BUSINESS & PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| GULF AIR B.S.C. (C)
- and -
|(1) ONE INFLIGHT LIMITED
(2) MOHAMAD EL ASSAAD
(3) SARA ABDALLAH ABDALA
(4) AMIR HIRANI
(5) INFLIGHT GLOBAL PTE LIMITED
(6) EPCON LIMITED
(7) GLOBAL ONE MEDIA LIMITED
Andrew Pearson (instructed by Byrne & Partners LLP) for the Fourth, Fifth and Sixth Defendants
Hearing date: 25 April 2018
Crown Copyright ©
THE HON. MR. JUSTICE PICKEN:
(1) an application by the Fourth Defendant, Mr Amir Hirani ('Mr Hirani'), to set aside a worldwide freezing order granted by Bryan J on 5 December 2017 (as varied by the order of Nicholas Vineall QC on 19 December 2017, and as further varied by the order of Patricia Robertson QC on 7 March 2018) ('the Freezing Order') or to vary the Freezing Order in relation to what has been described as the 'Electronic Devices Order';
(2) an application by the Fifth Defendant, Inflight Global Pte Ltd ('Inflight'), to set aside service out of the jurisdiction and for a declaration that the Court has no jurisdiction to hear the claims against it, together with an application to set aside the Freezing Order or to vary it as regards the Electronic Devices Order;
(3) an application in similar terms by the Sixth Defendant, Epcon Ltd ('Epcon'); and
(4) an application by the Claimant, Gulf Air B.S.C. (C) ('Gulf Air'), for continuation of the Freezing Order and amendment of the Electronic Devices Order which forms part of that order.
Factual background in brief
"4. In summary, the case relates to what is said to be a fraud committed by the respondents against the applicant in the period 2014 to 2017 pursuant to which the respondents, at a time when the second respondent, that is Muhammad Assad, who was employed by the applicant and in a position of influence in relation to awarding relevant contracts, allegedly conspired to procure, and did procure, the applicant, which is a well-known Middle Eastern airline, to award a relevant contract with an entity, a non-existent entity, described variously, or known as Global One Media Limited (that is GOM). GOM's former registration documents are said to be, and have prima facie been shown to me, to be forgeries, as has been confirmed by the Register of Companies with the use of the barcode of a different company; and an approximation of the name of other companies that are, and at all material times have been, defunct.
5. The first respondent, One Inflight Limited, however, does exist and is an English corporate company. It was incorporated in November 2014, owned 51 per cent by the second respondent, 49 per cent by his wife, the third respondent, both of whom were directors. Shortly thereafter, and certainly by 9 January 2015, it is deposed that the fourth respondent had acquired 15 per cent of the shares in the first respondent. The fourth respondent signed a tender document, which is at the heart of this case, on behalf of GOM, the non-existent company, on or about 20 January 2015, and his name appears as a signatory for GOM as a relevant officer of the awarded company.
6. The background to this matter is that Gulf Air wished to issue tenders for the provision of in-flight entertainment content services and in October 2014 instigated this process. The personal behalf of the applicant who did this was the second respondent, as a senior manager in in-flight products. He is the person who issued the relevant documents, the invitation to tender, decided who will be invited, disqualified the lowest bidder, vetted the tenders and ostensibly carried out due diligence.
7. In the event, the contract for the provision of these services was awarded to GOM on 18 April 2015. GOM was defined as a company and its registration number, that is the false registration number, was given in the tender documents. It appears that GOM itself trades from the trading address of the first respondent, initially 9 Hendon, Ashford, TW15 1SS UK, which was also the registered office of the first respondent, One Inflight Limited, from its incorporation until 9 July 2015. Therefore it is said a pattern emerges as the first respondent's business address changed.
8. The invoices raised by GOM were paid by the applicant. They were all personally provided by the second respondent to the applicant using variously the first respondent's address from time to time. Seven of the invoices, which the second respondent personally approved for payment totalling US$1.5m, were actually processed before the awarded contract was effective. The contract was for a fixed term of four years and the contract price was US$22.1m for that four-year period, although within two years and two months Gulf Air paid GOM, in fact the first respondent as it transpires on the affidavit of evidence before me, US$22.1m. The payments were all directed by the second respondent through accounts either held by the first respondent in the UK, a branch of HSBC in Ashford, or by a connected company in Singapore, the fifth respondent, Inflight Global PTE, which it is said is owned by the six respondent, a Seychelles company, EPCON Limited.
