(1) MARIA ELENA DE MOLESTINA (2) ISABEL NOBOA (3) HARRINGTON TRUST LIMITED (as trustee of the Hanover Trust and the Dressage Group) (4) DRESSAGE LIMITED v (1) ALVARO NOBOA PONTON (2) EARTH LIMITED (3) WIND LIMITED (4) FIRE LIMITED (5) WATER LIMITED (6) FRUIT SHIPPERS LIMITED (7) CODAN TRUST COMPANY LIMITED (as trustee of the Brunswick Trust) (8) PEMBROKE COMPANY LIMITED (9) TARLAND LIMITED [2002] EWHC 2413 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEENS BENCH DIVISION

COMMERCIAL COURT

[2002] EWHC 2413 (Comm)

Case No Case No: 1999 Folio 1383

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Between

(1) MARIA ELENA DE MOLESTINA (2) ISABEL NOBOA (3) HARRINGTON TRUST LIMITED (as trustee of the Hanover Trust and the Dressage Group) (4) DRESSAGE LIMITEDClaimants

(1) ALVARO NOBOA PONTON (2) EARTH LIMITED (3) WIND LIMITED (4) FIRE LIMITED (5) WATER LIMITED (6) FRUIT SHIPPERS LIMITED (7) CODAN TRUST COMPANY LIMITED (as trustee of the Brunswick Trust) (8) PEMBROKE COMPANY LIMITED (9) TARLAND LIMITEDDefendants

Before

Mr Justice Langley

Mr G. Pollock QC and Mr L. Rabinowitz QC and Miss P. Hopkins (instructed by Messrs LeBoeuf Lamb Greene & Macrae) for the Claimants

Lord Grabiner QC and Mr K. MacLean QC and Miss L. Lake (instructed by Messrs Cadwalader, Wickersham & Taft) for the 1st, 2nd and 5th Defendants

Mr G. Vos QC and Mr D. Joseph (instructed by Messrs Herbert Smith) for the 6th Defendants

Hearing dates : 3rd October 2002 –7th November 2002

Date 21 November 2002

[1]Mr Justice Langley : INTRODUCTION Sr. Luis Noboa ("LN") created a business empire based upon Ecuador. At the time of his death in New York on 28 April 1994 the value of the empire has been variously estimated but it is entirely reasonable to assume it was in excess of US $ 1 billion.

[2]It is depressing to record that since his death his family have been in bitter dispute about his fortune and their entitlement to shares in it. There have been proceedings in Ecuador and New York and the Bahamas as well as the present action.

[3]In 1997 several agreements were entered into. The various members of the family were advised by lawyers who drafted the agreements. Although there were, at least at the commencement of the trial, significant issues concerning the relationship (if any) of these agreements there can and could be no doubt that they were intended to resolve both the disputes between LN's widow and second wife, Mercedes Santistevan de Noboa ("Mercedes") and LN's children as well as the disputes between LN's children themselves. There were six children, all of whom were the children of LN and his first wife. LN's first wife and five of the children are still living. I shall follow the parties and the witnesses in referring to those involved in the material events by their Christian names.

[4]Whatever the intention, as between the children it has not been fulfilled to such an extent that the present proceedings were brought by two of LN's daughters (the first two claimants, Maria Elena and Isabel) to rescind some of the agreements and for damages on the grounds that they were induced to enter into the agreements by the fraud of their brother (the first defendant, Alvaro). When the trial began the issues for the court, shortly described, were whether or not the alleged oral representations and promises were made by Alvaro and, if and to the extent it might be found that they were, whether rescission was properly available as a remedy. Damages were to be determined later should they become a live issue.

[5]The issue concerning the remedy of rescission arose from the defendants' contention that the claimants were seeking to rescind only part of what was an overall transaction and that was not permissible in law: see De Molestina v Ponton [2002] 1 LL Rep 271 at 286-8 . At the conclusion of the claimants' evidence, Mr Pollock QC acknowledged that he could not ask the court to grant rescission and accordingly I ordered that claim to be dismissed against all the defendants. As Mr Vos QC's appearance for the 6 th defendant, Fruit Shippers Limited (FSL), was limited to the rescission issue he and his "team" took no further part in the proceedings and are to be heard further on questions of costs.

[6]The remaining issues are therefore simply whether any of the alleged representations or promises were in fact made or agreed. It is not Alvaro's case that if the representations were made they were true or that he believed they were true when made. His case is that they were not made. One side is not telling the truth and the court must decide which it is. Essentially the representations on which Maria Elena and Isabel rely relate to the control of FSL after completion of the agreements. They are of two kinds: alleged representations, first, that Alvaro intended to manage and control FSL jointly with Maria Elena and, second, that he would not acquire or vote the shares in FSL held for another sister, Maria Leonor, whom he represented. The claim also seeks specific performance of an alleged promise to manage and control FSL jointly and an order to set aside the acquisition by Alvaro of the FSL shares placed in trust for Maria Leonor and her children and an order that Alvaro should not vote those shares. THE BUSINESS

[7]The principal business of LN was the export of bananas. But at the time of his death his interests also included coffee, sugar refining, flour milling, shipping, banking, insurance and soft drinks. The principal Ecuadorian company engaged in the banana business was Exportadera Bananera Noboa S.A. (EBN). The ultimate holding company and the company owning most of the overseas business was FSL, a company incorporated in the Bahamas. FSL was undoubtedly the most valuable asset in the empire. There is attached to this judgment a Dramatis Personae which includes the names and a short description of the principal companies in LN's empire. THE FAMILY

[8]LN and his first wife, Sra. Isabel Ponton, had six children. In order of birth they were Luis ("Lucho"), Isabel, Diana, Alvaro, Maria Elena and Maria Leonor. LN was divorced in 1972 and shortly afterwards he married Mercedes (often referred to as "Meche" or "Mechita"). Mercedes had a son by a previous marriage, Ernesto Estrada. Lucho (who is said to have had drink and drugs problems) plays only a small part in the material events, as does his son, "Luchito". Isabel married Isidro Romero Carbo ("Isidro") but was divorced from him in 1998. Diana also plays little part. She married Omar Baquerizo Quintana. Her interests were largely looked after by Isabel and Maria Elena but her daughter Diana Quintana De Wuth was also involved. Alvaro married Dr. Annabella Azin ("Annabella"). Maria Elena married Dr. Oswaldo Molestina Zavala ("Oswaldo"). Oswaldo is a former senior provincial judge and member of the Ecuadorian congress. Maria Leonor suffered from serious drug problems. She married Jay Sicre and had two daughters, Cassandra and Nastassia. After Maria Leonor and her husband separated in 1988 she had another daughter, Carla. Maria Leonor was in hospital in New York in a comatose state from November 1991 until she died in 1999. Her interests were generally looked after by Alvaro.

[9]The Dramatis Personae also includes references to family members (and trusts connected to them) with a short description of them.

[10]The third claimant (Harrington) is the trustee of the Hanover and Dressage Trusts. They are trusts of which Maria Elena is the principal beneficiary. The fourth claimant (Dressage) is a company which owns shares in FSL on behalf of Maria Elena.

[11]The Defendants, apart from Alvaro, can be described shortly. Earth Limited is a Bahamian company owned and controlled by Alvaro; Wind Limited is another Bahamian company controlled jointly by Alvaro and Maria Elena; Fire Limited is also a Bahamian company controlled jointly by Alvaro and Maria Elena through a trust of which Lucho is the principal beneficiary. Water Limited is also a Bahamian company controlled by Alvaro. Earth, Wind, Fire and Water were established to hold various shares in FSL pursuant to the agreements made in 1997. Water was to be associated with Maria Leonor and her children although there is a major issue about what, if anything, was said by Alvaro in that regard.

[12]FSL was the only Defendant apart from Alvaro to be represented for the purposes of the trial. "Codan" is a Bermudan trust company and trustee of the Brunswick Trust and of the Tarland Trust. Isabel is the principal beneficiary of the Brunswick Trust. Diana is the principal beneficiary of the Tarland Trust. Tarland Limited (also a Defendant) holds shares in FSL through the trust for Diana. Pembroke Company Limited is Codan's nominee as trustee of the Hanover and Brunswick Trusts.

[13]Both before and after the death of her father Isabel has worked for the charitable organisation established by LN. Maria Elena worked in EBN first in the telex department and then in the purchasing department. After her father's death she continued to work in the purchasing department whilst the business was under Mercedes' control. Both Isabel and Maria Elena were appointed directors of FSL albeit without any executive function. Both also resigned as directors at the request of Mercedes and apparently to meet Bahamian legal requirements on 31 May 1996.

[14]Alvaro is a former Chairman of the Monetary Board of Ecuador. He was a Presidential candidate in the 1998 Ecuadorian elections and again in the 2002 election which was taking place during the trial. It was for that reason that Alvaro gave his evidence by video link from Ecuador.

[15]In 1979 Maria Leonor gave Alvaro a general power of attorney to represent her interests. In 1994 Isabel and Maria Elena challenged the validity of the power of attorney in the course of proceedings in Ecuador commenced by Alvaro concerning LN's estate. LN's DISPOSITIONS

[16]LN and Mercedes were married in New York on 25 February 1972. The marriage was registered in Guayaquil, Ecuador on 15 August 1973. Under Ecuadorian law parties to a marriage enjoy community of property ("sociedad conjugal") in respect of property subsequently acquired. But it is permissible, with the approval of the court, to divide community property whilst living so as to replace the division which would otherwise be carried out on death.

[17]In June 1990 LN and Mercedes applied to a court in Ecuador to dissolve their sociedad conjugal and on 7 July the court declared it dissolved. Thereafter and prior to his death in 1994 LN arranged for 48% of the shares in FSL to be placed in a trust (called St. Etienne) controlled by Mercedes. A further 48% of the shares in FSL were placed in Tarland of which LN was the beneficiary during his life and Isabel, Diana and Maria Elena equal beneficiaries on his death. On LN's death the trust was to be controlled by Isabel and Maria Elena. The balance of 4% (considered to represent LN's interest acquired before his marriage to Mercedes) of the shares in FSL was placed in a trust called Cairncross. LN was also the beneficiary of the Cairncross Trust during his life. On his death Mercedes was to have a life interest and on her death Isabel and Maria Elena were each to receive 1½% and LN's grandson Luchito 1%.

[18]The consequence of these dispositions made during his lifetime was that on LN's death Mercedes had a controlling 52% interest in FSL's share capital made up of 48% held in the St. Etienne Trust and her life interest in 4% held in the Cairncross Trust. Moreover Mercedes also controlled 52% of EBN and the other companies engaged in the banana and shipping businesses through similar arrangements. In 1994 Mercedes was in her mid-sixties, in good health and wealthy in her own right. Isabel, Diana and Maria Elena each had a beneficial interest in 16% of FSL's shares. None of Alvaro, Lucho or Maria Leonor had any interest in the banana business but other parts of the empire were distributed under LN's will, including to Alvaro. Part (about 33%) of the non-banana businesses had also been distributed to LN's first wife Isabel Ponton on their divorce. In very general but sufficient terms Alvaro and Lucho and Maria Leonor each inherited assets valued at about $7.5m, whereas Isabel, Diana and Maria Elena each received 16% of FSL valued at about $150m and shares in the Ecuadorian banana companies. KEY DOCUMENTS AND DATES

[19]The Agreements made in 1997 lie at the heart not only of the dispute but of any chronological account and assessment of the evidence. Moreover there can be no dispute about the fact that they were concluded, what they say, and indeed do not say, and that all relevant parties had skilled independent professional legal advice upon them.

