Case No: HC11C01448
Neutral Citation Number: [2012] EWHC 1377 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Rolls Building
Royal Courts of Justice
7 Rolls Building
London EC4A 1NL 

Date: 23rd May 2012 
Before:

MR JUSTICE VOS
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Between:

	(1)	The Governor and Company of the Bank of Ireland
(2)	Bank of Ireland (UK) PLC	Claimants	
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	(1)	Syed Asalat Shabbir Jaffery
(2)	Pritpal Gill (aka “Raj Gill”)	Defendants	

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Mr Neil Kitchener Q.C. and Mr Jamie Goldsmith (instructed by Mishcon de Reya LLP) appeared for the Claimants

The 1st Defendant did not appear until 2nd April 2012, after which he appeared in person

The 2nd Defendant appeared in person

Hearing dates: 21st to 23rd, 26th to 28th and 30th March 2012, 2nd to 4th, 17th to 19th, 23rd to 25th, 27th and 30th April 2012, and 1st to 3rd May 2012
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Judgment
Index
Section heading	Para	
Introduction	1	
Chronological background	15	
The terms of Mr Jaffery’s Employment Contract	136	
The Code of Conduct	137	
Mr Jaffery’s pay and bonuses 	138	
Issues	140	
The Bank’s witnesses	154	
The Defendants’ witnesses	219	
Mr Jaffery’s evidence	220	
Mr Gill’s evidence	256	
The other witnesses for the Defendants	284	
Legal principles	286	
Discussion of the issues to be decided	296	
Existence of fiduciary duties	297	
Breach of fiduciary duties	302	
Causation occasioned by breaches of fiduciary duty  	354	
Breach of Contract	363	
Deceit	366	
Forfeiture	370	
Dishonest assistance	374	
Bribery	388	
Transfer	394	
Conclusions	407	

Mr Justice Vos:

Introduction
1.	The first Claimant, the Governor and Company of the Bank of Ireland (“GCBOI”) is an Irish corporation, established by Royal Charter in 1783, which has carried on business as a bank in Ireland and the UK.  The second Claimant, Bank of Ireland (UK) PLC (“BOI PLC”) is the English public limited company to which the GCBOI transferred its UK business under a banking business transfer scheme (the “Scheme”) promoted under Part VII of the Financial Services and Markets Act 2000 in November 2010.  The first and/or second Claimants are referred to in this judgment, where there is no importance in the distinction between them, as the “Bank” or the “BOI”.
2.	This is primarily a claim for breach of fiduciary duty brought by the Bank against one of its erstwhile senior executives, Mr Syed Asalat Shabbir Jaffery (“Mr Jaffery”), who was summarily dismissed from his employment on 6th May 2011.  After the proceedings were first issued, the Bank obtained a Norwich Pharmacal order against Mr Pritpal (otherwise known as “Raj”) Gill (“Mr Gill”), who was known to the Bank as the agent for several of its customers, and was close to Mr Jaffery.  Mr Gill was, thereafter, swiftly joined in as second Defendant to answer claims of dishonestly assisting Mr Jaffery in breaches of fiduciary duty and of bribery.
3.	The Bank’s key allegations against Mr Jaffery are that he put himself in a position where his personal interest conflicted with his duty to the Bank, that he had secret interests in projects financed by the Bank’s lending, that he took bribes, and concealed his alleged wrongdoing from the Bank.
4.	The background to the proceedings is formed by a series of loans made by the Bank to customers connected with Mr Gill after May 2007 (the “Loans”).  These customers have been called the “Raj Gill Connection Customers” (“RGC Customers”).  They were BVI registered companies, ultimately owned by Panamanian trusts.  All of these entities were introduced to the Bank by Mr Gill.  Perhaps the central issue in the case is whether Mr Jaffery had any beneficial ownership interest in any of RGC Customers.  The Bank’s case is that Mr Gill and Mr Jaffery had interests in the RGC Customers.  The Defendants’ case is that the RGC Customers are all ultimately owned by one or other of Mr Gill’s sisters, Mrs Mandip Kaur Sumby (“Mrs Sumby”), and Ms Jastender Kaur Gill (“Ms Jastender Gill”).
5.	Alongside this main issue, there are suggestions in some of the papers and statements that interests in RGC Customers were in fact held or to be held by one or more of the following additional people or entities connected with them: (i) Mr Haji Kanji (“Mr Kanji”), the head of the Harry Mason group of companies; (ii) Mr Anoup Treon (“Mr Treon”), the head of the European Care group of companies; (iii) Mr Jaffery’s brother, Mr Syed Altaf Jaffery (“Altaf” or “Mr Altaf Jaffery”); (iv) Mr Jaffery’s sister, Ms Saeeda Akhtar Jaffery (“Ms Saeeda Jaffery”); and (v) Mr Jaffery’s nephew, Mr Syed Adnan Jaffery, who sadly died in January 2011 (“Adnan” or “Mr Adnan Jaffery”).
6.	The case concerns a number of loans that came to fruition and a number of prospective loans that were never made.  The ones that came to fruition were loans made as follows:  
i)	A £2 million loan (of which £1,997,000 was drawn down) to Backford Inc (“Backford”) in May 2007 to facilitate a release of equity from an unencumbered property at Worcester Park, Surrey (the “Backford loan”).
ii)	A £3.9 million loan (of which £3,417,000 was drawn down) to Telkin Investments Ltd (“Telkin”) in August 2007 to purchase 7 residential units in Hendon, London to develop into a care home (the “Hendon loan” or the “Telkin loan”).
iii)	A £2.08 million loan to SIG I Limited (“SIG I”) in June 2009 to purchase a site at Dividy Road, Stoke (the “Stoke site”) to be developed into care homes (the “first SIG I loan”).
iv)	A £0.72 million loan to SIG II Limited (“SIG II”) in June 2009 to assist in the purchase of 24 apartments on the Stoke Site (the “SIG II loan”).
v)	A £6.864m loan (of which £5,960,000 was drawn down) to SIG I in around May 2010 to develop the Stoke site into care homes (the “second SIG I loan”).  The first and second SIG I loans and the SIG II loan are referred to together as the “SIG loans”.
vi)	A £1.694m loan to Berkeley Realty Ventures Limited (“BRVL”) in November 2009 (the “Hornchurch loan”) to refinance an existing HSBC facility and to release equity to repay refurbishment costs on a property owned by Ms Jastender Gill, and occupied by Mr Gill and his family, at 4 Parkstone Avenue, Hornchurch, Essex (the “Hornchurch Property”).
7.	The prospective loans that were never in fact made were as follows:-
i)	A proposed £11.8m loan to SIG III Limited (“SIG III”) in February 2010 to purchase the Nightingale nursing homes in Preston, Norfolk and Coventry (the “proposed Nightingale loan”).
ii)	A proposed £1.3m loan to BRVL in April/May 2011 to purchase the Bombay Bicycle Club group (“Bombay Bicycle Club”) from V8 Gourmet Ltd (“V8”) (the “proposed Bombay Bicycle loan”).
8.	As will appear from the chronological background that I shall set out in due course, Mr Jaffery applied for an adjournment on the first day of the trial, on the grounds of his ill health.  I declined to grant a further adjournment (two having already been granted) for the reasons expressed in my judgment of the 21st March 2012, which I shall not repeat here.  Suffice it to say, however, that although Mr Jaffery was not represented and did not ultimately attend the trial until 3rd April 2012, he did enter into a protracted email communication with the court (copied to the other parties), so that court was always kept informed as to Mr Jaffery’s submissions and views on developments in the trial from day to day.  From 3rd April 2012, Mr Jaffery attended court and took a full part in the trial as a self-represented litigant.
9.	Mr Gill also represented himself at the trial. He cross-examined the Bank’s witnesses that were called in Mr Jaffery’s absence, but once Mr Jaffery began to attend, Mr Gill deferred to Mr Jaffery allowing him to take the lead in cross-examining the two important witnesses that were then called, Mr Mark Cunningham (“Mr Cunningham”), and Mr David McGowan (“Mr McGowan”).  The absence of Mr Jaffery at the start of the trial meant that some elements of Mr Jaffery’s case were, necessarily, not put to the Bank’s other witnesses.  Whilst this was unfortunate, it was in the circumstances unavoidable.
10.	I should record that, despite the strong feelings running in this case on all sides, both self-represented Defendants conducted themselves in a moderate, courteous and proportionate manner.  
11.	The burden of Mr Jaffery’s defence was that he had never had any interest in the RGC Customers, even though there had been discussions about the possibility that he might take such an interest at various times towards the end of his career at the Bank.  By that time, Mr Jaffery’s case was that the Bank had decided that he was no longer wanted, and he had been told by Mr Cunningham, in essence, to find another job, and that he could further his own business opportunities in the meantime.  Mr Jaffery said that various people at the Bank were fully aware that he was close to Mr Gill and the RGC Customers, and that he never took any bribe or improper benefit from them.  Mr Jaffery alleged that this case was initiated by the Bank against him as an act of vengeance for his whistle-blowing activities at the end of 2010, which resulted in a letter of concern being written by Lord Ahmed of Rotherham (“Lord Ahmed”) to the Chancellor of the Exchequer.  
12.	Insofar as he was able, Mr Gill supported Mr Jaffery’s case.  He also denied that he had any interest in the RGC Customers, and claimed that he acted only as an agent for them.  He vehemently denied paying any bribes or providing any benefits to Mr Jaffery for any assistance Mr Jaffery had given in relation to the Loans made to the RGC Customers.  Both Mr Jaffery and Mr Gill suggested that the Bank’s expenditure on this action in terms of time and costs was wholly disproportionate to the losses claimed.  They believe that the litigation is being used as an instrument of oppression against them.  I shall deal in due course with the specific allegations made, but suffice it to say at this stage that the Bank has not sought to establish that it has suffered any loss thus far as a result of the loans made to the RJC Customers, though it does say that it has made a provision of £2.9 million in case such losses should occur in the future.
13.	A peripheral issue of some importance developed during the interlocutory hearing preceding the trial and at the trial itself, concerning the provenance of certain documents found on an iMac desktop computer (the “iMac”), which was at one stage located at Mr Jaffery’s home, but was ultimately handed to the Bank after the commencement of these proceedings by solicitors acting for Mr Kanji.  Mr Jaffery denied responsibility for any of the documents found on the iMac, which he said was used by his nephew, Adnan, and by his wife, Mrs Ruqaiyah Jaffery (“Mrs Jaffery”).
14.	It is necessary to set out the chronological background to the issues that I have to decide at some length, since the relevant events cover more than 6 years.  I have tried to limit the coverage of events and documents to those that turned out to be strictly relevant.  The documentation was, as Messrs Jaffery and Gill repeatedly complained, very extensive.  I can say, however, by way of comment, that I thought both Defendants coped extremely well with the volume of documentation and the complexities raised by that documentation.
Chronological background
15.	On 21st February 2005, Mr Jaffery was employed by the Bank.  His contract of employment was signed by a Mr Lynch on behalf of GCBOI on 9th June 2005, and by Mr Jaffery on 10th October 2005 (“Mr Jaffery’s Employment Contract”).  I shall deal later with the terms of that contract. 
16.	On 25th September 2005, Mr Jaffery married his wife, Mrs Jaffery.
17.	On 5th July 2006, Mr Nigel Carter (“Mr Carter”) of Landmark Fiduciare SA (“Landmark”), a fiduciary agent in Geneva, and a Mr John Gogol executed a Declaration of Trust on behalf of the General Trust Company SA as the original trustee of the Berkeley Trust, a discretionary trust, with Ms Jastender Gill as the only named beneficiary.
18.	On 1st September 2006 two signatories executed a Declaration of Trust on behalf of the General Trust Company SA as the original trustee of the Gift Trust, a discretionary trust, with Mrs Sumby as the settlor and only named beneficiary.
19.	On 20th December 2006, Mr Jaffery was promoted by the Bank to the executive position of Head of Business Banking and Mid-Corporate Banking for London and the South-East of England.
20.	In or about December 2006, Mr Jaffery introduced Mr Gill to the Bank as a prospective customer.
21.	On 1st March 2007, Mr Jaffery wrote a credit reference for Mr Gill on the Bank’s notepaper addressed to a Mr Tony Krull saying that he (Mr Gill) was considered respectable and trustworthy for transactions up to £10 million, and “with respect to the specific Car Dealership purchase, we further confirm our agreement to provide full financial assistance to conclude the purchase”.  The Bank alleges that what he said was fabricated, and that it evidences an improper relationship between Mr Jaffery and Mr Gill.
22.	On 27th March 2007, Mr Jaffery emailed the Bank saying that he had read the Bank’s Code of Conduct and that he intended to remain in compliance with it.
23.	On 23rd May 2007, the Bank’s credit application for the Backford Loan was signed by Mr Paul Theaker (“Mr Theaker”), who allocated zero value to the “[u]nsupported personal guarantee from [Mr Gill] limited to £370,000”, and said that the shareholder in the owning company was Eaux Vives Holdings Ltd (Swiss) and that the beneficial owner was “[Mr Gill] and family”.
24.	On 24th May 2007, Mr Ian Hawthorn (“Mr Hawthorn”) approved a £2 million loan to Backford to facilitate an equity release against the property in Worcester Park, Surrey.
25.	On 29th May 2007, the Bank’s credit application for the Backford and Hendon loans signed by Mr Theaker and Mr Irfan Qadir (“Mr Qadir”) allocated zero value to the “[u]nsupported personal guarantee from [Mr Gill] limited to £290,000”, and said that the beneficial owner was “[Mr Gill] and family”.  Under “interest cover” it is recorded that although the loan is clearly outside policy, “this is mitigated in part by the personal guarantee of £290K … and the status of the borrower”.  The borrower is said to be known to Mr Jaffery for 5 years (and highly regarded by him), and to estimate his net worth at £60/70 million but to be reluctant to expand further.  Under the heading “[probability of default] Assessment”, the application says that the investment quality is high as the “borrower/Raj is considered an extremely shrewd investor who has proven his ability to buy and sell commercial and residential property where there are angles to make good returns. He has undoubted integrity and is vouched for by [Mr Jaffery].  Overall he is considered a good second tier player in this market”. 
26.	Also on 29th May 2007, Mr Theaker emailed Mr Martin Williams (“Mr Williams”) attaching the Hendon application and saying “Would you be able to look at this today in Bryan’s [Mr Bryan Baldrey] absence … as [Mr Jaffery] is insisting it goes to [Credit London] today”, and commenting: “It is a bit stretchy but has both Bryan’s and [Mr Jaffery’s] support”.
27.	On 30th May 2007, Mr Roberto Francioni (“Mr Francioni”) approved a £4.5 million loan to Telkin to purchase 7 residential units in Hendon, London.
28.	On 7th June 2007, Mr Gill provided the Bank with a net asset statement showing that he had net assets of £21.8 million, an income of £1.5 million per annum, and expenditure of £700,000 per annum.
29.	On 18th June 2007, £1.997 million was drawn down on the Backford facility.
30.	On 6th August 2007, the Bank granted the Telkin loan facility to Telkin in the sum of £3.9 million.
31.	A document found on the iMac which was created on 12th August 2007 and last saved on 21st October 2007 is entitled “Raj/ Syed To Do List” (the “To Do List”).  It has details of the “Hendon Deal”, the “C+ Deal”, the “Land Bank Deal”, and the “Palace Street Deal”.  It refers to shares of each of Mr Gill, Mr Treon and Mr Kanji in these projects, and also to “Syed”, “Altaf”, “Adnan” and “SJ” in the context of some of these interests.  There is a dispute as to whom the references to “Syed” and “SJ” refer.  The document refers to the “Hendon Deal” as being 40% Mr Gill, with 10% of that for “Syed”, and the note: “No option agreement etc for this deal between Syed and Raj – personal understanding only”.  Under the heading “Key issues to be highlighted/ agreed”, the To Do List says: “1. Land Bank stage 1 & 2  - NO formal agreement/ option between SJ and Raj. Profits disbursed as they occur. Stage 3 – to go through trust officially …  SJ/Raj to formally agree that above is their start point and understanding”. 
32.	A document found on the iMac last saved on 19th August 2007 shows a structure chart with Mrs Sumby at the top as the settlor and beneficiary of the Gift Trust, holding Excalibur Realty Limited (said to be “Raj 100%”), holding Berkeley Group Investments Ltd (said to be “Raj 100%”) (“BGI”), holding Berkeley Enterprise (said to be “Raj/SJ 50/50), and BV 2 Cap (said to be “Raj/ Anoop 50/50”), holding the Hendon Project, the “Land Bank Deal”, and “Peakmill International Limited 1010 Great West Rd C+ Deal”.
33.	Between the 24th August 2007 and 29th October 2007, £3.417 million was drawn down on the Telkin facility.
34.	On 15th October 2007, Mr Jaffery emailed Mr Bryan Baldrey (“Mr Baldrey”) concerning a new proposal in relation to the LandBank project (£10.88 million) from Mr Gill, describing him as an existing customer of the Bank and saying that he estimated Mr Gill’s net worth at £45 million of which £25 million was in liquid funds.
35.	On 16th October 2007, the Bank amended the Telkin loan facility to £3.4125 million.
36.	An undated 3-page document headed “Stoke Deal” (the “Stoke Deal document”) found in Mr Jaffery’s office, and said to originate from late 2007, considers the profit to be made from the Stoke site and mentions a share split of 33% to each of “me”, “Raj” and “Anoop”.  The note referred to the “Deal On Offer To You [Mr Kanji, according to the Bank]”, and continued: “Total cash required day 1 = £1.65M.  This will go in as directors loans, and be repaid first from profits.   ∙ Raj will put in £1.2M cash (73% of cash)  ∙  Anoop – nil cash but will provide pre lease, and assistance to get planning.  ∙ Me to inject £450k of cash (27% of cash).  I have £50k cash, but need £400k to get the deal off the ground.  I will offer you: You will hold all of my 33% shares.  They will be held by Fullwood Investments [accepted to be Mr Kanji’s company].  We will split 20% for you, and 13% me.  
[**] You pay £400K cash for the 20%.  On the figures in this paper your 20% shares should be worth £1.15M MINIMUM or up to a MAXIMUM of £1.51M.  On top of this you will get back your £400K initial investment.  All to be paid within 12 months.  I know you are short so I have arranged a short loan on my house etc, and will put up £150k day one, and you to chip in £300k.  We can square off once you get your stuff sorted in May.  Without you I cannot take part in this deal at 33%.  Raj does not want you in the deal as he does not want to put so much in for less than 33%. I would rather give you 20% [than] him. We need to move quickly and I have moved my cash to Anoops V2 capital today to allow the exchange”.  The part of the Stoke Deal Document that I have recorded above after the “[**]” is the third page.  Mr Jaffery denied that he had prepared the first 2 pages, but said that they were the work of Adnan or Altaf.  Mr Jaffery accepted, however, that the third page was created by him, but in 2010, rather than in 2007.
37.	On 6th November 2007, Mr Jaffery emailed Mr Ritchie Boucher (“Mr Boucher”, the Chief Executive Officer of GCBOI) in relation to a property in which Mr Gill was interested close to Buckingham Palace saying that he had had a very close look at the deal, and he thought it was one that they should get off the ground at the Bank.  Mr Jaffery said that Mr Gill and his family were “worth north of £100m”, they owned their own project management and architect firms, and their HQ was in Berkeley Square: “[i]n short he is a good guy, and one I will be adding my support to through GCC …”.
38.	Also on 6th November 2007, Mr Boucher responded to Mr Jaffery: “I will advise that our view of Mr Gill is that he is a very capable man, whom we are keen to support”.
39.	In November 2007, the Bank appointed administrators over the non-performing borrower, MDL (Stoke) Limited, which had owned the Stoke site.
40.	Shortly before 10th January 2008, a document entitled “1st Board Meeting” was created.  It was found in Mr Jaffery’s office, but he denied creating it.  It dealt with the shares in the C+ project and the Hendon project, indicating that 33% of the shares in C+ (concerning a property at 1010 Great West Road) were to be formally allocated to each of Mr Treon and Highbury (said by the Bank to be Mr Jaffery’s family’s offshore trust), and that 30% of the shares in the Hendon project were to be transferred to Mr Treon.
41.	A document found on the iMac computer created on 14th January 2008, according to the metadata by Mr Jaffery, refers to a “good meeting” the previous night.  In relation to the Land Bank project, the writer says that £1m will be released to each, and “out of my £1m I wish formally to pay back funds to you that I owe …”.  There follow blank sums to reflect “my third cash input to the C+ deal” and “ALL costs incurred in relation to the Highbury Trust set up etc” and “50% of ALL your personal ACTUAL (if any) costs on the Hendon deal”.  It continues “What ever the true total here is I pay you formally from the above release.  So that money is not a quazi loan its yours not to be paid back.  The balance I retain, and provide you with a loan as required  … … In essence it will put us back to square one. You £1.5.. me £0.5m but done on a proper basis”.  Under the heading “Altaf”, the document says that “[h]e is meeting Nigel [Mr Carter] on Tuesday” and “Pls let Nigel know that subject to the release coming from Land Bank etc and payment of his share of the cash on C+ they he should confirm/execute share issue (33% C+) with Bank T/f form to him.  Can he tell Altaf this is what is happening?? … Raj this is important to me, and pls do not let it slip during the days stuff”.  Mr Jaffery denied, despite the document’s contents, that this was a document that he had written to Mr Gill.  Mr Gill did not deny that it was a document that someone had written to him.
42.	On 13th March 2008, Mr Jaffery emailed the Bank saying that he had read the Bank’s Code of Conduct and that he intended to remain in compliance with it.
43.	On 22nd August 2008, Mr Jaffery allegedly created a document on the iMac computer entitled “New House Project”, referring to “Adnan style covings”, and recording the total cost of the project at £2.8M, value at £3.3m, and under the heading “FUNDS IN”: “Me now £300k  Dividy Rd £1.5m  Mortgage £500k  Other?”
44.	On 3rd September 2008, Mr Stephen Shakespeare (“Mr Shakespeare”) submitted the credit application for the approval of what became the purchase part of the SIG I loan and the SIG II loan, and for approval in principle of the development part of the SIG I loan.
45.	On 18th September 2008, the Bank’s credit opinion in relation to the SIG I proposal, signed by Mr David Stokes (“Mr Stokes”) and approved by Mr Harry McDaid, included the following: “Distressed site … currently in the name of MDL Stoke Ltd. with debt o/s of £4.885m and provision of £2m … ARU [Asset Recovery Unit] feel they would be pushed to achieve a sale at £1m+ given current market conditions and blighted nature of site, should the current proposal … fall away.  SIG is a newco offshore SPV whose ultimate beneficiary is Mandip Sumby, with [Mr Gill] (brother) managing his [sic] UK interests”. 
46.	In September 2008, Mr Jaffery created a document entitled “Anger man” (the “Anger Man document”) saying that Mr Gill, Mr Treon and Mr Jaffery “have an agreement to split everything we do 1/3 each”.  According to Mr Jaffery, the Anger Man document was (as it appears to be) directed at his wife at a time that they were having marital problems.  Mr Jaffery says that he exaggerated his financial interests and prospects, as many people might do to their wives.  
47.	On 16th February 2009, Mr Jaffery emailed Mr Baldrey in relation to “Dividy Road and Newquay” saying that he was happy to sign off the change in RAROC (Risk Adjusted Return on Capital) and that he should please “take this as my agreement to waive fees”. 
48.	On 18th March 2009, Mr Jaffery emailed the Bank saying that he had read the Code of Conduct and that he intended to remain in compliance with it.
49.	On 16th April 2009, Mr Shakespeare submitted a second credit application for  approval in principle of the development part of the SIG I loan.
50.	On 17th April 2009, Mr Jaffery emailed Mr Mark Cawood asking him to note that the Dividy Road, Stoke transaction carried his full support.
51.	At or about the end of April 2009, a document entitled “Stoke Deal” seems to have been created (the “April 2009 Stoke Deal document”).  The document was found in Mr Jaffery’s office after he was dismissed.  Mr Jaffery’s case is that it was created by Adnan or Altaf.  The document says that Mr Kanji has put £300,000 in cash into the Stoke Deal, and that SIG I is owned by Mr Gill.  The proposal (seemingly to Mr Kanji) suggests that Mr Kanji would get 15% of the equity in the Stoke Deal by 30th May 2009, and that “I will get another 15%”.  The document concludes with some words on the Hendon deal saying “[w]e have now decided to move back into the council for planning on the Hendon site”.
52.	On 27th May 2009, Mr Jaffery entered into a written agreement with V2 Capital Limited (Mr Treon’s company) for a loan facility of up to £100,000 bearing interest at 3% per annum.  Mr Jaffery said that this loan was drawn down, and was repaid.
53.	In June 2009, Mr and Mrs Jaffery completed the purchase of a flat at 33 Gloucester Walk, London W8 (“33 Gloucester Walk”) with partial funding from the Bank. 
54.	On 26th June 2009, £2.08 million was drawn down from the SIG I loan and £0.72 million was drawn down in respect of the SIG II loan.
55.	On 5th October 2009, Mr Shakespeare submitted the credit application for the Hornchurch Loan to BRVL.  The shareholder is said to be “TBA” with ultimate beneficiary “Jastender Gill (sister to [Mr Gill])”.  The application is based on Mr Gill paying rent for his occupation of the Hornchurch Property at £90,000 per annum, when the market rent is £54,000 pa, and Mr Gill being a key family member when it comes to management of the family assets/ businesses, and says that Mr Gill estimates his net worth at c £20 million.
56.	On 9th October 2009, Mr Duncan Rowland (“Mr Rowland”) signed off the credit opinion on the Hornchurch Loan on the same basis as the application.
57.	In October 2009, Mr Jaffery was further promoted to Head of Business Banking Great Britain (i.e. covering the whole of the UK except Northern Ireland).  This was an important promotion, which Mr McGowan accepted was a tap on the shoulder.
58.	At around this time, Mr Jaffery contends that he had a discussion with Mr Cunningham, the Bank’s Head of Business Banking for the UK and Ireland, based in Dublin, at which Mr Cunningham allegedly first made it clear that his (Mr Jaffery’s) time at the Bank was limited and that he could pursue other business opportunities.
59.	On 22nd December 2009, Mr Jaffery wrote a credit reference for “BGI” to Goldkorn Mathias Gentle confirming that “facilities of £40,000,000 … are available for the purpose of Commercial Property Investment”.
60.	On 11th January 2010, Mr Shakespeare signed a credit application in relation to the proposed Nightingale loan, which refers extensively to Mr Gill and his position as agent for Mrs Sumby (C2/4/324E), and includes “[Mr Gill] estimates his net worth at c£20m per A&L statement dated April 09. From [Mr Jaffery’s] knowledge of [Mr Gill] this is considered accurate”.  Mr Jaffery’s conclusion said that he had “known principle [Mr Gill] for 10 years+, and consider him to be competent to run a group of this size and complexity”.
61.	On 12th January 2010, the Bank’s credit opinion signed by Mr Ronan Cleary included the following: “[Mr Gill] purchased the distressed site … at Dividy Road, Stoke from the administrator for £2.8m, with BOI debt o/s of £4.885m and provision of c£2m, at above book MV (estimated at £1m at the time)”.
62.	On 20th January 2010, Mr Gill created a document on his computer headed “Dividy Road”, and under “Key Actions To Date”: “Part Initial Cash (£396k)   s” and “Funding agreed, and signed off    s/Raj”.  The “Points for Discussion” include “[s]ignificant cash short fall needs to be plugged”.  Mr Gill says that “s” is Mrs Sumby, not Mr Jaffery.
63.	On 10th February 2010, Mr Stokes’s decision memorandum in relation to the Stoke project development finance (SIG II) indicated that it was to be a condition of the funding that “[e]quity inputs to the development finance @ £400k day 1, and £250k per quarter thereafter”.  The requirement for a £400,000 input was accepted by Mr Jaffery.  Mr Jaffery said that he chased Mrs Sumby for this money, and denied that he was ever going to provide the £400,000 himself.
64.	On 22nd February 2010, Mr Jaffery emailed the Bank saying that:-
i)	“I understand the code and how it applies to me and my duties”;
ii)	“I am, and intend to remain, in compliance with the Code”; 
iii)	“I am not aware of anything which I need to bring to the attention of Group management”; 
iv)	“If I become aware of anything, I will immediately bring it to the attention of Group management”; 
v)	“If I have any conflicts of interest, I have written approval from a GEC member or a direct report of a GEC member for them and the processes by which they will be managed”; and
vi)	“I do not have a beneficial interest, financial or otherwise, in a customer’s business; or if I do, I have written approval from a GEC member or a direct report of a GEC member”.
65.	Mr Jaffery alleges that, in March 2010, he had a meeting with Mr Cunningham, at which he “made it abundantly clear that [Mr Jaffery’s] future at [the Bank] was limited and that [Mr Jaffery] would be permitted to continue with [his] pursuit of other business opportunities and gradually plan [his] exit from the [Bank]”, and that Mr Jaffery should in return support the Bank’s representations about the extent of potential loan losses in the likely event that he were interviewed by the FSA.
66.	On 3rd March 2010, £34,981.79 was paid by “Berkeley Group” into Mr Jaffery’s account with Ryletts Residential in connection with 33 Gloucester Walk.  The Bank relies on this payment, which they say was never repaid, as a benefit received by Mr Jaffery from Mr Gill.
67.	On 10th March 2010, £10,000 was allegedly paid by “Berkeley Group” into Mr Jaffery’s account with Intelligent Interiors in connection with 33 Gloucester Walk.  The Bank relies on this payment, which they say was never repaid, as a benefit received by Mr Jaffery from Mr Gill.  Ultimately, the Bank’s case in respect of this payment does not seem to have been assiduously pursued.  Mr Jaffery says that it was repaid.
68.	By 15th March 2010, emails between Mr Jaffery and Mr Jim Davidson at the Bank indicate that the £400,000 of equity due from SIG II was overdue, and the date for receipt from offshore funds was extended to 8th April 2010.
69.	On 17th March 2010, a document entitled “Berkeley Care Group” was created and found amongst Mr Jaffery’s documents in his office.  Mr Jaffery’s case in his evidence was that the document was created by his brother, Mr Altaf Jaffery, and not by him.  Mr Jaffery said the document reflected a proposal.  The document said that Hendon, Stoke, 1010 Great West Road (C+) and Nightingale were owned 33% each by Mr Gill, Mr Treon and “XX”.
70.	In April 2010, Mr Adnan Jaffery wrote to Leigh Carr (a firm of Chartered Accountants acting for him) saying that he was due to receive approximately £700,000 from Mr Jaffery “on behalf of himself and the wider family to ensure I can settle my debts/affairs. As you know Dubai and East Africa did not go well, and I have lost money.  Please hold the monies to my order”.  The Bank alleges that this document is a fabrication or that Adnan was collaborating with Mr Jaffery.
71.	On 19th April 2010, Mr Gill sent an email to Mr Treon and the email address barkcare@googlemail.com (said by the Bank to be Mr Jaffery’s email).  In relation to the Stoke project, he said “we all now agree that you will seek to effect a sale of the investment to a fund … subject to price”.  In relation to his understanding of the proposal, he said: “[s]hareholding remains as previously agreed”.  Mr Jaffery said he did not recall this document, and Mr Gill said that he used the barkcare email for Adnan and Altaf, but, at this time anyway, sent emails to Mr Jaffery at his BOI address.
72.	On 20th April 2010, Mr Jaffery emailed Mr Saleem Sheikh (“Mr Sheikh”) at GSC Solicitors asking if he had any bridging contacts who could get him a £700,000 mortgage loan on 33 Gloucester Walk for a maximum of 15 months secured by a second charge behind the BOI, and saying: “Funder cannot be linked to [BOI] in any way … i.e. customer etc. etc.  I do not want any conflict of interest at all”.  Mr Jaffery denied that he wrote this because he was intending to use the money to invest in the Stoke project. 
73.	On 27th April 2010, Mr Jaffery emailed Mr Theaker saying that he was seeking the Bank’s agreement to allow a second charge over his flat at 33 Gloucester Walk: “I am going to raise some funds to purchase a retirement flat in Pakistan – No debt is available in Pakistan”.   Paragraph 45.3A.5 of Mr Jaffery’s re-amended Defence admits that this was not the case, but says that Mr Jaffery did not wish to discuss his nephew’s personal circumstances with his superiors, and the reason for the loan could have had no impact on its approval.  In his evidence, Mr Jaffery said that he knew that Mr Kidd would make trouble for him if he knew the truth.
74.	On 28th April 2010, Mr Jaffery emailed Mr Theaker to tell him that the lender on the second charge was “Pat Stead” who was lending £700,000, and that he wanted it drawn down “asap”.  At about the same time, Mr Jaffery wrote to Mr Pat Stead confirming that he was taking the £700,000 loan from him, which was to be repaid within 12 months of drawdown at 1.5% interest per month, and that the “repayment source will be either through sale of 33 Gloucester Walk property or from refinance of Nursing Home at Dividy Road Stoke.  A further letter of confirmation from Landmark the trustees for the Stoke deals is being sent under separate cover”.  Mr Jaffery denied that this memorandum showed that he was using the money to put into the Stoke project.  The loan of £700,000 was ultimately made to Mr Jaffery by City of London Group plc instead of by Mr Pat Stead.
