Raja v Van Hoogstraten & Ors [2007] EWHC 1743 (Ch)

[2007] EWHC 1743 (Ch)

Case No CH 1993 R 6492

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 26/07/2007

Before

MR JUSTICE LIGHTMAN

Between

ASGAR SABIR RAJAClaimant

Mr Nigel Jones QC & Mr Robert Leonard (instructed by Engleharts, 18, Blatchington Road, Hove, East Sussex BN3 3YN) for Tombstone

Mr Andrew Onslow QC & Mr Charles Dougherty (instructed by Kennedys, 50 Mark Lane, London EC3R 7QT) for Healys

Mr Asgar Sabir Raja appeared in person representing the Estate of the for in person

late Mr Mohammed Raja

Hearing Hearing dates: 22 nd– 23 rd February & 27 th– 28 th February, 1 st& 5 th March, 19 th- 20 th April, 1 st- 3 rd May 2007

Judgment

INTRODUCTION

[1]Pursuant to the judgment of Peter Smith J (“the Judge”) of the same date (“the December 2002 Judgment”) on the 12th December 2002 on the application of the estate (“the Estate”) of the late Mr Mohammed Raja (“Mr Raja”) and on the grounds of his alleged contempt of court an order was made (“the Sequestration Order”) authorising the issue of a writ of sequestration (“the Writ”) in respect of the assets of the defendant in the action Mr Nicholas van Hoogstraten (“Mr van Hoogstraten”). (By the term the Estate I refer to the person who from time to time after the death of Mr Raja prosecuted this action on behalf of his estate.) On the 13th December 2002 pursuant to an order of the same date (“the December 13th Order”) the Writ was amended and the Writ in its amended form (“the Amended Writ”) extended to all the assets of the intervener Tombstone Limited (“Tombstone”). Tombstone was not a party to the action and there had never been any suggestion of contempt of court by Tombstone. The alleged contempt of court of Mr van Hoogstraten was his failure to comply with disclosure obligations in an earlier freezing order made against him. The application for the extension of the Writ to the assets of Tombstone was prompted by the terms of the December 2002 Judgment and in particular language in it which appeared to accept the allegation made in the action by the Estate that Mr van Hoogstraten was the beneficial owner or controlled some or all of the shares in Tombstone or in its shareholders and/or was the beneficial owner of some (but not all) of Tombstone’s assets. Throughout the proceedings the Estate was represented by Healys a firm of solicitors who instructed as Counsel Mr Peter Irvin (“Mr Irvin”). Healys (acting for the Estate) took the steps required to obtain the issue of the Writ and (pursuant to the December 13th Order) the issue of the Amended Writ.

[2]By a series of subsequent orders (“the Authorisation Orders”) the court authorised the sequestrators so appointed (“the Sequestrators”) to make various payments and various sales of properties belonging to Tombstone. On the 21st July 2004 the Court of Appeal decided that the finding of contempt against Mr van Hoogstraten had been wrongly made, and on that footing the Court of Appeal set aside the Sequestration Order and the December 13th Order (and with it the Amended Writ) and remitted it to this court to decide whether Mr van Hoogstraten and Tombstone had any claims arising from the issue of the Amended Writ.

[3]Mr van Hoogstraten has since abandoned any such claim, but Tombstone has made a series of claims against the Estate. The Estate however may not be good for any substantial recovery. The reason given to me for the absence of legal representation on behalf of the Estate at the trial of the present claims is lack of means. By reason of its concern that the Estate may not be able to meet any judgment on the claims presently before me Tombstone joined Healys as a co-defendant to the claims against the Estate. (I shall refer to the Estate and Healys together as “the Defendants”.) Any judgment against Healys may be expected to be satisfied. The claims are set out in Section G of the Re-Amended Particulars of Claim (“the Section G Claims”). These are claims in trespass and conversion in respect of monies and assets of Tombstone and they arise from acts of the Sequestrators in the course of the performance of their duties arising from the issue of the Amended Writ. The particular acts in question are the entry of the Sequestrators upon properties of Tombstone (“the Properties”) and the Sequestrators’ alleged conversion of choses in action belonging to Tombstone constituted by demands for and receipt of payments from debtors of monies due to Tombstone.

[4]On the face of it and most particularly according to its audited accounts which Tombstone has signed and filed for many years setting out or purporting to set out its balance sheet and assets, Tombstone is a substantial company. This is confirmed by the evidence of Mr van Hoogstraten who told me that it has £50-60 million of assets which include valuable and realisable properties. But there are substantial and longstanding issues between the parties as to the beneficial ownership of assets in the legal ownership and possession of Tombstone and of the shares in Tombstone and in its shareholders. This trial has been limited to the trial of all issues of liability in respect of the Section G Claims and excludes any issues as to beneficial ownership. These issues remain to be resolved at a later trial. For the purposes of this trial I must proceed on the basis that the owners of the shares in Tombstone are the persons shown as such in the register of shareholders, that Tombstone is the beneficial owner of the assets of which it is registered or otherwise shown to be the legal owner and of which the Sequestrators took possession and that Mr van Hoogstraten has no beneficial interest in either those shares or those assets. It is common ground that Mr van Hoogstraten was the sole director of Tombstone from not later than the 31st March 1994 until the 7th March 2003 when Ms Rosemary Hamilton (“Ms Hamilton”) was appointed a co-director. Mr van Hoogstraten both before and after the 7th March 2003 was at all times in control of Tombstone and made decisions and gave instructions on its behalf.

[5]The core issue at this trial is one of law, namely whether the Defendants are liable in damages for the losses occasioned to Tombstone by the issue of the Amended Writ and in particular the alleged acts of trespass and conversion by the Sequestrators. It is common ground that no claim lies against the Sequestrators personally for these alleged torts committed against Tombstone and any loss thereby occasioned. For the Sequestrators were bound to execute the Amended Writ and indeed (so far as relevant) were authorised to act in accordance with the Authorisation Orders: they were not obliged to assess their validity or regularity before acting upon them. The Sequestrators are protected in this respect regardless of any absence of jurisdiction or irregularity in the process by which the Amended Writ was (or Authorisation Orders were) obtained. If authority were necessary for this proposition it would be found e.g. in Gosset v. Howard

(1845) 10 QB 359

at 453-4.

[6]The policy considerations under the law affording complete protection to the Sequestrators do not extend to the parties and the solicitors who obtained the Amended Writ. The extent of their liability, and the protection afforded by the law to them, must be separately considered. This separate consideration does require an analysis of the relevant factual background. It should be noted (contrary to the contention of Tombstone) that the fact (if it be held to be a fact) that the present claims in trespass and conversion are not good in law does not mean that the law is somehow deficient in failing to afford redress in respect of the loss occasioned to Tombstone by the issue of the Amended Writ. If redress is not available on the present claims, the reasons why it is withheld must be examined and in any event redress may be obtainable against the Estate on the other claims which are yet to come before the court.

[7]There has in this case been very extensive evidence and the submissions on law and fact have been careful and wide ranging. It has not been necessary in this judgment to examine all the issues of fact or law raised.

FACTS

[8]I have given detailed accounts of the history of the relationship between Mr Raja and Mr van Hoogstraten and of the present proceedings in a series of judgments in this action culminating in the judgment which I gave on the 19th December 2005 (“the December 2005 Judgment”) holding that Mr van Hoogstraten had hired two thugs to murder Mr Raja in order to halt the prosecution by Mr Raja of his claim in this action. It is sufficient for me in this judgment to sketch the events relevant to the claims by Tombstone now before me.

[9]On the 8th October 1993 Mr Raja commenced this action. Mr Raja’s claim in a nutshell was:(a) that Mr van Hoogstraten had made loans to him on the security of a number of properties which were (for the most part) as such security transferred to Mr van Hoogstraten and nominees for him. The nominees included Tombstone;

(b) that in one form or another (including the receipt by Mr van Hoogstraten of the proceeds of sale of some of the properties) Mr Raja had repaid all sums due and secured; but

(c) that Mr van Hoogstraten refused to retransfer or procure the retransfer of the remaining properties held by him to Mr Raja. Mr Raja claimed as relief an account, a declaration that the charges granted had been redeemed and orders for the retransfer of those of the properties transferred to Mr van Hoogstraten and his nominees which remained unsold.

[10]On the 7th December 1998 Mr Raja issued a summons seeking permission to amend his pleading by adding an allegation of fraud against Mr van Hoogstraten and a claim for damages for fraud. Permission was granted to make this amendment on the 22nd April 1999. The addition of this allegation triggered the decision by Mr van Hoogstraten to engage two thugs to murder Mr Raja and they murdered Mr Raja on the 2nd July 1999.

[11]On the 8th November 1999 Asgar Sabir Raja (“Asgar”), a son of Mr Raja, was appointed to represent the Estate in these proceedings. He was later replaced by the present claimant, Asgar’s mother and Mr Raja’s widow and executrix (“the Claimant”). The Claimant lives in India and is unable to attend the trial and in the circumstances with the consent of all concerned I authorised Asgar to represent the Estate at this hearing. In September 2001, Mr van Hoogstraten (together with the two thugs) was charged with the murder of Mr Raja. His criminal trial commenced in April 2002. Mr van Hoogstraten gave evidence at the trial. He was concerned to establish that the sum claimed by Mr Raja was “peanuts” for a man of his immense wealth and that accordingly he had no motive for procuring Mr Raja’s murder. To this end he gave evidence of his wealth, including a statement that “we” have seven or eight hotels in Brighton. On the 22nd July 2002, whilst the two thugs were convicted of murder, Mr van Hoogstraten was acquitted of murder but convicted of manslaughter. He was sentenced to ten years’ imprisonment. He remained in prison from that date until December 2003.

