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IN THE HIGH COURT OF JUSTICE
||Royal Courts of Justice
Rolls Building, Fetter Lane, London EC4A 1NL
B e f o r e :
Thomas Roe QC and 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
HTML VERSION OF JUDGMENT
Crown Copyright ©
- By my order, dated 25th January 2016, I directed that the matters raised in this Claim and in associated, or related, Part 20 Claims be resolved in two stages. This judgment relates to the second stage, referred to in the order as 'the Second Issues'.
- The first stage (referred to as 'the First Issues') related to the liability of the Defendant, Ashok 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.
- By a deed of assignment, dated 3rd July 2014, Mr Gudka's personal representatives assigned all the estate's interest in the outstanding loan to the Claimant, Nirav 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.
- Although any liability for the outstanding loan was, plainly, a liability of all of the brothers, including Jaivant, the Claim, issued on 2nd September 2014, was only advanced against Ashok. By his Part 20 Claim, or, more accurately, a number of Part 20 Claims, Bharat and Narendra being joined by separate additional Claims in the course of 2016, Ashok, however, contended, in addition to a claim for equitable contribution from each of his brothers in respect of his liability, if any, upon the loan, that, by way of a separate agreement between himself, Jaivant and Bharat and in return for the transfer to Jaivant of his and Bharat's interest in a number of properties (which will be further discussed later in this judgment), Jaivant would take full responsibility for repayment of the loan.
- Jaivant (and Bharat) denied that any such agreement had been made and contended that the two documents, each dated 23rd May 2001, in which the alleged agreement purported to be set out, were forgeries and that, even if Jaivant and Bharat's apparent signatures upon the documents were not forgeries, those signatures had been given on blank paper and the purported agreement subsequently written in.
- It was, in essence, this contention and the consequential liability of Ashok, or Jaivant, dependent upon the court's resolution in respect of that contention, which constituted 'the First Issues'.
- The First Issues were determined by Ms Alison Foster QC, sitting as a Deputy Judge of this Division. In the course of a trial of those issues in October 2016, Ashok withdrew his contention that liability in respect of the loan had passed to Jaivant pursuant to the supposed agreement of 23rd May 2001 and conceded, or accepted, that the documents underlying that supposed agreement were false, did not reflect any agreement between himself, Jaivant and Bharat and had come into existence, as indicated by the undisputed expert evidence called before the Deputy Judge, at a much later date than that purportedly alleged.
- Consequential upon that concession, judgment was given, as between Ashok and Jaivant, in favour of Jaivant and, in due course and by order dated 12th January 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).
- The Second Issues, addressed in this judgment, are those issues, additional to those above, raised in, or arising out of, Ashok's Part 20 Claim or Claims, and Jaivant's Counterclaim to Ashok's Part 20 Claim. These issues relate to the business activities, or investments, carried on, or made, by the brothers over time and, in particular, to the identification and 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.
- The circumstances in which these issues arise are not in any significant dispute.
- It is common ground that until 1997 all of the four brothers carried on business together and that the main part of their business activities consisted in running a number of cash and carry off-licence businesses through the medium of a number of limited companies. It is, likewise, common ground that, in 1997, it was agreed that Narendra should withdraw from the business, on the footing that he would relinquish all his interest in the assets of the business and, correspondingly, be released from all its liabilities.
- After 1997, the three remaining brothers continued in their business activities. Those activities, in addition to the cash and carry businesses, included, as they always had, investment in property in India, the underwriting, or brokerage, of property developments in India, investment in the Indian stock market, together with a number of more diverse investments.
- In December 2000, however, the three brothers decided to separate out their business interests. To that end, Jaivant bought out Ashok and Bharat's interest in the cash and carry businesses and, with the aid of a trusted family friend, a Mr Haria, the brothers agreed and identified the existing assets and liabilities of their business and the terms upon which matters should proceed pending the disposal of assets and the payment out of joint liabilities.
- That agreement was arrived at, at a meeting between the brothers and Mr Haria, at the business's premises 3 Campsbourne Parade, London N8, on 28th December 2000, and, subsequent to the meeting, the substance of their agreement was reduced to writing by Mr Haria. Each of the brothers signed the four pages of manuscript prepared by Mr Haria; Jaivant and Bharat on 31st December 2000 and Ashok on 2nd January 2001. I will refer to this composite manuscript document as 'the 2001 agreement'.
- By the 2001 agreement, each brother agreed 'to abide by all that' had 'been decided' and to 'co-operate and share the responsibility in connection with property matters and all other matters' that had been 'discussed and finalised'. Central to the matters with which I am concerned has been the list of assets and liabilities, to which I will refer, as necessary, in the course of this judgment.
- Relevant also, in respect of the rights and liabilities in relation to a property referred to in the agreement as the 'Bombay Flat', are the following, extracted from the agreement. Firstly, 'AV, BV and JV' (Ashok, Jaivant and Bharat) have equal shares'. Secondly, 'Expenses on Flat and income from Flat to will be equally shared'. Thirdly, 'Loan of 200,000 rupees, taken by BV (Bharat) for Flat repairs etc. To be settled from rent receivable from the Flat'.
- In October 2012, the Bombay Flat was sold. That sale was the catalyst for this litigation. For reasons which were not canvassed at the trial of 'the Second Issues', it would appear that, by that date, Ashok was no longer on friendly terms with his brothers. Be that as it may, the sale of the Bombay Flat was completed on the 16th October 2012. Ashok, although having an equal share with Jaivant and Bharat in the property, was not informed.
- As explained later in this judgment, issues arise as to the meaning to be given to the words 'Bombay Flat', as referred to in the agreement. The physical unit which was sold in October 2012 consists of a single four bedroomed flat on the seafront in the Dadar area of Mumbai. The flat had been purchased in 1992. It was held under two separate legal titles; namely those of Flat 91 and Flat 92, on the 9th Floor of the Dadar Silver Beach Co-op Housing Society building, at 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.
- In due course, Ashok learnt of the sale of the flat and opened up discussions with his brothers as to his entitlement to his share in the proceeds of sale. Ashok's case is that, in the course of those discussions, he was presented with a document, referred to before me as the Total Claims document, which disclosed that the true purchase price achieved for the flat (meaning, here, both titles) was 120M rupees. That contention is hotly in dispute and is at the heart of the case in respect of the Second Issues.
- What is not in dispute, is that, discussions having failed, Ashok consulted solicitors, Pittalis LLP, and that, in May 2014, Ashok's claim in respect of his share in the flat was put, in correspondence, to Jaivant, Bharat and Narendra. The response to that claim, made, on behalf of Jaivant by his solicitors, Labrums, by letter of 9th June 2014, was that the 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.
- Further correspondence ensued between solicitors, dealing both with the Bombay Flat and with the putative account.
- Matters were brought to a head, however, not by the issue of any proceedings by either Jaivant or Ashok but by the launch by Jaivant's son, Nirav, of the Claim, against Ashok alone, in respect of the Gudka debt; Nirav having procured, as already set out, an assignment in his favour of that debt from Mr Gudka's personal representatives in July 2014.
- I have no doubt at all that the launch of those proceedings, at a time when Jaivant was being pursued by Ashok for an explanation of the sale of the Bombay Flat and for payment of his share of the proceeds of that sale, was not coincidental. I have no doubt, also, that the debt claim was 'resurrected' as a tactical move and was designed to put pressure on Ashok and to deflect him from his pursuit of Jaivant in respect of the proceeds of the Bombay Flat .
- I say 'resurrected' because it is the simple fact that, although the debt had been incurred by the brothers long prior to the 2001 agreement (in which it appears as a collective liability), no steps had been taken either for its recovery, or in respect of its repayment, from 2001 until the assignment of the debt to Nirav in July 2014. Although Jaivant told me that he regarded the debt as a personal liability to a good friend, he had not paid it, or any part of it, out of the proceeds of the Bombay Flat, or at all. Nor had the personal representatives of Mr Gudka, Jaivant's sister-in-law, Avani, and his wife's uncle, Premchand Hemraj Gudka, seen fit to mention the debt in their declaration of assets in respect of Mr Gudka, attached to the grant of probate in respect of his estate, in January 2002.
