Bank of Tokyo-Mitsubishi UFJ, Ltd v Baskan Gida Sanayi VE Pazarlama AS & Ors [2008] EWHC 659 (Ch)

[2008] EWHC 659 (Ch)Case No HC03C02596
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 09/04/2008
Before
MR JUSTICE BRIGGS
Between
THE BANK OF TOKYO-MITSUBISHI UFJ, LTDClaimantsKBC BANK NV LIMITEDClaimantBASKAN GIDA SANAYI VE PAZARLAMA ASDefendantsAHMET BASKANDefendantCEVET BASKANDefendantISMET BASKANDefendantMELIH BASKANDefendantAKSU GIDA SANAYI VE TICARET LTDDefendantINDO-MEDITERRANEAN COMMODITIES LTDDefendantFERRERO INDUSTRIAL SERVICES GEIEDefendantFERRERO SpADefendant(10) FERRERO OHGMBHDefendant(11) FERRERO FRANCE SADefendant(12) SHABBIR ABIDALIDefendant(13) ALANVAR ESTABLISHMENTDefendant(14) RIDGEBEACH LIMITEDDefendant
Mr John Wardell QC, Mr Thomas Grant and Mr Alexander Winter (instructed by Forsters LLP, 31 Hill Street, London W1J 5LS) for ClaimantsMr Raymond Werbicki (of Steptoe & Johnson, 99 Gresham Street, London EC2V 7NG) for Twelfth DefendantHearing Hearing dates: 2 nd– 3 rd April 2008
JudgmentMr Justice Briggs :INTRODUCTION
[1]This is an application by the twelfth defendant Mr Shabbir Abidali to strike out the claimant Banks’ claims against him pursuant to CPR 3.4(2) and, in the alternative, for defendant’s summary judgment on all claims against him pursuant to CPR 24.2.[2]Mr Abidali was added as a defendant to these proceedings on 2nd February 2007. The proceedings are listed for an eight week trial commencing in October this year. The Banks’ claims against Mr Abidali are set out in Re-Amended Particulars of Claim (“RAPOC”), pursuant to permission to re-amend given on 10th May 2007. Mr Abidali’s application was made on 30th November 2007, and was based upon the following four grounds:(1) The RAPOC is “unreasonably vague, wanting in particularity and discloses no reasonable grounds for bringing the claims against the twelfth defendant”.(2) The Claimants have no real prospect of success against the twelfth defendant.(3) It would be oppressive and unfair to require the twelfth defendant to defend the claims.(4) There is no compelling reason for a trial of the claims against the twelfth defendant.[3]It is convenient to deal briefly with grounds (3) and (4) first. In support of ground (3) Mr Werbicki for Mr Abidali focussed his submissions on the substantial inequality of arms as between the Banks and Mr Abidali, who is, according to disclosure made by him pursuant to a freezing order which I made in February 2007, an individual of relatively limited financial means, his assets consisting of illiquid interests in real property amounting to less than £400,000. I was told that he has funded his defence to the proceedings thus far by means of borrowings from his family and a former business associate (now deceased) in an aggregate amount well in excess of his net assets and that, (which I can well understand), he doubts his ability to fund a full and comprehensive defence to the claim all the way to the conclusion of an eight week trial.[4]By contrast Mr Werbicki points to the relatively unlimited resources of the claimant Banks, to the fact that these proceedings constitute, viewed as a whole, very heavy, long and complex commercial litigation in which the other active defendants are also well resourced, and to the likelihood that even sympathetic case management will make it difficult for Mr Abidali to absent himself without some risk from large parts of the trial, if the case is to proceed against him.[5]Taking those factors together, Mr Werbicki submits that the Overriding Objective requires the court to apply a more than usually stringent standard or test to the questions whether, under CPR 3.4(2) the RAPOC discloses reasonable grounds for bringing the claim, or whether under CPR 24.2 the Banks can show that they have a real prospect of succeeding on their claim against him. In his helpful skeleton argument Mr Werbicki summarises that submission by proposing that the RAPOC should show “very clear grounds” to support the Banks’ claims and that, in face of the CPR 24.2 application, the Banks should be “required to show very real prospects of succeeding in order to justify Mr Abidali’s involvement in continuing proceedings and an eight week trial”.