Dadourian Group Int Inc v Simms & Ors [2006] EWCA Civ 399

Case No A3/2005/0430[2006] EWCA Civ 399
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM the High Court of Justice
Chancery Division
Laddie J
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Tuesday, 11 th April 2006
Before
LORD JUSTICE WARDLADY JUSTICE ARDENLORD JUSTICE MOORE-BICK
Between
Dadourian Group Int. Inc.RespondentsSimms & OrsAppellants
(Transcript of the Handed Down Judgment ofSmith Bernal WordWave Limited190 Fleet Street, London EC4A 2AGTel No: 020 7421 4040 Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr Joe Smouha QC and Mr J Evans (instructed by Addleshaw Goddard) for Appellants – Jack and Helga DadourianMr Paul Simms (Appellant) in person & Mr Clive Freedman QC and Mr Charles Samek (instructed by Wallace LLP) for Respondents
Judgment
[1]These appeals arise out of the exercise by the court of its discretion to permit a party to enforce a worldwide freezing order (“WFO”), formerly called a worldwide Mareva order, in a foreign jurisdiction. We have not been shown any authority which decides how this discretion should be exercised and so this would appear to be the first time that this question has arisen directly on any appeal. In this judgment of the court, to which all members of the court have contributed, we set out guidelines to apply when an application for permission to enforce a WFO is made. A WFO is now an important interim remedy, having been principally developed by the courts in the last two decades of the twentieth century. There is now a specimen form of freezing order in the practice direction supplementing CPR 25. A freezing order enables the court to grant to a party who can show that he has an arguable claim against another party an order prohibiting that party from disposing of his assets to the amount of his claim. The principal benefit and objective of this type of order is that it prohibits a party against whom it is granted from dissipating his assets to defeat a judgment that the party obtaining the order may in due course obtain against him. In an appropriate case the WFO will prevent the party from dealing with his assets wherever they happen to be in the world. In that event, the WFO will usually contain an undertaking by the party who obtained the order not to seek to enforce it in another jurisdiction without its permission.[2]A major reason for requiring an undertaking is this form is to protect the defendant from a multiplicity of suits. However its very existence recognises that it may sometimes be necessary or desirable for the claimant to take separate proceedings in another jurisdiction. In this case, on a without notice application, Lewison J made an order (referred to below as “the Swiss variation order”) granting permission to enforce a WFO in Switzerland against the appellants. The appellants then applied to Laddie J to discharge the order. Laddie J refused. He held that the permission ought not to be set aside when the party who sought permission could show that there was a real prospect of assets in (in this case) Switzerland. The appellants’ main case on this appeal is that he misdirected himself in law in that he should have proceeded on the basis that the court should not give permission to enforce a WFO abroad if the party alleged to hold the assets can be brought before the English court. In our judgment, for the reasons explained below, this is too rigid an approach. The court has a discretion to grant permission whenever it considers it just so to do. Nonetheless, as we explain below, there is a range of factors which the court is likely to need to consider for this purpose.[3]In the next section of this judgment we give a summary of the background. We will then set out guidelines and explain the relevant principles. We will then apply those guidelines and principles to this case, which will require us to deal with the circumstances of this case in greater detail. There is a subsidiary application for permission to appeal as to the costs order which the judge made. We will deal with this at the very end of this judgment as it is a self-contained matter.[4]The appeals concern the position in advance of any trial and accordingly for the purposes of these appeals there are no findings of fact against any of the appellants. We should also add that there is no proprietary claim made by the respondents to assets held by the appellants.

Background

[5]At this stage we deal only with the background necessary for an understanding of our conclusions on the point of principle.[6]There are two appeals before us. The first defendant in this action Mr Paul Simms, who appears in person, brings one. The third and fourth defendants, Mr and Mrs Jack Dadourian for whom Mr Smouha QC appears, bring the other. By agreement Mr Smouha made his submissions first. The appeals are both against the order of Laddie J dated 16 February 2005. The judge dismissed the applications of all the appellants to set aside an order of Lewison J made without notice to the appellants and dated 13 February 2004. That order (“the Swiss variation order”) gave the respondents permission to enforce in Switzerland the WFO that they had obtained against the appellants. They obtained the WFO first by the order of Lindsay J dated 3 February 2004 and then, on the expiry of that order, by the order of Lewison J dated 13 February 2004. On the latter occasion, Mr and Mrs Dadourian did not appear. Where it is necessary to do so, I refer to this below as “the Lewison J WFO”.[7]The WFOs were also granted against the second defendant in this action but he was not a party against whom the Swiss variation order was made and so we need not refer to him hereafter.[8]The respondents’ claims against the appellants are substantial. We can take the essential facts from the judgment of the judge:
“3. This litigation arises out of an arbitration between the claimants and a company called Charlton Court plc (“Charlton”). In essence, the claimants and Charlton entered into an agreement relating to the manufacture of hospital beds and related equipment. The agreement went sour. In November 1998 Charlton brought breach of contract proceedings against [the first respondents] and claims of fraudulent misrepresentation against [the second and third respondents]. Those proceedings were commenced in the Supreme Court, New York County in the United States of America. 4. In the spring of 1999 the US District Court, Southern District of New York halted the action. It ordered that it be determined by arbitration pursuant to an arbitration clause in the Charlton [the first respondent] contract. That was to include the claims against [the second and third respondents]. The arbitration was commenced very shortly thereafter. The respondents counterclaimed for, amongst other things, fraudulent misrepresentation. 5. In July 2002 the arbitrator dismissed Charlton’s claims on the ground that it had failed to provide security in response to an order to do so. He also upheld [the first respondent’s] counterclaim for fraudulent misrepresentation. I should mention that an attempt by Charlton’s side to have the arbitrator removed for bias failed. The arbitrator held that the fraudulent misrepresentation had been made by Mr Simms and another individual, Selim Rahman, the second defendant. Apparently during the course of the arbitration Mr Simms gave evidence that Jack and Helga Dadourian were shareholders in Charlton via nominee offshore entities or trusts. 6. The arbitrator made an order in the claimants’ favour in the sum of $4.5 million. None of it has been paid. This has led to the current English proceedings. …”
[9]The causes of action in these proceedings include fraudulent misrepresentation and conspiracy.[10]Mr Simms, the first appellant and first defendant in this action, was a solicitor with an international commercial practice. He is no longer a solicitor, having been struck off the Roll on 2 February 2004 following proceedings before the Solicitors’ Disciplinary Tribunal. It is alleged that he was a close adviser of the second and third appellants, and an intermediary between them and their Swiss bankers and advisers.

