Darsan Jitendra Jhaveri and others v Lakshmi Anil Salgaocar (suing as the Administratrix of the Estate of Anil Vassudeva Salgaocar) and another

• Jurisdiction: Singapore
• Judge: Woo Bih Li JAD
• Judgment Date: 16 September 2024
• Neutral Citation: [2024] SGHC(A) 27
• Court: High Court Appellate Division (Singapore)
• Docket Number: Civil Appeal No 88 of 2023
• Hearing Date: 03 April 2024,17 April 2024
• Citation: [2024] SGHC(A) 27
• Year: 2024
• Plaintiff Counsel: Tan Chee Meng SC, Lim Wei Lee, Daryl Wong, Victoria Yu, Chin Ming Fwu and Wee Min (WongPartnership LLP) (instructed), Narayanan Sreenivasan SC, Palaniappan Sundararaj, Rajaram Muralli Raja, Eva Teh Jing Hui and Tan Si Xin Adorabelle (K&L Gates Straits Law LLC)
• Defendant Counsel: Davinder Singh SC, Jaikanth Shankar, Jaspreet Singh Sachdev and Ng Shu Wen (Davinder Singh Chambers LLC) (instructed), Kanapathi Pillai Nirumalan, Liew Teck Huat, Ritesh Vaman and Phang Cunkuang (Niru & Co LLC)
• Published date: 16 September 2024

See Kee Oon JAD (delivering the grounds of decision of the court): Introduction

This appeal, AD/CA 88/2023 (“AD 88”), was the culmination of a protracted dispute which had not only persisted for over a decade but had also spawned a plethora of related proceedings before the Singapore courts as well as courts elsewhere. The dispute centred on a claim by Mr Anil Vassudeva Salgaocar (“Mr Salgaocar”) against Mr Darsan Jitendra Jhaveri (“Mr Darsan”) for breaches of trust. In the court below, the trial judge (“the Judge”) found in favour of Mr Salgaocar (or, more precisely, Mr Salgaocar’s estate, as he passed away not long after the suit below was commenced). Dissatisfied with the Judge’s decision, Mr Darsan appealed.

We heard AD 88 on 3 April 2024 and dismissed it on 17 April 2024 after considering the parties’ submissions. We delivered a brief oral judgment. We now provide the full written grounds of our decision.

Facts The parties here and below

The first plaintiff in HC/S 821/2015 (“Suit 821”) was Mr Salgaocar. Mr Salgaocar was a highly successful Indian businessman. He was primarily involved in the business of selling and exporting iron ore from the iron mines which he and his family owned in India.¹ This business was conducted principally through Mr Salgaocar’s main operating company, Salgaocar Mining Industries Pvt Ltd (“SMI”).²

The first defendant in Suit 821 was Mr Darsan. He is an Indian businessman based in Hong Kong.³ He hailed from a family of gemstone traders and was in the business of dealing in gemstones and polymers.⁴ He decided to relocate to Hong Kong in 2000 to expand his business into the Chinese market.⁵

Mr Salgaocar commenced his claim in Suit 821 on 11 August 2015 against Mr Darsan on the basis that Mr Darsan was in breach of trust by, among other things, misappropriating the trust assets for his own benefit.⁶ According to Mr Salgaocar, this trust (“the 2003 Trust”) had been created pursuant to an oral agreement which was allegedly entered into in December 2003 between the two men (“December 2003 Agreement”).⁷ The agreement stipulated that Mr Salgaocar would set up special purpose vehicles (“SPVs”) for the conduct of the iron ore business. These SPVs would be funded by Mr Salgaocar, who would be the sole beneficial owner of all the shares issued in the SPVs and all monies, investments and other assets held by the SPVs. Mr Darsan would be a shareholder and/or director of the SPVs and would hold the shares in the SPVs and any interest in the SPVs’ assets on trust for Mr Salgaocar. Mr Darsan would also act in accordance with all instructions from Mr Salgaocar on matters concerning the SPVs. As consideration for this, Mr Salgaocar would pay Mr Darsan US$0.50 for each wet metric ton (“WMT”) of cargo sold by SPVs incorporated in the British Virgin Islands (“BVI”).⁸

