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

Fecha: 02-Oct-2025

Usha Shah

Usha Shah

21.

SKAT alleged that Mrs Shah was liable under English law for (a) unlawful means conspiracy, (b) dishonest assistance, (c) knowing receipt, and (d) unjust enrichment (by reason of mistake of fact induced by fraud).

Heading
Main Narrative [101]
Was SKAT Misled? [424]
Appendix 1 – Trial Defendants and Defendant Groups p. 173
Appendix 6 – The Factual Witnesses p. 212
A.1 Overall Summary
A.2 SKAT
A.3 Danish Dividend Tax
A.4 The Litigation
A.5 The Main Trial
A.6 Defendants and Claims
Invalidity
B.1 Terminology
B.2 Initial Discussion
Illustrative Shareholding Diagram
Section 23
Section 24
B.3 More Terminology
B.4 Further Discussion
Main Narrative C.1 The Sample Trades
C.2 The Tax Refund Claims
C.3 The Tax Agents
C.4 The Tax Reclaim Form
C.5 The CANs
C.6 Trading Models Summary
C.7 Solo Model Overview
C.8 Solo Model Genesis
C.9 Solo Model 2012/2013
C.10 Solo Model 2014/2015
C.11 Solo Model Proceeds
C.12 Varengold Bank
C.13 Dero Bank
C.14 Maple Point Overview
C.15 Maple Point 2014
C.16 Maple Point 2015
C.17 Legal Advice
C.17.1 SKAT’s Legal Guide
C.17.2 Clearstream
C.17.3 Hannes Snellman
C.17.4 Other Advice?
C.18 Klar Model
D.1 Factual Witnesses
D.2 Expert Evidence
Sham Trading?
Was SKAT Misled?
F.1 Misrepresentations?
F.1.1 Context
F.1.2 The Core Representations Alleged
F.1.3 Other Representations Alleged
F.1.4 The Tax Reclaim Documents
F.1.5 The Alleged Tax Ownership Representation
F.1.6 The Alleged Dividend Representations
F.1.7 The Alleged Tax Representation
F.1.8 The Alleged Honest Custodian Representation
F.1.9 Conclusion on Alleged Misrepresentations
F.2 Inducement?
F.2.2 The Pleaded Case
F.2.3 Reliance by Mr Nielsen?
F.2.4 Systemic Reliance?
F.2.5 Conclusion on Inducement
Result (except SKAT vs. Syntax)
SKAT vs. Syntax
Appendix 1 – Trial Defendants and Defendant Groups
Mr Oakley Paul Oakley, an Oakley/Mitchell D and one of the Other Solo Mr Patterson Mark Patterson
Double Two Double Two Holdings Ltd, a Jain D and one of the Other Solo Double Two Double Two Investments Ltd, a Jain D and one of the Other
PCM PCM Capital Ltd, a Sanjay Shah D
Woodfields Woodfields Financial Ltd, a Sanjay Shah D
DWF Ds
Declarations and other relief were also sought against the DWF Ds on the basis of alleged proprietary claims
Lindisfarne
Ms Bhudia, Mr Devonshire, Mr Hoogewerf, Mr Klar, Mr Knott, Körner Ds, Mr Murphy, Oakley/Mitchell Ds, Mr Patterson, Mr Preston, Mr Smith
Declarations and other relief were also sought against each of these defendants on the basis of alleged proprietary claim
Jain Ds
Godson Ds, Mr Fletcher
Mr Bains
Declarations and other relief were also sought against Mr Bains on the basis of alleged proprietary claims
Usha Shah
Declarations and other relief were also sought against Mrs Shah on the basis of alleged proprietary claims
Appendix 3 – Sample Trades Summary
SOLO MODEL TRADES The Sample Trades for Solo Model trading drew a distinction between
Solo Model 2012/2013 (Solo 1 to Solo 3, Solo 9) Equity Trades: on the dividend declaration date for a Danish company, (a) a short seller sold a certain quantity of shares in the company, via a broker, for settlement on the dividend payment date, th
Futures: on the same day as the Equity Trades, (a) via a broker, the USPF buyer entered into a listed futures contract to sell the same quantity of the same shares with an expiry date a number of week
Stock Loans: on the dividend record date, (a) the USPF buyer agreed to lend the same quantity of shares in the same Danish company to a stock lender in return for cash collateral equal to the sale pri
Give-Ups: prior to settlement the broker on the Equity Trades gave them up to SCP under give-up agreements, novating the obligations thereunder to SCP Unwind: several weeks later the traded positions were unwound through reverse trades, i.e.: (a) the
Example (Solo Model 2012/2013)
Equity Trades: on 7 August 2013, a TDC dividend declaration date, Rock Capital Private Fund Ltd ( Rock ) agreed to sell 4,500,000 shares in TDC to AOI at a price of DKK47.3850 through Novus as broker
Futures : also on 7 August, AOI agreed to sell and Rock agreed to buy, again through Novus as broker, 45,000 Flexible Futures (in 100k lots) in respect of TDC shares at a price of DKK46.4600 with an e
Stock Loans : on 12 August 2013, being the dividend record date, AOI agreed to lend 4,500,000 TDC shares to Colbrook and Colbrook agreed to lend 4,500,000 TDC shares to Rock, in both cases for collate
Credit Advice Note : SCP issued a CAN dated 13 August 2013 reflecting a credit to AOI’s account referable to the 7 August 2013 TDC dividend for a quantity of 4,500,000 shares, referring to a “ Gross D
Book Keeping : within account records at SCP
Tax Refund Claim : on 28 August 2013, Goal submitted a tax refund claim to SKAT for DKK1,822,500, supported by the SCP CAN, and that amount was paid by SKAT Cancelling futures: on 11 December 2013, Rock and AOI entered into Flexible Futures trades th
