(1) Al-Rushaid Petroleum Investment Company (2) Al-Rushaid Parker Drilling Ltd (Both companies incorporated under the laws of Saudi Arabia) Claimants/Applicants v TSJ Engineering Consulting Company Ltd Defendant/Respondent
| Jurisdiction | British Virgin Islands |
| Judge | Hariprashad-Charles J |
| Judgment Date | 20 April 2010 |
| Neutral Citation | VG 2010 HC 12 |
| Judgment citation (vLex) | [2010] ECSC J0420-3 |
| Court | High Court (British Virgin Islands) |
| Date | 20 April 2010 |
| Docket Number | Claim No. BVIHCV(COM) 37 OF 2010 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
(COMMERCIAL)
Claim No. BVIHCV(COM) 37 OF 2010
Mr. Richard Evans and Ms. Tameka Davis of Conyers Dill & Pearman for the Claimants/Applicants
Mr. John Carrington of McTodman & Co for the Defendant/Respondent
Also present is Mr. Keith Edward Oliver, Senior Partner of Peters & Peters, London
Discovery - Applicants seek Norwich Pharmacal relief - Respondent purportedly used as vehicle for receipt of secret commissions - information sought to trace assets -existing proceedings commenced in England against directors/shareholders of Respondent - Respondent incorporated in the BVI - Respondent not party to English proceedings - Whether conditions for grant of relief satisfied - Whether alternative means to obtain disclosure exists - Whether previous disclosure order made against registered agent of Respondent persuasive
In their application filed on 24 March 2010, Al-Rushaid Petroleum Investment Company and Al-Rushaid Parker Drilling Company ("the Applicants") seek an order for disclosure of all documents in the custody, possession or control of TSJ Engineering ("the Respondent") (including documents stored electronically) relating to any bank account, funds or source of funding held by it, whether in its own name or on its behalf and where so ever held.
The Applicants form part of one of the largest groups of suppliers of equipment and services to the onshore and offshore oil industry in Saudi Arabia ("the Group").
The Respondent is a company registered in the British Virgin Islands ("BVI"). It was incorporated on 2 February 2006.
This application for disclosure has its genesis in a disclosure order made ex parte on 17 February 2010 in the Citco Proceedings 1 where the Court ordered that the registered agent of the Respondent, Citco BVI Limited ("Citco"), should provide disclosure of specified information including:
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a. provide copies of all documents in its custody, possession and control (including documents stored electronically) relating to any bank account or other source of funding in the name of or relating to the Respondent; and
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b. all information in its knowledge or records, about the ultimate beneficial ownership, members and directors past and present of the Respondent.
Citco complied with the terms of the Order. The disclosure revealed that (a) the beneficial owners, shareholders and directors of the Respondent were Mr. Shekhar Shetty, Mr. James Wight and Mr. Tom Caplis and (b) the sole bank account of the Respondent had been closed on 28 October 2009.
The Applicants state that Mr. Shetty was a longstanding and very senior employee of the Group 2. His employment began in 1982 and by September 2009, he had risen to the position of director of both of the Applicants 3. Mr. Caplis was employed as a vice president within the Group between 2000 and 2007 4. Mr. Wight was also employed by the Group although his details are not that clear 5.
It is the Applicants' case that the Respondent has been used as a vehicle for the receipt of secret commissions by these three individuals who owed fiduciary duties to them by reason of the positions which they held. They further allege that they are the victims of actionable wrongs (viz. diverting opportunities and profits) at the instigation of Mr. Shetty, Mr. Caplis and Mr. Wight.
The Applicants have brought claims in England for dishonest breach of fiduciary duties and in conspiracy against the beneficial owners. They allege that the information sought in the present application is made so as "to enable the Applicants to trace the destination of the funds that (it is believed on cogent grounds) were routed via the Respondenf'.
The Respondent trenchantly opposes the application and premises its objection on three broad grounds namely: (1) the Applicants have not disclosed any good arguable case entitling them to the disclosure of documents by the Respondent; (2) disclosure is available to the Applicants otherwise than in these proceedings and (3) there is no bar against the requested disclosure being sought in the English proceedings from the parties.
