Anwar Gangat v Yusuf Jassat
| Jurisdiction | England & Wales |
| Judge | Lord Justice Stuart-Smith,Lord Justice Warby |
| Judgment Date | 06 May 2022 |
| Neutral Citation | [2022] EWCA Civ 604 |
| Docket Number | Case No: CA-2021-000218 |
| Court | Court of Appeal (Civil Division) |
[2022] EWCA Civ 604
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Eason Rajah QC (sitting as a Deputy High Court Judge)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Stuart-Smith
Lord Justice Nugee
and
Lord Justice Warby
Case No: CA-2021-000218
David Peters (instructed by Edwin Coe LLP) for the Appellant
Arfan Khan (instructed by Pandya Arbitration Global) for the Respondents
Hearing date: 22 March 2022
Approved Judgment
Remote hand-down: This judgment was handed down remotely at 10.30am on 6 May 2022 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Introduction
This is an appeal by the Defendant, Mr Yusuf Jassat, against the decision of Mr Eason Rajah QC, sitting as a Deputy High Court Judge, ( “the Judge”) given after a trial on liability alone, in which he held that Mr Jassat was liable to account to the Claimants, Mr Anwar Gangat and Mr Surendra Bhawan, for the reasons given in his judgment of 1 October 2021 at [2021] EWHC 2644 (Ch) ( “the Judgment” or “Jmt”).
Mr Jassat appealed with permission of Arnold LJ on three grounds, but after hearing from Mr David Peters on his behalf we decided that the appeal should be dismissed. In this judgment I give my reasons for agreeing to the dismissal of the appeal.
Facts
I can take the facts with gratitude from the Judge's careful findings, set out with commendable clarity in the Judgment at [27]–[114]. They can be summarised as follows.
Mr Gangat and Mr Bhawan are businessmen resident in South Africa. In the early to mid-1980s they became minority shareholders in various companies in the Jumbo Group in South Africa, which carried on a cash and carry business. This was a legitimate business: its profits were declared to the South African Revenue Service ( “SARS”), and tax was paid on them. The other major shareholders were two more businessmen, Mr Edrees Hathurani and Mr Dinesh Seetha, and in general the shares were held as to 40% for each of Mr Hathurani and Mr Seetha, and 10% for each of Mr Gangat and Mr Bhawan, although there were other shareholders in some of the companies. I will refer, as the Judge did, to Messrs Hathurani, Seetha, Gangat and Bhawan together as “the South African businessmen” or simply “the businessmen”.
The cash and carry business was sold in about 1998. That led ultimately to a lengthy inquiry by SARS, opened in or about 2006, into the sale and its proceeds. In the course of that inquiry Mr Hathurani disclosed to SARS, as part of a settlement with them, that for a decade or so an “off-book” cash business had been run alongside the Jumbo Group's legitimate business. This was not run legitimately: its profits were not declared to SARS and no tax had been paid on them. The other three South African businessmen also settled with SARS, making similar disclosures by affidavit.
These disclosures also revealed that the majority of the profits of the cash business had been secretly expatriated from South Africa in breach of exchange controls and placed in Swiss bank accounts. Substantial sums were involved: the Judge referred to evidence that the cash business made profits between 1987 and 1997 of about R209m of which some R207m had been expatriated, and found that after deduction of commission paid to middlemen some R200m ended up in the Swiss bank accounts: Jmt at [41]. We were not told the sterling or dollar equivalent, and during this period it appears that the Rand steadily declined in value against both, but some calculations by Mr Peters in his opening submissions for trial suggest that average rates over the period (assuming payments at an even rate) were about R5.2 to the £ and R3.2 to the $1, which on this basis would make the total transferred to the Swiss bank accounts the equivalent of some £40m or $65m. That is consistent with evidence that by the late 1980s or early 1990s some $20m had accumulated in the accounts.
Mr Hathurani was the dominant figure amongst the businessmen and it was he who arranged for the expatriation to Swiss bank accounts. He had known Mr Jassat, a British national resident in London, since the 1970s, and Mr Hathurani arranged for accounts to be opened under Mr Jassat's control. Over the years many accounts were opened and closed at a number of banks. Mr Jassat had signing authority over them and eventually became the account holder of some of them.
