This judgment was handed down remotely at 10.30am on 12 March 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
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HIS HONOUR JUDGE HODGE KC
Misrepresentation – False representation that trusted friend of claimants had been appointed as director of company – Whether inducing claimants to invest in company
Limitation – Whether claimants could with reasonable diligence have discovered the false representation – Limitation Act 1980, s. 32 (1)
Adjournment on medical grounds – Whether adjournment should be granted on second day of trial when defendant suffering from Bell's Palsy – Relevance of availability of remote participation
The following cases are referred to in the judgment:
Bradford Third Benefit Building Society v Borders [1941] 2 All ER 205
Bruce v Wychavon District Council [2023] EWCA Civ 1389
Clydesdale Bank Ltd v Paton [1896] AC 381
Derry v Peek (1889) 14 App Cas 337
Edgington v Fitzmaurice (1885) 29 Ch D 459
Levy v Ellis-Carr [2012] EWHC 63 (Ch)
Pasley v Freeman (1789) 3 TR 51
Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254
His Honour Judge Hodge KC:
Introduction and background
- This is my considered judgment following the trial of a Part 7 claim in the Business List of the Business and Property Courts in Manchester. The trial took place intermittently as a partly attended and partly hybrid hearing over four days, starting at 2.00 pm on Monday 10 February and concluding at about noon on Thursday 13 February 2025. With the exception of paragraph 91, in which I venture to provide a non-exhaustive summary of the principles that should govern an application for an adjournment of a trial or other hearing on medical grounds, this judgment is unlikely to be of interest to anyone other than the immediate parties to this litigation.
- The claimants are all friends and describe themselves as members of the 'Cheshire business community'. They are Mr Nigel Mather, Mrs Sharon Mather (his wife), Mr Charles Ledigo, and Mr Laurence Cleary. They are all represented by Mr Guy Vickers (of counsel), instructed by JMW Solicitors LLP.
- There were originally four named defendants but, by the time of the trial, the only active defendant was the second, Mr Balvinder Singh Rattan. At various times he has been represented by both solicitors and counsel. At the trial, however, he appeared as a litigant in person. I found him to be an intelligent, confident, and assertive individual.
- This claim concerns the affairs and business of Yagna Limited (Yagna), which was incorporated in 2007 as a biotechnology company. By 2012, Yagna purported to be engaged in the development of three business streams: cosmetic products, biodegradable food packaging, and a treatment for skin cancer. Its sole director was Mr Rattan, whose company, Lokpal Limited, was the majority shareholder. The third defendant, Mr Rattan's wife, was a significant minority shareholder in Yagna.
- By the claim form, the claimants seek "damages for fraudulent and/or negligent misrepresentation by the defendants which induced them to invest substantial sums into a company known as Yagna Limited, and/or in the alternative, damages for the misappropriation of the sums invested in Yagna Limited by the defendants".
- The particulars of claim were settled at a time when there were four defendants so a number of the matters pleaded do not relate to Mr Rattan. Indeed the principal defendant, and the focus of many of the allegations made by the claimants, is the first defendant, Mr Lakbir Basran MBE. He was very well known in the Cheshire business community as someone possessed of substantial personal wealth who had a very substantial reputation and expertise in business, companies, and investments. By 2012, Mr Ledigo and Mr Cleary had been personal friends of Mr Basran for some 30 years; and they had introduced him to Mr and Mrs Mather, who had also become his personal friends. From around 2012, relying upon his friendship with the claimants, and his knowledge that they put their trust and confidence in him, Mr Basran marketed the concept of investing in Yagna to the claimants. In or about July 2012, Mr Basran also introduced the claimants to Mr Rattan.
- Mr and Mrs Mather invested sums totalling £1,000,000 in Yagna in three tranches: £500,000 on 12 December 2012, £250,000 on 8 May 2013, and the final £250,000 on 21 November 2014. Mr Ledigo invested sums totalling £100,000 in Yagna in two tranches: £70,000 on 5 December 2012 (of which £20,000 represented Mr Cleary's total investment) and a further £50,000 on 31 May 2013.
- The claimants' case is that these investments were made in reliance upon representations by Mr Rattan that Mr Basran was to be, or had been, appointed as a director of Yagna. As regards Mr and Mrs Mather, these representations were contained in an email that Mr Rattan sent to Mr Basran and Mr Mather at 15.24 on 5 December 2012 (some one hour and 50 minutes after Mr Ledigo and Mr Cleary had invested a total of £70,000 in Yagna). As regards all four claimants, these representations are now said to have been made in three successive drafts of a shareholders agreement that were sent under cover of emails from (1) Mr Basran to Mr Mather, Mr Ledigo and Mr Cleary (with a copy to Mr Rattan) at 14.54 on 26 November 2012, (2) Mr Rattan to Mr Mather (with a copy to Mr Basran) at 8.55 on 19 December 2012, and (3) Mr Rattan to Mr Mather (with a copy to Mr Basran) at 12.23 on 10 March 2013.
- Mr Rattan submits that he did not send the email of 5 December 2012 and that Mr Basran must have done so using Mr Rattan's laptop to access his email account. At paragraph 18 of his joint defence with his wife, the former third defendant, pleaded by Alexander dos Santos (of counsel), Mr Rattan pleads as follows:
Paragraph 12 is denied. The queries may have been raised with [Mr Basran] instead of [Mr Rattan] and email which followed also sent by him. There was an agreement in place that [Mr Basran] would be appointed as director and in any event [Mr Basran] was acting as though he was already a director and he was carrying on the business as such. Emails show [Mr Basran] was claiming to be the chairman of Yagna (and also Biosafe). It was not understood by [Mr Rattan] nor at any time asserted (expressly or impliedly) that [Mr Basran] was or would be a director in order to protect the claimants' interests in Yagna. The claimants describe themselves as members of the local business community and were understood to have prior investment experience.
In any event, Mr Rattan asserts that the fact that Mr Basran was not formally appointed a director of Yagna until 12 September 2015 (in place of Mr Rattan) is immaterial since at all material times he acted as though he were a director of Yagna, and was regarded as such by all four claimants.
- Mr Basran did not defend the claim and, on 14 March 2022, DJ Richmond entered judgment in default against him for an amount to be assessed. On 29 March 2022 a bankruptcy order was made in relation to Mr Basran (then aged 73) on his own application. His disclosed assets total £6,411 against liabilities totalling £826,792.77, leaving an estimated deficiency of £820,381.77. At a hearing on 20 February 2023 to assess the damages to be paid by Mr Basran to the claimants, judgment was entered against him, in his absence, for sums totalling some £1.465 million, inclusive of interest at 2.5% p.a. until judgment and 8% p.a. thereafter. Mr Basran was also ordered to pay the claimants' costs, to be the subject of a detailed assessment if not agreed. Given Mr Basran's bankruptcy, no further action has been taken in respect of any assessment of the costs, and no sums have been received in respect of the damages and interest awarded to the claimants. In light of their personal knowledge of Mr Basran and his business history, the claimants find it difficult to believe that he has, effectively, no assets. They continue to carry out further investigations.
- By this time, the claim against the fourth defendant, Mr Bhagwant Singh Rattan, a relation of the second defendant, had been struck out for non-service by order of DJ Woodward dated 16 August 2022. The claim against the third defendant, Mrs Rattan (the second defendant's wife) was later struck out by HHJ Stephen Davies at a hearing on 10 November 2023 on the footing that the claim against her was inadequately particularised. That left the claimants proceeding against the second defendant, Mr Rattan, alone.
- One of the peculiarities of this case is that Mr Rattan is unable to rely upon any evidence of his own by way of defence to this claim. Although he filed a witness statement on 27 September 2024, this was almost two months out of time; and he has never made any application for relief from sanctions to enable him to rely upon it. This is a matter to which I will need to return later when I come to relate the history of this case.
Case history
- I have already set out the position in relation to Mr Rattan's co-defendants in the introduction to this judgment. Mr (and Mrs) Rattan were represented by a firm of solicitors called Sheridans between 20 January and 8 March 2022. It was during this period that a joint defence (settled by counsel) and an initial disclosure list were submitted on behalf of Mr and Mrs Rattan. The latter document is significant because item 63 on that list is the email of 5 December 2012, described as an email from Mr Rattan to Mr and Mrs Mather. Subsequently, Mr Rattan and (before the claim against her was struck out) Mrs Rattan were represented by a solicitors' practice called Karim, Missick & Traube LLP, initially from 21 April 2022 until 22 March 2024, and later from 15 October 2024 until 8 January 2025.
- A costs and case management hearing took place on 19 January 2024 before HHJ Stephen Davies. The claimants were represented by their solicitor and Mr Rattan by Mr dos Santos. The judge gave directions for the future case management of the case, including extended disclosure pursuant to PD 57AD Appendix 5 (governing less complex claims), and (by paragraphs 2 and 3) for the exchange of signed statements of witnesses of fact and any hearsay notices by no later than 29 July 2024, with the usual direction that except with permission from the court, oral evidence would not be permitted at trial from any witness whose statement had not been prepared in accordance with PD 57AC, had not been served in accordance with the court order, or had been served late.
- On 12 March 2024, a pre-trial review was fixed for 6 December 2024, and a five day trial was listed to start on Monday 10 February 2025.
- The claimants duly served witness statements from Mr Ledigo (his second), dated 26 July 2024, and Mr Mather (his third), dated 29 July 2024. Mr Mather, Mr Ledigo and Mr Cleary had previously served witness statements (their first), all dated 22 September 2022, for the assessment of damages hearing against Mr Basran. Mr Mather had also served a second witness statement, dated 15 July 2023, in response to an application by Mr and Mrs Rattan to strike out the proceedings against them on limitation grounds. I will refer to this second witness statement when I come to review the witness evidence. All three of Mr Mather's witness statements are made with the authority of his wife (and co-investor), Mrs Mather. Mr Ledigo's second witness statement asserts that his really close friend of 40 years, Mr Cleary, is "not well at the moment". During the course of Mr Ledigo's evidence, it emerged that Mr Cleary has not, in fact been "diagnosed with dementia" (as stated at paragraph 5 of this witness statement) but is merely "old and infirm". His solicitors are satisfied that he is 'litigation competent'.
- On 27 September 2024 Mr Rattan filed a witness statement. This was almost two months out of time; and he has never made any application for relief from sanctions to enable him to rely upon it.
- Since 25 September 2024 there have been a number of applications for further disclosure. These have been made primarily by the claimants (in most part successfully) but more recently by Mr Rattan (unsuccessfully). The claimants still do not consider that Mr Rattan has fully complied with orders for further disclosure made against him whilst solicitors were on the record for Mr Rattan. The first of these orders was made by HHJ Bever on 29 October 2024, when Mr Rattan was again represented by Mr dos Santos. The second order was made by me on 12 December 2024, when Mr Rattan was represented by Mr Josh O'Neill (also of counsel) in opposing the claimants' application for an 'unless' order. This latter date was also the adjourned hearing of the pre-trial review. There were two further hearings after Mr Rattan's solicitors had again ceased to act for him: (1) on a partly successful application by the claimants for further disclosure before HHJ Cawson KC on 10 January 2025 (with judgment being handed down on 14 January); and (2) on an unsuccessful application by Mr Rattan for further disclosure before me on Wednesday 5 February, shortly before the start of the trial.
- Mr Vickers complains, in particular, that contrary to my order of 12 December 2024, which required Mr Rattan to serve on the claimants' solicitors a witness statement in which Mr Rattan was to provide details of the searches undertaken and attach "electronic copies of the documents located as a result of that search including metadata", and explain "any omissions in his disclosure", during the entire course of the disclosure exercise, Mr Rattan has not served a single electronic copy of any document, and particularly of any emails, including any metadata. Mr Rattan has produced no explanation as to why he has not disclosed a single electronic document; he simply has not done so.
- In his written skeleton argument, Mr Vickers emphasises that in circumstances where matters are not adequately pleaded to, or set out in any witness statements, the absence of Mr Rattan's native emails in the period December 2012 to May 2013 means that the claimants, and the court, have only a partial picture of the true facts of this case. This has impeded the claimants in the preparation and pursuit of their claims. It remained the claimants' position that the court should show its displeasure at having its orders ignored by striking out Mr Rattan's defence (which it would be fully justified in doing since paragraph 4 of HHJ Cawson KC's order expressly adjourned any further consideration of the claimants' most recent application for a strike-out to the trial). Mr Vickers pointed out that this would still save time, and money, since the claimants would not have formally to prove their case. As the court was aware, Mr Rattan had no witness evidence that he could rely upon. Nevertheless, it is the claimants who bear the burden of proof; and, unless the court were to strike out his defence, Mr Rattan would be entitled to cross examine them. If his defence were to be struck out, he would only be allowed to cross-examine on the quantum of the claims; and it is clear that there is little that Mr Rattan has pleaded, or could say, about that aspect of the matter. Thus, significant court time could still be saved if Mr Rattan's defence were now to be struck out.
- At the start of the trial, I indicated that I was not minded to proceed down this route. Should I strike out Mr Rattan's defence, he might seek to challenge the decision on appeal; and, if, successful, the five court days set aside for the substantive trial of this claim would have been wasted. I considered that it would be preferable to determine the claim on its merits. Recognising the pragmatic good sense of this approach. Mr Vickers did not seek to press the point. In the light of the further disclosure that emerged from the claimants during the course of the trial (partly in response to questions from the bench), I consider that my approach has been fully vindicated.
- The real significance of these several disclosure hearings lies in the implications for Mr Rattan's witness evidence. In his skeleton argument on behalf of Mr Rattan, dated 11 December 2024, both resisting the claimants' application for an 'unless' order in relation to further disclosure from Mr Rattan, and made for purposes of the pre-trial review that was also before me on 12 December 2024, Mr O'Neill (of counsel) thrice referred (at paragraphs 3.4, 41 and 42) to the need for an application for relief from sanctions in respect of Mr Rattan's witness statement, filed on 27 September 2024, before he might rely on that statement at trial. Mr O'Neill expressly recognised that Mr Rattan had not yet filed any application for relief from sanctions (due to the funding issues which were said to have beleaguered his compliance with HHJ Bever's order for disclosure). Mr O'Neill expressly recognised that there was no such application before the court at that hearing (which also served as the pre-trial review). The trial timetable had been prepared, and approved, on the basis that the court would not be hearing any evidence from Mr Rattan.
- Solicitors remained on the record for Mr Rattan until 8 January 2025. Thereafter, on 17 January 2025, Mr Rattan issued his own application for disclosure, although this was not processed by the court and referred to me until Monday 3 February, when I ordered an attended hearing at 12 noon the following Wednesday 5 February, which was the day set aside for my pre-reading for this trial (which was listed to start at 10.30 on the following Monday morning). That application did not seek relief from sanctions in respect of the late service of Mr Rattan's witness statement. Rather it sought an 'unless' order for further disclosure from the claimants (although Mr Rattan did not pursue that sanction in his oral submissions before me). That application was dismissed with costs without any need for me to call upon Mr Vickers (whose skeleton argument I had pre-read) for the reasons I gave in a short extemporary judgment delivered shortly before the hearing concluded at 1.00 pm.
- Despite the time available to make such an application during the period of more than two months when Mr Rattan was again represented by solicitors (who had instructed two counsel), there has never been any application for relief from sanctions in relation to Mr Rattan's lately served witness statement. Nor has any evidence ever been filed in support of any such application (as required by CPR 3.9 (2)). The consequences are two-fold: (1) there is no evidence before the court from Mr Rattan; and (2) the claimants have been denied any opportunity of cross-examining him. Had Mr Rattan given evidence to support his submission that he did not send the email of 5 December 2012 to Mr Mather, and that Mr Basran must have done so using Mr Rattan's laptop to access his email account, Mr Rattan would doubtless have been subjected to a sustained cross-examination directed to challenging that version of events.
- At the end of the hearing on 5 February, I indicated to Mr Vickers that because I was not sitting the next two court days, and had pupil advocacy training commitments in Bedfordshire over the weekend (compounded by the effects of RMT action on Avanti train schedules), I would not be able to pre-read any skeleton argument he might submit until the Sunday evening before the trial. Mr Vickers assured me that his skeleton would be filed by close of business on the previous Friday. Because of this, and due to the disruption to the claimants' counsel's trial preparation caused by Mr Rattan's disclosure application (which had been compounded by the court's delay in processing it due to staff shortages), I put the start of the trial back to 2.00 pm on Monday 10 February. In the event, Mr Vicker's 19-page skeleton argument, two-page cast list, and six-page chronology (together with the earlier proposed trial timetable) were only submitted to me (and copied to Mr Rattan) at 20.35 on the evening of Sunday 9 February. For reasons that will become apparent, I should record that at the end of the 5 February hearing, Mr Rattan, who had up to then been addressing the court without any apparent difficulty, indicated that his face had suddenly been affected by an attack of Bell's Palsy.
The claimants' witness evidence
- I have already referred to the claimant's witness statements and the lack of any admissible witness evidence from or on behalf of Mr Rattan. In his second witness statement, Mr Mather explains that the earliest date that he first discovered that the claimants' investments in Yagna might not yield the promised returns was within six years of the issue of proceedings (i.e. after 20 August 2015). The first indication that Mr Mather had that something was amiss with his investment was a telephone call from Mr Basran on 14 September 2015 in which he indicated that the money had 'gone'. Not much further detail was given during this call but Mr Mather was reassured by Mr Basran that all his monies would be recovered. Mr Mather therefore had faith that Mr Basran would ensure that his investment was still safe. Even if the date of Yagna's annual return dated 23 August 2015, recording that all of the claimants' shares had been transferred out of their names without their consent or involvement, should be taken as the date of the claimants' discovery of the misrepresentations within this claim (even though the claimants did not see it until considerably later) this was still within six years of the date the claim form was issued.
- Of particular relevance to the claim against Mr Rattan are paragraphs 23 to 28 of Mr Mather's third witness statement. These read as follows:
23. In early December 2012, I sent a list of due diligence questions which had been prepared by our financial advisers to Mr Basran, who told me that Mr Rattan would answer them.
24. Mr Rattan responded personally to all the points I raised in his email of 5 December 2012. In his response, Mr Rattan stated that it was his intention that "as substantial profits arise in the company and they are surplus to the companies (sic) cash-flow requirement, then the dividends should be paid to shareholders at an appropriate level to return the shareholders (sic) initial capital". He stated that we had "been allowed to invest at a substantial discount to what the institutions will be allowed to come in at in the near future".
