Amedeo Hotels Ltd & v Zaman & Ors [2007] EWHC 295 (Comm)

IN THE HIGH COURT OF JUSTICE 2006 Folio No 1271

QUEEN’S BENCH DIVISION 2007 EWHC 295(Comm)

COMMERCIAL COURT

IN THE MATTER OF THE CIVIL JURISDICTION AND JUDGMENTS ACT 1982

AND IN THE MATTER OF PROCEEDINGS PENDING BEFORE THE

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

Venue Royal Courts of Justice

Date Thursday 25th January 2007

Before

HIS HONOUR JUDGE MACKIE QC

B E T W E E N

Between

AMEDEO HOTELS LIMITED PARTNERSHIPApplicant

CASA DE MEADOWS INCApplicant

CEDAR SWAMP HOLDINGS, INCApplicant

HRH PRINCE JEFRI BOLKIAHApplicant

FAITH ZAMAN (aka FARYSHTA ZAMAN or FAITH DERBYSHIRE)Respondent

THOMAS WILLIAM DERBYSHIRERespondent

CHARLES HOAREAURespondent

_________________________

JUDGMENT

_________________________

MR ANDREW HOCHHAUSER QC and MR D LORD (instructed by Simmons & Simmons)

appeared for applicants

MR ROBERT ANDERSON QC and MR ANDREW BODNAR (instructed by Stokoe

Partnership) appeared for 1 st and 2 nd Defendants

[1]This is an application by the first two Defendants to discharge, mainly on grounds of material non-disclosure, a Worldwide Freezing Order (“The Order”) made, without notice, by Mrs Justice Gloster on 5th and 6th December 2006. The Third Defendant, Mr Hoareau has been served with the proceedings and the Order but takes no part in this application.

[2]This action is brought under Section 25 of the Civil Jurisdiction and Judgments Act 1982 in support of proceedings in the US District Court for the Southern District of New York. On the initial return date of 12th December Mrs Justice Gloster heard both parties and continued the Orders until 19th December. The application came before me but was adjourned until 15th January since by the time preliminary matters and an application by a third party had been dealt with there was no prospect of the matter finishing that day. There were further hearings on 18th and again on 25th January when I informed the parties of my decision that there had been material non-disclosure but that the Order would be continued or re-imposed . I then gave brief reasons which I now develop.

[3]I also have an application on behalf of the Brunei Investment Agency (“BIA”) that the Court do, under CPR 5.4 , provide copies of the affidavits, exhibits and skeleton arguments in this case. Representatives from the BIA attended the hearings before Mrs Justice Gloster and also opposed an application by the Claimants on 19th December that I sit in private. The Claimants asked for an Order that I sit in private principally on the grounds of protecting privilege. The Defendants were neutral. I agreed to sit in private primarily to give effect to a Confidentiality Order in the US proceedings . I also considered that I could not decide the privilege issues unless I was first familiar with the material for which that privilege was claimed and with its context. For the same reasons I adjourned the hearing of BIA’s application until the conclusion of this one. BIA are represented by Mr Martin Pascoe QC and by Mr Barry Isaacs instructed by Freshfields. That application has fallen away as the parties have , with the Court’s consent, disclosed material to BIA. There was what I accept to have been a minor and unintentional breach of my order by the Defendants in the rush to comply with timetables in London and New York.

[4]The litigation in New York in support of which this case is brought was filed by the Claimant’s lawyers Loeb & Loeb on 1st December 2006 and is described by Mr Zweig, a partner in that firm, as follows:- “The complaint asserts a variety of claims based on a pervasive scheme of fraud, breach of fiduciary duties, breach of contract, conspiracy and criminal enterprise engaged in by the named defendants. The Complaint alleges that the principal architects of the fraud were defendants Faith Zaman (“Zaman”) and her husband Thomas William Derbyshire (“Derbyshire”), who, while acting as Plaintiffs’ chief legal advisors, strategists and confidantes for a period of over two years, engaged in numerous acts of theft and deception, self-dealing, and fraud.”

[5]I will refer later to developments in that case.

The parties

[6]The Fourth Claimant (“Prince Jefri”) is the youngest brother of the Sultan of Brunei. Until his resignation in 1997 he was Minister of Finance and head of BIA. The Second Claimant (“Casa”) is a Cayman company which owned, until its sale in July 2004, a property in Nevada called Tomiyasu Ranch. Prince Jefri is Casa’s sole shareholder. The First Claimant (“AHLP”) is a New York limited partnership which carries on business as the New York Palace Hotel. Prince Jefri is the beneficial owner of the hotel but is currently subject to an Order of the Brunei Court ordering him to transfer ownership to the BIA. The Third Claimant (“Cedar”) is a Cayman company ultimately owned by Prince Jefri. Cedar owned the Sunninghill Estate, a property in New York, until March 2006

[7]The First Defendant Faith Zaman, sometimes known by her married name of Derbyshire , qualified as a barrister in this country where she met her husband while doing pupillage. Ms Zaman worked for a period for ING Bank. The Second Defendant Mr Derbyshire is a barrister specialising in crime based in the Chambers of Mr Clegg QC. He claims a particular expertise in fraud and money laundering matters. Both Defendants became legal (a characterisation which Ms Zaman disputes) advisers to Prince Jefri in June 2004. The Third Defendant Mr Hoareau, a friend of Ms Zaman who lives in North London, is the sole director of a Delaware company, Westfields Invest Limited into which Sunninghill passed. He has not been actively involved in, or possibly aware of, the matters in dispute and, with respect to him personally, appears to be what a legal textbook would call a man of straw. References in this judgment to “The Defendants “ are to the first two defendants except where I state otherwise.

[8]I have had eleven bundles of evidence and other materials plus others from BIA. The Claimants’ evidence comprises three affidavits and two witness statements from Mr Sandy of Simmons & Simmons, and one affidavit each from Prince Jefri, his son Prince Bahar, and from the Claimants’ New York lawyers Mr Zweig and Mr Socolow ( the latter also producing a witness statement) and a witness statement from Mr Dehnert of the New York Palace Hotel . The Defendants’ evidence comprises two affidavits and a witness statement from Ms Zaman , three affidavits and a witness statement from Mr Derbyshire and a witness statement from their New York lawyer, Mr Cymrot.

