Executive Authority for Air Cargo and Special Flights v Prime Education Ltd ((in Liquidation))
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Ellenbogen,Mrs Justice Ellenbogen DBE |
| Judgment Date | 30 June 2023 |
| Neutral Citation | [2023] EWHC 1634 (KB) |
| Court | King's Bench Division |
| Docket Number | Case No: QB-2018-000676 |
[2023] EWHC 1634 (KB)
Mrs Justice Ellenbogen
Case No: QB-2018-000676
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
George Davies (instructed by MS Legal Solicitors) for the Claimant
The First Defendant did not appear
The Second and Third Defendants appeared in person
The Fourth Defendant did not appear
The Fifth Defendant was represented by the Third Defendant
Hearing dates: 7, 8, 15, 16, 17 & 20 December 2021
Approved Judgment
This judgment was handed down remotely at 14:00 on 30 June 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
By his judgment handed down on 5 February 2021 [2021] EWHC 206 (QB) and order sealed on 19 February 2021 (‘the Saini Order’), Saini J partially allowed the Claimant's appeal against part of an order made by Senior Master Fontaine, by which she had dismissed its application for summary judgment against the First, Second, Third and Fifth Defendants in this matter (the Fourth Defendant, at that stage, having yet to be served with proceedings out of the jurisdiction, in Turkey). At paragraphs 13 to 63 of his judgment, he set out a simplified summary of the factual and procedural history giving rise to the claims, expressly based upon the witness statements and main documents with which he had been provided and focusing on those matters which were common ground. It is convenient to adopt that summary in this judgment, as supplemented or varied by virtue of subsequent developments and so far as material to the issues for determination at trial.
The Claimant (‘EACS’) is an executive agency of the Government of Libya. Its original purpose was to provide flights for senior Government ministers and officials. It enjoys separate legal personality under Libyan law, and is accepted to be an entity having the ability to sue and be sued under the law of England and Wales. The First Defendant (“Prime Education”) is a company registered in England, incorporated on 20 June 2008, and now in liquidation. The Second and Third Defendants, who are husband and wife, (respectively, “Mr Sekerci” and “Mrs Sekerci”) were, at all material times, the sole directors of Prime Education. Mr Sekerci was also its company secretary. The Fourth Defendant (“PE Turkey”) is a Turkish company (incorporated in 2012) of which Mr Sekerci is a director and 50% shareholder, the other 50% shareholder being his business partner, Mr Burhan Conoglu. The Fifth Defendant (“York Property”) was a company registered in England and Wales, of which Mr and Mrs Sekerci were the sole directors. By the date of trial, that company had been dissolved and no claims were pursued against it. I made an order staying EACS' claims against that company.
In or around 2012, the remit of EACS was extended to take on responsibility for Libyan pilot and aviation engineer training, requiring it to create a pool of pilots and engineers beyond that which had been required to fulfil its original mandate. Libya's two State-owned airlines, Libyan Airlines and Afriqya, were also intended to benefit from the expanded pool of pilots and engineers. EACS decided to train between 180 and 250 individuals (the precise number being in issue). Those people would be required to attend aviation schools outside Libya, there being no such facilities within Libya. They would also be required to have the necessary facility with the English language in order to undertake the relevant courses.
Prime Education's business was to run international education and training programmes from the UK. PE Turkey was established to run education and training projects from Turkey. Each company provided its services for a variety of organisations in Libya and across the Middle East. It appears that Prime Education was first put in touch with EACS via the commercial attaché of the British Embassy in Libya, in around 2014.
On 17 December 2015, EACS and Prime Education entered into a written contract (“the 2015 Agreement”), which was signed on behalf of EACS by a Mr Jamil Shubana (“Mr Shubana”), the then General Manager and CEO of EACS, and by Mr Sekerci on behalf of Prime Education. The company stamp of EACS, bearing the words “EACS General Director”, appears under Mr Shubana's signature, stated position and date.
