Global Marine Drillships Ltd v La Bella & Ors [2014] EWHC 2242 (Ch)

[2014] EWHC 2242 (Ch)Case No HC10C02148
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Rolls Building, Royal Courts of Justice, 7 Rolls Buildings, Fetter LaneDate 07/07/2014
London, EC4A 1NL
Before
MR JUSTICE NEWEY
Between
GLOBAL MARINE DRILLSHIPS LIMITEDClaimant(1) WILLIAM LA BELLADefendants(2) LANDMARK SOLICITORS LLPDefendant(3) SALINA JAYNE JONESDefendant(4) CHARLES AND BARBER AND SONS LIMITEDDefendant(5) JAMES EDWARD BARBERDefendant(6) COLIN SHACKLESTONDefendant(7) ALAN WILCOCKDefendant(8) FRANK MULLINSDefendant(9) DAVID BEARDMOREDefendant(10) RICHARD ZACHARIASDefendant
Mr Iain Daniels (instructed by Bird & Bird LLP) for ClaimantMr Nigel Burroughs (instructed by Mills & Reeve LLP) for Second and Third DefendantsHearing Hearing dates: 5, 6 & 9-11 June 2014
JudgmentMr Justice Newey :
[1]These proceedings arise out of undertakings that the second and third defendants, respectively Landmark Solicitors LLP (“Landmark”) and Miss Salina Yildiz (formerly Jones), gave on 26 May 2010. The claimant, Global Marine Drillships Limited (“Global Marine”), alleges that the undertakings were broken and that it has suffered loss of roughly £3.5 million in consequence. Landmark and Miss Yildiz are also said to be liable for breach of trust.

Factual history

[2]Global Marine, which is incorporated in the Isle of Man, is one of a number of companies associated with Bridgehouse Capital Limited (“BHC”). Mr Stephen Scott, who has served as a director of both Global Marine and BHC, described BHC as “the family office for a number of offshore family trusts” and explained that it “manages firms and global assets with, from time to time, an estimated value of over $2 billion”. BHC is closely linked to a Mr Andy Ruhan, who was the chief executive officer of Global Marine as well as the chairman and chief executive officer of BHC.[3]Global Marine was established with a view to the acquisition of a deep sea drillship then known as “MPF-01” and later re-named “the Dalian Developer”. The Dalian Developer’s owner had been the subject of chapter 11 bankruptcy proceedings in the United States, and DVB Bank (“DVB”), which had lent some $80 million for the construction of the vessel, had taken control of it. The idea arose that Global Marine should purchase from DVB the special purpose vehicle (viz. Dalian Deepwater Developer Limited) in which the Dalian Developer had come to be vested.[4]The scheme required very considerable funding. The Dalian Developer was still in the process of construction: Mr Scott described the vessel as “only in practice a floating hull”. It was calculated that some $650-750 million would be needed to effect the acquisition and completion of the Dalian Developer.[5]Mr Scott contacted a Mr Martin Gibbins (or “Tobias-Gibbins”), whom he had been told was well-versed in debt financing. Mr Gibbins suggested that the best approach would be to obtain letters of credit and use those to secure a line of finance. Early in 2010, Mr Gibbins told Mr Scott that a concern called Petra Energy Berhad (“Petra”) had access to a line of finance from J.P.Morgan in Singapore subject to the provision of certain standby letters of credit (“SBLCs”). It was therefore proposed that Global Marine should procure SBLCs for the benefit of J.P.Morgan, with the result that the J.P.Morgan line of finance could be used by both Global Marine and Petra. Mr Gibbins told Global Marine that, for a fee, a company called Coolmead Investments Limited (“Coolmead”) would obtain SBLCs from HSBC and Deutsche Bank that would be acceptable to J.P.Morgan.[6]A structure chart dated 20 May 2010 depicts what was envisaged at that point. The chart shows J.P.Morgan providing funds totalling $245 million on the strength of letters of credit from HSBC and Deutsche Bank for sums of respectively $200 million and $150 million. Coolmead would receive fees of £56 million from Global Marine in two tranches. Coolmead was, however, to cover without any additional payment the cost of obtaining an insurance policy that was said to be a prerequisite of the issue of the SBLCs. Mr Scott said this about the policy in his witness statement:
“My understanding from La Bella was that the purpose of the policy was to insure against the risk of J P Morgan making any claim against an SBLC. Whilst at the time the use of SBLCs was relatively new to me, I understood that on the face of it, the SBLC can be ‘called upon’ to the extent that JP Morgan suffered loss in an event of default by [Global Marine]. JP Morgan would therefore call on the defaulting party (in this situation, it would have been [Global Marine]) and step in to recover the defaulting party’s assets. JP Morgan would subsequently then look to the SBLC for the balance of outstanding sums that were due to them.”
[7]There is reference in this passage to the first defendant, Mr William La Bella. Global Marine knew Coolmead to be run by Mr La Bella, but the company was understood to be backed by Saudi Aramco, the Saudi Arabian national oil company. That was not in fact the case.[8]It was Mr La Bella’s position that Global Marine should make a payment on account of Coolmead’s fees up front: he said that he wanted to ensure that he would be in funds as soon as he “pressed the button” and the SBLCs were issued. Global Marine was itself concerned that any payment it made should be adequately safeguarded. It came to be agreed that Global Marine would transfer money to Coolmead’s solicitors subject to the provision by those solicitors of an undertaking that would protect Global Marine.[9]On 12 May 2010, Mr La Bella informed Mr Scott that Landmark was acting for Coolmead. Landmark had been formed in 2008 by Miss Yildiz and had one other member. After leaving university in the mid-1990s, Miss Yildiz had worked in Barclays Bank’s legal division and then for two law firms before qualifying as a solicitor in 2006. Her experience lay mainly in conveyancing (especially residential conveyancing) and litigation. At some point, Mr Scott queried with Mr La Bella whether it was appropriate to instruct Landmark on a transaction as significant as that in which they were engaged, but Mr La Bella said that he had used Miss Yildiz and Landmark extensively and had faith in them. So far as Miss Yildiz was concerned, she and Mr La Bella were good friends.[10]Landmark supplied two draft solicitors’ undertakings in the course of 12 May 2010, and Mr Scott forwarded them to the solicitor acting for Global Marine, Mr Simon McNally. Mr McNally was both a director of Global Marine and a partner in Bridgehouse Partners LLP (“BPL”, now Adelphi Commercial Law LLP), which is based in the Isle of Man. Mr McNally was not happy with the drafts Landmark had prepared and (with some prescience) commented to Mr Scott, “there is something that makes me generally nervous and suspicious as to this”. On 14 May, however, £7 million was paid into BPL’s client account on Global Marine’s behalf, and by 17 May Miss Yildiz had given BPL an undertaking that, if the money were transferred to Landmark’s client account, she would hold it to BPL’s order. On the same day, Miss Yildiz supplied Mr McNally with details of Landmark’s indemnity insurance. Mr McNally had asked for these as he wanted to make sure that Landmark’s insurance cover would extend to the £7 million it was to receive. Mr McNally had observed to a Mr Michael Howarth, who was working for BHC as a consultant, in an email of 13 May:
“Given the sums involved I would also want to understand [Landmark’s] PI insurance cover in place, as we are as it stands going to be wholly reliant upon their undertaking for a given period of time. Given their size and apparent make up this raises some questions with me which I need to be satisfied with ….”
