“3.1 The Chairman explained that [the Sheikh] owned 99 ordinary shares in [JJW Guernsey] and [the Company] owned 1 share in [JJW Guernsey] and that together these constituted the entire issued share capital of [JJW Guernsey]. 3.2 The Chairman explained that [the Sheikh] and [the Company] (together the “Sellers”) wished to sell their entire holdings in [JJW Guernsey] to [JJW Inc] (the “Buyer”) in exchange for shares in [JJW Inc] equal in value to their respective holdings of shares in JJW Guernsey (the “JJW Share Exchange”). 3.3 It was further noted that the Company wished to transfer to [JJW Inc] shares that it owns in [Erste] in exchange for shares in [JJW Inc] (“the Erste Share Exchange”)”
“The sole asset of the Company is its minority shareholding in JJW Limited In light of the content of Mr Kinnon’s report to creditors on30 October 2013 , this appears to be a reference to JJW Guernsey and thus a misunderstanding of the factual position as set out in the Sheikh’s 2013 Affidavit and in the affidavit of Mr Yussouf. of which Sheikh Mohamed holds the remaining majority shareholding. The value of that asset is in excess of the total amount of claims in the liquidation…”
“The Company’s sole asset comprises its investment in the entire issued share capital of JJW Hotels and Resorts Inc (i.e. JJW Inc) which in turn owns 1,020,873 shares in JJW Limited (i.e. JJW Guernsey), representing 11.2% of JJW Limited’s entire issued share capital.”
“The sole asset of the Company is its shareholding in [JJW Guernsey]…the holding company for a portfolio of real estate and hotel property investments. It is my understanding that you are the ultimate beneficial owner of [JJW Guernsey]. In order to protect the interests of the creditors in the liquidation of the Company, I am entitled to register my interest in the Register of Shareholders of [JJW Guernsey] and to formally inhibit any sale of the assets of [JJW Guernsey] where such a sale would be to the detriment of the creditors of the Company. However, as an alternative, and as discussed with Mr Salfiti of your office, I am prepared to accept an undertaking from the directors of [JJW Guernsey], as a duly certified resolution of the board, in the terms of the attached draft”
“Representatives of the Company, Amjad Salfiti and Falak Yussouf have advised of the possible existence of a secured charge over the assets of the Company in favour of JJW Limited [i.e. JJW Guernsey]. In the event that such a security exists please provide evidence of this to me within 14 days of the date of this letter.”
“2.9 it is not a requirement of British Virgin Islands law that the Instruments of Transfer be dated and the Instruments of Transfer are not dated but the Director has nonetheless ascertained that the Instruments of Transfer were signed for and on behalf of the transferor on the 6th day of July 2010 (the “Signing Date”); 2.10 accordingly, beneficial ownership of the Transferring Shares transferred to [JJW Guernsey] on the Signing Date; 2.11 notwithstanding that the Instruments were signed on the Signing Date and notwithstanding that the Intention of Partners was that the Instruments of Transfer would be registered on the register of members of the Company..., owing to an administrative oversight the Register of Members has never been updated to reflect the transfer of the Transferring Shares; and 2.12 it is proposed to now formally approve the transfer of the Transferring Shares and accordingly approve the update to the Register of Members required to reflect the transfer of the legal ownership of the Transferring Shares.”
“3.1 the Instruments of Transfer are each in a form consistent with the Company’s articles of association and the Act and the transfer of the Transferring Shares to [JJW Guernsey] is authorised and approved by the directors; 3.2 the Old Share Certificates be cancelled and a new share certificate be issued to [JJW Guernsey] in respect of the Transferring Shares; and 3.3 the registered agent of the Company, Maples Corporate Services (BVI) Limited, be and is hereby authorised and instructed by copy of these resolutions to: (a) update the Company’s Register of Members to reflect the transfer of the Transferring Shares to [JJW Guernsey]; and (b) issue a new share certificate to [JJW Guernsey] in respect of the Transferring Shares and to affix the Seal of the Company to such Share Certificate in accordance with the articles of association of the Company.”
