Kuwait Oil Tanker Company Sak and Another (Claimants/Respondents) Abdul Fattah Sulaiman Khaled Al Bader and Others (Defendants/Appellants) H Clarkson & Company Ltd and Others (Third Parties)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE NOURSE |
| Judgment Date | 18 May 2000 |
| Judgment citation (vLex) | [2000] EWCA Civ J0518-2 |
| Date | 18 May 2000 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | A3/1998/1625 A3/1999/0023 A3/2000/5128 |
[2000] EWCA Civ J0518-2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
(Mr Justice Moore-Bick)
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London WC2
lord Justice Nourse
Lord Justice Potter and
Lord Justice Clarke
A3/1998/1625
A3/1998/1606
A3/1999/0023
A3/2000/5128
Mr Stanley Brodie QC and Mr Robert Howe (instructed by Messrs Olswang) appeared on behalf of the appellant first defendant.
The appellant second defendant did not appear and was not represented.
Mr Stanley Brodie QC and Mr Selwyn Bloch (instructed by Messrs Brian Harris) appeared on behalf of the appellant third defendant.
Mr Julian Malins QC, Mr Richard Slade and Mr Jonathan Adkin (instructed by Messrs Shaw and Croft) appeared on behalf of the respondent claimants.
Mr Craig Orr (instructed by Messrs Slaughter and May) appeared for the third third party.
The first, second and fourth third parties did not appear and were not represented.
INTRODUCTION
This is the judgment of the court, to which each of its members has contributed. These are appeals against an order of Moore-Bick J dated the 15 th December 1998 by which he gave judgment against all three defendants for very large sums of money. The first claimant ("KOTC") is a subsidiary of the Kuwait Petroleum Corporation ("KPC"), which is in turn owned by the State of Kuwait. The second claimant ("SITKA") is a Liberian company which is a wholly owned subsidiary of KOTC. The events which gave rise to the action took place between 1985 and 1992. During that period the first defendant ("Mr Al Bader") was both chairman and managing director of KOTC and president and a director of SITKA and the second defendant ("Mr Qabazard") was deputy managing director (administration and finance) and head of the finance department of KOTC. The third defendant ("Captain Stafford") was fleet operations manager of KOTC until September 1989, when he left and retired to Australia, although he returned to work for KOTC for a month in the summer of 1990. While he was in Kuwait Captain Stafford for most practical purposes acted as head of the operations department of KOTC and reported directly to Mr Al Bader.
The claimants put their case against the defendants in various ways, but their primary case was that the defendants dishonestly conspired to defraud them of more than US$60 million. The judge essentially accepted the claimants' case on conspiracy, although he also held that the defendants were liable for breach of fiduciary duty and thus liable to account to the claimants as constructive trustees. As a result of his conclusion that they were constructive trustees he awarded compound interest against all three defendants.
The total amounts awarded inclusive of compound interest but exclusive of costs were as follows. Mr Al Bader and Mr Qabazard were ordered to pay KOTC US$92,052,751 and £144,371 and SITKA US$44,733,165 and £174,291, making a total for each of them of US$136,785,916 and £318,662. Captain Stafford was ordered to pay the same sterling sum but slightly less in dollars, namely US$90,634,252 to KOTC and US$44,733,165 to SITKA, making a total of US$135,367,417. The reason for the difference between Mr Al Bader and Mr Qabazard on the one hand and Captain Stafford on the other was that the judge held that Captain Stafford did not join the conspiracy at the very beginning, but shortly afterwards. The amounts awarded reflect the fact that Mr Qabazard repaid an amount of about US$8 million to the Kuwait Prosecutors' Office in 1993.
Mr Brodie QC, who represented Mr Al Bader at the trial and has represented both Mr Al Bader and Captain Stafford on this appeal, challenges the judge's conclusions under three heads, namely conspiracy, fiduciary duty and constructive trust and interest. Mr Qabazard represented himself at the trial and attended throughout. He cross-examined the witnesses and made final submissions, but he did not give evidence. He served an appeal notice and indicated that he intended to represent himself on this appeal, but in the event he did not appear and was not represented at the hearing. In these circumstances we shall consider his appeal as well as those of the other defendants. We shall first say a word about the trial and the judgment and then address the principal issue of conspiracy. We shall address that issue under English law and then consider the question of double actionability. After that we will deal with the issues of fiduciary duty and constructive trust and interest.
