Standard Chartered Bank and another, Application to inspect court file

¶ 1 IN THE GRAND COURT OF THE CAYMAN ISLANDS 2 3 Cause No: G358/2010 4 5 6 IN THE MATTER OF AN EX PARTE APPLICATION PURSUANT TO 0.63 r.3(5) 7 AND IN THE MATTER OF AN APPLICATION BY STANDARD CHARTERED BANK 8 AND STANDARD CHARTERED INTERNATIONAL (USA) LTD. FOR LEAVE TO 9 INSPECT THE COURT FILE IN FSD 54 OF 2009 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 Appearances: Before: Heard: Mr. David Quest Q.c. instructed by Mr. Peter Hayden and Mr. Charles Moore of Mourant Ozannes on behalf of the Applicant, Ahmad Hamad Algosaibi and Brothers Company - the Applicant Stephen Moverley Smith Q.C. instrncted by Steven Barrie of Nelson & Company on behalf of Standard Chartered Bank and Standard Chartered International (USA) Ltd. - the Respondents The Hon. Mr. Justice Charles Quin 28th October 2013 JUDGMENT Judgment on Costs. Cause No. 358/2010. In'the Matter of an Application by Standard Chartered Bank Coram Quin J. Date: 24.12.2013 Page 10/15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 1.

¶ [2] This is the hearing of a snmmons issued by the Applicant on 9tl' July 2003 for an order that the ex parte order of the Honourable Mr Justice Quitl dated 19"' April 2013 be set aside and further that Standard Chartered Bank (,'SCB") and Standard Chartered International (USA) Ltd ("SCI") provide an account, verified by a signed declaration of an officer thereof, detailing the extent to which any material obtained from the court file in FSD 54 of 2009 has been used, disclosed or otherwise employed, including identifYing the specific documents together with the reason for use and the recipients thereof. In addition, the Applicant seeks costs and further and other relief. BACKGROUND Ahmad Hamad Algosaibi and Brothers ("AHAB ") is a Saudi Arabian partnership and the Plaintiff ill a very large and 10ng-ruMing fraud action before this court in Cause No. FSD 54 of 2009. AHAB's case in that action, in summary, is that the managillg director of one of its businesses, Maan Al Sanea, dishonestly arranged loan facilities in AHAB's name (but without AHAB's knowledge) and then misappropriated the proceeds. It is alleged that the fraud was perpetuated ill conj unction with a number of Cayman Islands companies, then beneficially oWlled and controlled by Mr Al Sanea, and into which the proceeds were paid. In total it is claimed that over US$ 9 billion was borrowed and misappropriated. The action is very complex and has recently been set down for a six-month trial in 2016. The assigned judge is the Chief Justice and he has heard numerous interlocutory applications over the past four years. Judgment on Costs. Cause No. 358/2010. In the Matter of an Application by Standard Chartered Bank Coram Quin J. Date: 24.12.2013 Page 20/15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

¶ [5] As a result of the fraud, ARAB is being pursued by a large number of bank creditors in different jurisdictions, seeking to recover the monies advanced under the loan facilities. The Respondent, SCB, is one such creditor of ARAB. SCB has brought numerous claims and enforcement proceedings against ARAB in different jurisdictions including the Cayman Islands but it is not a party to the fraud action. On the 24'h September 2010 the Respondents, SCB and SCI filed an Originating ex parte application for leave to inspect and take copies of the court file (in FSD 54 of 2009). This ex parte application was made pursuant to Grand Court Rule 63 Order 5 which reads: "The court may give leave in special circumstances on application to any person not a party to the proceedings to inspect the court file or to take a copy of any document on the court file relating to those proceedings". In support of their ex parte Originating Application the Respondents, SCB and SCI, filed the First Affidavit of Eric France sworn on 2nd December 2010 and the First Affidavit of Tahir Khan sworn on 21" September 2010. On the 6th December 2010 Mr. Justice Smith made the following Order:

¶ [1] The Applicants, SCB and SCI, shall be permitted to inspect the court file and take copies of any document on the court file relating to the proceedings in FSD 54 of2009; ii. This order to be served on the attorneys of record for the Plaintiff and the second named Defendants in FSD 54 of 2009; Judgment on Costs, Cause No. 358/2010. In the Matter of an Application by Standard Chartered Bank. Coram QUin J Date: 24.12.2013 Page 3 of 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 111. That there be liberty to apply by the Plaintiff and/or Second Named Defendant in FSD 54 of 2009 within five days of the date of the service of the order herein.

