Sheikh Mohamed Ali Alhamrani and Others v Sheikh Abdullah Ali Alhamrani
| Jurisdiction | UK Non-devolved |
| Judge | Lord Clarke |
| Judgment Date | 10 November 2014 |
| Neutral Citation | [2014] UKPC 37 |
| Date | 10 November 2014 |
| Docket Number | Appeal No 0009 of 2014 |
| Court | Privy Council |
[2014] UKPC 37
Lord Neuberger
Lord Mance
Lord Clarke
Lord Sumption
Sir Terence Etherton
Appeal No 0009 of 2014
Privy Council
From the Court of Appeal of the Eastern Caribbean Supreme Court (British Virgin Islands)
Appellant
Victor Joffe QC Lynton Tucker James Brightwell
(Instructed by David Miles, Blake Morgan)
Respondent
Elizabeth Jones QC Simon Hattan
(Instructed by Caroline Bassett, Forsters LLP)
Heard on 8 and 9 July 2014
This appeal arises out of a dispute between brothers, children of the late Sheikh Ali Alhamrani. Specifically it is a dispute between the respondent ("Sheikh Abdullah") and his six brothers, Sheikh Mohamed, Sheikh Siraj, Sheikh Khalid, Sheikh Abdulaziz, Sheikh Ahmed and Sheikh Fahad (collectively "the Brothers") 1. It centres on the ownership of shares in a British Virgin Islands registered company called Chemtrade Limited ("Chemtrade"), in which the Brothers held 75% of the shares, Sheikh Abdullah held 12.5%, and their two sisters ("the Sisters") 2 together held the remaining 12.5%. (That is, the shares were held in Sharia proportions: the male siblings each owned one eighth of the shares and the female siblings each owned one sixteenth.) In the action Sheikh Abdullah sought a declaration that the 75% shareholding held by the Brothers in Chemtrade was comprised in an offer made by the Brothers to Sheikh Abdullah in a letter dated 12 April 2008 ("the Offer Letter") and so passed into his ownership when he unconditionally accepted that offer on 5 August 2008, so that on his case he became the owner of 87.5% of the shares.
Chemtrade is the owner of 50% of the shares in Fuchs Oil Middle East Limited ("FOMEL"), which is a BVI company registered under the same Act as Chemtrade, namely the BVI Business Companies Act 2004. The remaining 50% of the shares in FOMEL are owned by a German public company called Fuchs Petrolub SE ("Fuchs"), with which FOMEL is operated as a joint venture.
In February 2008, a Saudi court known as the Board of Grievances initiated a mediation or conciliation process. It related to Saudi litigation primarily between Sheikh Abdullah and the Brothers. In April 2008 the Brothers, by the Offer Letter, which was written to the Board of Grievances, made an offer to purchase the interests of Sheikh Abdullah and the Sisters in jointly owned assets at a set price per share, or to sell their interests in the same assets at the same price per share. Subsequently, the offer of sale of the Brothers' interests was accepted by Sheikh Abdullah alone.
In August and October 2008, in judgments known as "Judgment 1080" and "Judgment 1220", the Board of Grievances affirmed the existence of an
The action was tried by Bannister J ("the judge"). After a trial lasting 29 days, on 21 December 2012 the judge held that the answer to the above question was no and that the Brothers' interests in Chemtrade were not included in the Offer Letter and were thus not included in the Sale Agreement. Sheikh Abdullah appealed to the Court of Appeal of the Eastern Caribbean Supreme Court, to which the Board will refer as the ECCA in order to avoid possible confusion with the Court of Appeal of the Board of Grievances in Saudi Arabia. On 18 September 2013, in a judgment delivered by Mitchell JA (Ag), with whom Blenman and Michel JAA agreed, the ECCA reached the opposite conclusion to that of the judge. It held that the answer to the question was yes and that the Offer Letter and the Sale Agreement included the Brothers' interests in Chemtrade. It accordingly allowed the appeal. In this appeal the Brothers invite the Board to reverse the decision of the ECCA and to restore the decision and order of the judge. Their case in essence is that the issues at trial were issues of fact upon which the judge made clear findings and that the ECCA ought not to have interfered with them.
