayment.
39. I turn now to Mrs Heptinstall's evidence .. It has to be said that there have been significant inconsistencies in the totality of the evidence which she has given to this court and the Kingston County Court. She has, less surprisingly perhaps, been inconsistent in what she has said to Mr Bielecki at various times, both on paper and on the telephone (the bundle containing transcripts of a number of calls). There are also two letters, which were produced later in 200 I which purport to be written on 31 July and 1 August 200 I between Mr and Mrs Heptinstall. In the first, he wrote to her as follows:

"Regarding the purchase of Trade and Assets of Microleve International Ltd.

I received a phone call from David Daniels today, saying that you were in desperate need of £50,000 to rescued the company from a bogus purchaser.

David has offered the Ace Patent to me as security against this money, which, quite frankly, I am not prepared to accept. However, I would be prepared to purchase the Trade & Assets in order to save them from getting into the wrong hands, and then licence you to use the Patent with the complement of royalties at 2% of the sales. If you are happy with this arrangement, then please confirm today. I will then Chaps the money into your account tomorrow."

In the purported reply, she accepted that proposal, asking that the money be transferred to MAL's account.

40. Mrs Heptinstall explained in her witness statement that these letters were produced in November 2001, after legal proceedings had been threatened by Mr Bielecki, as a record of conversations. She supplied them, she says, to her solicitors saying that "as the letters had never been signed or sent they were of no use" and that they were never used (a matter which is disputed by Mr Bielecki). It is now clear, and this is now accepted, that no discussion such as is recorded in the letters took place on or around 31 July and 1 August - indeed, they had not even spoken to each other by then - and -it also now accepted that there was never any agreement that Mr Heptinstall should purchase the MIL assets, simply that his loan (to whoever it may have been made) is secured over the Patent. The existence of these purported letters and the various inconsistencies in what Mrs Heptinstall has said. in her evidence, make me very cautious about accepting uncritically her evidence about what actually did happen in the period shortly before and shortly after 1 August 2001. I take all of that into account in assessing the totality of her evidence.
41. I deal next with what Mrs Heptinstall has to say about Mr Daniels' role. In his witness statement, he suggested that he was acting on behalf of MAL. In cross-examination, he accepted that the position was not so clear and that the distinction between Mrs Heptinstall and MAL was not always drawn. She regarded him as acting for MAL and herself, his function being to find finance for the venture. I accept that evidence, but is does not answer the question of central importance: On whose behalf did Mr Daniel's actually effect the £50,000 loan.
42. I move on to what she has to say about the new deal. Her evidence is that the administrators, with whom she had remained in contact since the rescission of the sale and purchase agreement at the end of April had informed her that she they were prepared to enter into a new deal for her to acquire the MIL assets with another investor. This, I do not, doubt, is correct. It would be no concern of the administrators to see that Mr Bielecki was involved in the future and, indeed, having had to serve statutory demands and bankruptcy notices on him in relation to his guarantee under the earlier deal with PPL, they may have even preferred that he was not involved.
43. Mrs Heptinstall says that, with the help of Mr Daniels, she then set about finding a new investor for the business. Mrs Heptinstall knew a Mr Stephen Scholefield who was frequently looking for new investment opportunities. Mr Scholefield undertook some due diligence in relation to the business following which a meeting was held on 30 July 2001 attended by Mrs Heptinstall, Mr Scholefield and Mr Daniels. Mr Scholefield said that he considered it was not viable to continue the business, the Company (ie MAL) was insolvent, on the verge of eviction from its premises, had no cash flow and virtually no product left to sell. He said that he was not prepared to pick up the pieces of someone else's mess but that he would be interested in buying back the trade and assets from the administrators and then doing a deal with just Mrs Heptinstall. Mr Daniels did not deal with this meeting in his witness statement and was not cross-examined about it. I see no reason to doubt what Mrs Heptinstall says about it.
44. Mrs Heptinstall says that, on the next day, she had a phone call from the administrators and was told that "her investor" (ie Mr Scholefield) had just been in and pledged £45,000 for the MIL assets. She told them that he was not "her investor" and that they must not sell to him and she explained what had happened at the meeting the day before. She was told that if she paid £46,000 the following day, they could stop the deal with Mr Scholefield. I accept that evidence.
45. She then says that she phoned Mr Bielecki to tell him what had happened. Precisely what she said to him is not clear. However, he said that she should speak to Mr Scholefield and record the conversation which she did on 2 August 2001. Mr Scholefield, as is apparent from the transcript, would not back down. Mrs Heptinstall reported this to Mr Bielecki who then drafted a letter on PPL's notepaper threatening legal action a letter which Mrs Heptinstall gave to Mr Scholefield that evening. I accept that evidence.
46. As is clear, on 1 August 2001, £46,000, which had come from the £50,000 paid by Mr' Heptinstall into MAL's bank account, was transferred to Hammond Suddards Edge. She says that~ on 2 August 2001, the administrators telephoned her to say that Mr Scholefield wanted to up his bid. They said that the person who had the most money in their account by noon on 3 August would be the successful bidder. She said that this was not fair. It was then suggested by the administrators that she attend at Hammond Suddards Edge on 3 August ready to buy. They said that they would call her 5 minutes before the noon deadline to let her know how much would secure the deal. They told her to have some cash ready in case she had to top up, the offer. I accept that evidence. I will come to the meeting on 3 August in due course,
47. Meanwhile, Mr Daniels had been active in obtaining the £50,000 payment from Mr Heptinstall. Mrs Heptinstall was not involved in the discussions and cannot give first hand evidence about what happened between Mr Daniels and Mr Heptinstall. What she does say in her witness statement, however, is this.

