Ahmad Hamad Algosaibi and Brothers Co (AHAB) v Saad Investments Co Ltd; Maan Al‑Sanea and Others - Ruling

¶ ```markdown # IN THE GRAND COURT OF THE CAYMAN ISLANDS ## FINANCIAL SERVICES DIVISION **CAUSE NO. FSD 54 OF 2009** **BETWEEN** **AHMAD HAMAD ALGOSAIBI AND BROTHERS COMPANY ("AHAB")** **PLAINTIFF** **AND** **SAAD INVESTMENTS COMPANY LIMITED** **MAAN AL-SANEA AND OTHERS** **DEFENDANTS** **IN CHAMBERS** **THE 12TH – 13TH APRIL, 2016; 23RD JUNE 2016** **BEFORE THE HON. ANTHONY SMELLIE Q.C., CHIEF JUSTICE** **APPEARANCES:** - Mr. David Quest Q.C., instructed by Mr. Peter Hayden and Mr. Charles Moore of Mourant for AHAB - Mr. Michael Crystal Q.C. and Mr. Mark Phillips Q.C., instructed by Ms. Colette Wilkins and Ms. Shelley White of Walkers for the Grant Thornton liquidators of the Saad Group of Companies ("the GT Liquidators or "GT Defendants") - Mr. Marcus Smith, Q.C. and Ms. Bridget Lucas, instructed by Mr. Ian Lambert and Mr. William Helfrecht of HSM Chambers for the AWALCO Group Liquidators (the "AWALCO Liquidators", the "AWALCo Defendants or the AWALCos") - Mr. Thomas Lowe Q.C., instructed by Mr. Marc Kish of Harneys for the SIFCO5 Defendants **RULING ON FURTHER SECURITY FOR COSTS** At the Cement Hearing, the parties had arranged for costs in March 2016. The court provided that a combined total of some USD52 million was to be provided as security for costs.

¶ [1] The Managing Director of the AWALCO Group Liquidators, Mr. Marcus Smith, Q.C., and Ms. Bridget Lucas, instructed by Mr. Ian Lambert and Mr. William Helfrecht of HSM Chambers, were present at the Cement Hearing.

¶ [2] The Defendants also then reported that they were preparing their estimates for costs to be incurred during the trial, and would seek to agree them with AHAB. In the event that agreement had not been reached, the Court would be invited to determine the application for security to cover the trial at the Pre-Trial Review (“PTR”).

¶ [3] As events transpired, agreement was not reached and so upon the PTR coming on before me on 12-13 April 2013, I was presented with summonses by the Defendants for resolution of the matter.

¶ [4] The requirement that AHAB as a foreign plaintiff having no assets in this jurisdiction against which an award of costs might be enforced, should provide security for the Defendants’ costs is, as explained above, settled. The applicable legal principles were discussed and applied in previous judgments of this court and indeed in previous judgments delivered in this case. See AHAB v SICL et al FSD 054 of 2009 judgment delivered on 15 November 2013 (the “November 2013 Judgment”) and FSD 054 of 2009 judgment delivered on 1 November 2015 (“the November 2015 Judgment”) in which the principles as they arose for peculiar application in a case of the scale, scope and complexity of this one, were discussed.

¶ [5] At its core, it is accepted that the setting of security for costs is a discretionary exercise to be undertaken by the judge necessarily applying a “broad brush”. The objective is to arrive at a fair and realistic, not necessarily a precise or generous, estimate of the costs to be incurred by the Defendants for the trial.

