SBM Bank (Mauritius) Ltd v (1) Renish Petrochem FZE (2) Mr Hiteshkumar Chinubhai Mehta [2021] DIFC CFI 054 (29 December 2021)

Claim No. CFI 054/2018

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

SBM BANK (MAURITIUS) LTD

Claimant

and

(1) RENISH PETROCHEM FZE
(2) MR HITESHKUMAR CHINUBHAI MEHTA

Defendants

JUDGMENT WITH REASONS OF JUSTICE LORD ANGUS GLENNIE

Hearing :	6 & 7 October 2021
Counsel :	Rupert Reed QC instructed by Dentons & Co on behalf of the Claimant: First and Second Defendants did not appear and were not represented
Judgment :	29 December 2021

UPONthe particulars of claim of the Claimant by dated 6 August 2018 (the“Claim”)

AND UPONthe defense of the First and Second Defendants dated 28 February 2021 (the“Defence”)

AND UPONhearing counsel for the Claimant in the hearing dated 6 & 7 October 2021

AND UPONreviewing all other case files and documents in respect of the Claim and the Defence

IT IS HEREBY ORDERED THAT:

1. The Claimant’s claim in fraud succeeds in part.

2. There be judgment for the Claimant against the First and Second Defendants jointly and severally in the sum of US$ 21,890,819.50, inclusive of interest to the date of this judgment.

3. That the First and Second Defendants shall pay the Claimant one half of its costs of the action, in so far as not otherwise dealt with, to be assessed by the Registrar on the standard basis if not otherwise agreed between the parties. Issued by:

Amna Al Owais
Chief Registrar
Date of Issue: 29 December 2021
At: 10.00am

REASONS FOR JUDGMENT

Introduction

1. The Claimant (the“Bank”) is a bank registered in Mauritius. The First Defendant (“Renish”) is a company registered in the Free Zone of Hamriyah. The Second Defendant (“Mr. Mehta”) is an Indian national. He is the sole shareholder in Renish. Both Renish and the Third Defendant (“Prime”) carry on the business of importing, exporting and trading in petroleum products or at least did so until June/July 2018.

2. The Bank’s primary claim against Renish is for repayment of USD 31,245,932.94 (inclusive of interest up to 9 September 2020) drawn down under a facility agreement dated 12 November 2017 (the“Facility Agreement”). There is no doubt that that sum is due. The Bank claims a like sum from Mr. Mehta under a personal guarantee of the same date (the“Personal Guarantee”). That too is indisputably due. Judgment for that sum in favour of the Bank was entered against Renish and Mr. Mehta on 31 May 2021 after a hearing before me. It remains unpaid. I shall refer to the claims under the Facility Agreement and the Personal Guarantee as “the contract claims”.

3. The Bank also alleges that Renish and Mr Mehta acted fraudulently in their dealings with it. It puts this case in two ways: first, it says that it was induced to conclude the Facility Agreement by fraudulent representations (the“Facility Agreement Representations”); and second, it says that it was induced to advance funds under the Facility Agreement by other fraudulent representations (the“Payment Representations”); those representations being made in each case expressly or impliedly by Renish and Mr. Mehta. I shall refer to these claims compendiously as “the fraud claims”. The sum claimed in respect of the fraud claims is the same as for the contract claims.

4. Notwithstanding that it has obtained judgment for the contract claims in the full amount of its loss, the Bank has pursued the action to trial with the intent of obtaining a finding of fraud against Renish and Mr. Mehta. It has limited its claim to the same amount as the (contract) judgment debt, viz USD 31,245,932.94, inclusive of interest up to 9 September 2020. It does not seek to recover further sums by way of interest beyond that date.

5. The Bank also advanced a claim against Prime, alleging, in broad terms, that Prime had conspired with Renish and Mr Mehta to deceive the Bank into entering into the Facility Agreement and advancing sums thereunder. The claim was formulated in a number of different ways, including unlawful means conspiracy. It is unnecessary to consider this aspect of the case because, minutes before the commencement of the trial on 3 October 2021, the Bank settled its claims against Prime. The terms of the settlement were and remain confidential. That left Renish and Mr Mehta as the only defendants with any continuing interest in the trial.

Outline chronology

6. The outline facts giving rise to this dispute are not seriously challenged. They have already been the subject of an immediate judgment granted in favour of the Bank on its claims in contract. I summarise them again here as a useful introduction to the claims in fraud.

7. Renish approached the Bank in February 2017 (having had no prior business relationship with it) in order to obtain trade finance banking facilities for the purposes of its business activities. Following discussions over the ensuing nine months or so, the Bank agreed to provide banking facilities in the form of a Facility Agreement, with Renish’s repayment obligations being supported by a Personal Guarantee from Mr. Mehta. Both documents were dated 12 November 2017. The Facility Agreement had an upper limit of US$ 30 million. Both the Facility Agreement and the Personal Guarantee were in fairly standard form, the Facility Agreement providing that non-payment was an Event of Default, upon the occurrence of which the Bank was entitled, among other things, to serve an Acceleration Notice making all amounts still outstanding thereunder immediately due and payable. Both the Facility Agreement and the Personal Guarantee contained a clause conferring jurisdiction on the courts of the DIFC.

8. In one way the focus of the dispute concerns the relationship between Renish and Prime. So far as concerns this part of the story, the arrangement, as presented to the Bank, was as follows: Renish was to supply oil to Lanka IOC Plc, a Sri Lankan subsidiary of the Indian Oil Corporation (“Lanka”); to fulfil its obligations under the supply contract(s), Renish would purchase oil from Prime, such oil to be delivered to Renish at the Khor Fakkan Port, Sharjah, and thereafter shipped by Renish to Sri Lanka; and, upon receipt of the oil in Sri Lanka, Lanka would pay Renish by making a payment into its account at the Bank, thus discharging Renish’s indebtedness to the Bank. The Facility Agreement would enable Renish to pay Prime for the oil in advance of receiving payment from Lanka; and the proposed mechanism was that, when requested by Renish, the Bank would make the required advance thereunder directly to Prime.

9. Between January and June 2018 Renish made six requests for funds to be transferred by the Bank to Prime pursuant to the Facility Agreement. Those requests were accompanied in each case by what were said to be contracts between Renish and Prime for the purchase of oil to be sold on to Lanka and by pro-forma invoices said to have been presented by Prime under those contracts. Pursuant to those requests the Bank made the following payments into Prime’s account with the National Bank of Kuwait (“NBK”):

(1)	30 January 2018	US$ 9,100,080.00	(repayable by 5 April 2018)
(2)	1 March 2018	US$ 8,595,013.68	(repayable by 16 April 2018)
(3)	19 March 2018	US$ 10,445,168.25	(repayable by 15 May 2018)
(4)	24 April 2018	US$ 8,844,660.00	(repayable by 20 June 2018)
(5)	22 May 2018	US$ 13,751,100.00	(repayable by 5 August 2018)
(6)	6 June 2018	US$ 7,439,719.50	(repayable by 29 August 2018)

The first three of those advances were repaid without any problem, save for a small shortfall of something over US$ 3,000 on repayment of the third (19 March) advance. Nothing turns on this shortfall. Two payments of US$ 6,794.51 and US$ 68,443.25 were made on 2 May and 22 June 2018 respectively, which the Bank credited against the fourth (24 April) advance of US$ 8,844,660.00; and on 31 May 2018 a further payment of US$ 15,742.88 was made, which the Bank credited against the fifth (22 May) advance of US$13,751,100.00. No other payments were made in discharge or reduction of the sums advanced by the Bank. In effect there has been a failure to repay the fourth, fifth and sixth advances.