"74. On the morning of Wednesday 1^st August 2001, Mr Daniels called to say that it was done and that £50,000 was being transferred that day. He said that he had spoken to Ms John, my P A, and that she had organized a rolling transfer to the Hammonds Suddards Edge account as per their instructions. When I asked which account the money was being sent to, Mr Daniels informed me that it was the Microleve Ace Ltd bank account. I said that I did not think that was a good idea as that company was insolvent and we did not want a repeat of what happened to Microleve International Limited. Mr Daniels told me not to worry and said that we could transfer it to another company afterwards. I said that bearing in mind all the problems that we had had with Mr Bielecki and the fact that he still owned all the shares it would be difficult. I suggested that he give me the Second Defendant's phone number and said that I would call him with details of another bank account. I telephoned the Second Defendant but it was too late, the money was not only in, but £46,000 of it had been transferred to Hammonds Suddards Edge"

48. At the resumed hearing, she was cross-examined on this aspect. She says that she did not give Mr Daniels and bank details but that it was Ms John (her PA) who did so and that she, Mrs Heptinstall was not available to deal with it. When Mr Daniels told her what had happened she objected and her answer to Mr Bielecki's question Why did you object was that it was "not MAL's deal; it was my deal". It was never intended, she said, that MAL would be the owner of the Patent. The administrators has said that the new deal could be through her. I accept Mrs Heptinstall' s evidence on this aspect. It is clear to me that, if Mr Daniels had asked her before Mr Heptinstall had made any payment, who was intended to acquire the MIL assets and who should the loan from Mr Heptinstall be made to, the answer would certain not have been MAL. It might have been Mrs Heptinstall herself, or it might have been another company which she owned and which acquired it. That, however, is not an answer to what the legal result of what undoubtedly did actually happen - transfer of £50,000 to MAL's account and onward transfer of· £46,000 to Hammond Suddards Edge - which is, a matter I will come to later.
49. Before 2 August 2001, Mrs Heptinstall had met or spoken to Mr Heptinstall. She states (and this is the thrust also of Mr Heptinstall's evidence) that, on that day, he was travelling the South Coast to start a sailing holiday. He must have been given Mrs Heptinstall's contact number and been told of her involvement by Mr Daniels. He phoned to say that he had not, of course, carried out any due diligence but had been happy to help a friend (ie Mr Daniels) in need. However, he was concerned about going on holiday and not knowing where his £50,000 had gone saying that he would like to call in en route. Mr Bielecki says that he doubts this meeting took place at all and certainly does not accept what Mrs Heptinstall says took place (see next paragraph).
50. Mrs Heptinstall then says this:

a. She explained that she was the brains behind the project, but that Mr Bielecki currently held all the shares in MAL (which was true, although she was entitled to receive 65% of them).