75.	Also on 28th April 2010, Mr Theaker and Mr Baldrey recommended approval to Credit London of Mr Jaffery’s wish to register a second charge against 33 Gloucester Walk in respect of a £750,000 loan to purchase a “a home in Pakistan where funding is currently restricted”.  The memorandum said that “[t]he property comprises 5 bedrooms, and some land around it.  The property will be utilised by the borrower’s parents and eventually as a home for the borrower himself.  The borrower’s family own property in Pakistan (in excess of £1m in value) that would cover the cost of this purchase but this is taking time and therefore a 12-month bridge has been sourced at short notice in order to complete on the purchase”.  Mr Jaffery accepted in evidence that what he had told the Bank about the purpose of the loan was untrue.
76.	On 29th April 2010, Mr Sheikh of GSC Solicitors wrote to Mr Pat Stead saying that he was informed that the repayment source for the loan would be either through the sale of 33 Gloucester Walk or from the “sums arising in respect of a sale of a Nursing Home at Dividy Road Stoke”.  Mr Jaffery could not explain in evidence why Mr Sheikh had said that his personal loan might be repaid from the Stoke property.
77.	On 30th April 2010, Mr Gill sent a draft shareholders’ agreement entitled “Investment Agreement” (which was ultimately found in Mr Jaffery’s office) to Mr Kanji and his daughter Sabrin (“Ms Sabrin Kanji”) and to the barkcare@googlemail.com address (which, as I have said, the Bank contends was Mr Jaffery’s address).  Mr Gill had amended the draft from a previous version showing the shareholdings in the Hendon project as 60% Fulwood (Mr Kanji’s company) and 40% BGI, to “Fulwood 30%, BGI 40% 10% to be held for saj V2 capital [Mr Treon’s company] 30%”. 
78.	On 4th May 2010, Mr Jaffery emailed Mr Williams at the Bank saying that the funds (the £400,000 due on Stoke) had not come in that day, and that Mr Gill would email.  Mr Jaffery explained that Mr Gill was negotiating a reduced break cost for a rolled deposit, but that he (Mr Jaffery) had made clear that the Bank’s patience was wearing very thin.  If, as the Bank contends, it was Mr Jaffery who was providing the £400,000, this email would be a particularly vivid example of the conflict that Mr Jaffery was facing.
79.	On 4th May 2010, Mr Gill emailed Mr Shakespeare providing an excuse as to why the £400,000 due had not reached the Bank on the due date, namely that the Trust’s deposits had been automatically rolled over on a 90-day cycle.  He then said “I have privately collated the £400k however am reluctant to use this for a number of reasons, the most important being it has direct implications to the structure! And that leaves me personally with cashflow issues … My preferred route however is still directly from the trust … I am seeing a director at the Bank tomorrow in Zurich to see if they can break the deposit without incurring the current penalty fee they are seeking. The fee is substantial, c£250k, considering the amount due is £400k this is not easy to swallow…”.  Mr Jaffery said in evidence that Mr Shakespeare had told Mr Gill that he should not be providing the money, but that his sister should be doing so. 
80.	On 7th May 2010, Ms Sabrin Kanji sent a yet further amended version of the draft Investment Agreement to Mr Jaffery’s BOI email address.  The draft accepted the changes that Mr Gill had made, so as still to record that the shareholders in Telkin including 40% to “BGI” “with 10% to be held on trust for SAJ”.  Ms Sabrin Kanji seems to have added the word “with” and capitalised the initials “SAJ”.
81.	On 10th May 2010, Mr Jaffery sent a text to his wife in the context of the £700,000 second charge that he wanted to take on 33 Gloucester Walk saying: “50% of all shares I own [are] Adnan’s. He has injected almost £950k in the various ventures. The rest is mine and held in my [sister’s] name as I cannot hold, and in trust for me. In the event [of] my death a side letter already exists which transfers my stuff to [you]. This is held and will [be] automatically activated by Landmark. [You] need do nothing. Fyi. My [sister] is not aware of the arrangement, and nor were [you]”.  Mr Jaffery’s evidence was that this text message was not true, but was written to stop his wife refusing to let him take out the second mortgage loan of £700,000, which he said he needed to pay off Adnan’s debts.
82.	On 11th May 2010, Mr Jaffery emailed GSC solicitors giving them his authority to pay £400,000 to the SIG I account at the Bank “when funds are received”.  When it was suggested to Mr Jaffery that this document demonstrated that he knew his £400,000 was being used for the Stoke project, he responded as follows:  “I said to Mrs Sumby, "These funds are required to be put in.  Why are they not coming?  How quickly can they come?" and she assured me they were going to come from the breakage of her deposit.  I knew the funds were going to her.  I said to her, "Look, do you want me to speak to the Bank and tell them that I've got GBP 400,000 going to my nephew, you can use those?" She said, "No, the funds will go from where I said they will go" and I said "Okay, fine." So in the end those funds did not go to the Bank directly”.
83.	On 12th May 2010, Leigh Carr wrote to Mr Shakespeare and Mr Jaffery saying they had advised Mr Gill to hold on to the £400,000 payment to SIG I, as they were reviewing his tax position.  Mr Jaffery’s response to this document was to say that Mrs Sumby made the payment, and she told him that the funds came from UBS.
84.	On 14th May 2010, Mr Gill emailed Leigh Carr saying that they would receive £400,000 into their client account and that they should pay it to SIG III at the Bank.
85.	On 20th May 2010, Mr Adnan Jaffery wrote 2 letters to Leigh Carr addressed to “Ralph”.  The first asked them to pay £400,000 to “Mandip” “to clear my outstanding liabilities once and for all.  The venture did not go to plan, and I have agreed a sum of £400,000 to settle the matter”.  Adnan reconfirmed that “the funds from my uncle [Mr Jaffery] are a gift not a loan …” and “Mandip will be contacting you shortly with the details of her account so please accept this as my authority to disburse the funds as she instructs”.  The second was in similar terms, save that the balance of the £700,000 was to be paid to Mr Kanji, and to be disbursed on his instructions.  The Bank alleges that these letters are either fabrications or that Adnan was collaborating with Mr Jaffery.
86.	On 21st May 2012, Mr Jaffery emailed Mr Peter Belcher at GSC Solicitors saying that it was very important for him that funds are paid out early in the morning, and “[a]lso I am keen for the funds to be paid directly to my accountants Lea Carr. …”.  Mr Jaffery denied in evidence that this email showed that Leigh Carr were in fact his accountants.  He referred to the witness statements made by partners and employees at Leigh Carr (to two of which I have already referred) as support for that proposition.  Mr Neil Kitchener QC, counsel for the Bank, relied on this document as showing that Mr Jaffery mis-spelt the name of Leigh Carr in a characteristic way that gave a clue as to the authorship of other documents containing the same mis-spelling.
87.	On 24th May 2010, £400,000 was paid into the SIG III account at the BOI by the accountants, Leigh Carr.  In effect, the competing positions are that Mr Jaffery says that this payment was to pay off Adnan’s £400,000 debt to Mrs Sumby, whilst the Bank say that it represented Mr Jaffery’s investment in the Stoke project.
88.	On 24th May 2010, Mr Jaffery emailed the Bank saying that he had read the Code of Conduct and that he intended to remain in compliance with it, in much the same form as he had done on 22nd February 2010.
89.	On 26th May 2010, Mr Gill emailed Leigh Carr asking him to remit the balance of what came in less their fees to Mr Kanji.  The copy of the email in the bundle has £296,633.37 noted on it.  This sum is said by the Bank to be Mr Jaffery’s repayment of the bulk of the £300,000 owed to Mr Kanji in relation to a loan made by Mr Kanji to Mr Jaffery in respect of Mr Jaffery’s alleged earlier investment in the Stoke project. 
90.	Between 1st and 14th July 2010, Mr Jaffery paid £40,000 to Metis Equity.  This payment and a later payment of £10,000 in January 2011 were originally relied upon as being further breaches of Mr Jaffery’s duty.  Ultimately, however, the Bank did not pursue this peripheral claim.
91.	On 21st October 2010, Mr Jaffery sent Mr Gill a business plan concerning setting up a new bank focussing on the hotel and healthcare sector.  Again, this email and Mr Jaffery’s and Mr Gill’s later involvement with KPMG and Ernst & Young in relation to starting a new bank was originally relied on by the Bank as a breach of Mr Jaffery’s duty.  This contention too was not pursued.
92.	On 1st November 2010, GCBOI’s UK business was transferred to BOI PLC pursuant to Part VII of the Financial Services and Markets Act 2000.
93.	On 5th November 2010, £1.694 million was drawn down from the Bank on the Hornchurch loan.
94.	A document entitled “Independent Review of the case of Raj Gill” dated November 2010 compiled by CSD Global Ltd was found on Mr Gill’s computer.  It concerned a debt of £5 million allegedly owed to Excalibur Realty Limited by a Mr Baljinder Chohan.  The document describes Excalibur Realty Limited as a BVI trust “set up by Mr Gill as his trading entity”, and trading in the UK as “Peakmill International”.  Excalibur is said to own 4 UK nursing homes in South and the Midlands.  Mr Gill is said to use GSC Solicitors LLP, because his parents knew the senior partner, Mr Sheikh (as he accepted in evidence).  But Mr Gill said that the CSD Global document was wholly inaccurate and unreliable. 
95.	On 14th January 2011, Lord Ahmed met Mr Jaffery and Mr Qadir (then also employed by the Bank) at the House of Lords, at which meeting they made allegations that the BOI PLC was a ‘sham bank’ and was being operated from Dublin in breach of the FSA’s requirements.
96.	On 19th January 2011, Lord Ahmed wrote to the Chancellor of the Exchequer, the Rt. Hon. George Osborne MP, beginning: “I write to you following an article last Sunday in the Irish paper, Sunday Business Post, in which [the CEO of BOI] admitted that the information supplied to the government re Bank Bonuses was both incorrect and misleading.  It has been brought to my attention that there are more ‘hidden truths’ that specifically relate to the [BOI] Operation in the UK”.  The letter continued by saying: “A key understanding from the FSA before granting [the UK Banking licence to BOI PLC] was that the UK Bank was not a ‘sham’, and was not in effect being run from Dublin.  This entailed a new UK CEO and full management board separate from its parent in Ireland to be formed.  Due to internal rivalries/ politics this original plan has been compromised.  The key people running the business are now in the real world reporting into Mark Cunningham who is based in Dublin.  … It is … common knowledge internally amongst staff that the UK CEO [Mr McGowan] has no power, is completely sidelined, and in effect a puppet”.  At the end of a lengthy trial in this case, I found myself thinking that Mr Jaffery must have had a hand in drafting this lengthy letter.  It appears that the Chancellor sent the letter to both the FSA and the Irish Banking regulator.
97.	On 2nd February 2011, Mr Jaffery sent a private memorandum to Mr Boucher by email to his private secretary, Ms Helen Scott (the “2nd February 2011 memorandum”).  The contents of the 2nd February 2011 memorandum are important to the defence raised in this case, though it will be observed that they seem to relate to staffing issues and to the esteem in which the Bank holds Mr Jaffery rather than to any allegation that BOI PLC was a sham bank. Since so much reliance has been placed by the Defendants on this memorandum and the events at this time, I shall set the memorandum in its entirety as follows:-
“I completely understand, and did think long and hard before making the contact.  This is not something I have done lightly, and I recognise there could be repercussions for my career in taking this step.
I have no desire to cause problems for Richie, BoI, or anyone ells, and rely on him to ensure the confidential nature of this note is respected.  I do not want to resort to formal channels, whistle blowing etc and my heart felt desire is to deal with my issues in a discreet and constructive manner.
•	I have worked in Business Banking for 6 years based in Bow Bells House, London.
•	Most of that time I have reported through David McGowan.  Over the past several months through Mark Cunningham, and Michael Kidd.
•	I have seen a distinct change in the way issues are being dealt with by my new line.  In relation to me personally I feel I have been completely sidelined, but fully recognise that in itself is not a matter for Richie.  Rather than settling down the approach seems to have intensified over the past few months, to the point where I now feel completely uncomfortable with some of the things I am being asked to front off.
1. I have a solid member of staff at RM2 level who seems to have been targeted for investigation by GIA.  They came to me simply saying they wanted to look at a few files..but they were all for one staff member. [Mr Qadir] They were not particularly discrete, and camped on the actual floor all the other staff were based.  It became obvious to everyone one staff was the focus.  I asked Michael and Mark what the visit was about both said they had no idea.  I asked the GIA person who said he had told Mark of the visit and what it related to.  I cooperated but was completely kept out of the loop which left me facing off to staff?  To date I heard nothing back.
2. I have a member of staff RM1 level who has been absent over the past 12 months.  Upto 1 week before he was due to return I was asked, to what I believed was a routine conference call, to go through the return to work (Me, Michael, HR).  Without even the courtesy of mentioning anything to me prior to the call I was told to effect that persons redundancy.  I tried to point out a number of key reasons why this would not fly on a governance basis, but the clear view was I was to find a way to exit him.  In hindsight this did build on a conversation I had with Michael where his view was the staff member had some how mislead the Bank in his illness.  Since I was not, as it were “fully cooperating” he confirmed to me that I was not to speak to the staff member, and Michael was going to deal with matter directly.  He appointed GIA to investigate possible gross misconduct from a matter that was dealt with over 6 years ago.  The staff member is unaware of the background here, and I fear reputations risk is being created.
3. A further member of staff RM1 level is currently putting together a possible grievance.  He received a 5 – outstanding rating in his appraisal from me, but again without any notice some one has been appointed externally which takes in at least 50% of his role?  I was not informed, and again made to look very bad when the staff member raised the matter with me.
The above a senior people, and loyal.  This is not the way I have seen the Bank operate, nor the way I expect it to operate now regardless of the challenges we face.
				======================================================
•	On a personal note when the GB business was restructured as part of the wider “1 retail” project under Des Crowley, many of the exec team moved into different roles.
As part of this I was appointed to run Business Banking GB, and Michael NI.  Given Colorado was still ongoing these along with my direct reports were “interim appointments”.  I worked very hard and think I did a good job.
•	I was told by David that “it had been decided” that we now needed a UK Head.  I was the only exec level candidate in the UK team, and was already looking after two thirds of the UK business.  Other appointments at that level had been simply made…NAMA/SPG etc etc.  However I would need to go through a process with a none exec candidate – but that I would come second, as the decision had been made… did I still want to apply?  I was shocked, but took it on the chin.
•	Was then told that three of my units would move away from me…took that on the chin.
•	Was then told even though I was now in charge of growth area my involvement in the growth strategy would be minimal, bar an initial fact find.  Since then I have had not only NO input but no communication even informally from my line on the matter, took that on the chin.
•	I attend the SMT for the UK chaired by my boss Michael.  All the other unit heads represent their units alone.  However I have to bring my direct reports to the meeting too?  To the point now that each of my reports is asked to present and my name is not even on the agenda as a speaker.  This has been humiliating in front of my staff…I took that on the chin.
•	The 2011 provision exercise had no involvement from me… rather I was simply presented with “the view”.  My staff had ad hoc involvement, again this was humiliating but I took it on the chin.
•	Nearly a year later I remain “interim”?  Not sure how many other execs in Des team are in the same position?
Not sure how Richie would feel in my position?  I took all of this on the chin, but now that other staff are being targeted in this way I feel compelled to act.
Apologies for the length of this note…there are several more examples but I think he will get my point.  I was initially going to speak to Des but feel he will simply focus on defending Mark/Michael.  That said I respect Des, and if Richie wants me not to pester him and take up with Des I will.
Thanks.
Syed”
	The double line in the centre of the email is also said by Mr Kitchener to be a characteristic of Mr Jaffery’s documents, and to shed light on the authorship of documents that he denies creating.  Certainly, Mr Jaffery did not deny using the double line mechanism, and he told me how it was created – by typing a line of equal signs and then pressing ‘enter’.  It does not, however, seem to work in all versions of Microsoft Word.
98.	On 17th March 2011, Fladgate, solicitors acting for Mr Kanji, wrote to Mr Gill alleging that Mr Kanji had reached an agreement with “your colleague Syed Jaffery” whereby he would sell his entire shareholding in TI (Holdings) Limited [Telkin] to Mr Gill for £1.35 million.
99.	On 25th March 2011, Fladgate wrote again to Mr Gill demanding financial data in respect of the Hendon project.
100.	On 26th March 2011, Mr Jaffery created a document on Mr Gill’s computer entitled “HENDON”, which became known in the course of the trial as the “disaster scenario document”.  Mr Jaffery’s explanation for this document was that he prepared it because he feared being blackmailed by Mr Kanji and wanted to exaggerate the disastrous consequences of such a course of action.  He originally denied, but ultimately accepted, in evidence that it was written in response to Fladgate’s letter of the previous day.  The document started by setting out the “Absolute Facts”, including that “[Mr Kanji] has 30% shares”.  It continues by setting out in 3 columns “possible actions after letter from lawyers” under the headings “action”, “re-action” and “result”.   The actions were “[Mr Kanji] writes to Bank re [Mr Gill]”, “[Mr Kanji] writes to Bank re [Mr Gill]”, “[Mr Kanji] writes to Bank re [Mr Gill]”, “[Mr Kanji] writes to Bank re [Mr Gill] and [Mr Jaffery]”, “[Mr Kanji] takes [Mr Gill] to UK courts alleging fraud”, “[Mr Kanji] lawyers start any form of action against Company directly”, and “[Mr Kanji] reports transactions to [HMRC]”.  Amongst the result of each of these actions is the suspension and dismissal of Mr Jaffery.  In one case it is said that the result would be that Mr Jaffery would also be prosecuted due to his actions whilst a Bank employee.  The results noted also include, in relation to a complaint against Mr Gill: “… as a result of … relationship with [S]yed asked to re-bank all deals.  He [Mr Gill] can get family support to re-bank”, and in relation to a report to HMRC “[Mr Kanji] and [Mr Jaffery] personal relationship exposed. [Mr Jaffery] investigated, Bank advised of transaction between [Mr Jaffery] and [Mr Kanji]”.  The conclusion to the note is: “[n]et result of any actions taken by [Mr Kanji] in manner described above will result in all parties being asked to re-Bank or face administrator being appointed and [Mr Jaffery] being dismissed”.
101.	On 4th April 2011, the Bank approved a loan of £2.994 million to BRVL in connection with the acquisition of Bombay Bicycle Club.
102.	A structure document relating to the Gift Trust was found on Mr Gill’s computer attached to an email dated 12th April 2011 from Landmark to Leigh Carr.  Mr Gill then emailed Mr Ralph de Souza of Leigh Carr saying they needed to speak.  Mr Gill accepted in evidence that he could have produced the chart.   The structure chart shows the Gift Trust at the top with “Excalibur” below and “Berkeley Group Investments” below that, with V2 Capital (Mr Treon’s company) having a 33% shareholding in all investments, and Fulwood (Mr Kanji’s company) having a 30% shareholding in the Hendon project, and Berkeley Care Group Limited holding European Care’s Nightingale, Stoke and Hendon sites. 
103.	On 5th May 2011, Lewison J made a without notice search order and freezing order against Mr Jaffery, and an order an order against Mr Gill that he preserve documents.
104.	On 6th May 2011, the Bank wrote to Mr Jaffery terminating his employment on the grounds of gross misconduct, saying that (i) he put himself in a position of conflict of interest “by virtue of your inappropriate relationship with [Mr Gill]”, (ii) he wrote letters of recommendation on Bank paper for Mr Gill and associated entities, and (iii) he had concealed from the Bank “financial and other benefits received which you gained from your relationship with Mr Gill”.
105.	On 6th May 2011, the Claim Form was issued in these proceedings.
106.	Also, on 6th May 2011, a letter was also written by the Bank to Mr Qadir complaining about his conduct as an employee of the Bank.  At this point, Mr Qadir had apparently been on sick leave from the Bank for some 18 months.
107.	Also, on 6th May 2011, the Bank (they say inadvertently) deleted Mr Jaffery’s work emails from 15th April to 6th May 2011.
108.	On the 12th May 2011, a member of the Bank’s staff wrote an anonymous memorandum “distributed to key Bank executives/control departments” (the “12th May 2011 memorandum”).  Because the 12th May 2012 memorandum has formed a central part of the defence advanced by both Defendants, it is necessary to set it out in its entirety as follows:-
“The announcement last Friday of [Mr Jaffery’s] dismissal came as no surprise to senior staff in [Business Banking UK] who were not only aware of highly irregular practices but brought these to the attention of Senior Management in the UK over the past 4 years.  Whilst the precise allegations against Jaffery have not yet been publicised he has not acted alone
The opinions expressed in this document are not the views of a disaffected minority within BBUK but the widely held views of a broad number of senior staff who have worked in BBUK since 2005.
It is worth reciting the background against which irregular practices not only developed but flourished since a Team headed by Jaffery (the Team) was recruited in 2005 to develop the Bank’s presence in a very competitive Business Banking market in London.  In essence the Jaffery team were recruited from HBOS/RBS and included Bryan Baldry, Irfan Qadir, Bob Francioni, Martin Williams & Paul Theaker who together with a number of RM’s treated the Bank and its existing staff with nothing but contempt since joining BoI.  Their recruitment was hailed publicly as a major ‘coup’ by BoI and a clear statement of the Bank’s intent on growing its UK business which was targeting a 33% contribution of Group profits from the UK division within a 5 year period.  It is evident normal rules of employment were not applied including routine due diligence prior to recruitment as the Team were well known for irregular & unethical practices not only within the Banking sector during their employment with HBOS/RBS but also by external professional firms including solicitors/accountants & receivers.
Specific staff were subject to disciplinary action including dismissal prior to joining BoI a key fact not disclosed by Jaffery who headed the team at HBOS.
Since 2005 Jaffery has controlled Business Banking with impunity and an arrogance rarely seen in the industry and not previously experienced in BoI.  The Team were allowed develop & expand their presence without effective checks and balances to manage this expansion and in particular irregular practices included:
•	Collusion with customers & participation in various transactions/projects:
•	Participation in syndicates acquiring properties sold by BoI through LPA’s with subsequent ‘flipping’ of properties at higher (market) values for personal gain:
•	Clear conflict of interest through fee split & shareholding arrangements in transactions funded by BoI:
•	Refinancing of ‘low grade’ facilities from HBOS/RBS resulting in rapid credit downgrade/provisioning by BoI - (several company principals appear on high risk lists & are subject to world wide restrictions/bans):
•	‘Railroading’ of credit applications through the normal credit process ignoring normal standards & quality:
•	Utilisation of fee related revenue without consent to settle professional fees (solicitors/valuation) with frequent transfer of fees to introductory sources.  In several instances full fees collected were remitted with no revenue accrual to the Bank although previously accounted for in RAROC calculations:
•	Marginal deals always carried the strong endorsement of Baldry/Qadir/Jaffery/Williams and routed direct to Francioni in Credit for unchallenged sanction through’08-’09 when the Bank had essentially ceased lending:
•	Continued involvement/advising of Relationships no longer within their control to the detriment of the Bank including direct approaches to LPA’s/Administrators to influence disposals/strategy:
•	Approval of high value property loans for Jaffery & Rafiq to acquire personal residences for development at a time when facilities were not available to long standing & credit worthy customers:
•	The Jaffery/Rafiq loans were ultimately outside of the RMC Act as BoI ceased mortgage lending through BBUK on personal residences in 2003:
•	Abuse of development expenditure through splitting of costs on various business cards to avoid detection & higher level consent/sign off:
•	Abuse of high value B/D Entertainment tickets (£1k+) including F1/6 Nations Rugby/Champions League/Wimbledon & Ascot intended for customers but utilised by Team, personal contacts & families:
A drinking culture has developed within the Team involving long absences from the office with Qadir not seen at work since 2008 although allegedly still on the payroll.  The Team continue to attend every significant hospitality event (Bank cost) notwithstanding the Bank are no longer in the market to attract new business.
As stated at the outset the views expressed above reflect a broad spread of opinion formed by the experience of several individuals and should not be construed as unsubstantiated rumour/allegations:
It is essential for the Bank to act decisively now to preserve its reputation in the London marketplace and not leave itself exposed to any further reputational challenges through media/FSA disclosure”.
109.	On 13th May 2011, Mishcon de Reya wrote a series of letters (the “Annex A letters”) to persons including Mrs Sumby, Mr Kanji, Ms Jastender Gill, Mr Carter, Mr Treon and Berkeley Group, enclosing letters from Mr Jaffery asking the recipients to provide all documents relating to Mr Jaffery’s interests in and benefits obtained from the various entities concerned with the Loans made by the Bank.  The responses received from these persons all confirmed that Mr Jaffery had no such interests and had received no such benefits, although there is a dispute that only became apparent at the end of the trial as to whether Mrs Sumby, Ms Jastender Gill and the Berkeley Group actually responded.  This is not a dispute I can now resolve, since evidence was not addressed to it.  For the purposes of my determinations, I have assumed in the Defendant’s favour that such responses were received, confirming the absence of Mr Jaffery’s interests.
110.	On 14th May 2011, Mr Gill’s organisation chart apparently recorded that he and Mr Jaffery were to own and be the executive team to run Bombay Bicycle Club together.  An overview document apparently of the same time says that “I am proposing to run the company jointly with Raj” and that the equity was to be split 3 ways.
111.	On 25th May 2011, the Particulars of Claim were served in these proceedings.
112.	On 27th May 2011, Briggs J gave a judgment saying at paragraph 22 that Mr Jaffery’s conduct in response to the service of the Orders “strongly suggests he will fail to provide truthful information about the nature and present whereabouts of any benefits derived from his breaches of duty”, and also made a Norwich Pharmacal order for the disclosure of documents against Mr Gill.
113.	On 10th June 2011, Mr Gill made a statement saying that Mr Jaffery had not received or been promised any interests within the scope of the disclosure order.
114.	On 22nd June 2011, Mr Gill’s solicitors said that there were no documents to disclose in response to the Norwich Pharmacal order, except some Bank statements.
115.	On 22nd July 2011, Mr Jaffery served his defence.
116.	On 27th July 2011, Sales J ordered that the trial of this action should be expedited on the application of Mr Jaffery.
117.	On 21st September 2011, the Bank wrote to the directors of SIG I, SIG II, Backford and Telkin notifying them that the facilities had expired on 31st July 2011, and that the fact of non-payment constituted an event of default.
118.	On 23rd September 2011, Arnold J made an order joining Mr Gill as the second Defendant to the action.  
119.	In November 2011, Mr Gill ceased to be represented.
120.	On 11th November 2011, the Bank called in the Backford, Telkin and SIG I and SIG II loans.
121.	On 15th November 2011, the BOI made a demand on the personal guarantees given by Mr Gill to the Bank in respect of the Backford and Telkin loans.  
122.	On 8th December 2011, the Bank appointed administrative receivers over the Stoke, Hendon and Backford properties.
123.	On 20th December 2011, GCBOI entered into a deed of assignment (the “Assignment”) whereby it assigned all its claims and rights of action against Mr Jaffery and Mr Gill to BOI PLC.  On the same day, written notice of the Assignment was given to each of Mr Jaffery and Mr Gill.
124.	On 21st December 2011, Briggs J ordered disclosure against Mr Gill, and ordered that the trial should be split into the following 2 stages:-
i)	Stage 1:
a)	all issues of liability relating to breach of fiduciary duty, deceit, breach of contract, dishonest assistance and bribery; 
b)	the issue of causation whether [GCBOI] was induced to enter into the Loans by breach of fiduciary duty and/or deceit;
c)	the issue of whether the transfer of the Loans from [GCBOI to BOI PLC] precludes either Claimant from recovering any damages; and
d)	the claim for forfeiture (including quantification of the same);
ii)	Stage 2: all other issues relating to quantum and in particular the amount of an account of profits or damages, once the Claimants have made their election.
125.	On 23rd December 2011, the Bank served its re-amended Particulars of Claim.
126.	On 5th January 2012, Mann J refused Mr Gill relief from sanctions for non-compliance with Briggs J’s order and ordered that Mr Gill should produce (i)  documents, and (ii) a computer image to the Bank’s forensic accountants for them to make searches.
127.	On 20th January 2012, the Bank was awarded judgment against Mr Gill in respect of the Backford and Telkin guarantees for £660,000, with execution stayed pending the further order of the court at this trial.
128.	On 24th January 2012, Mr Kanji’s solicitors handed the iMac computer to the Bank’s solicitors.  Mr Jaffery claims that the Bank’s solicitors and the Bank had written a series of threatening letters to Mr Kanji in the lead up to this hand-over.
129.	On 30th January 2012, Mann J made an order permitting the Bank to search the iMac.  Both Defendants applied to Mann J for an adjournment of the trial date, and Mann J postponed the trial by one month.
130.	In February 2012, Mr Jaffery ceased to be represented.
131.	On 7th February 2012, Mr Gill applied for a further adjournment, and Mann J postponed the trial by a further period of one week.
132.	On 19th March 2011, I adjourned Mr Jaffery’ application for a further more lengthy adjournment of the trial until Wednesday 21st March 2012 for medical evidence to be obtained.
133.	21st March 2012 was the first day of the trial.  On that day, I declined to adjourn the trial, having received a medical report from Mr Jaffery’s cardiologist Dr Richard Carroll just after 10.30am that morning.  I gave a full judgment dealing with the application, which I shall not repeat here.  I directed at the start of the trial that Mr Jaffery should be provided each evening with the transcripts of the hearing for that day.  It appears that he read those transcripts each day, because, as I have said, almost every morning during the first 8 days of the trial, I received submissions or comments from him by email. 
134.	On day 5 of the trial, 27th March 2012, I gave Mr Gill permission to use Mr Qadir as his McKenzie Friend, but he did not in the event make much, if any, use of Mr Qadir during the trial.  Mr Qadir ceased to attend court only a day or two later.
135.	On day 8 of the trial, Monday 2nd April 2012, Mr Jaffery started to attend the hearing and represent himself.  With one or two minor exceptions, he has attended all hearings since then. 
The terms of Mr Jaffery’s Employment Contract
136.	Mr Jaffery’s Employment Contract included the following terms:-
i)	Clause 31 provided as follows: 
“31. Confidentiality:  The contractual relationship between the Company and its employees is founded on trust.  Any breach of this trust by you, such as the use for your own purposes, the disclosure to a third party, or causing of any unauthorised disclosure of any trade secrets or confidential information about matters connected with the business (including information relating customers, customers lists or requirements, price lists or pricing structures, employees or officers, marketing, intellectual property, business plans or dealings, technical data, financial information and plans, designs formulae, product lines, research activities and any information which you are told is confidential or is provided to the Company in confidence by a third party), will render you liable to disciplinary action, and/or to civil proceedings to restrain you from disclosing the information to a third party, or from making personal use of it without authority from a senior manager, or for damages if loss to the Company results from an unauthorised disclosure.
Information about the Company, its members and its customers which comes to your knowledge during the course of your employment with the Company is confidential and must be treated as such, both during your employment by the Company and afterwards”.
ii)	Clause 32 provided as follows:-
“32. Restrictions on other Activities by the Bank of Ireland:  You shall not without the prior written consent of the Bank Of Ireland be employed, engaged, concerned or interested (whether directly or indirectly) in any trade, business, undertaking or occupation other than that of the Bank Of Ireland”.
iii)	Clause 33 provided as follows:-
“33. Confidential Information and Company Documents:  The contractual relationship between the Group and its employees is founded on trust.  During your employment (except in the proper performance of his duties under this Agreement) or at anytime without limit after the termination of the Employment of this Agreement:
(i)		divulge or communicate to any person
(ii)		use for his own purposes or for the purposes of any person other than the Bank Of Ireland 
(iii)		through any failure to exercise due care and diligence cause any unauthorised disclosure of any confidential information, provided that these restrictions shall cease to apply to any information which shall become available to the public generally otherwise than through any breach of this clause
All notes, memoranda, record lists of customers and supplier and employees, correspondence, documents, computer hardware and software, data listings and other documents and materials whatsoever (whether made or created by the Employee or otherwise) relating to the business of the Bank of Ireland:
(i)	shall be and remain the property of the Bank Of Ireland
(ii) 	shall be handed over to the Bank Of Ireland on demand and in any event on the termination of employment”.
iv)	Clause 37 provided as follows:
“37. Other employment:  You may not take up other employment, whether remunerated or not, without the prior approval of your manager who will ensure that no conflict of interest exists”.

The Code of Conduct
137.	The Group Code of Conduct for the Bank dated March 2007 (which did not materially change in later years) provided in material part as follows:-
“Compliance Policy Statement
This policy applies to all employees and directors of the Bank of Ireland Group.
… In all markets in which we do business, we are committed to operating with integrity and accountability: that is, we are committed to:
•	complying with the legal, regulatory and other requirements of the jurisdiction concerned; and to observing best market practice, and
•	acting honestly, fairly and reasonably in all dealings with customers, suppliers, employees, Government and regulators.
By complying with the letter and the spirit of the law and regulations, we aim to:
•	preserve the reputation and integrity of the Group
•	meet the requirements of all regulatory bodies
•	avoid adverse publicity associated with non-compliance
•	avoid the cost of ‘having to put things right’
•	protect the business of the Group and its staff.
All staff have a role to play in achieving these objectives.
1.  As an employee of the Group, you are personally accountable for compliance with both the letter and the spirit of this policy.
2.  You must act with integrity in all dealings with customers and other parties with whom the Group is connected, and in all internal matters.  No employee should act in a manner that could lead to any injury to our reputation.