¶ [6] On the 8th February 2013, SCB and SCI applied ex parte for an order pursuant to Smith J's order of 19 April 2010. On the 3'd April 2013, Tahir Khan filed an affirmation supplementary to his First Affidavit dated 21 ,( September 20 I O.

¶ [7] On the 19"' April 2013 the Respondents, SCB and SCI, obtained a second and supplementary ex parte Order for the documents which they had obtained: a. to assist in the recovery of sums due to SCB. under various trades with and facilities made available to AHAB, the First and Second Defendants in the AHAB action and related entities ("the debtors"); including in current or further proceedings against the debtors andlor any third parties within the Cayman Islands and in other fora worldwide; b. to assist SCB in defending or responding to any applications that the Debtors of any third parties that connnenced or might commence against SCE.

¶ [8] On 16th August 2013, AHAB applied for an order that the ex parte order of Quin J dated 19"' April 2013 be stayed pending the inter partes heaTing listed for November 2013. AHAB's application for a stay was grounded by the First Affidavit of Eric Lesley Lewis ("MJ'. Lewis") sworn on 20"' August 2013 and the Respondent, SCB, filed a Second Affinnation of Tahir Khan sworn on 22nd August 2013. Judgment on Costs. Cause No. 358/2010. In the Matter of an Application by Standard Chartered Bank. Coram Quin J. Date: 24.12.2013 Page 4 0[15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

¶ [9] On 22'd August 2013 I granted the Applicant, ARAB, an abridgment of time and further a stay of my order dated 19th April 2013 until the outcome of the inter partes hearing which is the subject of this ruling.

¶ [10] No further affidavits or affinnations have been filed and consequently both parties relied largely on skeleton submissions and correspondence for the purpose of this hearing.

¶ [11] The Applicant, ARAB, submits that the order dated 19th April 2013 be set aside on the basis of procedural irregularities and relies upon the fact that they received no notice of SCB's application in April 2013. Fmthennore, the Applicant submits that it did not receive any notice of the order nor did the order contain a liberty to apply provision. ARAB contends that this is a clear breach of the spirit of the rules: The Applicant submits that SCB did not provide full and frank disclosure, The Applicant contends that SCB did not set out its case fully or fairly nor did it identiiY crucial points for or against their application. Consequently the Applicant submits that SCB's failure to explain the position properly meant that the court proceeded on the erroneous basis that it was only asked to provide clarity to the 2010 order and the court was not invited to consider whether there was a good reason for doing so. Judgment on Costs, Cause No. 358/2010. In the Matter of an Application by Standard Chartered Bank. Coram Qutn J. Date: 24.12.2013 Page 5 0/15 1 2 3 4 5 6 7 8 9 10 15 16 17 18 19 20 21 22 23 24

¶ [12] The Applicant complains that the procedural irregularities and the breaches of the duty of non-disclosure were material and no explanation or excuse has been provided for them. The Applicant submits that this is not a "plainly deserving case" where the order should, none the less, be continued or re-granted. The Applicant submits that it should simply be discharged. I take note of the submissions that the Applicant is particularly concerned about the inspection of sensitive material such as affidavits or witness statements which were not read by the COUlt as part of the decision making process in April 2013 and SCB failed to identify the documents with sufficient precision in accordance with the principles of Dian AO v Davis Frankel & Mead [2005] 1 All E R 1074. The Applicant relies on this case and the case of Dobson v Hastings [1992] Ch 392 where Sir Donald Nicholls VC said, "Speaking generally, the parties are permitted to keep from the public gaze documents such as affidavits produced in preparation for a hearing which did not take place. Likewise with affidavits produced from interlocutory applications which are disposed of in chambers". The Applicant complains that SCB did not seek to explain with any precision what documents or classes of documents it wishes to see, therefore making it impossible for the court to consider whether permission to inspect and use them is justified. Accordingly the Applicant submits that the ex parte order dated 19 April 2013 should he discharged because of the above serious procedural irregularities and/or alternatively it should be discharged because there are insufficient substantive grounds for making it. Judgment on Costs. Cause No. 35812010. ]/1 the Matter of an Application by Standard Chartered Bank. Coram Quilt J. Date: 24.12.2013 Page 6 0[15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

