Harrington & Charles Trading Company Ltd and ors. v Jatin Rajnikant Mehta and ors
| Jurisdiction | England & Wales |
| Judge | Mr Justice Miles |
| Judgment Date | 03 October 2023 |
| Neutral Citation | [2023] EWHC 2420 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: BL-2022-000913 |
[2023] EWHC 2420 (Ch)
Mr Justice Miles
(sitting with MASTER KAYE)
Case No: BL-2022-000913
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (CHD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Ian Wilson KC, Philip Hinks, James McWilliams and William Day (instructed by Hogan Lovells International LLP) for the Claimants
Thomas Grant KC, Emily McKechnie and Paul Adams (instructed by Withers LLP) for the First to Fourth Defendants
Hearing dates: 19, 20, 21 July 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on 3 October 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Introduction
This judgment concerns applications by the first to fourth defendants ( the Defendants for short, though there are other defendants not party to the present applications) to strike out the claims or for reverse summary judgment ( the strike out applications). There was no suggestion that, for the purposes of the present applications, the tests for striking out under CPR 3.4(2)(a) and for summary dismissal under CPR 24 differ materially.
There are two main pillars of the strike out applications: that the claims fail to disclose reasonable grounds ( the reasonable grounds challenge), and that the way the claims have been brought amounts to an abuse of the process of the court ( the abuse challenge).
At a three day hearing in October 2022 Edwin Johnson J heard an application by the Defendants to discharge worldwide freezing orders that had been granted ex parte in May 2022 ( the WFOs) and an application by the Claimants to continue the WFOs. At the hearing the Defendants advanced sustained and detailed arguments that the Claimants' pleaded case failed to overcome the good arguable case ( GAC) threshold (as well as challenging the WFOs on other grounds). In a judgment of 22 November 2022 ( the November judgment), which led to an order of 8 March 2023 ( the March 2023 order), the judge examined each of the claims advanced in the Claimants' pleadings and decided that (apart from a Contribution Act claim, which he did not need to decide) the Claimants had established a GAC. He refused to discharge the WFOs.
The strike out applications had been issued on 6 July 2022 but they were not formally before the judge at the October hearing.
The Defendants also made a forum non conveniens challenge. That was addressed at a separate two-day hearing in December 2022. Edwin Johnson J dismissed the challenge in a judgment of 14 February 2023.
There were three days of further hearings before Edwin Johnson J in March 2023 dealing with the consequences of the November 2022 and February 2023 judgments. This led to the order of 8 March 2023. The Defendants have sought permission to appeal the order concerning the WFOs, but not so far as it concerns jurisdiction. Asplin LJ dismissed the application for permission to appeal on 29 August 2023.
As already noted, although the strike out applications had been issued before the October hearing, they were not formally before the judge. At the March 2023 consequentials hearing, the Claimants argued that the Defendants might be seeking, by pursuing the reasonable grounds challenge in the strike out applications, to relitigate points which had already been decided in the November judgment. The judge required the Defendants to serve a document identifying the points they sought to advance at the hearing of the strike out applications. The Defendants served such documents ( the Strike Out Points) later in March 2023.
The present application was listed for a six day hearing (including two-days pre-reading). The Claimants took the threshold point that the attempt to advance Strike Out Points (1) to (8) would amount to an abuse of the process of the court and/or a collateral attack on the November judgment. They argued that the orders now sought were inconsistent with, and would serve to undermine, the court's existing decisions about the claims meeting the GAC arguability test. They did not argue, ultimately, that the Defendants were precluded from advancing most of Point (10) (the abuse challenge), Point (9) (concerning a claim under the civil contribution legislation and which the judge did not need to decide in the November judgment), or Point (11) (which concerned only Docklands and which was not addressed by the judge).
The Defendants contended that there was nothing abusive about moving the strike out applications and that they should be allowed to proceed with them fully.
At the hearing I invited submissions at the outset as to whether Points (1) to (8) of the strike out applications were an abuse of the process of the court; and also whether the court should in any case refuse to entertain them under the guidance in Williams & Humbert Ltd v W&H Trade Marks (Jersey) Ltd [1986] AC 368. At the conclusion of argument on that point I informed the parties of my decision that the Defendants could not proceed with Points (1) to (8) on the basis that this was an abuse of process. I said that I would give reasons later – and do so here. I also said that I would consider the Williams & Humbert point – see this too below.