[11]Once he had received the 17 May undertaking, Mr McNally transferred the £7 million he was holding into Landmark’s client account. Mr La Bella had told Global Marine during a conference call on 14 May 2010 that he needed $10 million (or approximately £7 million) to be paid to Landmark so that Coolmead could acquire the requisite insurance.[12]On 26 May 2010, the £7 million was released to Landmark on the basis that it was to be held in accordance with new undertakings from Landmark and Miss Yildiz. The undertakings were set out in a letter from Miss Yildiz of the same date addressed to “Simon McNally Bridgehouse Partners LLP”. The letter stated as follows:
“I hereby confirm by way of irrevocable undertaking both personally and on behalf of this law firm, Landmark Solicitors LLP (‘Landmark’), that upon receipt of funds in the amount of US$32,000,000 (‘the Funds’) into our client account, details of which I have provided to you, I will hold and deal with the Funds solely and strictly in accordance with the following steps as set out below:- 1. Upon receipt of the sum of US$32,000,000, the Funds, I will hold the same to your order pending confirmation from you in accordance with points 2 and 3 below. 2. Upon written notification from you as to the dating and completion of the Agreement [i.e. an agreement being entered into between, among others, Coolmead and Global Marine], the sum of US$10,000,000 is released to me to be used for the sole purpose of a purchase of an insurance policy for [Coolmead], the premium for which is US$10,000,000. I further undertake to provide you with independent evidence, sufficient and satisfactory confirming to you that this insurance policy has been issued, such issuance to take place upon the issuance of the SBLC referred to in point 3 below. 3. Upon written notification from you as to the satisfaction of clause 1.6 of the Agreement and the issuance of the Standby Letter of Credit (‘SBLC’) referred to therein, the balance of the funds, namely US$22,000,000 are released to me to distribute to my client in satisfaction of the fees due and payable to them in accordance with clause 3.2 of the Agreement. I hereby confirm my irrevocable undertaking, both personally and on behalf of Landmark, that in the event that the insurance policy is not issued as anticipated in point 2 above for whatever reason, that the funds released to me for the sole purpose of the same, namely US$10,000,000 will be returned to you forthwith to the account details as set out below (or such other account details as you provide me in substitute thereof). Furthermore, in the event that the SBLC is not issued, for whatever reason, within seven working days from the date of this undertaking letter, I hereby confirm my undertaking to return to you the sum of US$32,000,000 (including the US$10,000,000 released to me for the purchase of the insurance policy as set out above) forthwith to the account details as set out below (or such other account details as you provide me in substitute thereof).”
[13]During her oral evidence, Miss Yildiz said that she was very familiar with solicitors’ undertakings. She also confirmed that she understood that the undertakings given on 26 May meant that it was “[her] responsibility and … [her] risk to ensure that the money was paid for an insurance policy”.[14]The “Agreement” mentioned in the 26 May undertakings was concluded on the same day between Coolmead, Global Marine and a company associated with Mr Gibbins called London Marketing FZ LLC. Among other things, the agreement provided for Coolmead to provide and/or procure the issuance of SBLCs issued by HSBC and Deutsche Bank for $200 million and $150 million respectively.[15]Somewhat earlier, on 16 May 2010, Miss Yildiz had had forwarded to her from “cspmusic7@aol.com” an email from a Mr Jose Manuel Alvarez Grijuela (“Mr Alvarez”) to which a draft insurance policy was attached. The draft was described on its first page as “Combined Civil Liability Malpractice (Professional Indemnity)”. The final page stated:
“• This Civil Liability Insurance is made in case of default of the policyholder to produce a Bank Guarantee or Standby Letter of Credit as per contract and not exceeding £5,000,000 liability. • If the Provider does not comply with the deadline of ten banking days for the dispatch of the Bank Guarantee of Standby Letter of Credit via MT760 to the coordinates of the Beneficiary’s bank, the Beneficiary may claim from the Provider, through the coordinating Agent, the funds transferred for the cost of issuing the Bank Guarantee or Standby Letter of Credit, and both the Provider and the Agent must repay their share of those funds without the right to protest or any judicial interpellation. • In the event of non performance by the provider of the Bank Guarantee or Standby Letter of Credit, full refund of the policy will be available.”
[16]Miss Yildiz quoted the passage set out above (though the limit on liability was misstated to be £500 million rather than £5 million) in an email to Mr Scott, Mr Howarth and Mr McNally of 17 May 2010. Mr McNally asked Miss Yildiz to provide a complete copy of the policy, observing that “an extract is not sufficient and cannot be read in isolation to the balance of the policy”, but Miss Yildiz responded that her clients did not wish the full policy to be sent as “it is too sensitive to their business”. Mr Scott commented to Mr McNally, “Ultimately we will only be relying upon a Landmark undertaking that the £7m will be refunded for any reason other than [Global Marine] pulling away”.[17]The “cspmusic7@aol.com” email address related to Cheshire Sound Productions, a music studio in Northwich, Cheshire. Miss Yildiz explained in one of her witness statements that she was told by Mr La Bella that the sixth defendant, Mr Colin Shackleston, and the eighth defendant, Mr Frank Mullen (or “Mullins” or “Crawford”), had the studio as a hobby and that Mr Mullen was expert in arranging insurance for deals such as that Global Marine was seeking to undertake.[18]On 27 May 2010, Miss Yildiz had forwarded to her from “cspmusic7@aol.com” another email from Mr Alvarez. The attachment comprised a draft policy comparable to that quoted in paragraph 15 above (though with a limit of £200 million instead of £5 million) and a letter addressed to “CSP Brokerage” from Mr Alvarez as a director of Platinum Financial Services S.L. (“Platinum”), for which an address in Marbella was given. The letter said:
“Subject to receipt of the premium payment in respect of the attached agreement and the proposed issuance of an SBLC by HSBC PLC. London, we confirm that we have arranged to have issued by a top five U.K. Insurance Company (Contract Default Insurance), for the amount of USD 200 Mio. Such cover is to be provided by the insurer disclosed in the attached draft policy for one year and one day from the date of issuance of the proposed SBLC by HSBC Plc. London. Premium amount 9,642,500 Dollars.”
Premium amount 9,642,500 Dollars.”[19]On the following day, Mr Scott rang Mr La Bella and was told by him that the premium for the necessary insurance policy had been paid on to an insurance company. By the end of the day, however, Mr Scott felt that he was receiving mixed messages and so sent Miss Yildiz an email asking for confirmation of whether the premium had been paid. No such payment had in fact been made.[20]On Monday 31 May 2010, which was a Bank Holiday, Mr La Bella came to Landmark’s office with Mr Mullen and Mr Shackleston. They told Miss Yildiz that, if she did not transfer the money she held to Mr Mullen, they would sue her, and they also threatened to report her to the Law Society. Miss Yildiz found Mr Mullen, in particular, unpleasant, and she threatened to call the police. Later on, Mr La Bella sent Miss Yildiz an email in which he purported to instruct her to forward £6.5 million to an account in the name of “C. SKACKLETON T/A CSP”.[21]At this stage, Miss Yildiz held out against the pressure that was put on her. She initially asked Mr La Bella a number of questions about the proposed payment. In his reply, Mr La Bella said, among other things, that he was “fully satisfied that the SBLC will be issued as arranged under the terms of the agreement and will despite your advice take full responsibility therein, and am fully satisfied that the premium payment will be paid and issued”. He also said:
“Coolmead and [Cheshire Sound Productions] have an existing arrangement whereby [Cheshire Sound Productions] provide banking instruments to my companies, on a prearranged agreement copy of which you already have with Asia Horizon Trading Ltd.”