BIA and Prince Jefri – Background

[9]In February 2000 the State of Brunei and BIA brought action in Brunei alleging that Prince Jefri had misappropriated huge sums. They obtained a Worldwide Freezing Order(“The Brunei Order”) from the Brunei Court . BIA also obtained a freezing order (“The English Order”) limited to England and Wales from the Chancery Division of this Court in support of The Brunei Order. In May 2000 the proceedings were compromised by a Settlement Agreement but the Freezing Orders remained in place in modified form. The Orders were “refreshed” in November and December 2004 and restrictions on Prince Jefri tightened. In October 2005 BIA issued an application in Brunei to enforce the Settlement Agreement. That application was granted and upheld on appeal but in November 2006 the Privy Council granted special leave to appeal. Despite variations Prince Jefri’s access to his world-wide assets up to the value of $15 billion has been limited by Orders which have remained in place throughout the events which are the subject of this dispute. Prince Jefri has also remained subject to obligations of disclosure. The Defendants say that there were widespread and flagrant breaches of the Freezing Orders throughout their service with Prince Jefri from June 2004 until November of 2006. The Claimants said initially that there may have been breaches caused by or contributed to by acts and omissions of the Defendants. The Claimants now accept that there have been breaches but still put the blame on the Defendants. The Claimants have disclosed the existence of breaches of the Orders in a letter to BIA’s solicitors of 11th January and there may be more to follow.

Prince Jefri and the Defendants – Background

[10]There is fierce disagreement between the parties but more about why matters happened and who was responsible than about what actually occurred. These differences are for the New York Court to resolve but I have to form a provisional view of certain aspects of the evidence. I emphasise that all views I express about the evidence are provisional , limited to the material before me, without the benefit of any live testimony and not intended to bind or influence other courts in New York or elsewhere.

[11]In June 2004, after being introduced to Prince Jefri by his adviser and former hairdresser Mr Maggistro, the Defendants were appointed legal advisers in succession to Mr Joe Hage, another English barrister. In August 2004 the Defendants were, with Mr Maggistro, given a very wide Power of Attorney to act for Prince Jefri. These powers were varied in May 2005 to include the Defendants only. The Claimants say that the First and Second Defendant were to be paid £1 million per annum each for their work. The Defendants say that they were to be paid £2 million each per annum for their work. A document which suggests that payment was to be £2 million is said by the First Defendant to relate to her remuneration but the Claimants dispute its authenticity. Ms Zaman was also appointed Managing Director of the New York Palace Hotel and Mr Derbyshire Managing Director of its restaurant, Gilt. Ms Zaman claims to have been employed under the terms of a Service Agreement with the hotel providing her with additional remuneration.

[12]There is a dispute about Ms Zaman’s role which I need to clarify. Ms Zaman says this:

“Prince Jefri asked us to undertake the task of being his advisors in relation to all matters, including as a replacement for Joe Hage as his personal legal advisor… although both my husband and to a lesser extent I would give the Prince advice as to the law, when Prince Jefri required formal legal advice he would take it from one of the battery of lawyers he had at his disposal.”

She says that shequickly developed into Prince Jefri’s “right-hand woman”. “When I met him he did not maintain any papers relating to his corporate entities or legal position”. She also says this about her role:- “Prince Jefri also asked me to co-ordinate all his corporate entities for him. He claimed he had no knowledge of the corporate structures or which entities were held by them. He asked me if he could appoint me as a director of all the entities that held his assets so that I could give instructions and manage them on his behalf. I agreed and he appointed me as director of about 30 entities worldwide. I undertook the corporate filings, management, taxes, payment of bills, hiring of employees and other matters for each and every one of the entities for which I was a director. The most difficult part was always attempting to obtain sufficient funding from Prince Jefri to meet any financial liabilities to pay invoices or taxes. He always insisted that paying bills was someone else’s responsibility. Although very much in charge of his affairs, Prince Jefri almost entirely left their day to day administration to others. He did not want to concern himself with paperwork which he considered mundane…”

[13]Ms Zaman corresponded on notepaper on which the word “Barrister” is prominently displayed. In response to her claims not to be a legal adviser the Claimants have exhibited a transcript of some proceedings in Delaware in which she appears on the record and makes submissions. In a letter dated “as of 1st June 2004” in which Ms Zaman puts forward in support of her claim to be due £2 million per annum she describes her duties as being those of “General Counsel and Adviser on matters concerning you and your family” and proceeds to write in terms of the “attorney-client” relationship and to refer to other matters plainly indicative of acting as a lawyer. The Claimants dispute the authenticity of this letter but it is an indication, at the least, of how Ms Zaman has seen her duties. It seems obvious that Ms Zaman was indeed Price Jefri’s legal adviser

[14]Mr Derbyshire accepts that he was Prince Jefri’s legal adviser and says that he worked tirelessly for him travelling all over the world often spending months apart from his wife. Mr Derbyshire also continued in private practice at the criminal bar a role which he said he has cut down over the last eighteen months as he and his wife have been preparing to re-establish themselves in California. It seems that much of Mr Derbyshire’s work was directed to the co-ordination of Prince Jefri’s legal representation in litigation across the world in particular in London and Brunei.

[15]The Claimants say that after June 2006 Prince Jefri and his London solicitors, Simmons & Simmons, began to have much more direct contact with each other and that as a result Prince Jefri began to lose confidence in the Defendants. He became concerned that he was not receiving records of his companies and these were being effectively controlled by the Defendants. He felt that there had been a failure to pass on advice from outside lawyers particularly over further developments in the litigation in the autumn of 2006. The Claimants say that this led to their decision to terminate the services of the Defendants on 7th November 2006. The Defendants do not disagree about the fact of their termination but they contend that it was brought about by Ms Zaman’s refusal to continue to approve payments by the New York Palace Hotel, an asset of Prince Jefri subject to the Freezing Orders, to Argent International Inc, a Panamanian company, of which, as Prince Jefri now puts it, he “retains the ultimate control”. Ms Zaman had been authorising payment of these invoices since at least March of 2005 but says that it was not until July 2006 that she learned of Prince Jefri’s true interest in the company. She says that her concern was increased once she saw a letter from BIA to the hotel in October 2006.

[16]After her dismissal Ms Zaman, through her then US lawyers, informed BIA’s US lawyers of her view that Prince Jefri was trying to extract money from the New York Palace Hotel by submitting bogus invoices from Argent. This information led BIA to apply for and obtain a Temporary Restraining Order (“TRO”) in the New York Court. Ms Zaman also removed two boxes of documents from the hotel in circumstances which gave the Claimants legitimate cause for concern. After further acrimony irrelevant to this application the Claimants brought action in the US and in England. On 7th December 2006 Judge Kaplan declined the Claimant’s request for a Temporary Restraining Order. When that request was renewed on 15th December the judge adjourned it forming the provisional views that there were measures equivalent to what in England would be a caution to protect the Claimants’ interests in the properties the subject of the action and further that there was as yet not enough evidence.

