Jersey Unreported Judgments

[2006]JRC045

royal court

(Samedi Division)

22^nd March 2006

 

Advocate S. J. Young for the Plaintiff.

Advocate M. H. Temple for the First and Second Defendants.

Advocate J. C. Martin for the Fifth and Sixth Defendants.

Judgment

deputy bailiff:

1.        This is a matter that was begun by Order of Justice in May 2005.  The Order of Justice was amended in August, 2005.  It contained freezing orders and accompanying disclosure orders against all the Defendants.  The total claim is very substantial and at present is put at something approaching $95,000,000.  The Defendants have challenged the jurisdiction.  They say that Jersey is not the appropriate forum and they have also challenged the imposition of the interim injunctions.  The Bailiff ordered a stay of the disclosure orders against the First and Fourth Defendants on the 25^th August pending those challenges.  I have not been referred to the orders, but I am assured by all parties that similar stays were granted in respect of the disclosure orders against the other Defendants. 

2.        I gave a decision on the forum application on the 16^th January, 2006.  I dismissed the Defendants' applications and held that Jersey was the appropriate forum.  At that stage, because I immediately embarked on hearing the inter partes application to set aside the injunctions, I continued the stay until I had given my decision on the application to discharge the injunctions.  I gave that decision on the 10^th March, 2006, and in light of the shortage of time available then, I extended the stay until close of business this coming Friday.

3.        The Defendants have applied for leave to appeal against my decision in relation to the forum aspect.  In relation to my decision concerning the injunctions, I have granted them leave to appeal merely on the basis that I wished to ensure that that appeal, together with the forum application for leave to appeal, could be case managed so as to come before the Court of Appeal at its hearing in the week beginning 15^th May, 2006. 

4.        It is in these circumstances that Mr Temple submits that I should continue the stay; he says that that there are only two months to go and that irretrievable prejudice would be suffered by the Defendants if they had to make disclosure if it turns out that their appeals are successful.  

5.        Mr Young referred me to the case of Motorola Credit Corporation v Uzan & others [2002] 2 All ER (Comm) 945.  There, disclosure orders were made as being ancillary to worldwide freezing orders.  The judge had refused to stay the disclosure orders pending the challenge to the freezing orders and the Court of Appeal, by a majority, upheld his decision saying that in normal circumstances a disclosure order need not be stayed pending a challenge to the freezing order.  Mr Temple referred me to the case of Raja -v- van Hoogstraten [2004] 4 ALL ER 793.  That case concerned rather different matters such as contempt, but in passing Lord Justice Chadwick made some helpful remarks and I think it is worth citing them in full.  They begin at paragraph 104 as follows:-

" 104 - The problem in cases where an order for disclosure has been made at the same time as, and in order to give teeth to, a freezing order made without notice to the defendant, is that the freezing order may be set aside after hearing full argument on both sides.  If so, it will then be seen that there was no proper basis for the disclosure order.  But by that time the Defendant may have been irremediably prejudiced by the disclosure of assets which he should not have been required to disclose.  On the other hand, if it is held after full argument that the freezing order should stand, then the claimant may be irremediably prejudiced if the order has not been capable of being policed in the meantime. The court is faced with the position, (familiar, also, in other contexts), that whichever course it takes on an application which has to be decided without full argument may lead to irremediable prejudice to one side or the other.  There is a balance to be struck.

105 - The need to strike a balance between the prejudice to the defendant if he is required to disclose assets which it is later held he should not have been required to disclose and the prejudice to the claimant if the defendant is not required to disclose assets which it is later held that he should have been required to disclose, was recognised by this court in the Motorola case.  The decision in that case illustrates that there is no general rule that a party against whom a freezing order has been made is entitled to a stay of the disclosure obligations ancillary to that order until after it has been finally determined whether the freezing order should stand.  Indeed, it provides support for the proposition that, in a normal case, a stay of the disclosure obligations is likely to be refused.  But it is no authority for the proposition that the defendant will always be refused a stay of the obligation to make disclosure pending the final determination of his application to set aside the freezing order; no authority for the proposition that, notwithstanding that his application to set aside the freezing order is made before the time at which he has to make disclosure, the question whether or not the obligation to make disclosure should be stayed pending the final determination of that application need not be entertained by the court; and no authority for the proposition that, having made an application within time, he should not be heard on that application (or on the question of an interim stay) until he has first made the disclosure to which he objects."

6.        In my respectful judgment, Lord Justice Chadwick sets out the correct approach.  Mr Temple has of course referred me to the well known case of Veka AG v TA Picot Limited [1999] JLR 306 which says that a stay should be granted where an appeal would otherwise be rendered nugatory.  But that was given in the very different context of final orders and the like.  It seems to me that it is not directly applicable to the sort of matters which I am now considering and which were considered in both Motorola and Van Hoogstraten.

7.        I must therefore consider where the balance comes down in this case because it is a matter of judicial discretion and there is no absolute rule one way or the other; but I do endorse the proposition in Motorola which appears to be supported in Van Hoogstraten, that, in a normal case, a stay of the disclosure obligation is likely to be refused notwithstanding a challenge to a freezing order. 

8.        Considering the matter in this case, I consider that the circumstances have changed since the stay was originally granted.  At that stage the Defendants had not had an opportunity to get before the Court in order to challenge the jurisdiction or challenge the imposition of the injunctions.  There have now been lengthy and detailed inter partes hearings on both those aspects.  The Court has rejected their applications.  Furthermore it has found that there is a risk of dissipation and that the Plaintiff has a serious case to be tried.  In all the circumstances I consider that the balance comes down in favour of the Plaintiff at this stage.  There clearly is, in my judgment, a risk of dissipation.  The fact that the disclosure has not been granted for some time is, as Lord Justice Waller said in Motorola not a reason for saying that it should now not be granted in order to ensure that the Plaintiff can police the injunctions which have been granted. 

9.        In all the circumstances, I propose therefore to remove the stay on the disclosure orders.  As to timing, the orders were originally that the Defendants should make disclosure of the assets within seven working days, to be followed by an affidavit giving further information within a further ten working days thereafter.  I appreciate Mr Young's point that they have already had plenty of time, but I think overall the right course is now to re-impose that order.  Disclosure must therefore take place by the 31^st March, 2006.

Authorities

Motorola Credit Corporation v Uzan & others [2002] 2 All ER (Comm) 945.

Raja -v- van Hoogstraten [2004] 4 ALL ER 793.

Veka AG v TA Picot Limited [1999] JLR 306.