- The only explanation, at all, for the assignment was that Mr Gudka had intended to benefit his grandchildren from his estate and that the assignment was intended to reflect that intention. Why the assignment happened to be completed just at the time when Ashok was pressing over the Bombay Flat was not explained. Nor was it explained why Nirav, only, of Mr Gudka's grandchildren was benefitted. Nirav, although in court for much of the trial, did not give any evidence.
- The only sensible conclusion, in respect of the foregoing, is that Nirav's claim against Ashok, whatever its core merits, was arranged, or procured, by Jaivant, Nirav and their family as a means of putting pressure upon Ashok. The overwhelming likelihood is that, if Ashok had not been pursuing the proceeds of the Bombay Flat, this long dormant debt would never have been assigned to Nirav and never brought into court.
- The question arising from that fact, which I will deal with later in this judgment, is why, if Jaivant had, or has, a good answer to Ashok's claim in respect of the Bombay Flat, he felt it necessary, with the aid of his family, to act in the way that he did. The further question, given the involvement and co-operation of Jaivant's family, in setting up Nirav's claim against Ashok, is the weight that I should give to the evidence of other of Jaivant's family members in respect of other aspects of the Second Issues.
- I have already set out, at the outset of this judgment, the way that Ashok responded to Nirav's Claim. In his evidence in 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.
- That explanation has to be set in a context. The fact is that, when first sued, Ashok was only pursued for one third of the debt. It was only in 2015 that the claim was amended to claim from him the whole debt. Likewise, while the original Claim pleaded a claim for interest it was not, at that stage, quantified in any way. Most particularly, the claim for compound interest, which resulted in a potential interest figure in excess of £4M, was only quantified very much later.
- In regard to Ashok's conduct itself, the pretence that there had been an agreement about the debt and the concoction of the relevant documents arose at a 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.
- What then of Ashok's explanation and what, correspondingly, of Ashok's credibility, against the background of his conduct and his explanation, in the context of his evidence in this trial?
- Plainly, he has seriously overstated the circumstances which, he says, caused him to behave in the way he did. Plainly, he has been guilty of sustained dishonesty in respect of his defence to Nirav's claim. Probably, it was only the weight of Nirav's evidence in respect of the documents which caused him to resile from his lie.
- The fact remains that Ashok was confronted with what I have termed a 'resurrected' claim, brought to life for tactical purposes and, as it seems to me, to deflect Ashok from a legitimate enquiry as to the sale and proceeds of the Bombay Flat. On any 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.
- None of that justifies Ashok's extended dishonesty, but it does afford a context and an explanation as to why Ashok behaved in the way he did. That, in its turn, carries some weight when I come to consider his credibility in giving evidence before me.
- As to that, although necessarily cautious as to his 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.
- It is apparent from the foregoing that I was not impressed by Jaivant as a witness, or by much of his evidence. I have no doubt at all that, in a number of areas, he has behaved dishonestly and lied to the court.
- The starting point, in this regard, is Nirav's Claim. I have already indicated my clear 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.
- The next matters, bearing on Jaivant's honesty and reliability as a witness and bearing, also, upon his overall conduct in respect of Ashok, relate to the Bombay Flat.
- From the outset, his dealings and conduct (and that of Bharat), in respect of that property have been thoroughly unsatisfactory and not such as to engender any feeling, or belief, that his evidence in respect of the property is to be trusted.
- Throughout this case, no serious explanation has been given as to why the Bombay Flat was sold without reference to Ashok. Jaivant sought to say that, had it been, Ashok would, in some mysterious way, have taken the money for himself. Given that Ashok never had any paper title to any part of the flat, that explanation lacks credibility.
- Likewise, although, before me, there was some evidence advanced that some of the proceeds had gone to pay debts which had been incurred by Jaivant to enable him to pay business debts of the three brothers, at no stage has Jaivant 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.
- The obvious, but unfortunate, answer to both these questions is that it was never their original intention to account to Ashok and that their hope was that their conduct would not come to light, or would not do so for a considerable period.
- In regard to Jaivant's evidence about the Bombay Flat, itself, I am afraid that I wholly disbelieve his evidence that the Bombay Flat meant Flat 92 and no more. The evidence, not disputed, is that Flats 91 and 92 have always been a single unit; one flat, bought as such. Flat 92 is merely a portion of the flat. In that context, the strong and obvious likelihood is that the references in the 2001 agreement to the Bombay Flat were to the composite unit and not merely to one part of it. That likelihood is reinforced by the provisions of the 2001 agreement relating to the income and expenses to be obtained and incurred in respect of the Bombay Flat, as set out earlier in this judgment. If the Bombay Flat equated to one portion of the actual flat, one would have expected that the agreement would say so. If the income and expenditure was limited to a portion of the income and expenditure from the flat, one would have expected the agreement to say so. In both respects, it did not.
- The fact that the two titles were held separately and in separate names and, in particular, the fact, that the title to Flat 91 was held by Narendra and his wife, is, in this case, nothing to the point. It is a hallmark of this case that property investments by the brothers were, for whatever reason, taken in a 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.
- Rather, in the context of the way that the brothers did their business, the obvious likelihood is that, when the flat in Bombay was purchased, as a single unit and as part of their Indian investments, the whole was and was intended to be owned by the brothers and that Narendra's name, as other names, appeared purely as a nominee. It is far less likely and wholly outside the business method of the brothers, as it emerged from the evidence, that the brothers would buy one part of a single unit as a collective investment and that one of their number, here Narendra, should separately purchase, or acquire, the beneficial rights in the other part. I am quite satisfied that that did not occur and, therefore, that Jaivant's evidence, to that effect, was untrue.
- I am further satisfied that Jaivant's intention, when the sale of the flat came to light, was to use the fact that the unit had two titles as a means of reducing the amount of the proceeds for which he might otherwise have to account. It is conspicuous that in Labrum's letter of 9th June 2014, referred to in paragraph 20 of this judgment, Labrums, no doubt on instructions from Jaivant, described Flats 91 and 92 as if they were two separate units and, although mentioning that they had both been sold, made no mention of the fact that they were sold as one unit and that, in truth, they constituted one unit. That letter was, at best, misleading and designed, as I see it, to obscure the fact that the Bombay Flat was one composite unit and that he and Bharat were accountable for all and not part, only, of the proceeds.
- Jaivant was cross-examined about these matters. His answers, when pressed by Mr Roe, for Ashok, were contradictory and unconvincing. He jumped between an acceptance that the Bombay Flat meant the collective unit and an averment that it did not. At one point he appeared to say, not that the Bombay Flat was just Flat 92 but that Narendra had, in effect, made away with the proceeds of Flat 91. Mr Roe, in his closing submissions, stigmatised this part of Jaivant's evidence as 'nonsense' and 'manoeuvring'. He was right to do so.
- Jaivant's reliability as a witness is further put in question by another aspect of the evidence, as it emerged, in respect of the Bombay Flat. As is already clear, a key question in the case is whether, granting that the Bombay Flat is, as I find, the composite unit comprised in the titles to Flats 91 and 92, the aggregate price said to have been obtained for the two titles was, in truth, the price actually obtained. If, contrary to Ashok's case, this was so, then a secondary, but important, question is whether that sale was at such an undervalue as to render Bharat and Jaivant accountable for the undervalue on the basis of their wilful default in obtaining the best price reasonably available.
- In dealing with this aspect of the case, both Ashok and Jaivant called expert 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.
- For present purposes, however, the importance of his report, dated 14th April 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.
- What, however, troubles me, in assessing the overall weight and reliability of Jaivant's testimony, is that at no point, until drawn to the court's attention by Ashok's 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.
- On this point, as with others, I did not find Jaivant capable of belief. It is simply not credible that the error in the document was not noticed. The only conclusion, which is the one put to Jaivant, but denied by him, is that he did not want to raise the matter for fear that it would devalue his expert's evidence and that his hope was that the matter would escape attention.