Return Equity Trades: on the same day, 11 December 2013, AOI sold and Rock bought 4,500,000 TDC shares at a price of DKK50.4101 through FGC Securities LLC ( FGC ) as broker, for settlement on 16 Decem
Stock Loan Recalls : the next day, 12 December 2013, AOI and Colbrook recalled the Stock Loans at the same price as the Return Equity Trades. SCP approved the recall by AOI of the loan to Colbrook at
Solo Model 2014/2015 (Solo 4 to Solo 8, Solo 10 to Solo 15)
Example (Solo Model 2014/2015)
Equity Trades: on 26 March 2015, a Carlsberg dividend declaration date, Ellbell agreed to buy and short seller JBJB International Ltd ( JBJB ) agreed to sell 538,827 Carlsberg B shares at a price per
Forwards: also on 26 March 2015, Ellbell entered into a forward contract whereby it agreed to sell 538,827 Carlsberg B shares to North Capital Group Limited ( North ) at a price per share of DKK564.93
Stock Loans: the following Monday, 30 March 2015, being the dividend record date, Ellbell agreed to lend 538,827 Carlsberg B shares to RVT Consult, RVT Consult agreed to lend 538,827 Carlsberg B share
Credit Advice Note : Old Park Lane issued a CAN dated 7 April 2015 reflecting a credit to Ellbell’s account referable to the 26 March 2015 Carlsberg B dividend for a quantity of 538,827 Carlsberg B sh
Book Keeping : within account records at Old Park Lane
Tax Refund Claim : on 1 May 2015, Acupay submitted a tax refund claim to SKAT for DKK9,776.044.52, supported by 7 Old Park Lane CANs including the Carlsberg B CAN referred to above, and the refund cla
Reversal of Forwards: on 2 June 2015, JBJB entered into a forward contract whereby it agreed to sell 538,827 Carlsberg B shares to T&S at a price per share of DKK619.2061 with an expiration date of 19
Return Equity Trades : on the same day, 2 June 2015, Ellbell sold, and JBJB bought, 538,827 Carlsberg B shares, at a price of DKK619.50 per share, for settlement on 4 June 2015, through Sunrise Broker
Stock Loan Recalls : also on 2 June 2015, for settlement on 4 June 2015, Ellbell (at 4:10:02 pm), RVT Consult (at 4:09:52 pm) and Colbrook (at 4:07:14 pm) recalled their stock loans at the same price
Example (Solo Model 2014/2015, Sub-Variant 1)
Three different Short Sellers owned by Rajeev Davé were used: Abra Holdings ( Abra ), SPK 23 (Cayman) Inc ( SPK 23 ) and A Squared Investments FZE ( A 2 ). Otherwise, the parties to the trading loops
Initial Trades: on a TDC dividend declaration date, 6 March 2014, for settlement on the dividend payment date, 12 March 2014
Stock Loans: on the dividend record date, 11 March 2014, the Godson Plan, likewise each of the other buyers, agreed to lend the volume of shares it had bought, to Neoteric Ltd, Neoteric agreed to lend
Credit Advice Note: SCP produced Credit Advice Notes dated 12 March 2014, each addressed to one of the buyers to reflect a credit to that buyer’s account referable to the 6 March 2014 TDC dividend for
Book Keeping : within account records at SCP, materially equivalent debit and credit entries were made, matching all of the individual transaction terms, to those described above in relation to Solo 4
Tax Refund Claim: on 2 May 2014, Goal submitted a tax refund claim to SKAT on behalf of the Godson Plan for a total DKK32,428,184.25, supported by 8 SCP CANs including the TDC CAN referred to above, a
Unwind: the traded positions were subsequently unwound through Return Equity Trades through different brokers, Bastion Capital London Ltd and Ballygate Capital Ltd, Reverse Forwards with the same Forw
Example (Solo Model 2014/2015, Sub-Variant 2)
Equity Trades: on 18 March 2015, a Pandora dividend declaration date, Westport bought 491,203 Pandora shares through TJM as broker, which matched that with two purchases through Mako as broker, one fo
Forwards: also on 18 March 2015, Westport agreed to a forward sale of 491,203 Pandora shares to Allitsen Asset Ltd ( Allitsen ), which agreed to forward sales to Ystwyth Trading Limited ( Ystwyth ) of
Stock Loans: on the dividend record date, 20 March 2015, Westport agreed to lend 491,203 Pandora shares to Trance, which agreed to lend 465,243 Pandora shares and a further 25,960 Pandora shares to Te
Unwind: the trades were subsequently unwound by reverse Equity Sales by SPK and Nisus to Sapien, by Sapien to Bastion, and by Bastion to Westport, by Stock Loan Recalls, and by Return Forward Trades
CAN etc: this Sample Trade can be seen as creating two settlement loops, one for 465,243 shares in Pandora with SPK as short seller, the other for 25,960 shares with Nisus as short seller, supporting
Example (Solo Model 2014-2015, Sub-Variant 2)
Solo 14 illustrates a marginally more complex version of Sub-Variant 2 At the buyer’s and short sellers’ ends, it was materially identical to Solo 15: a single buyer, Shapiro, buying, selling forward, then lending to feed the settlement loop, a singl
MAPLE POINT TRADES
In addition, the imperfect implementation in the Solo Model of the intention that the dividend compensation payment be ‘funded’ by the stock loan collateral was perfected. The stock loan confirmations
