Munib Masri (Applicant/Judgment Creditor) v Consolidated Contractors International Company SAL and Others (First and Second) (Respondents/Judgment Debtors) (Third Respondent)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Christopher Clarke |
| Judgment Date | 05 May 2011 |
| Neutral Citation | [2011] EWHC 1024 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2004 FOLIO 124 AND 831 |
| Date | 05 May 2011 |
[2011] EWHC 1024 (Comm)
Mr Justice Christopher Clarke
Case No: 2004 FOLIO 124 AND 831
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Gavin Kealey QC, Stephen PhilipsQC, MP and Colin West (instructed by Simmons & Simmons LLP) for the Judgment Creditor
Alan Boyle QC, James LewisQC, Dan McCourt FritzandBen Brandon (instructed by SC Andrew LLP) for the Judgment Debtors
Ian Mill QC, Andrew HunterandTom Cleaver (instructed by Jones Day) for the 3 rd Respondent
Hearing dates: 31 st January, 1 st, 2 nd, 3 rd, 7 th, 8 th, 9 th, 10 th, 14 th, 15 th, 16 th, 17 th and 18 th February 2011
Mr Munib Masri ("Mr Masri"/"the judgment creditor") applies for a declaration that the first and second respondents ("the judgment debtors") are in contempt of this court by reason of several breaches of orders made following a judgment on liability given by Gloster J on 28 th July 2006 ("the liability judgment") and for an order that they be fined on that account.
He also seeks the committal of the third respondent, Mr Wael S Khoury, on the ground that he is a de facto or shadow director or officer of the judgment debtors and has participated in the breaches relied on and/or wilfully failed to take reasonable steps to ensure that the orders were complied with. In January it became clear that the time estimate previously given for the hearing was woefully inadequate and that it would not be possible to deal with the case against all the respondents within such (extended) time as the Court was able to make available. I directed that the case against Mr Wael Khoury should only be dealt with after I had delivered judgment in respect of the judgment debtors.
This is a further round in the long drawn out feud between Mr Masri, on the one hand, and the Khoury and Sabbagh families on the other. The allegations of contempt and the defences thereto cannot be understood without reference to the complicated history of that feud and of the litigation that has followed in England, the Lebanon and elsewhere 1.
The cast
Individuals
The Sabbagh family was headed by Mr Hasib Sabbagh, prior to his recent death. He has two sons – Samir Sabbagh and Suheil Sabbagh.
The Khoury family has at its head Mr Said Tawfic Khoury. He has three sons – Tawfic Khoury, Samer Khoury and Wael Khoury. He has two daughters one of whom is Salwa Khoury. She is married to Samir Naef Khoury. Khoury family members reside in both London and Athens. [Note that Wael Khoury lives in London].
Companies
The Khoury and Sabbagh families are the owners of the Consolidated Contractors Companies Group. This Group is often known by the initials "CCC". At the head of the Group is Consolidated Contractors Group SAL (Holding Company) ("CC Holding"). It is beneficially owned as to 60% by the Khoury family (in part through Consolidated Investment Company, a Khoury family company) and as to 40% by the Sabbagh family. It is incorporated in Lebanon. CC Holding owns almost all the shares in two Lebanese offshore companies – Consolidated Contractors International Company SAL ("CCIC") and Consolidated Contractors (Oil and Gas) Company SAL ("CCOG"). These are Lebanese offshore companies. Such companies pay practically no tax in Lebanon but may not carry on business there 2. They may, however, manage from Lebanon businesses carried on elsewhere. According to the evidence of Mr Nassib Chedid, the judgment debtors' Lebanese lawyer, CCIC and CCOG have now about 100 employees in Beirut distributed over several offices of the Group and have bank accounts there. They have, however, several bank accounts elsewhere.
Two shares out of 500,000 in CCIC are directly held by Mr Samir Sabbagh and 2 shares out of 100,000 shares in CCOG are directly held by Mrs Salwa Khoury. These were allocated to, or acquired by, them in order that they might act as directors.
Lebanese law requires a director to be a shareholder but one share will suffice. A number of other individuals who have in the past acted as registered directors of the companies, also hold such nominal shareholdings.CCIC was the main group company. It has been a very successful company which has carried out a large number of construction projects mainly for government entities in the Middle East, where it enjoyed a great deal of success and a long standing reputation. CCOG operates in the oil and gas field and held the oil and gas interests of the Group.
