Sheikh Abdulrahman Khalid Bin Mahfouz v Sheikh Sultan Bin Mahfouz & Anor [2016] EWHC 1380 (Comm)

Case No CL-2015-000812[2016] EWHC 1380 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
COMMERCIAL COURT
Venue Rolls BuildingDate Wednesday, 25 th May 2016
Before
MR. JUSTICE LEGGATT
B E T W E E N:
Between
SHEIKH ABDULRAHMAN KHALID BIN MAHFOUZClaimantSHEIKH SULTAN BIN MAHFOUZClaimantEMAN BIN MAHFOUZClaimantNAELA BINT ABDULAZIZ MOHAMMED KAKIClaimantTHE ARAB ASIAN INTERNATIONAL HOLDING COMPANY (CLOSED)ClaimantMUHANED FARID MAHMOUD EL RASHIDDefendantTHE NOBLE HOLDINGS GROUP CORP (BVI)Defendant
Transcribed by BEVERLEY F. NUNNERY & CO.(a trading name of Opus 2 International Limited)Official Court Reporters and Audio Transcribers25 Southampton Buildings, London WC2A 1ALTel: 020 7831 5627 Fax: 020 7831 7737info@beverleynunnery.com
MR. R. ANDERSON QC AND MISS L. POWELL (instructed by Jones Day) appeared for Claimants. for THE DEFENDANTS did not appear and were not represented.
J U D G M E N T
[1]Where the defendant to a claim for money puts forward a defence which has a real prospect of success, he is entitled to have the merits of the claim and of that defence decided at a trial. Where, however, it is entirely plain on evidence before the court that the defence put forward is entirely without substance and is fanciful, it is unnecessary to have a trial of the proceedings and the claimant is entitled to summary judgment on his claim.[2]In this case, the claimants have applied for summary judgment on their claim for repayment of the sum of €35 million which was transferred to a Swiss bank account owned and controlled by the first defendant on 22 July 2011.[3]The first claimant is a Saudi Arabian businessman, the second, third and fourth claimants are members of his family and the fifth claimant is a private company incorporated in Bahrain controlled by the bin Mahfouz family. Dr Osama Bahanshal, who features in some of the events relevant to this action although he is not a party to it, is an advisor to the first claimant. The first defendant is a Jordanian national who styles himself as His Excellency A.M.R. El Rashid and claims to be a successful businessman with vast contacts in the Middle East. I shall refer to him simply as “the defendant”. There is a second defendant which is a BVI company, Noble Holdings, owned and controlled by the first defendant.[4]The background to the payment of €35 million as set out in the particulars of claim and in the claimants’ evidence involves various meetings held in July 2011 at the defendant’s home at 10 Walton Place, London, SW3 between him and the first claimant. At those meetings the defendant claimed that, as a result of his contacts in the Middle East, he was able to procure supplies of oil at a cheap price and that oil contracts were going to be granted to a company called RAM Oil. He further claimed that, in order to secure those contracts, it was necessary to pay a deposit of €75 million and that he, the defendant, had already paid part of that deposit but the remaining €35 million still needed to be funded. The first claimant agreed that his family would pay that €35 million.[5]An agreement was prepared, entitled “Confidential Cooperation and Qualifications Agreement”, to which there were four parties. Those parties included Noble Holdings, represented by the defendant, and the fifth claimant company. The terms of the agreement included at clause 13 a term whereby, if the oil purchase contract that was supposed to be entered into by RAM Oil with an unnamed oil producing entity was not executed by the end of the month, RAM Oil and Noble Holdings undertook to be responsible for recovery of the deposit and paying back the amounts that had been paid. In addition, on 20 July 2011, the defendant signed a personal guarantee the effect of which was that if no oil purchase contract was made (or, if a contract was made, until the sum of €35 million had been recovered under it) he would be responsible for repayment of that sum.[6]The claimants’ case is that, on the strength of the representations which the defendant had made and the agreements which had been signed, the sum of €35 million was transferred on 22 July 2011 from a joint bank account held by the first to fourth claimants to a bank account at Lombard Odier, a private bank in Switzerland. The first claimant believed at the time that the money was being sent and paid into that account directly to the oil producer entity as the balance of the deposit necessary to secure oil contracts. In fact, as the defendant has subsequently acknowledged, the bank account in question was the defendant’s own bank account.