COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
Case Nş: 2004 Folio 124 & 831
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE LONGMORE
LORD JUSTICE LAWRENCE COLLINS
| MUNIB MASRI
Judgment Creditor/ Appellant
|- and -
|CONSOLIDATED CONTRACTORS INTERNATIONAL COMPANY SAL
CONSOLIDATED CONTRACTORS (OIL & GAS) COMPANY SAL
TOUFIC SAID KHOURY
SAMER SAID KHOURY
Mr Alexander Layton QC & Mr Tom Raphael (instructed by Olswang) for the Respondents
Hearing dates : 7 & 9 May 2008
Crown Copyright ©
Sir Anthony Clarke MR:
The addressees and the orders
"(i) an order that an officer of [CCIC] ("the Judgment Debtor") attend court to provide information about the Judgment Debtor's means and any other information needed to enforce the order[s] of Mrs Justice Gloster ;
(ii) permission to serve any such order on the Judgment Debtor's current solicitors."
The "officer" was described as "the Judgment Debtor's Chairman and a director whose name is [TK]". A number of documents were attached with Arabic translations. In addition a list of documents which it was said that the judgment creditor wanted the officer to produce was also attached. An express request, with appropriate reasons, was made that TK be questioned before a judge. In addition, an application was made for substituted service of the order on TK by serving it on the judgment debtor's solicitors.
CPR Part 71
"contains rules which provide for a judgment debtor to be required to attend court to provide information, for the purpose of enabling a judgment creditor to enforce a judgment or order against him."
It is I think important to note that the purpose of the rule is for the judgment debtor to be required to attend court in order that information can be obtained to enable a judgment to be enforced against him. A corporate judgment debtor cannot attend in person. Hence, by rule 71.2(b) a judgment creditor may apply for an order requiring "an officer of that body" to attend court and provide the information about the judgment debtor's means "or any other matter about which information is needed to enforce a judgment or order", that is against the corporation. Thus an officer cannot be asked questions about his personal assets or indeed about anything which is not relevant to the enforcement of the judgment or order against the judgment debtor. On the other hand, it is fair to say that by rule 71.2(6) a person served with an order issued under the rule must attend court at the time and place specified in the order, produce the documents in his control which are described in the order and answer on oath such questions as the court may require. Moreover, by rule 71.3(1), an order to attend court must be served on the addressee personally. It is also of note that by rule 71.2(7) an order will contain a penal notice which states:
"You must obey this order. If you do not, you may be sent to prison for contempt of court."
The orders in this case included a penal notice in those terms.
The appeal against SK
"(b) if a judgment debtor is a company or other corporation, an officer of that body, to attend court to provide information about
(i) the judgment debtor's means; or
(ii) any other matter about which information is needed to enforce a judgment or order."
In the case of SK the question is whether an "officer of that body" within that rule is wide enough to include a director of a corporate director of the judgment debtor. It is a question of construction of the rule.
Jurisdiction under Brussels I
i) that the attribution of jurisdiction over the substance of the case under Brussels I carries with it jurisdiction to grant any procedural or evidential measures which are available under national law, including orders under Part 71; or
ii) that there is jurisdiction over the judgment debtors and the directors of a corporate judgment debtor are treated as the company for the purposes of an application under Part 71.
I will consider these alternative bases in turn.
"What however is necessary to stress in this context is that where the Court is exercising its power under s 51 of the Act it is doing so in the context of substantive proceedings in which the court does have jurisdiction. The exercise of the power to order costs to be paid by a party not named is an order made in those proceedings and it will only be exercised on the basis of a substantial connection with those proceedings by a non-party."
See also, to the same effect, per Waller LJ at page 612B.
"In my view Mr Hildyard must be right in one or other of his submissions. Either the application does not involve "suing" or, alternatively, if it does, the application falls within the definition of third party proceedings. My inclination is to the view that a summons issued in an action relating to costs does not "sue" the non-party. I would agree with the judge that "suing" involves pursuing a substantive cause of action. It does not relate to the making of orders ancillary to substantive proceedings pending before a particular Court. To proceed to commit for contempt for example, would in my view not be to "sue" the alleged contemnor. A proceeding to obtain an order for costs because someone has interfered with or been responsible for the bringing of substantive proceedings is not in my view to "sue" as contemplated in Titles I-III of the Convention. But if that be wrong then it seems to me that article 6(2) would apply."
In my opinion, the last sentence shows that the article 6(2) point was an alternative ground for the decision.
"19. The first point to be made, as regards the jurisdiction of a court hearing an application for interim relief, is that it is accepted that a court having jurisdiction as to the substance of a case in accordance with Articles 2 and 5 to 18 of the Convention also has jurisdiction to order any provisional or protective measures which may prove necessary.