“My investigations into the affairs of the Company revealed that the Company may own shares in a BVI domiciled company called Gulf Jadawel Limited (“Jadawel”). Citco BVI Limited is the registered agent of Jadawel on record”
“[t]o the extent that [the Liquidators] seek to open any kind of case in fraud beyond the specific allegations that he’s made about dishonesty in the new paragraph 53A of [the PoC] I will strenuously object to it…”
“130…Leggatt J’s formulation suggests that a separate and stronger principle enables the court to determine uncertainty as to the extent of loss against the defendant where he has “destroyed or wrongfully prevented or impeded the claimant from adducing relevant evidence”
“In the circumstances…once it is shown that a company director has received company money, it is for him to show that the payment was proper…”
“[15] That was the predicament in this case. The liquidator could not show that Munir and Zafar were de facto directors from the company’s books and papers because the directors had not handed over the necessary documents to the administrators. The judge held, in the context of Munir’s denial that he was a de facto director despite the fact that he had acted as chairman of the meeting convened to pass a resolution for voluntary liquidation, that, had it been necessary to do so, he would have been entitled to draw adverse inferences against the respondents to the proceedings… [16] The approach of the judge in this case was to seek to test the evidence by reference to both the contemporary documentary evidence and its absence. In my judgment, this was an approach that he was entitled to take. The evidence of the liquidator established a prima facie case and, given that the books and papers had been in the custody and control of the respondents to the proceedings, it was open to the judge to infer that the liquidator’s case would have been borne out by those books and papers. [17] Put another way, it was not open to the respondents to the proceedings in the circumstances of this case to escape liability by asserting that, if the books and papers or other evidence had been available, they would have shown that they were not liable in the amount claimed by the liquidator. Moreover, persons who have conducted the affairs of limited companies with a high degree of informality, as in this case, cannot seek to avoid liability or to be judged by some lower standard than that which applies to other directors, simply because the necessary documentation is not available”
“[22]…the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of the witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”
“[48] In this regard I would say something about the importance of contemporary documents as a means of getting at the truth, not only of what was going on, but also as to the motivation and state of mind of those concerned. That applies to documents passing between the parties, but with even greater force to a party’s internal documents including e-mails and instant messaging. Those tend to be the documents where a witness’s guard is down and their true thoughts are plain to see. Indeed, it has become a commonplace of judgments in commercial cases where there is often extensive disclosure to emphasise the importance of the contemporary documents. Although this cannot be regarded as a rule of law, those documents are generally regarded as far more reliable than the oral evidence of witnesses, still less their demeanour while giving evidence.”
“[88] Gestmin is not to be taken as laying down any general principle for the assessment of evidence. It is one of a line of distinguished judicial observations that emphasise the fallibility of human memory and the need to assess witness evidence in its proper place alongside contemporaneous documentary evidence and evidence upon which undoubted or probable reliance can be placed….But a proper awareness of the fallibility of memory does not relieve judges of the task of making findings of fact based upon all of the evidence. Heuristics or mental short cuts are no substitute for this essential judicial function. In particular, where a party’s sworn evidence is disbelieved, the court must say why that is; it cannot simply ignore the evidence.”
“Q…what you have done in your witness statements is seek to describe what you think might have happened, your opinion about what might have happened, based on the documents you’ve read? A. Yes, it’s using our, again, professional judgment in looking at documents and trying to assess them.”