9. Essentially the fraud is alleged to have been along these lines. The second respondent manipulated the tender process, of which he was in control, wearing his hat as a senior manager in in-flight products for the claimant inserted the first respondent into the supply chain, hiding the fact by a pretence that GOM was an active trading company with no connection to him or his wife, who was the third respondent. The first respondent's address appears on all the invoices. He then passed and approved all of the invoices and procure payment thereof. He never sought nor had any approval or authority to authorise payments that were in excess of the contract itself. .".
"Global One Media is a limited company that has been working with Inflight entertainment, Software development and packaging for over 14 years. They are world-established in the industry of software designers and ancillary revenue services. They have substantial experience in Content and Software design, management and services.
In point 1: They published their profit margin 6.7% and by keeping an open book, Gulf Air would work through a transparent data exchange that will enable us not only to improve the quality but to accurately decrease the cost when any new offer or package is available.
In point 2: Global One Media has confirmed that they would not increase the cost throughout the life of the contract. With this statement which would be included in the contract and through an open book policy, we will be able to acquire better packages in cost and quality.
In point 3: All suppliers are rejecting to support Gulf Air through their insourcing of the production to Bahrain; except for Global One Media. They have ensured in their statement that we would support Gulf Air with Vendor Service Bulletin and help set up racks for insourcing.
Mr Cogley submitted that this shows Mr El Assad evaluating a tender submitted by a non-existent 'front' company connected to him.
" When CA starts its day, our business day has ended and it seems a bit strange for a content supplier to demand that Global One Media personnel make ourselves available to WB outside of our office hours but that WB can't be flexible and provide the same courtesy. Ed and I have been flying between London and Bahrain and it's been difficult to set up a suitable time for all that falls within our respective office hours. ".
Mr Crawford's response the same day, 3 June 2015, was to the point:
"No need for a call tomorrow, per your E-mail below you are backing out on an already agreed upon deal with a list of fairly lame excuses of why you never came back to us to discuss. I am sorry but Warner Bros. just does not do business with companies that act in this fashion. It sounds like you have a lot more important things to do than setting up a long-term business relationship with Warner Bros. I have never in 25 years of working in the business been treated like you have treated Warner Bros. in this whole process. Warner Bros. has no interest in any other deals with your company going forward. Warner Bros. Is looking for long term partnerships with companies as we are and will be the premium content company in the world."
That email was sent not only to Mr Hirani but also (like Mr Hirani's own email to which it was a response) to Edward Grant and Eliana Fischer. Mr Crawford then re-sent the email, this time copying in Mr El Assaad, obviously oblivious to the fact that Mr El Assaad and Edward Grant were the same person. Edward Grant's response (again copying in Mr El Assaad), on 4 June 2015, was to say this:
"We have been operational flat out for GF launch. We do not, unfortunately, have time to spare. Moh'd has been very nervy on GOM team to get the cycle prompt, the delay = hefty compensation. We will make it, no doubt about it. We have good studios like yourself who are backing us up, were the team, vast lab and most importantly, we have the support from GF management, increasing budget and a long unbreakable contract. Partnering with GOM = long relationship with GF with gold pot of contracts. GF is our crucial creative contract, We intend and we will make it the finest content in realm and not only in the region.
We will argue with GF at present the aftermath of this email. GOM and GF would enjoy working with WB but it needs to be within CCO commercial strategy, GF's obtaining content based on their HDD and GOM team completing the work on time."
Mr El Assaad then replied to that, using his own name rather than his pseudonym, the same day, saying this:
"Just landed to this issue. I am troubled by WB actions and will have a chat with GOM team today. I personally want WB as a brand, BUT it is GOM decision and honestly they are doing a great job so far GOM have received the complete trust from the executive management and board of GF with the lineup and design changes.
Please call me anytime when you have time and we will discuss all areas of this project. However, I am oblivious to the contract details between you and GOM. Amir, CCO, makes the decision since he is accountable to delivery of the cycle and will be penalized for delay. ".
That email did not copy in Mr Hirani, nor for that matter Edward Grant and Eliana Fischer. Mr El Assaad did, however, forward the email to Mr Hirani (and to himself as Edward Grant and his wife as Eliana Fischer), only for Mr Hirani to reply saying:
"This is good thanks but please resend it to Jeff with Amir Hirani as GOM in copy just like Jeff did. He needs to know I know where GF stands. PLEASE. This is important."
"Mr El Assaad did not become aware that the GOM certificate of incorporation was a forgery until on or around 14 April 2015 when a company registration agent, Duport Associates Limited, informed him that GOM was not a registered company and the certificate of incorporation was invalid."
They then go on to plead in paragraph 36.1, as follows:
"Initially Mr El Assaad agreed with Mr Hirani that a new company incorporated in Singapore for tax purposes should take the place of GOM and Global One Media PTE Limited was registered by Mr Hirani in Singapore on 5 May 2015 for this purpose."