That was all quite artificial. The dividend in question should have been irrelevant to a simple ex-div stock loan. Further, since stock loan cash collateral is functionally a loan to the stock lender
Maple Point Model 2014 (Indigo 1, Indigo 2, NCB 3)
Equity Trades: on a Novo Nordisk dividend declaration date, 20 March 2014, a short seller, Palila Assets Ltd ( Palila ), sold and SMV bought, via E-Brokers (UK) LLP ( E-Brokers ) as broker, 11,500,000
Forwards: also on the dividend declaration date, SMV entered into a forward contract with Evimer to sell 11,500,000 Novo-Nordisk B Shares at DKK245.44 per share, with an expiry date of 19 September 20
Stock Loans: on the dividend payment date, 26 March, SMV agreed to lend 11,500,000 Novo-Nordisk B Shares to Potala with collateral of DKK248.10 per share, the same as the price under the Equity Trades
Unwind: as under the Solo Model 2012/2013, the traded positions were subsequently unwound using the same parties
Credit Advice Note: Indigo issued a CAN dated 26 March 2014 reflecting a credit to SMV’s account referable to the 20 March 2014 Nov-Nordisk B share dividend for a quantity of 11,500,000 shares, referr
Book Keeping: within account records at Indigo
Tax Refund Claim: on 13 May 2014, Goal submitted a tax refund claim to SKAT, including for the amount of DKK13,972,500 stated in, and supported by, that Indigo CAN, and SKAT paid in full Maple Point 2015 (NCB 1, NCB 2, Lindisfarne 1, Lindisfarne 2)
Equity Trades: on 6 May 2015, a Coloplast dividend declaration date, a short seller, Vistamax General Trading Inc ( Vistamax ), sold and Phovea bought 985,200 Coloplast B shares at a price of DKK523.5
Forwards: also on that date, Phovea entered into a forward contract with Interine Investment Limited ( Interine ), and Interine entered into an otherwise identical forward contract with Vistamax, to s
Stock Loans: on the dividend payment date, 11 May 2015, Phovea agreed to lend 985,200 Coloplast B shares to Interine with collateral of DKK515,752,200 (i.e. DKK523.50 per share, the same as the price
Unwind: the traded positions were later unwound using the same parties
Credit Advice Note : Lindisfarne issued a CAN dated 11 May 2015 reflecting a credit to Phovea’s account referable to the 6 May 2015 Coloplast B share dividend for a quantity of 985,200 shares, referri
Book Keeping: within account records at Lindisfarne
Tax Refund Claim: on 26 May 2015, Goal submitted a tax refund claim to SKAT for DKK1,197,018 supported by that CAN, and SKAT paid in full KLAR MODEL
The lack of any equity price hedge was deliberate, and it distinguished the thinking behind the Klar Model from that of the Solo Model or Maple Point Model. In those Models, the idea was that everythi
Example (Klar Model)
Equity Trade: on a Carlsberg dividend declaration date, 22 March 2012, Europa bought 1,000,000 Carlsberg B shares from Salgado at DKK465 per share for settlement on 28 March 2012, the dividend payment
Stock Loan: on 28 March 2012, the dividend payment date, Europa agreed to lend Salgado 1,000,000 Carlsberg B shares against collateral of DKK465 per share, for same day settlement Unwind: on 23 April 2012, Europa sold 1,000,000 Carlsberg B shares to
Book Keeping: in account records at Salgado, where the currency of account for Europa was GBP
Trading Profit/Loss: subject to the complexity dealt with in the next paragraph, the overall trading profit or loss for Europa, on paper, of this Sample Trade, Salgado 1 (Carlsberg B, 1,000,000 shares
Stock Loan MTM: subject to the exchange rate oddity referred to above, recalling the stock loan against a return of cash collateral of DKK465,000,000 treats the cash collateral as fixed at that amount
Taken with mark-to-market differences on the other open stock loans shown on Europa’s account, that contributed to a debit entry in the 5 April 2012 “Cash” account of £7,430,521.25. The effect of that
Credit Advice Note: on 29 November 2012, Salgado issued a CAN in respect of Europa’s account, referring to a “ Gross dividend ” amount of DKK5,500,000, a “ Tax amount ” of DKK1,485,000, a “ Withholdin
Tax Refund Claim: on 21 December 2012, Goal submitted a refund claim to SKAT that included a claim supported by that Salgado CAN, and in respect of that claim SKAT made a payment of DKK660,000, equal
Appendix 4 – The Tax Reclaim Forms
Sven Nielsen
Lisbeth Rømer
Jens Sørensen
Defendants
There was therefore room for the possibility that Mr Shah might have been, if anything, better placed as a result of his relative isolation from the forensic process for two years to give a reasonably
Graham Horn
Anupe Dhorajiwala
SKAT invited me to find that Mr Dhorajiwala was an evasive and non-responsive witness, who engaged in time-wasting, speculation and speech-making, and who had come to court “ to portray a false narrat
Rajen Shah
Guenther Klar
Mr Klar’s witness statement, adopted by him as his evidence in chief, was more problematic. Most significantly, Mr Klar there sought to spin his ‘sweet spot’ idea (Appendix 3, above, at paragraphs 64
