Priya Hiranandani-Vandrevala v Times Newspapers Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Nicol |
| Judgment Date | 12 February 2016 |
| Neutral Citation | [2016] EWHC 250 (QB) |
| Docket Number | Case No: HQ15D04225 |
| Court | Queen's Bench Division |
| Date | 12 February 2016 |
[2016] EWHC 250 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Nicol
Case No: HQ15D04225
James Price QC and Adam Speker (instructed by Schillings) for the Claimant
Adam Wolanski (instructed by Times Newspapers Ltd) for the Defendant
Hearing dates: 20 th January 2016
Approved Judgment
I direct that pursuant to CPR PD 39A 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.
This is an action for libel and malicious falsehood and breach of statutory duty under the Data Protection Act 1998 brought by Ms Hiranandani-Vandrevala in relation to articles published by Times Newspapers Ltd in the print edition of the Sunday Times for 23 rd August 2015 and in its on-line edition of the same date under the headline 'Hunt on for AIM firm's missing £350m: alleged fraud by the former chief of Hirco has raised more concern about the junior stock market'. The claim is also made in respect of the on-line article which appeared in place of the original from 25 th August 2015 under the headline 'AIM firm sued over £350m investment; alleged fraud by the former directors of Hirco has raised more concern about the junior stock market'.
In accordance with a consent order made by Master Eastman on 2 nd December 2015 I heard the trial of a preliminary issue to determine the meaning of the articles for the purpose only of the libel claims.
The print and original on-line versions of the article were in the following terms. Only the words of the article which I have italicised are relied upon by the Claimant. Paragraph numbers have been added for convenience.
'[1] Prince Charles spent his 65 th birthday travelling from India to Sri Lanka on official business. A week later he more than made up for it. About 400 guests, including the chancellor George Osborne and the steel billionaire Lakshmi Mittal, gathered at Buckingham Palace on November 21, 2013 for a champagne reception and a performance of Wagner works by the Philharmonic Orchestra.
[2] The lavish event cost £500,000. It was paid for by Cyrus Vandrevala, an Indian private equity investor, and his wife, Priya Hiranandani-Vandrevala. She sat next to Prince Charles; her husband was beside the Duchess of Cornwall.
[3] Clarence House insisted the evening was a gala to celebrate Prince Charles's patronage of the orchestra, but Vandrevala and his wife were keen to present it as a more personal occasion. "We are lucky that His Royal Highness has chosen to celebrate his birthday with us," the invitation said. Prince Charles was perhaps unaware of the allegations made against his hosts.
[4] Earlier that year the remnants of a property company once run by 38-year-old socialite Hiranandani-Vandrevala and her father Niranjan had launched a legal claim against them, accusing them of fraudulently breaching their duties as directors. Hirco, which was set up in 2006 to invest in township developments in India, alleged that the pair had persuaded it to buy plots of land from them at "grossly overstated" values.
[5] Hirco said its backers had lost more than £350m in projects the Hiranandis knew to be "unrealistic and unachievable" while more than £300m had gone into an offshore trust owned by Hiranandani-Vandrevala, her husband Cyrus and her brother, Darshan. The claim was filed in the Isle of Man, where Hirco is registered. Neither father nor daughter has filed a defence, although both deny the allegations.
[6] Hirco's shares were delisted last year because it was unable to give the City an accurate account of its finances. The Isle of Man case stewed as Niranjan Hiranandani, 65, a well-known figure in Indian property circles, tried to have the court battle moved to his home country.
[7] John Chapman, a hard-nosed American lawyer who is leading Hirco's campaign, accused him of using "frivolous procedural wrangling" to slow down the proceedings in the hope that Hirco would run out of money and go bust.
[8] Less than two weeks ago the company hit on some rare luck. For months, Hirco has been embroiled in a secret parallel arbitration with Niranjan Hiranandani and his wife, Kamal, in Singapore (Priya Hiranandani-Vandrevala, 38, is not a party to the case although she is named in the papers). The arbitration brought up reams of evidence that Hirco was unable to publish because the process was confidential.
[9] This month, it won the right to release its opening statement against the couple. The 160-page document — whose contents they contest — alleges what would be one of the most blatant frauds the London stock market has ever seen.
