ROYAL COURT
(Samedi Division)
25 October 1999
Before: F C Hamon Deputy Bailiff and
Jurats Rumfitt and Bullen
Between: (1) Armco Inc
(2) Armco Financial Services Corporation
(3) Armco Financial Services International Limited
(4) Armco Pacific Limited
(5) Northwestern National Insurance CompanyPlaintiffs
And: (1) Roger Thomas Donohue
(2) Patrick Henry Rossi
(3) Larry Loyd Stinson
(4) David Wilmot Atkins
(5) Wingfield Limited
(6) CI Services Holdings Limited
(7) NPV LimitedDefendants
And: (1) Paul Anthony Brereton Evans and Colin Graham Bird
(2) Rothschild Asset Management (Jersey) Limited
(3) Abacus Secretaries (Jersey) Limited
(4) Landau Limited
(5) Deutsche Morgan Grenfell (CI) Ltd
(6) Abacus Nominees Ltd Parties Cited
Application by the fifth and sixth Defendants for an order that the interim injunctions contained in the Plaintiff’s Amended Order of Justice be varied
Application by the Plaintiffs for an Order that the disclosure made by the fifth Defendant and the sixth Party Cited pursuant to terms of amended Order of Justice, dated 13 August 1998 be up-dated by the sixth Party Cited, as and when requested by the Plaintiffs
Advocate J C Martin for the Plaintiffs
Advocate M P G Lewis for the fifth and sixth Defendants
The sixth Party Cited did not appear and was not represented,
having previously informed the Court that it submitted itself
‘à la sagesse de la Cour’
JUDGMENT
THE DEPUTY BAILIFF: We have two summonses. First, a summons from the fifth and sixth defendants which is now all but agreed.
The request is for the interim injunctions in the amended Order of Justice of 13 August 1988 to be varied in two ways. The legal costs and disbursement incurred by the fifth and sixth defendants in the continuing American proceedings should be increased to $10,668.00 with £19,396.70 for the Jersey costs. There is then a further request that the continuing legal costs and disbursements in these American proceeding should roll on at a rate not exceeding fifty thousand dollars per month for three months from 20 July 1999.
With regard to the Jersey proceedings, a further payment to these defendants not exceeding £15,000 and an order to reinstate the fifth and sixth defendants to the Company’s register, a limit on reasonable costs of £15,000 legal fees and £1,500 for the fees of Abacus Financial Services.
There was some dispute because a strike-out application had been made by the defendants in the American proceedings. If the strike-out were successful the three months roll would become irrelevant. The plaintiff did not, therefore, agree the summons in total. The strike-out was not successful and the American hearing is now set for 20 March.
We have considered the correspondence and in our view this matter could easily have been resolved without incurring valuable court time. The summons is now agreed and the costs of and incidental to the application shall be paid by the representors, that is, the fifth and sixth defendants on a standard basis.
The second summons is more complex. The summons orders the fifth defendant duly to show cause why disclosure made by the fifth defendant and the sixth party cited pursuant to the terms of the amended Order of Justice dated 13 August 1998 should not be updated by the sixth party cited as and when requested in writing by the plaintiffs.
The sixth party cited has sent the Court a letter saying that it wishes to take no part in the hearing but rests "à la sagesse de la cour".
Advocate Martin argues that there is authority that ancillary disclosure orders to Mareva injunctions are made in order to trace assets and in order to police the Mareva injunction pre-judgement. She argues that because the amended Order of Justice did not provide for ongoing disclosure the order (which is a policing order) should be made.
In Gee on Marevas Injunctions (2nd Ed’n) Chapter 17, the author writes: "However, an order for disclosure of information about the defendant’s assets is not made as part and parcel of Mareva relief without there being consideration given as to whether such an order to really necessary. Thus in Bekhor Ltd v Bilton, [1981] QB 923 at p 950 Griffiths LJ said:
I agree that the power to order discovery in support of a Mareva injunction should be sparingly exercised, and if too readily resorted to could easily become a most oppressive procedure. I am sure that the judges in the commercial court have this well in mind. There should become no question of an order for discovery becoming a usual part of the Mareva relief.