[6]While I have considerable sympathy with the plight of any private individual (other than perhaps the most wealthy) drawn into a long and complex conflict between sophisticated and well-resourced companies, I have not been persuaded that those considerations call for some different or more rigorous test to be applied on applications under CPR 3.4(2) or CPR 24.2 than those which are now the subject of substantial, consistent and well-settled authority. CPR 24.2(a)(i) imposes what is sometimes called a reality test. It is designed to distinguish between the realistic and the fanciful or hopeless, and between cases where the outcome can only properly be determined by a trial, and cases where it can be seen without the need for a trial that the claim (or as the case may be the defence) is bound to fail. The hurdle facing an applicant for a striking out order under CPR 3.4(2)(a) is no less steep, albeit that it focuses upon the relevant statement of case rather than the party’s evidence in support of it.[7]Mr Werbicki frankly acknowledged that he could point to no authority supporting his submission that in cases of an inequality of arms, some different or more rigorous test was applicable. In my judgment the Overriding Objective is achieved both under CPR 3.4(2) and CPR 24.2 by ensuring that unreal, fanciful or hopeless cases (or defences) are dealt with without the effort and expense of a trial, for the simple reason that a trial has been shown to be unnecessary. By contrast, where a statement of case discloses reasonable grounds for a claim or the evidence relied upon in answer to a claim for defendant’s summary judgment discloses a real prospect that the claim will succeed, then the core of the Overriding Objective, namely enabling the court to deal with cases justly, set out in CPR 1.1(1), can only be achieved by a trial, albeit that the court will use its case management powers to minimise inequality of arms, and to ensure that the case is dealt with proportionately, expeditiously and fairly. It follows that Mr Abidali’s ground (3) affords him no assistance if he fails on grounds (1) and (2). I should add for completeness that the claimants allege that Mr Abidali is in truth the beneficial owner of substantially more assets than he has chosen to declare. For the reasons which I have given it is unnecessary for me to resolve that issue.[8]As for ground (4), Mr Wardell QC for the claimant Banks accepts that if the materials thus far deployed in evidence in response to Mr Abidali’s application fail to disclose a real prospect of success, this is not a case where there is some other compelling reason why the case should go to trial as against Mr Abidali. It follows that the outcome of this application turns first upon the question whether the RAPOC discloses reasonable grounds for the Banks’ claim against Mr Abidali and secondly, if it does, whether in the light of the evidence relied upon by the Banks, they have a real (i.e. more than fanciful) prospect of success as against him.

THE PLEADED CLAIM AGAINST MR ABIDALI

[9]The Banks’ claims arise out of a written loan facility agreement dated 14th December 2001 pursuant to which they agreed to provide trade finance to the first defendant (“Baskan Gida”) up to an aggregate of US$35 million. The purpose of the facility was to enable Baskan Gida to finance the purchase of hazelnuts (up to a maximum of the lesser of 90% of sales contract value and 100% of the purchase price payable), between the period of purchase and on-sale to customers.[10]By mid-February 2002 the Banks had advanced an aggregate of €22.8 million odd to Baskan Gida, against contracts to on-sell hazelnuts to the value of €25 million odd with the eighth defendant as agent for the ninth to eleventh defendants (all Ferrero companies), to which I shall refer collectively as Ferrero. There was supposed to be a security in favour of the Banks over hazelnuts purchased with the use of that lending constituted by Baskan Gida depositing hazelnuts in one of its warehouses in Giresun, Turkey (“Warehouse 2”) to be held on the Banks’ behalf by a custodian (“SGS”) pursuant to a Master Pledge Agreement, pending release in order to enable Baskan Gida to satisfy sale contracts made with Ferrero.