Arthur Hogarth Mr Hogarth evidently came to the witness box itching for a fight and adopted feistiness and awkwardness as his default mode, rather than having any patience with the process. In the content of his evi
Paul Baker
Secondly, Mr Baker sought to defend the indefensible rather than admit what was in fact obvious dishonesty in one of his contemporaneous actions. In early November 2015, he was asked to help one of th
Martin Smith
Michael Murphy
Usha Shah I am satisfied that Mrs Shah came to court to tell the truth and did so as best she could, given how long ago most of the facts occurred. I consider that she was a trustworthy witness. If Sanjay Shah
Paul Preston
Jonathan Godson
Mankash Jain
Daniel Fletcher
John Devonshire
Charles Knott
James Hoogewerf Mr Hoogewerf, not unlike Mr Hogarth (see paragraph 20 above), did himself no favours in the witness box. He was wound up by the process, and discomfort from a dental issue he was suffering may not hav
Jas Bains Mr Bains is a man of substantial academic ability, qualifying as a solicitor in September 2002 after a first class law degree and two years as a trainee solicitor at Freshfields. He stayed at Freshfie
In re-examination, Mr Choo asked Mr Bains about some oddities of behaviour during cross-examination. Mr Choo drew attention to what had appeared to be difficulty in focusing on and answering simple qu
Overall, in my judgment Mr Bains has become, and presented as, compromised. SCP’s principal business under Mr Bains’ stewardship as Head of Legal, the Solo Model trading, was founded upon two basic pr
Paul Oakley
Owen Mitchell
That does not mean that he or Mr Oakley realised at the time that they were involved in share-less share trading, let alone in fraud being practised on SKAT (if it was). I am satisfied in both respect
Appendix 7 – SKAT vs. Defendants other than Syntax
General Points
Deceit – Primary Liability In Pisante v Logothetis [2022] EWHC 161 (Comm) at [5], I identified a point of principle, “ whether it is sufficient for the tort of deceit that the representor make a statement that is liable to conv
In the event, I did not need to decide the point, and I said that it would merit a fuller consideration of the authorities and more fully considered and developed submissions than I had had in that ca
In the present case, any analysis of SKAT’s claims in deceit has the complexity throughout that any representations were made by the Tax Agents as part of tax refund claims they submitted to SKAT on b
Objection was taken in closing argument, however, that it had become unfair for SKAT to ask the court to consider possible liability on that basis, because of the way the trial had unfolded. On Day 10
For those allegations of primary liability, SKAT needed a theory of attribution of responsibility other than that of agency. In that regard, in summary, SKAT submitted that attribution of responsibili
SKAT referred, for example, to Parkes v Prescott (1869) LR 4 Ex 169, a libel case in which the chairman at a public meeting, at the request of a participant, slandered the claimant, and they both (the
More modern examples, SKAT said, included
SKAT submitted that those and other cases were best viewed not as establishing a series of specific doctrines of attribution, but as illustrations, each ultimately on their own individual facts, of a
It was also submitted by the DWF Ds that SKAT, having originally alleged deceit against the Tax Agents, could not rely on a doctrine of action through an innocent ‘agent’ merely by no longer pursuing
One consequence of that approach is that where a defendant is alleged to be liable in deceit, as a primary liability, in respect of a misstatement made to the claimant by another that induced the clai
I agree with the simple submission by Mr Head KC for the DWF Ds that the mismatch between (ii) and (iii) should mean that the pleaded deceit claim would fail. If the representation pleaded and underst
Deceit – Accessory Liability SKAT also pursued causes of action in deceit on the basis of accessory liability, in some cases against defendants not said to have a primary liability, in other cases as an alternative claim where pr
Although in some formulations for closing argument SKAT overlooked this, the need upon which Lifestyle Equities insists for the accessory to know of all the essential factual ingredients of the primar
Constructive Trusts (Proceeds of Fraud) SKAT claimed that if, as it alleged, it was induced by fraud to pay tax refund claims it had no liability to pay, then the traceable proceeds of that fraud were impressed with a constructive trust if
Mr Hoyle accepted that the notion was not limited to contracts, acknowledging that there could be other legal rights, for example statutory rights or rights under a trust, that justified receipt and r
That is a complex passage, mixing matters of Danish public law with matters of Danish private law on restitution or unjust enrichment and matters of practical advice and Danish procedural law (rules o
It is not necessary to decide whether SKAT’s analysis is correct, since (as will be seen, below), I have not extended this Appendix by considering, obiter , the equitable claims that SKAT asserted (in