In 2004, CCIC had its principal office in Athens. It was described by Mr Said Khoury in his 1 st witness statement of 18 November 2004 as " based" there. As late as 21 March 2010 CCIC described itself in Swiss proceedings as having its " siege" i.e. seat in Athens. In March 2008, CCIC's central accounting system was held on computer in its principal place of business in Athens: see para 5 of the third witness statement of Suheil Nasser, who was then the Chairman of the judgment debtors. The number of employees in Greece reduced from about 600 to about 75 by February 2010. The affairs of the Group were also managed from London.
In late 2004, CCOG had no physical office or physical presence in Lebanon; its financial accounting was carried out by CCIC personnel at CCIC's offices in Athens where all its financial records were; and it had no employees of its own: para 5 – 9 of the 1 st witness statement of Walid Noureddin. According to the same statement the majority of the shareholders of CC Holding were based in Athens, being Said Khoury, Hasib Sabbagh, Suhail Sabbagh, Samir Sabbagh, Tawfic Khoury, and Samer Khoury. Wael Khoury was based in London.
The Masila oil field.
Block 14, otherwise known as the Masila Oil Field, in the Yemen has turned out to be a very profitable oil field. CCIC obtained a 10% interest in that field by virtue of:
i) an Agreement for Petroleum Exploration and Production between the Yemeni Minister of Energy and Materials, Canadian OXY Offshore International Ltd ("Canadian Oxy") and CCIC dated 15 September 1986; and
ii) the Masila Joint Operating Agreement between Canadian Oxy and CCIC of 27 April 1987.
CCIC's interest was assigned to CCOG on 25 October 1992. For many years the Masila oil field was the only project which produced profitable revenues for CCOG.
The 1992 Agreement
By a one page agreement dated 6 November 1992 ("the 1992 Agreement"), written on the notepaper of Consolidated Contractors International (UK) Ltd, an English company ("CCUK"), and signed by Mr Masri and Mr Said Tawfic Khoury, Mr Masri was granted a 10% share of CCC's interest in the Masila Concession in exchange for payment of 10% of the costs in respect of the concession.
Mr Masri's proceedings
The first action
Mr Masri brought two actions. The first was commenced on 18 February 2004 ("the first action"). The Defendants were CCUK and CC Holding. CCUK and CC Holding were served within the jurisdiction. In the first action Mr Masri claimed that CCUK was a party to the 1992 Agreement, being the principal, or, in the alternative, the agent of CC Holding. In para 6 of his Particulars of Claim, Mr Masri pleaded that at the time that the Concession was originally granted in 1985 he had not known that CCC's interest in the Concession was owned by CCIC. He also referred to the fact that the interest had subsequently been transferred to another CCC Group subsidiary, CCOG. At para 12, Mr Masri pleaded that Mr Khoury was signing the 1992 Agreement on behalf of CCUK and that this was consistent with the fact that the agreement was recorded on the letterhead of CCUK. On 28 July 2004, CCUK applied in the first action for reverse summary judgment on the basis that it was not a party to the 1992 Agreement and that the claim against it had no reasonable prospect of success. CC Holding applied for an order to set aside the order made by Morison J on 11 June 2004 permitting service on it at the registered office of CCUK in London.
On 17 September 2004, for the purpose of resisting that application, Mr Masri served a witness statement stating that he believed that Mr Said Khoury signed the 1992 Agreement on behalf of CCUK and that it was an agreement between himself and CCUK. In his witness statement he said (para 36) that until recently he had no idea which CCC company held the interest. He also said (para 57) that Mr Said Khoury must have known that he did not know which company held the interest.
The second action
On 8 October 2004, Mr Masri commenced a second action ("the second action") against CC Holding, Mr Said Khoury, CCIC, and CCOG. The Particulars of Claim stated that it remained Mr Masri's case that the 1992 Agreement was made with CCUK. It was his alternative case that Mr Said Khoury made the 1992 Agreement as agent for CC Holding, or CCOG or CCIC, or as agent for CCUK acting as agent for CC Holding, CCOG or CCIC. None of these defendants was domiciled in England. As against CCIC, jurisdiction was asserted under the Judgments Regulation on the basis that it was domiciled in another Member State, namely Greece. As against CCOG, Mr Masri sought permission to serve out of the jurisdiction on the basis that it was not domiciled in a Member State but in Lebanon. CCIC and CCOG both disputed the jurisdiction of the English court. CCIC asserted that jurisdiction in the second action could not be founded upon the jurisdiction claimed against CCUK in the first action or on the basis of article 5.1 Judgments Regulation. CCOG asserted that there was no serious issue to be tried against it and that England was not the appropriate...
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