'b. Mr Heptinstall asked who the other investors were and whose money we were waiting for. She was confused by this because there was at this stage no proposed investor of whom she knew. She mentioned Mr Lee with whom there had been some discussion but he had gone on holiday for 3 weeks,

c. Mr Heptinstall informed her that Mr Daniels had led him to believe that MAL was his company. He told Mrs Heptinstall that he had been told that she was the inventor of the device, but had been told nothing about Mr Bielecki's involvement in MAL. He also told her that Mr Daniels had said that this was to be a temporary . loan and that he would get his money back in 2 weeks. He was nervous about the transaction and not at all happy that his money had gone into MAL's account. He did not know Mr Bielecki, who would have control over his money, and Mr Daniels had lied to him about getting his money back. He asked what security could be given for his loan while the funding was sorted out.

d. She told him not. to worry because the administrators had told her that she could place the deal wherever she wished. She told him that things had taken place in the course of a few hours (quite clearly there was indeed what might be described as panic at her end) and that a new company had not been formed to receive the MIL assets.

e. Since Mr Heptinstall had thought that he was lending the money to Mr Daniels, or at least, a Daniels vehicle which" he believed MAL to be, Mrs Heptinstall agreed that it was right that the assets should put into the name of Mr Daniels or of Mr Heptinstall. On the assurance that that would be done, it is said (by both of them) that he would be "happy to proceed" otherwise he would have to withdraw his money.

51. On 3 August 2001, Mrs Heptinstall attended at the offices of Hammond Suddards Edge with Mr Daniels. I should set out paragraphs 80 to 82 of Mrs Heptinstall's witness statement:

"80. It seemed only right that as the Second Defendant had thought he was lending the money to Mr Daniels, either he or Mr Daniels should hold the asset. The Second Defendant recognized that this made me very vulnerable and asked whether I was happy trusting a stranger. I said that anyone prepared to lend a friend £50,000 on the spot had to be trustworthy and pointed out that I was the business and they would not get very far without me. The Second Defendant then said that if it was possible to give him that assurance he would be more than happy to proceed, otherwise he would have to withdraw his money.

I then re-affirmed that if we didn't stand by this promise, which was a condition of the loan, the Second Defendant wished to withdraw his money. We then agreed that Mr Daniels would sign the contract in the absence of and on behalf of the Second Defendant. He would then transfer the asset to the Second Defendant upon his return."

52. Mrs Heptinstall was not cross-examined on these paragraphs. Mr Daniel does not deal with the meeting in his witness statement and was not cross-examined on these aspects, although he did, as I have already recorded, say that the reason why the agreement was put into his name was to avoid Mr Bielecki having any interest and because of Mrs Heptinstall's own financial position. Mr Bielecki did not seek to put in any additional evidence from Mr Daniels on this aspect once he had received the evidence of Mr and Mrs Heptinstall.
53. The administrators phoned Mrs Heptinstall as promised shortly before midday. She was told that the price would be £47,000 to clench the deal. She accordingly attended the meeting, with Mr Daniels, and the additional £1,000 was paid by her. The source of the £1,000, she says, was the £50,000 payment which went into MAL's bank account. I accept that evidence. And we know from the documents that Mr Heptinstall' s company was substituted as the purchase under the agreement and then Mr Heptinstall became transferee of the Patent itself. However, as is now accepted, the Patent was vested in Mr Heptinstall only as security. The question remains as to who was the owner subject to the discharge of that security by repayment of his loan.
54. Mrs Heptinstall says that, the day after the signing of the agreement, Mr Bielecki phoned her to see if the deal had been done. (There is, of course, a dispute about the position at this stage: Mr Bielecki says that the agreement between them was still subsisting, so that he would be expecting the transaction to be for the benefit of them both, whereas Mrs Heptinstall says that that agreement was at an end, but that she was nonetheless prepared to give Mr Bielecki a small share for the work he had done and, no doubt, to keep him off her back as she would put it: this would account for Mr Bielecki's continued involvement). She says that she told him that it had completed and, on his further questioning, explained that Mr Heptinstall had insisted that his name should be on the contract or he would withdraw his money. To this Mr Bielecki is said to have replied that this was a lawyer's worst nightmare (and unsurprising comment if in fact made); he asked how Mrs Heptinstall knew she could trust Mr Heptinstall as he was a total stranger. She brought the conversation to an end.
55. There is disagreement about what was said in this conversation. I am sure, however, that there was some conversation and it seems inherently likely that the sorts of issues mentioned would have been raised. It probably makes no difference, because what is clear is that there were further communications between Mr Bielecki and Mrs Heptinstall, leading up to an email dated 16 August 2001 from her to him. It includes the following