3.  Where you have, at any time, doubts or concerns about any matter relating to our compliance with legal or regulatory obligations, you have a duty to:
•	discuss the matter fully with your Manager; or 
•	discuss it directly with Senior Line Management; or 
•	raise the matter with your business unit Compliance Officer; or 
•	bring it to the Group’s attention independently of management, via the Group’s Speak Up policy.
4.  You will not be criticised by management, nor will you suffer as a consequence of bringing a breach, or suspected breach of our legal or regulatory obligations to the attention of the Group through appropriate channels, even if business is lost as a result.
….
2.  Your personal responsibilities under this Code
2.1  Integrity and Honesty
You are expected to act with integrity and honesty in your dealings with customers and other parties with whom the Group is connected and in all internal matters.  This is an overriding principle that should govern all your actions and decisions.
…
2.3	Conflicts of Interest
You must avoid situations where personal interests conflict, or appear to conflict, with the interests of the Group or its customers.
For the purpose of this Code, a conflict of interest occurs when an employee’s private or personal interests interfere, or may appear from the perspective of a reasonable person to interfere, with the interests of the Group or its customers.  A conflict situation may arise when an employee takes actions or has interests that may make it difficult to perform his or her duties objectively.  Conflicts of interest may also arise when an employee, or a member of his or her family, receives personal benefits as a result of his or her position in the Group
It is vital that customers and potential customers have confidence in the Group.  You must avoid actual or apparent conflicts of interest, some possible examples of which follow.
…
b.	Business Involvement
The primary business duty of loyalty of employees is to the Group and any business activities that conflict with this duty must be avoided.
If you are considering becoming involved in any capacity, including any non-executive capacity, in a business outside the Group, you should first refer the proposal for approval through your line manager.  If the involvement you are considering may require or lead to your holding a non-executive directorship, you should in addition refer to the Group’s Policy on Management Holding Non-Executive Director Positions (‘NED Policy’, available on insite) before seeking approval.
…
Any financial transactions relating to approved business interests should be negotiated through separately designated and properly established accounts.  Accounts designated as staff accounts must not be used for such purposes.
You should be particularly careful to observe the provisions of this Code when considering entering into a business relationship with a Group customer: in particular, your involvement in such an activity remains subject to this Code even if a third party – such as a spouse – maintains the formal link to the venture.
…
e. Gifts, Sponsorship and Invitations
You may not accept gifts, offers of sponsorships or invitations if they could be deemed to influence or compromise your position or any business decision of the Group.
The offer of invitations, gifts, payments, services, hospitality or other benefits which could be seen to compromise your integrity or affect your ability to exercise independent judgment, should be notified, in all cases, to your manager, senior line management or compliance officer, regardless of whether you intend to accept the offer.  Should you wish to accept such an offer, you should obtain prior approval in writing.
…
2.5	Following the Code
You are responsible for knowing the contents of this Code of Conduct and adhering to the standards as detailed herein.  Where you are responsible for managing other employees, you should ensure that they make themselves aware of the provisions of this Code.  
Where this Code refers to the need for you to have ‘approval’ for any action, you must apply in writing for such approval, and ensure that the approval is confirmed in writing, and you should retain these written records”.
Mr Jaffery’s pay and bonuses 
138.	The Bank made the following payments of salary and bonus to Mr Jaffery:
i)	In the 2007/8 year: £248,412.28, being:-
a)	salary of £152,042.37;
b)	a long term incentive plan bonus of £86,484 for the period between April 2005 to March 2006
c)	a stock options payment of £5,134.64;
ii)	In the 2008/9 year: £533,272.7, being:-
a)	salary of £163,050;
b)	a long term incentive plan bonus of £175,350 for the period between April 2005 and March 2006;
c)	a performance bonus of £186,242 for the period April 2007 to March 2008; and
d)	a stock options payments of £8,630.77 for the period April 2007 to March 2008); 
iii)	In the 2009/10 year: £273,400 including:-
a)	a long term incentive plan bonus of £110,350 for the period between April 2006 to March 2007.
139.	The Bank claims in this action that Mr Jaffery should forfeit the entirety of these payments of salary and bonuses.
Issues
140.	The Bank put forward a list of the issues that the court needed to decide.  I have amended that list somewhat as follows:-
141.	Existence of Fiduciary Duties: 
i)	Issue 1: Did Mr Jaffery owe fiduciary duties to GCBOI and/or BOI PLC?
ii)	Issue 2: If so, did those duties includes:-
a)	A duty not to make a secret profit;
b)	A duty not to allow his own interests to conflict actually or potentially with those of the Bank;
c)	A duty to disclose his own wrongdoing.
142.	Breach of Fiduciary Duties:  Did Mr Jaffery breach his fiduciary duties to GCBOI and/or BOI PLC in any of the following respects:-
i)	Issue 3: Did Mr Jaffery (i) receive or (ii) expect to receive, an interest (and if so what interest) in the customer of the Bank involved in the following projects and/or a benefit or profit from the project itself:-
a)	The Backford project;
b)	The Hendon project;
c)	The Stoke project; and/or
d)	The Hornchurch project?
ii)	Issue 4: Did Mr Jaffery expect to receive an interest (and if so what interest) in the customer of the Bank involved in the following projects and/or a benefit or profit from the project itself:-
a)	The Bombay Bicycle Club project;
b)	The Berkeley Care Group’s projects;
c)	The Casualty + project;
d)	The Land Bank project; and/or
e)	The Palace Street project?
iii)	Issue 5: Did Mr Jaffery (i) receive or (ii) expect to receive, any (and if so what) interests or benefits from any (and if so which) of the following customers of the Bank or their associates:-
a)	Mr Gill;
b)	Mr Treon;
c)	Mr Kanji;
d)	Berkeley Group; and/or
e)	Berkeley Care Group?
iv)	Issue 6: Did Mr Jaffery put himself in a position in which his personal interests actually or potentially conflicted with those of either (i) GCBOI and/or (ii) BOI PLC by:-
a)	promoting, supporting or managing any or all of the loans made by the Bank or which were applied for (and if so which)?
b)	providing references in respect of such loans or applications (and if so, which references)?
c)	having or expecting to have any of the undisclosed personal interests referred to in issues 3, 4 and/or 5?
d)	assisting Altaf and/or Adnan if (as Mr Jaffery contends) any of the interests or benefits referred to above were received or expected to be received by them or either of them?
v)	Issue 7:  Did Mr Jaffery fail to disclose his own (and if so what) wrongdoing?
vi)	Issue 8: Did GCBOI and/or BOI PLC give their consent to any, and, if so, which of the aforesaid breaches of fiduciary duty?
143.	Causation and inducement occasion by breaches of fiduciary duty:  
i)	Issue 9: Was the Bank caused or induced to enter into any of the loans (and if so which) by Mr Jaffery’s breach of fiduciary duty?
ii)	Issue 10:  Is Mr Jaffery entitled to any equitable allowance for his work and efforts in producing the interests or benefits? 
144.	Breach of contract: Issue 11:  Did Mr Jaffery act in breach of his Contract of Employment in any, and if so, which of the following respects:-
i)	By having or expecting to have any of the undisclosed personal interests referred to in issues 3, 4 and/or 5?
ii)	Putting himself in a position in which his personal interests actually or potentially conflicted with those of either (i) GCBOI and/or (ii) BOI PLC in the ways referred to in issue 6?
iii)	Failing to disclose his own wrongdoing in the ways referred to in issue 7?
iv)	Accepting bribes in the manner referred to in issue 21 below?
v)	Being engaged in any (and if so which) business activities without the Bank’s written approval?
145.	Deceit:  Issue 12: Is Mr Jaffery liable to GCBOI and/or BOI PLC (and if so which) in deceit, and in particular:-
i)	Did Mr Jaffery provide false annual certifications of compliance with the Bank’s Code of Conduct?
ii)	Was the Bank thereby induced to enter into some or all of the loans (and if so which)?
iii)	Was the Bank thereby induced to pay Mr Jaffery his salary and/or bonus?
146.	Forfeiture: Issue 13: Is GCBOI and/or BOI PLC entitled to forfeiture of Mr Jaffery’s salary and/or bonus, and, if so, for which periods and in which amounts, and is Mr Jaffery entitled to relief or an equitable allowance in respect of such forfeiture, and if so in what amounts?
147.	Dishonest assistance: Is Mr Gill liable to (i) GCBOI and/or (ii) BOI PLC for dishonestly assisting or procuring any (and if so which) of Mr Jaffery’s breaches of fiduciary duty?  In particular:-
i)	Issue 14: Did Mr Gill promise or give or facilitate the giving of any (and if so which) of the undisclosed personal interests referred to in issues 3, 4 and/or 5?
ii)	Issue 15: Did Mr Gill misrepresent to the Bank the true ownership of the customers involved in the loans (and if so which)?
iii)	Issue 16:  Did Mr Gill misrepresent to the Bank actual or expected personal interests of Mr Jaffery (or of Altaf and/or Adnan)?
iv)	Issue 17: Did Mr Gill solicit or encourage Mr Jaffery's involvement in the arrangement and/or management of the loans (and if so which)?
v)	Issue 18:  Did Mr Gill procure any (and if so which of) the references provided by Mr Jaffery?
vi)	Issue 19: Did Mr Gill procure Mr Jaffery’s business services to any (and if so which of) the Bank’s customers?
vii)	Issue 20:  Did Mr Gill act dishonestly in acting in any (and if so which) of the ways specified in issues 12-17 above and thereby in assisting or procuring any (and if so which) of Mr Jaffery’s breaches of fiduciary duty?
148.	Bribery: Issue 21:  Did Gill bribe Mr Jaffery? In particular, if Mr Gill promised or gave or facilitated the giving of the interests or benefits referred to in issues 3, 4, 5 and 12:-
i)	Did Mr Gill know that Mr Jaffery owed fiduciary duties to the Bank?
ii)	Did those promises or gifts put Mr Jaffery in a position in which his actual or potential personal interests conflicted with those of the Bank?
iii)	Did Mr Gill fail to disclose the promises or gifts to the Bank?

149.	Transfer:  Issue 22: Were GCBOI’s claims against Mr Jaffery (other than for breach of contract) transferred to BOI PLC by the Transfer and/or the Assignment?
150.	Issue 23: Were GCBOI’s claims against Mr Gill transferred to BOI PLC by the Transfer and/or the Assignment?
151.	Issue 24: If the GCBOI’s claims were not transferred to BOI PLC, is GCBOI entitled (in principle):-
i)	to an account of profits against Mr Jaffery and/or Mr Gill
ii)	to recover damages (on its own behalf) for all losses  (a) whenever they arose or (b) suffered as at the date of the Transfer? 
iii)	to recover damages (on its own behalf) in respect of the loss of value of its 100% shareholding in BOI PLC by reason of any loss suffered by BOI PLC, as an exception to the reflective loss principle applicable where the company has suffered loss but has no cause of action to recover it?
152.	Issue 25: If the GCBOI’s claims were not transferred to BOI PLC, is GCBOI entitled (in principle) to recover damages (for the benefit of BOI PLC) under the exception established in The Albazero?
153.	Before turning to deal with these issues, I will summarise the most important parts of the witnesses’ evidence and deal briefly with the legal principles that need to be applied.
The Bank’s Witnesses
154.	Mr Michael Kidd, the Bank’s Head of Business Banking for the UK, gave evidence first.  He was Mr Jaffery’s line manager from 19th March 2010 until Mr Jaffery was dismissed in May 2011.  His witness statement makes clear that he did not know whether the key allegations against Mr Jaffery were true.  Mr Kidd’s statement dealt with Mr Jaffery’s alleged erratic attendance and the loans made to Mr Jaffery.  Mr Kidd said in his statement that, at no time, had Mr Jaffery sought his approval to any deviation from the prohibition on conflicts of interest in the Bank’s Code of Conduct.
155.	In chief, Mr Kidd said that he did not think that the Bank would have taken forward the loans if it had known about Mr Gill’s convictions, and that the Bank would have wanted to investigate had it known about his disqualification as a director.   In fact, Mr Gill has a spent conviction on 4 counts for fraudulent evasion of VAT on 13th May 1998, for which he was sentenced to 2 years imprisonment and disqualified from being a director for 5 years.
156.	Mr Kidd said that the Bank had made a current provision of £2.9m in relation to the Loans.   And the Bank never allocated any security value to an unsupported personal guarantee.  Mr Kidd also said that the first time he was aware of the whistle-blowing allegations to the effect that the Bank was a “sham bank” was when an article in the Daily Mail was published about them in the middle of May 2011.  Mr Kidd said in chief that the Bank (my emphasis) only discovered in August 2011 that Mr Jaffery was the whistle-blower – later, in cross examination, he maintained that he had only said that he had discovered that in August 2011.
157.	Since Mr Jaffery did not attend this part of the trial, Mr Kidd was not cross-examined on many of the issues.  He was, however, cross-examined by Mr Gill on the 12th May 2011 memorandum, with which he said he did not agree, although he did say that it served to let him know what staff were feeling.  Mr Kidd did not think that Mr Cunningham was the author of the 12th May 2011 memorandum.  It appears that a number of staff were given time off after Mr Jaffery was dismissed, and that Mr Baldrey resigned without returning to work.   Mr Kidd denied that the Bank had over-sold the Stoke site, when it was bought by SIG I for £2.8 million, but he accepted it was very unusual for the Bank to grant loans at zero interest (as they did to SIG I).
158.	I gained the impression that Mr Kidd knew more about the 12th May 2011 memorandum than he was saying, and that he was keen to justify the Bank’s position that it had not known that Mr Jaffery was the whistle-blower until after his dismissal.  Otherwise, his evidence was reasonably satisfactory.
159.	Mr Stephen Shakespeare gave evidence next.  He was a relationship manager employed in the Bank’s Business Banking UK group.  He prepared the credit applications for the SIG and Hornchurch loans.  In his statement, he said that he knew that Mr Jaffery and Mr Gill were close friends, and that he did not have discussions with Mrs Sumby who was “presented as being the ultimate beneficiary of SIG I”.  He described Mr Gill as “the real driver behind the loan”.  He also said that he recorded in the Hornchurch application that the borrower was BRVL of whom the ultimate beneficiary was “[Ms] Jastender Gill (sister to [Mr Gill])”, because that is what he had been told by Mr Jaffery or Mr Baldry.  When he queried this, Mr Jaffery disagreed that this lending increased the RGC Customers’ exposure.  Mr Shakespeare’s witness statement says that, if he had known that any of the key allegations against Mr Jaffery were true, he would not have submitted the SIG application.  
160.	In chief, Mr Shakespeare said that the Bank would not have proceeded with the credit applications if it had known about Mr Gill’s convictions and disqualification.  He said that Stoke site was valued, in two parts, at £1.9m and £860,000 respectively.
161.	Again, Mr Shakespeare was only cross examined by Mr Gill.  He accepted that it was his personal obligation to know the Bank’s customer, and that the ultimate beneficiary of the SIG accounts was Mrs Sumby.  In that regard, he accepted that he would have had to make clear to his seniors if he thought that anyone else had a beneficial interest in the customer.  He did not make that clear on these loans, and he said he had not lied to the Bank about this.  His evidence was, therefore, that he did not believe that someone else (apart from Mrs Sumby) owned these assets.  He said that the SIG loan was the only loan he had done at 0% interest.
162.	Mr Shakespeare said that he had received the 12th May 2011 memorandum from Mr Jaffery, but that he did not agree with its findings.  He was, however, surprised at what had happened to Mr Jaffery, whom he had considered a reasonable boss.    Mr Shakespeare also told me that it was not normal to ask if a customer has been convicted of a criminal offence or disqualified as he director.  He had never asked those questions.   To avoid the need to deal with these matters with later witnesses, Mr Kitchener QC accepted, after Mr Shakespeare’s evidence that the Bank had no form asking potential borrowers if they had convictions or disqualifications, and that it was not the Bank’s usual practice to ask these questions.  
163.	Again, I felt that Mr Shakespeare knew more than he was saying about the 12th May 2012 memorandum, and that he was exceptionally nervous about his evidence.  Equally, his evidence seemed to me otherwise reasonably reliable.
164.	Mr Ian Hawthorn was a senior credit manager employed by the Bank, who had written the credit opinions on the Hendon and Backford loans. His statement said he did not know if the key allegations were true, but if he had known that any of the key allegations against Mr Jaffery were true, he would not have approved the Hendon and Backford loans.   In cross-examination, he refused to accept that there was any absolute requirement that a credit opinion was produced in every loan transaction approved by the Bank.  I found Mr Hawthorn’s evidence clear and reliable.
165.	Mr Roberto Francioni (known as “Bob”) was the Head of Business Banking, London Credit, at the relevant time.  He approved the Hendon loan and the extension of the Hendon and Backford loans,   His statement dealt with both the key allegations and some allegations made by Mr Kanji to the effect that there was an on-sale in the Hendon transaction to increase the price, and that he (Mr Kanji) and Mr Gill and Mr Treon obtained a one third interest in it.  He said he did not know if either the key allegations or Mr Kanji’s allegations were true, but if he had known that any of the key allegations or Mr Kanji’s allegations against Mr Jaffery were true, he would not have approved the Hendon loan or the extension to the Hendon and Backford loans.  He was unable to understand why Mr Jaffery gave instructions to waive the Bank’s fee on the extension to the loan, days after its approval.
166.	In cross-examination, Mr Francioni said that he was sent the 12th May 2011 memorandum by Mr Jaffery, but did not believe it was true, or that it came from his seniors.  It is to be noted that the allegations of misconduct in that memorandum were not raised against Mr Francioni in evidence.  He accepted that Mr Gill had not hidden his relationship with Mr Jaffery, and that everyone was fully aware that Mr Gill visited Mr Jaffery at the Bank and saw him on Sundays.  Mr Francioni was surprised at what happened to Mr Jaffery, and considered him as a friend.  I found Mr Francioni to be a reliable witness.
167.	Mr Paul Theaker was the relationship manager in the Bank who dealt with Mr Gill, and was asked by Mr Jaffery to draft the loan applications for the Hendon, Backford and Bombay Bicycle Club loans.  Mr Theaker gave similar evidence to Mr Francioni in relation to the key allegations and the Mr Kanji’s allegations.
168.	In cross examination, Mr Theaker said that he was aware of his ‘know your client’ and money laundering obligations, but had no need to report anything about the ownership of the assets in the loans in question.  He too was sent the 12th May 2012 memorandum by Mr Jaffery, but did not believe its contents were true.  It is to be noted that the allegations of misconduct in that memorandum were not raised against Mr Theaker in evidence.  He was very surprised by what happened to Mr Jaffery; having worked with him since 2002.  Though it was not put to him in cross-examination, the documentary evidence demonstrated the closeness of his relationship to Mr Gill.  By way of an early example, an email of 1st May 2007 shows Mr Theaker inviting Mr Gill away for the week-end (Mr Gill said) to Sharm El Sheikh.
169.	Mr Duncan Rowland was the credit manager who approved the Hornchurch loan.  His statement suggested that Mr Jaffery had put some pressure on Mr Shakespeare to promote the loan.  He said he would not have approved the loan had it not been supported by Mr Jaffery or if he known that Mr Gill had lied about the ownership structure.  There was no significant challenge to Mr Rowland’s evidence.
170.	Mr Sangyop Steven Lee (“Mr Lee”), a computer specialist employed by Alvarez & Marshall, was the last witness for the Bank.  He gave evidence of his investigation of the iMac computer, which had shown that it was used by both Mr Jafffery and his wife.  He found no evidence of the iMac having been used either by Mr Adnan Jaffery or by any member of the Kanji family.  The iMac had been regularly used from 2007 until 6th May 2011.  He did not, however find that the iMac had been connected to the router at 33 Gloucester Walk at any time after 29th April 2011.  It was, therefore, on his evidence, possible that the iMac was removed from 33 Gloucester Walk between 29th April and 6th May 2011.  Mr Lee was not cross-examined.
171.	Mr John Murphy, Head of Group Regulatory Compliance and Operational Risk, was in charge of the Bank’s investigation into Mr Jaffery’s activities.  Mr Murphy explained in his witness statement how the Bank had inadvertently deleted Mr Jaffery’s emails for the period between 15th April 2011 and 6th May 2011 (when he was dismissed).  Mr Murphy also explained how part of the GCBOI’s business was transferred to BOI PLC by the Scheme under Part VII of the Financial Services and Markets Act 2000, sanctioned by Henderson J on 29th October 2010.  The business transferred included all the loans made to the RGC Customers, but excluded Mr Jaffery’s Employment Contract.
172.	Mr Murphy’s statement explained the Bank’s relationship with (a) Mr Treon, who was head of the European Care Group of companies, to some of which the Bank had loaned between £80 and £100 million over the last 5 years, and (b) Mr Kanji, who was head of the Harry Mason group of companies, to whom the Bank is currently lending some £4.4 million.
173.	In chief, Mr Murphy said that the Bank became aware of sham bank allegations the day before the Daily Mail article on 12th May 2011.  He had become aware that Mr Jaffery was the whistle blower in August 2011.  The FSA has not written formally to the Bank in connection with the allegations, and he did not believe that the FSA passed on to the Bank the letter that Lord Ahmed wrote to the Chancellor of the Exchequer.  The FSA had neither launched an investigation into the sham bank allegations nor indicated that it might do so.   Mr Murphy said that the 12th May 2011 memorandum arrived in CEO’s office at the Bank by post on 16th May 2011, having been sent anonymously.
174.	In cross-examination, Mr Murphy was constrained to admit that he did not know whether Mr Boucher knew about the whistle-blowing allegations before the investigation into Mr Jaffery was initiated in March 2011.  He had spoken to 4 senior executives who had claimed not to know: Messrs Morris, Cunningham, Crowley, and Lockrey;  but not to Mr Boucher, who was the one who would most likely have been contacted by the Irish Banking regulator when it was sent Lord Ahmed’s letter by the office of the Chancellor of the Exchequer.
175.	Mr Gill also cross-examined Mr Murphy on the basis that Mr Cunningham had given Mr Jaffery permission to seek other business opportunities in March 2010, and therefore the Bank assumed that he was the whistle-blower and started the investigation in order to discredit him.  The exchange was as follows
“MR PRITPAL GILL:  So I put it to you, Mr Murphy, that actually you have already confirmed that Mr Cunningham, you was reporting up to Mr Cunningham for this investigation, that actually as Mr Cunningham knew that Mr Jaffery was looking for some outside interest, that you assumed he must be the whistle-blower and you concentrated your efforts on him to discredit him   because the deal had been struck between – 
MR JUSTICE VOS:  Pause there, because it is always good to ask questions that are short enough to get your mind round.  That was quite compact.  Mr Murphy, the question is that, as you have already confirmed that you were reporting up to Mr Cunningham, and he knew that Mr Jaffery was looking for an outside job or an outside interest, you assumed that he must be the whistle-blower and concentrated your efforts on him so as to discredit him. 
Mr Murphy:  That is completely untrue, completely untrue.  The first I knew of a whistle-blowing allegation was 13 May”.
176.	Mr Murphy was also asked about the money laundering rules.  He accepted that nobody in the Bank had made any report under those rules complaining that the ownership of the assets on which the loans were made to the RGC Customers was inaccurately stated.  Mr Gill sought to show that nobody in the Bank ever questioned that the stated owners of the assets were indeed the true beneficial owners of them.
177.	On the final day of his cross-examination, Mr Gill was asking Mr Murphy questions directed at showing that certain members of the Bank’s staff never really thought that the ownership of the assets was anything other than had been declared to the Bank.  In the course of that questioning, Mr Gill put a redacted document that he had obtained from Mr Jaffery to Mr Murphy.  It was an email dated 23rd February 2012 from Mishcon de Reya to Ms Saroop Treon of Harding Mitchell, the then solicitors to Mr Jaffery, suggesting that the Bank was unimpressed with a Mr Avtar Hare (Mrs Sumby’s ex business partner, who had, according to Mr Gill, obtained a freezing order against Mr Gill in October 2011, which he had then been forced to release).   Mr Murphy said that he was not aware that Mr Hare had lied in his application for a freezing order.  There followed the following perhaps rather more significant exchange:-
“MR PRITPAL GILL:  Where I was trying to go to is that actually the Bank do not believe that I own these assets at all. That is where I was trying to go to.
MR JUSTICE VOS:  What is your answer to that?
Mr MURPHY: The Bank's view is that Mr Gill is the beneficial owner of the assets.
MR JUSTICE VOS:  The entirety of them.
MR MURPHY: Yes.
MR PRITPAL GILL:  You base that belief –
MR JUSTICE VOS:  Take a moment, please.
MR MURPHY: When I say the entirety of them, what I mean is that Mr Gill is the beneficial owner, and we believe that Mr Jaffery has an interest in some of them”.
178.	Mr Murphy was cross-examined as to the investigation that he conducted into Mr Jaffery’s activities, and in particular about the errors made by the Bank in failing to join BOI PLC into the original action, and in deleting the three weeks of Mr Jaffery’s emails prior to 6th May 2011.  He explained that the reason why the Bank did not notice that the emails had been deleted until much later in the process was because searches were made by key words rather than by date.  Whilst I accept that this may be the case, the Bank’s conduct is surprising on two counts.  First, the Bank was obliged to make full disclosure to the court in applying for the freezing order on 6th May 2011, and yet it had apparently not even looked at Mr Jaffery’s emails for the three week period leading up to the application.  Secondly, it is very odd, as Mr Gill put to Mr Murphy, that the Bank did not notice that it had no more material from Mr Jaffery’s email database after 6th May, than they had when they last looked at it on 15th April.  That oddity is unaffected by Mr Murphy’s explanation that only key word searches were undertaken, as such searches would have produced the same results after 6th May, as they did on 15th April.  Overall, whilst I could not conclude that anything sinister had occurred, I am not satisfied that the Bank undertook its investigation with adequate care. 
179.	Mr Murphy’s 1st statement dated the 4th May 2011 said the following at paragraph 50:-
“I am told by the UK Head of Financial Crime, Steve Hyndman, that general concerns about Mr Jaffery’s conduct were first communicated to him in or around the middle of 2010 however nothing definitive was able to be concluded at that time. Toward the end of of 2010, Mr Hyndman consolidated the concerns he had been made aware of and communicated them to senior management.  It was this that resulted in the Bank appointing me to more closely examine the allegations … My department commenced its investigations into the allegations on 14 March 2011 …”.
180.	In cross-examination, Mr Murphy, said that his investigation started with Mr Peter Morris asking him “to investigate the business relation[s], if any, between Mr Gill and Mr Jaffery”.  He said that “Mr Steve Hyndman brought to Mr Morris's attention that there were rumours in the UK that perhaps Mr Gill and Mr Jaffery were in business together”.
181.	Mr Gill asked Mr Murphy about the transfer of the UK business to BOI PLC, but ultimately accepted that the real issue was about the legal effect of the transfer of the loans to BOI PLC in October 2010, when Mr Jaffery’s fiduciary duties remained owed to GCBOI between October 2010 and his dismissal.
182.	Mr Gill asked Mr Murphy why Mr Qadir’s P45 showed him to have been employed by an entity called Bank of Ireland Limited at BOI’s Belfast office.  Mr Murphy said that he had found out overnight that there was no such entity as Bank of Ireland Limited.  Mr Gill ultimately applied for permission to amend to plead that Mr Jaffery was employed by Bank of Ireland Limited, rather than by GCBOI.  I refused that application since it seemed to be unsupported by any evidence:  Mr Jaffery’s P45 was not produced and the only contract of employment available showed it to be between Mr Jaffery and GCBOI .
183.	I did not find Mr Murphy’s evidence entirely satisfactory, and I was left with a nagging doubt as to the true reason for such a massive investigation into Mr Jaffery’s conduct.  This is an issue to which I shall return.  I found his slip of the tongue in saying that the Bank’s view was that the assets were owned in their entirety by Mr Gill to have been rather revealing.
184.	The next witness was Mr Mark Andrew Cunningham, the Head of Business Banking for the UK and Ireland.  He was an employee of the GCBOI and the most senior executive of the Bank to give evidence at the trial.  Mr Cunningham was called somewhat at the last minute to answer the point that Mr Jaffery had made to the effect that Mr Cunningham had consented to Mr Jaffery preparing to leave the Bank and pursuing other business interests in the meantime.  His witness statement categorically denied that he had had any such conversation.
185.	Mr Jaffery’s first personal participation in the trial came on day 8 when Mr Cunningham was called.  And it was Mr Jaffery who cross-examined him.  Mr Cunningham accepted that the Bank of Ireland was in turmoil in 2009 and 2010 and business banking particularly so.  
186.	Mr Jaffery persuaded Mr Cunningham to accept that the employees in business banking in London were mostly employed by GCBOI, some were on secondment, but only 20-30 were actually employed by BOI PLC (as Mr McGowan was).  The point that was being put was that Mr Jaffery had complained about this structure and suggested at the time that the customers were being misled into thinking they were dealing with a UK regulated Bank when in fact the majority of the staff were employed by the Irish parent.  Mr Cunningham rejected these points, saying that the delineation between GCBOI and BOI PLC was clear and transparent.
187.	Mr Cunningham accepted that a letter had been sent to Mr Qadir complaining about his conduct on the same day as Mr Jaffery was dismissed, even though Mr Qadir had been away from work on sick leave for some 18 months up to that time.  Mr Cunningham accepted that the Bank had not followed its normal procedures in these investigations.  
188.	Mr Jaffery cross-examined Mr Cunningham about the various complaints that he said he had made to him over the months leading up to his dismissal. Broadly, Mr Cunningham denied all these points.  Mr Jaffery said that he had confronted Mr Cunningham about a number of his concerns about the Bank’s activities including (i) the disconnect between GCBOI and BOI PLC referred to above, (ii) the payment of secret bonuses (not disclosed to the Irish Ministry of Finance), and (iii) losses sustained in Bristol & West, one of the Bank’s subsidiaries (over which Mr Jaffery was briefly in control).
189.	Mr Cunningham had sat on the ‘Project Metal’ committee that governed the investigation into Mr Jaffery’s activities (which he called the “Steering Group”), and to which Mr Murphy reported.  On day 8, I suggested that the Bank should disclose the minutes of the Steering Group meetings, but the Bank claimed privilege for them. They did, however, disclose the 2nd February 2011 memorandum in the middle of Mr Cunningham’s evidence.
190.	Mr Cunningham’s evidence was that there had been three investigations.  The first two were into issues, rather than people. They concerned an alleged fraud in relation a loan made to Pendle Rise Limited (the “Pendle Rise Investigation”), and an alleged diversion of brokerage fees away from the Bank in which a Ms Rafiq was allegedly involved (the “Fees Investigation”).  It was only when the results of those investigations were inconclusive that the Steering Group was established and Mr Murphy was asked to move the investigation to the next level.  That was some time in March 2011, and Mr Cunningham maintained that, even then, the investigation concerned (i) Mr Jaffery (ii) Mr Darren Bailey, then an employee of the Bank in the Business Banking Great Britain group, (iii) Ms Rafiq and (iv) Mr Qadir.  It was at a meeting on 10th April 2011 between Mr Murphy, Mr Cunningham and Mishcon de Reya that the focus turned to Mr Jaffery and a discussion took place about whether the Bank would commence proceedings against him before or after Easter.  In the event, it was decided to proceed immediately after Easter, which was what happened.  Mr Cunningham said that he was unaware that Mr Jaffery had initiated the original investigations into both the Pendle Rise matter and the fees issues.
191.	Mr Cunningham rejected the contention that his evidence about the course of the investigation contradicted that of Mr Murphy, but it seemed to me that it did.  Mr Murphy said clearly that the investigation he was asked to begin on the 12th March 2011 was into Mr Jaffery’s relations with Mr Gill, whilst Mr Cunningham was clear that the investigation his Steering Group asked Mr Murphy to make was into the activities of Messrs Jaffery, Qadir, Bailey and Ms Rafiq, arising from the Pendle Rise and the Fees Investigations.  The documents that were later disclosed broadly supported Mr Murphy’s timing at least, in that, by 7th March 2011, there was a recommendation to widen the investigation to interview Mr Jaffery and other business banking staff.
192.	Mr Cunningham said that the Steering Group comprised 4 senior executives from the GCBOI, Mr Des Crowley (chairman), Mr Peter Morris, Ms Julie Sharp (the HR director), and Mr Cunningham, and that the Steering Group reported to Mr Boucher. It seemed to me a matter of some surprise that there was no disclosure of any documents as to how and why the Steering Group was established.  It is clear that Mishcon de Reya were engaged to participate in the investigation at an early stage, perhaps in about March 2011, so that much of the material thereafter might well be privileged.  But I would certainly have expected to see some internal documentation explaining the rationale for the establishment of such a high level group, particularly when all the witnesses expressed the (somewhat surprising) opinion that they were investigating the most serious fraud the Bank had ever suffered.  The motivation of the Steering Group was brought into stark relief, because it was Mr Jaffery’s contention that it had been established, in effect, to victimise him and Mr Gill, because he (Mr Jaffery) had blown the whistle on the Bank’s operation of a sham bank in the form of BOI PLC in November 2010.  
