High Court (Chancery Division) Judge Orders An Account Of Millions Taken Out Of South Africa During The Apartheid After A 7 Day Trial

Mr. Eason Rajah QC, sitting as a judge of the Chancery Division, delivered a judgment in a historic case involving millions taken out of South Africa during the Apartheid. Based on the Claimants’ pleaded case, the judge entered judgment in favour of the Claimants for an account. Arfan Khan represented the successful Claimants instructed by Pandya Arbitration Global.

The Claimants are domiciled and resident in South Africa. They were formerly the part owners of a successful South African Cash and Carry business known as the Jumbo Group. Between the 1980s and 1990s, very substantial monies in millions were taken out of South Africa belonging to the Claimants and placed into Swiss accounts. It was not in dispute that the Swiss accounts did not belong to the Defendant. Nor was it in dispute that these accounts contained monies belonging to the Claimants and other South African businessmen.  

The Claimants contended that the monies were originally taken out of South Africa to avoid the consequences of Apartheid and that they had since then regularised their financial affairs with the South African authorities. The Defendant, a British national and domiciliary, acquired complete control over the Claimants’ share of the monies in Swiss accounts, and, using these monies, made investments for the Claimants. In a signed document, the Defendant acknowledged that he held a joint cash and property portfolio for the Claimants amounting to millions, but refused to return the same.  

In litigation spanning over four years, the Defendant pleaded many lines of Defence, including a contention that the applicable law was the law of South Africa, and that the claims were barred by reason of illegality arising out of an alleged breach of the South African Exchange Control Regulations. Following extensive written submissions on behalf of the Claimants on the applicable law and illegality, including expert evidence, these lines of defence fell away at trial. At trial, the Defendant then advanced an unpleaded contention that the document which he signed was forged and that his dealings were with a third party instead of the Claimants. He denied that he owed any fiduciary duties to the Claimants.   

The Claimants closed their case on the pleaded case of a breach of fiduciary duties. In a reserved judgment, the Court analysed the rival contentions, including the Defendant’s unpleaded allegations of forgery and document suppression, and made findings of fact. The Court held that the Defendant was bound to deal with Claimants’ share of the expatriated funds on the instructions of the Claimants alone (§121). The Court found that the Defendant had complete control over the Swiss accounts and only he knew what had become of them (§51). The Court made findings regarding the Defendant’s knowledge of the Claimants’ interest in those monies, the Defendant having accepted that he held a Power of Attorney over those accounts, and found that the Defendant had used the Claimants’ monies to make investments on their behalf through an offshore structure controlled by him which he subsequently misappropriated (§ 42-68, 75-6, 103-4). 

The Court found that the key document had not been forged and that the Defendant was not a credible witness. The Court held that the Claimants had pleaded a claim for breach of fiduciary duties and that the Defendant had acted in breach of the same (§116, 122). The Court held that the Claimants were entitled to an account on their pleaded case for breach of fiduciary.

After the Claimants’ extensive oral cross-examination of the Defendant, the Court held that, on certain issues, the Defendant was either lying to this Court, or had lied in his witness statement in other proceedings, and was in prima facie contempt of Court (§21).

The judgment can be viewed here.

View Arfan Khan's profile here.

Arfan Khan

Call 2001