Riad Tawfiq AL Sadik v Clyde & Company LLP

JurisdictionEngland & Wales
JudgeSean O'Sullivan
Judgment Date12 April 2024
Neutral Citation[2024] EWHC 818 (Comm)
CourtKing's Bench Division (Commercial Court)
Docket NumberCase No: CL-2021-000395
Between:
Riad Tawfiq AL Sadik
Claimant
and
(1) Clyde & Co LLP
(2) Michael Black QC
(3) Marcus Staff
(4) Harney Westwood and Riegels
Defendants

[2024] EWHC 818 (Comm)

Before:

Sean O'Sullivan KC

(sitting as a Deputy Judge of the High Court)

Case No: CL-2021-000395

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

COMMERCIAL COURT (KBD)

Royal Courts of Justice, Rolls Building

Fetter Lane, London, EC4A 1NL

Nigel Jones KC and Sarah McCann (instructed by KEYSTONE LAW) for the CLAIMANT

Ian Croxford KC and Daniel Edmonds (instructed by REYNOLDS PORTER CHAMBERLAIN LLP) for the FIRST DEFENDANT

Charles Hollander KC and Joanne Box (instructed by DAC BEACHCROFT) for the SECOND AND THIRD DEFENDANTS

Alain Choo-Choy KC and Kyle Lawson (instructed by MISHCON DE REYA LLP) for the FOURTH DEFENDANT

Hearing dates: 11–15 March 2024

Approved Judgment

This judgment was handed down remotely at 10.30am on Friday 12 April 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Sean O'Sullivan KC (sitting as a Deputy High Court Judge):

1

This is a professional negligence claim brought by Mr Al Sadik (“C”) against his former legal advisers (together “the Ds”) in respect of an unsuccessful claim which he pursued in the Cayman Islands, and subsequently before the Judicial Committee of the Privy Council, between December 2009 and 18 June 2018 (“the Investcorp Claim”).

2

The Investcorp Claim was, by any sensible measure, a complicated and expensive dispute. Mr Jones KC (C's counsel) described it as “catastrophic”. From C's perspective, that is undoubtedly an accurate description. C lost at trial, with all of his different claims being dismissed. He then lost on appeal to the Court of Appeal and on further appeal to the Privy Council. An effort to bring proceedings in Dubai was scuppered by an anti-suit injunction granted by the Caymanian Court.

3

The present claim is also complicated, although perhaps not quite to the degree of the underlying litigation from which it has spawned. It is defended at every level by all of the Ds, who say (among other things) that they were not negligent and that, even if they had been, the matters complained about would not have made any difference to the end result given that, as Mr Hollander KC (for D2 and D3) put it rather colourfully, C went down to the sound of trumpets on every single allegation in the Investcorp Claim.

4

I am concerned with what might be described as a series of threshold issues. On 21 March 2023, Nigel Cooper KC (sitting as a Deputy Judge of this Court) ordered that the limitation issues raised by some of the Ds should be heard as preliminary issues, together with applications for reverse summary judgment made by all of the Ds.

5

I heard some evidence on the limitation issues, followed by submissions on those issues and then submissions on the summary judgment applications. I must pay tribute to the skill with which all of the arguments were presented to the Court, both in writing and orally, as well as to the cooperation between the legal teams, who agreed a timetable for evidence and submissions, and then largely stuck to it, working together to keep what could have been a rather sprawling hearing under control.

6

I am going to start by introducing the facts generally and setting the scene, before turning to the two aspects, which I will address in the order in which I heard them: limitation and then summary judgment.

A Background facts

7

What follows is intended to be introductory. It utilises both the factual introduction provided in C's skeleton for the hearing and a very helpful “ Defendants' Factual Narrative” which was provided by the Ds. In places, my summary will inevitably gloss over or simplify aspects of the story. There are probably also some parts of it which one party or another would consider controversial, but its purpose is only to assist the reader with understanding what follows. My specific factual findings (e.g. on knowledge) are contained in a later section of this judgment.

A.1 C's investment

8

C is an ultra-high net worth individual and very experienced businessman and investor, resident in Dubai. He is fluent in English. He is the owner of a successful construction and engineering company based in the UAE. In 2007, he sold shares in his company as part of a merger with an Australian firm in exchange for US$327 million. He was looking to invest some of that money.

