[2007]JRC056
royal court
(Samedi Division)
6th March 2007
Before : |
H. W. B. Page Esq., Q.C., Commissioner, sitting alone. |
Between |
United Capital Corporation |
Plaintiff |
And |
(1) John Felix Bender (2) John Koonmen (3) SGI Trust Jersey Investments (4) Johan Hendrik Laurentius Bartolomeus Wijsmuller (5) Bluebird Limited(a company incorporated in Anguilla (6) Dovetail Limited(a company incorporated in Anguilla
|
Defendants |
And |
(1) Kleinwort Benson (Channel Islands) Limited (2) UBS AG (Jersey) (3) Standard Bank Jersey Limited (4) Whitmill Trust Company Limited |
Parties Cited |
IN THE MATTER OF AN APPLICATION BY UCC FOR DISCLOSURE AGAINST THE FIRST AND FOURTH DEFENDANTS, AND THE FOURTH PARTY CITED
Advocate S. J. Young for the Plaintiff.
Advocate A. P. Begg for the Fourth Defendant
Advocate S. A. Franckel for the Fourth Party Cited
judgment
commissioner:
Background
1. The background to this matter is set out in the Judgment of the Deputy Bailiff dated 15th September 2006 concerning the failure of the First Defendant, Mr. Bender to comply fully and properly with certain disclosure orders obtained by the Plaintiff ("UCC") relating to his assets. The orders in question were contained in UCC's Order of Justice issued on 16th May 2005, but were subsequently stayed pending resolution of issues of forum conveniens and only took final effect when that stay was removed on 26th March 2006. For the reasons given in that Judgment, Mr. Bender was declared to be in contempt of court and was barred from taking any further steps in the action until such time as he had purged his contempt. Earlier this year, in the absence of any steps by Mr. Bender to redress the situation, his Answer to UCC's Order of Justice was struck out.
2. The "Assets" concerning which disclosure of information was concerned were defined as:
"Any and all monies, securities or other assets, real or moveable belonging to or in which the first and/or second defendants have or may have direct or indirect interest whether legal or beneficial whether held by or him for them or controlled directly or indirectly by them wheresoever situate",
though only Mr. Bender's assets are currently in issue.
3. Similar disclosure orders concerning knowledge of Mr. Bender's assets were made against the Fourth Defendant, Mr. Wijsmuller, and, at a later stage, against the Fourth Party Cited, Whitmill Trust Company Limited ("Whitmill").
4. In the case of Mr. Wijsmuller, his initial response to the disclosure order was contained in a substantial affidavit, served un-sworn on 31st March 2006, but subsequently sworn on 4th May 2006. The sufficiency of that disclosure was challenged by UCC and this elicited a further response from Mr. Wijsmuller in the form of a letter dated 28th July 2006. But UCC remained unsatisfied and, in due course, the matter came before the Court (the Deputy Bailiff, sitting with Jurats Bullen and Newcombe) on 26th October 2006.
5. In the course of that hearing Mr. Wijsmuller was cross-examined by Advocate Young on behalf of UCC. However, time ran out before the matter could be pursued to its conclusion and the hearing was adjourned generally on the basis:
(i) that the Court was satisfied that Mr. Wijsmuller was capable of providing more information concerning Mr. Bender's assets than he had done so far, even if he had no further documents and even though he might have thought that he had done everything required of him;
(ii) that Mr. Wijsmuller had a duty to assist UCC in its legitimate endeavours to discover what had become of Mr. Bender's assets and was strongly exhorted by the Court to co-operate with Mr. Young;
(iii) that the matter would, however, best be best pursued outside Court in a dialogue between the parties, but with liberty for UCC to come back before the Court if necessary with an amended disclosure order setting out more precisely what information it required from Mr. Wijsmuller. There was also discussion about how some form of controlled access to the "SGI" documents might be put in place.
6. In the case of Whitmill, disclosure was made in a letter from Advocate Franckel of Bakerplatt to Advocate Young dated 29th June 2006 enclosing:
(i) a Management and Administration Agreement, between Barwys Trust Anguilla Ltd ("Barwys") and Whitmill, dated 18th August 2005 but said to be effective from "on or about the end of March 2005";
(ii) an "Accounts Schedule" showing "the balance of each account relevant to these proceedings, at the date Whitmill took over administration of this account [and] the closing balance of each account and the date of the last statement";
(iii) a "Payments Schedule" detailing "the monies [paid] out of the relevant accounts within the period of Whitmill's administration and/or control of these accounts"; and
(iv) a number of bank statements "which evidence the above schedules".