It is not necessary to give the details of the accounts, but there was always a main account of Mr Hathurani's to receive the expatriated funds before division. It was agreed between the businessmen that the funds would be divided 40% to each of Mr Hathurani and Mr Seetha and 10% to each of Mr Gangat and Mr Bhawan. At some point in the late 1980s or early 1990s Mr Seetha and Mr Gangat came to London and met Mr Jassat (Mr Bhawan being content to let Mr Gangat look after his interests). The evidence was that by then about $20m had accumulated and it was time for the funds to be divided. They travelled to Geneva with Mr Jassat and new accounts were opened to receive the individual shares. One new account, called Camelot, was opened in the name of Mr Gangat to hold his and Mr Bhawan's share, and there was evidence that this then amounted to $4m (ie 20% of the total). Mr Jassat had a power of attorney over this account. From that point there were always accounts for the individual shares, controlled by Mr Jassat, although the accounts changed over time.
Thereafter funds would be expatriated and distributed in the agreed proportions. Mr Gangat and Mr Bhawan claimed however that a final $12m was not distributed because it was misappropriated by Mr Jassat. Their evidence was that over time Mr Jassat acquired a position of complete control over the Swiss bank accounts and only he knew what accounts existed and whose money they held. The Judge accepted that evidence. Mr Jassat accepted that he had never provided Mr Gangat and Mr Bhawan with an account of his dealings either with their individual accounts (Camelot and its successors) or with the main account.
Mr Jassat used funds from the Swiss bank accounts to invest in UK property, using Jersey companies, held by nominees for the relevant South African businessmen, to do so. Some idea of the scale of this can be obtained from a report by Grant Thornton in October 2012 ( “the Grant Thornton report”). HMRC had opened an investigation in November 2011 into Mr Jassat's affairs, and the report was produced by Grant Thornton on behalf of Mr Jassat to aid him in making a disclosure to HMRC. It identified 53 commercial and residential properties acquired between 1988 and 2005 by or on behalf of Mr Jassat, almost all of which had been acquired primarily for the South African businessmen, and 16 companies which had been set up for this purpose, three of which were for the benefit of Mr Gangat (and hence Mr Bhawan) and one for the benefit of all of them. Mr Jassat accepted that he had not provided any account to Mr Gangat and Mr Bhawan of his dealings with any of the companies which were created for them and which were managed and controlled on his instructions.
The sale of the Jumbo cash and carry business in 1998 caused a severe breakdown in relations between Mr Hathurani on the one hand and the other three businessmen on the other. Mr Hathurani became aggressive and threatening and refused to discuss the expatriated funds with them.
Then in 2004 the relationship between Mr Hathurani and Mr Jassat also broke down, after Mr Hathurani began to demand repayment of monies he said were due to him. Shortly afterwards Mr Jassat gave instructions to the Jersey nominees to transfer the Jersey companies to a Jersey trust called the Richmond Trust. This was a discretionary trust set up for the benefit of Mr Jassat and his family. Mr Jassat accepted that none of the businessmen were aware of the Richmond Trust. He said that he had given instructions to transfer the companies to the trust because he thought it would be safer, an explanation rejected by the Judge as not credible. The Judge considered it much more likely that they were transferred to improve Mr Jassat's position in his dispute with Mr Hathurani, but said that on any view Mr Jassat was not authorised to transfer companies held for Mr Gangat and Mr Bhawan to a trust for the benefit of his family, and this was simply a misappropriation by Mr Jassat of assets which did not belong to him.
In October 2008 Mr Hathurani began proceedings against Mr Jassat on the basis that his share of the monies in the Swiss bank accounts had been invested in UK real property pursuant to a partnership between them, and claiming in excess of £28m for partnership capital and profits. Those proceedings were in the end settled at the doors of the court on the basis that Mr Jassat had received no more than £7.5m of Mr Hathurani's money and would repay £8.75m by the end of January 2012.
For present purposes what is most significant is that in his Defence in that action Mr Jassat said that the monies which he had taken from two of the Swiss bank accounts had belonged to all four South African businessmen; and in his witness statement for the trial of that action, he said in particular that one property, a shopping centre at New Ash Green, was purchased with monies belonging to all four of them and hence was owned as to 60% by Messrs Seetha, Gangat and Bhawan. That was supported by a statement of truth, but was flatly contradictory to his evidence before the Judge in the present action, where he maintained that the New Ash Green property was purchased with Mr...
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