[10] It could cast fresh doubt over the integrity of the Alternative Investment Market (AIM), which has been smeared by the slow-motion unravelling of Quindell, an insurance claims processor, and the collapse of a cash shell called Langbar International, where £365m mysteriously went missing. Such scandals — and a high rate of run-of-the-mill company failures — have led American officials to describe AIM as "a casino". In an interview before he stepped down this summer, Chris Gibson-Smith, former chairman of the London Stock Exchange, defended the junior stock market to The Sunday Times. "If one or two are going wrong at one moment out of 3,000 companies, that's a pretty strict track record," he said.
[11] Hirco raised £383m from blue-chip investors such as Lazard Asset Management and Standard Life in 2006, making it the biggest AIM fundraising of the year.
[12] The deal generated £15m of fees for the investment banks involved: Bear Stearns, which was taken over by JP Morgan in the financial crisis, and HSBC, which became Hirco's nominated advisor after the float. HSBC's efforts were led by a banker called Russell Julius.
[13] Hirco was then chaired by Niranjan Hiranandani and run by his daughter as chief executive. She had worked as an accountant at Arthur Andersen before joining the family business. The board featured four non-executives, including Sir Rob Young, the former British high commissioner to India.
[14] Hirco's purpose was to invest in township developments sourced and overseen by the Hiranandanis. David Burton, one of the non-executives, acknowledged in retrospect the corporate governance problem of buying assets from the company's management.
[15] "I'm sure if you were floating Hirco today, you wouldn't have as your chairman and chief executive the people you were contracting the deals from," he said. "But there was at the time a gold rush and the Indian economy was booming."
[16] According to Hirco's Singapore filing, overseen by the law firm Allen & Overy, the arrangement turned out to be a "get enormously rich quick" scheme for the immediate Hiranandani family and Vandrevala. Hirco paid Niranjan Hiranandani £350.8m for two plots — one near Channai in the southeast and one in a barren area called Panvel near Mumbai in the west.
[17] Hiranandani said he had assembled the sites over time and obtained the necessary planning permissions.
[18] In fact, Hirco alleges, he bought them on the cheap and flipped them at a mark-up of more than 1,000% without securing the consents needed to start building.
[19] In the case of Panvel, Hirco claims the land it received was different to that described by Hiranandani. It alleges that he "manipulated maps" to suggest that it was one plot when it was actually "a scattered collection of irregular parcels".
[20] The statement says the five to eight-year development times and 25% returns that Hiranandani promised Hirco would have "required an unprecedented rate of development that has never been achieved in India before or since".
[21] It quotes a note from his brother, Surendra, asking: "How in the family interest are you going to give the returns you have promised your investors?"
[22] According to Hirco, £303m went as profit to the Hiranandani family via a company called Burke Consolidated Ltd in the tax haven of the British Virgin Islands. It is "common ground" that Hiranandani-Vandrevala, her husband and her brother at one point owned the trusts that control Burke Consolidated, the document says. Hiranandani has denied he was an owner.
[23] "He is not telling the truth about this," the document continues, at least in part because "he wishes to distance himself from the £303m profit".
[24] Despite the "ludicrously ambitious" plans, only 15 homes were completed at Chennai, and none at Panvel. The projects went under and were bought out of receivership by Hiranandani.
[25] Hirco says that the Hiranandanis concealed their fraud from the non-executives, including Young and Burton. Young is quoted as saying, with hindsight, Hirco "should have investigated and established whether our chairman and CEO were at best negligent and at worst lying to us".
[26] Hiranandani Group said: "Niranjan Hiranandani continues to categorically deny the allegations by Hirco. The dispute is currently being dealt with in confidential arbitration proceedings, and so it would be inappropriate for Mr Hiranandani to comment."
[27] It added that Hirco's publication of the Singapore submission was "in keeping with its long-running efforts to pressure Mr Hiranandani into a commercial settlement so that its hedge fund investors can extract a premium from the shares they bought at a distressed price following the global financial crisis".
[28] As well as Standard Life, Hirco's big investors include American hedge funds such as Weiss Asset Management and Alpine Woods, and Lars Bader, a trader who is understood to have bought shares.
[29] Hiranandani Group said: "For the avoidance of doubt, Mr Hiranandani will continue to aggressively defend himself against these scurrilous allegations — but unlike...
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