10. The Bank contacted Mr. Mehta on 27 June 2018 seeking repayment of the fourth advance which was by then about one week overdue. Despite an initial promise to pay, Mr. Mehta made no further contact with the Bank and no further payments were made. Accordingly, the Bank served an acceleration notice under the Facility Agreement, as a result of which the unpaid balance of the sums advanced, which were not otherwise due to be repaid until dates in August 2018, became immediately due and payable. As of 1 August 2018 the sum outstanding under the Facility Agreement was in excess of US$ 30 million.

11. Mr. Mehta’s explanation for this is that in June/July 2018 Renish fell victim to a campaign of disinformation orchestrated by business rivals who appeared to have been in league with some of the senior staff at Renish. He says that on 9 July 2018, while he was out of the country at a wedding in India, an unknown third-party, styling himself as “Truth of Renish”, circulated a malicious email falsely accusing Renish of illegal trading and fake accounting, with the intention of inflicting damage to Renish’s reputation and causing its demise. That email was circulated to a large number of Renish’s bankers and colleagues, some of whom were publicly identified and others who were blind copied into the email. As a result, a number of banks reacted with concern. One bank in particular went to the length of recalling Renish’s credit line in its entirety, with immediate effect. Worse, it presented a number of undated checks - which had been drawn on Renish, signed by Mr. Mehta and held by the bank as security for his credit line - to the face value of AED 85 million, for immediate encashment, resulting in them being dishonoured. That bank also filed a police case against Mr. Mehta. The combined effect of all this was to put Mr. Mehta’s liberty in jeopardy were he to set foot in the UAE again. He had little option but to remain in India against his will “until the dust settled” and he could reopen discussions with his creditors with a view to reaching an accommodation with them and allowing his business to continue. The immediate upshot, however, was that Renish’s business was no longer solvent and Mr. Mehta could not undertake its closure in an orderly fashion. The absence of Mr. Mehta, combined with his failure to ensure that Renish fulfilled its obligations under the Facility Agreement, caused the Bank to commence proceedings against Renish and Mr. Mehta, and also Prime, claiming the outstanding amounts due under the Facility Agreement and the Personal Guarantee and also advancing a claim in fraud. The Bank’s basic contention was that those three parties - Renish, Mr. Mehta and Prime - had combined together from the start to defraud the Bank and that there was no genuine oil trade between them so as to justify the various advances requested and made under the Facility Agreement.

Procedural matters

12. Given the way in which the trial developed, the prior procedural history of this case is of some importance. The Bank commenced proceedings against Renish, Mr. Mehta and Prime on 2 August 2018 alleging fraud. On that same day the Bank sought and obtained without notice a Worldwide Freezing Order (“WFO”) against Renish, Mr. Mehta and Prime. I need say no more about the procedural steps taken in the action in relation to Prime - so far as concerns Prime, the action proceeded with exchange of pleadings in the normal way. Renish and Mr. Mehta did not acknowledge service or file defences. On 12 August 2020 the Bank applied for immediate judgment against Renish and Mr. Mehta pursuant to RDC Part 24. Immediate judgment for the full amount of the claim plus interest was granted by H.E. Justice Ali Al Madhani on 27 September 2020 on the basis that he was satisfied on the unchallenged evidence adduced by the Bank that the inference of fraud was overwhelming. On 18 October 2020 Renish and Mr. Mehta, who had belatedly acknowledged service, applied for permission to appeal against that judgment. Their explanation for having allowed the immediate judgment to be entered without any appearance on their part was that until that judgment was entered against them and they came to hear of it from a third party, or by accident, they were unaware of the proceedings against them and of the WFO. Permission to appeal was refused on 9 February 2021. However later in February 2021 Renish and Mr. Mehta applied to set aside the immediate judgment under RDC Rule 24.22. That application came before me on 29 April 2021. My decision, issued on 31 May 2021, was, in effect (albeit expressed in more conventional terms), to set aside the immediate judgment in so far as that judgment was based on a finding of fraud but keeping it in place in so far as it was based on the contract claims.

13. In the meanwhile the Bank and Prime completed the process of pleading their respective cases. A Case Management Hearing took place at which directions were given on 21 October 2020 with a view to their dispute proceeding to trial. Consideration was given to disclosure of documents, witness statements, the possibility of expert evidence, and other matters. A trial estimated to last 3-4 days was fixed for 8 February 2021. That trial date was vacated by consent of those parties on 25 January 2021. Up until this point Renish and Mr. Mehta had played no part in these procedural matters, for obvious reasons, since immediate judgment had been granted in respect of the claim against them. However Renish and Mr. Mehta did appear at a Case Management Hearing on 11 February 2021. At that hearing directions were given with a view to the prompt hearing of their anticipated application to set aside the immediate judgment, including a requirement that they serve a signed Defence to the Bank’s claim. Other directions were given, by consent of the Bank and Prime, dealing with matters relevant to the impending trial - still only as between them, since obviously it was not known if Renish or Mr Mehta would be taking part in it - which was now fixed for 3 October 2021 with a time estimate of 7 days. Those directions included the grant of permission to the Bank and Prime to appoint experts in the field of forensic accountancy to analyse transactions and payments between 1 January and 1 August 2018 relevant to the account between Prime and Renish, all by reference to a case advanced by Prime (in Mr. Sadr’s witness statement) that payments from Renish to Prime could be justified and shown to be related to genuine oil trades between those parties.

14. Renish and Mr. Mehta served a Defence on 19 February 2021. That Defence was drafted by counsel, instructed by Ashish Mehta & Associates, Legal Consultants (“AM”). It had attached to it a Statement of Truth signed by Mr. Mehta. Paragraph 5 of that Defence contained an admission of paragraphs 7-11 of the Particulars of Claim and thereby, in effect, admitted that he had signed the Facility Agreement and the Personal Guarantee and that those agreements expressly conferred jurisdiction on the courts of the DIFC.

