“Warning to Guarantor This is an important document. You should take independent legal advice before signing and sign only if you want to be legally bound. If you sign and the Lender is not paid you may have to pay instead of the Borrowers without any limit on your liability.”
“7. What were all of the reasons for the change of entity and name from DTA to North Star? The Q4 2008 collapse in freight rates gave DTA further opportunity to expand its activities in the ship recycling market. 2012 was a record year for ship recycling volumes and in 2013 we decided to restructure our trade finance lines to cater for the increase in ship recycling volumes. At this juncture, the most interesting financing options at our disposal required us to set up North Star which has 100% beneficial ownership as oppose[d] to DTA’s 49/51% (on paper) share split which has to exist in any onshore UAE based LLC Company. North Star’s corporate structure provides an investor friendly transparent framework, devoid of Sharia Law governed corporate LLC requirements. In addition to the above, DTA continues to operate as a service company in Dubai. The company continues to be in good standing, holding a valid commercial license (copies of which can be provided for reference & records), having assets and providing services to the shipping industry from its registered office in Dubai, UAE. 8. Why is Tahir Lakhani not a director of North Star? Apart from the reason listed above, North Star was formed also with forward succession planning in mind, with Tahir Lakhani’s sons Ali Lakhani and Hasan Lakhani who are now fully active in the business.”
“This year’s winner of the Young Person in Shipping award joined the family business in 2012 and now has overall responsibility of the company’s sale-and-purchase and operational activities as well. Demonstrating his capabilities to the full, he has recently been responsible for overseeing and managing the successful dry-docking of the company’s latest vessel acquisition which was carried out in February 2016 in Dubai dry-docks. He has also built on an important strategic relationship with the Emirates National Oil Company, ENOC, and he is clearly a young man with a great future ahead of him in the shipping business.”
“Management Team with Considerable Experience”
“Mr. Ali Lakhani is the oldest son of the Chairman, graduating from Plymouth University U.K., in Maritime Law and Maritime Business in 2009. He went on to work for top-tier ship broking Companies; Braemar Seascope London (now Braemar ACM), SSY (Simpson Spence & Young) London and leading international law firm Stephenson Harwood, London. He then joined the group in 2012 being responsible for it’s S&P and trading activities. “Mr. Hasan Lakhani is the youngest son of the Chairman, a graduate from Regents University London with BA in Global Finance Management, joined the DTA Ship Agency in 2013, currently holding the position as General Manager of the DTA Ship Agency, Dubai Branch. He has had Internships with Emirates National Bank of Dubai and the world largest shipbrokerage Clarksons Platou Shipbrokering.”
“The corporation is insolvent and unable to pay its debts as they became due.”
“because I entered into them on instructions from my father, without understanding the nature of the liabilities I would be taking on or the risks involved, where I had no active involvement in the borrower companies and in circumstances where, as the Claimants (and their advisers and agents) were aware, I had not received any legal advice in relation to them.”
“[16] I had no involvement in the day to day management of North Star (and its subsidiaries) and no involvement or detailed knowledge of North Star’s maritime recycling business, apart from the fact that I would occasionally assist in finding ships to purchase for recycling. I also had no knowledge of North Star’s overall financial position, the detailed terms of its loan agreements or the status of its loans (including the loans with the Claimants). [17] In particular, I had no real contact with lenders relating to the financing for acquisition of vessels, including Yield Street, and their agents. So far as I can recall, the only direct contact I ever had with Yield Street was that I attended a relationship meeting at Yield Street’s New York office in August 2018. This was more of a social meeting to allow us to meet the main individuals at Yield Street and there was no discussion of the specifics of North Star’s business with Yield Street. I was also occasionally copied on emails from my father to Yield Street. [18] As a director of North Star and its subsidiaries (as well as several other group companies), I was often required to sign documents. I would estimate that I signed hundreds of documents each year without reading them. Where my signature is required on documents, my father or one of his staff would place the documents in front of me with marks to show me where I need to sign. Once I had signed, they would take the document away for onward transmission. It is not my father’s practice to explain the purpose or effect of agreements which he has negotiated. It may seem surprising to the Court that I would sign important documents without seeking to understand exactly what I was signing, but given my father’s decades of experience and my limited knowledge of the business, I had no reason to question and never felt able to question his judgment and would, therefore, sign as directed. My father is aggressive and domineering and would therefore react badly to me questioning his judgment. I was being particularly careful in 2018, since I had finally managed to get his approval to my marriage and did not want to give him any reason to change his mind. [19] Although I had a 50% beneficial shareholding in North Star, it was never my expectation that I would receive 50% of any profits made. My father would determine what happened to any profits, whether they were reinvested in North Star (or another family company) or paid out to him, me or my brother. In fact, given my limited role, I did not even expect to be told what profit was made. This was my father’s business and he had control.”
