Dubai Bank Ltd v Galadari (No. 2)

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLORD JUSTICE SLADE
Judgment Date21 Dec 1989
Judgment citation (vLex)[1989] EWCA Civ J1221-14
Docket Number89/1262

[1989] EWCA Civ J1221-14

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

INTERLOCUTORY LIST

(MR. JUSTICE MORRITT)

Royal Courts of Justice

Before:

Lord Justice Slade

Lord Justice Mann

and

Sir David Croom-Johnson

89/1262

CH 1989 D No.2034

Between:
Dubai Bank Limited
Plaintiff (Respondent)
and
(10) Larimore Investment Corporation
Defendant Appellant

MR. ROBERT REID Q.C. and MR. JULIAN MALINS (instructed by Messrs. Clyde & Co., Solicitors, London, EC3 1JP) appeared on behalf of the Tenth Defendant (Appellant).

MR. CHARLES PURLE Q.C. and MR. IAN GEERING (instructed by Messrs. Lovell White & Durrant, Solicitors, London, WC2) appeared on behalf of the Plaintiff (Respondent).

1

LORD JUSTICE SLADE
2

There is before the court an application for leave to appeal by the tenth defendant in an action, Larimore Investment Corporation, from an order of Morritt J. made on 15th November 1989, whereby he ordered the appellant to produce to the plaintiff, Dubai Bank Limited, for inspection and copying, a number of documents specified in a notice served by the plaintiff pursuant to R.S.C. 0. 24, r.10(1). By consent of the parties, the court has also de bene esse heard argument on the appeal itself, which was listed to follow the application for leave.

3

In the action, the plaintiff claims that the first defendant, Abdul Rahim Bin Ebrahim Galadari and the second defendant, Abdul Latif Bin Ebrahim Galadari with others fraudulently diverted interest due to the plaintiff or the Ruler of Dubai on both domestic and foreign deposits between 1971 and 1985. Since the action was instituted, a number of other parties have been joined on the basis that the monies alleged to have been fraudulently diverted can be traced into assets in their hands.

4

Two of such parties are the ninth defendant, G.B. Properties Ltd. and the tenth defendant, the appellant. The claims against them relate to a property known as 86/92 Kensington Gardens Square, London, W2, which in 1977 was acquired by G.B. Properties Ltd., a Panamanian company at that time controlled by the first and second defendants. It appears that in April 1986 the first and second defendants sold the shares in that company to the eleventh defendant, Mr. Kassim. On 26th June 1986 G.B. Properties sold the property to the appellant, which became the registered proprietor.

5

On 10th July 1989, on the ex parte application of the plaintiff, Vinelott J. made an order restraining the appellant from disposing of the property. On 24th July 1989, after the motion to continue the order had come before him inter partes, Morritt J. gave directions as to the filing of evidence and adjourned the application to come on as a motion by order, the hearing of which was originally fixed for 11th December 1989, but has since been fixed for 11th January 1990.

6

At that hearing before Morritt J. the appellant opposed the continuation of the injunction over the period until the hearing of the motion by order on the ground that it was not warranted by the plaintiff's evidence. For the purposes of that application only, it was accepted that the evidence established a prima facie case against G.B. Properties Ltd., but contended that there was no evidence of any connection between G.B. Properties Ltd. and the appellant, except an arm's length purchase of the property by the latter from the former. The judge concluded that the evidence before him sufficed to entitle the court, prima facie and at that stage, to link the appellant directly with the first and second defendants. The appellant was and is a Panamanian company and the persons behind it were not revealed. He concluded that the balance of convenience required the continuation of the injunction granted by Vinelott J. until judgment on the motion by order.

7

On 13th September 1989 Mr. A.U. Escher swore an affidavit on behalf of the appellant for use at the hearing of the motion by order. He is a director of the appellant and also an Assistant Vice President of Fides Trust Company. Fides is a company established under Swiss law and is a subsidiary of Credit Suisse Holding which is also the holding company of the bank of that name. This is a lengthy affidavit and we gratefully adopt the judge's summary of its contents:

"Mr. Escher's affidavit describes the background to Larimore and the transaction whereby it acquired the property. In summary Mr. Escher was instrumental in setting up a discretionary trust in May 1985 on behalf of individuals as ultimate settlors or as beneficiaries who were known to him. In 1986 one of those beneficiaries suggested that the trust might purchase the property in conjunction with Streib SA, a Panamanian company controlled by a friend of Abdul Rahim and Abdul Latif, which had the benefit of a contract to purchase the property.

