Abdullah Nasser Bin Obaid v Khalid Abdullah Al-Hezaimi
| Jurisdiction | England & Wales |
| Judge | Joanne Wicks |
| Judgment Date | 04 October 2022 |
| Neutral Citation | [2022] EWHC 2460 (Ch) |
| Docket Number | Case No: BL-2020-001547 |
| Court | Chancery Division |
[2022] EWHC 2460 (Ch)
Joanne Wicks KC
Case No: BL-2020-001547
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Richard Salter QC and William Edwards (instructed by Baker & McKenzie LLP) for the Claimants
Edward Ho (instructed by Jones Day) for the First and Third Defendants
APPROVED JUDGMENT
Joanne Wicks QC sitting as a Deputy Judge of the High Court:
INTRODUCTION
By a Settlement Deed dated 19 June 2019 (“ the Settlement Deed”), the parties settled certain claims and proceedings between them. The questions which arise in these proceedings are (1) as to the extent of the claims settled by the Settlement Deed and (2) whether it should be rectified.
The First Claimant, Mr Bin Obaid, and the First Defendant, Dr Al-Hezaimi, are businessmen and former business partners. Mr Bin Obaid is a Saudi Arabian national and is resident in Saudi Arabia. Dr Al-Hezaimi originally trained and qualified as a dental surgeon and was involved in business ventures in the medical field. The ventures in which Mr Bin Obaid and Dr Al-Hezaimi were involved together included a medical equipment business in Saudi Arabia and Egypt known as United Industrial Medical & Plastics Co (“ UIMP”) and a bone tissue bank in Riyadh.
The Second and Third Claimants are companies under the control of Mr Bin Obaid; the Second and Third Defendants are or were companies in the control of Dr Al-Hezaimi (the Second Defendant was struck off the BVI Register of Companies in about October 2021).
The business dealings between Mr Bin Obaid and Dr Al-Hezaimi were largely informal; often by phone or WhatsApp and large sums of money passed between them with relatively few contractual documents. The relationship fractured and the parties have since been involved in various proceedings both in England and in Saudi Arabia.
One such set of proceedings was commenced by the Claimants against the Defendants in this jurisdiction in 2017, under claim number HC-2017-001893 (“ the Main Action”). Baker & McKenzie LLP (“ Baker & McKenzie”) were the Claimants' solicitors (as they are in the current proceedings); Jones Day were the Defendants' (as they also are in the current proceedings). The Main Action proceeded to a trial before Falk J in June 2019, at which Richard Salter QC and William Edwards appeared for the Claimants and Robert Anderson QC and Andrew Scott appeared for the Defendants. The Settlement Deed was executed on the sixth day of the trial.
Between October and December 2019, following the Settlement Deed, various sets of proceedings were commenced in Saudi Arabia by either Mr Bin Obaid or the Third Claimant against Dr Al-Hezaimi (“ the 2019 Saudi Proceedings”). Dr Al-Hezaimi responded to some of those proceedings by contending that the claims brought in them were settled by the Settlement Deed. There is a dispute between the parties, which I do not need to resolve, as to the extent to which the 2019 Saudi P roceedings remain live or may be revived. In any event, in September 2020 the Claimants commenced this claim for a declaration as to whether the Settlement Deed had the effect of releasing claims in relation to various payments which were originally referred to in the Claimants' pleadings in the Main Action but subsequently removed by amendment and, in the alternative, for rectification of the Settlement Deed so as to provide that claims relating to those payments were not released. The Defendants in turn counterclaim for a declaration that the claims in the 2019 Saudi Proceedings were settled by the Settlement Deed and for indemnities, injunctions and damages for breach of it.
Because it is relevant to the rectification claim, I heard evidence relating to the negotiation of the Settlement Deed and the parties' subjective understanding of its effect at the time it was executed. This evidence is, however, inadmissible on the question of construction of the Settlement Deed and I have excluded it from consideration on that issue. I will set out separately below the background to the Settlement Deed, which is part of the context in which it falls to be interpreted, and my findings on the evidence adduced in respect of the rectification claim.
WITNESSES
On behalf of the Claimants, I heard oral evidence from Jack Michael Secunda, a solicitor with Baker & McKenzie, and Hugh Jonathan Lyons, a partner of that firm. I also read the witness statement of Abdulrahman AlAjlan, a Saudi Arabian lawyer at a firm associated with Baker & McKenzie. On the Defendants' side I heard oral evidence from Rhys Elis Thomas, a partner in the firm of Jones Day and read two witness statements of Dr Ibrahim Al-Howaimil, Dr Al-Hezaimi's Saudi Arabian lawyer.
