Banwaitt v Dewji [2013] EWHC 879 (QB) (17 April 2013)

Neutral Citation Number: [2013] EWHC 879 (QB) Case No: HQ11X03384 IN THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION Royal Courts of Justice Strand, London, WC2A 2LL 17/04/2013 B e f o r e : SIR RAYMOND JACK Sitting as a Judge of the High Court ____________________ Between: AMARJIT SINGH BANWAITT Claimant - and - MOHAMED DEWJI Defendant ____________________ Mr Edmund Cullen QC (instructed by Dentons UKMEA LLP) for the Claimant Mr Stephen Lloyd (instructed by Carter Lemon Camerons LLP) for the Defendant Hearing dates: 18, 20-22, 26 and 27 March 2013 ____________________ HTML VERSION OF JUDGMENT ____________________ Crown Copyright © Sir Raymond Jack: Introduction The parties to this action lived next to each other in Milton Keynes and were friends. The claimant, Mr Amarjit Singh Banwaitt, is a pharmacist and on his retirement in 2002 he was able to sell his business for a substantial sum. The defendant, Dr Mohamed Dewji, is a general practitioner in Milton Keynes, the senior partner in his practice. He also engages in property transactions. In June of 2008 Mr Banwaitt and Dr Dewji discussed a venture which Dr Dewji was orchestrating to buy land in Koh Kong province on the coast of Cambodia. The idea was to buy 427 hectares for US $14 million and sell them for $21 million. Mr Banwaitt paid Dr Dewji sums of $1 million and $750,000 towards the purchase of the land. The time scale was supposed to be short but became extended because Dr Dewji had not been able to find sufficient other investors to make up the full purchase price. Foreigners may not hold land in Cambodia, and Dr Dewji was working with a Cambodian national named Narong Men to implement the purchase. In February 2009 Dr Dewji heard that Narong Men might be dishonest. He went to the Cambodian police and on 16 March 2009 Narong Men was arrested. Following a trial he was sentenced to 3 years imprisonment for breach of trust. The nub of the case against him was that he had entered into two contracts with the vendor of the land, Tan Meng. The purchase price on one was $7.5 million and on the other was $14 million. The genuine contract was the $7.8 million contract, and the $14 million contract was for Dr Dewji. As the person injured by the conduct of Narong Men Dr Dewji was a party to the criminal proceedings against him. Narong Men was ordered to pay Dr Dewji $9,045,000 in restitution and compensation of $2 million. Narong Men appealed to the Court of Appeal and to the Supreme Court. His appeals were dismissed save that the Supreme Court reduced the compensation from $2 million to $1 million. In separate criminal proceedings Narong Men was found guilty of using forged certificates relating to the planning status of the land. He was sentenced to 7 years. His wife had left Cambodia but was tried in her absence and was sentenced to 5 years. They were ordered to pay damages to Dr Dewji in the sum of $1 million. The Cambodian court has frozen properties of Narong Men which may be available to satisfy the sums due to Dr Dewji but the process is complex and nothing has yet been realised. Meanwhile, on 12 September 2011 Mr Banwaitt had commenced proceedings against Dr Dewji in the English High Court to recover his money. His primary cause of action is that he was induced to pay by false representations made by Dr Dewji. The initial representations on which Mr Banwaitt relies are alleged to have been made orally at two meetings in June 2008. One took place on Mr Banwaitt's drive where he had been washing his car and the other on the golf course. There is a dispute as to which was the location of the first meeting. There are no notes as to either meeting. Dr Dewji sent Mr Banwaitt an email on 2 July 2008 to which were attached a number of pages giving information about the project. This is of some help. I intend to set out the history as best it may be ascertained from the documents available and then to return to consider against that background my findings as to what was said in the course of the two meetings. I say from 'the documents available' because the documents available are limited. Dr Dewji has not disclosed any written communications passing between himself and Narong Men, nor with Mr Ban, the Cambodian lawyer who was advising him on the deal, nor with the other investors. He only gave Mr Banwaitt a copy of the first and last pages of the contract for $14 million entered between Narong Men and Tan Meng, and he has not provided a copy of the full document. He accepts that he has a full copy in a hotel deposit box in Phnom Penh. Apart from that and the forged documents relating to the planning status of the land he has not disclosed any documents relating to the land purchase itself. He did not disclose the entries relating to the other investors made in the notebook which he kept for the project until required to do so at the trial. The position is not helped by the surprising failure of Mr Banwaitt's delayed application for further disclosure shortly before the trial. Some of this non-disclosure may be explicable but overall I am satisfied that Dr Dewji has disclosed as little as he thought that he could and that, if he had given full disclosure, the picture would be the clearer. Further, much of the story only emerged in Dr Dewji's cross-examination, which does not make my task easier. The Events Dr Dewji said that he first met Narong Men in April 2008 in Paris, where they both were for a meeting or conference concerning public health. He thought that they had talked about investments. On 3 May 2008 Dr Dewji was in Cambodia and had a meeting with Narong Men. The source for that, as with much of what follows, is the notebook which Dr Dewji kept to record matters relating to Cambodia and some other matters. Many of the notes are brief and Dr Dewji did not record everything that happened. On 11 May Dr Dewji recorded some facts relating to Narong Men. He appeared well-connected. He and Narong Men discussed four investment possibilities, buying flats in Phnom Penh, land in the provinces of interest for hotel chains - in particular some land in excess of 400 hectares in Koh Kong province (this was the land which became the subject of the venture), land on the outskirts of Phnom Penh, and last, buying up parcels of land which could be developed. Narong Men told Dr Dewji that he would need a local partner. On 12 May Dr Dewji recorded more information about the Koh Kong land. It was farmland to be opened for development. There were buyers interested, especially Australian hoteliers. It could be bought for $16 million, or perhaps $14 million, and be sold for $20 million or more. Dr Dewji's note also refers to other possible land purchases. It appears also at this point that Narong Men agreed to let Dr Dewji have a one third share in a deal to buy a flat in Phnom Penh for $50,000 to be resold after some work had been done to it for $60,000. Dr Dewji did not put up his share of the purchase money but may have received his share of the profit nonetheless. He said that