Following the alleged December 2003 Agreement, six SPVs were incorporated in the BVI between 2004 and 2011:⁹ Ling Tao Trading Ltd (“Ling Tao”); Sino Ling Tao Resources Ltd (“Sino Ling Tao (BVI)”); GBA Minmetals Trading Ltd (“GBA Minmetals”); Cheermark Global Ltd (“Cheermark”); Joyking Global Ltd (“Joyking”); and Eltina Ltd (“Eltina”). These BVI-incorporated SPVs (“BVI SPVs”) were funded by Mr Salgaocar and used to trade in iron ore.¹⁰ Mr Darsan was the sole shareholder, director and bank signatory of Sino Ling Tao (BVI) and GBA Minmetals and was a nominee shareholder, director and bank signatory of Joyking and Cheermark. He was also a bank signatory for Ling Tao.¹¹ Save for Eltina, however, these SPVs have since been struck off.

Another 21 SPVs were incorporated in Singapore from 2005 to 2012.¹² These included the following 12 Singapore-incorporated SPVs (“Singapore SPVs”):¹³ Singapore Star Holdings Pte Ltd (“Singapore Star Holdings”) (formerly known as Sino Noble Holdings Pte Ltd (“Sino Noble Holdings”)); Great Newton Properties Pte Ltd (“Great Newton Properties”); Capital Glory Investments Pte Ltd (“Capital Glory”); Newton Noble Properties Pte Ltd (“Newton Noble”); Sino Noble Asset Management Pte Ltd (“Sino Noble”); Singapore Star Investments Pte Ltd (“Singapore Star Investments”); Singapore Star Shipping Pte Ltd (“Singapore Star Shipping”); Singapore Star Properties Pte Ltd; Sino Ling Tao Resources Pte Ltd (“Sino Ling Tao (SG)”); Millers Capital Investments Pte Ltd; Nova Raffles Holdings Pte Ltd; and Trustworth Shipping Pte Ltd (“Trustworth Shipping”).

When Mr Salgaocar passed away on 1 January 2016, Suit 821 was continued by his widow, Mdm Lakshmi Anil Salgaocar (“Mdm Lakshmi”), in her capacity as the sole administratrix of his estate.

On 4 May 2018, Mr Darsan’s wife, Mdm Jhaveri Jashma Darsan (“Mdm Jashma”), and daughter, Ms Pooja Darsan Jhaveri (“Ms Pooja”), as well as 11 of the Singapore SPVs listed above (at [7(a)] to [7(k)]) were joined as defendants in Suit 821 to facilitate the claims which Mr Salgaocar’s estate was pursuing against them. Winter Meadow Capital Inc (“Winter Meadow”), a BVI-incorporated company, was also joined as the second plaintiff alongside Mdm Lakshmi to allow Winter Meadow to pursue causes of action against Mr Darsan, specifically for an account from Mr Darsan of Winter Meadow’s assets and for an order for the delivery up or transfer of the books and records of Winter Meadow.¹⁴ However, the plaintiffs discontinued their claim against Mdm Jashma on 4 March 2019 and did not effect service of process on Ms Pooja.¹⁵

On appeal, Mr Darsan was the first appellant whilst 11 of the Singapore SPVs, in the order listed at [7(a)] to [7(k)] above, were the second to twelfth appellants. Mdm Lakshmi and Winter Meadow were the first and second respondents, respectively.

Background to the dispute

Given the fact-centric nature of this appeal, we think it appropriate to set out in some detail the facts leading up to and following the alleged December 2003 Agreement and the parties’ dispute. The background facts are largely undisputed.