The three solicitors practising in England, Mr Secunda, Mr Lyons and Mr Thomas, all gave their evidence candidly and with conspicuous care. I have no doubt that each was genuinely attempting to recall, to the best of their ability, the events which led to the Settlement Deed being executed. All frankly admitted when they could not remember particular events or where their memories were hazy. There are some significant differences in recollection between Mr Secunda and Mr Thomas, in particular as to what was said at a particular meeting between them on Tuesday 18 June 2019. I am, however, completely satisfied that those differences stem from the fallibility of human memory rather than any attempt to proffer an account which better suits their respective clients.
BACKGROUND TO THE SETTLEMENT AGREEMENT
The Main Action commenced with an application by Mr Bin Obaid against Dr Al-Hezaimi without notice for proprietary and worldwide freezing injunctions and other relief. The application was supported by an affidavit of Mr Bin Obaid dated 21 June 2017, an affidavit of Mr Lyons dated 23 June 2017 and a witness statement of Mr Lyons dated 28 June 2017. Mr Bin Obaid contended that he and Dr Al-Hezaimi had agreed that Dr Al-Hezaimi would invest in English properties using Mr Bin Obaid's money and that these properties would be held in an offshore company, namely the Second Claimant, of which Mr Bin Obaid was the majority shareholder. He accused Dr Al-Hezaimi of perpetrating a fraud on him, as a result of which the properties (said to be worth more than £35 million) had come to be held by the Second and Third Defendants as Dr Al-Hezaimi's own vehicles. Barling J heard the application.
The Claimants put before Barling J draft Particulars of Claim. The draft Particulars identified a number of payments alleged to have been made by Mr Bin Obaid or the Third Claimant to Dr Al-Hezaimi (or to a company, Global Real Estate Portfolios Ltd, on his behalf) for the purpose of investing in English real property or for that and other purposes. Three such payments, totalling over SAR 10 million, were pleaded to have been made for the purpose of funding the purchase of properties in Reading, referred to as the City Tower Development; 11, totalling over SAR 56 million, for the purpose of funding the purchase of four properties in a block in Manchester called the Smithfield Square Development, and for other unrelated transactions (in respect of which no claim was made) and nine, totalling the equivalent of about £31.56 million, for the purpose of funding the purchase of 125 apartments in a Manchester development known as the Assembly Development. The draft Particulars alleged that the properties and any rental income or surplus monies from the funds advanced by them belonged to the Claimants beneficially and claimed a declaration to that effect, an order requiring transfer of title, damages and/or equitable compensation, an order for accounts and enquiries, interest and further or other relief.
Barling J granted proprietary injunctions and a worldwide freezing injunction by order dated 28 June 2017. The various transfers allegedly made by the Claimants were set out in Schedule C to his order. Following Barling J's order, and in accordance with an undertaking given to Barling J, the Claimants issued the claim in the Main Action on 29 June 2017 and served it together with Particulars of Claim in the form of the earlier draft.
On 22 September 2017, the Defendants (a) served their Defence and (b) issued an application to set aside Barling J's order on the basis of material non-disclosure.
By their Defence, the Defendants denied the Claimants' claims. They contended that the payments set out in the Particulars of Claim were not made for the purpose of investing in English property for the Claimants' benefit, but rather were for various other purposes. In particular, two of the payments alleged to have been made for the purpose of the City Tower Development and four of the payments alleged to have been made for the purpose of the Assembly Development were said to have been in fact made for purposes relating to the UIMP business, including to pay Dr Al-Hezaimi's salary and expenses, and one of the payments alleged to have been made for the purpose of the Smithfield Square Development was said to have in fact been made on account of Dr Al-Hezaimi's work on the tissue bank. The Defendants contended that none of the payments relied upon by the Claimants were made for the purpose of investing in property and that the properties in issue in the proceedings belonged beneficially to the Defendants.
The application to set aside Barling J's order was made on the basis that the Claimants had failed to make any, or any adequate, mention to Barling J of (a) the UIMP business; (b) an agreement between Dr Al-Hezaimi and Mr Bin Obaid by which Mr Bin Obaid agreed to buy out Dr Al-Hezaimi's stake in that...
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