2001/249
ROYAL COURT
(Samedi Division)
17th December 2001
Before: |
M.C. St. J. Birt, Esq., Deputy Bailiff, and Jurats Rumfitt and Bullen. |
Between |
(1) ED & F Man Liquid Products Limited |
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(2) Westway Trading Corporation |
Plaintiffs |
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And |
(1) Dennis Earl McMahan |
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(2) Kovzac Limited |
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(3) Clifton Resources Limited |
Defendants |
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And |
(1) The Royal Bank of Scotland |
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International Limited |
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(2) Barclays Plc |
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(3) Barclays Bank International Limited |
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(t/a Barclays Bank International) |
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(4) Bayard Trust Company Limited |
Parties Cited |
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AND |
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Between |
(1) ED & F Man Liquid Products Limited |
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(2) Westway Trading Corporation |
Plaintiffs |
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And |
Bayard Trust Company Limited |
Defendant |
(i) Application by the Plaintiffs for an Order adjourning the trial of the actions and for directions regarding service and inspection of certain documents;
(ii) Application by the Second Defendant for an Order that the actions be struck out unless the Plaintiffs furnish the Second Defendant with further and better particulars of their amended Order of Justice within 14 days.
Advocate A.D. Hoy for the Plaintiffs.
Mr. A.L. Glotov, a Director of the second Defendant
on behalf of the second Defendant.
Advocate J.P. Speck for the fourth Party Cited.
judgment
the deputy bailiff:
1. We are sitting today to consider two summonses in connection with two consolidated proceedings. The plaintiffs in each case are ED & F Man Liquid Products Limited as first plaintiff and Westway Trading Corporation as second plaintiff. In the first set of proceedings the defendants are Mr. McMahan, Kovzac Limited and Clifton Resources Limited. In the second set the defendant is Bayard Trust Company Limited. In essence both sets of proceedings arise out of a common set of facts.
2. It is alleged by the plaintiffs that their employee, Mr. McMahan, made a secret profit in that monies were paid to Kovzac Limited and Clifton Resources Limited, some of which found its way into his pocket unknown to the plaintiffs. Bayard Trust Company Limited is the company which administered both Kovzac Limited and Clifton Resources Limited and it is alleged that it is liable on the basis of knowing assistance because of its actions in relation to those two companies.
3. The trial is fixed for hearing for two weeks commencing 8th January, 2002. The first summons we have before us is an application by the plaintiffs for the hearing date to be vacated and the trial adjourned. The reason for this is that there are a number of documents, they say, which are in the possession of the FBI in the United States arising out of the criminal prosecution of McMahan. They have obtained an order from the District Court for the Northern District of Texas, Dallas Division, for the disclosure of some of those documents. However, they are not yet available and it may be necessary to return to the Dallas Court to get an order to compel the FBI to make the necessary disclosure. In short the documents are highly unlikely to be available in sufficient time for a hearing on 8th January. The plaintiffs assert that the documents are necessary because they relate to McMahan's fraud and possibly to other matters which are relevant for this trial and they have referred the Court to the affidavit of Special Agent Hogue of the FBI to support that.
4. Bayard Trust Company Limited through Advocate Speck has no objection to an adjournment and agrees that it would be sensible. However, Mr. Glotov, a director of Kovzac Limited, has appeared before us today to argue forcefully that an adjournment is not necessary and would be unfair. He bases his objection on a number of grounds. The first one is that, in fact, judging by the schedule to the order of the Dallas Court, virtually all the documents sought are already in the possession of the parties through the ordinary discovery process. In other words, the documents originate either from Bayard, or from the plaintiffs, or from other parties in the case. He does, however, accept that there appear to be at least two documents which are not so available at present and these are tape recordings carried out covertly by the US authorities covertly of telephone conversations between McMahan and one or more persons in the employment of the plaintiffs. But he says that that is unlikely to be evidentially significant in relation to the claim against Kovzac Limited in particular and Clifton Resources and Bayard as well.
