Derby & Company Ltd v Weldon (No. 6)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DILLON,LORD JUSTICE TAYLOR,LORD JUSTICE STAUGHTON |
| Judgment Date | 10 May 1990 |
| Judgment citation (vLex) | [1990] EWCA Civ J0510-2 |
| Docket Number | 90/0414 |
| Court | Court of Appeal (Civil Division) |
| Date | 10 May 1990 |
[1990] EWCA Civ J0510-2
Lord Justice Dillon
Lord Justice Taylor
and
Lord Justice Staughton
90/0414
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(The Vice-Chancellor, Sir Nicolas Browne-Wilkinson)
Royal Courts of Justice
MR. M. LYNDON-STANFORD, Q.C., MR. C. PURLE, Q.C., and MR. S.SMITH (instructed by Messrs Lovell White & Durrant) appeared on behalf of the Appellants/Plaintiffs.
MR. N. CHAMBERS, Q.C. and MR. M. HAPGOOD (instructed by Messrs Hopkins & Wood) appeared on behalf of the Respondents/First and Second Defendants.
MR. N. STEWART Q.C. and MR. T. MOWSCHENSON (instructed by Messrs Allen & Overy) appeared on behalf of the Appellants/Third to Eleventh Defendants.
MR. L. KOSMIN (instructed by Messrs Cameron Markby & Hewitt) appeared on behalf of the Receiver.
This court has before it an appeal by the plaintiffs in the action against an order of the Vice-chancellor dated 9th January 1990, and an appeal by the 3rd to 11th defendants against an order of the Vice-chancellor of the same date. Although, however, there are the two orders drawn up, each of which is stated to have been made on an application to the court by the Receiver, the two were made after the one contested inter partes hearing and after one judgment on the substance of both applications had been delivered by the Vice-chancellor. It is therefore convenient to treat the appeal by the 3rd to 11th defendants simply as a cross-appeal.
The appeal and cross-appeal represent the latest stage in the complex interlocutory proceedings in the action. The action is now set down for trial in the Chancery Division to commence early in October of this year with an estimated duration of three to six months. The previous history is conveniently summarised on pages 1 to 16 of the Vice-chancellor's judgment under appeal; some of the matters out of which the plaintiffs' claims arise are set out in somewhat greater detail in a judgment of Vinelott J. of the 12th March 1990 which is not the subject of this appeal.
The plaintiffs' claims against the various defendants are primarily claims for damages for deceit, breach of fiduciary duty and conspiracy to defraud, but there are also claims of a tracing nature in respect of alleged secret profits realised, directly or indirectly, by the first two defendants. There was a settlement agreement between certain of the parties entered into on certain matters in May 1984, and the plaintiffs claim to have that set aside on grounds of fraud.
The action was originally brought only against the first three defendants, Mr. Weldon, Mr. Jay and Milco Corporation, a company incorporated in Panama. The other defendants were added as further information became available. Mr. Weldon and Mr. Jay are British subjects resident in this country and were served with the proceedings in this country in the normal way. The fourth defendant, C.M.L. Holdings S.A. (commonly referred to as ("C.M.I.")) is a company incorporated in Luxembourg which was properly served with the proceedings under the European Convention and has submitted to the jurisdiction of the English Court on that basis. The 3rd and 5th to 11th defendants were made parties to the action under Order 11. The 3rd and 5th to 10th defendants, on being served with the proceedings, applied to set aside service under Order 12 rule 8; those applications failed and they then each entered a further acknowledgement of service, and they have since played a full part in the proceedings, serving defences, and in some cases even counterclaiming—but always asserting that they continue to protest the jurisdiction of the English Court.
On the 4th December 1987, Mareva relief was granted to the plaintiffs ex parte against Mr. Weldon and Mr. Jay in respect of their assets in the United Kingdom and in the EEC countries. At this stage leave was given for the fourth defendants, C.M.I., to be added as a party to the action. It seems that at this stage all the moneys which the plaintiffs wanted to secure by Mareva relief pending the outcome of the action were held by, or by subsidiaries of, the third and fourth defendants and the plaintiffs believed that the third and fourth defendants were controlled by Mr. Weldon, with or without Mr. Jay.
