Group Seven Ltd & Anor v Nasir & Ors, Court of Appeal - Chancery Division, October 06, 2017, [2017] EWHC 2466 (Ch)

Issuing Organization:Chancery Division
Actores:Group Seven Ltd & Anor v Nasir & Ors
Resolution Date:October 06, 2017
 
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Neutral Citation Number: [2017] EWHC 2466 (Ch)

Case Nos: HC-2014-000906 and HC-2014-001003

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Rolls Building, Fetter Lane, London, EC4A 1NL

Date: 06/10/2017

Before:

MR JUSTICE MORGAN

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HC-2014-000906

Between:

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Jeffrey Chapman QC, Simon Atrill and Simon Paul (instructed by Mishcon de Reya LLP) for the Claimants in both actions

William Flenley QC and Francis Bacon (instructed by Caytons Law) for Notable Services LLP, Mr Landman and Mr Meduri

Clive Freedman QC and Michael Ryan (instructed by Pinsent Masons LLP) for LLB Verwaltung (Switzerland) AG

Richard Jones QC and Olivia Chaffin-Laird (instructed by FPG, Solicitors) for Mr Louanjli

Hearing dates: 15-17, 20-24, 27-28 February 2017, 1-3, 6-10, 13-17, 20, 22-24, 27-29 March 2017, 4-7 and 25 April 2017 and written submissions thereafter

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Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

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MR JUSTICE MORGAN

Mr Justice Morgan:

PART 1: GENERAL MATTERS

The case in outline

  1. These proceedings arise out of a substantial fraud whereby Allseas Group SA (``Allseas'') was defrauded out of a large sum of money, €100 million. The fraud was followed by an attempt to launder the proceeds of the fraud using the client account of a firm of solicitors in London, Notable Services LLP (``Notable''). The attempt at money laundering was partly successful. Some €15 million were paid away by Notable. Some of these monies were recovered but, in the end, only €88 million was returned to Allseas which therefore lost about €12 million.

  2. The way that the fraud worked was as follows. Allseas had €100 million which it wished to invest. A group of fraudsters persuaded Allseas that they could facilitate an extremely profitable investment of that sum by Allseas. Allseas formed a subsidiary company, Allseas Group Ltd (now known as Group Seven Ltd and referred to in this judgment as ``Group Seven''), in order for it to make the relevant investment. Allseas transferred €100 million to Group Seven which transferred it to Allied Investment Corporation Ltd (``AIC'').

  3. AIC then set about removing the funds from the control of Allseas/Group Seven and laundering those funds. AIC transferred the funds to Notable's client account. Notable held that money in its client account for the benefit of Larn Ltd (``Larn''). Larn was controlled by a Mr Nobre who gave instructions (on behalf of Larn) to Notable to make a large number of payments out of its client account. Acting on these instructions, Notable paid away some €15 million. The Notable client account was with Barclays Bank. It seems that Barclays Bank reported these activities in relation to the Notable client account and the Metropolitan Police became involved. As a result of the police intervention the remaining monies were frozen and eventually, after some of the €15 million was returned to Notable, around €88 million were returned to Allseas.

    Who everyone is

  4. Allseas is a company registered in Switzerland, where it has its headquarters. It and its subsidiaries employ over 2,000 people in 9 countries. It specialises in pipe laying for the oil and gas industry.

  5. Group Seven (under the name Allseas Group Ltd) was incorporated in Malta on 20 April 2011 for the purpose of making what it thought was an investment but which led to it being the victim of the fraud described above. Allseas was and is the principal shareholder in Group Seven.

  6. Rheingold Management Inc (``Rheingold'') is incorporated in Panama. By a Deed of Assignment of Rights and Causes of Action dated 16 November 2012, Group Seven assigned to Rheingold the causes of action which are the subject of these proceedings.

  7. AIC was incorporated in Malta on 4 October 2011 for the purpose of participating in the fraud. Mr Rejniak was registered as a director, and sole shareholder, of AIC. In the course of the fraud, on 15 October 2011, Group Seven entered into a purported loan agreement, relating to the €100 million, under which AIC was the purported borrower. In earlier proceedings, to which I refer below, Peter Smith J set aside this loan agreement.

  8. Mr Rejniak is a Polish national. In addition to being a director and shareholder of AIC, he was a director of Group Seven between 18 July and 23 November 2011. In the earlier proceedings, Group Seven/Rheingold obtained judgment for damages for fraud against Mr Rejniak.

  9. Mr Sultana was held liable, in the earlier proceedings, for damages for fraud.

  10. Mr Nasir and Mr Yi have been sued in the present proceedings. The case put forward by Group Seven/Rheingold is that Mr Nasir and Mr Yi were parties to the fraud and were fellow conspirators of Mr Rejniak and Mr Sultana.

