Zambia v Meer Care and Others

JurisdictionEngland & Wales
CourtChancery Division
JudgeMR JUSTICE PETER SMITH
Judgment Date29 June 2007
Neutral Citation[2007] EWHC 1540 (Ch),[2007] EWHC 952 (Ch)
Docket NumberCase No: HC04C03129

[2007] EWHC 1540 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before

Mr Justice Peter Smith

Case No: HC04C03129

Between
Attorney General of Zambia for and on Behalf of the Republic of Zambia
Claimant
and
Meer Care & Desai (a Firm) & Ors
Defendants

Mr Sullivan, Ms Brown and Mr Evans (instructed by DLA Piper) for the Claimant

Mr Head (instructed by Reynolds Porter Chamberlain) for Mr Iqbal Meer a partner in the First Defendant

Mr Croxford QC and Ms Stanley (instructed by Barlow Lyde & Gilbert) for the Second and Eighth Defendants

Mr Veen (instructed by Direct Public Access) for Mr Naynesh Desai a partner in the First Defendant

Mr Bourne (instructed by Bevans) for the Fifth Defendant

Mr Fenwick QC and Ms Day (instructed by Barlow Lyde & Gilbert) for a partner in the Second Defendant

Mr Trace QC (instructed by Allen & Overy) on behalf of Donegal International Limited, an interested party

Mr Edelman QC (instructed by CMS Cameron McKenna) on behalf of QBE Insurance (Europe) Limited, an interested party

1

Hearing dates: 7th, 8th and 11th June 2007

2

Approved Judgment

3

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.

MR JUSTICE PETER SMITH
4

Peter Smith J:

5

RULINGS ARISING OUT OF JUDGMENT HANDED DOWN ON 4TH MAY 2007

6

1. The rulings in this judgment arise out of various consequential matters identified in the judgment I handed down on 4th May 2007.

7

2. There are 7 areas for consideration:—

1 Credit for recoveries against liabilities

2 Claims for interest on compensation/damages and costs

3 Costs

4 Permission to Appeal

5 Stay of enforcement of judgment

6 Contribution

7 Interim payments

8

A NUMBER OF PRELIMINARY MATTERS

9

3 The non-participating Defendants chose once again not to appear before me. The video link was maintained to enable them to appear if they so wished. FJT wrote seeking the transcripts of the trial hearing from AGZ's solicitors DLA. They referred that to me for consideration and I refused FJT access to those transcripts. The main reason for the refusal was that the parties agreed that whilst the judgment and the working out of the judgment was in the public domain the ring-fencing order should remain in place for the evidence which was led at trial. There were two reasons for this. First other Zambian co-accused had not sought to have that ring fencing lifted. Second as Mr Croxford QC for D2 and D8 indicated when I reserved judgment initially, the participating Defendants had given evidence on the basis that the evidence could not be used against them in any subsequent criminal proceedings.

10

4 FJT as my judgment records (paragraph 30) broke the ring-fencing provisions designed to protect him and the other Defendants on the very first day of the trial opening in October 2006. Accordingly as he had not participated in the trial of his own volition, and as he had broken the ring-fencing order, I considered it inappropriate for him to be given transcripts unless I could be assured that he would not break the ring fencing provisions again.

11

5 FK applied for permission to appeal by letter dated 23 rd May 2007. I refused him permission to appeal by letter dated 24th May 2007. By a further letter dated 6 th June 2007 he applied to vary the freezing order (which was continued after the judgment on 4 th May 2007) so that he could spend £2,000 a week for his “reasonable” living expenses and to fund legal representation in Zambia. I refused that application as there was no material before me provided by FK to justify paying such a large sum in his favour.

12

6 I also refused him a stay of execution of the judgment.

13

7 As indicated in my judgment (paragraph 525), I gave AGZ permission to consider amending his claim against IK. He duly issued an application to amend which was opposed by IK. Shortly before the resumed hearing on 7 th June 2007 AGZ and IK compromised that application on terms set out in a Tomlin Order and I dismissed AGZ's application.

14

SUMMARY OF LIABILITY

15

8 As a result of the judgment various calculations had to be made. First, AGZ was required to reduce his claim to the amount identified as traced but with the additional sums identified in paragraph 274 of my judgment which I determined were also government monies. That produced headline figures against all Defendants.