[22]During 1 June 2010, Miss Yildiz was bombarded with emails by Mr La Bella. Mr La Bella told Miss Yildiz, for example, that her actions had “damaged and compromised the position”, that she was “clearly out of [her] depth”, that she would be “held totally accountable”, that she had “unleashed the wrath of God”, that it would “give [Mr La Bella] no pleasure in watching [her] fed to the lions”, that she was “dead in the water” and that she was “indeed incredible”. Miss Yildiz was also supplied with a letter from Mr Shackleston and the seventh defendant, Mr Alan Wilcock, on behalf of Cheshire Sound Productions confirming that they had instructed Coolmead to instruct Landmark to forward £6.5 million to their account. Miss Yildiz made no payment, however.[23]On 2 June 2010, Mr La Bella changed tack and told Miss Yildiz that she was to transfer money to a “Brooklands” bank account. She was sent the details for an account in the name of “Charles Barber & Sons Limited t/as Brooklands” and a document recording a board resolution of “Charles Barber trading as ‘Brooklands’” stating that 50% of “the shareholding of ‘Brooklands’” was being transferred to Coolmead Properties Limited (another company linked to Mr La Bella) and that “following on” from that the “‘Brooklands’ bank account” would be operated by the directors and company secretary of Coolmead Properties Limited. Miss Yildiz also received an email from Mr Alvarez (copied to “cspmusic7@aol.com”) to which was attached a letter from Mr Alvarez on Platinum headed paper in which he said:
“We understand that you have now issued the requested premium to our UK partners for the premium payment in relation to the above referenced transaction. On the basis that we receive the funds we have already initiated delivery instructions for issuance of the pre-advice, which subject to the above we fully expect to be in a position to release – through the nominated bank – the pre-advice by no later than Monday 7th of June, 2010 close of business. We will however be in a position to forward bank acknowledgement Monday am and will keep you fully updated of the position during the course of Monday.”
[24]On 3 June 2010, Mr Scott chased Mr La Bella, explaining that he could not “over stress the need today for some clear communication from Coolmead” and that Global Marine was “trying carefully to manage the expectations of [J.P.Morgan], Petra and DVB Bank who are all parties critical to the [Global Marine] opportunity”. Mr La Bella replied in positive terms. He said:
“We coolmead can confirm that the upfront criteria for the issuance of the SBLC has been satisfactorily concluded, whereby we will / have now instructed our provider to confirm in writing to us the specific timings to PRE ADVICE. We fully expect to receive said confirmation within the next few hours and for the benefit of all concerned, have asked that Landmark translate that into a schedule for completion thereafter. For the record we expect to be in a position by MONDAY .07TH JUNE. 2010, to have a copy of the preadvice prior to issuance to [J.P.Morgan], and are more than happy at that juncture to provide said copy to all related parties for their perusal.”
On the same day, Mr Gibbins told Petra in an email that he had been communicating with “William La Bella’s team” and continued:
“What has transpired is that whilst the credit insurance premium was paid on Friday last week, the security for the two transactions was only put in place this afternoon. William tells me that the reason for this is that documents had to be received from the Middle East.”
[25]There were also references to the Middle East in correspondence of the following day. Mr La Bella told Mr Howarth in an email that he had instructed “our rep to fly to middle east to conclude the operation”. Mr Alvarez said in a letter addressed to Landmark that reached Miss Yildiz via Mr La Bella:
“Gentlemen I have received an email from the Middle East investors who as you know have had their representatives in Europe for over one week awaiting your arrival and [confirmation] of payment of the pre-advice of the Global and Coolmead transaction. They have confirmed that subject to receipt of payment within the next 24 hours they would be in the position to release the pre-advice Monday 7th of June 2010.”
[26]Earlier on 4 June, Miss Yildiz had told Mr La Bella by email that she had faxed a CHAPS transfer form, seemingly to transfer some of the £7 million in Landmark’s client account to the “Brooklands” account. There were nonetheless fraught (and rather extraordinary) email exchanges between Miss Yildiz and Mr La Bella during 4 June. Mr La Bella said that Miss Yildiz had “single handidly ruined everthing and put [herself] unilatterilly on the firing line”, that her “ranting and raving is finished” and that her “lies” would not be tolerated. Miss Yildiz responded:
“No it is you who has finished everything. ‘We’ will not tolerate my lies!!!!! What a joke – cant you even speak for yourself anymore! You know full well that I have never lied to you. But if that’s what you believe – fine, go away, I want nothing to do with you.”
[27]Miss Yildiz said this about the events of 4 June in a witness statement:
“From memory, I think I told Will [La Bella] that I would send the instruction to the bank on Friday 4 June but I did not actually do it. There would have been several telephone calls explaining why I did not do it and I believe I was still not satisfied that the Charles Barber account was secure. I wanted to be certain that Will had control of the money because I trusted him to ensure that it would be sent to pay for the insurance. He assured me that it would.”
[28]On 7 June 2010, Mr La Bella renewed his demands for Miss Yildiz to transfer money to the “Brooklands” account. In the first of his emails to her, Mr La Bella said:
“Please forward as agreed £5M to nominated account … Brooklands as instructed,, to faciltate part payment for the release of the SBLC for the above deal. I can confirm that I am in control of the financial accounts at Brookland and the funds will be utilised to buy in part the SBLC/release. I would like you to confirm by return that upon saisfactory provision of SBLC you will immediately release the balance of the funds ….”