"Just a quick line to say thank you for coming to the rescue last week and loaning Microleve £50,000. I would like to confirm that this money arrived in our bank account .....and has since be used for the purposes intended. I would like also to confirm the receipt of £10,000 received on .... to help with the cashflow."

56. Now there is a problem with this email It is addressed to "[email protected]" whereas his address should have been "[email protected]". It is said he did not receive it and that this accounts for the fact that he did not challenge it (as indeed he did not at the time). I think that that is probably correct. .
57. Nonetheless, it is clear that it was sent and it looks like an admission by Mrs Heptinstall that the £50,000 was a loan to MAL. It is said on her behalf that the reference in the first sentence to "Microleve" is to the project or the venture rather than to MAL. But I cannot accept that. It is not a natural reading, especially (i) when read with the draft which was in Mrs Heptinstall's handwriting on MAL headed notepaper and (ii) bearing in mind that the £10,000 additional loan was made (and is accepted by Mr and Mrs Heptinstall) as having been made to MAL.
58. Mrs Heptinstall's explanation for this email is that she sent it because Mr Bielecki told her to do ·so. It is perfectly clear that Mr Bielecki had input into the email, since he has made some amendments on the draft. It is, I consider, highly unlikely that Mrs Heptinstall would have decided, of her own initiative, to send such an email. I am satisfied that it was Mr Bielecki who wanted this email to be sent, and he no doubt wanted it in order to preserve his own position vis a vis the venture.
59. What it is more difficult for Mrs Heptinstall to explain is why she signed an email which described the loan as one to Microleve if, as she says, she never intended the MIL assets to belong to MAL. This is a point to which I will return.
60. I turn next to the evidence of Mr Heptinstall. In his witness statement he explains that he received a phone call from Mr Daniels on the afternoon of 31 July 2001 asking for financial help. Mr Daniels told him that he needed £50,000 to prevent Mr Scholefield from buying a patent from the administrators of a company that he was involved with. He says that Mr Daniels assured him that he could have his money back within 7 to 10 days; because he was a trusted friend, he agreed to lend him the £50,000. He refers to the email of 31 July 2001 which I have already mentioned when considering Mr Daniels' evidence. He says that the potential for conversion to equity had not in fact been discussed and that it was not discussed subsequently. He says that Mr Daniels told him that he was working on a medical equipment project with Mrs Heptinstall and that he was running the business and responsible for fund raising in return for "sweat equity".
61. He says this, about which there is no dispute: "I should mention. that when Mr Daniels telephoned me on 31 July 2001 he did NOT advise me that the company he was asking me to put my money into was in fact owned by a struck off/ex bankrupt lawyer nor that it was insolvent, struggling to pay its staff and close to being evicted from its offices." He says "I lent it to him and to no one else".
62. He says that on 1 August 2001, after he had transferred the money to MAL's bank account, he had a phone conversation with Mrs Heptinstall as a result of which it was agreed that he would break his journey to the South Coast the next day in order to meet her at MAL's offices. His account of the meeting which took place the next day is this:

a. Mrs Heptinstall explained the past history of MIL which was in the hands of administrators.

b. She explained that Mr Bielecki held 100% of the shares in MAL. She had struck a deal with him involving a 65/35 split of the shareholding in her favour, but that she had never been given her shares.

c. Mr Heptinstall told her that Mr Daniels had led him to believe that Mr Daniels himself and Mrs Heptinstall owned MAL.

d. Mrs Heptinstall said she had been advised by the administrators to wait until the deal with PPL had fallen through after which she could have a new deal herself with them.

e. He was shown the fax of 8 May 2001 from the administrators in which they stated that if, by 14 May, the outstanding instalments under the PPL agreement had not been paid, the administrators would be free to re-sell to a third party such as MAL.

f. He says he was very concerned having just put £50,000 into MAL's account at the say-so of a friend with no security. He asked Mrs Heptinstall about the return of his money within 7 to 10 days which she replied was unlikely as no other monies had been committed to the deal.

g. His immediate reaction was to ask for his money back but after talking the position through, he agreed to let it remain provided that he was given security of the Patent, described by him in his witness statement as MIL's patent.