193.	Mr Cunningham was heavily cross-examined on the sham bank allegations.  Mr Jaffery put to him that it was because of his (Mr Jaffery’s) complaints about the sham bank that he and Mr Cunningham did not see ‘eye to eye’.  In effect, it seems that from Mr Cunningham’s appointment as Head of Business Banking for the UK and Ireland in mid-2009, he and Mr Jaffery had come into some kind of conflict.  That much is confirmed by the 2nd February 2011 memorandum.  But Mr Cunningham strenuously denied that Mr Jaffery had had conversations with him in October 2009 or in March 2010 in which his (Mr Jaffery) leaving the Bank as a result of his dissatisfaction was discussed, or in which Mr Cunningham had said that he was content for Mr Jaffery to look for another job and meanwhile to engage in outside business interests “so long as Mr Jaffery did not rock the boat with the FSA”.  Mr Cunningham also denied that he had found out about Mr Jaffery (and Mr Qadir) being the whistle-blowers between an investigation in late 2010 and the investigation that began in March 2011. He maintained that the first the Bank had heard about Mr Jaffery being a whistle-blower was in the days leading up to the Daily Mail article on the 15th May 2011.
194.	When Mr Gill cross-examined Mr Cunningham, he accepted that he had not reported the alleged ownership discrepancies in relation to the loans to the Money Laundering authorities, and that the independent review that the Bank had conducted into the Loans after 6th May 2011 showed that there were no fraudulent valuations affecting the Loans, and that the only wrongdoing alleged was as to the ownership of the borrowing entities.  Mr Cunningham said that he thought the Bank had made some 20 (out of 15,000) loans at 0% interest in his experience, which he accepted was a small percentage.  He accepted also that the Bank thought, in its investigation, that Mr Gill, as a friend of Mr Jaffery’s, had been given sensitive information about the Bank.  He clarified in re-examination that the information he was talking about concerned Mr Jaffery’s interests in the companies.  He accepted that the Bank thought that Mrs Sumby was the beneficial owner of the borrowing entities when the loans were made.
195.	I did not find Mr Cunningham’s evidence wholly satisfactory.  He is plainly an astute Banker, who was keen to see the case against Mr Jaffery as a ring-fenced allegation of breach of fiduciary duty.  But he did not strike me as a man who would have been so concerned about fiduciary duties, had there not been some other political or reputational angle to the events which occurred.  He had, after all, himself been involved in politics.  I formed the very distinct view that he was hiding something in giving his evidence.  He and Mr Jaffery had plainly not got on (though something Mr Jaffery said in closing made me think it might have been more of a love hate relationship than a simple incompatibility), and I am quite certain that there is some truth in the allegation that he and Mr Jaffery regularly discussed the more contentious issues affecting the Bank.  I will deal with the specific conversation on which Mr Jaffery relies as constituting the Bank’s consent to his following his own business interests when I deal with Mr Jaffery’s evidence in due course, and in addressing the issues that I have to decide.
196.	Mr David McGowan was the Chief Executive Officer of BOI PLC.   When he began his evidence, however, he told me that was now the Chief Risk Officer designate for BOI PLC.  As CEO of BOI PLC, Mr McGowan reported to Mr Des Crowley of GCBOI, and to Mr Denis Holt, Chairman of the Board of BOI PLC.
197.	He was Mr Jaffery’s line manager between February 2005 and November 2009.  Mr McGowan said in his statement that, at no time, had Mr Jaffery sought his approval to any deviation from the prohibition on conflicts of interest in the Bank’s Code of Conduct.  He also sets out a detailed exposition of the Bank’s hierarchy and reporting lines, and its independent credit function.  
198.	Also in his statement, Mr McGowan says that Mr Jaffery’s provision of some 6 credit references for Mr Gill and his associated companies, Berkeley Group and BGI (Berkeley Group Investments Ltd), was a breach of the Bank’s practice.  He says, however, that he does not know whether the Bank’s allegations that Mr Jaffery provided managerial and administrative services to RGC Customers or the Berkeley Group is true.  He does, however, say that even if Mr Jaffery were providing these services to his brother, Mr McGowan would have regarded that as inappropriate and put a stop to it.  Moreover, if he had learned that Mr Jaffery had an inappropriately close relationship with Mr Gill, he would not have recommended approval of the SIG loans.
199.	Mr McGowan’s statement also says that he does not know whether it is true that Mr Jaffery received or was promised benefits by Mr Gill or the RGC Customers.  Mr McGowan dealt in detail in his statement with the SIG loans and the reason why they were made on apparently commercially unattractive terms (with no interest on some parts for some periods).  Mr McGowan’s position is that, if he had known the key allegations were true, he would not have supported the Loans.  Moreover, if he had known that, he would have summarily dismissed Mr Jaffery, and no bonuses would have been paid to him.
200.	In chief, Mr McGowan said that he had only found out about the sham bank allegations on Friday 13th May 2011 when he was contacted by the FSA.
201.	In cross-examination, Mr McGowan first accepted that it was quite normal for an employee to have covert conversations with prospective employers and only to inform his current employers about those discussions when a new contract of employment is in place.  He accepted, in effect, that the allegation against Mr Jaffery that he had been in breach of duty by discussing the establishment of a new bank was unjustified.
202.	At the outset of his cross-examination, Mr McGowan also accepted that Mr Jaffery had played a full and important role in the strengthening of the Bank’s control procedures as regards valuers, solicitors and credit.  It was put to him that this role was inconsistent with a desire to take advantage of the Bank, upon which Mr McGowan made no comment.  He did, however, accept that, when Mr Jaffery joined the Bank, its business banking division was under-performing, and that Mr Jaffery had made a major contribution in modernising that business.  Mr Jaffery had been brought in to inject life into the business, and to bring new customers.  Alongside Mr Jaffery, three new directors, also from HBOS, Messrs Qadir, Baldry and Francioni had also been employed.
203.	Mr McGowan freely accepted that Mr Jaffery had done well, and had been promoted above others to become one of the 100 or so executives in the Bank in 2006.  At the end of 2006, Mr McGowan had no concerns about Mr Jaffery’s trustworthiness or competence, and had no grounds for suspicion.  In relation to his business performance, Mr McGowan accepted that Mr Jaffery had passed all but 2 of his important Credit Quality Reviews (CQRs), which was an extremely good record.  CQRs are undertaken to ensure that loans are being underwritten and managed efficiently against established processes and procedures.    In addition, his credit scoring record was very good, with some 97% of Mr Jaffery’s department’s loan applications being scored at satisfactory or good.  His team was recognised for providing very high quality analysis and reports to the Bank.
204.	Mr McGowan accepted also that Mr Jaffery approached him about leaving the Bank in 2008 when he (Mr McGowan) was on holiday in Portugal.  BOI BB was in a much better shape in 2008 than it had been in 2005, and Mr Jaffery had played such an important role in this that Mr McGowan asked him to defer his decision until his return and then persuaded Mr Jaffery to stay, with a raise in salary.  Mr McGowan accepted that he had gone out of his way to promote and mentor Mr Jaffery.
205.	Mr McGowan explained that there were 5 regional directors in business banking in late 2009.  In October 2009, Mr McGowan appointed Mr Jaffery, by way of a tap on the shoulder, as interim Head of Business Banking GB (i.e. England, Wales and Scotland), with Mr Kidd as Head of Business Banking in Northern Ireland.  At about the same time, Mr Cunningham was appointed as Head of Business Banking for the Group, so Mr Jaffery reported to Mr McGowan as CEO designate of UK PLC and to Mr Cunningham as Head of the group’s Business Banking.  Mr McGowan accepted that he had appointed Mr Jaffery because he thought he had the skills needed to manage the repercussions of the ongoing financial crisis.
206.	Ultimately, towards the end of 2009, Mr McGowan decided that Mr Jaffery should report to Mr Cunningham alone. In the jargon, BOI PLC’s business banking was “outsourced” to GCBOI.  Mr McGowan thought he did not have the capacity to manage the business banking alongside all his other responsibilities.  Mr Jaffery had also had, in effect 2 bosses which Mr McGowan regarded as less than satisfactory.
207.	In March 2009, Mr Kidd was promoted to Head of Business Banking for the UK.  Thereafter, Mr Jaffery as Head of Business Banking for Great Britain reported to Mr Kidd.
208.	Mr McGowan said he would be astonished if Mr Cunningham had told Mr Jaffery in October 2009 that his services were no longer required.
209.	Mr McGowan was cross-examined about his own desire to leave the Bank.  He said he had had one or two discussions with Mr Jaffery about the possibility that he might leave the Bank.  And he admitted that he had made one visit to a head hunter at the time when Mr Cunningham arrived, but he said that had nothing to do with any unhappiness about his new role as CEO of BOI PLC.  His interest was occasioned by his new partner’s wish to move abroad.  Mr McGowan denied that he had shared Mr Jaffery’s concern about the reality being that BOI PLC was a sham bank run wholly from Ireland.  It is perhaps worth noting that, in his evidence on day 9 he said he had visited the head hunter in mid 2010, but on day 10, he said it was middle to late 2009.
210.	Mr McGowan was aware that Mr Jaffery was in a state of unhappiness and was considering other opportunities outside the Bank.  He knew that Mr Jaffery did not enjoy his working relationship with Mr Cunningham and he knew that his wish to leave the Bank was related to that problem.  Mr McGowan denied that he had become increasingly concerned about the way in which Mr Cunningham had been “throwing his weight around”, but I formed the view that, in reality, he and Mr Jaffery had indeed discussed the problems that Mr Cunningham was creating for them both in October 2009 and thereafter.  Mr McGowan accepted that he had discussed Mr Cunningham’s management style, but I think the conversations went further than that. At the least, as Mr McGowan himself said: “he has an unfortunate style which grates with people who work for him”.
211.	In my judgment, these discussions never extended to any overt discussion about a sham bank, since I am far from sure that even Mr Jaffery had developed his discontent into such an allegation at that stage.  But I do think that Mr McGowan felt that he was being undermined by Mr Cunningham, and was concerned that he did not have a real role as CEO of BOI PLC, because all the power remained in Dublin.  That was the nub of Mr Jaffery’s concern.  Mr McGowan undoubtedly complained to Mr Crowley, as he admitted.  But I think he made light in his evidence of what he thought at the time was a very serious matter.  That said, I accepted Mr McGowan’s suggestion that Mr Jaffery normally “went into writing”, when he had a problem, and that he never received a memorandum or email about a sham bank.
212.	In relation to the SIG I loan, Mr McGowan explained that the loan documentation recorded that there was a formal valuation of the Stoke site at £2.8 million, but that the ARU, which always veered towards the worst worst valuation, thought they might only get £1m.  The Bank would, however, have relied only on formal valuations from accredited experts.
213.	Mr McGowan accepted that he thought that the SIG deal was a good deal for the Bank in the round, and that it was in the Bank’s best interest.  He did not think the Bank was selling the Stoke site for more than it was worth. He was aware of number of interest free loans on his lending book.  According to Mr McGowan, the chronology was (i) that the SIG I loan was approved in September 2008 on the basis of the a £1.5 to £3.5 million valuation (which was actually from Edward Symmons dated 7th December 2007) with planning permission in prospect (ii) the valuation of £2.8 million was formally received in March 2009, and (iii) the loan was drawn down in April 2009, and (iv) planning permission was actually granted in November 2009. 
214.	Mr McGowan was asked why Mr Cunningham, as the Head of Business Banking in BOI PLC’s area did not report to him.  Ultimately, he explained that he did so, because he was a member of BOI PLC’s business committee, which met monthly; the minutes were provided to the FSA.  He had a legal contractual responsibility to BOI PLC under the service schedule agreements between GCBOI and BOI PLC, which had outsourced its Business Banking to GCBOI.  Mr McGowan said that there was no confusion, and everyone, including the FSA knew how it operated, and approved the modus operandi.  FSA on 1st October 2010.
215.	Mr McGowan could not add much on the subject of the investigation into Mr Jaffery and Mr Gill, about which he was only informed some time between March and April 2011. He said that the investigation by Mr Murphy was into GCBOI employees.  His concern was that loans were in BOI PLC, and the investigation was important to him on a systemic basis and because of the potential reputational repercussions.  He said that Mr Murphy kept him informed at all times.
216.	Importantly, Mr McGowan admitted that he had not complained to Mr Murphy or anyone else before mid-March 2011 (when the investigation began) about Mr Jaffery, and he was not aware of any prior investigation into Mr Jaffery’s conduct prior to the March 2011. 
217.	When Mr McGowan was cross-examined by Mr Gill, he accepted that the change to FSA regulation of BOI PLC was that control and management had to remain within the UK, whilst before the change GCBOI was “passported” to operate a branch in the UK, and control and management could legitimately remain in Ireland.  Mr McGowan reiterated that the first time anyone at the Bank had become aware of the whistle–blowing allegation was when the FSA telephoned him on 13th May 2011 and told him that they had initiated contact with head of group communications at GCBOI.  The FSA had not mentioned that the Central Bank of Ireland (the Irish banking regulator) had at that stage become involved.  In re-examination, Mr McGowan said that, had the Irish regulator been involved, he would have heard from the FSA “in a matter of days”, as the Irish regulator and the FSA are in very close communication with each other.
218.	Ultimately, my impression of Mr McGowan was that he was a careful witness, who had prepared very carefully to give his evidence.  He tried to answer questions truthfully, but was able, rather cleverly I think, to make light of the parts of his evidence that he thought might make things difficult for his employers.  I have no doubt that two planks of Mr Jaffery’s cross examination hit home.  First, Mr Cunningham was not an easy man to work with and both Mr Jaffery and Mr McGowan were unhappy when he was appointed and thereafter.  Neither of them liked the fact that GCBOI was in ultimate charge, in fact if not in name.  They felt side-lined.  A good example of the way that Mr McGowan was side-lined was his lack of involvement in the investigation that GCBOI was undertaking into Mr Jaffery, determined as they (GCBOI) were, I think, to find a reason to get rid of him.  Mr McGowan definitely did not feel the same way at the time.  Of course, once he was told of Mr Jaffery’s breach of fiduciary duty, he fell into line.

The Defendants’ Witnesses
219.	Before I deal with the evidence of the Defendants, I should mention that, in considering it, I have borne in mind the well-known dictum of Lord Goff in the Ocean Frost [1985] 1 Lloyd’s Rep. 1 at page 57 column 1 as follows:-
“Speaking from my own experience I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and the overall probabilities”.
Mr Jaffery’s evidence
220.	Mr Jaffery gave evidence first.  He relied on a total of 8 documents by way of his evidence in chief.  Many of them were produced during the initial stages of the litigation.  Those documents were two affidavits of means, four witness statements made at early stages, the most significant of which was entitled his third witness statement and was dated 8th June 2011, his fourth witness statement made for the trial dated 27th February 2012, and three further documents dated respectively 22nd March 2012, 23rd March 2012, and 26th March 2012, each of which was produced in reaction to hearings that took place whilst Mr Jaffery was in hospital.
221.	Mr Jaffery told me in the course of the trial that he had little formal education, having obtained only 4 “O” levels, without even passing Maths or English. Considering this less-privileged background, Mr Jaffery had an extremely successful career in banking.  He was undoubtedly highly regarded by those that took him on at the Bank in 2005, and by many of those that he worked with in the years until May 2011 when he was dismissed.  His career should not, in my view, be seen as one that is dominated by the events that are in issue in this action.  Mr Jaffery headed up a major part of BOI’s business banking, and was placed in charge of loans that ran into the billions.  It seems from the evidence that I have already summarised from the Bank’s witnesses that he was very good at his job.  Moreover, it was never seriously suggested that the Loans that are the subject of complaint in this action were improperly granted in banking terms.  It is only the alleged breaches of fiduciary duty that are the subject of complaint.  I do not say this to minimise the importance of the allegations, but rather to put them in their true perspective.  In the years with which this case was concerned, Mr Jaffery was working all hours to further the Bank’s business, and no complaint has been made of any nature about his success in having done so; that success is all the more remarkable given the extremely difficult economic circumstances in the years concerned, and the even more challenging situation faced by the Bank itself.  Given that context, it might seem churlish at first sight that the Bank has seen fit to re-claim the entirety of the salary and bonuses paid to Mr Jaffery without regard to the admittedly excellent work he did for the Bank in many areas.
222.	I can say also at the outset that Mr Jaffery has considerable charm.  It is easy to see how he did so well.  Despite the immense pressure that he was under arising from the case itself, the effect on his psychological health, and from the burden of being cross-examined over 4 days, he remained courteous and respectful.  I have taken all these matters into account in assessing his evidence. 
223.	Mr Jaffery’s opening statement made the following main points:-
i)	The Annex A letters sent out in interlocutory hearings to the various  trust companies confirm that Mr Jaffery never had any formal interest in any of the companies that took the loans from the Bank.
ii)	Adnan was the owner and user of the iMac computer, and it was he that wrote the structure chart documents, none of which was put into effect.
iii)	Altaf was the only officer of the Berkeley Care Group.  Mr Jaffery was never an officer.
iv)	Mr Jaffery’s sister bought 100% of the Bombay Bicycle Club with monies she inherited from Adnan.
v)	Well over 50% of the Bank’s deals were outside its policy – that is how it obtained and grew its business.
vi)	Mr Jaffery wrote the disaster scenario document of 26th March 2011 to persuade Mr Kanji not to go public.  The document was written at a time that Mr Jaffery and Mr McGowan wanted to leave the Bank, and when Mr Jaffery had told Mr McGowan that he thought Mr Kidd was a racist.
vii)	Leigh Carr were Adnan’s accountants and never acted for Mr Jaffery.
viii)	Mr Gill never said that his own net worth was £20 million.  That was always understood within the Bank to be the net worth of the family.
224.	In an important passage in Mr Jaffery’s third statement dated 8th June 2011, he said this about his discussions with Mr Cunningham:-
“44. Once Mark Cunningham and Michael Kidd had been installed in their respective roles, a position quickly developed whereby (contrary to the terms of its UK Banking licence) the UK arm of BOI was effectively controlled from Dublin. Formal management charts were created which suggested that this was not so.  However, this, I believe, was merely a sham designed to mislead the FSA.  The internal ruse created for the FSA of a “matrix management system” appeared to have satisfied the FSA.
45.  In March 2010 shortly after I was demoted, I had a meeting with Mark Cunningham at which he made it abundantly clear that my future at BOI was limited and that I would be permitted to continue with my pursuit of other business opportunities and gradually plan my exit from the Bank.  He made it clear that in return I should continue to support the Bank’s representations about the extent of potential loan losses in the likely event that the FSA were to interview me.
46. By the middle of 2010, I was becoming increasingly sidelined within BOI. At around this time, the FSA visited BOI and interviewed a number of senior personnel, including myself.  Prior to these meetings, I had to attend a number of pre-meeting briefings, the purpose of which was to ensure that I stuck to the official BOI story.  To ensure that I did so, a person from BOI’s head office sat in on my meeting with the FSA, with the result that I did not feel that I could speak openly about what BOI was doing”.
225.	When cross-examined by Mr Gill, Mr Jaffery said that Mr Gill had never promised him any shares in any companies, that he knew Mrs Sumby to be the owner of the companies, and that Mr Gill had never given him (Mr Jaffery) the impression that he controlled or had power to bind the companies.
226.	Mr Jaffery was cross-examined for nearly four days by Mr Kitchener.  On the first day, Mr Kitchener cross-examined Mr Jaffery extensively on the execution of the search order, the fact that he had spoken to each of his wife and Messrs Gill, Kanji and Treon between service of the order and the search taking place, and his conduct in relation to the iMac computer.   I am not engaged in a trial of Mr Jaffery’s alleged breaches of the search order, but the question of whether Mr Jaffery used the iMac is relevant to the authorship of some important documents that were found on it.  In closing, Mr Jaffery explained in some detail why it was most likely that his wife had removed the iMac from 33 Gloucester Place between 29th April and 5th May 2011 to the house of her friend, Ms Sabrin Kanji.  I will not dwell upon the details that concerned the intricacies of Mr Jaffery’s marital relationship, but I have to say I found the explanation reasonably convincing.   I do not think that Mr Jaffery directed his wife to remove the iMac when he was served with the search order – I think it more likely that Mrs Jaffery had already taken it away.
227.	The documents found on the i-Mac are more relevant to issues that I have to decide and were as follows:-
i)	The To Do List entitled “Raj/Syed to do list” created on 12th August 2007, which Mr Jaffery suggested might have been created by Mr Adnan Jaffery.
ii)	The document entitled “New House Project” dated 22nd August 2008, which Mr Jaffery maintained was written by his nephew, Mr Adnan Jaffery.
iii)	A detailed curriculum vitae of Mr Jaffery created on 24th January 2011, which Mr Jaffery maintains his wife prepared with his assistance.
228.	Mr Jaffery denied that any of the documents on the iMac were his documents, and attributed them to his wife or nephew.  He also said repeatedly in his evidence that he could not stop Adnan and Altaf discussing various prospective deals with Mr Gill and others, but that he had always made clear to them that they could not actually do a deal involving the Bank without telling him. 
229.	I have considered very carefully the authorship of the To Do List, in the light of both Mr Jaffery’s evidence and his helpful closing submissions explaining why he thought it was written by Adnan, rather than Altaf.  He pointed to the different font that was used and references to options (something that Adnan would be conscious of) and to Ralph (referring to Mr Ralph de Souza of Leigh Carr, Adnan’s accountant, but not someone very well known to Mr Jaffery).  Mr Jaffery said that, even now, he could find no reference to a “Kim” on his Blackberry and did not know who that person was.  He also submitted that Adnan must have been writing it as a proposal to get involved in a business with Mr Gill.  
230.	Despite all this, I have concluded that Mr Jaffery did indeed write the To Do List.  It is simply only consistent with his having done so.  The contents refer to all the ongoing deals which Mr Gill and Mr Jaffery were discussing, and I cannot see how anyone apart from Mr Gill and Mr Jaffery could have had all the necessary information to write it.  There is no reason why Mr Jaffery could not have used the iMac to create such a document at that time.  Moreover, the document makes repeated references to the lack of any formal agreements for Mr Jaffery’s shares – that seems to me to be something that Mr Jaffery himself was the only one likely to be seriously concerned about.
231.	I have also concluded that I cannot accept Mr Jaffery’s evidence that it was Adnan that wrote the New House Project document.  It seems to me that its contents point inescapably to it having been Mr Jaffery’s document.  It refers to his plan to buy a new house, it refers to “Adnan style covings”, which Adnan would hardly be likely himself to refer to, and to monies from Stoke in which Adnan was simply not involved.  Mr Jaffery also accepted that he had been involved in the creation of the curriculum vitae.
232.	Mr Jaffery was extensively questioned about the disaster scenario document of 26th March 2011.  He denied absolutely that the words in the document “[t]he following are Absolute Facts:  … [Mr Kanji] has 30% shares” meant that Mr Kanji was entitled to 30% of the Hendon project, but said they meant rather that he wanted or it had been “more or less agreed” that he would have 30%.  He said that Messrs Kanji, Treon and Gill were in dispute, and he was arbitrating, and was worried that Mr Kanji would make wild allegations triggering serious repercussions for him for no reason whatsoever.  
233.	Mr Jaffery explained this point in more detail in his closing submissions.  He referred to an exchange of emails between Mr Kanji and Mr Gill in June 2010 which made it abundantly clear that they had indeed fallen out.  It was also clear from these emails that Mr Kanji had made a number of “finger pointing” allegations against Mr Gill.  I accept that Mr Jaffery was treated by Messrs Gill, Treon and Kanji as a kind of mediator, and that Mr Jaffery became disproportionately concerned when he saw Fladgate’s letter of 25th March 2011.  I also accept that Mr Jaffery, as a banker, tended to see the most disastrous side of a situation first.  I even accept that Mr Jaffery wrote the document to try to head Mr Kanji off – and to try to show him that making allegations against all and sundry was not a sensible way to proceed.  
234.	Despite all this, Mr Jaffery did not offer any plausible explanation for why, even on his own version of events, and even if Mr Kanji did make wild allegations against him to the Bank, that would be so likely to result in such dire consequences for Mr Jaffery.  It seems to me that the disaster scenario document shows that Mr Jaffery was concerned about the exposure of his “relationship” with Mr Gill, Mr Kanji and Mr Treon.  I don’t think he can have been referring to friendship or that kind of relationship, but I think he must have been referring to a business relationship with these three people.  It is this aspect of the document for which Mr Jaffery did not really provide any explanation either in his evidence or in closing.  True, he may have been exaggerating the point by referring to certain dismissal and prosecution, but his concerns are what are important.  And they, as reflected in this document, seem to me to be that his business relationship with Messrs Gill, Kanji and Treon would be exposed to the Bank.
235.	A series of documents found in his own office were put to Mr Jaffery as follows:-
i)	The document entitled “1st Board Meeting” created before 10th January 2008, including manuscript annotations that Mr Jaffery admitted making.  The document refers to monthly meetings at Berkeley Square, and to various projects indicating that 33% of the shares in the C+ project were to be allocated to “Highbury”.  Mr Jaffery maintained that he had not attended any board meetings, and that the document was a proposal made by Altaf or Adnan to Mr Gill.  Despite a number of text messages between Altaf and Mr Jaffery concerning monies to be paid to Highbury, he denied that Highbury was an offshore trust in which either he or his brother had an interest.   Mr Jaffery also denied that the document showed that he was to get an interest in the projects mentioned.  Mr Gill denied having seen the document despite what Mr Jaffery said about it.
ii)	The Stoke Deal document from the end of 2007 apparently recording, as I have said, a share split for the Stoke project of 33% to each of Mr Jaffery, Mr Gill and Mr Treon, and an offer to Mr Kanji to participate if he provided £400,000 in cash, out of the £450,000 that Mr Jaffery was due to contribute.  I was unable to accept Mr Jaffery’s denials that the Stoke Deal document (a) was indeed a 3-page document, and (b) was entirely created by him in late 2007.  Read carefully, the Stoke Deal document is obviously one document, and is obviously written at a time when the funding for the Stoke project is being arranged.  The third page refers to the “figures in this paper”, of which there are none on Mr Jaffery’s explanation, and the proportions and figures themselves match exactly the calculations on the previous two pages.  Mr Jaffery’s only answer was to say that the third page referred to his arranging a “short loan on my house etc”, when he said he lived in rented accommodation in 2007 and had no house to raise money upon.   The day after the initial cross-examination on this, a document was put to him, which forced Mr Jaffery to admit that he had in fact owned a property at 8 Hill Hall until 2nd July 2008.  In deciding the truth of this document, I take into account, as Mr Jaffery admitted, that he has lied in other respects.  I also take into account that Mr Jaffery had originally, when he was represented by lawyers, accepted that he had written the entire Stoke Deal document (including 2 further pages which are in fact a separate iteration of the document).  In my judgment, the third page gave no support to Mr Jaffery’s case that he was trying buy a share in Stoke in 2010.  Rather it demonstrated that he was trying to raise the money to participate in the Stoke project at the beginning.  It does not, however, show one way or another whether he was successful in doing so.  It was put to Mr Jaffery that he in fact took the loan of £300,000 from Mr Kanji to which the third page refers.  He denied that, even in the face of another document found in his own office listing monies he owed including a sum of £300,000 owed to Mr Kanji, and a text to his wife found on the iMac saying that he was stressed and had received a “notice from [H]aji solicitor” on 18th May 2010.  Mr Jaffery also denied that he had repaid the £300,000 by procuring Leigh Carr to pay Mr Kanji £296,633.37 on 27th May 2010, from the £700,000 loan he raised on 33 Gloucester Walk.  Instead, Mr Jaffery maintained that he had taken the £700,000 loan to pay off Adnan’s debts out of natural love and affection for him, and that the £296,633.37 was a debt that Adnan owed to Mr Kanji, and the balance of £400,000 was paid at Mrs Sumby’s direction (to SIG I) in respect of a debt that Adnan owed her.
iii)	The April 2009 Stoke Deal document, showing that Mr Kanji had put £300,000 in cash into the Stoke Deal, and proposing that Mr Jaffery would get an extra 15% of the shares, and Mr Kanji would get 15%.  Mr Jaffery denied this was his document, but I have formed the clear view that he must have written it. As he himself admitted, neither Adnan nor Altaf (whom he suggested had written it) had any share in the Stoke project.
iv)	An important 5-page document entitled “Berkeley Care Group” and created on 17th March 2010, and sent by email on that day from Mr Jaffery’s BOI email address to his syed.Jaffery786@googlemail.com  address.  Mr Jaffery contended that this document was drafted by his brother and that he took it off a USB stick.  He said it had been an error sending it to himself.  He had meant to send it to his brother and to tell him that the proposal contained in the document was not a good option for him.  The document itself is expressed to be a detailed paper “to try to move the operation from an ad hoc to a strong organised operation”.  It refers to the involvement of three people, Mr Treon as Chairman, Mr Gill as Managing Director and “XX” as Finance Director.  It deals with renting an office in London, the one third split of shares between the three participants, and the refinancing of the Stoke project, and the salaries of the participants over three phases.  I have considered the contents of the document very carefully indeed and have formed the clear view that it was written by Mr Jaffery in his unmistakeable style, and that he told me a direct lie when he said he did not create this document.  I also formed the clear view that the finance director “XX” in the document was indeed Mr Jaffery.  Moreover, the cipher was used deliberately because he knew that he was not permitted to be involved in such businesses whilst a Bank employee.  I accept, however, that the document related to a proposal for future activity, and that it was written at a time when Mr Jaffery was contemplating leaving the Bank to spend his time furthering the activities of the Berkeley Care Group.  The office that Mr Jaffery did rent from Regus Group was not, in my judgment, as he said, for his brother, but for him – even though it was not ultimately used.  The emails of 17th March 2010 between Mr Gill and Mr Jaffery make it abundantly clear that the document was indeed created by Mr Jaffery for discussion initially with Mr Gill.
v)	An untitled document listing 4 projects: 33 Gloucester Walk, Stoke, 1010 Great West Road and Nightingale.  Mr Jaffery admitted creating this document, but denied it was a list of his assets, or that he had the remaining third share not mentioned in relation to the latter 3 projects.  Mr Jaffery said that this was his proposal to buy out Mrs Sumby in April or May 2010, when he was thinking of leaving the Bank, after his brother had suggested doing so, he said unrealistically, in March 2010.  He explained the references to Mr Gill having 33% and Mr Treon having 33% by saying that he wanted Mr Gill to have a share as he could not put any money in, and he wanted Mr Treon involved as his was a good covenant that would help him re-bank the projects.
236.	In the context of the cross-examination about Mr Jaffery renting an office from Regus in early 2010, Mr Jaffery, significantly in my view, admitted lying to them in a letter dated 1st May 2010, when he tried to get out of paying for the office for the remainder of the year to which he was committed.  He said he had decided to run the “group” from home, when that was simply a fabrication.
237.	In relation to the payment of £35,000 that Mr Gill allegedly made for Mr Jaffery in respect of the renovations to Mr Jaffery’s property at 33 Gloucester Walk, Mr Jaffery said this:-
“ … the truth of the matter is that I made -- my Lord, the property I purchased was not a simple matter of a couple of windows being changed and a bit of plasterboard.  It was a major renovation also with two apartments becoming one and a 500 square foot basement being dug out into the garden.  It was spiralling out of control in terms of complexity. If you link that with what I was doing in the Bank at the time I was working all the hours God sent.  For someone like me as Banker to say I wasn't actually 100 per cent aware of if I paid 10,000, 5,000, 9,000 was a little bit of a running joke within the department, that "You are a Banker and yet your own development is going all over the place" and Mr Francioni and Mr Theaker held my hand in a major way on that development and also, when the costs started spiralling out of control, they assisted me in getting additional loans, et cetera, et cetera.  So Mr Gill's assistance was ad hoc, but became more and more comprehensive as the build progressed so 35,000 on a GBP 4 million property is hugely regrettable.  How he paid it, where it came from, I have no idea”.
238.	Mr Jaffery denied that Mr Gill had gone 50/50 with him on the expenses of renovating 33 Gloucester Walk, and that the £35,000 had been paid for the assistance that Mr Jaffery had given in relation to the transactions with the Bank.
239.	There was much cross-examination about Mr Jaffery’s personal email accounts.  In essence Mr Jaffery denied having used a personal email on the grounds that he was a disorganised person who could not remember the passwords.  After some prevarication, he explained the various documents that were put to him showing that he had used the address at barkcare@gmail.com by saying that it was a “drop-box” which he might have asked people to send things to, so that others (his wife, brother, nephew etc) could print them out for him.  Whilst there may be an element of truth in Mr Jaffery’s statement that he forgot passwords, I do not accept his evidence about personal emails generally.  He used a number of these emails when he needed them, and his evidence that he had not done so was disingenuous and contradicted by the documentary evidence.
240.	Mr Jaffery was asked about the draft Investment Agreement sent by Mr Kanji to him under cover of an email dated 7th May 2010 relating to the Hendon project which provided that the “three existing shareholders have agreed the shareholding of the company as follows: FULWOOD 30%  BGI 40% with 10% to be held on trust for SAJ   V2Capital 30%”.   He denied drafting or being involved in the drafting of that document, and said he did not notice that he was shown as having 10% shareholding in the draft shareholders agreement.  He said that “SAJ” could have been Mr Adnan Jaffery, though it was drawn to his attention that in his defence he had claimed it was a reference to Mr Altaf Jaffery.
