Jersey Unreported Judgments

[2003]JRC151

royal court

(Samedi Division)

 

3^rd September 2003

 

 

 

 

 

Application by the Plaintiff to vary interim injunctions

 

Advocate  M.J. Thompson for the Plaintiffs.

Advocate D. R. Wilson for  and first and second Parties Cited

 

 

judgment

bailiff:

1.        This is an application by the plaintiffs seeking a variation of certain injunctions granted by the Deputy Bailiff on the 11^th August 2003 to assist in the enforcement of an arbitration award.

2.        The plaintiffs' are attempting to enforce arbitration awards made on the 28^th April and 3^rd July 2003 against the defendant, pursuant to which the defendant was ordered to pay to the plaintiffs $US5,968,409 plus interest of $US2,243,566.32 and costs and expenses of £105,900.60 plus interest on costs. 

3.        It is unnecessary to describe the history to the arbitration, save to say that it arose from payments made in 1997 by the plaintiffs of some $70,000,000 to the defendant in relation to a particular investment.

4.        Mr Thompson for the plaintiffs contends that the defendant and the parties cited have not complied with the injunctive orders made by the Deputy Bailiff and he now seeks further disclosure orders in addition to the orders originally made.

5.        Mr Wilson for the defendant and for the parties cited has challenged the Court's power to make the orders sought.  Counsel submitted that, a real risk of dissipation of assets needed to be shown, but the logic of this argument is that if there is indeed no risk of dissipation,  the defendant might be expected to seek the setting aside of the injunctions to which any disclosure order would be ancillary.

6.        Counsel told us that he was not instructed to challenge the injunctions, essentially on ground of expediency.

7.        We do not think that this position is tenable.  The fact is that the Deputy Bailiff was satisfied that there was a risk of dissipation and that there were grounds to order injunctive relief.  That order is not being challenged.  That is the footing upon which we have to consider whether the additional relief sought by the plaintiffs should now be granted.

8.        It is worth emphasising that this is a post-judgment case.  There has been an arbitration award in favour of the plaintiffs.  The words of Birt, Deputy Bailiff in Goldtron Limited -v- Most Investment Limited (2^nd August 2002) Jersey Unreported; [2002/148] appear to us be equally relevant in this case.  The Deputy Bailiff stated at paragraph 32;

"In our judgment, given that this is a case of post-award relief, the complete absence of any evidence about the financial position of the defendant or the nature of its business or the offer of any security (whether in whole or in part) for the award is sufficient for us to conclude that there is a risk of dissipation of assets in the event of the injunction being lifted".

9.        We have considered the submissions made to us but in our judgment the defendant has not complied fully with the orders made by the Deputy Bailiff.

10.      The initial response of the defendant was to file an affidavit by Kenneth Edward Rayner, a director of the parties cited who is no longer a director of the defendant. 

11.      Mr Rayner gave evidence that the information which he had as to the assets of the defendant, namely a bank account with £1,307.58 to its credit held in Jersey and 999 shares in a Cypriot company called CIS Emerging Fund Limited, to which we refer as CISEF, was given in his capacity of Director of the parties cited. 

12.      Mr Thompson challenged that as being inadequate.  In response to this criticism a further affidavit by one Talia Laoufer was submitted by Mr Wilson at the beginning of this hearing.  Miss Laoufer was appointed as a director of the defendant on the 1^st May 2003 but her evidence also fell short, in our judgment, of declaring the value and relevant particulars of the holding in CISEF.

13.      The long and the short of it is that the plaintiff has the benefit of an arbitral award by which the defendant was ordered to pay amounts totalling some $7,000,000.  It has failed to do so.

14.      It was able to pay legal costs and expenses amounting to over £1,000,000 to defend the arbitration proceedings.  Yet now its liquid assets are minimal and information as to the illiquid asset is sparse and inadequate.

15.      No undertaking has been forthcoming as to the retention of that illiquid asset, on the assumption that it is worth something, pending settlement of the judgment debt.

