Anwar Gangat v Yusuf Jassat
| Jurisdiction | England & Wales |
| Judge | Eason Rajah |
| Judgment Date | 01 October 2021 |
| Neutral Citation | [2021] EWHC 2644 (Ch) |
| Docket Number | Case No: HC-2017-001058 |
| Court | Chancery Division |
[2021] EWHC 2644 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY DIVISION
BUSINESS LIST (ChD)
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
Eason Rajah QC
Sitting as a Judge of the Chancery Division
Case No: HC-2017-001058
Arfan Khan (instructed by Pandya Arbitration Global) for the Claimants
David Peters (instructed by Edwin Coe LLP) for the Defendant
Hearing dates: 16, 17, 18, 21, 22, 23 and 29 June 2021
Approved Judgment
Eason Rajah QC
This trial was conducted on a fully remote basis. It is the trial of liability pursuant to the order of Deputy Master Nurse dated 9 March 2020 which directed a split trial. That order identifies the issues which might need to be determined to establish liability rather than quantum and disclosure has been restricted to those issues. I have concluded that it is not necessary to determine every issue identified in that order to determine the issue of liability.
This judgment is structured as follows:
A) Introduction
B) Approach to the evidence
C) The witnesses
D) The documentation
E) The facts (and findings)
The Jumbo Group and SARS
The expatriation of funds from South Africa
The Swiss bank accounts
Ownership of the funds in Swiss bank accounts
Investment in UK real estate
Breakdown in relations in 1998
The Richmond Trust
The Hathurani Proceedings
The Richmond Lodge Document
Grant Thornton report
Emails
F) The claim for an account – the law
G) Conclusions
A) Introduction
The Claimants, Anwar Gangat and Surendra Bhawan, are businessmen resident in South Africa. The Defendant, Yusuf Jassat, is a British national, resident in London, who has a number of business interests, including a property related business in partnership with his wife which trades as Richmond Lodge Management.
The Claimants were, with two other South African businessmen (Edrees Hathurani and Dinesh Seetha), the principal shareholders in that part of the Jumbo Group of companies which carried on a legitimate cash and carry business in South Africa from the mid-1980s until the sale of the business in 1998. During this period an “off book” cash business (“the cash business”) was run alongside the legitimate business of the Jumbo Group companies. The profits of the cash business were not declared to the South African Revenue and tax was not paid on them at that time. A portion of the profits from the cash business was expatriated from South Africa, in breach of South African exchange control requirements in place at the relevant time, and placed in Swiss bank accounts.
The Claimants' case is that the monies in the Swiss bank accounts belonged to them and to Mr Hathurani and Mr Seetha in shares agreed between themselves. The Swiss bank accounts were placed under the control of the Defendant. Initially, they say, the Defendant obtained their consent to the application of the monies in the Swiss accounts in the purchase of UK real property on their behalf, but over the years they lost oversight of the Defendant's actions with their funds. The Claimants now seek orders for accounts and inquiries to establish what has become of their share of the funds in the Swiss bank accounts under the Defendant's control, and equitable compensation for breach of trust and breach of fiduciary duty.
The Defendant accepts that he had some control of the Swiss accounts. He puts the Claimants to proof of their interest in the funds in those accounts. No positive case has been pleaded by the Defendant, but at trial it was argued that the Claimants cannot discharge the burden of proving their interest because the correct legal analysis of the position in South Africa is that the profits of the cash business are really the property of the Jumbo Group companies which carried on the legitimate cash and carry business.
If the Claimants can overcome that hurdle, the Defendant says that he managed all the Swiss accounts in accordance with Mr Hathurani's instructions and he says that so far as he was concerned the monies were Mr Hathurani's, or, at least, his to deal with as he thought fit. In essence he says that any duty he has to account in respect of the Swiss bank accounts is a duty to account to Mr Hathurani, not the Claimants, and that any claim the Claimants may have in respect of those accounts is against Mr Hathurani.