[11]It is alleged that, beginning in mid-January 2002, Baskan Gida transferred substantially the whole of its assets and business to two companies, Aksu Gida (the sixth defendant) and Baskan Yuksel, including the bulk of the hazelnuts which had by then been deposited in Warehouse 2, and which were recovered from the security arrangement upon the false basis that they were to be on-sold by Baskan Gida to the Ferrero companies. The alleged consequence was that when repayments to the Banks began to become due in mid-February 2002, Baskan Gida was to all intents and purposes a worthless shell. Hazelnuts transferred to Asku Gida were then sold by it to Ferrero in return for direct payment, bypassing the arrangements for payment to the Banks contemplated by the loan facility, with the overall result that, save for a little over €2 million (being the aggregate of a payment by Ferrero Italy, a payment by Baskan Gida and proceeds of the sale by the Banks of the remaining hazelnuts in Warehouse 2) the Banks have made no recoveries in relation to their substantial loan.[12]The Banks’ claims include:(1) A debt claim against Baskan Gida.(2) A conversion claim against Ferrero in relation to hazelnuts obtained by them allegedly contrary to the Banks’ security.(3) Claims in deceit against Ferrero, alternatively in negligent misrepresentation.(4) Claims in conspiracy against Mr Abidali and a company controlled by him, the seventh defendant Indo-Mediterranean Commodities Ltd (“Indo-Med”), and also against members of the Baskan family, Baskan Gida and Aksu Gida.(5) Knowing receipt and tracing claims against Ferrero in relation to hazelnuts received contrary to the Banks’ security.[13]As will be apparent from the foregoing summary, the only claim calling for detailed analysis on this application is the conspiracy claim, since that is the only cause of action asserted against Mr Abidali.[14]This claim is pleaded in paragraphs 217 to 219 of the RAPOC. Paragraph 218 contains the central allegation, as follows:
“From about November or December 2001, Ahmet Baskan, Cevat Baskan, Ismet Baskan, Melih Baskan, Baskan Gida, Aksu Gida, Mr Abidali and/or Indo-Med and/or any two or more of them wrongfully and with the intention to injure the Banks conspired, combined together and agreed to procure by unlawful means the advances from the Banks to Baskan Gida and/or to defeat by unlawful means the rights of the Banks and other creditors of Baskan Gida by transferring all the assets of Baskan Gida including hazelnuts purchased with the Banks’ funds to a nominee company which was held out as being entirely independent from Baskan Gida.”
[15]On analysis, two distinct conspiracies are alleged, accumulatively or alternatively. The first is a conspiracy to procure the advances from the Banks to Baskan Gida by unlawful means. The second is a conspiracy to defeat the rights of the Banks and other creditors of Baskan Gida, the unlawful means consisting of the transfer of Baskan Gida’s assets to a nominee company masquerading as being at arm’s length from Baskan Gida and its owners, the Baskan family.[16]Those conspiracies are supported first by sixteen alleged overt acts pleaded in separate sub-paragraphs of paragraph 219, and secondly by detailed allegations of requisite knowledge on the part of Mr Abidali and Indo-Med pleaded in general in paragraph 217, with fifteen sub-paragraphs of particulars of facts from which the knowledge pleaded generally is sought to be inferred. Those general allegations of knowledge are pleaded as follows:
“It is the Banks’ case that, from late December 2001/early January 2002 onwards, Mr Abidali and through him Indo-Med knew (i) that the loan facility had now come into existence, (ii) that hazelnuts stored at Warehouse 2 were subject to a security interest in favour of the Banks, (iii) that Baskan Gida were in the process of drawing down loans under the facility to purchase hazelnuts, (iv) that they were then selling or proposing to sell those hazelnuts on with a view to defeating the Banks’ security interests in the proceeds of sale, (v) that they intended to defraud their creditors (and in particular the Banks) by transferring their assets to nominee companies under purportedly legitimate (but actually sham) agreements.”
