IN THE GRAND COURT OF THE CAYMAN ISLANDS ~~"!~ ;).7 -3 -/ ~ 1 '~', /~~:j·";·~·~7.~'> ,FINANCIAL SERVICES DIVISION i<"'~ ~~ .. -' ~~; -' .- . \. f ~ ) .. " ':,". "', \ . , / .... , . CAUSE NO. FSD 54 OF 2009 \~~~;,,;,:,. ' .:.' ; , .:: ' IN THE MA TIER OF THE COMPANIES LA W (2009 REVISION) "< . .:: '! ,:~.. ..' AND IN THE MATTER OF SAAD INVESTMENTS COMPANY LIMITED"---" AND 16 OTHER LIQUIDATIONS BETWEEN AHMAD HAMAD ALGOSAIBI AND AND BROTHERS ("AHAB") COMPANY SAAD INVESTMENTS COMPANY ("SICL") LIMITED MAAN AL-SANEA AND OTHERS PLAINTIFF DEFENDANTS IN CHAMBERS THE 14TH FEBRUARY 2012 BEFORE THE HON. ANTHONY SMELLIE, CHIEF JUSTICE Appearances: Mr. Quest, Mr. Hayden and Mr. Keightley for AHAB (with them Mr. Simon Charlton of Deloittes) Mr. Helfrecht of Bodden & Bodden for the A W ALCos - the 13th - 19th Defendants Ms. Colette Wilkins of Walkers for the GT Liquidators of SICL Mr. Herbert for of Harneys for Kinetic Liquidators - 34th Defendant SIFCo #5 Mr. Flannagan of Nelson & Co. for Standard Chartered Bank Mr. Stephen Alexander of Maples & Calder for the Maples Defendants RULING
AHAB' s present application for an interim award of damages against Mr. Al Sanea proceeds on the basis that liability as established against him, does not depend upon liability having to be established as against any of the other Page 10f5 defendants, the companies of Mr. AI Sanea in liquidation. ARAB relies upon Grand Court Rules ("GCR") Order 29 rules 1 0 and 11.
ARAB says through Mr. Quest, that the arithmetic exercise of assessment of damages for the purposes of an interim award can proceed on the basis that Mr. Al Sanea's liability for breach of fiduciary duty and fraud is deemed established. Thus, the misappropriation of ARAB's money by Mr. Al Sanea enabled by that breach of duty and fraud and now deemed proven by the default judgment, can be identified and quantified. ARAB would rely on the forensic accounting evidence of Mr. Simon Charlton for these purposes. Further, says ARAB, there can be no risk of prejudice to the Defendants in Liquidation if it turns out at trial that they were not involved in the alleged conspiracy with Mr. Al Sanea to defraud ARAB. No recovery is sought from them now but only from Mr. al Sanea by virtue of the default judgment.
The problem nonetheless raised by the Defendants in Liquidation is whether there would be a risk of inconsistent verdicts. This risk is said to be presented by the fact that their defences to ARAB's claims depend upon their denial, not only of any conspiracy with Mr. Al Sanea, but also upon their denial that he committed the alleged breaches of fiduciary duty and fraud. That defence is crucial to their position because if it succeeds, not only would they not be liable for conspiracy but also because monies received by them from and through Mr. Al Sanea, would not be tainted by the alleged breach of fiduciary duty or fraud. So, despite the fact that Mr. Al Sanea's liability is by the default judgment against him deemed to be proven; there is a risk of inconsistent verdicts were the Defendants in Liquidation to prove at trial that he was not liable. Page 2 of5
Such concerns about inconsistent verdicts are said by Ms. Wilkins to lay at the root of OCR O. 37 rule 3. This rule mandates that where a trial proceeds against other defendants, the damages under the judgment already obtained against another defendant shall be assessed at the trial, unless the Court otherwise orders.
This Rule presents me with some difficulty now. Its rationale is not explained in the rule itself or, as far as I am able to ascertain, in the case law.
It may well be that the rule is aimed at avoiding unfair consequences such as could arise from a premature assessment and award of damages as against a particular defendant in respect of whom a default judgment was earlier obtained in the same action.
Such a thing could happen, for instance, in the context of a personal injury claim against more than one defendant and where liability and damage are to be apportioned or where contributory negligence on the part of the plaintiff could be found. Whether or not the Rule is aimed at avoiding the kind of inconsistent verdict said to be apprehended by the Defendants in Liquidation here, will itself be a matter for resolution.
One of the issues they will have to face as I can anticipate, will be why it is they should deny ARAB's immediate enforcement of its judgment against assets identifiable as Mr. Al Sanea's, when they have themselves brought no claim against him.
All that said and whatever may be its objectives, while ARAB has not sought an order under OCR O. 37 rule 3 to allow the assessment of damages on the interim basis to proceed, on a plain reading of the rule ARAB requires such an order and, Page 3 of5 as matters stand, I am simply not in a position to say whether or not such an order should be made.
Given the complex nature of this action, and the magnitude of the claim for damages against Mr. AI Sanea, it would be inappropriate for me to make an order under O. 29. r. 1 in favour of ARAB without hearing from the other defendants. That is; especially as to how it is perceived by them that an interim award could result in inconsistent outcomes at trial as against them, as to both their liability for damages and the quantum of the damages.
I am also concerned about whether as the judge who is likely to try the action as against the other defendants (and at the same time SICL's counterclaim against ARAB); I should be hearing and deciding now on the evidence as to the quantum of damages, although that would be as against Mr. Al Sanea only.
I do not think that I have heard enough today to allow me to decide that issue either.
The outcome then is that the application by the Defendants in Liquidation for the adjournment must be granted with direction for the hearing of their objections to ARAB's application for an interim assessment and award of damages.
The direction I give is that ARAB should specify what evidence it will seek to rely upon by way of assessing the damages directly attributed to Mr. Al Sanea's breach of fiduciary duty and fraud. This is evidence which it says would entitle it to receive an interim award irrespective of the outcome at trial of its claim as against the other Defendants in Liquidation. Page 4 of5
The Defendants in Liquidation in tum shall serve their evidence to show why a determination of an interim award based on Mr. Al Sanea's deemed liability could necessarily or reasonably be expected to result in inconsistent outcomes at trial.
This is all aimed at allowing the Court to make a determination pursuant to GCR 0.37 r. 3.
When that determination is made, depending on what it is, the Court will then direct whether another judge should hear AHAB' s application for an interim award.
AHAB's evidence to be filed within seven days.
The Defendants in Liquidation to file their evidence within two weeks of receiving ARAB's evidence. Skeleton arguments to be exchanged no later than seven days before the resumed hearing.
Costs oftoday reserved. Page 5 of5