[2005]JRC119A
royal court
(Samedi Division)
25th August 2005
Before: |
H.W.B. Page, Esq., Q.C. Commissioner, and Jurats Georgelin and Morgan. |
Between |
Jersey Financial Services Commission |
Representor |
And |
A.P. Black (Jersey) Limited |
First Respondent |
And |
A.P. Black (Jersey) Limited |
Second Respondent |
And |
Alistair Pollock Pedersen Black |
Third Respondent |
And |
Peter Stuart Langton |
Fourth Respondent |
And |
A.P. Black Limited |
Fifth Respondent |
And |
Eila Anneli Black |
Sixth Respondent |
Application by the Sixth Respondent to show cause why a Re-amended Representation should not be struck out
Advocate A. J. Olsen for the Representor.
Advocate N. Santos Costa for the First to Sixth Respondents.
judgment
the COMMISSIONER:
Introduction
1. The Sixth Respondent, Elia Anneli Black ("Mrs. Black"), applies for an order striking out the claim made against her in the Representation of the Jersey Financial Services Commission ("the Commission") as re-amended and served on her via Crill Canavan pursuant to leave granted by this Court on the ex parte application of the Commission on 8th December 2004. The application comes before the Court in the form of a summons by Mrs. Black dated 24th June 2005 which was heard on 25th August 2005. For reasons that will appear later, that hearing was the first occasion on which there was an effective inter partes hearing since 8th December 2004; and in substance the application was one to set aside the leave then given to join Mrs. Black as a respondent and to serve her out of the jurisdiction. Neither counsel suggested that it mattered whether the matter was addressed on that basis or as an independent application to strike out: the considerations were the same.
2. Mrs. Black has been joined as Sixth Defendant to proceedings instituted by the Commission in which the other current defendants are respectively
A.P.Blacks (Jersey) Limited ("Blacks Jersey"), the First Respondent;
Alistair Pollock Pedersen Black ("Mr. Black"), the Third Respondent, the husband of Mrs. Black; and
A.P.Black Limited ("Blacks London").
3. Proceedings against
- the (former) Second Respondent, Cater Allen Trust company (Jersey) Limited ("CATCJ") and
the (former) Fourth Respondent, Mr. Peter Stuart Langton ("Mr.Langton"),
were discontinued in December 2003 following a settlement between the Commission and those respondents approved by the Royal Court (the Bailiff sitting in private).
4. The proceedings concern, in short, the operation in the early 1990s' of what may for convenience be called the 'Delta Scheme', though whether there was, strictly speaking, anything that should be called a 'scheme' may be a matter of dispute. It involved the investment by participant members of the public in currency option dealings by companies in the United States of America and the Bahamas. Many of those investors were clients of and/or invested through Blacks Jersey, of which Mr. Black and Mrs. Black were directors. The scheme ended disastrously for many of those investors with its collapse in September 1993 and very substantial losses (said by the Commission to amount in aggregate, world-wide, to some US$ 90 million and to some £30 million in respect of investments made via Blacks Jersey).
5. The Commission brings the present proceedings with a view to recovering losses incurred by investors in the scheme via Blacks Jersey. It applies to the Court for orders against the several Respondents under Article 20(7) of the Collective Investment Funds (Jersey) Law 1988 ("the CIF law"). That Article provides:
"If on the application of the Commission the court is satisfied- (a) that profits have accrued to a person as a result of his failure to comply with any provision of this Law, or of any Regulation or Order made, or permit granted, or with any direction given, under this Law; or (b) that one or more investors have suffered loss or been otherwise adversely affected as a result of that failure; the court may make an order requiring the person concerned to pay into court for distribution as the court may direct such sum as appears to the court to be just having regard to the profits appearing to the court to have accrued and to the extent of the loss or other adverse effect".
6. It is alleged that each of the Respondents has been guilty of misconduct within the terms of this provision and are liable to make a payment into court for distribution among those investors who have suffered loss. More specifically, the Commission alleges (as summarised by Advocate Kelleher in his affidavit sworn on 8th November 2004 at paragraph 7) that the Respondents (i) acted as functionaries to the Delta Options Scheme under the provisions of Article 3 of the CIF Law and that they failed to obtain, indeed even apply for, a permit to act as a functionary to the scheme, as was required by Article 4; (ii) recklessly made statements and forecasts in relation to the scheme that were misleading, false and deceptive for the purposes of inducing participants, or potential participants to enter into investment agreements, or to refrain from exercising rights conferred by 'units' in the Delta Scheme, and thus committed offences under, and accordingly contravened, Article 9 (1); and (iii) made statements and forecasts that created, and were made for the purpose of creating, a false and misleading impression in the minds of participants and potential participants as to the value of units in the scheme, and thus committed offences under, and accordingly contravened, Article 9(2) of the CIF Law."
