The Court of Appeal upheld trial judge’s decision to order an account in millions

The Court of Appeal upheld trial judge’s decision to order an account in millions

The Court of Appeal (Lord Justice Nugee, Lord Justice Stuart Smith, and Lord Justice Warnby) upheld the decision of Mr Eason Rajah QC ordering an account in millions against the Defendant for breach of fiduciary duties.

The Court of Appeal held that the judge referred to the facts with commendable clarity (§3). Disclosures to the South African Revenue Service revealed that approximately £40 or £65 million, comprising profits in a off book cash business, were secretly taken out of South Africa by the South African businessmen in breach of Exchange Control regulations and placed in Swiss accounts. This included the Claimants’ share of monies. Thereafter funds were distributed in agreed proportions. The Defendant used the Claimants’ share of the monies to purchase various properties in the UK.

The Court of Appeal held the overall issue was whether the Defendant was accountable to the Claimants (§45). That ultimately depended on the question whether the Defendant had control of property belonging to the Claimants. The Court of Appeal held that the judge succinctly identified this question in his judgment which depended upon whether, viewed objectively, the Claimants were entitled to expect him to administer that property for their benefit (§45). There was no requirement to establish a breach of fiduciary duty in order to establish a duty to account.

There can be no hard and fast rules regarding the impact of document suppression, which depended upon the evidence and issues (§44). If the Court can make secure findings of fact on the basis of other evidence, even after making due allowances for what might have been deliberately withheld, then it is entirely appropriate for it to do so. (§44). The Court of Appeal held that, even considering the fact of deliberate document suppression, the judge had benefit of seeing extensive cross examination of the Defendant on the documentary evidence and other matters, such that, even discounting the Claimants’ evidence, the judge had enough material emanating from the Defendant to reach the conclusion he did (§ 46-47).

The Court of Appeal held that it should be very wary of being too prescriptive as to how judge’s write their judgments (§42). This is particularly when it comes to a trial judge’s analysis of the evidence. The Court would be doing no-one favours if it started laying down rules requiring judges to spell out in detail why they have or have not accepted particular pieces of evidence, let alone what the significance might be of evidence that, for whatever reason, was not before the Court (§ 42). It is to be assumed that a judge knew how to perform judicial functions, and had taken the whole of the evidence into consideration, unless the contrary is established (§43).

The Claimants’ Amended Particulars of Claim was not, on a fair reading of the pleading, limited to two specific sums namely $4 million and $12 million, but included an allegation that, whatever else the position was, the Defendant was accountable to them among other things for the portfolio listed in the Richmond Lodge Document which he admitted holding for them, and there was undoubtedly evidence to support that case (§55-57). That was sufficient to entitle the judge to find that the Richmond Lodge Document was intended to be an account of what the Defendant was holding for the Claimants in 2009, and to conclude that he was accountable at least for what he there admitted holding. It was not necessary for the Judge to delve into the detail of precisely how the assets there listed had come to be acquired (§56). Nor was it necessary to show what transfer of monies funded the portfolio (§55). The judge had rejected other answers to the claim and the defence of illegality did not feature in the appeal (§52).

The circumstances in which the Richmond Lodge Document came to be produced embraced the question whether it was produced by the Defendant and intended to be an acknowledgment of what he was then holding; or whether it had been altered for personal use (§62). The Judge had to resolve that question and did so with considerable care (§ 62 & 17). The effect of the judge’s decision, that the Richmond Lodge document was an agreed statement of account, had the effect of rejecting the Claimants’ case that it was a partial account, and was not something which the Defendant could object to on appeal (§64).

The Court of Appeal dismissed the appeal with costs.

Arfan Khan acted for the successful Respondents on appeal and Claimants at trial.

The judgment can be access here:

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