T.S.B. Private Bank International S.A. v Chabra
| Jurisdiction | England & Wales |
| Judgment Date | 1992 |
| Date | 1992 |
| Court | Chancery Division |
Injunction - Mareva injunction - Third party interests - Injunction granted against surety - Surety major shareholder of company - No cause of action against company - Whether company to be joined as co-defendant to action - Whether jurisdiction to grant injunction against company - Practice - Parties - Joinder - Company alter ego of defendant - No cause of action against company - Whether company to be joined as co-defendant -
The plaintiff bank issued a writ against the first defendant claiming, inter alia, £1.5m. for his failure to honour a guarantee which he had given in respect of advances made to a British Virgin Islands company by the plaintiff. Prior to the hearing the plaintiff obtained a Mareva injunction which, inter alia, restrained the first defendant from removing out of the jurisdiction or otherwise disposing of, in particular, the proceeds of sale of certain business assets belonging to a United Kingdom company in which he was the majority shareholder. On a further ex parte application by the plaintiff the court ordered, of its own motion, the addition of the United Kingdom company to the writ as second defendant under R.S.C., Ord. 15, r. 6(2)(b)(ii)F1 and granted a Mareva injunction against it in similar terms to the injunction made against the first defendant.
On the second defendant's application for the writ to be struck out as against it on the ground that no cause of action was disclosed and to set aside the Mareva injunction: —
Held, (1) that since the presence of the second defendant was necessary to ensure that all matters in dispute were effectively dealt with and its position fell within the broad provisions of R.S.C., Ord. 15, r. 6(2)(b)(ii), it followed that the second defendant was a proper party to the proceedings even though there was no cause of action against it on the guarantee; and that, accordingly, it should not be struck out of the writ (post, p. 238C–D, E–H).
(2) That although the court had no jurisdiction to grant an interlocutory injunction in favour of a plaintiff who had no good arguable cause of action against a sole defendant, it had power to grant the injunction against a co-defendant against whom no cause of action lay, provided that the claim for the injunction was ancillary and incidental to the plaintiff's cause of action against the other co-defendant; and that, accordingly, since the injunction made against the first defendant alone was inadequate to protect the plaintiff, it was appropriate to grant the injunction against the second defendant in support of the existing legal right claimed by the plaintiff against the first defendant (post, pp. 241H–242E, F–G).
The following cases are referred to in the judgment:
Barclays Bank of Swaziland Ltd. v. Hahn [
Company, In re A [
Hubbard v. Woodfield (
S.C.F. Finance Co. Ltd. v. Masri [
Siskina (Owners of cargo lately laden on board) v. Distos Compania Naviera S.A. [
Steamship Mutual Underwriting Association (Bermuda) Ltd. v. Thakur Shipping Co. Ltd. (Note) [
Vereker v. Choi [
The following additional cases were cited in judgment:
Atlas Maritime Co. S.A. v. Avalon Maritime Ltd. (No. 3) [
Siporex Trade S.A. v. Comdel Commodities Ltd. [
MOTION
On 8 April 1991 the plaintiff, T.S.B. Private Bank International S.A., incorporated in Luxembourg with registered office and place of business at 1A, Rue Pierre d'Aspelt, Luxembourg, issued a writ against the first defendant, Balbir Singh Chabra of 5, Beverley Drive, Coventry, claiming payment of, inter alia, £1.5m. for his failure to honour a guarantee given by him in respect of debts owed to the plaintiff by Foinavon Ltd., a British Virgin Islands company. On 16 May 1991 on the plaintiff's ex parte application Mummery J. continued and extended a Mareva injunction, made against the first defendant by Morritt J. on 10 May, which, inter alia, restrained him until judgment or further order from removing from the jurisdiction, or otherwise disposing of or dealing with his assets within the jurisdiction, including and in particular his shares in Beverley Hotels (London) Ltd. with registered office at 4, Copthall House, Station Square, Coventry, in which he was the majority shareholder. He was also similarly restrained from dealing with the company's assets within the jurisdiction including and in particular the proceeds of sale completed on or about 29 March 1991 of its hotel and restaurant interests. On 6 June 1991, Mummery J., of his own motion, on ex parte application by the plaintiff, ordered Beverley Hotels (London) Ltd. to be added as second defendant and the writ to be amended accordingly, and granted against the second defendant an order in Mareva form containing provisions regarding the position of the second defendant similar to those contained in the order made against the first defendant on 16 May.