- Similar concerns, as to the credibility of Jaivant's evidence, arise in respect of the Total Claims document. As earlier set out, that document was, on Ashok's case, presented to him in 2013, following the sale of the Bombay Flat. His case is that the figure of 120M said, in the document, to have been 'received', reflects the sum of 120M rupees received on the sale of the Bombay Flat. Jaivant's case is that the Total Claims document came into being 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.
- I am quite satisfied that Jaivant's evidence, in this regard, was untrue. The Total Claims document contains figures in pounds sterling converted into rupees, as well as figures, including the 120M figure, which, as is plain from the internal logic of the document, are figures in rupees. What is salient is that the rate of exchange used is the rate of 91 rupees to the pound and that that was not (and was not near) the rate of exchange (78 to 86 rupees to the pound) which, as a matter of record, obtained in the early part of 2012, when Jaivant says that this document was constructed. By contrast the rate of 91 rupees to the pound was the rate obtaining, in or about August 2013, at a time when, as is common ground, there was a meeting between Ashok, Jaivant, Bharat and Nirav at a hotel in Hendon and at which, Ashok's evidence is that the Total Claims document was presented to him. The 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.
- That conclusion raises the obvious question as to why, if the Total Claims document was no more than a projection as to the manner in which the proceeds of the assets in the 2001 agreement should, ultimately, be divided, Jaivant felt it necessary to lie about the date at which it had been prepared and provided. Regrettably, I have been compelled to conclude that the answer to that question is that, contrary to Jaivant's evidence, this document was not a mere projection of a possible division of the proceeds of the brothers' assets, as and when they were sold, but reflected, rather, the manner in which, at the date, in August 2013, when the brothers were still negotiating in respect of their entitlements out of the Bombay Flat, Jaivant was then proposing that the proceeds of the Bombay Flat should be divided.
- That, in its turn, predicates that the figure of 120M 'received' was, indeed the price obtained upon the sale of the Bombay Flat. I conclude that it was.
- Jaivant had no answer, in cross-examination, as to why, if the figure of 120M was no more than a rounded up estimate of the 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.
- While I will return to this aspect of the case in a little more detail later in this judgment, I have no doubt but that the reason why the Total Claims document refers to the sum of 120M rupees as being the 'Total Received' is because that figure was a sum of money which had actually been received. It was prepared and provided, as I find, as part of the discussions, or negotiations, which arose following Ashok's discovery of the sale of the Bombay Flat and, in that context, the overwhelming likelihood is that the sum in question was the sum received on the sale of the Bombay Flat.
- I am reinforced in this conclusion by, what seems to me, the obvious unreality that experienced businessmen, as the brothers plainly are, would have based any estimation of the 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.
- That conduct is all of a piece, as I see it, with Jaivant's (and Nirav's) conduct in respect of the Gudka debt, as already discussed. That debt was 'resurrected' at just the time when Ashok was pressing for explanation and payment in respect of the sale of the Bombay Flat and, as already set out, would not, in my view, have ever been pursued but for the fact that Ashok was pursuing that claim.
- The question, that I posed (somewhat rhetorically) in paragraph 27 of this judgment, was as to why Jaivant and Nirav should have acted in this way, if they had a good answer to Ashok's claim in respect of the Bombay Flat. One answer might have been that even although they had a good answer to Ashok's claim they preferred, nonetheless, to try and deflect him from the claim rather than addressing the merits. I reject that answer.
- It seems to me that the convoluted process of procuring the assignment to Nirav of a long dormant debt and then pursuing that debt is not something that Nirav, or Jaivant, would have entered into if they had had a good answer to Ashok's claim and, in that context, his contention that, as evidenced by the Total Claims document, the Bombay Flat had fetched 120M rupees. The irresistible conclusion has to be that Ashok was pursuing a good claim to which Jaivant and Bharat had no good answer and that, rather than conceding the claim and accounting properly, Jaivant, in conjunction with Nirav and other family members, were prepared to take the necessary steps to 'resurrect' the Gudka debt and to use it to pressurise Ashok.
- I have further and similar dissatisfactions in respect of Jaivant's evidence and conduct in regard to another of the assets, identified in the 2001 agreement as the Sumul Plot (Surat) (the Surat Plot). As with the Bombay Flat, the question, here, is whether, as alleged by Ashok, this property, conceded to be beneficially owned by the three brothers, was sold by Jaivant, with, or without, the concurrence of Bharat, but without any accounting to Ashok in respect of the proceeds of sale. Again, as with the Bombay Flat, issues also arise as to the true 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.
- The starting point, here, is the fact that, in his original Defence to Ashok's Part 20 Claim, Jaivant averred that the Surat plot had been purchased by Ashok and that he knew nothing about it. That position was reiterated in Jaivant's witness statement dated 17th March 2016, in which, in respect of the Surat Plot and a number of other properties in Surat, to which I will later refer, he chose to assert that he had no idea of their location and, so, had no basis upon which he could make enquiries.
- That position only 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.
- I was wholly unpersuaded by this explanation. On Jaivant's own case the Surat Plot had been sold for 8.34M rupees. While not an enormous amount (say £80,000), it is not one that one would expect to be completely forgotten, or overlooked. Further, it is clear from Jaivant's own evidence that the execution of the power of attorney had not been simply a matter of Jaivant's signing where told. Originally, the power of attorney was to have been in Jaivant's own name. That proved impossible, as I understand it, because, as one of the legal owners, he could not attorn in his own favour. Hence the introduction of Mr Gosai. None of that is at all suggestive of Jaivant acting in respect of the power of attorney as a mere cipher of Ashok, nor that this was a transaction where Jaivant's involvement was so slight that it might have been forgotten. The much more likely explanation and the one I accept is that this was Jaivant's transaction, in respect of which he had intended to have the power of attorney and, so, control over the Surat Plot and that, when that could not be done, he procured Mr Gosai, whom he described as a good friend, to act in the matter as attorney in his behalf and, in effect, under his control.
- The idea, I add, that the lengthy power of attorney, signed by both Bharat and Jaivant and some nine other people, had been something signed on blank sheets with the text of the power of attorney subsequently written in is a manifest absurdity and illustrative, only, as I see it, of Jaivant's continued efforts to distance himself, where possible, from any matters which might otherwise point towards, or give rise to, a responsibility.
- The corollary of the foregoing is that I am quite satisfied that Jaivant's evidence that he had forgotten all about the Surat Plot transaction until reminded by sight of the power of attorney was untrue. I am satisfied that he knew of the Surat Plot and of its sale. I am further satisfied that his reason for denying that knowledge can only to have been to obscure the fact that on its sale he had not accounted to Ashok for his share.
- The further corollary of the foregoing and, in particular, my finding that this was Jaivant's transaction is that I am unable to accept other parts of Jaivant's evidence as to the sale of the Surat Plot. Jaivant's case, as to sale, is that the matter was left entirely with Mr Gosai, such that he, Jaivant, had no involvement at all in the timing, or the progress, of the sale and that, from the time that he had given his power of attorney in 1996 until Mr Gosai accounted for the proceeds of sale, in 2003/2004, he had had no dealings at all in the matter; this despite the plot having been ostensibly sold in 1997 and the sale ostensibly completed in 2001. I do not regard that evidence as credible, or true. I am happy to accept that the power of attorney came into being as a matter of convenience and to enable a sale to be organised without requiring the sale to be signed off by a large number of nominal owners. I cannot accept, though, that Mr Gosai, having been appointed on that basis, would then have been left in control of the sale of the plot without any intervention by Jaivant. The much more likely scenario is that the sale, whenever implemented (and I will return to that question later in this judgment), was implemented by Mr Gosai at the direction of Jaivant, that the proceeds were remitted to Jaivant, but that, as I have already found, Jaivant did not choose to account to Ashok.
- The final particular matter, bearing upon Jaivant's credibility and upon his overall approach to this litigation, relates to an allegation made in his pleadings, but subsequently abandoned, to the effect that Jaivant had made a payment to the revenue, on behalf of Ashok and at his request, in the not inconsiderable sum of £200,000.
