Compagnie Noga D'importation Et D'exportation SA & Anor v Australian and New Zealand Banking Group & Ors [2006] EWHC 602 (Comm)

[2006] EWHC 602 (Comm)Case No 1999 FOLIO 404
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 24/03/2006
Before
MR JUSTICE CHRISTOPHER CLARKE
Between
Compagnie Noga D’Importation et D’exportation SAClaimantsNessim D GaonClaimantAustralian and New Zealand Banking Group and othersDefendants
Miss Vasanti Selvaratnam QC (instructed by Mr Herzog) for ClaimantsMr Paul Stanley (instructed by Byrne & Partners) for DefendantsHearing Hearing date: 17 th March 2006
Approved Judgment
[1]In this case the first claimant – Compagnie Noga D’Importation et D’Exportation S.A. (“Noga”) - claims to have been defrauded of large sums of money in relation to certain Bills of Exchange (“the Ajaokuta bills”). The claim has been assigned by Noga to the second claimant Mr Nessim Gaon (“Mr Gaon”), whose family founded Noga. The Ajaokuta bills were provided in connection with the construction of a steel plant in Nigeria, and were drawn on the owners of the plant by a Russian entity, called TPE, for payment to the order of a Russian bank. Noga claims to have contracted to purchase the bills in 1992 and to have acquired a beneficial interest therein. In 1996nine of the bills are said to have been sold by TPE to a company called Parnar Shipping Corporation for 19.06% of their face value; on sold by Parmar to a company called Mecosta Securities Inc (“Mecosta”) for 26.25% of face value ; and then sold back by Mecosta to the Nigerian Government at 53%. Mecosta is beneficially owned by Abubakar Atiku Bagudu (“Mr Bagudu”), the ninth defendant, and Mohammed Sani Abacha (“Mohammed”), the tenth defendant. Noga and Mr Gaon assert a proprietary claim to the proceeds of the 1996 sale which are said to include certain Nigerian Par bonds held by some of the defendants. They also advance personal claims against some of the defendants for the value of trust property. The amount of the personal claim has up to now been quantified at US $ 700,000,000.[2]In 1999 a worldwide freezing injunction was granted by Timothy Walker, J against, amongst others, Mr Bagudu and Mohammed. Mr Bagudu now seeks to vary that freezing injunction so as to enable him to put up a bail bond (in the sum of CHF 5 million, circa US $ 3.8 million) for Abba Abacha (“Abba”) who is Mohammed’s brother. Abba has been charged with money laundering in Switzerland. According to his lawyer – Maitre Bertossa – this is not related to the Ajaokuta transaction. Mohammed and Abba Abacha are the two remaining sons of the late General Sani Abacha, the Head of State of Nigeria from November 1993 until his death on 8th June 1998. Mr Bagudu is both a business associate of Mohammed and a friend of the Abacha family.[3]Abba was arrested in 2004 in Germany when trying to access bank accounts containing about $ 350,000 and extradited to Switzerland, where he is currently imprisoned. It is in order to free him from jail there that Mr Bagudu seeks a variation of the freezing order of Walker J. Since Mr Bagudu is no longer subject to a criminal investigation in Switzerland and since he intends to raise the money for the bail (which has to be provided in cash) from accounts of his at the Union Bancaire Privée in London, in respect of which no proprietary claim is made, provision of the bail monies by him is likely to be acceptable to the Swiss authorities.[4]Mr Paul Stanley on his behalf submits that he should be allowed to do so. He relies on the many statements of principle to the effect that it is not the function of a Mareva to prevent a defendant carrying on business in the ordinary way or interfering with the defendant’s ordinary way of life; not is it its function to place the claimant in a secured position: Derby & Co Ltd v Weldon (Nos 3 and 4) [1990] 1 Ch 65,76E; Gee, Commercial Injunctions (5th ed 2004) paragraph 3.001; and paragraph 20.042 approved in Halifax plc v Chandler [2001] EWCA Civ 1750, paras 18-20. The fact that a defendant seeks to make payments in ordinary course which, if made, will diminish the assets available to satisfy any judgment is not per se a ground of objection. Indeed, the Court will permit the payment not only of sums which are legally due but also sums which a businessman would regard it as dishonourable not to pay: The “Angel Bell” [1980] QB 65. A defendant should, he submits, only be restrained from making a payment if the payment would constitute an artificial transaction carried out in response to the litigation whose effect may be to deprive the claimant of the fruits of any judgment. Here, as he submits, Mr Bagudu would, if he was free to do so, want to provide bail for Abba Abacha even though not legally obliged to do so. What Mr Bagudu says in his witness statement is this: “9. The Abacha family have money which is frozen throughout Europe. It would obviously be preferable if the Abacha family were able to use its own money as a bail bond. There would therefore be no need for me to stand surety. However the Abacha family money is variously frozen not only by Noga but also by national authorities and the FGN. In addition I have been informed by Abba Abacha’s Swiss Counsel that he does not believe that the Investigating Magistrate would accept this money as a bail bond and that he asked the Investigating Magistrate whether he would accept the Luxembourg funds as a source of the bail bond. I am informed that the Investigating Magistrate replied that such a transfer could be the source of the extra complications because the Luxembourg funds are alleged to be of criminal origin. I do not believe that Abba Abacha has any funds to meet the bail bond apart from the frozen family funds and the relatively small assets in Germany, which have been frozen and which he was arrested trying to access. 