England and Wales High Court (Chancery Division) Decisions

Chellaram & Anor v Chellaram & Ors [2002] EWHC 632 (Ch) (16th April, 2002)

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		HC 01 01700

Mr Justice Lawrence Collins:

I Introduction

1. The Chellaram family is a well known trading family, of which the claimants and all of the non-corporate defendants are members. The family is no stranger to litigation. There has already been litigation in Singapore, in London, in Bombay and in Bermuda which has some relevance to the background to, or the issues in, this case. The litigation in London resulted in the decision of Scott J (as he then was) in Chellaram v. Chellaram [1985] Ch 409 in proceedings to which I shall refer as Chellaram v. Chellaram (No.1).
2. These proceedings were brought by the claimants for relief in connection with what they claimed were breaches of trust in relation to four settlements, one made in 1943, one in 1946 and two in 1975. The claimants were beneficiaries under each of these trusts. The 1943 and 1946 trusts were established by their great grandfather, and the assets of those trusts are buildings in Bombay. The claimants have alleged that their father’s cousins and their uncle, the trustees, have been in breach of trust by letting the properties at a loss to persons connected with themselves and have failed to provide proper accounts.
3. The 1975 trusts were established by their father and their uncle, and the trust assets consisted of shares representing part of the businesses run by their cousins outside India. The allegations relating to those trusts will be set out in detail later, but (at the risk of oversimplification) they are that their cousins, the trustees, diminished the value of the trust assets and later, as part of the settlement of Chellaram v. Chellaram (No.1), procured their sale at an undervalue to themselves or to companies controlled by them.
4. All of the defendants are, or are alleged to be, outside the jurisdiction. Two of the defendants were purportedly served by the posting of the claim form and particulars of claim to addresses in London, and the other defendants were the subject of a series of orders made on June 27, 2001 giving permission to effect service outside the jurisdiction (even though, on the claimants’ case, permission was not required in relation to two of the defendants).
5. These are applications by the defendants (other than the first defendant, who has not been served) to set aside the orders, or for declarations to the effect that service has not been properly effected or that the court has no jurisdiction (or for orders that if the court has jurisdiction, it should not be exercised). The case raises a number of novel points on jurisdiction and choice of law in relation to trusts, and an important point on postal service under the CPR.
6. The claimants have discontinued the proceedings in so far as they relate to the 1943 and 1946 settlements, but the settlements are relevant not only by way of background, but also because the defendants claim that (a) orders for service outside the jurisdiction in this action should be set aside because (among other reasons) the claimants did not disclose the existence of proceedings in India which claimed an interest in property which was subject to the 1943 and 1946 settlements, and (b) the existence of those proceedings is one factor (among others) tending to show that England is not the forum conveniens for the proceedings in relation to the 1975 trusts.

II Dramatis personae

7. The Chellaram trading enterprise was originally based in Bombay, India and was started by Kishinchand Chellaram (“Kishinchand”), who died in 1951, leaving three sons. There had been another son, Asandas, who effected a partition of his share in the family property in 1932, and who does not play a part in the story.
8. A family tree (showing the male line of the relevant parts of the family) is set out in an appendix to this judgment. Kishinchand’s eldest son Tahilram Chellaram (“Tahilram”) died in 1943, leaving three sons, all of whom worked with him in the business: Ram Chellaram (“Ram”), who died in 1987, and Murli Chellaram (“Murli”), the second defendant, and Pishu Chellaram (“Pishu”), the fifth defendant.
9. His second son, Shewakram Chellaram (“Shewakram”), died in 1949, and he and his wife Lachmibai Chellaram (“Lachmibai”), who died in 1997, had two sons, Mohan Chellaram (“Mohan”), the eighth defendant, and Harish Chellaram (“Harish”), who died in 1990. Harish was married to Radhika Chellaram (“Radhika”), who is still alive, and they had two sons, Vishal Chellaram (“Vishal”) and Ashwin Chellaram (“Ashwin”), who are the claimants.
10. His third son was Lokumal Chellaram (“Lokumal”), the first defendant, and he and his wife Kamlabai Chellaram (“Kamlabai”) had two sons, Lal Chellaram (“Lal”) and Sham Chellaram (“Sham”), the third and fourth defendants.
11. According to the defendants, after the death of Kishinchand, the family business traded as three branches. The Lokumal Group is the business run and owned by Lokumal, Lal and Sham. The Tahilram Group is the business run and owned by Murli and Pishu (Ram having died in 1987). Murli is unable to manage his own affairs, as a result of injuries sustained in an accident last year. The Shewakram Group comprised, following the death of Shewakram, the assets owned by or on behalf of Lachmibai (who died in 1997), Mohan, Harish (who died in 1990), Radhika, and the claimants.
12. According to the claimants, the original business eventually traded as two branches, the Lokumal Group and Tahilram Group, and not three. The Shewakram Group had interests in both the other two branches, and did not control any part of the original enterprise. Any businesses in which the Shewakram Group had an interest were controlled by either the Lokumal or Tahilram Group. Nothing turns for present purposes on this difference of emphasis.
13. Chellwood Holdings Ltd. (“Chellwood”), the sixth defendant, is a Gibraltar company in the Lokumal Group and is owned by Lal and Sham. In 1985 Chellwood purchased shares (representing interests in the Lokumal Group businesses) which were subject to the 1975 trusts.
14. Bermuda Trust Co. Ltd. (“Bermuda Trust”), the seventh defendant, is a Bermudan company and the trustee arm of the Bank of Bermuda. It became a trustee of the 1975 trusts in 1985.
15. Mr H. G. Advani (“Mr Advani”) was an adviser of very long standing (since the early 1930s) to Kishinchand and to the family. He was a senior lawyer, and was described in the Chellaram v. Chellaram (No.1) proceedings as the doyen of the Bombay bar. He was a trustee of three of the four trusts which are the subject matter of these proceedings, he advised on several of the important steps taken by the family, and drafted many of the documents, and acted as an arbitrator in valuing shares in the family businesses which the Shewakram Group sold to the other groups in 1985. He died in 1991.

III Jurisdiction

16. The principal questions on the existence of jurisdiction (as distinct from discretion to exercise jurisdiction) which arise in this case are (a) whether Sham was properly served by post at an address in London which the claimants say was his last known residence; (b) whether any of the defendants is domiciled in England for jurisdictional purposes; (c) whether any of the defendants is domiciled in a State or territory to which the Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters of 1968 (“the 1968 Convention”) applies, and, if so, whether the court may assume jurisdiction under the provision in the 1968 Convention relating to trusts; (d) which of the defendants are domiciled in countries or territories to which the 1968 Convention does not apply, and whether the provisions in CPR 6.20 authorising service on necessary and proper parties, and on trustees, apply to them.
17. The following countries are (or may be) relevant countries for the purposes of domicile or residence: (a) England, where Lal and Sham, the third and fourth defendants, are (or were) said to have residences to which the claim form and particulars of claim were sent by post in June 2001, and from where the claimants have suggested that Chellwood, the sixth defendant, is managed; (b) Hong Kong, where Lokumal, the first defendant, is domiciled, and where Sham, the fourth defendant, says he is resident; (c) India, where Murli and Pishu, the second and fifth defendants, are domiciled, and where Mohan, the eighth defendant, says he is domiciled; (d) Spain, where Lal says he is domiciled; (e) Gibraltar, where Chellwood is incorporated, and where the claimants say that Mohan, the eighth defendant, is domiciled; and (f) Bermuda, where Bermuda Trust, the seventh defendant, is incorporated.
18. The 1968 Convention is given effect by the Civil Jurisdiction and Judgments Act 1982 (“the 1982 Act”). It applies to Spain as a Contracting Party. It also applies to Gibraltar as a result of the Civil Jurisdiction and Judgments Act 1982 (Gibraltar) Order 1997, S.I. 1997 No. 2602, made under the power in section 39 of the 1982 Act to make provision to regulate as between the United Kingdom and specified territories (including any colony) jurisdiction and the enforcement of judgments.
19. Where the 1968 Convention applies, a defendant who is domiciled in another State or territory to which it applies can only be sued in the United Kingdom by virtue of the rules set out in the Convention: Articles 2 and 3. As from March 1, 2002, the 1968 Convention (and the parallel Lugano Convention) will for most Contracting States be replaced, as regards proceedings commenced from that date, by Council Regulation 44/2001, but the relevant provisions of the Council Regulation are not materially different.
20. The English court can only have jurisdiction in relation to defendants domiciled outside countries or territories to which the 1968 Convention (or the Lugano Convention) applies if (a) they submit to the jurisdiction (which none has); or (b) they have been validly served within the jurisdiction (as the claimants allege Sham has been); or (c) they fall within one of the heads of CPR 6.20 pursuant to which permission to serve a defendant outside the jurisdiction may be obtained.

Domicile

21. The effect of Article 52(1) of the 1968 Convention is that whether a party is domiciled in the United Kingdom depends on the law of the United Kingdom. For the purpose of proceedings in England, an individual will be domiciled in England if and only if (a) he is resident in England and (b) the nature and circumstances of his residence indicate that he has a substantial connection with England: 1982 Act, section 41(3). If a party is not domiciled in the United Kingdom then, in order to determine whether that party is domiciled in another Contracting State, the English court applies the law of that State: Article 52(2). Residence is not defined but means a settled or usual place of abode, which connotes some degree of permanence or continuity: Bank of Dubai Limited v. Abbas [1997] ILPr 308, 311(CA).
22. The domicile of a company is its seat, and in order to determine the seat, the court applies its rules of private international law: Article 53(2). The relevant rules of private international law are enacted in the 1982 Act, section 42. A foreign corporation will have its seat in England only if its central management and control is exercised in the United Kingdom, and that management and control is exercised in England or it has a place of business in England: section 42 (3), (4)). It will have its seat in another State or territory to which the 1968 Convention applies, if it is incorporated under the law of that State or territory and has its registered office there, or its central management and control is exercised there (unless the courts of that State or that territory would not regard it as having its seat there): section 42(6), (7).
23. The domicile of the defendants is only in part common ground. Where it is not common ground, the onus is on the claimants to show a good arguable case if they wish to establish that a defendant is domiciled in a particular State or territory: Seaconsar Far East Ltd. v. Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438; Canada Trust Co. v. Stolzenberg (No. 2) [2002] 1 AC 1, 13. The standard is therefore more stringent than that of showing merely a serious issue to be tried, but less stringent than proof on the balance of probabilities.
24. The position of the parties on domicile, and, where they differ, my findings are these:

(a) It is accepted that Lokumal, the first defendant, is domiciled in Hong Kong.

(b) It is accepted that Murli and Pishu, the second and fifth defendants, are domiciled in India.

(c) Lal, the third defendant, is domiciled in Spain, where he has been resident for 15 years, and whose law regards him as domiciled there (Article 52, 1968 Convention); Vishal, the first claimant, said that until evidence was served he considered that Lal was resident in London, and that the London address at which he was purportedly served was his usual residence, but the claimants now accept that he is domiciled in Spain.

(d) Sham, the fourth defendant, is resident in Hong Kong, and the nature and circumstances of his residence establish that he is domiciled there. The claimants have asserted, but have not put forward any cogent evidence, that he is domiciled in England. He holds a United Kingdom passport, and he occasionally stays at a flat in St John’s Wood which is owned by a family trust. But he has been a permanent resident of Hong Kong since 1984. From that time he has managed and run his business from Hong Kong where his principal activity is in shipping. All his children were brought up and received the major part of their education in Hong Kong. He spends approximately 9 to 10 months a year in Hong Kong and the remaining 2 to 3 months mostly on business in Asia. From December 1999 until the inception of these proceedings he was in London for a total of about 5 days on transit from the United States to Hong Kong. The evidence is clear in the sense that there is neither the requisite residence in, nor substantial connection with, England.

(e) Chellwood, the sixth defendant, has its seat (and therefore its domicile) in Gibraltar, where it is incorporated and registered, and the claimants have not supported or pursued their assertion that it is run from England with any evidence.

(f) It is accepted that Bermuda Trust, the seventh defendant, has its seat (and therefore its domicile) in Bermuda, where it is incorporated and registered.

(g) Mohan, the eighth defendant, says that he is domiciled in India. The claimants say that he is resident and domiciled in Gibraltar. But the evidence on his behalf is that although he does visit Gibraltar for a few months each year, he has his residence in India, and visits Gibraltar only on a tourist visa. I am satisfied that the claimants have not shown a good arguable case that he is domiciled in Gibraltar, and I will proceed on the basis that he is a non-Convention defendant.

