Abdullah Al-Dowaisan and Another v Imad Abdul Al-Salam & 3 Ors
| Jurisdiction | England & Wales |
| Judge | Hodge |
| Judgment Date | 07 February 2019 |
| Neutral Citation | [2019] EWHC 301 (Ch) |
| Docket Number | Case No: HC-2015-000366 |
| Court | Chancery Division |
| Date | 07 February 2019 |
[2019] EWHC 301 (Ch)
His Honour Judge Hodge QC
sitting as a Judge of the High Court
Case No: HC-2015-000366
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Nikki Singla QC and Mr James Goodwin (instructed by HFW) for the Claimants
Mr Mathew Hardwick QC and Ms Miriam Schmelzer (instructed by Lockett Loveday McMahon Solicitors) for the Defendants
Hearing dates: 15 – 18, 21 – 23, 25, 30 January & 7 February 2019 (10 Days)
Approved Judgment
Thursday, 7 th February 2019
JUDGE Hodge QC
This is my judgment on the trial of a claim by Dr Abdullah Al-Dowaisan and another against Mr Imad Abdul Al-Salam and three others, case number HC-2015-000366.
This judgment is arranged under nine headings as follows: (1) Introduction and overview; (2) The trial; (3) The witnesses; (4) The liability to account; (5) The claim for an account; (6) The ‘on-trust’ shareholdings; (7) The mandate account claim and the counterclaim; (8) Paramount; and (9) Conclusions. However, these headings are included for ease of reference and exposition only.
Inevitably, my consideration of later issues has informed my decision on earlier ones. Thus, and by way of example, my conclusions on the ‘on-trust’ shareholdings issue have clearly informed my decision on the claimants' entitlement to an account.
If, in the course of this oral judgment, I fail to address a particular point, it is not because I have overlooked it, but because I did not consider it to be sufficiently material to my ultimate decision and because, in the limited time available to me to consider my judgment, it was simply impossible for me to address every single one of the many points urged upon me by counsel.
Any wider legal interest in this judgment is likely to focus upon: (a) section 4, covering the liability to account; (b) section 5, concerning limitation and the discretion to order an account; and (c) section 7, concerning the defence of illegality in cases involving tax evasion.
I should make it clear that although the parties' written submissions included submissions on costs, this judgment will not address that issue which will have to be the subject of further submissions in the light of this judgment.
Introduction and overview
The first claimant, Dr Abdullah Al-Dowaisan is a Kuwaiti national and a dentist. He is 68 years old. The second claimant, Al-Dowaisan Pearl General Trading and Contracting Establishment is Dr Al-Dowaisan's Kuwait-registered investment vehicle. The claimants are represented by Mr Nikki Singla QC leading Mr James Goodwin (of counsel).
The first defendant, Mr Imad Abdul Al-Salam (who is aged 62), and the second defendant, Mr Husham Abdul Al-Salam (who is aged 58), are British citizens, brothers and businessmen of Iraqi origin based in the United Kingdom and primarily engaged in real estate development and management in the United Kingdom and in Morocco. The first and second defendants are directors of the third defendant, Mayfair Developments and Properties Ltd, a UK company (to which I shall refer as “Mayfair”), and, with Mr Al-Yassin, are directors and shareholders of and in the fourth defendant, Paramount Properties Ltd (to which I shall refer as “Paramount”), a company incorporated in the Isle of Man. The defendants are represented by Mr Matthew Hardwick QC leading Ms Miriam Schmelzer (also of counsel).
Mayfair was incorporated on 7 September 1999 as the successor to another company, Park Lane Properties and Estates Limited (also owned and controlled by the first and second defendants), which was incorporated on 11 December 1989 and dissolved on 1 March 2005. Those two companies were responsible for the development and management of a number of property projects in Manchester. Mayfair has been insolvent since about 2007.
Mayfair Developments International Ltd (to which I shall refer as “Mayfair International”) was incorporated on 10 December 2000 to develop and manage property projects in London. It was the successor to Park Lane Properties International Ltd, which had been incorporated on 10 March 1994 and was dissolved on 22 September 2009. Mayfair International has been insolvent since about 2004. Other Mayfair companies were incorporated to develop and manage properties in Leeds and in Morocco.
There is an agreed 27-page chronology which should be treated as appended to the transcript of this judgment to which reference can be made for a detailed history of this litigation and the events that have led up to it.
