Greig William Alexander Mitchell & Anor. v Sheikh Mohamed Bin Issa al Jaber & Ors.

The equitable jurisdiction to award interest must be exercised according to settled equitable principles. Interest is justified where it compensates for lost investment returns or borrowing costs, or where it provides a proxy for profits made from misapplied assets. A company in liquidation cannot automatically be treated as an investment vehicle for assessing compensatory interest. Where fiduciary assets have been misapplied, the court may presume beneficial use and profit unless clear evidence shows otherwise. Compound interest may be awarded where a fiduciary has withheld or misapplied assets, even without proof of actual profit or fraud as an element of the cause of action. The appropriate rate remains fact-sensitive and may be linked to the commercial borrowing rate.

The judgment concerned consequential matters following the court’s substantive decision ordering the Sheikh and the Fifth Respondent jointly and severally to pay equitable compensation of €67,123,403.36. The Liquidators sought interest from the date on which shares had been wrongfully transferred, primarily on a compensatory basis and alternatively on a restitutionary basis. They also advanced a late alternative claim under section 35A of the Senior Courts Act 1981 and sought to rely on fresh evidence concerning the company’s liquidation and creditors.

The central issues were whether equitable interest should be awarded, the proper basis and rate of any award, whether interest should be compounded, and whether the late evidence and statutory alternative should be admitted.

1. Fresh evidence. The Liquidators’ new evidence was served without a formal application and, in the case of expert evidence, without permission under CPR 35.4(1). It was unfair to permit reliance on the material at that late stage. The evidence was therefore excluded and the Liquidators’ quaternary case, which depended on it, failed.
2. Threshold for equitable interest. The court’s discretion is wide but must follow settled equitable principles. Interest may be awarded on a compensatory basis, reflecting lost investment returns or increased borrowing costs, or on a restitutionary basis, as a proxy for profits assumed to have been made from the use of misapplied assets.
3. Compensatory basis. The company’s liquidation was a core characteristic. It was not an investment vehicle and there was no evidential basis for assuming that it could have generated a 6.5% return or incurred increased borrowing costs. The compensatory claim therefore failed.
4. Restitutionary basis. The Sheikh had dishonestly misapplied the shares and the Fifth Respondent was liable to account as if it were a fiduciary. In the absence of clear evidence that the transfer provided no advantage, the court could presume beneficial use and profit. The possible later worthlessness of the shares did not negate that presumption.
5. Rate and period. The appropriate rate was 1% above base rate. Interest ran from the transfer to judgment. Against the Fifth Respondent, interest was compounded annually while it held the shares and was simple thereafter. The Sheikh was treated similarly because of his controlling relationship with the Fifth Respondent and his own misapplication of the shares.
6. Compound interest and statutory interest. Compound interest was available where a fiduciary withheld or misapplied assets, without proof of actual profit and even absent fraud as an element of the cause of action. The court declined to decide whether section 35A of the Senior Courts Act 1981 applied.

The parties were directed to prepare a draft order reflecting those decisions.

First-instance consequential judgment following the substantive judgment in [2023] EWHC 364 (Ch) and a subsequent costs judgment in [2023] EWHC 676 (Ch).