Grupo Torras SA & Ors v Sheikh Fahad & Ors [1999] EWHC 300 (Comm)

"Mr de la Rosa gave me a copy of a draft agreement that was never signed, between Torras Hostench and KIO for a loan from the office to T-H. This loan for US$27.4m was made by Kokmeeuw rather than KIO, and is past its original due date. Mr de la Rosa is aware that I would like to have this matter put in good order, and FKJ [i.e. Mr Jaffar] has emphasised this to him as well. ...."

"1.- The invoice amount was paid directly by our subsidiary to a third party. 2.- In consideration for you having acted as an agent in this matter, we will arrange for a fee of 10 pounds to be paid to yourselves."

"As per our telecon, you shall probably be receiving on Monday, July 31st a transfer from Royal Bank of Scotland, London branch, in the amount of US$ 5 million. The transfer to you will not indicate any account number. As soon as you receive this transfer, please apply it to account 101 900 [sic] reference STUART."

"that in view of imminent international deals it would be beneficial to purchase a company to act as agent for Oakthorn Ltd. It was noted that British Virgin Islands company called Allsports Promotions Ltd. was available and after discussion it was resolved to purchase the said company immediately."

"However, I understand that you have already been informed that Oakthorn and Croesus are involved in the strategic reorganization of the Group including divestments and forthcoming mergers affecting certain group businesses. I confirm to you that this reorganization will not affect the Company in any way."

"The General Meeting hereby accepts the resignations presented and unreservedly approves the management activities undertaken by the same in the exercise of their appointments, thanking them for the services rendered, especially the Deputy Chairman Mr ... de la Rosa and - posthumously - Mr ... Ball"

"The General Meeting of shareholders, as highest body of the company, considers that the actions initiated by the company and currently in process obviously demonstrate the existence of the company's clear desire to file legal actions against its former directors. Although the text of the said resolution is not formally recorded in the minutes of previous General Meetings of shareholders, the fact is that the company's will on this question is clear and the successive General Meetings of shareholders have so considered at all times. Nevertheless, in order to avoid any doubt and without accepting that the claims were not duly and effectively initiated on behalf of the company at the time they were filed, the General Meeting of shareholders of the company hereby ratifies and approves the commencement and continuation by the company of the English actions and the related actions, as well as all related or modified actions, in particular, against all or some of the former directors and executives who held office at any time during the period from 1986 to 26 May 1992, which ratification and approval shall be considered effective as from the date of commencement of the said proceedings. The terms "

"It must be accepted that the purpose of the Law is to facilitate the enforcement of liability and not to create formal obstacles, which could be regularised easily."

"All matters of procedure are governed by the domestic law of the country of the court to which the country wherein any legal proceedings are taken belongs (lex fori)."

"The illegality of the act derives either from its violation of the law or the Articles of Association, or from having been carried out without the diligence due: 'The directors shall be liable to the company, to the shareholders and to the creditors of the company for any damage they cause through acts contrary to the law or the articles of association, or acts carried out without the diligence with which they ought to perform their duties.' (article 133.1, L.S.A.)"

"It is well recognised that where a solicitor starts proceedings in the name of a plaintiff - be it a company or an individual - without authority, the plaintiff may ratify the act of the solicitor and adopt the proceedings. In that event, in accordance with the ordinary law of principal and agent and the ordinary doctrine of ratification the defect in the proceedings as originally constituted is cured: see Danish Mercantile Co. Ltd. v. Beaumont [1951] Ch. 680, since approved by the House of Lords in Alexander Ward & Co. Ltd. v. Samyang Navigation Co. Ltd. [1975] 1 W.L.R. 673. The reason is that by English law ratification relates back to the unauthorised act of the agent which is ratified; if the proceedings are English proceedings the ratification which cures the original defect, which was a defect under English law, must be a ratification which is valid by English law."

".... the validating of the act of commencing proceedings by later ratification by those who clearly have authority to do so under Panamanian law on behalf of the plaintiffs must be a matter for English law."

"In fact, under the Spanish rules of procedure, the parties cannot ratify illegal or invalid legal proceedings, because they contain basically judicial acts, which have been carried out by a judicial body, which is in its very essence a Body of the Spanish State. And the validity of the acts of a Body of the Spanish State cannot depend and does not in any case depend on ratification, and therefore on the will, of an individual. .... In other words, the ratification of proceedings is a legal concept unknown to Spanish law."

"It is not possible to derogate from the system imposing civil liability on directors. The Law ensures that the method by which proceedings are brought should always be free from obstacles, assessing the standing to sue of those who might bring proceedings. However, it would be contrary to the purpose of the law if the requirement of the proceedings [the Shareholders' resolution] could not be derogated from. It must be accepted that the purpose of the Law is to facilitate the enforcement of liability and not to create formal obstacles, which could be regularised easily. In this sense, the theory supported by [Professors Cortes and Rojo] would be contrary to the legal system, relying on a non-essential requirement."

"However, as stated by Gullon Ballesteros in [Comentario del Codigo Civil, I, Madrid 1995] there is a tendency in the case-law to weigh the importance of the violation committed by the void act when determining the effects of the nullity considered broadly."

"Even if one assumes that the requirement of a resolution of the General Meeting is a mandatory provision, which it is not, it is certain that the initial absence of such a formality could not result in total nullity. Article 6.3 C.C. is a more flexible provision than the Professors suggest. That provision states: 'Any acts contrary to a mandatory and prohibitive provision are void, unless the provision itself provides that a particular breach shall have a different effect.'"

"However, one cannot underestimate (to avoid an "excessively strict" interpretation of the Law of 1951, as emphasised by the Supreme Court (see STS 7/2/1994) the well known legal principle that the rule established in art. 6.3 CC must be interpreted according to flexible, not rigid, criteria. Thus any inconsistency with the Law or any absence of legal formalities which may be simply incidental in relation to the act in question does not have to carry the maximum sanction of nullity. This sanction is only applicable when there are important factors present which characterise the act as a grave breach of the Law, or moral or public policy."

