Plantation Holdings (FZ) LLC v Dubai Islamic Bank PJSC
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr. Justice Picken,The Honourable Mr Justice Picken |
| Judgment Date | 23 March 2017 |
| Neutral Citation | [2017] EWHC 520 (Comm) |
| Docket Number | Case No: CL-2013-000775 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 23 March 2017 |
[2017] EWHC 520 (Comm)
The Hon. Mr. Justice Picken
Case No: CL-2013-000775
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Stuart Cakebread and Juliette Levy (instructed by David Wyld & Co) for the Claimant
Robert Anderson QC and William Edwards (instructed by Baker & McKenzie LLP) for the Defendant
Hearing dates: 24, 25, 26, 27, 28 and 31 October 2016, 1, 2, 3, 8, 9, 10, 11, 14, 15, 16, 17, 18, 21, 22, 23, 24, 28, 29 and 30 November 2016, and 1, 2, 5, 6, 7, 12, 13 and 14 December 2016
Judgment supplied in draft to the parties: 15 March 2017
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This is a claim by the Claimant, Plantation Holdings (FZ) LLC ('Plantation') for some US$2 billion. Plantation is a Dubai company which was incorporated in 2004 for the purpose of developing an upmarket and exclusive polo facility on the outskirts of Dubai which was to include villas, a hotel, rented flats and business units ('Plantation Project' or 'the Project'). The land had originally, on 25 January 2004, been leased by the Dubai Development and Investment Authority ('DDIA'), a company which subsequently assigned its rights under the Lease to Dubai Tourism Development Company LLC ('DTDC') (later renamed Dubai Land LLC ('Dubailand')) to Mr Arthur Fitzwilliam (the 'Lease'), the majority shareholder and manager of Plantation who assigned his interest to Plantation in December 2004.
Mr Fitzwilliam's original idea had been relatively modest: to build what he picturesquely described as a "polo commune" for "polo mates" consisting of "a single polo field with some villas around it". Although the focus of the Project was to remain on polo and equestrian matters, there was a substantial change in terms of the scale of the Project which was ultimately intended to be on so grand a scale that it would cover a land area a third larger than Hyde Park, with four polo fields. This was to be a very substantial development which would be constructed out of desert land at a considerable cost (as at January 2008, some AED 1.39 billion or US$380 million).
The Lease permitted the development of a polo and equestrian facility, a hotel, business units, villas and apartments for sale. Specifically, the Lease, which was for a period of 49 years renewable for another 50 years and which was subject to Dubai law, defined the "Premises" as being "that piece of land consisting of more or less of … 14,372,941 sq. ft. … located at Dubai Land and as more particularly identified on the Plan of the Premises attached as the First Schedule hereto". This was revised upwards to 20,000,000.50 square feet by an amendment entered into on 3 October 2004. The Lease went on to define the "Project" as being "the Project called Plantation to be constructed by the Tenant on the Premises which includes, but is not limited to, a multifunction development comprising a hotel in combination with an independent Cosmetic Surgery Clinic, Equestrian Center, polo fields, stabling, veterinary clinic and residential villas and or apartments for sale, and as may be varied with agreement of both Parties". The 3 October 2004 amendment introduced into this description of the "Project" a reference also to an "Equine University". As Mr Fitzwilliam put it when describing the scale of the Project when giving his evidence, there was an occasion fairly early on, when he drove out "to the desert, overlooking the piece of land before the one we actually got, because there were a number of changes" and parked "on this high dune looking over the land that had just been allotted to me, thinking, 'Oh my God, what have I done?'". Mr Fitzwilliam may have been momentarily somewhat overawed. He was nonetheless not apparently overly perturbed since, as I shall come on to explain, he thereafter set about turning his idea into reality. Unfortunately for Mr Fitzwilliam, the reality turned out to be rather different to that which he had hoped for. The "world full of fun and adventure" which one of the advertising hoardings on the site boasted the Project would be did not materialise: the Project was never completed and Mr Fitzwilliam was to find himself incarcerated in a Dubai prison for some three years as a result of his involvement with the Project, only ultimately to be acquitted of the charges which he faced, during which time the Defendant, Dubai Islamic Bank PJSC ('DIB'), a Dubai incorporated bank and one of the largest banks in the Middle East, took possession of the land held by Plantation. This was clearly not the "adventure" (still less the "fun") which Mr Fitzwilliam had hoped for.