“yes, yes yes, I never worked it out and I am not the best person to ask as well…I need to look into it in order for me to give accurate information”. ii) Mr Deen initially denied working for the Sheikh notwithstanding the contemporaneous evidence showing him to have been on the record for the Sheikh in these proceedings between9 August 2019 and16 January 2020 . Later, however, his own evidence indicated a clear working relationship; he confirmed that he spoke to the Sheikh several times a week and that he took direction from the Sheikh on a regular basis. It is clear from that evidence, and I find, that Mr Deen acted as the Sheikh’s agent and his main conduit with his external lawyers. iii) Despite his statement focussing on the steps he had taken to produce documentary evidence, he was unable to provide any real detail as to what he had done and when it was put to him that various investigations had not happened his response was “I really can’t remember…I am not sure if that case or other case, but I think we couldn’t go before 2014. I might be wrong…I really can’t remember…”
“Do you understand that it’s [the Sheikh’s] case that he relied upon you to explain to him legal documents in relation to the company in liquidation?” to which Mr Salfiti responded “That’s not true though”
“findings of fact made by another decision maker are not to be admitted in a subsequent trial because the decision at that trial is to be made by the judge appointed to hear it (“the trial judge”) and not another. The trial judge must decide the case for himself on the evidence that he receives, and in the light of the submissions on that evidence made to him. To admit evidence of the findings of fact of another person, however distinguished, and however thorough and competent his examination of the issues may have been, risks the decision being made, at least in part, on evidence other than that which the trial judge has heard and in reliance on the opinion of someone who is neither the relevant decision maker nor the expert in any relevant discipline, of which decision making is not one. The opinion of someone who is not the trial judge is, therefore, as a matter of law, irrelevant and not one to which he ought to have regard”
“[23]. The salient observation is that a section 120(1) enquiry is largely, though by no means entirely, a subjective one. The courts have adopted a non-interventionist attitude when reviewing business decisions. The authorities uncontroversially establish this. Jonathan Parker J in Regentcrest plc (in liquidation) v Cohen and another elucidated that good faith is ascertained by reference to actual subjective state of mind. He stated: “The duty imposed on directors to act bona fide in the interests of the company is a subjective one...The question is not whether viewed objectively by the court, the particular act or omission which is challenged was in fact in the interests of the company; still less is the question whether the court, had it been in the position of the director at the relevant time, might have acted differently. Rather, the question is whether the director honestly believed that his act or omission was in the interests of the company. The issue is as to the director’s state of mind. No doubt, where it is clear that the act or omission under challenge resulted in substantial detriment to the company, the director will have a harder task persuading the court that he honestly believed it to be in the company’s interests; but that does not detract from the subjective nature of the test.” (My emphasis). [24]. Regentcrest plc further expanded on the words of Lord Greene MR in the case of Re Smith & Fawcett Ltd where he held that directors must exercise their discretion bona fide in what they consider – not what a court may consider – is in the interest of the company, and not for any collateral purpose.” [25]. Nonetheless, a section 120(1) enquiry has an objective overlay as bona fides cannot be the sole test, “otherwise you might have a lunatic conducting the affairs of the company and paying away its money with both hands in a manner perfectly bona fide yet perfectly irrational”
“I believe a BVI court would follow what I understand to be the position in England: the appointment of a person as a director of a company does not take effect unless the person properly agrees to the appointment” (a statement which was not challenged by Mr Fay KC). I was referred to Re British Empire Match Co Ltd(1888) 59 LT 291 which is support for this proposition; Kay J held at page 292 that a person who had “never agreed to be a director”, “never was a director”
“Supplementary Information”
“The assets, liabilities and owner’s equity of the Group by entity as of31 December 2008 and 2007 are presented below as supplemental information”
“175. (1) Subject to subsection (2), with effect from the commencement of the liquidation of a company (a) the liquidator has custody and control of the assets of the company; (b) the directors and other officers of the company remain in office, but they cease to have any powers, functions or duties other than those required or permitted under this Part; (c) unless the Court otherwise orders, no person may (i) commence or proceed with any action or proceeding against the company or in relation to its assets, or (ii) exercise or enforce, or continue to exercise or enforce any right or remedy over or against assets of the company; (d) unless the Court otherwise orders, no share in the company may be transferred; (e) no alteration may be made in the status of or to the rights or liabilities of a member, whether by an amendment of the memorandum or articles or otherwise; (f) no member may exercise any power under the memorandum or articles, or otherwise, except for the purposes of this Act; and (g) no amendment may be made to the memorandum or articles of the company. (2) Subsection (1) does not affect the right of a secured creditor to take possession of and realise or otherwise deal with assets of the company over which that creditor has a security interest. (3) Any thing or matter done or purported to be done in contravention of subsection (1) is void and of no effect”
“Insofar as a director is in possession of property that belongs to the Company, he should deliver that up to a liquidator. That is simply a matter of property.”
