KB-2023-004010 - [2025] EWHC 2689 (KB)

MGWL is the parent company of the MultiBank Group, an international group of companies and a major provider of brokerage services for foreign exchange and contracts for difference transactions. MGWL asserts that between March 2017 and December 2020, the MultiBank Group was in joint vent with a company called Von der Heydt & Co AG (‘VDH AG’) whereby MultiBank agreed to support certain notes issued in Luxembourg companies. In December 2019, the relevant funds were transferred into Mex notes by Mex Securities Sarl (‘Mex Securities’), described by MGWL's solicitor as "a Luxembourg securitisation vehicle".

MGWL says that trading losses had been incurred due to the trading strategy of VDH AG and its chief executive officer, Mr Michael Gollits. In return for MultiBank's support, MGWL says that through Mr Gollits, VDH AG agreed not to redeem the Mex notes for a period of time. Mex Securities needed this time to earn fees on commissions through the trading of the notes.

MGWL says that unbeknown to Mr Taher and MultiBank, Mr Michael Gollits established CSM, with two others, Mr Colm Smith and Mr Stewart Ford; and the initials "CSM" being the first letters of their first names, Colm, Stewart and Michael. CSM is said to have been a competitor of Mex Securities. MGWL says CSM planned to transfer funds from the joint venture to CSM and to injure the MultiBank Group's business.

MGWL's case is that VDH AG and other companies in its group came under regulatory scrutiny in Luxembourg; and that on 2 December 2020, Mr Gollits falsely represented to Mr Taher of MGWL that it had become necessary for VDH AG to withdraw funds from the Mex notes because of a supposed new regulation making illegal (in Luxembourg) the investment of the Mex notes in precious metals or precious metals derivatives. MGWL says Mr Gollits requested immediate redemption of the sums VDH AG had invested in the Mex notes.

MGWL's case is that on 7 December 2020, Mr Colm Smith, representing Mex Securities, attended in Dubai for negotiations with Mr Taher. The negotiations produced a settlement agreement whereby Mex Securities agreed to (and did) pay about €36 million to MGWL or a wholly owned subsidiary Mex Clearing Limited. In return, MGWL assigned to Mex Securities MGWL's claims against VDH AG.

On 10 December 2020, Mex Clearing issued a claim in the Eastern Caribbean Supreme Court (Virgin Islands) (the BVI proceedings) against Mex Securities, seeking the return of alleged loans. Control of Mex Securities is disputed by the defendants. The basis of the BVI claim was that : "the funds advanced by the pursuer [Mex Clearing] over the whole course of dealing were to be treated as loan finance to the eleventh defender [Mex Securities], which was by that time the party holding the proprietorial interest in the assets in which the note investment had been invested.

According to the condescendence in the Scottish proceedings:

"On 10 December 2020, Mex Clearing raised a claim against the eleventh defender [Mex Securities] and MBFX [Multibank FX International Corporation, a BVI subsidiary of Mex] in the British Virgin Islands seeking repayment of the sum of €36,385,509.52 ('Mex Clearing BVI Claim'). …. Whilst the dispute in the BVI proceedings was in substance between Mex Clearing and the eleventh defender, MBFX was joined as a second defendant as it held the funds in respect of which Mex Clearing sought payment."

What happened in December 2020 is further described in the recent decision on expenses of Lord Sandison in the Scottish proceedings at [11]-[12]:

"[11] … An agreement was reached that Mex Securities would enter into a settlement agreement and thereafter a consent order in the BVI court process acceding to the claim to the extent of most of the relevant sums, that Mex would assign its claims against VDH AG to Mex Securities and would thereafter assist it in funding the pursuit of those claims against VDH AG; and that, in the event of successful pursuit of the assigned claim against VDH AG, the ultimate proceeds after reimbursement of legal costs would be used first to restore the note holders to the position they should have been in but for VDH AG's actions, and thereafter would be divided equally between Mex and Mex Securities. The settlement was presented to the court and formalised in a consent order and schedule thereto granted by Wallbank J sitting in the BVI High Court on 14 December 2020. On 18 December 2020 the consent order was partially implemented. Mex Clearing received funds of €36,385,509.52 from MBFX in implement of an instruction from Mex Securities, in accordance with the consent order.

