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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Shah v Shah & Anor [2017] EWHC 2693 (Ch) (01 November 2017) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2017/2693.html Cite as: [2017] EWHC 2693 (Ch) |
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 2017] EWHC 2693 (Ch) | ||
CHANCERY DIVISION
Rolls Building, Fetter Lane, London EC4A 1NL |
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| 2017 |
B e f o r e :
____________________
| Nirav Shah | Claimant |
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| - and - |
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| Ashok Shah and Jaivant ShahBharat ShahNarendra Shah | Defendant/Part 20 Claimant Part 20 Defendants |
____________________
Chloe Shuffrey (instructed by Kapoor & Co.) for the Part 20 Claimant
Timothy Sisley (instructed by Labrums Solicitors LLP) for the First Part 20 Defendant
Bharat Shah appeared in person
Narendra Shah did not appear and was not represented
Hearing dates: 19th, 20th, 21st, 22nd, 23rd and 28th June and 13th July 2017
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VERSION OF JUDGMENT
Crown Copyright ©
Master Bowles:
Shah (Ashok), in respect of the outstanding part of a loan, initially of some £910,000, which had been advanced by a Mr Harakhchand Gudka (Mr Gudka) to Ashok and to the Part 20 Defendants, Jaivant Shah (Jaivant), Bharat Shah (Bharat) and Narendra Shah (Narendra). That loan had been advanced, over a period of time, by Mr Gudka, to Ashok, Jaivant, Bharat and Narendra, who are brothers, to assist the brothers in their joint business activities. Mr Gudka was Jaivant's father-in-law. He died in December 2000, at which date the sum outstanding on the loan was £510,000.
Shah (Nirav). Nirav is Jaivant's son. Mr Gudka's personal representatives were and are his brother, Premchand Hemrak Gudka and his daughter, Jaivant's sister-in-law, Avani Jayesh Kumar Devraj (Avani). No consideration was given for the assignment.
2017, judgment was given against Ashok in favour of Nirav in the sum of £510,000, together with interest in excess of £1M. That order provided, however, that that liability was joint and several with that of Jaivant and Bharat (it being common ground that, by agreement between the four brothers, Narendra had been released from any liabilities arising from the brothers' business dealings).
valuation of the residual assets derived from those activities and investments and to the accounting obligations of each of Ashok, Jaivant and Bharat in respect of those assets, such as to enable the effective dissolution and winding up of their collective activities.
Veer Savarkar Marg. The legal title to Flat 91 had been held by Narendra and his wife. The legal title to Flat 92 had been held by Jaivant, Bharat and Bharat's wife. Both the titles making up the unit were sold to a Mr and Mrs Deepak Pawar, for an ostensible aggregate price of 35.5M rupees; 20M rupees for Flat 92 and 15.5M rupees for Flat 91. Jaivant's case, before me, was that the Bombay Flat, as referred to in the agreement, related only to Flat 92, even although that title constituted only one part of a single dwelling.
Shah family had two flats in Bombay, Flats 91 and 92, that Flat 91 was owned by Narendra and his wife and that the Bombay Flat, as referred to in the agreement, meant only Flat 92. In regard to the Total Claims document, Labrums explained that the figure of 120M did not record the sum received on the sale of the flat, but was a document prepared by their client, Jaivant, in early 2012 and, therefore, before the sale of the flat and that the figure of 120M was a rounding up of the asset values, as set out in the 2001 agreement. No explanation was given as to why the flat (whether the entire unit or that part of it constituting Flat 92) had been sold without reference to Ashok. Nor was it explained that, in point of fact, Flats 91 and 92 constituted one unit. Nor was any explanation proffered, at that stage, as to where even the admitted proceeds of the sale had been applied. The letter did, however, contain a demand that Ashok account for a number of the properties identified as assets in the 2001 agreement and which were said to have been under his control. Some, but not all, of these properties are dealt with in this judgment, as part of the Second Issues.
chief, Ashok gave a, seemingly, heartfelt explanation, as to why he had concocted a dishonest defence to the Claim. He told me that it had all started because Jaivant had cheated him. He had only been asking for his share and nothing more. Instead of that, 'they' had pursued the Gudka debt and threatened him with the amount of interest. He had felt that 'their' aim was to destroy his family. He had become worried and upset and felt that he had had to do something to protect his family. He had done the most stupid thing. He had cheated too. He was very sorry.
very much later.
very early stage. They are first referred to in August 2014, prior to the issue of Nirav's claim and in response, it would appear, to the threat of that claim. The lie was persisted in right through and into the trial of the First Issues and Ashok seems only to have 'confessed' when confronted with the weight of the expert evidence called by Nirav.
view, Jaivant and Bharat, who, as one of the 'paper' owners of Flat 92 necessarily joined in the sale, had had a duty to account to Ashok for the proceeds of that property, if, as Jaivant contended, that was the Bombay Flat, and had failed in that duty. As set out later in this judgment, I have no doubt, both that the Bombay Flat constituted both Flat 91 and Flat 92 and that the price received for the Bombay Flat and for which Jaivant and Bharat have failed to account considerably exceeded even the aggregate price for which Jaivant has contended. In Ashok's terms, he had been cheated.
veracity, given his proven capacity to tell and sustain a 'big' lie, I did not feel, in the main, that his evidence could not be relied upon. In contrast to Jaivant, I felt that, on the whole, he tried to answer questions honestly, did not try and assess where the questioner was going and shade his answer accordingly and did not calibrate his answers having careful regard to the documentary evidence available. Again, in contrast to Jaivant, Ashok seemed to me to have sought to investigate and produce evidence in respect of matters in issue between the parties, whereas Jaivant was content to allow matters to remain obscure and to make concessions only when they were forced upon him.
