Saad Investments Company Ltds v Al -Sanea

On 20 and 23 September 2011 I heard two urgent applications in this case. The first was by the defendant (“Mr Al-Sanea”), who asked the court for alternative declarations as to jurisdiction and to set aside an order of Simon J dated 5 September 2011 giving the claimant (“SICL”) permission, among other things, to serve out of the jurisdiction proceedings concerning a put option agreement (“the Agreement”). The second was by SICL, which asked the court to grant a freezing order in support of the proceedings. Mr Al-Sanea opposed the grant of such an order. He made it clear that neither his application nor his opposition to SICL’s application involved any submission to the jurisdiction of the court. On 23 September 2011 I ruled that Mr Al-Sanea’s application would be refused and that SICL’s application would be granted, for reasons to be given later. In this judgment I set out those reasons.

This judgment deals with matters arising as follows:

Mr Al-Sanea is a national of Saudi Arabia and resides there. On his behalf Mr Richard Morgan QC and Mr James Aldridge stressed that he was and is subject to the law of Saudi Arabia and the subject of royal orders governing his actions.

Mr Stephen Atherton QC and Mr Tom Smith on behalf of SICL explained that it is a company incorporated in the Cayman Islands (“Cayman”) which was created to hold some of the offshore assets of Mr Al-Sanea and his family. It was placed into official liquidation in Cayman on 18 September 2009 on the petition of its creditors. Stephen John Akers, Hugh Dickson and Mark Byers of Grant Thornton UK LLP and Grant Thornton Specialist Services (Cayman) Limited were appointed as joint official liquidators of SICL (“the Liquidators”).

The Agreement comprises an original contract made between SICL and Mr Al-Sanea dated 1 April 2008 as revised by an amendment dated 20 October 2008. Under the Agreement Mr Al-Sanea, described as the “Seller”, granted SICL, described as the “Buyer”, a put option in relation to 32,600,000 shares in Berkeley Group Holdings plc (“Berkeley”), a UK housebuilder whose shares are listed on the London Stock Exchange. The Agreement states that it is governed by the law of the United Kingdom and that each party submits to the non-exclusive jurisdiction of the courts of the United Kingdom. It is common ground that these references to the United Kingdom should be read as being references to England and Wales.

Without limiting the points which might subsequently be raised by way of substantive defence, Mr Morgan in oral argument drew particular attention to certain specific issues. They can conveniently be divided into two categories. The first concerns whether notice of exercise of the put option was delivered to Mr Al-Sanea within the relevant time limit. The second concerns compliance by SICL with certain other requirements which Mr Al-Sanea said needed to be met in order for the notice to be valid. Some, but not all, of the legal submissions advanced in this regard were considered by Burton J in Awal Bank BSC (in Administration) v Al-Sanea [2011] EWHC 1354 (Comm), a case concerning a similar agreement between a bank and Mr Al-Sanea. It is recognised by Mr Morgan that I have a limited role in relation to substantive issues of this kind: as I explain below, my task is to consider whether SICL can demonstrate a reasonable prospect of success in its claim. To the extent that substantive issues arise as to the construction of notice requirements in the Agreement, it is common ground that I must consider whether SICL’s case has a reasonable prospect of success in the light of the principles concerning such requirements set out by the House of Lords in Mannai Ltd v Eagle Star Assurance Co. Ltd [1997] AC 749.