¶ [13] I turn now to the relief sought in paragraph 2 of the Applicant's summons dated 9th July 2003 that the Respondents, SCB and SCI, provide an account verified by a signed declaration of an officer thereof detailing the extent to which any material obtained from the court file in FSD 54 of 2009 has been used, disclosed or otherwise employed. The Applicant submits that this is a necessary and proper consequence of the discharge of the order so that ARAB can take any necessary steps, if necessary, to ensure that SCB does not make use of any documents in which it was not properly entitled. I note that the Applicant does not seek to discharge or vary the order dated 6th December 20 I 0 of Smith J in which he granted SCB and SCI pennission to inspect and take copies of any document in FSD 54 of 2009. Smith J did not impose any restriction in granting the Applicant leave pursuant to Grand Court Rule Order.63 rule 5.

¶ [14] Having heard the submissions by the Applicant on its Stay Application I confinn that I was wrong not to make an order that SCB and SCI serve my order dated 19 April 2013 on the attorneys of record for AHAB, and the Second Named Defendant in FSD 54 of 2009, with the usual liberty to apply provisions. Judgment on Costs. Cause No. 358/2010. In the Matter of an Application by Standard Chartered Bank. Coram Quin J. Date: 24.12.2013 Page 7 of15 1 2 3 4 5 6 7 8 9 10 11 15 16 17 18 19 20 21 22 23

¶ [15] However, T do not accept that SCB should have made their application inter partes. GCR 0.63 r.5(5) does not provide any guidance as to the manner in which an application for leave to inspect and take copies of documents from the court file should be made. It is an administrative application and no procedure or practice has been laid down. It is worth noting that SCB had given AHAB notice of their first application in December 2010 and that there was no objection from AHAB to Smith J's order nor to the manner in which the application was made. With the benefit of hindsight it would have been preferable for SCB and SCI to have adopted the same course by giving AHAB notice of their second ex parte application.

¶ [16] GCR 0.63 r.5(5) is an administrative application and could be made either orally, by letter or by summons but there is no requirement under the Grand Court Rules to serve the party or to provide notice. I agree with Leading Counsel for the Respondents that these proceedings are not typical adversarial proceedings. Furthermore, neither AHAB nor any of the Defendants to the AHAB action are parties to these proceedings.

¶ [17] I note that when the originating summons was issued ex parte, no objection at all was taken by AHAB and in fact, Mr. Lewis who swore an affidavit dated 20th August 2013 on behalf of AHAB, simply queried whether it was necessary to make the application at all given that AHAB was prepared to make every reasonable effort to provide SCB with the requested documents. The originating summons was made ex parte and no objection was taken or is taken and consequently T fail to see why any objection is taken to the second ex parte application in April 2013. Judgment on Costs. Cause No. 358/2010. In the Matter of an Application by Standard Chartered Bank. Coram Quin J. Dale: 24.12.2013 Page 8 of15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

