Motorola Credit Corporation v Uzan and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Waller,LORD JUSTICE WALLER,LORD JUSTICE SEDLEY,LORD JUSTICE RIX,LORD JUSTICE SCOTT BAKER |
| Judgment Date | 27 January 2003 |
| Neutral Citation | [2002] EWCA Civ 989,[2003] EWCA Civ 91 |
| Docket Number | A3/2002/1291,A3/03/1824 |
| Court | Court of Appeal (Civil Division) |
| Date | 27 January 2003 |
[2002] EWCA Civ 989
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
(MR JUSTICE DAVID STEEL)
The Lord Chief Justice of England and Wales
(The Lord Woolf of Barnes)
Lord Justice Waller and
Lord Justice Sedley
A3/2002/1291
A3/2002/1312
MR N STRAUSS QC and MR A CHOO-CHOY (instructed by Messrs Weil Gotshal
& Manges, London EC2M 2WG) appeared on behalf of THE APPELLANT FIRST DEFENDANT
MR K MACLEAN QC (instructed by Messrs Weil Gotshal & Manges, London EC2M 2WG) appeared on behalf of THE APPELLANT FOURTH DEFENDANT
MR M CRAN QC and MR M BOOLS (instructed by Messrs Steptoe & Johnson, London EC2V 7JE) appeared on behalf of THE RESPONDENT
Wednesday 26 June 2002
THE LORD CHIEF JUSTICE: I will ask Lord Justice Waller to give the first judgment.
The point which arises on this appeal is not unimportant in the context of freezing orders (Mareva injunctions as they used be called). A worldwide freezing order has been made against the first and fourth defendants by Moore-Bick J in the Commercial Court in aid of proceedings which had been taken against the defendants in the United States. As part of the order made the defendants were ordered to provide information, confirmed at a later date by sworn affidavits, of all their assets worldwide to the solicitors for the claimants.
The defendants are, however, making an application in the Commercial Court to have the worldwide order set aside. They say that they have a strong case for setting aside the orders. The question is whether (although they do not seek a suspension of the freezing order itself in the meanwhile) there should be a suspension or stay of the requirement to provide information and to provide the sworn affidavits to the solicitors for the claimants. David Steel J refused the first defendant a stay on the grounds that, prima facie, or in principle, disclosure orders were part and parcel of the freezing order jurisdiction and on the basis that the circumstances relied on by the first defendant did not take the case out of the norm.
The fourth defendant applied to Toulson J for a stay in her case. Toulson J refused a stay in consequence of the refusal by David Steel J. Both judges refused permission to appeal, but Rix LJ granted permission and ordered expedition. He also ordered that in the meanwhile the defendants should prepare letters and deliver the same to their own solicitors pending this appeal. That has been done, although they have not prepared letters; they have prepared schedules. He also ordered that there should be affidavits sworn and delivered to the defendants' solicitors. That has not been done, but those representing the defendants have indicated that they would be prepared to do that. These are the appeals from both judgments.
I should spell out the chronology and certain of the facts in a little more detail. On 28 January 2002, the claimants, Motorola and Nokia, commenced proceedings against all four defendants in the United States District Court Southern District. The four defendants are members of the same family: the first defendant, his father, his brother, and the fourth defendant, his sister. They were shareholders in a company named "Telsim". The allegation, in broad terms, is that the defendants induced Motorola to lend very substantial sums of money to Telsim with the intention that those sums should never be repaid. The main point relied on in support of the allegation of fraud is that it is alleged that in relation to the loan certain shares were pledged as security. It is said that as part of the fraud the value of the shares was diluted, reducing the shares pledged from 66% to 22%. The claim is in excess of US $2 billion.
The claimants sought injunctive relief in the United States. That was limited to assets in the United States by virtue of Supreme Court authority in 1999. There is no jurisdiction to grant worldwide relief so far as the United States court is concerned.
