Global Marine Drillships Ltd v La Bella & Ors

These proceedings arise out of undertakings that the second and third defendants, respectively Landmark Solicitors LLP (“Landmark”) and Miss Salina Yildiz (formerly Jones), gave on 26 May 2010. The claimant, Global Marine Drillships Limited (“Global Marine”), alleges that the undertakings were broken and that it has suffered loss of roughly £3.5 million in consequence. Landmark and Miss Yildiz are also said to be liable for breach of trust.

Global Marine, which is incorporated in the Isle of Man, is one of a number of companies associated with Bridgehouse Capital Limited (“BHC”). Mr Stephen Scott, who has served as a director of both Global Marine and BHC, described BHC as “the family office for a number of offshore family trusts” and explained that it “manages firms and global assets with, from time to time, an estimated value of over $2 billion”. BHC is closely linked to a Mr Andy Ruhan, who was the chief executive officer of Global Marine as well as the chairman and chief executive officer of BHC.

Global Marine was established with a view to the acquisition of a deep sea drillship then known as “MPF-01” and later re-named “the Dalian Developer”. The Dalian Developer’s owner had been the subject of chapter 11 bankruptcy proceedings in the United States, and DVB Bank (“DVB”), which had lent some $80 million for the construction of the vessel, had taken control of it. The idea arose that Global Marine should purchase from DVB the special purpose vehicle (viz. Dalian Deepwater Developer Limited) in which the Dalian Developer had come to be vested.

The scheme required very considerable funding. The Dalian Developer was still in the process of construction: Mr Scott described the vessel as “only in practice a floating hull”. It was calculated that some $650-750 million would be needed to effect the acquisition and completion of the Dalian Developer.

Mr Scott contacted a Mr Martin Gibbins (or “Tobias-Gibbins”), whom he had been told was well-versed in debt financing. Mr Gibbins suggested that the best approach would be to obtain letters of credit and use those to secure a line of finance. Early in 2010, Mr Gibbins told Mr Scott that a concern called Petra Energy Berhad (“Petra”) had access to a line of finance from J.P.Morgan in Singapore subject to the provision of certain standby letters of credit (“SBLCs”). It was therefore proposed that Global Marine should procure SBLCs for the benefit of J.P.Morgan, with the result that the J.P.Morgan line of finance could be used by both Global Marine and Petra. Mr Gibbins told Global Marine that, for a fee, a company called Coolmead Investments Limited (“Coolmead”) would obtain SBLCs from HSBC and Deutsche Bank that would be acceptable to J.P.Morgan.

A structure chart dated 20 May 2010 depicts what was envisaged at that point. The chart shows J.P.Morgan providing funds totalling $245 million on the strength of letters of credit from HSBC and Deutsche Bank for sums of respectively $200 million and $150 million. Coolmead would receive fees of £56 million from Global Marine in two tranches. Coolmead was, however, to cover without any additional payment the cost of obtaining an insurance policy that was said to be a prerequisite of the issue of the SBLCs. Mr Scott said this about the policy in his witness statement:

There is reference in this passage to the first defendant, Mr William La Bella. Global Marine knew Coolmead to be run by Mr La Bella, but the company was understood to be backed by Saudi Aramco, the Saudi Arabian national oil company. That was not in fact the case.

It was Mr La Bella’s position that Global Marine should make a payment on account of Coolmead’s fees up front: he said that he wanted to ensure that he would be in funds as soon as he “pressed the button” and the SBLCs were issued. Global Marine was itself concerned that any payment it made should be adequately safeguarded. It came to be agreed that Global Marine would transfer money to Coolmead’s solicitors subject to the provision by those solicitors of an undertaking that would protect Global Marine.

On 12 May 2010, Mr La Bella informed Mr Scott that Landmark was acting for Coolmead. Landmark had been formed in 2008 by Miss Yildiz and had one other member. After leaving university in the mid-1990s, Miss Yildiz had worked in Barclays Bank’s legal division and then for two law firms before qualifying as a solicitor in 2006. Her experience lay mainly in conveyancing (especially residential conveyancing) and litigation. At some point, Mr Scott queried with Mr La Bella whether it was appropriate to instruct Landmark on a transaction as significant as that in which they were engaged, but Mr La Bella said that he had used Miss Yildiz and Landmark extensively and had faith in them. So far as Miss Yildiz was concerned, she and Mr La Bella were good friends.