“I do not recall having entered into a personal guarantee in relation to this facility, however, as I have explained above, my father regularly required me to sign documents without explaining their effect, so it is possible that I did so.”
“On another matter re the new scrap facility do Ali and Hassan still own NSMH 50/50. This is the corporate guarantor of the facility. However you now want to personally guarantee this on your own unlike the existing guarantee whereby the three of you provide one each. How do we square this away? Their company will provide a corporate guarantee but as such you have no shareholding in it so your guarantee is questionable as there is no consideration legally on your part. I know you will say that ultimately “it is all you” but legally and technically as such this does not work on paper?”
“Hi Brian. I guess that is your call. SH here have drafted them off the old facility agreement so hopefully they are very similar. YS are running them by Seward and Kissel in NYC I believe so I suggest we wait to see if they come up with any major changes or not. If they don’t I believe you would not need to run them by presumably SH DXB but at the end of the day it is his/your call. My suggestion is to wait on the US attorneys response. Nigel is aware of this and knows the guy quite well at S&K so hopefully there will be no major hiccups. As I said I suggest we wait to hear back from the USA and we can then decide appropriately.”
“[30] I am confident, however, that neither my father nor anyone else discussed with me the responsibility that I was taking on by signing these documents (including the personal guarantee) or the nature of the risk involved. It never crossed my mind that I was accepting personal responsibility for repaying USD 25 million, since I do not have anything like the funds required to do so. [31] It has been pointed out to me that the first page of the Personal Guarantee includes a “Warning” stating that I should take independent legal advice. This was not pointed out to me at the time and I did not see this Warning. I would not have been given the opportunity to review the documents that I was asked to sign before signing them. I would therefore not have read this warning. I knew that my father was satisfied with the agreements and so signed them on that basis. I certainly did not receive any legal advice before doing so. [32] I now know that there were four further loans taken out with the Claimants in the amounts of USD 16.05 million, USD 12.65 million, USD 9 million and USD 14.5 million, in addition to an increase to the original loan from USD 25 million to USD 37.5 million, resulting in loans totalling nearly USD 90 million. I am also now aware that I signed further personal guarantees in relation to each of these loans. [33] As with the original loan, I was not involved in any of the discussions/negotiations in relation to these additional loans. My father did not discuss with me the scale of this additional borrowing. As was normal practice, I was simply told that there were documents which needed my signature and I signed them on my father’s instructions. [34] No one ever discussed with me the fact that the suite of documents I was signing included personal guarantees, which meant I was accepting personal responsibility for the entire borrowing. There was no discussion of the sums involved or the nature of the risk involved. I had no idea that I had personal responsibility for repaying tens of millions of US Dollars, money that I do not have and have never had. [35] Since my father had complete control of North Star, I had no idea the business was in serious trouble until January 2020 when I received notices of default from a number of the Claimants. I was, however, assured by my father that these problems would be resolved and a liquidator would be appointed in relation to North Star who would negotiate a resolution. [36] I only became aware of the scale of my potential exposure when I received demands for payment from the Claimants on5 March 2020 . I was again reassured by my father that he would resolve these issues.”
