Abdelrahman Abdullah Abbar and Another v Saudi Economic & Development Company (sedco) Real Estate Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice David Richards |
| Judgment Date | 24 May 2013 |
| Neutral Citation | [2013] EWHC 1414 (Ch) |
| Docket Number | Case No: HC09C04321 |
| Court | Chancery Division |
| Date | 24 May 2013 |
[2013] EWHC 1414 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
7 Rolls Building
London, EC4A 1NL
Mr Justice David Richards
Case No: HC09C04321
Jonathan Crow QC, Juliette Levy and David Welford (instructed by Charles Russell LLP) for the Claimants
Ali Malek QC, Rupert Reed and Emer Murphy (instructed by DAC Beechcroft LLP) for the Defendants
Hearing dates: 31 January, 4, 6-8, 11-13 February 2013
Introduction
In May 2007, the first claimant, Dr Abbar subscribed £500,000 for shares in a company incorporated in Anguilla, The Pinnacle Holdings Limited (PHL). A total of £120 million was subscribed by the promoters of the company and by institutional and individual investors. The stated purpose of the capital-raising exercise was to enable the company to purchase a site in the City of London, to demolish the existing buildings on the site and to sell the site, ready for redevelopment, within a period of 12 to 18 months. It is not in dispute that this was at that time the expectation of all parties. The site was purchased and the existing buildings were demolished, but the site was not sold. Instead, a decision was taken to retain it with a view to redevelopment. Attempts were made to raise new capital to buy out those investors who did not wish to retain their investment but these were only partially successful and a significant number of investors, including Dr Abbar, were unable to dispose of their shares and still hold them.
It is Dr Abbar's case that it was a term of the contract by which he subscribed for his shares that the site would be sold within a period of not more that 18 months and that thereby, or possibly by other means, an exit from the investment would be available to the shareholders. Having abandoned any claim against the fourth and fifth defendants, he claims that some or all of the remaining four defendants were parties to the contract and that each of them is liable in damages for breach of contract, or alternatively that some or all of them are liable in damages for the tort of inducing a breach of contract. Alternatively, Dr Abbar claims that if the statements on which he relies did not have contractual effect, they were representations on which he relied and that the defendants or some of them are liable either in negligence for negligent statement or under section 2 of the Misrepresentation Act 1967.
The claim is made also by Dr Abbar's son, the second claimant. Although the initial contact with Dr Abbar was made through his son, the evidence is clear that the investment was made by Dr Abbar, not by his son. No attempt was made at the trial to suggest otherwise, and I will proceed on the basis that the claim is maintainable, if at all, by Dr Abbar alone.
For convenience, the following is a summary table of contents.
The proceedings
| Content | Paragraphs |
| Introduction | 1–4 |
| The proceedings | 5–7 |
| The parties | 8–21 |
| The Pinnacle site | 22–23 |
| Outline of events | 24–49 |
| Information Memorandum | 50–97 |
| Claims in contract against SEDCO Anguilla and PHL | 98–133 |
| Breach of contract | 134–138 |
| Claims in contract against SEDCO and AIL | 139–187 |
| Procuring breach of contract | 188–195 |
| Misrepresentation claim | 196–215 |
| Damages | 216–233 |
| Illegality | 234–243 |
| Conclusion | 244 |
The claim was commenced by a claim form issued in November 2009. The claims made in the lengthy particulars of claim went well beyond claims for breach of contract and negligent representation, and included claims for fraudulent misrepresentation, conspiracy and breach of trust. The proceedings were initially served only on the sixth defendant, Arab Investments Limited, which applied in February 2010 to strike out the claims made against it, on grounds which included that there was no evidence of any of the alleged frauds. The application was heard in July 2010. While the judge did not strike out the claims, he required the claim to be re-pleaded by 17 September 2010. The amended points of claim, not served until 2 December 2010, maintained the claims in deceit, conspiracy and breach of trust. Preparations for the trial proceeded on the basis of these claims, but, on 4 January 2013, only three weeks before the date fixed for the trial, all these claims were abandoned. Re-amended particulars of claim were served to which I shall refer later. The change in the claimants' strategy may well owe something to a change of solicitors in or about August 2012 and to the instruction of leading counsel for the trial. I need say no more about it for the purposes of this judgment, although plainly it may have an effect on the appropriate orders for costs.