“if this is right, it simply begs the question of how to determine when a person is subject to fiduciary obligations if not by analysing the nature of their relationship with the person to whom the obligations are owed”
“the inquiry of primary relevance is not into the label but instead the basis on which a defendant has assumed responsibility for the assets in question and how they have dealt with them”
“Regrettably, however, the expressions “constructive trust” and “constructive trustee” have been used by equity lawyers to describe two entirely different situations. The first covers those cases already mentioned, where the defendant, though not expressly appointed as trustee, has assumed the duties of a trustee by a lawful transaction which was independent of and preceded the breach of trust and is not impeached by the plaintiff. The second covers those cases where the trust obligation arises as a direct consequence of the unlawful transaction which is impeached by the plaintiff. A constructive trust arises by operation of law whenever the circumstances are such that it would be unconscionable for the owner of property (usually but not necessarily the legal estate) to assert his own beneficial interest in the property and deny the beneficial interest of another. In the first class of case, however, the constructive trustee really is a trustee. He does not receive the trust property in his own right but by a transaction by which both parties intend to create a trust from the outset and which is not impugned by the plaintiff. His possession of the property is coloured from the first by the trust and confidence by means of which he obtained it, and his subsequent appropriation of the property to his own use is a breach of that trust. …. The second class of case is different. It arises when the defendant is implicated in a fraud. Equity has always given relief against fraud by making any person sufficiently implicated in the fraud accountable in equity. In such a case he is traditionally though I think unfortunately described as a constructive trustee and said to be “liable to account as constructive trustee.”
“as directors of an English company who are assumed to have participated in a misappropriation of an asset of the company, the defendants are to be regarded for all purposes connected with section 21 as trustees. This is because they are entrusted with the stewardship of the company’s property and owe fiduciary duties to the company in respect of that stewardship”
“As was mentioned in Brandeaux Advisers (UK) Ltd v Chadwick[2011] IRLR 224 at [47], Item Software v Fassihi is a somewhat controversial decision. Arguably it breaks new ground in treating a fiduciary duty as prescriptive rather than merely proscriptive. Its result can perhaps now be justified also by reference tos 172 of the Companies Act 2006 , which came into force on1 October 2007 . The duty to promote the success of a company which that provision imposes can be said to be expressed in prescriptive terms (a director ‘must act in the way he considered, in good faith, would be most likely to promote the success of the company’; my emphasis)…”
“Mrs Justice Smith: What should they have done to surrender the custody and control of the shares to the Liquidator? Mr Curl: …So the short answer to your Ladyship’s question is that the Sheikh and Ms Al Jaber should have provided co-operation, which means responding to correspondence, explaining what your position is in relation to an asset”
“Mrs Justice Smith: So the complaint is that there was a failure to co-operate with the liquidator by informing the liquidator of any encumbrances… Mr Curl: Yes. So essentially, there is a dispute over who is entitled to those assets. Instead of engaging properly with that process, as he was required to do, after a period of confusion and non-co-operation, the majority of the assets were transferred away.”
“…the property right remains vested in the company but its custody and control passes from the directors to the administrators or liquidators on appointment and without the need for any further action on their part”
“Mr Curl…So essentially, there is a dispute over who is entitled to those assets. Instead of engaging with that process, as he was required to do, after a period of confusion and non-co-operation, the majority of the assets were transferred away”
“(1) Registered shares are transferred by a written instrument of transfer signed by the transferor and containing the name and address of the transferee; … (3) The instrument of transfer of a registered share shall be sent to the company for registration. (4) Subject to the memorandum or articles and to subsection (5), the company shall, on receipt of an instrument of transfer, enter the name of the transferee of the share in the register of members unless the directors resolve to refuse or delay the registration of the transfer for reasons that shall be specified in the resolution. (5) The directors shall not pass a resolution refusing or delaying the registration of a transfer unless this Act or the memorandum or articles permit them to do so. … (8) The transfer of a registered share is effective when the name of the transferee is entered in the register of members. (9) If the directors of a company are satisfied that an instrument of transfer has been signed but that the instrument has been lost or destroyed, they may resolve (a) to accept such evidence of the transfer of the shares as they consider appropriate; and (b) that the transferee’s name should be entered in the register of members, notwithstanding the absence of the instrument of transfer.”