“Although I understand this is a matter for legal submissions, I understand that I may not be liable under the personal guarantees because I entered into them on instructions from my father without understanding the nature of the liabilities I would be taking on or the risks involved (which were vastly greater than any potential benefit that I might receive from the business undertaken pursuant to the loans), where I had no active involvement in the borrower companies and in circumstances where, as the Claimants (and their advisers and agents) were aware, I had not received any legal advice in relation to them. The Claimants were fully aware that I did not have the knowledge or experience to undertaken business of this nature or scale. They were relying on my father’s experience of the industry rather than mine in making their lending decisions.”
“For the avoidance of doubt, all the documents which I signed in relation to North Star’s relationship with Yield Street (including the Deeds of Confirmation) were signed on instructions from my father and without any explanation of the purpose or effect of the documents or any legal advice.”
“i) The court must consider whether the claimant has a “realistic” as opposed to a “fanciful” prospect of success: Swain v Hillman[2001] 2 All ER 91 ; ii) A “realistic” claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel[2003] EWCA Civ 472 at [8] iii) In reaching its conclusion the court must not conduct a “mini-trial”: Swain v Hillman. iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10] v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5)[2001] EWCA Civ 550 ; vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd[2007] FSR 63 ; vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd[2007] EWCA Civ 725 .”
“… There is an important distinction to be drawn between cases which have been tried where the parties have been able to test the opposing case and the trial judge was able to make findings of fact having seen the critical witnesses and evaluated the evidence. By contrast, in those cases where the lender is applying … to have the defence struck out, the court is being asked to hold that, even if the wife’s allegations of fact be accepted, the wife’s case is hopeless and bound to fail and that there is no reason why the case should go to trial. This conclusion is not to be arrived at lightly nor should such an order be made simply on the basis that the lender is more likely to succeed. Once it is accepted that the wife has raised an arguable case that she was in fact the victim of undue influence and that the bank had been put on inquiry, it will have to be a very clear case before one can say that the bank should not have to justify its conduct at a trial.”
“6. … Undue influence is one of the grounds of relief developed by the courts of equity as a court of conscience. The objective is to ensure that the influence of one person over another is not abused. In everyday life people constantly seek to influence the decisions of others. They seek to persuade those with whom they are dealing to enter into transactions, whether great or small. The law has set limits to the means properly employable for this purpose. To this end the common law developed a principle of duress. Originally this was narrow in its scope, restricted to the more blatant forms of physical coercion, such as personal violence. 7. Here, as elsewhere in the law, equity supplemented the common law. Equity extended the reach of the law to other unacceptable forms of persuasion. The law will investigate the manner in which the intention to enter into the transaction was secured: ‘how the intention was produced’, in the oft repeated words of Lord Eldon LC, from as long ago as 1807 (Huguenin v Baseley 14 Ves 273 , 300). If the intention was produced by an unacceptable means, the law will not permit the transaction to stand. The means used is regarded as an exercise of improper or ‘undue influence, and hence unacceptable, whenever the consent thus procured ought not fairly to be treated as the expression of a person's free will. It is impossible to be more precise or definitive. The circumstances in which one person acquires influence over another, and the manner in which influence may be exercised, vary too widely to permit of any more specific criterion. 8. Equity identified broadly two forms of unacceptable conduct. The first comprises overt acts of improper pressure or coercion such as unlawful threats. Today there is much overlap with the principle of duress as this principle has subsequently developed. The second form arises out of a relationship between two persons where one has acquired over another a measure of influence, or ascendancy, of which the ascendant person then takes unfair advantage. An example from the 19th century, when much of this law developed, is a case where an impoverished father prevailed upon his inexperienced children to charge their reversionary interests under their parents' marriage settlement with payment of his mortgage debts: see Bainbrigge v Browne(1881) 18 Ch D 188 . 