RAHMAN SHOWLAG (suing on his own behalf and as authorized representative of the Heirs of the Estate of SHEIKH AHMED SHOWLAG) v MANSOUR and FIRST UNION CORPORATION S.A.

• Jurisdiction: Jersey
• Court: Royal Court
• Judge: Hamon, Commr. and Jurats Blampied and Herbert:
• Judgment Date: 23 December 1991
• Date: 23 December 1991

ROYAL COURT

Hamon, Commr. and Jurats Blampied and Herbert:

R.J. Michel for the plaintiff;

A.R. Binnington for the defendants.

Cases cited:

(1) Adams v. Cape Indus. PLC, [1990] Ch. 433; [1991] 1 All E.R. 929; [1990] BCLC 479; [1990] BCC 786, dicta of Slade, L.J. applied.

(2) Arnold v. National Westminster Bank PLC, [1991] 2 A.C. 93; [1991] 3 All E.R. 41, dictum of Lord Keith of Kinkel applied.

(3) Broad Street Invs. (Jersey) Ltd. v. National Westminster Bank PLC, 1985-86 JLR 6, applied.

(4) Burke v. Sogex Intl. Ltd., 1987-88 JLR 316.

(5) Carl-Zeiss-Stiftung v. Rayner & Keeler Ltd. (No. 3), [1970] Ch. 506; [1969] 3 All E.R. 897; [1969] R.P.C. 194; (1969), 113 Sol. Jo. 922, applied.

(6) Greenhalgh v. Mallard, [1947] 2 All E.R. 255.

(7) Henderson, In re (1887), 35 Ch. D. 704, applied.

(8) Heseltine v. Strachan & Co., 1989 JLR 1, applied.

(9) Hunter v. Chief Constable of W. Midlands Police, [1982] A.C. 529; [1981] 3 All E.R. 727; (1981), 129 Sol. Jo. 829.

(10) Jacobson v. Frachon (1927), 138 L.T. 386; 44 T.L.R. 103; 72 Sol. Jo. 121, followed.

(11) New Brunswick Ry. Co. v. British & French Trust Corp. Ltd., [1939] A.C. 1; [1938] 4 All E.R. 747; (1938), 160 L.T. 137; 55 T.L.R. 260; 108 L.J.K.B. 115; 44 Com. Cas. 82; 83 Sol. Jo. 132.

(12) Pemberton v. Hughes, [1899] 1 Ch. 781; (1899), 80 L.T. 369; 15 T.L.R. 211; 68 L.J. Ch. 281; 47 W.R. 354; 43 Sol. Jo. 365, dictum of Lindley, M.R. applied.

(13) Picot (T.A.) (C.I.) Ltd. v. Vekaplast K.G., Ct. of Appeal, January, 23rd, 1991, unreported, followed.

(14) Takilla Ltd v. Farley (Ernest) & Son Ltd., Royal Ct., January 8th, 1991, unreported.

Additional cases cited by counsel:

Baxendale v. Bennett (1878), 3 Q.B.D. 525.

Carl-Zeiss-Stiftung v. Rayner & Keeler Ltd. (No. 2), [1966] 2 All E.R. 536.

Domer v. Gulf Oil (G.B.) (1975), 119 Sol. Jo. 392.

Duchess of Kingston's Case, [1775-1802] All E.R. Rep. 623.

Yat Tung Inv. Co. Ltd. v. Dao Heng Bank Ltd., [1975] A.C. 581 ([1975] UKPC 6).

Texts cited:

Dicey & Morris, 1 The Conflict of Laws, 11th ed., rr. 42-46, at 460-476 (1987).

Phipson on Evidence, 14th ed., para. 33-65, at 893 (1990).

Estoppel—chose jugée—scope of doctrine—court has discretion to strike out action if party already given full opportunity to be heard and final judgment delivered by competent court in respect of same question between same parties or their privies

Estoppel—chose jugée—scope of doctrine—foreign judgment may be res judicata in respect of Jersey proceedings—abuse of process to launch collateral attack on final decision of competent court—decided issues only to be reopened in exceptional circumstances, e.g. foreign court's method contrary to Jersey view of substantive justice; fresh evidence or new law clearly showing case wrongly decided

Conflict of Laws—parallel foreign proceedings—chose jugée—party already given full opportunity to be heard in foreign court cannot raise in subsequent Jersey proceedings issue which could have been effectively adjudicated abroad

Estoppel—chose jugée—finality—reasoned foreign judgment may be final although subject to appeal—may be res judicata in respect of Jersey proceedings

The plaintiff applied to the Judicial Greffier to strike out the defendant's answers under r.6/13 of the Royal Court Rules, 1982, on the ground that they were scandalous, frivolous or vexatious and/or otherwise an abuse of the process of the court or in the exercise of the court's inherent jurisdiction because the matters pleaded were res judicata and were prevented by issue estoppel from being argued in Jersey.

