Samba Financial Group v Mark Byers
| Jurisdiction | England & Wales |
| Judge | Lord Justice McCombe,Sir Ernest Ryder,Lord Justice Floyd |
| Judgment Date | 14 March 2019 |
| Neutral Citation | [2019] EWCA Civ 416 |
| Docket Number | Case No: A2/2018/0072 |
| Court | Court of Appeal (Civil Division) |
| Date | 14 March 2019 |
[2019] EWCA Civ 416
Lord Justice McCombe
Sir Ernest Ryder
(Senior President of Tribunals)
and
Lord Justice Floyd
Case No: A2/2018/0072
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE,
CHANCERY DIVISION
Mr Justice Birss
HC/2013/000606 and HC/2017/001598
Royal Courts of Justice
Strand, London, WC2A 2LL
Andrew Onslow QC and Alan Roxburgh (instructed by Latham & Watkins) for the Appellant
Mark Howard QC and Adam Cloherty (instructed by Morrison & Foerster (UK) LLP) for the Respondents
Hearing date: 12 February 2019
Approved Judgment
Introduction
This is an appeal by Samba Financial Group (“Samba”), a company incorporated in the Kingdom of Saudi Arabia, from the order of 6 December 2017 of Birss J. By his order the judge gave permission to the Respondents, Saad Investments Company Limited (“SICL”) (a company incorporated in the Cayman Islands) and its Joint Official Liquidators (Mr Stephen Akers, Mr Mark Byers and Mr Hugh Dickson) to re-amend their Particulars of Claim in the action. At the same time he dismissed an application by Samba to stay the proceedings or strike out the Claim Form and the Particulars of Claim.
In resistance to the re-amendment application Samba sought to stay the proceedings on forum non conveniens and abuse of process grounds and further argued that to permit the amendment would have the effect of depriving it of a limitation defence. This latter argument arose because of the doctrine of “relation back”, whereby the re-amended claim would be deemed to have been commenced, within the limitation period, on the date of issue of the original claim form on 14 August 2013. In this case, the primary limitation period is to be taken to have expired on 16 September 2015. Accordingly, Samba submitted, the application for permission to re-amend the Particulars of Claim should be refused and the action should be dismissed or struck out. It is the limitation question that is in issue on this appeal.
Factual Background
The background to the action was this. On 16 September 2009 a Mr Maan Al-Sanea had transferred to Samba a number of shares in various Saudi Arabian banks in purported payment or part payment by him of debts owed by him to Samba. At the date of transfer the shares were worth about US$318 million. SICL claimed and claims that the shares were held by Mr Al-Sanea on trust for it and that the transfer by Mr Al-Sanea to Samba was made in breach of that trust.
SICL went into liquidation in the Cayman Islands on 30 July 2009. The English courts recognise the Cayman winding-up proceedings as foreign main insolvency proceedings for the purposes of the Cross-Border Insolvency Regulations 2006. In the present proceedings, as originally formulated, the respondents sought an order under s.127 of the Insolvency Act 1986 that the transfer be declared void as a disposition of SICL's property after the commencement of winding-up. No claim was made against Samba, at that stage, that it held the shares as constructive trustee for SICL. Indeed, the respondents had made the conscious decision not to include such a claim in the proceedings.
Procedural History
The action went through a number of procedural vicissitudes (more fully summarised by the judge in his judgment ( [2017] EWHC 3106 (Ch)) involving disputes as to relevant proper law and as to jurisdiction and forum conveniens. In the High Court, Sir Terence Etherton C (as he then was) stayed the proceedings on the basis that the relevant proper law was that of Saudi Arabia and that that country was the more appropriate forum for the proceedings. The Court of Appeal (Longmore LJ, and Kitchin LJ and Vos LJ (as they then were)) found that it was at least arguable that the law of the Cayman Islands governed the matter and would have lifted the stay, subject to the possibility of a further appeal to the Supreme Court. That appeal was duly brought.
In the Supreme Court, the case took an unexpected turn when it was put to the parties by the court (initially in argument by Lord Sumption) that the relevant transfer might not have been a “disposition” of SICL's property at all within the meaning of s.127 of the 1986 Act. Following further submissions on that point, the Supreme Court held that the transfer was indeed not a “disposition” for the purposes of the section.
