Daraydan Holdings Ltd and Others v Solland International Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Lawrence Collins |
| Judgment Date | 26 March 2004 |
| Neutral Citation | [2004] EWHC 622 (Ch) |
| Docket Number | Case No: HC02 C 01911 |
| Court | Chancery Division |
| Date | 26 March 2004 |
[2004] EWHC 622 (Ch)
Mr Justice Lawrence Collins
Case No: HC02 C 01911
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Anthony Peto and Mr Tom Weisselberg (instructed by Jones Day) for the Claimants.
Mr Edward Bannister QC and Mr Sharif Shivji (instructed by Clifford Harris & Co) for the First, Second, Third and Fourth Defendants.
The Fifth, Sixth and Seventh Defendants made no appearance.
I direct that pursuant to CPR PD 39 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 ( Mr Justice Lawrence Collins)
I Introduction
This case is concerned with an allegation of bribes or secret commissions. Bribery is an evil practice which threatens the foundations of any civilised society: Lord Templeman in AG for Hong Kong v Reid [1994] 1 AC 324, at 330. It corrupts not only the recipient but the giver of the bribe.
Mr Khalid, the fifth defendant, extracted from Mr and Mrs Solland and their companies (the first to fourth defendants) about £1.8 million between 1997 and 2001, which represented a 10% commission on receipts from contracts with the claimants for the luxurious refurbishment of properties in London and Qatar.
The proceedings against Mr and Mrs Solland and their companies have now been settled, and the issues for decision are whether Mr Khalid is accountable to the claimants, and in particular whether the claimants are entitled to an order that he holds the payments on constructive trust. That question in turn depends on whether the controversial decision in Lister & Co v Stubbs (1890) 45 Ch D 1 continues to have any life after the decision of the Privy Council in AG for Hong Kong v Reid [1994] 1 AC 324, and (if so) whether it applies in the present case.
II The parties and their advisers
Sheikh Mohammed, the third claimant, holds the rank equivalent to the Deputy Prime Minster of Qatar and is Special Adviser to his brother, the Emir of Qatar. The other claimants are corporate vehicles for the holding of his property interests in England. The first claimant ("Daraydan") is incorporated in Jersey. Its shares are ultimately owned by a Jersey Trust, the Marsh Trust, of which Sheikh Mohammed is the settlor and a discretionary beneficiary. Its directors are appointed by what is now Standard Chartered Grindlays Trust Corporation (Jersey) Ltd (formerly ANZ Grindlays Trust Corporation (Jersey) Ltd) which is a Jersey company providing offshore trustee and corporate services ("SCG Jersey"). The other claimants ("Cairn", "Theebah", "Landmark" and "Northwest") are incorporated in the Isle of Man and Sheikh Mohammed is the beneficial owner of their shares.
Sheikh Sultan is a senior adviser to, and confidant of, Sheikh Mohammed. Sheikh Sultan is based in Qatar, and he has worked for Sheikh Mohammed since 1990, and is the director of Sheikh Mohammed's private office. He is also the chairman and chief executive officer of Qatar Industrial Services Establishment Ltd ("QIS"), a holding company set up to own and operate Sheikh Mohammed's industrial, trading and engineering concerns in Qatar. Mr Izzat Dajani, who joined QIS in January 1998, reports to Sheikh Sultan.
The third and fourth defendants ("Mr and Mrs Solland") are United Kingdom nationals and are resident in England. Mr Solland is of Iranian origin and has lived in the United Kingdom since 1965. Mrs Solland studied architecture and design, and has considerable experience as an interior designer and project manager. Together Mr and Mrs Solland own and control the second defendant, Solland Interiors Ltd ("Interiors"), an English company which carried on business as a design and refurbishment company from South Audley Street, in Mayfair, London W1.
The first defendant, Solland International Ltd ("International"), is a BVI company which was incorporated on the instructions of Mr Solland in September 1997 and has its administration and bank account in Zurich. International's shares are owned by an off-shore trust, the Ramat Gan Trust (also set up on the instructions of Mr Solland), of which Mr and Mrs Solland (and their son) are discretionary beneficiaries. International's board of directors is provided by Sinitus Treuhand AG ("Sinitus"), a Swiss company which provides professional services to off-shore companies. Two of its directors are Mr Ueli Werthmueller (who has been a director of International since 1997) and Mr Urs Meisterhans (who joined Sinitus in July 1999 and has been a director of International since November 2001). Mr Werthmueller was to give evidence in the trial, but was not well enough to attend, and Mr Meisterhans gave evidence instead.
The fifth defendant ("Mr Khalid") is a United Kingdom national of Syrian origin, who was resident in England at all relevant times until January/February 1998 and who then divided his time between England and Qatar whilst working for Sheikh Mohammed and his companies until his dismissal or suspension in July 2002.
The sixth defendant ("Mrs Al-Attiya") is Mr Khalid's sister and the seventh defendant ("Mr Al-Attiya") is his nephew. Both are resident in Qatar.
Mr Malcolm Melbourne ("Mr Melbourne") is an accountant, whose firm (Jayson Newman) audited the accounts of Interiors. Mr Martin Paisner ("Mr Paisner") is a solicitor, and a senior partner of what is now Berwin Leighton Paisner, and he advised Mr and Mrs Solland in relation to their personal affairs, and advised on the incorporation of International. He introduced them to Mr Stuart Gerber ("Mr Gerber"), an accountant and a partner in BDO Stoy Hayward, when the Inland Revenue began to raise questions on the relationship between Interiors and International.
III Contracts with the claimants, the payments to Mr Khalid, and these proceedings
In January 1997, after discussions between (in particular) Mrs Solland, Sheikh Mohammed, Sheikh Sultan, and Mr Khalid, Cairns and Interiors entered into what became the first of several contracts between the claimants and Interiors and International for the refurbishment of properties owned by the claimants in England and in Qatar. It was followed by other contracts, under which more than £20 million was paid by the claimants to Interiors or International. The most substantial contracts related to the refurbishment of Lombard House, Curzon Street, which Daraydan bought in 1997 for £14 million for the use of Sheikh Mohammed and his family as a private residence on their visits to London. Although originally built as a private residence it had been converted for use by a bank (ultimately National Westminster Bank), and required substantial stripping out and renovation for reversion to private use.
Between January 1997 and June 2000, the following contracts ("the Contracts") were entered into between the claimants and Interiors or International in relation to the following properties (together with the amounts paid to Interiors or International):
(a) On about January 17, 1997, a refurbishment contract between Cairn and Interiors for 27 Grosvenor Hill Court (the "Grosvenor Hill Court contract"): £632,737.
(b) On November 11, 1997, a written refurbishment and furnishing contract between Northwest and Interiors for 28 Charles Street (the "28 Charles Street contract"): £390,000.
(c) On January 21, 1998, a written contract for design services and strip-out work between Daraydan and International for Lombard House, Lombard Street (the "Lombard House Phase 1 contract"): £936,670.
(d) In July 1998, a refurbishment contract between Theebah and International for 46 Green Street (the "46 Green Street Contract"): £92,237.
(e) In July 1998, an agreement (evidenced by letter dated July 2, 1998) between Sheikh Mohammed and International) for design services in relation to a farmhouse in Al-Shahaniya, Qatar, (the "Qatar Farmhouse Design Contract"): £127,200.
(f) In March 1999, a written contract for the refurbishment and furnishing of 28A Charles Street between Landmark and International ("the 28A Charles Street Contract"): £486,566.
(g) March 5, 1999: a written contract for the refurbishment of Lombard House between Daraydan and International (the "Lombard House Main Contract"): £12,670,161.
(h) July 26, 1999: a written contract for the supply of goods and furnishings to Lombard House between Daraydan and International (the "Lombard House Supply of Goods Contract"): £3,910,237.
(i) June 16, 2000: a written contract for the supply of goods and refurbishment to a farmhouse in Al-Shahaniya, Qatar between Sheikh Mohammed and International (the "Qatar Farmhouse Main Contract"): £1,153,991.
Mr and Mrs Solland procured the payment by Interiors or International to Mr Khalid (or his nominees) of 10% of payments made by the claimants to Interiors and International, and between January 31, 1997 and October 22, 2001 about £1.8 million was paid to him by Interiors or International, or to Mrs Al-Attiya or to Mr Al-Attiya on his instructions.
The claimants were informed of these payments by a letter sent by Sinitus (to which I shall refer below) on May 15, 2002, and after correspondence between solicitors, proceedings were commenced by the claimants.
In these proceedings the claimants claimed against all the defendants an account of all secret commissions, an order for restitution of the secret commissions, a declaration that they were...
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