9. In cases of this latter nature the influence one person has over another provides scope for misuse without any specific overt acts of persuasion. The relationship between two individuals may be such that, without more, one of them is disposed to agree a course of action proposed by the other. Typically this occurs when one person places trust in another to look after his affairs and interests, and the latter betrays this trust by preferring his own interests. He abuses the influence he has acquired. In Allcard v Skinner(1887) 36 Ch D 145 , a case well known to every law student, Lindley LJ, at p 181, described this class of cases as those in which it was the duty of one party to advise the other or to manage his property for him. In Zamet v Hyman[1961] 1 WLR 1442 , 1444–1445 Lord Evershed MR referred to relationships where one party owed the other an obligation of candour and protection. 10. The law has long recognised the need to prevent abuse of influence in these ‘relationship’ cases despite the absence of evidence of overt acts of persuasive conduct. The types of relationship, such as parent and child, in which this principle falls to be applied cannot be listed exhaustively. Relationships are infinitely various. Sir Guenter Treitel QC has rightly noted that the question is whether one party has reposed sufficient trust and confidence in the other, rather than whether the relationship between the parties belongs to a particular type: see Treitel, The Law of Contract, 10th ed (1999), pp 380–381. For example, the relation of banker and customer will not normally meet this criterion, but exceptionally it may: see National Westminster Bank Plc v Morgan[1985] AC 686 , 707–709. 11. Even this test is not comprehensive. The principle is not confined to cases of abuse of trust and confidence. It also includes, for instance, cases where a vulnerable person has been exploited. Indeed, there is no single touchstone for determining whether the principle is applicable. Several expressions have been used in an endeavour to encapsulate the essence: trust and confidence, reliance, dependence or vulnerability on the one hand and ascendancy, domination or control on the other. None of these descriptions is perfect. None is all embracing. Each has its proper place. 12. In CIBC Mortgages Plc v Pitt[1994] 1 AC 200 your Lordships' House decided that in cases of undue influence disadvantage is not a necessary ingredient of the cause of action. It is not essential that the transaction should be disadvantageous to the pressurised or influenced person, either in financial terms or in any other way. However, in the nature of things, questions of undue influence will not usually arise, and the exercise of undue influence is unlikely to occur, where the transaction is innocuous. The issue is likely to arise only when, in some respect, the transaction was disadvantageous either from the outset or as matters turned out.”
“Proof that the complainant placed trust and confidence in the other party in relation to the management of the complainant’s financial affairs, coupled with a transaction which calls for explanation, will normally be sufficient, failing satisfactory evidence to the contrary, to discharge the burden of proof. On proof of these two matters the stage is set for the court to infer that, in the absence of a satisfactory explanation, the transaction can only have been procured by undue influence. In other words, proof of these two facts is prima facie evidence that the defendant abused the influence he acquired in the parties’ relationship. He preferred his own interests. He did not behave fairly to the other. So the evidential burden then shifts to him. It is for him to produce evidence to counter the inference which otherwise should be drawn.”
“So something more is needed before the law reverses the burden of proof, something which calls for an explanation.”
“In other words, proof of these two facts is prima facie evidence that the defendant abused the influence he acquired in the parties’ relationship. He preferred his own interests. He did not behave fairly to the other. So the evidential burden then shifts to him.”
“since neither coercion, nor pressure, nor deliberate concealment is a necessary element in a case of actual undue influence. Moreover, the judge did to my mind find more than a relationship in which Mrs Nadeem was content to leave it to Mr Nadeem to make decisions in financial matters because she trusted him. He expressly found that she did not read the facility letter and could not have understood it if she had read it. She simply signed the documents because her husband told her to sign, probably without any explanation at all.”
“The critical case would be one in which the defendant made the decision without reference to the complainant’s wishes, or without giving him full information, when at the time the transaction appeared to be one that was for the complainant’s benefit but subsequently it turned out badly for the complainant and the claimant now wishes to set it aside. In other words, denying the complainant the chance to decide for himself might amount to actual undue influence. However, on the balance of recent authorities it seems unlikely that a court will find it proved directly that the defendant exercised “undue” influence in such a case unless he has at least preferred his own interests.”