Jurisdiction under CPR 6.20

25. The claimants sought and obtained permission to serve Lokumal, Murli, Pishu and Bermuda Trust pursuant to CPR 6.20(3) and 6.20(11). Under CPR 6.20(3) permission may be given to serve a defendant outside the jurisdiction where the defendant is a necessary or proper party to a claim made against someone on whom the claim form has been or will be served (whether the service is in England or outside England, and whether it is within or without a 1968 Convention country). This is of practical relevance where there is no independent head of jurisdiction against a defendant who is not domiciled in a 1968 Convention country or territory, but other defendants can be served in England, or in non-Convention or Convention countries.
26. Permission may be granted under CPR 6.20(11) to serve out of the jurisdiction if

“a claim is made for any remedy which might be obtained in proceedings to execute the trusts of a written instrument where –

(a) the trusts ought to be executed according to English law; and

(b) the person on whom the claim form is to be served is a trustee of the trusts.”

27. I should also mention (although they have not been relied on by any party) CPR 6.20(14) and (15) which provide for jurisdiction, in the case of claims in constructive trust and restitution, where the defendant’s alleged liability arises out of acts committed within the jurisdiction.

Jurisdiction under the 1968 Convention

28. So far as defendants who are domiciled in 1968 Convention countries are concerned, Article 6(1) (jurisdiction over additional parties by virtue of proceedings against defendant domiciled in the forum) has no application because it is not now argued that any defendant is domiciled in England. The only head of jurisdiction on which the claimants rely is Article 5(6), which provides:

“A person domiciled in a Contracting State may, in another Contracting State, be sued….–

As settlor, trustee or beneficiary of a trust created by the operation of a statute, or by a written instrument, or created orally and evidenced in writing, in the courts of the Contracting State in which the trust is domiciled.”

29. The effect of Article 53(2) of the 1968 Convention is that in proceedings in England the domicile of a trust depends on the law of the United Kingdom. By section 45(3) of the 1982 Act, a trust is domiciled in England if and only if English law is the system of law with which the trust has its closest and most real connection.

Service

30. I will proceed on the basis that, except in the case of Sham, where the question of the validity of service has an important practical effect, it is not necessary for present purposes to make any finding with regard to the validity of service, since (where service has not been validly effected) it can be effected again if the English court has jurisdiction. The claimants have purported to serve all the defendants, except Lokumal, the first defendant. They have accepted that their purported service in India on Murli, the second defendant, and Pishu, the fifth defendant, was invalid because personal service was not effected and because the service was effected by persons without proper authority.

IV The issues

31. The principal issues are these. The first is whether the Civil Procedure Rules have effected a major change to the rules of jurisdiction, so that a defendant who is not domiciled or present in England can now be sued here by virtue of service on him at his last known residence. That in turn depends on whether the effect of the decision of the House of Lords in Barclays Bank of Swaziland Ltd v. Hahn [1989] 1 WLR 506 (that under the RSC service by post within the jurisdiction was only permissible if the defendant was in England at the time the writ was served or deemed to be served) survives the introduction of the CPR.
32. The practical effect of this point is that Sham was not present in England when the claim form was sent by post to the address at which he stays when he is in London. If service is valid then the court would have jurisdiction over Sham, and the court could give permission for service on other non-Convention defendants as necessary or proper parties under CPR 6.20(3). Since this point does not depend on an appreciation of the facts of the case it will be dealt with in the next section.
33. The second set of issues also relates to the non-Convention defendants. It includes the question of the applicability and interpretation of CPR 6.20(11) concerning claims in relation to trusts. It also raises the issues (a) whether the claimants can satisfy the court that England is the forum conveniens for the claims against those defendants; (b) whether the permission granted by Master Bragge to serve these defendants outside the jurisdiction should be set aside for non-disclosure; and (c) whether the claimants have established a serious issue to be tried on the merits of their claim.
34. The third set of issues relates to the question whether the 1968 Convention defendants (Lal and Chellwood) can be sued under Article 5(6) of the 1968 Convention.
35. The applicability of CPR 6.20(11) and Article 5(6) raises some novel and difficult questions. There are more than 800 pages of evidence on these applications, but there is not much dispute about the essential history. Where the parties differ, I will not of course make any findings, except to the extent that it is necessary, in particular, to decide whether the claimants have established a good arguable case for jurisdiction and (for CPR 6.20 purposes) a serious issue to be tried on the merits. But because the jurisdictional issues cannot be fully appreciated without an understanding of the factual circumstances they will be dealt with in section XIII.

V Service under CPR 6.5 and the decision in Barclays Bank of Swaziland Ltd. v. Hahn

36. The effect of CPR Part 6 is that a claim form may be served by (among other methods) first-class post, and for that purpose by CPR 6.5(6) the place of service of an individual is the "usual or last known residence". By CPR 6.7(1) a document served by first-class post is deemed to be served the second day after it was posted (excluding Saturday, Sundays and public holidays).
37. The claim form and particulars of claim were sent by first-class post under cover of a letter from the claimants' solicitors dated June 7, 2001, addressed to Sham at a flat in Imperial Court, Prince Albert Road, St John’s Wood, London. Sham is resident in Hong Kong. The flat belongs to a family trust, and he and members of his family stay in the property if and when they visit England. He was not at that address in June 2001.
38. The deemed date of service was June 11, 2001 (because June 9 and 10 were a Saturday and Sunday). Sham was in Hong Kong until June 9, 2001 and in Bombay from June 10 to 16, 2001.
39. Lal was served in the same way at another flat in London, but no issue arises with regard to Lal in this regard, because he is domiciled in Spain, and the English court can only assert jurisdiction over him if it is authorised to do so by the 1968 Convention.
40. The defendants rely on Barclays Bank of Swaziland Ltd v. Hahn [1989] 1 WLR 506 and Dicey and Morris, Conflict of Laws, 13th edition, 2000, para 11-084, for the proposition that, for jurisdictional purposes, it is not necessary that the defendant be in England when the proceedings are issued, but he must be in England when they are served.
41. Barclays Bank of Swaziland Ltd v. Hahn was a decision on the provision in RSC Order 10, r. 1(2) that: “A writ for service on a defendant within the jurisdiction may, instead of being served personally on him, be served - (a) by sending a copy of the writ by ordinary first-class post to the defendant at his usual or last known address, or (b) if there is a letter box for that address, by inserting through the letter box a copy of the writ enclosed in a sealed envelope addressed to the defendant ...”. The date of service was, unless the contrary was shown, deemed to be the seventh day after the date on which the copy was sent to the address: Order 10, r. 1(3).
42. In that case the defendant's wife rented a flat in England, and he and his wife spent no more than three months a year there. A copy of the writ was inserted through the letter box about two hours before the defendant arrived in England. Having been warned that the envelope had been put through the letter box, he did not go to the flat, and returned to Geneva the next day. The result of the deeming provisions was that the writ was deemed to be served a week later, when the defendant was still in Geneva. It was held that for the purposes of RSC Order 10, r.1 the defendant had to be within the jurisdiction at the time of service of the writ, but that he was duly served on the day he arrived because the evidence was that the copy writ came to his knowledge when he was within the jurisdiction.
43. Lord Brightman said (at 510-511)

“... I accept the appellant's proposition that the defendant must be within the jurisdiction at the time when the writ is served, and I do not find it possible to agree the Court of Appeal's approach. This approach would mean that a writ could validly be served under Order 10 on a defendant who had once an address in England but had permanently left this country and settled elsewhere… This appears to me to outflank Order 11 (relating to service of process outside the jurisdiction) in every case where the defendant was formerly resident in this country and is capable of being contacted abroad within seven days. I feel no doubt that the words ‘within the jurisdiction’ apply to the defendant, and not to the writ for service.”

44. The claimants say that the decision in Barclays Bank of Swaziland Ltd v. Hahn, being a decision under the Rules of the Supreme Court, has no application for the purposes of the Civil Procedure Rules 1998 which are “a new procedural code” (CPR 1.1). They rely on the approach that new provisions in the CPR are not to be limited by practices and attitudes that attach to the former rules of court, and that even provisions plainly based on provisions formerly found in the RSC would not necessarily be interpreted and applied in accordance with the case law built up around those provisions.
45. They say that there is no fundamental rule of procedure that a defendant outside the jurisdiction cannot be served within the jurisdiction, and rely on Rolph v. Zolan [1993] 1 WLR 1305, a case on the County Court Rules, which provided that a document could be served on a defendant “by first class post to his last known residence.” In that case the county court summons was sent by post to the defendant at his address in England at a time when he (a former solicitor) had emigrated to Spain and started a new career as a guitarist and flamenco dancer. A friend of the defendant collected his mail and posted it on to Spain with the result that he received the summons. It was held by the Court of Appeal, first, that the County Court Rules were not limited, as a matter of construction, to service only on a defendant who was within the jurisdiction. Secondly, the Court of Appeal rejected a submission to the effect that County Courts Act, section 76, limited the application of the County Court rule to defendants within the jurisdiction at the time of service. Section 76 provided that “…the general principles of practice in the High Court may be adopted and applied to proceedings in a county court.” The submission was rejected for two reasons: first, section 76 was primarily directed to extending the powers of the county court where the County Court Rules made no express provision, and not to curtailing its powers. Secondly, the interpretation of RSC Order 10, r 1 in Barclays Bank of Swaziland Ltd v. Hahn was a specific limitation and not a general principle of practice within the meaning of section 76: postal service was a matter of specific rules, and not a matter of general principles of practice.
46. Ralph v. Zolan is a decision on the former County Court Rules. The new regime under the CPR does not require me to follow decisions on the previous rules. In my judgment the decision does not bind me to hold that CPR 6.5 applies to defendants who are outside the jurisdiction at the time of service, or that it has effected a major change in the principles applicable to jurisdiction over persons outside England.
47. In my judgment there are two separate reasons why Sham has not been validly served. First, the claimants have not adduced any evidence which casts doubt on Sham’s evidence that the address in St John’s Wood is used only occasionally by him on the rare occasions when he visits London. In these circumstances there is no evidence that it ever was a “residence” and it therefore cannot be his “last known residence.” Secondly it has always been, and remains, a fundamental rule of English procedure and jurisdiction that a defendant may be served with originating process within the jurisdiction only if he is present in the jurisdiction at the time of service, or deemed service. Barclays Bank of Swaziland Ltd v. Hahn is simply an illustration of this principle (as is another case, not cited in argument, Cadogan Properties Ltd v. Mount Eden Land Ltd [2000] I.L. Pr 722, in which the Court of Appeal held that if the defendant is outside England, an order for substituted service in England could not be obtained unless permission to serve proceedings out of the jurisdiction had been obtained). CPR Part 6 contains general rules about service of documents and does not only apply to service of a claim form (see Godwin v. Swindon Borough Council [2001] 4 All ER 641, 646 (CA)), but I do not consider that CPR 6.5 has swept away the general principle so far as it relates to service of the claim form.

V The facts: the 1943 and 1946 Trusts

The 1943 Trust

48. The 1943 Trust was established by Kishinchand in April 1943 for the benefit of the wives and male children of Shewakram and Lokumal. The funds were to be divided equally into two separate trust funds: (1) the Lachmibai trust fund, for the wife and male children of Shewakram; and (2) the Kamlabai trust fund, for the wife and male children of Lokumal.
49. The net income of the respective trust funds was to be provided to the wife for the support, maintenance, education and advancement and otherwise for the benefit of her and her children born before the date of the creation of the trust (i.e. in the case of the Lachmibai trust fund, Mohan and Harish). Lachmibai had, during her lifetime, absolute discretion as to the use of the revenue derived from the trust assets of the Lachmibai trust fund. Upon the death of the survivor of Lachmibai and Shewakram, the trust fund would be held by the trusts such that that the male descendants of Shewakram would obtain on distribution an equal share of the trust assets depending on their respective father’s share.
50. The original trustees of the 1943 Trust were Tahilram, Shewakram and Lokumal. After Tahilram and Shewakram died, Mr. Advani and Murli were appointed trustees. After Mr. Advani died, Lal and Sham also became trustees, by deed of appointment dated January 5, 1993. The present trustees are Lokumal, Murli, Lal and Sham.
51. The present beneficiaries of the 1943 Trust assets are: as to the Lachmibai trust fund (representing 50% of the whole): Mohan (25% of the whole), and the claimants (12.5% each of the whole); as to the Kamlabai trust fund: Kamlabai (50% of the whole) during her lifetime, thereafter Lokumal during his lifetime, and thereafter Sham and Lal (25% each of the whole).
52. The trust monies were invested in real estate in Bombay, which is now called Central Building No. 2, which was acquired in May 1943. The property is fully tenanted. There is also a Bombay bank account which is used for the administrative costs associated with the administration of Central Building No. 2 and its tenancies.