"This Court when considering the text of paragraph number 3 of art. 6, which has a precedent in paragraph number 1 of art. 4 of the old CC, has recognised its importance by finding - S. 1-3-1934 (735) - that it permits the remedy of fundamental or serious committed in legal or procedural acts - as for the latter, see arts. 238-243 LOP; however, although [this Court] recognises the above, it has felt compelled to limit its scope, establishing - SS 19-10-1944 (A1176) and 28-1-2958, (A554) - that this provision only formulates a legal principle of a very general nature - judgments, inter alia, of 8-101963 (A4072), 22-3-1965 (A1904), 1-8-1966 and 8-3-1966 (A304), 19-1-1967 (A182), 31-5-1968 (A3746), 14-12-1971 (A5237), 30-6-1978 (A2626) and 8-6-1979 (A247) - which means that it must be interpreted with flexible, not rigid, criteria, therefore not meaning that any inconsistency with any law must always carry the maximum sanction of nullity nor that it is necessary, for an act in breach of the Law to be valid, that such validity is expressly established in the Law. This legal provision - ss.17-2-1964 (A1152) and 28-7-1986 (A4621) cannot be used indistinctly to determine whether or not an act is void, but acts in breach of the Law must be classified in three different groups: first Acts whose nullity is based on a specific final provision of a Law, making it obvious that in such a case, the nullity must be claimed even "ex officio". Second, Acts in breach of a law, which, regardless of that breach, admits the validity of the said "contra legem" acts, and Third, Acts in breach of or contrary to a legal provision which does not expressly mention anything about its nullity or validity. In this case the Court must be extremely careful in using a power which, to a certain extent is discretionary, by analysing the nature and aim of the provision breached, and the nature, motives and circumstances and foreseeable effects of the acts, to conclude that the said act is a valid one, regardless of the breach, whenever the minor nature of the breach so recommends or allows, or to declare it void wherever there are important reasons to describe the act as a serious breach of the Law, the moral or the public order, being affected by what the Code calls "causa torpe". This doctrine is completed by that of the partial nullity of agreements where only parts of it are in breach of the Law, and where it is certain that the agreement would have been made even without the void part-ss. 10-10-1977 (A3895) and those quoted in it and, finally, of 4-12-1986 (A7219)." (passage italicised for emphasis) Professor Ramos's concludes in part VIII(4)(c): "(c) In the light of this Doctrine and Jurisprudence, it would seem obvious that the absence of the requirement under Art. 134.1 LSA does not make the proceedings brought before the London Courts an absolute nullity. Art. 134 LSA does not contain any provision which sanctions the absence of the General Meeting's resolution with absolute nullity. If one considers the object of the provision - supporting claims for liability and the purpose and circumstances of the case - GT wants to bring the action - one must conclude that there would be no significant reason to invalidate the actions brought by the Company."

"One eventually sees how the provision, which is in theory the most strict provision in Spanish Law, is interpreted flexibly by Doctrine and case law. It is clear that in our legal system, cases of absolute nullity are judged restrictively, due to obvious reasons of procedural economy. In Substantive Law there is strong authority for the conservation of useful acts, as I have highlighted above (VII, 3-7). I have already explained how, in the field of company law in particular, this Doctrine is applied to void resolutions without any difficulties (Supra VII, 7)."

".... the conduct of the minor, rectified the absence of power. It would be absurd, contrary to procedural economy and the right to a trial without undue delays (art. 24 Constitution) that the ground of appeal should be allowed and Ma Dulce required to bring the same action against Mr F. and her mother Ma Jesus."

"Once the "legitimatio ad processum" of the receivership is recognised, the absence of the authorisation by the Commissioners does not necessarily suppose the nullity of the proceedings, since not all breaches of Law incur the extreme sanction of the voidness of absolute rights, and without prejudice to the fact that other effects could cause this absence (as in the case of insufficient "postulacion" (procedural representation)) it is true that rectification should have been possible under the third rule of art.693 of LEC with the consequence of rectification during the proceedings."

"since the agenda is established by the directors, then the directors would just keep putting things off, procrastinating, putting obstacles, and it would be necessary to call the General Shareholders Meeting by judicial means". Professor Cortes went on to suggest that, in the context of ratification, the resolution should appear on the agenda in order to protect the right of the 5% minority mentioned in article 134(2). I can well understand that any resolution to settle or waive claims against directors under article 134(2) would have to appear on the relevant agenda. Otherwise the relevant minority would not have the opportunity of registering its opposition. But that provides no reason why either a prior or a subsequent resolution to pursue such claims should appear on the agenda. Article 134(1) expressly provides that such a prior resolution need not so appear. If, as I have concluded, article 134(1) permits the absence of a prior resolution under article 134(1) to be rectified by a subsequent resolution, it would seem, as Professor Ramos indicates, illogical to reach a different conclusion in respect of a subsequent resolution. It is true, as Mr McGhee points out in his submissions, that the reason for abrogating any requirement for an agenda item (reluctance on the part of directors to include such an item on the agenda) will probably not have the same factual force if current directors have already purported to commit the company to proceedings against other directors. That is no doubt so on the particular facts of this case. But it would not necessarily or always be so. It would depend who were, or were claiming to be, directors at the time of the resolution. In the absence of a prior resolution, directors against whom proceedings were purportedly brought might still even be exercising, or claiming to exercise, their functions. The dominant consideration appears to me the general purpose of facilitating the bringing of proceedings against directors. That leads as much to the conclusion that, if ratification is permissible, no agenda item is necessary in respect of a resolution ratifying existing proceedings as it does to the express provision in article 134(1) whereby no agenda item is required for a prior resolution. Finally, it is necessary to consider the defendants' submission, which applies only in relation to the new proceedings begun on 24th May 1996, that the resolution of 29th April 1996 was in terms which cannot constitute valid authority for such proceedings under article 134(1). Two related points are made: (1) the resolution did not identify the directors against whom the fresh proceedings were to be begun; (2) it purported to delegate to current directors the question what action was to be brought against which directors or former directors in what jurisdiction. Professor Cortes, supported in general terms by Mr Diaz-Bastien, supports these objections by reference to the provision in article 134(2) that a resolution to institute or settle an action will constitute a dismissal of the directors involved. Unless the resolution identifies against which directors liability proceedings are to be undertaken, how, it is asked, can it be known which directors have been dismissed? In the present case, it is pointed out that Bruce Dawson was a director until 1992 who has not been made a defendant in any proceedings. Professor Ramos says in response that such resolutions are generally formulated in wide enough terms to cover any possible actions that may be appropriate, that nothing in article 134 requires a precise identification of the claims which may be made or the defendants - matters which may require investigation - and that, taken against the background of the existing English proceedings, the actual resolution passed was on any view in quite sufficiently specific terms. Professor Cortes accepted that Professor Ramos was not wrong in stating this, but said that it would be too vague if the company's manifestation of its will to pursue its directors simply took the form of a resolution to take "any type of action" for "any type of behaviour" of its directors. I can understand that. But a little later Professor Cortes appeared to me to revert to a more precise requirement, namely that the resolution should determine "directly or indirectly, if it is established against what persons the proceedings are brought, and for what concrete facts you are demanding liabilities"

