A v B
| Jurisdiction | England & Wales |
| Judge | Mr Justice Colman |
| Judgment Date | 28 July 2006 |
| Neutral Citation | [2006] EWHC 2006 (Comm) |
| Docket Number | Case No: 2005 FOLIO 683 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 28 July 2006 |
[2006] EWHC 2006 (Comm)
Mr Justice Colman
Case No: 2005 FOLIO 683
IN THE HIGH COURT OF JUSTICE
QUEEN's BENCH DIVISION
COMMERCIAL COURT
Ms Barbara Dohmann QC, Ms Clare Stanley, Mr Adrian Briggs and Mr Matthew Shankland (instructed by Weil Gotshal & Manges) for the Claimant
Mr Graham Dunning QC and Mr James Collins (instructed by Allen & Overy) for the First Defendant
Mr Michael Briggs QC, Mr Nicholas Lavender and Mr Toby Landau (instructed by Lewis Silkin) for the Second Defendant
Mr Shane Doyle QC (instructed by Taylor Wessing) for the Third and Fourth Defendants
Hearing dates: 5 to 12 April 2006
Reasons for Judgment
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The Hon
Introduction
The applications now before me arise in the context of what is, without doubt, the most unusual arbitration dispute I have ever encountered, either personally or in the law reports.
The second, third and fourth defendants, to whom I refer as “C”, “D” and “Company E” respectively, apply to set aside the claim and service of it upon them outside the jurisdiction (in the Bahamas) pursuant to an order of Mr Justice Andrew Smith made in respect of C and D on 8 September 2005 and by Mr Justice Morison in respect of Company E on 21 October 2005.
The first defendant, to whom I refer as “B”, applies for a stay of the claim which was served upon him within the jurisdiction.
In order to explain the grounds for these applications it is necessary to outline the nature of the claims and the unusual factual background on which they are based. I refer to the claimant as “A”.
A is the younger brother of C. From 1992 to 2000 the two of them carried on a very successful trading business. There were several companies involved in their A Group, most of the profits being derived from those companies trading in the Bahamas and in London. Until May 2004 A was authorised to manage and control the group.
In 1984 there was set up a discretionary Bahamian trust – the A Trust—of which C and his and A's father were protectors. Until 2005 A and his children were the only beneficiaries. D was the sole trustee at all material times after July 2002. D was a well-established Bahamian lawyer who acted from time to time as legal adviser to the brothers in relation to their commercial interests. It is said by A that a large number of the companies involved in or connected to the A Group's activities were held as part of the property of the A.
In the course of 1999–2000 disputes arose between the brothers with regard to C's participation in the A Group and to his entitlement to financial benefit from it, from the A Trust, from various other trusts and from other commercial activities.
A claims that he approached B, a well-known solicitor, then a consultant to Firm A, and instructed him to contact C in order to attempt to settle the dispute. He claims to have revealed to B at that time certain confidential information about his position with regard to the dispute. A meeting took place with C and A claims that there was agreement in principle as to how the brothers would separate their interests.
A states that in November 2001 C, who was about to undergo major heart surgery, proposed to A that before his operation a payment should be made to him so that he could make provision for his family in the event of his death. Such payment was to be made by way of settlement of all claims by C in respect of the A Group. The agreed amount was US$88 million. It was further proposed that if C survived the operation, US$37.5 million would be repaid by C to A within three months plus additional amounts to be agreed following the taking of an account. It is said that the additional sums were to be such as were found on the taking of the account to be required to be paid by C so that A received in total 50 per cent of all profits of the A Group from January 1990 to November 2001. In consideration of such payment A was to give up all claims with regard to the A Group.
A claims that such agreement was finally concluded orally at a meeting between him, C's daughter, F, as C's agent, and B at Claridges on 14 November 2001 at which C intermittently participated by telephone. A also claims that B was to be appointed protector of a Liechtenstein trust to which most of the US$88 million was to be transferred.
A claims that in November 2001 such amount was paid in accordance with that agreement.