The 1946 Trust

53. The 1946 Trust was established by Kishinchand Chellaram in July 1946. The Trust was established for the benefit of Lachmibai and the male children of Shewakram. The net income of the trust fund was to be provided to Lachmibai during her lifetime or to Shewakram in the event that he survived her. Upon the death of the survivor of Lachmibai and Shewakram, the trust fund was to be held by the trustees to divide amongst the male children/and all the male issue of the male line descending from Shewakram per stirpes in equal shares. Any male descendent had to attain the age of majority before receiving his share. Until that time, the trustees were required to provide the net income for the maintenance, upbringing, education and general welfare of the sons of Lachmibai and Shewakram.
54. The original trustees were Shewakram, Lokumal and Murli, and Lokumal and Murli are the surviving trustees. The present beneficiaries of the 1946 Trust are: Mohan (50%) and the claimants (25% each).
55. The trust monies were invested in property, a 30% share of a building in Bombay called Carmichael House. There is also a Bombay bank account which is used for the administrative costs associated with the administration of Carmichael House and its tenancies. There was also a trust part interest in another building on the site, Chellaram House, but that interest was, it would seem, disposed of some time ago.

Complaints concerning 1943 and 1946 Trusts

56. The figures put before the court indicate that the rental income from the two properties is relatively modest: in the case of Central Building No. 2, it barely breaks even, and in the case of Carmichael House the expenditure exceeds income by more than £1000 per annum. The defendants say that because the tenancies for the properties in the 1943 and 1946 Trusts come under the Indian Rent Control Act (whereby tenants’ occupation is protected and rental increases are limited to nominal annual amounts) it is difficult to value the properties or the claimants’ interest in them.
57. In 1998 the trustees of the 1943 Trust requested the beneficiaries to pay a contribution to the expenses of Central Building No. 2 to make up a shortfall. After Indian lawyers for the trustees sought approval from the beneficiaries to distribute the trust assets, the claimants’ London solicitors in early 2001 sought (inter alia) full accounts for the 1943 and 1946 Trusts for the period “pre-1980” to the date of their letter. In correspondence thereafter they took the position that information supplied was not sufficient, and that their clients had no intention of releasing the trustees from their obligations. The claimants then commenced these proceedings, making the allegations which are set out in paragraph 124 below.

Governing law of the 1943 and 1946 Trusts

58. There can be no doubt that the 1943 and 1946 Trusts, and their administration, are governed by Indian law, and the claimants accept that the governing law is that of India, and that the Indian courts can exercise jurisdiction over them. They were created in India by an Indian settlor over Indian property with trustees who were then resident in India, and were drafted by Indian lawyers, and are registered in Bombay. They refer specifically to the Indian Income Tax Act for authorised payments and the Indian Trusts Act 1882 for authorised investments. The only assets are property in Bombay and the bank accounts used for their administration. The administration of the Trusts is dealt with in India under Powers of Attorney granted by the trustees to directors of the Indian companies of the Lokumal or Tahilram Groups.
59. There is no case for any other governing law. The only foreign connection is the residence of three of the trustees in the case of the 1943 Trust (Lokumal and Sham in Hong Kong and Lal in Spain) and of Lokumal in the case of the 1946 Trust. Neither Trust, nor its administration, has any connection with England.

VI The 1975 Trusts

60. On February 14, 1975, two trusts were created by Harish (the father of the claimants) and Mohan (the claimants’ uncle) (“the 1975 Trusts” and separately “the Harish Trust” and “the Mohan Trust”). The 1975 Trusts were drafted in Bombay by Mr Advani.

Background: Kaycee (Bermuda) Ltd and Chellsons (Bermuda) Ltd

61. When Shewakram died in 1949, his interest in the Chellaram family trading enterprises outside India was inherited by Lachmibai, his widow. Prior to the death of Shewakram, the Chellaram family businesses were already being conducted mainly by Lokumal and Murli. In about 1960, the Chellaram businesses outside India became subsidiaries of a Bermudan holding company, Kaycee (Bermuda) Ltd ("Kaycee"), with shareholdings of 36% for the Lokumal Group, 34% for the Tahilram Group and 30% for the Shewakram Group (which at that time was effectively represented by Lachmibai, Shewakram’s widow).
62. In about 1973, the Lokumal Group and Tahilram Group decided to effect a separation of their trading interests outside India from one another with Lachmibai opting to retain her 30% interest in both groups. To implement this separation the Lokumal Group was to control Kaycee as the holding company for the Lokumal Group businesses and the Tahilram Group was to control another Bermudan company, Chellsons (Bermuda) Ltd. ("Chellsons") as the holding company for the Tahilram Group businesses. Lachmibai was to have a 15/51 interest in Kaycee and a 15/49 interest in Chellsons, i.e. 30% of the whole. The Lokumal Group (Lokumal, Lal and Sham) was to have 36/51 of Kaycee, and the Tahilram Group (Murli, Pishu and Ram) was to have 34/49 of Chellsons. The businesses to be allotted to each group were settled by an arbitration award made by Mr Hobart Moore in 1974.

The Trusts

63. According to the defendants, in about 1973 or 1974, Mr Advani advised Lachmibai, for Indian fiscal and exchange control reasons, to give one half of her 30% interest in Kaycee and Chellsons to each of her sons Mohan and Harish, and require them to settle their shares in discretionary trusts with Lachmibai remaining as a named beneficiary in both those settlements. It seems that because Mohan and Harish were non-resident Indians (NRIs) the shares would not be subject to Indian tax or exchange control. Vishal’s evidence is that the gift was an absolute one and quite separate from the creation of discretionary trusts, but nothing turns on this.
64. The assets of the 1975 Trusts established by Harish and Mohan were the shareholdings in Kaycee and Chellsons. Mohan and Harish were the respective settlors. The original trustees were Ram, and Mr K Rupchand and Mr G R Bharwani (who managed the Chellsons London company).
65. The beneficiaries were in the case of the Harish Trust: Lachmibai, Mohan, Radhika, the claimants, the wife and any children of Mohan, children and remoter issue of the father and mother of the settlor (Shewakram and Lachmibai), and the spouses of the aforesaid and the spouses of any adopted child of the settlor. In the case of the Mohan Trust the beneficiaries were: Lachmibai, Harish, Radhika, the claimants, children and remoter issue of the father and mother of the settlor (Shewakram and Lachmibai), spouses of the beneficiaries listed above and the spouses of any adopted children of the settlor.
66. The trust deeds provided that during the lifetime of the respective settlors, and in the event that the whole or part of the trust fund consisted of shares in Kaycee or Chellsons, the trustees would not without the written consent of the settlor dispose or deal with the shares. The vesting day was the period of 20 years or earlier when the claimants attained the age of majority or any day, which the trustees declared to be that day. What the beneficiaries obtained on the vesting day was at the absolute discretion of the trustees (clause 4(c)).
67. Clause 15(a) of each of the trust deeds provided:

“Notwithstanding anything herein contained if it shall appear to the Trustees beneficial to the Trust Fund and in the interest of the Beneficiaries so to do the Trustees may at any time or times and from time to time by Deed declare that this Settlement shall from the date of such declaration or where any date therefor is specified therein from such date take effect in accordance with the Law of some other place in any part of the World and that the forum for the administration hereof shall thenceforth be the Courts of that place and as and from the date aforesaid the Laws of the Country named in such declaration shall be the Laws applicable to this Settlement and the Courts of that Country shall be the forum for the administration thereof but subject to power conferred by this Clause.”

VII Eskay (Bermuda) Ltd: reconstruction of trusts

Eskay 1 formed to hold Kaycee and Chellsons shares

68. In October 1976, probably on the advice of Mr Advani, Eskay (Bermuda) Ltd (“Eskay 1”), a Bermudan company, was formed to hold those shares in Kaycee and Chellsons which were subject to the 1975 Trusts. The shares in Eskay 1 were expressly held by Mohan, Harish and Conyers Dill & Pearman (the well known Bermuda law firm) for the trustees of the 1975 Trusts.

Change in trustees and separation of Lokumal Group and Tahilram Group interests

69. In 1981 the following events occurred. First, Mr Rupchand and Mr Bharwani retired as trustees of the 1975 Trusts, the continuation as trustee of Ram was confirmed and Sham, Lal, Murli and Mr Advani were appointed as new trustees of each of the 1975 Trusts.
70. Secondly, there was a re-structuring of the interests of the 1975 Trusts in the Chellaram businesses. Prior to the reconstruction the trustees of each of the 1975 Trusts contained members of the Lokumal Group (Lal and Sham) and the Tahilram Group (Ram and Murli), and the interest of the trusts in Kaycee (the Lokumal Group vehicle) and Chellsons (the Tahilram Group vehicle) was held through Eskay 1. According to the defendants, the Lokumal Group and Tahilram Group wished to complete the separation of their business interests by also separating their responsibility as trustees of the shares in Kaycee and Chellsons.
71. In addition, according to the defendants (and not contradicted by the claimants), at that time it was the practice to reinvest the profits of Kaycee and Chellsons in the businesses and accordingly neither Kaycee nor Chellsons declared dividends for distribution to members. Lachmibai wished to receive a dividend for the Shewakram family and, in order to ensure income for the trusts, which held their interests through Eskay 1, it was decided that a class of preferential shares in Kaycee and Chellsons would be created to enable dividends to be paid so as to benefit only the trusts. As will appear, the claimants take a radically different view of the change.

Reconstruction of share capital of Kaycee and Chellsons

72. The following steps were taken. First, the shares held by Eskay 1 in Kaycee and Chellsons were converted into “B” shares, and all the remaining shares (i.e. those held by the Lokumal Group and the Tahilram Group) in Kaycee and Chellsons were designated "A" shares. The “B” shares were given a minimum guaranteed and preferential dividend of 6% but had restricted voting rights. The minimum guarantee in respect of dividend did not affect the right of the “B” shareholders to receive dividends pari passu with the right to dividends payable in respect of the “A” shares.
73. The defendants say that the restriction on voting rights was a recognition of the fact that the holders were not interested, and had voluntarily not participated, in the management of the relevant companies. The voting restrictions did not apply to certain important decisions of Kaycee or Chellsons, including any consideration of merger of the company with or into any other corporation; any sale of the company or any sale of a substantial portion of the company’s assets; and the dissolution or winding up of the company.
74. The claimants assert in the particulars of claim (as their parents did in Chellaram v. Chellaram (No.1)) that this reconstruction diminished the value of the assets of the 1975 Trusts through the creation of “B” shares, which were of less value than the unconverted shares which they represented. But they do not say why the “B” shares were less valuable than the “A” shares, and Vishal does not answer the evidence of Sham that the “A” and “B” shares were treated equally in the only transaction in which their value was relevant, to which I will turn in the next section.

Kayshewak and Eskay 2 hold shares in Kaycee and Chellsons: trustees re-arranged

75. Second, Eskay 1 was replaced as the shareholder in Kaycee and Chellsons by two new Bermudan companies, one of which was ultimately called Kayshewak Ltd (“Kayshewak”), which held the trust interests in Kaycee and the other called Eskay (Bermuda) Ltd. (“Eskay 2”) (after Eskay 1 had been placed into liquidation), which held the trust interests in Chellsons. All of the shares in Kayshewak and Eskay 2 were held (in the case of the Eskay 2 shares through a nominee company) for the trustees of the 1975 Trusts.
76. Third, the trust assets were divided into two funds, an “A” fund comprising the Kayshewak shares; and a “B” fund comprising the Eskay 2 shares. The trustees were re-arranged so that members of the Lokumal Group (Lokumal, Lal and Sham) became trustees of the “A” fund, i.e Kayshewak shares, Kayshewak being the company which held the shares in Kaycee, the Lokumal Group company. Members of the Tahilram Group (Ram, Murli and Pishu) became trustees of the “B” fund Eskay 2 shares, Eskay 2 being the company which held the shares in Chellsons, the Tahilram Group company. Mr Advani was a trustee of both funds.