[20]The Agreements and a summary description of their purpose and origins are as follows. The Febres-Cordero Agreement made on 27 January 1997 by which Mercedes provisionally agreed to sell her interest in FSL to FSL for very substantial consideration. The commercial terms of the agreement were substantially similar to terms which Alvaro had proposed to Mercedes in December 1996. The Pre-Brunswick Agreement made on 30 January whereby Isabel agreed to sell most of her interest in FSL again for very substantial consideration. Isabel had decided following a fractious meeting with Alvaro and Maria Elena on 20 January, at which she felt Maria Elena had let her down, that she too wanted to sell out of FSL (save for 3%). The Master Agreement signed by Alvaro, Isabel and Maria Elena on 24 and 25 February and by Mercedes on 7 March which set out the finally agreed terms on which FSL would buy out Mercedes. The February Share Distribution Agreements (SDAs) made on 26 February which provided for the distribution of the shares in FSL on the basis of the prior completion of the Master and Brunswick Agreements. The February SDAs were themselves in commercial terms the fulfilment of a single sheet document dated 31 January 1997 and signed by both Isabel and Maria Elena which set out the agreed shareholdings in FSL following the sales by Mercedes and Isabel of their interests. The Brunswick Agreement made on 2 April by which Isabel sold all but 1½% of her shares in FSL on the finally agreed terms. The April Share Distribution Agreements (SDAs) also made on 2 April which set out the finally agreed terms on which FSL shares were to be distributed on completion of the Master and Brunswick Agreements. Those terms were substantially the same as had been agreed on 31 January and in the February SDAs. Notably, on each occasion, Alvaro was to have a 25.1% shareholding and Maria Elena a 25% shareholding.

[21]Two things are apparent, at least to someone with a modest grasp of English law, from the matters recited in the preceding paragraph. First, the substance of the agreements the claimants seek to impugn was agreed effectively by the end of January 1997 and unless representations were made, continued until and relied upon before then they would at least risk being of no legal effect. Second, that a claim for rescission of the SDAs alone, but not the Master or Brunswick Agreements, such as the claimants sought to make, would at the very least face an uphill struggle unless it could be shown that the SDAs could in practical justice and common sense be considered separately from the other agreements.

[22]Isabel and Maria Elena claim to have been defrauded by their brother Alvaro. In common justice as well as legal principle the precise but not pedantic nature of that claim has to be set out in their claim and supported by witness statements so that it can fairly be addressed. That is even more the case where what is alleged is nowhere documented and what is documented is itself extensive, carefully drafted, and on occasion inconsistent with what is alleged.

[23]The Claim Form is therefore perhaps more than usually important. It was issued on 18 November 1999. The Particulars of Claim were amended on 15 December 1999. I shall refer to them as the APOC. The APOC was, as required, verified by a statement that the claimants believed that the facts stated in it were true. That statement was signed by the claimants' then solicitor with their authority. THE WITNESSES

[24]The witnesses who gave oral evidence in court on behalf of the claimants were Isabel, Oswaldo and Maria Elena in that order. The only witness who gave oral evidence on behalf of the Defendants was Alvaro who did so by video link with Ecuador. It is right that I should record that despite the key issues in this case turning on the veracity of the witnesses and the fact that there were on occasions breaks in the transmission I am entirely satisfied that the use of a video link did not affect the court's ability to assess Alvaro as a witness nor did it materially inhibit Mr Pollock's cross-examination of him. That cross-examination continued over 4 days. It took place at a time when Alvaro had just secured second place in the first round of the Presidential elections in Ecuador and so was one of the two candidates in a second and final round to be held on 24 November. Representatives of the claimants were present in Ecuador when and where Alvaro was giving his evidence.

[25]Whilst the detail which underlies my conclusions is to be found in the chronology which follows and conscious of the fact that the impression the witnesses made is of considerable if not conclusive importance I will set out my views of them and the evidence generally.

[26]Isabel was not an impressive witness but she was sufficiently truthful both to make a last minute "supplementary" witness statement which made significant changes to her first statement and to find herself unable to agree with much of her own and Maria Elena's pleaded and stated case with the, no doubt unwitting, result of effectively destroying it. She appears to have trusted none of Mercedes, Alvaro and indeed Maria Elena. She is the least forceful character amongst them and sided with whoever she saw at the time as being best placed to further her own interests. At times that was Mercedes, at times Alvaro and now and at other times Maria Elena. It was her own decision (made no later than 20 January 1997) to sell her shares in FSL. She says it was Alvaro who persuaded her to retain 3%. Thereafter, and once she had secured through the Brunswick Agreement other assets to the value of the assets LN had left her, she in effect had no real interest in FSL or its management. Her motivation should be seen in the context that the other assets (in particular Banco de Credito) under her control have suffered considerable losses. She sought to blame Alvaro for that but in my judgment it is much more probable that he was right in saying that the fault, if fault there was, lay with the management of the bank.

[27]Oswaldo gave his evidence with the assistance of an interpreter. He did his best to support his wife, Maria Elena. He conspicuously failed. His recollection of events, unless documented, was understandably vague sometimes to the point of non-existence. Certainly his evidence about the representations alleged to have been made by Alvaro, despite his claimed presence, was so vague as to their timing and content as to provide no basis on which it could fairly be concluded that it assisted the court or his wife's case. The major dilemma he faced was that Maria Elena had plainly relied upon him for advice in the negotiations and it was he who had discussed with the lawyers the question of a shareholders' agreement to regulate the management of FSL after Mercedes and Isabel had sold out. Yet, as he accepted, none of the written agreements or drafts contained the promises or representations on which the claimants rely. He could not explain it. He accepted he had not even raised the alleged promises with the lawyers before or after seeing the drafts. He said he did not trust Alvaro. All the more reason to ensure all the supposed promises were notified and recorded. Oswaldo's evidence about the agreements made in February 1997 and his role in them was also in my judgment notably evasive and unsatisfactory.

[28]Maria Elena, I regret to say, I found to be a wholly unsatisfactory witness. She is not the simple or naïve woman uninterested in money she and her counsel sought to portray. She is acute and not unintelligent. She constantly sought to anticipate the questions she was to be asked. But she will say whatever she thinks will support her current case regardless of truth and regardless of what she has said before. She was caught in a lie time and time again but seemed to think it somehow did not matter. There is no doubt that she, and not Isabel, is the prime mover in this claim and its predecessor in New York. Her motive is money and perhaps an injured sense of her own ability and importance and an irrational conviction that her cause is just and she has been wronged. Her evidence about why the alleged promises and representations were not documented was a prime example of her approach to giving evidence. In contrast to her husband, she maintained (albeit not in her witness statement) that she had told Mr Anderson and Mr Dyer (the lawyers acting for her trusts and FSL) of the promises and, in effect, it was their fault if they had not found their way into any of the drafts. I have no doubt that was a lie. It was also an attempt to meet a powerful point by falsely blaming others. The lawyers' notes and documents have been disclosed in this case. Another stark example of her willingness to support a case regardless of truth can be found in her witness statement where in order to sustain the rescission claim she said both that she was unaware of the February SDAs and that the agreements with Mercedes to buy her out of FSL and that the agreements for distribution of the FSL shares were "very separate". They were not, as the documents overwhelmingly show and she knew. So much so that Isabel and Oswaldo readily and inevitably conceded as much and the rescission claim was properly abandoned.

[29]Alvaro was an impressive and attractive witness. He gave his evidence in a forthright manner. He is plainly intelligent, direct, tough, strong-minded and a dominant personality. It is no surprise that he has been successful in business. He said he believed in facts and did not make promises. What was agreed went in written agreements. That was wholly convincing. There is no question that he is by far the strongest character amongst the Noboa children and in particular in comparison to Isabel and Maria Elena either alone or together. That of course gives rise to the question whether he dishonestly abused that strength as they allege. I am quite satisfied that he did not. His sisters were of course supported at the time by their husbands and advisers. I am also satisfied that Alvaro's evidence was given honestly and truthfully to the best of his recollection. In particular, I am sure, he is not (as he said he was not) a man who would contemplate running any company unless he was able to control it. He believes in one boss. Indeed Isabel readily accepted that throughout their negotiations Alvaro had been asking for control of FSL. So did Maria Elena although she said she had not understood it at the time. Moreover Alvaro did not believe his sisters were capable of running a business and it is not in issue that he alone of the siblings had the ability and experience to do so. The value of FSL would, of course, depend on the success of the business. Alvaro's irritation on occasions at both the length and nature of his cross-examination was in my judgment both genuine and very largely justified and would have been so even if he had not been concerned, as he was, to get on with his election campaign. I mean no criticism of Mr Pollock in saying that the effect of his whole cross-examination and putting of the claimants' case to Alvaro was to demonstrate not just the improbability but the untruthfulness of the sisters' case and their attack on their brother. CHRONOLOGY AND FINDINGS ALVARO AND LN

[30]It was part of the sisters' attack on Alvaro's credibility to seek to show that he had behaved badly towards his father, especially so when LN was very ill and close to death, and that their relationship was a bad one. Alvaro denied that. In my judgment the question is both immaterial and distasteful. The facts are that(i) Alvaro was told by his father that FSL was not for him and Alvaro deduced it would be left to Mercedes;

(ii) Alvaro was left assets worth "only" some $7.5m, which may fairly be said to be a mark of parental criticism;

(iii) it was Alvaro's evidence that he had discussed with LN that LN should leave a substantial ($250m) sum in cash to him. Alvaro's evidence of this was of a single conversation with LN which was not in terms of commitment;

(iv) on the other hand, both Isabel and Maria Elena said they were told (in Maria Elena's case directly by LN) that LN had indeed provided for a cash sum of $60m to be paid to Alvaro, which would indicate much less parental criticism; and

(v) Alvaro had taken steps before LN's death to challenge the division of community property (which had been announced in the press) between LN and Mercedes which understandably annoyed and upset LN.

[31]I would also observe that it would be no great surprise on what I have heard and seen about them if a father and son who seem to have had much in common had a healthy respect for each other as well as a potential for conflict. Alvaro had worked in FSL when his father had first been seriously ill but had left in 1988 on his father's recovery when they could not agree terms on which Alvaro would stay. Alvaro had become successful in his own right in business at the time of his father's death. I also think it likely, as Maria Elena herself suggested, that LN excluded Alvaro from FSL because he thought Alvaro and Mercedes would not work well together THE DISPUTES

[32]After LN's death the disputes about the division of his estate began in earnest. The main protagonists were Alvaro and Mercedes. It was only after LN's death that the dispositions became known to any of the siblings save that Alvaro, as stated, was aware his father had disposed of FSL to others. Isabel and Maria Elena arranged to transfer their 16% holdings in FSL from Tarland to the Brunswick Trust (Isabel) and the Hanover Trust (Maria Elena) whilst Diana's 16% remained in Tarland. The trustee of all three trusts was "Codan" a company run by the Bermudan law firm Conyers Dill and Pearman (CDP).