The dispute was closely intertwined with Mr Salgaocar’s iron ore business. While Mr Salgaocar’s family had sold and exported iron ore primarily to buyers in Japan following the closure of the Suez Canal in 1967, Chinese demand for iron ore started to grow as a result of the large-scale construction of steel plants in China.¹⁶ As such, Mr Salgaocar started marketing iron ore into China in 2000.¹⁷

Following the incorporation of the BVI SPVs pursuant to the alleged December 2003 Agreement, the trade of iron ore into the Chinese market was structured as follows. SMI would sell the iron ore exclusively to five of the BVI SPVs above – ie, Ling Tao, Sino Ling Tao (BVI), GBA Minmetals, Cheermark and Joyking – on a “free on board” (“FOB”) basis.¹⁸ Following this purchase, the relevant BVI SPV would, through Trustworth Shipping, charter or arrange for a vessel to load the iron ore for shipment to China.¹⁹ These SPVs would then on-sell the iron ore on a spot basis to the Chinese market on a “cost and freight” (“CFR”) basis while the vessel was en route to China.²⁰ The last BVI-incorporated SPV, Eltina, purchased iron ore not from SMI but from one of Mr Salgaocar’s other companies in Swaziland for further sale to the Chinese market.²¹ These transactions were known as the “two-legged contracts”. These contracts proved to be hugely profitable and the BVI SPVs obtained large amounts of profits from them.²² These profits were allegedly used to fund the Singapore SPVs and enabled them to acquire vessels, shipping assets and real estate.²³

According to Mr Salgaocar, Mr Darsan acted as Mr Salgaocar’s nominee shareholder and/or director and trustee in respect of the BVI and Singapore SPVs and their assets but was not involved in their day-to-day trading operations.²⁴ Instead, Mr Salgaocar hired Mr Terence Kwan (“Mr Kwan”) and Ms Yuk Fang Chiang Mirrica (“Ms Chiang”) to do work relating to the BVI SPVs’ business and oversaw matters relating to the BVI SPVs himself.²⁵ Mr Darsan, however, alleged that he was the one who had employed Mr Kwan, Ms Chiang and Ms Esther Tam (“Ms Tam”), a clerical assistant, to manage the operations of his iron ore trading business.²⁶

As for the Singapore SPVs, Mr Salgaocar’s position was that he had caused various individuals (including Mr Darsan) to hold their shareholding and/or positions in the Singapore SPVs for the benefit of and on trust for himself. These individuals included Mr N G Prabhu and Mr Rohit Ramesh Mathrani (“Mr Rohit”). Mr Salgaocar claimed that all major decisions regarding the investments and/or asset purchases made by the Singapore SPVs were made by him.²⁷

In 2007, Mr Salgaocar arranged for Mr Darsan to become a director of and obtain a majority shareholding in Singapore Star Holdings. In 2009, the Singapore SPVs were restructured such that Singapore Star Holdings served as a main holding company.²⁸ This rendered Mr Darsan the sole or majority shareholder of the Singapore SPVs in name.²⁹

The Singapore SPVs made several notable investments: Around 2006 to 2007, Mr Salgaocar decided to develop a block of condominium apartments named “Newton Imperial”. He designated Great Newton Properties to be the developer of Newton Imperial. This project took place from January 2007 to April 2011.³⁰ Around June 2008, Mr Salgaocar decided to purchase 60 office units in WCEGA Tower. He designated Sino Noble to be the asset holding company. In January 2007, Mr Salgaocar decided to purchase 24 apartment units in a condominium development called “The Waterford Residence”. Capital Glory and Newton Noble were designated as the asset holding companies that acted as the registered owners of these apartments. Around the same time, Mr Salgaocar decided to purchase four apartment units in a condominium development, Residences@Evelyn. He used four Singapore SPVs as the asset holdings companies for these apartments: Albana Investments Pte Ltd, Cargills Investments Pte Ltd,...