Fitzgerald v Lloyd Williams
| Jurisdiction | England & Wales |
| Judge | Otton L JJ.,Sir Thomas Bingham,Mr, Waite |
| Judgment Date | 20 December 1996 |
| Judgment citation (vLex) | [1995] EWCA Civ J1220-7 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | QBENI 95/0613/E |
| Date | 20 December 1996 |
[1995] EWCA Civ J1220-7
(Sir John Wood Sitting as a Deputy Judge
Before: The Master of the Rolls (Sir Thomas Bingham) Lord Justice Waite Lord Justice Otton
QBENI 95/0613/E
QBENI 95/1254/E
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE,
QUEEN'S BENCH DIVISION
MR. P HAVEY & MR. A FRASER-URQUHART (Instructed by Messrs. Marrache & Co., Knightsbridge, SW1X 7LT) appeared on behalf of the Appellants
MR. A MacNAB ( Amicus Curiae) (Instructed by Treasury Solicitor
MR. B L WILLIAMS appeared in person
Wednesday 20 December 1995
THE MASTER OF THE ROLLSWe have to resolve five main issues, all arising out of interlocutory orders made by Sir John Wood sitting as a deputy judge of the Queen's Bench Division. Most of those issues (concerning the discharge of a Mareva injunction on grounds of non-disclosure, leave given to the first defendant to draw on funds to which the plaintiffs make a proprietary claim, the securing of funds held by the sixth for the fourth defendant and the mode of trial) turn very largely on the facts of the case and raise no question of general legal importance. One of the issues (concerning the ordering of security against plaintiffs ordinarily resident outside England and Wales but within a member state of the European Union) raises a legal question of general significance.
The facts
There are (we are told) 87 plaintiffs in these two consolidated actions. All except 6 of them are Irish citizens ordinarily resident in Ireland. Their common link is that all claim to have been victims of a fraud perpetrated by the first defendant, who alone is the respondent to the appeals and application before us. In the first instance, these proceedings were issued against him alone; the other defendants were added later.
Of these additional defendants, the second defendant is the first defendant's wife; the third defendant is an Irish company owned and controlled by the first defendant and now in liquidation; the fourth defendant is a Liechtenstein establishment owned or controlled by the first defendant and now in liquidation; the fifth defendant, a Liechtenstein lawyer, was the trustee and is now the liquidator of the fourth defendant; the sixth defendant is a Liechtenstein bank at which the fourth defendant had an account into which money emanating from the plaintiffs was paid.
Among the plaintiffs in the actions are two (Mr Willcox and Mr Murray) whose roles are rather different from all the other plaintiffs. They were agents working in Ireland for a life assurance company and had in that capacity acquired a clientele. During 1992 the first defendant invited Willcox and Murray to act as selling agents of a limited edition of prints of original works of art. The distinctive feature of this scheme (described in the action as Scheme I) was that buyers, or investors as they were called, would have the right to sell their prints back to the third defendant after one year for a guaranteed profit of 14.3%. For reasons which are not at present clear, Scheme I was aborted.
It was followed by Scheme II, which related to works of art said to form part of what was called the Saloschin Collection. The Saloschin Collection was said to include, among other works, original works by German expressionist artists, removed from that country shortly before the Second World War. They had been collected by the father of a gentleman who lived in Oxfordshire under the name of George Saunders but who also bore the French title Vicomte Drevelle du Frenes and the Brazilian title Marques von Saloschin. An exhibition of these German expressionist works had been touring a number of American colleges since 1991. They were said to have been valued at about IR £2 million. The essence of Scheme II was the sale of complete sets of reproductions of these German expressionist works, the inducement being a profit of 100% obtainable on resale of the edition. A number of buyers agreed to buy sets of these prints, for which they paid in advance.
