Société Générale S.A v Saad Trading, Contracting and Financial Services Company and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Aikens,Lord Justice Rimer |
| Judgment Date | 23 May 2012 |
| Neutral Citation | [2012] EWCA Civ 695 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2011/2815(A)/FC2 |
| Date | 23 May 2012 |
[2012] EWCA Civ 695
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
Commercial Court
Mr Justice Teare
2009 FOLIO 1110
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Rimer
and
Lord Justice Aikens
Case No: A3/2011/2815(A)/FC2
Alexander Layton QC and Sean Snook (instructed by Clifford Chance LLP) for the Respondent
Adam Zellick (instructed by Lawrence Graham LLP) for the First Appellant
Tom Weisselberg (instructed by Olswang LLP) for the Second Appellant
Hearing dates: 30th of March 2012
A. The applications before the court and an outline of the issues in the case
There are before the court three sets of applications, all made by the respondent to this appeal, which I shall call Soc Gen. Each set of applications is made against the two appellants, whom I shall call respectively Saad and Mr Al-Sanea. The first set of applications are that conditions be imposed for the two appellants' right to proceed with the appeals. In each case the conditions sought are that (a) the appellants pay the amount of the judgment awarded by Teare J to Soc Gen in his order dated 5 October 2011, viz. US$ 49,138,545.44 plus interest awarded in the same order, viz. US$ 3,770,700.88 (although in the case of Mr Al-Sanea this is slightly less); and (b) the appellants pay the interim costs awarded by Teare J in the same order in favour of Soc Gen, viz. £250,000.
The second set of applications seeks orders that the appellants give security for costs in the appeal. The total sum sought by way of such security is £331,984.25. Soc Gen seeks an order that this security be paid into court and that if it is not, then the appellants' appeals should be dismissed.
The third set of applications requires some explanation of the nature of the case and the appeal. Saad is a trading company which is part of the Saad Group. In 2008/9 it engaged in commodities trading including trading in gold. The case concerns a Facility Letter dated 29 January 2009 between Soc Gen and Saad and a guarantee given to Soc Gen by Mr Al-Sanea of the same date. The Facility Letter ("F/L") was agreed so as to enable Saad to continue in gold trading. By paragraph 2(i) of Schedule 1 to the F/L, Saad could request Soc Gen to issue or confirm letters of credit and, unless otherwise agreed between Saad and Soc Gen, the UCP 600 terms would apply to such letters of credit. By clause 2(iv) of Schedule 1 of the F/L, Saad irrevocably authorised Soc Gen "in respect of all payments made by [Soc Gen] under [any letter of credit] to forthwith debit any such amount paid to the account of [Saad] with [Soc Gen]".
Pursuant to the F/L two Letters of Credit ("L/Cs") were issued by Soc Gen on 16 February 2009 for a value of approximately US$ 25 million each. The L/Cs were confirmed by National Australia Bank Ltd ("NAB") on 18 February 2009. The L/Cs were stated to be required for the purchase of gold bars. Their terms required presentation of five types of documents to obtain payment under the L/Cs. One type of document was identified as "drafts for 100 percent of invoice value".
On 18 February 2009 AGR Matthey ("Matthey") delivered to Brinks Australia the gold which Saad had contracted to buy from Matthey, for shipment to Standard Bank PLC London. On 19 February 2009 Matthey presented the required documents to NAB as the confirming bank, including the bills of exchange, which were accepted by NAB. The documents, less the drafts, were then forwarded by NAB to Soc Gen. Soc Gen reimbursed NAB at the maturity date of the drafts.
The documents (less the drafts, obviously) were then forwarded to Saad but it refused to reimburse Soc Gen. It subsequently denied its liability to do so on the ground that the bills of exchange drawn on and accepted by NAB which were included in the documents listed in the L/Cs as being required for presentation and were in fact presented by Matthey to NAB were not forwarded by NAB to Soc Gen. It was argued at the trial that this meant that, pursuant to the UCP 600 terms, Saad was not obliged to reimburse Soc Gen. Mr Al-Sanea's argument at the trial was that this meant he was not liable on the guarantee.