¶ [6] The Defendants’ applications for security for costs are supported by affidavits from the respective Joint Official Liquidators (“JOLs”), explaining the headings of costs as set out in Schedules to the Summons. The Schedules have all been prepared on the same basis, each recognizing that, if to be taxed on the standard basis pursuant to Order 62 of the
Grand Court Rules, costs would be recoverable at no more than 70% of the actual expenditure. They begin with a summary using that of the GT Defendants as a first example: ### SUMMARY OF SECURITY REQUIRED BY THE GT DEFENDANTS #### AHAB TRIAL COSTS | SECURITY REQUIRED (TRIAL PERIOD ONLY) | TOTAL HOURS | TOTAL COST (USD) | ALLOCATION OF COSTS TO COUNTERCLAIMS (USD) | AMOUNT CLAIMED (USD) | |---------------------------------------|-------------|-----------------|------------------------------------------|----------------------| | Opening arguments | 1,200 | 768,000 | 132,000 | 636,000 | | AHAB's witnesses | 3,840 | 2,457,600 | 105,600 | 2,352,000 | | Additional working days - AHAB's witnesses | 1,920 | 1,228,800 | 52,800 | 1,176,000 | | The Defendants' witnesses | 1,920 | 1,228,800 | 264,000 | 964,800 | | Additional working days - Defendants' witnesses | 800 | 512,000 | 110,000 | 402,000 | | Expert evidence | 1,920 | 1,228,800 | 52,800 | 1,176,000 | | Additional working days - Expert evidence | 800 | 512,000 | 22,000 | 490,000 | | Overrun | 1,200 | 768,000 | 33,000 | 735,000 | | Preparation of closing arguments | 2,400 | 1,536,000 | 264,000 | 1,272,000 | | Work on oral closings | 720 | 482,400 | 74,880 | 407,520 | | Oral arguments | 2,160 | 1,464,000 | 249,600 | 1,214,400 | | Total time costs | 18,880 | 12,186,400 | 1,360,680 | 10,825,720 | | Total time% | 13 | 1,500,000 | 10,025 | 778,004 | | Total recoverable costs and disbursements | 12,357,224 | 1,005,772 | 11,351,452 | Page 3 of 9

¶ [7] A major difference to note between the GT Defendants' estimates and those of the other Defendants, relates to the GT Defendants' counterclaim to which they attribute $1,005,772 of the recoverable costs and disbursements. This is then deducted in their Schedule from the total of $12,357,224 as shown above, to reflect the fact that as plaintiffs on the counter-claim, they are not entitled to security for costs of its prosecution. The total sum remaining – $11,351,452 – is thus the sum of security sought. This is a primary issue which I address here.

¶ [8] Given the magnitude and complexity of the counter-claim for some $6 billion, I am compelled to conclude that the amount allocated to it, representing less than 10% of the overall cost estimates for the trial, is far too conservative. An amount representing at least 20% would, in my view, be more fairly representative and consistent with the apportionment which I earlier applied to the costs of this counterclaim in the November 2013 Judgment, at paragraph 103. That is the allocation I now make.

¶ [9] I also note in this regard, that a second senior silk in the person of Mr. Phillips QC has been engaged for the GT Defendants' litigation team, with primary responsibility for presenting their counter-claim being reposed in him. This must be reflected in the costs attributable to the counterclaim.

¶ [10] The amount to be allocated to the counter-claim will therefore be reflected in a deduction of 20%, as explained further below. With the counter-claim accounted for in that way, the rest of, I accept ps submits , should be distinguished the Time Costs and Disbursements.

¶ [11] One reason for this which I recognize, is that at this stage of the proceedings, the JOLs can be expected to have arrived at their estimates of disbursements with somewhat more precision than might be attained in estimating Time Costs. Page 4 of 9

¶ [12] Time Costs are, moreover in my view, as prone as ever to be influenced by the JOLs' inclination, as prudent custodians, to err on the side of protecting their liquidation estates with the largest possible buffer. Here I note in particular, Mr. Quest’s criticism of the common approach of all the JOLs to the estimation of man hours to be spent by their entire litigation teams in the process of the trial.

¶ [13] In this regard, the Time Costs have been estimated on the basis that each litigation team – two comprising 10 lawyers and one of 7 or 8 lawyers – will be fully engaged for 10 hours each day for the entire length of the trial. This – notwithstanding that significantly smaller teams will actually be in the courtroom – is explained on the basis of all the support work that will have to be going on outside the courtroom, to support the lawyers who will actually be in court.

¶ [14] This I regard as a too generously cautious approach on the part of the JOLs. That is not the approach which I am called upon to take being mindful not only of the Defendants’ interests but also of the need not to impose an unfairly onerous burden on the Plaintiff.