he received it in cash when he was in Cambodia in early July. On 18 May 2008 Dr Dewji had a telephone conversation from England with Narong Men. Three sites were referred to, the Koh Kong land being the first. It was 400 hectares, and the price $14 million. There were 80 small sellers, the main seller being Tan Meng. This may indicate that Tan Meng was buying from the original owners. The Australian hoteliers would enter a memorandum of understanding to buy for $20.4 million and pay a 20% deposit if the land was available for development. Dr Dewji said in evidence that that meant that it would have a certificate of 'planning gain'. That is not planning permission, but it means that permission can be applied for. The turn round between purchase and resale would be about 6 months. Dr Dewji said in evidence that 6 months allowed time to get planning permission. A road was being built with three bridges. A deposit of $50,000 was needed. Narong Men was happy to work for no fee on the first investment but would want access to the investors thereafter. Dr Dewji noted the process as 'deposit, land check, boundary, contracts, payment and the planning permission followed by resale'. He said in evidence that he understood at this point that he could contract to buy the land and pay later. On 21 May Narong Men said that one bridge was complete. He said that four signatures were required on a certificate of planning gain, and that if the certificate was not provided the deposit could be returned. Dr Dewji also noted that the Australians confirmed 'MOU status'. On 1 June 2008 Narong Men said that the flat deal had been completed. Dr Dewji noted 'use money to pay deposit on Koh Kong if we go ahead'. Because the only money which Dr Dewji was entitled to from the flat was a few thousand dollars as he had not paid his share of the purchase price, this must mean that the idea was to pay the deposit from the total proceeds of the flat sale – but that possibility was not investigated at the trial. It seems that Narong Men said he would negotiate 2 months for investigations before a contract of purchase was entered into. They would review the position in a week. On 4 June Dr Dewji spoke again with Narong Men and noted 'deposit possible' and '2 months agreed'. Then the name of Ban Associates, the Cambodian lawyers used by Dr Dewji, appears for the first time. Dr Dewji said in evidence that the 2 months referred to a period over which, after having agreed to buy the land, they could pay, and which they could use to get full planning permission. Dr Dewji said in evidence that at about this point he had spoken to a number of potential investors and had in mind being able to pay $4 or $5 million by 1 July. He later referred to $4.2 and 4.3 million. On 4 June he made a list in the notebook of 13 possible investors. There are no figures or anything to indicate whether Dr Dewji had spoken to them when he made the list. The name of one, which I will call Jardines, re-occurs the next day. The note records that Jardines might subscribe 'up to $3M'. On 7 June he spoke to another, whom I can refer to as Co. The note reads: 'High interest, timing important, would ... funds from US or India, confirm 7m$, will meet at Paris.' He also spoke that day to MH who appears to have said the maximum he would invest was $0.5 and that he would come back. Another he called that day declined to be involved. On 9 June he spoke to Mustaf, another from the list of 4 June, who said that he would come back. On 11 June he spoke to another from the list, RR, but nothing concrete seems to have emerged. On 9 June 2008 Dr Dewji spoke to Mr Ban. Mr Ban gave him some general advice. Although it does not appear in the notebook Dr Dewji's evidence was that he appreciated that there was a risk that if the whole of the purchase price was not paid on a sale of land, the part paid might be irrecoverable. Dr Dewji later spoke to Narong Men. It appears that by this time the idea of purchasing through a company (in which Narong Men would have to hold 51%) was being considered. Dr Dewji noted 'Company regs in order – will look into bank account'. He also noted 'aim for purchase end of month early July.' On 12 June 2008 Dr Dewji spoke again to Mr Ban. The note records that Mr Ban had spoken with Narong Men and continues: 'did know him, and gone through all the details, will comment more when sees the deeds, has arranged paperwork issues with Narong and seeing him again in the next few days, will keep notes and documents strictly with Narong as land will need him as a partner to comply with regs, aware will need to keep me in the loop.' Dr Dewji suggested the name of Al Baraqa for the company. Narong Men was to sign a document recording that he was not entitled to any money. The reference to keeping 'notes and documents strictly with Narong' must reflect the need to present a Cambodian national as the buyer rather than Dr Dewji, a foreigner. Dr Dewji said in evidence that by about 12 June 2008 he had commitments from investors totalling $13.750 million, which he specified. Having considered all the evidence in relation to the investors I am satisfied that at this point the most he had was a promise of $7 million from Co, and $3 million from Jardines. He also was to have $1 million from Mr Banwaitt, and he himself was to put up $1 million. So he seems to have been $2 million short of $14 million. In his email of 1 October 2008 Dr Dewji included a statement that there were five original investors, totalling $14 million, which he identified as parties 1 to 5 and he set by each what they had undertaken to contribute: Party 1: $1.75 million Party 2: $1.75 million Party3: $7 million Party 4: $3. million Party 5 $0.5 million Parties 1 and 2 are Dr Dewji and Mr Banwaitt. But Mr Banwaitt originally contributed only $1 million. Nor does it does not appear that Dr Dewji originally intended to contribute more than $1 million. Party 3 is Co. Party 4 is Jardine. Party 5 was as identified by Dr Dewji as Mr Dhanji. I am satisfied that Mr Dhanji did not emerge as a subscriber until much later. So this email supports my conclusion as to what he had available in June. I also refer to paragraph 45 below where I consider his efforts to collect investors in September 2008, and what this shows about the position in June. I conclude there that the other investors on whom Dr Dewji relied for June were not brought in until the autumn. But even if that were wrong, it was Dr Dewji's evidence that Mr Alloo was raising money from properties in Dubai and that he aimed to pay at the end of August. (He in fact paid in November). Likewise Dr Dewji said that he expected the Canadians to pay in September, and Zaamin in about September. So on any basis Dr Dewji was short of the necessary $14 million in June and July. It is difficult to see why he proceeded as he did. He may have hoped to get some more funds at the last moment. But it is hard to see why he did not delay. He has not provided an explanation. On 10, 11 or 12 June 2008 there was the first discussion between Dr Dewji and Mr