Savings & Investment Bank Ltd v Gasco Investments (Netherlands) B.v (No. 2)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE PURCHAS,LORD JUSTICE NICHOLLS,LORD JUSTICE RUSSELL |
| Judgment Date | 12 November 1987 |
| Judgment citation (vLex) | [1987] EWCA Civ J1112-1 |
| Docket Number | 87/1121 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 November 1987 |
[1987] EWCA Civ J1112-1
Lord Justice Purchas
Lord Justice Nicholls
and
Lord Justice Russell
87/1121
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(Mr. Justice Scott)
Royal Courts of Justice
MR. D. ASHTON (instructed by Messrs D.J. Freeman & Co.) appeared on behalf of the Appellant/Plaintiff.
MRS. J. HORNE-ROBERTS (instructed by Messrs T.J. James & Sarch) appeared on behalf of the Respondents/Defendants.
The court is concerned with two appeals from judgments delivered by Scott J. on 17th February 1986 (the first judgment) and 17th February 1987 (the second judgment). Both appeals arise in conjunction with substantial and long-standing litigation involving a number of actions including the main action with Savings and Investment Bank Ltd. ("the Bank") as plaintiff, and a number of companies including St. Piran Ltd. and others as defendants. I shall refer to the corporate defendants collectively known as "Gasco".
Raper and Allen have been or are concerned in the management of the corporate defendants. The background is conveniently set out in the first judgment:
"In the main action Savings and Investment Bank Limited claims repayment of loans which it made to one or other of the corporate defendants. It claims that it was given, as security for the loans, charges over the assets of some of the corporate defendants. This action, which will decide whether or not the plaintiffs, Savings and Investment Bank Limited, are entitled to the charges in question and to repayment of the monies allegedly lent and allegedly thereby secured is, as I understand it, now proceeding in the Isle of Man. Actions in England seeking similar relief have been stayed. Before, however, the English actions were stayed, undertakings were given to the court for the purpose of protecting, until the conclusion of the Isle of Man action, the assets alleged to be subject to the plaintiffs' charge. Undertakings were given to the court for that purpose on two occasions, first, to Mr. Justice Peter Gibson on 4th October 1983; secondly, to Mr. Justice Whitford on 8th March 1984. The nature of the undertaking was that there would be no disposition of the assets of Saint Piran Limited so as to reduce the value of its assets in the United Kingdom to less than seven million pounds. Those undertakings were given, among others, by Saint Piran Limited itself and by Mr. Raper and Mr. Allen.
It is said by the plaintiffs that there have been breaches of those undertakings for which Mr. Raper and Mr. Allen are responsible."
Both Raper and Allen were at all material times directors of St. Piran. The motions with which these appeals are concerned related to contempts of court of which Raper and Allen were guilty in procuring, aiding or abetting breaches of the undertakings given on behalf of St. Piran.
A Notice of Motion dated 17th October 1985 was issued by the Bank. This claimed, inter alia, an order of sequestration against all assets and property belonging to Raper and Allen and an order for their committal to prison. In support an affidavit was sworn by a Mr. Beer to which was exhibited a very large number of documents purporting to prove the breaches alleged in the Notice of Motion. The short point which was raised as a preliminary point on motion dated 6th February 1986 in the first judgment was whether or not the proceedings initiated by the Notice of Motion were interlocutory proceedings within the provisions of RSC 0. 41, r.5(2) which provides:
"5(2) An affidavit sworn for the purpose of being used in interlocutory proceedings may contain statements of information or belief with the sources and grounds thereof."
The significance is that where a large number of complicated international transactions involving the exportation of assets abroad are concerned, it can be difficult if not impossible for direct proof of a breach of undertaking to be achieved without calling evidence from the proposed defendants or their servants or agents or others who would be unlikely freely to give evidence or by the production of documents published by them which could not formally be proved.
