Barros Mattos Junior v and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Lawrence Collins |
| Judgment Date | 24 June 2005 |
| Neutral Citation | [2005] EWHC 1323 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC 01 00699 |
| Date | 24 June 2005 |
[2005] EWHC 1323 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Lawrence Collins
Case No: HC 01 00699
Mr Michael Briggs QC and Miss Kathryn Purkis (instructed by Peters & Peters) for the Claimants.
Mr Romie Tager QC and Mr Philip Kremen (instructed by Brecher Abram) for the
42 nd Defendant – Mr Sunil Sunderdas Vaswani.
APPROVED JUDGMENT
| I direct that pursuant to CPR PD 39A para 6.1 no official shorthand not shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic. (Mr Justice Lawrence Collins) |
Hearing: June 8 and 9, 2005
Mr Justice Lawrence Collins
I Background
This case concerns an enormous fraud perpetrated on a Brazilian bank, Banco Noroeste SA ("the Bank"), by a group of individuals based in mainly in Nigeria including the late Chief Anajemba and Chief Emmanuel Odinigwe. The total loss inflicted was $242.5 million, of which some $190.3 million was transferred from the Bank to third parties by means of electronic SWIFT transfers from an account of its Cayman Islands branch held in New York.
The loss came to light during the course of the sale of the Bank by its then shareholders. It is said that as part of the sale they reimbursed to the Bank the amounts that had been misappropriated and took an assignment of the right to recover them ("the Assignment"). The shareholders are the claimants in these proceedings and they bring this action pursuant to the Assignment. The validity of the Assignment will be an issue in these proceedings.
The principal third party recipient was Mr Naresh Asnani ("Mr Asnani"). Between April 1995 and January 1998 about $126 million was fraudulently transferred by means of SWIFT transfers into accounts in Switzerland which were maintained or under the control of Mr Asnani and various members of his family.
Mr Asnani was arrested in Miami in December 2002, and on March 23, 2005 he was convicted of aggravated money-laundering by the Geneva Correctional Court, which sentenced him to imprisonment for three years, a fine of 100,000 Swiss francs and expulsion from Switzerland for ten years.
II The transfers to Mr Vaswani
The present application concerns transfers of $6,500,045 between October 30, 1996 and August 25, 1997 by Mr Asnani from accounts in Switzerland to an account at Citibank, Geneva, which had been opened on July 11, 1996 by the forty-second defendant ("Mr Vaswani") under the name "Sarina". The money received into the Sarina account was the product of four transfers aggregating $5,500,000 from an account held by Mr Asnani with Citibank, Geneva ("the Excel Account"), and one transfer of $1,000,045 from an account of his with Lloyds Bank, Zurich ("the Landmark/Evershine Account"). Claims relating to a further $600,000 are not pursued: that sum is made of about $500,000 paid out of the Landmark/Evershine account "by order of Stallion" (the Stallion Group being Mr Vaswani's business vehicle) and of about $100,000 paid to Mr Vaswani's account at American Express Bank, London.
At the time of the transfers Mr Vaswani was living in Lagos. He now lives in Dubai, following his deportation from Nigeria in May 2003 (which is the subject of a legal challenge). In evidence in these proceedings Mr Vaswani has said that he was born in India in 1963 and came to live in England in 1974, where he was granted British nationality. In 1983 he took up residence in Nigeria. His father is a highly successful business man and he developed his own entrepreneurial talents. He established Nigerian companies bearing the name "Stallion", and developed a large business or importing into Nigeria, including cars. He also established a bank in Nigeria of which he was the principal shareholder. He estimated his own personal wealth at about £25 million.
He says that he first met Mr Asnani in the early 1980s, and over the years their families developed a social relationship. He and Mr Asnani were part of a tightly knit community of Hindu Sindhis, whose members traded and lived in Lagos.
The claimants rely on evidence given in the Swiss criminal proceedings by Mr Asnani and Mr Giovagnoni, the manager of Citibank Geneva that Mr Vaswani was the contact point for introducing Mr Asnani to Citibank Geneva so that the Excel account could be opened there. Mr Vaswani denies having introduced Mr Asnani to Citibank. The judgment of the Geneva Correctional Court in March 2005 convicting Mr Asnani states that in June 1997 Mr Asnani opened an account at Citibank Geneva, benefiting for that purpose from the recommendation of Mr Vaswani. But Mr Vaswani did not give evidence at the criminal trial.