Unlawful Means Conspiracy
In FM Capital Partners Ltd v Frédéric Marino et al. [2018] EWHC 1768 (Comm) at [455]-[456], Cockerill J recorded that it had been conceded in that case that “ bribery, breaches of fiduciary duty, dish
Whether breach of fiduciary duty qualifies as unlawful means in this context (and potentially therefore also, if it might add anything, conduct giving rise to dishonest assistance or knowing receipt l
I do not think it obvious that there is any principled reason to distinguish between breach of a contract to which the conspiracy claimant is not party and breach of trust or fiduciary duty where the
Finally, I consider this all to have been a red herring in the present case. In a claim for damages for conspiracy to injure by unlawful means, the harm in respect of which damages can be awarded is t
Unjust Enrichment SKAT pursued unjust enrichment claims against almost all of the trial defendants. However, apart from Syntax (a Tax Agent, and therefore immediate recipient of payments from SKAT), and the corporate G
SKAT submitted that in the cases of a payment made by the claimant, if the defendant’s alleged unjust enrichment did not come through the receipt by them or their agent, from the claimant, of that pay
Taking the second possibility first, I do not read Lord Reed’s brief observation, unnecessary to the decision in ITC , as treating traceability of a benefit received by a defendant to a payment or oth
In relation to coordinated transfers, HHJ Bird took a very restrictive view of that concept in Tecnimont Arabia Ltd v National Westminster Bank plc [2022] EWHC 1172 (Comm), holding as a result that th
Though Tecnimont went too far in applying it, the principle remains that in the context of unjust enrichment claims, the defendant is only considered to have been enriched at the expense of the claima
SKAT’s Factual Cases
To illustrate that by one example, in the Fletcher Annex, SKAT rehearsed over several pages of close detail a factual case about the incorporation and use of a BVI company, Wappineer Ltd, and four Eng
As it happens, I do not draw that inference, and I judged Mr Fletcher’s evidence on that point to be truthful and supported by the contemporaneous documents, that is to say his evidence that concealme
SKAT vs. Sanjay Shah
It is axiomatic that there cannot be securities overdrafts, i.e. negative ‘holdings’ of shares. A “ positive account holding ” with a custodian backed by the custodian only by a short seller’s “ negat
Understanding of the Alleged Representations
The Core Representations
The premise of that submission – contemporaneous familiarity with the reclaim documents – is correct, except as regards the language of the Goal and Syntax cover letters, if that language made a diffe
There was an element, here and elsewhere in the case, of bold assumption on SKAT’s part that, since (as is now clear) the equity buyers under the Solo Model never acquired any shares, there must have
For the tax ownership representation, SKAT submitted that Mr Shah had not disputed in cross-examination that he thought a Solo Model CAN conveyed that the client to whom it was issued had a shareholdi
SKAT’s submission was that whether or not Mr Shah had that sort of idea in mind, since he knew the Solo Model CANs were an essential part of the tax refund claims being made to SKAT, he must have unde
For the dividend entitlement and dividend payment representations, SKAT said Mr Shah had admitted in cross-examination an understanding that the Solo Model CANs conveyed that the client had been entit
Again, as with the tax ownership representation, it does not follow, as SKAT submitted, from the fact that a CAN was being provided to support a tax refund claim that Mr Shah, or anyone else, must hav
When Mr Shah acknowledged, as he did, that CANs would convey to the reader an entitlement to the gross dividend amount, on his evidence as a whole I consider that he had in mind the circular reasoning
In my view, a fair summary of Mr Shah’s evidence on this point, taken as a whole, is that
The difficulty for Mr Shah, even allowing for the problems created by the way questions were put, was how to explain a reported payment of an amount net of ‘tax’ if, as he appeared to agree, the same
Save for the accidentally candid final answer, I did not believe that Mr Shah in that exchange was giving evidence of what he now perceives as recollection concerning how he understood or saw things a
The question arises whether Mr Shah took himself down that dead end in his evidence because he knows that at the time he did think SKAT was being told by the CANs, falsely, that the reported payment w
In my judgment, it reads too much into that answer to say that Mr Shah agreed anything by it as to what precisely, on its own or when submitted to SKAT, a CAN would state as regards the nature or mean
The Honest Custodian Representation
Conclusion
Knowledge of Falsity
The burden of proof remains on SKAT, of course; and I agree with the Shah Ds’ submission that Raja v MacMillan [2020] EWHC 951 (Ch), cited by SKAT, is not authority for any rule of law for the tort of