The letter continued:
"Whitmill does not provide any accountancy or book keeping services for any of these entities. Each account on the schedule includes the date at which Whitmill became de facto administrators of each account. Whitmill remain administrator of these accounts as at today's date."
However, having said what Whitmill does not do, the letter singularly failed to explain what it does do as administrator.
7. The present applications comes before me in the form of a summons dated 21st November 2006, consequent on the disclosure made by Whitmill in Bakerplatt's letter of 29th June 2006, by which the Plaintiff ("UCC") seeks orders that both Whitmill and Mr. Wijsmuller make further disclosure on affidavit of eight categories of documentation and information relating to certain specified entities as listed in a schedule to the summons.
8. In substance, both applications - against Whitmill and against Mr. Wijsmuller - amount to continuations, or further pursuit, of the original disclosure orders obtained by UCC, with this difference: that in the case of Whitmill, Mr. Young does not suggest that there has been any failure to date to comply with the original order, whereas in the case of Mr. Wijsmuller he does - that being the whole basis of his cross-examination of Mr. Wijsmuller at the October hearing last year.
9. The basis of UCC's application, is that the documents disclosed by Whitmill to date show two things of particular note:
(i) what appear to be payments out from the bank accounts of Bender-related entities of some US$13 million subsequent to the Mareva injunction freezing the accounts in question with effect from 16th May 2005; and
(ii) two further amounts, totalling US$14.6 million paid out from accounts of Bender-related entities by the name of Spellstone Limited ("Spellstone") and Rising Star Limited ("Rising Star") sometime between 1st April and 31st July 2005. As to these latter payments, there is as yet no documentation to show when within this four-month period the funds were moved; but, submits Mr. Young, given the other post-Mareva payments, there must be at least a real possibility that one or both of the payments in the second category also took place after 16th May 2005.
10. Though not the largest of the payments in question, two others require particular mention: one of US$113,000 in favour of Barwys, in respect of "Fees", on 8th July 2005, and another of US$100,000 also to Barwys, and again for "Fees", on 27th July 2005. Barwys is a company with which Mr. Wijsmuller is associated and it was and is pursuant to the Management and Administration Agreement with Whitmill referred to in paragraph 6 above that the latter has acted as "administrator" of the entities now under consideration.
Further disclosure by Whitmill
11. Given that Whitmill was "the administrator" of the entities in question throughout the period when these transactions took place, it is not unreasonable to assumed that its officers and directors might be able to help with much at least of the information now sought by UCC. Nor for the most part was there much resistance on the part of Whitmill to the orders sought. Mr. Franckel made it clear that, subject to one more substantial point, and one or two relatively minor observations (which it unnecessary to take time reviewing in this judgment), his client is content to rest on the wisdom of the Court.
12. The one substantial concern, says Mr. Franckel, is that UCC's real purpose in pursuing this application might be to obtain pre-action disclosure in order to enable it to decide whether or not to seek leave to join Whitmill as a defendant to the proceedings (a step that it has suggested in the past that it might take). The possibility that that might happen cannot, I suppose, be ruled out altogether, but in my view UCC's application for further disclosure of information of the kind described in Part A of UCC's summons under heads (1) to (5) is, on the evidence before me, entirely reasonable and well-founded. There will, accordingly, be orders in the terms sought, except that in the case of head (5) the wording will be:
"Bank Statements from April 2005 to 31 August 2005 inclusive for Rising Star Limited and Spellstone Limited showing all movements of monies to and from such bank accounts and specifically, without prejudice to the foregoing, those accounts held at EFG Bank, together with the purpose thereof (in so far as any director, officer, employee of Whitmill or any person working for Whitmill in any other capacity has knows or thinks he/she knows of such purpose)".
13. As regards the three remaining heads of information sought in Part A of UCC's summons:-
(i) Head (6): there will not be any specific order under this paragraph at this stage against Whitmill, though this is without prejudice to any information or documentation concerning Mr. Wijsmuller of which disclosure may be required under heads (1) to (5).