63. He says that he was unable to attend the meeting the next day, so that Mr Daniels signed the documents on his behalf with the understanding that they would be transferred to him upon his return from holiday. There is, however, no suggestion of a discussion between him and Mr Daniels after this time; in referring to an understanding, Mr Heptinstall must, I think, be referring to the discussions between Mrs Heptinstall and Mr Daniels which she refers to in her evidence and which I have already recorded.
64. Returning to Mr Daniels, I am sure that he regarded Mrs Heptinstall as in charge - as he says she was managing director of MAL - and would have followed her directions. For example, if Mrs Heptinstall had instructed him that the loan was to be to PPL rather than MAL, I have no doubt that he would have ensured that the payment was made to PPL and, given that that was also a joint Heptinstall/Bielecki company, it would surely have caused him no surprise. I use that example to show that Mr Daniels was not concerned with obtaining finance for the venture - the acquisition and development of the Patent rather than with the identity of the vehicles through which the venture would be conducted. Although Mr Bielecki relies very much on the June 2001 appointment of Mr Daniels on behalf of MAL which I have already referred to, that was concerned principally with the development of MAL's trading business: the acquisition of the MIL assets was something different which had originally been intended to be by PPL (and positively not by MAL). There is clearly nothing inconsistent with the terms of that appointment in Mr Daniels having a wider-ranging brief to acquire finance for the acquisition of the MIL assets for entities other than MAL. For instance, if Mr Daniels had found an investor willing to go ahead but who did not wish to become involved in MAL (as was Mr Scholefield's position), the vehicle through which Mrs Heptinstall and perhaps Mr Daniels himself would have acquired that interest would have been some other entity. Achieving that result would have been precisely what Mrs Heptinstall involved him for, and MAL could have not complained if he did so.
65. My conclusions in the light of all the evidence which I have seen and heard (which goes well beyond the important parts which I have recorded at some length) are as follows.
66. Mrs Heptinstall did not consider by the end of July that she was still locked into an agreement with Mr Bielecki for him to retain 35% of the ongoing enterprise. Whether she is right or wrong in her view is not a matter for me to decide in determining the preliminary issue which is before me. It is more likely than not that Mr Bielecki himself appreciated, by that time, that that was Mrs Heptinstall's view even though he fundamentally disagreed with it.
67. Accordingly, Mrs Heptinstall believed that it would be perfectly possible for the acquisition of the MIL assets to be made by her with or without new investors and that the vehicle for acquisition was a matter for her. It did not need to be MAL.
68. Mrs Heptinstall considered the medical device to be her invention which she was entitled to exploit as she wished - albeit that she would be wrong in that if in fact her agreement with Mr Bielecki remained binding on her.
69. Mr Daniels did not really distinguish between Mrs Heptinstall and MAL in his hunt for financial backers. His concern was to secure the venture: the vehicle was of no real consequence (provided that he would end up with some share in it).·
70. In asking Mr Heptinstall for £50,000, Mr Daniel's concern was ensure that Mr Scholefield was beaten off. I consider it more likely than not that, in his initial discussion with Mr Heptinstall, he represented that he was central to the running of the venture(and to be fair to him he did have some involvement and hoped to become a shareholder). But he did not tell Mr Heptinstall about Mr Bielecki's involvement or history or that Mr Bielecki still retained 100% of the shares in MAL. I also consider it more likely than not that he did tell Mr Heptinstall that the money would be needed only in the short term, although whether that was only 7 to 10 days is less clear. I think his email of 31 July lends some support to that conclusion In it, he speaks of simply leaving the £50,000 in place so that "we could convert [ie to equity] at an optimum rate, but it would need to be at least 90 days". Clearly, the loan would be for a shorter time if optimum rate conversion was not required. I also consider that the email give rise to a reasonable expectation on the part of Mr Heptinstall of receiving interest at the rate of 15% .pa.
