Privacy Settings

Claim No: CFI 048/2018

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

SKATTEFORVALTNINGEN
(the Danish Customs and Tax Administration)

Claimant

and

(1) ELYSIUM GLOBAL (DUBAI) LIMITED
(2) ELYSIUM PROPERTIES LIMITED

Defendants

ORDER WITH REASONS OF JUSTICE SIR JEREMY COOKE

UPON the freezing order of Justice Sir Jeremy Cooke issued on 27 June 2018 (the “Freezing Order”) (as subsequently varied)

AND UPON the Application filed by the Defendants on 30 August 2020 that the Freezing Order dated 27 June 2018 , in so far as it relates to the bank accounts listed in the draft order be set aside and that the Claimant take all steps to remove the Attachment Order made on 10 September 2018, in so far as it relates to those assets (the “Application”)

AND UPON reviewing the Claimant’s evidence in response filed on 20 September 2020

AND UPON reviewing the Defendants’ evidence in reply filed on 24 October 2020

AND UPON reviewing all relevant documents recorded on the Courts’ file

IT IS HEREBY ORDERED THAT:

1. The Freezing Order shall be lifted, insofar as it relates to the following assets (the “Accounts”):

2. The parties shall forthwith jointly apply to the onshore Dubai Courts for the discharge of the Attachment Order dated 10 September 2018 and any other relevant attachments, in so far as attach the Accounts.

3. Immediately upon the attachments being lifted over the Accounts, the Defendants shall forthwith procure that:

4. The relevant client account details for the purpose of paragraph 3(a) hereof are:

Meaby & Co Solicitors LLP
CW/5260/Shah
Royal Bank of Scotland
Meaby & Co Solicitors Client Account
16-01-29 (Sort Code)
00228854 (Client Account)

5. Upon receipt of funds from the Accounts, the Defendants’ solicitors shall apply the funds solely for the purpose of satisfying the First and Second Defendants’ outstanding business expenses in the following order of priority:

6. As soon as reasonably practicable after the Accounts are closed (and in any event within 14 days thereafter), the Defendants shall file and serve on the Claimant a witness statement deposing to:

7. Costs reserved.

Issued by:
Nour Hineidi
Registrar
Date of issue: 26 January 2021
At: 11am

SCHEDULE OF REASONS

1. On 30 August 2020, the two Defendants applied for the Worldwide Freezing Order dated 27 June 2018 (as subsequently varied) (the “Order”) to be set aside in relation to specific accounts held in the name of the First Defendant and the Second Defendant at Emirates NBD. There are eight such accounts, four in the name of each defendant. Each is numbered 101510402…, followed by three more numerals. Those numerals are 701, 702, 703 and 704 and represent accounts in AED, USD, GBP and EUR respectively. Somewhat strangely, the four accounts in the name of each of the two defendants have exactly the same account numbers. The evidence before me establishes that apart from the AED account ending in “701” in the name of the First Defendant, which contains AED408, 541.99, the equivalent account in the name of the Second Defendant which contains AED 588.65 and the USD account in the latter’s name ending in “702” which contains $719.51, the other accounts are either empty or contain less than £20. A lot of expense has been incurred in making this Application and in resisting it in relation to sums which are insignificant in the overall context of the litigation where the claim made is for over $2 billion.

2. The basis of the Application can be expressed shortly. The accounts which are held in onshore Dubai are subject to the terms of the Order which relate to monies other than those against which a proprietary claim is made. The sums therefore are subject to paragraph 10(2) of the Order which provides that there is no prohibition on the two defendants dealing with or disposing of any of their assets in the ordinary and proper course of business. The paragraph nonetheless provides that “before doing so, the Respondents must tell the [Claimant’s] legal representatives where the money is to come from”, without any obligation to inform the Claimant of the nature of the expense or the recipient. Over a period of years since the Order was first made, payment notifications have been made by the Defendants or their lawyers in that form.

3. Because the relevant accounts are in onshore Dubai, the Order was the subject of recognition by the onshore Dubai courts in the form of a Recognition Order which took effect as an Attachment Order dated 10 September 2018. The nature of such an order does not allow for an exception of the kind which appears in paragraph 10 (2) of this Court’s Order which means that those accounts are absolutely frozen. If the money is in them is to be used for the payment of “ordinary business expenses”, the Attachment Order made in the onshore courts must be discharged, at least pro tanto, in order to make the payments.

4. The Defendants offer undertakings to this court in the shape of a personal undertaking from Mr Sanjay Shah (“Mr Shah”), the sole director and shareholder of the First Defendant which wholly owns the Second Defendant, to use the sums of which release is sought solely for the purpose of meeting ordinary business expenses of two kinds, if the Court accedes to the application. The first is the payment of salary said to be due to Mr Shah himself and the second is the payment of Hertz under contracts for the hire of cars. As at the end of October 2020 the sum then owing in respect of the former was said to be AED 650,000 and in respect of the latter AED 154,649.02. The sums exceed the total amount standing in the relevant accounts.

