Before : |
Advocate Matthew John Thompson, Master of the Royal Court |
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Between |
Kuwait Oil Tanker Company SAK |
Plaintiff |
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And |
Ms Nouriya Al Mutawa |
First Defendant |
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And |
Matthew Chadwick |
Second Defendant |
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Advocate B. J. Lincoln for the Plaintiff.
Advocate D. V. Blackmore for the First Defendant.
CONTENTS OF THE JUDGMENT
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Paras |
1. |
Introduction |
1 |
2. |
Background |
2-7 |
3. |
Procedural History |
8-18 |
4. |
Relevant legal principles |
19-25 |
5. |
The Parties' Submissions |
26-28 |
6. |
Decision |
29-38 |
judgment
the master:
1. This judgment represents my detailed written reasons for dismissing the first defendant's application seeking to strike out the order of justice on the basis that the plaintiff's claim is obviously unsustainable and accordingly must be struck out, as either being scandalous, frivolous or vexatious or as an abuse process.
2. The background to this matter arises out of proceedings brought by the plaintiff against Mr Abdul Fattah Sulaiman Khaled Al Bader ("Mr Al Bader"), the brother-in-law of the first defendant. In summary in or about 1994 Mr Al Bader defended a claim brought by the plaintiff and another entity, as a result of which judgment for a sum exceeding US$135 million including interest was entered against Mr Al Bader in December 1998 for fraud and dishonest breaches of duties owed to the plaintiff. The plaintiff has since that time sought to enforce its judgment against Mr Al Bader without success. As part of the enforcement process Mr Al Bader was declared bankrupt. The judgment against Mr Al Bader remains outstanding. Mr Al Bader passed away in December 2009.
3. The present proceedings concern a flat known as Flat 104, Berkeley Court, Marylebone Road, NW1 5NE ("the property"). The property was acquired in the name of a Jersey company known as Westport Limited ("Westport"). The shares in Westport were held by Sanne Trust Company Limited ("Sanne") for the first defendant. The first defendant's case in summary is that she acquired the property through Westport for her sister who was married to Mr Al Bader in 2003 so that her sister and consequently Mr Al Bader had somewhere to live following Mr Al Bader being made bankrupt. The second defendant is the trustee in bankruptcy of Mr Al Bader who assigned all claims and causes of action to the plaintiff by a written assignment dated 24th April, 2014.
4. The order of justice alleges as follows:-
"7. In circumstances also particularised below, Westport was capitalised using funds provided by Mr Al Bader and used those funds to acquire a leasehold interest in property situate at and known as Flat 104, Berkeley Court, Marylebone Road, NW1 5NE, registered at HM Land Registry under Title Number NGL798704 ("the Property").
8. The trust of the entire beneficial interest in Westport in favour of Mr Al Bader is to be inferred from the following facts and matters and from the First Defendant's failure to provide any consistent credible explanation for these events.
Particulars
a Mr Al Bader left Kuwait for England on 5 January 1993 (shortly before he was prosecuted in Kuwait for his dishonest activities).
b Between May 1993 and September 2003, Mr and Mrs Al Bader lived at a property situate and known as 80 Viceroy Court ("Viceroy Court"), a property which had been conveyed into the name of Pontirana Investments Limited ("Pontirana"), a company incorporated in the British Virgin Islands.
c The sums used by Pontirana to purchase Viceroy Court were monies of the Plaintiff misappropriated by Mr Al Bader, as confirmed in a judgment dated 12 November 2002 delivered by Master Miller, a Master of the High Court of England and Wales, in proceedings in England between the Plaintiff and Mr Al Bader and Pontirana.
d Pontirana was used by Mr Al Bader to hide the true ownership of assets from the Plaintiff, as accepted in a judgment dated 17 October 2008 of Mr Justice Teare in the High Court of England and Wales.
e The Plaintiff obtained from the High Court of England and Wales an interim and, thereafter, final charging order against Viceroy Court in 2002 and Mr Al Bader vacated Viceroy Court on or about 10 September 2003, prior to any Possession Order being made against him.
f In response to the steps being taken against him, in the first half of 2003 Mr Al Bader caused or procured the First Defendant to set up and hold Westport through nominee shareholders on trust ultimately for him.
g On or about 27 June 2003 Mr Al Bader informed Messrs Gardner Weller that his wife or his sister would be purchasing a flat in London for him and his family and that it was expected that the flat would be available in about 3 weeks' time. Mr Al Bader stated that his solicitors at that time, Messrs Olswang, had advised him to put in place a lease between the registered proprietor and whoever was the named purchaser.
h So as further to conceal Mr Al Bader's other assets from the Plaintiff, in or around July 2003 the First Defendant came to control £1.4 million of funds ("the Funds") provided directly or indirectly by Mr Al Bader and thereafter she held the same and all assets acquired through their use on trust for him.