¶ [18] As I stated above, tbese are not adversarial proceedings whereby a party is seeking a interlocutory injunction or an Anton Piller order where the duty of full and frank disclosure is high. I accept tbe Respondents' submissions that the duty and the gravity of any lack of frankness will depend on the character of the application. At one end of the scale are the Anton Piller orders and Mareva injunctions, and at the other end of the scale are the relatively minor administrative and procedural applications. I am of the opinion that the second ex parte application of SCB and SCIV:as a \. minor procedural and administrative application. I receive assistance from the judgment of Hobhouse J in Payabi v Armstell Shipping [1992] QB 907 where he states at letter 'b' at page 918: "There is a duty of disclosure on all ex parte applications but the extent of the duty and the gravity of any lack of frankness will depend in any given case on the character of the application. At one end of the scale there are Anton Piller orders and Mareva injunctions where the consequences of the order maybe unpredictable and irremediable and very possibly most serious for the proposed defendant: there the follest disclosure must be made so as to ensure as far as possible that no injustice is done to the defendant. At the other end of the scale are minor procedural applications where there may be no risk at all of prejudice or at least none that cannot be folly made good by an order in costs. Where the application is, as in the present case, one of a character which would not prejudice the relevant parties' position, i. e. that of Armstell, and would not cause them any loss or inconvenience that would no fully be made good by an order in costs, the duty of disclosure does not have such an extreme extentll. I cannot find any non-disclosure on the part of SCB and SCI which leads to any irremediable consequences or prejudice against the Applicant. Judgment on Costs. Cause No, 358/2010. In the Matter of an Application by Standard Chartered Bank. Coram Quin J. Date: 24.12.2013 Page 9 0/15 1 2 3 4 5 10 11 12 13 14 15 16 17 18 19 20 21 22 23

¶ [19] ARAB and all the defendants in the FSD 54 of 2009 action knew about Smith J's order in 2010 and neither AHAB nor any of the defendants in the FSD 54 of 2009 action have brought any application to challenge Smith J's order. As I stated above, I regret not having provided for service of my order on AHAB but I cannot see where the Applicant has suffered any irremediable damage or prejudice. Furthermore, I do not find that the Respondents failed to explain the scope of the Smith J. order. The Smith J order speaks for itself and granted SCB the relief contemplated by GCR 0.63 r.3(5) to inspect and to take any copies of the documents in the FSD 54 of2009 action.

¶ [20] The Applicant has failed to present any sufficient ground for setting aside the order dated April 2013 and further, even if the order were set aside, Smith J's Order of December 2010 remains in place. SCB were plainly entitled under the terms of Smith J's order to inspect and copy documents and to use those documents as it thinks fit. To put it another way, Smith J. imposed no restrictions on the use of any documents that they inspected and copied. Moreover, there is no suggestion that Smith J's order was in any way improperly obtained.

¶ [21] It is helpful to note that neither SCB nor SCI object to providing the Applicant with a list of the documents they have copied from the court file in FSD 54 of 2009 or to the use made of the said documents. Indeed, it was regrettable that both parties were unable to agree a [mal order as to how the documents inspected and copied could be monitored. Judgment on Costs. Cause No. 358/2010. In the Matter of an Application by Standard Chartered Bank. Coram QUin J. Date: 24.12.2013 Page 10 0[15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

¶ [22] In conclusion, and having taken into consideration the submissions of both leading counsel for the palties I feel it is reasonable and fair for SCB and SCI to provide a full account of what discovery and inspection has taken place and for what purpose. Furthermore, I find that the Applicant is entitled to an order to ensure that they are kept abreast of what continuing inspection and discovery is taking place and for an order that the court will continue to monitor the discovery a~d inspection undertaken by SCB and SCI in FSD 54 of 2009

