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Cite as: [2003] 2 ILRM 40, [2002] IEHC 16

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N. (J.) v. K. (T.) [2002] IEHC 16 (19th February, 2002)

THE HIGH COURT

2002 No 1431p

BETWEEN

J. N. AND C. LIMITED

PLAINTIFFS

and

T. K. and J. S. trading as

M. I. and

L. T. B.

DEFENDANTS

JUDGMENT of Kearns J delivered on the 19th day of February, 2002.

1. While I first delivered this judgment ex tempore, I reserved the possibility of expanding the reasons in written form which I am now doing, both because of the importance of the points in issue and to provide the first-named Defendant and any legal adviser he may instruct with the detailed reasons for the Order

2. The first-named Plaintiff is a US citizen, and the second-named Plaintiff is his investment vehicle, an off-shore company registered in foreign islands. The first-named Defendant is a person whom the Plaintiff met in Ireland in 1999 who offered himself to the Plaintiff as a personal investment manager with particular expertise in trading foreign debt instruments through banks based in Switzerland. He informed the Plaintiff he had a farm in the South of Ireland and owned a number of racehorses. The second-named Defendant was stated to be an associate of Mr K. (though the Plaintiff never met him) and both men purported to carry on business through 'M. I.', though no such entity was subsequently found in the State or in Switzerland.

3. Relying on various representations made to him the Plaintiff in July 2000 made available $5 million which were to be lodged with the third Defendants in Switzerland by way of guarantee account against investment losses. The investment was to be for one year to September 2001, transaction ideas to be suggested by either certain named individuals in T.L.B. or by Mr. K., the account to be a joint account between the Plaintiff as 'participant' and Mr. K. as 'asset manager'.

4. In October 2001 Mr. K. informed the Plaintiff that the investment period had been extended to the end of the year, a unilateral decision which caused the Plaintiff some concern. When he sought a statement from L.T.B. through Mr. K. at this time setting out details of his investment account, accruals and securities purchased, he received while in London a fax from K. and S. stating only that the then value of his investment (to 26 October) was $9.8 million.

5. As the Plaintiff required reassurance directly from L.T.B. at this point he became extremely concerned and made various efforts to get information from the L.T.B. branch in Switzerland who declined to furnish any information without a Court Order. Mr. K. expressed outrage that the Plaintiff had contacted the bank, stating that the implications of such communication could be damaging to the Defendant in his standing with L.T.B. and other banks in Switzerland. However strange it may seem, Mr. K. demanded and obtained from the Plaintiff a written apology for his overture to the bank and extracted a promise from the Plaintiff that such requests of the bank would not be repeated.

6. At the end of 2001 the Plaintiff wrote to Mr. K. demanding repayment to him of his investment but failed to get it, being met with a variety of excuses. Mr. N. set in train inquiries of his own at this point which disclosed that the address in Dublin utilised by Mr. K. was a private residence with no reference to M. evident from the outside. A search against the title of the property failed to disclose any interest of Mr. K. in the property in question. All requests for information and co-operation from Mr. K. were unsuccessful. In the circumstances the Plaintiff is apprehensive that his investment monies either have been or may be in the process of being dissipated or perhaps misappropriated altogether.

7. On 1st February, 2002, O'Higgins J made the following Orders ex parte:-

(1) An Order restraining the Defendants until 11 February 2002 from diminishing the value of the monies invested by the Plaintiff with the Defendants or from otherwise dealing with or disposing of same.

(2) An Anton Piller Order to permit the Plaintiff's solicitors enter and search the premises in Dublin which the first-named Defendant had given as his address and there to seize the items listed in the Schedule to the Order.

(3) An Order restraining the first and second Defendants from removing from the State or from disposing of or reducing the value of any assets save and in so far as same exceed $10 million in value.

(4) An Order directing the first and second Defendants to disclose in writing details of all assets over €65,000 wherever situate.

8. These Orders were secured by the usual undertakings and detailed arrangements for notification thereof were provided for, including permission to notify by telephone and fax to the first-named Defendant at fax numbers in Dublin and Switzerland, by hand delivery to the premises in Dublin and by telephone and fax to the third named Defendant in London and Geneva.

