Dansingani & Anor v Canara Bank

Factual and Procedural Background

This appeal arises from an order of His Honour Judge Dight CBE dated 12 December 2020, granting judgment in favour of Company A ("the Bank") against Company B ("Siglo") and Defendant 1 in the sum of JPY 306,659,521, comprising principal and accrued interest. The Bank's claim against Company B concerned loans made pursuant to successive facility letters repayable on demand. The claim against Defendant 1 was under a guarantee of Company B's liabilities dated 27 May 1993. The Bank subsequently merged with another entity, which is the Respondent in this appeal.

The Bank also brought claims against Defendant 1's spouse, Defendant 2, on a guarantee she had given on the same date, and against both Defendants 1 and 2 for possession of their matrimonial home ("the House") pursuant to a mortgage dated 16 December 2008 ("the Mortgage"). The judge dismissed these claims on the basis that Defendant 2 had entered into the guarantee and mortgage as a result of undue influence exercised by Defendant 1, and that the Bank had failed to take reasonable steps to ensure there was no undue influence. Various counterclaims by Company B and Defendants 1 and 2 against the Bank were also dismissed.

The trial lasted 14 days between November 2016 and January 2017. The judgment was delivered in draft form on 29 November 2019, approximately 34 months after trial concluded.

The Appellants appealed on 11 grounds, primarily contending that the inordinate delay in delivering judgment constituted a procedural irregularity rendering the decisions unjust, and that the judge failed properly to analyse the evidence, rendering his findings unsafe. They sought a re-trial of the Bank's claims against them.

Company B was incorporated in 1991, engaged in importing, exporting, and distributing electronic entertainment goods, operating on a back-to-back trade model involving Japanese yen payments and US dollar receipts. Defendants 1 and 2 were directors and equal shareholders, with Defendant 1 as managing director. Defendant 2 had limited involvement in the business aside from signing documents at Defendant 1's request. Defendant 2's brother also held executive roles in Company B and lived with Defendants 1 and 2 in the House.

The Bank, a government part-owned undertaking, operated a London branch regulated by the Financial Conduct Authority, supervised by its Mumbai Head Office. Company B became a customer in 1993, providing security by a debenture, guarantees from Defendants 1 and 2, and a negative pledge over the House, which was subject to a first charge by another financial institution.

Company B was provided multi-currency credit facilities repayable on demand. From about 2003, Company B ceased purchasing goods in yen but maintained a significant yen debit balance. Financial difficulties arose in 2008 due to exchange rate movements and market downturns, leading to exceeded borrowing limits and requests for increased facilities. The Bank sought additional security via a second charge over the House, which Defendants 1 and 2 executed in December 2008 following a meeting with Bank representatives.

Company B’s deficit continued to grow, and in February 2009 the Bank failed to honour payment instructions for approximately 18 days. The Bank demanded repayment in July 2011 and made demands on Defendants 1 and 2 under the guarantees in August 2011, which were not complied with. Proceedings commenced in January 2012, with Company B later joined.

Legal Issues Presented

1. Whether the inordinate and inexcusable delay in delivering judgment constituted a procedural irregularity rendering the decisions unjust.
2. Whether the judge failed properly to analyse the evidence, resulting in unsafe findings of fact.
3. Whether the alleged oral assurances given by the Bank’s Chairman at the December 2008 meeting created binding obligations or representations invalidating the mortgage and guarantees.
4. Whether undue influence was exercised over Defendant 2 in relation to her guarantee and the mortgage.
5. Whether the Bank took reasonable steps to ensure no undue influence was exercised on Defendant 2.

