England and Wales High Court (Chancery Division) Decisions

Tanna & Anor v. Tanna & Anor [2001] EWHC Ch 413 (25th May, 2001)

B e f o r e :

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Mr. Anthony Trace QC and Mr. Nicholas Peacock (instructed by Messrs Nabarro Nathanson for the Claimants)
Mr. Simon Taube QC and Mr. Eason Rajah (instructed by Messrs Field Fisher Waterhouse for the Defendants)

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I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic

The Vice-Chancellor :

Introduction

1. Velji Tanna ("the Father") and his wife Nabithen ("the Mother") were born in Gujerat, India. They married there but moved to East Africa shortly after the end of the First World War, first to Kenya and then to Kampala, Uganda. They had eleven children born between 1927 and 1950. Five were sons, namely, in order of seniority, Ramniklal, Chandulal, the first Claimant Jayantilal, Dhirajlal and the first defendant Sureshchandra. Of the six daughters it is only necessary to mention three of them, namely, the fourth daughter Damyanti, the fifth Anjna, the second defendant, and the sixth and youngest Nila Devi who is the second claimant.
2. On 19th March 1945 Nakasero Soap Works Ltd ("NSW") was incorporated under the laws of Uganda to carry on the Father's business of manufacturing soap. The initial shareholders were the Father, the Mother and a brother and a brother-in-law of the Father. In 1949 the last two shareholders disposed of their shares. Thenceforward shares were issued to each of the brothers and to Damyanti. Other family companies were formed later, namely Nakasero Produce Agency Ltd, Confections Ltd and General Trading Corporation Ltd but their details are not material.
3. According to the claimants after the Second World War the Father became increasingly concerned that, following independence, those of Asian origin might be expelled from Uganda and their property in Uganda expropriated. Accordingly he arranged for accounts to be opened with banks outside Uganda to which money of NSW was remitted. Such accounts were operated in accordance with the Father's instructions. From the late 1950s the money of NSW was so remitted quite openly. In 1962 Uganda introduced exchange controls. Thereafter the remittances were made by covert means. The means employed involved the overseas suppliers of materials to NSW rendering invoices which, at the request of NSW, were inflated by the addition of a commission. The invoice was paid by NSW by a letter of credit opened with a foreign bank. Subsequently the Father or Chandulal collected the "commissions" from the foreign supplier outside Uganda and credited them to an account with a foreign bank in the name of persons other than NSW.
4. The Father died on 13th August 1971. At that time the shareholdings in NSW were:

The Father	108
The Mother	30
Ramniklal	420
Chandulal	60
(and jointly with wife)	600
Jayantilal	672
Dhirajlal	420
Sureshchandra	600
Damyanti	690
	3,600

By the end of 1972 the Mother and all the brothers and sisters had remained outside Uganda or had been expelled. Accordingly, with two exceptions to which I shall refer later, the remittances by NSW stopped in 1971/2.

5. In these proceedings, commenced on 28th November 2000, the claimants contend that they are beneficially interested in all such remittances. On that footing they seek declarations, accounts and inquiries to ascertain what assets now represent the remittances made by NSW and orders appropriate for their protection. Their claim is based on two alternative propositions. The first proposition is that (a) the remittances were the beneficial property of the Father as they had been made to him and for his benefit with the knowledge and approval of all the members and directors of NSW, and (b) on 12th August 1971 the Father orally declared himself to be a trustee of the remittances for one of four alternative classes of beneficiary comprising some or all of the Mother and their eleven children. I will refer to this claim as the Express Trust claim. The second proposition arises from an allegation that in early 1972 the sons agreed to and did equalise their shareholdings in NSW. The claimants assert that it was necessarily implicit in such an agreement ("the Equalisation Agreement") that they should also share equally in the remittances being held outside Uganda. It is contended that such an implication is both obvious and necessary to make the Equalisation Agreement workable. The consequence alleged is that the remittances were thereby subjected to an implied or constructive trust obliging the holders thereof to give effect to the agreement. I will refer to this as the Implied Trust claim.
6. By their application issued on 15th February 2001 and now before me the defendants seek orders under CPR 3.4(2)(a) and (b) and CPR 24.2 striking out or dismissing the Express Trust Claim and the Implied Trust Claim. Success on both those issues would not bring the action to an end because there is a third claim made by the first claimant alone to be registered as the holder of, inter alia, 672 shares in NSW. The contentions of the defendants in relation to each Trust Claim are that (a) the particulars of claim "disclose no reasonable grounds for bringing" it and (b) the claimants have "no real prospect of succeeding on" it and "there is no other compelling reason why the case should be disposed of at a trial" because (i) the evidence in support of it is inconsistent and incredible and (ii) the claim is barred by laches and acquiescence.
7. During the course of argument I suggested to Counsel for the claimants that the Particulars of Claim did not properly aver that the beneficial interest in the remittances, which had plainly belonged to NSW originally, became vested in those alleged to have constituted the trusts on which the claimants relied. He applied for permission to amend paragraphs 9 and 14 to cover that deficiency. The application was not opposed by counsel for the defendants in relation to paragraph 9. He did oppose the proposed amendment to paragraph 14 on the ground of inconsistency. I gave permission to amend in relation to both paragraphs for they deal with alternative claims, so that some degree of inconsistency may be permissible. The amendments were needed to ensure that the case for the claimants was clearly and properly put. The action is in its very early stages and I could see no prejudice to either side if the amendments were permitted.
8. The amendments clearly expose the conflict of interest between the claimants and NSW with regard to the beneficial ownership of the remittances. For that reason I directed that notice under CPR 19.8A be given to NSW. NSW appears to be under the control of the defendants. At one stage it was represented by the solicitors now instructed by the defendants. I am satisfied that if NSW had wished to participate in the argument on this application it had sufficient notice to have intervened.
9. It is convenient to note at this stage that in 1991 control of NSW was reacquired by the Tanna family from the Ugandan government. There is no evidence or allegation as to the nature of the Government's control between 1972 and 1991 nor as to the ownership of the assets of or the shares in NSW. Since 1991 NSW has carried on its business in Uganda. Its board of directors consists of Sureshchandra, Anjna and Dhirajlal. There is a dispute whether Jayantilal is also a director.
10. Before turning to the specific issues it is necessary to point out the extent to which each side relies on subsequent events. For the claimants great emphasis is placed on events allegedly occurring after the Equalisation Agreement was made in 1972. The precise terms in which they are alleged are not material. In summary the allegations (contained in paragraphs 16-27 of the Particulars of Claim) are as follows:

1. The remittances were not treated as part of the estate of the Father. By his will dated 8th June 1956 he appointed the Mother to be his executrix and bequeathed all his property whatsoever or wheresoever to her. Probate of the Father's will was granted out of the Ugandan Probate Registry to the Mother on 23rd November 1971. On 20th March 1972 the Father's shares in NSW were registered in the name of the Mother.
2. Before their departure from Uganda in December 1972 Ramniklal and Sureshchandra arranged for two foreign suppliers, Kurt Nitzer in Hamburg and Frank Fehr & Co. in London, to render invoices to NSW for the supply of raw materials. The invoices for £60,000 and £66,000 respectively were paid but the raw materials were never shipped. In 1975 Sureshchandra procured payment of £140,000 by Kurt Nitzer, which, by virtue of exchange differences and the addition of interest, £60,000 had then become. This was distributed as to £5,000 to the second claimant Nila Devi, £8,000 to the second defendant Anjna and the balance equally between all the sons except Chandulal. In the 1990s Sureshchandra obtained payment from Frank Fehr & Co of what then represented £66,000. The claimants maintain that it was not distributed amongst the family but was given to charity.
3. In July 1972 Chandulal, who controlled the remittances, orally informed the second claimant Nila Devi that he proposed to distribute the remittances openly made before the introduction of exchange control in 1962 between the five sons in accordance with their shareholdings in NSW. It is alleged that Chandulal implemented that intention by payment in late 1972 of £23,000 to Jayantilal at the same time as paying £10,000 to each of the second defendant Anjna and the second claimant Nila Devi. Later in 1972 Chandulal orally informed the Mother, who repeated it to Nila Devi, that he did not propose to distribute the remittances covertly made after the introduction of exchange control but intended to keep them for himself.
4. In 1973 Chandulal went to Geneva with Ramniklal and granted him a power of attorney so that he might operate one or more bank accounts to which some of the remittances had been credited.
5. In 1978 the Mother and the second claimant Nila Devi went to the offices of UBS in Zurich and arranged for Nila Devi to be authorised to operate an account in the name of the Father and the Mother containing a credit balance of £300,000 which, the claimants contend, represented some of the remittances.
6. Chandulal died on 11th January 1986. Probate of his will dated 13th June 1985 was granted out of the Bristol District Registry to the executors therein named on 2nd May and 9th September 1986. Ramniklal was one of them, two solicitors in Torquay being the others. The remittances were not treated as part of his estate and came under the control of Ramniklal pursuant to the power of attorney referred to in sub-paragraph (d) above.
7. Shortly after the death of Chandulal Ramniklal orally informed Jayantilal that only he, Ramniklal, and the Mother were authorised to deal with the accounts holding the remittances. Having discussed distribution of the remittances equally between the Mother and the children they agreed that no such distribution should be made until after the death of the Mother.
8. On 24th January 1992 Ramniklal died. Letters of Administration to his estate were granted to the second claimant Nila Devi on 14th May 1992. His estate did not include any of the remittances and passed to the Mother.
9. Later in 1992 the second claimant Nila Devi and the defendants Sureshchandra and Anjna went to Geneva and Zurich and made arrangements there for Nila Devi to be given powers of attorney to enable her to operate accounts with Swiss Banking Corporation, UBS, Lloyds Bank and Lloyds TSB. One of such accounts contained £250,000 which Sureshchandra and Anjna informed Nila Devi was derived from family moneys and was for her beneficial use.
10. In 1994 the second claimant Nila Devi in the company of Sureshchandra went to Swiss Banking Corporation and UBS in Geneva and Zurich and examined the statements for those accounts. Each of them was credited with US$6m. Sureshchandra orally informed Nila Devi that there was a stiftung in Liechtenstein holding US$1m and a property in Portugal.

