The Public Institution for Social Security v Fahad Maziad Rajaan Al Rajaan & Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Jacobs,Mr. Justice Jacobs |
| Judgment Date | 09 June 2020 |
| Neutral Citation | [2020] EWHC 1498 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2019-000118 |
| Date | 09 June 2020 |
[2020] EWHC 1498 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Jacobs
Case No: CL-2019-000118
Michael Lazarus and Christopher Burdin (instructed by Stewarts Law LLP) for the Claimant
Tom Weisselberg QC and Kendrah (instructed by Mishcon de Reya LLP) for the First Defendant
Hearing dates: 3 rd and 4 th June 2020
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.
A: Introduction: the application
The Claimant (“PIFSS”) applies for disclosure of further information by the First Defendant (“Mr. Al Rajaan”) arising from a worldwide freezing injunction (“WFO”) granted on 16 October 2019. The background to the present proceedings, which is well-known to the parties, is set out in my judgment on that application: see [2019] EWHC 2886 (Comm).
In summary, PIFSS operates the State of Kuwait's social security and pension scheme. Mr. Al Rajaan was its former Director General from 1984 to 2014. The claim in these proceedings is for relief in respect of alleged unlawful payments by various financial institutions and intermediaries of unauthorised secret commissions procured by Mr. Al Rajaan. PIFSS alleges that these secret commissions were paid over a period of approximately 20 years, between 1995 and around 2015. The amount of money paid is presently unknown but believed to exceed around US$ 840 million, of which it is alleged that Mr. Al Rajaan personally or via nominees received around US$ 513 million. The amount frozen by the freezing injunction is US$ 847 million, which encompasses the totality of the commissions allegedly paid both to Mr. Al Rajaan and others.
When a worldwide freezing order is made, it is typically the case that an order will be made for disclosure of assets, on the basis that this is necessary in order to enable the injunction to be made effective. Such an order was made in the present case. Paragraph 7 of the WFO therefore required Mr. Al Rajaan “to the best of his ability” to swear an affidavit setting out all his assets which were subject to the WFO as follows:
“… the Respondent must inform the Applicant's solicitors of all assets exceeding £ 50,000 in value whether in his own name or not and whether solely or jointly owned and whether the Respondent is interested in them legally, beneficially or otherwise, giving the value, location and details of all such assets.”
At the time that this order was made in October 2019, PIFSS was also seeking a far-reaching further disclosure order, as set out in paragraph 9 (a) (ii) of the draft order which was then before the court. The application was for information relating to the monies which Mr. Al Rajaan had received over the relevant period of approximately 30 years from 1984 to 2015, for the purpose of enabling PIFSS to trace those monies or their proceeds. The underlying basis of the application was that PIFSS claimed a proprietary interest in the monies paid to Mr. Al Rajaan. At the October 2019 hearing, it was conceded by Mr. Weisselberg QC, on behalf Mr. Al Rajaan, that PIFSS' evidence was sufficient to give rise to a serious issue to be tried in that connection: see paragraph [76] of my judgment. I held (see [77]) that it was appropriate for there to be relief which supported the proprietary claim, but that the extent of the relief – including the extent of asset disclosure – gave rise to discretionary considerations to be addressed after further submissions.
In the course of argument following judgment, I expressed a concern as to the tracing exercise contemplated by the order sought. It was not an application to trace money which had recently gone missing, but extended over a 30 year period which ended some 4 years prior to the application. Mr. Ritchie QC, who appeared for PIFSS on that application, submitted that his clients were concerned to make the litigation effective: the primary purpose of the disclosure order was to ensure that there will be effective recoveries. In his submissions in response, Mr. Weisselberg (who appears for Mr. Al Rajaan on the present application as well) submitted that it would be better to wait for: (i) the asset disclosure which had been ordered in relation to the freezing injunction, and (ii) the case management conference which would happen in due course. In his reply, Mr. Ritchie indicated that a proportionate or pragmatic approach would be for his clients and the court to reconsider the wider application in the light of whatever was disclosed pursuant to the disclosure in support of the freezing order. In short, the need for further orders in support of the proprietary claim would be informed by the extent of the disclosure of current assets that was provided by Mr. Al Rajaan. As Mr. Ritchie submitted:
“… if Mr. Al Rajaan gives the disclosure that we would expect him to give and discloses many hundreds of millions under 7, then it may cast the necessity of 9A (2) into a different light”.