[33]There is no doubt that Alvaro considered that LN's dispositions were unfair. He challenged the existence (and consequent dissolution) of the conjugal society in proceedings in the Ecuadorian courts. The basis of this challenge was that as LN and Mercedes had chosen to marry in New York no conjugal society existed to be dissolved. If the challenge succeeded the assets distributed to Mercedes on the dissolution and, it seems, the shares in FSL given to Isabel, Diana and Maria Elena, would have fallen back into LN's estate to be distributed according to Ecuadorian inheritance laws and thus, essentially, in equal shares to the children and Mercedes.

[34]In June 1994 Alvaro wrote to both Isabel and Maria Elena complaining that they had sided with Mercedes against him. He mentioned two matters: that they had accepted Mercedes "retaining my money" and that they had filed a suit against him challenging the validity of the power of attorney Alvaro held for Maria Leonor. The sisters replied in a letter dated 23 June that they did not understand what money Alvaro was referring to. Despite their, and Mr Pollock's, attempts to explain it no satisfactory explanation was given by either sister of this reply as each said they believed at the time Alvaro was indeed entitled to $60m. The fact is that both then saw it as in their best interests to support Mercedes against Alvaro. Hence also their challenge in the litigation to Alvaro's power of attorney for Maria Leonor.

[35]During the next two years the disputes continued but a number of events of some significance then occurred which can be shortly described. Isidro (Isabel's husband) had an executive role in the Ecuadorian companies. Mercedes was sufficiently unhappy about his conduct and its consequences for the banana business to start taking steps to replace him. The sisters also became concerned at being excluded from information about FSL. Isabel and Maria Elena, with Isidro's assistance, sought to negotiate with Mercedes to buy her out of FSL. These negotiations failed on the price put forward to Mercedes.

[36]Alvaro also negotiated with Mercedes. The concern felt by Maria Elena and Isabel (admitted by Isabel and Oswaldo but denied by Maria Elena) about the prospect of Alvaro replacing Mercedes as majority shareholder was such that in mid-December 1996 they sought legal advice on the question whether Mercedes could transfer the 4% shares in the Cairncross Trust (or at least the voting rights in them) to Alvaro as well as her 48% interest. It is a safe inference (from the terms of the Trust Deed and other evidence), and despite what Maria Elena said in her witness statement, that the advice they received was of no comfort to them on the point. Mercedes, for her part, seems to have been thoroughly fed up with the disputes, the damaging effect they were undoubtedly having on the business itself and the challenges to her personal position as LN's widow and the major beneficiary of his assets.

[37]So long as the litigation persisted LN's testamentary dispositions could not be put into effect. Various suggestions that Alvaro pressured Mercedes by the use of his political connections were made. Alvaro accepted that Mercedes may have believed that to be the case. He said it was not true although his sisters had suggested he should act in that way. He also said (rightly) that Mercedes herself had important people among her friends and that by the time the final agreements were executed his own political connections and influence were very much diminished. The dispute was a matter of public comment because of the people involved and the importance of FSL in the economy of Ecuador.

[38]What cannot be gainsaid is that Mercedes sensibly decided that she was not prepared to make any agreement with any of the siblings without an agreement among the siblings themselves to end all the disputes. By that time Alvaro and Ernesto Estrada, on behalf of Mercedes, had negotiated an agreement to buy out Mercedes from FSL to the point at which Alvaro had signed a document dated 12 December 1996 setting out the proposed basic terms and Ernesto Estrada had taken it away to get his mother's signature to approve it. On 20 December, however, he had returned the document with the part of it on which Mercedes and he, as witness, would have signed torn off. Alvaro's evidence was that Ernesto had earlier told him it had been signed and it is difficult to imagine why else it should have been torn as it was. Alvaro at once claimed in correspondence with both Mercedes and Ernesto Estrada that there was an agreement but he also acknowledged in his evidence that he could not prove an agreement without the signed document.

[39]On 22 December 1996 Mercedes wrote to all the Noboa children (and Luchito) except Maria Leonor to whom she referred in a postscript as concerned "through her authorised representative" by which she plainly meant Alvaro. Mercedes' letter made a number of significant points. She said the management of the banana business (with which she was not personally concerned) had not been satisfactory. That was a reference (at least in part) to Isidro. She said she had not been able to reach agreement with Alvaro because of a lack of agreement among the siblings. She said she had negotiated with Isidro but the terms proposed were not acceptable to her. She said she had reopened talks with Alvaro but they too had not proved successful and she had always insisted that it was a requirement of any successful conclusion to the negotiations "that a prior agreement should have been reached between all of you". Not surprisingly, Mr Vos relied strongly on this statement in support of his submissions that rescission was simply not permissible in law as it was clear that any agreement between the siblings was a precondition of any settlement with Mercedes and so it was not open to Maria Elena to seek to rescind the siblings' agreement but uphold the settlement with Mercedes which was subsequently concluded. Mercedes also made it clear in her letter that if there was no agreement she was about to take steps to install a new management of the business which would not have included any of the siblings or their spouses.

[40]It was this letter which finally drove Isabel, Maria Elena and Alvaro to co-operate with the objective of buying out Mercedes. Press conferences were held at the end of December and early January to announce family harmony and the sale of her interest by Mercedes (which Mercedes denied at the time). It was said that Alvaro was to be president and Maria Elena to help him in administration. Isidro was to be responsible for various non-banana businesses.

[41]There followed negotiations between the siblings and between them and Mercedes which culminated in the various written agreements to which I have referred. There is no dispute that in the course of these negotiations various proposals were put forward in particular by Maria Elena and Alvaro and discussed. Some are documented. Nor is there any dispute that the proposals included matters of corporate governance of and share distribution and voting powers in FSL. THE PLEADED CASE: THE EARLIER JANUARY PROMISES

[42]Paragraphs 22 and 23 of the APOC plead that two meetings "on or about 6 and 9 January 1997" were held between Alvaro, Maria Elena, Oswaldo, Isabel and Isidro at which "representations and warranties" were "given" by Alvaro that:

"(1) his only objective was that he should have a share in FSL equal to and no greater than the share held by each of Maria Elena and Isabel; (2) he was acting for and representing the interests of Maria Leonor, their incapacitated sister, as well as those of her minor children; (3) any shares in FSL which Maria Elena and Isabel agreed should be issued or distributed to or for the benefit of Maria Leonor or her minor children would be placed in a trust for the benefit of Maria Leonor and the minor children until the children were 30 years old; (4) he did not wish for, and would not seek to exercise, power or control in relation to FSL alone. Rather, Alvaro, Isabel and Maria Elena would jointly exercise such power and control. All material decision making in relation to FSL would be on the basis of the consent of all of them; (5) in order to ensure that there should be parity both in relation to ownership and control of their respective holdings: (a) Alvaro would not, without the consent of Maria Elena and Isabel, seek to acquire any additional shares in FSL (nor would he sell any shares without their consent); (b) Alvaro would not seek to vote any shares to be issued or distributed to or for the benefit of Maria Leonor and/or her minor children provided that Maria Elena and Isabel would not seek to vote the shares held by Tarland (over which they exercised voting control)."

[43]Paragraphs 24 and 25 of the APOC claim that at a further meeting on 13 January 1997 Alvaro "sought to persuade Maria Elena and Isabel" that they should permit him to become the controlling shareholder in FSL because the agreed restrictions meant he could otherwise always be outvoted by them acting together but they "rejected" his attempt "to resile from what had been represented and/or agreed by him" at the earlier meetings and so informed him at further meetings on 19 and 20 January attended by both of them and their husbands.

[44]Paragraph 26 of the APOC claims that shortly after 20 January Isabel informed Alvaro that she had decided to sell her interest in FSL but "only on the basis that Alvaro would agree that Maria Elena should continue to have management control of FSL (if necessary jointly with Alvaro) and that Alvaro should not seek to take ownership control of FSL, all in accordance with what Alvaro had already represented and warranted". Paragraph 27 of the APOC claims that Alvaro agreed or represented that he was willing to proceed on that basis. FINDINGS: THE EARLIER JANUARY PROMISES

[45]These alleged promises have not begun to be established: the simple and documented fact is that throughout the first 3 weeks of January and thereafter various ideas were discussed and debated but the parties were and remained in negotiation and indeed substantially in disagreement. Isabel's decision declared on 20 January to sell all but a small part of her shares in FSL was plainly a defining moment. Thereafter she (and Isidro) effectively left the future of FSL and the banana business to Alvaro and Maria Elena. It also meant that a further number of shares were available for distribution.

[46]Isabel's evidence was clear that no promises were made at any meetings on or between 6 and 9 January. Maria Elena in effect said the same. Isabel indeed said that Alvaro was at all times seeking control of FSL and proposing that he should vote Maria Leonor's shares. She also confirmed that no binding promises were made by Alvaro by 20 January. The APOC is therefore almost wholly inaccurate and the statement of truth supporting it unjustified and wrong. The parties had not even agreed what the eventual shareholdings would be. Insofar as Alvaro maintained that as from the end of December it had been agreed by his sisters that he would have control in a wider sense than being the Chairman and chief executive of FSL (which undoubtedly was agreed by then) I do not accept that. But I do unhesitatingly accept what is indeed not in the event really in issue on the oral evidence that Alvaro was always making it clear that control was what he wanted and was looking to be agreed. The notion that control should be on the basis of consent of the three siblings would be a recipe for corporate disaster to which I am sure Alvaro would never have agreed. That said, I do not doubt, nor does Alvaro dispute, that the discussions were in a context where all three (and later two) were talking in general terms about "working together" and "respecting each other".

[47]It was an important part of the claimants' case that Alvaro had produced a document for a meeting held on 13 January which had set out what he was then proposing. Indeed the document was one of the very few documents on which Mr Pollock placed any strong reliance in support of the claimants' case. I shall refer to it as the "distribution document". The evidence as to the date and origin of the document remains uncertain, but I agree with Mr Pollock that it was probably prepared by Alvaro and provided by him to his sisters on or shortly before 13 January. However Maria Elena herself said (in re-examination) that the document was not actually available at the meeting on 13 January although some of its points were discussed. She also said that Alvaro had asked at the meeting to be allowed to vote the shares (20%) then being proposed for allotment to Maria Leonor but she and Isabel had refused. The document itself plainly states that Alvaro is to act as Maria Leonor's representative. Far from stating that Alvaro would not vote Maria Leonor's shares it says only that Diana's shares would not be voted (by Isabel and Maria Elena). On that basis the key voting power, if Maria Elena and Isabel (each proposed to have 20%) acted together and disagreed with Alvaro (also to have 20%), would have lain with two small shareholdings assigned to "earning funds for" Lucho (2.8%) and for Luchito (1.2%) which is an improbable if not unimaginable basis for any final agreement. The distribution document was plainly part of a continuing negotiation. The continuing nature of the negotiations is also apparent from the fact that other documents (one of which is dated 13 January) show that other proposals were made on the basis that one or more of the three participants would choose to sell their share of the banana business. Indeed it is of obvious significance in the events which happened that the distribution document itself provided that if either Isabel or Maria Elena sold their allocation of FSL shares Alvaro should be entitled to 10.10%. It is of course also the sisters' pleaded case, supported by their witness statements, that at the meeting on 13 January Alvaro was seeking to persuade them that he should be the controlling shareholder.

