Robert Tchenguiz and Another v Rawlinson and Hunter Trustees SA and Others

JurisdictionEngland & Wales
JudgeMr Justice Eder,Mr Justice Eder:
Judgment Date26 July 2013
Neutral Citation[2013] EWHC 2297 (QB)
Docket NumberCase Nos: HQ12X05106, HQ13X00672,
CourtQueen's Bench Division
Date26 July 2013
(1) Robert Tchenguiz
(2) R20 Limited
Claimants in HQ12X05106 and HQ13X00672
and
(1) Rawlinson and Hunter Trustees SA
(2) Vincos Limited
(3) Euro Investments Overseas Inc
(4) Vincent Tchenguiz
(5) Amora Investments Limited
Claimants/Applicants in HQ12X05082 and HQ13X00414
Director of the Serious Fraud Office
Defendant to all claims
and
(1) Mr Stephen John Akers
(2) Mr Mark Mcdonald
Respondents

[2013] EWHC 2297 (QB)

Before:

Mr Justice Eder

Case Nos: HQ12X05106, HQ13X00672,

HQ12X05082, HQ13X00414

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice, Rolls Building

Fetter Lane, London, EC4A 1NL

Ms Rosalind Phelps and Mr James Duffy (instructed by Stephenson Harwood LLP) for the VT Claimants

Mr Joe Smouha QC, Mr Alex Bailin QC and Ms Alison Macdonald (instructed by Shearman & Sterling (London) LLP) for the RT Claimants

Mr Dominic Dowley QC, Mr James EadieQC andMr Simon Colton (instructed by Slaughter and May) for the Defendant

Mr William Trower QC and Mr David Allison (instructed by Chadbourne & Parke (London) LLP) for the Third Party Respondents (Joint Liquidators of Oscatello Investments Limited (in liquidation))

Hearing dates: 10 and 11 July 2013

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.

Mr Justice Eder– NON PARTY DISCLOSURE

Mr Justice Eder:

Introduction

1

The background to these present proceedings is to be found in the judgment of the Divisional Court in judicial review proceedings with Claim Nos CO/4236/2011 and CO/4468/2011 (the "JR Proceedings") delivered on 31 July 2012 with the reference [2012] EWHC 2254 (Admin) (the "DC Judgment"). Those proceedings concerned the business interests of two individuals i.e. Robert Tchenguiz ("RT") and Vincent Tchenguiz ("VT") and the companies and trusts through which their businesses are carried on in relation to what was and is said to be the unlawful entry, search and seizures by or at the instigation of the defendant ("SFO") at certain premises in London as well as the arrests and investigations connected to this. In broad terms, there are two groups of claimants i.e. those referred to as the R&H or VT Claimants and those referred to as the RT Claimants. In summary, they say that the searches, arrest and investigation and the publicity surrounding them had a disastrous effect on their business interests causing very extensive financial losses and reputational harm; and they now seek damages in these proceedings in the total sum of approximately £300 million. The substantive hearing of that claim is now scheduled to take place in 2014.

The present application

2

This judgment deals with the VT claimants' application under CPR 31.17 for third party disclosure from Stephen Akers and Mark McDonald, the liquidators of Oscatello Investments Limited ("the Joint Liquidators" and "Oscatello" respectively).

3

In particular, disclosure is sought of 5 specific documents (the "Reports") which were prepared by a firm of accountants i.e. Grant Thornton ("GT") on the instructions of the Joint Liquidators, who are also partners/directors of GT. These Reports were shown to the SFO by GT, but not permitted to be copied by the SFO. Thus, although the GT reports played what the claimants submit was a key role in the Information placed before HHJ Worsley by the SFO in March 2011 in support of the orders then sought by the SFO (the "Information") and obtaining of the warrants, these will not be disclosed by the SFO in the present proceedings.

4

There is no similar formal application by the RT claimants but Mr Trower QC expressly agreed that no separate formal application was necessary. In effect, therefore, this application should be treated as an application on behalf of all claimants.

5

The application is opposed by the Joint Liquidators on three main grounds i.e. (i) necessity/relevance; (ii) litigation privilege; and (iii) discretion. In support of such opposition (in particular with regard to the claim for litigation privilege), the Joint Liquidators rely upon a statement dated 5 July 2013 of Mr John Verrill, a solicitor, licensed insolvency practitioner and partner in the firm of Chadbourne & Parke (London) LLP ("CP"). I deal below with each of these points in turn but it is convenient to summarise at the outset the role of the Joint Liquidators and the relevant background to the present application.

