[2025] EWHC 2480 (Ch)

The Terms

On 6 February 2015 FCIB and the IPs entered into eight separate IPSAs. The first agreement (the “Hunt IPSA”) was made between FCIB (1) and Mr Hunt (2) solely in his capacity as liquidator of the companies set out in Exhibit A which were defined as “Griffins Companies”. The recitals to the Hunt IPSA recited the cross-claims between FCIB and three categories of clients and between the Griffins Companies. The clients in Categories #1 and #2 were those with account balances at FCIB and the clients at Category #3 were those against whom the Griffins Companies were creditors.

The First operative section of the IPSA recorded that FCIB had agreed to pay and Mr Hunt to accept single payments of £758,722.46 and €205,197.94 (the “Single Payments”) in respect of the Category #1 and Category #2 clients together with 82.5% and 80% of their account balances respectively (subject to certain deductions). It also provided a mechanism for Mr Hunt to claim the account balances of Category #3 clients by bringing claims against them. In clause (5) of the First section Mr Hunt and the Griffins Companies warranted and represented “the correctness of Exhibit A” as set out below. The Second section then provided as follows:

“FIRST

…(5) The Liquidator and the relevant Griffins Company represent and warrant the correctness of Exhibit A and, save for the account balances, Exhibits B and C.”

“SECOND

(1)

Except for the enforcement of the IP Settlement Agreements, the Liquidator and the Griffins Companies (together the “Griffins Entities”) “unconditionally and completely release, remise and forever discharge, and covenant not to sue, any of FCIB, CBCS, the Curators and any person responsible for or involved in the management of FCIB after 6 October 2006, and any corporation or other person or entity controlling, controlled by or under common control with any of them, and each of their respective present and former officers, directors, employees, agents, their heirs, executors, administrators, predecessors, successors and assigns (collectively the "FCIB Entities") of and from any and all claims, demands, obligations, actions, causes of action, suits, controversies, proceedings and liabilities of any nature whatsoever which have been asserted or could have been asserted, including but not limited to those in connection with (a) the Account; and (b) any account applications, account activity, account statement and any other agreement, document or instrument at any time signed by or agreed to by any of the FCIB Entities, the Clients or the Griffins Entities; and (c) any and all transactions at any time executed by any of the FCIB Entities for the Clients or the Griffins Companies; and (d) the remaining balance in any and all Accounts of the Clients or the Griffins Companies.

(2)

Except for the enforcement of this IP Settlement Agreement, FCIB unconditionally and completely releases, remises and forever discharges, and covenants not to sue, the Griffins Companies in respect of which a Settlement Payment is made hereunder, and the Liquidator (together the “Griffins Entities”) of and from any and all claims, demands, obligations, actions, causes of action, suits, controversies, proceedings and liabilities of any nature whatsoever which have been asserted or could have been asserted, including but not limited to those in connection with (a) one or more Accounts of the Clients; and (b) any account applications, account activity, account statement and any other agreement, document or instrument at any time signed by or agreed to by any of the Clients, the Griffins Entities or FCIB.”

In the Eighth section the parties agreed that the Hunt IPSA expressed their complete understanding and superseded any prior proposals, agreements, representations and understandings. It also provided that no variation would be effective unless in writing and signed by or on behalf of the parties. The parties also agreed in the Ninth section that it was subject to Curaçao law and they agreed to submit to the jurisdiction of the Curaçao Court. Exhibit A contained the list of 22 companies of which Mr Hunt was the sole liquidator (including Star but none of the other MTIC Companies). Exhibit B contained two tables which identified a series of FCIB accounts for Category #1 and Category #2 clients, the account name, the account balance, the amount to be paid by FCIB under the IPSA and the identity of the claimant. Exhibit C contained a similar table for Category #3 clients.

FCIB entered into a further seven IPSAs with (2) Mr Bramston on behalf of Griffins Companies, (3) Ms Hall on behalf of “Kingston Smith Companies”, (4) Ms Hall and Mr Jamie Taylor on behalf of “KS/BT Companies”, (5) Ms Hall and Mr David Ingram on behalf of “KS/GT Companies”, (6) Mr Hunt and Mr Hellard on behalf of “Griffins/GT Companies”, (7) Mr Bramston and Mr Hunt on behalf of other Griffins Companies of which they were the joint liquidators and (8) Mr Hunt and Mr Hellard on behalf of Owl Import and Export Ltd. All eight contained the same terms in the Second, Eighth and Ninth sections. Where I refer to these sections I intend to refer to the sections in each IPSA unless I state otherwise.

Forfeiture of rights

The Statements of Case

FCIB’s case was that the purpose of the IPSAs “was to put an end to all (purported) claims by or against FCIB so that it could be wound down and so that HMRC, through the Insolvency Practitioners, would receive payment of (part of) the taxes alleged to have been evaded by the account-holders through the MTIC fraud” see FCIB’s Defence, paragraph 100. After pleading the eight IPSAs FCIB’s Defence continued as follows:

“102.1

FCIB made clear to the Insolvency Practitioners that FCIB was seeking a settlement which would release totally, amongst others, FCIB from any future claims from the Insolvency Practitioners in their capacity as liquidators of FCIB’s account-holders and/or of companies who had claims against FCIB account-holders, and thereby achieve total peace.

102.2.

FCIB understood that it was entering into a full, final, and global settlement with all entities which the Insolvency Practitioners were able to represent. FCIB held that understanding in particular because the Insolvency Practitioners held themselves out to FCIB as acting on behalf of all account-holders at FCIB for whom they had been appointed in that capacity and thereby represented that they had authority from them to negotiate and enter into the IP Settlement Agreements on their behalf.

102.3.

The Insolvency Practitioners were aware that this was FCIB’s understanding and did not suggest to FCIB that it was wrong.

103.

On the basis of such understanding, induced by such representation, and to achieve the purpose referred to at paragraph 100, FCIB entered into the IP Settlement Agreements.

103.1.

Pursuant to section SECOND (1) of the IP Settlement Agreements, the parties agreed to: [see section N above].

103.2.

Pursuant to section NINTH of the IP Settlement Agreements, the parties agreed that the IP Settlement Agreements would be governed by Curaçao law and that the parties would submit to the jurisdiction of the Curaçao Court.

103.3.

Pursuant to section FIRST (5) of the IP Settlement Agreements, the Insolvency Practitioners warranted to FCIB that they had included all parties for whom they were acting in the lists attached to the IP Settlement Agreements (see section FIRST (5) IP Settlement Agreements).”

FCIB then pleaded the Ninth section of the IPSAs and that the effect of the new claims made by TWPS and the MTIC Companies was to frustrate the wind down of FCIB because the IPs insisted that there would be no distribution of FCIB’s assets until TWPS’s claims had been resolved. FCIB’s Defence then continued (amendments omitted):

“106.

TWPS and the MTIC Companies (except for (1) @tomic, (2) Comveen, and (3) Notebook) knew through their agents, namely their respective liquidators, of the negotiations taking place between FCIB and the Insolvency Practitioners culminating in the IP Settlement Agreements and of FCIB’s desire for total peace in those negotiations in line with the purpose and understanding pleaded at paragraphs 99 and 102 above.

107.

TWPS and the MTIC Companies (except for (1) @tomic, (2) Comveen, and (3) Notebook) nonetheless failed to inform FCIB (including through their agents, namely their appointed liquidators, who were involved in the negotiations and conclusion of the IP Settlement Agreements) that they had, asserted, or intended to assert, claims against FCIB.

108.

This gave rise to a legitimate expectation on the part of FCIB that TWPS and the MTIC Companies would not assert any claims against FCIB. In addition, the failure of these MTIC Companies to inform FCIB that they asserted, or intended to assert, claims against FCIB caused detriment because, had TWPS and these MTIC Companies informed FCIB, that would have affected the terms of the IP Settlement Agreements

and the negotiations taking place. As a result of the failure of these MTIC Companies, the opportunity to affect the terms of the IP Settlement Agreements and the negotiations was lost.”

Mr Deuss’s case was pleaded in very similar terms to FCIB’s case and in the Reply the Claimants replied to both of their cases together. The Claimants pleaded to the factual allegations made by the Defendants as follows:

“55.1.

