Daiwa Capital Markets Europe Ltd v Mr. Maan Abdul Wahed Al Sanea

• Jurisdiction: Cayman Islands
• Judge: Anthony Smellie
• Judgment Date: 11 July 2019
• Court: Grand Court (Cayman Islands)
• Docket Number: CAUSE NO. 22 OF 2019

Between

Daiwa Capital Markets Europe Limited

Plaintiff

and

Mr. Maan Abdul Wahed Al Sanea

Defendant

Before

THE HON. Anthony Smellie, CHIEF JUSTICE

CAUSE NO. 22 OF 2019

IN THE GRAND COURT OF THE CAYMAN ISLANDS

Action for recovery of an indemnity and/or contribution or for equitable subrogation on the basis of joint tortfeasor liability — action brought both in England and in Cayman — whether permissible to obtain leave to serve out in such circumstances on the basis that Cayman could become the proper forum for trial of the claims — Limitation Defence — whether available to former director who acted in fraudulent breach of trust

APPEARANCES:

Mr. Sam Dawson and Mr. Tim Baildam of Carey Olsen, Attorneys-at-Law for the Plaintiff

IN CHAMBERS

REASONS FOR JUDGMENT

1 In these proceedings, the Plaintiff, Daiwa Capital Markets Europe Limited (“Daiwa”), the London subsidiary of a Japanese investment bank and brokerage firm, 1 claims against the Defendant, Mr. Al Sanea, for an indemnity and/or contribution under the Torts (Reform) Law (1996 Revision) (the “Torts Law”) and/or at common law, alternatively, for equitable subrogation.

2 Daiwa's claims against Mr. Al Sanea arise out a judgment of Mrs. Justice Rose in the English High Court dated 16 February 2017 (“the English Judgment”) in proceedings brought by Singularis Holdings Ltd (In Official Liquidation) (“Singularis”), a Cayman Islands company. Singularis is one of the Saad Group of Companies established by Mr. Al Sanea in this jurisdiction and which have been in liquidation proceedings before this Court for several years at the instance of various creditors.

3 Mr. Al Sanea was a director of Singularis before its liquidation and before the time of the institution of those proceedings tried by Mrs. Justice Rose (the “Singularis English Proceedings”). He wholly owned and controlled Singularis.

4 Mrs. Justice Rose found that Mr. Al Sanea nonetheless breached his fiduciary duties to Singularis in instructing Daiwa to transfer USD204 million of Singularis' funds to companies owned or controlled by him, and that Daiwa was liable to Singularis for negligence in processing the transfers.

5 Daiwa asserts in these proceedings that it and Mr. Al Sanea are both liable to Singularis in respect of this loss, and that it would be just and equitable given that the transfers were made on his directions and for his benefit, for Daiwa to claim a complete indemnity from Mr. Al Sanea.

6 The Writ in these proceedings (“the Writ”) was issued on 14 February 2019, and by way of an ex parte Summons dated 11 June 2019 (the “Summons”) Daiwa sought:

• (a) Permission to serve the Writ and other documents in the proceedings out of the jurisdiction on Mr. Al Sanea in the Kingdom of Saudi Arabia pursuant to GCR Order 11, rule 1(1)(ff); and

• (b) An extension to the validity of the Writ for a period of six months to allow service of the Writ on Mr. Al Sanea in Saudi Arabia to take place.

7 At the ex parte hearing on 11 July 2019, I accepted Daiwa's submissions that the Court should grant leave to serve the Writ on Mr. Al Sanea out of the jurisdiction and the requested extension to the validity of the Writ to allow service to occur. These are the reasons for my decision.

Background to the proceedings

8 Mr. Al Sanea is a prominent Saudi Arabian national who owned or controlled the insolvent Saad Group of Companies (including Singularis) which, along with Mr. Al Sanea himself, has been the subject of very high stakes and complex litigation here 2 and in other jurisdictions.

9 In October 2017, Mr. Al Sanea was arrested in Saudi Arabia pursuant to a Royal Order for non-compliance with judgment enforcement orders, and he remains in custody in a place of detention in Saudi Arabia. Claims against him have previously been dealt with by a special enforcement Court in Saudi Arabia which appointed a consortium of advisers to locate, value and sell his assets. A trustee in bankruptcy has recently been appointed in Saudi Arabia in relation to a central company in the Saad Group called Saad Trading, Contracting and Financial Services Company, and in relation to Mr. Al Sanea himself.

10 Daiwa's claims in these proceedings (as did Singularis' in the Singularis English Proceedings) arise out of a stock-lending arrangement between Daiwa and Singularis.

