Abood v Tayeb

This is an appeal (with the permission of Patten J) by the claimant Kawther Al Abood (“the Claimant”) from the judgment dated the 25^th October 2004 (“the Judgment”) of Master Moncaster.

The Claimant is the widow of the late Shaker Al Abood (“the Testator”) who died on the 22^nd February 1986. The Testator by his English will dated the 10^th January 1986 appointed the defendant Nezhet Mohamed Tayeb (“the Defendant”) his executor. By an application dated the 2^nd December 2000 (“the 2000 Application”) by a Part 8 Claim Form the Claimant applied for an order that she be appointed personal representative of the Testator in place of the Defendant, delivery by the Defendant of estate accounts and papers relating to the administration of the Testator’s estate in England and an account of the property of the Testator which had come to the Defendant’s hands as executor of the Testator’s English estate. By a consent order dated the 30^th May 2000 (“the Consent Order”), it was ordered that the Claimant be so appointed and that the Defendant’s costs of the application be paid by the Claimant.

By application notice dated the 10^th May 2004 (“the 2004 Application”) the Claimant applied for the proceedings commenced by the 2000 Application to be restored and for the most comprehensive orders against the Defendant for accounts and information relating to the Testator’s worldwide assets and in particular his foreign assets. The Master by the Judgment dismissed the application. Hence this appeal.

A summary of the background facts to this litigation are helpfully set out in the Annex to the skeleton argument of Miss Barbara Dohmann QC, counsel for the Claimant. Mr Max Mallin, counsel for the Defendant, was content to agree the summary for the purposes of this appeal. The summary (with minor additions made by me to reflect further matters agreed during the hearing) reads as follows:

“1.

Mrs Al Abood is the widow of the testator, Mr Al Abood, who died in Boston, Massachusetts, USA on 22 February 1986.

2.

Mr Al Abood was an extremely wealthy Iraqi businessman. In the weeks and months prior to his death, he took some steps to organise his financial affairs. Mr Tayeb, a chartered accountant and experienced businessman with whom Mr Al Abood had had dealings since at least the early 1960s, was present in Boston during those weeks and assisted in taking those preparatory steps.

3.

Mr Al Abood established a family trust in January 1986, the SMA Settlement, a Jersey discretionary trust under the management of BNP Jersey Trust Corporation Limited. Mr Al Abood had a longstanding banking relationship with BNP in London, France, Monaco and Luxembourg.

4.

Mr Al Abood took preparatory steps to establish the Shake Trust (a Liechtenstein trust) in late January and early February 1986. This trust was to be established by the agency of Lloyds Bank’s Geneva branch, acting by Mr Georges Klonis, who had a longstanding relationship with Mr Tayeb. Mr Klonis and Mr Tayeb at various times took deathbed instructions from Mr Al Abood concerning the proposed Shake Trust as well as other matters. Mr Klonis’ evidence in the Landglaze Proceedings described at paragraph 10 below is that while he was in Boston, he sought instructions and guidance from Mr Tayeb by telephone in relation to the establishment of the trust. In the event the Shake Trust was not established until after Mr Al Abood’s death, although Mrs Al Abood did not know this fact [until 1997]. Mr Tayeb was a member of the managing committees of each of the trusts, as was Mrs Al Abood.

5.

Mr Al Abood also made a will, dated 30 January 1986 (the “Will”), which named Mr Tayeb as sole executor. The Will dealt with the disposal of two flats in Knightsbridge, but made no provision in relation to Mr Al Abood’s movable property in England.

6.

Probate was granted on 24 October 1986. The two flats which were the subject of specific bequests in the Will were assented to Mrs Al Abood on 20 March 1987. Mr Tayeb also participated in proceedings to recover a debt owed to the estate. Certain steps were taken in France, Monaco, Morocco and (albeit some time after Mr Al Abood’s death) Iraq to deal with assets belonging to Mr Al Abood in those jurisdictions. The steps in those jurisdictions of which Mrs Al Abood is aware are summarised at paragraphs 61 to 70 of her 3^rd witness statement.

7.