25. In response to my query about reserved matters, i.e. matters which the company cannot do without my approval such as issuing more shares, licensing its intellectual property, taking or making loans, selling assets or making capital expenditure above an agreed limit, Mr Rattan stated that seeking consent in respect of such matters would not be possible as this would "restrict the running of the business" which would be "disruptive in that they [the directors] have to ask for permission". He reiterated that Mr Basran had been made a director "for this reason" as "the shareholders he has introduced as investors are close associates of his". He went on to state in response to my query about having a right to appoint a director to the board, that "I have allowed him [Mr Basran] to become a company director". I therefore understood that Mr Basran had been made a director in order to protect my investment, as well as that of the other shareholders. Had it not been for Mr Rattan's assurance that Mr Basran, who I trusted and had confidence in, had been appointed as a director to protect my investment, I would not have felt comfortable investing in Yagna. Indeed, my wife and I would not have handed over our money had Mr Rattan not represented that Mr Basran had been made a Director of the Company.
26. As well as providing the comfort that Mr Basran had been appointed as a director of Yagna in order to protect our investment, Mr Rattan responded to all of the enquiries raised by our financial advisers about how our money was going to be invested and our rights as shareholders, and we found his responses satisfactory. Mr Rattan stated that Yagna's business strategy had been "worked on extensively with PWc (sic)", that the directors had "resolved an issue where the company will save £9.5m over the next 5 years" that "3 monthly updates will be made available to shareholders" and provided a number of warranties concerning litigation, intellectual property and the company's accounts. He also stated that "company directors are not allowed to take any directors (sic) remuneration until sufficient company profits are generated." This exchange persuaded Sharon and I that Yagna would be a safe and reliable investment. A copy of Mr Rattan's email is exhibited to this statement, at pages 15 to 17 of NM2.
27. We were particularly impressed to be informed that PwC, the well-known accountancy firm, were interested in Yagna and had agreed to come on board as its professional advisers. Obviously they are a big company, and Charles knew Ian Powell already so that gave us some comfort. Mr Rattan also mentioned Sir Christopher Evans, who we knew was a big name in biotechnology. It seemed like a lot of big companies and notable businessmen were interested in Yagna, so it wasn't a tin pot off the cuff company that doesn't sound viable.
28. I responded on 7 December 2012, to confirm that I was happy with his responses and would now look to get my funds invested into Yagna as soon as possible. A copy of my email to Mr Rattan is exhibited to this statement, at page 18 of NM2.
- At paragraph 31 of his third witness statement, Mr Mather records that after their initial investment, Mr Cleary, Mr Ledigo and Mr Mather received diamond cufflinks from Mr Rattan, which they were told was a welcome present for investing into Yagna. Mr Mather wrote a personal letter to Mr Rattan thanking him. Mr Mather comments: "Little did I know at the time that these gifts had been purchased using the funds we had just invested." At paragraph 40, Mr Mather relates that around Christmas 2013 he and Mrs Mather met Mr Rattan who took them to the jewellery shop, De Beers, where Mr Rattan bought Mrs Mather a diamond necklace because she had not received the cufflinks that the other three claimants had received. Mr Mather comments: "Again, I believe now that this necklace was purchased from the funds we had invested in Yagna."
- Mr Mather gives evidence of his three investments into Yagna (with his wife, Sharon) at paragraphs 29, 38, and 52 of his witness statement. At paragraphs 55 to 58, Mr Mather relates that on 14 September 2015, he received a telephone call from Mr Basran in which he stated that Mr Rattan had "been a naughty boy" and that all the claimants' investment funds had been taken by him. However, the claimants were reassured that another investor, a supposed high-flying American billionaire businessman called Samuel Mikail, was going to take Yagna over and sort matters out. The claimants were repeatedly assured that they would get their money back. However, as time went on, Mr Mather grew increasingly frustrated with the state of affairs.
- At paragraphs 60 and 61, Mr Mather explains that the claimants started to look into the position themselves. They quickly discovered that, on 23 August 2015, Yagna had submitted an annual return to Companies House which stated that all of the claimants' shares had been transferred to Mr Rattan and to Mr Mikail. Up to that point, the claimants had maintained the belief that they were registered as shareholders in Yagna at Companies House. Mr Mather comments that he "wasn't in the habit of going on Companies House to check the Company's filings". His understanding is that on 10 September 2015, Mr Rattan assigned all of Yagna's patents to Mr Mikail's company, Humanitarian Scientific LLC. Then, on 12 September 2015, all of the shares in Yagna were transferred away from Mr Rattan and Mr Mikail to Mr Basran. Mr Mather had never signed any stock transfer form and so Mr Rattan had acquired his shares illegally. Mr Mather understands that Mr Mikail was the only person to receive any funds as a result of this process.
- Earlier, at paragraph 57, Mr Mather relates that "Mr Mikail and Mr Basran had put the company into administration on 26 April 2016 without us knowing, and without informing the administrator of our investment into the company". In fact, Yagna had been placed into creditors' voluntary liquidation without any reference to the claimants despite Mr Basran's repeated assurances that he was resolving matters in their favour. On the same day, Mr Basran signed a statement of affairs stating that there were total assets available to Yagna's unsecured creditors of only £5,000, there was an unspecified trade creditor in the sum of £2,456,811, and an unpaid director's loan owed to Mr Basran of £1,200,000, and that the sum of £178,155 was owed to Mr Rattan. Mr Vickers points out that this statement is wholly inconsistent with Mr Basran's previous assertion that Mr Rattan had made off with Yagna's monies. Mr Basran did not inform the liquidators of the claimants' involvement in Yagna with the result that the liquidation was conducted without reference to them. The liquidation of Yagna produced no return for any of the claimants. At paragraph 62 of his witness statement, Mr Mather states that he had previously instructed solicitors, Davis Blank Furniss, to look into the matter. They contacted Andrew Andronikou and Michael Kiely (of UHY Hacker Young LLP), the former joint liquidators of Yagna, on or around 12 October 2018. At paragraph 63, Mr Mather relates that Mr Andronikou called his former solicitor on 12 November 2018 and notified him that there was hardly any paperwork relating to Yagna. When the solicitor said they found this surprising, Mr Andronikou said that it was not surprising as there had been a 'fraud' and that Mr Mikail had showed him a list of the 'victims' of the fraud. Mr Andronikou also confirmed that at the time he had not known that either Mr Mather or Mr Ledigo had been shareholders in Yagna. Mr Andronikou confirmed that he had met with Mr Rattan and had relied heavily on the representation, made by him as a director, that Mr Mikail was the only significant creditor. He further confirmed that his instructions had simply been to close the company down as it was an embarrassment to Mr Mikail. Mr Andronikou had only dealt with Yagna, but he understood that there were "seven different companies" involved in the fraud.
- In his second witness statement, Mr Ledigo describes his friendship with, and the trust he placed in, Mr Basran, whom he had known for around 30 years. They had first met on a trip to Milan with Manchester United FC, and they had become the best of friends, going everywhere together. They "basically invested in him. It started off as a charity for leukaemia. I'm quite shocked at how it turned out." It was Mr Ledigo who first introduced Mr and Mrs Mather to Mr Basran. It was Mr Basran who, in 2012, first introduced Mr Ledigo to Mr Rattan as his "business partner". Mr Basran first raised the idea of Mr Ledigo investing in Yagna when he said that after eight years of research, they might have discovered a cure for leukaemia. He also said that he thought that the technology he had been developing had commercial side applications, in particular bio-degradable packaging to cut down on plastic, but also beauty and anti-aging treatments. Mr Basran had said that with the money they could make from the commercial side, they could afford to give the leukaemia treatment to the NHS for free. Mr Ledigo did a lot of work for charities so the charity aspect was his main interest in the project.
- Mr Ledigo records that he considers himself to be "quite an experienced investor", who would generally make investments decisions following a massive amount of research. However, Mr Ledigo explains that he did not do his normal due diligence when it came to his investment with Mr Basran, whom he trusted completely due to their long friendship. "Because of my close friendship with Lak, I had a bit of a blind spot and so I didn't look into things as closely as I would have normally." At paragraph 14 of his second witness statement, Mr Ledigo says this:
I always saw Lak and Mr Rattan as equal partners in the business. It seemed that they were both in charge and jointly responsible for all aspects of management. Lak always assured me that he was a director of Yagna and would look after our investments. I always understood that part of his role was to protect my interests, as well as the interests of other investors.
- Originally, Mr Ledigo had decided to invest sums totalling £250,000 into Yagna but alarms bells rang when neither Mr Basran nor Mr Rattan answered a list of questions provided by the actuary in charge of Mr Ledigo's pension fund. As a result, Mr Ledigo limited his investment to £100,000. This was made in two equal tranches (with the first payment enhanced by a further £20,000 invested on Mr Cleary's behalf). At paragraph 19 of his second witness statement Mr Ledigo confuses the order of the two payments; but these are correctly pleaded at paragraphs 14 (b) and (c) and paragraph 18 (c) of the particulars of claim; and they are verified by the supporting bank documentation. I am satisfied that Mr Ledigo made a genuine mistake in paragraph 19 of his second witness statement about the amounts of the two payments. At paragraph 20 of his second witness statement, Mr Ledigo states:
I took the investment at face value, because I trusted Lak so much. I never made any further enquires. From that point on, Nigel got more involved with Yagna than I was. I understand that Nigel went to Mr Rattan's house, and that Mr Rattan took him to a top restaurant in London and insisted on paying the bill, basically without [sic: presumably intended to read 'with our'] money. He gave us cufflinks as well, and Sharon was bought a necklace from De Beers. He told us it was "a small reward towards the big one".
- A version of Mr Rattan's email of 5 December 2012 is exhibited to Mr Mather's third witness statement, together with Mr Mather's email response of 7 December. However, on the first day of the trial, Mr Vickers produced a further supplemental bundle of 24 pages comprising two email chains (with attachments), one between 25 and 26 November 2012, and another between 5 December 2012 and 10 March 2013, and a single email (with attachment) dated 19 December 2012. Given the claimants' solicitors' intense focus upon the deficiencies in Mr Rattan's own disclosure, it is regrettable, to say the least, that the claimants only produced these documents on the first day of the trial. It is necessary to go through these documents in chronological order.
- The first email chain begins with an email from Mr Rattan (signing himself as 'binder') to Mr Basran timed at 18.24 on Sunday 25 November 2012. This attaches a draft shareholders agreement purporting to be made on an unidentified date in November 2012 between shareholders to be identified and Yagna. Clause 2, headed (in capitals) 'The Board of directors of The Yagna Limited', and identifying Yagna's directors, includes the statement: "Lak Basran MBE To be appointed on December 1st 2012". Clause 4 addresses material changes in Yagna's business that had occurred since 1 July 2012. It comprises six paragraphs, lettered A to F. Mr Basran then forwarded this email, and its attached shareholders agreement, to various people, including Mr Mather, Mr Ledigo and Mr Cleary at 14.54 on 26 November 2012. Mr Rattan was copied in. The subject of the email is: 'RE: Investor shareholders agreement/Yagna Ltd'. The text reads:
Hi All
Here is the shareholders agreement for all investors/Yagna Ltd to sign
We have kept it very simple and not made it 'War and Peace'
The only info I still need to forward is the Yagna Ltd bank account number etc
I am conscious that time is pressing on and the need for funds to be remitted by end of this month ... so do apologise for the delay
Am in Italy till Wednesday but will send or get Binder to send the bank account details as soon as we have them
Thanks for all your support
kind regards
Lak
- The second email chain begins with Mr Rattan's email to Mr Basran and Mr Mather sent at 15.24 on 5 December 2012. This is summarised at paragraphs 24 to 26 of Mr Mather's third witness statement (cited earlier). The text of the email reads:
Dear Lak/Nigel
Thank you very much for the professional and polite manner in which you have raised some points of concern.
I have answered them with my reply in bold on the points raised.
I hope they are satisfactory answers.
The initial shareholders agreement drafted by company lawyers Jeffrey Green Russell was very onerous and that's not what I wanted as the investors are very close friends and associates .
However there was no harm in having a mutual set of rules for the shareholders along with presentations etc.
Nigel please feel free to call me any time and I thank you and your wife for the time and effort you have taken in being involved in the opportunity.
My cell number is 07515575602. I would welcome the opportunity to have a chat with you.
Kind regards
Binder
- There follow Mr Rattan's responses to a series of nine queries on (1) dividend policies, (2) whether Mr Mather's shares could be preference shares, (3) tag-along rights, (4) reserved matters, (5) pre-emption rights on transfer of shares, (6) right to appoint a director, (7) right to comprehensive information, (8) whether money could be invested both as loan and share capital, and (9) warranties.
- As regards (4), reserved matters, Mr Mather's advisers had asked:
Can there be a list of reserved matters which the company cannot do without your consent? For example, issuing more shares (which would water down your shareholding), changing the nature of the business, selling any assets, licensing any intellectual property, taking any loan, making any loan, making capital expenditure above a certain financial limit etc. These last few examples ensure that value is not taken out of the business.
Mr Rattan's answer was:
The matters referred to are normally the responsibility of the directors and to restrict the running of the business can be disruptive in that they have to ask for permission.
For this reason I have allowed Lak Basran MBE to become a company director as the shareholders he has introduced as investors are close associates of his.
However any material change in policy would be informed to the shareholders and they will be consulted where appropriate
One such example is that between the directors we resolved an issue where the company will save £9.5 million pounds over the next 5 years. Also each year this will result in a net profit bottom line increase of £1.8 over next 4 years. To go back and forth to investors to get their consent would not have allowed this deal to go through. The company directors have a good understanding of the business and have the right expertise, to carry out the business strategy that has been worked on extensively with PWC who we have now taken on board as our advisors
I would remind you that the company directors are not allowed to take any directors remuneration until sufficient company profits are generated.
- As regards (6), the right to appoint a director, Mr Mather's advisers had asked:
Can you have the right to appoint a director to the board. This gives you a say in the day to day running of the company.
Mr Rattan's answer was:
The same question was raised by Lak Basran MBE and I allowed him to become a company director as mentioned in point 4 reply. Also he has the depth of experience in the food industry to cover the bio degradable sector which is by far the most valuable technology that Yagna owns.
- Mr Mather replied to Mr Rattan (with a copy to Mr Basran) by email timed at 14.31 on Friday 7 December 2012, as follows:
Hi Binder
Sorry for the delay in responding to you
Firstly many thanks for the honest and comprehensive response to the questions that our advisors put to you
I have sent them the response and wait to hear from them. In the meantime I spoke with Lak earlier today as I am keen to get the finances into Yagna's account as soon as possible.
Having said that the funds are in place and I will be sending them by close of play Monday
In respect of the Shareholders agreement, I know Lak will be talking to you today I will wait and if you are going to revamp the original we can sign that when it is ready
We are aware of how much hard work and time you have already put into this project and we are delighted to be asked to be part of it
With that in mind we wish you every success in the coming years
I do hope we can meet up before Christmas and will forward some dates to Lak when we are free
Once again Many Thanks
Nigel and Sharon
- The final email in this chain is dated 10 March 2013 from Mr Mather to Mr Rattan (and copied to Mr Basran). Before I come to this, however, it is necessary to refer to an intervening email, timed at 08.55 on 19 December 2012, from Mr Rattan to Mr Mather (and also copied to Mr Basran). It reads:
Dear Nigel/Lak
I have not heard anymore regarding any adjustments to the shareholders agreement.
I have attached an amended agreement with some minor adjustments.
Please let me know the names or entity for the company registrar so I can get the lawyer to issue the shares and bring them on Friday.
Lak could you please do the same for other shareholders.
I am still waiting for their passport and utility bills details also.
I know at this time of the year everyone is busy but our lawyer is on the strict side.
Looking forward to meeting at 1 pm today Lak in Nottingham.
Kind regards
Binder
- Attached to this email is a later version of the shareholders agreement. It appears to be the same as the first, save that the list of material changes since 1 July 2012 has been expanded by the addition of four new matters (lettered G to J).
- I return then to the email dated 10 March 2013 from Mr Mather to Mr Rattan (and copied to Mr Basran). Correcting obvious typographical errors and infelicities of expression (as I have sought to do in other emails), this reads:
Dear Nigel
Thank you for the letter sent by you and Sharon. I wanted to get my own letterhead and send a personal letter to you both, however working around the clock at present.
Need a holiday but no chance until the summer it seems.
I have attached a shareholders agreement on which you will see has more points included than previously.
The main reason was to include more protection for shareholders.
The family especially my wife insisted that I do this. As you know wives can gently persuade us menfolk.
Also I could get some of our key scientific staff to understand the level of responsibility placed on the directors.
It's a pleasure to be part of Lak's club of people and I am very grateful for the support you and Sharon have provided our company.
I have asked Lak to get meeting date for all the investors after next week so that I can update on all aspects and also provide an actual set of accounts as per February 2013.
Kind regards
Binder
PS - sorry about the delay on sending updated shareholders agreement.
Lak can you please send the attachment to all the shareholders and sign on their behalf and return the same to me.
- The attached shareholders agreement is an expanded version of the previous drafts. It is now expressed to be made on 4 December 2012 between Mr Basran "representing the investors" and Yagna. There is no reference to any of the claimants as present shareholders in Yagna. Clause 2 still refers to Mr Basran as "To be appointed on December 1st 2012". The list of material changes since 1 July 2012 has been re-ordered and further expanded to embrace 18 matters (lettered A to R). Clause 5, relating to directors' remuneration, has been greatly expanded. The execution page now refers to Mr Rattan executing the agreement for and on behalf of Yagna as its managing director, and Mr Basran executing the agreement on behalf of the investors.
- At the beginning of the fourth (and final) day of the trial, before Mr Rattan addressed the court, I queried with Mr Vickers whether there was any email evidencing how the queries that Mr Rattan had answered on 5 December 2012 had been conveyed to Mr Mather by his advisers and passed on by him to Mr Basran. This query elicited three further scanned documents which were in Mr Mather's possession. I reiterate my earlier observation that in a case where the claimants' solicitors have persistently complained about deficiencies in Mr Rattan's own disclosure, it is regrettable, to say the least, that the claimants only produced these documents on the final morning of the trial, and then only in response to direct queries from the bench. This further disclosure directly supports the evidence given by Mr Mather at paragraph 23 of his third witness statement (cited above). Since it does the precise opposite of tending to undermine the claimants' evidence and case, this late disclosure has caused no prejudice to Mr Rattan. But it is not the way that commercial litigation should be conducted, with the court being left to tease documentary evidence out of the claimants when they are engaged in litigation with a defendant acting in person who is defending a claim for damages for fraudulent misrepresentation in a sum well in excess of £1 million. However, I must also bear in mind the point made by Mr Vickers that Mr Rattan has not disclosed any of the emails that he received during this period from Mr Basran.