241.	Mr Jaffery was cross-examined also about the email he sent to Mr Boucher on 2nd February 2011.  It was put to him, in effect, that what he wrote was disingenuous, since it contained a slew of allegations about the treatment of himself and his team, but made no mention of having already met Lord Ahmed to blow the whistle on the Bank.  Mr Jaffery’s gave two somewhat inconsistent responses: first, he said that you needed to follow the BOI’s “fireside chat” policy to be listened to; secondly, he said that the decision had already been made to get rid of him.  Either way, it seems to me that the email to Mr Boucher does support some of what Mr Jaffery put to the Bank’s witnesses about the treatment meted out to him by the Bank.  I have little doubt that, by February 2011, Mr Cunningham and Mr Kidd, at least, were keen to be rid of Mr Jaffery.  Since they were his two bosses, I also have no doubt that Mr Jaffery was made to feel extremely uncomfortable for some of the reasons set out in his email.
242.	Mr Jaffery was asked about the conversations that he allegedly had with Mr Cunningham in October 2009 and March 2010, in which Mr Cunningham said that he should leave the Bank and that, in the meantime, he could pursue his own business interests.   Mr Jaffery did not give any specific account of the alleged conversation in October 2009 (as opposed to the description he gave in his third statement of what was allegedly said in March 2010).  I formed the view that Mr Jaffery’s recollection of these conversations was somewhat impressionistic.  Undoubtedly, Mr Jaffery had frequent runs-in with Mr Cunningham.  They were poles apart, and they saw eye-to-eye on very little.  Whether or not Mr Cunningham told Mr Jaffery so in so many words, I have little doubt that shortly after he arrived in his new job in the Autumn of 2009, he gave Mr Jaffery to believe that his future at BOI was limited.  Strangely, I rather think he (Mr Cunningham) may not have intended to do so, but Mr Jaffery is such an emotional man that Mr Cunningham did not need to say much to give Mr Jaffery that very clear impression. That was, however, as Mr Jaffery explained, a very hard time to find another job.  I found the following exchange quite revealing:-
“Mr Kitchener: Coming back then to what you said about the March conversation in paragraph 45 of the witness statement.
A.  Yes, I beg your pardon.
Q.  You say that you would are permitted to continue with your pursuit of other business opportunities.
A.  Yes.
Q.  What other business opportunities did he know that you were pursuing?
A.  Mark Cunningham at this point was getting very irritated for the point you have just yourself made, when you said "It took you 19 months and this is ridiculous".  He said "How come you have not left, it has been months, why have you not left?"  What I tried to explain to Mark, "It is virtually impossible, Mark, to leave because nobody will touch this Bank with a bargepole, I can't leave".   So then Mark moved on and said "You don't have to -- literally, what other opportunities -- can you just go and do something -- you are a clever lad".  I mean, you have said to me several times "You are a very clever man, Mr Jaffery", maybe he was being sarcastic.  But he said to me "Do what you need to do but, please, my friend, you have to do it", but as fate would have it, I couldn't find a job, you are absolutely right, after desperately trying and all my emails show how many headhunters, how many people I desperately tried to leave the Bank with.  I couldn't find a business opportunity because, as at 6 May, I didn't have any shares, I didn't have any interest in any company, so I failed on both fronts, which is the most ironic thing I could [ever] tell you.  That is the whole irony of this whole case.  I wish I had found a job and I wish I'd found a business opportunity, I didn't find either.
Q.  I suggest that Mr Cunningham told you nothing that would indicate to you that the Bank consented to you planning any involvement in the business of any customer of the Bank.
A.  I suggest to you, Mr Cunningham, is that precisely the kind of man he is and precisely down his alley.  Nobody would be surprised in Bank of Ireland when I said any of this.  They would say "That is exactly what Mark would do".  Only you are surprised, maybe, in a court of law, but that is exactly the kind of personality we are dealing with”.
243.	Surprising as it may seem, I find that there was a significant element of truth in what Mr Jaffery was saying in that passage.  I am sure that conversations took place with him in which this kind of impression was given to Mr Jaffery.  Whether or not that impression can amount to the kind of consent necessary to allow Mr Jaffery to commit what would otherwise represent a breach of fiduciary duty is something I will consider in due course.
244.	Mr Jaffery accepted that he had not fully complied with his agreement with Mr Cunningham to support the Bank’s representations to the FSA, but it does not seem to me from the evidence I heard that Mr Jaffery said anything in his interview with the FSA that did the Bank any actual harm.  
245.	As regards the whistle-blowing to Lord Ahmed, Mr Jaffery accused the Bank of taking emails and notes that he had made, when they searched his office after he was dismissed.  That, he said, was why there were no disclosed documents identifying his concerns.  I cannot say if this is right, but I do have considerable reservations about the heavy-handed and disproportionate way in which this litigation has been conducted by the Bank.  On the evidence I heard, I can certainly not take the view that I have been shown all the relevant documents about the whistle-blowing episode.
246.	Mr Jaffery was cross-examined extensively on the last day of his evidence about the £700,000 that he raised on a second mortgage of 33 Gloucester Walk in May 2010.  Mr Jaffery’s evidence was that he had paid the entire £700,000 to Adnan’s accountants, Leigh Carr, so that he (Adnan) could pay his debts.  Adnan had used £300,000 of that money to pay off what Adnan owed to Mr Kanji, and the balance of £400,000 to pay off what Adnan owed to Mrs Sumby.  He made the payment to Adnan, he said, out of natural love and affection as he knew that Adnan was very ill.  He denied that, in the circumstances of these payments, there was anything strange about the fact that, when Adnan died in January 2011, his sister inherited his house and some £1 million and he inherited nothing.
247.	The documents were put in detail to Mr Jaffery as contained in the above chronology.  In relation to the £400,000 paid to SIG III on 24th May 2010, the following exchange took place:-
“Q.  What I suggest is that you knew very well that the receipt of the monies was absolutely nothing to do with any confirmation of Mr Gill's personal tax position; it was due to the fact that you had secured after some delay the proceeds of your second mortgage?
A.  Well, again you try and conflate three separate things and pretend they are all one thing because it suits you. Mr Gill was trying to say that he would potentially raise the 400,000, and I think all of us at the Bank had raised eyebrows.  One, we didn't think he had the ability to do it, two it wouldn't have made any sense, and he didn't in the end do that. The second thing is that Mrs Sumby separately said, who is the owner, that those funds will come from UBS, she said she will be breaking her deposit and, thirdly, yes, I was trying to pay my nephew's loan.  As it happens Mrs Sumby is in control of which amount she used.  She told me that she would break her deposit and I took that at face value.  I didn't conflate the two issues.  Fine, it suits you to do that.  Fine.  That doesn't make it true”.
248.	I am unable to accept Mr Jaffery’s explanation.  The documents make it abundantly clear that Mr Jaffery was desperate to obtain the £400,000 to contribute to the Stoke project.  There is not a single document showing Mrs Sumby’s involvement in procuring that payment.  It seems to me an inevitable consequence of the documentation that Mr Jaffery knew very well that the money he was raising on 33 Gloucester Walk was urgently required for the SIG investment required by the Bank.  Whether that investment was in fact his own investment giving him an interest in the Stoke project is a core issue in the case to which I shall turn in due course.
249.	Mr Jaffery was cross-examined extensively about the other potential deals in which he and Mr Gill were involved.  It was clear that towards the end of 2010 and in early 2011, Mr Jaffery was keen to leave the Bank and to find an investment that he could become involved in.  One of the ones that he looked at was the Bombay Bicycle Club.  The details do not really matter, since no investment was made whilst he was an employee of the Bank.   It was suggested, however, that the opportunity came to him whilst he was employed, and he therefore later took advantage of the opportunity in breach of duty.  I shall return to that contention. 
250.	Mr Jaffery was asked about all the references and recommendations he had given for Mr Gill.  It was suggested that he knew them to be untrue, and that, since he knew that Mr Gill had previously been disqualified as a director, he should not have given them at all.  Mr Jaffery said this:-
“… it is within my right as an executive of the Bank to write a Bank reference and I've written a Bank reference and I thought it was common ground between us, there was no issues with the Bank.  If you are saying there is an issue -- I'm very happy with every single reference I've given.  The language is standard and I've put the protections in, I've said that the Bank is not a credit reference agency and the information is provided without prejudice.   So there is no one to refer to for these.  They are my judgment call and I've made it and it is quite a standard practice to provide …  Nobody lends money on a Bank reference, my Lord, a Bank reference is there to provide some comfort, "This individual can", or "This company, et cetera, et cetera, can execute on what they say they can execute on".  Now, we are out for at least GBP 20 million to this family as a Bank, so to write a reference for someone -- the analogy I would give is if I walked in to try and buy Tesco and Tesco asked for a reference from my Bank and my Bank said "Mr Jaffery is good for GBP 10,000", they would know he is not even in that league to execute that deal. If my Bank said "He is good for business up to 200 million", that doesn't mean to say that Tesco is going to lend 200 million on my letter that means they are going to know I'm a credible individual to now engage with, that is what these references are there for”.
251.	Mr Jaffery denied that he was expecting an interest or had an interest in a number of other deals including the Land Bank deal, the Nightingale deal and the C+ deal.  He also denied that he had an interest in the METIS project, to which he said he had contributed £60,000 on behalf of his impecunious brother, Altaf.  
252.	I can conclude my treatment of Mr Jaffery’s evidence by saying that I found him an impressive witness, not impressive as regards his veracity, but as regards his stamina and fortitude.  I have little doubt that he has somehow managed to persuade himself that the majority of what he told me was true.  Unfortunately, he has admitted lying on several important occasions in important documents, some of which I have catalogued above.  His evidence cannot, therefore, be considered reliable.  Indeed, there were occasions when I found myself clearly detecting the difference between his demeanour when he was telling the truth and when he was lying.  I am sure he too knew (emotionally at least) when he was lying to me.  I will deal with those parts of his evidence that I am wholly unable to accept, most of which are signalled above, again in due course.
253.	Before dealing with Mr Gill’s evidence, I should say something about Mr Jaffery’s side of the story as regards the investigations the Bank undertook and his whistle-blowing activities. It is clear that Mr Jaffery did indeed make the sham bank allegation to Lord Ahmed in January 2011, and that Lord Ahmed faithfully reflected those allegations in the letter to the Chancellor, whose contents undoubtedly reflect Mr Jaffery’s perspective.  These events certainly support the likelihood that Mr Jaffery had said something about these matters to Messrs Cunningham and McGowan, as he put to them.  I am not sure, however, that he would have put the points quite as crisply to them as he did to Lord Ahmed.  Taking all the evidence together, I need to determine whether the Bank knew that Mr Jaffery had blown the whistle before it started its investigations into his activities.  This is not strictly relevant if Mr Jaffery was indeed in breach of his fiduciary duties, but it would cast a shadow over the motives of the Bank in investigating Mr Jaffery and then mounting this exceptional litigation campaign against him.
254.	I have not heard enough evidence to reach a clear conclusion about whether the Bank knew that Mr Jaffery was a whistle-blower before the 13th May 2012.  I am sure Mr McGowan did not know, but I strongly suspect that someone in the Bank at a senior level either knew or suspected that to be the case.  I see the force in Mr Jaffery’s contention that the disparity between Mr Murphy’s evidence and Mr Cunningham’s evidence is significant, and that the documents that were disclosed during Mr Cunningham’s evidence show that there was a sea change in the style of the investigation between the early reports of Mr Steve Hyndman in February 2011 into the Nightingale project and the initiation of the Project Metal group in March 2011.  I am sure that the latter investigation was into Mr Jaffery as Mr Murphy said, and not into a wider group of people as Mr Cunningham suggested.  Moreover, I cannot help thinking also that Mr Jaffery is right to have said that the reasons for the switch from employing the Bank’s normal procedures (Mr Hyndman and his boss, Mr John Crabtree, Head of Group Internal Audit) to a dedicated high level Steering Group based in Ireland, was occasioned by the fact that someone had got wind of the fact that Mr Jaffery was a whistle-blower.  As Mr Jaffery also said, it would not take much for the Bank to put two and two together, if it had heard that Lord Ahmed had written the letter to the Chancellor, to point the finger at him as probably the Bank’s most senior Asian employee.
255.	These matters do, I think, explain the peculiarly hard-nosed and disproportionate way in which the Bank pursued its investigation and indeed this litigation.  They do not, however, justify in any way any breaches of fiduciary duty that I may find to have been committed.  The whistle-blowing succeeded any breaches of duty, and the Bank, whatever its motives, is entitled to seek to vindicate its legal rights.  I shall return to this issue in due course.
Mr Gill’s evidence
256.	Mr Pritpal (Raj) Gill gave evidence next.  He relied in chief on a total of 12 statements and affidavits, mostly prepared in relation to various interlocutory applications.  They were dated 17th May 2011, 10th June 2011, 16th December 2011, 4th January 2012, 11th January 2012, 16th January 2012, 29th January 2012, 6th February 2012, 9th February 2012, 7th March 2012, and 13th March 2012.  His trial witness statement was dated 27th February 2012
257.	Mr Gill’s trial witness statement advanced the case that the Bank’s claims are a witch hunt (my expression) inspired because Mr Jaffery blew the whistle on its activities to Lord Ahmed.  Mr Gill cross-examined the Bank’s witnesses on the basis that GCBOI had obtained a UK Banking licence for the BOI PLC on the false basis that it would be run as a totally separate UK Bank, when in fact it was still to be governed from Ireland by the GCBOI.
258.	Mr Gill’s evidence was that he has never been a customer of the Bank, and that he was “advised very early on by Mr Qadir and [Mr Jaffery] [that] as I was made Bankrupt in the past and had been dis-qualified as being a director of a company I would not be suitable customer of the Bank”.
259.	Mr Gill said in his trial witness statement that the Bank’s primary case is that he is the owner of the Berkeley Care Group (“BCG”) companies and that he promised Mr Jaffery a share in these companies.  He says about this: “I am not the owner and never have been, my sister is the sole beneficiary of the GIFT trust.  This has been confirmed by not only the Banks own legal documentation but the trustees, Landmark Fiduciary, Leigh Carr accountants and my sister Mandip Sumby …”, and “[o]ver the years both Mr Syed Adnan, Mr Syed Altaf Jaffery, Mr Treon and Mr Kanji discussed with me a number of opportunities which, among many topics involved buying various assets from my sister’s trust and Mr Treon’s companies to form a care group, an investment vehicle centred around the development and running of a care group. … None of these plans were or have been executed”.
260.	Mr Gill’s witness statement denies bribing Mr Jaffery, and repeats that he has no shares or interests in any of the companies.  In relation to the allegation of knowing assistance, Mr Gill said in his statement that he was not aware of Mr Jaffery’s fiduciary duty or the “extent of what relationship he had with the Bank”.  He continues: “as far as I was aware my sisters’ accounts were managed by Mr Qadir, Mr Baldrey and Mr Williams and the in line boss was a Mr Kidd.  I was never aware of [Mr Jaffery] being the manager at any time.  I was under the impression he was an executive and had no material involvement in the running of accounts and or granting loans”.  He says that at no time was his relationship with Mr Jaffery kept secret from the Bank or its employees.
261.	In relation to the opening of a new Bank, Mr Gill says that it was his suggestion that Mr Jaffery should manage the new ethical Bank that he was proposing forming with a number of wealthy investors.
262.	In relation to SIG II, Mr Gill accepts that, at a late stage, Mr Jaffery offered to purchase the 24 flats at market price.
263.	In relation to the £400,000 payment, Mr Gill said this in his statement: “Mr Syed Adnan Jaffery owed my sister monies relating to losses incurred in a business deal.  I am aware that [Mr Jaffery] gifted these funds to Mr Syed Adnan Jaffery as he was dying at the time and subsequently passed away.  It is not out of the normal within the Asian community for family to repay these kinds of debts when families have close ties.  It is not a legal requirement only a moral one …”.
264.	In relation to the £35,000 that Mr Gill accepts he paid on behalf of Mr Jaffery in developing 33 Gloucester Walk, he says that the Bank was fully aware that he was assisting Mr Jaffery at the time “and in fact they had and were reimbursing numerous payments I had made personally or effected on [Mr Jaffery’s] behalf.  This was a payment that was overlooked and [Mr Jaffery] advised the [Bank] of and was intending to repay on the sale of the property”.
265.	In answer to questions formulated by Mr Jaffery (but put to Mr Gill by me in Mr Jaffery’s temporary absence), Mr Gill said that:-
i)	His relationship with the Bank began with Messrs Theaker and Baldrey to whom Mr Jaffery had introduced him.  Mr Gill said he had such a strong relationship with them that he went out drinking 2 or 3 times a week with them, and even sometimes went away at the week-ends.  Mr Gill was invited by the Bank to sporting events such as Wimbledon, football matches, and horse-racing.  He had an intellectual relationship with Mr Stokes, with whom he discussed their shared interest in Theology.  Messrs Jaffery and Qadir would not go out drinking, as they are committed Muslims.
ii)	Mr Gill acted as a consultant for his sister.  He knows many people as he is very sociable.  He oversaw planning and rent-collection and other aspects of her properties. He never signed documentation on her behalf.  Mrs Sumby had done well for herself, having done her PhD on fuzzy logic.  Ms Jastender Gill also did well as a chartered account, and she lived in California until 2009 or 2010, retaining a property in the UK.
iii)	Conversely, Mr Gill had lost money in 1997/1998 when the dot com bubble burst, and that resulted in the VAT fraud of which he was convicted and for which he spent 7 months in prison, and was disqualified as a director.  When he came out, he lived with his parents, and looked after them, in return for which Mrs Sumby and her husband agreed to help him get back on his feet by providing him with work, and Ms Jastender Gill bought the Hornchurch property for Mr Gill to occupy with his family.  Mr Gill said he would obtain from Mr Carter a copy of his consultancy agreement.
iv)	Mr Gill said that he got to know Altaf first in the early 1990s, when Altaf worked at HSBC.  He became friends with Adnan from his university days, and after he graduated when he worked for HSBC on a trading desk. His strongest relationship was with Adnan, who was more his age, and with whom he went clubbing and trained – including training for the London Marathon. Mr Gill got to know Mr Jaffery about a year after he came out of prison.  
266.	At the beginning of his cross-examination by Mr Kitchener, Mr Gill said that Mr Jaffery’s relationship with Adnan was a fatherly one, because Adnan’s parents had had an acrimonious split when Adnan was quite young.  Adnan was somewhat scared of Mr Jaffery.  He also explained that Adnan and Mr Jaffery did not know he (Mr Gill) had been to prison because Mr Gill’s family did not want anyone to know, as they were educated and distinguished, his great grandfather having been a judge in Lahore.  The conviction brought shame to his family, and only his parents and sister knew about it.  Other people thought he was travelling or pursuing his interest in Theology at an ashram, whilst he was in prison.
267.	Mr Gill was asked about the net asset statement that he signed on 1st May 2009 showing that he had net assets of £20 million.  The statement gave his sister’s address in Luxembourg, and he said that everyone in the Bank was fully aware that it was Mrs Sumby’s assets that he was speaking about.  They knew that he did not live in Luxembourg.  Mr Gill’s perspective was that the Bank was not relying on his net worth or his personal guarantees, nor upon his relationship with or support from Mr Jaffery.
268.	Mr Gill was cross-examined about his failure to disclose more documents.  It did not seem to me that I needed to decide the rights and wrongs of the interlocutory battles over disclosure that seemed still to be raging.  But I did accept Mr Gill’s evidence that he made or received something like 20 phone calls to one email.  He struck me as the kind of businessman, who operated by personal contacts in meetings or on the telephone, rather than in writing.  There are limited examples of documents actually created by Mr Gill, not, I think, because they have been concealed, but mainly because he did not do that much writing.  Some particular examples of documents he did create make that point good.  At the height of the crisis over the need for the £400,000 in May 2010, to which I have referred extensively above, Mr Gill did go into writing with his email of the 4th May 2010.
269.	Mr Gill was asked about the closeness of his relationship with Mr Jaffery.  Whilst it is true that they developed an increasingly close business relationship exploring numerous projects over the years between 2006 and 2011, I don’t think that they were quite living in each other’s pockets in the way that the Bank sought to suggest.  Mr Gill is a very different kind of person from Mr Jaffery, as is demonstrated by the evidence recorded above.  Their contacts were at a business and personal level, but I saw nothing to make me believe that there would have been anything “improper” in the relationship as suggested by the Bank, save insofar as impropriety is constituted by the breaches alleged in the case being proved.  Even the assistance that Mr Gill gave Mr Jaffery with the refurbishment of 33 Gloucester Walk was plausibly explained by Mr Gill in a telling passage of his evidence as follows:-
“Q. … we have heard that you provided a great deal of assistance … to Mr Jaffery in relation to the renovation of his house and you didn't charge for that …?
A.  I did assist Mr Jaffery in parts of his development, yes, I did.  Whether they were large or not, that is really a subjective question and a subjective point of view.  Mr Jaffery at the time was being swamped, he had no idea what he was doing.  He needed some guidance on co-ordinating things in a slightly different way. However, everyone at the Bank, including Mr Francioni, Mr Theaker, Mr Baldrey, Mr Williams, all knew this.
Q.  They didn't know [the] extent of what you [were] doing or that it was at no charge, did they?
A. I think they did know to the extent that I was doing it, because why would Mr Theaker have sent me money many times himself.  Mr Francioni, I met a number of times going to the office and Mr Francioni used to even joke, saying "Without you, Raj, he wouldn't even be able to get this development finished off".  So I think it was common knowledge that I was helping.  No, I didn't charge.  I wasn't spending 24 hours a day or eight hours a day or a working day doing it, I was helping a friend out.  I wouldn't consider it appropriate to charge”.
270.	Mr Gill explained the £35,000 that he had paid in respect of the refurbishment as follows when he was opening his case:-
“At the time he was refurbishing his flat, the Bank knew because Mr Paul Theaker -- he was only allowed to draw down once a month and the contractors needed paying sometimes in between and he asked me as a friend 'Do you mind assisting?'  Which I didn't mind.  So I would pay him in the interim and he would pay me at the end of the  month.  I was sending those to Paul Theaker and he was sending the money to me.  So that was not without the knowledge of the Bank, that was in full view of the Bank … But there are numerous numbers of transactions that demonstrated that.  Now one of those transactions did get missed and when he picked it up he said, 'Look, I haven't got the money because I done all my draw down. When I sell the flat I will reimburse you that 35,000'”.
271.	The upshot was that, according to Mr Gill, Mr Jaffery still owes him the sum of £35,000.  I accept this part of his evidence with one caveat, despite the Bank’s reliance on an email dated 18th December 2009 from Mr Jaffery to Mr Belcher at GSC Solicitors saying that Berkeley Group owed him £35,000.  The caveat is that it appears that the money that Mr Gill was using to pay Mr Jaffery’s bills was from his sister or the “Berkeley Group”.  Undoubtedly, Mr Gill did not make a very clear distinction between his own money and that of his sister.
272.	Mr Kitchener put a number of the important documents created or allegedly created by Mr Jaffery to Mr Gill and asked him detailed questions about them, after he denied absolutely having seen them at the time.  I did not find this exercise very illuminating, although questioning on one or two of the documents was revealing.
273.	Taking the most relevant documents in chronological order:-
i)	Mr Gill was asked about the Stoke Deal document of late 2007.  His answers were important, because he stuck to the identical story to that told by Mr Jaffery, namely that the first 2 pages were from 2007, whilst the 3rd page was from 2010.  I think this showed that Mr Gill was not being entirely truthful, but had collaborated with Mr Jaffery to align their evidence.  For the reasons I have given, I am wholly satisfied that the document is a single 3 page document from 2007, and that Mr Jaffery’s story that the third page is separate and from a later date is simply wrong.  I accept Mr Gill’s evidence that the figures in the Stoke Deal document, in offering the deal to Mr Kanji, concerning £1.2 million cash to be put in by Mr Gill and £450,000 to be put in by Mr Jaffery, are not what happened, mainly because £5 million was not what was paid for the Stoke site so no cash was required up front in 2009, when the site was eventually purchased.  I do not accept that it was Adnan and Altaf that were proposing to pay £5 million.  I think this was the proposal made by Mr Jaffery alongside Mr Gill.  I will turn later to resolve who the participants eventually turned out to be.  The cross-examination on this document proved revealing in another respect as well, because Mr Gill gave the following answer, dropping his guard somewhat, I think, when asked why he thought the third page was a different document.  He said: “Because in mid 2010 Syed said he wanted to do something outside of the Bank and that is the only time I've known him -- he took a loan out on his house.  So I'm assuming that when he said, "I've arranged a short-term loan on my house," that he was referring to the 700,000 that he took from …”.  Mr Kitchener interrupted him at that stage, and he resumed his composure in later answers. But the £700,000 loan on Mr Jaffery’s house had not previously been suggested by Mr Jaffery or by Mr Gill to have been for Mr Jaffery’s own business interests.
ii)	Mr Gill denied, as I have already said, having seen the 1st Board Meeting document created before 10th January 2008.  It is noteworthy, however, that an undated agenda listing most of the same projects as the 1st Board Meeting document and some of the same comments says that 33% of the C+ project was to go to Altaf after payment of £[blank] “[t]o be completed by next board”.  This seems to me to make it clear that the exact entitlements to the projects were hardly fixed by this time.
iii)	The 14th January 2008 document that Mr Jaffery apparently sent to Mr Gill was put to Mr Gill.  He denied having written it, but not that it was written to him.  He accepted that he may have arranged a meeting between Altaf and Mr Carter, but not that there was such a thing as the Highbury Trust.   
iv)	A document entitled “Board Meeting 2 17th January 2008” was put to Mr Gill (though it had not been put to Mr Jaffery).  The document refers again to 33% of the shares in C+ going to Mr Treon, and this time 33% also to Altaf “pending payment”.  Mr Gill said that this document too reflected only plans and that Altaf made no payment.  The document does, however, show that Altaf was seriously considered as a participant in some, at least, of the various projects.
v)	Mr Gill said he did not know who had written the April 2009 Stoke Deal document (though, as mentioned above, I am sure it was written by Mr Jaffery).  He said that the document was wrong to record that Mr Kanji had put £300,000 in cash into the Stoke project, since no cash had been put in at that stage.  It was put to him also that the document was correct to say that Mr Gill owned the new SPV, SIG I Limited, but again Mr Gill denied this.  I shall return to both the ownership of SIG I and to the alleged injection of the £300,000 into the Stoke project.
vi)	The 20th January 2010 document from Mr Gill’s computer was put to him.  He accepted it was his document (Mr Jaffery had denied he had written it on Mr Gill’s computer).  Mr Gill said that the reference to his “Key Actions To Date” including “PG [personal guarantees]/ Cash to date (£398k)” was a reference to his having managed the project up to that time, and the accrual of the costs that would have to be paid for during 2010, including planning and professional costs rolled up whilst planning permission was awaited (it was granted in November 2009).  Mr Gill said that “Part initial cash (£396k)  s” referred to Mrs Sumby needing in future to provide money and the “s” in “Funding agreed and signed off  s/Raj” also referred to Mrs Sumby.  Mr Gill could not provide a convincing explanation as to why he had used an “s” for the surname of his sister and “Raj” for himself.  I formed the view that the “s” was in fact a reference to Mr Jaffery.  Interestingly, Mr Gill mentioned in passing that his sister, Mrs Sumby, had refused to provide the personal guarantee to BOI that he had provided. 
vii)	I have already determined that Mr Jaffery produced the Berkeley Care Group document of 17th March 2010.   Mr Gill said that this document was a proposal by Altaf to become a finance director in respect of the Nightingale project.  He denied that it reflected that the three existing partners in Hendon, Stoke and 1010 Great West Road were Messrs Gill, Treon and Jaffery.  I do not entirely accept that denial, though I do accept that the document is a proposal to try to “move the operation from an ad hoc, to a strong organised operation” as its first line says.
viii)	Mr Gill denied knowing what Ms Sabrin Kanji was referring to in the draft Investment Agreement of 7th May 2010, when it was said that BGI would hold 10% of its 40% on trust for “SAJ”. But it turned out, when he was shown his own email of 30th April 2010 that he had put those words into the document by way of tracked changes before sending it back to Ms Sabrin Kanji and to the barkcare@googlemail.com email address.  Mr Gill tried to deny that he had done so, referring to a host of other emails that the Bank had not mentioned.  But I formed the clear view that it had indeed been Mr Gill who had changed the shareholdings from 60% to Fulwood (Mr Kanji) and 40% to BGI (Berkeley Group International Limited), to 30% to Fulwood, 40% to BGI “(10% to be held for saj)” and 30% to V2 Capital (Mr Treon).
ix)	In relation to Mr Jaffery’s disaster scenario document of 26th March 2011, found on Mr Gill’s computer, Mr Gill denied having seen it at the time.  He said that Mr Jaffery must have sent it to Mr Treon at the time.  He said that he thought the document showed that Mr Jaffery “probably put more importance on” Mr Kanji’s solicitor’s letter of 25th March 2011 than he had.  He said that Mr Kanji was making some outrageous suggestions.  Mr Gill said that he was pre-occupied with his discussions with Mr Treon that were going on at the same time about a proposed Four Seasons Health Care group.  I am satisfied that this document was drafted by Mr Jaffery without significant input from Mr Gill.
x)	An email apparently written by Mr Gill to Mr Treon and copied to the barkcare@googlemail.com address on or after 29th March 2011 was put to Mr Gill (but not put to Mr Jaffery).  It listed the monies that had come in on the Stoke Deal as follows: “[Mr Kanji] 317k  H Kassamal 225k  K Patel 50k  Meera Construction 50k  M Pindoria 300k  M&S Main 131k”.  Mr Gill’s evidence was that these sums totalled some £1 million (in fact £1,073,000), and were, despite the heading to the email saying “Stoke” related to Hendon.
274.	Mr Gill was cross-examined at some length about the injection of £400,000 into the Stoke deal in May 2010.  His evidence did not add much to what Mr Jaffery had said, although he did say that his sister was never confident that Adnan would actually repay the £400,000, since he had been saying he would do so for a long time.  She may, he said, have used the delay and the urgency as a tool to get the money from Adnan.  The doubt about the payment from Adnan, said Mr Gill, was the explanation for the other possible sources of the money being considered (breaking the deposit, which Mrs Sumby would not do, he said, and Mr Gill himself subject to his tax position).  Mr Gill was questioned about his 4th May 2010 email to the Bank relating to the “collation” of the £400,000, and he explained that his sister could not lend money to her trust for tax reasons.
275.	Quite a lot of time was spent in asking Mr Gill about Mr Jaffery’s possible purchase of the 24 flats at the front of the Stoke site in early 2011.  Mr Gill accepted he had recorded that £1 million had been agreed by BGI as the sale price on 29th March 2011.  It was put to him that this was a deal agreed at an undervalue to benefit Mr Jaffery, because Knight Frank had valued the flats at £1.73 million in November 2010.  Mr Gill rejected that suggestion on the basis that the Bank had valued them at £980,000, had a 10% over-ride on the property, and could have vetoed any sale, and that Knight Frank’s value was some months earlier.  In any event, the sale never took place.
276.	There was also lengthy cross-examination of Mr Gill about the Bombay Bicycle Club transaction, which again did not take place before Mr Jaffery was dismissed.  Mr Gill accepted that Mr Jaffery was intending to take part in the deal, but he insisted that before he was dismissed, he was intending to buy a separate part of the V8 Gourmet Group himself, not take a share with BCG.  Only after he was dismissed did Mr Gill change the deal so that Mr Jaffery could participate in a single deal.  Ultimately, the V8 Gourmet group went into administration shortly after Mr Jaffery was dismissed, and Ms Saeeda Jaffery  took a debenture using her inheritance from Adnan, and Ms Jastender Gill took over the surviving parts of the business.  Mr Gill accepted that at the stage that this deal was being negotiated, Mr Jaffery was indeed using the barkcare@googlemail.com email.  The BOI had offered finance for the Bombay Bicycle Club transaction on 15th April 2011, but the offer lapsed after Mr Jaffery was dismissed.  Mr Gill refused to accept that he had said that Mr Jaffery should not present the deal to Mr Theaker because he knew of the conflict.  And he denied both that he and Mr Jaffery had always intended to buy and operate the Bombay Bicycle Club together, and that he had obtained the opportunity because of Mr Jaffery’s position at BOI.
277.	Mr Gill was asked many questions about the Hendon project.  His evidence was that Mr Jaffery had no interest in it, but that he was involved in the detail from an early stage, because he (Mr Gill) had fallen out with Mr Kanji, and Mr Kanji had become very petty accusing him of all manner of misdeeds, so that Mr Jaffery had had to mediate and deal with minor matters, because Messrs Gill and Kanji would not otherwise communicate.  I accept, as I have already said, that there was some truth in this story, though it did not account for the entirety of Mr Jaffery’s involvement.  I will return to deal with Mr Jaffery’s interest in the Hendon project in due course.
278.	At this stage, it is worth mentioning a point that was raised in closing concerning Mr Gill’s irate email to Mr Kanji dated 15th June 2010, which concluded in relation to the Hendon project by saying that “I am not prepared to carry out a dialogue with you any longer … Once a year BGI will issue a statement and as a minority shareholder I am sure this will be circulated to you”.  I mention this, not because it reflects what happened, but because it seems to be an acknowledgment that it was not right for Mr Gill to have said that Mrs Sumby had a 100% interest in the Hendon project.  Mr Gill did not provide an explanation for what he had said.
