Sheikh Mohamed Ali M. Alhamrani and Four Others v Sheikh Abdullah Ali M. Alhamrani, J.P. Morgan Trust Company (Jersey) Ltd and Russa Management Ltd

JurisdictionJersey
CourtCourt of Appeal
JudgeBeloff, McNeill and Martin, JJ.A.
Judgment Date24 July 2009
Date24 July 2009
COURT OF APPEAL
Beloff, McNeill and Martin, JJ.A.

M.H.D. Taylor for the plaintiffs;

N.M. Santos Costa for the first defendant;

J.P. Speck for the second defendant;

T.V.R. Hanson for Sheikh Fahad Ali M. Alhamrani;

P.C. Sinel for Trustcorp (Jersey) Ltd.

Cases cited:

(1) Arrow Nominees Inc. v. Blackledge, [2000] C.P. Rep. 59; [2000] 2 BCLC 167; [2001] BCC 591, applied.

(2) Ashmore v. Corporation of Lloyd's, [1992] 1 W.L.R. 446; [1992] 2 All E.R. 486; [1992] 2 Lloyd's Rep. 1, dictum of Lord Roskill considered.

(3) Esteem Settlement, In re, 2000 JLR N-41, referred to.

(4) Hamilton v. Al Fayed (No. 2), [2001] E.M.L.R. 15, applied.

(5) Jersey Fin. Servs. Commn. v. A.P. Black (Jersey) Ltd., 2002 JLR 443, referred to.

(6) Logicrose Ltd. v. Southend United Football Club Ltd., The Times, March 5th, 1988, applied.

(7) O'Brien v. Marett, 2009 JLR N [36], referred to.

(8) Raja v. Van Hoogstraten, [2006] EWHC 1315 (Ch); (2006), 150 Sol. Jo. (L.B.) 855, referred to.

(9) S v. F, 2008 JLR N [19], referred to.

(10) Shah v. Ul-Haq, [2009] C.P. Rep. 39; [2010] 1 All E.R. 73; [2009] R.T.R. 27; [2009] EWCA Civ 542, dictum of Janet Smith, L.J. considered.

(11) Tilling v. Whiteman, [1980] A.C. 1; [1979] 2 W.L.R. 401; [1979] 1 All E.R. 737; (1979), 38 P. & C.R. 341, referred to.

(12) United Capital Corp. Ltd. v. Bender, 2006 JLR 269, referred to.

(13) Williams & Humbert Ltd. v. W. & H. Trade Marks (Jersey) Ltd., [1986] A.C. 368; [1986] 2 W.L.R. 24; [1986] 1 All E.R. 129, applied.

(14) Zahoor v. Masood, [2009] C.P. Rep. 44; [2009] EWCA Civ 650, dicta of Mummery, L.J. referred to.

Text cited:

Zuckerman, Civil Justice Quarterly, at 419-420 (2008).

Civil Procedure—pleading—striking out—fraudulent conduct—pleading exceptionally struck out for fraudulent or dishonest conduct (e.g. false testimony and incomplete disclosure) if unacceptable risk to fairness of trial, making judgment unsafe—alternative measures, e.g. indemnity costs orders, available to penalize less serious conduct—incomplete or inaccurate disclosure common in hotly-contested litigation and court only rarely to consider fair trial impossible

The plaintiffs brought proceedings in the Royal Court alleging breach of trust and fiduciary duty.

The plaintiffs, the first defendant and their four other siblings had been beneficiaries of several substantial Jersey trusts of which the second and third defendants had been the trustees. A dispute arose concerning the management of the trusts, which appeared to have sustained considerable losses. The plaintiffs ("the first party") brought proceedings against, inter alios, the first defendant, as trust protector and pursuant to a power of attorney, alleging breach of trust and fiduciary duty. The most substantial claims concerned large distributions of trust money to a group of companies which the first party claimed were owned beneficially by the first defendant. He claimed that the companies had at all times been held for the benefit of the whole family and that the first party had been aware of the commercial decisions that it sought to challenge. The first party also brought proceedings against the second and third defendants, as trustees of the Jersey trusts, for negligence and breach of duty concerning those transactions and others. The first two defendants also argued that the first party's claims against them were, in any event, barred by acquiescence or prescription on the basis that the first party had known of any breaches of duty for more than three years before bringing proceedings.