Landmark supplied two draft solicitors’ undertakings in the course of 12 May 2010, and Mr Scott forwarded them to the solicitor acting for Global Marine, Mr Simon McNally. Mr McNally was both a director of Global Marine and a partner in Bridgehouse Partners LLP (“BPL”, now Adelphi Commercial Law LLP), which is based in the Isle of Man. Mr McNally was not happy with the drafts Landmark had prepared and (with some prescience) commented to Mr Scott, “there is something that makes me generally nervous and suspicious as to this”. On 14 May, however, £7 million was paid into BPL’s client account on Global Marine’s behalf, and by 17 May Miss Yildiz had given BPL an undertaking that, if the money were transferred to Landmark’s client account, she would hold it to BPL’s order. On the same day, Miss Yildiz supplied Mr McNally with details of Landmark’s indemnity insurance. Mr McNally had asked for these as he wanted to make sure that Landmark’s insurance cover would extend to the £7 million it was to receive. Mr McNally had observed to a Mr Michael Howarth, who was working for BHC as a consultant, in an email of 13 May:

Once he had received the 17 May undertaking, Mr McNally transferred the £7 million he was holding into Landmark’s client account. Mr La Bella had told Global Marine during a conference call on 14 May 2010 that he needed $10 million (or approximately £7 million) to be paid to Landmark so that Coolmead could acquire the requisite insurance.

On 26 May 2010, the £7 million was released to Landmark on the basis that it was to be held in accordance with new undertakings from Landmark and Miss Yildiz. The undertakings were set out in a letter from Miss Yildiz of the same date addressed to “Simon McNally Bridgehouse Partners LLP”. The letter stated as follows:

Upon receipt of the sum of US$32,000,000, the Funds, I will hold the same to your order pending confirmation from you in accordance with points 2 and 3 below.

Upon written notification from you as to the dating and completion of the Agreement [i.e. an agreement being entered into between, among others, Coolmead and Global Marine], the sum of US$10,000,000 is released to me to be used for the sole purpose of a purchase of an insurance policy for [Coolmead], the premium for which is US$10,000,000. I further undertake to provide you with independent evidence, sufficient and satisfactory confirming to you that this insurance policy has been issued, such issuance to take place upon the issuance of the SBLC referred to in point 3 below.

Upon written notification from you as to the satisfaction of clause 1.6 of the Agreement and the issuance of the Standby Letter of Credit (‘SBLC’) referred to therein, the balance of the funds, namely US$22,000,000 are released to me to distribute to my client in satisfaction of the fees due and payable to them in accordance with clause 3.2 of the Agreement.

During her oral evidence, Miss Yildiz said that she was very familiar with solicitors’ undertakings. She also confirmed that she understood that the undertakings given on 26 May meant that it was “[her] responsibility and … [her] risk to ensure that the money was paid for an insurance policy”.

The “Agreement” mentioned in the 26 May undertakings was concluded on the same day between Coolmead, Global Marine and a company associated with Mr Gibbins called London Marketing FZ LLC. Among other things, the agreement provided for Coolmead to provide and/or procure the issuance of SBLCs issued by HSBC and Deutsche Bank for $200 million and $150 million respectively.

Somewhat earlier, on 16 May 2010, Miss Yildiz had had forwarded to her from “cspmusic7@aol.com” an email from a Mr Jose Manuel Alvarez Grijuela (“Mr Alvarez”) to which a draft insurance policy was attached. The draft was described on its first page as “Combined Civil Liability Malpractice (Professional Indemnity)”. The final page stated:

Miss Yildiz quoted the passage set out above (though the limit on liability was misstated to be £500 million rather than £5 million) in an email to Mr Scott, Mr Howarth and Mr McNally of 17 May 2010. Mr McNally asked Miss Yildiz to provide a complete copy of the policy, observing that “an extract is not sufficient and cannot be read in isolation to the balance of the policy”, but Miss Yildiz responded that her clients did not wish the full policy to be sent as “it is too sensitive to their business”. Mr Scott commented to Mr McNally, “Ultimately we will only be relying upon a Landmark undertaking that the £7m will be refunded for any reason other than [Global Marine] pulling away”.

