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England and Wales High Court (Queen's Bench Division) Decisions
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Cite as:  EWHC 250 (QB)
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| Priya Hiranandani-Vandrevala
|- and -
|Times Newspapers Ltd
Adam Wolanski (instructed by Times Newspapers Ltd) for the Defendant
Hearing dates: 20th January 2016
Crown Copyright ©
Mr Justice Nicol :
' Prince Charles spent his 65th 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.
 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.
 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.
 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.
 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.
 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.
 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.
 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.
 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.
 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.
 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.
 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.
 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.
 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.
 "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."
 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.
 Hiranandani said he had assembled the sites over time and obtained the necessary planning permissions.
 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.
 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".
 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".
 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?"
 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.
 "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".
 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.
 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".
 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."
 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".
 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.
 Hiranandani Group said: "For the avoidance of doubt, Mr Hiranandani will continue to aggressively defend himself against these scurrilous allegations – but unlike Hirco will do so only in the proper forum."'
'£350 million is missing from Hirco's accounts because it has been misappropriated and/or fraudulently obtained by the Claimant and other members of her family.'
'the Claimant, together with other members of her family, has misappropriated and/or fraudulently obtained over £300 million from Hirco.'
'there are reasonable grounds to suspect that the Claimant and other members of her family had fraudulently obtained more than £300m by persuading Hirco to buy plots of land from them at values they knew to be grossly overstated'.
The approach which the Court should adopt to deciding meaning
'(1) the governing principle is reasonableness. (2) The hypothetical reasonable reader is not naïve but he is not unduly suspicious. He can read between the lines. He can read in an implication more readily than a lawyer and may indulge in a certain amount of loose thinking but he must be treated as being a man who is not avid for scandal and someone who does not, and should not, select one bad meaning where other non-defamatory meanings are available. (3) Over-elaborate analysis is best avoided. (4) The intention of the publisher is irrelevant. (5) The article must be read as a whole, and any "bane and antidote" taken together. (6) The hypothetical reader is taken to be representative of those who would read the publication in question. (7) In delimiting the range of permissible defamatory meanings, the court should rule out any meaning which "can only emerge as the produce of some strained, or forced, or utterly unreasonable interpretation" (see Eady J. in Gillick v Brook Advisory Centres approved by this court  EWCA Civ 1263 at  and Gatley on Libel and Slander (10th edition paragraph 30.6). (8) It follows that "it is not enough to say by some person or another the words might be understood in a defamatory sense". Neville v Fine Arts Company  AC 68 per Lord Halsbury LC at 73.'
'although a combination of words may in fact convey different meanings to the minds of different readers, the jury in a libel action, applying the criterion which the first principle dictates, is required to determine the single meaning which the publication conveyed to the notional reasonable reader and to base its verdict and any award of damages on the assumption that this was the one sense in which all readers would have understood it.'
The repetition rule
'At the forefront of Mr Price's argument was the submission that the case falls squarely within the repetition rule, which he submitted applies precisely to the report of the contents of Mr Gorman's affirmation, which is a hearsay report of what Mr Gorman affirmed; from this it follows, in the words of Lord Devlin [in Lewis v Daily Telegraph Ltd  AC 234], that it is the same as a direct statement, and that is all there is to it.'
At p. 134 Hirst LJ agreed with the submission because the report of statements in an affirmation 'palpably falls directly within the rule, since it is essentially hearsay.' This was not a situation where the defendant could rely on privilege for reporting court proceedings, since the affirmation had not been deployed in any public hearing. Hirst LJ added at p. 135,
'It is indeed the one-sidedness of the present publication which to my mind vindicates the justice of applying the repetition rule to the present case, avoiding the unfairness similar to that identified by Lord Denning in 'Truth' (N.Z). Ltd v Holloway  1 WLR 997 of a private court document emanating from one side being disseminated on a very wide scale to the public at large.'
