Simetra Global Assets Ltd & Anor v Ikon Finance Ltd & Ors

The evidence at the trial of this action presented a very confused and incomplete picture. I say that as a fact and not as a criticism of the legal teams involved.

Not all parties participated or participated fully. The Claimants (Simetra Global Assets Limited and Richcroft Investments Limited) were fully represented. So too were Ikon Finance Limited (“Ikon Finance”), Ikon Group Limited (a Hong Kong company), Ikon Atlantic Limited, Ikon Europe Limited and FTechnics Inc (“FTechnics”), with Mr Ersan Acun and Mr Engin Yikilmazoglu, (all together “the Ikon Defendants”). Mr Diwakar Jagannath, the Seventh Defendant, took some part, in person, including by giving evidence and providing written argument.

Defences of GStar FX Inc (“GStar”) and Mr George Daskaleas (“Mr Daskaleas”), the Fifth and Sixth Defendants, were struck out early in the proceedings. Simetra Management Limited (“Simetra Management”) and Richcroft Management Limited (“Richcroft Management”), the Tenth and Eleventh Defendants, have taken no part in the proceedings.

It is for me to do my best to make findings that will determine the position between the parties who did participate. I shall not address disputes of fact where in my judgment they lead nowhere in determining whether the Claimants are entitled to what they claim from those parties.

Richcroft Investments Limited, the Second Claimant, was incorporated in late 2012. Simetra Global Assets Limited, the First Claimant, was incorporated in July 2013.

The directors of the Claimants were respectively Richcroft Management with Richcroft Global Sponsor Limited, and Simetra Management with Simetra Global Sponsor Limited.

On the case advanced by the Claimants, Richcroft Management and Simetra Management were owned and controlled by Mr Daskaleas. Mr Litinas was the owner of Richcroft Global Sponsor and of Simetra Global Sponsor.

Mr Litinas gave evidence for the Claimants. A second witness called by Simetra Global Assets and Richcroft Investments was Maria Kitromilidou. I listened to their evidence closely at trial, and I have reviewed that evidence since. The truthfulness and quality of their evidence is of particular importance in this case.

In the case of Mr Litinas I have, as asked by the Claimants, made due allowance for the fact that he gave his evidence through an interpreter.

I found the evidence of Mr Litinas wholly unconvincing throughout.

One example was his evidence that, when a Mr Vozianov expressed concerns in 2014, he (Mr Litinas) had worked to bring about that expression of concern to put pressure on Mr Daskaleas. This was not the truth. I am also quite sure that his evidence to me about why the account he gave in a subsequent witness statement about contact with Mr Daskaleas was not included in his first witness statement was false evidence.

Mr Litinas was not frank when giving evidence on the subject of the ways in which the higher the figure claimed for the value of a fund the more he benefitted. Nor did he explain truthfully why he did not add to his own investment, when encouraging others to do so, if he really had the belief he asked the court to accept he had in the figures for trading and balances

I have more to say about his evidence and involvement below.

On the whole the evidence of Ms Kitromilidou did not assist one way or the other in finding the truth on the material points in this case.

This was partly because her role with the Claimants was simply administrative and she took no relevant decisions and had no responsibility to take relevant decisions. She explained her understanding of the role in which she was involved as “not to verify the result” but “just to calculate the net asset value based on the results produced to us and given to us by Mr Daskaleas, who was the investing manager and solely responsible for the trading …”.

However a further reason why the evidence of Ms Kitromilidou did not help me was because it was not, in my assessment, reliable. An example was her evidence by witness statement that the auditors to the Claimants, GMA, “periodically requested and received” confirmations from Ikon Finance (or other of the Ikon Defendants). This was incorrect, yet she persisted in that evidence at trial.

Her evidence was opportunistic. Below I set out correspondence from October 2014 about balances that featured centrally at trial. The contrast between the lack of attention to these in Ms Kitromilidou’s witness statement and her oral evidence at trial was marked. Mr Paul McGrath QC for the Ikon Defendants does not overstate things when submitting that “in her oral evidence she presented them as if they were so important that, without them, the funds might not have continued to operate”.

Again I have more to say about her evidence and involvement below.

I am satisfied from the documentary and oral evidence that Mr Jagannath had in all material respects the authority of a chief executive in relation to Ikon Finance, and for that matter all other of the Ikon Defendants that are companies.