THE TRIAL AND THE JUDGMENT
These proceedings were commenced in July 1994 and came to trial in 1998. The trial lasted 70 days, during which the judge heard many witnesses, including Mr Al Bader and Captain Stafford. He also heard evidence from representatives of SITKA's shipbrokers, H Clarkson & Co Ltd ("Clarksons"), including in particular from Mr McCoy. Those witnesses had to be subpoenaed by the claimants because the defendants had made both Clarksons and Mr McCoy third parties, although in the event the third party claims were abandoned before the trial.
Mr McCoy was an important witness because he played a significant part in the relevant events, although the claimants did not suggest that he acted dishonestly in any way. Shortly after his appointment as chairman of KOTC in March 1983 Mr Al Bader had become acquainted with Mr McCoy, who was then deputy head of the sale and purchase division of Clarksons. As the judge found, much of Mr McCoy's contact with KOTC was through Captain Stafford, who both handled the day to day aspects of KOTC's purchase and sale of tankers and played a major role in SITKA's chartering of tankers.
At the trial much depended upon whether the defendants acted dishonestly at the time. The judge held that in each case they did. Given the length of the trial, during which Mr Al Bader gave evidence for some eight days and Captain Stafford also gave evidence at some length, the judge had a good opportunity to form a view on that central question. He did not, however, do so on the basis only of his views of Mr Al Bader and Captain Stafford in the witness box, but on the basis of a thorough and painstaking analysis of both the oral and, in particular, the documentary evidence relating to the large number of transactions called into question, which at every stage he tested against the probabilities. His judgment extends over 176 pages and discusses almost every point in the case. Whatever conclusions are reached on the issues in this appeal, the judgment is a tour de force which we greatly admire.
In the skeleton argument lodged in this appeal on behalf of Mr Al Bader and Captain Stafford the arguments advanced were almost entirely points of law. It was expressly stated that, although Mr Al Bader and Captain Stafford did not accept the correctness of the findings of fraud and dishonesty made against them, for the purposes of the appeal it was not intended to challenge the judge's findings of fact as such. However, after that skeleton had been lodged, certain new evidence came to light upon which both Mr Brodie and Mr Malins QC (who appears for KOTC and SITKA) now seek to rely. At one time each was (at least formally) seeking to exclude the evidence upon which the other sought to rely, but as the appeal progressed it became clear that neither was seriously arguing that any of the evidence should be excluded. In the result we admitted it and have considered it in some detail.
In opening the appeal, Mr Brodie relied in particular upon new evidence relating to an account in the name of Gulf Shipping (to which we shall refer further below) and submitted that if that evidence had been available to the judge he would not have reached the conclusions that he did in the case of Mr Al Bader and Captain Stafford. As the appeal progressed, Mr Brodie developed that submission until, by the end of the argument, he was challenging many of the judge's findings of fact. By contrast Mr Malins submitted that the new evidence supports the judge's findings, which (he submitted) were based on the careful and detailed analysis referred to above.
The judge described the central issues at the trial and expressed his view of the correct approach to the burden and standard of proof in a case of this kind, where serious dishonesty is alleged, in this way (at page 35):
Notwithstanding the complexity of the allegations made by the plaintiffs, however, Mr Malins QC ? nailed his colours to the mast and accepted that they could only succeed in this case if and to the extent that they could satisfy the court that the defendants had been acting dishonestly. There was scarcely any dispute about the movement of funds as I have described them and so, although a large number of issues were raised during the trial, the two central issues between the parties can really be stated quite simply: to what extent was each of the defendants involved in withdrawing and disposing of funds belonging to the plaintiffs; and, insofar as he was, was he acting dishonestly? That being so, it is necessary to keep two things in mind: first, that the burden of proof rests firmly on the plaintiffs; and secondly, that although the standard of proof in this case is the same as that which applies in all civil proceedings, namely, proof...
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