Background to the present application: June 2003 to December 2004
7. A joint Answer by Blacks Jersey and Mr. Black in response to the Commission's original Representation was filed in December 2000 and was subsequently amended in November 2001. The Commission's original Representation underwent considerable amendment and eventually emerged in a revised form dated 16th June 2003.
8. On 17th June 2003 Orders were made by this Court requiring each of the Respondents to file and serve lists of investors and summaries of monies derived (paragraph 3) and lists of documents (paragraph 4) by specified dates.
9. But a fortnight or so prior to that order Crill Canavan, writing on behalf of Blacks Jersey, Mr. Black, and Blacks London, had informed Carey Olsen on behalf of the Commission that although their clients denied all allegations they were "in no position to take any further part in the proceedings" and that, so far as Blacks Jersey and Mr. Black were concerned they proposed "to rely on the Answer already filed and to rest on the wisdom of the Court". In the case of Blacks London, service had been accepted by Crill Canavan on that company's behalf but it had never filed any Answer to the claim. Crill Canavan also stated that, as from that point, they no longer represented any of these Black Respondents. In practice they continued to pass on to Mr. Black documents served on Crill Canavan.
10. No further part in the proceedings was taken by any of these Black- Respondents until December 2004: all orders and directions of the Court subsequent to this communication from Crill Canavan, including the Court's orders of 17th June 2003, were met with silence.
11. CATJ and Mr. Langton, by contrast, continued actively to defend the claims made against them until December 2003. At this point, shortly before the trial of the action was due to start in January 2004, a settlement was reached between the Commission and CATJ and Mr. Langton which resulted in discontinuance of the proceedings against them.
12. There then followed a considerable period of time during which the Commission conducted inquiries with a view to deciding whether it wished to continue to trial with the proceedings against the remaining Respondents. Having eventually decided that it wished to do so, in December 2004 it sought and was granted leave by this Court (Commissioner Page) to make certain further amendments to its Representation including the addition of Mrs. Eila Black as an additional Respondent. Leave to serve Mrs. Black out of the jurisdiction was given and a return date for her to appear was set for 14th January 2005. In the event, service of process was accepted on behalf of Mrs. Black by Crill Canavan.
January to April 2005
13. Meanwhile Mr. Black (but not the two Black companies) had indicated a desire to resume active defence of the claim against him. In subsequent affidavits dated 15th February and 2nd March 2005 he apologised for his conduct in relation to the proceedings and gave a categoric assurance of his intention in future fully to comply with all orders of the Court.
14. At the hearing on 14th January 2005 Advocate Santos Costa explained that his firm was no longer able to act for Mrs. Black, although he would be continuing to act for Mr. Black; that both Mr. and Mrs. Black were in the process of seeking legal aid; and that he was only present (at least as regards Mrs. Black) as a matter of courtesy at the request of those responsible for the legal aid scheme. Mrs. Black was not present on that occasion.
15. The Commission has made it plain on a number of occasions that it is wholly sceptical of the claims of Mr. and Mrs. Black to be so impecunious as to qualify for legal aid, but that is not a matter on which this Court is currently in position to express any informed view.
16. Because there appeared to be unresolved legal aid complications concerning her representation (including, the Court was informed, a conflict of interest that had prevented those first approached from acting for Mrs. Black and because of representations made by the Commission concerning the propriety of any certificate being granted to either Mr. Black or Mrs. Black), the Court adjourned the return date for the proceedings against Mrs. Black to 16th February 2005. In doing so the judge (Commissioner Page) emphasised the desirability of any such complications being resolved as quickly as possible and the importance of Mrs. Black (as well as Mr. Black) attending the adjourned hearing.
17. When it came to the hearing on 16th February 2005 Mrs. Black herself was duly present. She was, however, still without the benefit of any advocate in court to represent her - notwithstanding, it seems that a legal aid certificate had been issued in her favour. (The circumstances which led to this unsatisfactory state of affairs was subsequently the subject of an inquiry by the Bâtonnier which acquitted counsel of any failure of duty in this respect). The hearing, so far as it concerned Mrs. Black, was therefore adjourned once more and subsequently re-fixed for 10th March 2005 in order to ensure that Mrs. Black was properly represented before any orders directly affecting her were made.
