Deutsche Bank AG v Sebastian Holdings Inc & Anor [2015] EWHC 2773 (QB)

Case No CL-2009-000709[2015] EWHC 2773 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 07/10/2015
Before
MR JUSTICE COOKE
Between
Deutsche Bank AGClaimant
Miss S. Tolaney QC and Mr J. MacDonald (instructed by Freshfields Bruckhaus Deringer LLP) for respondentMr S. Cogley QC and Mr T. Marland (instructed by Cooke, Young and Keidan LLP) for applicantHearing Hearing date: 30th September 2015
Judgment

Introduction

[1]This is Mr Vik’s application to set aside or vary the order of Teare J made without notice on 20th July 2015. The order provided for Mr Vik to attend on 28th October 2015 to be examined pursuant to CPR Part 71 in his capacity as an officer of the defendant (SHI) and for him to produce documentation as set out in the order on a date two weeks prior to the hearing, namely 14th October 2015.[2]The order is challenged on five grounds, each of which, it is suggested, should lead to the order being set aside. Alternatively Mr Vik contends that the order be varied with regard to the timing for compliance with it in the light of proceedings in the USA and in the Court of Appeal here. In the United States there is a trial scheduled in Connecticut for two weeks beginning on 10th November 2015 whilst there is an appeal against the Non-Party Costs Order made against Mr Vik which is scheduled to be heard in the Court of Appeal in this country on 3rd November with an accompanying application for the admission of new evidence.[3]The five grounds upon which it is contended that the order should be set aside are as follows: i) the Order is unjustified and exorbitant and Part 71 jurisdiction was not properly engaged because of the absence of any exceptional circumstances. ii) The Order was sought and obtained for a collateral purpose, namely to obtain documents which have been refused in the Connecticut proceedings and to have a “dry run” at cross-examination of Mr Vik prior to the Connecticut proceedings. iii) The proposed examination serves no useful purpose. iv) The documents sought are not properly the subject of an enquiry within CPR Part 71. v) The Order would not have been made if there had been full and frank disclosure to Teare J.[4]On 8th November 2013 I found SHI liable to pay DBAG some $243 million following a lengthy trial. I also ordered SHI to pay 85% of DBAG’s costs on an indemnity basis and ordered an interim payment on account of £34 million. Subsequently I made a Non-Party Costs Order against Mr Vik personally in respect of those costs on 24th June 2014. I have knowledge of the background to the application made by DBAG for examination of Mr Vik in relation to the assets of SHI, of which he was the sole shareholder and director at the relevant time, because at the time of the trial there was evidence relating to its assets and his attempts to impede the recoverability by DBAG of sums due to it.[5]I can see nothing in any of the grounds which are put forward which would justify setting aside the order for the reasons which appear hereafter.