"However, modern jurisprudence, by interpreting article 5.4 of the Ley de Suspension de Pagos has declared in judgements 9 April 1985, 22 April 1987 and 11 October 1988 that what this regulation stipulated was that the receivers had a duty to notify the judge regarding the appropriateness of any claims filed by the suspended party against third parties, without alluding in any way - judgement of 8 July - to the powers which the suspended party has, since in principle, it maintains the right to administer its assets freely and any kind of ordinary lawsuits may be filed against it without calling the Receivers to the litis. And even if the Receivers are not notified, this is not a case for applying article 5.4 of the Ley de Suspension de Pagos, nor does it cause a lack of standing to be a party therein or for lack of standing to be alleged - judgements - of 25 November 1969 and 9 April 1986, as a defect sanctionable under article 533.2 of the Ley de Enjuiciamiento Civil. The only thing which might be queried is whether filing a claim without the agreement or authorisation of the Receivers is a defective action which lacks effectiveness under article 6 in fine. This theory must also be rejected because [the claim] could only be null and void if it was described as one of the cases expressly established in the preceding three paragraphs of the regulation, among which the one we are studying here is not included. Moreover, as established in the Judgements of 22 April 1947 and 11 October 1988, these would be actions which the receivers or, as the case may be, the creditors might contest, if they were damaging to them. Finally, we must record that since this is a procedural issue, it can be amended. And during the time the evidence was being gathered, the suspended party presented a document recording the agreement of the receivers (page 138), although the signature appearing on the document was not ratified in the presence of the court, although as we have said above, the fact that it was lacking would not mean that the alleged defect existed."

"The first ground of the appeal that have to be analysed is that of the procedural exception of lack of capacity of CGA, S.A. to be a plaintiff, that arises from its Suspension of Payments. Through the evidence gathered by decision of the Bench, that is, through the certificate issued by the Secretary of the Court of First Instance of Barcelona number 1, the Bench has confirmed that in the File Court number 991/86 the said company applied for the suspension of payments order on 27 October 1986, admitted by the Court by "

"although the suspended may also bring those actions by itself, if that is convenient to the good of the said assets 'is necessary the Court's leave'". The words "and is necessary the Court's leave" are a quotation - on their face also from the last paragraph of article 5. The reference to "actions .... convenient to the good of the said assets" appear to quote the last paragraph of article 5. But the last paragraph of article 5 deals only with actions by the receivers in their own names, not with actions by the suspended company. I find the dictum in this judgment therefore difficult both to follow and to accept. It is clearly less convincing than that of 5th April 1989, and was, as I have indicated, also no part of the ratio decidendi. The Audiencia Nacional's decisions of 5th April 1989 and 20th February 1992 do, however, make one common point. Both of them identify the issue before the court as, in Spanish terms, a procedural issue, and as such both indicate that it can be corrected during the proceedings. Last but not least, I come to the most recent decision before me, the Supreme Court's decision of 18th December 1995 (A 9141). The defendants point out, correcting Professor Ramos's report, that the first objection raised in this case was stated by the Court in general terms, as involving breach of articles 5, 6 and 17 of the LSP, and lack of legitimation to exercise the actions, and not specifically as involving lack of a receivers' report or judicial authorisation under article 5.4. The Court found it difficult in fact to discern whether the precise basis of objection was inadequacy of power, lack of capacity or absence of action (see paragraph (D) in its reasons). The plaintiff company had been in suspension of payments which was lifted by order of 26th January 1989, following a creditors' agreement, which reserved the pursuit of actions to the settlement committee (presumably a committee of creditors). On the facts, it is not even clear whether the proceedings were begun before or after this order. Paragraph (E) in the reasons may suggest after. Whatever the position in this regard, the Court dismissed the objection for the following clear and all-embracing reasons: "

"Since it is a fact that there is no record of any compliance with the requirements of the cited provisions of the Law of 1922 (LSP), it is clear that the claim has not been filed in accordance to the Law; and that the above mentioned defect has not been corrected."

"When in the Reply to the Claim defects which caused a lack of personality were identified, instead of correcting them in the manner stated in article 129 [of the law governing Administrative jurisdiction], first, the existence of the requirements was denied and then the correct acceptance of them by the Court was challenged."

"As I understand it, Sheikh Khaled ceased to act as a director of Grupo Torras SA on 26 May 1992, and therefore any action against him expired four years after that date."

"The time for lapse of all kinds of actions, where there is no specific provision to the contrary, will be counted from the date upon which they may have been exercised."

"Resignation or waiver by the directors is the counterpart or compensation to the company's freedom of revocation ..... and is configured as the unilateral contractual waiver of administration, specifically a unilateral declaration of the director of a receptive nature, insofar as it comes into effect from the moment the company is aware of it (GARRIGUES Comentario, II, 114; J. GIRO TENA, Sociedades Anónimas 356; E. POLO, Administadores, 242; F. SANCHEZ CALERO, Administradores, 462). This means that in spite of the tone of Article 131 of the 1989 LSA (and 77.1 of the 1951 LSA), the resignation of a director comes into effect, with regard to the company, from the moment that the company is made aware, without the Board's acceptance being necessary. Article 147.1 RRM indicates that "

"Resignation, like any legal transaction or act, may be express or implied. Curiously, in Spanish corporate practice, it is not uncommon to see implied resignations, that is, with no document or written instrument, not even verbal notice, addressed to the company which expressly states the wish to leave the company. In such cases, the resignation is deduced from the act of the Director himself and is as effective as if it had been produced by a formal notification to the company, or to the majority shareholder, or to the Directors as a group, of the desire to no longer work for the company and to no longer represent or manage the same. It is from the point in time of the removal that the relationship between the company and the Director comes to an end (see for example the reasoning in the Judgment of the Supreme Court, Chamber One dated 8th May 1990) and the limitation period starts to run. In the second case, that is to say, as regards the company, the resignation takes effect from the moment the company becomes aware of it, directly or indirectly, through any means possible according to whether the resignation is de facto, implied or express. Its effect is that the Director ceases to manage and represent the company. From this point in time the Director is not liable for the acts which the governing body carries out, because he is not a Director."

"Due to health problems from which I have been suffering for some considerable time, I find myself medically unable to continue in my employment as head of the Kuwait Investment Office, London, particularly in view of the increasing workload in the present circumstances which calls for a major effort which I am unable to provide due to my state of health.PRIVATE  I should therefore be grateful if you would retire me from my post as head of the Kuwait Investment Office, London, at a time convenient to you. I regret that my state of health compels me to leave my employment with the Kuwait Investment Office, London, after serving this Office for nigh on twenty seven years. Wishing to place my experience at the service of the national financial and economic departments, I shall continue as a member of the management board of the Investment Authority, and I should be pleased to be chairman of a public company in which the Government has a stake if you so wish, so long as such employment is not a full-time requirement due to my state of health. I take this opportunity to thank you for all your assistance in performing the tasks of my present position, and I trust that Allah will bring success upon all our efforts to serve our country under the leadership and guidance of H.H. the Ruler and Heir Apparent, whom Allah preserve." "

