Chia Hsing Wang v Hussam Otaibi
| Jurisdiction | England & Wales |
| Judge | Ashley Greenbank |
| Judgment Date | 29 October 2021 |
| Neutral Citation | [2021] EWHC 2896 (Ch) |
| Docket Number | Case No: BL-2021-000528 |
| Year | 2021 |
| Court | Chancery Division |
[2021] EWHC 2896 (Ch)
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 Ashley Greenbank
(sitting as a Deputy Judge of the High Court)
Case No: BL-2021-000528
John Wardell QC and Tom Roscoe, counsel (instructed by LK Law LLP) for the Applicants
Andrew Hunter QC and Tom Mountford, counsel (instructed by Herbert Smith Freehills LLP) for the Respondents
Hearing dates: 16 and 17 September 2021
APPROVED JUDGMENT
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Ashley Greenbank (sitting as a deputy judge of the High Court): Introduction
The applicants, Mr Chia Hsing Wang, who is known as “Bruno Wang”, and two companies controlled by him, which are incorporated in the Cayman Islands, apply for pre-action disclosure under CPR 31.16.
The respondents are Mr Hussam Otaibi, Mr Mutaz Otaibi and Mr James Wilcox and various companies, which the applicants assert, are owned and/or controlled by one or more of them. Mr Hussam Otaibi, Mr Mutaz Otaibi and Mr Wilcox are the principals in an investment management and advisory business known as the “Floreat group” and many of the respondents (but not all) are companies which undertake the investment management and advisory business or fund vehicles established and managed by them. The parties referred to Mr Hussam Otaibi, Mr Mutaz Otaibi and Mr Wilcox together as the “Floreat principals” and I will do the same.
There are no current proceedings between the parties. The application for pre-action disclosure relates to possible claims which the applicants say they may bring against the respondents arising from the management of Mr Wang's financial and other affairs by the Floreat group in the period between 2014 and 2020.
Background to the application
Mr Wang is a Taiwanese national. Mr Wang owns, or has effective control on behalf of his family of, a large portfolio of assets a significant proportion of which derive from his late father. For reasons which I do not need to expand upon, the portfolio of assets which derive from his father has been the subject of extensive litigation in several jurisdictions and Mr Wang's access to and freedom to deal with the portfolio has been restricted. In particular, the portfolio was for a long period of time subject to an attachment and freezing order in Switzerland. I am told by the applicants that that order has recently been released, but I have seen no evidence in that respect.
In the Autumn of 2014, Mr Wang entered into discussions with Mr Hussam Otaibi and Mr Wilcox about the possibility of the Floreat group assisting Mr Wang with family office and investment advisory services. At this time, many of the restrictions to which I have just referred were fully in place and Mr Wang and his family were experiencing significant difficulties in gaining access to the assets and income from the portfolio to support their lifestyles and meet their ongoing expenses.
Following these discussions, from late 2014, Floreat group companies provided, inter alia, investment advisory and family office services to Mr Wang and the other applicants pursuant to:
i) an Investment Advisory Agreement of 11 December 2014 between the fourth respondent, Floreat Merchant Banking Ltd (“FMB”), the fifth respondent, Floreat Wealth Management Ltd (“FWM”) and Mr Wang (the “2014 IAA”);
ii) a Supply of Services Agreement of 11 December 2014 between the sixth respondent, Floreat Private Ltd (“FPL”) and Mr Wang (the “2014 SOSA”);
iii) an Investment Advisory Agreement dated 19 January 2016 between the eighth respondent, LV II Investment Management Ltd (“LVII”) and Blue Water Limited (the second applicant) (the “2016 IAA”); and
iv) a Supply of Services Agreement dated 14 December 2018 between FPL and Amida Group Holdings (the third applicant) (the “2018 SOSA”).
The services provided under these agreements were wide-ranging. The respondents say that the services provided to Mr Wang and the applicants were of great benefit to them and that substantial fees are due under the agreements, which Mr Wang and the other applicants have failed to pay. Steps are now being taken to commence arbitration under those agreements.
