Anwar Gangat & Anor. v Yusuf Jassat

Where a defendant controls assets belonging to another in circumstances in which, objectively, the owner is entitled to expect administration for the owner’s benefit, equity requires an account. The assets need not be vested in the defendant; control is the key component, and proof of a prior breach is unnecessary.

Deliberate suppression of documents has no automatic consequence. Its effect depends on the issues and the remaining evidence. If reliable documents, admissions and objective probabilities permit secure findings, the trial judge may determine the claim. An appellate court should not impose prescriptive requirements for detailed analysis of every item of evidence.

The claimants, South African businessmen, alleged that the defendant had controlled and misappropriated funds and investments held for them through Swiss accounts and offshore companies. After a trial on liability alone, the High Court held that the defendant was accountable in equity and ordered an account based on the Richmond Lodge Document: [2021] EWHC 2644 (Ch).

On appeal, the defendant challenged the treatment of the claimants’ document suppression, the legal basis for the fiduciary obligation, and whether the Richmond Lodge Document and resulting account fell within the issues for trial. The central question was whether the finding that the document recorded assets under his control derived from the claimants’ money was open to the judge.

The appeal was dismissed unanimously. Lord Justice Nugee gave the reasons, with Lord Justices Warby and Stuart-Smith agreeing. The appeal turned on whether the High Court was entitled to find that the Richmond Lodge Document recorded assets under the defendant’s control derived from the claimants’ money. If that finding was open, an account followed.

1. Document suppression. Deliberate withholding of documents does not impose a fixed consequence. The court must assess its effect in context. It may draw adverse inferences, find that a burden of proof has not been discharged, or dismiss a claim where a fair trial is impossible. It may nevertheless determine the issues where reliable evidence remains. The judge had recognised the suppression and the risk of a misleading documentary picture. He was entitled to rely on reliable documents, prior admissions and objective probabilities. The appellate court should assume, absent compelling reason, that the judge considered the evidence and understood his task. It was not necessary to require a separate detailed analysis of documents not before the court. The approach was consistent with The Ocean Frost [1985] 1 Ll R 1, Piglowska v Piglowski [1999] 1 WLR 1360, Thomas v Thomas [1947] AC 484 and Henderson v Foxworth Investments Ltd [2014] UKSC 41.
2. Equitable obligation to account. Where A controls property belonging to B in circumstances in which, viewed objectively, B is entitled to expect A to administer it for B’s benefit, equity requires A to account. The property need not be vested in A; control is the key component. A prior breach of duty is not legally necessary, although the judge found that the transfer to the Richmond Trust was a misappropriation. The evidence, including the defendant’s own statements and pleadings, supported findings that he controlled the relevant accounts, Eastover and other investments. The principle in Al-Dowaisan v Al-Salam [2019] EWHC 301 (Ch) was applied.
3. Scope of the trial and order. The pleadings relied alternatively on a relationship of trust and confidence and on the portfolio identified in the Richmond Lodge Document. The issues for trial covered the document’s production, whether monies were held for the claimants, and liability to account. The judge was therefore entitled to find that the document was an acknowledgment of assets held in 2009 and to use it as the starting point for the account. The consequential order, including income, profits, sale proceeds and current value, fell within the determined liability.

The appeal was dismissed.

• Court of Appeal (Civil Division): the defendant’s appeal was dismissed unanimously: [2022] EWCA Civ 604.
• High Court of Justice, Business and Property Courts, Business List (ChD): after a trial on liability alone, the defendant was held accountable in equity and an account was ordered: [2021] EWHC 2644 (Ch).