The “cspmusic7@aol.com” email address related to Cheshire Sound Productions, a music studio in Northwich, Cheshire. Miss Yildiz explained in one of her witness statements that she was told by Mr La Bella that the sixth defendant, Mr Colin Shackleston, and the eighth defendant, Mr Frank Mullen (or “Mullins” or “Crawford”), had the studio as a hobby and that Mr Mullen was expert in arranging insurance for deals such as that Global Marine was seeking to undertake.

On 27 May 2010, Miss Yildiz had forwarded to her from “cspmusic7@aol.com” another email from Mr Alvarez. The attachment comprised a draft policy comparable to that quoted in paragraph 15 above (though with a limit of £200 million instead of £5 million) and a letter addressed to “CSP Brokerage” from Mr Alvarez as a director of Platinum Financial Services S.L. (“Platinum”), for which an address in Marbella was given. The letter said:

On the following day, Mr Scott rang Mr La Bella and was told by him that the premium for the necessary insurance policy had been paid on to an insurance company. By the end of the day, however, Mr Scott felt that he was receiving mixed messages and so sent Miss Yildiz an email asking for confirmation of whether the premium had been paid. No such payment had in fact been made.

On Monday 31 May 2010, which was a Bank Holiday, Mr La Bella came to Landmark’s office with Mr Mullen and Mr Shackleston. They told Miss Yildiz that, if she did not transfer the money she held to Mr Mullen, they would sue her, and they also threatened to report her to the Law Society. Miss Yildiz found Mr Mullen, in particular, unpleasant, and she threatened to call the police. Later on, Mr La Bella sent Miss Yildiz an email in which he purported to instruct her to forward £6.5 million to an account in the name of “C. SKACKLETON T/A CSP”.

At this stage, Miss Yildiz held out against the pressure that was put on her. She initially asked Mr La Bella a number of questions about the proposed payment. In his reply, Mr La Bella said, among other things, that he was “fully satisfied that the SBLC will be issued as arranged under the terms of the agreement and will despite your advice take full responsibility therein, and am fully satisfied that the premium payment will be paid and issued”. He also said:

During 1 June 2010, Miss Yildiz was bombarded with emails by Mr La Bella. Mr La Bella told Miss Yildiz, for example, that her actions had “damaged and compromised the position”, that she was “clearly out of [her] depth”, that she would be “held totally accountable”, that she had “unleashed the wrath of God”, that it would “give [Mr La Bella] no pleasure in watching [her] fed to the lions”, that she was “dead in the water” and that she was “indeed incredible”. Miss Yildiz was also supplied with a letter from Mr Shackleston and the seventh defendant, Mr Alan Wilcock, on behalf of Cheshire Sound Productions confirming that they had instructed Coolmead to instruct Landmark to forward £6.5 million to their account. Miss Yildiz made no payment, however.

On 2 June 2010, Mr La Bella changed tack and told Miss Yildiz that she was to transfer money to a “Brooklands” bank account. She was sent the details for an account in the name of “Charles Barber & Sons Limited t/as Brooklands” and a document recording a board resolution of “Charles Barber trading as ‘Brooklands’” stating that 50% of “the shareholding of ‘Brooklands’” was being transferred to Coolmead Properties Limited (another company linked to Mr La Bella) and that “following on” from that the “‘Brooklands’ bank account” would be operated by the directors and company secretary of Coolmead Properties Limited. Miss Yildiz also received an email from Mr Alvarez (copied to “cspmusic7@aol.com”) to which was attached a letter from Mr Alvarez on Platinum headed paper in which he said:

On 3 June 2010, Mr Scott chased Mr La Bella, explaining that he could not “over stress the need today for some clear communication from Coolmead” and that Global Marine was “trying carefully to manage the expectations of [J.P.Morgan], Petra and DVB Bank who are all parties critical to the [Global Marine] opportunity”. Mr La Bella replied in positive terms. He said:

There were also references to the Middle East in correspondence of the following day. Mr La Bella told Mr Howarth in an email that he had instructed “our rep to fly to middle east to conclude the operation”. Mr Alvarez said in a letter addressed to Landmark that reached Miss Yildiz via Mr La Bella:

Earlier on 4 June, Miss Yildiz had told Mr La Bella by email that she had faxed a CHAPS transfer form, seemingly to transfer some of the £7 million in Landmark’s client account to the “Brooklands” account. There were nonetheless fraught (and rather extraordinary) email exchanges between Miss Yildiz and Mr La Bella during 4 June. Mr La Bella said that Miss Yildiz had “single handidly ruined everthing and put [herself] unilatterilly on the firing line”, that her “ranting and raving is finished” and that her “lies” would not be tolerated. Miss Yildiz responded:

Miss Yildiz said this about the events of 4 June in a witness statement:

On 7 June 2010, Mr La Bella renewed his demands for Miss Yildiz to transfer money to the “Brooklands” account. In the first of his emails to her, Mr La Bella said:

I shall have to return later in this judgment to the events of 8 June 2010, as to which there is significant dispute. What is certain is that, although the CHAPS form of the previous day had been for a £5 million payment, Miss Yildiz in fact transferred £3 million of the money in Landmark’s client account to the Charles Barber account. Miss Yildiz noted in a witness statement that “£3 million was sent out on 8 June in the morning”. The £5 million form was never acted on.

Charles Barber and Sons Limited (“Charles Barber”), the holder of the account to which the £3 million was credited, operated a car dealership in Northwich. Charles Barber is the fourth defendant to the present proceedings; one of its directors and shareholders, Mr James Barber, is the fifth defendant; and the company accountant, Mr David Beardmore, is the ninth defendant.

During the days that followed, Petra complained to Mr Scott about delay. On 9 June 2010, however, Mr La Bella told Mr Scott that a pre-advice would be issued that day. On 10 June, Mr La Bella sent Mr Scott a draft pre-advice, which Mr Scott rapidly approved. Mr Howarth and Mr Gibbins also visited Charles Barber’s premises (where Mr La Bella had an office) that day to discuss the delay in the provision of an SBLC. Mr Howarth reported that he had been told that there had been a slight delay, but that the SBLC would now be issued the next day, 11 June.

No SBLC having in the event been forthcoming, on 15 June 2010 Global Marine discussed the delay with Mr Wilcock. He said that the SBLCs were to be provided for Coolmead, which was essentially a broker, by Asia Horizon Trading Limited (“Asia Horizon”) and that, if given exclusivity, Asia Horizon could obtain the SBLCs within three days on its own, without Coolmead being involved. On that basis, Global Marine decided to terminate its contract with Coolmead.

On the same day, Mr McNally asked Miss Yildiz for information about the £7 million Landmark had been paid. He had trouble getting hold of Miss Yildiz, but eventually succeeded in speaking to her by telephone in the early afternoon. Following that conversation, Mr McNally sent Miss Yildiz an email which he said (and I accept) reflects what had been said. The email included this:

Later in the afternoon, Mr McNally emailed to Mr La Bella a letter giving “formal notice with immediate effect of the termination of [Global Marine’s agreement with Coolmead]”. Mr McNally also emailed the letter to Miss Yildiz, together with a further letter in which he said:

During the evening of 15 June, Mr Ruhan emailed DVB to “confirm … in the strongest possible terms that Global Marine Drillships Limited have put in place a facility to complete the MPF transaction [i.e. that relating to the Dalian Developer] and provide additional working capital for the company to complete the project management etc.”. Mr Ruhan might be said to have been over-egging the pudding.

Mr McNally and Miss Yildiz spoke by telephone three times on 16 June 2010. Mr McNally said, and I accept, that emails he sent to Miss Yildiz following the conversations reflect them accurately. The first email, sent at 9.34 am, included this:

By this stage, Miss Yildiz had made a second transfer to the Charles Barber account. Having stayed overnight at Mr La Bella’s house in Cheshire, Miss Yildiz remained in Cheshire until at least lunchtime on 16 June. In the course of the morning, Miss Yildiz went to a shop near Mr La Bella’s home that had a fax machine and used it to send a CHAPS form authorising a payment of £1.5 million to the Charles Barber account.

