Ahmad Hamad Algosaibi and Brothers Company Plaintiff v (1) Saad Investments Company Ltd (2) Maan Al Sanea (3) Awal Trust Company Ltd (as Trustee of The Saad Star Trust) (4) Barclays Private Bank and Trust (Cayman) Ltd (as Trustee of The Saad Settlement) (5) Saadgroup Ltd (6) Golden Belt 2 Ltd (7) Golden Belt 3 Ltd (8) Sngularis Holdings Ltd (9) Singularis Holdings (No 2) Ltd (10) Singularis Holdings (No 3) Ltd (11) Singularis Holdings (No 4) Ltd (12) Singularis Holdings (No 5) Ltd (13) Awal Feeder 1 Fund (14) Awal Finance Company Ltd (15) Awal Finance Company (No 2) Ltd (16) Awal Finance Company (No 3) Ltd (17) Awal Finance Company (No 4) Ltd (18) Awal Finance Company (No 5) Ltd (19) Awal Finance Company (No 6) Ltd (20) Saad A
| Jurisdiction | Cayman Islands |
| Judge | Hon. Justice Henderson |
| Judgment Date | 30 September 2009 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NO. 359 OF 2009 |
| Date | 30 September 2009 |
Hon. Justice Henderson
In what circumstances may a plaintiff obtain Mareva injunction relief against a party where no cause of action is asserted against that party? That is the primary question to be resolved on this application.
On July 24, 2009 the plaintiff Ahmad Hamad Algosaibi and Brothers Company (‘AHAB’) appliedex parte to me for a Mareva injunction against all forty-three defendants freezing assets up to the amount of U.S. $9.2 billion dollars in and outside the Cayman Islands. This was coupled with the usual requests for disclosure of financial information and with a request for the appointment of receivers over the first, fifth, and eighth to forty-third defendants (collectively referred to as the ‘Cayman Saad companies’). All of the requested relief was granted.
A number of subsequent orders have been made concerning disclosure and giving directions to the receivers. On July 28, 2009 I granted leave to serve the second defendant, Mr. Maan Al Sanea (‘Mr. Al Sanea’), outside the jurisdiction on the ground that he is a necessary and proper party to the claims brought against the defendants which are Cayman Islands companies. On September 17, 2009 I granted leave to the plaintiff to attempt to enforce my order in Jersey and to use some of the documents disclosed in compliance with the order in proceedings to be commenced in Jersey and in England.
The general endorsement on the writ of summons advances claims against the first, second and eighth to twelfth defendants only. All other defendants were joined for the sole purpose of obtaining Mareva relief against them. This application is brought by the third, fifth to seventh, ninth to thirtieth, andthirty-eighth to forty-third defendants (‘the applicants’). With the exception of the ninth to twelfth defendants, no cause of action is pleaded against these applicants; I will refer to them in this ruling as the ‘non-cause-of-action defendants.’
The applicants say that the court has and had no jurisdiction to grant Mareva relief in relation to the non-cause-of-action defendants as a matter of law. They say also that the plaintiff failed on theex parte application to make full and frank disclosure of the proper legal analysis concerning the position of the non-cause-of-action defendants. There is an alternative request for fortification of AHAB's undertaking as to damages. Although the appointment of the receivers is not directly in issue, their appointment would, in the case of the non-cause-of-action defendants, fall to be set aside if the applicants are successful.
Since this is the first opportunity for the applicants to address this court about the Mareva injunction, I have conducted a full hearingde novo in accordance with the usual procedure referred to in Wea Records Ltd. v. Visions Channel 4 Ltd [1983] 1 WLR 721. The ‘review’ of an ex parte order is not in any sense an appeal.
