Category Archives: Chancery Division

HIGH COURT (CHANCERY DIVISION) ENTERS JUDGMENT FOR THE CLAIMANTS FOR OVER £22.7 MILLION

Breach of Fiduciary Duties, Chancery Division, Commercial and Chancery litigation, Judgment millions

HIGH COURT (CHANCERY DIVISION) ENTERS JUDGMENT FOR THE CLAIMANTS FOR OVER £22.7 MILLION

Arfan Khan represented the successful Claimants in Gangat v Jassat throughout the litigation instructed by Pandya Arbitration Global.  

The Claimants, former part-owners of the Jumbo Group in South Africa, through third parties transferred substantial funds in millions to Swiss accounts in the 1980s and 1990s allegedly in breach of the South African Exchange Control Regulations to avoid the consequences of the Apartheid. Later, when the Apartheid was over, they regularised their financial affairs with the South African Revenue Service. 

The Defendant, a British national, took control of these funds and made investments on the Claimants’ behalf, amassing a significant portfolio of cash and property. Despite holding these assets, the Defendant refused to return them. After over seven years of litigation, the High Court ruled in favour of the Claimants, ordering an account for breach of fiduciary duty. 

The Defendant’s appeal against the decision ordering an account was dismissed by the Court of Appeal (Lord Justice Nugee, Lord Justice Stuart Smith, and Lord Justice Warby) on all grounds.  

Thereafter, the High Court awarded the Claimants an interim payment in the $millions and recently entered judgment for the Claimants for over £22.7 million including costs.  

 The reported judgments can be accessed through the following links:

Gangat v Jassat (2022) EWCA 604 (Court of Appeal)
Gangat v Jassat (2021) EWHC 2644 (Ch)

The recent order entering judgment has not been made publicly available.

 

Arfan Khan leads against HMRC in a first time tax appeal

Appeal, Chancery Division, Chancery Litigation, Commercial and Chancery, Commercial and Chancery litigation, Commercial and International Law, Court of Appeal, Leading Chancery Barrister, Leading Counsel, Tax and Chancery Chamber,

Arfan Khan led Mr Joseph Howard in the Court of Appeal on a first time tax appeal of general public importance.

The Appellant is an Italian company. It provides containers and logistics services across Europe. The Appellant arranged the transport of goods for a customer, a Romanian company, GBT. This included a quantity of wine, which was seized by UK Border Force on the basis that excise duty had not been paid.

On 12 May 2015, HMRC issued an assessment to excise duty in respect to the seized wine to GBT. On 17 December 2015, HMRC issued the appellant with a reduced penalty assessment calculated on the basis that the Appellant’s conduct was not deliberate.

The Appellant appealed to the FTT on the basis that Article 37 of Directive 2008/118/EC (“the Excise Duties Directive”) meant that as the wine had been lawfully seized and destroyed, no excise duty point ever arose, the appellant was an innocent agent, and the penalty assessment was out of time. The FTT dismissed the appeal.

The Appellant appealed to the Upper Tribunal. The Upper Tribunal granted permission to appeal. However, it dismissed the appeal holding that Article 37 did not apply. The Appellant applied directly to the Upper Tribunal for permission to appeal to the Court of Appeal. Arfan Khan was then instructed and led a written skeleton argument for permission to appeal to the Court of Appeal.

The Upper Tribunal exceptionally granted permission to appeal against its own decision on the Article 37 ground. It held that the appeal raised a point of general public importance in respect of which there were real prospect of success.

The Respondent filed a Respondent’s notice seeking to uphold the Upper Tribunal on the basis that excise duty was chargeable by reason of a deemed duty point following the reasoning in Jones v HMRC, and that Article 37 did not as a result apply.

The Respondent’s notice proceeded contrary to what was alleged to be written concessions made by the Respondent. It was alleged that the Respondent had conceded before the Upper Tribunal that the basis of seizure did not necessarily require duty points to arise where the goods had been lawfully seized, and there was no challenge to the legality of the seizure.

Following the grant of permission, the Appellant filed supplemental submissions in response to the Respondent’s notice. These included a novel submission, not considered in Jones v HMRC, namely that, if the statutory deeming provisions apply to bar jurisdiction, they should be set aside in order to give effect to Article 37 of the EC Directive and Article 47 of the EU Charter and/or declared incompatible with Article 6 of the ECHR. The supplemental submissions distinguished the decision in Jones.

