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||Neutral Citation Number:  EWHC 2466 (Ch)
||Case Nos: HC-2014-000906 and HC-2014-001003
IN THE HIGH COURT OF JUSTICE
||Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
B e f o r e :
MR JUSTICE MORGAN
||(1) GROUP SEVEN LIMITED
(2) RHEINGOLD MANAGEMENT INC
||(1) ALI NASIR
(2) JONG-KANG YI
(3) NOTABLE SERVICES LLP
(4) MARTIN LANDMAN
(5) FRANCESCO MEDURI
(6) LLB VERWALTUNG SWITZERLAND) AG FORMERLY KNOWN AS LIECHTENSTEIN LANDESBANK
(7) OTHMAN LOUANJLI
(8) SEBASTIEN ELBIED
(9) RENAISSANCE LIMITED
(a company incorporated under the laws of the United Arab Emirates)
(10) BRIDGE LIMITED
(a company incorporated under the laws of the United Arab Emirates)
||EQUITY TRADING SYSTEMS LIMITED
||(1) NOTABLE SERVICES LLP
(2) MARTIN LANDMAN
(3) FRANCESCO MEDURI
4) LLB VERWALTUNG SWITZERLAND) AG FORMERLY KNOWN AS LIECHTENSTEIN LANDESBANK
(5) OTHMAN LOUANJLI
(6) SEBASTIEN ELBIED
(7) RENAISSANCE LIMITED
(a company incorporated under the laws of the United Arab Emirates)
(8) BRIDGE LIMITED
(a company incorporated under the laws of the United Arab Emirates)
Jeffrey Chapman QC, Simon Atrill and Simon Paul (instructed by Mishcon de Reya LLP) for the Claimants in both actions
William Flenley QC and Francis Bacon (instructed by Caytons Law) for Notable Services LLP, Mr Landman and Mr Meduri
Clive Freedman QC and Michael Ryan (instructed by Pinsent Masons LLP) for LLB Verwaltung (Switzerland) AG
Richard Jones QC and Olivia Chaffin-Laird (instructed by FPG, Solicitors) for Mr Louanjli
Hearing dates: 15-17, 20-24, 27-28 February 2017, 1-3, 6-10, 13-17, 20, 22-24, 27-29 March 2017, 4-7 and 25 April 2017 and written submissions thereafter
HTML VERSION OF JUDGMENT APPROVED
Crown Copyright ©
Mr Justice Morgan:
|Part 1: General Matters
|The case in outline
|Who everyone is
|The earlier proceedings
|The current proceedings
|The Group Seven claims
|The Larn claims
|The witnesses apart from Mr Landman, Mr Meduri and Mr Louanjli
|Mr Landman, Mr Meduri and Mr Louanjli: general remarks
|The expert evidence
|Part 2: the claims against Mr Nasir and Mr Yi
|The relevant facts for the purposes of these claims
|The liability of Mr Yi
|Part 3: the claims against Notable, Mr Landman and Mr Meduri: the facts
|The relevant facts for the purposes of these claims: before 2 November 2011
|2 November 2011
|3 November 2011
|The first meeting
|The second meeting
|The third meeting
|The fourth meeting
|The fifth meeting
|4 November 2011
|5 November 2011
|7 November 2011
|8 November 2011
|9 November 2011
|10 November 2011
|11 November 2011
|14 November 2011
|The telephone calls from Notable to Mr Louanjli
|15 November 2011
|My findings about the payments
|Events after 15 November 2011
|Part 4: the claims against Mr Louanjli, LLB, Mr Elbied, Renaissance and Bridge: the facts
|Part 5: Group Seven's claims against Notable, Mr Landman and Mr Meduri: discussion and conclusions
|The breach of trust
|Did Notable dishonestly assist a breach of trust?
|Did Mr Meduri dishonestly assist a breach of trust?
|Did Mr Landman dishonestly assist a breach of trust?
|The money claimed from Mr Landman
|The money claimed from Notable
|Part 6: Group Seven's claims against Mr Louanjli and Bridge: discussion and conclusions
|Part 7: Group Seven's claims against LLB: discussion and conclusions
|Part 8: Group Seven's claims against Mr Elbied and Renaissance: discussion and conclusions
|Part 9: the claims by Larn: discussion and conclusions
|Part 10: the contribution claims
PART 1: GENERAL MATTERS
The case in outline
- These proceedings arise out of a substantial fraud whereby Allseas Group SA ("Allseas") was defrauded out of a large sum of money, 100 million. The fraud was followed by an attempt to launder the proceeds of the fraud using the client account of a firm of solicitors in London, Notable Services LLP ("Notable"). The attempt at money laundering was partly successful. Some 15 million were paid away by Notable. Some of these monies were recovered but, in the end, only 88 million was returned to Allseas which therefore lost about 12 million.
- The way that the fraud worked was as follows. Allseas had 100 million which it wished to invest. A group of fraudsters persuaded Allseas that they could facilitate an extremely profitable investment of that sum by Allseas. Allseas formed a subsidiary company, Allseas Group Ltd (now known as Group Seven Ltd and referred to in this judgment as "Group Seven"), in order for it to make the relevant investment. Allseas transferred 100 million to Group Seven which transferred it to Allied Investment Corporation Ltd ("AIC").
- AIC then set about removing the funds from the control of Allseas/Group Seven and laundering those funds. AIC transferred the funds to Notable's client account. Notable held that money in its client account for the benefit of Larn Ltd ("Larn"). Larn was controlled by a Mr Nobre who gave instructions (on behalf of Larn) to Notable to make a large number of payments out of its client account. Acting on these instructions, Notable paid away some 15 million. The Notable client account was with Barclays Bank. It seems that Barclays Bank reported these activities in relation to the Notable client account and the Metropolitan Police became involved. As a result of the police intervention the remaining monies were frozen and eventually, after some of the 15 million was returned to Notable, around 88 million were returned to Allseas.
Who everyone is
- Allseas is a company registered in Switzerland, where it has its headquarters. It and its subsidiaries employ over 2,000 people in 9 countries. It specialises in pipe laying for the oil and gas industry.
- Group Seven (under the name Allseas Group Ltd) was incorporated in Malta on 20 April 2011 for the purpose of making what it thought was an investment but which led to it being the victim of the fraud described above. Allseas was and is the principal shareholder in Group Seven.
- Rheingold Management Inc ("Rheingold") is incorporated in Panama. By a Deed of Assignment of Rights and Causes of Action dated 16 November 2012, Group Seven assigned to Rheingold the causes of action which are the subject of these proceedings.
- AIC was incorporated in Malta on 4 October 2011 for the purpose of participating in the fraud. Mr Rejniak was registered as a director, and sole shareholder, of AIC. In the course of the fraud, on 15 October 2011, Group Seven entered into a purported loan agreement, relating to the 100 million, under which AIC was the purported borrower. In earlier proceedings, to which I refer below, Peter Smith J set aside this loan agreement.
- Mr Rejniak is a Polish national. In addition to being a director and shareholder of AIC, he was a director of Group Seven between 18 July and 23 November 2011. In the earlier proceedings, Group Seven/Rheingold obtained judgment for damages for fraud against Mr Rejniak.
- Mr Sultana was held liable, in the earlier proceedings, for damages for fraud.
- Mr Nasir and Mr Yi have been sued in the present proceedings. The case put forward by Group Seven/Rheingold is that Mr Nasir and Mr Yi were parties to the fraud and were fellow conspirators of Mr Rejniak and Mr Sultana.
- Larn was formed on 26 September 2006. A single subscriber share was issued to Mr Nobre. Mr Nobre's full name is Luis (or Louis) Augusto Ramos Nobre so that the name of the company is Mr Nobre's initials. After incorporation, further shares were issued to Mr Nobre and he remained the sole shareholder of Larn. At all times, Mr Nobre was the sole director of Larn. On 15 October 2011, in order to assist with money laundering, AIC and Larn entered into a loan agreement, or purported loan agreement, whereby 100 million was loaned by AIC to Larn. In the earlier proceedings, to which I refer below, Peter Smith J set aside this loan agreement. Larn did not trade and did not have any business premises. Larn went into administration on 31 May 2012 and then into creditors' voluntary liquidation on 24 May 2013. Larn has since changed its name to Equity Trading Systems Ltd but I will continue to refer to it as Larn, its name at the time of the relevant events.
- Mr Nobre is Portuguese. In February 2016, after a trial lasting some 80 days, he was convicted at Southwark Crown Court on 6 counts of money laundering and 3 counts in connection with the possession of fraudulent banking documents contrary to the Fraud Act 2006. The first 2 counts of money laundering related to the 100 million which are the subject of the present proceedings. He was sentenced to imprisonment for 12 years in relation to the money laundering offences and 2 years in relation to the fraudulent documents, to run consecutively.
- In relation to most of the matters which are the subject of this judgment, it is not necessary to distinguish between Mr Nobre and Larn. Accordingly, I will normally refer to events which involved Mr Nobre by referring to what he did or said and without discussing whether his actions are to be attributed to Larn.
- Notable was a limited liability partnership formed in February 2009. The members of the LLP in 2010 and 2011 included Mr Landman, Mr Meduri and Ms Ciserani. In February 2010, Notable was recognised by the Law Society and the Solicitors Regulation Authority as a law firm with the status of a Legal Disciplinary Practice. On 23 June 2017, following the conclusion of the trial but before the handdown of this judgment, the members of Notable appointed an administrator of Notable under Schedule B1 to the Insolvency Act 1986 on the ground that Notable was, or was likely to become, unable to pay its debts. It has not been suggested that the moratorium on legal process imposed by paragraph 43(6) of Schedule B1 should prevent the court giving its reserved judgment in relation to the claims against Notable.
- Mr Landman is an accountant. He was a founding member of Notable and remained a member until 26 June 2012.
- Mr Meduri is a solicitor and was a founding member of Notable. He has remained a member of Notable throughout.
- Where appropriate, I will refer to Notable, Mr Landman and Mr Meduri as "the Notable Defendants".
- Liechensteinische Landesbank (Switzerland) Ltd ("LLB") is a subsidiary of Liechensteinische Landesbank AG. LLB traded as a private bank, principally in Switzerland, but it also had a small representative office in Abu Dhabi. LLB ceased its banking activities at the end of 2013. It has now changed its name to LLB Verwaltung (Switzerland) AG.
- Mr Louanjli was employed, with effect from 1 June 2011, by LLB as a relationship manager in its representative office in Abu Dhabi. He left the employment of LLB in June 2013.
- Bridge Ltd was incorporated in Ras Al Khaimah, UAE at the request of Mr Louanjli on 30 January 2011. At all material times, Mr Louanjli was the sole shareholder and director of Bridge. I am told that Bridge has since been struck off the register of companies.
- At the relevant times, Mr Elbied was employed as a banker by Barclays Capital in Paris.
- Renaissance Ltd was formed by Mr Elbied in May 2013.
The earlier proceedings
- Group Seven and Rheingold have brought earlier proceedings against various persons involved in the fraud. The Defendants in those proceedings were AIC, Mr Rejniak, Mr Sultana, Larn and Mr Nobre. The claim against Larn and Mr Nobre was compromised by a Tomlin order made on 4 April 2012 which provided for the repayment to Group Seven of certain sums. Larn and/or Mr Nobre failed to make the agreed payments and Group Seven obtained judgment against them in the sum of 11,143,192.11. On Group Seven's application, an administration order was made in relation to Larn and it was later placed in liquidation, as described above.
- The earlier proceedings went to trial against the other Defendants, apart from Larn and Mr Nobre. The proceedings were tried by Peter Smith J in the Spring of 2014. At the trial the only active Defendant was Mr Sultana. The judge handed down his judgment on 26 June 2014:  EWHC 2046 (Ch). He held that AIC, Mr Rejniak and Mr Sultana had committed a fraud on Group Seven and, amongst other orders, he entered judgment in favour of Rheingold against AIC, Mr Rejniak and Mr Sultana for damages for fraud in the sum of 9,179,850.48. Mr Sultana appealed to the Court of Appeal but his appeal was dismissed on 25 June 2015: see  EWCA Civ 631.
The current proceedings
- The current proceedings involve two actions which have been tried together. In the first action, the Claimants are Group Seven and Rheingold and the Defendants are Mr Nasir, Mr Yi, Notable, Mr Landman, Mr Meduri, LLB, Mr Louanjli, Mr Elbied, Renaissance and Bridge. In the second action, the Claimant is Larn and the Defendants are the same as in the first of the current proceedings, with the exception of Mr Nasir and Mr Yi.
The Group Seven claims
- In the first of the current proceedings, Rheingold claims as the assignee of the claims formerly vested in Group Seven. Accordingly, any judgment against a Defendant will be in favour of Rheingold rather than Group Seven. However, when describing the claims, I will for the sake of convenience continue to refer to the claims as claims made by Group Seven in whom the right to sue (if any) had been vested prior to the assignment to Rheingold.
- Group Seven's claim against Mr Nasir was that he was a conspirator together with Mr Rejniak and Mr Sultana and others to defraud Group Seven. Mr Nasir served a Defence to this claim but by an order dated 8 November 2016 his Defence was struck out and judgment was entered against him, in favour of Rheingold, for damages to be assessed, such assessment to take place at the trial of these proceedings.
- Group Seven's claim against Mr Yi was that he was a conspirator together with Mr Rejniak and Mr Sultana and others to defraud Group Seven. Mr Yi has not defended the claim. The Claimants have not sought judgment in default of Defence against Mr Yi and have asked for judgment to be given against him on the evidence adduced at this trial.
- Group Seven's claim against Notable, Mr Landman and Mr Meduri is for compensation for dishonest assistance in relation to breaches of trust by Larn in relation to the 100 million in the Notable client account. Group Seven also claims against Notable and Mr Landman for unconscionable receipt of trust monies. The sum claimed from Notable for unconscionable receipt is £219,150.90 and the sum claimed from Mr Landman for unconscionable receipt is £218,304.28.
- Group Seven's claim against Mr Louanjli is based on an allegation that he made dishonestly false statements about Mr Nobre to Notable. Group Seven alleges that Mr Louanjli is liable in deceit, for conspiracy with Mr Nobre and for dishonestly assisting a breach of trust.
- Group Seven's claim against LLB is that it is vicariously liable for the above-mentioned wrongdoing of its employee, Mr Louanjli.
- Group Seven has a further claim against Mr Louanjli and against a company, Bridge, wholly owned by him. The claim is for unconscionable receipt of trust monies in the sum of 561,840.
- Group Seven makes the same claims against Mr Elbied as it made against Mr Louanjli, namely, that he is liable in deceit, for conspiracy with Mr Nobre and for dishonestly assisting a breach of trust. Further, Group Seven claims against Mr Elbied and Renaissance for unconscionable receipt of trust monies in the sum of 1,000,000.
The Larn claims
- The Claimant in the second action is Larn. Most of Larn's claims appear to be legally very similar to the claims made by Group Seven against Notable, Mr Landman, Mr Meduri, Mr Louanjli and Bridge, LLB and Mr Elbied and Renaissance. However, because Larn was itself part of the fraud in relation to Group Seven that fact has given rise to issues potentially affecting Larn's claims which do not affect Group Seven's claims. In addition, Larn originally claimed against Notable for alleged negligence in breach of a duty of care owed by it (as Larn's solicitor) to Larn but that claim was not pursued at the end of the trial.
The witnesses apart from Mr Landman, Mr Meduri and Mr Louanjli
- I will refer to some of the more important witnesses at this stage but, later in this judgment, I will separately consider the evidence given by Mr Landman, Mr Meduri and Mr Louanjli.
- Group Seven called various witnesses from Allseas to give evidence as to the underlying fraud committed by Mr Rejniak, Mr Sultana and others. The Allseas witnesses who gave oral evidence were Mr Kooger and Mr Heerema. I also had various written statements from other witnesses, namely, Mr Van Tiel, Mr Visser and Mr Pathuel. There were various reasons why these last three witnesses did not give oral evidence but it is not necessary to explain those reasons.
- There was no real issue as to the evidence given by Mr Kooger and Mr Heerema. Most of their evidence went to establish that Group Seven was the victim of a fraud practised on it by a group of fraudsters. Their evidence was directly relevant to Group Seven's case against Mr Yi but as Mr Yi did not take any part in the trial, there was no challenge from that quarter to their evidence. So far as the active Defendants were concerned, they all accepted that Group Seven had been defrauded in the way it described. There was an investigation of how it came about that Group Seven was taken in by the fraudsters and I heard submissions to the effect that if Group Seven could be taken in by some very improbable claims by the fraudsters it was not surprising that Notable, Mr Landman, Mr Meduri and Mr Louanjli were similarly taken in by the deceit practised on them by Larn and Mr Nobre. However, those submissions did not involve any challenge to the evidence of Mr Kooger and Mr Heerema.
- I also heard evidence from two solicitors from Mishcon de Reya, the solicitors for the Claimants in both actions. The solicitors who gave evidence were Mr Stubbs and Mr Gepfert and they dealt with various matters and various investigations which were carried out. Some of the evidence which they gave was clarified and explored in cross-examination and, to the extent necessary, I will make my detailed findings on such matters in the course of this judgment.
- I also heard evidence from Mr Swan who is currently a trainee solicitor with Stewarts Law LLP. Mr Swan gave evidence as to a meeting he attended at Notable's offices on 3 November 2011. I will make my detailed findings as to that meeting later in this judgment.
- Group Seven called Victoria Weir who had been romantically involved with Mr Nobre until around the summer of 2011 and she had a daughter by him in January 2011. I accept much of Ms Weir's evidence although I am slightly cautious in relation to one part of her evidence. She gave evidence that Mr Landman had called her when she was in Paris in around November 2011. Mr Landman accepted that he did have a telephone conversation with her around that time. Ms Weir told me that Mr Landman had said to her that "she was going to get her money back" or words to that effect. Mr Landman says that he did not describe the position in that way. Ms Weir's recollection may be right but it may not. It is not in dispute that a payment was made to her, as I will later describe. In her mind, the payment being made to her clearly involved Mr Nobre paying back her money and that is how she remembers the telephone call but it is entirely possible that Mr Landman did not describe matters in that way.
- The liquidator of Larn, Mr Levy, gave evidence on a number of matters and, in particular, as to the inquiries he had made as to the persons who had received payments which were made by Notable on the instructions of Larn and Mr Nobre in November 2011.
- Notable called Mr Landman, Mr Meduri and Ms Ciserani. I will consider the evidence of Mr Landman and Mr Meduri in greater detail later in this judgment. As regards Ms Ciserani, I find that she was a wholly honest and generally reliable witness who took great care over the evidence which she gave. Notable also provided a witness statement from Mr Signori who was employed by Notable as a paralegal in October and November 2011. Mr Signori was not required to attend to give oral evidence in accordance with his statement.
- Mrs Landman gave evidence principally about some conversations which she had with Ms Weir. I found her evidence generally reliable although I do not accept her evidence that the sum of £3,000 paid by Ms Weir to Mrs Landman was the repayment of a loan which Mrs Landman had made to Ms Weir. I find that the payment of £3,000 was for the benefit of Mr Landman and was a part payment to Mr Landman in respect of the sum of £10,000 which Mr Landman had made, or caused to be made, to Savills in relation to the fees which Mr Nobre owed Savills.
- At the beginning of the trial, I was provided with a witness statement from Mr Haddu-Levi which appeared to support evidence to be given by Mr Landman. I was told that Mr Haddu-Levi would give oral evidence in accordance with his statement. Mr Landman was cross-examined in detail on the matters dealt with by Mr Haddu-Levi in his statement and I was later told that Mr Haddu-Levi would not be giving oral evidence. For reasons which I will explain in the course of this judgment, I am satisfied that Mr Haddu-Levi's statement was largely untrue.
- The Notable Defendants served a Civil Evidence Act notice in relation to a witness statement from a Mr Binda of Unifida. Mr Binda resides in Switzerland. His witness statement referred to arrangements which Mr Landman had made with Unifida and with a company called Nisroy Investments Inc. I am able to make my findings as to the connection between Mr Landman and Nisroy Investments Inc so far as relevant to the issues in this case without having to make further findings as to the matters described by Mr Binda.
- LLB called three witnesses, Mr Vuille, Mr Klar and Mr Walser, who had been employed by LLB at the relevant time. Their evidence was clarified and explored in cross-examination and I will make my detailed findings on such matters in the course of this judgment.
- As regards Mr Nobre, I was referred to one or two passages in a transcript of part of the evidence which he gave at his criminal trial. Since everyone before me accepted that Mr Nobre was a fraudster I am not minded to rely on his evidence in the criminal trial as proof of anything which is in dispute in the current proceedings.
Mr Landman, Mr Meduri and Mr Louanjli: general remarks
- It is of critical importance in this case for me to assess the credibility, and the honesty, of Mr Landman, Mr Meduri and Mr Louanjli. Group Seven alleged that Mr Landman, Mr Meduri and Mr Louanjli were dishonest. Mr Louanjli and LLB joined with Group Seven in contending that Mr Landman and Mr Meduri were dishonest. The Notable Defendants joined with Group Seven in contending that Mr Louanjli was dishonest. It was also submitted that Mr Landman, Mr Meduri and Mr Louanjli lied in their evidence to the court.
- The allegations against Mr Landman, Mr Meduri and Mr Louanjli are serious. The fact that the allegations are serious led some of the Defendants to submit that the more serious the allegation the more cogent must be the evidence relied upon. Counsel for Mr Louanjli also submitted that because the consequences for Mr Louanjli of a finding of dishonesty would be very grave, the stronger must be the evidence before a court could hold that the allegation had been proved. These submissions were said to be based on the speech of Lord Nicholls in Re H (minors)  AC 563, in particular at 586. However, that passage in the speech of Lord Nicholls has been discussed on a number of later occasions where it has been pointed out that it has been misunderstood: see re B (Children)  AC 11 at - and at -, re S-B (Children)  1 AC 678 at - and re J (Children)  1 AC 680 at -. It is clear from those decisions that the nostrum "the more serious the allegation, the more cogent the evidence needed to prove it" is wrong: see re B (Children) at  per Lady Hale of Richmond. These authorities were reviewed in Otkritie International Investments Management Ltd v Urumov  EWHC 191 (Comm) at - and see also I T Human Resources plc v Land  FSR 10 at .
- The correct position in relation to the standard of proof is as follows. The standard of proof is the civil standard, that is the allegations require to be proved on the balance of probabilities. It must be proved that the fact which is in issue more probably occurred than it did not occur. While it is obviously right to consider the inherent probability, or the inherent improbability, of an event in considering whether it has been proved on the balance of probabilities, there is no necessary connection between seriousness and inherent improbability.
- This description of the standard of proof does not allow me to say that the more serious the consequences of a finding, the more cogent must be the evidence in support of it, as submitted by counsel for Mr Louanjli. However, if the consequences of an adverse finding are very serious for a witness, that may mean that witness will find giving evidence a very stressful experience and I can plainly take that matter into account when assessing his evidence.
- It is important that I form my assessment of the honesty of witnesses by reference to what was known by them at the relevant time. Today, a large number of matters are clear. It is clear that Mr Nobre was a fraudster and a money launderer. It is clear that Mr Nobre groomed Notable in order to use them to assist him with his money laundering. It is clear that Notable did in fact provide considerable assistance to Mr Nobre. Nonetheless, it is obvious that hindsight must be avoided and I must take particular care in that regard.
- At the trial, the court was given evidence as to a large number of matters but it was clear that not all of those matters were known to all of the Defendants at the relevant time. When I make my findings as to the involvement of Mr Yi together with Mr Sultana, Mr Rejniak, Mr Nasir and others it must be remembered that the actions of those persons in defrauding Group Seven were not known to the Notable Defendants nor to Mr Louanjli. Similarly, I need to consider separately the information which Mr Nobre gave to the Notable Defendants from my consideration of the information which Mr Nobre gave to Mr Louanjli. For this reason, in this judgment, I will set out the facts for the purpose of the separate claims in separate sections. I will deal with the facts which are relevant to the claim against Mr Yi separately from the facts relevant to the claim against the Notable Defendants which, in turn, will be separate from the facts relevant to the claim against Mr Louanjli.
- Much of the cross-examination of Mr Landman and Mr Meduri and many of the submissions focussed on the grounds for suspicion in relation to what Mr Nobre was asking Notable to do. Again, the extent to which matters were suspicious must be judged by reference to the knowledge available to Notable at the relevant time and not by reference to the matters which are now known. There is a fundamental difference between a finding that a person ought to have appreciated something and a finding that he did appreciate something. It is permissible to make a submission that because a person ought to have appreciated something that he must have appreciated, and therefore did appreciate, that thing. However, even in a case where the court is satisfied that a person ought to have appreciated something, the court has to consider separately whether the particular individual did appreciate that thing. The same comment applies to the cross-examination of Mr Louanjli and the suggestion that, because of the existence of grounds for suspicion of Mr Nobre, Mr Louanjli must have appreciated that Mr Nobre was a money launderer.
- In this context, I will mention the fraud that was practised on Group Seven by Mr Sultana and Mr Rejniak and others. On the information which is available to the court today, it is obvious that Group Seven was being defrauded. Even on the information which Group Seven had at the relevant time, the proposed investment and the circumstances surrounding it looked suspicious in the extreme. It is still very difficult to understand how Group Seven did not realise that it was being defrauded. Nonetheless, it is absolutely clear that Group Seven were deceived. Counsel for the Notable Defendants and for Mr Louanjli referred to the way in which Group Seven was deceived by fraudsters in order to support their contention that something similar happened when Mr Nobre persuaded the Notable Defendants and Mr Louanjli to help him with money laundering. They stressed that Mr Nobre was an extremely skilful fraudster and they were as much victims who were misled by him as Group Seven were victims of Mr Rejniak and Mr Sultana.
- Group Seven's experience does show that skilful fraudsters can persuade innocent people of many surprising things. I bear that experience in mind in warning myself to avoid hindsight and to pay close attention to the facts and the evidence of the witnesses as to what actually happened and their actual state of mind at the relevant time.
- There has been an eight week trial. Individual documents have been put under a microscope. Great care and effort and time has been spent in assessing their contents and their possible implications. However, what I am concerned with is what happened at the time when the documents came into existence and were shown to others who had to decide what reaction, if any, to make to their contents.
- An allegation that a person has been dishonest has a substantial subjective element. Therefore, the court has to make findings about a person's state of mind at some time in the past. If the individual gives evidence to the effect that he did not have that state of mind at the relevant time then, if he is a credible witness and if there is no contemporaneous document to contradict his evidence, it may be inappropriate to reject his evidence. Even if the court feels that the witness ought to have appreciated something at the relevant time, if he says that he did not appreciate it, perhaps because he was inexperienced or just naοve or he was deceived by a fraudster, it may be inappropriate to reject his evidence.
- Moreover, if a person accused of dishonesty tells lies in the course of his evidence on some of the issues in the case, the court still needs to ask itself whether it is appropriate to find that he was dishonest in relation to other issues in the case. The fact that a witness tells lies on one topic does not mean that all of his evidence is untruthful. The witness may be telling lies for a reason which does not necessarily indicate that he was dishonest in the way alleged.
- In relation to Mr Landman, I have to determine whether he was dishonest in his dealings with Mr Nobre and in relation to the payments made by Notable at the request of Mr Nobre. His case was that he and his colleagues acting on behalf of Notable were satisfied about the source of the 100 million and did not suspect anything untoward in relation to the payments from the Notable client account. It is important for me to form a view as to Mr Landman's credibility.
- Mr Landman was cross-examined in detail as to the many issues of fact in this case. However, there was one issue of fact, in particular, on which he was cross-examined thoroughly and which is of considerable importance for the purpose of my assessment of his credibility. This issue concerned a payment of £170,000 to a Panamanian company called Nisroy Investments Inc ("Nisroy"). The allegation against Mr Landman in relation to this payment was a serious one. It was said that Mr Landman had asked Mr Nobre to make a personal payment to him in return for Mr Landman acting on Mr Nobre's instructions in various respects. It was said that Mr Nobre agreed to pay Mr Landman £170,000 for this reason. It is said that Mr Landman then produced an invoice from Nisroy for £170,000 and that sum was paid out of the Notable client account. At the meeting on 15 November 2011, in order to obtain authorisation to make this payment, Mr Landman told Mr Meduri that the payment was a fee for Mr Haddu-Levi for his introduction of certain investments to Mr Nobre. The money was duly paid to Nisroy who then paid it to Mr Landman or on his instructions.
- It is clear to me that the allegations against Mr Landman in relation to this payment of £170,000 have been established. I do not make any specific findings as to the precise nature of Mr Landman's historic involvement with Nisroy nor as to whether he was the beneficial owner of that company nor whether it was a vehicle which was available for him to process payments on his instructions. However, it is clear that he had a long-standing association with Nisroy and that in all respects relevant to this case it acted on his instructions.
- On 7 November 2011, after the money had arrived in the Notable client account, Mr Landman emailed Mr Binda of Unifida asking him to prepare an invoice from Nisroy for £170,000. He instructed Mr Binda to backdate the invoice to 1 November 2011 which was before the money had arrived in the Notable client account. He instructed Mr Binda to state that the invoice was for "services in connection with Fairfax and introduction to vendor". Mr Binda did as he was instructed and produced the requested invoice.
- On 15 November 2011, Mr Landman approved the payment to Nisroy of £170,000 out of the Notable client account. Mr Meduri had no reason to think on 15 November 2011 that this was a payment, whether directly or indirectly, to Mr Landman himself. £170,000 was duly paid from the Notable client account to Nisroy. On 18 November 2011, Mr Landman instructed Mr Binda of Unifida to pay £25,000 to Colombo Fiduciaria SA. Mr Landman had earlier borrowed £25,000 from Mr Colombo of that company and the payment to that company was a repayment by Mr Landman of the money which he owed. This payment was duly made. Also on 18 November 2011, Mr Landman instructed Mr Binda to transfer £32,700 to Bell Investments Ltd. The precise link between Mr Landman and Bell Investments Ltd was not properly explained but the evidence points to this payment being made from monies which were at Mr Landman's disposal. This payment was also duly made. Also on 18 November 2011, Mr Landman instructed Mr Binda to send the balance of the £170,000 to his personal bank account in Israel and that was done. On 25 November 2011, in connection with the payment to the account in Israel, Mr Landman asked Ms Chantal of Unifida to confirm to the Israeli bank that he was the beneficial owner of Nisroy and it appears that she did so.
- The evidence before me as to the Nisroy invoice and the payments by Nisroy to Mr Landman was very clear. However, Mr Landman denied that the Nisroy invoice involved in any way a personal payment to him. To help him to sustain this denial, he came up with two explanations. The first was as to why Nisroy invoiced Larn for £170,000. The second was as to why Mr Landman was instructing Nisroy to pay £170,000 to himself or at his direction.
- The first explanation was as to why Nisroy invoiced Larn for £170,000. It was said that that was for a fee due to Mr Haddu-Levi. The story went as follows. Mr Landman knew Mr Haddu-Levi and had introduced him to Unifida. Mr Haddu-Levi had introduced Mr Nobre to potential investments in Fairfax and to Maybourne. Mr Landman had negotiated a fee for Mr Haddu-Levi in return for these introductions. Accordingly, Mr Landman on behalf of Mr Haddu-Levi had asked Nisroy to invoice Larn. It was then alleged that, about a year later, Nisroy had paid to Mr Haddu-Levi £160,000, being the £170,000 which had come from the Notable client account less £10,000 for fees to Unifida or Nisroy. Mr Landman produced a witness statement signed by Mr Haddu-Levi in support of this explanation. I was told that Mr Haddu-Levi would give oral evidence at the trial. However, after Mr Landman was cross-examined about this explanation, when it became abundantly clear that his evidence was false, I was told that Mr Haddu-Levi would not, after all, give oral evidence.
- As to the second explanation put forward by Mr Landman, in summary, he said that the payment by Nisroy to his Israeli bank account had nothing to do with Notable or Mr Nobre. The explanation was that he had various arrangements with Unifida and others involving the payment of "retrocessions" to him and various profit sharing arrangements. The monies totalling £170,000 which he instructed Nisroy to pay to him or at his direction were connected with those arrangements. It was a complete coincidence that the sums involved came to £170,000 which was the same as the amount of money paid to Nisroy from the Notable client account. Mr Landman said that the sums payable to Colombo Fiduciaria and to Bell Investments were sums genuinely payable to those companies and not to him.
- The two explanations put forward by Mr Landman were false. Mr Landman knew that they were false. Nonetheless, he gave sworn evidence that these explanations were true. He was cross-examined for many hours about his explanations and he persisted in lying to the court about them. He persuaded Mr Haddu-Levi to sign an untrue witness statement. Mr Landman also lied to his partner Mr Meduri about the Nisroy invoice. Mr Landman's false evidence in these respects is a very serious matter. It is clear that Mr Landman is prepared to tell lies wholesale to the court and to attempt to sustain the lies throughout lengthy cross-examination.
- In view of Mr Landman's lies in relation to Nisroy, I do not feel that I can accept anything he says to me unless it is supported by some other reliable evidence or, perhaps, is inherently probable. In a case where Mr Landman is facing serious allegations of dishonesty, his lies in relation to Nisroy place him at a considerable disadvantage. If he had not been called to give evidence to face these allegations, I would no doubt have been asked to draw an adverse inference from the fact that he had not been called. In the present circumstances, his position is even worse than if he had not been called. When he was called, he persisted in lying to the court on a matter of some importance. He thereby demonstrated that he was in that respect at least dishonest.
- The fact that Mr Landman persisted in his lies about the payment to Nisroy does not mean that he is necessarily lying in relation to other matters. In relation to other matters, where the Claimants allege that Mr Landman was dishonest, the burden remains on the Claimants to establish what they allege. However, Mr Landman cannot expect me to attach much weight to his explanations in defence of such allegations unless his explanation is supported by other reliable evidence or is inherently probable. Further, I am entitled to take into account the fact that Mr Landman's persistent lying at this trial shows he has a propensity for dishonesty.
- Mr Meduri's position is quite different from that of Mr Landman. Mr Meduri was cross-examined in great detail with a view to showing that he knew certain matters at the relevant time and that he had been seriously dishonest. I will make my specific findings in relation to these matters in due course in this judgment but at this stage I will record my overall assessment of Mr Meduri's evidence. On the whole, I accept his evidence as to what occurred and as to his state of mind. I consider that he gave his evidence reasonably fairly and I do not accept the various criticisms which were made as to how he answered questions and how he explained himself. Conversely, I do not accept everything which he said. In the course of his cross-examination, it was put to him at length that he had been dishonest and that he was not telling the truth. It was not surprising to find that, when he rejected those suggestions, he explained why he did not accept them. The suggestions made to him were often in the nature of putting arguments as to why he should agree that he had been dishonest. It is difficult for a witness to answer such a suggestion without putting forward the contrary arguments. It would not be fair to say that such a witness is being unhelpful because he is "argumentative". It is also entirely understandable that a witness will emphasise the arguments which show him in the best possible light. In the present case, it was obvious that Mr Meduri had considered in detail the evidence as to what had happened and he sought to justify his conduct. The process of a witness reviewing the evidence of what happened and then justifying his conduct will inevitably involve a witness in some element of reconstruction as well as pure recollection. It was contended that Mr Meduri had sought advice from other solicitors, and the Law Society, in relation to what was needed to guard against money laundering not because he really wanted to know and not because he really wanted to follow their advice but for the purpose of "papering the file", that is, creating documents which would give the false impression that he had made the correct enquiries and followed the correct procedures. That suggestion was always improbable and having heard the evidence I do not accept it.
- Mr Louanjli gave evidence which he knew to be untrue in relation to a number of key matters. I do not accept his evidence about the conversation with Mr Meduri on 3 November 2011 nor about the conversation he had with Mr Landman just before Mr Louanjli sent the email of 14 November 2011. I also do not accept his evidence about the money which his company, Bridge Ltd, received from Renaissance Limited. I find that I am not able to rely on his evidence on any issue unless his evidence is supported by the documents or is inherently likely or consists of an admission against his own interest.
The expert evidence
- Both Group Seven and LLB called expert evidence. The witness called by Group Seven was Mr Marcus Bόhler and the witness called by LLB was Mr Mark Idriss. These witnesses gave evidence as to certain aspects of Swiss banking practice and as to the usual authority of a relationship manager for a Swiss private bank. There were significant differences between them. As will be seen, later in this judgment, I will have to decide whether LLB is vicariously liable for certain actions and statements on the part of Mr Louanjli, a relationship manager for Larn/Nobre at LLB. At that stage I will direct myself that this issue turns on whether Mr Louanjli's actions and statements were sufficiently closely connected with Mr Louanjli's employment, looking at the scope of his employment broadly. I find that the expert evidence does not offer much assistance when attempting to answer that question.
PART 2: THE CLAIMS AGAINST MR NASIR AND MR YI
The relevant facts for the purposes of these claims
- The evidence, in particular the evidence of Mr Kooger and Mr Heerema on behalf of Group Seven, establishes the following facts. Over a period from March 2011 to November 2011, Group Seven was persuaded by a group of fraudsters to part with 100 million. Group Seven was told by the fraudsters that this sum would be invested and then returned to Group Seven together with a very substantial profit from its investment. These statements were false. There was no intended investment. Instead, the fraudsters intended to steal the money from Group Seven.
- On 17 October 2011, Group Seven transferred 100 million to AIC. AIC attempted to transfer that sum to bank accounts which Larn was attempting to set up. AIC's intention was to move the money out of the control or reach of Group Seven. Eventually, on 2 November 2011, 100 million was paid into the client account of Notable. Between 15 and 17 November 2011, Notable acting on the instructions of Larn, given by Mr Nobre, made payments totalling about 15.9 million. Some of that money was returned to Notable but approximately 12 million was paid away and not recovered.
- The principal players in the group of fraudsters were Mr Sultana and Mr Rejniak. In the earlier proceedings to which I have referred, Group Seven's assignee, Rheingold, has already obtained judgment for damages for fraud against Mr Sultana and Mr Rejniak but have not recovered anything from them. Neither Mr Nasir nor Mr Yi was sued as a defendant in those earlier proceedings. Both Mr Nasir and Mr Yi have been sued in the present proceedings. Rheingold has obtained judgment (for damages to be assessed) against Mr Nasir in default of defence. I am asked to assess the damages to be paid by Mr Nasir. On the evidence before me the loss suffered by Group Seven as a result of the fraud in which Mr Nasir participated was 11,105,101.18 less the sum recovered from Mr and Mrs Lucas (to whom I refer later in this judgment). As the sum recovered was £697,352.11 (or 846,799.45), Group Seven has calculated its net loss as 10,258,301.73. However, I was told by Group Seven that in accordance with an agreement which it entered into in the first set of proceedings, it should give credit for a larger figure as the amount of a notional recovery from Mr and Mrs Lucas. The larger figure is 1,925,250.70. On that basis, Group Seven has calculated its recoverable loss as 9,179,850.48. I did not receive any submissions from any of the defendants as to these figures. As explained, Group Seven has assigned its claim against Mr Nasir to Rheingold. Accordingly, I assess the damages payable by Mr Nasir to Rheingold in the sum of 9,179,850.48. As will be seen, when I come to consider the claims made by Larn, Larn says that it is not bound to give credit for the larger figure of about 1.9 million but only the lower figure of about 0.8 million.
- Mr Yi has taken no part whatever in these proceedings. The claim against Mr Yi is put different ways but the substance of the claim is that Mr Yi was one of the group of fraudsters who defrauded Group Seven. It is said that Mr Yi conspired with the other fraudsters, including Mr Sultana, Mr Rejniak and Mr Nasir, to defraud Group Seven. Rheingold, as the assignee of Group Seven asks me to make findings on the evidence in relation to the claim against Mr Yi and to determine that claim.
- The principal evidence in support of the claim against Mr Yi was given by Mr Kooger. There is some background evidence as to there being a connection between Mr Yi and Mr Nasir and also a connection between Mr Yi and Mr Sultana. Although Mr Sultana and others began the process of defrauding Group Seven in March 2011, Group Seven did not have any dealings with Mr Yi until July 2011. Around that time, Mr Sultana invited Mr Kooger and Mr Visser (of Allseas) to visit Malta in order to meet the members of what was described as "the investment team" who would, in some way or other, handle the intended investment for Group Seven. Mr Kooger and Mr Visser did visit Malta in response to that invitation and they stayed there from 19 July 2011 to 28 July 2011. During that time, they were principally engaged on matters to do with the proposed investment and there were multiple meetings with "the investment team".
- The investment team put together by Mr Sultan comprised Mr Sultana, Mr Rejniak, Mr Nasir, Mr Yi and Ms Chetcuti-Ganado. Mr Kooger gave evidence that he understood that Mr Nasir and Mr Yi were both UN agents or officers. At the various meetings, Mr Yi did not speak much. Mr Kooger thought that Mr Yi was assessing Mr Kooger and Mr Visser as possible participants in the investment project. Mr Kooger had certain impressions as to Mr Yi. The impressions were that Mr Yi knew Mr Rejniak from Hong Kong and that Mr Nasir and Mr Yi were colleagues. His impression as to the connection between Mr Nasir and Mr Yi was based on hearing their conversation in the lobby of the hotel where they were all staying. In the conversation, Mr Nasir and Mr Yi talked about their UN office and other people on the "floor". In fact, Mr Nasir and Mr Yi had no connections with the UN.
- During the visit to Malta in July 2011, Mr Kooger heard Mr Sultana, Mr Rejniak, Mr Nasir and Mr Yi talking about some of their previous investments and the fact that those investments has been cleared by "the Fed". This was a reference to the Federal Reserve in the United States. On the material before me, I find that those statements are more likely than not to have been false. Mr Kooger gave evidence that he did not recall Mr Nasir and Mr Yi making any particular statements themselves but he said that they were presented as part of a team and he believed that they were adopting what was said by Mr Sultana and Mr Rejniak.
- On 21 July 2011, Mr Kooger sent an email to Mr Heerema. In that email, Mr Kooger referred to the arrangements which were being discussed in Malta. He commented on Mr Sultana, Mr Rejniak and Ms Chetcuti-Ganado. He said that he was dealing with "exceptional people". He then added: "I am not totally clear on the role of the others". "The others" was a reference to Mr Nasir and Mr Yi. As to Mr Yi, he said: "Jon, the Chinese man, says he is a member of a dynasty from Manchuria, so highly placed. He has contacts with the stem cell therapy business in China."
- Mr Kooger and Mr Visser left Malta on 28 July 2011. They did not meet, or speak to, Mr Yi after that time.
- Mr Kooger had further dealings with Mr Sultana, Mr Rejniak and Mr Nasir between July and October 2011. Between 3 and 5 October 2011, Mr Kooger and Mr Visser made a further visit to Malta when they met Mr Sultana, Mr Rejniak, Mr Nasir and Mr Keller. Between 13 and 17 October 2011, Mr Kooger and Mr Visser made another trip to Malta where they met Mr Sultana, Mr Rejniak and Mr Nasir. It was on 17 October 2011 that Group Seven transferred the 100 million to AIC.
- On 26 October 2011, Mr Sultana sent an email to Mr Kooger, Mr Visser, Mr Rejniak, Mr Nasir, Ms Chetcuti-Ganado and Mr Yi. In that email, Mr Sultana expressed thanks "to each and everyone of you". He added: "PS: We must not forget Ali and Jon who played a major role.". The reference to "Ali" was to Mr Nasir and the reference to "Jon" was to Mr Yi. On the same day, Ms Chetcuti-Ganado replied to Mr Sultana's email so that her reply went to all of the recipients of the earlier email, including Mr Yi. Ms Chetcuti-Ganado thanked Mr Sultana "who brought everyone together and coordinated everything and everybody".
- Also on 26 October 2011, Mr Kooger replied to Mr Sultana's email and his reply was sent to all the recipients of Mr Sultana's email, including Mr Yi. He expressed his thanks to "each and everyone of you." He said that Mr Rejniak deserved a special word of thanks but so also did Mr Nasir, Mr Yi and Ms Chetcuti-Ganado. He referred to the others as "the team". Mr Visser also replied to all of the recipients of Mr Sultana's email and agreed with what Mr Sultana had said.
- Finally, on 26 October 2011, Mr Nasir replied to Mr Kooger's email and thanked everyone, including therefore Mr Yi, for their help.
- In December 2011, Mr Sultana was in contact with Mr Yi again. Mr Nasir was also involved with both of them at that time. It seems likely that this contact was not directly concerned with the money taken from Group Seven but was in connection with a similar scheme to defraud a Mr Jan Pathuel of 120 million. However, on 16 December 2011, Mr Yi emailed Mr Sultana in terms which showed that Mr Yi knew a number of detailed matters in relation to what had happened with Group Seven.
The liability of Mr Yi
- Based on the above evidence, I am satisfied that Mr Yi conspired with Mr Sultana, Mr Rejniak and Mr Nasir to defraud Group Seven of 100 million. From Group Seven's perspective, Mr Yi's role appeared to have been a limited one. However, I find that he must have known of the details of the conspiracy to defraud Group Seven and he participated in the steps taken to carry the conspiracy into effect. It follows that he is liable to pay damages to Group Seven's assignee, Rheingold, in respect of the losses suffered as a result of the fraud on Group Seven. As in the case of Nasir, I assess the damages payable by Mr Yi in the sum of 9,179,850.48.
PART 3: THE CLAIMS AGAINST NOTABLE, MR LANDMAN AND MR MEDURI: THE FACTS
The relevant facts for the purposes of these claims: before 2 November 2011
- By 2009, Intrust Ltd ("Intrust") had an established business of providing advice and services involving the creation of companies and trusts in offshore jurisdictions for tax reasons. Intrust was owned by the Intrust Group of Companies Ltd ("the Intrust Group"). Mr Landman was the executive chairman of Intrust and of the Intrust Group. He had a substantial shareholding (at one time it was 37.5% and later it was 40%) in the Intrust Group.
- Notable was formed as an LLP in February 2009 initially to provide notarial and certification services connected with the business of Intrust. The founder members of Notable were Mr Landman, Mr Meduri, Ms Stone and Ms Potter. Mr Landman was an accountant and the other three were lawyers. Mr Meduri has throughout been the managing partner of Notable. Ms Stone was the money laundering reporting officer ("the MLRO") of Notable. In March 2009, as a result of provisions in the Administration of Justice Act 1985 and the Legal Services Act 2007 and changes to the Code of Conduct of the Law Society it became possible to form a multidisciplinary partnership, known as a Legal Disciplinary Practice ("LDP"). Notable wished to take advantage of these new arrangements and in February 2010, Notable was duly recognised by the Law Society and the Solicitors Regulation Authority as a law firm with LDP status.
- In 2010 and 2011, Intrust and Notable shared offices at 33 Wigmore Street, London, W1. Thereafter, Intrust's business declined and it moved to smaller offices in Swiss Cottage. It went into administration in June 2012 and it was dissolved on 1 October 2014. Some businesses, formerly linked to Intrust, still exist and Mr Landman continues to be involved in those businesses.