¶ [23] Accordingly I make the following order: i. Subject to this order and to any further order, SCB and SCI shall have continuing permission to inspect the court file and to take copies of any document on it. ii. To the extent that any document, not the subject of any sealing, non- disclosure or similar order, is required to be filed on the court file by AHAB and has not been so filed (whether because of its size or otherwise), AHAB will, on the payment of its reasonable copying charges supply a copy of any such document to SCB. For the purpose of this order, any such copy shall be treated as if it were a copy that has been filed on the court file and copied by SCB. iii. SBC shall within 28 days of this order, provide AHAB's attorneys with a list: Judgment on Costs. Cause No. 358/2010. in the Maller of an Application by Standard Chartered Bank. Coram Quin J. Date: 24.12.2013 Page 11 of 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 a) IdentifYing the documents it has copied from the court file; and b) Containing, in relation to each snch docnment, the additional infonnation specified in the table set out in Annex I to this order/Judgment ("the Additional Infonnation"); and c) Give AHAB' s attorneys particulars of how the documents set ant in Annex I have been used, which are reasonably sufficient for AHAB to detennine whether AHAB might have been prejudiced by the use of such particulars or to explain why such particulars cannot be given. IV. Liberty to AI-IAB to apply for further relief or further orders in relation to any misuse of the documents. v. If on or after the date of this order in relation to any document copied from the Court File (a "Copied Document") SCB wishes: (a) to disclose that Copied Document to a third party; (b) to refer to that Copied Document in any pleading; or (c) to exhibit that Copied Document to any evidence (each such use being termed in this order a "Specified Use") it shall first provide in writing to AHAB's attorneys, in relation to that Copied Document, the Additional Infonnation ("the Use Notice") and shall not use that Copied Document for any Specified Use (except where SCB is ordered or directed by a court or tribunal of competent jurisdiction or otherwise required by law to produce such Copied Documents) until after the later of: (a) 7 days after service of the Use Notice on AI-IAB's attorneys; (b) if AI-IAB serves an Objection Notice in accordance with paragraph 6 below, 14 days after such service; (c) if Judgment on Costs. Cause No. 358/2010. In the Matter of an Application by Standard Chartered Bank. Coram Quin J. Date: 24.12.2013 Page 12 0/]5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 ARAB applies to court in accordance with paragraph 7 below, the detennination of that application. vi. If ARAB reasonably objects to the Specified Use to which SCB wishes to put the Copied Document on the grounds that it will cause prejudice to it, it may within 7 days of service upon its attorneys of the Use Notice, give written notice to SCB's attorneys that it objects to the Specified Use ("the Objection Notice") identifYing the prejudice it is alleged the Specified Use will cause ARAB. If no Objection Notice is made by AHAB within 7 days of the service of the Use Notice, it shall be deemed to have waived the right to raise an objection to the Specified Use of the said documents and/or to issue an Objection Notice. vii. Within 14 days of service of the Objection Notice AHAB may, on the ground that the specified use will cause it prejudice, apply to Court for a direction as to whether SCB can use the Copied Document for the Specified Use ("the Application"). ARAB may only make an application on the ground that the Specified Use will cause prejudice to it. Ifno Application is made by ARAB within 14 days of the service of the Objection Notice, it shall be deemed to have waived the right to raise an objection to the Specified Use of the said documents and/or to issue an Application. Judgment on Costs. Calise No. 358/2010. In the Matter of an Application by Standard Chartered Bank. Coram Quin J. Date: 24.12.2013 Page 13 of 15 1 VBI. If AHAB makes an Application it shall use its best endeavours to 2 ensure that it is detennined as soon as practicable and by way of 3 telephone hearing if requested by either party. AHAB and SCB shall 4 exchange written submissions ahead of the application hearing as 5 follows: 6 a) By Spm 3 clear business days in advance by AHAB, and 7 b) By Spm 2 clear busiuess days in advance by SCB. 8 IX. Any information supplied to AHAB in relation to a Copied Document 9 pursuant to this order shall be treated as confidential by AHAB and 10 shall not be disclosed to any third party save for AHAB's attorneys. 11 x. No order as to costs. 12 Xl. Liberty to apply. 13 14 15 16 Dated this the 24th December 2013 17 18 19 20 21 Honourable Mr. Justice Charles Quin 22 Judge of the Grand Court 23 24 25 Judgment on Costs. Cause No. 358/2010. In the Matter of an Application by Standard Chartered Bank. Coram Quin J. Date; 24.12.2013 Page 14 of 15 1 2 3 4 5 6 7 ANNEXl Identification Use in Use in Use in Private Jurisdiction Disclosure of document Proceedings Proceedin~s or Public in which to 3,d against Against 3' Proceedings Proceedings Party ARAB Party take place [Name and [yes/no] [yes/no] [Public/private] [jurisdiction] [yes/no] date of doc] Judgment on Costs. Cause No. 358/2010. In the Matter of an Application by Standard Chartered Bank Coram Quin J. Date: 24.12.2013 Referred to in pleadings or exhibited in evidence [yes/no] Page 15 of15