ROYAL COURT
(Samedi Division)
25 October 1999
Before: Sir Philip Bailhache, Bailiff, and
Jurats Querée, and Tibbo
BetweenNationwide Building SocietyPlaintiff
AndAvinash Laxman JadhavDefendant
AndAbbey National Treasury International LimitedParty Cited
Application by the Plaintiff for an Order varying its Order of Justice.
Advocate M J Thompson for the Plaintiff
Advocate D C Sowden Defendant
JUDGMENT
THE BAILIFF: On 29 May 1998 the Deputy Bailiff granted an injunction restraining the Defendant and the party cited from dealing with moneys held to the order of the Defendant in an account with the parties cited.
The Court was told that the account contained some £135,000, made up of approximately £128,000 as to capital, and £7,000 of accumulated interest. The Plaintiff’s claim is for some £117,000 in addition to interest and costs.
It should, however, be explained that the party cited has also begun proceedings against the Defendant, seeking the sum of £18,0000, so that one way or another, if the claims are made out, the whole of the injuncted moneys is more than accounted for.
The Order of Justice giving rise to the injunction, contains the following paragraph:
"Nothing in this Order shall prevent the Defendant from making such payments in respect of its reasonable legal fees, and legal costs of defending these or any other proceedings or receiving legal advice in contemplation of legal proceedings brought or intended to be brought by them, provided that the amount of and source of such payment has first been notified to the Plaintiff’s Advocate not less than 48 hours prior to the making of the same".
Pursuant to that paragraph, the Court ordered on 23 June 1998 that the Defendant be permitted to draw £15,000 in order to meet certain legal costs and other expenses. On 24 June 1999 the Defendant issued a further summons seeking payment of legal fees in the sum of £5,750, and seeking provision for anticipated further fees in the sum of £5,000. The Defendant also sought funds to enable the repayment of overdrafts on bank accounts in the sum of £1,482.80, and of loans from a Mrs Claudia Vega in the sum of approximately £9,500 and the beneficial bank in the sum of $2,500 US. It will be seen that the total sought by the Defendant exceeds £21,000.
The Plaintiff responded by issuing a cross-summons seeking the removal in its entirety of paragraph 3 of the Order of Justice set out above. The Court ordered, at the beginning of this hearing, that it would determine the cross summons first. Both counsel were agreed that the relevant law is contained in a judgment of the Court of Appeal in Armco Inc & Others -v- Donoghue and Others, (24 September 1998) Jersey Unreported, (1998) JLR N.12, applying the principle set out in United Mizrahi Bank Ltd -v- Doherty and Others [1998] 2 All ER 230. At page 8 of her judgment Gloster JA referred to the Court’s discretion in allowing the payment of a Defendant’s legal costs out of enjoined funds, in circumstances in which the Plaintiff is asserting a proprietary claim - which, we interpolate, is the case here - and set out the relevant principles:
"For present purposes they may shortly be stated as follows, although I emphasise that this is not an exhaustive list of the very many different factors that may affect a Courts discretion in such circumstances:
1.Only in an exceptional case, "where the merits could be gone into for the purpose of satisfying a Court that the proprietary claim was so strong that it could be demonstrated that such a proprietary claim was well founded at an interlocutory stage" .... (should] a Defendant .... not be free to draw on enjoined funds to finance his defence"; see the passage from United Mizrahi Bank -v- Doherty [1998] 2 All ER 230 at 234, already cited above, citing Lord Bingham MR in Sundt Wrigley & Co -v- Wrigley [1993] Unreported Judgment of the Court of Appeal of England.
2.In non-exceptional cases where a proprietary claim is made a "careful and anxious judgment has to be made....as to whether the injustice of permitting the use of the funds by the defendant is outweighed by the possible injustice to the defendant if he is denied the opportunity of advancing what may turn out to be a successful defence"; see per Lord Bingham MR in Sundt Wrigley & Co -v- Wrigley (supra).
3.A defendant should not be allowed to draw on a fund which may belong to a plaintiff for the purpose of paying the defendant’s legal costs unless and until he has shown that there are no funds of his own upon which he can draw for that purpose; see Fitzgerald -v- Williams [1996] QB 657 at 669G-H. The burden of proof is upon the defendant to do so; see A -v- C (No. 2) [1981] 2 All ER 126 at 127h-128c.
4.The Court looks at the reality of what is likely to occur if no order were made. If the costs would, in practice, be funded by a third party, then the Court will take this into account; see Gee on Mareva Injunctions and Anton Piller Relief (4th Ed’n) page 319."