view that that Claim, whether or not good in itself, was resurrected by Jaivant and Nirav to pressurise and deflect Ashok. While that may be unattractive and raise questions as to the need for that behaviour, it cannot be said to have been wrongful in itself. What, however, is wrong is to lie about it and to pretend, as I find that Jaivant did, that this manoeuvre was no more than the bona fide fulfilment of the late Mr Gudka's intentions in respect of his grandchildren. It was no such thing.
chosen to explain why neither he, nor Bharat, who, necessarily, joined in the sale, took any steps, following the sale, to account to Ashok for his share, or to pay over that share.
variety of family, or family-related names, such that the legal title is, in this case, no clue to the beneficial title. The title to Flat 92 is, itself, illustrative of this, it being common ground that Ashok had a third interest in that portion of the flat notwithstanding that his name did not appear on the title.
valuation evidence as to the market value of the Bombay Flat at the date at which it was sold. Jaivant's expert witness, who gave evidence by way of video link from India, was a Mr Shaikh. He produced a report in respect of the value of the Bombay Flat, separately valuing each apparent unit, at the critical date of 2012. I will deal with his evidence and the quality of his evidence later in this judgment.
2017, is that it contained, or purportedly contained, photographs of the block in which the Bombay Flat is to be found, together with a location map. In the course of the trial, but only when Ashok's expert gave his evidence, it emerged that those photographs were not of the subject building and that the location plan did not show the location of the subject building, but a location some considerable distance from the subject building. Mr Shaikh was not recalled but submitted a witness statement averring that, although the photograph and plan mistakenly showed the wrong building in the wrong place, he had, actually visited the correct building and given his valuation in respect of the correct building. The veracity of that supplemental statement remains for consideration.
valuer, Mr Chalikwar, did Jaivant, or anyone on his behalf, choose to explain that the report showed the wrong building and the wrong location. The correct building and its location is well known to Jaivant. He and his family have used the Bombay Flat from time to time since 1992. Given the importance of the valuation evidence and given that the report has been in the hands of him and his lawyers since April, it would be extraordinary, if true, if Jaivant had not noticed the mistake. Jaivant acknowledged that he had seen and read the report. He maintained, however, that he had not noticed that the photographs were of the wrong building, or that, instead of being shown as located on the Bombay water's edge, it was shown as being a significant distance inland.
very much earlier, prior to the sale of the Bombay Flat, and that, although the sum of 120M is stated to have been a sum 'received', it was, in fact, no such thing, but simply a rounding up of the total estimated asset values, as shown in the 2001 agreement and, presumably, intended as some form of projection of the way that the proceeds of sale of those assets would be divided as and when the assets were sold.
very clear conclusion to be drawn from this is that, as Ashok says, the Total Claims document came into being after and not before the sale of the Bombay Flat and was provided to him at the time that he says it was.
value of the brothers' assets, as shown in the 2001 agreement, it should refer to the figure of 120M rupees as being the 'Total Received'. Instead, although Jaivant was said in Labrums' letter of 9th June 2014 to have 'prepared' the Total Claims document, his approach, when cross-examined, was to distance himself from the document and to contend that this was Nirav's document and that it had not been prepared by him. Not insignificantly, although the importance placed by Ashok on the Total Claims document had been made clear in Ashok's witness statement of 26th May 2017, Nirav was not called to give evidence.
value of their assets in 2013, or 2014, upon estimated values of those, largely, property assets some eleven or twelve years earlier. It is much more likely, I fear, that, when Ashok forced the issue, by pressing for his share in the proceeds of the Bombay Flat, via solicitors' correspondence and the threat of proceedings, and when, in that correspondence, the Total Claims document was raised, as identifying the price received for the Bombay Flat, Jaivant took advantage of the broad similarity between the estimated value of the brothers' assets in 2001 and the price obtained for the Bombay Flat, so as to use the one to disguise, or hide, the price obtained for the other.
view, have ever been pursued but for the fact that Ashok was pursuing that claim.
value received for the property and, whether, if the true value was not obtained, Jaivant (with, or without, Bharat) is accountable to Ashok upon the basis of wilful default.
chose to assert that he had no idea of their location and, so, had no basis upon which he could make enquiries.
changed when confronted by documents procured by Ashok which showed that both Jaivant and Bharat had given a power of attorney to a Mr Gosai in 1996 in respect of their legal interest in two of the sub-plots which, together with a number of other sub-plots, held in other, as I understand it, family names, make up the Surat Plot. At that point, but only at that point, Jaivant conceded, as he had to, that he had known something of the matter. His new explanation was that, until reminded by sight of the power of attorney, he had forgotten all about the Surat Plot; the reason for that being that the plot had been sold and the proceeds divided in 2003 or 2004. He sought further to explain his forgetfulness, of the sale and of the power of attorney, by the assertion, firstly, that Ashok may have given him and Bharat blank pieces of paper to sign and, secondly, that he and Bharat simply had signed where they had been told to by Ashok.
choose to account to Ashok.
very much more likely explanation of this allegation and the reason why it is relevant in considering Jaivant's approach to this litigation is, regrettably, that it was made without good cause in an attempt to bolster, or enhance, Jaivant's case and is demonstrative, at best, of Jaivant's willingness to make unsupported and unsupportable allegations for that purpose and, at worst, of a dishonest willingness to render Ashok liable for monies to which Jaivant was not entitled. Either way, it provides the court with no confidence in Jaivant's conduct both in respect of this litigation and generally.