Claims in the US litigation relevant to this action

[17]Before turning to the judgment of Mrs Justice Gloster and the allegations of non-disclosure I first summarise briefly that part of what the Claimants allege against The Defendants in the New York action which is relevant to this application. Sunninghill

[18]The Sunninghill Estate is a large property on the North Shore of Long Island, New York now apparently worth over $20 million. On 10 March 2006 Cedar transferred the property to Westfields Invest Limited for a notional price of $11.8 million (none of which was actually paid). The Claimants say that this was a fraudulent transfer by the Defendants to Westfields a company they own or control. They point to the facts that the Third Defendant is the sole Director of Westfields, that the company’s address was given as Mrs Zaman’s apartment at the New York Palace Hotel, that no documentation has been provided to Prince Jefri to show that he is the owner of Westfields Invest apart from, recently, an unsealed share certificate, that Prince Jefri has never had the keys to the property and that the First Defendant’s half-brother gave Sunninghill as his address when employed by the New York Palace Hotel.

[19]The Defendants contend that the transfer was carried out at the behest of Prince Jefri and with the assistance of his son Prince Bahar as part of efforts to evade the Brunei injunction. They say that Prince Jefri was and remains the ultimate beneficial owner of Westfields and that the Defendants have never asserted otherwise. They point out that a key feature of the application to Mrs Justice Gloster was that Ms Zaman had “self appointed” herself as the sole officer and Director of Cedar (presumably to carry out the unlawful transfer) and had made a false representation to Cedar’s lawyers. In fact, as the Claimants now acknowledge Prince Bahar was the sole President, Secretary and Treasurer of Cedar and had in April 2005 been appointed as such under his own signature and that of Prince Jefri.

[20]A curious feature of the transaction relied upon by the Claimants is that a separate Delaware company called Westfields Invest Limited (sometimes “Investment”), on whose behalf Mr Hoareau, the Third Defendant, also appears to have signed is given, alternatively and additionally, as the signatory for the purchase. There may even be a third Westfields Invest Limited since this name appears on a list of BVI companies including at least two of which Ms Zaman admits held assets beneficially owned by her retrieved from the computer used by her and her half-brother. As yet the Defendants have not fully explained these matters even though Ms Zaman appears to have been responsible for them.

[21]The Claimants suggest that given the inevitability of adverse publicity and of attention from BIA it is improbable that Prince Jefri would bring proceedings in respect of Sunninghill if as the Defendants suggest he knew that Westfields was his. As however the parties accept that the company holding the property belongs to Prince Jefri the issue, which comprises $22 million of the $28 million subject to the current order of this court, falls away except as regards non-disclosure and future questions about the credibility of witnesses. Tomiyasu Ranch

[22]This Nevada property held for Prince Jefri by Casa was sold for $14 million in June or July 2004 without the involvement of the Defendants and, as the Claimants conceded at the outset of the English action, in breach of the Brunei injunction. After Prince Jefri’s legal fees had been paid the balance of $5,086,999 was transferred to his California lawyers, the Braun Law Firm.

[23]In July 2005 Prince Bahar signed documents prepared by Mr Braun so that a cheque for the entire $5,086,999 could be issued to Casa De Meadows. The cheque was sent to Ms Zaman who in September sent it on to Prince Bahar with various corporate documents to enable him to open an account in Casa’s name. When Prince Bahar sought to open an account at UBP Bank in Geneva his banker Mr Nahoum made it clear that there would be a risk of the funds being frozen notwithstanding a letter to him from Mr Braun which included the statement “Ms Zaman has further requested that we advise you that to the best of our knowledge these funds are not subject to any injunction or freezing order issued by a United States court”. If made this statement does not reflect well on Ms Zaman ignoring ,as it appears to, the relevance of the Brunei Order. The Claimants disclosed none of this when applying to Mrs Justice Gloster.

[24]In April 2006 Ms Zaman obtained from the Braun Law Firm a cheque dated 26 April payable, like the first one , to “Casa De Meadows Inc, a Cayman Is Corp LLC.” In May Ms Zaman caused a new Delaware company to be incorporated but under the surprising name of “Casa De Meadows Cayman Islands Corp.LLC”. Ms Zaman set up a US bank account for that company at JP Morgan Chase in New York into which the cheque was paid at the end of May. Ms Zaman suggests that the Claimants’ current New York lawyers Loeb& Loeb (as well she says as Prince Jefri, Prince Bahar and Mr Braun) were aware of and party to this transaction. Mr Socolow, the partner in Loeb&Loeb, points out with the support of the documents that his firm’s involvement was limited only to writing, at Ms Zaman’s request, on the question whether Casa De Meadows Cayman Islands Corp LLC was doing business in the State of New York. When Mr Socolow asked Ms Zaman about the relationship between the two Casa companies she told him that Casa De Meadows Inc was the holding company for Casa De Meadows Cayman Islands Corp LLC. Ms Zaman suggests that if she were acting dishonestly she would never have involved Loeb in any capacity. The new Casa bank account was used by Ms Zaman for her own purposes contributing to the purchase of two properties in Manhattan Beach California for $4,950,500 and $2,145,000 respectively. Ms Zaman says that the transactions in 2006 were authorised by the Claimants who also agreed that the proceeds could be taken by her in payment of salary. The Claimants deny that they knew anything about the transactions in 2006 or that they authorised Ms Zaman to take the money for herself. Alleged credit card fraud

[25]The Defendants were issued with corporate credit cards in their roles as Managing Director of the New York Palace Hotel and its restaurant respectively. The Claimants’ initial analysis of expenditure on those cards shows items totalling some $880,000 which appear to be personal expenditure of the Defendants, including amounts which seem to relate to the Defendants’ Californian homes and some $43,000 incurred after the termination of their employments. The Defendants say that there was extensive use of the cards by and on behalf of Prince Jefri’s family to pay for facilities and expenses including those incurred by Prince Jefri himself in Las Vegas. The Defendants have not yet attempted to justify or refute in detail the Claimants’ claims.

Alleged Golden Twist fraud

[26]The Claimants allege that when the management of the New York Palace Hotel decided to upgrade the guest rooms by supplying plasma televisions Ms Zaman insisted these be bought through a London intermediary, Golden Twist. In September 2005 Golden Twist issued a purchase order for $4,050,515.62, a price which the Claimants say was well above current market rates, followed by an invoice for this amount dated 28 September 2006. The invoice required that payment should be made to an account at Societe Generale in Monaco where Ms Zaman also holds a personal account. The Claimants originally believed that Golden Twist was not a company at all but have now learned from the list on the computer to which I have already referred that it is a BVI company. Ms Zaman claims that all this was with Prince Jefri’s full knowledge and in accordance with his instructions in order to provide him with funds outside the injunction. She says that he agreed with her request that payments of $1 million in February 2006 and $600,000 in October could be taken by Ms Zaman for her salary. She concedes that the $1.4 million remaining in the Golden Twist account belongs to the Claimants and to this extent therefore there is agreement. The Claimants deny any knowledge of these arrangements and say that Ms Zaman’s account is untrue. There are some difficulties at present between the New York Palace Hotel and Golden Twist in securing delivery of the televisions.

