Clyde & Co: Only claim against firm left
A businessman’s $1.75m negligence claim against City law firm Clyde & Co for allegedly failing to advise him properly on the risk of an anti-suit injunction “must go to trial”, the High Court has ruled.
However, Sean O’Sullivan KC, sitting as a deputy High Court judge, struck out Riad Tawfiq Al Sadik’s other claims against Clyde & Co, barristers Michael Black KC and Marcus Staff, and offshore law firm Harney Westwood & Riegels.
Judge O’Sullivan said Mr Al Sadik made a “complicated and expensive” damages claim against Investcorp Bank in the wake of the 2008 financial crash, which could accurately be described as “catastrophic” from Mr Al Sadik’s perspective.
A later effort to bring proceedings in Dubai was “scuppered” by an anti-suit injunction issued in the Cayman Islands.
The judge described Mr Al Sadik as “an ultra-high net worth individual and very experienced businessman and investor”, living in Dubai.
In March 2008, he invested $136m with Investcorp, but his “investments suffered during the global financial crisis”, so badly that he had lost around $56m by December 2009.
Having instructed Clyde & Co, Mr Black and Mr Staff, and Harneys, he launched a claim against Investcorp that same month in the Grand Court of the Cayman Islands.
Mr Al Sadik alleged that Investcorp had guaranteed a 45% return on his investment over a three-year period, had “fraudulently misrepresented its ability to generate a return” and “deceitfully withheld the fact that it was applying leverage to the investment”, which increased his losses.
He made an application for permission to reamend his amended statement of claim in 2011 – so as to assert that the investment management agreement was a sham created for the purpose of misleading him – but this was refused.
The following year, the Cayman Islands court dismissed all of the claims the following year and ordered Mr Al Sadik to pay around $15m in costs.
The businessman’s appeal was dismissed and he then appealed to the Judicial Committee of the Privy Council, which dismissed his appeal in 2018.
Clyde & Co had already “indicated that there was a jurisdictional basis for bringing a claim in Dubai” and a claim was issued there. However, the Grand Court of the Cayman Islands granted an anti-suit injunction in November 2018.
In his negligence claim, issued in June 2021, the businessman did not allege that his lawyers were negligent in their conduct of the trial or appeals.
Instead, he argued that that if they had advised him to make the reamendment application earlier, it would have succeeded, and if that had happened, his claim against Investcorp would have been successful.
He also argued that Clyde & Co and Mr Black failed to advise him properly on the risk of the anti-suit injunction. As a result, he had to pay his own and Investcorp’s legal costs. This claim was valued at $1.75m.
Judge O’Sullivan said the defendants argued that they were not negligent. Some of them raised limitation issues and all of them applied for reverse summary judgment.
The judge ruled that the claims against Harneys and Mr Staff were time-barred, because Mr Al Sadik “had the knowledge required for bringing an action for damages in December 2011”. The claims against Mr Black were also disposed of, apart from those relating to the anti-suit injunction.
On reverse summary judgment, the judge said that none of the negligence claims against any of the defendants based on the timing of the reamendment had a real prospect of success and they were all entitled to summary judgment.
On the anti-suit injunction, Judge O’Sullivan said he accepted counsel for Mr Black’s submission that it was “clear beyond argument” that the KC’s advice was being sought “on the premise that” Mr Al Sadik had already been advised about the risk of an anti-suit injunction, rendering the claimant’s argument “hopeless”.
However, Mr Al Sadik had a “real prospect of succeeding on his claim” against Clyde & Co in relation to the anti-suit injunction.
The issue as to whether there was a break in the chain of causation at or after the point at which the law firm ceased to act for him was not suitable for summary disposal. “That claim must go to trial.”
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