Algosaibi v Saad Invs

• Jurisdiction: Cayman Islands
• Judge: (Smellie, C.J.)
• Judgment Date: 06 July 2011
• Date: 06 July 2011
• Court: Grand Court (Cayman Islands)

Grand Court, Financial Services Division

(Smellie, C.J.)

AHMAD HAMAD ALGOSAIBI AND BROTHERS COMPANY

and

SAAD INVESTMENTS COMPANY LIMITED and FORTY THREE OTHERS

G. Keightley for the plaintiff;

S. Folpp for the receivers;

J. Golaszewski, B. Basdeo, Ms. S. White, I. C. Lambert and D. Herbert for the defendants.

Cases cited:

(1) Boehm v. Goodall, [1911] 1 Ch. 155; [1908–10] All E.R. Rep. 485, followed.

(2) Capewell v. H.M.R.C., [2007] 1 W.L.R. 386; [2007] 2 All E.R. 370; [2007] UKHL 2, followed.

(3) Mirror Group Newspapers Plc v. Maxwell, [1998] BCC 324; [1998] 1 BCLC 638, considered.

Companies-receivers-costs-receivers liable to pay defendant companies” costs in successful remuneration proceedings if delay caused by their unreasonable, disproportionate, or unco-operative conduct-not if adjournment caused by innocent mistake as to information required by court to justify fees

Companies-receivers-remuneration-court would approve fees if detailed justification-submitting line item bills and time sheets insufficient-required to provide explanation for total time spent on each task, charging rate, why tasks undertaken and why tasks more difficult or expensive than anticipated

Companies-receivers-indemnity-recovery of fees from assets of companies within receivership not precluded by indemnity agreement between receivers and those who appointed them

The plaintiff (‘AHAB’) brought claims against the second defendant and 42 companies controlled by him in respect of an alleged fraud.

The second defendant had been manager of one of the businesses of the plaintiff company. The plaintiff alleged that, while he was in control of the business, he fraudulently misappropriated US$9.2bn. from the plaintiff.

Several of the companies controlled by the second defendant were placed into receivership, and subsequently into liquidation. The receivers had been appointed by AHAB, and applied to the Grand Court for the payment of their fees from the assets of the companies within their receivership. AHAB had signed an indemnity agreement covering all fees not recoverable from the companies.

The receivers submitted line item bills and time sheets, but the court, requiring a more detailed justification for the fees sought, adjourned the hearing for one week.

The receivers argued that (a) they had a first charge, or equitable lien, over the assets of the companies, which were severally liable for their fees, and the presence of the indemnity agreement did not preclude their claim against the companies or first require them to proceed against

AHAB; and (b) they should not be liable for the defendants” costs, as they had provided what they thought to be appropriate information and had not caused the delay by any unreasonable, disproportionate, or unco-operative conduct.

The plaintiff submitted, in support of the application, that the indemnity agreement was a contractual matter and did not affect the recoverability of fees from the companies” assets.

The defendants submitted in reply that (a) the receivers” claim should be against AHAB, as the party who appointed them, or under the indemnity agreement; and (b) the adjournment had been caused by the unreasonable, disproportionate...