- Mr Landman explained that because he had been a director of Intrust, a company which had gone into administration, Mr Meduri asked him to step down as a member of Notable, which he did with effect from 26 June 2012.
- Mr Landman first met Mr Nobre on 18 October 2010 when Mr Nobre came to Mr Landman's offices. Mr Nobre was introduced to Mr Landman by a Mr Aronson who was known to Intrust. At the meeting on 18 October 2010, Mr Nobre was accompanied by Mr Aronson, Mr Wallis and Mr Licki. Mr Landman already knew Mr Aronson and Mr Wallis and Mr Nobre introduced Mr Licki as his business partner. At this meeting, Mr Nobre indicated the services he wished Mr Landman to provide but Mr Landman said that he was unable to recall the detail of what he was told. Mr Nobre said that he did not have a UK bank account and Mr Landman agreed that he would introduce him to his banking contacts. Mr Nobre produced his Portuguese passport at this meeting and Mr Landman made a photocopy of it.
- Mr Nobre came to Mr Landman's offices again on 17 November 2010. Mr Landman's evidence was that he saw Mr Nobre as a potential client for Intrust. A Dr Terry accompanied Mr Nobre to this meeting. Dr Terry was described as the former chairman of an off-shore bank or an American bank of which Mr Nobre was said to be a customer. By this stage, Mr Landman had been told of the existence of two companies owned or controlled by Mr Nobre, Larn and Erbon Wealth Management Ltd ("Erbon"). Dr Terry was a director of Erbon. Mr Landman was told that in the past Dr Terry had managed Mr Nobre's wealth. Mr Nobre spoke several European languages. He spoke English fluently but his meaning was not always clear. At this meeting, or perhaps at the previous meeting, Mr Landman was told that Mr Nobre was living in England and had previously lived in Geneva. Mr Nobre told Mr Landman that he was living in the Landmark Hotel, in Marylebone, and that he wished to buy a property in London to live in. He said that his partner Victoria Weir was pregnant. He described Ms Weir as coming from a wealthy family. Mr Nobre also said that he wanted to buy one or two office buildings or hotels with a view to building up a property portfolio. He wanted to have international tax advice and the services of an accountant to help him with introductions to banks and other businesses.
- In October and November 2010, Intrust carried out certain searches in relation to Mr Nobre, his companies and his associates and it was given certain further information by Mr Nobre. Intrust found that Larn had been formed on 26 September 2006 and Erbon had been formed on 22 September 2005. Mr Nobre was the sole director of Larn. Mr Nobre was one of several directors of Erbon. Although the searches in relation to Larn and Erbon, which I have seen, do not say anything about the assets and trading activity of these two companies, Mr Landman told me that he appreciated that they did not trade and had no assets. Mr Nobre produced a letter dated 29 October 2010 stating that he had a non-exclusive licence to occupy residential premises at 15 Briary Close, London NW3 until 26 April 2011. Mr Nobre also produced a draft document which referred to the Louis VII Nobre Foundation and the Larn Foundation. The Larn Foundation was said to be a charitable foundation but it was also described as having the purpose of protecting Nobre family members and of perpetuating the Nobre name, its heritage and wealth. An internet search in relation to Mr Nobre did not reveal any information about him. Around this time, Mr Nobre produced two powers of attorney granted on 15 November 2010 by Larn and by Erbon in favour of Mr Landman. Mr Landman said that he had not asked for these powers of attorney. Erbon also formally appointed Intrust as an international tax adviser and investment banking adviser. Erbon also provided what was described as a certificate confirming that it complied with the laws of the jurisdictions in which it operated in relation to customer due diligence and money laundering prevention.
- On 17 November 2010, Mr Nobre gave Mr Landman a document which set out the objectives and business investments of Larn. The document was designed to give the impression that Mr Nobre was a very successful businessman and investor who wished to have tax and financial advice and assistance. He listed business activities in a very wide range of sectors. He said that his companies traded in a wide range of financial instruments. He said that his companies lent money to major international banks. On 18 November 2010, Mr Nobre sent Mr Landman a further document which was said to be the Larn-Nobre Joint Organization Chart for 2011. This document referred to a large number of companies worldwide which had Larn or Nobre in the name. The document listed a very wide range of business sectors in which the companies were said to be involved. It referred to interests in hedge funds and venture capitalists. It referred to sole ownership or majority stakes in private banks and brokerage firms in Mumbai, Dubai, Sao Paulo, Geneva, Hong Kong, New York, various cities in China, London and, indeed, several other places. The interests in London were said to include a private bank with a London branch and three brokerage firms based in London. These entities were not identified by name. In fact, most of the companies referred to in this document did not exist. Mr Landman said that he did not think there was any need to carry out company searches. He said that it did not matter to him whether the companies existed.
- On 19 November 2010, Mr Nobre sent Mr Landman a different version of the document headed Louis VII Nobre Foundation. This document referred to the charitable activities of the foundation. These activities were worldwide. As one example, I refer to the Nobre Maternity & Child Hospital which was said to exist in several countries in South America and Africa. The foundation was said to award a number of prizes. For example, the Nobre Legacy Luso Society Awards consisted of 21 prizes per year. Each prize was worth 1 million. The document also referred to a proposed Nobre City in Portugal. This proposed city was to have a number of facilities including a 352,000 seat sports stadium and an international airport with 7 or 8 runways. The city was to be home to a population of 105,000 or 252,000 people and the budget for the creation of the city was to be 112 billion.
- Looking at these documents objectively, and without using hindsight, I find it difficult to take seriously the statements in these documents. The statements appear to be fantastic and unreal.
- On 19 November 2010, Mr Shore who was the money laundering reporting officer for Intrust emailed Mr Nobre and asked him for documents showing his residential address, a professional reference and a banker's reference. On 24 November 2010, Mr Nobre replied stating that he was living in the Landmark Hotel. On or about 26 November 2010, Mr Nobre provided two references dated 26 November 2010. The two references were in identical terms. They stated that the referee had known Mr Nobre for about one year and had worked for him as a chartered accountant. The referee said that he had no reason to doubt his integrity or his satisfactory conduct in both his business and personal life. One of the referees was a Mr Kingsnorth who had, it seems, granted Mr Nobre the non-exclusive licence to occupy 15 Briary Close, a copy of which had previously been provided by Mr Nobre to Mr Landman. Both references were sent from what appeared to be residential addresses. Mr Nobre did not provide a banking reference as had been requested on 19 November 2010.
- Mr Landman introduced Mr Nobre to a number of his banking contacts. These were CitiBank, Union Bancaire Privιe and Mashreq Bank. Mr Landman was not involved in the further communications between Mr Nobre and these banks. It seems that Mr Nobre and his companies did not open a bank account with any of these banks.
- On 2 December 2010, Mr Nobre emailed Mr Landman stating that he and Ms Weir had found a house in London which they were very keen to buy. The house was known as Palladio, in Compton Avenue, Highgate, London. Mr Nobre stated that the asking price was £40 million and that he had offered £35 million and might be prepared to increase that offer.
- On 6 December 2010, Mr Landman and Mr Nobre met representatives of PCP Capital Partners and discussed a possible acquisition by Mr Nobre of three London hotels. This possible acquisition was described by Mr Landman in his evidence as the Maybourne transaction. Mr Landman told me that he was impressed by the business-like way in which Mr Nobre conducted himself at this meeting. Later documents showed that the investment being sought by the owners of the hotels was either £250 million or £400 million.
- By 9 December 2010, Mr Landman had contacted Mr Meduri, acting for Notable, in connection with the possibility of Notable being instructed to act for Mr Nobre in relation to the purchase of Palladio. On 10 December 2010, Ms Ciserani, a solicitor at Notable, contacted the Solicitors Regulation Authority to check what Notable needed from Mr Nobre as a proof of his address. The SRA confirmed that a notarial declaration could be a sufficient proof of address. A notary at Notable then certified that Mr Nobre was resident at 15 Briary Close. Mr Landman gave evidence that Mr Nobre asked him to negotiate the price for the Palladio and Mr Landman negotiated the vendor down from £40 million to £37 million.
- Around this time, a firm of solicitors, Sheridans, had been approached to carry out the conveyancing in connection with Mr Nobre's purchase of Palladio. It seems that the original intention was that Mr Nobre would be Sheridans' direct client. Sheridans wished to carry out due diligence on Mr Nobre and on the source of the funds being used to purchase the property. On 13 December 2010, Sheridans emailed Mr Nobre and Mr Landman seeking the answers to certain questions. In particular, they wanted confirmation of the source of the purchase price of £37 million together with appropriate documentary evidence. Sheridans referred to Mr Landman suggesting that "the bank in Switzerland" would provide "a statement of providence". Mr Landman told me that Mr Nobre had told him that he had a bank account in Switzerland. Sheridans said that they could not act for Mr Nobre without being given the answers to their questions. They also said that they were not prepared to act in accordance with a suggestion that Mr Landman had made to the effect that Mr Nobre should instruct Notable and Notable would instruct Sheridans so that Sheridans would not need the answers to those questions. That suggestion shows that Mr Landman was in that respect prepared to act for Mr Nobre in circumstances where he knew that another firm of solicitors would not feel able to act for him due to his failure to provide the answers sought by way of due diligence.
- On 14 December 2010, Mr Landman replied to Sheridans stating that Mr Nobre felt that the information provided to Sheridans had been sufficient and that Mr Nobre would not instruct Sheridans. When he wrote that email, Mr Landman knew that Mr Nobre had not provided any information about the source of the price of £37 million and was unwilling to do so.
- On 14 December 2010, Mr Meduri of Notable confirmed in writing that Notable would act for Mr Nobre in connection with the purchase of the shares in the company which owned Palladio. Mr Meduri sent Mr Nobre a formal letter of engagement. The letter was addressed to Mr Nobre personally, rather than to Larn. The sum payable by Mr Nobre for Notable's services was specified as a fixed fee of £125,000, excluding VAT. Mr Nobre counter-signed the letter of engagement. There was a due diligence questionnaire attached to the letter of engagement. This stated that the source of funds was Banque Pasche Zurich and that Mr Nobre would send Notable a pre-advice stating the provenance of the funds. Under "source of wealth", the statement was made that Mr Nobre's wealth came from:
"Trading Financial Instrument as principal and also in joint ventures with partners who provided the capital. Previously worked as an adviser for investments and some funds came from real estate transaction"
In relation to Mr Nobre's residential address, the due diligence questionnaire referred to advice from the Law Society (i.e the SRA) that Notable could rely on a notarial certificate as to his address. The questionnaire also stated that Mr Nobre had been recommended by professionals known to us; that seems to have been a reference to Intrust. The questionnaire was signed by Mr Meduri but was qualified by the following wording:
"Approved pending further due diligence before acting."
The questionnaire was completed so as to indicate that Mr Nobre had provided a recent utility bill although he had not done so.
- Notable carried out a risk assessment in relation to the instructions from Mr Nobre and concluded that the transaction was in the high risk category and enhanced due diligence ought to be applied and further due diligence documents were to be provided when funds were received. It seems that enhanced due diligence was appropriate because the transaction was one which carried a higher risk of money laundering.
- On 14 December 2010, Mr Meduri of Notable made a formal offer on Mr Nobre's behalf of £37 million for the shares in the company which owned Palladio. Also on that date, Notable prepared an invoice for Larn for £9,150.90 for notarial services; these services related to the notarisation of Larn's and possibly Erbon's corporate documents and did not relate to the purchase of Palladio.
- On 17 December 2010, the vendor of Palladio accepted the offer to purchase at £37 million. On 19 December 2010, Mr Landman emailed Mr Meduri to say that Mr Nobre was targeting completion of the purchase by 31 December 2010. The purchase was to take the form of a sale of the shares in the company which owned Palladio to a Panamanian company. Mr Landman also stated that Mr Nobre was sending 50 million to Notable's client account "this week" and at the same time 20 million would be sent to Intrust's client account pending the opening of a UK bank account.
- On 20 December 2010, Mr Nobre emailed Mr Meduri indicating that he wished to send 55 million to the Notable client account.
- On or about 21 December 2010, Notable instructed Gregory Rowcliffe Milner ("GRM"), a firm of solicitors, to carry out the legal work on the purchase of Palladio in so far as it involved conveyancing. On 21 December 2010, Mr Meduri arranged for the purchase of an off-the-shelf Panamanian company to acquire the shares in the company which owned Palladio. The Panamanian company was Shelford Overseas Inc ("Shelford"). At some point it was decided that the transaction would take the form of Shelford taking a transfer of the title to Palladio from the vendor company rather than the form of a sale of shares.
- On 22 December 2010, GRM emailed Mr Meduri giving some preliminary comments on the conveyancing issues arising on the purchase of Palladio. GRM asked for documentary evidence as to the link between Mr Nobre and Shelford. He stated that GRM's fees would be £35,000.
- On 22 December 2010, Mr Meduri emailed Mr Landman stating that it was a good thing that GRM did not object to the due diligence on the origin of the funds for the purchase of Palladio and on Mr Nobre's identity. On 23 December 2010, Mr Meduri received a declaration of trust whereby the shares in Shelford were declared to be held on trust for Mr Nobre. The declaration stated that it had been made on 6 July 2010 which was the date of incorporation of Shelford. The declaration of trust had actually been executed on 23 December 2010. Mr Meduri was cross-examined as to the dishonesty involved in back dating this document. I do not regard the back dating of this document in this respect as being of any real significance when assessing the issues as to dishonesty in this case.
- Mr Nobre decided that he wished to have a survey of Palladio carried out. Notable were prepared to instruct Savills to carry out the survey but in early January 2011 they delayed doing so while they waited for Mr Nobre to put them in funds to cover Savills' fees. On 12 January 2011, Mr Nobre emailed Notable and GRM stating that he would pay a fee of £20,000 in the week of 21 January 2011.
- On 13 January 2011, Mr Nobre emailed Mr Landman asking for a reference from Notable and possibly also from Intrust. The purpose of the request was that he wished the reference to be addressed to HSBC Monaco to enable him to open a personal account with that bank. The opening of the account would enable him to send the monies needed to pay Savills' fee. Mr Nobre asked Mr Landman to ensure that no copy of the reference would be kept in the offices in London to avoid any trace of the reference in connection with his offshore corporate accounts. The request included a draft reference which stated that Mr Nobre had maintained an account in the books of the referee and the account had been operated to the referee's entire satisfaction. The referee was also asked to say that he considered Mr Nobre to be of good financial standing and a trustworthy person in his business obligations.
- Mr Landman passed Mr Nobre's request for a reference to Mr Meduri and he asked Mr Meduri to prepare the reference and send it to HSBC Monaco. However, shortly thereafter but before Mr Landman had spoken to Mr Meduri, Mr Landman emailed Mr Nobre stating that Notable/Intrust could not send the reference as worded but could confirm that the funds being transferred were for the purchase of the house. Mr Landman copied this response to Mr Meduri. Mr Landman and Mr Meduri gave evidence that Mr Meduri later said to Mr Landman that they could not give the requested reference. Mr Nobre did not pursue the request for a reference. In the meantime, Mr Meduri expressed concern to Mr Landman about the risk of Notable becoming liable to pay Savills' fee. In that context, he emailed Mr Landman to say that he did not know if Mr Nobre was reliable. A little later, Mr Meduri wrote to Mr Landman:
"The reference he wanted us to write just scares me and I seriously doubt his reliability now."
- On 13 January 2011, Savills agreed to act on the instructions of Shelford but wanted to be paid 50% of the fee on issue of an executive summary of their report with the balance on the issue of the full report. Savills duly provided an executive summary of their report and on 20 January 2011 invoiced Shelford for 50% of the fee which, inclusive of VAT, was £11,910. Savills then prepared the full report and on 31 January 2011 invoiced Shelford for a further sum of £12,348.92.
- Mr Nobre did not pay Savills' fees but raised a large number of points about the survey and the proposed purchase. Mr Landman gave evidence that he continued to press Mr Nobre for payment of Savills' fees and Mr Nobre continued to assure him that he would pay the fees but he failed to do so. Eventually, Mr Landman paid, or caused to be paid, £10,000 to obtain the release of Savills' full report which was provided on 22 March 2011. Mr Nobre was again asked to pay Savills' fees on a number of occasions, but he did not do so. Eventually, in the face of threats of litigation from Savills, Mr Landman made, or caused to be made, a further payment to Savills. Mr Landman said that the total he paid to Savills (he said out of his own monies) was £14,304.28. Group Seven contend that these payments to Savills were not paid by Mr Landman personally but were paid by Intrust. As will be seen, Mr Nobre later (in November 2011) paid the sum of £14,304.28 to Mr Landman rather than to Intrust and it is said that Mr Landman must now repay that sum to Group Seven. I find that as between Mr Landman and Mr Nobre, it was always accepted that it was Mr Landman who had paid the money to Savills and that it was Mr Landman who could claim repayment from Mr Nobre. Whether Mr Landman found the money in Intrust or from his own resources does not affect this position.
- In the meantime, Mr Landman remained in contact with Mr Nobre in relation to possible investments by Mr Nobre. On 7 January 2011, they met to discuss possible investments. Thereafter, Mr Landman continued to email Mr Nobre with information about various business opportunities and investments of which Mr Landman became aware.
- In March 2011, Mr Landman became aware of an opportunity to invest in an investment bank known as Fairfax. Mr Landman, together with Mr Nobre and Dr Terry, met representatives of Fairfax on 17 March 2011 and Mr Nobre had a number of further meetings with Fairfax and some of those meetings were attended by Mr Landman. Eventually, the negotiations did not result in any agreement and Mr Nobre did not make any investment in Fairfax.
- On 28 March 2011, Ms Weir paid £3000 to Mrs Landman. Although there was a dispute as to what this payment was for, I find on the balance of probabilities that Mr Nobre had asked Ms Weir to make this payment for the benefit of Mr Landman because Mr Landman was pressing Mr Nobre to repay him the £10,000 which Mr Landman had paid, or caused be paid, to Savills in relation to their fees. This means that when Mr Nobre repaid Mr Landman the sum of £14,303.28 in November 2011, Mr Landman ought to have given Mr Nobre credit for this £3,000 but he did not do so.
- On 28 March 2011, in view of the fact that the proposed purchase of Palladio was not proceeding, the solicitors for the vendor collected from GRM the documents which the vendor's solicitors had earlier provided in connection with the proposed purchase.
- On 4 May 2011, Mr Meduri and Mr Nobre signed a second letter of engagement. Like the first letter of engagement of 14 December 2010, this letter was addressed to Mr Nobre, rather than to Larn. The letter stated that Notable would provide Mr Nobre with legal assistance in any matters that he instructed them to deal with on his behalf and, in particular, they would assist him on commercial transactions and investments to be carried out in and from the United Kingdom. Mr Landman gave evidence that this letter was intended to cover the work he was doing for Mr Nobre in relation to possible investments such as the Maybourne transaction and Fairfax. He said that the letter should not have referred to legal assistance as Mr Nobre was not being given any legal assistance in relation to possible investments. The letter stated that Notable's charges would be based on time spent on the relevant matter.
- On 11 May 2011, GRM sent to Notable its bill for £24,217.05 for its services in relation to the purchase of Palladio. Mr Nobre was asked to pay this bill on a number of occasions but he did not do so. Eventually, Mr Landman negotiated with GRM a reduction in their bill and Intrust Group paid GRM £12,642.42 on 3 October 2011.
- On 15 May 2011, Mr Landman asked Mr Nobre if the funding he had believed to be in place that week would no longer be available. There was no evidence of a reply from Mr Nobre. On 24 May 2011, Savills informed Mr Landman that the balance of their fees was outstanding. Throughout May, June and July 2011, Mr Landman and Mr Meduri pressed Mr Nobre for payment of the fees due to Savills and GRM. Mr Nobre repeatedly made promises to pay but he repeatedly failed to do so.
- On 22 July 2011, Mr Nobre emailed Mr Landman and Mr Meduri and said that he had been in Switzerland and had had talks with his bank and his funds would be "unfrozen" that day and that he would send £100,000 to Notable on 28 July 2011. The £100,000 was to be used to pay Savills and GRM with the remainder to Notable. Mr Nobre also referred to certain arrangements he was making to invest in Fairfax. On the same day, Mr Landman replied to Mr Nobre and asked various questions. One question was whether Mr Nobre wished to pursue the house purchase; this was a reference to Palladio. Mr Nobre did not answer that question. On 28 July 2011, Mr Nobre emailed again and confirmed that the money to be transferred would arrive in three days.
- On 4 August 2011, Mr Nobre emailed that there was a hold up at his bank. He referred to an amount of 44.5 million in a mixture of swiss francs, euros and dollars. He also said that he was transferring to Notable £6.5 million for the investment in Fairfax. On 11 August 2011, Mr Nobre emailed Mr Landman and Mr Meduri again referring to his funds being unfrozen and blaming further delays on his bank. On 12 August 2011, Mr Nobre emailed Mr Landman and Mr Meduri stating that they would receive the sums of £100,000 and £6.5 million the following week.
- Before August 2011, Mr Landman's wife, Yardena, had met Mr Nobre and Ms Weir and Mrs Landman had become friendly with Ms Weir. On 16 August 2011, early in the morning, Ms Weir telephoned Mrs Landman. Ms Weir was very distressed. She told Mrs Landman that she had not heard from Mr Nobre in a month and that he had used up £200,000 of her money and she was going to have to leave the Landmark Hotel. Mrs Landman went to see Ms Weir at the Landmark Hotel and lent her a sum of money to enable her to pay her fare on Eurostar to Paris where Ms Weir's mother was living. Later that morning, Mrs Landman telephoned her husband and told him what had happened and what Ms Weir had said. At 12.49 that day, Mr Landman emailed Mr Shore of Notable and said:
"Louis a con man. His wife called yardena this morning to see her at 6 am at hotel. She says hes not called her in month. Used up 200000 of her money. She has to leave hotel. Another one!!!!"
- Mr Landman gave evidence that the reference to "another one" was a reference to another client of Intrust whom Mr Landman described as a Walter Mitty character. Mr Landman said that he had sent this email to Mr Shore because it had been Mr Shore who had introduced this other client to Notable. Mr Landman did not tell Mr Meduri what Ms Weir had said on 16 August 2011. What is clear from this email was that Mr Landman was told on 16 August 2011 that Mr Nobre had been living off his partner Ms Weir. Previously, Mr Nobre had been able to give the impression of personal wealth because he was able to afford a suite at the Landmark Hotel for many months. That impression was dispelled when it became clear that Mr Nobre was not living off his personal wealth. Mr Landman gave evasive evidence about this email. He suggested that the reference to Mr Nobre being a con man was a reference to the fact that he had walked out on his partner and their baby who had been born in January 2011. Mr Landman probably did have a low opinion of Mr Nobre for leaving his partner and child but I find that the references to Mr Nobre being a con man and having a Walter Mitty character indicate that Mr Landman appreciated that Mr Nobre's statements about himself were not reliable and, in particular, the statements and promises about his money were not reliable. However, as will be seen, Mr Landman continued to act for Mr Nobre.
- Later on 16 August 2011, Mr Landman emailed Mr Nobre asking for information about the transfer of funds which had been promised. On 17 August 2011 there were exchanges between Mr Landman and Mr Meduri. They agreed that if Mr Nobre did not pay Notable within the week, Notable should take legal action against Mr Nobre. Mr Landman continued to press Mr Nobre for information about a transfer of funds. On 19 August 2011, Mr Nobre emailed Mr Landman and Mr Meduri and stated that he was continuing to have problems with his bank or banks. He said he would never lie to them and they would be paid "shortly". He asked them to trust him.
- By 27 August 2011, Notable had not received any monies from Mr Nobre. On that day, Mr Landman emailed Mr Nobre and said that the situation was getting ridiculous. He referred to Mr Nobre's suggestion that Mr Landman meet Mr Nobre's bankers. Mr Nobre replied stating that his banker had confirmed that the funds (stated to be 44.5 million with no currency specified) would be available on 1 September 2011.
- On 31 August 2011, Mr Nobre forwarded to Mr Landman an email he had sent to Fairfax stating that the monies for the investment in Fairfax would be sent to Notable on or just after 1 September 2011 when they were "unfrozen".
- No money arrived from Mr Nobre on or shortly after 1 September 2011. On 5 September 2011, Mr Landman emailed Mr Nobre and asked to speak to his bankers. Savills and GRM continued to press Notable for payment of their fees. On 7 September 2011, Mr Nobre emailed Mr Landman and said that his bankers had "no more issues on money laundry which they investigated". He said he would pay very soon. On 12 September 2011, Mr Nobre emailed that there were no further complications with the proposed transfers. On 16 September 2011, Mr Nobre emailed to say that there had been a change of plan; he would first send Notable £30,000 and then later send them the remaining (unspecified) amount. The money did not arrive as promised and Mr Landman continued to press Mr Nobre for payment. On 27 September 2011, Mr Landman emailed Mr Nobre:
"I trusted you. I helped you. You let me down."
- On 27 September 2011, Mr Landman met Mr Aronson and Mr Wallis to discuss a possible investment by Mr Nobre in mining in Ghana. By the end of September 2011, Mr Landman needed to borrow money to settle the tax affairs of himself and his wife. On 29 September 2011, he asked a friend of his, Mr Colombo, for a loan of £125,000. He said he needed the money by the end of October 2011 and he wanted a loan for one year.
- On 30 September 2011, in an email to GRM, Mr Meduri referred to Mr Nobre as "the idiot". On 3 October 2011, Mr Landman paid £12,642.42 to GRM out of his wife's monies.
- On 6 October 2011, Mr Nobre emailed Mr Landman and Mr Meduri and said that "my/our Swiss based bank" had sent back transfers received from BVI/Granada and Vaduz, San Marino. He said he was going to deal with the problem and he might decide to assemble his funds in his private bank account at Metro Bank, London. On 12 October 2011, Mr Nobre emailed again stating that "one of the funds" had arrived and another would arrive and that his Metro Bank account would accept 500,000 "without making problems". On 15 October 2011, Mr Landman emailed Mr Nobre referring to "lots of promises but no funds". On 16 October 2011, Mr Landman emailed Mr Nobre and referred to the fact that the payments he had made for Mr Nobre had come from his wife's monies. He suggested meeting in Zurich that week. On 17 October 2011, Mr Nobre emailed Mr Landman and Mr Meduri to say that the transfer had cleared and they would receive monies that week. Mr Meduri's reaction was that he did not believe Mr Nobre. On 18 October 2011, Mr Landman went to Mr Nobre's hotel in Zurich and spoke to Mr Nobre briefly. They agreed to meet later that day. Mr Landman attended at the hotel as arranged and waited for Mr Nobre for several hours but he did not turn up. On 21 October 2011, Mr Landman emailed Mr Nobre stating "this is really the end" and complained bitterly about Mr Nobre's broken promises.
- On Saturday 22 October 2011, Mr Nobre emailed Mr Landman and Mr Meduri. He said that his funds had arrived and he would begin distributions the following Monday. He said that they would receive a very generous amount to reflect the time they had waited. He said that they would receive £2,700,000 to be used to pay:
(1) the survey costs plus interest;
(2) GRM's fees plus penalties and interest;
(3) £100,000 for Notable for their services and waiting time to be split:
a) £20,000 for Mr Landman "personally";
b) £10,000 for Mr Meduri "personally";
c) £20,000 for Intrust;
d) £50,000 for Notable;
(4) the remaining funds were to be as directed by Mr Nobre.
- Mr Meduri's reaction to this email was the sarcastic comment that Father Christmas had arrived early. Mr Landman sarcastically suggested that they should not spend the money yet. On 25 October 2011, Mr Landman emailed Mr Nobre and asked if matters were proceeding as planned. He asked him again by further emails over the next few days. Mr Nobre did not reply. On 28 October 2011, Mr Landman's email to Mr Nobre said that Mr Nobre was betraying his trust and showing disrespect. On Sunday 30 October 2011, Mr Nobre emailed Mr Landman stating that he wished to transfer funds to Notable for investments for himself or Larn. He proposed one transfer of 100 million or two transfers of 50 million each. He stated that he wished to use Notable's bank account at Barclays Bank but later Larn would open an account at Barclays Wealth. He asked for Mr Landman's or Mr Meduri's personal guarantee that they would honour his instructions and that if he could count on them he would send the money on Tuesday morning.
- On 30 October 2011, Mr Landman replied to Mr Nobre's email of 22 October 2011 apparently giving the confirmation that Mr Nobre had requested. On 31 October 2011, Mr Nobre asked Mr Landman and Mr Meduri for Notable's bank details. The same day, Mr Meduri provided the information requested. Later that day, Mr Nobre emailed to inform Mr Landman and Mr Meduri that the funds were coming from the Bank of Valletta from an account of "a member company newly incorporated in Malta as partner and minor shareholder of Larn: Allied Investment Corporation Ltd". Mr Nobre also said that he was coming to London on 2 November 2011 when he would give further instructions to Notable.
- Mr Meduri emailed Mr Nobre on 31 October 2011 and, in relation to Mr Nobre's forthcoming instructions as to payments out, he said that:
all transfers will have to be justified by supporting documents and have to be compliant with our regulatory procedure."
Mr Nobre replied the same day authorising Notable to pay the amounts he had earlier mentioned. This was a reference to his email of 22 October 2011 which had referred to personal payments to Mr Landman and Mr Meduri. Mr Nobre then questioned what Mr Meduri meant about supporting documents and a regulatory procedure. He said: "I do not wish my funds frozen or blocked!"
- Shortly after Mr Nobre's email of 31 October 2011, Mr Landman sent two emails in response, one timed at 18:01 and the second at 18:03. The second email was copied to Mr Meduri but the first was not. In the first email Mr Landman said:
"I just wanted to remind you that you promised me 150000 for the help with the house transaction. Do you recall this (you sent me by text)"
This statement does not appear to relate to the letter of engagement between Mr Nobre and Notable under which Mr Nobre was to pay £125,000 plus VAT for its work in relation to Palladio. The email refers to a text not a letter of engagement. Further, it would not be appropriate to ask Mr Nobre if he remembered the commitment in the letter of engagement as it would be straightforward to refer to the letter of engagement itself. Further, the fact that Mr Landman referred to "you promised me" rather than "you promised Notable" coupled with the apparently deliberate decision not to copy Mr Meduri into this email suggests that Mr Landman was intending to refer to an arrangement between Mr Nobre and Mr Landman personally. Finally, in view of what subsequently happened, I find that that is indeed what Mr Landman was referring to. Mr Landman did not give any candid evidence as to what arrangement he had earlier made with Mr Nobre. It is possible, but I think somewhat unlikely, that Mr Landman genuinely thought that this payment was due to him for his help in negotiating the price for Palladio.
- Mr Landman's second email in response to Mr Nobre's email of 31 October 2011 explained that what Mr Meduri had meant by his reference to supporting documents was that any transfers of monies needed to be supported by an invoice or a contract so that when Notable's client account was audited, it could be seen that Notable had complied with the Solicitors Account Rules. Mr Meduri also emailed Mr Nobre to confirm his agreement to Mr Landman's email. Mr Nobre thanked Mr Landman for this clarification; he said he would lodge a loan agreement and an indemnity letter for Notable's files. Mr Landman followed that up with an email by reminding Mr Nobre of his request for "my promised fee"; he did not copy this email to Mr Meduri. Later that evening, Mr Meduri emailed Mr Landman to say that he was starting to believe Mr Nobre.
- On 1 November 2011, Mr Nobre emailed Mr Meduri and Mr Landman to say that the 100 million was due to arrive imminently. Mr Landman replied in an email, not copied to Mr Meduri, asking Mr Nobre to get back to him on the fee he had been promised as Mr Landman was "banking on it". He pressed Mr Nobre again later that day. Mr Nobre replied by email saying that the offers he had made in his email of 22 October 2011 were generous offers. He asked Mr Landman to make clear when they met what Mr Landman had in mind as the promised fee. Mr Landman replied referring to a text from Mr Nobre promising Mr Landman a fee for help with the house. It is clear from this email, that Mr Landman was referring to a fee to him personally and not the payment of the fee to Notable pursuant to its letter of engagement. Mr Landman said that he assumed that the £20,000 promised in the email of 22 October 2011 as a personal payment to Mr Landman was for his help with the loan and Fairfax and other matters. The reference to "a loan" was probably a reference to the fact that Mr Landman had paid, or caused to be paid, the fees claimed by Savills and GRM.
- The trial bundle contains a draft of an email written by Mr Nobre in response to Mr Landman's last email about the promised fee. The parties did not agree where this draft came from. Mr Landman says that he did not receive an email which was in accordance with this draft. In the draft email, Mr Nobre referred to a personal fee to Mr Landman of £30,000 for "the reception of this funds" and for introducing Mr Nobre to Barclays Wealth. He said he intended to keep 70% of the funds for a year for investment purposes. He said that if the Fairfax deal was still available, Mr Landman would receive another fee. He then said that when the funds were transferred to Notable, he would wish to withdraw cash in the amounts of £70,000 and CHF 30,000. I do not need to make a finding as to whether Mr Landman received an email in accordance with this draft. The existence of the draft shows that Mr Nobre was prepared to make personal payments to Mr Landman in response to Mr Landman having pressed him to do so. I note that the request for cash in this email is slightly different from the request for cash made in an email Mr Nobre sent to Mr Meduri on 2 November 2011 and that fact might suggest that the draft email was never sent.
2 November 2011
- On 2 November 2011, 100 million arrived in Notable's client account. That day, Mr Nobre sent to Mr Landman a letter dated 2 November 2011 from Bank of Valletta to AIC confirming that that bank was paying that sum to Notable. Mr Landman was abroad from 31 October 2011 to 3 November 2011 and Mr Meduri was responsible for dealing with the consequences of the funds arriving in Notable's client account. He asked Ms Ciserani of Notable to assist with certain matters which would arise from that fact.
- On 2 November 2011, Mr Stone, who was the head of the accounting department at Notable, emailed Mr Meduri with a list of questions, as follows ("LN" is Mr Nobre and "LOE" is a letter of engagement):
"In respect of 100m deposit my comments/recommendations:
1. Who is our client?
2. Is due diligence complete and up to date?
3. Are funds covered by original signed LOE? how can this be evidenced?
4. How is Allied Investments related to LN?
5. Why are they sending funds on behalf of LN?
6. Who are Allied Investments? Can we conduct searches? who are the directors?
7. Who beneficially owns Allied Investments?
8. Have we conducted up to date Lexis Nexis search of Allied and LN?
9. Do these funds belong to LN by virtue of directors loan account or shareholder loan and how can this be evidenced?
10. What third party verification can we have to above (other than LN)?
11. If funds are not Allied but introduced, what is the source of funds, reason for deposit in Allied and terms under which Allied accepted the funds?
I will no doubt have extra points."
- Later on 2 November 2011, Mr Stone emailed Mr Meduri again with three extra points, as follows:
"1. Will need copy of the original agreement where LN waived enjoyment of interest?
2. Need evidence of the underlying transaction that funds will be used for. Cannot merely use client account to hold funds.
3. Need evidence of underlying transaction or source of wealth for funds coming into client account."
- There was then a great deal of email traffic on 2 November 2011 which included the following emails. Mr Meduri sent both of Mr Stone's emails to Ms Ciserani. He also emailed Mr Nobre acknowledging the receipt of the monies and asking Mr Nobre for the date of the proposed meeting in London. He said that he would send a further email identifying the documents needed for Notable's internal compliance. Mr Meduri emailed Mr Landman to say that Notable was checking what information was missing and that it needed to have all supporting documentation in place before it did anything. Mr Nobre then replied to Mr Meduri's email asking to meet Mr Meduri at 11:00 am on 3 November 2011. He copied this email to Mr Landman. Mr Nobre said he would bring documents to deal with Notable's requirements as to internal compliance. He asked Notable to arrange a meeting with Barclays Wealth to enable him to open an account with them. He said he would leave 70% of the funds, transferred into dollars. He then asked Mr Meduri to withdraw cash for Mr Nobre to pick up when they met. The cash he requested was £50,000, CHF 30,000 and 20,000. The email also referred to Mr Nobre meeting Mr Landman in London on 4 November 2011. Mr Meduri then emailed Mr Landman saying: "we cannot be his bank". By accident, this email also went to Mr Nobre. Mr Meduri immediately sent a second email to Mr Nobre and Mr Landman saying that Notable could not withdraw the cash he had requested. Mr Bulzinetti of Notable asked Intrust to run a "complicheck" on Mr Nobre, Larn, Erbon and AIC. Mr Nobre emailed Mr Meduri, copied to Mr Landman, asking why Notable could not act on his instructions to withdraw cash for him. He also asked if Notable could come up with another solution as he wanted to have immediate use of his funds. Mr Meduri replied saying that he or Mr Landman would try to find a solution. Mr Landman emailed Mr Nobre to say that Mr Nobre needed to discuss with Mr Meduri the position in relation to the use of a solicitor's client account. Mr Nobre replied to Mr Landman and Mr Meduri saying that it was urgent that he obtained the cash he had requested. He reminded them that he had agreed certain sums would be paid to Mr Landman and Mr Meduri and others; this was a reference to what he had said in his earlier email of 22 October 2011.
- Mr Landman gave evidence that, on 2 November 2011, he realised that the due diligence required in this case might not be straightforward and that it would be sensible for Notable to have independent advice. The documents corroborate that evidence as they show that on 2 November 2011, he contacted a Mr Upson of Stewarts Law to see if he could assist. Mr Upson was not available to attend a meeting at Notable on 3 November 2011 and it was agreed that Stewarts Law would send its own compliance officer, a Mr Brehony, to a meeting at Notable. Mr Landman told Mr Meduri of this arrangement. Later, on 2 November 2011, Mr Shore sent to Mr Landman the two emails he had earlier sent to Mr Meduri with 14 questions dealing with due diligence as to the client and the source of funds.
3 November 2011
- On 3 November 2011, Intrust sent to Mr Bulzinetti and Ms Ciserani of Notable the results of Lexis Nexis searches on Mr Nobre, Larn, Erbon and AIC. Although the searches ran to 68 pages, there were no negative comments on the subjects of the searches. The searches did not disclose any information of any substance. A further search in relation to AIC showed that the company had been formed on 4 October 2011 and there had not been any filed returns or accounts. There were a further 30 pages of Lexis Nexis searches in relation to Mr Rejniak, a director of AIC, but again there was no information of any substance.
- There were a number of meetings at Notable's offices on 3 November 2011. These were:
(1) A meeting beginning at 11:00 am attended by Mr Meduri, Ms Ciserani and Mr Bulzinetti of Notable and Mr Brehony and Mr Swan of Stewarts Law;
(2) A meeting beginning at 12:00 noon attended by Mr Meduri, Ms Ciserani and Mr Bulzinetti of Notable, Mr Brehony and Mr Swan of Stewarts Law, Mr Nobre, Mr Miller (described as Mr Nobre's security guard) and Mr Amar (described as chief of staff for Mr Nobre or Larn);
(3) A meeting beginning at 1:30 pm attended by Mr Meduri, Ms Ciserani and Mr Bulzinetti of Notable and Mr Brehony and Mr Swan of Stewarts Law;
(4) A meeting beginning at 2:30 pm attended by Mr Meduri, Ms Ciserani and Mr Bulzinetti of Notable and Mr Nobre; and
(5) A meeting beginning at 5:00 pm attended by Mr Meduri, Ms Ciserani and Mr Bulzinetti of Notable.
- There were notes of these meetings prepared by Ms Ciserani and Mr Bulzinetti. Mr Swan prepared a note of the meetings he had attended. I heard evidence about these meetings from Mr Meduri, Ms Ciserani and Mr Swan. I also received a witness statement from Mr Bulzinetti. There were some differences between the accounts given but I consider that each of these witnesses was genuinely trying to recall what had happened and to give accurate evidence as to these events. As will be seen, there was a telephone conversation with Mr Louanjli during the fourth of these meetings. Mr Louanjli gave evidence in relation to such a conversation. He denied that it had ever taken place. I reject his evidence. His evidence was untrue and he knew that it was untrue. I will now attempt to summarise the more important points from these five meetings.
The first meeting
- At the first meeting, Notable wished to have advice from Mr Brehony of Stewarts Law as to the money laundering implications involved in the receipt of monies from Mr Nobre. Mr Meduri gave a summary of the matter covering the period from December 2010 up until the money was received by Notable. He said that Mr Nobre was an ultra-high net worth individual who had retained Notable one year earlier to make a number of investments in the United Kingdom. He said that at that time, Notable had carried out know your client ("KYC") checks and performed due diligence. Mr Meduri made a number of statements which were not accurate or which were arguably not complete. He gave the impression that the KYC and due diligence had been thorough, whereas they had not been thorough. He said that the purchase price for Palladio was "estimated" to be around £50 million to £60 million. The correct figure was £37 million. Mr Meduri suggested in evidence that he had meant to say 50 million to 60 million and he had added some further sums to the price for stamp duty and other expenses. I consider that it is more likely than not that Mr Meduri made a genuine mistake when he referred to pounds rather than euros. It is true that he failed to correct the later note of the meeting which referred to pounds and which he saw. I do not think that Mr Meduri was attempting to mislead Mr Brehony in this respect. In any case, as I refer to below, he pointed out to Mr Brehony that the 100 million was far in excess of the purchase price and the purchase of the house might be a front for other investments.
- Mr Meduri told Mr Brehony that the purchase of Palladio had not proceeded due to lack of funds. He told Mr Brehony that Mr Nobre had had difficulties in obtaining the release of his funds from Swiss banks. He said that Notable had had to pay Savills and GRM out of its own funds. He did not tell Mr Brehony of all of the difficulties which Notable had had with Mr Nobre in connection with his failure to pay the fees for Savills and GRM and the many and repeated broken promises from Mr Nobre as to when he would pay these fees and send monies to Notable. Mr Meduri gave Mr Brehony the impression that the transfer of 100 million was somehow connected with a possible purchase of Palladio although he also said that Mr Nobre had decided to defer the purchase while he waited for the market to move downwards.
- Mr Meduri told Mr Brehony that Mr Nobre wanted Notable to make a number of payments out of its client account. The payments were to be for various professional fees and investments. After those payments were made, Mr Nobre wanted to transfer the balance of the funds to an account with Barclays Wealth which he was in the process of opening.
- Mr Meduri said that Notable's first concern was in relation to the source of funds. Mr Nobre had told Notable that the funds would come from LLB in Zurich whereas they had arrived from AIC, a Maltese company. He also pointed out that the funds received far exceeded the purchase price of Palladio and Mr Nobre wished to draw on the monies for reasons unconnected with the purchase of Palladio. Mr Meduri told Mr Brehony that Notable was concerned about the lack of supporting documents showing the connection between Mr Nobre/Larn and AIC. Mr Brehony agreed that these were matters of concern.
- Mr Meduri told Mr Brehony that he wanted advice as to:
(1) Whether Notable could pay its own fees and disbursements out of the monies received from Mr Nobre;
(2) What steps Notable needed to take in relation to anti-money laundering regulations;
(3) Whether he could transfer funds to Mr Nobre out of Notable's client account in the short time requested by Mr Nobre; and
(4) Whether he could transfer the balance of the funds to Barclays Wealth.
- Mr Meduri told Mr Brehony that Mr Nobre had been told, in writing, that there could be no movements of funds from the client account unless Notable was fully satisfied as to the underlying transaction and there was a full due diligence exercise on the source of funds. Mr Meduri expressed the concern that the Palladio purchase was a front for other investments.
- Mr Brehony gave detailed advice to Mr Meduri. The main points of the advice were:
(1) Mr Meduri had been cautious and had been right to be cautious;
(2) Overpayments into a client account were a "red flag" warning sign of money laundering issues;
(3) Mr Brehony gave Mr Meduri a copy of the Law Society warning card which referred to the above red flag;
(4) Mr Brehony said that the urgent requests for payment and the fact that Mr Nobre might no longer wish to purchase Palladio were also warning signs;
(5) One course of action would be to file a suspicious activity report with SOCA and Mr Brehony advised on the reasons for and against such a course;
(6) The most pressing concern was for Notable to satisfy itself about the source of funds; for this purpose, it should be satisfied that Mr Nobre was the owner of the shares in AIC; further, Notable should make enquiries as to the provenance of the monies;
(7) Notable should not allow itself to be rushed by Mr Nobre;
(8) Mr Meduri should read the decision in Shah v HSBC as to its position as regards his duties to Mr Nobre;
(9) The circumstances of the case gave rise to a "judgment call"; anti-money laundering regulations involved risk-based assessments and were a grey area; unless Mr Meduri felt entirely comfortable he should go down the route of filing a suspicious activity report; the assessment had to be based on suspicion which could not be formed frivolously and should not be fanciful;
(10) Mr Brehony recommended speaking with the Solicitors Regulation Authority and the anti-money laundering co-ordination team at the Law Society's Practice Advice Service for further advice which should be followed to the letter.
- The Claimants argued that Mr Meduri deliberately misled Mr Brehony in a number of respects at this first meeting and he continued to mislead Mr Brehony at the second and third meetings. The suggestion was that he was misleading Mr Brehony so that Mr Brehony would give more relaxed advice about what was needed in terms of compliance. It was also suggested that Mr Meduri approached this exercise with a view to producing pieces of paper to "paper the file" (as the Claimants put it) so that after the event, when they had simply acted in accordance with Mr Nobre's wishes, they could pretend to any third party investigating the position that they had genuinely attempted to comply with proper money laundering checks. I can address that point at this stage in relation to the first meeting. Although it is possible to say that some parts of the history were not fully stated to Mr Brehony, I do not accept the suggestion that Mr Meduri was deliberately misleading Mr Brehony with a view to obtaining relaxed advice from Mr Brehony. That suggestion simply does not fit with my findings as to what was said at the first meeting. At that meeting, Mr Meduri expressed a number of concerns which he genuinely had about the money that had arrived and about Mr Nobre. Mr Brehony formed the view that Mr Meduri was being cautious. Mr Brehony's advice at the first meeting did not favour a relaxed approach to compliance. I consider that at this first meeting, Mr Meduri was genuinely attempting to get reliable advice as to what he should do in relation to a situation which was not straightforward, which could produce problems for Notable and where Notable needed guidance from advisers with greater experience than themselves.
The second meeting
- After Mr Meduri had explained the background of the matter to Mr Brehony and taken his advice, Mr Nobre arrived at Notable's offices. He was accompanied by Mr Miller and Mr Amar. Mr Meduri left the meeting with Mr Brehony to greet Mr Nobre. Mr Nobre told Mr Meduri that he and Ms Weir had split up and that the purchase of Palladio was on hold as Mr Nobre was waiting for the price to drop. Mr Meduri had not previously been told of Mr Landman's email to Mr Shore of 16 August 2011 and the fact that Mr Nobre and Ms Weir had split up. Mr Meduri then brought Mr Nobre and his companions into the meeting with Mr Brehony. Mr Meduri had not previously told Mr Nobre that there would be another firm of solicitors present at this meeting. At the beginning of this second meeting, Mr Meduri confirmed to Mr Brehony that the purchase of Palladio was on hold.
