Mr Amarjit Bhaur v Equity First Trustees (Nevis) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Marcus Smith |
| Judgment Date | 28 September 2021 |
| Neutral Citation | [2021] EWHC 2581 (Ch) |
| Docket Number | Claim No: E30BM407 |
| Court | Chancery Division |
[2021] EWHC 2581 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN BIRMINGHAM
PROBATE TRUSTS AND PROPERTY LIST (ChD)
Sitting remotely at:
Birmingham Civil Justice Centre
Priory Courts
33 Bull Street
Birmingham B4 6DS
THE HONOURABLE Mr Justice Marcus Smith
Claim No: E30BM407
Mr Mark Anderson, QC and Mr David Mitchell (instructed by Kangs Solicitors) appeared for the Claimants
Mr Michael Ashe, QC and Mr Julian Hickey (instructed by Levy & Levy Solicitors) appeared for the Fifth Defendants in the Part 8 Claim and the Applicants in the Declaration Application
Hearing dates: 26 to 30 April and 17 June 2021
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
CONTENTS
| A. | INTRODUCTION | §1 |
| (1) | The parties | §1 |
| (2) | The reason for the commencement of the Scheme | §5 |
| (3) | This litigation | §12 |
| (4) | Structure of this Judgment | §14 |
| B. | THE SCHEME | §15 |
| (1) | Incorporation of the Original Partnership | §15 |
| (2) | Establishment of a Staff Remuneration Trust | §18 |
| (a) | Safe Investments UK's resolution to establish a Staff Remuneration Trust | §18 |
| (b) | The retention of Appleby | §22 |
| (c) | Establishment of Gooch Investment | §25 |
| (d) | Establishment of the First Staff Remuneration Trust | §28 |
| (e) | Re-registration of Safe Investments UK as an unlimited company | §31 |
| (3) | First recap and synthesis | §33 |
| (4) | The Second Staff Remuneration Trust: the move to Nevis | §36 |
| (5) | Second recap and synthesis | §41 |
| (6) | Events subsequent to the creation of the Second Staff Remuneration Trust | §43 |
| (7) | Changes arising because of new legislation | §45 |
| (8) | The “New Structure” | §49 |
| (9) | Aston Court PCC, IVM PCC and the creation of a purpose trust | §55 |
| (10) | Further recap | §68 |
| (11) | Estera and the Estera Purpose Trust | §69 |
| (12) | Removal of Estera and a volte face | §72 |
| (13) | Final recap | §79 |
| C. | THE TRIAL | §81 |
| (1) | The parties before the Court | §81 |
| (2) | Representation | §82 |
| (3) | Evidence | §85 |
| (4) | Phase 2 | §89 |
| D. | THE PLEADED CASE ON MISTAKE | §91 |
| E. | THE LAW | §94 |
| (1) | Introduction | §94 |
| (2) | Pitt v. Holt | §95 |
| (3) | Subsequent cases | §102 |
| (4) | Other relevant considerations articulated in the case law | §106 |
| (a) | Even in unopposed cases, the court must be satisfied there is a mistake | §107 |
| (b) | The relevant mindset is that at the time of the disposition | §108 |
| (c) | The need for causation | §109 |
| (d) | Distinguising mistake from other states of mind | §112 |
| (e) | The relevance of tax implications | §116 |
| (f) | Tax avoidance or evasion | §118 |
| (g) | Mistakes and mispredictions | §120 |
| (h) | Mistakes and the acceptance of risk | §124 |
| F. | THE FACTS GOING TO THE QUESTION OF MISTAKE | §127 |
| (1) | Introduction | §127 |
| (2) | Narrative: inception of the Scheme | §129 |
| (a) | Initial contact | §129 |
| (b) | Some tax law | §137 |
| (c) | Engagement of Aston Court | §141 |
| (d) | Timetable for implementing the Scheme | §146 |
| (e) | The First Staff Remuneration Trust | §150 |
| (f) | Details of employees and benefits to them | §153 |
| (3) | Narrative: revisions to the Scheme over time | §161 |
| (4) | “Red flags” | §177 |
| (a) | Meaning | §177 |
| (b) | Control | §179 |
| Articulation of what is meant by control | §179 | |
| Loss of practical day-to-day control | §185 | |
| Loss of formal control | §188 | |
| (c) | Advisors apart from Aston Court | §191 |
| (d) | HMRC investigations | §198 |
| G. | MISTAKE | §201 |
| (1) | Introduction | §201 |
| (2) | Aston Court | §205 |
| (a) | Introduction | §205 |
| (b) | The marketing phase | §208 |
| (c) | The implementation phase | §211 |
| (d) | Poacher-turned gamekeeper phase | §213 |
| (e) | A note of caution | §214 |
| (3) | The Bhaur Family's state of mind: evidence as at the inception of the Scheme | §215 |
| (4) | Subsequent after-the-event “backbearings” | §218 |
| (5) | Conclusion | §219 |
| H. | EXERCISE OF JURISDICTION OVER A FOREIGN TRUST | §222 |
| Order | §230 |
A. INTRODUCTION
(1) The parties
