Khodari v Tamimi

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Wilson,Lord Justice Hooper,Lord Justice Pill
Judgment Date08 Oct 2009
Neutral Citation[2009] EWCA Civ 1109
Docket NumberCase No: A2/2009/0089

[2009] EWCA Civ 1109

IN COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT, QUEEN'S BENCH DIVISION

MR JUSTICE BLAIR

Before: Lord Justice Pill

Lord Justice Hooper

and

Lord Justice Wilson

Case No: A2/2009/0089

LOWER COURT NO: HQ08X01090

Between
Fahad AL Tamimi
Appellant
and
Mohamad Khodari
Respondent

Mr Alan Steinfeld QC and Mr Jonathan Russen (instructed by Bircham Dyson Bell LLP) appeared for the Appellant.

Mr Mark Howard QC and Mr Neil Mendoza (instructed by Barker Gillette LLP) appeared for the Respondent.

Hearing date: 28 July 2009

Lord Justice Wilson

Lord Justice Wilson:

A: INTRODUCTION

1

Mr Tamimi, the defendant, appeals against an order made by Mr Justice Blair in the High Court, Queen's Bench Division, on 18 December 2008. The judge thereby gave judgment in favour of Mr Khodari, the claimant, against the defendant in the sum of £240,500 plus interest and dismissed the defendant's counterclaim.

2

Before the judge there was little active dispute between the parties in relation to the relevant facts. Insofar as they were in dispute, the judge preferred the claimant's version of them; and in this court the defendant does not challenge any of the judge's findings of primary fact. Instead he presses the following four arguments, to each of which, so he says, the judge wrongly declined to accede:

(a) Of the sum of £240,500 for which the judge gave judgment, £202,000 was irrecoverable by virtue of s.1 of the Gaming Act 1892.

(b) Of the said sum of £240,500, £11,000 (of which one half is included in the said sum of £202,000) was irrecoverable by virtue of s.40(1) of the Consumer Credit Act 1974.

(c) Section 140A of the Consumer Credit Act of 1974 was engaged, with the result that the said sum of £240,500 fell to be reduced by an order under s.140B thereof.

(d) The claimant was acting towards the defendant in a fiduciary capacity and the defendant's counterclaim for a direction that, as a fiduciary, the claimant should account to the defendant for all their mutual dealings since December 2002 should have been upheld.

So the four arguments span three branches of the law. On behalf of the defendant Mr Steinfeld QC describes the first argument as the thrust of the appeal and the other three as relatively trivial.

B: THE FACTS

3

The claimant resides in London and is an associate director of the National Bank of Dubai, attached to its Sloane Street branch. The defendant resides in Saudi Arabia and is a wealthy and well-known businessman. The defendant often visits London for business purposes. Until recently the defendant was a heavy and compulsive gambler, particularly at Les Ambassadeurs Club, behind Park Lane, of which he was a member. There he not only played the tables but often conducted business. The claimant was also a member of the club but did not gamble to any significant extent.

4

The parties met in 2001, when the claimant, who was then a manager at Riyadh Bank in London, assumed responsibility for an account which the defendant then held there. Later that branch closed and the defendant moved his account elsewhere. In 2005, however, when the claimant began to work for the National Bank of Dubai, the defendant moved his account there and, as before, the claimant assumed managerial responsibility for it. The result was that it was open to the claimant, with the consent of the defendant even if given only orally, to direct transfers out of the defendant's account.

5

At the club, if his luck was out, the defendant sometimes found himself urgently in need of more chips with which to attempt to recoup his losses but without immediate access to funds of his own. A practice arose in which, acting in a personal capacity, the claimant would accede to urgent requests on the part of the defendant, made usually by telephone at night or at any rate outside banking hours, to come to the club and to lend him money. The practice began in December 2002 and ended on 8 September 2007.

6

Occasionally the claimant's loans to the defendant were in cash, with which – or at least with part of which – the defendant no doubt proceeded to buy chips from the cashier at the club. Usually, however, the loans took the form of chips which the claimant had himself there and then bought from the cashier. In order to make these loans to the defendant, the claimant:

(a) used cash which he already had in his possession; or

(b) bought cash from bureaux de change; or

(c) bought chips from the cashier with one or other of his two personal bank debit cards or with banker's drafts drawn on one of his personal bank accounts.