'The repetition rule (I gratefully adopt Hirst LJ's term for it, as well as his exposition of the facts, authorities and arguments) is a rule of law specifically designed to prevent a jury from deciding that a particular class of publication – a publication which conveys rumour, hearsay, allegation, repetition, call it what one will – is true or alternatively bears a lesser meaning than would attach to the original allegation itself. By definition, but for the rule, those findings would otherwise be open to the jury on the facts, why else the need for a rule of law in the first place?'
'As, however, Hirst LJ has shown in the passages he cites from the various speeches (including Lord Devlin's) so far from Lewis's case undermining the repetition rule, it in fact reiterates it. And, as I began by pointing out, the repetition rule is indeed a rule which, where it applies, dictates the meaning to be given to words used. Had Mr Gorman's affirmation alleged, not that the appellant is guilty of dishonesty and perjury, but only that he is suspected of such misconduct, then Lewis's case would be in point: the defendant on repeating such lesser allegation would then have had to prove merely grounds for suspicion and not actual guilt. As it is, however, Lewis's case affords Mr Eady [counsel for the defendant] no support whatever.'
'Coming now to Mr Rampton [counsel for the defendant]'s meanings of no more than reasonable suspicion, his argument rests principally on the context in each of the publications, and, in particular the omitted words with their frequent use of qualifying words such as "alleged", "suggested", "apparently", "said to be" and the like, coupled with reservations sometimes expressed such as the statement in the last paragraph of the report that inquiries have so far failed to substantiate that Suresh Shah is the frontman for Dalal. I do not propose to go through these in detail; suffice it to say that I have come to the conclusion that in the case of each of the publications these miscellaneous qualifying words and reservations do render each set of the words complained of capable of bearing a meaning of no more than reasonable suspicion.'
'[T]he correct approach is not in doubt. If the defamatory sting of an article is wholly removed by surrounding words then, to use Baron Alderson's famous phrase in Chalmers v Payne (1835) 2 CM &R 156 at 159, "The bane and the antidote must be taken together." Nor could it be doubted that the principle applies to repetition cases – see again, Stern v Piper. As Huntley JA observed in Sergi v Australian Broadcasting Commission  2 NSWLR 669 at 670: "the bane and antidote theory …is merely a vivid way of stating that the whole publication must be considered not a segment of it". One asks, therefore, in this as in any other case where the principle is invoked, whether, considered as a whole, the publication is damaging to the claimant's reputation. That, at least, is the question ultimately to be asked. At present, of course, the court is concerned with whether the defamatory meaning sought to be alleged - here the lying meaning - could be conveyed to the ordinary reasonable reader, the supposed antidote notwithstanding.'
'The first formidable obstacle which Mr Craig's argument encounters is a long and unbroken line of authority the effect of which is accurately summarised in Duncan & O'Neill on Defamation, 2nd ed. (1983), p. 13, para 4.11 as follows:
"In order to determine the natural and ordinary meaning of the words of which the plaintiff complains it is necessary to take into account the context in which the words were used and the mode of publication. Thus a plaintiff cannot select an isolated passage in an article and complain of that alone if other parts of the article throw a different light on that passage."'
'But as the authorities emphasise, account must be taken of the context; the publication must be considered as a whole. What Mr Tomlinson [counsel for the claimant] described as a "Socratic dialogue" should take place with one reader saying to another such words as "Be fair…" (per Lord Reid in Lewis at 259) or "Steady on…" (per Hirst LJ in Mapp at 529H). The question which I have to decide is whether, taking proper account of the context, the passages on which Miss Page [counsel for the defendant] relies as antidote have the effect of displacing or modifying the impression created by the passages selected for complaint and so lowering the overall impression conveyed to the ordinary reasonable reader to a level of meaning lesser than guilt of corruption.'
