Case No: HQO2XO3960 and
Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
MR JUSTICE NEWMAN
Between :
THE MAYOR AND BURGESSES OF THE LONDON BOROUGH OF TOWERHAMLETS | Claimant |
- and - | |
(1) BASIL BHARAT CHAVDA (2) DULCIE DRUSCILLA JOSEPH (3) CINDY JOSEPH CHAVDA | Defendants |
Ashley Underwood QC and Adrian Davis(instructed byEdwin Coe) for the Claimant
Harry Hodgkin (instructed by LHP Law) for the first and third defendants
The second defendant appeared in person
Hearing dates: 4th, 5th, 6th, 7th, 11th, 12th, 13th and 15th July 2005
Judgment
Mr Justice NEWMAN :
Introduction
The Asylum and Immigration Act 1996 abolished the entitlement of asylum seekers to receive state benefits irrespective of their immigration status. The change in the law resulted in asylum seekers being without food and accommodation and liable to starvation and illness on the streets. This state of affairs led the Court of Appeal in the case of M v Hammersmith and Fulham [1998] 30 HLR 10 to rule that their circumstances could fall within the duties owed by local authorities under section 21 of the National Assistance Act 1948.
As the number of asylum seekers increased the burden which fell upon local authorities became very onerous. That said, the provisions of section 21 to 24 of the 1948 Act do not give rise to an automatic duty to provide food and accommodation; whether or not a duty is owed is a matter requiring assessment. The London Borough of TowerHamlets (“TowerHamlets”) constructed a scheme for identifying and assessing those asylum seekers to whom it owed a duty under section 21 and 24 of the 1948 Act. The procedures were reduced to writing and they were approved by the TowerHamlets internal audit team. The written procedure, which had to be followed at all times, was circulated to the relevant officers and an application form and draft letters were prepared for use in the implementation of the scheme.
The important components of the procedure included that:
The prospective service user was required to attend the office, in order for the assessment to be carried out;
The duty social worker had to establish the source of the referral and whether the applicant had a connection with TowerHamlets;
The duty social worker had to check the applicant’s SAL1, SAL2, IS96 and any other documentation in this connection;
The duty social worker had to ensure that the applicant produced a letter of eviction, dated and signed;
The duty social worker had to obtain a referral letter from the applicant’s solicitor with a photograph of the applicant and the solicitor’s seal;
The duty social worker had to obtain a DSS refusal letter;
The duty social worker had to ascertain whether care and attention was available to the applicant elsewhere;
The duty social worker had to consult the team manager for agreement as to whether the applicant was to be accommodated;
The team manager had to check the relevant documentation;
The duty manager was responsible for ensuring that all asylum seekers were re-assessed on a fortnightly basis.
The application had to be signed and dated by the applicant, the assessment officer and the reviewing officer. From July 1999, in circumstances to which I shall come, the reviewing officer and manager of the asylum seekers team was Dulcie Joseph.
The application form contained provision:
for the details of the “nuclear family composition”;
other addresses where the applicant had lived in the United Kingdom;
the date of the asylum claim;
the address at the time of the asylum claim; and
for the documents which had been seen, with a requirement to place copies on the file and to stamp the originals so that they could not be re-used.
Form SAL1 is an acknowledgement of a claim for asylum made at port; form SAL2 is an acknowledgement of a claim for asylum made after entry and form IS96 is a notification of temporary admission. These documents, along with the DSS benefits refusal letter and the eviction letter, were to be kept on file.
Dulcie Joseph began working for TowerHamlets on 1st August 1998. She had a background in social work. In addition, between 1982 and 2001, she was a magistrate. She was plainly a very competent, experienced manager in the field of social work and local authority care. For some years shortly before she joined TowerHamlets, she had helped the husband of her cousin, the defendant Mr Basil Chavda, to establish and run a care home in Birmingham. She carried out this work whilst living in London. She has appeared in person at this trial. As a result, I have had ample time to assess her character and abilities. I agree with her colleagues who have assessed her as generally very able, as a very competent manager and, at times, very authoritarian, but capable of exhibiting charm and, according to her mood, being very friendly. These attributes combined to make her manipulative. She has conducted her case with courtesy, with considerable insight into the factual issues which the case involves and with the same combination of charm and deliberate forcefulness, which I have concluded marked her time as the manager of the asylum seekers team. Regrettably, I must also record that she has not been truthful. She was repeatedly evasive when giving her evidence, sometimes even when the answer which was called for was obvious and not prejudicial.
The care home in Birmingham which she established was part of the business of a company called Tivity Homes Limited (“Tivity”). Both she and Basil Chavda were directors. She was still a director when she commenced her employment with TowerHamlets. At the time she authorised the first asylum seekers to be accommodated in Tivity accommodation, on 19th July 1999 and thereafter until 31st August 1999, she remained a director of Tivity. She did not inform TowerHamlets of her directorship.
The essential facts underlying the claim by TowerHamlets
When Dulcie Joseph joined TowerHamlets she joined the homeless social work team. The team was the responsibility of the Social Services Department and the members of the team reported to Yvonne Doyle. The demands in connection with accommodating asylum seekers led TowerHamlets to transfer the functions of the homeless social work team and its role with asylum seekers from Social Services to the Housing Directorate.
As part of this, Yvonne Doyle transferred to the Housing Department and she was the team manager for the social workers until she left in July 1999.
Shortly after the transfer in April 1998, in about July 1998, the homeless social work team was split into two separate teams, namely the homelessness team and the asylum seekers team. Dulcie Joseph was appointed manager of the homelessness team and Tony Greenwood was made manager of the asylum seekers team, both having as their line manager Yvonne Doyle. It is pertinent to note that Dulcie Joseph was part of the homelessness team in December 1998 because there is evidence that she and Yvonne Doyle visited Basil Chavda in that month.
