Ictor Anstalt (a company registered in Liechtenstein) v Mir Steel UK Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Asplin: |
| Judgment Date | 13 October 2014 |
| Neutral Citation | [2014] EWHC 3316 (Ch) |
| Docket Number | Case No: HC10C02124 |
| Court | Chancery Division |
| Date | 13 October 2014 |
[2014] EWHC 3316 (Ch)
He Hon Mrs Justice Asplin DBE
Case No: HC10C02124
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Thomas Braithwaite and Dan McCourt Fritz (instructed by Fox Williams LLP) for the Claimant
Paul Downes QC and Stewart Chirnside (instructed by Clyde & Co LLP) for the First Defendant
Hearing dates: 9, 10, 11, 14, 15, 16, 17, 23 and 24 July 2014
This case concerns a hot strip steel mill ("HSM") on land in Newport, South Wales (the "Site") and arises from the sale of the Site together with the HSM by the administrators of Alphasteel Limited ("Alphasteel") the registered owner of the Site itself, to the Defendants. The trial is as to the issue of liability only.
In about 1991, the Claimant ("Lictor") a Liechtenstein Anstalt, purchased or was engaged to purchase the parts required to assemble the HSM. Lictor sourced the parts and they were shipped to the Site in about 1997. Lictor permitted Alphasteel to assemble the HSM at the Site and to use it to manufacture steel products.
It is alleged that on 3 April 2000 Alphasteel and Lictor entered into an agreement (the "April Agreement") which amongst other things, purports to regulate the basis upon which Alphasteel would use the HSM.
On 20 December 2007, Alphasteel entered administration. In July 2008, the Administrators sold the Site, together with the HSM and other assets, to the Second Defendant ("Libala") by means of the purchase by Libala of a "hive down" company, Mir Steel UK Limited ("Mir"). Mir was created for the purpose of the purchase by Libala pursuant to a hive down agreement (the "HDA"). Libala, a company incorporated in Cyprus, lent Mir the purchase price of approximately £57.3 million which was paid to Alphasteel on the same day. On 14 July 2008, Libala purchased the share capital of Mir for £1, to complete the transaction.
In summary, Lictor's case is that by virtue of the April Agreement, Lictor retained ownership of the HSM and rights over it including the right to come upon the Site and remove it. It is said therefore, that the sale of the Site together with the HSM was a breach of the April Agreement, which the Defendants knowingly procured. Lictor asserts that the HSM is a chattel or collection of chattels, and therefore Lictor retains title to the HSM, which was not passed to the Defendants upon transfer of the Site. In the alternative, Lictor claims that Alphasteel, Mir and Libala conspired together to cause damage to Lictor by the use of unlawful means, being the breach of the April Agreement by Alphasteel, resulting in the loss of Lictor's rights to the HSM.
Libala has played no part in these proceedings, and default judgment was granted against it on 10 March 2011.
In December 2011, David Richards J gave judgment on an application by Mir (a) to join Alphasteel and its Administrators to the action as Part 20 Defendants under CPR 20.7(3)(b), and (b) for summary judgment on the two economic tort claims. The neutral citation of the judgment is [2011] EWHC 3310 (Ch). Both of Mir's applications were dismissed. Further, in November 2012, the Court of Appeal dismissed Mir's appeal against David Richards J's judgment in relation to the joinder of Alphasteel and the Administrators. The neutral citation of the Court of Appeal judgment is [2012] EWCA Civ 1397.
Before going into administration, Alphasteel was represented by Mr Paul Webb of Taylor Wessing LLP (formerly Taylor Joynson Garrett). At the relevant time, the Administrators were represented by Mr Jeremy Scott at Withers LLP and Werta Anstalt which controlled Lictor ("Werta") was represented by DLA Piper UK LLP ("DLA"). During the negotiation of the sale of the Site, Libala was represented by Clyde & Co. Clyde & Co also represent Mir in these proceedings.
The Witnesses
For the most part, I consider that the witnesses were honest and endeavoured to do their best to assist the court. I found Mr Haydn Swidenbank the present Operations Director and an Executive Director of Mir who worked for Alphasteel as an accountant from 2002 until late 2006 ("Mr Swidenbank") to be an entirely honest and straightforward witness and accept his evidence. Mr Steven Preece, a technical consultant with considerable experience in the steel industry who worked for Alphasteel from 1978 until 1985 and returned in 1993 in order to re-commission the HSM at the Site ("Mr Preece") also sought to assist the court. However, I am unable to accept his evidence as to the level of activity in a second hand market in used HSMs. In his second witness statement he described second hand HSMs as being "regularly" advertised for sale. In cross examination he accepted that the word "regularly" should not have appeared in his evidence. I will return to this matter below.