2017, Bharat has been unrepresented. At the trial, subject to a limited cross-examination of Mr Chalikwar, Bharat took no part. He had not complied with my directions as to the provision of witness statements and he elected to give no evidence. Nor, although invited, did he exercise his right to make submissions.
views that I have formed as to his role in the material matters and as to his liabilities to account, or his entitlement to be accounted to, must and have, necessarily, been determined without the benefit of any assistance that he might otherwise have given.
virtually conclusive. Where, however, the court is, as I find, dealing with persons who are prepared to behave dishonestly and, where, as explained by Mr Chalikwar, one is confronted with the known phenomenon, in India, of 'black money'; that is to say the practice (described by Mr Chalikwar as a large problem in India) whereby registered sale documents disclose only a part of the true price paid, in order to avoid building tax and stamp duty; the weight to be attached to registered sales figures is significantly diminished. In this case, I have concluded, for the reasons already set out, that the evidence derived from the Total Claims document outweighs the weight to be given, given the 'black money' phenomenon, to the registered sale price and that the Total Claims document and the figure of 120,000,000 rupees received is, by far, the better indicator of the price obtained for the Bombay Flat.
view, I have also tested the 120M rupee figure against the expert evidence as to the value of the Bombay Flat at the date of its sale.
very much prefer that of Mr Chalikwar to that of Mr Shaikh. Although, when it emerged that the photograph and location plan shown in Mr Shaikh's report were a photograph and a location plan in respect of an entirely different building than that which he had been asked to consider, Mr Shaikh, as already stated, put in a supplemental statement averring that, notwithstanding the photograph and plan, he had actually based his valuation of the Bombay Flat upon an inspection of the correct building, I remain in some doubt as to whether this was actually the case.
very little weight to Mr Shaikh's evidence stem from Mr Shaikh's apparent lack of familiarity, when cross-examined, with the district in which the Bombay Flat is situated and his apparent failure, under cross-examination, to absorb the relevance, when it was put to him by Mr Roe, for Ashok, of the fact that the flat lies, as I was told, within the Coastal Regulation Zone 1, which severely regulates development of land on, or close to, the Dadar seafront, where the Bombay Flat is to be found. The impression he gave was not merely that he was largely unaware of the Regulation but also of the relevance of the Regulation to the subject property. It was as if he had not realised that the subject property was on the seashore and subject to the Regulation.
values.
valuing one unit but believed that he was valuing two separate units. When put to him that the flat actually constituted one unit, he agreed that a valuation which simply aggregated the values he had placed upon what he had believed to be two separate units did not produce a proper valuation of the actual unit to be valued. By the same token, he had not, in his reports, been prepared to give a global value for the two separate units (as he believed them to be) sold to one buyer, as, in that circumstance, the global valuation would not reflect the individual value of each unit but would derive from the parties' particular negotiations.
valuation date. They constituted no more than abbreviated sales particulars of new-build properties currently on the Bombay market, from which Mr Shaikh had derived current values for, as he had understood it, the two units he had been asked to value. Those values had then been adjusted by way of what he termed a 'back calculation', in order to derive the value of 18,500 rupees per square foot, in October 2012, that he had then applied to each apparent unit in order to reach the two values of circa 23M rupees (Flat 92) and circa 17.5M rupees (Flat 91) for which he contended.
very strong impression that Mr Shaikh had no real knowledge either of the subject property (the flat and the block) or of the area in which it stood, or of the limitations in respect of development in that area, which might impact upon value. I felt that, because of his lack of knowledge of the subject property and the position of the subject property upon the Dadar seafront, the somewhat vestigial comparables that he had selected and from which he had apparently worked in determining his valuation were of very little weight and did not, in any significant way, assist him, or me, in determining a true valuation of the Bombay Flat at the relevant date.
Chalikwar's evidence was of a different quality. While unable to inspect the interior of the flat, given its sale, he had visited and photographed the block in which it is situated. Unlike Mr Shaikh, whose professional base is in Vadodara, some 400 kilometres from Bombay, Mr Chalikwar practises in Bombay. With the knowledge acquired from that fact and from, as I was told, his fifteen years' experience, he was able to tell me about the limitations upon development on the Dadar seafront and in the area of the subject property, by reason of its being in Coastal Regulation Zone 1. In that regard, he told me that there was no supply of new-build property in the relevant area and no significant new development.
varied having regard to the height within the building of the relevant units, the age of the building in question and whether the unit in question, as the Bombay Flat did, faced the sea with uninterrupted sea views. He illustrated the quality of the property by reference to the fact that a number of high-grade corporate bodies, including Tata International, had purchased units within the block.
Chalikwar had identified a number of nearby comparables, where valuations had been given in 2012 and 2013, and he was able to differentiate and grade those comparables, as against each other and as against the subject block and the subject flat by reference to their age, facilities and position. He had also located two more recent valuation reports (2015), pertaining to the subject block itself, including one relating to the adjacent unit to the Bombay Flat.
Chalikwar put it, carefully prepared valuations provided for banks and private individuals contemplating transactions in respect of the properties in question and which, therefore, it may be inferred, informed actual transactions. In that context and in the absence of any critique of the valuations themselves, I see no reason not to place reliance upon them.
Chalikwar placed a value of 30,000 to 40,000 rupees per square foot upon the Bombay Flat at the relevant date, in good condition. That valuation seemed to me to be well supported by his comparables.
Chalikwar explained that two comparables within the Miramar Building, half a kilometre from the subject block, were within an older building with less good views and not on the sea edge (all factors reducing value), but that nonetheless they had been valued in 2013 at 30,000 rupees per square foot. A further comparable (Twin Towers), somewhat further away from the subject block, without the same sea views and again in a slightly older building, but at a higher level than the Bombay Flat (height increasing value) had achieved a valuation some six months prior to the relevant date of 45,000 rupees per square foot. His 2015 comparables, within the subject block, had been valued, respectively, at 55,000 and 59,700 rupees per square foot. In regard to growth in value, Mr Chalikwar was in no doubt but that there had been such growth in the building in the years since 2012. That growth varied building to building, but Mr Chalikwar's estimate was of 8% to 10% per annum. On that footing, the indications from the 2015 valuations, from within the subject block (coupled with the Twin Towers valuation), tended to support the higher end of Mr Chalikwar's range.