i On or around 23 July 2003 Westport received the Funds by way of subscription for its shares.
j By a transfer dated 1 August 2003 made between Anisia Mary Shami as vendor and Westport as purchaser, legal title to the Property was transferred into the name of Westport in consideration of the payment of £1,397,500 representing part of the Funds received by way of subscription for its shares.
k At a board meeting of Westport held on 29 July 2003 the directors resolved that Mrs Al Bader, the First Defendant's sister and wife of Mr Al Bader, "could be a tenant for six months, then on a month by month basis, while the company looked for a more lucrative tenant in order to increase the overall return on the Company's investment" and approved a tenancy agreement for a period of six months with a rent of £12,000 per annum. The rental yield produced by the Tenancy Agreement was less than 1%, and substantially lower than a commercial yield. None of these facts or matters suggest any true commercial relationship and the reasonable inference to be drawn is that (i) Mr Al Bader was the ultimate beneficial owner of Westport and (ii) the arrangements were part of a disguise being used by Mr Al Bader to keep his ultimate beneficial interest hidden.
l In or about 29 August 2003, Mr Al Bader informed Messrs Gardner Weller that, with effect from 10 September 2003, he would be moving with his family to the Property, but that on no account was this information to be disclosed to any person.
m Following Westport's acquisition of the legal title to the Property, Mr and Mrs Al Bader were the first, and have been the only, occupants of the Property, paying an uncommercial rent in respect of their occupation thereof.
n Mr Al Bader resided at the Property until his death in October 2009. Mr Al Bader's living arrangements between September 2003 and his death in October 2009 mirrored those held to have existed between 1993 and 2003, namely that Mr Al Bader resided in a London property which belonged to a company, the shares in which were ultimately held on Mr Al Bader's behalf through a member of his family.
o The Property continued to be Mrs Al Bader's residence and was be considered by Mrs Al Bader herself to be her residence until approximately 21 February 2011 when she fled from England to Kuwait in order to avoid answering to Orders of the English Court requiring her to attend before the Court to provide answers to the Trustee in Bankruptcy in relation to Mr Al Bader's assets.
p Following Mrs Al Bader's departure from England to Kuwait on approximately 21 February 2011, the Property has remained empty.
q A warrant for Mrs Al Bader's arrest was made by the English High Court on 15 December 2011 on account of her failure to appear for questioning. The arrest warrant has been registered at all customs points of entry into the UK and is likely have had an impact on any intentions Mrs Al Bader may have had in returning to the UK, and to the Property in particular.
9. Accordingly the First Defendant has held her interest in the shares of Westport on express, alternatively implied, trust, initially for Mr Al Bader, from 12 May 2009 until 10 July 2009 for the (English) Official Receiver of Mr Al Bader's bankrupt estate, and thereafter for the Second Defendant.
10. Further or alternatively, at all material times and due to Mr Al Bader's provision of the Funds, the First Defendant has held all her interest in the shares of Westport on resulting, alternatively constructive, trust for Mr Al Bader and, following Mr Al Bader's bankruptcy, for the (English) Official Receiver and, thereafter, the Second Defendant."
5. The first defendant denies that funds were provided by Mr Al Bader and alleges at paragraph 7 of her answer that:-
"...in fact, Westport was capitalised by the First Defendant by way of funds received from her cousin Mr Anwar Sultan Al-Essa ("Mr Al-Essa"), an individual entirely unconnected with Mr Al-Bader. The monies were paid by Mr Al-Essa in payment of a business debt owed by Mr Al-Essa to the First Defendant's brother Mr Faiz Abdul Aziz Almutawa ("the First Defendant's Brother") and which debt passed to the First Defendant upon her brother's death. Mr Al-Essa caused to be transferred the sum of £1,462,958.82 at 09:01am on 9 July 2003 to the client account of Messrs. Devonshires who were the English solicitors instructed by Westport at the relevant time and on the instruction of the First Defendant, to whom those monies were owed. It is admitted that Westport used the funds it had received to acquire the leasehold interest in the Property."
6. Further at paragraph 8 of her answer, the first defendant says that:-
"...it is denied that the entire beneficial interest of Westport is held in trust (or in any other way) for Mr Al-Bader and it is averred that the Plaintiff seeks to bring a claim based on circumstantial matters and inferences and that it has no evidence to support those assertions. It is further averred that the First Defendant has already explained the background to the First Defendant's acquisition of an interest in Westport and the source of the funds provided by Westport in order to acquire the interest in the Property."