Banwaitt. At 10.10 a.m. on 13 June Mr Banwaitt sent an email to Barclays, his bank. The relevant parts read: "On a more urgent matter, I am negotiating a land deal in the Far East and may need the sum of one million dollars ($1,000,000) + 50,000 pounds to be transferred to an account, the details of which I will supply soon – the transfer hopefully to take place on 26 June 2008. I will confirm. .... As there is a strong possibility that I will be disposing of my interest in the land deal shortly afterwards, I will be transferring the capital back in 3/4 months thereafter, and then change it back into sterling – any advice to save on charges and costs will be appreciated." On 14 June 2008 Dr Dewji spoke with Narong Men. Narong Men said he had met Mr Ban, and the papers were in order and Mr Ban was appointed to act for Narong Men and later for the company 'in order if investors fixed – aware we will progress more than likely'. On 15 June he spoke with Mr Ban who confirmed what Narong had said. He had given Narong the forms for the formation of Al Baraqa if needed. Dr Dewji said in evidence that he understood at this point that the land had planning gain and also that to sell it on to the Australian group planning permission was necessary and had not been obtained. On 16 June 2008 Dr Dewji had a telephone conversation with Mr Sung Bonna. Mr Bonna is head of Bonna Realty Group Co Ltd, a substantial Cambodian property company. Mr Bonna is also the president of the Valuers and Estate Agents of Cambodia. Mr Bonna gave him some general advice. On 17 June 2008 Dr Dewji spoke to Jardines who needed the 'account transfer details for Phnom Penh.' So Jardines had decided to take part. At about this time Dr Dewji took steps to open an account with the ANZ Royal Bank in Phnom Penh. The first entry is a cash deposit of US$100 on 20 June 2008. On 20 June 2008 Dr Dewji spoke with Narong Men. Narong Men said Dr Dewji could definitely see the planning gain documents before purchase. (They were there and are frequently referred to as 'the deeds', which is confusing because they do not, as I have understood it, fulfil the function that deeds have in an English property transaction.) On 21 June 2008 Dr Dewji spoke with Mr Ban. He had by now decided to fly to Phnom Penh on 28 June. It was agreed that he would check the paperwork after he arrived, and that they needed to decide in the next week whether to buy or not. It would take about 4 weeks to set up Al Baraqa, but meanwhile a dormant bank account held by Narong could be used. On about 21 June Dr Dewji and Mr Banwaitt discussed the project a second time. On 23 June Dr Dewji spoke with Narong Men. The price of $14 million had been reconfirmed, and the deposit was to be paid in full now. Narong would fix meetings for the following week. He would get Al Baraqa set up and also get the waiver document – the document saying he was to have no share in the proceeds – organised. Dr Dewji gave confusing evidence about the payment of a deposit. He said it was to be $50,000. He said at first that he could not remember if it was paid. He then said that it was paid by means of a cheque drawn to Sunil Gohil, who was assisting with the transaction, for $200,000. He said he did not use the account he had opened with the ANZ Royal Bank in Phnom Penh because he did not know the state of the account. That would not have prevented him transferring money to the account. He said he made out the cheque for $200,000 and not $50,000 because he knew that more money would soon be needed. He subsequently produced a statement for his bank account in England. This showed that a cheque for £100,000 had been debited on 29 July 2008. Dr Dewji said that this was the cheque in question, being the then equivalent of $200,000. When asked about the statement he first said that the payee was Gohil, then he said he was pretty sure that it was not Gohil. He said that he had had to post the cheque to an address in the UK. The court in Cambodia was satisfied that in addition to the sums which went through Dr Dewji's Cambodian bank account a further $200,000 was paid to Narong Men. How far that was proven before the court by documentary evidence is unclear. I do not find the evidence Dr Dewji gave to me about the $200,000 cheque credible. On 23 June Dr Dewji also spoke to Mr Ban. Mr Ban needed to meet with Narong Men to check the deeds. He was happy to draft a letter from Narong saying that he had no interest in the venture. The road was nearly complete. Al Baraqa was being formed. He had met Rattana Hout who represented the Australian group. They would want to assess the deeds, but were otherwise happy. On 23 June Mr Banwaitt sent an email to Dr Dewji. He said that he had the funds ready and just needed the bank details to do the transfer. He asked to be reminded by email of (1) the total investment funds required, in sterling and dollars, because this might involve two transfer fees, (2) the expected percentage return on the total investment, (3) a rough guide about the turn around time, if known, and (4) how the funds (capital and income) might be brought back to the UK or re-invested abroad. Dr Dewji did not reply but came to Mr Banwaitt's house with a piece of paper on which he had written the details of the account he had opened with the ANZ Royal Bank in Phnom Penh. On 26 June Mr Banwaitt emailed his bank that the transaction had been delayed and was likely to be done on Monday (30 June) to Thursday of the next week: he would let the bank know as soon as the papers were found to be in order and the deal signed. This suggests that Mr Banwaitt then intended to transfer his money after that had occurred. Dr Dewji flew to Cambodia on 28 June. On 29 June he met with Narong Men. His very abbreviated note records that all was in order, meetings were arranged, the deeds (i.e. the planning gain documents) would be available, and that they would use Dr Dewji's ANZ account for moneys coming in which would be transferred to a dormant account of Narong Men until Al Baraqa was set up. They also apparently went to see the land. On 30 June Dr Dewji also spoke to Mr Bonna and there is the first reference to Mme Dominique, the representative of French interests who later were to consider buying the land instead of the Australians. On 1 July 2008 Dr Dewji met with Mr Ban for the first time, and with Narong Men. They told him that the papers and deeds were in order, and should satisfy the Australians. It seems surprising that Mr Ban did not question the deeds, i.e. the planning gain certificates, because the one that covers 427 hectares covers land which is a different shape to that on the other certificate. He subsequently moved from Cambodia to Thailand and Dr Dewji has been unable to trace him. Dr Dewji noted that the company, Al Baraqa, should be in place for completion – that may refer to the resale of the land, and that the obtaining of planning permission was important as it would increase the chances of re-sale. On 1 July Dr Dewji and Narong Men also met with Mr Rattana Hout, the representative of