18. At the adjourned hearing on 10th March 2005 Advocate Pierre Landick of Sinels appeared on behalf of Mrs. Black. He informed the Court that he wished note to be taken of the possibility that Mrs. Black might be advised to apply to strike out the proceedings against her as an abuse of process, lest it should subsequently be suggested that such an option had been waived. No substantive challenge to the joinder of Mrs. Black was, however, made on that occasion. For the rest, the burden of Mr. Landick's submissions was that there was a great number of documents to look at and that it would be some time before he would be in a position to serve an Answer on behalf of Mrs. Black. In setting a of date of 15th April 2005, five weeks away, for the filing of an Answer by Mrs. Black - as the Court did at the conclusion of that hearing - the Court made it clear that this was without prejudice to any application that might be made to strike out the proceedings against her but emphasised that if any such application were going to be made it should be done as swiftly as reasonably possible.
19. In the event, the 15th April 2005 came and went without any Answer being served on behalf of Mrs. Black and without any extension of time being sought either by agreement with the Commission or by leave of the Court. Instead, in two letters dated 15th April 2005, Sinels wrote of the difficulties that they were experiencing in drawing up the requisite pleading (having regard, among other things, to the volume of documentation to be examined) and of the fact that they were taking Mrs. Black's instructions but were "minded at this stage" to issue four applications: (1) for stay of the order for discovery; (2) to strike out the proceedings as an abuse of process; (3) for leave, in effect, to bring in CATCJ, Mr. Langton and others as third parties; and (4) for the question whether Delta was a Collective Investment Fund to be tried as a preliminary issue.
20. On 18th April 2005 Mr. Black swore an affidavit in response to paragraph 3 of the Order of 17th June 2003 (which he had previously ignored), and on 9th May 2005 e-mailed directly to the Court a draft affidavit and list of documents intended as compliance with paragraph 4 of that same Order. The latter was several weeks out of time and not in proper form. It was plain, however, that it represented a substantial, if belated, attempt to comply with the 17th June 2003 Order.
21. On 29th April 2005 Crill Canavan wrote to Carey Olsen enclosing what was said to be an Answer on behalf of Blacks London: but it no more than say that Blacks London adopted the Answer served by Mr. Black and Blacks Jersey in December 2000 as amended in September 2001. They also went on to say, among other things, that the matter of representation for Mr. and Mrs. Black was "still not resolved but, as soon as it is, we will be in a position to file an Amended Answer and bring in the other parties" (a reference it seems to CATJ and Mr. Langton).
19th May 2005
22. On 10th May 2005 a number of summonses taken out by the Commission came before the Court, the purpose being to address what the Commission considered (to a large extent justifiably) to be failures of the various respondents to comply with Orders made in these proceedings, a degree of confusion and uncertainty as to the stance of the two Black companies and what documents had purportedly been served on their behalf, and the repeated intimations of possible applications to strike out (by Mrs. Black) and/or to seek leave to add other parties (by both Mr. and Mrs. Black) without, as it seemed, any decision one way or the other being made and acted on. Of particular concern to the Commission, quite rightly, was that as late as the day of the hearing itself, some four weeks after expiry of the relevant deadline, no form of Answer had been served on behalf of Mrs. Black, no summons seeking an extension of time had been issued and no indication of when any pleading could be expected had been given; also that, up until the day before the hearing, no list of documents had been served by Mr. Black in compliance with the extended deadline of 15th April 2005, no extension of time had been sought and no explanation offered for the delay: and this notwithstanding his assurance in his affidavit of 9th March 2005 of his intention fully to comply with future orders of the Court.
23. This unsatisfactory state of affairs was compounded when, in the course of the hearing on Tuesday, Mr. Santos Costa confessed that he himself was in a state of uncertainty as to his own position as regards the parties whom he was supposed to be representing and was largely without instructions, as a result of which the hearing was adjourned until the afternoon of Friday 13th May 2005. In the course of that adjournment the Court was informed by Advocate Landick that Mrs. Black had decided to cease to instruct Sinels and to join Mr. Black in instructing Advocate Santos Costa of Crill Canavan. At the hearing on the Friday Mr. Santos Costa confirmed that he now represented Mr. Black, Mrs. Black and Blacks London. The position as regards Blacks Jersey remained unresolved, pending further inquiries as to the present composition of the board of directors of that company (as to which Mr. Santos Costa said that Mr. Black was unsure): that point apart, the position was back to what it was in December last year when Mrs. Black was first joined in these proceedings.
24. The lengthy orders subsequently made by the Court on 16th May 2005 were designed to ensure so far as possible that each of the Respondents, and in particular Mr. and Mrs. Black personally, were in no doubt as to what was required of them. In the course of its judgment given on that occasion, reference was made by the Court to the following, among other, matters:-
(i) If the two Black companies wished to resume active defence of the proceedings, as appeared to be the case - at least as regards Blacks London - it was right that they should each formally confirm in writing by a duly authorised director or officer their intention of complying in future with orders made by this Court, as Mr. Black himself had done. Being corporate entities no purpose would be served by requiring them to explain and apologise for their past contempt of court: Mr. Black, with whom both companies appeared to be closely associated, had done that already.