At Miss Yildiz’s request, Mr La Bella undertook to her that the funds were “for the sole release of the insurance that provides for the contract default insurance … in providing the SBLC”. Thereafter, Miss Yildiz completed a CHAPS transfer form providing for the transfer of £5 million from Landmark’s client account to the account (of Charles Barber and Sons Limited) whose details she had first been given on 2 June. Miss Yildiz emailed the form to “cspmusic7@aol.com”, as well, it seems, as faxing it to Mr La Bella and Mr Mullen.[29]I shall have to return later in this judgment to the events of 8 June 2010, as to which there is significant dispute. What is certain is that, although the CHAPS form of the previous day had been for a £5 million payment, Miss Yildiz in fact transferred £3 million of the money in Landmark’s client account to the Charles Barber account. Miss Yildiz noted in a witness statement that “£3 million was sent out on 8 June in the morning”. The £5 million form was never acted on.[30]Charles Barber and Sons Limited (“Charles Barber”), the holder of the account to which the £3 million was credited, operated a car dealership in Northwich. Charles Barber is the fourth defendant to the present proceedings; one of its directors and shareholders, Mr James Barber, is the fifth defendant; and the company accountant, Mr David Beardmore, is the ninth defendant.[31]During the days that followed, Petra complained to Mr Scott about delay. On 9 June 2010, however, Mr La Bella told Mr Scott that a pre-advice would be issued that day. On 10 June, Mr La Bella sent Mr Scott a draft pre-advice, which Mr Scott rapidly approved. Mr Howarth and Mr Gibbins also visited Charles Barber’s premises (where Mr La Bella had an office) that day to discuss the delay in the provision of an SBLC. Mr Howarth reported that he had been told that there had been a slight delay, but that the SBLC would now be issued the next day, 11 June.[32]No SBLC having in the event been forthcoming, on 15 June 2010 Global Marine discussed the delay with Mr Wilcock. He said that the SBLCs were to be provided for Coolmead, which was essentially a broker, by Asia Horizon Trading Limited (“Asia Horizon”) and that, if given exclusivity, Asia Horizon could obtain the SBLCs within three days on its own, without Coolmead being involved. On that basis, Global Marine decided to terminate its contract with Coolmead.[33]On the same day, Mr McNally asked Miss Yildiz for information about the £7 million Landmark had been paid. He had trouble getting hold of Miss Yildiz, but eventually succeeded in speaking to her by telephone in the early afternoon. Following that conversation, Mr McNally sent Miss Yildiz an email which he said (and I accept) reflects what had been said. The email included this:
“You just confirmed to me that two amounts of money of the £7M which was sent to you has been sent out, namely £3M and then a further £2M which has been sent out today. You confirmed that these have been sent to the insurance broker you have been dealing with. As discussed, I need immediate confirmation from you in writing as to those payments and as to where these payments have been made. I also need confirmation that you are still holding the balance of funds, namely a further £2,000,000. As discussed and you confirmed, these monies are still held in relation to the undertaking, and in the event that this is required to be returned, you confirmed this can be done so given the insurance arrangements in place. Again can you please confirm this in writing for the record. … It is imperative that we continue to receive updated information on the progress or otherwise of the finalization and issuance of the first Standby Letter of Credit, given the time taken to date and also the situation relating to its onward use by my client ….”
[34]Later in the afternoon, Mr McNally emailed to Mr La Bella a letter giving “formal notice with immediate effect of the termination of [Global Marine’s agreement with Coolmead]”. Mr McNally also emailed the letter to Miss Yildiz, together with a further letter in which he said:
“I hereby write to confirm that the funds that I transferred to you and being held by you, in the sum of £7,000,000 (or US dollar equivalent, $10,000,000) should be returned to my client account forthwith in accordance with your undertaking.”
[35]During the evening of 15 June, Mr Ruhan emailed DVB to “confirm … in the strongest possible terms that Global Marine Drillships Limited have put in place a facility to complete the MPF transaction [i.e. that relating to the Dalian Developer] and provide additional working capital for the company to complete the project management etc.”. Mr Ruhan might be said to have been over-egging the pudding.[36]Mr McNally and Miss Yildiz spoke by telephone three times on 16 June 2010. Mr McNally said, and I accept, that emails he sent to Miss Yildiz following the conversations reflect them accurately. The first email, sent at 9.34 am, included this:
“As per our conversation just now, I need immediate confirmation from you as to the fact that you have the funds and are returning them to me today.”
A letter was attached in which BPL said:
“We hereby give you notice that you are in breach of the undertakings given to us in your letter of 26 May 2010. In the event that you do not provide us with an immediate response and confirmation as to the return of funds, we hereby put you on notice that we will be reporting you to the relevant authorities forthwith and taking such further action as we deem appropriate to protect our client’s position, and to enforce the undertakings given by you.”
In a second email, sent an hour or so after Miss Yildiz had rung him at 10.08 am, Mr McNally said:
“To confirm my clients will not be proceeding with Coolmead, and as such I request that you arrange for the transfer of the funds back to me in accordance with your undertaking. From our conversation earlier, you confirmed to me that you have currently on your client account £4,000,000. I would ask that this is sent back immediately …. In relation to the further £3,000,000 which is to be returned in accordance with the undertaking, you confirmed that you had the ability to recall this and as such I request also that you do the same such that we can then ensure that your undertaking is met.”
The third email, sent at 2.38 pm, read as follows:
“To confirm our conversation at around 2.10pm. You confirmed to me now that you have not in fact got £4,000,000 in your client account as you told me this morning, but that you now only have £2,000,000 in your client account. You further confirmed to me that £2,000,000 had been sent to the same account as the £3,000,000 has been sent out, namely to the insurers. You further confirmed to me that these funds were capable of being returned to you given the nature of the insurance policy and its refundable nature. You further confirmed to me that £2,000,000 is in your client account and that you would arrange for these funds to be returned to me this afternoon. Can you please arrange for these funds to be sent to me this afternoon and send me immediate written confirmation as to the fact that this has been done. Furthermore I ask that you provide confirmation in writing as to the return of the balance of the funds, and the further payment of £5,000,000 in accordance with your undertaking, which you continue to be in breach of. I look forward to hearing from you as a matter if urgency, as you confirmed to me you would do so when we last spoke.”
[37]By this stage, Miss Yildiz had made a second transfer to the Charles Barber account. Having stayed overnight at Mr La Bella’s house in Cheshire, Miss Yildiz remained in Cheshire until at least lunchtime on 16 June. In the course of the morning, Miss Yildiz went to a shop near Mr La Bella’s home that had a fax machine and used it to send a CHAPS form authorising a payment of £1.5 million to the Charles Barber account.[38]By now, Global Marine was proceeding with Asia Horizon, of which Mr Mullen, Mr Shackleston and Mr Wilcock were all directors. At Mr Scott’s request, Mr McNally emailed a draft agreement between Global Marine and Asia Horizon on 16 June 2010 to the seventh defendant, Mr Richard Zacharias of Zacharias Taylor Solicitors Limited (“Zacharias Taylor”), the solicitors acting for Asia Horizon. Mr Zacharias having undertaken to hold the money to his order, Mr McNally also transferred £2 million into Zacharias Taylor’s client account.[39]On 17 June 2010, Miss Yildiz returned £2 million to BPL. Miss Yildiz also sent Mr Alvarez an email in which she asked for confirmation by return that he had received funds for an insurance policy and that “the insurance policy/Pre-advice has been issued”. In the early evening, Miss Yildiz telephoned Mr Scott in a state of some distress and told him that she was out of her depth and had no experience of this type of transaction. She referred to having transferred on Mr La Bella’s instructions some of the £7 million that Landmark had been holding.[40]At 9.46 pm, Miss Yildiz told Mr McNally in an email:
“I understand from my client, Mr. Will La Bella of Coolmead Investments Ltd. that he has met with Mr. Andy Ruhan today. I understand that the sum of £2,000,000 is being returned from the funds for the insurance tomorrow morning and that the balance is to be retained. Please would you confirm that this accords with your instructions.”