The evidence of Mr Yikilmazoglu, for himself and the other Ikon Defendants, seeking to distance Mr Jagannath from authority of this breadth was not credible and I reject it. Mr Yikilmazoglu referred to Mr Jagannath as “our group CEO” on 4 February 2014, and there is other correspondence in similar terms. I also reject Mr Yikilmazoglu’s evidence seeking to distance FTechnics and Ikon Finance from what was termed the “Ikon Group” (of companies) when they were so described in the Group’s brochure and that brochure was made widely available.

Indeed on this aspect of Mr Jagannath’s authority I accept as accurate his own evidence in these terms:

“…you have to understand something. Ikon, the name was actually – I actually came up with the Ikon name, right? I actually registered the Ikon name in New York. My name, along with Mr Yikilmazoglu, was synonymous Ikon itself as a brand and an entity amongst the entire trading community. So it’s not as if it is some wild assertion of me as being the CEO of Ikon Group. Everyone understood that Engin [Yikilmazoglu] and I were the drivers of the Ikon brand and the Ikon companies … I was the face of Ikon …”

The business model for the Claimants was, in summary, as follows. Investors would purchase non-voting shares in one or other or both of the two companies. This would provide the two companies with additional funds, in addition to funds each already had.

The two Claimant companies would then make their funds available for forex trading. If the forex trading with the Claimants’ funds was successful the Claimants’ shareholders would expect a return on their investment in the Claimants.

The forex trading would be on trading platforms licensed by GStar (the Fifth Defendant) from FTechnics (an Ikon Defendant) under what was termed a “White Label Agreement”. Under this, on the Claimants’ case:

“… clients would trade on a “GStar” branded trading platform, and hold trading accounts with GStar, rather than an Ikon trading platform and holding accounts held with Ikon [Finance]”.

Mr Jagannath signed the White Label Agreement for FTechnics.

GStar had been incorporated in Belize in 2012 by Mr Daskaleas. The trading platforms were set up in early 2013, and initially US$ 20 million was transferred to them by PK Equity Investments Ltd (“PKI”).

PKI was a BVI company with funds under Mr Daskaleas’ control. The funds originated from investors in return for (in due course) shares. On the Claimants’ own case Mr Daskaleas was the sole beneficial owner of PKI, and controlled its sole director.

The individual who encouraged investors to purchase shares in the Claimants was Mr Litinas. He acquired shares himself too. He would additionally take a proportion of management fees tied to asserted increases in the value of the funds involved.

The Claimants were the latest in a line of companies involved by Mr Litinas and Mr Daskaleas in forex trading in line with the business model described at paragraphs 22 and 23 above.

The Claimants say they were victims deceived by a fraudulent scheme. The Claimants describe Mr Daskaleas as “the critical and central figure in all aspects of the fraudulent scheme”. However the Ikon Defendants and Mr Jagannath are alleged by the Claimants to have played a “vital supporting role” in the fraudulent scheme practised on the Claimants.

Mr Clive Freedman QC, appearing for the Claimants with Ms Josephine Higgs andMr Philip Aspin, described in opening what it was said happened in the early stages of Richcroft Investments Limited (the Second Claimant, and the first of the Claimants to be incorporated):

“… $3.7m had been transferred to Richcroft Experts’ [an LLP established by Mr Daskaleas] account … on GStar’s platform in May 2013. … Mr Daskaleas thereafter sent Richcroft [Investments]’s administrator, AMF Global, monthly statements for Richcroft [Investments] for this account … on GStar’s platform, purporting to show a consistently increasing balance as a result of the successful forex trading. It is now clear that these were fraudulent statements reflecting wholly fictitious balances and fictitious trading. These statements were believed to be genuine by AMF Global: using these statements, AMF Global calculated the NAV [net asset value] of the fund, and prepared monthly statements for the individual investors setting out the monthly profits.”

In earlier stages of this litigation the case advanced by the Claimants was that a total of US$202 million had been transferred to trading accounts in their name with GStar.

This large sum was said to be legacy funds from previous trading led by Mr Daskaleas, and before the Claimants were in existence or operational. The larger part of it was a sum of US$180 million.

The Claimants refer to instructions to Ikon Finance to transfer the sum of US$180 million but I am not satisfied that instructions were ever received by Ikon Finance. The Claimants say of a separate confirmation to AMF Global as the First Claimant’s administrator that US$180m had been deposited in an account in the First Claimant’s name on GStar’s platform that:

“[t]he mechanics of how Mr Daskaleas produced this statement are unclear, but it is now clear that it was a fraudulent document, and no such balance had been credited to this account.”