[17]The first question is whether the allegations in paragraphs 217 to 219 of the RAPOC disclose by way of pleading reasonable grounds for a claim by the Banks to recover their losses from Mr Abidali. There was no dispute before me as to the relevant law. Where two or more persons agree together to use unlawful means for securing a particular end, and thereby cause injury to the claimant, then each will be liable for an unlawful means conspiracy if he knew that unlawful means were to be employed and knew also that damage to the claimant was reasonably foreseeable as a probable consequence. It is generally said that the conspiracy must be “aimed or directed” at the claimant, either alone or with others, but that requirement is satisfied if injury to the claimant is the natural and probable consequence of the deliberate acts complained of: see Lonrho v. Fayed [1992] AC 448 at page 467 and Kuwait Oil v Al Bader [2000] 2 All ER Comm 271 at pages 315-6.[18]It is necessary to summarise a little of the uncontentious background. Baskan Gida was a long established Turkish company owned and controlled by the Baskan family and was by 2001 the world’s largest single supplier of hazelnuts. Traditionally it funded its business by borrowing from Turkish banks but, beginning in late 2000, serious disruption of the Turkish economy led to rapid rises in the interest rates charged by those banks such that, in order to continue in profitable business, Baskan Gida was obliged to seek alternative sources of funding.[19]From July to August 2001 Baskan Gida obtained funding in the aggregate sum of approximately US$10 million from an American investor called Ashraf Dahod, pursuant to an agreement made on or about 25th June 2001 between Mr Dahod, Indo-Med and Baskan Gida (“the Dahod Agreement”). In order to comply with certain Sharia requirements Mr Dahod’s funding was agreed to be on an interest free basis, but for a consideration consisting of a commission of US$140 per metric tonne of hazelnuts sourced with the use of Mr Dahod’s money and on-sold to Ferrero, which were Baskan Gida’s principal customers for hazelnuts. The loans by Mr Dahod were to be routed through Indo-Med and the commission was payable by Baskan Gida to Indo-Med, and then split 70/30 between Mr Dahod and Indo-Med. The commission of US$140 per metric tonne was identical to the profit margin agreed between Baskin Gida and Ferrero as the basis for pricing Baskan Gida’s sales of hazelnuts.[20]From mid-2001 Baskan Gida was in active negotiations with the claimant Banks for substantial funding which it hoped to secure at much lower interest rates than those being charged by its Turkish bankers. It is not in dispute that Mr Abidali played a part in introducing Baskan Gida to both Mr Dahod and the claimant Banks as potential lenders. Those aspects of the background are all sufficiently pleaded elsewhere in the RAPOC.[21]In seeking to persuade me that paragraphs 217 to 219 of the RAPOC failed to disclose reasonable grounds for a conspiracy claim against Mr Abidali Mr Werbicki took me in his written and oral submissions in some detail through each of the particulars of knowledge and overt acts relied upon by the Banks. One of his purposes in doing so was to show that certain of the particulars, viewed separately from the remainder, could not sensibly found an inferential or other case that Mr Abidali had the requisite knowledge or agreed to participate in the requisite unlawful acts, such that the particulars in question should be struck out.[22]I do not intend to follow Mr Werbicki down that path, for two main reasons. The first is that, in common with other causes of action which depend critically upon the defendant’s knowledge (such as dishonest assistance in a breach of trust) the question whether the requisite knowledge is or is not to be inferred depends upon an appreciation of the whole of the pleaded circumstances, rather than by a review of each one in isolation. My second reason is that it is well established that strike-out and summary judgment applications should not be allowed to degenerate into a mini-trial, still less into a war of attrition on detailed evidence of allegations in a long and complex statement of case. If the claim is not demonstrably bad as a whole, then no useful or proportionate purpose will generally be served considering whether some small parts of it can be struck out. There may of course be exceptions where a particular allegation involves, for example, the calling of lengthy and expensive expert evidence, if the truth or otherwise of the allegation is of no significant consequence to the outcome of the claim as a whole. In my judgment the correct approach in the present case is to consider whether the allegations in paragraphs 217 to 219 of the RAPOC, taken as a whole, fairly disclose reasonable grounds for a claim against Mr Abidali in unlawful means conspiracy.[23]In my judgment, those allegations clearly do disclose reasonable grounds. Stripped to its bare essentials, the Banks’ pleaded case is that, knowing that Baskan Gida owed substantial sums to its Turkish bankers and that it was in the process of incurring substantial debts to the claimant Banks, Mr Abidali agreed in secret with members of the Baskan family to strip Baskan Gida of its assets, including the hazelnut business with which alone it could continue to service those debts, by the use of a series of backdated sham transactions designed to give the false appearance of an arm’s length asset sale to an independent third party, whereas in truth the main acquirer of the assets, Asku Gida, continued to be a creature of the Baskan family, and in circumstances where Indo-Med’s and Mr Dahod’s investment in the hazelnut business was to be preserved. In short, the allegation is that Mr Abidali participated with knowledge in a serious fraud on the Banks by the Baskans, in part for his own benefit.