The claimants rely on the fact that Mr Vaswani and Mr Asnani knew each other as part of the Indian community in Lagos, and say that Mr Vaswani knew that Mr Asnani was in business in a relatively modest way as an importer of electrical equipment and general goods from the Far East in importing white goods, and that there was no reason for him to be flush with dollars. They say that Mr Vaswani failed to ask any questions of Mr Asnani as to how it was he had in excess of $7 million to sell; as to whether the dollars belonged to him; as to how he or any other persons obtained them and they did so legitimately, and as to why he required payment for those dollars to be made in Naira and to third parties.
Mr Vaswani says that the receipt of the $6.5 million is to be explained by transactions, in good faith and as part of his normal commercial operations, in which he, on behalf of his main Nigerian trading company, Stallion Nigeria Ltd, purchased from Mr Asnani US dollars in exchange for Nigerian naira in Nigeria payable to, or to the order of, Mr Asnani. The dollars were used to pay for goods and materials purchased by Mr Vaswani's Nigerian companies on the international market.
III Proceedings
On November 1, 2000 a criminal complaint was laid by the claimants in Switzerland against Mr Asnani. In January 2001 Mr Vaswani's Sarina account was frozen by the investigating magistrate.
On February 19, 2001 these proceedings were started. Mr Vaswani was joined to these proceedings by order of Lightman J on February 3, 2003, when a worldwide freezing order was made against him in the total sum of $6.5 million. He was served in England while on a temporary visit. He was sued as a secondary recipient, in that he received the money from the primary recipient, Mr Asnani. The freezing order was subsequently replaced by undertakings and security being given by Mr Vaswani in respect of three flats that he and his wife own in London through a BVI company.
On February 28, 2003 Mr Vaswani applied (a) for the discharge of the freezing order on the basis of material non-disclosure and (b) for a stay of proceedings on forum conveniens grounds. On May 22, 2003 Sir Andrew Morritt V-C dismissed the applications. As regards the application for a stay, he held: (a) there was no natural forum given that the case involved a misapplication of money from an account held by the Cayman Island branch of the Bank in New York and which money was transferred to transferees in several countries; (b) six of the ten substantive defendants to the proceedings had addresses in England and the English courts had jurisdiction over them; (c) the conduct of Mr Asnani was central to the claims against all the substantive defendants and it would be inconvenient to have claims heard in different jurisdictions with the risk of conflicting findings; (d) the services and procedure provided by the Courts in England were preferable or superior to those of Nigeria. He made no determination as to the applicable law of the claims.
In the skeleton argument for the hearing before Sir Andrew Morritt V-C, it was contended on behalf of Mr Vaswani that what factors might put him on constructive notice was to be determined by reference to the proper law of the transaction between him and Mr Asnani, namely Nigerian law. That was a factor relied on in relation to the factors pointing to Nigeria as the appropriate forum. The claimants said that the applicable law of the receipt claims was likely to be Swiss law, and accordingly the governing law was a neutral factor in a contest between the English forum and the Nigerian forum. The fact that an issue of Nigerian law arose had been overplayed by Mr Vaswani, because it was not a central issue. In any event the issue of Nigerian law was a straightforward one and principles of Nigerian law were familiar to the extent that they were closely based on English law.
By the time of the hearing before Sir Andrew Morritt V-C the only issue of Nigerian law which was canvassed was relating to exchange control, and in deciding that Mr Vaswani had not satisfied him that the action or the claim was clearly and distinctly more appropriately tried in Nigeria than in England, he said that the issue of Nigerian law appeared to be a simple point of construction of the statute of a common law country which applied to that issue similar principles to those applied in England.
Mr Vaswani was served with the claimants' seven-times-amended particulars of claim on July 22, 2003, and he served a defence on September 29, 2003.
The particulars of claim did not raise any issue of foreign law.
In his defence Mr Vaswani admitted the underlying fraud, and that the other defendants received funds which had been misappropriated from the Bank. Mr Vaswani's defence to the claim prior to the proposed amendment was that, on behalf of various of his main Nigerian trading company, Stallion Nigeria Ltd, he purchased from Mr Asnani dollars on the well-established parallel currency...
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