ROYAL COURT
(Samedi Division)
13 July 1998
Before: Sir Peter Crill, KBE Commissioner and
Jurats Herbert, de Veulle
BetweenEdgar Herbert FuchsPlaintiff
AndDr Ben EkehFirst Defendant
AndUddin NajamSecond Defendant
AndSwiss Bank CorporationParty Cited
Application by the Second Defendant for an Order discharging the injunctions imposed
by the Order of Justice
Advocate J Martin for the Plaintiff
Advocate MHD Taylor for the Second Defendant
THE COMMISSIONER: On the 16 January 1998, the learned Deputy Bailiff signed an Order of Justice at the instance of Edgar Herbert Fuchs, the Plaintiff, who is a German citizen and the beneficial owner of a company CBG GmbH & Co. KG Leipzig.
That Order of Justice disclosed that in June, 1997, Mr Fuchs had received from the First Defendant a letter offering him a partnership in a joint oil venture with a company called the Nigerian National Petroleum Company.
The offer was attractive in as much as the Plaintiff was told, after telephoning the First Defendant, a Dr Ekeh, who has not been able to be traced we should add by the German Police, that the Plaintiff would receive a share of 30% out of the National Petroleum Fund which stood at US$30 million.
Whether or not the Plaintiff was induced to enter into this contract as a genuine commercial enterprise or whether he was just actuated by greed is beside the point, the fact is he did enter into some agreement as a result of which he paid five sums of money to various banks, but the two in question which remain for us to look at were the sum of US$200,000 to Bankers Trust Company in London, for the benefit of Nerus King Limited, and US$95,000 to U.B.A. plc, 535 Madison Avenue, New York, beneficiary Oak Singer International.
He was then asked that the second payment of US$95,000 should not be sent to Madison Avenue but to the Swiss Banking Corporation, New York. SWIFT Code: SBCOU33, for the account Swiss Bank Corporation, 40. Esplanade, St Helier, Jersey, Channel Islands. SWIFT Code: SBCOJESH, beneficiary: U.Najam, Account No: 36659. Mr Najam being the Second Defendant.
Having made the various payments, the Plaintiff discovered - later on in December - that frauds had been perpetrated on members of the German public in ways such as I have outlined. He noticed a news item on German television regarding the arrest of various members of a group which were called, I quote:" The German Connection ".
In the course of his transactions which led to the Order of Justice, the Plaintiff was put in touch with someone calling himself Douglas Lloyds and Co, Senior Advocate, Nigeria, in Lagos, the principle of that firm being someone called Douglas Lloyd Ukwoma.
Subsequent enquiries through the German Chamber of Commerce, Lagos, and the German police revealed that neither the First Defendant, Dr Ekeh, nor the Second Defendant the Nigerian Lawyer, existed, but it is pertinent to observe that all the payments that the Plaintiff made were as a result of the requests made to him by his soit disant Nigerian Lawyer.
It is reasonable to assume therefore, that he was guided in his reasons for making these payments by that Lawyer. Subsequent to his discovery that there had been what is commonly called a "scam" perpetrated on German nationals by Nigerians, he took steps to try to recover what he had paid as a result of the arrangements, and he has recovered the £200,000 because the transaction in respect of that account had not been closed, and therefore the Bankers Trust was able to release it save for an account of bank fees in the sum of US$500.
As regards the balance which is lost elsewhere, he was advised by his German lawyers that it was not worth pursuing those sums because of the time scale; they would undoubtedly have disappeared, and that it was the custom in such matters that once the monies had been received to move them on within two or three weeks from the account into which they had originally been paid.
That indeed happened in the case of the US$95,000, which was moved, incorporated into a larger sum, which I will mention in a moment, by the Second Defendant from a designated account to a joint account with his wife in the same bank.
The Deputy Bailiff imposed a Mareva injunction freezing the sum in the hands of the Party Cited, and the application before the Court today is to lift the injunction. However, the Deputy Bailiff imposed some further orders.
The Party Cited was to provide the Plaintiffs Advocate, within three working days of service, with a good deal of information relating to the accounts maintained, either in the name of, or for the benefit of the First and/or Second Defendants, or any Third Party.
The summons today is not only for the lifting of the injunction imposed by the Deputy Bailiff, but also for a cancellation of those additional orders. A further matter raised in todays summons that was adjourned at an earlier date in June, is that the Second Defendant is asking that any reference to him in the Order of Justice be struck out. That matter is not properly before us; it was not raised at the earlier hearing and it is something with which we do not propose to deal. It is something which must be the subject of a separate application, and therefore we decline to make that order.
We now return to the main order, the attack against which is based on the two principal grounds, namely that full and frank disclosure was not made to the learned Deputy Bailiff and that the Plaintiff did not come with "clean hands".
