Serious Fraud Office and Another v LCL and Others

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeMr Justice Foxton
Judgment Date28 July 2020
Neutral Citation[2020] EWHC 2077 (Comm)
Docket NumberCase No: CL-2017-000323
Date28 July 2020

[2020] EWHC 2077 (Comm)




Royal Courts of Justice, Rolls Building

Fetter Lane, London, EC4A 1NL


Mr Justice Foxton

Case No: CL-2017-000323

Serious Fraud Office & Anor
LCL & Ors

Mr Tim Akouh and Mr Rick Hoyle (instructed by Harcus Parker LLP) for the seventh respondent

Sebastian Kokelaar (instructed by Richard Slade and Company) for the eighth and ninth respondents

James Pickering QC and Samuel Hodge (instructed by Spring Law) for the 12th, 13 th and 14th Respondents

Mr Ulrich Pelz in person

Rupert Hamilton (instructed by HFW) for the 21 st to 25 th Respondents

Kennedy Talbot QC for The Serious Fraud Office

Tony Beswetherick (instructed by Stephenson Harwood LLP) for the Second Applicants

Mr David Caplan (instructed by Charles Russell Speechlys Bircham LLP) for the 18 th Defendant

Mr Rupert Bowers QC (instructed by Keystone Law) for Litigation Capital Ltd

Mr David Rosen (solicitor-advocate of David Rosen & Co) for Ms Sinead Irving

Sean Upson (solicitor-advocate) for Stewarts

Dr Gerald Martin Smith in person

Hearing dates: 27 th and 28 th July 2020


Mr Justice Foxton

Tuesday, 28 July 2020

( 10.30 am)

Ruling by Mr Justice Foxton

Mr Justice Foxton

I am now going to issue my ruling following on from the argument yesterday as to whether the so-called individual underlying asset claims (“IUA Claims”) should be determined as part of the Directed Trial.


I am not going to rehearse the background to the application at any length, I have set out the lengthy background, both to the action and to the application, in prior judgments which are reported at [2020] EWHC 788 (Comm) and [2020] EWHC 1280 (Comm). I adopt the definitions used in those judgments.


But by way of very brief introduction, on 25th July of this year the Settlement Parties finally served their consolidated pleading, which had the effect of resolving their claims against each other and allowing them, going forward, to be represented before the court principally by a single team with the potential saving for time and costs at the trial.


Having anticipated such a development, the Settlement Parties obtained from me in May an order that required anyone claiming proprietary interests in certain individual underlying assets (the “IUAs”) to articulate those claims. They now, at this CMC, take the next step of applying to me for an order directing that the IUA Claims be heard as part of the Directed Trial in January.


So far as the other parties are concerned, their positions are as follows:

a. LCL support the application.

b. In the form in which it was finally put forward yesterday, which involved the significant revision, HPII is neutral on the application.

c. Phoenix and Minardi oppose the application on the basis that it cuts across the logic of Mr Justice Popplewell's original management scheme and because it is said there simply will not be enough time, either in advance or possibly at the January hearing, to deal with the additional issues.

d. Mr Ulrich Pelz also opposes the inclusion of the IUA Claims, saying it will add to the complexity and cost of the January trial, increase the number of participants and delay the resolution of the Directed Trial. Mr Pelz also raises a separate issue, which I will come back to, which is that it has always been the collective understanding of the parties, going back to the hearings before Mr Justice Popplewell in 2018, that issues arising from the so-called Qatar project were not to be part of the first phase trial in this litigation. It has become apparent following the service of Mr Pelz's claimed submissions in relation to the IUAs yesterday that there are a number of IUAs in relation to which those issues might be relevant and that this may also be true in relation to one of the so-called Jersey properties, which is already part of the Directed Trial. I will return to the particular position of Mr Pelz in due course.

e. Ms Sinead Irving opposes the inclusion of the IUAs in the Directed Trial on the basis that, as someone who says they have not been closely involved in the underlying events and disputes, should not have to participate in the trial of any issues which do not directly concern her. Mr Rosen, on her behalf, has submitted that there should be, in effect, a three-phase trial process with Ms Irving only participating if and to the extent necessary at the end.

f. Finally Mr Sodzawiczny is neutral on the application.


Having considered all the arguments, I have decided that the appropriate course is to order the inclusion of the IUA Claims in the Directed Trial on the basis of the final form application put forward by Mr Akkouh yesterday. The effect of that decision is that in addition to the matters already to be determined in January 2021, the proprietary claims to the IUAs will also be included. That will not include, however, the issue of whether HPII is able to trace into the Isle of Man settlement and the Arena and non-Arena companies, nor will it involve any issue of whether Mr Pelz is able to trace into those assets, or indeed into the payment made in 2015 to Ocean on the basis of the so-called Qatar settlement agreement.


I have reached that conclusion for the following reasons.


I do not accept the submission that the targeted inclusion of these specific IUAs sought now cuts across the logic of Mr Justice Popplewell's original order. In any event, Mr Justice Popplewell's order reflected a number of pragmatic, as well as principled, considerations. In my judgment of 20 May I said at paragraphs 45(iii) to 46:

“There was no developed proposal for the inclusion of specific underlying assets within the directed trial at the April 2018 CMC. Instead, a rather general proposal was put forward in the course of argument. By contrast, the Settlement Parties' application identifies specific underlying assets and the rationale for selecting them. It is clear that Mr Justice Popplewell's reasons for refusing that application were essentially pragmatic, as can be seen from the fact that the Jersey properties were included within the Directed Trial, even though they are underlying assets. It will be for the judge at the July CMC to determine whether those pragmatic considerations still hold good, or whether circumstances have changed sufficiently to make another order appropriate.”

Similarly, although Mr Justice Popplewell generally excluded upstream issues from the Directed Trial, he did include those issues so far as Mr Sodzawiczny's claim is concerned.


It has fallen to me at this July CMC to determine whether those pragmatic considerations still hold sway. It is now clear, in a way it could not possibly have been to Mr Justice Popplewell, that there is a very substantial overlap between the factual issues which arise in determining the claims to the Relevant Assets and the Jersey properties, which already formed part of the Directed Trial, and those which arise in relation to the IUA Claims.


First, the basis upon which the various parties claim an entitlement to trace involves a very substantial overlap between the issues which are currently part of the Directed Trial and the IUA Claims. The consequence of that is a very key element of the IUA Claims is already in play.


Further, issues relating to LCL — its role, the...

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