15. As already mentioned, despite their still holding immediate judgment for their contractual claims, the Bank have continued against Renish and Mr. Mehta with the intention of obtaining a judgment against them on the basis of the fraud alleged in the Particulars of Claim. I have not seen any court order dealing with the point, but it appears to have been accepted between all parties, including Renish and Mr. Mehta, that the trial would proceed on 3 October 2021 and would be to decide all issues between all parties. This is certainly the assumption underlying the application made on 25 August 2021 by AM, on behalf of Renish and Mr. Mehta, seeking to defer the trial hearing by about 6 months, from October 2021 to March 2022, failing which to give directions to certain banks to allow them access to funds lying in dormant accounts of Mr. Mehta “pending the revival of such accounts”. The basis of the application, supported by an Affidavit from Mr. Mehta, was that Renish and Mr. Mehta were unable to instruct solicitors or counsel for the trial scheduled for 3 October 2021 due to lack of funds from their third party funder, because the pandemic had prevented him returning to Singapore to access funds from his Singapore bank accounts; but that their funder expected the position to change in the next few months; and that Mr. Mehta himself had funds in certain bank accounts in Dubai which could be used to cover his legal costs and expenses if the court were to issue directions to those banks to allow him to access the accounts and withdraw funds to cover his legal expenses. For reasons set out in paras.19 and 20 of my Order dated 2 September 2021 I refused that applicationin hoc statu, leaving it open to Mr. Mehta to come back to court with better information. My reasons, in brief, were that there was no explanation from Mr. Mehta or from the third-party funder as to why the funder, who was now in India, could not release funds from his Singapore bank without being physically in the country; nor was there any explanation from Mr. Mehta or his Dubai banks to explain what the problem was which prevented him accessing his accounts with them, or stating precisely what order was required.

16. On 9 September 2021 AM applied for an Order that they had ceased to act on behalf of Renish and Mr Mehta. That application was duly granted on the same day. Since then neither Renish nor Mr. Mehta has been legally represented.

17. On 19 September 2021 Renish and Mr. Mehta renewed their application to defer the trial for six months and/or for the court to give directions to the banks in Dubai to release funds to meet their legal expenses. That application was supported by two further witness statements from Mr. Mehta and a witness statement from Mr. Kankani, the third-party funder. Mr. Kankani described his funding arrangements with Mr. Mehta and explained that his “key for online transfers” was not working and required his presence in Singapore to be able to fix it. I found it difficult to accept that he could not achieve this with the assistance of an Indian bank. It is noteworthy from Mr. Mehta’s 5th witness statement that he did not say that he had made any contact with his banks in Dubai to find out if there was a problem - he simply asserted his belief that some order or direction from the court would enable him to access funds. On the same day Mr. Mehta issued an application for disclosure of documents from Prime and from the Bank. Those applications were considered on the first day of the trial. Having heard from Mr. Reed on behalf of the Bank and from Mr. Mehta personally I refused the application to defer the trial, essentially for the same reasons as given for rejecting the application when it was made earlier and, in addition because Mr. Mehta had still, despite the WFO, failed to disclose any of his assets and could not therefore show that he was in difficulties in getting legal assistance to conduct this litigation. The disclosure application was also refused: many of the documents sought had already been disclosed and others appeared to be unrelated to any live issue in the proceedings.

18. Mr. Mehta appeared personally at the commencement of the trial on 3 October 2021, with the intention, as I understood it, of representing himself and de facto representing the interests of Renish. Not surprisingly, the last-minute settlement between the Bank and Prime took Mr. Mehta by surprise. It had consequences so far as concerned the future conduct of the trial. It removed a party, Prime, which was represented by counsel and would clearly have played an active role at the trial, probably the lead role in defending the claims. It resulted in a reduction in the number of witnesses to be called. In this way, it altered the shape of the forthcoming trial so far as concerned Mr. Mehta.

19. It was only fair to Renish and to Mr. Mehta that I should give Mr. Mehta some time to take stock of the changed position; and that I should require Mr Reed QC, who appeared for the Bank, to revise his skeleton argument so as to focus the case against the remaining defendants. On that basis I adjourned the case until Wednesday 6 October. Mr. Reed duly filed his revised skeleton argument on 5 October 2021.

20. The Court re-convened on 6 October. Mr. Mehta was not present. He had, however, lodged a further application to defer the trial on the same grounds as in previous applications but in addition: (i) because the settlement between the Bank and Prime had changed the nature of the case entirely, and without Prime remaining in the action he could not properly defend himself; (ii) because he wanted to appeal against the earlier refusal of his previous applications; (iii) because he and Renish had preferred a case against Prime in the court in Sharjah and this trial should be held after the decision in thar case; (iv) because he wished to pursue opportunities to settle the case with the Bank; (v) because he had no legal representation; and (vi) because he had an “adverse” medical condition caused or aggravated by the circumstances of the previous few days, which meant that he could not participate in the trial if it went ahead on 6 October. Mr. Mehta did not appear to support his application. After considering the application with Mr. Reed QC I refused it. My reasons, in short, were as follows: that the Bank’s case against the defendants had not changed, albeit that Prime was no longer involved in the action; that the desire to appeal against my earlier refusal to defer the trial was not a sound basis for adjourning, and it appeared that no application had yet been made for permission to appeal; that nothing was known about the case newly raised against Prime in Sharjah, but the existence of any such claim provided no basis to deferring this case which had been fixed for many months; that the proposed settlement discussions were not something that the court could take into account; and that there was no medical or other evidence to support Mr. Mehta’s assertion about his poor medical condition.

21. Enquiries from the Registry confirmed that Mr. Mehta did not intend to appear at or to take part in the trial. It would in those circumstances have been open to the Bank to apply under RDC Rule 35.14 to strike out the defendants’ defence; but Mr. Reed made it clear that he did not wish to proceed in this way - he sought to prove the Bank’s case on the evidence. Accordingly the trial proceeded in the absence of Renish and Mr. Mehta.

Evidence at trial

22. The documents filed for the purpose of the trial ran into several thousand pages. In the event, very few were referred to. The witness evidence was also relatively limited.

23. The Bank’s factual evidence was confined to the evidence of one witness, Ravi Guness, a Senior Officer in its Recovery, Workout and Collection Units. He submitted a witness statement dated 7 January 2021. He had no involvement with the events giving rise to the dispute between the Bank and Renish, Mr. Mehta and Prime. His evidence derived entirely from information obtained from discussions with colleagues at the Bank or from the documents he had read. In effect he sought to pull together the relevant documents to give an account of what had or had not taken place in respect of the relevant dealings between the Bank and Renish/Mr. Mehta and, in turn, their transactions with their customers and suppliers, including Prime. Mr. Reed tendered him for cross-examination on his witness statement but, since there was no-one else appearing at the trial and therefore no prospect of cross-examination, this was dispensed with and his statement was taken as read.