The material terms of the Lewison J WFO

[11]The Lewison J WFO prohibited the disposal by the appellants of their assets, wherever situate, up to $5.5m. None of the appellants now suggests that the WFO should not have been granted. The WFO extends to all the assets of each of the appellants:
“… whether or not they are in his own name and whether they are solely or jointly owned. For the purpose of this order the Respondent’s assets include any asset which he has the power, directly or indirectly, to dispose of or deal with as if it were his own, and the Respondent is to be regarded as having such power if a third party holds or controls the asset in accordance with his direct or indirect instructions.”
[12]However, the respondents could not enforce the WFO in a foreign jurisdiction unless the court gave its permission because of the undertaking to the court not to do so. The undertaking was set out in the WFO and read:
“The Applicant will not without the permission of the court seek to enforce this order in any country outside England and Wales or France or seek an order of a similar nature including orders conferring a charge or other security against the Respondent or the Respondent’s assets, other than in those jurisdictions.”
[13]This undertaking is based on the form of order stipulated in the Civil Procedure Rules (“CPR”). The Swiss variation order was made pursuant to this undertaking.[14]The WFO contained a number of other provisions based on the example of a form of order set out in the practice direction supplementing CPR 25, including terms about the extra-territorial effect of the[15]The key point is that, if the respondents obtain the permission of the court to enforce the WFO in Switzerland, they can enforce the WFO against assets there if they can obtain from the Swiss court an order that declares that the order is enforceable by the courts of that jurisdiction: see para. 19(2) (c).[16]In addition to the above provisions, when the WFO was granted, the respondents, as is usual, gave a number of undertakings to the court that were also set out in the WFO. The court attaches great importance to these undertakings and breach of them would be a serious matter. These undertakings included the usual undertakings to pay damages should it be found that the party applying for the order should pay damages to the other party, to provide a copy of the court’s order to persons notified of the court’s order, to pay the costs and damages to third parties and not without the court’s permission to use the information obtained under it except for the for the purpose of the instant proceedings. These undertakings were as follows:
“(1) If the court later finds that this order has caused loss to the Respondent, and decides that the Respondent should be compensated for that loss, the Applicant will comply with any order the court may make. (2) Anyone notified of this order will be given a copy of it by the Applicant’s legal representatives. (3) The Applicant will pay the reasonable costs of anyone other than the Respondent which have been incurred as a result of this order including the costs of finding out whether that person holds any of the Respondent’s assets and if the court later finds that this order has caused such person loss, and decides that such person should be compensated for that loss, the Applicant will comply with any order the court may make. (4) . . . (5) The Applicant will not without the permission of the Court use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in England or Wales or in any other jurisdiction other than this claim.”
[17]Mr Simms applied for permission to appeal against the WFO but this was refused by Dyson LJ on 13 May 2004. Accordingly the appellants no longer challenge the making of that order.

The Swiss variation order

[18]The respondents had difficulty in locating the assets of Mr and Mrs Dadourian. The latter appear to have few assets in their own name but to be interested in trusts set up abroad. By 13 February 2004, the respondents had identified the possibility of assets in Switzerland which they considered were assets of the appellants to which the WFO applied. These included bank accounts and trust’s assets. Although this was not explained to the court, they wanted to enforce the WFO against assets held by a bank (which I will call “the Swiss Bank”) and the trust. The Swiss bank was Canadian Imperial Bank of Commerce (referred to in some of the witness statements as “CIBC”) which subsequently became Credit Agricole Suisse. The respondents applied to Lewison J for permission to do so, which he gave in the form of the Swiss variation order.[19]The critical part of the Swiss variation order was as follows:- “The applicant has permission and is authorised to enforce the order in Switzerland [viz the WFO of 13 February 2004] and to seek in Switzerland an order of a similar nature, including orders conferring a charge or other security against the respondents or the respondents’ assets.”[20]Thus the Swiss variation order gave the respondents permission to obtain orders which conferred greater rights over the appellants’ assets than were conferred by the WFO.

Events in Switzerland following the Swiss variation order

[21]Both parties have put in evidence as to events which have occurred since the Swiss variation order. In brief, what happened was that the respondents sought to obtain orders in Switzerland against the appellants for the enforcement of the WFO made by Lindsay J and the Lewison J WFO, an order prohibiting the applicants from reducing their assets, including funds held by the Swiss bank, whether legally or beneficially owned, an order preventing the Swiss bank from disposing of any of the appellants’ assets, including those held on trust by third parties and further relief including an order for costs against the appellants.. The relief included orders preventing the disposal of funds held or owned at the Swiss bank.[22]The original order of the District Court in Zurich dated 20 February 2004 merely enforced the WFO made by Lindsay J on 3 February 2004, rather than the Lewison J WFO, and dismissed the other applications. This was the position at the time of the application to Laddie J who directed the respondents to withdraw any relief in Switzerland relating to the order of Lindsay J. The respondents appealed to the Supreme Court of the Canton of Zurich which on 21 March 2005 upheld their appeal to the extent only of granting a declaration of enforceability in relation to the Lewison J WFO and discharging the order of the District Court in relation to the order of Lindsay J. The respondents had withdrawn the appeal in relation to assets to which Mrs Dadourian was only economically entitled, and in relation to the relief sought against the Swiss bank.[23]In the end, therefore the Swiss courts gave relief only as against the appellants. However, in due course the trust was made a party to the English proceedings in which the respondents obtained a WFO against the trust. Thus, the effect of the Swiss proceedings was that the respondents obtained little, if anything, which they had not obtained in the English proceedings. In the result, as between the parties, these appeals may concern little more than costs. As to that, we are told by Mr Smouha that some £150,000 has been expended in costs by the parties in appearing before the judge and now on this appeal.