“28. Undue influence is one of the grounds on which equity intervenes to give redress where there has been some unconscionable conduct on the part of the defendant. It arises whenever one party has acted unconscionably by exploiting the influence to direct the conduct of another which he has obtained from the relationship between them. As Lord Nicholls of Birkenhead observed inRoyal Bank of Scotland plc v Etridge (No 2)[2002] 2 AC 773 at p 794–5: “Undue influence is one of the grounds of relief developed by the courts of equity as a court of conscience. The objective is to ensure that the influence of one person over another is not abused. … … [It] arises out of a relationship between two persons where one has acquired over another a measure of influence, or ascendancy, of which the ascendant person then takes unfair advantage.” 29. Thus the doctrine involves two elements. First, there must be a relationship capable of giving rise to the necessary influence. And secondly the influence generated by the relationship must have been abused. 30. The necessary relationship is variously described as a relationship “of trust and confidence” or “of ascendancy and dependency”
“[24] A relationship of trust and confidence between two parties is recognised in equity as being fiduciary in nature. It will therefore be the source of various fiduciary duties including an obligation to act in good faith and an obligation to avoid conflicts of interest and duty. But it is also important to keep firmly in mind that not every failure by the fiduciary party will amount to a breach of these core obligations. The defining characteristic of a fiduciary relationship is loyalty. A fiduciary who acts negligently but in good faith is not unfaithful and commits no equitable wrong: see Bristol and West Building Society v Mothew[1998] Ch 1 at page 18F. [26] … It is convenient to deal with the second question first. As Lord Nicholls explained in Etridge at paragraphs 6-12, it is impossible adequately to classify every type of situation in which improper or undue influence can be said to have been used to persuade a person to enter into the transaction under review. But for a person’s conduct to fall into this category it must, on established principles, make it unconscionable for that person and any who have notice of his conduct to seek to rely on the effect of what has been done. Conscious deception obviously satisfies this test as does an abuse of confidence in the form of a breach of loyalty or good faith of the kind described above. The trusted adviser who chooses to prefer his own interests over those of the person who confides in him is a classic example of this. [27] The language of the decided cases summarised by Lord Nicholls in the passage I have referred to is replete with references to abuse of trust, exploitation and domination of the injured party. All of these characterise some conscious act of wrong-doing on the fiduciary’s part. But it is much more difficult to apply these notions to cases of innocent misrepresentation where the highest it can be put is that more care should have been taken in giving the information or advice which was relied on. To elevate such a failure into a breach of fiduciary duty or abuse of confidence is to fall into the very trap exposed by Millett LJ in his judgment in Mothew which I have already referred to.”
“where you direct the conduct of another in a way which produces the outcome you want, knowing that that means they haven’t made an independent informed decision, that is considered to be, in the context of a relationship of trust and confidence, an unconscionable act. It is not something you should do, to use your influence in that kind of way”
“[87] These considerations point forcibly to the conclusion that there is no rational cut-off point, with certain types of relationship being susceptible to theO'Brienprinciple and others not. Further, if a bank is not to be required to evaluate the extent to which its customer has influence over a proposed guarantor, the only practical way forward is to regard banks as ‘put on inquiry’ in every case where the relationship between the surety and the debtor is non-commercial. The creditor must always take reasonable steps to bring home to the individual guarantor the risks he is running by standing as surety. As a measure of protection, this is valuable. But, in all conscience, it is a modest burden for banks and other lenders. It is no more than is reasonably to be expected of a creditor who is taking a guarantee from an individual. If the bank or other creditor does not take these steps, it is deemed to have notice of any claim the guarantor may have that the transaction was procured by undue influence or misrepresentation on the part of the debtor. [88] Different considerations apply where the relationship between the debtor and guarantor is commercial, as where a guarantor is being paid a fee, or a company is guaranteeing the debts of another company in the same group. Those engaged in business can be regarded as capable of looking after themselves and understanding the risks involved in the giving of guarantees.”