The Judgment of Mrs Justice Gloster

[27]At the end of the second of two hearings the Judge made the order which is the subject of this application. She was satisfied that it was appropriate to make a freezing order and that the Claimants had a good arguable case. She was also satisfied that there was a real risk of dissipation given the conduct of the Defendants. Having approached the exercise of the Section 25 jurisdiction with caution the Judge was satisfied that it was a discretion which she should exercise. There was a real and connecting link between the Defendants, their assets and England. The making of the order would not interfere with the management of the case in the primary court in New York where the freezing order jurisdiction is extremely limited. The Judge saw no danger in the order giving rise to disharmony or confusion with those made in New York. The assets of the Defendants within the jurisdiction and their degree of presence here meant that an order would be capable of enforcement if disobeyed. The Judge was also satisfied that the Defendants are domiciled in the United Kingdom whatever their temporary residence in the United States and that the making of orders would not be an inappropriate use of a long-arm jurisdiction. The Judge also had regard to cross undertakings and an offer to fortify these by lodging $2 million in court to which the BIA had consented.

[28]The order made by the Judge extended to $28 million, of which $22 million relates to Sunninghill, $5 million to the proceeds of Tomiyasu and $1 million to Golden Twist.

The Defendants’ application to discharge

[29]The Defendants put forward three grounds for their application. First they say that the order was obtained by serious material misrepresentation and non-disclosure. Secondly while accepting that there is in effect a good arguable case for an Order they contend that there is no real risk of dissipation. Thirdly they say that having regard to the attitude adopted by the New York court it is “inexpedient” within the meaning of Section 25 to continue the relief set out in the Order. Although logically the second and third grounds precede the first, the question of non-disclosure has dominated the application and I will address that first after turning to the law which does not seem much in dispute.

Misrepresentation and non-disclosure – The Law

[30]It is generally not necessary for a first instance Judge to go beyond the well-known guidance of Lord Justice Ralph Gibson in Brinks Mat v Elcombe

[1998] 1 WLR 1350

at 1356 which is as follows:- “In considering whether there has been relevant non-disclosure and what consequence the court should attach to any failure to comply with issues in these appeals appear to me to include the following.(1) The duty of the applicant is to make “a full and fair disclosure of all the material facts:” see Rex v. Kensington Income Tax Commissioners, Ex parte Princess Edmond de Polignac [1917] 1 K.B. 486, 514, per Scrutton L.J.

(2) The material facts are those which it is material for the judge to know in dealing with the application as made: materiality is to be decided by the court and not by the assessment of the applicant or his legal advisers: see Rex v. Kensington Income Tax Commissioners, per Lord Cozens-Hardy M.R., at P. 504, citing Dalglish v. Jarvie (1850) 2 Mac. & G. 231, 238, and Browne-Wilkinson J. in Thermax Ltd. v. Schott Industrial Glass Ltd. [1981] F.S.R. 289, 295.

(3) The applicant must make proper enquiries before making the application: see Bank Mellat v. Nikpour [1985] F.S.R. 87.. The duty of disclosure therefore applies not only to material facts known to the applicant but also to any additional facts which he would have known if he had made such inquiries.

(4) The extent of the inquiries which will be held to be proper, and therefore necessary, must depend on all the circumstances of the case including (a) the nature of the case which the applicant is making when he makes the application; and (b) the order for which application is made and the probable effect of the order on the defendant: see, for example, the examination by Scott J. of the possible effect of an Anton Piller order in Columbia Picture Industries Inc. v. Robinson

[1987] Ch. 38

; and (c) the degree of legitimate urgency and the time available for the making of inquiries: see per Slade L.J. in Bank Mellat v. Nikpour [1985] F.S.R. 87, 92-93.

(5) If material non-disclosure is established the court will be “astute to ensure that a plaintiff who obtains [an ex parte injunction] without full disclosure … is deprived of any advantage he may have derived by that breach of duty:” see per Donaldson L.J. in Bank Mellat v. Nikpour, at p. 91, citing Warrington L.J. in the Kensington Income Tax Commissioners’ case [1917] 1 K.B. 486, 509.

(6) Whether the fact not disclosed is of sufficient materiality to justify or require immediate discharge of the order without examination of the merits depends on the importance of the fact to the issues which were to be decided by the judge on the application. The answer to the question whether the non-disclosure was innocent, in the sense that the fact was not perceived, is an important consideration but not decisive by reason of the duty on the applicant to make all proper inquiries and to give careful consideration to the case being presented.

(7) Finally, it “is not for every omission that the injunction will be automatically discharged. A locus poenitentiae may sometimes be afforded:” per Lord Denning M.R. in Bank Mellat v. Nikpour [1985] F.S.R. 87, 90. The court has a discretion, notwithstanding proof of material non-disclosure which justifies or requires immediate discharge of the ex parte order, nevertheless to continue the order, or to make a new order on terms. “when the whole of the facts, including that of the original non-disclosure, are before [the court, it] may well grant … a second injunction if the original non-disclosure was innocent and if an injunction could properly be granted even had the facts been disclosed:” per Glidewell L.J. in Lloyds Bowmaker Ltd. v. Britannia Arrow Holdings Plc., ante, pp 1343H-1344A. “when the whole of the facts, including that of the original non-disclosure, are before [the court, it] may well grant … a second injunction if the original non-disclosure was innocent and if an injunction could properly be granted even had the facts been disclosed:” per Glidewell L.J. in Lloyds Bowmaker Ltd. v. Britannia Arrow Holdings Plc., ante, pp 1343H-1344A.

[31]The focus of the submissions of Mr Hochhauser and Mr Anderson has been on the considerations set out in (2) and (7) as above and mainly by reference to cases cited in Gee on Commercial Injunctions, Chapter 9. The duty extends to placing before the Court all matters which are relevant to the Court’s assessment of the application or as Bingham J. said in Siporex the applicant “must disclose all the facts which reasonably could or would be taken into account by the Judge in deciding whether to grant the application”. Disclosure must be of all matters which are relevant to the “weighing” operation that the Court has to make in deciding whether or not to grant the Order (see Thermax as cited in Gee).

[32]Mr Anderson QC, in argument, accepted that he may have put the position too high, but only slightly so, in stating in his skeleton that all breaches of the Brunei or English Orders should have been disclosed. He submits that with the Brunei Settlement Agreement being so frequently referred to throughout the documents any matters relating to its breach should be disclosed. In closing Mr Anderson said that any breach of significance of the Brunei Order, with its potential for being a breach of the English Order ought to have been brought to this Court’s attention.

[33]Mr Hochhauser submits that there is no such obligation to make a general confession of all sins that could possibly touch upon anything to do with the Orders or the Settlement Agreement. He suggests that Mr Anderson’s reliance on the Settlement Agreement is misplaced. The duty extends to those matters that are relevant to the Court’s assessment of the application.