The issue of principle

[24]We can now turn to the issue of principle which we identified at the start of this judgment. To do this we do not need to set out the cases which show how the courts developed the WFO jurisdiction. It is enough to say that this court held in Derby & Co Ltd v Weldon [1990] Ch 48 that a freezing order could be made in respect of assets which were outside the jurisdiction. However, the making of the order in respect of foreign assets is a serious step and the risks of refusing this relief must justify it. There is an obvious risk of oppression to the defendant and third parties. To meet the court’s concerns about the risk of oppression to the defendant arising from the commencement of proceedings abroad, the plaintiffs in Derby v Weldon offered an undertaking not to seek (among other things) to enforce the WFO abroad without the permission of the court. As explained above that undertaking is now ordinarily given when a WFO is made. There was, however, little discussion in Derby v Weldon about the circumstances in which the court would give its permission, save for the following passage from the judgment of Nicholls LJ at page 59. He held:
“In the present case the plaintiffs propose that this point should be dealt with by the plaintiffs giving to the English court an undertaking in terms which will preclude them from making any application to a foreign court to enforce the order without first obtaining leave from the English court. This seems to me to be a convenient course. If this undertaking is accepted, and an order is made, it would then be for the judge of the English court to whom any application for such leave might be made to consider, amongst other matters, whether the enforcement of the order in the country or countries for which leave is sought will, under the law of that country, result in the order having a substantially similar effect there to a Mareva restraint order in this country, as distinct from the order having there a more far-reaching effect (such as the assets in the country being attached as a form of security for the plaintiffs’ claims, which is not the object of a Mareva restraint order). On any application for such leave, which normally would be inter partes, the judge can be expected to have before him what we do not have, namely, evidence of the law and practice in the country or countries in which the order is sought to be enforced. The undertaking, I add, is being offered by all the plaintiffs, which include amongst their number English companies whose substance has not been questioned. So the undertaking is a worthwhile one.”
[25]Nicholls LJ contemplated, therefore, that the court would consider a range of matters, but that in particular it would consider the form of relief that might be obtained abroad, and evidence as to the law and practice of the foreign jurisdiction. With the benefit of these observations, a number of guidelines can in our judgment be stated about the exercise of discretion to grant permission to enforce a WFO abroad. We refer to these guidelines below as the Dadourian guidelines. We will now set out the guidelines, and in the paragraphs that follow below we set out commentary on each of the guidelines in turn. Guideline 1: The principle applying to the grant of permission to enforce a WFO abroad is that the grant of that permission should be just and convenient for the purpose of ensuring the effectiveness of the WFO, and in addition that it is not oppressive to the parties to the English proceedings or to third parties who may be joined to the foreign proceedings. Guideline 2: All the relevant circumstances and options need to be considered. In particular consideration should be given to granting relief on terms, for example terms as to the extension to third parties of the undertaking to compensate for costs incurred as a result of the WFO and as to the type of proceedings that may be commenced abroad. Consideration should also be given to the proportionality of the steps proposed to be taken abroad, and in addition to the form of any order. Guideline 3: The interests of the applicant should be balanced against the interests of the other parties to the proceedings and any new party likely to be joined to the foreign proceedings. Guideline 4: Permission should not normally be given in terms that would enable the applicant to obtain relief in the foreign proceedings which is superior to the relief given by the WFO. Guideline 5: The evidence in support of the application for permission should contain all the information (so far as it can reasonably be obtained in the time available) necessary to make the judge to reach an informed decision, including evidence as to the applicable law and practice in the foreign court, evidence as to the nature of the proposed proceedings to be commenced and evidence as to the assets believed to be located in the jurisdiction of the foreign court and the names of the parties by whom such assets are held. Guideline 6: The standard of proof as to the existence of assets that are both within the WFO and within the jurisdiction of the foreign court is a real prospect, that is the applicant must show that there is a real prospect that such assets are located within the jurisdiction of the foreign court in question. Guideline 7: There must be evidence of a risk of dissipation of the assets in question. Guideline 8: Normally the application should be made on notice to the respondent, but in cases of urgency, where it is just to do so, the permission may be given without notice to the party against whom relief will be sought in the foreign proceedings but that party should have the earliest practicable opportunity of having the matter reconsidered by the court at a hearing of which he is given notice.[26]It should be emphasised at the outset that the grant of permission to take proceedings abroad to enforce a WFO is a discretionary exercise. The court must exercise the discretion in the way that seems to it most just and convenient. It is not possible to foresee all the circumstances in which applications of this kind can arise, and accordingly, justice is most likely to be achieved if judges have the maximum flexibility as to the circumstances in which, and the terms on which, an order will be made.[27]A primary reason for giving permission to enforce a freezing order abroad is that in the particular case under consideration it is the way in which the WFO is most likely to be rendered effective to safeguard the position of the applicant in relation to assets which exist, or are thought to exist in the relevant jurisdiction. Those assets must of course be ones to which the WFO applies. Issues often arise about ownership of such assets. In some cases issues as whether property held by third parties is in fact owned by the defendant may also more easily be determined and managed by the courts of the jurisdiction where that asset or third party is located than in the English courts.[28]A court that grants a WFO must control the proliferation of foreign proceedings to enforce the WFO as the grant of the WFO might otherwise become oppressive. The court has an ongoing responsibility for seeing that the WFO is not oppressive. However, where the need to enforce the order abroad is shown, the court can in our judgment retain that control by the terms on which it grants its permission (see guideline 2, below). In other words, as we see it, there is no need for the court to have as its preferred option, as submitted by the appellants in this case, that the court should not grant permission, where there is or is likely to be a dispute as to who owns the asset, unless it considers that the dispute cannot be resolved in the English proceedings.[29]If the dispute is more properly fought out in the English courts, it would be possible to follow the procedure laid down by Lloyd LJ, with whom Sir George Waller agreed, in SCR v Masri [1985] 1 WLR 876, as follows:
“(i) Where a plaintiff invites the court to include within the scope of a Mareva injunction assets which appear on their face to belong to a third party, e.g. a bank account in the name of a third party, the court should not accede to the invitation without good reason for supposing that the assets are in truth the assets of the defendant. (ii) Where the defendant asserts that the assets belong to a third party, the court is not obliged to accept that assertion without inquiry, but may do so depending on the circumstances. The same applies where it is the third party who makes the assertion, on an application to intervene. (iii) In deciding whether to accept the assertion of a defendant or third party, without further inquiry, the court will be guided by what is just and convenient, not only between the plaintiff and the defendant, but also between the plaintiff, the defendant and the third party. (iv) Where the court decides not to accept the assertion without further inquiry, it may order an issue to be tried between the plaintiff and the third party in advance of the main action, or it may order that the issue await the outcome of the main action, again depending in each case on what is just and convenient.”
[30]However, it is possible that the foreign court will have some similar process. Accordingly, even accepting Mr Smouha’s argument that the third party will want to have the dispute resolved, it need not follow that the third party should be joined to the English proceedings for this purpose. If the dispute is resolved in favour of the claimant, Mr Smouha recognises that it may be necessary at that stage for the court to give permission for the WFO to be enforced abroad. On this basis, the preferred route favoured by Mr Smouha will not remove the need for permission to be granted at that later stage, and that is another reason in our judgment for rejecting his argument that the English court should have a preference for joining the third party into the English proceedings, wherever possible.[31]It may be suggested that a third party needs to be joined to the English proceedings to obtain the benefit of the undertaking to compensate third parties for their costs incurred as a result of the WFO (“the costs undertaking”). In our judgment, this undertaking can be extended to protect him without his being joined as a party, as part of the terms imposed by the court (see guideline 2, below).[32]The discretion to grant permission is one to be exercised in the light of all the circumstances. It follows from this that consideration should be given to all the options that are feasible in the light of those circumstances. Such options would undoubtedly include the option of granting permission on terms, for example by stipulating the type of actions to be commenced abroad and the number of actions that may be brought with the court’s permission and by requiring the claimant in appropriate circumstances to report back to the court.[33]If a third party is not to be joined to the English proceedings, the court is likely to want to consider whether he should have the benefit of an extension of the costs undertaking. (In an appropriate case, security may be required to be given to support any such extension.) It may be that third parties should also be given liberty to apply in the English proceedings for the purposes of an application to revoke the permission. These terms will help to reduce the risk of oppression to the third party as a result of the grant of permission. But the court may conclude that the question of what safeguards should be given to protect the interests of a third party should be left to be dealt with by the foreign court in accordance with its normal practice.