VIII The proceedings in Singapore and in England in 1983/1985

77. According to the claimants, in May or August (both dates are found in the documents) 1983 the trustees of the 1975 Trusts ceased making payments to Harish and Radhika who had until then been receiving $250,000 per annum from the family interests. In August 1983 they were removed as directors of K Chellaram & Sons (Far East) Pte Ltd, a Chellaram Singapore company, and allegations of fraud were made against them in Singapore proceedings by Murli (who then had overall responsibility for managing the business affairs of the Tahilram Group).
78. In December 1983, Harish and Radhika and their sons, the claimants in these proceedings (as minors), brought proceedings in the High Court in London against the then trustees of the 1975 Trusts (Lokumal, Murli, Lal, Sham, Pishu, Ram, and Mr Advani) in Chellaram v. Chellaram (No.1). They sought (inter alia) accounts in respect of both trusts from the dates of their creation, and an order removing the defendants as trustees and appointment of new trustees in their place.
79. The complaints by the plaintiffs in Chellaram v. Chellaram (No.1) were that the trustees had failed to prepare and provide proper accounts of the trusts; the effect of the conversion of the shares into class “B” shares had diminished their value, and the defendants had procured the conversion in breach of trust for their own benefit; no reasonable trustee could properly have declined to exercise his discretion to provide Radhika and Harish with an income equivalent to that which had been cut off, and to produce such income; and the allegations of fraud in the Singapore proceedings had caused such a breakdown of trust that it had become impossible for the defendants to exercise their powers and discretions vis-a-vis the plaintiffs in good faith.
80. Each of the defendants entered appearances or instructed their solicitors Norton, Rose, Botterill & Roche (“Norton Rose”) to accept service on their behalf. The defendants then sought a stay of the proceedings on the ground that England was not the forum conveniens.
81. Scott J refused a stay: Chellaram v. Chellaram [1985] Ch 409. He did not decide on the governing law of the trusts. He said that he was originally strongly inclined to regard the law of India as the proper law of the settlements, but he had become less certain. The beneficiaries were an Indian family, and the trustees were all Indian in origin, and the settlements were drawn up in Bombay, by an Indian practitioner, and the settlors were Indian in origin and domiciled in India at the date of the settlement. Those factors pointed strongly to the law of India being the proper law. But the trust property was Bermudan, and the underlying assets, in the form of the operating companies, were all situated outside India, and the purpose of the settlements was in part to escape Indian taxation and Indian exchange control. But, most important, the identity of three original trustees, two of whom were permanently resident in England, and the third being the member of the family who in 1975 appeared to have the closest connection with England. The inference was inescapable that the parties to the settlement contemplated that administration would take place in London.
82. Although India was a more convenient locality as far as the personal circumstances of the parties and any witnesses were concerned, a stay was refused principally on these grounds. There was some doubt whether the Bombay court would have jurisdiction over the non-Indian defendants, even if they submitted to its jurisdiction. It might take from 7 to 10 years to get a hearing, and a minimum delay of 7 years might expose the plaintiffs to considerable hardship. It was common ground that the payments had ceased and that the financial position of Harish and his family had correspondingly worsened. A delay might represent a serious injustice. The commencement of the action in England was not an exercise in forum shopping, since there was always a strong connection between England and the settlements, and between England and the Chellaram family. Administration of the settlements was intended at the date of the settlements to take place in England. Such administration as had taken place since the date of the settlement had taken place in England, four of the defendants held British passports, and all the defendants as well as the plaintiffs regularly spent time in England. Each of the defendants was either served personally or voluntarily submitted to the jurisdiction by giving instructions to Norton Rose to accept service.

IX Settlement of the proceedings and the sale of the Shewakram trust interests in Kaycee and Chellsons to the Lokumal and Tahilram Groups

Background

83. In 1985 an agreement was reached whereby the Singapore and London proceedings were discontinued, and which was intended to turn into cash the interests of the beneficiaries of the 1975 Trusts in Kaycee and Chellsons. According to the defendants in these proceedings, relations within the family had reached the point where each side wanted a clean break. The Lokumal Group and the Tahilram Group wished to have absolute control and ownership of their businesses and the Shewakram Group no longer wished to be tied into those businesses but to be paid out their share.
84. The method by which this aim was achieved must be understood, according to the defendants, in the light of the tax advice the family had received. They say that it was understood by the trustees, following written advice from the accountants Moore, Stephens & Co. (“Moore, Stephens”) to Norton Rose, that the decision in Chellaram v. Chellaram (No.1) that the administration of the trust assets was conducted in the UK and that some of the trustees had English connections (Scott J having held that the trustees had English addresses and appeared to visit England regularly), led to a risk that the Inland Revenue would argue that all revenue flowing from Kayshewak and Eskay 2 to the 1975 Trusts would be liable to UK tax. In any event, the cost of defending a lengthy enquiry by the Inland Revenue would be extremely expensive. The advice of the accountants in November 1984 was therefore that none of the trustees should be UK resident, that the current trustees should resign and an independent, professional off-shore trustee be appointed in the Channel Islands or Bermuda.
85. The claimants allege (particulars of claim, para 39) that the appointment of Bermuda Trust was for the purpose of enabling breaches of trust to be effected by seeking to avoid the necessity for court approval in England under RSC Order 80, r. 10, but Vishal says nothing about the evidence that it was solely for tax reasons. RSC Order 80, r. 10 provided that no compromise of a monetary claim by an infant would, so far as it related to that claim, be valid without the approval of the court.

Heads of Agreement and Supplemental Agreement: change of trustees and agreement to sell shares

86. The following steps were then taken. First, on March 29, 1985 Heads of Agreement (negotiated mainly in Bombay and executed in Bombay, Hong Kong and Singapore) were agreed between (a) Harish and Radhika on behalf of themselves and the claimants (as minors), (b) Lokumal, Lal, and Sham, and (c) Murli, Pishu and Ram. It was agreed that all the trustees of the 1975 Trusts would resign in favour of the Bank of Bermuda, who would act as trustee in respect of both of the 1975 Trusts; the assets of the trusts would vest to the extent of 1/3rd each in (a) Radhika and Harish and the claimants; (b) Lachmibai; and (c) Mohan. Radhika and Harish would then sell their shareholdings in Kayshewak to the Lokumal Group (Lokumal, Lal and Sham) and in Eskay 2 to the Tahilram Group (Murli, Pishu and Ram).
87. The price of the shares to be sold was to be fixed by arbitrators, with Radhika and Harish appointing Mr M B Chanrai (a successful international businessman and the brother-in-law of Harish and Mohan) as their arbitrator, and the purchasers appointing Mr Advani as their arbitrator. They were to conduct two separate, final and binding arbitrations in respect of the Eskay 2 shares on the one hand and the Kayshewak shares on the other. It was also provided that because the arbitrations would be family arbitrations and the arbitrators had been known to all parties for a long time, the parties were to be barred from moving the court for their removal for misconduct; and that the parties might be heard, but were not entitled to legal or accountancy assistance at the hearings.
88. The agreement was conditional on withdrawal of proceedings in England and Singapore, but the parties had the right to seek redress from the courts if the arbitration failed. Certain payments were to be made upon withdrawal of the litigation on account for the share sales. Part of the proceeds were to be used by Harish and Radhika to reduce their indebtedness to the Singapore company which had been the subject of the Singapore proceedings.
89. Clause 18 provided:

“The parties expressly agree that only the courts of Bermuda shall have jurisdiction over this Agreement and agree to exclude the UK courts from any jurisdiction whatsoever over this Agreement directly or indirectly.”

90. Second, on May 31, 1985 a Deed supplemental to the Heads of Agreement (“the Supplemental Agreement”) was entered into between Lachmibai, Harish, Radhika (on their own behalf and that of their children, the claimants), Mohan, Lokumal, Lal, Sham, Murli, Pishu, Ram and Mr Advani.
91. They agreed to appoint the Bank of Bermuda as trustee in place of the family trustees, and Mohan, Harish and Radhika (both themselves and on behalf of their children) (“the beneficiaries”) agreed not to challenge or impugn the appointment. All rights against the family trustees that the beneficiaries might have had were given up as well as any rights to the Kayshewak and Eskay 2 shares once transferred to the relevant purchasers. In addition it was agreed that a letter of wishes would be presented to the new trustee which was scheduled to the Deed. The effect of the letter of wishes was to indicate that the intention was to make an early appointment to Harish and Radhika and their sons of 2/3rds of the Mohan Trust fund, with a later appointment of 1/3^rd of each of the Trust funds to Lachmibai and 1/3^rd of the Harish Trust fund to Mohan. The Supplemental Agreement was signed by the parties in Jersey, Singapore and Bombay in May 1985. Since the Supplemental Agreement was supplemental to the Heads of Agreement it was no doubt impliedly governed by the same choice of law and choice of jurisdiction provisions.
92. Third, on the same day Bermuda Trust was appointed under the powers in the 1975 Trusts as a new trustee in place of the Chellaram family trustees. Mr Advani remained as trustee.

Choice of law and jurisdiction for 1975 Trusts

93. Fourth, on May 31, 1985, purportedly pursuant to clause 15 of the 1975 trust deeds, the Chellaram family trustees declared in relation to each of the 1975 Trusts:

“I. This settlement shall continue to take effect in accordance with the Hindu Family Law being the proper law of the Settlement. 2. Without prejudice to the provisions of paragraph (I) above the forum for the administration of the Settlement shall henceforth be Bermuda.”

94. The claimants suggest that the declarations were ineffective because they seem to bear a date of June 10, 1985, which is after the trustees resigned, but there is other evidence that execution took place on May 31, 1985. In any event, it is likely that this choice was not authorised by clause 15(a). Even if the reference to Hindu Family Law is to be taken as a choice of Indian law, clause 15(a) does not authorise the choice of different laws to govern the trust and its administration.
95. Later that year, in October/November 1985, Bermuda Trust and Mr Advani executed deeds in respect of each of the 1975 Trusts declaring that :

“The Settlement shall henceforth take effect in accordance with the laws of the said Islands of Bermuda [and] the Courts of the said Islands of Bermuda shall henceforth be the forum for the administration of the Settlement.”

96. Only the deed relating to the Harish Trust has been located, but I am satisfied for the purposes of this application by the contemporary correspondence that there were deeds for both Trusts.

Appointment of shares

97. Fifth, Bermuda Trust and Mr. Advani as trustees of the Mohan and Harish Trusts made the following appointments: (a) under the Mohan Trust, on July 29, 1985, 50,000 Kayshewak shares were appointed to Harish (25%), Radhika (25%) and the claimants (25% each); and on November 18, 1985, 25,000 Kayshewak shares were appointed to Lachmibai; and (b) under the Harish Trust, on November 18, 1985, 50,000 Kayshewak shares were appointed to Mohan, and 25,000 Kayshewak shares were appointed to Lachmibai.
98. The second November 18, 1985 deed appointed the same number of Eskay 2 shares in the same proportions, and I infer that this was so in the case of the other appointments also.

Arbitration

99. The “B” shares of Kaycee were the principal assets of Kayshewak. In November 1984 Moore, Stephens had arrived at a valuation range of between $17 and $21 as an approximate fair value (based on the accounts to June 30, 1983) for both the “A” and “B” shares of Kaycee, on the assumption that no distinction was to be drawn between the two classes of shares.
100. Following a formal hearing in Jersey at the offices of Moore, Stephens, the arbitrators on July 29, 1985 valued the Kayshewak shares at $45 per share, which represented a valuation of the Kaycee shares at $25. The amount due to Radhika and Harish and their sons was therefore $2,250,000. The award recited that the arbitrators had determined the value and that the parties had agreed to the valuation and had requested the arbitrators to make the award by consent. The Kayshewak award states: “This Award shall be enforced either in the Courts of Jersey where it has been made or in Bermuda and in no other jurisdiction”. It was signed by all parties, including Harish and Radhika on behalf of the claimants.
101. The Eskay 2 arbitration resulted in a valuation of £180,000. The consent award stated:

“The law of Bermuda shall apply to this award.”

102. The defendants have put in detailed evidence to support their contention that the valuation of the Kayshewak and Eskay 2 shares was done on a proper basis. According to the defendants, the valuations by Moore, Stephens and the arbitrators were all made without any distinction being made between “A” shares and “B” shares of Kaycee and Chellsons. They say that at no time since the delivery of the awards in 1985 until these proceedings had Harish, Radhika or the claimants complained about the values arrived at by the arbitrators; during the course of the valuation the arbitrators reviewed all relevant company files documents and records, and were also afforded the assistance of Moore, Stephens; the arbitrators also heard formal and informal representations from all parties, over a period of about 2 months. They relied on the computations and statements prepared by Moore, Stephens and also sought independent verification of the values of real properties and vessels and various other important key assets.
103. The defendants say that the price of £180,000 at which the Eskay 2 shares were valued was fair and generous because their value was directly dependent on the value of its shareholding in Chellsons, which in turn was dependent on the financial position of the Chellsons Group as a whole, which was very grave because the Central Bank of Nigeria had defaulted on bills payable to Chellsons which were security for debts owed by Chellsons to banks and other lenders. The defendants say that contemporary documents show that at the time when the valuation of the Eskay shares took place, the Chellsons Group was fighting for its survival. The claimants have not contradicted this evidence.
104. The claimants say that the arbitrators based their valuation on the financial advice provided by accountants employed by the companies controlled by the defendants who bought the shares. The particulars of claim do not put forward any positive case. It is simply said that the claimants do not accept the valuations (paras 44 and 45).

X Completion of sale and treatment of proceeds of sale

Agreement by claimants’ parents: Kayshewak Award Supplemental Agreement

105. By an agreement dated August 7, 1985 and signed in Jersey, called the Kayshewak Award Supplemental Agreement, Harish and Radhika agreed with the purchasers of the Kayshewak shares (Lokumal, Lal, Sham and Chellwood) that during the minority of their sons, the claimants, or unless the Bermuda court should otherwise order, they would invest the proceeds of sale of the claimants’ share of the sale of the Kayshewak shares (50%) in investments authorised under the laws of Bermuda.
106. They represented to the purchasers that they had agreed to sell the shares of their sons on the same terms as all other selling shareholders in the belief that the sale was on the best terms reasonably obtainable and “in the best interests and advantage” of their sons (as minors). They covenanted to procure that as and when their sons came of age each of them would ratify and confirm the sale, and until such ratification they would keep the purchasers indemnified against any claims by or on behalf of the claimants.