It is admitted that during the negotiations for the IP Settlement Agreements (of which no particulars whatsoever are pleaded by the Defendants), representatives of FCIB at certain points in the negotiations made reference to, and sought to negotiate, a final global settlement with all parties that Mr Hunt did and could possibly represent that would result in total peace. However, FCIB did not respond to Mr Hunt’s queries as to how such a settlement might be achieved and at no time made any offer to such companies (other than those which were seeking payment of their account balances) such that the negotiations that ultimately led to the IP Settlement Agreements, were conducted by Mr Hunt only on behalf of companies over which he was appointed which had significant bank balances with FCIB.

55.2.

It is denied that the IP Settlement Agreements were ultimately concluded on the basis of total peace with all the companies which Mr Hunt did and could possibly represent rather than a total peace with all companies that Mr Hunt represented that had a significant bank balance with FCIB. FCIB ultimately did not pursue settlement agreements based on the meaning of “total peace” as expressed at the meeting in Curacao but sought instead and (for a lower sum than a settlement agreement for “total peace” would have required) agreed to pay certain sums in respect of claims for account balances only with companies which were bringing such claims. In particular in this regard:

55.2.1.

The recitals in the IP Settlement Agreements record the categories of company which are affected by the agreement, described as categories 1, 2 and 3, of which categories are limited to and explicitly defined as companies with balance claims;

55.2.2.

The schedules, which are warranted as accurate, set out the people and entities to be bound by the IP Settlement Agreements;

55.2.3.

In the IP Settlement Agreements, the relevant insolvency practitioner is stated as acting solely in his or her capacity as a liquidator of the named companies;

55.2.4.

Pursuant to the terms of the IP Settlement Agreements, specifically clause ‘Second (2)’, FCIB only waived its claims against companies to which it made a payment pursuant to the IP Settlement Agreements. In other words, FCIB did not release the MTIC Companies (save for Star Telecommunications) from liability pursuant to the IP Settlement Agreements;

With one exception (addressed below) the MTIC Companies did not have or pursue claims against FCIB for account balances.”

The Law

It was common ground that the Rome II Regulation determined whether English or Curaçao law applied to the pre-contractual conduct of the IPs. The Claimants argued that the negotiations for the IPSAs were governed by English law rather than the law of Curaçao in reliance on Article 4 which provides as follows:

“1.

Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur.

2.

However, where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, the law of that country shall apply.

3.

Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question.”

Mr Parker and his team submitted that under Article 4, English law applied because the MTIC Companies were registered in, operated in and were “habitually resident” in England, the negotiations were conducted almost entirely in London and neither of the Claimants was a party to an IPSA. Mr Scott submitted both orally and in writing that this submission was wrong because Article 4 was subordinate to Article 12, paragraph 1 which provided as follows:

“1.

The law applicable to a non-contractual obligation arising out of dealings prior to the conclusion of a contract, regardless of whether the contract was actually concluded or not, shall be the law that applies to the contract or that would have been applicable to it had it been entered into.”

Mr Wright submitted in his oral reply that Article 12 had no application in the present case because the Claimants and the MTIC Companies were not named as parties to any of the IPSAs and, in effect, because there were no relevant contract for the purposes of Article 12. I reject that submission and I accept Mr Scott’s argument. The negotiations between the IPs and FCIB for the IPSAs clearly fall within Article 12, paragraph 1 as “dealings prior to the conclusion of a contract”. Moreover, for these purposes it makes no difference whether a binding contract between FCIB and Mr Hunt in his capacity as liquidator of TWPS came into existence as the remaining words of Article 12 make clear. All of the IPSAs were expressly governed by the law of Curaçao and I hold that it governs the question whether the conduct of Mr Hunt and the other IPs gave rise to a forfeiture of rights.

Expert evidence

The experts were agreed both about the doctrine of forfeiture of rights under Curaçao law and also how it was to be applied. In their Joint Statement dated 11 November 2024 they agreed as follows:

“1.

Construction and interpretation of the IP Settlement Agreements

i.

The 'limiting function of reasonableness and fairness'

Second, the so-called ‘limiting function of reasonableness and fairness’. The limiting function of reasonableness and fairness entails that a holder of a right (including a claim) is not, or is no longer, entitled to rely on a right or claim because that will be held unacceptable according to standards of reasonableness and fairness (Article 6:2 (2) and 6:248 (2) DCC) (BvdW 7.2.1; JB 85; RJT 123, 127-132).

j.

Precontractual duty to disclose

The DSC holds under Curaçao law that already when parties start negotiations regarding a contract, a legal relationship will arise that is governed by reasonableness and fairness (Art. 6:2 (1) CCC) which entails other’s reasonable interests.

The principles of reasonableness and fairness in the negotiating phase are

also the general basis for a duty to disclose information to arise. The basic requirements to accept a duty to disclose information according to Curaçao and Dutch law are: (i) a party knew or ought to know the correct state of affairs, (ii) that party knew or ought to know that the relevant fact is relevant for the other party, (iii) that party must take into account that the

other party is not aware of the correct state of affairs, and (iv) that party should in the given circumstances according to generally accepted views in society (in Dutch ‘verkeersopvattingen’) enlighten the other party. A duty to disclose entails the disclosure of the correct state of affairs as far as is relevant for the other party. He who neglects his obligation to disclose information regarding the (in his opinion) correct meaning of a term or clause may be bound by the interpretation that the other party reasonably could give to that term or clause (JB 57, 78; RJT 69-74).”

“2.

Forfeiture of rights (rechtsverwerking)

a.

Legal framework for forfeiture of rights in general

The legal concept of forfeiture of rights is an application of the restrictive effect of reasonableness and fairness, laid down in articles 6:2(2) and 6:248(2) CCC (BvdW 7.2.2, JB 85, RJT 122).

The concept of restrictive effect of reasonableness and fairness is discussed in general in par. 1(i) above. As forfeiture of rights is based on the restrictive effect of the reasonableness and fairness, a party can only forfeit its rights if this party acted in a manner that cannot be reconciled according to the standards of reasonableness and fairness with the subsequent enforcement of the right in question. The concept of forfeiture of rights must be applied restrictively and can only be applied if enforcement of the right in question is unacceptable (BvdW 7.2.2, 7.2.5, JB 87-89, RJT 122-123, 132, 139-142).

b.

Applications of forfeiture of rights

In inter alia its Bab/Cordial judgment the DSC held that a mere lapse of time is in itself insufficient to reach the conclusion that the rights holder forfeited its rights. According to the DSC, inaction (stilzitten) on the part of the rights holder can only lead to forfeiture of rights if, based on the circumstances of the case, a certain action by the rights holder could reasonably have been expected (BvdW 7.2.5(a), JB 89, RJT 142, 145).

Reliance on forfeiture requires special circumstances on the basis of which (i) the other party has a legitimate expectation that the rights holder will no longer pursue its right or (ii) the position of the other party would be unreasonably aggravated or disadvantaged if the rights holder were to enforce its right. If one of these grounds are fulfilled, the requirement of the existence of special circumstances to invoke forfeiture of rights is met (BvdW 7.2.3-7.2.4, JB 89, RJT 142-143).

The question whether the aforementioned requirements have been met depends on all the circumstances of the case and is thus case-specific (BvdW 7.2.5-7.2.6).”

Findings of fact

I find that the IPSA negotiations took place in the following circumstances. FCIB went into Emergency Measures in connection with alleged VAT fraud, HMRC had appointed IPs to various English companies implicated in that fraud, FCIB and those IPs were in dispute and asserting claims against each other and, in order to bring the Emergency Measures to an end, FCIB wanted to settle all of those claims. I also find that Mr Hunt, Mr Potts and the IPs who had been appointed by HMRC knew and understood this background.

I make these findings of fact on the basis of Hunt 6, paragraphs 21 to 30 and 84 and, in particular, Mr Hunt’s admission that he was aware of a letter dated 22 November 2013 from the Central Bank to HMRC inviting a global resolution of all relevant issues relating to those customers of FCIB who had used their accounts for unlawful activities. I also rely on Mr Fatherly’s letter dated 14 February 2014 to HMRC stating that representatives of FCIB and the Central Bank were prepared to meet with Griffins for a confidential discussion on possible settlement.