As regards full and frank disclosure, we are satisfied that all the material matters were in fact disclosed to the learned Deputy Bailiff. The details supporting the documents that were submitted would not have added very much, in our view, to the overall picture which the Deputy Bailiff would have had to enable him to decide whether or not to impose the injunction.
The strongest point urged very cogently by Mr Taylor for the Second Defendant is that of the "clean hands". Looking at the correspondence from Mr Douglas Lloyd & Co, or from Mr Ukwoma, I suppose we should call him, if indeed he exists, it is clear that the money was to be used for a bribe, and Mr Taylor says that "This Court should not lend itself to anything of that nature"
We do not know, however, as Advocate Martin has rightly pointed out, firstly whether it was so to be used, and secondly if it were so used, whether that was contrary to either the common law, or statute law of Nigeria. We had our attention drawn to an extract from the supplement to "The Financial Times," in which the complicated business arrangements of Nigerians in that country wishing to obtain foreign currency were sketched out.
We interpose here to say that the Order of Justice stated that the Second Defendant was a resident in Nigeria. This is not correct; he is a Nigerian, now resident in the United Kingdom, and we do not think that that mistake - if it was a mistake - is of sufficient materiality to cause us to lift the injunction. The arrangements as we understand it for the kind of transactions described in "The Financial Times" were that anyone resident in Nigeria. wishing to obtain foreign currency would have tried to ascertain from a Broker whether he would have a client able and willing to supply United States currency, whereupon it would be supplied and the appropriate equivalent of the Nigerian currency would be released in accordance with the contract made in Nigeria.
It seems to us that, even if it were a bribe to the Auditor General, according to the letter from the Nigerian Lawyers, the Plaintiff was in the hands of the Nigerian lawyers; he acted on their advice; their letters became more and more strident; in fact, in one letter any delay was described as dangerous, and it was clear that pressure was being put on him to make these payments, and it may well be that his greed, if greed it was, overcame his prudence and he made the payments. But that does not in our view add up to his knowing (a) that it was a bribe, and (b) that it was contrary to the law of Nigeria, therefore we do not on that ground accept the submission of Mr Taylor.
However, at the original hearing Mr Taylor made a number of other points which he has now put in an amended summons at the request of the Court, the points are - and I read them -
I would just like to deal briefly with one or two other matters arising from this application.
As regards the balance of convenience, as Bean has pointed out in his well known work, it really is a question of a risk of injustice. This, it cannot be too firmly stressed, is an action, instituted by an Order of Justice; a Mareva injunction has followed on from the action, claiming the money it is therefore a proprietary action, it is not a tracing action. Mr Fuchs says "It’s my money" the Second Defendant says "It’s my money".
The Second Defendant says "I was expecting some money anyway because I had some negotiations with a company in Nigeria", whose name he refused to disclose in open Court. (That, in itself, is in our view, strange,) " and that Company owed me some money as a result of the kind of transaction that I have set out above in relation to the currency matters, and that it so happened that I received that money in my account, and that I was not concerned from where it had come, and therefore I had no knowledge of Mr Fuchs, and I assumed that he was one of those with whom arrangements had been made to provide the dollars which were necessary for the business arrangements I have touched on". That really is his case, on the other hand the Plaintiff says: "It is more than a coincidence that the Second Defendant received this money, and that following the usual practice where there is some form of dishonesty or scam, within a short time the money was transferred to another account".
That is a fact; it did occur. If we were to lift the injunction, it seems to us without any doubt that the money would disappear. Mr Fuchs, if the Second Defendant bothered to defend the main action at all, might well get a judgment in his favour, that would be a rather a hollow victory. If an application were made under Rule 6/7(5), to enforce it against Mr Najam, to whom would they look; the Plaintiff knows nothing about them.
We have little doubt that there would be a severe risk of dissipation of this money if we were to lift the injunction. We are not satisfied about the explanation given by Mr Najam as to how he came to have an account with money paid into it by Mr Fuchs, and for the reasons I have mentioned we are not going to lift the injunction. The application fails.
As regards the other matters raised by Mr Taylor, we have not lifted the injunction there seems therefore no reason why the affidavits the Plaintiff has asked for should not be filed, because these are matters affecting this jurisdiction, and we are not prepared to vary the orders already made by the Deputy Bailiff, which were quite properly made on the information that he had.
Authorities
Trasco International Aktiengesellschaft -v- R.M. Marketing Limited (29 October 1986) Jersey Unreported
Walters and Others -v- Bingham (1985-1986) JLR 439
Holman -v- Johnson (1775) 1 Cowp 341
Lipkin Gorman -v- Karpnale [1991] 2 AC 548
Bean on Injunctions (5th Ed’n): pp. 26-32, 116-119