“he was not able to clarify what he meant by it or provide any documentation or any evidence in that regard”
“2. TRANSFER OF SHARES 2.1 The Sellers [sic] hereby irrevocably transfers its legal and beneficial interests in the Company Shares to the Buyer free from Encumbrance in consideration of€56,755,600.00 (the “Consideration”) to be paid on demand by the Buyer to the Seller in such way that is mutually agreed by the Buyer and the Seller. 2.2 Upon receipt of the Consideration by the Seller, completion of the transfer of the Company Shares pursuant to this Agreement shall take place immediately, when 2.2.1 the Seller shall deliver to the Buyer a share transfer form duly executed by the Seller in respect of the Company Shares in favour of the Buyer and procure that the Company shall register such transfers and issue and deliver to the Buyer a certificate representing the Company Shares in the name of the Buyer; and 2.2.2 the Seller shall, at the request of the Buyer, do and execute or procure to be done and executed all such acts, deeds, documents and things as may be reasonably necessary to give effect to this Agreement.”
“Upon receipt of the Consideration by the Seller”
“The Chairman [the Sheikh] then informed the meeting that the Company [JJW Guernsey] wished to transfer its entire holding in [JJW Inc] (the “Buyer”) for a consideration of€56,755,600.00 to be paid on demand by the Buyer to the Company in such way that is mutually agreed by the Buyer and the Company (the “Transfer”).”
“An equitable charge may, it is said, take the form either of an equitable mortgage or of an equitable charge not by way of mortgage. An equitable mortgage is created when the legal owner of the property constituting the security enters into some instrument or does some act which, though insufficient to confer a legal estate or title in the subject matter upon the mortgagee, nevertheless demonstrates a binding intention to create a security in favour of the mortgagee, or in other words evidences a contract to do so…An equitable charge which is not an equitable mortgage is said to be created when property is expressly or constructively made liable, or specially, appropriated, to the discharge of a debt or some other obligation, and confers on the chargee a right of realisation by judicial process, that is to say, by the appointment of a receiver or an order for sale… It is not, I think, necessary to determine in the present case in what circumstances there is a true distinction between these two types of charge or precisely where it lies”
“…please note the Share Certificates are enclosed for you to kindly carry out the necessary reversal of ownership”
“A further feature of the tort of conspiracy, which is also found in criminal conspiracies, it that, as the judge pointed out…, it is not necessary to show that there is anything in the nature of an express agreement, whether formal or informal. It is sufficient if two or more persons combine with a common intention, or, in other words, that they deliberately combine, albeit tacitly, to achieve a common end. Although civil and criminal conspiracies have important differences, we agree with the judge that the following passage from the judgment of the Court of Appeal Criminal Division delivery by O’Connor LJ in R v Siracusa(1990) Cr. App. R. 340 at 349 is of assistance in this context: Secondly, the origins of all conspiracies are concealed and it is usually quite impossible to establish when or where the initial agreement was or when or where other conspirators were recruited. The very existence of the agreement can only be inferred from overt acts. Participation in a conspiracy is infinitely variable: it can be active or passive. If the majority shareholder and director of a company consents to the company being used for drug smuggling carried out in the company’s name by a fellow director and minority shareholder, he is guilty of conspiracy. Consent, that is agreement or adherence to the agreement, can be inferred if it is proved that he knew what was going on and the intention to participate in the furtherance of the criminal purpose is also established by his failure to stop the unlawful activity. Thus it is not necessary for the conspirators all to join the conspiracy at the same time, but we agree with the judge that the parties to it must be sufficiently aware of the surrounding circumstances and share the same object for it properly to be said that they were acting in concert at the time of the acts complained of. In a criminal case juries are often asked to decide whether the alleged conspirators were ‘in it together’. That may be a helpful question to ask, but we agree with [counsel for the defendants] that it should not be used as a method of avoiding detailed consideration of the acts which are said to have been done in the pursuance of the conspiracy. In most cases it will be necessary to scrutinise the acts relied upon in order to see what inferences can be drawn as to the existence or otherwise of the alleged conspiracy or combination. It will be the rare case in which there will be evidence of the agreement itself. Curiously this is such a case, although it appears to us that in crucial respects it is also necessary to draw inferences as to the extent of the agreement from what happened after it.”