¶ [15] For such reasons, I applied a discount of 20% to the overall estimates for Time Costs when making an earlier award of security for costs in this matter. See the November 2013 Judgment at paragraph 99. That is the discount I apply now to the overall Time Costs (before the discount for the counter-claim time costs) for the same reasons. A discount of 10% will also be applied to the estimate for Disbursements taking the same philosophic the JOLs’ ch but also taking into account the likely outcome of the case. There will also be a more precise allocation of 20% of the Disbursement to the Counterclaim consistent with the approach to allocation of time costs. The award of security for the trial for the GT Defendants therefore becomes: Page 5 of 9
```markdown # TIME COSTS $8,530,480 - 1,706,096 (20% general discount) 6,824,384 - 1,364,877 (20% allocation to counterclaim) $5,459,507 # DISBURSEMENTS $3,826,744 - 382,674 (10% discount) 3,444,070 - 688,814 (20% allocation to counterclaim) 2,755,256 + 5,459,507 8,214,763 (Total Time Costs and Disbursements allowed by way of award of security for costs of the trial) ## 16. The AWALCos JOLs' summary is as follows: | Security required - 18 July - 24 February 2017 | Total hours | Total cost (US$) | |---|---|---| | Opening Arguments | 1,200 | 663,480 | | AHAB's witnesses | 3,840 | 2,123,136 | | Additional working days - AHAB's witnesses | 1,920 | 1,061,568 | | The Defendants' witnesses | 1,920 | 1,061,568 | | Additional working days - The Defendants' witnesses | 800 | 442,320 | | Expert evidence | 1,920 | 1,061,568 | | Additional working days - Expert evidence | 800 | 442,320 | | Overrun | 1,200 | 663,480 | | Preparation of closing arguments | 2,400 | 1,326,960 | | Work on oral closings arguments | 816 | 452,040 | | Oral | 2.40 | 1,326,960 | | Defendants - Disbursements | 100 | 1,570,000 | | | | $9,007,780 (Total recoverable time costs and disbursements) |

¶ [17] I adopt the same approach to the estimates for Time Costs and Disbursements for the AWALCos as follows: **TIME COSTS** $7,437,780 - 1,487,556 (20% general discount) $5,950,224 **DISBURSEMENTS** $1,570,000 - 157,000 (10% discount) 1,413,000 + 5,950,224 $7,363,224 (Total Time Costs and Disbursements) allowed for the award of security for costs of the trial)

¶ [18] The SIFCO5 JOLs' summary is as follows: | Security required - 18 July - 24 February 2017 | Total hours | Total cost (US$) | |---|---|---| | Opening Arguments | 900 | 496,800 | | AHAB's witnesses | 2,880 | 1,589,760 | | Additional working days - AHAB's witnesses | 1,440 | 794,880 | | The Defendants' witnesses | 1,440 | 794,880 | | Additional working days - The Defendants' witnesses | 600 | 331,200 | | Expert evidence | 1,440 | 794,880 | | Additional working days - Expert evidence | 600 | 331,200 | | Overrun | 900 | 496,800 | | Preparation of closing arguments | 1,800 | 993,600 | | Work on oral closings | 636 | 356,640 | | Oral arguments | 1,800 | 993,600 | | **14,436** | **$7,974,240** | | | **Defbursements** | **10,1068** | | | **Total time costs** | **2,462** | | | **Defendants - Disbursements** | **2,462** | | | **$8,043,968** | | | Total recoverable time costs and disbursements

¶ [19] I adopt the same approach to the SIFCO 5 claim except for the disbursements to which I apply a 30% discount with the following results. The larger discount applied to disbursements for SIFCO5 is the result of my not being satisfied in the first place, that it should incur such significantly greater disbursements than the AWALCos, even while the GT Defendants' disbursements are understandably higher than that of either because of costs they will assume for technical support for the trial which will be available to all parties. (See again the November 2015 Judgment, para. 62 et seq). TIME COSTS \begin{equation} \begin{aligned} & \$5,581,968 \\ & - 1,116,394 \quad (20\% \text{ general discount}) \\ & \$4,465,574 \end{aligned} \end{equation} DISBURSEMENTS \begin{equation} \begin{aligned} & \$2,462,000 \\ & - 738,600 \quad (30\% \text{ discount}) \\ & 1,723,400 \\ & + 4,465,574 \\ & \$6,188,974 \quad (\text{Total Time Costs and Disbursements}) \\ & \text{allowed for the award of security for costs} \\ & \text{of the trial) \end{aligned} \end{equation}

¶ [20] This then results in AHAB being required to provide a further combined sum of \$21,766,961 as security for the costs of the Defendants for the trial. AHAB will be allowed and required to provide this further security in tranches, either by cash or by way of bank guarantee(s) as before.

¶ [21] There will be two equal tranches for payment by the Defendants keeping with the judgment, on 1st July 2016 and 1st November 2016 (to be held in escrow pending the outcome of the trial and taxation if so ordered). Page 8 of 9

¶ [22] This brings the total owed for security for costs to cover to the end of the trial of this case, to USD73,766,961. **Hon. Anthony Smellie** Chief Justice June 23, 2016 Page 9 of 9