Apex Global Management Ltd & Anor v Fi Call Ltd & Ors

For reasons explained in my main judgment in these proceedings (the neutral citation for which is [2015] EWHC 3269 (Ch)) there remains for determination a protracted and convoluted dispute between certain of the parties concerning or arising out of their respective claims to the “Al Masoud moneys” as defined in paragraph [31] of that judgment (“my Main Judgment”). (Footnote: ¹) Put shortly, the second and third Respondents, Global Torch and Prince Abdulaziz (the Global Torch Parties), maintain that the Al Masoud moneys were paid into bank accounts of Fi Call Limited by the Prince at the direction of Mr Almhairat and in discharge of the Prince’s obligation to account to Mr Almhairat for such moneys; whereas the Apex Parties (as defined) maintain that those payments were made by the Prince by way of personal loan to Fi Call Limited, and had nothing to do with, and did not discharge, the Prince’s obligations to the Apex Parties further to the Prince’s receipt of the Al Masoud moneys.

What I have described as the protracted and convoluted nature of the dispute is apparent from the five principal questions which now arise for determination:

I turn to deal with these questions in turn.

Plainly, the primary contestants in a dispute as to whether Prince Abdulaziz has properly accounted for Apex’s share of the Al Masoud moneys are the Prince and Apex. But unless and until set aside, the Default Judgment against Prince Abdulaziz has concluded the dispute as between those contestants. The first question is whether the dispute (or, at least, the issues to which it gives rise) may nevertheless fairly and properly be determined as part of Global Torch’s Counterclaim. In my view, the answer depends on whether Global Torch can demonstrate, in its own right and not as proxy for Prince Abdulaziz, that such a determination is necessary as part of the Counterclaim or the relief to be granted in respect of it.

I addressed this question in paragraphs 126 to 134 of my Main Judgment. Put shortly, I considered there to be a slender basis for a conclusion that it was necessary to determine these issues as part of the Counterclaim (see paragraph 132 of my Main Judgment); but I decided to direct a further hearing after the Liquidator appointed in the winding up of Fi Call which I ordered (see paragraph 134 of my Main Judgment) had investigated the position and reported. This was both to enable me to assess more clearly whether the issue would arise as part of the process of determining the part of the Counterclaim based on section 994 of the Companies Act 2006 or in the winding up of Fi Call Limited, and whether it fell properly to be decided accordingly, and also to enable the Apex Parties to participate in this part of the proceedings (see especially paragraph 139 of my Main Judgment).

Pursuant to my directions, the Liquidator, Mr Anthony Batty (a Fellow of the Institute of Chartered Accountants and a Licensed Insolvency Practitioner, “the Liquidator”), conducted an investigation into the three payments into bank accounts of Fi Call Limited made by the Prince on 17 February 2010, 11 March 2010 and 15 March 2010 respectively with a view to establishing how they were accounted for and their nature and purpose. Having given the Apex Parties repeated opportunities to assist him in that investigation (none of which was taken up), the Liquidator has provided a detailed report dated 17 February 2016 (“the Liquidator’s Report”).

The Liquidator’s Report has clarified the factual sequence relevant to this aspect of the dispute. Further, and amongst other things, the Liquidator’s Report exhibits translations and originals of banking documents purporting to evidence banking instructions given to Prince Abdulaziz’s bank (SABB) for payments into Fi Call’s account totalling US$8 million (before bank charges of US$171), and appearing on their face (Footnote: ²) to represent and effect remittances of the Al Masoud share purchase moneys to Fi Call (less a deduction of some US$2 million retained by Prince Abdulaziz himself). The authenticity of these documents has subsequently been certified on behalf of the Bank. The Liquidator attended the hearing in case any of the parties might wish to question him; but none did.

I return to the Liquidator’s Report and this documentation later. For the present, suffice it to say that it does appear to me to illuminate both the purpose and circumstance of the payments and thereby what would otherwise be a contested issue in the winding up of Fi Call Limited as to whether Fi Call received and retained the moneys thus remitted as agent for one or other of Prince Abdulaziz or Apex or as an accretion to its funds for deployment in its business and, in either case, on what terms. However, this still does not necessarily mean that it is necessary and appropriate to determine such issue as part of the trial of the Counterclaim, rather than later in the liquidation.

As to that, as rehearsed in paragraphs 130 to 131 of my Main Judgment, Mr Fenwick QC on behalf of Global Torch has submitted that the determination of the issue was and remains what he described as an “integral part” of the winding-up claim and, further, that it is both appropriate and necessary to determine the issue in the context of Global Torch’s plea in its Counterclaim that Mr Almhairat (Apex’s owner and Apex and Fi Call Limited’s only acting Director) had failed to keep statutory records.

Mr Collings QC for the Apex Parties, on the other hand, has submitted that it would be wholly inappropriate for me to seek to determine the issue as part of the main trial: he submitted that the trial had come to an end “and there is no last vestige of it”. Further, he submitted that even if the trial continued, the issue went to no claimed relief, still less any relief that might be available to Global Torch (whose application to amend to claim the Al Masoud moneys itself I refused, see paragraphs 117 and 128 of my Main Judgment): it was essential in this regard to differentiate between Global Torch (which could properly participate in the Counterclaim) and Prince Abdulaziz (who could not); it had on analysis “nothing to do with Global Torch at all” and it could not, in such circumstances, be necessary to adjudicate it at its behest.

I acknowledge the force of Mr Collings’s arguments. However, as it seems to me, they are to at least some extent based on a misunderstanding. Although Mr Collings apparently found this surprising, I had made clear in my Main Judgment that the hearing in April 2016 to which this judgment relates was a continuation of the trial of the Counterclaim. Having wrestled with just the sort of points that Mr Collings raised as to whether it was necessary, fair and appropriate to adjudicate the issue of the Al Masoud moneys in the context of that trial, I felt it necessary to direct a further hearing in the circumstances and for the reasons that I sought to explain in paragraphs 126 to 139 of my Main Judgment. The basis on which I invited submissions on the Apex Parties’ behalf at that further trial hearing is explained in paragraph 139 of the Main Judgment.

Put shortly, I decided that Mr Almhairat’s accounting failures leading to serious deficiencies in Fi Call Limited’s accounting records constituted unfairly prejudicial conduct within the scope and meaning of section 994 well sufficient to give rise to my powers under section 996 of the Companies Act 2006. I determined that these include not only giving directions to the Liquidator to be appointed pursuant to the winding-up order that I also had decided to make, but also the determination of the issue as to the Al Masoud moneys for the purposes of giving full relief in respect of the matters complained of (see section 996 of the Companies Act 2006) and establishing the respective rights in that liquidation of (in particular) Global Torch and the Apex Parties.

Further consideration and argument on the point has confirmed me in my view that there is a sufficient basis for the determination of the issue as to the Al Masoud moneys in the context of the trial. The issue affects the rights between Global Torch and Apex as shareholders (and in the latter case at least a potential creditor) of Fi Call Limited. The question whether Prince Abdulaziz, in paying the relevant sums into accounts of Fi Call Limited (as it is now common ground he did), did so (a) as a loan by him, (b) to be treated as a loan by the Apex Parties or (c) for the moneys to be held as a stakeholder on behalf of the Apex Parties obviously affects the claims of both creditors (including, potentially, either the Prince or the Apex Parties) and potentially the shareholders. (See also paragraph 125 of my Main Judgment.)

Further, the investigation and determination as to the true basis on which Fi Call Limited received the Al Masoud moneys into its accounts in Beirut and Jordan is, in my judgment, required in order to give appropriate relief in respect of the matters complained of (to quote directly from section 996(1) of the Companies Act 2006), being the unfairly prejudicial conduct of the affairs of Fi Call Limited in failing to keep any or any proper accounting records (and see again paragraphs 137 and 138 of my Main Judgment).

Global Torch has a direct interest as a shareholder in Fi Call Limited in it being determined who Fi Call Limited’s creditors are, and especially whether the Prince or the Apex Parties is a loan creditor in respect of the Al Masoud moneys. Although I would reach the same decision without doing so, I also consider that in the particular circumstances I would be entitled to have regard also to the interests of its majority shareholder (the Prince). It is well established that a member’s interests may include the interests of the beneficial owners of the shares: see Hollington on Shareholders’ Rights, 7^th ed. at 7-74.Given that it was the Apex Parties’ own case, and the Prince accepts, that Global Torch was and is his corporate vehicle (see paragraph 21 of my Main Judgment), I consider that in the particular circumstances the position of the Prince is not for these purposes materially different from the position of a beneficial owner. In seeking to vindicate those interests, I do not consider Global Torch would be acting inappropriately as a proxy litigant: it is acting in right of the shares of which it is the legal owner albeit in accordance with the interests of the Prince as its controlling shareholder.

The relief sought, in effect pursuant to sections 994 to 996 of the Companies Act 2006 and in the liquidation of Fi Call Limited, is of particular importance given the extraordinary twists and turns of these very exceptional proceedings. Fi Call Limited seems most unlikely to have any assets. If shown, as part of the necessary investigations in the liquidation and in determining the extent and effect of Mr Almhairat’s failings in respect of Fi Call Limited’s accounting records, that the Default Judgment was based on a claim that could never have been sustained had Mr Almhairat properly discharged his statutory duty in that regard, it would be odd if the Court was stymied by the fact of that Default Judgment from giving effective relief in respect of the matters complained of. In that context, on the basis of Mr Almhairat’s evidence as to the financial position of the Apex Parties, the moneys held subject to the order made by the Supreme Court have become in monetary terms the principal focus of these entire proceedings (see paragraph 31 of my Main Judgment) and it may well be the only pot available for satisfaction of any remedies granted. In my view, the overall justice of the matter strongly favours a substantive determination of the issue as to the Al Masoud moneys, if (though, of course, only if) that may be done consistently with the decision of the Supreme Court.

Further, as previously noted and in accordance with my directions, the Liquidator has reported to the Court accordingly, attaching further evidence. As I understand it, the Liquidator is content that I should adjudicate, if I feel able properly to do so, this issue in the winding up: and indeed I understand him to support that course. This seems to me further to reinforce the necessity and appropriateness of determining the basis on which the Al Masoud moneys were paid by Prince Abdulaziz into bank accounts held by Fi Call Limited (as is common ground they were).

In the result, notwithstanding the reservations I expressed in my Main Judgment and Mr Collings’s well presented objections, I consider that in the extraordinary circumstances of this very exceptional case it is necessary, fair and appropriate to determine the basis on which the relevant three payments were received by Fi Call Limited and thereby the issue as to the Al Masoud moneys in the context of the Counterclaim. I am persuaded that it is a matter that it is necessary and appropriate to adjudicate for the purpose of “giving relief in respect of the matters complained of” (see section 996 of the Companies Act 2006, and also, as to the Court’s power to grant relief which the petitioner has not sought, Re Neath Rugby Ltd (No 2) [2009] EWCA Civ 291, [2009] 2 BCLC 427) and as a matter incidental to the order for the winding up of Fi Call Limited on the just and equitable ground. I note that this is, in effect, what Lord Clarke suggested, and later in his judgment hoped, might be appropriate: see paragraph 73 of his judgment in the Supreme Court (Prince Abdulaziz v Apex Global Management Ltd & Anor [2014] UKSC 64).

Before turning to the substantive merits of the dispute, I should deal with two further procedural matters. The first is an issue as to the evidential record, and, in particular, whether the further evidence sought to be introduced through the Liquidator’s Report and its attachments should be admitted into the trial process. The second is as to the relevant standard of proof to be applied in determining the merits.

As to the first, the material in issue is the Liquidator’s Report and its attachments. As previously indicated, much of the Liquidator’s Report is conclusory or judgmental. So far as it consists of judgment as to disputed matters for adjudication by this Court I can and do take no substantive account of it. However, as will already be apparent the Report does attach and address documentary evidence relating to two important matters: (1) the fact and sequence of events following the three payments now accepted to have been made by Prince Abdulaziz into bank accounts of Fi Call Limited, which appear to suggest strongly that Mr Almhairat was aware that the payments represented onward payment of the Al Masoud moneys to Fi Call Limited; and (2) the Prince’s own intentions in making such payments.

As to (1), the material primarily consisted of the following: (a) a share certificate exhibited by the Liquidator, dated 15 March 2010 and evidencing the fact that Mr Al Masoud became legal owner immediately upon the last of the three payments into Fi Call Limited’s bank account by Prince Abdulaziz (on 13 March 2010), and apparently issued on the authority of Mr Almhairat; (b) an Option Agreement, giving Mr Al Masoud an option to acquire further shares “in consideration of the payment of the sum of £10 million, receipt of which is acknowledged”, and relied on by Prince Abdulaziz as confirming that all the moneys including Apex’s share had indeed been accounted for and paid to the Company; (c) payment on the authority of Mr Almhairat of a ‘Finder’s Fee’ of $500,000 pursuant to a Finder’s Fee Deed dated and signed on 7 February 2010, which provided for the payment by Fi Call Limited of such a fee in consideration of the introduction of Mr Al Masoud as an investor in Fi Call Limited.

In addition, the Liquidator drew attention to the fact, and attached documentation to show, that (d) the Option Deed conferring on Mr Al Masoud an option to purchase further shares, was then extended by 45 days on 24 May 2010 by agreement with Apex given in writing by Mr Almhairat; thereafter (e) on 30 June 2010 Mr Al Masoud paid $10 million to Prince Abdulaziz for the second tranche of shares in accordance with the Option Deed, and (f) on 7 July 2010 Prince Abdulaziz remitted that $10 million to the account of Fi Call Seychelles at RBS Coutts, as agreed with Mr Almhairat.

Mr Collings sought to dismiss this material as adding nothing new: of the documents he said “they have been around for donkey’s years”. However, the Liquidator’s investigations culminating in his Report brought a new focus on the correlation between the payments in and the outward and visible signs that they were treated by Mr Almhairat as relating to the Al Masoud moneys. The Liquidators’ Report also provided the (in a sense, negative) confirmation (to quote from its summary conclusions) that there was “no other probable reason for these payments to be anything other than a remittance of the Al Masoud share purchase [moneys] to Fi Call Limited.”

As to (2) in paragraph [20] above and the Prince’s own apparent intentions in making the three payments, the evidence produced by the Liquidator of the bank payment instructions to which I referred in paragraph [6] above was new. Mr Collings objected to their admission into evidence “through the back door” of the Liquidator’s Report; he queried why the documents, which are dated February 2010, had not been made available much earlier; and he also submitted that they took the matter no further anyway, since they were not communicated to Apex or Mr Almhairat and could not serve as notice of appropriation of the amounts paid in by Prince Abdulaziz to the discharge of his obligations to Apex in any event.

I am not persuaded that the fact that the route whereby this ‘new’ evidence was introduced was the Liquidator’s Report provides good grounds for refusing to admit it, if that was what Mr Collings was suggesting in depicting it as having been adduced through the ‘back door’. After all, a principal purpose of my decision to defer a decision on this part of the case was to enable the Liquidator to search for such evidence, seek thereby to make good in this particular context the deficiency in the accounting records for which Mr Almhairat was responsible, and to report to the Court thereafter.

I have been more troubled that this evidence was never under the control of Apex or Mr Almhairat and should have been available to Prince Abdulaziz had he diligently sought it. I must acknowledge misgivings as to the account given on behalf of Prince Abdulaziz, in a letter from Mishcon de Reya to me dated 10 May 2016, of his efforts over the course of nearly three years to secure the documents from his Bank (SABB). Given his status, it is difficult not to be surprised that SABB apparently took so long to perform the search of its archives which ultimately resulted in the documents being found and handed over to the Prince’s Private Office in December 2015.

Nevertheless, I have concluded that in the particular circumstances I should exercise my discretion to admit this evidence also, subject to the content of Mishcon de Reya’s letter of 10 May 2016 being formally confirmed in a witness statement attaching the documentation from SABB verifying the source and genesis and authenticity of the bank payment instructions. It seems to me, in the round, that the overall justice of the case justifies and requires this course.

I proceed, therefore, on the basis of the documentary record disclosed in the Liquidator’s Report and attachments including the bank payment instructions and the rest of the SABB banking documentation, as well (of course) as the evidence as it stood previously.

The last procedural issue I must address in the context of this first question is the standard of proof to be applied. At a trial, of course, issues of disputed fact are to be determined on the balance of probabilities. As discussed at some length in oral argument, my conception of this part of the proceedings as being part of the original trial of the Counterclaim indicates that that would be the usually applicable standard. Mr Collings objected to this on three principal grounds and on the more generalised basis that it would be unfair.

Mr Collings’ first ground of objection was that the Supreme Court had stipulated that only a summary process that did not require disclosure should be available to the Prince; and in that context the standard would be whether the Apex Parties’ case was fanciful. However, I do not accept that the Supreme Court said anything to suggest that at the trial then imminent the standard of proof would be anything other than the usual balance of probabilities. So on my view of the nature of this part of the hearing, Mr Collings’ first point falls away.

Mr Collings’ second point of objection, which he advanced somewhat guardedly, was that he had not appreciated the true nature of the hearing, supposing it to be (as I understood him) confined to the set aside application and directions for any subsequent fraud proceedings. On re-reading my Main Judgment, and as previously indicated, I do not really think there was room for real doubt as to the purpose of the hearing. I am satisfied that this was made clear in my Main Judgment. Even if it was an unusual process (Mr Collings described it as “singular”), it was never suggested to me that it was an impermissible one.

Thirdly, Mr Collings submitted that to adjudicate the matters at a deferred part of the trial without full disclosure and cross-examination was inappropriate and unfair. The issue as to disclosure has troubled me. However, it is important to bear in mind the stage in the proceedings that has been reached. The issue is as to whether the Prince or the Apex Parties should be treated as Fi Call Limited’s creditor in respect of the three payments made into the latter’s accounts. The position having been investigated by the Liquidator, and the parties having been given numerous opportunities to advance any further documentation or suggestions, I have not been persuaded that disclosure by the Prince would materially assist.

More generally, although since the Apex Parties did not have the opportunity to test the evidence by cross-examination and contrary evidence that might at first seem unfair, on further analysis I do not think it is. It is a risk they took in denying themselves that opportunity, as I formed the view at an earlier stage they had done. When taking that risk they were fully aware, and the Supreme Court had made clear, that the issue as to the Al Masoud moneys might properly be determined at the trial (and, by necessary implication, on a balance of probabilities); and indeed Lord Clarke expressed the hope that this might be possible (see paragraph 78 of his judgment).

Furthermore, the Apex Parties were given permission and encouragement to attend at the deferred part of the trial, and did so. The consistent refusal otherwise of the Apex Parties to engage with the Liquidator, coupled with their notable reluctance to commit to a consistent factual averment as to their version of events, reinforced the impression given by their non-attendance at trial that beyond the fact of the Default Judgment and the repetition of assertions that they had earlier in effect abandoned, they had no substantive case to propound. They preferred to the last to rest on the Default Judgment than demonstrate any coherent basis for their claim.

Even so, had I been persuaded that there were real grounds for supposing that disclosure and/or cross-examination might have undermined the evidence on which I have in the event relied, I might well have declined to proceed: but for reasons that should become apparent I was not so persuaded. Moreover, Mr Collings did not suggest that he wished to question the Liquidator; on the contrary, he confirmed that he did not intend to do so.

Turning at last to the merits, the question for determination, then, is whether the evidence now available in the circumstances as they now are demonstrates that the payments made by Prince Abdulaziz into accounts in the name of Fi Call Limited (on which it is accepted Mr Almhairat was a joint signatory), were intended to be and should have been accounted for by Fi Call Limited as moneys either held to the account of Mr Almhairat or advanced by him to Fi Call Limited (whether by subscription or loan); and, if so, whether such payments thereby discharged the Prince’s obligation to account to Apex for its share of the Al Masoud moneys so that the payment to Apex of the moneys held on account, or enforcement of the Default Judgment, would constitute double-recovery.

Although the issue now arises as between Fi Call Limited, Global Torch and the Apex Parties and the focus is on the purpose and nature of the payment made, the deficiencies which the Supreme Court identified in the evidence as then presented provide a useful frame of reference. The Supreme Court considered that the evidence before them was deficient especially in failing to show that the payment made had a sufficient ‘label’ to make it right in law to treat it as intended and communicated to be appropriated to the satisfaction of Prince Abdulaziz’s obligation to account. I must determine whether the evidence now available is sufficient to makes good these deficiencies, and to supply the ‘label’ then considered to be lacking.

The centrepiece of Mr Fenwick’s submissions was, naturally and advisedly, the Liquidator’s Report and its attachments, and especially the bank payment instructions showing on their face that each of three payments by Prince Abdulaziz through his bank to Fi Call Limited was intended “as a payment against the purchased shares of Fi Call company by Salman Al Masoud…”

Mr Fenwick accepted that there was no indication that the bank payment instructions were copied to Fi Call Limited; but he submitted that a notice of each transmission of funds, and the obligation to which they related, would surely have been received by Fi Call Limited, probably in the form of a notice, though the company’s accounting records had been so woefully neglected that there was no written record of this.

Mr Fenwick emphasised also the timing coincidences brought into focus by the Liquidator’s Report and its attachments. I have referred to these in paragraphs [20] to [22] above; and a time-line of events prepared by the Liquidator (attached for convenience) is also instructive.

Mr Fenwick echoed the Liquidator in submitting that these arrangements, their timing and their sequence, all suggest satisfaction on the part of Mr Almhairat as to the proper completion of the Al Masoud transaction which is very surprising if he did not believe he had been paid. As the Liquidator put it in his Report:

“If neither Mr Almhairat or Apex had benefitted from the first Al Masoud share purchase, it is questionable why Mr Almhairat would have been willing to extend the Option Deed and by doing so, facilitate the second purchase by Mr Al Masoud and second payment of $10,000,000 in July 2010, in the same manner as the 1^st tranche i.e. again to HRH Prince Abdulaziz.”

Mr Fenwick suggested that equally (if not more) ‘questionable’ is why, if Mr Almhairat believed Apex had not been paid, he chose to borrow from Fi Call funds to pay off a debt to a Mr Hijazi rather than demand payment of his share of the Al Masoud moneys from Prince Abdulaziz. Further, Mr Fenwick prayed in aid the fact that not only was there no semblance of any complaint at that time by Mr Almhairat (his conduct on the contrary appearing to be consistent with an acceptance that he had been paid in full), but also there was no suggestion on his part at any stage during the active life of Fi Call Limited, nor indeed until 2012 in the context of the proceedings, that he had not been paid.

Mr Fenwick submitted that this evidence left no room for any real doubt that the Apex Parties, and Fi Call Limited, had at the time of receipt accepted the payments made as representing a payment by Prince Abdulaziz into the bank accounts of Fi Call Limited in accordance with the Share Purchase Agreement to be treated as a loan or contribution on Mr Almhairat’s behalf such as to satisfy and discharge the Prince from his obligation to account for Mr Almhairat’s share of the Al Masoud moneys.

That conclusion was submitted to be supported also by the Apex Parties’ conduct thereafter, and by the fact (which Mr Fenwick acknowledged had been relied on before the Supreme Court) that the Apex Parties had never committed to any alternative explanation for the transfers in question, despite having had numerous opportunities to do so. They had not complained of non-payment or raised any other objection until the proceedings. The most they had done was to deny that Mr Almhairat had ever agreed to make a loan to Fi Call Limited and to float the possibility that the moneys paid by Prince Abdulaziz to Fi Call were so paid as a loan under the terms of an agreement in November 2009 for Prince Abdulaziz to lend up to $20 million to Fi Call; but there was nothing of substance to link the payment of $8 million to that agreement; the payment was not preceded by any notice of drawdown as provided for by the terms of that agreement (and as given by Mr Almhairat on an earlier occasion) and there was no indication in either the instructions or any other writing that the payment was referable to it.

Lastly, Mr Fenwick advanced complementary submissions to the effect that it should not avail Mr Almhairat, whose responsibility (and failure) it was to keep proper accounts for Fi Call Limited, now to advance the mere possibility, without proof, of an explanation which would secure for himself a windfall. In this connection, Mr Fenwick referred to Keown v Nahoor and others [2015] EWHC 3418 (Ch) in support of the propositions that (a) the burden of proof is on a fiduciary to justify payments made to him or his creature and (b) that a fiduciary whose breach of duty makes it difficult for a claimant to establish the true state of things, and who declines to commit to any verified explanation, runs the risk of adverse findings against him (see also per Longmore LJ in Keefe v Isle of Man Steam Packet Co Ltd [2010] EWCA Civ 683 at [19]).

Against this, in his vigorous submissions, Mr Collings elaborated his contention that none of the evidence, whether ‘new’ or ‘old’, demonstrated that the moneys paid into Fi Call Limited’s accounts were to be treated as so paid at the direction and on behalf of the Apex Parties; nor accordingly did such evidence demonstrate that such payments, though now admitted by the Apex Parties to have been made, constituted payments in discharge of Prince Abdulaziz’s obligation to account to Apex for its share of the Al Masoud moneys.

More particularly, Mr Collings submitted that none of the new material or its analysis demonstrated with any sufficient degree of certainty that the payment made by Prince Abdulaziz was made in satisfaction of any agreement between him and Apex/Mr Almhairat. He submitted that it was still quite possible, for example, that the money was paid by Prince Abdulaziz under the admitted agreement for Prince Abdulaziz to extend loans to Apex (and see paragraph 35 of Lord Neuberger’s judgment in the Supreme Court).

Mr Collings described as “a huge leap” and “simply not made out on the evidence” the contentions that the payments made by the Prince were made on behalf of Mr Almhairat as a loan or capital contribution to Fi Call Limited, such as to represent an accounting for the Al Masoud share proceeds of sale. Mr Collings submitted that the sequence of events described in the Liquidator’s Report at most signified acceptance on the part of Mr Almhairat that Mr Al Masoud had paid the Prince in full, but did not demonstrate that the payments by the Prince were on Mr Almhairat’s behalf or at his direction. He dismissed the ‘new’ evidence of payment instructions on the basis that they “don’t go anywhere” and as of “absolutely no value whatever”.

Mr Collings submitted that their only conceivable relevance was to the issue whether the payments to Fi Call Limited had been allocated or appropriated to discharge Prince Abdulaziz’s obligation to account for the Al Masoud moneys, and that, he submitted, “doesn’t work because they were never communicated and there is no evidence that they were”. The moneys, he submitted, had been sent without a label (or at least without a label visible either to Fi Call Limited or to Mr Almhairat): they became moneys of Fi Call Limited subscribed or lent by Prince Abdulaziz, and having nothing ostensibly to do with Prince Abdulaziz’s obligations to the Apex Parties, whether under the Al Masoud SPA or otherwise. Mr Collings submitted that communication, express or implied, to the creditor of the debtor’s intention to appropriate the payment to a specified debt is essential: for if the debtor does not convey his intention the creditor will in due course (though that is an uncertain concept) be entitled to exercise its own election.

Mr Collings sought to turn Mr Fenwick’s submission on the duties of fiduciaries against the Global Parties. Prince Abdulaziz was just such a fiduciary, with an admitted obligation to account. He was indeed the first fiduciary in the chain; and it was primarily his duty to demonstrate that he had indeed fulfilled his duty, and not for the Apex Parties to show that he had not.

Understandably, Mr Collings also emphasised and elaborated the evidential gaps that had concerned the Supreme Court and maintained that these remained unplugged. Thus, for example, he emphasised the disparities in certain of the figures and inconsistencies in some of the evidence, and depicted the retention by Prince Abdulaziz of some US$2 million out of the Al Masoud share sale proceeds as inconsistent with the picture as portrayed by the Prince.

Mr Collings pointed out also that the payment made was not “into the straightforward HSBC account, it goes into two brand new accounts: one in Beirut and one in Jordan”, suggesting (at least by implication) that the payments were made for some purpose of the Prince’s rather than at the direction or for the benefit of the Apex Parties. Mr Collings took me at some length through an accounting exercise designed to demonstrate that the money that Fi Call Limited received went almost straight out again to allegedly seriously improper ventures in which Prince Abdulaziz was interested, and in particular, such ventures as the alleged Beirut Transactions and the alleged Nairobi Transactions to which I referred in paragraphs 159 to 170 of my Main Judgment. This line of argument required Mr Collings to perform something of a volte-face. He was required to rely on these transactions and their alleged impropriety, although the Apex Parties had previously strenuously urged me against their adjudication in what I described as the somewhat “Alice in Wonderland” world in which the Counterclaim came to be fought out (see paragraph 164 of my Main Judgment).

The argument, which appeared to echo and elaborate submissions made by Mr Lightman on behalf of the Apex Parties in the Supreme Court to the effect that the “peculiar manner in which the sums were transferred suggests that they were not simply working capital for the company but may have been other moneys transferred for other purposes”, was also coupled with an allegation (made in oral argument) that “Prince Abdulaziz was treating this company as his own personal fiefdom for grossly improper purposes…”. Apart from any forensic objective I took this to be in support of a more general submission that the Global Torch Parties’ relationship with Fi Call Limited was such that money went in and out of it for their own convenience, rendering unrealistic any suggestion that any particular payment in could be appropriated to any particular transaction.

In the round, Mr Collings submitted that there was no material change of circumstances such as to justify a re-run of arguments addressed to and rejected by the Supreme Court: the case had been considered with great care and at three levels, culminating in detailed analysis by their Lordships. The deficiencies that they had identified told not only against summary disposition but any safe conclusion on the question to be decided. The ‘new’ evidence made no material difference.

I turn to my determination of these competing submissions.

In wrestling further with this issue I have been acutely conscious that the Supreme Court took a more nuanced view than I did on the evidence then available, and that there is a danger lest my original assessment (which at least the majority did not share) that the case against Prince Abdulaziz was “[to] put it lightly frail” (see paragraph 35 of Lord Neuberger’s judgment) influence me now. Further, I have sought to treat with reserve the more general propositions advanced by Mr Fenwick as to the inferences to be drawn from silence, and especially the failure of the Apex Parties to commit to any clear and consistent position.

However, in my view, despite the clamour of the dispute, and notwithstanding the apparent extent and gravity of the contested facts, there is now much more common ground and much less room for relevant dispute than might be supposed. In particular, and as previously mentioned, it is no longer disputed (as once Mr Almhairat sought to argue) that Fi Call Limited did not receive the Al Masoud moneys (except for the US$2 million deduction rightly or wrongly made by Prince Abdulaziz). Nor is it any longer disputed that the moneys received became company moneys: neither side any longer suggests that the moneys were paid to Fi Call Limited as stakeholder.

As it seems to me, the only real dispute, stripping away the sound and the fury, is whether the material available now demonstrates with sufficient clarity that the moneys paid by Prince Abdulaziz and received into the (new) Beirut and Jordan bank accounts of Fi Call Limited, on which it is accepted that Mr Almhairat was a joint signatory, represented and should have been accounted for as (a) loans or capital injections by the Prince or (b) loans or capital injections by or on behalf of the Apex Parties. Put more shortly: had the payments been properly accounted for, who should have been shown as Fi Call Limited’s creditor in respect of this accretion to its funds?

The crux of the Supreme Court’s analysis and its conclusion as encapsulated in paragraph 39 of Lord Neuberger’s judgment was that, on the basis of the evidence then put forward, and having regard to the existence of a loan agreement under which the Prince agreed in principle to make loans to Fi Call Limited, the Apex Parties’ suggestion (and I note the word) that the money was paid by Prince Abdulaziz under that loan agreement and not in discharge of any obligation to Mr Almhairat, did not appear fanciful. It was only the last-minute suggestion of this possibility by the Apex Parties which seems to have persuaded Lord Clarke also that the case was not fit for summary disposal (and see paragraph 67 of his judgment).

It seems to me that the position is considerably clearer than it was before the Supreme Court (where, it should also be remembered, the appeal itself concerned whether a default judgment should have been entered). I accept the submissions on behalf of Prince Abdulaziz that the events and their sequence, as described in the Liquidator’s Report (see paragraphs [20] to [22] above) and in the documentation attached to it, simply do not fit with the suggestion that Mr Almhairat considered or assumed that the payments to Fi Call Limited’s accounts made by the Prince had nothing to do with the Al Masoud SPA and represented a wholly separate loan. As I previously noted, there is nothing in the evidence that to my mind suggests any such assumption on Mr Almhairat’s behalf.

On the contrary, the events and their sequence seem to me to be consistent only with Mr Almhairat having, at that time, recognised and accepted that the payment was being made for that reason and purpose. Further, and as previously emphasised, Mr Almhairat was a joint signatory on all Fi Call Limited’s bank accounts, including the relevant ‘new’ accounts in Beirut and Jordan, and he was Fi Call Limited’s only executive director; it was his duty to account for the Company’s receipts and funds.

Further, the bank payment instructions, assuming their authenticity (which I do not think I have any real reason to doubt), show quite clearly that Prince Abdulaziz intended the payment to represent payment on of the moneys Mr Al Masoud had paid for the shares sold to him by Global Torch and Apex. That, to my mind, confirms that the moneys were not intended by the Prince to be advanced by way of loan or subscription, but pursuant to the Al Masoud SPA which (by clause 5.6) provided for payment of the purchase consideration into Fi Call Limited’s Bank account (see paragraph [122] of my Main Judgment).

Moreover, the work done by the Liquidator has revealed that (a) Mr Almhairat was aware of the Loan Agreement and the formal procedure for drawing down funds under that Agreement, (b) he did issue a withdrawal notice on 2 January 2010 for the sum of £1 million, (c) that sum was paid to a different account at HSBC in London, but (d) there is no evidence of any other withdrawals against the facility (under the Loan Agreement). In my view, this too is inconsistent with the Apex Parties’ suggestion that the payments made to Fi Call Limited were by way of loan by the Prince rather than by way of loan (or possibly subscription) by the Apex Parties.

The Supreme Court also posed the question whether the payments were sufficiently labelled to establish their appropriation to a debt or other obligation in favour of the Apex Parties. The law on appropriation is not without its uncertainties, especially in relation to the question (raised by Lord Sumption in argument in the Supreme Court) as to when an appropriation must be made by a debtor and when, if not made in due course, the creditor is instead permitted to make its own appropriation or election. However, it seems to be clear that a debtor’s right to appropriate does not expire on payment, and may indeed survive for years until something happens which makes it inequitable for him to exercise it (see Chitty on Contracts, vol 1, 29^th ed. paras. 21-060 and 21-061).

In the present case, although the Apex Parties pleaded originally that in February 2010 they had elected to treat Prince Abdulaziz as having received their share of the Al Masoud purchase moneys on their behalf and for their benefit, when Prince Abdulaziz pleaded discharge by payment to Fi Call Limited, the Apex Parties did not admit any payment, and simply denied both discharge and that there had been any agreement for any part of the proceeds of the sale of shares to be contributed to Fi Call Limited as working capital. They raised no positive case of their own.

Even now, having eventually admitted the fact of payment into Fi Call Limited’s accounts, the Apex Parties have denied that Mr Almhairat ever agreed to make a loan of the Al Masoud moneys but never averred as a fact that the payment represented a loan by the Prince to Fi Call Limited. The suggestion advanced to that effect was no more than that: pressed to state Apex’s own actual position on the facts, and in particular whether its case was and is that the payment made by Prince Abdulaziz was indeed by way of loan to Fi Call Limited, Mr Collings (as indeed Mr Lightman before him) declined to do so, insisting that it was not for Mr Almhairat to offer a positive case, but rather for the Prince to establish that the appropriation and discharge of any obligation to the Apex Parties was plain and obvious. There is no positive factual averment contrary to Prince Abdulaziz’s factual case, nor any definite election on the part of Mr Almhairat to treat the payment undoubtedly made to Fi Call Limited by the Prince as a loan by the Prince pursuant to the Loan Agreement rather than a payment in satisfaction of the Prince’s obligations under clause 5.6 of the Al Masoud SPA.

Another deficiency identified by the Supreme Court was that although they had seen some of the payments into and out of the bank accounts into which the Prince made the three payments of some $6 million, they had not seen all of them, and Lord Neuberger indicated that the fact that “much of the money may have been subsequently paid out to the Prince may be inconsistent with the Prince’s case” (see paragraph 35 of Lord Neuberger’s judgment).

Mr Collings took this point out and sought to trace what became of the payments in to show that the moneys paid in were paid out to fund Prince Abdulaziz’s ventures. I have naturally been troubled by this. I accept that if it were shown, as the Apex Parties have sought to contend, that Prince Abdulaziz was using Fi Call Limited as a money-laundering vehicle to disguise his funding of illegal or improper transactions, that would tend to support the contention that Fi Call Limited received the moneys not as a loan or subscription by the Apex Parties to be used in its corporate activities, but as an advance from the Prince to be held to his order or direction.

However, in addition to the fact that (as I see it) the argument is at least in part notably inconsistent with the Apex Parties’ previous insistence that the Court should not adjudicate upon the disputed Beirut and Nairobi Transactions (see paragraphs [52] and [53] above) the possibility has to be assessed in the circumstances relating directly to the Al Masoud monies as now apparent. It is now clear that in point of fact the moneys remitted by the Prince were the Al Masoud moneys (or at least a proportion of them) and that the moneys became part of Fi Call Limited’s own moneys to be used for its corporate purposes. In my view there is no longer, on the fuller evidence now before the Court, any real room for doubt that Mr Almhairat was aware of all that at the time. Even if it be the case (and this has not been demonstrated) that thereafter some part of the moneys were, at the instance or direction of Prince Abdulaziz, extracted from Fi Call Limited and used for improper purposes, and even if that would be a valid complaint for breach of duty owed to Fi Call Limited, that does not signify that the payment to the company was not by way of accounting to the Apex Parties for its share of the Al Masoud moneys.

In short, particularly if the proper evidentiary standard is the balance of probabilities, I am satisfied that it has been demonstrated clearly that the payments made by the Prince should be accepted as being on behalf and at the direction of Mr Almhairat as an accretion to the funds of Fi Call Limited (whether by loan or subscription) such as to discharge the amounts owed by the Prince to Mr Almhairat in respect of the Al Masoud moneys. Indeed, I consider the suggestions advanced by Mr Almhairat to have been demonstrated to be fanciful. Whether that contribution by (in effect) Mr Almhairat was by way of capital contribution or loan is not necessary or even fruitful to decide, though the Apex Parties may raise the issue in the liquidation, if so advised.

The Set Aside Application (see paragraph 2(2) of my Main Judgment), which I directed to be heard at the same further hearing, is brought by Prince Abdulaziz himself.

On the basis of my conclusions on the first question, this second question is, to my mind, to be answered in the affirmative. It is, in my view, a necessary corollary of the possibility envisaged by each member of the Supreme Court that the issue as to the Al Masoud moneys might be adjudicated at the trial that, if it was so, the Default Judgment must be set aside, and the moneys held as security released to Prince Abdulaziz.

Having reached that conclusion, the question whether the Prince might in his own right have succeeded in his Set Aside Application is, on my view of the case, redundant. Adjudication of the true basis on which the payment should have been accounted for by Fi Call Limited as part of the section 994 proceedings and/or to establish who was and is Fi Call Limited’s creditor in this regard in its winding-up makes unnecessary the determination of what is essentially the same issue as raised by the Prince in his own Set Aside Application.

However, much of the argument before me focused on that Application; and since it seems to me that Prince Abdulaziz would have been entitled to its adjudication (whether on procedural or substantive grounds), and also in case it is determined subsequently that the substantive issue raised should not have been adjudicated in the context of the Counterclaim, I turn to consider the procedural permissibility, and subject to that the merits, of the Prince’s application.

As to this, it has long been Prince Abdulaziz’s case that it is plain that the Default Judgment is based on a claim that was and remains plainly and obviously unsustainable, since he long ago accounted to Apex for the sums claimed. On that footing, he contends that, whatever the result of the first question, the Default Judgment against him should be set aside, and the sums which by the direction of the Supreme Court were paid by him into a solicitor’s account as a condition of being permitted to appeal to the Supreme Court to challenge the Default Judgment, but which the Supreme Court directed should continue to be held to the order of the Court notwithstanding the failure of the appeal, should be released back to him.

The Apex Parties opposed this application by the Prince on both procedural and substantive grounds.

As to the procedural grounds, Mr Collings submitted first, that it was simply not open to the Prince, having failed to persuade the Supreme Court that his case was sufficiently strong to merit summary disposition and the setting aside of the Default Judgment accordingly, to repeat that application, at least in the absence of exceptional circumstances. Mr Collings stressed, relying on Thevarajah v Riordan and others [2015] UKSC 76 and its invocation and approval of Buckley LJ’s observations in Chanel Ltd v FW Woolworth & Co Ltd [1981] 1 WLR 485 at 492-493,that the general rule against repeat applications applies even in interlocutory matters; as Buckley LJ put it:

“Even in interlocutory matters a party cannot fight over again a battle which has already been fought unless there has been some significant change of circumstances, or the party has become aware of facts which he could not reasonably have known, or found out, in time for the first encounter.”

Secondly, Mr Collings submitted that there was no such material change as to amount to exceptional circumstances which might warrant a repeat application. Mr Collings accepted that the circumstances had altered in that, when the Supreme Court was addressing the matter, it was envisaged that the trial would be a contested one. He accepted also that some additional material had been produced, but except possibly for the bank payment instructions (see paragraph [24] above) that revealed nothing new. As to the bank payment instructions, Mr Collings submitted that there is “almost a Ladd v Marshall type test” precluding reliance, in justifying and advancing a repeat application, on evidence which could with reasonable diligence have been obtained when making the original application. Adopting that test by analogy, he submitted that in this case no such special grounds as the test required had been established: it had not been shown that the evidence could not have been obtained with reasonable diligence before the previous hearings culminating in that before the Supreme Court.

Thirdly, Mr Collings submitted that on analysis the ‘new’ material did not justify a re-run of matters already adjudicated. It might well be said to confirm the source of the payment made as being the Al Masoud moneys; but it could not be said to demonstrate the reason and basis for the payment made by Prince Abdulaziz, nor to amount to notice of the appropriation of the payment to satisfaction of the obligation to account to Apex for its share of the Al Masoud moneys. On that basis, he submitted, the Ladd v Marshall criteria were not satisfied; but in any event, in point of substance, the case failed the summary judgment test.

Mr Fenwick, on the other hand, submitted (in line, of course, with his submissions in relation to the Counterclaim) that the circumstances had changed substantially since the hearing in the Supreme Court. The supposition current when the matter was before the Supreme Court that there would be a properly contested trial had been unpredictably falsified by the fact that Apex and Mr Almhairat were debarred. The Liquidator’s Report and its attachments provided new evidence, including the instructions clearly referencing the First Al Masoud SPA, which Mr Fenwick submitted “inexorably demonstrates that the relevant payments made by [Prince Abdulaziz] to Fi Call comprised an accounting by him of $8 million (i.e. more than the $6 million claimed by [the Apex Parties]) received by him in connection with the First Al Masoud SPA)”. That evidence transformed, or at least greatly strengthened, the case, effecting a change in circumstances that merited a renewed application.

Further, Mr Fenwick reasoned that it was implicit in the Supreme Court’s direction that Mishcon de Reya LLP should continue to hold the moneys paid in as a condition of permission to appeal, despite the dismissal of the appeal and until further order of a High Court Judge, that the Set Aside Application and Prince Abdulaziz’s application for repayment to him of those moneys should be “looked at afresh”, notwithstanding the usual rule against repeat applications. Mr Fenwick also relied in this context on the postscript to the judgment of Lord Neuberger, with which all their Lordships had agreed, and which seemed to make room for a review.

Dealing first with the latter point, and the general rule against repeat applications (see Chanel v FW Woolworth), I do not accept that it is implicit in the Supreme Court’s direction for the retention of moneys as security that it was envisaged that Prince Abdulaziz would be entitled to have his contention that the Apex Parties’ claim to the Al Masoud moneys should be summarily disposed of “looked at afresh”. In my view, the Supreme Court, in making that order, was responding to the concerns I had expressed about the potential for dissipation and the need to protect the Prince in case at the end of the day the Global Torch Parties should be vindicated by a finding at trial. A renewed application for summary judgment seems to me to me most unlikely to be what the Supreme Court had in mind.

More generally, I agree with Mr Collings that general principles of proportionality and finality, reinforced now by the CPR’s statement of the overriding objective, require that the Court should and would ordinarily refuse a repeat application for the same relief except in the exceptional circumstances described byBuckley LJ in Chanel v FW Woolworth & Co Ltd [supra] at 492-493. Restraint would be particularly indicated in the present case, where the essential issue as to whether Prince Abdulaziz had already accounted for the money so that the default judgment, if allowed to stand, would result in double-recovery, has been contested all the way to the Supreme Court.

In the particular context of the Prince’s Set Aside Application, therefore, the questions are (1) whether the circumstances are so exceptional, and the position so materially different than that which was addressed by the Supreme Court and the lower courts before it, as to outweigh the requirements of proportionality and finality, especially having regard to the previous long appellate history of the matter; and (2) whether in the new circumstances the uncertainties that caused the Supreme Court to conclude that the case was not clear enough to warrant summary disposition have been so convincingly addressed as to dictate, in all justice, a different approach now, and an order setting aside the Default Judgment.

As to whether the circumstances are sufficiently exceptional to justify a repeat application, I think it is also necessary to consider why it is that they have changed. There is plainly a difference in this regard (as there would be in the context of the Ladd v Marshall criteria) according to whether or not the evidence said so materially to alter the landscape was or was not previously available to Prince Abdulaziz. As to that, I have previously indicated my misgivings as to the reasons advanced for the considerable delay in obtaining evidence from the Prince’s bank that might have been expected to be provided without delay (see paragraph [23] above). Further, I think I should also take into account that, but for my own intervention and the two-stage approach I directed, the evidence might not have been available to or secured in time by Prince Abdulaziz, who has thus benefited from the proceedings which he was debarred from participating in.

Against that, I think it is also appropriate to bear in mind in this context Mr Almhairat’s responsibility for the extraordinary gaps in the records of Fi Call Limited resulting in the lack of evidence to record the nature of a payment of such a considerable sum into Fi Call Limited. Fi Call and its accounting and other records were under the control of Mr Almhairat as its only executive director. It was Mr Almhairat’s breach of duty in failing to keep proper records or any semblance of documentary order which is a proximate cause of the uncertainty. By contrast, it now appears that Prince Abdulaziz did seek to record the basis on which he was making the three payments.

Further, and more amorphously, in the particular circumstances where an order obtained by default may be shown by newly, even if belatedly, found documents to be based on a false case, a fair judicial approach and perhaps the public interest seems to me to weigh more heavily in the scales in a balancing exercise which is in the end based on public policy.

The balance is nevertheless a difficult one. I admit to having had considerable reservations about permitting a process which involves second-guessing a decision made at least in part for broader reasons of proportionality and procedural discipline and at every level of the Court hierarchy, albeit on the basis of less complete evidence and in a somewhat different context. However, the case is very exceptional. I also do take some comfort in this context from the postscript to the Supreme Court’s judgment (see paragraphs 42 to 44 and 80). In the end, my conclusion is in favour of permitting a repeat application, and leaving the issue to be determined on the merits rather than by decisions based on evidence now shown to have been incomplete and by a procedural convention which ultimately must yield to the interests of justice. I stress, however, that this is a conclusion based on the wholly exceptional, perhaps even unique, circumstances of this case, and in particular on the extraordinary circumstance that facts have emerged and have been determined in the proceedings which suggest that an injustice would otherwise be occasioned which it is not too late to avoid.

Turning to the merits of the Prince’s application, it will already be apparent that, at least on the balance of probabilities, I consider that it has been established that Prince Abdulaziz did account for the Apex Parties’ share of the Al Masoud moneys, so that payment to Mr Almhairat of the moneys held as security or enforcement of the Default Judgment would result in the latter wrongly achieving double-recovery. The question is whether, having regard to the newly provided evidence and changed circumstances, the case is strong enough to merit summary disposition.

Ringing in my ears, as it were, is Lord Neuberger’s admonition in paragraph 35 of his judgment that

“it would require a particularly clear case before any court could properly conclude that the claim against [the Prince] was plainly bound to fail…”

I have of course weighed carefully and anxiously the reasons for the conclusion of the majority of the Supreme Court on the evidence then before them that the case did not merit summary disposition, and Lord Neuberger’s further warnings, express and implicit, against summary judgment in a case of this kind.

However, with diffidence and the greatest respect, I have concluded that the fuller evidence now available leaves room only for a claim based on a possibility too shadowy to succeed. Although, in the context of the evidence as it was presented when the matter was before it, the Supreme Court held (see paragraph 35 of Lord Neuberger’s judgment) that the “Apex parties’ suggestion that the money was paid by Prince Abdulaziz under a $20m loan agreement does not appear fanciful”, in my judgment the new evidence does now demonstrate that suggestion, on which the Apex Parties came to rely but have never espoused as being the fact, to be just that: fanciful. There is, to my mind, nothing of substance to support it, notwithstanding its energetic but ultimately somewhat fact-free repetition.