11. The dispute which is now the subject matter of these proceedings arose when, according to the claimants, in December 1999 Sureshchandra revoked the powers of attorney granted to Nila Devi to enable her to operate the Swiss Bank Accounts. The defendants rely on the changes they perceive to have occurred in the allegations made by the claimants. These may be summarised as follows:

1. On 3rd December 1999 the solicitors then acting for the first claimant Jayantilal wrote to Sureshchandra. They referred to Jayantilal's concern that large sums of NSW shareholders' moneys had been wrongly diverted to private accounts then under Sureshchandra's control. They asserted that such money was "the rightful property of the shareholders". They stated that their client

"as a shareholder is entitled to the benefits of his ownership and is hereby requesting from you full documentation and information relating to his shareholding and interest in the companies as well as funds and securities held outside Uganda and currently under your control."

(b) On 29th February 2000 Jayantilal wrote to Dipika, the daughter of Chandulal, purporting to set out the full facts as he knew them. In that letter he asserted that the remittances had been divided into two by Chandulal just before he died. One very large fund had been given to the Mother for the benefit of the family. This larger fund was supposed to be for the benefit of the whole family. He added

"I have just discovered that this larger part of the funds, in which you should have a share, has been transferred to Anjna and Suresh as sole beneficiaries thus stealing every one else's share."

(c) On 26th June 2000 the claimants sought an order for pre-action disclosure pursuant to CPR 31.16. In the application notice the claimants averred that

"The Applicants contend that [the remittances] were placed on trust by [the Father] for the benefit of his wife and 11 children.."

In his first witness statement in support of that application, made on 24th June 2000, Jayantilal referred to the conversations with his father in August 1971 now alleged to have given rise to a declaration of trust. He did not then allege such a declaration had been made. He made no reference to the implication into the Equalisation Agreement now relied on as giving rise to the Implied Trust obligation. An order for disclosure was made by Master Price but the defendants produced no documents or information in response thereto relevant to the allegation of a trust. Various documents relating to the transfers of shares in NSW in 1972 were produced from which the equalisation of the brothers' shareholdings in NSW in 1972 was apparent.

(d) In the Particulars of Claim as served on 28th November 2000 the Express Trust claim and the Implied Trust claim were raised for the first time. The allegation with regard to the express trust set up three alternative classes of beneficiary.

(e) On 13th March 2001 the solicitors for Jayantilal obtained the opinion of Mr Anand, an advocate in New Delhi concerning the customary Hindu law of succession. He explained what it was but concluded, for a number of reasons, that it did not apply to the estate of the Father. On 3rd April 2001 the claimants served a reply in which, in response to the assertion in the defence that the Express Trust claim failed for uncertainty, they contended that

"The necessary certainty was derived (in whole or in part) from the understanding of each member of the Tanna family (arising from their family, culture and education) of the tenets of Hindu law and custom, and, in particular the law and custom that, ordinarily, joint Hindu family property would pass in equal shares upon Velji's death either to his sons or to his widow and his sons (the widow only having a life interest in her share, which share would, upon her death, be passed to the sons)."

In his second witness statement made on 9th April 2001 Jayantilal referred for the first time to what he had been taught about Hindu custom and the treatment of the assets of a Hindu family. He suggested that in view of that knowledge he was not surprised by parts of his conversation with the Father in August 1971. In addition, on 27th April 2001, the claimants amended the particulars of claim to aver a fourth alternative class of beneficiary to be entitled under the Express Trust claim which would be consistent with the customary law as explained by Mr Anand.

(f) In the second witness statement made by Jayantilal on 9th April 2001 he elaborates on his previous descriptions of the conversations he had with the Father in August 1971. He avers for the first time that his father, though speaking in Gujerati, used the English word 'trust' and proposed that he should draft and sign a trust document to formalise his intentions.

12. Finally, before turning to the issues I have to decide, I should record that the Mother died on 4th March 2001.

The Express Trust Claim

13. This claim is pleaded in paragraphs 10 and 15. The allegations are made against the background, as now pleaded in paragraph 9, that the remittances had been made by NSW to the Father with the approval of all the shareholders for the time being of NSW so that "he thereby became legally and beneficially entitled to the said monies". That averment is supported by particulars set out in paragraphs 9.1 to 9.7. The particulars are to the effect that no shareholder or director of NSW ever challenged the passing of title to the Father, that Sureshchandra, Anjna and Dhirajlal have all recognised that title thereto had passed from NSW, that none of the money had been treated as an asset of NSW and that because of powers of attorney given to the Father by all the shareholders and directors he was entitled to transfer the money of NSW to himself. It is also averred in paragraph 9 that

"On several occasions, [the Father] expressed his intention to ensure that there was sufficient money outside Uganda, in Europe, for the family."