[34]I agree with Mr Hochhauser. It is a matter of degree in every case. Breaches of Court Orders are very serious matters but are primarily for the courts which make them to deal with.. Those breaches that do not come into the weighing of the balance of factors in this case do not have to be disclosed. I also bear in mind the considerations set out in another familiar passage in Brinks Mat, the paragraph in the Judgment of Lord Justice Slade at 1359 in which he draws attention to the practical realities of bringing any case before the Court and the fact that the borderline between what is material and what is not material may be a somewhat uncertain one. This of course raises the question of what comes into the balance on the facts of this case and I will address that below.

[35]The other question of law concerns the circumstances in which the Court can and should exercise a discretion, notwithstanding proof of material non-disclosure or misrepresentation which justifies the immediate discharge of an Order, nevertheless to continue it or to make a new Order on terms. Mr Anderson emphasises, again by reference to Gee and to the cases referred to that this discretion is to be exercised “sparingly” and that the examples of its use “innocent albeit careless non-disclosure” and “when there is non-deliberate material non-disclosure which is not of central importance in a serious fraud case” have no application here.

[36]Mr Hochhauser placed emphasis on Bebehani –v- Salem

[1989] 1 WLR 723

. He also drew attention to an unreported decision of the Court of Appeal Marc Rich and Others v Krasner and Others (Transcript, 15 January 1999). In that case the court reviewed the exercise of discretion by Mr Justice Carnwath, as he then was, when faced with facts which would in normal circumstances have justified protective relief but were offset by serious non-disclosure and lack of objectivity in the Claimant’s presentation.

[37]As the judge put it “the court is then faced with an unenviable choice between application of the golden rule, with the result that it would be potentially aiding and abetting fraud, and on the other hand giving the benefit of draconian remedies to Plaintiffs who, under the ordinary principles, should not be entitled to them. However, as I have said the approach of the cases is it requires a balance to be drawn and that is what I propose now to do”.

[38]The Court of Appeal endorsed that approach stating that the judge had appreciated that the prima facie result of the application would be to discharge and refuse to re-grant the orders obtained by the breach of the obligation to disclose. But they said that he was correct to recognise that notwithstanding those considerations he was entitled to continue with the relief obtained on the ex parte application.

[39]Mr Hochhauser drew attention to the judgement of Sir Thomas Bingham MR in Fitzgerald v Williams

[1996] QB 657

at 669, to submit that while it is no excuse that if disclosure had been made this would have made no difference to the first judge’s decision, the court will, when evaluating how to deal with non-disclosure, take that fact into account. Similarly he submitted by reference to Memory Corporation

[2000] 1WLR 1443

that while non-disclosure is not excused if it is primarily the fault of a professional adviser this is a circumstance to bring into the balance. The Claimants finally urged me to follow the approach of Mr Kealey QC, sitting as a deputy High Court Judge in Trade Credit Finance Number One Limited v Bilgin [2004] AllER (D) 47.

[40]My task is to consider;(a) whether there has been material non-disclosure ,

(b) if there has, whether it requires the immediate discharge of the ex parte Order and

(c) whether, even if it does require that step, the Order should nevertheless be continued or replaced by one on other terms. The step of renewing or replacing an order requiring immediate discharge will usually only be taken where the original non-disclosure was innocent or had powerful mitigating factors but that is a consequence of the approach of the court in exercising its discretion, not a rule of law. A review of this case law brings a judge back to Brinks Mat and to the dilemma described by Carnwath J in Marc Rich. There is a real public interest in the court ensuring that full disclosure is made on a without notice application which I must weigh against the degree and extent of the culpability of a non-disclosure and its importance to the outcome of the application

Misrepresentation and non-disclosure relied upon by the Defendants

[41]It is common ground that the Claimants disclosed the existence of possible breaches of the Brunei injunction in respect of Prince Jefri since a section of the affidavit of Mr Sandy of Simmons & Simmons deals with this expressly in Paragraphs 120 to 134 stating that investigations carried out following the termination of the Defendants indicated that there might have been breaches by Prince Jefri of the Brunei order. These paragraphs disclose that substantial payments made from the New York Palace Hotel to Argent and to other companies may be breaches of the order. Mr Sandy says “I am informed by Prince Jefri that he was advised by Zaman and/or Derbyshire that such payments were not in violation of the Brunei injunction on the basis that he, Prince Jefri, did not own Argent International Inc”. The sale of Sunningdale “appears to be” a breach of the order. Mr Sandy says that Prince Jefri was advised that the sale would not contravene the order because it was of no effect in the US. It is accepted that the sale of the Tomiyasu Ranch was a breach of the order but Prince Jefri says that he was unaware of the sale. Use of the proceeds of sale by amongst others, English lawyers is disclosed as a potential breach of the orders. What is described as the misappropriation of the remaining Tomiyasu funds is also disclosed as a breach of the injunction as are certain aspects of the credit card expenses incurred by Mr Derbyshire in paying for the fees and disbursements of English solicitors and counsel.

[42]The Defendants say that there has been misrepresentation and non-disclosure of the utmost gravity and that Mrs Justice Gloster was seriously misled. The Defendants say that the Claimants have conceded that any breach of the Brunei injunction by or on behalf of Prince Jefri is a relevant matter which ought to have been disclosed as one sees from Mr Sandy’s evidence. They say that disclosure so far barely scratches the surface of Prince Jefri’s serial breaches of the Brunei Order. These matters are dealt with for the most part in the first two affidavits of Mr Derbyshire. Before this on 2nd December 2006 Mr Derbyshire had written to Mr Zweig of Loeb & Loeb warning that unless the New York law suit was withdrawn he would tell “the whole truth about all my dealings with Prince Jefri and his associates over the previous three years including their dishonest involvement in assisting Prince Jefri to breach Orders from the Courts of the USA Brunei and England”. Short passages from Mr Derbyshire’s first two witness statements illustrate his approach and the views which he and his wife have formed. “Prince Jefri has implemented a sustained campaign to circumvent the restrictions imposed upon him by the Courts of Brunei and England. His modus operandi has been to try to “salt away” or realize assets which are frozen and then to blame his advisers if he is caught out. I regret to say that my wife and I have been drawn into this web of deceit operated by, or at the behest of, the Prince. Indeed, it was only when we demonstrated an unwillingness to continue with these schemes, that the prince turned on us; in accordance with his invariable practice. Thankfully, however, we have retained sufficient documentary evidence to show that the “frauds” concocted as the alleged bases for the present proceedings (both in this jurisdiction and in New York) are just that; concoctions. As I will demonstrate at all times we have acted at the behest of Prince Jefri, and in accordance with his instructions.” “In the course of acting for Prince Jefri over the course of some 2½ years, I learned a great deal about the Prince’s nefarious activities and relationships. I refer to some of these matters below. Although not directly relevant to the specific allegations against me and my wife. I believe that they are matters which(a) ought properly to have been disclosed by the Prince on his without notice application and

(b) put the allegations against us in their proper context." The numerous individual allegations can be grouped first into those the Claimants say are irrelevant, secondly those about Argent and thirdly those relating to the individual claims.

