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23 July 2018
In the Ahmad Hamad Algosaibi & Brothers Company (AHAB) v Saad judgment handed down on 31 May 2018, AHAB's attempts to trace into the hands of the defendants were addressed (for further details please see "Grand Court dismisses multibillion-dollar fraud claim in "one of the largest Ponzi schemes in history""). In respect of defendant SIFCO5, the Grand Court found that AHAB's claims, which attempted to trace its funds to that entity, were "unparticularised and unprincipled". Further, AHAB was unsuccessful in establishing that funds representing traceable proceeds from the Money Exchange reached SIFCO5 or in articulating any discernible cause of action against SIFCO5 in respect of such funds.
AHAB argued that it was unnecessary to demonstrate an unbroken chain of transactional links in order to bring a tracing claim. Citing Relfo Limited (in liquidation) v Varsani ((2014) EWCA Civ 360) and Federal Republic of Brazil v Durant International Corp ((2015) UKPC 35), AHAB argued that:
Rejecting AHAB's arguments, the court distinguished the cited authorities from the general rule that a chain of transactional links must be established in order to trace. In doing so, the court held that while a defaulting trustee or fiduciary is required to account for trust funds in their hands, this did not absolve AHAB of the burden of demonstrating that particular funds comprised trust assets.
AHAB also argued that because of Al Sanea's position as director of the defendants, it should be assumed that he was the "directing mind and will" of each defendant company; therefore, knowledge of his alleged fraud against AHAB could be attributed to each company, including SIFCO5. The court disagreed, finding that:
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