Lisa SA v Lomax Trading Company Ltd
| Jurisdiction | British Virgin Islands |
| Judge | MOORE, J. |
| Judgment Date | 27 January 2000 |
| Neutral Citation | VG 2000 HC 7 |
| Court | High Court (British Virgin Islands) |
| Docket Number | CIVIL SUIT NO. 21 OF 1999 |
| Date | 27 January 2000 |
IN THE HIGH COURT OF JUSTICE
CIVIL SUIT NO. 21 OF 1999
Mr. Martin Mann Q.C.
Mr. Michael Fay for the Plaintiff
Mr. Ribin Potts Q.C.
Mr. Guy Phillips
Mr. Samuel J. Husbands for the Defendants
This case began by way of an ex parte summons seeking a Mareva Injunction or freezing order as they are called nowadays. These injunctions have been designed to assist plaintiffs by having the assets of a defendant frozen so that in the event of a successful claim against the defendant the resulting judgment could be satisfied out of the frozen assets. Applications of this kind are commonly made ex parte so that the unwary defendant is not alerted beforehand. The first intimation that a defendant has that anything is afoot is unusually the receipt of the freezing order when it is served upon him.
The Mareva order has, in nearly every case, the predictable effect of filling the unsuspecting defendant with dismay and galvanizing him into action in an attempt to have the noose of what has come to be called ‘this draconian order’ removed from around his neck. Draconian in double measure if it is accompanied by an order appointing a receiver.
The Plaintiff's ex parte summons was brought initially against the first three substantive defendants and against the first two discovery defendants. The plaintiff's net was, by the Order of the 3 rd November 1999, spread even wider so as to enmesh the 6 th to the 20 th substantive defendants and a third discovery defendant (No. 21.) World wide injunctions were granted against these BVI registered corporations.
Not unexpectedly, a degree of legal skirmishing has gone on between the parties since the making of the ex parte order on the 16 th of February 1999. The Court of Appeal has already ruled on one tussle which reached that level. By order made on the 10 th January, 2000, the Court of Appeal decreed that ‘Paragraph 2 (ii) of the Order.. made on the 3 rd November 1999 and the Appellants' obligations to comply therewith be stayed pending the determination of the Application by the Appellants (the 6 th to 13 th Defendants in the Court below) to discharge the said Order or further order.
This summons, which is inter partes is brought by the sixth to thirteenth defendants who describe themselves as the ‘New Corporate Defendants’, an appellation which I find convenient to adopt, seeking:
- An Order discharging the Order dated 3rd November 1999. Some thirteen grounds are stated; 2. Alternatively to paragraph 1 above, an Order discharging paragraph 3 of the Order (‘the Receivership Order’). Seven grounds are stated; 3. Further as alternatively to paragraph 2 above, an order discharging paragraph 4 of the Order (‘the Disclosure Order’). Eight grounds are stated; 4. Pending any discharge of the Order, an Order that the Plaintiff do forthwith give security to the satisfaction of the Court for:— (i) any Order which this Court may make pursuant to the undertaking given by the Plaintiff in paragraph (i) of Schedule 2 to the Order; and; (ii) such costs as the New Corporate Defendants may incur in these proceedings(including in particular the costs of this summons) and that, if such security is not given forthwith, the Order shall be discharged forthwith and this action shall be stayed. Three ground are stated. 5. Pending any discharge of the Receivership Order, an Order that the Receiver do forthwith give security as receiver to the satisfaction of the Court, in such manner and amount as the Court shall in its discretion direct. If the Receiver does not give such security forthwith, his appointment as receiver shall be discharged forthwith. 6. An Order that the Plaintiff do forthwith disclose the identity of each of the ‘confidential sources’ referred to in paragraphs 6 and 7 of the affidavit of Juan Guillermo Gutierrez Strauss sworn herein on 1st November, 1999. 7. An Order striking out the Writ and all proceedings pursuant thereto under Order 18, Rule 19 of the Rules of the Supreme Court and/or the inherent jurisdiction of the Court. Three grounds are stated. 8. Alternatively to paragraph 7 above, an Order that all further proceedings in this action be stayed as against the New Corporate Defendants. Three grounds are stated. 9. An Order that the costs of this application be paid by the Plaintiff to the New Corporate Defendants, such costs to be taxed on an indemnity basis and paid forthwith. 10. Such further or other relief and directions as the Court may think fit.
The further Defendants claim in their skeleton arguments that as a matter of principle and authority, the terms of the order went very considerably beyond what could be justified on any ex parte interlocutory application, intended merely to protect the Plaintiff's position until such time as the further defendants be heard.
There is considerable force in these contentions of the further defendants. It therefore behoves Plaintiffs seeking ex parte relief to apply only for what is reasonably necessary for the protection their interests rather than to craft their prayers in too sweeping and all encompassing terms thus heaping upon an as yet unheard defendant the burdens of complying with what could be in essence a draconian and oppressive order.
There has been bitter complaint about paragraph 2 (ii) of the order of the 3 rd November 1999. It is in identical terms to paragraph 16 th of the Order of the 3 rd February 1999 and so I will set it out in full before going further. The further Defendants are Ordered to:
‘Confirm the information given in writing pursuant to paragraph 2 (i) of this Order by way of an affidavit sworn by the directing mind (whether or not a de jure director of the respective Defendant and exhibiting all the documents in that respective defendant's power, possession, control or custody evidencing the information. Such affidavit together with exhibits must be served on the Plaintiff's solicitors within 21 days of the service of this Order on the respective Defendant.’
The ancient rule deriving from the canon law is that one who is in contempt may not be heard further in the same litigation for his own benefit, unless and until he has purged his contempt. But later, the rule seems to have been confined to applications made in the same proceedings as those giving rise to the contempt. This practice being coercive in nature was not universally applied. Thus a contemnor could be heard on an application to purge the contempt; or for the purpose of setting aside the order breach of which had put him in contempt. He is not precluded from defending himself in the action itself.
The House of Lords has confirmed that the question of whether the contemnor should be heard should be approached on the basis of a discretion which should be exercised flexibly, according to the circumstances, rather than on the basis of a rule. X Ltd v Morgan—Granpian (Publishers) Ltd [1991] a AC a at p 46per Lord Bridge.
As in the case of all discretions, the discretion should be exercised judicially as well as judiciously and not whimsically or capriciously. Thus, the conduct of the contemnor, may be a relevant factor for consideration: All of the relevant cirucumstances of the case must be considered. But even though the Court may hear a contemnor, he may still find himself liable to the sanctions open to the Court provided the correct procedures are followed and the requisite...
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