Mrs Al Abood [who was some 20 years younger than her husband] was largely ignorant of her husband’s business and financial affairs prior to her husband’s death and, indeed, for many years thereafter. Following her husband’s death, she was principally reliant upon her close friends and advisers, such as Mr Tayeb and his sister Mrs El Shamari, and those responsible for the administration and maintenance of the trusts.

8.

From the early 1990s, Mrs Al Abood’s relationship with Mr Tayeb deteriorated. At the time, it seemed to Mrs Al Abood that the deterioration arose primarily out of disagreements between them about the performance and investment strategy of the trusts, and Mr Tayeb’s resistance to Mrs Al Abood’s suggestions for changes to be made to improve the performance of the trusts. Mrs Al Abood made requests for documentation which were ignored or refused by both Mr Tayeb and Lloyds Bank. At around the same time, Mrs Al Abood’s relationship with Mr Tayeb’s sister, Mrs El Shamari, also deteriorated.

9.

In 1998, Mrs El Shamari commenced criminal proceedings in Nice and Monaco against Mrs Al Abood, alleging that Mrs Al Abood had misappropriated several million dollars of money entrusted by Mrs El Shamari to Mrs Al Abood, and obtained pre-trial attachment orders for the seizure of Mrs Al Abood’s bank accounts, cars and furniture. Mrs Al Abood successfully defended those proceedings and successfully brought proceedings against Mrs El Shamari and her son (Hisham El Shamari) in the United States (“the US Proceedings”), in respect of a series of frauds perpetrated by them. Mr Tayeb gave evidence in support of his sister in both sets of proceedings and provided his sister with confidential documents belonging to the Al Abood family trusts.

10.

In late 1998, Mrs Al Abood discovered that, since 1992, a substantial unauthorised quarterly commission had been paid by Lloyds Bank out of the Shake Trust funds held by it to a company called Landglaze Holdings SA (“Landglaze”). It transpired that Landglaze was a corporate vehicle controlled by Mr Tayeb for his own benefit and that the commission payments had been made with the full knowledge of Lloyds Bank but without the authorisation of both trustees of the Shake Trust. Those commission payments were successfully recovered following proceedings in England commenced in April 2000 (the “Landglaze Proceedings”), judgment on the merits being given by Mr Justice Rimer in July 2002 (reported at [2003] WTLR 21). [The ground on which the Claimant succeeded was lack of authority to make the payments: the allegation by the Claimant against the Defendant of fraud was rejected.]

11.

By the late 1990s, therefore, the relationship between Mrs Al Abood and Mr Tayeb had broken down irretrievably.

12.

Since then, Mrs Al Abood has been engaged in substantial enquiries in a number of jurisdictions to ascertain the full extent of her husband’s assets and wealth. Mrs Al Abood has, however, been unable to conclude those enquiries to her satisfaction and remains of the view that some of her husband’s assets remain unaccounted for.”

The Judgment is a detailed and comprehensive examination of the relevant law and facts. In the course of recounting the history and the terms of the two applications and the Claimant’s witness statements, the Master drew attention to the allegations made by the Claimant against the Defendant which (he held) showed that in the Claimant’s eyes the Defendant was a duplicitous fraudster and that the main purpose of the orders which she sought was to provide material to convict him of fraud. He then examined briefly what he described as the “extraordinary list” of ten examples of matters which the Claimant asserted required explanation by the Defendant, some of which related to events which occurred during the Testator’s lifetime.

The Master turned to examine the duties of the Defendant as executor of a foreign testator and held (as agreed by counsel) that these duties extended both to English assets and also to foreign assets which have come into his possession. He went on to hold that the claim in the 2000 Application was on its face expressly limited to the English estate of the Testator and, even if (which was dubious) the claim was capable of amendment by removing that express limitation that after the lapse of time there was no reason why the required permission should be given to amend the 2000 Application by removing that limitation.

The Master then considered whether the Consent Order concluded the proceedings commenced by the 2000 Application. He held that it did, but that it did not preclude the issue of fresh proceedings making fresh claims subject only to the possible availability of a limitation defence.