"Decree no. 3/1992 of the Ministry of Finance, President of the Board of Directors of KIA Ministry of Finance, President of the Board of Directors of KIA. - In view of the stipulations of Law no. 47/1982 on the creation of the Kuwait Investment Authority. - And of the Personal regulations of the Kuwait Investment Authority - And of the letter received from Sheikh Fahad Mohammed Al-Sabbah, dated 12/2/92 regarding his retirement. - And by virtue of the authority invested in us, We have decided: Article One As of 8/4/1992, to accept the resignation of Sheikh Fahad Mohammed Al-Sabah, President of the Board of Directors of the Kuwait Investment Office in London, invoking his right to retirement. Article Two The authorities, acting as such, should implement this decision, in force as from 8/4/1992. [Signature] Nasser Abdallah Al Roudham Minister for Finance and Chairman of the Board of Directors of KIA. Copy to: KIA KIO - London"

"47. Identity of facts investigated in the Spanish criminal proceedings and of the facts on which the claim is filed in England were based are now absolutely identical (although in Spain other facts are also being investigated). On November 18th 1996 the Spanish Public Prosecutor requested the Court to investigate facts relating to operations "

"Both the Spanish Public Prosecutor and the Madrid Court no. 3 have already resolved that if a civil judgment is issued in England, this decision cannot be accepted or executed in Spain until the Spanish criminal proceedings are determined, and only to the extent on which the judgment issued in England be compatible with the decision of the Spanish criminal proceedings. (General Prosecutor document dated 13th February 1997, point 3 third sentence, annexed and ruling dated 22nd April 1998, legal ground second, annexed)."

"19. Where a court of a Contracting State is seised of a claim which is principally concerned with a matter over which the courts of another Contracting State have exclusive jurisdiction by virtue of Article 16, it shall declare of its own motion that it has no jurisdiction."

"In proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or the decisions of their organs, the courts of the Contracting State in which the company, legal person or association has its seat."

"On 4th December 1998 I filed criminal proceedings against GT and others demonstrating that these parties have falsely implicated me in the proceedings before Your Lordship and have manufactured forged documents. The forged document issues will be dealt with in the Spanish proceedings. Any judgments in the English proceedings should and can only come after judgments in these criminal proceedings which have now been accepted in Spain."

"The standard of proof Where the matters in issue are facts the standard of proof required in non-criminal proceedings is the preponderance of probability, usually referred to as the balance of probability. This is the established general principle. There are exceptions such as contempt of court applications, but I can see no reason for thinking that family proceedings are, or should be, an exception. By family proceedings I mean proceedings so described in the Act of 1989, sections 105 and 8(3). Despite their special features, family proceedings remain essentially a form of civil proceedings. Family proceedings often raise very serious issues, but so do other forms of civil proceedings. The balance of probability standard means that a court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence. Deliberate physical injury is usually less likely than accidental physical injury. A step-father is usually less likely to have repeatedly raped and had non-consensual oral sex with his under age stepdaughter than on some occasion to have lost his temper and slapped her. Built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation. Although the result is much the same, this does not mean that where a serious allegation is in issue the standard of proof required is higher. It means only that the inherent probability or improbability of an event is itself a matter to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred. The more improbable the event, the stronger must be the evidence that it did occur before, on the balance of probability, its occurrence will be established. Ungoed-Thomas J. expressed this neatly in In re Dellow's Will Trusts [1964] 1 W.L.R. 451, 455: "

"On 7 January 1988 Koolmees paid Ptas.5,181,009,909 via Banco Zaragozano and Ptas. 2,500,000,000 via a bank outside Spain for the acquisition of 70,000 shares par value Ptas.1,000 each from Howritz [sic] Corporation". In his evidence, Mr Robinson confirmed the making of this Ptas.2.5b payment, evidently offshore as an additional complementary payment. The explanations which defendants say they received are not consistent. None of them refers expressly to Mr Sarasola. Mr de la Rosa in an interlocutory affidavit dealing with his alleged knowledge of Croesus produced - without confirming - some press material associating Mr Sarasola with Horowitz Corporation and with alleged services relating to Plaza de Castilla. During final submissions, I observed that the evidence did not disclose any link between Mr Sarasola and Horowitz Corporation, to which Mr Boswood assented, saying ".... nothing to do with Mr Sarasola, although Mr Sarasola was in some way involved with the Plaza Castilla transaction, but not qua vendor [or?] to do with the vendor of the site". Mr Folchi, who was prevented by unavoidable personal circumstances from attending, then made written submissions, attaching a copy of a deposition taken from Mr Sarasola on 24th August 1997 before an investigating magistrate of the Audiencia Nacional in the presence of and under questioning from lawyers acting for GT. When deposed, Mr Sarasola said that Horowitz Corporation was his mother-in-law's investment vehicle, which had been established on his advice by her or possibly by him on her behalf. He disclaimed any real knowledge, beyond speculation, that it too was linked to his mother-in-law, as well as about Bigley itself or its receipt of the $27.4m in June 1988 (or about a further $1.1m paid to Bigley from Pincinco in October 1990 - save to speculate that this might represent interest on the $27.4m). Mr Sarasola's disclaimer conflicts with strong evidence from the file of Merrill Lynch Bank Suisse. The file starts with a note of a meeting on 8th December 1987 between Mr Sarasola and Chandra Farek of the bank, although Mr Sarasola said in his deposition that he had never heard of him. According to the note, Mr Sarasola told the bank that he maintained an account in the name of Horowitz and said that he was going to open another account in the name of Bigley. The file includes numerous documents indicating that this is what Mr Sarasola then did. The file contains a letter signed by him dated 8th December 1987 instructing the bank to accept orders from a Mr Alvaro A. Alonso, signature cards signed by Mr Sarasola dated 10th December 1987 and 2nd July 1988 (accompanied in the bank's file by photographs of his passport) and declarations by the account managers dated 10th December 1987 and 21st January 1988 as to Mr Sarasola's control and beneficial ownership of account Bigley. All Mr Sarasola did when copies were shown to him during his deposition was to refuse to answer to copies, to question their authenticity and to suggest that their use was in some unexplained way illegal. It is true that only copies of these documents were and are available. But it is implausible to think that this internal bank documentation made available by Merrill Lynch Banque Suisse to Juge Tappolet (whether in original or copy form) was or is the product of forgery and of some elaborate plot. Mr de la Rosa's reference to a payment to Horowitz Corporation seems, from Touche Ross Nederland's letter dated 17th May 1988, to invoke a payment of Ptas.2.5b which had already occurred at the beginning of 1990 quite separately from the $27.4m paid in June 1988. In a letter dated 25th June 1996, Mr de la Rosa actually asserted that the $27.4m was itself paid on 7th January 1988 rather than on 1st June 1988, and that all documents relied upon by GT to show a payment on 1st June 1988 were "sham" - including, it would appear, his own undated letter requesting the payment, which he says he was "asked to sign, without date, some months after the payment had actually been made"

"I refer to our agreement at the [GT] board meeting held on 17th February 1988 to proceed with a public bid for Ebro S.A. You suggested that from your conversations with Ebro's management and principal shareholders it may be necessary to pay a premium of up to $90 million out side of Spain. In looking for the best legally acceptable way to accomplish this you might consider providing a loan to a foreign company in the amount of the premium. In order to avoid any question of foreign exchange permissions it might be better if this came from the proposed U.K. subsidiary of Torras. Please let me know if you intend to proceed by this route"