the Australian interests. They would be happy with a memorandum of understanding and a 20% deposit, they would want an early finish and planning permission was important. Dr Dewji accepted in cross-examination that he was at this point prepared to go ahead with the purchase of the land without a memorandum and deposit from the Australians if he felt they were genuine: that is certainly what he did. At 16.46 UK time on 1 July Mr Banwaitt sent an email to Dr Dewji saying that he had just instructed his bank to transfer the money ($1 million), but the transfer could not be made that night. He said that the transfer showed just how much trust he had, no paperwork, no documents, and his life savings were riding on the deal. Dr Dewji replied the next day. In response to the reference to the absence of paperwork he said that he was putting some in a separate mail, and that he would not pay a cent till he was clear. An email from Mr Banwaitt's bank sent on 2 July shows that the bank was having a problem with the transfer, and the money was only credited to Dr Dewji's ANZ account on 3 July. On that day $500,000 were transferred from the ANZ account to an account of Narong Men's wife, number 951885 – that apparently being the dormant account which Narong Men had said that he had. A further $470,000 was similarly transferred on 8 July. That left $28,590 in the account. Thus the only money which Dr Dewji had in Cambodia at this time was the money transferred by Mr Banwaitt. I will revert to the material emailed to Mr Banwaitt separately on 2 July when I consider the alleged misrepresentations. A little about what Mr Banwaitt was told by Dr Dewji was happening in Phnom Penh is revealed by Mr Banwaitt's emails to his bank. He said on 2 July that until about 4.34 pm the day before the deal was not signed and could have gone either way. He said Dr Dewji was waiting at the ANZ Bank in Cambodia to check the transfer number. This suggests an urgency and an uncertainty. On, probably, 1 July Dr Dewji made a 'to do' list in his notebook. I consider that it related to the purchase of the land. The first name refers to Jardines and is ticked. The second name is Co and is noted 'will call later'. Then there is a name, Shabir, who I consider was listed as a potential investor. It is ticked. Then there is a note that investors should be emailed with an up-date. I take that as a reference to the material emailed to Mr Banwaitt on 2 July. On 3 July Dr Dewji and Narong Men met again with Rattana Hout. Dr Dewji's note reads 'All set, will get deposit once we get paperwork and trans deeds to them – no issues raised.' But they also on that day met with Mme. Dominique representing the French interest. They thought she was a good alternative option to the Australians. The next entry in the notebook relates to a telephone conversation between Dr Dewji and Co. Co's group had suffered a big loss and would only be able to contribute $3 million or possibly $4 million instead of $7 million. Co would call again within a few days. It is plain that there was no money coming from Co immediately. Dr Dewji's note shows that he was very upset by this news. This important note was only disclosed with the other 'investor' notes early in the trial. The next note is of a conversation with Mr Bonna. It reads: 'Not to worry and speak to seller – aim for staged payments as norm in Cambodia – look at planning permission after elections – look for other buyers – knows Aussies and they will not want delay'. The next note reads 'Narong to discuss with sellers and refer back'. 3 July is the date borne by the $7.8 million contract for the purchase of the land. The $14 million contract is dated 5 July. It seems clear that on 3 July Dr Dewji intended that Narong Men and Tan Meng should sign a contract of purchase. He believed that it occurred. He was not present. He said Narong went to Tan Meng's lawyers on the morning of 3 July to sign a contract to be effective on 5 July. There is no copy of the $7.8 million contract. The copy of the $14 million contract is incomplete and the terms as to payment are missing. Dr Dewji has a full copy in Cambodia. His evidence as to the provision for payment was unsatisfactory. He first said it provided that payment should be made as agreed between the parties. He also said that he understood that it reflected that there would be stage payments, the exact dates not being decided but to be completed within the next 3 months. As to the actual initial payment he said in cross-examination that he had originally intended to pay $4.2 or 4.3 million, but when Co's money did not arrive he went ahead because he had a contract. He said that there were discussions with Tan Meng and they, i.e. he and Narong Men, agreed to pay a further $500,000 on top of the $200,000 already paid. I have already dealt with the issue of the $200,000. When he was later asked again he said that the contract provided, or perhaps that it was agreed outside the contract, that payment should be in three parts, one third at the end of July, one third at the end of August and one third at the end of September. All of this points to an intention to conceal what the contract actually provided as to payment. One would expect to find an explanation for what happened regarding the contract to be contained in Dr Dewji's witness statement. But all it says, in paragraphs 33 and 34 is that 'The aim was to move forwards with the investment; however over the next few days it became apparent that one of the investor group, represented by [Co] was looking to significantly reduce their share. The group reported .... . On returning back from Cambodia on the 7 th of July 2008, I informed all the rest of the investors, including Mr Banwaitt of the shortfall in investors. I explained that I was still going ahead as an investor myself.' There is a yawning gap as to what had happened in Cambodia as to the contract and payment. All that is certain is that Dr Dewji authorised Narong Men to sign a contract for the purchase of the land for $14 million and that he used Mr Banwaitt's money to make the sole payment against the purchase price. He accepted in cross-examination that he knew that any moneys paid on account of the price would be at risk if the full price was not eventually paid. On 4 July Dr Dewji met with Narong Men. He noted that there were no major issues and Narong felt able to hold the situation, but it might affect the Australians and they should speak to Mme Dominique. They were joined by Mr Ban. Dr Dewji noted: 'paperwork completed, delay in investors (Co) will it affect buyers – Narong to chase further, look for stage payments – norm here.' On 7 July Dr Dewji returned to England. On 14 July Dr Dewji noted that stage payments were confirmed and on 17 July that they were sorted, but he did not record what payments were required. His evidence as to that was vague. In his witness statement he said that this was when stage payments were arranged. That would negate the contract having provided for them. On 19 July he recorded that Rattana Hout and the