[12]On the 8th August 2002 the Estate applied for permission to re-amend and plead the conviction and obtain judgment by reason of Mr van Hoogstraten’s conviction.

[13]On the 27th August 2002 on the Estate’s application made without notice supported by the first and second affidavits of Mr James Lightfoot (“Mr Lightfoot”) an assistant solicitor employed by Healys, Rimer J made the freezing order requested (“the Freezing Order”). The Freezing Order had two critical and distinct components which I shall refer to respectively as “Paragraph 5” and “Paragraph 9”. Paragraph 5 froze assets which Mr van Hoogstraten owned or controlled and control was given a wide meaning. Paragraph 9 required provision of information in respect of the assets which Mr van Hoogstraten owned, and was couched in far narrower terms. The two paragraphs read as follows:

“ FREEZING INJUNCTION 5. Until the return date or further order of the court, the Respondent must not- (a) remove from England and Wales any of his assets which are in England and Wales up to the value of £5 million or (b) in any way dispose of, deal with or diminish the value of any of his assets whether they are in or outside England and Wales up to the same value. 6. Paragraph 5 applies to all the Respondent’s assets 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. 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. 7. This prohibition includes the following assets in particular- (a) the properties identified in Schedule E of this order or the net sale money after payment of any mortgages if it has been sold; (b) the property and assets of the Respondent’s businesses, or any business in which he has a beneficial interest, and specifically the property and assets of those businesses and enterprises listed in Schedule F of this order or the sale money if any of them or their assets have been sold and (c) any shareholdings, directors loans, charges, rental or other income whether due to the Respondent, held in his own name or to which he is beneficially entitled in or from the companies listed in Schedule F of this order…. PROVISION OF INFORMATION 9. (a) Unless paragraph 9(b) applies, the Respondent must within 1 week of service of this order and to the best of his ability inform the Applicant’s solicitors of all his assets worldwide exceeding £10,000 in value whether in his own name or not and whether solely or jointly owned, giving the value, location and details of all such assets…. 10. Within 14 days after being served with this order, the Respondent must swear and serve on the Applicant’s solicitors an affidavit setting out the above information.” (a) remove from England and Wales any of his assets which are in England and Wales up to the value of £5 million or (b) in any way dispose of, deal with or diminish the value of any of his assets whether they are in or outside England and Wales up to the same value. (a) the properties identified in Schedule E of this order or the net sale money after payment of any mortgages if it has been sold; (b) the property and assets of the Respondent’s businesses, or any business in which he has a beneficial interest, and specifically the property and assets of those businesses and enterprises listed in Schedule F of this order or the sale money if any of them or their assets have been sold and (c) any shareholdings, directors loans, charges, rental or other income whether due to the Respondent, held in his own name or to which he is beneficially entitled in or from the companies listed in Schedule F of this order…. PROVISION OF INFORMATION 9. (a) Unless paragraph 9(b) applies, the Respondent must within 1 week of service of this order and to the best of his ability inform the Applicant’s solicitors of all his assets worldwide exceeding £10,000 in value whether in his own name or not and whether solely or jointly owned, giving the value, location and details of all such assets…. 10. Within 14 days after being served with this order, the Respondent must swear and serve on the Applicant’s solicitors an affidavit setting out the above information.”

[14]The Respondent is defined in Schedule C as Mr van Hoogstraten in the various names which he uses. Schedule D lists among the persons to be notified of the order Tombstone. Schedule E lists as properties subject to the order properties registered in the name of Tombstone in which Mr van Hoogstraten was believed to have a beneficial interest. (In the order as later amended by Patten J there were 17 such properties.) Schedule F included Tombstone among the businesses and enterprises owned or controlled by Mr van Hoogstraten or in which he had a beneficial interest. The order fixed the 10th September 2002 as the return date. The Freezing Order was served on Mr van Hoogstraten and his solicitors on about the 30th August 2002 and a copy of the order was served on the registered offices (amongst others) of Tombstone by post on the 29th August 2002.

[15]Mr van Hoogstraten (as he was entitled to) for his own reasons and to achieve a perceived advantage decided thereafter to act in person in this action and gave notice to this effect on the 3rd September 2002. The decision (which on occasion and when it suited him he departed from) played a large part in giving rise to the difficulties, confusion and mistakes which later arose. There can be no doubt that these would have been avoided if Peter Smith J (“the Judge”) had been afforded throughout the proceedings the assistance of counsel on behalf of Mr van Hoogstraten. I was faced with like difficulties by the decision of Mr van Hoogstraten to act in person throughout crucial stages in the proceedings leading to the December 2005 Judgment. Notwithstanding the decision to act in person Mr van Hoogstraten at all times maintained a close relationship with and had access for legal advice to his longstanding friend Mr Englehart, the principal of Engleharts.

[16]Mr van Hoogstraten wished to attend the return date on the Freezing Order on the 10th September 2002. His attendance required the cooperation of the prison authorities. For reasons beyond his control he was prevented from doing so. On that date Patten J directed that the Freezing Order (as amended in an immaterial respect) should continue in force. On the same date Mr van Hoogstraten wrote to the court complaining that he had been prevented from attending and saying that the Freezing Order ought to be set aside. In response to that letter on the 20th September 2002 Patten J’s clerk wrote to Mr van Hoogstraten explaining that he needed to make a formal application to set aside the Freezing Order. On the 25th September 2002 Mr van Hoogstraten made such an application, but it was lost by the court.

[17]By a letter to Healys dated the 26th September 2002 Engleharts as solicitors for (amongst other companies) Tombstone requested the removal of Tombstone from Schedule F on the grounds that the order interfered with its business and (in default) threatened an application to the court. No complaint was made about the inclusion of Tombstone’s assets in Schedule E.

[18]In reply by letter dated the 27th September 2002 Healys refused this request stating that the Estate’s evidence in support of the application for the Freezing Order contained significant evidence that shareholdings in Tombstone were held by nominees for Mr van Hoogstraten and that he had substantial beneficial interests in those shares and in their underlying assets. Healys went on to say that Mr van Hoogstraten had failed to comply with Paragraph 9, that he was in contempt of court and that they were issuing an application for a sequestration order. They also suggested that, if Tombstone intended to make an application, it should be listed at the same time as the Estate’s application in respect of Mr van Hoogstraten’s contempt. The obvious and proper course to be taken by the Estate was to join Tombstone as a defendant. If the Estate had done so, the subsequent problems with which I am concerned could and should have been avoided. There was no sufficient reason why the Estate made the unfortunate and short-sighted decision not to do so. It was no excuse that Mr van Hoogstraten could or should have joined Tombstone.

[19]On the 1st October 2002 Healys again wrote to Engleharts asserting that:(1) Mr van Hoogstraten exercised considerable control over Tombstone through shareholdings held by Willoughby’s Consolidated PLC (“Willoughbys”) and Messina Investments Limited (“Messina”);

(2) assets registered in the name of Tombstone were assets in which Mr van Hoogstraten had a significant interest;

(3) it was nonsense to suggest that Tombstone was not a company that held assets of Mr van Hoogstraten or over which he exercised control;

(4) Healys had now applied for the appointment of a sequestrator to remedy Mr van Hoogstraten’s contempt in failing to comply with his duty of disclosure; and

(5) Healys again suggested that any application by Tombstone be listed at the same time as their application. By letter dated the 11th October 2002 Engleharts wrote that they did not propose responding in detail to the points made regarding the individual companies.

[20]The Estate’s application to commit Mr van Hoogstraten for contempt was issued on the 2nd October 2002 supported by Mr Lightfoot’s 4th affidavit and came before the Judge on the 11th October 2002. The Judge heard the application in the absence of Mr van Hoogstraten and found the contempt proved. He imposed a fine of £200,000 suspended for 28 days pending compliance with Paragraph 9, with a provision to the effect that the amount of the fine should escalate over any further period of non-compliance.

[21]By letter dated the 16th October 2002 Healys again invited Tombstone and the other companies to proceed with any application by them on the next hearing in respect of the Freezing Order. Engleharts did not reply.

[22]On the 17th October 2002 Mr van Hoogstraten wrote to the Judge protesting that he was being denied his legal right to defend the action. By his reply dated the 22nd October 2002 and received on the 26th October 2002 the Judge stated that Mr van Hoogstraten should comply with Paragraph 9.

[23]On the 24th October 2002 a further hearing took place before the Judge. Mr van Hoogstraten was unable to attend court by reason of the absence of a suitable prison van. The Judge ordered that Mr van Hoogstraten should pay the costs of the hearing summarily assessed at £2,384.75 on the basis that Mr van Hoogstraten had chosen not to attend. By letter of the same date giving this explanation for his order, the Judge went on to say that he was not prepared to entertain any application by Mr van Hoogstraten until he complied with the Freezing Order and that, if Mr van Hoogstraten wished to make representations on the correctness of this decision, he was at liberty to do so and the Judge would make arrangements for Mr van Hoogstraten to be brought to court.