It was (and remains) unlawful for licensed casinos to sell chips against credit cards: s.16 Gaming Act 1968 (now replaced by s.81(2) Gambling Act 2005).

7

During the period of almost five years in which the parties conducted such dealings, the claimant lent to the defendant sums which, so the judge found, totalled in the region of £7,000,000. Individual loans of £50,000 were common and sometimes they were of up to £250,000.

8

From the beginning the arrangement between them was that the claimant's loans to the defendant were repayable on demand, together with a fee of 10%. In fact the defendant's practice was to repay the loans very quickly, typically within a day or two. The arrangement which obtained, and with which until April 2007 the defendant complied, was that, irrespective of the length of time for which each loan remained outstanding, a fee of 10% of it was payable to the claimant in addition to, and at the time of, its repayment.

9

One of the defendant's arguments to the judge was that, of the payments of 10%, one half had been procured by misrepresentation on the part of the claimant. The defendant alleged that the claimant had falsely represented to him that 5% of each loan reflected the cost to him of providing it and that accordingly, in agreeing to pay a fee of 10%, he, the defendant, had agreed that profit should accrue to the claimant in respect of each loan at a rate only of 5% rather than of 10%. But the judge found that the claimant had made no representation to the defendant about the cost to himself of providing the loans and thus that the suggested misrepresentation fell away. No appeal is brought against his finding in this respect. The judge also accepted the evidence of an owner of bureaux de change, called on behalf of the claimant, that a fee of 10%, or even more, for short-term loans made in circumstances analogous to the present was fairly normal.

10

The defendant's repayments to the claimant, together with 10%, no doubt took various forms. Success at the tables often prompted almost immediate repayment in cash or perhaps even in chips. But, during the two periods when the claimant managed those successive bank accounts, repayment was sometimes made out of them at the claimant's direction, in particular by banker's drafts credited to the claimant's casino account. Before us there was some debate as to the nature of the judge's findings in this respect. But in my view he made himself sufficiently clear. In referring to the ability of the claimant, “acting on oral instructions”, to issue banker's drafts against the defendant's accounts and/or in recording that there had been no suggestion that the claimant ever dishonestly caused payments to be made to him out of the defendant's accounts, he must, as Mr Steinfeld concedes, have found that the defendant had consented in advance to the claimant's procuring repayment in that way. The only area of possible ambiguity is whether the defendant's advance oral consent was given in general, compendious terms or whether, as I consider to be the correct inference from the judgment, the defendant gave an individual consent specific to each repayment out of his accounts.

11

The arrangement between the parties was based entirely on trust. The defendant did not sign any document recording the loans; nor did the claimant sign any document recording the repayments. The claimant kept some private written records of the transactions; but there was no satisfactory evidence that the defendant did so.

12

As at 5 April 2007 the defendant's indebtedness to the claimant was nil. At that time the claimant therefore destroyed such private records of their past transactions as he still kept.

13

In the period between 6 April and 8 September 2007, following which their relationship broke down, the claimant – so the judge found – made eighteen further loans to the defendant. They totalled £1,125,000 and ranged in size from £5,000 on two occasions to £250,000. Two of the defendant's legal arguments require us to note that, apart from the two loans of £5,000, all of the loans exceeded £25,000 and that, apart from one of the loans of £5,000 and another loan of £30,000, all of them were made prior to 1 September 2007. The additional profit due in respect of the loans amounted, so the judge found in accordance with the claimant's evidence, to £109,500, there having been three minor agreed departures from the usual 10% which I need not explain. But, against the total of £1,234,500 which he thus owed, the defendant, between May and August 2007, made nine payments totalling £994,000. The difference is the sum of £240,500 for which the judge gave judgment.

C: SECTION 1 of the GAMING ACT 1892

14

Section 1 of the Gaming Act 1892 (“the Act of 1892”), together with s.18 of the Gaming Act 1845 to which it relates, has been repealed with effect from 1 September 2007: ss. 334(1)(c) and (d) and 358 Gambling Act 2005 and Art. 2(4) Gambling Act 2005 (Commencement No 6 and Transitional Provisions)...

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