7. The basis of the application brought by the first defendant is summarised at paragraph 24 of the first defendant's skeleton argument as follows:-
"24. In order for the Plaintiff's claim to succeed they must be able to prove, on the balance of probabilities, that the Funds were actually transferred from the Plaintiff to Mr Al-Bader and then from Mr Al-Bader to Anwar and that it was those monies which were used to fund the purchase of the Property. The Plaintiff is unable to do so for the following reasons:
a. Whilst the Plaintiff clearly infers (albeit that it is not specifically pleaded) that Anwar also conspired with Mr Al-Bader and the First Defendant to conceal the Plaintiff's property (in particular the Funds), the First Defendant has provided evidence from Anwar which confirms that he has had no financial dealings with either Mr Al-Bader or Jawaher, nor has he received funds directly or indirectly either from them or from an account of either of them (see paragraphs 26-27 of the Anwar's First Witness Statement [First Defendant's Bundle/Tab 7/Page 5]).
b. The evidence provided by the First Defendant, however, shows that the purchase monies for the property were provided by Anwar to Messrs. Devonshires and this has been confirmed by the First Defendant (at paragraph 18 of her First Witness Statement [First Defendant's Bundle/Tab 8/Page 3]), Anwar (at paragraph 23 of his First Witness Statement [First Defendant's Bundle/Tab 7/Page 4]), and by a partner and former partner of Messrs. Devonshires namely Philip Barden (at paragraph 20 of his First Witness Statement [First Defendant's Bundle/Tab 10/Page 5]) and Allan Hudson respectively (at paragraph 16 of his First Witness Statement [First Defendant's Bundle/Tab 8/Page 3]).
c. Copies of the bank transfer details for the payment made by Anwar to Messrs. Devonshire in the sum of £1,462,958.82 have been discovered and show that Anwar transferred that sum from his own bank account.
d. The Second Defendant, as Trustee in Bankruptcy, had access to all of the assets of Mr Al-Bader and should have been able to trace the flow of the Funds from the Plaintiff to Anwar, if such occurred but no such evidence has been discovered by the Plaintiff."
8. The first defendant accordingly contends that the claim made by the plaintiff plainly and obviously cannot succeed as the plaintiff discloses no evidence that the monies used to acquire the property came from Mr Al Bader. Accordingly the claim does not raise any question fit to be decided by the Royal Court and therefore should be struck out as being scandalous, frivolous and vexatious. Alternatively the claim of the plaintiff is obviously and incontestably bad and should be struck out as an abuse of process.
9. The present proceedings were commenced by an order of justice dated 13th May, 2014.
10. On the same day an application for leave to serve out of the jurisdiction was made by the plaintiff to me by an affidavit sworn by Advocate Katie Louise Hooper. In her affidavit Advocate Hooper set out the procedural history leading to the issue of the order of justice. The material parts of the affidavit in summary set out the following:-
(i) On 25th November, 2009, the second defendant's appointment as trustee and bankruptcy of Mr Al Bader was recognised by the Royal Court;
(ii) On 15th January, 2010, the entire shareholding in Westport was transferred by Sanne to the first defendant at her request;
(iii) On 10th February, 2010, the second defendant sought certain disclosure from Sanne about the property and Sanne's role in relation to it;
(iv) Following the transfer of the property to the first defendant, the plaintiff initially determined it would commence proceedings in England coupled with an application for an interim injunction and obtained permission from the Royal Court to use the information supplied by Sanne to this effect;
(v) On 30th January, 2014, the Royal Court through Commissioner Clyde-Smith granted the plaintiff the relief they sought in respect of their desire to use information to commence proceedings England. The first defendant was only to be notified of this order once she had been served with the proceedings to be brought before the English Courts;
(vi) An application for an injunction was made to his Honour Judge Keyser Q.C. in the Chancery Division of the High Court on 3rd February, 2014. The injunctions sought were refused on the basis that there was no serious issue to be tried as to the intended proprietary claim to the property;
(vii) In light of this decision the intended claim in England was not pursued. Instead the claims of the second defendant were assigned to the plaintiff as set out above and the present proceedings were therefore issued as personal claims against the first defendant for dishonest breach of trust and dishonest breach of fiduciary duty as assignee of any cause of action the second defendant was entitled to bring against the first defendant. I observe in passing that there was disagreement between counsel because Advocate Lincoln suggested that the plaintiff's claim was a claim in fraud. At the hearing I indicated to the parties that references to fraud were best avoided when fraud was not expressly raised on the pleadings and any such allegation inevitably raised questions about who might have been involved in any alleged fraud;
(viii) I was also informed by Advocate Hooper that the plaintiff intended to seek injunctive relief in England in aid of the present Jersey proceedings before serving Jersey proceedings.