But in or about February 1999 Tony Greenwood and Dulcie Joseph swapped roles and she became the manager of the asylum seekers team. In about July 1999 Yvonne Doyle left in order to take up a secondment with a project of the Association of Local Government. She was not replaced and her responsibilities were divided between the two team managers, Dulcie Joseph and Tony Greenwood, who reported directly to Colin Cormack, the Head of the Housing Division.
Basil Chavda
As well as his business interests conducted through Tivity, Basil Chavda was also a director of a company called Bayhill Limited. In August 1999 he was being pursued by the liquidators of Bayhill, and this pursuit eventually led to him being disqualified as a director for a period of nine years. As a result of this, he decided to set up a new business entity called De Ville, an unincorporated trading organisation in the name of his wife, Cindy Joseph-Chavda, but in respect of which he was the effective proprietor. He was, it is said, the principal of the business, which was purported to be operated by his wife.
After the formation of De Ville, TowerHamlets made a considerable number of placements of asylum seekers with De Ville. In 2001 Basil Chavda incorporated the business in the name of Abbey Homes (UK) Limited (“Abbey”). The total sum paid to De Ville (Abbey) was £3,991,263.90. Of that sum, £3,468,470 was paid on the express authority of Dulcie Joseph. TowerHamlets allege that the placements were made corruptly by Dulcie Joseph and as part of a fraudulent conspiracy between her and Basil Chavda. Placements made between July 1999 and April 2000 were purportedly made by TowerHamlets pursuant to its policy to disperse asylum seekers out of London. In April 2000 the law changed.
The change in the law
By 1999 it was obvious that the burden in connection with the accommodation and support of asylum seekers being discharged by local governments was unduly heavy and demanding. The Immigration and Asylum Act 1999 was passed with a provision for central government to resume its obligations towards asylum seekers. In brief, the following changes were implemented. Section 95 permitted the Secretary of State to arrange for the provision for support for asylum seekers. As from 3rd April 2000 destitute new asylum seekers who made their claims on entry could not be accommodated by local authorities, but they became the responsibility of the National Asylum Support Service (NASS). The Act did include provision for interim support. The regulations imposed a requirement to provide support on local authorities (regulation 3). Under the regulations, local authorities had to refuse support where an applicant had made a claim for support under the interim provisions to another local authority, or where he had made an application under section 21 of the 1948 Act in the previous twelve months.
As of 24th July 2000 destitute new asylum seekers who made their claims “in country” could not be accommodated by local authorities, but were the responsibility of NASS. As of 25th September 2000 all asylum seekers whose claims had been refused and had been accommodated by local authorities became the responsibility of NASS. As a result, local authorities, including TowerHamlets, did not have a power or a duty to provide support for asylum seekers save in very limited circumstances. In particular, it left a residual duty to provide support for the spouse or partner of an asylum seeker and close family. The latter arose in part by reason of the engagement of Article 8 of the ECHR.
This change in the law should have meant that TowerHamlets accommodated fewer asylum seekers than they had in the past. It was not until August 2001 when it was realised that this was not the case. Information was given to TowerHamlets by NASS, which information has proved to be correct, that TowerHamlets continued to assume responsibility for many new claimants who were the responsibility of NASS and for whom there was no legal duty or responsibility which fell upon TowerHamlets. Examination of the records which have been made reveal that, as opposed to a fall off in numbers after July 2000, there was an increase. This information made available by NASS and investigations which were then conducted by the authority’s internal audit section led to the Metropolitan Police Fraud Squad being involved and the authority stopped making payments to De Ville and Tivity.
The Proceedings
These proceedings were commenced when Abbey, as claimant, sought to recover £827,158.50 and interest from TowerHamlets. The claim was issued on 23rd August 2002. By an amended defence and Part 20 claim, TowerHamlets joined Abbey trading as De Ville, Basil Chavda, Dulcie Joseph, Tivity and Cindy Joseph-Chavda as defendants. Included in the pleading were the following allegations:
that all payments made to Abbey, Tivity and De Ville were made under contracts which were ultra vires and that the sums were, therefore, irrecoverable. Further, it was pleaded:
“Joseph, Chavda, Tivity, and Joseph-Chavda and Abbey Homes conspired to enter into the arrangements by which the defendant purported to be liable to the claimant, Tivity and De Ville, for the accommodation of asylum seekers. Chavda, Joseph-Chavda and the claimant [Abbey Homes Limited] paid bribes to her in order to secure that she arrange for the defendant to assume those liabilities. The best particulars of the bribes that the defendant is able to give prior to full disclosure or an account is that £50,000 was paid to her or her order as set out in the schedule attached to this pleading marked ‘A’”.
that Dulcie Joseph had acted in breach of the implied term of good faith in her employment contract.
that the claimant, Abbey, knew that she was acting in breach of her contract because it bribed her and because it completed the standard forms which were sent to her.
Conspiracy – the legal principles
It has been common ground that the case of Kuwait Oil Tanker Company SAK & Anor v Al Barder & Others [2000] 2 All ER (Comm) 271 sets out the principles governing this case. Of the two types of actionable conspiracy referred to by the Court of Appeal, TowerHamlets allege a conspiracy to injure by unlawful means. As a result, before finding the claim proved, the court must be satisfied that the defendants intended to injure the claimant, but injury to the claimant need not have been the predominant purpose. The claimant must prove that it has suffered loss or damage as a result of the unlawful action taken pursuant to the conspiracy. It is not necessary to show that there is anything in the nature of an express agreement, whether formal or informal. It is sufficient if two or more persons combine with a common intention or, in other words, that they deliberately combine, albeit tacitly, to achieve a common end. The task of the court is to scrutinise the acts which are relied upon to see what inferences can be drawn as to the existence or otherwise of the alleged conspiracy.