- One of these lately disclosed further documents are the last two pages of an incomplete email from Mr Mark Traynor, an associate solicitor in the corporate department of the Manchester office of the solicitors' practice, Brabners Chaffe Street LLP. This sets out the nine questions that Mr Mather addressed to Mr Basran and were answered by Mr Rattan's email of 5 December 2012. It is not clear when this email was sent to Mr Mather. The other document includes the opening two lines of an email from Mr Mather to Mr Basran, bearing the subject line 'Yagna', timed at 20.45 on Tuesday 4 December 2012. This reads:
Hi Lak
Great day today enjoyed the company
There is nothing more of this email. Above it is Mr Basran's reply, timed at 21.53 the same evening, and copied to Mr Rattan. This reads:
Hi Nigel
Great to see you and Sharon earlier today
You are perfectly entitled to ask questions as required re this investment
I am forwarding this to Binder as it is his area of expertise .... and he will reply to you
The lawyers are, as you say, felt obliged [sic] to put everything on the table but we need to ensure it does not get over-complicated unnecessarily
As agreed, however, this 'By invitation' opportunity is exactly for people like you who want to make a difference .... and also benefit greatly from the opportunity given
I think by now you know how Binder and I operate with the utmost integrity and openness
Today's news I gave you puts this opportunity on an even bigger footing!!
Binder will clarify the areas for you and I look forward to having you both on board in the next couple of days
PS
The shareholders agreement was a bit 'War and Peace' but has been simplified at the request of other investors
Warm regards
Lak
- At this point it is appropriate for me to comment upon this documentary evidence.
- First, the particulars of claim make no reference to Mr Basran's email of 26 November 2012 or its attached first draft of the shareholders agreement. Paragraphs 11 (g) and (h) move seamlessly between emails that Mr Basran sent to the claimants on 17 and 29 November 2012. Nor do the particulars of claim contain any reference to the emails of 19 December 2012 or 10 March 2013 and their respective attached revised draft shareholders agreements. However, paragraph 17 of the particulars of claim does make reference to emails sent by Mr Basran to or for the claimants on 7,13 and 14 March 2013.
- Second, at paragraph 12, the particulars of claim do plead Mr Rattan's response to the queries raised by Mr Mather's professional advisers in his email of 5 December, albeit its precise timing (at 15.24) is not mentioned. This was almost 2 hours after the banking documents appended to Mr Ledigo's second witness statement show that he made his first investment into Yagna (with Mr Cleary's £20,000). The first investments into Yagna (without the precise timing of the two 5 December 2012 payments) are pleaded at paragraph 14 of the particulars of claim. Whilst reliance is pleaded on (amongst other representations) those contained in the 5 December email response from Mr Rattan, there is no plea of reliance on Mr Basran's email of 26 November 2012 or its attached first draft of the shareholders agreement.
- Third, paragraphs 18 and 22 of the particulars of claim plead the further investments into Yagna made by Mr and Mrs Mather and Mr Ledigo but there is no plea that these were made in reliance on any of the emails of 26 November 2012, 19 December 2012 or 10 March 2013 or their respective attached revised draft shareholders agreements.
- Fourth, the first reference to "copies of unsigned purported shareholder agreements" in the particulars of claim is to be found at paragraph 24, which pleads that Mr Rattan provided these to Mr Mather and Mr Ledigo "at some point thereafter". In its context, this must mean some time after the last investment into Yagna made by Mr and Mrs Mather on 21 November 2014. There is therefore no plea that any reliance was placed on any of the various iterations of the shareholders agreement when any of the claimants invested in Yagna.
- Fifth, the plea that Mr Basran and Mr Rattan either made or joined in with the knowingly false representation that Mr Basran "had been appointed a director of Yagna prior to the claimants making their investments" is contained in paragraph 37 (a) of the particulars of claim. The claimants allege that had they "known that [Mr Basran] had not been appointed a director, then they would not have invested their monies". There is no plea that any reliance was placed on any of the various iterations of the shareholders agreement when any of the claimants invested in Yagna. Mr Rattan responds to paragraph 37 (a) at paragraph 43 (a) of his defence (pleaded by Mr dos Santos) with the bare assertion that he "did not represent that [Mr Basran] was a director before investments were made".
- Sixth, Mr Mather's third witness statement contains no reference to the emails of 26 November and 19 December 2012 or their attached draft shareholders agreements. Paragraphs 22 and 23 move seamlessly between 17 November and 5 December 2012. Paragraphs 29 and 30 move from 12 December 2012 to a Christmas party at Mr Basran's house which was attended by Mr Rattan. Paragraph 35 of Mr Mather's third witness statement does refer to Mr Rattan's email of 10 March 2013 and its attached shareholders agreement, thereby indicating this had been in Mr Mather's possession long before the trial. But he did not see fit to exhibit copies of them to his third witness statement. However, and significantly, this statement contains no mention of (or complaint about) the representation, in successive iterations of the shareholders agreement, that Mr Basran was to be appointed to the board of Yagna on 1 December 2012. I can only infer that Mr Mather attached no significance to this particular representation, and placed no reliance upon it.
- Seventh, Mr Ledigo's second witness statement contains no reference to any of the emails of 26 November, 5 December or 19 December 2012, or 10 March 2013, or to any of the draft shareholders agreements. Rather, at paragraph 14, Mr Ledigo emphasises that it was Mr Basran (and not Mr Rattan) who "always assured me that he was a director of Yagna and would look after our investments". I can only infer that Mr Ledigo attached no significance to any of these emails or draft agreements and placed no reliance upon them.
- I identified these deficiencies in the claimants' pleadings and witness evidence to Mr Vickers during the course of the trial. The claimants made no attempt to amend the particulars of claim or to seek to adduce any supplemental witness statements. I can understand the reasons for this. Indeed, on the morning of the second day of the trial, in Mr Rattan's absence from court, Mr Vickers expressly acknowledged that he would be in difficulty in seeking to amend and adduce any further evidence if the trial were to proceed as listed. Mr Rattan appears at trial as a litigant in person. He is unable to rely upon any witness evidence in support of his defence. He clearly wished to delay the trial. Any application by the claimants to amend the pleadings, or to rely upon additional evidence, would have played into his hands. Even if it did not lead to an adjournment of the trial, it might well have served to deny the claimants the forensic advantage of being able to deploy their case without having to answer any evidence in response from Mr Rattan. That forensic advantage must come at a price to the claimants. I should hold them strictly to their pleaded case.
- It is convenient for me at this point to address the oral evidence of Mr Mather and Mr Ledigo. I find both witnesses to be honest, credible, reliable, and honourable men, who were doing their best to assist the court. I am satisfied that I can safely rely upon their evidence.
- Mr Mather gave evidence for some two hours before the court adjourned for lunch at about 1.35 on the afternoon of the third day of the trial. I allowed Mr Vickers to question Mr Mather about the late discovery of the emails of 26 November and 19 December 2012. I accept Mr Mather's explanation that he discovered them whilst trawling back through his emails after noting that they had been omitted from the trial bundle despite having sent copies to the claimants' previous solicitors. There is no reason why the claimants or their present solicitors should have deliberately held them back until the eve of the trial. I am satisfied that their earlier non-disclosure was not a deliberate act designed to wrong-foot Mr Rattan, or to secure any late forensic tactical advantage for the claimants.
- Mindful of the provisions of CPR 3.1A (5), I had originally envisaged that I would put such questions as I might consider proper to Mr Mather and to Mr Ledigo on behalf of Mr Rattan. However, as I will relate when I come to address the course of the trial in the next section of this judgment, and prompted by Mr Vickers, I formed the view that Mr Rattan was well able to undertake the task of cross-examining them. I am entirely satisfied that any constraints upon the content of Mr Rattan's cross-examination was the product of the nature, and limitations, of his defence, coupled with his inability to rely upon any positive evidence in support thereof, rather than Mr Rattan's status as a litigant in person. One cannot make bricks out of straw if even the straw is lacking.
- During the course of Mr Rattan's cross-examination of Mr Mather, a consensus emerged that the cell phone number provided for Mr Rattan in the email of 5 December 2012 was incorrect by one digit: it should have read 07515 574602. That was the number stored in Mr Mather's own phone, which he had used to contact Mr Rattan. Mr Mather reiterated the evidence in his witness statement as to the genesis of this email; and I accept that evidence.
- Mr Rattan's cross-examination about that email proceeded on the basis that Mr Basran had sent the email using Mr Rattan's email address, and that Mr Rattan had not been aware that Mr Basran had composed this email and sent it to Mr Mather. I reject this suggestion. I find as a fact that the 5 December email was indeed sent by Mr Rattan (as it purports to have been). Mr Rattan's suggestion is contrary to the description of the email in the initial disclosure list prepared and submitted when Sheridans were acting as Mr (and Mrs) Rattan's solicitors (which acknowledges that this was an email from Mr Rattan). The suggestion is implausible in the light of Mr Basran's email of 4 December 2012 to Mr Mather (which was copied to Mr Rattan) stating that Mr Basran was forwarding Mr Mather's queries to Mr Rattan as this was his area of expertise, and advising that it was Mr Rattan who would be replying to Mr Mather's queries. Mr Rattan's suggestion is also lacking in plausibility because it tends to assume an intention on the part of Mr Basran to commit some form of fraud, and to throw the blame for it upon Mr Rattan, as early as December 2012. It also presupposes that Mr Basran was prepared to accept the consequences of the likelihood of his deception coming to light. In any event, it is impossible to reconcile Mr Rattan's suggestion with his silence, and lack of challenge, in the face of Mr and Mrs Mather's email response of 7 December 2012 (which appears to form part of an email chain culminating in Mr Rattan's email to Mr Mather of 10 March 2013). Not only did Mr Rattan fail to raise any challenge to the 5 December email with Mr and Mrs Mather, there is no evidence, or any suggestion, that he ever complained to Mr Basran about any unauthorised use of his email account. The suggestion that the 5 December email was composed and sent by Mr Basran is also contrary to previous acknowledgments by Mr Rattan that the email was his, apparently made to HHJ Cawson KC at the hearing on 10 January 2025, and later repeated to me on the first day of the trial, when Mr Rattan told the court that he did not deny sending the email, and that it had been intended to give comfort to the claimants (although he later seemed to change his position about this).
- Mr Mather was clear that Mr Basran had not asked him to invest in Yagna. Rather he had offered him the opportunity to do so. Mr Mather accepted that at that early stage, Mr Rattan had not invited him to invest in Yagna, and Mr Rattan thanked him for being honest about that. Mr Mather also accepted that Mr Basran had described himself in writing as Yagna's chairman. He acknowledged that Mr Basran had been his friend for years and that obviously he had trusted him. Mr Mather denied ever having received any payment from Yagna, or any other benefits, on account of his investment in that company, evidence that I accept. In summary, despite challenge by Mr Rattan, Mr Mather maintained the account he had given in his written evidence. I accept that evidence.
- At the conclusion of Mr Mather's evidence, I referred him to the last two sentences of paragraph 25 of his third witness statement; and I asked him how important it had been that Mr Basran should have been a director of Yagna. My note of his evidence reads:
We knew him as a personal friend. We trusted him – that he would have control of the company's money and would be able to look after our investment.
I pointed out that Mr Basran would only have been one of a number of Yagna's directors. Mr Mather replied:
He would still be on the board. He would have an influence and a say in the company. How it would move forward.
I then asked Mr Mather what he would have done had he not been told that Mr Basran was to be one of Yagna's directors. Mr Mather's response was:
We would probably not have invested.
There were no questions from either Mr Rattan or Mr Vickers directly arising out of my questions.
- Mr Ledigo gave evidence after the short adjournment on the third day of the trial for about 25 minutes. In answer to questions from the bench, he corrected the order of his investments set out in his second witness statement (consistently with the banking documents appended to that statement and the particulars of claim). I accept that this was a genuine error on his part. Mr Ledigo's witness evidence was not really challenged during the course of his cross-examination, and I accept it. Mr Ledigo made it clear that he had not signed any shareholders agreement although he could recall having seen one. In re-examination he clarified that this had been towards the end of November 2012. In further cross-examination, Mr Ledigo made it clear that he was not familiar with the concept of a shadow director.
- Mr Mather was recalled on the morning of the fourth day of the trial, after my queries at the start of that court day had resulted in the production of three further pages of scanned documents (as related above). These went towards showing how the inquiries from Mr Mather's solicitor had been referred to Mr Basran; and how he, in turn, had passed them on to Mr Rattan. This confirmed what Mr Mather had stated at paragraph 23 of his third witness statement. Mr Mather explained the circumstances in which he had discovered these documents, and what they were.
- Mr Rattan was given the opportunity to cross-examine Mr Mather on this issue. Mr Rattan strongly objected to these documents being produced at this late point in the trial. He claimed that there were things going on between Mr Basran and Mr Mather to which he (Mr Rattan) had not been privy. Ignoring the fact that Mr Basran's email to Mr Mather of 4 December, acknowledging Mr Mather's email earlier that evening, had been copied to him, Mr Rattan claimed that there was nothing to show that he had received these documents. Ignoring the fact that these further documents had been produced in response to queries from the bench, and not of the claimants' own initiative, Mr Rattan objected that it did little credit to the claimants to be producing further evidence as and when it suited them. Mr Rattan asserted that he could not be held responsible for actions of Mr Basran which had been performed without his knowledge. Ignoring the fact that he had been engaged in advancing submissions, rather than putting questions to Mr Mather, Mr Rattan then indicated that he had no further questions for him.
Mr Vickers's trial skeleton
- At this point in my judgment, it is appropriate for me to refer to the way in which the claimants' case is advanced in Mr Vickers's written skeleton argument. I do so without thereby endorsing any of the points made by Mr Vickers. I will leave his recital of the relevant law to a later point in this judgment.
- Mr Vickers begins by explaining that when this action commenced, the claimants were very much in the dark as to precisely what had happened to the money they had invested in Yagna, or all the "fine promises" that Mr Basran and Mr Rattan had made to them. The claimants knew that between September 2015 and April 2017, Mr Basran had been blaming Mr Rattan for taking their money; and they anticipated (correctly) that when he came to serve his defence, Mr Rattan would seek to blame Mr Basran. The claimants therefore anticipated an adversarial contest, involving a cut-throat defence by each of those two defendants, with each attempting to prove that it was the other who was actually responsible, disclosing documents appropriately, and with some prospect that the true facts might come to light. However, the claimants were not depending upon that. This proved to be just as well, because Mr Basran declared himself bankrupt; whilst Mr Rattan has failed to disclose any material which affords any explanation for what happened to Yagna in 2015. The claimants really have no more insight into who it was who took their money than they did before this claim began.
- Although they plead the background to their investments, and the events that happened thereafter, from the outset the claimants have focused on the matters they can prove. In particular, they rely upon the fact that, after the first and second defendants had made a variety of extravagant statements about the merits of their projects, but before the claimants made their investments, Mr Rattan made a specific representation to Mr Mather that he had appointed Mr Basran as a director of Yagna. To Mr Rattan's knowledge, Mr Basran, the holder of an MBE, was a man whom the claimants knew and trusted: Indeed, Mr Ledigo and Mr Cleary had done so for 30 years.
- Mr Vickers emphasises that this representation was made in a very specific context:
(1) Mr Basran had been softening the claimants up for some 18 months, seeking a significant financial investment in a company (Yagna) that he was representing to them was going to achieve huge ("bigger than Facebook") success across three discrete, areas of activity: a cure for cancer; hair loss prevention and anti-ageing, moisture and skin detoxification cosmetics; and a biodegradable packaging to replace plastic in the packaging and sale of fresh foods.
(2) Mr Basran's pitch had been based around an appeal to the claimants' understanding (heavily reinforced in his emails) that Mr Basran was a humanitarian, primarily interested in charitable activities; and that whilst the investment would be highly profitable for the claimants, because they were getting in on the "ground floor", they had also been "selected" as investors because they shared Mr Basran's humanitarian and charitable impulses.
(3) The claimants were invited to meetings and presentations, as well as being provided with a Business Plan and other materials which were, simultaneously, relentlessly positive whilst also being very vague.
(4) Regular emails from Mr Basran kept up the "hard sell" and, as December 2012 approached, he ramped up the rhetoric, explaining why that point was a great time to invest because everything was looking so positive; and, in any event, that was the time investment was needed (although, subsequently, Mr Basran claimed that the investment had not been used, before it then mysteriously disappeared).
(5) Mr Mather, who (together with his wife) was to invest by far the most significant sum (£1,000,000), sought some professional financial advice, and was provided with a set of 'due diligence' questions to ask in relation to the planned investment. He sent these to Mr Basran, who asked Mr Rattan (as, in reality, the sole director of Yagna) to respond to those questions.
(6) It was therefore clear that the claimants were intending to rely upon the answers to those questions when deciding whether or not to invest in Yagna.
(7) Mr Mather asked, in particular, whether there could be a list of reserved matters which the company could not undertake without the shareholders' consent. The answer was that there could not be such a list. However: "For this reason I have allowed Lak Basran MBE to become a company director [of Yagna] as the shareholders he has introduced as investors are close associates of his". Further, in response to the later question whether the claimants could have the right to appoint a director to the Board to give them a say in the day-to-day running of Yagna, Mr Rattan replied: "The same question was raised by Lak Basran MBE and I allowed him to become a company director as mentioned in point 4 reply".
(8) The email, dated 5 December 2012, that contained the representation that Mr Rattan had allowed Mr Basran to become a director of Yagna also made it clear that there was a current shareholders agreement but that Mr Rattan was going to redraft it. Mr Vickers points to an unsigned redraft of a shareholders agreement, dated 4 December 2012, in which Mr Basran is now shown as a party to the agreement, who is described as "representing the investors".
- The claimants have brought this action in fraudulent misrepresentation because it is undeniable that an email purporting to have been sent by Mr Rattan contained false statements that were intended to persuade the claimants to invest in Yagna: Mr Basran was not a director of Yagna in December 2012 and Mr Rattan had not allowed him to become one. Mr Rattan must have known that these statements were not true, because he must have known that he had not passed any resolution to appoint Mr Basran as a director of Yagna, nor had he informed Companies House that he was now a director. It would be difficult (even if he had any evidence to rely upon) for Mr Rattan to contend that he was not, at the very least, reckless in what he said, the meaning and purpose of which is unambiguous. The context of his responses, both in relation to the questions being asked, and the lead-up to them, establishes that Mr Rattan must have intended the claimants to rely upon the false representations, because they were designed to give the claimants comfort that any investments they made would be looked after and protected by Mr Basran, their long-time friend, in whom they reposed their trust.