When Mr Scott put Mr Fatherly’s letter to Mr Hunt, he gave evidence that Mr Fatherly was on a frolic of his own in trying to put pressure on HMRC to agree to settle the claims and he refused to accept that Griffins were being invited to discuss a settlement of all of their claims:

“Q. The suggestion made on the basis of a letter sent for and on behalf of Griffins. I'm just trying to understand your answer that this is a Mr Fatherly letter. Are you suggesting he was on a frolic of his own? A. To some extent, yes; but there are no claims against HMRC, so it doesn't sound like (indecipherable) me. I don't quite see what your point is, but that's a more Mr Fatherlyism than myself. So it's not the house style, no, is the answer to your question. Q. Right. You see in the fifth paragraph Griffins or Mr Fatherly, whoever it may be, they say: "We have, today, received a message from Curaçao that representatives of FCIB and the Central Bank are prepared to meet with Griffins for a confidential discussion on possible settlement." A. Yes. Q. And you must have known that Griffins was being invited to Curaçao to discuss settlement of all claims by companies represented by Griffins? A. No, or being, at its highest, we were going to meet with FCIB about our claims, including a global settlement as referred to in their letter in November. Q. And "our claims" for those purposes, that is the claims of the Griffins represented companies, all of them? A. Well, that wasn't our intention; and then, at the meeting, I think we clarified exactly what the scope of the meeting was. So the meeting was talks about talks, I suppose is probably the best way of describing it.”

I reject that evidence. It was obvious to Mr Hunt from the letter dated 22 November 2013 that FCIB wanted to achieve a global settlement and this is consistent with the position which it adopted at the Curaçao Meeting. Further, I do not accept that Mr Fatherly would not have sought Mr Hunt’s authority before sending the letter dated 14 February 2014 to HMRC or following it up.

I find that the IP Group co-ordinated with one another and with HMRC in respect of the settlement negotiations and Griffins took a leading role in them. I make this finding of fact on the basis of the correspondence both before and after the Curaçao Meeting. But I place particular reliance upon two important documents: first, the composite note of the Curaçao Meeting prepared by Mr Hunt, Mr Bramston and Mr Potts together immediately after the meeting. In that note they recorded that Mr Hunt and Mr Potts informed FCIB as follows:

“SJH said that Griffins there to settle. We had a meeting with HMRC and had spoken to lawyers for other IPs, and that we had been working out how to put in place a structure for a settlement. We did not intend going into the merits of the various claims and counter claims. CP said that was "perfect".”

Secondly, I place particular reliance upon a briefing note which Mr Hunt sent to Mr Bramston at 01.03 on 3 September 2014 immediately before a further meeting in London (below) with Mr Peterson who had been appointed by the Central Bank to exercise the powers of FCIB. It is apparent from this note that Mr Hunt and Mr Bramston had recently spoken and that Mr Bramston was acting independently of Mr Hunt. Mr Hunt stated in terms that HMRC had asked Griffins to act on behalf of all of the IPs and stressed the benefits of him doing so:

“HMRC has contacted just Griffins to act on behalf of all the IPs in negotiating a settlement. HMRC want closure and have plans for an agreement involving the CPS as well. It may be that there are Dutch angles and international relations going on that we have not awareness of. There could be Russian money or terrorist money going through Curacao and we are a small cog in a very big wheel. Whatever the game is, we have been given a steer as to a percentage recovery and HMRC are taking a pragmatic view on the their recovery. HMRC want a bigger deal and settlement with all the IPs is a big part of that.

You then have all the other IPs. They have their own WIP and reputations to guard and are at different levels of awareness of the bigger game and their own lack of knowledge. We should take note that the person with probably the most information is Richard Healey and he is advising his client to stay well away from us. GT did Softwarecore and so have some direct experience of the Dutch political angle.

If you put this together then it seems that an individual IP doing a deal is of very little consequence and is of no help to HMRC. In the case of Griffins, we have fought to be at the forefront of the FCIB problem and we are known by HMRC, the other IPs and the lawyers as having achieved this. If we settle we get some cash and abandon HMRC and the other firms to start from scratch, incur costs and delays which harm HMRC. We gain some fees but lose all our political capital with HMRC and probably the group.

There are many problems for Petersen. The IPs care about their money but can't do a deal blind. They never do it in normal cases and they will certainly not cut and run when they are in competition with other IPs. This is a practical example of the 'Prisoner's dilemma' game, where people will not act rationally even where it is in their interests to do so. They would rather go to court and lose than do a weak deal with this audience. Petersen is trying every variation on a very basic strategy of trying to dictate a range without offering to provide any verifiable proof of anything he says. If the bank can't pay out in full then all he has to do is get us to sign up to confidentiality agreements and show us the numbers. If that's too hard, show HMRC and their lawyers. If he doesn't, we will pack his bags for him as he is insulting our intelligence. On the other hand, if FCIB is solvent, what is this pantomime about???”

“If Petersen plays the bigger card of the desirability of a deal to save the reputation of Curacao then he needs to read his own legislation. The Central Bank can absorb the assets and liabilities of FCIB and pay its debts in full now. It can collect the other assets over time and even make a profit. It has a balance sheet of over $1.6bn in net assets.”

“I see my job tomorrow as making these points without making it appear as if he is losing face. He needs to understand that there is a trick to getting all these parties together and that is politics not litigation. If he misunderstands us then he is going to fail. If he is trying to pull a fast one he is going to fail. If he gets found out he is going to fail and we are going to carpet bomb is [sic] little crooked island and make sure everyone on that island knows that it was because he lied to do a deal. We are going to find out one day what the solvency position was during the 8 years and now and if he has lied we will come after him.”

When Mr Scott put this briefing note to Mr Hunt, he attempted to distance himself from it and its contents. He accepted that he had reviewed it before he came to give his trial witness statement and that there was no mention of it in Hunt 6. Mr Scott then put the first line of the passage above to him:

“Q. Let's have a look at it. You say in the second sentence: "This is not a conventional negotiation where we can make a claim and settle for a good sum. It is all politics." And in the next paragraph you elaborate on that sentiment. Can I ask you to read the third paragraph, please. It's the one that begins: "HMRC has contacted just Griffins to act on behalf of all the IPs in negotiating a settlement." A. Yes. Q. And you don't mention in your trial witness statement, do you, that HMRC had contacted just Griffins to act on behalf of all the IPs in negotiating a settlement? A. I don't, no. Q. Because you are at pains in the witness statement to suggest that you were only negotiating for yourself? A. That's correct. Q. And that is a false account given to the court, is it not? A. No, this is a false document. Q. Sorry. It's a false document. It's your document, Mr Hunt. It's your e-mail. Were you lying to Mr Bramston in it? A. Yes. Q. Can you explain why you were lying to Mr Bramston. A. I have some sympathy for you in terms of this unusual document, but allow me to explain. It's sent, I believe, after a late night phone call from one of the other IPs or actually, I think, their lawyer, to complain to me about Mr Bramston's behaviour. Mr Bramston had a -- decided that he -- he came up with some scheme where he was going to settle, for a very small amount of money, his estates because it benefited him personally. And everyone was upset with Mr Bramston. so I knew that I had the meeting with Mr Bramston first thing in the morning. And this e-mail is essentially an exercise in gobbledygook. It's to discombobulate him so that he has no idea what I'm talking about. So the whole of it is performative. Tim was -- the way to stop Tim when he got a sort of tunnel vision was to overload him with facts, give him information that he couldn't cope with. So the whole of this stream is an exercise in nonsense, to be honest, to completely discombobulate him, so that when we went in the meeting first thing in the morning he didn't quite know what the lie of the land was. So it's a fairly extraordinary document. I'd completely forgotten it. It would have been in my partner filing sent items. It wasn't in the case file. So it was -- and it was -- it was a device between -- that I used to rein Tim in, I suppose, on behalf of all of the IPs who were complaining about his behaviour in the negotiations. So I accept it's a very unusual document. Q. And is this generally how partners at Griffins treat one another, discombobulating and so on? A. No, I mean, Tim did resign the following year; and he -- I had received a further complaint against him, so we put him on gardening leave, for the same reason. He was starting to sort of not make good decisions. So, without airing too much of his position, we -- that -- this was my attempt to rein him in, late at night, having received a phone call. I had completely forgotten the incident, to be honest, until I saw the document. But that's its function; so ... Q. And when you say Mr Bramston wasn't making good decisions, do you mean he was making decisions for his own personal benefit, rather than -- A. Exactly that. He seemed to be more interested in his fees and Griffins' fees, than he was in the interests of the creditors. So I took it very seriously. But I did it in a fairly unusual way because it was late at night; and I didn't want -- and there was a series of communications going on where Tim was talking to Mr Peterson and the other IPs were unhappy with Mr Bramston. Q. And you thought it would be enough to send him this two page e-mail to get him back on the straight and narrow? A. At that time of night, the purpose was simply I didn't know what conversations were happening in what context. So the idea was simply to send him a note that would confuse him; so he didn't quite know what the position was. And that, in my experience, was how you sort of stopped Tim. Tim would like to plan and understand strategies and bits of pieces. So giving him some strange information would cause him to pause; and that's how you sort of slowed him down. Q. I see. Mr Hunt, in fairness to you, I will be inviting his Lordship to conclude that the account you have just given of this e-mail is a false account and you know it to be false. I should give you the opportunity to comment on that. A. I accept it's an extraordinary document, but it's the sort of thing I do. I have sent one with a similar sort of intention in January this year, where it's sort of like a strategy to -- to ex -- to change or anchor a conversation a different way, for someone, the recipient, to react to, to create a different angle. So this -- this -- this is an extraordinary document but its intention is purely to -- to shock Tim into sort of reminding him that there's -- there's more than just simply fees involved in this case. Q. Where you said a moment ago that you've done the same sort of thing before, do you mean sending a document which you know contains lies? A. No. No, it's more -- as I say, it's more anchoring. So you are sending a -- an unconventional document -- I suppose an unconventional position -- so taking a position, in a particular way, to create the (indecipherable) in a particular direction. So I see it as a form of that. In this particular case, it was just simply a word soup of as many concepts -- there's a reference, I think, to game theory, I think in here. It is literally a dump of every word I could think of that Tim would just be confused by. Because Tim was a strategic thinker, but he would slow when he reached an obstacle; and that was the purpose of it. It's an extraordinary document, I accept.”

