Byers & Anor (Joint Official Liquidators Saad Investments Co Ltd) v Samba Financial Group

When a court directs a preliminary issue for trial, the parties must confine their evidence and submissions to the issue actually identified. An argument that would require determination of a different issue cannot be introduced through expert evidence. Where the existence of proprietary rights is assumed for the directed issue, evidence addressing whether those rights arose at all, including alleged illegality in their creation, is outside its scope. Expert evidence on that separate question may also be excluded where the court has already determined that the question cannot fairly be tried without disclosure.

The liquidators applied to strike out passages from the defendant’s expert reports on Saudi Arabian law. The reports addressed the alleged unlawfulness of transactions that had created the claimants’ proprietary interests. A prior procedural ruling had identified for trial only whether Saudi Arabian law extinguished or subordinated those interests on a transfer of securities, even if the defendant knew of them. The central issue was whether the proposed expert evidence impermissibly reopened the separate question of illegality.

1. Application granted. The challenged passages in the defendant’s expert reports were removed from the reports and excluded from the evidence at trial.
2. The issue directed for trial concerned the priority between the claimants’ existing rights in the disputed securities and the defendant’s rights as purchaser, assuming the claimants had such rights. It did not concern whether the claimants had acquired any proprietary rights because the underlying transactions were unlawful under Saudi Arabian law.
3. The defendant’s pleaded case distinguished between the existence of the claimants’ equitable interest and the effect of the transfer under Saudi Arabian law. The existence of the relevant property rights was therefore a given for the purposes of the preliminary issue.
4. The defendant could argue that Saudi Arabian law did not recognise trusts or separate equitable interests, and therefore treated the registered owner as having the relevant rights. It could not, within the directed issue, argue that the trusts were unlawful and that the claimants consequently had no proprietary rights.
5. The court had previously determined that the separate illegality issue could not fairly be tried without disclosure of the defendant’s documents. The proposed evidence raised that same issue and would also substantially alter the issue directed for trial.

The judgment records an earlier procedural ruling dated 8 April 2020 concerning which issues could fairly proceed to trial. This was a first-instance decision on the subsequent application to exclude parts of the expert evidence.