The Abu Dhabi royal family has lost a preliminary battle in the bitter court dispute with its former London estate manager.
The case has been brought by a number of companies which own a £5bn portfolio of central London properties – including the Berkeley Square estate – 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.
They are suing Lancer Property Asset Management for “tens of millions of pounds” in damages. They accuse Lancer, which was fired as manager of the estate in 2017 after 16 years of service, of dishonesty and fraud.
In its defence, Lancer argues that there was no dishonesty and no fraud, and says it has evidence that the claimants were aware of the payments that are now being complained of.
The first preliminary court skirmish took place in January at London’s commercial court. The parties have had to wait until today for the judge, Mr Justice Roth, to give his written judgment.
At the hearings, lawyers for the claimants attempted to strike out part of the Lancer defence relating to material disclosed during an earlier mediation between the parties in 2012.
They said this was shared “without prejudice” and as a result is privileged, meaning it cannot now be relied upon. Lancer’s lawyers opposed this, arguing that it was an attempt by the claimants to “suppress” evidence that damaged their case.
And in today’s ruling, the judge backed Lancer.
The arguments centred on the interpretation of the “without prejudice” (WP) rule that governs the admissibility of evidence, and is in place to help litigants settle their differences, rather than fight all the way though the court system.
It is often used to encourage parties in a mediation to be more open, as what they say or disclose cannot ordinarily be used against them later.
“However, it is well established that the WP rule is not absolute, and is subject to exceptions,” the judge said in his ruling.
The question is: “do any of the exceptions apply in this case?”
And he ruled that two exceptions do apply. The judge found that as Lancer wanted to use evidence from the mediation about what they themselves said at the time, they shouldn’t be barred. The judge pointed out that if Lancer had attempted to mislead in the mediation, that could have been used against them.
The other exception relies on a complicated case law argument about the so-called “Muller exception”.
As such, the judge dismissed the claimants’ application to strike out parts of Lancer’s defence, and allowed Lancer to amend their defence accordingly.
Lancer managing director John Kevill said in a statement that he was “delighted” with the ruling.
“As we have stated previously, we regard the claim against us to be vexatious and malicious,” he added.
“It is important that all of the evidence is available before the court, including that which the claimants sought to exclude by wrongly invoking privilege.
“This is key evidence which allows us to defend ourselves against the fundamentally misconceived claims that have been brought against us.”
The parties are no strangers to courtroom disputes. Last year, four of Lancer’s directors – John Kevill, Duncan Ferguson, Andrew Lax and Byron Pull – took Astrea Asset Management, the company that took over the management of the estate, to the Employment Tribunal alleging unfair dismissal.
Lax and Pull both had their claims dismissed. Ferguson and Kevill’s claims were upheld, but Kevill’s compensation was reduced by 100% for “substantially bad” conduct.
Today’s dispute has much longer to run. It is scheduled to go to trial after 1 May 2021 and last 18 days.