As to urgency, Mr Morgan drew attention to the fact that SICL commenced these proceedings and sought permission to serve out on Mr Al-Sanea by an alternative means without engaging in any pre-action correspondence at all, despite the fact that, on SICL’s case, Mr Al-Sanea has been liable since 11 June 2011. Its application to serve out was granted at a without notice hearing. (I examine at section E below Mr Al-Sanea’s contention that at the hearing none of the obvious defences were raised.) Despite the fact that Mr Al-Sanea is resident in Saudi Arabia and engaged in other, extremely substantial litigation, the Order provided for Mr Al-Sanea to serve evidence in answer to SICL’s application for a freezing order within 7 days i.e. by Monday 12 September 2011. The apparent need for an extremely tight timetable was the imminent discharge in Cayman of a worldwide freezing order (“the Cayman WFO”) against Mr Al-Sanea obtained by a third party (which that party accepts has to be discharged for lack of full and frank disclosure). However, SICL had known that the Cayman WFO was to be discharged in due course since at the latest 1 August 2011, yet it did not commence proceedings until 1 September 2011. On Monday 12 September 2011 SICL agreed a short extension until 2pm on Tuesday 13 September 2011 for Mr Al-Sanea’s evidence in answer, but at 8.02 pm on Monday evening SICL e-mailed to say that it could not proceed with the freezing order application and the urgency had gone out of the matter. However, on the morning of Tuesday 13 September 2011 SICL indicated that it again intended to proceed with its freezing order application as a matter of urgency.

In these circumstances Mr Al-Sanea’s evidence, and his application challenging jurisdiction, has necessarily been prepared under extreme time pressure. I have considerable sympathy for Mr Al-Sanea and his legal team in this regard. It is nevertheless right to deal with the applications now as a matter of urgency, if only for this reason: I was informed by the parties that although the Cayman WFO was discharged on 20 September 2011, an order in this country with similar effect continued in force but was likely soon to be discharged. While it was in force there was no need for SICL to seek a freezing order, but as its discharge was imminent it followed that SICL’s application needed to be considered speedily. I did not consider that such criticisms as might be made of SICL would warrant shutting it out from seeking relief. In the event a great deal of hard work by all involved has, I am satisfied, made it possible to have a fair hearing of such points as are appropriate to be raised for the purposes of these applications.

It is common ground that SICL must show that it has a reasonable prospect of success, and that what this test involves is as explained by Lawrence Collins J in BAS Capital Funding Corporation v Medfinco Ltd [2004] 1 Lloyd’s Reports 652 at paragraphs 151 to 153.

I turn to the first category of substantive points relied on by Mr Al-Sanea for the purposes of his application. SICL accepts that notice of the put option was required to be served by midnight on 30 March 2011. The Agreement describes this notice as a “Put Option Exercise Notice” and I shall refer to it as a “POE notice”. Mr Morgan observes that while the letter alleged to constitute the POE notice said on its face that it was delivered by courier, it is not now maintained that a courier in fact delivered it to Mr Al-Sanea. Various assertions as to method of delivery have recently been made on behalf of SICL. Only one such assertion is relied on for the purposes of the present applications. It is that a POE notice dated 29 March 2011 (“the 29 March notice”) was delivered no later than midnight on 30 March 2011 to Post Office Box number 3250, Al Khobar, 31952, Saudi Arabia (“the PO Box”).

The final provision in clause 5 of the Agreement states that “All notices served shall be sufficiently served on [Mr Al-Sanea] if delivered to P.O. Box 3250, Al Khobar, 31952, Saudi Arabia”. I note that there are other, more formal, provisions as to notice in the Agreement, but it seems to me that this final provision gives rise to a strongly arguable case that actual delivery to the PO Box no later than midnight on 30 March 2011 constituted sufficient delivery for the purposes of the Agreement.

Does SICL have a reasonable prospect of showing that such delivery took place? On behalf of SICL Mr Akers’s first witness statement and his first affidavit said simply that the notice was delivered to Mr Al-Sanea “in accordance with the final clause” of the Agreement. However, Mr Akers’s second witness statement provided detail which was lacking from the first witness statement. In his second witness statement Mr Akers said that “on the basis of information provided … by employees of my firm Grant Thornton and Mr David Wells, an employee of the Liquidators’ Saudi Arabian counsel, Al Sawwaf” he believed that:

(1)

The Al Khobar Central Post Office is the post office at which the PO Box is located.

(2)

At approximately 9.30 am on 30 March 2011, an agent of Al Sawwaf, Mr Abdul Karim Massoud, handed over an envelope containing a copy of the 29 March notice at the Al Khobar Central Post Office for delivery by registered mail to P.O. Box 3250.