Allegations which the Claimants say are irrelevant to the application

[43]Mr Derbyshire produces material to indicate that Prince Jefri has maintained a bank account, codenamed “Simon”, with UBS in Zurich which may have contained funds up to US$ 250 million. He also alleges that a collection of works of art stored in Switzerland belonging to Prince Jefri was sold by one of his wives falsely claiming to be the owner. Mr Derbyshire says that a Mr Zobel who has been put forward as someone funding Prince Jefri’s lifestyle and legal expenses did no such thing.

[44]The Claimants do not respond with evidence on any of these matters contending that they are irrelevant to the issues before the Court. . Mr Hochhauser draws the line in effect between the Argent and the Simon matters. He submits that Argent is relevant because of Ms Zaman’s complaint that she was only dismissed because she was refusing to continue to siphon money from the New York Palace to Argent. In contrast Simon Marketing may have supplied money to Argent but that is a step removed when determining whether or not relief should be granted against Ms Zaman on the case that she is advancing.

[45]I agree that the boundary between what is material in the context of the Claimant’s application for the Order is between Simon on one side and, on the other, Argent and the allegations addressed to the particular heads of claim. . Many of the allegations made by Mr Derbyshire were first put forward for the reasons explained in his letter to Mr Zweig. A careful record seems to have been kept ready for use by the Defendants when falling out with their employer, listing a very wide range of alleged breaches of Orders committed by Prince Jefri on the face of it knowingly assisted by them, his legal advisers. This record is not focussed on the matters in issue in the New York action. Mr Anderson‘s reliance on the Settlement Agreement to urge a wider range of disclosure is in my view misplaced.

Alleged non-disclosure-Argent

[46]The Defendants criticise the Claimants for failing to disclose that the dismissals followed Ms Zaman’s refusal to continue approving payments to Argent. That is of course not a matter that I can determine upon this application since the Claimants’ account is quite different and , when one looks at the surrounding circumstances , at least as convincing . The Defendants point to e-mails which they say make it plain that the quantum of Argent invoices was being determined by reference to Prince Jefri’s requirements for money and that references to “the boss” are clearly to him. They contrast the references in Mr Sandy’s first affidavit with what Prince Jefri now concedes in his affidavit that “it is fair to say” that “ultimate control of Argent” is retained by him.

[47]The most telling evidence to support what the Defendants say is perhaps Simmons & Simmons own letter of the 11th January 2007 to Freshfields in which they make a disclosure that Prince Jefri had informed them that evidence provided by one of their solicitors in November 2005 in a committal application was materially incorrect in a number of ways. Those errors include an account at UBS in Zurich in Prince Jefri’s own name of which he was aware but had not disclosed and another account at UBS in the name of Simon Marketing. The letter also states:- “Argent International Limited (the bearer share for which is held by Prince Bahar but the company is we understand controlled by Prince Jefri). We understand that Argent has itself been funded by payments from the two UBS accounts referred to above and by payments from Amedeo Hotels Limited Partnership.” This four page letter sets out other detailed disclosed and seeks to place the blame on the Defendants. In its last paragraph the letter states:- “Disclosure was given by Prince Jefri at a time when he relied upon Ms Zaman and Mr Derbyshire for legal advice and assistance in complying with the various Court Orders and followed their advice as to his obligations under those Orders.”

[48]The Claimants recognised the importance of making disclosure about Argent and referred both in general to the possible breaches of the orders and also, in particular,to the position of Argent. Indeed, that reference gave rise to the concerns expressed by Mrs Justice Gloster about the position of BIA. But any Judge reading Paragraph 124 of Mr Sandy’s first affidavit, prepared no doubt on his client’s instructions, would see it as an indication that Prince Jefri did not own Argent . I reject the alternative interpretation put forward on behalf of the Claimants. I agree with Mr Anderson’s characterisation of the statement as being quite seriously misleading. Prince Jefri should, at the very least, have given to the Court in December the account of his role in Argent which his solicitors Simmons and Simmons supplied to Freshfields on 11 January. I accept that full disclosure would probably not have affected the Judge’s decision but it remains a serious, not an innocent non-disclosure. Alleged non-disclosure-

Sunninghill

[49]The Claimants allege that Mr Derbyshire told Prince Jefri at the time of the transfer that the sale price was to be about US$ 11 million which was the same price as Prince Jefri paid for the ranch and was therefore a good deal. The Defendants say that Prince Jefri purchased the property for US$ 8 million (in reality some US$ 9.5 million) and not US$ 11.8 million and this should have been disclosed.

[50]The Claimants accept that when Mr Derbyshire conveyed the first offer received for Sunninghill around the end of 2004 he suggested to Prince Jefri that it would be easier to sell Sunninghill if it was first transferred from Cedar Swamp to a different company not known to BIA. Prince Jefri accepts that this is something which he should have drawn to the attention of his lawyers and the Court before the Freezing Injunction. He apologises for this and says that he did not recall it or realise its relevance until he had seen the evidence of Mr Derbyshire. The Claimants say that the matter should be seen as a minor one. It was a suggestion made once only more than a year before the transfer to Westfield and Prince Jefri says that it had not been suggested by the Defendants that there had not been a real sale of Sunninghill . Nevertheless Prince Jefri has moved from a position where he recalled only that his previous lawyer must have attempted to sell Sunninghill to one where he accepts that it was at least raised for discussion in his presence.

[51]Thirdly there is the admitted error, which I have already mentioned, that Ms Zaman had ceased to be a director of Cedar Swamp and that Prince Bahar had succeeded to that post. It follows that the Claimant’s original statement is wrong and also that it is a serious error to suggest that Ms Zaman had misrepresented to Cedar Swamp’s lawyers that Prince Bahar was the sole director. He was. The Claimants apologise for the mistake but suggest that it is immaterial because whether or not she was a director of Cedar Swamp she instigated the transaction. As Prince Bahar explains, he signed what she asked him to. The Claimants say that this quality of detail was not something that Prince Jefri could have been expected to recall and it was not apparent from the corporate documents available to the Claimants, as opposed to the Defendants on 6th December.

[52]I do not accept that there was non-disclosure about the original purchase price. Disclosure would have gone only to the truth of a statement attributed to Mr Derbyshire not to the question of whether he would have made it. Potentially more serious, are the facts, accepted by Prince Jefri, that there had been some previous discussion of the sale of the property . No doubt Prince Jefri should have volunteered this from the outset but I can understand that it is a level of detail that he did not recollect until it was put to him. This issue turns to a degree on which account of events is true. I cannot decide that so it is right to give the Claimants the benefit of the doubt. This is particularly so where there are unanswered inconsistencies and discrepancies in the evidence of the Defendants about Sunninghill (see paragraph 4 of the Claimant’s further skeleton argument ) and what are, if one were to accept the Defendant’s case, the surprising aspects , notably the role of Ms Zaman’s friend the Third Defendant , to which I have already referred .