9

Following discussions in late 2007 and early 2008, C and Investcorp Bank B.S.C. and certain entities related to Investcorp Bank (all which I will refer to collectively as “Investcorp”) agreed an investment scheme. As part of this, on about 1 March 2008, C and his wife entered into a share purchase agreement (“the SPA”) with Investcorp Bank, Investcorp Nominee Holder Limited and Shallot IAM Limited (“Shallot”). Shallot was a Caymanian SPV, incorporated for the specific purpose of handling C's investment with Investcorp.

10

The SPA provided as follows:

A. PURPOSE

I/We have requested Investcorp Bank B.S.C. (‘Investcorp’) to establish a separately managed account (the ‘Investment Account’), which will invest in certain hedge funds or segregated accounts with any hedge fund managers selected by the Investment Manager (as defined below), including, but not limited to, any Investcorp hedge fund (whether an Investcorp Fund of Hedge Funds, an Investcorp Single Manager Fund or any other Investcorp hedge fund product (any of the foregoing, an ‘Investcorp Hedge Fund’) or a hedge fund or a segregated account with any other hedge fund manager; provided, however that any such other hedge fund manager is at the time of investment a manager with which an Investcorp Hedge Fund is invested. The Investment Account will be established as a special purpose vehicle, Shallot IAM Limited which will be incorporated under the laws of the Cayman Islands (the ‘Company’). All assets of the Company are hereafter referred to as the ‘Assets Under Management’ and each hedge fund or segregated account in which Assets Under Management are invested is hereafter referred to as an ‘Underlying Investment’. To the extent that Assets Under Management are invested in any Investcorp Fund of Hedge Funds, such investment will be made in non-fee bearing shares.

B. SUBSCRIPTION: CURRENCY

Subject to the acceptance hereof by Investcorp and subject to the terms and conditions set forth in this Share Purchase Agreement, I/we hereby agree to purchase, and Investcorp agrees to procure the Issuance and sale, for an aggregate purchase price equal to the Investment amount indicated on the signature page hereof (the “Investment Amount”), of a number of UAE Dirham denominated Participating Non-Voting Redeemable Preference Shares of the Company, par value equal to the UAE Dirham equivalent to US$0.01 per share (“Company Shares”), equal to (i) the Investment Amount, divided by (ii) UAE Dirham 1,000.00…

C. INSTRUCTIONS FOR SUBSCRIPTION

I/We understand that this Agreement must be completed,, dated and executed by me/us, and must be received by Investcorp at least seven calendar Days prior to the applicable Subscription Date, unless such requirement is waived. At least five calendar Days prior to the applicable Subscription Date, I/we shall transfer the total Investment Amount to the account indicated on the signature page of this Agreement in UAE Dirham net of all withholdings, cost of exchange and banking charges, and/or authorize Investcorp to debit my/our account with Investcorp for such amount. The Company Shares will be issued on the Subscription Date, and recorded in my/our name in registered, book entry format.

I/We understand that no acceptance of this investment shall be final until (a) Investcorp receives payment of the Investment Amount, (b) the conditions set forth in Section D below have been satisfied, and (c) the Subscription Date has occurred. Prior to the Subscription Date, Investcorp may determine to return all or part of the Investment Amount to me/us in the event of an Inability to deploy subscription monies or for any other reason. I/We understand that my/our subscription cannot be revoked by me/us in whole or in part at any time after my/our delivery of this Agreement to Investcorp. Any amounts held by Investcorp prior to the Subscription Date will earn interest at a market rate, and accrued interest, plus any amount not accepted for investment, will be returned to me/us within a reasonable time after the Subscription Date (or, if earlier, within a reasonable time after Investcorp determines not to proceed with this subscription).

D. ACTIONS TO BE TAKEN PRIOR TO ACCEPTANCE OF SUBSCRIPTION

In contemplation of my/our investment, and as a condition precedent to the final acceptance thereof, I/we understand and agree that the following actions shall be taken:

1. The Company will enter into (a) an Investment Management Agreement (the “Management Agreement”), pursuant to which the Company will appoint Investcorp Investment Advisers Limited (“IIAL” or the “Investment Manager”) as its sole and exclusive manager in respect of its acquisition, holding and disposition of Its corporate assets. I/we understand that I/we may receive a copy of the Management Agreement upon written request to Investcorp.

2. The Initial shareholder of the Company has elected the directors of the Company, who will continue to serve as directors of the Company until their successors are duly elected. I/We understand that the Incumbent directors will have the power to fill any vacancies on the Company's board of directors. I/We further understand that the Company's board of directors will authorize or otherwise cause the Company to take any actions that the board believes are necessary or desirable In order to effectuate the purposes of this Investment or otherwise manage...

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