Derby & Company Ltd v Weldon (No. 1)
| Jurisdiction | England & Wales |
| Judgment Date | 1989 |
| Date | 1989 |
| Year | 1989 |
| Court | Court of Appeal (Civil Division) |
Injunction - Mareva injunction - Jurisdiction - Interlocutory application to freeze foreign assets - Jurisdiction to grant worldwide injunction - Safeguards to protect third parties and to avoid oppression of defendants
The first two defendants were formerly directors of two of the plaintiff companies. The plaintiffs, all companies in a large group of associated companies, sought substantial damages for breach of contract, negligence, breach of fiduciary duty, deceit and conspiracy to defraud alleging that the defendants, contrary to their obligations to the plaintiffs, had dealt in commodities on their own behalf on a large scale worldwide, and had allowed the plaintiff group to suffer huge trading losses. The plaintiffs by motion sought Mareva injunctions freezing and ordering disclosure of the defendants' assets up to the value of £25m. both inside and outside the jurisdiction. The defendants disclosed assets within the jurisdiction which fell far short of the sum that would satisfy the claim and denied that they had any assets elsewhere in the E.E.C. countries or that the court had any jurisdiction to grant Mareva injunctions outside the jurisdiction. On hearing the motion the judge granted a Mareva injunction in relation to the defendants' English assets on the grounds that a refusal would involve a real risk that a final judgment in favour of the plaintiffs would remain unsatisfied since there were grounds for supposing that the defendants might have acted dishonestly and were able to lock away assets in inaccessible overseas companies. However he refused a Mareva injunction in relation to the foreign assets as being contrary to the court's practice.
On the plaintiffs' appeal against the judge's refusal of a worldwide Mareva and on the defendants' cross-appeal against the judge's finding that there was a high risk that the defendants would dispose of their foreign assets before judgment:—
Held, allowing the plaintiffs' appeal and dismissing the defendants' cross-appeal, that the court would only make a pre-judgment worldwide Mareva and concomitant disclosure order in an exceptional case; that in view of the very large sum involved, the insufficiency of English assets, the existence of foreign assets and the judge's justifiable finding that there was a real risk that they would be dissipated before trial it was appropriate as a matter of justice to the plaintiffs to make such an order; that the defendants had a safeguard against undue oppressiveness as long as by undertaking or proviso or a combination of both they were protected both from a multiplicity of proceedings in foreign jurisdictions and from the misuse abroad of information gained from the order for disclosure; and that, accordingly, since the position of third parties would be protected by a proviso preserving the personal effect of such an order on and to the particular defendants against whom it was directed, in all the circumstances it was just and convenient to grant a Mareva injunction in relation to the defendants' assets wherever situated (post, pp. 54F–G, 55B–E, F–H, 56C–D, E, 57A–B, 58G, 61D).
Per curiam. Although the principles applying to the grant of a Mareva injunction, a developing jurisdiction, should be fully argued where appropriate, there should not be allowed (i) any attempt to persuade a court to resolve disputed questions of fact whether relating to the merits of the underlying claim in respect of which a Mareva is sought or relating to the elements of the Mareva jurisdiction such as that of dissipation or (ii) detailed argument on difficult points of law on which the claim of either party may ultimately depend (post, pp. 58E–G, 64D–E).
The following cases are referred to in the judgments:
A v. C (Note) [
American Cyanamid Co. v. Ethicon Ltd. [
Ashtiani v. Kashi [
Babanaft International Co. S.A. v. Bassatne [
Ballabil Holdings Pty. Ltd. v. Hospital Products Ltd. [
Bankers Trust Co. v. Shapira [
Clunies-Ross, In re; Ex parte Totterdell (
Coombs and Barei Constructions Pty. Ltd. v. Dynasty Pty. Ltd. (
Guinness Plc. v. Saunders [
Haiti (Republic of) v. Duvalier [
Interpool Ltd. v. Galani [
Lister & Co. v. Stubbs (
Maclaine Watson & Co. Ltd. v. International Tin Council (No. 2) [
Spiliada Maritime Corporation v. Cansulex Ltd. [
The following additional cases were cited in argument:
Allied Arab Bank Ltd. v. Hajjar [
Attorney-General's Reference (No. 1 of 1985) [
Avant Petroleum Inc. v. Gatoil Overseas Inc. [
Cook v. Deeks [
Cook Industries Inc. v. Galliher [
Denilauler v. S.n.c. Couchet Frères (Case 125/79) [
House of Spring Gardens Ltd. v. Waite [
London and Counties Securities v. Caplan (unreported), 26 May 1978, Templeman J.
