Qatari Diar Hid E-Mails, Let Witnesses Lie at Trial, Candy's Lawyer Says

Qatari Diar Real Estate Investment Co., part of the emirate’s sovereign-wealth fund, deleted e-mail evidence and let witnesses lie during a trial over a botched deal to build luxury apartments at London’s Chelsea Barracks, U.K. developer CPC Group Ltd. told a judge.

Qatari Diar “deliberately destroyed” relevant e-mails while its law firm, Herbert Smith, failed before last month’s trial to search a server in London that held messages deleted from one in Doha, CPC lawyer Anthony Stephen Grabiner said. The new messages support CPC’s claim that Qatari Diar isn’t being truthful about why it abandoned the luxury development, he said at a hearing today at the High Court in London.

“All these witnesses lied to you and I when they gave evidence,” and were motivated by a need to conceal the true reason for backing out of the real-estate deal, Grabiner said at the hearing. CPC, controlled by real-estate entrepreneur Christian Candy, claims the emir of Qatar instructed the company to abandon the development.

CPC sued for breach of contract in November claiming Qatari Diar must pay as much as 81 million pounds ($119.8 million) for backing out of the deal. Qatari Diar claims it owes nothing because no value was created at the site.

Judge Peter Smith said today the new e-mails wouldn’t prevent him from reaching a judgment before the end of July.

Rapid Pace

Joe Smouha, Qatari Diar’s lawyer from Essex Court Chambers, said in a June 9 court filing that the rapid pace of the trial led to the late discovery of the e-mails.

Qatari Diar “was required to carry out disclosure at a break-neck pace in order to satisfy CPC’s unjustified insistence on as early a trial as possible,” Smouha said in the filing.

Smouha denied CPC’s claim that Qatari Diar’s witnesses were lying and said the e-mail highlighted by CPC -- written by former Qatari Diar spokesman Christopher Joll -- doesn’t support the developer’s allegations.

The claim “that QD’s witnesses were not telling the truth and that their evidence was ‘concocted’ is unsustainable,” Smouha said in a filing. “When properly examined,” the e-mail “adds nothing to the other evidence on which CPC relies.”

Herbert Smith had similar problems with e-mail evidence when it represented Virgin Atlantic Airways Ltd. in a U.K. antitrust regulator’s criminal case against four current and former British Airways Plc executives over an alleged price- fixing scheme. The firm declined to comment on the Qatari case.

Prince’s Criticism

A joint venture of CPC and Qatari Diar paid 959 million pounds for Chelsea Barracks in January 2008. In November of that year, Qatari Diar bought out CPC’s stake for an initial payment of about 38 million pounds and agreed to make 81 million pounds in deferred payments, CPC said. Candy was retained for project management, design and marketing.

When Prince Charles subsequently criticized the development as unsuitable for the area, Qatari Diar withdrew its planning application. CPC claims Qatari Diar deleted e-mails relating to Prince Charles in order to hide evidence. The company sued in November for breach of contract.

Sheikh Hamad Bin Khalifa Al-Thani, the emirate’s ruler, spoke to Prince Charles in February 2009 about his objections to the project, according to CPC’s lawsuit. Prince Charles turned over notes about the meeting, CPC’s lawyer Grabiner said.

The Chelsea Barracks development was planned to include mixed-use buildings of between five and 13 stories, comprising 638 residential units, as well as hotel space, a community center, retail units and restaurants, court papers show.

The case is CPC Group Ltd. v. Qatari Diar Real Estate Investment Company, case no. 4260/09, High Court of Justice, Chancery Division (London).

To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net.

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