Mr Hirani's application to discharge the Freezing Order
"a. The claimant must demonstrate a real risk that a judgment against the defendant may not be satisfied as a result of unjustified dealing with the defendant's assets.
b. That risk can only be demonstrated with solid evidence; mere inference or generalised assertion is not sufficient.
c. It is not enough to rely solely on allegations that a defendant has been dishonest; rather it is necessary to scrutinise the evidence to see whether the dishonesty in question does justify a conclusion that assets are likely to be dissipated.
d. The relevant inquiry is whether there is a current risk of dissipation; past events may be evidentially relevant, but only if they serve to demonstrate a current risk of dissipation of the assets now held.
e. The nature, location and liquidity of the defendant's assets are important considerations.
f. Whether or to what extent the assets are already secured or incapable of being dealt with is also relevant.
g. So too is the defendant's behaviour in response to the claim or anticipated claim."
"Mr Barden relied on the decision of the Court of Appeal in Thane Investments Ltd & Ors v Tomlinson & Ors  EWCA Civ 1272 and in particular the judgment of Peter Gibson LJ who suggests that even in a case of fraud, the mere fact that there is fraud does not of itself lead to a freezing injunction being granted. I dealt with the case of Thane v Tomlinson in some detail in my judgment in Madoff Securities International Ltd v Raven & Ors  EWHC 3102 (Comm), reported at  2 All ER (Comm) 634 at paragraphs 163 and following, and I pointed out that there were two earlier decisions of the Court of Appeal which were not cited in Thane, possibly because the defendant was unrepresented, which suggest to the contrary that, in an appropriate case, the mere fact that sufficiently serious allegations of fraud are made may be sufficient to justify the conclusion that there is a risk of dissipation."
Indeed, as Flaux J went on to explain, in saying what he did in the Madoff Securities case, the analysis of Patten J (as he then was) in Jarvis Field Press v Chelton  EWHC 2674 (Ch) as to how the Court should approach the Thane Investments case is helpful:
"It is necessary to have regard to the particular respondents to the application and to ask oneself whether, in the light of the dishonest conduct which is asserted against them, there is a real risk of dissipation. As Peter Gibson LJ made clear in the passage I have already quoted, the court has to scrutinise with care whether what is alleged to have been dishonesty justifies the inference. That is not, therefore, a judgment to the effect that a finding of dishonesty (or, in this case an allegation of dishonesty) is insufficient to found the necessary interference. It is merely a welcome reminder that in order to draw that inference it is necessary to have regard to the particular allegations of dishonesty and to consider them with some care."
"As to the principle to which Males J makes reference at (c), Tatneft accepts that, following the Thane Investments case, not every general allegation of dishonesty will be sufficient to justify an inference that there is a real risk of dissipation. It was submitted, however, correctly in my view, that it is appropriate to take into account the underlying allegations made against a defendant."
"We agree with Peter Gibson LJ that the court should be careful in its treatment of evidence of dishonesty. However, where (as here) the dishonesty alleged is at the heart of the claim against the relevant defendant, the court may well find itself able to draw the inference that the making out, to the necessary standard, of that case against the defendant also establishes sufficiently the risk of dissipation of assets. That is supported by two earlier Court of Appeal decisions, not cited in Thane Investments. These are Norwich Union v Eden (25 January 1996 unreported) and Grupo Torras SA v Al Sabah (21 March 1997 unreported). Both of them were cited by Flaux J in his judgment in Madoff Securities International Ltd and others v Raven and others . Those decisions are not inconsistent with what Peter Gibson LJ said in Thane Investments v Tomlinson, but they put it into context, and their context is a good deal closer to that of the present case."
I then went on to refer to the Madoff Securities case and what Flaux J had to say in that case about the Thane Investments case, before observing that the Court of Appeal in the VTB case agreed with Flaux J's approach at , as follows:
"We agree with those observations by Flaux J. On that basis it seems to us that it would have been right for the judge to take into account a finding of a good arguable case that Mr Malofeev had been engaged in a major fraud, and that he operated a complex web of companies in a number of jurisdictions, which enabled him to commit the fraud and would make it difficult for any judgment to be enforced. We would regard such factors as capable of providing powerful support for the case of a risk of dissipation."