The background facts

[6]The key element to many of the disputed issues before me appears to lie in the facts recited at section 33(a) of my judgment of 8th November 2013. i) I held at paragraph 1435 ff. that Mr Vik had arranged for funds of approximately $896 million to be transferred out of SHI to himself or to companies associated with him or his family. Additionally, shares worth $92 million approximately in Confirmit were transferred to him. Thus nearly $1 billion worth of assets were transferred in the course of a week or so at a time when DBAG was seeking to recover sums owed to it by SHI. ii) I also held at paragraph 1439 that SHI had given inadequate disclosure of its financial position and that Mr Vik had lied in a disclosure statement and that his explanations for the transfers to which I have already referred were not credible. I found that Mr Vik treated SHI’s assets as if they were his own and transferred them in order to render access to them more difficult. iii) At paragraph 1461 I concluded that all the funds transferred were available to SHI prior to transfer and that Mr Vik, at a moment’s notice, could procure the transfer of the funds back to SHI if he chose to do so. I found that there was no good bona fide commercial reason for the transfers (see also paragraph 1464 and paragraphs 66-68 of the Non-Party Costs judgment).[7]I also declined to grant a stay of execution of the judgment pending any application for permission to appeal on the basis that SHI was in a position to pay the sums awarded because of the funds that were available to it – namely the $896 million transferred at the direction of Mr Vik in October 2008.[8]When the matter came before the Court of Appeal on an application relating to permission to appeal, Tomlinson LJ said the following at paragraphs 25-26:
“25. … I approach this application on the basis that, as the judge himself put it at paragraph 1455 of his judgment, the transfers out of SHI were done both with a view to depleting SHI's assets and with a view to making it more difficult for DB to seek recovery, should it need to do so. In short, SHI has sought to dissipate its assets in order to avoid paying a judgment which it knew DB would have to seek. There was, as the judge found, "a strong element of impropriety in making those transfers". 26. I have already indicated that I accept it as inherent or implicit in the judge's findings that, as at October 2008, SHI had the right to recover its funds. It has not been asserted that the ability to recover the funds has been lost in consequence of subsequent transactions in the ordinary course of business. It follows that if circumstances have changed such that SHI no longer has the right to recover its funds, that can only be because it has carried out further acts of impropriety with a view to avoidance of payment of the judgment which it anticipated would be rendered against it. I can give little weight to VBI's protestation that "under no circumstances will it return money transferred to it by SHI." Beatrice has not replied directly to SHI's letter of 24 January 2014 quoted above. It has however made clear in litigation in New York that it opposes return of the funds. That is hardly surprising.”
[9]He went on to say at paragraph 36 that:
“It is right to point out that Mr Vik gave no guarantee for the liabilities of SHI to DB, and that is a point which he is entitled to stress and does stress. However there is no evidence to suggest that Mr Vik is not still the sole owner and director of SHI as he was in 2008. SHI apparently observed no corporate formalities. Given the judge's findings as to the manner in which Mr Vik treated SHI and its assets as his own, it is difficult to think that there can be a more appropriate case in which to take into account that he could, if minded to do so, pay the judgment debt. However, it is not in my judgment necessary to go that far. On the basis on which I approach the case SHI could itself pay the judgment debt into court if Mr Vik chose to procure it to do so. That does not involve Mr Vik funding SHI or paying the judgment debt on its behalf. It involves Mr Vik taking steps to restore to SHI what are rightfully its assets.”
[10]Additionally, as appears from other evidence, including the tenth and twelfth witness statements of Mr Hart: i) SHI disposed of interests in various private equity investments between December 2008 and April 2011 but nothing is known as to the consideration received for such disposals or the whereabouts of such receipts. ii) SHI claims to have disposed of all its remaining assets pursuant to a Sale Agreement “as of 26th September 2012” which had, as I said in the Non-Party Costs judgment, a number of unusual features and did not specify the assets sold. The identity of the purchaser was not disclosed and the documents gave rise to justified suspicions on the part of DBAG.[11]The whole history of the proceedings against SHI, Mr Vik’s creature company, as set out in the previous judgments I have given, reveals attempts by Mr Vik and Mr Johansson to avoid liability, to deceive the court and to conceal the true state of SHI’s financial affairs.[12]There is thus, as DBAG submits, on my findings and those of the Court of Appeal, a basis for saying that SHI has assets which could be used to satisfy the judgment against it, although the location of any such assets is currently unknown. These are the very circumstances for which CPR 71.2 was designed.[13]I should add that, following the service of the order made by Teare J under CPR 71 on Mr Vik on 21st July, the evidence from his current solicitor is that on 28th July 2015 he sold his shares in SHI to a company called Rand AS and ceased to a director the same day. Rand AS had been a director since 2nd April 2015. From other evidence before the Court it appears that Rand AS was controlled by Hans Eirik Olav, a friend and business associate of Mr Vik who was until June 2015 the chairman of Confirmit and who also had been an officer of other companies associated with Mr Vik. No details of this disposal of the shares have been given by Mr Vik but in a witness statement adduced for the purposes of the Non-Party Costs Order appeal, Mr Vik stated on 23rd September that Mr Olav had fallen ill and resigned from Rand AS and that he, Mr Vik had no current association with Rand AS or Mr Olav. Mr Vik said that he now has no control over SHI’s documents.[14]DBAG contends that Mr Vik’s conduct is all of a piece and that these actions are all intended to impede enforcement of the judgment against SHI. It is hard to come to any other conclusion.