I reject Mr Hunt’s evidence that the briefing note was a false document created by him to shock or confuse Mr Bramston. I find his explanation for this document wholly implausible and internally inconsistent. He accepted that the motivation for sending this document was “to rein Tim in, I suppose, on behalf of all of the IPs who were complaining about his behaviour in the negotiations”. But if Mr Hunt was acting only for himself in those negotiations, he would not have been trying to “rein in” Mr Bramston on behalf of the other IPs. I accept Mr Scott’s submission that the explanation which Mr Hunt gave in evidence for the briefing note was false, that Mr Hunt knew it to be false and that he had invented it to explain away a highly damaging document.

I also find that the briefing note accurately reflected the true position on 1 September 2014. In particular, I find that HMRC had appointed Griffins to act on behalf of the IP Group in the settlement negotiations, that Mr Hunt had accepted that appointment and that he was co-ordinating those negotiations on behalf of all of them. I also find that he was taking a very aggressive line in those negotiations and, as he put it, to raise the temperature:

“Q. When you say: "If he gets found out he is going to fail and we are going to carpet bomb [his] little crooked island ...", you're referring there to Mr Peterson? A. Yes. Q. And when you say "if he gets found out", presumably you mean found out for trying to pull a fast one, as you put it in this paragraph? A. That's what it says, yes. Q. And what you were contemplating here is that Mr Peterson might lie to you; yes? A. I'm not -- I'm not really forming those sort of thoughts, I'm afraid. It's entirely a story. It's got to have a basis in truth, otherwise it would be nonsensical. So it has to have a meeting. It has to have broad structure. But the purpose of it is just simply to -- as I've reached the end of the e-mail, to raise the temperature. Q. You're presumably aware, Mr Hunt, that neither in these proceedings, nor in Curaçao, have you ever alleged that Mr Peterson told lies in the IPSA negotiation or acted at all improperly? A. I think that's right, yes. Q. Isn't the reality here that if anyone was trying to pull a fast one, it was Griffins, by entering the IPSAs without telling FCIB that Griffins had a roster of other companies that may have claims against it? A. That's not correct. Q. Can you just go back to the e-mail, your phrase "little crooked island". Presumably that's intended as a reference to Curaçao? A. Yes. Q. And, reading on, you say in the penultimate paragraph: "If Peterson runs away I will tell Duncan that the man is an idiot who was ill-prepared and his stance came apart under even basic questioning." A. Yes. Q. Do you see that? Now, the aggression that we see on display here, threatening to tell HMRC that Mr Peterson is an idiot, threatening to carpet bomb a crooked little island, is that how the partners at Griffins generally communicated about FCIB? Or was it just you? A. No, as I say, it's a -- it's performative. It is exactly that. It's an exaggeration. None of that came to pass. The meeting didn't run in that way. None of those conversations actually happened. Those weren't the allegations. So that's how I, having initially come across this e-mail and forgetting about it, I suddenly realised what it was; it's entirely an exercise in discombobulation of Mr Bramston. Q. Looking back on these words now, are you satisfied that the language is what the court would expect of its office holders? A. I don't think it's -- I don't think it's very good -- it's very good language, but it's not intended to -- its purpose was to (indecipherable) say very narrowly focused on Mr Bramston; so ... Q. Mr Hunt, do you want to take the opportunity to apologise for threatening to carpet bomb Curaçao and calling it a crooked little island? A. No.”

I also find that Mr Hunt and the Griffins IPs, who were acting on behalf of the IP Group as a whole, knew during the IPSA negotiations that the companies of which they were liquidators had potential claims against FCIB and TWPS other than for the recovery of account balances. There are three key documents which provide clear contemporaneous support for this finding of fact upon which I rely. Moreover, when they were put to Mr Hunt in cross-examination, he acknowledged that he was aware of the potential claims for fraud against FCIB and TWPS and that TWPS might be used as a vehicle to make claims against the officers of FCIB.

First, in the Letter of Claim Blake Morgan asserted that FCIB knowingly and actively facilitated fraud. Mr Potts accepted in cross-examination that this was an allegation of fraud against FCIB and that he had a solid basis for making it. When Mr Thanki put the letter to Mr Hunt, he accepted that he was looking at using the allegation of fraud against FCIB and his appointment as liquidator of TWPS in the negotiations:

“Q. Okay. But we can see what Blake Lapthorn are doing here is making a very serious allegation here against FCIB? A. That's in 2014, where a −− there's a whole raft of events that would lead up to that. But essentially they're taking into account what was known up to that point, including the criminal conviction, essentially. Q. Perhaps, I think my Lord was interested in this and he asked you about −− asked about this a little while ago. But if it's not the material we've been looking at, I 'm struggling to see on what material this allegation is based. Perhaps it's not stated in the letter. A. My recollection of the letter is it's, along with the appointment of TWPS is one of the threads that we were looking at in terms of negotiations, could TWPS be used, could essential −− and yes, there's a letter in late August essentially putting claims to FCIB and whatever else was essentially putting claims to FCIB and whatever else was going on at the time. I can't remember. But the whole point was to state, at its highest, our suspicions that the defences by FCIB to paying the balances was not right in that they insisted that FCIB was a victim.”

Secondly, by email dated 6 October 2014 Mr Hunt wrote to Mr Fatherly setting out a form of words to be used in writing to the Official Receiver to justify the appointment of Mr Hunt as the liquidator of TWPS:

“Transworld acted as an agent for an offshore company against who TC Catering has a number of claims. In July 2012 a Dutch criminal court handed down a decision which seems to suggest that Transworld was party to conduct which affects those claims although Transworld is not specifically named. The Liquidator wishes to appoint Stephen Hunt to attempt to recover records that belong to Transworld that may assist in establishing the relationship between the entities. This may gave rise to further claims against Transworld but without an investigation it is not possible to express a firm view.”

Mr Hunt was unable to say whether this explanation was provided to the Official Receiver. But he accepted in cross-examination that what he must have had in mind was a Direct Claim against FCIB:

“Q. And do you see your proposed text begins: "Transworld acted as an agent for an offshore company against TC Catering has a number of claims." A. Yes. Q. And the offshore company you had in mind here was FCIB, wasn't it? A. Yes. Q. And the claims you had in mind in this first sentence, they were claims by TC Catering against FCIB, weren't they? A. Presumably. Q. And they would have been claims arising out of your suspicion that FCIB and TWPS were involved in MTIC fraud, wouldn't they? A. I don't know specifically, but that would be logical. Q. Well, what other claims would you have been contemplating here? A. Exactly (indecipherable ).”

