CL-2018-000297, CL-2018-000404, CL-2018-000590, - [2025] EWHC 2364 (Comm)

This litigation concerned share trading on cum-ex terms, Danish dividend tax, and the approach of the Danish customs and tax administration (‘SKAT’) to the processing and paying of claims for dividend tax refunds between mid-2012 and mid-2015. The final trial in these proceedings, on which this is the judgment, was the trial of claims pursued by SKAT concerning 4,170 of the dividend tax refund claims that were submitted to it and paid by it during that period. The aggregate amount paid by SKAT in response to those 4,170 claims was just under DKK12.1 billion (c.£1.4 billion at today’s exchange rate).

An equity trade is on cum-ex terms if it is traded, i.e. entered into, on or before a dividend declaration date, for settlement, i.e. performance, after the record date for that dividend. In October 2021, in an interview for a German television documentary, Sanjay Shah said of the Danish cum-ex scandal and his part in it: “… just going back to what happened in Denmark, why would they pay out for years and years and then, after four years of payments, they say, “Oh, we made a mistake, or we were cheated”? If there’s a big sign on the street saying, “please help yourself”, then me or somebody else would go and help themselves”.

This judgment determines whether SKAT was cheated in the sense that is relevant to this litigation. That is to say, it determines whether Sanjay Shah and others practised upon SKAT the deceit it alleged by its pleadings in this court. On the evidence put before the court at trial, and without forgetting that SKAT bore the burden of proof, one alternative to emerge was that Sanjay Shah and others were able to and did help themselves to a fortune because SKAT’s processes were so limited as to fit Mr Shah’s street sign analogy, not because they needed to or did practise deceit upon SKAT as it alleged.

Sanjay Shah is one of several trial defendants convicted in Denmark on criminal charges arising out of the activities considered in this judgment. A New York federal jury has awarded SKAT US$500 million in damages against a number of parties involved in some of those activities. There are also some judgments in favour of SKAT in Dubai. None of those decisions is relevant to whether any of the trial defendants in these proceedings is liable as alleged by SKAT. That falls to be judged by reference to the claims pursued by SKAT at the trial in this court, all of which are governed by English law, and upon the evidence and argument put before this court at that trial. Those claims, and that evidence and argument, may or may not be the same as or similar to the criminal charges or civil claims brought in other jurisdictions under systems of law other than English law, or the evidence and argument put to those other courts; and even if all was the same or materially similar, the decisions of judges or juries in other jurisdictions as to what had or had not been proved are inadmissible opinions about the facts in this court, which must reach its own decision.

SKAT accepted that if it made a financial recovery pursuant to any of the decisions elsewhere, credit would have to be given for that if remedies fell to be considered here, but that is a different point. Any such recovery might reduce the loss ultimately suffered by SKAT at the date of this judgment, or it might involve a transfer or restoration to SKAT of assets in which it claimed to have an ownership interest. Either way, the recovery might need to be taken into account, without the decision of the other court having anything to say as to liability on a claim pursued here or as to the remedies available in this court if such a claim succeeded.

The broad factual claim advanced by SKAT was that market appetite to provide funding to support the cum-ex trading strategies upon which Sanjay Shah’s main business had been focusing dried up by late 2011, and that he and senior individuals then working for him turned to fraud, developing a cum-ex trading model they knew and intended would result in false statements being made to certain tax authorities, including SKAT, in the hope of tricking them into paying tax refund claims, Sanjay Shah and his colleagues realising at the time that they would be invalid claims or at any rate having no honest belief that they were or might be valid claims. A large cast of individuals was assembled, all of whom, SKAT alleged, were made aware or became aware that the business in which they were participating existed to generate the deception of SKAT through false statements made in tax refund claims submitted to it, but participated anyway, through greed in view of the financial rewards on offer.

