Chellaram v Chellaram (No. 2)

JurisdictionEngland & Wales
JudgeMr Justice Lawrence Collins
Judgment Date16 April 2002
Neutral Citation[2002] EWHC 632 (Ch)
Docket NumberHC 01 01700
CourtChancery Division
Date16 April 2002
Between
(1) VISHAL HARISH CHELLARAM
(2) ASHWIN HARISH CHELLARAM
Claimants
and
(1) LOKUMAL KISHINCHAND CHELLARAM
(2) MURLI TAHILRAM CHELLARAM
(3) LAL LOKUMAL CHELLARAM
(4) SHAM LOKUMAL CHELLARAM
(5) PISHU TAHILRAM CHELLARAM
(6) CHELLWOOD HOLDINGS LIMITED
(7) BERMUDA TRUST COMPANY LIMITED
(8) MOHAN SHEWAKRAM CHELLARAM
Defendants

[2002] EWHC 632 (Ch)

Before

MR JUSTICE LAWRENCE COLLINS

HC 01 01700

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand

London WC2A 2LL

As approved by the Court for handing down

Mr Patrick Lawrence (instructed by Anderson's) for the Claimants.

Mr Antony White QC (instructed by Wedlake Bell) for the Second and Fifth Defendants and (instructed by Herbert Smith) for the Third, Fourth, and Sixth Defendants.

Mr Colin Nasir (of Linklaters & Alliance) for the Seventh Defendant.

Mr James Pickering (instructed by Singh Karron & Co) for the Eighth Defendant.

Hearing: February 22, 25, 2002

I direct that pursuant to CPR39A para 6.1 no official shorthand note shall be taken of this

Judgment and that copies of this version as handed down may be treated as authentic

Mr Justice Lawrence Collins)

Mr Justice Lawrence Collins

I Introduction

1

The Chellaram family is a well known trading family, of which the claimants and all of the non-corporate defendants are members. The family is no stranger to litigation. There has already been litigation in Singapore, in London, in Bombay and in Bermuda which has some relevance to the background to, or the issues in, this case. The litigation in London resulted in the decision of Scott J (as he then was) in Chellaram v. Chellaram [1985] Ch 409 in proceedings to which I shall refer as Chellaram v. Chellaram (No.1).

2

These proceedings were brought by the claimants for relief in connection with what they claimed were breaches of trust in relation to four settlements, one made in 1943, one in 1946 and two in 1975. The claimants were beneficiaries under each of these trusts. The 1943 and 1946 trusts were established by their great grandfather, and the assets of those trusts are buildings in Bombay. The claimants have alleged that their father's cousins and their uncle, the trustees, have been in breach of trust by letting the properties at a loss to persons connected with themselves and have failed to provide proper accounts.

3

The 1975 trusts were established by their father and their uncle, and the trust assets consisted of shares representing part of the businesses run by their cousins outside India. The allegations relating to those trusts will be set out in detail later, but (at the risk of oversimplification) they are that their cousins, the trustees, diminished the value of the trust assets and later, as part of the settlement of Chellaram v. Chellaram (No.1), procured their sale at an undervalue to themselves or to companies controlled by them.

4

All of the defendants are, or are alleged to be, outside the jurisdiction. Two of the defendants were purportedly served by the posting of the claim form and particulars of claim to addresses in London, and the other defendants were the subject of a series of orders made on June 27, 2001 giving permission to effect service outside the jurisdiction (even though, on the claimants' case, permission was not required in relation to two of the defendants).

5

These are applications by the defendants (other than the first defendant, who has not been served) to set aside the orders, or for declarations to the effect that service has not been properly effected or that the court has no jurisdiction (or for orders that if the court has jurisdiction, it should not be exercised). The case raises a number of novel points on jurisdiction and choice of law in relation to trusts, and an important point on postal service under the CPR.

6

The claimants have discontinued the proceedings in so far as they relate to the 1943 and 1946 settlements, but the settlements are relevant not only by way of background, but also because the defendants claim that (a) orders for service outside the jurisdiction in this action should be set aside because (among other reasons) the claimants did not disclose the existence of proceedings in India which claimed an interest in property which was subject to the 1943 and 1946 settlements, and (b) the existence of those proceedings is one factor (among others) tending to show that England is not the forum conveniens for the proceedings in relation to the 1975 trusts.

II Dramatis personae

7

The Chellaram trading enterprise was originally based in Bombay, India and was started by Kishinchand Chellaram ("Kishinchand"), who died in 1951, leaving three sons. There had been another son, Asandas, who effected a partition of his share in the family property in 1932, and who does not play a part in the story.