- Mr Meduri told Mr Nobre why Stewarts Law had been instructed. Mr Meduri told Mr Nobre that Notable had to be careful with how it proceeded with the transactions which Mr Nobre had requested since there were compliance issues on which Notable had yet to be satisfied. Mr Nobre requested the withdrawal of sums of money to enable him to deal with personal matters and to pay third parties. He produced a list of payees. The list was 11 pages long and there were 39 payees. There was no previous sign in Notable's files of many of the names of the payees and Mr Meduri did not know anything about most of the payees. One of the payees was Notable itself and the sum to be paid was £250,000. The list of payees contained totals of the sums requested. The totals were: CHF4,410,500, $6,870,000, £2,925,854.48 and 2,932,000. Mr Nobre also said that he wanted to transfer the balance of the account to Barclays Wealth. He provided a letter of instructions to convert part of the money into US dollars before the transfer to Barclays Wealth. Mr Nobre said that these requests represented new instructions from him but the original instructions in connection with the purchase of Palladio remained effective. Mr Meduri told Mr Nobre that Notable could not pay him sums in cash.
- Mr Meduri asked Mr Nobre for information about his connection with AIC. Mr Meduri asked Mr Nobre to swear an affidavit confirming the information which Mr Nobre was providing about AIC and Larn. An affidavit was prepared in the course of the meeting and Mr Nobre swore it. The affidavit stated that AIC was a shareholder of Larn and that Mr Nobre was the beneficial owner of both AIC and Larn. He produced a board resolution of Larn of 17 October 2011 to appoint Mr Rejniak as a director of AIC. The resolution referred to AIC being "shareholders and partners" of Larn. The resolution also resolved to allot 1 share although it did not specify the company in which the share was held nor the allottee. Ms Ciserani's note of the meeting stated that the share being allotted was a share in Larn and the allottee was AIC.
- The affidavit also stated that there was a loan agreement between AIC and Larn and Mr Nobre produced a copy of a loan agreement dated 15 October 2011. This agreement was signed by Mr Rejniak as a director of AIC and by Mr Nobre as a director of Larn. The loan agreement recorded that AIC was lending 100 million to Larn. Clause 2 of the agreement stated that the purpose of the loan was that the money was exclusively to be used by Larn for investment purposes. The agreement provided for interest at LIBOR plus 2 % with the interest to be paid at the end of the term of the loan which was 13 months from 15 October 2011. The loan was to be repaid by 30 November 2012 but the term of the loan could be extended by agreement. It was agreed that the loan would be subordinated to other loans granted by banks or financial institutions. The agreement provided that the loan was governed by Maltese, Swiss and/or UK law. The loan agreement was 1½ pages long.
- Mr Nobre also produced a copy of Mr Rejniak's passport. Mr Meduri asked for a certified copy of this passport. A certified copy of this passport was sent to Notable by email the same day and also couriered to Notable the following day. Then Mr Nobre produced a letter of indemnity from AIC and Larn addressed to Notable and Barclays Bank. The letter was signed by Mr Rejniak and Mr Nobre. The letter stated that Notable and Barclays Bank were acting only as a "facilitator" and were not liable for any credit risk or financial exposure.
- At this meeting, Mr Nobre said that the monies had been transferred from AIC to Larn "for tax mitigation purposes". Mr Nobre offered to contact the bank manager in LLB so that the manager could assure Mr Meduri that a full KYC procedure had been undertaken and that LLB were satisfied with the results. Mr Meduri then asked Mr Nobre to leave so that he could confer with Mr Brehony and so that Mr Meduri could satisfy himself as to whether the bank manager's assurances would be sufficient for compliance purposes. Mr Nobre, Mr Miller and Mr Amar then left the meeting.
The third meeting
- After Mr Nobre and his associates left, Mr Brehony told Mr Meduri that he wished to think further about the situation before he provided a detailed opinion on the money laundering issues which arose. Mr Brehony suggested that Mr Meduri telephone the Law Society helpline on money laundering. Mr Meduri did so using the speakerphone so that all present in the meeting could hear what was said. There are various notes of the ensuing conversation. The notes are not completely accurate in that they suggest there was one conversation with one person at the Law Society whereas there were in fact two conversations with two different people.
- Initially, Mr Meduri was put through to an unnamed person at the Law Society. He was described as a junior person in that he was more junior than Mr Choudhury to whom Mr Meduri spoke later. Mr Meduri outlined the background to the more junior person and said that there was a concern as to the source of the funds. The junior person said that written confirmation from the originating bank could be useful. He suggested finding out how long the money had been in that bank account and that Notable should ask for relevant bank statements. Later he said that Notable should obtain 6 months of bank statements. There was then discussion about whether the funds were a large part of the client's wealth or only a small part. The junior person said that the size of the transaction was not necessarily a warning sign. At this point it was suggested that Mr Meduri needed to speak to Mr Choudhury who was the anti-money laundering co-ordinator at the Law Society. It seems this suggestion was made when the junior person was told that the sum involved was 100 million.
- Having been connected to Mr Choudhury, Mr Meduri again outlined the background of the matter. It seems that Mr Brehony also explained certain matters arising to Mr Choudhury. Ms Ciserani and Mr Swan have prepared detailed notes of what was said. The notes suggest that all of the comments made by the representatives of the Law Society were made by Mr Choudhury. It is possible that some of the comments were made by the more junior person. One example of this is that Mr Swan's note suggests that Mr Choudhury referred to obtaining 6 months' bank statements whereas it is clear that Mr Choudhury did not say that and that comment was made by the more junior person only. It is possible that there are other examples of this. However, after the conversations on 3 November 2011, Notable tended to rely on the notes which had been prepared and I will do so also on the basis that all of the comments from the Law Society (except for that relating to bank statements) were made by Mr Choudhury himself.
- Mr Meduri told Mr Choudhury that the money had come from a bank in Zurich, LLB. This comment is likely to have been based on what Mr Nobre had said at the earlier meeting that day. Mr Meduri then said that the monies were paid into Notable's client account by AIC. Mr Meduri said that Mr Nobre had offered to ask the bank (i.e. LLB) to phone Mr Meduri to confirm that the money was transferred to LLB through legitimate channels and the necessary KYC and due diligence had been done. Mr Meduri asked if he could rely on the bank manager's assurances, as LLB was a European bank, and whether that protected Notable from any "fallout" if issues in relation to the funds later emerged.
- Mr Choudhury said that obtaining assurances from the bank manager was "along the right lines" and that if Mr Meduri could get something in writing which confirmed what he had been told then this would go well towards sufficient due diligence on the client. Mr Choudhury said that Mr Meduri should check on AIC, to check who its shareholders were and to do due diligence on them as well. Mr Choudhury seemed to think that the funds were going to be used (at least in part) for the purchase of a property because he referred to funds coming from AIC for the purchase price of a property.
- Mr Choudhury asked whether a negative press search had been done and he recommended a Lexis Nexis search on the directors and any beneficial owners of AIC. Mr Choudhury asked why AIC was investing in Larn and Mr Meduri replied that Mr Nobre wanted to become UK resident and, for tax reasons, he did not want to bring money into the UK.
- Mr Swan's note of the conversation with Mr Choudhury then continued as follows:
"OC advised that what NS should do now is cover its bases. The entire exercise was all about mitigating risk. OC told FM that they had already demonstrated this on the file by carrying out the measures they already had. He said that SOCA was not looking for law firms to get everything 100% correct (since they are lawyers and not private investigators), but that they were looking for contemporaneous notes and for NS to categorise the client as "high risk". He warned that if they blindly accept what the client tells them at face value SOCA will throw the book at them, but as they had already gone above and beyond the call of duty in this regard, they should be fine. He told FM to make sure that a comprehensive note was kept on file of all of the actions NS were taking in relation to AML risk management and the reasons why these actions were being taken.
OC expressed the opinion that it was good that the client was open to allowing his bank manager to speak to the law firm. It was also good that there was a reason why AIC was involved, why there was a loan agreement (i.e. for tax avoidance purposes) in other words, there was nothing uncomfortable per se with what the client was doing, he was not being manifestly secretive.
FM explained that NS was significantly out of pocket and had outstanding fees and disbursements on this matter which FM would like, ideally, to apply against funds on account, irrespective of whether they were, ultimately, to be returned. OC referred FM to the "adequate consideration" defence that would be available to NS in this context, provided the underlying invoices were bona fide. In this context OC advised that any related professional fees that NS or the client wished to settle might be protected by this defence. It was vital, however, that NS had sight of all underlying invoices and satisfy themselves to their bona fides.
OC advised all present to remember that the client had not claimed he had made a mistake in transferring the amount of money that he had into the NS client account (which was a typical red flag for money laundering). The client had expressed from the outset that he wanted NS to deal with all of his commercial transactions. Hence the client asking FM to pay money out of his client account was in accordance with his instructions these had not changed since he instructed NS. The other alternative would have been for the client to bring the £86m to the UK himself and then pay tax on the surplus £26m. OC said that from FM's point of view, given his knowledge of the client and his purpose for instructing NS (which was and remains tax driven), there was nothing in this course of action which departed from his original instructions.
OC went on to state that FM had done the due diligence on the client and relevant sanctions checks. The funds came from AIC and provided FM could find out the provenance of the funds (i.e. Zurich) and performed checks on each and every one of the proposed recipients of payments out of the NS client account, then a departure from the strict letter of the Solicitor's Regulations which prevent law firms being used as bank accounts can happen, provided it is comprehensively documented and in accordance with the client's explicit instructions. Provided all the recipients of the money are legitimate, then there is no reason why FM should not comply with the client's instructions. OC further recommended further securing the last six months of bank statements from the client."
- I have already made a finding that the last sentence quoted in the preceding paragraph was not said by Mr Choudhury although it had been said by the more junior person to whom Mr Meduri spoke on 3 November 2011.
- Mr Choudhury also referred to an alternative strategy of filing a suspicious activity report but he pointed out a number of problems with that approach. He then added:
"Ultimately, OC advised that it was a judgment call for FM and NS; and that at the end of the day, the decision had to be theirs and theirs alone. He told FM to make sure he asked the client what the investments were for, and if the client is full and frank with his answers then FM had little to be concerned about."
- Mr Meduri then asked Mr Choudhury a number of questions about transferring the balance of the funds into a bank account in the name of Mr Nobre, as distinct from Larn. At that stage, Mr Nobre could do what he liked with the money. Mr Choudhury concluded by saying that the client seemed like a sophisticated person and there was no reason why Notable would not be happy with the outcome. At that point, the call to Mr Choudhury ended and Mr Brehony and Mr Swan left Notable's offices.
- I referred earlier to the Claimants' submission that Mr Meduri had deliberately misled Brehony as to the background to these matters. The Claimants also submitted that Mr Meduri misled Mr Choudhury in similar ways. As to the second and third meetings, I make the same finding as I earlier did in relation to the first meeting. Mr Meduri was genuinely attempting to get reliable advice as to what he should do in relation to a situation which was not straightforward, which could produce problems for Notable and where Notable needed guidance from advisers with greater experience than themselves.
The fourth meeting
- After Mr Brehony had left, Mr Nobre returned and met Mr Meduri, Ms Ciserani and Mr Bulzinetti again. Mr Meduri and Mr Nobre agreed that Mr Meduri should speak to the bank from which the 100 million had originated to check on the bank's verifications as to the source of the funds. Mr Nobre said that he had an account at LLB and that the money had come from his account. He said that the individual at LLB to whom Mr Meduri should speak was a Mr Louanjli. Mr Nobre produced Mr Louanjli's business card and Notable took a photocopy of it. The card carried the logo of LLB. It named Mr Louanjli as "Director Private Banking". It referred to the full name of LLB and to its Abu Dhabi representative office. The card gave Mr Louanjli's numbers for his landline, fax and mobile. The card also gave an email address for Mr Louanjli on an email account belonging to LLB. Mr Nobre also wrote Mr Louanjli's hotmail email address on the photocopy of the card although the address was incomplete.
- Mr Nobre then telephoned the mobile number on Mr Louanjli's business card. Mr Nobre used the speaker phone in the Notable board room where the meeting was taking place so that the conversation could be heard by the others in attendance. The call was made at 15:22 and lasted just over 10 minutes. Mr Louanjli answered the call. He identified himself. Mr Nobre said that he was with his lawyers and that they wanted to satisfy themselves as to the source of the funds which they had received. After Mr Nobre made some initial introductions, Mr Meduri spoke to Mr Louanjli and said that he wished to know how Mr Louanjli knew Mr Nobre, whether he was aware of the monies which had been transferred and what checks the bank had done on Mr Nobre and the source of the funds. Mr Meduri gave evidence that Mr Louanjli appeared to be happy to answer these questions.
- Ms Ciserani's note of what was said by Mr Louanjli is as follows:
"Mr Louanjli confirmed that he works for Liechtensteinische Landesbank, is based in Abu Dhabi and that the bank is based in Switzerland. He also confirmed the following:
- Mr Nobre has been the bank's client since a certain amount of time
- They have successfully completed the KYC procedure on source of funds
- They are aware that the funds were sent from them to Allied's bank account at Bank of Valletta.
Mr Louanjli agreed to provide a written confirmation of the above on the bank's letterhead and his copy passport."
Mr Meduri gave evidence that Mr Louanjli said that he was travelling and he agreed to provide a written confirmation of what he had told Notable on the bank's letterhead. It was agreed that Notable would send Mr Louanjli an email to his bank and his hotmail address with the terms of the declaration which Notable wished him to make and that Notable would copy Mr Nobre into these emails.
Ms Ciserani told me that she wrote "a certain amount of time" because Mr Louanjli said that he had known Mr Nobre for "a long time", or some such phrase and because "a certain amount of time" is the English translation of an Italian idiom which suggests a longstanding relationship. As their names suggest, Mr Meduri, Ms Ciserani and Mr Bulzinetti are native Italian speakers and often communicated with each other in Italian. They are also fluent in English. Mr Bulzinetti's note of the conversation with Mr Nobre used both the phrases "long term relationship" and "long relationship" in respect of the relationship between Mr Louanjli and Mr Nobre. I accept the evidence of Mr Meduri and Ms Ciserani as to the telephone conversation with Mr Louanjli on 3 November 2011.
After the call to Mr Louanjli, Mr Meduri went through the list of payments which Mr Nobre had produced at the earlier meeting. Mr Meduri asked for clarification on each of the payments. He asked Mr Nobre to provide for each payment the relevant supporting documents, invoices or agreements, and he made it clear that Notable could not process the payments without this information. Mr Meduri said that Notable would prepare a memo listing the documents needed in relation to each payment. Mr Meduri also advised Mr Nobre to open a bank account in the UK within 15 days. Mr Nobre said that he would open a bank account in the name of Larn in the following week and it would take about 7 days to open the account. Although Mr Nobre had some documents with him, it was agreed that he would return the following day and go through the documents with Ms Ciserani. Mr Meduri was due to go to Italy the following day and so could not deal with Mr Nobre then.
In view of Mr Nobre's statement that he would open a bank account in the UK within about 7 days, Mr Meduri raised with him the question of interest on the money in the client account. Notable's accounts department had told Mr Meduri that the calculation of interest would be troublesome. Mr Meduri asked Ms Ciserani to check whether it was open to a client to waive his entitlement to interest on monies in the client account. Ms Ciserani found the relevant rule and guidance notes in the SRA handbook and showed it to Mr Meduri. The rule and guidance notes referred to the client giving informed consent to the waiver of interest. Mr Meduri explained to Mr Nobre the issue about the interest and Mr Nobre agreed to sign a waiver of his right to interest. Ms Ciserani drafted a form of waiver and Mr Nobre signed it. Mr Nobre then left Notable's offices. A copy of the signed waiver was sent to Mr Nobre the next day.
The Claimants criticised Notable for asking Mr Nobre to sign a waiver of interest. I am not persuaded that there were any real difficulties in calculating the interest payable to Mr Nobre of Larn in the absence of a waiver. However, I accept the evidence of Mr Meduri and Ms Ciserani that it was thought to be more straightforward to have a waiver of interest and that it was thought that the period of time during which interest would be earned would be very short. Further, even if Mr Meduri saw the waiver of interest as an opportunity to make a further profit out of the situation, I do not think that that would throw any real doubt on his evidence as to the matters which are essential to my decision in this case. Further, I do not think that there is anything in the Claimants' criticism of Notable that they did not tell Mr Brehony or Mr Choudhury about the waiver of interest.
The fifth meeting
The fifth meeting was an internal review by Mr Meduri, Ms Ciserani and Mr Bulzinetti of the outcome of the earlier meetings. This meeting lasted 1½ hours. They agreed on the further action to be taken which was, in summary:
(1) To obtain advice from Stewarts Law on the position;
(2) To tell Stewarts Law about the oral confirmation given by Mr Louanjli and that he would confirm matters in writing;
(3) To email Mr Louanjli seeking the written confirmation;
(4) To prepare a memo for Mr Nobre listing the documents needed to support the requested payments;
(5) To complete a google search on LLB and Mr Louanjli; and
(6) To complete a Google search on each individual and company which they had come across in the course of the meeting with Mr Nobre.
At the end of the meetings on 3 November 2011, Mr Meduri believed that the 100 million had come from the account at LLB, of which Mr Nobre was the sole beneficial owner, to the bank account of AIC and then to Notable's client account. He also believed that Mr Nobre was the beneficial owner of AIC and Larn, that Allied was a single purpose vehicle and that the funds had been transferred in this way for tax reasons.
4 November 2011
There were several relevant events on 4 November 2011. Mr Nobre emailed Mr Meduri providing two email addresses for Mr Louanjli. The first was his LLB email address and the second was his complete hotmail address. Mr Nobre referred to Mr Louanjli as "one of my bankers". Mr Nobre said that "the official email letter" would be sent to Mr Meduri when Mr Louanjli returned from his trip. Mr Nobre then specified that only Mr Meduri should contact Mr Louanjli who would reply on one occasion only so that no further communications were authorised. Mr Meduri replied saying that Notable's email to Mr Louanjli would be sent by Ms Ciserani and asked Mr Nobre to ask Mr Louanjli to prepare his letter in reply as soon as possible. Mr Meduri referred to Mr Louanjli sending a letter "formally from his bank". Mr Meduri also copied these emails to Ms Ciserani and Mr Bulzinetti and asked them to check that Mr Louanjli worked for LLB and as to his position with LLB.
Mr Meduri replied by email to Mr Stone's email of 2 November 2011, which had raised various questions as to due diligence. Mr Meduri reported on the various meetings which had taken place on 3 November 2011 and on the further checks which were being carried out. Mr Meduri obviously regarded Mr Louanjli's contribution as being very important. Mr Meduri told Mr Stone that the case was high risk and Notable would carry out continuous monitoring of Mr Nobre.
Mr Bulzinetti requested Google searches on LLB, Mr Louanjli, Mr Nobre, Larn, AIC and Mr Rejniak and these were carried out. Ms Ciserani prepared a list of documents to be provided by Mr Nobre to support his requests for 39 payments. In most cases, the list specified that an invoice was needed. Mr Nobre came to Notable's offices and met Ms Ciserani and they discussed the list of payments. Mr Nobre added a further payee to the list and referred to 9 invoices in relation to that payee.
Mr Landman joined the meeting between Mr Nobre and Ms Ciserani towards the end of that meeting. Ms Ciserani then left Mr Landman and Mr Nobre together. I find on the balance of probabilities that it was at this time that Mr Landman raised again with Mr Nobre his request to be paid a personal fee of £170,000. The only persons present when this was discussed were Mr Nobre and Mr Landman. I did not hear any evidence from Mr Nobre and in any case Mr Nobre would not be likely to have been a credible witness. I have already held that Mr Nobre did pay Mr Landman a personal fee of £170,000 and Mr Landman perjured himself when he denied it at the trial before me. Mr Landman's evidence was that it was at this point on 4 November 2011 that he asked Mr Nobre to pay a fee of £170,000 to Mr Haddu Levi. I find that Mr Landman did not ask Mr Nobre to pay a fee to Mr Haddu Levi but in view of the fact that Mr Landman gave evidence that it was at this point that he raised the question of a payment of £170,000, I am able to find that it was at this conversation on 4 November 2011 that Mr Landman asked Mr Nobre to pay a personal fee of £170,000 and Mr Nobre agreed. Further, Mr Landman referred to this fee in an email to Mr Meduri and Mr Nobre on 5 November 2011.
During the meeting between Mr Landman and Mr Nobre, they telephoned Mr Louanjli twice on his mobile. The first call was at 14:11 and lasted 210 seconds. The second call was at 14:25 and lasted 809 seconds. Mr Landman gave evidence that Mr Louanjli said that he would travel to London that weekend and would meet Mr Landman at Heathrow airport on the Sunday so that he could obtain a written declaration from him for the purposes of due diligence. Mr Landman then spoke to Ms Ciserani. I am not clear what exactly he told her about the detail of the conversation with Mr Louanjli but he must have told her that it had taken place as she referred to a conversation between Mr Landman and Mr Louanjli in her later email to Mr Louanjli. Mr Louanjli did not reply at the time to say that no such conversation had taken place. Indeed, there is evidence from Mr Louanjli's disclosure (to which I will refer below) to the effect that there was such a conversation with Mr Louanjli. Later, Mr Landman arranged for Mr Meduri to go to Heathrow airport to meet Mr Louanjli although the arrangement was then cancelled. Further, on 5 November 2011, Mr Nobre emailed Mr Louanjli and referred to seeing him in London on Sunday morning. In view of this corroboration of Mr Landman's evidence, I accept what he said as to the conversation with Mr Louanjli on 4 November 2011.
After her meeting with Mr Nobre, Ms Ciserani emailed Mr Meduri and Mr Landman to set out what she said were her main points of concern. She referred to Mr Nobre's due diligence questionnaire which, I understand, was the questionnaire he had completed in 2010. She said that his statement that he built his fortune through investments and joint ventures with partners was too general and that Notable should obtain names and specific information about such investments. She said that she had asked Mr Nobre for this information and that he had replied that he was not willing to provide it. Ms Ciserani reported that the check on Mr Louanjli had not yet established his connection with LLB. She said that Mr Nobre had provided some of the documents to support the payments he had requested and that Notable would run searches on the payees. Finally, she stated that she would contact Mr Brehony for advice.
Ms Ciserani emailed Mr Meduri and Mr Landman, with a copy to Mr Stone, her notes of the 5 meetings which had taken place on 3 November 2011 and asked for their thoughts, if any. She also emailed Mr Brehony and reported on the further meeting with Mr Nobre on 3 November 2011 after Mr Brehony had gone. She told him about the conversation with Mr Louanjli. She expressed the view that Notable should not proceed with any payment to third parties until it received a written declaration signed in original form by Mr Louanjli confirming what he had said on the telephone. She asked for Mr Brehony's opinion on the matter.
Notable contacted LLB by telephone and was told that Mr Louanjli worked for LLB in Abu Dhabi as a relationship manager. Ms Ciserani emailed Mr Louanjli at his two email addresses. Her email was copied to Mr Meduri and Mr Landman. Mr Landman's email address was his Notable email address. In her email to Mr Louanjli, Ms Ciserani referred to the conversations which he had had with Mr Meduri and with Mr Landman. This was a reference to the conversation with Mr Meduri on 3 November 2011 and with Mr Landman on 4 November 2011. Ms Ciserani's email continued:
"We understand that Mr Louis is known to your bank, that you completed the KYC procedures and were fully satisfied about the source of funds.
We also understand that you will send us a written confirmation of the above.
Please also confirm that you are aware that the funds have been transferred from Mr Louis's account to Allied Investment Corporation Ltd at Bank of Valletta.
I herewith attach a draft letter with the information you already confirmed by phone. Please feel free to amend the draft if you are not confident with the information included."
The document attached to Ms Ciserani's email to Mr Louanjli was not a draft letter but was a draft affidavit to be sworn by Mr Louanjli. The draft contained the following statements:
"THAT I am Director Private Banking at Liechtensteinische Landesbank (Switzerland Ltd) of (address) (the "Bank");
THAT I know Louis Augusto Ramos Nobre in person and he is a long standing client of the Bank;
THAT the Bank carried out the KYC procedure on Mr Nobre and on the source of funds; the Bank was also fully satisfied with the results and ascertained that the funds are clear;
AND THAT the amount of Euro 100 mil. has recently been transferred from Mr Nobre's bank account at the Bank to Allied Investment Corporation Limited of Malta, Bank of Valletta."
Ms Ciserani sent a further email to Mr Brehony stating that Notable had established that Mr Louanjli was a relationship manager with LLB. She said that Mr Nobre had been very supportive and had liaised directly with Mr Louanjli in order to arrange a meeting with Notable over the weekend in order to provide the written confirmation needed for due diligence.
Mr Brehony replied to Ms Ciserani, with a copy to Mr Meduri, Mr Landman and Mr Bulzinetti. He said that his advice would mirror that of Mr Choudhury that the exercise was about risk mitigation rather than risk elimination. He said that Notable had to be comfortable with the retainer. He said that like Ms Ciserani he drew considerable comfort from the conversation with Mr Choudhury and that from Mr Choudhury's view Notable had "ticked a lot of the requisite boxes already". Mr Brehony said that the key points had already been picked up in Ms Ciserani's note of the meetings and he added some additional points which included the following comments:
(1) Mr Brehony recollected that Mr Choudhury had requested at least 6 months' bank statements from the originating bank; in fact, Mr Brehony's recollection was not quite accurate; the reference to bank statements did not come from Mr Choudhury himself but from the more junior person to whom Mr Meduri first spoke;
(2) Notable needed to satisfy itself that there was a coherent and plausible "back story" in relation to how the wealth was accumulated;
(3) Mr Choudhury took comfort from the fact that LLB was in a European jurisdiction with equivalent anti-money laundering rules;
(4) The process was risk mitigation and Notable should keep comprehensive records on file;
(5) Mr Choudhury had expressed concern about making payments which were not related to "the underlying transactions";
(6) There were issues about using a client account as a bank;
(7) It was sensible to transfer funds to Barclays Wealth;
(8) There was a question as to why Larn did not have a business banking account of its own and why it was going through its principal;
(9) He raised a number of questions in response to statements in Ms Ciserani's first email to him of that day.
Ms Ciserani prepared an updated list of the documents needed to support the payments which Notable had been requested to make.
5 November 2011
On 5 November 2011, Mr Landman emailed Mr Meduri with a copy to Mr Nobre. Mr Landman gave instructions as to the invoices to be raised to be paid out of Mr Nobre's funds. He said there should be an invoice for the Savills' fee with the money to be paid to Mr Landman rather than Notable. He said there should be an invoice from Notable for £150,000. This was the figure in the letter of engagement relating to Palladio. He said he believed that no VAT was required. The email said that the £150,000 was to cover the GRM invoice "as well as compliance etc relating to client account". Although the email is not clear, Mr Landman referred to a bonus of £10,000 which was to be taken from another company, "west", a reference to an associated company of Intrust. Mr Meduri gave evidence that he was entitled to be paid commission, or a bonus, each year. There was also to be an invoice from Intrust for £20,000 and an invoice from Nisroy Ltd, which Mr Landman would provide, for £170,000; this was said to be "per meeting Friday". This was a reference to Mr Landman's meeting with Mr Nobre on 4 November 2011 when it was agreed that Mr Landman would receive a personal fee of £170,000.
7 November 2011
On 7 November 2011, Ms Ciserani emailed Mr Landman and Mr Meduri with her list of the further information which she considered was needed for the due diligence process. This included:
(1) The declaration from Mr Louanjli;
(2) Detailed information on how Mr Nobre accumulated his wealth;
(3) 6 months' bank statements from LLB;
(4) Information from LLB as to how long Mr Nobre had been a customer;
(5) (if possible) copies of LLB's KYC.
Ms Ciserani commented that Notable had done all it could in relation to AIC. As to Mr Brehony's question as to why Larn did not have a bank account, she said that the reason being tax mitigation was an acceptable explanation. As to the payments requested, Notable could process payments that related to Palladio but should be cautious in relation to other payments. She said that the advice that Notable could only process payments that related to investments already known to Notable was "generic" by which she meant "not specific". She asked for Mr Landman's and Mr Meduri's comments.
Mr Landman and Mr Meduri were both in Lugano on 7 November 2011 and met for lunch. Mr Meduri told Mr Landman that the suggestion that Notable obtain 6 months' bank statements for Mr Nobre did not come from Mr Choudhury but from the more junior person at the Law Society to whom he had first spoken.
Mr Landman asked Mr Binda of Unifida to prepare an invoice in the name of Nisroy addressed to Larn for £170,000, expressed to be for services in connection with Fairfax and introduction to vendor. He asked for it to be backdated to 1 November 2011.
Ms Ciserani prepared a note about the proposed meeting with Mr Louanjli. It said that Mr Louanjli had missed his flight on Sunday 6 November 2011. This information was given by Mr Nobre to Mr Landman. The note also stated that another appointment had been scheduled for 8 November 2011. That appointment did not take place.
8 November 2011
On or before 8 November 2011, Ms Ciserani had carried out a lot of research as to the Money Laundering Regulations and the Law Society's Guidance in relation to them. She had also done research as to LLB and as to the position of Liechtenstein within the EEA as regards the Money Laundering Directive. On 8 November 2011, Ms Ciserani emailed Mr Meduri with a copy to Mr Landman. She stated that she had reviewed the anti-money laundering regulations and the Law Society guidance in relation thereto and she had reviewed the documents which had been provided to Notable. She said that Notable had no proof that Mr Louanjli had the authority of LLB to make a declaration on behalf of LLB. She said that Notable should require the declaration to be signed by a duly authorised signatory of LLB. She also said that Notable should ask for 6 months' bank statements and a copy of the due diligence carried out by LLB. She suggested that if Mr Meduri or Mr Landman did not share her view, Notable should get comfort from Mr Brehony as to its ability to rely on the declaration of Mr Louanjli. She then referred to the subject of the requested payments. She summarised the Law Society guidance as to Money Laundering. She said that Mr Brehony wanted more clarification as to the connection between the payments and Notable's legal work. She said that she was not confident about making any payments apart from those connected with Palladio. She understood that, with a few exceptions, Notable had no knowledge of the underlying transactions and had not provided any legal work in relation to them.
On 8 November 2011, Mr Landman replied to this email saying "Please do nothing further". Also on that day, Mr Swan of Stewarts Law prepared his note of the meetings he had attended at Notable's offices on 3 November 2011 and this note was sent to Notable on 10 November 2011.
9 November 2011
On 9 November 2011, an email arrived at Notable's offices out of the blue. It came from a law firm in Marbella, Spain, known as Vogt Advokatfirma. Vogt said that it represented Messrs Whitestep (Mr Milton) who had had dealings with Larn and Mr Nobre. Vogt then said that the parties had entered into a memorandum of understanding under which sums were payable to Whitestep. Vogt then referred to the parties meeting at Andbanc in Andorra the preceding week. The particular relevance of the message was that Vogt referred to $100 million (i.e. dollars not euros) being received by Andbanc and then being returned to the forwarding Maltese bank "due to lack of KYC information from your client". The Vogt email came to Mr Stone of Notable who forwarded it to Mr Meduri, Mr Landman and Ms Ciserani. Mr Landman then emailed Mr Nobre asking him to call him urgently. Ms Ciserani emailed Mr Stone saying that she was looking into it. Mr Landman emailed Ms Ciserani saying that he was dealing with the matter.
At the end of 9 November 2011, Mr Nobre emailed Mr Landman with his reply to the email from Vogt of 8 November 2011. Mr Nobre's email had been blind copied to Mr Landman and to Mr Meduri. Mr Nobre's email made a number of points as to the underlying arrangements with Whitesteps and the events which had happened to which I need not refer. Of more interest is what Mr Nobre said in his reply about Larn's banking arrangements. The reply made the following statements:
(1) Larn required a banking arrangement with a bona fide bank which would accept 100 million, to be transferred in one total amount only;
(2) Larn had agreed to pay Whitesteps 250,000 if they were successful in "fulfilling our requirements";
(3) Whitesteps had demanded 1 million to be able to fulfil Larn's requirements to be able to withdraw the full amount of Larn's money in one total amount;
(4) Larn had agreed to pay 1 million whereupon Whitesteps had increased their demands to 2 million;
(5) Larn had agreed to pay Whitesteps and sent an authority to Andbanc;
(6) The requested KYC on Larn and Mr Nobre was sent to Andbanc;
(7) Andbanc had opened a bank account;
(8) Larn authorised a transfer of 1 million to Whitesteps;
(9) Mr Nobre and Mr Milton travelled to Andbanc in Andorra;
(10) Andbanc said that it would only transfer sums of up to 20 million per transfer and not all of the funds could be withdrawn;
(11) Andbanc was satisfied with the KYC for Larn and Mr Nobre;
(12) Whitesteps were not entitled to the fee of 2 million.
Mr Nobre's reply to Vogt indicated that he or Larn had sent, or caused to be sent, 100 million to Andbanc because Larn was trying to find a bank to accept that money and was prepared to pay Whitesteps 2 million to help Larn find such a bank. There was obviously a considerable dispute of fact between Mr Nobre and Whitesteps as to the arrangements which were to operate as between them. However, even assuming that the facts were accurately stated in Mr Nobre's reply, they raised some obvious questions. Why did Larn/Nobre need to find such a bank if he had that money in his bank account at LLB? Why did he have such difficulty in finding a bank to accept the money that he was prepared to pay a fee of 2 million to Whitesteps to assist him to do so?
When Mr Landman received Mr Nobre's reply to Vogt, he immediately emailed Mr Nobre to say:
"Pls do not send this to francesco and his collegues (sic), Louis do you not want to solve problem with me re source of funds?"
Mr Landman did not know that Mr Nobre's reply to Vogt had already been blind copied to Mr Meduri. Mr Meduri did receive a copy of this email. At the time of its receipt, he was attending various meetings in Lugano and he did not pay much attention to the email. He noted that Mr Landman had emailed to say that he was dealing with the matter. Mr Meduri did ask Mr Landman about the email and Mr Landman told him that the email related to a commercial dispute between Mr Nobre and a third party.
By 9 November 2011, Mr Louanjli had not replied to Ms Ciserani's email of 4 November 2011 asking him to swear an affidavit as to LLB's relationship with Mr Nobre. On 9 November 2011, Mr Landman emailed Mr Nobre and asked if Mr Landman could telephone Mr Louanjli in relation to the request for an affidavit. Around the same time, Mr Nobre emailed Mr Landman a copy of a draft affidavit which Mr Nobre had prepared and which he was prepared to swear. The draft affidavit stated that the funds in question were "verifiable/verified and cleared [in] accordance to International Regulatory Requirements". The draft also stated that the funds were earned from "Oil; Gas products/services; Tier 1 Bonds/Fix Income trades investments issued by prime western Financial Institutions". In his email, Mr Nobre also replied to Mr Landman's suggestion that Mr Landman telephone Mr Louanjli. Mr Nobre said that Mr Louanjli would telephone Mr Landman and Mr Landman was not to contact him until then. Mr Landman then asked Mr Nobre to get Mr Louanjli to call him the next day. Mr Landman commented on Mr Nobre's draft affidavit by saying it was "absolutely useless" and it had to be specific as to which deals, which countries and which banks were referred to. These exchanges with Mr Nobre were not copied to Mr Meduri.
10 November 2011
On 10 November 2011, Mr Nobre emailed Mr Landman to say that his comments on the draft affidavit were insulting and Mr Landman then emailed him to say:
"Louis I'm trying to help you. This is not some game. I'm being direct and clear so you do not get wrong message. I need an affidavit that confirms exactly how this money was made. If my txt was not accurate change it. It was however specific which yours needs to be. Exactly what was traded which counties (sic) and banks. I will try to see if this is then sufficient but I believe we will still need confirmation from either bank that they did kyc and were satisfied about origin.
If that is required according to the law firm and law society then in absence of it we will have to return the funds. I do not want to do it. I'm happy to talk to either bank to explain what we need and why. I'm trying to help. I will not go against advise (sic) as it will not be agreed by my partners as consequences are serious.
No insult intended. Just want you to be clear."
On 10 November 2011, Mr Nobre emailed Mr Landman a copy of a reply from the Bank of Valletta saying that it could not issue "such a declaration". It was not clear from this reply what declaration had been sought. Mr Landman asked Mr Nobre for further information about this but none was provided.
On 10 November 2011, Mr Meduri sent to Ms Ciserani a copy of Mr Nobre's reply to Vogt and asked her to place it in the file. Ms Ciserani asked Mr Meduri for clarification in relation to the subject of this reply from Mr Nobre and Mr Meduri told her that the email related to a different matter and that Mr Landman was dealing with it. She did not appear to attach any further importance to the reply from Mr Nobre to Vogt.
On 10 November 2011, Mr Brehony emailed Mr Meduri, Ms Ciserani and Mr Bulzinetti with a copy of Mr Swan's attendance note of the meetings attended by Stewarts Law on 3 November 2011. Mr Brehony made a number of further points in his email, as follows:
(1) The key outstanding issue related to the source of the funds;
(2) There needed to be a coherent "back story";
(3) The due diligence which was undertaken in relation to Mr Nobre and other protagonists was obviously helpful, as confirmed by Mr Choudhury;
(4) The circumstances were a classic money laundering risk scenario and were high risk;
(5) Notable had to form its own subjective judgment in order to be comfortable before proceeding;
(6) Further steps should be taken in conjunction with Mr Choudhury;
(7) Other firms could offer further advice but it was likely the advice would be the same as Mr Brehony's advice;
(8) It would probably be sufficient comfort if:
a) Notable procured the outstanding document as recommended by Mr Choudhury;
b) Notable obtained Mr Choudhury's approval to the steps taken; and
c) Mr Nobre providing a satisfactory back story about his source of funds and source of wealth.
Ms Ciserani replied to Mr Brehony saying that Notable was still waiting for confirmation from Mr Nobre regarding source of funds and for a statement from the originating bank and the matter was currently on hold.
On 10 November 2011, Mr Landman began to make efforts to obtain information from Barclays Bank as to any checks it had done on the 100 million before it accepted them.
Mr Nobre emailed Mr Landman and Mr Meduri with another draft affidavit to be sworn by him and a letter of reference from Armajaro. Both the draft affidavit and the letter of reference were dated 11 November 2011. Mr Nobre said that Armajaro was FSA regulated and one of the top five hedge funds in commodities in Europe. Mr Nobre asked that his funds should now be fully available to him. The draft affidavit stated as follows:
"These funds were earned from Oil; Gas products/services with dismantlement's of sea pipelines structures with vessels by Allseas.
I and my network of Companies trade/invest different commodities and financial instruments/securities, tier 1 Bonds/Fix Income issued by prime western Financial Institutions [e.g. HSBC-Barclays-DB-CS-LLB, etc., etc.]. My/Our Strategic Economic Partners, private and Institutional are mainly European; Brazilian; Chinese/HK; North Americans with some exceptions. (Attached references letters by: ARMAJARO Global Commodities and Financial Services Group [
Asset Management LLP and
Securities Ltd, all FSA regulated] Exhibit 002)."
The Armajaro reference was signed by a Mr Sofiane Megharbi, who was said to be a Partner and European Head of Sales. The reference did not have an address for Armajaro. Mr Megharbi wrote that he had known Mr Nobre for many years in a personal and professional capacity. He said that Mr Nobre/Larn and his network of companies was currently working with the Armajaro Group in commodities and financial/securities investments. He then said that Mr Nobre was a partner of theirs "successfully engaged in a very discrete manner on several projects, to achieve our aims and objectives. I know him to be a man of strong ethics, undoubted personal and professional integrity and values. I am very pleased to recommend him to you."
Mr Nobre then emailed Mr Landman telling him to "end this NOW!!" and suggesting that Mr Landman should be very firm with his lawyer.
11 November 2011
On 11 November 2011, Mr Meduri emailed Mr Landman with his comments on Mr Nobre's draft affidavit and the letter from Armajaro. Mr Meduri stated:
(1) The draft affidavit did not give Mr Nobre's address and Notable should be given an updated proof of address;
(2) The affidavit and the letter from Armajaro "should be sufficient", provided that the letter of reference was genuine;
(3) The letter from Armajaro did not provide an address or a contact number and it would be good practice to call "the professional" who provided the letter;
(4) It would be good to have a letter from Barclays Bank in the absence of a letter from LLB; the letter from LLB had been promised many times and its absence left a gap;
(5) Notable had minuted the telephone conversation with "the bank manager" Mr Louanjli;
(6) Mr Brehony's email had referred to bank statements (i.e. from LLB) and if they were provided they would supply proof of address and fill the gap left by the absence of the letter from LLB;
(7) Notable should liaise with Mr Choudhury; although Mr Choudhury could not tell Notable whether or not to proceed he could say if they had ticked the boxes and give them comfort to proceed;
(8) If Notable obtained what it was still seeking, then it should ask Sharon Stone (the MLRO for Notable) to attend on Monday, 14 November 2011 to go through the file with Mr Meduri and sign off in relation to due diligence to allow Notable to proceed with the transfer of payments related to "the property transaction and those which were connected to the investments we were aware of".
Mr Landman replied to Mr Meduri by email. He suggested that they talk about what was needed. He suggested that Mr Meduri was changing the requirements and that Mr Meduri had earlier said that bank statements were not needed, that it was not necessary to have an updated proof of address and that it was not necessary to involve Ms Stone. Mr Landman added that the letter of reference was an additional comfort. I was not given any evidence of any conversation between Mr Landman and Mr Meduri on 11 November 2011 in response to Mr Landman's email.
Ms Thompson of Intrust, an accountant who managed Notable's client account, reported to Mr Landman on her conversation with Barclays Bank who had told her that funds would only have been credited to Notable's account if the funds passed the bank's checks and that if they had not passed those checks, Notable would not have received the funds. Mr Meduri was also aware of what Barclays Bank had said to Notable about its checks and he wanted to see if they would put it into writing. Mr Landman then emailed Barclays Bank for written confirmation as to its compliance in relation to the funds. Barclays Bank replied in general terms only to the effect that it complied with all relevant regulations whenever it did business. Mr Landman emailed Barclays Bank again and pressed for a more specific answer. In the event, Barclays Bank did not provide anything further. Instead, the bank emailed Mr Landman to ask him for further information as to where the funds had come from, where they were going, what the underlying transaction consisted of and as to Notable's involvement. Mr Landman replied in general terms only stating that Notable had the information necessary for its own due diligence.
Mr Nobre emailed Mr Landman and Mr Meduri with a copy of the letter from Armajaro to which had been added its address and telephone and fax numbers. Mr Nobre stated that his affidavit would state his private address and he would bring with him a certificate of residence issued by the Portuguese embassy in London. Mr Landman replied by email asking Mr Nobre to bring a statement relating to his Metro Bank account. He also asked Mr Nobre to telephone him.
Mr Meduri told me that on 11 November 2011 he tried to contact Ms Stone to ask her to attend the offices on 14 November 2011 but he was unable to speak to her until 14 November 2011. He then invited her to attend Notable's offices on 15 November 2011 but she was unable to do so and did not come to review the file until 21 November 2011.
At some point on 11 November 2011, Mr Meduri made a handwritten note on the subject of due diligence. His note cross-referred to Mr Swan's notes of the meetings attended by Mr Brehony and Mr Swan on 3 November 2011. Mr Meduri noted that Notable could pay itself its fees and disbursements out of the money in its client account, irrespective of whether it was satisfied with the due diligence. As to Notable's ability to use the funds to pay third parties, he noted that such payments could be made if Notable was satisfied that all of the payees were "legitimate". He also noted that he knew about the possible investment in relation to Fairfax. He then noted certain matters which were needed "before proceeding". These were: (1) the affidavit from Mr Nobre with his residential address; (2) a "letter from the bank?"; this was explained as a reference to a letter from LLB or the Maltese Bank or Barclays Bank; and (3) a check on the Armajaro reference. Mr Meduri then noted that Notable should call Mr Choudhury and should make a written note of everything. He ended his handwritten note with the words: "Overall positive but WE MUST OBTAIN THE ABOVE". In due course, Notable did: (1) receive an affidavit from Mr Nobre with a residential address; (2) receive an email from Mr Louanjli; and (3) carry out a check on Armajaro.
14 November 2011
On 14 November 2011, Mr Stone emailed Mr Landman and Mr Meduri and asked to be updated in relation to due diligence. He raised four specific questions, as follows:
"1. What independent bank evidence we have (not supplied by client)
2. What independent evidence on source of funds
3. interpretation of letter sent in last week
4. Legal advice given to Notable".
At some point on 14 November 2011, Mr Nobre provided Notable with an affidavit which he swore that day before a notary public employed by Notable. Mr Nobre gave his address as 15 Briary Close, London, NW3 3JZ and he exhibited a certificate of residence written in Portuguese by the Portuguese General Consul in London. The certificate was dated 2 March 2011 and gave Mr Nobre's address as 15 Briary Close. The full text of the affidavit, which was slightly different from the earlier draft affidavit now read:
"THAT I am a Director, Chairman & CEO of LARN LIMITED at 29, Harley Street, London W1G 9QR (the "Larn")
THAT I hereby confirm the Origins of the funds wire/sent to Barclay Bank (address given); Solicitors NOTABLE SERVICES LLP Client Account (account number given), is for further credit to LARN LIMITED. The funds are verifiable/verified and cleared accordance to International Regulatory Requirements. (Attached Swift report copy and Bank of Valletta letter Exhibit 002).
These funds were earned from Oil; Gas products/services with dismantlement's of sea pipelines structures with vessels by Allseas.
I and my network of Companies trade/invest different commodities and financial instruments/securities tier 1 Bonds/Fix Income issued by prime western Financial Institutions [e.g. HSBC-Barclays-DB-CS-LLB, etc., etc.]. My/Our Strategic Economic Partners, private and Institutional are mainly European; Brazilian; Chinese/HK; North Americans with some exceptions. (Attached reference letters by: ARMAJARO Global Commodities and Financial Services Group, a top leading (5Th) European Hedge Fund, located in Mayfair-London, ARMAJARO Asset Management LLP and ARMAJARO Securities Ltd, all FSA regulated. Exhibit 003).
AND THAT the amount of 100'000,000.00 One Hundred Million Euros has been transferred with my, Luis NOBRE agreement and LARN LIMITED, from the account of partner/shareholder, Allied Investment Corporation Limited of Malta, Bank of Valletta to SOLICITORS "NOTABLE SERVICES"-London clients account at Barclays Bank London, for further credit to LARN LIMITED for further investments as I/We may deem feet."
Exhibit 001 was the certificate from the Portuguese Consul and a letter dated 12 November 2011 from a cashier at the Tottenham Court Road branch of Metro Bank addressed to Mr Nobre at 15 Briary Close and stating an IBAN number and a BIC number, but not stating to which accounts these numbers related. Exhibit 002 was a copy of the SWIFT notification of the transfer from Bank of Valletta together with a letter from that bank dated 2 November 2011 stating that it was making such a transfer. Under the heading "Details of payment", this letter stated: "For further credit to Escrow account Larn Limited re investments". Exhibit 003 was the letter of reference from Armajaro.