"I cleared my lines with Sheikh Fahad, because there had been an issue about ... continuing to make investments in Spain. Sheikh Fahad had said at one point that we should make no further investments in Spain without his authority.". Mr Robinson cleared the payment first by putting it to Mr Jaffar who said that he would clear it with Sheikh Fahad, and then at a later date because of his concern by going to see Sheikh Fahad and specifically checking that Sheikh Fahad was happy with what had been done. Sheikh Fahad admits Mr Nigel Black's memoranda of 20th and 27th July 1989. These described the promissory notes swap and the intention to use the proceeds of the Conycon/Grueyesa notes to repay "existing debt .... owing to Kokmeeuw of about U.S.$30m", which was specifically identified as a loan of $27.4m from 1st June 1988 carrying interest. There is no reason to think that these memoranda did not reach or were not read by him. They elicited no response. A year later at the end of June 1990 Sheikh Fahad received Mr Al-Haroon's memorandum querying the basis on which $25m had been lent to Croesus (and $55m to Oakthorn). Shortly afterwards, he received Mr de la Rosa's "clarification" asserting that Sheikh Fahad was already aware that these loans had been authorised and their amounts "paid .... to KIO as repayment of offbook funds advanced to [GT]", and referring to the intention to "repay" the loans out of commissions generated on "forthcoming divestments"

"9. .... To the extent that it appears I was the recipient of monies that may have originated from the Plaintiffs I received such monies in the genuine belief that it represented underwriting fees on an investment in a company nothing to do with the Plaintiffs. I shall explain in a subsequent affidavit how the monies came to me and what has become of them, when further responding to the Order of 7th March 1995."

"2. At paragraph 9 of my first Affidavit I have stated that I would explain in my second Affidavit how monies that are said to have originated from the Plaintiffs came to be in my possession. Whilst I personally would like to explain the matter in detail, the whole of the information required is not yet available to me and I am advised by my solicitors that it would be unwise at present to go on oath about the matter."

"In fact the account at Oberson Thiebaud received a total of $20 million. At about the end of August or early September 1990 I learned that such monies would be coming to me in the belief, as stated in my first Affidavit at paragraph 6, that it represented underwriting fees on an investment in a company nothing to do with the Plaintiffs. The term "underwriting fees" is how I viewed it in my mind but it might be that it was more properly a return on a capital investment or a potential capital investment. The matter is unclear to me at present and that is one of the matters that my solicitors are pursuing on my behalf but where so far the full information is not yet available. Upon hearing that the monies would be paid to me in October I spoke to Mr Paul Dawson about the matter and asked him to let me know the details of the account of Oberson Thiebaud in Geneva. He gave them to me. I passed the details on so that arrangements for payment could be made. As will appear below the monies were paid into two accounts of Mr Oberson."

"Speaking from my own experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and, where there is a conflict of evidence such as there is in the present case, reference to the objective facts and documents, to the witnesses' motives, and to the overall probabilities can be of very great assistance to a Judge in ascertaining the truth."

"In addition as agreed with you we shall be paying 29,887,994 pesetas of expenses relating to the operation on your behalf". In the letter, Coggia then asked THL to pay the total of nearly Ptas.150m in three directions, some Ptas.83.8m to Zymo, the Spanish notary's vehicle, Ptas.62m to Coggia (which Mr Coll explained was for a payment to Mr Folchi's firm unconnected with any of the present operations) and some Ptas.3.96m to Russell Limebeer. Mr Coll's explanation of the letter was that Coggia had, due to exchange rate differences, ended up the Pincinco transaction being notionally owed Ptas.119m to which it had no right and that the letter was designed to rectify this by having Coggia pay certain sums for THL. On any view the letter is another example of Mr Coll's facility for misleading explanation - on his own account the Ptas.29.8m were not "expenses relating to the operation"

"At no time did I ever receive, nor did I ever request information concerning the ultimate recipient of the payments apart from the information that I have already given during the meetings on November 13th and 15th."

"I do not think that I devote so much attention to the issue, and I do not think I considered that myself was obliged or entitled even to make an assumption so detailed. I do not remember." and "

"Two transfers in the amount of US $22.5 million and $15.5 million respectively were applied to make complementary payments. A further two transfers for an amount of $10 million and $2 million respectively went to external accounts, according to information that I received from Mr Ball. My actions in this operation corresponded entirely with the normal conduct of a professional acting under properly given instructions. I did not receive any further information concerning the ultimate beneficiary of the payments than that which I have disclosed. I did not have reason to think that any individual at KIO/GRUPO TORRAS would personally benefit as a consequence of the payments made."

"It could be, but not necessarily. In general, correspondence with Swiss banks, or foreign instrumental companies or offshore companies were not kept in my files."

"I was sending the money to accounts controlled by KIO's top executives as it was supposed to happen with external accounts. It is fair to say that my assumption was that KIO was managing private funds through external accounts."

"Would you please prepare as per our phone call of yesterday an audit request as discussed yesterday and sent it as soon as possible to M. Juan Jose Folchi fax Nbr (00343) 2185950 or to my attention fax Nbr (022) 7388067 so that the formula can be checked for approval before [sending] it to auditors."

"17.7 .... Folchi at all material times was and acted as a professional adviser to GT and/or the KIO and at no time was Folchi responsible for, nor did Folchi participate in, the taking of decisions in principle by GT and/or the KIO and/or THL..... Folchi's role was to advise on and implement decisions made by those with the authority to take such decisions and such decisions as Folchi took were concerned solely with the mechanics of carrying into effect decisions made by GT and/or the KIO in accordance with instructions received by Folchi from those authorised to give them. 21.1.1. Russell was and has acted a professional adviser to Folchi's firm and clients including GT, and Folchi repeats paragraph 17.7 above, mutatis mutandis, in relation to Russell; 21.1.2. in relation to the transactions the subject of these proceedings, Russell acted in accordance with instructions received, either directly or indirectly, from Folchi; 21.2. For the avoidance of doubt, the reference to instructions from Folchi and acting in accordance with instructions is a reference either to specific instructions given by Folchi, directly or indirectly, as a result of which Russell took the steps required to carry out those instructions, or to general instructions pursuant to which Russell took decisions and/or steps on the basis of his professional expertise in order to carry out the instructions in circumstances where Folchi was content to rely upon Russell to take the decisions and/or the actions required to implement the instructions. .... 25.3 At all material times in relation to the transactions the subject of these proceedings herein, Parker, as an employee of Folchi's Firm, has acted solely on the instructions of Folchi or other members [or] employees of Folchi's Firm and not otherwise."

