A.L.I. Finance Ltd v Havelet Leasing Ltd

JurisdictionEngland & Wales
Date1992
CourtChancery Division
[CHANCERY DIVISION] A.L.I. FINANCE LTD. v. HAVELET LEASING LTD. AND OTHERS [1980 A. No. 5864] 1990 June 12, 13 Scott J.

Company - Director - Locus standi - Mareva injunctions made against company and director - Director in person seeking variation of orders against himself and company - Whether director having locus standi to apply on behalf of company for variation of order - R.S.C., Ord. 12, r. 1

The plaintiff obtained, inter alia, Mareva injunctions against the first three defendant companies and the fourth defendant, their managing director and beneficial owner, its claim being in essence that he had effected transfers of assets by the first to the second and third defendants in respect of which the plaintiff had a proprietary claim. On the application of the fourth defendant, an administration order was made in respect of the first defendant. Moneys that the defendants were, by variations of the terms of those injunctions, authorised to expend on legal representation having been fully spent, notwithstanding the terms of R.S.C., Ord. 12, r. 1,F1 the fourth defendant applied in person, on his own behalf, and sought to apply in person, on behalf of the second defendant, further to vary the terms of those injunctions so that, inter alia, the second defendant might have leave to use some of the assets standing in its name to pay certain specified trading debts.

On the issue whether the fourth defendant had locus standi to make the application on behalf of the second defendant: —

Held, that although the fourth defendant had no right of audience on behalf of the second defendant and by virtue of R.S.C., Ord. 12, r. 1 an application by the second defendant, being a “step in the action,” could not be made “otherwise than by a solicitor,” there was no reason in principle why, in an appropriate case, a director of a company involved in litigation should not be allowed to become a party to it, in order on his own behalf to make an application in relation to orders made against that company; that further, in the exercise of the court's inherent power to regulate its own proceedings so as to maintain its character as a court of justice, and as a matter of discretion, the exceptional circumstances of the case warranted the grant to the fourth defendant of liberty to address the court, in relation to applications made by other parties, on behalf of the second and third defendants as well as on his own behalf (post, pp. 462C–F, 463D–G, 464B–C).

Engineers' and Managers' Association v. Advisory, Conciliation and Arbitration Service [1979] 1 W.L.R. 1113, C.A. and Abse v. Smith [1986] Q.B. 536, C.A. applied.

The following cases are referred to in the judgment:

Abse v. Smith [1986] Q.B. 536; [1986] 2 W.L.R. 322; [1986] 1 All E.R. 350, C.A.

Battle v. Irish Art Promotion Centre Ltd. [1968] I.R. 252

Bremer Vulkan Schiffbau und Maschinenfabrik v. South India Shipping Corporation Ltd. [1981] A.C. 909; [1981] 2 W.L.R. 141; [1981] 1 All E.R. 289, H.L.(E.)

Collier v. Hicks (1831) 2 B. & Ad. 663

Connelly v. Director of Public Prosecutions [1964] A.C. 1254; [1964] 2 W.L.R. 1145; [1964] 2 All E.R. 401, H.L.(E.)

Engineers' and Managers' Association v. Advisory, Conciliation and Arbitration Service [1979] 1 W.L.R. 1113; [1979] 3 All E.R. 223, C.A.

Frinton and Walton Urban District Council v. Walton and District Sand and Mineral Co. Ltd. [1938] 1 All E.R. 649

London County Council and London Tramways Co., In re (1897) 13 T.L.R. 254, D.C.

O'Toole v. Scott [1965] A.C. 939; [1965] 2 W.L.R. 1160; [1965] 2 All E.R. 240, P.C.

Scriven v. Jescott (Leeds) Ltd. (1908) 53 S.J. 101

Serjeants at Law, In re (1839) 6 Bing. N.C. 187; (1840) 6 Bing. N.C. 232

Tritonia Ltd. v. Equity and Law Life Assurance Society [1943] A.C. 584; [1943] 2 All E.R. 401, H.L.(Sc.)