Australians had pulled out. On 16 July Dr Dewji had a conversation with Co who said that he might put in $3 million. That did not happen. Al Baraqa Investment Co., Ltd was incorporated on 16 July 2008. On 22 July Narong Men signed a statement that he held his shares on behalf of Dr Dewji and that the sales particulars signed by him for the Koh Kong land was on behalf of Al Baraqa and he had no claim to any profits. On 22 July Dr Dewji transferred $506,816 to his ANZ account and on the same day it was transferred to account 951885. On 30 and 31 July the ANZ account was credited with sums totalling $750,000 from Mr Banwaitt. I will return to the question of what Dr Dewji had told Mr Banwaitt and how these sums came to be paid. But I record here that on 28 July Mr Banwaitt emailed to his bank that 'our solicitors are finalising the deal at around 11.00 a.m. this morning, so the transfer is to take place after 11 a.m.' That shows that Mr Banwaitt did not think that a contract had been signed and that his $1 million had been paid against it, and that he thought that his further money would only be transferred once a contract had been signed. Also on 31 July $750,000 was credited to the ANZ account from Jardines. On 1 August $1.5 million was transferred to account 951885. Jardines paid a further $2,252,595 into the ANZ account on 29 August, which ws transferred to account 951885 on 1 September. Dr Dewji made transfers of $211,822, $989,813 and $141,262 into the ANZ acoount on 23 September, 20 October and 3 November 2008 respectively. On 6 October Zaamin Investments transferred $750,372. On 7 October Mr Dhanji (mistyped on the statement as Shanji) transferred $500,248. There were also transfers in October and November from a group of Canadian investors and a man named Alloo. Virtually all of these moneys were transferred to account 951885. In total $8,845,000 was transferred from the ANZ account to 951885. The balance in the ANZ account was then $5,953. It may be wondered how much of the money reached Tan Meng. In the criminal proceedings Tan Meng said he received $4.1 million. Narong Men said he paid him $4.7 million and a cheque for $200,000 which was dishonoured. I note that there may be questions as to Tan Meng's ability to give title to the land. On 28 July 2008 Dr Dewji spoke to Narong Men. They aimed to meet at the end of August. There was reference to a $250,000 deposit – probably related to the French interest. On 4 August they agreed to meet on 24 August in Phnom Penh. A note of a meeting on that date with Mr Ban records that he needed to get the investors sorted. Meanwhile on 22 August he had spoken with Narong Men and his wife. He recorded that payment was due 'as per schedule', that the French buyers were on board but there was anxiety about the delays 'in investor sums'. Dr Dewji said in evidence that the schedule referred to the formalised agreed terms between Narong Men and Tan Meng. No schedule has ever been produced. It would seem an essential document for Dr Dewji to have, but he does not apparently even have a note of its terms. The last entry for August in the notebook is dated 26 August. The next entry is dated 13 September. Between the two is a list of names. It is clearly a list of potential investors. Subsequent notes show Dr Dewji getting in touch with some of them. He said in cross-examination that in mid June he had had funds available from investors as follows: Alloo $250,000 Co $7 million Himself $1 million The Canadian group $750,000 Dhanji $500,000 Zaamin $750,000 Jardines $3 million Nazir (Zaamin) $500,000 That gives a total of $13,750,000. It includes nothing from Mr Banwaitt. Dr Dewji said that there were others showing interest and that he was potentially over-subscribed. Having considered Dr Dewji's notes and having heard him cross-examined I am satisfied that he had not been in touch with any of the above prior to September 2008 save for Co and Jardines. On 29 September 2008 Mr Banwaitt sent Dr Dewji an email requesting a meeting of the investors to discuss what to do. He said the investors would need assurances that the sale to the hotel developers would go through in accordance with 'scheduled timetables', and that this would not become the next problem. He thought that there was a 21% shortfall. 21% of $14 million is about $3 million. He was thinking that all the money had otherwise been paid by the investors. At about this time Dr Dewji put in train the preparation of drawings by architects which could be used to obtain planning permission. Narong Men told him on 23 December 2008 that they were ready. In cross-examination Dr Dewji said that the architect had been showing the planning authority the drawings and in effect getting approval as he went along. However in his affidavit sworn on 19 September 2011 he had said "In January 2009 the architect began the process of applying for planning permission." On 1 October 2008 Dr Dewji sent Mr Banwaitt a long email. It was probably in part a reaction to Mr Banwaitt's of 29 September. But it was also a report to the others who were already involved and may have also been sent to others who had not then invested. Dr Dewji attached copies of the planning gain certificates and of Al Baraqa's certificate of incorporation. He said among much else that drawings had been successfully forwarded to the planning authorities. He said that the French group had paid a deposit. There is no record of that nor is there any reference to it having been paid in Dr Dewji's notes. He said that they had been talking of completing with the French on 16 December but due to an unforeseen delay in completing the purchase on his part it had had to be put off to the first quarter of 2009. He did not say that the reason why the purchase had not been completed was that he did not have the money, though that becomes clear later. He gave a list of 5 unnamed original investors with an amount set by each. On any view it does not tie in with his evidence. The total was $14 million. He referred to the reduction of one investor's contribution from $7 to 4 million. He said he had found $2.25 million from new parties. So there was a shortfall of $1.75 million. In fact at this point only $5.22 million had been received in the ANZ account and the total received was $8.845 million. In the second or third weeks in October 2008 Dr Dewji came to Mr Banwaitt's house. He said that he lost all Mr Banwaitt's money and that he and his son would work the rest of their lives to repay him. Soon afterwards Dr Dewji gave Mr Banwaitt two certificates of shares in Al Baraqa and told him all was in fact well. One certificate was dated 9 July 2008. Al Baraqa was incorporated on 16 July 2008. The other was dated 22 August 2008. There are other inconsistencies. The strong probability is that these were valueless pieces of paper produced with the aim of giving Mr Banwaitt reassurance. When they came across each other on subsequent occasions, Dr Dewji continued to reassure him. Dr Dewji's visit to say the money was lost was, if true, an extraordinary occurrence