[24]To this central core the RAPOC adds two additional elements, first that Mr Abidali knowingly played a part in planning misrepresentations to the claimant Banks designed to procure lending by them to Baskan Gida, at a time when he knew that the asset stripping exercise was to follow, and secondly that he knew and agreed that the asset stripping process should, by including as part of the assets transferred hazelnuts which should have remained subject to the Banks’ security, necessarily involve a deliberate and unlawful infringement of the Banks’ security rights in relation to those hazelnuts.[25]Mr Werbicki’s challenge to the adequacy of the pleaded grounds for the Banks’ claim against Mr Abidali focussed upon two main submissions. The first was that the particulars of primary fact relied upon in support of the general allegations of knowledge on the part of Mr Abidali in paragraph 217 of the RAPOC could not even if they were all proved, properly lead to the inferences sought to be made upon the basis of them. The second was that the alleged conspiracy was not with sufficient clarity shown to be aimed or directed at the claimant Banks. I reject both those submissions.[26]As to the first, I consider that each of the five specific matters alleged to have been known to Mr Abidali in the opening section of paragraph 217 of the RAPOC are sufficiently grounded by way of inference upon the primary facts pleaded by way of particulars. In all respects except one, they are amply and clearly grounded upon the particulars. The only exception is the allegation that Mr Abidali knew that the hazelnuts stored at Warehouse 2 were subject to a security interest in favour of the Banks, which is supported only by the general effect of the particulars taken as a whole, in the sense that Mr Abidali had been involved in initiating the negotiations between Baskan Gida and the Banks and, as the person in control of Indo-Med which was responsible for the administration of Mr Dahod’s investment, had the strongest possible reasons for informing himself about Baskan Gida’s borrowing arrangements, in the course of an alleged close relationship with Baskan Gida and its directors.[27]It would in my judgment be quite wrong to strike out that allegation of knowledge on the grounds of a want of particulars as to primary facts upon which it is based. It seems to me that the question just how much Mr Abidali knew about Baskan Gida’s borrowing arrangements with the Banks is pre-eminently a matter for trial. Furthermore the Banks’ case is not dependant upon showing that Mr Abidali knew about the Banks’ security over the hazelnuts in Warehouse 2, in the sense that without it the claim would fail.[28]As for Mr Werbicki’s second submission, it seems to me an obvious inference from the pleadings that Mr Abidali must have appreciated that the natural consequence of an asset stripping exercise of the type alleged would be to cause harm to all those creditors of Baskan Gida whose interests were not thereby preserved, as were those of Mr Dahod and Indo-Med, by the structure created for that purpose. It is clearly alleged that Mr Abidali knew that the Banks had by the beginning of 2002 become substantial lenders to Baskan Gida, and that the asset stripping exercise was, to Mr Abidali’s knowledge, being conducted in secret.[29]It follows in my judgment that the application based upon CPR 3.4(2) must therefore fail. I turn therefore to the more complicated question whether the evidence relied upon by the Banks in support of those allegations satisfies the reality test imposed by CPR 24.2, in the sense of disclosing a more than fanciful prospect that the Banks’ claim against Mr Abidali may succeed.

REAL PROSPECT OF SUCCESS?

[30]For the purposes of this application both the claimant Banks and Mr Abidali deployed a wealth of evidence on this issue. The Banks’ evidence runs to some four lever arch files, Mr Abidali’s evidence occupied two. In detailed witness statements, skeleton arguments and oral submissions each side sought to support their respective cases in relation to each of the detailed particulars set out in paragraphs 217 and 219 of the RAPOC. No stone was left unturned. To analyse those submissions and the weight of the evidence separately in relation to each of the particulars alleged would amount to the conduct of a mini-trial on the documents. Furthermore, each side made detailed submissions about the credibility or otherwise of Mr Abidali’s explanation, in a lengthy witness statement, of his personal role in the matters which have led to this litigation. Save to the limited extent that it is sometimes possible to reject as obviously incredible evidence in support of a claim or defence which is being challenged by way of an application for summary judgment, questions of credibility are quintessentially matters for trial.