Invest Bank P.S.C. v Ahmad Mohammad El-Husseini
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Baker |
| Judgment Date | 13 May 2022 |
| Neutral Citation | [2022] EWHC 894 (Comm) |
| Docket Number | Case No: CL-2021-000412 & 000413 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 894 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, London EC4A 1NL
Mr Justice Andrew Baker
Case No: CL-2021-000412 & 000413
Tim Penny QC and Marc Delehanty (instructed by PCB Byrne LLP) for the Claimant
Daniel Warents and Emma Hughes (instructed by Streathers Solicitors LLP) for the First, Third and Fourth Defendants
Louise Hutton QC (instructed by Fladgate LLP) for the Second Defendant
Jamie Riley QC and Tom De Vecchi (instructed by Stewarts Law LLP) for the Fifth, Sixth and Eighth Defendants
Tiffany Scott QC (instructed by Edwin Coe LLP) for the Seventh Defendant
Hearing dates: 21, 22 February 2022
Approved Judgment
This is a reserved judgment to which CPR PD 40E has applied. Copies of this version as handed down may be treated as authentic.
Introduction
The claimant (‘the Bank’) is a public shareholding company established in Sharjah, UAE and listed on the Abu Dhabi Securities Exchange, with retail and corporate banking activities in the UAE and Lebanon. The first defendant (‘Ahmad’) is a Lebanese businessman against whom the Bank says it has judgment debts from proceedings brought by it in Abu Dhabi. The claims in those proceedings were made on what the Bank says were personal guarantees given by Ahmad in connection with credit facilities granted to two UAE companies. The total said to be due under the judgments is c.AED 96 million (equivalent to c.£20 million).
The second to fifth defendants (‘Mohammed’, ‘Alexander’, ‘Ziad’ and ‘Ramzy’, collectively ‘the Sons’) are Ahmad's sons by his marriage to the sixth defendant (‘Joan’). Ahmad and Joan say they divorced in 2017. Further to its suspicions about Ahmad's dealings with his assets at that time, and by reference to certain evidence arguably inconsistent with the claimed divorce, the Bank does not admit that Ahmad and Joan are not still married (or at least managing their financial affairs still as if married).
The Bank seeks to pursue by this Claim:
(1) Primary debt claims against Ahmad, suing on the UAE judgments, alternatively on the underlying alleged guarantees.
(2) Secondary claims, which variously involve the other defendants, for relief relating to assets against which, directly or indirectly, the Bank wishes to assert an entitlement to enforce Ahmad's liability to it (if any), namely (collectively, ‘the Claim Assets’):
(a) two London properties, 9 Hyde Park Garden Mews (‘9HP’) and 32 Hyde Park Garden Mews (‘32HP’), the latter of which is a corner property also referred to as 43 Sussex Place;
(b) the proceeds of sale (‘the Proceeds’) of a third London property, 18 Hyde Park Square (‘18HP’), as to which the basic facts are that 18HP was transferred to the seventh defendant (‘Virtue Trustees’), a Swiss entity operated by Kendris AG (‘Kendris’), a professional services company, as trustee of a trust known as the Spring Blossom Trust, established by Ahmad as settlor on 4 April 2017, the beneficiaries being Joan and the Sons, and Virtue Trustees sold the property some months later at a fair market price, to a buyer unconnected to Ahmad or his family, and transferred almost all of the net proceeds of sale to Joan;
(c) shares (‘the UK Shares’) in the eighth defendant (‘Commodore UK’), previously named Commodore Contracting Company Limited, a company incorporated in this jurisdiction; and
(d) US$15 million in cash (‘the US$15m’) said to have been held by Medstar Holdings SAL (‘Medstar’), a Lebanese company that appears to have been owned and controlled by Ahmad at all material times.
Prior to the events upon which the secondary claims focus, legal title to 9HP and 18HP was held by Marquee Holdings Ltd (‘Marquee’), a Jersey company that has since been dissolved. It was not in dispute that there is a serious issue to be tried on the Bank's claim that Marquee was ultimately wholly owned and controlled by Ahmad, albeit (as to control) the Bank acknowledges that Marquee's directors were individuals from Kendris. The Bank asserted that Marquee held that title for and on behalf of Ahmad as beneficial owner of the properties. The defendants disputed that there is a serious issue as to that, i.e. they said it was fanciful to suggest that Marquee was not the beneficial owner.
It was common ground, in contrast, that Ahmad was legal and beneficial owner of 32HP before the events of 2017.