"As with all discretionary considerations, much depends on the facts…The stronger the case for the order sought and the less serious or culpable the non-disclosure, the more likely it is that the court may be persuaded to continue or re-grant the order originally obtained. In complicated cases it may be just to allow some margin of error. It is often easier to spot what should have been disclosed in retrospect, and after argument from those alleging non-disclosure, than it was at the time when the question of disclosure first arose."
“[24] D3 acted on behalf of the borrowers as a key point of contact for GMTC, as will be seen from correspondence referenced below. Other points of contact were Mr. Brian P. Nolan, who worked in North Star’s Finance department, and Mr. Richard France, Head of Purchasing for North Star in the UAE and a senior employee in its ship sale- and-purchase department. [25] The degree of control exercised by D3 over the borrowers’ activities will emerge below, but can be illustrated by a striking exchange of emails on10 February 2020 , when GMTC (Mr. Simmons) posed a number of urgent questions to Mr. France (North Star “Head of Purchasing”) regarding the status of the loans and the financed vessels, at a time when the lending relationship was rapidly approaching crisis point [9/1/244]. Mr. France responded in the following terms [9/1/243]: “Dear Andrew, Good morning - thank you for reaching out to us with the below email. I’ve checked with Azhar, Brian et al and it transpires that Tahir [i.e. D3] is the only party privy to thebelow requested information. Tahir is reading this email in copy and we’ve been assured will respond to you. Any future communication regarding these matters directed to us will be directed to Mr Lakhani, however for the sake of expediency, we would ask that such matters be onlyaddressed to Tahir as neither ops, compliance, s&p etc or Iare involved in the YieldStreet related matter and regrettably we cannot be of assistance to you. Brgs Richard (As agents only)” [26] As well as demonstrating the degree of control exercised by D3, this email suggests a clear attempt by Mr. France to distance himself and other North Star employees from any responsibility for what D3 was believed or suspected to be doing. I will return to this, in context, below, although at present I note that it might be said on behalf of D1 and D2 that this places D3, rather than them, centrally in the frame. “Dear Andrew, Good morning - thank you for reaching out to us with the below email. I’ve checked with Azhar, Brian et al and it transpires that Tahir [i.e. D3] is the only party privy to thebelow requested information. Tahir is reading this email in copy and we’ve been assured will respond to you. Any future communication regarding these matters directed to us will be directed to Mr Lakhani, however for the sake of expediency, we would ask that such matters be onlyaddressed to Tahir as neither ops, compliance, s&p etc or Iare involved in the YieldStreet related matter and regrettably we cannot be of assistance to you. Brgs Richard (As agents only)”
“Your Lordship that is evidence of what we say is a serious campaign of fraud in relation to many aspects of the loan. In the circumstances we say our submission that the Third Defendant will take steps to hide his assets to defeat an ultimate 143. judgment is made out; in relation to the First Defendant, his involvement in signing 6 MOAs for delivered vessels which appear to be shams he cannot be trusted not to dissipate assets, the risk of dissipation is made out; in relation to the Second Defendant, there is limited evidence connecting him to the fraud, the only example we’re aware of is that he appears to have signed a document which helped to execute fraud – thereis therefore some direct evidence of his involvement, but wealso rely on the fact of his ownership of North Star so he is, onthe face of it, heavily involved in this operation and thereforewe would ask the court to at least infer there is a real risk orprospect that he has known about what his father and brotherwere up to and also given what he is up to. Also, as a personal guarantor he stood to benefit from the fraud; the fraud was designed to buy time and avoid Events of Default to then mitigate the prospect of a claim on the personal guarantees. The Second Defendant was also going to benefit from fraudulent devices in so far as they were successful, which supports complicity and knowledge. In relation to the Second Defendant and others as needs be, we also rely upon his conduct and behaviour in relation to the demand, which is complete silence – we say he is not innocent and is like his father and brother, involved. 144. An additional point: if, as appears to be the case, the ownership of these companies – the beneficial ownership of these companies – resides with the 2 sons, and the father does not appear to have any ownership and yet appears to control it; there is a real prospect he appears to control assets which are in the legal and beneficial ownership of his sons. Therefore there is a risk of dissipation of the assets of the First and Second Defendant which justifies the order.”
