Mitchell and another (Joint Liquidators of MBI International & Partners Inc (In Liquidation)) (Respondents) v Sheikh Mohamed Bin Issa Al Jaber and others (Appellants)

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Case summary

Case ID

UKSC/2024/0075

Parties

Appellant(s)

Sheikh Mohamed Bin Issa Al Jaber

Respondent(s)

(1) Greig William Alexander Mitchell, (2) Kenneth Melvin Krys

Issue

(1) When is a former director of a company liable as an intermeddler? (2) Is the original transfer of Shares to the Company subject to an unpaid vendor’s lien? (3) Is the quantum of equitable compensation for misappropriated property to be ascertained by reference to the date of misappropriation or the date of judgment? (4) Which party bears the burden for proving that the claimant has or has not suffered loss on a counterfactual scenario?

Facts

Sheikh Mohamed Al Jaber is a former director of MBI International & Partners Inc (the “Company”), a company incorporated in the British Virgin Islands. Greig Mitchell and Kenneth Kyrs are the current liquidators of that company. In 2008, the Sheikh was contemplating a restricting of companies associated with him. On 10 October 2011, a winding-up order was made in the BVI regarding the company. Recognition of the BVI liquidation was granted under the Cross-Border Insolvency Regulations 2006 by the High Court on 9 June 2017. On 8 March 2016, the JJW Inc (a subsidiary of the Company) amended its share register to enter another company, JJW Guernsey, as the owner of 891,761 shares in JJW Inc (the “Shares”). The Shares had previously been owned by the Company. This was done pursuant to a written resolution passed by the Sheikh as the sole director of JJW Inc on the basis of share transfer forms purportedly signed for and on behalf of the Company in July 2010 by the Sheikh. During this transfer, the Sheikh incorrectly held himself out as being a director of the Company (which he had in fact ceased to be following the winding up order). On 23 June 2017, JJW Guernsey transferred the shares to MBI Holdings Inc, another company within the Sheikh’s group of companies. All of JJW Inc’s assets were then transferred to another company, JJW UK. The Sheikh contends that these transfers were part of process of restructuring the group of companies associated with him. On 8 May 2019, the liquidators began a claim seeking compensation for the transfer of the Shares. The trial judge found that the Sheikh had in fact signed the share transfer forms in 2016 and had dishonestly caused the transfer of the Shares. He had, therefore, misappropriated the Company’s property in breach of his fiduciary duties. The trial judge also found that JJW Guernsey was liable in knowing receipt. The trial judge ordered both to pay EUR 67.1 million (ie, the value of the Shares at the date of misappropriation) in equitable compensation to the Company. The Sheikh and JJW Limited appealed to the Court of Appeal, which upheld the trial judge’s finding that the Sheikh acted in breach of his fiduciary duties and that JJW Guernsey was liable in knowing receipt. It ordered that no equitable compensation was payable, however, as the Shares were now worthless and the liquidators had therefore suffered no loss. The liquidators now appeal to the Supreme Court of the United Kingdom against the Court of Appeal’s finding regarding the equitable compensation. The Sheikh and JJW Guernsey also appeal against the Court of Appeal’s conclusions regarding the Sheikh’s fiduciary duties and JJW Guernsey’s liability in knowing receipt.