Daltel Europe Ltd and Others v Makki and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lloyd,Lord Justice Wilson,Lord Justice Auld |
| Judgment Date | 28 February 2006 |
| Neutral Citation | [2006] EWCA Civ 94 |
| Docket Number | Case No: 2005/1138 |
| Court | Court of Appeal (Civil Division) |
| Date | 28 February 2006 |
[2006] EWCA Civ 94
[2005] EWHC 749, 997, 998, 999 and 2258 (Ch)
Lord Justice Auld
Lord Justice Lloyd
Lord Justice Wilson
Case No: 2005/1138
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MR JUSTICE DAVID RICHARDS
Royal Courts of Justice
Strand, London, WC2A 2LL
Hugo Page Q.C. (instructed by Irwin Mitchell) for the Appellant
Robert Anderson (instructed by Jones Day) for the Respondents
This is an appeal by Hassan Makki against orders made by Mr Justice David Richards upon finding Mr Makki guilty of contempt of court in a number of respects. Mr Makki challenges most of the findings of contempt, some of the sentences passed, which were for committal for periods aggregating 12 months, and the order for costs. He also seeks to challenge a later decision of the judge on an application by the Claimants under CPR Part 24 for summary judgment.
His appeal against the orders for committal lies without permission. He may have needed a short extension of time for that appeal, which he was granted at the outset of the hearing. He needs permission to appeal as regards costs. He also sought permission to amend the grounds of appeal, and to introduce additional evidence. He needs permission to appeal against the order for summary judgment. As regards all these matters, apart from the extension of time, we heard argument in full and said that we would give our decisions when giving judgment on the appeals.
The claim form was issued on 26 February 2004, at that stage against Mr Makki alone. On the same day freezing and search orders were made without notice against Mr Makki by Mr John Jarvis Q.C. sitting as a judge of the Chancery Division. They were executed on the next day at the offices in London which Mr Makki used at that time. Particulars of Claim were served in March 2004 and Mr Makki's Defence in May 2004. The Defence was verified by a statement of truth signed by Mr Makki. In the meantime, Mr Makki had been examined in private under the Insolvency Act 1986 section 236, on 6 April 2004. On 17 June 2004, at a directions hearing the Claimants were given permission to add an extra Claimant (Globenet) and two additional Defendants. The Claim Form and Particulars of Claim were duly amended in July, and the Third Defendant served a Defence in August, also verified by a statement of truth signed by Mr Makki.
The Claimants issued two separate applications to commit Mr Makki for contempt, and relied on two separate kinds of contempt: first, breaches of the search and freezing orders made on 26 February 2004, and secondly, under CPR rule 32.14, that Mr Makki had verified Defences in the action on his own and the Third Defendant's part without an honest belief in the truth of the statements made. Permission to make that application was given by Mr Justice Mann in September. The first committal application, made later in September, relied on rule 32.14 and also on some breaches of the orders made on 26 February 2004. The second, made in December 2004, relied on further alleged breaches of the orders.
The committal applications came before the judge in January 2005, for a hearing which lasted over all or parts of 16 days, until 11 February. The parties were represented as they are before the Court of Appeal, the Claimants by Mr Anderson, instructed by Jones Day, and Mr Makki by Mr Page Q.C., instructed by Irwin Mitchell. Mr Makki did not attend the hearing. Eight affirmations made by him were before the judge, but he did not make himself available for cross-examination. The same was true of two other witnesses on his behalf.
On 3 May 2005 the judge handed down his judgment on the committal applications, in which he held that most of the contempts alleged were made out. On 10 and 11 May he heard submissions about the orders to be made in consequence of his findings. He ordered that Mr Makki be committed to prison for various periods in respect of the different contempts proved. He gave judgment on 10 May about that, and also as to the primary question of costs. On 11 May he gave a further judgment on an application by Mr Makki for a stay of the costs orders and one by the Claimants for an interim payment on account of costs, and he refused permission to appeal on the question of costs. His order was sealed on 25 May.
Before the committal applications came on for hearing the Claimants had also applied for judgment under Part 24 on part of their claim against Mr Makki. That application came on for hearing before the judge on 19 and 20 July. He gave judgment on 21 October, and refused permission to appeal. By then the appeal against the committal order was listed for hearing before the Court of Appeal in late November. Mr Makki issued an Appellant's Notice on 3 November, and the application for permission to appeal was then directed to come on for hearing with the committal appeal.
Thus it is that we have heard argument over three days on the appeal against the committal orders, together with Mr Makki's applications to amend his grounds of appeal and to adduce additional evidence in support of that, and for permission to appeal in respect of the costs order and of the later order under Part 24. We were provided with a mass of documentary material, but by dint of full skeleton arguments from both Counsel on the main appeal, and well-focussed oral submissions from each of them, the argument was conducted within the time allowed, though supplemented by further written submissions at the court's invitation after the hearing.
The principal judgment runs to 375 paragraphs, with an appendix of a further 24 paragraphs, extending over 118 pages. The judge deals very fully with the various issues as they were before him, in particular with the factual allegations of contempt. In all respects except one the committal appeal is on questions of fact, and is not, therefore, of general interest outside the parties involved in or affected by the various transactions and the trial itself. In those circumstances, while I will deal fully with the one point of law which was argued before us, I do not propose to deal extensively with the facts, on the basis that anyone interested in the case on the facts will have access to and will have read, or be able to read, the judge's judgment. I will deal with the facts by focussing on the principal points and on the salient features of the evidence so far as relevant to those points.
The Claimants are three companies all now in liquidation, and their respective liquidators. Mr Makki was the person behind each company while it was active, though he denies that as regards Globenet. The two companies most important for present purposes are Pacifica and Globenet. Each of these held a licence under section 7 of the Telecommunications Act 1984 to offer telecommunication services. This they did, on a wholesale basis, using telecommunication switches connected physically with the BT network so as to be able to route incoming and outgoing calls via that network. Pacifica and Globenet entered into interconnect agreements with BT under which they agreed to pay for access to the BT network on a time basis according to tariff tables. They could sell the right to use their interconnect services to others. This is sometimes referred to as the sale of airtime, which is a convenient label, so long as it is understood that what was sold was a contractual right in the nature of a service, rather than a commodity. The access which they obtained under these agreements was used (to speak in neutral terms at present) by a New Jersey company, which I will call Arbinet, which operates a global exchange to facilitate the sale and purchase of voice telephone minutes. Arbinet is a third party in no way connected with Mr Makki. It paid for the minutes used at a price quoted to it which, it is common ground, was less than the price payable by Pacifica and Globenet to BT. Pacifica traded from about June to August 2003, its services being suspended by BT on 27 August, no doubt for non-payment. Globenet traded with BT from about 28 September until 28 October 2003, when BT suspended its service for failure to provide a guarantee.
The amounts paid by Arbinet were credited to two different accounts: one in the name of the first claimant, Daltel Europe Ltd ("Daltel"), a US dollar account in London, and the other an account in the name of the Third Defendant, Daltel USA ("DUSA"), in Geneva. In particular, 3,650,000 was paid into the Daltel London dollar account, and 1,413,929.35 into the DUSA account in Geneva. Part of the sum paid to the London dollar account was later transferred to the Geneva account. These sums were then withdrawn and paid to accounts in the name of Mr Makki and his father in Beirut. No sums were paid to Pacifica and Globenet, except insofar as payment to the Daltel London dollar account may have amounted to payment to Pacifica and Globenet, which did not have bank accounts of their own. Pacifica and...
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