Lexi Holdings Plc v Shahid Luqman
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE SMITH |
| Judgment Date | 28 August 2008 |
| Neutral Citation | [2008] EWHC 2908 (Ch) |
| Docket Number | Case No: HC06C04067 |
| Court | Chancery Division |
| Date | 28 August 2008 |
[2008] EWHC 2908 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Smith
Case No: HC06C04067
Mr Philip Jones QC and Ms Ruth Holtham appeared on behalf of the Claimant
Mr Stephen Knapfler appeared on behalf of the Respondent
I apologise for not being able to deliver a typed judgment but I am afraid, being the interim judge has put enormous pressures under my clerk and the team. For example, there were 25 applications on Thursday. And to cap it all, the judge managed to break the judicial 10-year-old fax machine last night. Anyway, I will read this judgment.
INTRODUCTION
On 20 th of August, 2008, I heard an urgent application issued by the first defendant, Mr Luqman for an order to return his two passports within seven days of the order. The application was originally listed for the 21 st of August but I heard it on the 19 th of August and granted an application by the claimant, hereinafter called “Lexi”, to bring the application forward. I dismissed the defendant's application but indicated I would give reasons in a later judgment which I now do.
BACKGROUND
The application relates to a passport order initially made by David Richards J on the 13 th of November, 2006 and continued by Briggs J on the 21 st of December, 2006. The order was made ancillary to freezing and tracing orders made at the same time. Paragraph 22(1) of Richards J's order prevented Mr Luqman from leaving the jurisdiction until he had complied with the disclosure orders. And paragraph 22(2) required the delivery of the passports until he had complied with those disclosure orders.
Paragraph 16 of Briggs J order continued the orders until Mr Luqman complied with the continuing retirement. Mr Luqman delivered up his passports in January, 2007 but he was subject to committal proceedings in relation to his initial failure to comply. On the 6 th of December, 2007, Briggs J made a judgment in default against Mr Luqman in the sum of £59,607,498.16 together with interest as specified in that order. The default being Mr Luqman's failure to comply with the disclosure order. He also granted a charge over Mr Luqman's assets in the sum of £75,255,353.39. On the same day, he continued the pre-judgment freezing order of Richards J as continued by him. That order did not expressly reapply the passport order but nothing turns on that because it was ancillary to the disclosure orders which were expressly continued. In any event, if it is argued or it has been determined elsewhere that the passport orders have expired, Lexi can apply for a renewed order. I should say that Mr Knafler, who appears for Mr Luqman, in paragraph five of his first skeleton argument accepted that the passport order was still in force and was not spent. I agree with that analysis.
PREVIOUS CONDUCT OF MR LUQMAN
Mr Luqman failed to comply with the disclosure orders and the passport order. On the 2 nd of July, 2007, Henderson J provisionally indicated that he was going to commit him to prison for 18 months. I will not burden this judgment with the details but see his judgment at 2007 EWHC1508. On the 19 th of November, 2007, Henderson J, see his judgment again 2007 EWHC2355, reviewed his earlier decision and increased the sentence to two years. That being the maximum allowed cumulatively for any contempts of court. The reason he increased it was because he determined that Mr Luqman invented the story in collusion with someone else in an attempt to pervert the course of justice. On the 4 th of October, 2006, the previous year, under disqualification proceedings, Mr Luqman was disqualified for 15 years. That is of course the maximum under the 1986 Act. In the course of giving judgment, Patton J described him as being completely dishonest. Finally on the 18 th of January, 2008, Mr Luqman was judged bankrupt on the petition of another of his creditors, Riggs Bank.
INVESTIGATIONS
On the 5 th of October, 2006, Richard Fleming and Brian Greene, two partners in KPMG were appointed administrators over Lexi. Their investigations led to the present proceedings and those investigations are continuing. On the 17 th of April, 2008, Lexi obtained search orders against Mr Luqman and other members of his family and recovered substantial documents and the former server of Lexi. On the 7 th of July, 2008, Lexi issued applications against those other defendants for committal to be heard on the 10 th of November, 2008. At the same time they issued proceedings against Mr Luqman were returned at the same time also for contempt, for committal for contempt of court. Richards J on the 7 th of August, 2008 granted further passport orders against all other respondents to those committal applications. No application was made in respect of Mr Luqman's position because there was already in existence the passport order.
