The High Court has ruled that a fraudulent misrepresentation against Khalid Affara’s Arab Investments brought by one of the investors in its proposed Pinnacle skyscraper in the City of
Saudi Arabian lawyer and politician Dr Abdelrahman Abbar alleges that he and his son invested £500,000 in the 945ft development in April 2007 on the understanding that it would be used to finance the purchase and preparation of the site at a cost of £270m.
He claims that the site was to be sold to a developer within 12 to 18 months, at which point he expected to see a return on his investment.
Abbar claims that Saudi Economic & Development Co (SEDCO), a sharia–compliant investment specialist, made “deceitful or reckless” representations to him concerning the scheme, and that the investment was taken to finance the purchase and development of the Pinnacle at a cost of £1.1bn within a time-frame of at least five years.
Arab Investments is alleged to be liable for SEDCO’s supposed misrepresentations because it was “a prime mover and principal behind the seeking and taking of the investment”.
It denies liability for the alleged misrepresentations, arguing that it is merely the asset manager for the Pinnacle.
Dismissing Arab Investments’ bid to have those allegations thrown out, Deputy High Court judge Nicholas Strauss QC said that its contention that its role was “simply that of asset manager… lacks reality” and “may turn out at trial to have been lacking in candour”.
He said: “Whether [Arab Investments] or Mr Affara owned the property at the outset, and whatever the extent of its role in relation to the raising of equity finance may turn out to be, it seems to me to be at least possible… that Arab Investments played a central role in the transaction”.
He ruled that Arab Investments’ application to strike out other allegations of fraudulent misrepresentation and breach of trust in the claim would be adjourned in order for the particulars of claim to be amended.
“It seems to me that this case really involves only one allegation, which is a straightforward one and which can be much less elaborately pleaded,” he said.
A spokesman for Arab Investments said:
“We are content with the outcome of the hearing because the judge has asked the claimant fundamentally to amend its pleading as a condition of the case continuing. Since we had offered this outcome in advance, the judge awarded us our costs for all three days of the hearing and we remain confident that this misconceived case will be thrown out at trial.”
Abbar and another v Saudi Economic & Development Co Real Estate Ltd and others Chancery Division (Mr Nicholas
Stuart Cakebread and Juliette Levy (instructed by Robert Cook & Co, of Fleet) appeared for the claimant; Rupert Reed (instructed by Davies Arnold Cooper LLP) appeared for the sixth defendant.