- The long and short of that matter is that Jaivant had never paid £200,000 to the revenue upon behalf of Ashok. Jaivant told me that he and Ashok had received a demand from the revenue for £400,000 and that he thought that he had paid it all but had subsequently discovered that he had not.
- That explanation is not, I am afraid, credible. First of all it provides no explanation at all for the averment that the payment had been requested by Ashok. Secondly, it leaves wholly unexplained how Jaivant could ever have come to believe, erroneously, that he had paid £200,000 when he had not. Jaivant sought to justify his supposed 'error' on the footing that he had had so many payments going out at the material time (2006) that 'he must have thought' that he had paid the whole revenue demand. A payment of £200,000, however, is not a payment of such modest amount that one might realistically be mistaken about it.
- The 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.
- In the result, I have, I am afraid, become wholly satisfied that Jaivant was, not merely, not an honest or a reliable witness but further that much of his conduct of this litigation has been designed to hide, obscure, or deflect attention from, his dishonest behaviour in respect of the matters, or, at least, the principal matters, alleged against him by Ashok.
- Before turning, in greater detail, to the particular matters (two of which, the Bombay Flat and the Surat Plot, already foreshadowed) embraced within the Second Issues, I should say something about the role of Bharat in these proceedings.
- Bharat was, at an earlier stage of the proceedings, represented by Labrums, Jaivant's solicitors, and lodged a Defence to Ashok's Part 20 Claim, drafted by Jaivant's counsel, Mr Sisley, and, in effect, making common cause with Jaivant in respect of the matters in issue as they pertained to him. Before me, however, and at an earlier interlocutory hearing in January 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.
- In the result his credibility is not, as such, in issue and the 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.
- As is already plain, the price achieved on the sale of the Bombay Flat constitutes a significant, if not the significant, issue, within the Second Issues. In respect of that issue, I have, for the reasons already given, concluded that the flat was sold for 120M rupees, as set out in the Total Claims document.
- In forming that conclusion, I have, of course, not overlooked the fact that the sale documents disclose an aggregate price for the two titles making up the flat of 35.5M rupees and the evidential weight to be attached to those documents.
- In many situations and jurisdictions, the figures, as disclosed by the sales documents, would be 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.
- In reaching that 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.
- In regard to that evidence, I 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.
- My reasons for that doubt and my corresponding reasons, or some of them, for attaching 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.
- Whether or not that last be the case, I was not persuaded, given his apparent lack of knowledge of the Regulation and of its effect in preventing development on the seafront, by his evidence that, by reason of new projects, there was, or had been, an oversupply of comparable property and a consequent depression in values.
- In regard to the flat, itself, he had not understood that he was 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.
- In regard to Mr Shaikh's comparables, none of these were in close proximity to the subject property, or on the Dadar seafront. At best, as Mr Sisley put it in his closing submissions, they were 'posh flats' in Bombay. Nor were any of Mr Shaikh's comparables contemporary with the October 2012 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.
- In the end, I was left with a 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.
- Mr 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.
- He described the property as being in a prime location overlooking the Arabian Sea and he was able to explain to me how prices 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.
- Mr 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.
- Mr Sisley sought to devalue those comparables, as not being evidence of concluded transactions. They were, however, as Mr 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.
- Based upon his inspection, his experience and his comparables, Mr 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.
- At the bottom end of the range, it was further supported by a May 2011 transaction relating to flat 83, within the subject block, sold at a price reflecting 29,100 rupees per square foot some 16 months before the date relevant to this enquiry.
- Within the range, Mr 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.
- In the result, it seems to me, based upon Mr 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.
- That finding serves only to reinforce my conclusion that the purported aggregate price paid for the two titles was not the price actually paid. It is, as Mr Roe submitted, simply not credible, even making all allowances for the fact that Jaivant says that the flat was in poor condition and even allowing, as contended by Jaivant, that the property was not fully marketed, that Jaivant and Bharat were prepared to sell at a price, which, set against the likely true 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.
- My only concern, arising from the 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.
- I have decided that the discrepancy between the two figures does not negate my 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.
- In the result, I am satisfied that the Bombay Flat was sold for 120M rupees and that Jaivant and Bharat are accountable jointly and severally to Ashok in the sum of 40M rupees, subject to such proper deductions from that figure as may be appropriate. Those deductions would include one third of any tax actually paid on the sale and one third of any costs of sale actually incurred.
- In so far as it can be demonstrated that proceeds of the sale went to pay joint business debts of the three brothers, then, in accounting to Ashok, one third of those sums are also deductible. In this regard, it is, as already stated, Jaivant's case that some part of the proceeds of sale were applied in repayment of monies that he had, himself, borrowed to pay outstanding joint liabilities of the brothers' business and, in particular, that he had, by this means, repaid the brothers' indebtedness to a Mr Deepak 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.
- It is common ground that £25,000, or 3M rupees, expressed by Jaivant to be a loan, but, as it would seem to me, actually derived from the proceeds of the Bombay Flat, were made available to Ashok, in 2013, as part of the discussions which took place when the sale of the Bombay Flat came to light. That sum can also be deducted from the sums for which Jaivant and Bharat are accountable.
- In the light of the foregoing and, in particular, my finding that the Bombay Flat was sold at full 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.
- Although, in solicitors' correspondence at an early stage, it had been contended that Flat 92 had been sold through a broker in Bombay (Labrums letter of 23rd June 2014), before me, Jaivant acknowledged that that had not been the case and that such 'marketing' as had taken place had simply amounted to making it known to friends and connections that the Bombay Flat was available for sale. The justification, such as it was, was said to be that the sale was urgent because creditors were pressing. That would seem to be, in itself, untrue. As set out above, the two creditors of the brothers, who were, or may, have been paid out indirectly from the proceeds of the flat, were paid out from other sources prior to the sale. The persons who Jaivant told me had put up funds for their repayment (his nephew and his wife's younger sister) were paid out, respectively, in December 2012 and May 2013. None of that suggests any pressing urgency.
- What seems to me to be clear, had it been the case that the sale had taken place at the price alleged, is that that price would, indeed could, only have been obtained because of Jaivant and Bharat's failure, borrowing and adapting the words of Brightman LJ, in Bartlett .v Barclays Trust Co. (No. 2)  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.
- As regards that liability, Mr Roe submitted that, in determining the figure for which, on this premise, Jaivent and Bharat should account, I should take the mid-point of Mr 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.
- There remains, in respect of the Bombay Flat, two subsidiary matters, namely the possible rental income achieved from the property between 2001 and 2012 and, correspondingly, the expenses incurred in maintaining and, on Ashok's case, managing the property as a rental unit.
- I have no doubt that rental income was received for the Bombay Flat, during that period, notwithstanding Jaivant's denial, in evidence, of that fact. As foreshadowed earlier in this judgment, the 2001 agreement is explicit as to the brothers' intentions at that time; namely that 'income from the flat .. be equally shared' and that a loan of 200,000 rupees taken out by Bharat for repairs to the flat be repaid from rental income. The 2001 agreement also made provision for family use of the flat upon the basis that any one of the brothers should only use the flat if the other brothers were informed well in advance. The intention, plainly, as one would expect in respect of an asset of the brothers' joint business, was that the property be exploited for profit and not left empty and unexploited for large periods of the year.
- Jaivant's evidence on this was that letting had been impossible because the residents' committee had not, or would not have, allowed it and because, also, the property was out of repair. I found that evidence entirely unconvincing. The Bombay Flat had not been new to the brothers at the date of the 2001 agreement and, in consequence, if permission to let had been, or would have been, refused by a residents' committee, or the like, then that would have been known well before the date of the agreement and, in consequence, the agreement would not have provided for shared income from the flat, or for Bharat being recouped the loan that he had, apparently taken out for repairs, out of such income.