The court then proceeded to hear the remaining Strike Out Points. The Defendants argued Points (9) and (10), but did not in the event pursue Point (11).
I heard the application with Master Kaye, with whom I am jointly case managing the case. I am responsible for this judgment but it contains our joint views.
The pleaded case
The parties agreed that the Court should consider the case set out in the Claimants' latest consolidated amended particulars of claim ( the CAPOC).
This section of the judgment contains a summary of the case advanced by the CAPOC.
There have been no defences, but the Defendants have stated that they strongly deny these allegations. I therefore emphasise that what follows is a summary of the Claimants' allegations and nothing said here should be read as a finding of fact.
The First to Sixth and Ninth Claimants comprise six English companies and one English LLP in liquidation (the Claimant Companies). They were all entities forming part of the ‘Transactional Services Unit’ (the TSU) of the Amicorp corporate group (the Amicorp Group), a group that provided company administration and other services. The Seventh and Eighth Claimants are the Joint Liquidators of each of the Claimant Companies.
Of the Claimant Companies: (a) in certain instances following restoration, the First to Sixth Claimants (the Layer 2 Claimant Companies) were placed into liquidation on 11 August 2021 (in the case of the First, Second, Fourth and Sixth Claimants) or 10 February 2021 (in the case of the Third and Fifth Claimants); and (b) following restoration, the Ninth Claimant ( the Layer 3 Claimant Company or Docklands) was placed into liquidation on 31 May 2022.
The First Defendant ( Jatin Mehta) was a director and (so the Claimants contend) controller of two Indian jewellery companies (respectively Winsome and Forever Precious). The Second, Third and Fourth Defendants are, respectively, Jatin Mehta's wife ( Sonia Mehta), and two sons ( Vishal Mehta and Suraj Mehta).
The Fifth Defendant ( Mr Obidah) was and is a close business associate of Jatin Mehta. The First to Fifth Defendants are referred to collectively in the CAPOC as the Alleged Principal Conspirators.
The Sixth and Seventh Defendants ( IIA and Polishing respectively) are Singaporean companies which (the Claimants contend) were at all material times owned and controlled by all or some of the Alleged Principal Conspirators.
The Eighth Defendant ( Mr Kothari) is an individual who the Claimants contend introduced some or all of the Alleged Principal Conspirators to the Amicorp Group and thereafter provided instructions to the Amicorp Group on their behalf.
Winsome and Forever Precious were parties to precious metals facility agreements pursuant to which loans of gold bullion were advanced to them by various banks (the Precious Metals Facilities and the Bullion Banks). The repayment obligations of Winsome and Forever Precious under the Precious Metals Facilities were supported by the issue by a consortium of banks (the Consortium Banks) of irrevocable standby letters of credit (the SBLCs) pursuant to working capital facilities (the Working Capital Facilities) between the Consortium Banks and Winsome and Forever Precious.
Winsome and Forever Precious defaulted under the Precious Metals Facilities in April 2013 (the Default). The Bullion Banks made demands of the Consortium Banks under the SBLCs, which were met.
The explanation given at the time by Jatin Mehta and Mr Obidah for the Default was that Winsome and Forever Precious had exported gold and jewellery to distributor companies in the UAE controlled by Mr Obidah on credit terms (such entities being referred to in the CAPOC as the Layer 1 Companies); the UAE companies had sold the gold and jewellery but had suffered heavy losses on foreign exchange and commodities transactions; and, as a result, the UAE companies had failed to pay Winsome and Forever Precious, leaving Winsome and Forever Precious unable to meet their obligations to the Bullion Banks or the Consortium Banks.
The Claimants' case is that the Default was in fact part of a fraud orchestrated by the Alleged Principal Conspirators and participated in by the Sixth to Eighth Defendants pursuant to which the proceeds were misappropriated, dissipated and concealed for their benefit, leaving Winsome and Forever Precious unable to meet their obligations to their creditors...
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