Choithram Intl SA v Pagarani
| Jurisdiction | UK Non-devolved |
| Judge | Lord Browne-Wilkinson |
| Judgment Date | 29 November 2000 |
| Judgment citation (vLex) | [2000] UKPC J1129-1 |
| Date | 29 November 2000 |
| Docket Number | Appeal No. 53 of 1998 |
| Court | Privy Council |
and Others
and Others
[2000] UKPC J1129-1
Present at the hearing:-
Lord Browne-Wilkinson
Lord Jauncey of Tullichettle
Lord Clyde
Lord Hobhouse of Woodborough
Lord Millett
Privy Council
[Delivered by Lord Browne-Wilkinson]
This is an appeal from the judgment of the Court of Appeal of the British Virgin Islands (Byron C.J. (Ag.), Singh and Redhead J.J.A.) given on 8th April 1998 upholding the decision of Georges J. that the actions of Thakurdas Choithram Pagarani ("TCP") shortly before his death were insufficient to constitute a completed gift to the Choithram International Foundation ("the Foundation") a philanthropic body created by TCP at the same time as the gift. The case again raises, but with a new twist, the question "when is a gift completed".
TCP was born in 1914 in India. He was a devout Hindu. In 1928 he married the first respondent, Lalibai Thakurdas Pagarani, by whom he had six daughters, the second to seventh respondents.
In about 1937 TCP left India and eventually established a supermarket business in Sierra Leone. Lalibai and their children remained in India. In Sierra Leone he met and in 1944 went through a ceremony of marriage with Virginia Harding who bore him eight children including three sons. The fifth and sixth appellants are sons of that union named Kishore and Lekhraj. TCP remained in Sierra Leone until the 1980s but used to return to India to visit his Indian family and those members of his Sierra Leone family whom he had taken to India to be brought up according to Indian ways and customs.
The businesses carried on by TCP were outstandingly successful and spread widely throughout the world. They were usually named "T. Choithram and Sons" and were often known simply as "Choithrams". In 1989 TCP brought most of his business under the umbrella of the first four appellant companies which became, in effect, holding companies. He was not the sole owner of the shares in those companies. He owned 64% whilst the eighth appellant Mr. Rajwani owned 10%, Ramesh Pohumal Thanwani 10% and his sons Kishore and Lekhraj 8% each.
TCP used those companies, and in particularly T. Choithram International S.A. and Bytco International S.A., as his bankers. He did not draw profits out of the companies but built up credits on accounts with those companies. He also established joint accounts in the name of himself and the name of a member of the family. In consequence, after his death the individual family members became the sole owners of their respective accounts.
TCP throughout his life was outstandingly generous in his charitable giving. His gifts amounted to many millions of U.S dollars. The judge found that "having made generous provision for his first wife and each of his children, [he] intended to leave much of the remainder of his wealth to charity, to the exclusion of his children. This he hoped to achieve by setting up a foundation to serve as an umbrella organisation for those charities which he had already established and which would in due course be the vehicle to receive most of his assets when he died. This was from all accounts, a longstanding intention of the deceased". The draft trust deed was first prepared in 1989 by London solicitors, Messrs. Macfarlanes. The draft reached a final stage in 1990 but was not executed. However, as the judge found, by the end of 1991, with his health clearly failing, TCP apparently finally decided to set up the trust. The judge accepted the evidence that TCP told his son Lekhraj that he would like to sign the trust deed in London and that he had clearly made up his mind to put pen to paper and do everything as quickly as possible.
The draft trust deed intended to establish the Foundation took the form of a pilot settlement subject to the law of Jersey in the Channel Islands. It was expressed to be made between TCP (defined as the Settlor) of the one part and the Settlor, Mr. Rajwani, Mr. Thanwani, Mr. Jethwani, two of TCP's sons Kishore and Lekhraj, and a Mr. Patel (who are defined as the Trustees). It was recited that TCP had transferred £1,000 to the Trustees "to the intent that they should make the irrevocable settlement hereafter contained", and that further property might be paid transferred or otherwise placed under the control of the Trustees. It then provided that during a defined trust period the Trustees might apply the income to or for the benefit of the beneficiaries as defined and at the expiration of the trust period should hold the capital for the T. Choithram Foundation, the Choithram Charitable Trust, T. Choithram Charity Trust Ltd. and Choithram Fountain of Humanitarian Services Charitable Trust in equal shares absolutely, those being four charities which TCP had established during his lifetime. The "Beneficiaries" as defined were TCP and the four charitable institutions just mentioned. Power was given to the Trustees (with the consent of the Protector, who was TCP) to appoint that the Beneficiaries were to include such persons as they might specify.