[34]Consideration should also be given to the option of refusing to give permission and leaving the claimant to litigate the matter in England. This will often be possible even if it means that a new party has to be joined to the proceedings. However, we accept Mr Smouha’s submission that a person holding assets which the claimant contends belongs to the defendant could be served with the English proceedings even though he is himself out of the jurisdiction on the ground that he is a necessary and proper party: see Judgments Regulation, art 6(1) and the Lugano Convention, art 6(1), where the Judgments Regulation and the Lugano Convention respectively apply, and in other cases, CPR 6.20(3).[35]Likewise the court must be astute to see that there is a real prospect that something will be gained by starting proceedings abroad. In retrospect, in the present case, as already noted, the respondents obtained little if anything that they could not have obtained in the English proceedings. The benefit to be obtained by the claimant by commencing proceedings abroad must be proportionate to the cost and inconvenience to the defendant of defending the foreign proceedings as well as the English proceedings. In considering the various options the court should consider the extent to which the objections to giving permission could be met by imposing a requirement for an undertaking to be given by the claimant, including for example an undertaking to return to the court if there is a material change in circumstances.[36]If the court decides that it is appropriate for it to give permission, consideration should be given to the form of the order, in particular the scope of the permission given to the applicant, the terms on which it is given and any restrictions to be placed on the permission. The permission will inevitably be restricted to enforcement in a specified jurisdiction and against specified defendants. But, over and above that, the court will need to bear in mind that the mere fact that the undertaking, not to seek to enforce the order abroad, was given in unqualified terms does not mean that the court’s permission with respect to enforcement should also be in unqualified terms.[37]In exercising its discretion, the court should balance the interests to the claimant against those of the defendant and any other party who is likely to be joined to any proceedings in the foreign court. So far as the claimant is concerned, he is at first sight entitled to take reasonable steps to ensure that the WFO provides him with effective safeguards against dissipation and to take steps in foreign courts where it is necessary to do so to obtain that safeguard. As Robert Walker J said in International Credit and Investment Co Ltd v Adnam [1998] BCC 134 at 136:
“... it has become increasingly clear, as the English High Court regrettably has to deal more and more often with major international fraud, that the court will on appropriate occasions, take drastic action and will not allow its orders to be evaded by the manipulation of shadowy offshore trusts and companies formed in jurisdictions where secrecy is highly prized and official regulation is at a low level.”
[38]On the other hand, so far as the defendant is concerned there is the risk of oppression from a multiplicity of suits and the costs which the foreign proceedings will generate. How serious this is depends on such matters as what litigation is contemplated and the other pressures on the defendant from the English litigation.[39]In the case of the third party, once the court reaches the conclusion that the claimant has shown proper grounds for bringing some proceedings against the third party, the court should weigh up the inconvenience to him of being sued in this jurisdiction as against the inconvenience to him of being sued in the foreign jurisdiction in which the claimant proposes to sue him. However, less weight needs to be given to the interests of a third party who is not independent of the parties against whom the WFO was obtained.[40]It is well established that under English law a WFO only operates in personam and does not give the claimant any interest in the assets which fall within its scope. In many foreign jurisdictions, however, orders designed to fulfil a broadly similar purpose may give the person who obtains them priority over other creditors in the event of insolvency. In principle the permission given to the applicant should not enable him to obtain relief in the foreign proceedings unless it is equivalent to the relief obtained in the English proceedings, and no more. By contrast, the terms of the Swiss variation order quoted above contemplate that a charge may be obtained, although (as explained) the WFO itself conferred no security interest. The order should not give the applicant permission to obtain a superior form of protection in the foreign court without good reason. If the only form of relief available in the foreign court is one which is more extensive than the WFO, the court may be less willing to grant its permission to take proceedings abroad. In an appropriate case, however, it may do so. The applicant should bear in mind that it may be necessary to provide evidence of the range of orders available under foreign law in order that the court can make a properly informed choice as to whether to grant permission to seek a superior form of relief abroad (see guideline 5 below).[41]To enable the court properly to exercise its discretion, the evidence in support of the application should set out the facts relevant to the court’s consideration of the grant of permission with care and in sufficient detail to enable the court to reach a properly informed decision. Scrutiny of this evidence is another way in which the English court exercises control over the enforcement of the WFO. The party seeking permission should file evidence describing the nature of the proceedings which it proposes to commence in the foreign jurisdiction if permission is granted, including details of the names of the parties whom it is proposed to sue and (so far as known) details of the property against which it is desired to enforce the WFO.[42]We recognise, however, that the stage of investigating the existence of assets belonging to the defendants and the stage of enforcement of the WFO against those assets cannot be kept wholly separate and that the claimant may not be able to identify with certainty the assets against which it desires to enforce the order.[43]The evidence supporting the application for permission should also describe the relevant law and practice of the foreign court. This should cover such issues as whether the foreign court would be likely to grant the order to be sought, on what basis the foreign court would allow proceedings against a third party who was holding assets alleged by the claimant to belong to the defendant and whether its procedures would grant the defendant (and the third party) the right of access to court, and of a fair trial on any issue in dispute, guaranteed by the European Convention of Human Rights. That is relevant to the question of oppression. The evidence should also, where practical, cover issues such as how long the proceedings are likely to take and, if costs are to be sought against any party, what they are likely to be. It may also be desirable for the evidence to set out the range of other orders that the foreign court may make in the circumstances, particularly where the court is being asked to permit the applicant to seek abroad a form of relief which is superior to that conferred by the WFO (as to this, see guideline 4 above).[44]The evidence should also cover the extent to which the foreign court is likely to be familiar with a WFO. Clearly the more familiar the foreign court is with a WFO, the more predictable the result of the foreign proceedings will be. However, it does not seem to us that it would necessarily be an objection to giving permission that the evidence shows that the foreign court would grant interim relief against assets held by a third party whose ownership is disputed by the defendant on some lower threshold than an English court. That would merely be one of the factors which the court would have to consider.[45]In some cases there may be evidence that the defendant is present within the jurisdiction of the foreign court. In such cases the court can more readily give permission for proceedings in that jurisdiction of a kind that would enable the foreign court to exercise its personal jurisdiction over the defendant.[46]The evidence about the practice of the foreign court will be relevant to the court’s assessment of the risk of inconsistent judgments. Mr Smouha drew the court’s attention to this risk. This again is something that court should consider and weigh in the balance. It may occasionally be possible to take steps to avoid a duplication between the issues which have to be decided in both courts. It may be that the risk can in some way be mitigated by conditions imposed on the claimant. It may be that the risk is more theoretical than real.[47]The court will need to satisfy itself that the proceedings in the foreign court are necessary and justified. For this purpose, the claimant does not in our judgment have to show that assets are likely to exist but merely that there is a real prospect that such assets exist. This is a sufficiently high test because of the safeguards which the court can impose in other ways to protect the interests of the persons against whom an action may be taken by the claimant in the foreign proceedings. It may appear more logical that the court should not permit a claimant to seek to enforce a WFO against assets whose ownership is disputed prior to resolution of that dispute, but, where there is a risk that the assets will be spirited away in the meantime and of the claimant going unpaid, logic has to give way to that course of action which appears to the court to be most likely in practice to be productive of justice between all the affected parties. That is likely to involve the taking of immediate steps to hold the position until the dispute as to ownership is resolved.[48]The court needs to be satisfied that there is a risk of dissipation of the assets in relation to which the claimant wishes to bring the foreign proceedings. However, if there is a real prospect that the assets are beneficially owned by the defendant this burden is likely to be discharged by the evidence already filed in the English proceedings.[49]The application for permission to enforce a WFO abroad should be on notice to the other parties unless the party seeking permission shows that there is a good reason for the application to be made without notice, as where there is a real risk that the assets may be removed from the jurisdiction of the foreign court if notice is given. If an order is made without notice, the order should be made on the basis that an application should be made on notice to renew it, and that will expire unless renewed. Nevertheless, the order giving permission should be served immediately unless the court gives permission otherwise, which it may do under CPR 23.9. To defer service may prevent or hinder a party from applying to discharge the order or from appealing to a higher court, and so such an order should only be made for good reason and for the shortest practicable period.