Mr Meduri asked Oreste Signori of Notable to carry out a search on the Armajaro Group and Mr Sofiane "Mergharbi" (rather than the name on the letter which was "Megharbi"). Mr Signori obtained some information about the Armajaro Group and some of the group companies. He found that Armajaro Asset Management LLP and Armajaro Securities Ltd were authorised and regulated in the United Kingdom by the Financial Services Authority, since dates in 2002 and 2001 respectively. He obtained documents which reported that the Armajaro Group was the biggest cocoa exporter in Asia and Africa based in the United Kingdom and that Armajaro Asset Management LLP had established a commodity based hedge fund. Mr Signori's searches did not produce any negative information about companies in the Armajaro Group. Mr Signori carried out searches in respect of Sofiane "Mergharb" rather than Megharbi and obtained no information. However, he also established that Mr Sofiane Megharbi was registered on the Financial Services Authority register for Armajaro Securities Ltd and had been so registered since 9 January 2008.
On 14 November 2011, Mr Landman called Mr Louanjli and spoke to him for 2 minutes 52 seconds. The call is recorded as having taken place at 14:04.
On 14 November 2011, Mr Louanjli sent an email to Mr Landman. The email is recorded as having been sent at 2.05 pm. The email came from Mr Louanjli's LLB email address and was sent to Mr Landman at his Intrust email address. Mr Louanjli was described in the mail as a "Relationship Manager". The email contained standard wording which referred to LLB and gave its address in Zurich and its telephone and fax numbers. The email stated:
I would like to confirm That Mr. Louis Nobre is well known to the Bank and did satisfy to the KYC and due diligence that we did run during his account opening process.
Hope this will Help.
Please feel free to contact me if you have any queries.
Mr Landman immediately forwarded this email to Mr Meduri who emailed the reply: "Thanks great". Shortly after that, Mr Meduri forwarded Mr Louanjli's email to Ms Ciserani. Mr Meduri told me that he then discussed Mr Louanjli's email with Ms Ciserani. He considered that the email did not contradict what Mr Louanjli had said on the telephone on 3 November 2011 and he did not read the email as correcting or qualifying any of the information provided in the telephone call. However, because the email did not go as far as the statements made by Mr Louanjli in the telephone call, Mr Meduri decided to speak to Mr Choudhury again to discuss the up to date position.
Ms Ciserani's reaction to Mr Louanjli's email was that she was "not impressed" but, like Mr Meduri, she did not consider that the email corrected or qualified the information given by Mr Louanjli in the telephone call of 3 November 2011.
After he had received Mr Louanjli's email, Mr Meduri telephoned Mr Choudhury at the Law Society at 14.46 pm. Ms Ciserani was present throughout the call, which was on a speakerphone, and she later prepared a note of the conversation. Ms Ciserani's note of the conversation, which I find to be accurate, was as follows (I have corrected the spelling of Mr Choudhury's name):
"FM called Mr Choudhury in order to provide him with an update on the new documents received from the client released from the banks involved in the transaction.
Specifically, FM confirmed that we called the Maltese Bank of Valletta and Barclays and got confirmation from both institutions that funds have been screened and checked.
FM also mentioned to Mr Choudhury that we called the manager of the originating bank, Mr Louanjli, and spoke to him personally. FM summarised the conversation we had with Mr Louanjli, whereby he confirmed that the client, Mr Nobre, is a long standing client and that the bank is satisfied with KYC and DD procedure on the funds.
FM also highlighted that we called the originating bank to verify that Mr Louanjli is actually employed by them as a director and got confirmation on this point. Finally, FM quoted the email received on 14.11.11 by Mr Louanjli form (sic) his business email address stating: "I would like to confirm that Mr Nobre is well known to the bank and did satisfy to the KYC and due diligence that we did run during his account opening process".
Mr Choudhury stated that such a declaration gives a confirmation on the client; however does not help in explaining the source of the money in the account. This appears to be a standard letter which does not say much on the source of funds.
FM mentioned then the statement obtained by the client about source of funds and the reference letter on Mr Nobre signed by a FSA regulated individual working for a regulated company, Armajaro Group, which has been partner to Mr Nobre in many investments and financial activities. Mr Choudhury stated that he feels more confident with such a statement rather than with the declaration provided by the originating bank.
In conclusion, Mr Choudhury stated that at some point Notable Services should draw a line and move on. And in order to do so Notable should ask the following question: what could any other firm in our position do? Mr Choudhury agreed with FM that nothing more could be done by Notable Services to get more comfort in relation to the source of funds.
The fact that the client has always been transparent, responded promptly to our requests and put us in contact with other parties, which in turn have been cooperative is a positive sign, which should provide Notable with comfort.
Mr Choudhury reminded FM that there is always a risk. However, as lawyers, we are not requested to eliminate the risk, but to mitigate the risk instead. It is important to demonstrate that we did whatever was under our control to verify the funds and not just blindly accepted the funds in our clients' account.
Furthermore, Mr Choudhury mentioned the opportunity to conduct ongoing monitoring of the relationship and transaction in accordance with Reg.8 AML Regulations 2007 and ensure that the transaction is consistent with our knowledge of the client's business.
Finally FM requested whether Mr Choudhury would confirm his initial advice that Notable can proceed with making payments to third parties on behalf of the client as long as they relate either to the property transaction or to client's investments which were known to us. Mr Choudhury confirmed."
Mr Meduri told me that, following his call to Mr Choudhury, he considered that Notable had sufficient supporting information as to the source of the funds and that Notable had completed its due diligence on that point and that he relied upon the information provided by Mr Louanjli in the telephone call of 3 November 2011 and in the email of 14 November 2011.
Ms Ciserani told me that after this call to Mr Choudhury, Mr Meduri told her of his conclusion as to the completion of due diligence. Ms Ciserani told me that she had agreed with this assessment. She also said that she relied on Mr Louanjli's email.
In the afternoon of 14 November 2011, Barclays Bank emailed Mr Landman and referred to its request to Mr Landman on 11 November 2011 for information about the funds. Barclays Bank asked for "a brief overview on the deal". Mr Landman replied that the deal was that Mr Nobre wished to make investments in the UK and that Mr Landman wanted to introduce Mr Nobre to Barclays Bank the next day with a view to opening a bank account to hold the balance of the funds after paying professional fees and transferring some monies to Mr Nobre's personal account at Metro Bank. Mr Landman added that Mr Meduri would provide further information "as he's done the due diligence".
Having spoken to Mr Choudhury, Mr Meduri emailed Barclays Bank and stated that "the purpose of the funds" was to purchase a house for £65 million. Mr Meduri stated that Notable had instructed another law firm to complete the conveyancing on the house and that Notable was also acting as commercial lawyers for the client "and we look after all of his investments in the UK". He added that Notable had engaged a third party law firm to carry out the compliance on the source of funds and to advise Notable on due diligence in this case. He said that Notable had completed compliance on the source of funds and had liaised with Mr Choudhury the AML coordinator at the SRA. He stated that "today we have successfully completed the compliance on the client". There were then some short emails between the Bank and Mr Landman and Mr Meduri.
At 4.00 pm, Mr Signori telephoned the number on the Armajaro reference and verified that he was speaking to Mr Megharbi. Mr Signori referred to the letter dated 11 November 2011 from Armajaro, referred to above as the Armajaro reference, and asked Mr Megharbi to confirm that he had signed the letter. Mr Megharbi so confirmed and the call ended.
In the afternoon of 14 November 2011, Mr Nobre emailed Mr Landman and Mr Meduri asking for confirmation that all of the transfers which he had requested to be made had been made. In particular, Mr Nobre wished to have confirmation about payments to be made to a Mr Lucas and his associates in connection with One Blotter Holdings Ltd. At this point, Notable had not made any of the transfers which had been requested. Mr Meduri replied to Mr Nobre saying that unfortunately, Notable had missed the payment deadline for that day but added "however as discussed we shall process the payments tomorrow as agreed".
Later in the afternoon, Mr Bulzinetti emailed Mr Signori and asked him to carry out Lexis-Nexis searches on a list of individuals and companies. These were the persons either identified by Mr Nobre as intended payees out of the funds in the Notable client account, or other names which had been identified as connected with those payees.
The telephone calls from Notable to Mr Louanjli
In the above findings as to the events which took place between 3 and 14 November 2011, I have referred to some (but not all) of the telephone calls which took place between Notable and Mr Louanjli. In particular, I have referred to the telephone call from Mr Meduri to Mr Louanjli on 3 November 2011 and the telephone calls from Mr Landman to Mr Louanjli on 4 November 2011. In fact, there were more telephone calls between Mr Landman and Mr Louanjli to which I have not yet referred.
Before making my findings as to further telephone calls between Mr Landman and Mr Louanjli, I will refer to Mr Louanjli's evidence as to telephone contact with Notable and what was originally shown by the documents which were disclosed.
As regards the telephone call between Mr Meduri and Mr Louanjli on 3 November 2011, Mr Louanjli denied that he had spoken to Mr Meduri. He accepted that he might have spoken to Mr Nobre on 3 November 2011 but if he did and if Mr Meduri had been present during this telephone call from Mr Nobre, then Mr Louanjli said that he was not aware of it. In any case, Mr Louanjli said that he did not say what was recorded in Notable's note of the conversation with him on 3 November 2011. I reject that evidence. I also find that Mr Louanjli knew that his evidence on this point was untrue.
As regards the two telephone conversations between Mr Landman and Mr Louanjli on 4 November 2011, Mr Louanjli denied at all stages during his evidence that he had spoken to Mr Landman on 4 November 2011. I also reject his evidence on that point. Mr Louanjli knew that this evidence was not true.
The documents which were originally disclosed showed that Mr Landman had spoken to Mr Louanjli on 14 November 2011. Mr Louanjli's evidence was that Mr Landman had telephoned him out of the blue as he had never spoken to Mr Landman before this call. Mr Louanjli said that Mr Landman introduced himself and explained that he worked for a company called Intrust which was a company which specialised in offering family office services to wealthy individuals. Mr Louanjli's evidence was that Mr Landman explained that Mr Nobre was in the process of setting up a family office in London and that it was necessary for Mr Landman to carry out some checks on Mr Nobre. According to Mr Louanjli, he explained to Mr Landman that he could not disclose any information but Mr Landman suggested that Mr Louanjli telephone Mr Nobre and get his approval to providing information to Mr Landman. Mr Louanjli said that he then spoke to Mr Nobre who agreed that he could provide information to Mr Landman and Mr Louanjli then sent the email to Mr Landman at his Intrust email address. I reject this evidence by Mr Louanjli as a further deliberate lie. In particular, it is clear that Mr Louanjli lied when he said that he had not spoken to Mr Landman before this telephone call. I have already found that Mr Landman and Mr Louanjli had two conversations on 4 November 2011. Further, I will refer below to the further conversations they had on 10 and 11 November 2011.
As it happened, the documents originally disclosed did not reveal that Mr Landman had spoken to Mr Louanjli on a number of occasions on 10 and 11 November 2011. This was because the telephone records which were disclosed were those of Mr Landman and they had been extensively redacted on the grounds of irrelevance. Unfortunately, those redactions originally included a number of calls from Mr Landman to a Moroccan mobile number which was Mr Louanjli's Moroccan mobile phone. When it was realised, in the course of closing submissions, that Mr Louanjli had a Moroccan mobile and Mr Landman's telephone records were re-checked, it then emerged that Mr Landman telephoned that Moroccan mobile on 10 and 11 November 2011 and the relevant entries were then disclosed. Of course, when Mr Louanjli had given his evidence at an earlier stage in the trial, he was not aware that there were telephone records showing that he had spoken to Mr Landman on 10 and 11 November 2011.
Mr Landman's telephone records showed that, during the afternoon of 10 November 2011, Mr Nobre texted to Mr Landman the number of Mr Louanjli's Moroccan mobile. Mr Landman then sent two texts to Mr Louanjli's Moroccan number. The times on the various records do not match but that is probably due to the various phones being in different time zones. Mr Landman could only have sent the texts to that number after he had been given it by Mr Nobre. The documents do not show what the texts said. It is more probable than not that the texts either invited Mr Louanjli to telephone Mr Landman or were a statement that Mr Landman had tried to, or would try to, telephone Mr Louanjli.
On 10 November 2011, Mr Landman called or attempted to call Mr Louanjli on five occasions. Some of these calls may have only consisted of voicemail messages but the records show longer calls which are unlikely to have been only voicemail messages; the longer calls include calls of 2 minutes 55 seconds and of 12 minutes 55 seconds.
On 11 November 2011, Mr Landman called or attempted to call Mr Louanjli on seven occasions. Again, some of these calls may have only consisted of voicemail messages but the records show a longer call of 2 minutes 3 seconds which may not have been only a voicemail message.
When the new information about telephone calls came to light during closing submissions, I gave permission to Mr Louanjli to put in further evidence as to these telephone calls and I also gave permission to Mr Landman to put in further evidence on the same subject. Mr Louanjli did put in a further witness statement and at the request of some of the other parties, he made himself available for further cross-examination, which was conducted by video link from his hotel room in Los Angeles, where he was temporarily staying. Mr Landman chose not to put in a further witness statement and no other party asked for him to submit to further cross-examination on the subject of these telephone calls.
Mr Louanjli's further witness statement stated that he did not recollect anything about the texts and calls from Mr Landman on 10 and 11 November 2011. He was cross-examined in detail about these communications with Mr Landman and he stuck to his account that he did not now recall anything about them.
I find that these communications did happen as the records show. I also find that Mr Landman wanted to speak to Mr Louanjli about the information which Mr Louanjli had been asked to give in relation to Mr Nobre and the source of funds. There is no reason to think that Mr Landman was contacting Mr Louanjli to discuss an alleged interest on the part of Intrust in setting up a family office for Mr Nobre. I find that in the communications which took place between Mr Landman and Mr Louanjli on 10, 11 and 14 November 2011, Mr Landman discussed with Mr Louanjli the information which Mr Louanjli was willing to provide to Notable in connection with the 100 million which Mr Nobre had transferred to Notable's client account.
I consider that it is likely that I would have found a frank account of the conversations between Mr Landman and Mr Louanjli to have been of great relevance to some of the issues in this case. However, I have not any reliable evidence about these communications. Mr Landman did not refer to them at all in his witness statements and no one asked him to return for further cross-examination about these communications. Accordingly, I have no evidence from him about what was said. Further, the parties who are alleging that Mr Landman knew certain matters and was dishonest did not put any suggestions to Mr Landman as to what he discussed with Mr Louanjli in these conversations. As I have explained, Mr Louanjli said that he had no recollection of these conversations. I think it is very likely that Mr Louanjli does have a recollection of these communications but in the absence of any reliable evidence from him, I am not able to make any findings in addition to those which I have already made.
15 November 2011
On 15 November 2011, Ms Thompson of Intrust emailed Mr Landman, Mr Meduri, Ms Ciserani and Mr Stone. She said that she had considered the minutes of the meetings which Notable had with Mr Brehony and also Mr Brehony's subsequent email to Ms Ciserani. Ms Thompson considered that there were still concerns that needed to be addressed. She stated that Mr Choudhury had mentioned obtaining 6 months' bank statements, which had not been obtained, and he had also expressed concerns about Notable paying sums from its client account when the payments were not obviously related to an underlying transaction. She expressed the view that Notable should get approval from Ms Stone, the MLRO, before transferring any funds.
Mr Meduri replied by email to Ms Thompson, with a copy to the other recipients of her email. He said that there should be a meeting as Ms Thompson was mixing two different matters. He said:
"The source of funds has been cleared. The second issue (transfer of funds from client account) is completely a different matter."
Ms Ciserani also sent an email to Mr Landman and Mr Meduri about the matter. She said that she would like "to clarify [her] position". She then made the following points:
(1) After the meeting on 3 November 2011, she had considered the documents which had been provided and the guidance on AML from the SRA and the Law Society;
(2) She had expressed her concerns at that point but was asked to wait for further documents to be provided by Mr Nobre;
(3) Mr Nobre's affidavit and the Armajaro reference were "of comfort";
we have not obtained a letter of comfort from the originating bank, as requested in the first instance, but only an email, which is not conclusive in my opinion. We called all the banks involved and they all confirmed that they undertook their DD and KYC procedures; however they were not prepared to put this in writing."
(5) She considered that Notable had done its best to get comfort but the transaction was clearly very high risk and it had to take extra care;
(6) She was not confident about proceeding with the payments which Mr Nobre had requested. She added: "The SRA officer stated that we could proceed only with payments related either to the property transaction or to client's investments we were already aware of. As per my understanding, apart from a few exceptions, we have no knowledge of the underlying transaction of such payments and we have not received any mandate from the client to provide legal work in relation to them. In this respect, I believe that we are relying too much on the minutes drafted by Paul's assistant during our meeting and there are still grey areas in such a document."
(7) She understood that Mr Nobre was proposing to open a bank account with Barclays Bank and she did not understand the pressure for Notable to make payments rather than Mr Nobre using his new bank account to make payments;
(8) The transaction should be signed off by Ms Stone in her capacity as MLRO for Notable.
In the morning of 15 November 2011, Mr Meduri telephoned Mr Brehony to keep him informed of developments and to report on his telephone call to Mr Choudhury. However, Mr Brehony was not then available to speak to Mr Meduri but (at 10:09 am) he emailed Mr Meduri recommending that Mr Meduri speak to Mr Choudhury which, of course, Mr Meduri had already done. Mr Brehony stated that he doubted if he would be able to add much to the advice given in this earlier email of 4 November 2011 and that, ultimately, it was for Notable to form its own judgment "on source of fund et al".
Also during the morning of 15 November 2011, at 10:28 am, Mr Meduri emailed the solicitors for one of the proposed payees who had been pressing for payment the previous day. Mr Meduri wrote that Notable had instructed the bank to make the payment in accordance with the client's instructions. This statement appears premature as the meeting with Mr Nobre to go through the list of proposed payees had not happened. It may be that Mr Meduri expected that the payment to this payee would be approved in due course and he was pretending that approval had already been given. Alternatively, it may be that Mr Meduri was not really intending to scrutinise the proposed payments with any care.
Then, at 11:03 am, Mr Landman emailed Mr Beagelman, one of Mr Nobre's proposed payees. Mr Landman had introduced Mr Beagelman to Mr Nobre and Mr Beagelman had provided certain services in relation to Mr Nobre's hotel and possibly his travel arrangements. When Mr Landman saw that Mr Nobre proposed to pay Mr Beagelman sums which exceeded £500,000, Mr Landman emailed Mr Beagelman to ask how much Mr Beagelman intended to pay Mr Landman for his introduction to Mr Nobre. Mr Beagelman did not reply to this email but he forwarded Mr Landman's email to Mr Nobre.
In the morning of 15 November 2011, there was an internal meeting at Notable attended by Mr Landman, Mr Meduri, Ms Thompson and Ms Ciserani. A note of the meeting, referred to below, suggested that the meeting was called by Mr Landman but the documents suggest that it was called by Mr Meduri. Ms Ciserani made a detailed note of what was discussed at this internal meeting and, subject to the question as to who called the meeting, I find that her note is generally accurate. Her note recorded the following (I have corrected the spelling of the names of Mr Choudhury and Stewarts Law but I have not corrected the other misspellings and typing errors):
"A meeting has been called by ML following two emails sent earlier in the morning respectively by JT and CC whereby JT and CC expressed their concern in relation to the proposed transaction (att. 1 and 2).
The main issues arisen by JT and CC concerned the source of funds and the instructions received by the client in relation to payments to third parties.
In particular, regarding source of funds, JT stated that she reviewed the advice provided by Paul Brehony of Stewarts Law whereby, in recollecting the conversation we had with Mr Choudhury (the AML COORDINATOR at the SRA), he advised Notable to obtain the last 6 months bank statements from the originating bank have not been obtained.
On this point FM highlighted that such documentation was mentioned as relevant by the first advisor at the SRA helpline, whom we have initially been put through when we called the SRA to seek advice on the soundness of the transaction for AML purposes. However, Mr Choudhury did not mention the need to ask the originating bank for the bank statements. The email sent by Paul was not accurate on this point.
CC, who was present at the time of the conference call with Mr Choudhury, confirmed the above, as documented in the minute drafted by CC in relation to such conversation, where there is no mention of the bank statements.
ML and FM summarised all steps taken by Notable to verify the source of funds, which include:
- liaising with the director of private banking at the originating bank who personally confirmed by phone that the client is a long-standing client of their, the bank successfully completed the KYC and DD procedure and was satisfied with it. There were also be arrangements for the director to come to London to meet ML and FM in person to render such a declaration in front of them, but he was busy travelling for work and missed the flight. However, we called the bank and got confirmation that the director is employed and works for them as relationship manager. We have also received an email from the director's email address at the bank confirming the above;
- obtaining confirmation from the other banks involved in the transaction Bank of Valletta and Barclays that they successfully completed the due diligence intra-banks checks on source of funds;
- obtaining satisfactory explanations from the client on how he built his fortune over the years along with supporting documents including a statement issued by a regulated individual, which appears to be of comfort, as confirmed by the SRA officer, Mr Choudhury, during the last call with him held on 14.11.11;
- obtaining satisfactory explanations from the client on why the funds have been provided by a third party and verifying the connections between the client and the third party;
- seeking advice from an independent lawyer, specialised in AML, Paul Brehony of Stewarts Law;
- contacting the SRA to get comfort on our due diligence exercise on a step-by-step basis.
CC confirmed that, as far as she understands, the right steps have been taken so far to get comfort about the source of funds.
The second issue which was at stake concerned the payments the client requested Notable to make on his behalf to third parties.
CC and JT stressed the fact that according to the provisions contained in the regulations and guidance issued by the SRA a law firm account cannot be used as a bank facility and all payments made from such account should be related to underlying transactions known to Notable.
In particular as confirmed by Mr Choudhury, payments could be processed only if related either to the purchase of the property or client's investments known to Notable.
CC and JT highlighted that the documents provided by the client to support the payments (most of them are invoices) do not show in themselves a relation to a particular investment. Therefore, CC and JT stated that they are not confident about processing with most of the payments.
ML and FM replied that each payment will be reviewed together with the client in the meeting to be held with him later on at 11.30 am and processed only if sufficient explanations/documents showing the link to known investments are obtained from the client and that any transaction that were not investment related would not be processed.
ML and FM stated that since the first day they met the client in autumn 2010 they have been aware of investments that the client was conducting in and from the UK. In particular they have been directly involved in an investment called Fairfax. The client expressly requested ML and FM to assist with his commercial transactions and investments.
Finally CC highlighted that in her opinion no payments can be processed until and unless Sharon Stone, in her capacity as MLRO officer, approve and sign off the due diligence documentation.
ML confirmed that Sharon is aware of the transaction. ML and FM have always informed her husband Peter Stone each step taken in relation to the transaction, shared with him views on how to proceed and that he would have relayed this information to Sharon.
Furthermore FM proceeded to send to Sharon an email informing her that we would be making these payments.
On 11.30 am the client arrived and joined the meeting."
Towards the end of the internal meeting, Mr Meduri emailed Ms Stone to confirm that Notable had completed due diligence in relation to Mr Nobre following advice from Mr Brehony and Mr Choudhury. He stated that Notable was satisfied with the outcome and would proceed to act for the client making payments for which it had full documentation and in the light of the checks which had been carried out. He said that Ms Stone would then review the file on the following Monday and he had "signe[ed] the file off".
As recorded in the note of the internal meeting, Mr Nobre arrived at Notable's offices at about 11:30 am. There was then a meeting attended by Mr Landman, Mr Meduri, Ms Thompson, Ms Ciserani, Mr Nobre and Mr Amar. After the meeting, Ms Ciserani prepared a note of the meeting which I accept as being generally accurate. Her note incorporated some comments where it is apparent she was adding information which was provided, or referring to events which took place, after the meeting with Mr Nobre but before the finalisation of the note. The note provided as follows:
"ML and FM explained to the Client that further explanations and documents were still necessary in order for Notable to proceed with the payments as the invoices provided by the Client in the first instance were not conclusive in order to demonstrate a link between the relevant payment and underlying investment.
ML and FM highlighted to the Client that payments could not be processed unless and until Notable has a full understanding of such a relation.
It was then decided to go through each payment request, as per attached list.
1) 1.000.000,00 to Reinassance LTD
Invoice obtained. The invoice refers to financial services provided through the creation of SPVs, Estate Planning services (optimize real estate projects in European countries such as France, Monaco, Luxembourg, Portugal) and optimization of investments (investment portfolio) and liabilities (credits).
2) £ 160,000.00 to Accounts Centre CY Ltd
Invoice obtained. This invoice refers to professional services for company formation.
3) US$ 5,000,000.00 to Intrasales Ltd
Invoice obtained. The invoice relates to a reimbursement for bank charges for swift's MT760 and which are to be deducted from future dividend from trading investments relating to the project.
Intrasales Ltd is the Client's partner and account co-holder. Funds cannot be transferred to Europe.
Do we have any proof that Intrasales and Larn are partners?
4) US$ 270,000.00 to Marc Darmudas
Invoice obtained. The invoice is for consultancy fees issued for services rendered to Larn Ltd in seeking investment projects in Hong Kong and China.
5) £ 250,000.00 To Notable Services LLP
The payment's instructions from the client refer to professional fees including fees for external professionals who assisted in the preliminary stages of purchase of the property in London (Palladio) (Gregory Rowcliff Milners +Savills).
Invoice issued by Notable Services LLP amounting to £9,150.00 for certification and legislation services
Invoice issued by Intrust Ltd amounting to £24,000.00 for fixed fees
Payment to Intrust Ltd amounting to £10,000.00
6) £ 250,854.48 to Travel & Lifestyle Ltd
Invoice obtained. The invoice relates to agreed services rendered.
7) £ 150,000.00 to Michael Beagelman
Invoice obtained. The invoice relates to the provision of special services.
8) £ 100,000.00 to Secure Communications International Ltd (Mr Beagelman)
Invoice obtained. The invoice related to Larn MB security systems partnership investments
9) CHF 300,000.00 to Claude Bellanger
Payment on hold: still waiting for invoice
10) CHF 300,000.00 to Victoria Weir
This is a payment to the Client's wife for the assistance she provided for the prospected purchase of the property in London. In particular she arranged security service, house keeping, and liaised with surveyors and architects. ML witnessed the above and both ML and FM know her personally
11) US$ 300,000.00 to Emery Financial (Bradford Sarvak)
Invoice obtained. The invoice relates to consultancy fee and expenses.
12) US$ 250,000.00 to William and Cleo Boehringer
Invoice obtained. The invoice relates to consultancy/advisory services and logistical support.
13) US$ 50,000.00 to William Boehringer
Payment deleted from client
14) £ 250,000.00 to HM Consultants
Invoice obtained. The invoice refers to fees ref: consultancy, risk management assessment, vetting and recruitment of security personnel, procurement of security equipment & vehicles.
15) 100,000.00 to Compagnie des Courtiers et Merchands de France
Invoice obtained. The invoice relates to fees ref: consultancy and negotiation for the purchase of profits in the hotel related activity of the Group Starwood in France.
16) 105,000.00 to Michael Amar
17) 300,000.00 to Michael Amar
One invoice obtained for both payments. The invoice relates to fees as chief of staff for 2011. Mr Michael Amar is known to ML and FM. CC met him with the client. He is chief of staff of Larn Ltd. Business card also provided.
18) £ 555,000.00 to the Client
Transfer to client's account at Metro bank, London.
19) CHF 3,500,000.00 to the Client
This amount is to be paid to the Client's bank account in Geneva. The money will be used by the client to purchase a Bar called Tour de Molard and a Cafι' Bar called L'Antidote (purchase price respectively CHF 1,300,000.00 and CHF 800,000.00 for a total of CHF 2,100,000.00). The balance is to undertake refurbishment works. This payment is connected with payment n.19-commission fees for intermediary work.
As supporting documents the Client provided copied of the letters signed by the intermediary Mr Paumier at Fitz-James Group SA Geneva stating the terms of the transfer (owner's details, purchase price, description of the property) along with an extract of the company register of the companies, respectively La Tour du Molard SA and L'Antidote SA.
We verified that the above bars are in existence running searches on the internet.
20) £ 105,000.00 to Mr Lucas
Invoice obtained. The invoice refers to board/executive services and in particular to the fees for the provision of 12 months board member and executive services.
Mr Lucas was regulated by the FSA until 2010.
21) £ 100,000.00 to Mr Lucas
Invoice obtained. The invoice refers to recruitment services and in particular to the provision of two board members over a period of 12 months.
22) US$ 500,000.00 to Mr Lucas
Invoice obtained. The invoice refers to the purchase of Alphacet Inc (bank patent).
ML spoke at the phone to Mr Lucas and asked him to provide information in writing about the investment.
Mr Lucas sent two emails, one explaining the content of the investment and a second one explaining the reason for the urgency.
Mr Lucas confirmed that an email could be provided to prove that the negotiation is current.
23) 250,000.00 to Mr Lucas
Invoice obtained. The invoice refers to the purchase of Lycias Investments Ltd (Cyprus).
ML spoke at the phone to Mr Lucas and asked him to provide information in writing about the investment.
Mr Lucas sent two emails, one explaining the content of the investment and a second one explaining the reason for the urgency.
Funds returned from bank.
24) £ 105,000.00 to Mr Redpath
Invoice obtained. The invoice is in relation to fees for services rendered as 1 year board member and executive services.
25) £ 150,000.00 to Miss Paulina Solaz
Payment cancelled from client
26) £ 250,000.00 to Mr Dharambir Singh
Payment cancelled from client
27) CHF 110,000.00 to David Paumier
Invoice obtained. The invoice is for intermediary services in relation to various properties and opening of a bank account of a period of 24 months.
28) CHF 75,000.00 to Mr David Paumier of Fitz-James Group SA
Invoice obtained. The invoice relates to commission fees for intermediation services rendered in relation to the acquisition of Cafι' Bar L'Antidote and Bar Tour de Molard (connected with payment n.19)
29) CHF 25,000.00 to Mr Didier Pretot (Avocat in Geneve)
Invoice obtained. The invoice relates to fees and disbursements for services rendered from12th March to 12 July 2010.
30) 105,000.00 to 2LC Maintenance Sarl
Invoice obtained. The invoice is for engineering work related to a bottling company.
31) 14,000.00 to Mr Desimeur Thierry
Invoice obtained. This invoice relates to consultancy fees for the implementation of IT infrastructure.
32) 700,000.00 to Mr Jean-Marie Goeders
Pro-forma invoice obtained. The invoice relates to an advance payment of a first instalment amounting to 25,000,000.00 for the acquisition of 50% of IP rights of a project called "Jungle City", as per preliminary agreement signed between Mr Goeders and Larn Ltd on 28.04.11. Mr Goeders is the creator of the project and a partner of the Client. The project is a leisure centre and the parties are entering into a joint venture to develop the project.
CC saw an unsigned copy of the preliminary agreement on the Client's file. The Client stated that he retains a signed copy in his office. According to the agreement reviewed on the Client's file, the total amount of the purchase price is 50,000,000.00. The contract is governed by UK law. The final contract has still to be signed.
CC also saw in the Client's file the copy of a letter dated 28.02.11 signed by the Client and addressed to Mr Goeders, whereby the Client stated his intention to enter into the said joint venture in relation to the project.
The Client also provided a resume in French language of the project.
33) 350,000.00 to Attorney Prof. Joaquim Nobre Rogerio
Payment cancelled from client
34) 8,000.00 to Maria Lucena Ramos Nobre Morais
Payment cancelled from client
35) CHF 1000,000.00 to T Solutions Tatiana Zarubina
Invoice obtained. The invoice relates to advance payment for board's membership and executive services.
T Solutions provide translation services and PA services.
36) £ 350,000.00 to Cannon Capital
Two invoices obtained. One invoice of £250,000.00 refers to a deposit for the contracted sale of 6 share properties (listed in the invoice) bought through Cannon Capital for a total purchase price of £2.35mil. The second invoice refers to a repayment loan of £ 50,000.00 plus interest of £ 50,000.00
ML confirmed that he knows the director of Share Capital Ltd signing the invoice, Mr NJ Wallis. The company name on the invoice is misspelt (Share Ltd).
37) £ 150,000.00 to GK Baker
Invoice obtained. The invoice refers to generic consultancy fees. ML confirmed the he is aware of the consultancy and know Mr Baker personally.
38) US$ 250,000.00 to Marek Rejniak
Invoice obtained. The invoice relates to advance payment for being a director ref: 2011 (company: Allied International Corp.)
39) US$ 250,000.00 to Ben O'Raffery Solicitors Client Account (ref: Mr Marek Rejniak)
Invoice obtained. The invoice relates to advance payment for being a director ref: 2011 (company: Allied International Corp.)
40) £1,230,000.00 to Mr Christopher Lucas / Tamara Jane Laura Lucas / Acumen Founded Ltd
Numerous invoices obtained. The invoice refers to the purchase of One Blotter Holdings Ltd.
ML spoke at the phone to Mr Lucas and asked him to provide information in writing about the investment.
Mr Lucas sent two emails, one explaining the content of the investment and a second one explaining the reason for the urgency.
41) CHF 50,000.00 to Geneve Expat
Invoice obtained. The invoice relates to the fees for intermediary services to search high value properties in accordance to a mandate dated 7 June 2010.
42) £170,000.00 to Nisroy Investments Inc
Invoice obtained. The invoice relates to services in connection with Fairfax and introduction to vendor."
It was not the purpose of the meeting with Mr Nobre on 15 November 2011 to investigate the origin of the 100 million or the source of Mr Nobre's wealth. Instead, the purpose of that meeting was, apparently, to investigate the propriety of Notable making payments, in particular payments to third parties, out of the monies in the Notable client account. At this point, I will make my findings about the payments which were made by Notable following the meeting with Mr Nobre on 15 November 2011.
My findings about the payments
I will first consider the test which ought to have been applied by Notable for that purpose and the test which was purportedly applied by Notable.
The SRA Accounts Rules which were current at the time were the 2011 Rules which came into force on 6 October 2011. Rule 14.5 provided:
"You must not provide banking facilities through a client account. Payments into, and transfers or withdrawals from, a client account must be in respect of instructions relating to an underlying transaction (and the funds arising therefrom) or to a service forming part of your normal regulated activities."
The Guidance Note in relation to Rule 14.5 provided:
"Rule 14.5 reflects decisions of the Solicitors Disciplinary Tribunal that it is not a proper part of a solicitor's everyday business or practice to operate a banking facility for third parties, whether they are clients of the firm or not. It should be noted that any exemption under the Financial Services and Markets Act 2000 is likely to be lost if a deposit is taken in circumstances which do not form part of your practice. It should also be borne in mind that there are criminal sanctions against assisting money launderers."
The status of Rule 14.5 and the Guidance Note in relation to it are different. The Rule is mandatory but the Guidance Note is not: see Rule 2.1.
It is clear from the Note to Rule 14.5 that one of the purposes of the Rule was to assist in the prevention of money laundering. This is also made clear by the following two documents
(1) The SRA Warning Card on Money Laundering stated:
"Never accept instructions to act as a banking facility, particularly if you do not undertake any related legal work."
(2) The Law Society Anti-Money Laundering Practice Note stated:
"Solicitors should not provide a banking service for their clients."
The 2011 Rules came into force shortly before the critical events in this case. The previous rules which were relevant were the Solicitors Accounts Rules 1998 which were in different terms from the 2011 Rules. In 2004, a note was added to Rule 15 of the 1998 Rules which referred to a decision of the Solicitors Disciplinary Tribunal (Wood and Burdett, which was a money laundering case) which stated that solicitors should not provide banking facilities through a client account. The note referred to taking deposits from clients as "part of a solicitor's practice" and specifically referred to sanctions against money laundering. From 2009, the notes to the 1998 Rules were stated to be mandatory. It was held by the Divisional Court in Patel v Solicitors Regulation Authority  EWHC 3373 (Admin) that Rule 14.5 of the 2011 Rules was a re-statement of the position under the Guidance Note to Rule 15 of the 1998 Rules. Accordingly, I do not consider that the fact that the 2011 Rules only came into force shortly before the relevant events is material.
The position under the 1998 Rules and under Rule 14.5 of the 2011 Rules was analysed by the Divisional Court in Patel v Solicitors Regulation Authority. Judgment in that case was given on 29 November 2012, after the relevant events in this case. The court set out the history of the Rule and discussed the decisions of the Solicitors Disciplinary Tribunal. The court explained the permitted uses of solicitors' client accounts and the uses which were not permitted. At , Moore-Bick LJ explained what was meant by "an underlying transaction" and "normal regulated activities". He said:
"The primary purpose of maintaining a client account is to segregate funds held for the client from the solicitor's own funds in order to provide the client with a measure of protection. One would therefore expect it to be used to hold funds which have come into the solicitor's hands in relation to services carried out for the client, to be paid out in due course to the client or in accordance with his instructions. Rule 14.5 of the SRA Accounts Rules refers to instructions relating to an underlying transaction or a service forming part of the solicitor's normal regulated activities. The expression "regulated activities" includes in this context all forms of legal activity as defined in section 12 of the Legal Services Act 2007. That means the provision of legal advice or assistance in connection with the application of the law or with any form of resolution of legal disputes and the provision of representation in connection with any matter concerning the application of the law or any form of resolution of legal disputes. It follows that in most cases the receipt of client funds will result from the provision of services forming part of the solicitor's normal regulated activities, but some recognised professional services, such as acting as an executor, will not fall into that category. There is clearly scope, therefore, for funds to arise from underlying transactions of a kind which, although they form an accepted part of the professional services provided by solicitors, do not fall within the definition of regulated activities. They are likely, nonetheless, to be legal activities in the broad sense of the expression."
I make two comments on the decision in Patel. First, the passage I have quoted refers to a solicitor's normal regulated activities. Notable was a LDP but it was regulated in the same way as a solicitor's practice. It was not argued that, on account of the nature of Notable's practice, Rule 14.5 did not apply to it or that Rule 14.5 operated in some modified way in relation to it. Neither Mr Landman nor Mr Meduri gave evidence that they thought that rule 14.5 did not apply to Notable. My second comment is that breach of Rule 14.5 does not necessarily involve dishonesty on the part of the solicitor.
It is fairly clear that the majority of the payments which were made by Notable on Mr Nobre's instructions involved a breach of Rule 14.5. However, the real question in this case is whether Mr Landman and Mr Meduri were dishonest in authorising those payments. In order to assess that matter, I must have regard to the advice they received from Mr Choudhury and their reaction to it.
The question of what payments Notable could properly make in this case out of its client account was discussed with Mr Choudhury on 3 November 2011 and Mr Swan's note recorded Mr Choudhury as saying:
provided FM could find out the provenance of the funds (i.e. Zurich) and performed checks on each and every one of the proposed recipients of payments out of the NS client account, then a departure from the strict letter of the Solicitor's Regulations which prevent law firms being used as bank accounts can happen, provided it is comprehensively documented and in accordance with the client's explicit instructions. Provided all the recipients of the money are legitimate, then there is no reason why FM should not comply with the client's instructions."
Ms Ciserani's note of what Mr Choudhury said on this subject on 14 November 2011 stated as follows:
"Finally FM requested whether Mr Choudhury would confirm his initial advice that Notable can proceed with making payments to third parties on behalf of the client as long as they relate either to the property transaction or to client's investments which were known to us. Mr Choudhury confirmed."
It might have been expected that Mr Choudhury would have given an accurate explanation of what Rule 14.5 meant although, of course, he did not have the benefit of the later analysis in Patel v Solicitors Regulation Authority. It might also have been expected that Mr Choudhury would have told Notable that it had to comply with the Rule. Instead, Mr Choudhury is recorded as advising on 3 November 2011 that it was permissible to depart from the requirements of Rule 14.5. It was not suggested that the note of his advice did not faithfully record what he had said in that respect. His advice on that occasion, as recorded, refers to four requirements, namely:
(1) Confirmation on the source of funds;
(2) Checks on the recipients;
(3) Explicit client instructions; and
(4) Comprehensive documentation.
This statement as to the requirements does not appear to include a requirement that the transaction is one with which Notable were dealing or even of which Notable had prior knowledge. However, this note of the advice of 3 November 2011 should be taken together with the note of Mr Choudhury's advice on 14 November 2011 where he confirmed Mr Meduri's understanding that the transaction (or investment) had to be known to Notable. The reference to "known to Notable" can only be understood as a requirement that the matter is known to Notable in a way which is not confined to a mere statement from the client as to the underlying transaction.
Ms Ciserani did her own research into the rule that a solicitor ought not to provide banking facilities through its bank account. She was more concerned about this point than Mr Landman and Mr Meduri were. She (rightly) thought that Mr Choudhury's suggested test about transactions "known" to Notable was vague. However, Mr Landman and Mr Meduri thought that they could safely rely on Mr Choudhury's advice.
At the internal meeting on 15 November 2011, the test to be applied for that purpose was described in this way:
each payment will be reviewed together with the client in the meeting to be held with him later on at 11.30 am and processed only if sufficient explanations/documents showing the link to known investments are obtained from the client and that any transaction that were not investment related would not be processed".
At the meeting with Mr Nobre on 15 November 2011, the approach was described as follows:
further explanations and documents were still necessary in order for Notable to proceed with the payments as the invoices provided by the Client in the first instance were not conclusive in order to demonstrate a link between the relevant payment and the underlying investment.
ML and FM highlighted to the Client that payments could not be processed unless and until Notable has a full understanding of such a relation."
Mr Meduri was cross-examined as to the test which was to be applied before authorising payments out of the client account. He said that he believed that it was not necessary for Notable to have been instructed to provide legal services in relation to the relevant transaction or investment. He said that he believed that the test to be applied was whether Notable was aware of the transaction or investment to which the payment related. He appeared to accept that the source of such awareness had to be something more than then the mere say-so of Mr Nobre. However, he essentially left the application of this test to Mr Landman. If Mr Landman stated that he had such awareness, Mr Meduri would accept what Mr Landman said.
Mr Landman was also cross-examined about the test which was to be applied before authorising payments out of the client account. As Mr Landman was the person at Notable who was given the task of deciding whether the relevant test was passed in each case, it was important to know what he said he had done. Mr Landman said that he relied on Mr Meduri's explanation as to the test to be applied as Mr Meduri had taken advice from Mr Choudhury and Stewarts Law. Mr Landman said that Notable had to have "prior awareness" of the transaction and there had to be paperwork which reasonably linked the payment to that transaction. He said that he was clear that Notable did not need to have been instructed in relation to the transaction. On the question as to what was meant by "prior awareness" and whether it was sufficient to rely on what Mr Nobre had said previously, or at the meeting on 15 November 2011, as the only source of the information as to the nature of the transaction, I consider that Mr Landman gave inconsistent evidence on this question. He first said that he believed that he was able to rely on what Mr Nobre said about the transaction even without any independent awareness of it. Later, he told me that it was not good enough to rely on what Mr Nobre told him about a transaction because a client could seek to mislead his solicitor in this respect. This was a crucial question for Mr Landman to explain in his evidence and the inconsistency is unimpressive. In view of this inconsistency and in view of my assessment of Mr Landman that he was prepared to lie to the court on important matters, it becomes important to look at what Mr Landman actually did to see what test he must have been applying. As will be seen, with some exceptions, Mr Landman's knowledge of the alleged underlying transactions came from what Mr Nobre told him about it.
Ms Ciserani also gave evidence about her understanding of the test to be applied before authorising payments out of the client account. She had done her own research into that question and she had been inclined to the view that Notable should only make payments in relation to transactions in which it had been instructed. That approach would have involved the question whether the second letter of engagement (of 4 May 2011), which referred in very vague terms to Notable acting for Mr Nobre in relation to unspecified investments, would have sufficed for this purpose. In any case, Ms Ciserani took the view that Notable could rely on the advice given by Mr Choudhury that it could authorise payments from its client account in relation to transactions or investments of which it had prior awareness. She believed that that was the test which was applied at the meeting on 15 November 2011 although, for that purpose, Notable was relying on Mr Landman to apply that test.
In advance of the meeting with Mr Nobre, Mr Meduri had obtained information about the various intended recipients. He had commissioned searches in relation to these recipients. The principal searches were carried out using Lexis/Nexis but there were also checks of sanction lists and some searches using Google. Some of the results of these searches were copied into the trial bundles where they occupied about three full lever-arch files. There was hardly any reference to these searches at the trial apart from drawing attention to the fact that they existed. That was because these hundreds of pages did not contain any information of any real relevance about the intended recipients. On the other hand, the searches had not brought to light any matters of particular concern about the intended recipients. I was also told that Notable obtained many more pages of search results (in excess of a further 2000 pages) which were not copied into the trial bundles.
At the meeting with Mr Nobre, Mr Meduri appears to have spent the bulk of his time applying himself to a review of these searches. Ms Ciserani assisted him to locate the results of the searches which related to individual intended recipients. Thus, when an intended recipient was identified, Mr Meduri would look at the results of the search in relation to that recipient to see if he could see any negative comment. Having carried out that exercise and having found no negative comment, he considered that Notable had done what it could to implement Mr Choudhury's advice to carry out checks on the intended recipients. It is likely that some of the searches which appear in the trial bundles were not available to Mr Meduri at the meeting on 15 November 2011. An example of this happening is the search in relation to Ms Zarubina which was obtained at 9.24 am on 16 November 2011. Further, the time sheets for Mr Bulzinetti and Mr Signori of Notable suggest that they spent time on 16 and 17 November 2011 carrying out such searches. It also seems likely that Mr Meduri's review of the results of the searches, which were available on 15 November 2011, was somewhat superficial. However, even if he had applied himself diligently to every page of the results of the searches, I do not think that he would have acted any differently as a result because, after all, the results did not contain any information of any real relevance. Nonetheless, I consider that Mr Meduri genuinely thought that what he had done was a permissible way of implementing Mr Choudhury's advice to carry out checks on the intended recipients.
Mr Meduri, with the possible exception of the payments in relation to Palladio and Fairfax, did not involve himself in the part of the meeting which sought to apply the test as to whether Notable had prior knowledge (apart from the mere say-so of Mr Nobre) of the underlying transaction or investment. Mr Meduri left that to Mr Landman.
Mr Landman's role at the meeting was to deal with the issue as to whether Notable had prior knowledge (apart from the mere say-so of Mr Nobre) of the underlying transaction or investment. Mr Landman did not separately involve himself with the implementation of Mr Choudhury's advice to carry out checks on the intended recipients (unless that came up as part of what he was considering as to Notable's knowledge of the underlying transaction or investment). He left the issue of checks on intended recipients to Mr Meduri.
At the end of the appraisal process, such as it was, in relation to each intended recipient, Mr Landman and Mr Meduri signed a standard form used by Notable to ask for a transfer to be made out of the Notable client account. At this meeting, the course followed (with one or two exceptions) was that Mr Meduri would sign his name as the person requesting that the transfer be made and Mr Landman would sign to authorise the transfer.