16

9 AGZ claimed interest in addition to those headline figures. Initially he sought compound interest. However, at the start of the hearing I indicated that my provisional view in line with the authorities provided by the Defendants was that where AGZ obtained judgment for damages only for conspiracy or dishonest assistance the court had no power to order compound interest. The reason for the latter is that the claim for dishonest assistance is an equitable form of compensation for losses sustained but does not have any fiduciary element to it: see the comprehensive review of the authorities in this area by Rimer J in Sinclair Investment Holdings SA v Versailles Trade Finance Limited & Ors [2007] EWHC 915 (Ch).

17

10 Equally as regards the participating Defendants where there was no money obtained and retained by fraud there was in my view no jurisdiction to award compound interest see President of India v La Pintada Compania Navigacion S.A. [1985] AC 104, Westdeutsche Landesbank Girozentrale v Islington Borough LBC [1996] AC 669 and Black v Davies [2005] EWCA Civ 531.

18

11 Neither limitation of course applies to the non-participating Defendants FJT, XFC, SC and RS who all were fiduciaries and obtained and/or retained monies as a result of the fraud. Francis K, FK and AC were not in that capacity and any interest, in my view, against them could only be simple interest.

19

12 That proposition in my view equally applied to the participating Defendants. I saw nothing in principle as to why interest should not be applied differently depending on the status of the relevant Defendant.

20

13 Faced with that preliminary observation AGZ accepted this split of interest as between the two categories and sought compound interest only against the fiduciaries and simple interest on the rest which I accepted as correct.

21

14 Attached to this judgment are schedules of liability in respect of each Defendant. To understand the various issues I will take the MCD summary by way of an example. In that summary the calculations are agreed as between the parties subject to issues of principle. Thus the Zamtrop liability ($8,633,788) is the total claim against MCD established by AGZ under the conspiracy and dishonest assistance claims. The figure for interest ($4,797,542.04) is simple interest calculated on each item wrongfully removed from the date of removal until the date of judgment. The next two figures represent a corresponding liability and interest under the BK conspiracy.

22

15 The next deduction (Jarban) represents the recovery of the Jarban Property ($1,336,725.84). The figure represents the totality of the monies wrongfully removed and used to buy the Jarban properties. The interest figure ($818,328.67) represents interest on the figure so misappropriated from the date of the misappropriation until the date of judgment. Those properties will realise a price in excess of the monies taken and the cumulative interest claimed on them. AGZ concedes that he must give credit for the value of any realised asset up to the amount misappropriated together with interest from the date of misappropriation until the date of judgment. The difference between AGZ and the Defendants is where the realisation exceeds that amount; and whether or not the Defendants should also have credit for that excess against other misappropriations.

23

16 The Lonrho deduction is calculated on the same basis. The figure of $513,073.53 represents the money expended in the acquiring the Lonrho flats and the interest figure ($272,618.14) is interest on the same basis. Monkey Fountain, Siavonga, Lilayi Road are similar realisations. The Harptree figure is the amount held by MCD at the start of the trial which I ordered to be transferred to AGZ and the interest represents interest accumulated from that date until the date of judgment. The final figure ($60,627.62) represents residual amounts on MCD's ledger.

24

17 Thus in the case of MCD AGZ contends he has an entitlement to $11,135,665.61 representing the misappropriations and simple interest on the misappropriations with credits for the relevant realisations.

25

18 As regards CM there is a different argument about 12B Serval Road which is currently occupied by FJT in respect of which I made a 14 day possession order on Monday 11 th June 2007. I will revert to that when I analyse CM's liability.

26

19 The competing argument with the recoveries credited against the other misappropriations will reduce MCD's liability to $7,495,307.31. This is almost entirely due to the Jarban realisation which now is estimated at $3,884,354.63 with accumulated interest of $508,690.82.

27

20 The evidence justifying these figures is not disputed by the Defendants, and is to be found in the witness statement of John Jumba dated 21 st May 2007 and the second witness statement of Oliver M Kalabo dated 18 th May 2007.

28

21 The Jarban figure is based on a current valuation. When I delivered judgment on 4 th May 2007 Jarban had a contemplated value of Euros 3,100,000 on the basis of a sale that was proceeding. That sale did not proceed so the parties have agreed the revised figure in USD based on a current valuation.

29

22 Finally, by way of preliminary observation I should indicate that the parties have provided me with calculations showing the net liabilities if a limitation defence is held to be successful on any appeal to the Court of...

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