279.	It was suggested to both Mr Gill and to Mr Jaffery that they were responsible for the forgery of a copy of the Hendon facility letter dated 16th October 2007.  This version, which had been provided to Mr Kanji, showed that Mr Gill had guaranteed the deal up to £1.1 million instead of up to £290,000 (as was the truth).  I do not think it necessary to reach a conclusion on this allegation, since Mr Kanji, who disclosed the allegedly forged document was not called, and I cannot see that it is anyway of much assistance in deciding the core issues in the case.
280.	Mr Gill was also cross-examined on whether Mr Jaffery and Mr Qadir knew of his conviction.  He broadly repeated the version of events that he had put forward in answer to Mr Jaffery’s questions.  Ultimately, I am not sure that it matters whether Mr Jaffery knew of Mr Gill’s conviction as well as his disqualification and his bankruptcy.  As Mr Gill said, banks do, in fact, lend to people who have been bankrupt and who have been disqualified and with past convictions (certainly spent ones), so the point is rather academic.  Moreover, BOI do not actually ask potential borrowers if they have any convictions.  The more important point put to Mr Gill was that he had effectively used Mr Jaffery’s position at the Bank to further his business, knowing that he would not have been so favourably treated without Mr Jaffery’s support.  Mr Gill denied all these suggestions, but his denial of the latter point was less convincing.  It was very clear from a whole raft of documents (some put to Mr Gill and many not) that Mr Gill used his relationship with Mr Jaffery to advance his (or his sisters’) position, and that he knew that Mr Jaffery was supporting his loan applications and obtaining favourable terms for him.  He was also taking Mr Jaffery’s advice as to how to present matters to the Bank.  I shall return to the significance of these points, the relevance of the conviction, and the question of whether the Bank would have entered into the same transactions anyway.
281.	Mr Gill was asked directly about his view of Mr Jaffery’s duties to the Bank.  I found his answers more than usually evasive.  The following passage provides an example:-
“Q. You understand that Mr Jaffery's [obligation] was always to act in the best interests of the Bank.
A.  I think anyone who is employed by any firm has to act in the best interests of who they work for, that is –
Q.  You obviously understood that he wasn't entitled to have -- he wasn't allowed to get himself into a situation where his personal interests conflicted with the interests of the Bank.
A.  That would really be a matter for him, wouldn't it?
Q.  No, I suggest it's a matter for you and that that is a matter that you would have known about, because it is obvious.
A.  No.
Q.  You knew that he couldn't have an interest in a Bank customer like SIG or Telkin, whilst he was employed by the Bank.
A.  He didn't have an interest in SIG or Telkin.
Q.  You knew that he couldn't.
A.  He didn't have an interest in Telkin.
Q.  You knew that he couldn't be promised an interest in a Bank customer like SIG or Telkin while he was employed by the Bank –
A.  And he wasn't promised.
Q.  -- or have any expectation of such interest –
A.  And he had no expectation.
Q.  -- or receive any undisclosed benefits from customers –
A.  I can't talk about other customers but from myself he received nothing -- or my sisters, he received nothing”. 
282.	After some considerable deliberation, I have concluded that these answers, like much of Mr Gill’s evidence, were not born of ignorance of the law, but of a close understanding of the legal issues in this case.  Moreover, I am certain that Mr Gill understood the limits of what was permissible at the time.  His conduct, taken as a whole, demonstrates to me that he understood the tightrope upon which he and Mr Jaffery were walking.  The question that remains is whether, at any time, they toppled over.
283.	Mr Gill was asked about his personal assets, and he denied having any, except for what he was paid by way of consultancy fees and commission.  He said that he had never claimed to the Bank that he was worth £20 million, or £60-£70 million.  All assets estimates related to his sisters and family.
The other witnesses for the Defendants
284.	Eventually, the day before Mr Gill was due to give evidence, Mr Gill confirmed that he would not be calling his two sisters, Mrs Sumby and Ms Jastender Gill.  Mr Gill told me, however, that Ms Jastender Gill moved back to the UK from Los Angeles some 2 years ago, and had moved to Colchester because her daughter obtained a place at the Grammar School in Colchester. Mrs Sumby’s statement dated 27th February 2012 said that she was the sole beneficiary of the GIFT Trust and the various companies underlying the trust, and that Mr Gill had never directly or indirectly been a beneficiary.  Mrs Sumby also said that her trustees had contracted Mr Gill to assist in the sourcing and management of deals.  Ms Jastender Gill’s statement said that she was the beneficiary of the BEREKELY (sic) Trust and the various companies underlying the trust, and that Mr Gill had never directly or indirectly been a beneficiary.  Ms Jastender Gill says in her statement that in August 2006 she bought the Hornchurch Property for £1.25 million in her own name, with a mortgage of £1 million from HSBC.   She recently gifted the Hornchurch Property into a trust on tax advice at which time the Bank “took over the loan”.  Ms Jastender Gill says that she will not transfer the Hornchurch Property to Mr Gill as it is not his property and never has been. 
285.	No other witnesses were, therefore, called by either Defendant, though repeated reference was made to the affidavits of 3 representatives of Leigh Carr (Mr Noorali Jin, Mr Roy Whitcomb, Mr Ralph de Souza) that had been filed in interlocutory proceedings.  It was accepted by Mr Kitchener QC that I could take into account, subject to the usual questions as to weight, the statements of Mr Gill’s sisters and of Leigh Carr’s representatives.
Legal principles
286.	Before turning to deal with the issues that I have to decide, it is useful to set out some of the non-controversial principles affecting those issues under the following 7 headings:-
i)	Breach of fiduciary duty;
ii)	Consent to a conflict of duty and interest;
iii)	Dishonest assistance in a breach of fiduciary duty;
iv)	Causation in relation to breaches of fiduciary duty and dishonest assistance;
v)	Allowances and forfeiture of salary and bonuses;
vi)	Reflective loss;
vii)	Bribery.
1. Breach of fiduciary duty
287.	The rules applicable to conflicts between duty and interest of fiduciaries and the ‘no profit’ are well summarised in 2 short passages from Snell’s Equity 32nd edition 2010 at paragraphs 7-018 and 7-041 as follows:-
“7-018.  “It is an inflexible rule of a Court of Equity that a person in a fiduciary position … is not allowed to put himself in a position where his interest and his duty conflict”
The rule applies even where the fiduciary’s personal interest “possibly may conflict” with his duty, but only if a reasonable person “looking at the relevant circumstances would think that there was a real sensible possibility of conflict.”  Thus, if there is no non-fiduciary duty in the circumstances, there can be no conflict between duty and interest.
The fiduciary conflict rule has sometimes been attributed to considerations of morality, but the better view is that it is based on “the fallibility of human nature” rather than on morality.  It is:
“based on consideration that, human nature being what it is, there is a danger, in such circumstances, of the person holding a fiduciary position being swayed by interest rather than by duty.”
By having a personal interest in a transaction which conflicts with his non-fiduciary duty, the fiduciary “puts himself in such a position that he has a temptation not faithfully to perform his duty to his employer.”  It is the temptation to breach non-fiduciary duties that is the evil against which the rule is directed.  Thus, in Aberdeen Railway Co v Blaikie Bros, Lord Cranworth L.C. identified that a director owed a duty to his company to obtain property for the company’s use at the lowest price possible and observed that the director’s personal interest in a transaction with the company “would lead him in an entirely opposite direction.”
It is not necessary to show that there has been a breach of non-fiduciary duty in order for there to have been a breach of fiduciary duty: “it is quite enough that the thing which he does … has a tendency to interfere with his duty.”  Indeed, a fiduciary can be in breach of the fiduciary conflict rule even though his or her conduct has been to the benefit of the fiduciary’s principal.  The rule is a general rule, based on generalised considerations of risk, rather than one which requires an assessment of whether the fiduciary has actually succumbed to temptation, as that is often too difficult to determine.  In this sense, fiduciary doctrine is often described as “prophylactic”.
Similarly, the fairness or otherwise of the transaction is generally not a relevant consideration, and “no inquiry on that subject is permitted.”  Nor is it relevant whether any gain by the fiduciary was one that the principal could or could not have obtained.
The honesty or otherwise of the fiduciary is also irrelevant: a breach of fiduciary duty “may be attended with perfect good faith.”  The fiduciary conflict rule “might be departed from in many cases, without any breach of morality, without any wrong being inflicted and without and consciousness of wrong-doing.”  This does not mean that the rule can be departed from where the fiduciary does not act immorally: it means that the rule applies irrespective of considerations of morality.
The rule is not avoided by the fiduciary arranging a transaction through a third party if there is an “understanding or agreement in honour, or in any other shape” with the effect that the third party is in fact acting on behalf of the fiduciary”.
…
“7-041.  The second of the two major themes of fiduciary loyalty is the profit rule.  The essence of the profit rule is that a fiduciary acts in breach of fiduciary duty where he or she makes a profit by reason or in virtue of the fiduciary office or otherwise within the scope of that fiduciary office.  A fiduciary is required “to account for any benefit or gain obtained or received by reason of or by use of his fiduciary position or of opportunity or knowledge resulting from it.”
The fiduciary’s honesty is no defence.
“The rule is not dependent on fraud or bad faith or whether the actions of the fiduciary were clandestine.  The rule is dependent on the mere fact of the profit being made.”
It is also irrelevant whether the principal could have obtained the profit for itself.  The reason for this is that if a fiduciary could justify his or her conduct on such a basis:
“there will be a temptation to refrain from exerting their strongest efforts on behalf of the [principal] since, if it does not meet the obligations, an opportunity of profit will be open to them personally.”
It is also irrelevant whether the fiduciary’s conduct has caused any loss to the principal.  Indeed, the fiduciary can still be required to account even though he acted in good faith and avowedly in the interests of his principal”.
2. Consent to a conflict of duty and interest
288.	The rules applicable to the circumstances in which a conflict between duty and interest can be authorised are also well summarised in Snell’s Equity supra at paragraph 7-019 as follows:-
“The fiduciary conflict rule has few exceptions.  However, “a person occupying a fiduciary position will be absolved from liability for what would otherwise be a breach of duty by obtaining a fully informed consent.”  Such consent may have been obtained at the outset from the person who created the fiduciary relationship, or it can be obtained from the fiduciary’s principal, or from the court.  Company directors can seek authorisation to act with a conflict between duty and interest from the other directors.
Fiduciaries are not generally obliged to make full disclosure and seek consent.  Rather, the fundamental obligation is to desist from acting in a way that involves a conflict between duty and interest; disclosure and consent provide a mechanism by which the fiduciary can avoid liability if he wishes to act in such a situation.
However, it is a breach of statutory duty for a company director to fail to disclose any interest he has in a contract or proposed contract with the company, although this is not necessary where the other directors are already aware of the conflicting interest.
It has been said that a fiduciary is liable under the fiduciary conflict rule even if he was not aware of the conflicting interest, but this seems unnecessarily harsh and there is contrary authority.  However, a fiduciary cannot avoid the effect of the rule where he has deliberately refrained from acquiring information about a conflicting interest, or where he ought, consistently with his professional duty, to have recognised the conflicting interest”.
3. Dishonest assistance in a breach of fiduciary duty
289.	The test of dishonesty is now clearly established by the Privy Council in Barlow Clowes v. Eurotrust [2006] 1 WLR 1476.  In Starglade Properties Limited v. Roland Nash [2010] EWCA Civ 1314 the Court of Appeal (Morritt C, Hughes and Leveson LJJ) reviewed the applicable principles and said this:-
“26. In Twinsectra Ltd v Yardley [2002] 2 AC 164 … [t]he majority concluded that the test of dishonesty was a combination of an objective and subjective test. The combined test was described by Lord Hutton (p.172D) as one
“...which requires that before there can be a finding of dishonesty it must be established that the defendant's conduct was dishonest by the ordinary standards of reasonable and honest people and that he himself realised that by those standards his conduct was dishonest.”
27. This was explained by Lord Hutton, with whom the majority agreed, in paragraph 36 in these terms:
“It would be open to your Lordships to depart from the principle stated by Lord Nicholls that dishonesty is a necessary ingredient of accessory liability and to hold that knowledge is a sufficient ingredient. But the statement of that principle by Lord Nicholls has been widely regarded as clarifying this area of the law and, as he observed, the tide of authority in England has flowed strongly in favour of the test of dishonesty. Therefore I consider that the courts should continue to apply that test and that your Lordships should state that dishonesty requires knowledge by the defendant that what he was doing would be regarded as dishonest by honest people, although he should not escape a finding of dishonesty because he sets his own standards of honesty and does not regard as dishonest what he knows would offend the normally accepted standards of honest conduct.”
28. There is no suggestion in any of the speeches in Twinsectra Ltd v Yardley that the standard of dishonesty is flexible or determined by any one other than by the court on an objective basis having regard to the ingredients of the combined test explained by Lord Hutton.
29. In the third of the relevant authorities I have listed in paragraph 23 above, Barlow Clowes Ltd v Eurotrust Ltd [2006] 1 WLR 1476, the Privy Council accepted that (para 10):
“Although a dishonest state of mind is a subjective mental state, the standard by which the law determines whether it is dishonest is objective.  If by ordinary standards a defendant's mental state would be characterised as dishonest, it is irrelevant that the defendant judges by different standards.
It added:
“15. Their Lordships accept that there is an element of ambiguity in these remarks which may have encouraged a belief, expressed in some academic writing, that Twinsectra had departed from the law as previously understood and invited inquiry not merely into the defendant's mental state about the nature of the transaction in which he was participating but also into his views about generally acceptable standards of honesty. But they do not consider that this is what Lord Hutton meant. The reference to “what he knows would offend normally accepted standards of honest conduct” meant only that his knowledge of the transaction had to be such as to render his participation contrary to normally acceptable standards of honest conduct. It did not require that he should have had reflections about what those normally acceptable standards were.
16. Similarly in the speech of Lord Hoffmann, the statement (in para 20) that a dishonest state of mind meant “consciousness that one is transgressing ordinary standards of honest behaviour” was in their Lordships' view intended to require consciousness of those elements of the transaction which make participation transgress ordinary standards of honest behaviour. It did not also to require him to have thought about what those standards were.
17. On the facts of Twinsectra, neither the judge who acquitted Mr Leach of dishonesty nor the House undertook any inquiry into the views of the defendant solicitor Mr Leach about ordinary standards of honest behaviour. He had received on behalf of his client a payment from another solicitor whom he knew had given an undertaking to pay it to Mr Leach's client only for a particular use. But the other solicitor had paid the money to Mr Leach without requiring any undertaking. The judge found that he was not dishonest because he honestly believed that the undertaking did not, so to speak, run with the money and that, as between him and his client, he held it for his client unconditionally. He was therefore bound to pay it upon his client's instructions without restriction on its use. The majority in the House of Lords considered that a solicitor who held this view of the law, even though he knew all the facts, was not by normal standards dishonest.”
There is no suggestion in this case either that the standard of dishonesty is flexible or determined by any one other than by the court on an objective basis having regard to the ingredients of the combined test as explained by Lord Hutton in Twinsectra and Lord Hoffmann in Barlow Clowes”.
4. Causation in relation to breaches of fiduciary duty and dishonest assistance
290.	The rules applicable to causation in cases where equitable compensation is claimed for a breach of fiduciary duty are also set out in Snell’s Equity supra  at paragraph 7-059 as follows:-
“(b) Causation.  However, compensation is only available in respect of loss which is shown to have been caused by the breach of fiduciary duty, which requires the court to determine what would have happened but for the breach of fiduciary duty.  This can involve consideration of how the principal would have acted if the fiduciary had not acted in breach of fiduciary duty.  Compensation cannot, therefore, be recovered where it is clear that the principal would have acted in the same way even if the fiduciary had disclosed all the material facts.  In Swindle v Harrison, Evans L.J. suggested that a fiduciary may be unable to avail himself or herself of this rule where the breach of fiduciary duty involved dishonesty or fraud, but Tuckey L.J. has since pointed out that neither Hobhouse L.J. nor Mummery L.J. appeared to accept Evans L.J.’s distinction between fraudulent and non-fraudulent breaches of fiduciary duty.  In Gwembe Valley Development Co Ltd v Koshy, the defendant director was found to have acted dishonestly in not disclosing his interest in a transaction and was nonetheless held not liable to pay equitable compensation on the basis that his breach had not been proven to have caused loss to his company.
The burden of proving that the breach of fiduciary duty caused the loss for which equitable compensation is claimed rests with the principal.  The principal (or beneficiary) bears the primary onus of showing that “but for the breach, the beneficiary would not have acted in the way which has caused the loss.”  If that onus is met, the court may draw inferences (but cannot merely speculate) as to what would have happened if the fiduciary had performed his duty properly, and in the absence of evidence to justify such inferences the beneficiary is entitled to be placed in the position he was in before the breach occurred, unless the fiduciary (on whom the onus will lie) is able to show what the principal (or beneficiary) would have done if there had been no breach of fiduciary duty.
In Canada and New Zealand, adapting Lord Thankerton’s comments in the Privy Council in Brickenden v London Loan & Savings Co, a slightly different approach to causation has been adopted, whereby the fiduciary bears the burden of proving that the principal would have acted in the same way if it wishes to avoid an award of compensation; and mere speculation will not suffice to convince the court of this, but inferences can be drawn from the evidence where they are clear.  However, the difference in approach is unlikely to matter in terms of the practical outcome of cases.  In English cases, where the onus of proof has fallen on the claimant, claims have generally failed not because the claimant failed to show that he would have acted differently, but because it was clear from the evidence that he would not have acted differently.
If causation is made out, so that a compensation award is available, the fiduciary does not avoid responsibility to compensate for the full amount of that loss by having diverted a profitable opportunity to a partnership (or other vehicle) which is only partly owned by the fiduciary …”.
5. Allowances and forfeiture of salary and bonuses
291.	Snell’s Equity provides as follows at paragraph 7-041 in relation to allowances:-
“Similarly, a fiduciary who has acted in breach of fiduciary duty, and against whom an account of profits is ordered, may nevertheless be given an allowance for skill and effort employed in obtaining the profit which he has to disgorge, where:
“it would be inequitable now for the beneficiaries to step in and take the profit without paying for the skill and labour which has produced it.”
This power is exercised sparingly, out of concern not to encourage fiduciaries to act in breach of fiduciary duty.  It will not likely be used where the fiduciary has been involved in surreptitious dealing or has acted dishonestly or in bad faith.  However, allowances are not ruled out simply because the fiduciary can be criticised in the circumstances, and there are instances of them being made even where the fiduciary has acted surreptitiously and deceitfully”.
292.	In relation to forfeiture of salary and bonuses, the Bank relies on Jacob LJ’s judgment in Imageview Management Limited v. Jack [2009] EWCA Civ 63, in which a football agent made a secret side deal with the Football Club that engaged Mr Jack.  Imageview was due to be paid 10% of Mr Jack’s monthly salary.  The Court of Appeal (Mummery, Dyson and Jacob LJJ), held that Imageview should forfeit its right to its commission as a result of its breach of fiduciary duty.  Jacob LJ reviewed the authorities culminating in Keppel v. Wheeler [1927] 1 KB 577 in which Atkin LJ had said at page 592:- 
“Now I am quite clear that if an agent in the course of his employment has been proved to be guilty of some breach of fiduciary duty, in practically every case he would forfeit any right to remuneration at all. That seems to me to be well established. On the other hand, there may well be breaches of duty which do not go to the whole contract, and which would not prevent the agent from recovering his remuneration; and as in this case it is found that the agents acted in good faith, and as the transaction was completed and the Appellant has had the benefit of it, he must pay the commission. Therefore, I think, the Defendants are entitled to recover on their counterclaim”.
293.	Jacob LJ continued as follows:- 
“[44] I accept Mr Lopian's submission that there can be cases of harmless collaterality. And that there can be cases where there is just an honest breach of contract such as Keppel. But this is simply not such a case. This is a case of a secret profit obtained because Mr Berry/Imageview was Mr Jack's agent. And there was a breach of a fiduciary duty because of a real conflict of interest. That in itself would be enough, but there is more: the profit was not only greater than the work done but was related to the very contract which was being negotiated for Mr Jack. Once a conflict of interest is shown, as Atkin LJ said in the last passage quoted, the right to remuneration goes.
[46] I would also observe this: that none of the cases relied upon by Mr Lopian involve a direct conflict of interest between that of the agent and of his principal: they do not involve any question of a breach of fiduciary duty arising from such a conflict. Nor do any of the cases involve a secret payment to the agent from the very party with whom the agent is dealing on his principal's behalf. It is in such cases that the Andrews v Ramsey principle applies with its full rigour.
[47] Finally in relation to this point and indeed the further points about the appropriate remedies I should mention what was something of a constant refrain from Mr Lopian. It was this: Mr Jack got the benefit of the contract negotiated for him. Why should he not have to pay for it? Why should he have the benefit of the agent's work for nothing at all?
[48] The answer is twofold. First it has already been given in the cases, and second there are sound policy reasons as to why.
[49] As far as the cases are concerned, I have already cited enough to show that the principle is established, see for instance Atkin LJ in Keppel (“forfeit any right to remuneration at all”), Lord Alverstone CJ in Andrews (“not entitled to recover any commission”), Wills J in Andrews (“the case ought to be the same whether the commission has already been paid or whether the agent has to sue for it”), Scrutton LJ in Rhodes (“The result may actually be that the employer makes money out of the fact that the agent has taken commission”).
[50] The policy reason runs as follows. We are here concerned not with merely damages such as those for a tort or breach of contract but with what the remedy should be when the agent has betrayed the trust reposed in him – notions of equity and conscience are brought into play. Necessarily such a betrayal may not come to light. If all the agent has to pay if and when he is found out are damages the temptation to betray the trust reposed in him is all the greater. So the strict rule is there as a real deterrent to betrayal. As Scrutton LJ said in Rhodes at p 28, “The more that principle is enforced, the better for the honesty of commercial transactions””.
6. Reflective loss
294.	In Johnson v. Gore Wood & Co (a firm) [2002] 2 A.C. 1, the House of Lords considered the question of losses claimed by a company where those losses had, in truth, been sustained by the company’s subsidiary.  Lord Bingham summarised the principles to be derived from a number of authorities as follows at pages 35-6:-
“These authorities support the following propositions. (1) Where a company suffers loss caused by a breach of duty owed to it, only the company may sue in respect of that loss. No action lies at the suit of a shareholder suing in that capacity and no other to make good a diminution in the value of the shareholder's shareholding where that merely reflects the loss suffered by the company. A claim will not lie by a shareholder to make good a loss which would be made good if the company's assets were replenished through action against the party responsible for the loss, even if the company, acting through its constitutional organs, has declined or failed to make good that loss … 
(2) Where a company suffers loss but has no cause of action to sue to recover that loss, the shareholder in the company may sue in respect of it (if the shareholder has a cause of action to do so), even though the loss is a diminution in the value of the shareholding … (3) Where a company suffers loss caused by a breach of duty to it, and a shareholder suffers a loss separate and distinct from that suffered by the company caused by breach of a duty independently owed to the shareholder, each may sue to recover the loss caused to it by breach of the duty owed to it but neither may recover loss caused to the other by breach of the duty owed to that other …”. 
7. Bribery
295.	In Fiona Trust & Holding Corporation v. Yuri Privalov [2010] EWHC 3199 (Comm), Andrew Smith J considered the principles upon which claims to recover bribes are made.  He said the following at paragraphs 70-73:-
“70.  …  English law take a broad view of what constitutes a bribe for the purposes of civil claims. It considers that a bribe (or “secret commission” or “surreptitious payment”) has been paid where “(i) … the person making the payment makes it to the agent of another person with whom he is dealing; (ii) … he makes it to that person knowing that that person is acting as the agent of the other person with whom he is dealing; and (iii) … he fails to disclose to the other person with whom he is dealing that he has made that payment to the person whom he knows to be the other person’s agent”: Industries & General Mortgage Co Ltd. v Lewis, [1949] 2 AER 573 at p. 575G. Thus, a bribe is “a commission or other inducement which is given by a third party to an agent as such, and which is secret from his principal”: Anangel Atlas Compania Naviera SA v Ishikawajima-Harima Heavy Industries Company Limited, [1990] 1 Lloyd’s LR 166 at p. 169. 
71. “When an agent receives or arranges to receive by way of a bribe or secret commission in the course of his agency from a person who deals or seeks to deal with his principal, the agent is liable to his principal jointly and severally with that person (1) in restitution for the amount of the bribe or secret commission; or (2) in tort for any loss suffered by the principal from entering into the transaction in respect of which the bribe or secret commission was given or promised, and the bribe, if it was paid, is held on trust for the principal”, and the person who pays or promises the bribe is also liable in restitution and damages to the principal: Bowstead & Reynolds on Agency (2010) 19th Ed at 6-084. The principal may also require either the agent or the briber to give an account of profits.
72. It is not necessary in order to establish a claim for a claimant to show that the bribe was either paid or received dishonestly: where a bribe is paid, it is irrelevant whether either the briber or the agent realised that they were doing wrong. In English law corruption and fraud are presumed, and so a claim can be brought on the basis of the payment of an “innocent” bribe: Re a debtor, [1927] 2 Ch 367 at p. 376 per Scrutton LJ. It is also presumed that the person paying a bribe intended that the agent would be influenced by it and that the agent was in fact induced to act in favour of the briber in relation to transactions between the briber and the recipient’s principal: Hovenden & Sons v Millhoff, (1900) 83 LT 41; Industries & General Mortgage Co Ltd. v Lewis, (cit sup). If a bribe is paid to an agent, it does not assist the briber or the agent to show that in fact the agent acted in his principal’s best interests. 
73. The reason that the law so protects a principal if his agent receives a bribe is that he is entitled to be confident that the agent will act wholly in his interests, and the test for whether a payment or other benefit or promise amounts to a bribe depends upon whether it puts the agent in a position in which his duties to his principal and his interest might conflict. Accordingly:
i) It is not necessary that the bribe be given in connection with a particular transaction or series of transactions. The possibility of a conflict between duty and interest might be created by a bribe paid to an agent in order to influence him in favour of the person paying it generally and not directed to any particular matter or intended to influence him in relation to a particular transaction. In the Fiona action the claimants have sought to link payments made to Mr. Privalov and Mr. Borisenko and arranged by Mr. Nikitin to particular schemes about which they complain, but, as I shall explain, I conclude that they have not established connections of this kind. This does not mean that they are not entitled to rely upon the payments as bribes. If a secret payment is made to an agent, it taints future dealings between the principal and the person making it in which the agent acts for the principal or in which he is in a position to influence the principal’s decisions, so long as the potential conflict of interest remains a real possibility: see Daraydan Holdings v Solland, [2005] Ch 115 at para 132.
ii) The law recognises that some gifts or benefits are too small to create even a real possibility of a conflict of interest and so too small to be treated as a bribe. … It is a question of fact depending on the circumstances of each case where the line is to be drawn between “a little present” and a bribe, and so unsurprisingly there is little guidance about this in the authorities, but the test, as I understand it, is whether it is sufficient to create a “real possibility” of a conflict between interest and duty: Imageview Management v Jack, [2009] 1 Lloyd’s Rep 436 para 6 per Jacob LJ. It is not whether such a conflict is actually created.
iii) If a payment is made to an agent that creates a real possibility of this kind, it does not make “any difference whether the surreptitious profit was gained as a pure gift or for services rendered or for any other reason”: Keogh v Dalgety & Co Ltd., (1916) 22 CLR 402, 418. An agent might have a conflict between his interest and his duty as a result of being rewarded for “moonlighting” for a person engaged in transactions with his principal”.
Discussion of the issues to be decided
296.	The legal principles that I have set out above have not been much contested.  But, bearing in mind that Mr Jaffery and Mr Gill were self-represented litigants, I tried to point out to them in the course of argument where there was room for argument or debate about the legal principles urged upon me by the Bank.  In the result, both Mr Jaffery and Mr Gill sensibly concentrated on the facts, which seem to me to be the real arena in which this case will be decided.
Existence of Fiduciary Duties: 
Issue 1: Did Mr Jaffery owe fiduciary duties to GCBOI and/or BOI PLC?
297.	Mr Jaffery did not dispute that he owed fiduciary duties to his employer, GCBOI, but he did query whether he could have owed such duties to BOI PLC, with whom he never had a direct contractual relationship.  The UK business of GCBOI was, of course transferred to BOI PLC on 1st November 2010, excluding Mr Jaffery’s and other employment contracts.  
298.	The entire Code of Conduct is directed at employees’ obligations to the BOI “Group” not just to the employer company, GCBOI.  For example, paragraph 2.3 makes it clear that “[f]or the purpose of this Code, a conflict of interest occurs when an employee’s private or personal interests interfere … with the interests of the Group or its customers”.
299.	The Bank relied on a dictum of Etherton J in Shepherds Investments Limited v. Andrew Walters [2006] EWHC 836 (Ch) to the effect that anything that was a competitive threat to the group (of which a subsidiary was a part, and from which the defendants allegedly diverted a business opportunity) was of direct concern to the parent (by whom the defendants were employed).  It seems to me to be obvious that if the employee of a parent is required to by that parent to work for one of its subsidiaries as a banker handling loans and dealing with its financial affairs, the employee must owe fiduciary duties as much to the subsidiary in connection with the financial affairs that the employee is required to handle, as he would to the parent employer in connection with its own financial affairs.
300.	In my judgment, therefore, Mr Jaffery owed fiduciary duties to GCBOI, and after the 1st November 2010 to both GCBOI and BOI PLC. 
Issue 2: If so, did those duties include (1) A duty not to make a secret profit; (2) A duty not to allow his own interests to conflict actually or potentially with those of the Bank; (3) A duty to disclose his own wrongdoing?
301.	It is common ground that the first 2 duties were owed by Mr Jaffery.  The third duty is supported by paragraph 65 of the decision of Peter Smith J in Hanco ATM Systems Limited v. Cashbox ATM Systems Limited [20070 EWHC 1599, where he held that it was clear law that an employee who owes fiduciary duties (whether a director or not) owes a duty, as part of those fiduciary duties, to disclose his own wrongdoing to his employer.  The scope and extent of this duty could depend on the precise circumstances, but in the case of a clear commercial conflict of interests, it seems to me to be right to say that such a conflict must be disclosed.
Breach of Fiduciary Duties:  Did Mr Jaffery breach his fiduciary duties to GCBOI and/or BOI PLC in any of the following respects?
Issue 3: Did Mr Jaffery (i) receive or (ii) expect to receive, an interest (and if so what interest) in the customer of the Bank involved in the following projects and/or a benefit or profit from the project itself:- (a) the Backford project; (b) the Hendon project; (c) the Stoke project; and/or (d) the Hornchurch project?
302.	This is the key issue in the case, which ultimately turns on the weight to be attached to the key documents upon which Messrs Jaffery and Gill were cross-examined.  Interestingly, when I came to collate these key documents in preparing my judgment, I identified only 17 of them, amounting to some 46 pages in all.  This case might have taken far less time if these documents had been isolated and put into chronological order at an earlier stage.
303.	The first question is whether the iMac documents and those which Mr Jaffery attributed to Adnan or Altaf should properly be disregarded as having been created by these third parties in relation to deals with which Mr Jaffery was not involved.   I have considered each document carefully, but have concluded, as already indicated in relation to some of them, that the iMac documents I have mentioned above were indeed created by Mr Jaffery.  I do think that both Altaf and Adnan were involved in some limited respects in the projects that are the subject of this action.  Consideration was given as the projects developed to Altaf having a share of the C+ project (for example), as we see from the “Board Meeting 2” document of 17th January 2008, but I do not think either Altaf or Adnan ever obtained any share in any of the relevant projects. These projects were very much the babies of Mr Gill and Mr Jaffery.  Of that, I am absolutely sure.
304.	In deciding whether Mr Jaffery was ever intended to have an interest in the projects, it is necessary, in my view, to start at the end.  The first question is whether Mr Jaffery ever actually paid any money for such an interest.  The Bank does not suggest that it can prove any payment was made by Mr Jaffery towards the projects before the £700,000 mortgage loan was raised in May 2010.  The truth about that payment and the use to which it was put is, therefore, very important. For that reason, I have dealt at some length above, both in the chronology and in relation to the evidence, with the events of the Spring of 2010, when £400,000 was required for the Stoke project.  I have already found that Mr Jaffery knew that the £400,000 was to be used for the investment in the Stoke project.  The bigger question, however, is whether Mr Jaffery was making that payment in order to gain a personal interest in the project.
305.	Mr Jaffery’s case as to the £700,000 is that he arranged the loan on his property at 33 Gloucester Walk (jointly owned with his wife) so that he could make a gift of £700,000 to his nephew, Adnan, to enable him to pay his debts.  Adnan was at that time only months from his tragic death, as everyone must have known or at least feared.  Mr Jaffery says that Adnan used the gift, as to £400,000 to repay a debt he had incurred to Mrs Sumby, and as to £300,000 to repay a debt to Mr Kanji, both having arisen as a result of his business activities in Dubai and East Africa.
306.	The primary support for Mr Jaffery’s case is Mr Adnan Jaffery’s ‘by hand’ letter to Leigh Carr addressed to “Ralph/Noorali” dated April 2010 in which he said expressly that he was to receive £700,000 from Mr Jaffery “on behalf of himself and the wider family to ensure I can settle my debts/affairs”, and Mr Adnan Jaffery’s two letters to Leigh Carr dated 20th May 2010 asking them to pay the £400,000 to Mrs Sumby, and the balance to Mr Kanji.  
