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

SKAT vs. Syntax

Judgment in default was entered by SKAT against a number of corporate defendants, so that what was left for each of those defendants was only a need to measure damages or determine to what other remedies, if any, SKAT might be entitled under its relevant default judgment. The proceedings against all but one of the default judgment defendants were later stayed, leaving the question of remedies for determination at the Main Trial, and now by this judgment, only against Syntax. For these purposes (see paragraph 30 above and Appendix 1, below), Syntax was the 22^nd defendant to the Second Claim, in which the default judgment was entered against it on 10 May 2019.

I do not know whether Syntax has any assets such that any judgment as to remedies and consequent relief to which SKAT may be entitled will be of any practical value. It is also an unusual case in that the conclusions now reached after trial, on liability issues that would have been common, mean that Syntax would have had a good defence to the claims pleaded against it. However, SKAT stood on its entitlement under a properly entered default judgment, and there was no application on behalf of Syntax seeking the exercise of a discretion to set it aside, nor any appearance for Syntax for any other purpose.

The effect of the default judgment is that liability on the claims pleaded by SKAT against Syntax stands established and my conclusions on liability issues as between SKAT and other trial defendants are irrelevant to Syntax’s position (subject, in both respects, to the complication noted at the end of paragraph 626 below).

SKAT has recovered substantial sums from various parties under settlements or through legal process of one kind or another. It prepared a detailed spreadsheet together with an explanatory ‘Note on Recoveries’ setting out how it offered to give credit for its recoveries to date. SKAT sought thereby to allocate amounts recovered in a logical manner, taking into account the source of the recovery and any particular terms on which the recovery was made that might affect how it should be allocated across the tax refund claims giving rise to the litigation claims.

The vast majority by value of what SKAT has recovered to date has been under settlements with confidentiality terms as to the paying parties, and as to how much each of them would pay. SKAT’s spreadsheet and the Note on Recoveries explained SKAT’s approach to allocation, and presented the detailed figures, in such a way as not to infringe that confidentiality. It was not necessary, for the purpose of judging the fitness for purpose of SKAT’s approach, to require SKAT to reveal more, and no trial defendant sought any such order. In summary, SKAT has recovered to date:

There was no obvious error in SKAT’s approach that might have caused me to reject it in the absence of any active objection to it. I would therefore have relied on SKAT’s analysis and the detailed accounting in the spreadsheet in respect of any trial defendant, had the question of giving credit for recoveries arisen as a result of some claim against that defendant having succeeded. In the event, the point now arises only as part of quantifying relief under the default judgment against Syntax.

In quantifying SKAT’s entitlement to damages, or assessing its entitlement to any other form of relief, under the default judgment, SKAT is entitled to rely on its primary pleaded case as to the causes of action available to it. Its primary pleaded case, on an allegation that Mr Shah took over effective control of Syntax on 19 September 2014, was that Syntax was liable for damages for deceit and/or unlawful means conspiracy in respect of tax refund claims submitted in respect of Solo Model trading on or after that date. In oral closing argument, however, that claim was abandoned, and Ms Nanchahal rested SKAT’s request for quantified relief on the alternative pleaded case of liability for deceit and/or conspiracy in respect of Solo Model tax refund claims submitted by Syntax on or after that date.

Under the default judgment, therefore, the only proof required of SKAT for its common law damages claim was proof of the amount it paid on Solo Model tax refund claims submitted by Syntax on or after 19 September 2014. At trial, SKAT proved that amount to have been DKK2,763,859,045.79.

Credit for recoveries by SKAT to date has to be given against that total. The recoveries spreadsheet gave credit of DKK1,264,918,064.76 for recoveries referable to losses allegedly caused by Syntax. However, that was on the basis of the primary case not pursued in closing of liability for the total paid by SKAT on all Solo Model tax refund claims submitted on or after 19 September 2014, which at trial SKAT proved to have been DKK5,960,889,149.91. A revised version of the spreadsheet now identifies that recoveries allocated against Syntax reclaims, rather than all Solo Model reclaims, submitted on or after 19 September 2014 amount to DKK316,998,798.95. As a result, the loss suffered by SKAT and recoverable as damages from Syntax under the default judgment is DKK2,446,860,246.84, subject to the point in paragraph 625 below.

On the basis of the liability case pleaded, Syntax was unjustly enriched through the payment to it, by SKAT, of Solo Model tax refund claims submitted to it on or after 19 September 2014. At trial, as I have just stated, SKAT proved that amount to have been DKK2,763,859.045.79. The question of apportionment of recoveries already made by SKAT again arises, reducing the claim to DKK2,446,860,246.84.

The question will need to be addressed whether SKAT can ask for judgment to be entered for substantial damages if it asks for judgment for payment by way of restitution in respect of unjust enrichment. In Pisante v Logothetis (no.2) [2022] EWHC 2575 (Comm), for example, I concluded that entering judgment, by way of restitution consequent upon rescission of an investment transaction, that required Libra to pay Swindon the full value of the consideration it had paid for the rescinded transaction, some US$8,991,250, left Libra with a nominal damages liability only for fraud, since Swindon’s only pleaded damages claim was for the loss it suffered by way of paying that consideration and I refused an application to amend. I reasoned that there should be no substantial damages judgment, because “with the dismissal of the amendment application there is neither claim nor proof of loss beyond the US$8,991,250 that … Libra will have been ordered to restore to Swindon consequent upon rescission” (ibid, at [78]). The position was different as against Mr Logothetis personally, as there was no restitutionary claim against him, so that in his case an undischarged judgment against Libra could not be said to have reduced Swindon’s loss or to give rise to any logical difficulty over an award of damages in respect of that loss.

There was a proprietary claim pleaded against Syntax, on which at trial SKAT asked for hypothetical declaratory relief, i.e. a declaration that if Syntax had retained sums paid to it by SKAT, or their traceable proceeds, then it held the same on trust for SKAT. At trial, SKAT made no attempt that I could identify to prove that Syntax has retained anything traceable to sums paid to it by SKAT now some 10 years or so ago. I am not satisfied that it is appropriate to grant declaratory relief in those circumstances. That makes it unnecessary to consider a possible complication I identified in preparing this judgment, but which was not addressed at trial, namely that the default judgment in any event was only for an amount to be determined by the court in respect of SKAT’s claims for monetary relief. It was obtained upon an application by SKAT supported by a solicitors’ witness statement that made no mention of the claims for declaratory relief. If I might otherwise have contemplated granting any declaration, I would have given SKAT an opportunity to address that complication before making a final decision.

Finally, as well as being the subject of that default judgment in the Second Claim, Syntax was also a defendant to the First Claim (see paragraph 30 above, and Appendix 1 below). Judgment in default was entered against Syntax in the First Claim on 31 August 2018, but by a Consent Order dated 6 February 2024 all further proceedings against Syntax in that Claim were stayed, with no order as to costs. I shall ask counsel for SKAT to assist me as to whether any further order needs to be or should be made now in respect of the First Claim as against Syntax.