9. The Orders were successfully faxed to Mr. K's Dublin and Swiss fax numbers on the 4th February. Entry to the Dublin premises could not be effected, although there is evidence that a male occupant was present when the Plaintiff's solicitor called at 10.55 am on the 2nd February who stated that Mr. K. would be "back in half an hour", this being said over the intercom. On returning later there was no response at the door on two separate occasions. Follow-up visits to the Dublin premises over the days following similarly yielded no response.

10. The Notice of Motion returnable for 11th February was left at the Dublin premises on 5th February, following which a voicemail message for the Plaintiff's solicitor was left at his office or mobile as follows:-

"Mr. G. my name is T. K. On checking my Irish mobile last night there was a message on it from you so I am actually paying you the courtesy of replying to your call. I also understand that some documents were delivered from you to my daughter's residence in (Dublin) and also some stuff addressed to a J. S. whom I do not know. This obviously relates to M. I. and I have been in touch with M's solicitor who is an A. L. Kindly note that (Dublin) is my daughter's residence and is not an office of M. or anybody else. Thank you. Bye."

11. Thereafter Mr. G. on the 7th February wrote to Mr. L., who on the 15th February wrote in reply that he no longer acted for Mr. K. Mr. L's firm did not come on record or enter an Appearance. Both yesterday and this morning Mr. H. solicitor, appeared in Court and indicated that he had instructions from Mr. K. but had no instructions to enter an Appearance. He confirmed he was in contact with Mr. K. The matter was adjourned on the 11th February until yesterday.

12. The subject matter of the application before me, in respect of which I reserved consideration overnight, is a request on behalf of the Plaintiff not merely to continue the existing reliefs until the 4th March, but to order in addition, that Mr. K. whose present whereabouts are unknown, be restrained, without leave of the Court, from leaving the jurisdiction until the 4th March, and for a further order the he deliver up his passport or other travel documents to the Plaintiff's solicitors.

13. This form of relief is known as a 'Bayer injunction' and is derived from the decision of the Court of Appeal in Bayer AG v Winter [1986] 1 AER 732.

14. In that case the defendants were allegedly distributing on a worldwide basis counterfeit insecticide purporting to be a product of the Plaintiffs. The Plaintiffs sought and obtained Mareva and Anton Piller injunctions but feared the first Defendant would evade the effect of such orders by leaving the jurisdiction and therefore sought the relief which this court is now being asked to grant. The Court of first instance refused the relief sought, but the Court of Appeal held it had jurisdiction to make such an order under and by virtue of s.37(1) of the Supreme Court Act, 1981, which provides:-

"The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so."

15. Fox L.J. stated as follows at p 736:-

"..... the court has a wide discretion to do what appears to be just and reasonable in the circumstances of the case.

The court has to exercise that discretion according to established principles, and the particular matter with which we are concerned at the moment, namely of an injunctional restraint on a person leaving the jurisdiction, is not one on which there appears to be previous authority. It is clear however that the law in relation to the grant of injunctive relief for the protection of a litigant's rights pending the hearing of an action has been transformed over the past ten years by the Anton Piller and Mareva relief which has greatly extended the law on this topic as previously understood so as to meet the needs of justice.

Bearing in mind we are exercising a jurisdiction which is statutory, and which is expressed in terms of considerable width, it seems to me that the court should not shrink, it is of opinion that an injunction is necessary for the proper protection of a party to the action, from granting relief, notwithstanding it may, in its terms, be of novel character."

16. In assessing the harm which such an injunction would do to the defendant, Fox L.J. said that if it caused embarrassment or hardship, he could apply to the High Court forthwith, on evidence, to ask that it be varied or discharged. As for the Plaintiff, he found that if the defendant failed to answer the matters contained in the order or failed to be frank, the Plaintiff could seek an order for cross-examination but that the courts would be frustrated if the Defendant left the jurisdiction. He also noted, as would be appropriate to this case also, that it was doubtful whether the first Defendant had a permanent residence within the jurisdiction. The relief sought was granted in the circumstances, noting that the order should be of very limited duration and should be no longer "than is necessary to enable the Plaintiffs to serve the Mareva and Anton Piller orders which they have obtained and endeavour to obtain from the defendant the information which is referred to in those orders."