Chalikwar's evidence and analysis, that the value of the Bombay Flat, at the relevant date was, undoubtedly within the range that he identified and was more likely than not at the higher end of the range. On that basis the value of the Bombay Flat, if sold in good condition, lay between 81,360,000 rupees and 108,480,000 rupees and was, as I find, more likely to have been at the top end of that range.
value of the property, as being at the top end of Mr Chalikwar's range, was less than one third of its true value and only 5M rupees more than the estimated value (30M rupees) placed on the flat in the 2001 agreement.
valuation evidence, has been as to whether the fact that the top end of Mr Chalikwar's valuation is so significantly below the 120M rupees 'received', appearing in the Total Claims document, and which, for the reasons already set out, I have concluded reflects the purchase price received for the Bombay Flat, as to negate, or put in question, that conclusion.
Valuation is not an exact science and the relevant discrepancy, of a shade over 10%, between the Total Claims figure and the top end of Mr Chalikwar's valuation does not, given all the other circumstance already discussed, seem to me to place the Total Claims figure so far from the valuation figure as to override the conclusion that I have reached. Ultimately, as Mr Shaikh recognised in his evidence, a price will reflect the result of a particular negotiation between buyer and seller. In this case, rather than Bharat and Jaivant selling cheaply, my conclusion is that Bharat and Jaivant achieved a very good price for the property.
Shah and a Mr Ramesh Shah. It is common ground that both Deepak Shah and Ramesh Shah were creditors of the brothers and that they are shown as such in the 2001 agreement. It follows that, provided that it is accepted (as I understand to be the case) that they have been repaid, then one third of those repayments can be deducted from the sums for which Bharat and Jaivant are otherwise accountable to Ashok.
value, Ashok's alternative contention, that Bharat and Jaivant account to him on the basis of wilful default, by reason of their sale of the Bombay Flat at a manifest undervalue, no longer falls for determination. If, however, I had found that the Bombay Flat had been sold for 35.5M rupees, I would have concluded that that sale was at a manifest undervalue and that the extent of the undervalue was such as to demonstrate an obvious failure by Jaivant and Bharat, both of whom must be regarded as agents and, therefore, fiduciaries for Ashok in respect of the sale, to take even the most rudimentary steps to secure, as was their duty as agents, the best price for the property.
v Barclays Trust Co. (No. 2) [1980] 1 Ch 515 at 546, to do something that a prudent agent, or fiduciary, would have done in seeking to sell the property; namely to adequately expose this valuable property to the market. Their failure, in that regard, exposes, or would have exposed them to liability upon the basis of wilful default.
Chalikwar's valuation and, so, arrive at a value for the property of 95M rupees. For reasons already stated, I consider that it is more likely than not that the true value of the property at the relevant date was, subject to condition, at the higher end of the range. Making an allowance, however, for the possible lack of good repair and although I might think that 95M rupees constitutes a conservative valuation, I am content to adopt that figure and, accordingly, had I determined that the property had been sold at the price alleged by Jaivant, I would have directed that Jaivant and Bharat account to Ashok for one third of that figure.
very little evidence as to the extent of that income. Ashok's evidence was that he had been told by Bharat, who seems to have had the running of the property, that it was let out on short holiday lettings for, say, fourteen day periods, to UK or Kenyan visitors, that it could fetch some £600 per week for such lettings. Ashok's understanding from Bharat was that the flat was let for twenty five to thirty weeks per year. Because Bharat had the management of the flat, any one of the brothers wanting to use the flat had first to check with Bharat to see whether it was already rented.
challenged by Bharat. In fact, Bharat made no attempt to seek to challenge it. I see no reason to disbelieve it and do not. I felt that when tested by Mr Sisley, in cross-examination, Ashok's evidence and answers conveyed the ring of truth.
very general nature and, in effect, a snapshot of the rental position at the time when the relevant information was conveyed to Ashok by Bharat. I do not think, therefore, that one can simply mathematically extrapolate £600 per week over twenty five, or thirty weeks, per year over twelve years. I think the safer course, seeking to make a fair adjustment to reflect what must have the inevitable vicissitudes of the rental market and, also, what must have been changing prices over a twelve year period, is to discount both the rent and the rental periods in each year. In consequence, I propose to determine the rental income received on what I consider the safer footing that the property was let for twenty weeks per year at a mesne rent of £500 per week over the twelve year period. That produces a gross rental income, over the period, of £120,000.
very little assistance from Jaivant (and none, of course, from Bharat). While espousing alleged annual expenses of 400,000 rupees, Jaivant did not provide me either with any documentary support, or with any convincing reason for the lack of such support. As Mr Roe pointed out, he gave me two wholly inconsistent explanations for the lack of any documentation. The first was that all relevant receipts had been destroyed, following the sale. The second was that, following sale, he had approached a Mr Mohan (presumably a person charged with the administration of the block) for the relevant receipts, but that they were not forthcoming. Both cannot be true.
changing costs of services and any local taxation, the rate of occupancy of the flat and the amount of the cleaning, managing and maintenance costs engendered by such occupancy. Taken, as a whole, however, I find it difficult to say that average annual costs in the broad order of 400,000 rupees, reflecting, dependent upon rate of exchange, an annual expenditure in the running of the flat of circa £4,500, are intrinsically unlikely, or obviously overstated. As with the rental income, however, I prefer to take a cautious view. In the result, I am prepared to allow expenses, against rental income, at the rate of £4,000 per annum and to conclude, therefore, that the amount accountable to Ashok in respect of net rental income is £24,000.