particularly when viewed against the assurances of progress that he was otherwise giving. I accept it, in part because it would be a strange embellishment for Mr Banwaitt to have invented. I can only conclude that Dr Dewji, for a moment, lost his nerve. Dr Dewji visited Cambodia at the end of October and in December. On 23 December he sent Mr Banwaitt an update on progress. It was mainly about planning approval. He said he aimed to complete the sale by the end of January. In fact he was still short of the purchase price by some $5 million. On 22 February 2009 Dr Dewji was alerted to the possibility of fraud by Narong Men. He flew out to Cambodia. After making investigations he went to the police. Narong was arrested on 16 March and in due course tried, convicted and sentenced, as I have set out. When Dr Dewji was back in England he sent an email on 25 March as follows: "Dear Investor, As most of you have been aware I have been in Cambodia for the past couple of weeks trying to bring forth the completion of the project. I got back yesterday early morning and wanted to drop a note that we have made a lot of progress but as at present I haven't been able to complete everything and we still [have] a few steps to follow. I will be going back there within the next 10 days to 2 weeks to work on our exit strategy – I will keep everyone informed as and when I have some concrete details." The reality was that he had met with disaster. When cross-examined he tried to explain the email by saying that he told the investors the truth by telephone. In fact Mr Banwaitt did not learn of the arrest and fraud until later in the year. In the course of an email sent on 27 March 2009 Dr Dewji said that he was committed to get the best and quickest exit strategy, but was reluctant to tell Mr Banwaitt anything definite until he had all the details in his hand. On 12 May he emailed the investors that he had returned from Cambodia: "The main issues pertaining were in relation to obtaining and completing all the paperwork with regards to the land so we could go ahead with regards to the sale. Unfortunately I returned early ... as there are still issues with reference to the final documents that are outstanding. I have put in place with our lawyers and contacts to have this completed on an asap basis." He referred to interest from a Saudi buyer. There was no reference to the French. Mr Banwaitt replied the same day asking to be bought out of the group. He said that he had been brought in at a late stage because the group was short of funds, on the basis that the transaction would be completed by December 2008, and that the buyers had committed with a 20% deposit. On 24 May Dr Dewji replied that he was trying to find a buyer for Mr Banwaitt's share. On 19 June 2009 Dr Dewji sent an email to the investors. He referred to the 'failure of our local partner to deliver as per our agreements with him. He said 'On my last two visits I had started lodging possible legal proceedings against the local partner, while still pursuing completion without referring to this option. He referred to having had Narong Men's assets frozen. But he did not refer to his arrest and the criminal proceedings against him. On 9 August 2009 Mr Banwaitt sent Dr Dewji a letter drafted by his son. He asked to see the banking trail, the company documents (Al Baraqa), the title deeds for the land purchased, correspondence relating to the legal actions in Cambodia, correspondence with government bodies, and a document setting out in detail what Dr Dewji's intended course of action was. I have not been able to find any substantive reply, and Mr Banwaitt got no documents. On 14 September Mr Banwaitt again asked for the court case documents and the documents relating to the land. The emails continued through 2010. In January 2011 Mr Banwaitt was living in Thailand. There were discussions about him coming to Cambodia to speak to the lawyers instructed by Dr Dewji. Mr Banwaitt said he would only do that if Dr Dewji provided him with documents to provide a basis for discussion. Dr Dewji would not do so and Mr Banwaitt did not go to Cambodia. On 30 March 2011 Mr Banwaitt and Dr Dewji had a meeting at Mr Banwaitt's home, which he recorded. I have listened to the recording as well as seeing a transcript. In the course of the meeting Mr Banwaitt asked to see bank statements so he could see what had happened to his money. Dr Dewji refused because it would show who the other investors were, which was confidential. Mr Banwaitt said that the names could be blocked out. Dr Dewji still refused. It is apparent that Dr Dewji was refusing to produce any documents because of what they would show. Mr Banwaitt said that Dr Dewji had collected a 20% non-refundable deposit from the hotel developer. Dr Dewji said that he did not collect it himself and that it had gone into the account for the purchase of the land. The Representations I bear in mind that I am concerned with what was said at two meetings in June 2008 and that no notes were taken. I bear in mind that an honest witness may nonetheless unwittingly firm up his evidence. I have however help from what passed between the two men in writing subsequently. I concluded that Dr Dewji was a man who would lie when it suited him and was ready to think of dishonest explanations for things adverse to his case. It was apparent in the witness box and blatant untruthfulness is apparent from the documents. I refer in particular to his emails to the investors of 25 March and 12 May 2009 which do not mention the arrest of Narong Men for fraud and which give a wholly misleading picture. Dr Dewji is an intelligent man, but he may have an unjustified confidence in his abilities. It is difficult to know why he conducted things as he appears to have done in late June and in early July 2008. I found that Mr Banwaitt was an essentially honest man. He should have known better than to have got involved in the venture. No doubt the substantial profit and his reliance on Dr Dewji clouded his judgment. I am satisfied that it was Dr Dewji who approached Mr Banwaitt about the venture. Dr Dewji had previously invited Mr Banwaitt to join him in property speculation in Dubai, but Mr Banwaitt had not considered Dubai a good prospect. I find that Dr Dewji approached Mr Banwaitt because he thought that he, Dr Dewji, could do very well out of the scheme and he needed Mr Banwaitt's money to make it possible. The strong probability is that it occurred as Mr Banwaitt said, when he was washing his car on his driveway. I take the representations which I was invited to consider in relation to these first two meetings from the closing submissions of Mr Edmund Cullen QC for Mr Banwaitt. Subject to the shortfall leading to the introduction of Mr Banwaitt he had investors to provide $14 million . The pleaded misrepresentation was that 'he had got some rich people together to buy the land for US$14 million', and 'one investor had dropped out and they were short of the total to complete'. In his witness statement Mr Banwaitt stated that he was told that Dr Dewji