The Joint Liquidators

6

The facts relating to the appointment of the Joint Liquidators and their conduct of the liquidation are set out in Mr Verrill's statement. Certain of such facts are or may be in issue but without prejudice to any such possible dispute in the future, it is convenient to adopt for present purposes the brief summary set out in Mr Trower's skeleton argument which was as follows.

7

The Joint Liquidators act as liquidators of Oscatello and a number of additional companies registered in the British Virgin Islands (together the "Oscatello Companies").

8

The Oscatello Companies formed part of a complex group of companies including their subsidiary undertakings which, at all material times (following a restructuring of the group in late 2007) were ultimately controlled by Investec Trust (Guernsey) Limited ("Investec") and Bayeux Trustees Limited (together with Investec, the "TDT Trustees") in their capacity as joint trustees of the Tchenguiz Discretionary Trust (the "TDT").

9

The main beneficiaries of the TDT were Robert Tchenguiz ("RT") and his children and remoter issue. The TDT was settled on 26 March 2007 by a declaration of trust made by, among others, Investec in its capacity as trustee of the Tchenguiz Family Trust ("TFT"), pursuant to a power to settle new trusts contained in the TFT instrument. The beneficiaries of the TFT include RT and his brother VT.

10

The Oscatello Companies performed two main roles: (i) they held positions by way of direct equity/debt investments; and (ii) they participated in large-scale derivatives and futures trading. Investment decisions were made by the TDT Trustees in conjunction with or at the direction of R20 Limited ("R20"). From around the date of the inception of the TDT in March 2007, R20 advised the TDT and the companies held under its umbrella (including the Oscatello Companies) on their general commercial and investment strategies. RT is a director of R20.

11

In around late 2007, the Oscatello Companies were restructured. A framework agreement providing the basis for the continued operation of the Oscatello Companies was concluded with, among others, the Icelandic bank Kaupthing hf ("Kaupthing"). Kaupthing and certain of its subsidiaries agreed to continue to fund the Oscatello Companies' operations by way of an overdraft facility and other forms of lending, secured over shares in the Oscatello Companies. That funding was used principally for the purposes of purchasing and servicing equity and debt instruments in the form of contracts for differences and credit default swaps.

12

The amount of funding provided by Kaupthing to the Oscatello Companies increased rapidly throughout 2008, largely as a consequence of a need to meet margin calls as asset values deteriorated. By the end of 2008, Kaupthing had collapsed and the Oscatello Companies could no longer meet their obligations.

13

On 10 December 2008, Mr Akers and Mr McDonald were appointed as joint receivers over the shares of the Oscatello Companies.

14

On 18 August 2009, Mr Akers and Mr McDonald were appointed as joint liquidators of a number of the Oscatello Companies.

15

On 16 February 2010, Mr Akers and Mr McDonald were appointed as joint liquidators of Oscatello.

16

The appointment of Mr Akers and Mr McDonald as liquidators has been recognised in England and Wales by order of this court dated 31 March 2010 made pursuant to the terms of the Cross Border Insolvency Regulations 2006. Their appointment as liquidators has also been recognised in Guernsey by order of the Royal Court of Guernsey dated 21 April 2011.

17

The Joint Liquidators estimate that the shortfall in the assets of the Oscatello Companies to meet the claims of its creditors is in excess of £1,950,000,000.

18

The liquidation of the Oscatello Companies has been exceptionally complex. There has been worldwide litigation, including complex and hard fought proceedings in London, the Isle of Man, Guernsey and the British Virgin Islands. The Oscatello Companies have frequently found themselves on the other side of litigation to parties associated with RT and VT. One example is provided by the proceedings pending before the Royal Court of Guernsey. The Guernsey proceedings concern a claim by the TDT Trustees against Oscatello and others seeking to challenge the terms and enforceability of intra-group lending by the Oscatello Companies. RT is a protector of the TDT and gave oral evidence to the Guernsey Court.

19

According to Mr Verrill, it is likely that there will be further litigation between the Oscatello Companies and parties associated with VT and RT. In this regard:

i) the Joint Liquidators continue actively to consider the commencement of proceedings against a large number of parties (including those associated with RT and VT) in order to recover assets or to receive compensation in respect of assets of the Oscatello Companies which appear to have been misapplied; and

ii) the solicitors to the VT Claimants have indicated that they are contemplating claims against the Joint Liquidators arising from the criminal proceedings brought by the SFO. The solicitors to the VT Claimants have made a number of very serious allegations, including an allegation that the Joint Liquidators provided misleading and inaccurate information to the SFO for the purpose of damaging VT and the...

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