General caveat

[50]We have formulated the above guidelines in an attempt to bring together the extensive submissions made to us by both counsel, for which we are very grateful. There is inevitably some overlap between them. However, the guidelines should not be treated as exclusive of any other matter which in the particular circumstances of an individual case needs to be considered. Judges will obviously be alert to such matters, and the advocates should draw such matters to their attention and include them in their submissions.

Application of the Dadourian guidelines to the judgment of Laddie J

[51]We now return to the present case. The appendix to this judgment summarises the judgment of the judge. The crucial part of the judgment is quoted verbatim.[52]The judge did not have the benefit of all the submissions made on these appeals. The principal submission Mr Smouha made to us was that the court should order the joinder to the English proceedings of a the third party alleged to be holding any assets within the scope of the WFO but located in the foreign jurisdiction, unless some good reason to the contrary was shown. The English court could then extend the WFO to the third party. (That route was referred to in argument as route B.) He also submitted to us that the judge should have applied the test of good arguable case to the existence of relevant assets in the foreign jurisdiction. As we have rejected both these submissions in the commentary accompanying the Dadourian guidelines, those submissions cannot undermine the judge’s judgment.[53]However it is also clear that there were other matters which the judge did not consider. These include the question of possible oppression of the third parties whom it was proposed to join to the proceedings in Switzerland, evidence as to the law and practice in Switzerland, and the terms on which the Swiss variation order should have been made or should be continued.[54]In our judgment it follows that the exercise by the judge of his discretion to refuse to discharge the Swiss variation order must be set aside. On that basis it falls to this court to exercise that discretion in his stead. In those circumstances this court is entitled to have regard to matters now in evidence even if the evidence of them was not before the judge and indeed even if they had not then occurred.[55]The fact that further evidence for example as to Swiss law needed to be filed does not mean that it would be a wrong exercise of discretion to refuse to discharge the Swiss variation order. If the judge had appreciated that such evidence ought to have been produced, he would have merely adjourned the application for a short period to enable it to be filed, or accepted what he was told on instructions on the basis of an undertaking by the advocate to the court to confirm all such matters in a witness statement to be filed with the court after the hearing. In our judgment there would have been no difficulty in obtaining satisfactory evidence or instructions as to Swiss law and practice. The appellants have not in our judgment pointed to any matter which, under the Dadourian guidelines, should have been considered which would have prevented the exercise by the judge of his discretion to continue the permission given by the Swiss variation order.[56]We are also satisfied that there was no other consideration in this case which would have caused the court to discharge the Swiss variation order. The appellants argue that subsequent events have shown that the grant of permission to enforce the proceedings in Switzerland was unnecessary. But that does not mean that it was not right to grant the relief at the time and if it was right then it should not now be discharged except in a case of necessity (which is not present) since to do so may affect the incidence of costs. We note that the Swiss variation order permitted the respondents to obtain a charge over assets in Switzerland and that there was and is no evidence which would justify this. (We do not exclude the possibility that there might be such evidence in other cases, for example where the court has no power to grant a provisional measure equivalent to a freezing order but only power to grant for example a nantissement or saisie conservatoire.) In the light of the lack of evidence we would have discharged that part of the Swiss variation order which gives permission to obtain a charge or other security. However, it is not in our judgment necessary to do this because the respondents no longer seek relief in Switzerland and would have to return to the court for a fresh order if they changed their position on this.[57]In our judgment a major consideration supporting the grant of relief in this case is the fact that Mr and Mrs Dadourian have clearly sought to hinder the claimants in their pursuit of assets within the scope of the WFO. The evidence before us shows that there have been many applications to judges of the Chancery Division seeking relief against them since the WFO was granted. We have counted about ten orders against them. The applications against them include two further applications to enforce the WFO abroad, in France and the USA respectively. In the event, the application in relation to France was withdrawn. Of course the number of applications and orders does not of itself meant that Mr and Mrs Dadourian have failed to co-operate with the respondents in identifying the assets subject to the WFO but there is one instance at least where they have clearly done so and this is in relation to Brinton Establishment (“Brinton”). We explain briefly below the events which support this point though we do not set out all the events that have occurred in relation to Brinton as it is unnecessary for us to do so to support the point we are making.[58]Mr and Mrs Dadourian’s evidence filed in these proceedings is that Mr Dadourian, who is some 85 years of age, has transferred virtually all his assets to Mrs Dadourian. Her evidence in turn is that she has transferred most of these assets to a trust of which she is a potential discretionary beneficiary. She originally declined to disclose the name of the trust but an entity known as Azuri Limited (“Azuri”), and alleged by the appellants to be a nominee of the trust, was ordered by Evans-Lombe J to make this disclosure. The trust is Brinton. Mrs Dadourian, however, disclosed that the trust provided Mr and Mrs Dadourian with an income of about $100,000 per year. In addition, they are entitled to occupy rent-free(1) a property in France owned indirectly by Azuri and(2) a further property in Lennox Gardens in London. Mrs Dadourian’s evidence is that the trust was entitled to the ultimate beneficial ownership of both properties. The trust was also on her evidence responsible for the outgoings and rent on a property in Florida which Mr and Mrs Dadourian also occupied (rent-free) for part of the year. All this would suggest that the trust had a substantial positive net worth. As we shall explain in the next paragraph, however, that impression was shown to be false.