GFH Capital Ltd v Haigh [2014] EWHC 3157 (Comm)

[2014] EWHC 3157 (Comm)

Case No 2014/956

IN THE HIGH COURT OF JUSTICE

QUEEN’S BENCH DIVISION

COMMERCIAL COURT

Venue The Rolls Building, 7 Rolls Buildings, Fetter Lane

Date Wednesday, 13 August 2014

London

EC4A 1NL

Before

MR JUSTICE MALES

Between

GFH CAPITAL LIMITEDClaimant

DAVID LAURENCE HAIGHDefendant

Digital Transcript of Wordwave International, a Merrill Corporation Company

165 Fleet Street, 8th Floor, London, EC4A 2DY

Tel No: 020 7421 4046 Fax No: 020 7422 6134

Web: www.merrillcorp.com/mls Email: mlstape@merrillcorp.com

(Official Shorthand Writers to the Court)

MR ANDREW BONAR (instructed by U/K) appeared for Claimant

MR ROBERT LAWSON QC and EMILY MCCREA-THEAKER (instructed by Stephenson Harwood LLP) appeared for Defendant

Judgment

[1]There are two applications before the court by GFH Capital Limited, a company registered in the Dubai International Financial Centre, in proceedings here against the defendant, Mr David Haigh.

[2]The proceedings are under s.25 of the Civil Judgments and Jurisdiction Act 1982 in support of proceedings in the DIFC. In the DIFC proceedings, the substantive claim which the claimant is bringing is concerned with an alleged invoice fraud said to have been perpetrated by Mr Haigh. In support of that claim the claimant has obtained a worldwide freezing order from the DIFC, granted initially on an interim basis and then confirmed by Sir John Chadwick, the Deputy President of the DIFC Court. The s.25 proceedings here are for an English injunction to reinforce the worldwide freezing order obtained in the DIFC.

[3]The first of the applications before me today is for an interim freezing order here pending the decision on the claimant’s s.25 application. The second application is for evidence to be provided in the form of documents from two banks, Co-operative Bank and NatWest pursuant to a letter of request issued by the DIFC Court.

[4]The defendant, Mr Haigh, is currently in prison in the DIFC in connection with the same matters as are the subject of the proceedings there. That has led to difficulties for him and the lawyers whom he has instructed, previously another firm, but more recently Stephenson Harwood, and Mr Lawson who has represented him today has had only a limited opportunity to take instructions through Stephenson Harwood and has not had full opportunity to make all the points which conceivably he may have wished to put before me today. Nevertheless, he has been able to assist me in relation to both applications.

[5]Notice of the applications was given to the defendant, perhaps unusually in the case of a freezing order application, but since the defendant is in custody in Dubai, there was no reason not to do so. However, the notice given was short with only two days between the notice of the application and today’s hearing.

[6]So far as the freezing order is concerned, I am sufficiently satisfied for the purpose of this interim application that there is a good arguable case on the merits of the invoice fraud claim. I bear in mind that the defendant has not had a full opportunity to put evidence before this court, but nevertheless he has had an opportunity, at least to some extent, to challenge the order made in Dubai there, but has not done so. That is not to say that there may not be a valid defence in due course, but I am satisfied that the good arguable case test is satisfied and also that there is sufficient evidence of a risk of dissipation of assets.

[7]The freezing order which is sought here mirrors the terms of the order already made in Dubai, broadly speaking, with the differences that it is limited to assets within the jurisdiction of this court and that there is no application for disclosure of assets to be made pursuant to any order of this court. There was an order made by the DIFC Court for such disclosure of assets, which has not yet been complied with either in full or indeed at all. The defendant says that that has been due to difficulties for his lawyers in communicating with him in prison and that access to him is controlled, naturally enough, by the Dubai Prison Service and is very limited with only relatively infrequent and short visits allowed. He says, however, that there will be information about his assets provided, I think, by the coming Sunday, Sunday of course being a working day in Dubai.