The first party's knowledge of and involvement in the investment in the group of companies were therefore central to, but not determinative of, the first two defendants' defences. After cross-examination of the first party's witnesses, it appeared that the first party had failed to disclose a large number of documents. On the basis of certain newly-discovered documents, the first two defendants claimed that there were strong grounds for concluding that members of the first party and at least one other witness had given perjured evidence, and that certain documents had been falsified and destroyed. The first defendant accordingly applied to the Royal Court for the first party's case to be struck out in its entirety on the grounds that its dishonest conduct (a) had so corrupted the trial process that there was a substantial risk that a fair trial was not possible; and/or (b) amounted to a conspiracy to pervert the course of justice and was such an abuse of process that the claims should be struck out in the interests of the administration of justice. The second defendant issued a summons to the same effect.

At a directions hearing to determine whether the strike-out applications should have been heard before hearing further witnesses, the Royal Court (Page, Commr.) dismissed them. It considered, inter alia, that at the late stage of the trial (most of the witnesses had been heard), the strike-out applications would have resulted in a substantial trial within a trial (as they could not be determined without hearing further evidence) that was more likely to prolong the proceedings than save time or expense. The court also considered (on the basis of authority which was later overturned) that in certain cases it could be legitimate for a court on a strike-out application to have regard to other parties' litigation conduct and that, in the present case, serious questions arose as to the conduct of the first two defendants. The court considered that the dismissal of the strike-out applications would not cause injustice to the first two defendants as their allegations, if made out, could be reflected in the final judgment. The court also considered the application of the proposed fourth defendant (the new trustee, which had replaced the second defendant) to be added as a party to the proceedings (pursuant to a Beddoe order) to be a further reason not to strike out the proceedings.

The first two defendants appealed against the Royal Court's dismissal of their strike-out applications, submitting inter alia that (a) in the context of the directions hearing, they had no opportunity to address the court on whether their applications should be heard at all; (b) the decision was plainly wrong and substantively unfair in denying them the right to have the applications heard; (c) the court erred in seeking to balance their alleged misconduct against that of the first party, and in treating the dismissal of the first party's claim at the end of the trial as if it were equivalent to an earlier strike-out; and (d) the court took irrelevant considerations into account, including the new trustee's application to be joined as a party to the proceedings.

Held, dismissing the appeal:

(1) The Royal Court had exercised its discretion to dismiss the strike-out applications in a rational, proportionate and judicious manner and the first two defendants' appeals against that decision would be dismissed. The Royal Court's decision had been essentially one of case management, with which an appellate court would rarely interfere. The Royal Court had a discretionary power to strike out a claim on the ground of a litigant's fraudulent conduct (e.g. suppressing or forging evidence, or perjury) but that was a draconian power which should rarely be exercised. It could be exercised, before or during a trial, if it were necessary to do justice in a particular case. If a litigant's conduct put the fairness of a trial at an unacceptable risk, so that any judgment in his favour would be regarded as unsafe, a court would be bound to exclude him from further participation in the proceedings and, if he were a claimant, to determine his claim against him. Alternative measures, e.g. indemnity costs orders, were available to deal with less serious conduct by litigants that did not justifying striking out. It was not clear that to strike out a litigant's claim in circumstances other than a serious contamination of the trial process would not infringe his right to a fair trial under art. 6 of the European Convention on Human Rights and would not be penal, rather than protective of the court's functional integrity ( paras. 21-27; para. 56).

(2) It could not be said that the first two defendants had had no opportunity to address the Royal Court, before it dismissed their strike-out applications, on whether the applications should be heard at all. It was a matter of elementary fairness that a court should not make an order if the affected party had been given no notice of its substance and no opportunity to address the court on it. Although it might not have been plainly obvious at the directions hearing that the court considered the issue of whether rather than when the applications should be heard, there had been sufficient indication that it would do so and a sufficiently astute advocate could have taken the opportunity to address the court on it. In any event, the first two defendants' submissions in favour of the strike-out applications being heard as soon as possible necessarily focused on why they should have been heard at all and it was impossible to see how their submissions could have been materially improved if they had initially recognized the need to justify the hearing of the applications. In the context of a case management hearing, not a criminal trial, there had been no unfairness to the first two defendants ( para. 31; paras. 33-36).

(3) The first two defendants were not entitled to a determination of their strike-out applications and the Royal Court's decision to dismiss them was not plainly wrong or substantively unfair. Litigants had no right to have any application they chose to make determined by a court, at whatever prejudice to the administration of justice, either in the particular case or generally. It had been for the Royal Court, with its close knowledge of this case, to decide that the interests of...

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