22. Thus, the court having jurisdiction as to the substance of a case under one of the heads of jurisdiction laid down in the Convention also has jurisdiction to order provisional or protective measures, without that jurisdiction being subject to any further conditions, "
The conclusion in  was repeated in the summary at . The principles were also repeated and endorsed by the ECJ in Case C-99/96 Hans-Hermann Mietz v Intership Yachting Sneek BV  ECR I-2277 at [40 and 41].
No discretion under CPR 71
"The former rule gave the court a discretion but the new rule gives the judgment debtor a right to issue."
The Evidence Regulation
"1. This Regulation shall apply in civil and commercial matters where the court of a Member State, in accordance with the law of that State, requests:
(a) the competent court of another Member State to take evidence; or
(b) to take evidence directly in another Member State."
"Secondly, the Evidence Regulation applies where the requesting court wants another Member State court to take evidence, or itself to take evidence directly in another Member State; see recitals (7) and (8) and Article 1. That is not this case. The Evidence Regulation does not apply to the situation where an order is made against a judgment debtor to substantive proceedings over which the court has jurisdiction, requiring the debtor to provide evidence to the English court as to nature and location of his assets. So there is no evasion of the Evidence Regulation. "
I agree. I prefer Gloster J's analysis to that of Master Miller.
"Application may be made to the courts of a Member State for such provisional, including protective measures as may be available under the law of that State, even if, under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter."
It can immediately be seen that article 31 is not addressing the position we have in this appeal because here the application is made to the court of the Member State which does have jurisdiction as to the substance of the matter.
"Moreover an application to hear a witness in circumstances such as those in the main proceedings could be used as a means of sidestepping the rules governing, on the basis of the same guarantees with the same effects for all individuals, the transmission and handling of applications made by a court of a Member State intended to have an inquiry carried out in another Member State (see [the evidence Regulation]) of 28 May 2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters "
In my opinion the ECJ was not considering the problem we have here. As Mr Salzedo correctly submits, that was a case in which the claimant was seeking evidence in Holland for the purposes of contemplated proceedings in Belgium. It was in effect a request to the Dutch court to help it. Here Mr Masri is not applying to the Greek court for the examination of the addressees in Greece. Nor is he applying to the English court to examine them in Greece.
Addressee out of the jurisdiction
"Unless paragraph (3) applies, where the permission of the court is required for a claim form to be served out of the jurisdiction the permission of the court must also be obtained for service out of the jurisdiction of any other document to be served in the proceedings."
Tomlinson J held at  that that provision was concerned with documents which require to be served on parties to the proceedings and that IK, as the person against whom an order under CPR 71 was made, was not a party. He also noted that Aikens J pointed out in C Inc plc v L  2 All ER (Comm) 446 that rule 6.30(2) itself requires the identification of a ground within CPR 6.20 which gives the court power to grant permission to serve out of the jurisdiction the document service of which is sought to be effected. He added that it was not suggested that there is any head of CPR 6.20 under which permission could be granted to serve either an order or an application for an order under CPR 71.2(1)(b). Having reached that point, Tomlinson J considered on what basis, as he put it, the "court can assume an exorbitant jurisdiction to permit service of such an order out of the jurisdiction". He first considered in  what he described as "the closest analogy", namely a witness summons issued under rule 34.2, and then in  the decision in The Ikarian Reefer (No 2), which he said did not assist.
"(1) Rule 1 of this Order shall apply to the service out of the jurisdiction of an originating summons, notice of motion or petition as it applies to service of a writ.
(4) Service out of the jurisdiction of any summons, notice or order issued, given or made in any proceedings is permissible with the leave of the Court, but leave shall not be required for such service in any proceedings in which the writ, originating summons, motion or petition may by these rules or under any Act be served [out of the jurisdiction] without leave."
The words in square brackets were added in 1996: see the discussion by Waller LJ in The Ikarian Reefer (No 2) at 613B. Waller LJ added at page 613C that, where there is an action pending before the English court, then a summons in the action can be served on a person domiciled and resident outside the jurisdiction; and at page 614B-C that, since the position was governed by RSC Order 11 rule 9(4), it was not material to look at Order 11 rule 1. It was also so held in the context of the forerunner of CPR 71, namely RSC Order 48, in Union Bank of Finland v Lelakis  1 WLR 590.