Mr Wang and the other applicants, however, say that under those agreements and in related transactions, assets in the portfolio were invested in structures and arrangements that were designed primarily to benefit the Floreat principals or to acquire assets (principally art and real estate) for the benefit of the Floreat principals or which have been enjoyed the Floreat principals. Some of the facts are hotly disputed. It is not the purpose of these proceedings to decide upon them.
The applicants say that the application for pre-action disclosure is intended to assist them in clarifying their potential claims against the respondents, primarily the Floreat principals, and to enable them to plead their case more accurately.
Procedural background
The application was made on 23 March 2021. In the application, the applicants applied:
i) for an order under section 33(2) of the Senior Courts Act 1981 and CPR 31.16 for pre-action disclosure of documents within nine classes of documents set out in the schedule to a draft order attached to the application in connection with “proceedings in respect of matters set out in Mr Wang's first witness statement”; and
ii) for orders under CPR 5.4C and CPR 39.2 to preserve the confidentiality of matters set out in the second witness statement of Mr Wang.
The application was supported by two witness statements made by Mr Wang.
i) Mr Wang's first witness statement provided background to his relationship with the Floreat principals, the 2014 IAA and the 2014 SOSA with the Floreat companies, the changes to those arrangements leading to the 2016 IAA and the 2018 SOSA with the second and third applicants, and the investments made under these arrangements. It set out the “main categories of complaint” which Mr Wang asserts may give rise to future proceedings and provides some detail of the various matters of alleged wrongdoing on which Mr Wang relies. I have set out more details of these matters later in this judgment, but in summary they are:
a) the classification of Mr Wang as a “professional investor” or a “professional client” for the purpose of the IAA 2014 and IAA 2016;
b) representations made to Mr Wang that the funds, in which the portfolio was invested, were established funds in which other high-net worth individuals had invested;
c) investments made by those funds in real estate assets – namely an estate in Berkshire called “Springs Farm”, office premises and residential apartments at 33 Grosvenor Street, London, and land in Mexico referred to as “Isla Holbox” (or “Holbox Island”) – which the Floreat principals have used or enjoyed for their own benefit or which Floreat group companies have occupied;
d) the arrangements for the payment of expenses of Mr Wang and his family through a company called Mount Tai Limited (“Mount Tai”), which is owned by Mr Hussam Otaibi (the first respondent);
e) the mismanagement of Mr Wang's assets and the charging of excessive fees; and
f) the failure by the respondents to provide details of the investments when requested.
The exhibits to Mr Wang's first witness statement include copies of the IAA 2014, the 2014 SOSA, the 2016 IAA, the 2018 SOSA, filings at HM Land Registry relating to the property at 33 Grosvenor Street, and correspondence concerning Mr Wang's attempts to obtain information about the investments and solicitors' correspondence in relation to the proceedings.
ii) Mr Wang's second witness statement provides background to the imposition of the freezing and attachment orders that have been imposed on the portfolio, the steps that have been taken to secure the lifting of those orders and details of the portfolio. The exhibits include documents relating to the imposition of the freezing and attachment orders and a detailed report prepared by FFP (Cayman) Limited (“FFP”), a corporate and trustee services firm in the Cayman Islands, for the purpose of these proceedings, setting out their findings concerning transactions involving the assets in the portfolio undertaken by the respondents.
I have set out more details of the application for the order for pre-action disclosure later in this judgment. The application has not been served on the eighth respondent, LVII.
On 10 June 2021, FMB, FWM and FPL (the fourth, fifth and sixth respondents) made a cross-application to strike out the application in so far as it related to them for lack of jurisdiction. This was on the grounds that those respondents were parties to advisory and service agreements with the applicants (i.e. the 2014 IAA, the 2014 SOSA and the 2018 SOSA), which contained binding arbitration provisions; that the matters raised in the application fell within the scope of those provisions; and...
To continue reading
Request your trial