Automated Summary
Key Facts
The claimants (Union Properties PJSC and UPP Capital Investment Co LLC) allege that AED 337 million transferred from their accounts in 2018 was unlawfully used to purchase P-Notes (Participation Notes) in UP shares, which were then misappropriated by Hassan Al Mulla. The court found the claimants failed to provide sufficient evidence linking Nasser Butti Omair Yousef Almheiri to the fraud, particularly regarding his alleged orchestration of transfers and financial benefit from the proceeds. The case centered on whether Almheiri, as a former director and chairman, authorized fraudulent transactions, including the transfer of P-Notes to Arqaam Bank and subsequent misappropriation, with the court rejecting the new evidence as inadmissible due to lack of credibility and connection to the fraud.
Issues
- The court assessed the claimants' proposed amendments to reinstate Mr. Almheiri as a defendant, focusing on whether the new allegations (e.g., his orchestration of the fraud and financial benefit) were sufficiently coherent, particularized, and supported by factual evidence. The judge previously rejected similar amendments for lack of clarity and evidentiary basis.
- The court considered the admissibility of fresh evidence submitted on appeal, applying the three-part test from Ladd v. Marshall [1954] 1 WLR 1498: (1) whether the evidence could not have been obtained with reasonable diligence before the earlier hearing, (2) whether it would probably have had an important influence on the result, and (3) whether it is apparently credible. This included evaluating witness statements and a financial report (Salah Report) to determine if they met these thresholds.
- The appeal challenged the strike out order against Mr. Almheiri, arguing the judge erred in finding the pleadings insufficient to infer dishonesty or conspiracy. The court reviewed if the amended claims (including knowing receipt and conspiracy) met the threshold for alleging actionable misconduct, considering the credibility of witness evidence and the absence of direct documentary proof linking Mr. Almheiri to the fraud.
Holdings
- The appeal by the claimants, Union Properties PJSC and UPP Capital Investment Co LLC, against the order of Justice Sir Andrew Smith dismissing their application to amend the particulars of claim and striking out the claim against the respondent, Nasser Butti Omair Yousef Almheiri, was dismissed. The court held that the new evidence, including the Salah Report and witness statements, did not satisfy the necessary conditions for admissibility under the Ladd v. Marshall criteria and could not have influenced the outcome of the strike out application. The claimants' application to reinstate the claim against Mr. Almheiri was therefore refused.
- The Appellants (Union Properties PJSC and UPP Capital Investment Co LLC) were ordered to pay the Respondent's costs on the standard basis as agreed or to be subject to a detailed assessment of costs if no agreement was reached. This cost order was a direct consequence of the court's determination that the appeal and amendment applications lacked credible evidence to support the allegations against Mr. Almheiri.
Remedies
- The appeal was dismissed.
- Appellants must pay the respondent's costs on the standard basis as agreed or be subject to a detailed assessment of costs.
Legal Principles
- The judgment addressed claims of breach of director's duties, including failure to exercise independent judgment and oversight (UP's case against Mr Almheiri).
- The court required the claimants to show their amended allegations carried 'some degree of conviction' and were not fanciful (Kawasaki Kisen Kaisha Ltd v James Kemball Ltd).
- The court emphasized that the claimants must demonstrate a real prospect of success for their amendments, not merely an arguable claim, with coherent and particularized pleadings supported by credible evidence (Elite Property Holdings v Barclays Bank plc).
- The court applied the Ladd v. Marshall criteria to assess the admissibility of fresh evidence on appeal. The evidence must not have been obtainable with reasonable diligence, must probably influence the outcome, and must be apparently credible.
Precedent Name
- Kawasaki Kisen Kaisha Ltd v James Kemball Ltd
- Transview Properties Limited v. City Site Properties Ltd
- Tajik Aluminium Plant v. Ermatov
- JSC Bank of Moscow v Kekhman
- Three Rivers District Council v Bank of England (No 3)
- Ladd v. Marshall
- Elite Property Holdings v Barclays Bank plc
Cited Statute
- ADGM Financial Services and Markets Regulations 2015
- UAE Federal Law No. 32 of 2021 on Commercial Companies
Judge Name
- Kenneth Hayne
- Sir Nicholas Patten
- Lord David Hope
Passage Text
- "(1) It is not enough that the claim is merely arguable; it must carry some degree of conviction:..." (from Kawasaki Kisen Kaisha Ltd v James Kemball Ltd [2021] EWCA Civ 33)
- "The material in the Salah Report does not provide a sufficient basis for the use which is sought to be made of it in the draft amended pleading. It is not and was not intended to be a tracing exercise..." (from paragraph 3.82)
- "We therefore refuse to admit the evidence and dismiss the appeal with costs." (from paragraph 3.83)