[7]I am satisfied that, as a matter of legal analysis, if the facts alleged by the claimants are correct, the money was received by the defendant on trust to be held by him and used for the purpose of paying the intended deposit to the oil producer entity and for no other purpose. It is apparent that that purpose failed as the money never was paid to any oil producer entity. Information obtained by the claimants pursuant to a freezing order in these proceedings has established that as soon as the money was received into the defendant’s Swiss bank account, which had a zero balance before the money was paid in, he immediately went on a spree, spending the money for his own private purposes. Those purposes included: using money to carry out various foreign currency exchange trades, share trades and commodities trades; issuing cheques and making transfers distributing money to other accounts of his own and to accounts of third parties, including his partner; money spent on purchases at Harrods and on buying luxury vehicles; and, significantly because this part of the money can be traced into real property, buying the premises at 10 Walton Place in which the defendant was living at the time for the sum of £12.75 million.[8]By early 2012, it had become apparent that no progress had been made with the acquisition of the supposed lucrative oil contracts through RAM Oil. At that stage, the defendant persuaded the claimants that they should agree to the money (which they believed was still held in the Swiss bank account into which it had been transferred) being used for a further similar joint venture. According to the claimants’ evidence, in April 2012 it was agreed that a new joint venture company would be established and such a company was formed, called Union International Petroleum, incorporated in the British Virgin Islands, which was supposed to be used for obtaining lucrative oil contracts. The parties at that stage signed letters formally withdrawing from RAM Oil. Then in September 2012, a new Confidential Cooperation and Qualifications Agreement was drawn up and signed documenting these purported new arrangements together with an accompanying personal guarantee from the defendant in similar terms to the one that he had given before.[9]Needless to say, nothing came of the further opportunities to acquire lucrative oil contracts which the defendant had promised. In late 2013, the claimants finally began to lose patience and decided that they wished to reclaim their money. On or about 18 February 2014, the first claimant and Dr Bahanshal met the defendant at 10 Walton Place and, according to their evidence, handed him a letter dated 16 February 2014 requesting repayment of the sum of €35 million. At that same meeting, the defendant prepared and signed a letter dated 18 February 2014 in which he promised that he would repay the money within a period of between forty-five and ninety days.[10]The money was not repaid within that time and, beginning in July 2014 and continuing for the rest of that year and until August 2015, numerous text messages were exchanged between Dr Bahanshal representing the claimants and the defendant. In those messages the defendant gave repeated assurances that money was going to be repaid and made repeated excuses as to why no money was in fact repaid. In particular, a meeting took place in September 2014 at which, according to what is recorded in the text messages, the defendant promised that he was going to make an initial repayment of €18.5 million on Wednesday, 24 September 2014. However, that day came and went and afterwards various excuses were proffered, such as the bank details having been incorrect. When those excuses wore thin, he came up with a proposal that the money would be paid in the form of three banker’s cheques. However, those banker’s cheques never materialised. The saga continued with further similar promises followed by excuses when no money was returned.[11]On 16 July 2015, a telephone conversation took place between Dr Bahanshal and the defendant which was tape-recorded by Dr Bahanshal’s daughter and a transcript of that conversation, as translated from the Arabic, records the defendant discussing how he was at that time suggesting that a trip should take place to Switzerland to meet the managers of the Swiss bank where the money was supposedly still held in order to sort out its repayment. Of course, no such visit took place and no repayment was made. On the evidence subsequently acquired from the defendant’s bank statements, it is apparent that by this time the money had long since been spent.[12]Ultimately, on 1 September 2015 the claimants issued a statutory demand for repayment. That elicited a response from solicitors, Taylor Wessing, instructed by the defendant, in a letter dated 17 September 2015. In that letter the defendant’s solicitors did not dispute that the Confidential Cooperation and Qualifications Agreement had been made in 2011 and that the sum of €35 million had been paid into a Swiss bank account. The Letter said that the money was not advanced to RAM Oil because RAM Oil never opened a bank account. The letter claimed that in autumn 2011 the first claimant had approached the defendant wanting to withdraw his investment and that the defendant prepared instructions to the Swiss bankat that time to return the €35 million to the claimants. However, the first claimant allegedly then said that he wanted to invest in the new entity which was then set up, Union International Petroleum. According to the defendant’s solicitors, an agreement was then reached under which the €35 million would be kept by the defendant partly to compensate him for losses which he had allegedly suffered in withdrawing from the venture with RAM Oil and partly as consideration for the purchase of 45 per cent of the shares of Union International Petroleum, which was to be the vehicle for the intended new venture.