[24]On the 31st October 2002, Mr van Hoogstraten attended before the Judge and applied to discharge the Freezing Order. The Judge refused to entertain the application until Mr van Hoogstraten complied with Paragraph 9. The Estate’s application dated the 7th August 2002 to strike out Mr van Hoogstraten’s Defence and Counterclaim was adjourned until a case management conference to be heard in November 2002.

[25]On the 13th November 2002, the case management conference took place. Mr van Hoogstraten had on the 11th November 2002 issued an application to set aside the Freezing Order and all subsequent orders against him. The Judge repeated that he would not entertain the application until Mr van Hoogstraten complied with Paragraph 9. He directed that the time for compliance by Mr van Hoogstraten with Paragraph 9 be extended until the 20th November 2002, and that in default of compliance the Defence and Counterclaim should be struck out, Mr van Hoogstraten should be barred from defending and the Estate should be entitled to judgment. He gave leave to the Estate to apply for permission to issue a Writ of Sequestration of the assets of Mr van Hoogstraten. The hearing was adjourned until the 27th November 2002.

[26]Meanwhile on the 15th November 2002 the Estate amended its application notice to seek an order striking out Mr van Hoogstraten’s Defence and Counterclaim on the grounds of Mr van Hoogstraten’s conviction for manslaughter and of his contempt and issued an application for permission to issue a writ of sequestration. On the 15th and 18th November 2002 Mr van Hoogstraten provided his first and a supplemental asset disclosure affidavits. These disclosed minimal assets and certainly no interest in any hotel. At the same time Minaides Robson (“Minaides”) went on the record as solicitors for Mr van Hoogstraten.

[27]At the adjourned hearing on the 27th November 2002 Mr van Hoogstraten was represented by counsel. Mr Irvin, in paragraph 9 of his skeleton argument, in support of his contention that Mr van Hoogstraten was in continuing breach of Paragraph 9, alleged that Mr van Hoogstraten had effective control over various nominees or stooges, and he pressed for cross-examination of Mr van Hoogstraten on his affidavits of assets. The Judge refused to order cross-examination. He said:

“I am not going to make any definitive … ruling as to what Mr van Hoogstraten might or might not own directly or indirectly or control indirectly. The sole issue is whether or not he has complied.”

[28]The hearing was adjourned to the 9th December 2002. The hearing proceeded on the 9th and 10th December 2002. Mr Irvin in his skeleton argument for this hearing made plain that the issue before the court was non-disclosure, not ownership, and (in paragraph 5) advanced the proposition that Mr van Hoogstraten’s meagre affidavit of assets must be “blatantly and indeed impudently untrue”. At the hearing the extensive evidence included the fifth affidavit of Mr Lightfoot to which were exhibited newspaper articles. These articles indicated that Mr van Hoogstraten had spent £28 million on his residence at Hamilton Palace, Uckfield, East Sussex, that his art collection was worth approximately £200 million, that he had 30 bank accounts in his own name or company names and that he owned eight hotels in Brighton or Hove. The Judge gave judgment, namely the December 2002 Judgment, on the 12th December 2002. In the December 2002 Judgment he held that:(1) the Defence and Counterclaim should be struck out and judgment entered for the Estate by reason of the conviction of Mr van Hoogstraten of manslaughter the motive for which was the desire to obtain an advantage in these proceedings; and

(2) Mr van Hoogstraten was in breach of Paragraph 9 and that for this reason a sequestrator should be appointed of Mr van Hoogstraten’s assets.

[29]I must refer to certain paragraphs in the December 2002 Judgment which had a bearing on subsequent events and are relevant on this application. “26. Mr Van Hoogstraten self evidently as the sole director controls Tombstone Ltd. It seems to me the assets of Tombstone Ltd ought to have been dealt with in any compliance affidavit. He has failed to provide [information as to] any assets of Tombstone Ltd. Significantly, Tombstone Ltd apparently lent him £600,000.00 (Six Hundred Thousand Pounds) in April 2002 to enable him to defend himself on the criminal charges and to prosecute the appeal against the conviction. That is a flagrant breach of Section 330 of the Companies Act 1985…. The conclusion I draw on the evidence before me is that Mr Van Hoogstraten controls Tombstone to such an extent that despite his apparent modest shareholding no other shareholder complained about the apparent removal of a sum in excess of £600,000.00 (Six Hundred Thousand Pounds). The conclusion I draw from that absent any other explanation is that no one else complains because no one else [is] interested and that is because he ultimately is the beneficial owner of Tombstone Ltd. Now of course Mr Van Hoogstraten disputes that but that is not a basis for refusing or not providing the information required by the Freezing Order….”

[30]The Judge stated again (in paragraph 40) that Tombstone belonged beneficially to Mr van Hoogstraten, (in paragraph 73) that (as he had made clear on the 27th November 2002) he was not going to entertain any cross-examination on affidavits or attempt to resolve any issue as to credit on the evidence of Mr Lightfoot or Mr van Hoogstraten and (in paragraph 74) that it was essential at this stage not to be embroiled in a mini-trial. He went on:

“77. It is not appropriate as this stage to attempt to deal with the many matters which Mr Lightfoot raises in his affidavit. There are however a number of clear matters which notwithstanding a further affidavit of Mr van Hoogstraten to which I shall make reference below lead me to the conclusion that Mr van Hoogstraten has assets which he has not disclosed in the two affidavits. I am satisfied beyond reasonable doubt that that is the position… 79. I am satisfied that Mr van Hoogstraten has wilfully concealed his interest in significant other assets. I cannot attempt at this stage to identify all of those assets; that will be the task of the sequestrator, [who] I propose to be ordered to be appointed in this case… 90. I have considered those transcripts [of evidence at the criminal trial] and it demonstrates quite clearly to my mind that the purpose of the evidence given by Mr van Hoogstraten was to show that he personally was very wealthy and that the assets were deployed to supportthat. They extended to the various assets identified by Mr Lightfoot correctly in his fifth affidavit and set out above… 97. My conclusion is that Mr van Hoogstraten has only told the truth when it was necessary for him to do so and that was when he was on trial for murder. His evidence there corroborates what Mr Lightfoot has said in his first affidavit. Mr van Hoogstraten now chooses to be portrayed as man of considerably less worth because it suits him to do so. I reject his affidavit evidence. To my mind it is completely untrue and incredible. 98. I should stress that saying that save in relation to the assets mentioned above namely Tombstone Ltd, Hamilton Palace, the antique collection and the (as yet unidentified bank accounts) the hotels in Brighton and Hove where the position is the same I am not making any determination as to the ownership of other disputed assets. 99. I am not in a position to determine fully what his assets are and that is not the point of the exercise in any event. I am satisfied to the standards that I have set out above that his affidavits are not true affidavits and that he has failed to comply with the Freezing Order as extended by the 10 September 2002 [order]. I am satisfied therefore that he was also in contempt on the 11 October 2002 and that he has failed to purge that contempt because his affidavits are not true.”

[31]The Judge concluded by saying that he was appointing the sequestrator as the only effective means of identifying, collecting and realising Mr van Hoogstraten’s assets for the purpose of paying fines which he had imposed for contempt and any sums due to the Estate for damages and costs.

[32]By his order (the Sequestration Order) giving effect to the December 2002 Judgment the Judge:(1) struck out the Defence and Counterclaim and barred Mr van Hoogstraten from defending the case;

(2) gave directions for all necessary accounts and inquiries;

(3) ordered Mr van Hoogstraten and/or Tombstone as his nominee to deliver up land certificates and execute transfers in respect of five properties the return of which the Estate had claimed in the action; and

(4) gave permission to the Estate to issue a writ of sequestration in respect of the assets of Mr van Hoogstraten. He gave Mr van Hoogstraten liberty to apply. He made no declarations as to ownership. The order was not sealed but the Writ of Sequestration was sealed.

[33]On the same day that the Sequestration Order was made, the Sequestrators instructed Healys as their solicitors. The Sequestrators expressed concern to Mr Lightfoot that the Writ in its existing form did not give to them sufficient power to seize the assets of Mr van Hoogstraten held in the name of Tombstone as they thought was intended by the Judge in the December 2002 Judgment and gave instructions that an application should be made to the Judge to obtain clarification. Mr Lightfoot then put in hand an application to be made without notice to Mr van Hoogstraten or Tombstone on behalf of the Estate and the Sequestrators to amend the Writ. Since Mr Lightfoot was a young and inexperienced litigation solicitor and quite out of his depth, after he had drafted the Amended Writ, he submitted it to Mr Irvin for his approval and Mr Irvin approved it and the making of an application. Mr Lightfoot thereupon instructed Mr Irvin to make the application.

[34]The hearing of the application on the 13th December 2002 was very short. The Judge was sitting as Applications Judge hearing urgent applications for interlocutory relief and he heard the application during a short break in his list. The Judge was not furnished with any skeleton arguments or draft order or other papers ahead of the hearing. The application proceeded before the Judge as though the order sought was nothing more than a formality and followed as a matter of course from the December 2002 Judgment. The relevant part of the transcript reads as follows:

“MR IRVIN: I am sorry to trouble your Lordship in this busy list this morning but I hope not to detain you very long. My Lord, it is in connection with the writ of sequestration, the sequestrator, having considered the writ as issued yesterday, took the view that it might be difficult for her to enforce against Tombstone assets, i.e., principally the hotel, which your Lordship will remember is registered in the name of Tombstone— MR JUSTICE PETER SMITH: Yes MR IRVIN: Because in the light of your Lordship’s judgment it might therefore be appropriate to have Tombstone included in the writ expressly, and you will see----. MR JUSTICE PETER SMITH: I have determined that Tombstone belonged to him beneficially, didn’t I? MR IRVIN: That’s right. MR JUSTICE PETER SMITH: And he is a director and he was in contempt and therefore he is in control of Tombstone. MR IRVIN: Yes. MR JUSTICE PETER SMITH: Therefore, I will do. MR IRVIN: My Lord, I am obliged. You will see the terms in which it is set out in the writ--- MR JUSTICE PETER SMITH: Yes.”