Thirdly, I have already referred to the ethics checklist which the Claimants disclosed during Mr Hunt’s cross-examination: see [640]. That checklist stated that Blake Lapthorn had introduced the appointment. It also included the following handwritten comments: “Creditors may included [sic] MTIC S213 Claims from Griffins Liquidators”; “Keep eye on intercompany claims although they are likely to pass through Transworld and on to officers. Transworld has no outside creditors beyond MTIC”; and “Blake Morgan will keep an additional eye on this. We anticipate other IP assistance will be available if required.” Mr Hunt accepted in terms that he was already contemplating S.213 claims to be brought by the MTIC Companies against TWPS:

“Q. And if we look over the page, the top of page 4. You see in the box providing details, it says: "Self review. Creditors may include MTIC section 213 claims from Griffins liquidations." Do you see that? A. Yes. Q. So in November 2014 can I take it you're already anticipating the possibility of section 213 claims against TWPS from other Griffins liquidations; yes? A. Yes, the purpose of the box is to think of every conceivable conflict.”

The principal issue between parties in relation to forfeiture of rights was whether Mr Hunt, Mr Bramston and Mr Potts held themselves out as negotiating on behalf of all of the companies in liquidation of which they themselves were liquidators and all of the companies of which the other IPs were liquidators or whether they held themselves out as negotiating on behalf of a sub-set of those companies only.

The Curaçao Meeting. In their composite note of the Curaçao Meeting Mr Hunt, Mr Bramston and Mr Potts recorded that Mr Hunt told FCIB that four categories of case had been identified (and I will refer to them as “Category 1”, “Category 2”, “Category 3” and “Category 4”):

“1)

75% already paid out;

2)

protocol cleared and no monies paid out;

3)

broader category where claims by the group of IPs pending or awaiting resolution, including protocol pending through to cases where claims just identified. This includes claims where there is English and overseas litigation not yet concluded.

4)

everything else i.e. everyone else involved in mobile phone trading.”

“SJH proposed that proceed on the basis that FCIB not in negative asset position otherwise would be in bankruptcy and proposed that FCIB pay all (1) and (2) + (3) in full, but that the content of (3) could be for further discussion. SJH said that he was aware some IPs had more (3) cases than Griffins, and that there may be special circumstances/commercial positions on each of those in (3)”

“SJH said that the bank cannot benefit from the fraud. If the banks takes all the account balances, he questioned who gets the money?

MW said that if you took the legal costs, the charges incurred by the bank, and the admin costs, that is close to the value of the total balances on the effected accounts.

SJH suggested that we could issue against the banks and then stay. We would then wait to see if the cat (4) accounts brought a claim.

C Potts then explained that the bank has its existing procedures and an ability not to pay out to companies involved in MTIC fraud. A discussion on Cayenne then ensued.

TJB said the group of liquidators may hold useful data to assist the bank defeat cat (4) claims.

TJB said that we do not know what their costs, or the account balances of the cat (4) claims [which FCIB would keep]. TJB said we were working on an assumption that cat (4) cases had enough in them to cover the bank's costs. If that was not the case we would re-consider the level of settlement to reflect the commercial reality.”

The Defendants’ case was that Categories 1 to 3 contained all of the companies in liquidation whom the IPs represented and Category 4 contained “everyone else”, i.e. all those companies who might have a civil claim to account balances or for any other relief and whom the IPs did not represent. In support of their case the Defendants relied on the fact that FCIB maintained throughout the negotiations that it wanted “total peace”. In the course of his oral submissions Mr Scott produced a list of twenty-one documents dated between 9 October 2014 and 7 November 2014 in which the parties used the term “total peace” or the following expressions were used: “finality”, “final settlement”, “Tidy & End”, “Global Offer”, “Global settlement” and “All encompassing agreement”.

The Claimants admitted that during the negotiations FCIB sought to negotiate a final global settlement with all of those parties whom Mr Hunt could possibly represent which would result in total peace: see the Reply, paragraph 55.1 (above). However, Mr Hunt’s evidence was that the four categories represented four different categories of accounts rather than four different categories of customers. His evidence in his witness statement was as follows:

“88.

At the meeting we discussed structures and ideas for how FCIB might pay out the account balances, and we came up with categories of accounts. I independently recall these being:

(a)

Category 1 – accounts where FCIB had already paid out 75% of the account balance, and there was the remaining 25% to be discussed/paid;

(b)

Category 2 – accounts where a request had been made for payment of the 75% under the Protocol but no payment had yet been made;

(c)

Category 3 – accounts that had been identified as being processed for payment in the future – i.e. a request was still to be made under the Protocol but the companies were in liquidation and IPs were appointed;

and (d) Category 4 – all the other T&C accounts.

89.

I recall us discussing how FCIB would deal with Category 4 claims if they wanted to achieve finality, as there were potentially thousands of accounts that would fall within this category. The category had been loosely anticipated in the HMRC meeting of September 2011 (referred to at paragraph 32) when it was explained to us that FCIB intended to pay out the balances of all remaining non-insolvent account holders. We proposed to FCIB that one solution would be to give me a list of all the account holders, and then I, along with the other IP's could work it out between us by winding up the companies and taking the appointments between us all, and recovering the FCIB balances. This would leave the legitimate non-fraudulent account holders. We explained a bit about the iBase software that we had, and how we could play a role in managing Category 4, if FCIB were prepared to share that information of accountholders with us.

90.

FCIB said that they were not interested in dealing with Category 4, and did not want to accept the offer of help in exchange for the information. They said that they had their own strategy and had done their own 'data mining' for dealing with Category 4, so this was not a concern and the remainder of discussions focussed on Categories 1–3 only. My understanding was that FCIB had their own plan for finality and I (and the other IP's) were just a piece in that puzzle. That was the end of discussions regarding finality (in a global sense), as that would need to involve dealing with Category 4 and FCIB were clear they did not want our help in dealing

with that.”

Mr Scott cross-examined Mr Hunt at some length about the difference between the various categories and, in particular, the difference between Category 3 and Category 4. In particular, he asked Mr Hunt to explain his suggestion that the IPs could issue claims against FCIB and wait to see if the Category 4 account holders brought a claim against it. Mr Scott had to put his question three or four times before he finally got an answer (my emphasis):

“Q. Yes. The point I understand you to be making is that the IP group could bring their claims, category 1, 2, 3, claims −− A. Yes. Q. −− they could be stayed. And then you would see whether the claims of everyone else, the category 4 cases, would be brought? A. I think that paragraph is saying −− it's not very long, but I −− but I think what that's saying is that if we identify balances then −− Q. If I can just stop you there. No mention of balances in this paragraph, is there? No. No, but we're only talking about balances. We would then wait to see if the category 4 accounts brought a claim. I think what we're trying to do is to attach to the balance in a some way. So imagine there was £1 million that wasn't in category 3. So Official Receiver in some way. So it seems to be a contemplation of attaching to a balance and then see effectively in the owner of the account then disputed it in some way. So we're trying to work out how −− how do you deal with the rest of the list and give them −− because of course what would happen is they would just sit there; they wouldn't be closed, they wouldn't be open. Someone could come along later and claim it. So we were trying to work out how to do it. And we suggested −− having first offered effectively forensics, we're then trying to say: maybe we could claim it in some way with their −− a bit like there's a Harvey attachment. So there's a Harvey attachment, same sort of thing. So register sort of a generic claim, maybe HMRC a claim in fraud and then see who claims. It was about trying to sort of ring−fence the balances and how that would work. Q. And the point I'm putting to you, Mr Hunt, let me try one more time, is that we have, on the one hand, the category 1, 2, 3 claims −− A. Yes. Q. −− which are claims of the IP group. Now we have category 4, which are the claims of everyone else. That's −− that's the distinction that you are drawing (overspeaking) −− A. (overspeaking) no, the category 4 was anything that's not in category 1, 2 and 3 (overspeaking) −− Q. So are you suggesting that there could be category 4 cases where the companies in question were represented by Griffins? A. No, I don't think we've contemplated that. I don't −− well, I'm trying to think. There was −− what we were contemplating −− so, for example, a −− an MTIC company with no balance, didn't have a claim to a balance, so we weren't thinking about −− it's surprising in hindsight, but neither side were talking about claims against FCIB in fraud. We just weren't in that space. We were trying to −− we were trying to resolve the emptying of the balances; that was the start, beginning, end of the negotiations. Not because of any artificial line; it's just why we were there and why the bank wanted to deal with its balance liabilities. I don't think the bank was thinking about claims at all. It didn't consider it had done anything wrong; and, therefore, it didn't need to worry about claims, to some extent.”