8

A family tree (showing the male line of the relevant parts of the family) is set out in an appendix to this judgment. Kishinchand's eldest son Tahilram Chellaram ("Tahilram") died in 1943, leaving three sons, all of whom worked with him in the business: Ram Chellaram ("Ram"), who died in 1987, and Murli Chellaram ("Murli"), the second defendant, and Pishu Chellaram ("Pishu"), the fifth defendant.

9

His second son, Shewakram Chellaram ("Shewakram"), died in 1949, and he and his wife Lachmibai Chellaram ("Lachmibai"), who died in 1997, had two sons, Mohan Chellaram ("Mohan"), the eighth defendant, and Harish Chellaram ("Harish"), who died in 1990. Harish was married to Radhika Chellaram ("Radhika"), who is still alive, and they had two sons, Vishal Chellaram ("Vishal") and Ashwin Chellaram ("Ashwin"), who are the claimants.

10

His third son was Lokumal Chellaram ("Lokumal"), the first defendant, and he and his wife Kamlabai Chellaram ("Kamlabai") had two sons, Lal Chellaram ("Lal") and Sham Chellaram ("Sham"), the third and fourth defendants.

11

According to the defendants, after the death of Kishinchand, the family business traded as three branches. The Lokumal Group is the business run and owned by Lokumal, Lal and Sham. The Tahilram Group is the business run and owned by Murli and Pishu (Ram having died in 1987). Murli is unable to manage his own affairs, as a result of injuries sustained in an accident last year. The Shewakram Group comprised, following the death of Shewakram, the assets owned by or on behalf of Lachmibai (who died in 1997), Mohan, Harish (who died in 1990), Radhika, and the claimants.

12

According to the claimants, the original business eventually traded as two branches, the Lokumal Group and Tahilram Group, and not three. The Shewakram Group had interests in both the other two branches, and did not control any part of the original enterprise. Any businesses in which the Shewakram Group had an interest were controlled by either the Lokumal or Tahilram Group. Nothing turns for present purposes on this difference of emphasis.

13

Chellwood Holdings Ltd. ("Chellwood"), the sixth defendant, is a Gibraltar company in the Lokumal Group and is owned by Lal and Sham. In 1985 Chellwood purchased shares (representing interests in the Lokumal Group businesses) which were subject to the 1975 trusts.

14

Bermuda Trust Co. Ltd. ("Bermuda Trust"), the seventh defendant, is a Bermudan company and the trustee arm of the Bank of Bermuda. It became a trustee of the 1975 trusts in 1985.

15

Mr H. G. Advani ("Mr Advani") was an adviser of very long standing (since the early 1930s) to Kishinchand and to the family. He was a senior lawyer, and was described in the Chellaram v. Chellaram (No.1) proceedings as the doyen of the Bombay bar. He was a trustee of three of the four trusts which are the subject matter of these proceedings, he advised on several of the important steps taken by the family, and drafted many of the documents, and acted as an arbitrator in valuing shares in the family businesses which the Shewakram Group sold to the other groups in 1985. He died in 1991.

III Jurisdiction

16

The principal questions on the existence of jurisdiction (as distinct from discretion to exercise jurisdiction) which arise in this case are (a) whether Sham was properly served by post at an address in London which the claimants say was his last known residence; (b) whether any of the defendants is domiciled in England for jurisdictional purposes; (c) whether any of the defendants is domiciled in a State or territory to which the Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters of 1968 ("the 1968 Convention") applies, and, if so, whether the court may assume jurisdiction under the provision in the 1968 Convention relating to trusts; (d) which of the defendants are domiciled in countries or territories to which the 1968 Convention does not apply, and whether the provisions in CPR 6.20 authorising service on necessary and proper parties, and on trustees, apply to them.

17

The following countries are (or may be) relevant countries for the purposes of domicile or residence: (a) England, where Lal and Sham, the third and fourth defendants, are (or were) said to have residences to which the claim form and particulars of claim were sent by post in June 2001, and from where the claimants have suggested that Chellwood, the sixth defendant, is managed; (b) Hong Kong, where Lokumal, the first defendant, is domiciled, and where Sham, the fourth defendant, says he is resident; (c) India, where Murli and Pishu, the second and fifth defendants, are domiciled, and where Mohan, the eighth defendant, says he is domiciled; (d) Spain, where Lal says he is domiciled; (e) Gibraltar, where Chellwood is incorporated, and where the claimants say that Mohan, the eighth defendant, is domiciled; and (f) Bermuda, where Bermuda Trust, the seventh defendant, is incorporated.

18

The 1968 Convention is given effect by the Civil Jurisdiction and Judgments Act...

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