[12] At this point the plot thickens. Almost immediately after settlement terms were agreed and the consent order was finalised, Mex Securities purported to renege upon it. Mr Smith left Dubai to return to Luxembourg on 18 December 2020. On 22 December 2020, agents purporting to act on behalf of Mex Securities wrote to Mex's solicitors in the BVI claim and separately to MBFX, suggesting that only Mr Volotovskiy was a director of Mex Securities, which had no knowledge of the consent order and was seeking to challenge any implement of it. Mex claims that Mex Securities had been incorporated in Luxembourg in 2018 as a securitisation vehicle for the purpose of a proposed venture which had been discussed between Mex and VDH AG but which did not proceed. Mex allowed it to use the "Mex" style, but it was not integrated into its group and was not controlled by Mex. It was used as the vehicle for a note swap transaction which led to the operation of the indices in question at the suggestion of Mr Gollits, who appointed Mr Smith and Mr Volotovskiy to manage it."

In reneging on Wallbank J's consent order (‘the BVI Consent Order’), Mex Securities alleged that the settlement was a "sham". Mex Securities brought a claim in Luxembourg on or about 2 March 2021 (ibid., at [31]) alleging that Mr Taher had pressured Mr Smith into agreeing to the settlement embodied in the Tomlin order (holding Mr Smith in a "golden prison" in Dubai) and that Mr Smith was not authorised by Mex Securities to agree to the settlement.

In April 2021, in the BVI proceedings that had led to the BVI Consent Order, Mex Clearing obtained an anti-suit injunction against Mex Securities continuing the Luxembourg claim, which did not then progress further. Mex Clearing also applied for an anti-suit injunction in England, which Bryan J granted in the High Court in London on 16 April 2021. Bryan J also granted other relief to protect MGWL against what he called scurrilous and demonstrably false allegations made in the Luxembourg proceedings.

Then on 23 April 2021, a company associated with VDH AG called Von de Heydt Invest SA (tenth defender in the Scottish proceedings) (‘VDHI’), applied ex parte as an additional claimant in the BVI proceedings against Mex Clearing and MBFX for a worldwide freezing order (‘the BVI WFO’) and an order staying the BVI Consent Order (and for certain disclosure). Jack J granted the BVI WFO that day and it was upheld on appeal. Its basis was that Mr Smith and MGWL had perpetrated a fraud against VDH AG, VDHI and their clients. The allegation was that the BVI claim and settlement were a fraudulent ruse benefiting Mr Taher at the expense of investors in the Mex notes.

According to the condescendence in the Scottish proceedings, from April to October 2021, Mex Clearing and MBFX applied unsuccessfully in the BVI proceedings to have the BVI WFO set aside. On 4 October 2021, Jack J gave a judgment refusing to discharge it. In the further course of the BVI proceedings, Jack J was recused from the case in an appellate decision made on 29 April 2022. The procedural history of the BVI proceedings has been complex and there has been no trial or definitive conclusion to them.

On 18 October 2023, MGWL commenced the Scottish proceedings by summons in the Court of Session. The relief sought in the "Conclusions" was:

"For declarator that the defenders have engaged in an unlawful means conspiracy directed inter alia at harming and injuring the interests of the pursuer by: (a) by causing the eleventh defender [Mex Securities] to seek to renege on the agreement recorded in the schedule to the Consent Order granted by the High Court of Justice of the British Virgin Islands dated 14 December 2020 (as defined in the Condescendence hereto) which agreement was a lawful, valid and binding compromise entered into by the parties to it, and for that purpose (b) causing a bribe or inducement to be paid to the third defender [Mr Smith] by the transfer of investment funds from the ninth and tenth defenders [VDH AG and VDHI] in the sum of at least $7m to be paid to the eighth defender [CSM] (and thus indirectly to the benefit of the third defender [Mr Smith]) to induce him to cause the eleventh defender [Mex Securities] to seek to renege; (c) attempting to insulate the ninth and tenth defenders [VDH AG and VDHI] from exposure to their own customers and regulatory difficulty arising as a consequence of their own actions, by seeking to create the false impression that those difficulties were caused by the pursuer; (d) seeking to advance a dishonest account that the third defender [Mr Smith] lacked legal authority to bind the eleventh defender [Mex Securities] to the terms of the settlement; (e) seeking to advance a dishonest account that the third defender's [Mr Smith's] giving of consent to that settlement on behalf of the eleventh defender [Mex Securities] was vitiated by improper pressure applied to him; (f) harming the pursuer's interests and reputation by making, and seeking to publicise, false claims against the pursuer and related companies; (g) furthering the carrying on of substantial volumes of investment business between the defenders; and (h) concealing the first defender's [Mr Ford's] interest in and involvement with that business in light of the prohibition order made against him by the Financial Conduct Authority."

The Claimants then added a claim for payment by the Defendants to the pursuer, MGWL, jointly and severally or severally, of £85 million plus interest at 8 per cent per annum, and a claim for the expenses of the action.

Lord Sandison explained in a recent judgment on expenses at [20] that there was a "section 1 petition process" followed by "the grant of commission and diligence on 18 October 2023". As he explains, "dawn raids" then took place at the residences of Mr Ford (first defender) and Mr Cormack (second defender) and the offices of Melville (fifth defender) and Regal Consultancy International Limited (seventh defender) (Regal). A large amount of documents, hard copy and electronic, were recovered, though many of them had nothing to do with the dispute. Lord Sandison allowed them to be used in related litigation elsewhere.

Also in October 2023, MGWL began proceedings in the High Court in London (the English proceedings) under section 25 of the Civil Jurisdiction and Judgments Act 1982 ancillary to and in support of the Scottish proceedings. On 20 October 2023, Lavender J granted a worldwide freezing order against the defenders in the Scottish proceedings who were also the defendants in the English proceedings (“the WFO”).

Subsequently in the English proceedings, on 1 December 2023 Mr Taher swore a lengthy affidavit giving an account on oath of what he said had happened. He defined as "the Conspirators" (at paragraph 7.1) Mr Ford, Mr Cormack, Mr Smith, Mr Gollits and Mr Duthie. The first four were defenders in the Scottish proceedings. Mr Duthie, alone among "the Conspirators", was not. Mr Taher developed his allegations about "the Conspirators" at paragraph 108:

"108.

… the central allegations in the Scottish and English Proceedings, are that:

108.1

the Dubai Agreement [i.e. the settlement in December 2020] was entered into by myself and the MultiBank Group lawfully, but subsequent to the return of Colm Smith to Luxembourg, there became an unlawful means conspiracy which occurred (involving Stewart Ford, Michael Gollits, Colm Smith, Adam Duthie, VDH-AG, VDH-I and the other Conspirators) to pay and entice Colm Smith to renege on the Dubai Agreement and further, to issue the Luxembourg Summons.; and

108.2.

There is an unlawful means conspiracy in Scotland, which should be tried in that jurisdiction, which involves, amongst other things, the following:

108.2.1.

First, on the one hand for VDH-I to commence litigation in the BVI and allege fraud against me and against Colm Smith, pretending, albeit falsely, it is a separate entity from VDH-AG and is not part of the VDH Group and has no knowledge of the involvement of VDH AG with Colm Smith, CSM and the other Conspirators; and

108.2.2.

Second, on the other hand, for VDH-AG (sister company to VDH-I, working hand in hand with VDH-I) to enter into the unlawful means conspiracy, pay and work with Colm Smith and his company, CSM, so as to entice and/or induce and/or bribe him to renege on the Dubai Agreement, disappear and not defend the fraud allegations against him by VDH-I; and

108.2.3.

Third, through utilising VDH-I as the sole protagonist alleging fraud against me in the BVI, shield Michael Gollits, VDH-AG and the VDH Group, from allegations of illegal trading in gold, breach of fiduciary duty in relation to the value of the Notes, deceiving the Noteholders as to the real value of the Notes and other wrongdoings by Michael Gollits and VDH-AG; and

108.2.4.