I remind myself that the burden of proof rests on TowerHamlets and that, although the standard of proof in this case is the same as that which applies in all civil proceedings, namely proof on the balance of probabilities, the court should require cogent evidence commensurate with the seriousness of the allegation before it considers itself justified in finding the case proved.
The essence of the conspiracy allegation
The change in the law meant that applicants were rejected by TowerHamlets and referred to NASS after 24th July 2000. This led to an almost total cessation of placements by TowerHamlets with Tivity in Birmingham. Payments by Tivity to Dulcie Joseph commenced in December 1999. By July 2000 she had received six payments totalling £12,200. Her son, Keith, had received two payments totalling £6,200. The total of £18,400, is, but for £100, an amount which Dulcie Joseph and Basil Chavda maintain was loaned by the former to the latter some years before 2000. TowerHamlets submit that the conspiracy was formed in 1999, alternatively, at the latest, in or about July 2000 after the change in the law.
It is alleged that, in order to maintain placements, Dulcie Joseph, in co-operation with Basil Chavda, gave up implementing the internal procedures and requirements for assessment which had been established and, to that date, fulfilled. In particular, the assessments were not made by social workers. She abandoned the need for significant parts of the forms to be filled out as well as the need for the accompanying documentation. Instead, Dulcie Joseph supplied Basil Chavda with blank application forms and left it to him (or someone on his behalf) to fill out the forms. De Ville opened a dedicated office in Smethwick to enable Basil Chavda to entertain applications from asylum seekers who were already being accommodated by NASS, but who preferred to live in the Midlands. There has been insufficient evidence to conclude with any certainty how the NASS asylum seekers were “poached”, but they came in such numbers that Basil Chavda operated a waiting list for them. When an asylum seeker came to the top of the waiting list, Basil Chavda would have the asylum seeker sign an application form and he or his assistant would complete parts of the form. The asylum seeker would then be accommodated immediately at Basil Chavda’s expense, although he waited, in general, weeks before he was paid by TowerHamlets. He was always paid.
The application form would be despatched to TowerHamlets by post or fax. When received, Dulcie Joseph wrote what purported to be social worker assessments in response to those forms. Typically those assessments would say that the applicant was a destitute asylum seeker wishing to join relatives in the Midlands. No evidence of the family relationship was available: invariably it would state “cousin”. No original documents were seen. No evidence of destitution was seen. No evidence of eviction was seen. No evidence of a connection with TowerHamlets was seen. No evidence of a referral was seen. Commonly there was evidence that the applicant was already being supported by NASS up to the point in time when De Ville decided to accommodate the asylum seeker.
Following upon the assessments made by Dulcie Joseph, the administrative staff at TowerHamlets drew up the booking letters which provided for payments to be backdated to the date upon which De Ville first accommodated the applicant. On the express instructions of Dulcie Joseph, the requirement that all incoming documents should be date stamped was not applied to the application forms. Thereafter, a social worker was allocated, but his or her role was strictly circumscribed by a new direction issued in writing by Dulcie Joseph. It was no part of the social worker’s function to question or confirm the assessment performed by Dulcie Joseph. It was a rubber-stamping exercise.
It can be noted that the substance of these allegations was not in dispute. She supplied the forms in blank. Mr Chavda (or an assistant) filled out the forms. She authorised them. TowerHamlets paid for accommodation which was provided to asylum seekers to whom it owed no duty.
The essence of the case for TowerHamlets is that this arrangement was so manifestly in breach of the applicable internal procedures, which were known to Dulcie Joseph and so far outside that which any businessman, like Basil Chavda, would engage in without prior arrangement, giving him the confidence he would be paid, that it gives rise to the irresistible inference that the two of them had come to an agreement that Dulcie Joseph would secure the authorisation of any asylum seeker Basil Chavda chose to accommodate and ensure that payment by TowerHamlets was made to Tivity.
TowerHamlets, with justification, rely upon the pleaded case for Abbey. The claim was for £680,986.85 for accommodation provided in pursuance of booking letters. It was also for a sum of £177,195.59 for clients without booking letters. There is force in the suggestion that Mr Chavda must have instructed solicitors that there was an agreement for payment even where there was no booking letter.
Mr Chavda’s role
The first placement with Tivity was in July 1999. Mr Chavda’s case is that this placement and those which ensured thereafter were made pursuant to an agreement he had reached with TowerHamlets, not through Dulcie Joseph, but through Yvonne Doyle who, until July 1999, was the manager in charge of the homelessness social work team. He relies upon a letter dated 15th July 1999, apparently signed by Yvonne Doyle, notifying him that “… we will be placing Asylum Seekers at the property shortly” and specifying the rates which would be paid. More than that, he submits there is a letter dated 24th November 1998 written to him by Yvonne Doyle offering his services “for Homeless persons and Asylum Seekers” and suggesting that she visit Birmingham to see the accommodation. It is said his contact with TowerHamlets was routine because he was inviting business from other London Boroughs as well.
It will be necessary for me to examine other evidence in connection with the date on which Yvonne Doyle and Dulcie Joseph met Basil Chavda. The detail apart, in my view, it is unlikely that he made contact with TowerHamlets in ignorance that Dulcie Joseph was employed by the borough. Had it been a coincidence, she would certainly have become aware of his approach. Ms Doyle had no recollection of the letter dated 24th November 1998 and denied writing the letter dated 15th July 1999. I shall return to comment on her evidence.