16.      It is well established that disclosure orders may be made even without being auxiliary to a Mareva injunction in order to assist a judgment creditor to obtain satisfaction.

17.      We need only refer to extracts from the judgment of Coleman J in Gidrxslme Shipping v Tantomar-Transportes, (1994) 4All ER, 507 at 519 where the learned Judge stated..

"Where, by contrast, one has the position that a judgment has already been obtained or an award made and where a Mareva injunction in aid of execution is justified, the jurisdiction to make a disclosure order arises both as a power ancillary to and in support of the injunction and, independently of the injunction, as a power in support of the execution of the judgment or award.  It follows that whereas it may on the facts of the case in question be inappropriate to extend the Mareva injunction to assets outside the jurisdiction-and it is clear from the two authorities cited that such extensions are likely to be rarely justified-very different considerations may apply to disclosure orders in aid of execution.  That being so, there is, in my judgment, a very firm jurisdictional basis for an order, made post-judgement or post-award, which includes both a Marvea injunction confined to assets within the jurisdiction and a disclosure order in respect of worldwide assets".

18.      The learned Judge continued at page 521...

"In view of the outstanding and unsatisfied awards against the defendants, amounting in aggregate to $US357,349.47 plus interest and costs, the first award having been converted into a judgment for $US284,392.47, it is, in my judgment, entirely just and convenient in aid of execution of those awards that the defendants should be required to tell the plaintiffs where their assets are, whether inside or outside the jurisdiction of the English Courts".

19.      And later on the same page the learned Judge continued...

"In my judgment, quite different considerations apply in the case of a post-judgment or post-award disclosure order.  In such cases it is just and convenient that the judgment or award creditor should normally have all the information he needs to execute the judgment or award anywhere in the world".

20.      The principles outlined by Coleman J in that case were approved by this Court in Goldtron Limited -v- Most Investment Limited, to which reference has already been made. 

21.      In this case the arbitral award remains unsatisfied and no indication has been given by the defendant as to when or how it might be satisfied. 

22.      The information contained in the affidavits filed by the defendant, in particular the affidavit filed by Talia Laoufer, is wholly inadequate.  Miss Laoufer was appointed as a director of the defendant on the 1^st May 2003.  Presumably there are accounts of the defendant and of the Cypriot company CISEF in which the defendant has invested and it should not be too difficult for Miss Laoufer to state, with the assistance of Mr Rayner, what assets, if any, are held by CISEF and their value.

23.      In default of satisfactory compliance with the injunctive order made by the Deputy Bailiff, we have no hesitation in reaching the conclusion that the further disclosure orders sought by the plaintiffs should be made.  We order accordingly.

24.      Mr Wilson the Court accepts that the undertaking in paragraph 1 should extend to the disclosure orders which the Court has made today, notwithstanding that the orders have been made inter partes.

25.      So far as paragraph 2 is concerned there is no disagreement that the reasonable costs of the parties cited should be paid.  I think we have dealt with paragraphs 3 and 4.

26.      As to the question of costs, it is true that the affidavit sworn by Mr Kenneth Edward Rayner was sworn on behalf of both the defendant and the parties cited. 

27.      The parties cited are not however defendants to the action brought by the plaintiffs and in the exercise of my discretion I decline to make the order jointly and severally against the defendant and parties cited.  The defendant will pay the costs of the plaintiffs on the standard basis. 

28.      I make no order in respect of the costs of the parties cited.

 

 

 

Authorities

I.B.L. Limited and Another -v- Planet Financial and Legal Services Limited and Another; [1990] JLR 294

Goldtron Limited -v- Most Investment Limited  (9^th August 2002);  [2002/148]

Gidrxslme Shipping Co Litd -v- Tantomar-Transportes Maritimos Lda (1994) 4 All ER 507

Gee: Mareva Injunctions and Anton Piller Relief, (4^th Edition) (1998), pp 346-352.