Completion of sale and receipt of proceeds

107. Harish and Radhika instructed the new trustees of the 1975 Trusts (Mr Advani and Bermuda Trust) to transfer the 50,000 shares in Kayshewak which Harish and Radhika held for themselves and the claimants to Chellwood as nominated purchaser. Harish and Radhika were subsequently paid the money for those shares by Chellwood as set out below.
108. The awards related only to the shares in which Harish and Radhika and their sons had an interest. The remaining 100,000 Kayshewak shares in the hands of the 1975 trustees were transferred to Mohan and Lachmibai by a deed of appointment executed in respect of both 1975 trusts on November 18, 1985, and were sold to Chellwood for the same price as fixed in the consent award. I infer that the Eskay 2 shares were treated in a similar manner when they (or perhaps shares in a nominee company) were transferred to Murli, Pishu and Ram (or their company).
109. Following execution of the deeds of appointment the Bank of Bermuda Ltd. wrote to the Gibraltar lawyers who had dealt with the appointment of Bank of Bermuda earlier, Triay & Triay, on December 2, 1985 to say: “These Deeds have effectively terminated the Settlements, subject to completion of the transfers of ownership of the Kashewak and Eskay shares.”
110. Harish and Radhika were paid the sums due to them and their sons for the Kayshewak shares. Vishal accepted in an affidavit in the Indian proceedings that Harish and Radhika had been paid in full. $1,125,000 represented the sum due to the claimants. In respect of that sum, their parents received two amounts of $375,000 on August 7, 1985 and on October 14, 1985. A third instalment of $375,000 was included in a payment on October 20, 1988 of $630,066.53 to the trustees of the Geneva Trust, which is referred to below. The $535,000 capital component of the final instalment paid by Chellwood was used to make the payments of $267,500 to each of the claimants in 1992 and 1995, when they signed the releases referred to below. There is no dispute about these payments.
111. The Eskay 2 shares had been valued in the 1985 arbitration at £180,000. Not all of the price has been paid. £50,000 of the Eskay award was paid to the claimants’ parents in 1986. It is said by on behalf of Murli and Pishu that other payments in satisfaction of the award were made by Ram. There is evidence from Murli’s son, Suresh Murli Chellaram, that both claimants, after they had reached the age of majority, pressed Murli for payment of the balance of the sale price, which Murli had not paid because of the financial position of the Tahilram Group. Vishal does not deny that he asked for payment, although he says he did not “press” for payment.

Geneva Trust and execution of releases

112. There were proceedings in Bermuda by Lal and Sham against Harish and Radhika in connection with the final payments due to them for the benefit of the claimants in connection with the sale of the Kayshewak shares. There was no evidence before me on the nature of the action, but it was discontinued on condition that Radhika established a trust in Geneva over the then unpaid proceeds of sale due to the claimants from Chellwood for the Kayshewak shares. The trust fund was $630,000. The trustees were United Overseas Bank and Trust Co. (Bahamas) Ltd and Mr Justice P. N. Bhagwati. Justice Bhagwati was a former Chief Justice of India (and is now chairman of the United Nations Human Rights Committee), and he was involved in settling the terms of the trust. Harish was not a party to the Trust Deed, but on the date of its execution, June 30, 1988, he approved its terms in the form of a separate confirmation.
113. The trustees were to hold the trust fund as to half each for the claimants on their attaining 21. It was to be invested, prior to distribution, as permitted by the laws of Bermuda. The income of the trust prior to their attaining majority could be applied for their benefit, maintenance and advancement, such sums being payable to their parents or guardians upon receipt of an undertaking to use the funds as directed.
114. The deed provided that the trustees should not pay and distribute the trust fund to either of the claimants until each of them had executed a deed of release. If they did not execute a deed of release within 90 days of their attaining their majority, then the trust in their favour would determine and the fund would be held for Radhika and Harish to be applied solely to meet any liability under the indemnity in favour of Lokumal, Lal and Sham in the Kayshewak Award Supplemental Agreement. The release was to be in favour of Lokumal, Lal, Sham and Chellwood in respect of any matter arising out of Chellaram v. Chellaram (No.1), the Kayshewak consent award or the sale of shares pursuant thereto or otherwise howsoever arising during the minority of the releasor in any way touching or concerning any interest of the releasor in Kayshewak or the operation thereof or of any subsidiary or associate or the trusts affecting the same.
115. Each of the claimants signed releases and were paid out part of their share of the Geneva Trust fund ($267,500 each) when they reached the age of 21 on June 18, 1992, in the case of Vishal, and April 25, 1995, in the case of Ashwin. The releases recited the Chellaram v. Chellaram (No.1) proceedings, and also that the litigation had been settled by the submission to arbitration and the Kayshewak Consent Award; that their interests in the proceeds of sale of the shares in Kayshewak was $562,500 each; that Lal and Sham had purchased the shares for Chellwood, and had paid $375,000 of that sum to Radhika and Harish as trustees for the claimants, and the balance had been paid to the trustees of the Geneva trust.
116. Vishal says that if he had not signed within 90 days he would have received nothing, and he needed the money to go to University in England: but in the event he bought a property for his family and he needed the money for the Indian litigation dealt with in the next section.

XI Indian proceedings

117. In 1991 the claimants in these proceedings commenced proceedings in the High Court at Bombay against eighteen members of the Chellaram family (including all of the individual defendants in these proceedings) and against seven Chellaram companies or partnerships.
118. The proceedings were, according to Vishal, instituted on the claimants’ behalf by their mother Radhika, after her mother-in-law Lachmibai had excluded the claimants from a family-owned property which they regarded as an ancestral home. In those proceedings it is alleged that the business of Kishinchand, and Lokumal, Tahilram, and Shewakram, was run as a joint Hindu Undivided Family (“HUF”), and that the HUF had world-wide concerns and firms, situated all over the world.
119. Consequently it is claimed that, through their father Harish, they are entitled to a one-ninth share in the entire property and assets of the joint Hindu family properties of the HUF, or alternatively, if the Shewakram group had separated, for a declaration that they are jointly entitled to a one-third share in the Shewakram group of the Kishinchand HUF properties. The prayer seeks a declaration that the plaintiffs are jointly entitled to a 1/9^th share of the property/ies belonging to the HUF, disclosed and undisclosed, with particulars of the disclosed properties in an exhibit, which includes Carmichael House and Central Building No. 2.
120. An interim order for disclosure of all properties and business assets in India was also sought, in which it was submitted by Vishal that it was obvious that all the businesses and properties, within India, held by the Kishinchand Chellaram family were all the joint Hindu family businesses and properties in which the claimants had an undivided share, right, title and interest.
121. In one of his affidavits in support of the application (November 4, 1996) Vishal submitted that the existence of an HUF in India and abroad was clearly established by (inter alia) the allegations in the statement of claim in Chellaram v. Chellaram (No.1), the 1985 Heads of Agreement, the Supplemental Agreement, the Kayshewak Consent Award, and the Eskay Consent Award. The affidavit concluded by submitting that although these agreements related to the joint businesses and properties outside India, it was obvious that all the businesses and properties in India were all subject to the joint Hindu family regime.
122. Interim relief was refused by Mr Justice Rebello on August 19, 1999. He noted that the heads of all the three families had chosen to deny the existence of an HUF. He said that the various trusts (without specifying which) created by which the plaintiffs had become beneficiaries negated the concept of an HUF, since if there was an HUF and if the plaintiffs were members of it, they could not be made beneficiaries in respect of the HUF property.
123. The claimants’ position is that although the subject matter of the Indian proceedings includes properties in Bombay which are subject to the trusts, the proceedings do not relate to the trusts or their assets; and that the references to the worldwide assets of the HUF were purely historical, and that the proceedings related only to Indian assets, and that was why no foreign companies were joined as defendants.

XII The present proceedings

124. The allegations in the particulars of claim in relation to the 1943 Trust and the 1946 Trust (now discontinued) are as follows:

(1) Lokumal, Murli, Lal and Sham have let the properties in Bombay to persons connected to themselves on terms which have resulted in the income being less (or allegedly less) than the running costs of the properties, and have asked the claimants for a contribution to the losses being made.

(2) No proper accounts have been provided despite requests being made by the claimants in 1998 and by their solicitors in January 2001, and the claimants have received no part of their interest in the capital or income of the trusts and seek the removal of the present trustees accordingly.

125. The relief claimed is that those defendants deliver accounts of the capital and income of the 1943 Trust and 1946 Trust from February 14, 1997 to date, and be removed as trustees of the settlements and be replaced by fit and proper persons.
126. With regard to the 1975 Trusts, the allegations are as follows:

(1) Lokumal, Murli, Lal, Sham and Pishu in breach of their duties as trustees procured the conversion of the shares owned by the trusts in Chellsons and Kaycee into “B” shares, whose value immediately after their creation and since was less than that of the unconverted shares which they represented.

(2) During August 1983 the trustees ceased to make payments from trust income in favour of Harish or Radhika, and since that date had made no payment to either claimant and provided no trust accounts.

(3) The 1985 Heads of Agreement and Supplemental Agreement, purportedly settling all the litigation in Singapore and England, were executed by the trustees and the claimants’ parents, who had no authority to do so on behalf of the claimants who were then minors, and their execution comprised a breach of trust by the defendants because the intention and effect was to benefit the trustees and the claimants’ parents at the expense of the claimants.

(4) In particular, the Heads of Agreement were in breach of trust because

(a) they procured for the trustees (for no benefit to the beneficiaries) a release from the breaches of trust mentioned above in consideration (inter alia) of the claimants’ parents being released from the separate claims against them in the Singapore actions;

(b) they enabled the trustees to purchase trust property and to do so not at its market value but according to the discretion of the arbitrators, one of whom was himself a trustee, Mr Advani, and the other was the husband of a sister of Mohan and Harish.

(5) Accordingly the Heads of Agreement comprised an agreement which was void or voidable, and the claimants (who, it is alleged, only became aware of its terms during the year 2000) seek to avoid it.

(6) The purported appointment of Bermuda Trust as a trustee to act jointly with Mr Advani as continuing trustee of the 1975 Trusts in May 1985 was for the purpose of enabling the breaches of trust, and was consequently void or voidable at the instance of the claimants, and in either event is ineffective to release the existing trustees.

(7) The advance of the interests of Vishal and Ashwin to Harish and Radhika “as bare trustees” by the deeds of appointment of July 29, 1985 was a breach of trust, and it caused the property appointed to pass out of the control of the trustees.

(8) The claimants do not accept the valuation of the 50,000 shares in Kayshewak at $2,250,000 or the valuation of the shares in Eskay 2 at £180,000, but no part of the sale proceeds of either shareholding has been paid to either claimant, and that, save as mentioned, neither of the claimants had ratified or confirmed the sale or any part of any agreement comprised or reflected in the heads of agreement. But it is accepted that each of the claimants received $267,500 allegedly as part of the sale proceeds of the Kayshewak shares.

(9) The releases are not binding because neither claimant had any knowledge of the circumstances of the litigation, the arbitration or the sale of the shares when they executed the releases, or had any sight of the trust documents therein mentioned.

(10) By a proposed amendment a claim that the releases were procured by the undue influence of Lokumal, Lal and Sham is abandoned. Instead, it is alleged that the releases are unenforceable because by the terms of the Geneva Trust it was provided that the moneys that remained due to the claimants as a result of the sale of the trust assets should only be released to them if they executed the release within 90 days of their coming of age; the trust deed was made to the knowledge of and at the instigation of Lokumal, Lal and Sham; no attempt was made to ascertain the value of the claim against the ex-trustees which it was proposed that they should release; the moneys to be paid to them from the trust were moneys to which they were entitled in any event, whether as payment pursuant to the sale of trust assets if that transaction was binding on them, or as payment on account of their entitlement to compensation from the trustees in the event of the sale of the trust assets being set aside; in the circumstances it was unfair and inequitable for the execution of the releases to have been obtained by the threatened withholding of money to which they were beneficially entitled.

