Ammar Al Assam v Dimitrios Tsouvelekakis
| Jurisdiction | England & Wales |
| Judge | Jonathan Richards |
| Judgment Date | 07 March 2022 |
| Neutral Citation | [2022] EWHC 451 (Ch) |
| Docket Number | Case No: PT-2021-000836 |
| Year | 2022 |
| Court | Chancery Division |
[2022] EWHC 451 (Ch)
JUDGE Jonathan Richards
Sitting as a Deputy Judge of the High Court
Case No: PT-2021-000836
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY, TRUSTS AND PROBATE LIST (ChD)
Rolls Building
Fetter Lane
London, EC4A 1NL
Simon Adamyk and Jessica Powers (instructed by DWF Law LLP) for the claimants
David Head QC and Clarissa Jones (instructed by Peters & Peters LLP) for the defendant
APPROVED JUDGMENT
The Defendant lives in England. The Claimants have served proceedings on him in England. The Defendant takes no point on the efficacy of that service and accepts that the English courts have jurisdiction to try the claim. However, by application notice dated 29 October 2021, he has applied for an order that the English courts decline jurisdiction and stay the claim on the basis that Cyprus is the more suitable and appropriate forum for determination of the claim. Applications of this type have long been referred to by their Latin tag of “ forum non conveniens” but in the interests of readability I will use the term “appropriate forum”. This is my judgment on the Defendant's application.
I had evidence of fact from Mr Woodland, the Defendant's solicitor, and from Mr Twomey, the solicitor for the Claimants. Both sides also put forward expert evidence on Cyprus law. The Claimants relied on expert evidence from Dr Marcos Dracos, a barrister qualified in both Cypriot and English law and practising in both Cyprus and England and Wales. The Defendant relied on expert evidence from Dr Polyvious Polyviou, who is both an academic and a practising lawyer in Cyprus. Neither party challenged the expertise or independence of the other's expert.
THE PROCEEDINGS
The legal claims and the background to them
C1 and C2 are settlors of two trusts (the “AAA Trust” and the “Hamza Trust” and together the “Trusts”). C1 to C8 are members of the same family and are beneficiaries of the Trusts which were both established under the International Trusts Law of the Republic of Cyprus.
The Trusts both held funds and investments through two asset-holding companies: C9 (“AAA Group”) in the case of the AAA Trust and C10 (“Hrostenco”) in the case of the Hamza Trust. AAA Group is incorporated in Panama. Hrostenco is incorporated in the British Virgin Islands.
The trustee of each of the Trusts was Latimer (Management Services) Limited (“Latimer”). Latimer is incorporated in Cyprus and is subject to financial and fiduciary service regulation in Cyprus. Latimer exercised its functions as trustee through Mr Antonis Partellas and Mr Stelios Kiliaris, its directors and shareholders both of whom are resident in Cyprus. Mr Partellas and Mr Kiliaris are also directors of and equal shareholders in Alliott Partellas Kiliaris Ltd (“APK”), which is also incorporated in Cyprus. All payment instructions when investments were made by the Trusts were made by way of instruction letters on AAA Group or Hrostenco headed paper, signed by Ms Antonia Kyriakou (an employee of APK).
Between July 2010 and May 2015, some 60% of the total funds that C1 and C2 contributed to the Trusts were represented by investments in two telecommunications companies (“Rolaware” and “Dremoplex”). Both of these companies were incorporated in Cyprus but carried on businesses in mainland Greece involving the exploitation of telecommunications and broadcasting licences. From time to time shares acquired by the Trusts in Rolaware and Dremoplex were held by a nominee company Hamervate Limited, incorporated in Cyprus. APK was the auditor of both Rolaware and Dremoplex.