- Obviously, it is the claimants' case that they relied upon the representations made by Mr Rattan in deciding to invest in Yagna. Furthermore, those representations were never corrected; and they were repeated in the revised shareholders agreement, and in the conduct of Mr Basran and Mr Rattan over the period between the making of the first investments, in December 2012, and the subsequent tranches paid in May 2013 and (as regards Mr and Mrs Mather) in November 2014. All of this backed up, and supported, the initial misrepresentations. Nothing could have indicated to the claimants that Mr Basran was not a director of Yagna so as to give them any reason to doubt it or to carry out a search at Companies House.
- Mr Vickers accepts that, despite their later deep suspicions about the truth of many of the things they were being told between 2012 and 2014 (supported by the way in which Mr Basran strung them along between 2015 and 2017), the claimants cannot prove the falsity of other representations made to them before they made any of their investments. Equally, however, there is no evidence that much, if any, of those representations were true, rather than merely just a set of extravagant hopes expressed as reality by the first and second defendants, who may or may not have known, or at least strongly suspected, that they were overselling Yagna beyond any realistic expectation of success. However, whilst these matters form a significant part of the background factual matrix, and the court may conclude that Mr Rattan, acting in concert with Mr Basran (as it appeared to the claimants), never had any genuine belief in any of the other representations that they made about Yagna, ultimately the claimants can show, without question, that Mr Rattan made a false representation that he had allowed Mr Basran to become a director of Yagna to protect their interests which he knew to be untrue, or, at the very least, was reckless as to its truth when he made it. If the court accepts Mr Mather's evidence that it was the specific representation that his investment would be protected because Mr Basran had been appointed as a director of Yagna that caused him and his wife to invest large sums of money into Yagna, then the claimants are entitled to recover their money from the misrepresentor, Mr Rattan.
- Mr Rattan raises a limitation defence. The claimants deal with this in their reply, and in Mr Mather's second witness statement. The claimants deny that their claims are statute-barred. They contend that they could not, with reasonable diligence, have discovered that the representations made to them had been made fraudulently until less than six years before the commencement of this action. In particular, they say:
(1) Mr Ledigo and Mr Cleary had known Mr Basran for approximately thirty years, and had introduced him to Mr and Mrs Mather as a highly trusted friend.
(2) In such capacity, Mr Basran had introduced the claimants to Mr Rattan, thereby giving him, also, his 'seal of approval'.
(3) The claimants were courted by Mr Basran and Mr Rattan in the ways set out in the particulars of claim, with words deliberately designed to represent that the investments they were being asked to make were only for a very fortunate few, and that the opportunity was only being extended to them because of their long-standing friendship with Mr Basran.
(4) Mr and Mrs Mather, in particular, were not sophisticated investors, and the capital they had amassed was the result of a substantial win on the National Lottery.
(5) When the claimants made their investments in Yagna, they were not aware that they were doing so on the basis of misrepresentations; in particular the false representation that Mr Rattan had allowed their trusted friend, Mr Basran, to become a director of Yagna.
(6) The claimants understood that, in the ordinary way, their investments would take some time to come to fruition, given the nature of the investments they thought they were making. Therefore, they were not immediately concerned that their investments did not result in returns right away: they understood that they had invested in a growing company and that was why their investments would increase in value as Yagna became more established and its several projects and products came to market and made a profit. It would only be in the fullness of time that they expected to see a return on their investments.
(7) In fact, the claimants had no concerns about the security of their money, which was invested in a company in which (so they were told) their longstanding and trusted friend had been installed as a director. They had no reason to doubt the truth of the representations that Mr Basran and Mr Rattan had made about the excellent potential of Yagna's products, nor any reason whatsoever to feel any concern about their investments until the call from Mr Basran to Mr Mather, on 14 September 2015 (less than six years before this action was commenced), in which he indicated that their money had "gone".
(8) Even in that telephone call, little further detail was given; but Mr Basran reassured the claimants, through Mr Mather, that all their monies would be recovered. They therefore had faith that Mr Basran would ensure that their investments remained safe. Still they had no suspicion that any misrepresentations had been made to them because Mr Basran was telling them that Mr Rattan had made off with their money, although in such vague terms that they could not understand how that might have happened. Equally, however, they had no reason to disbelieve their trusted friend at that stage.
(9) There was no defining date which the claimants can point to thereafter when the scale of the misrepresentations became immediately clear: their learning of the extent of their losses was gradual and was confused by the numerous conflicting reassurances they were receiving from Mr Basran during this period.
(10) At some point (which the claimants are now unable to pinpoint, save to say that it was less than six years before the commencement of this action), the claimants became aware that an annual return for Yagna Limited had been filed on 23 August 2015, confirming that their shares had been transferred out of their ownership to other parties, without their consent or approval. Even then, however, the claimants continued to trust that Mr Basran could not simply be lying to them about being close to recovering their investments. Their realisation that the whole enterprise had probably been a Ponzi scheme, and that they had been duped out of their money by the first and second defendants' misrepresentations, only slowly developed once Mr Basran's promise that he had actually recovered their monies, and they should expect to see it in their accounts very soon, proved to be yet another deceit.
(11) Even if the date of that annual return is taken as the date after which discovery of the misrepresentations could have been made with reasonable diligence, that was 23 August 2015. These proceedings were issued on 20 August 2021, and thus within six years of this date.
- Turning to the issue of damages, the evidence establishes that the claimants' monies were paid over to Yagna Limited, and the circumstances in which that occurred (as pleaded in the particulars of claim). The evidence demonstrates that, initially, the claimants' funds were recorded in Yagna's management accounts as shareholder funds; and the claimants were allotted shares in Yagna, as recorded in the annual return dated 27 March 2014. Without the claimants' knowledge, however, those shares were 'transferred' away from them on 23 August 2015, as recorded in Yagna's annual return bearing that date. A further annual return, dated 12 September 2015, shows all of Yagna's shares as having been transferred to Mr Basran on that date. Mr Basran then placed Yagna into creditors' voluntary liquidation on 26 April 2016, declaring estimated total assets of only £5,000. The statement of affairs signed by Mr Basran made no mention of the claimants, or their investment, but claimed that Mr Basran was owed £1,200,000 and Mr Rattan £178,155, despite having purported to blame Mr Rattan when communicating with the claimants (always in vague terms). This included the assertion, on 14 September 2015, that Mr Rattan "had been a naughty boy", and had taken all the claimants' monies. However, at the same time as blaming Mr Rattan, Mr Basran was clearly still dealing with him, as demonstrated by the fact that all the shares in Biosafe Packaging Solutions Limited (a company in which Mr Basran had originally held 800 of the 900 shares, with Yagna holding the remaining 100) were transferred to Mr Rattan on 24 August 2015; whilst shortly thereafter, on 12 September 2015, all of the shares in Yagna were transferred to Mr Basran (as previously related). This was only two days after Mr Rattan, purportedly acting on behalf of Yagna, had executed an assignment of the patents owned by Yagna to Humanitarian Scientific LLC, a limited liability company established under the laws of the State of New York (of which Mr Basran was the chief executive officer) for $1 (and unspecified "other good and valuable consideration"). This document was executed on behalf of Humanitarian Scientific LLC by Mr Samuel Mikail on 23 September 2015.
- The claimants only seek damages equivalent to the sums they were "duped" into investing in Yagna through the misrepresentations of Mr Rattan, together with simple interest. They do not seek to prove the position they would have been in had the fraud against them never been committed, and they had been able to invest their monies in other ways. The claimants received no benefits from the shares they were fraudulently induced to purchase. Although, for several years after the loss of their funds came to light, Mr Basran continued to reassure the claimants that he would recover (or, indeed, had recovered) their money, and they continued to place their trust in his ultimately empty promises, thereby doing everything they reasonably could to mitigate their loss, ultimately none of the claimants have ever received back any of their investments in Yagna.
The trial
- The trial took an unusual course. I have already noted that at the end of the hearing before me on 5 February, Mr Rattan, who had previously been addressing the court without apparent difficulty, indicated that his face had suddenly been affected by an attack of Bell's Palsy. I have also referred to the late service of Mr Vicker's trial skeleton by email at about 8.35 on the evening before the trial. Mr Vickers copied Mr Rattan (but not the Manchester BPC listing email address) in to this email, thereby providing Mr Rattan with my judicial email address.
- Mr Vicker's email provoked a series of emails direct from Mr Rattan to Mr Vickers and to me. The first was at about 11.05 on the evening of Sunday 9 February. Mr Rattan strongly objected to "always being sent your skeleton arguments just before the trial. It leaves me at a disadvantage to be able to get my defence ready." Mr Rattan also accused the claimants of having produced fabricated evidence about contact between the claimants' former solicitor at Davis Blank Furness and a partner in UHY Hacker Young, who had been falsely represented as being one of Yagna's joint liquidators. Mr Rattan invited the court to invite the claimants "to retract the evidence in court proceedings as it is not factual and does not have any element of truth". This digression from the real issues in the case has generated further emails and documents and has become something of a running sore with Mr Rattan. I am satisfied that this is not something that bears any relevance to any issue that I have to decide in this litigation; and I exclude it entirely from my deliberations. I responded to the three emails I had received from Mr Rattan at about 8.25 the following morning. I confirmed their safe receipt; and I reminded Mr Rattan that the trial was listed to commence at 2 o'clock that afternoon, when he might make such representations as he might see fit.
- As previously recorded, at the hearing of Mr Rattan's disclosure application the previous Wednesday, I had put the start of the trial back to 2.00 pm on Monday 10 February. Mr Rattan lives in Chigwell in Essex, and he was intending to travel to Manchester by train from Euston on the morning of the hearing. Shortly before 9 o'clock on the morning of Monday 10 February, I received an email from Mr Rattan (copied to Mr Vickers and the Manchester BPC listing email address). It reads:
I would inform you that I am not well and [had] to get off the train this morning at Euston. I caught some virus and temperature vomiting and making way to court from Euston. This may mean I will arrive an hour late around 1pm. I apologise if I get slight late. But I am on my way. I just noted that the trial is at 2pm.
I immediately sent an email thanking Mr Rattan for letting me know, further reminding him that the trial was to start at 2.00 pm, and expressing the hope that he would soon feel better.
- Mr Rattan arrived at court before the new start time of 2.00 pm. It appears that he led the court clerk to understand that he was ill because at 1.42 pm she sent an email to facilities management requesting "a deep clean to be done at court 42 at the end of the day. The second defendant in person is ill with norovirus." When the court convened, Mr Rattan explained that he had spent New Year's Eve in hospital, and that he suffered from both chronic kidney and chronic obstructive pulmonary diseases. He said that he had also been experiencing diarrhoea. He told the court that he was not staying overnight in Manchester during the trial. He said that his face had not been right since the previous Wednesday and that it would take two or three days for it to recover. He did not apply to adjourn the trial. I indicated that the court would proceed that afternoon with Mr Vickers's opening and would then adjourn so that Mr Rattan would have overnight to consider both Mr Vickers's skeleton argument and also his further opening submissions before Mr Rattan opened his defence to the court.
- This course was followed. Mr Vickers went in detail through the further emails and the draft shareholders agreements that the claimants had just disclosed for the first time. He emphasised that this case is not about who went off with Yagna's money. Rather, it was about the two explicit representations contained in Mr Rattan's email of 5 December that he had allowed Mr Basran to become a director of Yagna, implicitly to protect the claimants' interests as investors in that company. Mr Vickers explained that since Mr Rattan was not giving any evidence, Mr Vickers would have no opportunity to cross-examine him. But whatever had happened to Yagna's funds was of no concern to the claimants in this litigation. It was only necessary for them to prove that Mr Rattan had made a representation of fact that was demonstrably untrue (to Mr Rattan's knowledge); and that the claimants had relied upon this representation when they had invested in Yagna. Mr Vickers emphasised that Mr Rattan had made no attempt to correct the false representation that he had allowed Mr Basran to become a director of Yagna, impliedly to look after the claimants' interests. The defence raises no specific points on quantum. The fact is that none of the claimants had ever recovered any of their investment in Yagna. They had made their investments in Yagna under a false premise. Whether it would have made any difference had Mr Basran in fact ever been appointed as a director of Yagna was irrelevant to the issue whether the claimants had been induced to invest in that company because of a false representation. None of the claimants knew where their money had gone. Someone had dissipated their money; and somebody had received it.
- Shortly before 8 o'clock on the morning of Tuesday 11 February I received an email from Mr Rattan (copied to Mr Vickers but not to Manchester BPC listing). It reads as follows:
Please see below my attendance to hospital yesterday. My condition worsened yesterday afternoon on the train after reading some contents in the bundle. I have attached below my medical condition after the stress and includes a description of what it is. Also previous conditions are of COPD are included CKD. Therefore regrettably I will not be able to attend court until I get better.
The accompanying documents included a short explanation of Bell's Palsy as "a temporary weakness or lack of movement affecting one side of your face, a drooping eyelid or corner of your mouth"; with treatment explained as including a ten-day course of steroids, eyedrops and eye ointment. There were also patient notes from the King George Emergency Department of Mr Rattan's local NHS Trust. These recorded that he had arrived as a 'walk-in' at 19.42 on 10 February and been triaged at 20.54 accompanied by a relative. The chief complaint was described as "Neurological, Facial weakness". The notes read:
Today around 4 pm patient feeling stressed and tired and had sudden onset of left facial asymmetry, known to have Bell's Palsy and states symptoms are similar [as] before? Stress related, Nil arm weakness, Nil headache, W/blurring vision on the left side of eye. Nil chest pain.
Previous medical history: Bell's Palsy, COPD, CKD
On examination: Alert & orientated, GCS 15, well perfused, NKDA.
- I responded to Mr Rattan's email at 8.22 am (with copies to Mr Vickers and to Manchester BPC listing) as follows:
Thank you Mr Rattan.
On the basis of the information you have submitted to me, you should not assume that the trial will not proceed in your absence. I will discuss with Mr Vickers at 10.30 am whether the trial is to proceed this week.
Should you wish, and if I decide that the trial is to proceed, I would be prepared to adjourn the trial until 10.30 tomorrow morning so that you may travel up to Manchester. You could then arrange accommodation in Manchester for the remainder of the trial.
Alternatively, if you wish to attend remotely, I would be prepared to consider allowing you to do so by Microsoft Teams or some other remote video platform. Please let me know if you would wish to be sent an invitation to join the hearing at 10.30 am if I can arrange a hybrid (partly remote) hearing at such short notice.
At 9.09 am Mr Rattan replied:
Thank you for your email. I am waiting for doctor consultation this morning and will you update later when I can attend court next.
At 9.30 am I responded:
Thank you Mr Rattan. The hearing will commence at 10.30 this morning and I will invite representations from Mr Vickers about the way forward. I have offered you the opportunity to attend remotely.
- Mr Rattan's next two emails were timed at 10.26 and 10.30 am. I delayed the start of the day's hearing by five minutes to read them. The first states:
I am having a medical consultation at my GP surgery at Fullwell Cross. I am currently taking medication which does not allow me to concentrate and speak properly …
There follows an allegation, made for the first time, and expanded in a later email timed at 10.30, that the cell phone number contained within the 5 December 2012 email is a false number, which had been flagged up for suspicious activities, and currently being primarily associated with an HMRC scam. The second email asserts that the quoted cell phone number did not belong to Mr Rattan; and requires the claimants to "retract false evidence". As previously alluded to, Mr Mather's oral evidence clearly established that the quoted cell phone number had simply been misstated by one digit; and that, subject to that one correction, it was Mr Rattan's actual cell phone number, something which Mr Rattan did not seek to challenge during his cross-examination of Mr Mather. The first email continues:
When I read the below and other points it brought my stress level up at which point my face collapses.
In order for trial to proceed I pull like the out forward that since I didn't know court proceeding I will request some friends and family to assist me with funds so I can get legal representative and for that perhaps it would be reasonable to get a brief adjust I can recover and court proceeding can take place in a proper manner.
I have my appointment at 11 and been driven to the surgery as I write the email.
All I am requesting is fair trial and not based on made up evidence.
I will update you in due course.
- The trial resumed at 10.35 am in the absence of Mr Rattan. Mr Vickers made a number of points tending to confirm that the 5 December 2012 email had been sent by Mr Rattan (as I find to be the case). In the light of Mr Rattan's forthcoming appointment with his GP, scheduled for 11.00 am, at 10.55 am I adjourned the trial until 12 noon. During that adjournment, Mr Vickers kindly provided me with copies of the decisions of (1) Norris J in Levy v Ellis-Carr [2012] EWHC 63 (Ch) (with Mr Vickers directing me to paragraphs 33 to 36 of the judgment) and (2) the Court of Appeal in Bruce v Wychavon District Council [2023] EWCA Civ 1389.
- I have at all times been conscious of Mr Rattan's status as a litigant in person and also of the overriding objective in CPR 1.1 of dealing with the case justly and at proportionate cost; in particular, the requirement to ensure that the parties are on an equal footing and can fully participate in the proceedings,. Accordingly, at 11.19 on the morning of the second day of the trial, I sent an email to Mr Rattan acknowledging receipt of his two most recent emails. I continued:
I have been discussing matters in open court with Mr Vickers (for the claimants).
I have adjourned until 12 noon by which time I hope to have received an update from you about your medical consultation with your GP, together with any supporting documentation from your GP. If you wish to attend remotely at 12 noon, please let the court know and it will send an invitation to your email address.
There are three options available to the court:
(1) To adjourn the trial with permission to restore at a future date convenient to all parties.
(2) To resume as a hybrid hearing (with you attending remotely and the claimants' side in court) at 2.00 pm
(3) To resume either as a hybrid hearing or with everyone including you in court at 10.30 am tomorrow. In this event, I would suggest that you stay on in Manchester until the trial concludes.
I would welcome your observations on these alternative courses with your report about your consultation today.
- At 12.12 the court received an email from Mr Rattan forwarding "a medical certificate from the doctor following the hospital attendance last night", and requesting "an adjournment please due to health reasons". In fact the medical certificate is dated 11 February. It is on the headed notepaper of Fullwell Cross Medical Centre. It is signed by Dr Vedat Barut (a name that does not appear amongst the names of the six doctors at that practice whose names are printed on the headed notepaper). The body of the letter reads as follows:
RE: Medical Certificate for Court Proceedings
This letter is to confirm that I have assessed my patient today who is currently experiencing an acute episode of Bell's palsy for which I have prescribed treatment. Due to their current medical condition, they are not medically fit to attend court proceedings for the next two weeks. I recommend a pause in proceedings until 25/02/2025 to allow adequate time for recovery.
Mr Rattan's email says nothing about the second or third of my suggested alternative courses of action. In it, Mr Rattan expressed no wish to address me remotely later that day.