Scheme II was followed by Scheme III. Scheme III related not to the German expressionist works which had been included in the travelling exhibition in the United States but to 26 original paintings by Old Masters which were part of the Saloschin Collection. These paintings were said to have been authenticated by an expert art historian in London. The essence of the scheme was very simple. Willcox and Murray would buy the 26 Old Masters and 100 sets of the Scheme II prints from the fourth defendant for US $5.25 million and would re-sell to Malaysian buyers for US $ 10.5 million. Willcox and Murray were to raise the purchase price of US $5.25 million by soliciting subscriptions from investors, who would receive payment of 180% of the sum subscribed when the onward sale to the Malaysians was completed. The first defendant said that he had himself paid £851,948.00 to the fourth defendant as a deposit on the purchase price to secure the purchase of the works.
None of the Scheme II investors ever received any of the German expressionist reproductions. Some of them asked for their money back, which they received with a profit of 100% added. The great majority asked that their Scheme II subscriptions should be treated as subscriptions to Scheme III: they were accordingly treated as Scheme III subscribers and credited with subscriptions of twice what they had subscribed under Scheme II, the addition representing their 100% profit.
Pursuant to Scheme III, Willcox and Murray made agreements to buy the Old Masters and the prints from the fourth defendant and re-sell them to Malaysian buyers at the prices mentioned. They also raised nearly £2 million by way of original subscription and transferred subscription (including the notional profit which was credited to Scheme II subscribers).
Scheme III was never carried through. Doubts were raised about the authenticity of the German expressionist works touring the United States, which were impounded by the police. A professional valuation of the Old Masters showed them to be worth a very small fraction of their previous alleged valuation and cast doubt on their provenance.
The very greatly simplified narrative set out above represents the plaintiffs' version of events. It is not accepted by the first defendant, who claims to be a victim not a perpetrator of fraud. The court has not investigated the facts and cannot express any view, even a provisional view, on where the truth lies. But it has never been suggested that the plaintiffs' account does not disclose an arguable case of fraud.
On 11 and 16 May 1994 the writs in these actions were issued. Apart from Willcox and Murray the plaintiffs are those who subscribed to Scheme III. Their complaint is that representations said to have been made by the first defendant to Willcox and Murray and passed on by them to these plaintiffs were fraudulent, and that they were in the result cheated out of the sums which they subscribed. They claim damages for fraudulent misrepresentation, and also equitable tracing remedies in relation to the sums which they subscribed. None of these plaintiffs makes any claim against Willcox and Murray. Instead, Willcox and Murray themselves seek relief as a result of the fraud of which they claim to have been the unwitting instrument.
On 18 May 1994 the High Court in Dublin, on the application of 55 plaintiffs (including Willcox and Murray) and on reading two affidavits of Murray, made an order freezing the proceeds of a forthcoming sale of the premises in Dublin occupied by the third defendant. After that order Murray on 2 June 1994 swore an affidavit in the Irish proceedings on which the narrative summary given above is based. On 3 July 1994 Mr Ensor, a Dublin solicitor acting for the first defendant, swore an affidavit in the Irish proceedings. There is an unresolved dispute whether this affidavit ("the Ensor affidavit") was served on the plaintiffs' Irish solicitors. It was a short, two page, affidavit which made two points: first, that the Dublin premises occupied by the third defendant were owned not by the first defendant but by a pension fund; and secondly, that the first defendant would strenuously contest the allegations of wrongdoing made against him. On 11 July 1994 the High Court in Dublin continued its earlier order and in addition ordered the first defendant on affidavit to disclose his assets in Ireland and all documents relating to them. In response to this order the first defendant swore an affidavit on 5 August 1994 ("the first defendant's Irish discovery affidavit"). In this affidavit the first defendant deposed, so far as relevant, (a) that his majority shareholding in the third defendant was held as bare trustee for Saunders, (b) that he had a 25% interest in the proceeds of the sale by Willcox and Murray of the Scheme III Old Masters and prints, and (c) that the premises referred to above were owned by a pension fund of which the first defendant was a trustee and a potential beneficiary but in which he held no personal beneficial interest.
On 13 September 1994 the plaintiffs in both these actions applied to Tuckey J for the grant of a world-wide Mareva injunction against the first defendant. The...
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