Ahmad Hamad Algosaibi and Brothers Company (‘Ahab’) Plaintiff v Saad Investments Company Ltd Maan Al-Sanea and Others Defendants

JurisdictionCayman Islands
JudgeThe Hon. Anthony Smellie
Judgment Date22 February 2013
CourtGrand Court (Cayman Islands)
Docket NumberCAUSE NO. FSD 54 OF 2009
Date22 February 2013
Ahmad Hamad Algosaibi and Brothers Company (‘Ahab’)
Saad Investments Company Limited
Maan Al-Sanea and Others
[2013] CIGC J0222-1

The Hon. Anthony Smellie QC, CHIEF JUSTICE


CAUSE NO. FSD 54 OF 2009

Mr. Michael Crystal QC, instructed by Ms. Colette Wilkins of Walkers for the GT JOLs

Mr. Marcus Smith, QC instructed by Mr. Ian Lambert of Boddcn and Boddcn for the AWALCOs JOLs

Mr. Thomas Lowe, QC instructed by Mr. David Herbert and Ms. Heather Neilson of Harneys for SIFCO 5 JOLs

Mr. Ewan McQustcr, QC and Mr. David Quest instructed by Mr George Kelghtley of Mourant for AHAB


Now. fully three years after the institution of this action by AHAB, T have before me applications by the present defendants to strike it out.


Described compendiously, the basis for their strike out applications is the complaint that AHAB has failed by its proprietary tracing claim, to plead ‘a reasonable cause of action,’ but merely one that is ‘frivolous and vexatious’ and so ‘has no hope of success.’ The proprietary tracing claims are those upon which AHAB's case primarily proceeds against the present defendants. To the extent proven, they would have established that the assets of the present defendants are AHAB's property. Thus, the consideration that is of pivotal importance to these strike out applications, for reasons to be explained below. AHAB pleads other restitutionary and damage claims as well and these too will be discussed.


The strike out applications are all in terms of Grand Court Rules Order 18 where the well known rules are set out.


AHAB's response, also described compendiously, is that it has pleaded a good arguable case, one already recognised and described as such in judgments of this Court in interlocutory proceedings, the earliest of which is reported at 2910 CILR 555 (at para 80).


To the extent its pleadings still lack particularization and specificity, AHAB asserts that as parties who are ‘mixed up’ in the fraud perpetrated against AHAB by their principal Mr. Al Sanea, the present defendants have an obligation to give discovery of all information that may be relevant to assist AHAB's advisers in the more detailed and specific pleading of its claim. For this proposition AHAB relies on Arab Monetary Fund v Hashim (No. 2) [1990] 1 All E.R. 673 as applied by this Court in Grupo Torros v Bank of Butterfield 2000 CILR 441 and this is a proposition to be more fully considered below.


The history of this action is already well documented in the several judgments of this Court and of the Court of Appeal issued since the action was commenced. Those judgments dealt with the several interlocutory applications which have, however well intentioned, nonetheless beset the progress of the action to trial. These included an earlier strike out application brought on behalf of the present defendants.


In that application, the basis for strike out was said to be the deliberate and contumelious breach by AHAB of its disclosure obligations resulting in an abuse of the process of the Court as well as prejudice to the applicants. While a breach was admitted by AHAB, the threshold test for strike out — the alleged abusive nature of the breach — was not established and so that application was dismissed. A detailed judgment was delivered on 2 nd December 2011 (‘the December 2011 judgment’).


Considerable time and expense have also been spent in addressing jurisdictional and procedural challenges which have been unsuccessfully raised by the 2 nd Defendant Mr. Al Sanea. In those challenges, going all the way to the Privy Council, he insisted that AHAB should bring its claim against him not in this jurisdiction but in Saudi Arabia.


Steps have also been taken by AHAB itself. Having successfully resisted Mr. Al Sanea's challenges and having obtained default judgment against him in light of his failure to file a defence. AHAB also moved to obtain an interim award of damages pending the final determination of the action. This too was, however, resisted by the present defendants. They argued unsuccessfully that an interim award should not be made against Mr. Al Sanea lest it results in inconsistent outcomes in the event the allegations raised against him and which implicated them as his accessories, were not to be substantiated as against them ultimately at trial. That unsuccessful argument was addressed in a written judgment delivered on 12 th June 2012 (‘the June 2012 judgment’). It is the subject of an application now also raised before me by the present defendants for leave to appeal; an application which will be separately addressed in this judgment.