[48]What is clear is that no agreement on anything was reached on 13 January. So much so, that after the meeting Isabel and Maria Elena met and determined that they would propose that Alvaro (and Maria Leonor) should have no interest in FSL, which they would keep, and Alvaro and Maria Leonor should be compensated by other assets and/or money.

[49]It is Alvaro's evidence (supported by a witness statement from Luchito) that there was a meeting on 15 January (according to Alvaro) and "in January" (according to Luchito) at which he, Luchito and Maria Elena were present when Alvaro said clearly to Maria Elena that in the event of disagreement between them he, Alvaro, would make the final decision to which Maria Elena expressed no disagreement.

[50]Mr Pollock said this must be inaccurate and indeed untruthful because by 15 January Isabel had not decided to sell out of FSL and the conversation recorded plainly took place in that context. As regards the date I think Mr Pollock is right; as regards the conversation I see no basis for a challenge to its terms. Indeed Isabel would recognise it and so would Maria Elena, albeit with hindsight, save perhaps for Maria Elena's alleged silence at what Alvaro was saying.

[51]Despite the APOC, it is not now even suggested there was any relevant meeting involving Alvaro on 19 January. But there was an undoubtedly important meeting on 20 January. The evidence about it, which is not really in dispute, bears no resemblance to paragraphs 25, 26 and 27 of the APOC. Isabel (as she had agreed with Maria Elena) told Alvaro at the meeting that he (and Maria Leonor) should leave FSL to her and Maria Elena. Alvaro was dismayed. Isabel felt Maria Elena did not back her up and left very upset. The meeting ended. There was nothing for Alvaro to "resile" from, and nothing was agreed. Isabel herself said so in her evidence and it is obvious from the nature of the meeting as each of them described it.

[52]Isabel informed Alvaro by telephone on 20 January after the meeting that she would leave FSL in exchange for other assets. Isabel agreed that once she had made that decision she thought "decisions of how (Maria Elena) was going to work in FSL with Alvaro were for (Maria Elena) to make". Isabel said she did not speak at all in this conversation with Alvaro about the control of FSL.

[53]After 20 January matters moved rapidly to the execution of the first set of agreements. THE FEBRES-CORDERO AGREEMENT

[54]The Febres-Cordero (or Settlement) Agreement was so named after Leon Febres-Cordero, a former President of Ecuador and friend of Mercedes, who signed the agreement as "Mediator".

[55]The Agreement was signed by Mercedes on 27 January 1997. It was also signed shortly prior to 27 January by Alvaro (both for himself and expressly on behalf of Maria Leonor) by Isabel and Maria Elena (both for themselves and expressly together with Diana Quintana de Wuth on behalf of Diana) and by Ernesto Estrada.

[56]The Agreement expressed itself to relate to the rights and shares of the parties as heirs and surviving spouse in the entire estate of LN. It provided (Clause 1) that LN's will would be opened and read (a formal procedure of Ecuadorian law to enable the estate to be administered). By Clause 2 Mercedes agreed to renounce all participation in the estate of LN in favour of those of his children who signed the Agreement (with the exception of certain specific assets which were to be her exclusive property). By Clause 4 Mercedes also agreed (in effect) to renounce her life interest in the Cairncross Trust in favour of those otherwise entitled to the FSL shares on her death namely Isabel (1½%) Maria Elena (1½%) and Luchito (1%). By Clause 6 Mercedes was to receive US$ 127 million paid in cash and five annual promissory notes each valued at $30 million and payable with interest and to be secured in a manner to be agreed. Clause 10 provided that: "10 Upon final implementation of this agreement, all the signatories promise, freely and voluntarily, to affirm in writing their express recognition that community property was established by the late Mr Luis A. Noboa Naranjo and his surviving spouse Mrs Mercedes Santistevan de Noboa".

[57]By Clause 11 the parties agreed:

"11. To terminate immediately and finally all verbal or written public and private recriminations, suits, attacks, complaints, etc., pressures and persuasions for the benefit of or against the respective parties, both in Ecuador and abroad. This agreement being made, they are expressly bound to renounce the right to start any litigation of any sort between them and all parties are prohibited from making each and every type of allusion, comment or observation in public or private with respect to the content of this agreement, its background, or the final implementation of the same. With respect to statutory heirs who do not subscribe to this agreement and among whom could be family members and third parties, beneficiaries of the benevolence of Mr Luis A. Noboa Naranjo, the dispositions and testamentary provision in their favour which are contained in the will shall be fulfilled and respected. If this agreement is not formally implemented in a period of thirty days after its signing, or upon the termination of the extensions accepted by all signing parties, all provisions of this agreement are null and void … and in such event, the shares, propositions, arguments or legal criteria previously held by each of the parties shall remain intact."

THE PRE-BRUNSWICK AGREEMENT

[58]A memorandum of agreement dated 30 January 1997 signed by Isabel, Maria Elena and Alvaro provided for the compensation to be received by Isabel in return for her surrender of her interest in FSL save for 3%. The later "Brunswick Agreement" set out the same substantial terms drafted formally by the parties' lawyers.

[59]The document recorded that Isabel was to have various interests in assets including 69% of Banco de Credito. Apart from the 3% of FSL the other assets can be described as the non-banana interests held by FSL. Isabel was also to have her liabilities (in excess of $20.5m) in respect of a shopping mall forgiven and promissory notes worth nearly $7.75m. The agreement also noted alternative monetary considerations in the event that some of the assets were not available or Isabel chose not to take them. The assets had been valued so as to equal Isabel's interest in the 14.5% of FSL which she was to sell. THE 31 JANUARY SHARE DISTRIBUTION AGREEMENT

[60]Dated 31 January and signed by both Isabel and Maria Elena there is a document which records the agreed distribution of shares in FSL. The document plainly assumes completion of the buy-out of both Mercedes and Isabel and relates to the distribution of shares following completion of those agreements. It provided as follows:

"Alvaro Noboa company 25.1% Trust for Maria Elena 1.5% Trust for Maria Elena 23.5% Maria Leonor company (represented by Alvaro) 25.00% Trust for Diana Noboa 16% Trust for Isabel 1.5% Trust for Isabel 1.5% Trust for Luchito 1.0% Luchito company 0.9% Alvaro and Maria Elena company 1 3.0% Alvaro and Maria Elena company 2 1.0% 100% "

[61]The reason why Maria Elena and Isabel had two separate entries was to reflect the 4% life interest Mercedes was to surrender so that the 1½% interests of the sisters were accelerated. So also Luchito's 1% interest. Luchito's 0.9% further interest was a balancing figure to reflect the fact that LN had left him 1% of FSL before FSL was depleted by the payments to be made by it to Mercedes as the price for her 48% of the shares. The companies shown as controlled jointly by Alvaro and Maria Elena were in the event "Fire" (3% for Lucho, Luchito and others) and "Wind" (for future distribution). The company to be controlled by Alvaro was in the event "Earth" and the company of Maria Leonor (represented by Alvaro) "Water".

[62]Thus at 31 January 1997 there was agreement, at least in principle, both on the terms of the buy-outs of Mercedes and Isabel and on the distribution amongst the siblings of the shares in FSL. None of these documents recorded or referred to any of the representations or promises alleged in these proceedings or anything resembling them. Maria Elena said she had agreed with Alvaro at a meeting on 27 January that he should have a 25.1% interest in FSL, albeit she says that was on the basis that he promised not to "use" Maria Leonor's shares. THE PLEADED CASE: THE LATER JANUARY PROMISES

[63]Paragraph 28 of the APOC claims that:

"On 23 rd , 24 th , 27 th , 28 th , 29 th and 30 th January 1997, there were further meetings between Alvaro, Maria Elena and Isabel at the offices of Alvaro in Guayaquil. At those meetings, Alvaro once again represented and/or warranted that after Isabel relinquished the substantial part of her FSL shareholding, any arrangement to be put in place with regard to FSL would involve Alvaro and Maria Elena (alone) jointly controlling and running the business of FSL and that the representations and warranties he had previously given and/or made (adapted as necessary given the change in the position of Isabel) would still apply (as to which, see paragraph 23 above). Those meetings were "closed door" meetings between the siblings alone, on Alvaro's insistence, Alvaro having told his sisters that he was their "trusted brother" and that the control of FSL was a family matter. "

[64]It was, as stated, on 31 January that agreement in principle was reached and recorded on the distribution of FSL shares among the siblings following the buy-outs of Mercedes and Isabel. The APOC claims this was agreed at a meeting of Alvaro, Isabel, Maria Elena and their spouses on or about 31 January.

[65]Paragraphs 31 and 32 of the APOC claim that at this meeting and at a further meeting held "some days thereafter" between Alvaro, Maria Elena, and their spouses "31. Alvaro repeated the warranties and/or representations made and/or given during the meetings in early January 1997 (allowing for the change in the position of Isabel). In particular Alvaro warranted and/or represented that:(1) he did not wish, and would not seek, to exercise power or control in relation to FSL alone; rather, Alvaro and Maria Elena would jointly exercise such power and control, and all decision making in relation to FSL would be on the basis of the consent of both of them;

(2) although he represented the interests of Maria Leonor and her minor children, any shares which Maria Elena and Isabel agreed should be issued or distributed for the benefit of Maria Leonor and/or her minor children were to be, and would be, held on trust until the minor children reached 30 years of age;

(3) he would not without the consent of Maria Elena and Isabel seek to acquire any additional shares in FSL (including those to be distributed to or for the benefit of Maria Leonor and/or her minor children) and he would not without her consent sell any shares either;

(4) he would not seek to vote any shares to be issued or distributed for the benefit of Maria Leonor and her minor children provided that Maria Elena and Isabel would not seek to vote the shares held by Tarland (over which they exercised voting control). 32. Further, Alvaro also warranted and/or represented to Maria Elena that if she were to agree to such a redistribution which included him, the board of FSL following any redistribution which included him as a substantial shareholder: (1) would consist of four persons, namely himself, Maria Elena and their spouses; (2) would, in relation to major decisions, require approval from at least three board members." FINDINGS: THE LATER JANUARY PROMISES

[66]I also reject these allegations. Indeed there was almost no evidence to support them at the conclusion of the claimants' case and not much even in the witness statements. There was no evidence at all that any meetings even took place on 23, 28 or 29 January or "some days" after 31 January. Both Isabel and Maria Elena said no promises or representations were made on 30 January. There is no document to support any of the allegations. It is accepted that there were no "closed door" meetings. No representations or warranties had previously been given by Alvaro and so none could be repeated.