In my judgment, therefore, Prince Abdulaziz is entitled to succeed in his application and should be entitled in his own right to have the Default Judgment set aside accordingly.

On the basis of my conclusion as to the first and second questions, this third question does not arise.

However, in case I am wrong in both my previous answers, and since argument was addressed to me on the point (albeit Mr Collings described his submissions as being “on the hoof”), I should briefly indicate my provisional view on the issue.

The competing arguments may quite shortly be stated. Mr Collings submitted on behalf of the Apex Parties that the effect of the Supreme Court’s decision upholding the Default Judgment and debarring order on the evidence as it was at that stage was that such judgment could only be upset upon a showing that the claim was plainly and obviously flawed or unsustainable. Only a process that did not require a trial was available to Prince Abdulaziz: for the same reason as he had been debarred from defending the trial (failure and refusal to make a disclosure statement), so too he could not prosecute a claim based on fraud (which would necessitate a disclosure statement likewise).

Mr Fenwick, on the other hand, contends on behalf of Prince Abdulaziz that the Supreme Court’s decision imposes no such impediment, and that it remained open to Prince Abdulaziz to invoke the necessary and salutary jurisdiction of the Court to set aside judgments obtained by fraud; he cited Gentry v Miller [2016] EWCA Civ 141.

The conundrum is obvious. A judgment based on a fraud would be abhorrent; but the only way of establishing a fraud would be a trial after proper compliance with procedural requirements (including disclosure obligations which may require Prince Abdulaziz to do what in the present proceedings he maintained he cannot do).

A not dissimilar conundrum was addressed in Gentry v Miller [supra], on which Mr Fenwick sought to rely. There, an insurer wished to set aside a default judgment out of time because it had ascertained there to be a viable allegation that the claim on which the judgment was founded was brought fraudulently (see para. 26). Vos LJ said this

“26.

… The competing considerations here are the finality of litigation set against the desirability of allowing the allegation of fraud to be tried out. In the context of an application after trial to adduce new evidence, this was considered by the Court of Appeal in Owens v Noble [2010] EWCA Civ 224, [2010] 1 WLR 1489. There, the court determined that the true principle was that “where fresh evidence is adduced in the Court of Appeal tending to show that the judge at first instance was deliberately misled, the court will only allow the appeal and order a retrial where the fraud is either admitted or the evidence of it is incontrovertible. In any other case, the issue of fraud must be determined before the judgment of the court below can be set aside” (see paragraph 27 of Smith LJ, paragraph 50 of Elias LJ, and paragraph 72 of Sedley LJ.

27.

An application to set aside a default judgment is not entirely analogous to an application to adduce new evidence of fraud after a trial, because CPR Part 13.3(1)(a) expressly sets the level of proof necessary by providing that the defendant must show a “real prospect of successfully defending the claim” rather than that the evidence is incontrovertible. But nonetheless, it is axiomatic that there must be finality to litigation and the rules of court must be obeyed, so a default judgment cannot be set aside as a matter of course just because an arguable fraud is alleged, however long after that judgment the application is made. At some point, the court must leave the applicant to seek to vindicate its rights by bringing a fresh action based on the fraud as envisaged by the decision in RBS supra. The question of precisely when that point arises will depend on all the circumstances of the particular case, and can be resolved by the application of the CPR and the rules that I have already summarised.”

This reluctance (at the least) to permit a default judgment to be set aside on grounds of fraud without a fresh action unless the fraud is admitted or incontrovertible seems to me to chime with the Supreme Court’s refusal in the present case to permit a disbarred party to set aside the disbarring order unless he or she can show that the claim can safely be summarily adjudicated in his or her favour without a trial (and thus without requiring the procedural steps non-compliance with which had led to the disbarring order).

I think it is plain both from the analysis and decision in Gentry v Miller, and from the rationale of the Supreme Court’s decision in this case, that Prince Abdulaziz could only set aside the Default Judgment if in separate proceedings which proceed to trial he ultimately demonstrates that the claim on which it was based was fraudulent. If (as is the assumption on which this question is premised) he had failed to satisfy the requirements for summary judgment, a separate action to establish fraud is the only remaining recourse. In that separate action Prince Abdulaziz would have to fulfil the procedural requirements (which may well include those he apparently felt unable to fulfil in these proceedings) or once more be unable to proceed to establish his claim.

It follows that, had this issue arisen, I would have not have felt it right or even open to me to determine the issue of fraud in these proceedings: still less in the summary way which Mr Fenwick seemed to seek. I would have left Prince Abdulaziz to bring a new action, if so advised, and left those proceedings to take their course subject to the usual procedural rules. I prefer to leave the question whether in those separate proceedings Prince Abdulaziz would be required personally to sign the disclosure statement to be decided in those separate proceedings, if brought.

It would follow from my conclusion that Prince Abdulaziz had already accounted to the Apex Parties for their share of the Al Masoud moneys and that the Default Judgment should be set aside that the moneys the Prince was required to put up as a condition of permission to appeal to the Supreme Court should be repaid to the Prince, so as to prevent Apex obtaining double-recovery.

I have considered whether, in case I am wrong in my conclusion that the Default Judgment should be set aside, and given that the Order of the Supreme Court required the issue to be determined at High Court level, I should attempt to decide and state what would have been my approach if I had determined that the Default Judgment should remain in force.

I have decided that I should not attempt this: there are too many imponderables to make that a safe or satisfactory course, especially given the extant appeals and applications for permission to appeal, and the possibility that the Liquidator might also in such circumstances wish to make submissions. Accordingly, if my decision is successfully appealed, and subject of course to any other directions or guidance the Court of Appeal may give, the safer course is to leave the question to be determined if and when it actually arises.

Lastly, I must address the question of costs, including the costs in the Supreme Court.

When ordering that the sum of US$8,699,998.49 should continue to be held by Prince Abdulaziz’s solicitors until further order of this Court, the Supreme Court also ordered as follows:

“Save that the respondents should not be ordered to pay the appellant’s costs of the appeal in the Supreme Court, the question what order to make with regard to the costs in the Supreme Court be reserved to a High Court Judge (possibly Hildyard J) to be determined at the same time as a decision is made about the moneys held as security as set out in paragraph 1 of this order.”

In taking that course it is apparent from the statement of the Supreme Court’s reasons that the Court had especially in mind the concerns that I had expressed in my earlier judgments as to the risk of dissipation of any moneys paid out to the Apex Parties (and see also paragraphs 42 to 44 in the postscript to Lord Neuberger’s judgment).

In the event, the Prince has succeeded in his application before me, and to that extent has been vindicated; but the fact remains that his appeal was dismissed in the Supreme Court.

As it presently seems to me, the fairest result is likely to be that there should be no order for costs in the Supreme Court. However, I shall make a final decision on this at the same time as determining the costs of this application, on which matter I would invite short further written submissions in light of this judgment, which can if necessary be elaborated at a convenient moment after this judgment has been handed down.