- Met with that point, Jaivant's answer was to seek to distance himself from the agreement, make out that he hadn't read it properly, that despite its terms, Bharat had not taken out, or used, a loan to make repairs and make out, further, even although it is common ground that the agreement had been written up by Mr Haria, to reflect the agreement of all three brothers, that the agreement had, in some unexplained way, been 'masterminded' by Ashok. As with so much of Jaivant's evidence, I found these excuses to be untrue and incapable of belief.
- I also found wholly implausible the necessary corollary of Jaivant's evidence, namely that, notwithstanding, on his case, the property being entirely sterile as an income-producing asset and, yet, as he alleged, incurring expenses at the rate of 400,000 rupees per year, the brothers would have left the property unsold and, seemingly, largely unused for eleven years. I do not believe that to have been true.
- Rather, I am satisfied that a rental income was achieved for the property. There is 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.
- That evidence could, had Bharat elected to engage fully with this litigation, have been 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.
- All that said, I am conscious that the material is limited, of a 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.
- In producing that income, however, there must have been expenditure, not merely in respect of any local taxes, or the provision of services, but also in respect of cleaning, maintenance and local management.
- In this regard, I received 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.
- In the absence of documentary support, from an accounting party, for expenses allegedly incurred by that party and in the absence of a consistent and plausible explanation for that lack, it is open to me to draw such conclusions, or to make such presumptions, as may be necessary and appropriate. Mr Roe submits that I should conclude that the expenses are overstated.
- I am quite satisfied that, as with the rents, it is unlikely that annual expenses were at a constant over the relevant period. It is much more likely that expenses differed year on year, depending, no doubt among other things, upon the 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.
- As to the accounting parties, it seems to me to be clear that both Jaivant and Bharat should account, jointly and severally. There is clear evidence, not least in the 2001 agreement, but also from Ashok, that management lay with Bharat. Jaivant's dishonest denial, as I find, that income was received from the property, when, in fact, significant income was received, is best explained upon the footing that Jaivant joined with Bharat in taking the income and in refraining to give any account of it.
- I turn next to the issues pertaining to the Surat Plot. These have already been outlined in paragraph 63 of this judgment. My core conclusions and my reasons for those conclusions are set out in paragraphs 64 to 68. In essence, I am satisfied that the purchase of the Surat Plot was orchestrated by Jaivant, through the agency, as attorney, of Mr Gosai, that the sale of the Surat Plot was carried out by Mr Gosai at the direction of Jaivant and that, on that sale, Jaivant neglected to account to Ashok for his share in the proceeds of sale.
- The outstanding questions are as to the price achieved on the sale and, as with the Bombay Flat, whether, if the price said to have been obtained was the price actually achieved on the sale, that sale was at such a manifest undervalue as to require the conclusion that Jaivant, in selling the property, as agent for Ashok and Bharat, must have failed in his duty to properly expose the property to the market.
- Jaivant's case, supported, on this point, by the sale deeds for each of the six plots, is that the property was sold by Mr Gosai, as attorney, in 1997, for an aggregate price of 8.34M rupees, at a time when the land was undeveloped agricultural land with no consent for development. Notwithstanding that sale, at that date, and notwithstanding that the sale deeds appear to support a completion date of 2001, he contends that Mr Gosai told him nothing about either the sale, or the completion, until Mr Gosai accounted to him for the proceeds in 2003/2004. At that stage, he says, the monies were equally divided between the three brothers.
- For the reasons that I have already given, I do not accept that Jaivant was ignorant of the sale, in the way that he alleges. I am quite satisfied that the sale was at his direction. Nor do I think that the process of sale is accurately reflected in the sale documents. In particular, I do not accept that the property was sold in 1997.
- Firstly, it seems to me to be profoundly unlikely that, having purchased several plots of undeveloped agricultural land in 1996, those same plots, still undeveloped and still without any benefit of development permission, would have been resold in 1997. It is much more likely that the purchase was made with a 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.
- Secondly, the suggestion, that the land was sold in 1997, is completely inconsistent with the 2001 agreement, which identifies the Surat Plot as an asset of the brothers, with an alleged 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.
- Thirdly, the price obtained, or said to have been obtained, for the land in 1997, is wholly inconsistent with 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.
- In rejecting the sale date of 1997, I have, of course, given careful consideration to the weight that I should properly attach to the sale documents which purport to support, or endorse, that date. My difficulty, in this case, is that I find myself having little faith in their accuracy. Not merely do the sale documents not sit easily even with Jaivant's own account of events (in so far as they state that payment was made over time between 1997 and the purported completion date in 2001, whereas Jaivant asserts that payment was only made to him and his brothers in 2003/4), but also they are inconsistent with a so-called Land Bearing Revenue Survey, which sets out an apparently authoritative 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.
- In my 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.
- In so saying, I have in mind, also, the 'black money' phenomenon, or problem, adverted to earlier in this judgment. It seems to me that, in the context of an environment where sales figures are disguised, or misstated in sales documents, the court is entitled to look carefully at and ask questions about sales documentation and should not start with any strong assumption that the content of such documents, automatically, reflects the truth. In this case, one can see good reason, if a sale price was to be misstated, to modify the documents to reflect a sale at a time when that price might have a greater appearance of reality. That, or something like it, seems to me to be what occurred here.
- In light of the above conclusion, the further likelihood is that the price actually achieved for the Surat Plot was a price which broadly reflected the true market 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.
- I have found the task of determining the 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.
- Mr Shaikh did not give, nor was he asked to give, any basis, by way of comparables, or otherwise, for his 2003 figure. He did, however, make what was, in my 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.
- As to that, Mr Mangukia, who has an office only three hundred, or so, metres from the Surat Plot, was able to tell me that the bungalows eventually built upon the Surat Plot had been sold through his office in 2003, at a price which embraced the land and the building to be constructed upon it, and that, in 2004, the price for such bungalows had reflected a land value of 15,000 to 17,000 rupees per square metre.
- That 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.
- I am left, in these circumstances, with Mr Shaikh's figure of 4,250 rupees per square metre for undeveloped, but non-agricultural, land and Mr Mangukia's figure for the land 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.
- Doing the best I can with this 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.
- In the result, I consider that the likely market 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.
- For the reasons already given, the clear likelihood is that that figure reflects, or is close to, the price obtained by Mr Gosai, at the direction and on behalf of Jaivant, when the Surat Plot was sold. Accordingly, allowing some margin, I find that the sale price received for the Surat Plot was 33M rupees and that Jaivant should account to Ashok for one third of that figure. In this instance, I do not consider that Bharat is equally accountable. I see no reason to hold that Bharat, although he may have been accounted to, by Jaivant, was involved in the making of the sale and should, in consequence, be jointly accountable, with Jaivant, for Ashok's share of the proceeds. As earlier set out, this was Jaivant's transaction and it was his responsibility to account to his brothers for the proceeds.
- I add, but only for completeness, since I am satisfied that Jaivant procured a market price, that, if that be wrong and if, contrary to my 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.
- Although the Bombay Flat and the Surat Plot were, at trial, the major issues in debate, the Second Issues also embrace a number of other questions pertaining to the assets owned by the brothers, as identified in the 2001 agreement. I will deal with each of those in turn.
- The 2001 agreement identifies, as an asset of the brothers' business, two shops and a flat in Surat, 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.
- Ashok's case is that the properties were purchased, for the brothers, by Jaivant and, as he believes, managed for Jaivant by a Mr Barendra Patel (Mr Patel). His case, further, is that, by making enquiries of a Mr Kantilal 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.
- Mr Sisley's approach, in cross-examination and argument, was to treat the fact, that Ashok had, as he claimed, been able to identify the relevant units, as evidence that he must, in fact, be the owner of the units and to treat Ashok's failure to identify the precise property details within the buildings as evidencing Ashok's appreciation that, if he gave too much detail, it would point, conclusively, towards his ownership.
- I did not interpret Ashok's evidence in that way. It seemed to me that, in complete contrast to Jaivant, Ashok had made a bona fide attempt to discover details as to the relevant properties, whereas Jaivant, much as he had sought to do in respect of the Surat Plot, had elected to affect complete ignorance and, in so far as he could, to provide the court with the least possible information.