Mr McNally promptly disputed the accuracy of Miss Yildiz’s account. In an email sent to Miss Yildiz at 10.04 pm on 17 June, he said:
“Your email and the contents are noted. You are incorrect. Your undertaking to me is to return all of the funds to me that are still due, namely £5,000,000. I suggest you do so. You continue to be in breach until that has happened and for the avoidance of doubt, you have not been released from that undertaking.”
Miss Yildiz replied that she would be responding in full to Mr McNally’s email in due course, but could in the meantime confirm that she had returned £2 million to Mr McNally’s client account.[41]The events of 15, 16 and 17 June are important to the defences that Landmark and Miss Yildiz advance, and I shall come back to them later in this judgment.[42]On 18 June 2010, Mr La Bella sent Mr Howarth an email in which he said:
“I confirm my agreement to remit through Landmark LLP the sum of 2M sterling to be sent to [BPL], this instruction has been signed off on my return to the office now and will be confirmed by Landmark to you once they have received funds. There instructions are to remit immediately upon receipt to you.”
For her part, Miss Yildiz sent an email to two people at Charles Barber (Mr Edward Barber and Mr Beardmore) asking for confirmation that “the funds will be returned in full as soon as possible on Monday morning”. “It is imperative,” she said, “that these funds are now returned as a matter of extreme urgency to our bank details.” She continued to chase Charles Barber, she explained in a witness statement, over the course of the next few days.[43]During the evening of 18 June, Miss Yildiz rang Mr Scott again, and was again very upset. She said that she could not believe that Mr La Bella had put her in the position she was in.[44]On 23 June 2010, Miss Yildiz said in an email to Mr McNally:
“I am advised by my client Coolmead Investments Ltd. that a new contract has been entered into between Asia Horizons and your client Global Marine … that is due to expire on or around today’s date. I was informed by my client, by Alan Wilcock and by Frank Mullen that it was agreed between all parties and your client that the funds sent for the insurance were to be utilised in exactly the same way for the same purpose as per the contract with my client Coolmead. Please would you confirm. I am advised by my client, Frank Mullen and Alan Wilcock that the pre-advice/equivalent as per their contract (of which I have not had sight of) is to be issued today or has already been issued. Please would you confirm. I shall request for the return of the funds immediately on the assumption that you have not received the pre-advice.”
Mr McNally replied:
“I will make this simple. You are under an obligation to return the balance of funds that you had from us previously in accordance with the undertaking you gave to me and this firm. The balance of funds to be returned are £5,000,000. Please ensure that these are returned forthwith.”
Please ensure that these are returned forthwith.”[45]A little before this, no SBLC having been provided by Asia Horizon, Mr McNally had written to Mr Zacharias to terminate Global Marine’s agreement with Asia Horizon and to ask for the return of the £2 million that had been paid to Zacharias Taylor. The money was repaid in full by 28 June.[46]On 26 June 2010, Petra told Mr Howarth in an email, “there has to come a time when we have to say enough is enough”.[47]It is common ground between the parties represented before me that in fact no relevant insurance was ever acquired and no relevant SBLC was ever issued. By 29 June 2010, the balance on the Charles Barber account had nevertheless been reduced to about £963,000. More than £3.5 million of the £4.5 million transferred into the account had thus been disbursed. A variety of payments had been made from the account at the request of Mr La Bella, Mr Wilcock or Mr Mullen over the previous three weeks. More than £1.6 million had gone to an account in Spain, apparently on Mr Mullen’s instructions. The payments requested by Mr La Bella appear to have included two payments of £25,000 each to Sunset Media and J & DV Tyrell on 8 June; a payment of £50,000 to Mr P. Woods on 10 June; payments of £24,961 and £9,538 on 16 June to M.E.Mullen and Keytech CCTV Limited respectively; and payments of £4,300 and £19,985 on 24 June to Mr C. Whittaker and Lewis Hammerson Small (a firm of solicitors) respectively.[48]The present proceedings were issued on 29 June 2010. On the previous day, Global Marine had applied without notice for, and been granted (in fact, by me), a freezing order against Mr La Bella, Landmark, Miss Yildiz and Charles Barber.[49]On 21 July 2010, Mr La Bella sent Miss Yildiz an email that read as follows:
“Hope all is as well as can be expected out there, just a quick update on the Global Marine position. I have met with the owner last week and agreed with him that I make arrangements to return the funds that you are currently sat on in your client account, can you please liaise with your bank/Bridgehouse to release said funds to him. In addition I have agreed to release the balance of funds held at Brooklands circa 900k back to Bridge House, in addition to funds that were sent to Zachariaous by Mr Frank Mullen/Alan Wilcox,, which is around 235k. In short when [these] funds are returned to Global/Bridge Housee the amount outstanding to them from the original 7M is approx 3.5M, which at the meeting with the owner I have agreed to make arrangements for those monies to be repaid to Global in full. I would appreciate any emails that you have in relation to Asia Horizon Trading/Frank Mullen/Alan Wilcox/Dae Shackleton, asif they do not repay the monies that they have received I will have to take legal action to freezez their accounts and charges to be placed on their assets ASAP.”
[50]The trial before me related only to the claims against Landmark and Miss Yildiz. Global Marine has obtained judgment in default against Mr La Bella and Mr Shackleston. Charles Barber has been the subject of a winding-up order.[51]In 2011, Miss Yildiz travelled to Spain and spoke to Platinum’s owner. He told her that Mr Alvarez had not been employed by Platinum in May/June 2010. It also transpires that Mr Wilcock was found guilty of conspiracy to defraud in 1982 and, I am told, that Mr Mullen was imprisoned at one stage.[52]Miss Yildiz returned £315,000 after the issue of proceedings. Taking account also of the £2 million she paid back on 17 June and recoveries of £1,189,106.48 from other defendants, Global Marine has lost £3,495,893.52 of the £7 million it provided.[53]Miss Yildiz was recently suspended from practice as a solicitor for three years by the Solicitors Disciplinary Tribunal on the basis of allegations related to the matters described in this judgment.

The parties’ positions in brief summary

[54]Global Marine’s case can be summarised quite shortly. It maintains that, no insurance policy or SBLC having been issued, Miss Yildiz and Landmark were obliged by their undertakings of 26 May 2010 to return all of the £7 million that had been paid into Landmark’s client account, but have failed to do so. It is also alleged that Miss Yildiz and Landmark have acted in breach of trust. According to Global Marine, it follows from the 26 May undertakings that the £7 million was held on trust as follows: i) The £7 million would be held on trust for Global Marine until Miss Yildiz and Landmark received written confirmation from BPL that Global Marine’s agreement with Coolmead had been completed and executed; ii) The £7 million would be paid in satisfaction of the premium charged for a policy of insurance for the benefit of Coolmead in respect of any liability it might have to Global Marine in the event of the failure to provide the SBLCs; iii) In the event that the policy of insurance was not issued for any reason, the £7 million would be returned forthwith to BPL.[55]Miss Yildiz and Landmark do not dispute either that they gave the 26 May undertakings or that the £7 million was the subject of a trust having the terms set out in the previous paragraph. They advance two defences to Global Marine’s claims. In the first place, they contend that the payments made to Charles Barber (of £3 million and £1.5 million) were authorised by Global Marine. Secondly, they say that on 17 June 2010 Global Marine agreed that, if the £2 million remaining in Landmark’s client account were returned, it would not pursue Mr La Bella, Landmark or Miss Yildiz for the balance of the £7 million. Accordingly, Miss Yildiz and Landmark were (so it is said) released from any liability they would otherwise have had to Global Marine.[56]I shall take these defences in turn.