That is a brief overview of the already protracted history of this action. The following is an essential brief summary of the factual background. The action arises from allegations that Mr. Al Sanea abused his position of trust in which he was placed by AHAB as managing director of AHAB's Money Exchange, the financial division of AHAB's extensive business interests in Saudi Arabia.


It is AHAB's pleaded case that, primarily by means of his forgery of the signatures of AHAB partners on hundreds of bank loan and letters of credit transactions, Mr. Al Sanea, over the course of several years, was able to obtain fraudulently and misappropriate to his own purposes, funding from many banks to the order of magnitude of some USD9.2 billion. Further, that some USD6.2 billion of the proceeds have been shown by forensic accounting investigations to have been used by Mr. Al Sanea to fund a conglomerate of investment companies called the SAAD Group, established by him in this jurisdiction. The present defendants arc 16 members of the Group. AHAB sues to recover the proceeds of the fraud in this action by way of its personal claim against Mr. Al Sanea as well as by its proprietary tracing, restitutionary and damages claims against the present defendants.

The present defendants

The present defendants are, 16 along with others of Mr. Al Sanea's SAAD Group of companies are now, in compulsory winding up before this Court.


AHAB having obtained its default judgment and interim award personally against Mr. Al Sanea, must now establish its claims against the present defendants in order to succeed in the action by which it seeks to claim ahead of the proven creditors in the liquidation of the present defendants. These are in the main banking creditors who provided investment capital to them, some by way of secured loans.


Without a proprietary tracing claim, AHAB would be able to resort, as against the present defendants, only to its claim for damages and/or equitable compensation or restitution, as pleaded at sections K5 and K6 of its Amended Statement of Claim.


Those claims are based upon the allegations that the present defendants by their dishonest assistance to and conspiracy with Mr. Al Sanea, were in knowing receipt of and unjustly enriched by AHAB's money misappropriated by Mr. Al Sanea from the Money Exchange. If proven at trial, those claims would allow AHAB to rank only as a judgment creditor, and thus at best pari passu with other unsecured creditors and behind the secured creditor banks.


However, if AHAB is successful in its proprietary tracing claims, given the USD6.2 billion magnitude of those claims; the claims of all creditors would likely be entirely defeated. The assets which have been recovered by the liquidators would be insufficient: to satisfy AHAB's proprietary claim, let alone those of the banks and other creditors.


The liquidators of the present defendants are therefore understandably concerned to know, and to know as soon as possible, whether AHAB's proprietary tracing claim could succeed. Hence. I am told, this application.


The present defendants are members of different sub-groups of Mr. Al Sanea's SAAD Group and have different liquidators.


The first sub-group comprises nine companies — the 1 st, 8 th, 30 th to 33 rd and 35 th to 37 th Defendants. These Companies have appointed as their joint official liquidators, directors of Grant Thornton Specialist Services (Cayman) Limited. They will be referred to as the GI Defendants and their liquidators as the GTJOLs.


Most prominent among the GT Defendants from AHAB's point of view, are the 1 st Defendant, SAAD Investments Company Limited (‘SICL’) and the 8 th Defendant, Singularis Holdings Limited (‘SHL’). The information so far discovered by AHAB indicates that SICL and SHL were, as among the SAAD Cayman Group, primary recipients of funds by way of shareholder contributions by Mr. Al Sanea, funds which AHAB alleges were misappropriated by him from the Money Exchange.


The second sub-group comprises six companies — the 13 th to 18th Defendants, members of the AWAL sub-group. They will, as the context requires, be referred to herein as the ‘AWALCOs’. The AWALCOs are also alleged to have received massive injections of capital by way of shareholder contributions from Mr. Al Sanea using money misappropriated from the Money Exchange.


The third sub-group comprising what may be described as the SAAD Investments Finance Companies, is that sub-group within which the 34 th (and last of the present defendants) – SAAD Investments Finance Company (No. 5) Limited (‘SIFCO 5’), comes.

The challenge to the legal basis of AHAB's claim

The applicable law is not controversial as the principles of law relating to striking out are agreed by all. The challenge goes to the inadequacy of AHAB's pleaded case. The GT Defendants, the AWALCOs and SIFCO 5 have each filed separate summonses but seeking similar relief pursuant to GCR 0. 18 r. 19.


The GT Defendants' summons seeks the strike out of AHAB's claim on alternative bases:

  • (i) that the entire claim as against them be struck out...

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