[67]The concept of "jointly controlling and running the business" is not only hopelessly vague but fails to recognise that there is no dispute that at all times it was agreed that Alvaro would be chief executive of FSL. Indeed he was the only one qualified to take on that role. Most significantly, as the 31 January document shows, Alvaro was to have 25.1% of the shares in FSL which, if he was entitled to vote Maria Leonor's proposed shares, would give him control. The obvious question is why the 0.1%? Indeed, as Isabel agreed in evidence her understanding of the position was accurately recorded in a note Mr Anderson made of a telephone conversation with her on 7 February. The note records her saying that "Alvaro will control 25% of FSL and then 25.1% for Maria Leonor through a power of attorney which will be controlled by Alvaro". Alvaro also pointed out (without challenge) that the Spanish word in the document dated 31 January denoting that he represented the company proposed for Maria Leonor was "Apoderado". He said that was a strong word making it clear that he was to act in relation to her interest.

[68]If the supposed representations had been made and were binding their effect would have been that Alvaro had and could vote 25.1% and Maria Elena had and could vote 25%. The balance of control would be with the minor holdings including Isabel's 3%. That is fanciful and it is fanciful to imagine that Alvaro would have agreed to it and indeed most improbable that Maria Elena would have done so either.

[69]There is no dispute that there were discussions about placing the shares to be allocated to Maria Leonor in a trust. Some documents refer to a trust, others to a company, to hold the shares. The claimants indeed rely on the fact that Alvaro did create a trust and place the shares in the trust to support the allegation that he promised and represented that he would do just that. Of course, without an agreement not to vote or buy the shares such a promise would not assist the claimants in any event as it is not suggested that there was any agreement on the terms of any trust. Alvaro accepts that he said a trust for Maria Leonor and her children was a good idea. But he denies that he ever made any promises that the shares would be placed in trust and said he had always made it clear that he would decide what should be done for Maria Leonor just as Maria Elena and Isabel would (and did) decide what should be done for Diana. He said he had thought at one time that it would make more sense to place cash (perhaps $50m) rather than shares in a trust for Maria Leonor. Again, I accept Alvaro's evidence. It is supported by the documents which do not record any such promise and the later events not only in relation to the shareholders agreement (paras 84 to 91) but also when he acquired the shares (paragraphs 96 to 97).

[70]Although there is no dispute that it was agreed the board of FSL would initially consist of Alvaro, Maria Elena and their spouses there is no evidence at all that this was agreed in or by the end of January 1997. The initial composition of the board after 2 April was in fact Alvaro, Annabella, Maria Elena and Oswaldo and that was recorded in a resolution of FSL dated 2 April. The Articles of FSL at all times provided for decisions of the board to be taken by a majority but also for the chairman (always agreed to be Alvaro) to have a casting vote in the event of a tie. Although other changes were made to the Articles to reflect the agreements made in April, no change was made to this provision. Whether expressed (as it variously is in the APOC) that all decisions or material decisions required unanimous consent or approval of three board members, none are consistent with the Articles or the fact that they were only amended in other respects. THE MASTER AGREEMENT

[71]The Master Agreement was "dated as of February 26, 1997". It was entered into between FSL (as Purchaser) the interests of Mercedes (as sellers), Alvaro, Isabel, Maria Elena and trusts and companies in which they were interested.

[72]Mercedes, Alvaro, Isabel, Maria Elena and "Maria Leonor … represented by Alvaro …." also executed an agreement to record that the execution of the Master Agreement would satisfy the 30-day requirement contained in the last paragraph of Clause 11 of the Febres-Cordero Agreement. The Master Agreement itself implemented the Febres-Cordero Agreement. The recitals are unequivocal in recording that the Master Agreement was intended and agreed to be "part" of the resolution of all the disputes between Isabel, Maria Elena, Alvaro and Mercedes "in order to promote the unified and harmonious ownership, management and direction" of FSL and its affiliated companies. The commercial terms of the Agreement were essentially the same as the Febres-Cordero Agreement. The "Closing Date" was to be on or before 15 April. Isabel, Maria Elena and Alvaro agreed jointly and severally to indemnify Mercedes and FSL against any estate claims by Lucho, Diana and Maria Leonor. It was a condition precedent to performance of the Agreement by both FSL and Mercedes that the litigation should be terminated, claims released and the sociedad conjugal recognised. The Agreement (like all the major final agreements concerned) contained an exclusive jurisdiction clause naming "the Commercial Division of the High Court" in England. It was in fact sealed by FSL and Mercedes and her interests on March 7 1997 but by Alvaro and Maria Elena on 24 February and Isabel on 25 February. That was not an accident. Mercedes was not prepared to sign until the siblings had formally agreed on the distribution of the remaining assets amongst themselves. Alvaro also ensured that the Master Agreement was not released until the February SDAs were fully signed. THE FEBRUARY SDAs

[73]On 26 February three Share Distribution Agreements were executed. They were agreements between FSL, Earth, Water, Wind and Fire and respectively the Trustees for Brunswick (that is, Isabel), Hanover (that is, Maria Elena), and Tarland (that is, Diana). They were in substantially the same terms. Each took the form of a short three clause Agreement incorporating the terms of a larger agreement exhibited to it which had been drafted as a single composite agreement covering all the interests of Brunswick, Hanover and Tarland. The reason is not in dispute. Oswaldo was concerned that the trusts for the three sisters should be dealt with in separate agreements but as he raised that concern very late in the day the legal drafting was effected as stated. The agreement was signed by Alec Anderson on behalf of the Brunswick Trustees and the Hanover Trustees and Mr Bease on behalf of Tarland.

[74]The exhibited draft composite agreement referred to the proposed purchase by FSL of 48% of its shares from St. Etienne (that is, Mercedes) and the agreement of (in effect) the Trustees of Brunswick, Hanover and Tarland "immediately after" that purchase to cause FSL both to execute the Brunswick share purchase agreement (by which FSL was to purchase Isabel's shares in FSL save for 1½%) and to distribute 250 FSL shares to Earth (that is, Alvaro), 251 to Water (that is, Maria Leonor), 10 to Wind (that is Luchito) and 30 to Fire (that is Maria Elena and Isabel). There is no dispute that the document erroneously misplaced the figures of 250 and 251 as the agreement was that Earth should have 251 shares and Water 250 shares.

[75]It is, as a matter of the wording used, really beyond argument that the Master Agreement, Brunswick Agreement and February SDAs were together intended to produce a single overall transaction and result, namely the buying-in by FSL of its shares from Mercedes and Isabel and a redistribution of the share capital whereby Alvaro (Earth) held 25.1%, Maria Leonor (Water, represented by Alvaro) held 25%, Maria Elena held 25%, Isabel held 3% and Diana held 16%. The balance was to be held for Lucho, Luchito and 1% for future distribution. Diana in effect retained her 16% but only in FSL reduced by the consideration paid to Mercedes and Isabel and enhanced by the interests in Ecuadorian assets which Mercedes transferred to FSL as part of the Master Agreement. THE FEBRUARY SDAs : THE PLEADED CASE AND FINDINGS

[76]Paragraph 35A of the APOC sets out "the Claimants' case in relation to the February SDAs". Their case is that the SDAs were "no more than drafts unsupported by consideration and were not intended by any of the parties to them to be binding", alternatively that if intended to be binding the subsequent circulation of revised drafts "evidenced an agreement" that they "should no longer be treated as binding and/or should be discharged", alternatively that they were superseded by the Share Distribution Agreements dated 2 April 1997.

[77]The reason for this frankly extraordinary sequence of pleas is not hard to seek. To maintain a case that rescission of the Share Distribution Agreements alone (but not the Master and Brunswick Agreements) was sustainable in law the case that was sought to be made was that the February SDAs were to be or could be ignored or at least discounted and only the April SDAs considered. The basis of the rescission claim was that there was a time after the Master Agreement when FSL was in the control of Isabel and Maria Elena (also acting for Diana) whose independent decision it was then to distribute the shares as they in fact were distributed giving Alvaro 25.1% and Alvaro representing Maria Leonor 25%. So, it was contended, the April SDAs could be rescinded as separate agreements because they were not part of an overall settlement of the various disputes and Alvaro had no more than a hope that his sisters would distribute any shares to him or Maria Leonor.

[78]It readily and unsurprisingly became apparent from the cross-examination of Isabel, Oswaldo and even Maria Elena that such a case was quite unsustainable and it was properly abandoned by Mr Pollock at the conclusion of the claimants' evidence. It defied common sense. It was inconsistent with the sisters' complaint in New York. It would work patent injustice to FSL itself. It should never have been advanced but it serves to demonstrate an approach to this litigation by and on behalf of the claimants of which other illustrations also became apparent. The fact was that on 26 February (and indeed before) all the key elements of the transaction were in place: the Master Agreement provided for the buy-out of Mercedes and the February SDAs for the buy-out of Isabel and the redistribution of FSL's shares.

[79]It was also Maria Elena's and Isabel's instructions to their solicitors (confirmed in witness statements signed on 27 June 2000 and 2 April 2001) that they did not even know of the existence of the February SDAs until after this litigation began when they were mentioned in Alvaro's defence served on 25 February 2000. Maria Elena also said she had not authorised anyone to sign the February SDAs on behalf of the Tarland (for Diana) and Hanover (her own) Trusts. This evidence was also plainly intended to support the rescission claim. It has been exposed as entirely untruthful. Isabel really accepted as much.

[80]The documents give rise to an overwhelming inference that Maria Elena was also well aware not only of the February SDAs but also that they were required to be executed in tandem with the Master Agreement. On 22 February she instructed Alec Anderson on the proposed issue of the shares to Earth, Water, Fire and Wind. On 25 February she sent a manuscript note to Oswaldo enclosing copies of draft letters of direction from the protectors to the trustees of both the Hanover and Tarland Trusts which she had received from CDP asking Oswaldo to "check it and let me know". The drafts referred in terms to the intention to enter into the February SDAs stating both their purpose (future distribution of FSL shares) and their intended date (February 26). The draft concerning the Hanover Trust required only her signature authorising Mr Duran to sign as protector. The Tarland Trust draft required signatures from herself, Isabel and Ernesto Weisson. Maria Elena accepts that Oswaldo told her on 25 February that he thought there should be three separate agreements. Maria Elena did sign the Tarland Trust Draft. So did Isabel, who also signed a draft for the Brunswick Trust. Maria Elena also spoke to Mr Duran who said he had received some documents for signature from Alec Anderson and she told him to sign them. Mr Duran did sign the draft. Oswaldo's request for three separate agreements was duly carried out. He had a copy of the original single draft (sent to him on 24 February) which he marked up.

[81]No copy of a letter of direction in respect of the Hanover Trust signed by Maria Elena is included in the papers, but the number of lawyers involved and their knowledge of the documentary requirements in my judgment makes it improbable in the extreme that one out of so many legal niceties escaped the net. On 24 March CDP sent a fax direct to Maria Elena and Mr Duran in respect of the Hanover Trust attaching a "new Letter of Directions from Protector". This was in respect of what became the April Share Distribution Agreements. The fax said in terms that "while we realise that you have signed a letter similar to this one before" a new letter was required because of amendments to the Agreement. This drew no recorded comment from Maria Elena. The new letter itself, which Maria Elena did sign, also referred in terms to the execution of the February SDAs.

