MBI International & Partners Inc, Re

The Sheikh has asserted that pursuant to a purported resolution of Holding BVI dated

These Proposed Amendments flow through into the causes of action as follows.

The Liquidators say that this is a responsive re-pleading which responds to the Sheikh's change of position as evidenced by his list of corrections. Insofar as this new case involves deletions, it is obviously something of a blow for the Liquidators because it brings to an end any chance of a claim against Holdings UK, an onshore and apparently solvent entity for knowing receipt, leaving only what Mr Curl described, as a vestigial claim in

In the first instance the court must determine whether the proposed amendments have a real prospect of success. The test to be applied is the same as that for a summary judgment under CPR Part 24. Thereafter, the question of whether to grant a late amendment is within the discretion of the court and is to be determined having regard to the overriding objective. An over-arching consideration is the need for the court to strike

Mr Curl took me to Swain Mason v Mills & Reeve LLP, [2011] 1 WLR 2735 in which

Mr Curl pointed out that in this passage Lord Justice Lloyd appeared to have identified what Mr Curl described as a carve-out for late disclosure or new evidence, such that the approach in such a case would not be as stringent as might otherwise be the case for late

I do not read this paragraph in quite the same way as Mr Curl. In my judgment, Lord Justice Lloyd was not intending to identify a separate category of case to which entirely different considerations would apply. On the contrary, his remarks in the final sentence of this passage were plainly intended to have a general application to very late amendment applications, albeit that I do not doubt that a litigant who advances a very late amendment in circumstances where he has been prompted to do so by late disclosure or late evidence

Equally, such a litigant may well be in a position to submit, as the Liquidators do in this case, that lateness is a relative concept and that in truth the amendment is not late at all, owing to the fact that it could not have been made previously. If such

This is not, however, a carve-out but merely, as I understand it, an appreciation that there is a spectrum along the road to trial with different factors likely to carry

It was common ground that the general principles to be applied on an application for late amendment are to be found in the speech of Mrs Justice Carr (as she then

Both the cases of Swain Mason and Quah Su-Ling were approved, albeit obiter, in

Ms Stanley also referred me to Rose v Creativity etc [2019] EWHC 1043, a decision of his Honour Judge Eyre QC, in which he examined the principles to be

Finally, Mr Curl referred me to the case of Brown v Innovatorone [2011] EWHC

I have regard to all of the principles set forth in these cases in determining this

This application arises midway through the trial. The Liquidators have already called their evidence and Ms Stanley has cross-examined their witnesses by

However, the Liquidators say that, through no fault of their own, they now find themselves in a position where they are forced to amend to reflect the new evidence as intimated in the Sheikh’s list of corrections. They submit that, at all material times, the Sheikh has been under an obligation to give a true account of the affairs of the Company and that he has failed to do so on a number of occasions. They say that lateness is relative and that this application is not late because they could not previously have pleaded out the case they now seek to put, owing to the fact that until the list of corrections was served, they had been operating under the

The MBI Respondents strongly oppose this application and make it clear that the grant of permission will likely necessitate an adjournment of the trial. If this is correct then this is itself a factor which must go into the balancing exercise identified

I accept that the Liquidators have been put in an invidious position. They have proceeded on the basis of evidence given by the Sheikh, both during his section 236 examinations and in subsequent witness statements (making it clear in their Points of Claim that they were doing so) only to find that evidence being changed at the

In order to obtain information about the affairs of the company, recognition of the company's liquidation was obtained in this jurisdiction on 9 June 2017. On 29 August 2017, the Sheikh agreed to be interviewed within 11 weeks but he failed to comply with that order. On 13 December 2017, the Sheikh submitted to an order that he produce all books, papers and records in his possession and/or control in relation to the assets of the company, but I understand that he did not produce any

I pause here to note that if the documents which have recently been disclosed were in the Sheikh's possession and control, they should have been produced pursuant to

During his s. 236 examination, the Sheikh consented to the Liquidators approaching Maples & Calder and Citco BVI Limited (offshore service providers) for

The information provided by the Sheikh as to the transfer of the Holding BVI shares to Holdings UK was clear and was repeated on at least four separate occasions, months apart. I do not accept that, prior to the very late disclosure of last week, the Liquidators had access to any contemporaneous documents which ought to have indicated to them that the Sheikh’s evidence was obviously

The 2017 resolution was unclear, referring as it did to an acquisition of 100 per cent of the Company, as was the Petsche e-mail of 12 December 2017, which said that “…by Resolution of 27 July 2017 it was resolved that a 100% of [Holdings BVI] will be acquired by [Holdings UK]”. The documents attached to that e-mail included a certificate of incumbency which showed that the Company held 129,112 shares in Holding BVI on 23 June 2017, but no documents were produced to show the

Further, the fact that the MBI Respondents’ Defence asserted that it had never been disputed by the Respondents that the 129,112 shares belong to the Company, with express and sole reference to the Petsche email (which does not appear to make that plain), did not provide a clear picture to the Liquidators. No changes were made to the Sheikh's witness statements, which continued to be apparently unequivocal in

Whilst I expressly make no final decision as to whether, in litigating this case, the Liquidators have made proper investigations, that being an issue to be determined at the conclusion of the trial, I accept in general terms that insolvency office holders have a generous margin of latitude in the exercise of commercial judgment, as was indeed confirmed on the morning of 12 February 2021 by Mr Lowe QC, expert for

On the submissions that I have heard for the purposes of the amendment application, and by reference to the documents that I understand to have been available to the Liquidators, it appears to me to have been reasonable for them to take the view that they were entitled to continue to pursue their pleaded case as to

Further, it strikes me as a singularly unattractive position for any director to take, including the Sheikh) to say that a liquidator knew or should have known that the information he provided when compelled to do so was inaccurate and thus that the

Once the late disclosure was provided and the liquidators realised that there was likely to be a change of position, they put down a marker about the possibility of an amendment, but whilst the Sheikh's witness statements remained unchanged, a state of affairs for which, as I've said, there's been no explanation, in my judgment they were entitled to decide to wait and see what would transpire when the Sheikh came to give his evidence. The MBI Respondents could not have been oblivious to the

It follows that having regard to the fact that this application could not have been made much earlier than it has been, I do not regard it as very late and nor do I consider that the onus on the Liquidators is as heavy as it might have been in different circumstances, although I, of course, appreciate that I must have regard to the principles set forth in the cases that I have already referred to and must carry

I turn next to consider the strength of the Proposed Amendment, which I shall do in conjunction with considering whether the text of the amendments is satisfactory in terms of clarity and particularity. I preface this section by saying that Mr Curl has produced what are complex amendments in a very short space of time. During the course of his submissions, he frankly acknowledged that there were some areas in which the proposed amendments were wanting, as a consequence of the time

Mr Curl took me through the Proposed Amendments paragraph by paragraph. Their purpose appears to be to advance new breaches of fiduciary duty and/or new breaches of trust together with a claim of negligent mis-statement based on the Sheikh's inaccurate statements and to amend an existing unlawful means conspiracy

I am bound to say that having reviewed the Proposed Amendments in detail, I am not comfortable that the new amendments are pleaded with sufficient clarity and particularity, although having regard to the submissions that have been made to me, I believe that, with some exceptions which I identify below, they appear to satisfy the comparatively low hurdle of showing a real prospect of success. I now set out

This paragraph makes a new factual plea as to the date of the production of the 2017 resolution to Mrs Caulfield, the former liquidator. Ms Stanley asserts that this paragraph is factually wrong because the 2017 resolution was not produced to Mrs Caulfield at the time of the Petsche e-mail of 12 December 2017. Mr Curl was not able to address this point, saying that he needed to double-check it and follow it up. However, he confirmed that if Ms Stanley is correct on the factual position,

This paragraph asserts a representation to the court, the former liquidators and the Liquidators made on four occasions. The information set out in this paragraph has been available to the Liquidators for some time, but it is pleaded now because of the assertion in paragraph 55C that the representations made by the Sheikh were

Mr Curl appeared to acknowledge this during his submissions, praying in aid, as I have said, the extreme time pressure under which the draft was prepared. Nevertheless, the Sheikh is entitled to know precisely what it is he said, that is alleged to amount to an actionable representation and this pleading does not satisfy

Having said that, it does not seem to me to be a difficult exercise to particularise the

As I have already said, this paragraph asserts that the representations were untrue and that one was in breach of undertaking. Although the use of the word "untrue" is perhaps unusual and one might more usually expect a plea that a representation was "false", I anticipate that the word "untrue" has been used in circumstances where the Liquidators are not seeking to make any claim in deceit or dishonesty.

Ms Stanley asserts that the undertaking was also impossible to perform because it required that the witness statement should set out the name of the UK entity that now holds the shares in Holding BVI. Mr Curl responded that it was clear when seen in context that this undertaking required information about the entity now holding the shares in Holding BVI and that it was artificial to interpret the undertaking in the very strict manner adopted by Ms Stanley. It seems to me that this point is arguable and that I cannot say in the present circumstances and absent detailed argument on the law that a properly pleaded case based on the undertaking

These paragraphs appear to be intended to provide particulars of the assertion that

Mr Curl attempted to explain the use of the words "real position" by saying that the amendments were expressed in that way so as to "avoid accepting that these recently produced documents or what the Sheikh is now saying is necessarily the gospel truth in circumstances where he has changed his position so many times". This appeared to me to be an acknowledgement that the Liquidators were seeking to hedge their bets against the possibility that a new case might subsequently emerge. Whilst this might be understandable in the circumstances of this case, it is not satisfactory and does not seem consistent with the clear assertion that the

Paragraph 55D must be read, says Mr Curl, with paragraph 55C. In other words, it pleads sufficiently the Sheikh's knowledge that the representations were untrue at all material times. However, once again there are no particulars on which the plea of knowledge can be founded and no plea, as I have already said, that the knowledge is to be inferred from pleaded facts if this is the Liquidator's case, as it

Paragraph 55E suffers from similar problems. In this paragraph there is again a plea of knowledge, albeit again without any attempt to plead the underlying basis

As to the plea in paragraph 55E that the Sheikh was aware of the content of

Paragraph 55F alleges that despite the Sheikh's knowledge of the inaccuracy of the representations he had made, together with his breach of undertaking, he did not correct these with the court or the Liquidators until 9 February 2020. This appears simply to build on the earlier paragraphs by making a factual statement as to the

Paragraph 55G again contains the imprecise and unclear statement as to the

There are no particulars of the steps that the Sheikh is said to have taken in order to achieve this end and, further, Ms Stanley points out that the resolution recording the decision to proceed with the transfer of assets and liabilities states that it is a resolution of the board of directors of “JJW BVI Inc”. There is no allegation that the Sheikh was a director of JJW BVI Inc. and made the resolution in that capacity,

This paragraph asserts that the disposal of the assets and liabilities of Holding BVI had the effect of extinguishing the value of the Company's Holding BVI shares at a time when the Sheikh knew that the Liquidators were taking steps to investigate and/or recover their value. This paragraph led to considerable argument during the hearing as to whether it was signposting a claim for reflective loss. If so, said Ms Stanley, the rule against reflective loss in Prudential Assurance Co Ltd v Newman Industries Ltd [1982] Ch 204 would be an absolute bar to such a claim.

Mr Curl explained that this was a plea of circumstances rather than loss and that the essence of the new claim was that the Sheikh had failed to discharge his duty to the Company to act in its best interests and for its proper purposes. He explained that the plea in 55H is intended to be circumstantial in the sense that it is describing the effect and consequence of the breach of duty, namely that assets of the Company in liquidation were put out of reach of the Liquidators by reason of the conduct of the Sheikh. Thus, he says, the loss caused by the breach of duty is to the Company

Mr Curl pointed to paragraph 82A in support of this proposition, which sets out the alleged breaches of duty or breaches of trust, making the point that these

I am bound to say that having looked carefully at the Proposed Amendment, and

Whilst I can see that the way in which the pleading has been put together may have given rise to some confusion and was the cause of Ms Stanley's submissions and that it might be more clearly pleaded so as to ensure that there is no

Ms Stanley criticises this paragraph on the grounds that it does not tie the alleged breaches of duty into the specific duties pleaded in paragraphs 61 to 63. This is

Paragraph 82A(d), however, appears to allege negligent mis-statement but is presently inadequately pleaded. The pleaded representations were not made to the Company but to the court and the Liquidators, and the pleaded duty of care alleged in paragraph 61(c) is not a duty to take care when making statements. A negligent mis-statement claim would ordinarily require a plea that when making his statement to the court, the Sheikh somehow assumed responsibility to the Company to protect it from relying on what he said in evidence and thereby suffering loss. There is no

Mr Curl relied on the fact that section 236 of the Insolvency Act compels the

He went on to say that if a liquidator could not rely on representations made by company directors when compelled to provide information under section 236, that provision would have no effect. Absent sight of any authorities produced by either side, I am certainly not in a position to say that this argument has no real prospect

This paragraph replaces the previous claim for conspiracy with a claim that “pursuant to” the conspiracy already pleaded in respect of earlier events, the Sheikh and/or Ms Al Jaber and/or JJW Guernsey and/or Holdings UK caused or allowed or participated in the untrue representations.

During argument, I asked Mr Curl how the conspiracy in this regard could possibly be said to involve Ms Al Jaber and he acknowledged that it could not. However, he said that JJW Guernsey and Holdings UK were implicated by reason of the Sheikh

On the face of it, this plea, in the absence of further particulars, looks difficult given the elements required to establish the tort of unlawful means conspiracy, namely two or more persons combining and taking action which is unlawful in itself with the intention of causing damage to a third party who does incur the intended damage - see Clerk & Lindsell on Torts, 23rd Edition at paragraphs 23-15. How is it said that the corporate entities were involved in the making of the untrue representations? Having said that, I also note that paragraph 96 begins with the words "pursuant to the conspiracy", which appears to be intended to indicate that the making of the untrue representations was done as a part of the over-arching

Overall, in my judgment, the pleading is plainly insufficiently particularised and

However, as Ms Stanley herself accepts in her submissions, it is possible to ascertain that the amendments make broad allegations relating to the Sheikh's knowledge and understanding of the status of Holding BVI shares during a period since June 2017. Accordingly, it appears possible to see how a claim of breach of duty based along these lines, if properly pleaded and particularised, might have

I do not consider that I need to be satisfied that the claim is stronger than that in the circumstances of this case, where I do not consider the amendment to be truly late

I shall return in due course to the implications of my findings as to the inadequacies

The consequence of a refusal to amend will be that the Liquidators will be forced to argue their case on the basis of a factual position that the MBI Respondents have recently produced evidence to suggest is incorrect. No explanation has been

Mr Curl submitted that the Sheikh has a track record for, as he put it “general delinquency in the conduct of litigation”, by reference to previous cases before the English courts. In this regard, however, I note that I have not yet heard the Sheikh give evidence and am not in a position to determine his credibility (which is a central issue in these proceedings) at this stage. Nothing I have said in this Judgment

However, as Mr Curl points out, if the amendment application is refused, then the Sheikh would appear to have derived a tactical advantage from saying one thing in his statements, disclosing documents very late in the day which suggest a different factual position, and then changing his story so as to be consistent with those documents once the trial is under way. This would be neither fair nor just to the Liquidators.

Ms Stanley spent a good deal of time in her written note for the hearing submitting that the late disclosure was, in fact, helpful to the MBI Respondents, not least because it showed that the knowing receipt claim against Holdings UK was

Whilst I, of course, accept that the Sheikh's current legal team have acted properly in disclosing information upon it becoming available to them, I again note that I simply have no evidence from the Sheikh from which I can draw any conclusions as to his conduct. In particular, I cannot conclude, as Ms Stanley invites me to do, that if the liquidators had sought an order for standard disclosure (rather than Model B disclosure), it is “impossible to think” that the March 2020 registered agent

In this regard, I note Mr Deen's witness statement for the trial dated 19 June 2020 to the effect that various investigations into documents have been undertaken by the MBI Respondents, but that difficulties have been encountered and that

It is difficult to see what prejudice either Holdings UK or Ms Al Jaber could possibly suffer by reason of the Proposed Amendment. In the case of Holdings UK, the amendments seek to delete the claim of knowing assistance, leaving only a plea of conspiracy, which is perhaps rather more tenuous against Holdings UK than had previously been the case. In the case of Ms Al Jaber, Mr Curl has accepted that the

However, Ms Stanley maintains that if I allow the amendments at this stage, “extreme prejudice” will be caused to the MBI Respondents, which will make it impossible for the trial to continue without an adjournment. This prejudice is said

As to this, the allegations have not been made before because the Sheikh has only just changed his witness evidence. Ms Stanley says that the Sheikh's legal team cannot be expected to deal with amendments such as this in the middle of a trial

I disagree. In circumstances which remain opaque, late disclosure has recently been provided and the Sheikh has sought to amend his witness evidence to set out a clear but revised case. Any amendments to the Defence will presumably simply reflect that evidence. The Liquidators put down a marker about this at the outset of the trial but the list of corrections was not received until the morning on which it

I accept, however, that prejudice will be caused to the MBI Respondents if the Proposed Amendment is allowed in its current state, but this is a point I return to shortly.

Again, I do not understand why this is so. It would seem from Ms Stanley's written note for the hearing that investigations made shortly before the trial resulted in the disclosure of the late evidence and presumably, therefore, the change in the Sheikh's statement. Having now pinned his colours to the mast in his list of corrections, I fail to see what further factual evidence is required from the Sheikh. I would have expected him to want to provide an explanation as to why his evidence has changed so late in the day and precisely what he knew and when he knew it, but he has, to date, for whatever reason, chosen not to do that in a further witness statement (deliberately so, according to Ms Stanley, hence the provision of a list of corrections

I do not understand this. Absent evidence from the Sheikh as to how he came to change his position, I can only infer that investigations have already taken place to

Again it was not suggested that this would be necessary when the Sheikh served his list of corrections, which prompted the chain of events leading to the proposed amended pleading. An allegation as to the 2017 resolution has been on the Points of Claim since the outset in one form or another and if the Sheikh wished to obtain evidence about its “background and rationale”, as Ms Stanley suggested in her written note, it is to be expected that he would have done so in the ordinary course of the run-up to trial.

In circumstances where it was already anticipated that, in light of the list of corrections, the Sheikh would be subject to cross-examination as to how he came to give evidence in, amongst others, the statement of 4 May 2018, this is surely an issue that the MBI Respondents should already have considered. Accordingly, I also reject the yet further suggestion that Mr Salfiti's cross-examination and Mr Krys' cross-examination might have been different if the new case had been known. Without evidence about when and how the Sheikh came to change his position, and given the marker put down by the Liquidators at the very outset of the trial, I do not see how I can give any real weight to this suggestion.

In light of what I have said about paragraph 55H already, I do not consider this to

As an over-arching point, it is important, in my judgment, in considering the submissions on prejudice, that the MBI Respondents have brought this situation on their own heads and that the Liquidators should not be in any way disadvantaged by their conduct. I repeat that the MBI Respondents have not seen fit to provide any

In my judgment, the balancing exercise plainly weighs in favour of permitting the amendments, assuming that they have a real prospect of success and are properly particularised and pleaded. The Liquidators have a good reason for the timing of the application and the prejudice that they will suffer if I refuse this application far

I do not consider that there is any real likelihood that the trial will have to be adjourned if I permit the amendments in a proper form, and although I will of course hear submissions from Ms Stanley in due course if she wishes to make them, my present view is that it would be neither fair nor just to the Liquidators to grant

I need to return, however, to the issue of the Proposed Amendment. As it stands, it is insufficiently particularised and exhibits the lack of clarity and potential difficulties (including as to real prospect of success) that I have identified above. I have given very careful consideration to whether that means I should simply refuse the Proposed Amendment and require the trial to continue. However, on balance, that would not be the right approach given my application of the relevant principles to the circumstances of this case. In particular, this is not a truly late amendment owing to the fact that it could not have been made before now and this Proposed Amendment has been produced under substantial time pressure by the Liquidators in the middle of trial.

Whilst I would not be prepared to adjourn the trial for an indefinite period, as

I am prepared to give the Liquidators until 1 pm on Monday afternoon, thus allowing the Liquidators the weekend and Monday morning to consider further a revised

If I am not satisfied that any revised draft I receive by then cures the defects I have identified above, then the amendments will be refused and the trial will proceed on

I will expect a reasonable and proportionate approach to this issue to be adopted by both parties. I shall then expect to proceed immediately with the evidence of the Sheikh, subject to any application that Ms Stanley wishes to make as to

As they have been doing, to date, the parties will need to continue to cooperate in determining how the trial is to be completed as expeditiously as possible, given the slippage occasioned by this application.