The plaintiff was the representative of the estate of the late Sheikh Rahman Showlag, who had employed the first defendant as a driver. The plaintiff alleged that transfers of money from bank accounts held in the name of the Sheikh to Swiss accounts held by the second defendant, a nominee company of the first defendant, had been fraudulently obtained and sought to recover the money on behalf of the estate. The defendants claimed that the transfers were a gift from the Sheikh to the first defendant. The plaintiff was pursuing litigation in England, Jersey, Switzerland and Egypt to freeze any assets transferred there by the first defendant. Criminal proceedings had been brought against the first defendant in Egypt, during the process of which a "stop" order had been placed on the Egyptian assets, thus preventing their removal from the jurisdiction unless and until the first defendant was acquitted. There had been fierce activity in England, where the first defendant had applied for proceedings to be adjourned pending a decision in the Egyptian trial before which time he was unable to leave the jurisdiction. The English High Court (Hoffmann, J.) refused the application because the first defendant was not prepared to make any arrangements to ensure that, if the Egyptian freezing orders were lifted, the assets would not be moved beyond the reach of any English judgment. The English proceedings came to trial in the first defendant's absence and final judgment was given against him on overwhelming evidence. Shortly thereafter, the Egyptian court made similar findings of fact and convicted him but the conviction was quashed on appeal, on the basis of affidavit evidence which differed in several material respects from that put to the lower court in Egypt and the English High Court and was subsequently shown to be false. The Egyptian General Prosecutor lodged an appeal to the Cour de Cassation. Meanwhile, the plaintiff had applied to the Judicial Greffier for, inter alia, confirmation of the interim injunctions in Jersey, a declaration and an order that certain assets be delivered up to the estate of the late Sheikh. The defendants answered that the transferred assets were a gift and had not been fraudulently obtained, which prompted the present application to strike out the defendants' answers on the ground that the matters therein raised had been properly litigated in England and were prevented by issue estoppel from being argued in Jersey. The Judicial Greffier struck out the defendants' answers but was unable to give judgment in the terms of the plaintiff's Order of Justice (the jurisdictional points are noted at 1991 JLR N-3 and N-10) and the matter was accordingly adjourned to the Royal Court.

The plaintiff submitted, inter alia, that (a) the English High Court decision was res judicata in respect of the Jersey proceedings and it was an abuse of the process of the court to launch a collateral attack on a final decision of a court of competent jurisdiction; (b) there were no exceptional circumstances which justified impeachment of the English judgment since it was clear that an adjournment would have been granted had the first defendant complied with the judge's reasonable request for security over the Egyptian assets; (c) the first defendant had therefore had full opportunity to be heard but had chosen not to present his case and since it was a well-recognized extension of the doctrine of res judicata that a party could not raise in subsequent proceedings issues which could formerly have been heard, the defendants should not now be permitted to plead that the transferred assets were a gift; (d) in any event, the evidence against the first defendant was overwhelming and since his absence had done him no substantive injustice, and a merely procedural error was in itself insufficient to warrant interference with the conclusions of the English court, a clear issue estoppel was raised; (e) this was unaffected by the judgment of the Egyptian Court of Appeal, which postdated the English decision and which was inconclusive because of the pending appeal to the Cour de Cassation and the extraordinary errors of fact made by the appellate court; and (f) accordingly, the Royal Court should exercise its discretion to strike out the defendants' answers and give judgment for the plaintiff in terms of the prayers of his Order of Justice.

In reply, the defendants submitted, inter alia, that (a) although the circumstances of the present case satisfied the basic criteria for the raising of an issue estoppel, the court should not exercise its discretion to do so because the breach of natural justice in the English proceedings resulted in a situation which offended against Jersey views of substantive justice and which comprised the exceptional circumstances necessary to justify departure from the normal rules as to striking out; (b) the English judge had acted unreasonably in making into a precondition of adjournment something which the first defendant could not reasonably have been expected to do; (c) the first defendant was therefore tried in his absence in breach of a basic principle of natural justice; (d) since he was also effectively denied the opportunity to formulate his defence, the findings of the English court should not be regarded as conclusive and his answers to the plaintiff's Order of Justice should be heard in Jersey; (e) alternatively, the prayers of the plaintiff's Order of Justice should be struck out because the decision of the Egyptian Court of Appeal, which had progressed from a full and fair hearing and could be regarded as final despite the pending appeal, was res judicata in respect of the Jersey proceedings; and (f) in any event, even if the English judgment were res judicata and the Egyptian decision were not, there was sufficient doubt raised by the Egyptian findings to compel the Royal Court to refuse to strike out the defendants' answers.

Held, ruling that the case proceed to hearing:

(1) The Royal Court was entitled to approach the case as an appeal de novo and could therefore exercise its own discretion unfettered by the Judicial Greffier's decision. To make good a claim of estoppel per rem judicatam the party asserting it had to establish that there had already been a judicial decision of final character by a court of competent jurisdiction in respect of...