Mr Hathurani brought proceedings in the High Court in 2008 in relation to the Defendant's handling of the funds in the Swiss accounts and those proceedings were compromised in 2011 on the basis that the Defendant would pay Mr Hathurani £8,750,000 by 31 January 2012. The Defendant no longer pursues his pleaded case that Mr Hathurani was acting on behalf of the Claimants in those proceedings and that the compromise of those proceedings extinguished any claim they may have in the expatriated funds. The Defendant does assert that it would be an abuse of process for the Claimants, who he says chose not to join those proceedings, to seek to assert an interest in any asset claimed by Mr Hathurani in the Hathurani Proceedings. This is significant because Mr Hathurani claimed that the Defendant had acquired a shopping centre at New Ash Green (“ New Ash Green”) for Mr Hathurani, whereas the Claimants contend that they have a 20% interest in it.
The Defendant says that he acquired only one property, called Eastover, for the Claimants in 1991 using a Jersey corporate vehicle for that purpose. He says the Claimants agreed with him in 2009 that he should pay them £653,009 in respect of their interest in Eastover which would be treated as an interest free loan. He accepts that it has not been repaid.
The Claimants say that the Defendant controls much more property acquired with their funds than simply Eastover. They rely on a document which the Defendant accepts that he prepared and signed in 2009 in which he acknowledges holding in addition to Eastover (and its rent and investments made from its rent) further sums in cash of approximately $7.5m and a 20% share of the shopping centre at New Ash Green. The document was also signed by his daughter and it has been called the “ Richmond Lodge Document” in these proceedings. At the pre-trial review I directed that the original Richmond Lodge Document be produced by the Claimants for inspection. The original which was produced is identical in all respects save that it is clear from the placement of the signatures that it is a different document to the document which was disclosed by both sides. The Defendant alleges that this recently produced document is a forgery.
Other issues were raised by the pleadings which have fallen by the wayside. There was on the face of the pleadings a dispute between the parties as to the consequences of the South African tax and foreign exchange evasion involved in the expatriation of the funds in the first place. Expert evidence from South African lawyers was filed and served by both parties. There is broad agreement between the experts and neither were called as witnesses. In light of their evidence much of the dispute on illegality has fallen away and the Defendant restricts his argument on the doctrine of illegality to the argument that there should be a stay of any money judgment against the Defendant. If the Claimants can establish that it was their money which was used to acquire Eastover, he says the only order which should be made is an order for the payment of £653,009 and that such order should be stayed until the Claimants have secured that its enforcement would not be a further breach by them of South African exchange control regulations.
B) Approach to the evidence
There is a considerable conflict in the evidence. Both sides accuse the other of giving dishonest evidence.
In resolving the conflict of evidence in this case I have sought to adopt the approach described by Robert Goff LJ (as he then was) in The Ocean Frost [1985] 1 Lloyd's Reports 1 at p.57:
“It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses' motives, and to the overall probabilities, can be of very great assistance to a Judge in ascertaining the truth.”
This passage has been repeatedly cited with approval and applied by subsequent cases; see for example Bancoult, R (on the application of) (no3) v Secretary of State for Foreign and Commonwealth Affairs [2018] UKSC 3 at paragraphs 100–101.
I also note that the matters on which the witnesses have given evidence date back to the 1980's and 1990's. Where witnesses give evidence on matters which have taken place so long ago, there is bound to be detail upon which their memory cannot be expected to be reliable.
Ordinarily the court would be assisted by contemporaneous documentation. In this case, there are some contemporary documents available but it is a feature of this case that the South African businessmen were seeking to conceal their connection with the expatriated funds from the South African authorities. There was therefore an aversion to creating or keeping documentary records which might now be helpful to a court. There are subsequent events which may shed some light on the issues, and some of those events have generated documents. On any view the documentation which is available is not complete, and there is always a danger when the documentation available is incomplete that the picture that is disclosed is misleading. This is a particular danger where it is said that there has been deliberate suppression of relevant documents by one or other side in a case.
Notwithstanding these challenges, I do my best to assess the...
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Anwar Gangat v Yusuf Jassat
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