AJ Bekhor & Company Ltd v Bilton
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STEPHENSON,LORD JUSTICE ACKNER,LORD JUSTICE GRIFFITHS |
| Judgment Date | 06 February 1981 |
| Judgment citation (vLex) | [1981] EWCA Civ J0206-2 |
| Docket Number | 81/0034 |
| Court | Court of Appeal (Civil Division) |
[1981] EWCA Civ J0206-2
Lord Justice Stephenson
Lord Justice Ackner
and
Lord Justice Griffiths
81/0034
1979 A 2152
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(Mr. Justice Parker)
Royal Courts of Justice
MR. S. A. STAMLER, QC. and MR. M. JONES (instructed by Messrs Coward Chance, solicitors, London) appeared on behalf of the Respondents (Plaintiffs).
MR. R. A. GATEHOUSE, QC. and MR. G.M. NEWMAN (instructed by Messrs Harbottle & Lewis, solicitors, London) appeared on behalf of the Appellant (Defendant).
I will ask Lord Justice Ackner to give the first judgment.
The essential point raised by this appeal is whether and to what extent an order for discovery can be made in relation to matters which relate, not to the issues in the action, but to the operation of a Mareva Injunction granted against the defendant restraining him from removing from the jurisdiction of the High Court or otherwise dealing with certain of his assets. The question arises out of the following circumstances.
FACTS
The respondent company, the plaintiff in the action, carry on business as stockbrokers. On 12th July 1979 they issued a specially endorsed writ for £217,077.42 being the balance of money which they alleged they lent from time to time to the appellant as his stockbrokers. Order 14 proceedings were threatened, but after a series of adjournments and special appointments this course was abandoned. The defendant delivered a defence and counterclaim, disputing the alleged debt on a number of bases, including the statutory defence provided by The Money Lenders' Act, that the transactions relied upon by the plaintiffs were nominee transactions and accusing the plaintiffs of negligence. It is accepted that the defence and counterclaim raises arguable points.
Early last year the plaintiffs heard that the defendant had sold two farms and they made an ex parte application for an injunction restraining the defendant from removing from the jurisdiction or otherwise disposing of any of his assets, including in particular any monies in his bank account, including the proceeds of the sale of Rocky Lane Farm, Henley, save insofar as the sum of his assets exceeded £250,000. The order was granted. When the matter was argued, inter partes, a week later, the point was taken on the defendant's behalf that so far from there being evidence that he was resident outside the United Kingdom, the evidence filed by the plaintiffs established that he was resident in the United Kingdom. The defendant himself provided no evidence, but his wife swore an affidavit referring to the fact that she had been married to the defendant for 18 years, that they had three children and that he had for some five years, until he recently sold it, lived at Rocky Lane Farm. She stated that he was English, as are his father and mother, and that she and he had lived in England during the whole of their married life. The affidavit concealed that for some time they had not been happily married, that he had been close friends with a divorced lady and that he had decided to separate from his wife and go and live with this lady and her daughter in Monte Carlo and there start a new life.
Notwithstanding the doubts as to whether the court then had jurisdiction to make a Mareva Injunction where the defendant is resident in the United Kingdom, Mr. Justice Kilner Brown made an order on 18th March, but it restrained the defendant from removing from the jurisdiction "or otherwise disposing out of the jurisdiction any of his assets" etc.
The appellant entered a notice of appeal against the injunction, one of the grounds being "The defendant was based or resident in England or within the jurisdiction".
