Automated Summary
Key Facts
In the judgment of 6 March 2026, Justice Sir Andrew Smith dismissed claims brought by Union Properties PJSC and UPP Capital Investment Co. L.L.C. against five Defendants: Thomas Trinkler, First Fund Management Limited (FFM), Jorg Klar, Paresh Khiara, and Ahmed Khouri. The Claimants alleged a fraudulent scheme involving the misappropriation of AED 320,717,867.84 through Participatory Notes (P-Notes), which were allegedly diverted to third parties while false investment reports were provided to the Claimants. The Court concluded that the Claimants failed to prove the Defendants participated in the fraud, breached directors' duties, or were dishonestly assisting the misappropriation, resulting in the dismissal of all claims against them.
Issues
- Whether Mr Khouri breached his duties as a director of Union Properties and UPP Capital by instructing the purchase of Participatory Notes (P-Notes) and failing to investigate the investment manager TAP.
- Whether Defendants were liable for unlawfully conspiring to misappropriate funds or dishonestly assisting breaches of directors' duties.
- Whether the Settlement Agreement with Settling Parties extinguished the claims against remaining Defendants, specifically Mr Khouri.
- Whether Defendants made false representations regarding the custody and trading of P-Notes, establishing liability in deceit or negligent misstatement.
Holdings
The court dismisses all claims against the five Defendants (Mr Trinkler, FFM, Mr Klar, Mr Khiara, and Mr Khouri). The Claimants failed to prove fraud, breach of duty, dishonest assistance, conspiracy, or FSMR breaches due to lack of cogent evidence and failure to meet the civil standard of proof.
Remedies
The court dismissed all claims against the Second, Fourth, Fifth, Sixth, and Twelfth Defendants, as well as against Mr Trinkler, FFM, Mr Klar, Mr Khiara, and Mr Khouri.
Legal Principles
- The applicable law for a tort is the law of the country where the events constituting the tort occurred, subject to exceptions.
- Claimants must prove the authenticity of documents and the elements of fraud on the balance of probabilities.
- In deceit, damages are limited to the financial loss flowing directly from the alteration of position under the fraudulent representations.
- The civil standard of balance of probabilities applies, but cogent evidence is required to justify a finding of fraud or other discreditable conduct due to the seriousness of the allegations.
- In negligent misstatement, a defendant owes a duty of care if they assumed responsibility for the representation and the claimant reasonably relied on it.
Precedent Name
- Snook v London and West Riding Investments Ltd
- Ivey v Genting Casinos (UK) t/a Crockfords
- Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd
- King v Stiefel
- Davy v Garrett
Cited Statute
- ADGM Application of English Law Regulations 2015
- UAE Federal Law No. 5 of 1985 Concerning the Issuance of the Civil Transactions Law
- ADGM Financial Services and Markets Regulations 2015
- ADGM Court Procedure Rules 2016
- UAE Securities and Commodities Authority Governance Rules
- ADGM Courts Civil Evidence Judgments Enforcement and Judicial Appointments Regulations 2015
- UAE Federal Law No. 2 of 2015 on Commercial Companies
Judge Name
Justice Sir Andrew Smith
Passage Text
- In these circumstances, I am unable to accept that either the September 2019 Version of any of the minutes or any of the other documents sent to the SCA under cover of the email of 30 September 2019 are reliable evidence of what they purport to show, and in particular of how the Investment Committee came to its decision to appoint TAP to manage investments. The Claimants have not shown that the letter of 18 June 2018 purporting to be from Mr Klar is genuine nor that the Investment Committee acted on the basis of his recommendation. Therefore, I conclude that the September 2019 Version of the minutes and Mr Klar's letter are fabrications, and I reject the contention that he recommended TAP to the Investment Committee.
- I therefore dismiss all the claims against Mr Trinkler, FFM, Mr Klar, Mr Khiara and Mr Khouri. Although the Claimants were the victims of a fraud that caused them loss, they have made allegations against these Defendants that they have not been able to substantiate, and they have not shown that these Defendants were party to any wrongdoing.
- I therefore reject the factual basis for the allegations that Mr Khouri was in breach of his director's duties to the Claimants.