"152.1. In about April 1992, Sheikh Fahad and de la Rosa confirmed to Folchi that, since the condition had been fulfilled, the payment of $20 million should be made. 152.2 Accordingly, Folchi gave instructions to Russell with the result that on 24th April 1992 Wardbase issued an invoice to Tp in the sum of US$20 million, and the invoice was paid by Tp on 26th May 1992 on the instructions of Soler. 152.3. Thereafter, payments of 1.9 billion Pesetas were made in accordance with instructions received from Sheikh Fahad and de la Rosa by or on the instructions of Folchi, who was given the reference details of the payment, but not the details of the ultimate beneficiaries."

"Years later, in 1992, and during the process of preparing the Memorandum for the Kuwait Attorney General, DE LA ROSA sent me a copy of the Memorandum and it reminded me that in January 1989, DE LA ROSA, ROBINSON and myself had conversations about this matter. I thought then that DE LA ROSA'S memory was better than mine. I cannot recall at all a conversation at the beginning of 1989 such as the one described."

"I do not particularly remember the contract signed between TORRASPAPEL and WARDBASE on September 4th 1989. In respect of the .... contract, I can state the following: * I did not draft the agreement. * It is possible that it may have been drafted by one of the lawyers at my law firm. I cannot assure or deny this possibility. * A copy of the contract was in the files of my law firm. * I saw a copy of the contract during the process of preparing the Memorandum dated November 19th 1992."

"He also talked about his wish to retire and referred to the payment of $20m in relation to the Belgium project. DE LA ROSA mentioned the name FAHAD on several occasions and informed that I was with him and that he was giving me instructions about the aforesaid payment."

"I think that there is a cause of action when it is remembered that the tort is a conspiracy to injure. I would suggest that a conspiracy to do an unlawful act - when there is no intention to injure the plaintiff and it is not aimed or directed at him - is not actionable, even though he is damaged thereby. But if there is an intent to injure him then it is actionable. The intent to injure may not be the predominant motive. It may be mixed with other motives. In this context, when the agreement is to do an unlawful act, we do not get into the "quagmire of mixed motives", as Lord Simon described them in the Crofters case at p.445. It is sufficient if the conspiracy is aimed or directed at the plaintiff, and it can reasonably be foreseen that it may injure him, and does in fact injure him."

"First, for a cause of action to exist at all there must be an intent to injure both in conspiracy and in unlawful interference. There is no cause of action in A if he happens to be injured by virtue of a conspiracy to injure B."

"People who wish to disperse huge sums of others' monies for their personal purposes will not be over-concerned who makes or bears the payments, so long as they can be covered up. It is unlikely to be difficult in this situation to infer an intention to injure or defraud any company which in fact suffered loss."

"It is sufficient if the conspiracy is aimed or directed at the plaintiff, and it can reasonably be foreseen that it may injure him, and does in fact injure him."

"Furthermore, it is well-established law that if A and B conspire together to carry on, for example, a course of fraudulent trading, C may join in (or in the older phraseology "adhere to") the conspiracy at a later date and then A may drop out and be replaced by D. But it all remains a single conspiracy as long as all of them are for the period of their participation acting in combination to achieve the same criminal objective."

".... the gist of the tort of conspiracy is not the conspiratorial agreement alone, but that agreement plus the overt act causing damage. ... The tort of conspiracy .... is complete only if the agreement is carried into effect so as to damage the plaintiff. Accordingly, the acts done in pursuance of the agreement are an integral part of the tort."

"It consists of concerted action taken by two or more persons pursuant to agreement between them with the dominant purpose of damaging another and actually damaging him."

"The gist of the cause of action is damage to the plaintiff; so long as it remains unexecuted the agreement, which alone constitutes the crime of conspiracy, causes no damage; it is only acts done in execution of the agreement that are capable of doing that. So the tort, unlike the crime, consists not of agreement but of concerted action taken pursuant to agreement."

"The office paid without suit, not in ease of the [defendant], and not as co-obligors, but without prejudice. It is, to all intents, as if it had not been paid .... I am satisfied that it is to be considered as if the insurers had not paid a farthing."

"The provision of loan capital and its conversion into share capital are self-contained commercial transactions in which the company gives and receives value. By themselves they are incapable of mitigating or avoiding the loss which the company sustained by the theft of its funds."

"I accept that although share capital appears on the left side of a balance sheet, yet it is not a true debit unlike borrowings by a company. A share represents a fraction of a company's net worth, as well as stating the nominal amount paid up on it, or for which the holder is liable to pay. But I reject the contention that a share has a value, in the sense of a monetary amount to which a shareholder is entitled, or upon which a creditor can truly look as a fixed sum in English pounds."

"(1) to participate in the distributable profits of the company while it is a going concern; (2) rights to participate in the division of the assets of the company in a liquidation, and (3) rights to participate in any distribution to shareholders on an actual or notional reduction in capital." (Courtaulds Investments Ltd. v. Fleming [1969] 1 W.L.R. 1683, 1693 per Buckley J.) These submissions were made with reference to English law. A correct analysis in respect of shares issued by GT is strictly a matter for Spanish law. I note that Mrs Antolinez described the Spanish position, without challenge, in her report as follows: "8. If nothing is specifically said to the contrary, funds received from the shareholders are ultimately repayable and, as such, as classified on the "

"Now it is true that the money has gone back into the hands of the company, but it has not gone back into the hands of the company as free in their hands as it was before it was paid out; because it was paid back to the company for debentures issued by them. Unless those debentures are given back to them, unless those debentures are given back to them free without any expense to them, so that they have the debentures in their hands and are free to tear them up, and can have the money in their hands, and be free to use it as they please; they have not the money back in their hands as free as it was before, because it is saddled with this, that they must take some means to get back the debentures. Well it may be that they could get back the debentures, but are they bound to go to the expense of endeavouring to get them back? It may be that they could not get them back; but even supposing that by some successful procedure they got the debentures back, if the persons from whom they recovered them were insolvent they would at least have to pay the costs of the proceedings. They have not therefore the money free in their hands as they had it before, and therefore it seems to me the loss which was once £2600 remained the same loss at the time when a supposed action would be brought, that is, when these proceedings are taken under the 165th section. Even in that view therefore the decision of the Vice-Chancellor is right;PRIVATE  ...."

"Fraud constitutes unlawful means, even fraud on a third party who suffers no loss."

"The company may not give funds, loans, guarantees or facilitate any kind of financial assistance for the purchase of its own shares or the shares of its parent company by a third party."

"(1) As a general rule, an act done in a foreign country is a tort and actionable as such in England, only if both (a) actionable as a tort according to English law, or in other words is an act which, if done in England, would be a tort; and (b) actionable according to the law of the foreign country where it was done. (2) But a particular issue between the parties may be governed by the law of the country which, with respect to the issue, has the most significant relationship with the occurrence and the parties."