There being a lawful agreement in existence in 1998, it is submitted there is no evidence that, so far as Mr Chavda was concerned, the position changed. It should not be concluded that he understood the changes in the law. There was nothing secretive about his behaviour and he was entitled to (and did) assume all relevant persons at TowerHamlets were aware of the way in which the paperwork was being done after July 2000. A course of dealing arose which resulted in payment and he relied upon that course of dealing, not upon a fraudulent conspiracy when accommodating asylum seekers without receiving authority or payment.
Mr Chavda did not need to understand the law. He must have realised the consequence of the change and could not have taken up the task of interviewing asylum seekers and filling out the forms without an explanation of some sort. As an intelligent businessman, he must have realised that the forms could not properly be filled out by him. He was not filling out large sections. He must have known they had to be signed by the social worker and that documentation had to be supplied. In my judgment, he knew enough to realise that there was no need for TowerHamlets to pay for asylum seekers already supported by NASS. He made payments to Dulcie Joseph out of the money he received from TowerHamlets. He made those payments in order to maintain the flow of business. For reasons which will appear later, they were bribes and not the repayment of a debt.
The arrangement was manifestly dishonest. Further, in support of the case for dishonesty on the part of Dulcie Joseph, it is said she did not disclose her personal and close relationship with Basil Chavda. She did not disclose that she was a director of Tivity and had been a director since 7th July 1994. She only ceased to be a director on 31st August 1999. She did not reveal that Basil Chavda was married to her first cousin and that there had been a childhood and family relationship between them in Trinidad. The payments, in excess of £50,000, were kept secret. It has been an essential part of Dulcie Joseph’s defence that those sums were paid by way of discharge of an outstanding debt from Basil Chavda to her. But the existence of such a debt and the payments in discharge were not revealed. I have concluded that the payments were bribes. It follows they were dishonestly made and received and that Dulcie Joseph and Basil Chavda have forged documents and lied to the court in an attempt to show that there was an outstanding debt in excess of £50,000 between them.
The court has received voluminous evidence from persons who worked for TowerHamlets, including Susan Nelhans McDonald. They were impressive and honest witnesses. Susan Nelhans McDonald became concerned about the way in which asylum seekers were being placed in Birmingham. It was obvious to Megan Rainey, another witness, that by early 2001 the checks and balances which had originally been in place had all gone. Clients were being accepted on behalf of TowerHamlets in contradiction of previously agreed policy and procedure. She spoke to Dulcie Joseph as a result, but she was told that Colin Cormack had said that it was all right. Susan Nelhans McDonald realised that asylum seekers were being given a package of support without having been assessed by a social worker. She said:
“There were envelopes full of applications coming in daily. I considered this whole process to be wrong and I asked Dulcie Joseph about it. She told me not to worry about it and to continue processing the application forms as they were received.”
TowerHamlets allege and I accept that Dulcie Joseph managed to control and limit the consequences of what she was doing by the exercise of her personality. She controlled subordinate staff by the exercise of authority and, where necessary, a measure of intimidation. Many of the staff were on short-term contracts and felt vulnerable. For example, Susan Nelhans McDonald records:
“The files that we made up were sometimes forwarded to Dulcie Joseph, but often we were instructed to file them away, and sometimes she would write in them, often retrospectively, something along the lines that the family needed relocation in Birmingham. I was concerned about how she could possibly know this. As far as I was aware, she never saw these people … by now I was finding Dulcie Joseph to be unapproachable and intimidating. I accept that this is why it went on for so long. There was an unpleasant atmosphere in the section, and I think that because staff felt intimidated and threatened, they just kept quiet. That was certainly the case with me.”
Conclusion on the conspiracy allegation
In my judgment, the evidence of the existence of a conspiracy between Dulcie Joseph and Basil Chavda to the effect alleged is overwhelming. Dulcie Joseph and Basil Chavda intended to injure TowerHamlets by imposing upon it a liability in respect of asylum seekers which, but for their actions, would not have been undertaken and accepted by TowerHamlets. They did so in order to acquire a benefit from the proceeds. Basil Chavda was to benefit from millions of pounds in revenue paid to his business entities and Dulcie Joseph received substantial sums of money.
As I have said, the fact that blank application forms were supplied to Basil Chavda to enable him to fill out the forms on behalf of asylum seekers was not in dispute. The existence of procedures and criteria for assessment and their continuing application was not in dispute. Indeed, Dulcie Joseph herself drafted a fresh written procedure in October 2000 which, so far as it referred to family and friends, only permitted an asylum seeker to be accommodated by TowerHamlets if: (a) he could prove that he was connected in a relevant way to a person already being accommodated by TowerHamlets, and (b) he was referred by NASS or the Refugee Council. Despite being the author of this guidance, Dulcie Joseph authorised payments in respect of asylum seekers where there was no proof that the asylum seekers arriving in Birmingham were connected in any relevant way to a person already accommodated by TowerHamlets and where there had been no reference by NASS or the Refugee Council. She did it repeatedly. Her only answer or explanation for these flagrant breaches of the internal procedures for which she was responsible and to which she had contributed was that she thought it would save money for TowerHamlets in paying train fares for asylum seekers to come to London or for social workers from TowerHamlets to travel to Birmingham. This thoroughly inadequate explanation for her behaviour, which she could not possibly have believed, justified her actions and the fact that she advanced it confirmed dishonesty on her part.
Her explanation that she had received in excess of £50,000, not as bribes but as repayment of a debt due to her from Mr Chavda, had it been true, which it was not, provided no answer to the unlawful nature of her conduct, but she obviously thought it did, as did Basil Chavda. Had it been true, it would simply have meant that she had acquired the benefit through the abuse of her office and as a fraud upon her employers because she secured the repayment of a debt which was long outstanding. It was accepted, indeed asserted, that the money was paid out of the proceeds which Mr Basil Chavda received from TowerHamlets.