For many years after the death of their father, the siblings owned in common a number of Saudi companies, or interests in Saudi companies, along with interests in land, mainly in Saudi Arabia, and also Chemtrade, for the most part in Sharia shares. The siblings also held interests in similar shares under three Jersey Trusts, which held assets known colloquially in the family as the Foreign Investments. Chemtrade was never held within the Jersey Trusts and so did not form part of the Foreign Investments. Although there was no overall holding company and the siblings mostly held their shares directly (but sometimes through other companies), the companies were generally referred to as the Alhamrani Group of Companies. Over the years following their father's death further companies were added, including FOMEL and a company called Alhamrani Fuchs Petroleum Saudi Arabia ("AFPSA"), which was another joint venture with Fuchs, in which the siblings had a 68% interest and Fuchs a 32% interest. The siblings' 68% interest was held in other Alhamrani Group companies, known as AUC and AIG. The assets and the respective shares of the siblings in the assets were accounted for by a central accounting department known as the General Accounting Department or the Sons' Account. The expression "Sons' Account" (which included the Sisters' accounts) was used to refer to the Department and also to the set of assets which were managed and reported on by the Department, including the Foreign Investments, namely the Jersey Trusts. There was a dispute about whether there was any overarching partnership between the siblings. Annual financial statements for the Sons' Account were audited annually by the Group's auditors, Deloitte & Touche Bakr Abulkhair ("DTBA").
The judge set out the background to the dispute at paras 5 to 22 of his judgment. It is not necessary to repeat that account here. What follows is a summary of the findings of fact made by the judge between paras 23 and 33, which cover the period in February, March and early April 2008 before the date of the Offer Letter, namely 12 April 2008. The origin of the proposal in the Offer Letter was a suggestion made by the Court of Appeal of the Board of Grievances that the parties should explore the possibility of mediation or conciliation. On 10 February it proposed what is sometimes called a shotgun agreement. The proposal, which was made to Sheikh Abdullah and the Sisters, was that Sheikh Mohamed, who had the current management of the companies and the other assets, and was thus better equipped for that task than Sheikh Abdullah, should value each separate Sharia share in the jointly owned assets, with Sheikh Abdullah and the Sisters having the choice either of selling their shares to the Brothers or of buying the Brothers out, in each case at a price equivalent to the Brothers' valuation. The minute of the meeting (as copied by Sheikh Abdullah) showed that Sheikh Abdullah and the Sisters accepted the Court of Appeal's proposal that Sheikh Mohamed would value:
"all the companies, partnerships, shareholdings, funds and all trades and investments in Saudi Arabia and abroad as registered in the financial statements"
and that Sheikh Abdullah and the Sisters should have the choice of either selling their shares to or buying the shares of the Brothers
"in all the partnerships mentioned above in Saudi Arabia and abroad".
The judge correctly held that the authenticity of the minute could not be in doubt because it was relied upon on 10 March in litigation in Jersey over the Jersey Trusts at a time long before the dispute about whether FOMEL was included in the Brothers' Offer Letter, which itself was not made until over a month later, had erupted.
On 11 February a similar proposal was made by the Court of Appeal to Sheikh Mohamed and the Brothers. The judge noted that there was no documentary note of the meeting, but he accepted that Sheikh Siraj's evidence that the judges did not specify what particular assets were to be included in the calculation was credible. However, he noted that it was admitted in the Brothers' defence in the action that the Court of Appeal proposed a valuation of all assets in joint ownership both within and outside Saudi Arabia. He concluded that at the very lowest the Brothers did not understand that Sheikh Mohamed was to value only assets within Saudi Arabia. Otherwise (he said) they would not have asked the Court of Appeal on 11 March for permission to postpone the valuation of the Jersey Trusts on the ground that valuation at that time was impracticable. As the judge put it, they would not have had to refer to the Jersey property at all. The judge concluded, in the Board's view correctly, that the proposal was put to the Brothers in similar terms to those noted in Sheikh Abdullah's copy of the minute referred to in para 7 above.
On 13 February Sheikh Mohamed instructed the Group Finance Director to arrange a valuation by DTBA. On 16 February the Finance Director instructed his assistant to arrange a valuation "for the whole group, every single asset", and then divide by eight. Property...
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