24. Other factual witness statements were filed both on behalf of Prime and on behalf of Renish and Mr. Mehta. On behalf of Prime, there were two Affidavits or witness statements from Abdul Hadi Farhang (“Mr. Farhang”), its sole director and shareholder, and two Affidavits or witness statements from Ali Dideh Var Sadr (“Mr. Sadr”), a consultant with Prime to whom Mr. Farhang had delegated all day-to-day conduct of Prime’s operations. There were also filed two witness statements from Mr. Mehta on behalf of himself and Renish. Neither of them was made specifically for the purpose of this trial: the first (“First Witness Statement”) was dated 12 December 2020 and concerned the WFO made against these defendants in August 2018; while the second (“Second Witness Statement”) was dated 11 April 2021 and was made in support of the (partially successful) application to set aside the immediate judgment granted against them on 27 September 2020 by H.E. Justice Ali Al Madhani. In light of (a) the Bank’s settlement with Prime and Prime’s consequent absence from the trial and (b) the failure of Renish and Mr. Mehta to appear at the trial, none of these Affidavits or witness statements were adduced in evidence by the defendants; and, notwithstanding my raising with Mr. Reed QC at an early stage of the hearing what status such evidence had, no application was made by the Bank to put in those statements as hearsay evidence (c.f. RDC Rule 29.48). Mr. Reed appeared at times to accept that such evidence had not been formally adduced and was not before the court. At other times, sometimes in the same breath, he sought to rely on particular passages in the statements, and those of Mr. Sadr in particular, to support inferences which he sought to draw against Renish and Mr. Mehta, while accepting that that evidence had not been challenged in cross-examination and therefore was of “little” or “minimal” weight. That latter course seemed to imply that the evidence was before the court, notwithstanding that it had not been formally adduced. In my opinion such an approach is illegitimate. If the statements are not put in as hearsay evidence, whether in whole or in part, they have no evidential value for any purpose. That is not to say that they are wholly irrelevant - they might directly or indirectly raise questions about the claimant’s case or identify weaknesses in it which ought to be addressed - but they are not evidence.

25. So far as concerns expert evidence, the Bank submitted a report from Clare Lavin, a forensic accountant with the accountants Grant Thornton, an Associate Director in their forensic team in the UAE and head of their Disputes Advisory practice. She also prepared a supplementary report in response to the expert evidence filed by Prime. She was instructed to review the payments received by and made by Prime in respect of a number of relevant cargo transactions, to reconstruct a ledger of transactions and payments similar to that provided by Mr. Sadr in his second witness statement, and to analyse the payments made by the Bank to Prime in accordance with Prime’s disclosure and Mr. Sadr’s second witness statement. Mr. Reed tendered her for cross-examination and her reports were taken as her evidence. Prime lodged an expert report from Christopher Drewe, a chartered accountant and a partner in the Crisis & Disputes team at Mazars LLP, a UK firm within the Mazars Group, an international accountancy and advisory organisation. He was instructed, in accordance with the Case Management Order dated 28 February 2021, to review and analyse transactions and payments made between 1 January and 1 August 2018 in so far as relevant to the account between Renish and Prime, all by reference to Prime’s disclosure and the second witness statement of Mr. Sadr. In the event he was not called by Prime as a witness, nor was his report sought to be relied on by the Bank as hearsay evidence. Accordingly, as with the defendants’ witness statements, his report had no evidential status and was relevant only to the extent of providing the context for some of Ms. Lavin’s evidence.

The law

26. The Bank’s claim is in fraud, or deceit. Article 31 of the Law of Obligations (DIFC Law No. 5 of 2005) provides as follows:

“31 Deceit

(1) A defendant is liable in deceit if:

(a) he makes a statement that is fraudulent;

(b) he intends that a person should rely on the fraudulent statement;

(d) the claimant suffers loss as a result of relying upon the statement.

(2) A statement is fraudulent if its maker:

(a) knows that it is false;

(b) has no belief in its truth; or

(3) It is no defence to an action under this Article that the claimant could have discovered the deceit if he had exercised reasonable care.”

As Mr. Reed QC observed in the course of the hearing, under reference to Clerk & Lindsell on Torts, 23rd ed., at paras 17-19, 17-31, 17-35, 17-39 and 17-41, the test for deceit under DIFC law reflects that in English law.

27. It is, of course, trite that a representation need not be express. It can be implied from all the circumstances. Under reference toCorinth Pipeworks SA Barclays Bank Plc v Afras Ltd and another [2010] DIFC CFI 024 at paras 84-86, Mr. Reed submitted that in finance fraud there is commonly an implied (fraudulent) representation (i) as to the borrower’s intention to repay the finance and/or (ii) as to the need for and/or purpose of the finance. That may well be so, but all depends on the particular facts and circumstances. It will be necessary to consider this in more detail in relation to the terms of the Facility Agreement and the requests for advances made by Renish thereunder.

28. I was addressed on the law relating to the liability of a company for the deceit of its directors or employees if the deceit was carried out within the scope of their actual or ostensible authority, and as to the liability of a director or controlling shareholder for the company’s wrongdoing if that wrongdoing was authorised, directed or procured by him. I need not spend time considering this aspect. There is no doubt that in this case Mr. Mehta acted on behalf of Renish as well as for himself and that any legal liability for what occurred is the liability of both of them.

29. The standard of proof required to make good an allegation of fraud is the ordinary civil standard, i.e. balance of probabilities: see e.g.Otkritie IIM Ltd v Urumov [2014] EWHC 191 (Comm) at para 88. This is now well established. In addition it is worth reminding oneself that fraud or dishonesty is usually a matter of inference from primary facts. Direct evidence of fraud is rare. All that is required is that the primary facts give rise to an inference of fraud or dishonesty which is more probable than any innocent explanation. All facts can be taken into account, whether occurring before, at the time of or after the critical events. It is wrong to look at each fact individually and ask, in relation to each, whether that fact gives rise to an inference of dishonesty - any assessment of whether the facts are sufficient to prove fraud or dishonesty must be made on the basis of all the relevant evidence taken as a whole, it being in the nature of a case based on inference from circumstantial evidence that the whole is greater than the individual parts. Dishonesty or fraud can therefore be made out by inference from an accumulation of primary facts, none of which on their own would prove the allegation to the requisite standard.

30. The final matter concerns the way in which the Bank’s case has been pleaded and is a matter which, as will be apparent from what follows, has caused me some concern in this case. There is a clear disparity between the case pleaded against Renish and Mr. Mehta and the case sought to be made against them on the evidence and in submissions. The Bank’s pleading is precise, but it omits significant parts of the Bank’s case as sought to be presented at trial. I raised this with Mr. Reed in the course of the hearing. He referred me to a number of cases and relied on the summary of the position inRobert Sofer v Swissindependent Trustees SA [2020] EWCA Civ 699 at para 23. Fraud must be specifically alleged and sufficiently particularised. Lord Millett put it succinctly inThree Rivers District Council v Bank of England (No.3) [2003] 2 AC 1at para 184: “fraud … must be distinctly alleged and as distinctly proved.” Dishonesty can be inferred from primary facts, provided that those primary facts are themselves pleaded. The purpose of giving particulars is to allow the defendant to know the case he has to meet and to give him the chance of trying to answer that case. It is true that, when giving particulars, no more than a concise summary of the facts relied upon is required - but each fact from which, whether alone or in conjunction with other facts, an inference of fraud or dishonesty is sought to be drawn must be pleaded, albeit that the pleading of those primary facts may be done by way of summary rather than in precise detail. As Lord Millett said inThree Riversat para 186, it is not open to the court to infer dishonesty from facts which have not been pleaded. It may be that it was thought to be unduly cumbersome to amend to Particulars of Claim to reflect the additional evidence or lines of argument that emerged during the course of preparation for trial - but if the Bank had wanted to advance a case which was not reflected in their pleadings this is what they should have done: see, albeit in a different legal context,HRH Emere Godwin Bebe Okpabi v Royal Dutch Shell plc [2021] 1 WLR 1294 at para 105. I come back to this aspect of the case when considering the evidential case sought to be advanced by the Bank in light of the pleadings.