[31]Again, (as with the question whether the RAPOC discloses reasonable grounds for the Banks’ claim), I consider that the correct approach is to consider whether the Banks’ evidence as a whole discloses a real prospect of success against Mr Abidali at trial, looking at the matter in the round rather than by item by item but, of course, alert to the question whether some essential plank in the claimants’ case against him is so devoid of supporting evidence that, regardless of the rest of the structure, the claim must inevitably fail.[32]When it is borne in mind that the claim in conspiracy against Mr Abidali is made not merely against him but against a number of other defendants who are not present or represented on this application, it is also important for me to avoid pre-judging matters which will in due course fall to be determined at trial. It is well established that a summary judgment application is not an occasion for reaching views as to the relative strengths and weaknesses of the parties’ cases. The only question is whether the claimants’ case surmounts the relatively low hurdle presented by the reality test.[33]On that broad analysis, the claimant Banks have in my judgment a real prospect of success against Mr Abidali. My reasons follow. First, there is quite plainly a real prospect that the Banks will show that those senior members of the Baskan family in control of the affairs of Baskan Gida conspired to injure the Banks, together with Baskan Gida’s Turkish bank lenders, by unlawful means. The evidence amassed during the course of a long and painstaking process of investigation and the pursuit of disclosure in these proceedings clearly discloses a real prospect that the Banks will show that during a substantial part, if not the whole, of the period when Baskan Gida was drawing down very substantial sums by way of loan from the Banks and using them for the purchase of large quantities of hazelnuts, ostensibly for direct sale to the Ferrero companies, the Baskan family were at the same time, and in secret, preparing to strip Baskan Gida’s assets and business, including the bulk of the hazelnuts purchased with the Banks’ money in circumstances such that Aksu Gida and, to a lesser extent Baskan Yuksel between them became the owners of the assets and business by the time when, in mid-February 2002, repayments began to become due to the Banks. This was done in such a way that the same hazelnuts were then to be, and were, sold to Ferrero by Aksu Gida in return for direct payment, in circumstances where, had those sales been made by Baskan Gida, the Banks would have been largely repaid direct by Ferrero. It is equally clear that the Banks have a real prospect of showing that the asset stripping process necessarily involved, to the knowledge of Baskan Gida and the Baskan family, both a serious fraud on the Banks and, more particularly, a breach of the Banks’ security rights over the hazelnuts in Warehouse 2, to be achieved by a dishonest representation by Baskan Gida to SGS as to the purpose for which it was sought to withdraw them from SGS’s custody.[34]Secondly, it is clear to the point of being undisputed that Mr Abidali as the controlling mind behind Indo-Med played an instrumental part in the process whereby Baskan Gida divested itself of the bulk of its assets and business in favour of Aksu Gida. Mr Abidali’s own evidence is that this was proposed to him in January 2002 by the Baskans as a means whereby Indo-Med and Mr Dahod could have their investment in Baskan Gida secured, at a time when Baskan Gida was having difficulties with one of its Turkish lending banks, but when neither Indo-Med nor Mr Dahod were pressing for payment. According to Mr Abidali, and documents recording it to which I shall in due course refer, the scheme involved Mr Aksu (who was an employee of Baskan Gida and owner of Aksu Gida) transferring 80% of his shares in Aksu Gida to Indo-Med in return for an assignment of Indo-Med’s rights as creditor of Baskan Gida under the Dahod Agreement, and for Baskan Gida to transfer assets including US$8 million worth of hazelnuts to Aksu Gida, together with a lease of its main factory premises, in settlement of that debt, so as to enable Aksu Gida to continue without interruption the business of the sale of hazelnuts previously carried on by Baskan Gida, which in February 2002 it duly did, making very substantial sales to the Ferrero companies.[35]Thirdly, the critical issue is therefore not whether Mr Abidali participated in a process which the claimants have a reasonable prospect of showing involved an unlawful means conspiracy to injure the Banks, but whether he did so with the knowledge that the process whereby Baskan Gida was stripped of the bulk of its assets involved the commission of unlawful acts aimed or directed in the relevant sense at the Banks. If the Banks have a real prospect of showing that Mr Abidali had that knowledge, then it seems to me to follow that the Banks have a real prospect of success against him.