".... our courts will look back over the series of events constituting it [the alleged tort] and ask themselves "

"In the first place, I have no doubt that the combination which is fundamental to the tort of conspiracy was formed in Kuwait, where [the conspirators] were all resident and where for the most part they carried out their duties in connection with the affairs of KOTC. Secondly, apart from a relatively short period between August 1990 and March 1991 the whole conspiracy was organised and run from Kuwait. Although Mr Al Bader, Mr Qabazard and Capt. Stafford all visited London on many occasions, they did not do so in order to organise the fraud, although they did make use of their presence in London for the practical purpose of collecting and disposing of some of the proceeds. Apart from the initial visit to Geneva to open the accounts at BMB, directions could be given from Kuwait by telephone and fax."

"When the articles of association of the company do not state otherwise, the board of directors may .... appoint from within its number an executive committee or one or more managing directors (Comision ejecutiva o uno o mas Consejeros delegados), notwithstanding the powers of attorney which it may confer upon any other person."

"omission of the degree of diligence required by the nature of the obligation and which corresponds to the circumstances of the persons, time and place". The elements of extra-contractual liability are essentially the same with the substitution of an illegitimate act or omission for a breach of contract and with the caveat that fault or negligence can no longer be measured by reference to any contractual obligation, but simply according to the circumstances, the minimum standard of due diligence being that of the prudent paterfamilias. In this case, if any non-director became party to what under English law would amount to a conspiracy to injure by doing an unlawful act or using unlawful means, it seems inevitable that he would be liable under Spanish law either for breach of contract, if he had a contract, or extra-contractually. Mr Folchi relied, as I have said, heavily on a lawyers' strong prima facie entitlement to rely upon the good faith of the individuals instructing him and follow their instructions. But, assuming a lawyer who becomes party with those instructing him to a conspiracy aimed or directed at and injuring his client by unlawful act or means, it is difficult to see any basis on which the lawyer could conceivably justify his conduct by reference to his instructions. The situation would axiomatically be one where his instructions were on their face illegitimate or it would be unethical and improper to implement them. So far as concerns causation, it is common ground that, in respect of contractual or extra-contractual liability, individual causal responsibility would have to be shown. Mr Folchi argues that all relevant acts occurred without his intervention and were done by GT directors of executives. That is difficult to follow. Mr Folchi was a lynch-pin of the arrangements which were made for and the instructions which were given in the Oakthorn 1 and 2 transactions, the Pincinco transaction and the Wardbase transaction. If he was party to or knew the facts making them conspiracies to injure GT by unlawful act or means, it was his obvious duty to stop them. Had he taken any steps to do so, their further implementation would have been impossible. Had I concluded that any non-director was a party to any of the conspiracies, I would have held on that basis that he too had individual responsibility under Spanish law for all the loss occasioned by that conspiracy. V.2. Breach of directors' duties It follows from what I have already said under the heading of Spanish law that, in addition to the conspiracy claims on which GT is entitled to succeed against Sheikh Fahad, Mr Jaffar, Mr de la Rosa and (in respect of the Pincinco transaction) Sheikh Khaled, GT is also entitled to succeed against each for breach of his directors' duties. In the light of the facts found in sections IV.3(e) and IV.3(i), it would not be right in my view to attribute causative responsibility for the loss which THL suffered to any breach of duty by Mr Soler or Mr Moukarzel, although their conduct as directors of THL fell far short of that to be expected of an English company director. Mr Folchi's position is different. Having become a director of THL for the Pincinco transaction, he assisted in the implementation of that extraordinary transaction, which clearly imperilled THL's solvency and to his knowledge involved the transfer of large sums to amongst others Mr de la Rosa and Mr Jaffar. Without his participation, the transaction would not have occurred as it did. In my judgment, his failure to address the obvious problems and implications in and of what was happening involved a breach of this duties as a director of THL, and makes him responsible on this basis also, although the measure of liability relates only to the sums disbursed by THL in respect of the transaction in the first half of 1992. V.3. Dishonest assistance As against Sheikh Fahad, Mr Jaffar, Mr de la Rosa and Sheikh Khaled, this represents a further potential head of liability. As against other defendants, who have not been shown to be party to any conspiracy, dishonest assistance represents a possible alternative route to recovery. I start with English law. V.3(a) English law The liability which the plaintiffs assert under this heading arises in equity. It does not depend upon participation by the relevant defendant in a conspiracy, or necessarily upon any conspiracy at all. The case-law establishes that it depends on proof of the following conditions: (i) A breach of trust or fiduciary duty by someone other than the defendant (ii) in which the defendant assisted (iii) dishonestly, together with (iv) resulting loss. Taking these ingredients, if B, an officer or employee of company A, misappropriates company A's money, B is in breach of fiduciary duty. A fiduciary duty may also arise at the very moment of misappropriation, as where money of A is paid to C by mistake and misappropriated by C: Chase Manhattan Bank Bank N.A. v. Israel-British Bank (London) Ltd. [1981] 1 Ch. 105. If, in either of these situations, B or C (as the case may be) is assisted by D acting dishonestly, then D is himself liable in respect of resulting loss. The plaintiffs, referring to Lord Browne-Wilkinson's words in Westdeutsche Landesbank Girozentrale v. Islington L. .C. [1996] AC 669, 715H-716D, would I think also submit that, if an outsider, C, simply misappropriates company B's money, C is treated as holding company B's money on constructive trust, and as being in breach of fiduciary duty in respect of it. If the Court of Appeal's reasoning in F.C. Jones & Sons v. Jones [1997] Ch 159, 164F to which I was not referred raises any doubt about this as a general proposition, it is not one which, on the facts of the present case, seems to me relevant. Here, the monies misappropriated were on any view misappropriated in breach of fiduciary by a number of directors. The liability of any others as dishonest assisters relates to that misappropriation. Further, insofar as Jones suggests that a stranger C who abstracts a third party's (B's) monies may not breach any fiduciary duty, but may become liable simply at common law, it seems most improbable that this could mean that a third party D who dishonestly assisted C could escape liability for dishonest assistance. Jones was not concerned with this situation, and indeed recognised (in a different context) that it would be absurd if the position where a person had no title offered lesser protection at common law than would exist in equity where there was a bare legal title and constructive trust. Mr McGhee for Sheikh Khaled submits that, to be relevant to a claim based on dishonest assistance, the breach of trust or fiduciary duty must have occurred in relation to the plaintiff. As a general submission, that seems logical in respect of liability which is essentially accessory: see in Royal Brunei Airlines Sdn Bhd v. Ming [1995] 2 AC 378 (P.C.), but the particular situation and relationship of THL and GT may require further consideration. I add, for completeness (since it does not matter in this case), that ingredient (i) can be satisfied by an innocent, rather than fraudulent, breach of trust or fiduciary duty. Ingredient (ii) includes the purely factual question, whether the defendant's conduct did assist the breach of trust or fiduciary duty. It may also be confined to this factual question, but I will return to that. In Brink's Ltd. v. Abu-Saleh and Others [1996] CLC 133, the necessary factual assistance was absent, because the wife, in accompanying her husband on his couriering trips to Switzerland to bank monies pursuant to what they thought to be a tax evasion exercise, did so simply to keep him company and visit Switzerland on an expenses free basis and not to afford him 'cover'. Ingredient (iii) was considered in Royal Brunei Airlines Sdn Bhd v. Ming, where Lord Nicholls gave the advice of the Privy Council. The case establishes that dishonesty in the context of a knowing assistance claim is an objective standard: see p.389B-G. The individual is expected to attain the standard which would be observed by an honest person placed in the circumstances he was: p.390F. But those circumstances include subjective considerations like the defendant's experience and intelligence and what he actually knew at the time: p.389D and 391B. Since dishonesty has other connotations in other branches of the law, and indeed in ordinary language, I cite in full the following explanation by Lord Nicholls at p.389: "

