Dadourian Group International Ltd Inc. and Others v Simms and Others (No. 1)
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Warren,MR. JUSTICE WARREN,The Honorable Mr Justice Peter Smith,Mr Justice Patten,MR JUSTICE WARREN,Mr Justice Warren |
| Judgment Date | 25 July 2008 |
| Neutral Citation | [2008] EWHC 1784 (Ch),[2007] EWHC 1986 (Ch),[2008] EWHC 186 (Ch),[2008] EWHC 723 (Ch),[2005] EWHC 1768 (Ch),[2005] EWHC 268 (Ch) |
| Docket Number | Case No: HC04000366,Case No: HC 04 C00366,Case No: HC04 C 00366,Case No: HC04C00366 |
| Court | Chancery Division |
| Date | 25 July 2008 |
[2005] EWHC 1768 (Ch)
Mr Edward Bartley Jones QC
Case No: HC04000366
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London WC2A 2LL
Clive Freedman QC and Charles Samek (instructed by Wallis LLP) for the claimants
Ian Clarke (instructed by Ellis Taylor) for the defendant
Hearing date: Thursday 30 June 2005
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic.
INTRODUCTION
1. On 22 March 2005 David Richards J granted a freezing injunction against Azuri Limited (“Azuri”) which was not then (indeed is not now) a party to this action. The injunction was granted under what is frequently described as the court's “Chabra” jurisdiction as a freezing injunction against a third party by way of ancillary relief (in aid of, and as part of, the freezing relief already granted against the first four defendants to this action). The issue before me, on this application by order, is whether that injunction should be continued or, to put it somewhat differently, not discharged. The difference between the two formulations is not mere pedantry, as will become apparent below, Further, if the injunction be continued (or not discharged) subsidiary questions arise as to (1) whether Azuri should be joined as party to this action and (2) whether any issue arises as between the claimants and Azuri which needs to be tried and, if so, how and when that issue should be tried.
BACKGROUND
2. This litigation involves a bitter dispute between various members of the Dadourian family. It has already involved a very substantial number of interim applications being heard by this court. One of such interim applications was heard by Laddie J on 16 February 2005 and I gratefully utilise the summary in his judgment of the basic background to this litigation.
3. The claimants are Dadourian Group International Inc (“the company”), Alex Dadourian and Haig Dadourian. The third defendant is Jack Dadourian (“Jack”) and the fourth defendant is Helga Dadourian, his wife (“Helga”). The first defendant is Paul Francis Simms. He was a partner in the well known firm of solicitors, Bower Cotton. Following the Law Society's intervention into that practice and subsequent disciplinary proceedings Mr Simms was struck off on 2 February 2004.
4. This litigation arises out of an arbitration between the claimants and a company called Charlton Corporation plc (“Charlton”). In essence, the claimants and Charlton entered into an agreement relating to the manufacture of hospital beds and related equipment. The agreement went sour. In November 1998 Charlton brought breach of contract proceedings against the company and claims of fraudulent misrepresentation against Alex Dadourian and Haig Dadourian. Those proceedings were commenced in the Supreme Court, New York County, USA.
5. In the spring of 1999 the US District Court, Southern District of New York, halted that action. It ordered that the dispute be determined by arbitration pursuant to an arbitration clause in the contract. That was to include the claims against Alex Dadourian and Haig Dadourian. The arbitration was commenced very shortly thereafter. The company, Alex Dadourian and Haig Dadourian counterclaimed for, amongst other things, fraudulent misrepresentation.
6. In July 2002 the arbitrator dismissed Charlton's claims on the grounds that it had failed to provide security in response to an order so to do. The arbitrator also upheld the company's counterclaim for fraudulent misrepresentation. An early attempt on Charlton's side to have the arbitrator removed for bias failed. The arbitrator held that the fraudulent misrepresentations had been made by the first defendant and another individual, Mr Selim Rahman (the managing director of Charlton). Mr Rahman is the second defendant to this action. It is alleged by the claimants that during the course of that arbitration the first defendant gave evidence that Jack and Helga were shareholders in Charlton via nominee offshore entities or trusts.