"There are many cases where the use of and familiarity with a network of offshore companies has been regarded as a factor tending to support the existence of a risk of dissipation, albeit that the weight to be given to such a factor has to be assessed in all the circumstances of each individual case (see Elektromotive Group Ltd v Pan  EWHC 2742 (QB) at [84(b)]; A.H. Baldwin & Sons Ltd v Al-Thani  EWHC 3156 (QB); and Holyoake v Candy  EWHC 970 (Ch) at ). As the Court of Appeal said in VTB Capital Plc v Nutritek International Corporation  EWCA Civ 808,  2 Lloyd's Rep 313 at  and , 'the factor of a good arguable case as to fraud against the person in question, and the use of a web of offshore companies in connection with the fraud, could properly provide a basis for taking this into account in favour of the grant of an injunction We would regard such factors as capable of providing powerful support for the case of a risk of dissipation.' In my judgment that is also the position here."
Inflight's jurisdictional challenge and its application to discharge the Freezing Order
"First, the claimant must satisfy the court that in relation to the foreign defendant there is a serious issue to be tried on the merits, i.e. a substantial question of fact or law, or both. The current practice in England is that this is the same test as for summary judgment, namely whether there is a real (as opposed to a fanciful) prospect of success: e.g. Carvill America Inc v Camperdown UK Ltd  EWCA Civ 645,  2 Lloyd's Rep 457, at . Second, the claimant must satisfy the court that there is a good arguable case that the claim falls within one or more classes of case in which permission to serve out may be given. In this context 'good arguable case' connotes that one side has a much better argument than the other: see Canada Trust Co v Stolzenberg (No 2)  1 WLR 547, 555-7 per Waller LJ, affd  1 AC 1; Bols Distilleries BV v Superior Yacht Services  UKPC 45,  1 WLR 12, -. Third, the claimant must satisfy the court that in all the circumstances the Isle of Man is clearly or distinctly the appropriate forum for the trial of the dispute, and that in all the circumstances the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction."
"A claim is made against a person ('the defendant') on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and (a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and
(b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim."
"An attempt to clarify the practical implications of these principles was made by the Court of Appeal in Canada Trust Co v Stolzenberg (No 2)  1 WLR 547. Waller LJ, delivering the leading judgment observed at p 555:
'"Good arguable case" reflects that one side has a much better argument on the material available. It is the concept which the phrase reflects on which it is important to concentrate, i.e. of the court being satisfied or as satisfied as it can be having regard to the limitations which an interlocutory process imposes that factors exist which allow the court to take jurisdiction.'
When the case reached the House of Lords, Waller LJ's analysis was approved in general terms by Lord Steyn, with whom Lord Cooke and Lord Hope agreed, but without full argument:  AC 1, 13. The passage quoted has, however, been specifically approved twice by the Judicial Committee of the Privy Council: Bols Distilleries (trading as Bols Royal Distilleries) v Superior Yacht Services Ltd  1 WLR 12, para 28, and Altimo Holdings, loc cit. In my opinion it is a serviceable test, provided that it is correctly understood. The reference to 'a much better argument on the material available' is not a reversion to the civil burden of proof which the House of Lords had rejected in Vitkovice. What is meant is (i) that the claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway; (ii) that if there is an issue of fact about it, or some other reason for doubting whether it applies, the Court must take a view on the material available if it can reliably do so; but (iii) the nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it. I do not believe that anything is gained by the word 'much', which suggests a superior standard of conviction that is both uncertain and unwarranted in this context."
" the question whether D2 is a proper party is answered by asking: 'Supposing both parties had been within the jurisdiction would they both have been proper parties to the action?': Massey v Heynes & Co (1888) 21 QBD 330 at 338, per Lord Esher MR. D2 will be a proper party if the claims against D1 and D2 involve one investigation: Massey v Heynes & Co at 338, per Lindley LJ; applied in Petroleo Brasiliero SA v Mellitus Shipping Inc (The Baltic Flame)  EWCA Civ 418,  1 Lloyd's Rep 203, at  and in Carvill America Inc v Camperdown UK Ltd  EWCA Civ 645,  2 Lloyd's Rep 457, at , where Clarke LJ also used, or approved, in this connection the expressions 'closely bound up' and 'a common thread': at ,  ."
"Good to hear from you and apologies for my late response. Just some unofficial news for you; official email will be sent out next week. I will no longer be acting as Chief Commercial Officer for Global One Media. I have decided to move back to my aviation consulting company: Airborne Communication & Entertainment, LLC (contact shown below in signature field).
Please address any further questions regarding Global One Media to its CEO, Natan Blanchman at firstname.lastname@example.org. Alternatively, you may also contact Mohamad El Assaad at Gulf Air. Both are in copy of this message. Gulf Air will be signing and managing all contracts moving forward.