An order for disclosure of information about assets by discovery of affidavit will only be made if the purpose of the order is genuinely ancillary to the effective working of the injunction. Thus, for example, such an order was not granted when it was sought in an attempt to show past dealings with assets within the jurisdiction in order to justify restoration of a Mareva injunction which had been discharged: Smith v Hegard Court of Appeal (Civil Division) Transcript No: 603 of 1980,
(7 August). Similarly, such an order will not be made if its purpose is merely to investigate whether an injunction has been broken and (if so) to supply material for contempt proceedings. On the other hand, an order would be made if the purpose is to identify and preserve assets of the defendant which might otherwise be dissipated notwithstanding the existence of the injunction: House of Spring Gardens Ltd v Waite [1985] FSB 173 at pp 181 and 183."
On the latter part of that statement the Royal Court held in Johnson Mathey Bankers Limited v Arya Holdings Limited - National Westminster Bank plc (1985-86) JLR,208 that it was appropriate to make ancillary orders which would ensure the "policing" of the injunctions. The orders made in that case ensured not only that appropriate documentation should be made available to the Plaintiff. The Court (at page 214) cited with favour the comments of Robert Goff J in AV -v- C (1981) QBD 960:
"Considerations such as these point, in my judgement, to the conclusion that the Court should, where necessary, exercise its power to order discovery or investigations in order to ensure that the Mareva jurisdiction is properly exercised and thereby to secure its objective which is, as I have described, the prevention of abuse."
This order is in effect a form of discovery. There is a caveat issued by the Court of Appeal in A. C. Mauger & Son (Sunwin) Ltd v Victor Hugo Management Limited and others (1990) JLR Note 16.
"Once a Mareva injunction has been granted, the Court in policing that injunction should not be loath to make an order for discovery of the assets subject to the injunction in some form appropriate to the circumstances of the case, although this is not an inflexible rule. Discovery of assets should only be ordered in aid of enforcing the injunction and not for the extraneous commercial benefit of the applicant, e.g. if discovery of the full value of assets is unnecessary to the enforcement of the injunction itself."
The foundation of the jurisdiction of the Court is to prevent judgments of the Court being rendered ineffective because the defendant is attempting to remove the plaintiff’s assets from the jurisdiction or is dissipating them.
We cannot see that the case cited is of any great assistance to us. The amount of money frozen here is known. The plaintiffs apparently wish to obtain bank statements from Abacus Nominees Limited to ensure that the Mareva injunctions have been complied with. The plaintiffs have no evidence to show that any party is in breach of the injunctions. Indeed, Advocate Martin answered our question to that effect, with a rhetorical question, asking what would happen if these defendants changed lawyers and vastly more fees were incurred. We find that scenario unrealistic. The fifth and sixth defendants have to give an undertaking that all requests for the release of funds have been made in accordance with the orders made in this Court. Abacus are of the highest reputation and if a fee were rendered to them in which they had doubt they would, in our view, be bound to bring the matter to this Court’s attention.
We cannot see in the circumstances that we should accede to the order and it is therefore accordingly refused. The applicant shall bear the costs of and incidental to the summons on a standard basis.
Authorities
Gee on Mareva Injunctions (2nd Ed’n): Chapter 17.
Bekhor, Ltd-v-Bilton [1981] QB 923.
Johnson Matthey-v-Arya Holdings, Ltd & Anor (1986-86) JLR 208.
AV-v-C (1981) QB 960.
A.C. Mauger & Son (Sunwin) Ltd-v-Victor Hugo Management Ltd & Ors (1990) JLR N.16.
RSC (1999 Ed’n): O.29/1/47-O.29/1/69.