Bank of Ireland & Anor v Jaffery & Anor

The Bank sued a senior executive, Mr Syed A. S. Jaffery, and an introducer/agent, Mr Pritpal ("Raj") Gill, alleging breaches of fiduciary duty, deceit, bribery and dishonest assistance arising from a series of loans to customers connected to Mr Gill (the "RGC Customers"). The court applied established equitable principles: fiduciaries must not place themselves in positions of conflict or make secret profits, and full disclosure or informed consent is required to avoid liability.

The judge found on the evidence that Mr Jaffery had been promised interests in key projects (notably the Hendon and Stoke projects), had adopted a clandestine approach to those interests and had invested at least £400,000 into the Stoke project while employed by the Bank. Those arrangements created real conflicts and amounted to breaches of fiduciary duty and breaches of his employment contract. The Bank’s claim that some of the defendants’ conduct amounted to bribery and deceit succeeded in part. The court also found that Mr Gill dishonestly assisted in the breaches and participated in promises and concealment.

Not all allegations succeeded: the Backford loan was not found to have been induced by breaches, and the court declined to order forfeiture of the entirety of Mr Jaffery’s salary and bonuses, concluding that such a remedy would be disproportionate given his wider valuable work for the Bank. The assignment of GCBOI’s claims to BOI PLC was upheld as effective to transfer claims (subject to the Scheme’s exclusions).

This is a first-instance Chancery Division judgment concerning claims by the Bank of Ireland (GCBOI and its UK subsidiary BOI PLC) against a senior banking executive, Mr Syed A. S. Jaffery, and an introducer, Mr Pritpal (Raj) Gill. The Bank alleged that, while employed by GCBOI, Mr Jaffery acquired or expected undisclosed beneficial interests in a number of projects for which the Bank provided loans, that he received benefits and loans from third parties connected to those projects, and that he concealed those interests and benefits. The Bank relied on equitable doctrines (fiduciary duty, no secret profit), contract (terms of employment and the Group Code of Conduct), and tort/equitable remedies (deceit, account of profits, dishonest assistance and bribery). It also sought forfeiture of salary/bonuses and injunctive remedies.

Procedural posture: first instance trial before Vos J of the High Court (Chancery), extensive multi-day hearing. Interlocutory steps included a Norwich Pharmacal order, search and freezing orders and disclosure disputes. The Bank’s UK business had been transferred under a Part VII scheme to BOI PLC in November 2010; an assignment of GCBOI’s claims to BOI PLC was made in December 2011.

Nature of relief sought: declarations and equitable relief for breaches of fiduciary duty, dishonest assistance, deceit, bribery, forfeiture of remuneration, and consequential monetary relief (accounts, equitable compensation or damages).

Issues framed by the court included (i) existence and scope of fiduciary duties owed by Mr Jaffery (and whether they extended to BOI PLC post-transfer), (ii) whether he was promised, received or expected interests or benefits from specific projects or customers, (iii) whether he put himself into conflicts of interest or failed to disclose wrongdoing, (iv) causation / inducement of the Bank’s lending, (v) dishonest assistance by Mr Gill, (vi) bribery, deceit and breach of contract, and (vii) whether GCBOI’s claims had been transferred to BOI PLC.

Reasoning and outcome (concise): the judge reviewed documentary evidence (including material found on an iMac), witness testimony and the Bank’s internal Code and employment contract clauses. Applying the established equitable principles regarding conflict of interest and secret profits, the court concluded that:

• Mr Jaffery owed fiduciary duties to GCBOI (and to BOI PLC after the Part VII transfer) and breached them by being promised and/or obtaining undisclosed interests in the Hendon project and in the Stoke project and by failing to disclose those interests.
• Mr Jaffery invested at least £400,000 into the Stoke project while employed by the Bank; the court concluded that this payment was made for the Stoke investment rather than being a purely familial gift.
• The Bank was induced in respect of the loans after the dates on which the relevant undisclosed interests or false Code of Conduct certifications were made (the Backford loan was an exception and did not depend on the breaches).
• Mr Gill dishonestly assisted the breaches and participated in promises and concealment; part of the bribery/deceit case succeeded against both Defendants (notably the Hendon interest).
• The court declined to order forfeiture of all salary/bonuses, considering that remedy disproportionate given the value of Mr Jaffery’s wider work for the Bank, but allowed the Bank to pursue equitable remedies including an account/compensation in respect of the proven breaches. The assignment of GCBOI’s claims to BOI PLC was effective to transfer the Bank’s claims.

The judgment also records and briefly assesses allegations that the Bank’s investigation and litigation were motivated by the fact that Mr Jaffery had made whistle‑blowing complaints; the court found some tension and unexplained aspects in the Bank’s investigative record but did not accept that the whistle‑blowing claim vitiated its substantive findings of breach.

The Bank's claims succeeded in part. Vos J held that Mr Jaffery owed fiduciary duties to GCBOI (and to BOI PLC after transfer) and breached them by receiving or expecting undisclosed interests in the Hendon and Stoke projects, by investing at least £400,000 in the Stoke project while employed, by supporting and giving references for loans to RGC customers (other than Backford) and by failing to disclose his wrongdoing. The Bank’s deceit and bribery claims succeeded in part (notably as to the Hendon interest). Mr Gill was held to have dishonestly assisted the breaches. The court dismissed the Bank’s claim for total forfeiture of salary and bonuses as disproportionate. The Assignment of GCBOI’s claims to BOI PLC was effective to transfer the claims. Remedies and quantum were left for further determination.