The Abu Dhabi royal family has failed in a further bid to strike out key elements of Lancer Property Asset Management’s defence in the ongoing multi-million-pound litigation between the royals and Lancer, the former manager of their £5bn portfolio of central London properties.
The Court of Appeal has sided with Lancer in the preliminary row, with its reasons for dismissing an appeal by the royals published today.
The case has been brought by 24 companies that are ultimately beneficially owned by Sheikh Khalifa bin Zayed bin Sultan Al Nahyan, emir of Abu Dhabi and president of the United Arab Emirates, whose London portfolio includes the Berkeley Square Estate.
They are suing Lancer Property Asset Management, which was fired as manager of the estate in 2017 after 16 years of service, for “tens of millions of pounds” in damages, alleging dishonesty and fraud, with a trial scheduled for June 2021.
The appeal concerned aspects of the defence put forward by Lancer (and its fellow defendants, including its holding company and directors) and the scope of the “without prejudice” rule, the general effect of which is to render inadmissible all negotiations genuinely aimed at settlement.
The claimant companies were represented in their dealings with Lancer by Mubarak Al Ahbabi. Their case is that Al Ahbabi and the defendants conspired to inflate the fees that were payable to Lancer under the asset management agreement for the purpose of funding onward payments that Lancer made to companies owned Al Ahbabi personally, principally a company called Becker.
They allege that, between 2005 and 2015, Lancer made payments of more than £26m to Becker, for which it provided no services, and that this constitutes misappropriation.
Representing the claimants at the appeal hearing in December, David Quest QC said: “The claimants’ case is that those payments were bribes, Dr Al Ahbabi acted in breach of fiduciary duty to the companies and that the defendants dishonestly assisted him in participating in this arrangement to defraud the claimants.
In their defence, the defendants allege that Sheikh Khalifa approved the payments to Becker in a document which pre-dated the 2005 agreement.
They rely on what was said in the course of a “without prejudice” mediation that took place between the claimants and Lancer in 2012, specifically that in their written position paper for that mediation Lancer made reference to the payments it had made to Al Ahbabi’s company and that this paper was seen at the time by the claimants’ solicitors.
The claimants had argued that this material was shared “without prejudice” and as a result was privileged, meaning it cannot now be relied on.
However, last year, High Court judge Mr Justice Roth dismissed their strike out application, ruling that the without prejudice rule is “not absolute” and that the Lancer defendants could rely on two exceptions that apply in this case.
Now the Court of Appeal has upheld that ruling. Lord Justice David Richards said: “The purpose for which the defendants may adduce evidence of the mediation statements is to determine the authority of Dr Al Ahbabi, which goes to the validity of the settlement deeds put in issue by the claimants.”
To send feedback, e-mail jess.harrold@egi.co.uk or tweet @estatesgazette