(ii) Head (7): I have seen and heard nothing that would justify an order in these terms.
(iii) Head (8): I do not propose to make an order in the terms of the summons. I would, however, expect there to be no divergence in substance between the information of which disclosure by Whitmill is now ordered (coupled with that already disclosed) and any information disclosed by Whitmill to Mr. Bender's legal advisers; but if, for any reason (and it is difficult at the moment to see what that could be) there is any such divergence, then Whitmill must state clearly that that is the case and explain on what basis the withholding of any information is thought to be justifiable.
14. In responding on affidavit to the orders now made, Whitmill will be expected:
(i) to explain exactly what has been and is entailed in acting as "administrator" of the entities in question and also the extent of Whitmill's premises, staff and organisational set-up; and
(ii) to identify the individual persons involved in relevant transactions and/or possessed of relevant information, rather than speaking merely of "Whitmill".
15. Unless and until otherwise ordered, the further disclosure required from Whitmill is to be supplied by mid-day on Monday 19th March 2007.
Further disclosure by Mr. Wijsmuller
16. An un-sworn four-page affidavit by Mr. Wijsmuller in response to UCC's application was produced by Advocate Begg shortly before the hearing (Mr. Begg, having been appointed to represent Mr. Wijsmuller under a legal aid certificate early in 2007). That affidavit raises, if anything, more questions than it solves; but for the moment I confine myself to noting the following points.
17. First, Mr. Wijsmuller refers back to his earlier disclosure affidavit of 4th May 2006 and his letter of 28th June 2006 to which I have referred earlier and says:
"The affidavit and the letter comprise all the documentation that I had in my possession or control in relation to these entities at any time (paragraph 4) .............the information that I have disclosed to date is all the information that I have (paragraph 5)...........I can't disclose anything further because the Plaintiffs or its agents took away all my data and when I got it back, they tried to take it away again" (paragraph 10).
Discussion in the course of the hearing elicited that this last passage was a reference to not only the hard-copy SGI documents currently held to the order of the Court (as result of earlier direction given by me), but also to an electronic copy of a "data-base" which has been lodged by Mr. Wijsmuller with his lawyer in the Netherlands for safe-keeping (apparently the same data-base as that referred to in paragraphs 38 to 56 of the un-sworn affidavit by Mr. Wijsmuller bearing a foot-note date of 11th January 2007). This, it seems, is but one of several copies of a data-base, which started out, at least, as an electronic version of SGI's records, though whether it has since been the subject of editing of some kind is, or may be, a matter for inquiry at some later stage.
18. But what matters for present purposes is that Mr. Wijsmuller, speaking of SGI records and, it seems, this data-base, says in his latest affidavit:
"...at the end of the contempt hearing, the Deputy Bailiff directed me to assist UCC in recovering data from the liquidators. Undoubtedly, given the proper tools and means I will be able to resurrect an enormous amount of data. Indeed, I will be able to tell the Court to the penny how much there was in Mr. Bender's bank account in March 2005. Even without such tools, there are in excess of 900,000 legible documents on the database which, although there are parts of the database that are accessible only by password or that are encoded in some way, they are not encrypted (and obviously not encrypted). Much of this personal data relates to other clients of SGI, STAL and other regulated entities, to staff and to personal and business contacts" (paragraph13).
19. The existence of the electronic data-base lodged with Mr. Wijsmuller's Dutch lawyer (Advocate Robert Schurink) means, therefore, that it is not strictly correct for Mr. Wijsmuller to say that he does not have access to any other potentially relevant documentary material: plainly he could have such access if he chose to do so. Now, he may think it prudent to have lodged the data-base with someone who will be able, if necessary, to confirm that it has not been interfered with since 17th November 2006, at least (that being the date when, as I understand, the data-base was lodged with Advocate Schurink). But that consideration could be covered equally well either by making a copy of the data-base and leaving the existing one in the care of Advocate Schurink, or, better still, by requiring the original to be deposited with this Court in the same way that the hard-copy SGI documents are currently held. I am, therefore, strongly disposed to think that there should be orders that Mr. Wijsmuller give directions for steps of this kind to be taken forthwith, and for him simultaneously to file an disclosing all pass-words necessary to gain access to the contents of the data-base (that affidavit to be lodged with the Court but not, for the time-being, disclosed to any other party). Once that is done, consideration can be given to who and under what circumstances is to be allowed to inspect its contents. As orders of this kind were not specifically discussed at the recent hearing, all parties concerned will have an opportunity to make representations on the matter before any such order is made. Mr. Wijsmuller is to refrain, in the meantime, from doing anything to change the condition of the data-base or the circumstances and terms on which it is held by Advocate Schurink.