17. The court placed considerable reliance on the decision in House of Spring Gardens Ltd v Waite [1985] 11 FSR 173 where Cumming-Bruce L.J. stated (at p 183):-

"The court has the power (and, I would add, the duty) to take such steps as are practicable upon an application of the plaintiff to procure that where an order has been made that the defendants identify their assets and disclose their whereabouts, such steps are taken as will enable the order to have effect as completely and successfully as the powers of the court can procure".

18. It is clear from the foregoing that the jurisdiction to make such an order derives from the requirement to make court orders effective and is analogous to disclosure orders in aid of Mareva relief.

19. The corresponding Irish statutory provision is s.28(8) of the Supreme Court of Judicature (Ireland) Act, 1877:-

"A mandamus or an injunction may be granted or a receiver appointed by an interlocutory order of the court in all cases in which it shall appear to the court to be just or convenient that such order shall be made, and any such order may be made either unconditionally or upon such terms and conditions as the court shall think just ..."

20. It goes without saying that such relief in Ireland could be granted only in exceptional and compelling circumstances. Any such order is prima facie in breach of the constitutional right to travel, placing that right in abeyance for the specified period. However, the right to travel may be curtailed in some instances. In Lennon v Ganley & Fitzgerald [1981] ILRM 84 where it was sought to restrain the Irish Rugby Football Union from travelling to South Africa to play rugby because of that country's apartheid policy, O'Hanlon J said that the defendants

"... should only be restrained from exercising such right (to travel) if it was in some way unlawful for them to act in the manner in which they seek to act."

21. Given that leaving the State with the intention of defrauding one's creditors is a criminal offence under s.124 of the Bankruptcy Act, 1988, this requirement is, to put it neutrally, capable of being met on the facts established on affidavit, always bearing in mind that the court as yet has heard only one side to the dispute.

22. I am more than happy to adopt the criteria for granting such relief as enumerated by Courtney (Mareva Injunctions) Butterworths 1988 at p. 457 where the author states that such an injunction should only be granted where:

"(1) The court is satisfied that there is a probable cause for believing that the defendant is about to absent himself from the jurisdiction with the intention of frustrating the administration of justice and/or an order of the court.

(2) The jurisdiction should not be exercised for punitive reasons; a defendant's presence should be required to prevent a court hearing or process or existing order from being rendered nugatory.

(3) The injunction ought not to be granted where a lesser remedy would suffice.

(4) The injunction should be interim in nature and limited to the shortest possible period of time.

(5) The defendant's right to travel should be out-balanced by those of the Plaintiff and the proper and effective administration of justice.

(6) The grant of the injunction should not be futile."

23. I am satisfied that the instant case requires the making of the orders sought, both in relation to the restriction on the defendant leaving the country and in requiring him to hand over his passport. A very substantial sum of money is unaccounted for in circumstances which give rise to considerable suspicion. The fact that two different solicitors consulted by Mr.K. within several days were denied instructions to enter an Appearance does nothing to allay one's concerns. The Court has a very real apprehension that the first-named Defendant may be about to absent himself from the jurisdiction with the intention of frustrating the orders of the Court. Indeed, one concern is that he may already have done so, which brings into play the 'futility' consideration last mentioned by Mr. C. However, this will often be a possibility in this sort of case and there is no positive evidence to this effect. Any order made cannot only be described as futile. It may prove quite effective. There is no punitive aspect to the order which I will qualify further by ordering that he shall not leave the jurisdiction before the 4th March, 2002 without leave of the court . From everything I have said earlier I hope I have made it clear I have decided (at this point only) that the Defendant's right to travel is out-balanced both by those of the Plaintiff and the requirement to secure the proper and effective administration of justice.

24. I note the undertaking of the Plaintiff's solicitors to keep in their custody any passport or travel documents delivered up.

25. I also give leave to the Plaintiffs to serve a Notice of Motion returnable for the 4th March, 2002 seeking the attachment and committal of the first-named Defendant for failure to comply with the terms of the Order of O'Higgins J. made on the 1st February, 2002. All other reliefs will continue in the interim.