As Mr Cogley pointed out, and notwithstanding the reference to Gulf Air "signing and managing all contracts moving forward", the fact that "any further questions" were directed to Mr Blanchman at "Global One Media" might suggest that Inflight had a continuing role. It should be acknowledged that by this stage the Seventh Defendant, Global One, had, of course, been incorporated also and, as such, that might be the explanation for the reference to "Global One Media". However, Mr Hirani's email was a response to an email from the BBC which attached a draft contract identifying the BBC's contractual counterpart as Inflight (then known as Global One Media PTE Ltd), and so it must be open to question, at the very least, whether Mr Hirani's email really entailed anything more than Mr Hirani saying that he himself (as opposed to Inflight) was ceasing to be involved. There is also the fact that two contracts exist (in the case of the first signed only by Mr El Assaad and not also by the BBC) from early September 2016 and dated 11 July 2017 respectively, in which the so-called "technical services provider" is identified as "Global One Media PTE Ltd" (and so Inflight). These two contracts describe the parties as being BBC Worldwide Ltd and Gulf Air. As such, they are consistent with what Mr Hirani, at least on one view, had in mind when he sent his email on 25 July 2015, namely that he personally would no longer be involved but that there would be continued involvement on the part of Global One Media PTE Ltd albeit that the BBC's contractual counterpart would be Gulf Air directly. Ultimately, these seem to me to be matters which are appropriately resolved at a trial and which are not capable of summary dismissal (in Inflight's favour) at this stage. Specifically, whether Mr Pearson is right when he submitted that what happened as regards the identification of Global One Media PTE Ltd as "technical services provider" was a matter which was unknown to Mr Hirani and Inflight at the time is a matter which cannot readily be assumed bearing in mind the overall evidential position.
Application to discharge
"MR COGLEY: Now, yes; R5 now R5
MR JUSTICE BRYAN: Yes.
MR COGLEY: - is a company incorporated in Singapore and the first five invoices that were to be raised by One Inflight, by R1 and this was before the contract was even operative, but the first five invoices, and indeed they were paid, the bank account details that were given on them were bank account details in Singapore.
MR JUSTICE BRYAN: This oh, I see, an account in Singapore; right.
MR COGLEY: They had an account in Singapore.
MR JUSTICE BRYAN: Right.
MR JUSTICE BRYAN: By an account in Singapore, do we now know that it's
MR COGLEY: Yes, it's the account of
MR JUSTICE BRYAN: Of R5?
MR COGLEY: That's right, it's R5's account.
MR JUSTICE BRYAN: Right.
MR JUSTICE BRYAN: Those or the bank account details of R5?
MR COGLEY: R5, yeah.
MR JUSTICE BRYAN: How do I know that that's the bank account of R5?
MR COGLEY: I think you do, my Lord, yes.
MR JUSTICE BRYAN: No, I'm saying how do I know?
MR COGLEY: Oh how
MR JUSTICE BRYAN: Can you just prove it to me?
MR COGLEY: Oh, how do you know? We don't have a single document that proves it, my Lord, but it's dealt with in the affidavit.
MR JUSTICE BRYAN: Yes.
MR COGLEY: And, my Lord, what we can do is - my Lord, while I'm giving this reference, I also add this point
MR JUSTICE BRYAN: Yeah.
MR COGLEY: - if you go to paragraph 95, here's reference to what has become R5; at that time it was called Global One Media Group; it changed its name to Inflight Global PTE. Yes, it doesn't actually say, my Lord, expressly, that it is the account. My Lord, can I put it this way; we know it is and any affidavit that I am required, that we are required to produce to pose into those matters -
MR JUSTICE BRYAN: Yes.
MR COGLEY: - as I indicated at the beginning, we will add that in, because we know, if I may put it that way
MR JUSTICE BRYAN: Right.
MR COGLEY: - because we can make we can make
MR JUSTICE BRYAN: Well, I think you should."
Later on, Mr Cogley explained that it was this evidence, concerning Inflight having the relevant Singaporean bank account identified in the invoices, which was "how we tie in Hirani and Inflight Global PTE Limited".
"We believe that the Singapore account is operated by the Fifth Respondent because the Fifth Respondent is the only Singaporean entity that has been discovered. We have not been able to identify a One Inflight Limited or Global One Media in Singapore or any business connection between the First Respondent and/or the Second Respondent in Singapore but we do know that the fourth respondent, who was intimately involved in the fraud and without whose participation the fraud would not have occurred, is a director of the Fifth Respondent."