By their claims, the Claimants seek to make the Defendant liable for losses suffered in connection with the Trusts' investments, including those made in Rolaware and Dremoplex. The claims are put in the following ways:
i) Claim 1 (negligence) – C1 and C2 contend that the Defendant assumed personal responsibility to them to take reasonable care to invest funds in accordance with the agreed objective of the Trusts, which was to ensure capital preservation. He breached that duty by giving poor investment advice to Latimer and caused loss.
ii) Claim 2 (breach of fiduciary duty) – C1 and C2 contend that there was a long history of dealings between them and the Defendant and the trust and confidence that they reposed in him caused him to owe fiduciary duties, including a duty to act in good faith, and not to put himself in a position of conflict. He had an involvement with Rolaware and Dremoplex which gave rise to a conflict of interest. More generally he breached his fiduciary duty and caused loss.
iii) Claim 3 (deceit) – C1 and C2 contend that the Defendant lied to them by providing false portfolio reports and making other misrepresentations including misreporting the existence of USD millions in cash which did not exist. Had they known the true position earlier, they would have intervened earlier and prevented much of the loss.
iv) Claim 4 (dishonest assistance in Latimer's breach of trust) – C1 to C8 contend that Latimer breached its duties as trustee by making speculative high-risk investments and failing to monitor them properly and that the Defendant's actions amounted to dishonest assistance in those breaches.
v) Claim 5 (alternative tortious claim under Swiss law). The Claimants pleaded a Swiss law claim in tort as an alternative. However, since it appears that the Defendant agrees that any claim in tort would be governed by Cyprus law, it appears unlikely that this claim will need to be advanced.
vi) Claim 6 (contractual claim under Swiss law) This claim is made by AAA Group and Hrostenco alone. It is said that AAA Group and Hrostenco executed documents, governed by Swiss law, that gave the Defendant power to place orders on accounts held with a Swiss financial institution (“Kendra”). It is said that the Defendant owed AAA Group and Hrostenco contractual duties of “diligence” and “fidelity” that he breached by causing the challenged investments to be made and caused loss as a result.
The parties appear agreed that Claims 1 to 4 will be governed by Cyprus law although the Defendant emphasised that his position might evolve as the litigation progresses. They also appear agreed that the Cyprus law applicable to these claims is broadly similar to applicable English law.
Issues that are likely to arise
As Lord Clarke noted in paragraphs 192 to 194 of his judgment in VTB Capital plc v Nutritek International [2013] 2 AC 337, in a case where the appropriate forum for proceedings is in dispute, it is essential to identify those issues that are likely to arise at the trial of the action on the merits. Only when those issues are identified is it possible to identify the suitability of the various candidate jurisdictions.
The Defendant has not to date served any Defence. However, the skeleton argument of Mr Head QC and Ms Jones, and also the witness statement of his solicitor, Mr Woodland provide an indication of the points that he is likely to make in his defence. Predicting the course of litigation such as this is necessarily going to be somewhat uncertain, but I have concluded that the following issues, at least, are likely to arise:
i) The way in which the Trusts made their decisions to make investments and the legal framework within which those decisions were made. This issue will be thrown into focus by the Defendant's assertion that it was, in all cases, Latimer's decision, in its capacity as trustee, whether particular investments were made or not. This issue will also involve an analysis of whether the Trusts' investment strategy was intended to protect capital (as the Claimants say) or whether it was intended to be much more adventurous (as the Defendant says). It will also involve some consideration of what investments the Trusts might have made if they had not made the investments that the Claimants criticise.
ii) The nature and evolution of the relationship between the Defendant and the Claimants and between the Defendant and the Trusts. That will set out a basis for establishing whether the Defendant did assume a degree of personal responsibility to the Claimants for the selection of successful investments and whether any fiduciary relationship was established. An understanding of that issue will help to address related points that the Defendant looks likely to raise in his defence namely that (i) to the extent he had any duties, they were owed to Latimer (in its capacity as trustee of the Trusts) and not to the Claimants in their capacities as settlors/beneficiaries (ii) that a company the Defendant controlled (“Tiger Capital”) was appointed to manage the brokerage accounts of AAA Group and Hrostenco with Kendra, (iii) that the arrangement with Tiger Capital provided Tiger Capital with extensive protection by way of indemnities and acknowledged that investments might be made in assets in which Tiger Capital had an interest or involvement and that (iv) while the Defendant was authorised to place orders on the Kendra accounts, he was not authorised to withdraw funds or assets from those accounts.
iii) As well as helping to establish the nature and scope of any duties that the Defendant...
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