[35]By the December 13th Order the Judge gave permission to issue an amended writ of sequestration in the form provided to the court. The Amended Writ (so far as material) read as follows:

“(a) The First Defendant’s Defence and Counterclaim has been struck out pursuant to the judgment of Mr Justice Peter Smith handed down on the 12th December 2002 a copy of which is annexed hereto (b) The said Judgment confirms that Sequestrator shall be appointed to identify, collect and realise the assets of the First Defendant for the purposes of: (i) Paying fines previously ordered by the court, as varied by Mr Justice Peter Smith on 12th December 2002 (ii) Paying any sums found due to the Claimants both as to damages and costs including, but not limited to, interim payments in the sum of £400000 to be paid into court on account of damages and £200,000 to be paid to Healys Solicitors on account of costs (iii) Recovering such other sums as the Court shall direct (c) The Court has expressly declared in paragraph 26 of the said judgment that the First Defendant is the beneficial owner of Tombstone Limited and its assets and accordingly for the purposes of this Writ of Sequestration the assets held by Tombstone Limited are to be treated as part of the real and personal estate of the First Defendant.”

The same day Healys served the Amended Writ on Mr van Hoogstraten and on Minaides. (i) Paying fines previously ordered by the court, as varied by Mr Justice Peter Smith on 12th December 2002 (ii) Paying any sums found due to the Claimants both as to damages and costs including, but not limited to, interim payments in the sum of £400000 to be paid into court on account of damages and £200,000 to be paid to Healys Solicitors on account of costs (iii) Recovering such other sums as the Court shall direct

[36](As confirmed by Mr Englehart in his evidence), there was no obstacle to Tombstone thereafter making an immediate application for the discharge of the December 13th Order and with it the Amended Writ, but Mr van Hoogstraten for his own reasons was content that Tombstone should live with them.

[37]After the hearing on the 12th December 2002 there was correspondence between the solicitors for the Estate and the solicitors for Mr van Hoogstraten as to the form of order following the December 2002 Judgment. To conclude matters arising from the December 2002 Judgment a hearing took place on the 18th December 2002 at which Mr van Hoogstraten was represented by Mr Reza and the Estate by Mr Irvin. It would appear that (quite remarkably) at the hearing no reference was made to the application and order made on the 13th December 2002. In the course of the hearing the Judge made clear (in case his judgment was not clear in that respect) that his findings were that Mr van Hoogstraten was the beneficial owner of Tombstone, Hamilton Palace, eight hotels and £200 million worth of antiques and that the findings were made because he rejected Mr van Hoogstraten’s evidence to the contrary, but he added (speaking to Mr Irvin) that that “his clients were not home by a long way” save in relation to those particular assets. He went on to refuse Mr van Hoogstraten’s application for permission to appeal and a stay. Though the Writ and the Amended Writ were issued respectively on the 12th and 13th December 2002, the Judge signed the forms of order in respect of the hearings on the 12th and 13th December on the 23rd January 2003.

[38]On the 20th and 23rd December 2002 Engleharts on behalf of Tombstone wrote to the Sequestrators to the effect that the sequestration covered only the assets of Mr van Hoogstraten and Tombstone and accordingly did not extend to a property believed to belong to Tombstone which did not in fact do so. On the 10th January 2003 Engleharts on behalf of Tombstone and Mr van Hoogstraten wrote to the Sequestrators requesting payment by them of corporation tax and trade debts owed by Tombstone. On the 27th January 2003 they again wrote stating that any queries regarding Mr van Hoogstraten’s personal affairs or the affairs of Tombstone should be addressed to Mr van Hoogstraten.

[39]On the 31st January 2003 Decherts served notice of acting on behalf of the Sequestrators on Engleharts as solicitors for Mr van Hoogstraten. On the same day Decherts issued an application for directions including (in particular) a direction granting permission to sell certain properties held in the name of Tombstone and sent a copy of the application to Minaides and on the 5th February 2003 Decherts sent a copy of the application notice to Engleharts. On the 4th February 2003 Healys served by post the application and supporting witness statement on “the Directors of Tombstone”. On the 7th February 2003 Engleharts wrote to Healys:

“Whilst we have in the past represented Tombstone Limited we are not instructed to represent them in this action”

. On the same day they wrote to Healys to the same effect, but that they would act for Willoughbys as an interested party. On the 10th February 2003 at a hearing at which Willoughbys and Mr van Hoogstraten were represented by counsel, in an exchange with Mr van Hoogstraten

the Judge said:

“The Sequestrators have been appointed over the assets of Tombstone to realise them because I found as a fact that Tombstone belongs beneficially to Mr van Hoogstraten”

. The Judge went on to confer power on the Sequestrators to sell assets in the name of Tombstone sufficient to realise £1.25 million. He also ordered that Mr van Hoogstraten should answer the requests for information by the Sequestrators and that the Sequestrators should have the power to execute the necessary documents to effect such sales. On an application of Willoughbys to intervene he gave directions to Willoughbys for the service of evidence identifying the beneficial ownership of the shares in that company and producing the original share register. He adjourned the application until the first open day after the 14th March 2003.

[40]On the 18th February 2003 Byrne & Partners served notice of acting on behalf of the Sequestrators. On the 27th February 2003 the Judge refused to hear further applications by Mr van Hoogstraten until he complied with the order of the 10th February 2003 to answer the Sequestrators request for information or indicated willingness to do so. Directions were given as to evidence in respect of Willoughby’s application. The Judge ordered that no contract for the sale of Tombstone’s properties should be entered into until final determination of Willoughby’s application or further order.

[41]On the 7th March 2003, Ms Hamilton (the partner of Mr van Hoogstraten and mother of one of his sons) was appointed an additional director of Tombstone. She acted as his nominee complying with his directions whilst he remained in prison and ceased to act as a director on his release. On the 12th March 2003 Ms Hamilton made a witness statement in support of her application dated the 14th March 2003 in the capacities of a director and shareholder in Tombstone to intervene to represent the interests of Tombstone. She stated that only on her appointment did she appreciate the significance and consequence of the order appointing Sequestrators of the assets of Tombstone and that she had then instructed Messrs Turner & Debenhams (“T&D”) to join her in her capacity as a director and shareholder as a party to the action. Mr Pieri of T&D agreed to act for her but refused to act on behalf of Tombstone fearful of acting for someone with Mr van Hoogstraten’s reputation for violence. The reason which Mr Pieri gave for refusing to act for Tombstone was not the true one, but a specious one, namely that there would be a conflict of interest acting for Ms Williams and Tombstone. Ms Hamilton applied to be allowed on behalf of Tombstone and its shareholders the opportunity to be represented to challenge the finding that Mr van Hoogstraten beneficially owned the assets of or shares in Tombstone and to apply for a stay of execution on the transfer of assets of Tombstone. Her application came before the Judge on the 13th March 2003. He directed that her application should be dismissed unless she provided specified information requested by the Sequestrators and that the hearing of her application should be conditional upon her producing original documents relating to her claim to be a director and shareholder. Ms Hamilton made a second witness statement on the 18th March 2003.

[42]On the 19th March 2003, the Judge heard the applications of Ms Williams and Willoughbys to intervene. He pressed counsel for both applicants without success for an explanation why Tombstone had not applied to be joined and made clear his view that the decision not to bring in Tombstone as a party was deliberate. He referred to the absence of explanation in his judgment. In the course of argument of counsel the Judge explained that he had extended the powers of the Sequestrators to assets of Tombstone on the basis that there was a true identity or nomineeship between Mr van Hoogstraten and Tombstone and that he had “lifted the veil”, and Tombstone and Mr van Hoogstraten were “the same thing”. He ordered both Willoughbys and Ms Hamilton to provide further information by 4 p.m. on the 27th March 2003. Subject only to that evidence the Judge reserved judgment on the application. Further evidence was served and on the 3rd April 2003 the Judge gave judgment dismissing both applications with costs and refused permission to appeal and a stay. In his judgment he said that he was firmly of the view that his finding in the December 2002 Judgment that Tombstone belonged beneficially to Mr van Hoogstraten was correct.

[43]On the 4th April 2003 Mr van Hoogstraten and Ms Hamilton wrote to Minaides asking them to intervene on behalf of Tombstone to prevent any sale of Tombstone’s assets.

[44]On the 13th June 2003 the Court of Appeal heard a series of applications for permission to appeal orders of the Judge. First it refused the application of Willoughbys for permission to appeal against the order refusing it permission to intervene on the ground that no explanation had been proffered why Tombstone should not protect the property it claimed to own. At the hearing Chadwick LJ had asked Mr Leonard, counsel for Willoughbys, to explain why Tombstone had not made the application and he had stated that he could not. The court however granted Mr van Hoogstraten permission to appeal against the orders and finding made against him extending from the Freezing Order to the Sequestration Order. The court however refused a stay of the Sequestration Order, but directed that the Sequestrators should restrict their activities to the management, insurance and protection of properties already under their control; they should be at liberty to realise from the properties identified by the Judge a sum of £1 million for the purpose of meeting existing and future liabilities under the sequestration.