- The hearing resumed at 12.30 without Mr Rattan in attendance. I received oral submissions from Mr Vickers opposing any adjournment of the trial. He accepted that the medical certificate submitted by Mr Rattan did more than the doctors' notes in the two authorities he had referred me to. It identified the medical attendant; detailed the most recent medical consultation; identified what the relevant medical condition was; and stated in terms that Mr Rattan was not medically fit to attend court proceedings for the next two weeks. However, Mr Vickers pointed out that Dr Barut had not identified the features of Mr Rattan's condition that prevented him from participating in the trial process; nor had Dr Barut explained why Mr Rattan should be able to do so after two weeks. I consider that there is force in the first of these criticisms, but the second can probably be explained by the fact that the documentation previously provided refers to the treatment for Bell's Palsy as including a ten-day course of steroids. Mr Vickers criticised Mr Rattan for waiting until the second day of the trial before applying for any adjournment and obtaining and supplying any supporting medical evidence. Mr Vickers submitted that this was simply a delaying tactic, undertaken with a view to securing the time to raise funds to secure legal representation. Having known that this trial was coming on for the past 11 months, this was something that Mr Rattan should have undertaken at a very much earlier point in time. Mr Vickers also reminded the court that this is not a case in which Mr Rattan is giving, or calling, any witness evidence in support of his defence. During the course of Mr Vickers's submissions, it was established that should the trial be adjourned part heard, it could not resume before me, with both Mr Vickers and his clients in attendance, before the week commencing 28 July 2025.
- At the end of Mr Vickers's submissions I indicated that unless the claimants were content to see the trial adjourned, I would refuse Mr Rattan's request for an adjournment of the trial. I gave a brief summary of my reasons; and I indicated that these would be set out more fully when I came to deliver my substantive judgment. After taking instructions over a short adjournment, Mr Vickers indicated that the claimants would like the trial to continue at 10.30 the following morning. He pointed out that if Mr Rattan had any difficulty in speaking, he could have someone in attendance who could ask his questions for him; and he would have the afternoon to prepare his questions.
- As promised, I proceed to set out my reasons for refusing Mr Rattan's request for an adjournment of the trial. In addition to the guidance provided by Norris J's judgment in Levy v Ellis-Carr, I also derive assistance from the leading judgment of Coulson LJ in the Court of Appeal in Bruce v Wychavon DC at paragraph 42. This reads:
Furthermore, particularly post-pandemic, the potential difference between being unfit for work and being unfit to attend court, is of some significance, given the wide use of live streaming and CVP in most court centres. It is now much easier for parties to attend court remotely, and for their evidence to be given, or their submissions heard, over a live link. In this way, even a party with a medical condition may, depending on the symptoms, be expected to participate remotely in a court hearing.
- From the authorities, I consider that the following propositions (which are not intended to be exhaustive) are relevant when considering any application for an adjournment of a hearing on medical grounds:
(1) The decision whether to grant or to refuse an adjournment is a case management decision, which is to be exercised having regard to the 'overriding objective' in CPR 1.1 of dealing with the case justly and at proportionate cost.
(2) Of particular importance is the need, so far as practicable, of ensuring that the parties are on an equal footing and can participate fully in the proceedings, and that parties and witnesses can give their best evidence.
(3) But also relevant are the requirements of economy, proportionality expedition, fairness, and the appropriate allocation and application of the court's scarce resources.
(4) The court must consider all the circumstances of the case, so as to enable it to deal justly and fairly with the application to adjourn, bearing in mind the different, and often competing, interests and needs of all the parties. These will include the timing, and the circumstances, of the application, and the previous conduct of the parties.
(5) Medical evidence tendered in support of any adjournment application should: (a) identify the attending clinician; (b) give details of their familiarity with the applicant's medical condition (including details of all recent attendances); (c) identify, with particularity, (i) the nature of the applicant's medical condition, and (ii) the specific features of that condition which (in the opinion of the attending clinician) prevent the applicant's effective participation in the hearing or trial process: (d) if the condition is 'stress' induced or 'stress' related, explain how adjourning the hearing or trial may affect the condition, given that the litigation will still be ongoing, and the resulting stress can therefore be expected to continue; (e) expressly address the capability of the applicant to participate in the hearing or trial process remotely via a live video link, identifying (if appropriate) any specific features of the applicant's condition which (in the opinion of the attending clinician) might prevent this; and (f) provide a reasoned prognosis, and also a timetable for recovery.
(6) The court should consider what weight it should attach to the medical opinion evidence, and what arrangements, short of an adjournment (such as remote participation via a live video link) might be made to accommodate the applicant's difficulties.
(7) Any decision to refuse an adjournment on medical grounds may fall to be reviewed, either on further application, or of the court's own initiative, as a result of any material change of circumstances, or any other material developments, during the course of the trial which may further indicate an inability to participate fully in the proceedings.
- In the present case, I refused Mr Rattan's request for an adjournment for the following reasons: First, and foremost, Dr Barut's letter states that Mr Rattan is "not medically fit to attend court proceedings for the next two weeks". However, it does not address his ability to participate remotely in a trial by live video link. This is a significant omission in view of the reference, in my email to Mr Rattan timed at 8.22 that morning, to the option of Mr Rattan attending the resumed trial remotely. Mr Rattan had clearly received this email because he had responded to it at 9.09, long before his GP appointment. I had also referred to the option of resuming as a hybrid hearing (with Mr Rattan attending remotely and the claimants' side in court) in my later email timed at 11.19 that morning. Nor does the doctor's letter make it clear that the doctor appreciated that Mr Rattan would not be giving any live witness evidence, and so would not be subject to any cross-examination, and that his role would be limited to listening, cross-examining two of the claimants, and making oral submissions.
- Secondly, I was concerned by the previous history of Mr Rattan's conduct of and in these proceedings, and the light that this threw upon the genuineness of his adjournment request. First, Mr Rattan had thrice previously instructed, and then withdrawn, his instructions from solicitors: first Sheridans, and then Karam, Missick & Traube LLP (twice). His email timed at 10.26 that morning suggested that one reason for seeking an adjournment might be to give him some "time to request some friends and family to assist me with funds so I can get legal representative". This was despite having known about the trial date for some 11 months. Second, there was the reported, and varied, nature of Mr Rattan's medical conditions. On the first day of the trial, he had been complaining of some form of virus, with vomiting and diarrhoea (although on Monday afternoon he had been able to accommodate a hearing lasting over an hour and a half with only one short toilet break). However, there was no mention of any of these complaints in the reports of either Mr Rattan's attendances at the hospital on the Monday evening or his GP's surgery on the Tuesday morning. At both consultations, Mr Rattan's reported complaint resulted in a diagnosis of Bell's Palsy. This was a condition that Mr Rattan had mentioned at the end of the hearing before me on Wednesday 5 December. Yet Mr Rattan had not sought any medical treatment for, or requested any adjournment on account of, this condition until the evening of the first day of the trial.
- In the event, I am satisfied that my decision to refuse Mr Rattan's request for an adjournment of this trial was entirely justified. It has been vindicated by the way in which he has been able to conduct himself during the remainder of the trial. He has not in any way been disadvantaged in the conduct of his defence. Any difficulties that Mr Rattan may have experienced when cross-examining Mr Mather and Mr Ledigo, and in making submissions to the court, are entirely the product of the nature, and the limitations, of his defence, and his inability to rely on any positive evidence in support thereof, rather than being attributable to any medical condition affecting Mr Rattan.
- At about 1.40 on the afternoon of Day 2 the court adjourned until 10.30 the next morning. At 1.55 pm I sent the following email to Mr Rattan (copied to Mr Vickers and to Manchester BPC listing):
Thank you for your most recent email. I have carefully considered its contents, and those of your earlier emails. I have also received oral submissions from Mr Vickers for the claimants.
I have decided to adjourn this trial until 10.30 tomorrow morning. It will continue then. You may attend either in person or remotely, using the court's video platform. I will include my reasons for this decision when I come to deliver my formal, substantive judgment.
Should you wish, you may have someone present with you to assist you in delivering any opening submissions you may wish to make, and in asking any questions of the two claimants who will be giving evidence. If you are going to attend, either in person or remotely, you may wish to spend this afternoon and evening preparing any submissions you may wish to make, or any questions you may wish to ask. The principal purpose of any cross-examination of the two claimants who will be giving evidence is to challenge any parts of that evidence with which you disagree, and to emphasise, or to get them to mention, any matters that may be adverse to their case, or favourable to your defence.
- Mr Rattan replied at 7.09 that evening (copying in Mr Vickers) as follows:
I just saw your email and tried to understand. I have serious health issue and I wish that trial would have been adjourned. I saw that there is no mention of my health issues. I am not sure what I should do apart from I can ask some questions to cross examine them in writing in advance as speech is impaired. And see how I can state grounds on why the claimants claim is defective and bring to your attention.
I replied at 8.47 pm (with copies to Mr Vickers and to Manchester BPC listing) thus:
As I explained to you in my email timed at 13.55 today, I will include my reasons for refusing you an adjournment when I come to deliver my formal, substantive judgment on this claim.
If you are unable to travel to Manchester to attend the hearing at 10.30 am tomorrow, you can submit any documentation to the court. I will have regard to any written submissions, and I will put any appropriate questions you may submit to the witnesses. I have already indicated that, should you wish to attend remotely, you may have someone present with you to assist you in delivering any opening submissions you may wish to make, and in asking any questions of the two claimants who will be giving evidence.
Thus closed the second day of the trial.
- At 9.21 the next morning, Mr Rattan submitted a ten-page, typed skeleton argument with a copy to Mr Vickers. Correcting obvious typographical errors (as I have been doing with Mr Rattan's earlier emails), the covering email reads:
Please see attached my skeleton pleading as best possible I have complied.
I am as you have been informed that I am not medially unfit but I will attempt to be on a remote site.
I will l request humbly that in light of sale evidence being presented by the claimants and that I should have the bank statements later this evening which prove that I did not abscond with the funds.
A later email, timed at 9.46 am reads:
There are typo errors. I meant to say the claimants have presented false evidence. A pdf copy has been file also into court. I will attempt to sign in remotely for the hearing. I would like to cross examine claimants as well.
I responded by email at 9.51 (with copies to Mr Vickers and Manchester BPC listing) as follows:
Thank you Mr Rastan for your two emails this morning.
I have read, and printed out, your skeleton. I should emphasise that this case is not really about the treatments being developed by Yagna Ltd, or about what happened to the claimants' investment in that company but whether they were induced to make that investment by the representations in your emails, particularly that of 5 December 2012.
If you attend remotely, you will have an opportunity to cross-examine the two claimants who are to give evidence. If you have difficulty in speaking, you can have someone with you to put your questions; or, if you write them out, I will put them for you. However, you should confine questions to that which is strictly relevant in the statements of case; and you may wish to be careful about allowing the claimants to introduce matters that may be helpful to them about which they have previously given no evidence.
At 9.58, Mr Rattan replied:
I don't have any to assist me I will try to write the questions out as best as possible and send them to you
My face is disfigured and embarrassing so I will put the mask on if okay. I will take it off so you can confirm it's me and put it on again. Thank for your assistance. The Yagna bank statement are from a previous accountant which would help.
- At 10.24, Mr Rattan submitted an 8-page document containing some 76 questions he wished to put to Mr Mather and Mr Ledigo. He copied in both Mr Vickers and Manchester BPC listing. At 10.30 I replied to all thanking Mr Rattan for this latest document. I said that I would require some time to read through it (as might Mr Vickers) so I had put the start of the hearing back to 11.00 am. Having read Mr Rattan's list of questions, I formed the view that many of the questions were entirely irrelevant to the pleaded issues. At 11.00 am I sent an email to Mr Rattan informing him that the hearing was about to start in court and inviting him to log in if he had not already done so. After a few minutes, Mr Rattan joined the hearing, which started at about 11.15. Mr Rattan then addressed the court in opening. Initially, Mr Rattan was visible on camera, wearing a face mask; but he then disappeared from view and was invisible to those assembled in court for the rest of the day. Since Mr Rattan was not going to be giving any evidence, and professed to be embarrassed about what he described as his facial disfigurement, and to avoid any risk that Mr Rattan might choose to withdraw from the hearing, I raised no objection to this. But it meant that I was unable to observe Mr Rattan during the course of the court hearing. In particular, from background sounds emanating from Mr Rattan's device, I formed the clear impression that he was not alone during the court hearing despite having told me that he had no-one available to assist him. As Mr Vickers observed, Mr Rattan had no difficulty in expressing himself verbally. I therefore allowed him to cross-examine Mr Mather and, after a delayed short adjournment, Mr Ledigo. In doing so, I was conscious that, as guided by CPR 3.1A (5)(b), if I were to question them, I would only put those questions to Mr Mather and Mr Ledigo that I considered to be proper.
- I have already summarised the oral evidence of Mr Mather and Mr Ledigo. Since Mr Rattan had adduced no evidence, it was Mr Vickers who addressed the court in closing after the conclusion of their evidence. He did so for a little under an hour. This enabled Mr Rattan to have overnight to reflect upon his own closing submissions.
- Mr Vickers submitted that, from the perspective of Mr and Mrs Mather, the claim was a very straightforward one. They only needed to rely upon the email of 5 December 2012, timed at 15.24. However they did rely upon other matters as well. Mr Vickers accepted that the 5 December email could not have affected the minds of Mr Ledigo or Mr Cleary when they decided to invest in Yagna because their initial investments had been made some two hours earlier (at 1.29 pm). Mr Vickers submitted that this was a joint venture in support of which Mr Basran and Mr Rattan had been engaged in making joint representations. He emphasised that a person may be liable in deceit as a joint tortfeasor if he was a knowing and active party to a scheme to defraud, even if he had not himself said anything and the actual representation has been made by someone else. He reminded me that at paragraph 14 of his second witness statement, Mr Ledigo had stated that Mr Basran had "always assured me that he was a director of Yagna and would look after our investments". This was important because Mr Basran was someone whom Mr Ledigo had trusted.
- Mr Vickers identified three relevant questions for the court: (1) Who had made the relevant representations? (2) Were they false? (3) Had the claimants relied upon them?
- In the 5 December 2012 email, Mr Rattan had represented that he had allowed Mr Basran to become a director of Yagna. This was in the context of Mr Mather inquiring about reserved matters and the right to appoint a director. We now know that the plea, implicit in paragraph 24 of the particulars of claim, that Mr Mather and Mr Ledigo were first provided with copies of the unsigned purported shareholders agreements after 21 November 2014 is incorrect: The first version was produced as early as 26 November 2012. In re-examination, Mr Ledigo stated that he had first seen a version of the draft shareholders agreement towards the end of November 2012. But the pleader appears not to have appreciated that a version of the draft shareholders agreement had been made available to Mr Ledigo, Mr Cleary (and Mr Mather) before any of them had made their first investment in Yagna. However, Mr Vickers accepted that this claim is not pleaded on the basis that any of the claimants had placed any reliance upon any statement in the draft shareholders agreement. Moreover, Mr Ledigo was circumspect in his evidence. He had emphasised his trust in, and reliance upon, Mr Basran.
- Paragraph 5 of the reply pleads that Mr Basran made representations in emails sent to the claimants, and that these had not been corrected by Mr Rattan. The email from Mr Basran to Mr Mather, Mr Ledigo and Mr Cleary, timed at 12.15 on 17 November 2012, and pleaded at paragraph 11 (g) of the particulars of claim, provided information about Yagna that had been sourced from Mr Rattan. Mr Rattan had been copied in to this email, demonstrating his knowledge that Mr Basran was passing on information that Mr Rattan had been providing. Mr Vickers submitted that Mr Basran and Mr Rattan were both involved in procuring the claimants' investment in Yagna together.
- Mr Vickers submitted that there can be no conceivable reason why Mr Basran should have accessed Mr Rattan's laptop to send the email of 5 December 2012. Why should Mr Rattan have provided Mr Basran with the log-in details for his laptop and email account? Why did Mr Rattan not point out to Mr and Mrs Mather, when they replied to the 5 December email on 7 December, that he was not the author of the earlier email? The 5 December email is said to render the claims of Mr and Mrs Mather unassailable. In it, Mr Rattan made a clear representation of fact (that he had allowed Mr Basran to become a director of Yagna) that he knew to be untrue. Mr and Mrs Mather had relied upon that representation when they had invested in Yagna. The loss was the amount they had invested in Yagna. Ultimately, they had retained no shares in Yagna; and, in any event, that company had proved to be worthless. Mr Rattan has pleaded nothing in his defence to be set-off against the loss of this investment.
- Turning to the claims of Mr Ledigo and Mr Cleary, Mr Vickers did not seek to amend the particulars of claim to plead the several iterations of the draft shareholders agreement, or that any of the claimants had placed any reliance upon them. However, these successive draft agreements, prepared by Mr Rattan, evidence and confirm the assurances that Mr Basran had always provided to Mr Ledigo that he was a director of Yagna and would look after the claimants' investments. Mr Vickers submitted that everything that was said by either Mr Basran or Mr Rattan was effectively repeated and endorsed by the other because this was a joint venture between the two of them. All of the evidence was said to support Mr Ledigo's contention that he had relied upon a course of conduct between these two defendants. Mr Vickers pointed to the email from Mr Basran to Mr and Mrs Mather, timed at 21.26 on 21 August, updating them on the progress made since the scientific presentation to potential investors in London on 17 July 2012 as evidencing an encouragement to invest and the inculcation of a sense of urgency. He said that all this had the ring of two men who did not really have anything, but hoped to have something, promoting a company without any reason to believe that it represented a viable investment. They may have had high hopes for Yagna, but they had had no reason to believe that these were justified. Mr Vickers accepted that he needed to establish that representations had been made by Mr Basran and Mr Rattan jointly in order for Mr Ledigo and Mr Cleary to succeed in their claims against Mr Rattan.
- When the trial resumed the following morning, which was the fourth day of the trial (Thursday 13 February), Mr Rattan chose to attend only by telephone so he was not visible at all during the hearing. The hearing began with my query concerning the whereabouts of any emails evidencing the queries raised by Mr Mather's professional advisers, and their communication to Mr Basran, as related by Mr Mather at paragraph 23 of his third witness statement. As I have previously explained, this led the claimants to produce three further pages of scanned documents, showing the queries raised on Mr Mather's behalf by Mark Traynor of Brabners Chaffe Street LLP, their passage to Mr Basran, and his onward transmission of those queries to Mr Rattan. This confirmed what was said at paragraph 23 of Mr Mather's third witness statement, and explains the genesis, and 'cut-and-paste' format of Mr Rattan's email of 5 December 2012. Mr Mather was re-called to address this further documentation; and Mr Rattan had the opportunity to question him on this issue. Mr Vickers then addressed the court on the issue of interest. Initially, he made it clear that he would not be seeking interest from Mr Rattan at a rate in excess of the 2 ½ % that HHJ Bever had awarded against Mr Basran in his judgment on the assessment of damages on 20 February 2023. Later, Mr Vickers pointed out that interest rates have been considerably higher since the assessment of damages before HHJ Bever.