[82]It should also be repeated that there is a further consequence of the claimants' growing recognition of the binding nature of the February SDAs. Representations, to have legal effect, must be relied upon by the representee when entering into the relevant agreements sought to be rescinded, in this case the April SDAs. But if the April SDAs had in effect been agreed by 26 February or the end of January (as they were) then the relevant representations had to have been made prior to that. The claimants' assertions about the timing of the representations they allege have changed and the inference that this is the reason is compelling.

[83]It was also a significant part of the submissions made on behalf of the claimants that Alvaro had in effect, if he was right, achieved agreement for his control over FSL in exchange for nothing or next to nothing and moreover had done so when it was clear that his sisters had been most concerned to avoid Alvaro having control when that possibility first arose towards the end of 1996. That, it was said, made it probable that Alvaro was not telling the truth and that he had made the alleged promises. But the submission ignores a number of matters. It was Alvaro who agreed to forego his court claims against the estate and Mercedes with the result that the estate could be administered and the assets distributed and Alvaro also agreed to indemnify Mercedes against future estate claims by Diana, Maria Leonor and Lucho. It was submitted that Alvaro's legal claims were hopeless. I have read Mr Arzube's witness statement which gives some support to that submission. But I do not think it matters. There is no doubt (as the sisters themselves acknowledged) that the protracted claims and proceedings caused Mercedes real concern and unhappiness and were a significant factor in her willingness to settle. The terms of the Master Agreement itself suggest as much. Further, Alvaro was the only person in the family able to run FSL and so to maintain the value of its shares, and it cannot be gainsaid that Maria Elena (and Isabel) agreed to allot 25.1% of FSL's shares to Alvaro personally. Again, why the extra 0.1%? There was no coherent answer to this question from either sister which was consistent with their case that Alvaro had agreed to joint control. It speaks volumes as to where the truth lies. I would add, as Alvaro said, both Maria Elena and Isabel received the full value of their own inheritance without deduction. Neither of them gave up anything in favour of Alvaro or anyone else. Nor, of course, did they ever have control of FSL: Mercedes had control and was plainly prepared to exercise it in a manner to which the sisters and their husbands came to object. I do not find it surprising that the sisters were content to replace Mercedes with Alvaro in exchange for keeping the full value of their own inheritance. As Alvaro said, those who did give value were Mercedes in the price she required and Diana (at least originally) whose interest was diluted. Finally, once Isabel had decided her interests lay outside FSL, it is no surprise that Alvaro's persistent requirement for control prevailed, especially so after Isabel in effect chose to leave FSL. As Alvaro put it, and I accept, his sisters "gave up". FEBRUARY REPRESENTATIONS

[84]Paragraphs 33 and 34 of the APOC claim that "in or about late February 1997 Maria Elena caused Alvaro to be sent a draft Memorandum of Agreement dated 26 th February 1997 intended to record (in part) the agreements made between them as to the future management of FSL … In particular … the Memorandum of Agreement provided that:

"33. (1) the parties to the agreement would, in relation to any election of directors of FSL, vote all shares owned by the parties or over which those parties had voting control so as to fix the number of directors of FSL initially at four. Two of the four directors were to be nominated by Maria Elena and the Hanover Trust trustee (at the time, Codan). The number of directors might be increased and elected with the consent of, among others, Maria Elena and the Hanover Trust trustee. (2) none of the parties to the agreement would sell, transfer, convey, assign, charge, hypothecate or otherwise dispose of or grant any security interest with respect to any shares owned or held by them without the consent of, among others, the Hanover Trust trustee and Maria Elena. 34. At a meeting between Alvaro and Maria Elena in Maria Elena's office at FSL in early March 1997, Alvaro told Maria Elena that he did not consider that it was necessary or appropriate that he sign the Memorandum of Agreement to record these matters as they were brother and sister and as such should trust one another. Nonetheless, without signing the document, he did represent and agree that: (1) he would run FSL jointly with Maria Elena; and (2) he would abide by each of the terms contained in the Memorandum of Agreement."

[85]The Memorandum of Agreement referred to in Paragraphs 33 and 34 of the APOC was a document prepared by DEJ but faxed by Alec Anderson to Maria Elena and Oswaldo (at Oswaldo's fax number) on 24 February 1997. The fax enclosing the document read "please see draft Agreement as requested", said Mr Anderson would try to get a copy to Mr Dyer, and added "but if I cannot, please give copies to him and Alvaro as you deem appropriate". The draft was of an agreement to be made on 26 th February between Earth, Water, Wind and Fire, Alvaro and Maria Elena and Maria Elena's interests. It referred to the intended distribution of the shares in FSL by an agreement "dated as of February 26, 1997" and recited that "the parties intend hereby to set forth their agreement regarding how they will exercise any powers which are exercisable by them, directly or indirectly, in order to nominate and elect the Board of Directors of FSL and govern any dealings in shares of FSL". The body of the draft agreement included the provisions summarised in Paragraph 33 of the APOC.

[86]The draft made no reference to Isabel or Diana or their interests. Nor did it provide for any (let alone the alleged) restrictions on the power to vote any shares or upon the management of FSL. There is no dispute that Alvaro did not sign even this document and told Maria Elena he would not do so. But far from agreeing to abide by it, his evidence is that he told her he would never sign something like that. I have no doubt at all that Alvaro's account is to be preferred. It is entirely credible that Alvaro would never agree to anything which might restrict his powers to manage the company even in the very limited terms of the Memorandum. It was already agreed that he would be Chief Executive of FSL and would control 50.1% of the shares. He would also control the board by the casting vote. The draft did not in fact even purport to affect any of those matters. What I do think is probable, as Alvaro indeed accepts and Maria Elena herself said, is that he did talk again of "working together" and respecting each other and the like. It ought also to be noted that Maria Elena's evidence both as to the date on which the supposed conversation alleged in paragraph 34 of the APOC took place and the contents of the Memorandum was utterly confused.

[87]It is of interest in this connection that Mr Dyer of DEJ had also earlier sent Oswaldo (but not Alvaro) on 16 February a Memorandum attaching for his "review" a number of draft documents, including a draft of the Brunswick Agreement (by which FSL was to acquire Isabel's shares) and a draft "Agreement among Members" relating to the ownership of FSL by, in effect, Earth (Alvaro), Water (Alvaro on behalf of Maria Leonor) and Maria Elena. This draft was much more detailed than the later Memorandum. Recognising that the later Memorandum provided no support for and indeed was inconsistent with the claimants' case, in his closing submissions Mr Pollock sought to place considerable reliance on this earlier draft on the basis that Mr Dyer could hardly have produced it if it did not reflect what had been discussed. But even this draft contained no reference to the shares to be held by Water being placed in any trust or not being voted. Nor did it contain any reference to Diana's interest in 16% of FSL's shares. It did provide for a four-member board (Alvaro and his wife Annabella, Maria Elena and Oswaldo) and required unanimous agreement to increase the number of directors. It also provided that specified (material) acts of FSL required unanimous approval of members including the transfer of shares. Mr Dyer, however, says in his witness statement (supported by his own notes) that this latter provision should have been limited only to sales to "outsiders". I am sure he is right. Mr Cephas noted the same (see paragraph 89).

[88]Mr Dyer had written a joint letter to Alvaro and Oswaldo on 13 February entitled "Re: Fruit Shippers Management Structure". This letter included the statement:

"The policy and objective stated at the Guayaquil meeting was to organise the officer appointments to provide Alvaro Noboa with full executive power …. I recommend the following for the primary executive positions: Alvaro Noboa: Chairman of the Board and Chief Executive Officer. In this position, Alvaro Noboa would preside over all board meetings and as the chief executive officer of the company, would be the senior executive … with full executive power to direct the activities of and bind the company. He would be subject only to the direction of the board of directors."

[89]The reference to the Guayaquil meeting was to a meeting on 4 February. This meeting had been attended by Alvaro, Oswaldo (who arrived late), Mr Dyer, Mr Cephas, and Carlos Aguirre. Mr Pollock's reliance on the earlier DEJ draft is, however, wholly misplaced. There is no evidence that it was ever seen by or provided to Alvaro nor that such an agreement was discussed on 4 February. The earlier draft is not referred to in the Pleadings or the witness statements of either Isabel or Maria Elena. Nor was Alvaro cross-examined upon it. Its origin appears to have been a belief of Mr Dyer, as solicitor to FSL, that a shareholders agreement would be desirable. Mr Dyer discussed the matter with Oswaldo in the course of an aeroplane journey on 6 February travelling back from the meeting on 4 February. There is nothing to suggest that Alvaro played any part in the matter at all. Mr Cephas did comment on the draft, but I am quite satisfied that he did so without speaking to or taking any instructions from Alvaro upon it. When Mr Cephas did take instructions from Alvaro he made a note of them. Mr Cephas noted that it was agreed that the siblings would not sell their shares to outsiders individually ("all sell or none sell") but as regards other matters (and the only ones noted referred to the board) he recorded:

"AN told ME that issues will be resolved within the next few weeks or months – AN will want to work with ME for awhile before he decides all these issues – will work out all of these issues as a family as they go along."

[90]Mr Pollock placed reliance on this note. In my judgment it fully supports Alvaro's evidence. The bare facts are that the first draft shareholders agreement did not contain the pleaded promises or representations; it was never seen or considered by anyone other than the lawyers and Oswaldo; Alvaro was asked to sign the later Memorandum; the later Memorandum contained much less than the first draft and nothing at all resembling the alleged promises or representations; and Alvaro refused even to sign the later Memorandum.

[91]It is also these drafts which served to demonstrate some of the most unsatisfactory evidence given to the court to which I have already referred. Oswaldo, who was sent both drafts, could not explain why neither contained the alleged promises or representations. He said he had not told any of the lawyers about them. Isabel said she was too concerned with other matters at the time. But Maria Elena said (albeit not referred to in her witness statement or even suggested before) that she had told both Mr Dyer and Mr Anderson of the promises and representations allegedly made by Alvaro on which she relies in these proceedings. She did not. She said she had because she could not explain why she had not consistently with her case being true. THE APRIL AGREEMENTS

[92]On April 2, 1997 the final set of Agreements were executed at a unified closing. By the Brunswick Agreement (to which FSL, Isabel, Maria Elena and Alvaro and their interests were parties) Isabel sold 145 out of her 160 shares in FSL to FSL. The consideration was the interest in the various assets, unconnected with the banana and shipping business, and the payments and debt forgiveness recorded in the Pre-Brunswick Agreement.