[59]In due course the respondents applied to the court for a freezing order and other relief against Azuri. After an initial hearing before David Richards J, the matter came before Mr Edward Bartley Jones QC, sitting as a deputy judge of the Chancery Division. He gave judgment on 13 July 2005. In his judgment he notes the reluctance by anyone involved with Azuri or Mrs Dadourian to disclose information concerning Brinton. He referred to the order dated 22 April 2005 of Evans-Lombe J requiring Azuri to provide details of the entity which was subsequently disclosed to be Brinton. Mr Bartley Jones drew the inference that Mrs Dadourian was concerned that the respondents should not discover the name of Brinton and that Azuri was anxious to follow the wishes of Mrs Dadourian. Mr Bartley Jones also records in his judgment that Mrs Dadourian described Brinton as holding significant assets on a discretionary basis. She describes the potential beneficiaries as including children and later descendants of Mr Dadourian. She states that she is merely one of a list of potential beneficiaries. Mr Bartley Jones contrasts this evidence with evidence of Dr Grabher on behalf of Azuri to the effect that Mrs Dadourian is the named principal beneficiary but that she has no entitlement to payments made by Brinton. In the result, Mr Edward Bartley Jones continued a WFO previously made by David Richards J on 22 March 2005 against Brinton. In addition he joined Azuri to the proceedings. He directed an issue to be tried as to whether the assets of Azuri (and by necessary implication Brinton) were assets of Mr or Mrs Dadourian available to satisfy any judgment obtained by the respondents against them. The respondents served the freezing order on a director of Brinton, Dr Marxer. The order required him to disclose the assets of Brinton. He disclosed that Brinton owned a mere $9,514.52 but he did not disclose any other assets. The solicitors for Mr and Mrs Dadourian wrote to Dr Marxer to query this. Dr Marxer’s firm in Lichtenstein replied giving notice of a meeting of Brinton for 10 November 2005. The letter merely proposed that the legal structure and position of Brinton should be explained in the presence of Mr Simms as representative of Mr and Mrs Dadourian.[60]As far as we can see there is no satisfactory explanation before this court for the discrepancies in the evidence regarding the asset position of Brinton. Those discrepancies throw considerable doubt on the reliability of the evidence of Mr and Mrs Dadourian as a complete and accurate disclosure of the existence and location of assets within the scope of the WFO. We shall return to the question of the location of those assets below.[61]We turn to consider the position of Mr Simms. His case is that there is no evidence of any assets in Switzerland belonging to him. Strictly that is correct. However, there is evidence of a close working relationship between him and Mr and Mrs Dadourian and between him and the Swiss bank. This is contained for example in the affidavit of Michael Clarke, a partner in the respondents’ then solicitors, sworn on 13 February 2004 in support of the application for the Swiss variation order. He stated: “7. At page 302 of bundle MPC1 there is a copy of a letter written by First Defendant, Mr Simms, to Mr Moser at CIBC Zurich on 8 January 1998 in which Mr Simms requests Mr Moser to telephone Helga Dadourian and then to send to Mr Simms a draft “letter of comfort”. 8. Having read the transcript of notes taken at the Disciplinary Tribunal by a shorthand writer engaged by the Claimants. I can say that Mr Simms gave evidence to the Tribunal to the effect that he knew CIBC in Zurich, that he had been to the Bank and met senior officers of the Bank and (in other parts of his evidence under cross examination) reference was made by Leading counsel for the Law Society to a letter from Mr Moser (qv.) at that Bank in relation to Hackar Funding Corporation, a company of which Mr Simms admitted to being a Director in 1998. Although the precise terms of the letter from Mr Moser and the nature of the First Defendant’s business with the Bank in Zurich is not clear from the note, I believe that the First Defendant may have business relations with CIBC in Zurich. 9. In paragraph 54 of my first Affidavit I referred to the finding of the arbitration tribunal in litigation arising from the fraudulent sale by Jack Dadourian of 500,000 tonnes of wheat in Uzbekistan in which the tribunal said: ‘Following the judgments given against him in England and California, Mr Dadourian divested himself of his assets, which he put in the name of his wife …’ 10. I respectfully submit that this evidence, drawn substantially from material supplied by Charlton in the arbitration justifies my belief that the First-Fourth Defendants (or one or more of them) may hold significant assets in Switzerland. Accordingly I ask that the Claimants’ undertaking at paragraph (8) of Schedule B be amended so as to allow for enforcement in Switzerland or the seeking of a similar order there.” ‘Following the judgments given against him in England and California, Mr Dadourian divested himself of his assets, which he put in the name of his wife …’[62]Moreover, Mr Simms was a director and the chairman of Charlton and Charlton had an account with the Swiss bank. There is also evidence that Mr Simms was the principal beneficiary of Hackar Funding (referred to by Mr Clarke), a trust whose banking was handled by Mr Moser, and that Mr Simms had a number of off-shore trusts or companies which had connections with the Swiss bank and in addition that Mr Simms had a long and continuing involvement with Mr and Mrs Dadourian. This included directorships of companies owned and controlled by Mr Dadourian, and his ownership and control of the Citilegal group of companies which was materially involved with entities said by Mr and Mrs Dadourian to be owned or controlled by Brinton. In all the circumstances we accept the submission of Mr Freedman that if the entities with which Mr Simms was associated or if Mr and Mrs Dadourian had assets in Switzerland, the court is entitled to hold that there is a real prospect that Mr Simms has assets there too. We note also that the passage from Mr Clarke’s affidavit set out above contains evidence that Mrs Dadourian had a relationship with the Swiss bank in Zurich which would further imply that there was a real prospect of finding that she had assets in Switzerland. For the purpose of the exercise of the discretion to continue the Swiss variation order, the position of Mr and Mrs Dadourian cannot be distinguished because the evidence of Mr Dadourian about transferring his assets to Mrs Dadourian has not yet been tested by cross-examination. In the circumstances in our judgment the respondents have discharged the onus of showing that there is a real prospect that the appellants have assets in Switzerland and moreover in the light of the history of this matter it is reasonable and proportionate for them to seek to enforce the WFO in Switzerland in order to safeguard their rights under the WFO in relation to those assets.

