|[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]|
England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Dar Al Arkan Real Estate Company & Anor v Al Refai  EWHC 1793 (Comm) (24 June 2015)
Cite as:  EWHC 1793 (Comm)
[New search] [Printable RTF version] [Help]
QUEEN'S BENCH DIVISION
incorporated in the Kingdom of Bahrain)
Strand, London, WC2A 2LL
B e f o r e :
| Dar Al Arkan Real Estate Company
|Bank Alkhair B.S.C.(c) (formally Unicorn
Investment Bank B.S.C.(c)) (a company
incorporated in the Kingdom of Bahrain)
|(1) Mr Majid Al-Sayed Bader Hashim Al Refai
(instructed by Addleshaw Goddard LLP) for the Claimants
Stuart Ritchie QC, Neil Mendoza and Harriet Ter-Berg
(instructed by PCB Litigation LLP) for the Defendant
Hearing date: 5 June 2015
Crown Copyright ©
Mr Justice Andrew Smith:
i) The "stay" question: whether the court should stay enforcement of the discontinuance costs order; and
ii) The "previous orders" question: whether orders previously made in the case that Mr Al Refai pay the costs of the claimants should be overridden by the discontinuance costs order.
The stay question
i) The November 2012 judgment is in respect of an allegation that, while so employed, he (and another employee, Mr Falah Al Falah) unlawfully appropriated money belonging to BA. Mr Al Refai says that the relevant payments to Mr Al Falah or his company (or both) were made in BA's best interests and were properly incurred.
ii) The October 2013 judgment is in respect of loans apparently made to Mr Al Refai before he was dismissed. Mr Al Refai's case is that the loans were to be set off against an end-of-service payment to which he was entitled under Bahraini employment law on the termination of his employment and which BA denied him on the basis of trumped-up allegations of misconduct.
Neither judgment has been satisfied in whole or in part.
i) The November 2012 judgment was based wholly on findings made by the Bahraini Criminal Court in a judgment of 26 June 2012 (the "June 2012 judgment").
ii) The June 2012 judgment resulted from fraud on the part of BA, who had brought a criminal complaint as part of a campaign against Mr Al Refai designed to avoid liabilities arising from his employment contract and made allegations without genuinely believing them. BA is said to have given fraudulently misleading witness statements to Deloittes, who were responsible for investigating the complaints.
iii) The fraud that brought about the June 2012 judgment also vitiates the November 2012 judgment.
iv) The October 2013 judgment was based on BA's false and fraudulent assertion, accepted by the Court, that Mr Al Refai had legitimately been dismissed for gross misconduct.
i) The nature of the claim (so that, for example, there will seldom be a stay on enforcement of a judgment on a dishonoured bill of exchange).
ii) In cases where the judgment debtor does not himself have a cross-claim against the judgment creditor, but a person associated with the judgment debtor does, how close that association is. In Orri v Moundreas,  Comm LR 168 Mustill J, whose judgment was cited with approval by Ralph Gibson LJ in the Burnet case at p.809B, referred to cases "where the court will look behind the corporate structure at one or both parties to find the persons truly at interest, and then exercise its power to grant a stay, as the justice of their mutual relations may demand".
iii) The relationship (if any) between the claim giving rise to the judgment and the cross-claim.
iv) The strength of the cross-claim.
v) The size of the cross-claim, a consideration that Bingham LJ thought to be rarely, if ever, decisive.
vi) The likely delay before the cross-claim will be determined.
vii) The prejudice to the judgment creditor if a stay is granted.
viii) The risk of prejudice to the party making the cross-claim if a stay is refused.
Bingham LJ made clear that these are not the only relevant considerations and that the importance of each depends on the circumstances of the particular case. But I use them as a convenient framework.
i) It followed the claimants discontinuing the claims against Mr Al Refai. He cited the judgment of Pill LJ in Safeway Stores Ltd v Twigger,  EWCA Civ 1472, in which he said at para 58 that by discontinuing their claim against a defendant, the claimants "accepted that it is not a valid claim against" him. Pill LJ did not, I think, mean that this is always the implication of discontinuance: certainly, it is not unusual (to give just one of many possible examples) for a claim to be discontinued when it is learned that a defendant is uninsured or otherwise not worth suing. In this case I can well understand that, settlement having been reached with the other defendants (on terms of which I am unaware), the claimants did not wish to pursue this expensive litigation against Mr Al Refai alone. I do not infer that they accepted that they had no valid claims against him.
ii) The discontinuance costs order followed discontinuance at a late stage in the proceedings, during the first trial in litigation that was being managed in stages, after the claimants had cross-examined Mr Al Refai and after they had decided not to call any witnesses of fact. I can, I think, safely infer that the timing was connected with the settlements with other defendants, and of course I know nothing of the negotiations that led to them. It was suggested that the claimants faced questions about their case on the iniquity issues to which they had no answer, and there might be something in that, but there is no sufficient basis to find that they suddenly saw difficulties that they had not previously recognised and considered.
iii) Thirdly, I was invited to take it into account that the claimants agreed to pay costs assessed on the indemnity basis. Mr Ritchie, citing the judgment of Tomlinson J in Three Rivers District Council v The Governor and Company of the Bank of England,  EWHC 816 (Comm), submitted that thereby the claimants recognised that the case and their conduct of it was "out of the norm", and in particular suggested that this was the sort of case that Tomlinson J described at para 25: a case in which weak and opportunistic claims, inconsistent with the documents, involving allegations of dishonesty and other impropriety over a long period, were aggressively pursued inter alia in cross-examination, and were maintained to the "bitter end". I shall revert to how the claim was pursued, but the fact that the claimants agreed to pay indemnity costs does not seem to me in itself a significant consideration that weighs against the stay. I add only that, because the costs order went by consent, I have not myself heard argument about the appropriate basis for assessment, and, as things stand, I regard that as an open question.
i) The corporate connection: the nature of the relationship between Daar and BA was an issue in the litigation. The case advanced by the defendants (other than FTI) was that both were controlled by Sheikh Yousef, but I am not in a position to adjudicate upon it. However, there is not, and never was, any dispute that Daar and BA were (and are) related parties: this was stated in their annual reports and accounts.
ii) Their relationship in the litigation: the claimants together brought these proceedings, and, at the risk of over-generalisation and while BA alone brought claims against Mr Al Refai for breach his employment contract, otherwise the claims brought by the two claimants were largely similar and arose from largely similar facts.
iii) The relationship in the discontinuance costs order: it was against both claimants, and created a joint and several liability. This is therefore not simply a case of one party seeking a stay in reliance on a third party's claim against the judgment creditor.
i) First, the claimants allege that Mr Al Refai embezzled from BA $1 million that had been paid by Al Arkan into the so-called Rubicon account to create a bonus pool for employees of BA. Mr Al Refai refutes this in paras 42 to 48 of his rejoinder, and will apparently contend in the enforcement action that this allegation was made dishonestly and tainted the Bahraini judgments.
ii) Secondly, the claimants allege that Mr Al Refai improperly shredded documents of BA before his employment ended. Mr Al Refai refutes this in paras 5 to 12 of his rejoinder, and alleges Sheikh Yousef's statement about this in the Bahraini proceedings was dishonest.
iii) Thirdly, the evidence for the Bahraini proceedings apparently included allegations about a cash-flow spreadsheet said to have concealed a payment of $11.25. Mr Al Refai says that the allegation was made dishonestly, and his case about that is set out in this litigation at paras 18 to 21 of his rejoinder.
The reality is that this litigation and the Bahraini proceedings are about different aspects of the same dispute.
The previous orders question