[93]The February Share Distribution Agreements were re-drafted as three full separate agreements and with minor amendments (including the correction to Earth's and Wind's share percentages) were executed in Agreements also dated April 2, 1997. Once again, the agreements were plainly drafted as and intended to be part of a single process whereby Mercedes' and Isabel's shares in FSL were brought in and re-distributed. In addition the Ecuadorian banana interests owned by Mercedes (48% plus 4% for life) were transferred by Mercedes to FSL. DIANA's AGREEMENT

[94]In August 1997 Diana personally agreed to accede to the Master Agreement and consent to the Brunswick Agreement and Share Distribution Agreements. FSL agreed to pay $20m as consideration for her accession to the agreements. SUBSEQUENT EVENTS ALVARO's PURCHASE OF 25% of FSL

[95]Following closure of the April agreements Alvaro arranged for the 25% of FSL's shares distributed to Water to be held in a revocable trust for the benefit of Maria Leonor and her three daughters. Water was itself formed as a subsidiary of another company. There is evidence from Cassandra and Nastassia (who are now about 18 and 16 and live in Spain with their father) that they know nothing of this trust or any interest they have in it. Their half-sister, Carla, lives with Alvaro and his family in Ecuador. She is now 11. Alvaro said he had attempted both directly and through Carla to contact Cassandra and Nastassia but their father (Jay Sicre) would not permit it. Alvaro also expressed concerns about Mr Sicre acquiring knowledge of the arrangements he had made for the children for reasons which were not challenged and were understandable.

[96]On 30 October 1997 Alvaro wrote to Maria Elena. His letter included the statement "I also inform you confidentially that I acquired my sister Maria Leonor's share in Fruit Shippers". The letter was copied to Oswaldo amongst others. Isabel also accepted that she became aware of the purchase in December when Alvaro told her by telephone. Maria Elena had not thought to tell her about it.

[97]If Alvaro had promised or represented only some 9 or 10 months earlier that he would not acquire Maria Leonor's shares without Isabel and Maria Elena's agreement and that he would not vote them this was not only a gross violation of something said to have been of great importance to his sisters but also a remarkably open admission of just that. Yet it produced no adverse reaction from any of the addressees at the time or for some months thereafter. It cannot have been (and was not) lost on Maria Elena, Isabel and Oswaldo that Alvaro now owned as well as controlled 50.1% of FSL. Isabel said she had not reacted because she had considerable problems at the time (in the businesses she owned and in her marriage and indeed with Maria Elena) and the problem was really a problem for Maria Elena. Maria Elena said she had not written about it because she was too hurt but she had spoken to Alvaro to the effect that Maria Leonor's children would complain if the shares were worth more than the consideration when they became entitled to the trust fund. Alvaro also recalled a conversation to that effect. But the conversation itself does not address what Maria Elena says Alvaro had promised. Indeed it is hardly consistent with it, and I am satisfied that no more was said at the time. Indeed Maria Elena agreed, remarkably, that Alvaro had never promised that he would not buy the shares. It is also noteworthy that in October Maria Elena had no difficulty in writing to Alvaro about her reporting lines within the management structure of FSL and her objections to them.

[98]It was also a major part of the claimants' attack on Alvaro's veracity and integrity that he had in effect arranged the sale of Maria Leonor's shares by himself in a fiduciary position to himself in his own interest and indeed had done so at an under-value. Alvaro readily acknowledged that he took full responsibility for the transaction and the consideration although, at the request of the trustees, a valuation had been obtained "for their files". Had the matter itself been the subject of litigation and English Law no doubt interesting questions would have arisen but the only possibly relevant fact for this litigation is that very substantial consideration was agreed for the shares, and has been duly provided to the latest date documented (the end of the year 2000). Alvaro said that at the time of his purchase he had changed his mind about whether shares should be held in the trust particularly because Cassandra and Nastassia had no connection with FSL or Ecuador and because the banana business was sufficiently volatile to create uncertainties about the value of shares in FSL. I accept this evidence. I also think that the consideration agreed was of more than sufficient size to make it of no relevance to the issues in this case. THE MANAGEMENT OF FSL

[99]The claim alleges that from October 1997 onwards Alvaro put in place a management structure for FSL which limited Maria Elena's management role and so made false the representations that they would exercise power jointly and all decision-making would be based on the consent of both of them. There is no dispute that Alvaro exercised the role of Chief Executive Officer whereas Maria Elena's role was in "administration". There is also no real doubt that Maria Elena had a strong sense of her own status and abilities which was not shared by Alvaro. In March 1998 Alvaro sought election as President of Ecuador. To do so, he was required to resign as a director of FSL as was Oswaldo who sought election as a Senator (for an opposing political party). Alvaro, without seeking Maria Elena's consent or including her, appointed a committee of seven executives to manage FSL.

[100]Maria Elena was indignant and upset. She refused to permit a general meeting to be called to appoint new directors. She could do so as the Board then consisted only of Annabella and herself. In June 1998 Alvaro, having written to Maria Elena on 26 June to explain clearly the need to do so, revoked her appointment as a director so that Annabella could call the meeting. The meeting was held on 7 July. Two further directors (Mr Cephas and Ms Urrutia) were appointed in effect by Alvaro and without the consent of Maria Elena who was (as Alvaro's letter had said she would be) reinstated as a director at the same meeting. Further directors were appointed in the same way on 31 July. In September 1998 (having come second in the Presidential election) Alvaro was re-appointed to the Board. Finally, in June 1999, Maria Elena was relieved of any executive role in FSL. THE COMPLAINTS

[101]It was the events in June 1998 relating to her role in the management of FSL which led to Maria Elena (with Oswaldo) seeking advice from Mr Dyer. She said that Mr Dyer raised the question of Alvaro's buying of Maria Leonor's shares and said those shares were "the key" to the matter. When Alvaro learnt that Mr Dyer (who was advisor to FSL) was discussing such matters with Maria Elena and Oswaldo he forbad him to do so. Mr Pollock criticised that but I think Alvaro's reaction was quite understandable.

[102]There is a typed letter dated 27 June 1998 in the documents which is addressed by Maria Elena to Alvaro and which Maria Elena said she had sent by a driver to Alvaro's house. Alvaro said he had not received it. He was electioneering at the time. The wording suggests it was intended as a response to Alvaro's letter dated 26 June. The letter states that: i) Before the Brunswick Agreement was signed on 2 April 1997 Maria Elena had asked Alvaro to sign a shareholders' agreement but he had refused saying he gave his word to abide by it; ii) Alvaro had promised to place Maria Leonor's 25% in trust in her name so that her daughters would inherit them at the age of 30; iii) "We agreed that if any shares were sold we would get together to see which shareholders, among all of them, wanted to buy. Six months have not passed and you inform us that you bought [Maria Leonor's] shares".

[103]I accept Alvaro's evidence that he did not receive this letter at the time. It is also notable for the reference only to 2 April and the shareholders agreement and the lack of any reference to a promise not to vote Maria Leonor's shares.

[104]On 22 July Maria Elena wrote to Mr Anderson who acted for her. In that letter she set out much the same points as those I have numbered (i) to (iii) from the 27 June letter. She added that it had also been agreed that the 4 directors "would pass all resolutions with 3 votes," and "We were only going to use Earth with 25.1% shares and Hanover and Dressage with 25% shares". There was no reference to her letter to Alvaro dated 27 June or even the fact that she had already written to him on the matter.

[105]Mr Anderson helped Maria Elena to draft a letter for her to send to Alvaro. It was sent on 23 July. It was received by Alvaro. The Presidential campaign was over by 23 July. The letter asserted in terms that "in March and April last year before the closing" Alvaro had reached a verbal agreement with Maria Elena and Isabel including promises that three out of four votes would be required to pass board resolutions; that only Maria Elena's 25% and Alvaro's 25.1% of the shares in FSL would be voted "so that a majority vote including both of our votes would be required for the passing of any shareholder resolutions"; that the shares of any family member would only be sold with the consent of the three siblings; that the shares for Maria Leonor were to be held on trust; that "matters of great importance" would have to be approved by Maria Elena and Alvaro; and that Maria Elena had asked Alvaro to sign a shareholders agreement and he promised to "respect" her, said it was not necessary and promised that "this would be done so that we did not need any written agreement".

[106]Alvaro said he did not reply to this letter as Maria Elena had by then started to set up companies to compete with FSL and had openly allied herself to his political opponents. The letter was, so it said, copied to Mr Dyer, Mr Cephas, Mr Aguirre, Mr Weisson and "File". It is written in language which is at least curious if the 27 June letter had been written and sent. It too contrasts in its terms with the APOC. The representations and verbal agreements relied upon are all said to have been made "in March and April last year". There was no reference to any material event in January or February. THE NEW YORK PROCEEDINGS

[107]On October 13 1998, and notwithstanding the jurisdiction clause in all the relevant agreements, Maria Elena and Isabel brought proceedings against Alvaro in New York. Those proceedings were in the event stayed in favour of this jurisdiction. But the defendants understandably draw attention to discrepancies between what was then alleged and is now alleged by the claimants. The New York claim was for rescission and $501m damages. The complaint (with my emphases): i) Stated (paragraph 9) that the arrangements with Mercedes were " part of a larger arrangemen t among the siblings to redistribute the shares of FSL …" ii) Alleged (paragraph 18) that "in the latter part of February 1997 Alvaro called Maria Elena and Isabel into a private meeting … in Ecuador" and that "Alvaro convinced Maria Elena and Isabel that they did not need legal representation at this meeting because he was their trusted brother and because the control of FSL was a family matter" and that it was at this meeting that he promised to make all decisions about FSL jointly with Maria Elena; iii) Alleged (paragraph 16) that Maria Elena and Isabel had reasonably relied upon a false representation by Alvaro that he had a power of attorney from Maria Leonor granted prior to her incapacity when he knew it had lapsed when she became incapacitated; iv) Alleged (paragraph 22) that Alvaro promised Maria Elena and Isabel that "he and Maria Elena would share power over FSL with all business decisions to be made jointly ", and also "promised that he would not vote the shares held for Maria Leonor's benefit in exchange for the promise of Maria Elena and Isabel that they would not vote the shares held for the benefit of their sister Diana ".