The Foundation trust deed remained unexecuted until, at the end of 1991, TCP was diagnosed as suffering from cancer. He left his home in Dubai (where he had primarily established himself after he left Sierra Leone in the 1980s) and came to London to stay with his son Lekhraj. As already stated, it was clear that he intended to give his property to the Foundation. Preparations were made for an elaborate ceremony at which he was to establish the Foundation and give it all his wealth. There were summoned to his bedside in Lekhraj's house the First Secretary of the Indian High Commission in London, a Mr. Sri Nivasan. In an upstairs bedroom in Lekhraj's house on 17th February 1992 TCP executed the Foundation trust deed in the presence of Mr. Nivasan, Lekhraj, Kishore, Mr. Rajawani and Mr. Param. Mr. Rajawani was an old friend and business associate of TCP. Mr. Param was the accountant to TCP's companies. Immediately after signing the Foundation trust deed TCP said certain words. The witnesses varied in their recollection of the details of what was said but all were in substantial agreement. Thus the witnesses recollect him as having said "I now give all my wealth to the Trust" or "I have given everything to the Trust" or "I'm handing all my gift, all my wealth, all my shares, to the Trust" or that he made a declaration of gift of "his shares and wealth to the Choithram International Foundation". TCP then said to Mr. Param that he, Mr. Param, knew what to do and that he should transfer all his balances with the companies to the Foundation and his shares as well. Again the exact words used are not identically remembered. Mr. Param was expressly picked out by the judge as a witness who impressed him as "reliable and thoroughly trustworthy". According to Mr. Param he was instructed by TCP to "transfer all my wealth with the companies to the Trust". According to Lekhraj, Mr. Param was instructed to transfer to the trust all his balances with the company and his shares as well. Mr. Rajwani confirmed that Mr. Param was directed that "all my wealth, all my shareholding, and whatever credit balances, should be transferred to the Choithram International Foundation".
On that evidence the judge said that he entertained no doubt that TCP executed the Foundation trust deed on 17th February as alleged and that he was equally satisfied that he made a gift of all his wealth with the companies to the Foundation. He also refers to the deceased having made an oral declaration giving "all his wealth to the Foundation".
On the same day, 17th February 1992, the other Trustees present in London namely Mr. Rajwani, Kishore and Lekhraj signed the trust deed. The remaining Trustees of the Foundation who were not in London signed the Foundation trust deed shortly thereafter.
On the evening of the same day, 17th February, there were meetings of the Boards of Directors of the four holding companies at TCP's bedside. These were attended by TCP, Mr. Rajwani, Kishore and Lekhraj. Minutes were prepared and kept: the judge found that the meetings did take place. The minutes record that TCP declined to accept the chair and Mr. Rajwani was elected as chairman. TCP reported that he had executed the settlement "creating the Trust, Choithram International Foundation and gifted all his wealth to it and thus necessitating the Company to make the required entries in its records to evidence and exhibit the change of ownership of the assets from Mr. T.C. Pagarani to the Trustees of the Choithram International Foundation". The meetings passed resolutions acknowledging the declaration of gift of all TCP's wealth to the Foundation and resolved "that the Company hereby acknowledge and confirm that the Trustees of the Choithram International Foundation are henceforth the holders of the shares and assets in the Company gifted to the Choithram International Foundation by Mr. T.C. Pagarani".
The Memorandum and Articles of the Companies contained pre-emption rights for the holders of the remaining 36% of the shares in the companies. Within a week all the other shareholders had executed waivers of their rights. On 24th February there was a meeting of the Trustees of the Foundation in London attended by TCP, Mr. Rajwani, Lekhraj and Kishore. TCP was elected chairman. He reported that the Foundation had been established and all his wealth had been given to the trust. Amongst the other business transacted it was resolved to go ahead with an eye hospital project in Sierra Leone as agreed with representatives of the Sight Savers Association, a project involving major expenditure of funds incapable of being met by the Foundation without substantial funds having been injected. The minutes were...
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