- In regard to Mr Patel, Ashok's case was that Mr Patel was a good friend of Jaivant and of Mr Gosai and that his information that Mr Patel had managed the properties for Jaivant had come from Jaivant, himself, at the time when they were still working together, prior to the 2001 agreement. Mr Sisley's original skeleton argument indicated that Jaivant had never heard of Mr Patel. In cross-examination, however, Jaivant, told me that he did know Mr Patel, but that he had only met him two or three times and had never done any business with him. Despite this apparently limited connection, Mr Patel was prepared both to make a witness statement and to attend the trial as a witness upon Jaivant's behalf. While Mr Patel denied managing the properties, it emerged, in cross-examination, that he actually lived in the residential block in which the flat in question is to be found, albeit that he denied that his flat was that flat.
- Mr Sisley suggested that Mr Patel had been introduced into Ashok's evidence as to these properties, in order to provide 'colour' for Ashok's fiction. Likewise, he suggested that the proposition, put to Mr Patel, in cross-examination, that the flat in which he lived was the one owned by Jaivant, had also been invented as a piece of 'colour'.
- As to the latter, Ashok told me, candidly, that the suggestion about the flat had been no more than a guess. As to the former, I am unpersuaded that Mr Patel's name had simply been introduced at random, by Ashok, to provide 'colour' and, therefore, that it was a mere coincidence that he should happen to live in the relevant block of flats. The greater likelihood, as it seems to me, is that Jaivant had, at some earlier stage, mentioned to Ashok that Mr Patel had, at least, some connection with the flat, or the block, even if not as manager, and that that had stuck in Ashok's mind.
- In the end, this issue can only be resolved upon the basis of the relative credibility of Ashok and Jaivant. There is no suggestion that this was property with which Bharat was concerned. On that question, both generally and specifically, in respect of these properties, I prefer Ashok's evidence.
- I am satisfied that Ashok has tried to establish the facts. I am satisfied that Jaivant was content to leave matters obscure. I conclude that he did so because clarity might do him harm. I am satisfied that Mr Patel was not introduced by Ashok to provide 'colour' for his falsehood, but, rather, that he was somewhat better known to Jaivant than Jaivant, at least at first, accepted and that Jaivant had, at some stage, mentioned him to Ashok as being (as it has transpired was the case) in some manner associated with the properties in dispute. I find that Jaivant was the purchaser of these properties for the three brothers and that he must, therefore, account to Ashok and, indeed, Bharat for their value.
- As to that 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.
- The next issue for consideration relates to a flat, referred to in the 2001 agreement as the Jamnagar Flat, which had been held, for the brothers, by Bharat. It is not in dispute but that Bharat sold the flat and that, in November 2013, Bharat paid over to Ashok the sum of 2M rupees. The question which has arisen, within the Second Issues, is whether this sum is the sum due to Ashok upon the sale of the flat, or whether the sum paid over to Ashok was intended to be divided as between Ashok and Jaivant, as Jaivant now contends.
- I have had 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.
- Bharat provided a hand written receipt to be signed by Ashok in respect of the monies received and Ashok duly signed that receipt. There is nothing at all in the receipt to indicate that the monies paid over to Ashok, by Bharat's, intermediary, Jaivant's nephew Beej 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.
- If there were any doubt at all about that, such doubt is dispelled, in my 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.
- Mr Sisley sought to take a point upon the 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.
- I cannot accept that. In so far as Mr Sisley's point is any more than a speculation, it seems to me, without the benefit of any evidence upon the point, as at least as likely that the value would have increased to 6M rupees as that it would only have increased to 3M rupees.
- Be that as it may, I am completely satisfied that the combination of the language of the receipt and the timing of the payment makes it clear that the payment was made to Ashok, for Ashok, and that no part of the sum paid was due to Jaivant.
- I turn next to the issues arising in respect of a number of plots of land, identified in the 2001 agreement as 'Bangalore 2 Plots (Prestige)'. In this instance the essential issue raised is as to the identification of the plots.
- Jaivant's case is that, although the 2001 agreement refers to two plots, actually it was intended to refer to three plots, that those plots are plots 89, 90 and 91 within the Prestige development, that they were purchased, for the business, by Ashok and, therefore, that, on their sale he should account, or should have accounted, to Jaivant (and presumably Bharat) for their value.
- Ashok's case is that the 2001 agreement refers, correctly, to two plots and that those plots are plots 94 and 96 on the Prestige development, that, although those plots were held in the names, respectively, of Jaivant's mother-in-law, Pushpabhen Gudka (Mrs Gudka) and his wife, Kirtika 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.
- Ashok explains the circumstances, whereby plots 94 and 96 came into the beneficial ownership of the brothers, by reference to his overall dealings within the Prestige development. His evidence is that, in 1995, he had acted as, what he called, a 'broker' in respect of this development and that, in that capacity, he had reserved, or 'booked', plots 89 to 96 in his name. His arrangement with the developer was that, if he brokered the sale of six units, he would receive two units by way of commission. He told me that he had brokered sales of six units, that, in respect of plots 89, 90 and 91, the sales had been to a syndicate led by a Mr Rajani and that, pending Mr Rajani's sale on of those plots, he had held them as trustee. He explained that because he had been able to broker the sales to Mr Rajani (and others) plots 94 and 96 had been secured for the brothers by way of commission. They had been placed in Mrs Gudka's and in Kirtika's names after discussion with Jaivant.
- Ashok's account derives support from three matters.
- Firstly, the 2001 agreement refers to two plots and not three. That document was carefully prepared by Mr Haria, after lengthy discussions between the brothers and has seemed to me, throughout these proceedings, to provide an accurate statement of the assets of the brothers as at the date of its preparation. In that context, it seems to me to be highly unlikely that, on this occasion and in respect of these units, it was mistaken.
- Secondly, the process of brokering property, in broadly the way now alleged by Ashok, is very much in line with the practice of the brothers, as explained by Jaivant in paragraph 5.2 of his Amended Defence and Counterclaim.
- Thirdly, the practice, of placing properties acquired by the brothers in family names, was, as this case clearly demonstrates, the common currency of their property dealings. The fact, therefore, that plots 94 and 96 are held in the names of Jaivant's wife and mother-in-law, is wholly consistent with their way of doing business.
- Additionally, such documentary evidence as there is seems to me to support Ashok's case that he was, in essence, a broker and not an owner in respect of plots 89 to 96.
- Emails, directed to a Mr Arun 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.
- The same point emerges from a consideration of the title deeds, in respect of plots 94 and 96. These show that Ashok did not purchase those plots in 1995, since his name does not appear on those titles. While, as this case well demonstrates, documents of title are not always to be trusted, in this instance they support Ashok's position that to have a plot 'booked' in one's name is not the same as owning the plot in question.
- The only actual evidence of ownership of plots 89, 90 and 91 is to be found in Jay 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.
- Taking all these matters together and taking into account, also, the quality, in this regard, of Ashok's own evidence, when properly pressed in cross-examination by Mr Sisley, I am satisfied that Ashok was never the owner of plots 89, 90 or 91, on behalf of the brothers.
- Mr Sisley drew my attention to the fact that the full details of Ashok's account only surfaced during his cross-examination and also that there was a sad lack of documentary support in respect, for example, of the trust under which Ashok held the relevant plots. Both points are true.
- It is, however, a feature of this case and of the way that the brothers conducted their business that much was done informally and without documentation. It is also a feature of this case, as with many others of this kind, which require the court to consider the details of a large number of transactions over a lengthy period of time, that it is only under and within the focus of trial that the parties come to grapple with that detail. Ashok was properly pressed on both these matters. I considered his answers and his account to be true.
- The corollary, or corresponding consequence, of that conclusion, given that I am satisfied that the 2001 agreement was accurate in its reference to the brothers being the owners of two plots within the Prestige development, is that the two plots in question were, or must have been, as Ashok contends, plots 94 and 96 and that, as with other of the properties owned by the brothers, the fact, that legal title to the properties was vested in, respectively, Kirtika and Mrs Gudka, does not denote that those persons are the beneficial owners of the two plots, or properties.