[13]To support the account given in the letter from Taylor Wessing dated 17 September 2015, a document was enclosed which purported to be a letter dated 10 April 2012 from the defendant to the first claimant recording the terms of the alleged agreement which I have just described.[14]Thereafter, these proceedings were commenced and particulars of claim were served on 1December 2015. No defence has been served by the defendant, although the time for service of a defence has expired some time ago. Such defence as he has put forward to the claim is contained in two witness statements and principally in his second witness statement made in these proceedings which is dated 25 April 2016. In that witness statement, the defendant no longer stands by the account given in the letter from his previous solicitors, Taylor Wessing, saying simply that that account was inaccurate. He gives a new explanation of the circumstances in which the payment of €35 million was made. He accepts that he received that money into his bank account. He contends that the money was not, however, a deposit and now claims instead that it was given to him as a gift. According to the defendant, he had certain private meetings with the first claimant in July 2011 at which the first claimant reached out to him using a particular Bedouin tradition for that purpose.[15]According to the defendant’s evidence, the first claimant said that he knew that the defendant had sensitive, confidential information about the first claimant’s father from his work in national security throughout the Middle East, including information which could provide access to vast assets hidden by his father to a value of billions of dollars. In his witness statement, the defendant says:
“He asked to see the file containing this information. He initially offered to pay me £300 million for the entire file. I told him I could not release it and would not accept the money for any reason. However, he was insistent about seeing the file. After he reached out to me and I gave him my word of honour, I showed him one file for a minute or so. He flipped through the papers, found something about a safe deposit in Bank Austria, Vienna, near the Hotel Sacher. He told me that he had found something on this after his father died. He said there was at least £300 million worth of property in it, including precious stones, and it was just part of his father’s emergency reserve.”
[16]The defendant claims that he did not on that occasion give the first claimant any further information or assistance but that after that meeting, unsolicited by him, the first claimant arranged to pay the sum of €35 million into the defendant’s Swiss bank account.[17]Shortly after that, a further meeting allegedly took place at which the defendant gave the first claimant the key to the safe deposit box at the Austrian bank. According to the defendant, it was “a heavy, multi-pronged, bronze coloured metal key with a number on it.” He goes on to claim in his statement that he had information contained in a secret red file that he kept, he says, in his bedroom at 10 Walton Place about the sort of assets which had been hidden by the first claimant’s father which the first claimant wanted to get hold of. These assets supposedly included: extremely valuable paintings, including by Rubens, Picasso and Van Gogh, in a safe deposit box in Credit Suisse in Zurich; gold bullion, paintings and bearer shares in a large secure room in Kaiser Partner private bank in Liechtenstein; and paintings, treasury bonds, gold bullion and cash held in HSBC private bank in Hong Kong.[18]In a nutshell then, the defence put forward by the defendant is that the sum of €35 million was given to him as a gift in return for sight of some information about property of the first claimant’s father contained in a secret red file. In recognition of this gift, the defendant allegedly handed over the key to a safe deposit box.[19]I am entirely satisfied that there is no substance whatever in that defence and that it is a figment of the defendant’s graphic imagination. There are at least six reasons why it is wholly incredible and incapable of being taken seriously.[20]The first is that it was raised for the first time on 25 April of this year in the defendant’s second witness statement in these proceedings. It is incredible, if there were any truth in the defence, that he would have waited until then to provide his explanation of the payment against a background where he had been served with a statutory demand on 1 April 2015, served with proceedings on 13 November 2015 and served with the particulars of claim on 1 December 2015.