Daltel Europe Ltd and Others v Makki and Others
| Jurisdiction | England & Wales |
| Judge | Mr. Justice David Richards,MR JUSTICE DAVID RICHARDS,Mr Justice David Richards |
| Judgment Date | 03 May 2005 |
| Neutral Citation | [2005] EWHC 749 (Ch),[2004] EWHC 726 (Ch) |
| Docket Number | Case No: HC04C007102,Case No: HC04C00702 |
| Court | Chancery Division |
| Date | 03 May 2005 |
[2004] EWHC 726 (Ch)
The Honourable Mr. Justice David Richards
Case No: HC04C007102
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MR. D. ALEXANDER appeared on behalf of the Claimants.
MR. H. PAGE appeared on behalf of the Defendant.
Approved Judgment
Tape Transcription of Marten Walsh Cherer Ltd., Midway House, 27/29 Cursitor Street, London EC4A 1LT. Telephone No: 020 7405 5010. Fax No: 020 7405 5026
There are two applications before the court. By the first application, Hassan Ali Makki, the defendant in proceedings commenced towards the end of February this year (which I will call "the action") applies for the return of his British and Lebanese passports. They were surrendered to the claimants' solicitors to hold to the order of the court, pursuant to the terms of a freezing order made without notice on 26 th February 2004. The second application is made by the liquidators of three companies for an order under section 236 of the Insolvency Act 1986 for the private examination of Mr. Makki.
The three companies are Daltel Europe Limited, Pacifica Limited and Globe Net (UK) Limited. Two of the companies, Daltel and Pacifica, are claimants in the action and notice of an application has been given to join Globe Net as a claimant, which I understand will not be opposed by Mr. Makki. The liquidators of all three companies are also named as claimants in the action.
Briefly the background to these applications is as follows. Each of the companies was engaged in the business of the purchase and sale of telecommunications airtime. Each held a licence issued pursuant to section 7 of the Telecommunications Act 1984, which permitted them to offer telecommunications services and obliged British Telecommunications Plc ("BT") to provide interconnection facilities to them, i.e. access to telecommunications services by connection to the BT network. Charges were agreed for these facilities between BT and the companies. Although some relatively small payments were made to BT, the amounts due for the bulk of these facilities have not been paid. The unpaid debts from all three companies total some £9,372,347, comprising some £1,703,410 for Daltel and £3,980,055 for Pacifica for purchases made in each case between December 2002 and August 2003, and a sum of £3,694,936 for purchases by Globe Net made between December 2002 and October 2003.
Statutory demands were served by BT on Daltel and Pacifica in September 2003 which were not satisfied. On petitions presented by BT in October 2003, both companies were ordered to be wound up by the High Court on 19 th November 2003. The Official Receiver became provisional liquidator of the companies, and on 17 th December 2003 the present liquidators were appointed as joint liquidators.
A statutory demand was served on Globe Net on 22 nd December 2003, which was not satisfied, and on a petition presented by BT in January 2004 it was ordered to be wound up by the High Court on 10 th March 2004. Provisional liquidators were appointed in February and they have now been appointed as the joint liquidators of Globe Net.
The evidence placed before the court by the claimants in support of their without notice applications in February 2004 states that at least some of the airtime purchased from BT was sold through an unconnected airtime exchange called Arbinet, for which a total of US$6,278,818 was paid, either to the companies or to others on their instructions. A total of US$2,152,388 was transferred from Daltel to accounts with banks in Beirut, and a further sum of just over US$1,500,000 was paid on 3 rd November 2003 to an account in Geneva. From disclosures made by Mr. Makki pursuant to the freezing order, it is now known that that sum of US$1.5 million was transferred from Geneva to another account in Beirut and that all four accounts in Beirut are in the joint names of Mr. Makki and his father. The liquidators say in evidence that they have been unable to identify any genuine commercial reasons for these transfers.
