Behbehani v Salem (Note)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE NOURSE,LORD JUSTICE WOOLF |
| Judgment Date | 11 September 1987 |
| Judgment citation (vLex) | [1987] EWCA Civ J0911-1 |
| Docket Number | 87/0898 |
| Court | Court of Appeal (Civil Division) |
| Date | 11 September 1987 |
[1987] EWCA Civ J0911-1
Lord Justice Nourse
and
Lord Justice Woolf
87/0898
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
(MR. JUSTICE ROUGIER)
Royal-Courts of Justice
MR. M. BURTON Q.C., MR. R. SLOWE and MR. S. ISAACS (instructed by Messrs Theodore Goddard) appeared on behalf of the First, Second, Fourth, Fifth and Sixth Appellants (Defendants)
MR. M. ROSEN (instructed by Messrs Harris Rosenblatt & Kramer) appeared on behalf of the Third Appellant (Defendant).
MR. S. BRODIE Q.C., MR. R. THOMAS Q.C., and MR. J.NICHOLSON (instructed by Messrs Oppenheimers (appeared on behalf of the Respondents (Plaintiffs).
I will ask Lord Justice Woolf to deliver the first judgment.
This appeal raises the question as to the
circumstances in which it is appropriate, having discharged a Mareva and Anton Piller injunction because of the failure of the applicant for that injunction to make proper disclosure to the court, for the court to then immediately re-grant substantially the same injunction.
In this case the original injunctions were granted by Roch J. on 9th April this year in the usual way on an ex parte application. Those injunctions were discharged and re-granted by Rougier J. on 7th May, the order being drawn up on 15th May. The material before this court indicates that the first plaintiff is a Kuwaiti national who is extremely affluent; the second plaintiff is a company (the shares of which are owned by the first plaintiff) and which was used by the first plaintiff in connection with his property transactions (principally or in respect of property situated in England); and the third plaintiff is a French company also owned by the first plaintiff which was used by him in connection with his French property transactions.
The first defendant is not without means. He apparently has not always been as wealthy as he is now. The plaintiff says of him in paragraph 3 of his first affidavit:
"I met the First Defendant for the first time in about 1976 in London. The first Defendant was introduced to me as a real estate agent. He said he specialised in acquiring substantial residential properties and land for residential purposes on behalf of his clients. He told me that he had a number of respectable and very wealthy clients from the Middle East for whom he had made substantial profits. I arranged for the first defendant to purchase some small residential properties in England on my behalf and from 1978 onwards I began making more substantial investments through the First Defendant as my agent. Investments were made in England, France, Spain and Canada".
The second defendant is a company controlled by the first defendant. The third defendant is a son of the first defendant and a director of the second defendant. He assisted in the management of at least two properties acquired on behalf of the plaintiffs in England. The fourth defendant is the chairman and managing director of the 5th defendant, and the fourth and fifth defendants were involved in certain of the plaintiff's property transactions. The sixth defendant is closely associated with the first defendant in Spain and held powers of attorney to act on behalf of the plaintiff in Spain. It is alleged that he received money on behalf of the first plaintiff in Spain and in England.
The third defendant was separately represented and separate arguments were to be advanced on his behalf before this court. Before the learned judge he was not separately represented. So far as the remaining defendants are concerned, it was suggested by Mr. Burton on their behalf that in addition to the general argument he presented there were arguments that he could advance in respect of individual defendants which would make it possible to distinguish their cases. However, as the argument proceeded, it was possible to dispose of this appeal without dealing with the possible differences in the positions of the defendants, and the separate arguments can be gone into hereafter if and insofar as it is necessary to do so. We have also not heard the separate arguments which Mr. Rosen wished to advance in relation to the third defendant.
Mr. Burton also wanted to rely on fresh evidence that was not before the judge and, although we did not finally rule on the application to adduce that evidence, having regard to the lack of welcome this court was displaying towards the idea of fresh evidence being introduced on this appeal, Mr. Burton has deferred reliance upon that fresh evidence for consideration, if need be, on a fresh application for discharge of the injunction granted by the learned judge.