AHAB advances a claim in damages for conspiracy, deceit, and breach of fiduciary duty by Mr. Al Sanea coupled with allegations of misappropriationand requests for declarations of its entitlement to trace assets, an accounting, and restitution. The same relief is claimed against the first Defendant, Saad Investments Company Limited (‘SICL’), for its alleged participation in these acts. As against the eighth to twelfth defendants (‘the Singularis companies’), there are claims in damages for conspiracy and deceit and for a declaration of entitlement to trace assets misappropriated by Mr. Al Sanea and paid to those defendants by SICL in breach of its own fiduciary duty. It is said that all such sums received by the Singularis companies are impressed with a constructive trust in favour of AHAB; restitution and an accounting are requested.
Mr. Yousef Ahmad Algosaibi (‘Mr. Algosaibi’) has been the chairman of AHAB since February 2009. In his affidavit evidence, Mr. Algosaibi explains that AHAB is a general partnership and a family enterprise which has carried on business in Saudi Arabia since 1969. It has extensive interests in manufacturing, travel, real estate, shipping and insurance.
One division of AHAB is an unincorporated business known until 2006 as the AHAB Money Exchange Commission and Investment (to which I shall refer as the ‘Money Exchange,’ despite its recent change of name). Mr. Al Sanea, who married into the Algosaibi family, has had the day to day responsibility of running the Money Exchange since 1981. He has never been a member of AHAB's board or its executive committee. The Money Exchange was run as an entirely separate business. The principal business of the Money Exchange has been the provision of remittance services inside and outside Saudi Arabiaand currency exchange. It has seven branches in Saudi Arabia but it is not licensed or regulated by the Monetary Authority there.
All instructions of significance provided to employees of the Money Exchange came from Mr. Al Sanea himself. Mr. Algosaibi says that his family members ‘did not interfere’ in Mr. Al Sanea's management of the Money Exchange and he cannot recall ever having had substantive discussions with employees of the Money Exchange or its related financial businesses. Mr. Al Sanea, who was granted a 25% interest in the profits of the Money Exchange division, was entrusted with the sole authority to govern and guide its affairs.
He was also granted permission to borrow funds from the Money Exchange. A member of the Algosaibi family agreed to guarantee these debts and took some security for them from Mr. Al Sanea. According to Mr. Algosaibi, it was agreed that the indebtedness would not exceed about U.S. $610 million dollars and that adequate security would be posted. Mr. Algosaibi and AHAB were unaware of any indebtedness by Mr. Al Sanea to the Money Exchange which exceeded this limit. Mr. Algosaibi explains that the financial statements of the Money Exhange were consolidated with those of other entities and he did not receive any audit materials relating specifically to the Money Exchange.
In April, 2009 the directors of AHAB began to receive default notices from financial institutions in Saudi Arabia, the Middle East, Europe and the United States for very significant amounts regarding loans of which they wereunaware. In May, they hired Deloitte Corporate Finance Limited to investigate the circumstances of these unauthorized loans.
The Deloitte investigation has occupied approximately twenty-five to thirty professional investigators working in Bahrain, Saudi Arabia, England and the Cayman Islands. The investigation is ongoing. Its findings to date are summarized in an affidavit by Mr. Simon Charlton (‘Mr. Charlton’) sworn July 24th, 2009. Mr. Charlton's team has secured documents and electronic data at the Money Exchange premises and begun a review and analysis of the material. Many employees of the Money Exchange have been interviewed.
The Deloitte investigators have not had access to all of the relevant books and records. Mr. Al Sanea has removed some from the Money Exchange offices and stored them at a Saad company warehouse in Saudi Arabia. Mr. Charlton says that records prior to 2006, including original loan documents, are missing and that all original records from 2006 onwards are in the possession of Mr. Al Sanea or of companies controlled by him.
In general terms, Mr. Charlton alleges that Mr. Al Sanea has caused the unauthorized transfer of large amounts of money from AHAB or the Money Exchange to his own group of companies; has directed employees of the AHAB group to obtain loans from third parties in the name of AHAB which were neither needed by nor used for the benefit of AHAB; has transferred funds from AHAB accounts to accounts controlled directly or indirectly by Mr. Al Sanea; has used funds from AHAB for the purpose of paying expensesof his own and of his companies; and has directed employees to...
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