Following the alleged transfer, it was said, those large sums totalling US$202 million had been traded to produce large profits. The combined proceeds had then, it was said by the Claimants, been misappropriated by GStar and Mr Daskaleas with the assistance of Ikon Finance, Mr Jagannath and other of the Defendants.

In fact it is clear that the Claimants were not transferees of these large sums. This had become the Claimants’ own position by the time the trial opened.

Further it is clear to me that Mr Litinas and Ms Kitromilidou well knew throughout that nothing like US$202 million had been transferred. Neither could explain to my satisfaction how they or (through them) the Claimants could genuinely have believed this. Neither Mr Litinas nor Ms Kitromilidou took any material step to verify the position.

In fact it additionally suited Mr Litinas to leave undisturbed the fanciful idea that an original investment he had made of US$5.45 million was now somehow worth US$45 million after forex trading. This was an idea that he did not (I find) believe, but it suited him as it enabled him to excuse taking a percentage fee calculated on the asserted totals.

The case advanced by the Claimants now alleges that they were misled by false claims of large profits which were not in fact made.

As a result, it is said, each company continued to operate as an investment fund, accepting funds by way of investment and making payments out both to those who had invested in them and to Richcroft Management and Simetra Management (the Tenth and Eleventh Defendants, owned and controlled by Mr Daskaleas).

Trading activity is not alleged to have begun until 2014. According to the Claimants it was “by 21 May 2015” that “the reality emerged” that each “had barely traded”. In my judgment “the reality” was appreciated much earlier. Even Ms Kitromilidou said, on 3 October 2014, that:

“We cannot continue to pay dividends on unconfirmed results until the audit is completed … In the meantime no redemption must be made for any units, until the audit is complete.”

The unconfirmed results to which she was referring were from GStar, not Ikon Finance or other of the Ikon Defendants, or Mr Jagannath.

Ms Kitromilidou sought to present a picture in her evidence that she had throughout 2014 been pressing for balance confirmations from Ikon Finance in order to finalise 2013 accounts. I accept the contention of Mr Paul McGrath QC and Mr James Sheehan for the Ikon Defendants that the picture was a false picture. She had no material contact with the Ikon Defendants until May 2015.

Reference letters, of some generality, were provided by one or more of the Ikon Defendants and Mr Jagannath in late 2013 and mid 2014, in favour of Mr Daskaleas and GStar. It is entirely unclear whether and how these were in fact used. Importantly I do not consider they were provided with any dishonest intent, and I do not consider they had any relevant effect on anyone.

Across 2014 Mr Litinas, and at least some investors, were conscious that there was little or no visibility from GStar and that there needed to be but was not independent confirmation of the balances held on GStar’s platform. An audit was embarked on in mid 2014, with the engagement of Grant Thornton (Greece) by GStar. The information gathering was initially directed to GStar and Mr Daskaleas.

But from early October 2014 there was more specific correspondence that featured heavily at trial. I focus below on what I consider are the most material exchanges, which need to be read in some detail.

A letter dated 3 October 2014 from Mr Yikilmazoglu to GStar read:

“This letter is to confirm that the balances of following accounts as of October 3, 2014:

949258271

$278,859,639.00

949258272

$66.966.209.00

949258273

$24,841.991.00

This letter is provided upon request of the account holder.”

A letter dated 3 October 2014 from Konstantinos Venetis, a Chartered Accountant with Grant Thornton (Greece), addressed to Mr Daskaleas at GStar read:

“Dear Mr. Daskaleas,

You mandated us to provide our advice on the setting up of a modern system of corporate governance at GSTAR.

…

In the context of the above task undertaken by us, today 3/10/2014, we examined the software of the platform of your company in order to understand the way in which it operates and the possible risks in relation to trading issues. The information we received is deemed adequate for the purpose of our examination at this stage. We note that the operation of the platform will be scrutinised by our company’s experts as well, especially from the perspective of security of the information flow, completeness and accuracy of the transactional methods, the risks of violation of confidentiality, etc. Our audit will also be expanded to cover, among others, issues associated with: features of transactions that are conducted in the platform; recording of transactions; transparency and information to counterparties; requirements for cooperation with third parties who perform supplementary tasks; means of managing risks that the platform is exposed to and mechanisms in place for the detection of said risks; means for the management of the technical functions of its systems and selection of account operators; authorisation with regard to access to the platform.