"Subsection (2) states that a person is guilty of an offence 'if knowing or having reasonable grounds to suspect that any property is another person's proceeds of drug trafficking [section 49(2) of the 1994 Act] / of criminal conduct [section 93C(2) of the 1988 Act]' he does one or other of the things described to 'that property' for the purpose which the subsection identifies. A person may have reasonable grounds to suspect that property is one thing (A) when in fact it is something different (B). But that is not so when the question is what a person knows. A person cannot know that something is A when in fact it is B. The proposition that a person knows that something is A is based on the premise that it is true that it is A. The fact that the property is A provides the starting point. Then there is the question whether the person knows that the property is A."
Mr Pearson submitted that, since the Singapore bank account was not owned by Inflight but by Global One (the Seventh Defendant), or so it is assumed for present purposes, Mr Cogley (and Gulf Air) cannot have known that it was owned by Inflight when Bryan J was told that that was the case. It was Mr Pearson's submission that the crucial difference between knowledge and belief is that knowledge is a justified true belief.
"The facts and matters deposed in this Affidavit are true to the best of my knowledge, information and belief. Save where the context indicates, the contents of this Affidavit are based upon my own personal knowledge. Where the matters which I depose to herein are not within my own personal knowledge, they derive either from documents that I have read or information that has been provided to me by senior managers of the Applicant, and I believe the same to be true."
Clearly, it would not have been appropriate for Mr Cogley to have sought, in his exchanges with Bryan J, to say something similar to this. He did not need to do so since it is implicit: Mr Cogley was telling Bryan J what he knew to be the case in the sense that what he told Bryan J was based on what he believed to be the case. The more so, because (unlike Carol Anderson, somebody who was putting evidence before the Court) Mr Cogley was not giving evidence when he was making his submissions to Bryan J. The more so also, because Mr Cogley expressly pointed out to Bryan J that "We don't have a single document that proves it". It was obvious that what Mr Cogley was saying to Bryan J was that, as far as he and Gulf Air were concerned, the Singapore bank account was Inflight's bank account: in other words, that that was what they understood to be the position, not that that was certainly the position.
"b. Failure to disclose a material fact will sometimes require immediate discharge of the order. This is likely to be the court's starting point, at least when the failure is substantial or deliberate.
c. Nevertheless the court has a discretion to continue the injunction (or to impose a fresh injunction) despite a failure of disclosure; although it has been said that this discretion should be exercised sparingly, the overriding consideration will always be the interests of justice.
d. In considering where the interests of justice lie, it is necessary to take account of all the circumstances of the case including (without attempting an exhaustive list) (i) the importance of the fact not disclosed to the issues which the judge making the freezing order had to decide; (ii) the need to encourage proper compliance with the need for full and frank disclosure and to deter non-compliance; (iii) whether or to what extent the failure to disclose was culpable; and (iv) the injustice to a claimant which may occur if an order is discharged leaving a defendant free to dissipate assets, although a strong case on the merits will never be a good excuse for a failure to disclose material facts.
e. The interests of justice may sometimes require that a freezing order be continued, but that a failure of disclosure be marked in some other way, for example by a suitable order as to costs."
Specifically, as to (b), Mr Pearson having expressly disavowed any suggestion that the breach (if there was one) was deliberate, the question is whether the failure was substantial. Consistent with what I have explained above, however, I cannot accept that the failure was substantial since I cannot accept that Mr Cogley's use of the word "know" as opposed to "believe" amounts to anything substantial (or, indeed, substantive) at all. It follows that this is not a case where, even if there were a relevant failure, there should be immediate discharge of the Freezing Order. It follows, too, that the discretion described in (c) and amplified in (d) does not arise. If, however, it did come into play, then, the interests of justice perfectly obviously justify the continuance of the Freezing Order and not its discharge. The fact not disclosed (even assuming that it is a fact at all and, if it is, that it is material) is either wholly unimportant or is so lowly on the importance scale as not to warrant immediate discharge: see (d)(i). Nor, in my view, is this a case in which (d)(ii) applies since I am clear that any failure was inadvertent at worst. That addresses (d)(iii) also and, as to (d)(iv), in my assessment, the injustice to Gulf Air through discharging the Freezing Order would be significant. For all these further reasons, I decline to discharge the Freezing Order as against Inflight.