127. The relief claimed with regard to the 1975 Trusts is that the first to fifth defendants deliver accounts of capital and income; that the releases signed in 1992 and 1995 be declared void or set aside; a declaration that the claimants are entitled to the entire capital and income of the trust fund of the Mohan Trust, and a declaration that they are each entitled to 25% of the assets of Harish Trust; an order removing such of the first to seventh defendants as are trustees of the 1975 Trusts and their replacement by some fit and proper persons, and all necessary and consequential vesting orders; an inquiry as to the amount of loss suffered by the trust estates and the beneficial interests of each claimant by reason of the reconstruction and conversion in 1981/1982, and the arbitration and share sales of 1985; a declaration that the Trusts are entitled to 75,000 shares in Eskay 2 and Kayshewak or the assets representing those shares, or alternatively an inquiry as to the assets of the Trusts; a declaration that the first to fifth defendants remain liable as trustees to make good the losses and replenish the trust estates accordingly; alternatively an inquiry as to the amount of income and the size of the trust estates to which the claimants should have become entitled since the company reconstruction in 1981/1982, and an order that the first to fifth defendants do account for the amount found due on the inquiry.

XIII Jurisdiction

General

128. Since Sham and Lal were not validly served in England, the English court will only have jurisdiction in these proceedings in one of the following circumstances.
129. First, as regards the defendants who are domiciled outside the States or territories to which the 1968 Convention applies (Lokumal, Sham, Murli, Pishu, Bermuda Trust and Mohan) the court may assume jurisdiction if either (a) the case comes within the trust provision of CPR 6.20(11); or (b) the defendant is a necessary or proper party under CPR 6.20(3) to proceedings against another defendant who is amenable to the jurisdiction either under CPR 6.20(11) or under the trust provision of Article 5(6) of the 1968 Convention.
130. Second, as regards the defendants who are domiciled in a State or territory to which the 1968 Convention applies (Lal and Chellwood), the court has jurisdiction only if Article 5(6) is applicable. Since there is no defendant who is domiciled in England, there is no basis for jurisdiction over additional parties under Article 6(1).
131. It has been well established for more than 100 years that a claimant cannot pursue causes of action against a foreign defendant under CPR 6.20 (and its predecessor Order 11) which are not within the provisions for service out of the jurisdiction, even if the claimant has other claims which are within it: see cases in Dicey and Morris, para 11-129. It is therefore not permissible to join with claims covered by CPR 6.20 claims which are not within any of the heads of jurisdiction. In my judgment the same principle applies in the case of the 1968 Convention.
132. In cases to which CPR 6.20 applies, in addition the claimants must show, because the burden is on them, that England is clearly the appropriate forum (Spiliada Maritime Corp. v Cansulex Limited [1987] AC 460), and the court will not give permission unless satisfied that England is the proper place in which to bring the claim: CPR 6.21(2A). Unless and until there is a decision of the European Court or of the House of Lords to the contrary, where the English court has jurisdiction under the 1968 Convention, the proceedings may be stayed in favour of the courts of a non-Contracting State (Re Harrods (Buenos Aires) Ltd. [1992] Ch 72, applied to defendants domiciled in other Contracting States in Ace Insurance SA-NV v. Zurich Insurance Co [2001] EWCA Civ 173) if the defendant can show that there is another available forum, having competent jurisdiction, which is more suitable for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice, unless the claimant can show that there are circumstances by reason of which justice requires that a stay should nevertheless not be granted: e.g. Lubbe v. Cape plc [2000] 1 WLR 1545, 1553-5 (H.L.).
133. In the section on domicile (paragraph 23) I referred to the rule, applicable to both Convention and non-Convention cases, that the claimant must establish a good arguable case that the court has jurisdiction. In non-Convention cases, the claimant must also establish a serious issue to be tried on the merits.
134. But where the question of jurisdiction depends, not on some free-standing question such as domicile, but on elements which are linked to the elements of the claim, the claimant must equally establish that the requisite elements of jurisdiction exist. The question of the requisite standard of proof was addressed fully in the context of jurisdiction in contract cases under RSC Order 11, r. 1(1)(e) (now CPR 6.20(5)) by Lord Goff of Chieveley in Seaconsar Far East Ltd. v. Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438, 453-455. The effect of the decision is that where jurisdiction depends on several elements, for example that there was a contract, that it was broken, and that it was broken within the jurisdiction, then a good arguable case for each of those elements must be established.
135. The good arguable case test was accepted as the appropriate test for domicile in the context of the 1968 Convention in Canada Trust Co. v. Stolzenberg(No. 2) [2002] 1 AC 1, 13, and there is no reason to doubt that it applies also to the more complex jurisdictional provisions of the 1968 Convention (and has been so applied in several decisions in the Court of Appeal: see Dicey and Morris, para 11-225, n. 69).
136. Where jurisdiction depends on a question of law or construction, the court will decide it rather than apply the good arguable case test: see cases at Dicey and Morris, para 11-127, n. 34. That approach has consistently been applied to cases where jurisdiction has depended on the applicable law of a contract for the purposes of what is now CPR 6.20(5)(c). In such cases the court does not consider whether the claimant has a good arguable case that the contract is governed by English law, but rather whether the contract is governed by English law. Some of the most important cases on the applicable law of a contract at common law were decided under predecessors of this rule (e.g. Amin Rasheed Shipping Corp. v. Kuwait Insurance Co. [1984] AC 50) and I do not consider that anything in the Seaconsar case is intended to throw doubt on their approach. Accordingly in a case such as this, if jurisdiction depends on the identification of the applicable law, the claimant would have to satisfy the court that the applicable law was English law, and the good arguable case test would only have a role to play if there were a relevant factual issue (for example, if an express choice of law were said to be ineffective on the facts of the case).

Law applicable to trusts and jurisdiction

137. Both CPR 6.20(11) and Article 5(6) are in terms concerned with express trusts. CPR 6.20(11) provides that a claim form may be served out of the jurisdiction if “a claim is made for any remedy which might be obtained in proceedings to execute the trusts of a written instrument where –(a) the trusts ought to be executed according to English law; and (b) the person on whom the claim form is to be served is a trustee of the trusts.” Article 5(6) provides: “A person domiciled in a Contracting State may, in another Contracting State, be sued….– As settlor, trustee or beneficiary of a trust created by the operation of a statute, or by a written instrument, or created orally and evidenced in writing, in the courts of the Contracting State in which the trust is domiciled.”
138. Accordingly, neither CPR 6.20(11) nor Article 5(6) applies to constructive trusts. CPR 6.20(14) makes special provision for constructive trusts, and it is clear both from the text of Article 5(6) and from the Schlosser Report on the 1978 Accession Convention (by which the United Kingdom acceded to the 1968 Convention, and which introduced Article 5(6)), para 117, that Article 5(6) does not apply to constructive trusts.
139. The effect of CPR 6.20(11) and Article 5(6), as implemented in the United Kingdom, is that the relevant connecting factor for the purposes of jurisdiction in the case of CPR 6.20(11) is the law “according to which the trusts ought to be executed,” which must be English law, and in the case of Article 5(6) (as implemented by 1982 Act, s. 45(3)) is “the system of law with which the trust has its closest and most real connection,” which must be English law.
140. CPR 6.20(11) applies only to claims against a person who “is” a trustee of the trusts, and Article 5(6) applies only to an action against a defendant “as settlor, trustee or beneficiary of a trust.”
141. Both CPR 6.20(11) (which had its origin in the nineteenth century) and Article 5(6) (which originated in 1978) pre-date the Recognition of Trusts Act 1987 (“the 1987 Act”), which implements the Hague Convention of 1986 on the law applicable to trusts and on their recognition (“the Hague Convention”). Although the formulations differ, each is referring to the applicable law, and in each the starting point will be the Hague Convention rules. I consider it likely that the wording of CPR 6.20(11) is apt to encompass claims which may depend on English law either as the law applicable to the trust itself or as the law governing its administration, while Article 5(6) is probably limited to claims in relation to trusts governed by English law.
142. The position prior to the 1987 Act, which is reflected in the judgment of Scott J, in Chellaram v. Chellaram (No.1), was that in the absence of an express or implied choice a trust was governed by the system of law with which it had its closest and most real connection: [1985] Ch at 424-5; and cf Duke of Marlborough v. Attorney General (No.1) [1945] Ch 78, 83 (“the law by reference to which the settlement was made and which was intended by the parties to govern their rights and liabilities”); Iveagh v. IRC [1954] Ch 364, 370. In Chellaram v. Chellaram (No.1) Scott J expressed the view that the rights and duties of the trustees were governed by the proper law of the settlement (and not by the law of the place of administration if different); and that if the court had personal jurisdiction over the trustees the inherent jurisdiction of the court to remove and appoint trustees was a matter of machinery for English law as the lex fori, and could be exercised regardless of the governing law of the trust or the law governing the administration of the trust: see p. 432.
143. Under the Hague Convention (1987 Act, Sched):

“A trust shall be governed by the law chosen by the settlor. The choice must be express or be implied in the terms of the instrument creating or the writing evidencing the trust, interpreted, if necessary, in the light of the circumstances of the case.” (Article 6(1))

144. By Article 7:

“Where no applicable law has been chosen, a trust shall be governed by the law with which it is most closely connected.

In ascertaining the law with which a trust is most closely connected reference shall be made in particular to -

(a) the place of administration of the trust designated by the settlor;

(b) the situs of the assets of the trust;

(c) the place of residence or business of the trustees;

(d) the objects of the trust and the places where they are to be fulfilled.”

145. By Article 8 the law specified by Article 6 or 7 is to govern the validity of the trust, its construction, its effects and the administration of the trust. In particular that law is to govern the appointment, resignation and removal of trustees; the relationships between the trustees and the beneficiaries including the personal liability of the trustees to the beneficiaries; the variation or termination of the trust; the distribution of the trust assets; and the duty of trustees to account for their administration. By Article 9 a severable aspect of the trust, particularly matters of administration, may be governed by a different law.
146. By Article 10 the law applicable to the validity of the trust is to determine whether that law or the law governing a severable aspect of the trust may be replaced by another law. Under English law the governing law may be changed with the concurrence of the beneficiaries (Duke of Marlborough v. Attorney General (No.1) [1945] Ch 78 at 85) and probably also by the exercise of a power reserved in the trust instrument: Dicey and Morris, 13^th ed. para. 29-020; Lewin, 17^th ed. para 11-42. But it is not changed merely by a change in circumstances such as a change in the trusteeship: Duke of Marlborough v. Attorney General (No.1), at 85.
147. By Article 22 the Convention applies to trusts regardless of the date on which they were created, but, by section 1(5) of the 1987 Act, Article 22 is not to be construed as affecting the law to be applied in relation to anything done or omitted before the Act came into force (on August 1, 1987: S.I. 1987 No.1177).

The time for testing the applicable law for jurisdictional purposes

148. One of the questions canvassed in this case is the critical date for determining the applicable law for the jurisdictional purposes of CPR 6.20(11) and Article 5(6). The claimants argue for the date when the causes of action arose, which they say was before the change to Bermuda law was made, with the consequence (they argue) that English law applies as the law with the closest and most real connection with the 1975 Trusts, and accordingly gives the English court jurisdiction under both CPR 6.20(11) and Article 5(6).
149. The defendants say that the critical date for determining whether English law is the applicable law and whether the defendant “is” a trustee (CPR 6.20(11)) or whether the defendant is sued as a trustee of a trust which “is” domiciled in England (Article 5(6)), is the date when the court is seised of the proceedings. At that date, the defendants say that either there was no subsisting trust, or if there was, it was governed by Bermuda law.
150. In Winter v. Winter [1894] 1 Ch 421 the then current version of what is now CPR 6.20(11) provided that service was permissible out of the jurisdiction where the action was for the “execution (as to property situate within the jurisdiction) of the trusts of any written instrument, of which the person to be served is a trustee, which ought to be executed according to the law of England.” The defendant was the sole trustee of a settlement executed in England. The defendant had sold the consols comprised in the settlement and had left England, and there was not at that time, nor had there at any time since been, any property subject to the trusts of the settlement situate within the jurisdiction. The action was for the administration of the trusts. Stirling J held that service should be set aside because the words “as to properties situate within the jurisdiction” limited the generality of the rule and imposed a condition which had to be fulfilled in order that service out of the jurisdiction might properly be allowed. It referred to property which was actually situate within the jurisdiction, and not simply property which ought to be, or if the trusts were duly executed would be, so situate. Although the rule did not in terms define the periods at which the property was to be situate within the jurisdiction, since the rule related to service, the relevant period was when leave to effect service was given. But in Official Solicitor v. Stype Investments (Jersey) Limited [1983] 1 WLR 214 Whitford J said that but for Winter v. Winter he would have taken the relevant date as the date on which the cause of action accrued rather than the date of the application for leave to serve out of the jurisdiction.
151. In this case the question in relation to CPR 6.20(11) is whether the condition that “the trusts ought to be executed according to English law” must be fulfilled when permission to serve out is sought, or whether it is sufficient that English law applied to the trusts at the time of the cause of action. I consider that the first construction is the correct one, and is supported by the other condition that the defendant “is” a trustee of the trusts. So also in the case of Article 5(6) its application to a person sued as a trustee of a trust which “is” domiciled in a Contracting State supports the construction that the time of the proceedings is the critical time.
152. It is also supported not only by Winter v. Winter but also by part of the reasoning which led the House of Lords to hold in Canada Trust Co. v. Stolzenberg (No. 2) [2002] 1 AC 1 that for the purposes of the Lugano Convention (and therefore also the 1968 Convention) the date for determining whether a defendant was domiciled in the United Kingdom or in another Contracting State was the date when the proceedings were instituted, and not when they were served. One of the factors which led Lord Steyn, in the leading speech, to that conclusion was the aim of the Convention (citing Case C-125/92 Mulox IBC Ltd. v. Geels [1993] ECR I-4075, 4103) to allow the plaintiff easily to foresee the court before which he may bring an action and the defendant reasonably to foresee the court before which he may be sued.
153. Finally it is supported by the strict approach to interpretation of both CPR 6.20 and the 1968 Convention. In the context of what is now CPR 6.20 it has been said on many occasions, applying The Hagen [1908] P 189, 201, that where there is doubt as to the construction of any of its heads, the doubt should be resolved in favour of the foreigner (or, more strictly, against the exercise of extra-territorial jurisdiction). In the case of the 1968 Convention the European Court has emphasised on several occasions that the exceptions to Article 2, which gives primacy to the court of the domicile, are to be construed strictly (see cases cited at Dicey and Morris, para 11-051).
154. I will, however, in case I am wrong on this point, also consider the question of the applicable law at the time when the cause of action is said to have arisen.