Fourth, the price that VDH Group (including VDH-AG and VDH-I) will have to pay Colm Smith, his master Stewart Ford, Brian Cormack and other Conspirators is not only to pay € 8.6 million from 1 January 2021 to July 2023, but to also, for VDH-AG to become the investment manager to CSM, and issue Junk Bonds amounting to US$ 5.6 billion, in order to both give credibility to these Junk Bonds and also shield and conceal the involvement of Stewart Ford in the Bonds and the profits arising therefrom (in breach of the FCA life ban on Stewart Ford who suffered the heaviest fine in the history of the FCA amounting to circa GBP 76 million for issuing similar Junk Bonds as those now being issued by CSM under the synopsis of VDH-AG); and

108.3.

Needless to say, the result of the concealment of the involvement of VDH-AG with Colm Smith and CSM and the unlawful means conspiracy tantamount to abusive behaviour by VDH-I to conceal facts, deceive and mislead the BVI Honourable Courts so as to cause unjustifiable and substantial harm to the MultiBank Group and I both economically and reputationally."

On 15 December 2023, Mr Tinkler sitting as a Deputy Judge of the High Court acceded to the application to discharge the WFO as against Mr Gollits, VDH AG and VDHI. He refused MGWL's application to continue the English WFO. The approved transcript of his judgment was issued on 25 January 2024: see [2023] EWHC 3394 (KB). While there was a good arguable case against the three defendants, after a 3-day hearing Mr Tinkler, gave an oral judgment discharging the freezing injunctions as against those three respondents. He found that there was material non-disclosure in a number of respects, and that such was the non-disclosure that it was inappropriate having discharged the injunction to grant a fresh one.

MGWL had been "highly reckless in its attitude to compliance with its obligations", he noted at [8]. He gave details of the failures of disclosure at [75]-[120]. I will not repeat them here. Among the points were that Lavender J had wrongly been told MultiBank had a "blameless reputation in the industry", when in fact it was on a watch list issued by the Financial Conduct Authority (the FCA) warning against dealing with it and to "beware of potential scams".

Mr Taher's past censure by Stanley Burnton J and other criticisms in past English court proceedings had been omitted; so had Mr Taher's past contempt of court and an arrest warrant issued against him for failing to attend hearings. The BVI proceedings had been presented in a selective way that was "misleading in itself and by omission" ([81]). Statements about control of the VDH companies were misleading. Lavender J had not been told the full facts about the regulatory history of the VDH companies and Mr Gollits; he was given a version that was "significantly different from the truth" ([118(5)]).

Mr Tinkler also found that there was no risk of dissipation. (The Court of Appeal did not agree with that part of the judgment as appears below, although the Court of Appeal affirmed the end result.) Mr Tinkler also found that there was no connection which these respondents had with the jurisdiction and therefore found that relief should be refused on the ground that the fact that the court had no jurisdiction apart from s.25 of the Civil Judgments and Jurisdiction Act 1982 to make an order made it inexpedient for the court to grant it.

On 14 March 2024, permission was granted for an appeal to the Court of Appeal. The hearing was listed for 22-24 July 2024. Whereas other respondents applied to have the WFO discharged, Mr Smith and CSM did not make an application for discharge until September 2024. They did not engage with the WFO and did not provide the information required. On 22 March 2024, the Contempt Application referred to above was issued.

Orders were made for alternative service. Having previously not responded to the WFO and the Contempt Application, Mr Smith emailed the Court on 11 June 2024, the day before the date of the final hearing. Mr Smith stated:

“Because I wish to appear in person, I need a lot of time to prepare for the case, I have seen that there are many lawyers acting for the applicant and there are thousands of documents to study. Please advise how I can request the court to grant me sufficient time to prepare to defend the application for contempt of court.”

There were hearings on 12 June 2024 and 30 July 2024 before Ellenbogen J and Morris J respectively who adjourned the Contempt Application, but made costs orders reflecting the Court’s displeasure regarding the approach of Mr Smith and CSM to the Contempt Application.