The difficulty for those defendants, though, is that by the First HS Advice and Ms Becker-Christensen’s emails in finalising it, it was apparent that in Hannes Snellman’s view it was essential for Dan
Honest Custodian Representation
Intention to Induce Reliance by SKAT
Attribution of Responsibility SKAT’s Particulars of Claim, with its Schedules 5A to 5AG containing further particulars against individual defendants or groups of defendants, was a difficult, poorly structured, somewhat impenetrabl
It will become apparent from what follows why it had not jumped readily off the page of SKAT’s pleading that it also pursued a case of the kind considered in paragraph 9 ff of this Appendix, above; bu
Those common design pleas alleged that liability was created by the actions SKAT alleged in Section G of the Particulars of Claim, said to be “ actions taken in furtherance of the deceits in pursuance
Those pleas were reiterated and particularised in Schedule 5B to the Particulars of Claim. Paragraph 3 of that Schedule alleged that Mr Shah procured or induced the Solo Model custodians to do the act
In a footnote in its written closing submissions, SKAT also referred to paragraph 8C of Schedule 5B. That alleged that “ As set out in paragraphs 3-6 above, [Mr Shah] played a significant role in the
Going back, then, to Section G of the main Particulars of Claim, it occupied (so far as it related to the Solo Model) 18 pages, opening with paragraph 49, by which SKAT alleged that the representation
True Principal
In short, this was, in substance, SCP’s tax reclaim business . I do not consider that is affected by the fact that Mr Shah chose to take the primary profit into Ganymede rather than SCP itself. I have
The Solo Model trading structure, as SCP’s devised modus operandi , required SCP to have access to tax favoured entities to be the equity buyers under the Model. USPFs (and later LabCos) were identifi
Deliberate Deceit Scheme
On the pleaded case, I consider it is not necessary to go any further than that for any case of primary liability for deceit against Mr Shah to be dismissed. In case that is wrong, and in case it migh
Accessory Liability for Deceit
As Professor Paul S Davies explains and emphasises in Accessory Liability (2015, Hart Studies in Private Law), which I respectfully consider an exceptional work whose only defect now is being 10 years
The conduct element of accessory liability in tort is discussed in Accessory Liability , supra , at pp.188 to 202. As explained from p.194, what precisely the law means by the inducement or procuring
As regards the USPFs and LabCos, I was not persuaded by the evidence at trial that they acted fraudulently. Firstly, I would not have found that they were told, or otherwise realised, that Solo’s meth
Secondly, I would not have found that they realised at the time that the tax reclaim documents were misleading, as alleged by SKAT. Such a finding would have required a conclusion that the USPF or Lab
Fourthly, and finally as regards that alleged liability, SKAT would have had to prove, if Lifestyle Equities were taken to be definitive as to the test, that Mr Shah knew that the USPFs and LabCos, re
At the risk of philosophy, obiter , on p.262 of a judgment, I wonder if there may yet be room to consider whether knowledge of the essential facts is or should be the definitive test. The question is
Whether I applied a test of knowledge, or concluded that belief or intent was the better test or at any rate would suffice, the trial did not give me any basis for finding against Mr Shah that he knew
Unlawful Means Conspiracy
Any claim of unlawful means conspiracy against Mr Shah therefore fails; and I consider that at this point in this Appendix ( cf paragraph 116 above) I have now reached the limit of utility or realism
Other Claims
SKAT vs. Other SSDs
SKAT vs. DWF Ds
Understanding of the Alleged Representations
The Core Representations
Materially similar primary submissions were made against Rajen Shah and Mr Dhorajiwala
SKAT’s alternative submission, against each of the DWF Ds, was an argument that “ In any event, [he] made certain admissions as to the content of the Core Representations in their full form ”. However
For that example, the particular exchange cited by SKAT from Mr Horn’s cross-examination was as follows
That came nowhere close to an admission by Mr Horn that he understood and intended at the time that something to the essential effect of the tax ownership representation, as pleaded, would be made to
Given the obiter nature of this Appendix, I shall not lengthen it further by going through each of the sections of evidence picked out by SKAT for Mr Horn, or those it highlighted for Rajen Shah or Mr
The Honest Custodian Representation As in its argument against Sanjay Shah (see paragraph 82 above), so also against each of the DWF Ds, SKAT rested in closing on the non sequitur that because he had made an admission that anyone seeing
Conclusion
Knowledge of Falsity
