Mercantile Group (Europe) AG v Aiyela

JurisdictionEngland & Wales
JudgeLORD JUSTICE HOFFMANN,LORD JUSTICE STEYN,THE MASTER OF THE ROLLS
Judgment Date30 July 1993
Judgment citation (vLex)[1993] EWCA Civ J0730-4
Docket NumberNo. QBCM1 93/0579/B
CourtCourt of Appeal (Civil Division)
Date30 July 1993
BETWEEN
Mercantile Group (Europe) AG
Respondent
And Victor Aiyela
Appellant

[1993] EWCA Civ J0730-4

(Mr. Justice Hobhouse)

Before: The Master of the Rolls (Sir Thomas Bingham) Lord Justice Steyn and Lord Justice Hoffmann

No. QBCM1 93/0579/B

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

MR. M. MANN Q.C. and MR. M. WARWICK (instructed by Messrs. Lucas Baron Jacobs, Walthamstow) appeared on behalf of the Appellant.

MR. M. BARNES Q.C. (instructed by Messrs. Lovell White Durrant, London WC2) appeared on behalf of the Respondent.

1

30th July, 1993.

LORD JUSTICE HOFFMANN
2

Chief Aiyela is a man of influence in Nigeria. He is able to negotiate lucrative contracts for foreign corporations. In return he is paid large commissions. In 1983 he negotiated on behalf of the plaintiff a contract to purchase a large consignment of oil. The plaintiff put him in funds to pay the purchase price. But he was not satisfied with his commission. He paid only part of the purchase money to the sellers. The rest, amounting to US $ 1.8 million, he kept for himself. On 6th August 1984 the plaintiff commenced proceedings against him. It also joined as defendants his wife and certain companies which he controlled on the ground that they had each received some of the money as constructive trustees. On 3rd November 1989 the proceedings were compromised by a Tomlin order. Mr. Aiyela and two companies admitted liability and undertook to pay US $2.2 million by 5th November 1990. If the money was not paid, judgment could be entered forthwith. The plaintiff abandoned its causes of action against the other defendants, including Mrs. Aiyela.

3

Mr. Aiyela paid US $388,000 immediately. But he paid nothing more. On 13th February 1991 the plaintiff entered judgment for US $1.8 million. It then tried to enforce it. But the previous history of attempts to discover the whereabouts of Mr. Aiyela's assets were not encouraging. In 1984 the plaintiff had obtained a Mareva injunction and an order for disclosure of assets. Mr. Aiyela said that he had no assets in the jurisdiction. The magnificent house in which he lived in Hampstead belonged to a foreign company. Likewise the Rolls Royce and three other motor cars. The household expenses were paid out of his wife's income from Nigeria. He was cross-examined on his affidavit and adhered to this story. Then the plaintiff discovered from his former personal assistant that he was channelling his income, including a US $3 million commission for negotiating a Nigerian fertiliser contract on behalf of an American corporation, to an undisclosed Channel Island company which he controlled. He was able to draw for his own purposes upon this company's bank accounts. This discovery led to the negotiations which ended in the Tomlin order.

4

When judgment was entered in 1991, Mr. Aiyela had left Hampstead and gone abroad. But in 1992 he returned to England. The Aiyelas' style of living was just as grand as before. They lived in a big house on the St. George's Hill estate in Weybridge with servants and motor cars. The plaintiff first tried to have Mr. Aiyela examined as to his means under Ord 48, r.1. He was served while sitting in his chauffeur driven car. But he refused to come because the process server had not tendered conduct money. Thereafter he evaded service.

5

On 23rd July 1992 Mr. Anthony Colman Q.C. (sitting as a High Court judge) granted a Mareva injunction against

6

Mr. Aiyela, limited to assets within the jurisdiction. He made an order requiring Mrs. Aiyela to provide detailed financial information about herself and her husband. She was required to give particulars of the companies or trusts which she or her husband had caused to be formed and the assets which they held; her own and her husband's bank accounts, credit card accounts, properties, motor cars and other chattels. In response to this order Mrs. Aiyela gave certain information but did not disclose accounts with the Midland Bank in Tolworth, Surrey in her name and that of a company which she controlled. A payment had been made into her account from Nigeria on the instructions of

7

Mr. Aiyela. This information was put before Saville J. on 7th December 1992 when he extended world-wide the Mareva injunction against Mr. Aiyela and made a separate Mareva against

8

Mrs. Aiyela in respect of any account on which she could draw at the Midland Bank, Tolworth.

9

On 25th November 1992 Mr. Aiyela was adjudicated bankrupt on the petition of another creditor. It is not however suggested that the bankruptcy affects the court's jurisdiction to grant discovery or Mareva relief against his wife.

10

Mr. Aiyela applied to Hobhouse J. to discharge the July order for disclosure of assets and the December order so far as it affected the bank accounts on which she could draw. Her counsel accepted that there was evidence to suggest that

11

Mr. Aiyela was determined to frustrate the execution of the judgment against him, that Mrs. Aiyela had no independent financial means and that monies emanating from her husband or companies which he controlled had been paid into bank accounts in her name. Mrs. Aiyela disputed these conclusions but accepted that they gave rise at least to triable issues. On this basis counsel conceded that if there was jurisdiction to make the orders against Mrs. Aiyela, he could not challenge the exercise of that jurisdiction. But he argued that there was no such jurisdiction. In the Tomlin order the plaintiff had abandoned any substantive cause of action against Mrs. Aiyela and the court could not therefore order her to disclose information about her assets or those of her husband or make a Mareva injunction against her. Hobhouse J. held that there was jurisdiction to make both orders and dismissed the summons. Mrs. Aiyela now appeals.

12

The Disclosure Order

13

There is no dispute that the court was entitled to grant a post-judgment Mareva against Mr. Aiyela. The question is whether, ancillary to that order, it can order discovery from a person against whom there is no substantive cause of action. The power to order disclosure is derived from section 37(1) of the Supreme Court Act 1981. The exercise of this power against third parties was discussed by the House of Lords in Norwich Pharmacal v Customs and Excise [1974] A.C. 133. The effect of this decision, as expounded in later cases, is that jurisdiction to order disclosure against a third party exists when two conditions are satisfied. First, the third party must have become mixed up in the transaction concerning which discovery is required. Secondly, the order for discovery must not offend against the "mere witness" rule, which prevents a party from obtaining discovery against a person who "will in due course be compellable to give that information either by oral testimony as a witness or on a subpoena duces tecum": see Lord Reid at p. 174. In the Norwich Pharmacal case the Customs and Excise, by the exercise of their statutory powers, became "mixed up" in the importation of infringing chemicals and an order for discovery did not offend against the mere witness rule because it sought discovery of the identity of the importers with a view to bringing proceedings against them. As Lord Reid said:

[T]he foundation of the [mere witness] rule is the assumption that eventually the testimony will be available either in an action already in progress or an action which will be brought later…Here if the information in the possession of the respondents cannot be made available by discovery now, no action can ever be begun because the appellants do not know who are the wrongdoers and who have infringed their patent."

14

Mr. Mann Q.C. says that the Norwich Pharmacal principle is limited to finding out the identity of a tortfeasor. But...

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