(ii) As regards the setting of fresh deadlines and 'default' orders, a distinction had to some extent to be made between, on the one hand, the original Black Defendants, who had long-since been parties to the proceedings and had until recently been in long-standing breach of directions and orders made by this Court, and, on the other hand, Mrs. Black who had only relatively newly been joined. Unacceptable though it was for the previous deadline for service of her Answer to have been allowed to pass without appropriate action, there could be no question of acceding to the Commission's suggestion that judgment in default of defence should be given against her without more ado. Nor would it be appropriate to require her to swear an affidavit of her assets and means as was required of Mr. Black as one of the conditions of permitting him to defend the proceedings afresh notwithstanding his earlier contempt. She had not previously been in breach of any order. In the early part of this year, at least, there had also been difficulties over her legal representation.
(iii) That said, it was wholly unacceptable for the timetable of the proceedings to be put in jeopardy by unresolved questions of representation of the Respondents and belated decisions to as to which the Court can, in the nature of things, know little of what is going on behind the scenes and why. Nor was it necessary for those advising the Respondents to have been able to digest the entirety of the available documentation before formulating properly drawn Answers or deciding whether to apply to strike out the proceedings or to seek leave to add other parties. There was plainly a balance to be struck between (a) allowing the Respondents a proper opportunity to take advice and give instructions, and their advisers a reasonable time to consider and prepare defences in what was, on any view, a major set of proceedings; and (b) ensuring that the proceedings move forward with reasonable dispatch and in an orderly fashion.
(iv) The question of any application to strike out the proceedings against Mrs. Black was, in particular, one that needed to be resolved as a matter of high priority and it was appropriate to set a deadline by which any summons seeking such an order must to be issued. In the ordinary way, this was an application that should have been launched on the occasion of the first effective return date - which, in the event, was 10th March 2005. The possibility of keeping open that option had been permitted by the Court as a matter of indulgence in the light of the difficulties that Mrs. Black appeared to have had with securing legal representation. The importance of the application being made as soon as possible had been emphasised on a previous occasion. Since then, some nine weeks had elapsed, no such application had been made, but it was still sought to keep that possibility alive without any clear indication of when a decision would be made. It was now some five months since Mrs. Black had been joined as a party to these proceedings and it was time for these matters to be brought to a head one way or another. The fact that the Court had now set a deadline of 7th June 2005 for service of any summons by Mrs. Black to strike out the Commission's claim was, however, wholly without prejudice to any submission that the Commission might make as to the stage at which the application was made and was not to be taken as legitimising the interval of time that has elapsed since Mrs. Black was joined as a party.
(v) If any other application of the kind adumbrated in Sinels' letter dated 15th April 2005 or Crill Canavan's letter dated 29th April 2005 were seriously contemplated, appropriate action also needed to be taken without further delay. Here again, the mere fact that the Court was setting certain deadlines was not to be taken as offering any encouragement to those who might be minded to make any such application.
24th June 2005: the Summons
25. Eventually on 24th June 2005, a summons on behalf of Mrs. Black was issued by Crill Canavan seeking the striking out of the Commission's Re-Amended Representation so far as it concerned Mrs. Black on various grounds, alternatively leave to join CATJ and Mr. Langton as Third Parties. The strike-out was said to be justified (1) under Royal Court Rule 6/13(1)(d) on the ground that Mrs. Black's joinder to the proceedings might "prejudice, embarrass or delay the fair trial of the action"; (2) and (3) under Rule 6/13(1)(d) and/or the inherent jurisdiction of the Court on the ground that such joinder would be an abuse of process; and (4) on the ground such joinder would involve a breach of Article 6(1) of the ECHR.
26. Of these, the first is misconceived, inasmuch as Rule 6/13 (1)(d) can only avail someone who is already a party to the proceedings and will, in any event, continue to be so and who is seeking to prevent the proceedings being encumbered with an issue that " may prejudice, embarrass or delay the fair trial of the action". Mrs. Black has no locus to argue that her joinder would have this effect on the trial as constituted prior to her joinder, and neither Mr. Black nor either of corporate Black respondents has made any such submission.