The alleged debt owed from Mr Chavda to Dulcie Joseph
There is some evidence, other than evidence emanating from Dulcie Joseph and Basil Chavda, that when they parted company over the management of the care home in Birmingham, there may have been a degree of animosity existing between them. It is not powerful and may well have resulted from self-serving statements made to the witnesses. But even if she was owed some money, it is impossible to determine how much and I am more than satisfied it was not a debt amounting to anything like £50,000. On her own evidence, the figures have varied. She did not inform anybody at TowerHamlets that she was owed money nor did she inform anybody about the receipt of money. Some of her colleagues gave evidence about how censorious she was with them about the receipt of anything, even the purchase of a lunch, from a service provider. She even cross-examined in order to discredit a witness by suggesting the witness had enjoyed lunch at another’s expense. It is clear she must have known that she had a duty to disclose the payments.
The payments commenced at the time when referrals commenced and they continued until TowerHamlets stopped paying. On her own evidence, payments began because Basil Chavda said “He is making a bit of money now”.
Despite the fact that the payments ceased simply because NASS informed TowerHamlets of its belief that payments were being made for asylum seekers who were not the responsibility of TowerHamlets but the responsibility of NASS, it has never been suggested that the amount which was owed by Basil Chavda was any more than the total which was paid until that event intervened. With that in mind, it is necessary to consider the documents signed by Basil Chavda and Dulcie Joseph, which purport to record the amount of the debt and a subsequent agreement between them for its discharge.
There is a letter, which purports to be dated 6th December 1996, signed by Dulcie Joseph addressed to Basil Chavda which records:
“Reference monies owed
I have calculated that you still owe me approximately £62,000 for Consultation fees, formulation of Policies and Procedures, research which I conducted for you, as well as the loan of £18,500.
I hope you would settle this as soon as possible.
If I do not hear from you within 28 days, I will seriously consider consulting a Solicitor with the intention of seeking payment through the Court.
Hope to hear from you urgently”.
There is no evidence of any prior written request for payment. No evidence that she had claimed consultation fees at the time the fees were incurred. No evidence as to when the loan of £18,500 was made. Simply this letter which threatens solicitors being involved within 28 days. It is not clear from the letter whether the sum of £62,000 includes the sum of £18,500 by way of loan or not. There is no evidence as to how the calculation of £62,000 was made.
The purported settlement of the claim beggars belief. By a letter purporting to be dated 13th January 1997, signed by Basil Chavda and Dulcie Joseph, the parties apparently reached the following agreement:
“Further to our meeting of 10January 1997 and those previously, regarding a claim against me for loss of earnings and damages, I confirm that I will agree to pay you the sum of £45,000, as detailed on attached schedule, on conditions as follows:
1. That you will not proceed with any legal action regarding this issue.
2. Accept the above amount as full and final settlement and you will not make further claim against me regarding this issue.
3. I can pay you at my whim (i.e. whenever I am in financial position to afford this payment) and to have an open ended arrangement to suit my situation.
4. There will be no interest charged, payable or accrued.
5. That you will be responsible for any tax implications that may arise on receipt of this funds.
I hope this agreement will in line with our discussions on Friday and if you are satisfied with it please sign and return second duplicate copy for my file”.
The attached schedule listed details:
“Loan advanced to B.B. Chavda 18,500.00
Interest Due to 31 December 1996 4,500.00
Research Fees in respect Childrens
Home (as per your invoice) 7,000.00
Compilation of Procedures and Policy
for above (as per your invoice) 12,000.00
Travel Expenses incurred
from 08.10.95 to 31.12.96 3,200.00
TOTAL AMOUNT CLAIMED 45,200.00”
These arrangements purported to confirm, but for no reason that has been forthcoming, that Dulcie Joseph agreed to accept £45,200 in discharge of a debt amounting to at least £62,000. Having threatened to seek payment through the court, she gave up her right to go to law and, in return, received no satisfaction that she would ever be paid. In return for a legal right to claim a sum, she accepted the whim of Mr Chavda to pay her a lesser sum. The invoices referred to in the schedule were not in evidence and nobody could speak as to their existence. The need to include a reference to payment, according to a “whim”, was obviously driven by the unsystematic method and size of the payments by way of bribes.
I am satisfied these documents were forged by Dulcie Joseph and Basil Chavda with a view to giving the impression that the debt corresponded with the amount of money which had been paid as bribes. Something which they could have only have known in 2001 when the payments ceased because of the intervention by NASS. There is no evidence that anyone had kept track of the amounts that had been paid, if they had been paid in discharge of a debt. And one is left with the startling co-incidence that discharge of the debt actually coincided with the time when TowerHamlets ceased making payments to De Ville. There are no originals available of the letter, the signed agreement or the schedule.
Dulcie Joseph’s evidence in connection with these documents was entirely unsatisfactory. She blamed the absence of originals upon the police. DS Bright, who gave evidence before me, stated that he wanted the originals in order to check their authenticity, but had not been able to carry out any investigations because he did not have them. There was no coherent explanation for the absence of the invoices. The explanations advanced for the way in which the sums claimed were calculated and the sums agreed were formulated made no sense. Dulcie Joseph variously contended that she was entitled to an agreed salary of £36,000 and to an estimated salary of £48,000 per annum, yet the claim does not relate to either sum and is, instead, for consultancy work and not salary. Dulcie Joseph lied to DS Bright when she was first interviewed. She denied receiving any payments from De Ville. By the time she was next interviewed she had created the story about a debt. Basil Chavda in fact recorded the payments to Dulcie Joseph on a spreadsheet where they were denoted as consultancy fees. He suggested it was not his spreadsheet, but the spreadsheet of Mrs Vann. I reject that explanation as incredible. It was found on his disk at his home. It relates to a period when Mrs Vann was not employed by him. She denies ever having heard of Mrs Joseph or putting in a heading of consultancy payments. I accept her evidence; she was, unlike Mr Chavda, a straightforward and honest witness. Mr Chavda provided no credible evidence in connection with the documents.