[53]It may well be that Prince Bahar, as he says, signed whatever his father’s well qualified, well paid and well trusted legal advisers put in front of him; common sense and some of the evidence on both sides points that way. Nevertheless the fact that the First Defendant had ceased to be a director of Cedar and been replaced by Prince Bahar meant that an incorrect picture was given to the court and two false points taken against the Defendants. While again this would probably have made no difference to the outcome it was a non-disclosure. Alleged Non-Disclosure –

Tomiyasu Ranch

[54]I have referred above to the attempts by Prince Bahar to cash the first cheque issued for the balance of the proceeds of sale. Mr Anderson submits that it is quite astonishing that not one word was disclosed about the earlier attempts to cash the cheque. He says that it sits ill with the broad denial of knowledge which Mr Sandy puts forward on behalf of Prince Jefri in his first affidavit. Prince Jefri apologises for this omission and says that the failure was not intentional. Mr Hochhauser points to the gap in time between the efforts in 2005 and those in 2006 (although this is not quite the period of one year which he suggests). He says that the real point is that Prince Jefri denies, and would be unlikely to have any knowledge of , the setting up of the second Casa company, the cashing of the cheque or the personal use of the proceeds by Ms Zaman.

[55]The conduct attributed to the Defendants would have appeared less questionable had it been disclosed that in 2005 the Claimants, with Prince Bahar and the First Defendant, had obtained a cheque for US $5,086,999 and tried to bank it. The events of 2005 , as opposed to responsibility for them, are not disputed. It is clear from Mr Sandy’s second witness statement that Prince Jefri volunteered information about the 2005 events to his solicitors and did not seek to conceal them. Unfortunately these instructions did not work through into the evidence These events should have been disclosed on the first application. This non-disclosure is material but has to be seen in context. The striking features of this head of claim , first the conduct of Mrs Zaman in forming the separate company with a deceitful name to bank the money and secondly the completely undocumented claim that the money was her remuneration, were not present in 2005.

Alleged credit card fraud

[56]The Defendants complain that the Claimants failed to disclose to the Judge that the card had been used to meet personal expenses of Prince Jefri and his entourage and not just lawyers’ expenses at hearings. The Claimants point out by reference to the transcript of the hearing before Mrs Justice Gloster, that they adopted a cautious approach when applying for a Freezing Order, accepted that some expenses could be legitimate and, at that point, did not seek an Order covering the credit card sums in general or the cost of any of the flights or other items attributable to Prince Jefri and his entourage in particular.

[57]The Claimants’ allegation is simply that the Defendants have misused these cards by causing their employer to pay for their own private expenditure. The fact that, at times with the Defendant’s consent and co-operation, the cards may also have been used to meet the expenditure of the beneficial owner of the employer and his entourage, while no doubt regrettable, is it seems to me beside the point. The fact that the cards might also have been used in a way which caused a breach of the orders, is adequately disclosed in general terms in Mr Sandy’s first affidavit.

[58]The claim that by signing various corporate records, no doubt at the request and with suitable assurances from amongst others the Defendants , Prince Bahar was approving individual items on the credit cards of the Defendants, seems to me to be fanciful, not only as a matter of non-disclosure but, subject of course to the fact that this is a matter for the New York Court, as a defence. One would not expect directors or other officers signing documents which they relied on the Defendants to vet to check personally individual items on the credit cards of senior executives. They would of course take that on trust.

Non-disclosure – Other Matters

[59]There is a complaint about what appears to be a mistaken claim by the Claimants in the New York complaint that Mr Derbyshire took BND 1,050,000 for his own use . He deposes that far from misappropriating this money he advanced it to help Prince Jefri pay legal fees by passing it on to a third party funder. The Claimants dispute this but have not produced any evidence to support their position. It is no answer for the Claimants to say that the Order claims nothing in respect of this item . The claim can only have been put forward to discredit Mr Derbyshire. On the evidence before me this was a claim which should not have been made and Mr Derbyshire is rightly aggrieved. His claim that the matter is even more serious given his standing as a barrister rings a little hollow given his deplorable role in these events.

[60]Prince Jefri attributes most breaches of the orders since June 2004 to the acts and omissions of the Defendants. Given the overall picture and what happened in the period before the Defendants arrived that seems improbable. Prince Jefri seems to have been breaking court orders well before the Defendants arrived on the scene. The Defendants have however undoubtedly been closely and knowingly involved, in assisting breaches of the orders, devising additional ways of getting round them and giving advice which was inappropriate. There is at least one indication that Prince Jefri was advised by the Defendants that an apparent breach was somehow excused because the orders were of no direct effect within the United States. Both Defendants have in different ways emphasised their position and standing as English barristers. They both assumed wide ranging responsibilities looking after Prince Jefri’s affairs at remuneration which, even if one accepts the Claimant’s case and rejects that of the Defendants, was very high by the standards of in-house lawyers based in the United Kingdom. They had obvious responsibilities to ensure that Prince Jefri’s affairs were kept in good order, properly recorded and operated in accordance with the law. Part of their duties in giving legal advice would be to ensure that it was properly recorded and conveyed to their client. Where there is confusion, disarray in the records and a lack of clarity about what actually happened or what advice was given that is to a considerable degree the fault of the Defendants, recognising that Prince Jefri remains the person principally responsible for breaches of the orders and non-disclosure.

Effect of Non-disclosure-should the Order be discharged?

[61]In applying the facts to the legal principles I have summarised I bear in mind that there is considerable public interest in the court ensuring that full disclosure is made on without notice applications. I take particular account of the degree and extent of the culpability with regard to the non-disclosures and their importance and significance to the outcome of the application.

[62]I turn first to the degree and extent of the culpability of the non-disclosure. I do not consider that there is likely to have been any intention on the part of the Claimants to omit or withhold information which they were advised was material or to misrepresent the true position as regards either Sunninghill, the proceeds of Tomiyasu or other individual claims. The matters now disclosed are no more embarrassing than other material volunteered by the Claimants. There would be little incentive to conceal them because the Defendants knew all about them and, by the time this action was brought, had threatened to make extremely wide ranging detailed and damaging claims about the Claimants. Furthermore in the case of Tomiyasu it appears that Prince Jefri volunteered information about the matter to his solicitor which I conclude, should have been disclosed. The Claimants should not have claimed to the Court that Mr Derbyshire had misappropriated money on the basis of such thin material but they did not have access to the material which the Defendants’ have now produced . On the other hand Prince Jefri’s failure to disclose his true interest in Argent is serious and, I conclude, intentional. No Claimant should be allowed to escape the consequences of non-disclosure if he declares the importance of disclosing a particular matter but, instead of doing so provides a misleading or untruthful version of those events. This seems to me a serious material non-disclosure which would usually require the Order to be set aside.