view to procuring the enhanced value arising on permission to develop and that the plots were only sold after that permission was granted, in April 2003.
value of 50M rupees, as at that date. Jaivant tried to explain this on the basis of his ignorance of the sale and the fact that he had left the matter completely to Mr Gosai. As already set out, I am unable to believe that evidence. It is simply not credible that Jaivant, who had wanted to have control of the property, via the power of attorney, should have surrendered that control and all apparent interest, or influence, in the property to Mr Gosai, such that he was unaware of the sale of the land.
value at that date, as valued by Mr Shaikh. His evidence is that, in 1997, the undeveloped land would only have been worth 2.26M rupees. While I have, as already set out, had considerable reservations as to the quality of Mr Shaikh's evidence in respect of the Bombay Flat and, therefore, I have approached his valuations in respect of the Surat Plot with some caution, the discrepancy remains striking.
chain of title to each of the sub-plots, specifying, in each case, a sale date, by Mr Gosai, as attorney, of September 2003 and a registration date in May 2004.
view, this document accords very much more closely with the likelihoods of the situation than do the purported sale deeds and, for that reason, I consider it a more reliable and accurate guide to what occurred than the sale deeds themselves.
value of the plot in September 2003. As already stated, the likely purpose of acquiring undeveloped land was, or would have been, to retain that land until development permission was granted and to obtain the uplift in value derived from that permission. In that context, it would be unlikely, as I see it, for Jaivant, by Mr Gosai, to have sold at a significant undervalue.
value of the Surat Plot, in September 2003, a difficult one. Mr Mangukia, Ashok's expert valuer, in respect of the Surat Plot, had not been asked for a September 2003 valuation, but had valued as at June 2004. His valuation valued the plot, at that date, at 14,000 rupees per square metre. Mr Shaikh, who, as indicated earlier, provided Jaivant's valuation of the Surat Plot, as well as of the Bombay Flat had provided a 2003 valuation of 4,250 rupees per square metre. That valuation recognised the change of use from agricultural to non-agricultural and, given his 2001 valuation of the land, as agricultural land, at a value of 825 rupees per square metre, also recognised a significant uplift in value arising from the change of use.
view, a valid point as to the potential difference in land values, as between 2003 and 2004. He explained that, while in 2003, development permission had been granted, nonetheless, until development came to be implemented, the land in question was without any infrastructure, or facilities, and was no more than an uncleared plot. He explained, with some credibility, that it was only after the implementation of the development permission, by the building out of the development and the provision of infrastructure, that the land value would have fully increased. He suggested that that increase might well have been by a factor of three or four.
value of 15,000 to 17,000 rupees per square metre.
value, whether in 2003 or 2004, would, however, have been a developed value, with benefit both of the building constructed, or to be constructed, and of the necessary infrastructure material to the unit sold. As such, it does not seem to me to provide very much useful guidance as to the value of the relevant land, with development permission, but prior to actual development. There is no suggestion, in this case, that the Surat Plot, as sold, was anything other than undeveloped land, or that Jaivant, or Mr Gosai, had taken any steps towards implementing its development.
value, once development had taken place. I have, also, an acknowledgment, by Mr Mangukia, that prior to November 2003, when, as I understand it, some relevant further pre-implementation permission was granted, his suggested figure of 14,000 rupees per square metre might have been somewhat lower.
very limited material, I prefer, in this instance, to base myself upon Mr Shaikh's evidence. In respect of the Surat Plot, he seemed to me to have very much more confidence in his evidence and to have a real awareness as to the impact upon his valuation of the changes in status of the land, as between agricultural, non-agricultural, but undeveloped, and developed. His evidence had the merit, also, of directly addressing the relevant date. Mr Mangukia, no doubt because he had been asked, in effect, to give a post-development valuation, did not provide me with any real assistance in respect of the land prior to its development.
value of the Surat Plot, at the date of its sale in September 2003, was circa 34M rupees (4,250 x 8,220 square metres, the size of the overall plot). While that figure is significantly less than the estimated value of 50M rupees shown in the 2001 agreement, which, as it seems to me, must have reflected a hoped for value, following the grant of development permission, it is very much closer to that figure than would be the valuation, of circa 115M, to be derived from Mr Mangukia's figures. To that, albeit limited, extent, it seems to me that the estimate in the 2001 agreement supports, rather than negates, the view I have formed.
view and my finding, the property was sold for the price alleged, then, in addition to Jaivant being accountable to Jaivant for one third of the price that was achieved, he will also be accountable for one third of the difference between that price and the market value of the property. As with the Bombay Flat, the differential between the price allegedly achieved and the true market price is so great that, if the price allegedly achieved was, in truth, the price received on the sale, then that undervalue can only be explained upon the basis that Jaivant, by Mr Gosai, failed to take even rudimentary steps to market the property at its true value and, in so failing, was in breach of his duty owed to his brothers, as their agent and fiduciary, and, in consequence, accountable upon the basis of his wilful default.
valued in the 2001 agreement at 1.5M rupees. Jaivant's pleaded case is that these properties, as with the Surat Plot, had been purchased by Ashok and that he knew nothing about them. Given that Jaivant was lying about the Surat Plot, knowledge of which he was, eventually, forced to admit, and given his known course of dealings in the Surat area, pertaining to the Surat Plot, I approach his equivalent evidence as to these properties with considerable caution.