In the summer of 1988 the plaintiffs applied for worldwide Mareva relief against Mr. Weldon and Mr. Jay. This was refused by Mervyn Davies J. on 20th June 1988, but allowed by this court on appeal on 29th July 1988. The decision of this court is reported at 1989 2 WLR 276 and has been referred to for convenience as Derby v. Weldon No. 1; the judgments are important as indicating the basis on which worldwide Mareva relief may be granted. The order made by this court against Mr. Weldon and Mr. Jay in respect of their assets worldwide applied up to a total of £25 m, that being the then estimated amount of the plaintiffs' claims.
Similar worldwide relief, up to the same limit was granted, for a short term, by Mervyn Davies J. on the 11th August 1988 against the third and fourth defendants, Milco and C.M.I. That injunction was continued by the Vice-chancellor on the 4th November 1988 as against the fourth defendant C.M.I., but not against the third defendant, Milco, since it was in the Vice-chancellor's view important that there was no evidence that an injunction against Milco, a Panamanian company, would be enforced by the courts of Panama. On the 7th November the Vice-chancellor appointed the Receiver, Mr. Morris, a partner in the firm of Touche Ross, to be receiver of the assets of C.M.I., but not of the assets of Milco. But he directed that no steps should be taken to enforce the appointment of the Receiver as receiver of the assets of C.M.I. by getting in those assets until after the courts of Luxembourg should have declared the order enforceable, or otherwise enforced it.
There were appeals against these orders of the Vice-chancellor and the decision of this court of the 16th December 1988 is reported as Derby & Co. Ltd. v. Weldon (Nos. 3 & 4) [1989] 2 WLR 412. This court granted worldwide Mareva relief against Milco as well as against C.M.I. and appointed the Receiver receiver of the assets of Milco as well as of the assets of C.M.I. Moreover it deleted the proviso, mentioned above, which required the order to be recognised in relation to C.M.I. by the Courts of Luxembourg. Again the judgments are of great importance in relation to the basis of worldwide Mareva relief. Plainly the purpose of appointing the Receiver was the same as the purpose of the Mareva injunctions, and in that sense the appointment of the receiver was in aid of the Mareva injunctions.
In the meantime in the course of the hearings before the Vice-chancellor in November 1988 there was disclosed for the first time the existence of the fifth defendant, the Wollstein Stiftung, a Stiftung established under the Law of Liechtenstein. It appears that, at any rate on paper, C.M.I., the fourth defendant, is a wholly owned subsidiary of a Panamanian company Peripheria S.A., which is wholly owned by the Wollstein Stiftung.
It appears also that the Wollstein Stiftung was in existence as long ago as the 11th January 1975, which is well before any of the matters of which the plaintiffs complain in this action. It appears that the beneficiaries under the trusts of the Stiftung were or included the descendants of Mr. Weldon's grandfather, and it was envisaged in 1975 that the principal beneficiaries would be Mr. Weldon's father, Max Weldon, and Uncle Henry Weldon, and Mr. Weldon himself. The principal function at that stage of the Wollstein Stiftung seems to have been to receive, either directly or through Milco, dividends on shares in Cocoa Merchants Ltd., an English company, which is the second plaintiff in this action; as a matter of history it was the sale of the share capital of that company by, broadly, Mr. Weldon and Mr. Jay and their interests, to one of the other plaintiffs in June 1981 which set the scene for the matters of which the plaintiffs complain in the action. Max Weldon died before 1981, and there is an Agreement of the 27th January 1981 between Henry Weldon and Mr. Weldon which appears to indicate that subject to a certain payment under that agreement being made Henry Weldon would have no further interest in the assets of the Stiftung.
The Receiver having been appointed by the Vice-chancellor in November 1988 in respect of C.M.I. and the existence of the Stiftung having been disclosed as above-mentioned, there was correspondence on the 18th and 21st November between the Receiver's solicitors, Messrs Cameron Markby, and the solicitors then acting for C.M.I., Messrs Theodore Goddard, whereby it was agreed that the assets of the subsidiaries of C.M.I. by then identified by the Receiver should be vested in a joint account in a Swiss bank in the names of the Receiver and, as stated in the letter, Dr. Peter Ritter, a Liechtenstein lawyer who is now the eighth defendant. The bearer shares of the subsidiaries were also to be held on...
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