11. On the basis of Advocate Hooper's first affidavit, I was satisfied that the grounds existed to order service out of the jurisdiction and therefore ordered on 15th May, 2014, as follows:-
On the application of the plaintiff and upon reading the affidavit of Katie Louise Hooper filed in support of the application, IT IS ORDERED that:-
1. pursuant to Rules 7(j), 7(q) and 9 of the Service of Process (Jersey) Rules 1994 ("the Rules) the plaintiff have leave to serve a summons annexing the proposed Order of Justice upon the first defendant personally out of the jurisdiction at Block 8, Nafe ben Al Azraq St, House No.13, Al-Shaab, Kuwait; and
2. the date upon which the first defendant is required to appear before the Royal Court of Jersey is as follows:-
(i) in the event that service upon the First Defendant of the summons annexing the Order of Justice takes place on or before Friday, 14th November, 2014, at 2.30 p.m., the first defendant is required to appear before the Royal Court on Friday, 9th January, 2015, at 2.30 p.m.; or
(ii) in the event that service upon the first defendant of the summons annexing the proposed Order of Justice occurs after Friday, 14th November, 2014, the first defendant is required to appear before the Royal Court on Friday, 17th April, 2015, at 2.30 p.m.;
3. pursuant to Rules 7(c) and 9 of the Rules the plaintiff have leave to serve a summons on the second defendant personally c/o Isadore Goldman 12 Bridewell Place, London, EC4V 6AP;
4. the date upon which the second defendant is required to appear before the Royal Court of Jersey is Friday, 27th June, 2014, at 2.30 p.m.;
5. the obligation to commence the process of serving the first and second defendants shall not take effect until 4 weeks after the date of this order or determination of any application of interim relief in England, if sooner; and
6. liberty to apply."
12. No challenge to the order giving leave to serve out has been made by the first defendant.
13. On 22nd May, 2014, injunctive relief was granted by Peter Smith J. preventing any registration of or any transfer of the property by the United Kingdom Land Registry.
14. On 16th December, 2014, on an inter parties application, the property having been sold, Mrs. Justice Rose ordered that the proceeds of sale of the property which had been paid into court in England were to remain in court, pending determination of the present proceedings in Jersey. I address later the evidence filed by the first defendant in relation to this application.
15. The first defendant's answer to the order of justice was filed on 14th May, 2015.
16. Directions were given for discovery and the exchange of witness statements by acts of court dated 10th July, 2015, and 16th September, 2015.
17. On 9th December, 2015, further directions were also given in respect of the present strike out summons in the event that the strike out summons was not successful.
18. The first defendant has filed a witness statement together with witness statements from Allan Hudson dated 4th November, 2015, a former partner of Devonshires Solicitors ("Devonshires"), from Philip Barden dated 20th November, 2015, a current partner in Devonshires and from Mr Al-Essa. Devonshires acted in relation to the acquisition of the property in 2003. Mr Al-Essa is a Kuwaiti businessman and cousin of the first defendant. The first defendant has also filed an affidavit in support of the present application sworn on 14th January, 2016.
19. The plaintiff has filed an affidavit from Mr Mark Stephen Aspinall, a partner in Sutherland (Europe) LLP, English Solicitors for the plaintiff and a witness statement of Mr Alex Davies an analyst at a company known as Blackdot Solutions Limited. This witness statement in summary contains results of Mr Davies' investigations into the family tree of the first defendant's brother Faiz Al Mutawa ("Faiz").
20. The general principles on a strike out application are well known and have been considered in a number of cases. I most recently considered them in Holmes v Lingard [2015] JRC 226 at paragraphs 81 and 82.
21. In this case the first defendant emphasised that the power to strike out was not limited to whether the allegations set out by the plaintiff describe a sustainable legal position, but whether the claim could be substantiated on proper grounds. Advocate Blackmore referred in particular to the following:-
(i) At paragraph 18/19/35 of the Rules of the Supreme Court 1999 ("the White Book") the power to strike out extended to "any action which the plaintiff clearly cannot prove and which is without any solid basis."
(ii) In Mauger (née Kenny) v Batty [1995] JLR Note 8b, the Court noted in relation to the power to strike out that "The power to do so is discretionary and is not limited to cases in which the facts are not in dispute: the court may look at all the evidence, including affidavit and extraneous evidence and may even consider an application to strike out under the inherent jurisdiction which is made out of time. The power must only be used if it is clear that the action cannot succeed..."
(iii) In T. A. Picot (C.I.) Limited & Vekaplast Window (C.I.) Limited v Crill [1995] JLR 33; Le Quesne J stated that "the power strike out could only be exercised in respect of "a claim which must fail".