Mr Potts accepted in cross-examination without any qualification that at the Curaçao Meeting he was acting for Mr Hunt and Mr Bramston in their capacity as liquidators of companies which had potential claims against FCIB. When he was asked about the four different categories of case his evidence was as follows:

“Category 4 we see is "everything else ie everyone else"? A. Hmm, hmm. Q. And that means everyone who is not represented by a member of the IP group, doesn't it? A. No, we're talking about the cases. So it's easier to understand as the cases, because category 1, 2, 3 and 4 −− so 1 and 2 are the ones we've already got to −− an ability to recover. Category 3 are the ones that we're working on or we've identified, because I had identified in my head that if we go into settlement negotiations and have a full and final settlement, we're waiving the right to pursue any claims. So category 3 is there to preserve those claims that the IP group have got so they can continue to appoint and we can recover the money. And then the 4 is everything else. Q. Just focus on the words. So it's "everyone else"? A. It says "everything else". Q. "Everything else, ie everyone else". That's what it says? A. Yes. Q. And the point I'm putting to you is that what “everyone else" is for the purpose of this category is everyone who is not represented by an IP group member? A. So that is correct in terms of what the word says, but what's envisaged in relation to the IP −− I mean what became the IP settlement agreement is everything outside category 1 to 3. So, for example, if an IP is appointed over a company but it's not in category 1 to 3 then that will be in category 4. Q. And that explanation that you've just given, do we find any trace of that in the composite note? A. I think this is the composite note. Q. Yes, it is. What I want to know is if the explanation that you have just given about an IP group member being appointed and that being a category 4 case, is that explanation to be found in this composite note? A. I presume −− no, because we didn't −− Q. And it's not an explanation that you ever gave to FCIB, is it ? You never suggested, "I'm here to negotiate for the IP group, but some of my clients may have claims in category 4 and we're not settling those". You never said that, did you? A. The conversation was −− Q. Did you ever say that or not, Mr Potts? It's a straightforward question. A. No. I 'm so sorry. No.”

Mr Parker asked Mr Potts in re-examination about the answer which he had given to Mr Scott’s question about the identity of his clients and this time he qualified his answer in the following way:

“MR PARKER: Could we possibly please pull up {DAY7/69:12} of this morning's transcript. It's a question, I think, that you'll find at line 12. You were being asked about the February 2014 meeting in Curaçao. A. Hmm, hmm. Q. And Mr Scott asked you a question -- sorry, at line 12. A. Yes. Q. "And your clients, for the purpose of this meeting, they were Mr Hunt and Mr Bramston, in their capacity as liquidators for companies that may have claims against the [claimant]?" MR SCOTT: I think that's the bank; I think it's a mistake on the transcript. It's claims against the bank. MR PARKER: Thank you. That may have claims against the bank. A. Hmm, hmm. Q. And you answered in the affirmative? A. Hmm, hmm. Q. Now, when Mr Scott was referring to "companies that may have claims against the bank", what sort of claims did you understand Mr Scott to be referring to? A. Balance claims. MR PARKER: Thank you.”

I reject Mr Hunt’s evidence in relation to the categorisation of the claims or companies which fell within Categories 1 to 3 and the claims or companies which fell within Category 4 and I find that Mr Bramston, Mr Potts and he intended Categories 1, 2 and 3 to include the claims of all of the companies of which members of the IP Group were liquidators (to which I will refer as the “IP Companies”). I also find that they intended Category 4 to include everyone else, namely, any companies or customers of FCIB of which members of the IP Group were not liquidators and over which they had no control (“Non-IP Companies”). Finally, I find that Mr Hunt explained this to FCIB at the Curaçao Meeting. I make these findings of fact for the following reasons:

The London Meetings. On 1 September and 3 September 2014 two meetings took place in London at which Mr Hunt and Mr Potts met Mr Peterson who was acting on behalf of FCIB (the “London Meetings”). No notes of that meeting were disclosed by either party although Mr Hunt accepted that he did not inform FCIB at either meeting that partners in Griffins were liquidators of companies with claims against FCIB for whom he was not conducting negotiations:

“Q. And you would have known that FCIB was looking to meet the liquidators in London with the objective of reaching an overall settlement agreement? A. That's what it says, yes. Q. You would have known that that was the case at the time −− A. Yes. Q. −− when you read these e−mails? A. Yes. Q. And you would have known that HMRC was putting Griffins forward to participate in that meeting, to discuss overall settlement agreement with FCIB? A. Yes. Q. So far as concerns the September meetings, presumably you attended those meetings? A. Yes. Q. Do you recall who else attended on the Griffins side? A. Mr Bramston certainly. Presumably Mr Fatherly. Q. Anyone else? A. Not that I can recall. Q. Do you recall whether anyone on your side took notes of the meetings? A. I don't recall if Mr Potts was, then Mr Potts would have taken his own notes; if Mr Fatherly was there, Mr Fatherly would take his own notes, but that's normally it. Q. And at the September meeting, there was no suggestion from the Griffins side, was there, that there were Griffins represented companies with claims against the bank, that you were not negotiating on their behalf? A. Sorry. Can you just repeat the question again? Q. Yes. There was no suggestion from your side, was there, that there were Griffins represented companies with claims against the bank but that you were not negotiating on their behalf? A. That's correct. Q. Can we go, please, to {F/2236/1}. This is an e−mail from Mr Potts to Mr Welten on 2 September 2014. And we see it is sent the day after a meeting the day before. Can you read the first paragraph, please. A. Yes. Q. And can you see that Mr Potts writes: "I am in a position to make a global offer in relation to all of the cases of Griffins, Baker Tilly, Kingston Smith and Chantrey Vellacott." A. Yes. Q. And, presumably, you would have seen and approved of this e−mail before it was sent? A. Not necessarily, but possibly. Q. Presumably you would have given instructions to Mr Potts to send this e−mail on behalf of Griffins? A. Broadly, yes. I mean, I'm not trying to make a point on it, but broadly, yes. Q. And there's no suggestion, is there, in this e−mail that the global offer being made in relation to all of the Griffins, Baker Tilly cases, and so on, somehow excludes Q. And there's no suggestion, is there, in this e−mail that the global offer being made in relation to all of the Griffins, Baker Tilly cases, and so on, somehow excludes companies that they represented with claims against the bank? A. That's correct.”

TWPS. Mr Hunt accepted in cross-examination that he did not inform FCIB about the deed of assignment of the debt owed by TWPS to TC Catering, the restoration of TWPS to the register, the winding up of TWPS and his appointment as liquidator:

“Q. When the decision was taken in 2014 to have TWPS restored and a Griffins liquidator put in place −− A. Yes. Q. −− your side, the Griffins team and Mr Potts, you didn't inform FCIB about that decision, did you? A. That's correct. Q. And your side didn't inform FCIB about any Deed of Assignment, the petition to wind up and restore, any court order, your appointment as TWPS' liquidator −− none of that was disclosed prior to the IPSAs being entered into, was it? A. Only except by way of advertisement but not directly.”

The Letter of Comfort. Mr Hunt relied on amendments which he made to a letter of comfort to be given by HMRC to FCIB (the "Letter of Comfort"). He gave the following evidence in Hunt 6 in relation to this issue (original emphasis):

“105.