However, I found Mr Robert Drennan, an accountant who is a consultant and was a former partner of Rawlinson & Hunter which advised Lictor as to its tax affairs ("Mr Drennan") to be evasive and defensive at times and I approach his evidence with some caution. Further, I found Mr Paul Taylor, a solicitor and partner in the firm of Fox Williams LLP ("Mr Taylor") to be a very defensive witness who on numerous occasions sought to argue the case on behalf of Lictor rather than answer the questions put to him. Mr Jeremy Scott, a solicitor formerly of Withers LLP who advised the Administrators at the relevant time, ("Mr Scott") was a very careful witness. However, at times, he appeared unable or unwilling to answer the questions put to him in cross examination. I accept that to some extent such reluctance arose from a desire to avoid a waiver of his clients' legal professional privilege.
Mr Mark Fry is a licensed insolvency practitioner, a partner in Begbies Traynor (Central) LLP and was appointed as a joint administrator of Alphasteel ("Mr Fry"). Although I found that he too was for the most part, an honest witness, he was nevertheless, extremely defensive of his role in the sale of the Site and adopted an argumentative style in cross examination.
With regard to Mr Fry, Mr Scott and Mr Taylor they each accepted that in relation to the discussions at some of the meetings which they attended, they were dependant upon the notes of those meetings for their recollection to varying degrees. In each circumstance where this is the case, I treat their evidence with some caution.
Mr Ali Hosseini is the Chief Executive Officer of Adpico, a company incorporated in Abu Dhabi ("Adpico") and of Alita Trading DMCC, a steel trading company incorporated in Dubai ("Alita") ("Mr Hosseini"). Adpico is a company controlled by Mr Rostami-Safa ("Mr Rostami-Safa"), an Iranian industrialist who is also Mr Hosseini's father in law. Mr Hosseini's interest in Alphasteel and the Site arises from the fact that his father in law was running a company known as Satico Ltd ("Satico") at the time it purchased the interests of Werta in Alphasteel, Lictor and Technoplan Anstalt ("Technoplan"). In addition, Werta sold its claims against Satico in relation to that purchase to Alita. I refer to these matters in more detail below. I found Mr Hosseini to be an unsatisfactory witness. He sought to make a set speech and otherwise was generally evasive and often failed to answer questions in cross examination. In particular, I found his answers when questioned about the possibility of false accounts having been prepared for Lictor lacked credibility. Overall, I am unable to accept his evidence unless it is consistent with the oral testimony of others and/or the documentary evidence.
Both Mr Batt, Lictor's expert and Dr Luke, Mir's expert gave evidence by way of their reports, their agreed list and orally during the site visit which took place on the second day of the trial. Mr Batt also sought to assist in cross examination. Dr Luke was not cross examined and his evidence is therefore, unchallenged.
The Facts in more detail
Acquisition of the HSM by Lictor
Alphasteel was a steel manufacturer incorporated in 1974 and originally was controlled by Werta which itself was in the ultimate ownership of a wealthy Greek family, the Angelopoulos family. In addition to Lictor, Werta also controlled another Liechtenstein Anstalt, Technoplan which owned an area of land adjacent to the Site known as the Slobland which was used for storing waste from the Site.
When first incorporated, Alphasteel manufactured rolled steel at the Site using a different hot strip mill (the "Original HSM"). In the 1980s the production of steel in Europe was regulated by a quota system under the European Steel Plan, and in around 1985 Alphasteel agreed to sell approximately 10 years' worth of its quota to British Steel. As a result, Alphasteel could no longer use the Original HSM for the production of steel in the UK. In fact, the Original HSM was moved to Indiana, where the Angelopoulos family incorporated a new company, Beta Steel, to commence production in the USA.
After steel quotas were abolished in the early 1990s, Werta decided to recommence the production of hot rolled steel at the Site, and Lictor was engaged to place a number of orders for the parts necessary to assemble the HSM. Lictor placed orders with a total value of £27,561,224.28.
Early Advice
By a letter dated 31 March 1993, Trexim AG (the Angelopolous family's holding company) wrote a letter to Alphasteel on behalf of Lictor stating that certain motors, (the "Large Motors") were to be despatched to Alphasteel's premises at the Site. The letter made clear that the Large Motors were intended to remain the property of Lictor. It is not in dispute that the Large Motors...
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