'It is not, therefore, correct to say as a matter of law that a statement of suspicion imputes guilt. It can be said as a matter of practice that it very often does so, because although suspicion of guilt is something different from proof of guilt, it is the broad impression conveyed by the libel that has to be considered and not the meaning of each word under analysis. A man who wants to talk at large about smoke may have to pick his words very carefully if he does not want to exclude the suggestion that there is also a fire; but it can be done. One always gets back to the fundamental question: what is the meaning that the words convey to the ordinary man: you cannot make a rule about that. They can convey a meaning of suspicion short of guilt; but loose talk about suspicion can very easily convey the impression that it is a suspicion that is well founded.'
i) I have followed the principles in Jeynes, which it is unnecessary to repeat.
ii) The article includes the allegations made by Hirco, but it also includes the denials by the Claimant and her father (Mr Price was minded to accept that his response would be understood by the reader to extend to the Claimant as well). These are not just bare denials, but include a counter-allegation that Hirco was trying to pressurise Mr Hiranandani into a settlement so that shares, which the current holders bought at a knock down price, could yield a substantial profit (see paragraph 27). Hirco's allegations are described as 'scurrilous' and they were to be 'vigorously defended.'
iii) More space is given to Hirco's allegations than to the Hiranandani response, but it would be apparent to the reader that Mr Hiranandani took the position that the proper forum for a detailed refutation of the charges was the private arbitration taking place in Singapore (see paragraphs 26 and 29).
iv) Mr Wolanski relied on paragraph 6 ('Hirco's shares were delisted last year because it was unable to give the City an accurate account of its finances') to argue that the reader would take this as meaning that Hirco's credibility was suspect and that itself would weaken the weight to be given to its allegations. I considered this to be a more neutral factor. The article elsewhere said that Hirco had lost £350m as a result of the transactions with the Hiranandani family. It is not made clear to the reader whether this was the cause of its inability to give an accurate account of its finances or whether there was some independent reason for this.
v) The headline of the print version ('Hunt on for AIM firm's missing £350m') suggests that there is an issue as to what has happened to the missing money, rather than stating definitively that it has been lost through fraud. The headline of the later on-line version ('AIM firm sued over £350m investment') is neutral as to whether the suit is or is not well-founded.
vi) The sub-heading refers to an alleged fraud and elsewhere in the article it is made clear that the allegations of wrongdoing by the Hiranandanis are just one side of the dispute. In the context of an article which does a good deal more than simply repeat one person's allegations (and which the repetition rule would treat as a statement of guilt and no lesser meaning), this is a feature on which the defendant can rely in support of a Chase level 2 meaning, just as the Defendant was able to do in Shah v Standard Chartered Bank. This is not an article which purports to be an independent investigation or judgment by the Sunday Times. In Charman at  Gray J. said,'The first to which Miss Page rightly draws attention, is that a report of a police investigation into alleged criminality is likely to bear a lower level meaning than a report of a newspaper's own investigation.'
vii) In his skeleton argument Mr Wolanski submitted 'No reasonable reader would conclude from this article that the allegations made by Hirco must be well-founded' [my emphasis]. This may be a forensic flourish, but it is worth emphasising that my task is to decide what meaning a reasonable reader would attribute to the article. It is not to eliminate meanings which a reasonable reader could not give to the article. Nonetheless, I agree with the substance of Mr Wolanski's submission, that the meaning which the article had was a Chase level 2 rather than a Chase level 1. I have said that the meaning was that there were cogent rather than just reasonable grounds to suspect wrongdoing because of the degree of detail with which Hirco's case is set out.
viii) In my judgment the later on-line version of the article had the same meaning. Mr Wolanksi argued that the case was clearer still in this case because of the different headline and because the reader was told that the article had been the subject of a legal complaint from Priya Hiranandani-Vandrevala. In my view the change in the headline was of marginal significance. The addition of the notification of the legal complaint had no effect on the meaning of the article as a whole.
Other issues as to the meaning of the articles
There were cogent grounds to suspect that the Claimant (and her father) had fraudulently breached their duties as directors by persuading Hirco to buy plots of land from them at grossly over-stated values. This had caused a loss to Hirco of £350 million and had led to £300m going into an offshore trust owned by the Claimant, her husband and her brother, Darshan.