The position is different for Mr Dhorajiwala. Again, it was admitted that if he had thought the dividend entitlement, dividend payment, or tax representation, or in each case a representation to the s
Honest Custodian Representation
Intention to Induce Reliance by SKAT
The DWF Ds argued against any such conclusion; but the argument addressed the wrong question in such a way as rather to confirm that there was no separate point on intention to induce. It was said for
Any separate issue whether the defendant intended to induce reliance by SKAT fell to be addressed only if, contrary to that defendant’s submissions on the prior question, it was found against them tha
The DWF Ds did refer, additionally, to evidence that would support findings that they considered it to be SKAT’s task to assess tax refund claims and decide whether to pay them, that there was a hope
Attribution of Responsibility For the reasons I gave, above, in relation to Sanjay Shah, but a fortiori for the DWF Ds since they were always acting under his ultimate direction, working for SCP, I do not accept SKAT’s case that t
Maple Point Model
Within that joint venture, Oryx for 2014, and WWAM for 2015, controlled the relationships with the Tax Agents, and was de facto the party directing the Tax Agents’ activity. My conclusion for the Mapl
Accessory Liability for Deceit As with Sanjay Shah for the Solo Model tax reclaim business (paragraph 113 ff , above), the possible accessory liability for deceit that would have required to be considered in the case of the DWF Ds
Again, I would not have found that the USPFs acted fraudulently as alleged by SKAT ( cf paragraphs 117 and 120 to 122 above). Had the finding been that they acted fraudulently, there would have been n
SKAT vs. Lindisfarne
SKAT addressed at length on the evidence whether Lindisfarne knew at the time that its CANs would be and were being sent to SKAT, or only (as Lindisfarne said) that they would be and were being sent t
As it happens, I agree with SKAT that it was plain on the contemporaneous evidence that Lindisfarne at the time in fact understood that the CANs themselves would be and were being submitted to SKAT. M
It was my assessment at trial that, through the fog of his feistiness in the witness box, the penny was starting to drop for Mr Hogarth that there was at least an argument that Lindisfarne CANs may ha
Since Lindisfarne acted honestly, I find, at the time, any claim against it founded upon the honest custodian representation could not succeed. For completeness, SKAT’s argument was once again flawed
SKAT’s claim against Lindisfarne for damages for deceit therefore would have failed in any event
SKAT accepted, on the authority of Canada Square Operations v Potter [2023] UKSC 41, [2024] AC 679, that a concealed fact is only relevant to the right of action for the purpose of s.32(1)(b), if the
SKAT submitted that it was only able to discover “ the true position of Lindisfarne’s knowledge and dishonesty ”, so as to be able to plead a deceit claim in these proceedings, after its review of dis
Unjust Enrichment
Negligence
SKAT submitted that “ [the] principles governing whether a defendant made a representation … addressed in the context of deceit … apply equally to a claim in negligent misrepresentation ”. The claim w
That formulation preserves the important factor that SKAT founded its claim squarely on its allegation that statements to the essential effect of the particular representations it pleaded were made to
I agree with SKAT’s submission that the established legal principles under the foundational decision of the House of Lords in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, on negligence
As reflected in paragraph 197 above, a well-developed body of authority following Hedley Byrne establishes that the foundation for a duty of care in that type of case is a notion of assumption of resp
In Caparo Industries plc v Dickman [1990] 2 AC 605 at 638C-D, Lord Oliver summarised the principle established by Hedley Byrne as follows
Lord Oliver noted that his formulation accorded inter alia with the US authority of Glanzer v Shepard (1922) 135 N.E. 275, where a purchaser paid too much for goods because of a negligent weight certi
It has never been a bar to liability that the defendant did not communicate directly with the claimant. As Lord Morris said in Hedley Byrne , at 497: “ apart from cases where there is some direct deal
In JP SPC4 v Royal Bank of Scotland International Ltd [2022] UKPC 18, [2023] AC 461, the Privy Council judgment summarised the factors that examination of the case law shows to have been “ of particul
In considering those factors, particularly the second and third of them, it will be relevant whether
Applying those principles, SKAT submitted that “ Lindisfarne owed [SKAT] a duty to take reasonable care [to ensure] that the Core Representations and Custodian Honesty Representations were accurate ”
In that regard, SKAT submitted that
For its part, Lindisfarne submitted, by way of positive case against the imposition of any duty of care, that
