[1] Sheikh Mohamed Ali M Alhamrani v Sheikh Abdullah Ali M Alhamrani

JurisdictionCaribbean States
CourtEastern Caribbean Supreme Court
JudgeWebster JA
Judgment Date24 Nov 2017
Neutral Citation[2017] ECSC J1124-2
Judgment citation (vLex)[2017] ECSC J1124-4
Docket NumberBVIHCMAP2016/0030

THE EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Before:

The Hon. Dame Janice M. Pereira, DBE Chief Justice

The Hon. Mr. Mario F. Michel Justice of Appeal

The Hon. Mr. Paul Webster Justice of Appeal [Ag.]

BVIHCMAP2016/0030

Between:
[1] Sheikh Mohamed Ali M Alhamrani
[2] Sheikh Siraj Ali M Alhamrani
[3] Sheikh Khalid Ali M Alhamrani
[4] Sheikh Mohamed Ali M Alhamrani (as representative of the estate of the late Sheikh Abdulaziz Ali M Alhamrani)
[5] Sheikh Ahmed Ali M Alhamrani
[6] Sheikh Fahad Ali M Alhamrani
Appellants
and
Sheikh Abdullah Ali M Alhamrani
Respondent
Appearances:

Mr. Lynton Tucker and Mr. James Brightwell for the Appellants

Ms. Elizabeth Jones, QC for the Respondent

Commercial appeal - Assessment of costs - Burden of proof in cost assessment proceedings - Whether the learned judge effectively reversed the burden of proof and required the paying party to prove that the disputed items of the claim were unreasonable and should not be allowed - Whether the learned judge made errors in principle in conducting the cost assessment proceedings - Whether the learned judge improperly exercised his discretion during the cost assessment proceedings

This is an appeal regarding costs awards amounting to US$9,361,244.02 plus interest of US$1,172,000.96 made by a judge of the Commercial Court in favour of the respondent, Sheikh Abdullah Ali M Alhamrani (“Sheikh Abdullah”), in respect of proceedings between the appellants and Sheikh Abdullah in the Commercial Court and the Court of Appeal. The appellants were dissatisfied with the awards made by the learned judge and have appealed to this Court.

The appellants and Sheikh Abdullah are the children of the late Sheikh Ali M. Alhamrani (collectively referred to as “the siblings”) who died in 1976. The family carried on various businesses in the United Arab Emirates, including a joint-venture with a German lubricants manufacturer called Fuchs Petroleum Saudi Arabia (“Fuchs”). Fuchs Oil Middle East Limited (“Fomel”), a British Virgin Islands company, was one of the companies used by the joint-venture. Chemtrade Limited (“Chemtrade”), another BVI company, owns 50% of the shares of Fomel, and Fuchs owns the remaining 50% of the shares. The siblings owned the shares in Chemtrade.

In or about 2000 unhappy differences developed between Sheikh Abdullah and the appellants. The disputes were referred to a court in Saudi Arabia and the proceedings in that court resulted in an agreement between the siblings in April 2008 regarding the distribution of the assets of the joint-venture. Essentially the agreement provided that Sheikh Mohamed, one of the siblings, would value the businesses and Sheikh Abdullah would have the option of either purchasing the appellants' shares or selling his shares to them, in either case at the value determined by Sheikh Mohamed. Sheikh Abdullah opted to purchase the appellants' shares. A further dispute then developed between the siblings as to whether the shares that the appellants owned in Chemtrade were included in the sale.

Sheikh Abdullah's position was that the disputed shares were included in the sale to him and, when completed, would make him the majority shareholder of Chemtrade. In January 2010, he commenced proceedings in Saudi Arabia claiming ownership of the disputed shares. He also excluded the appellants from Fomel's affairs. In November 2010, Chemtrade commenced an unfair prejudice claim against Fomel in the BVI Commercial Court seeking an order that either Fomel or Fuchs purchase its shares in Fomel (“the unfair prejudice claim”). In July 2011, Sheikh Abdullah commenced separate ownership proceedings in the Commercial Court in respect of the disputed shares (“the ownership claim”).

At a directions hearing for both cases before the judge of the Commercial Court in November 2011, Sheikh Abdullah agreed to pursue the BVI ownership claim instead of the extant ownership proceedings in Saudi Arabia. The learned judge entered a consent order that the ownership claim and the unfair prejudice claim be tried together, and that each party in either action shall give standard disclosure to all the other parties (“the Consent Order”). The two claims were not consolidated.

The trial of the joint claims took place over a period of 32 trial days between September and November 2012. The learned judge delivered his judgment in December 2012. He dismissed Sheikh Abdullah's claim and allowed Chemtrade's unfair prejudice claim but did not order a buyout of its shares. Instead, he ordered that the articles of association of Fomel be amended to avoid any future deadlock in the company's board of directors.