Were the payments to Charles Barber authorised by Global Marine?

[57]The argument that the payments to Charles Barber were authorised by Global Marine is largely based on the proposition that representatives of Global Marine were shown a copy of the £5 million CHAPS transfer form at a meeting on 8 June 2010. It was evident on the face of the form, Miss Yildiz and Landmark maintain, that the transferee was to be Charles Barber (so it is said), but Global Marine raised no objection.[58]It is not suggested that Miss Yildiz has personal knowledge of these events. She explained her position in these terms in a witness statement:
“I remember speaking to Frank [Mullen], Will [La Bella] and Alan [Wilcock] in the morning of 8 June who all confirmed that Alan had taken a copy of the Chaps form which I had faxed to my bank and copied to them, and had given it to Bridgehouse. More specifically, I was told Alan had put it in the middle of a table and it had been seen by Stephen Scott, Michael Howarth and Martin Gibbins. I remember speaking to Michael Howarth on that day who told me he had seen it. I was a bit annoyed that they had taken the CHAPS form down to London to flaunt it to the client without my authority, particularly since I had not in the end actually sent £5 million, but only £3 million.”
Miss Yildiz also said:
“The truth of it is that they all knew that £3 million had gone to Charles Barber’s account and approved of it. Presumably, like me, they believed the money was going to partly reimburse Frank for the money he had already paid out to pay for the insurance for the SBLC and partly to Jose [Alvarez] in Spain.”
During cross-examination, Miss Yildiz said that the assertion that “they all knew that £3 million had gone to Charles Barber’s account” stemmed from what she had been told had happened on 8 June.[59]Miss Yildiz placed reliance, too, on her recollection of a conversation on 15 June 2010. Miss Yildiz said this about the 15 June conversation in a witness statement:
“Stephen Scott knew where the first sum of money had gone and when I spoke to him on 15 June in the afternoon … he asked me to send the second tranche of £2 million to the same account. I specifically recall him referring to Charles Barber and Brooklands. He made a comment along the lines of ‘as long as you are happy it is going to be spent on the insurance’ or words to that effect.”
[60]It was apparent, however, from Miss Yildiz’s oral evidence that her recollection of the events at issue in these proceedings is poor. Miss Yildiz has evidently found it difficult to revisit matters that she understandably found traumatic and which have had very serious consequences for her. She explained in cross-examination that she found it painful to read the trial bundles because they brought back “a lot of upsetting memories”. In the circumstances, it is not perhaps surprising that her evidence lacked detail and was in some respects confused. Global Marine’s solicitors calculated that in the course of her evidence Miss Yildiz said she did not know 165 times, that she could not remember 103 times and that she was not sure 80 times.[61]When asked in cross-examination about the alleged meeting of 8 June, Miss Yildiz thought that she “definitely would have spoken to Will La Bella” but was not sure that she had spoken to Mr Wilcock as well. Questioned about who she understood to have been at the meeting, she said that she could not remember exactly who was there. She was unable to give a clear account of what she had been told.[62]Questioned about whether she remembered Mr Scott requesting her on 15 June to make a second payment to the Charles Barber account, she seemed none too sure; she said, “I think I do remember this.” Pressed on why Mr Scott would be specifying that money should be paid to the Charles Barber account, she said, “I think they just knew.”[63]For his part, Mr Scott disputed that he had any knowledge of Charles Barber until 17 June 2010. Mr Scott said that, far from attending a meeting with Mr Wilcock and Mr La Bella on 8 June, he was told that day that Mr La Bella was in hospital. Mr Scott said that Mr Howarth and Mr Gibbins visited Mr La Bella in his office at Charles Barber’s premises on 10 June (and not 8 June), but he still did not know that money had been paid to Charles Barber; he understood from Mr Howarth that the car dealership where the meeting took place was “another one of La Bella’s investments”. Mr Scott first saw the £5 million CHAPS transfer form, he said, when he told Mr Wilcock at their meeting on 15 June that Global Marine had asked for the £7 million to be returned. Mr Scott explained what ensued as follows in his witness statement:
“At this point, Wilcock took out a document and held it in front of him and told me that we could not get it [i.e. the £7 million] back as it had already been spent. I saw the document was a CHAP transfer document but I did not see the detail. I did not see the amount of the payment nor the details of the payee. However, he told me that he may be able to transfer the insurance policy and still issue the SBLC so I was a little less concerned about the document or the funds that had been paid for the insurance.”
[64]On Mr Scott’s evidence, it was on 17 June that he saw that the CHAPS form named Charles Barber as the transferee. He said this in his witness statement:
“In the late afternoon of 17 June, a meeting was scheduled to take place with La Bella to discuss recovering the £7 million. Prior to that meeting, I called Wilcock and asked him to fax me a copy of the CHAPS document that he had had [with] him in the meeting on 15 June. In that call, Wilcock said that although the form referred to £5m having been transferred, in fact only £3m had been paid. He sent it to me straight way. Although I saw that the payment was to Charles Barber & Sons Limited, I had no idea who they were. I sent this to Mr McNally as I knew he was extremely frustrated in [relation] to the insurance payments.”
[65]This account ties in with evidence given by Mr McNally. Mr McNally said that the first he knew of funds having been remitted to the Charles Barber account was when Mr Scott faxed the CHAPS transfer from to him on 17 June 2010. Mr McNally said that he assumed Charles Barber was an insurance broker, but “immediately carried out research on Charles Barber and at 16:56 reported to Stephen Scott that Charles Barber appeared to be a car dealership”.[66]It was put to Mr McNally in cross-examination that an email he sent Mr Zacharias on 16 June 2010 indicated that he already knew that money had been paid to Charles Barber. Mr McNally said in the email that it would be necessary to work out certain matters in relation to the £2 million he had transferred to Zacharias Taylor that day “together with further funds that I believe your clients may be holding”. Mr McNally was adamant, however, that these words did not refer money paid to Charles Barber. He explained:
“I didn’t know whether he was holding further funds or not. I had heard various stories as to funds having been transferred from Landmark’s account to Zacharias’ account, and so I was trying to cover that off in that eventuality. Again I come back to what I said earlier, I consistently asked for confirmation as to where funds had been and sent from the Landmark account, and I was never given that confirmation, despite numerous pieces of correspondence and attempts at phone calls. So for all I knew, there could have been funds that had been sent from Landmark to Zacharias’ client account. I didn’t know at the time.”