14. In paragraph 10 it is alleged

In August 1971, when [the Father] was not well, he summoned Jayantilal to Uganda: Jayantilal travelled to Uganda with his family to find his father ill and the family doctor advising that [the Father] did not have very much time (which Jayantilal took to mean a matter of some months). During long discussions held over some 3 days, the last of those days being the day that [the Father] became very ill and died, [the Father] and Jayantilal (partly in the presence of [the Mother] and the family doctor) talked about the monies deriving from NSW Ltd which [the Father] had over the years exported from Uganda.

10.1 [The Father] told Jayantilal that, in addition to himself, only Chandulal and [the Mother] were signatories on the bank accounts abroad. [The Father] expressed a concern that, after his death, Chandulal might take control of the monies as [the Mother] would be isolated (not being able to read or write English and further not being able to travel alone). [The Father] told Jayantilal that he did not trust Chandulal, as he had taken his secretary as his mistress and had begun to gamble on a regular basis in the casinos of Nairobi.

10.2 [The Father] discussed how best to prevent abuse by Chandulal (or any other member of the family) of what he referred to (in Gujerati) as "our money". [The Father] raised various possibilities including using the monies to purchase houses in England for each of his 5 sons, dividing the monies into 5 separate bank accounts, and rearranging the shareholdings in NSW Ltd (and the other Ugandan companies) so that each would have a parent company incorporated in England and Wales.

10.3 [The Father] asked that Jayantilal accompany him to Europe so that he [the Father] could make the arrangements to protect the exported monies and he asked the doctor if he could travel to Europe to do so: the doctor told him that he was too ill to travel. [The Father] then asked Jayantilal whether he could make arrangements with the banks by telephone from Uganda: Jayantilal (who had no experience in dealing with foreign banks) did not know the procedures nor the banks and, accordingly, no contact was made. Jayantilal (who did not know that his father was going to die within days) thought that the arrangements could be made when he returned to Europe and could act on [the Father's] instructions.

10.4 Nonetheless, [the Father] throughout the discussions over these three days made plain to Jayantilal that the monies that had been exported from Uganda were for the family. In Jayantilal's discussions after [the Father's] death with other members of the family (in particular Chandulal, Ramniklal, Sureshchandra, Anjna and Nila Devi) the exported money was always referred to as being (and was considered to be) for the whole of the family. Everyone understood by the expression "the whole of the family" that what was meant was (in accordance with Indian custom) that the 5 sons would share in the money equally but each would have a moral obligation to use some of the money to look after their mother and sisters (including their married sisters)."

15. The consequence is alleged in paragraph 15 of the Particulars of Claim to be that

"the effect of what was said by [the Father] to Jayantilal in August 1971 (see paragraph 10 above) was to constitute [the Father] trustee of the exported monies to be held by him for (i) the benefit of each of the 5 Tanna sons equally, (ii) for the benefit of each of [the Mother] and the 11 Tanna children equally, (iii) for the benefit of [the Mother] together with the 5 Tanna sons and the 2 unmarried Tanna daughters (namely Anjna and Nila Devi) equally, or (iv) for the benefit of each of the 5 Tanna sons and [the Mother] equally."

(It is paragraph (iv) which was added by amendment on 27th April 2001.)