- In reaching that conclusion, I have, necessarily, given 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'.
- Kirtika's and Avani's evidence amounts to this; that it was their father, Mr Gudka, Jaivant's father-in-law, who had purchased plots 94 and 96, respectively for his wife and for Kirtika, that he had provided the purchase money and that he had remitted the money to Avani, who had paid it to Ashok. Neither Kirtika , nor Avani, identify the date, or the circumstances of payment, or provide (it is said because of the lapse of time) any documents in support of their evidence.
- Sejal's evidence was that, in 2009, she had, at her father's request, collected the title documents for plots 94 and 96 from Ashok. The fact of collection, at that date, is accepted by Ashok. His recollection, as he told me, was that Sejal had brought with her a letter from Kirtika, asking for the documents, that Jaivant had requested the documents and that he had handed them over because that had always been the practice between himself and Jaivant.
- My problem with the evidence of each of Kirtika, Avani and Sejal is that I do not feel able to invest any trust in it, as evidence upon which I can rely.
- As set out earlier in this judgment, I am quite satisfied that Jaivant, Nirav and other members of his family, including, specifically, Avani, as one of those who implemented the assignment upon which Nirav founded his case against Nirav, resurrected the Gudka loan for the express purpose of pressurising Ashok and in the hope and intent of deflecting him from pursuing his claims in respect of the Bombay Flat.
- As foreshadowed, in paragraph 27 of this judgment, the fact that members of Jaivant's close family were prepared to act in that way and for that purpose necessarily casts doubt upon the quality and credibility of any evidence that close family members, such as Kirtika, Avani and Sejal might give as to other matters related to these proceedings. Given that doubt, I find myself unable to accept, in particular, Kirtika and Avani's uncorroborated evidence that plots 94 and 96 were purchased by Mr Gudka for his wife and daughter, or that Sejal, when collecting the documents of title, was acting for her father, rather than on behalf of Kirtika and Jaivant.
- It seems to me much more likely that plots 94 and 96 were the two plots, within the Prestige development, which were accepted by the brothers, in the 2001 agreement, as being the property of their joint business, and that the two plots had been acquired for the brothers, albeit placed, as was their practice, in the names of family members, in the manner explained to me by Ashok, as an incident of his brokerage activities upon behalf of the brothers and in lieu of the commissions to which he, on behalf of the brothers, would otherwise have been entitled.
- I do not think that that conclusion is negated by the fact that Kirtika and Mrs Gudka are referred to in Ashok's 2014 document as being beneficiaries. That document was brought into being to dispel the suggestion that he owned plots 89, 90 and 91. It was not addressed to the beneficial ownership of plots 94 and 96.
- Nor do I think that my conclusion is negated by the fact that Ashok, as he accepts, handed over title documents to Sejal. It is said that, by 2009, relationships were so strained, as between Ashok and Jaivant, that if, indeed, the plots had been joint property of the brothers he would not have acted in that way. It seems to me, however, that the matter is wholly equivocal. If things were as bad as is suggested, then it is unlikely that Ashok would have handed over the relevant documents, whatever the position as to ownership. The more likely scenario, given that this was three years prior to the sale of the Bombay Flat and given that even after that catalysing event there remained some attempts at communication between the brothers, is that there was, in 2009, at least some semblance of a working relationship, such that the brothers would release documents to each other.
- In the result I have decided that plots 94 and 96 were the property of the brothers and were the two plots referred to in the 2001 agreement. Accordingly, it seems to me that they have to be brought into account as part of the dissolution of the brothers' business activities. To that end, I think that plot 94 must be sold and the proceeds divided between the brothers.
- In this regard, I am told, that, unlike, Kirtika, Mrs Gudka has not been served with notice of these proceedings under CPR 19.8A. In consequence, although a question might arise as to whether she is, in any event, bound by my decision, as being privy to the conduct of Jaivant, in respect of this litigation, she should, as it seems to me, be served, in due course, with a copy of the order giving effect to my decision. That will give her an opportunity, if she chooses to take it, to seek to re-open my decision and will, otherwise, ensure that she is bound by my order.
- Plot 96 has, I am told, already been sold, for, I think, 10M rupees and the balance of the proceeds after tax and agents' fees paid to Jaivant's solicitors and used to support this litigation. If that be the case then Jaivant is accountable both to Bharat and Ashok for their one third shares of the net proceeds.
- The final property within the 2001 agreement, where ownership, or control, is in issue, is the property referred to in the 2001 agreement as 'Bangalore Bungalow (Crystella)'. The 2001 agreement attributes an estimated value of 10M rupees to that property.
- Ashok's case is that, although he had, in 1995, expressed an interest in purchasing a bungalow within this development and although he had retained that interest up to and, as it would seem, beyond the date of the 2001 agreement, he had, ultimately, elected not to pursue the matter. He explained the presence of the property in the 2001 agreement upon the basis that, at the time of the agreement, he and his brothers were still contemplating its purchase and that it had been included in the agreement in contemplation of its future purchase and at what they believed to be its value.
- In support of that case, he produced a letter from the director of the development company, a Mr 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.
- I am not able to accept either Ashok's, or Mr Chittiappa's, evidence in respect of this matter.
- The critical evidence is the 2001 agreement and the presence of the property in the agreement as an asset of the business. The 2001 agreement was intended to draw a line under the business activities of the brothers and to crystallise the assets and liabilities of the partnership. In that context it is not credible for Ashok to assert that a property should be entered as an asset of the business, when, on his own case, no money had passed hands, no offer had been made and, at very best, there was simply some oral understanding that the property might be kept available.
- Nor, with respect to Ashok, is it credible, in the context of what was, in effect, a dissolution agreement entered into between the brothers, that the brothers would identify as an asset and include in the agreement an asset, which, if it were to be purchased, would require the continuation of their business in order for monies to be found for its purchase.
- Additionally, Ashok's evidence to me was, when it came even to broad detail, seriously inconsistent with Mr 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.
- By the same token, it is impossible, as I see it, to square Mr 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.
- Taking these matters together, the only safe conclusion, I am afraid, is that neither Ashok, nor his witness, can be believed in regard to their dealings in respect of this property, that, in this instance, not merely has Ashok not told me the truth, but, also, he has, in some manner, persuaded Mr 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.
- I have not made this finding lightly, because, as earlier stated, I have, on the whole found Ashok, despite his behaviour, in respect of the First Issues, and despite what I find to be his dishonesty in respect of this property, a credible and helpful witness. In this instance, however, I am, with regret, satisfied that he has falsified the facts in order to evade accounting to his brothers in respect of this property.
- The consequence of my finding is that this property must be brought into account and that Jaivant and Bharat are each entitled to look to Ashok for one third of its value.
- Before turning to a number of business 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.
- By my order of 10th January 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.
- Additionally, it is not in dispute that two other sets of properties, referred to in the 2001 agreement as the 'Mahabaleshmar Plots' and the 'Panchgani Plots', are owned by the brothers, although, again, held in the names of family members and are to be sold and the proceeds divided.
- I turn next, to three other ventures in which, according to the 2001 agreement, the brothers were involved.
- The first of those relates to an investment in a gas plant in Mombasa, shown in the 2001 agreement as having an estimated value of 1.5M rupees. Ashok's case is that that investment failed. The matter has not been pursued.
- The second 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.
- Jaivant has produced absolutely no documentation, at all, in respect of this investment. His written evidence was that in 2010 he was told, by Mr 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.
- Ashok agreed that the initial investment had been 1M rupees. His evidence was that, in his belief, the 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.
- It is indisputable but that, in respect of this 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.
- In that circumstance, it seems to me that, unless provided with a full and proper account, the court is entitled to draw its own conclusions as to the value of the investment and to require Jaivant to account for that figure.
- In this case, there are two sources of evidence as to that 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.
- The second source of evidence, is Ashok's evidence as to his discussion with Jaivant in 2013 and the 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.
