Summary

Claims made on the basis of conspiracy, dishonest assistance, breach of director's duty, money had and received and knowing receipt in relation to alleged fraud on company controlled by Kuwaiti Investment Office.

Facts

The plaintiffs claimed against the defendants in relation to a series of complex transactions called 'Croesus', 'Oakthorn 1', 'Oakthorn 2', 'Pincinco' and 'Wardbase'. The claims were made on the basis of conspiracy, dishonest assistance, breach of director's duty, money had and received and knowing receipt. The second plaintiff ('THL') was a wholly owned subsidiary of the first plaintiff ('GT'). GT was incorporated in Spain and was controlled by the Kuwait Investment Office ('KIO') in London. The key facts were that the first defendant ('F') had been chairman of GT and of KIO, and was accused, together with 55 other defendant individuals and companies of being at the heart of very large-scale fraud upon GT. By the time of trial only 15 defendants still faced claims. In a detailed and complex 361-page judgment, the judge considered both the substantive claims and various objections to the proceedings. (i) Whether GT lacked capacity and/or authority to bring the present proceedings under Spanish law. (ii) Possible defences of limitation under Spanish law. References are given below to the other stages in this prolonged litigation, in which F both made and withdrew representation. (iii) Miscellaneous objections.

Held

(1) The objection by those of the defendants who were directors of GT, based on art.134(1) Spanish Companies Act 1989, that no shareholders' resolution was passed before the commencement of the present English action failed because: (i) English law allowed the ratification of proceedings begun by solicitors without authority; (ii) art.134 would not and did not as a matter of Spanish law preclude such ratification or prevent the shareholders resolving upon it, even in relation to Spanish proceedings and in any event in relation to English proceedings; (iii) there was no need for the relevant shareholders' resolution to appear on the agenda. The resolution passed was in terms which constituted proper authorisation of the further precautionary English action which was begun against (amongst others) the same GT directors; (iv) those defendants who were not directors could not invoke art.134 in any event. (2) Article 5(4) Spanish Law of Suspension of Payments did not require any more than a report (which took place) by the receivers to the judge supervising GT's suspension of payments. Neither art.5(4) nor any non-compliance by the receivers with art.5(4) (if there had been any) would affect GT's capacity and entitlement to bring and pursue the present proceedings. The termination of GT's suspension of payments would have validated the present proceedings if they would otherwise have been affected by any non-compliance with art.5(4). (3) In view of the conclusions that the action was properly begun, the reliance of some defendants upon the four-year limitation period provided under art.949 Spanish Commercial Code was irrelevant. However, the defendants concerned would not have satisfied the requirements of that article in any event. (4) Most of the miscellaneous objections raised should have been raised (if at all) at the interlocutory stage and had no relevance at trial. In any event, however, there was no merit in any of them. (5) Each of the Croesus, Oakthorn 1, Oakthorn 2, Pincinco and Wardbase transactions each involved a separate conspiracy to injure, in respect of which GT suffered loss which could be claimed against the conspirators. (6) Neither the writing off against share premium account nor the capitalisation of loans in GT's accounts had any effect in extinguishing any such loss or claim. (7) The substance of the conspiracy was committed in Spain in the case of the Croesus and Wardbase transactions, but not in the other transactions. To the extent that the substance of a conspiracy was committed in Spain, it had, in order to be actionable in England also to be actionable under Spanish law. Where necessary, this had been shown. (8) The judge identified those of the defendants who had been party to the conspiracy and/or liable for breach of duties as directors and/or dishonest assistance and/or money had and received and/or knowing receipt. (9) GT was entitled to be subrogated to certain of THL's claims to trace. (10) Orders were made reflecting the above and giving details of the relief.

Judgment accordingly.