The learned judge heard submissions on costs in February 2013 and delivered his decision in March 2013. The judge ordered Sheikh Abdullah to pay 100% of 40% of the appellants' overall costs of the joint trial, but he reduced Sheikh Abdullah's share of the responsibility for the costs to 70% of the 40% on account of certain aspects of the appellants' conduct during the litigation. Sheikh Abdullah was therefore required to pay 28% (70% of 40%) of the appellants' agreed or assessed costs of the combined proceedings.

Sheikh Abdullah appealed against the judge's order refusing his claim to the disputed shares. The appeal was heard by the Court of Appeal over a period of five hearing days in July 2013. In a judgment delivered in September 2013, the Court of Appeal allowed Sheikh Abdullah's appeal and set aside the judgment in the court below, and, having found that the disputed shares were included in the buy-sell agreement, ordered that they be transferred to Sheikh Abdullah or his order within 28 days. The Court of Appeal also ordered that the appellants pay Sheikh Abdullah's costs of the appeal and of the trial in the court below, to be assessed if not agreed. The Court of Appeal made a further order in November 2013 staying the execution of its judgment until the final disposal of the appellants' appeal to the Privy Council.

The appellants' appeal to the Privy Council was dismissed and they were ordered to pay Sheikh Abdullah's costs before the Privy Council and in the Court of Appeal, both on a standard basis. The Privy Council also affirmed the Court of Appeal's order for the costs at first instance.

The hearing of the assessment of Sheikh Abdullah's costs took place before a judge of the Commercial Court, over a period of four days in June 2016. The learned judge was presented with a list of 28 disputed points and it was agreed he would hear counsel on each point and then make rulings on the points as the hearing progressed. The judge did not produce a written judgment.

At the end of the costs hearing the learned judge ordered that:

  • a. The appellants pay Sheikh Abdullah's costs of the High Court proceedings in the sum of $7,804,361.20 with interest in the sum of $1,086,196.02, continuing at the daily rate of $1069.09.

  • b. The appellants pay $934,026.83 in respect of Sheikh Abdullah's costs of his appeal to the Court of Appeal and $436,697.33 in respect of Sheikh Abdullah's costs of the stay application, together with interest of $72,479.39 and continuing at the daily rate of $187.77.

  • c. The appellants pay Sheikh Abdullah's costs of $186,158.66 together with interest of $13,325 and continuing at the rate of $20.89 per day in respect of an application for a freezing injunction made by Sheikh Abdullah to the Court of Appeal.

The appellants appealed against these orders. The notice of appeal lists 20 grounds of appeal. Grounds 1 to 4 deal with different aspects of the burden of proof in costs assessment proceedings, in particular the appellants' complaint that the learned judge effectively reversed the burden of proof and required them, as the paying party, to prove that the disputed items of the claim were unreasonable and should not be allowed.

Grounds 5 to 20 allege errors of principle in the assessment not just in the exercise of the judge's discretion.

Held: allowing the appeal on grounds 9 to 13 to the extent of reducing the amount awarded from £600,000 to £480,000, and on ground 18 by ordering that the amount awarded for travel time be recalculated at the rate of one-half of each fee earner's normal hourly rate, to be assessed by a judge of the Commercial Court if not agreed by the parties within 21 days, dismissing the appeal on all other grounds and making the orders in paragraph 87 numbered 4–6 of this judgment, that:

  • 1. The assessment of the costs in this matter was undoubtedly one of, if not the largest and most complicated assessments ever undertaken in the BVI. The judge was faced with a difficult task and had to find sensible and practical means to complete the detailed assessment within the four days allocated for the hearing. The judge was entitled to employ a broad-brush approach to the assessment rather than a line by line assessment.

  • 2. It is settled law in the Eastern Caribbean that section 11 of the Eastern Caribbean States Supreme Court (Virgin Islands) Act can be used to import the law and practice in the High Court of Justice in England but only where there is no local law or practice covering the point. Part 65.2 of the Civil Procedure Rules 2000 (“CPR 2000”) sets out where the burden of proof lies in an assessment of costs and outlines the basic principles that the assessor should follow when carrying out an assessment. Rule 44.3 of the English Civil Procedure Rules 1998 covers substantially the same ground as Part 65.2. Therefore, there is no room for the application or operation of rule 44.3 of the English CPR in the BVI.

    Leeward Islands Resorts Limited v Charles Hickox ANUHCVAP2008/003 (delivered 22nd March 2010, unreported) followed; Part 65.2 of the Civil Procedure Rules 2000 applied; section 11 of the West Indies Associated States Supreme Court (Virgin Islands) Ordinance applied; Rule 44.3 of the English Civil...

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