- It was then Mr Rattan's opportunity to address the court in closing. Mr Rattan had submitted a 10-page typed document containing his final submissions under cover of an email to me (copied to Mr Vickers) timed at 7.53 that morning. Although I had pre-read, and have since re-read, the whole of this document, it is really only at paragraph 24 (on page 6) that the material submissions begin. Without in any way seeking to detract from the full contents and effect of these submissions, at the beginning of Mr Rattan's oral opening, I sought to summarise them as follows:
(1) It was not Mr Rattan, but Mr Basran, who composed and sent the email of 5 December 2012, responding to the due diligence questions posed by Mr and Mrs Mather's corporate solicitor. Mr Rattan is not therefore the maker of any representation that he had allowed Mr Basran to become a director of Yagna. In any event, the claimants relied solely on Mr Basran.
(2) Mr Basran acted as a de facto director (and chairman) of Yagna so it made no real difference that he was never formally appointed as a director of Yagna.
(3) Mr Rattan did not benefit in any way financially or otherwise from the demise or liquidation of Yagna.
(4) The claimants did nothing to stop the liquidation of Yagna, or take any effective remedial action after its liquidation.
In addition:
(5) The claim for negligent misrepresentation is out of time under the Limitation Act 1980. As for any claim in fraudulent misrepresentation, the claimants have not provided any basis to show that, with reasonable diligence, they could not have discovered before 20 August 2015 the falsity of each and every representation they claim to have relied upon as inducing them into making their investments in Yagna.
- Mr Rattan added very little to his written submissions. He emphasised that he had behaved in an honourable manner throughout his career. He had worked hard, had never previously been accused of any fraud, and had never taken any moneys from Yagna. For all purposes, Mr Basran had acted as a director of Yagna, so any representation had been fulfilled.
- Mr Vickers then replied for about 15 minutes. He made the following points: First, there was no evidence to support Mr Rattan's assertion that he had not written the email of 5 December 2012. This assertion was inconsistent with previous admissions he had made to the court. Second, it was irrelevant that Mr Basran may have acted as a shadow, or de facto, director of Yagna after the representations that he was already a director had been made. This claim is about the truth of the representations when made. Apart from the representations in the 5 December 2012 email, Mr Rattan had been privy to emails from Mr Basran in which the latter had also made the same representation, and Mr Rattan had never corrected him. The court should consider the totality of the email traffic. The two men had been acting in concert. The claimants had been entirely dependent on the information being fed to them by Mr Basran and Mr Rattan. Third, the fact that Mr Rattan had derived no personal benefit was entirely irrelevant to the question whether he had made the false representations.
- Fourth, Mr Vickers reviewed the evidence the court had seen and heard. After the claimants discovered that they were no longer on Yagna's share register, and that their investments in Yagna had disappeared, it was hardly surprising that they should have acted as they did as Mr Basran had represented this as the only way of securing the return of their investments. In any event, this conduct, or lack of action, was entirely irrelevant to the present claims. The tort of misrepresentation was complete when the claimants had suffered loss by investing their moneys in Yagna. Fifth, Mr Vickers referred the court to the totality of Mr Mather's third witness statement, which demonstrates the extent of Mr Rattan's involvement in the affairs of Yagna. Mr Vickers also relies upon his written skeleton argument, which I have already addressed earlier in this judgment.
- I now turn to the law on fraudulent misrepresentation.
The law on fraudulent misrepresentation
- In his written skeleton argument, Mr Vickers provides a helpful statement of the law governing claims in fraudulent misrepresentation which he has collected together from Chapter 17 of Clerk & Lindsell on Torts (24th edn, 2023). Based on Mr Vickers's observations, and enhanced by my own researches in that text, I can summarise the applicable law in the following propositions (with all paragraph references being to Chapter 17 of Clerk & Lindsell):
(1) To found an action in deceit the claimant must show a misrepresentation of present fact or law (or, at the very least, something done which was aimed at inducing action on the basis of false information). However, a representation may be either express or implied from conduct; furthermore, adopting the representation of a third party can be sufficient: para 17-05.
(2) The representation must of course be false. Where an issue arises as to whether a representation is true or not, the court normally looks to the reasonable meaning of what the defendant said; indeed, this is often decisive: para 17-06.
(3) Statements of belief or opinion generally carry an implication that the belief or opinion is reasonably held. Further, a defendant who has made a true statement is bound to correct it if, though true when made, it is later, to his knowledge, falsified by events. Also, a person may be liable in deceit as a joint tortfeasor if he is a knowing and active party to a scheme to defraud, even if he has not himself said anything and the actual representation has been made by someone else: para 17-11.
(4) It is clearly established that a representation of present intention, whether the intention be that of the representor or a third party, is a sufficient representation of an existing fact to form the foundation of an action for deceit. "The state of a man's mind", said Bowen LJ (in Edgington v Fitzmaurice (1885) 29 Ch D 459 at 483) "is as much a fact as the state of his digestion. It is true that it is very difficult to prove what the state of a man's mind at a particular time is, but if it can be ascertained it is as much a fact as anything else". Thus, in that case it was held that a prospectus was deceptive when it contained false statements of what the company intended to do with investors' money once it received it. Moreover, a statement as to the future will often indeed imply a statement as to present intention; as Lord Herschell put it (in Clydesdale Bank Ltd v Paton [1896] AC 381 at 394), "that which is in form a promise may be in another aspect a representation". Thus a promisor generally represents by implication that he has, at the moment of making the promise, the intention of fulfilling it: para 17-12.
(5) Nevertheless, this principle cannot be taken too far. The mere fact that an expressed intention is not eventually carried into effect is little evidence of the original non-existence of the intention, since the representor may have subsequently changed his mind: para 17-13.
(6) A mere statement that one thinks a given state of affairs exists is not a statement that it does in fact exist: it follows that it cannot engender liability in deceit on that basis. However, this is not a very important limitation in practice. A statement of opinion is invariably regarded as incorporating an assertion that the maker does actually hold that opinion; hence, the expression of an opinion not honestly entertained amounts to fraud. And the same goes for projections as to the future: if a defendant says he expects an event to take place when he does not, he makes an untrue statement of fact. The only serious obstacle in the way of maintaining an action for a false representation on this basis lies in the difficulty of proving what the defendant's real opinion was: para 17-14.
(7) Furthermore, at least where the facts are not equally well known to both sides, a statement of opinion by one who knows the facts best will often carry with it a further implication, namely that the representor not only holds the opinion but believes that facts exist which reasonably justify it. If he does not do so, it follows that he will be liable in deceit. In such a case, the test as to whether a statement of opinion involves such a further implied representation will involve a consideration of the meaning which is reasonably conveyed to the representee. The material facts of the transaction, the knowledge of the respective parties, their relative positions, the words of the representation, and the actual condition of the subject-matter are all relevant to this issue: para 17-15.
(8) There is no misrepresentation in the case of mere exaggerated praise by a vendor of his wares; he is entitled to assume that his statement will be construed as mere puffing. However, though a vendor may entertain 'sanguine expectations' of the advantages to be derived from his goods, and may employ 'high colouring and even exaggeration' in his description of them, he must make no misstatement of any material facts or circumstances: para 17-17.
(9) The tort of deceit is complete only when the representation is acted upon. Where there is an interval between the time when the representation is made and the time when it is acted on, and the representation relates to an existing state of things, the representation is deemed to be repeated throughout the interval. Hence if it is false to the maker's knowledge at the time when it is relied on, there will be a deceit at that time. It also follows that if, during the time between the making of the representation and the claimant acting upon it, the defendant discovers it to be false, or circumstances change to his knowledge, so that it is now untrue, liability may be incurred: para 17-19.
(10) Although the decision in Pasley v Freeman (1789) 3 TR 51 established the existence of a tort based on fraud, it did not make entirely clear what state of mind was required in the defendant in order to establish it. The leading case on this point is the later decision of the House of Lords in Derry v Peek (1889) 14 App Cas 337. There, Lord Herschell laid down the essentials of fraud in the following propositions (at 376):
First, in order to sustain an action of deceit, there must be proof of fraud and nothing short of that will suffice. Secondly, fraud is proved when it is shown that a false representation has been made (i) knowingly, (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false. Although I have treated the second and third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states. To prevent a false statement from being fraudulent, there must, I think, always be an honest belief in its truth.
See para 17-20.
(11) It should be noted that if the requisite degree of knowledge or recklessness is shown, the defendant's motive in making the representation is irrelevant: "If fraud be established it is immaterial that there was no intention to cheat or injure the person to whom the false statement was made": Bradford Third Benefit Building Society v Borders [1941] 2 All ER 205 (at 211 per Viscount Maugham). The fact that the representor was not actually dishonest, or acted with the aim of facilitating a bona fide business transaction, is beside the point (although, of course, lack of dishonest intent may be powerful evidence of a bona fide belief in the truth of the facts asserted by the defendant): para 17-21.
(12) If the defendant knows his statement to be untrue he will be responsible for any loss suffered as a result. Even if the party making the representation may have had no knowledge of its falsehood, he will still be responsible if he had no belief in its truth and made it, "not caring whether it was true or false". As Lord Herschell put it (in Derry v Peek at 368):
Any person making such a statement must always be aware that the person to whom it is made will understand, if not that he who makes it knows, yet at least that he believes it to be true. And if he has no such belief he is as much guilty of fraud as if he had made any other representation which he knew to be false, or did not believe to be true.
See para 17-22.
(13) The claimant must have been influenced by the misrepresentation. To entitle a claimant to succeed in an action in deceit, he must show that he acted (or, in a suitable case, refrained from acting) in reliance on the defendant's misrepresentation. If he would have done the same thing even in the absence of it, he will fail. What is relevant here is what the claimant would have done had no representation at all been made. In particular, if the making of the representation in fact influenced the claimant, it is not open to the defendant to argue that the claimant might have acted in the same way had the representation been true. It also seems clear that the claimant must have acted himself to his detriment. If his loss results, not from his own reliance, but from that of third parties, the defendant may be liable for the torts of unlawful interference with trade, passing-off or malicious falsehood, or even negligence; but he will not be liable in deceit: para 17-36.
(14) Although the claimant must show that he was induced to act as he did by the misrepresentation, it need not have been the sole cause. Provided it substantially contributed to deceiving him, that will be enough. If the claimant's mind was partly influenced by the defendant's misstatements the defendant will not be any the less liable because the claimant was also partly influenced by some other factor, such as a mistake of his own. In such cases, moreover, the claimant has the benefit of an evidential presumption that he was influenced, at least to some extent, by the deceptive statement: a presumption that has been said on high authority to be very difficult to rebut: para 17-38.
(15) A person to whom a misrepresentation is made is not deceived if he actually knows the truth. However, it is no answer to an action for deceit that the claimant might have discovered the falsity by the exercise of ordinary care: it does not lie in the mouth of a liar to argue that the claimant was foolish to take him at his word. Nor can the representor escape liability on the ground that knowledge of the truth must be imputed to the representee; as, for example where the representee's agent knew the true facts. Since the reasonableness of the claimant's reliance is not relevant to liability in deceit, the editors of Clerk & Lindsell submit that it equally follows that the materiality or otherwise of the defendant's statement is out of account. All that is required is reliance: once this is shown the fraudulent defendant should not be permitted to argue that what he said would not have induced a reasonable person to so act: paras 17-41 and 17-42.
(16) Deceit is not actionable per se: damage, in other words, is of the gist of the action. Moreover, it is up to the claimant to prove his loss. Nevertheless, there is authority that where a claimant proves that he has been deceived into expending money, the burden shifts to the defendant if he wishes to argue that the expenditure did not in fact amount to a loss to the claimant: para 17-43.
(17) The measure of damages in deceit is the loss directly flowing from the claimant's reliance on the defendant's statement; that is, generally speaking, the sum that will put him in the same position as if he had not relied on it. Credit must, of course, be given for any gains made by the claimant, though to qualify for deduction such gains just be closely connected with the relevant transaction, and also both tangible and relatively permanent. The defendant bears the burden of proving such benefits: para 17-45.
(18) Since the claimant's entitlement is to be put in the position he would have occupied had he not relied on the defendant's representation, it follows that no account is taken of what his position would have been had that representation been true. It follows that if the claimant is duped into buying an asset, he is generally entitled to recover the difference between the price paid and the market value of the property he received in exchange, and not the difference between the market value and the amount the defendant said the property was worth. Again, if the claimant is deceived into entering into a transaction by a statement as to the gains to be made from it, he can recover only the amount he loses as a result of relying on the representation and not the profit the defendant said he would make: para 17-46.
- On the subject of damages, Mr Vickers also cited from the speech of Lord Browne-Wilkinson in Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254, at 266H-7D as follows:
In sum, in my judgment the following principles apply in assessing the damages payable where the plaintiff has been induced by a fraudulent misrepresentation to buy property: (1) the defendant is bound to make reparation for all the damage directly flowing from the transaction; (2) although such damage need not have been foreseeable, it must have been directly caused by the transaction; (3) in assessing such damage, the plaintiff is entitled to recover by way of damages the full price paid by him, but he must give credit for any benefits which he has received as a result of the transaction; (4) as a general rule, the benefits received by him include the market value of the property acquired as at the date of acquisition; but such general rule is not to be inflexibly applied where to do so would prevent him obtaining full compensation for the wrong suffered; (5) although the circumstances in which the general rule should not apply cannot be comprehensively stated, it will normally not apply where either (a) the misrepresentation has continued to operate after the date of the acquisition of the asset so as to induce the plaintiff to retain the asset or (b) the circumstances of the case are such that the plaintiff is, by reason of the fraud, locked into the property. (6) In addition, the plaintiff is entitled to recover consequential losses caused by the transaction; (7) the plaintiff must take all reasonable steps to mitigate his loss once he has discovered the fraud.
Conclusions and supporting reasons
- In the light of my very full recital of the issues, the evidence, the submissions, and the general law, I can be relatively brief in my conclusions and supporting reasons.
- I have already indicated that I accept the evidence of the two claimants who gave live evidence before me. Mr Mather's evidence provides support for the claim by his wife. Mr Ledigo's evidence also supports the claim made by Mr Cleary.
- For the reasons set out at paragraph 61 above, I find as a fact that the 5 December email was composed and sent to Mr Mather by Mr Rattan (as it purports to have been). I reject Mr Rattan's unevidenced suggestion that it was Mr Basran who composed and sent the email, using Mr Rattan's laptop and email address, and that Mr Rattan had been ignorant of this. I accept Mr Vickers's submission that this email renders the claims of Mr and Mrs Mather unassailable. I find that in this email, Mr Rattan made a clear representation of fact that he had allowed Mr Basran to become a director of Yagna. I find that Mr Rattan had actual knowledge that this statement was untrue because he knew that he had not appointed Mr Basran to the office of director, and that no-one else had done so. Had I not found that Mr Rattan had actual knowledge of the falsity of this representation, I would have found that he was reckless as to whether it was true or false because he should never have stated that he had allowed Mr Basran to become a director of Yagna without verifying the true position. Both from the context in which the statement was made, and his reference to the reason for Mr Basran's appointment ("the shareholders he has introduced as investors are close associates of his"), it is clear that Mr Rattan intended Mr (and Mrs) Mather to rely upon this statement as an inducement to them to invest in Yagna. Indeed, the very fact that Mr Rattan has falsely sought to distance himself from this email shows that he fully appreciates its significance to Mr and Mrs Mather's investment decision. This is not a peripheral lie intended to bolster an honest defence; rather, it goes to the heart of the case against Mr Rattan.
- I find that both Mr and Mrs Mather did rely upon this false representation when they invested £1 million in Yagna, in three separate tranches. I accept Mr Mather's evidence (at the end of paragraph 25 of his third witness statement) that:
Had it not been for Mr Rattan's assurance that Mr Basran, who I trusted and had confidence in, had been appointed as a director to protect my investment, I would not have felt comfortable investing in Yagna. Indeed, my wife and I would not have handed over our money had Mr Rattan not represented that Mr Basran had been made a director of the company.
This was reinforced by Mr Mather's answers to my questions at the end of his evidence, which I have reproduced at paragraph 63 above.
- In my judgment, Mr Rattan can derive no comfort from the facts that Mr Basran may have acted as though he were a director of Yagna, or that it may have made no difference to the loss of Mr and Mrs Mather's investment had Mr Basran been appointed as a director of Yagna. Having represented to Mr and Mrs Mather that he had allowed Mr Basran to become a director of Yagna, the onus lay on Mr Rattan to correct that misstatement by pointing out that Mr Basran was merely acting a de facto or shadow director. There was no duty on any of the claimants to check the true position by making a search against the entries for Yagna at Companies House. The claimants were entitled to take Mr Rattan at his word. There was nothing to put any of the claimants on inquiry. Since it was the making of this false representation that in fact influenced Mr and Mrs Mather to invest in Yagna, it is not open to Mr Rattan to argue that they would have suffered the same loss of their investment had the misrepresentation been true.
- I find that the loss suffered by Mr and Mrs Mather as a direct result of their reliance upon Mr Rattan's misrepresentation is the total amount (£1 million) that they invested in Yagna. Ultimately, they retained no shares in Yagna; and, in any event, that company has proved to be worthless. Mr Rattan has pleaded nothing by way of defence to be set-off against the loss of this investment. At one time I queried whether the values of the diamond cuff-links that Mr Rattan presented to Mr Mather, Mr Ledigo, and Mr Cleary, and of the diamond necklace that he later presented to Mrs Mather, should be set-off against the loss of their respective investments. However, whilst Mr Mather may have speculated that these had been purchased using the funds the claimants had invested in Yagna, there is no direct evidence to that effect; there is no plea to this effect in Mr Rattan's defence; and Mr Rattan's questioning of Mr Mather proceeded on the basis that these items of jewellery had been purchased from his own funds rather than using Yagna's moneys. For any gains made by a claimant to qualify for any deduction from an award of damages for fraudulent misrepresentation, such gains must be closely connected with the relevant transaction; and it is the defendant who bears the burden of proving any such relevant countervailing benefits. Mr Rattan has not sought to contend that the value of these items of jewellery should be set off against any award of damages made in favour of any of the claimants. Nor has he discharged the evidential burden of establishing that this would be appropriate in all the circumstances.