27. But this is of little consequence as the thrust of Advocate Santos Costa's case on behalf of Mrs. Black rested primarily on the second and third heads of "abuse of process". In practice it is unnecessary to spend time in this judgment considering the finer points of the inter-relationship between these other heads of jurisdiction and the weight that ought to be given to Article 6(1) of the Convention (given that the Convention is not yet part of the domestic law of Jersey), because Advocate Olsen, on behalf of the Commission, accepted that the Court has an inherent jurisdiction to strike out proceedings in circumstances where it would be an abuse of process or otherwise unjust to allow them to be pursued. This concession is consistent with certain observations of Southwell JA, the President of the Court of Appeal, in the course of giving the judgment of the Court on the trial of a preliminary issue in the present case as to whether any period of prescription applies to proceedings of the present kind (held, overturning the decision of the Royal Court at first instance: no such period applies). The material passage, particularly relied on by Mr. Costa, is as follows:-
"As Mr.Olsen [on behalf of the Commission] made clear, this {the absence of any period of prescription] does not mean that the Commission can linger until doomsday before bringing such an application before the Court. The respondent or prospective respondent to any such application has a number of routes to ensuring that such an application (if there has been long and unjustified delay) fails at the outset or when the Court exercises its discretion: (i) As soon as an application is launched the respondent can apply to the Court to strike out the application as an abuse of process. It may be also that a threatened application can be prevented by applying to the Court for judicial review of the Commission's threatened us of its Article 20(7) power. (ii) If the application proceeds, the Court has a complete discretion whether to make an order at all. Lapse of time may be a strong factor leading to no order being made, particularly if the lapse of time is long and cannot be justified by the Commission. It must, however, be kept in mind that financial irregularities in activities such as collective investment funds are likely to take no little time to unravel. In these proceedings it is not suggested that (i) above would apply, and in any event an application based on abuse would have to be have been made at the outset of the proceedings and anyway not later than when the preliminary issue was sought. But it will be open to the Respondents to rely on the lapse of time at the trial and to seek to persuade the Court not to make any order. The protection which (i) and (ii) above give to respondents to an Article 20(7) application may indeed be stronger protection than is afforded by a mere prescription period."
28. Mr. Santos Costa relied on five main considerations: First, the fact that the material events took place in the early 1990s', some 13 years ago. Secondly the lapse of time since the Commission had started proceedings against the original respondents in June 2000. Thirdly, the unfairness (as Mr. Costa submitted) of the Commission's decision to start proceedings notwithstanding the terms of a report by Advocate Wheeler in 1998. Fourthly, the weakness of the case against Mrs. Black (as Mr.Santos Costa submitted). And, fifthly, the prejudice to Mrs. Black were she to be barred, by reason of the Commission's November 2003 settlement with CATCJ and Mr. Langton, from seeking third party relief against them.
29. Taking the first two of these matters together, the overall lapse of time since the events which gave rise to these proceedings occurred can be broken down into the following periods:-
(i) From the collapse of the Delta Scheme toward the end of 1993 until the appointment, on 1st October 1996, of Advocate Wheeler under Article 128(1) of the Companies (Jersey) Law 1991 as Inspector to investigate the affairs of Blacks Jersey.
(ii) From 1st October 1996 until completion of Advocate Wheeler's report on 24th July 1998.
(iii) From the time of that report until the issue of proceedings by the Commission in June 2000. During this time, among other things, a number of actions were started by aggrieved investors against CATCJ, Mr. Langton and Blacks Jersey (all of which were at one time stayed pending the outcome of the present proceedings, but the current status of which is unknown to us), an inquiry was conducted and a report made by Advocate Wheeler, and decision was evidently made by the Commission, notwithstanding that report, to launch proceedings under Article 20(7).
(iv) From the issue by the Commission of its original Representation in the Royal Court on 30th June 2000 until 28th September 2001 when further progress went into abeyance, for twelve months, pending trial of the preliminary issue concerning prescription first before the Bailiff and subsequently on appeal.
(v) From mid-September 2002, when the Court of Appeal gave its decision on the preliminary issue, until June 2003, during which the Commission geared itself up again and its Representation was amended and subsequently substantially re-formulated; and then, on 17th June 2003, orders were made for discovery and inspection of documents, the exchange of affidavits of evidence-in-chief, and for the provisional listing of the proceedings for trial in January 2004.
(vi) From June 2003 until November 2003, during which the Black Respondents ceased to take any part in the proceedings (or in the case of Blacks London, continued to ignore the proceedings) and during which the settlement with CATCJ and Mr. Langton was negotiated.
(vii) From December 2003 until November 2004 during which the Commission conducted various enquiries and debated whether it would be justified, in the discharge of its function as a public regulatory body, in continuing to pursue the proceedings against the remaining Respondents and to seek leave to join Mrs. Black as an additional respondent (as, in the event, it did). Meanwhile the trial date was adjourned indefinitely.
(viii) From 8th December 2004, when this Court gave leave, ex parte, for Mrs. Black to be joined as a Respondent, until the issue of her summons seeking her removal from the action in late June this year.