10. I am a business associate of Mohammed Abacha and was a business associate of his late brother Ibrahim. I have a continuing relationship with Mohammed not least because of this ongoing litigation. I believe it is in my own business interests to stand surety for Abba. Culturally within Nigeria my assisting the family in this regard will be seen as the proper thing to have done and I believe my actions will assist future independent business ventures. ……….. 18. I would have had no hesitation in standing surety for Abba Abacha in the normal course. Were it not for the Claimant’s freeze it is something I would have done immediately. I am in a position to help the Abacha family. It would be expected culturally that I would offer that assistance, especially as it does not involve the loss of monies. Normally I would have no hesitation in doing this. Mr Gaon has done business in Nigeria for many years and he will be well aware of the social and cultural norms in Nigeria. As Mr Gaon will know if I am unable to provide this assistance then it would be regarded in Nigeria as my not meeting my cultural responsibilities for Abba’s welfare and it will therefore cause me serious embarrassment and damage in Nigeria. I believe it is unfair that the Claimants should seek to use the freeze to stop me from doing something which I would have done in the normal course.” ………..[5]In his witness statement of 14th March 2006 Mr Herzog, speaking with the agreement of Mr Gaon, responds:
“15. I do not accept Mr Bagudu’s contention that he will be “damaged” either from a business or social or cultural point of view if the Court does not accede to his application to vary the injunction. Firstly, the Abacha family is associated in the minds of all right thinking Nigerian people with money laundering and corruption and despoliation of Nigeria and its people on an unimaginable scale. Secondly, the fact of making this application will absolve Mr Bagudu from any criticism. The fact that the court may not accede to his application will not be seen to be his fault. Thirdly, Mr Bagudu does not appear to be acting out of sense of duty to Abba Abacha but in order to advance his own business interests with an eye to future business opportunities for himself based on fostering “good relations” with the Abachas (see paragraph 10). This is not a good reason to vary the injunction. ”
[6]Mr Stanley submits that a claimant takes his defendant, as it were, as he finds him such that, if Mr Bagudu wishes, and would, but for the freezing order, have advanced the bail monies out of his own funds, thereby putting his own monies at risk, he should be allowed to do so. He also relies on a number of other factors as supporting the appropriateness of making the variation sought:a. The sum involved in providing the bail monies is comparatively small: it amounts to about 0.5% of Noga’s claim and to less than 0.3% of the total frozen funds. It has, however to be remembered that Noga are not the only claimants since the Federal Government of Nigeria (“Nigeria”) itself has a huge claim against many defendants including Mohammed and Abba.b. The sum is not paid away for good and will only be lost if Abba refuses to return to Switzerland. Mr Bagudu will undertake to return the bail monies to the bank accounts from which they are to come, once they are due back, and to inform the examining magistrate of this undertaking.c. There are a number of factors likely to reduce the risk of Abba not answering his bail, in that:(i) Abba’s alleged offences are, in the view of Maitre Bertossa, unlikely to carry serious punishment having regard to the fact that five other defendants who in Maitre Bertossa’s (not necessarily objective) view have a greater responsibility than that which is alleged against Abba, have been fined between CHF 25,000 and CHF 1,000,000;(ii) Mr Bagudu in a position of influence over Abba both culturally and socially because he is an elder who, if the variation sought is allowed, will have assisted him; and(iii) there is little point in his absconding because he could be extradited from Nigeria, which would be only too willing to do so because Switzerland has seized all the Abacha family money and given it to Nigeria.[7]In addition Mr Stanley submits that, on the evidence before the Court, although there is a very great deal of Abacha family money it is caught by freezing orders made in(a) the present action;(b) the proceedings in the Chancery Division brought by Nigeria;(c) Luxembourg and(d) Germany.