[21]Second, the contents of the explanation given are wholly incredible and fantastical. The idea that assets worth billions of US dollars and certainly more than £300 million had been somehow lost to the bin Mahfouz family, and that huge sums of wealth were residing in a safe deposit box in a bank in Vienna to which the defendant just happened to have the key, is the stuff of fantasy. There is no explanation of how he had got this key, no explanation of why the first claimant should have paid €35 million without even any expectation at that stage that he would be given the key to the magic safe deposit box, and no explanation of why the first claimant should then seek to reclaim that sum four years later with what, on the defendant’s account, must be a completely trumped up case.[22]The third reason why the defence is incapable of belief is that no other evidence apart from the defendant’s say-so has been put forward to support it. Sadly for him, the secret red file which contained the information on the first claimant’s father has disappeared. He is unable to produce it. The only explanation offered for that is a suggestion that the file was taken when documents were removed from the defendant’s house pursuant to a search order. However, no complaint that this valuable file had gone missing was made until some time after the search had taken place. Moreover, detailed evidence has been provided of the circumstances in which the search was carried out which indicates that, throughout the whole time when the search was being conducted by the claimants’ solicitors, the defendant’s own solicitors, Taylor Wessing, were present and in attendance. It is inconceivable in those circumstances that any such secret file could have disappeared as a result of the search.[23]The fourth reason why the defence is incredible is that it is inconsistent with the previous defence advanced in the letter from Taylor Wessing dated 17 September 2015. A witness statement made by a partner at Taylor Wessing, Mr. Neil Smyth, subsequently confirmed that that letter had been fully reviewed and approved by the defendant himself before it was sent. Furthermore, it attached, as I have mentioned, a document which purported to be an agreement made in April 2012 in support of the account given in the letter. That document as well as the explanation given in the letter is completely inconsistent with the account which the defendant has now put forward.[24]The fifth reason why the defence is incredible is that it is inconsistent with the letter dated 18 February 2014, mentioned earlier, which the defendant signed and in which he acknowledged his obligation to repay the sum of €35 million and promised to repay it within forty-five to ninety days. It is also inconsistent with the long series of text messages between the defendant and Dr Bahanshal to which I have also referred, in which numerous promises were made that the money was about to be repaid. It is also inconsistent with the telephone conversation between the defendant and Dr Bahanshal in July 2015 which was tape-recorded. The suggestion that that evidence could somehow have been fabricated is completely fanciful and without any substance whatever.[25]The sixth reason why the defence put forward is incapable of belief is that it is inconsistent with the two sets of agreements and personal guarantees signed by the defendant which documented the arrangements regarding the intended use of the money to secure lucrative oil contracts. Those agreements are referred to, moreover, in the letter of demand for repayment that was made in February 2014. The second guarantee signed by the defendant in September 2012 can be shown to have been created at that time through the metadata for the document which has been put in evidence. The defendant’s suggestion that it is a subsequent forgery can be altogether discounted.[26]Taking the evidence as a whole, it is plain beyond doubt that the sum of €35 million was not a gift to the defendant and was transferred to him for a purpose which failed because he misappropriated the money.[27]The defendant has written a letter to the court yesterday in which he asked for an adjournment of this hearing, pleading that he is without money to pay his current solicitors, Baker & McKenzie, but suggesting that money will shortly come through which will enable him to fund his defence. In light of the evidence before the court, the suggestion that more money may shortly be coming through is not entitled to any greater credence than the promises that the defendant made many times that he would repay the claimants after he had already squandered their money. If I thought that there was any possibility that the defendant might be able to put forward evidence which would indicate that he had a real prospect of successfully defending the claim, I might have been sympathetic to his application for an adjournment. However, in circumstances where it is entirely clear that he has no prospect of coming up with any genuine defence and that the defence which he has put forward is fantastical and false, no purpose would usefully be served by giving him any further time.[28]The claimants are entitled to summary judgment and judgment will be entered for the sum of €35 million together with interest on that sum.