Bank of Credit & Commerce International SA & Anor v Saadi & Anor

Summary judgment may be entered where credible evidence shows that the defendant has no real prospect of successfully defending the claim and no other compelling reason requires a trial. A person who controls trust money under a pre-existing fiduciary relationship may be liable for knowingly permitting its misapplication or benefiting from it. Under section 21(1)(a) of the Limitation Act 1980, no limitation period applies to an action by a beneficiary concerning fraud or fraudulent breach of trust to which the trustee was party or privy. Compound interest may be awarded for breach of trust and fiduciary duty.

The claimants, both companies in liquidation within the BCCI group, sought summary judgment against a former employee who had worked as an account manager in the Affiliate Co-ordination Unit. They alleged that he had participated in, or knowingly permitted, a series of fraudulent misappropriations from BCCI accounts. The second defendant, his wife, was joined only for enforcement purposes.

The first defendant had been personally served but had filed neither a defence nor evidence. The application concerned whether the evidence established liability for breach of trust and fiduciary duty, whether limitation defeated the claim, and whether compound interest was recoverable.

1. Summary judgment. The court applied CPR 24.2. The claimants bore the burden of showing that the first defendant had no real prospect of successfully defending the claim and that there was no other compelling reason for trial. The defendant’s failure to file a defence or evidence left the claimants’ credible evidence unanswered. The evidence, including the circumstances of the Willow Cottage transaction and evidence from participants in the fraud, established his knowing involvement or, at minimum, his knowing failure to prevent the misapplication of money under his control.
2. Equitable liability. The defendant’s control over the relevant accounts placed him in the same position as an account manager previously held liable as a constructive trustee and fiduciary. By knowingly permitting the misappropriation, and/or knowingly benefiting from it, he acted in breach of trust and fiduciary duty. The claimants were entitled to equitable compensation of £3,174,215.68.
3. Limitation. Although no limitation defence had been pleaded, the court considered the issue. The pre-existing fiduciary relationship made this a Category 1 constructive-trust case under the analysis in Paragon Finance plc v DB Thakerar [1999] 1 All ER 400. The claim therefore fell within section 21(1)(a) of the Limitation Act 1980, so that no limitation period applied.
4. Interest and order. Following the approach in Wallensteiner v Moir [1975] 1 QB 373, compound interest was appropriate, calculated at the relevant judgment rate with six-monthly rests. Summary judgment was entered for £3,174,215.68, with interest of £14,746,130.87. The first defendant was ordered to pay costs on the indemnity basis, subject to detailed assessment if not agreed.