16. The first issue is whether for the purposes of CPR Rule 3.4(2) those allegations disclose "reasonable grounds for bringing the claim". For the defendants it is submitted that it does not. It is submitted that the three certainties necessary for the creation of a trust, namely certainty of words or intention, subject matter and objects are not adequately alleged. See Knight v Knight (1840) 3 Beav. 148, 173. It is suggested that the allegations do not support a contention that the Father intended to constitute himself a trustee for members of his family to the exclusion of himself; it is submitted that the property intended to be subject to the alleged trusts was never adequately denoted; it is argued that the pleading itself demonstrates uncertainty as to the class of beneficiary intended to take.
17. Each of these submissions is disputed by the claimants. It is pointed out on their behalf that at this stage the allegations must be taken to be true. It is contended, rightly, that no particular form of words is required so long as the intention is clear. They rely on Heartly v Nicholson (1875) 19 Eq Cas 233, 242 for the proposition that it is not necessary that the declaration of trust should be in explicit terms if it is evinced by unequivocal acts.
18. I will consider each of the requisite certainties in turn. I reject the suggestion that there was insufficient certainty of subject matter. It is, in my view, quite plain that the Father was dealing with the remittances from NSW then standing to the credit of the foreign bank accounts. That was the subject matter of the conversation, as alleged in paragraph 10. It was in respect of those moneys that the Father was concerned that Chandulal might obtain control, as alleged in sub-paragraph 10.1. It was those moneys to which the Father referred as "family money", as alleged in sub-paragraph 10.2 and 10.4 and which he wished to travel to Europe to protect, as alleged in sub-paragraph 10.4. The fact, if it be one, that it may be difficult, if not impossible now to identify all the money referred to does not prevent the constitution of a trust in August 1971. It was clear in August 1971 to what the Father referred and there is no suggestion that it was impossible then to identify the property in question.
19. Likewise I reject the contention that the Father failed to identify with sufficient certainty the class of beneficiary if he intended to declare himself to be a trustee of the remittances then in the foreign bank accounts. It is plainly alleged in sub-paragraph 10.4 that the class was to be whatever the Father meant by "the family". The fact that it is arguable which of the four alternatives set out in paragraph 15 he meant does not necessarily give rise to such uncertainty of concept as can prevent the constitution of a trust. The court frequently has to resolve such questions in order to identify the intended beneficiary originally intended. Only rarely does it find the task impossible so as to invalidate the trust.
20. Certainty of intention is in many ways the most important one. If the court is satisfied that the alleged declarant had the requisite intention it will strive to validate it. In this case it is not alleged that the Father intended to transfer the property to others either for their benefit or as trustees for others. Thus there is no question of imperfect gift. What must be shown is that the Father intended to dispose of his beneficial interest in favour of others by himself undertaking an obligation to apply the relevant property for their benefit. The question is whether from the facts alleged it would be open to the court to draw that inference from what the Father said and did. What is alleged to have been said and done must be evaluated by reference to the surrounding circumstances at the time, including the situation of the persons concerned.
21. I do not consider that the court could infer the necessary intention from the allegations contained in paragraph 10. The opening passage sets the scene and identifies the property under discussion. Paragraph 10.1 explains why the Father was concerned. Paragraph 10.2 records a discussion of various courses of action each of which is inconsistent with an immediate intention to constitute himself a trustee. Paragraph 10.3 explains the Father's wish to go to Europe to implement one or other of those courses of action. This, too, is inconsistent with an immediate intention to constitute himself a trustee. Thus the alleged declaration of trust depends on the effect in all the surrounding circumstances of the statements attributed to the Father in paragraph 10.4 that the exported money was "for the family".
22. In my view those words used in the context described in some detail in the Particulars of Claim are wholly inadequate to justify the inference of the requisite intention. This was how, as alleged in paragraph 9, the Father described the original intention with which the remittances were made from time to time between 1959 and 1971. That is what paragraph 10.4 is referring to also. It cannot be regarded as any evidence of an intention that whatever the beneficial ownership of the money in the past it was to be changed by virtue of his statement. Assuming that the Father was the beneficial owner, as the claimants allege in paragraph 9, the words "for the family" cannot justify the inference that the Father intended then and without more to dispose of his beneficial interest. The tenor of the conversations described in Paragraph 10 demonstrates, first, a concern to effect some distribution in the future and, second, to protect the family from the effect of Chandulal's control. An immediate declaration of trust is inconsistent with the first and does nothing to achieve the second.
23. For these reasons I accept the submission that the Particulars of Claim do not disclose reasonable grounds for bringing the Express Trust Claim. Accordingly I will strike it out. In these circumstances it is unnecessary for me to deal with the alternative contention that the Particulars of Claim are also an abuse of the court's process. It is also unnecessary to deal with the alternative contention advanced under CPR Rule 24.2(1)(a). But in case this case goes further it may be helpful if I briefly indicate my conclusion on that issue too.
24. As counsel for the claimants pointed out, to justify dismissing a claim under CPR Rule 24.2 it is necessary to establish both that there is no real prospect of success and that there is no other compelling reason why the case should be disposed of at a trial. In my view the first of those requirements is satisfied. The only witnesses to the conversations with the Father in August 1971 were Jayantilal, the Mother and the family doctor. Only Jayantilal is still available to give evidence. He has provided two witness statements and has verified the truth of the Particulars of Claim. In those three documents he has dealt in progressively greater detail with the relevant events of August 1971. For the most part those three documents are mutually consistent but the allegation I have summarised in paragraph 11(f) above is new. If at trial the judge accepted the evidence of Jayantilal with regard to that statement it would only go to confirm my conclusion on the effect of paragraph 10 as it stands. A suggestion by the Father that he should draft and sign a written declaration of trust is wholly inconsistent with an intention that he should become a trustee immediately and without one. I will defer consideration of whether for some other compelling reason there should be a trial until I have dealt with the other issues.

