Salim Moosa v Karim Issa Mawji

Hearing dates: 8, 11–15, 19–20 March 2024

APPROVED JUDGMENT

This judgment was handed down remotely at 10.30 am on 28 June 2024 by circulation to the parties or their representatives by email and by release to The National Archives.

Introduction

. This is my judgment following the trial of an action brought by three brothers against their former real estate adviser in which they seek an account in common form and other relief. The events concerned go back over twenty years and cover property developments in the UK, Germany and South Africa.

. The Claimants (the “Moosas”) claim that in July 2000 they appointed the Defendant (“Mr Mawji”) as their agent in respect of a portfolio of properties in England. By virtue of that appointment Mr Mawji owed them personally fiduciary, contractual and common law duties. Mr Mawji denies the claim.

. The Moosas say that in breach of his appointment Mr Mawji has failed to account to them in respect of his dealings with their investments. They make particular claims in respect of six specific projects. Five of those are in England and one is in Germany (the “Schedule Projects”). The Moosas make a further claim in respect of a property in South Africa (“Mystic River”). The histories of these projects are complex and I will address each separately in due course.

. Mr Edward Brown KC and Mr Alex Riddiford appeared for the Moosas. Mr Simon Atkinson and Mr Theo Dixon appeared for Mr Mawji.

. The parties' relationship stretches back to 1998. I have taken various dates from the parties' agreed chronology. The parties referred to many entities that played some role in the extended history. I have considered carefully the chronology and dramatis personae and extracted the information that is necessary for me to dispose of the case. A complete history of the parties' relationship is beyond the scope of this judgment.

. The Moosas are successful businessmen based in South Africa. I will with no disrespect refer to them by their first names.

. It is common ground that the Moosas and their extended family had by 1998 a property portfolio in England. It had been overseen by their cousin Razak Moosa. The family held each property through a standalone offshore company. The shares were held by a Guernsey corporate services provider, Saffery Champness. Razak lived in London between 1986 and 1996. He then returned to South Africa and instructed an accountant to handle the UK business.

. Mr Atkinson noted that it was Razak's companies that provided property management services up to 2000, and that it was not Razak himself who handled the business. I disagree and accept that Razak oversaw matters.

. In 1997 the Moosas decided to separate their interests from the rest of the family group. Up to 2000 they used two entities to hold their investments. The first was a Panamanian entity Fenchurch Enterprises Inc (“Fenchurch”). The second was a BVI entity Mavedene Limited (“Mavedene”).

. The Moosas were thus looking for someone to handle their affairs in the UK. A family friend, Mr Abdul Sacoor, recommended Mr Mawji to them. At that time Mr Mawji ran a company called Montague Goldsmith Limited (“MGL”).

. At their first meeting in late 1998 or 1999 Shaukat explained to Mr Mawji that the Moosas were looking for an advisor to replace Razak, and that would have to be done in stages as the family situation was sensitive.

. In November 1998 Graham Gower, a Director of MGL, faxed an initial report on the property portfolio to the Moosas. Later, on a date which was unclear from the evidence, a further report was created which listed eight property-owning companies holding 10 freehold properties producing a total annual rental income of about £1.39M. Some had more than one tenant. A manuscript column was added to the table, headed “horse or donkey?”. Three of the 10 were marked “H”, which meant they were to be kept. The remainder were marked “D” and one property “?”.

. From 1999 to mid-2000 MGL engaged in a partial management role alongside the existing Moosa family management.

. Mr Mawji's evidence was that MGL (and later Montague Goldsmith AG a Swiss company incorporated in November 2003 (“MGAG”)) offered an alternative approach to property investment. Their clients tended to own portfolios of properties; MGL focused on capital appreciation of assets under management. Some properties would be considered as assets to “hold and enhance” and there would also be new investments.

. For new investments, the approach was by way of Mr Mawji's “private equity model”. In this model MGL would set up a new entity to own an investment which would be owned and managed by MGL. A client would make an investment by way of a loan which would carry interest. The client would be entitled to 50% of any profit on the sale of the asset and MGL would retain 50% of the profit as its payment.

. In July 2000 there was a meeting at which the Moosas say that Mr Mawji was appointed to manage the properties and that a fiduciary obligation was created such that from this time onwards Mr Mawji owed a duty to the Moosas. Mr Mawji says that the result of the meeting was instead that MGL was appointed to a full managing agent role, and that he did not agree any personal obligation.

. While it occurred at an early stage in the parties' relationship, this meeting is important. It will be important to determine whether Mr Mawji was a fiduciary when later transactions which are in dispute were undertaken. Mr Atkinson submitted that if the Moosas did not succeed in showing that Mr Mawji owed the Moosas a personal obligation to account then the accounting claim would fail in its entirety.

. I note at this point that the Moosas have claimed only against Mr Mawji and not against the companies in which he was involved. In March 2004 Mr Mawji resigned as a director of MGL, and it was dissolved in 2012. MGL's role was taken over by MGAG. In July 2009, MGAG entered into voluntary solvent liquidation.

. Mr Brown made the point that in the light of these events the relationship must have been directly between the Moosas and Mr Mawji because there is no evidence that the Moosas were informed of the change of entities involved. I do not think that this is conclusive of what the parties agreed in 2000. It does appear, however, that there were a number of changes of entity which were not notified to the Moosas. They appear to have accepted these changes without question.

The approach to evidence

. The parties agreed that in a case such as this, contemporaneous documents are likely to be a more reliable guide than human memory: see Gestmin SGPS SA v Credit Suisse (UK) Ltd [2020] 1 CLC 428, Simetra Global Assets Ltd v Ikon Finance Ltd [2019] 4 WLR 112 at [48], Kogan v Martin [2019] EWCA Civ 1645 and Phipson on Evidence (20 ^th Edition) at 45–10. Internal documents, where a party is less likely to be guarded in what they say, may be more telling than memory.

. However, the documentary record provided on disclosure was on matters of significance to the trial very thin. The Moosas say that Mr Mawji should as an adviser have kept meticulous and compliant records. Mr Mawji notes that no claim has been brought against the companies which carried out the various property activities, and it was suggested that had such a claim been made that there would have been more disclosure.

. Given the state of the documents that I did see, it appears that the relationship between the parties was not well documented on either side. While the Moosas were provided with many financial statements, neither side appeared to care much for formality about their relationship, and there were many fewer relationship documents than might have been expected in relation to a substantial investment portfolio. There was little on strategy, structure or performance of the investments. Notably, there were no client agreements or terms (which might have indicated the extent of the relationship) and no indication of “know your client” diligence on Mr Mawji's side.

. The evidence of the witnesses is in this case therefore significant. I had the opportunity to see two of the Moosa brothers and Mr Mawji cross-examined extensively at a trial over eight days.

The witnesses

. At trial there were three witnesses for the Moosas.

. Salim Moosa is an experienced businessman with substantial interests both inside and outside South Africa. He provided an extensive witness statement covering the history of the relationship with Mr Mawji. He accepted that he did not have full recall of the matters in dispute, and in particular his memory of dates was not reliable. On a number of occasions he said that he did not understand documents that he had signed when he did so or that he had signed them in a hurry and so was not aware of their contents. On other occasions, he had clearly reviewed figures provided to him in some detail. It appears that his dealings with Mr Mawji were often informal. There were no client agreements. Many documents did not have letterheads; some documents from Mr Mawji were handwritten; and there appears not to have been regular reporting on the state of the whole portfolio. Salim appeared at times during his cross-examination enthusiastic to make up for a lack...