" I venture to think that if a non-party committed a contempt of the English court the fact that that non-party was outside the jurisdiction physically would not prevent the English court having jurisdiction to proceed to commit for contempt. By analogy, as it seems to me, unless by some Convention the United Kingdom has agreed that its courts would not exercise a jurisdiction, the English court has jurisdiction to decide the issue whether a non-party has taken such steps in relation to an action as should render that person liable to pay the costs of the action. Even more clearly, if what is alleged (as in this case) is that the non-party in reality brought the main proceedings, the English court has jurisdiction to decide whether there has in effect been a submission to the jurisdiction by the non-party. "
As I read that passage, the key question in such a case would be whether there was a sufficiently close connection to make it just to make an order for costs. It was not necessary to establish a submission to the jurisdiction, although such a submission would of course make the case stronger on the facts. See also at pages 613H to 614B in a passage quoted by Tomlinson J at  in Vitol.
"It is obvious that in circumstances where the court finds that the non-party has a substantial connection with the existing case, so that the Court's powers under s 51 could be exercised, then it had to find a way to exercise those powers over a person who was resident out of the jurisdiction."
I agree. Aikens J continued:
"But it does not follow that there is an inherent jurisdiction to permit service on a person out of the jurisdiction in other cases which are actually covered by rules of Court. For the reasons I have given, in my view the present circumstances are covered by the CPR. So in my view there is no room to invoke the inherent jurisdiction of the court as a last resort."
He also noted in a footnote that in any case section 51 claims are now covered by rule 6.20(17).
Conclusion on jurisdiction
The scope of the appeal
"Permission to appeal is granted in respect of all points, save the issue of full and frank disclosure in respect of which permission is refused."
The question is whether Master Miller was refusing permission to appeal on all aspects of the exercise of his discretion. That seems to me to depend upon whether the reference to "the issue of full and frank disclosure" encompasses all aspects of the exercise of the discretion. In my judgment it does not. I would accept Mr Salzedo's submission that it simply meant that permission was not being granted as to Master Miller's conclusion that there had not been full and frank disclosure in the respects suggested. It was not to be open to the claimant on appeal to say that there had been full and frank disclosure or that it was of no significance. I do not think that Master Miller intended, for example, to exclude consideration of the weight to be attached to the alternative method of obtaining information or evidence in Greece to which he referred in . In short, permission was being granted in respect of "all points" except the issue of full and frank disclosure, which would include such points. I shall consider the appeal on that basis.
Exercise of discretion
"51. I finally turn to full and frank disclosure. I have indicated the areas where it is said that there was not full and frank disclosure. In my view, both areas are made out. I can well understand why, trying to cut the Gordian knot, as it were, in the impasse, which has occurred so far as execution of the judgment is concerned in this case, that the course adopted by the judgment creditor's solicitors appeared to be appropriate and the best course. Of course, I accept that not everybody in the law can know everything, not withstanding any presumption to the contrary and I accept that there was certainly no deliberate intention to mislead the court or to obtain orders, which it was known just would be unobtainable if the full facts were known.
52. The judgment creditor suggested that all that has happened is that the court now has before it all the information, which it perhaps should have had in the first place. That is a strong factor in favour of allowing the orders to stand, if it was otherwise proper to do so. Unfortunately of course, that is not the case here, because I have already found that there was no jurisdiction to make the order, and courts do not make orders, or do not at any rate confirm orders, which they are persuaded eventually that they had no jurisdiction to make.
53. I have to hold that in view of the fact that I have found that there is no jurisdiction, clearly these orders must be set aside. On any view, the order against the second-named addressee must be set aside, and in case this matter goes further, I shall simply consider what would have been the appropriate course if the judgement creditor had persuaded me that its contention as to jurisdiction was sustainable and proper, although it had not made, as I have indicated, full and frank disclosure.
54. Applications made without notice place a very high burden on those applying to make them to ensure that the court has such information as it needs in order to decide whether the order should not be made. There is no doubt that had the order been fully aware of the problems involved in this case, it would not have made the orders ex parte, but would have required attendance at court.
55. On the basis that the judgment creditor would have succeeded, even had full disclosure been made, which of course is not what has happened in this case, in my view, the totality of the failure to give full and frank disclosure, which is not limited to the procedural point, but also includes the service point as well, although to a lesser extent, the appropriate course would have been to set aside these orders for failure to make full and frank disclosure. That is my judgment."
The two areas in which there was a failure to make full and frank disclosure were a failure to draw the attention of the court to the Evidence Regulation, Brussels I and the Service Regulation and misinformation about the facilities available for service in Greece: see .
"since the date of the liability judgment, the actions of the defendants have demonstrated in a patently obvious fashion that they propose to take advantage of any opportunity open to them to resist enforcement of the judgments of the English courts, to evade their responsibility to pay Mr Masri what is due to him, as found by the English courts, and to put every obstacle in his way to prevent him from enforcing [his] judgment against them."
The plethora of points taken in the three appeals to this court this year are evidence that what Gloster J says there is correct.
Lord Justice Longmore
Lord Justice Lawrence Collins