The Implied Trust Claim

25. In paragraph 15 of the Particulars of Claim the Express Trust claim is said to be alternative to the Implied Trust claim. In fact it must be the other way round because the events giving rise to the Express Trust claim preceded those relied on in support of the Implied Trust claim. If the former succeeded then the second must fail.
26. The Implied Trust claim is set out in paragraphs 11-14. In paragraph 11 it is alleged that not all members of the Tanna family were aware of the shareholdings in the family companies. Then it is alleged

"...After [the Father's] death two things happened: first, [the Father's] shares in the various family companies were (in each case on 20 March 1972) transferred to his widow, [the Mother]; and secondly, the Tanna sons entered into discussions concerning their respective shareholdings in the various companies.

12. Those discussions took place between Chandulal, Ramniklal, Jayantilal and Sureshchandra in Uganda. As a result of those discussions, by early 1972, it was agreed that there should be an equalisation of the sons' shareholdings in NSW Ltd. Dhirajlal, already resident abroad was told about the agreement and went along with it, sharing in the subsequent distribution of funds referred to in paragraph 21 below.

27. Paragraph 13 explains that the transfers required and effected were transfers by Damyanti of 250 shares to each of Ramniklal and Dhirajlal and of 70 shares to Sureshchandra. In consequence of those transfers the holdings in NSW became

The Mother	138
Ramniklal	670
Chandulal (with wife)	660
Jayantilal	672
Dhirajlal	670
Sureshchandra	670
Damyanti	120
	3,600

28. In paragraph 14 it is alleged that

"By the time that the agreement to equalise the shareholdings in NSW Ltd came to be implemented in May 1972, Chandulal had left Uganda for Europe. Because he was the only person who knew any details concerning the exported monies, there was, in the course of the discussions between the remaining Tanna sons, no detailed discussion concerning the monies that had been exported from Europe save that Ramniklal stated that when Chandulal got back from Europe (that he would never return was not known at the time) the Tanna sons would deal with the monies. It was, however, as revealed by that statement by Ramniklal, necessarily implicit, in the agreement reached between the Tanna sons (that their shareholdings in NSW Ltd should be equalised) that they should also equally share in the monies that were being held outside Uganda. In further support of their contention that such was implicit, the Claimants aver that it was obvious that such must have been intended, alternatively such was necessary in order to make the agreement workable."

29. The allegation is supported by reference to the further matters set out in paragraphs 14.1 to 14.3. They state

14.1 When the agreement was made between the Tanna sons in early 1972 it was plainly evident to them all that their family (along with all other Asians) would be sometime in the future expelled from Uganda and their Ugandan assets expropriated by the government. Accordingly, the equalisation of their shareholdings in NSW Ltd was not agreed with a view to them benefiting equally from the Ugandan assets of NSW Ltd: it was known that those assets would, in the future, no longer be available to the shareholders in NSW Ltd.

14.2 Rather, the equalisation of shareholdings was agreed with a view to the Tanna sons benefiting equally from monies deriving from NSW Ltd that were outside Uganda. That the Tanna sons were looking to those monies outside Uganda as being most important for the future is revealed by the fact that it was Damyanti (who was set up by [the Father], together with Jayantilal, as a shareholder outside Uganda to whom distributions could be made (so exporting monies from the country)) whose shares were transferred to each of Ramniklal, Dhirajlal and Sureshchandra: it would no longer matter whether there was a shareholder to whom distributions could be made outside Uganda since, once Asians were expelled from Uganda, there would be no income received from the Ugandan assets.

14.3 That such was necessarily implicit in the agreement reached concerning the equalisation of shareholdings in NSW Ltd is further supported by the facts and matters set out in paragraphs 16 to 27 below, particularly the events concerning the payments made via Kurt Nitzer and Frank Fehr & Co in late 1972. The Claimants will also rely on the above as indicia of a constructive or resulting trust and as evidence (as was the case) that all the shareholders and directors of NSW Ltd approved of the transfer of the monies from NSW Ltd to the Tanna sons and the creation of the said trust, and Paragraphs 9.2 to 9.6 (inclusive) above are repeated.

30. The matters set out in paragraphs 16-27 are those which I have summarised in paragraph 10 above. The matters set out in paragraphs 9.2 to 9.6 are that Sureshchandra, Anjna and Dhirajlal have all recognised that title to the remittances had passed from NSW, that between 1972 and 1999 the five sons had received distributions of such money and that none of the remittances had been treated by NSW as an asset in its accounts.

31. The first issue is whether in the words of CPR Rule 3.4(2)(a) the particulars of claim disclose reasonable grounds for bringing the Implied Trust claim. The Defendants submit that they do not. They point out that the allegation is curious in a number of respects. First it is alleged that the necessity for the implication was revealed by the statement of Ramniklal. But that statement was made after the agreement had been made and in the context that there had not been any detailed discussion in the absence of Chandulal. How could anything be revealed by no discussion? They submit it is not permissible to imply a term into a contract by reason of subsequent events and in any event, for a number of detailed reasons, the matters referred to in paragraphs 16-27 do not do so.