By now, Global Marine was proceeding with Asia Horizon, of which Mr Mullen, Mr Shackleston and Mr Wilcock were all directors. At Mr Scott’s request, Mr McNally emailed a draft agreement between Global Marine and Asia Horizon on 16 June 2010 to the seventh defendant, Mr Richard Zacharias of Zacharias Taylor Solicitors Limited (“Zacharias Taylor”), the solicitors acting for Asia Horizon. Mr Zacharias having undertaken to hold the money to his order, Mr McNally also transferred £2 million into Zacharias Taylor’s client account.

On 17 June 2010, Miss Yildiz returned £2 million to BPL. Miss Yildiz also sent Mr Alvarez an email in which she asked for confirmation by return that he had received funds for an insurance policy and that “the insurance policy/Pre-advice has been issued”. In the early evening, Miss Yildiz telephoned Mr Scott in a state of some distress and told him that she was out of her depth and had no experience of this type of transaction. She referred to having transferred on Mr La Bella’s instructions some of the £7 million that Landmark had been holding.

At 9.46 pm, Miss Yildiz told Mr McNally in an email:

The events of 15, 16 and 17 June are important to the defences that Landmark and Miss Yildiz advance, and I shall come back to them later in this judgment.

On 18 June 2010, Mr La Bella sent Mr Howarth an email in which he said:

During the evening of 18 June, Miss Yildiz rang Mr Scott again, and was again very upset. She said that she could not believe that Mr La Bella had put her in the position she was in.

On 23 June 2010, Miss Yildiz said in an email to Mr McNally:

A little before this, no SBLC having been provided by Asia Horizon, Mr McNally had written to Mr Zacharias to terminate Global Marine’s agreement with Asia Horizon and to ask for the return of the £2 million that had been paid to Zacharias Taylor. The money was repaid in full by 28 June.

On 26 June 2010, Petra told Mr Howarth in an email, “there has to come a time when we have to say enough is enough”.

It is common ground between the parties represented before me that in fact no relevant insurance was ever acquired and no relevant SBLC was ever issued. By 29 June 2010, the balance on the Charles Barber account had nevertheless been reduced to about £963,000. More than £3.5 million of the £4.5 million transferred into the account had thus been disbursed. A variety of payments had been made from the account at the request of Mr La Bella, Mr Wilcock or Mr Mullen over the previous three weeks. More than £1.6 million had gone to an account in Spain, apparently on Mr Mullen’s instructions. The payments requested by Mr La Bella appear to have included two payments of £25,000 each to Sunset Media and J & DV Tyrell on 8 June; a payment of £50,000 to Mr P. Woods on 10 June; payments of £24,961 and £9,538 on 16 June to M.E.Mullen and Keytech CCTV Limited respectively; and payments of £4,300 and £19,985 on 24 June to Mr C. Whittaker and Lewis Hammerson Small (a firm of solicitors) respectively.

The present proceedings were issued on 29 June 2010. On the previous day, Global Marine had applied without notice for, and been granted (in fact, by me), a freezing order against Mr La Bella, Landmark, Miss Yildiz and Charles Barber.

On 21 July 2010, Mr La Bella sent Miss Yildiz an email that read as follows:

The trial before me related only to the claims against Landmark and Miss Yildiz. Global Marine has obtained judgment in default against Mr La Bella and Mr Shackleston. Charles Barber has been the subject of a winding-up order.

In 2011, Miss Yildiz travelled to Spain and spoke to Platinum’s owner. He told her that Mr Alvarez had not been employed by Platinum in May/June 2010. It also transpires that Mr Wilcock was found guilty of conspiracy to defraud in 1982 and, I am told, that Mr Mullen was imprisoned at one stage.

Miss Yildiz returned £315,000 after the issue of proceedings. Taking account also of the £2 million she paid back on 17 June and recoveries of £1,189,106.48 from other defendants, Global Marine has lost £3,495,893.52 of the £7 million it provided.

Miss Yildiz was recently suspended from practice as a solicitor for three years by the Solicitors Disciplinary Tribunal on the basis of allegations related to the matters described in this judgment.