Shah, who had been a major builder/developer at the relevant time, he had been able to identify the buildings in which the shops and the flat were to be found, but had been unable to pinpoint the precise addresses within the building. Jaivant had contributed nothing to this enquiry.
value.
value, by my order of 10th January 2017, I directed that a joint valuation report prepared in respect of these properties, albeit, given the lack of detailed addresses, upon a generic basis, be admitted in this account. That evidence places a broad value upon the two shops of 4.8M rupees each and a value upon the flat of 6M rupees. The valuation date, in respect of that report was October 2016. Subject to any further submissions when this judgment is handed down, I propose to adopt those valuations, with the result that Jaivant is accountable to each of Bharat and Ashok, in respect of these properties (two shops forming part of the Centre Point Complex, Gopipura, Surat; residential flat in the Rajul Building, Arihant Park, Sumul Dairy Road, Surat), in the sum of 5.2M rupees.
very little difficulty in concluding that the sum paid to Ashok was intended for Ashok and that it was not intended that he should account for one half of that sum to Jaivant.
Shah, were intended other than for Ashok himself. In particular, Bharat's wording of the receipt, for signature by Ashok, stated that 'I (Ashok) am happy to accept this sum and now no amount is outstanding from this apartment'. The plain meaning of the receipt (Bharat's document) is that the monies were paid over by Bharat for Ashok and not, in any respect, for onward transfer to Jaivant.
view, by the timing of this payment. By November 2013, the Bombay Flat had been sold behind Ashok's back, Ashok had discovered that fact and Ashok was in negotiation with his brothers as to his share. Given this state of relations, it is profoundly unlikely that Bharat would have been making payments to Ashok with a view to Ashok transmitting part of that payment to Jaivant. It is overwhelmingly more likely that Bharat would have accounted separately to Jaivant and, therefore, that the monies paid to Ashok constituted Ashok's share in the proceeds of the flat.
value of the flat. That value had been estimated in the 2001 agreement at 1.5M rupees. His suggestion was that the greater likelihood, given that 2001 estimate, was that, twelve or thirteen years on, it was more likely that the value of the flat had increased to 3M rupees than to 6M rupees; as would be indicated by Ashok's share being 2M rupees.
value would have increased to 6M rupees as that it would only have increased to 3M rupees.
value.
Shah (Kirtika), they are owned beneficially by the brothers and that, as with so many of the brothers' assets, legal ownership has little, if any, relationship with beneficial ownership.
very much in line with the practice of the brothers, as explained by Jaivant in paragraph 5.2 of his Amended Defence and Counterclaim.
Shah in 2005, do no more than assert, as Ashok asserts, that plots 89 to 96 were 'booked' in his name. Of those plots, it can be seen that two, although booked in Ashok's name were, in fact, purchased by a Mr Arun Kumar Hansraj Shah and a Mr Kamal Kumar Hansraj Shah, in June 1995. Although the names do not wholly tally, by cros- referencing with an email letter from a Jay Vedala, dated 13th January 2017, it would appear that those plots were plots 92 and 93. Be that as it may, the emails demonstrate, very clearly, that the booking of a plot and the ownership of a plot are not to be equated.
Vedala's email letter. That letter appears to indicate that Ashok was the owner of those plots for a period, but that the plots have now been sold. With the caveat that Ashok maintains that, when he held the plots, he did so as trustee, the letter is entirely consistent with Ashok's evidence.
vested in, respectively, Kirtika and Mrs Gudka, does not denote that those persons are the beneficial owners of the two plots, or properties.
very careful consideration to the contrary evidence given to me by Kirtika, to the statement of Avani, admitted before me pursuant to a hearsay notice, and to the evidence of Sejal Shah (Sejal), who is Kirtika's cousin and the daughter of Premchand Gudka. Avani is Kirtika's sister and another daughter of Mr and Mrs Gudka. She and Premchand Gudka are the personal representatives of Mr Gudka and, as set out earlier in this judgment, parties to the assignment of the Gudka debt to Nirav. I have also take into account the fact that, in a document prepared by Ashok in 2014, which purports to describe the ownership of plots 89 to 96, Kirtika and Mrs Gudka are identified, in respect of plots 94 and 96, as 'beneficiaries'.
chooses to take it, to seek to re-open my decision and will, otherwise, ensure that she is bound by my order.
value of 10M rupees to that property.
value.
Chittiappa, dated April 2014, to the effect that Ashok had not made any offer for the property (identified in the letter as Villa No.7), or paid any money for the property. Mr Chittiappa also gave evidence before me, in which he confirmed that, in 1995/1996, Ashok had discussed the purchase of the property, but that the purchase had not proceeded. He told me that Ashok had only expressed an interest in Villa No.7, that Ashok had asked him to keep the property 'on hold' for him, that Ashok was supposed to come back to him, but that properties kept being sold and that by 1998/1999 the project had been completed. Ashok, he said, had come back to him in 2000 and told him that, because of cash flow, he was no longer interested. Up until that time, although Ashok had only expressed an interest and had not paid any money, or otherwise reserved the property, he had regarded Ashok as having an oral option.
Chittiappa's, evidence in respect of this matter.
very best, there was simply some oral understanding that the property might be kept available.
Chittiappa's. In particular, Mr Chittiappa told me that the project had been concluded by 1998/1999 and that Ashok had, in any event, withdrawn his interest in 2000. Were that to be right, then, not merely would all the properties have been sold prior to the discussions leading up to the 2001 agreement and the agreement itself, but also Ashok would, by the date of those discussions and that agreement (the very end of 2000), have withdrawn his interest. None of that can be squared with Ashok's evidence.
Chittiappa's evidence, to me, that he had given Ashok some informal option in respect of the villa, which had remained in place until 2000, with his written evidence that the villa (No.7), which was, he said, the only one in which Ashok had expressed interest, had been registered, in the name of a Mr Appaya, since 1995.