30. Broken down in this way, it becomes evident that, protracted as the proceedings have been and continue to be as regards Respondents other than those with whom a settlement has been negotiated, the lapse of time since the material events and since the institution of the action is at least readily explicable. For our part, we are also of the view that that lapse of time is not such as to warrant any finding that there has been unjustified delay on the part of the Commission in instituting or pursuing these proceedings.
31. At the same time, it is inescapable that Mrs. Black is faced, for the first time, in 2004/2005, with the prospect of having to respond in litigation to serious charges of misconduct in relation to events that took place 13 years ago.
32. The unfairness of this state of affairs is compounded (says Mr. Santos Costa) by the unreasonableness of the Commission's decision to start proceedings in the first place despite the conclusions reached by Advocate Wheeler in his July 1998 report after the best part of two years' investigation and despite the Commission's letter dated 13th January 1999 to Speechly Bircham, Mr. and Mrs. Black's London solicitors in the light of that report. The gist of that letter, from Mr. John Pallot, the Commission's Director of Investments, had been that, subject to one point which had been referred to the Chief Adviser's Office, the Commission had concluded that there was no case for bringing any legal proceedings. In particular, in the case of the CIF Law (one of four sets of statutory provisions that had been under consideration) the conclusion had been reached that the Delta Scheme did not constitute a 'collective fund' within the meaning of that law and, accordingly neither Blacks Jersey nor CATCJ were considered to have been in breach of Article 4 of the Law. To have started proceedings as it did against this background and without ever having explained its change of mind, had itself been an abuse of process of a kind that could have been challenged by judicial review. This is not, however, a challenge that was ever mounted by any of the other Respondents and has not been made as such by Mrs. Black. Had it been, it would have been the subject of proper enquiry, evidence and consideration on its own terms within the context of judicial review. We accordingly place little weight on this consideration.
33. Although she has had what she describes as something of a "roller-coaster ride" (having been relieved to note the conclusions of Advocate Wheeler's report in 1998 and then, much later having learned of the settlement with CATCJ), Mrs. Black does not claim to have been lulled into any sustained sense of false security that no proceedings would ever be instituted against her, personally. On the contrary, in her affidavit sworn on 17th August 2005 for the purpose of the present application, she says (echoing paragraph 15 of the skeleton argument lodged on her behalf) that she has lived with the uncertainty as to whether proceedings would or would not be brought against her for 12 years. The Commission's decision to seek leave to join her can, it seems, hardly have come as a total surprise.
34. Mr. Santos Costa also relied on what he submitted was the relatively minimal part played by Mrs. Black in the history of this affair: the fact, as he put it, that Mrs. Black had always been "a bit-part player in the narrative". He also submitted that the Commission had had all the information relevant to her involvement within its power and control since June 1993. Not so, says Mr. Olsen. Detailed proofs of evidence of Delta Scheme investors taken in the course of the summer of 2003 and documents found among the extensive discovery provided by CATCJ and Mr. Langton prior to the settlement with them led the Commission to conclude that Mrs. Black had, in fact, played a far more direct and active role in the business carried on by Blacks Jersey and Blacks London than the Commission had previously believe. In an affidavit sworn on 8th November 2004 for the purposes of the Commission's application for leave to join Mrs. Black as a respondent, Advocate Kelleher summarised what one may assume were thought to be the main indicators of such involvement so far as discovered by the Commission at the time when Mr. Kelleher's affidavit was sworn. Particular mention was made of evidence given by four named-investors and to unspecified numbers of others ("Other investors......."; and "Numerous investors..."). Reference was also made to a CATCJ file note dated 19th February 1993 recording a "director's bonus" payment to Mrs. Black of 200,000 Finnish Marks, the equivalent of £23,400, and to the fact that Mrs. Black had signed the annual accounts of Blacks London for 2003 as company secretary on 16th March 2004.
35. This material, undoubtedly goes some way towards suggesting that Mrs. Black held some sort of position of significance within the Black companies at the material time. And, while she said in her affidavit that she would find it difficult at this remove in time to comment on the individual conversations referred to in Mr. Kelleher's affidavit, she made no attempt in that affidavit, to address the substantive charge that she did in fact play a direct and active part in the affairs of the Black companies. On the other hand, given that Commission's examination of the CATCJ/Langton discovery was only in the early stages, it seems, when Mr. Kelleher swore his affidavit in early November 2004, and given the interval of time that subsequently elapsed before this application came on for hearing in late August 2005, it is a little surprising that no additional evidence of the extent of Mrs. Black's involvement has been put before the Court: it is reasonable to suppose that if anything of particular note had been discovered it would have the subject of further affidavit evidence. All in all, it is quite difficult to get much of a feel for the strength of the case against Mrs. Black.