The essence of the claim made by the claimants is that, having invested with the first and second defendants in a number of their property investment projects in the UK and Morocco, the claimants want an account. Over the course of more than 15 years, from about November 1993 to the year 2000, the claimants invested a total of some £12,547,000 into projects which were introduced and managed by the first and second defendant and corporate entities under their control.
Although the amended particulars of claim did not identify any returns at all to the claimants from their investments, it is now accepted that they received some £10.6 million. It is common ground that Dr Al-Dowaisan, Imad and Husham (as I shall, without any disrespect, refer to them) had a close, friendly and successful working relationship until about the years 2009 and 2010 when it deteriorated as a result, first, of the failure of two development projects in Morocco (known as Garden City and Tanja) and, second, Dr Al-Dowaisan's decision to side with Imad's former personal assistant, Mrs Ala'a Hamond in her capacity as a defendant to civil proceedings in Manchester which had been brought by Imad to recover the monies represented by a substantial number of cheques which she was said to have forged on certain of Imad's bank accounts. This resulted in a substantial money judgment in Imad's favour in June 2012 following a lengthy trial before His Honour Judge Stephen Davies (sitting as a judge of the High Court).
The claimants accept that apart from a few outstanding matters, an account has now been provided to them in relation to the majority of the development projects, but they complain that they never received any contemporaneous account and that these proceedings were necessary in order to obtain the full information to which they had been entitled. The claimants say that in resisting this claim to an account, the defendants' conduct has been obstructive and unreasonable and that the claimants should be awarded their costs of the claim for an account from the defendants.
The defendants maintain that the claimants never made any investment with Imad or Husham, who were not fiduciaries and owed no personal duty to the claimants to account. On the contrary, it is said that after three or four very early projects in the mid-1990s (when direct investments were made) the claimants made each of their UK investments through an offshore holding company, and that the offshore holding company retained a firm of solicitors (Gorvins Solicitors in Manchester) to manage the flow of funds and distribute the proceeds of the development projects.
The defendants say that whilst Mayfair did owe a limited duty to account to investors for the funds received and disbursed by it in respect of six of the development projects (for which it was responsible), it fully complied with that duty. In any event, the defendants object that the claim for an account is time-barred or should be refused by reason of the claimants' inordinate delay and/or as a matter of the proper exercise of the court's discretion.
Finally, the defendants say that the claim for an account is, and always was, entirely without merit or purpose in circumstances where: (1) the claimants received detailed contemporaneous information in respect of their investments and, in any event, (2) the source of the accounting material in respect of the investment projects was Gorvins Solicitors, whom the claimants could and should have approached for any required material and, further, (3) it has been the disclosure of accounting material from Gorvins in these proceedings which has enabled the parties to reconstitute an account in respect of each of the projects.
In addition to the claim for an account, the claimants bring two claims related to that claim. The first is the ‘mandate claim’ which has provoked a counterclaim by Imad only. Between 2000 and 2004 Dr Al-Dowaisan opened five bank accounts in his name and signed mandates in favour of Imad and Husham (‘the mandate accounts’). Those accounts comprised one UK account held at NatWest, one Swiss bank account held at UBS, and three Moroccan accounts held at Arab Bank.
Dr Al-Dowaisan maintains that he believed, at the time proceedings were commenced, that these were his accounts, containing proceeds of his investments with the defendants, asserting that this was the reason given to him by Imad and Husham, and so he claimed the £5.4 million which had been transferred out of these accounts without his authorisation.
It is said by Dr Al-Dowaisan that this understanding was consistent with his relationship of trust and confidence with Imad and Husham to manage his investments and was also consistent with numerous statements made by the defendants to the court (in these and earlier proceedings) and to the police that the mandate accounts contained Dr Al-Dowaisan's monies. The court is invited by the claimants to disbelieve Imad's vague and incredible evidence that Dr Al-Dowaisan was fully aware that Imad and Husham intended to use the mandate accounts for their personal monies.
It is said that the defendants' evidence...
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Table of cases
...Union, 2000 BCCA 143 ................................................................................411 Al-Dowaisan v Al-Salam, [2019] EWHC 301 (Ch) ............................................. 653 Alberta (Attorney General) v Plantation Indoor Plants Ltd (1982), 34 AR 348, 133 DLR (3d) 7......