In broad terms, the reasoning was that where an asset was held on trust, the legal title remained capable of transfer to a third party, even though in breach of trust. The trust rights, including the right to have the legal title held and applied in accordance with the terms of the trust, were not thereby “disposed of” and continued to be capable of enforcement by the beneficiary unless and until the dealing with the legal title had the effect, under the lex situs of the asset, of overriding those rights. If the rights were overridden that was not because of a “disposition” of them by the transfer of legal title but because of their limited nature and because they were capable of being defeated, for example by acquisition by bona fide purchasers for value.
The Supreme Court decision that there had been no disposition for the purposes of s.127 meant that the claim as originally formulated had to fail. However, the court remitted the proceedings to the High Court to permit the respondents to attempt to save the action by applying to re-amend the claim.
Application for Permission to Re-Amend the Particulars of Claim; the New Claims
The respondents made that application. They deleted entirely the claim under s.127, which the Supreme Court had held was bound to fail, and in its place formulated a claim in constructive trust against Samba personally, a claim which, as I have mentioned, they had previously deliberately eschewed. The new claim is presented in some 6 1/2 pages of pleading, alleging features of “Samba's knowledge and conduct” in paragraphs 37A to 37F of the draft. I annex a copy of those paragraphs to this judgment.
It will be seen that the allegations of relevant knowledge and conduct include the following matters.
It is said that Mr Al-Sanea himself was a director of Samba until 2003 (six years before the dealing in question). Mr Saud Algosaibi, a director of Samba until shortly before the transfer, is said to have known of SICL's practice to hold shares using Mr Al-Sanea as a nominee. Reliance is placed upon his directorship of AHAB from 1990 to 2003, a company which paragraph 10 of the pleading tells us obtained a freezing order in the Cayman courts against a number of parties, including Mr Al-Sanea, in July 2009. Also relied upon is SICL's “longstanding relationship” with Samba as a borrower, an owner of shares in Samba and as a depositor with Samba. The shares are said to have comprised at times up to 8% of SICL's total equity investments. Cross-reference is made to a “SICL/Samba Facility Agreement” made in 2004, which is said to have been amended from time to time thereafter, under which Samba lent US$60 million to SICL. From this it said that it is to be inferred that Samba would, in the course of its same “longstanding relationship”, have taken and did take detailed steps to understand how SICL's shares in Saudi Arabian banks were held and by whom. It is said those steps would have revealed that Mr Al-Sanea held the shares in issue on trust for SICL. “Further or alternatively”, as it is alleged, a reasonable bank would have or ought to have appreciated (or should have made inquiries) “which would have revealed the probability that” the shares were held by Mr Al-Sanea on trust for SICL.
The new pleading goes on to allege that Samba recklessly failed to make inquiries that “an honest and reasonable bank” would have made and which would have revealed the trusts. It is then alleged that Samba received in July 2007 an information memorandum called “the RCF Document”, SICL's business plan, accounts and annual reports. From these documents it is said that Samba would have known of SICL's shareholdings in the banks in which the disputed shares were held. It would have known that Mr Al-Sanea's registered holding in Samba would have been as a nominee for SICL of which he was the ultimate beneficial owner.
There is then outlined in the pleading the freezing of Mr Al-Sanea's Saudi Arabian assets, the proceedings by AHAB in the Cayman Islands in July 2009 and the winding-up of SICL and the appointment of the three individual respondents to this appeal as liquidators. These events, it is alleged, would have given rise in Samba to suspicions and an appreciation of a need to make enquiries with regard to the transfer of the disputed shares in breach of freezing measures in Saudi Arabia and in the Cayman Islands.
For Samba, it was pointed out to us by counsel that the directions order made on 20 November 2018 (by HH Judge Klein, sitting as a Judge of the High Court) in respect of the new claim has identified that the date ranges for relevant disclosure in the newly formulated claim are to be (for the present respondents) 1 January 1980 to the present date and (for Samba) 1 January 1987 to 14 August 2013.
The Decision on the Application by Birss J
The cross-applications by the present respondents for permission to re-amend in these terms and by Samba to stay/strike out the action came before Birss J on two days in October 2017. A number of points were advanced by Samba in resistance to the amendment application and in support of its own application to bring the action to an end. One argument was that the newly formulated claim was bound to fail because Saudi Arabian law was the applicable...
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