It follows that I have concluded the sums of money were not paid in discharge of a debt, but were paid as bribes in return for the unauthorised and fraudulent referral by Dulcie Joseph of asylum seekers who were not the responsibility of TowerHamlets. Through these fraudulent activities, TowerHamlets paid money to Basil Chavda and he passed on part of the proceeds to his co-conspirator, Dulcie Joseph.
When did the conspiracy commence?
TowerHamlets opened its case upon the basis that, at some time shortly before Yvonne Doyle left TowerHamlets, in July 1999, she and Dulcie Joseph visited Birmingham to look at accommodation which could be used for asylum seekers. I emphasise that at this time TowerHamlets, along with other London Boroughs, were desperate to find accommodation for asylum seekers outside London where there was a shortage of accommodation and where prices were high. There was a local and nationally supported dispersal policy.
Initially it was the case for TowerHamlets that Yvonne Doyle and Dulcie Joseph had travelled and had met Mr Chavda and this was likely to have been in the summer of 1999. However, when Akinola Alabi, a witness called by TowerHamlets, was cross-examined by Dulcie Joseph and by counsel on behalf of Basil Chavda, two significant facts emerged. The first was that Mr Alabi, who at the time had been employed by TowerHamlets Legal Services as its principal lawyer with responsibility for managing a team of qualified legal staff, was also the boyfriend of Yvonne Doyle. Secondly he accepted that on an occasion when Yvonne Doyle and Dulcie Joseph visited Basil Chavda he had accompanied them. This had not appeared in his witness statement. This led to the suggestion being put to Mr Alabi that he had given his name to Mr Chavda as “John”, and that, rather than it being an occasion when he had simply accompanied Yvonne Doyle, as he had suggested, in order to be with his girlfriend at her invitation and to have a day out, Dulcie Joseph suggested that he was there with a computer in order to do business for himself. Mr Alabi denied that he went there to do business. He denied that he had set up, by this time, a company, having an address in Ealing. He did not recall being given a cheque for £50 by Dulcie Joseph to set up a business. When cross examined by Mr Hodgkin, he denied having knowledge of a company called Tara Services Limited.
In support of this account of events, a letter and draft agreement were put to him as having been sent by him to Basil Chavda under the signature “John” and under cover of a letter dated 7th December 1998. The letter was to this effect:
“Accompanying this letter is a draft agreement in respect of placements to be made by myself. The draft reflects the matters we discussed at our meeting last week. Please peruse the draft agreement and contact me with any observations you may have. Finally, thank you for your hospitality last week. We were made to feel extremely welcome.” Signed ‘John’ .
The draft agreement amounted to a proposal of a contract to be between Tivity and a company called Tara Services Limited (“Tara”). From the draft it is apparent Tara required accommodation within which to place homeless persons. The reference to homeless persons is important because it contrasts with the later arrangements which were in respect of asylum seekers. The draft agreement was designed to provide for the terms and conditions upon which Tara would place homeless persons in accommodation operated by Tivity. One of the obligations of Tivity was to ensure that each property complied with registration requirements stipulated by the “Council”. It pointed to there having been a corrupt proposal by “John”
It was made the thrust of the case for Basil Chavda and indeed for Dulcie Joseph that this agreement, drafted by Mr Alabi, was a proposal which was put to Basil Chavda, whereby Mr Alabi, through Tara, would benefit by homeless persons being placed with Tivity. From the nature of the case, as it was put by Dulcie Joseph, she did not distance herself from this proposed arrangement. She offered the evidence that she had loaned Mr Alabi £50 to start up the business. She also sought to involve Yvonne Doyle as a party who was likely to benefit from this arrangement. The plan to discredit Yvonne Doyle and Mr Alabi by this line of cross examination had been laid by the disclosure and subsequent reliance on the “John” documents.
Yvonne Doyle gave evidence. She denied, or at least could not remember, ever having travelled to Birmingham with her then boyfriend, Mr Alabi. She expressed surprise, if not indignation, at the suggestion he could have had any reason to come, let alone at her invitation. Her absence of recollection and the manner and demeanour she adopted in the witness box was not impressive. Bearing in mind the level of authority she attained within TowerHamlets and the secondment that she enjoyed with the Association of London Government, her total lack of recall was surprising. The documents in the case disclose continued contact with Mr Chavda, for example, when she was employed by the Association of London Government in the role of deputy project manager, information and development manager. I have concluded that she was not being full and frank in the account she gave to the court.
It will be remembered that the letter addressed to Yvonne Doyle dated 24th November 1998 (see para 26 above) suggested a meeting. It seems likely that the meeting between Mr Alabi, Yvonne Doyle, Dulcie Joseph and Basil Chavda took place before 7th December 1998. All those involved agree there was only one meeting when they attended together in Birmingham. At that date, the seeds were sown for some sort of business to be done, if agreement could be reached, and it was known to everyone present that it was being proposed that bribes or commission payments should be paid by Tivity for any business placed. TowerHamlets have not made a positive case that the letter dated 15th July 1999 (see para 26 above) is a forgery. Yvonne Doyle denied authorship. She suggested she had already left TowerHamlets on secondment by that date. There is no evidence as to the precise date she left.
On balance, I have concluded that I should assume the letter to have been written by Yvonne Doyle before she left as team manager. I have insufficient evidence to determine whether she made the proposal as part of a corrupt bargain by her or not. I am satisfied that, because of Dulcie Joseph’s connection with Basil Chavda and their earlier meeting with him together, Dulcie Joseph knew the letter was sent. In my judgment, it is enough thereafter to fix the commencement of the conspiracy between her and Basil Chavda that she received her first payment in December 1999 and thereafter continued to place persons and receive payments.