Chittiappa to give untrue evidence upon his behalf and that the fundamental likelihood is that, as evidenced by the 2001 agreement, the property had, at the date of that agreement, been held by Ashok for the brothers.
value.
ventures, or investments, identified in the 2001 agreement, I should, for completeness and because this account is, in essence, concerned with the final dissolution and winding up of the brothers' business, record the situation as it relates to a number of other properties.
2017, I directed that a number of plots (110 to 112/113 Victorian View, Borewell Road, Whitefield, Bangalore), referred to in the 2001 agreement as the 'Bangalore (Deepak) plot' and, which it was common ground had come to Ashok on behalf of the brothers as a result of his brokerage, or underwriting activities, be sold, with a view to an equal division of the proceeds of sale between the three brothers. That direction must now be put into effect.
ventures in which, according to the 2001 agreement, the brothers were involved.
value of 1.5M rupees. Ashok's case is that that investment failed. The matter has not been pursued.
venture is an apparent investment in a barge and tugboat business at Jamnagar, valued in the 2001 agreement at 5M rupees. It is common ground that this investment was managed by Jaivant on behalf of the brothers and that the venture itself was entered into with a friend of Jaivant, a Mr Vervaria, in, or about, 1997. Jaivant says that it is his belief that the investment made was in the order of 1M rupees.
Vervaria, that the project had failed and that the vessels, apparently a tug boat, a barge and an oil tanker, had no value. He told me, in expansion of that evidence, that he had chased up Mr Vervaria every two or three years, but had gathered that Mr Vervaria had had problems securing contracts, that the vessels had required expensive repairs and that substantial mooring fees had been incurred. He told me that he had spoken, again, to Mr Vervaria, in 2015, who had told him there was 'nothing doing' in respect of the business, and that he, Jaivant, didn't know, one way, or the other, what was going on. He had not made any enquiries as to the possible scrap value of the vessels.
venture had, until relatively recently, had a value. He based that belief upon the fact, denied by Jaivant, that Jaivant had told him, in December 2013, at the time when the sale of the Bombay Flat was the subject of discussion and negotiation, that he was selling the brothers' interest in the business for £100,000 and that Ashok would get £60,000, to reflect his share in the project and something of what he was owed in respect of the Bombay Flat. In his written evidence he stated that he had, subsequently, been informed that the vessels had been scrapped and had no value. He didn't know whether this was true. He pointed out that the connection with Mr Vervaria was Jaivant's and that, in consequence, it was only Jaivant who could realise this investment.
venture, Jaivant has wholly failed to fulfil his obligation to account. He has provided neither documentation nor coherent explanation as to what has occurred. He has not, in any significant way, investigated the matter, but has simply washed his hands of the whole thing.
value of the investment and to require Jaivant to account for that figure.
value. The 2001 agreement placed an estimated value of 5M rupees upon the brothers' share in the venture, as at that date. That figure must have emanated from Jaivant, since he was the only one of the brothers to have any dealings with Mr Vehvaria and the only one, therefore, who could have ascribed a value to their investment. The conclusion, to be derived from his estimate, is that the venture was in effective operation at that date and that, at least in approximate terms, the brothers' share in the venture was at the value given in the agreement.
value, of £100,000 then placed by Jaivant upon the brothers' share in the venture. I am not disposed to disregard that evidence. I find the circumstantial detail persuasive.
venture, I should conclude that an investment, apparently worth £100,000 in late 2013, has now reduced to nothing.
value of this investment. In the absence of the presentation of such evidence within a sensible time scale, I shall order him to account to Ashok and Bharat upon the footing that the brothers' share in this venture is worth £100,000.
venture for consideration is referred to, in the 2001 agreement, as the 'Moonshine Plots (Surat)' and given, at the date of that agreement, a prospective, or estimated, value of 7M rupees. This is another venture which was in the hands of Jaivant, on behalf of the three brothers.
venture in question related to the prospective development of a drive-in cinema; the vehicle for the development being a company, Moonshine Films (Pvt) Ltd (Moonshine), owned and controlled, as I am told, by the same Mr Gosai who held power of attorney over the Surat Plot. Despite the estimated value of the brothers' investment, as being 7M rupees, a figure which, as with that in respect of the Jamnagar tug boat scheme, must have emanated from Jaivant, his evidence to me is that, in fact, the only sum of the brothers' money 'invested' in the company, or the development, was an amount of 464,000 rupees loaned to the company in 1998. Other than telling me that the development had been mired in litigation in the Indian courts for fifteen years and that the development site, itself, had been occupied by illegal occupants, Jaivant had, he told me, no idea what was going on. His only suggestion was that, if and when the site was sold, or developed, any monies that he recovered would be shared.
view, Jaivant has given a sufficient account of his involvement, for the brothers, in this enterprise. At the least, given that Mr Gosai is Jaivant's good friend, I would have expected that evidence might have been available from Mr Gosai as to the state of the venture.
very modest scale of the brothers' involvement, via Jaivant, in the venture.
value of the investment, as shown in the 2001 agreement, and the very much smaller loan said to have been made to Moonshine by Jaivant. If this was a loan of 464,000 rupees in 1998, how, rhetorically, could the brothers have given it a value of 7M rupees three years later? As set out above, Jaivant must have been responsible for that estimated figure, since he is the only person who could have ascribed a figure. On this point, Jaivant told me nothing about the rate of interest presumably recoverable upon the loan, if it was a loan, or, why, if only a loan and a modest one, no steps had been taken for its recovery, or why Jaivant envisaged that any recovery would only take place when the scheme came to fruition.