[36]Mr Abidali’s case is that he knew nothing of any planned divestment by Baskan Gida of its business and assets before it was mentioned to him on a visit which he made to Giresun in Turkey for a different purpose in January 2002, that he had no knowledge of any security rights of the Banks in relation to hazelnuts in Warehouse 2, or at all, and that since Indo-Med and Mr Dahod were creditors of Baskan Gida, there was nothing unlawful in the arrangements by which, in effect, Baskan Gida paid what it owed them by the transfer of hazelnuts and other assets of a sufficient value to extinguish the debt to Aksu Gida, by then 80% owned by Indo-Med and Mr Dahod. That is, of course, a case which may succeed at trial, in particular if Mr Abidali establishes his credibility while being cross-examined as to it. For present purposes the question is whether the Banks have evidence to the contrary which stands a more than fanciful prospect of leading to the opposite conclusion. In my judgment they do, and this is the fourth reason for my decision. The evidence may be summarised as follows:(a) Mr Abidali accepts that he was aware that the loan facility from the Banks, in the negotiation of which he had briefly participated in 2001, had borne fruit by the end of the year, such that from the beginning of 2002 Baskan Gida was funding its hazelnut purchases with substantial assistance from the Banks by way of loan.(b) Even his own account of the circumstances in which the proposed asset transfer scheme was first mentioned to him suggests a real prospect that Mr Abidali was aware that Baskan Gida was in some form of financial difficulty by mid-January 2002, albeit that on his case the difficulty was said to have been explained to him as arising in relation to Baskan Gida’s Turkish lenders.(c) An email from Mr Abidali to Mr Dahod in February 2002 shows that Mr Abidali knew that the asset transfer scheme was being prepared and implemented in secret.(d) Every one of the documents prepared for the purpose of recording the asset transfer scheme was, to the knowledge of Mr Abidali, backdated. This included, most importantly, a Protocol Agreement between Baskan Gida and Indo-Med providing in terms for US$8 million Baskan Gida’s debt to Indo-Med to be settled by the transfer of hazelnuts, which was prepared in January 2002, but backdated to 5th November 2001, so as to suggest falsely that Baskan Gida had a contractual obligation to transfer hazelnuts to Indo-Med which ante-dated its borrowing facility with the claimant Banks.(e) Promissory notes from Baskan Gida to Indo-Med which were also provided for in the Protocol Agreement were similarly backdated, and then used in January 2002 as the basis for an entirely collusive bankruptcy claim by Indo-Med against Baskan Gida in late January which was purportedly settled on the same day, albeit that the settlement agreement was in fact prepared only many months later. On the assumption which no-one has challenged that Turkish insolvency law is broadly to the same effect as English law, it is well arguable (to put it at its lowest) that the only discernable purpose of the bankruptcy claim and its almost simultaneous settlement was to pretend some semblance of creditor pressure as a means of justifying what would otherwise appear to have been a fraudulent preference of Indo-Med and Mr Dahod over Baskan Gida’s other creditors. Other documents, such as the assignment agreement between Baskan Gida and Aksu Gida were prepared in about August or September 2002, many months after the asset transfers were in fact implemented, at the end of January.(f) Mr Abidali had the prime responsibility for the conduct of Indo-Med’s defence in these proceedings, before his joinder as a party in his own right. He caused Indo-Med to rely in its defence and in further information provided on request upon the documents purporting to record the asset transfer transactions as if they were in all respects entered into on the dates which they bear, and as if the bankruptcy claim made by Indo-Med against Baskan Gida was a genuine adversarial claim by a pressing creditor. The fact (which is now undisputed) that the documents were all backdated, in some cases by many months, and that the bankruptcy claim was, as even Mr Wewrbicki was constrained to concede, “co-operative” emerged mainly from disclosure given by Indo-Med after it went into administration (and thereby fell out of Mr Abidali’s control). That disclosure included a waiver of privilege in relation to documents held by Indo-Med’s then solicitors and accountants. The evidence before me discloses a real prospect, but not necessarily an unanswerable case, that Mr Abidali caused Indo-Med to fail to provide the disclosures which would have revealed these matters, and also gives rise to a real prospect that he actively concealed important aspects of the January 2002 asset transfer transactions in which he had participated. There is evidence which gives rise to a real prospect that Mr Abidali did much the same in proceedings brought in the Turkish courts in 2002 by one of Baskan Gida’s Turkish bank creditors. (f) There is significant evidence tending to suggest, if not contradicted by credible evidence to the contrary, that by contrast with the appearance created by the backdated documents of an asset transfer to a company in which the Baskan family had no interest of any kind, the reality is that the Baskan family retained some concealed form of ownership or control of the affairs of Aksu Gida, such that the claimants have a real prospect of showing that the assets were removed from Baskan Gida to an entity which can properly be described as another nominee of the Baskan family. The evidence consists of emails, memoranda and other documents suggesting that members of the Baskan family, and in particular Melih Baskan, continued to have an influential and, in certain respects governing, role in the conduct of the ongoing hazelnut business after its transfer to Aksu Gida. A memorandum from Mr Dahod dated 24th October 2002 which, while confirming the continued value placed by Mr Dahod in