In his statement to the Official Receiver as provisional liquidator of Pacifica, Mr. Makki stated that it had sold airtime to a wholesale client in the United States called Weybridge Management LLC, and that a total of over £4 million was due from Weybridge to Pacifica. A number of documents have since come to light in relation to Weybridge, which indicate a close connection with Mr. Makki. A document purporting to be a sale and purchase agreement dated 12 th August 2003 states that he was then its sole member. A Power of Attorney was granted on 22 nd February 2004 by Weybridge to Daltel (USA) LLC, which Mr. Makki accepts is controlled and owned by him.
The evidence placed before the court in February 2004 also made a powerful case that each of the companies was under the sole control of Mr. Makki. He is the sole director and shareholder of Daltel and was, until 24 th September 2003, a director of Globe Net. There is substantial evidence that he has either controlled or been a major influence over the activities of all three companies.
On 26 th February 2004 Mr. John Jarvis QC, sitting as a Deputy Judge of the Chancery Division, made a search order and a freezing order. So far as relevant to Mr. Makki's application for the return of his passports, the provisions of the freezing order to which reference need be made are as follows.
Paragraph 12: The respondent [Mr. Makki] shall, within two business days, deliver up to the second, fourth and fifth applicants pursuant to section 234 of the Insolvency Act 1986 any property, books, papers or records of the first and third applicants and/or Globe Net (UK) Ltd.
Paragraph 18: The respondent must, where possible, immediately deliver up to the applicants' solicitors all the asset documents and company asset documents, or copies of those documents. Where it is not possible to make immediate delivery up of asset documents and company asset documents, the respondent must deliver up such documents to the claimants' solicitors as soon as possible, and in any event within 10 working days from the date of service of this order. In the case of bank accounts, these documents must include bank statements showing the state of the account at the date of this order."
The terms "asset documents" and "company asset documents" are defined in paragraph 15 of the order.
"Asset documents" are defined as documents in Mr. Makki's possession, power or control, whether in England and Wales or not, that relate to or evidence the existence, location or value or details of any of his assets. Company asset documents are similar documents relating to or evidencing the existence, location or value or details of the company assets or relating to what has become of the company assets and are also defined to include books, papers or records of any of the three companies in Mr Makki's possession, power or control.
Paragraphs 20 and 21 deal with Mr. Makki's passports and provide as follows:
"20 The respondent must immediately inform the applicants' solicitors of the existence and whereabouts of all passports held by him or in his name, giving details, nationality and number.
"21. The respondent shall at once deliver up to the applicants' solicitors all passports held by him or in his name, to be held by the applicants' solicitors to the order of the court until the expiration of 48 hours after the respondent has complied fully with the disclosure and delivery up obligations set out above."
In pursuance of that order, Mr. Makki disclosed that he held a British and a Lebanese passport and he delivered those up in accordance with paragraph 21.
The search order contained provision in paragraph 16 requiring Mr. Makki immediately to permit an independent computer specialist to make two electronic copies or images of any or all of the documents held on any computers at Mr. Makki's premises. This was done and the copies were handed over to the supervising solicitor in accordance with the terms of the order. The order makes provision for the copies to be searched for relevant documents at the supervising solicitor's offices, with Mr. Makki and/or his legal representatives being present.
As I understand it, a protocol agreed between the parties involved the production of two DVDs. The first contained all the documents which are relevant and to which no objection to production is taken on the grounds of legal professional privilege. This DVD has been given to the claimant's solicitors, but it has so far proved impossible for them to read all the documents on it for technical reasons outside their control. The second DVD contains all the documents as to which Mr. Makki has objected to production on grounds of legal professional privilege. The supervising solicitor has been going through these documents and has indicated that in a significant number of cases no objection can be taken on grounds on legal professional privilege. As I understand it, though I may be updated, he has yet to complete this task. At least some of the documents have yet to be made available to the claimants and cannot be made available until the supervising solicitor completes his investigation.
Pursuant to paragraphs 12 and 18 of the freezing order, Mr. Makki has delivered up all the relevant documents which, he says, he had in his possession, power or control in hard copy form. The claimants do not, at any rate on this application, challenge that assertion, but they point out that the requirements of paragraphs 12 and 18 are not confined to documents in hard copy form but extend to all documents including those stored on computers under Mr. Makki's control. It is agreed that he has not delivered up...
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