The Bank’s pleaded case

31. It is often said that pleadings recede in importance once the case proceeds to trial. That may be so in many cases, but it is not always so, and particularly when allegations of fraud fall to be considered. So I make no excuse for looking carefully at the Bank’s pleadings in this case. The Bank’s pleaded case against Renish and Mr. Mehta has been discussed already in a number of judgments, in particular in the immediate judgment granted by H.E. Justice Ali Al Madhani dated 27 September 2020 and in my judgment dated 31 May 2021 which, in effect, set aside that immediate judgment in so far as it was based on the allegations of fraud. This, however, is the trial of the action - and the Bank’s fraud claim requires to be set out again and analysed in more detail.

32. As already indicated, the pleaded fraud claim against Renish and Mr. Mehta falls into two distinct parts:

(i) The Bank was induced to enter into the Facility Agreement by the Facility Agreement Representations made on behalf of Renish by Mr. Ahmed (Renish’s chief executive) and/or by Mr. Mehta to the effect that the Facility Agreement was required for the purposes of genuine bona fide commercial arrangements for the supply and/or purchase of petroleum products and that Renish intended to repay all sums due thereunder (Particulars of Claim para 9); and

(ii) that Renish made six requests for funds to be transferred by the Bank to Prime over the period January to June 2018; and the Bank was induced to make such payments, specifically (but not limited to) those of 19 March, 24 April, 22 May and 6 June 2018, by the Payment Representations, express or implied, to the effect that the payments were required to fulfil genuine bona fide commercial arrangements for the purchase of oil from Prime and the sale and shipment of that oil to a buyer in Sri Lanka, i.e. Lanka (Particulars of Claim paras 12-13). Particulars of the Payment Representations are given as follows:

(a) that Renish had concluded a sale agreement with Lanka for the supply of petroleum products which Renish intended to fulfil;

(b) that Renish had concluded a sale agreement with Prime for the purchase of petroleum products which both Renish and Prime intended to perform;

(c) that Renish was to make advance payment to Prime in consideration for the delivery of a consignment of oil to the Kor Fakkan Port, Sharjah;

(d) that Renish was then to ship the oil consignment to an alleged buyer based in Sri Lanka, namely Lanka; and

(e) that Lanka would then pay Renish in its account at the Bank pursuant to a notice of assignment and notice of acknowledgement of assignment.

All of (a) - (e) is described in para 12 of the Particulars of Claim as “the Purported Sale”.

33. It is then said, in para 40 of the Particulars of Claim, that the representations, i.e. both the Facility Agreement Representations set out in para 9 and the Payment Representation set out in para 12, were false. Specifically it is said:

(i) that the Purported Sale (and its component transactions) was a sham transaction; and

(ii) that none of Renish, Prime or Mr. Mehta had any intention of fully performing the terms

(a) of the Purported Sale; or

(b) of the Facility Agreement and/or Personal Guarantee insofar as they were party to the same;

(iii) that each of Renish, Prime and Mr. Mehta knew and understood that the Purported Sale was a device intended to deceive [the Bank] and defraud it of the sums advanced by [the Bank] under the Facility Agreement.

I am, of course, no longer concerned with the claim against Prime, and I include references to Prime in summarising the allegations made by the Bank simply for completeness. It is unnecessary to recite sub-paras (d) - (f) of para 40 since these sub-paragraphs essentially repeat the same factual allegations but with a focus on the claim against all three defendants, Renish, Mr. Mehta and Prime, based on fraudulent conspiracy and the like, which (since the settlement between the Bank and Prime) are no longer pursued or, if they are still maintained against Renish and Mr. Mehta, add nothing to the basic fraud claim summarised above.

34. The allegation in para 40 of the Particulars of Claim is that the Purported Sale “and its component transactions” was a sham transaction. I emphasise the words “and its component transactions”. On any fair reading of that allegation, that amounts to a positive case that each element of the Purported Sale, as identified in para 12 of the Particulars of Claim, including the contracts with Lanka, was a sham. It is now accepted by the Bank, as recorded in the letter of 15 September 2021 sent by Dentons on its behalf: (i) that Lanka did enter into contracts with Renish by its award letters of 16 January and 23 March 2018; (ii) that those award letters were genuine; (iii) that they were presented to the Bank by Renish when it sought payment of the six advances under the Facility Agreement; and (iv) that deliveries of oil were made by Renish to Lanka in accordance with those contracts, at least in respect of the first three of the six payments which the Bank was induced to advance under the Facility Agreement. This is an important concession, and one which ought to have been made by an amendment to the Particulars of Claim rather than, as was done here, by way of an “admission” under RDC Rule 15.1 (which is designed to enable a party to admit the truth of another party’s case and is not intended as a vehicle by which a party can withdraw part of its own pleaded case). In response to my enquiry, in the course of the hearing, as to whether the Bank had ever had any basis for suggesting that the contracts with Lanka were not genuine, Mr. Reed QC told me that the basis for the allegation was “simply that we [the Bank and/or its lawyers] had written [to Lanka] on a number of occasions and they had failed to reply”. That is entirely unsatisfactory. An allegation of dishonesty is not lightly to be tossed around - such an allegation should never be made unless there is a proper basis for it. There was no proper basis for that allegation here.

35. In para 42 of the Particulars of Claim, the Bank pleads that “in support of the above averments and inferences”, i.e. the averments of fraud in para 40, it “relies upon the following facts and matters.” The Bank then goes on in para 43 onwards of the Particulars of Claim to set out facts and matters on which it relies in support of its averments and of the inferences it asks the court to draw. I do not propose to set them out in full, but it is important to note in general terms what is relied on in this regard. For obvious reasons I set out only the matters directed at Renish and Mr. Mehta and not those solely directed at Prime; and I do so as much for what is not relied on by the Bank in support of its case as for what is. The matters relied on are as follows (by reference to paragraph numbers of the Particulars of Claim):

Paras 43-44 - misleading statements by Renish and Mr. Mehta in June 2018 seeking to explain delay in payment by reference to delays in delivery of the oil.