On 9 December HMRC advised Chris Potts that they were in direct discussions with FCIB about the conditions attached to the proposed settlement. This ultimately resulted in a letter provided to FCIB from HMRC (the "Letter of Comfort"). I did not see a final copy of the Letter of Comfort, but Chris Potts and I had a hand in the drafting, as HMRC were concerned to ensure that nothing would be said by HMRC that contradicted the position taken by the IPs that were involved in the IPSA discussions. HMRC had a concern about one paragraph of the draft Letter of Comfort in particular Document 74 {GOW_00032231} which read:

"We understand that agreement has been reached between First Curaçao International Bank (FCIB) and UK Insolvency Practitioners who, acting to recover debts owed to HMRC as creditor, have been pursuing claims against FCIB, the Centrale Bank van Curaçao en Sint Maarten (CBCS) and against the balances of certain FCIB account holders. We confirm that HMRC supports FCIB and those IPs to enter into settlements providing for a complete release and settlement of all claims. That settlement includes (1) the retention by FCIB of a portion of the account balances of the certain account holders as compensation for its costs, losses and damages caused by the acts and omissions of such account holders and (2) the payment of the remaining balance to the IPs.”

106.

My immediate reaction was that this was too widely worded, and in particular it needed to refer to the IPs as the liquidators of the specific companies that were intended to be parties to the IPSAs, to reflect the limited nature of the agreement. The following changes were therefore suggested by our side:

"We understand that agreement in principle has been reached between First Curaçao International Bank (FCIB) and UK Insolvency Practitioners who act as liquidators of certain UK companies and trustees of certain bankrupts. The IPs, acting to recover debts owed to HMRC and others as creditors, have been pursuing claims against FCIB, the Centrale Bank van Curaçao en Sint Maarten (CBCS) and against the balances of certain FCIB account holders. We confirm that HMRC supports FCIB and those IPs to enter into settlements providing for a complete release and settlement of all claims as set out in such agreements. Such agreements includes (1) the retention by FCIB of a portion of the account balances of the certain account holders as compensation for its costs, losses and damages caused by the acts and omissions of such account holders and (2) the payment of the remaining balance to the IPs. HMRC does not object to any IP settling with FCIB on the terms described or assert any claim against FCIB for doing so." [my emphasis added]

107.

I understood from HMRC that the initial drafting of the draft Letter of Comfort was provided by Mr Welten, and so the significance of the amendments (i.e. limiting the reference to "complete release" and "settlement" to those set out in the IPSAs) would have been apparent. I have not seen email exchanges between Mr Welten and HMRC, nor the various iterations of the draft Letter of Comfort. The amended response clearly confirmed (again) that a global settlement was not what was proposed or agreed.”

I do not accept that the amendments demonstrate that a global settlement was not intended. All that they show is that Mr Potts and Mr Hunt amended the Letter of Comfort to limit its effect and tie it more closely to the IPSAs themselves. If the IP Group had intended to reserve the right to bring claims on behalf of the MTIC Companies and TWPS (which had been restored to the register by this date), it would have been easy to make it clear in the Letter of Comfort that the IP Group had reserved those rights and that the Letter of Comfort did not extend to those claims.

The warranty. Mr Parker also relied on the warranty in section 1(g) of each IPSA in his cross-examination of Professor Biemans. He put it to FCIB’s expert that FCIB would have had a claim for damages for breach of warranty if Exhibit A had been incomplete (my emphasis):

“Q. Well, can we look at −− maybe we can go back to the agreement in {I/1/3}. And you see the middle of the page there, clause one, sub−clause (5)? A. Hmm, hmm. Q. "The Liquidator and the relevant Griffins Company Q. I'm saying clause 1 sub−clause (5) addresses that situation, doesn't it, by saying that the liquidator and the Griffins company represent and warrant that the list is correct? A. My Lord, I would love to say "yes" to this question, just to move on to the next topic, but I can't. It's −− you could say −− you could say that this warranty address −− could be read as certainly addressing this question, but it's not that easy. I 'm sorry to say that. Q. Well, you do need to answer the question, Professor Biemans, I put to you, because if you don't answer that question you can't then move on to the question of forfeiture of rights, can you? A. I think you can move on straight to the question of forfeiture of rights. If you work on the assumption that none of the parties listed on Exhibit A are not contract to the party then you can move on to that issue. Q. Staying with FCIB's complaint. FCIB says the list is incomplete. Yes? A. Yes. Q. Clause 1, sub−clause (5), on the wording −− I would put to you on the wording FCIB have agreed with the parties to the agreement that in that eventuality the warranty comes into play. And if the warranty comes into play FCIB can claim their losses on the companies on the list not bringing claims, can claim their losses from the Exhibit A companies? A. Okay. So if −− my Lord, if I understand the question correctly the question deals with who can be sued in the case that the list is incomplete. And I would say if you −− if you read the literal wording of this clause, it would be the liquidator and the relevant Griffins companies. Q. It ended up being a rather long question. I apologise for that. What I'm putting to you is clause 1, sub−clause (5) on its wording appears to assume that a company that's not on the list but should be can bring a claim against FCIB. A. So, my Lord, if I understand the question correctly, it says that if there's not a company on the list it should be able to bring a claim, right. And that would be the interpretation of this clause. I would say if you go for the interpretation of this clause you would need more than only this clause, so only on the face of it. It would be hard under Curaçao law to make that claim, but that could be a claim, yes. And it could also have been the reasonable expectation or an expectation of the −− of the liquidator entering into this agreement. Could have been. Yes. Q. I think we're all agreed the starting point −− the

starting point under Curaçao law −− A. Yes. Q. −− is the literal meaning of the words of a clause? A. Yes. That's correct. Q. Yes. A. Yes. That's also in the report. Q. So what else could it mean other than if companies aren't on the list that might cause a loss to FCIB that the Exhibit A companies are liable for? A. One explanation of this contract and this clause could be that you say the liquidator hereby guarantees, in person, that all the companies that he can enter into a settlement agreement with FCIB are listed in this list, so so it's a full disclosure of all the companies that he's representing at the moment and that have to be entered into the settlement. Q. And if it isn ' t −− and if it isn't −− A. Hmm, hmm. Q. −− then FCIB can sue the Griffins −− the Exhibit A companies? A. FCIB would then also −− but that's my −− my reading of the contract also sue the liquidator for withholding all these names in person. And that −− but that would also be Curaçao insolvency law. Q. So, despite it twice being said that the liquidator is only contracting in his capacity as agent of the companies −− A. Hmm, hmm. Yes. Q. −− nonetheless you are saying he assumes a personal liability? A. Yes, my Lord. And there's a two step reasoning for that. The first one is that, despite the contract saying that you act only as a liquidator in that capacity, some clauses could be read as that you have the personal guarantee, because who else can guarantee that all companies are on the list? I don't think the Griffins companies can guarantee that. And the liquidator, as being a representative of the Griffins companies, cannot guarantee that is all the companies because it presumes it is more than the companies that are listed in the Exhibit A. So that's one thing. There's another thing under Dutch −− under Curaçao insolvency law. Even if you act in your capacity as a liquidator, you can be held personally liable. And if you exclude your liability under Curaçao law, it’s only valid up to a certain point. So if you do things on purpose or there's gross negligence, it does not work. So that would be my answer. Q. But you would agree, would you, that under Curaçao law −− A. Hmm, hmm. Q. −− if the parties to the agreement have agreed that the claims of companies that should have been on the list remain and can be brought? A. Hmm, hmm. Q. That, in those circumstances, Q. That, in those circumstances, those claims can't be said to be forfeited? A. Oh, my Lord, if the question could be more specific then that would really help for me to say "yes" or "no", because forfeiture of rights is a very −− it's a very different principle; and then you need to take into account all the circumstances, as Bart van der Wiel also explained.”

It is unnecessary for me to decide whether FCIB had (or has) a personal claim for breach of warranty against Mr Hunt or whether the IPSAs excluded that liability because no such claim was made in these proceedings and none of the experts suggested that the existence of such a claim excluded or prevented the Court from finding that the Claimants had forfeited their rights to bring any of the claims in this action. Professor Biemans stated this very clearly at the end of the passage from his cross-examination (above) and I accept that evidence.

Moreover, I do not accept that by agreeing to the warranty FCIB was in some way acknowledging or accepting that any other IP Companies which were not on the list in Exhibit A were entitled to pursue separate claims. In my judgment, FCIB was relying on Mr Hunt’s express representation that the list in Exhibit A of the Hunt IPSA was accurate in the sense that it was a complete list of all of the IPSA Companies of which he was the sole liquidator. Although the construction of the warranty is a matter for the Court, I accept the answer which Professor Biemans gave in bold (above) and I rely on that evidence. In clause (5) of the First section of the Hunt IPSA, Mr Hunt expressly represented to FCIB, as Professor Biemans put it, that “all the companies that he can enter into a settlement agreement with FCIB are listed in this list” and that he had disclosed “all the companies that he's representing at the moment and that have to be entered into the settlement”.