Arguments of the Parties

Appellants' Arguments

• The delay of approximately 34 months in delivering judgment was inordinate, inexcusable, and amounted to a serious procedural irregularity undermining justice.
• The judge failed properly to analyse the evidence, particularly regarding the oral assurances allegedly given by the Bank’s Chairman, rendering findings unsafe.
• The judge was one-sided in his assessment of witnesses, favoring the Bank’s witnesses and failing to address important points raised by the Appellants.
• The Bank’s alleged oral assurances constituted open-ended commitments to support Company B, which were not honored, rendering the mortgage and guarantees unenforceable.
• The judge did not adequately consider the Bank’s motivations, including alleged attempts to conceal non-performing asset status from regulators.
• Requested a re-trial on the basis that the Court of Appeal could not substitute its own findings of fact.

Respondent's Arguments

• Delay in judgment, while regrettable, is not itself a ground for appeal and does not warrant overturning findings of fact.
• The judge conducted a thorough and detailed analysis of extensive documentary and oral evidence, applying appropriate legal principles.
• The alleged oral assurances were not given; the Bank’s support was conditional and limited in time, consistent with contemporaneous documents.
• The judge’s findings on witness credibility were well-founded, with Bank witnesses found honest and reliable, and Appellants’ witnesses found to have lied or been unreliable.
• The Bank took reasonable steps regarding Defendant 2’s guarantee and mortgage, and the claims based on undue influence were properly dismissed.
• The judgment was careful, detailed, and consistent with the evidence and legal principles, and the appeal should be dismissed.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court carefully examined the extensive factual and documentary evidence, including thousands of pages of documents and lengthy oral testimony, to resolve highly contested issues.

Central to the dispute was whether the Bank’s Chairman gave open-ended oral assurances at a December 2008 meeting that the Bank would support Company B indefinitely if Defendants 1 and 2 granted a second charge over the House, and whether subsequent formal documentation could be disregarded as mere formality. The judge found these alleged assurances were not made.

The Court accepted the judge’s detailed credibility assessments, which found the Bank’s witnesses honest and reliable, and the Appellants’ witnesses, particularly Defendant 1 and his brother-in-law, to be dishonest and unreliable, often lying both in correspondence and under oath.

The judge’s approach aligned with established principles for assessing oral evidence, notably testing recollections against contemporaneous documents and overall probabilities, as laid out in Gestmin and The Ocean Frost.

The Court found that the Bank’s conduct was consistent with conditional, limited short-term support, as reflected in documentary records and witness evidence, rather than open-ended commitments. The Bank’s internal communications and negotiations with Company B demonstrated genuine commercial dealings rather than sham or deceit.

The judge also found that Defendant 2’s guarantee and mortgage were entered into under undue influence by Defendant 1, and that the Bank failed to take reasonable steps to ensure Defendant 2 understood the risks, justifying dismissal of claims against her.

Regarding the delay in judgment delivery, the Court acknowledged the unacceptable length of delay and the formal admonishment of the trial judge for misconduct, but emphasized that delay alone does not constitute grounds for overturning findings of fact or judgment.

In addressing the Appellants’ complaints that the judge failed to properly analyse evidence or was one-sided, the Court found that the judge had addressed the principal issues, carefully scrutinized witness evidence, and provided clear reasons for accepting or rejecting testimony.

The Court rejected arguments that the judge ignored the Bank’s motivations, including alleged regulatory concealment, finding no evidential basis for conspiracy or improper conduct by the Bank.

Overall, the Court concluded that the judge’s findings were well-founded, supported by evidence, and consistent with legal principles, and that the appeal lacked merit.

Holding and Implications

The Court DISMISSED the appeal.

The judgment confirms that inordinate delay in delivering a judgment, while serious and subject to judicial discipline, does not alone justify overturning findings of fact or substantive decisions absent other grounds. The Court upheld the trial judge’s detailed factual findings, including rejection of alleged oral assurances and affirmance of the Bank’s rights under the guarantees and mortgage, save for the claims relating to Defendant 2 where undue influence was found. No new legal precedent was established; the decision directly affects the parties by affirming the Bank’s entitlement to repayment and rejecting the Appellants’ challenges.