(3)

The 29 March notice was expressed on its face to be “By Courier” because, given the limited time available to the Liquidators to ensure it was delivered in accordance with the Agreement, the original of the 29 March notice was scanned and emailed to Al Sawwaf who in turn sent a copy of it by courier to Mr Massoud for Mr Massoud to deliver it in accordance with the final clause of the Agreement.

Mr Morgan criticises this evidence as inadequate, adding that it fails to comply with CPR. SICL has not provided a witness statement from Mr Massoud. SICL has not given details of precisely who has passed on what information to whom, nor has it adduced evidence as to when an envelope handed in to the post office would reach the PO Box. In formal terms, however, the witness statement in my view complies with CPR: it identifies statements which are matters of information or belief, and it indicates the source for matters of information or belief. In practical terms, if an envelope addressed to the PO Box is handed in at 9.30am at the post office where the PO Box is located then in the ordinary course one would expect it to reach the PO Box later that day. It is relevant to note that Mr Akers has produced copies (with English translations) of what he says are (1) the envelope containing the copy of the 29 March notice which Mr Massoud handed over at the Al Khobar Central Post Office and (2) a receipt that Mr Massoud was given for it. The documents he produces do not on their face verify that they do in fact concern an envelope containing a copy of the 29 March notice, but they are at least consistent with this being the case. Mr Al-Sanea objects that the 29 March notice referred to delivery by courier when no courier delivered anything personally to him, but it is at least seriously arguable that this was a mere deficiency of wording and that it did not render the notice invalid. If Mr Akers’s second witness statement were the sole evidence adduced by SICL at trial in opposition to evidence of non-delivery then it might not carry the day. However, in circumstances where time and resources are limited it suffices in my view to show a reasonable prospect of success on this issue.

In order to examine the second category of substantive points relied on by Mr Al-Sanea for the purposes of his application, it is necessary to set out extensive parts of the Agreement:

WHEREAS

(A)

The Buyer owns 32,600,000 (thirty-two million and six hundred thousand) shares in Berkeley Group Holdings plc, a company licensed under the Laws of the United Kingdom.

(B)

For valuable consideration, the Seller has offered to sell a put option to the Buyer and the Buyer has agreed to buy a put option from the Seller for a period of three (3) years, with an option to extend the put option for an additional one (1) year period, at the market price of each Share as of the date of this Agreement and thereafter as of the date of the anniversary of the Agreement that coincides with the date on which any additional option may be exercised, provided, however, that the put option shall be cancelled or avoided at such time as the price on the exchange on which the Shares are customarily listed equals or exceeds GBP 12.50 (Twelve and 50/100 only Pounds Sterling) per share (the “Barrier Price”).

NOW IT IS HEREBY AGREED as follows:-

1.

PUT OPTION.

1(A) The Seller hereby grants to the Buyer an option (the “Put Option”) to sell the beneficial ownership of all or any part of the Shares to the Seller at a strike price of GBP 11.97 (Eleven and 97/100 only Pounds Sterling) per Share (the “Put Option Price”). Provided the Buyer is not in default of its payment obligation under Clause 1(F) and provided the Barrier Price has not earlier been met or exceeded, the Put Option shall be exercisable by the Buyer at any time and from time to time after the date of this Agreement until the first to occur of (a) 31 March 2011 or (b) if the Buyer elects to purchase a Successive Put Option, the delivery of one or more notices to the Seller to purchase a Successive Put Option as defined in Clause 1(B) or (c) the delivery to the Seller by the Buyer of one or more notices covering the aggregate of all the shares pursuant to Clause 1(C) of this agreement.

1(B) Provided the Buyer is not in default of its payment obligation under Clause 1(F) and provided the Barrier Price has not earlier been met or exceeded, the Seller further hereby grants to the Buyer an additional one-year option (the “Successive Put Option”) to sell the beneficial ownership of all or any part of the Shares to the Seller. The “Successive Put Option” shall exist in favour of the Buyer beginning 1 April 2011 and shall be exercisable by the Buyer at any time and from time to time thereafter until the first to occur of (a) 31 March 2012 or (b) the delivery to the Seller by the Buyer of one or more notices covering the aggregate of all the shares pursuant to Clause 1(C) of this agreement. The strike price per Share (the “Successive Put Option Price”) shall be the price listed on 1 April 2011 on the exchange on which the Shares are customarily listed.