Meanwhile the gold was sold on by Saad and the judge found that Saad had title to the gold when it did so. Saad were paid for the purchase before Saad were obliged to reimburse Soc Gen. Soc Gen put forward an alternative argument at the trial that, even if it could not recover under the F/L terms, it was entitled to recover the value of the two L/Cs, viz. some US$ 50 million, by way of restitution on the basis that Saad, which had had the benefit of the value of the gold which it had sold on, would otherwise be unjustly enriched. It was said that Mr Al-Sanea was liable on the guarantee for such a claim. Teare J declined to deal with this basis of claim as he found for Soc Gen against both the appellants on the primary basis, i.e. under the F/L terms.
The third set of applications by Soc Gen is that this court now makes an order that the court hearing the appeals should also deal with the restitution claims against both appellants. Those claims are subject to a Respondent's notice in the appeal.
Permission to appeal from the judge's decision was granted on paper by Sir Mark Potter on 16 and 19 December 2011, although it is not entirely clear for which grounds permission has been granted so far as each appellant is concerned. The appeals are estimated to take 1.5 days. It is said that the restitution point would, if heard, take another 1 – 1.5 days.
B. The first two applications: the relevant provisions of the CPR on "conditions" and security for costs on appeal
With regard to the possible imposition of conditions upon the appeals of Saad and Mr Al-Sanea, CPR 52.9 (1)(c) and (2) provide:
(1) The appeal court may-
………..
(c) impose or vary conditions upon which an appeal may be brought.
(2) The court will only exercise its powers under paragraph (1) where there is a compelling reason for doing so.
With regard to security for costs on an appeal, CPR 25.13(1)(a) and (b) (i) and (2)(a) (i) and (ii) and (c) provide as follows:
(1) The court may make an order for security for costs under Rule 25.12 if-
(a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and
(b) (i) one or more of the conditions in paragraph (2) applies;…
(2) The conditions are –
(a) The claimant is –
(i) resident out of the jurisdiction; but
(ii) not resident in a Brussels Contracting State, a State bound by the Lugano Convention or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982;
….
(c) the claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant's costs if ordered to do so;
……….
Both Saad and Mr Al Sanea accept that the conditions in paragraph (a) of CPR Pt 25.13(2) apply to them and it is clear that (c) presently applies if Saad's own evidence on these applications is accepted.
CPR 25.15 (1)(a) and (2) provide as follows:
a. The court may order security for costs on an appeal against-
i. An appellant;
…..
on the same grounds as it may order security for costs against a claimant under this Part.
(2) The court may also make an order under paragraph (1) where the appellant, or the respondent who also appeals, is a limited company and there is reason to believe it will be unable to pay the costs of the other parties to the appeal should its appeal be unsuccessful.
C. The first two applications: imposition of conditions and security for costs: The evidence before the court
In support of its application for the imposition of conditions and that security for costs on the appeal be provided, Soc Gen first filed a witness statement by Mr Giles Allison, a solicitor employed by Clifford Chance, Soc Gen's solicitors in this case. This statement, dated 12 January 2012, notes that Saad is a limited partnership organised under the laws of the Kingdom of Saudi Arabia. Saad has its head office in that country. The statement also says that Mr Al-Sanea, who is resident in Saudi Arabia, is a general partner of Saad who owns 90% of its share capital. Those facts are not disputed.
Mr Allison states that Clifford Chance has written to the appellants' solicitors on many occasions to request payment of the sums set out in Teare J's order, but there has been none. Nor, however, has there been any request for an extension of the time in which to pay nor an application to the court to stay Teare J's order.
In paragraph 21 of his first witness statement, Mr Allison states that his firm has received advice from a Saudi law firm that it will be very difficult for Soc Gen to enforce Teare J's order in Saudi Arabia as English court orders are not enforced there because there is no reciprocal arrangement for enforcement of judgments or orders. At the hearing before us counsel for the respondents to the applications accepted that, effectively, the only way that Soc Gen could enforce Teare J's judgment in Saudi Arabia would be to start a fresh action there, based on the judgment obtained in England.
Mr Allison's first witness statement also says, at [22], that:
"…it appears that the Appellants' assets may be largely held in the Kingdom of Saudi Arabia. Furthermore, to the best of my knowledge neither appellant directly owns any assets in the United...
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