71. Clearly, by 1 August 2001, Mr Heptinstall would have believed that the vehicle through which the venture was to be operated was MAL - although what little he knew about MAL gave him no indication that MAL was not really Mr Daniels' company, or at least one in which he has a substantial interest, and he knew noting of Mr Bielecki's involvement. It is entirely uncertain on the evidence which I have heard whether the loan which he made was to Mr Daniels or to MAL - I certainly do not think that, at this stage, it could be treated as a loan made to Mrs Heptinstall. Mr Daniels says that the loan was not made to him and he does, of course, gain support from that from the 16 August email which identifies MAL and gives MY Heptinstall various options. But that email was not, in my view, a contractual document of any sort. He also gains support for that conclusion' from the fact that the money was actually paid into MAL's account. But against that, Mr Heptinstall was producing the money on Mr Daniels' say so without any due diligence of any sort on MAL. It is perfectly possible to view the loan as one made to Mr Daniels with the money, at Mr Daniels' direction, being paid into MAL's bank account for the purpose of acquiring the MIL assets. But if it was a loan to Mr Daniels, it was transferred to MAL's bank account at his direction. Whether the loan was to MAL or to Mr Daniels (accompanied by his direction to pay the money to MAL), it seems to me that there is no escape from the conclusion that MAL become the beneficial owner of that money, even if only for the brief time in which it was in it account. I only add here that it was not argued that MAL received the money as agent or trustee for someone else. Accordingly, it follows that the money transferred to Hammond Suddards Edge was MAL's money, although it must be remembered that the money was only in MAL's hands for a short time before £46,000 of it was transferred across.
72. But that is not an end of the matter. Mr Heptinstall provided the money, quite clearly, because he was a friend of and trusted, Mr Daniels. He thought he was lending money in order to assist a venture in which Mr Daniels, had a significant interest. He was told nothing about Mr Bielecki's involvement. I accept his evidence that he would not have put up an unsecured loan of £50,000 if he had been told about this at the outset. Mr Daniels' representations which led to the making of the loan were, in my judgment, material misrepresentation which would have entitled Mr Heptinstall to demand his money back. Quite probably, the loan was, in any event, repayable on demand so that he could have insisted on its repayment. His case, however, for return of the money would have been stronger than that since he might have been able to claim the return of the actual fund which represented his loan, that is to say, as to £46,000, the money which went to Hammond Suddards Edge.
73. That makes it necessary to move on to the events of 2 and 3 August 2001. I accept the evidence of Mr and Mrs Heptinstall that they did meet on 2 August 2001 and reject the doubts which Mr Bielecki expressed about that. It is plain that they discussed the position of MAL since it was the very purpose of the meeting for Mr Heptinstall to learn what he could in the absence of any due diligence. It is inconceivable that he would not have been told something about the history of MIL and how MAL had come into the picture. In that context, it is also inconceivable that Mr Bielecki's involvement would not have been explained - in particular that he retained 100% of the shares in MAL. The failure of Mr Daniel to give that information to his friend in persuading him to part with £50,000 would have been enough to shake anyone's faith. I accept his account of the meeting as I have set it out above.
74. Mrs Heptinstall's account of the meeting, whilst not inconsistent with what Mr Heptinstall said, was fuller. But I accept her account also.
75. However, there is nothing in the evidence which Mr and Mrs Heptinstall have given in relation to either the 2 August or 3 August meeting which suggests that they considered or discussed in detail the status of Mr Heptinstall's loan or the underlying ownership of the MIL assets and in particular the Patent. The concern seems to have been· to ensure that Mr Heptinstall's loan - to whomsoever it was made - was secured; and that the acquisition was to be in Mr Daniel's name (and then eventually in Mr Heptinstall's, or one of his company's, name)in order to achieve that security. There is nothing to suggest that Mr Heptinstall asserted his right to recover his loan to MAL (whether by making a demand or by asserting misrepresentation on the part of Mr Daniels) and then agreed to recategorise it as loan to Mrs Heptinstall or one of her companies: indeed, since Mr Heptinstall has claimed that the loan was to Mr Daniels, one would not have expected him to do so.