1943 and 1946 Trusts

155. Neither CPR 6.20(11) nor Article 5(6) can apply to the 1943 or 1946 Trusts. It is common ground that they are governed by Indian law, and there is no possible basis for English jurisdiction.

1975 Trusts

156. It is central to the claimants’ case on the merits in relation at least to Lokumal, Lal and Sham that they can avoid the effect of the releases which they signed when they attained majority in 1992 and 1995 respectively. That is why the particulars of claim originally pleaded undue influence (and why the claimants now seek to plead that they were obtained unfairly and inequitably), and also sought an order that the releases be declared void or be set aside. The defendants argued that the claimants’ case on the releases was so weak that it did not raise a serious issue to be tried, but in my judgment there is a more fundamental objection to the claim for a declaration relating to the releases.
157. There is no basis for an argument that the claims relating to the releases fall within CPR 6.20(11) or Article 5(6), and the court has no jurisdiction to deal with them as independent claims for the reason given in paragraph 131 above. But the claimants now say that they are really matters for reply to a defence of release, and that it is not necessary for the releases to be pleaded as a part of their positive case. I shall proceed on the basis that that submission is correct.
158. So far as the 1975 Trusts are concerned, on the construction of CPR 6.20(11) which I have preferred, even if the trust subsists, the only person who “is” a trustee is Bermuda Trust, and the other non-Convention defendants could only be served under CPR 6.20(3) (which would make a difference because of the even more special care which must be exercised before service is authorised under that head). But the assets of the trusts have been distributed, and Bermuda Trust, the sole trustee, acknowledged as long ago as 1985 that the trusts were at an end.
159. This is a hurdle which could be overcome in theory if the claimants had a good arguable case that the deeds of appointment were ineffective to transfer the trust property. If there is a transfer of trust property in breach of trust for which the trustees remain accountable, the trust relationship remains and the fruits of the claim will be held on the same trusts. But it is noteworthy that the claimants do not plead that the deeds of appointment were invalid, perhaps because to do so might entail that the sums paid to Harish and Radhika and to the claimants will become repayable.
160. But, in any event, in the second choice of law in 1985 the trustees chose Bermuda law and jurisdiction for the trusts, and therefore there is prima facie no basis for a contention that the trusts ought to be executed according to English law. The trustees had the power under clause 15(a) to select the applicable law, and that choice is prima facie effective as a combined result of the common law and Articles 6(1) and 10 of the Hague Convention.
161. There is no good arguable case for impugning the validity of the choice of applicable law. There is no reason to believe that there was any reason for the change other than to distance the trusts from UK tax law. There is clear and contemporary evidence produced by the defendants that the change to a Bermuda-based trustee and the choice of Bermuda law and jurisdiction in 1985 was tax-driven, to avoid an argument that UK tax law might apply to the income from the Kaycee and Chellsons shares. Although it is alleged in the particulars of claim that the appointment of Bermuda Trust was effected for the purpose of enabling the breaches of trust, Vishal has not sought in any way to contest the evidence on the reason for the appointment (or the choice of Bermuda law). To do so he would have to show that the 1984 letter from Moore, Stephens to Norton Rose recommending the change of trustee was bogus window dressing. It is not surprising that he has not sought to do so. But unless he has something to say about the defendants’ evidence about the change, I do not see how the claimants can possibly establish a good arguable case that the choice of Bermuda law is ineffective, and that therefore as at the date of the proceedings the trusts ought to have been executed according to English law.
162. In the case of the 1968 Convention defendants (Lal and Chellwood), Article 5(6) applies only to a defendant who is sued “as settlor, trustee or beneficiary.” Chellwood is a defendant because it purchased the shares, but it is not a settlor, trustee or beneficiary of the trusts. At most it might be a constructive trustee, but (as I have mentioned) Article 5(6) does not apply to constructive trusts. Nor is Lal any longer a trustee, and, decisively (and for the same reasons as in relation to CPR 6.20(11)) the trusts are not domiciled in England, because they would not (if they still existed) have their closest and most real connection with English law. I do not doubt that in deciding whether it is English law with which the trusts have their closest connection, it is permissible to take into account the express choice of Bermuda law to negate that connection.
163. Since there is no basis for jurisdiction under CPR 6.20(11) or Article 5(6), there is no basis for service of additional necessary or proper parties under CPR 6.20(3).
164. If I am wrong in my conclusion that the governing law or domicile of the trusts is to be tested as at the date of the proceedings rather than the date when the cause of action arose, I would be faced with the same difficulty as Scott J. in Chellaram v. Chellaram (No.1). For the reasons given above in paragraph 136 (although this was not the subject of argument), if this question arose in the present proceedings it would be for the claimants to show that English law was the applicable law, and I doubt whether there would be any factual issues such that the question would fall to be decided on the good arguable case basis. The court would have to come to its own view. Since in these circumstances the question of jurisdiction would be linked with the actual alleged breaches of trust it is likely that the effect of section 1(5) of the Recognition of Trusts Act 1987 would be that the common law rules would prevail if they led to a result different from that under the Hague Convention.
165. Scott J’s initial view was that the trusts were governed by Indian law, but he was left with doubts because the trust property was shares in Bermudan companies and the underlying assets were outside India; the purpose of the trusts was to escape Indian tax and exchange control and two of the three original trustees were in London. Accordingly he did not find it easy to see why, if the parties had intended Indian law to govern the trusts, they would have arranged for an English administration. But he did not decide the question of the governing law.
166. By Article 7 of the Hague Convention, in the absence of a choice of the applicable law, a trust is governed by the law with which it is most closely connected. In ascertaining that law reference is to be made “in particular” to (a) the place of administration designated by the settlor – no such place was designated; (b) the situs of the assets of the trust – this was Bermuda if account only is taken of the shares in Kaycee and Chellsons which were settled, but many other countries (especially in Asia and Africa) if the underlying assets are taken into account; (c) the place of residence or business of the trustees – Mr Rupchand and Mr Bharwani were resident in London at the date of the settlements, and the evidence of Ram’s residence was inconclusive, although he then had substantial London connections; (d) the objects of the trust and the places where they were to be fulfilled – there was no one place to which these factors could point. In the light of the paucity of authority at common law, I doubt if there is any significant difference between the Article 7 and the likely approach at the common law.
167. Because the approach to this question was not the subject of argument (and, in view of my other holdings, further argument would serve little point) I will simply indicate that in my judgment it is likely that Indian law was the law with which the trusts were most closely connected. They were drafted in India by Indian lawyers for a family of Indian origin with strong Indian ties, but with international interests, and it is very doubtful that the fact that at least two of the trustees were in London, and that it was contemplated (but not required) that administration would (at least initially) take place in London would have made English law the law with the closest connection.

XIV Discretion and forum conveniens

168. It is for the claimants to show that England is “the proper place in which to bring the claim” against the non-Convention defendants: CPR 6.21(2A). Since the exercise of jurisdiction would involve bringing foreign parties to England:

“The effect is, not merely that the burden of proof rests on the plaintiff to persuade the court that England is the appropriate forum for the trial of the action, but that he has to show that this is clearly so.” (Lord Goff of Chieveley in Spiliada Maritime Corp. v. Cansulex Ltd [1987] AC 460, 481)

169. I have to approach this question on the hypothesis that not only would the court have jurisdiction under CPR 6.20 against the non-Convention defendants, but also that the court would have jurisdiction over Lal, in each case on the hypothesis that the trusts are governed by English law and, in the case of the non-Convention defendants, that there are serious issues to be tried on the merits of the case.
170. This is a case in which the claimants cannot show that England would clearly be an appropriate forum. On the above hypotheses, the only connections with England would be (a) the trusts would be governed by English law; (b) the settlement in 1985 related (in part) to English proceedings, and (c) the individual defendants have access to homes in England when they visit. But the governing law is not a weighty factor when there is no reason to suppose that the law applicable in the competing jurisdiction is any different. The Heads of Agreement in 1985 were expressly governed by Bermuda law, the Supplemental Agreement was, no doubt, impliedly governed by the same law, and the consent awards were governed by Bermuda law. The fact that the individual defendants can travel to England is a very minor factor, compared with the fact that, apart from Lal, they are all based in India (as is Radhika, who is bound to be a party on the indemnities which she gave in the Kayshewak Award Supplemental Agreement if the proceedings continue) and Hong Kong, and that the claimants are in Singapore.
171. Against that, there are proceedings in India against all of the individual defendants. It is clear that the application for interim relief in those proceedings was limited to property in India. There is evidence from the defendants that the proceedings as a whole relate to property worldwide. The pleadings and Vishal’s affidavit in those proceedings support that view, and it is difficult to see how the claim to a HUF could be limited to Indian property, although such a claim would be inconsistent with the claims made in these proceedings. But even if the Indian proceedings do not raise the same issues as these proceedings, or even deal with the same property as the 1975 Trusts, it is plain that the determination of the Indian proceedings will require an investigation of the way in which the Chellaram family dealt with their assets both in India and outside. The offer by the claimants to discontinue the Indian proceedings if the English court assumes jurisdiction over this action is purely tactical in nature.
172. India is an available forum. The evidence for the defendants from their Indian lawyer, Mr Malkani, is that the claim in the present Indian proceedings could be amended to include claims in relation to the 1975 Trusts. It may be true, as Vishal asserts, that that would not be an easy task, because the trust claims are incompatible with the claim that an HUF exists, but it is the claimants’ problem if they are making inconsistent claims. Even if it could not be amended, the court would have jurisdiction in fresh proceedings. Jurisdiction in Bombay is governed by the Letters Patent (Bombay), which grants jurisdiction if the cause of action arose within the local limits of the court, or if the defendant was resident or carried on business or worked for gain there. Mr Malkani’s opinion is that all of the individual defendants have the requisite connection with Bombay and could be sued there as having addresses or businesses there. He also confirms that Chellwood and Bermuda Trust could effectively submit to the jurisdiction of the Bombay court. Scott J in Chellaram v. Chellaram (No.1) [1985] Ch. 409, 435 expressed some doubt as to whether a defendant could submit to the jurisdiction of the Bombay High Court, but in Konamaneni v. Rolls-Royce Industrial Power (India) Ltd fuller evidence in relation to proceedings in Hyderabad persuaded me that submission was possible and Mr Malkani relies on the decisions of the Indian Supreme Court to which I referred when accepting evidence to that effect. Mr Malkani also says that they could be added as defendants with the permission of the court, but he does not give authority for that view. An undertaking has already been given by Lal and Sham on their own behalf and on behalf of Chellwood, and the court can take this into account in considering whether there is an alternative forum: Lubbe v Cape plc [2000] 1 WLR 1545, 1552-6.
173. The following factors point to India as the forum conveniens. First, there are already proceedings pending there which raise the issue of the property rights in the Chellaram family, and an Indian court is far better equipped to understand the intricacies of these family relationships. If there were proceedings in England, the same matters would be ventilated in two jurisdictions. Second, several of the most important witnesses are in India: Murli, Pishu and Mohan (although there may be doubts about the ability of Murli and Mohan to give effective evidence); Radhika (who, as I have said, would no doubt be joined as a party by Lokumal, Lal, Sham and Chellwood on the indemnities which she gave); Mr Chanrai and his assistant (concerning the consent awards, Mr Advani having died in 1991); and former Chief Justice Bhagwati (concerning the Geneva Trust and the releases).
174. Lokumal and Sham are in Hong Kong, and the claimants are in Singapore. Lal has not, of course, suggested that it would be inconvenient for him to attend. The only important witnesses who would not be compellable in India are the lawyers involved in the 1985 settlement, Macfarlanes and Norton Rose. But it is not realistic to suppose that they would not attend if asked to by their clients, and privilege, unless waived, would prevent them being compelled by any other party to give evidence. The partner in Moore, Stephens who dealt with the matter has since died, and the representatives of Bermuda Trust and of United Overseas Bank would be only marginally relevant witnesses.
175. I do not consider that any assistance in this exercise is to be derived from Chellaram v. Chellaram (No.1). In that case the defendants had been served in England or had submitted to the English jurisdiction, and the decision was based on stay principles, where the burden is on the defendant to show that there is another more appropriate forum. The following factors were held to be relevant: (1) there was doubt whether the Bombay court would have jurisdiction over non-Indian parties; (2) delay in Indian proceedings might expose the plaintiffs to considerable hardship; (3) India would be more convenient so far as witnesses were concerned, but the geographic factor was not of great importance; (4) it was not a case of forum shopping because administration was intended to take place in London; (5) it was not a case of lis alibi pendens; (6) all defendants had either been served in England or had instructed solicitors to accept service on their behalf.
176. I have already dealt with the point on the jurisdiction of the Indian court. This may not be a case of lis alibi pendens in the sense that the same issues are before the Indian courts, but it is a case in which there are proceedings in India to which all of the individual defendants are parties and which will cover much of the same ground.
177. On delay Scott J ([1985] Ch. 409, 435) said that, in view of the fact that Harish and Radhika had had no payments since 1983, a delay of seven to ten years might represent a serious injustice to them. This is not a case of an application for a stay of proceedings, and in Konamaneni v. Rolls-Royce Industrial Power (India) Ltd., paras 59 and 176, I expressed the view that in cases of service out of the jurisdiction delay in the foreign court would only be a factor if it were so great that the foreign court could not be regarded as an available forum. I also said that it was well known that problems of delay in Indian proceedings have lessened in recent years. The evidence in the present proceedings suggests that any delay would be a maximum of 4 to 5 years and that it may be possible to obtain an expedited hearing because of the age of some of the parties. This is not a case where the claimants are being kept out of their money. They and their parents have received all the money to which they were prima facie entitled, and these are proceedings in substance to set aside a settlement 16 years before the proceedings were instituted, and 9 years after Vishal, and 6 years after Ashwin, became entitled to bring them. In this case delay in the Indian proceedings is not a factor which can make England the clearly appropriate forum.
178. On the hypothesis that the court would not exercise jurisdiction, not only because the claimants had not shown that England was the clearly appropriate forum, but also because India was the appropriate forum, and that the proceedings would continue against the non-Convention defendants in India, then there would be an overwhelming case for a stay of proceedings against Lal if (contrary to my view) the English court had jurisdiction over him under Article 5(6).
179. I should add two points on the forum conveniens aspect. First, there is little to be said for Bermuda as an alternative forum, and even Bermuda Trust did not press for it. Second, Vishal said in his witness statement that former Chief Justice Bhagwati had apparently condoned breaches of trust and had filed evidence in support of the defendants, and accordingly Vishal had “a real and justifiable fear that we will not be able to achieve justice in India.” Vishal’s advisers should not have allowed this unworthy suggestion to be made, and it has now been abandoned.