Today, within the scope of studying the conclusion of transactions through the trading accounts, which are facilitated by the platform, among others, you demonstrated the software which facilitates trading and transactions. Additionally and in relation to the above, you displayed to us the activity of three distinct trading accounts. Indicatively, we recorded the outstanding balances that were displayed in the platform’s software at 13:56 EET in relation to the three trading accounts linked to codes 949258271, 949258272, 949258273.

The said balances were:

•

949258271: Balance 278.859.639$

•

949258272 Balance 66.966.209$

•

949258273 Balance 24.841.991$

At the time when the platform software was demonstrated to us, all the above

outstanding balances appeared to be finalised per trading account and no transactional activity appeared to be underway.

Currently, a verification procedure, directly from IKON Group, regarding the aforementioned balances has been initiated.

Within the scope of our mandate, we will address IKON Finance Limited in order to have a purpose-built questionnaire answered as per IKON Finance Limited internal control systems. The purpose of the above is to evaluate the competency of the said systems in relation to transparency issues, security of transactions and, generally, in relation to the safeguarding of both GSTAR FX INC’s and its clients’ interests.

Upon completion of our appointed project, a detailed report will be delivered to you and, subsequently, we will be in a position to regularly verify both the outstanding balances and the transactions related to accounts handled by GSTAR, for which we will be further mandated to audit and report.

The current letter addresses you for the purposes of your personal use and does not constitute a findings’ report, which will be drafted and delivered to you upon completion of our tasks.”

An undated letter from Mr Daskaleas at GStar to Mr Jagannath read:

“Within the scope of an internal audit procedure underway, GSTAR FX INC has appointed Grant Thornton to conduct an independent due diligence of itself in order to set up a modern system of corporate governance at GSTAR FX INC.

Against this background, we request from IKON Group to verify the accuracy of the information included in the attached document to the extent that IKON Group is involved. Finally, for efficiency purposes we request that you forward your response directly to Mr. Konstantinos Venetis, who is a Chartered Accountant and a Senior Partner at Grant Thornton Greece at the following address …”

A letter dated 17 October 2014 from Mr Jagannath to Mr Venetis at Grant Thornton Greece was signed by Mr Jagannath as “Chief Executive Officer” and on the headed paper of “Ikon”. It read:

“Dear Mr Venetis,

As a result of GSTAR FX INC’s written request addressed to IKON Finance Limited, dated 7 October 2014, we have been informed of Grant Thornton’s letter to GSTAR FX INC, dated 3 October 2014. To our understanding your letter was sent within the scope of an internal audit procedure of GSTAR FX INC, conducted by your firm. We have been requested by GSTAR FX INC to provide verification of information included in the abovementioned letter, to the extent that IKON Group was involved. We hereby confirm the contents thereof. In particular we inform you of the following:

a)

IKON Finance Limited is authorized and regulated by the Financial Conduct Authority (FCA). IKON Finance Limited has adopted an internal control system which lives up to requirements in relation to transparency, security of transactions and, generally, in relation to the safeguarding of both GSTAR FX INC’s and its clients’ interests.

b)

The outstanding balances in relation to the three trading accounts linked to codes 949258271, 949258272 and 949258273 on 3 October 2014 were:

•

949258271 Balance 278.859.639$

•

949258272 Balance 66.966.209$

•

949258273 Balance 24.841.991$

c)

The abovementioned under b, outstanding balances were finalised per trading account and no transactional activity was underway on 3 October 2014.

Further to the above, we remain at your disposal for any additional clarification regarding IKON Finance Limited internal control systems as well as any relative issues mentioned in your letter addressed to GSTAR FX INC dated 3 October 2014 especially from the perspective of security of the information flow, completeness and accuracy of the transactional methods, the risks of violation of confidentiality; features of transactions that are conducted in GSTAR FX INC’s platform; recording of transactions; transparency and information to counterparties; requirements for cooperation with third parties who perform supplementary tasks.

A letter dated 3 November 2014 to Mr Daskaleas from Mr Venetis read:

“Within the scope of our audit of GSTAR FX INC’s platform’s operation from the perspective of security of the information flow, completeness, accuracy of transactional methods and the risks of violation and confidentiality, we examined on 3/10/2014, the software of the said platform and recorded the outstanding balances that were displayed in the platform’s software at 13:56 EET in relation to the three trading accounts linked to codes 949258271, 949258272 and 949258273.

The said balances were:

a.

949258271: Balance 278.859.639$

b.

