Shah and Another v Standard Chartered Bank
| Jurisdiction | England & Wales |
| Judge | MAY L.J.,SIR BRIAN NEILL |
| Judgment Date | 02 April 1998 |
| Judgment citation (vLex) | [1998] EWCA Civ J0402-9 |
| Docket Number | No:97/0676/E |
| Court | Court of Appeal (Civil Division) |
| Date | 02 April 1998 |
[1998] EWCA Civ J0402-9
Lord Justice Hirst
Lord Justice May
and
Sir Brian Neill
No:97/0676/E
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION (Mr. Justice Kennedy)
Royal Courts of Justice
Strand, London, WC2A 21L
MR. D. BROWNE Q.C. and MISS A. PAGE (instructed by Messrs. Peter Carter-Ruck) appeared for the Appellants/Plaintiffs.
MR. R. RAMPTON QC and MR. P. MOLONEY (instructed by Messrs. Herbert Smith) appeared for the Respondent/Defendant.
HIRST L.J.
Introduction
This is an appeal by the plaintiffs Suresh Bhagwanji Raja Shah and Navin Bhagwanji Shah against the order of Ian Kennedy J. dated 20 December 1996 in favour of the defendant Standard Chartered Bank.
The plaintiffs' claim is for damages for libel and slander, contained in several publications.
By their two summonses, both of which were unsuccessful, the plaintiffs sought the following orders:-
1. A determination under RSC Order 82 rule 3A that the words complained of were not capable of the meanings pleaded in and then sought to be justified by the defence.
2. The striking out under Order 18 rule 19 of the particulars of justification pleaded in the defence.
The application to strike out, which of course only arises if the appeal fails on the first issue, raises not only points of principle, but also a number of detailed questions relating to the individual particulars of justification.
Consequently the two summons fall to be determined entirely separately.
During the course of the hearing before us it became clear that the pleadings as presented to the judge, and as they stood at the outset of the appeal, were in several respects unsatisfactory. As a result, leave to make very substantial amendments to the statement of claim was sought by Mr. Desmond Browne QC on behalf of the plaintiffs, and these in turn led to an application for leave to make substantial amendments of the defence by Mr. Richard Rampton QC. In this judgment I deal in the first instance with the pleadings in their final form, as presented for leave to amend, so that the issues presently determined in these judgments are not identical to those considered by the judge.
The Background
The plaintiffs, who are brothers, were respectively the Chairman and Deputy Chairman of Mount Banking Corporation (Mount) until 3 October 1992 when the bank was wound up by order of the Court. The defendants (SCB) is a bank incorporated in England by Royal Charter.
In 1991/92 SCB was the victim of a major fraud said to have been committed upon it by a large number of Indian brokers, other people in the financial sector, and two of its employees. This fraud came to light in May 1992 and amongst those suspected of involvement in the fraud was a Mr. Bhupen Dalal (BD).
Shortly thereafter in a number of communications to the Bank of England SCB made a number of allegations against Mount, inter alia (according to the plaintiffs' case) that they had illegally laundered the proceeds of BD's fraud on SCB through Mount.
Thereafter in July 1992 the bank made an emergency application for the appointment of provisional liquidators for Mount which came ex-parte before Millett J. on 3 October 1992, and led to his making the order sought. This application was supported by an affidavit of Mr. David Green, the Deputy Head of the Banking Supervision Division of the Bank of England, in which these allegations formed a substantial part; indeed the judge said when making his order that the only really serious allegation in Mr. Green's affidavit was one of money laundering.
Subsequently the Bank of England ruled that the plaintiffs were not fit and proper persons to be engaged in the direction of a bank, but the allegation of money laundering did not form part of the material ultimately relied upon, as is shown by the findings of the Banking Appeal Tribunal on 13 October 1993, and the judgment on appeal from that tribunal of Vinelott J. on 29 July 1994, in which he stated:-
"I should mention at the outset that no evidence of complicity in money laundering has ever been discovered and this matter does not form one of the charges later brought against the Shahs. The incident is only relevant in as much as it was the trigger which later led to intervention by the Bank".