[45]Funded by a loan of £17,250 from Hamilton Property Holdings Limited, on the 25th June 2003 Tombstone (acting by Engleharts) applied for permission to intervene. The application was supported by a witness statement dated the 25th June 2003 purporting to give reasons for the failure of Tombstone to apply earlier. On the 27th June 2003 the Judge dismissed the application to intervene, but on the same day Tombstone issued a notice of appeal against this order and Chadwick LJ, whilst he granted Tombstone permission to appeal, dismissed the application for a stay on the sales of the properties. He held that a deliberate decision had been made in February 2003 that the intervention should be made, not by Tombstone, but by Ms Hamilton and Willoughbys, and that the current application should have been made by Tombstone “many months ago or immediately after the 13th June 2003 when I pointed out the position to Willoughby’s counsel”. He went on to say that no explanation was given for this last minute application for the stay which should be refused as an abuse of process.

[46]In July 2003 the Court of Appeal quashed Mr van Hoogstraten’s conviction for manslaughter and gave directions leading to his re-indictment.

[47]On the 4th July 2003 the Court of Appeal refused Ms Hamilton’s application for permission to appeal against the order refusing her permission to intervene.

[48]The appeals by Mr van Hoogstraten and Tombstone were due to be heard in November 2003, but in November 2003 they requested an adjournment on the basis that neither had funds to instruct counsel. On the 12th November 2003 the Court of Appeal reluctantly granted the adjournment on terms:(1) varying its order of the 13th June 2003 so as to give the Sequestrators liberty to realise a further sum of £240,000 from properties the subject of the Sequestration Order for the purpose of funding their costs until the postponed hearing; and

(2) that neither Mr van Hoogstraten nor Tombstone would seek to have recourse to the Estate in respect of the diminution of assets subject to the sequestration by realisations made for the purpose of paying the Sequestrators’ costs over the period of the adjournment.

[49]In December 2003 Mr van Hoogstraten’s re-indictment was quashed and he was released from prison.

[50]On the 21st July 2004 the Court of Appeal allowed Mr van Hoogstraten’s appeals with costs. In consequence of the setting aside of the finding of contempt by Mr van Hoogstraten the Court of Appeal set aside the December 13th Order (and with it the Amended Writ) and the court ordered that the question whether Mr van Hoogstraten or Tombstone was entitled to an Inquiry as to Damages arising out of the making of the December 13th Order be remitted for determination by a judge of the Chancery Division. The Court of Appeal had no occasion and was not invited otherwise to explore any issue whether the Amended Writ was open to challenge on any other ground and in particular whether it was obtained irregularly.

[51]On the 11th November 2005 Mr van Hoogstraten resigned as a director of Tombstone. The current directors are Ms Hamilton, Mr Martin (a long time associate of Mr van Hoogstraten) and two sons of Mr van Hoogstraten, one of whom is the son of Mr van Hoogstraten and Ms Hamilton. On the 19th December 2005 in the December 2005 Judgment I held that Mr van Hoogstraten had hired two thugs to murder Mr Raja to halt the prosecution of this action. Permission to appeal the December 2005 Judgment was refused by the Court of Appeal.

[52]The initial claimants on the Inquiry as to damages were Mr van Hoogstraten and Tombstone and the initial defendant was the Estate. Mr van Hoogstraten subsequently abandoned his claim and I need say no more about his claim. Tombstone’s claim is in damages and not for restitution because the Estate gained no benefit from the sequestration. Tombstone in the original Particulars of Claim limited its claim to a claim against the Estate for the sequestration management and legal costs.

[53]On the 9th March 2006 Tombstone amended its Particulars of Claim to introduce for the first time the contention that the December 13th Order and accordingly the Amended Writ were nullities or alternatively irregularly obtained and sought to join Healys as an additional defendant and to introduce the Section G Claims against the Defendants. On the 26th July 2006 I gave directions in respect of the Inquiry as to Damages directed by the Court of Appeal. I joined Healys as an additional defendant and gave permission to amend and I gave directions for the trial of the issue of liability as the first stage of the proceedings but excluding issues of beneficial ownership and possession.

[54]The trial date was fixed for the 19th February 2007 and began on the 22nd February 2007. There was an adjournment due to witness unavailability and lack of suitable dates on the 6th March 2006 and the trial did not begin until the 22nd April 2007. In default of earlier sufficient particularisation on the 20th March 2007 I made a direction requiring Tombstone to particularise the acts of trespass pleaded as part of the Section G Claims. The particulars were furnished in draft on about the 19th April 2007 when the trial resumed and the particulars were formally served on the 20th April 2007.

ISSUES

[55]There are three core issues in this case. The first issue is whether the Defendants are secondarily liable as having procured the alleged acts of trespass and conversion by the Sequestrators (for which the Sequestrators are immune from liability). The second issue is whether it is a sufficient answer to such claim against the Defendants that the Sequestrators’ activities were authorised by the December 13th Order and the Amended Writ, and this in turn raises the question whether the December 13th Order and consequently the Amended Writ were nullities or open to challenge on the ground of irregularity. There is and can be no challenge to the validity of the Authorisation Orders. Healys have placed reliance on the Authorisation Orders, but they cannot provide a complete answer to the claims and in particular can provide no answer to claims in respect of torts committed before the orders came into effect. The third issue is whether, assuming that the Estate and Healys are so liable, Tombstone can establish the claims which they make for damages for the trespass and conversion alleged.

EVIDENCE

[56]The course of events can be ascertained to a very large extent from the contemporaneous correspondence. There is however a lacuna. Tombstone, Willoughbys and Mr van Hoogstraten were entitled to refuse and did refuse to make any general waiver of privilege with regard to events between December 2002 and June 2003. This has rendered it very difficult to reach any clear conclusion as to the true reasons for their and Ms Hamilton acting as they did.

[57]Evidence was given by some six witnesses. Mr van Hoogstraten, Mr Englehart and Ms Hamilton gave evidence on behalf of Tombstone. Mr Lightfoot, Mr Amjad Rajah (“Amjad”) and Mr Pieri gave evidence on behalf of the Defendants. All save Mr van Hoogstraten were witnesses of truth. I need only say a word about the evidence of Mr van Hoogstraten and Amjad.

(a) Mr van Hoogstraten

[58]Mr van Hoogstraten was the principal witness called on behalf of Tombstone. He made all decisions on behalf of Tombstone at all relevant times. Where others made decisions, they were subject to confirmation by him and he confirmed them. I did not find Mr van Hoogstraten to be a satisfactory or reliable witness. He said what he thought advanced his case. He prevaricated, his recollection was selective, he was more concerned to make his own points (and in particular attacks on other persons) than to give answers to questions and (as is his practice) he treated the court with contempt. His evidence must accordingly be examined with care. But one thing which Mr van Hoogstraten told me, and indeed insisted on, was that he knew that the December 13th Order and the consequent Amended Writ when issued were wrongly made and issued and would be set aside by the Court of Appeal, but that he did not regard them as very important and was content that they continued in force unchallenged. He said that (as he saw it) the orders preserved the assets sequestered and did not interfere with the conduct of Tombstone’s business. (He gave evidence to the same effect regarding the Freezing Order, namely that he knew that it was wrongly granted and would be set aside on appeal, but was content to live with it and did so.) He was not anxious to retrieve his own or Tombstone’s assets from the Sequestrators until he learnt that the Sequestrators intended to sell them and recoup their expenditure, remuneration and costs out of the proceeds.

[59]I have examined this evidence with care and I have concluded that it is credible and that I should accept it. As I have said, he took a similar attitude in respect of Freezing Order. I decline to reject this evidence (as suggested by counsel for Tombstone) as mere bravura. That was not the impression which he gave me when in the witness box or when I studied the transcript of his evidence. The view which he took that, if challenged, the December 13th Order would be set aside was plainly correct in law and a detached informed observer could well have reached the same conclusion. Mr van Hoogstraten is an intelligent and a very experienced litigant and was in a position to appreciate the injustice of the procedure adopted to obtain the order and indeed in the grant of the order itself. (It should be noted that Mr Englehart told me that he took the same view of the unimportance of the December 13th Order.)

[60]A great deal of time and effort at the trial was expended (amongst others in the cross-examination of Mr van Hoogstraten) on investigating the efforts made on behalf of Tombstone to instruct T&D to act on its behalf to protect Tombstone from the consequences of the December 13th Order and the reasons why Mr Pieri of T&D did not accept instructions. This was however a matter of peripheral importance. It was at all times open to Tombstone to instruct other solicitors both before or after Mr Pieri refused to act.

[61]I make two further findings of fact (which on the evidence cannot seriously be challenged) namely that:(1) Mr van Hoogstraten at all times had access to legal advice and representation for himself and Tombstone (in particular to Mr Englehart) and had more than ample funding to obtain both. Any necessary application for the release of funds frozen by the Freezing Order or the subject of the Sequestration Order to pay for such advice and representation should have succeeded;

(2) Mr van Hoogstraten always gave anxious consideration whether it suited his and Tombstone’s perceived interests and whether it was tactically advantageous to be legally represented and decided accordingly. There never was an occasion when he could not obtain legal representation if he wanted it, though it is correct that he could not get T&D to represent Tombstone.

