Al-Dowaisan & Anor v Al-Salam & Ors

A personal relationship of trust and confidence does not, without more, make a commercial participant a fiduciary. The question is whether the circumstances create a legitimate expectation that one party will act in the other's interests, with discretion, power and vulnerability serving as indicators. A company director is not personally liable to account merely because he coordinates investments or is the principal human contact where the relevant companies and solicitors control the funds.

An account in common form is an equitable obligation rather than a claim for breach and is not subject to a limitation period. The court nevertheless retains discretion to refuse an account where further information has little utility, underlying claims are likely to be time-barred, or the order would be disproportionate. The illegality defence may deny recovery where enforcing the claim would damage the integrity of the legal and tax systems and denial is proportionate.

The claimants had invested substantial sums in property projects introduced and managed by the defendants and companies connected with them. They sought accounts, claimed beneficial ownership of certain shareholdings and monies passing through mandate accounts, and resisted a counterclaim for £400,000 on grounds of illegality.

The central issues were whether the individual defendants owed personal fiduciary or accounting duties; whether further accounts should be ordered; whether shareholdings in four projects were held on trust for the defendants; whether the claimants had beneficial interests in the mandate accounts; and whether tax evasion defeated the counterclaim.

1. Personal accounting duties. The court applied the legitimate-expectation approach to fiduciary relationships. The claimants' relationship with the first defendant was essentially commercial. They were not peculiarly vulnerable, the first defendant could not unilaterally affect their legal or practical interests, and there was no expectation of single-minded loyalty. The corporate veil could not properly be lifted. Neither individual defendant owed a personal duty to account.
2. Accounting obligations. The relevant Mayfair company owed a limited duty to account for money received from the claimants and money released to it for reinvestment or payment. In Morocco, the individual defendants and another director had to account for money received into their foreign-currency account until it was paid to the development company, and as trustees of shares for benefits received in that capacity.
3. Account and limitation. An account in common form enforces an equitable obligation and is not subject to a limitation period under the Limitation Act 1980. The court retained discretion, considering the likely utility of further information, prior disclosure, delay, the reasons for seeking an account, the cost of the exercise and whether consequential claims would be time-barred. No further general account was ordered, subject to further submissions concerning Moroccan tax-retention monies.
4. On-trust shareholdings and mandate accounts. The four shareholdings were held on trust for the individual defendants. Imperfections in the trust declarations could be corrected by construction. The claimants had no beneficial interest in the mandate-account monies.
5. Illegality. Applying the structured public-policy approach in Patel v Mirza [2016] UKSC 42, the court dismissed the £400,000 counterclaim. The mandate account had been used to conceal beneficial ownership and facilitate tax evasion. Refusing recovery would protect the integrity of the legal and tax systems and was proportionate, notwithstanding interference with property rights.

First-instance judgment in the High Court. The court determined the substantive claims and counterclaim, but left consequential orders and costs for further submissions.