[67]In contrast, Mr La Bella, who attended to give evidence following the service of a witness summons, maintained that Mr Howarth and Mr Gibbins came to Charles Barber’s premises unannounced on 8 June 2010 to see him and Mr Wilcock. According to Mr La Bella:
“During the course of that meeting, a conference call took place in the board room of Charles Barber’s showroom attended by me, Mr Howarth, Mr Gibbins, Mr Wilcock and Mr Mullins who was in Spain. Michael Howarth and Martin Gibbins were aware that funds had been transferred to the Charles Barber account which was controlled by Mr Wilcock and me. Mr Howarth and Mr Gibbins knew that there had previously been problems with transferring money from A to B and that the Charles Barber accounts had been utilised to release the funds prior to transmission to the broker.”
[68]This account differs somewhat from Miss Yildiz’s. Miss Yildiz referred to the supposed meeting of 8 June having been in London and to Mr Scott having been present at it. Mr La Bella, on the other hand, said that the meeting was in Northwich and that Mr Scott was not there. More importantly, no trace of the alleged meeting has been identified in the contemporary documents, and Mr La Bella made no reference to it at earlier stages of the litigation. As was pointed out by Mr Iain Daniels, who appeared for Global Marine, Mr La Bella had prepared three witness statements, an affidavit and two draft defences before judgment in default was finally obtained against him, but none of them made any mention of a meeting on 8 June. More recently, Mr La Bella provided a witness statement for the purposes of the hearing before the Solicitors Disciplinary Tribunal. Once again, there was no reference to an 8 June meeting. It is also relevant to note that the evidence available to me strongly suggests that the events with which I am concerned involved a fraud in which Mr La Bella was complicit.[69]I should also mention evidence that Mr La Bella gave about a conversation with Mr Ruhan on 16 June 2010. He said in his witness statement:
“Ms Yildiz was at my home, along with Mr Woods in the late morning of 16 June 2010. I remember taking a telephone call from Mr Ruhan while being outside. During our conversation, Mr Ruhan told me that further funds should be transferred out to ensure that the deal went through. We agreed that an additional sum of £1.5M should be released by Landmark to top up the funds that had been transferred to Spain.”
For her part, Miss Yildiz spoke of remembering that Mr La Bella was on the telephone to Mr Ruhan while she was “having a sandwich at a pub in the sunshine near Will’s house”.[70]While I do not dismiss the possibility that Mr La Bella spoke to Mr Ruhan on the telephone at lunchtime on 16 June, the idea that he asked Mr La Bella to make an additional payment of £1.5 million at that stage makes little sense. One oddity is that Mr La Bella claimed in cross-examination that he asked Miss Yildiz to make a payment of £2 million, not £1.5 million; as Mr Nigel Burroughs, who appeared for Landmark and Miss Yildiz, accepted, Mr La Bella’s evidence in this respect was rather confusing. In any case, it would have been strange for Mr Ruhan to request Landmark to make a further payment when Mr McNally was repeatedly insisting that all available money should be returned to him. Miss Yildiz suggested that Mr McNally had not been kept up-to-date, but the evidence does not appear to me to sustain that proposition. Another problem with Mr La Bella’s evidence about his conversation with Mr Ruhan is that Miss Yildiz would seem to have authorised the £1.5 million transfer before she would have had “a sandwich at a pub in the sunshine near Will’s house”. It is significant, too, that Mr La Bella did not mention his supposed conversation with Mr Ruhan until his recent evidence.[71]The truth, in my view, is that Global Marine did not authorise the payments to Charles Barber. The likelihood, I think, is that Mr Scott’s account is substantially correct and that he did not know that any money had been paid to Charles Barber until 17 June. I do not accept that any relevant meeting took place on 8 June, that there was any reference to Charles Barber or Brooklands when Miss Yildiz spoke to Mr Scott on the telephone on 15 June, or that Mr Ruhan told Mr La Bella to make a further transfer on 16 June.[72]There is, moreover, force in Mr Daniels’ submission that points Miss Yildiz has made would not establish a defence even if I accepted them. Take, for example, Miss Yildiz’s evidence about the £3 million payment. Miss Yildiz said that Global Marine believed that this was “effectively to pay for the insurance”. Similarly, as regards her 15 June conversation with Mr Scott, Miss Yildiz accepted in cross-examination that even on her account Mr Scott’s position was that “the risk [was] still on [her] to make sure [the payment was] for insurance”. In the light of such comments, it is hard to see how Global Marine could be said to have accepted that any of the £7 million should be used for anything other than insurance or that the 26 May undertakings should be varied so that Landmark and Miss Yildiz were not liable to return the money if no insurance policy was ultimately issued.[73]It is noteworthy that the supposed meeting on 8 June could not explain why Miss Yildiz made the £3 million payment. By the time of the alleged meeting, Miss Yildiz had already, it seems, both signed the £5 million CHAPS transfer form and authorised the £3 million transfer that was in fact effected. On 16 June, Miss Yildiz made the £1.5 million payment in the teeth of demands from Mr McNally for the return of the £7 million.[74]Miss Yildiz explained that she would not have made the two payments if she had not thought that they were proper. She had, I gather, been led to believe that Charles Barber was Platinum’s UK partner, and she derived comfort from the fact that Mr La Bella had control over the Charles Barber account. Even now, Miss Yildiz sees no reason not to trust Mr La Bella. I am afraid, however, that Miss Yildiz’s confidence is misplaced. It seems to me that Mr Daniels must be right that Miss Yildiz’s resistance to doing as Mr La Bella asked her was eventually overcome by a combination of aggression and false promises, from Mr La Bella in particular, with tragic consequences.

Were Miss Yildiz and Landmark released?

[75]Landmark and Miss Yildiz contend that they were released from any further liability to Global Marine as a result of a meeting on 17 June 2010. Their Amended Defence says this on the subject:
“At a meeting on 17 June 2010 at [Global Marine’s] offices, it had been agreed that, if [Mr La Bella] arranged for the £2 million to be sent from [Landmark’s] client account to [Global Marine], [Global Marine] would not pursue either [Mr La Bella] or [Landmark and Miss Yildiz] for the balance of the £7,000,000 paid to [Landmark] and subject to the Undertaking. The meeting was attended by [Mr La Bella], PJ Woods (a colleague of [Mr La Bella]), Andrew Ruhan, Stephen Scott, Michael Howarth and Martin Gibbins.”
[76]Miss Yildiz explained in her witness statement that she had been told by Mr La Bella on 17 June 2010 that her undertakings had been taken over by Mr Zacharias and that she was no longer bound by them. She also said that Mr Mullen, Mr Wilcock and Global Marine had subsequently confirmed what Mr La Bella had told her, including that she had been released from her undertakings.[77]Mr La Bella said this about the 17 June meeting in his witness statement:
“At that meeting the funds which had been transferred to Landmark were discussed. It was agreed that if certain monies were returned, [Global Marine] agreed that any obligation on Coolmead or its solicitors to return funds would be extinguished. Those funds were as follows: 8.1 The £2M which Landmark held in its client account; and 8.2 A further £2M comprising the funds left in the Charles Barber account which amounted to approximately £1.83M; and a further £170k from residual funds left in the accounts of Landmark. It was agreed that the money which had already been spent on the insurance would be put towards that use by Asia Horizon. It was not a question of [Global Marine] foregoing the funds that had already been utilised but rather that Mr Wilcock had confirmed to [Global Marine] at a meeting on the previous day (16 June 2010) that money had been transferred to Spain in furtherance of the purchase of the insurance ….”