I will now make my findings as to what Mr Landman said and did in relation to each of the payments which were considered at the meeting on 15 November 2011. I heard detailed submissions as to whether the request for payment and the supporting documents, in each case, were suspicious and whether Mr Landman applied a test as to prior awareness (from a source other than Mr Nobre) or some other test and what the result of applying one or other test should have been. In view of the amount of detail with which I was presented, I consider that it is not necessary to rehearse all of that detail in this judgment but instead I will record my findings and the essential reasons for making those findings.
The first payment authorised was of 1,000,000 to Renaissance Ltd. As will be seen, later in this judgment I describe the evidence at the trial as to Renaissance and the involvement of Mr Louanjli and Mr Elbied in relation to that company. It is not suggested that the facts which I find in relation to Renaissance were matters which were known to anyone at Notable on 15 November 2011.
Mr Nobre's payment instruction document of 3 November 2011 referred to the proposed payment as being a "financial services fee". Mr Nobre produced two different invoices in relation to this proposed payment. Both invoices were dated 4 November 2011. One invoice stated that it was for "management consultancy duties". The second invoice stated that it was for "discretionary management on financial services through creation of SPVs, Estate Planning services (optimize real estate projects in European countries such as France, Monaco, Luxembourg, Portugal) and optimization of investments (investment portfolio) and liabilities (credits)". The attendance note of the meeting repeated the wording of this second invoice. The second invoice did not appear to relate to investments in the United Arab Emirates.
In Further Information provided by Mr Landman, he had stated that the proposed payment was believed to be for a consultancy service managed by Mr Boehringer. In his witness statement, Mr Landman said that the proposed payment related to services provided in relation to a business that Mr Nobre had been looking to invest in in Dubai. He said that he was aware that Mr Nobre had discussed with Mashreq Bank in Dubai the possibility of Larn and Erbon opening bank accounts in Dubai. He said that Notable had been asked in December 2010 to forward notarised documents to Mr Boehringer of Renaissance. Mr Landman also said that he understood from what Mr Nobre and Mr Baker had told him that Mr Nobre had been in Dubai with Mr Wallace earlier in the year to explore potential investments. Mr Wallace had told Mr Landman that the particular transaction in question was not proceeding.
When cross-examined, Mr Landman agreed that he had not previously heard of Renaissance. When asked about the difference between an invoice for investments in Europe and his alleged belief that the invoice related to investments in Dubai, he suggested that the invoice was for both types of investment. He accepted that he did not know of any link between Mr Boehringer and Renaissance.
I find that Mr Landman had no idea as to what the invoice for 1,000,000 related to. The description in the second invoice of the services rendered is in general terms and appears deliberately vague. When Mr Landman first attempted to explain what he knew about these services, he said that they related to investments in Dubai but the second invoice provides no support for any such belief. He also suggested a connection between Mr Boehringer and Renaissance but he had no basis for that statement. I find that Mr Landman did not have any knowledge of the alleged transaction or investment in this case. He did not say that he even asked Mr Nobre on 15 November 2011 any questions as to what was involved and he did not say that Mr Nobre volunteered any explanation. Although Mr Landman said that he had heard much earlier from Mr Nobre about a desire to invest in Dubai, that possibility does not appear to me to have any relevance to the question whether Mr Landman knew about the underlying transaction or investment which had led to these invoices. Accordingly, if I ask myself whether Mr Landman knew about the underlying transaction from Mr Nobre or from an independent source, the answer is the same: Mr Landman did not know. I also find that Mr Landman could not possibly have believed that his state of mind satisfied the test which he says that he knew he had to apply. He could not possibly have genuinely believed that his state of ignorance of the underlying transaction could satisfy whatever precisely the test as to knowledge required. I find that when Mr Landman told Mr Meduri that he could approve this payment because he was aware of the underlying transaction he was saying to him something which he, Mr Landman, knew to be untrue. The reason why Mr Landman said something which he knew to be untrue was that he wanted to do what Mr Nobre had asked him to do. He wanted to make this payment, and the other payments, which Mr Nobre had requested. He, or Mr Meduri, might find that they could not make a payment if there was no supporting invoice produced by Mr Nobre but Mr Landman was not going to refuse to authorise a payment because he was not aware of the underlying transaction. Instead, he was going to say, even if the statement was not true, that he was aware of the underlying transaction.
The second request for a payment was to Accounts Centre CY Ltd, a company apparently incorporated in Hong Kong. The invoice was for £160,000 and it suggested that the fee was for forming companies possibly with the names, Bank Ltd, Banking Ltd, London City Bank and Command Ltd. Mr Landman had not heard of this payee nor indeed of the formation of the companies referred to in the invoice. He did not know whether the companies existed and, if they did, whether they had any connection to Mr Nobre. In his witness statement he suggested the possibility this invoice might have been connected to an idea which Mr Nobre had told him that he had, namely, the formation of a trading platform and the purchase of intellectual property rights in respect of security software. I find that Mr Landman did not know about the alleged transaction to which this invoice related, whether from Mr Nobre or from another source. I find that he dishonestly told Mr Meduri that he was aware of the underlying transaction and that Notable could authorise the payment requested by Mr Nobre.
The third request for a payment was to Intrasales Ltd. The invoice was for $5 million. This was the largest of the payments made as a single transfer. The description of the services rendered was somewhat difficult to understand but might have been stating that Larn was obliged to pay this sum in relation to bank charges for "SWIFT'S MT 760". The invoice was signed by a Mr Darmudas. Mr Landman accepts that he authorised this payment at the meeting on 15 November 2011. The money was transferred from Notable's account on 16 November 2011. As it happened, the payment made from Notable's client account was returned by the bank to which it had been sent. There was evidence that Mr Landman, after 15 November 2011, sought further information about the basis of this invoice and he was given further information. There was some investigation as to what that information amounted to and what had subsequently happened to a document which was said to have been provided to Mr Landman. However, what matters for present purposes is what Mr Landman knew about the alleged transaction which was the subject of this invoice when he approved the payment on 15 November 2011. I am not satisfied on his evidence that he did know about the alleged transaction yet he approved the payment on the basis that he was aware of it.
The fourth request for a payment was to Mr Darmudas, who had signed the Intrasales invoice. There was an invoice from Mr Darmudas for $270,000 which was said to be for consultancy services rendered to Larn in relation to seeking investment projects in Hong Kong and China. The payment was to be made to a bank in Latvia. Mr Landman was not able to give any specific evidence about what he knew on 15 November 2011 about the alleged transaction in relation to this invoice. I am not satisfied on his evidence that he did know about the alleged transaction yet he approved the payment on the basis that he was aware of it.
The fifth request for a payment was to Notable and/or Intrust. Notable had prepared invoices for £210,000 and £9,150. Intrust had prepared invoices of £10,000 and £24,000. It is not alleged that Mr Landman did not know about these matters. The fee of £210,000 was made up of a charge of £175,000 and VAT of £35,000. The fee of £175,000 comprised a fee of £125,000 in accordance with the first letter of engagement plus £50,000 said to be due pursuant to the second letter of engagement. The fee of £9,150 was for certification services. The Intrust invoices were the subject of the forty-third and forty-fourth requests for payment which are considered below.
The sixth request for a payment, of £250,854.48, was to Travel & Lifestyle Ltd. The invoice for this sum was for unspecified "agreed services". The seventh request for a payment, of £150,000, was to Mr Beagelman. The invoice for this sum was for unspecified "special services". The eighth request for a payment, of £100,000, was to Secure Communications International Limited. The invoice for this sum was for "Larne (sic) MB security systems partnership investments". Mr Beagelman was connected to Travel & Lifestyle Ltd and Secure Communications International Ltd. Mr Landman had introduced Mr Beagelman to Mr Nobre and when Mr Landman saw that Mr Beagelman and his companies were to receive substantial sums from Mr Nobre, Mr Landman had emailed Mr Beagelman in the morning of 15 November 2011 to ask him to pay Mr Landman an introduction fee.
Mr Landman did have some snippets of information about Mr Beagelman which might have been relevant to these three invoices. First, he knew that Mr Beagelman had helped Mr Nobre with negotiations with the Landmark Hotel. Secondly, Mr Landman knew that Mr Nobre had dealings of various kinds with Mr Beagelman which might have involved the question of security for Palladio or business matters or even investments. Mr Landman gave evidence that he had heard of a proposal to invest in the encryption of digital communications. I do not think that Mr Landman knew that there was an actual underlying transaction or investment which had led to these invoices being raised. Even if Mr Landman might have speculated as to whether Mr Beagelman had provided some advice in relation to an investment which had not come about, or even if Mr Beagelman had offered some advice about security at Palladio, I do not consider that Mr Landman knew what these large sums for specified services were truly for. I find that Mr Landman appreciated that he did not know this but yet he approved the payments saying to Mr Meduri that he was aware of the underlying transaction or investment.
The ninth request for a payment was of CHF 300,000 to a Swiss lawyer, Maitre Bellanger. The proposed payment was suggested to be partly for the purchase of a company and partly for fees. This payment was not made. The reason it was not made was that Mr Nobre had not produced an invoice for this sum. I find that Mr Landman did not know about the alleged underlying transaction although he told me that he did know of it because he believed that it was part of Mr Nobre's "tax planning".
The tenth request for a payment was of CHF 300,000 to Ms Weir. Ms Weir had not provided an invoice to Mr Nobre. Mr Nobre's request for this payment had described the payment as being for "Consulting Services, Expenses and Bonuses". The note of the meeting on 15 November 2011 referred to this payment being for Ms Weir's assistance in connection with Palladio and the note referred to Ms Weir making certain arrangements, in particular in relation to surveyors and architects.
Mr Landman knew who Ms Weir was and he knew of her former relationship with Mr Nobre. He knew that Mr Nobre had expressed an interest in buying Palladio for himself and Ms Weir to live in. He knew that Ms Weir had gone to look at Palladio as a potential future home. The idea that Ms Weir had become entitled to be paid a fee for what had occurred in this respect is absurd. Yet Mr Landman persisted in his evidence in pretending that he genuinely believed that this payment was a payment of a fee for these services. I do not accept that Mr Landman ever believed any such thing. The statement that this payment was a fee for consultancy provided by Ms Weir to Mr Nobre was simply a false statement and Mr Landman knew that to be the case. I also do not accept Mr Landman's evidence that he thought that part of this payment was for other business advice which Ms Weir had given to Mr Nobre.
Further, Mr Landman knew that Ms Weir had told Mrs Landman that Mr Nobre had spent some £200,000 of Ms Weir's money prior to August 2011. I find that Mr Landman must have realised that Mr Nobre's payment to Ms Weir was connected with this fact and his evidence to the contrary was untrue.
The eleventh request for a payment was to Emery Financial or to Mr Bradford Sarvak. Emery Financial's invoice was for $300,000 for "consultancy fee and expenses". The invoice requested that the money be paid to the bank account of Mr Sarvak. Mr Landman approved this payment and stated that he was aware of the underlying transaction. It is plain that he was not so aware. The furthest he was able to go in his evidence was to say that Mr Nobre told him at the meeting on 15 November 2011 that Mr Sarvak was someone who had helped him with finance in the United States but Mr Nobre gave no further details and Mr Landman did not know anything more. This was plainly not enough to satisfy the test which Mr Landman said that he was seeking to apply and I find that Mr Landman was not genuinely seeking to apply that test.
The twelfth request for a proposed payment, of $247,500, was to Mr and Mrs Boehringer. Their invoice described the services rendered as "consultancy/advisory and logistical support". I find that Mr Landman was not aware of the alleged underlying transaction in this case and that he knew that he was not aware of any such transaction but yet he told Mr Meduri that he was aware and he approved the payment.
The thirteenth request for a payment, of $50,000, was requested by Mr Nobre on 3 November 2011. The payment appears to have been intended to be made to Mr Boehringer's American Express account. Mr Nobre did not produce an invoice for this sum and on 15 November 2011 he withdrew his request for this payment.
The fourteenth request for a payment, of £250,000, was to HM Consultants. Its invoice referred to the provision of security services rendered from July to September 2011 but it also referred to "consultancy fees" and "procurement of security equipment and vehicles" and other matters. In his witness statement, Mr Landman said that he believed that the sum was an "advance payment" for security services. When cross-examined, he said that he had been told that some of the payment was for security at Palladio. If that statement had been true, as Mr Nobre had not bought Palladio, the only possible connection between this invoice and Palladio would have been that some preliminary advice on security might have been given and a small sum might have been payable for that advice. Mr Landman suggested that this invoice was related to a transaction of which he was aware, namely, the former intention to purchase Palladio. I do not consider that this invoice was ever capable of being approved on that basis. Mr Landman knew that the invoice did not relate to an underlying transaction or investment. Mr Landman gave evidence that he had reason to believe that Mr Nobre did have a security guard of some kind but the provision of security services was not an underlying transaction or investment. Insofar as Mr Landman suggested that he believed that this payment came within the advice that Mr Choudhury had given, I do not accept his evidence. This was obviously a case of Mr Landman allowing Notable's bank account to be used to pay such bills or invoices as Mr Nobre presented and Mr Landman knew that.
The fifteenth request for a payment, of 100,000, was to la Compagnie des Courtiers et Marchands de France. The invoice was in French and Mr Landman did not speak or read French although he suggested that he could guess what the invoice said. The invoice described the services so as to refer to fees for advice and negotiation for the purchase of the hotel assets of Group Starwood in France. Mr Landman did not know about the alleged underlying transaction or investment apart from a statement which he says Mr Nobre made to him at some earlier point in time that Mr Nobre was negotiating to buy a group of hotels in France. Mr Landman did not know if such a transaction had ever taken place and he had not heard of the company which rendered the invoice. It may be that this French company was connected with Mr Amar, who is referred to below, but Mr Landman did not know that. I find that Mr Landman did not know of the underlying transaction or investment in this case but he said that he did.
The sixteenth request for a payment, of 105,000, was to Mr Amar. The seventeenth requested payment, of 300,000, was also to Mr Amar. When Mr Nobre requested these payments on 3 November 2011, the first was described as being for a "signing bonus" and the second was described as being an "executive loan". Mr Nobre then produced an invoice from Mr Amar for the meeting on 15 November 2011. There was a single invoice which described the sum due as "fees for chief of staff for 2011". The sum in the invoice was now £405,000 not 405,000. Nobody at Notable appears to have noticed this change of currency. Mr Landman knew that Mr Amar was described as Mr Nobre's "chief of staff" but I think that he had little idea of what his duties involved. Mr Amar was French and Mr Landman knew that he spoke hardly any English so his attendance at business meetings, conducted in English, would not have involved his participation in the discussion of business matters. It was not alleged that there was any underlying transaction or investment. The payment was to be simply a sum of money which Mr Nobre wished to pay Mr Amar. This payment plainly did not meet the test stated by Mr Choudhury and I find that Mr Landman knew that. The reason that he approved the payment was that he wished to follow Mr Nobre's instruction to make the payment. He was knowingly allowing Notable's client account to be used as a bank for Mr Nobre.
The eighteenth request for a payment, of £555,000, was to Mr Nobre's account at Metro Bank. This plainly did not relate to an underlying transaction or investment and Mr Landman's conduct is not to be assessed by reference to whether he knew of such a connection. I consider that Mr Landman's conduct would be wrongful if he knew that Mr Nobre was not entitled to treat the money in Notable's client account as his money, or the money of Larn which was wholly owned by him. Later in this judgment, I will consider Mr Landman's state of mind in relation to that matter. If Mr Landman believed that the money in Notable's client account belonged to Mr Nobre, then he would not be guilty of any wrongdoing in authorising the transfer of that money to Mr Nobre's own bank account.
The nineteenth request for a payment, of CHF 3.5 million, was to Mr Nobre's bank account in Switzerland. In relation to this proposed payment, Mr Nobre had produced documents, in French, from a Mr Paumier in Geneva which advertised two businesses (two bars in Geneva) as being available for sale at asking prices which totalled CHF 2.1 million. Mr Landman said that Mr Nobre told him that the balance of the CHF 3.5 million was to be used for fees and refurbishment of the properties. There was considerable examination of what Mr Landman knew about these proposed transactions. The furthest his evidence went was that Mr Nobre had told him at some earlier time that he was interested in investing in properties in Geneva. If it is to be asserted that Mr Landman knew of the underlying transaction or investment in this case, I would not accept that assertion. Mr Landman did not know enough to amount to such knowledge. Further, his only source was Mr Nobre himself. However, since the money was to be paid to Mr Nobre's bank account, I consider that this payment falls to be dealt with in the same way as the payment into Mr Nobre's Metro account. The question of possible wrongdoing by Mr Landman in this respect should turn on Mr Landman's knowledge of whether this money belonged to Mr Nobre.
I can now take a number of requests for payments together. These are the requests for payments numbered 20 (of £105,000 to Mr Lucas), 21 (of £100,000 to Mr Lucas), 22 (of $500,000 to Mr Lucas), 23 (of 250,000 to Mr Lucas) and 40 (various payments, described below, to Mr Lucas, Ms Lucas and Acumen Founded Ltd). The reason for these payments was variously described. The descriptions given in the request of 3 November 2011 differed to some extent from the invoices which Mr Nobre later provided. These invoices described the subject matter of the payment as follows:
(1) No. 20 12 months Board member and executive services in advance, start date to be agreed;
(2) No. 21 for recruitment services, to provide two board members as discussed for risk and compliance/operations for period of 12 months inclusive of salary and expenses;
(3) No. 22 funds for purchase of Alphacet Inc; the amount had changed from a dollar amount to £345,000;
(4) No. 23 purchase of Lycias Investments Ltd (Cyprus);
(5) No. 40 there were nine invoices, as follows:
a) 3 invoices for £100,000 each to Mr Lucas described as tranches no 1, 2 and 3 funds for purchase of One Blotter Holdings Ltd, A, B and C shares;
b) 115,000 to Mr Lucas described as - tranche no 4 funds for purchase of One Blotter Holdings Ltd, A, B and C shares;
c) 4 invoices for £100,000 each to Ms Lucas described as tranches no 5, 6, 7 and 8 funds for purchase of One Blotter Holdings Ltd, A, B and C shares;
d) £500,000 to Acumen Founded Ltd described as - tranche no 9 funds for purchase of One Blotter Holdings Ltd, A, B and C shares.
Mr Landman was aware of Mr Lucas' existence. During the meeting on 15 November 2011, Mr Landman had a telephone conversation with Mr Lucas. Mr Landman asked for some documents to confirm what was involved in relation to these invoices. Mr Landman told me that Mr Lucas was very aggressive and threatening as to the time Notable was taking to make the payments. Mr Lucas then sent an email to Mr Landman giving some basic information about One Blotter Holdings Ltd, Alphacet Inc and Lycias Investments and stating that Larn was acquiring shares in the first and third of these companies and was acquiring assets from the second of these companies. Mr Lucas advised Notable not to delay in relation to One Blotter Holdings Ltd. Notable then carried out searches in relation to Mr Lucas and did not find any negative comments about him. Later that day, Mr Lucas sent a second email to Mr Landman suggesting that there was considerable time pressure in relation to these payments; this was after some at least of the payments had been authorised.
I find that Mr Landman had some rather basic information about these transactions. He was not clear about the background to the payments in relation to alleged board members. He suggested that the payment was essentially part of the cost to Larn of its acquiring interests in these companies from Mr Lucas.
The twenty-fourth request for a payment, of £105,000, was to Mr Redpath. The invoice produced by Mr Nobre stated that the payment was for one year board member and executive services fees in advance. Mr Landman said that he was told by Mr Nobre that Mr Redpath was to be a board member of one of the companies in which Larn was acquiring an interest from Mr Lucas. Mr Landman said that he thought that Mr Lucas might have said the same thing. At best for Mr Landman, he was not clear what this payment was for but he authorised it and said that he was aware of the underlying transaction.
The twenty-fifth request for a payment was for Miss Solaz. Mr Nobre did not produce an invoice for this payment. I find that it was for that reason that Notable did not make this payment.
The twenty-sixth request for a payment was for Mr Singh. Mr Nobre did not produce an invoice for this payment. I find that it was for that reason that Notable did not make this payment.
The twenty-seventh request for a payment was for a payment to Mr Paumier of CHF 110,000. The twenty-eighth request for a payment was for a payment to Mr Paumier of CHF 75,500. Mr Nobre produced two invoices in French from Fitz-James Group SA of which Mr Paumier was said to be the Chief Executive Officer. The first invoice stated that the fee was for conducting searches for property for investment purposes and for negotiations in connection with opening a bank account. The second invoice stated the sum due was commission for the purchases of the two businesses in Geneva (the two bars referred to above). In relation to the first invoice, I find that Mr Landman had no information as to any underlying transaction. As to the second invoice, for the reasons I gave earlier when considering the position in relation to the alleged proposal to purchase these two businesses, Mr Landman did not have knowledge of the underlying transaction or investment.
The twenty-ninth request was for a payment to Mr Pretot, a lawyer in Geneva. Mr Nobre produced an invoice dated 15 July 2010 for CHF 19,115, although the request was for a payment of CHF 25,000. The fee was expressed to be for services, which were not further specified, from 12 March to 12 July 2010. Mr Landman had no information whatever as to what this invoice related to and I find that he did not even ask Mr Nobre for an explanation.
The thirtieth request was a payment of 105,000 to 2LC Maintenance Sarl. Mr Nobre produced an invoice dated 19 October 2010. The invoice was in French and appeared to be for a consultancy in relation to a bottling factory. Mr Landman did not have any prior knowledge of any underlying transaction or investment to which it related. He told me that he asked Mr Nobre to what it related and Mr Nobre gave some rather general information that the invoice was for engineering work to a bottling factory.
The thirty-first request was for a payment of 14,000 to Mr Thierry Desimeur. Mr Nobre produced an invoice in French which appeared to say that the payment was due for advice and computer engineering. Mr Landman had no information as to what this invoice was for and he did not even ask Mr Nobre for an explanation.
The thirty-second request was for a payment of 700,000 to Mr Goeders. Mr Nobre produced an invoice which referred to a deposit in accordance with a memorandum of understanding concluded between Mr Goeders and Larn awaiting the signing of the final agreement by the deadline established in the letter of 29 September 2011. Mr Landman only had a superficial understanding of what this payment was for and the source of that information was Mr Nobre. Mr Landman said that Mr Nobre had mentioned this project to him at an earlier time or times and that he was very excited about it. Mr Landman said that he believed that Ms Ciserani had seen a draft of the memorandum of understanding referred to in the invoice.
The thirty-third request was for a payment of 350,000 to Professor Nobre Rogerio. Mr Nobre did not produce an invoice for this payment and it was not made. I find that the reason why Notable did not make this payment was simply because no invoice was produced.
The thirty-fourth request was for a payment of 8,000 to Ms Nobre Morais. Mr Nobre did not produce an invoice for this payment and it was not made. I find that the reason why Notable did not make this payment was simply because no invoice was produced.
The thirty-fifth request was for a payment of CHF 100,000 to Ms Zarubina. Mr Nobre produced an invoice for this payment. The invoice stated that the sum due was an advance payment for "Board's membership and Executive Services". I find that Mr Landman did not know anything as to what this invoice related.
The thirty-sixth request was for a payment of £350,000 to Cannon Capital Ltd. Mr Nobre produced two invoices. The first invoice was an undated invoice from Share Ltd or possibly Share Capital Ltd for the sum of £250,000 which was said to be due as a deposit for the contracted sale of six properties bought by Larn through Cannon Capital. Mr Nobre also produced copies of six contracts all dated 28 March 2011 for the identified properties. The contracts named the purchaser as Larn and stated that the deposits due under the contracts had been paid. Mr Landman may have had snippets of information about this alleged transaction. He knew Mr Wallis who was connected with the invoicing companies. Mr Landman suggested that he knew something more about these contracts but I do not accept his evidence. I find that he did not have any real information about the alleged transaction apart from what was stated in the invoice.
The second invoice from Share Ltd or Share Capital Ltd stated that £100,000 was due as repayment of a loan of £50,000 plus interest of £50,000. Mr Landman gave two conflicting versions of what he thought about this invoice. In his witness statement, he said that he thought this invoice related to a loan to enable Larn to buy the property portfolio. When cross-examined, Mr Landman said that the statement in his witness statement was incorrect. He also suggested that the statement in the invoice was wrong and that when he approved the payment pursuant to this invoice, he had known that the matter was misdescribed in the invoice. He suggested that the payment of £100,000 was a penalty which was due from Larn because it had failed to pay a sum that was due under the contracts at an earlier point in time. In view of Mr Landman's inconsistent evidence as to what the second invoice related to I am not able to find that he knew what the second invoice related to at the meeting on 15 November 2011. I note that it was put to Mr Landman that the true position was that Mr Wallis had lent money to Mr Nobre and the payment being made to Mr Wallis' company was the repayment of that personal loan to Mr Nobre. I think that it is likely that this was indeed the purpose of the payment but I am not able to find that Mr Landman knew that.
The thirty-seventh request was for a payment of £150,000 to Mr Baker. Mr Nobre produced an invoice from Mr Baker from his residential address for £150,000 which was said to be for "consultancy services rendered". Mr Landman knew of Mr Baker. He said that he was a recent acquaintance acquired as a result of Mr Landman's association with Mr Nobre. Mr Landman attended a meeting with Mr Nobre, Mr Baker and Mr Baker's sister in law on 27 September 2011. The meeting lasted up to one hour. At the meeting, Mr Baker and his sister in law tried to persuade Mr Nobre to make a certain investment which they were marketing. Mr Landman initially suggested that because of this meeting he was aware that Mr Baker was providing consultancy services to Mr Nobre. He later agreed that this meeting did not involve Mr Baker providing consultancy services to Mr Nobre. He then suggested that Mr Baker was providing consultancy services to Mr Nobre at some other time or in some other way but he was not able to give any real information to support that suggestion.
Mr Landman had other information about the connection between Mr Nobre and Mr Baker. On 21 October 2011, Mr Landman was forwarded an email from Mr Baker to Mr Nobre. In the email, Mr Baker complained to Mr Nobre about his "delayed payment". The email does not identify what the payment was for but the email does complain bitterly about Mr Nobre's failure to make the payment and the fact that Mr Nobre had made a number of promises which he had not kept. Mr Landman also knew that on 3 November 2011, Mr Nobre had told Mr Meduri and Ms Ciserani that the thirty-seventh request for payment was for the repayment of a loan to Mr Baker. Mr Meduri wrote "return loan" on Mr Nobre's list of requested payments. On 4 November 2011, Mr Landman reviewed Mr Nobre's list, saw the words "return loan" written by Mr Meduri and then wrote "on hold" besides them.
I find that Mr Landman did not know that the proposed payment to Mr Baker was for consultancy services of which he was aware. It is more likely than not that Mr Landman believed that the payment was the repayment of a loan which Mr Baker had made to Mr Nobre but I am not able to find that Mr Landman was aware of the detail of the arrangements about such a loan.
The thirty-eighth request was for a payment of $250,000 to Mr Rejniak. The thirty-ninth request was for a payment of $250,000 to Mr Rejniak with the payment being made to a bank account of a firm of solicitors in Dublin. Mr Nobre produced two invoices from Mr Rejniak, described as invoice 001 and invoice 002. Both invoices were dated 4 November 2011 and contained the words "request for advance payment" but did not otherwise state what the payments were for. Mr Landman was aware that Mr Rejniak was a director of AIC and Notable had obtained a copy of Mr Rejniak's passport. However, Mr Landman did not know what these payments were for. He asked Mr Nobre who told him that the invoices were for payment of salary to Mr Rejniak for 2011, which was contrary to what the invoices stated. Mr Landman also knew that AIC had not traded or carried on any activities. Whether Mr Landman remembered it or not, AIC had only been incorporated on 4 October 2011.
I have dealt with the fortieth request for payment earlier in this judgment.
The forty-first request was for a payment of CHF 50,000 to Geneve Expat. Mr Nobre produced an invoice in French which stated that the fee was for advice and research for possible property investments in the area around Geneva. I find that Mr Landman did not know anything about the alleged underlying transaction or investment to which this invoice related.
The forty-second request was for a request for payment of £170,000 to Nisroy Investments Ltd. Mr Landman did know a great deal about this invoice. This was to be a payment to Mr Landman himself. The fee was principally, if not exclusively, Mr Landman's personal fee for helping Mr Nobre to use the Notable client account to make the payments requested by Mr Nobre. Mr Landman did not tell anyone at Notable that this was the true position. Instead he pretended to them that it was a sum due from Larn to Nisroy, with whom Mr Landman was not connected, but Mr Landman was able to confirm that he knew of the underlying transaction so that he could authorise the payment of this sum from the Notable client account.
The forty-third request was for a payment of £10,000 to Intrust. This was said to be the sum to which Intrust was entitled for reimbursement of part of the fee paid on behalf of Mr Nobre to Gregory Rowcliffe Milner. Notable contended that Intrust was actually entitled to a slightly higher figure and the Claimants contended that Intrust was not entitled to this figure. Part of this dispute turned on whether and when Intrust had made certain payments on behalf of Mr Nobre. It is not necessary for any issue in this case for me to determine this detailed accounting point.
The forty-fourth request was for a payment of £20,000 plus VAT to Intrust. Mr Landman said that he had agreed that fee with Mr Nobre in relation to work done by Intrust and its associated companies principally in connection with the formation of Shelford in Panama. Shelford was to be the purchaser of Palladio. Mr Landman said that Mr Nobre was also liable to pay Intrust a fee for the provision of certain corporate services for Shelford and also for some VAT advice. It may be that Mr Nobre was liable to pay something to Intrust in these various respects although the position is far from clear. It may also be that Mr Nobre's readiness to agree this additional fee to Intrust was because he treated it as another charge which Mr Landman extracted from Mr Nobre in return for showing a willingness to help Mr Nobre with the use of the Notable client account to make the payments which Mr Nobre had requested.
The forty-fifth request for payment was for £14,304.28 to Mr Landman to reimburse him for the payment which had been made on behalf of Mr Nobre to Savills. I find that as between Mr Landman and Mr Nobre, Mr Nobre agreed that this sum should be paid to Mr Landman. I also find that Mr Nobre had already made a partial repayment in that respect to Mr Landman by paying the sum of £3,000 to Mrs Landman's bank account in Israel.
Finally, the forty-sixth request for payment was for £12,642.42 to Mr Landman to reimburse him for the payment he had made on behalf of Mr Nobre to Gregory Rowcliffe Milner. I find that Mr Landman did arrange for this sum to be paid on behalf of Mr Nobre and that he and Mr Nobre agreed that the sum would be reimbursed by this payment to Mr Landman.
Having considered individually the requests for payments made by Mr Nobre, I will now stand back and consider Mr Landman's response to these requests. I make the following findings:
(1) The majority of the payments were made in breach of Rule 14.5 of the Solicitors' Accounts Rules;
(2) Mr Landman was entitled to rely upon the advice of Mr Choudhury, which had been relayed to him by Mr Meduri, to the effect that it was permissible to make payments from the Notable client account, at the request of the client, if Notable knew of the underlying transaction or investment to which the payment related;
(3) Notable did not make a number of the payments which were requested; the reason for this was because Mr Nobre had not provided an invoice to Notable for such payments; the position was different in relation to Ms Weir where no invoice was provided and Notable still made the requested payment;
(4) In all cases where Mr Nobre provided an invoice for the requested payment, Notable made the payment;
(5) In making payments, Notable relied upon Mr Landman to say whether he knew of the underlying transaction or investment;
(6) Mr Landman said that he knew of the underlying transaction or investment in every case where a payment was made;
(7) In some of the cases where Mr Landman said that he knew of the underlying transaction or investment it is clear that Mr Landman did not have any relevant information, not even from Mr Nobre himself;
(8) In the cases where Mr Landman did not have any relevant information about the underlying transaction or investment, the explanation for Mr Landman's conduct is that he wanted to comply with Mr Nobre's request even though he knew that Notable was not complying with the Solicitors' Accounts Rules.
(9) In other cases where Mr Landman said that he knew of the underlying transaction or investment it is clear that Mr Landman did not have any relevant information apart from some non-specific information provided by Mr Nobre;
(10) In the cases where Mr Landman was given some non-specific information from Mr Nobre, I do not consider that he regarded that information as enabling him to comply with the Solicitors' Accounts Rules; instead, the reason why he approved the request for a payment was that he wanted to comply with Mr Nobre's request for a payment to be made;
(11) In the course of his evidence about these payments, Mr Landman repeatedly pretended that he knew more about the underlying matter than he genuinely did know;
(12) Mr Landman did not misunderstand the advice he had been given as to when it was proper for Notable to approve the requests for payments;
(13) Mr Landman did not make a genuine effort to apply the advice he had been given as to when it was proper for Notable to approve the requests for payments;
(14) Mr Landman deliberately and knowingly broke the Solicitors' Accounts Rules;
(15) Mr Landman's breaches of the Solicitors Accounts Rules were influenced by the fact that Mr Nobre had agreed to pay him £170,000 to assist him in this and possibly other respects;
(16) Mr Landman's conduct in relation to Mr Nobre's requests for payments involved Mr Landman in repeatedly and knowingly making false statements to Mr Meduri as to Mr Landman's knowledge of the underlying transaction; he was dishonest;
(17) Mr Landman was dishonest in relation to his statements to Mr Meduri even if Mr Landman thought that the money in the Notable client account belonged to Mr Nobre.
I will now make my findings as to Mr Meduri's position in relation to the payments which were authorised on or shortly after 15 November 2011. I have earlier described what Mr Meduri did in relation to searches in respect of the intended recipients. At the meeting on 15 November 2011, Mr Meduri did not try personally to apply the test as to whether Notable knew of the underlying transaction or investment. Mr Meduri was aware that with some exceptions, he did not have any such knowledge; the exceptions related to payments which were presented as being in relation to Palladio and possibly Fairfax. Mr Meduri knew that Mr Landman was the client partner for Mr Nobre. He also believed that Mr Landman had had considerable involvement with Mr Nobre in relation to proposed investments by Mr Nobre. Mr Meduri left it to Mr Landman to say whether the test as to knowledge of the underlying transaction or investment was satisfied. If Mr Landman said that he had the requisite knowledge, then Mr Meduri did not challenge that and he did not investigate what precisely Mr Landman said that he knew.
I will now continue the narrative from after the meeting with Mr Nobre on 15 November 2011
As I explained earlier, Mr Meduri had telephoned Mr Brehony in the morning of 15 November 2011 and Mr Brehony had sent a reply email to Mr Meduri. Mr Brehony emailed Mr Meduri again in the afternoon of that day asking if Mr Meduri still wanted to speak to him. Mr Meduri replied to say that he had spoken to Mr Choudhury and all issues had been resolved. He stated that Notable had:
obtained email confirmation form (sic) originating bank confirming what we discussed and letter of referral from a regulated firm in UK which backs up the source of funds of the client."
Mr Meduri then stated that Notable had received all back-up documentation regarding the payments which Notable was asked to make "relating to investments and professional fees" and it had run checks on the payees. He added that Notable had held back some payments in relation to which it was not satisfied and that Mr Nobre was opening a bank account at Barclays Bank as already agreed.
During the course of 15 November 2011, one of the proposed payees, a Mr Lucas emailed Mr Landman and Mr Meduri to put pressure on Notable to make the payment to him and his associates stressing that the matter was very urgent. I have referred to this above when considering the payments to Mr Lucas and his companies.
It appears that at some point, Mr Landman arranged a meeting to introduce Mr Nobre to Barclays Bank at 8 am on 16 November 2011.
Events after 15 November 2011
On 16 November 2011, Ms Ciserani emailed Mr Landman with a copy to Mr Meduri and others. She said that she and Ms Thompson continued to have concerns about some transactions and she referred to the proposed payments to Ms Weir, Mr Amar, HM Consultants, Mr Baker, Mr Goeders and the payment to Mr Nobre's Swiss bank account. Later that day, Mr Landman replied to Ms Ciserani, with his reply copied to Mr Meduri and others, stating that Mr Landman and Mr Meduri had approved all of these payments having considered the explanations given and the supporting documents. Later that day, Ms Ciserani emailed Mr Landman and Mr Meduri again raising a question about the proposed payment to Mr Baker. Mr Meduri then emailed Mr Landman to ask about Mr Baker's consultancy and asked two questions of Mr Landman: was he aware of the consultancy and did he know Mr Baker. Mr Landman replied: "yes".
On 18 November 2011, Mr Landman suggested to Mr Meduri that Ms Ciserani's role in future transactions should be reviewed. On or about 18 November 2011, Ms Ciserani prepared a memorandum, described as confidential, for Sharon Stone. Ms Ciserani stated that she wanted to draw attention to certain aspects of the transaction relating to Mr Nobre which concerned her. She said that she was confident about the source of funds and she explained why she took that view. However, she remained concerned about the payments requested by Mr Nobre. She referred to the advice which had been given by Mr Brehony and by Mr Choudhury. She said that in the majority of cases, she could not see any express link between the payments and investments made by Mr Nobre. She said that Mr Landman and Mr Meduri had confirmed that they were aware of all of the investments related to the payments. She said that Mr Landman and Mr Meduri had asked Mr Nobre for explanations and documents at the meeting on 15 November 2011 but she did not consider that the explanations and documents provided were conclusive. She also referred to Mr Nobre stressing the urgency of the matter as to when payments had to be made. She asked Ms Stone to examine the matter. She later made some revisions to this memorandum and sent it to Ms Stone in advance of her review of the file on Monday, 21 November 2011.
On 18 or 19 November 2011, Mr Nobre attended an appointment at Barclays Bank to open an account with them. On 19 November 2011, Ms Ciserani emailed Ms Stone and Mr Meduri with some concerns about the payments which were being made. Mr Meduri replied in reassuring terms.
On 21 November 2011, Mr Meduri met Ms Stone. He provided her with Notable's file in relation to Larn/Mr Nobre. He also gave her his version of events and his justification for the decisions which had been taken in relation to Larn/Mr Nobre. On 6 December 2011, Ms Stone prepared a report on the matter. I refer to that report below.
By 30 November 2011, Barclays Bank had still not opened an account for Larn/Mr Nobre and Mr Nobre sought advice from Mishcon de Reya (who are now the solicitors for the Claimants) as to what could be done to reclaim the balance of the 100 million which had been paid into the Notable client account. Mr Nobre was critical of Mr Landman and of Barclays Bank for the situation which had come about. On 1 December 2011, Mishcon de Reya wrote to Notable stating that they were instructed on behalf of Larn and Mr Nobre and asking Notable to forward a full copy of their files in relation to those clients, and the files were thereafter collected from Notable.
On 6 December 2011, Ms Stone prepared her report as MLRO for Notable in relation to the events concerning Larn and Mr Nobre. Ms Stone recorded that she had spoken to Mr Meduri at length, and she had also spoken to Ms Ciserani, about the events in question. Ms Stone concluded that Notable could not have done anything more than it did to mitigate the risk that the client might be involved in money laundering. The report set out Ms Stone's understanding of the history of the matter. The Claimants criticised various statements made by Ms Stone. She referred to the proposed purchase price for Palladio as being £65 million, whereas it was £37 million. She also said that the Palladio transaction was ongoing whereas it had long since ceased to be a live transaction. It was suggested to Mr Meduri that he had deliberately misled Ms Stone. He stated that he had had a short, 15 minute, meeting with her for the purpose of handing over the files to her and leaving her to get on with her review. I think the truth lies in the middle. I find that Mr Meduri did brief Ms Stone in detail based on his view of the matter. I also think that it is highly likely that Mr Meduri wanted to influence Ms Stone to think that everything had been above board and that there was no cause for concern. After all, by the time that Ms Stone became involved, Notable had received 100 million into its client account and had paid out some 15 million in accordance with Mr Nobre's instructions. It would have been a matter of concern to Mr Meduri if Ms Stone had taken the view that they had been at fault in assisting money laundering by Mr Nobre. However, I do not find that Mr Meduri misled Ms Stone in relation to the purchase price for Palladio or the continuing status of that transaction. It is more likely than not that Ms Stone made statements about those matters based on her reading of the files.
PART 4: THE CLAIMS AGAINST MR LOUANJLI, LLB, MR ELBIED, RENAISSANCE AND BRIDGE: THE FACTS
Mr Louanjli was born in Morocco but grew up in France from the age of 10. His mother tongues were Arabic and French but he spoke English fluently. He attended the University of Paris where he excelled in Mathematics and Econometrics. He took a Master's Degree from the same university. He then entered the world of banking. In 2005, he did an internship with Sociιtι Gιnerale and obtained a permanent position as a trader with that bank. In 2006, he joined Goldman Sachs and worked for them in London and New York before moving to Dubai. In 2009, he joined Falcon Bank, a small private bank in Dubai where he worked in different capacities, the last of which was as a relationship manager. In 2011, he joined LLB at its representative office in Abu Dhabi. He was offered a position at LLB on 25 February 2011 and he accepted the offer on 3 March 2011. LLB and Mr Louanjli signed a written contract of employment in May 2011 and his employment with LLB commenced on 1 June 2011. He was employed by LLB as a relationship manager. His contract of employment provided that he would abide by all internal policies issued by LLB and that he would not obtain for his own benefit any gift or other benefit from any third party in respect of any business transacted, or proposed to be transacted, on behalf of LLB. The contract also contained detailed restrictions on the disclosure of confidential information. The contract provided for Mr Louanjli to receive bonuses on introducing new clients to LLB.
Mr Louanjli described his role at LLB as a sales role where his job was to introduce potential clients to the bank and then to advise them on the opportunities of subscribing to various investments promoted by the bank. He told me that he had always been driven and ambitious in his banking career.
While Mr Louanjli was employed by LLB, his immediate superior was Mr Nico Tschui, who was head of the Abu Dhabi office. Mr Tschui was a Liechtenstein and Swiss National. He did not give evidence at the trial. The other representatives of LLB who were involved in the events which are now relevant were Mr Walser (Head of the Private Office from May 2011), Mr Maurer (relationship manager), Mr Vuille (in charge of compliance) and Mr Klar (the CEO of LLB). These four gentlemen were based at LLB's offices in Zurich. Mr Walser, Mr Vuille and Mr Klar gave evidence at the trial; Mr Maurer did not.
In 2011, Mr Louanjli was 31 or 32 years old. Although the LLB office was in Abu Dhabi, Mr Louanjli lived in Dubai throughout his employment with LLB. He went to the Abu Dhabi office from time to time but he was more often away from that office. He had an LLB email account but he did not have remote access to it. He therefore relied on his Blackberry and his personal email account for LLB business matters.
Mr Louanjli left LLB with effect from 30 September 2013 and at the time of the trial he was working as a relationship manager for a Swiss private bank in a representative office in Dubai. Mr Tschui and Mr Maurer also work for the same Swiss private bank.
On 30 January 2011, Mr Louanjli incorporated Bridge Ltd, of which he was the sole director and sole shareholder.
In early 2011, Mr Louanjli was introduced to Mr Elbied who worked for Barclays Capital in Paris. Before May 2011, Mr Elbied told Mr Louanjli that he had met a Mr Amar who worked for an individual who was extremely wealthy, had made investments in a large number of sectors and was always looking for new opportunities. This individual was Mr Nobre. Mr Amar introduced Mr Elbied to Mr Nobre. Mr Elbied then arranged a meeting, to be held in London on 4 May 2011, when he would introduce Mr Louanjli to Mr Nobre.
Mr Louanjli, with Mr Elbied, met Mr Nobre at the Landmark Hotel on 4 May 2011. The meeting lasted a couple of hours and took place in the lobby of the hotel. Mr Louanjli was very impressed by Mr Nobre and, certainly at this stage, believed him to be a man of very considerable wealth. Mr Nobre gave Mr Louanjli some information about the type and range of investments which he said that he had made. Mr Nobre then said that he had a large amount of cash which he wished to invest. He said that he wanted to form a relationship with a younger type of banker who could help him make money from his investments and such a banker could also expect to make a lot of money. He expected loyalty and trust from such a banker and, if he obtained that, the banker would benefit considerably from his generosity. Mr Louanjli wanted to have Mr Nobre as a client. Although, on 4 May 2011, Mr Louanjli was not yet officially employed by LLB, he wanted to secure Mr Nobre as a client for LLB. Mr Tschui had sent to Mr Louanjli, by email, the relevant documents needed to open an account with LLB. Mr Tschui had sent Mr Louanjli these forms as early as 9 April 2011 and Mr Louanjli then forwarded them to a personal email account on 3 May 2011, obviously in preparation for the meeting with Mr Nobre. At the meeting with Mr Nobre, Mr Louanjli began to complete the necessary documents for that purpose. Mr Louanjli printed out some of these documents on 4 May 2011 and provided them to Mr Nobre. Other documents were completed for Mr Nobre in the following days. The document which is of principal importance for present purposes was the Client Profile.
The Client Profile named LLB's client as Larn. It stated that the business relationship involved an increased risk because of a business connection in respect of commodities but it added that Larn only traded in commodity futures and not in real commodities. It stated that the approximate amount of assets to be deposited with LLB would be $8 million and the origin of those assets was said to be given in attached documents. Larn's estimated annual income was stated to be in excess of CHF 2 million and its estimated total wealth was stated to be between CHF 10 and 50 million. The beneficial owner of Larn was said to have Portuguese nationality.
The client profile referred to a corporate resolution of Larn and further documents prepared by Larn. The corporate resolution authorised the opening of a bank account for Larn with LLB and stated that the monies to be paid into the account were the result of various transactions. However, the transactions were described in a very general way and the description did not contain any specific information. It was stated that the monies would come from a western bank which would confirm that the funds were "legally earned, good, clean, clear, of non-criminal origin". It stated that Larn would seek advice from LLB in relation to a number of areas of possible future investment. This resolution was accompanied by a confirmation certificate from Larn stating that Larn complied with all customer due diligence and anti-money laundering regulations and referred to the Swiss Criminal Code, and a number of real or imaginary international controls in a large number of jurisdictions.
With the client profile, Larn provided a further document headed "Profile, Objectives and Business Investments". This contained a photograph of Mr Nobre and referred to his professional background and described in very general terms a wide range of business activities in a large number of countries. This document also referred, again in the most general terms, to the investments which were intended to be made by Larn and for which it would wish to have LLB's advice. Mr Louanjli said that he believed what Mr Nobre had stated in the documents which accompanied the client profile. However, he also agreed with the suggestion put in cross-examination that he could not care less what the documents said provided that compliance at LLB were satisfied with them.
The client profile was signed on 9 May 2011 by Mr Tschui as relationship manager, presumably because Mr Louanjli was not yet employed by LLB. Mr Tschui had not met Mr Nobre. The client profile was countersigned by Mr Limacher from the Anti-Money Laundering Department of LLB although he added the words: "profile needs to be completed". Mr Limacher also prepared a check list of other information which needed to be provided. Finally, the client profile was signed on behalf of the executive board of LLB.
Mr Nobre allowed Mr Louanjli to inspect his passport and provided him with a copy of the passport. Mr Louanjli provided the copy to Mr Tschui who confirmed that he had seen the original passport, although he had not.
On 10 May 2011, someone at LLB carried out a Google search in relation to Larn but the search did not reveal anything of any relevance.