Global Marine’s case can be summarised quite shortly. It maintains that, no insurance policy or SBLC having been issued, Miss Yildiz and Landmark were obliged by their undertakings of 26 May 2010 to return all of the £7 million that had been paid into Landmark’s client account, but have failed to do so. It is also alleged that Miss Yildiz and Landmark have acted in breach of trust. According to Global Marine, it follows from the 26 May undertakings that the £7 million was held on trust as follows:

The £7 million would be held on trust for Global Marine until Miss Yildiz and Landmark received written confirmation from BPL that Global Marine’s agreement with Coolmead had been completed and executed;

The £7 million would be paid in satisfaction of the premium charged for a policy of insurance for the benefit of Coolmead in respect of any liability it might have to Global Marine in the event of the failure to provide the SBLCs;

In the event that the policy of insurance was not issued for any reason, the £7 million would be returned forthwith to BPL.

Miss Yildiz and Landmark do not dispute either that they gave the 26 May undertakings or that the £7 million was the subject of a trust having the terms set out in the previous paragraph. They advance two defences to Global Marine’s claims. In the first place, they contend that the payments made to Charles Barber (of £3 million and £1.5 million) were authorised by Global Marine. Secondly, they say that on 17 June 2010 Global Marine agreed that, if the £2 million remaining in Landmark’s client account were returned, it would not pursue Mr La Bella, Landmark or Miss Yildiz for the balance of the £7 million. Accordingly, Miss Yildiz and Landmark were (so it is said) released from any liability they would otherwise have had to Global Marine.

I shall take these defences in turn.

The argument that the payments to Charles Barber were authorised by Global Marine is largely based on the proposition that representatives of Global Marine were shown a copy of the £5 million CHAPS transfer form at a meeting on 8 June 2010. It was evident on the face of the form, Miss Yildiz and Landmark maintain, that the transferee was to be Charles Barber (so it is said), but Global Marine raised no objection.

It is not suggested that Miss Yildiz has personal knowledge of these events. She explained her position in these terms in a witness statement:

Miss Yildiz placed reliance, too, on her recollection of a conversation on 15 June 2010. Miss Yildiz said this about the 15 June conversation in a witness statement:

It was apparent, however, from Miss Yildiz’s oral evidence that her recollection of the events at issue in these proceedings is poor. Miss Yildiz has evidently found it difficult to revisit matters that she understandably found traumatic and which have had very serious consequences for her. She explained in cross-examination that she found it painful to read the trial bundles because they brought back “a lot of upsetting memories”. In the circumstances, it is not perhaps surprising that her evidence lacked detail and was in some respects confused. Global Marine’s solicitors calculated that in the course of her evidence Miss Yildiz said she did not know 165 times, that she could not remember 103 times and that she was not sure 80 times.

When asked in cross-examination about the alleged meeting of 8 June, Miss Yildiz thought that she “definitely would have spoken to Will La Bella” but was not sure that she had spoken to Mr Wilcock as well. Questioned about who she understood to have been at the meeting, she said that she could not remember exactly who was there. She was unable to give a clear account of what she had been told.

Questioned about whether she remembered Mr Scott requesting her on 15 June to make a second payment to the Charles Barber account, she seemed none too sure; she said, “I think I do remember this.” Pressed on why Mr Scott would be specifying that money should be paid to the Charles Barber account, she said, “I think they just knew.”

For his part, Mr Scott disputed that he had any knowledge of Charles Barber until 17 June 2010. Mr Scott said that, far from attending a meeting with Mr Wilcock and Mr La Bella on 8 June, he was told that day that Mr La Bella was in hospital. Mr Scott said that Mr Howarth and Mr Gibbins visited Mr La Bella in his office at Charles Barber’s premises on 10 June (and not 8 June), but he still did not know that money had been paid to Charles Barber; he understood from Mr Howarth that the car dealership where the meeting took place was “another one of La Bella’s investments”. Mr Scott first saw the £5 million CHAPS transfer form, he said, when he told Mr Wilcock at their meeting on 15 June that Global Marine had asked for the £7 million to be returned. Mr Scott explained what ensued as follows in his witness statement:

On Mr Scott’s evidence, it was on 17 June that he saw that the CHAPS form named Charles Barber as the transferee. He said this in his witness statement:

This account ties in with evidence given by Mr McNally. Mr McNally said that the first he knew of funds having been remitted to the Charles Barber account was when Mr Scott faxed the CHAPS transfer from to him on 17 June 2010. Mr McNally said that he assumed Charles Barber was an insurance broker, but “immediately carried out research on Charles Barber and at 16:56 reported to Stephen Scott that Charles Barber appeared to be a car dealership”.

