Pattni v Ali

JurisdictionUK Non-devolved
JudgeLord Mance
Judgment Date20 November 2006
Neutral Citation[2006] UKPC 51
CourtPrivy Council
Docket NumberAppeal No 23 of 2005
Date20 November 2006
Kamlesh Mansukhal Damji Pattni
Appellant
and
(1) Nasir Ibrahim Ali
(2) Dinky International SA
Respondents

[2006] UKPC 51

Present at the hearing:-

Lord Bingham of Cornhill

Lord Walker of Gestingthorpe

Baroness Hale of Richmond

Lord Carswell

Lord Mance

Appeal No 23 of 2005

Privy Council

[Delivered by Lord Mance]

1

This appeal is brought by special leave against the judgment dated 19 th February 2004 of the Staff of Government Division (consisting of Mr G. Tattersall QC and Mr D. Allen QC) of the High Court of Justice of the Isle of Man, dismissing an appeal against the judgment dated 14 th November 2003 of His Honour the Deemster Kerruish. Their Lordships will refer to the appellant, Kamlesh Mansukhal Pattni, as Mr Pattni and the respondents, Nasir Ibrahim Ali and Dinky International SA, as, respectively, Mr Ali and Dinky.

2

The events giving rise to these proceedings go back to early 1992. They concern an agreement alleged to have been made, in a document dated 10 th April 1992, for the sale and purchase of shares in World Duty Free Company Limited ("World Duty"). World Duty is an Isle of Man company, now in receivership, which traded under the name Kenya Duty Free Complex. Under an agreement dated 27th April 1989 and amended 11 th May 1990 made with the Republic of Kenya, World Duty had the exclusive right to operate duty free complexes at Jomo Kenyatta International Airport, Nairobi, and Moi International Airport, Mombasa. Mr Ali, a Dubai-based business-man with Kenyan interests, owned one of World Duty's shares and was one of its three directors. Dinky (a Panamanian corporation, the shares in which were owned by Mr Ali and his wife) owned the remaining 99,999 shares. Mr Pattni, a Kenyan businessman, maintains that by the alleged sale agreement Mr Ali and Dinky (through Mr Ali signing as its director) agreed to sell to him their shares in World Duty and that he paid the stipulated price, but that the shares were never transferred into or registered in his name in accordance with the alleged agreement.

3

The alleged sale agreement was expressed to be subject to Kenyan law, and to contain a submission to the Kenyan jurisdiction by its parties. The issue whether it was genuine or a forgery gave rise in 1998 to Kenyan proceedings between Mr Pattni as plaintiff and Mr Ali, Dinky and World Duty as defendants in the High Court of Kenya at Nairobi Milmani Commercial Courts. In circumstances to which their Lordships will come, these culminated in a judgment given by Mr Justice Mbaluto on 25 th September 2001, which in turn led to an order in a decree issued by the Court's Deputy Registrar on 27 th September 2001, by paragraph 2 of which it was, inter alia, adjudged that Mr Ali and Dinky "do transfer all the 100% shares in the 3 rd defendant [World Duty] to the plaintiff as per the said sale and purchase agreement …..". The terms and effect of the judgment and decree are central to the present appeal, and their Lordships will set them out more fully in due course.

4

The current proceedings were begun on 14 th September 2001 by the issue by Mr Ali and Dinky of two petitions (later consolidated) "in the matter of" World Duty in the Chancery Division of the High Court of Justice of the Isle of Man, claiming inter alia an order declaring them to be the beneficial owners of the share capital in World Duty, and seeking a direction as to the notice to be given of the petitions. Notice was evidently given to Mr Pattni, who is the sole effective respondent to the proceedings and the appellant in the present appeal. Mr Pattni in response to the petitions relied on the Kenyan judgment and decree dated 25 th and 27 th September 2001.

5

An order was thus made on 14 th August 2003 in Mr Ali's and Dinky's petitions for the hearing on 16 th and 17 th October 2003 of a preliminary point whether the Kenyan court's judgment "relating to the issued shares in World Duty …. can be enforced in the Isle of Man being a judgment in rem". By its latter phrase the order begged an issue. The skeletons prepared for the preliminary hearing showed that Mr Ali and Dinky were relying on the lack of any formal steps by Mr Pattni to establish his alleged case in the Isle of Man. Mr Pattni therefore issued his own petition dated 14 th October 2003 in the Chancery Division of the Isle of Man seeking, in summary, (a) rectification of World Duty's register of members kept in the Isle of Man by the insertion of his name in replacement of those of Mr Ali and Dinky as shareholders in World Duty (an application evidently intended to be pursued in accordance with principles and procedure similar to those discussed in Buckley on the Companies Acts paragraphs 359.16-18A and in Re Hoicrest Ltd., Keene v. Martin [2000] 1 BCLC 194) and/or (b) declarations that Mr Ali and Dinky submitted to the Kenyan proceedings, that they are estopped from making assertions as to their contractual position contrary to the Kenyan court's findings and that Mr Pattni is the legal and beneficial owner of the shares in World Duty.

