Juan Carlos Alvarez v Dr Jacob Moor
| Jurisdiction | England & Wales |
| Judge | Mr Justice Kerr |
| Judgment Date | 15 July 2019 |
| Neutral Citation | [2019] EWHC 1774 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ10X01583 |
| Date | 15 July 2019 |
[2019] EWHC 1774 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
THE HONOURABLE Mr Justice Kerr
Case No: HQ10X01583
Andrew Thomas (instructed by Westbrook Law Limited) for the Claimant
The First Defendant appeared in person and for the Third Defendant
The Second Defendant did not appear and was not represented
Hearing Dates: 11th–12th and 14th–17th June 2019
Introduction
The claimant, Mr Alvarez, sues for damages or recovery of approximately 2.31 million US dollars ($), plus interest, which he placed in the hands of the third defendant (Shatton) for investment. The money was nearly all lost to Mr Alvarez. He alleges that he was induced by fraudulent statements from the defendants to entrust his money to Shatton and that the defendants dishonestly conspired and contrived to misappropriate it for Shatton's use and that Shatton invested most of it into a fund from which it disappeared.
The defendants deny any fraud. They say Mr Alvarez invested in Shatton with his eyes open and that he was fully aware of and consented to Shatton's placing of his funds, via a reputable Swiss bank, into the fund from which, by misfortune, the money was lost without fault or wrongdoing on the part of any of the defendants. They also deny any contractual obligation to restore to Mr Alvarez the amount of his lost investment or any interest or profits from it.
The first and third defendants, Dr Moor and Shatton, were represented by solicitors until a week before the trial, when Dr Moor filed notices of change stating that the solicitors were no longer acting. He represented himself and Shatton at the trial. The second defendant, Mr Knoebl, was unrepresented throughout, but filed pleadings and documents. He did not attend the trial. All three defendants applied to adjourn the trial; Dr Moor in person, Mr Knoebl by letter to the court. I dismissed the applications to adjourn for reasons I gave orally at the time.
Dr Moor had to get used to how civil proceedings are conducted in the High Court in England. At first, his eagerness to speak frequently got the better of him and he could not restrain himself from speaking over and aggressively interrupting others. During the first days of the trial, I had to rebuke him and take breaks to enable him to compose himself and behave with appropriate respect for witnesses and the court. By the end of the trial he had learned correct courtroom conduct and his behaviour was satisfactory.
Facts
Mr Alvarez is a French national born in Uruguay, where he lives and works. He is an agronomical engineer and cattle rancher who at one time employed 200 workers. Dr Moor is an Israeli national, resident in Nigeria and London. He is a doctor of chemistry and the owner and controlling shareholder of Shatton, a company previously involved in infrastructure projects in Africa and elsewhere. Mr Knoebl is a civil engineer of German nationality who has in the past been closely associated with Dr Moor and Shatton.
In 2005, Mr Alvarez sold certain properties in Uruguay and opened an account with Liechtensteinische Landesbank AG (LLB) in Zurich in order to deposit the proceeds of sale. In 2006, his deposit with LLB was about $1.82 million. A friend in Uruguay introduced him to a Mr Anthony Blaser, a Swiss intermediary who was ready to recommend investments to Mr Alvarez. Mr Georg Koenigbauer, a German businessman from Shwarmstedt, near Hannover, was also at that time put in touch by an associate in Germany with an intermediary in Switzerland who may have been Mr Blaser.
Mr Alvarez and Mr Koenigbauer were both introduced to Shatton as a potential vehicle for them to invest in. Mr Alvarez was introduced via another intermediary, Ms Marie-Luise Weiss. Through Ms Weiss, Mr Alvarez was put in contact with Mr Knoebl who, in turn, introduced him to Dr Moor and Shatton. Mr Alvarez travelled to Zurich in 2006 to open his account with LLB. He became interested in investing in Shatton, which also banked at LLB. He spoke to Mr Colin Stember of LLB, who recommended Dr Moor and Shatton, saying LLB had known them for years and never had any problem with them.
Mr Alvarez's pleaded case is that Shatton was at this time a “shell company” with no significant trading activity. Mr Thomas, representing Mr Alvarez, accepted at the hearing that it had been involved in infrastructure projects but not projects with a turnover of more than $100 million. I accept the documentary evidence that Shatton was, in 2006 and 2007, involved in significant infrastructure projects in the oil industry and the provision of medical services. It was not then a “shell company”.