The Defamations Complained of
The original cause of action in slander were based on identical words allegedly spoken to Bank of England representatives at two separate meetings in July 1992 by Mr. Harwood, a private investigator whom the plaintiffs allege, and SCB deny, was acting on behalf of SCB as their agent, and by Mr. Reed an employee of SCB. This original slander, as alleged in the statement of claim, is as follows:-
"In the early months of 1992, Suresh Shah knowingly helped Bhupen Dalal, one of those charged in India in connection with the securities market scandal to launder the substantial proceeds of this fraud via Dubai, through Mount and then back to India. The Shahs may not be Mount's beneficial owners, but acting as a front for Dalal. $150 million of funds from Bhupen Dalal has been laundered by Mount Banking Corporation. Suresh has arranged for the purchase of $70 million of India Development Bonds and $80 million of Non-Resident Deposits on Dalal's behalf. The funds for the purchase were routed through ANZ Dubai."
This form of words stems from an account of the conversation given by Mr. Green in his affidavit, though he was not present.
In their defence SCB admit the occurrence of both meetings, but deny that the words or words to the like effect were spoken on the respective occasions.
The two conversations were recorded in writing by Bank of England officials in two notes for record, and by two further or alternative pleas the plaintiffs put forward two additional causes of action in slander based on the version of the two conversations as contained in those two notes for record, in effect translating the relevant parts of the notes from oratio obliqua to oratio recta, as follows:
The Harwood Slander
"I am a private investigator with considerable experience in finance-related investigations. My client this time is Standard Chartered Bank and I am currently undertaking am investigation into Mount Banking Corporation related to the recent Indian Government security scandal in which Standard Chartered have been affected and have incurred losses of £200 million plus…. Mount Banking Corporation is linked with that scandal … The funds [meaning thereby the funds realised from that scanda1] are likely to have been remitted via Dubai, a known stop-off point for funds washed from India. Bank of America, one of Mount Banking Corporation's agent banks in India, was also used in the transaction chain …. The corporate route of the funds to Mount Banking Corporation could have been direct from Snow India, or via a UK company called CIFCO (UK) Ltd., to whom Mount Banking Corporation are bankers … There is a correlation between Mount Banking Corporation's increases in capital and previous financial scandals in India… Have Mount Banking Corporation's activities come to the Bank of England's attention before now?
[I should note in parenthesis that objection is taken by Mr. Rampton to two phrases ("Mount Banking is linked with the scandal", and "one of Mount Banking Corporation's agents banks in India") on the ground that they must have been interpolations by the Bank of England rather than words spoken by Mr. Harwood, but I regard that as a small matter to be resolved at the trial and not at this stage.]
The Reed Slander
"I have decided to approach you following the meeting you had with Mr. Harwood, one of Standard Chartered's private investigators …. Standard Chartered has two investigations running in parallel into the recent Indian government securities scandal … I will go through the main points which our investigation has raised.
(i)Suresh Shah, Chairman of Mount Banking Corporation, is the banking frontman for Bhupendra Dalal, the key individual in the scandal and under arrest in India for his part in it. I have been informed of the link between Shah and Dalal by my contact at India's Central Bureau of Investigation.
(ii)I subsequently received further information from a journalist in India which indicated that Dalal had managed to channel US$150 million of the proceeds from the scam to ANZ in Dubai (or possibly Bank of America but I think Bank of America may not have a branch in Dubai) with further sums going on to Switzerland. From Dubai Shah purchased for Dalal US$70 million of Indian Development Bonds and US$80 million of Non Resident deposits, both of which can provide anonymity to holders. Shah then took the IDB's back to India for Dalal.
(iii)I have not as yet been able to establish a direct link between Dalal and Shah nor whether Shah acted bona fide in the aforementioned transactions; the evidence I have received on the matter so far has been purely circumstantial. Shah is likely to be aware that his associations with Dalal re being scrutinised by the Indian authorities, but not necessarily by Standard Chartered Bank The Central Bureau of Investigation promised to show me the path of the funds about a month ago but has not done so yet …
(iv)Our investigation has suggested that the other key associates of Dalal are Mr. Kalyanapuram Sampath, a lawyer, Dalal's main man in the UK responsible for setting up companies for him. He appears to be a director of CIFCO (UK) Ltd. which has an account with Mount Banking Corporation ……
(v)There is a correlation...
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