Paras 45-46 - failures by Renish and Mr. Mehta in July 2018 to respond to requests by the Bank for payment of the sums outstanding; and Mr. Mehta subsequently absconding and failing to make contact with the Bank.

Para 47 - failure by Renish’s auditor in July 2018 to respond to the Bank’s email seeking further information as to Renish’s current financial position - the inference being that he was unable to obtain instructions or was instructed not to reply.

Para 50 - information from a business intelligence consultancy, in a report to the Bank dated 31 July 2018, to the effect that Renish’s registered office and its trading address were locked and apparently abandoned - the inference being that Renish and its employees had abandoned these offices because its officers and controllers knew they had committed a fraud against the Bank and sought to evade liability for the same. Similar inferences are sought to be drawn against Mr. Mehta from the fact of his absence from his residential address in Dubai.

Paras 51-53 - failure by the defendants in and after August 2018 to comply with the WFO obtained by the Bank and served on them at various addresses - the inference being that they failed to comply in order to evade their obligations to the Bank, in circumstances where they each knew that they had committed a fraud and had no honest explanation for why the outstanding sum of around US$ 30 million had not been repaid or accounted for.

Paras 55-59 - monies received from the Bank by Prime pursuant to requests by Renish under the Facility Agreement were within a matter of days dissipated by Prime, such payments out of Prime’s account including sums paid to Renish totalling over US$ 7 million (on 23 May 2018) and US$ 675,000 (on 10 June 2018) as well as sums paid to other entities such as Petro Hub Energy FZE (two payments totalling nearly US$ 3.5 million on 23 and 24 May 2018), the owner and director and authorised signatory of which is Mr. Ahmed, the CEO of Renish - it is averred that there was no legitimate commercial purpose behind such payments and it is to be inferred that they constituted a means of dissipating monies to Renish, Mr. Mehta, Prime and others pursuant to the fraud against the Bank.

Para 61 - the principal accounts used to make such transfers were all held at the National Bank of Kuwait (“NBK”) - it is to be inferred that Renish and Prime used the same bank to facilitate the transfer of funds with minimum scrutiny and to enable funds to be dissipated as quickly as possible in furtherance of the fraud.

Para 62 - in October 2018 the then Fourth Defendant, NBK, submitted a reference to the JJC (the“JJC Application”), making extensive reference to the terms of the WFO, but, despite being served with the Application, Renish, Mr Mehta and Prime all ignored it - giving rise to the inference that they had no basis to deny their involvement in the fraud and no honest explanation for their involvement in the relevant transactions or their failure to account for the sums received from the Bank.

36. In his skeleton argument, and in outlining the Bank’s case by reference to the documents filed in court, Mr. Reed sought to develop three distinct lines of evidence.

37. His first, over-arching, point focussed on the relationship between Renish and Prime. He submitted that Renish and Prime “operated in effect as a single entity throughout the material time”. Any suggestion that Renish was not directly involved in or was ignorant of transactions effected by Prime, including payments from the Prime accounts, was “fanciful”. He pointed to what he described as a “striking feature” of the evidence that Renish’s employees operated the key bank accounts used in dissipating the proceeds of Renish’s fraud; and that Renish employees acted interchangeably for Prime and Renish depending upon what suited Renish at the particular time. In addition to Mr. Ahmed, the CEO of Renish, he identified three individuals - it is unnecessary to name them here - who were employees of Renish but who acted for both Renish and Prime in relation to the activities which are the subject of the present dispute. There is not even a hint of this in the Bank’s pleadings.

38. His second point focussed on the action by Renish and Prime in opening bank accounts in the name of Prime with NBK on 16 February 2017, within a couple of days of Renish, through Mr. Mehta and Mr. Ahmed, meeting officials of the Bank in Mauritius to discuss opening the Facility with the Bank, which in due course became the Facility Agreement signed in November 2017. It is alleged, based on what Mr. Sadr says in his second witness statement, that this was done at Renish’s suggestion to enable transfers to be made “within seconds” and to minimise scrutiny insofar as round-figure sums were transferred between them. Emphasis was placed on the timing of the opening of the accounts, that having occurred “at the very time” when Renish was first seeking trade finance from the Bank. The inference sought to be drawn is (a) that Renish informed Prime both of its intention to approach the Bank and of the opportunities this presented for fraud; and (b) that the Prime accounts at NBK were set up specifically for the purpose of receiving and then moving the funds paid in by the Bank as quickly and with as little scrutiny as possible. Mr Sadr, of course, has not given evidence. Although there is a reference in para 61 of the Particulars of Claim to the accounts with NBK and the opportunity thereby given of moving money quickly and without close scrutiny, the allegation now sought to be made, with its emphasis on the timing of the opening of the accounts, goes well beyond what is pleaded.

39. The third point relates to the genuineness or otherwise of documents presented by Renish to the Bank when requesting the six payments under the Facility Agreement, viz. contracts between Renish and Prime for the purchase of oil and pro-forma invoices presented by Prime under such contracts. There are two aspects to this. First, it is sought to be argued, based on what Mr. Sadr had said in his second witness statement, that these documents were not made by or with the involvement of Prime at all but were forgeries carried out by Renish. But Mr. Sadr has not given evidence and his witness statement has not been put in as evidence or, if it is in in some way, is to be treated as having “minimal weight”. Second, and in support of this line of evidence, reliance is sought to be placed on an analysis by Ms. Lavin, the Bank’s expert witness, consistent in this respect with the conclusion drawn by Mr. Drewe, the expert instructed by Prime, showing that, whether in terms of timing or the amount of any particular payment, there is no correlation between the advances made by the Bank to Prime (pursuant to requests made by Renish under the Facility Agreement) and any specific cargoes of oil ostensibly being delivered by Prime to Renish. But there is no allegation of forgery in the Particulars of Claim. Nor is there any reference in the pleadings to the alleged mismatch between payments and specific cargoes of oil. In other words, there is no pleading of any of the primary facts from which the inference of fraud in this respect is sought to be drawn.

40. In my view these matters ought to have been pleaded, even if only in summary form. These defendants are entitled to fair notice of the primary facts intended to be proved and the inferences sought to be drawn. It is not sufficient that part of the case now sought to be made against them was canvassed in expert reports, since the exchange of reports was not something to which they were a party and they were, in any event, entitled to proceed on the basis of the case made against them on the pleadings. Nor is it sufficient that the primary facts and inferences are set out in the skeleton argument filed on behalf of the Bank in the lead up to trial. Had these defendants taken part in the trial they could, and in my view would, have objected to these lines of evidence, and rightly so. That objection would have succeeded and the evidence would have been excluded. The fact that they took no part in the trial does not alter the position. Were the court to allow these lines of evidence to be deployed against them it would be at risk of making findings of fraud on the basis of a case made at trial of which these defendants had had no proper notice. I shall exclude these matters from consideration.