It was put to Mr McNally in cross-examination that an email he sent Mr Zacharias on 16 June 2010 indicated that he already knew that money had been paid to Charles Barber. Mr McNally said in the email that it would be necessary to work out certain matters in relation to the £2 million he had transferred to Zacharias Taylor that day “together with further funds that I believe your clients may be holding”. Mr McNally was adamant, however, that these words did not refer money paid to Charles Barber. He explained:

In contrast, Mr La Bella, who attended to give evidence following the service of a witness summons, maintained that Mr Howarth and Mr Gibbins came to Charles Barber’s premises unannounced on 8 June 2010 to see him and Mr Wilcock. According to Mr La Bella:

This account differs somewhat from Miss Yildiz’s. Miss Yildiz referred to the supposed meeting of 8 June having been in London and to Mr Scott having been present at it. Mr La Bella, on the other hand, said that the meeting was in Northwich and that Mr Scott was not there. More importantly, no trace of the alleged meeting has been identified in the contemporary documents, and Mr La Bella made no reference to it at earlier stages of the litigation. As was pointed out by Mr Iain Daniels, who appeared for Global Marine, Mr La Bella had prepared three witness statements, an affidavit and two draft defences before judgment in default was finally obtained against him, but none of them made any mention of a meeting on 8 June. More recently, Mr La Bella provided a witness statement for the purposes of the hearing before the Solicitors Disciplinary Tribunal. Once again, there was no reference to an 8 June meeting. It is also relevant to note that the evidence available to me strongly suggests that the events with which I am concerned involved a fraud in which Mr La Bella was complicit.

I should also mention evidence that Mr La Bella gave about a conversation with Mr Ruhan on 16 June 2010. He said in his witness statement:

While I do not dismiss the possibility that Mr La Bella spoke to Mr Ruhan on the telephone at lunchtime on 16 June, the idea that he asked Mr La Bella to make an additional payment of £1.5 million at that stage makes little sense. One oddity is that Mr La Bella claimed in cross-examination that he asked Miss Yildiz to make a payment of £2 million, not £1.5 million; as Mr Nigel Burroughs, who appeared for Landmark and Miss Yildiz, accepted, Mr La Bella’s evidence in this respect was rather confusing. In any case, it would have been strange for Mr Ruhan to request Landmark to make a further payment when Mr McNally was repeatedly insisting that all available money should be returned to him. Miss Yildiz suggested that Mr McNally had not been kept up-to-date, but the evidence does not appear to me to sustain that proposition. Another problem with Mr La Bella’s evidence about his conversation with Mr Ruhan is that Miss Yildiz would seem to have authorised the £1.5 million transfer before she would have had “a sandwich at a pub in the sunshine near Will’s house”. It is significant, too, that Mr La Bella did not mention his supposed conversation with Mr Ruhan until his recent evidence.

The truth, in my view, is that Global Marine did not authorise the payments to Charles Barber. The likelihood, I think, is that Mr Scott’s account is substantially correct and that he did not know that any money had been paid to Charles Barber until 17 June. I do not accept that any relevant meeting took place on 8 June, that there was any reference to Charles Barber or Brooklands when Miss Yildiz spoke to Mr Scott on the telephone on 15 June, or that Mr Ruhan told Mr La Bella to make a further transfer on 16 June.

There is, moreover, force in Mr Daniels’ submission that points Miss Yildiz has made would not establish a defence even if I accepted them. Take, for example, Miss Yildiz’s evidence about the £3 million payment. Miss Yildiz said that Global Marine believed that this was “effectively to pay for the insurance”. Similarly, as regards her 15 June conversation with Mr Scott, Miss Yildiz accepted in cross-examination that even on her account Mr Scott’s position was that “the risk [was] still on [her] to make sure [the payment was] for insurance”. In the light of such comments, it is hard to see how Global Marine could be said to have accepted that any of the £7 million should be used for anything other than insurance or that the 26 May undertakings should be varied so that Landmark and Miss Yildiz were not liable to return the money if no insurance policy was ultimately issued.