The first action in the courts of this country was by Motorola alone against the first defendant alone. The first defendant is neither a citizen nor a resident on the United Kingdom. However, he has a house in London and certain assets in the United Kingdom including, as I understand it, the contents of the house and a motor car.
On 30 January 2002 (within a short time of the United States proceedings starting), Motorola applied for a freezing order in relation to the first defendant's assets within the jurisdiction of the English court, that is to say a domestic freezing order. The application was made in support of the United State action relying on section 25 of the Civil Jurisdiction and Judgments Act 1982 and CPR Part 25.4. The application came on ex parte before Cresswell J. We have a transcript of that hearing. It was made clear as a result of an interchange between Cresswell J and Mr Cran QC, who represented Motorola on that occasion and has represented them in this court, that the release being sought was limited to the United Kingdom, but a reservation was made equally clear that it was possible that Motorola might apply to the English court for worldwide relief.
Cresswell J made an order. It included an order to disclose at once assets in England and a requirement to confirm that information by affidavit within 14 days. That disclosure was complied with, although the first defendant did apply to set aside that order on the grounds of non-disclosure.
On the first return date in relation to that application (15 February 2002) the order was continued, and the return date on which the application to set the order aside would be argued was initially set as 26 April 2002. But the matter was adjourned while certain proceedings were taking place in the United States action. The matter was ultimately adjourned until 17 July 2002, which is the date on which the application with which this court is concerned is due to be heard.
In the United States there was a six-day hearing with witnesses called to consider whether the United States freezing orders should be continued and whether other orders should be made. The defendants could have given evidence in those proceedings, but chose not to do so. That resulted in the decision in favour of Nokia and Motorola. The judge delivered a written judgment on 21 May 2002 resoundingly in favour of Nokia and Motorola, the first paragraph of which reads:
"When business deals go sour, both sides are apt to cry 'fraud' and courts know better than to take such claims at face value. But here we have the unusual case where every preliminary indication is that the defendants, behind a facade of legitimacy, engaged in repeated acts of fraud and chicanery, and thereby perpetrated, and continue to perpetrate, a rather massive swindle."
Part of the order made by the judge on that day was that certain shares were to be deposited with the court in order to restore the security which the claimants alleged had been destroyed. In argument before him on that occasion it was said that there were difficulties in putting up the shares as security, having regard to the requirement of Turkish ownership and the possibility that if Turkish ownership fell below 50%, there was a risk of a loss of licence. Indeed expect evidence appears to have been given on that aspect. But despite that argument, the judge made the order. It is clear from the judgment that he was dismissive of that point. It seems that, in addition to such argument as may have been put to the judge on that day, certain proceedings may have been taken in Turkey by distributors seeking injunctions to prevent these shares being lodged. Mr Cran QC, on behalf of the Motorola, suggests that the same answer as was given by the judge in the United States can be given to that application, that is to say that in reality there is no basis on which the ownerships of the shares would be destroyed by putting them up as security and no basis on which there is a risk to any licence. This application in Turkey looks like a contrived application to make it more difficult for the defendants to put up the security ordered by the United States court.
Up until this point Motorola and Nokia had not applied for worldwide relief in the United Kingdom. Something is made of that point by Mr Strauss QC for the first defendant. However, Mr Cran submits that it is quite clear that it is only in very exceptional circumstances that worldwide relief will be given under section 25 in circumstances where the potential defendants are not resident or domiciled in the United Kingdom, and that it is only in the context of the very strong findings by the United States judge, and, in addition, the fact that there was a failure to comply with the order the judge made for the deposit of shares, which had expired on 20 May, that Motorola decided that they would make an application for worldwide relief. On 30 May 2002, without notice to the solicitors for the first defendant, Motorola applied to Moore-Bick J for worldwide relief in relation to all four defendants. This application was supported by the evidence previously relied on, but in addition by reference to the reasons given by the United States court and the fact that the shares had not been deposited.
We have a transcript of the hearing before Moore-Bick J. He made that worldwide order, a copy of which appears at Tab 14 of the bundle. It contained an order requiring the...
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