(C)

The Put Option or any Successive Put Option shall be exercised by the delivery to the Seller of a written notice of exercise (the “Put Option Exercise Notice”) signed by the Buyer. The Put Option Exercise Notice shall specify the number of Shares being sold, the amount payable at the Put Option Closing (as defined below) and the Put Option Closing Date (as defined below). If, however, the Barrier Price has earlier been met or exceeded, the Put Option and any Successive Put Option shall be cancelled and avoided.

(D)

The sale of all of the Shares to the Seller pursuant to the exercise of the Put Option shall take place at a closing (the “Put Option Closing”) to be held at the offices of Saad Investments Company Limited, care of Saad Financial Services S.A., 80 Rue de Lausanne, 1202 Geneva, Switzerland at 3:00p.m. local time on the fourteenth day after the date of the Put Option Exercise Notice or such other date, time and place as the parties may agree (the “Put Option Closing Date”).

(E)

At the Put Option Closing:

(i)

The Seller shall pay to the Buyer an amount equal to the product of the relevant Put or Successive Put Option Prices and the number of Shares being sold (the “Option Sale Amount”), in cash within a period of sixty days, in immediately available funds by transfer to the account of the Buyer notified to the Seller in the Put Option Exercise Notice; and upon receipt of “Option Sale Amount” by the Buyer, the Buyer shall give an irrevocable instruction to transfer all right, title and interest in and to the relevant number of Shares free and clear of any lien, security interest, mortgage, pledge, charge or other encumbrance of any nature whatsoever to the relevant authorities; or

(ii)

As an alternative to the settlement in clause E(i) above, the Buyer shall have the option to receive payment from the Seller, being the difference between the “Put Option Price” and the price listed on the “Put Option Closing” on the exchange on which the Shares are customarily listed (“Option Settlement Amount”), but only if the Put Option Price is higher than the listed price on the “Put Option Closing”, in cash within a period of sixty days, in immediately available funds by transfer to the account of the Buyer notified to the Seller in the Put Option Exercise Notice.

(iii)

For the avoidance of doubt, the provisions of Clause 1 of this Agreement shall apply to any stock dividends on or with respect to the Shares that are paid during the period beginning after the Put Option Closing and ending on the expiration of the Put or any Successive Put Option but shall not apply to any other distributions on or with respect to the Shares that are made during the period beginning after the Put Option Closing and ending on the expiration of the Put or any Successive Put Option unless the terms relating to the sale of such distributions are otherwise expressly agreed in writing by the Seller and the Buyer.

(iv)

…

(F)

In consideration of the payment of US$5,000.000 (five million only United States Dollars), receipt of which is hereby acknowledged, the Seller grants the Put Option to the Buyer for a period of one (1) year from the date hereof. In addition, the Seller grants to the Buyer the Successive Put Option, provided that the Buyer pays US$ 5,000,000 (five million only United States Dollars), on or before the commencement of any Successive Put Option period.

…

4.

REPRESENTATIONS AND WARRANTIES OF THE BUYER TO THE SELLER.

The Buyer hereby represents, warrants and covenants to the Seller as follows:

(A)

The Buyer has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by the Buyer have been duly authorized by all requisite corporate action of the Buyer.

(B)

The Buyer owns the Shares free and clear of any lien, security interest, mortgage, pledge, charge or other encumbrance of any nature whatsoever, except for such restrictions on transfer as may be imposed by applicable laws.

(C)

Upon the execution and delivery of this Agreement by the Buyer, this Agreement shall constitute the legal, valid and binding obligations of the Buyer, enforceable against the Buyer in accordance with its terms except insofar as the enforcement thereof may be limited by any applicable laws relating to or affecting the enforcement of creditors’ rights generally or by general equitable principles.