[8]The principles applicable to the grant of a freezing order here pursuant to the 1982 Act were set out by Neuberger J, in the case of Ryan v Friction Dynamics Limited [2001] CP Reports 75. In that judgment, Neuberger J referred to the case of Credit Suisse Fides Trust SA v Cuoghi

[1998] QB 818

, where the Court of Appeal stated the principle that, where a defendant and his assets are located outside the jurisdiction of the court seized of the substantive proceedings, it is most appropriate that protective measures should be granted by those courts best able to make their orders effective. In relation to orders taking direct effect against the assets, this means the court of the state where the assets are located and in relation to orders in personam, including orders for disclosure, this means the court of the state where the enjoined person resides.

[9]In this case, the assets with which the current application is concerned are located here. They consist, so far as is known, of various bank accounts and of a property, a house, but the defendant is not only physically located in Dubai, he is actually in custody there.

[10]The Cuoghi case also included some observations by Lord Bingham CJ, to the effect that on any application under s.25 the English Court must recognise that its role is subordinate to and must be supportive of the primary court.

[11]Having referred to those broad principles, Neuberger J set out a series of numbered general principles applicable when the court is asked to exercise its jurisdiction under s.25. I need not set them all out, but in particular principle number six makes clear that the fact that there is a worldwide freezing order granted by the principal foreign court, does not prevent the English Court from granting a freezing order, at least in relation to English assets. It is commonly the case when the position is reversed and an injunction is given by the English Court as the primary court seized of the substantive claim, that a freezing order may be on terms which specifically envisage that the claimant will apply for freezing orders to support that primary order in foreign jurisdictions where assets are located. That is indeed the position here where the order of the Dubai Court contemplates and gives permission for an application to be made to this court.

[12]Principle number seven stated by Neuberger J is that before an overlapping order is made under s.25, the court should expect to be given cogent reasons to justify it. Overlapping orders in that context mean applications where the same or essentially the same relief is sought in more than one jurisdiction, the consequence of which is that there will be increased costs and use of court time and possibly a risk of double jeopardy for defendants.

[13]Later in the judgment, Neuberger J said this: “I have not been referred to any specific provision, rule, case or practical example which demonstrates that the enforcement of the 1990 order against British defendants in respect of British assets would be more difficult or expensive or time consuming than enforcement of the freezing order, save that it is said that third parties and, in particular, the bank, with substantially all its assets in this jurisdiction, would be more amenable to complying with a domestic order. I am not particularly impressed with that aspect of the claimant’s case. The onus is on the claimant to show that the freezing order in this country confers some extra justifiable and valuable benefit to the claimants.” (Quote unchecked)

[14]So the position is that it is not sufficient or it is not necessarily sufficient simply to say that the banks which it is sought to enjoin are amenable to a domestic order when they would not be amenable to the order of a foreign court. There remains an onus on the claimant to show that there is some extra justifiable and valuable benefit to the claimants in the making of an order here. It is, therefore, not good enough simply to say something to the effect that an order here is to the same effect as the foreign order, which is already in place, and therefore will do no harm.

[15]These are the principles which I propose to apply.

[16]Every case will, of course, depend on its own particular facts, although I observe that the arguments on the facts of the Ryan case mirror some of the arguments which have been addressed before me. Counsel for the defendant in that case marshalled a number of points, including that the freezing order was in respect of the same assets as the order in the foreign court, that the defendants there were resident and domiciled in the foreign court, there the United States, and were amenable to sanctions there and that they had submitted to the jurisdiction of the foreign court and accepted that its order had extraterritorial effect and that it applied to all their assets in Britain.

[17]These and other points were referred to by Neuberger J as making out a formidable case for challenging the making of a freezing order here under s.25. They are equally applicable here. The order sought is in respect of the same assets. The defendant is not only present in the DIFC and amenable to sanctions by the court there. He is actually in prison there. He does not challenge the jurisdiction of the DIFC Court and does not challenge that the order against him there prevents him from dealing with his assets worldwide. Nevertheless, on the facts of that case, those considerations were outweighed by other matters, which Neuberger J went on to mention, including, in particular, that there was some evidence that the defendant in that case had been prepared to breach court orders.