949258272 Balance 66.966.209$

c.

949258273 Balance 24.841.991$

At the time when the platform software was demonstrated to us, all the above outstanding balances appeared to be finalised per trading account and no transactional activity appeared to be underway.

Following up our audit we addressed IKON Group, which provides among other support services to GSTAR FX INC liquidity through IKON bank accounts, in order to receive an independent third party verification of the abovementioned findings of our investigation. Additionally we requested provision of information regarding the establishment of internal control systems by IKON Group in order for us to evaluate the competency of the said systems in relation to transparency issues, security of transactions and, generally, in relation to the safeguarding of both GSTAR FX INC’s and its clients’ interests.

Through a letter addressed to me personally by Mr Diwakar Jagannath, who is the Chief Executive Officer of IKON Finance Limited, dated 17/10/2014, IKON Group has verified both the existence of an internal control system and the abovementioned outstanding balances, which were recorded on 3/10/2014.

Following receipt of the above letter, we consider that given the standing and applicable operating procedures, the findings of 3/10/2014 in relation to the outstanding balances of trading accounts linked to codes 949258271, 949258272 and 949258273, as displayed in the platform’s software, have been sufficiently verified.

Upon completion of our appointed project, a detailed report will be delivered to you.

The current letter addresses you for the purposes of your personal use and does not constitute a findings’ report, which will be drafted and delivered to you upon completion of our tasks.”

On their face this correspondence showed and appeared to confirm substantial balances. However the correspondence was in fact concerned with what are known as “demo accounts”. And as the correspondence does make clear, its context was a project there described and to be completed with a report from Grant Thornton (Greece) to GStar.

“Demo accounts” are notional accounts used for test or trial purposes, and not actual accounts containing actual funds.

It is accepted by the Claimants, through Mr Clive Freedman QC, that demo accounts are commonly used in the industry (or were at the time).

On the evidence at trial, I find that each of Mr Daskaleas and Mr Jagannath knew that the accounts were demo accounts.

So too, I find, did Mr Venetis of Grant Thornton (Greece). Mr Venetis did not give evidence but I accept Mr Jagannath’s evidence as to the knowledge Mr Venetis acquired, including from a phone call between Mr Jagannath and Grant Thornton (Greece). Further, in the present case I do not consider that Mr Venetis would likely have been party to correspondence in these particular terms unless he understood the accounts to be demo accounts.

The parties adduced expert accounting evidence to attempt to assist in illuminating what Mr Venetis was doing in confirming balances on demo accounts. I intend no disrespect to the experts when I say that the evidence did not really assist on this factual point. It did help me to understand however that in the view of experts in the same area of professional endeavour it is not impossible that a confirmation could be legitimately produced when demonstration balances were concerned rather than actual balances. Mr Eastwood (called by the Claimants) indicated, understandably, how rare and unusual it would be.

Mr Engin Kuru, called by the Ikon Defendants, was alive to the dangers of correspondence that does not make clear on its face that the accounts referred to are demo accounts rather than actual accounts containing actual funds. He had written to Mr Jagannath:

“Let us speak about this before we confirm them the balances via email. These are demo accounts for GStar, I am not sure if we should confirm the balance of a demo account. If we think we should let us speak about from which email and what the wording will be.”

The danger presented by the correspondence was, most obviously, that it would, as it stood and if shown to a prospective purchaser of shares in the Claimants who was ignorant of the demo accounts, risk misleading that investor. These proceedings concern however a claim by the Claimants and not a claim by investors who were purchasers of shares in the Claimants.

In the present case, given the danger to which I have referred I do not consider it was appropriate that Mr Daskaleas, Mr Jagannath or Mr Venetis should play any part in bringing the correspondence into existence, even where (as is likely) the context here was one of an internal “systems audit” and not a financial audit. I appreciate this is a serious criticism of each, including of Mr Venetis as a senior professional from whom I have not heard evidence. It is however a criticism that goes to their want of care not their want of honesty.

The Claimants alleged that Mr Jagannath and the Ikon Defendants had a motive for dishonesty in that continuation of the business allowed them to make money on a parallel “risk fund”. I find that the “risk fund” was not a material consideration for Mr Jagannath and the Ikon Defendants. Mr Jagannath was however attracted by the possibility, even if remote, that very substantial flows of funds might move through the Ikon group of companies at some future point if they remained in good relation with Mr Daskaleas. But I find this consideration did not motivate Mr Jagannath to any dishonesty.