(D)

Each of the representations and warranties contained in this Clause 4 is true and correct as of the date of this Agreement and will be true and correct as of the Put Option Closing Date (if the same shall occur) with the same force and effect as though such representations and warranties had been made on and as of the Put Option Closing Date.

It is apparent that while clauses 1(A), 1(B), 1(C), 1(D) and 1(E)(i) refer to a sale of shares beneficially owned by SICL, clause 1(E)(ii) confers on SICL an option – which for convenience I shall refer to as “the cash difference election” – to receive a cash payment without any sale of shares. I return below to this feature of the Agreement.

One of the requirements which Mr Al-Sanea said needed to be met in order for the notice to be valid concerned the statement in the second sentence of clause 1(C) that the notice “shall specify … the Put Option Closing Date.” The 29 March notice purported to do this, stating:

The Put Option closing will take place at 3:00 p.m. Swiss time fourteen days from the date of delivery of this notice, which is 12 April 2011. …

Mr Al-Sanea says that if, as SICL contends, the notice was delivered on 30 March 2011, then this wording was unsatisfactory in that 14 days after 30 March was 13 April, and the notice thus identified conflicting dates. To my mind there is at least one seriously arguable answer, namely that the 29 March notice was written on the assumption that it would be delivered that day. Moreover it is strongly arguable that clause 1(D) of the Agreement made it clear that the Put Option Closing was in the absence of contrary agreement to be held 14 days after the date of the POE notice itself, not the date of its delivery. I see considerable force in the reasons given by Burton J in that regard in the context of the similar agreement in Awal Bank. In those circumstances I consider that there is a substantial argument that such criticisms of the 29 March notice as may be made in this regard do not invalidate it.

Another of the requirements which Mr Al-Sanea said needed to be met in order for the notice to be valid concerned the statement in the closing words of clause 1(E)(ii) that the cash payment was to be made by transfer to the account of SICL notified to Mr Al-Sanea in the POE notice. The 29 March notice did not identify a specific account, stating merely that the Liquidators would provide details in due course. In a context where clause 1(E)(ii) is necessarily dealing with a sum which cannot be computed at the time the POE notice is given I consider that there is a substantial argument that it was permissible to indicate in the notice that the account would be identified later, or at least that any failure to specify the account with more particularity would not of itself invalidate the POE notice.

Mr Morgan then advanced arguments which are in my view much stronger. They point to the words used, and structure adopted, in clauses 1(A), 1(B), 1(C), 1(D) and 1(E)(i) – all of which envisage an actual sale of shares – and they note that the cash difference election in clause 1(E)(ii) is expressed to arise at the Put Option Closing, a stage which by definition will only be reached if procedures which are designed to lead up to an actual sale are followed. Mr Morgan forcefully submits that clause 4 contains a warranty that if a Put Option Closing date is ever reached then on that date SICL will be the owner of the shares. On Mr Morgan’s construction of the Agreement SICL’s claim would be bound to fail as SICL admits that at the Put Option Closing date it did not own anything like the number of shares in question. SICL’s claim would further fail because the 29 March notice failed to do the things which were required by clause 1 in relation to an intended actual sale of shares, and because no Put Option Closing took place in the way that might be expected if an actual sale of shares occurred. There had to be, submitted Mr Morgan, a truthful put option exercise, identifying a true number of shares in respect of which an option for sale was being exercised. Against that, however, Mr Akers’s second witness statement indicates that it is likely that as at 1 April 2008, while SICL held more than 32.6m shares in Berkeley, those shares were subject to security for any liabilities owed to certain financial institutions under prime brokerage agreements entered into by SICL with those institutions. The custodians of those shares appear from company and bank records in the Liquidators' possession to have included Citigroup, Citi Private Bank Geneva, Deutsche, Credit Suisse, JPMorgan and Lehman Brothers. On the basis of SICL’s Interim Report dated 30 September 2008 and its Annual Report for 2008, the Liquidators also believe that the purpose of the POA was to support the value of the shares in Berkeley as an asset of SICL. The value of SICL's equity portfolio was reported to have decreased as a result of the global deterioration of equity markets. To limit its exposure to equity market volatility a portion of its equity portfolio was hedged with equity put options. This meant that a minimum value would be maintained in the balance sheet for the equities hedged with put options so that in the event of declining share prices the balance sheet value would not decline.