On 12 June 2024 he appeared by video link before Ellenbogen J. She granted an adjournment to 30 July 2024 she ordered that the parties should come prepared to address all matters arising including sanction should that issue arise. She ordered that all parties attend in person. Any evidence would have to be filed by 5 July 2024 by the Defendants. She ordered that the Third Defendant and the Eighth Defendant were to be jointly liable for the costs thrown away by the adjournment with a payment on account assessed at £15,000 to be made by 3 July 2024. The payment was made albeit late.

There was a further application for an adjournment which came before Morris J on 30 July 2024. The application by the Third Defendant and the Eighth Defendant was on the basis that the Third Defendant was unable to travel to the UK to attend the hearing since he had suffered injuries due to a horse-riding accident. Morris J acceded to the application for a second adjournment, but he ordered that Mr Smith and CSM were to be jointly liable for the costs thrown away by the adjournment with a payment on account of £35,000 to be paid by 13 August 2024.

The English WFO, meanwhile, remained in force as against all the English defendants (also being the Scottish defenders) except as against Mr Gollits, VDH AG and VDHI who had, it will be recalled, persuaded Mr Tinkler to discharge it as against them. MGWL had obtained permission to appeal against that decision and the appeal was argued from 22 to 24 July 2024. The appeal was dismissed for the reasons given in the reserved judgments of the Court of Appeal (Males and Coulson LJJ and Sir Julian Flaux C) handed down on 8 August 2024: see [2024] EWCA Civ 959.

The Court of Appeal judges agreed with Mr Tinkler save only that they found that there was evidence of a risk of dissipation, and whilst agreeing substantially with the findings about non-disclosure, in certain respects, they made different findings which did not affect the overall result.

The Court of Appeal treated three aspects of non-disclosure as the most serious, namely:

In my judgment on the Contempt Application, I summarised the relevant chronology as follows:

“[19] On 25 September 2024, the Third Defendant filed an affidavit in opposition to the Claimant's application. On 27 September 2024, the Third Defendant, the Eighth Defendant and the Twelfth Defendant applied to discharge the WFO and to stay the application to commit and to vacate the hearing listed for 18 November 2024 pending the outcome of their discharge application. On 21 October 2024, Soole J made an order on paper dismissing the application to stay the application to commit and to vacate the hearing listed for 18 November 2024. Soole J held that "the fact of the application to discharge the worldwide freezing Order provides no good reason to stay the contempt application nor therefore to vacate the hearing listed for 18 November 2024". He ordered in respect of the discharge application that it be listed for directions only on 18 November 2024 by the Judge hearing the contempt application, who would determine at what stage in the hearing to consider the directions. Since this order was made without a hearing, Soole J granted any person affected by the order 7 days within which to apply to the court to set aside or vary its terms. No application was made within the seven-day period, and no attempt was made on 18 November 2024 to apply out of time.”

The Contempt Application was heard and a number of points were advanced to explain the failure to provide the information. In my judgment, I found that Mr Smith and CSM knew that their failure to provide the information was a breach of the court order. I found that the order for alternative service was properly made and should not be set aside. It was not illegal in Luxembourg to have service by email. I found the contempts proved.

In my judgment, I stated that I would deal with penalty only at the same time as dealing with the application to set aside the WFO. That was capable of affecting the appropriate penalty.

On 22 January 2025, I ordered that the determination of penalty and the application to set aside the WFO be heard at a rolled-up hearing on 10-11 March 2025. Shortly before the hearing, there was a written application for cross-examination of Mr Taher which I dismissed in an order made on 6 March 2025.

At a hearing in the Court of Session on 5 March 2025, MGWL appeared by fresh agents and counsel and indicated that it proposed to abandon the Scottish proceedings. On 6 March 2025 MGWL's Chief Operations Officer, Mr Salem Kattoura, filed a witness statement in that matter.