“In my telephone call with Mr. Reynolds on Friday 28 February, he said his information was that the Claimants’ advances had been consumed on interest repayments. It might therefore be said by the Defendants, in relation to the "real risk of dissipation”, that the Defendants were not setting out to steal money from the Claimants, but simply struggling to fund an over-extended business, by means (if demonstrated) which they would not necessarily repeat when faced with any order that might be made by the English court. (Against this, the Claimants say that they have been the victims of sustained and sophisticated deception. There is also evidence of deception of flag state authorities, which indicates that institutional standing will not necessarily deter the Defendants from self-serving conduct; although it is right to say, here, that only D3 is clearly implicated in the deception of flag state authorities).”
“We direct your attention in particular to paragraphs 16-20 of the Injunction, which makes clear, inter alia, that it is a contempt of Court for any third party knowingly to assist in or to permit a breach of the Injunction, subject to the terms of paragraph 19 regarding persons outside England and Wales. That is reinforced by the Penal Notice on the first page of the Injunction which provides as follows: IF YOU (1) MUHAMMAD ALI LAKHANI, (2) MUHAMMAD HASAN LAKHANI, OR (3) MUHAMMAD TAHIR LAKHANI DISOBEY THIS ORDER YOU MAY BE HELD TO BE IN CONTEMPT OF COURT AND MAY BE IMPRISONED, FINED OR HAVE YOUR ASSETS SEIZED. ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS THE RESPONDENT TO BREACH THE TERMS OF THIS ORDER MAY ALSO BE HELD TO BE IN CONTEMPT OF COURT AND MAY BE IMPRISONED, FINED OR HAVE THEIR ASSETS SEIZED. We also draw your attention to paragraph 3 of Schedule B wherein the Applicants undertake to pay the reasonable costs of anyone other than the Respondent incurred as a result of the Injunction including the costs of finding out whether that person holds any of the Respondents’ assets. Please contact Charles Buss (cbuss@wfw.com) and Kelsey Tollady (ktollady@wfw.com) of this office with any queries you may have.”
“We write further to our letter dated27 April 2020 . By that letter, we notified you of the worldwide Freezing Injunction (the “Injunction”) dated22 April 2020 made against Muhammad Ali Lakhani, Muhammad Hasan Lakhani and Muhammad Tahir Lakhani (the “Respondents”), which restrains the Respondents from removing assets (whether owned legally or beneficially) up to the value of US$76.7 million from the English Court’s jurisdiction or otherwise dealing with such assets worldwide. In that letter, we also drew your specific attention to paragraph 19 of the Injunction which makes clear that it is not binding on persons who are resident outside of the jurisdiction of the courts of England and Wales. To be clear, we notified you of the Injunction to help you to avoid giving any assistance to the Respondents, knowingly or otherwise, to breach the terms of the Injunction. We also sought to make clear to you the consequences of such a breach for the Respondents to whom the Injunction does apply. Assuming that you are not resident within the jurisdiction of the courts of England and Wales, the Injunction, including the penal notice in the Injunction, will not apply to you. However, we trust that you would want, as would any reasonable and responsible person, to take steps to avoid assisting in the breach of an English court order, even if you would not be prima faciein contempt of court by doing so. By that letter, we notified you of the worldwide Freezing If you have any further queries as to the nature and effect of the 164. Injunction, please do not hesitate to contact Charles Buss (cbuss@wfw.com) or Kelsey Tollady (ktollady@wfw.com) of this office.”