32. For the claimants, counsel submitted that the allegations were more than adequate to satisfy the requirements of CPR Rule 3.4(2)(a). He contended that at the time the Equalisation Agreement was made the remainder of the family was about to be expelled and NSW taken over by the Ugandan government. In those circumstances the only purpose of the agreement would be to deal with the remittances outside Uganda.

33. I accept the submissions of Counsel for the defendants. In my view the Particulars of Claim do not disclose reasonable grounds for bringing the Implied Trust claim. There are a number of reasons.

34. First, the allegation in Paragraph 9 is that the Father was the legal and beneficial owner of all the remittances made by NSW during his lifetime. The allegations relating to the Implied Trust claim follow that prior allegation. They are not stated to be alternative to it. Nor could they be because it would be wholly inconsistent with the Particulars of Claim and all the evidence that the remittances made during the lifetime of the Father should have been for the benefit of the five sons to the exclusion of the Father, the Mother and the daughters. The only remittances alleged to have been made after the death of the Father are those referred to in Paragraph 10(b). But, as alleged, they were both arranged and effected after the Equalisation Agreement had been concluded. It follows that at the time the Equalisation Agreement was made "by early 1972" it is not and could not be alleged that the five sons were between them absolutely entitled to the remittances. I do not understand how the claimants can properly verify both paragraphs 9 and 14 of the Particulars of Claim.

35. Second, at the time the Equalisation Agreement was made there was no discussion of the remittances because it was only at the later stage when Ramniklal made the statement referred to in paragraph 14 that there had been any discussion of them at all. If the alleged necessity for the implication only became apparent after Chandulal had left for Europe then it could not have been obvious at the time the Equalisation Agreement was made. And if it was not obvious then no implication on the ground of obviousness can be made.

36. Third, the implication that the five sons "should also share equally in the monies that were being held outside Uganda" is not necessary to make the Equalisation Agreement workable. If such monies belonged beneficially to NSW then no implication was required for the equalisation of the shares would carry with it the right to a proportionate part of the monies. If such monies did not belong beneficially to NSW then those monies and the shares in NSW were unconnected.

37. Fourth, even if such an implication were either obvious or necessary to make the Equalisation Agreement workable there is insufficient identity of parties. On any view the Father was beneficially interested, either alone or jointly with his five sons. It is not alleged that the Mother was a party to the Equalisation Agreement as the Father's personal representative or universal legatee. If the beneficial owners of the remittances were the shareholders in NSW for the time being then the Mother and Damyanti were necessary parties but are not alleged to have participated in these discussions at all.

38. Fifth, the suggestion in paragraph 14.1 that there was no point in making the Equalisation Agreement in relation to the assets of NSW in Uganda may or may not be well founded. It might have explained an express agreement with regard to the remittances had there been one, but no express agreement is alleged. It cannot explain or justify an implication with regard to the remittances into a pointless agreement.

39. In principle, an implication into a contract must be justified by reference to the circumstances as they existed at the time the express agreement is made. Subsequent events might give rise to a subsequent agreement, but none is alleged. They cannot, in my judgment, be used to justify an implication into the express contract for the first time after it was made. It follows that none of the events alleged in paragraphs 18-27 could support an implication into the Equalisation Agreement not otherwise justified. This leaves paragraphs 16 and 17. Paragraph 16 asserts that the remittances were not treated as being part of the Father's estate. Paragraph 17 avers that the members of the family "looked to Chandulal" in relation to the remittances. Those allegations could not, in my judgment, justify the implication contended for either.

40. For all these reasons I conclude that the Implied Trust claim should also be struck out under CPR Rule 3.4(2)(a). Though it is unnecessary to do so I propose to deal shortly with the alternative claim for judgment dismissing the Implied Trust claim under CPR 24.2.

41. All the matters to which I have referred in paragraphs 31-40 demonstrate that there is no realistic prospect of success. But in addition there is the clear evidence of the genesis of the Implied Trust claim and the defence of delay and acquiescence.

42. It is not appropriate to conduct a trial on witness statement under the new rules any more than it was appropriate to conduct a trial on affidavit under the old. But with a claim such as this it would be wrong for the court to ignore the subsequent events relied on by the defendants. It is quite clear from the history of the dispute summarised in Paragraph 11 above that the Implied Trust claim, like the Express Trust claim, first arose in the Particulars of Claim as served on 28th November 2000. Neither claim was referred to in the letter before action dated 3rd December 1999, the letter from Jayantilal to Dipika dated 29th February 2000 or the application for an order under CPR Rule 31.16 made on 26th June 2000. Of greater significance is the fact that in the first witness statement of Jayantilal made on 24th June 2000 no mention is made of the declaration of trust, the Equalisation Agreement or of the discussions now said to have led to and followed it. The order made by Master Price on 12th July 2000 pursuant to the application under CPR 31.16 required Sureshchandra and Anjna to disclose, inter alia, all documentary evidence in relation to the creation of any trust or showing the shareholders in NSW from incorporation to date. By their witness statements dated 22nd August 2000 they swore that they did not have and never had had any document relating to the creation of a trust in favour of the claimants. They disclosed and subsequently produced the transfers made on 15th May 1972. The declaration of trust and the Equalisation Agreement and the alleged implication therein were then raised in the Particulars of Claim served on 28th November 2000. In my view the late emergence of both the Express Trust claim and the Implied Trust claim is yet further support for the view that neither has any real prospect of success.