The background to this Application is the claim in the English proceedings HC10C0074 between Al-Rushaid Parker Drilling Limited (the "English Claimant") v Shekhar Shetty, Tom Caplis and James Wight (the "English Defendants") 6. The English Defendants are directors/shareholders of the Respondent. The English Claimant claims equitable compensation and an account from the English Defendants.
The material allegations in the Particulars of Claim in the English proceedings are well documented in the written submissions of learned Counsel for the Respondent, Mr. Carrington. For present purposes, I shall gratefully adopt them.
• The English Defendants owed fiduciary duties to the English Claimant, among other things, not to have any interest in any transaction made for the account of that Claimant; not to participate in any business competing with the Claimant or engage in any of the commercial activities carried on by the Claimant; not to receive any secret commission in respect of any transaction entered into by the Claimant; not to undertake any steps for the purpose or with the intention of securing such payments in future.
• The English Claimant found on Mr. Shetty's computer files an unsigned document dated 25 January 2006 headed "Consultancy Agreement" stated to be an agreement between the Respondent and a Chinese company called Shandong Kerui Petroleum Equipment Co. Limited ("Shandong Kerui").
• The Respondent's bank account at the Swiss bank of Pictet et Cie in Geneva, Switzerland was closed on 23 October 2009, five days after the solicitors for the English Claimant addressed a number of enquiries to Mr. Shetty's solicitors relating to the Respondent.
• The English Court is being asked to infer from these facts that the English Defendants procured the incorporation of the Respondent for purposes of procuring a and/or receiving secret commission in respect to the contract between the English Claimant and Shandong Kerui or alternatively, that the Respondent did enter an agreement with Shandong Kerui on the terms approximating those of the unsigned draft Consultancy Agreement.
• To date, the English Claimant has not seen any evidence of actual receipt by the Respondent of any secret commission in respect of the Shandong Kerui contract or otherwise in breach of the duties of the English Defendants.
• The English Claimant seeks an account from the English Defendants requiring full disclosure of their respective dealings with the Respondent and/or Shandong Kerui and/or full disclosure of any commissions received from Shandong Kerui and equitable compensation for the loss and damage incurred by its extensive and ongoing investigations in the alleged breaches of duty by the Defendants.
The present application is made to enable the Applicants to trace the destination of funds that were routed through the Respondent. It cannot be disputed that the present application is in aid of the English proceedings. Notably, the Respondent is not a defendant to those proceedings.
The principles on which the Court will grant Norwich Pharmacal relief are conveniently set out in the treatise, Gee on Commercial Injunctions 7. The power of the court to compel a third party to disclose information in its possession to enable a party to establish the identity of its wrongdoer and/or the wrongdoing has its genesis in the case of Norwich Pharmacal Co. v Commissioners of Customs & Excise. 8 It was held that a person who was innocently mixed up in the wrongdoing of another, so that he was more than a "mere witness", could be compelled to disclose the identity of the actual wrongdoer, in order that proceedings could be taken by the victim against the appropriate defendant. At page 175 of the judgment, Lord Reid stated:
"They seem to me to point to a very reasonable principle that if through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrong-doing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers. I do not think that it matters whether he became so mixed up by voluntary action on his part or because it was his duty to do what he did. It may be that if this causes him expense the person seeking the information ought to reimburse him. But justice requires that he should co-operate in righting the wrong if he unwittingly facilitated its perpetration."
Thus, for example, information has been ordered to enable the person wronged to identify a mole within the organization, 9 to trace assets which have been taken without the alleged fraudsters being alerted, 10 to locate assets upon which a judgment could be enforced, 11 to enable third parties to be identified who had themselves done nothing wrong but who had received letters containing allegedly false statements, 12 and to obtain information which is central to a contemplated claim, and which will show whether the applicant does have a good cause of action against a named person. 13
The Norwich Pharmacal principle has been further extended to embrace cases where what is sought is not only restricted to the identity of a wrongdoer but can extend to "… full information required for this purpose, including information about what the wrongdoer has done with his assets....
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