The case for the plaintiffs in summary is that after the first plaintiff met the first defendant he was induced, primarily by the first defendant, to make substantial property investment in England, France, Spain and Canada; and with regard to those investments substantial secret profits were made by the first defendant. Mr. Behbehani alleges that he used to be told the purchase price of a property, which was substantially in excess of the actual purchase price, that he paid the inflated price, but the properties were acquired at a lower price, and that the first defendant obtained substantial benefits in consequence. The first defendant was then acting as his agent, and he was making the secret profits fraudulently.
Other misconduct is also alleged against the first defendant and the other defendants. It is alleged that the first defendant sold properties in which he was interested to the plaintiffs without disclosing that fact, and indeed suggesting that they were owned by others. Certain of the properties, it is alleged, were not, as they should have been, placed in the plaintiffs' name, and after the properties had been acquired it is alleged they were managed in such a way that the plaintiffs were deprived of the income which they should have received. No proper accounts were provided to the plaintiffs, and it is alleged that the defendants abused the trust which was placed upon them. It is contended that this conduct of the defendants was fraudulent.
The total amount claimed to have been fraudulently obtained as a result of this conduct is in excess of £17m.
Before Rougier J. the ground which was primarily advanced for discharging the injunctions was nondisclosure. In the first defendant's first affidavit he makes it clear that he did, however, also argue that the injunctions should be discharged because there was no evidence of risk of removal or dissipation of assets, and other defendants rely on a similar ground.
It was accepted before the judge that the plaintiffs had made out a sufficient prima facie case. On my reading of the evidence, I should make it clear that I am satisfied that there is a strong prima facie case of fraud as against the first defendant and the fourth defendant involving large sums of money, although they are not necessarily as large as those alleged in the statement of claim.
The law with regard to the non-disclosure of material matters on an application for an ex parte injunction has now been clearly stated in a series of cases. In the course of helpful arguments by Mr. Burton and Mr. Brodie, we were referred to the most helpful authorities. However, for the purposes of this appeal, I need do no more than refer to the decision of this court in Brink's Mat Limited. v. John William Elcombe and Others, when on 12th June 1987 this court allowed an appeal from Alliott J. It is not necessary to go into the facts of the Brink's Mat case. It suffices if I refer to the following passages in the judgments of the court, starting with the judgment of Ralph Gibson L.J. at p. 31 at B, where he said this:
"In considering whether there has been relevant non-disclosure and what consequence the court should attach to any failure to comply with the duty to make full and frank disclosure, the principles relevant to the issues in these appeals appear to me to include the following:
(i) The duty of the applicant is to make 'a full and fair disclosure of all the material facts': Kensington Income Tax Commissioners [1917] 1 K.B. 486: per Scrutton L.J. at page 514.
(ii) The material facts are those which it is material for the judge to know in dealing with the application as made: materiality is to be decided by the court and not by the assessment of the applicant or his legal advisers: see Kensington Income Tax Commissioners case per Lord Cozens Hardy M.R., citing Dalglish v. Jarvie, 2 Mac & G 231, 238; Browne-Wilkinson J., Thermax Ltd. v. Schott Industrial Glass Ltd. [1981] F.S.R. 289 at 295.
(iii) The applicant must make proper inquiries before making the application: Bank Mellat v. Nikpour [1985] F.S.R. 87. The duty of disclosure therefore applies not only to material facts known to the applicant but also to any additional facts which he would have known if he had made such inquiries.
(iv) The extent of the inquiries which will be held to be proper, and therefore necessary, must depend on all the circumstances of the case including (a) the nature of the case which the applicant is making when he makes the application; and (b) the order for which application is made and the probable effect of the order upon the defendant: see, for example, the examination of Scott J. of the possible effect of an Anton Piller order in Columbia Picture Industries v. Robinson [1986] 3 W.L.R. 542; [1986] 3 A.E.R. 388; and (c) the degree of legitimate urgency and the time available for...
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...is all a misunderstanding. That is something which in itself I do not have regard to at this stage for the reasons given by Woolf LJ in Behbehani v Salem [1989] 1 WLR 723,735A-D. Mr Arip points out that no other Defendant has yet had an obligation to put in a Defence. Mr Fletcher QC and Mr ......
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