5. Secondly he says that there has been considerable delay on the part of the plaintiffs in seeking this information. He says it should have been done much earlier.
6. Thirdly he says that any adjournment would cause hardship to the principal beneficial owner of Kovzac Limited, Mr. Dolotiy, because the assets of Kovzac Limited had been injuncted since the commencement of these proceedings back in 1998. He says, therefore, that it would be unreasonable and unfair to adjourn the case, perhaps for some time, having regard to the fact that the assets would remain frozen here.
7. In reply Mr. Hoy explained that the delay was not of the plaintiffs' making, they had tried to proceed by agreement with the FBI in a sensible and prudent course. Eventually they had obtained a consent order. As to the fact that only two tape recordings appear to be in issue he accepted that that may be so although he could not be certain. Certainly he accepted that there was no evidence before us that other documents would also become available but he did assert that the tape recordings could be essential. The fact is that the plaintiffs' case depended upon the corruptness of Mr. McMahan because if Mr. McMahan was not defrauding the plaintiffs then the case would fall at the first hurdle. He submits that these tapes do or are likely to provide evidence of Mr. McMahan's dishonesty.
8. We have considered these submissions carefully and it is certainly the case that the grounds for an adjournment are weaker at the end of the oral hearing than they appeared on the papers because it was not made clear to us that we were really talking only of two tape recordings. Nevertheless we understand why the plaintiffs might consider these to be critical and we think that, overall, the interests of justice would best be served by granting an adjournment, but only a short one and we wish to make it clear that the Court is highly unlikely to grant any further adjournment.
9. Mr. Glotov was perfectly entitled to make the point, which he did, concerning the fact that Kovzac's assets have been restrained for so long and Kovzac and its principal beneficial owners are entitled to have this matter resolved so that they can establish the title to the funds if they are successful. We therefore do vacate the date of 8th January and we adjourn the trial until 4th March when two weeks are available in the Court's diary at that time and will now be allocated to this case. We repeat that we are highly unlikely to be sympathetic to any application for further adjournment.
10. We turn next to Kovzac's summons which is for an 'unless' order in relation to a request for further and better particulars. The position is that a consent order was made on 10th September ordering the plaintiffs to provide further and better particulars of the Order of Justice. The plaintiffs purported to answer that request on 20th October. Mr. Glotov, supported by Mr. Speck, took us through these and it is palpably obvious that the response to the request was wholly inadequate. Indeed one has to say that it is hard to see how it ever came to be filed as an answer to the request. The answers to some of the questions do not even seem to address the questions asked let alone answer them adequately. We wish to make it absolutely clear to the plaintiffs that they must now file a proper response. We do not go into detail but questions were asked about which plaintiff was involved in certain matters and which defendant. The response seems to focus only on Clifton, it does not mention Kovzac at all. They have to give much better details of the various representations as requested and they have to give details of the payments, the payers, and the payees. In other words they must focus on the requests, all of which we consider to be eminently reasonable. They must answer them fully. We think that the gravity of the failure is such that we should grant an 'unless' order to ensure that the plaintiffs do a better job. We therefore order that, unless the plaintiffs by close of business on 8th January furnish the second defendant with full and proper further and better particulars of the amended Order of Justice as set out in the Order of the Royal Court of 11th September, the Order of Justice will be struck out and the actions dismissed with costs on a standard basis. That is our order in respect of these two summonses.
11. That leaves two matters, first of all any consequential directions; in particular the question of timing in relation to discovery and inspection of the American documents; and secondly any question of costs arising out of today's hearing. We will order as per paragraph (2) of the summons that the plaintiffs within seven days of receipt of the documents disclosed serve on the defendants a list of the American documents and file an affidavit verifying such list and inspection should be available forthwith thereafter.
12. That leaves only the question of costs. We order that the plaintiffs pay the costs of both Bayard and Kovzac Limited in relation to both summonses.
No Authorities