(b) Amjad

[62]Amjad gave evidence (which I accept) that the attitude adopted by the Estate in the litigation against Mr van Hoogstraten, and in particular in respect of the application for the Amended Writ, was one of caution. If there had been any appreciation of a risk that the December 13th Order might be challenged on any grounds (which included irregularity), the Estate would immediately have sought the guidance of the court and taken all necessary steps to eliminate risk of any personal liability.

PRELIMINARY OBSERVATIONS

[63]It is necessary to make two preliminary observations. My first observation is on the relationship between Mr van Hoogstraten and Tombstone and its assets. There are to be found in submissions of Mr Irvin to the Judge and in the observations of the Judge both before and after the 13th December 2002 Order (and in particular in the December 2002 Judgment) widespread reference to the “identification” of Mr van Hoogstraten with Tombstone, Mr van Hoogstraten “controlling” and being the “alter ego” and the “directing mind” of Tombstone, and to Mr van Hoogstraten “owning” or having an interest in Tombstone, its shareholders, its shares and its properties or some of them. These terms are not interchangeable and their inexact use is apt to give rise to confusion and did do so. There can be no doubt that at all times Mr van Hoogstraten (both when, and when not, a director or sole director) was in control of Tombstone and could colloquially be described as its directing mind and alter ego. As such he had control over its assets. That however did not of itself mean that he had any proprietary interest in any of the shares in Tombstone or in any shareholder in Tombstone or in any of its assets. If Mr van Hoogstraten held or had a beneficial interest in shares in Tombstone or its shareholders, this did not of itself confer upon him any proprietary interest in any asset of Tombstone: at most it could be said that in a very broad sense he had a financial interest in its affairs and assets. The Sequestrators of Mr van Hoogstraten could have no unconceded claim to any shares in or to any property of Tombstone unless they could establish (in proceeding against the registered shareholders) that Mr van Hoogstraten was beneficially entitled to their shares and (in proceedings against Tombstone) that he owned the property held in the name of Tombstone. There never were any such concessions or any such proceedings.

[64]My second observation is on the December 13th Order and the Amended Writ. I should first state the well established principle that sequestration does not lie against third parties who are not parties to the existing action unless they appear and submit to the jurisdiction (see Craig v. Craig [1896] 171 at 174). I should secondly underline the serious character of any order for sequestration. Sequestration is a process of contempt. It is a remedy for serious cases of deliberate contempt: it is not a simple method of execution of money judgments. The court can only make such an order on an application made against a party to proceedings without notice in quite exceptional circumstances and for such an order to be made against a non-party (if it is ever to be made) without notice must require the fullest consideration by the court of the justification for and the immediate need for such a draconian order.

VALIDITY AND REGULARITY

[65]To make good their claim for damages Tombstone have three hurdles to overcome. The first is to establish that, unless protected by the December 13th Order, the Defendants are legally responsible for the acts of the Sequestrators done in pursuance of the duties imposed on them by the Amended Writ. The second is to establish that no protection is or should be afforded to the Defendants by the December 13th Order. The third is to establish that the acts of the Sequestrators relied on constituted torts giving rise to the claims in damages made on this application. This third hurdle is the subject of the penultimate part of this judgment headed “Damages”.

[66]I do not have any difficulty in holding that Tombstone overcame the first of these hurdles. By applying for and obtaining as they did the December 13th Order and the Amended Writ, the Defendants brought about the imposition on the Sequestrators of the duties set out in the Amended Writ namely “to identify collect and realise” the assets of Tombstone. Regardless of any order subsequently to be obtained authorising particular sales, these duties required the Sequestrators as part of this process (where appropriate) to enter upon and view the Properties and to obtain payment of sums due from its tenants and banks. On any common sense basis the Defendants were parties to any acts of trespass or conversion by the Sequestrators involved in so acting. The court should draw for this purpose no distinction between the Estate and Healys (consider e.g. Barker v. Braham (1773) Wils 368 and Codrington v. Lloyd (1838) 8 Ad & El 449).

[67]I turn now to the second hurdle. The proceedings on the 13th December 2002 have a number of extraordinary and disturbing features involving misrepresentations and non-disclosures and (by reason of the same) serious breaches of duties owed to the court by Mr Irvin, Healys and (through them) the Estate. As regards Mr Irvin I must make plain that Mr Irvin is not a party or represented and I have not heard any explanation from him. But I do have the transcript of what he said on the 13th December 2002. The foremost of these features were:(1) the application for the relief sought against Tombstone was not (as the Judge was plainly led to believe) a mere formality and the relief sought did not follow as a matter of course from, but went far beyond, the December 2002 Judgment. The relief went far beyond it (in particular) by granting extensive relief against a non party to the action and to any contempt proceedings and relief which was not the subject of consideration in the December 2002 Judgment;

(2) there was no conceivable justification for the making of the order sought on a without notice application abrogating the important safeguards afforded by the rules of natural justice. (The suggestion that after the December 2002 Judgment Tombstone knew that an application for sequestration of its assets made without notice to Tombstone would immediately follow is wisely no longer advanced by the Defendants; it was unmaintainable on the facts. This would in any event not have furnished any justification);

(3) the attention of the Judge was not drawn to the objections which should have been apparent to the Estate’s legal representatives to the course which they invited the Judge to take; and

(4) Healys failed in their duty to make and provide a note or record of the proceedings on the 13th December 2002 to Mr van Hoogstraten or Tombstone which would have made clear the misrepresentations and non-disclosure. This deficiency was only made good recently when a transcript of the hearing was obtained. It should be said that Tombstone never requested any such note or record and could itself at anytime have obtained a transcript from the shorthand writers.

[68]I would elaborate on what I have said on these features as follows: i) there was a failure to provide the Judge prior to the hearing with any papers, with any skeleton argument or with any draft of the order sought. It was the responsibility both of solicitors and counsel to provide such assistance to the Judge. Of particular importance was the absence of provision of the draft order and an explanation of the need and justice of the grant of such an order. It was unsatisfactory to hand him the copy at the hearing in the course of the most abbreviated address: consider Memory Corp Plc v. Sidhu

[2000] 1 WLR 1443

at 1460 (“Memory”). The inference to be drawn from the absence of such provision in any ordinary case, where it is not otherwise explained is, (and the only inference to be drawn in this case was), that the application raised no questions and could properly be granted “blind”. It is no answer that the Judge was enthusiastic in his immediate response to the application and did not call for any further elaboration or explanation. It was the duty of counsel not to lead the Judge into temptation, to temper his (less than fully informed) enthusiasm and do his reasonable best to ensure that no order was made which would not, indeed should not, have been made if the Judge had been fully briefed; ii) the application was made in the course of a day when the Judge was immersed in other work as the Applications Judge. Counsel proceeded with it on the false basis that the making of the order sought was a matter of course flowing from the December 2002 Judgment and in no way departing from or going beyond it and the transcript of the hearing makes clear that the Judge proceeded on this basis. This approach on the part of the Judge was encouraged, not only by what counsel said at the hearing, but also by the otherwise inexplicable failure of counsel and solicitors to provide the Judge with any papers before the hearing and (most particularly) to give notice of the hearing to Tombstone. When a judge is approached to make an order in a break between other commitments, the judge must be particularly dependent on counsel and solicitors fulfilling their duty of full disclosure, and counsel and solicitors must make every effort to ensure that he focuses on the obstacles which they must surmount in order to be entitled to the relief sought and on the unusual features of the application. There was a total failure in this regard; iii) the draft Amended Writ provided to the Judge contained in paragraph (c) the crucial misstatement that the court had expressly declared in paragraph 26 of the December 2002 Judgment that Mr van Hoogstraten was the beneficial owner of Tombstone and its assets. Paragraph 26 stated nothing of the sort. Paragraph 98 stated that Mr van Hoogstraten was the owner of the assets there specified, but specifically said that no determination was made in respect of any other assets; iv) the Sequestration Order was extended to assets (indeed all the assets) of Tombstone, but Tombstone was not a party to proceedings, was not in contempt, and was given no notice of the application. (Indeed even Mr van Hoogstraten was given no notice.) The fact that the Judge in the Judgment had expressed the view that Mr van Hoogstraten was the beneficial owner or controlled specific assets of Tombstone or Tombstone itself in nowise bound Tombstone: see St George’s Healthcare NHS Trust v. S

[1999] Fam 26

d 59-60 (“St George’s”); and accordingly could not justify an order extending to any (let alone all) the assets of Tombstone. No such order could or should be made unless and until Tombstone had been given the opportunity to dispute the claim. No warning to the Judge was given in this regard; v) the failure to give notice of the application to Tombstone is particularly striking since RSC Order 46.5(2) required the application notice for permission to issue the writ of sequestration against the assets of Tombstone be served on Tombstone. The Judge’s attention was not drawn to this rule. RSC Order 46.5(3) provided that the court might dispense with service of the application notice if it thought it just to do so. Likewise the Judge was not invited to exercise this power. There was no basis for any suggestion that it was just to do so. There was no urgency or other reason for any such draconian step; vi) the Judge’s attention needed to be, (but was not), drawn to the potentially catastrophic and irremediable consequences of the Amended Writ on Tombstone as the owner of the sequestered assets, and in particular the charge created by the order over its assets in favour of the Sequestrators in respect of their costs and expenses. That charge was effective whether or not and whenever the order was subsequently discharged.