Dulcie Joseph’s case was that she had informed Yvonne Doyle of her earlier association with Mr Chavda, but not of the detail. The allegation about Mr Alabi’s role was introduced in order to discredit Yvonne Doyle, who denied she had been so informed. As I find, it is likely that Dulcie Joseph had informed Yvonne Doyle of her earlier relationship with Basil Chavda but no more, but not with a view to discharging her obligations of disclosure to TowerHamlets. As it seems likely to me, she did so on or before the occasion when Yvonne Doyle, herself and Mr Alabi visited in Birmingham.
It was not until Basil Chavda saw Mr Alabi in court that he realised that “John” was an employee of TowerHamlets, that he was using a false name and that he was Yvonne Doyle’s boyfriend at the material time. Disclosure of the Tara documents was effected in the mistaken belief that it would undermine Yvonne Doyle’s evidence in which she had denied knowing Basil Chavda or of a connection between Dulcie Joseph and Basil Chavda. But the attempt was misguided. The evidence undermined their own evidence. Whatever disclosure was made to Yvonne Doyle by Dulcie Joseph and Basil Chavda, in my judgment, it could not amount to disclosure to TowerHamlets, owing to the obvious impropriety which surrounded the circumstances in which the disclosure was made.
I have given careful consideration to the question whether I have sufficient evidence in this case to conclude that all those who visited Birmingham have acted corruptly and conspired together to injure TowerHamlets. I have concluded that I should not do so, at least so as to make a finding against Mr Alabi and Yvonne Doyle. That would be unfair to them. They have not had an opportunity of meeting the allegation. Indeed, owing to the manner in which it has arisen, it has not been put in clear terms to them when they were in the witness box. My suspicions remain.
The position of Dulcie Joseph is different. She paid £50 to Mr Alabi and she knew of the proposal by Tara. She had good reason to suspect the propriety of it. Nothing came of it because Mr Chavda did not want to do business with “John”. The seeds of opportunity to make money by collaboration were, however, in my judgment, sown in the minds of Dulcie Joseph and Basil Chavda at this time.
The extent to which this opportunity became fixed in the mind of Dulcie Joseph is amply demonstrated by the uncontradicted evidence of Rohan Vaughan. He was employed as a social worker by TowerHamlets from May 1999 until September 1999 when he left to become team manager of the asylum team at Hammersmith. In about November 1999 Dulcie Joseph telephoned him to say that she had found a new accommodation provider and they agreed to visit the provider. In early 2000 he travelled with her to Birmingham. He remembered the company to be called Aspects. On the journey home she commented:
“… the accommodation business was a very lucrative business opportunity and certainly something we could consider getting ourselves involved in”.
He agreed. He understood the idea was to rent or buy cheap property and house asylum seekers for the London authorities.
A list of service providers was drawn up and maintained at TowerHamlets. Neither De Ville or Tivity or Aspects were placed on the list, but many placements were made.
The evidence of Basil Chavda and Dulcie Joseph
Mr Chavda gave evidence, in particular, about his role in the management of Abbey, to which I shall come later.
As to Dulcie Joseph:
Her evidence was contradictory, in particular about documents which might evidence the “loan” to Mr Chavda. In answering requests for further information, she stated that her accountant was dealing with her tax position when, as she had to admit, he was not. The answer had been given in order to delay and mislead. She stated that her “records” showed that she had received £45,200, but then she gave contradictory answers to explain why the “records” had not been disclosed.
She adapted her evidence to meet the case as she thought it was being advanced.
Monies received
In her further information she contended that she had received precisely £45,200.
In her witness statement she claimed that Mr Chavda still owed her £2,700.
Under cross-examination she volunteered that she had been overpaid. It is patently obvious that she volunteered that because there had already been discussion in court about the schedule showing payments in excess of £50,000.
The Khorrami file
When faced with her own “assessment” and a complete lack of evidence on the file to support it, she asserted for the first time that Mr Chavda used to telephone her prior to sending forms to give her information. Not only has this never been suggested before, but Mr Chavda flatly contradicted it. It was pure invention.
Judicial Review threats
At one point in her evidence she claimed that she had to relax the criteria being applied to asylum seekers because every file was accompanied by a solicitor’s letter threatening judicial review. When challenged to find even one such letter in the 333 files in court she was said that was “impossible” because no such threat had been made in those files.
The falsity of the documents she created
She accepted that a draft letter given to Mr Ghotbi by Mr Vaughan would have been dishonest and wholly unacceptable had she dictated it. That was precisely the effect of Mr Vaughan’s evidence.
Submissions by Dulcie Joseph
Written final submissions were presented to the court. The principal points can be summarised as follows:-
It is inconceivable that TowerHamlets did not know that 18 months after the change in the law the asylum team were processing asylum seekers.
Mr Cormack knew that she believed there was a responsibility resting on TowerHamlets for “cousins and other extended family members”.
In truth, to have carried out the conspiracy, as alleged, would have been impossible.
Sufficient disclosure was made of a relationship between her and Basil and Cindy Chavda. Yvonne Doyle knew of the relationship and the fact that she was owed money.
There was no direct evidence of any agreement between Mr Chavda and Dulcie Joseph.
TowerHamlets have not proved this case, despite years of attempting to do so and at the expense of her health. She has been made a scapegoat.
She denied being involved in a conspiracy and that the loan documents are false.
My conclusion on these points already appears, but, out of consideration for the submissions, I should emphasise that:-
I am satisfied on the evidence that because of her authority and style of control over her staff, Dulcie Joseph successfully kept anyone from being in a position to challenge her activities.