On 13 May 2011, Mr Tschui emailed Mr Louanjli to ask for more information about Larn. In response to the question as to where the funds into LLB would come from, Mr Louanjli stated: "HSBC London". He added that Mr Nobre had made "the rest of his money" from real estate transactions in Portugal in the 1990s.
On 13 May 2011, Mr Limacher emailed Mr Maurer and Mr Tschui and others stating that more information was required from Larn and Erbon (for whom it was apparently intended an account would also be opened). He stated that the documents supplied were very general, not verifiable and not plausible. Mr Maurer also added his own requests for further information. Mr Tschui then emailed Mr Louanjli passing on the request for more information in three respects.
Mr Louanjli sent Mr Tschui's request for further information to Mr Elbied at his Renaissance email address. Mr Elbied replied that he feared that Mr Nobre would not be prepared to answer a question as to which banks would send the money to LLB and who would be the sender.
It was initially intended that Mr Elbied would enter into an intermediary agreement with LLB whereby LLB would reward Mr Elbied for the introduction of Larn. Mr Louanjli had told Mr Tschui that Mr Elbied had effected the introduction and Mr Tschui had emailed to Mr Louanjli a draft intermediary agreement. However, Mr Elbied considered that it would be better if his employer, Barclays Capital, did not come to know that he had introduced a potential client to LLB and he did not enter into the intermediary agreement. At around this time, on 20 May 2011, Mr Elbied formed Renaissance Ltd in the UAE.
On 20 May 2011, Mr Louanjli went to the LLB offices in Zurich to meet some of the people he would be working with. He told me that he also dealt with the setting up of an account for Larn. Later that day, Mr Maurer emailed Mr Louanjli with a copy to Mr Tschui stating: "Below the account details for Larn Limited"; and then giving numbers for LLB bank accounts in euros, pounds and dollars. The email did not suggest that there was any restriction on the use of the account. Mr Louanjli forwarded this email to Mr Elbied. Either Mr Elbied or Mr Louanjli then gave the account numbers to Mr Nobre.
On 23 May 2011, Mr Louanjli had a telephone conversation with Mr Maurer. Mr Louanjli said that he was working on a memorandum for Larn which he would send to Mr Maurer. Mr Maurer said that he was waiting for Mr Louanjli's memorandum and then the account would finally be opened. This exchange shows that Mr Louanjli knew that he had to send a memorandum on Larn to Mr Maurer before the account would be opened so that it would be a functioning account. On 24 May 2011, Mr Maurer emailed Mr Louanjli, with a copy to Mr Tschui, stating that he was still waiting for the memorandum on Larn, that compliance were putting pressure on him because Mr Limacher had made an exception by providing an account number. On 25 May 2011, Mr Maurer and Mr Louanjli had a telephone conversation about opening a bank account for a client but it is not completely clear that this referred to Larn.
In May 2011, Mr Nobre had provided Mr Louanjli with a copy document which purported to be a bank guarantee issued on 6 May 2011 by a bank in Funchal in favour of Geneve International Corp for the sum of $2.37 billion payable on a maturity date of 6 June 2012. On 26 May 2011, Mr Louanjli telephoned Mr Tschui to discuss this document. Mr Tschui was strongly of the opinion that the document was obviously a fake and expressed himself in strong terms to Mr Louanjli. It may be that Mr Louanjli was minded to treat the document at face value before this telephone call but then he appeared to accept that he was 95% persuaded that the document was a fake but he still wanted to check in case it was genuine.
On 31 May 2011, Mr Maurer emailed Mr Louanjli to say that he was still waiting on his memorandum on Larn. On 1 June 2011, Mr Limacher emailed Mr Maurer and asked for a comprehensive client profile for Larn. Mr Maurer replied that there was no longer a need for an account for Larn and he would have the operations department of LLB close the account immediately. Mr Louanjli told me that he had asked Mr Maurer to close the account. His reason was that he was aware that Mr Nobre had not sent any money to LLB and that an account opened at his request which was not funded would adversely affect the calculation of his bonus.
On 6 June 2011, LLB prepared a business card for Mr Louanjli saying that he was a Director, Private Banking for LLB. By this time, Mr Louanjli had an LLB email address.
On 7 June 2011, Mr Maurer gave instructions to close Larn's account. The instructions were said to be at the request of Mr Tschui and Mr Louanjli. Mr Maurer also noted that no transactions had taken place in relation to the account "as the profile was not complete". On 7 June 2011, Mr Maurer had a Bloomberg conversation with Mr Louanjli stating that Larn was "not serious" and adding that LLB had already opened an account for Larn. On the same day, Mr Louanjli spoke to Mr Maurer describing Mr Nobre as a bullshitter. Later on 7 June 2011, Mr Louanjli telephoned Mr Tschui saying that he had spoken to Mr Nobre who had asked for the account to be kept open for 48 hours and he would transfer five million into it. Mr Maurer, who was also on the telephone to Mr Tschui, said that the account was already closed. Then Mr Maurer said that the account was never actually open because he had been waiting for Mr Louanjli's memorandum on Larn. Mr Tschui then explained Mr Maurer's last point to Mr Louanjli saying that the account "was not officially opened". Finally, on 22 June 2011, Mr Maurer gave further instructions to close the account in the name of Larn. At this stage, the documents refer to there being a "debit side lock" on the account. I understand that this meant that money could be paid into the account but not paid out.
The documents do not disclose any communications between Mr Nobre and Mr Louanjli from this time until 18 August 2011. In October 2011, Mr Louanjli told his colleagues at LLB that Mr Nobre had continually promised to send money but the money had never arrived. He also told his colleagues that he had told Mr Nobre that the Larn account at LLB had been closed.
Then, on 18 August 2011, Mr Nobre sent an email to Mr Louanjli stating that he had given instructions for $44.5 million to be sent to Larn's account at LLB, the money coming from SG, Paris. He asked Mr Louanjli to confirm that LLB would act on Mr Nobre's transfer instructions. He told Mr Louanjli that the transfer instructions would include a transfer to Renaissance. He also said that he looked forward to seeing Mr Louanjli on the following Monday or Tuesday. Mr Nobre then forwarded this email to Mr Elbied who in turn sent it on to Mr Louanjli for a second time. When Mr Nobre told Mr Louanjli that he would make a payment to Renaissance, Mr Elbied's company, Mr Nobre must have thought that this information would be relevant to Mr Louanjli also. In the event, Mr Nobre did not send any money to LLB around this time.
On 11 October 2011, Mr Louanjli signed a document prepared by LLB to confirm that he had received, read and understood the various Directives of LLB and he was aware that these rules were binding upon him.
On 17 October 2011, the Bank of Valletta sent 100 million euros to the credit of Larn at LLB using the account details for Larn that had originally been provided by Mr Louanjli to Mr Elbied in May 2011. On the same day, Mr Nobre emailed Mr Louanjli with documents which showed that the money had been sent from AIC's account at Bank of Valletta to Larn's account at LLB.
On 17 October 2011, Mr Louanjli emailed Mr Walser, Mr Maurer and Mr Tschui with his comments on the fact that 100 million had arrived for the credit of Larn. He forwarded to them the documents he had received by email from Mr Nobre. He gave an account of how he had met Mr Nobre which deliberately did not mention Mr Elbied. He said that he had doubts about Mr Nobre during the account opening process and that he had closed the account. He then said: "Further KYC will follow". He told me that the arrival of the monies meant that LLB had to do KYC on the client.
After Mr Louanjli had sent his email of 17 October 2011, there was a telephone conversation between Mr Walser, Mr Maurer and Mr Tschui. Mr Louanjli joined the conversation at some point. Mr Louanjli heard the others agree that the money had to be sent back to the Bank of Valletta and it was impossible for LLB to accept it. Mr Louanjli told the others that he had previously told Larn that the account at LLB had been closed. He was instructed to tell Larn that the money would be sent back and that if Larn wished to deposit money with LLB, the bank would have to do KYC on Larn and would have to know where the money had come from. Later that day, the money was returned by LLB to Bank of Valletta; the reason given for the return of the money was that the account with LLB had been closed.
On 18 October 2011, Mr Louanjli, Mr Elbied and Mr Nobre met in Zurich. They stayed in the same hotel. Mr Louanjli and Mr Nobre went to LLB's offices in Zurich. Mr Nobre met Mr Maurer and Mr Klar. Mr Nobre authorised Mr Maurer and Mr Louanjli to contact Bank of Valletta and they did so. Mr Louanjli told Ms Saliba of Bank of Valletta that the Larn account with LLB was not closed but was not operational. She gave Mr Louanjli the information she had as to the money being paid to Larn pursuant to a loan agreement. She said that Bank of Valletta had done a lot of checking before they had accepted the money.
On 19 October 2011, Mr Nobre sent to Mr Louanjli a copy of a loan agreement whereby AIC agreed to lend 100 million to Larn to be used exclusively for investment purposes and he also sent a resolution of AIC relating to this loan. On the same day, Mr Louanjli and Mr Maurer received an email from Ms Saliba of Bank of Valletta stating that the money had been transferred by Allseas to Group Seven who then transferred it to AIC. She said that her bank had a copy of a contract between Allseas and Group Seven and a contract between Group Seven and AIC. On the same day, Mr Louanjli prepared a memorandum in relation to Larn. He stated that LLB had opened an account for Larn but the account was closed in mid-June after no transactions had taken place. He also gave his understanding in very general terms as to where Mr Nobre's wealth had come from and the nature of Larn's intended investments. Mr Vuille then emailed Mr Limacher stating that he doubted the suggestion that the Larn account had been closed because there were no transactions. It seemed to Mr Vuille that the reason the account was closed was because the necessary clarifications in relation to Larn were not forthcoming.
On 20 October 2011, Mr Vuille emailed Ms Saliba and asked a large number of specific questions about the background to the transactions involving AIC. Ms Saliba provided some further information to LLB. LLB was able to see that the money had come from Allseas Group SA to Group Seven (then called Allseas Group Ltd) and was then the subject of an interest free loan to AIC which then lent the money to Larn. There was then a meeting at LLB to discuss the situation. The meeting was attended by Mr Vuille, Mr Maurer, Mr Louanjli and others. Mr Vuille told me that the meeting was heated and lasted for about an hour. Mr Louanjli wanted LLB to accept the money and pushed hard to persuade it to do so. Mr Vuille did not agree. He told Mr Louanjli that LLB was not "in a bazaar" and would not use "smoke and mirrors". He said that the whole transaction was "absolute bullshit". I accept Mr Vuille's evidence as to the course of this meeting.
On 20 October 2011, Mr Vuille prepared a memorandum which he sent to Mr Louanjli and others. Parts of this memorandum have been redacted but most of Mr Vuille's reasoning can be seen. He commented on the suggested loan to AIC and the suggested loan by AIC to Larn. He thought that the apparent commercial arrangements were not plausible and had not been properly explained. He considered that LLB would run a commercial risk and a reputational risk if it accepted the money into an account for Larn. He also referred to Larn's request to transfer $1.5 million to a private account for Mr Nobre. In that respect, he considered that such a transfer might be regarded as embezzlement and a potential case of money laundering. He concluded that due to there being high inherent risks involved, he strongly recommended that LLB should abstain from any relationship with Larn or Mr Nobre. I was also provided with a further memorandum from Mr Vuille of the same date. This second memorandum is in slightly different terms from the first memorandum and Mr Louanjli is not included in the list of addressees. However, on 21 October 2011, Mr Tschui sent a copy of this memorandum to Mr Louanjli.
Although LLB had declined in October 2011 to open an account for Larn or to accept the 100 million, Mr Louanjli tried hard on Mr Nobre's behalf to find another bank to accept this money. Mr Louanjli approached Bank Frick on 21 October 2011 for this purpose. Mr Tschui's father worked for Bank Frick and Mr Tschui had suggested to Mr Louanjli that he contact that bank. Mr Louanjli also contacted a Mr Shahab in the hope that he could recommend a bank that could be approached. Mr Nobre approached Capitalia with a view to them recommending suitable banks and Mr Louanjli contacted Capitalia in order to help Mr Nobre to place the 100 million. Mr Louanjli also attended a meeting with Capitalia. He also appears to have had some involvement with Mr Nobre's approach to AndBanc, a bank in Andorra.
Mr Louanjli knew that nothing had come of these various approaches to alternative banks. In his witness statement, he said that he did not regard the case as one where Mr Nobre was "hawking the same funds" around various banks. In fact, to Mr Louanjli's knowledge, that is exactly what Mr Nobre was doing and Mr Louanjli knew that a series of banks would not offer banking facilities to Larn or Mr Nobre. In his witness statement, Mr Louanjli explained that he wanted to help Mr Nobre because he thought that he could make a lot of money out of him by way of commissions and bonuses. I think it is likely that Mr Louanjli's expectations were more specific and well grounded than this mere aspiration. As will be seen, Mr Nobre paid Mr Elbied and Mr Louanjli a substantial sum for the assistance they gave him. I think it is more likely than not that Mr Nobre had specifically promised a payment of that kind to Mr Louanjli to induce him to work for him and to help him place the 100 million at some bank or other.
On 27 October 2011, Mr Nobre asked Mr Louanjli to write a reference for him based on a sample reference which Mr Nobre provided. The sample reference suggested that Mr Louanjli, on behalf of LLB, should confirm that Mr Nobre had "maintained a good record for more than a year to our entire satisfaction" and that Mr Nobre was "of good financial standing and a trustworthy person in his business obligations for the purpose of opening a bank account". On Day 26 of the trial, Mr Louanjli gave evidence about his reaction to this request from Mr Nobre. He said that he did not give such a reference because such a reference would have been untrue and dishonest. He agreed that it was dishonest of Mr Nobre to ask him to give that reference. He agreed that it showed that Mr Nobre believed that Mr Louanjli would be dishonest on his behalf. He then attempted to explain why he continued to help Mr Nobre after it had emerged that Mr Nobre was prepared to be dishonest in this respect. On the morning of the next day of the trial, Mr Louanjli volunteered further evidence in relation to this request for a reference. He said that he had thought about the matter overnight. He said that he should have stopped any further communication with Mr Nobre after this dishonest request. However, he explained that he was blinded by the possibility of doing business with Mr Nobre even though he knew that he might be dishonest because he might be very rich. He also said that he felt under pressure from Mr Elbied and Mr Tschui to continue to work with Mr Nobre. On 2 November 2011, in a telephone conversation with Mr Maurer, Mr Louanjli told him that he was not still in contact with Nobre. Mr Louanjli accepted at the trial that this was a lie.
As explained earlier, Bank of Valletta sent 100 million to Notable's client account on 2 November 2011. That day, Mr Louanjli called Mr Nobre and spoke to him for over 22 minutes. Mr Louanjli told me that he did not remember what they discussed.
In the course of 3 November 2011, Mr Meduri was invited by Mr Nobre to telephone Mr Louanjli and he did so. I have made detailed findings earlier in this judgment as to the circumstances in which that telephone call was made. On the basis of those findings, Mr Louanjli did not suggest in the course of the call that he did not know what Mr Meduri was talking about. Indeed, it is inherently likely that he had been forewarned by Mr Nobre that Mr Meduri would make such a call to him. Mr Nobre's telephone records suggest that Mr Nobre and Mr Louanjli spoke in the course of 3 November 2011.
I have earlier made findings as to what Mr Louanjli said to Mr Meduri during this telephone call. It will be helpful if I set out again my findings as part of the chronology so far as it concerns Mr Louanjli. Ms Ciserani's note of what was said by Mr Louanjli is as follows:
"Mr Louanjli confirmed that he works for Liechtensteinische Landesbank, is based in Abu Dhabi and that the bank is based in Switzerland. He also confirmed the following:
- Mr Nobre has been the bank's client since a certain amount of time
- They have successfully completed the KYC procedure on source of funds
- They are aware that the funds were sent from them to Allied's bank account at Bank of Valletta.
Mr Louanjli agreed to provide a written confirmation of the above on the bank's letterhead and his copy passport."
Mr Louanjli denied that this conversation had taken place. In the alternative, he denied that he had knowingly spoken to Mr Meduri but instead he thought he was talking to Mr Nobre. I do not accept his evidence in these respects which was deliberately untrue. Mr Louanjli also gave evidence that on 3 November 2011 he was on holiday in Morocco and that he was travelling on a train at the time when Mr Meduri says that he spoke to Mr Louanjli. I accept that Mr Louanjli was on holiday in Morocco on 3 November 2011. I am not persuaded that he was on a train at the time of the telephone call. It was also submitted on his behalf that he did not realise the significance of the call. I do not accept that suggestion. The telephone call was initiated by Mr Nobre who put Mr Louanjli on to Mr Meduri who plainly wanted to have information about Mr Nobre or Larn from Mr Louanjli as his or its or their relationship manager. Mr Louanjli freely gave the information recorded by Ms Ciserani. The content and meaning of the information was clear. Mr Louanjli had been assisting Mr Nobre in trying to persuade banks to accept the 100 million. He knew that Mr Nobre was very keen indeed to have Mr Louanjli's assistance in having the money paid into a bank account so that Mr Nobre could draw on it. Mr Louanjli had spoken to Mr Nobre for 22 minutes the previous day, 2 November 2011. When he was telephoned on 3 November 2011, he did not express any surprise or ask for any clarification as to the purpose of the call. I will refer later to the email which Ms Ciserani sent to Mr Louanjli on 4 November 2011 which referred to the telephone conversation with Mr Meduri on 3 November 2011. Mr Louanjli did not contact Notable to say that he had been misunderstood or that he had not appreciated that Notable were going to rely upon what he had said over the telephone.
Later in this judgment, I will make more detailed findings as to the accuracy of Mr Louanjli's statement on 3 November 2011 but, at this point, I can summarise those findings as follows:
(1) The statement that "Mr Nobre has been the bank's client since a certain amount of time" was misleading;
(2) The statement that "they have successfully completed the KYC procedure on source of funds" was clearly not true;
(3) The statement that "they were aware that the funds were sent from them to Allied's bank account at Bank of Valletta" was misleading.
Later in the evening of 3 November 2011, Mr Elbied emailed to Mr Louanjli a draft introducer's agreement to be entered into by Larn and Renaissance and a template for an invoice which might be used. The draft agreement stated that Renaissance was an international business company and wished to introduce management consultancy to Larn. In return, Larn agreed to pay to Renaissance 1 million as an upfront commission. On 4 November 2011, just after midnight, Mr Elbied emailed to Mr Louanjli an invoice he had prepared for Renaissance to send to Larn for 1 million. Mr Elbied wrote in his email to Mr Louanjli: "tu vas etre content de moi". Mr Louanjli suggested that this meant: "you will be pleased for me", suggesting that this invoice was for the benefit of Mr Elbied alone. I consider that a better translation is: "you will be pleased with me", indicating that Mr Elbied and Mr Louanjli were both expected to benefit from this invoice.
In due course, Larn and Renaissance entered into the introducer's agreement and Renaissance provided Larn with an invoice for 1 million. As indicated earlier, Larn/Mr Nobre asked Notable to pay 1 million to Renaissance on 3 November 2011 and that sum was approved by Notable on 15 November 2011 and was paid to Renaissance. The idea that Renaissance was providing management consultancy services to Larn had no reality. What Larn was paying for was the assistance which Mr Elbied and Mr Louanjli had provided to Larn in relation to paying the 100 million into a bank account. There is no doubt that Mr Elbied appreciated that this was the reason for the payment. Mr Elbied had collaborated with Mr Louanjli who provided a great deal of the assistance given to Larn. When he provided that assistance, Mr Louanjli expected to be paid by Larn/Mr Nobre for what he had done. As will be seen, Mr Elbied shared part of the 1 million with Mr Louanjli's company, Bridge Ltd. I find that the reason why Mr Elbied was sending the draft agreement and the template invoice to Mr Louanjli on 3 November 2011 was that Mr Elbied and Mr Louanjli had previously agreed that they would share the payment that Larn/Mr Nobre had previously agreed to pay to Renaissance and Mr Nobre knew that it would be shared in this way. These findings explain why Mr Elbied was writing to Mr Louanjli at this point. They are also supported by what subsequently happened.
On 4 November 2011, Notable communicated further with Mr Louanjli. I have made findings as to the conversations between Mr Louanjli and Mr Landman on that day. Again, Mr Louanjli gave evidence which he knew to be untrue to the effect that these conversations did not happen. I have also set out the terms of the email sent by Ms Ciserani to Mr Louanjli.
The documents obtained on disclosure show a large number of email communications between Mr Louanjli and Mr Elbied and Mr Nobre in the period from 3 November 2011 to 14 November 2011. I will not describe those many communications in detail but I can summarise them as follows:
(1) Mr Louanjli passed Ms Ciserani's request for an affidavit to Mr Elbied;
(2) Mr Louanjli received comments from Mr Elbied (who also passed on comments of Mr Nobre) about the requested affidavit;
(3) Mr Louanjli was plainly reluctant to put his name to some of the statements in the draft affidavit;
(4) Although he had spoken on the telephone to Mr Meduri on 3 November 2011, he was very reluctant to put anything in writing about Larn's connection with LLB;
(5) There are references in these communications to Mr Louanjli's conversation with "the legal department" which I find was a reference to Notable and to a conversation or conversations with "the chairman" which I find was a reference to Mr Landman;
(6) Mr Elbied advised Mr Louanjli to stay under cover as regards LLB;
(7) Mr Nobre sent to Mr Louanjli revised drafts of the proposed written statement;
(8) Mr Louanjli thought that some of the statements in the drafts prepared by Mr Nobre were not true; at the trial, Mr Louanjli gave evidence that he considered that Mr Nobre was acting dishonestly.
In addition to the email communications between Mr Louanjli and Mr Elbied and Mr Nobre in this period, there were also telephone calls between Mr Louanjli and Mr Nobre. In addition, Mr Louanjli had telephone conversations with Mr Landman on 10, 11 and 14 November 2011. I have made my findings earlier in this judgment as to his conversations with Mr Landman.
Eventually, on 14 November 2011, Mr Louanjli did send an email to Mr Landman. It will be helpful to set out again, at this stage in the chronology concerning Mr Louanjli, my earlier findings as to this email. The email was sent at 2.05 pm on that day. The email came from Mr Louanjli's LLB email address and was sent to Mr Landman at his Intrust email address. Mr Louanjli was described in the email as a "Relationship Manager". The email contained standard wording which referred to LLB and gave its address in Zurich and its telephone and fax numbers. The email stated:
I would like to confirm That Mr. Louis Nobre is well known to the Bank and did satisfy the KYC and due diligence that we did run during his account opening process.
Hope this will Help.
Please feel free to contact me if you have any queries.
Later in this judgment, I will make more detailed findings as to the accuracy of Mr Louanjli's email of 14 November 2011 but, at this point, I can summarise those findings as follows:
(1) I find that the email contained a statement which was untrue and the email as a whole was misleading;
(2) The part which was untrue was that Mr Nobre "did satisfy the KYC and due diligence that we did run during his account opening process";
(3) The part that was misleading was that Mr Nobre was "well known to the Bank" and when it further stated that there was an "account opening process".
On 16 November 2011, Notable sent 1 million to Renaissance. On 19 November 2011, Mr Elbied texted Mr Nobre saying that he had just had "great news". This was a reference to the receipt by Renaissance of the money. Mr Elbied thanked Mr Nobre. Mr Nobre then replied by text to Mr Elbied to say that he hoped that Mr Elbied and Mr Louanjli were happy. This shows that Mr Nobre made this payment to reward not only Mr Elbied but also Mr Louanjli for the assistance that they had given him. Mr Elbied replied on behalf of himself and Mr Louanjli to confirm that they were happy with the payment. On 20 November 2011, Mr Elbied emailed Mr Louanjli with a copy of the bank statement of Renaissance showing that the money had arrived.
On 27 November 2011, Mr Louanjli spoke to Mr Nobre by telephone. On 28 November 2011, Renaissance sent 300,000 to Bridge, Mr Louanjli's company. I find that Mr Louanjli knew that the source of the 300,000 received by Bridge was the 1 million paid by Mr Nobre to Renaissance with the intention that that sum would be shared between Mr Elbied (or his company) and Mr Louanjli (or his company) in return for the assistance they had given Mr Nobre.
Mr Louanjli initially denied that he had ever received such a payment. Then he was reminded that he had received it. Mr Louanjli then gave evidence that the payment to Bridge of 300,000 was nothing to do with his assistance to Mr Nobre. Instead, he said that he and Mr Elbied had decided to go into business together. The business was to be a Belgian waffle business. It was said that the payment of 300,000 was an investment by Mr Elbied in that business. This explanation was false and Mr Louanjli knew it to be false. First of all, the explanation does not work as regards the timing of the payment. The first suggestion that Mr Elbied and Mr Louanjli would go into a Belgian waffle business only came later. Secondly, on Mr Louanjli's account all of the money for that business came from Mr Elbied but there was no explanation as why he only had a 30% stake in the business and Mr Louanjli had a 50% stake; a Mr Alloul had a 20% stake. Thirdly, Mr Louanjli drew on the 300,000 for his own benefit. Finally, in any case, it is clear from the contemporaneous documents and my findings based on them that the 300,000 was the reward for Mr Louanjli's assistance to Mr Nobre. What Mr Louanjli might have done with the money after he had received it is not material to these findings.
On 6 December 2011, Mr Louanjli travelled to London and met Mr Nobre and Mr Elbied and others. Although what happened at that meeting was investigated in the evidence, I consider that it is not necessary to make findings about that meeting.
At some point, Renaissance and Bridge entered into, or purported to enter into, a loan agreement whereby Renaissance agreed to lend 162,000 to Bridge. The agreement stated that the purpose of the loan was for investment purposes "such as Real Estate, Food and Catering Services or Financial Investments". The money advanced was to bear 3% interest and the loan period was 24 months. The agreement was dated 23 December 2011 but I am not able to find whether the agreement was executed on that date or was back dated. On 11 January 2012, Bridge received 162,000 from Renaissance.
On 1 October 2012, Bridge received the further sum of 100,000 from Renaissance. On 14 April 2013, Bridge paid 100,000 to Renaissance. There were no movements in the Bridge euro account between these two dates so that there is reason to believe that the payment on 14 April 2013 simply involved Bridge returning to Renaissance the money paid to Bridge on 1 October 2012.
PART 5: GROUP SEVEN'S CLAIMS AGAINST NOTABLE, MR LANDMAN AND MR MEDURI: DISCUSSION AND CONCLUSIONS
Group Seven puts forward two types of claim. First, it says that Mr Landman and Mr Meduri dishonestly assisted Larn's breaches of trust in relation to the sum of 100 million which was said to have been held on trust for Group Seven. It is not said that Ms Ciserani dishonestly assisted that breach of trust. It is said that Notable is vicariously liable to Group Seven for the dishonesty of Mr Landman and Mr Meduri. The second claim is for the unconscionable receipt of trust monies by Notable and separately by Mr Landman. It is not said that there was unconscionable receipt of trust monies by Mr Meduri.
I will first consider the allegation that Mr Landman and Mr Meduri dishonestly assisted a breach of trust by Larn.
It is agreed that in order for a defendant to be liable for dishonestly assisting a breach of trust, it must be shown that:
(1) there was a trust;
(2) the trustee committed a breach of that trust;
(3) the defendant assisted the trustee to commit that breach of trust; and
(4) the defendant's assistance was dishonest.
Group Seven's case is that the 100 million remained owned beneficially by Group Seven. Group Seven submitted that in the earlier proceedings brought by Group Seven against Mr Sultana and others, Peter Smith J held that the documents which purported to record a loan of 100 million to AIC and a further loan of that sum by AIC to Larn were void and of no effect. In their pleaded Defence, the Notable Defendants accepted that Larn held its interest in that sum (in Notable's client account) on trust for Group Seven. In his closing submissions, Mr Flenley appeared to cast some doubt on this conclusion and suggested that the right analysis might have been that the loan agreements were voidable by reason of fraudulent misrepresentation but that they had not been avoided by the time that Notable had made the payments out of its client account on or after 15 November 2011. However, Mr Flenley's final position was that I should proceed on the basis of the admission made by the Notable Defendants in their pleading to the effect that at all relevant times, Larn's interest in the money in the Notable client account was held on trust for Group Seven.
The breach of trust
The breach of trust which is identified by Group Seven was that Larn paid away some 15 million of trust monies for Larn's or Mr Nobre's own purposes and not for the purposes, or with the consent of, the beneficiary Group Seven. There is no dispute about this element of the cause of action.
The assistance in the breach of trust which is identified by Group Seven is that, having received 100 million into its client account, Notable paid out some 15 million of that sum on the instruction of Mr Nobre. Again, it is clear that Notable did assist Larn's breach of trust in relation to paying out the 15 million.
The above findings mean that the key issue in relation to the alleged liability of the Notable Defendants is whether they were dishonest. The ingredients of dishonesty, for the purposes of this equitable claim, have been considered in a number of authorities. However, the parties before me disagreed as to what those ingredients were and it is possible that I will need to resolve that disagreement in order to determine whether the necessary ingredients of dishonesty have been established in this case.
The parties cited a large number of cases. In order to analyse the cases in order to extract from them the principles which I must apply, I will take first the decisions of the Privy Council and of the House of Lords, then the decisions of the Court of Appeal and then any helpful decisions at first instance,
The cases in the Privy Council and the House of Lords comprise Royal Brunei Airlines v Tan (PC)  2 AC 378 ("Tan"), Twinsectra Ltd v Yardley (HL)  2 AC 164 ("Twinsectra") and Barlow Clowes Ltd v Eurotrust Ltd (PC)  1 WLR 1476 ("Barlow Clowes").
Mr Flenley submitted that there was a difference in the reasoning between Twinsectra, a decision of the House of Lords, and Barlow Clowes, a decision of the Privy Council, and that I was bound to follow Twinsectra and I was not entitled to treat Barlow Clowes as a persuasive authority, insofar as it was in conflict with Twinsectra. He did not make the same submission as to Tan as he recognised that the House of Lords in Twinsectra had approved the decision in Tan. In support of his submission, Mr Flenley relied upon the discussion in Willers v Joyce (No 2)  3 WLR 534 which restates the well established rules as to precedent, namely, that I am bound by a decision of the House of Lords or Supreme Court and by a decision of the Court of Appeal but I am not bound by a decision of the Privy Council. Willers v Joyce (No 2) also makes it clear that where a High Court judge is faced with a conflict between a decision of the House of Lords or Supreme Court on the one hand and a decision of the Privy Council on the other, the High Court judge must follow the decision of the House of Lords or Supreme Court and is not free to disregard the decision of the House of Lords or Supreme Court by predicting that, if the decision of the Privy Council was itself in the future to be considered by the Supreme Court, that court would follow the decision of the Privy Council. Mr Flenley recognises that there are a number of decisions of High Court judges which have followed Barlow Clowes but he submits that those decisions were reached before the clarification of the law provided by Willers v Joyce (No 2). He submits that I should therefore not follow these other decisions by High Court judges.
I consider that the short answer to Mr Flenley's submission is that the Court of Appeal in Starglade Properties Ltd v Nash  1 Lloyd's Rep F.C. 102 has held, as part of its ratio, that the decision in Barlow Clowes, and in particular its explanation of the decision in Twinsectra, contained a correct statement of English law. I am bound by the decision in Starglade and accordingly I will proceed on the basis that Barlow Clowes contains a correct statement of English law and that the earlier decision in Twinsectra is now to be understood in the light of the explanation of it given in Barlow Clowes.
In Tan, the judgment of the Privy Council was given by Lord Nicholls. One point which was established in Tan was that it was not essential that the trustee who had committed a breach of trust had been dishonest. Conversely, an accessory who had assisted the trustee to commit a breach of trust would only be liable if the accessory were dishonest. Lord Nicholls discussed in detail what was meant by dishonesty in this context. At page 389B-G, under the heading Dishonesty, he said:
"Before considering this issue further it will be helpful to define the terms being used by looking more closely at what dishonesty means in this context. Whatever may be the position in some criminal or other contexts (see, for instance, Reg. v. Ghosh  QB 1053), in the context of the accessory liability principle acting dishonestly, or with a lack of probity, which is synonymous, means simply not acting as an honest person would in the circumstances. This is an objective standard. At first sight this may seem surprising. Honesty has a connotation of subjectivity, as distinct from the objectivity of negligence. Honesty, indeed, does have a strong subjective element in that it is a description of a type of conduct assessed in the light of what a person actually knew at the time, as distinct from what a reasonable person would have known or appreciated. Further, honesty and its counterpart dishonesty are mostly concerned with advertent conduct, not inadvertent conduct. Carelessness is not dishonesty. Thus for the most part dishonesty is to be equated with conscious impropriety. However, these subjective characteristics of honesty do not mean that individuals are free to set their own standards of honesty in particular circumstances. The standard of what constitutes honest conduct is not subjective. Honesty is not an optional scale, with higher or lower values according to the moral standards of each individual. If a person knowingly appropriates another's property, he will not escape a finding of dishonesty simply because he sees nothing wrong in such behaviour.
In most situations there is little difficulty in identifying how an honest person would behave. Honest people do not intentionally deceive others to their detriment. Honest people do not knowingly take others' property. Unless there is a very good and compelling reason, an honest person does not participate in a transaction if he knows it involves a misapplication of trust assets to the detriment of the beneficiaries. Nor does an honest person in such a case deliberately close his eyes and ears, or deliberately not ask questions, lest he learn something he would rather not know, and then proceed regardless. However, in the situations now under consideration the position is not always so straightforward. This can best be illustrated by considering one particular area: the taking of risks."
Later in his judgment, Lord Nicholls considered the type of case where a trustee takes a risk as to whether he is entitled to act in a particular way and he went on to consider the position of an accessory who assists the trustee to act in that way. In that context, he asked the question as to what honesty required the accessory to do and he answered his own question by saying at pages 390F-391D:
"The only answer to these questions lies in keeping in mind that honesty is an objective standard. The individual is expected to attain the standard which would be observed by an honest person placed in those circumstances. It is impossible to be more specific. Knox J. captured the flavour of this, in a case with a commercial setting, when he referred to a person who is "guilty of commercially unacceptable conduct in the particular context involved:" see Cowan de Groot Properties Ltd. v. Eagle Trust Plc.  4 All E.R. 700, 761. Acting in reckless disregard of others' rights or possible rights can be a tell-tale sign of dishonesty. An honest person would have regard to the circumstances known to him, including the nature and importance of the proposed transaction, the nature and importance of his role, the ordinary course of business, the degree of doubt, the practicability of the trustee or the third party proceeding otherwise and the seriousness of the adverse consequences to the beneficiaries. The circumstances will dictate which one or more of the possible courses should be taken by an honest person. He might, for instance, flatly decline to become involved. He might ask further questions. He might seek advice, or insist on further advice being obtained. He might advise the trustee of the risks but then proceed with his role in the transaction. He might do many things. Ultimately, in most cases, an honest person should have little difficulty in knowing whether a proposed transaction, or his participation in it, would offend the normally accepted standards of honest conduct.
Likewise, when called upon to decide whether a person was acting honestly, a court will look at all the circumstances known to the third party at the time. The court will also have regard to personal attributes of the third party, such as his experience and intelligence, and the reason why he acted as he did.
Before leaving cases where there is real doubt, one further point should be noted. To inquire, in such cases, whether a person dishonestly assisted in what is later held to be a breach of trust is to ask a meaningful question, which is capable of being given a meaningful answer. This is not always so if the question is posed in terms of "knowingly" assisted. Framing the question in the latter form all too often leads one into tortuous convolutions about the "sort" of knowledge required, when the truth is that "knowingly" is inapt as a criterion when applied to the gradually darkening spectrum where the differences are of degree and not kind."
Tan makes it clear that the test of accessory liability is dishonesty on the part of the accessory and that the test is not a test of knowledge in respect of something or other. However, the extent and nature of an accessory's knowledge plainly has some part to play. Lord Nicholls referred to the accessory's conduct being assessed "in the light of what [the accessory] actually knew at the time". He also stated that an honest person would have regard "to the circumstances known to him
". He added that when a court was called upon to decide whether a third party was acting honestly, a court would look "at all the circumstances known to the third party at the time". Lord Nicholls also gave a number of examples of dishonesty where the example involved knowledge of certain relevant matters.
It appears, however, from Tan that an accessory can properly be held to be dishonest where his state of mind stops short of knowing all of the facts surrounding the breach of trust and the way in which the accessory's conduct is of assistance to the trustee who is committing a breach of trust. Lord Nicholls referred to an honest man not deliberately closing his eyes and ears, or deliberately not asking questions, lest he learn something that he would rather not know. He also stated that acting in "reckless disregard of others' rights or possible rights can be a tell-tale sign of dishonesty". He also referred to an honest person asking further questions.
The test for dishonesty in this context was considered in detail by the House of Lords in Twinsectra. As I have already said, some of the statements in the judgments in Twinsectra have been subsequently explained in Barlow Clowes. However, there are other statements in Twinsectra that appear to be authoritative and have not been the subject of that further explanation. I will focus on the passages in Twinsectra which discuss the ways in which the knowledge of the accessory might be relevant to the question of dishonesty. Lord Hoffmann referred to the fact in that case that the accessory honestly believed that the money was at the disposal of the trustee and he added at :
"I do not suggest that one cannot be dishonest without a full appreciation of the legal analysis of the transaction. A person may dishonestly assist in the commission of a breach of trust without any idea of what a trust means. The necessary dishonest state of mind may be found to exist simply on the fact that he knew perfectly well that he was helping to pay away money to which the recipient was not entitled. But that was not the case here."
In Twinsectra, Lord Millett dissented on the question as to the test for dishonesty. However, in a passage which was apparently approved in Barlow Clowes, he said at -:
"135 The question here is whether it is sufficient that the accessory should have actual knowledge of the facts which created the trust, or must he also have appreciated that they did so? It is obviously not necessary that he should know the details of the trust or the identity of the beneficiary. It is sufficient that he knows that the money is not at the free disposal of the principal. In some circumstances it may not even be necessary that his knowledge should extend this far. It may be sufficient that he knows that he is assisting in a dishonest scheme.
136 That is not this case, for in the absence of knowledge that his client is not entitled to receive it there is nothing intrinsically dishonest in a solicitor paying money to him. But I am satisfied that knowledge of the arrangements which constitute the trust is sufficient; it is not necessary that the defendant should appreciate that they do so. Of course, if they do not create a trust, then he will not be liable for having assisted in a breach of trust. But he takes the risk that they do.
137 The gravamen of the charge against the principal is not that he has broken his word, but that having been entrusted with the control of a fund with limited powers of disposal he has betrayed the confidence placed in him by disposing of the money in an unauthorised manner. The gravamen of the charge against the accessory is not that he is handling stolen property, but that he is assisting a person who has been entrusted with the control of a fund to dispose of the fund in an unauthorised manner. He should be liable if he knows of the arrangements by which that person obtained control of the money and that his authority to deal with the money was limited, and participates in a dealing with the money in a manner which he knows is unauthorised. I do not believe that the man in the street would have any doubt that such conduct was culpable."
What is interesting in this passage is how Lord Millett described the knowledge which is, or may be, sufficient to support a finding of dishonesty. Knowledge that the money is not at the free disposal of the principal is sufficient. Knowledge that the accessory is assisting in a dishonest scheme may be sufficient. Conversely, there is nothing intrinsically dishonest in a solicitor paying money to his client if the solicitor does not know that the client is not entitled to receive it.
Barlow Clowes explained certain statements as to dishonesty which had been made in Twinsectra and made it clear that the test in this context as to whether a person was consciously dishonest in providing assistance required him to have knowledge of the elements of the transaction which rendered his participation contrary to ordinary standards of honest behaviour, but did not require him to have reflections on what those normally acceptable standards were. In Barlow Clowes, the judgment of the Privy Council was given by Lord Hoffmann. In that case, the trial judge had held that a Mr Henwood had dishonestly assisted a breach of trust and the Privy Council upheld that decision. The trial judge's finding was summarised at  as follows:
"The judge found that during and after June 1987 Mr Henwood strongly suspected that the funds passing through his hands were moneys which Barlow Clowes had received from members of the public who thought that they were subscribing to a scheme of investment in gilt-edged securities. If those suspicions were correct, no honest person could have assisted Mr Clowes and Mr Cramer to dispose of the funds for their personal use. But Mr Henwood consciously decided not to make inquiries because he preferred in his own interest not to run the risk of discovering the truth."
Lord Hoffmann said at  that such a state of mind was dishonest.
At -, Lord Hoffmann thought that it was substantially accurate to say that the trial judge could only find dishonesty if she was able to find that Mr Henwood "had solid grounds for suspicion which he consciously ignored that the disposal in which [he] participated involved dealings with misappropriated trust funds." The reasoning of the trial judge had included a finding that Mr Henwood realised that "there must be some real possibility" that the moneys could be investors' money. The trial judge also took account of the fact that Mr Henwood knew that the man with whom he was dealing had previously been dishonest. Finally, the trial judge had regard to the fact that Mr Henwood had told lies in his evidence from which she inferred that he had been suspicious that he was involved in wrongdoing, a matter which he denied in his evidence. On the question of what Mr Henwood needed to know in order to be held to be dishonest, Lord Hoffmann said at :
"First, it was not necessary
that Mr Henwood should have concluded that the disposals were of moneys held in trust. It was sufficient that he should have entertained a clear suspicion that this was the case. Secondly, it is quite unreal to suppose that Mr Henwood needed to know all the details to which the court referred before he had grounds to suspect that Mr Clowes and Mr Cramer were misappropriating their investors' money. The money in Barlow Clowes was either held on trust for the investors or else belonged to the company and was subject to fiduciary duties on the part of the directors. In either case, Mr Clowes and Mr Cramer could not have been entitled to make free with it as they pleased. In Brinks Ltd v Abu-Saleh  CLC 133, 151 Rimer J expressed the opinion that a person cannot be liable for dishonest assistance in a breach of trust unless he knows of the existence of the trust or at least the facts giving rise to the trust. But their Lordships do not agree. Someone can know, and can certainly suspect, that he is assisting in a misappropriation of money without knowing that the money is held on trust or what a trust means: see the Twinsectra case  2 AC 164, para 19 (Lord Hoffmann) and para 135 (Lord Millett). And it was not necessary to know the "precise involvement" of Mr Cramer in the group's affairs in order to suspect that neither he nor anyone else had the right to use Barlow Clowes money for speculative investments of their own."
Paragraph  in Barlow Clowes is interesting in that Lord Hoffmann refers to "a clear suspicion" of a breach of trust being sufficient. Further, he held that an accessory could suspect that he was assisting in a misappropriation of money without knowing that the money was held on trust or what a trust meant. Finally, Lord Hoffmann referred with approval to paragraph  in the dissenting judgment of Lord Millett in Twinsectra, which I have quoted above.
I now turn to a number of decisions of the Court of Appeal which contain statements relevant to the test for dishonesty in relation to this form of accessory liability. I will confine my consideration to decisions of the Court of Appeal which came after the decision in Tan. The cases which were cited included: Heinl v Jyske Bank  Lloyd's LR Banking 511, Abou-Rahmah v Abacha  1 All ER (Comm) 827, Att. Gen. of Zambia v Meer Care & Desai  EWCA Civ 1007, Starglade Properties Ltd v Nash  Lloyd's LR F.C. 102, Novoship (UK) Ltd v Mikhaylyuk  QB 499, Clydesdale Bank plc v Workman  PNLR 302 and Goldtrail Travel Ltd v Aydin  BCC 707. I will not attempt to summarise the facts of those cases which are usually lengthy and complicated. I will instead see if the cases contain statements of principle which I should apply to my findings of fact in the present case.
In Heinl v Jyske Bank, the Court of Appeal reversed the trial judge's finding of dishonesty in relation to a defendant who had assisted a breach of trust. They reached that finding even in relation to a defendant who had persistently lied in advance of, and throughout, the trial as to his relationship with the principal fraudster. All three members of the court directed themselves by reference to the legal principles as laid down in Tan. Nourse LJ said that the application of those principles to the facts of a particular case invariably depended, to a greater or lesser extent, on the state of knowledge of the person who is sought to be made liable: page 523, col. 1. He stated, in connection with an allegation of involvement in money laundering, that the first question must be to ask whether the dealings with the money were inherently likely to have been carried out for the purpose of concealing its origins: page 526, col. 1. He held that the evidence showed that the defendant might from time to time have suspected what was going on but it did not go so far as to show that he shut his eyes or anything like that; that state of mind did not suffice to amount to dishonesty: pages 531 col. 2 to 532, col. 1. Sedley LJ said that the line between guilt and innocence was a fine one and it ran between suspecting what was going on and either knowing or shutting one's eyes to it: see page 532, col. 2. Colman J referred to the possible states of mind of someone who has in fact assisted a breach of trust. Such a person might: (1) know facts which amount to a breach of trust; or (2) know facts which suggest that a breach of trust has been or is to be committed; or (3) know facts which fall short of amounting to a breach of trust but which lead him to believe that other facts exist which do amount to a breach or will involve a future breach, although he cannot be certain about that. In relation to the third possibility, Colman J said that such a person would be judged to be acting dishonestly if he rendered assistance, when an honest man would not have done so, either at all or without making further enquiry or taking further steps: see page 535, col. 2. Colman J said that it was not enough for the claimant to show that a reasonable man ought to draw the inference that there was a substantial probability that the funds originated from the claimant but it must be established that the defendant did indeed draw that inference of a substantial probability.
In Abou-Rahmah v Abacha, Rix LJ quoted with approval paragraphs  and  of the judgment of Lord Millett in Twinsectra and also paragraph  of the judgment of Lord Hoffmann in Barlow Clowes. He commented on a claim against an accessory who had assisted money laundering in these terms at -:
It is one thing to be negligent in failing to spot a possible money-launderer, providing the negligence does not extend to shutting one's eyes to the truth. It is another thing, however, to have good grounds for suspecting money-laundering and then to proceed as though one did not. Money-laundering is a serious crime, for the very reason that ex hypothesi its subject matter is the proceeds of crime. It is true that such proceeds are not necessarily those of a breach of trustthey could be the proceeds of drug dealing. But I am doubtful that that possibility provides any protection where there is a breach of trust. It is also true that the growing concern now experienced about money-laundering and the international precautions now taken against it must be viewed in the context of public policy rather than on the level of an equitable tort designed to provide remedies in the civil law against knowing assistance in breach of trust. Nevertheless, I do not see why a bank which has, through its managers, a clear suspicion that a prospective client indulges in money- laundering can be said to lack that knowledge which is the first element in the tort.
38 As Millett J said in Agip (Africa) Ltd v Jackson  Ch 265 , 295:
"it is no answer for a man charged with having knowingly assisted in a fraudulent and dishonest scheme to say that it was 'only' a breach of exchange control or 'only' a case of tax evasion. It is not necessary that he should have been aware of the precise nature of the fraud or even of the identity of its victim. A man who consciously assists others by making arrangements which he knows are calculated to conceal what is happening from a third party, takes the risk that they are part of a fraud practised on that party."