5. The Claimant, whilst recognising the “ordinary business expenditure” exemption, has objected to the release of the relevant bank accounts from the Order, with its consequent effect on the onshore Attachment Order, because of its suspicions about the rationale put forward by the Defendants. The Claimant is suspicious by reason of the very nature of the alleged wrongs perpetrated by the Defendants and Mr Shah as well as an incident which occurred at the end of October 2018. In the seventh witness statement of Damien Crosse, evidence is given of that occasion when there was agreement to the release of funds in the Emirates NBD account from the onshore attachment imposed by the Dubai Recognition Order for payments excepted from the Order, only to find that Mr Shah had attended the bank in person and obtained payment in cash to himself of all the sums then standing to the credit of that account. Late notice was given of the Defendants’ business expenses said to have been met with the cash sums thus obtained, of which evidence has now been given in a witness statement from Mr Shah dated 24 October 2020. The Claimant remains suspicious as to the receipt by any of the supposed creditors of cash payments of this kind and the lack of evidence produced in support.

6. Furthermore, the Claimant remains unpersuaded that:

7. When the Defendants’ lawyers first sought the consent of the Claimant to the release of the onshore attachment order on 12 August 2020 it was said that Mr Shah was owed AED 325,200, including salary for August 2020, on the basis of his entitlement to AED 50,000 per month. When a contract of employment was produced, however, on 20 August 2020, the contract, which was dated 1 January 2012 provided for a salary of AED 6,006,000 per year (AED 500,500 per month). This inconsistency was striking. In Mr Shah’s witness statement of 24 October 2020, however, he explains that the employment contract dated 1 January 2012 was varied by one page amendments dated 1 February 2016 and 1 July 2016, with reductions, first to AED100,000 per month and then to AED 50,000 per month, for no obvious reason. Copies of the contract and amendments were exhibited to that witness statement. He went on to explain that although the contract was dated 1 January 2012, it was not drafted and signed until approximately 2015. The “original” contract was signed by him for the employer as well as for himself as the employee. He says that there must have been an effective contract in existence from 20 January 2012 because it would have been necessary to produce such a contract to the DIFC Authority on his application for a visa. The original could not be located, however, and the 2015 version was created to document the existing position.

8. I regard this as highly unsatisfactory, particularly as Mr Shah failed to disclose any such contract of employment as an asset of his at any time prior to the correspondence referred to above. This is exacerbated by the position in relation to loans allegedly made by the First Defendant to the Second Defendant and loans made by Mr Shah himself to the First Defendant. A Loan Facility Agreement dated 4 June 2015 under which the First Defendant is said to have lent US$ 9 million to the Second Defendant was not disclosed until 3 July 2020, despite Mr Shah’s sworn affidavits of assets on 23 July 2018 and 17 October 2019. Given the other evidence as to the lack of documentation in relation to alleged intercompany loans to which Mr Crosse’s seventh witness statement makes reference, there is every reason for suspicion. According to Mr Shah it was not until 2018 (and apparently after the freezing orders were made in the UK and in the DIFC) that efforts were made to regularise the position with documentation of existing loans. Mr Shah accepts that he is not in a position to provide a full exposition of the loans and for that reason, his asset disclosure affidavits had generally excluded intercompany loans.

9. Whilst, at one time, the Claimant was suspicious as to some of ulterior motive for spending money in costs in order to obtain the release of bank accounts in which there was little or no money, in addition to those accounts which at least contained figures of some use, the evidence shows that the purpose of obtaining release of all the accounts was to minimise expenditure in relation to banking charges as well as to release whatever sums were available.

10. Despite the doubts that I have about the reliability of the evidence which has been adduced on the part of the Defendants, it does appear to me that the salary payment is a genuine business expense of the First Defendant because Mr Shah is engaged by it in connection with the litigation and the sums which are claimed relate to the period from July 2019 onwards. The figure to the end of October, on the basis of AED 50,000 per month is AED 650,000.

11. It is interesting that the contract of employment which has been produced does not provide for Mr Shah to have a car in addition to his salary and indeed it specifically states that there are to be no such additional perks. Nonetheless the evidence from Mr Shah refers to a contract made in 2018 with Al Futtaim Transport and Rental Services, trading as Hertz for the lease of 4 vehicles which have been in use by him and three other employees since then. Hertz has now recalled 3 of the vehicles and was due to recall the fourth in November 2020. The payments therefore relate to the past and despite the fact that the evidence is thin and that the Defendants appear now to employ no one other than Mr Shah, past debts are part of ordinary business expenditure.

12. In the circumstances, it seems to me that the terms of the Order which allow for ordinary business expenditure, without the need to establish that there are other assets available to make such payment which are not caught by the Order, must be put into effect and the Order varied to permit payment of the sums in the relevant accounts to Hertz and to Mr Shah. Priority should be given to Hertz who is said to threaten criminal proceedings, although on what basis is unclear. However suspicious the Claimant may be and the doubts which I entertain, on the evidence I consider that the Defendants should be allowed access to the relevant accounts in order to make the business payments referred to.

13. In order to ensure that the funds in those accounts are used for this purpose, it will be a term of the order which releases each of the relevant accounts from the Worldwide Freezing Order that the sums be paid to the order of the Defendants’ solicitors Meaby & Co Solicitors LLP for disbursement, first to Hertz and the balance for the benefit of Mr Shah. The order should also provide for a joint application to be made to the onshore Dubai Courts for the discharge of the Attachment Order in relation to the relevant accounts and for payment to Meaby & Co. The parties’ lawyers should be able to agree the form of order for approval by the Court.

14. In all the circumstances, I consider that the costs involved in this Application should be reserved. If the action in the DIFC was to proceed to judgement, I would ordinarily consider that the costs involved should be costs in the case, but it appears that the substantive issues will now be determined in the English litigation so that it is best simply to reserve costs at this stage.