On 15 November 2001 C underwent heart surgery and this was successful.
On 22 July 2002 A sent to B a letter stated to be written on behalf of A, C, G and various A Group companies. Its purpose was to replace an oral retainer which had been given to B in 1998 and under which he acted as a consultant for a monthly fee. The effect of the letter was to increase the monthly retainer fee to £15,000 from 1 January 2002. The letter included the following passage:
“We have known for some time, and appreciate, your reputation as a solicitor and solicitor-advocate of skill and experience, and know that you are someone with great experience in the strategy and management of the resolution of business disputes, and in mediation and litigation.
Our objective is that we should be in a position to have immediate access to you and your litigation and dispute resolution experience, your general counsel, so that you can give (or obtain) legal advice on any matter which we feel it is appropriate or necessary to have legal advice.
We will from time to time communicate information to you about particular activities relating to our business and/or our personal affairs even though we might not then need legal advice from you upon those activities. This is because we wish to keep you informed of all current developments relating to certain areas of our business and/or our personal affairs so that you are able to give or procure legal advice at short notice if this is needed.
The effect of your retainer has been, and continues to be, that all information given to you since the inception of the retainer by any of the companies or individuals identified above is confidential (while also of course being protected by privilege).”
This was accepted by B.
At about the same time as this letter was sent, D was appointed by C and H as trustee of the A Trust.
Following C's recovery there were no major developments until November 2003 when in the course of a meeting at C's home in Palm Beach, Florida, A asked for repayment by C of US$37.5 million which he claimed to be due under the oral agreement of November 2001. C made no such payment.
On 26 April 2004 D executed two deeds the effect of which was to transfer various companies in the A Group previously owned by the A Trust to two other trusts which A had set up some three weeks earlier – the B Trust and the C Trust of which A was protector and D was sole trustee. D and C assert that A induced D to transfer those assets out of the A Trust to the B Trust and the C Trust by untruthfully informing D that C approved of such transfers.
On 1 June 2004 A appointed his Bahamian lawyer, I of Firm B as sole trustee of the B Trust and the C Trust in substitution for D. On the same day A took steps to take control over Company J by causing the removal of its directors. Two weeks later A took steps to take control of the Board of Company K and Company L.
Meanwhile, proceedings had been brought by Company E against Company M in the Commercial Court in 2003. On 20 April 2004 B in conjunction with Firm A was instructed by A to advise Company E with the agreement of C and D. Thereafter A and Company E worked together on those proceedings. However, in May 2004, following the transfer of assets to the B Trust and the C Trust, it is alleged that D took steps to prevent A dealing with those assets, for example by giving notice to warehouses holding material on behalf of A Group companies that A was no longer authorised to deal with such property and to Deutsche Bank stating that A was not authorised to deal with the financial affairs of Company K. The relationship between C, D and A was thus seriously deteriorating. However, meetings were held on 14 and 16 June 2004 between A with his Bahamian lawyers and B to discuss the disputes between A and C. The meeting on 16 was attended by C's daughter, F. It is submitted by A that at these meetings B was acting for C and his daughter.
Then on 16 June 2004 the fraternal warfare sharply escalated.
On that day D entered a criminal complaint against A with the Bahamas Police, the substance of which was that A had stolen and/or fraudulently used share certificates in Company K and had caused the transfer of all the assets of the A Trust to the B Trust and the C Trust. On 18 June 2004 the Bahamian Police conducted a dawn raid on A's home seizing computers and other property.
On 18 and 22 June 2004 D in his stated capacity as trustee of the A Trust commenced proceedings in Holland and Belgium to freeze the assets of A Group.
On 28 June 2004 there was an attempt to commence a mediation before Mr David Shapiro, one of the most experienced mediators in London. This, however, got nowhere because Mr Shapiro took the view that as long as there was a pending criminal complaint there could be no chance of success.
In the course of June 2004 A continued his contacts with B and Firm A with regard to Company E's claim against Company M and in particular as to A putting up security for costs on behalf of Company E....
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