76. Nor is there anything in the evidence to suggest that acquisition in the name of Mr Daniels on 3 August 2001 was other than as security. Again, even if the loan from Mr Heptinstall was made to Mr Daniels, it was MAL's money which was used to acquire the MIL assets and there was, as at the meeting on 2 August 2001, no discussion about treating the money other than as MAL's money.
77. Accordingly, I reach the conclusion that the MIL assets were purchased with money which belonged beneficially to MAL so that the MIL assets belong to MAL. It has not been argued that the circumstances under which MAL thus acquired the beneficial ownership of the assets (subject to Mr Heptinstall's security) give rise to any claim by Mrs Heptinstall to that beneficial ownership and it is difficult to see how such a case could get off the ground on the evidence which I have heard.
78. This conclusion is consistent with the contents of the email dated 16 August 2001 which Mrs Heptinstall sent to Mr Heptinstall - she says on the instruction of Mr Bielecki who certainly had a hand in the drafting. It is also consistent with (a) the retention by MAL of the balance of the £50,000 apart from the £46,000, plus £1,000 paid to the administrators and (b) the making of two further loans by Mr Heptinstall to MAL. However, I wish to emphasise that I have not, in reaching my conclusion, relied on any of those factors. Each of them is open to another explanation which does not support Mr Bielecki's case. I mention them only to show that I have not overlooked them.
79. The conclusion that MIL assets were acquired by MAL makes it unnecessary to consider the issue whether, in any event, Mrs Heptinstall' s position as a director of MAL made it impossible for her to acquire those assets personally in any event. My answer to that is that it would not have done so. The reason for this is that the potential acquisition of the MIL assets was not a corporate opportunity of MAL. At an early stage, when the agreement between Mrs Heptinstall and Mr Bielecki was clearly still subsisting MAL was only a trading entity; it was PPL which was to acquire the MIL assets. I can see that, had PPL survived, it might have been said against Mrs Heptinstall that the potential acquisition was a corporate opportunity of PPL. But PPL no longer survives and nobody is entitled to assert that opportunity against Mrs Heptinstall. I see nothing which would have obliged Mrs Heptinstall to forgo what was really her opportunity in favour of MAL.
80. I reach the conclusion that the MIL assets were acquired by MAL with regret. It seems to me that, if Mrs Heptinstall herself had borrowed the £50,000 she would have been entitled to acquire the MIL assets herself. The opportunity was really hers and not that of MAL (although. of course, such acquisition would have been subject to whatever rights subsisted as between her and Mr Bielecki under their earlier agreement but she maintains that those have come to an end). But equally, and unfortunately for her, there was nothing to prevent MAL from acquiring the MIL assets: it did not acquire them in circumstances under which it became obliged to account to Mrs Heptinstall. It might have been possible for her to have rescued the situation on 2 or 3 August 2001 by agreement with Mr Heptinstall but that was not done, and it is now far too late to do so.
81. Mr Bielecki has argued that Mr Heptinstall's loan is not .secured. However, in the light of the facts as I have found them, it is clear that Mr Heptinstall was prepared to continue (and not to call in his loan) only if he had security: and that security was provided by vesting the Patent in him. In my judgment, the Patent in his hands stands as security for his £50,000 loan together with interest at 15% to reflect the email of 31 July 2001 from Mr Daniels.
82. Mr Bielecki also argued that the £50,000 loan had been converted into equity. In the course of argument, I was unable to see any foundation for that assertion on the evidence which had been given. I think that Mr Bielecki in fact abandoned the point - he certainly stopped arguing it. But if he did not, I need only repeat that there is nothing in the evidence which gets remotely near establishing that such a conversion took place. At the very most, there was mention of it as a possibility.
83. Accordingly, in relation to the preliminary point, I rule that the MIL assets are assets of MAL; but they are subject to a security interest in the hands of Mr Heptinstall. He in fact has the legal title to the Patent vested in him. He may take such steps as he thinks appropriate to enforce his security. In the course of doing so, it may be that Mr Bielecki will wish, and be able, to seek some sort of account relating to the use and exploitation of the Patent over the last few years. I say nothing about that at all.