Mahmood v KPMG - Case Update

KPMG and a former partner have succeeded in their application to strike a claim for professional negligence and misconduct alleged in connection with the administrations of a number of insolvent companies between 2008 to 2010.

The claimant, Bashar Bin Mahmood, was a director, shareholder and/or guarantor of the companies. He accused the defendants of selling development properties (the companies’ main assets) at an undervalue, causing significant losses. He initially valued his claim, which he brought in the English High Court, at over £1.2 billion, but later reduced it to £25 million.

This was not the first time Mr Mahmood brought this claim, however. In 2022, he commenced litigation against the same defendants in the Central London County Court. That Court struck out the claim in 2023 on grounds that it disclosed no reasonable grounds for bringing the case and was considered an abuse of process. The claim — and a subsequent appeal — were ultimately found to be “totally without merit”.

Now, the English High Court has ruled the current claim to be an abuse of process, as it largely duplicates the previous claim before the Central London County Court. The claimant’s attempts to relitigate the same issues were deemed barred by principles of cause of action estoppel, issue estoppel, and the Henderson principle, which prevents parties from raising claims that should have been brought in earlier proceedings. The Court also rejected the claimant's argument that new information warranted the current claim, finding no evidence of deliberate concealment by the defendants.

The Court also found that the claim was abusive in that the claimant lacked standing to sue and knew this when he brought the claim. The claimant was made bankrupt in 2009, after the events underlying his complaints took place. Any claims, if they existed, were vested in his trustee in bankruptcy (now the Official Receiver). The Court emphasized that the Central London County Court had dismissed his claim for this very reason, and the claimant had no valid basis to continue the litigation fully knowing about this limitation from the outset.

The claim was struck out as totally without merit, and the Court indicated it would consider a civil restraint order against the claimant to prevent further frivolous litigation.

The decision can be accessed here.

Professionals involved:

• Matthew Abraham of South Square (instructed by Stephenson Harwood LLP) for KPMG and the former partner

• Timothy Becker (instructed by Direct Access) for the claimant