  11. Larn was formed on 26 September 2006. A single subscriber share was issued to Mr Nobre. Mr Nobre's full name is Luis (or Louis) Augusto Ramos Nobre so that the name of the company is Mr Nobre's initials. After incorporation, further shares were issued to Mr Nobre and he remained the sole shareholder of Larn. At all times, Mr Nobre was the sole director of Larn. On 15 October 2011, in order to assist with money laundering, AIC and Larn entered into a loan agreement, or purported loan agreement, whereby €100 million was loaned by AIC to Larn. In the earlier proceedings, to which I refer below, Peter Smith J set aside this loan agreement. Larn did not trade and did not have any business premises. Larn went into administration on 31 May 2012 and then into creditors' voluntary liquidation on 24 May 2013. Larn has since changed its name to Equity Trading Systems Ltd but I will continue to refer to it as Larn, its name at the time of the relevant events.

  12. Mr Nobre is Portuguese. In February 2016, after a trial lasting some 80 days, he was convicted at Southwark Crown Court on 6 counts of money laundering and 3 counts in connection with the possession of fraudulent banking documents contrary to the Fraud Act 2006. The first 2 counts of money laundering related to the €100 million which are the subject of the present proceedings. He was sentenced to imprisonment for 12 years in relation to the money laundering offences and 2 years in relation to the fraudulent documents, to run consecutively.

  13. In relation to most of the matters which are the subject of this judgment, it is not necessary to distinguish between Mr Nobre and Larn. Accordingly, I will normally refer to events which involved Mr Nobre by referring to what he did or said and without discussing whether his actions are to be attributed to Larn.

  14. Notable was a limited liability partnership formed in February 2009. The members of the LLP in 2010 and 2011 included Mr Landman, Mr Meduri and Ms Ciserani. In February 2010, Notable was recognised by the Law Society and the Solicitors Regulation Authority as a law firm with the status of a Legal Disciplinary Practice. On 23 June 2017, following the conclusion of the trial but before the handdown of this judgment, the members of Notable appointed an administrator of Notable under Schedule B1 to the Insolvency Act 1986 on the ground that Notable was, or was likely to become, unable to pay its debts. It has not been suggested that the moratorium on legal process imposed by paragraph 43(6) of Schedule B1 should prevent the court giving its reserved judgment in relation to the claims against Notable.

  15. Mr Landman is an accountant. He was a founding member of Notable and remained a member until 26 June 2012.

  16. Mr Meduri is a solicitor and was a founding member of Notable. He has remained a member of Notable throughout.

  17. Where appropriate, I will refer to Notable, Mr Landman and Mr Meduri as ``the Notable Defendants''.

  18. Liechensteinische Landesbank (Switzerland) Ltd (``LLB'') is a subsidiary of Liechensteinische Landesbank AG. LLB traded as a private bank, principally in Switzerland, but it also had a small representative office in Abu Dhabi. LLB ceased its banking activities at the end of 2013. It has now changed its name to LLB Verwaltung (Switzerland) AG.

  19. Mr Louanjli was employed, with effect from 1 June 2011, by LLB as a relationship manager in its representative office in Abu Dhabi. He left the employment of LLB in June 2013.

  20. Bridge Ltd was incorporated in Ras Al Khaimah, UAE at the request of Mr Louanjli on 30 January 2011. At all material times, Mr Louanjli was the sole shareholder and director of Bridge. I am told that Bridge has since been struck off the register of companies.

  21. At the relevant times, Mr Elbied was employed as a banker by Barclays Capital in Paris.

  22. Renaissance Ltd was formed by Mr Elbied in May 2013.

    The earlier proceedings

  23. Group Seven and Rheingold have brought earlier proceedings against various persons involved in the fraud. The Defendants in those proceedings were AIC, Mr Rejniak, Mr Sultana, Larn and Mr Nobre. The claim against Larn and Mr Nobre was compromised by a Tomlin order made on 4 April 2012 which provided for the repayment to Group Seven of certain sums. Larn and/or Mr Nobre failed to make the agreed payments and Group Seven obtained judgment against them in the sum of €11,143,192.11. On Group Seven's application, an administration order was made in relation to Larn and it was later placed in liquidation, as described above.

  24. The earlier proceedings went to trial against the other Defendants, apart from Larn and Mr Nobre. The proceedings were tried by Peter Smith J in the Spring of 2014. At the trial the only active Defendant was Mr Sultana. The judge handed down his judgment on 26 June 2014: [2014] EWHC 2046 (Ch). He held that AIC, Mr Rejniak and Mr Sultana had committed a fraud on Group Seven and, amongst other orders, he entered judgment in favour of Rheingold against AIC, Mr Rejniak and Mr Sultana for damages for...

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