This was probably only a tactical move because within a fortnight the appellant swore an affidavit in support of an application to vary the injunction and in that affidavit disclosed his domestic circumstances, which I have described above. He conceded that he had arranged for the sale of Rocky Lane Farm, but gave no information as to whether it had been sold and if so for how much. He denied that he had sold the other farm, Barnes Farm, this farm belonged to his mother and had been sold by her, he receiving no part of the proceeds. He explained that he had taken a lease for one year with options to extend, of a flat in Monte Carlo where he and the lady and her daughter were to live, and the rent and service charge for which amounted to nearly £15,000 per year. He asserted that if he had remained he would have been free to spend as he had throughout his life, "my income from the investment of my assets wherever situated". He explained that he would be willing to withdraw his appeal and accept that his assets be frozen within the jurisdiction if he was granted leave to take out of the jurisdiction his Citroen motor car, certain personal possessions and the income arising from the investment of his assets. He further stated that the income arising from the investments of such assets as he had out of the jurisdiction, which he did not particularise, would be insufficient even to pay the rent and service charges on the flat.
At the hearing of this application by Mr. Justice Parker on 28th April, the appellant's counsel, who has not appeared in this appeal, informed the learned judge that the decision taken to advance the contention before Mr. Justice Kilner Brown that the appellant was still genuinely resident within the jurisdiction was upon his advice and that therefore no adverse inference should be drawn against his client. Counsel also informed the learned judge that the appellant's assets within the jurisdiction amounted to between £217,000 and £250,000 and that he was prepared to limit his claim to be allowed to remove income to the sum of £25,000 per annum.
The application to vary was largely successful. It was in the following terms:
Upon the defendant by his counsel undertaking "(i) to withdraw his appeal to the Court of Appeal under Notice of Motion dated 1st April 1980 and (ii) not to change the investment of his assets within the jurisdiction so as to be likely to depreciate their value
IT IS ORDERED:
(1) That the Order dated 18th March 1980 and the Injunction thereby granted be varied by allowing the Defendant to remove from the jurisdiction:
(a) personal possessions to the value of not exceeding £5,000
(b) his Citroen Motor Car; and
(c) the sum of £1,250 per month" (Viz £15,000 per year) "out of the income from his United Kingdom investments for living purposes."
Within a few months of the injunction being varied, a problem arose with regard to the second of the two undertakings referred to above. The injunction as ordered by Mr. Justice Kilner Brown, in no way fettered the appellant's right to deal with his assets within the jurisdiction, in such manner as he thought fit. To meet the possible objection which might have been made by the respondents to the variation sought, the appellant had been advised to give an undertaking that his assets would not be invested in any manner which was likely to depreciate their value, such an undertaking being designed to prevent him investing his capital in a wasting asset for the purpose of producing a very high income. However, the undertaking as incorporated in the order— not to change the investment of his assets within the jurisdiction etc—was capable of being construed so as to prevent the appellant meeting his financial obligations within the jurisdiction from his assets within the jurisdiction. The appellant's solicitors therefore sought the respondent's solicitors agreement to his utilising the assets within the jurisdiction to discharge his commitments there. Understandably the respondent solicitors stated that before they could agree to any variation of the terms of the undertaking, they must know the exact nature of the appellant's assets and the way in which they were invested, as well as the extent of his expenses and obligations in this country which he had to meet. The appellant solicitors failed to provide this information. They however confirmed that their client was spending capital to meet his commitments in the jurisdiction "to the extent that his remaining income in this country was insufficient". They asserted, quite wrongly, that a Mareva Injunction in standard form in no way prevents a defendant spending within the jurisdiction. They had apparently overlooked the terms of the ex parte order which was indeed in standard form.
On 28th October the appellant's solicitors filed an affidavit making the points referred to above and stated that their client's commitments involved the expense of his making occasional visits to England, paying his professional advisers and maintaining his wife and three children. They sought, on the appellant's behalf, a variation of the undertaking so as to enable the appellant to continue to honour his commitments within the jurisdiction out of his assets within the jurisdiction. The respondents countered by giving notice that at the restored hearing of the summons they would apply, under Order 24 rule 7 (1) and Order 26 rule 1 (1), for an order that the appellant should swear an affidavit which, as amended by the learned judge, obliged him to:
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(1) disclose the full value of his assets within the jurisdiction as at
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(a) 11th March 1980,
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(b) 28th April 1980,
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(c) the date of the affidavit;
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(2) identify with full particularity, the nature of his assets, including the identity of all bank...
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