Daiwa financed the acquisition by Singularis of shares in well-known banks — HSBC Holdings Plc, BNP Paribas SA, and JP Morgan Chase & Co. — and held a margin of a certain percentage of the total value of the shares lent to Daiwa under the terms of the arrangement. The transaction was terminated in June 2009 and Daiwa was left holding USD204 million for the account of Singularis (the “Funds”). Singularis (acting through Mr. Al Sanea, who had authority to give instructions to Daiwa in relation to the arrangement) instructed Daiwa to make a series of payments to other entities owned or controlled by Mr. Al Sanea and his family (the “Payments”). Daiwa acted in accordance with the instructions that it received and the funds were paid out

11 Singularis subsequently went into official liquidation under the supervision of this Court and Joint Official Liquidators (the “JOLs”) were appointed. The JOLs contended that the Payments constituted a misapplication of Singularis' funds to the detriment of Singularis and its creditors. Mr. Dawson, on behalf of Daiwa, explained to me that the JOLs had sought to recover the amount of the Payments as follows:

• (a) First, the JOLs issued proceedings against Mr. Al Sanea in this Court on 31 August 2012, in which Singularis alleged that Mr. Al Sanea had breached his fiduciary duties to Singularis in instructing Daiwa to effect the Payments and was liable to compensate Singularis accordingly. Singularis was granted permission to serve the writ on Mr. Al Sanea out of the jurisdiction on 23 October 2012, by way of substituted service. Mr. Al Sanea having failed to file a defence, Singularis obtained a default judgment in April 2013 and final judgment following a damages assessment at an open Court hearing in July 2013 against Mr. Al Sanea for the full amount of the Payments of USD204 million (the “Cayman Judgment”). Mr. Dawson explained that, so far as Daiwa is aware, the JOLs have not recovered anything from Mr. Al Sanea pursuant to this judgment.

• (b) Second, the JOLs commenced proceedings against the Al Sanea related recipients of the Payments in Saudi Arabia and in England and Wales. Those proceedings led to a relatively modest recovery of approximately US$753,000.

• (c) Third, the JOLs commenced the English proceedings against Daiwa in the English High Court for dishonest assistance in relation to Mr. Al Sanea's breaches of fiduciary duty and/or negligence, in giving effect to the instructions received from Mr. Al Sanea. By the English Judgment, Mrs. Justice Rose held that, whilst Mr. Al Sanea had breached his fiduciary duties to Singularis in instructing Daiwa to make the Payments, Daiwa was not liable for dishonest assistance as it had not acted dishonestly in processing the Payments. However, the English Judgment held that Daiwa was liable to Singularis for breach of contract and in negligence (subject to a reduction for contributory negligence of 25% to US$152,804,925). That decision, which was upheld by the English Court of Appeal, is currently on appeal to the Supreme Court.

Indemnity and/or contribution

12 Daiwa's claims in these proceedings against Mr. Al Sanea for an indemnity and/or contribution are brought under section 6 of the Torts Law, which provides that:

• “6(1): Where damage is suffered by any person as a result of a tort (whether or not such tort is also an offence)- […] (c) any tort-feasor liable in respect of such damage may recover contribution from any other tort-feasor who is, or would, if sued, have been liable in respect of the same damage, (whether as a joint tort-feasor or otherwise) so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability in respect of which contribution is sought.

• 6(2): In any proceedings for contribution under this section, the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person's responsibility for the damage, and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity.”

13 As explained above, the premise of Daiwa's claim under these provisions, is the finding in the Singularis English Proceedings that Daiwa is a joint tort-feasor with Mr. Al Sanea and liable in respect of the same damage but that it is just and equitable that Daiwa should be fully indemnified by him.

Limitation issue

14 Section 12(1) of the Limitation Law (1996 Revision) (the “Limitation Law”) provides that claims under section 6 of the Torts Law must be brought within two years from the date on which the right to recover contribution accrued. Section 12(3) of the Limitation Law states that if the person is held liable by a judgment given in civil proceedings, then the relevant date for calculating the limitation period for contribution claims is the date on which the judgment is made. In the present case, the English Judgment holding Daiwa liable to Singularis was dated 16 February 2017, and Daiwa issued the Writ on 14 February 2019, and so within the limitation period.

The English Proceedings

15 An issue I had to consider on this application was that on the same day as the Writ was issued on 14 February 2019, Daiwa also issued proceedings in the English High Court seeking contribution, an indemnity or equitable subrogation, from Mr. Al Sanea the “Daiwa English Proceedings....