In the light of these submissions, I decided that the appropriate course was to adjourn the application under paragraph 9 (a) (ii) for wider disclosure pending provision of the disclosure ordered under paragraph 7, although I indicated that an order for wider disclosure in support of a proprietary claim would in principle be available. Paragraph 9 of the order made therefore provided:
“The Applicant's application for the relief set out at paragraph 9 (a)(ii) of the draft order at tab 6b of the hearing bundle both in relation to the schemes identified in the Consolidated Particulars of Claim and any further schemes identified in the Respondent's affidavit served pursuant to paragraph 8 is adjourned with permission to restore.”
The date for provision of Mr. Al Rajaan's disclosure affidavit (pursuant to paragraph 7 of the order) was 13 November 2019. Mr. Al Rajaan served that Affidavit (“FAR 1”) on that day.
Following receipt, Stewarts on behalf of PIFSS wrote a detailed letter dated 11 December 2019. They said that the picture that emerges is a ‘marshalling by your client of (in most cases) a more up-to-date picture of some of the assets which PIFSS was already aware of through information within the Swiss Mutual Legal Assistance material and the Swiss Domestic Material’. A specific issue raised on the first page of the letter (and which is central to the application now pursued) is that there was a ‘remarkable disconnect’ between the assets personally received over a 20 year period (exceeding US$ 440 million), and the assets disclosed (likely less than US$ 200 million). Lifestyle spending could not account for that differential ‘particularly given the likely investment and inflationary returns on investments and real estate since receipt’. A large number of detailed points were also made as to the disclosure provided.
On 13 December 2019, Mishcon de Reya (“Mishcons”) on behalf of Mr. Al Rajaan said that they were unable to obtain detailed instructions on Stewart's letter, since Mr. Al Rajaan's health was ‘precarious’. At around that time, Mr. Al Rajaan had been receiving hospital treatment for a serious condition. On 15 January 2020, Mishcons wrote to advise that their client's health had improved sufficiently to allow them to take instructions on the 11 December letter. On 31 January 2020, a detailed response was provided. In response to the argument as to the disconnect between Mr. Al Rajaan's receipts and the assets shown, Mishcons said that it was a non sequitur to suggest that these figures should tally, and that Mr. Al Rajaan's position in relation to the commissions allegedly received was reserved. The whereabouts of monies received by Mr. Al Rajaan was ‘an entirely separate question to the question of our client's current asset position. Your insistence that the two should marry up is misconceived and plainly wrong’. At the conclusion of the letter, Mishcons said that as a result of further enquiries, Mr. Al Rajaan would file a corrective affidavit in relation to three matters.
At the time of this correspondence, Mr. Al Rajaan was in the process of preparing to serve his defence in the action. A lengthy defence was served on 28 February 2020. Very shortly afterwards, and without (as Mr. Weisselberg submitted) giving Mr. Al Rajaan any ‘respite’ following service of his defence, PIFSS made the present application for further disclosure and related relief. The application was served on 13 March 2020, and was supported by an Affidavit of Mr. Nicholas Haworth, a partner in Stewarts. On 20 March, I gave directions for the hearing of the application together with some ancillary orders. Shortly thereafter, Mr. Al Rajaan provided his second witness statement (“FAR 2”). This constituted, essentially, the ‘corrective Affidavit’ foreshadowed in Mishcons' letter of 31 January.
Mr. Al Rajaan's evidence in response to the application comprised his third witness statement (“FAR 3”) dated 4 May 2020 together with the 5 th witness statement of Ms. Kathryn Garbett, a partner at Mishcons.
Mr. Al Rajaan's third witness statement described his historic lifestyle expenditure, essentially by way of a response to PIFSS' argument as to the disconnect between the sums received by him and the US$ 183 million of assets which have been disclosed. The witness statement describes an...
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