- I am satisfied that Mr Rattan cannot raise any valid limitation defence to this claim for damages for fraudulent misrepresentation. Mr Mather's second witness statement, and paragraphs 54 (and following) of Mr Mather's third witness statement, afford a complete answer to any plea that this claim is statute-barred. On the facts, there was nothing to put any of the claimants on inquiry as to the true position concerning their investments in Yagna until September 2015, less than six years before this claim was commenced. I find that the claimants could not, with reasonable diligence, have discovered that the representations made to them had been made fraudulently until less than six years before the commencement of this action. I accept as compelling Mr Vickers's submissions on this aspect of the case, as set out at paragraph 74 of this judgment. Of course, any of the claimants could have discovered that Mr Basran had not in fact been appointed a director of Yagna simply by making a search against that company's records at Companies House. But they had no reason to do so. They relied entirely on what they had been told by Mr Rattan (and Mr Basran). They had no reason to doubt their veracity, or to investigate the truth of what they had been told. The law is clear that it is no answer to a claim for fraudulent misrepresentation that the claimant might have discovered its falsity by the exercise of ordinary care: it does not lie in the mouth of a liar to argue that the claimant was foolish to take him at his word.
- In my judgment, as a matter of law, it is entirely irrelevant to this claim in fraudulent misrepresentation whether or Mr Rattan benefitted in any way financially or otherwise from the demise or liquidation of Yagna. It is also irrelevant that the claimants did nothing to stop the liquidation of Yagna, and took no effective remedial action after its liquidation. Such matters afford no defence to the present claim.
- For these reasons, I find that Mr and Mrs Mather have established that Mr Rattan is liable to them in the tort of fraudulent misrepresentation. The appropriate measure of damages is their lost investment in Yagna of £1 million.
- However, the position is different in the case of Mr Ledigo and Mr Cleary. As Mr Vickers recognises, Mr Cleary's £20,000 investment, and Mr Ledigo's initial investment of £50,000, were made by way of a single payment made almost two hours before Mr Rattan sent his email of 5 December 2012 to Mr Mather. Clearly, neither Mr Cleary nor Mr Ledigo placed any reliance on this email when making these investments. Nor is there any evidence that Mr Ledigo placed any reliance on this email when he came to make his second investment of £50,000 on 31 May 2013.
- As I relate at paragraph 55 of this judgment, Mr Ledigo's second witness statement contains no reference to any of the emails of 26 November, 5 December or 19 December 2012, or 10 March 2013, or to any of the draft shareholders agreements; although in oral evidence he said that he could recall having seen a version of the shareholders agreement towards the end of November 2012. Rather, at paragraph 14, Mr Ledigo emphasises that it was Mr Basran (and not Mr Rattan) who "always assured me that he was a director of Yagna and would look after our investments". I find that neither Mr Ledigo (nor Mr Cleary, who gave no relevant evidence) attached any significance to any of these emails or to any statement in the draft shareholders agreements. I find that they placed no reliance upon them when they decided to invest in Yagna. In particular, they placed no reliance upon the statement in the several iterations of the draft shareholders agreement that Mr Basran was to be appointed to the board of Yagna on 1 December 2012. It was Mr Basran's assurances, and not any confirmatory assurance from Mr Rattan, that induced Mr Ledigo and Mr Cleary to invest in Yagna.
- In his written submissions, Mr Vickers had not sought to differentiate between the claims of Mr and Mrs Mather on the one hand and Mr Ledigo and Mr Cleary on the other. The representation relied on was that in the 5 December email. In his oral submissions, Mr Vickers accepted that he needed to establish that representations had been made by Mr Basran and Mr Rattan jointly in order for Mr Ledigo and Mr Cleary to succeed in their claims against Mr Rattan. Mr Vickers relies upon the principle (recognised at paragraph 112 (3) of this judgment) that a person may be liable in deceit as a joint tortfeasor if he is a knowing and active party to a scheme to defraud, even if he has not himself said anything, and the actual representation has been made by someone else. The position here is that Mr Rattan had himself made a representation; but, apart from the statement in the draft shareholders agreement, this was not made to Mr Ledigo or to Mr Cleary. In my judgment, the evidence does not sufficiently demonstrate that in or around December 2012, Mr Rattan was a knowing and active party with Mr Basran in any scheme to defraud the claimants, or other potential investors in Yagna. As Mr Vickers acknowledged (in paragraph 15 of his trial skeleton), despite their now deep suspicions about the truth of what they were being told between 2012 and 2014, the claimants "cannot prove the falsity of other representations made to them before they made" their investments in Yagna. In my judgment, on the evidence, there is insufficient evidence to justify the court in finding that Mr Rattan is liable to Mr Ledigo and Mr Cleary for fraudulent misrepresentation, effectively on the footing of 'joint enterprise'. For these reasons the claims by Mr Ledigo and Mr Cleary fall to be dismissed.
- Turning to the issue of interest, initially Mr Vickers had been content for this court to follow the approach of HHJ Bever on the assessment of damages against Mr Basran, and to award simple interest at the rate of 2.5% per annum on the £1 million in damages to be awarded to Mr and Mrs Mather. Later, Mr Vickers pointed out that interest rates had risen since the time of the hearing before HHJ Bever. I have researched the change in base rates over the period between 2016 and today. Between August 2016 and March 2020 base rates varied between 0.25 and 0.75%. They then fell to 0.10% for some 18 months before rising again, eventually peaking at 5.25% for about 12 months between August 2023 and August 2024, when they fell back to 5%. Apart from the level of base rates, I have to bear in mind two further factors: (1) The delay between the initial letter of claim (which surprisingly was not in evidence but was sent in or around December 2018) and the issue of the claim form on 20 August 2021; and (2) that this is not a case where it has been demonstrated that Mr Rattan has had the use or benefit of the claimants' moneys during the period for which interest falls to be awarded. Had the claim been issued more promptly, judgment might have been recovered at least two years earlier, avoiding much of the period when base rates were at their highest. Bearing all relevant factors in mind, in my judgment the appropriate exercise of the court's discretion is to award interest at the rate of 2.5% per annum from the date each of the three investments was made until the date of judgment. I will leave Mr Vickers to calculate the precise amount due to Mr and Mrs Mather by way of interest.
Disposal
- For these reasons, I dismiss the claims by Mr Ledigo and Mr Cleary against Mr Rattan. I direct the entry of judgment in favour of Mr and Mrs Mather against Mr Rattan in the sum of £1 million, with interest at the rate of 2.5% per annum from the date each of their three investments was made until the date of judgment.
- So far as costs are concerned, although the claims of Mr Ledigo and Mr Cleary have failed, at present I cannot see that their presence as co-claimants has added materially to the costs of the proceedings against Mr Rattan beyond the costs of and occasioned by Mr Ledigo's second witness statement. My provisional view, subject to any submissions, is that costs should follow the event; and that Mr and Mrs Mather should be entitled to recover the bulk of the costs of the claim against Mr Rattan.
- I would invite Mr Vickers and Mr Rattan to attempt to agree the terms of a draft order to give effect to this judgment. If they cannot agree on such a draft, Mr Vickers should submit a single composite order, clearly identifying where the parties differ, together with brief written submissions from each of Mr Vickers and Mr Rattan explaining the reason for their different proposed disposals. If either party wishes to apply for permission to appeal this judgment to the Court of Appeal, they should submit their written reasons for contending that my decision is either wrong, or unjust because of a serious procedural or other irregularity in the proceedings in this court: see CPR 52.21 (3). They should also submit their written reasons for contending that any appeal would have a real prospect of success, or that there is some other compelling reason for the appeal to be heard: see CPR 52.6 (1).
- I propose to hand down this judgment remotely by email at 10.00 am on Wednesday 12 March 2025. No attendance is required. Mr Vickers and Mr Rattan should submit a list of any typing corrections and other obvious errors by 12 noon on Monday 10 March 2025. No changes of substance will be accepted. By the same time and date they should also submit any written submissions addressing the issues I have identified at paragraph 129 above.
- That concludes this substantive reserved judgment.
Postscript
- Out of the blue, at 13.41 on Saturday 8 March 2025, I received an email from Mr Jonathan Raynes, of Steptoe International (UK) LLP (Steptoe). This email was copied to Mr Vickers, his instructing solicitors, and the court. It enclosed a notice of change of legal representative, stating that Steptoe had been instructed to act on behalf of Mr Rattan in this claim, together with a letter addressed to me. The letter states:
We have been instructed by Balvinder Singh Rattan, the second defendant in the above proceedings. We enclose a Notice of Change of Solicitors.
We have been made aware that a draft judgment has been shared with the parties on a confidential basis, and that any clerical corrections have been requested by noon on Monday before that judgment is handed down on Wednesday of next week. The parties have also been invited to agree, insofar as possible, the terms of a draft order and to make any application for permission to appeal from the judge by the same date.
We respectfully request a short extension of 24 hours until noon on Tuesday for that deadline, in order that we may consider the draft judgment, take instructions, and endeavour to agree an appropriate order with Mr Vickers. We recognise that this request is made out of working hours but were only engaged yesterday and this short extension is necessary if we are to be able to properly consider the position with our client and respond on his behalf.
We intend to submit this letter and its enclosure by CE-File but the system appears currently to be inaccessible, and in light of the urgency we are therefore sending it in the first instance by email.
- This provoked an email response from Mr Vickers timed at 15.51. This explains that Mr Vickers had sent his draft order and associated updated interest calculations to Mr Rattan by email timed at 19.59 on Tuesday 4 March 2025. Mr Vickers reproduces the text of this email. He informs me that this had received no acknowledgment or response. Mr Vickers's email continues:
Although I am available until 3.30pm on Monday 10th March, I am, thereafter, away from chambers and, for significant periods of 11th and 12th March, simply unavailable due to pre-existing travel commitments, some by air when I will not be able to access e-mail. In any event, I will not be able, conveniently and without disruption to the schedule agreed with my travelling companions, to give consideration to any submissions made after the deadline of 12.00 noon on Monday 10th March which you previously imposed and around which I have made/adjusted my travel arrangements.
This appears to be simply another last-minute delaying tactic employed by Mr Rattan, who has had 3 working days to consider my draft order and/or employ solicitors to look at it (an act he appears to have waited to take until after close of business on Friday 7th March).
I would also ask you to note that Mr Rattan has instructed solicitors, post-judgment and, presumably having paid, or agreed to pay, their fees despite still being in default of payment of a previous interlocutory costs order owed to my client in the total sum of £14,991.00.
In the circumstances, and having taken instructions today, my clients object to any extension of time and ask me to invite you to consider the attached draft order as their (still) unopposed position as to the correct order following the judgment you have given. Should Mr Rattan, via Steptoe & Co, ask you to consider an application for permission to appeal before Wednesday 12th March, my submissions would be that
(a) The issue of permission to appeal is a matter between the proposed appellant and the trial judge (in the first instance) but the claimants do not accept that there are any grounds for granting such permission here;
(b) If such an application is made, and refused, a simple additional paragraph noting that 'The Defendant's application for permission to appeal is refused' can be inserted into my draft order.
Mr Vickers's suggested typographical corrections to my draft judgment followed by way of a separate email timed at 16.15.
- I responded to Mr Vickers's first email by an email to all, timed at 18.13 on Saturday 8 March 2025, as follows:
I acknowledge receipt of Mr Raynes's email timed at 13.42 today, this email, and Mr Vickers's further email timed at 16.15 today attaching his suggested typographical corrections. I thank him for these.
I fear that CE-File is not available until 1300 tomorrow (Sunday) due to planned maintenance. Those who maintain the system may not appreciate that those who use it (including the judiciary) frequently have to do so outside the normal working week.
I attach a further draft of my judgment incorporating those of Mr Vickers's suggested typographical corrections that I consider appropriate.
In view of what Mr Vickers says about his limited availability after 12 noon tomorrow [sic: this should have read 'Monday'], I am prepared to extend the deadline for any further suggested clerical corrections to my draft judgment, any suggested amendments to the terms of Mr Vickers's proposed draft order, and for any application for permission to appeal from the judge until 3.00 pm on Monday 10 March but not any later.
I note that I sent my draft judgment out, with my request for any clerical corrections to the draft judgment, the terms of a draft order, and any application for permission to appeal by email timed at 08.29 on Thursday 27 February.
- With no prior warning, I received a further email from Steptoe at 15.01 on Monday 10 March. This was copied to Mr Vickers and his solicitors. It attaches a six-page letter and draft grounds of appeal, also extending to six pages. The letter begins by thanking me for the additional time allowed. It continues:
Regrettably, time has not permitted us to seek to reach agreement on any of the content with Mr Vickers in view of his inability to give any consideration to this matter after noon today. However, in light of his comment regarding the date when he sent the draft order to Mr Rattan, we can confirm that it was sent to Mr Rattan at the time and on the date claimed. That was some days before we were engaged or able to be shown the draft judgment.
- The letter suggests three further typographical corrections to the draft judgment which (with modifications) I have incorporated therein. It then suggests a minor change to one of the recitals to Mr Vickers's draft order, which I have varied slightly. The first four paragraphs of the draft order are agreed as fairly reflecting the draft judgment. However, paragraphs 5 and 6, setting out a proposed order for costs, are disputed. The provisional view expressed in the draft judgment that costs should follow the event is accepted as the default position under CPR 44.2 (2). There is said to be no good reason to depart from this default position in the present case. However, the letter makes the point that there are four claimants who made claims against Mr Rattan in these proceedings. Two claimants succeeded, but two failed. Those same four claimants also made claims against three further defendants. One succeeded by default, but two were struck out. Accordingly, the default position (if costs follow the event) should be that:
(1) Mr Rattan should be ordered to pay the first and second claimants' costs of their successful claims against him, but not the costs of their claims against the other defendants; and
(2) The third and fourth defendants should be ordered to pay Mr Rattan's costs of successfully defending the claims they advanced against him.
- That is the principle which should be reflected in the court's costs order. To make no order as to costs between the third and fourth claimants and Mr Rattan (as Mr Vickers's draft proposes) would be unfair and unjust in circumstances where the court has found their claims to be unsustainable as pleaded and on the evidence presented.
- After making further representations, Steptoe submit that the appropriate order for costs should be:
(1) Mr Rattan should pay the first and second claimants' costs insofar as such costs are attributable to the specific claims made by them, and one half of any costs common to the claimants that cannot be attributed to any specific claim;
(2) The third and fourth claimants should pay Mr Rattan's costs insofar as such costs are attributable to the specific claims made by those claimants, and one half of any costs incurred by Mr Rattan that cannot be attributed to any specific claim; and
(3) Such costs should be the subject of a detailed assessment if not agreed.
- Steptoe then address the proposed interim payment on account of costs. They acknowledge that the default position under CPR 44.2( 8) is that where the court orders a party to pay costs subject to detailed assessment, it should order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so. Mr Rattan also acknowledges that 70% of any budgeted costs is prima facie a reasonable sum to pay on account. However, Steptoe take the approved costs budget of £200,000 to cover the costs of all four claimants; and, in the absence of any better evidence, they say it is reasonable to suppose that only half of that sum reflects the costs specifically attributable to the claims of the first and second claimants and their apportionment of common costs, and the other half is specifically attributable to the claims of the third and fourth claimants and their apportionment of common costs. Thus the budget for the first and second claimants' claims should be considered to be £100,000 and not £200,000. A reasonable sum of 70% of the approved costs budget would therefore be £70,000 and not £140,000. That is the amount of any interim payment which Mr Rattan should be required to make.
- The same principles are said to apply in respect of the costs of defending the unsuccessful claims of the third and fourth defendants, assuming the court accepts the submission that costs should follow the event and that those defendants should pay Mr Rattan's costs of defeating their unsuccessful claims. Steptoe therefore submit that a corresponding order should be made requiring the third and fourth defendants to make an interim payment to Mr Rattan, equal to 70% of one half of his approved costs budget, if one exists. If there is no such approved budget, then (recognising that, as a litigant in person for parts of this matter, Mr Rattan is likely to have incurred lower costs than the claimants), an on account payment of half that required to be made to the first and second claimants should be made by the other two defendants, in equal shares.
- Thus Steptoe submit that the court should make an order that:
(1) Mr Rattan should make an interim payment on account of the costs due to the first and second claimants in the sum of £70,000;
(2) The third and fourth claimants should each make an interim payment on account of the costs due to Mr Rattan in the sum of £17,500; and
- Mr Rattan seeks an order for a stay of execution of the judgment (and of any orders for costs) until the determination of his anticipated appeal against the judgment. There is said to be at least a reasonable prospect of a successful appeal which would reverse the finding that Mr Rattan is liable to the first and second claimants. As a private individual with limited means, who is dependent upon loans to allow him to obtain legal advice at this juncture, any order for payment within 14 days is likely to drive him to bankruptcy, and would therefore stifle any proposed appeal. It would also have a devastating effect on the personal circumstances of Mr Rattan and his family, and is likely adversely to impact his medical conditions (which Steptoe understand to be in part stress-related). If permission to appeal is granted, and this court's judgment were to be overturned on appeal, that devastating impact could not be undone. Real prejudice to Mr Rattan and his family (in the sense of irremediable harm) is probable if the judgment were to be enforced and he later won the appeal.
- There is said to be no equivalent corresponding prejudice to Mr and Mrs Mather. They are in a fortunate financial position, and were able to invest funds in a growing company in the expectation of a return only in the fullness of time (as the draft judgment records). It will, it is to be presumed, cause no irremediable harm to either of them if the enforcement of the judgment against Mr Rattan takes place next year instead of this, with interest accruing at the judgment rate. Unlike the first defendant, who appears to have fled and perhaps hidden assets, Mr Rattan has stayed to 'face the music' and has deep family ties. There is therefore no reason to think that the prospects of enforcing the judgment would worsen if a stay pending appeal were to be granted.
- Mr Rattan also requests permission to appeal. In the limited time available since Steptoe were instructed on Friday, they have identified various grounds of appeal, which they have set out in the document attached to their email. Steptoe throw down a marker that if permission is granted by this court for an appeal, or it is necessary to apply to the Court of Appeal for permission to appeal, it is likely that they will be able to refine those grounds before any formal notice of appeal is filed. I will address the application for permission to appeal at the end of this postcript.
- Steptoe's email provoked a response from Mr Vickers in the form of an email, copied to all, timed at 16.33 on 10 March. This reads as follows (subject to the correction of apparent minor typographical errors):
Despite your variation that any further submissions from Mr Raynes should be sent by 3.00pm (given my availability until 3.30 today), I note he sent through lengthy documents by e-mail at 3.02, after your deadline.