If required, Lindisfarne alleged that there was fault by SKAT in causing any losses for which Lindisfarne might be held liable, such that damages should be reduced for contributory negligence under th
The limits of the doctrine identified in paragraph 219 above would have to have been examined more closely if SKAT had established its prima facie claim against Lindisfarne by reference to systemic re
SKAT vs. Mr Klar
Mr Klar also participated in Solo Model and Maple Point Model activity
At the Main Trial, Mr Klar accepted that Solo Model, Maple Point Model and Klar Model trading all in fact operated without the acquisition by any party of any shareholding, and that upon the findings
There was something of the Red Queen about Mr Klar and his thinking. In “ Through the Looking Glass ”, the Red Queen responds to Alice’s insistence that “ one can’t believe impossible things ” with th
Mr Klar accepted that he knew at the time that this was improper and that it involved deliberately providing false information to the bank. He said he did what he did to make sure Salgado could pay it
Deceit
Mr Klar did not, however, understand that statements to the effect of the representations alleged by SKAT, or any of them, would be made to SKAT. He considered that CANs indicated that the clients to
As regards the honest custodian representation, in closing SKAT relied on a single answer by Mr Klar in cross-examination
I consider it misstates the effect of that question and answer to say, as SKAT contended, that Mr Klar conceded by it a belief at the time that the honest custodian representation would be or was bein
Primary Liability
Accessory Liability
SKAT noted that Mr Kenning was, by background and experience, a tax attorney in the US, with prior experience of div-arb trading (although there was no detail concerning that experience in evidence)
SKAT vs. Messrs Patterson & Bains
Sanjay Shah considered Mr Patterson his “ lieutenant ” in operating the Solo Model. He went on to participate in Mr Shah’s clandestine acquisition of control of Varengold Bank and Dero Bank through wh
Mr Patterson did not participate in the Main Trial, and made some significant admissions as part of pleading guilty to criminal charges in Denmark and in a Response to a Notice to Admit Facts he serve
Mr Bains joined Solo in about October 2010, having qualified as a solicitor and practised at Freshfields before moving to roles at ING, then Barclays. He had experience of tax structured transactions
Mr Bains joined Arunvill in October 2014, turning down lucrative terms offered by Sanjay Shah for a return to SCP in order to do so. He sold himself to Arunvill, in part, on the basis that he could br
For current purposes, the important implication of Mr Bains’ presentation to Arunvill, in my judgment, is that it contradicts the idea that Mr Bains thought when working for Sanjay Shah that the Solo
Whilst at Solo, Mr Bains himself signed a substantial number of SCP CANs. As part of the development of the Solo Model, Mr Bains was involved in assessing SCP’s ability properly to implement the Model
Deceit
SKAT alleged that Mr Patterson was liable on the basis of assistance pursuant to a common design to deceive SKAT. Until oral closing argument, SKAT had suggested that participation in Sanjay Shah’s ac
I agree with SKAT’s argument against Mr Patterson that, on the evidence cited in the Patterson Annex to SKAT’s written closing submissions, it is probable, and I therefore find, that he was aware at t
SKAT advanced an allied submission that because Mr Patterson surely knew (and indeed I would have been content to find, on the probabilities, that he did know) that the Solo Model settlement method wa
SKAT submitted that it is not necessary, for accessory liability in deceit, for the putative accessory to know “ the precise means by which the deceptive [representations] would be made to [the claima
Turning to Mr Bains, again SKAT’s case in closing argument was only that he was liable as an accessory to deceit on the basis of assistance provided pursuant to a common design to deceive SKAT. As wil
I agree with SKAT that Mr Bains was aware throughout his involvement with the Solo Model that CANs such as those issued by SCP, a number of which he signed himself, were issued on the back of the trad
SKAT submitted in closing, to the contrary, that Mr Bains conceded in cross-examination that he understood during the relevant period that the core representations, or their essence, would be made to
The seeming partial agreement with the last part of that long final question was the answer relied on by SKAT. It was put on the premise that Mr Bains had said something in the preceding answers that
Unlawful Means Conspiracy and Other Claims
SKAT vs. Other Solo Model Ds
In 1997, after completing a university degree in accounting and finance, Ms Bhudia joined Merrill Lynch as a Financial Controller in its Global Equities business. She met Sanjay Shah there and they re
Deceit
Trading Counterparties (Ms Bhudia and Messrs Körner, Mitchell, Murphy, Oakley & Smith)
Conclusions