Charles Ridley v Dubai Islamic Bank PJSC
| Jurisdiction | England & Wales |
| Judge | Christopher Hancock |
| Judgment Date | 26 May 2020 |
| Neutral Citation | [2020] EWHC 1213 (Comm) |
| Date | 26 May 2020 |
| Docket Number | Claim No: CL-2018-000827 |
| Court | Queen's Bench Division (Commercial Court) |
[2020] EWHC 1213 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
QUEENS BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Christopher Hancock QC sitting as a Judge of the High Court
Claim No: CL-2018-000827
Matthew Morrison (instructed on a direct access basis) for the Claimant
Robert Anderson QC and William Edwards (instructed by Baker and McKenzie) for the Defendant
Hearing dates: 24 October 2019 with further written submissions delivered on 31 January 2020, 31 April 2020, 1 May 2020 and 6 May 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Christopher Hancock QC (sitting as a Judge of the High Court):
Introduction and factual background.
I have to deal with a number of interlinked applications, as follows:
(1) The application of the Defendant (“the Bank”) to set aside the order of Carr J (as she then was) allowing service out of the original claim form;
(2) The Bank's application to set aside the order of Carr J giving leave to serve the original claim form by alternative means;
(3) The application of the Claimant (“Mr Ridley”) to amend his particulars of claim.
The factual background is complex.
The starting point is the fact that Mr Ridley was guilty of a fraud committed in Dubai some years ago. Whilst both parties were in agreement that the details of that fraud were not of immediate relevance for present purposes, I think it is helpful to set them out in general terms. I take the facts set out in the following paragraphs from the judgment of Hamblen J (as he then was) in earlier proceedings between the Bank, reported at [2011] EWHC 2718 (Comm), where he said:
“2. The Bank's case is that it was the victim of a US$330 million receivables fraud perpetrated by the Second to Fifth Defendants (Mr Cornelius, Mr Ridley, Mr Nil and CCH Europe). From 2002 onwards, the Bank (which is 30% state owned) entered into trade financing arrangements with CCH Europe. If operated as intended, CCH Europe (acting as the Bank's agent) was to enter into trade finance contracts with third parties and the Bank was to provide funding. From around 2002 to 2007 the Bank advanced around US$500 million to CCH Europe (or its parent company). These funds, so the Bank thought, were being applied for the purpose of legitimate trade financing.
3. It turned out that a substantial proportion of the monies advanced were not used to fund trade finance transactions despite documentation to that effect being presented. The Bank discovered this in around the summer of 2007. Of the sums advanced by the Bank, only around US$160 million had been applied to fund trade finance transactions. The rest, some US$330 million, had been diverted to companies controlled by Mr Cornelius.
4. In the second witness statement of Mr David Mills made with the authority of Mr Ridley it is stated as follows:
“Mr Ridley, whose career has been predominately in trade finance in the Middle East, was party to a receivables fraud pursuant to trade financing arrangements made by the Bank with the Fifth Defendant, CCH (Europe) GmbH, and its parent company in 2002. That fraud involved the presentation to the Bank of false documentation.
The fraud was brought to the attention of the Bank in 2007 by Mr Ridley himself, who recognised the failure of the genuine business schemes in which the Bank's funds had been invested to generate the revenues necessary to repay the Bank. The fraud forms the background to the two agreements of the summer of 2007, but the Bank in comprehensive terms (cl. 12.4 of the RSA) waived and compromised all its claims against Mr Ridley and the other parties. The purpose of the RSA was to ensure that the Bank was repaid all that was owed.”
5. The discovery of this deception and misuse of funds led to a Restructuring Agreement dated 19 August 2007 (“the RSA”) between the Bank and (among others) the Second to Fifth Defendants. The agreement is governed by English law and subject to an English jurisdiction clause. Under that agreement, CCH Europe agreed to repay about US$501 million in accordance with a repayment schedule. Messrs Cornelius, Ridley and Nil guaranteed this repayment obligation, as well as agreeing to disclose their assets and provide security over and transfer to the Bank all proceeds derived from the advances. The RSA also gave the Bank certain security. In particular, it took security over a leasehold interest in Dubai known as Plantation. In return the Bank agreed to waive and compromise any and all claims it had against the Defendants which the Defendants contend includes claims in and complaints for the purpose of criminal proceedings.