There is a highly unusual feature of the proceedings which I should mention. By an order dated 7 October 2010, Proudman J referred to the Attorney General for investigation and, in his discretion in the public interest, for prosecution of such individuals as may have been responsible for a criminal contempt of court, constituted by the creation and distribution of a forged version of the judgment given on the application for summary judgment. The judgment was altered to make it appear as if findings of fraud were made against the defendants. Copies of the altered judgment were distributed in Saudi Arabia to the press and others by Dr Abbar. Dr Abbar's evidence, in an affidavit before Proudman J, was that while he accepted that he distributed the altered judgment, he did so in the belief that it was the genuine judgment. As the judgment of Proudman J makes clear, there are a number of persons who may have been responsible for the creation of the false judgment and Dr Abbar's evidence may well be correct. So far as I am aware, the Attorney General's enquiries are continuing. This serious matter is extraneous to the merits of the claims now made by Dr Abbar, which do not to any significant extent depend on his credibility, and I have disregarded it for the purpose of considering and ruling on those claims.
The defendants are overall highly critical of the manner in which the claimants have pursued these proceedings. They cite in particular the fraud, conspiracy and trust claims, made, they say, with a view to putting pressure on the defendants, only to be abandoned very shortly before the trial. They refer to delays in the progress of the proceedings and to the level of costs which the activities of the claimants have caused, citing in particular that at least five interim costs orders have been made against the claimants over the period of three years leading to the trial. Again, to the extent well founded, these matters may well be relevant to issues of costs but they are not in point as regards determining the merits of the claims as they are now formulated.
The parties
Dr Abbar
Dr Abbar is a Saudi Arabian national, with his own legal practice in Jeddah, founded by him in 1987. He holds post-graduate law degrees from the University of Georgetown, USA, as well as business diplomas from Boston University, Wharton School of Management and Harvard. His legal experience is principally in commercial oil transactions, corporate law, litigation and arbitration. He has extensive business experience. Before qualifying as a lawyer, he worked for his family's business, a major business conglomerate in Saudi Arabia, dealing in petroleum trade, shipping and industrial construction and contracting. He has also been the general counsel to the Saudi Arabian Marketing and Refining Corporation, the downstream petroleum company owned by the Saudi government, and been a member of its corporate management committee.
Dr Abbar gave evidence, which was clear and convincing. He struck me as highly intelligent and as a skilled lawyer, with an eye for detail, as well as a shrewd investor.
SEDCO
The second defendant, Saudi Economic & Development Company (SEDCO) Limited (SEDCO) is a company incorporated in Saudi Arabia. At all material times, it was a service company for a large privately-held investment group, owned and controlled by members of the bin Mahfouz family, a prominent Saudi family whose wealth is founded on banking. The bin Mahfouz family founded the National Commercial Bank of Saudi Arabia. The SEDCO group of companies was formed in 1994, bringing together various business interests inherited by the four sons of the late Sheikh Salem bin Mahfouz. Some of his grandsons are now actively involved in the business. Although initially a family investment group, it has over time invited non-family members to participate in some investments.
The SEDCO group comprises three divisions: the financial investment group, the direct investment group and the real estate group (REG). Each of these groups may comprise a number of corporate entities but each is managed on a unified basis, with its own management structure. Each group is in turn subject to overall management control by an executive committee for the entire SEDCO group and, above that, by the board of directors. Each tier of management has authority to commit the group up to specified financial limits. Any investment or expenditure above the relevant limit is referred to the next tier for recommendation or, as appropriate, decision. It is clear from the documentary and oral evidence that decision-making in the SEDCO group is a structured and well-documented process.
Two senior executives in the SEDCO group gave oral evidence. Yousuf Khayat had 11 years' experience in...
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