[18]It seems to me that there are two considerations in this case which do amount to cogent reasons for the grant of an injunction, at any rate on the interim basis which I have indicated, and do show that a freezing order here would confer some extra justifiable and valuable benefit to the claimants.

[19]The first of those is that the order made by the DIFC, although binding on the defendant personally, by its terms does not prevent the banks here from complying with any order as to removal of assets, which might be given by or on behalf of the defendant, Mr Haigh. It would therefore not be a breach by the banks (as distinct from the defendant) of the order by the DIFC Court if they were to remove assets at his request or at the request of somebody acting on his behalf. If the order had purported to bind the banks in that way the position might be different. I see the force of the point made by Mr Lawson, that a court could reasonably assume that the banks would not knowingly disregard an order of the DIFC Court, but that is not or necessarily the position if they are faced with any instruction which is contractually binding on them.

[20]The second consideration is that there has been some considerable delay in the provision of any information pursuant to the disclosure order made by the DIFC Court, notwithstanding the difficulties of access to which I have referred. Some considerable time has gone by since that order was made and it is to be expected that the defendant would have made some disclosure by now. As it is, it appears that he has to some extent now admitted the ownership of assets which the defendant has been able to identify.

[21]But there is evidence before me that the defendant has in the past operated through a number of overseas trusts and offshore companies. In particular, I was referred to documents to do with the ownership of a Guernsey company called Sport Capital and it is a real risk for the claimant, in my judgment, that there are assets of which it may not presently be aware or of which it may be aware in general terms, but is not able to identify with specificity. For example, I have in mind some evidence that there may be bank accounts owned by the defendant with HSBC in addition to other banks where accounts have been identified. It is not possible for the defendant at present to say or to identify any HSBC Bank account in this country, although there is at any rate some reason for thinking that such accounts may exist. A freezing order would, therefore, enable the claimant to give notice to HSBC. If the claimant is unable to identify accounts that may mean that the cost of HSBC checking whether it has such accounts and complying with the order may be greater than in a case where the account can be identified, but if that is an expense which the claimant is prepared to bear, that seems to me to be a matter for it.

[22]So for those reasons I conclude that in principle that there should be a freezing order. I will hear counsel on the precise terms of that in due course.

[23]Secondly, so far as the letter of request is concerned, this relates to accounts held at two banks within the jurisdiction, Co-operative Bank and NatWest. The documents sought in relation to the accounts, there being two accounts at the Co-op and one account at NatWest, are the same in each case and are as follows:(1) the identity of the nominal and, if different, ultimate beneficial owner of each account;

(2) if not included within paragraph 1 above, copies of documents provided to the bank by the nominal and/or beneficial owner of each account as proof of their identity;

(3) the history of dealing on each account from the date on which it was opened or 1 February 2013, whichever is later; and

(4) where available, the destination of payments out of each account.

[24]I have been referred to the House of Lords decision in In re Asbestos Insurance Coverage Cases

[1985] 1WLR 331

, where the House of Lords set out the principles which apply to an application here for documents pursuant to a letter of request.

[25]Lord Fraser referred at page 335 to the statement of principle previously made by Lord Wilberforce in the Westinghouse case

[1978] AC 547

to the effect that following the spirit of the 1975 Act, letters rogatory ought to be given effect to so far as possible. Nevertheless, so far as documents are concerned, the power of the court to order production is limited to particular documents, which are specified and which appear to the court making the order to be or to be likely to be in the possession or custody or power of the person against whom the order is made.