I have had to cancel my attendance at a social event I was due to attend, on my holiday, at 4.00pm today because these matters are more important. However, I will keep my response brief and only make the main points.
(1) Mr Rattan has had plenty of opportunity to make submissions to you since you handed down your provisional judgment. It is quite intolerable that he does so, even after the extended deadline, without even attempting to discuss matters with me.
(2) On the issue of costs:
(a) Your provisional view was the correct one: the claims by Mr Ledigo and Mr Cleary were about 10% of the total claim. And, other than Mr Ledigo's second statement, it is quite clear that the costs incurred by Mr and Mrs Mather would have been exactly the same whether Mr Ledigo and Mr Cleary joined with them in the claim or not. You should order Mr Rattan to pay the claimants' costs excluding the costs of the preparation of Mr Ledigo's second witness statement.
(b) In respect of Mr Rattan's submission that he should recover some part of his costs from Mr Ledigo and Mr Cleary, there are three points to be made:
(i) Again, it is unlikely that any additional time was spent dealing with the far smaller claims of Mr Ledigo and Mr Cleary;
(ii) Mr Rattan is fortunate that the claimants only came to appreciate that the representation that Mr Basran was going to be (and, later, had been) appointed as a director of Yagna had been set out in the draft shareholders agreement sent in late November. While the court dealt with this matter, correctly, on the face of the pleadings, it was obvious that Mr Ledigo had seen the draft shareholders agreement before investing his, and Mr Cleary's, money and had matters been pleaded differently, and his attention drawn to the actual chronology, and his memory jogged, at the time he made his second witness statement, amendments to the pleaded case would probably have been made then. His clear evidence was that he had always been led to believe by Mr Basran that he (Mr Basran) was going to be/had become a director of Yagna. It would be wrong to award Mr Rattan any costs for defending a claim which was, on the facts as became clear at trial, defectively pleaded but where Mr Rattan had, evidently, made the same representation (in the draft shareholders agreement) before Mr Ledigo and Mr Cleary invested as they did before the Mathers invested (in the email of 5 December 2012). There was no merit, factually, in Mr Rattan's defence: he succeeded on a technicality of the way in which, years after the events, the claimants' then lawyers understood the facts from the documentation they had seen (hence the knowledge of the shareholders agreements, but not when they were provided, was presented as "at some time thereafter", which we all now know was incorrect).
(iii) Other than at the CCMC in front of HHJ Stephen Davies, Mr Rattan has no costs because he sacked his solicitors shortly thereafter and only reinstructed them, on occasions, to deal with interlocutory applications, all of which he lost and was ordered to pay costs in respect of. The only issue where there is an outstanding 'costs in the case' order is Mr Rattan's application to strike out the claims on the basis of limitation (an issue upon which, ultimately, he lost, even against Mr Ledigo and Mr Cleary, so that those costs must follow whatever overall order as to costs you now make: see (2) (a) above). In addition there is a reserved costs order made by HHJ Bever on 29 October 2024 in respect of the claimants' first application for specific disclosure. That ought also to be converted into an order for costs in favour of the claimants given your later determination that the order had been correctly made and that Mr Rattan had not complied with it. Thus, even if you were to make any costs order in favour of Mr Rattan against Mr Ledigo and Mr Cleary, it could at most be for a proportion of the costs incurred by Mr Rattan in preparing for, and attending, that CCMC. And, even then, should not be for more than 10% of those costs. Thus, the suggested 'payments on account' contended for by Mr Raynes are ludicrous in the extreme.
(c) The claimants' cost budget was approved in the total amount of £202,847.67. The proposed interim payment on account of costs is just short of 70% of that figure.
(3) The question of permission to appeal is between the defendant and the court. Naturally, the claimants are opposed to it, and to Mr Rattan dragging out his hopeless defence any longer. The claimants are confident that you will address the grounds presented by Mr Raynes based upon your actual knowledge of how matters unfolded at trial. One point to be made, however, is the implicit criticism that the trial Judge "denied" Mr Rattan "the opportunity to present his own factual evidence". This is an astonishing submission for Mr Raynes to make given that Mr Rattan filed no written evidence by the deadline, that he never sought relief from sanctions despite being repeatedly reminded that he needed to do so (via experienced counsel who represented him at interlocutory hearings as well as by the claimants' solicitors in correspondence and the claimants' counsel in at least two sets of skeleton submissions for such interlocutory hearings) and given the fact that, in the statement he did serve late, he made no attempt to even address the email of 5 December 2012 or the misrepresentation that lay at the heart of the claimants' claims.
(4) The claimants oppose the stay sought by Mr Rattan. Unless this court grants him permission to appeal, he should seek permission, and a stay, elsewhere. This court has already described Mr and Mrs Mather's claims as "unassailable". To deny them the opportunity, now, to seek to enforce the judgment in their favour by threatening bankruptcy if a stay is not granted, is not an appropriate submission. With respect, Mr Raynes probably knows less about Mr Rattan's finances than the claimants do, and it is notable that, despite constantly saying he has no money, he found the money to pay tens of thousands of pounds to his own lawyers (and, in adverse costs, to the claimants, although over £15,000 remains outstanding in that regard) on interlocutory hearings when it suited him (and, again, now to instruct another firm of solicitors).
(5) The recital is correct. The Claimants WERE represented by counsel throughout. Mr Rattan DID attend in person on 10 February and by Teams on 12 and 13 February. Mr Raynes has simply misread, or misunderstood, a recital which says precisely that.
I hope these brief comments will be of assistance.
- This provoked a brief 'Extremely Urgent' email response from Steptoe, copied to all, timed at 17.10 om 10 March 2025. This reads:
I would like to make three brief points in reply to Mr Vickers's email.
First, my email was sent at 15.00, and not 15.02 as claimed. That can be seen from the copy attached. I accept that it may not have been received by Mr Vickers until two minutes later.
Second, I had perhaps misunderstood Mr Vickers's statement that he would "not be able, conveniently and without disruption to the schedule agreed with my travelling companions, to give consideration to any submissions made after the deadline of 12.00 noon on Monday 10 March". If so, and he was in fact available until 3.30pm, I can only apologise – but from the response it does not appear that any discussion would have been productive.
Third, I reject the assertion that it was not appropriate to make a submission that Mr Rattan may be driven to bankruptcy if the judgment is enforced. That submission accorded with my instructions, and inability to pay is a legitimate ground for a stay – CPR 83.7 (4) (b).
I am of course prepared to address any further issues if it would be of assistance.
- By an email to all timed at 17.17 on 10 March I replied acknowledging safe receipt of all three emails. I stated that I was working on this postscript to my draft judgment, which would address the points made, and also on a draft order. I concluded: "But this is where the email traffic ceases."
- I accept that Steptoe sent their email at precisely 15.00. It reached my inbox at 15.01. It apparently reached Mr Vickers's inbox a minute later. With 12 pages of attachments, it was clearly unlikely to provoke any detailed, considered response by Mr Vickers's 15.30 deadline.
- I have made a minor change to the second recital to Mr Vickers's draft order to remove any apparent ambiguity as to the attendances at trial.
- On the issue of the incidence of costs, I bear all the submissions I have received firmly in mind. The starting-point is that costs should follow the event. Mr and Mrs Mather's claims succeeded, whereas those advanced by Mr Ledigo and Mr Cleary failed. I agree with Mr Vickers that Mr Rattan is fortunate to have succeeded in resisting their claims, which resulted from the way those claims had been pleaded. The fact remains that Mr Rattan had misrepresented the true position as to Mr Basran's position within Yagna to Mr Ledigo and Mr Cleary in a similar way to the misrepresentations made to Mr and Mrs Mather. He then presented a false case (without committing himself in any witness statement, verified by a statement of truth) in a failed attempt to escape the consequences of his misrepresentations. In such circumstances, it would be unjust for him to recover any costs from Mr Ledigo or Mr Cleary. There is, however, a further reason for the court to exercise its overarching discretion as to costs by declining to make any costs order against Mr Ledigo and Mr Cleary. That is because I am satisfied, based upon the knowledge of this case that I have acquired during the course of two interim applications, as well as the trial itself, that the addition of Mr Ledigo and Mr Cleary as co-claimants has added very little to the costs of this litigation. That is because it would have been necessary to cover much, if not all, of the same ground as was traversed at, and in preparation for, trial, even if Mr Ledigo and Mr Cleary had not been parties to the litigation but merely potential witnesses for Mr and Mrs Mather. At present, I find it difficult to identify any additional costs caused by their joinder as third and fourth claimants save possibly for the costs of and occasioned by Mr Ledigo's second witness statement. (The earlier witness statements of both Mr Ledigo and Mr Cleary were directed to the assessment of damages ordered in the claim against Mr Basran.) I say 'possibly' because, even if not a co-claimant, Mr Ledigo might well have been tendered as a witness in support of the claim successfully brought by Mr and Mrs Mather. It is therefore not clear that Mr Rattan would have been saved the costs of addressing Mr Ledigo's evidence, even if he had not been joined as the third claimant.
- In the circumstances of this particular case, I do not consider that it would be realistic, appropriate, just, or convenient, to seek to identify costs common to the claimants that cannot be attributed specifically to the claims of Mr and Mrs Mather, apportion them equally, and order Mr Ledigo and Mr Cleary to pay half of such common costs. Apart from the practical difficulties that this would create for the costs judge on a detailed assessment, it would not be just to order Mr Ledigo and Mr Cleary to pay half the costs attributable to the claim founded upon the misrepresentation in the shareholders agreement when the reason that their claim failed was not because it was without merit but because it had not been properly pleaded.
- In my judgment, and in the exercise of my discretion as to costs, I am satisfied that the just order is that (1) Mr Rattan shall pay the first and second claimants' costs of the claim against him (including all reserved costs) save to such extent (if any) that these costs have been increased by the joinder of the third and fourth claimants; and (2) there shall be no order as to costs between the third and fourth claimants and Mr Rattan.
- It is common ground that there should be a payment on account of costs in favour of Mr and Mrs Mather, and that 70% of the budgeted costs is the appropriate starting point. Steptoe assume that the approved costs budget was intended to cover the costs of all four claimants; and, in the absence of any better evidence, they submit that it is reasonable to suppose that only half of the budgeted costs reflects the costs specifically attributable to the claims of Mr and Mrs Mather and their apportionment of common costs, with the other half being specifically attributable to the claims of Mr Ledigo and Mr Cleary and their apportionment of common costs. Thus the budget for the claims brought by Mr and Mrs Mather should be considered to be £100,000 and not £200,000. A reasonable sum of 70% of the approved costs budget should therefore be £70,000 and not £140,000. That is the amount of any interim payment which Mr Rattan should be required to make.
- I reject this submission for the reasons advanced by Mr Vickers, and for the reasons I have already set out. The claimants' costs budget was approved by HHJ Stephen Davies at the costs and case management hearing on 19 January 2024 in the sum of £202,847. This was at a time when the only remaining defendant was Mr Rattan. Some small deduction may be appropriate to reflect costs attributable to the joinder of Mr Ledigo and Mr Cleary. I would allow a generous amount of some £20,000 odd for this. The starting point should therefore be a figure in the order of £180,000. The interim payment on account of costs will therefore be £126,000.
- I turn now to Mr Rattan's application for permission to appeal. In broad summary, Steptoe advance the following grounds of appeal:
(1) The court's finding that, by an email he sent on 5 December 2012 to Mr Mather and Mr Basran, Mr Rattan made a representation of fact (namely, that he had allowed Mr Basran to become a director of Yagna) which was untrue, and was known by Mr Rattan to be untrue, is wrong and is not a finding which was reasonably capable of being reached on the evidence and as a matter of law. Mr Basran was a de facto director of Yagna, and acted as a de facto director of that company, such that the representation was true, and was understood by Mr Rattan to be true. Alternatively, Mr Basran was a shadow director of Yagna, and acted as a shadow director of such, so the representation was true, and was understood by Mr Rattan to be true. (Grounds 1-3)
(2) The court's finding that Mr and Mrs Mather relied on the false representation that Mr Basran had been allowed to become a director of Yagna when they invested £1 million in that company wrongly presupposes that Mr and Mrs Mather would not have invested if they had known that Mr Basran was only a de facto or shadow director rather than a de jure director. (Grounds 4 and 5)
(3) The court was wrong to find that there was nothing to put the claimants on inquiry that Mr Basran was not a director (in the sense of a de jure director) before August 2015; alternatively there was a serious irregularity in the claimants' disclosure which renders it unjust to make such a finding. As a consequence, the findings that Mr and Mrs Mather would not have invested if they had known that Mr Basran was not a director (in the sense of a de jure director), and that Mr and Mrs Mather's claim was not statute-barred, are unreliable and cannot stand. It is probable that Mr Mather was made aware by his solicitors that Mr Rattan was the sole de jure director of Yagna (and thus that Mr Basran was not a de jure director) but resolved nevertheless to invest. (Ground 6).
(4) The court acted unfairly and in breach of the rules of natural justice in dismissing without inquiry Mr Rattan's contention that Mr and Mrs Mather had belatedly produced what Mr Rattan claimed to be fabricated evidence regarding contact between their former solicitor at Davis Blank Furness and a partner in UHY Hacker Young. It was not just simply to exclude that challenged evidence from the court's deliberations. If, as Mr Rattan contended, Mr and Mrs Mather had indeed fabricated evidence on this one issue, then this would be relevant to the credibility of their evidence more generally. Falsus in uno, falsus in omnibus. (Ground 7).
(5) The court was wrong in finding that Mr & Mrs Mather did not discover, or could not with reasonable diligence have discovered, the supposed falsity of the representation made on 5 December 2012 that Mr Basran was a director of Yagna until August 2015, because the draft shareholders agreements issued on 19 December 2012 and 10 March 2013 should have alerted them to the fact that Mr Basran was not or may not have been a director. A reasonably diligent investor (or his advisors) would have made enquiries at that point, and could readily have ascertained whether or not Mr Basran was a de jure director by consulting the freely available Companies House records. As such, their claim was statute-barred, and the court was wrong to find otherwise. (Ground 8)
(6) The court acted unfairly and in breach of the rules of natural justice in rejecting Mr Rattan's request for an adjournment of the trial on medical grounds. (Ground 9)
- Whether these nine grounds of appeal are viewed individually or cumulatively, I do not consider that there is any real prospect of Mr Rattan persuading the Court of Appeal that this court's judgment was either wrong or unjust because of a serious procedural or other irregularity in the proceedings in this court. It is not suggested that there is any other reason (still less any compelling reason) why an appeal should be heard.
- In approaching these grounds of appeal, it should be remembered how Mr Rattan presented his defence at trial (albeit without the benefit of any witness evidence verified by a statement of truth). His case was that it was not Mr Rattan, but Mr Basran, who had composed and sent the 5 December 2012 email. Given the many opportunities Mr Rattan had (when represented by solicitors and counsel) to seek to rectify the consequences of the late submission of his witness statement by applying for relief from sanctions, the only reasonable inference is that he was unwilling either to give evidence in support of a case he knew to be false, or to tender himself for cross-examination (or both). It is also relevant to bear in mind the terms of the relevant representations: "i have allowed Lak Basran MBE to become a company director as the shareholders he has introduced as investors are close associates of his … i allowed him to become a company director …"
- The natural, and ordinary, meaning of these words is that Mr Rattan had validly appointed Mr Basran as a statutory (or rightful) director of Yagna. There was no evidence that they were understood by any of the claimants in any other sense. There is no evidence that Mr Rattan understood them in any other sense. He denied that he was responsible for them. That disposes of Grounds 1-5.
- It was never put to Mr Mather in cross-examination that his solicitor (or any other professional adviser) ever made him aware that Mr Rattan was the sole de jure director of Yagna (and thus that Mr Basran was not a de jure director) but that they had resolved nevertheless to invest in Yagna. Mr Mather's email response dated 7 December to Mr Rattan's 5 December email expressly thanked Mr Rattan "for the honest and comprehensive response to the questions that our advisors put to you". Mr Rattan was therefore on notice that Mr and Mrs Mather had been in receipt of professional advice at the time. As stated in my substantive judgment, there was nothing that should have operated to put Mr or Mrs Mather on notice or on inquiry that Mr Rattan had lied to them about Mr Basran's appointment as a director. That is sufficient to dispose of Grounds 6 and 8. Ground 6 is an exercise in speculation and surmise, with no foundation in the evidence.
- As recorded in my substantive judgment, the point raised by Ground 7 is wholly collateral, and irrelevant, to the issues in this litigation. In any event, it concerned the dealings of Mr and Mr Mather's former solicitor; and it would not have affected my view of Mr Mather's credibility on the issues arising in this litigation.
- In my judgment, there is no merit in any of the objections raised to my refusal of an adjournment in Ground 9. My reasons for refusing Mr Rattan's request for an adjournment are fully set out in my substantive judgment. I note that paragraph 9.1 records that "Mr Rattan informed the court that he was suffered [sic] from vomiting and diarrhoea, chronic kidney disease, chronic obstructive pulmonary disease, and Bell's palsy, and that he had attended hospital on 10 February 2025". It does not acknowledge that the chief complaint made at the hospital was "neurological, facial weakness"; or that the medical certificate referred only to "an acute episode of Bell's palsy". In any event, having heard Mr Rattan's remote participation in the remaining two days of the trial by Teams, and received his written submissions, I am entirely satisfied that Mr Rattan's participation in the trial was not impaired by any medical condition from which he may have been suffering. Mr Rattan's full and effective participation in the trial may have been impaired by the lack of any witness evidence from Mr Rattan. But that was a difficulty entirely of his own making.
- For these reasons, I refuse Mr Rattan permission to appeal. He may seek to renew his application to the Court of Appeal, if so minded or advised, within 21 days from the formal hand-down of this judgment, that is by Wednesday 2 April 2025. Had I granted Mr Rattan permission to appeal, I would have imposed a condition that he discharge all outstanding costs liability to the claimants arising under any interim costs orders made in this litigation.
- Since I refuse Mr Rattan permission to appeal, the question of any stay of execution of the judgment and order for costs pending any appeal does not arise. I will, however, allow 28 days for payment (until 9 April 2025) rather than the usual order for payment within 14 days. I do so because of the size of the award, and so that Mr Rattan can include any application for a stay of execution in any notice of appeal.
- I should, however, make it clear that I would not have granted Mr Rattan any further stay of execution pending appeal without requiring him to swear (or make) an affidavit (or affirmation) as to his income and financial resources and means. That is because I am troubled by the apparent readiness and ease with which Mr Rattan has felt able to instruct, and disinstruct, solicitors and counsel, apparently at will, from time to time during the course of this litigation.
- That concludes this over-lengthy postscript to this judgment.