This case is a further consequence of Mr Fitzwilliam's unfulfilled dream of creating the Project. Specifically, the case arises under a contract ('the Restructuring Agreement' or 'the RSA') entered into on 19 August 2007 and which provides for the restructuring of approximately US$501 million (the 'Rescheduling Amount') in payments owed to DIB. Specifically, the RSA was entered into as a result of the fraudulent misappropriation of certain funds received from DIB by individuals who are not involved in the current proceedings (the 'CCH fraud'). These individuals, Mr Ryan Cornelius and Mr Charles Ridley, were investors in the Plantation Project, who, unbeknownst to Plantation, used about US$18 million of the misappropriated funds by way of investment in the Project. With the Plantation Project well underway, Plantation entered into the RSA agreeing to act as surety by granting DIB a conditional assignment of its leasehold land for the Project ('the Conditional Assignment'). Just under a year later, on 9 June 2008, DIB alleged that Plantation had committed four breaches of the RSA and required the breaches to be remedied within 15 days. Those breaches alleged by DIB, including allegations that Plantation had not complied with Law No. 8 of 2007 (a Dubai law which had recently come into force and which was designed to protect those who purchase 'off-plan'), were set out in a letter served on Plantation by DIB's Dubai lawyers, Al Tamimi & Co. ('Al Tamimi'), on 9 June 2008. That letter set out details of a number of alleged breaches of the RSA. Plantation's position is that none of these alleged breaches had occurred at the time that the letter was sent on 9 June 2008. On the contrary, Plantation maintains that, in sending the letter, DIB was simply looking for 'a way out' and that this explains why unmeritorious breaches were asserted by DIB. In any event, the letter having been sent by DIB to Plantation and the alleged breaches having not been remedied in the time afforded to Plantation by DIB, with the result that, on 20 July 2008, DIB perfected the assignment of the Lease and thereby took control of the land to which the Lease related. Plantation contends in these proceedings that DIB had no right to take that action and that, as a result of DIB's actions, Plantation has suffered substantial losses. It is Plantation's case that in July 2008 the Lease was worth either US$2 billion or AED 2,934,491,309 (approximately US$800 million), depending on whether I decide that a particular deal would have been available in June 2008, and that, in the circumstances, DIB is liable to pay Plantation damages in one of these amounts.
DIB denies liability to Plantation. DIB's case is that it was entitled to act as it did and when it did, and that accordingly it was not in breach of the RSA in doing what it did. Even if that is not the case, however, it is DIB's position that there is, in any event, no basis upon which Plantation can claim to be entitled to substantial damages since Plantation's case entirely ignores both the highly precarious nature of Plantation's financial position, specifically a funding model which required it to achieve sales at an unachievable (and unachieved) rate (all the more so having regard to the wider economic realities in the second half of 2008). DIB contends that, in the circumstances, even had DIB not taken the action which it did, Plantation would, in any event, have failed and DIB would, as a result, have been entitled to take possession following an Event of Default.
These are the issues which must be resolved in these proceedings. It ought, however, to be acknowledged at the outset that the present proceedings are, in fact, the second set of proceedings to come before the Commercial Court concerned with the Project. The first involved Mr Cornelius and Mr Ridley as defendants in a claim brought by DIB seeking payment of some US$432 million (after giving credit for recoveries) arising under the RSA. In broad terms, DIB's case in those proceedings, which resulted in a judgment in DIB's favour handed down by Flaux J (as he then was) on 6 December 2013 ( [2013] EWHC 3781 (Comm)), was that Events of Default occurred under the RSA which led to the acceleration by DIB of repayment of sums due, with the result that Mr Ridley and Mr Cornelius (and two other defendants), who were all guarantors under the RSA, were jointly and severally liable to DIB for the outstanding amount due under the RSA. Mr Ridley and Mr Cornelius were by that stage in prison in Dubai, having been arrested in May 2008 and subsequently convicted by the criminal courts there of defrauding DIB and paying bribes to DIB's employees. They remain in prison to this day.
The factual witnesses
It will be necessary in a moment to deal with the factual background in some considerable detail. Before doing so, I should, first, however, say something...
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