the relationship which had been developed with Melih Baskan and his family in connection with the hazelnut business, also appears to assume, on one interpretation, that the true commercial interest of Mr Dahod in the business after its transfer to Aksu Gida continued to be a right to a US$140 per mt profit share on sales to Ferrero, just as it had been prior to that transfer, pursuant to the Dahod Agreement. By contrast, the backdated transactional documents suggest that from the end of January 2002, Mr Dahod via Indo-Med was the 80% beneficial owner of the business itself. An email from Mr Abidali to Mr Dahod in October 2002 describes a conversation between him and Melih Baskan which treats Mr Dahod’s money as if it continued to constitute an investment in a Baskan family business, long after the asset transfer at the end of January.[37]Fifthly, there is in my judgment a real prospect, contrary to Mr Werbicki’s submissions, that the detailed explanation now given of his role by Mr Abidali in his evidence in support of his present application will be found at trial to be untrue, simply because of its inherent improbability. It requires the court to accept that, at a time when neither Indo-Med nor Mr Dahod were pressing for repayment of their investment in Baskan Gida, and had no apprehension that it might be in financial difficulties, the Baskans approached Mr Abidali out of the blue with a repayment proposal in mid January, consisting of a radical restructuring amounting to disposal of the Baskans’ long established business, designed to leave it in the hands of Mr Dahod and Indo-Med, merely because Baskan Gida was in a dispute of an unspecified nature with one of its Turkish lenders. It then requires the court to accept that a brief negotiation without any significant due diligence led to a transfer of the business and assets by the end of January to a company (Aksu Gida) with no previous experience of hazelnut exports save for the provision of employees to Baskan Gida, committing Mr Dahod and Indo-Med to all the risks and uncertainties of a business in Turkey of which they had no experience either, assisted only by a former employee of Baskan Gida (Mr Aksu) who spoke no English, and with whom they could only communicate through interpreters. If it is shown at trial that this at first sight surprising account is not to be believed, the question will then arise why Mr Abidali should have chosen to lie about it, if innocent of the conspiracy alleged against him.[38]Mr Werbicki was right to emphasise in his submissions that, notwithstanding the most diligent investigation and the most rigorous pursuit of its disclosure entitlements in these proceedings, the Banks cannot point to any single document which, on its own, demonstrates either that Mr Abidali knew that the January 2002 transaction necessarily involved a breach of any security rights of the Banks over the hazelnuts transferred, or even that he knew beyond the possibility of contradiction that the effect of the asset transfer transaction would be to defraud the Banks, in the sense of ensuring that they would never receive repayment of monies still being advanced in substantial amounts at the time when the transaction was being planned and implemented. Nor does the Bank’s evidence clearly show any active participation by Mr Abidali in an asset stripping planning exercise in 2001, prior to the completion of the negotiation of the Banks’ facility, or his active participation in any misleading of the Banks leading to the grant of that facility. The evidence goes no further than showing the Mr Abidali had a meeting with Melih Baskan at an important point in the Baskans’ conduct of those negotiations, when a particular and important falsehood was being prepared for presentation to the Banks.[39]As I have already explained, active participation in the alleged conspiracy in 2001 is not an essential element in the Banks’ claim against Mr Abidali, nor does the establishment of liability on his part as an unlawful means conspirator necessarily depend upon it being shown that he knew that the Banks had security rights in relation to the hazelnuts stored in Warehouse 2 and then (on the Banks’ case) transferred to Aksu Gida in breach of those rights. Furthermore it is axiomatic that a case of conspiracy is rarely proved by documents recording either the relevant knowledge or the relevant agreement, all the more so in cases where, as here, the relevant transaction was carried out in secret. The question how much if anything an alleged conspirator knew, and the extent to which he agreed to take part in the matters complained of, is generally to be answered only upon a considered appreciation of the whole of the evidence, after its deployment and testing at a trial. It would therefore be entirely inappropriate in my judgment to accede to Mr Werbicki ’s submission that I should here and now strike out or dismiss parts of the claimants’ conspiracy claim on the basis that those parts are not separately supported by persuasive evidence, when they are not essential to the claimants’ success, and where there is in my judgment a real prospect that the degree of knowledge and participation which may be established against Mr Abidali at a full trial may be broader than that which can be established against him by documents presently available.[40]For those reasons Mr Abidali’s summary judgment application also fails, and must be dismissed.

Cited in 1 later judgment