had gathered a group of rich investors to purchase the land for $14 million, that Dr Dewji had already invested $1 million, that one investor had dropped out, that he may have said that he was $3-4 million short. It does not appear that anyone had dropped out, or that Dr Dewji had contributors totalling $14 million at any time. Nor had Dr Dewji already invested $1 million. Dr Dewji thus gave a false picture that Mr Banwaitt was being brought in to plug a gap. That this is what Mr Banwaitt understood is supported by his email of 25 March 2009. A French hotel chain had made a deposit of 20% and was locked in. This was pleaded as 'They were selling to a French hotel chain for development. The hotel company had given a non-refundable deposit to buy for some $21 million and it was locked in to purchase on either 16 or 17 December.' In his witness statement Mr Banwaitt said that he had been told that two hotel groups were interested and that it had been decided to sell to a French chain, which had provided a 20% non-refundable deposit to purchase for $21 million on 16 or 17 December 2008. I think that Mr Banwaitt may have become confused in his recollection about what he was told in relation to the two hotel chains. Mme Dominique and the French did not surface until 30 June 2008. The information provided on 2 July relates to the Australians. It was they who were considering a deposit. The information provided by Dr Dewji stated that the group had agreed to purchase at $5.10 per square metre and to complete a memorandum of understanding ('MOU') with a 10% deposit on being presented with land papers certified for development in July. Completion would be at the end of November. The original purchase would not be completed until this MOU and deposit had been received. Mr Banwaitt did not know what an MOU was. It may have legal effect but it is often a half-way house not intended to be legally binding. Mr Banwaitt said that he read the information as relating to an earlier time and thought that Dr Dewji had since managed to increase the deposit which had been paid. I find that Mr Banwaitt was told that a hotel chain had agreed to buy the land and that a deposit had been paid of 20% and so was locked in. That was untrue. Neither was it true as stated in the emailed information that the intention was not to complete the purchase until the MOU had been received: that was never the intention. Mr Banwaitt referred to the buyers being committed with a 20% deposit in his email of 12 May 2009, and was not contradicted. At the recorded meeting in 2011 Dr Dewji lied about the payment of the 20% deposit, saying that it had been paid. The sale and purchase would be back-to-back Mr Cullen listed this separately, no doubt because it arose from what was particularly said. It is however closely linked to what was said about the hotel group buyers. Mr Banwaitt said in his witness statement that during the second meeting he told Dr Dewji that it was his life savings which he could not afford to lose. He said Dr Dewji responded that it was a back-to-back deal. Mr Banwaitt had said the same in his affidavit of 12 September 2011. In the particulars of claim it was alleged that Mr Banwaitt used the expression a back-to-back deal and Dr Dewji did not demur. I find that Dr Dewji did represent that it was a back-to-back deal and I think it likely that it happened as said in Mr Banwaitt's witness statement and affidavit. Mr Banwaitt was normally a cautious investor, as Dr Dewji knew. Mr Banwaitt had given Dr Dewji his view that Cambodia was a 'dodgy country' and great care was needed. Mr Banwaitt needed the reassurance that nothing could go wrong. It might be debated quite exactly what a back-to-back deal meant. But there was no way that it was going to be back-to-back here. The Australian group had not paid a deposit nor entered an MOU, and were not about to. The investors would be buying without any kind of certainty as to a purchaser. The purchase moneys were needed urgently or the deposit paid by the purchasers would be forfeited. I am satisfied that this was said in order to provide a sense of urgency. In paragraph 9 of his witness statement Dr Dewji says that he told Mr Banwaitt that a deposit of $50,000 had been paid. In fact no deposit had been paid at the time of the first or second meeting, and contrary to Dr Dewji's evidence I am satisfied that none was ever paid. Full planning permission had been granted . In his witness statement Mr Banwaitt said that he was told that 'full planning permission had been granted for the development of the land and the title deeds were stamped with four signatories of the government planning authorities'. I think it likely that Dr Dewji did not say much more than words to the effect that the land was available for development and they had deeds with the necessary 4 signatories, and did not refer to full planning permission. But I accept that he gave the impression to Mr Banwaitt, and intended to give the impression, that nothing further was required as regards planning permission. The information emailed on 2 July 2008 is similarly silent about the need to obtain planning permission before selling on, and is misleading. Full planning permission was a hurdle that the investors would have to jump, and knowledge of that would have discouraged Mr Banwaitt. It is uncertain how far if at all Mr Banwaitt relied on information sent on 2 July 2008 in respect of the $1 million payment he was then engaged in making. It does not correct the false representations which I have found were made orally. It adds a further false representation in that it states that Al Baraqa will purchase the land, that the company 'is incorporated in Cambodia and has Dr M Dewji and Mrs T Dewji as its directors. Also named within the company (without an[y] rights to the assets of the company) is Mr Narong Men.' In fact Al Baraqa was not incorporated until 16 July 2008. It was not intended that the company would be the purchaser. Further, Narong Men was not just 'named within the company', but was the majority shareholder and chairman. The information was dishonest as to who would purchase the land from the vendor and was dishonest as to the role of Narong Men in the company. The Second Investment When Dr Dewji returned from Cambodia on 7 or 8 July 2008 he told Mr Banwaitt that completion had been put off until 28 July. He said the price need not be paid till then. He did not tell Mr Banwaitt that a contract had been signed and that Mr Banwaitt's money had been paid to Narong Men to provide a payment against the price. Mr Banwaitt thought that his money was still safe in Dr Dewji's ANZ Bank account. I refer to Mr Banwaitt's email to his bank of 28 July 2008. Dr Dewji intentionally gave Mr Banwaitt a false picture. If Mr Banwaitt had known the truth, he would have been horrified. Later in July Dr Dewji came to Mr Banwaitt's house. He said that they were still short of money. He asked for further help. Paragraph 23 of Mr Banwaitt's witness statement says both that he thought his money was safe and that he felt