Mr Morgan acknowledges that on established principles the court when construing a document must seek to identify the meaning which it would convey to a reasonable person having all background knowledge available to the parties. This is not the same thing as the meaning of the words. It is what parties using those words must reasonably have understood them to mean. Detailed syntactical analysis must give way to common sense. For the purposes of the present application he does not dispute Mr Akers’s account of the background. He asserts, however, that the purpose of what was done was to maintain the value of the underlying physical asset, and that there is nothing in the background to the Agreement to suggest that SICL could dispose of the physical shares and still rely on the cash differential election. I note that a similar argument did not find favour with Burton J in Awal Bank. For my part, I limit myself to saying that both the presence of clause 1(E)(ii) in the Agreement and Mr Akers’s account of the background in my view give rise to substantial counter-arguments to Mr Morgan’s submissions. Here, as elsewhere, I take full account of the passages in the Mannai case relied upon by Mr Morgan (Lord Steyn at [1997] AC 767 E to 768 E and 772 at C, Lord Hoffman at 776 A to C (the “blue paper” point) and 780 G, and Lord Clyde at 780 H to 781 E and 782 A to F). At a substantive hearing there will be much in those passages that can properly be relied upon in support of Mr Al-Sanea’s contentions. Those passages do not, however, in my view deprive SICL of substantial arguments that the Agreement is to be read in a way which would permit exercise of the cash difference election prior to the Put Option Closing Date, thereby making it unnecessary to comply with requirements which only made sense in the context of an actual sale of shares.

Other points taken by Mr Morgan concerned inaccuracies in the documentation, principally as to the date and time at which the relevant price was to be determined, and the inaccurate assertion that a Put Option Closing would take place. In my view there are at least substantial arguments that the inaccuracies relied upon did not invalidate what was done by SICL in this regard.

For all these reasons I conclude that SICL’s substantive claim has a reasonable prospect of success.

Mr Al-Sanea’s case in this regard was that arguments now identified ought to have been foreseen and drawn to the attention of Simon J – but no mention was made of them. Both sides proceeded on the basis that I should apply the test in Dadourian Group International Inc v Simms [2006] 1 WLR 2499 as discussed by Lightman J in Albon v Naza Motor Trading Sdn Bhd [2007] 1 WLR 2489. Applying that test, I do not consider that there was inadequate disclosure in any of these respects.

At the without notice hearing SICL drew attention to inaccuracies in what it had said about the date and time at which the relevant share price was to be determined, and to the reference to the “law of the United Kingdom”. Mr Morgan submits that SICL ought to have drawn attention to the question whether a POE notice had been validly served and to Mr Al Sanea’s other arguments.

The evidence before me leads me to conclude that at the time of the hearing before Simon J SICL thought that it had validly served the 29 March notice. The procedure adopted by Mr Massoud in order to achieve delivery of the 29 March notice to the PO Box was not in my view such as would call for special mention. As to Mr Al-Sanea’s other arguments, Simon J’s attention was drawn to the decision of Burton J in Awal Bank. I do not consider that SICL needed to go further than this.

The skeleton argument initially lodged on behalf of Mr Al-Sanea identified one issue only for decision by the court on SICL’s application for a freezing order. This was whether the circumstances were such as to give rise to “a real risk of dissipation or secretion” of assets. It was said in the skeleton argument that matters apparently relied upon by SICL did not, on analysis, suggest any such risk.

In oral submissions Mr Atherton said that in summary the matters relied upon by SICL were these:

(1)

Mr Al-Sanea had an obligation as a former officer of SICL to cooperate with its liquidators but had failed to do so.

(2)

The liquidators had been forced to obtain orders against Mr Al-Sanea in Cayman to comply with his obligation, but he had not obeyed those orders.