20. Secondly, Mr. Wijsmuller says, evidently with reference to Mr. Young's schedule of potentially material payments from Bender-relate entities,
".....there was one large catch-up payment representing, if I correctly recall seven months of allowances back-dated to the deemed service of Mr. Bender in August 2005. Apart from a small amount, Mr. Bender forwent his living expenses and allowed me to benefit from them in terms of feeding and clothing my family and me" (paragraph 11).
Again, discussion in the course of the hearing seemed to suggest that money released by this Court from funds otherwise frozen by the Mareva injunctions for the specific purpose of providing for Mr. Bender's "living expenses" (as is normal in such cases), has in fact found its way - possibly via Barwys - to Mr. Wijsmuller. More than that is unclear at the moment. There will, therefore, be an order that Mr. Wijsmuller explains fully on affidavit the arrangements with Mr. Bender concerning these payments, the amounts concerned and the other circumstances in which this happened, and that he discloses all documents in his possession, custody or power having any bearing on this particular matter.
21. Thirdly Mr. Wijsmuller says, somewhat enigmatically,
"...I have been in a fiduciary capacity for Mr. Bender since the mid nineties. I have ongoing personal obligations as trustee despite the fact that the legal entities that are, or were, his trustee in name either no longer exist, or have been usurped by the Plaintiff or agents of the Plaintiff (in either the present proceedings or the SGI proceedings), or are prevented from appointing me as director by operation of Jersey's Financial Services Law as enforced by the JFSC" (paragraph 7).
Mr. Begg, having taken instructions from Mr. Wijsmuller, endeavoured to explain what this meant - having regard in particular to the use of the present tense - but not, I have to say, entirely successfully. Mr. Wijsmuller needs to give a fuller explanation of this passage in a further affidavit.
22. These three points apart, I do not propose to make any further disclosure order against Mr. Wijsmuller at this stage, partly because there has been no dialogue of the kind envisaged by the Deputy Bailiff (though that might well have proved to be an unsatisfactory exercise as long as Mr. Wijsmuller remained without legal representation), but mainly because the sequence most likely to be of assistance to all concerned appears to me to be this: first, for Whitmill to provide the additional documents and information now ordered; then, for UCC to formulate whatever questions it wants to put to put to Mr. Wijsmuller in the light of that information (and to do so in more precise, less composite terms that those of UCC's current summons); and finally for Mr. Wijsmuller to respond. And when it comes to that response Mr. Wijsmuller will need to heed, in particular, the point repeatedly made by the Deputy Bailiff that, even if he has no additional documentation of relevance to disclose, Mr. Wijsmuller almost certainly has more information "in his head" than he has so far revealed - a point that his most recent affidavit still chooses to ignore. In any event, it may be that by that stage the question of access to the data-base currently held to the order of Mr. Wijsmuller by his lawyer in Holland will have been resolved and that further documentary material from that source will have emerged.
23. An affidavit by Mr. Wijsmuller dealing with the points referred to in paragraphs 20 and 21 above, is to be filed, together with the documents called for in paragraph 20, by mid-day on Monday 19th March 2007 (unless and until any other period is directed.)
Generally
24. In the meantime, UCC's summons will stand adjourned generally.
25. The advocates for UCC and Mr. Wijsmuller should discuss and agree, if possible, whether they wish to have an oral hearing on the matter of the making of an order of the kind envisaged in paragraph 18 above, or whether they are content to make their respective submissions (if any) in writing. In the former case they should attend upon the Bailiff's Judicial Secretary in the course of the next 7 days to fix a further hearing date.
26. There will be liberty to all parties to apply.
27. All questions of costs will be reserved to the next hearing.
Authorities