- The question next arising is as to whether, in the absence of any material, other than Jaivant's assertion that he had been told in 2015 that there was 'nothing doing' in respect of the venture, I should conclude that an investment, apparently worth £100,000 in late 2013, has now reduced to nothing.
- In the absence of the proper evidence that Jaivant has failed to provide, I am not inclined to form that conclusion.
- I am inclined, however, to give Jaivant a further and final opportunity to present credible evidence as to the current 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.
- The third and last 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.
- The 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.
- It does not seem to me that, on any 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.
- More troublingly, I find myself somewhat sceptical as to Jaivant's account and the, apparently, very modest scale of the brothers' involvement, via Jaivant, in the venture.
- As a starting point, I have heard no explanation as to the discrepancy between the estimated 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.
- The only other relevant material before me is the record of a judgment, or finding, of the Indian Company Law Board, in 2006, which identified Jaivant as a director of the Moonshine company and a party to litigation brought by another director, or ex-director, alleging that the respondents, including Jaivant, had acted oppressively in the allocation of shares in the company. That allegation was made out and orders made to rectify the oppressive allocation. No order, however, was made to wind up the company, nor was it suggested that the company was insolvent. In regard to Jaivant, the judgment, or finding, indicated that, although a director, he was not a shareholder, but that he had been 'inducted to the board' in order that he, Jaivant, could have confidence in respect of the funds that he had promised to bring to the project. The findings appear to confirm that Jaivant's original lending, towards the purchase of the development land, was 464,000 rupees. They are silent as to any other funds that Jaivant may later have provided.
- The Company Law Board findings cut both ways. On the one hand they show that Jaivant was and, presumably, is a director of the company and became a director because he was intended to put in substantial funds. On the other hand, they appear to confirm the limited nature of the original advance. They leave the court in total ignorance of anything that has occurred since 2006, although, if still a director, Jaivant is plainly in a position to inform the court and his brothers as to the true state of affairs. Other than in regard to the provision of funds towards the purchase monies for the development land, the findings are also silent as to any other investment, or lending, that Jaivant may have made between 1998 and 2006.
- As indicated in paragraph 213 of this judgment, I am satisfied that Jaivant has failed to give any proper account in respect of the 464,000 rupee loan that he acknowledges to have made. He has not informed the court as to the terms of the loan, or as to the agreed repayment date for the loan, or the projected return, by way of interest on the loan. All those matters must be within his own knowledge. Additionally, as a director of the company, or through his friendship with Mr Gosai, Jaivant has been and is in a position to give a proper account in respect of the current state of the 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.
- I remain in some doubt, moreover, as to the true extent of the monies advanced. I find it hard to believe that, if only 464,000 rupees were lent, the brothers, relying as they must have done, on Jaivant, could have placed a 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.
- A possible resolution of this matter might be to direct that, in the absence of a full and proper account, Jaivant should account to his brothers for the full estimated 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.
- While I do not propose to take that course, at this stage, I do not rule out the possibility. I will, however, give Jaivant a further and final opportunity to give a proper account of his dealings with Moonshine before reaching any final conclusion as to the course to be taken.
- I turn next to the investment made by the brothers, 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.
- Questions do, however, arise in respect of the historic dealings within the account over the years since its inception. As to that, despite my order of 3rd August 2016, requiring Ashok to disclose all transactions and dealings in respect of the share dealing account, it was only 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.
- The first question raised is as to the apparent loss in 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.
- Over and above this, apparent, discrepancy, Mr Sisley's careful analysis of the tax assessments indicates that, over the years, sales from share dealings have raised larger amounts than have been reflected in share purchases. While it is not suggested that these differences reflect anything more than the likelihood that the brokers have kept a cash reserve for future share dealing, Mr Sisley, rightly, submits that the extent and whereabouts of this, apparent, cash reserve, which does not appear to be reflected in the available bank statements, must be disclosed and brought into account.
- Other matters have emerged from the documentation that require accounting. Beej 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.
- In regard to the bank accounts associated with the share dealing account, Mr Sisley's analysis tends to indicate that relatively small sums of money (87,911 rupees between 2009 and 2010; circa 35,000 rupees between 2009 and 2016) appear to have disappeared from the accounts. The bank account pass books, themselves, show up a number of withdrawals in favour of Ashok (135,414 in October 2010; 50,000 rupees in December 2014), albeit each with apparently corresponding deposits.
- Mr Roe's submission, in respect of all of the last foregoing, was that these 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.
- The final tranche of issues, falling for determination within the Second Issues, relate to various loans and other liabilities paid by Jaivant and in respect of which, it is said, that Ashok should make contribution.
- A considerable number of these matters are not in dispute.
- It is agreed by Ashok that he must contribute his one third share towards a number of the liabilities listed, as such, in the 2001 agreement. Three of these payments, due to Prakesh Patel, Alka 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.
- Ashok also accepted his liability to contribute, appropriately, towards monies, including legal costs, owed to a Mr and Mrs Deepak 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.
- Ashok also accepts his liability to contribute his share of the monies shown as due to Rashmi Shah and Max Matthias (Rashmi and Max) in the 2001 agreement). Those sums are respectively £8,000 and £29,000.
- In regard to Max Matthias, Jaivant told me that he had actually paid £34,400, to reflect interest on the loan and that, in regard to Rashmi 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.
- In regard to Rashmi 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.
- There remain a number of small, or relatively small, business debts, paid by Jaivant, but allegedly incurred before he had bought out the interest of his two brothers in the cash and carry businesses. None of these liabilities appear in any part of the 2001 agreement. There is no evidence that they were ever raised, as liabilities to which Bharat and Ashok should contribute, until mentioned by Jaivant (as items 19.2 to 19.4. 19.6 and 19.8 to 19.11) in his Defence to Ashok's Part 20 Claim, in November 2014. The amounts claimed, as subject to contribution, range in size from £100, an alleged rent refund to a flower shop, called Bloomers, to £4,000 in respect of some roof repairs. The only documents produced in respect of any of these items are two diary pages disclosed by Jaivant in the course of the trial, one being a diary page for 1st January 2001 and the other, rather curiously, being a diary page for 13th December 2001.
- I am not satisfied, or persuaded, that Ashok, or Bharat, should contribute to these historic liabilities of the cash and carry business. It seems to me that the clear intention underlying the 2001 agreement was that the brothers would identify and agree, as between themselves, their continuing mutual obligations, derived from their 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.
- It may well be that if these matters had been raised in 2001, at a time when, as Jaivant told me, the three brothers remained on good terms, there would have been some measure of contribution. That, though, would, I think, have been a matter of good will and not legal, or equitable, obligation. Jaivant, as it seemed to me, came to recognise this in his evidence, in saying, as he did, that it was up to Ashok as to whether he should contribute to these debts.
- The final two matters in debate relate to professional fees.
- The first relates to an accountant's bill, for £3,657.19, dated January 2008, from a firm of accountants, 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.
- The other matter of professional fees relates to a solicitor's account from a firm of solicitors, Bray Noorani. The fees in question amount to £3,001.28 and were requested, by letters to Jaivant dated 9th January, 7th February and 13th March 2001. Jaivant claims to have paid this account, which related to an unfortunate occasion when each of the three brothers were arrested and taken to a police station in connection with some aspect of the cash and carry business. No charges of any kind were ever laid, but a solicitor, Mr Bray, assisted the brothers in this predicament.
- Ashok's case is that he was separately invoiced for his share of the solicitor's fees and paid that share, in the sum of £1,500. Bray Noorani's letter of 9th January confirms that payment. It seems to me to be reasonably clear, given the outstanding figure of just over £3,000, that the overall account was circa £4,500, that Ashok has paid his share and that he should contribute no more.
- This claim must now be relisted for further argument.
- There will be questions for consideration as to the precise form of order in relation to the continuing accounting, which I am directing in respect of the Jamnagar tugs venture and Moonshine and which may need to be directed in relation to the share dealing account and its associated bank accounts.
- There will also need to be discussion and determination as to the 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.
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