36. It is convenient at this point to deal with another reason for the Commission's decision to seek leave to join Mrs. Black. Investigations reveal, it is said, that "Mr. and Mrs. Black have arranged their financial affairs in such a way that enforcement of any judgment that it may in due course obtain against them will prove to be less difficult as against Mrs. Black than it would be as against Mr. Black" (paragraph 19 of Mr. Kelleher's affidavit) or, rather less delicately, the suggestion that Mrs. Black may have "aided and abetted her husband in the concealment and/or transfer of [his] assets" (paragraph 12 of the Commission's skeleton argument). Even if true, and it is not denied in Mrs. Black's affidavit, this does not of itself tell one anything about the extent to which Mrs. Black may have been involved in any reprehensible conduct in relation to the Delta Scheme. It is, however, a properly candid explanation of one of the Commission's reasons for seeking redress against Mrs. Black at such a late stage and a factor of relevance to the exercise of the Court's discretion. (Whether, any such arrangements or dealings would, in practice, be proof against a tracing action by the Commission or by a trustee in bankruptcy or ancillary relief granted by the Court in aid of orders made, would be another matter, were the occasion to arise).
37. Finally, submitted Mr. Santos Costa, there is the matter of Mrs. Black's ability or otherwise to join CATCJ and Mr. Langton as third parties to the action for the purpose of seeking indemnity or contribution from them in respect of any liability to which she may be held subject. There were, he said, two alternatives: either the proceedings against Mrs. Black must be struck out; or, if she is to continue to be a party, justice requires that she be given leave to join CATCJ and Mr. Langton.
38. One thing is quite clear to us, and that is that it would be wholly unjust for either CATCJ or Mr. Langton to be re-joinded as parties to these proceedings at any time - let alone over 18 months after it had formally been released from them. We are not privy (at this stage at least) to the terms of the November 2003 settlement, but it is reasonable to assume that a major reason, on the part of CATCJ and Mr. Langton, for entering into that agreement was to draw a line under their formal involvement as respondents to any claim against them. Mr. Olsen made it abundantly clear that the Commission was of the same view and would strongly resist any move to re-join CATCJ or Mr. Langton as parties to the action. Mrs Black was not, of course, a party to that settlement and could not be bound by it; but any such move would almost certainly fail on the ground of abuse of process.
39. The critical question for present purpose is, therefore, what weight we should attach to Mrs. Black's inability, in practice, to join CATCJ and Mr. Langton as third parties were she herself to continue to be a respondent. Mr. Santos Costa argued that this was a matter of fundamental importance, not least because it is Mrs. Black's case that she relied on Mr. Langton for advice as to the necessity for a Collective Investment Fund Licence and because of the conclusion reached by Advocate Wheeler, as recorded in paragraph 12.3 of his Report, to the following effect:-
"From my review of matters I have come to the conclusion that the functions carried out by [CATCJ] for and on behalf of [Blacks Jersey] constituted much more than the provision of administrative services and the maintenance of statutory books and records. It is quite clear that in fact a wide range of management and administrative services were provided in the manner previously described. Bearing in mind the particular involvement of Mr. Langton who was a Director of both companies I have come to the conclusion that the detailed knowledge and involvement which Mr. Langton had can properly be imputed to [CATCJ]. If, therefore, [Blacks Jersey] has committed any offences under Jersey law it is quite arguable that [CATCJ} aided and abetted it in doing so".
It is only fair and right (Mr. Santos Costa submitted) that Mrs. Black, if she were to remain a respondent, should have the opportunity to obtain discovery from CATCJ, to cross-examine Mr. Langton and any other witnesses called by CATCJ, to seek formal findings of fact in her favour as to their conduct and to have a formal adjudication on her claims for indemnity or contribution.
40. As against this, Mr. Olsen suggested that Mrs. Black wholly fails to establish that inability to join CATCJ and Mr. Langton would result in any prejudice to her. He pointed out that she still has the option to seek leave join any or all of the numerous other persons and bodies mentioned as potential third parties in earlier correspondence and in paragraph 1.3 of Mrs. Black's Answer dated 21st June 2005 (not, we think, a particularly cogent point); and that CATCJ's discovery would, in practice, be available to her via the Commission in any event (which, we shall assume, is a correct statement of the position, though the matter was not explored in any depth). He was, not surprisingly, unable to provide any answer to the point about cross-examination of witnesses.