The US proceedings

[15]I should mention at this stage the proceedings in the USA in New York and Connecticut. The details of these proceedings were set out in Mr Hart’s tenth witness statement which was put before Teare J who made the ex parte order under CPR 71.2. Putting to one side SHI’s 2008 proceedings in New York where a decision is awaited on DBAG’s motion for summary judgment on the basis of res judicata, there remain the 2013 New York proceedings and 2013 Connecticut proceedings commenced by DBAG against (inter alia) Mr Vik and SHI. These proceedings were commenced following the handing down of my judgment on liability against SHI on 8th November 2013. In them DBAG seeks to recover sums due to it under that judgment on the basis that Mr Vik is or was the alter ego of SHI, Beatrice and VBI (the recipients of some of the October 2008 transfers) whilst also claiming that various transfers from SHI to recipients were fraudulent and made with a view to evading liability to DBAG.[16]DBAG’s requests for disclosure by SHI in the New York proceedings in relation to SHI’s financial position have so far been refused. In the Connecticut proceedings, some disclosure has been ordered in as much as it relates to the issues before the court but other requests relating to the assets of SHI have been refused. I take it that refusal is likely to have been based on the conclusion that such documents are not relevant to those issues. Though detailed reasons for the refusal have not been given it is fair to assume that the Connecticut court did not consider the disclosure sought as necessary for the purpose of determining the central issues before it relating to the alter ego argument.

The documents sought

[17]Whilst it is clear that there is a significant overlap in the documents sought under CPR 71 and those sought or ordered in the United States, there is an obvious conceptual difference between the issues which arise in the different proceedings. Those sought here relate to the assets and finances of SHI, namely its means to pay the judgment debt, whilst the documents sought in Connecticut and New York relate to the alter ego issue which, whilst not limited simply to the funds passing between Mr Vik’s “creature companies” do not necessarily encompass all the financial assets of SHI – in particular sums received by SHI on disposal of its assets.[18]A recurring theme in Mr Vik’s arguments before this court was that historic transfers of assets have no bearing on SHI’s current available means to meet the English judgment and that therefore documents relating past assets and questioning thereon are irrelevant. It was said that DBAG had failed to identify any cause of action by which it could make recovery of assets which had been transferred and that any remedy in respect of fraudulent transfers, transfers at an undervalue or fraudulent preference was only open to a liquidator of SHI. It was pointed out that DBAG had not taken any steps to put SHI into liquidation in the Turks and Caicos Islands where it is incorporated nor in any other jurisdictions.[19]The basis of this argument is ill-founded. What DBAG says is that the assets transferred remained SHI’s assets, relying on findings made by the English Courts in this respect. It says that it is entitled to question SHI’s officers about the whereabouts of such assets and to see documents which relate to that. The past history of assets which have been transferred but which remain SHI’s assets is therefore highly material in ascertaining the location of such assets now as they constitute the means by which the judgment debt could be satisfied. Moreover, it is clear that any claim which SHI might have to the return of funds could constitute a chose in action and thus, in itself, an asset of SHI. Moreover, not only are the judgment debtor’s means a relevant consideration but so also is “any other matter about which information is needed” in order to enforce the judgment or order, as set out in CPR 71.[20]In Mubarik v Mubarak [2002] EWHC 2171 (Fam), Hughes J, as he then was, stated that a predecessor to Part 71 did not “authorise a freestanding process of specific discovery”. He stated that the oral examination was a process of considerable potential utility to a judgment creditor in a case where the judgment debtor was deliberately evading his obligation to pay. The obligation on the judgment debtor to procure books or documents was necessarily ancillary to the process of examination and not independent of it but that it was an important and often vital part of the process and a significant tool in the enforcement of the court’s order in relation to which, ex hypothesi, the judgment debtor was in default. The documents specified for production had however to be relevant to the questions to which the examination was directed, which, for the purposes of CPR Part 71 are those which I have set out above.