The Master however said that he would not be minded to dismiss the application on this ground if he considered that the Claimant was free to serve a new claim form seeking the relief claimed and gave an undertaking to issue it and that accordingly it was necessary to consider the merits of the 2004 Application. On this basis he considered the claims raised by the 2004 Application. After examining these claims he concluded that it would be wrong, unjust and oppressive to make the order sought by the 2004 Application. He held that what the Claimant was seeking in the main was something akin to the American pre-action oral discovery to obtain evidence in support of her claim that the Defendant had been fraudulent and was guilty of embezzlement; and that the prospect of orders for the disclosure and cross-examination producing anything worthwhile was small in proportion to the cost and amount of court time involved.

By the Appellants Notice dated the 8^th November 2004, the Claimant contended that the Judgment was wrong to dismiss the entirety of the Claimant’s 2004 Application and that the Defendant should be ordered to give an account and information in respect of (1) “the TRT Contract” and all commissions or other payments under that contract paid into an account named Carat or Karat whether held at Lloyds TSB Bank plc (or its predecessors in Geneva or elsewhere); and (2) accounts opened in the name of or for the benefit of the Shake Trust at Lloyds TSB Bank (or its predecessors). The form of order for this relief sought on the appeal is expressed as an order:

“Upon the Claimants undertaking to issue and serve a New Claim Form in respect of the relief sought.”

Before I turn to the merits of the claim in respect of the two matters on which the account is sought, it is necessary to say a word about the procedure followed by the Master and which the Claimant invites me on this appeal to adopt. Miss Dohmann has properly accepted the correctness of the decision by the Master that the Consent Order brought an end to the proceedings commenced by the 2000 Application. In those circumstances it was not open to the Master to do otherwise than dismiss the 2004 Application to restore those proceedings. He could not refuse to do so on the surmise that a fresh claim might be made. If a fresh claim was made, he would have to consider the fresh claim on its merits and after the Defendant had the full opportunity to examine it and make his case in respect of it e.g. raising any limitation defence. The order in respect of the claim made on the 2004 Application could not be affected by the outcome of any such fresh application. Further in this case no such claim was made or indeed has ever been made, though I have been provided with a draft fresh claim. Still less could the Master adopt the course of deciding the outcome of the 2004 Application by reference to the outcome of some possible future claim when he gave no intimation of any intention to do so at the hearing and invited representations from the parties on his possible adoption of this course.

I turn now to the merits of the issues sought to be raised. As the Master put it, the Claimant in the 2004 Application raised before him a “rag bag” of claims and pressed them as a whole before him. These he held to be oppressive. What the Claimant has done on this appeal is to select, not two items of relief previously sought, but two amongst many allegations made in her evidence and seek on this appeal relief in respect of them alone. This was not the case presented to the Master and it does not seem to me to be open to the Claimant to raise this new case on the appeal and say that the Master wrongly exercised his discretion in refusing to grant such restricted relief when he was never asked to do so.

Leaving aside these considerations, in any event this appeal must fail on the merits. The claim in respect of payments made or in course of payment to accounts in the name of or for the benefit of the Shake Trust at Lloyds TSB Bank plc is hopeless because the Testator’s estate had no interest in the monies in question. The only person interested and entitled to an account was and is the Shake Trust, a distinct legal entity. When I raised this point, Miss Dohmann readily and responsibly agreed that this was so and abandoned the claim. Turning to the claim in respect of the TRT Contract, it is clear (even as it is common ground) that if any commission was paid pursuant to the TRT Contract to the Carat or Karat account or elsewhere, the Defendant would be under an obligation to account for that payment. But the Defendant has denied under oath that he has any as yet undisclosed relevant documents and that any such payment was ever made, and Miss Dohmann has fairly and properly conceded that the Claimant has no evidence that any payment was made. It is fair to say that the documentation produced by the Claimant shows clearly that there was an anticipation at one time of a substantial payment and that the Defendant has in regard to these accounts and his knowledge of them changed his evidence in the course of hearings in court proceedings in the USA and in this country and in his evidence on this application. But (like the Master) I can see no useful purpose in any further orders for disclosure of documents or cross-examination on an application for an account.

I recognise that the Claimant may not be able to pursue her suspicions of the Defendant further if I refuse relief: in particular the necessary statement of truth cannot be signed on any claim form against the Defendant. But I do not think that the grant of the relief sought on the application would serve any useful purpose. It will be a mercy to all concerned to bring this extravagantly expensive litigation to a close.