In opening the Claimants alleged that:

“Further investments were obtained from genuine investors on the back of the represented performance of the companies for whom Mr Daskaleas made the investments. These included investors who introduced sums of money to the Claimants totalling $13.9m in the case of [the First Claimant] and c. $5m in the case of [the Second Claimant].”

I heard no direct evidence from any investor other than Mr Litinas, and he did not add to his original investment which had begun in 2009, years before the incorporation of the Claimants, and predated the correspondence from October 2014. I do not have any confidence that any investor made any further investments “on the back of the represented performance” in the form of that correspondence, as opposed to what Mr Litinas may have asserted to them.

I do have considerable concern about a stage in January 2015 when Mr Daskaleas asked Mr Jagannath to arrange for a further copy of the letter dated 17 October 2014 to be signed. Mr Jagannath arranged for Mr Acun to do this, and to do so by going to the offices of Grant Thornton (Greece), taking his passport with him as proof of identity. Mr Daskaleas said at the point of this request that:

“This will open the doors to big Russian businessmen cause they care about the “volume” I am managing”.

I understand why the Claimants submit that the implication “was that Mr Daskaleas would be using this letter to mislead investors that he was in fact managing these volumes of monies”. I am still not persuaded that Mr Jagannath, or Mr Acun, appreciated that fact. On the facts their conduct was not dishonest by ordinary (objective) standards (as to those standards being the applicable standards see in particular Ivey v Gaming Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67 at [62] to [63]).

The Claimants also refer to correspondence in February and May 2015 but this I regard as immaterial at the time, and as throwing no light on earlier stages.

Mr Jagannath wrote as follows to Mr Daskaleas in May 2015:

“Is it something I don’t know … can you tell me what is going on … this admin lawyer is asking us where the demo money is? What is going on??? … George you have to tell me what this is about .., George you need to tell me what’s going on …”

I accept the submission of Mr McGrath QC that this is not the reaction of someone involved in a conspiracy with Mr Daskaleas. My assessment having seen Mr Jagannath is that it was dawning on him that he had been misused (“played”) by Mr Daskaleas.

Above all I wish to make it clear that having heard their evidence (and whatever any “big Russian businessmen” may have believed if they had been shown the re-signed letter dated 17 October 2014), I do not accept that either Mr Litinas or Ms Kitromilidou, and thus the Claimants, believed at any point that the actual balances were anything like the magnitude referred to in the correspondence set out above, or, for that matter, in interim financial statements that were finalised in late January 2015. Nothing like those sums had been transferred to the accounts and nothing like those sums could, in the circumstances of this case, credibly have been made from trading with sums that were transferred.

In fact, as Mr McGrath QC forcefully emphasised, the experts do not disagree that the Claimants received back more over the short period of their involvement than they actually transferred in.

In the circumstances the Claimants’ case must fail against the Ikon Defendants and Mr Jagannath.

The Claimants alleged the Ikon Defendants and Mr Jagannath were liable for dishonest assistance in breaches of alleged fiduciary duty, in deceit, and unlawful means conspiracy.

These allegations fail in every material respect. It suffices however to say that I find there was no dishonesty on the part of the Ikon Defendants or Mr Jagannath. I find there was no deceit by them, and nothing they did was relied on by the Claimants. And I find they were not conspirators with Mr Daskaleas or between themselves.

Indeed the Claimants, by Mr Litinas especially, have themselves much to answer for to those who may have invested at one time or another. The present trial has appeared to me little more than an elaborate and expensive, unmeritorious and now unsuccessful, attempt to throw off their responsibility onto the shoulders of the Ikon Defendants and Mr Jagannath.

A claim of a transaction defrauding creditors under section 423 of the Insolvency Act 1986 was also included by the Claimants. This too must fail, again in every material respect. It is again sufficient to deal with it shortly.

On 23 May 2016 and after these proceedings were on foot Ikon Finance resolved to return capital of US$5 million to Ikon Europe. The procedures under sections 642-643 of the Companies Act 1986 were used. The reduction in capital had been approved a year earlier and FCA approval had been obtained.

I have the greatest doubt that this was a “transaction” under section 423. In any event I accept that Ikon Finance regarded (then as now) these proceedings as misconceived, and that has proved to be the case. Moreover, the Claimants did not satisfy me on the evidence that the return of capital was for the purpose of putting assets beyond the reach of the Claimants or otherwise prejudicing the interest of the Claimants.