HRH Princess Deema Bint Sultan Bin Abdulaziz Al Saud v Ronald William Gibbs

A contractual mandate to liquidate assets must be construed in its commercial and contractual context. A qualification that the manager has no liability to realise a specified minimum sum does not remove the obligation to commence liquidation or excuse failure to perform it.

Where a contract records an agreed state of affairs as the basis of the transaction, the party making the representation may be contractually estopped from denying it in later litigation. The doctrine requires no reliance or detriment.

The claimant sought the return of approximately US$25 million and consequential losses under a Settlement Agreement dated 18 April 2018. The funds had been transferred to the defendant for investment, but he failed to liquidate and return them after receiving the claimant’s written instruction.

The defendant was debarred from defending the proceedings following repeated breaches of court orders. The court therefore determined liability and quantum on the evidence adduced by the claimant, including expert valuation evidence. The central issues were the construction of the Settlement Agreement, contractual estoppel, the value of the assets that should have been liquidated, and consequential investment losses.

1. Liability. The claim succeeded in substantial part. The defendant was obliged, from receipt of the claimant’s valid instruction on 25 April 2018, to commence liquidation of the Investment Portfolio as soon as reasonably possible. Liquidation had to maximise returns, avoid penalties and avoid fire-sale situations, with the net proceeds paid into the claimant’s nominated account.
2. The wording giving the defendant a mandate, but no liability, to realise liquidation proceeds of not less than US$25 million did not permit him to avoid liquidation altogether. It meant that he was not automatically liable for any shortfall caused by a fall in asset values, but he remained liable for failing to liquidate the portfolio in the contractually required manner.
3. The defendant was in breach of contract by failing to transfer cash and proceeds already realised, and by failing to liquidate other assets which could have been liquidated within the periods identified by the evidence. The claim for breach of trust or fiduciary duty was stood over because the claimant had not identified the traceable proceeds required for that relief.
4. Under the doctrine of contractual estoppel, a party to a binding contract containing an agreed state of affairs may be prevented from asserting that the opposite was true. No reliance, detrimental reliance or unconscionability was required. The Settlement Agreement and attached 2018 Investor Summary established the contractual basis that the defendant held the listed assets for the claimant, that she had a proprietary interest in them, and that their agreed value was just under US$25 million.
5. The defendant was therefore estopped from contending that the claimant held only options, development agreements or notional interests in the listed assets. Where expert valuation was rendered unreliable by the defendant’s failure to provide disclosure, the agreed valuations in the 2018 Investor Summary constituted the best evidence of loss.
6. The claimant was also entitled to consequential loss for being deprived of the money. On the evidence, a compounded return of 9% per annum represented the appropriate loss of investment value. The claimant was to carry out the monetary calculation, to be confirmed by the court.