"Mr. Jackson and Mr. Griffin are professional men. They obviously knew that they were laundering money. They were consciously helping their clients to make arrangements designed for the purpose of concealment from, inter alios, the plaintiffs. It must have been obvious to them that their clients could not afford their activities to see the light of day. Secrecy is the badge of fraud. They must have realised at least that their clients might be involved in a fraud on the plaintiffs. Can Mr. Jackson and Mr. Griffin possibly have believed that their arrangements had an honest purpose? They pleaded no such belief. They have given no evidence. On their behalf it was submitted that they were entitled to be reassured by the fact that they were taking over arrangements which had been established for some years; that they were introduced to them by a partner in a well known and reputable firm of chartered accountants; and that, if there was any wrongdoing, it would surely have come to light long before. Had Mr. Jackson and Mr. Griffin given evidence to this effect, I might or might not have believed it. But I will not assume it when they do not tell me so. .... What did Mr. Jackson and Mr. Griffin think was going on? There is some evidence of this in the minutes of the first meeting of the directors of Keelward Ltd. on 22 March 1984, and it would be wrong of me to ignore it. It suggests that they thought that their clients were engaged in evading Tunisian exchange control, possibly with the connivance of the plaintiffs and on their behalf - though the minutes do not say so. In my judgment, however, it is no answer for a man charged with having knowingly assisted in a fraudulent and dishonest scheme to say that he thought that it was "only" a breach of exchange control or "only" a case of tax evasion. It is not necessary that he should have been aware of the precise nature of the fraud or even of the identity of its victim. A man who consciously assists others by making arrangements which he knows are calculated to conceal what is happening from a third party, takes the risk that they are part of a fraud practised on that party."

"After Mr. Smyth's letter of 14 August 1984, the defendants cannot claim that the possibility of a fraud on the plaintiffs never crossed their minds; it was specifically drawn to their attention. Yet they never made any inquiries of the plaintiffs or took any steps to satisfy themselves that the arrangements had the plaintiffs' knowledge and approval. They comforted themselves with the fact that there was "no clear case of fraud under English law."

"(i) What is the proper law which governs the relationship between the defendant and the person for whose benefit those powers have been conferred, (ii) what, under that law, are the duties to which the defendant is subject in relation to those powers, (iii) is the nature of those duties such that they would be regarded by an English court as fiduciary duties and (iv) if so, is it unconscionable for the defendant to retain those assets."

"The relevant question in the present context is whether and to what extent an English Court ought to recognise and enforce an equitable claim for monetary compensation based on fault where the fault alleged lies wholly in things done or not done in a foreign jurisdiction."

"In the application of this principle to the claim which the AMF brought against the FNBC defendants, the first requirement was that the AMF should have been able to establish a cause of action against the FNBC defendants which was recognised by English law. For the reasons which I have already set out I am satisfied ... that, - in relation to FNBC, FNBC (CI) and FCTC (Cayman) - this requirement was fulfilled. The second requirement, as it seems to me, was that the English Court must have satisfied itself that there was no rule of any relevant foreign law which - in the words of Lord Pearson in Boys -v- Chaplin (supra, [1971] AC 356, 397) - would provide a defence to the AMF's cause of action; or - as it might, perhaps, be put in the context of a Barnes -v- Addy constructive trust claim - would make it inequitable to hold that an FNBC defendant should be treated as if it were a trustee. If, as the authorities show, the basis of such a claim is dishonesty or lack of probity on the part of the defendant, then it must be right to judge honesty or dishonesty in the light of all relevant circumstances; and those circumstances must include relevant provisions of local law. It follows that I think the appropriate course, in the present case is to examine the evidence as to Swiss law not for the purpose of identifying any rule of that law which the English court would have been concerned to enforce, but rather for the purpose of deciding whether, having regard to the legal framework within which the FNBC and its affiliates were conducting the operation of the numbered accounts at its Geneva branch, there was such dishonesty or lack of probity as would have made it equitable for the English court to treat those defendants as if they were trustees. Mr Ross-Munro submitted that it is not open to me to approach the matter in the way that I have just indicated. He submitted that a Barnes -v- Addy constructive trust claim by the AMF against the FNBC defendants could not have succeeded in the English court unless it were established (at the least) that the conduct complained of would have been actionable as a civil wrong in the Swiss courts. Mr Ross-Munro sought support for his submission in the speech of Lord Wilberforce in Boys -v- Chaplin (supra, [1971] AC 356). Lord Wilberforce explained the reason for requiring actionablility in the foreign court in these terms (ibid, at page 389 D-G): 'The broad principle should surely be that a person should not be permitted to claim in England in respect of a matter for which civil liability does not exist, or is excluded, under the law of the place where the wrong was committed. This non-existence [or] exclusion may be for a variety of reasons and it would be unwise to attempt a generalisation relevant to the variety of possible wrongs.' Lord Wilberforce was, of course, making those observations in the context of a claim for the recovery of damages for personal injury. Although the observations in the passage cited are general in nature, I am not at all sure that Lord Wilberforce would have taken the view that conduct which was properly to be regarded as dishonest in the light of the relevant provisions of the local law - but, in respect of which the local law gave no civil remedy - ought not to be the subject of a successful Barnes -v- Addy constructive trust claim in England. That was not a question which he can be taken to have had in mind. It is reasonably clear that Lord Donovan and Lord Pearson would not have taken that view - see, ibid, at pages 383D and 405F. Nevertheless, I am content to assume that Mr Ross-Munro is correct in his submission that the AMF would not have succeeded against the FNBC Defendants in the English court if it were established that the conduct complained of was not actionable as a civil wrong under Swiss law. For the reasons which I shall explain I am satisfies that the conduct of FNBC in relation to the operation of the numbered accounts at its Geneva branch - and the conduct of FNBC (CI) and FCTC (Caymen) in relation to the disposal of monies in those accounts - would have been actionable as a civil wrong in the Swiss courts. It is unnecessary, therefore, to decide whether that was a necessary requirement."