The Bank alleges that Ahmad took steps in relation to the Claim Assets in 2017 by which to disguise his (beneficial) ownership of them or to cause them to be transferred within his family with a view to putting them beyond the reach of, or otherwise prejudicing the interests of, his creditors. In that regard, the Bank says that it was not Ahmad's only major creditor, alleging that there were also substantial debts owed to Doha Bank, First National Bank and Al-Fujairah Bank, and a possible liability on an allegation of misappropriation of funds relating to entities referred to as Rheinmetall and Federal Development. It also says that Ahmad's steps taken with a view to avoiding his creditors extended also to properties in Ibiza (owned by a BVI company that was transferred to Joan), Lebanon, Berlin, France and Canada.
In respect of the Claim Assets, the Bank seeks to claim:
(1) declarations that Ahmad holds the beneficial interest in 9HP, 32HP and the UK Shares, legal title to which is now held variously by the Sons,
(2) relief under s.423 Insolvency Act 1986 (‘IA 1986’) as regards all of the Claim Assets (but in the alternative to (1) as regards 9HP, 32 HP and the UK Shares), on the basis that the steps allegedly taken by Ahmad in 2017 relating to each of the Claim Assets involved a transaction or transactions at an undervalue entered into by him for the purpose of putting assets beyond the reach of or otherwise prejudicing the interests of his creditors within s.423(1)/(3).
The applications that remain live (aside from issues relating to costs of various matters raised but ultimately not pursued, which are to be dealt with after this judgment is handed down) are:
(1) the Bank's application, resisted by the Sons, to amend to pursue against them a s.423 claim in respect of the US$15m, and the Bank's application, resisted by Alexander, to amend to pursue against him a s.423 claim in respect of US$250,000 said by the Bank to have been received by him from Joan out of the Proceeds, various other proposed amendments not being (or not remaining) contentious;
(2) applications by Ahmad, Alexander and Ziad seeking to set aside permission to serve the Claim on them outside the jurisdiction so far as it makes:
(a) the declaratory relief claims, and/or
(b) the s.423 claims currently pleaded concerning assets other than 32HP (to the s.423 claim in respect of which no objection is taken at this stage);
(3) an application by Mohammed challenging jurisdiction in respect of the claims currently pleaded against him, which concern his UK Shares, or seeking a stay of those claims, and an alternative application by him for summary judgment dismissing those claims.
The points argued all concern the substantive merits of the (proposed) claims, and the argument proceeded on the basis that there was no material difference in the present case between (a) the need for there to be a serious issue to be tried on the merits as a pre-requisite for any grant of permission to serve proceedings out of the jurisdiction, (b) the need for there to be a real as opposed to fanciful prospect of success so as to defeat an application for summary judgment and (c) the need for a claim proposed to be introduced by amendment to have arguable merit sufficient for it to be appropriate (other things being equal) to grant permission to amend in the face of resistance.
The argument at the hearing also proceeded on the basis that, as to matters of fact, those equivalent threshold merits tests fall to be determined by reference to the case pleaded by the Bank except where allegations made by it can be shown on a summary argument to be demonstrably untrue or unsupportable (see HRH Emere Godwin Bebe Okpabi v Royal Dutch Shell [2021] UKSC 3, [2021] 1 WLR 1294, per Lord Hamblen at [22], reiterated in Brownlie v FS Cairo (Nile Plaza) LLC [2021] UKSC 45, [2021] 3 WLR 1011, per Lord Leggatt at [100]). I do not accept a submission made by the Bank in the written reply submissions it provided after the hearing (see paragraph 14 below) that it should not be limited to the case pleaded or proposed (after amendment) to be pleaded. Where a claimant has presented its case in fully pleaded form, prepared by experienced solicitors and counsel expert in the field, the defendants and the court are entitled to proceed on the basis that the case pleaded is the best case it is thought can be pleaded, unless and until an application (or revised application) to amend is put forward. I return to this at the end of this judgment (see paragraphs 130–131 below).
Finally, as regards the way in which the contentious issues were dealt with, the argument proceeded:
(1) on the basis that there is a serious issue to be tried whether Ahmad engaged in a concerted effort to keep assets out of the hands of creditors, as alleged by the Bank, but also
(2) as was clarified fully by a helpful intervention from Mr Penny QC during Mr Warents' submissions, on the basis that the Bank is not in a position to allege, and therefore does not presently allege, that any of...
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