39 In Brinks Ltd v Abu-Saleh (No 3)  CLC 133 Rimer J had differed from that view, and in Grupo Torras SA v Al Sabah  CLC 1469 Mance J had preferred Rimer J's view to that of Millett J; but in Barlow Clowes  1 WLR 1476 , para 28, Lord Hoffmann said that the Privy Council did not agree. I therefore consider that Millett J's observations in Agip apply in the present case."
In her judgment in that case, Arden LJ said:
"It is sufficient if the defendant knows of the elements of the transaction which make it dishonest according to normally accepted standards of behaviour."
In Att. Gen. of Zambia v Meer Care & Desai, a claim against solicitors in a money laundering case, the test which was applied was to ask whether the solicitor (Mr Meer) knew that his instructions, which he carried out, involved in effect handling stolen money, or that he had a clear suspicion that this was the case which he chose to ignore. This test had been agreed by counsel and Lloyd LJ, giving the judgment of the court commented at :
"21 If either aspect of the test is satisfied on the facts, Mr Meer would be correctly characterised as dishonest. Plainly that would be so if he actually knew that his client had no right to require the relevant funds in the firm's client account to be paid out to the particular person or for the particular purpose for which he instructed Mr Meer to apply the money. Equally, if Mr Meer had a clear suspicion that this was the case and he deliberately decided not to enquire in order to avoid having confirmation that it was so, that is properly characterised as dishonesty, of the kind often called blind-eye, or Nelsonian: see for example Lord Scott of Foscote in Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd  UKHL 1,  1 AC 469, at paragraphs 112 to 116. The facts of which knowledge was to be imputed in that case did not involve dishonesty, but the principle of establishing knowledge in this way is the same whether what is to be found to be known is dishonesty or something else in that case the unseaworthiness of a vessel."
In Starglade Properties Ltd v Nash, the question of dishonesty arose in a factual context different from the context of the present case. Sir Andrew Morritt stated the question is whether the accessory's conduct departed from the ordinary standard of honest behaviour and that in civil proceedings it was for the court to determine what that standard was and to apply it to the facts of the case.
In Novoship (UK) Ltd v Mikhaylyuk, the Court of Appeal dismissed an appeal against the trial judge's finding of fact that the defendant had been dishonest. The Court of Appeal did not themselves set out the legal principles as to the test of dishonesty.
In Clydesdale Bank plc v Workman, Lewison LJ stated that he was not convinced that recklessness was equivalent to dishonesty in this area of the law, although it was undoubtedly evidence of dishonesty.
In Goldtrail Travel Ltd v Aydin, the trial judge held that the defendant had dishonestly assisted a breach of fiduciary duty. The defendant's appeal to the Court of Appeal was against the judge's findings of fact in that respect. The Court of Appeal held that the appeal was hopeless. The case was cited to me because Vos LJ, with whom the other members of the court agreed, referred in this judgment to the submissions for the appellant who had relied upon statements made by Mance J in Grupo Torras SA v Al-Sabah  CLC 1469 at 1665-1666 and by Lewison J in Ultraframe (UK) Ltd v Fielding  EWHC 1638 (Ch) at -. Vos LJ did not need to consider those submissions in any detail because he considered that the appeal was hopeless on the judge's findings of fact.
I will now refer to some of the decisions at first instance to which I was referred. Mr Flenley cited Baden v Sociιtι Gιnιrale  1 WLR 509 at  as to what the accessory must have known in order to be held liable. The statement in that case is not wholly in accordance with how matters are described in later authorities to which I have referred.
I was also referred to a passage in the judgment of Millett J in Agip (Africa) Ltd v Jackson  Ch 265 at 295A-C. That passage was quoted by Rix LJ in Abou-Rahmah v Abacha and I have quoted it above. I was also referred to the decision of the Court of Appeal in Agip (Africa) Ltd v Jackson  Ch 547 but I need not refer to any particular passage in the judgments of the Court of Appeal.
In Grupo Torras SA v Al-Sabah  CLC 1469 at 1665-1666, Mance J referred to the need for the defendant's dishonesty to have been "towards the plaintiff" in relation to property held or potentially held on trust. In that case, it was held that a number of defendants had not dishonestly assisted a breach of trust even though they were held to have been dishonest in other respects.
In Ultraframe (UK) Ltd v Fielding  EWHC 1638 (Ch) at -, Lewison J held that the assistant must know that the person he is assisting is not entitled to do what he is doing and, although he need not know all the details of the whole design, he must in broad terms know what the design is.
In Novoship (UK) Ltd v Mikhaylyuk, at first instance, Christopher Clarke J summarised the law as to dishonesty in this way, at -:
"91 In assessing dishonesty the question is whether what was done was what an honest person would have done in the defendant's circumstances. The Court looks at what the defendant knew or what he suspected, but about which he consciously decided not to make further inquiries which might lead to knowledge. It then looks to see whether, in the light of that knowledge or suspicion, the transaction in which the defendant participated was one in which he could, applying normally acceptable standards, honestly participate: See Royal Brunei Airlines v Tan  2 AC 378 PC, at pages 390 and 391 ("honesty is an objective standard"); Barlow Clowes v EuroTrust  1 WLR 1476 PC, per Lord Hoffmann at para 10 ("If by ordinary standards a defendant's mental state would be characterised as dishonest, it is irrelevant that the defendant judges by different standards"); Abou-Rahmah v Abacha  1 Lloyds Rep 115 CA, per Rix LJ at paras 14 and 16, Arden LJ at paras 59 & 65; Starglade Properties Ltd v Nash  EWCA Civ 1314.
92 It is not necessary for the defendant to know (or even suspect) the existence of a trust or of facts giving rise to a trust. It is sufficient if the defendant knows or suspects that the transaction is such as to render his participation dishonest. It is no answer to say that he thought the purpose was, for example, tax evasion or money laundering. See Barlow Clowes v EuroTrust (above), per Lord Hoffmann at para 28; Abou-Rahmah v Abacha (above), per Rix LJ at paras 32 and 37 to 39; Agip v Jackson  Ch 265, per Millett J at 295."
In Madoff Securities International Ltd v Raven  Lloyd's LR F.C. 95 at  Popplewell J had to deal with a slightly unusual submission where there was said to be a mismatch between the mental state of the fiduciary and the mental state of the assistant. He summarised the law by saying that it was sufficient if the assistant knew or suspected that transaction was such as to make his participation dishonest. He also said at :
"So accessory liability on the part of a dishonest assistant requires no more from his point of view than the actus reus of assisting by participation in the transaction, and the mens rea of dishonesty. It is not necessary that the assistance should play any part in the mental state of the fiduciary, still less that it should assist the mental state of the fiduciary in a way which is necessary to render the fiduciary's act a breach of trust or fiduciary duty."
That comment was made in the context of the specific submission with which the judge was dealing. If and insofar as it was suggested that it differed from other statements of principle, I do not read it as intended to depart from those other statements.
I consider that I may be assisted when making my findings of fact in relation to dishonesty to consider whether a defendant had a motive for the alleged dishonesty. The relevance of motive in this context was well expressed by Mann J in Mortgage Agency Services Number One Ltd v Cripps Harries LLP  EWHC 2483 (Ch) at  where he said:
"Of particular relevance to a case of fraud such as the present is the question of motive. By and large dishonest people are dishonest for a reason. They tend not be dishonest wilfully or just for fun. Establishing a motive for deceit, or conspiracy, is not a legal requirement, but if a motive cannot be detected or plausibly suggested then wrongful intention (to tell a deliberate lie in order to deceive) is less likely. The less likely the motive, the less likely the intention to deceive, or to conspire unlawfully. In many, if not most, fraud cases this would not be a particularly live point. The defendant is often a person who would be a direct beneficiary of the fraud, and a plausible motive is, to that extent, relatively easily propounded. The present case is, however, different."
Did Notable dishonestly assist a breach of trust?
Whether Notable dishonestly assisted a breach of trust turns on whether Mr Landman and/or Mr Meduri, who are also sued personally, dishonestly assisted a breach of trust. It is not said that any other individual at Notable dishonestly assisted a breach of trust. If either Mr Landman or Mr Meduri dishonestly assisted a breach of trust, then it is accepted that Notable is liable for that conduct. I therefore need to consider the position of Mr Landman and Mr Meduri separately. I will start with the position of Mr Meduri.
Did Mr Meduri dishonestly assist a breach of trust?
In considering Mr Meduri's position, it is helpful to approach the matter in two stages. The first stage is to examine what Mr Meduri knew or suspected about the ownership of the 100 million and what he knew or suspected as to Larn's entitlement to use that money as if it were its own. The second stage is to assess Mr Meduri's conduct in relation to the approval by Notable of the payments requested by Mr Nobre.
In relation to the first of these stages, I will begin by considering what Mr Meduri actually knew as distinct from what he might have suspected. It is not clear to me that Group Seven ever did allege that Mr Meduri actually knew that the money was not owned by Larn or that Group Seven ever did put that allegation to Mr Meduri in cross-examination. However, as I understand it, Group Seven do allege that Mr Meduri knew that Larn was not entitled to use the money as if it were its own. For this purpose, Group Seven relies on the loan agreement between AIC and Larn, a copy of which was produced to Notable by Larn, which agreement contained the provision that the sum of 100 million was exclusively to be used by Larn for investment purposes. I consider that it was relatively clear to Mr Meduri that some at least of the payments authorised on 15 November 2011 were not for investment purposes. Mr Meduri's evidence was that he did not pay any real attention to the provision in the loan agreement as to the purposes for which the money might be used. His explanation was that the two parties to the loan agreement were connected companies which were both owned by Mr Nobre. Accordingly, it was said, it was for Mr Nobre on behalf of AIC to permit Larn to use the money in the way which Mr Nobre wanted. In support of this explanation, Mr Meduri said that he believed that the loan agreement was simply a paper transaction between connected companies to allow Larn to have the use of the money in the United Kingdom in a way which was tax efficient as distinct from an arms-length loan intended to have provisions which had to be observed. I accept this evidence.
The next question is what did Mr Meduri suspect as to the ownership of the 100 million and/or about Larn's entitlement to use that money as if it were its own. For this purpose, it is necessary to consider what degree or extent of suspicion might impose a liability on Mr Meduri for assisting Larn's breach of trust.
I have referred above to the various authorities which offer guidance as to what degree or extent of suspicion is relevant in this context. In Tan, Lord Nicholls said that an honest person did not deliberately close his eyes and ears, or deliberately not ask questions, lest he learn something he would rather not know. Lord Nicholls also referred to "reckless disregard of others' rights or possible rights" being a tell-tale sign of dishonesty. In a number of the cases, there are references to "clear suspicion". In Heinl, it was said that the fine line between guilt and innocence ran between "suspecting what was going on and either knowing or shutting ones' eyes to it". Some of the cases dealing with blind eye knowledge were influenced by the judgment of Lord Scott in Manifest Shipping Co v Uni-Polaris Insurance Co  1 AC 469 at :
"116 In summary, blind-eye knowledge requires, in my opinion, a suspicion that the relevant facts do exist and a deliberate decision to avoid confirming that they exist. But a warning should be sounded. Suspicion is a word that can be used to describe a state-of-mind that may, at one extreme, be no more than a vague feeling of unease and, at the other extreme, reflect a firm belief in the existence of the relevant facts. In my opinion, in order for there to be blind-eye knowledge, the suspicion must be firmly grounded and targeted on specific facts. The deliberate decision must be a decision to avoid obtaining confirmation of facts in whose existence the individual has good reason to believe. To allow blind-eye knowledge to be constituted by a decision not to enquire into an untargeted or speculative suspicion would be to allow negligence, albeit gross, to be the basis of a finding of privity."
Before 15 November 2011, there were obviously questions which needed to be asked as to where the 100 million had come from and how it was that Larn was able to transfer it to the Notable client account. These questions arose for two reasons. The first reason was that the anti-money laundering regulations, which governed Notable's conduct, required it to ask questions as to the source of the funds. The second reason would have applied even if the anti-money laundering regulations did not exist. Mr Nobre was an unusual character who was in many respects secretive and, objectively considered, should have been regarded with a level of suspicion which behoved Notable to ask questions about him and his alleged wealth. The difficulty for Group Seven's case of dishonesty, in so far as it is based on there being grounds for suspicion of Mr Nobre, is that Notable, and Mr Meduri in particular, did ask questions. He took advice as to the questions he should ask. He then endeavoured to pursue those questions. The advice from Mr Choudhury of the Law Society was that he could only go so far and there would come a point when he could draw a line and form a judgment as to what he was dealing with.
If I apply the approach of Lord Scott in Manifest Shipping, I am not persuaded that Mr Meduri failed to ask further questions of Mr Nobre because he did not want to know what the answers to further questions might reveal. I am also not persuaded that whatever suspicions Mr Meduri might have entertained about Mr Nobre at earlier stages of his involvement amounted to having a firm belief in the existence of the relevant facts which pointed to Larn not owning the money or not having the right to deal with it as its own. On this approach, I am not persuaded that Mr Meduri had blind eye knowledge of these matters. Nor do I think he had a "clear suspicion", as that phrase is used in the authorities, of these matters. Further, I do not find that he acted in reckless disregard of others' rights or possible rights.
The authorities make it clear that blind eye knowledge, created by a wilful omission to ask questions, is quite distinct from incompetence in making appropriate inquiries and is even different from gross negligence in making those inquiries. If the question were: did Mr Meduri display a high level of competence in conducting his anti-money laundering inquiries, I might well be persuaded that he did not. Group Seven have identified a large number of respects where more could have been done. The real question is why further steps were not taken. In that regard, I am not persuaded that Mr Meduri did not undertake further inquiries because he had grounds for suspecting that the money was not Larn's money and he did not want his suspicions confirmed. Instead, I find that Mr Meduri considered that he had asked appropriate questions and that Mr Nobre had provided adequate answers to those questions which entitled Mr Meduri to proceed on the basis that Mr Nobre was entitled to deal with the money as his own.
Accordingly, I find that Mr Meduri did not actually know and did not have blind eye knowledge that Larn was not the beneficial owner of the 100 million or that Larn was not entitled to use that money as if it were its own.
The second stage of the consideration of Mr Meduri's position involves an assessment of Mr Meduri's conduct in relation to the approval by Notable of the payments requested by Mr Nobre. At this point in my reasoning, I have reached the conclusion that Mr Meduri was proceeding on the basis that the 100 million was Larn's money and that Larn was prima facie entitled to do with its money as it pleased. However, Notable was not unrestricted in the assistance it could give Larn in this respect. Notable was bound by the Solicitors Accounts Rules and it had to satisfy itself that it could act properly in accordance with those Rules.
I have already made detailed findings as to the ways in which Notable failed to comply with those Rules. It is clear that Notable broke those Rules. However, as I have explained, in judging the honesty of Notable's conduct, Notable and Mr Meduri in particular were entitled to rely on the advice given by Mr Choudhury. Based on that advice, Notable and Mr Meduri set about establishing two things. The first was that they had done proper checks on the recipients of payments. The second was that Notable knew sufficient about the underlying transactions to which the payments related. As I have explained, Mr Meduri made himself primarily responsible for the first of these and effectively left the second of them to Mr Landman. I consider that Mr Meduri was entitled to leave the second task to Mr Landman. Mr Landman was the client partner and repeatedly told Mr Meduri that he knew about the underlying transactions. Mr Meduri appreciated that he himself did not know about the underlying transactions with the exception of the transactions relating to Palladio and possibly Fairfax.
As regards Mr Meduri's level of competence in relation to the first task, the checking on the intended recipients, Group Seven made a large number of criticisms as to how Mr Meduri went about matters. If I had to form a view on Mr Meduri's competence in this respect, it is likely that I would not rate his performance very highly and perhaps it was incompetent. However, I am clear that Mr Meduri was not dishonest in these respects.
In assessing Mr Meduri's conduct in relation to the receipt by Notable of 100 million into its client account and the subsequent payments made by Notable on the instructions of Mr Nobre, I can make the following comments. Mr Meduri had not had to deal with a similar situation in the past. He was not very experienced or well prepared for dealing with the situation in which he found himself. He very wisely sought advice and he genuinely tried to follow it. I also consider that he was more dazzled than suspicious about the enormous amount of money he was dealing with and the exotic character and behaviour of Mr Nobre. I am also sure that ultimately he did not want a confrontation with Mr Nobre. He did not want to turn Mr Nobre away. He did want Notable's fees to be paid out of the 100 million although it seems that he was advised by Mr Choudhury that Notable could pay itself those fees even if there remained unanswered questions as to the source of the funds. However, if I take into account all of these matters in addition to those I have already considered I do not find that Mr Meduri was dishonest. Indeed, some of the considerations mentioned in this paragraph go some way to explain why he acted the way he did and in a way which did not involve dishonesty.
Did Mr Landman dishonestly assist a breach of trust?
The position of Mr Landman is much more complicated than the position of Mr Meduri. As with Mr Meduri, it is helpful to approach the matter in two stages. The first stage is to examine what Mr Landman knew or suspected about the ownership of the 100 million and what he knew or suspected as to Larn's entitlement to use that money as if it were its own. The second stage is to assess Mr Landman's conduct in relation to the approval by Notable of the payments requested by Mr Nobre.
In relation to the first of these stages, I will begin by considering what Mr Landman actually knew as distinct from what he might have suspected. It is not clear to me that Group Seven ever did allege that Mr Landman actually knew that the money was not owned by Larn or that Group Seven ever did put that allegation to Mr Landman in cross-examination. I confess that I am highly suspicious as to what Mr Landman might have found out from Mr Nobre which he did not share with the court in the course of his evidence. I am particularly suspicious about what he might have found out in the period from 4 to 14 November 2011 when he was in very close contact with Mr Nobre and he also had contact with Mr Louanjli. I am quite sure that Mr Landman has not been frank with the court about what was happening and what was discussed in that period. However, my suspicion as to the possibilities which there might have been during that period for Mr Landman to find out about the source of the 100 million is simply not enough for me to make a finding on the balance of probabilities that Mr Landman knew that the money did not belong to Larn.
Group Seven does allege that Mr Landman knew that Larn was not entitled to use the money as if it were its own because of the terms of the loan agreement between AIC and Larn. I have already considered this point when addressing the position of Mr Meduri. In the end, I consider that I must make the same findings in relation to Mr Landman, and for the same reasons, as I did in relation to Mr Meduri.
The next question is what did Mr Landman suspect as to the ownership of the 100 million and/or about Larn's entitlement to use that money as if it were its own? I have already considered, in some detail, a similar question in relation to Mr Meduri. I then reached the conclusion that Mr Meduri did not have blind eye knowledge that Larn did not own the money or that it was not entitled to use the money. I have carefully considered whether I am able to make the same findings in relation to Mr Landman. I have found this a difficult assessment given Mr Landman's propensity for dishonesty. I have to ask myself whether Mr Landman's state of mind amounted to a firmly grounded suspicion as to where the 100 million had come from and whether he deliberately decided to avoid asking questions as to the source of the money.
As to the extent of Mr Landman's suspicion as to where the 100 million came from, there must have been times during his long association with Mr Nobre when he considered that Mr Nobre was a fake. He described him as "a con man" in August 2011. However, even before the 100 million arrived, he did not always think that Mr Nobre was a fake. This is shown by the fact that he spent of lot time seeking to assist Mr Nobre with his proposed investments. He also paid, or caused to be paid, Mr Nobre's bills to Savills and GRM. When the 100 million arrived, Mr Landman seems genuinely to have thought that he had been wrong to have doubts about Mr Nobre. Mr Landman then thought that Mr Nobre had been right all along and that he was indeed a very rich man.
As to whether Mr Landman deliberately refrained from asking questions about the source of the money because he did not want to know the source of the money, I must take proper account of the fact that Notable did ask a large number of questions on that topic. Notable took advice as to how to go about that process and the task was carried out, principally by Mr Meduri and Ms Ciserani. I have held that Mr Meduri and Ms Ciserani believed that Notable had asked the appropriate questions and had been give adequate answers. As to Mr Landman, it is in his favour that it was he who proposed to Notable in the first place that it instruct solicitors to advise Notable on the steps it should take as a protection against money laundering. At that stage, it is clear that Mr Landman genuinely wanted that advice and expected Notable to follow it. Mr Landman also knew that at the end of the process, Mr Meduri and Ms Ciserani were satisfied with the outcome and that they were entitled to proceed on the basis that Mr Nobre was able to deal with the money as his own. I have considered whether the evidence supports a finding that Mr Landman sought to manipulate the process of enquiry being carried out by Mr Meduri and Ms Ciserani and what the effect of such a finding should be. I have referred earlier to interventions by Mr Landman when he suggested that Ms Ciserani should not look into something and when he was critical of Ms Ciserani after the event for, it seems, trying to be thorough. I have also considered the implications of the information which Mr Nobre gave to Vogt about AndBanc and Mr Landman's direction to Mr Nobre not to tell Mr Meduri about that matter. Those points give me cause for concern but my overall conclusion is that Mr Landman allowed Mr Meduri and Ms Ciserani to carry out the process of inquiry which Mr Landman had started and that he was entitled to rely on their conclusion that Mr Nobre had provided adequate information as to the source of the funds.
Finally, on the question of blind eye knowledge, I have reflected again on the fact that I have found Mr Landman to have a propensity for dishonesty. His persistent lying at the trial was a bad example of that. Further, he consistently lied to Mr Meduri on 15 November 2011 as to his alleged knowledge of the underlying transactions. His lies to Mr Meduri showed that he wanted to help Mr Nobre and, of course, he was being well paid by Mr Nobre for acting in that way. I therefore wish to consider whether these findings taken with any other relevant considerations would justify the conclusion on the balance of probabilities that Mr Landman had blind eye knowledge that the money was not beneficially owned by Larn or that Larn was not entitled to use it. In the end, I am not satisfied that I can make that finding. I am not persuaded that the fact that Mr Landman has a dishonest propensity and was dishonest in relation to the authorisation of payments justifies a finding that he was dishonest in this further respect also, when the evidence actually points the other way.
The second stage of the consideration of Mr Landman's position involves an assessment of his conduct in relation to the approval by Notable of the payments requested by Mr Nobre. At this point in my reasoning, I have reached the conclusion that Mr Landman was proceeding on the basis that the 100 million was Larn's money and that Larn was prima facie entitled to do with its money as it pleased. However, Notable was not unrestricted in the assistance it could give Larn in this respect. Notable was bound by the Solicitors Accounts Rules and it had to satisfy itself that it could act properly in accordance with those Rules.
I have already made detailed findings as to the ways in which Notable failed to comply with those Rules. However, as I have explained, in judging the honesty of Notable's conduct, Notable and Mr Landman in particular were entitled to rely on the advice given by Mr Choudhury. Based on that advice, Notable set about establishing two things. The first was that they had done proper checks on the recipients of payments. The second was that Notable knew sufficient about the underlying transactions to which the payments related. As I have explained, Mr Meduri made himself primarily responsible for the first of these and effectively left the second of them to Mr Landman.
I have made detailed findings as to the role which Mr Landman played in relation to the approval by Notable of the payments requested by Mr Nobre. I have found that Mr Landman dishonestly said, time and time again, that the test as to knowledge of the underlying transaction was satisfied when he knew that it was not.
The combination of the findings which I have so far made gives rise to an issue of principle which I must resolve. In the course of closing submissions, I raised with counsel the possibility that an issue of this kind might arise and I received submissions as to how to resolve it.
Mr Chapman submitted that all of the ingredients of the equitable wrongdoing of dishonestly assisting a breach of trust were established in relation to Mr Landman. It was submitted that: (1) Mr Landman had assisted Larn to commit a breach of trust by authorising payments to be made out of the Notable client account; and (2) Mr Landman's assistance, in giving that authorisation, had been dishonest. Mr Chapman relied upon the analysis of the legal position in Madoff Securities International Ltd v Raven  Lloyd's LR F.C. 95 at  where it was said at :
"So accessory liability on the part of a dishonest assistant requires no more from his point of view than the actus reus of assisting by participation in the transaction, and the mens rea of dishonesty."
Mr Flenley countered this submission and he relied on the tests as to dishonesty which are identified in the authorities referred to earlier and, in particular, he relied on what was said by Lewison J in Ultraframe at  where he said:
"1506 Although it is not necessary for the dishonest assistant to know all the details of the whole design, he must, I think, know in broad terms what the design is. Liability as a dishonest assistant, as the law has developed, is a secondary liability akin to the criminal liability of one who aids and abets the commission of a criminal offence. In that context, there are well developed principles for determining when an aider and abettor is to be treated as having participated in a joint enterprise. Criminal liability as an accessory depends on proof that the accessory intended, foresaw, or contemplated that an offence would or might be committed in furtherance of the joint enterprise. But it does not extend to the commission of unforeseen and uncontemplated offences that are outside the scope of the joint enterprise. The fine details of these principles need not be discussed here."
Based on this passage, Mr Flenley submitted that Mr Landman cannot be an accessory to Larn's breach of trust when he thought that Larn was using its own money to make payments which it wished to make. He submitted that a dishonest breach of the Solicitors Accounts Rules, of which I have found Mr Landman guilty, should not impose on Mr Landman, the same liability as if I had found him guilty of knowingly assisting Larn to commit a breach of trust.
I do not think that the precise point raised in this case, based on the combination of my findings of fact, is expressly covered by any earlier authority, although the comments of Lewison J in Ultraframe might be said to be a good signpost. I am not persuaded that the analysis in the Madoff case is of direct assistance. The question in that case was completely different and I think that it would be misleading to take the remarks in that case out of the context in which they were expressed.
The issue I am now addressing might be said to raise a policy question. If I were to hold Mr Landman liable in the way contended for by Group Seven, he would be liable for losses that he could not have foreseen. Although he should have foreseen that he was exposing himself, and Notable, to liability for a breach of the Solicitors Accounts Rules, and that would be a liability to disciplinary proceedings, it would turn out that he was liable for all the consequences of Larn's breach of trust, when he did not know that Larn was committing a breach of trust.
In some areas, the law takes a strict approach to the liability for dishonesty. In the tort of deceit, the victim is entitled to recover all damage directly flowing from the tort and there is no requirement that the losses be foreseeable. It was said in Doyle v Olby (Ironmongers) Ltd  2 QB 158 at 167: "it does not lie in the mouth of the fraudulent person to say that they could not reasonably have been foreseen" and this was approved by the House of Lords in Smith New Court Ltd v Scrimgeour Vickers  AC 254. However, it is one thing to say that a wrongdoer is liable for the unforeseeable consequences of that wrongdoing and another to say that a wrongdoer who has committed one wrong is liable for the consequences of a different wrong, which he did not commit.
The question for me is whether what Mr Landman dishonestly did was to assist a breach of trust when he did not have the relevant knowledge as to there being a breach of trust. I think that I would have to extend the basis of the liability for dishonest assistance of a breach of trust to hold him liable and I am not persuaded that such an extension is justified. My conclusion is that Mr Landman is not so liable.
It follows that I hold that Notable, Mr Landman and Mr Meduri are not liable for dishonestly assisting a breach of trust.
The second claim which Group Seven makes against Notable and Mr Landman (but not Mr Meduri) is for unconscionable receipt of trust monies. I will later refer to the particular sums which are claimed under this head but I will first consider the legal principles which are to be applied.
In El Ajou v Dollar Land Holdings plc  2 All ER 685 at 700g, Hoffmann LJ said that the test for liability in a case of knowing receipt of trust property which had been disposed of in breach of trust was as follows:
the plaintiff must show, first, a disposal of his assets in breach of fiduciary duty; secondly, the beneficial receipt by the defendant of assets which are traceable as representing the assets of the plaintiff; and thirdly, knowledge on the part of the defendant that the assets he received are traceable to a breach of fiduciary duty."
In Brown v Bennett  1 BCLC 649, Morritt LJ said at 655i that the statement in El Ajou as to the appropriate test was entirely conventional. This statement of the test was repeated again in BCCI (Overseas) Ltd v Akindele  Ch 437.
Akindele raised the questions as to what, in this context, was meant by knowledge and whether, in particular, it was necessary for the recipient to have been dishonest. Having reviewed earlier authorities, Nourse LJ (with whom Ward and Sedley LJJ agreed) held that it was not necessary for the claimant to show that the recipient to have been dishonest. He then considered what was meant by the requirement of knowledge that the property which had been received was traceable to a breach of trust or a breach of fiduciary duty. The court considered the earlier categorisation of knowledge in Baden v Sociιtι Gιnιrale pour Favoriser le Dιveloppement du Commerce et de l'Industrie en France SA (Note)  1 WLR 509 at 575-576, which had been as follows:
(1) actual knowledge;
(2) wilfully shutting one's eyes to the obvious;
(3) wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make;
(4) knowledge of circumstances which would indicate the facts to an honest and reasonable man;
(5) knowledge of circumstances which will put an honest and reasonable man on inquiry.
In Akindele, it was said that in earlier cases the first three categories had been taken to constitute actual knowledge (or its equivalent) and the last two constructive knowledge although some doubt had been expressed as to the correct classification of categories (4) and (5). Further, Nourse LJ expressed grave doubts as to the utility of the Baden categorisation in cases about knowing receipt of trust property.
Ultimately, in Akindele, Nourse LJ held as follows (at 455 E-G):
"For these reasons I have come to the view that, just as there is now a single test of dishonesty for knowing assistance, so ought there to be a single test of knowledge for knowing receipt. The recipient's state of knowledge must be such as to make it unconscionable for him to retain the benefit of the receipt. A test in that form, though it cannot, any more than any other, avoid difficulties of application, ought to avoid those of definition and allocation to which the previous categorisations have led."
Akindele was considered in Armstrong GmbH v Winnington Networks Ltd  Ch 156 where it was said at :
"132 In my judgment, the position, in a commercial context, can be summarised as follows: (1) Baden types (1) to (3) knowledge on the part of a defendant render receipt of trust property "unconscionable". It is not necessary to show that the defendant realised that the transaction was "obviously" or "probably" in breach of trust or fraudulent; the possibility of impropriety or the claimant's interest is sufficient. (2) Further Baden types (4) and (5) knowledge also render receipt "unconscionable" but only if, on the facts actually known to this defendant, a reasonable person would either have appreciated that the transfer was probably in breach of trust or would have made inquiries or sought advice which would have revealed the probability of the breach of trust."
I note that in the Armstrong case this formulation of the test was apparently agreed by the parties: see at . Nonetheless, it was not submitted to me that I should not follow the approach in Armstrong and I am prepared to do so.
The money claimed from Mr Landman
Group Seven claims payment of three sums from Mr Landman. The three sums are:
(1) £170,000 paid by Larn to Nisroy;
(2) £14,304.28 paid by Larn to Mr Landman in relation to the Savills' fee; and
(3) Such portion of the £34,000 initially paid to Intrust which Mr Landman received beneficially.
All three of the sums claimed from Mr Landman were part of the 100 million held on trust for Group Seven and the three payments were a breach of trust by Larn. I will therefore proceed to consider whether these sums were beneficially received by Mr Landman.
As to the £170,000, this sum was negotiated by Mr Landman with Mr Nobre. The agreement was that Mr Nobre would make this personal payment to Mr Landman in return for his assistance in allowing Notable's bank account to be used for Mr Nobre's benefit. In order to disguise the fact that the payment was a personal payment to Mr Landman, he channelled the payment through Nisroy who were acting as his nominee in this respect. He then directed Nisroy to make payments to himself (£112,000), to Mr Colombo or his company (£25,000) and to Bell Investments (£32,700) together with bank charges of £300. The payment to Mr Colombo or his company was to repay a debt owed by Mr Landman. Mr Landman did not give any truthful evidence as to why he directed a payment to Bell Investments. On the basis of these findings, I consider that the whole of the £170,000 was received by Mr Landman's nominee and was therefore received by Mr Landman. It does not matter what Mr Landman went on to direct should be done with the money.
The sum of £14,304.28 was received by Mr Landman. The sum of £34,000 was not received by Mr Landman. It was received by Intrust and there was no evidence that Intrust made any relevant payment to Mr Landman.
Accordingly, I need to consider whether it would be unconscionable for Mr Landman to retain the £170,000 and the £14,304.28. In relation to both sums I will begin by considering Mr Landman's state of mind when he received these sums and for this purpose I will make use of the Baden classification. Consistently with my earlier findings in relation to the allegation that Mr Landman dishonestly assisted a breach of trust by Larn/Nobre, I hold that Group Seven has not established that Mr Landman had knowledge within categories (1), (2) or (3) of that classification that the monies he received were being paid to him in breach of trust. However, I find that the case comes within category (4) of that classification. In particular, I find that Mr Landman knew facts which would have shown an honest and reasonable man that Mr Nobre was not entitled to the 100 million. I have already made detailed findings as to what was known to Mr Landman and although I have found that subjectively he thought that Mr Nobre was entitled to the money I consider that objectively an honest and reasonable man would not have reached that conclusion. Without repeating at length the facts which are of principal importance supporting this objective conclusion, I refer to the following matters in particular:
(1) The information which Mr Nobre gave about himself and his alleged charitable foundations showed that much of what Mr Nobre said was pure fantasy;
(2) Mr Landman never saw any evidence of actual trading or commercial investments by Mr Nobre;
(3) For a man who allegedly had vast wealth, Mr Nobre was surprisingly unable to pay his bills as he went along;
(4) The suggestion that Mr Nobre's ability to stay for a long period in an expensive hotel showed that he was a wealthy man was exploded in August 2011;
(5) In August 2011, following the information provided to Mrs Landman by Victoria Weir, Mr Nobre should objectively have been considered as a "con man";
(6) Mr Nobre's explanations as to why he could not transfer his money from his other bank account were inherently suspicious;
(7) Mr Nobre's reply to Vogt, containing information about his dealings with Mr Milton and AndBanc should have rung an alarm bell that a reputable bank would not accept the money from Mr Nobre;
(8) Mr Nobre's explanations as to where the money was coming from were inconsistent;
(9) The amount of 100 million which was paid into Notable's client account was a different amount from that previously stated by Mr Nobre and came from a different source;
(10) A reasonable man would have asked himself why Mr Nobre wanted Notable to do something which Notable was not allowed to do, namely, use its client account as a bank account for Mr Nobre, making the payments requested by him even where Notable was not involved in the underlying transaction or even independently aware of the underlying transaction.
In the light of my finding that an honest and reasonable person would have realised that Mr Nobre was not entitled to the 100 million, was it unconscionable for Mr Landman to receive and to seek to retain the £170,000 which he received? I find that it was plainly unconscionable. An important factor in this assessment is that Mr Landman obtained the £170,000 in return for deliberately and dishonestly breaking the Solicitors Accounts Rules and dishonestly misleading Notable as to his involvement in, or knowledge of, the transactions which led to Notable paying away some 15 million on and after 15 November 2011.
The above analysis was by reference to Mr Landman's position when he received the £170,000. It was not argued that I should consider his position at a later point in time. For example, it might have been relevant to ask whether Mr Landman was a bona fide purchaser without notice of the trust when he received the £170,000 and whether he had retained that sum, or part of it, when he later found out that Mr Nobre was not entitled to the money. If that had been argued I would have held that Mr Landman was not a bona fide purchaser of the £170,000 without notice of the trust. First, he was not a bona fide purchaser as he negotiated the payment of the £170,000 in return for his dishonesty in relation to making payments out of the Notable client account, Secondly, he had notice (as distinct from knowledge) of the fact that Mr Nobre was not entitled to the money. However, it is less clear whether Mr Landman had retained all or part of the £170,000 when he later became subjectively aware that Mr Nobre was not entitled to the money. As the case was not put that way, I will not consider that approach any further.
As to the £14,304.28, apart from the sum of £3,000 to which I refer below, on balance I do not think that it was unconscionable for Mr Landman to retain the repayment to him of the sum paid to Savills on Mr Nobre's behalf. As between Mr Landman and Mr Nobre, it was agreed that Mr Landman had incurred that liability by paying or causing to be paid that sum to Savills. If Mr Landman had actually known on 15 November 2011 that Mr Nobre was not entitled to the 100 million then I would have held that it would be unconscionable for Mr Landman to retain his payment. However, I have only held that Mr Landman had notice that Mr Nobre was not entitled to the money and I do not think that it would be right to hold it was unconscionable for Mr Landman to accept repayment of a genuine debt owed to him. However, on my findings, Mr Nobre (through Ms Weir) had already paid Mr Landman £3,000 towards this debt and I would hold that, to the extent of £3,000, to which Mr Landman was not entitled on 15 November 2011, it was unconscionable for him to retain this sum.
Accordingly, there will be judgment for Group Seven against Mr Landman for the sum of £173,000.
The money claimed from Notable
Group Seven claims payment of three sums from Notable. The three sums are:
(2) £9150.90 (the correct figure was £9,150.00); and
(3) The interest paid on the sum of 100 million while it remained in the Notable client account.
The first two of the sums claimed from Notable were part of the 100 million held on trust for Group Seven and the two payments were a breach of trust by Larn/Nobre. These two sums were beneficially received by Notable. The position as regards the interest on the 100 million in the Notable client account is that Mr Nobre waived the right to receive that interest so that prima facie it was available to be received by Notable. However, after Mr Nobre instructed Mishcon de Reya to act for him, the balance of the monies in the Notable client account were remitted to that firm and the monies remitted included the interest earned on the 100 million. I understand that Mishcon de Reya have accounted to Group Seven for the balance of the monies including the interest so that Notable do not have to account for that interest to Group Seven a second time.
Accordingly, I need to consider whether it would be unconscionable for Notable to retain the £210,000 and the £9,150. As to Notable's state of mind, Mr Landman's state of mind is to be attributed to Notable. I have already made my findings as to Mr Landman's state of mind at the time of Notable's receipt of these sums.
As between Larn/Nobre and Notable, Notable was entitled to the £210,000. The sum was made up of the fixed fee of £125,000 pursuant to the first letter of engagement and £50,000 as a subsequently agreed fee pursuant to the second letter of engagement. VAT of £35,000 was then added to these fees to reach the total of £210,000. As Notable did not actually know that Larn/Nobre were not entitled to the 100 million, I do not think it was unconscionable for Notable to retain the £210,000. I have considered whether I should take the view that the payment of £210,000 was excessive for the work actually done by Notable. There are certainly arguments that the fixed fee of £125,000 was excessive. However, I do not think that I have the evidence which would enable me to substitute a lower figure for that fee or to hold that part of the £125,000 should be regarded as an unconscionable receipt.
As to the claim for £9,150.90, the sum actually received was £9,150. This was a fee due to Notable and I am not persuaded that it was unconscionable for it to retain that sum.
Mr Flenley submitted, by reference to Criterion Properties plc v Stratford UK Properties LLC  1 WLR 1846, that because Notable had contracted with Larn/Nobre for these payments, then as a matter of law, it would not be open to me to hold that it was unconscionable for Notable to retain them. Mr Flenley referred to paragraph  in the judgment of Lord Nicholls in that case. I do not consider that this paragraph is relevant to the circumstances of the present case. What was being considered by Lord Nicholls is a case where the directors of A make an agreement with B under which B is to receive benefits. Lord Nicholls said that in such a case the issue is whether the agreement was made by the directors within their actual or apparent authority so that A is bound by the agreement. He said the issue was not whether B's receipt of the benefits was unconscionable. The claim by Group Seven against Notable is not a claim by Larn/Nobre (i.e. A in Lord Nicholls' example) against Notable (i.e. B in Lord Nicholls' example) and I do not consider that Lord Nicholls' judgment has any bearing on the question whether it was unconscionable as between Group Seven and Notable for Notable to receive the relevant sums.
PART 6: GROUP SEVEN'S CLAIMS AGAINST MR LOUANJLI AND BRIDGE: DISCUSSION AND CONCLUSIONS
Group Seven puts forward four types of claim against Mr Louanjli. The claims are for: (1) dishonest assistance of a breach of trust; (2) deceit; (3) conspiracy to injure by unlawful means; and (4) unconscionable receipt of trust monies. Group Seven also has a claim against Bridge for unconscionable receipt of trust monies.
As to the claim for dishonest assistance, the case against Mr Louanjli is that:
(1) the oral statements made by Mr Louanjli to Mr Meduri on 3 November 2011 and the email he sent on 14 November 2011 were relied upon by Notable to satisfy itself as to Mr Nobre and the source of the money in question;
(2) being satisfied as to these matters, Notable then took Mr Nobre's instructions as to the payments he wished Notable to make and Notable made the payments requested by Mr Nobre;
(3) the payments made at the request of Mr Nobre involved a breach of trust by Larn;
(4) Mr Louanjli's oral statements and email assisted that breach of trust;
(5) Mr Louanjli's assistance was dishonest; and
(6) Group Seven suffered loss and damage as a result.
The first question I will consider is as to the effect of Mr Louanjli's statements and his email on the behaviour of Notable. Mr Louanjli and LLB argued that Notable did not rely on his oral statements and his email. They submitted:
(1) Notable needed to have written confirmation as to the source of funds and, therefore, what Mr Louanjli said in a telephone conversation did not satisfy that requirement;
(2) Mr Louanjli failed to fly to London to swear an affidavit and did not attend a meeting that had been proposed; this showed that Mr Louanjli was not prepared to make statements to Notable on which it could rely;
(3) Ms Ciserani provided a draft affidavit to Mr Louanjli but said that he could remove any of the content he did not wish to be included; Mr Louanjli never swore any affidavit so that he thereby indicated that he did not want to make a statement in relation to any of the contents of the draft affidavit;
(4) The email of 14 November 2011 did not provide any information about the source of the funds;
(5) Mr Choudhury told Notable that the email of 14 November 2011 did not provide any information about the source of the funds;
(6) Notable was determined to accept the money and make the payments requested by Mr Nobre;
(7) Notable was dishonest.
The real question is whether Mr Louanjli's statements and his email did assist Larn. I find that they clearly did assist Larn. Larn and Mr Nobre were seeking to satisfy Notable as to the source of the money in question. Larn and Mr Nobre wanted Mr Louanjli to support their case as to the source of the money in question. On 3 November 2011, Mr Louanjli appears to have been prepared to support Larn and Mr Nobre and he sought to do so. On 14 November 2011, Mr Louanjli was much more reluctant to commit himself by putting in writing anything too specific. Nonetheless he was persuaded by Mr Nobre to write the email which he sent on that day. Notable asked a number of questions and was given various bits of information which Notable used to form its assessment as to the source of the money. Notable wanted to know what Mr Louanjli would say. Notable took what he said into account. What Mr Louanjli said encouraged Notable to regard Mr Nobre as reliable and to believe that he was entitled to deal with the money as his own. The issue is not whether Notable would have acted in the same way without Mr Louanjli's oral statements and his email. The question is whether his oral statements and his email influenced Notable's behaviour in a relevant way. It is also not relevant to ask whether Notable were reasonable in relying on what Mr Louanjli had said or written. It is certainly possible to examine his statements and his email and to question whether anything of real substance was said. Nonetheless, based on the detailed evidence given on the point by Mr Meduri and Ms Ciserani as to the part played by Mr Louanjli's oral statements and his email, I am satisfied that they influenced Notable's behaviour in a relevant way and assisted Larn to commit a breach of trust.
I accept that Notable wanted to have reliable, good quality information, in writing, as to the source of funds. However, despite its efforts, what Notable received was the oral confirmation on 3 November 2011 and the email of 14 November 2011, both from Mr Louanjli, and the Armajaro reference. Together, this information was not good quality information and the conversation on 3 November 2011 was not in writing, although Ms Ciserani made a written note of what was said. Nonetheless, Notable regarded the statements from Mr Louanjli as deserving of some weight. Mr Meduri told Mr Choudhury that Mr Louanjli was Mr Nobre's banker and had basically backed up Mr Nobre's account of matters. The fact that Mr Louanjli did not come to London did not prevent Notable relying on what he had said. After all, it would have been a major step for Mr Nobre's banker to travel from Morocco to London to confirm the information provided and Notable do not appear to have been surprised that he did not in the end do so. Although Ms Ciserani had invited Mr Louanjli to amend her draft affidavit and he did not provide any affidavit, that was not seen by Notable as cancelling the effect of what Mr Louanjli had stated on 3 November 2011. If Mr Louanjli had wanted to correct what he had said on 3 November 2011 it was open to him to do so and he did not do so. When Mr Choudhury told Mr Meduri that the email of 14 November 2011 did not provide any information about the source of the funds, Mr Meduri was still of the view that the fact that Mr Nobre had introduced him to Mr Louanjli and that Mr Louanjli had backed up Mr Nobre's account of matters was of real importance in carrying out checks on Mr Nobre and on the monies. As to whether Notable was determined to accept the money and make the payments requested by Mr Nobre, I find that Ms Ciserani and Mr Meduri were influenced in being prepared to accept the money by the statements made by Mr Louanjli. As to Mr Louanjli's contention that Notable was dishonest, I have found that Mr Meduri and Ms Ciserani were not dishonest although Mr Landman was dishonest in a different way, namely, in relation to his authorisation of the payments made at the request of Mr Nobre.
Accordingly, the key question is whether Mr Louanjli's assistance of the breach of trust was dishonest. It is relevant to consider a number of matters for this purpose, as follows:
(1) Were Mr Louanjli's oral statements and email true?
(2) If not, did Mr Louanjli know that they were not true?
(3) Did Mr Louanjli actually know or have blind eye knowledge that he was assisting a breach of trust?
I have set out above Ms Ciserani's note of what Mr Louanjli said on 3 November 2011. Group Seven has pleaded that Mr Louanjli's statement contained the following express or implied representations which were said to be false:
(1) An express representation that Mr Nobre was an established client of LLB;
(2) An express representation that Mr Louanjli was the person at LLB responsible for managing Mr Nobre's accounts;
(3) An express representation that LLB was the bank from which the 100 million originated and from which they were transferred to AIC's account at Bank of Valletta;
(4) An express representation that LLB had completed a "Know Your Customer" procedure in relation to the source of the 100 million (which, Mr Louanjli implied was compliant with EEA standards and the outcome of which was satisfactory); and
(5) An implied representation that Mr Louanjli and LLB had no reason to believe that Mr Nobre was anything other than honest or that any business with which he was concerned (in particular, Larn) was [not] a bona fide business and Mr Louanjli and LLB believed that they were not fraudulent vehicles; there is a somewhat surprising omission in the pleading of the word "not" but it seems that the Defendants knew what Group Seven intended to plead.
I find that some parts of that statement were not true but I do not find that all of the matters alleged in Group Seven's pleading have been established. I will put the matter in my own words, as follows. The part of that statement which was clearly not true was the statement that: "they have successfully completed the KYC procedure on source of funds". I have described above what LLB did in relation to its checks as to the source of the 100 million which Larn sent to LLB. Although LLB opened a bank account in the name of Larn, it did not complete its checks as to the source of the money at that stage. Later, LLB stated that further checks on the source of the money and on Mr Nobre needed to be carried out. Of course, the use of the term "KYC" was not entirely appropriate as KYC ("know your client") deals principally and perhaps only with checks as to the proposed client. However, in the phrase "KYC procedure on source of funds", one cannot read KYC as not involving or not including checks on the source of funds. What the words meant, and whether they were true, are different questions from what Mr Louanjli subjectively meant by them and what Notable subjectively took them to mean but these subjective questions are relevant to questions as to Mr Louanjli's honesty and as to the effect of the statement on Notable's behaviour. I find that Mr Louanjli meant to refer to checks on the source of funds and possibly also "know your client" checks on Larn/Mr Nobre. I also find that Notable were influenced by this statement into being reassured that a bank had done proper checks on the source of the money.
