Thakkar v Thakkar & Ors

Factual and Procedural Background

This opinion concerns a financial remedy application dated 27th June 2014 made by the Plaintiff against the Defendant. The preliminary issues relate to the terms on which the Defendant's mother and sister hold shares in Inspire Holdings Group Ltd and the extent of the Defendant's interest in Inspire Holdings Group Ltd, Mara Group Holdings Ltd (collectively referred to as "the Group"), and any underlying companies or assets.

The parties are members of the same family involved in a complex business structure primarily operating in Africa, with a history of migration from Uganda and subsequent establishment of multiple businesses and holding companies. The Defendant is the founder and public face of the Mara Group, described as a multi-sector conglomerate operating in numerous African countries.

The Plaintiff and Defendant were married in 2008 and later separated, with the Plaintiff filing for divorce in June 2014. The dispute arose concerning the beneficial ownership of the Group's shares, with particular focus on the roles of the Defendant's mother and sister as legal shareholders and whether they hold their shares as nominees or bare trustees for the Defendant.

The litigation includes extensive evidence, including affidavits, witness statements, and oral testimony from family members and company representatives. The Defendant's mother did not file evidence or attend court, and an adverse inference was invited to be drawn from her absence.

The court also considered complex offshore structures involving foundations and bearer shares, the impact of regulatory and "Know Your Client" (KYC) requirements, and alleged sham arrangements concerning share ownership.

Legal Issues Presented

1. On what terms do the Defendant's mother and sister hold the shares in Inspire Holdings Group Ltd?
2. What is the extent of the Defendant's beneficial interest in Inspire Holdings Group Ltd, Mara Group Holdings Ltd, and any underlying companies or assets?
3. Whether the 2012 corporate structure holding the Group's shares constitutes a sham.
4. Whether the Defendant's mother and sister hold shares as nominees or bare trustees for the Defendant.
5. Whether adverse inferences can be drawn from the absence of the Defendant's mother as a witness.

Arguments of the Parties

Plaintiff's Arguments

• The Defendant is the ultimate beneficial owner of the Mara Group despite legal ownership being held by his mother and sister.
• The Plaintiff contends that the Defendant led her to believe he was the beneficial owner and that the shares held by the mother and sister are held on trust or as nominees for the Defendant.
• The Plaintiff disputes the Defendant's claim that the 2012 shareholding structure is genuine and asserts that it may be a sham or artificial device to conceal true ownership.
• The Plaintiff invites the court to draw adverse inferences from the Defendant's mother's failure to provide evidence or attend court.

Defendant's Arguments

• The Defendant denies any beneficial interest in Inspire Holdings Group Ltd and asserts that the shares are legally and beneficially owned by his mother and sister.
• The Defendant and other family members contend that the 2012 structure was not a sham but a legitimate restructuring necessitated by regulatory and KYC requirements.
• The Defendant argues that any beneficial interest he holds is limited and that the shares held by his mother and sister reflect genuine ownership interests.
• Defendants rely on the legal principle that the Plaintiff must prove sham to succeed in challenging the shareholding structure.
• Defendant's counsel submits that the pleadings are vague and do not disclose a reasonable cause of action.

Second and Third Respondents' Arguments (Defendant's Mother and Sister)

• They deny the Plaintiff's claim and assert that the 2012 restructuring vested legal and beneficial ownership in them.
• The sister explained that her shareholding was concealed due to concerns about her husband's creditors, and that the arrangement was a family decision to protect assets.
• The mother did not participate in evidence but was represented by counsel who provided medical reasons for her absence.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by considering the burden and standard of proof, confirming that the Plaintiff must prove her assertions on the balance of probabilities. The court carefully examined allegations of dishonesty by witnesses, noting that a lie alone does not prove ownership but may be considered if no innocent explanation exists.

The court addressed the absence of the Defendant's mother as a witness and, after considering medical evidence and counsel submissions, found on balance that she likely avoided giving evidence to avoid lying, justifying an adverse inference.

The court analyzed the complex offshore foundation structures and holding companies, noting the lack of formal executed regulations for the initial foundation and the 2012 restructuring prompted by regulatory concerns, especially KYC requirements. It found that the restructuring was a legal transfer of title rather than a transfer of beneficial ownership.

The court rejected the Defendant's and family members' claims that the Defendant held shares on trust for his sister, finding this narrative inconsistent with the facts, including the sister's own business dealings and the absence of credible explanation for excluding the Defendant from beneficial ownership.

The court found that the Defendant was the entrepreneur and primary asset creator and controller of the Group and that the shares held by his mother and sister were held as nominees or bare trustees for him. It rejected the suggestion that the 2012 structure was a sham but found that the declaration to the BVI authorities that the mother and sister were beneficial owners was a sham document intended to mislead.

The court found that the Defendant's evidence was generally credible, whereas the evidence of the Defendant's sister and father was less reliable, and that the mother had chosen not to participate in the proceedings.

The court concluded that the Defendant holds 100% beneficial interest in the Group, with the mother and sister holding legal title as nominees or bare trustees.

Holding and Implications

Holding:

(a) The Defendant's mother and sister hold the shares in Inspire Holdings Group Ltd as nominee or bare trustees for the Defendant.

(b) The Defendant holds 100% beneficial interest in Inspire Holdings Group Ltd, Mara Group Holdings Ltd, and all underlying companies or assets.

Implications: The court's decision confirms the Defendant as the true beneficial owner of the Group despite legal title being held by family members. This ruling directly affects the parties' financial remedy proceedings by establishing the Defendant's ownership rights. The court did not establish any new precedent but applied established principles concerning nominee holdings, sham arrangements, and beneficial ownership in complex family and corporate contexts.