The 2015 Agreement was made in both Arabic and English language versions. In broad summary, it provided that Prime Education would supply civil aviation educational and training consultancy and management services within the European Union, including the UK, to EACS. Those services would be provided to individuals nominated by EACS, in return for fees to be paid by EACS to Prime Education. In practice, Prime Education was intended to act as an intermediary between EACS and the educational institutions which would provide the training to the students and to handle financial dealings with those educational institutions, as well as paying living allowances and so forth to students. For this purpose, EACS was to provide funds, in advance, to Prime Education, so that it would be able to give assurances to the educational institutions that it was in a position to pay the course fees, accommodation costs and living expenses of the students. The funds would also be used to pay fees required for obtaining visas for the students. Prime Education (referred to as “PE” in the 2015 Agreement) was required to set up a “designated clients account for EACS”.
Page 9 of the 2015 Agreement dealt with account management of the “Clients Account” and provided as follows:
“A clients' bank account will be opened with our bankers, HSBC. The account will be controlled by PE's accounts department and they will have instant access to the funds in this account.
A clients account is designed to hold clients' money and is protected if anything happens to the funds. For example, when EACS deposit the project value funds into the clients account, and if PE was to cease trading for whatever reason, the funds in the clients account will be protected and will always legally be the money of EACS. PE will have control of the bank account, and the money in it, however PE will be bound by strict UK laws and regulations on our conduct on this account. Withdrawals from the account will be for payments for education providers, accommodation fees and student wages. All withdrawals will be approved as per a payment schedule to be initially agreed for payments made to education and accommodation providers. This schedule will be agreed upon signing of contracts.”
The 2015 Agreement also contained terms and conditions for the “Clients Account” which included the following:
“Funds can only be deposited and withdrawn in GBP (£ sterling)
Funds in this account can only be used on behalf of our client (EACS) and cannot be used by PE;
In order to operate this account, PE will be bound by all relevant laws and regulations involved when holding and controlling clients' funds;
If PE was to cease training, sell the company or become bankrupt, the client account funds will be protected and returned to EACS;
For any foreign payments, GBP will need to be transferred to PE's trading account (business current account) and then international payments sent from there…;
A monthly statement of the account will be sent to EACS.
…
By opening a bank account and managing the project funds in this way will mean the following:
…
Any fees due to PE for the management of this project will be pre-agreed in a contract and paid separately directly to PE.”
EACS' responsibilities under the 2015 Agreement included being able to show that each student had enough money to cover course fees and living costs. In this regard, the agreement provided:
“The evidence PE will use to satisfy this requirement will be for EACS to transfer the full course fees to the clients account held by PE. PE will then transfer the required course fees to the course provider for each student. Receipt of these funds will be detailed in the CAS/visa support letter. The course fees for the remaining course period will be held in the clients account held by PE until payment is requested by the course provider (month 13 of the course, prior to enrolment).”
and:
“EACS must show that they [the students] have money for living costs per month, per student, for the course duration. All of these funds will be held in the clients account held by PE (in the UK) and a statement of account will be used as evidence for visa application purposes…”.
The 2015 Agreement specifically addressed what was to happen were the agreement to be “cancelled” by either party:
“If this contract is cancelled by PE after the contract has been signed and the invoice paid by EACS, PE will refund the full monies received from EACS back to EACS. If EACS cancels the contract after it has been signed and monies have been transferred to PE, PE will refund all course fees, accommodation fees and student salaries but will not refund any fees due to PE. If EACS cancels the contract once the students have started their studies, only the course fees, accommodation fees and student salary balance remaining will be refunded back to EACS. No PE fees will be refunded.”
The 2015 Agreement set out a “tariff of fees”, divided between visa support; health insurance; and student management. Prime Education was to administer “student salaries”:
“All students' salaries will be held in the clients account controlled by PE and transferred to the students on...
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