[8]Miss Vasanti Selvaratnam Q.C., for the Claimants submits:(i) that it would be wholly inappropriate to vary the freezing order so as to allow Mr Bagudu to put up bail of CHF 5 million on behalf of his co-defendants’ brother and thus run the very real risk of diminishing by that amount the sum for which the claimants may be able to enforce any judgment;(ii) that such a payment would not be one within the scope of the ordinary Mareva proviso or one which, consistently with the policy underpinning the Mareva jurisdiction, it would be appropriate to allow; and(iii) that a variation should certainly not be allowed: (a) in the absence of full and accurate evidence from Abba, his wife, and Mohammed as to the extent of their assets, and (b) until attempts by them to secure a variation of any orders that preclude the use of those assets to raise bail have failed. She points out that the investigating magistrate in Switzerland has not indicated that he will not accept Abacha family money as bail money, only that that may involve complications. Further the effect of allowing a variation will be to reduce by a large sum the assets that are caught by the injunction, in circumstances where the sum paid may well be lost, if the bail is forfeited, and where the assets in reality caught by the Mareva are much less than the $ 700,000,000 claimed in the action. Further the undertaking offered is inadequate to protect the claimants against loss of the bail money if Abba does not answer to his bail.[9]The relevant principles that I have to apply may be summarised as follows: i. The essential test is whether it is in the interests of justice to make the variation sought; ii. Since the court has already determined that, in the absence of a freezing order, there is a real risk of dissipation sufficient to justify the making of an order it is for the applicant to satisfy the court that it is appropriate make the variation sought and to adduce any evidence that is necessary to persuade the court that that is so; iii. In determining whether or not to allow the variation proposed the Court is concerned to examine whether to do so would be consistent with the policy that underpins the jurisdiction, namely that a defendant should be restrained from evading justice by disposing of assets otherwise than in the ordinary course of business with the result that any judgment goes unsatisfied; Gangway Ltd v Caledonian Park Investments (Jersey) Ltd [2001] 2 Lloyd’s Rep 715; TTMI Ltd of England v ASM Shipping Ltd of India [2005] EWHC 2666 (Comm). iv. The correct test is “to consider objectively the overall justice of allowing the payment to be made including the likely consequence of permitting it on the prospects of a future judgment being left unsatisfied, and bearing in mind that the assets belong to the defendant and that the injunction is not intended to provide the claimant with security for his claim or to create an untouchable pot which will be available to satisfy an eventual judgement” : Gee, paragraph 20.054; v. If the question is whether or not the Mareva should be varied so as to allow frozen monies to be used to fund a defence it may be necessary to show that there are no other funds or sources of payment which should as a matter of objective fairness be used for that purpose in preference to the frozen funds. The same principle must apply if what is sought is to fund the giving of a recognizance in favour of another. vi. Because the court has already been satisfied of a risk of dissipation judges are entitled, on an application to vary, to have a healthy scepticism about assertions made by the applicant particularly where the applicant, or those to whom his evidence or contentions relate, have been less than frank in dealing with the court or the claimant.[10]I have come to the conclusion that it is not appropriate to make the variation sought because the interests of justice do not require it. I have reached that conclusion for a number of reasons.[11]First, it seems to me that the payment that Mr Bagudu seeks to make is quite different to the sort of payment that is usually excepted from the restriction of a Mareva order. It is not a payment in the ordinary, normal or usual course of business or living. I entertain considerable scepticism as to whether Mr Bagudu owes any cultural or social obligation to raise bail for Abba, who is not his relative but the brother of his business partner.[12]Second, I regard it as inappropriate to allow payment of the sum needed for bail in the absence of full and direct information as to what are the assets of Abba, his wife, and Mohammed, and without any attempt having been made to obtain a variation of any order that prevents them from using the frozen assets in order to put up the bail money, and without it being apparent that any such attempt is doomed to failure. It is Abba and his family who should be securing, if they can, Abba’s release, and, to the extent necessary, seeking a variation of any court order.

