Orb A.R.L. & Ors v Ruhan & Ors

On applications to amend pleadings, join parties, serve claims out of the jurisdiction and obtain proprietary injunctions, the court must assess the realistic prospects of the pleaded case and the practical utility of the relief sought. A serious issue to be tried may exist despite difficult factual and legal questions, including questions of illegality, tracing and state of mind. However, service out and equitable relief may be refused where the claimant has already recovered sufficient assets to satisfy the arguable claim. An applicant seeking service on the Sphere Drake basis must make full and frank disclosure of material recoveries and settlement arrangements. Failure to do so may also defeat a proprietary injunction because it bears on clean hands, justice and convenience. A defendant may amend to advance a strongly arguable counterclaim arising from the same transactions, even where the earlier case was deliberately misleading, provided the new case is not itself an abuse of process.

The claimants sought permission to amend their claim against Mr Ruhan, add further defendants and parties, serve prospective defendants outside the jurisdiction, and obtain proprietary injunctions. They alleged an oral profit-sharing agreement, fiduciary breaches, tracing claims, dishonest assistance and knowing receipt concerning profits from hotel transactions and subsequent corporate dealings.

Mr Ruhan resisted the claimants’ applications and sought permission to amend his Defence, bring counterclaims and join claims concerning the transfer of assets said to belong beneficially to him. The court also considered disclosure, privilege and costs. The central issues were whether the proposed cases had realistic prospects, whether service out and injunctions were justified, and whether the proposed amendments constituted an abuse of process.

1. Claimants’ applications. Permission was granted to amend the claim against Mr Ruhan to plead additional relevant facts. Service out on the proposed second to fifth defendants and the proprietary injunction applications were refused.
2. An amendment should generally be permitted where the prejudice can be compensated in costs. Permission may be refused where the amendment has no realistic prospect of success. The alleged oral agreement, its possible illegality, the fiduciary-duty case and the tracing claims raised fact-sensitive issues requiring a trial. The claimants therefore had a serious issue to be tried in relation to the alleged agreement and, in part, the tracing of approximately £92 million.
3. The jurisdictional gateways were satisfied on a good arguable case. Nevertheless, the claimants had obtained assets under the Isle of Man Settlement which appeared to exceed their best recoverable entitlement. Tracing, dishonest-assistance and knowing-receipt claims against the additional defendants were therefore unnecessary. The court would not permit service out where full recovery had already been made or where the practical purpose of the claim had disappeared.
4. The claimants’ failure to disclose the value and basis of those recoveries, and their late disclosure of the settlement documents, breached the required standard of full and frank disclosure. The conduct also weighed against clean hands, the balance of convenience and the requirement that an injunction be just and convenient. No injunction was granted.
5. Mr Ruhan’s applications. Permission was granted to amend his Defence and bring the proposed counterclaims and additional claims. The new case was strongly arguable and closely interconnected with the claimants’ claims, so it should be tried in the same proceedings. The earlier deliberate failure to disclose the nominee arrangements was misleading and attracted indemnity costs, but the alleged abuse concerned the abandoned case rather than the new claims. The new pleading was not itself an abuse of process.
6. Early disclosure concerning the Isle of Man Settlement was refused. The pleadings and requests for further information should be finalised first, with disclosure to follow in the ordinary course. Costs were ordered to reflect both the claimants’ non-disclosure and Mr Ruhan’s deliberate attempt to mislead.