“What is clear from the authorities is that it is necessary to look at all the particular facts of the case to establish whether there was a combination and whether someone participated, actively or passively in the conspiracy – being aware that someone was committing a potentially unlawful act, but (simply) not taking steps to stop it, may not suffice to demonstrate a combination, but it all depends on the circumstances, and in particular the position of the individual concerned.”
“Equitable compensation is apt to include a payment made to restore to a claimant the value of the assets or funds removed without authority by a trustee or other fiduciary, such as a director. It may also include reparation for losses suffered by the claimant…”. (See also Libertarian per Lord Millett NPJ at [168] and [170] and Davies v Ford[2021] EWHC 2550 (Ch) per David Holland KC at [106]-[107]). vi) The purpose of a substitutive order (referred to by Lord Toulson in AIB v Redler as a “restitutionary order”) is to “replace a loss to the trust fund which the trustee has brought about” (AIB v Redler at [65]). vii) “The basic rule is that a trustee in breach of trust must restore or pay to the trust estate either the assets which have been lost to the estate by reason of the breach or compensation for such loss...If specific restitution of the trust property is not possible then the liability of the trustee is to pay sufficient compensation to the trust estate to put it back to what it would have been had the breach not been committed” (Target Holdings Ltd v Redferns[1996] 1 AC 421 , per Lord Browne-Wilkinson at 434 C-D). This approach was approved in AIB v Redler by Lord Toulson at [67] in the following terms: “[i]f the trustee makes an unauthorised disposal of trust property, the obvious remedy is to require him to restore the assets or their monetary value. It is likely to be the only way to put the beneficiaries in the same position as if the breach had not occurred. It is the real loss which is being made good”
“had actually obtained [the] security which was taken into account in concluding that no loss flowed from the breach of trust in the premature release of the loan monies. This was the context of the question posed by Lord Browne-Wilkinson at the start of his speech: ‘Is the trustee liable to compensate the beneficiary not only for losses caused by the breach but also for losses which the beneficiary would, in any event, have suffered even if there had been no breach?’. As Lord Toulson said in AIB at [67], ‘the finance company was seeking to be put in a better position on the facts…than if the solicitors had done as they ought to have done’”. ii) (at [45]-[48]), the impact of hypothetical events did arise in AIB v Redler (there was always a risk of the borrower defaulting but the absence of a legal charge increased the Bank’s exposure). In that case, the court rejected the claim for compensation equal to the loan monies released by the solicitors and awarded compensation by reference to the value of the legal charge for which the Bank had bargained but never received. Lord Toulson said at [62]: “…it would not in my opinion be right to impose or maintain a rule that gives redress to a beneficiary for loss which would have been suffered if the trustee had properly performed its duties”
“…the directors are always the parties who are best to have the information. The information that Maples would provide, in our view, was limited, and…most of the law firms and parties will…protest and object, so its not a cheap and easy exercise, and it may not have got us much useful information. The Sheikh, in our view, was the best placed person, or some of the staff that he had working with him, which is why we did Mr Yussouf and Mr Salfiti as well, were the best placed to be able to give us information regarding the company.”
“…there is no set off available between a debt due to a misfeasant and his liability to repay the moneys which he has been ordered to pay in misfeasance proceedings”