[78]For his part, Mr Scott accepted that a meeting took place at Global Marine’s offices on 17 June at which he, Mr La Bella, Mr Woods (an associate of Mr La Bella and, seemingly, the recipient of the £50,000 payment mentioned in paragraph 47 above), Mr Howarth and Mr Ruhan were all present. According to Mr Scott, Mr La Bella said that he had £2 million of the £7 million, that Landmark held another £2 million and that the remaining £3 million had been spent on an insurance policy. Mr Scott explained as follows in his witness statement:
“[Mr La Bella] said that he could not return the £3 million because it had been spent on an insurance policy. I repeatedly pointed out to him that wording of the undertaking was clear and that, if the SBLC was not issued, the premium was always to be returned to us and that we required him to return it. La Bella accepted that this was the agreement but said that it would take him longer to return the £3 million than the £4 million. La Bella said that he knew we were working with Asia Horizon now in order to get the SBLC in place of Coolmead, and he suggested that maybe the insurance policy could be transferred to Asia Horizon, and that he could be released from repaying the final £3 million if Asia Horizon produced the SBLC. Although at this stage I had no reason to believe that La Bella had not arranged for an insurance policy and therefore that it could not be transferred to Asia Horizon, Andy Ruhan and I were keen to keep the deal separate and we informed La Bella that he remained liable for the return of the full £7 million if he could not arrange that [Global Marine] received the full value in some other way. At no time did we agree that La Bella could transfer the insurance policy (which was subsequently found to be non-existent in any event) to Asia Horizon. Further, we did not agree at any time that La Bella and Coolmead were somehow released from their liability. At no time did we release Landmark either impliedly or expressly from its undertaking given to Simon McNally …. The meeting concluded and the position was that if [Global Marine] could somehow get value for the insurance policy, we could consider that at the time and we would not be unreasonable. However, it was made clear that a separate deal would have to be concluded if this was going to happen.”
[79]Mr Scott adhered to this account during his oral evidence. When it was put to him that he was desperate to salvage the deal, he said:
“I think there’s a difference between being desperate to do a deal and acting desperately. I certainly wasn’t in the business of acting recklessly with somebody else’s money.”
Mr Scott also said:
“there would be no sense in our, as in Global Marine Drillships, releasing Landmark from her undertaking given that we had no similar undertaking for the return of the monies in the event that the insurance policy was never called upon or never properly put into play or indeed the SBLCs weren’t issued, so there would be no sense for us to release her from her undertaking.”
[80]There is considerable force in these comments. Further, Mr Scott’s evidence tallies with the email Mr McNally sent to Miss Yildiz at 10.04 pm on 17 June. As explained in paragraph 40 above, Mr McNally told Miss Yildiz in that email that she had not been released from her undertaking. During his oral evidence, Mr McNally said that it had been “absolutely clear” to him that there was “no release or variance of the undertaking” and that he would have derived that understanding from discussions with Mr Scott.[81]In contrast, Mr La Bella’s position has not been consistent. In his recent witness statement, he said that Coolmead, Landmark and Miss Yildiz were to be released from further liability if sums totalling about £4 million, including “the funds left in the Charles Barber account which amounted to approximately £1.83M”, were returned. In the past, however, Mr La Bella has claimed (even more implausibly) that Global Marine agreed to accept just £2 million from Landmark. Thus, in a witness statement dated 2 July 2010 Mr La Bella said:
“[Global Marine] (via those people who attended at that meeting) confirmed that the agreement with Coolmead was at an end and that [Landmark] was to return £2,000,000 of the £7,000,000 which had been transferred to it by [BPL]. The figure of £2,000,000 was agreed to because I explained that £5,000,000 of the original £7,000,000 had already been spent or committed to on various intermediaries and that these had to be paid regardless …. It was agreed that [Global Marine] would deal directly with Asia Horizon moving forward and that Coolmead’s obligations to [Global Marine] were at an end. It was also agreed that if the remaining £2,000,000 was returned, then [Global Marine] would consider that to be an end of the matter and no further action would be taken against Coolmead or [Landmark or Miss Yildiz] for any alleged breach of undertaking and the return of the now spent £5,000,000 …. As far as I am concerned, [Global Marine] is not entitled to the refund of the money based on the agreement made at the meeting …. Coolmead honoured its part of the bargain by repaying the £2,000,000 to [Global Marine].”
In a draft defence the truth of which Mr La Bella confirmed in a witness statement dated 21 September 2010, Mr La Bella similarly asserted:
“Howarth and Ruhan on behalf of [Global Marine] accepted that [Global Marine] would benefit from the arrangements and payments already paid by Coolmead, and it was agreed by Ruhan and Howarth on behalf of [Global Marine] that if Coolmead returned the sum of £2m., that sum would be accepted in full and final satisfaction of all claims [Global Marine] may have against [Mr La Bella] and Coolmead.”
This version of events plainly differs substantially from that which Mr La Bella now puts forward. It is, moreover, hard to see how it can be satisfactorily reconciled with the fact that in July 2010 Mr La Bella thought it appropriate to agree to make arrangements for the return to Global Marine of the “approx 3.5M” that was “outstanding to them from the original 7M” (see the email from Mr La Bella to Miss Yildiz of 21 July quoted in paragraph 49 above).[82]In all the circumstances, I have no hesitation in accepting Mr Scott’s evidence and rejecting that given by Mr La Bella. I do not believe that Global Marine agreed to release Mr La Bella, Landmark or Miss Yildiz from further liability.

Other matters

[83]Miss Yildiz has come to believe that Global Marine was guilty of fraudulent conduct in relation to the events with which I am concerned. She said in a witness statement:
“Since these proceedings were issued against myself and Landmark I have been made aware that the whole transaction was a fraud and that the ultimate aim of the whole deal was either a bank fraud or other fraud or to get at my professional indemnity insurance – or both.”
[84]Miss Yildiz’s understanding doubtless reflects what she has been told by Mr La Bella. Mr La Bella asserted as follows in the witness statement he provided in connection with the disciplinary proceedings against Miss Yildiz:
“I am now convinced that what happened was effectively a set up – an elaborate deception worked upon me by Global Marine and its associates for their own nefarious ends. I believe that Platinum, the broker that I had dealings with, were linked to Global Marine/ [Bridgehouse] all along, and that the money which was paid out [and] which they now seek to recover in the High Court proceedings has been held by them or their associates all along. It is my strong belief that this will be the ultimate conclusion that is reached in the High Court proceedings.”
[85]Far, however, from it being the case that such far-fetched allegations have been established, they (rightly) do not even form part of the case advanced by Mr Burroughs in his realistic and attractively presented submissions. The evidence indicates that Global Marine was the victim of fraud, not that it was engaged in it.

Conclusion

[86]This is a sad case. It is a tragedy that Miss Yildiz did not continue to hold out against Mr La Bella’s demands. The fact that she was subjected to intense pressure does not, however, provide her with a defence to the claims that Global Marine makes, and neither of the defences in fact advanced on her behalf and that of Landmark has been made out. In the circumstances, I shall give judgment for Global Marine.

Cited in 1 later judgment