No additional cases were cited in argument.

APPLICATION

By a writ issued on 30 April 1990 the plaintiff, A.L.I. Finance Ltd. (formerly Arbuthnot Leasing International Ltd.) claimed relief against the defendants, Havelet Leasing Ltd., Havelet Leasing Finance Ltd., Havelet Enterprises Ltd. and Robert Patrick Maughan, who was the managing director of the first three defendants and their beneficial owner. Initially all the defendants were legally represented but, after a number of interlocutory orders, including Mareva injunctions which limited their ability to use assets for the purpose of such representation, Mr. Maughan appeared in person and sought leave both to appear on behalf of the second defendant and to apply on its behalf for a variation of certain of those orders so as to permit it to pay certain trading debts. Both applications were opposed by counsel appearing for the plaintiff and for the first defendant.

The facts are set out in the judgment.

John Brisby for the plaintiff.

Colin Rimer Q.C. and Paul Girolami for the first defendant.

The fourth defendant appeared in person.

The second and third defendants were not represented.

SCOTT J. The issue before me is whether a director of a company has locus standi to appear in person and make an application on behalf of the company. I shall start by describing, in brief I hope, the litigation in which the point arises.

The plaintiff in the action is A.L.I. Finance Ltd. The plaintiff has very substantial claims against Havelet Leasing Ltd. (“Leasing”) arising as I understand it (although I have not seen the underlying documentation or the voluminous affidavits that have been sworn in connection with this matter) from leasing transactions between the two companies. The second and third defendants are Havelet Leasing Finance Ltd. (“Finance”) and Havelet Enterprises Ltd. (“Enterprises”). The fourth defendant is Mr. Maughan.

Mr. Maughan is, I am told, the beneficial owner, one way or another (whether directly or through holding companies is not clear to me), of the shares in the three Havelet companies, Leasing, Finance and Enterprises. He is also managing director, if not the only director, of each of the three companies.

The plaintiff contends — again I am speaking of my understanding and without having seen the underlying documents or the affidavits that depose to these matters — that Mr. Maughan effected transfers of assets from Leasing to Finance and Enterprises for no or for insufficient consideration, with the intent or with the effect of frustrating the plaintiff's claims against Leasing. Moreover, the plaintiff claims that the assets, or some of the assets, transferred to Finance or to Enterprises were assets in respect of which the plaintiff has a proprietory claim. So the plaintiff asserts a tracing remedy against Finance and Enterprises in order to try and recover its (the plaintiff's) property.

A very large number of interlocutory orders have already been made in the action, which was commenced by the plaintiff in April 1990. After my summary of the issues in the action, it will come as no surprise that the injunctions that have been granted include those of a Mareva character. I should give a brief resume of some of the injunctions.

The action was commenced in the Queen's Bench Division but later transferred into the Chancery Division. On 30 April 1990 Jowitt J. made an ex parte order in the Queen's Bench Division restraining Finance and Enterprises from disposing of the assets specified in the schedule thereto, i.e. the assets claimed in specie by the plaintiff, and from disposing of any other of their assets within the jurisdiction, save in so far as the unencumbered value of those assets exceeded £1.7m. Discovery orders were made against Mr. Maughan. In addition an earlier Mareva injunction granted by Ian Kennedy J. against all the defendants including Mr. Maughan was continued and varied so as to apply to all assets within the jurisdiction, save in so far as the unencumbered value of those assets exceeded £2.7m.

On 4 May 1990 the injunctions were varied by Jowitt J. so as to permit payment by Finance and by Enterprises of legal costs up to £15,000, provided that payment was made from one or other of two specified bank accounts. On 9 May 1990 the injunctions were further varied by Auld J. so as, inter alia, to increase the £15,000 figure to £40,000. In addition, Auld J. varied the order so as to permit Finance to pay certain specified debts, provided that the total of those debts...

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