6

At the commencement of the hearing before Deemster Kerruish on 16 th October 2003 it was agreed that (in lieu of the previous single question) five questions fell to be determined as preliminary points. In the event, only the first two arise presently for consideration. They are, as formulated before Deemster Kerruish:

  • (a)Is the Judgment a judgment in rem or in personam?

  • (b)Did the Kenyan court have jurisdiction to make the Judgment?

Both the courts below have held in answer to question (a) that the judgment was in rem and in answer to question (b) that the Kenyan court had no jurisdiction to make it. It is common ground that the answer given to question (b) follows if the answer to question (a) is correct. It is not however common ground, at least before their Lordships, that an affirmative answer to question (b) necessarily follows if the judgment was a judgment in personam.

7

To understand the nature of the Kenyan judgment and decree, it is necessary to examine their terms and background more closely. Mr Pattni's case in the Kenyan proceedings was that there had been first a memorandum of understanding made 27 th March 1992 between Mr Ali (referred to as the "First Party") and himself (referred to as the "Second Party") and then the sale and purchase agreement dated 10 th April 1992 signed by Mr Ali (referred to as "Nasir"), Dinky and himself (referred to as the "Purchaser"). The alleged memorandum of understanding read as follows:

"IT IS HEREBY AGREED as follows:-

  • 1)That the First Party agrees to sell to the Second Party 100,000 shares (100%) of World Duty Free Company Limited for a price of US $13,750,000 (Thirteen Million Seven Hundred and Fifty Thousand United States Dollars).

  • 2)As a token of the Second Party's commitment of fulfilling his obligation, the Second Party has today paid Kshs. 90,000,000 (Ninety Million Kenya Shillings) equivalent to US $3,000,000 (Three Million US Dollars) receipt of which the First party hereby acknowledges.

  • 3)Furthermore both parties have agreed to formalise a Sale/Purchase Agreement of the shares of World Duty Free Company Limited to be signed by both parties upon the First Party's arrival in Nairobi, Kenya in early April, 1992.

  • 4)The First Party shall sign the Sale/Purchase Agreement on his own behalf and shall cause the agreement to be signed by DINKY INTERNATIONAL SA of WD – 3, Roundabout 3, P.O. Box 16892, United Arab Emirates as shareholder in World Duty Free Company Limited.

  • 5)The First Party agrees to transfer his shares and will make Dinky International SA to transfer its shares to the Second Party within a period of twelve months from the date of signing the Sale/Purchase agreement.

  • 6)It is also agreed between both parties that the exchange rate applicable would be Ksh. 30/= (Thirty Kenya Shillings) to a US Dollar.

  • 7)The Second Party agrees that the First Party will remain as the Chairman and CEO of World Duty Free Company Limited up to 10.01.1994 when the Second Party will appoint his own directors and run the operations of World Duty Free Company Limited."

8

The alleged sale and purchase agreement read:

"WHEREAS

  • (A)Nasir and Dinky as existing shareholders desire to sell and the Purchaser desires to purchase 100% of all issued and outstanding shares owned by Nasir and Dinky in the Company known as WORLD DUTY FREE COMPANY LIMITED a company incorporated in the Isle of Man with its registered office at Third Floor, Exchange House, 54-58 Athol Street, Douglas, Isle of Man and whose operational Head Office address is at P.O. Box 8222, Dubai, United Arab Emirates (hereinafter referred to as the "Company"), in accordance with the terms set out in this Agreement (the "Sale Shares")

  • (B)The parties desire to provide for certain procedures concerning the said sale and purchase of the Sale Shares.

  • (C)The Company has been granted the exclusive right to operate duty free complexes in Kenya, trading as Kenya Duty Free Complex under the terms of an agreement dated 27th April, 1989 by the Republic of Kenya for its International airports in Nairobi and Mombasa as amended on 11th May, 1990.

NOW THIS AGREEMENT WITNESSETH as follows: -

  • 1)That Nasir and Dinky agree to sell and the Purchaser agrees to purchase the Sale Shares at a total price of US $13,750,000 (Thirteen Million Seven Hundred and Fifty Thousand United States Dollars).

  • 2)The Purchaser has paid to Nasir and Dinky through Trade Bank Ltd a down payment amounting to US $5,125,000 (Five Million One Hundred and Twenty Five Thousand United States Dollars) equivalent to Kshs 153,750,000 (One Hundred and Fifty Three Million Seven Hundred and Fifty Thousand Kenya Shillings) calculated at the agreed exchange rate of Kshs 30/= for each United States Dollar, the receipt of which is...

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