In the statement, Mr Kattoura said he wanted to explain to the court why MGWL "felt it had little choice but to discontinue the claim against the defendants in Scotland". Insisting that the claim was well founded on its merits and that the defenders had indeed taken part in the unlawful conspiracy as alleged, he said the costs of continuing the Scottish proceedings would be many millions of pounds and the evidence of the ability or otherwise to collect from the respondents if successful was not promising. In particular, it was revealed in February 2025 that VDH AG was going into a process of liquidation. Further, the Fifth Defendant went into bankruptcy in early 2024. There was also concern that CSM was engaged in illegal activities and that was another reason to believe that it would not be good for the money. In a hearing on 10 March 2025, I expressed the view that I was dissatisfied with the evidence of Mr Kattoura and that it was “problematic”.

MGWL filed its notice to discontinue the Scottish proceedings on 7 March 2025. At the hearing in London on 10 March 2025, I discharged the English WFO as against Mr Smith and CSM. I declined to deal with issues of costs and arising from MGWL's cross-undertaking in damages. I ordered MGWL to file further witness evidence addressing its reasons for discontinuing the Scottish proceedings, if so advised, by 31 March 2025. A further hearing would be listed as necessary to deal with outstanding issues.

The Claimant stated that it would not press for any particular penalty in respect of the contempts. With the discharge of the WFO, there fell away the order for the provision of information. It did not affect the fact that the contempts had been proved and penalty remained outstanding. However, there was no longer a need for coercive punishment to bring about observance of the disclosure provisions in the WFO.

On 20 March 2025 Lord Sandison, in his own words (see his recent judgment on expenses, at [23]):

"found Mex liable to the defenders in the expenses of the causes on an agent and client, client paying basis; found the defenders' agents entitled to charge an additional fee … with 15% specified as the level of increase in the charges to be allowed at taxation in respect of each such paragraph, found Mex liable to the Scottish defenders for payment of interim expenses in the sum of £150,000 in each process and authorised the sum lodged as caution to be uplifted and paid to their agents."

Lord Sandison in the Scottish proceedings, the same judge who had granted the ex parte orders in Scotland was troubled by how the Claimant had brought conspiracy to defraud proceedings in Scotland claiming £85,000,000 which had suddenly discontinued. He expressed himself about the reasons set forth for this in the following terms in a judgment given about costs reported at [2025] CSOH:

“27.

The reasons advanced for the abandonment did not stand up to scrutiny, as could be seen from a close examination of a witness statement provided by the COO of the MultiBank Group, Salem Kattoura, in one of the related English proceedings. VDHI's insolvency event had occurred many months previously. It had not been represented in the proceedings here for a considerable time, and nothing about their circumstances justified an abandonment only in March 2025. The Scottish defenders were unaware of any particular change in VDH AG's ability to satisfy any decree despite the surrender of its banking licence as part of a restructuring exercise in January 2025. Mr Kattoura's allegation that Mr Taher considered CSM to be a Ponzi scheme was an example of just the sort of self-referential exercise that had characterised Mex's conduct throughout the proceedings here and elsewhere. No notice had been given of any change in circumstances on the part of the Scottish defenders which could justify a change of approach in relation to them. Although Mex claimed that the "Engenera" entity in which Melville Consulting Partners Limited was heavily invested, Engenera Green Bond plc, had become insolvent, in fact it was another related entity with a similar name which had done so, as was quite clear from publicly available information. Melville Consulting Partners Limited continued to have substantial net assets, amounting to over £7 million according to its latest (unaudited) accounts to 31 March 2024. The timing of the abandonment in the context of the conduct of the action to date amply justified the inference that the conduct of the action had been unreasonable throughout.

….

44.

The factors that a court would generally take into account in deciding whether to make an award of expenses on an agent and client scale were set out in McKie . In this case, Mex's conduct of the litigation had been either, or both, incompetent and unreasonable. There was no cogent reason for a properly prepared action to be abandoned at this stage. The explanation tendered by Mex was not credible. The event of insolvency affecting VDHI had happened many months ago, that affecting VDH AG more recently, but on no logical basis could they be causally linked to the recent abandonment. In any event, CSM's liquidity position had not changed at any relevant point. If Mex was concerned about the liquidity of any of the remaining defenders, it could quite reasonably have abandoned the action against only those defenders which it deemed to be a recovery risk.