The Court of Appeal (Lord Justice Patten, Lord Justice Baker, and Mr Justice Mann) dismissed the appeal holding:

“50. As Mr Khan and Mr Howard on behalf of the appellant accepted in the course of the hearing before us, unless Article 37 subsequently disapplied its effect, there can be no doubt that the provisions of Article 33 were satisfied. The wine in the fifth container had been “released for consumption” in Italy. At the point of arrival at Purfleet, it was being “held for commercial purposes … in order to be delivered here”. Accordingly, it was subject to excise duty here and excise duty became chargeable here. At that point, under regulations 5 and 6 of the HMDP Regulations, an “excise duty point” arose and the appellant, being a person “concerned in carrying … the goods”, became liable to a penalty under paragraph 4 of schedule 41 to the Finance Act 2008.

51. Did Article 37 apply so as to prevent excise duty being chargeable on the wine? In my judgment, it did not, for the reasons identified by the UT at paragraphs 61 to 71 of its decision. …

52. In the context of this appeal, the construction of Article 37 turns on two phrases: (1) “during their transport in a Member State” and (2) “as a consequence of authorisation by the competent authorities of that Member State”.

53. I agree with the UT that “transport” should be given its ordinary meaning. For my part, I derive no assistance by comparing and contrasting the use of the word “movement” in Article 38. The wine in the appellant’s container was being transported from the ship to its ultimate destination in the UK. Had it continued on its journey, it would have been “transported” until it reached its destination. But it did not continue on its journey. It was seized by Border Force and held by that agency until it was destroyed following forfeiture. At the time of its destruction, it was not being “transported”.

54. As for the second phrase, I do not accept the submission that the ultimate destruction of the wine by or on behalf of Border Force following forfeiture falls within the scope of the phrase “as a consequence of authorisation by the competent authorities”. The destruction of the wine following forfeiture took place on the orders of Border Force. The word “authorisation” means the granting of official permission. The plain and obvious purpose of including that phrase in Article 37 is to cover the destruction of goods which are partially, but not totally, destroyed in transit. Article 7(4) provides that, for the purpose of this Directive, goods shall be considered totally destroyed or irretrievably lost when they are rendered unusable as excise goods. But there will be other cases where the goods are substantially damaged while being transported but have not become totally unusable (for example, where a proportion of a consignment of wine bottles are broken but the remainder are intact). Article 37 allows for circumstances where the competent authorities may formally agree to the destruction of the remainder so as to remove them from the scope of the duty”.

The Court of Appeal held that the Respondent’s notice had become academic by reason of the Appellant’s concession on appeal as follows:

“63. I would be reluctant to embark on a lengthy analysis of HMRC’s alternative argument raised in its respondent’s notice based on its interpretation of the decision in Jones. I take that view for three reasons. First, as I have just concluded, I consider the UT’s decision as to the construction of Article 37 was correct. On behalf of the appellant, Mr Khan in effect accepted at the outset of the hearing before us that, subject to its being subsequently removed by Article 37, an excise duty point arose under Article 33, and it must have persisted. The two factors which HMRC are seeking to have “deemed” from the failure of the appellant to contest the condemnation of the wine – that excise duty was chargeable and an excise duty point had arisen – are therefore conceded by the appellant. The “deemed duty” point is therefore of academic interest only in this appeal..”.

As a result, and amongst other reasons, the Court of Appeal refused to offer any expansive dicta on the Respondent’s notice. However, it concluded that the Upper Tribunal’s comments on the interpretation and application of the decision in Jones (based on the Respondent’s concession below) should not be regarded as authoritative. The Court of Appeal did not permit the Respondent to resile from what the Upper Tribunal described as a concession. It left open the possibility of argument in future cases.

Arfan Khan has a specialist appellate practice in Chancery, Commercial and Public law. He also has a substantial litigation practice in Chancery, Commercial and Public law. He is an experienced pleader, as evident from his numerous reported cases at appellate level, as well as in the High Court both as a leader and sole counsel.

The Court of Appeal judgment can be access here:

https://www.bailii.org/ew/cases/EWCA/Civ/2020/405.html

General Transport v HMRC

 

Court of Appeal grants permission in important trust appeal

Appeal, Chancery Division, Court of Appeal, Privy Council appeals, Trust and Property appeal,

Court of Appeal (CHD) grants permission to appeal in important trust appeal

The Appellant, a former solicitor, claimed he held a beneficial interest in property by way of constructive or resulting trust. The property was purchased as an investment. It was registered in the sole name of the Appellant’s wife. A joint charge was placed over the property by the Legal Services Commission. This was done in order to secure the joint indebtedness of the Appellant and his wife arising out of their legal practice as solicitors.

The Court at first instance held that the Appellant was not entitled to a beneficial interest in the property by way of constructive or resulting trust, and that the property vested in the wife’s joint trustees in bankruptcy.