Disposition of the main appeal

[63]In the circumstances in our judgment the appeals in so far as they relate to Laddie J‘s refusal to discharge the Swiss variation order should be dismissed. Procedural issues arising out the circumstances of these appeals[64]The appeals before us are against the order of Laddie J rather than against the Swiss variation order. However, the Swiss variation order is said to be unusual procedurally for the reasons given below and we need to deal with those points as they may if well-founded constitute grounds for challenging the refusal of Laddie J to discharge that order.[65]First, Lewison J made the Swiss variation order on an application made to him in open court by the respondents without notice to the appellants, even though the judge had just before that application heard the application for renewal of the WFO against them on notice. Mr Clarke explained in his affidavit that the claimants had received advice from Swiss lawyers that the Swiss courts would not enforce the WFO unless it had been made on a hearing on notice to the appellants, but the claimants feared that the appellants would dispose of their assets in breach of the WFO if given notice of the application for the Swiss variation order. Mr and Mrs Dadourian were not represented on this application or on the application for the Swiss variation order.[66]At first sight it may seem odd for the application for permission should have been heard without notice before the same judge as had heard without notice the application for renewal of the WFO on notice. It has not, however, been suggested by the appellants that the judge could not deal with both applications. In my judgment, given that the application to renew the WFO was heard in open court and on notice, it is difficult to see that the fact that the judge had heard that application should preclude him from hearing the application made without notice for the Swiss variation order. There is a possibility he might have felt that he could not deal fairly with the on notice application knowing (if he did then know) that there was to be an application without notice in the absence of the defendants immediately thereafter for the Swiss variation. That was obviously not this case. If it occurred then clearly the judge should recuse himself in the usual way.[67]The second procedural point is this. Lewison J did not give any reasons when he made the Swiss variation order. In my judgment, while it would have been better if he had expressly explained why he was making the order, this is not a valid criticism. In the context of this urgent application, it was the clear implication of his making the order sought that he accepted that the submissions made to him were a sufficient basis for granting the order.[68]The third procedural point is this. Under CPR 23.9 order the Swiss variation order should have been served forthwith on the appellants unless the court gave permission otherwise. This did not happen although the judge was not asked to make an order deferring service of the order. This was an error on the part of the respondents, not the judge. The appellants’ case is that they were unaware of the order until January 2005. They then applied to Laddie J to discharge the order. I refer to the judgment of Laddie J below, and that is the judgment under appeal.[69]The respondents clearly ought to have sought an order deferring service. We consider that on the evidence before the judge the court would probably have made such an order but only for a period sufficient on the evidence for the respondents to obtain some provisional measure in Switzerland. Once that relief was obtained, the Swiss proceedings would have to have been served and there would be no need to defer service of the Swiss variation order any longer.[70]Mr Simms submits that, if the Swiss variation order had then been served, the appellants could then have applied to discharge it, and the costs of the Swiss proceedings would have been avoided. We do not accept this submission. Once the Swiss proceedings were served, the appellants were in a position to investigate whether the English court had given permission and if so on what evidence and on what terms. While we do not in any way condone the respondents’ failure to obtain an order under CPR 23.9 we do not consider that it was causative to a material extent of the appellants’ loss. In addition, if the judge was entitled to refuse the application to set aside the Swiss variation order, that is another reason for rejecting Mr Simms’ submissions. In this situation, it is not enough for him to say that another judge might have exercised his discretion differently.