Mr Parker and his team criticised Professor Biemans for expressing his views about the construction and effect of the IPSAs rather than limit himself to evidence of the law in contrast to Mr van der Weiel, who was careful not to express an opinion on this issue: see van der Weiel 1, paragraph 6.6.3. But Mr Parker chose to put the question to Professor Biemans and I am entitled to have regard to the answer which he gave in cross-examination. I found him to be a reliable witness and I found his evidence to be of assistance to the Court. I, therefore, place considerable weight on his evidence.

Conclusion. I find that at the Curaçao Meeting Mr Hunt, Mr Bramston and Mr Potts held themselves out as negotiating on behalf of all of the companies in Categories 1, 2 and 3, that those three categories included all of the IP Companies and that Category 4 included only Non-IP Companies. I also find that Mr Hunt continued to hold himself out as acting for the companies in Categories 1, 2 and 3 at the London Meetings and until the execution of the IPSAs and that he did not inform FCIB of his appointment as liquidator of TWPS. Finally, I find that in giving the warranty in the First section, paragraph (5) Mr Hunt represented that he had disclosed of all of the IP Companies (i.e. those in Categories 1, 2 and 3) of which he was the sole liquidator and that he was entering into the Hunt IPSA on their behalf.

Mr Hunt’s evidence in Hunt 6 was that when he was appointed as liquidator of TWPS he did not have any idea what its role had been. He subsequently withdrew that evidence and I have set out the relevant extract from his cross-examination above. When Mr Scott suggested to him that it was in the interests of FCIB for him to reveal his appointment as liquidator of TWPS, he suggested that the reason why he did not do so was because the original motivation for restoring TWPS to the register was now irrelevant:

“Q. Presumably you would agree that FCIB had a reasonable interest in knowing what you were up to in trying to have an affiliated company restored and you put in charge of it? A. I don't know if it was in their interests or not. Q. The question is: they would have had a reasonable interest in knowing that. Is your answer that they would or they would not? A. I don't know what their reasonable interest would be. Could you be more specific? It's a very straightforward, Mr Hunt. You seem reluctant to answer it. You were negotiating a settlement with the bank. In the course of that negotiation, you procured control of an affiliated company of the bank. I'm asking you: did the bank have a reasonable interest in knowing about that? Yes or no? A. No. Q. Why do you say "no", Mr Hunt? A. Because I don't think it was relevant to the negotiations that were going on at the time. Q. How was it irrelevant to the negotiation when the purpose of having TWPS restored was to shake the tree and find out whether there was something with which to leverage the negotiation? A. Because the tree had already been shaken, to use your phrase. And by the time events transpired and the appointment made, the negotiations were all but over. So −− Q. But the IPSAs hadn't been signed. A. Yes. Q. The IPSAs were signed in February of 2015. So you had ample time to tell them: by the way, I've been appointed a liquidator of one of your affiliated companies? A. Yes, but, as I said, sort of the majority of the reasoning in March/April 2014 looked like it was ending. So the appointment was becoming moot. If it had been signed, if the IPSAs had been signed then I'm not sure there would have necessarily been the purpose of the appointment. If it hadn't been started then I don't think we would have actually pursued it per se. But it's −− the idea or the circumstances in March changed in September when the negotiations became more live again. Q. Presumably, Mr Hunt −− MR JUSTICE LEECH: I'm not sure I understand that answer, Mr Hunt. Are you saying that it wouldn't have been necessary to restore TWPS to the Registry if the IPSAs had already been signed by that date? A. In 2014, I don't think it could be described as necessary at all, the entire exercise with Transworld. It was one of other −− several other ideas to try and advance negotiations. By the time −− I think the petition happens in August 2014, the −− the approach by FCIB to restart, essentially, negotiations or develop them a bit further happens at the end of that. So the petition is already running whilst the first week in September negotiations happen. So it's becoming sort of slightly redundant, the entire process, if we're going to do a deal. So we are effectively going through the motions of continuing with the expectation or hope that the IP settlements would be signed. So this is just happening on the same time line, but they're not related. So there's no −− there's no huge purpose −− well, the purpose in March is not really made good because other events have transpired in negotiations, if that makes sense.”

I reject that evidence and I find that Mr Hunt intended TWPS to be a vehicle for claims against FCIB principally for the benefit of Griffins and that he did not disclose his appointment to FCIB for that reason. I have reached this conclusion for the following reasons:

FCIB called no witnesses to give evidence and the Court was given no real explanation why it could not have called any of the individuals who were involved in the negotiations for the IPSAs. Mr Parker and his team submitted, therefore, that I should dismiss FCIB’s case for this reason alone. In particular, they submitted that FCIB could not prove that any of its representatives understood Categories 1 to 3 to include all of the IP Companies and Category 4 to include only Non-IP Companies or that they relied on this representation in any way.

I have carefully considered whether I should dismiss FCIB’s case on forfeiture of rights for this reason despite the adverse findings which I have made against the Claimants. With some hesitation, however, I am satisfied that FCIB did understood the Categories 1 to 3 and Category 4 in the way in which I have found and that it would have been material for Mr Hunt to disclose that the MTIC Companies and TWPS had potential claims against FCIB. I have reached these conclusions for the following reasons:

I find, therefore, that it would have been material for Mr Hunt, Mr Bramston and Mr Potts to disclose to FCIB during the negotiations that the MTIC Companies and TWPS had potential claims against FCIB and that FCIB was disadvantaged by their failure to disclose these claims. In particular, I find that FCIB lost the opportunity to negotiate a settlement of the Direct, Indirect and TWPS Claims on reasonable terms.

Findings of Curaçao law

Based on the findings of fact which I have made in (i) to (v) above, I find that Mr Hunt and the IP Group acting in their capacity as the liquidators of TWPS and the MTIC Companies (apart from @tomic, Comveen and Notebook) acted in a manner which cannot be reconciled according to the standards of reasonableness and fairness. I also find that their conduct gave rise to a legitimate expectation on the part of FCIB that the IP Group would no longer pursue any rights or claims on behalf of the IP Companies including TWPS and the MTIC Companies (apart from @tomic, Comveen and Notebook). Finally, based on the finding of fact which I made in (vi), I find that the position of FCIB was materially disadvantaged as a result of TWPS and Mr Hunt attempting to enforce any rights which they had either directly or as assignees of the MTIC Companies to bring claims against FCIB. In particular, FCIB lost the opportunity to extend the IPSAs to settle those claims and was forced to defend the claims in this action.

Accordingly, I hold that both TWPS and Mr Hunt in his capacity as liquidator of TWPS have forfeited their rights to bring the TWPS Claims against FCIB. I also hold that TWPS has forfeited its rights to bring the Direct Claims against FCIB as assignee of the MTIC Companies. I have considered whether TWPS should be held to have forfeited the rights of @tomic, Comveen and Notebook since Mr Hunt and Mr Bramston did not represent those companies in the negotiations for the IPSAs. But since the Direct Claims were being brought primarily for the benefit of Mr Hunt and Griffins and those companies are not separate parties to this action, I hold that TWPS and Mr Hunt have also forfeited their rights to bring those claims against FCIB.

Based on the findings of fact which I have made I also find that the conduct of TWPS and Mr Hunt gave rise to a legitimate expectation on the part of Mr Deuss that TWPS and Mr Hunt would not pursue any of the TWPS Claims against him and that he was materially disadvantaged as a result of TWPS attempting to enforce any rights which it had against him personally. I make these findings for the following reasons:

Other Curaçao law issues

Given my findings in relation to forfeiture of rights, it is unnecessary for me to decide whether TWPS or any of the MTIC Companies were parties to any of the IPSAs and also whether they committed unlawful group conduct. If it had been necessary for me to decide those issues, I would have held that they were not parties to any of the IPSAs and that they were not liable for unlawful conduct in the same way as the Judge did in the Curaçao Judgment. Although I have held that I am not bound by any issue estoppel, I would have reached similar conclusions and for similar reasons.