(3)

In relation to both applications and orders in the Cayman proceedings, Mr Al-Sanea took steps to make it difficult to serve them on him, to the extent that the court in Cayman was obliged to dispense with service.

(4)

Mr Al-Sanea either personally or through his agents removed documents and property of the companies he set up, in particular from offices in Switzerland, which were relevant to the liquidators’ investigations and had refused to hand them over.

(5)

Among these documents were the originals of promissory notes worth in excess of $2billion.

At the stage when Mr Atherton had put forward point (5) above Mr Morgan intervened. He asked what evidence was relied upon in relation to the promissory notes. Mr Atherton made reference to an order which had been made by the court in Cayman. As he spoke, however, he received a message from his instructing solicitors and he asked that the hearing should temporarily continue in private. I excluded the public for a short period so that I could learn what it was that was said to require a private hearing. It then became apparent that it would be necessary for me to rise so that Mr Atherton could take instructions and the two sides could discuss how to proceed. After a short break I was told that time was needed to explore the matter. After making appropriate enquiries I informed the parties that it would be possible for the hearing to continue on 23 September 2011, should this be necessary.

In the meantime Mr Atherton’s submissions proceeded in public. The next point advanced on behalf of SICL concerned alleged difficulties in serving proceedings in the present case upon Mr Al-Sanea. Mr Atherton then turned to a different concern, namely a question which had arisen as to the nature of an order apparently made by the King of Saudi Arabia requiring Mr Al-Sanea to pay both his own liabilities and those of his companies to Saudi creditors. It was submitted by Mr Atherton that discharge of those liabilities would be an unjustifiable dissipation. Although the draft freezing order which had been submitted on behalf of SICL did not make specific provision in this regard, Mr Atherton indicated orally that SICL would seek that such specific provision should appear in the freezing order. I observed that such a course would go well beyond what was notified for the present hearing, and I suggested that the remainder of 20 September should deal with matters which were yet to be argued in relation to Mr Al-Sanea’s application, leaving over further argument on the freezing order to 23 September. Both parties were content to take this course.

In a supplemental skeleton argument filed shortly before the resumed hearing Mr Morgan objected to new evidence in a second affidavit of Mr Akers which went beyond the scope of the matters pursuant to which the previous hearing had been adjourned. The supplemental skeleton added that even so the position remained that “there was no real evidence of risk of dissipation or secretion in the context of the parties’ relationship.” I consider that there is force in the objection. I have concluded, however, that SICL’s case as it stood prior to the adjournment sufficiently demonstrates a risk of dissipation. If I had been minded to rely on subsequent revisions to that case I would have given Mr Al-Sanea the opportunity of further time to enable the preparation of a considered response to those revisions.

Adjournment enabled both sides to give further thought to the legal principles concerning “dissipation of assets”. Mr Morgan relied on the judgment of Robert Goff J in Iraqi MOD v Arcepey Shipping [1981] 1 QB 65, at 72 C to G, in support of the proposition that it is inappropriate to use a freezing order to prevent a defendant from discharging existing obligations. I proceed on that basis for the purposes of the present application. One aim of SICL in seeking a freezing order is that the order should prevent Mr Al-Sanea from making payments which Mr Al-Sanea says would merely discharge existing obligations under the royal order mentioned earlier. It is in my view open to SICL to seek to have this investigated further, and accordingly I do not consider that SICL’s application falls foul of the principle in the Iraqi MOD case.

More generally, both sides referred me to my discussion of what is meant by “dissipation” in Mobil Cerro Negro v Petroleos de Venezuela [2008] 1 Lloyds LR 684. In determining SICL’s application I have adopted the principles which I described in my judgment in that case.

Mr Morgan also relied upon Thane Investments v Tomlinson [2003] EWCA Civ 1272 at [23] and [26] in support of a proposition that not co-operating with the liquidators was a separate dispute that did not go to risk of dissipation or secretion. However whether there is a sufficient risk of dissipation must turn on the facts. The passages in Thane relied on by Mr Morgan do not focus upon conduct of the kind alleged in the present case. I take from Thane that there must be a clear focus upon the assets of the defendant and whether there is a real risk of their being dissipated.