The substance of the claim

41. Turning now to the substance of the claim, I consider first the case - pleaded in para 9 of the Particulars of Claim - based on the “Facility Agreement Representations” said to have been made on behalf of Renish by Mr. Ahmed (Renish’s chief executive) and/or by Mr. Mehta, to the effect that the Facility Agreement was required for the purposes of genuinebona fidecommercial arrangements for the supply and/or purchase of petroleum products and that Renish intended to repay all sums due thereunder.

The Facility Agreement Representations fraud

42. It is not clear from the Defence served on behalf of Renish and Mr. Mehta whether it is accepted that such representations were made, but I am prepared to accept that they were made, if not expressly then by necessary implication from the very fact of negotiating to set up the Facility Agreement. However I have seen nothing to persuade me that, in the period of negotiation, which began in February 2017, leading up to the signing of the Facility Agreement on 12 November 2017, the representations were untrue.

43. It is apparent from documentation produced by the Bank (included in the court bundle at E5485) that from the time it was signed in November 2017 until at least the end of March 2018 the Facility Agreement was used by Renish for numerous high value transactions in the oil and petroleum trade, with suppliers such as ADNOC (4 transactions), Arya, Shell, Vertex Global and E3 Energy. In each case finance was provided and repaid on time. Add to these the first three transactions with Prime, which were also repaid in full (save for an insignificant shortfall of around US$ 3,000 on the third of them) and that amounts to 10 successful transactions carried out with the use of the facility. I have no reason to doubt that these were not all bona fide genuine transactions and, with the exception of the three transactions involving Prime, I understood Mr. Reed to agree. His argument was that this did not mean that the Facility Agreement was not set up as a means of fraud on the Bank. On the contrary this just showed how subtle and carefully crafted the fraud was: Renish and Mr. Mehta were happy to put genuine deals through the Facility Agreement, the borrowing and re-payment on a regular basis over the period November 2017 to March 2018 being intended to build up, within the Bank, confidence and trust in Renish and Mr. Mehta, with a view to the Bank being willing over time to advance the maximum allowed under the Facility (US$ 30 million), at which point Renish and Mr. Mehta would default, leaving the Bank out of pocket in that amount. That is, of course, a possible explanation of what happened, but I am not persuaded on the evidence that it is the correct one. I prefer the simpler explanation, namely that the Facility Agreement was negotiated by Renish, through Mr. Ahmed and Mr. Mehta, as a means of providing the finance for genuine oil/ petroleum deals with a variety of suppliers and wide range of buyers. Things may have gone wrong later - and I consider this other aspect of the case later in this judgment - but, as at 12 November 2017, which is the critical date for this part of the case, I see nothing to persuade me, on balance of probabilities, that the Facility Agreement Representations were false. So I reject the fraud case based on the Facility Agreement Representations as formulated in paras 9 and 40 of the Particulars of Claim. There is, in my view, simply no evidence to support it.

44. In coming to that conclusion on this part of the claim I have not overlooked the various adminicles of evidence listed by the Bank in paras 43 onwards of the Particulars of Claim (see para 35 above). I fully accept that subsequent conduct, particularly conduct resonant of dishonesty, can reflect back and colour an assessment of what went before. Had the default occurred within a month or two of the signing of the Facility Agreement the inference that the facility was set up as a vehicle for fraud on the Bank would have been more compelling, and Mr. Mehta’s subsequent conduct might well have cast his actions in setting up the facility in a dishonest light. But this is not such a case. One cannot help but be struck by the number and value of legitimate deals carried out with the aid of finance provided by the Bank under the facility. It is entirely speculative to suggest that it was all done to lull the Bank into a false sense of security, to encourage it to make advances to the limit of what was covered by the facility before defaulting and walking away from it leaving the Bank to suffer the loss.

45. The only thing which remotely assisted the Bank’s case on this point was the “evidence” to the effect that in parallel with Renish’s approach to the Bank in February 2017, Mr. Farhang and Petro Hub opened the Prime accounts with NBK. According to Mr. Sadr’s statement this was done at the suggestion of Renish so as to enable transfers between Renish and Prime to be completed within seconds and to minimise scrutiny of round-figure transfers between them. The inference sought to be drawn was that this was all set up at the same time as the Facility Agreement was negotiated as part of the mechanism for putting sums advanced by the Bank out of its reach when the moment came to trigger the fraud. And further inferences are sought to be drawn about the introduction of Lanka as a buyer with a view to building up Prime’s credibility with the Bank; and, based in part on Mr. Sadr’s “candid (and uncontradicted) evidence” (as Mr. Reed described it) that Prime’s banking and accounting relationships were deliberately designed to mislead its banks by concealing trading in order to avoid their KYC requirements.

46. I have put the word “evidence” in inverted comas to indicate that in reality this case was not based on evidence at all. Mr. Sadr was not called to give evidence and his statement was not put in by the Bank as hearsay evidence (see para 24 above). In so far as it was evidence, it was of minimal weight, to use Mr. Price’s own word, not “uncontradicted” except to the extent that any statement which is not put in and of which the maker is not called to give evidence is uncontradicted. Without Mr. Sadr’s evidence on this point the story woven around the opening of the NBK accounts in the name of Prime is wholly speculative. But further, this line of reasoning is dependent on inferences sought to be drawn from the primary facts - such as the fact of opening the NBK accounts, the co-incidence of timing, the alleged intention or purpose behind the opening of the accounts - which are not pleaded or even hinted at in the pleadings (see para 38 above). No fair notice has ever been given of this line of evidence and I refuse to admit it.

47. In summary, therefore, I do not find this part of the Bank’s case - the case based on the Facility Agreement Representations - proved.

The Payment Representations fraud

48. The representations referred to in this part of the claim are representations allegedly made by Mr. Ahmed and/or Mr. Mehta by or on behalf of Renish in order to induce the Bank to make certain payments under the Facility Agreement into Prime’s account with NBK. The allegation concerns only the third, fourth, fifth and sixth payments made to Prime, as detailed in para 9 above. Accordingly I shall confine my consideration to these four payments. The allegation is that the Bank was induced to make these payments by express or implied representations to the effect that the payments were required to fulfil genuinebona fidecommercial arrangements for the purchase of oil from Prime and the sale and shipment of that oil to a buyer in Sri Lanka, i.e. Lanka (Particulars of Claim paras 12-13). It is now accepted that the Lanka contracts were genuine contracts. The focus of the Bank’s case, therefore, is on the relations between Renish and Prime, the allegation in the Particulars of Claim being that the purported sale and purchase agreements between Renish and Prime were sham transactions, which neither party had any intention of performing - they were designed in effect to present documentation to the Bank to induce it to make payments to Prime, ostensibly for the cargoes shown on the relevant documentation (particularly sale contracts and bills of lading), which Prime and Renish would then walk away with leaving the Bank with no means of recovering its losses. This is somewhat at odds with the Bank’s pleading in para.5 of its Reply (as explained by the letter from Dentons dated 15 September 2021) where the Bank says that it “has no positive case” and makes “no admissions ... as to the nature of extent of the alleged or any trading relationship between Prime and Renish”, but I put that to one side for the present.