XV Serious issue to be tried

180. On the view which I have taken on the jurisdiction and forum conveniens issues, the question of the strength of the claim in relation to CPR 6.20 does not arise, and I will therefore deal with it shortly. There can be little doubt that the claimants’ case is, on the evidence adduced so far, a very weak one.
181. There are two basic complaints. The first (which was also the subject of Chellaram v. Chellaram (No.1)) is that the 1981 reconstruction was a breach of trust because the conversion of the trust shares in Kaycee and Chellsons to “B” shares was procured for the benefit of Lokumal, Lal, Sham, Murli and Pishu and diminished the value of the trust estate. But the claimants have not answered the evidence that the reason for the reconstruction was to ensure an income flow for Lachmibai and that the “A” and “B” shares were treated equally in the 1985 valuations.
182. The second complaint is that the 1985 settlement and its implementation was a breach of trust because it involved self-dealing by the trustees (through the indirect sale of the trust assets to them or their companies) and its intention and effect was to benefit the trustees and Harish and Radhika at the expense of the claimants. But there is unanswered evidence that there was no prejudice to the claimants because the shares were properly valued, and (as regards the Kayshewak shares) the claimants executed deeds of release on attaining their majority, and directly received part of the proceeds of sale, and (as regards the Eskay 2 shares) pressed for payment direct to themselves.
183. The purchase of trust property by a trustee by a trustee is not void. It is voidable within a reasonable time at the instance of a beneficiary: Holder v. Holder [1968] Ch 353, 398 (CA). These proceedings were commenced some 9 years after Vishal attained his majority and 6 years after Ashwin did so.
184. For the reasons I have given, the validity of the deeds of release could arise in English proceedings only in reply to the defendants’ reliance on them, since there is no basis of jurisdiction for a positive claim. The claimants asserted in the particulars of claim (paras 51 and 52) that the deeds of release were not binding for two reasons.
185. The first was that neither claimant had any knowledge of the circumstances of the litigation, the arbitration or the sale of shares when they executed the releases, or had any sight of the trust documents mentioned therein. That contention had been preceded by a statement that the claimants only became aware of the terms of the heads of agreement in the year 2000 (para. 38). These pleas are demonstrably untrue. The recitals to the deeds of release referred in terms to the previous litigation, the settlement, the arbitration and the sale of shares, and in his 1996 affidavit in the Indian proceedings Vishal himself gave a full account of Chellaram v. Chellaram (No.1) and of the settlement in 1985 and exhibited the statement of claim (which set out the terms of the trusts fully), the Heads of Agreement, the Supplemental Agreement and the awards. When he was confronted with this material in the evidence for the defendants, all he could say was this:

“Although I had previously been aware of the existence of the 1975 trusts and 1985 agreement, it was only in 2000 that I gained sufficient information and understanding to make decisions about my own position in relation to these disputes. It is in that context that the word ‘aware’ is used in paragraph 38 in the particulars of claim settled by counsel.”

186. The second contention was that the releases were procured by the undue influence of Lokumal, Lal and Sham. It was said that the claimants lacked any independent legal advice and were ignorant of the nature of the breaches of trust which they were purportedly releasing. This contention has been abandoned. It was bound to fail. By the time the releases were executed litigation was already being pursued on the claimants’ behalf in India by legal advisers who had responsibilities to them. Even if it were arguable (which I do not consider it is) that there was then the requisite relationship of trustee and beneficiary, it could not be said that the Lokumal defendants had taken an advantage which was only explicable on the basis that there had been undue influence: Royal Bank of Scotland v. Etridge (No. 2) [2001] 3 WLR 1021, 1034. The burden would therefore have been on the claimants to show actual undue influence. Justice Bhagwati, who was a trustee of the Geneva Trust appointed by the claimants’ mother, gave evidence that there was no undue influence, and it has not been contradicted.
187. That contention has been replaced by another contention, that the releases were ineffective because it was “unfair and inequitable” for their execution to have been obtained by the threatened withholding of money (under the terms of the Geneva Trust) to which they were entitled. Although the court can consider all the circumstances with a view to seeing whether it is fair and equitable that a beneficiary who has acquiesced in, or given his concurrence to, a breach of trust should be able to turn round and sue the trustees (Re Pauling’s Settlement Trusts [1962] 1 WLR 86, 108, affd in part [1964] Ch 303) that enquiry is concerned with the requisite degree of knowledge. There is no principle of the law of contract or trusts which makes a release ineffective simply because it is unfair. This is not a case where the releases could be said to have been wrung from the claimants by “distress or terror” (see Lewin, Trusts, para 39-74).
188. In my judgment the weakness of the claim is such that I would have held that for the purposes of service out of the jurisdiction under CPR 6.20 there would not have been a serious issue to be tried on the merits for much of the claim, and if there had been jurisdiction under Article 5(6) the case would have been ripe for an application to strike much of it out. Some qualification is necessary because I have not heard full argument on the extent to which the claim in respect of the Eskay 2 shares, where there was no release, and where the evidence on acquiescence and concurrence is not so powerful, falls to be treated in the same way as the claim in relation to the Kayshewak shares.

XVI Non-disclosure

189. This issue, like the other subsidiary issues, would only have arisen if the court had jurisdiction, and if England had been shown by the claimants to be the forum conveniens. On the without notice application for permission to serve out the duty of the applicant is to make full and fair disclosure of all the material facts, and I set out the relevant principles in Konamaneni v. Rolls-Royce Industrial Power (India) Ltd.
190. The witness statement in support of the application was defective in many respects, but in at least two ways it plainly failed to make full and fair disclosure, and exhibited particulars of claim which in one important and material respect were untrue and misleading. The existence of overlapping proceedings between the same parties in other jurisdictions is always a highly material factor on an application for permission to serve out. There was no mention of the Indian proceedings, in which all of the individual defendants in this action were also defendants. The English proceedings at the time of the application concerned not only the 1975 trusts but also the 1943 and 1946 trusts. There can be no doubt that the Indian proceedings commenced 10 years before, and still continuing, concerned the title to the property comprised in the complaints of breach of trust in the English proceedings even if it was not so clear that the 1975 trust assets were also comprised in the Indian claim. The failure to refer to the Indian proceedings was a material non-disclosure, because it was relevant to forum and also to the merits of the claim (since the claims in the Indian action were inconsistent with the claims in these proceedings).
191. The second point is that the account in the witness statement of Chellaram v. Chellaram (No.1) is misleading. It says that the court had already accepted jurisdiction and held that England was the proper place for the dispute regarding the 1975 trusts, without disclosing that (a) in that case all the defendants had been personally served in England or instructed solicitors to accept service on their behalf; (b) except as regards the reconstruction in 1981, there were no similar issues; (c) the principles applied by Scott J were not those applicable in a case of permission to serve out of the jurisdiction.
192. Finally, the witness statement referred to and relied on, in support of the application, the particulars of claim. I have already set out the evidence showing that the statement in the particulars of claim, para 38, that the claimants only became aware of the terms of the Heads of Agreement in the year 2000 was demonstrably false and designed to give the impression that the proceedings for equitable relief had been brought promptly.
193. In my view these would have been sufficiently serious failures to justify setting aside the orders.

XVII Conclusion

194. The orders of Master Bragge will be set aside, as will service on those defendants who have been served, or purportedly served, and I will make a declaration that the court has no jurisdiction to hear the claims.

XVIII Postscript: the position of Herbert Smith

195. Lal, Sham and Chellwood are represented by Herbert Smith, and the partner responsible is Ms Anna Pertoldi. Herbert Smith is a large firm of solicitors in the City of London, with more than 150 partners, of whom more than 50 specialise in litigation. I was a partner in that firm from 1971 until the end of September 2000 (when I was appointed to the High Court bench), and Ms Pertoldi worked in the same group as I did between 1988 and 1999 (both before and after she became a partner), and worked with me on several cases. The claimants made an application that I should disqualify myself, but withdrew the application on the morning of the hearing. It would have been another case (the others being Locabail (UK) Limited v. Bayfield Properties Limited [2000] QB 45 and Bank of Credit and Commerce International SA v. Ali, December 3, 2001) in which parties raised the question whether I should have heard, or should hear, matters which have been assigned to me, on the ground that I was, or had been, a partner in the firm of Herbert Smith.
196. In Taylor v. Lawrence [2002] EWCA Civ 90 the Court of Appeal concluded (at para 60) that the appropriate test for potential bias was the test in Re Medicaments (No.2) [2001] 1 WLR 700 (CA) as modified by Lord Hope of Craighead in Porter v. Magill [2002] 2 WLR 37, 84:

“The court must first ascertain all the circumstances which have a bearing on the suggestion that the judge was biased. It must then ask whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility that the tribunal was biased.”

197. The judgment in Taylor v. Lawrence emphasises that in this country it is an everyday occurrence that barristers appear before judges who were former members of their chambers, and who will therefore be likely to have worked very closely with them. The judgment does not deal in this respect with the position of solicitors, but there is no reason to believe that different considerations apply, and, indeed, every reason to the contrary. There is no reason to distinguish the situation of solicitors on the ground that solicitors practise as partnerships while barristers share premises, staff, practice development (or marketing) and the expenses associated therewith, but not profits. No fair-minded and informed observer could conclude that there would be a real possibility that a judge, whether a former barrister or solicitor, would have the slightest inclination to act in breach of the judicial oath and favour a set of chambers or firm of which the judge was a former member.
Chellaram Family tree: Lokumal, Tahilram and Shewakram branches male line

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