6. In 2007, CCH Europe repaid around US$10 million and another party to the RSA (CCH Europe's parent company) repaid a further US$50 million. No other payments have been made.”
As noted in this extract, the discovery of the fraud led to a Restructuring Agreement, the “RSA”, pursuant to which the amounts due to the Bank were to be repaid, and Mr Ridley, amongst others, guaranteed such repayment. The RSA is central to these current applications. That is because that agreement, which was signed on 19 August 2007 and which is expressly governed by English law, contained the following provisions, at Recital (D) and clause 12.4:
“… (D) In settlement of any potential claims against them in respect of the application of the Advances, the CCH Individual Guarantors 1 have agreed to each provide a guarantee and indemnity to the Bank… in respect of the Company and the Parent's obligations under the Agency Agreements and the Restructuring Agreement and on the terms described herein…
…12.4 the Bank hereby agrees, to irrevocably waive and compromise any and all claims, whether existing of future, known or unknown, it has or may have against each of the Guarantors arising from or in connection with the Agency Agreements and the transactions contemplated by the Agency Agreements….”
The RSA also included clause 25.6, which provided that:
“Each of the parties acknowledges and agrees that a breach of the Restructuring Agreement by any other party would cause irreparable damage to each of the other parties and that they will not have an adequate remedy at law. Therefore the obligations of each of the parties shall be enforceable by a decree or order for specific
performance issued by any Court of competent jurisdiction and appropriate injunctive relief may be applied for and granted in connection therewith….”
Finally, the RSA included a jurisdiction clause, in the form of clause 27.2, which provided that:
“The parties submit to the exclusive jurisdiction of the English Courts with respect to all disputes arising out of or in connection with the terms of this Restructuring Agreement. The parties agree that the courts of England are the most appropriate and convenient courts to settle disputes and accordingly no party to this Restructuring Agreement will argue to the contrary.”
The English proceedings on the guarantee.
In due course, the payments required under the RSA were not made, and an action was commenced by the Bank in England (in early October 2010) seeking monies due pursuant to the agreement. As Hamblen J recorded in the earlier action:
“15. The Bank began these proceedings in October 2010. The First Defendant (PSI) is a company controlled by Mr Cornelius. The Bank's claim against it is a proprietary claim in respect of certain shares which the Bank alleges are the proceeds of assets to which it has equitable title. PSI has recently filed a Defence and the claim against it continues. The Bank obtained default judgment against CCH Europe.
16. The claim against Messrs Cornelius, Ridley and Nil is a debt claim for US$440,468,428.10 million arising under the guarantee obligations in the RSA. This is set out at paragraphs 25 to 32 of the Particulars of Claim. The Bank's application is made prior to any of the Defendants filing Defences. In the case of Messrs Cornelius and Nil, this application is made prior to the filing of acknowledgments of service and the Bank obtained permission to make the application in these circumstances.”
An application for summary judgment was made in those earlier proceedings, which was heard by Hamblen J, and it is from his judgment on that application that the above quotations are taken. I return to the relevance of this application below, since the Bank relies on certain passages from the judgment in support of its allegation that the current proceedings involve an abuse of process by Mr Ridley.
For present purposes, I need only note that Hamblen J rejected the application for summary judgment, holding that at least two of the (various) defences put forward had realistic prospects of success, namely an allegation that the events of default relied on by the Bank had been brought about by the Bank itself, and an argument based on an estoppel by convention. In the light of his findings on these arguments, he did not need to deal with the Defendants' other arguments, and did not do so.
The trial in those English proceedings was heard by Flaux J (as he then was) in September and October 2013, with judgment being given in December 2013. The judgment is reported at [2013] EWHC 3781 (Comm)....
To continue reading
Request your trial