49. I have already explained (in paras 37-39 above) why I have excluded evidence about the close relationship between Renish and Prime and the expert evidence suggesting that there is no correlation between payments advanced by the Bank and any shipments made by Prime. This was potentially important evidence, if accepted, but in light of my ruling it cannot be relied on in support of this claim.

50. However, there is other evidence which is both admissible and compelling. As set out in para 35 above, the case pleaded in paras 55-59 of the Particulars of Claim is to the effect that monies received from the Bank by Prime pursuant to requests by Renish under the Facility Agreement were within a matter of days dissipated by Prime to Renish or entities involved with Renish for no obvious legitimate commercial reason. Those payments out of Prime’s account included sums paid to Renish totalling over US$ 7 million (on 23 May 2018) and US$ 675,000 (on 10 June 2018), as well as two payments totalling nearly US$ 3.5 million made on 23 and 24 May 2018 to Petro Hub Energy FZE, a company owned and controlled by the CEO of Renish. The inference sought to be drawn is that these payments constituted a means of dissipating monies to Renish, Mr. Mehta and Prime pursuant to the fraud against the Bank.

51. I find as a fact that these payments were made. Mr. Mehta has offered no explanation for them. He says, in para 26 of his Defence, that the other companies to whom payments were made are part of the Renish group; and that the fact that Petro Hub “as it happens” was personally owned by Mr. Ahmed, the CEO of Renish, is a factor of no relevance. But the most important indication of his case is at para 26(4) of his Defence where he says that the payment totalling US$ 7,886,000 to or for the benefit of Renish “were strictly transfers in the ordinary course of business”. No explanation is given of what business is referred to. Had there been a proper explanation I can think of no reason why Mr. Mehta would not have said what it was. Absent any explanation from Mr. Mehta I accept the inference sought to be drawn by Mr. Reed so far as it relates to the fifth and sixth advances made by the Bank. These payments out to Renish and Petro Hub are, as he put it, “characteristic of illegitimate and fraudulent trading”. The timing speaks for itself. The first payments to Renish, totalling over US$ 7 million, were made out of the Prime account on 23 May 2018, the day after the Bank paid a sum of over US$ 13 million (the fifth payment) into that account. The two payments to Petro Hub were made at about the same time. The further payment to Renish of US$ 675,000 was made on 10 June, four days after the Bank’s payment into that account of some US$ 7 million (the sixth payment).

52. I make no findings as to the ownership or control of the other entities to whom payments were made out of Prime’s account. They include Astron Global Ltd (US$ 4 million) and Noven International Pte Ltd (US$ 1,500,000). But that does not matter. I am concerned with Renish’s position, and absent any coherent explanation from Mr. Mehta for the payments to which I have referred, the inference of fraud is irresistible. Given that the first payments to Prime (and the payments to Petro Hub) were made immediately after receipt of the fifth advance from the Bank, it is legitimate to conclude that the fraud was being perpetrated in respect of the fifth and sixth payments, i.e. those of 22 May and 6 June 2018.

53. I should make it clear that I make no findings at all about Prime’s involvement in the fraud or that of Mr. Farhang or Mr. Sadr. Prime was released from the action and did not appear to defend itself; and it would be wrong to make findings against a party who for the reasons set out earlier did not appear at trial.

54. I was urged by Mr. Reed “to stand back and consider all the evidence in the round.” When such evidence was considered fairly and realistically the case in fraud was, he submitted, overwhelming. I agree that it is necessary to look at all the admissible and relevant evidence as a whole. That is why, in the context of the inference of fraud derived from the payments to Renish out of the Prime account at NBK and the timing of such payments that I can, so it seems to me, gain some support from the other matters relied on by the Bank. These are summarised at para 35 above. Although they involve inferences to be drawn from subsequent conduct, they can in my opinion be treated as casting light on the conduct of Renish and Mr. Mehta at that time. However, I do not accept the argument that the court can simply look at all the material and conclude that fraud, in some ill-defined way, has been established. Attention must always be focused on the pleaded case in fraud and the court cannot go beyond that pleaded case.

55. It should be emphasised that the inference I draw from these payments to Renish and Petro Hub from Prime’s account relate only to the fifth and sixth advances made by the Bank, i.e. the (fifth) advance of US$ 13,751,100 made on 22 May 2018 and the (sixth) advance of US$ 7,439,719.50 made on 6 June 2018. There is no similar link in terms of timing to justify drawing a similar inference in respect of earlier payments. The third advance was to all intents and purposes repaid in full and on time, while the fourth advance, made on 24 April 2018, was not due to be repaid until mid-June 2018. There is no evidence or even any suggestion of funds being removed from Prime’s account at NBK immediately upon receipt of these sums. It is idle, and impermissible in the absence of evidence, to speculate on what may have occurred to alter Mr. Mehta’s intentions in his dealings with the Bank. But I find the Bank’s case established in respect of these last two advances, in a sum totalling US$ 21,190,819.50.

56. On this figure it is appropriate to add on a sum by way of interest up to the date of judgment. I was not given precise figures but, scaling it back from the amount awarded by way of principal and interest on the contractual claims (US$ 31,245,932.94, comprising an interest element of something over US$ 1 million), it seems appropriate in this case to add interest in the sum of US$ 700,000.

Disposal

57. I shall give judgment for the Bank on its fraud claim to the extent of US$ 21,890,819.50 inclusive of interest to date.

58. I have already throughout this judgment made it clear that the evidence sought to be adduced by the Bank went far beyond any case that was open to it on the pleadings. Much of the material filed with the Court was not relevant to the Bank’s pleaded case. This should be reflected in the order in respect of costs. My order is that the Bank is entitled to recover one half of its legal costs of the action, in so far as not already dealt with, to be assessed by the Registrar on the standard basis if not agreed between the parties.

Rider

59. It should be made clear that this judgment on the Bank’s fraud claim awards damages and interest in an amount which is already included within the judgment debt constituted by my judgment of 31 May 2021 on the Bank’s contract claims. The two judgment debts are not to be aggregated. In so far as any recovery is made in respect of either judgment, that sum must be deducted from the amounts awarded and outstanding under both judgments.

The Dubai International Financial Centre

SBM Bank (Mauritius) Ltd v (1) Renish Petrochem FZE (2) Mr Hiteshkumar Chinubhai Mehta [2018] DIFC CFI 054

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You are here: BAILII >> Databases >> The Dubai International Financial Centre >> SBM Bank (Mauritius) Ltd v (1) Renish Petrochem FZE (2) Mr Hiteshkumar Chinubhai Mehta [2021] DIFC CFI 054 (29 December 2021) URL: http://www.bailii.org/ae/cases/DIFC/2021/cfi_054.html Cite as: [2021] DIFC CFI 054, [2021] DIFC CFI 54