The Appellant appealed. Permission to appeal was refused on the papers by the Honourable Mr Justice Snowden. The Appellant renewed permission to appeal on the issue of whether he had a beneficial interest in the property. Following an oral hearing in the Business & Property Courts of England & Wales (Chancery Appeals), the Honourable Mr Justice Snowden was ‘persuaded’ to grant permission to appeal limited to that issue without expressing a concluded view on the merits of the appeal.

The appeal raises evidential issues concerning the correctness of the first instance judge’s findings of fact on the Appellant’s beneficial interest in investment property in light of the LSC charge, and all the relevant circumstances.

The appeal also seeks to establish a novel point of law in sole ownership cases involving the determination of beneficial interest in property. Namely where property is purchased as an investment, in the absence of an express direction by the Privy Council that its decision in Marr v Collie [2018] AC 631 represents the law of England and Wales, the Courts at first instance are bound to follow the Court of Appeal decision of Lord Neuberger to the contrary in Laskar v Laskar [2018] 1 WLR 2695.

This is consistent with higher authority, including the reasoning of the Supreme Court in Willers v Joyce [2018] AC 851 concerning the procedure in the Privy Council for holding that a Court of Appeal decision is wrong. This involves expressly making a decision that the Court of Appeal is wrong, and directing that the domestic courts should treat the Privy Council decision as representing the law of England and Wales. Marr does not expressly appear to overrule Laskar. Nor does it appear to contain the direction in question.

Arfan Khan represented the Appellant and did not appear below.

 

Chancery Division rules on the test for setting aside summary judgment and copyright infringement

Appeal, Chancery Division, copyright infringement, copyright infringement, High Court, Phonographic Performance, Phonographic Performance Judgment, summary judgment set aside test, Uncategorized, , , , , , ,
Phonographic Performance Ltd v Ambibola Balgun t/a Mama Africa [2018] EWHC 1327 (Ch)
Copyright infringement – Summary Judgment set aside test

The Claimant claimed that the Defendant had played sound recordings, which infringed copyright in relation to two songs, contrary to s.16 of the Copyright & Patents Act 1988 (“the CPDA”). The Claimant obtained summary judgment on its claim in the absence of the Defendant who was acting as a litigant in person. Following enforcement, the Defendant applied to set aside summary judgment. The Master refused to set it aside using CPR 39.3 (5) as a guide.

The Defendant appealed contending that

1. The Master’s approach to the principles applicable to setting aside an order for summary judgment obtained in the absence of a party was wrong, in that he had applied the test for setting aside judgment after a trial, which was not the right approach. The defence had real prospects of success because the defendant had authorised the playing of music in the restaurant, but he had not authorised the infringement of copyright.

2. He had no control over whether independent DJ’s played music infringing the copyright;

3. There were other reasons why this matter ought to go to trial, including the fact that it was inappropriate to conduct a mini trial at the summary judgment. (§ para 9 of the Judgment).

Miss Penelope Reed QC sitting as a Judge of the High Court Chancery Division held:

1. There was some force in the first argument, and it ought to be easier to set aside summary judgment orders in appropriate circumstances (§ para 13).

2. The Court should take into account other rules of the CPR which provide that judgments can be set aside such as judgments in default under CPR r 13 (§ para 14).

3. It was not inappropriate to take into account considerations set out in CPR r 39.3 (5). However, the Judge held that those considerations ought not to be too rigidly applied in circumstances where there has been no trial (§ para 14). There may be other relevant considerations, including whether there are other reasons why the matter ought to be tried (§ para 15).

4. The Master had used CPR r 39.3 (5) as a guide. Whilst another Judge may have taken a different view on the issue of whether the Appellant acted promptly, the Master could not be criticised for finding that the application had been made late. The Master had not erred (§ para 18).It is the authorisation of the playing of music in public which is relevant within the meaning of s.16 of the CPD 1988, and not the authorisation of specific songs which infringe copyright (§ para 28).

5. Amstrad could be distinguished on the basis that there was no control over use to which their equipment was put, whereas the Appellant had complete control over the playing of music in his premises (§ para 28).

6. DJ’s did not exceed the nature of the authority conferred upon them. Therefore, the Master’s decision was not at odds with the law of agency (§ 29).

7. There were no real prospect of success at trial and permission ought to be refused (§ para 30).

The Judgment can be accessed here:

http://www.bailii.org/ew/cases/EWHC/Ch/2018/1327.html

Judgment: Phonographic Performance Ltd

Arfan Khan argued the case on behalf of the Defendant, instructed by DCK Solicitors. He did not appear below.

State Immunity
Court of Appeal