Mr Cormack trusted her and probably gave inadequate scrutiny and consideration to the position. I accept that she was able to dispel any line of inquiry he might have embarked upon by her persuasion and force of character. It has to be said that any failure to act by him cannot change the position as I have found it to be.
I am satisfied that no proper disclosure was made. Proper disclosure required disclosure of the relationship, the debt and the payments.
I am satisfied on the evidence that Dulcie Joseph has lied and forged documents.
As to Mr Chavda:
At paragraph 36 of his witness statement he asserted that he was “Company Secretary for Bayhill Limited” and that the company was managed by the family of Mrs Shani, but that he ended up taking the blame for “others”. This evidence comprised an attempt to escape the contents of his Carecraft statement where he stated he was a director, the sole registered director, the financial controller in charge of the financial affairs of the company against whom “… it would be appropriate to make orders against him for a period of 9 years”. In evidence he stated that he thought it was “best to make a false statement at the time”. He accepted other parts of the statement were not true.
His denial of involvement in the management of Abbey was wholly unimpressive. Documents showed that he was concerned with the formation (D2/3/22). He asserted that “De Ville” was not merged into the corporate business but ceased to exist, but he continued to use “De Ville” headed paper, where he was descried as “Principal”.
I reject his evidence that he took the asylum seekers in at his own immediate expense and took the risk he would not be paid.
He gave unsatisfactory evidence about the so-called loan and the compromise agreement. When cross examined about the alleged exchange of correspondence at E290 and E291, he deliberately lied about whether there had been a meeting or not.
For completeness, I should record that there was uncontradicted evidence that the services provided to asylum seekers by Mr Chavda were of a high quality. Further, he assisted with language difficulties and was generally humane and considerate in his dealings with the families, including the needs of young children. That said, it has not affected my assessment of his honesty and reliability as a witness which have fallen to be decided by reference to other evidence in the case.
I accept that he was not secretive about his actions, but, so long as Dulcie Joseph fulfilled her function in the conspiracy, secrecy was not required. Nor can the fact that TowerHamlets failed to detect what was happening provide any defence to Mr Chavda nor affect the obvious irregular and unlawful character of his arrangement with Dulcie Joseph. There was no innocent, open course of dealing to which Mr Chavda can point to defend the claim.
Section 15(4) of the Company Director’s Disqualification Act 1986
A person is deemed to be involved in the management of a company “if he is a director of the company, or if he is concerned, whether directly or indirectly, or takes part, in the management of the company”.
It is clear that Mr Chavda was, to all intents and purposes, De Ville. Abbey was the merged business of De Ville and the partnership Abbey Homes Property Investment (AHPI). He was instrumental in the incorporation of the company. His wife was appointed a director to circumvent the consequences of disqualification. But she had no opportunity by reason of her health and family commitments and could play no part in the running of the company. Mr Sheikh and Mr Chana performed administrative tasks, but they did not act as the directing mind and will of the company. Mr Chavda was central to the company’s activities in connection with asylum seekers. He acted as though he controlled the company. He instructed solicitors in the action brought by Abbey. I reject the submission that his role in connection with asylum seekers was to “liaise” and “relay their requirements”.
Cindy Joseph-Chavda
TowerHamlets’ case against her is that she was a director of Abbey and was therefore involved in the management of the company. Further that it is inconceivable that she did not know of Mr Chavda’s disqualification. She admits having authorised payments by Abbey to Dulcie Joseph.
The issue to be determined in connection with Mrs Chavda’s role in these matters is whether:
she knew that Mr Chavda was disqualified;
she was involved in the management of the company; and
she acted or was willing to act on instructions given (without leave of the court) by Mr Chavda (see section 15 of the 1986 Act).
Mrs Chavda did not dispute that she was aware that she was a director of Abbey and admitted she became a director because her husband asked her to do so. She remembered authorising cheques to be paid to Dulcie Joseph, but, save for this, she knew nothing about the business. Mrs Chavda trained as an accountant and had thought that she would want to be involved in business matters. However, two things made that impossible: principally a debilitating and serious nervous condition and the demands of being a mother to her children.
Having heard her evidence, I am satisfied that she acted on the instructions of Mr Chavda in relation to all business matters, including her position as a director of Abbey, but, save for authorising, for example, payments, she knew nothing about the business and was incapable of playing any meaningful role. She left everything to Messrs Sheikh and Chana because Mr Chavda told her to do so. In effect, she signed forms as and when her signature as a director was required. Plainly she was a director and was willing to act on his instructions.
Did she know that he was disqualified as a director?
In her oral evidence, she denied that she knew he was disqualified. She said that, before being in court on the day she gave evidence, she had not known he had been arrested. She could remember a little about the events surrounding Bayhill, but only that she was told Mr Lal had been dishonest.
Mr Underwood submits that it is implausible that she did not know of the disqualification and the arrest. In circumstances other than those surrounding Mr and Mrs Chavda, there would have been compelling force in the submission. However, I have concluded that it is likely that Mr Chavda told her no more than she needed to know and would not have volunteered to her information so damaging to his status and integrity unless he had to do so. He did not have to do so. She was prepared to act according to his bidding because she completely relied on him. I accept her evidence that she did not know that he was disqualified.
Conclusion
It follows that the claim in fraud based on a conspiracy between Dulcie Joseph and Basil Chavda is made out and that TowerHamlets are entitled to recover damages against each of the conspirators in connection with that conspiracy. It follows also that the claim against Mr Chavda for being involved in the management of Abbey when he was disqualified for being a director is also made out. As a consequence, he is liable for the debts of the company.
I shall leave issues of quantum and debt to be resolved by the parties (if possible), failing which I shall give directions in connection therewith.