22. I accept that exercising a power to strike out is not limited to a claim which is bound to fail as a matter of law but also extends to claims which on the evidence must fail. Equally, as is well known, the power must only be used if it is clear that the action cannot succeed (see Mauger); it must be plain and obvious that the claim cannot succeed or the claim must be incontestably bad.
23. The other relevant legal principle pertinent to the present application concerns whether or not as a matter of law it is open to bring a claim based on inference.
24. Advocate Lincoln contended that it was clear that as a matter of Jersey law that there is nothing impermissible in the Royal Court being invited to draw inferences of fact from positive evidence of other facts (see Brazil v Durant [2012] (2) JLR 356 at paragraph 226 and Lloyds Trust Co. (C.I.) Limited v Fragoso [2013] JRC 211.
25. Jersey law therefore follows that of England and Wales with regard to the use of inferential evidence in cases of potentially fraudulent conduct. Advocate Lincoln referred me to the approach in England and Wales which he contended represents the Jersey approach by reference to JCS Bank v Ablyazov [2013] EWHC 510 (Comm) where Mr. Justice Teare at paragraph 198 stated as follows:-
"198 ...The Bank's case is based upon inference from circumstantial evidence. In this regard it is helpful to recall what Rix LJ said about circumstantial evidence in his judgment on the occasion of Mr. Ablyazov's appeal against the finding of contempt at [2012] EWCA Civ 1411 at paragraph 52:
"It is, however, the essence of a successful case of circumstantial evidence that the whole is stronger than individual parts. It becomes a net from which there is no escape. That is why a jury is often directed to avoid piecemeal consideration of a circumstantial case: R v. Hillier (2007) 233 ALR 63 (HCA), cited in Archbold 2012 at para 10-3. Or, as Lord Simon of Glaisdale put it in R v. Kilbourne [1973] AC 729 at 758, "Circumstantial evidence...works by cumulatively, in geometrical progression, eliminating other possibilities". The matter is well put in Shepherd v. The Queen (1990) 170 CLR 573 (HCA) at 579/580 (but also passim):
"...the prosecution bears the burden of proving all the elements of the crime beyond reasonable doubt. That means that the essential ingredients of each element must be so proved. It does not mean that every fact - every piece of evidence - relied upon to prove an element by inference must itself be proved beyond reasonable doubt. Intent, for example, is, save for statutory exceptions, an element of every crime. It is something which, apart from admissions, must be proved by inference. But the jury may quite properly draw the necessary inference having regard to the whole of the evidence, whether or not each individual piece of evidence relied upon is proved beyond reasonable doubt, provided they reach their conclusion upon the criminal standard of proof. Indeed, the probative force of a mass of evidence may be cumulative, making it pointless to consider the degree of probability of each item of evidence separately."
26. In my judgment as a matter of law it is open to a plaintiff to prove its case by inviting the Royal Court to draw inferences of fact from other evidence before it as set out in Ablyazov.
27. The overall thrust of Advocate Blackmore's application was that the plaintiff's case was bound to fail because the plaintiff had adduced no positive evidence in support of its claims. What the plaintiff had to prove on the balance of probability was that funds were actually transferred from the plaintiff to Mr Al Bader, then from Mr Al Bader to Mr Al-Essa, which enabled Mr Al-Essa to advance the monies used to fund the purchase of the property. The plaintiff could not prove this for the following reasons.
(i) There was evidence from Mr Al-Essa which set out that he had no financial dealings with either Mr Al Bader or Mrs Al Bader and that he had never received any funds directly or indirectly from them (see paragraphs 26 and 27 of Mr Al-Essa's first witness statement).
(ii) The evidence advanced by the first defendant was that the purchase monies to acquire the property were provided by Mr Al-Essa to Devonshires which was confirmed by the first defendant and Devonshires. Relevant bank records of Devonshires had been disclosed which showed the receipt of funds for the purchase from Mr Al-Essa.
(iii) The second defendant as trustee in bankruptcy of Mr Al-Bader should have been able to trace the flow of funds from the plaintiff to Mr Al-Essa if this had occurred but no such evidence has been disclosed by the plaintiff. Had the second defendant been able to identify such funds, evidence would inevitably have been adduced to show such a transfer. The plaintiff has always accepted that there is no such evidence.
(iv) The lack of such evidence means that it cannot be shown that Mr Al Bader transferred funds to Mr Al-Essa. There was no positive evidence of funds coming from Mr Al Bader to Mr Al-Essa.
(v) There were no positive facts from which the Royal Court could draw inferences to conclude that funds had come from Mr Al-Bader. This was so even if the witness evidence advanced on behalf of the first defendant did not fully come up to proof.
(vi) There was no evidence that Mr Al-Essa or the first defendant were dishonest.
28. Advocate Lincoln contended as follows:-
(i) The background to this claim was that Mr Al Bader had been held to be a fraudster and had concealed his assets.
