Harrington v Mehta
| Jurisdiction | England & Wales |
| Judge | Mr Justice Edwin Johnson |
| Judgment Date | 22 November 2022 |
| Neutral Citation | [2022] EWHC 2960 (Ch) |
| Docket Number | Claim Number: BL-2022-000913 |
| Court | Chancery Division |
[2022] EWHC 2960 (Ch)
Mr Justice Edwin Johnson
Claim Number: BL-2022-000913
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Re: HARRINGTON & CHARLES TRADING COMPANY LIMITED (IN LIQUIDATION)
Re: BRAMHALL & LONSDALE LIMITED (IN LIQUIDATION)
Re: HOLDWAVE TRADING LIMITED (IN LIQUIDATION)
Re: OC305234 LLP (IN LIQUIDATION)
Re: OCEANROAD GLOBAL SERVICES LIMITED (IN LIQUIDATION)
Re: CONNECOR (UK) LIMITED (IN LIQUIDATION)
Rolls Building
7 Rolls Buildings
Fetter Lane
London, EC4A 1NL
Ewan McQuater KC, Ian Wilson KC, Philip Hinks, James McWilliams, and William Day (instructed by Hogan Lovells International LLP) for the Claimants
Andrew Hunter KC and Luka Krsljanin (instructed by Jones Day) for the First, Second, and Fourth Defendants
Justin Higgo KC, William Willson, and Paul Adams (instructed by Howard Kennedy LLP) for the Third Defendant
Hearing dates: 6 th, 7 th, and 10 th October 2022
Remote hand-down: This judgment was handed down remotely at 10.00am on Tuesday 22 nd November 2022 by circulation to the parties and their representatives by email and by release to The National Archives.
The structure of this judgment
This judgment is, necessarily, a lengthy judgment. For ease of reference, I provide the following guide to the different sections of the judgment.
Introduction
| Introduction | Paragraphs 2–7 |
| The parties | Paragraphs 8–14 |
| The alleged fraud | Paragraphs 15–22 |
| The Indian criminal investigations | Paragraph 23–24 |
| The UAE proceedings | Paragraphs 25–26 |
| Various reports | Paragraphs 27–29 |
| The claims made by the Claimants in this action | Paragraphs 30–35 |
| The destinations of the Funds | Paragraphs 36–41 |
| The applications and the procedural position | Paragraphs 42–50 |
| The scope and circumstances of this judgment | Paragraphs 51–63 |
| The evidence at the First Hearing and at this hearing | Paragraphs 64–67 |
| The Discharge Application – the law | Paragraphs 68–73 |
| The Discharge Application – the case of the Respondents | Paragraphs 74–76 |
| The Discharge Application – the so-called Grant Thornton Scheme | Paragraphs 77–86 |
| The Discharge Application — jurisdiction | Paragraphs 87–96 |
| The Discharge Application — non-participation of the Indian Banks; quantum /maximum WFO sum | Paragraphs 97–108 |
| The Discharge Application – core facts | Paragraphs 109–140 |
| The Discharge Application – explanation of the law | Paragraphs 141–164 |
| The Discharge Application – the Indian civil and criminal proceedings | Paragraphs 165–184 |
| The Discharge Application – procedural/other | Paragraphs 185–199 |
| The Discharge Application – nondisclosure of the Grant Thornton Scheme | Paragraphs 200–205 |
| The Discharge Application — the viability or merits of the causes of action relied upon | Paragraphs 206–212 |
| The Discharge Application — the alleged weakness of the evidential case against the Third Defendant in particular | Paragraphs 213–220 |
| The Discharge Application — the viability or merits of the allegations that the Claimant Companies have suffered loss and are insolvent | Paragraphs 221–225 |
| The Discharge Application — conclusions | Paragraphs 226–238 |
| The Continuation Application – the issues | Paragraphs 239–242 |
| The Continuation Application – is there a good arguable case? – the test | Paragraphs 243–264 |
| The Continuation Application – is there a good arguable case? – the Alleged Fraud | Paragraphs 265–275 |
| The Continuation Application – is there a good arguable case? — the position of each of the Respondents | Paragraphs 276–303 |
| The Continuation Application – is there a good arguable case? – the proprietary claims | Paragraphs 304–331 |
| The Continuation Application – is there a good arguable case? — the claim for breach of fiduciary duty | Paragraphs 332–346 |
| The Continuation Application – is there a good arguable case? – the claims under the 1986 Act | Paragraphs 347–371 |
| The Continuation Application – is there a good arguable case? – the claim in conspiracy | Paragraphs 372–378 |
| The Continuation Application – is there a good arguable case? – loss, quantum and the Inbound Claims | Paragraphs 379–388 |
| The Continuation Application – is there a good arguable case? – dishonest assistance/the claim under the 1978 Act | Paragraphs 389–390 |
| The Continuation Application – is there a good arguable case? — conclusion | Paragraph 391 |
| The Continuation Application – real risk of dissipation of assets? | Paragraphs 392–393 |
| The Continuation Application – assets inside or outside the jurisdiction? | Paragraph 394 |
| The Continuation Application – just and convenient? | Paragraphs 395–396 |
| The Continuation Application – what sum should be the subject of the WFO? | Paragraphs 397–398 |
| The Continuation Application – conclusion | Paragraphs 399–401 |
| Overall outcome of this hearing | Paragraphs 402–403 |
This is the hearing of rival applications seeking, respectively, either to continue or to discharge a worldwide freezing order.