Scott J. held that the proceedings were not interlocutory and that hearsay evidence was not admissible. However, he accepted that the provisions of the Civil Evidence Act 1968 ("the 1968 Act") applied and would mitigate the difficulties under which an applicant for a committal order in a case such as the present one finds himself. This suggestion was accepted by Mrs. Horne-Robers acting for the defendants.
In view of the attitude taken in relation to the 1968 Act the Bank did not appeal the judgment of Scott J. at the time but proceeded on what was then the accepted application of the 1968 Act. On 5th December 1986 they issued a further Notice of Motion claiming similar relief but setting out their case in considerably greater detail. By this time further information was to hand. Notices were given, inter alia, that the Bank would seek leave to put in thirteen identified statements under the 1968 Act. Counter-notices were served. By this time Mrs. Home-Roberts had changed her view as to the applicability of the 1968 Act. She now contends that the application to commit gives rise to proceedings which are criminal proceedings and, therefore, not "civil proceedings" within the meaning of that expression in the 1968 Act. So the matter came again before the judge as a second preliminary point. This issue formed the subject matter of the second judgment in which the learned judge found in favour of the Bank. Messrs Raper and Allen now appeal against this. In view of these developments, the Bank sought and obtained leave to appeal out of time against the first judgment.
The court, with the consent of the parties, decided to hear the two appeals together and heard argument in the first instance from Mr. Ashton in support of the appeal against the first judgment, and then heard from Mrs. Horne-Roberts both in response to Mr. Ashton's appeal against the first judgment and in support of her appeal against the second judgment. Having heard the submissions as far as that stage the court found it unnecessary to call upon Mr. Ashton to reply to Mrs. Horne-Roberts on the first appeal, or to respond to her submissions in support of the second appeal. This judgment, therefore, will deal comprehensively with both the issues, namely (1) whether or not for the purposes of 0. 41, r.5(2) the motion was an interlocutory proceeding giving rise to an interlocutory order and (2) whether the same proceeding was a "civil proceeding" within the meaning of that expression in the 1968 Act.
The Interlocutory Issue
Mrs. Horne-Roberts' submission which found favour with the judge was that an application to commit to prison for contempt of court initiated separate "freestanding" proceedings which were independent of the actions in which the undertakings had been given, the breach of which gave rise to the contempt. She submitted that the application which raised the question whether or not there had been a breach in respect of which a committal order should or should not be made resulted in an order which finally disposed of that particular issue between the parties—see Salter Rex & Co. v. Ghosh [1971] 2 Q.B. 597 as followed in White v. Brunton [1984] 1 Q.B. 570 ("the application approach").
Having considered at some length the case of Gilbert v. Endean [1878] 9 Ch.D. 259, Scott J. said:
"Mr. Ashton, for the plaintiffs, has drawn attention to the reference by Lord Justice Cotton to the rights of the parties. He has pointed out, correctly, that a committal application is not an application which will finally determine the rights of the parties. In my judgment, however, it is not useful to search the report of Gilbert v. Endean for language apt to describe the state, interlocutory or otherwise, of committal applications. In Gilbert v. Endean the court was not concerned with a committal application.…..
The real point of distinction which, to my mind, Lord Justice Cotton was making, was between, on the one hand, subservient applications designed to regulate in some way the conduct of legal proceedings between the parties and, on the other hand, applications raising independent issues. Applications of the former variety will almost invariably be interlocutory in form as well as in character.
…..
A committal application is not made with a view to regulating the conduct of the litigation in which the order alleged to have been broken was made. It is not made for the purpose of facilitating the resolution of the dispute which is the subject of that litigation. It represents an attempt by one party to enforce an order of the court which has been contumaciously broken by the other party. It raises issues which are independent of any issues in the action. If the application succeeds, it does not lead to payment of any sum to the applicant, save perhaps in respect of costs: it leads or may lead to the imposition on the respondent of penalties for the purpose of securing obedience to the law. It is in every sense, in my view, free-standing as a lis, unconnected, save historically,...
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