Marshall (Thomas) (Exports) Ltd. v. Guinle [
Metropolitan Bank v. Heiron (
National Bank of Greece v. Constantinos Dimitriou, The Times, 16 November 1987; Court of Appeal (Civil Division) Transcript No. 1107 of 1987,
Porzelack K.G. v. Porzelack (U.K.) Ltd. [
Shell-Mex and B.P. Ltd. v. Clayton [
Space Investments Ltd. v. Canadian Imperial Bank of Commerce Trust Co. (Bahamas) Ltd. [
Sterling Engineering Co. Ltd. v. Patchett [
Thompson's Settlement, In re [
Yandil Holdings Pty. Ltd. v. Insurance Co. of North America (
INTERLOCUTORY APPEAL AND CROSS-APPEAL from Mervyn Davies J.
The plaintiffs, Derby & Co. Ltd., Cocoa Merchants Ltd. (C.M.L.), Phibro-Salomon Finance A.G., Phibro-Salomon Ltd., Philipp Brothers Inc., Philipp Brothers Ltd. and Salomon Inc., all companies in the Salomon group of companies, issued a writ on 25 June 1987. They sought from the first and second defendants, Anthony Henry David Weldon and Ian Jay, formerly directors of C.M.L., and against the third and fourth defendants, Milco Corporation of Panama and C.M.L. Holding S.A. of Luxembourg (C.M.L.), damages for breach of contract, negligence, breach of fiduciary duty, deceit and conspiracy to defraud. The claims arose out of the trading activities of C.M.L. between February 1981 and June 1984 while under the management of the first and second defendants and in particular the dealings with a Far Eastern commodity dealer, Cocoa Merchants (Far East) Ltd. (C.M.F.E.), allegedly one of the first and second defendants' nominee companies, which in 1984 became insolvent owing over £35 million to C.M.L.
On 4 December 1987 the plaintiffs applied ex parte to Sir Nicolas Browne-Wilkinson V.-C. for Mareva orders restraining Mr. Weldon and Mr. Jay from removing out of the United Kingdom or from France, Italy, West Germany, Luxembourg, Eire, Denmark or the Netherlands any of their assets within the United Kingdom or the continental countries; from dealing with any such assets save in so far as they exceeded £25m.; and compelling Mr. Weldon and Mr. Jay to serve affidavits within seven days disclosing the full value of the assets. The ex parte order was granted over seven days.
On 11 December 1987 the matter came before Sir Nicolas Browne-Wilkinson V.-C. inter partes, when in a second notice of motion dated 8 December the plaintiffs sought even wider orders, freezing the assets exceeding £25m. wheresoever in the world situate and for disclosure of particulars of bank accounts, nominees, etc. At the hearing, as the parties were not ready, Mr. Weldon and Mr. Jay gave undertakings essentially in the terms of the order sought holding the position until the motions could be heard. Affidavits of the assets were lodged with Chief Master Munrow and ordered not to be disclosed to the plaintiffs pending the hearing of the motions.
The motions came on before Mervyn Davies J. on 21 April 1988 and on 20 June he gave judgment granting a Mareva injunction freezing the defendants' assets within the jurisdiction but refusing an order in relation to assets outside the jurisdiction and made orders pursuant to that judgment on 27 June including (in paragraph 6) certain orders for tracing relief in relation to sums of money paid by or on behalf of...
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