In brief the factual background is that an account in the name of Mrs Sharmila Jadhav, wife of the Defendant, was opened with the Plaintiff at its Gateshead, Tyne and Wear Branch in England on 30 April 1997.
On the 19 February 1998, the Plaintiff received a fax purportedly sent by Mrs Jadhav from Gateshead advising of a change of address for her in India. On 14 March 1998, the Plaintiff received a further fax authorising the transfer of the balance on the account to the Abbey National, the party cited in Jersey, for the account of the Defendant.
On 20 March 1998 the Plaintiff received a hard copy of the fax and a letter with a withdrawal form all purportedly bearing the signature of Mrs Jadhav. On 24 March 1998 in response to these authorisations, the Plaintiff drew a cheque in favour of the Defendant in the sum of £117,654.74, and sent it to his account at the Abbey National in Jersey. It is that account which has now been injuncted.
The Plaintiff claims that those signatures were not the signatures of Mrs Jadhav and were forged by the Defendant. That claim is denied by the Defendant. The present state of the evidence is that the Plaintiff has obtained reports from two handwriting experts, Mr Michael Handy and Mrs Philippa Lavel.
Mr Handy’s conclusion is that there is no evidence that the signatures on the handwritten letter and the withdrawal slip, dated 12 March 1998 were made by Mrs Jadhav. So far as the signatures on the remaining documents placed before him were concerned, he considered that it was unlikely that they were signed by Mrs Jadhav.
Mrs Lavel reached essentially the same conclusion. Her opinion was that the advised genuine signatures of Mrs Jadhav and the questioned signatures were most unlikely to be of common authorship.
The Defendant has apparently engaged a handwriting expert but no evidence is yet available from that expert, notwithstanding that the funds released in July 1998 included the sum of £1,000 in respect of the fees of a handwriting expert.
Mrs Jadhav is now living in India, and the Defendant is living in the USA by reason, he states, of threats made by Mrs Jadhav’s family. Matrimonial proceedings between the Defendant and Mrs Jadhav are in train in India. The Defendant has asserted that he has obtained a research studentship at a University in the USA, and is not able to earn until he has obtained the necessary qualifications in the USA. He is, however, a qualified orthopaedic surgeon in England, a Fellow of the Royal College of Surgeons, and was employed in various capacities in England between January 1992 and August 1997, but finally as a consultant orthopaedic surgeon at the Queen Elizabeth Hospital in Gateshead.
He is clearly a high skilled professional man. Counsel submitted, although we have no evidence on the point, that he is now unable to work in the United Kingdom because of visa requirements, and that he is relying upon the charity of friends in order to support himself in the USA. On that basis, it appears that he has obtained legal aid in Jersey, and that the necessary moneys will be forthcoming from the Legal Aid Fund to pay for the opinion of a handwriting expert.
We accordingly return to the principles laid down by Gloster J A in the Armco case. We are not satisfied that this is one of those exceptional cases where at this stage of the interlocutory proceedings we can say that the proprietary claim is so strong that it can be demonstrated that it is well-founded. At present, the evidence of forgery is indeed strong, but nevertheless we cannot conclude that it is overwhelming.
We therefore regard this as a non-exceptional case where there is a proprietary claim by the Plaintiff, and a:
"careful and anxious judgment has to be made as to whether the injustice of permitting the use of the funds by the Defendant is outweighed by the possible injustice to the Defendant if he is denied the opportunity of advancing what may turn out to be a successful defence."
We were not impressed by the explanation given on behalf of the Defendant, for his present inability to earn a living. He is a highly skilled surgeon. If he chose to apply his skills, we consider that he ought to be able to produce funds from which he could draw to meet the legal costs of his defence, but in any event those costs are, for the present, covered. He has obtained legal aid and is not prevented from continuing his litigation with the Plaintiff. On the other hand, if he is permitted to continue to draw funds from the injuncted account, there could well be grave injustice to the Plaintiff as the funds to which it asserts title are gradually whittled away by the Defendant.
Having carefully weighed the different considerations in the balance, we have reached the conclusion that the Defendant should no longer be permitted to use the injuncted funds for the purposes of his defence. We accordingly grant the application of the Plaintiff, and remove paragraph 3 from the prayer to the Order of Justice.
Authorities
United Mizrahi Bank -v- Doherty & Ors [1998] 2 All ER 230
Armco Inc & Ors -v- Donohue & Ors (24th September, 1998) Jersey Unreported. CofA