[63]I turn next to the significance of the non-disclosure to the outcome of the applications for the Order. In my judgment full disclosure of the matters which should have been revealed would probably not have had a material effect on the decision of Mrs Justice Gloster. The Claimants would have disclosed that they had clearly broken the Brunei and English Orders. The Defendants’ conduct would have appeared less stark and linked more closely to transactions of which the Claimants were aware. But those who break court orders still have a right to protection from fraud. The court’s view on good arguable case, dissipation and Section 25 would also probably have been the same. While some disclosures would have placed the Defendants in a better light , others would have put them in a worse one. Despite these considerations the usual course would have been to set aside the Order.

Should the order be re-imposed

[64]I consider that the order should be re-imposed, in terms which I will decide after further discussion with Counsel, for the following reasons.

[65]First and above all the claims for restitution of property and recovery of damages, in support of which the existing injunction was granted, belong, or may belong , not to the Claimants but to the people of Brunei through BIA , an institution which supports, subject to a variety of conditions, the relief sought by Prince Jefri. The net result of discharging the existing order might well be to deprive BIA, which is blameless in this matter, of assets belonging to it while providing a windfall to the Defendants who would become free to use and dispose of property which they would otherwise have no right to deal with. This is necessarily a broad judgment since BIA may fail in its case against Prince Jefri and the Claimants against the Defendants. But the justice of keeping injunctions in place seems to me clear. It would be wrong to punish BIA for the non-disclosure of Prince Jefri.

[66]Secondly on the material before me , subject to the reservations I have expressed and recognising that the case is in its early stages, the prospects of success for the Claimants seem relatively strong . This adds force to the first reason .

[67]I have mentioned already factors which appear to give substance to the Claimants’ claims given the roles assumed by the Defendants. There is as yet no answer to the credit card claim beyond an implausible ratification argument. The defence to the claim for the remaining proceeds of the sale of Tomiyasu Ranch depends on Ms Zaman’s assertion that her payment into the company she had deceitfully incorporated and its payment out to her personally was approved by Prince Jefri ( her claim that Prince Jefri came up with the idea of incorporating a Delaware company with a Cayman name suggests an improbable degree of detailed technical expertise given her own account of how they worked together). While recognising that the parties might adopt unorthodox measures to evade the Orders there is not even an informal contemporaneous record –an e-mail confirmation of such a large and unusual transaction would have been an obvious and simple step for a lawyer to take- let alone evidence of the usual formalities and deductions under a contract of employment between London based parties . Similar considerations apply to the defence of the Golden Twist claim. Further given the existence of an efficient and systematic machine, Argent , for supplying Prince Jefri with money from the hotel it is not obvious why he would need another vehicle for doing the same thing , on a one off basis, into a company and into a bank account in Monaco with which , on the documents, only Ms Zaman had a connection.

[68]I therefore consider it just to continue or reimpose the Order even though the non- disclosure was not innocent.

Risk of dissipation

[69]The claimants must satisfy the Court that without the world-wide freezing relief granted by this Court, there is a real risk that any judgment that might be obtained by them in New York would remain unsatisfied, The defendants submit that there is no such risk .The claims as regards Sunninghill and part of Golden Twist will fall away as arrangements are made for ensuring that these assets are held by the Claimants. They submit that the other claims are more than secured by the two properties in California which the Defendants own worth more than US$7m. There is no serious suggestion that the defendants will dispose of these properties or indeed of other property acquired before the present dispute arose.

[70]The Claimants rely on the facility, identified by Mrs Justice Gloster, which the Defendants have for incorporating companies, sometimes inappropriately and transferring money around the world. The Claimants also rely on the Defendants’ proposal to move out of the jurisdiction to make a new life and their own admitted involvement in breaches of other court orders.

[71]The evidence produced on this application more than confirms Mrs Justice Gloster’s first impression and emphasises that the Defendants do not hesitate to break or assist others to break Court orders if it is in their financial interest to do so. There is a risk of dissipation in this case and probably a likelihood. Against that the sums secured by this injunction will as a result of regularising the position of Sunninghill and of Golden Twist greatly reduce . It is premature however to take that point further until the size of the amount secured has been identified and security, or its equivalent, been offered to meet it.

Section 25 and expediency

[72]The claimants have to satisfy the Court not only that it is appropriate to grant a freezing order on established domestic law principles but also that it is not inexpedient to make such an order. The Court of Appeal identified five particular factors in Motorola Credit Corp v Uzan and ors (no2) (

[2004] 1 WLR 113

(CA). The Court is concerned first with whether making the order will interfere with management of the case in the Primary Court, secondly whether it is the policy of that Court not itself to make such orders, thirdly the risk of disharmony or confusion, fourthly whether there is at the time the order is sought, likely to be a potential conflict as to jurisdiction and fifthly whether the Court will be making an order which it cannot enforce. Mrs Justice Gloster gave consideration to all these matters in her brief judgment and as I see it nothing has changed to affect that view. The fact that world-wide freezing orders are not available in New York may well be a reason for giving rather than withholding that relief here. There is no issue as to jurisdiction. There is no sign of an order causing disharmony or interfering with the management of the case in New York. If at any stage Judge Kaplan or one of his colleagues were to express a contrary view then this would of course be given immediate and most careful consideration should one or other party draw it to this Court’s attention.

Conclusion on application

[73]The application succeeds to the limited extent that the existing injunction will be discharged and replaced by a new one in terms to be agreed or decided by me after hearing the parties. I will also hear from Counsel on the question of costs.

[74]Any order will be subject to the parties satisfying the court that steps are being taken to regularise the UK tax and social security position which at present is puzzling. If there is truth in Ms Zaman’s claims about how and when she was paid, those arrangements do not appear to comply with basic English tax and social security rules for contracts of employment. That is primarily the responsibility of the Claimants who, I recognise, contend that the transactions in issue were not salary payments at all. The Claimants do accept however that they have made payments of some $2 million. They may of course have acted on the advice of the Defendants or others or not been given advice they were entitled to expect. It is also surprising, given the account of the Defendants of the steps which they have taken to move the base for their lives from London to California that each of the statements of Ms Zaman gives an address in Monaco, apparently a rented flat in which she does not live, because, as she puts it ,“I maintain my residence in Monaco for tax purposes”. That surprise was not allayed by a claim on instructions that she has a Certificate of Residence given the reality that she lives and has a base either in the United States or in the UK but not it seems in Monaco . I am concerned that the parties, with the possible exception of The Second Defendant, may have sought the benefits of employing and of being employed in England without complying with the basic obligations which go with that. The Court is not a tax collector but it will require the parties to satisfy it about these matters , which may of course have a good explanation.

[75]This draft is being circulated initially to the parties to consider not just corrections of the usual kind but also whether particular passages should not be made public.A copy of what may initially be a redacted draft will then go to the lawyers for BIA. GH8011/MVF