Abba

[13]I have evidence from Maitre Bertossa that Abba has no funds, so far as he is aware, apart from the frozen Abacha family funds in Luxembourg and the frozen funds in Germany and that he is instructed that Abba has no further funds. I have, however, no witness statement from Abba himself. If Abba has, as it is accepted by Mr Stanley he may have, an interest in the funds in Luxembourg, which are of the order of $345 million, it should be for him to seek permission to have a portion of those funds used to get him out of jail. Even if those funds are the subject of a proprietary claim the Court, in English law, has a discretion to allow the use of the funds although that will involve “a careful and anxious judgment … as to whether the injustice of permitting the use of the funds by the defendant is out-weighed by the possible injustice to the defendant”: Sundt Wrigley Co Ltd v Wrigley (unreported, 23rd June 1993), per Sir Thomas Bingham, M.R., Halifax PLC v Chandler [2001] EWCA Civ 1750. I have no evidence that Luxembourg law is different.

Abba’s wife

[14]I have evidence from Mr Bagudu that Abba’s wife came from a relatively poor family in Niger, that her father was a tyre distributor, and that he was not able to provide any dowry of substance. But when she married, she married into a family of immense wealth. I have no evidence from her about the funds to which she has access. Maitre Bertossa can only say that he believes that she does not possess any funds.

Mohammed

[15]So far as Mohammed is concerned, there is no doubt that he has an interest in huge funds in Luxembourg and Liechtenstein. Mr Bagudu’s witness statement reveals that the current value of these funds, which are subject to several restraining orders, is about $ 345 million and $ 140 million. It would be open to him to ask to be allowed to use part of those funds to get his brother out of jail. I appreciate that, if those are the only funds in which Mohammed or other Abacha family members have an interest, it may require an application to more than one court to enable part of them to be released. But no such application has been made to any court.[16]Further it is not clear that the only funds to which Mohammed is entitled are those that are caught by the orders that have been made in England and Luxembourg. As to that, in April 2001, after assets not previously disclosed had been discovered, Mohammed swore his fifth affidavit in which, he gave evidence as to the then value of certain assets in Luxembourg and Liechtenstein. Thereafter in the proceedings before Rix L.J concerning the question as to whether or not there had been a valid settlement of Noga’s claim, Rix L.J. made a series of adverse findings as to Mr Bagudu’s probity and honesty, including, in particular, dishonesty and lies about Mohammed’s assets and his own. He also referred to multiple instances of dishonest suppression of the existence of assets on the part of Mohammed. No statement of assets has been made by Mohammed since 2001, or at least none that is before me. In the proceedings brought by Nigeria in the Chancery Division Mohammed has declined to swear an affidavit of assets on the grounds that it might incriminate him; and he has not yet sworn any affidavit in these proceedings in accordance with the order that I made on 10th February 2006, although the date by which he is required to do so has not yet arrived. I make no assumptions as to what he might have said in the Chancery proceedings if he had not availed himself of the privilege against self incrimination, or as to what he might say if he swears an affidavit in accordance with my order. I simply do not know the full extent of his assets because he has not chosen to tell me. Whereas in other circumstances it might be legitimate to assume that there were no undisclosed Abacha family assets, in the light of the findings of Rix L.J., the salient passages of which are set out in paragraph 14 of Mr Herzog’s 13th witness statement, I am not prepared to do so. If Mohammed has assets which have not previously been disclosed they will be caught by the world wide freezing orders obtained by Noga and Nigeria; but the existence and extent of any such assets will be relevant to any decision as to whether those orders should be varied.[17]It is for Mr Bagudu as the applicant to establish that there should be the variation that he seeks. When I do not know whether Mohammed has (as he well may have) unrevealed assets which he has not so far declared, and where no attempt has been made by him to ask the courts to allow him to use known assets of his that have been frozen for that purpose, I do not regard it as appropriate to make a variation to the freezing order to enable Mr Bagudu to secure the release of Mohammed’s brother.[18]I also take into account the fact that the assets that are the subject of the Mareva order against Mr Bagudu are limited in value. The schedule of assets attached to his 5th witness statement shows assets totalling $ 551, 0000,000. But a major part of those assets (i.e. those attributed to the companies named Doraville, Rayville International Sa, Harbour Engineering and Standard Alliance) are assets (valued at over $ 350 million) in which Mr Bagudu has agreed with FGN that he will not claim an interest if the FGN succeeds in its claim against Mohammed, who also appears to have an interest in the companies. As to the rest Mr Bagudu claims to have only a minor interest in the Ridley Group Discretionary Trust (assets totalling about $ 125 million). The Citibank Account ($ 4.2 million) is a joint account with Mr Bagudu’s wife. The HSBC accounts are very modest in amount. The UBP accounts are those from which the proposed payment is to be made, and the payment will almost exhaust the accounts. The amounts in the accounts of Byrne & Partners are subject to considerable depletion for legal and living expenses. Mr Bagudu does not admit that he has any interest in assets held by Autoonet Anstalt.[19]For these reasons I decline to make the order sought.

Cited in 7 later judgments