venture, the solvency, or otherwise of the company and the consequent recoverability, or otherwise, of the loan and accrued interest on the loan. In the absence of a full and proper account of all these matters, it seems to me that Jaivant must be accountable to the brothers for, at least, the amount of the admitted advance to the company.
value on the investment of 7M rupees in early 2001. The greater likelihood must be that a larger sum has been invested in the venture, as had been, as is clear from the record of the Company Law Board findings, the original intention when Jaivant went into this venture and was appointed a director of Moonshine. Correspondingly, given that, from 2001, the brothers were unwinding their affairs, it seems unlikely that significant amounts of the brothers' funds were invested in Moonshine after that date.
value of this investment, as estimated in 2001, on the basis that that still reflects the best estimation of the brothers' investment and upon the basis that nothing has been placed before the court to establish that that estimation is incorrect.
via Ashok, in a share dealing account held by a firm of Bombay stock brokers, or accountants, Kirit Thakkar. In the 2001 agreement that investment was estimated at 300,000 rupees. The most up to date valuation appears to be that of 31st March 2017, showing a total valuation of the relevant holdings, inclusive of dividends and bank interest accrued upon dividends, when deposited in bank accounts, in Ashok's name, associated with the share dealings, of some 859,163 rupees. There is no dispute but that, as part of the dissolution of the brother's affairs, this account must be liquidated and the funds standing to the account shared equally between the three brothers.
very shortly before trial that Ashok produced a bundle of tax calculations and balance sheets relating to the account, from 2004 onward. Further, it was only, following examination of these late disclosed documents and following Ashok's cross-examination in respect of those documents that the existence of two associated bank accounts fully emerged. Copies of those bank accounts, dating from 2008 and 2011, were only provided after the close of evidence.
value of the account in the year to 31st March 2017, given that the August 2016 value was circa 1.3M rupees and given a generally rising market. A possible, if partial, answer to that question is that the 2017 material, while including interest and dividends, does not, overtly, include, as does the 2016 valuation, cash held in the relevant bank accounts.
Shah (presumably the same Beej Shah, who acted as intermediary in respect of the Jamnagar Flat), has, seemingly, received a loan of 250,000 rupees and a gift of 220,000 rupees. On the face of it and unless that borrowing and that gift was authorised by all three brothers, Ashok, as the accounting party in respect of this account, must account to his brothers for their share in those monies. By the same token, monies totalling 233,000 rupees, apparently transferred to Jaivant in 1995, will fall to be set off against his entitlement out of the share dealing account.
various matters could and should be dealt with informally between the parties. I agree. In the absence, however, of agreement on these questions, it will be for Ashok to give his account.
various loans and other liabilities paid by Jaivant and in respect of which, it is said, that Ashok should make contribution.
Shah and Raj Shah, are marked in the 2001 agreement as being for Jaivant to pay. Rightly, as it seems to me, given that these payments are to be found in a list of the debts owed by the brothers, Ashok agreed that, although the markings in the agreement indicated that Jaivant would pay those amounts in the first instance, they did not indicate that Jaivant was not entitled to appropriate recoupment from his brothers.
Shah and Mr and Mrs Ramesh Shah (shown in the 2001 agreement as Deepak and Ramesh). I have already dealt with these liabilities in paragraph 100 of this judgment. Ashok's share of these liabilities can be set off against the monies for which Jaivant and Bharat must otherwise account to Ashok in respect of the Bombay Flat.
Shah and Max Matthias (Rashmi and Max) in the 2001 agreement). Those sums are respectively £8,000 and £29,000.
Shah, he had also paid out an additional £2,000 in repayment of a separate debt allegedly owed by Ashok to Rashmi Shah. I am not persuaded that Ashok should make any payment in respect of these additional amounts.
Shah, the suggested debt was undocumented and unexplained. In regard to Max Matthias, Jaivant explained that he had felt obliged to pay interest out of fairness and because the debt was long standing. He did not assert any legal obligation to pay that interest and, while it may be commendable that interest was, apparently, volunteered in this way, that fact does not entitle Jaivant to pass a share of that interest on to Ashok.
various businesses and investments, that those obligations should be crystallised and identified and that that the list of debts, set out in the 2001 agreement, was, in consequence, intended to be, as between the brothers, full and final and to draw a line in respect of those obligations.
Shah Dodhia & Co, relating, apparently, to the winding up of one, or other, of the brothers' cash and carry businesses. The fee note is addressed to both Ashok and Jaivant. Jaivant asserts, in his schedule of accounting, that he has paid this bill and seeks one third by way of contribution. In his pleading he asserts, rather differently, that Ashok had 'in his time of need' asked him for help and that he had, on that basis, paid £1,220 to the accountant's on his behalf. Ashok's position, in his schedule of accounting, is to deny both his liability to Shah Dodhia and that Jaivant had any authority to make payment on his behalf. I was not given the benefit of any oral evidence on this issue, nor have I been able to locate, or identify, any written evidence. In these circumstances, I do not regard Jaivant's case as having been made out.
charges of any kind were ever laid, but a solicitor, Mr Bray, assisted the brothers in this predicament.
venture and Moonshine and which may need to be directed in relation to the share dealing account and its associated bank accounts.
valuation and sale of various of the assets in debate, as to the interest payable (period, rate and type) in respect of the sums for which each of the parties is to account, or contribute, as to whether, where appropriate, the parties should account in rupees, or sterling, and, if sterling, the appropriate date (or dates) at which the rate of exchange should be determined. There will also, of course, have to be a consideration of the final form of order, of costs and of the interaction between the overall liabilities arising from this trial and Ashok's liabilities arising out of the First Issues. As at this trial, I will rely, in these matters, greatly upon the assistance of counsel.