[26]That expression was explained at page 337D to 338D in the judgment of Lord Fraser as follows:

“The meaning of the expression “particular documents specified in the order” in subsection (4)(b) was concerned by several of the noble and learned lords who took part in the Westinghouse case [1978] A.C.547 decision. They were all emphatic that the expression should be given a strict construction. Having regard to the purpose of subsection (4) which, as I have already mentioned, is to preclude pre-trial expeditions Lord Wilberforce said, at p.609: ‘These provisions, and especially the words “’particular documents specified in the order’ (replacing ‘documents to be mentioned in the order’ in the [Foreign Tribunals Evidence Act] 1856) together with the expressed duty of the English court to decide that the documents are or are likely to be in the possession, custody or power of the person called upon to produce, show, in my opinion, that a strict attitude is to be taken by English courts in giving effect to foreign requests for the production of documents by non-party witnesses. They are, in the words of Lord Goddard C.J., not to countenance ‘fishing’ expeditions: Radio Corporation of America v. Rauland Corporation [1956] 1 Q. B. 618, 649.” ‘These provisions, and especially the words “’particular documents specified in the order’ (replacing ‘documents to be mentioned in the order’ in the [Foreign Tribunals Evidence Act] 1856) together with the expressed duty of the English court to decide that the documents are or are likely to be in the possession, custody or power of the person called upon to produce, show, in my opinion, that a strict attitude is to be taken by English courts in giving effect to foreign requests for the production of documents by non-party witnesses. They are, in the words of Lord Goddard C.J., not to countenance ‘fishing’ expeditions: Radio Corporation of America v. Rauland Corporation [1956] 1 Q. B. 618, 649.”

[27]Applying what is said there, it seems to me that the letter of request is drafted in terms which fall foul of those principles. The documents sought are to some extent conjectural and in any event cannot be regarded as particular documents.

[28]The first category, the identity of the nominal and beneficial owner of the account is not a request for documents at all, but for information. The third category, the history of dealing on each account from the date on which it was opened, once again is information which may be contained in documents which the bank has, but is not a document or anything which is identified with sufficient particularity, although it may be that the relevant information would be contained on bank statements which are likely, of course, to exist. The fourth category, where available the destination of payments out of each account, is similarly not a request for documents, but for information, albeit, information which would be derived from documents.

[29]In the course of argument, Mr Lawson produced a narrower request for documents which he submitted would comply with the requirements set out in the Asbestos case, if I were minded to make the order, and Mr Bonar supplemented that in the course of his reply.

[30]It seems to me that following the principle that the letter of request should be complied with so far as possible, but bearing in mind the limitation on the court’s power under the Act, it would be appropriate to make an order in the following terms, so that the following documents would be required to be provided: first, the account opening forms; second, the signature mandates for the accounts; third, copies of the documents provided to the bank by the nominal and/or beneficial owner of each account as proof of their identity; and fourth, the bank statements for each of the accounts for the period from the date on which it was opened, or 1 February 2013, whichever is the later. These are documents which are clearly identified. It is apparent that they exist and an order in that form will enable the banks to know precisely what it is that they must provide.

[31]Mr Bonar suggested that there were two further categories of documents which on this more specific basis should also be included, namely, first, the banks’ ledger and secondly, payment instructions for any inter-account transfers from each account. However there is no evidence as to the form in which the banks keep their internal records as distinct from the statements provided to their customers. Whether there have been any inter-account transfers is conjectural. I am not satisfied, therefore, that these last two suggestions comply with the principles in the Asbestos case.

[32]The order which I propose to make will enable the claimant to have, at any rate, most of the information which it seeks pursuant to the letters of request. It may be that documents provided pursuant to the order which I propose to make will themselves give rise to further specific requests. If that happens, that can be dealt with in due course. I am neither encouraging nor shutting out any such further applications.

[33]I should say that on Monday of this week, the two banks were given notice of this application, albeit at very short notice. I see no reason why they needed to be given only such a short time to consider the application. In fact, the Co-operative Bank was able to confirm that it would consent to the order in the wider form of the original application, while the position of NatWest was that it neither opposed nor resisted any such application and would comply with any order which the court might make. It could be said, therefore, at any rate in relation to the Co-operative Bank, that it has consented to the order in the wider terms. However, the bank cannot by consenting confer upon the court a power to order production of documents which it does not have under the Act.

[34]So, on the more limited basis, there will be an order to the effect which I have indicated. Each bank must provide the documents which will be ordered by 4.30p.m. on 3 September of this year. That is to say, 21 days from today. ________________________________________