The allegations against Mr Luqman are a), a failure to disclose assets, paragraph 14 of the application notice. A failure to disclose Lexi's server and documentation, paragraph 32. There has of course been no determination on these issues by the Court. However Mr Knafler who appears as I said for Mr Luqman acknowledged in argument that there was clearly an issue to be tried as to whether or not his client was in contempt of court. And he could not say, he did not say that the application for his client's committal was an abuse of the process. It follows from that that there still remains outstanding matters in relation to the disclosure parts of the order to which the passport order was ancillary. Further, Mr Knafler in argument acknowledged that Lexi had legitimate grounds for believing that if Mr Luqman obtained his passports, he would be most unlikely to return to the jurisdiction and would therefore frustrate the committal application. I would have determined that that was the position on the evidence before me in any event even if Mr Luqman had not agreed it.
ORIGINAL BASIS FOR MR LUQMAN'S APPLICATION
Mr Luqman's application was supported by the fourth witness statement of his solicitor, Teresa Marie Fenton, dated the 12 th of August, 200In that she stated that Mr Luqman needed his passport returned so that he could attend proceedings in Lahore to be examined on the 27 th of August, 200Lexi did not accept that his personal attendance was required for that hearing. It produced a witness statement from a Mr Khan, its Pakistan lawyer. In fact, it was not necessary for me to determine that issue even if I could for reasons which I will give shortly. The stated grounds in the application were twofold. The first, that the passport order was spent. That argument was abandoned. Second, that Mr Luqman had a right to travel under EU law. Mr Knafler abandoned that application as well, acknowledging once again quite rightly in my view that the right to travel under EU law is not absolute and is fettered by whatever State believes is appropriate for restrictions to be put on a particular person's travel.
REVISED BASIS
Revised grounds were set out in Mr Knafler's two skeleton arguments. They were as follows. First, the only justification for restraint was at Section 37 of the Supreme Court Act, 1981 which gives the Court power to grant interim relief in aid of any action. Based on the decision of Wilson J in B v B [1998] 1WLR 329 it could be capable of being exercised post judgment, a point which Mr Knafler did not accept. However he accepted I was bound to follow the decision of Wilson J in that regard, would only exercise it an aid to proceedings or enforcement. Second, he stated it could not be issued to restrain a person from leaving the jurisdiction until a sum of money was paid. This was based on Section 4 of the Debtors Act, 1869 which generally abolished imprisonment for failure to pay money.
This in my view is of no relevance as the jurisdiction to grant an injunction under Section 37 is freestanding and independent and exercisable according to the principles under that Section and it is not to be fettered by principles that might apply under the Judgments Act and restrictions on the enforcement of the Judgment Act. In his supplemental skeleton, Mr Knafler further submitted that it was unlikely that Mr Luqman would go to Pakistan but instead would contest the jurisdiction of the Pakistan proceedings. In my view, the suggestion that the passport order in this action is sought as an aid to enforcing a judgment is wrong. The retention of the passport is sought first as an aid to the disclosure orders to ensure compliance as specified in the orders, and second, to aid the committal proceedings so as to ensure the committal proceedings are effective. It is quite clear in my view that if the passport orders are discharged and the passports delivered back to Mr Luqman, Lexi has substantial grounds for believing that effective committal proceedings against him will not be successful because Mr Luqman will simply not be here. It is also likely that if he obtains his passports back, that he will not make any appearance in Pakistan either. I do not see how the power should be restricted to pre-judgment applications. The Section should be given its widest interpretation.
Mr Knafler took me to various parts of Wilson J's judgment in B v B. And for the purposes of this judgment, I refer to pages 331H to 333D and 334B to 335B.
'No doubt more orders for payment of maintenance and tax would be obeyed if there was a power to commit for longer than six weeks. But Parliament has clearly determined that such invasion of personal liberty should be strictly limited even in the cause of enforcing judgments debts.
In inviting the court to restrain the husband from leaving the...
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