[69]The first question raised is whether the features which I have referred rendered the Amended Writ a nullity. If it is a nullity, it can afford no protection to the Estate or to Healys against the claim in trespass and conversion with which I am concerned. Whatever the earlier authorities may have stated, it is now well established that an order of a court of unlimited jurisdiction (and that of course includes the High Court) cannot be held to be invalid or a nullity: an error can only form the basis for an appeal and a party is not liable in damages for having enforced the order and for doing what he was authorised by the order to do on the ground that by reason of such an error the order was invalid or a nullity: see e.g. Isaacs v. Robertson

[1985] AC 97

at 102-3i; St George’s at p.61, Strachan v. The Gleaner

[2005] 1 WLR 3204

; and Goff & Jones, The Law of Restitution 7th ed para 16.0001. There is a clear distinction between lack of jurisdiction and impropriety in exercising jurisdiction e.g. without due regard to the important safeguards for parties affected which renders a valid order open to challenge on grounds of irregularity: see Fourie v. Le Roux

[2007] 1 All ER 1087

. There can accordingly be no question of the December 13 Order or the Amended Writ being nullities.

[70]The second question is whether there was such irregularity in obtaining the Amended Writ that, though the order was valid, nonetheless, it was an order which by reason of the disregard for such safeguards and in particular by reason of misrepresentation or non-disclosure on the application made for it, the court in the exercise of its inherent jurisdiction ought not merely set aside the order, but should go beyond this and deprive the parties who procured it of the benefit of the protective effect which it would otherwise have afforded. The classic statement of the principle or (as I prefer to see it) of the then prevailing rule of practice is to be found in the judgment of Warrington LJ in R v. Kensington Income Tax Commissioners ex p. de Polignac

[1917] 1 KB 486

at 509:

“It is perfectly well settled that a person who makes an ex parte application to the court – that is to say in the absence of the person who will be affected by that which the court is asked to do – is under an obligation to make the fullest disclosure of all material facts within his knowledge, and if he does not make the fullest possible disclosure, then he cannot obtain any advantage from the proceedings and he will be deprived of any advantage he may have already obtained by means of the order which has thus wrongly been obtained by him. That is perfectly plain and requires no authority to justify it.”

[71]This statement of principle or rule of practice was later modified by pre-CPR authorities which established that:(1) the obligation to make the fullest disclosure goes beyond disclosing the known facts but extends to investigating the relevant facts and law and disclosing the results of such investigation and identifying the crucial points militating against acceding to the application and likely defences; and

(2) where there is a breach of this obligation the court has a discretion whether to set aside the order and deprive of the advantages previously obtained, a discretion to be exercised taking into account most particularly (and in appropriate cases as factors of decisive importance) the culpability of the breach and the need to protect the administration of justice and uphold the public interest in requiring full and fair disclosure: see Brinks Mat Ltd v. Elcombe

[1988] 1 WLR 1350

at 1358D per Balcombe LJ and 1359C per Slade LJ (“Brinks Mat”).

[72]The provisions of the CPR made clear that, if there ever was previously a rule of law or practice which established a separate category of irregularity which conferred on a party an entitlement as of right to have the order set aside and which survived the decision of the Court of Appeal in Brinks Mat, it did not survive the CPR: see Nelson v. Clearsprings (“Clearsprings”)

[2006] EWCA 1252

and consider Akram v. Adam

[2005] 1 WLR 2762

. It is now in all cases a matter for the court in the exercise of its discretion to decide whether the irregularity established is such as to merit setting aside the order and depriving the party who obtained it of entitlement to rely upon the making of the order as a justification of acts done pursuant to it in all the circumstances bearing in mind the overriding objective and the need for proportionality: see Memory. One of the relevant circumstances is the promptness with which the application is made and the length and impact of any delay and the reasons for it.

[73]In my judgment, the misrepresentations and non-disclosures to which I have referred on the without notice application made on the 13th December 2002 were so culpable and serious as to entitle and indeed require the court in the exercise of its discretion to set aside the December 13th Order and the Amended Writ and deprive the Estate and Healys of the protection otherwise afforded by those orders on an application promptly made by Tombstone for such relief. The discretion could only properly have been exercised in favour of granting Tombstone such relief. There were no countervailing considerations. I do not think that the seriousness of the defaults can have been alleviated by any conjecture of the likely response of the Judge if alerted to them to be inferred from what he said before and after the 13th December Order. In any event it cannot be assumed that, if properly informed and assisted, the Judge would or could have allowed the order to stand as he did: indeed I am confident that he (like the Court of Appeal on any appeal) would have set it aside.

[74]Nonetheless the Defendants contend that there are three reasons why I should not today grant such relief. I shall consider each in turn. The first reason is that the December 13th Order (together with the Amended Writ) was set aside by the Court of Appeal as long ago as the 21st July 2003, not on the ground of irregularity (which was not raised as an objection to the order until March 2006), but on the ground that this relief followed automatically from the success of Mr van Hoogstraten’s appeal against the finding of contempt against him. The question raised is whether, when the irregularly made order is set aside on grounds other than irregularity, it is open to a party prejudiced by the making of the order at a later stage to seek an order depriving the party who obtained the order of the protection thereby afforded on the grounds of irregularity in obtaining the order.

[75]It is clear that the court cannot accede to an application to deprive a party who has irregularly obtained an order of the protection afforded by the order so long as the order is subsisting. In my judgment it would be absurd and grossly unjust that the party prejudiced by the order irregularly obtained should be deprived of any right to apply for withdrawal of the protection afforded by the order unless in fact the order was set aside on the grounds of irregularity. Such a rule would open the way (for example) for the party who obtained the order himself to apply (if necessary on a without notice application) on grounds other than irregularity for the setting aside of the order at any time before any such application had been made by the party prejudiced by the making of the order or before such application has been heard and in this way to defeat any claim against him. Such an application by the party who obtained it would almost certainly succeed since the order was made for his benefit. As a matter of principle this cannot be the law, and there is no authority which requires me to reach this conclusion.

[76]Principle and the authorities establish two different propositions. The first is that, where the party prejudiced by such an order applies for its setting aside, whether on grounds of irregularity or on other grounds, and the court makes such an order on grounds other than irregularity, that party may be precluded under the principles of res judicata from later claiming that the order had been obtained irregularly and seeking on this ground the withdrawal of the protection otherwise afforded by the

[77]Accordingly the claim by Tombstone for withdrawal of the protection of the orders is not lost by reason only of the fact that the December 13th Order and the Amended Writ were set aside by the Court on grounds other than their irregularity.

[78]The second reason is the Defendants’ contention that the present application to withdraw the protection today is an abuse of process. In determining whether this application is an abuse of process by reason of the failure to challenge the regularity of the December 13th Order at earlier dates when the occasion to make such an application occurred, the court is bound to make a broad merits-based judgment which takes account of the public and private interests involved and of all the facts of the case focusing attention on the crucial question whether in all the circumstances Tombstone is misusing or abusing the process of the court by seeking to raise before it the issue of regularity which could have been raised before: see Gore Wood above at 31 per Lord Bingham. For the purpose of this exercise Tombstone should be recognised for what it was, namely as the corporate embodiment of Mr van Hoogstraten: for he at all times made decisions and gave instructions on its behalf: see above. The third reason is the Defendants’ contention that in the exercise of my discretion whether to withdraw the protection I should decline to accede to Tombstone’s application because it would be grossly unjust with the passage of time and events (and in particular in the light of the long apparent acceptance by Tombstone of the December 13th Order and its regularity) to do so now.

[79]I have no doubt that in the quite exceptional circumstances of this case in the exercise of my discretion I should decline to withdraw the protection. My reasons for so deciding can be stated shortly as follows:(1) it should have been plain to any competent lawyer with any knowledge or experience of litigation (and accordingly any such lawyer instructed by Tombstone) that: (a) the December 13th Order had been irregularly obtained, for it had been obtained for no apparent or sufficient reason on a without notice application against a non-party to the proceedings against whom there had never been any allegation of contempt and in contravention of RSC Order 46.5(2), and accordingly the order would practically as a matter of course on any prompt application be set aside on this ground; and (b) in any event at any time, since the order was made on a without notice application, Tombstone could apply for its discharge on the merits on a full hearing;

(2) Tombstone (through Mr van Hoogstraten) at all times knew (but the Defendants did not know) that the December 13th Order could and would be set aside by the Court of Appeal. If Tombstone had challenged the order forthwith (as any ordinary litigant would have done) there would have been an early finality in this litigation: the December 13th Order and the Amended Writ would have occasioned Tombstone no damage or loss. Instead, not merely was Tombstone content that the December 13th Order and the Amended Writ should remain in force until the Sequestrators applied for power to sell the Properties, but through Engleharts Tombstone requested the Sequestrators to pay tax and trade debts owed by Tombstone. When the Sequestrators did apply to sell the Properties, instead of making any challenge, for no good or sufficient reason Tombstone left the making of any challenge to others who had no locus standi to make it. Tombstone was accordingly in a very real sense the author of the loss in respect of which it seeks the lifting of the protection afforded to the Defendants by the orders and for which it claims relief in this action;