Greed can be a powerful motive, and I consider there was substantial greed here. However, the evidence at trial did not persuade me to accept SKAT’s claim, and I do not make the findings it sought. I also do not accept, on the other hand, the positive factual case advanced by Sanjay Shah and the other architects of the cum-ex trading models that gave rise to SKAT’s claims in the proceedings, that is Graham Horn, Rajen Shah and Guenther Klar, that during the relevant period they held a reasonable belief that those models generated tax refund entitlements under Danish tax law. In Mr Klar’s case, I accept his evidence that he did think at the time that the resultant tax refund claims were valid in that sense, but I conclude that he had no reasonable basis for that view. In the case of Sanjay Shah, Mr Horn and Rajen Shah, I do not accept evidence they each gave that at the time they thought the tax refund claims they were facilitating were valid claims. That does not mean that the deceit alleged by SKAT occurred, however. My rejection of narratives put forward by many of the trial defendants, with findings I make that some, notably Sanjay Shah, were dishonest in various ways at the time and untrustworthy as witnesses, does not prove the case pleaded by SKAT and pursued by it at trial, although it is capable of lending some indirect support to it. On the evidence as a whole, however, I have concluded that that case was not established.

The money-making strategy devised and implemented by Sanjay Shah, with Mr Horn and Rajen Shah, likewise Mr Klar’s version of it, was pursued, and worked between mid-2012 and mid-2015, not because they identified that it involved falsehoods being communicated to SKAT that might trick it into paying, but went ahead anyway. Rather, it was pursued and worked because they did not identify any such thing, that is to say they did not consider that anything untrue would be or was being stated to SKAT, and when they implemented the strategy, they found that SKAT paid. They engaged in concealment and obfuscation that involved pervasive collateral dishonesty, because of an instinct that if it was known that the tax refund claims resulted from pre-planned and coordinated trading, the sole purpose of which was to create tax refund claims predominantly (by value) for the benefit not of the tax refund claimant, SKAT might challenge the claims rather than pay and/or the Financial Conduct Authority (‘the FCA’) might disapprove (some of the entities central to the trading models being FCA regulated financial services firms). Even bearing that well in mind, I was not persuaded that the strategy would have been pursued if Sanjay Shah, Mr Horn or Rajen Shah, respectively Mr Klar, thought that it would or did involve false statements being made to SKAT to mislead it into paying claims.

More fundamentally still, and the basis upon which I have concluded that the claims pursued by SKAT in this court on which liability was in issue all fail, I was satisfied on the evidence that SKAT was not misled by misrepresentations made to it through the tax refund claims it received, as it alleged. Its controls for assessing and paying dividend tax refund claims were so flimsy as to be almost non-existent. That, it might be thought, came to be exploited somewhat ruthlessly. However, that did not require, nor did it involve in fact, that the misrepresentations alleged by SKAT were made or induced SKAT to pay claims it would otherwise not have paid.

None of the 4,170 tax refund claims with which the trial in these proceedings was concerned was a valid claim under Danish tax law, and SKAT would have been entitled not to pay any of them. SKAT did not suggest, however, that paying a tax refund claim that it was not obliged to pay gave it a cause of action it could pursue in this court. The causes of action that SKAT did pursue in this court all required it to prove that it had been deceived into paying, except for one cause of action against Lindisfarne Partners LLP, claiming damages for negligent misstatement, but that cause of action still required SKAT to prove that it was misled into paying claims, as it alleged, by the misrepresentations it claimed were made to it.

The result is that SKAT failed to establish any of the claims it pursued at trial, where liability was disputed, and all those claims will be dismissed.

Against one trial defendant, Syntax GIS Ltd, SKAT was entitled to treat a default judgment as establishing liability on at least some of the claims pleaded against it, so that what was left was the measuring of the amount to be awarded to SKAT under that judgment. The default judgment against Syntax proved nothing against any other defendant; and my conclusions as to liability in respect of SKAT’s claims against all the other trial defendants are irrelevant to SKAT’s entitlements under the default judgment.

SKAT established at trial that, on tax refund claims for which it pursued remedies against Syntax under the default judgment, it paid in aggregate some DKK2,763,859,045.79, against which credit must be given by SKAT in respect of recoveries it has made to date. I shall ask counsel to assist further as to the amount of that credit and also as to whether, if SKAT asks for judgment for the net amount, after recoveries, by way of restitution to reverse unjust enrichment, there can then be any judgment for damages. A claim was also pleaded against Syntax for a declaration in contingent form, to the effect that if Syntax has retained to date any of the sums paid to it by SKAT, or their traceable proceeds, then it holds the same on trust for SKAT. No attempt was made to establish that Syntax has retained anything traceable to sums paid to it by SKAT, and I shall not grant any declaratory relief.