For present purposes I proceed by confining myself to factual matters put in evidence by SICL prior to 20 September 2011, taking account of all arguments on them advanced on behalf of Mr Al-Sanea on both 20 and 23 September. On this basis I conclude that SICL has shown such a risk of dissipation of assets as, when taken in conjunction with other relevant factors – including both the circumstances of the present application and my assessment of the strength of SICL’s claim, makes it appropriate to grant a freezing order of the nature sought.

The factual matters which in my view warrant that conclusion can be stated shortly. They comprise a good arguable case that there have been (1) not merely failures to co-operate with the liquidators but also active steps taken by Mr Al-Sanea deliberately in order to cause property belonging to companies in liquidation to be removed and withheld from the liquidators (Mr Akers’s first affidavit, paragraphs 59-63); (2) failures to comply with court orders in Cayman (paragraphs 64 to 69); and (3) a history of evading the service of process of foreign courts (paragraphs 71 and 72). Mr Morgan stresses that SICL has not alleged fraud or dishonesty against Mr Al-Sanea, nor has any liquidator apparently commenced substantive proceedings anywhere based upon allegations of misuse of monies. That is an important factor, and I take it fully into account. Nevertheless the account of events since the appointment of the liquidators, if borne out, is in my view highly disturbing and warrants intervention by the court to safeguard such assets as are known to exist.

Mr Al-Sanea asks the court to draw an inference from the fact that for the hearing on 23 September 2011 additional claims against him were asserted, based on evidence not deployed initially in support of the application: either SICL had no real belief in their strength or it was seeking a freezing order for a collateral purpose, namely to secure assets in favour of other presently unarticulated claims. I do not think it right to draw any such inference. As indicated earlier, the evidence lodged prior to 20 September 2011 in my view demonstrates a sufficient risk of dissipation. When the hearing was adjourned SICL sought to buttress its case further, but that does not demonstrate any impropriety in the course that it took prior to the adjournment.

As to “the context of the parties’ relationship” I was concerned at the hearing on 20 September 2011 that Mr Atherton might not be fully aware of what had taken place between the parties. By the time the hearing resumed on 23 September 2011 it was clear that both parties had had sufficient time to consider the position. Mr Al-Sanea took the view that certain confidential matters known to both him and SICL should not be disclosed to the court. SICL accept that he is entitled to insist that such matters remain confidential, and I draw no adverse inference from this. Mr Al-Sanea suggested that SICL’s stance was unmeritorious: without prejudice negotiations had been taking place between representatives for each side and a certain degree of co-operation has resulted, yet now SICL seemed to take the position that a worldwide freezing order was needed. I do not agree. The matters referred to above in my view plainly give rise to concern about the risk of dissipation, and such subsequent co-operation as I am aware of does not significantly reduce that risk.

In reaching my conclusion on the grant of a freezing order I place no reliance on such orders as may or may not have been made in Saudi Arabia. I note that SICL put at the forefront of its case concerns which it had as to what Mr Al-Sanea might do with his assets in purported compliance with his obligations in Saudi Arabia. Conversely, however, Mr Al-Sanea is entitled to stress that as a Saudi national he is under a duty to comply with Saudi law. In my view the position in Saudi Arabia is properly to be regarded, for the purposes of my decision as to whether or not to grant a freezing order, as neutral. There is no suggestion before me of any impropriety on the part of Mr Al-Sanea in the events leading to the making of such orders. It is not uncommon for questions to arise in the context of freezing orders as to the effect of orders made elsewhere. If a dispute arises in this court as to the extent or effect of what has been ordered in Saudi Arabia then this court can consider how any such dispute may properly be resolved.

I add that after I gave my ruling on 23 September 2011 various matters as to the form of order were the subject of oral argument. My reasons for deciding those matters in the way that I did were given orally at the time, and I do not repeat them here.

For the reasons given above I declined to grant Mr Al-Sanea the relief sought in his application, and I concluded that it was in principle right to grant SICL the order which it sought. I express my thanks to both sides for the assistance I was given, both orally and in writing.