"The arrangement was that Larimore should purchase the property and another Panamanian company, Iroise Investments Limited, would be owned by the trust and hold 50 per cent. of the shares in Larimore. Both Iroise and Larimore were shell companies Fides had in stock. Unsigned heads of agreement between Iroise, Streib and Larimore suggested that Larimore was to purchase the property as trustee for Streib and Iroise.

"The purchase was completed on the 26th June, 1989 when £3,237,500 was debited to Larimore's loan account with Credit Suisse, London, on the security of a guarantee of Credit Suisse, Zurich, which was in turn secured on four deposit accounts with Credit Suisse, Zurich, opened in June 1983 and January 1984 by three individuals 'who had either directly or indirectly beneficial interests in the Trust'.

"After completion of the purchase, Streib SA dropped out and Larimore repaid it its original contribution of £579,150. The loan account of Larimore with Credit Suisse, London, was secured on the property by a legal charge given in November 1986 and the guarantee of Credit Suisse, Zurich, and the underlying security on the four deposit accounts was discharged.

"In his affidavit Mr. Escher explains that after reading the affidavits of DBL he obtained a mandate from the account holders with Credit Suisse, Zurich, and has reviewed all the bank statements with supporting debit and credit advices. On the basis of this review he concludes that there is no connection between Larimore and 18 named persons including Abdul Rahim and Abdul Latif."

8

On 26th November 1989 the plaintiff's solicitors served on the appellant's solicitors a notice pursuant to R.S.C. 0. 24 r.10 requiring them to produce for their inspection the following documents which were said to have been "referred to" in Mr. Escher's affidavit namely:

  • "(a) The discretionary trust (paragraph 8)

  • (b)The consent of the trustees (paragraph 11)

  • (c)The four accounts, two of which were opened on 27th June 1983 and two of which were opened in January 1984 (paragraph 11)

  • (d)Larimore's loan account (paragraph 14)

  • (e)The guarantee by Credit Suisse, Zurich on the security of the four accounts (paragraph 14)

  • (f)The offer to sell 86–92 Kensington Garden Square (paragraph 15)

  • (g)The account of Larimore Investment Corporation at Credit Suisse, London (paragraph 16)

  • (h)The guarantee by Credit Suisse, Zurich (paragraph 16)

  • (i)The transfer of £242,000 on 11th July 1986 to the discretionary settlement (paragraph 16)

  • (j) The transfer of £579,150 on 11th July 1986 to Mr. Al-Akabi (paragraph 16)

  • (k) The guarantee from Credit Suisse, Zurich (paragraph 17)

  • (1) The all monies legal charge (paragraph 17)

  • (m) The mandate from the account holders (paragraph 18)

  • (n) The bank statements of Credit Suisse, Zurich (paragraph 18)

  • (o) The supporting credit and debit advices (paragraph 18)

  • (p) The records and bank statements of the Credit Suisse, Zurich accounts (paragraph 19)

  • (q) The certified copies of the bank statements of all but one of the accounts at other banks (paragraph 19)"

9

and to permit them to take copies thereof.

10

R.S.C. 0. 24, r.10(l) provides:

"Any party to a cause or matter shall be entitled at any time to serve a notice on any other party in whose pleading or affidavits reference is made to any document requiring him to produce that document for the inspection of the party giving the notice and to permit him to take copies thereof."

11

0. 24 r.10(2) provides for a notice of objection to be served. A notice of objection, and subsequently an amended version of that notice, was served in the present case.

12

0. 24, r.11 (so far as material) provides:

"If a party…who is served with a notice under rule 10(1) objects to produce any document for inspection…, then subject to rule 13 (1), the court may, on the application of the party entitled to inspection, make an order for production of the documents in question…"

13

0. 24, r. 13(1) provides:

"No order for the production of any documents for inspection or to the Court shall be made under any of the foregoing rules unless the Court is of the opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs."

14

Before Morritt J. three principal points were apparently taken on behalf of the appellants in opposition to the application under 0. 24, r.10:—

15

First it was pointed out that rule 10 does not in terms refer to affidavits filed on behalf of the party in question. The phrase used is "in whose…..affidavits". It was therefore submitted that an affidavit sworn on behalf of a party by an unconnected third person, and even a part of an affidavit sworn by a third person, otherwise than as a servant of a party, are not covered by the rule. It was submitted that parts of Mr. Escher's affidavit...

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