Njord Partners SMA-Seal LP & Ors v Astir Maritime Ltd & Ors

In claims for deceit, a representation must be clearly identified and assessed objectively in context. Liability requires falsity, absence of an honest belief, an intention that the representee should rely on the statement, actual inducement and loss. A claimant’s ability to discover the truth does not defeat fraud.

A person may be jointly liable for deceit where they materially assist another’s fraud pursuant to a common design and possess knowledge of the essential features of the tort. Mere silence by a director, without more, does not ordinarily make the director personally liable for another’s misrepresentation. Unlawful-means conspiracy may be established where the defendants cannot obtain their desired gain without causing the claimant’s loss.

The claim arose from a USD 45 million lending facility made available to Astir Maritime Ltd and secured, among other things, by a personal guarantee from Muhammad Tahir Lakhani. The claimants alleged that Tahir fraudulently overstated his assets, later gave false explanations for delayed repayments, and that Muhammad Ali Lakhani participated in the fraud and authorised false Approved Borrower Statements.

The court considered claims in deceit against Tahir, accessory liability against Ali, deceit concerning the Approved Borrower Statements, and unlawful-means conspiracy. The central issues were whether the representations were made, false and dishonest, whether the claimants relied on them and suffered loss, and whether Ali’s conduct satisfied the requirements for accessory liability and conspiracy.

1. Asset Representations. Tahir authorised the Statement of Net Worth and represented that he personally owned the listed assets and honestly believed in their stated net values. The representations were false. Tahir knew that he did not own several assets and had no honest belief in the stated valuations. The claimants relied on the statement in deciding to enter into and increase the facility, and would not have done so without satisfactory asset information supporting the guarantee. Tahir was therefore liable in deceit for the resulting loss.
2. Ali’s accessory liability. Mere silence by a director who knows of another person’s false statement does not, without more, create personal liability in deceit. Nor was there a pleaded or proved communication by which Ali had manifestly adopted Tahir’s representations. That narrower case failed. However, Ali materially assisted the preparation of the Statement of Net Worth, knew that it contained false statements, knew that it was intended to induce lending, and acted pursuant to a common design with Tahir. He was therefore liable as an accessory to Tahir’s deceit. The pleading deficiencies caused no unfair prejudice, so the court dealt with the wider case at trial.
3. Delay Representations. Tahir admitted making and falsity, and intending reliance. The recoverable loss was assessed by reference to about 1 June 2019, when the claimants would probably have suspended the facility absent the apparently plausible explanations, rather than by reference to the first false explanation on 5 March 2019.
4. Approved Borrower Statements. Ali knowingly approved use of his electronic signature and thereby made the statements in the documents. He was at least reckless as to their truth, intended reliance, and the statements were conditions precedent to drawdowns. He was liable for the resulting losses.
5. Conspiracy. Tahir and Ali combined, actively participated, used deceitful unlawful means and caused loss. Their intention to injure was established because they could not obtain the desired borrowing without depriving the lenders of funds in exchange for unreliable repayment obligations and an inadequately supported guarantee.
6. Judgment was entered for the lenders against Tahir and Ali. The precise sums and consequential matters were left for agreement or further submissions. Applications for permission to appeal and other consequential applications were adjourned.

First-instance judgment in the Commercial Court. The judgment itself records no prior appellate decision in this litigation.