Jackson & Ors v Thakrar & Ors

An agent who acquires property in a principal’s name without authority does not thereby confer beneficial ownership on the principal. Beneficial ownership may pass only if the principal, with knowledge of the transaction, ratifies it. Where the agent neither accounts nor informs the principal, the registered holder may have no more than bare legal title.

An out-of-court appointment of administrators must comply strictly with the notice requirements protecting qualifying floating-charge holders. The requirements are mandatory and cannot be waived retrospectively. The power to appoint administrators must also be exercised for its statutory purpose. A primary purpose of halting litigation or protecting assets from creditors is improper.

This was a fact-finding judgment in the fifth judgment of the long-running Thakrar Litigation. It concerned claims and applications arising from earlier proceedings, including claims concerning properties transferred into the names of Ramila and Vijaya, the beneficial ownership and management of Glen International Limited and Teso International Group Limited, alleged transfers of shares to Mr Harjivan, the validity of Teso charges, the compromise of claims by Suburban Property Company Limited, alleged abuse of process, and the purported administration of Glen.

The central questions were who beneficially owned the properties and companies, whether the alleged share sale and charges were genuine, whether the compromise had been procured by fraud, whether the Family Actions were abusive, and whether the administration appointment was valid and made for a proper purpose.

1. Beneficial ownership. Ramila and Vijaya were nominees only. Their registration as proprietors did not pass beneficial ownership because they gave no consideration, lacked knowledge of the transactions and did not ratify them. An unauthorised act by an agent does not bind the principal until ratification, which requires knowledge of the act and a conscious decision to adopt it. Subhash retained the beneficial ownership of the properties and their proceeds.
2. Glen and Teso. The evidence showed that Subhash formed, controlled and managed both companies as their beneficial owner. The directors and management companies acted as formal functionaries. Mr Harjivan never acquired any beneficial interest in their shares. The alleged £12 million purchase and associated payments were unsupported and fabricated.
3. Teso charges. The charges were a device intended to deter or defeat third-party claims. Teso had not made the alleged loans. The charges were therefore a sham and could be discharged.
4. Abuse and compromise. The Family Actions were conducted as an abuse of process. Subhash was the moving force and the family members, other than Shantaben, knowingly participated. Suburban Property Company Limited was fraudulently misled into compromising its claims against Ramila and Glen by the apparent independence and good faith of their defences.
5. Administration. Applying the three-stage approach in Howard Smith Ltd v Ampol Petroleum Ltd, the court identified the power exercised, the substantial purpose for which it was exercised, and whether that purpose was proper. The administration was principally intended to halt the litigation and preserve Glen’s assets for Subhash. That was an improper motive. No written notice was given to Teso under paragraph 26 of Schedule B1, and the requirement was mandatory. The purported appointment was consequently unlawful, a nullity and invalid; alternatively, it had to cease under paragraph 81.
6. Other applications. The applications for a mistrial, retrial or recusal were rejected. The contribution proceedings had been dismissed and could not be revived.

The judgment describes earlier judgments and applications within the same litigation, including an appeal by certain Thakrar family members which had been stood over. It is itself a first-instance fact-finding judgment and does not determine an appeal from another reported judgment.