Epcon's jurisdictional challenge and its application to discharge the Freezing Order
"(xii) Yet further, the suggestion that the Sixth Defendant held the shares in the Fifth Defendant on behalf of the Fourth Defendant because the latter ' did not have an appropriate company already in existence ' [Fourth Defendant's second Affidavit, paragraph 33] is inconsistent with the existence of another company solely incorporated by the fourth defendant Inflight Global LLC, a company incorporated in June 2013 in Nevis, owned by the Fourth Defendant, and that had (up until June 2016) a bank account. Inflight Global LLC was not only directly owned by the Fourth Defendant, but was clearly a more 'appropriate company' than the Sixth Defendant, as Inflight Global LLC provided IFE (type) services, whereas the Sixth Defendant's activities consisted of management consultancy in the cement, power generation, renewable energy and mining industry sectors;
(xiii) The Sixth Defendant is said to be solely and beneficially owned by the Fourth Defendant's brother, Pharaohs Hirani. The Claimant does not admit this, and requires it to be strictly proved. However, on 30 December 2016, the Fifth Defendant transferred to the Sixth Defendant the sum of USD$22K. The Fourth Defendant/Fifth Defendant and Sixth Defendant assert that this sum was a gift made by the Fourth Defendant personally to his brother, Pharaohs Hirani to assist the latter in a move. The Claimant's case is that in fact this was a payment either in consideration of the fact that the Sixth Defendant was holding (and on the Claimant's case hiding) the shareholdings of the Fourth Defendant in the Fifth Defendant or alternatively was a payment reflecting the fact that the Fourth and/or Fifth Defendant hold an interest in the Sixth Defendant; and in any event is not a transfer between individuals, but a transfer between corporate entity;"
Later on, in paragraph 60, under the heading "The Role of the Fifth and Sixth Defendants", this is then stated:
"The Fifth and Sixth Defendants or offshore companies. The Fifth Defendant is wholly beneficially owned by the Fourth Defendant. The Claimant cannot presently fully state its case in relation to the beneficial ownership of the Sixth Defendant, but for the avoidance of doubt does not admit that the Fourth Defendant has no interest therein. It is the Claimant's case that each has been involved in the Scheme although the precise involvement cannot presently be particularised beyond that identified under paragraph 52 and the subparagraphs thereunder. The same will be further voluntarily particularised upon the earlier of Disclosure or the provision of Further Information. It is, however and in any event, to be inferred that the Fifth Defendant is the alter ego of the Fourth Defendant and that the Fourth Defendant treats the assets of the Fifth Defendant as his own. The Sixth Defendant, at the very least, was a vehicle utilised by the Defendants to hide the Fourth Defendant's shareholding in the Fifth Defendant and such was in furtherance of the Scheme. In further support of this latter assertion, the Claimant relies on the fact that, according to the Defendants, the Fifth Defendant was incorporated by the Fourth Defendant at the request of the Second Defendant and it follows that each of the Defendants knew and/or consented/agreed or acquiesced in the issued shares of the Fifth Defendant, owned by the Fourth Defendant, being held by the Sixth Defendant. Further the Defendants are liable on that basis or as having received either the Claimant's monies or the benefit of the Claimant's confidential information, and are liable as co-conspirators in the Scheme to like extent and in relation to the same matters (whether discrete causes of action or incidents of dishonest assistance or knowing receipt) as the Fourth Defendant. Further and in support of this, the Fourth Defendant's knowledge is to be imputed to the Fifth Defendants. In the case of the Sixth Defendant, whilst not directly imputed, the Sixth Defendant agreed/acquiesced in hiding the Fourth Defendant's shares in the Fifth Defendant. The same could not have occurred without, in turn, the intervention/agreement of Pharaohs Hirani, whose knowledge as a Director of the Sixth Defendant is imputed to it."
Application to discharge
The Electronic Devices Order
"The Respondent must upon service of this order preserve and keep safe any device capable of transmitting and/or storing electronic communication and make such available to the Applicant's solicitor for collection along with a copy of the password or passwords or other means of access for purposes of the same being inspected by the Applicant, its servants or agents."
"The Respondent must from the time of the service of this order preserve and keep safe and secure any document, meaning anything in which information of any description is recorded, whether a physical document or an electronic document which relates to any transactions, agreements or correspondence between the Applicant and the Respondents, and any transactions, agreements or correspondence between them and any other Respondents."
This paragraph is not in dispute and, it would appear, never has been in dispute, albeit that in the most up-to-date version of the Freezing Order, following the hearing which took place on 7 March 2018 before Patricia Robertson QC, the relevant paragraph has been re-numbered so that it is paragraph 7(1).
"The Fourth, Fifth and Sixth Defendants must:a. Preserve and keep safe any device capable of transmitting and/or storing electronic communication; and
b. The obligation to 'make such available to the Applicant's solicitor's [sic] for collection along with a copy of the password or passwords or other means of access for purposes of the same being inspected by the Applicant, its servants or agents' as previously ordered is suspended ".
