(1) Sheikh Mohamed Bin Issa Al Jaber (2) MBI & Partners UK Ltd (3) JJW Hotels & Resorts Ltd v (1) Amjad Elias Salfiti (2) Basem Bosheh (2018)
A worldwide freezing injunction obtained without notice was discharged for failure to comply with the duty of full and frank disclosure. In any event the claimants had failed to show a good arguable case against the defendants or a risk of dissipation.
The defendants applied for the discharge of freezing injunctions made on the without notice application of the claimants.
The first claimant (C1) was a wealthy businessman and the de facto controller of the second and third claimant companies. The first defendant (D1) was a UK solicitor who had acted as an adviser to C1 and a director of his companies until his dismissal. The second defendant (D2) was a moneychanger in Palestine. The claimants had obtained a worldwide freezing injunction against the defendants and an order restraining them from appointing a receiver over C1's London property. C1 claimed that he had been defrauded by the defendants. He alleged that they had arranged loans at high rates of interest containing the power to appoint a receiver, that the loans appeared to be between C1 and D2 when in fact they were for the benefit of D1, and that in any event he had overpaid interest on the loans to the extent of about £3 million which had been misappropriated by the defendants. On the without notice application for a freezing injunction the court was told that C1 was the beneficial owner of the group containing the second and third claimants, that he had not signed the main loan agreement and would not borrow money at a rate of 12% per annum, and that he had never met D2 and thought that he might not exist. On the return date, the claimants' position had changed: it was no longer said that he was the beneficial owner of the companies, which were owned by his children, and it was accepted that he had signed the loan agreement and that D2 existed.
The defendants argued that the freezing injunction and the order restraining appointment of a receiver should be discharged for breach of the obligation to make full and frank disclosure and because there was in any event no good arguable case against them in the particulars of claim and no risk of dissipation.
There had been a breach of the obligation to make full and frank disclosure when obtaining the without notice orders, Brink's-MAT Ltd v Elcombe  1 W.L.R. 1350 and Bank Mellat v Nikpour  4 WLUK 121 followed. The obligation was not simply to highlight the detail in the documents, but to take the points for and against the application, Siporex Trade SA v Comdel Commodities Ltd  2 Lloyd's Rep. 428 applied. C1 and his legal representatives had to identify the weaknesses in their own case and what the defendants might have said in answer, Fundo Soberano de Angola v Jose Filomeno dos Santos  EWHC 2199 (Comm) applied. It appeared that there had been no effort to comply with the duty of disclosure and fair presentation. The judge had been given the wrong impression about C1's ownership of the business. Also, contrary to what the judge had been told, there was evidence that parts of the business were heavily indebted and that short-term loans at high rates of interest were routine. It was no longer asserted that C1 had not signed the main loan agreement. That was a matter within C1's own knowledge and his assertions should have been checked. His case that he had signed the agreement but that D1 had abused his trust was a different claim. The doubt over D2's existence was part of the initial case that had suggested fraud, but was no longer pursued. Again, the evidence had been available to C1 including evidence of loan repayments to D2. The alleged £3 million overpayment had been based on the unlikelihood of loans at 12% per annum, but there was evidence of such loans and the assumptions underlying the overpayment claim were readily challenged. D1's dismissal had been put forward in support of the injunctions, but the manner of his dismissal and the allegation of dishonesty were contested. Overall there had been avoidable non-disclosure and one-sided presentation in respect of material facts which impacted on the judge's exercise of discretion. Even if not deliberate, there had been a breach of the duty of full and frank disclosure which warranted the discharge of the orders, Dar Al Arkan Real Estate Development Co v Al Refai  EWHC 3539 (Comm) applied. The failure was so serious and substantial that the orders should not be regranted, OJSC Oil Co Yugraneft v Abramovich  EWHC 2613 (Comm) applied. In any event the orders should not be renewed because there was no good arguable case; all the elements of the claim were contradicted. Nor had the claimants shown a risk of dissipation.
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02 Nov 2018
Sarah Worthington QC
 11 WLUK 46