I also find that two other parts of the statements made on 3 November 2011 were misleading and were deliberately misleading. The statement that "Mr Nobre has been the bank's client since a certain amount of time" was misleading. The true position was that Larn/Mr Nobre (I do not distinguish between them for present purposes) had applied to open a bank account with LLB and LLB had opened such an account. The account was inactive and the bank account was closed. When Mr Nobre tried to pay 100 million into the former account, LLB rejected the money. Perhaps in a very technical sense, it could be said that Larn/Mr Nobre had been a client of LLB but it was misleading to say that it or he has been a client "since a certain amount of time". That statement was intended to convey and did convey a sense of reassurance that Larn/Mr Nobre was a client of LLB in a real sense which was more than a purely technical sense.
I also find that the statement that "they were aware that the funds were sent from them to Allied's bank account at Bank of Valletta" was misleading and was deliberately misleading. The true position was that LLB had rejected the transfer from AIC to LLB and had returned the money to AIC at Bank of Valletta. In a purely technical sense, the money had moved from LLB to AIC at Bank of Valletta. However, the statement was designed to give the impression that there was a straightforward transfer from money resting in one bank to another bank. That impression was misleading and I find it was deliberately misleading. I also find that Notable was misled by it. I do not find that there were further false statements made, expressly or impliedly, in the telephone conversation of 3 November 2011.
I now turn to consider Mr Louanjli's email of 14 November 2011. Group Seven's pleading in relation to this email is somewhat puzzling. Group Seven pointed out that the email did not provide any information about the source of the 100 million. Then it was pleaded that the email did not confirm the matters which had been pleaded as the subject of Mr Louanjli's oral statement of 3 November 2011, namely:
(1) A representation that LLB was the bank from which the 100 million originated and from which they were transferred to AIC's account at Bank of Valletta;
(2) A representation that LLB had completed a "Know Your Customer" procedure in relation to the source of the 100 million (which, Mr Louanjli implied was compliant with EEA standards and the outcome of which was satisfactory); and
(3) An implied representation that Mr Louanjli and LLB had no reason to believe that Mr Nobre was anything other than honest or that any business with which he was concerned (in particular, Larn) was [not] a bona fide business and Mr Louanjli and LLB believed that they were not fraudulent vehicles.
Later in Group Seven's pleading, it was not alleged that the email of 14 November 2011 contained any express representations but it was alleged that it contained an implied representation to the effect that Mr Louanjli and LLB had no reason to believe that Mr Nobre was anything other than honest or that any business with which he was concerned (in particular, Larn) was [not] a bona fide business and Mr Louanjli and LLB believed that they were not fraudulent vehicles. However, this pleaded implied representation was the very thing which it had earlier been pleaded the email did not contain.
Putting the difficulties created by Group Seven's pleading to one side for the moment, I will put in my own words my findings as to the email of 14 November 2011. I find that the email contained a statement which was untrue and the email as a whole was misleading. The part which was untrue was that Mr Nobre "did satisfy the KYC and due diligence that we did run during his account opening process". The true position was that Larn/Mr Nobre did not satisfy LLB's KYC and due diligence. The email was misleading when it said that Mr Nobre was "well known to the Bank" and when it further stated that there was an "account opening process". Literally, those statements were true but they gave a misleading impression and Notable was misled. Mr Nobre was certainly known to LLB but he was known as someone whom LLB did not want as a client; the email suggested otherwise. Further, there was an "account opening process" and an account was indeed opened, but it was opened only in a technical sense. The email gave the misleading impression that Mr Nobre maintained an account at LLB.
The result of my findings about the email of 14 November 2011 is that I have not upheld the pleaded case that the email contained the implied representation which was pleaded. Conversely, I have held that the email was untrue and misleading in respects which are not pleaded. I obviously have to take account of the facts I have found as to the email of 14 November 2011 when I consider other questions such as Mr Louanjli's honesty. Mr Louanjli had a full opportunity to deal with the contents and accuracy of the email and a full opportunity to deal with the challenge to his honesty. However, when I come to make my findings as to whether Mr Louanjli assisted the breach of trust, I cannot make a finding that the email of 14 November 2011 contained untrue and misleading statements because Group Seven have not pleaded that it did (apart from the pleaded implied representation which I have not accepted). On that basis, I have reviewed my earlier findings as to Mr Louanjli's assistance of the breach of trust. On the assumption consistent with the pleaded case that the email of 14 November 2011 did not contain any relevant representations, I would still hold that Mr Louanjli assisted the breach of trust. He made statements on 3 November 2011 on which Notable relied and he did not correct them in his email of 14 November 2011.
As regards Mr Louanjli's knowledge of the matters which were the subject of his oral statements and his email, I find that Mr Louanjli knew all of the relevant facts. He knew about Mr Nobre's attempts to open a bank account. He knew that an account had been opened but that checks on the source of funds and on Mr Nobre remained to be completed. He knew that the account had been inactive and had been closed. He knew that Mr Nobre had attempted to pay money into the account and the money had been rejected. Finally, he knew the views of others at LLB and Mr Vuille in particular as to the risks involved in opening an account for Larn/Mr Nobre and in accepting the 100 million. I find that on 3 November 2011, Mr Louanjli made statements which he knew to be untrue and which he knew were misleading. That was dishonest behaviour. As regards the email of 14 November 2011, I find that Mr Louanjli made a statement which on the facts known to him was untrue and he made statements which he knew were misleading. His state of mind on that occasion was more complex than it had been on 3 November 2011. On 14 November 2011, he was reluctant to commit himself in writing and he may have calculated that he had just stayed on the right side of the line as to the accuracy of his statement. Nonetheless, I find that he miscalculated. In some circumstances, I could see that a genuine belief that a false statement was true would mean that the maker of the statement was not acting dishonestly. However, I would regard Mr Louanjli's conduct on 14 November 2011 as dishonest. He knew that he had made an earlier false statement which he did not correct and he must have appreciated that his email on 14 November 2011 was liable to mislead.
The next question is whether Mr Louanjli actually knew or had blind eye knowledge as to whether he was assisting a breach of trust. It is not said that Mr Louanjli actually knew that Larn held the money on trust for a third party. It is not said that Mr Louanjli actually knew that Larn was not entitled to treat the money as its own. What I have to consider is whether Mr Louanjli had blind eye knowledge that Larn had come by the money in a way which meant that it was not entitled to treat the money as its own.
I have already set out the legal principles to be applied in assessing whether Mr Louanjli's state of mind amounted to dishonesty. Mr Louanjli knew that Mr Nobre was dishonest; I refer to my earlier findings as to Mr Louanjli's knowledge in relation to Mr Nobre's request that Mr Louanjli should provide a dishonest reference and make dishonest written statements. In addition, Mr Louanjli knew a large number of other matters which strongly pointed to Mr Nobre being dishonest and, through Larn, being in possession of a large amount of money where there was no proper explanation as to where it had come from or how he had come by it.
Mr Louanjli knew what Mr Vuille had said on 20 October 2011 when LLB rejected the money. Mr Vuille was clearly of the view that the commercial explanations given by Mr Nobre were not plausible. Mr Vuille also referred to Mr Nobre's request for a personal payment of $1.5 million which Mr Vuille considered might be regarded as embezzlement and a potential case of money laundering. Of course, another banker might honestly take a different view from Mr Vuille. However, I am not able to find that Mr Louanjli honestly took a different view from Mr Vuille. Instead, I find that Mr Louanjli did not care whether Mr Nobre was honest or whether he was entitled to treat the money as his own. What drove Mr Louanjli was that Mr Nobre appeared to have control of a large sum of money and that Mr Nobre would pay him for helping Mr Nobre to be able to draw on that money. Although Mr Louanjli denied that he had ever agreed that Mr Nobre would pay him for his help, he did accept that he expected to benefit financially from helping Mr Nobre.
Quite apart from what Mr Louanjli knew about Mr Vuille's views on 20 October 2011, Mr Louanjli also knew that a number of other banks then declined to provide banking services to Larn/Mr Nobre despite Mr Louanjli's considerable efforts to persuade them to do so. By 3 November 2011, it must have been clear to Mr Louanjli that Mr Nobre was generally dishonest and that there was a strong case that Mr Nobre had come by the money dishonestly and was engaged in the process of laundering the money. Mr Louanjli knew Mr Nobre's case about the money being loaned by Group Seven to AIC and by AIC to Larn. Mr Louanjli knew that Mr Vuille did not regard that case as plausible. I do not think that Mr Louanjli thought it was plausible either. If he wanted to assess its plausibility, he needed to ask Mr Nobre for much more information but he did not do so. Nonetheless, Mr Louanjli threw in his lot with Mr Nobre with a view to receiving a substantial payment from Mr Nobre. Mr Louanjli then assisted Mr Nobre to launder the money and he was rewarded for his assistance. Using the language of the various authorities, Mr Louanjli deliberately did not ask questions of Mr Nobre because he did not want to find out more about the dishonesty which he must have suspected was taking place. Mr Louanjli acted in reckless disregard of the possible rights of others and, in this case, that recklessness was a tell-tale sign of dishonesty. Mr Louanjli had solid grounds for suspicion and a clear suspicion that Mr Nobre had come by the money dishonestly. Mr Louanjli had good grounds for suspecting that he was assisting in money laundering.
It might be said that what Mr Louanjli assisted Mr Nobre to do was to cause Notable to accept the 100 million into its bank account but that acceptance did not cause any loss to Group Seven; Group Seven only suffered loss when Notable paid away about 15 million on or after 15 November 2011. Could it then be said that Notable's conduct in breaking the Solicitors Account Rules and Mr Landman's dishonesty in authorising those payments broke the chain of causation between Mr Louanjli's dishonesty and Group Seven's loss? Or could it be said that Notable's breach of the Rules and Mr Landman's dishonesty were not foreseeable so that Mr Louanjli is not liable for the resulting loss? I do not consider that Notable's conduct in making the payments broke the chain of causation or was not foreseeable. Mr Louanjli's dishonesty assisted Mr Nobre in persuading Notable to accept the money into its client account and that enabled Notable to make the payments requested by Mr Nobre. Further, it was wholly foreseeable that Mr Nobre would use the Notable client account to launder the money. That was the whole point in Mr Nobre paying the money into that account in the first place and I have found that Mr Louanjli knew that there was a strong case that Mr Nobre was engaged in money laundering.
It follows that I find that all of the ingredients of dishonestly assisting a breach of trust have been established in relation to Mr Louanjli. Group Seven suffered loss and damage as a result and are entitled to equitable compensation from Mr Louanjli. I find that the amount of Group Seven's loss for which Mr Louanjli is liable is 9,179,850.48.
Before dealing with the claim against Mr Louanjli for unconscionable receipt of trust monies, I will deal relatively briefly with Group Seven's alternative claims against Mr Louanjli. Group Seven contends that Mr Louanjli conspired with Mr Nobre and with Mr Elbied to commit unlawful acts with the intention of injuring Group Seven and, in the event, causing injury to Group Seven.
Group Seven also contends that it has a claim in the tort of deceit against Mr Louanjli. In relation to that claim, I am persuaded that the statements made on 3 November and the email of 14 November 2011 contained statements which were false and which Mr Louanjli knew to be false. I also find that Notable relied on those statements and that reliance caused loss to Group Seven. Does that give Group Seven a cause of action against Mr Louanjli in the tort of deceit?
Mr Louanjli and LLB submit that these facts do not constitute the tort of deceit. They rely on how the tort is described in Clerk & Lindsell on Torts, 21st ed. at para 18-01:
"The tort involves a perfectly general principle: where a defendant makes a false representation, knowing it to be untrue, or being reckless as [to] whether it is true, and intends that the claimant should act in reliance on it, then in so far as the latter does so and suffers loss, the defendant is liable."
At para. 18-31, Clerk & Lindsell discuss the case where the statement is not made to the claimant directly, for example, where the statement is made to a third party with the intent that it be passed on to the claimant and where the defendant intends to induce the claimant to act on the statement. It is also pointed out that it may suffice if the intention is to deceive the claimant, either individually or by reference to a class of persons to which he belongs. At para. 18-34, Clerk & Lindsell discuss the requirement that the claimant is influenced by the statement so that he acts in reliance upon it.
In Chagos Islanders v Attorney General  EWHC 2222 (QB) at , Ouseley J said that a person cannot sue in deceit:
"in respect of representations which were not made to them directly or to an agent and in reliance upon which they did not act, being unaware of them. I regard that as obvious."
In the present case, I have held that Mr Louanjli's representations were made to Notable and that Notable did rely upon them and the statements contributed to Notable being satisfied as to the source of the 100 million and, being so satisfied, Notable made payments out of that sum on the instructions of Mr Nobre, causing loss to Group Seven. However, it cannot be said that Mr Louanjli intended his statements to be passed on to Group Seven or to a class of persons, of which Group Seven was a member. Further, it cannot be said that Group Seven was aware of the statements or relied upon them in any way.
In response to the submissions of Mr Louanjli and LLB, Group Seven submits that Notable was acting on behalf of its client, Larn, and Larn held the monies on trust for Group Seven. It was then submitted that Notable was acting for Group Seven alternatively that Larn was the agent of Group Seven.
I am not able to accept the submissions of Group Seven that Mr Louanjli is liable to it in the tort of deceit. I do not think that Mr Louanjli's statements were made to Notable as agent for Larn. Notable made its inquiries of Mr Louanjli in order to satisfy the regulatory requirements to which it was subject. Even if Notable was the agent of Larn so that the statements were made to Larn, Larn was not deceived. Larn knew all of the relevant facts and did not rely upon Mr Louanjli's statements which it knew to be untrue. I cannot see any basis for saying that Notable was the agent of Group Seven. Further, Larn as trustee of the monies was not the agent of Group Seven either.
Based on my earlier detailed findings of fact, I conclude that Mr Louanjli did conspire with Mr Nobre to make the statements he made on 3 November 2011 and to send the email on 14 November 2011. It may not matter if he also conspired with Mr Elbied. On the balance of probabilities, I am able to find that he conspired with Mr Elbied in relation to the email sent on 14 November 2011 but the position is unclear in relation to the statement made on 3 November 2011. I also find that those statements were unlawful acts as they amounted to assisting Larn's breaches of trust. I also consider that they conspired to commit the tort of deceit in relation to Notable (although there was no tort of deceit in relation to Group Seven, as explained above) and such deceit was a further unlawful act.
I also find that Mr Louanjli had a sufficient intention to injure Group Seven. Mr Louanjli knew that there was a strong case that Mr Nobre was laundering money which he had obtained dishonestly. It is obvious that such conduct was intended to harm the true owner of the money. Although, in such a case, it was probably not necessary for Mr Louanjli to know who the true owner was, in fact he did know that the money had come from Group Seven to AIC and from it to Larn. I also find that the conspiracy caused loss and damage to Group Seven and Mr Louanjli is liable for such loss and damage.
Accordingly, Mr Louanjli is liable to Group Seven for his conspiracy to injure Group Seven by unlawful means. The damages recoverable by Group Seven are in the same amount as the compensation payable for his dishonest assistance of a breach of trust.
I now turn to consider the claim against Mr Louanjli for unconscionable receipt of trust monies. In view of my finding that Mr Louanjli is liable for the full amount to Group Seven's losses on the basis of dishonest assistance in a breach of trust and conspiracy to injure by unlawful means, I will deal with this relatively briefly.
Mr Nobre made a payment of 1 million to Renaissance (Mr Elbied's company) out of the 100 million. Mr Elbied and Mr Louanjli knew the source of that money and knew that Mr Nobre was not entitled to treat it as his own. Renaissance made three relevant payments to Bridge. These were: (1) 300,000 less 70 bank charges on 28 November 2011; (2) 162,000 less 70 bank charges on 11 January 2012; and (3) 100,000 on 1 October 2012. Mr Louanjli knew that these payments by Renaissance to Bridge came from the 1 million received by Renaissance from Mr Nobre.
The first question is whether Mr Louanjli, as distinct from Bridge, beneficially received these three payments. I find that Bridge was a nominee for Mr Louanjli and so receipt by Bridge amounted to receipt by Mr Louanjli. In the alternative, it would be necessary to ascertain what sums Mr Louanjli drew from Bridge's bank account as those sums would undoubtedly have been beneficially received by Mr Louanjli.
The next question is, as between Mr Louanjli and Group Seven, whether it was unconscionable for Mr Louanjli to retain these three payments. There can be no argument as to the first payment. This payment was effectively a payment made by Mr Nobre to Mr Louanjli for his assistance in connection with the breach of trust and Mr Louanjli knew that was the case. The position as regards the second and third payments was the subject of evidence from Mr Louanjli as to the reason why Renaissance/Elbied made the payments. Were they investments in a business to be operated by Mr Elbied and Mr Louanjli? Were they loans? Did Mr Louanjli repay the 100,000 to Mr Elbied.? I consider that the answers to those questions do not affect the issue of unconscionability as between Group Seven and Mr Louanjli of Mr Louanjli retaining these payments. The questions arise as between Renaissance/Elbied and Mr Louanjli and not as between Group Seven and Mr Louanjli.
Accordingly, I hold that Mr Louanjli is liable to Group Seven for his unconscionable receipt of 561,860.
Group Seven also claimed to be able, at least in principle, to trace its monies into any part of the 561,860 retained by Mr Louanjli or Bridge. If Group Seven wishes to have any order in relation to that possibility, it can be mentioned after the hand down of this judgment.
PART 7: GROUP SEVEN'S CLAIMS AGAINST LLB: DISCUSSION AND CONCLUSIONS
I have held that Mr Louanjli is liable to Group Seven for dishonestly assisting a breach of trust and for conspiracy to injure by unlawful means. I have also held that Mr Louanjli is liable to Group Seven for unconscionable receipt of trust monies. At the relevant times, Mr Louanjli was an employee of LLB. Group Seven says that LLB is vicariously liable for Mr Louanjli's wrongdoing, that is, for his dishonest assistance of a breach of trust and for his conspiracy. It is not suggested that LLB is vicariously liable for his wrongdoing in that he unconscionably received trust monies.
In the course of the argument as to whether LLB was vicariously liable to Group Seven for Mr Louanjli's wrongdoing, a number of matters were addressed. The question was raised as to whether Mr Louanjli had actual authority on behalf of LLB to make the oral statements he made on 3 November 2011 and to send the email of 14 November 2011. Then the question was raised as to whether Mr Louanjli had apparent authority from LLB to act as he did, on the basis that LLB had held him out to Notable as having such authority. Then the parties considered whether LLB would be vicariously liable for Mr Louanjli's wrongdoing, even in a case where he did not have actual or apparent authority to act in that way on behalf of LLB.
Group Seven submitted that it did not need to show that Mr Louanjli had actual authority to make the statements which he did on 3 and 14 November 2011 because, it said, it could readily demonstrate that he had apparent authority to make those statements (even if he did not have actual authority). There was considerable examination at the trial of the terms and conditions of Mr Louanjli's employment and of the various internal documents within LLB which imposed limitations on his behaviour or gave direction as to how Mr Louanjli should conduct himself as an employee. There was also considerable evidence at the trial as to the extent to which LLB had trained Mr Louanjli in relation to these matters. LLB asserted that Mr Louanjli had been trained to a considerable extent and Mr Louanjli gave evidence that his training had been very limited. Although Group Seven did not press the case that Mr Louanjli had actual authority to act as he did, I would not have held that Mr Louanjli had the actual authority of LLB to act dishonestly in his own interests and not in the interests of LLB. In case it is material, I will also make the finding that LLB's training of Mr Louanjli was indeed perfunctory.
On the question of Mr Louanjli's apparent authority, it was clear that LLB had appointed Mr Louanjli to be a relationship manager and had held him out as such. Although LLB had originally given Mr Louanjli a business card which described him as a director, private banking and although that card was supplied by Mr Nobre to Notable, Notable had ascertained on 4 November 2011 that Mr Louanjli was not a director of LLB but that he was instead a relationship manager. Accordingly, Notable did not rely on the description of Mr Louanjli as a director of LLB.
There was considerable discussion as to the role of a relationship manager employed by a Swiss bank. There was expert evidence as to the typical arrangements within Swiss banks as to the giving of "references" for customers, when such references were permitted, the form they were permitted to take, the persons who were typically authorised to give them and the number of signatures required for any such reference. However, this evidence as to the typical position within Swiss banks did very little to inform me as to the apparent position as would be perceived by third parties, particularly third parties who were not principally operating in Switzerland but who, like Notable, consisted of professionals operating in the United Kingdom, although they also operated outside the United Kingdom (including Switzerland). On the facts of this case, I find that Notable did believe that Mr Louanjli as a relationship manager of LLB was authorised to give information to Notable when requested to do so by his client.
If Mr Louanjli had apparent authority to make the statements which he made on 3 and 14 November 2011, by reason of LLB holding Mr Louanjli out to Notable as having such authority, then LLB would be liable to Notable for the wrongdoing involved in the making of those statements. However, LLB did not hold Mr Louanjli out in any way to Group Seven. There was no contact between LLB and Group Seven at all. I consider that the claim by Group Seven against LLB is not best understood as a case of LLB being liable to Group Seven by reason of any apparent authority of Mr Louanjli.
It is clear that an employer's vicarious liability for the wrongdoing of an employee is not confined to cases where the wrongdoing was within the actual or apparent authority of the employee. The test which is instead applied to determine whether in a particular case the employer is vicariously liable for the employee's wrongdoing is to ask whether the conduct in question was sufficiently closely connected with the work which the employee was authorised to do so that the conduct should be regarded as within the scope of the employee's employment and so that the employer should be held liable for it. In view of the fact that LLB did not hold Mr Louanjli out to Group Seven and the further fact that vicarious liability is not restricted to wrongdoing which is authorised by the employer, I consider that I should proceed to consider whether LLB should be held liable to Group Seven, as the party suffering the relevant loss, for the conduct of an employee which was not authorised by LLB rather than considering whether LLB held Mr Louanjli out to Notable so that Notable would be entitled to say that LLB was liable to it on the basis of Mr Louanjli's apparent authority.
For present purposes, in order to identify the legal principles to be applied in order to determine whether, in this case, LLB should be held liable for Mr Louanjli's wrongdoing it is sufficient to refer to three cases at the highest level of authority. The cases are Lister v Hesley Hall Ltd  1 AC 215, Dubai Aluminium Co Ltd v Salaam  2 AC 366 and Mohamud v Wm Morrison Supermarkets plc  AC 677. I was also asked to consider a fairly recent decision at first instance as an illustration of these principles being applied.
The facts of Lister v Hesley Hall Ltd are far removed from the present case. Before Lister, the courts had tended to adopt a test, propounded in Salmond on Torts, which asked whether the wrongdoing (a) was authorised by the employer or (b) was a wrongful and unauthorised mode of doing some act authorised by the employer. The part of this test which referred to an unauthorised mode of doing an authorised act was found to be unhelpful in that case. Instead, the House of Lords identified the relevant question as being whether the conduct in question was sufficiently closely connected with the work which the employee was authorised to do, so that the conduct should be regarded as within the scope of the employee's employment and so that the employer should be held liable for it. The House of Lords referred to the policy considerations involved in the identification and the application of this test.
In Dubai Aluminium Co Ltd v Salaam, the House of Lords gave further consideration to the appropriate test for vicarious liability. On the facts of that case, it was assumed (for the purposes of contribution proceedings under the Civil Liability (Contribution) Act 1978) that a partner in a firm of solicitors was acting as such when he conducted himself in a way which amounted to dishonestly assisting a breach of fiduciary duty. His actions were not within his actual or apparent authority but the firm was nonetheless vicariously liable for them. The question arose under section 10 of the Partnership Act 1890 which refers to a "partner acting in the ordinary course of the business of the firm" but this wording was considered to restate the common law as to the vicarious liability of a partnership for the wrongful acts or omissions of a partner.
In Dubai Aluminium, Lord Nicholls explained the policy considerations raised by an allegation that a partner or an employer is vicariously liable for the actions of another partner or an employee. He said at -:
Whether an act or omission was done in the ordinary course of a firm's business cannot be decided simply by considering whether the partner was authorised by his co-partners to do the very act he did. The reason for this lies in the legal policy underlying vicarious liability. The underlying legal policy is based on the recognition that carrying on a business enterprise necessarily involves risks to others. It involves the risk that others will be harmed by wrongful acts committed by the agents through whom the business is carried on. When those risks ripen into loss, it is just that the business should be responsible for compensating the person who has been wronged.
22 This policy reason dictates that liability for agents should not be strictly confined to acts done with the employer's authority. Negligence can be expected to occur from time to time. Everyone makes mistakes at times. Additionally, it is a fact of life, and therefore to be expected by those who carry on businesses, that sometimes their agents may exceed the bounds of their authority or even defy express instructions. It is fair to allocate risk of losses thus arising to the businesses rather than leave those wronged with the sole remedy, of doubtful value, against the individual employee who committed the wrong. To this end, the law has given the concept of "ordinary course of employment" an extended scope."
At , Lord Nicholls then stated:
"If, then, authority is not the touchstone, what is?
Perhaps the best general answer is that the wrongful conduct must be so closely connected with acts the partner or employee was authorised to do that, for the purpose of the liability of the firm or the employer to third parties, the wrongful conduct may fairly and properly be regarded as done by the partner while acting in the ordinary course of the firm's business or the employee's employment."
Lord Nicholls then explained, at , that "the close connection" test was not precise as to the type or degree of connection which would suffice and he then added at :
"This lack of precision is inevitable, given the infinite range of circumstances where the issue arises. The crucial feature or features, either producing or negativing vicarious liability, vary widely from one case or type of case to the next. Essentially the court makes an evaluative judgment in each case, having regard to all the circumstances and, importantly, having regard also to the assistance provided by previous court decisions. In this field the latter form of assistance is particularly valuable."
At , Lord Nicholls referred to some limits to this approach. He said:
"32 The limits of this broad principle should be noted. A distinction is to be drawn between cases such as Hamlyn v John Houston & Co  1 KB 81, where the employee was engaged, however misguidedly, in furthering his employer's business, and cases where the employee is engaged solely in pursuing his own interests: on a "frolic of his own", in the language of the time-honoured catch phrase. In the former type of case the employee, while seeking to promote his employer's interests, does an act of a kind he is authorised to do. Then it may well be appropriate to attribute responsibility for his act to the employer, even though the manner of performance was not authorised or, indeed, was prohibited. The matter stands differently when the employee is engaged only in furthering his own interests, as distinct from those of his employer. Then he "acts as to be in effect a stranger in relation to his employer with respect to the act he has committed": see Isaacs J in Bugge v Brown (1919) 26 CLR 110, 118. Then the mere fact that the act was of a kind the employee was authorised to do will not, of itself, fasten liability on the employer. In the absence of "holding out" and reliance, there is no reason in principle why it should. Nor would this accord with authority. To attribute vicarious liability to the employer in such a case of dishonesty would be contrary to the familiar line of "driver" cases, where an employer has been held not liable for the negligent driving of an employee who was employed as a driver but at the time of the accident was engaged in driving his employer's vehicle on a frolic of his own."
In Dubai Aluminium, both Lord Nicholls (at ) and Lord Millett (at -) discussed the earlier case of Kooragang Investments Pty Ltd v Richardson & Wrench Ltd  AC 462. Lord Millett analysed that decision as follows:
"126 Kooragang Investments Pty Ltd v Richardson & Wrench Ltd  AC 462 is another example. A valuer in the defendants' employ gave negligent valuations to former clients of theirs. He was doing work of a kind which he was employed to do. But the defendants were not liable. The valuer was moonlighting. He was acting, not as an employee of the defendants, but as an employee or associate of the former clients to whom he gave the valuations and on their instructions. He carried out the valuations at the premises of the former clients and using their staff. The defendants received no payment for the valuations and the director responsible knew nothing of them. The only connection between the valuations and the defendants was that the valuations were made on the defendants' stationery. As Lord Wilberforce said, at p 475: "A clearer case of departure from the course or scope of [the valuer's] employment cannot be imagined: it was total."
127 Unless the use by the valuer of the defendants' stationery in that case was enough to tip the scale, which it clearly was not, it merely amounted to a false representation that he was giving the valuations on their behalf. Since the representation was made by the valuer himself and not by the defendants or with their authority, it did not render them liable for holding him out as having their authority to act on their behalf."
The facts of Mohamud v Wm Morrison Supermarkets plc are (like Lister) far removed from the present case. Nonetheless, to put some of the reasoning in that case into context, it is useful to set out the headnote of the report of that case in the Appeal Cases, as follows:
"The claimant, having stopped at the petrol station at one of the defendant's supermarkets, went into the sales kiosk and asked the defendant's employee if it was possible to print off some documents which the claimant had stored on a USB stick. The employee refused the request in an offensive manner, and in the exchange of words which followed he used racist, abusive and violent language towards the claimant and ordered him to leave. He then followed the claimant as he walked back to his car and, having told him never to return, subjected him to a serious physical attack. The claimant brought an action in the county court for damages for assault and battery against the defendant on the ground that it was vicariously liable for the assault. The judge made a finding that the employee had assaulted the claimant but, dismissing the claim, held that the defendant was not vicariously liable for that assault since the employee's actions had been purely for reasons of his own and beyond the scope of his employment, so that there was an insufficiently close connection between the assault and the employment. The Court of Appeal dismissed an appeal by the claimant.
On appeal by the claimant, contending that the test of vicarious liability should be broadened so as to turn, in the case of a tort committed by an employee, on whether a reasonable observer would have considered the employee to be acting in the capacity of a representative of the employer at the time of committing the tort
Held, (1) that, on a claim that an employer was vicariously liable for a tort committed by one of its employees, the established test, which was to inquire as to the nature of the employee's job and then to ask whether there was sufficient connection between that job and the employee's wrongful conduct to make it right, as a matter of social justice, for the employer to be held liable, remained good without need of further refinement, albeit that it was imprecise and required the court to make an evaluative judgment in each case having regard to the circumstances
(2) Allowing the appeal, that, applying that test, since the job of the defendant's employee had been to attend to customers and to respond to their inquiries, and since there had been an unbroken sequence of events between his response to the claimant's initial inquiry and his following him onto the forecourt and ordering him never to return, which he had reinforced by violence, the employee's conduct, albeit a gross abuse of his position, had been in connection with the job which the defendant had entrusted to him; and that, accordingly, there was sufficient connection between the employee's job and his wrongful conduct to hold the defendant vicariously liable for the assault on the claimant
In Mohamud, the Supreme Court adhered to "the close connection" test identified in Lister and Dubai Aluminium. Lord Toulson said at -:
"44 In the simplest terms, the court has to consider two matters. The first question is what functions or "field of activities" have been entrusted by the employer to the employee, or, in everyday language, what was the nature of his job. As has been emphasised in several cases, this question must be addressed broadly
45 Secondly, the court must decide whether there was sufficient connection between the position in which he was employed and his wrongful conduct to make it right for the employer to be held liable under the principle of social justice which goes back to Holt CJ. To try to measure the closeness of connection, as it were, on a scale of 1 to 10, would be a forlorn exercise and, what is more, it would miss the point. The cases in which the necessary connection has been found for Holt CJ's principle to be applied are cases in which the employee used or misused the position entrusted to him in a way which injured the third party."
These cases also restated the established principle that an employer can be vicariously liable for intentional and dishonest wrongdoing which is done for the benefit of the employee and not for the benefit of the employer: see Lister at , , , - and  and Mohamud at -, applying the landmark decision in Lloyd v Grace, Smith & Co  AC 716.
In addition to these statements of principle in the House of Lords and the Supreme Court, I was shown a decision at first instance, the decision of Nicol J in Axon v Ministry of Defence  FSR 32, as an illustration of the principles being applied, although the application in that case was not necessary for the ultimate decision in that case. In Axon, the judge took the relevant principles from Mohamud. He asked himself what was the field of activity entrusted by the employer to the employee, looked at broadly. He then asked himself whether there was a sufficient connection between that field of activity and the wrongful conduct to make it right for the employer to be held liable to the claimant under the principle of social justice. The judge also held that an employer could be vicariously liable even though the employee's tort was intentional, prohibited, criminal and committed for the employee's own ends. On the facts of that case, the judge held that if the employee had committed a tort, her employer would have been vicariously liable for it.
I am satisfied that these principles apply where the wrongdoing of the employee consisted of dishonestly assisting a breach of trust or conspiracy to injure by unlawful means. There was some discussion at the trial as to whether these principles are modified or different principles are applicable where the employee has committed the tort of deceit of the claimant and the claimant contends that the employer is vicariously liable for such deceit. It was suggested that the decisions in Armagas v Mundogas ("The Ocean Frost")  1 AC 717 and JJ Coghlan Ltd v Ruparelia  EWCA Civ 1057 were authority for the proposition that where the wrongdoing consists of the tort of deceit, the employer is only liable if the employee had apparent authority from the employer to make the relevant representations. There are passages in the judgments in those cases that suggest that this might be the law but, if so, I do not see why the principle which applies in that type of case should be applied where the wrongdoing involves dishonestly assisting a breach of trust or conspiracy to injure by unlawful means. Generally speaking, the most recent cases on the principles as to vicarious liability stress that those principles apply irrespective of the kind of wrongdoing which is being considered. The same principles apply whether the wrongdoing is in a commercial or in a non-commercial context and they again apply whether the harm done is physical harm or financial harm. Further, the decision in Dubai Aluminium specifically concerned a firm's vicarious liability for a partner who dishonestly assisted a breach of trust in a commercial case.
For the purpose of applying these legal principles in this case, I consider that the following matters are of particular relevance:
(1) Mr Louanjli was employed by LLB as a relationship manager;
(2) Mr Louanjli had been the LLB relationship manager for Larn/Mr Nobre;
(3) When Mr Louanjli made the relevant statements on 3 November 2011 and sent the relevant email on 14 November 2011, he was acting or purporting to act as the representative of LLB and he was giving information or purporting to give information which emanated from LLB;
(4) Mr Louanjli's statements were made, and the email was sent at the request of Larn/Nobre, and for the purpose of assisting Larn/Mr Nobre;
(5) Mr Louanjli did not have the actual authority of LLB to do what he did;
(6) Notable believed that Mr Louanjli was acting within his authority;
(7) Notable would not have known of the limitations imposed by LLB on Mr Louanjli's authority;
(8) Mr Louanjli did what he did in his own interests and he was not seeking to advance the interests of LLB;
(9) Mr Louanjli was dishonest.
LLB stresses the fact that when Mr Louanjli made his statement on 3 November 2011 and wrote his email on 14 November 2011, he was not seeking to advance the interests of LLB in any way. Mr Louanjli suggested that his actions may have been beneficial to LLB. His suggestion was that if Mr Louanjli helped Mr Nobre place his monies in another bank, then Mr Nobre might have kept in contact with Mr Louanjli and used LLB to make investments or something of that kind. I do not accept that suggestion. In November 2011, Mr Louanjli was pursuing his own interests and was not seeking to confer benefits on LLB. However, this finding does not mean that Mr Louanjli was on "a frolic of his own" with the result that LLB was not liable for his actions. Similarly, this finding does not mean that his actions were not closely connected with the work which Mr Louanjli was authorised to do. Nor is this case like the case of Kooragang. In this case, Mr Louanjli's position at LLB was central to the statements which he made. Notable wished to hear from Mr Louanjli because he was described to them as Larn/Nobre's relationship manager at LLB. It was important that Mr Louanjli was able to describe what LLB had done and its relationship with Larn/Nobre. Mr Louanjli's statements were expressed to be made by him as a relationship manager at LLB and not otherwise.
LLB also submitted that this case was unlike Lister and Mohamud. This is a commercial case and those cases were not. It was submitted that LLB did not have any relationship with the victim, Group Seven. LLB did not delegate to Mr Louanjli the performance of some task which Group Seven had asked LLB to perform. LLB said that all that had happened was that LLB's employment of Mr Louanjli had given him the opportunity to act the way he did but that was not enough to found vicarious liability for his actions: see per Lord Clyde in Lister at . I do not accept the submission that the legal principle is altered on account of the fact that this is a commercial case. Dubai Aluminium was a commercial case. Further, the authorities cited say that the same legal principle applies whether the wrongdoing is in a commercial or a non-commercial context. It is true that there was no relationship between LLB and Group Seven. But the tort of dishonest assistance of a breach of trust does not involve a direct relationship between the wrongdoer and the victim. The wrongdoer is an accessory who assists someone who may have a direct relationship with the victim. The principles established by the authorities apply irrespective of the kind of wrongdoing established and those principles have been applied to a case of dishonest assistance of a breach of trust: see Dubai Aluminium. I do not consider that this was a case where Mr Louanjli's employment by LLB merely gave him an opportunity to commit the wrongdoing in the sense considered by Lord Clyde in Lister. Here, Mr Louanjli's employment with LLB as a relationship manager for Larn/Nobre allowed Mr Louanjli to pass on information about LLB's relationship with Larn/Nobre and the statements made by Mr Louanjli were expressed to be made on behalf of LLB, a matter which was important to Notable.
LLB then submitted that a finding that it was vicariously liable for the wrongdoing of Mr Louanjli would be particularly inappropriate. It was said that LLB had behaved properly. They had refused to accept the money from Larn/Nobre. They did not want Mr Nobre as a client. It was submitted that, by way of contrast, Group Seven had been extraordinarily foolish and gullible to allow itself to be defrauded by the team of fraudsters. In response to this submission, Group Seven submitted that there were features of LLB's behaviour which they could criticise. Group Seven criticised the lack of training and the lack of supervision of Mr Louanjli. It also criticised some of the conduct of Mr Tschui and Mr Maurer. The liability of LLB in this case does not turn upon a consideration of whether its conduct is open to criticism. The liability contended for is vicarious liability and not personal liability. Nor is it relevant that Group Seven was foolish and gullible. Mr Louanjli as a dishonest wrongdoer does not have a defence of contributory negligence on the part of the victim. LLB is vicariously liable for Mr Louanjli's wrongdoing and it too does not have a defence of contributory negligence.
Applying the above legal principles to the facts of this case, I conclude:
(1) Approaching the matter broadly, Mr Louanjli was employed by LLB to act as a relationship manager for those doing business, or applying to do business, with LLB;
(2) The expert evidence does not assist me to answer the question, approaching the matter broadly, as to how to characterise Mr Louanjli's employment; the experts did not deal with that question "broadly"; further, they were experts within the world of Swiss banking rather than outside it in relation to persons dealing with such banks;
(3) Statements made by Mr Louanjli, ostensibly as a relationship manager of LLB, at the request of the person in respect of whom he was the relationship manager, were sufficiently closely connected with the scope of his employment by LLB as to make it just for LLB to be liable for those statements and Mr Louanjli's wrongdoing, even though Mr Louanjli was acting in his own interests and was dishonest.
It follows that LLB is vicariously liable to Group Seven for Mr Louanjli's wrongdoing in dishonestly assisting Larn's breach of trust and in conspiring to injure Group Seven by unlawful means.
PART 8: GROUP SEVEN'S CLAIMS AGAINST MR ELBIED AND RENAISSANCE: DISCUSSION AND CONCLUSIONS
Group Seven makes the same four claims against Mr Elbied as it made against Mr Louanjli. These claims were for: (1) dishonest assistance of a breach of trust; (2) deceit; (3) conspiracy to injure by unlawful means; and (4) unconscionable receipt of trust monies. Group Seven also claims against Renaissance for unconscionable receipt of trust monies. Mr Elbied and Renaissance did not defend the claims against them.
When considering Group Seven's claims against Mr Louanjli and Bridge, I set out most of the relevant facts as regards the claims against Mr Elbied and Renaissance. In summary, I conclude that Group Seven has made out its claims against Mr Elbied for dishonestly assisting a breach of trust and for conspiracy to injure by unlawful means but not its claim for deceit. Accordingly, Mr Elbied is liable to Group Seven for its loss and damage in the sum of 9,179,850.48.
Mr Nobre made a payment of 1 million to Renaissance out of the 100 million. Mr Elbied knew the source of that money and knew that Mr Nobre was not entitled to treat it as his own. The first question is whether Mr Elbied, as distinct from Renaissance, beneficially received this payment. I find that Renaissance was a nominee for Mr Elbied and so, as regards most of the 1 million, receipt by Renaissance amounted to receipt by Mr Elbied. However, based on this analysis, I can see an argument that I should only hold him liable for 700,000 as when the payment of 1 million was received from Mr Nobre, it was always envisaged that 300,000 would be paid over for the benefit of Mr Louanjli so that Mr Elbied was only the beneficial recipient of 700,000. Although Mr Elbied did not defend the claim, I nonetheless consider that this argument is right and that I should give effect to it.
Group Seven also claimed to be able, at least in principle, to trace its monies into any part of the 700,000 retained by Mr Elbied or Renaissance. If Group Seven wishes to have any order in relation to that possibility, it can be mentioned after the hand down of this judgment.
PART 9: THE CLAIMS BY LARN: DISCUSSION AND CONCLUSIONS
Larn makes the same claims against the Notable Defendants, Mr Louanjli and Bridge, Mr Elbied and Renaissance, and against LLB as were made by Group Seven against those defendants. There is an important difference between the claims made by the two claimants in relation to the trust which is alleged for the purpose of asserting that a defendant has dishonestly assisted a breach of trust and unconscionably received trust monies. For the Group Seven claims, the relevant trust was the trust under which Larn held its interest in the Notable client account on trust for Group Seven. For the Larn claims, the relevant trust arises from the fiduciary duty owed to Larn by Mr Nobre as a director of Larn in relation to the assets of Larn. It is established law that the principles as to dishonest assistance and unconscionable receipt apply to a breach of a fiduciary duty of that kind in the same way as they apply to a breach of trust.
In addition to the claims by Larn which are parallel to the claims made by Group Seven, Larn initially put forward an independent claim. It claimed against the Notable Defendants for breach of the duty of care owed to Larn by the Notable Defendants as Larn's solicitors and advisers. As I understand it, Larn's desire to put forward this claim in negligence was the real reason that Larn brought its own proceedings. Larn maintained that claim throughout the trial but at the end of the trial, the claim in negligence was not pursued.
In these circumstances, in the absence of a claim in negligence and having made my findings of fact as to the position of the various defendants, I can deal fairly shortly with the other Larn claims.
As to Larn's claims against the Notable Defendants for dishonestly assisting a breach of trust, I have held that the Notable Defendants did not dishonestly assist a breach of trust by Larn, essentially because it was not shown that they actually knew (in this context knowledge includes blind eye knowledge) that Larn/Nobre were not able to deal with the money as their own. I reach the same result in relation to Larn's claim that the Notable Defendants dishonestly assisted Mr Nobre to break his fiduciary duty to Larn. The Notable Defendants acted on the basis that Larn was the beneficial owner of the money. They also believed that the loan from AIC to Larn was a paper transaction without commercial significance as AIC and Larn were both owned and controlled by Mr Nobre who was able to authorise the instructions of Larn to the Notable Defendants without being in breach of fiduciary duty. The Notable Defendants proceeded on the basis that there were no other creditors of Larn.
As to Larn's claim against Mr Landman for unconscionable receipt of £173,000, I have held that Mr Landman is liable to Group Seven as the beneficial owner of the £173,000. In theory, Larn is entitled to say that:
(1) The payment by Larn of £173,000 involved a breach of fiduciary duty by Mr Nobre;
(2) It was unconscionable for Mr Landman to retain that sum as against Larn;
(3) Larn is entitled to bring proceedings to recover that sum so that it can, as a trustee for Group Seven, pay that sum back to Group Seven; as to Larn's locus standi see Lewin on Trusts 19th ed., paras. 40.024 and 42.033 citing Pulvers v Chan  PNLR 9.
However, Group Seven as the beneficial owner of the money has already successfully claimed this money from Mr Landman. In those circumstances, I doubt if it is appropriate to enter judgment in favour of Larn against Mr Landman for the same money.
As regards Mr Louanjli and Mr Elbied, I have already held that they were liable to Group Seven for dishonestly assisting a breach of trust by Larn and for conspiring with Larn and Mr Nobre to injure Group Seven by unlawful means. For the same reasons as before, Mr Louanjli and Mr Elbied are liable for dishonestly assisting Mr Nobre to break his fiduciary duty to Larn. Mr Louanjli and Mr Elbied had blind eye knowledge that Larn/Nobre were not free to deal with the 100 million as if it were their own money and that the money was owned by a third party. I will leave open the question whether Mr Louanjli and Mr Elbied are liable for conspiring with Mr Nobre to injure Larn when their actions were not aimed at Larn.
It was argued that Larn could not sue Mr Louanjli and Mr Elbied for dishonestly assisting Mr Nobre to break his fiduciary duty to Larn as it was argued that Larn's claim against them was tainted with illegality and so should fail. I consider that the answer to that submission is provided by the decision in Bilta (UK) Ltd v Nazir (No 2)  AC 1. In Bilta, the parallel to the claim by Larn against Mr Louanjli and Mr Elbied was the claim by Bilta against Jetivia SA and Mr Brunschweiler. The Supreme Court held that those defendants could not successfully argue that Bilta's claim against them should fail by reason of illegality. In particular, the wrongdoing of the directors of Bilta was not to be attributed to Bilta. Based on this authority, Mr Nobre's wrongdoing is not to be attributed to Larn so that Larns's claim is not tainted by Mr Nobre's illegality. Larn's claim against Mr Louanjli and Mr Elbied is for a slightly higher amount of loss as compared with the amount of the loss claimed by Group Seven. As explained earlier in this judgment, Larn says that in relation to a loss of 11,105,101.18 it must give credit for 846,799.45 but not for the larger figure (for which Group Seven has given credit) of 1,925,250.70. Larn says that the resulting net figure for its loss is 10,258,301.73. I did not hear any submissions from the defendants as to these figures. Following the hand down of judgment, in the absence of agreement, I will hear submissions as to the appropriate judgment to be entered in favour of Larn.
As to the claims for unconscionable receipt against Mr Louanjli and Mr Elbied, as I have already held that Group Seven as the beneficial owner of the relevant monies is entitled to judgment for those monies, I doubt if it is appropriate to enter judgment in favour of Larn against Mr Louanjli and Mr Elbied for the same money.
For the sake of completeness, I add that Larn could not claim in the tort of deceit against Mr Louanjli and Mr Elbied for the simple reason that Larn was not deceived but knew (through Mr Nobre) the relevant facts.
As Mr Louanjli is liable to Larn for dishonestly assisting Mr Nobre break his fiduciary duty to Larn, I hold that LLB is vicariously liable to Larn for Mr Louanjli's wrongdoing.
PART 10: THE CONTRIBUTION CLAIMS
There are various contribution claims which need to be dealt with in the light of my findings as to the liability of some of the defendants.
The parties proceeded on the basis that the contribution claims would be dealt with following the hand down of this judgment and, accordingly, I will not now comment on the contribution claims.
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