45.

The proceedings had been brought in October 2023. That was around three years after the events said to have given rise to the action. There was no cogent explanation for the delay. However, there were ongoing proceedings in the BVI concerned with the validity of the consent order which was central to the present action. The existence of the present proceedings was successfully used by persons and entities connected to Mex to persuade the court in the BVI to postpone a trial on that matter in February 2024. That was their purpose, and it was an improper one. Had the present action proceeded to proof, the defenders might well have been in a position to invite the court to find in fact that it had been an abuse of process. It was regrettable that that opportunity had been denied to them. However, the court was entitled to draw inferences from the background to the raising of these proceedings. Since all that these proceedings seemed to have achieved was a stay in the BVI case, and standing their abandonment for no cogent reason, the court was invited to find that the raising of this action was motivated solely by a desire to achieve that. That was unreasonable conduct. CSM cast no aspersions on counsel and agents who had acted for Mex. It was taken at face value that they would have been acting on instructions and were entitled to assume that Mex was genuine in its desire to ventilate the issues at proof. However, it might be noted in this regard that the turnover of representation for Mex had been vigorous.

46.

The action alleged an unlawful means conspiracy and a range of steps taken by the defenders said to amount to fraud. Those allegations had not been vindicated. CSM's position was that there never had been any proper basis to make those averments at the outset. However, it had been preparing for proof, in keeping with all timetables set by the court, to refute the allegations. Not only were the reputations of the averred conspirators impugned, but they were faced with an £85 million claim. Any defender acting reasonably would vigorously oppose such claims where they were not admitted. CSM, having gone to entirely reasonable and predictable expense to resist Mex's claim, should not be left out of pocket by the award of expenses on the usual scale. Mex should bear the cost of its own unfounded and unreasonable, failing which incompetent, litigation.”

As regards costs, Lord Sandison ordered that:

MGWL now relies also on the third and fourth witness statements of Louise Wright dated 31 March 2025 and 28 April 2025. That evidence sought to fill the gap by stating that the impecuniosity of the Defendants was only recently discovered and at the time and costs saved by discontinuing the Scottish proceedings was a very substantial advantage. There was a further application to cross examine Mr Kattoura and Ms Wright which was refused. Mr Grant KC for the Claimant said that it was very unusual for such an application to be made and that the court would very frequently form a view about such evidence without the need for cross-examination. This is indeed such a case.

In my judgment, the evidence of Ms Wright does not advance matters substantially for the following reasons. First, although it provides some further details, it does not substantially advance the position from that stated by Mr Kattoura. It seeks to provide more information about VDH AG, but the attempt to say that the proceedings in Scotland all hinged on the solvency of VDH AG, who were not even parties to the proceedings in the BVI, is unconvincing. Lord Sandison found, as set out above that the insolvency of VDHI and the more recent insolvency of VDH AG could “on no logical basis….be causally linked to the recent abandonment.” More generally, it does not provide a refutation to the conclusions of Lord Sandison.

As regards the proceedings in Scotland, Lord Sandison suggested that its motivation had been to achieve a stay of the proceedings in the BVI so as to frustrate the fraud claim in the BVI. That had been achieved. Further, the effect of the discontinuance was that there was no ability of the defenders in Scotland to prove the true motivation for the discontinuance and particularly Mr Smith and CSM to show that the proceedings in Scotland were tactical, without merit and, according to them, fraudulent. Ms Wright is simply a legal adviser acting on such instructions as she has been given without knowledge of the true intentions and motivation of the Claimant. She was not in a position to refute the conclusions of Lord Sandison.

Third, the Claimant has not waived legal professional privilege and therefore the many communications and advices which must have been passed between general counsel and the Claimant are not before the court. For example, there has not been revealed the Claimant’s strategy in relation to the following matters, namely:

The Court has now had a hearing on 20 June 2025 and continued on 29 July 2025 to hear submissions about penalty, costs and the cross undertaking as to damages.