under pressure to pay more to safeguard his investment. I am satisfied that he was very concerned by things not going to plan, and that he would not have invested more unless he had felt he needed to protect what he had already paid. He may not have been thinking clearly. It would certainly have been in Dr Dewji's interest to let him think that if the deal did not go through the investors' money was somehow at risk, and I think it likely that this occurred. The pleaded case as to what Dr Dewji told Mr Banwaitt about the money still required when he asked him for more in the latter part of July 2008 was he was still short of some $3 million to complete. In cross-examination Mr Banwaitt said that he was told that it was $2 or 3 million. In fact, at this point Dr Dewji had received only Mr Banwaitt's $1 million and his own $506,816 (22 July). He would receive $3 million from Jardines in August. It was not until the latter part of August or September that Dr Dewji tried to drum up more investment. A statement in July that he was $3 million or $2 million short was a lie. Overall I am satisfied that Dr Dewji materially misrepresented in the ways which I have set out the investments which he was inviting Mr Banwaitt to make. He did so intentionally with the aim of making the investments seem safe when they were far from safe. Mr Banwaitt was induced to pay over his moneys by reason of them. Had he known the truth in late June – the first payments, or in the latter part of July – the second payments, he would not have paid. Mr Banwaitt may have a right to rescission. He has, alternatively, an undoubted right to damages for the tort of deceit. A Duty of Disclosure Mr Cullen submitted that the relationship between Dr Dewji and Mr Banwaitt was such that Dr Dewji owed Mr Banwaitt a duty of disclosure like that owed in a contract uberrimae fidei . He referred me to Chitty on Contract, 31st edition, paragraphs 6-170,171 and to the judgment of Briggs J in Ross River Ltd v Cambridge City Football Club Ltd [2008] 1 All E R 1004 commencing at paragraphs 196 and 197. Mr Lloyd did not accept that a duty of disclosure arose in the facts here, but neither did he dispute it. I accept that a duty of disclosure arose because Dr Dewji was the orchestrator of the venture, was inviting Mr Banwaitt to join and persuading him to do so, and he knew that Mr Banwaitt was totally reliant on him as Mr Banwaitt said at the time on the golf course and in his email of 1 July 2008. This way of putting it is perhaps the belt to the braces of the case in overt misrepresentation. As the history and my consideration of the case in misrepresentation show, the duty of disclosure was broken at every turn. Rescission Mr Cullen put as Mr Banwaitt's primary case the case for rescission of the agreement or agreements which Mr Banwaiit had made with Dr Dewji for the investment of his moneys. Repayment of the monies would follow. Mr Banwaitt did not rescind the agreements until his amended particulars of claim. Mr Stephen Lloyd submitted on behalf of Dr Dewji that Mr Banwaitt has affirmed the contract and had lost his right to rescission. A right to rescission will be lost 'if the representee, having discovered the misrepresentation, either expressly declares his intention to proceed with the contract, or does some act inconsistent with an intention to rescind the contract' – Chitty, paragraph 6-129. Mr Lloyd did not identify any particular acts of affirmation after July 2008. Lapse of time is capable of indicating affirmation: Chitty, paragraphs 6-132, 133. The short answer here is that in important respects Mr Banwaitt never discovered the truth until the trial. Thus he did not know the position as to what other investors there were in June and July 2008. He did not know that there was no money at risk paid by other investors when Dr Dewji first approached him. He did not know the truth about the $250,000 deposit supposed to have been paid. He did not know how far from back-to-back the situation had been in 2008. The claim for rescission of the agreement therefore succeeds and Mr Banwaitt is entitled to the return of the sums he paid. Damages If rescission was not open, then Mr Banwaitt could fall back on his alternative claim for damages. Mr Lloyd submitted that I should not decide any issue as to damages until I had delivered my judgment on liability and heard further argument. I do not think that is necessary. Mr Cullen submitted that the claim for damages was straightforward in that Mr Banwaitt had paid his money and lost it: he had got nothing. Mr Lloyd submitted that Mr Banwaitt has an investment which has a value. Mr Cullen submitted that that had not been pleaded. In my judgment Mr Cullen's submission as to loss is right. While Dr Dewji has rights against Narong Men, it was not suggested that Mr Banwaitt has rights against him, and no attempt was made to put a value on any such rights. There is no evidence that Mr Banwaitt has acquired any rights in the land purportedly sold by Tan Meng or any part of it, and again no attempt was made to put any value on it. Mr Banwait may have shares in Al Baraqa – the only evidence is the dubious share certificates, but there is no evidence that the shares have any value: Al Baraqa owns nothing: it was to be the vehicle to receive the proceeds of sale of the land. The situation here is not equivalent to that of a person who buys shares in a company following a misrepresentation and the shares turn out to be worth less than they should be but have a value. Here Mr Banwaitt has suffered loss in the sums that he paid. Other Claims I record that Mr Banwaitt also advanced cases in negligent misrepresentation, breach of contract, breach of trust and breach of a duty of care. In view of my conclusions as to fraudulent misrepresentation, negligent misrepresentation does not arise. The case in breach of contract was, in summary, that Dr Dewji contracted with Mr Banwaitt that Mr Banwaitt's money should be used solely to purchase the identified land through Al Baraqa and with a back-to-back arrangement with a purchaser in place. The claim in breach of trust was that this was a case where money had been paid for a specific purpose, citing the first ground of decision in Twinsectra Ltd v Yardley [2002] 2 AC 164 . The case in relation to duty of care was that, if Dr Dewji was not under an absolute duty in contract as to the use of the money, he at least was under a duty to exercise reasonable care as to its use, which in the circumstances he did not do. My conclusion in favour of Mr Banwaitt in relation to misrepresentation and rescission mean that these do not require consideration. Paragraph 25 of the amended particulars of claim asserted that Dr Dewji was a trustee of the benefit of the orders of the Phnom Penh court for repayment. Mr Cullen stated that if Mr Banwaitt succeeded on rescission, this fell away. Mr Banwaitt had originally suggested that the moneys he had paid were a loan to Dr Dewji. This was rightly not pressed at the trial. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII