Decisive Capital Management SA v Les Geonnais Ltd
| Jurisdiction | England & Wales |
| Judge | Richard Farnhill |
| Judgment Date | 25 October 2023 |
| Neutral Citation | [2023] EWHC 2658 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: BL-2020-001611 |
[2023] EWHC 2658 (Ch)
Richard Farnhill
(sitting as a Deputy Judge of the Chancery Division)
Case No: BL-2020-001611
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
BUSINESS LIST (ChD)
Rolls Building
Fetter Lane,
London, EC4A 1NL
Mr Giles Wheeler KC (instructed by Withers LLP) for the Claimant
Mr Daniel Lewis (instructed by Spector, Constant & Williams Limited) for the Third Defendant
Hearing dates: 21–27 September 2023
Richard Farnhill (sitting as Deputy High Court Judge for the Chancery Division):
Introduction
This claim arises out of a failed refinancing of sums owed by the First Defendant ( LGL) and Second Defendant ( Seventy Eight, and collectively with LGL, the Borrowers). As part of that process the Borrowers took out a loan initially of £2 million (the Original Loan) and ultimately of £2.5 million (the Amended Loan) from the Claimant ( Decisive). The Third Defendant ( Dr Alanizi) gave personal guarantees in favour of Decisive in respect of both the Original Loan (the Original Guarantee) and the Amended Loan (the Amended Guarantee, and collectively with the Original Guarantee, the Guarantees). The Borrowers are indirectly owned or controlled by the Yousfan Trust, of which Dr Alanizi is a beneficiary. Royal Bank of Canada ( RBC) acted both as the corporate director of the Borrowers and as trustee of the Yousfan Trust.
Decisive has obtained judgment against the Borrowers. Accordingly, the claim now proceeds only against Dr Alanizi.
Broadly, Dr Alanizi's Defence is that he was induced to enter into those guarantees by misrepresentations made by Decisive's representatives. One of the difficulties in this case is that once one seeks to move beyond such broad outlines the Defence, as Mr Lewis accepted during closing, is at best difficult to work with. I should emphasise that Mr Lewis and his instructing solicitors did not settle that Defence, and they have been granted only limited scope to amend it.
This is not a point of pleading pedantry or even pleading best practice. Dr Alanizi asserts a defence of misrepresentation on the part of Decisive. To assess it one must understand who said what to whom and when. While the Defence was clear that the representations, if made at all, were made to Dr Alanizi, it is not clear from the Defence when they were made, by whom or even what they were said to be. Nor was the Defence always consistent with the witness statement of Dr Alanizi.
Making the best that one can of the Defence, the alleged representations take six pleaded forms:
i) Decisive would not seek to and would not need to enforce the Guarantees (the No Risk Representation).
ii) Decisive honestly believed that the chance of enforcing the Guarantees was low (the Low Risk Representation).
iii) The refinancing was a “done deal” (the Done Deal Representation). That was said to support the first two representations, but Mr Lewis made clear that those representations were advanced regardless of whether I found that the Done Deal Representation was made or, if made, regardless of whether it was actionable.
iv) There was an implied representation that the first three representations had a reasonable basis (the Reasonable Basis Representation).
v) An email sent by Decisive to Dr Alanizi on 26 February 2020 (which I address below) carried with it an implied representation that (i) Yunak Corporation Ltd ( Yunak) was a shareholder and major investor of Decisive; (ii) it had available cash balances of £89,179,722.34 in its client account at Fladgate LLC; and (iii) it had committed or agreed to lend part of that sum to refinance the Longbow Loan (the Yunak Representation).
vi) A more limited refinancing being contemplated in July 2020 was a “done deal” (the July Done Deal Representation).
The July Done Deal Representation is relevant only to the Amended Guarantee; the other alleged representations are relevant to both the Guarantees.
The Defence is founded on, and only on, pre-contractual misrepresentation (whether under the Misrepresentation Act 1967 or at common law). It is not suggested that any of the alleged representations gave rise to a collateral contract or some form of estoppel.
The witness evidence
Three witnesses gave evidence at trial, and one non-witness merits mention.
Mr Chamat is a director and the CEO of Decisive. He was the principal decision-maker at Decisive in this transaction and was involved in most but not all of the key exchanges with Dr Alanizi.
Mr Chamat recognised in his witness statement that he did not remember meetings or discussions in great detail and did not recall precisely what was said by him or by Dr Alanizi with the exception of certain phrases he believes were used. That is far from a surprising acknowledgment. There is a growing line of English cases recognising that most if not all witnesses will have equally imperfect recollection. I was referred, in particular, to Gestmin SGPS SA v Credit Suisse (UK) Ltd & Anor [2013] EWHC 3560 (Comm). There, Leggatt J concluded at [22]:
In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.
I note also the observations of Michael Green J in Wrangle v Brunt [2021] EWHC 368 (Ch) regarding the need to have regard to objectively ascertainable facts where the documentary record is limited or incomplete. Again, I felt that Mr Chamat's witness statement fairly recognised the importance of such an approach.
Mr Chamat's oral evidence was a very different manner of beast, however. When he came to give evidence Mr Chamat was suffering from ill health, and I make allowance for that in assessing his evidence at trial. Even making such allowance, he was an unconvincing witness on a number of levels.
He often gave long, discursive answers in response to straightforward questions. Those answers bore no obvious relation to the question asked. In light of this Mr Lewis invited me to find that Mr Chamat was an evasive witness. On balance I think that goes too far. Mr Chamat is obviously most comfortable when he is selling to or working with clients. As he put it in cross-examination, “ this is my way, I'm here to support the clients, and this is my DNA”. I do not believe that he focusses on detail, preferring to delegate that to others. Again, to quote Mr Chamat:
In this whole case, if I may, I really left it most of the time to the team that we had. I didn't get involved a lot in the whole transaction, so I really relied on John Nacos in the beginning and till April/May, and I would be involved when needed, really, yes.
His approach to giving evidence was similar. He did not pay attention to the details, or in some cases even the terms, of questions in giving his answer. Even on re-examination, which was short, he had to be urged to focus on the question. He was not evasive as such, but he defaults to broad statements of principle rather than precise matters of detail. For better or worse, that is also his DNA.
A greater problem was that Mr Chamat obviously had points he wanted to get across as to the responsibility for the breakdown of the relationship. At times he used questions simply as a vehicle to expand upon Decisive's case. His proffered answers were speeches, and he repeatedly observed that he would come back to points or make points later. Given what he said about his recollection in his witness statement, which I accept, I had little or no confidence in those aspects of his oral evidence. To the extent they were proper evidence for these proceedings at all, they should have taken the form of evidence in chief. Most certainly they did not address the questions he was asked.
Throughout, he exuded supreme confidence, even where he was contradicting Decisive's pleaded case, his witness statement or his earlier answers. In saying that I do not question Mr Chamat's honesty. On the contrary, he passionately believed in Decisive's case. The difficulty is that his belief has consumed his recollection, such that even where he gave an answer to a question I often had limited confidence in the detail of it.
I accept that Mr Chamat was very committed to the refinancing, at least in its early stages. He believed that other parties, notably Attestor, were also committed. In my view, he likely would have been comfortable giving Dr Alanizi significant reassurance about the way that the transaction would work. At the same time he is a sophisticated operator with considerable experience and was keen to ensure that Decisive and its investors and co-lenders were not bound in prematurely. That would inevitably have qualified any reassurance he gave.
Dr Alanizi is, as I have noted, the remaining defendant in these proceedings, judgment having been given against the Borrowers. He was...
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