(ii) Mr Al Bader prior to his death did not make any payment to discharge wholly or partially the plaintiff's judgment against him, notwithstanding that he obtained by fraud the principal sum of US$60 million; outstanding interest on the principal sum is now in excess of US$75 million.
(iii) The approach to the plaintiff's claim now taken by the first defendant was sufficiently similar to that taken in respect of another property in London known as Viceroy Court where Mr Al Bader had resided and which the plaintiff had successfully challenged before the English High Court. Master Miller expressly rejected evidence that the purchase monies provided by Mr Al Bader were a re-payment of a debt to a Dr Al-Mutawa a cousin of the first defendant. Advocate Lincoln contended that the present arrangement was sufficiently similar and accordingly in all the circumstances the Royal Court should be invited to reject the first defendant's claim set out in her answer as to where funds came from to acquire the property. The similarities relied upon were that in both cases the property was acquired through an offshore company, the property was acquired by a relative, it was said in both cases that the relative provided funds because of a debt owed and the providers of funds were said to be wealthy and respectable individuals. In addition it was not surprising there was no direct evidence of funds from Mr Al Bader to acquire the property because in light of the Viceroy Court Scheme having been set aside, he was bound to take more care to attempt to distance himself from the acquisition of the property.
(iv) The acquisition of the property started some two weeks after Mr Al Bader was required to leave Viceroy Court. Mr Al Bader was also involved in finding the property and instructing Devonshires. Attached to page 1 of the exhibit to the witness statement of Mr Hudson is a fax dated 20th June, 2003, to Mr Al Bader copied to the first defendant stating "I have just had a call from Mr Wright's solicitor to the effect that he is not willing to withdraw the present contract and issue a new one unless a payment is made of £20,000 by way of non-refundable deposit. In return he will permit a three week period during which Miss Al-Mutawa may exchange". It is contended that Mr Al Bader was therefore clearly involved finding the property and negotiating with the seller.
(v) Exactly the same day Mr Hudson wrote to Mr Al Bader again by fax informing him of his discussions with the Vendor's solicitor. This fax does not appear to have been copied to the first defendant.
(vi) In a fax also dated 20th June, 2003, sent to the first defendant by Mr Hudson he stated:-
"I understand that you wish to purchase the leasehold interest in the above property at a price of £1,400,000.
I understand there is supposed to be a contract out for the sale of the property to a third party at a price of £1,350,000. I am advised by the selling agents that this party has completed its searches and enquires and accordingly is in a position to proceed immediately.
Whilst I am assured by Mr Al Badr that the vendor has agreed he will provide a period of 10/15 days during which the Vendor will not deal with the existing buyer or any other buyer, the fact is that this is not binding in English law...."
(vii) It is at least arguable that the understanding referred to in the above extracts came from Mr Al Bader. The fax further confirms that it was Mr Al Bader who was dealing with the vendor. This fax was also copied to Mr Al Bader.
(viii) At page 3 of a fax sent by Mr Barden to Fawzi Al-Mutawa (whom Mr Barden deposes introduced the first defendant to him) on 20 June 2003, Mr Barden states:-
"Obviously we do not want to fall into any trap whereby it is alleged that at a subsequent date that in fact Mr Al Badr is the beneficial owner of this property and the Trustee in Bankruptcy and/or the Creditors then seek to take possession. We do not want a repeat of what is happening in relation to the present property."
(ix) This paragraph of itself may be no more than professional caution. However in paragraph 4 on page 2 of the same fax, Mr Barden states "Our present instruction from Mr Al Badr in this regard is that we have two weeks to exchange contracts in relation to the property...". Mr Barden then goes on to say at the end of paragraph 4 "It is important that we are not taking instructions from Mr Al Badr."
(x) It is arguable this extract goes beyond professional caution and demonstrates that Mr Al Bader was involved in the acquisition of the property. This fax was also copied to Mr Al Bader.
(xi) Mr Barden also wrote to Mr Al Bader separately that same day (i.e. 20th June, 2003,) and stated:-
"The real problem in this matter from our point of view is that we are representing Nooria Mutawa, not you. Therefore, we must deal on the basis of instructions received from her and in accordance with our standard procedures.
If we are seen to be taking instructions from you on a daily basis that will produce the very evidence that we do not want, namely it will suggest you are the beneficial owner."
(xii) Advocate Lincoln also relied on the fact that, on the records of Devonshires showing receipt of monies for the first defendant, there was a manuscript annotation "Al Bader" and a phone number which appears to be the writing of Mr Hudson. Advocate Lincoln submits that this was indicative of Mr Al Bader pulling the strings.