The appeal against the judge’s order as to costs

[71]There is a separate application for permission to appeal the judge’s order as to costs. The appellants submit that the judge should not have made an order that the appellants should be jointly and severally liable to pay the costs of the applications, but rather that he should have apportioned them as between on the one hand Mr and Mrs Dadourian and on the other hand Mr Simms. The order which the judge made was as follows:
“3. The First, Third and Fourth Defendants do pay the Claimants’ costs of the Applications summarily assessed in the sum of £60,000 by no later than 4pm on 16th March 2005. For the avoidance of doubt, the First, Third and Fourth Defendants are jointly and severally liable for the said sum”
[72]Mr Smouha submits that before the judge there was a separate application by Mr Simms which was made on different evidence and that accordingly the costs of that application should not have been aggregated with that of the applicants whom he represents. The judge held in his short judgment on costs that there was no basis upon which it would be reasonable to split the costs as assessed by him between the various defendants. Mr Smouha submits that the judge could have assessed the overlap and made all the defendants jointly and severally liable for that element only.[73]Mr Simms submits that there should have been separate apportionment of the costs of the claimants in relation to particular applications. He submits that of the time taken by the court (two days) he addressed the court for approximately one hour. He therefore submits that his share was approximately 10 to 15% of the total costs. Much of the argument was in relation to the trusts.[74]Mr Freedman submits that the appellants were effectively the same side and there was therefore a large overlap between the costs incurred in relation to each of them and therefore the joint and several order was appropriate.[75]He takes the example of a claim against an employer and an employee with respect to the issue of vicarious liability. He submits that the usual order would be joint and several. He submits there was a very large overlap and that Mr Evans (then counsel for Mr and Mrs Dadourian) accepted this. He refers to page 8 of the transcript.[76]Moreover, Mr and Mrs Dadourian insisted that their application should be considered with that of Mr Simms. He accepts that Mr Simms spoke for only a small part of the hearing as Mr Evans dealt with all the principal matters. He sought to reopen the matter resolved by Dyson LJ on the application for permission to appeal arising out of the Lewison J WFO. Accordingly Mr Simms did not add significantly any costs. In those circumstances it was completely artificial to have two estimates of costs. The reaction of the judge was important. He observed that the costs could not be apportioned.[77]Mr Freedman also relies on the fact that in interim applications the principle today is “pay as you go”.[78]Mr Freedman points out that the respondents estimated their costs at £100,000. The judge assessed them as £60,000 and he submits that this court should not further reduce that sum.[79]On the question of the order for costs made by the judge, we refuse permission to appeal. Mr Evans, who then appeared for the third and fourth defendants, accepted that there was an extremely large overlap in costs between the two applications and he made no submission that the costs could be apportioned between the three appellants. In those circumstances, there was little else that the judge could do apart from make an order for the costs to be paid by the appellants jointly and severally.

order

“19. Persons outside England and Wales (1) Except as provided in paragraph (2) below, the terms of this order do not affect or concern anyone outside the jurisdiction of this court. (2) The terms of this order will affect the following persons in a country or state outside the jurisdiction of this court:- (a) the respondent or his officer or agent appointed by power of attorney; (b) any person who: (i) is subject to the jurisdiction of this court; (ii) has been given written notice of this order at his residence or place of business within the jurisdiction of this court; and (iii) is able to prevent acts or omissions outside the jurisdiction of this court which constitute or assist in a breach of the terms of this order; and (c) any other person, only to the extent that this order is declared enforceable by or is enforced by a court in that country or state. 20. Assets located outside England and Wales Nothing in this order shall, in respect of assets located outside England and Wales, prevent any third party from complying with:- (1) what it reasonably believes to be its obligations, contractual or otherwise, under the laws and obligations of the country or state in which those assets are situated or under the proper law of any contract between itself and the Respondent; and, (2) any orders of the courts of that country or state, provided that reasonable notice of any application for such an order is given to the Applicants solicitors . . .” (a) the respondent or his officer or agent appointed by power of attorney; (b) any person who: (i) is subject to the jurisdiction of this court; (ii) has been given written notice of this order at his residence or place of business within the jurisdiction of this court; and (iii) is able to prevent acts or omissions outside the jurisdiction of this court which constitute or assist in a breach of the terms of this order; and (c) any other person, only to the extent that this order is declared enforceable by or is enforced by a court in that country or state.

Cited in 22 later judgments

and 13 more of the most senior