7. The arbitrator made an order in the claimants’ favour in the sum of approximately $4.5 million. None of it has been paid. This has led to the current action in England. It is alleged by the claimants:
(1) that the first four defendants to this action are properly to be regarded as Charlton's privies and are so bound by the arbitrator's awards and findings to the same extent as if they were Charlton;
(2) that the first and second defendants are liable to the company for fraudulent misrepresentation, alternatively negligent misrepresentation, and that Jack and Helga are vicariously liable to the company for such fraudulent/negligent misrepresentations of the first and second defendants;
(3) that the first and second defendants together with Jack and Helga are liable to the company for conspiracy, pursuant to which the first and second defendants made the fraudulent misrepresentations in question to the company;
(4) that the first and second defendants together with Jack and Helga are liable to the claimants for another conspiracy. Under that conspiracy it is alleged that the New York action and the arbitration were dishonestly commenced and prosecuted by Charlton, dishonest because the conspirators knew that there was not a shed of truth in any suggestion that the company was in breach of contract or that either Alex Dadourian or Haig Dadourian had been guilty of fraudulent misrepresentation;
(5) that the first and second defendants and Jack and Helga are liable to the claimants for the tort of malicious abuse of process by the commencement and prosecution of the New York action and the arbitration;
(6) that Jack and Helga are liable to the claimants to the extent of Charlton's liability to them by reason of the piercing of Charlton's corporate veil;
(7) that the first and second defendants and Jack and Helga are liable to the company for having procured Charlton's breach of the relevant option agreement as between the company and Charlton.
8. In addition to the first four defendants there are a further seven defendants to the present action. They are the former partners of the first defendant in Bower Cotton. The claimants say that they are liable for the wrongdoings of the first defendant by virtue of the provisions of sections 5 and 10 of the Partnership Act 1890.
9. An integral part of the claimant's claim against Jack and Helga is the postulate that they owned, directed and controlled Charlton. Various of the fraudulent misrepresentations relied upon by the claimants were to the effect that Jack and Helga had no beneficial interest in, or control of, Charlton. Indeed, it is expressly alleged that the company would not have entered into its contractual arrangements with Charlton had it known that Charlton was a company in which Jack and Helga were involved (other than as intermediaries). The shareholding in Charlton was held by a Panamanian company, Ancon Group Incorporated and it is the claimants’ case in this action that Ancon Group Incorporated is, ultimately, controlled by “family trusts” of Helga and/or Helga and Jack. An admission to this effect was, allegedly, made by the first defendant during the course of the arbitration.
10. On 3 February 2004 the claimants obtained, in this action, a worldwide freezing injunction against the first defendant, the second defendant and Jack and Helga from Lindsay J. That order was continued by Lewison J on 13 February 2004. The first defendant sought permission to appeal the freezing injunction but his application was rejected by Dyson LJ on 13 May 2004. The freezing injunction was limited to the sum of US $5.5 million.
11. On 16 February 2005 there came before Laddie J certain applications by the first defendant, Jack and Helga to set aside various earlier orders made against them. Two of the issues which arose before Laddie J are relevant for present purposes:
(1) one of those issues arose in the context of permission granted by Lewison J on 13 February 2004 to enforce the worldwide freezing order in Switzerland. Technical difficulties had arisen, subsequently, primarily over the question whether the order of Lewison J of 13 February 2004 had “continued” the earlier order of Lindsay J of 3 February 2004. I shall have to return to this, in due course, when I consider whether, if I grant the claimants the relief they now seek, I should merely refuse to discharge the earlier order of David Richards J or make a new separate, and distinct, order by way of continuation;
(2) the second issue concerned whether the claimants should be granted permission to enforce the order of Lewison J of 13 February 2004 in Switzerland. Laddie J held (paragraph 52) that the claimants need only demonstrate a real prospect that there were assets in the country where enforcement was sought. It is the observations made by Laddie J in respect of submissions on the evidence on that issue which are relevant for present purposes.
12. Counsel for Jack and Helga conceded before Laddie J that the claimants had made out, to a sufficient level of confidence, the factors which needed to be satisfied to justify a worldwide freezing order. In other words, as Laddie J recorded, counsel accepted (for that application at least) that the claimants had made out a good case not only that Jack and Helga had assets but that there was an appreciable risk that they would seek to hide or dissipate those assets. Laddie J regarded counsel's concession as amounting to little more than an acknowledgement of the inevitable. The evidence before him, he said, painted a picture of...
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