In the event, however, as I have mentioned, Mr Pearson adopted a slightly modified position during the course of argument. He accepted that it would be appropriate for paragraph 7(4)(a) to remain in place. Indeed, it was his submission that, precisely because Mr Hirani, Inflight and Epcon were, in any event, under an obligation to preserve and keep safe "any device capable of transmitting and/or storing electronic communication", it would be unnecessary and disproportionate to require them to permit inspection of the devices as contemplated by the original (but, as matters stand, suspended) obligation contained in paragraph 11(3) of the freezing order granted by Bryan J.
"(2) The First, Second, Third and Seventh Defendants must preserve and offer for inspection all devices owned by each of them capable of transmitting or storing electronic communications so that the Applicant's forensic expert may inspect and take a mirror image of the data on such devices by 20 May 2018, the manner and location of such inspection to be agreed between the parties. In the absence of such agreement either party shall have liberty to apply to the Court.
(3) After the date upon which inspection and imaging occurs pursuant to paragraph 7(2) of this order or further order of the Court the First, Second, Third and Seventh Defendants shall be released of the obligations set out in paragraph 7(2) of this order. The mirror images shall be held by the Applicant's forensic expert to the order of the Court."
"The Respondent must upon service of this order:(i) Preserve and keep safe any device capable of transmitting and/or storing electronic communication; and
(ii) Make available such devices to an expert for the purpose of interrogating, extracting and/or downloading all material, data and metadata of thereon."
The proposed draft variation then includes an additional paragraph 12(5), as follows (after a correction to the word "available" through the addition of the letters "un" at its start):
"The expert referred to in paragraph 12(4)(ii) shall provide copies and images of all material, data and metadata are located on the devices to the Claimant's solicitors and the respective Defendants' solicitors. The Claimant's solicitors shall not examine, read or consider that material unless with the consent of the respective Defendant's and/or by order of the court. Upon receipt of the material described herein the respective Defendants' solicitors shall examine the same and identify any privileged material or material that does not in any way relate to this dispute. If there is a doubt as to whether it does so relate it will remain unavailable to the Claimant's solicitors. The material identified as irrelevant/privileged shall be extracted/removed and the respective Defendants' solicitors shall send to the Claimant's solicitors a copy of all remaining material in electronic form. The Claimants shall be at liberty to examine, read and consider this material. The parties expressly have permission to apply to court for further directions in relation to access to certain materials or any part thereof."
"This remedy includes the power to order the inspection of a database and to order access to a party's computer or to direct the provision of an imaged version of a database, but it will only make such order where this relief can be shown to be both necessary and proportionate (Patel v Unite  EWHC 92 (QB), January 26, 2012, unrep. (Judge Richard Parkes QC); M3 Property Ltd v Zedhomes Ltd  EWHC 780 (TCC), March 26, 2012, unrep. (Akenhead J))."
Mr Pearson highlighted, in particular, the words "but it will only make such order where this relief can be shown to be both necessary and proportionate". He did so both to make good his point that there had been a failure to comply with the duty of full and frank disclosure at the hearing before Bryan J and in support of his submission that an order requiring inspection of devices is neither necessary nor proportionate and ought not, therefore, to be continued.
"Preservation and delivery up of documents; my Lord, I am not proposing to, because it's fully dealt with in my skeleton argument, but I am happy to do so if you wish the court has ample jurisdiction to make the orders sought under 11(1)(2) or (3). They are essentially in relation to preservation ---".
The impression given, in other words, so Mr Pearson submitted, was that there is no particular hurdle to be overcome in order to obtain an inspection order such as that made on 5 December 2017.
"(a) The scope of the investigation must be proportionate.
(b) The scope of the investigation must be limited to what is reasonably necessary in the context of the case.
(c) Regard should be had to the likely contents (in general) of the device to be sought so that any search authorised should exclude any possible disclosure of privileged documents and also of confidential documents which have nothing to do with a case in question.
(d) Regard should also be had to the human rights of people whose information is on the device and, in particular, where such information has nothing or little to do with the case in question.
(e) It would be a rare case in which it would be appropriate for there to be access allowed by way of taking a complete copy of the hard drive of a computer which is not dedicated to the contract or project to which the particular case relates.
(f) Usually, if an application such as this is allowed, it will be desirable for the Court to require confidentiality undertakings from any expert or other person who is given access."
(1) Mr Hirani's, Inflight's and Epcon's applications to set aside the Freezing Order are each dismissed;
(2) Inflight's and Epcon's applications to set aside service out of the jurisdiction and for a declaration that the Court has no jurisdiction to hear the claims against them are each dismissed; and
(3) Gulf Air's applications for continuation of the Freezing Order and for amendment of the Electronic Devices Order which forms part of that order are granted.