It is noteworthy that the supposed meeting on 8 June could not explain why Miss Yildiz made the £3 million payment. By the time of the alleged meeting, Miss Yildiz had already, it seems, both signed the £5 million CHAPS transfer form and authorised the £3 million transfer that was in fact effected. On 16 June, Miss Yildiz made the £1.5 million payment in the teeth of demands from Mr McNally for the return of the £7 million.

Miss Yildiz explained that she would not have made the two payments if she had not thought that they were proper. She had, I gather, been led to believe that Charles Barber was Platinum’s UK partner, and she derived comfort from the fact that Mr La Bella had control over the Charles Barber account. Even now, Miss Yildiz sees no reason not to trust Mr La Bella. I am afraid, however, that Miss Yildiz’s confidence is misplaced. It seems to me that Mr Daniels must be right that Miss Yildiz’s resistance to doing as Mr La Bella asked her was eventually overcome by a combination of aggression and false promises, from Mr La Bella in particular, with tragic consequences.

Landmark and Miss Yildiz contend that they were released from any further liability to Global Marine as a result of a meeting on 17 June 2010. Their Amended Defence says this on the subject:

Miss Yildiz explained in her witness statement that she had been told by Mr La Bella on 17 June 2010 that her undertakings had been taken over by Mr Zacharias and that she was no longer bound by them. She also said that Mr Mullen, Mr Wilcock and Global Marine had subsequently confirmed what Mr La Bella had told her, including that she had been released from her undertakings.

Mr La Bella said this about the 17 June meeting in his witness statement:

For his part, Mr Scott accepted that a meeting took place at Global Marine’s offices on 17 June at which he, Mr La Bella, Mr Woods (an associate of Mr La Bella and, seemingly, the recipient of the £50,000 payment mentioned in paragraph 47 above), Mr Howarth and Mr Ruhan were all present. According to Mr Scott, Mr La Bella said that he had £2 million of the £7 million, that Landmark held another £2 million and that the remaining £3 million had been spent on an insurance policy. Mr Scott explained as follows in his witness statement:

Mr Scott adhered to this account during his oral evidence. When it was put to him that he was desperate to salvage the deal, he said:

There is considerable force in these comments. Further, Mr Scott’s evidence tallies with the email Mr McNally sent to Miss Yildiz at 10.04 pm on 17 June. As explained in paragraph 40 above, Mr McNally told Miss Yildiz in that email that she had not been released from her undertaking. During his oral evidence, Mr McNally said that it had been “absolutely clear” to him that there was “no release or variance of the undertaking” and that he would have derived that understanding from discussions with Mr Scott.

In contrast, Mr La Bella’s position has not been consistent. In his recent witness statement, he said that Coolmead, Landmark and Miss Yildiz were to be released from further liability if sums totalling about £4 million, including “the funds left in the Charles Barber account which amounted to approximately £1.83M”, were returned. In the past, however, Mr La Bella has claimed (even more implausibly) that Global Marine agreed to accept just £2 million from Landmark. Thus, in a witness statement dated 2 July 2010 Mr La Bella said:

In all the circumstances, I have no hesitation in accepting Mr Scott’s evidence and rejecting that given by Mr La Bella. I do not believe that Global Marine agreed to release Mr La Bella, Landmark or Miss Yildiz from further liability.

Miss Yildiz has come to believe that Global Marine was guilty of fraudulent conduct in relation to the events with which I am concerned. She said in a witness statement:

Miss Yildiz’s understanding doubtless reflects what she has been told by Mr La Bella. Mr La Bella asserted as follows in the witness statement he provided in connection with the disciplinary proceedings against Miss Yildiz:

Far, however, from it being the case that such far-fetched allegations have been established, they (rightly) do not even form part of the case advanced by Mr Burroughs in his realistic and attractively presented submissions. The evidence indicates that Global Marine was the victim of fraud, not that it was engaged in it.

This is a sad case. It is a tragedy that Miss Yildiz did not continue to hold out against Mr La Bella’s demands. The fact that she was subjected to intense pressure does not, however, provide her with a defence to the claims that Global Marine makes, and neither of the defences in fact advanced on her behalf and that of Landmark has been made out. In the circumstances, I shall give judgment for Global Marine.