. The First Claimant, Mr Amarjit Bhaur is the husband of the Second Claimant, Mrs Joginder Bhaur. They are the parents of two sons, respectively the Third and Fourth Claimants, Mr Mandeep Bhaur and Mr Baldeep Bhaur. I shall refer to the First to Fourth Claimants as the Bhaur Family. 1 As will become clear, the Bhaur Family referred to themselves in this way, and the description very much reflects a close-knit, trusting and engaged family unit. Where it is necessary to differentiate between members of the Bhaur Family, I shall refer to the First Claimant as Mr Bhaur, to his wife, the Second Claimant, as Mrs Bhaur and (without intending any disrespect, but for clarity and concision) to the Third and Fourth Claimants as Mandeep and Baldeep. When describing states of mind, in particular, I shall refer more or less interchangeably to Mr Bhaur and/or the Bhaur Family. That reflects the fact that Mr Bhaur operated in the context of a close-knit family unit and it is neither necessary nor pointful to seek to differentiate Mr Bhaur's state of mind from that of his family. Mrs Bhaur appears to have played little or no role in the administration of the family business.
. The Fifth Claimant (Safe Investments Management UK) – Safe Investments UK – is a company set up by the Bhaur Family in circumstances that it will be necessary to describe in some detail. For the present, it is sufficient to note that Safe Investments UK was part of a broader scheme (the Scheme), contemplated and initially implemented by the Bhaur Family in 2006/2007, but refined and developed by them (by which I mean not only by themselves, but by “advisors”, agents and/or other third parties directly or, increasingly, indirectly retained by the Bhaur Family) over a number of years, ending in 2017/2018.
. I shall only refer to the Claimants when I intend to refer to the Bhaur Family and Safe Investments UK.
. The Defendants named in the title to these proceedings are all, to a greater or lesser extent, involved in the Scheme, and I will describe their nature and role when the Scheme is described in detail in Section B below.
(2) The reason for the commencement of the Scheme
. It is important that I not say too much, at this stage, about the Bhaur Family's thinking in setting up and continuing the Scheme, for such matters are best considered after the Scheme has been described in detail. But some background is necessary.
. Mr Bhaur was born in 1948 in India. He moved to the United Kingdom in 1968, when he was about 20. He has been married to Mrs Bhaur for some 45 years and (as I have noted) has two sons, Mandeep and Baldeep, as well as three grandchildren. As will be seen, it is the interests of later generations of the Bhaur Family that loom large over the genesis of the Scheme, and I should say at the outset that I accept that Mr Bhaur wanted
to provide for future generations and to pass on to them the fruits of his and his wife's labours. Mr Bhaur began work in the United Kingdom as a bus conductor and then a bus driver. He carried on as a bus driver until 1976, when he moved into the retail clothing business, called “Tony's Fashion”. 2 The venture proved successful, and Mr and Mrs Bhaur opened a number of retail units under this brand. The profits from the venture were such that Mr and Mrs Bhaur were able invest in a number of properties, which were developed and then either sold or retained to rent out. This side of the business also proved to be successful and, by 1989, Mr and Mrs Bhaur had established a considerable property portfolio. They ran this side of the business as a partnership (there was no incorporation, but also no formal partnership deed). The legal and equitable interests in the property portfolio vested in them.
. By 1992, the property side of Mr and Mrs Bhaur's business was so successful that Mr Bhaur took steps to close down “Tony's Fashion”, so as to concentrate on the property business. As I have said, this business was conducted as a partnership between Mr and Mrs Bhaur, which was known as Safe Investment Management, but which I shall refer to as the Original Partnership. It is fair to say that little thought was given by the Bhaur Family as to how – in legal terms – they conducted their business. There was, for example, no written partnership agreement. The partnership involved the buying and selling of properties, but also their maintenance and renovation. As Mr Bhaur describes in his second witness statement ( Bhaur 2): 3
“In addition to the purchasing of the properties, I was maintaining and renovating them. My skills expanded to the point that I was undertaking a similar role to a Quantity Surveyor (albeit I never achieved the...
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Bhaur v Equity First Trustees and Others
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