307.	The veracity of Adnan’s three letters is vouched for in two statements from Mr Noorali Jin and Mr Ralph de Souza of Leigh Carr, but neither was called to give evidence.  Mr Jaffery explained their failure to do so, by saying they were out of pocket on fees owed by Mishcon de Reya (which the Bank denied).  He said also that they were a reputable and well known firm.
308.	Mr Jin said this at paragraphs 5-7 of his statement:-
“5. On or about mid April 2010 I was told by Ralph de Souza that we should expect to receive £700,000 into Leigh Carr’s client account from a firm of solicitors instructed by Adnan Jaffery’s uncle.  Adnan Jaffery was Ralph de Souza’s client and I had not had any involvement with his files prior to that date.
6. Ralph de Souza told me that he was going to be on holiday when the money was due to come in and he asked me to deal with the money when it did come in, in his absence.  Ralph de Souza told me that I would receive details from Raj Gill about where the money should be transferred.
7. I attached at page 1 of “NJ1” two e mails that I sent to Steve Shakespeare at the Bank of Ireland on 12 and 19 May 2010 respectively.  I believe that Raj Gill had called me prior to when I sent the e mail of 12 May 2010.  I was dealing with the matter for Ralph de Souza whilst he was away but I was not familiar with the file.  Although in 12 May e mail I referred to Raj Gill as “our client” I was mistaken because he is not in fact a client of Leigh Carr.  The “client” referred to in the e mail is, I am now aware, a trust which gave instructions to Leigh Carr through Mr Gill from time to time.  On the basis of the contents of these e mails I believe that Mr Gill had called me to say that the funds were to be used to pay “SIG I and II”.  I did not know who or what SIG I or II were”.
309.	Mr de Souza said this at paragraphs 5-7 of his statement:-
“5. Mr Adnan Jaffery, now deceased, was a client of Leigh Carr, managed by me.  Adnan became unwell and towards the end of 2009 it became apparent to me that he was in fact terminally ill.  He was treated in Harley Street which is approximately five minutes from my office.
6. I became aware that Adnan wanted to settle some debts he had incurred prior to his death and that Leigh Carr would receive monies for that purpose.  Adnan, due to his illness and the fact that my office was close to Harley Street, requested that my firm assist with the transactions.  I was told by Adnan that his uncle, Mr Syed Asalat Shabbir Jaffery, would provide some money to Adnan by way of a gift to enable Adnan to clear his outstanding commitments and put his financial affairs in order.  Mr Adnan Jaffery passed away on 8 January 2011.
7. I recall that in April 2010 Adnan Jaffery attended at my office and hand delivered a letter addressed to myself and Noorali Jin, another partner at Leigh Carr.  A copy of the April 2010 letter is attached hereto at page 1 of “RS1”.  I was aware in general terms (from what Adnan had told me) that Adnan Jaffery had been unsuccessful in a property transaction in Dubai.  I was not aware of any transaction by Adnan in East Africa.  Adnan had told me that he felt morally obliged to contribute to the losses incurred by others on his behalf in relation to the failed property transactions.  I understood from Adnan that the monies to be received by Leigh Carr from his uncle were to be used to settle those debts.  By the April 2010 letter Adnan instructed me to hold the monies received from his uncle to Adnan’s order.
…
I have subsequently become aware of two further letters both dated 20 May 2010 from Adnan Jaffery concerning the use to be made of the funds received by Leigh Carr on his behalf. …  I did not see those letters when they arrived at Leigh Carr because I was away on holiday… I have been informed by my assistant, Jagdish Natt, that he opened the letters after they arrived and put them in a file.  I believe that no other person at Leigh Carr saw the letters or acted upon them prior to the transfer of the Monies …”.
310.	One would be very surprised to find apparently respectable chartered accountants lying in witness statements, whether or not they were being called to give evidence to support those statements.  It was for that reason that I put to Mr Kitchener that it was more likely than not that Adnan’s letter had been received by them at the time, so that the choice was between Adnan’s letters being genuine and their having been concocted at the time as an elaborate plan to conceal Mr Jaffery’s investment.
311.	I have also taken into account, in determining whether Mr Jaffery had a beneficial interest in the Stoke project, the fact that the legal interest in the Stoke project is in SIG I, a company apparently owned by an offshore structure of which Mrs Sumby is a beneficiary.  This does not, however, seem to me to be conclusive as to the identity of the real beneficiaries.  I put to Mr Kitchener that Mr Jaffery might have trouble recovering a share in the Stoke project from Mrs Sumby.  Mr Kitchener’s response was that, whilst that might be true, Mr Jaffery’s trustee in bankruptcy (if one were ever appointed) might have less difficulty.
312.	There are a number of reasons why I have reached, with some initial hesitation, the clear conclusion that the story about the gift to Adnan was a fabrication undertaken at the time, and that it was put forward in order to conceal from as many people as possible the fact that it was Mr Jaffery that was investing in the Stoke project.
313.	I have taken into account the strange position that that conclusion seemingly creates, namely that, by the end of May 2010, Mr Jaffery may have been the only person (apart from the Bank) to have provided any significant cash for an investment in the Stoke project.  I have not been able to determine whether Mr Kanji paid money in to the Stoke project as the Bank suggested. And apart from some minor costs that might have had to have been paid up until May 2010, I am inclined to accept that no major cash had been required for the Stoke project up to that time.  No interest was payable to the Bank, no building works had commenced, and planners and professional fees had, according to Mr Gill, been rolled up.  The documents that Mr Jaffery referred to in closing seemed to support this proposition.
314.	I have also taken into account Mr Jaffery’s submission that there were much simpler ways in which he could, had he wanted, concealed the investment he was making in the Stoke project.  He could, for example, have simply sent the money to Mrs Sumby in Switzerland.  As Mr Jaffery put it in closing: “I was a father figure to him, I wouldn't have had to say to Adnan, "I know you respect me, you like me and you think I'm a decent guy, but could you do something dodgy with me, go down the road and let's have a big conspiracy with your accountants”.  Looked at with the cool benefit of hindsight, Mr Jaffery is undoubtedly right.  But for reasons we may still not know, Mr Jaffery was desperate to raise the £400,000 for Stoke.  Sometimes, such desperation pushes people to do unlikely, even stupid, things.  As Mr Jaffery points out rhetorically: why would he have used accountants without the benefit of privilege, rather than solicitors with the benefit of it? And why would he have used his BOI email address, rather than the barkcare@googlemail.com email?
315.	In closing, Mr Jaffery also asked me to take into account that there was no point in his investing in Stoke.  Mrs Sumby, he said, knew at the outset that she needed to put £1.9 million into the project.  Moreover, that money has indeed been provided, and the project has completed pretty well on time and on budget.  What was the point in his forfeiting his career for such an investment?  Again, I see the force of this, but it seems to me that, for whatever reason, the documents show that Mr Jaffery did want an interest in Stoke.
316.	The factors that seem to me to make it clear on a balance of probabilities that the £400,000 was Mr Jaffery’s investment in the Stoke project can be summarised as follows:-
i)	A revealing text from Mr Jaffery to his wife dated 18th May 2010 said “Money did not come in today again!!!!!!! I am so stressed I can not think straight.  Got a notice from [Mr Kanji’s solicitor]!!!!!!!”.  It seems strange that he should be so stressed by the money not arriving if it was not needed for his own purposes.
ii)	Mr Jaffery told the Bank an admitted bare-faced lie about his need for the money to buy a flat in Pakistan.  I cannot accept his explanation that he did not want to discuss his nephew’s personal circumstances with Mr Kidd.  Whilst I do accept that Mr Jaffery did not get on with Mr Kidd, I do not think he needed to create such an elaborate lie, unless he was using the money for a purpose he knew to be improper.
iii)	Mr Jaffery’s letter to Mr Pat Stead confirming the £700,000 loan included the crucial words: the “repayment source will be either through sale of 33 Gloucester Walk property or from refinance of Nursing Home at Dividy Road Stoke.  A further letter of confirmation from Landmark the trustees for the Stoke deals is being sent under separate cover”.  No such further letter has been disclosed.  But Mr Jaffery was unable to explain what he had written.  He could only have been contemplating repaying the loan from the Stoke project if he was to have an interest.
iv)	The payment to SIG I was originally going to be made by GSC Solicitors, but was then switched to come from Leigh Carr.  That appears to have happened at a time when the story concerning the repayments by Adnan was being developed.  The switch seems to me to support the concealment that Messrs Jaffery and Gill were engaged upon.
v)	The timing of the investment in the late Spring of 2010 fits in with Mr Jaffery’s own account of his demise at the Bank and his conversation with Mr Cunningham in March 2010.  I have little doubt that Mr Jaffery was solidifying his intentions about leaving the Bank at that time, and looking to ensure that he had some personal external business interests to fall back on when he did leave the Bank.
vi)	Mr Kitchener made a point in his reply that seemed to me to have some weight.  He asked rhetorically what the rush was to pay off Adnan’s debts, and pointed to the urgency that Mr Jaffery obviously felt.  I take into account that Mr Jaffery could have waited for the sale of 33 Gloucester Walk rather than raising an expensive loan just to engage in an act of philanthropy.  Mr Jaffery might say that it was urgent because of Adnan’s imminent death, and that counterbalances the point a little.   In the result, the sale of 33 Gloucester Walk completed in May 2011, after Adnan died. 
vii)	It is not disputed that, when Adnan died in January 2011, only 8 months after these events, he left £1 million and his house to Mr Jaffery’s sister (Adnan’s mother), but nothing to Mr Jaffery.  That is a little surprising if indeed Mr Jaffery had shown him such an act of extreme generosity shortly before his death.  It provides some support to the unlikelihood of the story Mr Jaffery has told, even though Mr Jaffery sought to explain it in closing by saying that it was he that suggested to Adnan leaving his money to his mother, when he (Adnan) asked him what he should do, very shortly before his death.
viii)	Mr Jaffery’s email to Mr Sheikh at GSC Solicitors on 20th April 2010 provides further support.  Mr Jaffery said that the funds should not be linked to the BOI in any way: “I do not want any conflict of interest at all”.  If his story about repaying Adnan were true, there would have been no such conflict and no problem.  If, however, the money was being used for his personal investment in the Stoke project, such a conflict was certainly a reality – and, moreover, a reality of which I think Mr Jaffery was acutely aware.  I understand Mr Jaffery’s explanation for this email, which revolves around his desire to leave the Bank, and his not wanting to borrow from anyone remotely connected with the Bank, in case when he left, the Bank put pressure on that lender to call in the loan.  That may be right but does not, in my judgment, explain the email’s reference to conflicts.
ix)	Mr Gill’s email dated 4th May 2010 to Mr Shakespeare providing an excuse as to why the £400,000 had not been provided is also implausible and seems to have been created as part of the plan to conceal Mr Jaffery’s investment.  There is no evidence that Mrs Sumby had a 90 day deposit, or that Mr Gill had “collated” £400,000;  indeed Mr Gill denied he could ever have done so.  The emails about Mr Gill’s tax position do not, for that reason amongst others, seem to have been any more than manufactured excuses. 
x)	Last but not least, the Stoke Deal documents all support the proposition that Mr Jaffery was always intended to have a personal interest in the Stoke project.  The documents by themselves might be capable as characterisation as ‘proposals’ as Mr Jaffery tried to say.  But, once they are seen in the light of the events of April and May 2010, they can only realistically be regarded as steps in the development of a cohesive plan to provide Mr Jaffery with an interest as an investor in the Stoke project.
317.	In the circumstances, the precise usage of the balance of £300,000 from the £700,000 loan on 33 Gloucester Walk assumes a lesser importance.  The Bank claims that the £300,000 too was an investment by Mr Jaffery in the Stoke project, because it (or rather some £296,000) was repaid to Mr Kanji in respect of monies he had paid by way of an earlier investment in the Stoke project on Mr Jaffery’s behalf.  The support for this is to be found, according to the Bank, in the Stoke Deal documents, the first of which says that Mr Kanji was to “chip in £300k” for an investment of £450,000 that Mr Jaffery was to make, and the third of which (the April 2009 Stoke Deal document) starts by recording that “[Mr Kanji] Cash in £300,000”.  That document seems to envisage that Mr Kanji was to get 15% of the equity shares in the new SPV by 30th May 2009 for that £300,000.   The Bank also relies on Mr Gill’s email of 29th March 2011 to Mr Treon referring to £317,000 having come in from Mr Kanji.  It will be recalled that Mr Gill said these monies related to Hendon.  There are other documents too that indicate that Mr Kanji may have invested money in Stoke, including Fladgate’s letter dated 16th January 2012 alleging that Mr Kanji invested £450,000 in the Stoke deal, of which only about £296,000 had been repaid.  But, by that time, the parties had fallen out very badly, and I heard limited evidence about the details of that dispute.  Mr Gill said in evidence that no money had been required for the Stoke project before the £400,000 paid in May 2010.  This led to a significant inquiry into documents that might indicate that monies had been expended in relation to Stoke before that date. There were early references to set-up costs of £10,000, fees of £150,000, and to Mr Gill having paid all planning and professional costs of £180,000 himself.  But it seemed to me that none of these references conclusively established that any monies had actually been expended or invested prior to 24th May 2012.  And, as I have said, the documents that Mr Jaffery referred to in closing supported his version of events that no money had been needed earlier.
318.	Moreover, Mr Jaffery referred in closing also to an email dated 17th July 2008 from GSC Solicitors to Mr Gill headed “Hendon project” saying “[y]ou will recall that in the Backford file [we originally] held £450,000 of which £300,000 was repaid to Contitrades [which Mr Jaffery said was one of Mr Kanji’s companies].  This left £150,000 which has been applied in accordance with this statement.  The balance on this statement was added to the balance of statement 4 and transferred to Telkin on instructions”.  This shows that a £300,000 was returned to Mr Kanji in 2008, but does not prove much more than that.
319.	In the result, I do not think that there is enough evidence for me to determine that the £300,000 from the £700,000 was used to fund an investment by Mr Jaffery in the Stoke project.  It was undoubtedly a sum that went from Mr Jaffery to Mr Kanji, but on the evidence, I cannot be sure what that sum represented.  In any event, I do not think that my inability to make a finding as to the reason for the payment by Mr Jaffery to Mr Kanji affects the important issue, which is whether Mr Jaffery did indeed make a financial investment in the Stoke project.  Whether or not he invested more, I do find that he invested at least £400,000 of his own money (or from money belonging to himself and his wife) in the Stoke project on 24th May 2012, when that money was paid to a SIG account at the Bank.
320.	These findings are very helpful in the determination of Issue 3.  The Bank no longer suggests that Mr Jaffery was either promised or obtained an interest in the Hornchurch property.  It was, however, suggested in closing that the promise of the interest in Hendon pre-dated the loan application for Backford (and, of course, Hornchurch), so made those projects too a breach of Mr Jaffery’s fiduciary duty.  The Bank says, in effect, that the “benefits and interests given to [Mr Jaffery] were in respect of all the loans taken together”.  Though no specific argument was addressed on this account to the Hornchurch loan, it seems that the Bank includes it in its argument.
321.	In these circumstances, the next question is whether Mr Jaffery was promised or obtained an interest in the Telkin/Hendon project.  There is, in my judgment, compelling evidence that he was promised such an interest.  That evidence can be briefly summarised as follows:-
i)	Mr Jaffery’s “To Do List” shows that, as early as 12th August 2007, before the Telkin facility was even drawn down, he was expecting a cut of 10% of the shares in the Hendon project out of Mr Gill’s 40% on the basis of “personal understanding only” with no formal “option agreement”.  This document is extremely revealing in showing that, even at that stage, Mr Jaffery was well aware that any interests he was to take in these projects needed to be clandestine.
ii)	The Anger Man document refers to “Hendon again is getting stuck” giving the impression that Mr Jaffery expected an interest in it.  I do not accept Mr Jaffery’s evidence that he was exaggerating his assets to his wife at a bad time in their marriage.
iii)	The most compelling evidence is, however, contained in the draft Investment Agreement that Mr Gill himself amended on 30th April 2010 so as to show that it was agreed that “BGI” had 40% of the deal “10% to be held for saj”, whom I am sure was Mr Jaffery.  Mr Gill cannot get around his own amendment to the draft agreement.
322.	Mr Jaffery argued in closing, in effect, that the idea of his having his interest in the Hendon project never got off the ground. He pointed to the fact that it was not even alleged that he had injected money into the Hendon deal, and that the subsequent versions of the draft shareholder agreements on 19th May 2010 and 6th September 2010 showed 1/3rd shares going to each of V2 (Mr Treon), BGI and FI (Mr Kanji).  He asked rhetorically why would he allow a change from a concealed 10% held for him by Mr Gill to involving all three of them in his clandestine interest?  As it seems to me the answer to Mr Jaffery’s question does not matter.  I have held that he was promised a 10% interest in Hendon at the outset.  That is enough to constitute a breach of fiduciary duty.  Whether or not the interest ever crystallised is of no importance.   The promise is a benefit nonetheless.
323.	I have concluded, therefore, that Mr Jaffery was promised his interest in Hendon by August 2007.  I do not accept that there is sufficient evidence to conclude that there was such a promise earlier than that, and certainly not as early as the Backford loan application (in May 2007) or draw down (which was on 18th June 2007).  There was, therefore, no breach of fiduciary duty, on this account anyway, affecting the Backford loan.
324.	The question that then arises is whether Mr Jaffery was promised or acquired an interest in the Stoke project at an earlier stage than May 2010.  I think, on the evidence, that, whether or not he paid money for such an interest before May 2010, he was always intended to have such an interest from the earliest consideration of the Stoke project. That much is made clear by the Stoke Deal document and the June 2009 Stoke Deal document, which says “I [Mr Jaffery] will get another 15%” (emphasis added). Mr Jaffery’s New House Project document confirms this to be the case, insofar as it shows that, in August 2008, he was expecting £1.5 million to be produced for him out of the Stoke project.  It is hard to be sure that Mr Jaffery was always intended to have a one third interest (as the Bank contends), since the documents that show that to have been intended are mostly proposals rather than firm expositions of the existing factual situation.
325.	In deciding these issues, I have had well in mind the disaster scenario document, which is, of course, very damaging to Mr Jaffery’s case, because it shows that Mr Jaffery was of the view that, if Mr Kanji, wrote to the Bank in relation to Mr Jaffery (obviously meaning that Mr Kanji would disclose to the Bank Mr Jaffery’s interests in the Stoke and Hendon projects - at least), he (Mr Jaffery) would be dismissed and prosecuted.  He may well have been guilty of some hyperbole in suggesting prosecution, but whatever happened, he expected to be dismissed.  I can only conclude from the disaster scenario document as a whole, and the surrounding materials, that Mr Jaffery knew very well that his having taken interests in projects funded by the Bank was a breach of his duties to the Bank that he feared being discovered.
326.	I shall return to consider under issue 6 below whether the fact that Mr Jaffery had been promised interests in the Stoke and Hendon projects at the time of the Hornchurch loan contaminates that loan as well.
Issue 4: Did Mr Jaffery expect to receive an interest (and if so what interest) in the customer of the Bank involved in the following projects and/or a benefit or profit from the project itself:- (a) the Bombay Bicycle Club project; (b) the Berkeley Care Group’s projects; (c) the Casualty + project; (d) the Land Bank project; and/or (e) the Palace Street project?
327.	Mr Kitchener said in closing that there was no need for findings to be made in relation to the Land Bank and Palace Street projects.  The Berkeley Care Group’s projects did not come to fruition, save for those otherwise mentioned in this issue and that I have already mentioned and made findings about, namely Hendon and Stoke.  This issue, therefore, concerns only the Casualty + and Bombay Bicycle Club projects.
328.	Starting with the Casualty +, the Bank’s case is that Mr Jaffery and his brother had a one third interest in the C+ project.  Although the C+ project was not funded by the Bank, it was, it is said, an undisclosed 3rd party business in which Mr Jaffery was involved in breach of the Code of Conduct.  Individual deals cannot, according to the Bank, be isolated.  Instead, the Bank’s contention is that Mr Jaffery acquired his interest in all the deals, including the C+ project, in part as a result of his position as an officer of the Bank.  
329.	Mr Jaffery’s To Do List describes the final share status for the C+ deal as 33.3% to Mr Gill, 33.3% to Mr Treon, and 33.3% for “Syed/Altaf”, with an “Option Agreement for Altaf” and an “Actual share allocation for [Mr Treon]”.   Mr Jaffery’s interest is supported by the Anger Man document, although the 1st Board Meeting (and its agenda), the 2nd Board Meeting documents support the proposition that Altaf may have had (or been going to purchase) the 1/3rd interest either for himself or through the Highbury offshore vehicle.  
330.	The answer to this part of this issue is that Mr Jaffery almost certainly did expect to receive some interest in the C+ project.  It is impossible to be sure what interest he and/or Altaf actually held.  But there is no evidence that he received the interest in the C+ deal as a result of his position in the Bank.  It is not even clear when he acquired that interest, since it was funded by another lender.  It is true that Mr Jaffery ought to have disclosed his interest in the C+ project, but I am not satisfied that the Bank has proved that he was promised or acquired an interest in the C+ project in breach of his fiduciary duty to the Bank.
331.	As for Bombay Bicycle Club, I am satisfied that Mr Jaffery was considering taking an interest in the project during the last few months of his employment with the Bank.  At that time, it was well known within the Bank that he was looking towards leaving the Bank.  He did not take any interest in Bombay Bicycle Club assets until after he left the Bank, and those interests that were eventually taken were not funded by the Bank.  Mr Kitchener submits that this was an opportunity that came to Mr Jaffery whilst an employee of the Bank, so that he was not permitted to take advantage of it without breaching his fiduciary duties, even after the termination of his employment.  Mr Jaffery did, in my view of the evidence, expect to receive an interest in the Bombay Bicycle Club project, which the Bank agreed to fund (albeit that the funding never materialised).  The documents support this as being what Mr Jaffery and Mr Gill expected.  I need not determine precisely what interest in what project was expected as this changed rapidly from time to time.  
332.	The next question is whether the Bombay Bicycle Club project that Mr Jaffery (or his sister) participated in after his dismissal was an opportunity acquired in breach of fiduciary duty, for which he must account.  Mr Kitchener relies on the propositions that it is not necessary to show that the principal was pursuing the opportunity, or even that it could have pursued the opportunity; it is enough that the opportunity came to the fiduciary in his role as a fiduciary, and that it puts the fiduciary in a position of potential conflict between his duty and his interest.  The Bank relies on the well known case of IDC v. Cooley [1972] 1 WLR 443.
333.	In my judgment, Mr Kitchener’s arguments are ill-founded.  One aspect of Mr Jaffery’s fiduciary duty was not to be interested in loans that the Bank made.  He breached that duty in the ways I have already mentioned.  But the opportunity that belonged to the Bank was the opportunity to lend money on the Bombay Bicycle Club transaction, not to borrow money on that transaction.   Moreover, the Bank knew by that time that Mr Jaffery was looking for other business opportunities.  Mr Jaffery would only have been in breach of his fiduciary duty if the Bank had made the proposed loan and he had secretly invested in the project.  The opportunity to invest did not come to Mr Jaffery in his capacity as a fiduciary; it came to him as a private person looking for a new business opportunity after he left the Bank.
Issue 5: Did Mr Jaffery (i) receive or (ii) expect to receive, any (and if so what) interests or benefits from any (and if so which) of the following customers of the Bank or their associates: (a) Mr Gill; (b) Mr Treon; (c) Mr Kanji; (d) Berkeley Group; and/or (e) Berkeley Care Group?
334.	Probably the main point upon which the parties concentrated under this issue is the question of whether Mr Gill paid Mr Jaffery £35,000 effectively in return for his services in promoting and procuring the various loans.  It is common ground that Mr Gill did in fact provide nearly £35,000 for 33 Gloucester Walk on 3rd March 2010 for the benefit of both Mr and Mrs Jaffery, and that that sum has not been repaid.    As I have already found, however, in dealing with Mr Gill’s evidence, I do not think that this payment was intended to be improper.  I think it was not repaid due to an oversight in Mr Jaffery’s chaotic financial life.   I will deal in due course with the question of whether it should, nonetheless, properly be regarded as a bribe.
335.	It was also suggested that Mr Jaffery had an inappropriately close relationship with Mr Gill, and that this by itself constituted a breach of fiduciary duty.  I do not agree.  Mr Jaffery and Mr Gill were friends, and many employees of the Bank knew that to be the case.  Indeed, many other Bank staff were also friends with Mr Gill and went out drinking with him on social occasions (though Mr Jaffery did not, as I have said, drink and did not attend such occasions).  I do not think that this, by itself, was a breach of duty, nor do I think that the help that Mr Gill gave Mr Jaffery in renovating 33 Gloucester Walk was such a breach.  Both these matters were well known to and condoned by many senior employees of the Bank. There was never concealment of any kind.  Mr Gill’s relationship with Mr Jaffery and his assistance was undertaken entirely in the open.
336.	Mr Jaffery’s argument here is that “relationship banking” were the buzz words at the Bank, and that BOI staff were actively encouraged to make and build close relationships with customers.  I have taken this into account in making the finding in the previous paragraph.
337.	Mr Kitchener argued also that Mr Treon and Mr Kanji, as customers of the Bank, provided personal loans to Mr Jaffery, and that such loans were taken in breach of Mr Jaffery’s fiduciary duty, because they constituted a personal benefit to him.  Mr Jaffery’s own documents support the fact that Mr Jaffery regarded himself as indebted to Mr Treon for £100,000 and Mr Kanji for £300,000 and £155,000.  Mr Jaffery admitted in closing receiving a £155,000 commercial loan from Mr Kanji; it is unclear whether it has been repaid.  Apart from the loan agreement with Mr Treon’s company to which I have already referred, there is little more evidence about these loans, but that is probably because of the inadequate disclosure provided by Mr Jaffery.  The loan of £100,000 was definitely made by Mr Treon’s company to Mr Jaffery.  Mr Kanji also loaned money to Mr Jaffery, although there is doubt as to the terms of the loans and as to whether £300,000 was ever loaned in addition to the £155,000.  These loans (at least the £100,000 and £150,000) ought to have been disclosed to the Bank and they were not.  As such, the loans constituted breaches of Mr Jaffery’s fiduciary duties.  Mr Gill told me in closing that he was unaware of these loans.
338.	There is insufficient evidence to allow me to make any further findings as to any other benefits received by Mr Jaffery from Mr Gill or other entities.
Issue 6: Did Mr Jaffery put himself in a position in which his personal interests actually or potentially conflicted with those of either (i) GCBOI and/or (ii) BOI PLC by: (a) promoting, supporting or managing any or all of the loans made by the Bank or which were applied for (and if so which)? (b) providing references in respect of such loans or applications (and if so, which references)? (c) having or expecting to have any of the undisclosed personal interests referred to in issues 3, 4 and/or 5? (d) assisting Altaf and/or Adnan if (as Mr Jaffery contends) any of the interests or benefits referred to above were received or expected to be received by them or either of them?
339.	It is obvious that Mr Jaffery put himself in a position in which his personal interests actually conflicted with those of GCBOI (and BOI PLC after it acquired the loans) when he received and expected to receive and retained interests in the Hendon and Stoke projects in the manner I have described.  I have already held that Altaf and Adnan did not obtain any interests (except possibly Altaf’s interest in the C+ project).  If Mr Jaffery had consummated any assistance he may have given to Altaf to receive any interests, it would have been as much a breach of his fiduciary duty to the Bank as if he had acquired the interests himself. 
340.	This leaves the two questions of whether Mr Jaffery put himself in a position in which his personal interests conflicted with those of the Bank by:- 
i)	promoting, supporting or managing any or all of the loans made by the Bank or which were applied for; and 
ii)	providing references in respect of such loans or applications.
341.	It seem to me to be obvious, once again in the light of the primary findings of fact already made that Mr Jaffery was (once he was promised the interest in the Hendon project) indeed in such a position of conflict as a result of his involvement in promoting the loans taken by Mr Gill and his family and as a result of giving references to the Bank for Mr Gill and his family.  This is because Mr Jaffery knew that he was receiving an interest in the Hendon project, and knew that he would be investing in the Stoke project, whilst he was at the same time encouraging the Bank to make loans to the same people with whom he was involved in business.  The loans were obviously for his personal benefit, and their promotion and provision of references put him in a hopelessly conflicted position.
342.	It does not matter for the purpose of these findings whether the interest of Mr Gill’s family was held by Mr Gill himself or his sisters.  
343.	This finding means that all the project loans made by the Bank after Mr Jaffery was first promised an interest in the Hendon project are affected by this breach of fiduciary duty.  Mr Jaffery was giving references for and promoting the loans in which Mr Gill was involved, when he had been promised a secret interest by Mr Gill.  This means that the Hornchurch loan, which Mr Jaffery also supported, is similarly affected, even though Mr Jaffery was never promised or intended to have any personal interest in the Hornchurch property.
Issue 7:  Did Mr Jaffery fail to disclose his own (and if so what) wrongdoing?
344.	Mr Kitchener accepted in closing that, if the Bank were unsuccessful in the more substantive issues, it would not be able to succeed on this issue alone.  Nonetheless, having decided that Mr Jaffery owed the Bank a duty to disclose his own wrongdoing, it is clear that he acted in breach of that duty in failing to disclose his interests in the Hendon and Stoke projects, and his other breaches of fiduciary duty. 
Issue 8: Did GCBOI and/or BOI PLC give their consent to any, and, if so, which of the aforesaid breaches of fiduciary duty?
345.	The case on consent came in, as I have described, late in the day, and was pursued with a distinct lack of clarity.  Nonetheless, I formed the clear view as the Claimants’ evidence developed that there was some truth in it.
346.	As I have already said in dealing with Mr McGowan’s evidence, the Bank was aware that Mr Jaffery was in a state of unhappiness and was considering other opportunities outside the Bank.  That was certainly the case by March 2010, at which point Mr Jaffery started to take steps to crystallise his investment in the Stoke project. Mr McGowan and Mr Cunnigham knew very well that Mr Jaffery did not like working with or reporting to Mr Cunningham or Mr Kidd.  Mr Jaffery felt, in effect, that he had been demoted by the appointment of Mr Kidd in March 2010.  That was, therefore, a crucial time in a number of respects.  It was the time when £400,000 was due on the Stoke project, and when Mr Jaffery created his Berkeley Care Group document explaining his vision for moving the projects from the ad hoc to a strong organised operation.
347.	All that said, the only real question that I have to decide under this head is whether Mr Cunningham (or perhaps Mr McGowan) ever truly consented to any breaches of fiduciary duty.  I have set out the highpoints of Mr Jaffery’s description of the conversations with Mr Cunningham at paragraphs 242-4 above.  I do not think Mr Jaffery was being untruthful in what he said.  But equally I do not think what he described can be taken to have meant that Mr Cunningham was giving his approval to his taking an actual interest in any business projects before he left the Bank.  I am sure he told Mr Jaffery to go and find another job, and told him that he was a clever resourceful (my word) person who could find other business opportunities even in the terrible economic climate prevailing at the time.  But Mr Jaffery does not suggest that he told Mr Cunningham that he had been promised an interest in the Hendon project, nor that he expected to be making an investment into the Stoke project.  And I do not think he did so.  Mr Cunningham cannot, therefore, have given his fully informed consent to such involvement, in the way that is required if the Bank is to be taken as having waived its right to rely on those breaches of fiduciary duty.  
348.	Mr Cunningham certainly approved Mr Jaffery looking for another job, as he was doing when investigating with Mr Gill starting an entirely new Bank.  The Bank cannot be heard to complain about that, even if they could otherwise have done.  But insofar as Mr Jaffery was taking a personal interest in projects funded by the Bank whilst he remained an employee, I do not think the conversations with Mr Cunningham and Mr McGowan gave Mr Jaffery any permission to do so.  Mr Jaffery had taken care to keep his interests secret in the ways I have described, and he was not about to change that, in all the discussions about his personal position that he undoubtedly had with Messrs Cunningham and McGowan.  That is why the sham bank allegations are something of a red herring in this context.  Mr Jaffery let Messrs Cunningham and McGowan know he was unhappy, though, as I have held, he never really expressed that clearly as being as a result of a formulated sham bank allegation.  These discussions and the possibility of his leaving the Bank were connected, but it was only when Mr Cunningham told him that he wanted or at least was happy for him to leave that there was any concrete discussion of what he might be able to do. As I have said those conversations did not constitute a licence to do more than look for other personal business interests whilst preparing to leave the Bank.  There is, as Mr Jaffery I think understood (as appears from the disaster scenario document), a world of difference between being told that you can look for other business interests on the one hand, and being told that you can take an interest in deals already funded by the Bank, on the other hand. 
349.	These findings are confirmed by what Mr Jaffery said in his oral closings about his conversations with Mr Cunningham.  In those submissions, he did not suggest that Mr Cunningham had given him permission to consummate any interest in any project.  
350.	Mr Jaffery said this:-
“So I said I will pop it in an email to you, Mark, and that is when we had this thing about, look, go and do your thing and when you actually come to do it, I will give the written approval, but to be fair to him, I don't think he ever had any intention of giving me any written approval simply because I think he thought that the day he turns up [to get the approval] he will be off, and that is it” (emphasis added).
351.	Later in closing, Mr Jaffery said this in a discussion with me:-
“Q. What you are really saying is that he [Mr Cunningham] gave you encouragement to prepare for a business interest.