I made the worldwide freezing order in question at a hearing ( “the First Hearing”) on 27 th May 2022, together with certain ancillary orders. These orders were made on the application of the Claimants against the First to Fourth Defendants in this action. The application was made on a without notice basis and was heard in private. I will use the expression “the WFO” to mean the worldwide freezing order which I made at that hearing. I will use the expression “the May 2022 Order” to refer to the entirety of the orders which I made at that hearing. By the May 2022 Order, the WFO was expressed to continue until the return date, which was specified as 10 th June 2022.
The grounds upon which I decided to grant the WFO and certain associated relief, as contained in the May 2022 Order, were set out in an unreserved judgment which I delivered at the conclusion of the First Hearing. A transcript of the First Hearing and a transcript, which I have approved, of my judgment delivered at the First Hearing ( “the First Judgment”) were both available for this hearing.
The WFO was continued, by the consent of the parties, by an order of Tribunal Judge Nicholas Aleksander (sitting as a High Court Judge) made on 10 th June 2022. By this order the WFO was continued until the restored return date. This hearing constitutes the restored return date. As it was necessary for me to reserve my judgment on this hearing, the parties sensibly agreed the terms of an order, which I approved and made, for the WFO to continue until the handing down of this judgment and the resolution of matters consequential upon the judgment.
The essential dispute on this hearing can shortly be summarised. The Claimants say that the WFO should now be continued until trial. The First to Fourth Defendants say that the WFO, as it currently exists, should be discharged, on the basis that there was serious, substantial, and material non-disclosure and unfair presentation at the First Hearing. The First to Fourth Defendants further say that there should be no continuation of the WFO, whether or not it is discharged in its existing form.
The hearing occupied three days, which turned out (putting it neutrally) to be a challenging time estimate. I will return to this topic, but some idea of the scale of this dispute can be gathered from the representation, by counsel, of the parties. The Claimants were represented by Ewan McQuater KC, Ian Wilson KC, Philip Hinks, James McWilliams, and William Day. The First, Second, and Fourth Defendants were represented by Andrew Hunter KC and Luka Krsljanin. The Third Defendant was represented by Justin Higgo KC, William Willson, and Paul Adams. I am grateful to all counsel for their helpful written and oral submissions, and for their co-operation in formulating and keeping to a hearing timetable which allowed the oral arguments to be concluded in the time available.
The parties
This is a case of alleged fraud. The Claimants' case is that each of the First to Fourth Defendants were complicit in a US $1 billion fraud whereby the proceeds of bullion advanced to two companies were misappropriated, laundered and concealed through multiple layers of corporate entities, with the vast majority of the proceeds said to have ended up in entities owned and/or controlled by the First to Fourth Defendants.
The First to Sixth Claimants are said to have been used as vehicles in the alleged fraud, as one layer of the corporate entities through which the proceeds of the alleged fraud are said to have passed. It is convenient to refer to the First to Sixth Claimants, collectively, as “the Claimant Companies”, subject to the point that the Fourth Claimant is an LLP. All of the Claimant Companies are registered in this jurisdiction. The Claimant Companies were formerly within something described as the Transactional Services Unit of a group of companies known as the Amicorp Group, which provided company administration and other services ( “the Amicorp Group”).
The Third and Fifth Claimants were placed into members voluntary liquidation ( “MVL”) on 26 th October 2020. Each MVL was converted into a creditors' voluntary liquidation in February 2021, with the Seventh and Eighth...
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