(xiii) The first defendant had advanced five different explanations as to the source of funds. There was no evidence from those involved in making some of these statements, to address why the relevant explanation given at the appropriate point in time was incorrect. In particular there is no evidence from Mrs Al Bader about statements she made about the source of monies; also there is no evidence from another family member Fawzi Al Saleh who introduced the first defendant to Devonshires about statements he made to Devonshires about the source of funds; the first defendant herself has given two different explanations one to Sanne and the statement she now relies upon. There is no evidence from Sanne that the explanation recorded by an employee of Sanne contemporaneously is not correct. The first defendant's own evidence on this issue is limited because she simply says she cannot remember. Mr Barden also does not address why an explanation given by him to Advocate James acting for Sanne in 2008 was not correct. Of the explanations given as to source of funds, other than the present one relied upon, three of these were also given in 2008 after the plaintiff had asserted a claim to ownership of the property. At the time the statements were therefore being made by both Mr Barden and the first defendant, both were on notice of the plaintiff's claim. In these circumstances Advocate Lincoln contends it is surprising that no explanation is given as to why incorrect statements were made. These were all matters ripe for cross-examination.
(xiv) The defence advanced on the basis that monies received from Mr Al-Essa represented re-payment of a debt inherited by the first defendant from Faiz did not sit with the evidence obtained by the plaintiff in respect of who would have been entitled to inherit from Faiz's estate. By reference to the witness statement of Mr Davies, it is Faiz's children not the first defendant as his sister who would have inherited. Absent any will, none having been produced, the first defendant would not have inherited. The payment from Mr Al-Essa could not therefore be justified as being in respect of discharge of a debt which the first defendant had inherited.
(xv) The first defendant's evidence on how she came to receive the benefit of a debt was vague. She was not clear whether she inherited it or was given it by Faiz's children. While she does indicate that the administration of Faiz's estate was complex, she does not explain what those complexities were. She simply says that there were no documents at all relating to how the benefit of the debt was transferred to her and why it was transferred to her. She does not explain why those entitled to interest agreed to transfer the debt to her. This is also a matter to be explained at trial.
(xvi) The present application is inconsistent with the first defendant's failure to challenge the granting of service out of the jurisdiction on the basis there was no good arguable case.
(xvii) The evidential picture is not complete because there are serious deficiencies in the first defendant's discovery. This was likely to lead to a specific discovery application if the present application was refused.
(xviii) Mr Al-Essa's evidence was to the effect that he owed monies to Faiz by virtue of an oral agreement reached in 1982 that Mr Al Essa would purchase from Faiz a penthouse apartment in Lebanon although no purchase price was ever agreed. Yet records recently disclosed by the first defendant show that Mr Al-Essa appears to only have acquired the apartment in 1999 and not from Faiz. The purchase price paid was US$ 60,000. Yet 4 years later Mr Al Essa paid over £1.4 million to the first defendant via Devonshires on the basis that he owed this sum to Faiz's estate. This is clear evidence according to Advocate Lincoln entitling the Royal Court to reject the explanations advanced as to why Mr Al Essa advanced funds to Devonshires. Again this evidence must be tested at a trial.
(xix) The plaintiff is therefore entitled, taking all of the above matters into account, to seek to persuade the Royal Court not to believe evidence adduced by or on behalf of the first defendant and to prefer the plaintiff's case.
(xx) The plaintiff is further entitled to ask the Royal Court to draw inferences if evidence by on or behalf of the first defendant is not accepted by the Royal Court. There are sufficient facts inconsistent with or contrary to the first defendant's case including the similarities with the failed Viceroy Court transaction for the Royal Court to infer that the funds in some manner must have come from Mr Al Bader.
(xxi) It may also be that neither the first defendant nor her witnesses appear at trial. That is also another basis to draw inferences (see Wisneiwski v Central Manchester Health Authority [1998] PIQR P324 and 330). Dr Al-Mutawa did not appear for cross- examination in respect of the Viceroy Court transaction; it is not at present known which of the witnesses will appear at trial.
29. These submissions all led to the conclusion that an evaluation of the evidence adduced to-date and any future evidence that might be adduced was a matter for trial. The relevant threshold on a strike out application had not been met.
30. The conclusion I reached is that the arguments of Advocate Lincoln are to be preferred. At this stage I am not persuaded that this is a case where the plaintiff's claim is bound to fail, it is hopeless or that there is no prospect of the claim succeeding. The first defendant has not therefore met the required high threshold to persuade me to strike out the plaintiff's claim.