By a notice of motion dated 17 June 1991 the second defendant applied (1) to strike out the writ of summons issued on 8 April 1991 and re-issued on amendment on 10 June 1991 in so far as it related to the second defendant on the ground that it disclosed no cause of action against the second defendant and (2) to set aside the order of Mummery J. dated 6 June 1991.
The facts are stated in the judgment.
Gregory Mitchell for the defendants.
Andrew Fletcher for the plaintiff.
4 July 1991. MUMMERY J. read the following judgment. The plaintiff is a bank incorporated in Luxembourg with its registered office and principal place of business there. It claims to have a written guarantee dated 24 July 1990 from the first defendant, Mr. Balbir Chabra, whom I shall call Mr. Chabra, up to a limit of £1.5m. in respect of sums payable under a facility letter dated 20 August 1990 to a British Virgin Islands company, Foinavon Ltd. In reliance on the guarantee the plaintiff claims to have advanced to Foinavon £1.5m. which that company has failed to repay on a demand made on it by letter of 7 March 1991. The plaintiff has also demanded payment by Mr. Chabra of the sum claimed to be owing to it, by a letter dated 8 March 1991. Mr. Chabra has not paid that sum or any part of it to the plaintiff.
Mr. Chabra is a director of the second defendant, a United Kingdom company owned by Mr. Chabra and/or his wife. Until about the end of March 1991 he held 80,000 of the 90,000 issued shares and his wife owned 10,000 shares. I was informed by counsel for the defendants, on instructions, that Mr. Chabra now claims to have transferred all his shares in the company to his wife. The details of the transfer, such as date, place of execution and consideration paid, if any, are unknown.
The second defendant company carried on a hotel business in the United Kingdom. It has nine subsidiary companies. It has now ceased to trade. It appears that at the end of March 1991 it completed the sale of a hotel resulting in a substantial surplus, believed to be about £1m. It also appears that the company has substantial liabilities.
On 8 April 1991 the plaintiff issued a writ endorsed with a statement of claim against Mr. Chabra, claiming payment of £1.5m. plus interest. The writ was sent by post to Mr. Chabra's address at 5, Beverley Drive, Coventry. Mr. Chabra is now in India. His address there is not known. Neither he nor his solicitors will reveal it. According to a medical certificate dated 17 June 1991 he is in Ashlock Hospital in New Delhi. He is diagnosed to have severe depression and anxiety neurosis and has been advised to rest for four weeks.
There are affidavits from Mr. Chabra, from his accountant, Mr. Alan Thompson, and from his son Brijmohan or “Cookie” Chabra. Cookie Chabra claims to have been a director of the company since the end of March and to hold a power of attorney from his absent father. According to these affidavits, Mr. Chabra and his wife left England to return to India before the writ was served. The date given in their affidavit evidence is 3 April 1991 and the reason given for departure is ill health. It appears that a doctor in Coventry signed medical certificates dated 3 April 1991 for both Mr. and Mrs. Chabra recommending, in each case, “early retirement.” Mr. and Mrs. Chabra appear to have lost little time in implementing the medical recommendation. They have not returned to Coventry and it does not appear from any evidence I have seen that they have any intention of returning to this country.
In these circumstances it has been contended on behalf of Mr. Chabra that the writ has not been duly served on him. By a motion Mr. Chabra seeks a declaration to that effect under
I shall refer to the terms of that order of 16 May. It contained the customary undertakings on the part of a plaintiff seeking such an order and then restrained Mr. Chabra until after judgment or further order in the meantime from removing from the jurisdiction, or otherwise disposing of or dealing with his assets within the jurisdiction, including and in...
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