On 24 January 2007, Mr Alvarez signed an agreement with Ms Weiss entitling her to commission in respect of any investments by Mr Alvarez with Shatton. When she put him in contact with Mr Knoebl, giving Mr Alvarez his email address, she described him as the Vice President of Shatton. In an email of 28 January, he introduced himself to Mr Alvarez and described himself as Vice President of Shatton, though writing from a private email address. He clearly intended Mr Alvarez to believe he held the position of Vice President.
In that introductory email, Mr Knoebl said he was a “member of the Trading Provider, or, called the Trading Platform”. After mentioning Shatton's trading activities, he added:
“In our function as project undertaker we have received from the American authorities a platform to finance our multi-billion sized projects ourselves …. We do not offer our services on the market, with this one exception …”.
Mr Alvarez and Mr Knoebl began to correspond extensively after that and over the following months and years their emails became friendly and sociable. They discussed their wives, families and leisure activities and at times touched on politics and cultural issues as well as business. Mr Alvarez also corresponded with Dr Moor, less frequently and only about business. Dr Moor tended to be busy and often travelling the world. He referred Mr Alvarez to Mr Knoebl on issues relating to investment in Shatton and led Mr Alvarez to regard Mr Knoebl as authorised to provide information on Shatton's behalf.
Dr Moor, with permission from Mr Alvarez, established the latter's credentials as an investor, with officials from LLB, Mr Stember and Mr Benamar Mokhtari. On 31 January 2007, Dr Moor sent Mr Alvarez a draft investment contract with an annex called “Annex II”. He sent a powerpoint presentation of Shatton's activities, supplemented by 30 pages of documents comprising bank references from well known banks and other evidence of respectable credentials likely to be of interest to a potential investor. These documents dated back to 1985.
It is agreed that on or about 31 January 2007, Dr Moor spoke by telephone to Mr Alvarez (in English, which Dr Moor speaks better than Mr Alvarez) and explained some of Shatton's activities to him. Mr Alvarez signed the contract (the investment contract) and Annex II. Annex I, not yet available, was to provide for a bank guarantee from LLB to produce the investment monies. Dr Moor then suggested it would be more efficient for Mr Alvarez to open a “Lombard credit line” with LLB rather than providing a bank guarantee. Mr Alvarez accepted and the draft investment contract was amended and resigned accordingly.
The Lombard credit line was approved by LLB on 7 February 2007. The amount was $1.638 million, about 90 per cent of Mr Alvarez's deposit with LLB. Mr Alvarez then transferred the funds for investment to a sub-account in Shatton's name, with Mr Alvarez as the beneficial owner. Shatton executed a power of attorney in favour of Mr Alvarez, giving him what Dr Moor described as “a joint power on the sub-account”. However, the power of attorney did not prevent Shatton from investing the money in the sub-account of its own accord, without Mr Alvarez's counter-signature.
Such was, in brief, the machinery by which Mr Alvarez provided the initial funds for his investment in Shatton's activities and projects. These arrangements were put in place from 7 to 13 February 2007. The other relevant terms of the investment contract were that Mr Alvarez would make available to Shatton for investment at least $1.8 million “for his participation in Shatton's project” (clause 1a). Within 60 banking days of the availability of funds, the parties would execute an annex (called “Annex III” but never executed) (clause 1c):
“setting out the project schedule, the profit return and its provisions. In the event that no agreement on terms and schedule of the return profit are reached then the Investor may request Shatton in writing to swift back his own funds … and Shatton shall forthwith procure the return of the funds …”.
Mr Alvarez had the right to inspect the progress of construction of the project (clause 1d). The profit return would be made available to Mr Alvarez by Shatton in accordance with the schedule in “the Profit Return Agreement” (clause 2). There was a force majeure clause (clause 3) and an English law and arbitration clause (clause 4). The annexes formed part of the agreement (clause 5). The agreement “is replacing any other previous agreements or understanding” (clause 7).
Annex II was entitled “Project Participation Agreement”. The parties agreed “to work together in good faith, using their best efforts and resources to complete the proposed transactions”. Shatton “warrants that the funds in the custodial account is secured and will not be lost directly or indirectly, and will be timely released … not later than one .. year and one … month from the date of this Agreement”, unless extended by agreement (clause 1c).
The...
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