31. That does not mean that the plaintiff does not face challenges. At trial it will not only have to persuade the Royal Court not to accept the positive case advanced by the first defendant in her answer but will also have to persuade the Royal Court, which is a separate question, that the Royal Court should then draw inferences that the funds used to acquire the property came from Mr Al Bader. For the plaintiff to succeed at trial, it must overcome the matters raised by the answer, the evidence adduced in support of the answer by the first defendant and must also persuade the Royal Court to draw inferences and to conclude that on a balance of probabilities the funds used to purchase the property did ultimately come from Mr Al Bader. Success on the former basis may not mean that the plaintiff succeeds on the latter issue.
32. What is clear is that in relation to the different explanations advanced by the first defendant as to where monies came from, these are issues to be explored at trial. Sufficient criticisms have been advanced by the plaintiff of these explanations set out above which mean that the plaintiff's case is not hopeless and is not bound to fail. There is also direct evidence of contact between Mr Al Bader and Devonshires as set out above. Whether these communications are no more than Devonshires exercising professional caution and judgment or whether they are indicative of Mr Al Bader pulling the strings are matters that can only be resolved at trial when all relevant evidence is before the Royal Court.
33. There is also an arguable case that the explanation that the first defendant inherited a debt due from Al-Essa to her late brother is one that is inconsistent with Kuwaiti inheritance law.
34. The explanation advanced by Mr Al-Essa as to why he owed monies to Faiz is also inconsistent with property records in Lebanon as to when the apartment was acquired by Mr Al Essa, from whom and for a very different price.
35. I also accept it is open to the Royal Court to conclude that the arrangements for the acquisition of the property are sufficiently similar to the scheme used in respect of the acquisition of Viceroy Court which scheme was set aside by the English Court. That is not to say that the Royal Court will reach such a conclusion; what is clear is that such a submission is not a hopeless argument and that it is open to the plaintiff to invite the Royal Court to reach such a conclusion.
36. Finally, I note in respect of the inter partes hearing relating to whether or not the injunctions granted by Peter Smith in England should continue, Mrs Justice Rose at paragraphs 21 and 22 of the judgment recorded that initially the first defendant had contended that the injunction granted should be discharged on the basis that there was no arguable case for the existence of a trust (see paragraph 21). However, the morning before the application to discharge the injunctions was to be heard, the first defendant's English barrister changed his position. The relevant part of paragraph 22 of the judgment states as follows:-
"Importantly he (the first defendant's counsel) records that Mrs Al Bader now recognises that the evidence served on her behalf in relation to the substance of the dispute does not permit the Court to reach a confident and decisive view at an interim hearing. She accepts that the issue in dispute as to the source of the funds can only be resolved at trial." (Emphasis added).
37. In other words in England on an application to discharge the injunctions, the first defendant ultimately conceded without argument that the source of funds to acquire the property was a matter that could only be argued at trial. Yet she has now sought to contend in Jersey a different position contrary to the concession made in England. In my view the concession made in England was the right one. At the time of this concession evidence had been filed by the first defendant, Mr Al-Essa and Mr Barden, including evidence of the transfer of funds from Mr Al-Essa to Devonshires. In my judgment there is no material difference between the evidence that was before Mrs Justice Rose, when it was conceded that the source of funds issue was a matter for trial, and the evidence now contained in the witness statements produced by the first defendant in the present proceedings. The only difference is that Mrs Justice Rose did not have the benefit of a statement from Mr Hudson. The one additional point that he raises, which was not raised in the witness statements before the English High Court, was that it was he who suggested use of an offshore company to acquire the property in order to avoid capital gains tax. I do not consider that this additional piece of evidence sufficiently alters the case so that it is appropriate at this stage to strike out the plaintiff's claim.
38. Finally, the fact the plaintiff has not served, other than the evidence of Mr Davies, any substantive evidence of its own in support of its claim, does not justify granting the strike out application. It was always clear from the first affidavit of Advocate Hooper filed in support of the application for leave to serve out of this jurisdiction that the plaintiff's case was going to be based on inference. The granting of leave was never challenged. It was also clear at least by the time of the inter partes hearing before Mrs Justice Rose in England that the plaintiff was challenging the evidence advanced by the first defendant as to the source of funds on a number of grounds. The position has not in substance changed since that hearing. The issues were agreed then as being matters for trial, which in my view remains the position.
39. For all these reasons therefore the first defendant's application is refused.
Authorities
Holmes v Lingard [2015] JRC 226.
Rules of the Supreme Court 1999 ("the White Book").
Mauger v Kenny [1995] JLR Note 8.
T. A. Picot (C.I.) Limited & Vekaplast Window (C.I.) Limited v Crill [1995] JLR 33.
Brazil v Durant [2012] (2) JLR 356
Lloyds Trust Co. (C.I.) Limited v Fragoso [2013] JRC 211.
JCS Bank v Ablyazov [2013] EWHC 510 (Comm).
Wisneiwski v Central Manchester Health Authority [1998] PIQR P324.