A. Yes.
Q.  He did not say that you may have one whilst you remain an employee.
A. No, he did not say that and I agreed with the point that you made to Mr Kitchener that, if you feel that I have invested 400,000 in that business as a personal investment, then, yes, I agree that is not what he said I could do.
Q. That [is] not what he said you could do?
A. Absolutely not, no”.
352.	Finally, Mr Jaffery did not suggest in closing that the Bank had consented to his receiving personal loans from Bank customers, though he did say that he had discussed such loans with Mr McGowan.  That was not put to Mr McGowan and was not part of Mr Jaffery’s evidence.
353.	Despite these findings, I do not think that the Bank can properly complain about the close relationship between Mr Jaffery and Mr Gill, nor about the help that Mr Gill gave Mr Jaffery in relation to 33 Gloucester Walk.   These matters were openly undertaken and fully disclosed and understood and condoned by the Bank.
Causation and inducement occasioned by breaches of fiduciary duty  
Issue 9: Was the Bank caused or induced to enter into any of the loans (and if so which) by Mr Jaffery’s breach of fiduciary duty?
354.	I have already set out the applicable principles of causation extracted from Snell’s Equity.  As Snell makes clear, a fiduciary will not be held liable to pay equitable compensation if the proven breach cannot be shown to have caused loss.  In this context, this means that the court must determine what would have happened but for the breach, or, in the circumstances of this case, whether the Bank would have acted differently had it known of the relevant breaches of fiduciary duty at the relevant time.
355.	The proper approach is reflected in paragraphs 147 and 159 of the judgment of the Court of Appeal (Mummery, Hale and Carnwath LJJ) in Gwembe Valley Development Company Limited v. Thomas Koshy [2003] EWCA Civ 1478 as follows:-
“[147] However, when determining whether any compensation, and, if so, how much compensation, should be paid for loss claimed to have been caused by actionable non-disclosure, the court is not precluded by authority or by principle from considering what would have happened if the material facts had been disclosed. If the commission of the wrong has not caused loss to the company, why should the company be entitled to elect to recover compensation, as distinct from rescinding the transaction and stripping the director of the unauthorised profits made by him? There is no sufficient causal link between the non-disclosure of an interest by Mr Koshy and the loss suffered by GVDC, if it is probable that, even if he had made the required disclosure of his interest in the transaction, GVDC would nevertheless have entered into it. In our judgment, a director is not legally responsible for loss, which the company would probably have suffered, even if the director had complied with the fiduciary-dealing rules on disclosure of interests.
…
[159] In our judgment, Rimer J was entitled to refuse to order equitable compensation on the factual basis that he was not satisfied that loss had been caused to GVDC as a result of the breaches of duty by Mr Koshy. The crux of Mr Koshy's wrongdoing was non-disclosure of his personal interest in the pipeline loan transactions and the unauthorised profit made by him from the transactions. The appropriate remedy for non-disclosure is to make him account to GVDC for that profit. It is not appropriate, if GVDC so elected, to require him to compensate GVDC for loss suffered in the venture when the probabilities are, as the judge, on the evidence, found them to be, that disclosure by Mr Koshy of his interest would have made no difference to what GVDC would have done”.
356.	The issue, therefore, that I have to determine is whether the Bank would have granted the loans and entered into the relevant transactions, had it known about Mr Jaffery’s breaches.  I have so far found, in essence, 7 breaches and each needs to be considered separately for causation purposes (the promised interests in Hendon and Stoke, the actual contribution towards Stoke, the loans from Messrs Treon and Kanji, the promotion of Mr Gill’s loans, and the references for Mr Gill’s family).
357.	As regards the interest in the Hendon project that Mr Jaffery was promised as early as August 2007, before the Hendon loan was drawn down, it seems to me fairly obvious that the Bank would not have proceeded with the transaction had they known that Mr Jaffery was to have an interest.  First of all, that is what the Bank employees who gave evidence said, and they were not challenged on the point.  Secondly, the Bank’s Code of Conduct makes very clear that Bank staff cannot have an interest in projects financed by the Bank.  I accept that it is possible that, if the matter had not been approached by Mr Jaffery and Mr Gill in the clandestine manner that it was, the Bank might have considered funding the Hendon loan, knowing that Mr Jaffery had a minor interest.  But they would not have done so, knowing that he had not paid for that interest, and was apparently being provided with it as some kind of quid pro quo for assisting with Mr Gill’s banking facilities.  In the circumstances, on the evidence I have heard, it seems to me to be clear that the Bank would have refused to allow the transaction to proceed in the way that it was going, had it discovered in August 2007 that Mr Jaffery was to have an interest of the kind he had been promised.  Mr Jaffery himself accepted in closing that Mr McGowan would have probably said they would do the transaction, but made sure that Mr Jaffery had no connection with the application and approval of the loans.
358.	I have found already that Mr Jaffery was also intended to have an interest in the Stoke project from the beginning, and that he later contributed at least £400,000.  I am satisfied that the Bank would not have proceeded with the Stoke transactions or the Hornchurch loan, had it known of these interests. 
359.	The support for the loans and the giving of references are more nebulous breaches, in that they are all part of the interest that Mr Jaffery was taking.  Had the Bank known the details of all the breaches of fiduciary duty, I am satisfied that it would not have continued lending to the RGC Customers, and it would have disciplined Mr Jaffery.  Depending upon when the breaches were discovered, I am not entirely sure that the Bank would have dismissed Mr Jaffery.  It would certainly have done so at any stage after October 2009, when Mr Cunningham took office as Mr Jaffery’s boss.  If, however, these events had been discovered during the early years between 2007 and 2009, when Mr Jaffery was recognised as doing an excellent job for BOI’s business banking, I am inclined to think that Mr McGowan would have persuaded his superiors in Ireland to keep Mr Jaffery on.  To some extent, this would obviously have depended on the way in which the breach or breaches of fiduciary duty came to light. This finding may not, in any event matter, for the purposes of deciding the outcome of this case.  
360.	These findings are unaffected by the issue of Mr Gill’s conviction, disqualification and bankruptcy.  I did not accept at face value the evidence of the Bank’s witnesses that they would not have made the Loans had they known of Mr Gill’s conviction, disqualification and bankruptcy.  The Bank did not place so much store by knowledge of these matters that it actually ever asked anybody. These events were long in the past, and I am sure that Mr McGowan would still have defended Mr Jaffery’s wish to pursue this business relationship even had he known, certainly until Messrs Kidd and Cunningham became closely involved.
Issue 10:  Is Mr Jaffery entitled to any equitable allowance for his work and efforts in producing the interests or benefits? 
361.	This issue should, in my view, be considered alongside the claim for forfeiture of Mr Jaffery’s salary and bonuses.  I shall consider the forfeiture issue below under issue 13.  If forfeiture were to be ordered, it is clear that some allowance would be required.  But, assuming for this purpose that forfeiture is not being ordered, it does not seem to me that it would be inequitable for the Bank to step in and take any profits that Mr Jaffery may have made from his breaches without paying for his skill and labour in producing the profit (if any) that he will have to disgorge.  Mr Jaffery deliberately concealed his interests from the Bank, knowing that, had they been disclosed, they would not have been permitted.  The Code of Conduct was very clear in that respect.
362.	Rather different factors apply to the question of forfeiture of salary and bonuses.
Breach of contract 
Issue 11:  Did Mr Jaffery act in breach of his Contract of Employment in any, and if so, which of the following respects: (1) by having or expecting to have any of the undisclosed personal interests referred to in issues 3, 4 and/or 5? (2) putting himself in a position in which his personal interests actually or potentially conflicted with those of either (i) GCBOI and/or (ii) BOI PLC in the ways referred to in issue 6? (3) failing to disclose his own wrongdoing in the ways referred to in issue 7? (4) accepting bribes in the manner referred to in issue 21 below? (5) being engaged in any (and if so which) business activities without the Bank’s written approval?
363.	Mr Kitchener accepted that his breach of contract claim added little to the claim for breach of fiduciary duty.  Mr Jaffery argued that the more relaxed provisions of the Code of Conduct were in conflict with the more dogmatic terms of his Employment Contract.  He pointed for example to the clear prohibition on outside business interests in clause 32, and contrasted it with less stringent requirements in paragraph 2.3b of the Code of Conduct to the effect that conflicting business activities “must be avoided”.  I do not share Mr Jaffery’s view that there is in fact a conflict between these provisions.  Both seem to me to provide a complete prohibition.
364.	It is clear, in my judgment, that Mr Jaffery’s interests and prospective interests in the Hendon and Stoke projects were also breaches of clause 32 of Mr Jaffery’s Employment Contract, in that he had become interested in a business without the prior written consent of the Bank.  I do not think that Mr Jaffery was in breach of clause 37, since he did not have any formal employment outside the Bank.  The implied terms relied upon do not go beyond the fiduciary duties upon which I have already reached conclusions.
365.	I am not sure that I need to determine whether the ancillary breaches that I have found are also breaches of contract, since the Bank will be adequately compensated for its primary claim.  Mr Kitchener accepted that the damages for breach of contract would only put the Bank in the position that it would have been in had the contract not been broken, whilst the remedies for breach of fiduciary duty could be more favourable.  In short, the contractual claims will not give the Bank a better remedy, so they are not of great importance to these claims.
Deceit:  
Issue 12: Is Mr Jaffery liable to GCBOI and/or BOI PLC (and if so which) in deceit, and in particular: (1) Did Mr Jaffery provide false annual certifications of compliance with the Bank’s Code of Conduct? (2) Was the Bank thereby induced to enter into some or all of the loans (and if so which)? (3) Was the Bank thereby induced to pay Mr Jaffery his salary and/or bonus?
366.	These issues are also of subsidiary importance in the light of the findings I have already made.  It is clear, however, that Mr Jaffery’s certification of compliance with the Code of Conduct were, after August 2007, false.  I have no doubt for the reasons I have given that they were also knowingly false in that Mr Jaffery was fully aware both of his obligations to the Bank and of the fact that he was not complying with them.  I note in this regard the secrecy attached to his initial interest in the Hendon project and the disaster scenario document.  
367.	It is, perhaps, particularly surprising that Mr Jaffery’s two email certificates of compliance with the Code of Conduct on 22nd February 2010 and 24th May 2010 were extremely specific in reciting that he did not have any interest in a customer’s business.  The latter was sent on the very day that Mr Jaffery made his £400,000 investment into the Stoke project.  The Bank’s evidence was that it relied on these certificates, and I accept that. Had they not been given, Mr Jaffery would have been investigated earlier, and the subsequent loans (anyway Stoke and Hornchurch) would not have been made.
368.	I do not accept Mr McGowan’s broad brush evidence that Mr Jaffery would have been dismissed if he had known of what he describes as the “key allegations”.  It seems to me that the position was more nuanced.  If, for example, Mr Jaffery’s potential 10% interest in the Hendon project had come to light in March 2008, when Mr Jaffery signed his first obviously false certificate of compliance with the Code of Conduct, I am far from sure that he would have been dismissed, let alone deprived of his salary and bonuses.  Instead, I think he would have been reprimanded and told not to get involved in Mr Gill’s family business.  Mr Jaffery was a very valuable employee at that stage; Mr Kidd and Mr Cunningham were not on the scene and I think it most likely that Mr McGowan would have protected him.  I accept, however, that had the false certificates of February and May 2010 come to Mr Kidd’s and Mr Cunningham’s attention in mid-2010, Mr Jaffery would have been dismissed in an instant. 
369.	The Bank was, therefore, induced to make the Loans (except the Backford loan) by the latter 4 false certifications, and was induced to pay his salary and bonuses after February 2010 by the false certifications in February and May 2010.
Forfeiture 
Issue 13: Is GCBOI and/or BOI PLC entitled to forfeiture of Mr Jaffery’s salary and/or bonus, and, if so, for which periods and in which amounts, and is Mr Jaffery entitled to relief or an equitable allowance in respect of such forfeiture, and if so in what amounts?
370.	As regards forfeiture of Mr Jaffery’s salary and bonuses, the situation is, in my judgment different from the question of a just allowance out of any profits made from the breaches of duty.  
371.	This is not a case such as Imageview supra, where an agent has betrayed the trust of his principal in relation to the sole subject matter of the agency.  As I have already said, Mr Jaffery was employed by the Bank in a senior position and betrayed the Bank’s trust in respect only of the transactions involving the RGC Customers.  In other respects, he seems to have been a valuable and diligent employee promoting the Bank’s interests successfully.  Of course, the Bank must be compensated on normal principles for the breaches of duty that I have found.  The law applies the rules as to breach of fiduciary duty strictly for the reasons given by Jacob LJ in his judgment in Imageview, but it does not do so unfairly.  
372.	Mr Kitchener argued that the equitable solution would be to require Mr Jaffery to forfeit his bonuses, since they would not have been paid had his breaches been uncovered.  That was the clear benefit that Mr Kitchener said he obtained from his failure to disclose his wrongdoing.  Whilst it might be true, as I have said, that, had he given a true certificate of compliance (or rather non-compliance) with Code of Conduct in 2010, he would have been dismissed and lost a large part of his bonuses, that does not mean that it is equitable for him now to have to repay them.  The bonuses were paid for the good job he was doing to improve and promote the Bank’s business generally.  The Bank can be fully and properly compensated by requiring Mr Jaffery to disgorge his profits or paying equitable compensation.
373.	It would be unfair in my judgment, even taking into account the nature of Mr Jaffery’s breaches, to require him to repay his salary and bonuses, or indeed any part of them.  The breaches must, as I have already said, be looked at in the context of his employment as a whole.  Mr Jaffery worked long hours over several years for the Bank.  It would be both disproportionate and inequitable in the circumstances of this case to require Mr Jaffery to repay some 5 years of salaries and bonuses in addition to disgorging his profits or paying equitable compensation.

Dishonest assistance: Is Mr Gill liable to (i) GCBOI and/or (ii) BOI PLC for dishonestly assisting or procuring any (and if so which) of Mr Jaffery’s breaches of fiduciary duty?  
Issue 14: Did Mr Gill promise or give or facilitate the giving of any (and if so which) of the undisclosed personal interests referred to in issues 3, 4 and/or 5?
374.	It is obvious, in the light of the facts that I have found that Mr Gill promised Mr Jaffery the interests in respect of Hendon and Stoke.  Mr Gill was the central point of contact, and it does not matter for these purposes whether he was acting for himself or for Mrs Sumby or for anyone else.  Mr Gill amended the draft Investment Agreement himself to show that he was holding 10% in the Hendon project for Mr Jaffery.  The Berkeley Care Group document that he was sent on 17th March 2010 shows that each of Mr Gill and “XX” were to have one third of the Stoke shareholding.  Mr Gill was fully aware, in my judgment, that “XX” was indeed Mr Jaffery, and that the secrecy about using his name was in order to conceal his interest from the Bank.   Mr Gill also, I think, saw the various Stoke Deal documents leading to a similar conclusion, and he was of course intimately involved in Mr Jaffery’s provision of the £400,000 for the Stoke project in May 2010.  
375.	For these and many other reasons, it is abundantly clear from the documents that Mr Gill promised Mr Jaffery his interests in Hendon and Stoke.
Issue 15: Did Mr Gill misrepresent to the Bank the true ownership of the customers involved in the loans (and if so which)?
376.	Mr Kitchener submitted that there was no need for me to decide this issue at this stage, though he indicated it might become necessary at the second stage when the appropriate remedies are determined.
Issue 16:  Did Mr Gill misrepresent to the Bank the actual or expected personal interests of Mr Jaffery (or of Altaf and/or Adnan)?
377.	Mr Gill represented to the Bank throughout – and the Bank accepted – that the beneficial owner of the Hendon and Stoke projects that it financed was Mrs Sumby operating through the GIFT Trust, and various SPVs.
378.	In the light of the findings I have made, these representations were false, and were known by Mr Gill to have been false.  Mr Gill knew, at least, of Mr Jaffery’s interests in Hendon and Stoke, but never told the Bank about them.  As I have already held, Mr Jaffery was always intended to have a beneficial interest in both the Hendon and Stoke projects, and Mr Gill knew that he was.  
Issue 17: Did Mr Gill solicit or encourage Mr Jaffery's involvement in the arrangement and/or management of the loans (and if so which)?
379.	Mr Gill and Mr Jaffery worked together as if they were business partners on the Hendon and Stoke projects.  It is not right to say that Mr Jaffery managed the loans, nor did he decide upon them.  The loan decisions were taken by Credit London, which was a department of the Bank that was deliberately kept separate from the front line business banking staff.  The management of the loans was undertaken by a variety of more junior staff, who ultimately reported to Mr Jaffery, but not by Mr Jaffery personally.  That said, in the course of the trial, I was shown numerous documents that demonstrated that Mr Jaffery was influencing the Bank’s decision-making processes in relation to the loans.  Mr Jaffery supported the applications for each of the loans at the outset, and regularly suggested that interest rates should be dropped, fees should be waived or repayments should be delayed.  Mr Gill was fully aware of all these interventions, and, on one occasion, even wrote to the Bank precisely in the terms drafted by Mr Jaffery so as to achieve some more favourable treatment than had previously been suggested.
380.	It is clear from the documents that Mr Gill solicited Mr Jaffery’s involvement in the loans in numerous ways.   I accept also, as Mr Gill submitted in closing, that other Bank staff suggested indulgences of one kind or another for the RGC Customers.  I was shown examples of both Mr Theaker and Mr Baldrey doing so.  Such conduct obviously does not affect the significance of Mr Jaffery’s actions, nor the conduct of Mr Gill in soliciting it.
Issue 18:  Did Mr Gill procure any (and if so which of) the references provided by Mr Jaffery?
381.	Again, it cannot be doubted that Mr Gill asked Mr Jaffery to provide the references for him, some of which I have set out in the chronological background above.  Perhaps more importantly, Mr Gill also solicited and obtained Mr Jaffery’s personal support for the loans that he obtained in relation to each of the projects, in each case supported by a reference for Mr Gill and his family and their worth.
Issue 19: Did Mr Gill procure Mr Jaffery’s business services to any (and if so which of) the Bank’s customers?
382.	I am not sure that this issue takes the matter much beyond previous issues.  I do not need to determine what Mr Jaffery’s precise involvement was in each of the loans.  Suffice it to say that he was intimately involved in procuring the Hendon and Stoke loans within the Bank, and in smoothing their path within the Bank after they had been agreed.
Issue 20:  Did Mr Gill act dishonestly in acting in any (and if so which) of the ways specified in issues 12-17 above and thereby in assisting or procuring any (and if so which) of Mr Jaffery’s breaches of fiduciary duty?
383.	I have already set out the appropriate objective test for dishonesty.  I must apply that test to Mr Gill’s conduct.  
384.	Mr Gill’s submissions in closing were made on the assumption that I would find that Mr Jaffery had acted in breach of fiduciary duty. He said that, even if I were so to find, he had not behaved dishonestly according to normally acceptable standards.  His main point was that the Stoke transaction was so unusual that nobody would have found it odd, let alone dishonest, had they thought that Mr Jaffery had made a financial contribution.  Mr Gill pointed to the fact that the Bank had suggested to him that he take the Stoke site; the Bank had provided a 0% loan for the full amount of the purchase price; the Bank had taken a 10% override; and the Bank had financed the development.  In short, the Bank was looking for anyone to take its problem off its hands, and nobody would have regarded it as dishonest for Mr Jaffery to help out by investing his own money in such a project. 
385.	The problem with this submission is that, if it were correct, any breach of fiduciary duty could be excused by an evaluation of the level of assistance that the agent was, in fact, providing to the principal.  That is not the test and it is not the vice that the law seeks to cater for.  The vice in a breach of fiduciary duty is that the agent is secretly putting himself in a position in which his interests conflict with those of his principal.  That is what right thinking people generally think to be wrong, and that is what the law is seeking to address.  Here, Mr Jaffery’s financial interest in the Stoke project was carefully concealed from the Bank.  Mr Gill knew that.  Had Mr Gill thought (even wrongly) that the Bank had given its fully informed consent to Mr Jaffery’s interest, it would be a different matter; but that was not Mr Gill’s case.  The unusual nature of the Bank’s problem and the exceptional steps it took to extricate itself cannot create an excuse for a fiduciary agent who secretly puts himself in a conflict position, nor can it exculpate a purchaser who knows that he has an advantage, because the agent is, unknown to his principal, motivated by his own financial interest.
386.	In my judgment, Mr Gill’s conduct in procuring Mr Jaffery’s services to assist him in obtaining and servicing the loans within the Bank, and promising him interests in the projects and soliciting his investment in Stoke, was indeed dishonest.  Mr Gill’s knowledge of the circumstances of the Hendon and Stoke transactions in particular, and the help that was given to him on the other transactions meant that his conduct was contrary to normally acceptable standards of honest conduct.  My reasons for making this finding can be summarised as follows:-
i)	Mr Jaffery was acting on both sides of the fence.  He was persuading the Bank to grant the loans on the one hand and taking a share of the projects on the other.  Mr Gill knew all this, and participated in it.  Any ordinary person would know that such conduct was improper and dishonest.
ii)	Mr Jaffery was involved in determining the terms of the loans and their repayment, and was an investor as well.  Mr Gill knew that too, and was again a participant.  Any ordinary person would regard such conduct as dishonest.
iii)	The fact that Mr Jaffery and Mr Gill were aware of the dishonesty of what they were doing is made abundantly clear by the secrecy enshrined in the various documents already referred to: the use of “XX” to refer to Mr Jaffery in the March 2010 Berkeley Care Group document being the most obvious example.  
387.	In addition to the objective factors, it is obvious that Mr Gill knew full well that his conduct was dishonest.  He did not suggest in cross-examination that he was unaware of Mr Jaffery’s fiduciary duties or of the fact that he could not properly have an interest in the various projects.  Whilst I do not think that Mr Gill helped to draft the disaster scenario document – it reads like Mr Jaffery’s own work.  I do think he saw it.  By that stage, he was, in my judgment, fully aware that what he had set up, procured and participated in was wrong and dishonest.  
Bribery: 
Issue 21:  Did Gill bribe Mr Jaffery? In particular, if Mr Gill promised or gave or facilitated the giving of the interests or benefits referred to in issues 3, 4, 5 and 12: (1) Did Mr Gill know that Mr Jaffery owed fiduciary duties to the Bank? (2) Did those promises or gifts put Mr Jaffery in a position in which his actual or potential personal interests conflicted with those of the Bank? (3) Did Mr Gill fail to disclose the promises or gifts to the Bank?
388.	I will consider the bribery allegations under the headings taken from the Fiona Trust supra, rather than from this issue as drafted by the Bank:-
i)	Was the payment or benefit provided to Mr Jaffery, the agent of the Bank with whom Mr Gill was dealing?
ii)	Did Mr Gill provide the payment or benefit to Mr Jaffery knowing that he was acting as the agent of the Bank?
iii)	Did Mr Gill fail to disclose to the Bank that he had provided such a payment or benefit to Mr Jaffery, whom he knew to be the Bank’s agent?
389.	There is no real doubt that, insofar as Mr Gill provided gratuitous payments or benefits to Mr Jaffery in relation to the various projects, he satisfied these three conditions making the payments or benefits a bribe.  The question is what gratuitous, non de minimis, payments or benefits were provided.
390.	For the reasons I have given, I do not think the payment of £35,000 was a gratuitous payment.  It was a benefit, but had it been repaid immediately as was intended, it would have not have been of significant value, and would not have constituted a bribe.  Though it was not repaid due to an oversight, I still do not think that the payment constituted or was intended to constitute a bribe.
391.	There is no evidence that the promise of Mr Jaffery’s 10% interest in the Hendon project was paid for, so it plainly satisfies these criteria and was known to do so by Mr Gill, and constitutes a bribe.
392.	The interest in Stoke is more difficult, because Mr Jaffery ended up paying a large amount (£400,000 at least and perhaps £700,000) for whatever interest he actually had.  Whilst the promise of an initial interest in Stoke was a bribe insofar as it was not intended to be paid for, I am not sure that that was ever the real intention of the parties.  Mr Jaffery’s 14th January 2008 document indicates exactly the contrary, namely that Mr Jaffery wanted to pay Mr Gill back whatever monies he owed him to put matters on a “proper basis”.  For that reason, I do not think that Mr Jaffery’s promise of an interest, nor his taking of an interest, in Stoke, on the evidence before me, can be regarded as gratuitous.  Mr Kitchener argued that the interest itself was an investment at an undervalue, because Mr Jaffery obtained a greater interest than the £400,000 justified.  I am not satisfied that the evidence established this.  I have not been able to find precisely what interest in Stoke Mr Jaffery ultimately obtained for his £400,000.  I do not, therefore, think this payment has been proved to be a bribe.
393.	Interest free loans made to Mr Jaffery by Mr Gill would have constituted bribes, but I do not have sufficient evidence to determine that the terms of the loans were not entirely commercial, and I cannot therefore hold them to have been bribes.
Transfer  
Issue 22: Were GCBOI’s claims against Mr Jaffery (other than for breach of contract) transferred to BOI PLC by the Transfer and/or the Assignment?
394.	A large part of Mr Jaffery’s and Mr Gill’s defence revolved around their complaints concerning the transfer of the Bank’s UK business from GCBOI to BOI PLC.  The complaint was not so much about the transfer itself, but about the fact that, according to the Defendants, BOI PLC was, even after the transfer, run from Ireland in violation of promises allegedly made to the FSA at the time of the transfer.
395.	In deciding these issues, the sham bank allegation described above seems to me to be largely irrelevant.  I simply have to determine whether the claims that the Bank makes are sustainable, and if so, which entity is entitled to make them.
396.	In relation to this issue, Mr Kitchener relied upon the Court of Appeal’s decision in Offer-Hoar v. Larkstore Limited [2006] 1 WLR 2926, where it was held that an assignment of a claim for damages for breach of contract was valid since it took place after the cause of action had accrued, and that the assignee could claim substantial damages irrespective of when precisely the actual damage had occurred. 
397.	The Scheme which was implemented on 1st November 2010 was effective to transfer under clause 2.1 the UK “Business” of GCBOI to BOI PLC.  “Business” was defined as including “all rights…and assets of whatever nature used in, or relating to, any such businesses [including the business banking business] including the Transferred Assets”. The “Transferred Assets” included “the contracts with Customers”, and all “rights, interests, benefits and powers” of the Bank arising under or by virtue of “the Transferred Loans” (including the Loans) and “all rights and claims (whether present or future, actual or contingent) against any third party in relation to the Business or arising as a result of the Transferor having carried on the Business, other than those relating to Excluded Matters”. 
398.	By clause 2.6, and the definitions and paragraph 2 of Part B of schedule 2, “the Excluded Matters” included “all contracts of employment between the Transferor and its employees, any rights and entitlements thereunder…, and any claims arising thereunder”. 
399.	The effect of the transfer as at 1st November 2010 was that GCBOI had assigned all its rights under the loan agreements with which I am concerned to BOI PLC, but retained any claims against Mr Jaffery under Mr Jaffery’s Employment Contract.  It is by no means clear that the words used in paragraph 2 of Part B of schedule 2 of the Scheme were sufficient to include claims for breach of fiduciary duty, let alone dishonest assistance against Mr Gill, but this may not matter.
400.	The Bank then sought to rectify matters once the problem was pointed out by entering into the Assignment of 20th December 2011, which effected an assignment by GCBOI to PLC of “any and all claims and rights of action it has or may have in or connected with the claims made against Mr Jaffery and Mr Gill in [this action] or the Loans, whether accrued or accruing in the future and whether arising in contract or in tort or in equity or otherwise”. 
401.	It seems to me that the Assignment is effective to transfer the claims made against Mr Jaffery and Mr Gill in this action, insofar as they were not already transferred to BOI PLC, including all claims for breach of Mr Jaffery’s Employment Contract.  The question is whether the point made by Mr Jaffery is a good one, namely whether, because at the time of the Assignment, the Bank had not (allegedly) sustained any losses on the Loans, no claim for damages could be assigned to BOI PLC.
402.	That point is, in my judgment, answered by the Offer-Hoar decision, at least insofar as claims in contract are concerned.  Here, of course, we are concerned with causes of action for breach of fiduciary duty, bribery, deceit and dishonest assistance as well.  It seems to me that the same principles must apply.  Provided that the assignment post-dates the accrual of these causes of action, there is no reason why the fact that losses may later accrue to the assignee should prevent recovery of those losses.  That was just the position in Offer-Hoar, where the losses accrued in respect of the property that was transferred.  The assignee did not seek to make a claim that could not otherwise have been made by the assignor, nor was the claim any greater.  But it did not matter that the losses actually accrued later, provided that a complete cause of action was assigned.  It is the same here.  The losses on the Loans or a disgorgement of the profits in relation to a loan project could have been claimed by GCBOI had the loans and Mr Jaffery’s Employment Contract remained with GCBOI.  Now that the Loans have been assigned to BOI PLC, that company will suffer the losses.  It also has the claims for breach of fiduciary duty and the other claims assigned to it.  For the reasons given by the Court of Appeal, there cannot be a black hole into which these claims fall.  
403.	As it seems to me, the only possible argument would be that, because GCBOI retained Mr Jaffery’s Employment Contract, but assigned claims for breach of it to BOI PLC, those claims are indeed not sustainable.  That might be a reasonable argument if GCBOI had suffered the losses claimed after the Assignment, but that is not what has happened on any analysis.  Mr Jaffery’s breaches of contract were all completed by the date of the Assignment (and indeed he had been dismissed so that Mr Jaffery’s Employment Contract was at an end).  A complete cause of action for at least nominal damages had accrued by the date of the Assignment.  Any losses that were incurred after the Assignment were incurred by BOI PLC. 
Issue 23: Were GCBOI’s claims against Mr Gill transferred to BOI PLC by the Transfer and/or the Assignment?
404.	The position as regards the dishonest assistance and bribery claims against Mr Gill is the same as for Mr Jaffery, save that there are no complications caused by the non-assignment of Mr Jaffery’s Employment Contract.
Issue 24: If the GCBOI’s claims were not transferred to BOI PLC, is GCBOI entitled (in principle): (1) to an account of profits against Mr Jaffery and/or Mr Gill? (2) to recover damages (on its own behalf) for all losses  (a) whenever they arose or (b) suffered as at the date of the Transfer? (3) to recover damages (on its own behalf) in respect of the loss of value of its 100% shareholding in BOI PLC by reason of any loss suffered by BOI PLC, as an exception to the reflective loss principle applicable where the company has suffered loss but has no cause of action to recover it?
405.	In the light of my decisions above, these issues do not arise.
Issue 25: If the GCBOI’s claims were not transferred to BOI PLC, is GCBOI entitled (in principle) to recover damages (for the benefit of BOI PLC) under the exception established in The Albazero?
406.	This issue too does not arise.
Conclusions
407.	For the reasons I have given, the claims for breach of fiduciary duty, breach of contract, deceit, and accepting bribes, succeed in part against Mr Jaffery, and the claims for dishonest assistance in a breach of fiduciary duty and paying bribes succeed in part against Mr Gill.
408.	The successful claims for breach of fiduciary duty against Mr Jaffery are as follows:-
i)	Mr Jaffery’s breach of fiduciary duty in being promised an interest in the Hendon and Stoke projects and in investing £400,000 in the Stoke project;
ii)	Mr Jaffery’s breach of fiduciary duty in taking the loans made to him by Mr Treon and Mr Kanji (or their entities);
iii)	Mr Jaffery’s breach of fiduciary duty in promoting and supporting the Loans made by the Bank to RGC Customers (except the Backford loan);
iv)	Mr Jaffery’s breach of fiduciary duty in providing references in support of the Loans made by the Bank to RGC Customers (except the Backford loan).
v)	Mr Jaffery’s breach of fiduciary duty in failing to disclose his own wrongdoing in the above respects.
409.	The successful claims for dishonest assistance against Mr Gill are as follows:-
i)	Assisting Mr Jaffery’s breach of fiduciary duty in being promised an interest in the Hendon and Stoke projects and in investing £400,000 in the Stoke project;
ii)	Assisting Mr Jaffery’s breach of fiduciary duty in promoting and  supporting the Loans made by the Bank to RGC Customers (except the Backford loan);
iii)	Assisting Mr Jaffery’s breach of fiduciary duty in providing references in support of the Loans made by the Bank to RGC Customers (except the Backford loan);
iv)	Assisting Mr Jaffery in failing to disclose his own wrongdoing in the above respects.
410.	The remaining claims for breach of fiduciary duty against Mr Jaffery, and for dishonest assistance against Mr Gill, are dismissed.
411.	The Bank’s claim for damages for Mr Jaffery’s breaches of clause 32 of Mr Jaffery’s Employment Contract succeeds in that Mr Jaffery became interested in the Hendon and Stoke projects without the prior written consent of the Bank.
412.	The Bank’s claim for deceit succeeds against Mr Jaffery in respect of the last 4 certifications of compliance with the Code of Conduct dated 13th March 2008, 18th March 2009, 22nd February 2010 and 24th May 2010, insofar as the Bank was induced thereby to make those Loans after those dates, and was induced to pay Mr Jaffery’s salary and bonuses after February 2010 by the false certifications in February and May 2010.
413.	The Bank’s claim for bribery succeeds against Mr Jaffery and Mr Gill only in respect of the interest in the Hendon project promised to Mr Jaffery.
414.	The Bank’s claim for forfeiture of Mr Jaffery’s salary and bonuses is dismissed.
415.	I will hear counsel and the Defendants as to the appropriate form of order and costs.