On 6 September 2023, Andrew Baker J handed down judgment in the case of Kallakis v AIB [2023] EWHC 2148 (Comm) following a Commercial Court trial spanning five weeks.
The claimant, Michalis Kallakis, brought claims exceeding £300 million against AIB relating to the sale of a portfolio of 14 properties as mortgagee at the height of the financial crisis in November 2008. The properties were sold following the discovery by AIB that its lending - with an outstanding debt at the time of £709 million - had been induced by a massive mortgage fraud committed by Michalis’ father, Achilleas Kallakis.
Michalis claimed that he was the beneficiary of an alleged trust that was the beneficial owner of the properties and brought claims against AIB in relation to the sale for alleged: (i) misrepresentation (ii) sale at undervalue (iii) sale without authority and (iv) unjust enrichment.
He also ostensibly brought a claim against his father, Achilleas, for alleged negligence as purported advisor to the trust.
A number of the claims were abandoned in closing argument and the Court dismissed the remainder. This included findings that:
- The alleged trust, through which Michalis claimed to have standing to bring the claims, has never existed. The alleged trust was no more than a means for Achilleas to try to dishonestly conceal his beneficial ownership of assets;
- Notwithstanding the purported claim brought by Michalis against Achilleas, the proceedings were brought at the instance of, and to pursue the interests, of Achilleas. Accordingly, the proceedings were “dishonest in conception, inception and prosecution” and thereby an abuse of process; and
- In substance the claims were “without foundation”. This included because, in relation to the sale at undervalue claim, Michalis’ property valuation expert gave “entirely unsatisfactory” evidence and on a number of occasions “was making his evidence up as he went along, which involved him not telling the truth to the court”.
A copy of the judgment can be found below.
Neil Kitchener KC, Sandy Phipps and James Fox appeared for AIB, instructed by CMS Cameron McKenna Nabarro Olswang LLP.
View Judgment