41. More importantly, he also submitted, first, that it would always be open to the Court, in its final adjudication, to adjust the quantum of any payment that it might order Mrs. Black to make, under Article 20(7) of the CIF Law, so as to take account of the relative degrees of culpability attaching to Mrs. Black and CATCJ/Mr. Langton; and, secondly, that Mrs. Black had failed to show a sufficiently good prima facie case against CATCJ or Mr. Langton to justify a Court in giving leave to join them as third parties.
42. As to the first of these, Mr. Olsen is no doubt right - as far as it goes. But we are by no means satisfied that the net result from Mrs. Black's perspective would necessarily come to exactly the same thing as if she were able to pursue a formal claim for contribution or indemnity against CATCJ and/or Mr. Langton. On any view, there is a material difference between a process that is heavily dependent on the exercise by the Court of a discretion (under Article 20(7)) and a process that may involve an adjudication of legal entitlement.
43. As to the second, it is true that the basis of Mrs. Black's case for indemnity or contribution from CATCJ and/or Mr. Langton is not presented in any great detail and, indeed, that her formal Answer to the Commission's Re-Amended Representation contains nothing by way of a plea that if anything was amiss it was the fault of CATCJ and Mr. Langton (beyond a bald statement that "CATCJ acted as Jersey adviser to Blacks Jersey" in paragraph 27). But there is sufficient in paragraphs 7 and 8 of Mrs. Black's affidavit of 17th August 2005 and in the passage from Advocate Wheeler's report referred to above to warrant the conclusion that there could well be a sufficient basis for claims against CATCJ and Mr. Langton and to justify Mrs. Black being permitted to join them as third parties: a matter on which a court would, in the ordinary course of events, also be minded to give someone in her position the benefit of the doubt.
44. Of course, a cynic might say that this line of argument is wholly artificial and is advanced simply to further the strike-out application; that if Mrs. Black had been joined as a respondent to the original proceedings she would no more have thought of issuing indemnity or contribution notices against her co-respondents CATCJ and Mr. Langton than Mr. Black did; that in practice she would, no doubt, have ceased to take any further part in the proceedings after June 2003 in the same way that Mr. Black did. Furthermore, as the Commission makes no bones about suggesting (not surprisingly), it is difficult to see Mr. Black's re-newed interest in actively defending the proceedings as anything other than a reaction to the prospect of Mrs. Black being made a party.
45. Tempting as it is to think that this assessment might not be all that far from the truth, we do not think it open to us to espouse it. The fact is that Mrs. Black was not a respondent originally, and we have to take things as the now stand, five years on. Looking at matters in the round, it seems to us that this particular factor cannot be ignored. For the Commission to ask for, or the Court to permit, Mrs. Black to be added and retained as a respondent to these proceedings - itself an exercise of the Court's discretion - while at the same time denying her - again as a matter of discretion - any possibility of making third-party claims of a kind that would ordinarily be permitted, is a strong thing to do.
46. It is important to recognise that Mr. Black's position is different, as is that of Blacks London and Blacks Jersey. Each of them purports in his Amended Answer (served in the case of Mr. Black and Blacks London on 21st June 2005, and in the case of Blacks Jersey on 25th July 2005) to reserve the 'right' to join others as third parties, including CATCJ and Mr. Langton. But all three have been respondents from the outset. All three had every opportunity to issue proceedings for contribution or indemnity against CATCJ and/or Mr. Langton prior to the settlement had they wished, but did not do so. All three chose instead to forego active defence of the proceedings and to ignore orders made by this Court (in the case of Black London from an early stage; in the case of the other two from the summer of 2003 until December 2004). Since December 2004 they have been granted leave to resume active defence of the action and to comply with orders the original deadlines for which had long-since expired. In these circumstances, no application by any of them could now be made with any realistic prospect of success either to strike out the Commission's proceedings (as indeed none has been made) or for CATCJ or Mr. Langton to be brought back into the proceedings as third parties (the injustice of which would exceed even that discussed above in relation to Mrs. Black; and the time for any such application being in any event now well past).
Conclusion
47. We are compelled in the end to conclude that it would be an abuse of process - or, as we would prefer to put it, that it would not be fair and just - for Mrs. Black to be retained as a respondent to these proceedings. We reach this conclusion on the basis of a combination of considerations: the late stage at which she has been joined; the difficulty of being able to discern with confidence the extent of her involvement and the strength of the case against her; and the bar on any possibility of joining CATCJ or Mr. Langton as third parties to the claim against her. We have well in mind the very considerable losses that is said to have been suffered by large numbers of investors, the considerable practical difficulties likely to be involved on the part of the Commission in investigating the background to these losses and the pursuit of redress from those believed to be responsible. But these considerations are, in our view, outweighed on this occasion by the potential injustice of Mrs. Black being brought into these proceedings as a respondent at this stage.
No Authorities