(3) an application to discharge the December 13th Order and set aside the Amended Writ and (in default) for permission to appeal could and should have been made at the hearing of the 18th December 2002. At that hearing at which Mr van Hoogstraten was represented by Mr Reza, matters arising from the December 2002 Judgment including the form of order and the grant of permission to appeal were on the agenda and dealt with. Tombstone however, of which Mr van Hoogstraten was the “corporate embodiment”, for its own reasons absented itself and took no action;

(4) though the Sequestrators did their best in early February 2003 to prompt Tombstone to be represented at the first hearing on the 10th February and later at the hearing of their application for power to sell properties in the name of Tombstone and though Mr van Hoogstraten was represented by counsel Tombstone for their own reasons declined to be represented. The (ultimately successful) application by the Sequestrators for directions authorising the sale of the properties was the occasion (if not earlier made) for a challenge to the December 13th Order on this ground, for the claim to relief sought by the Sequestrators proceeded on the basis that the December 13th Order was valid and regularly made. Tombstone stood by whilst futile applications to intervene were made at the instance of Mr van Hoogstraten by Ms Hamilton and Willoughbys and made no application at all to the court until the 25th June 2003 and no application on grounds of irregularity until March 2006. So far as reliance as an excuse for this and other actions and delays is placed on the alleged hostility of the Judge to Mr van Hoogstraten and his identification of Tombstone with Mr van Hoogstraten, it is appropriate to have in mind the words of Lord Hoffmann in Arthur S Hall v Simons

[2002] 1 AC 615

at 699: “Whatever may have been the foibles of the Judge who heard the case it cannot be assumed that he would have behaved irrationally. If he did, it would have been corrected on appeal.”

(5) the application by Tombstone to the Court of Appeal for permission to appeal against the Judge’s refusal of permission to intervene was again the occasion to raise any allegation of irregularity, but the allegation of irregularity was only advanced as late as March 2006; and

(6) throughout the intervening period the Defendants proceeded on the basis that, whether or not on its merits the December 13th Order should have been made, there was no question of any irregularity which might defeat the protection otherwise afforded to those who procured the Order and secured compliance with it. As Amjad told me in his evidence and I fully accept, any hint of irregularity would have prompted the Estate to make an application to the court for resolution of the issue.

[80]In a word I am firmly of the view that in all the circumstances of this case it would be unjust and indeed oppressive to the Defendants to accede to Tombstone’s last minute and surprise application to spring upon the Defendants an order depriving them of the protection on which they could reasonably rely over the protracted period since the 13th December 2002.

[81]In the circumstances it is unnecessary to decide whether Tombstone is also precluded from obtaining this relief on the ground that its application is an abuse of process. It is sufficient to say that (if necessary) I would hold that Tombstone’s application to remove the protection is an abuse of process. The public interest in the finality in litigation and the efficiency and economy in the conduct of litigation in the interests of the parties and the public as a whole required that Tombstone make any such application as the present at the earliest practicable date. There was no sufficient reason why this should not have been done at the hearing on the 18th December 2002 or (in default) on the 10th February 2003 or on Willoughbys’, Mr van Hoogstraten’s and Ms Williams’ applications to the Judge and the Court of Appeal. The reasoning which I have set out explaining my decision on the exercise of discretion is (in all its essentials) equally applicable to my decision on this ground also.

[82]I should add that I can see no scope for any invocation by Tombstone of the European Convention on Human Rights or the Human Rights Act 1998. The rights of Tombstone infringed by the December 13th Order gave rise to remedies available under English law to Tombstone. I have referred in paragraph 3 of this judgment to claims by Tombstone which have yet to go to trial, and the remedies sought on this application are lost because Tombstone deliberately failed promptly to avail itself of them and there are now impelling reasons to refuse relief.

DAMAGES

[83]Besides concluding that this application fails for the reasons which I have given, I also hold that Tombstone’s claim must also fail because on no basis can Tombstone be entitled to the relief by way of damages which it seeks. No arguable claim was made out to any recoverable loss.

[84]I have already referred to the delay on the part of Tombstone’s legal advisers in adequately particularising the acts of trespass and conversion relied on. The heads of claim are damages for acts of trespass and conversion by the Sequestrators for which the Defendants are responsible in performance of their duties under the Amended Writ. The claim advanced at the trial before me for damages for trespass to the Properties by the Sequestrators is bound to fail because all but one of the Properties the subject of the Amended Writ were at all material times let and Tombstone was accordingly neither in possession nor in occupation of them. There could be no trespass by the Sequestrators on the properties let save and unless the trespass was of a permanent character injurious to the reversion: see Mayfair Property Company v. Johnston

[1894] Ch 508

. No trespass of this character is pleaded or proved. In the case of the one property which was un-let, a representative of the Sequestrators apparently visited the property. There is not and cannot be alleged to have been any relevant or significant act of trespass which could occasion the grant of relief. Counsel for Tombstone could not suggest otherwise. The claim for damages for conversion is for conversion of choses in action, namely the rights of Tombstone to payment of rent by the tenants of its property and of monies standing to its credit in its bank accounts, by collecting payment. But in OGB v. Allan

[2006] 2 WLR 920

the House of Lords (affirming the Court of Appeal) held that there can be no conversion of choses in action. The claim in conversion was accordingly not pursued at the trial. The accepted fragility of the claim in damages was underlined by Tombstone’s novel argument at the hearing that the court should look at the acts of trespass relied on “in the round” in deciding whether they had caused loss. It was not explained what looking at the same facts “in the round” added to looking at them squarely in the face. Counsel for Tombstone all but recognised that no serious case could be advanced in trespass or conversion.

[85]When I reserved judgment on the 3rd May 2007 I left it open to the parties to clarify their oral submissions to me in writing. In a written note dated the 22nd May 2007 Tombstone submitted:(1) that there might have been and were other acts of trespass and conversion beyond those on which the trial proceeded and on which I heard argument; and

(2) that I ought not to decide the issue of damages on the case as presented to me by Tombstone but should leave it open to Tombstone to rely on the other available acts which could be established. This submission lay outside the range of those for which I have given liberty to the parties to address to me. The submission makes a new case on which evidence was not called and argument was not addressed. It is a submission which it would be a gross injustice to the Defendants to accede to. It was for Tombstone to make its case as presented at the trial.

[86]It is fair to say that in their pleadings in this case the Defendants denied the liability for acts of the Sequestrators and did not raise the issue whether acts in question constituted torts giving rise to claims in damages. But they did raise this issue at a late stage without objection. By letter dated the 31st January 2007 the Defendants requested full particulars of the acts of trespass and conversion alleged. Tombstone’s response was inadequate. On the 29th March 2007 I gave directions for particulars and these were provided on the 20th April 2007. The trial proceeded on the basis of the heads of claim which I have set out above. The weakness of the claim was apparent to all in court when I was addressed on the issue. Tombstone raised no complaint and made no application at that stage for permission to amend or for an adjournment. There is no sufficient justification for affording Tombstone the opportunity now to make a new case. It is not sufficient that a recent report of the Sequestrators may give reason to believe that other torts could be established. There can be and is no suggestion that any relevant information was wrongfully withheld from Tombstone. If there might have been other maintainable claims, that fact was readily ascertainable by Tombstone. Tombstone was however content to rest its case on the acts of trespass and conversion to which I have referred.

[87]The question accordingly does not arise as to the legal effect of the imposition by the Court of Appeal in its judgment delivered on the 12th November 2004 of the term that Tombstone would not seek recourse in respect of the diminution of assets subject to the sequestration by realisations made for the purpose of paying the Sequestrators’ costs over the period of the adjournment. The adjournment must be the period from the original date fixed for trial (namely the 17th November 2003) until the date on which the Court of Appeal gave judgment discharging the December 13th Order. Tombstone contend that the provisions of the order operate to limit the liability of the Estate alone and not any liability of Healys. If this is correct, this may furnish a further ground supporting the contention on the part of the Defendants that the pursuit of the present application is an abuse of process. If Healys or the Estate or the Court of Appeal had appreciated that there was any risk of a claim based on irregularity such as the present against the Defendants, there can be no doubt that the Court of Appeal would have required, and acceded to the request to require, that the same protection should be afforded to Healys as was afforded to the Estate. The delay in proceeding with the appeal would have occasioned the same further detriment to Healys as to the Estate.

CONCLUSION

[88]For the reasons which I have given I accordingly dismiss all claims against Healys and the Section G Claims against the Estate.

order

see e.g. Williams v. Smith (1863) 14 CB(NS) 596. The second is that where a party stands by whilst such an application is made by a third party with a sufficient degree of identity to him or a sufficient identity of interest, the doctrines of estoppel and abuse of process may lead to the same result: see House of Spring Gardens Ltd v. Waite

[1991] 1 QB 241

and Johnson v. Gore Wood

[2002] 2 AC 1

at 32 (“Gore Wood”). There may be a sufficient identity to him if the applicant was the corporate embodiment of him: if he made decisions and gave instructions on its behalf: see Gore Wood above. Leaving aside these situations, as it seems to me, that is to say where the order has been set aside on grounds other than that of irregularity in circumstances which do not give rise to the application of the principles of res judicata or abuse of process, the court must exercise its discretion whether to withdraw the protection of the order in the light of all the circumstances and in particular the intervening circumstances. It may no longer be just, as it would have been just at an earlier date, to order that the protection of the order be withdrawn.

Cited in 1 later judgment

Tombstone Ltd v Raja & Anor 2008