[108]The significance of these complaints is that the first(i) was contradicted in the present proceedings to support the (now abandoned) plea of rescission and the second

(ii) dates the alleged promises about control of FSL to one private meeting in the latter part of February, whereas both Isabel and Maria Elena accepted in cross-examination that the allegation is untrue both in the date and in alleging that Alvaro had ever suggested such a private meeting. The contrast with the case pleaded in the APOC is also glaring. The third

(iii) complaint about the validity of Alvaro's power of attorney on behalf of Maria Leonor is not even alleged in the present proceedings, no doubt for the good reason that Isabel in her witness statement described the allegation as "not entirely accurate" and in 1994 the sisters had in fact challenged the validity of the power in the proceedings in Ecuador (proceedings which were not resolved) and thus could not truthfully have claimed to have relied on any representation about its validity in 1997 or at least not without considerable difficulty. The fourth

(iv) complaint bears a resemblance to complaints made in these proceedings but differs from them both in language and substance. WITNESSES

[109]Mr Pollock criticised Alvaro for not calling Luchito, Ernesto Weisson, Mr Cephas, Annabella, Mr Dyer or Mr Aguirre to give oral evidence. He submitted that they, or some of them, would have faced difficult cross-examination and their absence was a sign of concern about and weaknesses in Alvaro's case. Some of the matters which Mr Pollock said he would have asked about were developed from the documents in his closing submissions. In my judgment this criticism is also misplaced. The quality of the claimants' evidence was such that a decision to limit the defence response was entirely understandable. The witnesses were largely peripheral. The points Mr Pollock developed have, so far as I think necessary, been addressed in this judgment. It was also said by the defendants that the claimants conspicuously failed to adduce any evidence from Mr Anderson. CONCLUSION

[110]The alleged representations and promises are not supported but contradicted by the documents and the simple indisputable fact that Alvaro obtained control over 50.1% of FSL's shares. None of them has been established. The evidence of the claimants has been starkly exposed as inconsistent, lacking coherence, and wholly unreliable. Their witness statements and pleadings have been shown to be contrived and untruthful. Lord Grabiner submitted that the claim was brought dishonestly. The evidence to support the rescission claim and the changing in the dates on which the alleged representations and promises were alleged to have been made of themselves in my judgment justify that submission. Sadly, they do not stand alone. This claim must be dismissed. DRAMATIS PERSONAE Individuals An individual whose name is marked with an asterisk gave oral evidence at the trial. An individual whose name is marked with a double asterisk gave a witness statement which was put in evidence under the Civil Evidence Act. Aguirre Millet, Carlos Director and chief financial officer of FSL; former President of FSL; director of various companies within the FSL group. Member of executive committee appointed by Alvaro to run FSL during presidential campaign Anderson, Alec Partner in Conyers, Dill & Pearman; also director and representative of Codan Anton, David Expert accountant engaged on behalf of FSL and Alvaro **Arzube, Luis Ecuadorian lawyer; advised Mercedes in connection with Alvaro's litigation in Ecuador Baquerizo, Roberto Former group finance manager and Chief Executive Officer of FSL. Now controller of international accounts receivable at FSL Bease, Robert McLean (Bob) Director of Tarland. Director of Cairncross, Inc., Director of St. Etienne. Managing Director of Intercredit Bank & Trust Limited. Former director and Vice-President of FSL Boulton, Richard Expert accountant engaged on behalf of the Claimants Bucaram, Abdulla Former President of Ecuador and political ally of Alvaro Carpenter, Roger Officer of Private Trust Corporation Ltd. Authorised signatory for Business Management Ltd., the corporate director of Earth and Water ** Cephas, Derrick Dorrell Partner in Cadwalader, Wickersham and Taft; represented Alvaro in 1997 Coyle, James Former director of FSL and secretary to FSL Crespo, Andres Lawyer acting for Alvaro in Ecuador Cuesta, Alexandra Appointed director of FSL in July 1998 Diaz, Nury Appointed director of FSL in July 1998 Duran, Alfredo Protector of the Brunswick and Hanover Trusts in 1997 ** Dyer, (Thomas) Michael Partner at DEJ responsible for restructuring on behalf of FSL Estrada, Ernesto Mercedes' son from her first marriage Febres Cordero, Leon Former President of Ecuador, ex-employee of FSL and friend of Mercedes Fisher, Robert Vice President and Chief Operating Officer of FSL in 1996/1997 (resigned 1998). Member of executive committee appointed by Alvaro to run FSL during presidential campaign Gomez Centurion, Pedro Executive at FSL, favoured by Mercedes to replace Isidro at EBN Harrah, Richard Chief Financial Officer and Chief Administrative Officer of FSL since 1996/1997; Vice President of FSL from 1999. Member of executive committee appointed by Alvaro to run FSL during presidential campaign Hawkins, Howard Partner in CWT. Advised Alvaro in relation to litigation in NY against Pacific Fruit Inc. and in relation to the present dispute Mahuad, Jamil Former President of Ecuador (defeated Alvaro in last Presidential election) Maier, Kurt Member of executive committee appointed by Alvaro to run FSL during presidential campaign * de Molestina, Maria Elena Noboa The First Claimant. LN's fifth child * Molestina Zavala, Oswaldo ("Oswaldo") Maria Elena's husband Monge, Xavier Member of executive committee appointed by Alvaro to run FSL during presidential campaign * Noboa Ponton, Alvaro ("Alvaro") The First Defendant. LN's fourth child ** de Noboa, Annabella Azin Alvaro's wife Noboa, Carla Maria Leonor's third daughter (not Jay Sicre's) Noboa Baquerizo, Gonzalo Lawyer at Estudio Juridica Noboa, Mercedes' lawyers in Ecuador (no relation) Noboa, Gonzalo Current President of Ecuador (no relation) * Noboa, Isabel ("Isabel") The Second Claimant. LN's second child and eldest daughter. (Known as Isabel Noboa de Romero until her divorce from Isidro) Noboa Naranjo, Luis Adolfo ("LN") Father of 6. Husband of Mercedes." Noboa Ponton, Luis ("Lucho") LN's eldest son, known as "Lucho" ** Noboa Ycaza, Luis ("Luchito") Lucho's eldest son, known as "Luchito". Member of executive committee appointed by Alvaro to run FSL during presidential campaign Noboa, Maria Leonor ("Maria Leonor") LN's sixth and last child. Comatose since November 1991 and died in 1999. (Known as Maria Leonor Noboa de Sicre until her separation from Jay Sicre.) de Noboa, Mercedes Santistevan ("Mercedes") LN's second wife, known also as "Meche" or "Mechita" Ponce, Enrique Uncle of Isabel et al. Business partner and associate of LN Ponton Avila, Isabel LN's first wife and mother of his 6 children de Quintana, Diana Noboa ("Diana") LN's third child Quintana, Omar Baquerizo Diana's husband Rodriguez Morales, Manuel LN's lawyer in Ecuador Romero Carbo, Isidro ("Isidro") Isabel's former husband; former employee of Industrial Molinera S.A. and EBN Sanchez, Sylka Director of FSL and Alvaro's lawyer in Ecuador ** Sicre, Cassandra Noboa Maria Leonor and Jay Sicre's elder daughter ** Sicre, Jay Maria Leonor's estranged husband ** Sicre, Nastassia Noboa Maria Leonor and Jay Sicre's younger daughter Sitrick, James Consultant to, and former partner in, Coudert Brothers. Lawyer for and friend of LN Urrutia, Maria Appointed director of FSL in July 1998 Villota, Sandra Appointed director of FSL in July 1998 Weisson Pazmino, Ernesto ("EW") Controller for Corporacion Noboa and director of FSL since November 1999. Member of executive committee appointed by Alvaro to run FSL during presidential campaign ** de Wuth, Diana Quintana Diana's eldest daughter Companies, Firms and Trusts Agroindustries San Esteban S.A. Noboa company owning flower farm Arneil Inc. Bahamas company formed to receive shares in FSL for Maria Elena. Not in fact used Banco de Credito S.A. Bank in which Isabel received a controlling interest under the Brunswick Agreement Banco del Litoral Bank set up by Alvaro Bank of N.T. Butterfield Executor and Trustee Company Limited ("BETCO") Trustees of the Cairncross Trust Bonita Shipping Limited Subsidiary of FSL. Transferred m.v. "BLACK SEA" to Codan's nominee under Brunswick Agreement Brunswick Trust Trust of which Isabel principal beneficiary Cadwalader, Wickersham & Taft Alvaro's solicitors; also solicitors for Earth and Water since November 2001 Cairncross Inc. Company by which Cairncross Trust held shares in FSL Cairncross Trust Trust created by LN to receive 4% of FSL shares, held in Cairncross Inc. Club Angala Trust Trust created by LN to receive 4% of his Ecuadorian holdings. Codan Trust Company Limited ("Codan") Bermuda trust company. Trustee of the Brunswick Trust (and Seventh Defendant in that capacity) and of the Tarland Trust. Formerly trustee of the Hanover and Dressage Trusts, until replaced by Harrington Compania Azucarera Valdez S.A. Sugar company in which Isabel received a controlling interest under the Brunswick Agreement. Also holds cattle ranch called San Rafael Compania de Seguros Condor Corporacion Noboa insurance company Conyers, Dill & Pearman ("CDP") Solicitors in Bermuda for Codan Corporacion Noboa Not a separate legal entity; group of Ecuadorian companies controlled by FSL and including Exportadera Bananera Noboa (EBN) Coudert Brothers LN's solicitors. The Claimants' former solicitors Dressage Limited BVI company by which Maria Elena holds shares in FSL (through Dressage Trust). Fourth Claimant Dressage Trust Trust of which Maria Elena settlor and principal beneficiary. Owns shares in Dressage Limited Dyer, Ellis & Joseph ("DEJ") FSL's lawyers in Washington. (Formerly Dyer, Ellis, Joseph & Mills) Earth Limited ("Earth") Bahamas company owned and controlled by Alvaro. Second Defendant Ekostar S.A. Company in which Maria Elena and Oswaldo have interest; engaged in fruit production and export in Ecuador Estudio Juridica Noboa Mercedes' lawyers in Ecuador Exportadera Bananera Noboa S.A. ("EBN") Principal Ecuadorian company in the FSL banana business. Lead company in Corporacion Noboa Fire Limited ("Fire") Bahamas company controlled jointly by Alvaro and Maria Elena through the Fire Trust. Fourth Defendant Fire Trust Trust of which Lucho principal beneficiary Fruit Shippers Limited ("FSL") Sixth Defendant. Hanover Trust Trust of which Maria Elena principal beneficiary and through which she owns shares in FSL Harrington Trust Company Limited ("Harrington") Replaced Codan as trustee of the Hanover Trust and the Dressage Trust. Third Claimant in that capacity Herbert Smith FSL's present solicitors. Formerly solicitors for Earth and Water Industrial Molinera S.A. Principal company in LN's milling and industrial business Ingaseosas S.A. Company holding Ecuador Coca-Cola franchise in which Isabel received a controlling interest under the Brunswick Agreement Inversiones Cialiga S.A. Company through which Mercedes held 48% of shares in Noboa Ecuadorian companies LeBoeuf, Lamb, Greene & MacRae The Claimants' present solicitors Lovells Solicitors for Wind and Fire Macfarlanes Solicitors for the Seventh to Ninth Defendants Pacific Aviation Ltd. Noboa company which owned LN's private plane; retained by Mercedes under the Master Agreement Pacific Fruit, Inc. One of FSL group operating companies Pembroke Company Limited ("Pembroke") Nominee for Codan as trustee of the Hanover and Brunswick Trusts. Eighth Defendant P.R.I. Nominees Ltd. Director of Wind and Fire Red Snapper Investments Limited Company holding shares in FSL on behalf of Luchito St. Etienne Investments Limited Company by which Mercedes held shares in FSL (through St. Etienne Trust) St. Etienne Trust Trust of which Mercedes was protector and principal beneficiary and by which she held 48% of shares in FSL Tarland Limited Holds shares in FSL for Diana (through Tarland Trust). Ninth Defendant Tarland Trust Trust established by LN with himself as beneficiary during his lifetime, and Maria Elena, Diana and Isabel as beneficiaries in equal shares on his death. Subsequently amended so as to render Diana principal beneficiary. Protectors are Maria Elena, Isabel and EW Water Limited ("Water") Bahamas company controlled by Alvaro. Fifth Defendant Wind Limited ("Wind") Bahamas company controlled jointly by Maria Elena and Alvaro. Third Defendant

Cited in 2 later judgments