Acquiescence

43. Even assuming a real prospect of success for either claim it is necessary to consider the defence of laches and acquiescence raised by the defendants in paragraph 28 of their defence. The defendants point out that the claimants, on their own case, had known of the alleged oral declaration of trust and the Equalisation Agreement since 1971 and 1972 respectively. Further they have known since 1972 that Chandulal intended to keep the remittances made after exchange control was introduced into Uganda in 1962 for himself because that is what they allege in paragraph 19.2 of the Particulars of Claim. Similarly they have known since 1975 that distributions actually made were not in accordance with what they alleged were the terms of the trust. Between 1972 and 1999 Chandulal, Ramniklal and the family doctor attending the Father in August 1971 died. By 1999 the Mother was not competent to give evidence. Since then she has died. The defendants point out that there are now no witnesses available who, from their own knowledge, could contradict the evidence of Jayantilal on most important issues.

44. For the claimants it is contended that until 1999 there was no occasion to institute any proceedings to establish the trust for which they contend. I do not accept that submission. Their own case as to the intentions and actions of Chandulal between 1972 and 1975 demonstrate beyond doubt that they could and should have commenced proceedings to establish the trust and to protect the alleged trust property in the late 1970s.

45. Counsel for the claimants also submitted that it would be premature to conclude at this stage that the defence of acquiescence would succeed. He suggested that there was a good reason for the failure of the claimants to institute proceedings earlier. Such reason is set out in the reply. The allegation is that Chandulal told the Mother and the second claimant, Nila Devi, shortly before his death in 1986 that he intended to return the money and did so.

46. I do not accept these submissions. The defence of acquiescence is apparent from the claimants own pleadings. The suggested reason for inaction is a bad one because the alleged intentions and actions of Chandulal in the mid 1980s cannot excuse the failure to commence protective proceedings in the late 1970s. Accordingly in my judgment the defence of acquiescence destroys any real prospect of success the claims might otherwise have had.

Other compelling reason for a trial

47. Counsel for the claimants pointed out, correctly, that before judgment could be given for the defendants under CPR 24.2 it is necessary also to conclude that there is no other compelling reason why the Express Trust claim and the Implied Trust claim should be disposed of at a trial. He relied strongly on what he suggested were nine matters which cried out for further investigation. In summary they were the following:

1. In paragraph 17 of the defence Sureshchandra avers that Chandulal and/or Ramniklal had given him substantial sums to hold as beneficial owner which he believes was or included a substantial part of what had belonged to Chandulal beneficially. The claimants say that further information is required as to how and when Sureshchandra obtained such a title.
2. They comment adversely on the attitude of the defendants who by their solicitors' letter dated 31st October 2000 indicated, before it was even formulated, that they would apply to strike out the claimants' claim. It is suggested that the discretion of the court arising under CPR 24.2 should not be exercised in favour of such a party.
3. They suggest that there must be relevant documents to be obtained from the Revenue's investigation, after his death, into the affairs of Chandulal, the files of the solicitors who were his executors and how the remittances were dealt with in the administration of the estates of the Father, Chandulal and Ramniklal (particularly the boxes referred to in paragraphs 77-81 of the witness statement of Nila Devi made on 9th April 2001) and the documents relating to the distribution of the moneys paid by Kurt Nitzer and Frank Fehr & Co. as described in paragraph 10(c) above.
4. They suggest that there must be further investigation into the distributions already made and referred to in paragraphs 62-65 and 103 of the same witness statement of Nila Devi. It is suggested that these and other payments are inconsistent with Chandulal, Ramniklal or Dhirajlal being beneficial owners.
5. It is suggested that these inquiries are likely to reveal potential witnesses with useful evidence as to what they were told by the Father, Chandulal, Ramniklal and others as to the purpose of some of the transactions.
6. The claimants point out that at least US$12m is involved so that the costs of a trial would not be disproportionate to the amount at stake.
7. The claimants suggest that the evidence of the defendants is incredible so that the claim by Sureshchandra to be the beneficial owner of the remittances is most improbable.
8. The claimants submit that as it is clear that the moneys in question were not dealt with as part of the estate of the Father, Chandulal or Ramniklal it is hard to see how it could now have devolved on Sureshchandra except under a trust.
9. The claimants point to the evidence of Nila Devi in paragraphs 12 and 104 of her witness statement made on 9th April 2001 to the effect that statements made by the Father both to her and to Dhirajlal indicated that he intended to set up a trust. The allegation is not supported by any evidence from Dhirajlal.

Conclusion