CPR 71.2

[21]I turn to the terms of CPR 71.2 which provides that a judgment creditor may apply for an order requiring an officer of a corporation which is a judgment debtor to attend court to provide information about:
“(i) the judgment debtor’s means; or (ii) any other matter about which information is needed to enforce a judgment or order.”
[22]The rule provides that an order may be made for an officer of the judgment debtor to attend the court to provide information about its means or any other matter about which information is needed to enforce a judgment or order. It is self-evident that, for such an order to be made, the applicant does not need to be aware of the extent or location of the judgment debtor’s assets since this is the purpose of the enquiry. Mr Vik contends that DBAG knows that SHI has no assets in this jurisdiction and no assets anywhere in the world that are capable of satisfying the judgment and that, for this reason, no enforcement proceedings have been taken against SHI in this country or the USA. This is also why SHI has not been put into liquidation in its country of incorporation or centre of operations, namely the Turks and Caicos Islands. In saying this, SHI relies on various statements made by DBAG at different stages in the proceedings where it is said that SHI had no apparent assets but this cannot assist SHI in the circumstances which I have already outlined regarding the various transfers of assets made by SHI on Mr Vik’s instructions both in October 2008 and subsequently. DBAG should be able to ask questions about any matter which will assist it in enforcing the English judgment by any means available to it and SHI’s past history of asset transfers is clearly material in that regard.[23]I was taken to a series of authorities upon which SHI relied in advancing the proposition that an order could only be made on a non-resident foreigner under CPR Part 71 if there were exceptional circumstances. That is not a phrase which appears in Part 71 at all but it was said that, because of the territorial nature of Part 71, there was either no jurisdiction to make an order against an individual who was only fleetingly present in the jurisdiction when served or that such jurisdiction should only be exercised exceptionally. It is no doubt true that the nationality and residence of the company and officer are relevant to the exercise of discretion but I did not find anything in the authorities which justified the proposition as put. In any event, I am entirely satisfied that this is an appropriate case for the exercise of the court’s jurisdiction and that it is sufficiently “exceptional”, should there be any such requirement.[24]The essential point made on SHI’s behalf was that Mr Vik was not resident or domiciled in the jurisdiction. On 20th July at the time when the application was issued and 21st July when the order upon was served, he was in the country for a very limited time in order to attend the offices of DBAG’s solicitors in order for him to be deposed as part of the process for providing evidence in the Connecticut proceedings. The order was therefore made against a non-resident requiring him to produce documents belonging to a Turks and Caicos company of which he was the sole shareholder and one of the co-directors at a time when the documents, wherever they might be, were not themselves within the jurisdiction. This was said to be the exercise of an exorbitant jurisdiction.[25]It was in this connection that reliance was placed on the decision of the Court of Appeal in Kuwait Airways Corporation v Iraq Airways Co & anor [2010] EWCA Civ 741 and in particular to paragraphs 10-12 in the judgment of Rix LJ. The Court was there concerned about the exercise of the Bayer v Winter jurisdiction relating to disclosure supported by a restraint order and passport order made against the Director General of the respondent company. Rix LJ referred to the reasoning of the first instance judge and a passage in Phipson on Evidence at paragraph 8.32 which acknowledged the possibility of a witness summons against persons temporarily within the jurisdiction but which also emphasised the limitations upon that possibility and the need to have regard to the provisions of CPR Part 71 in the context of the application being made. Reference was made to the court not exercising unusual or exorbitant jurisdiction unless it was necessary. At paragraph 34 the Lord Justice referred to the fact that CPR 71 is not available against respondents out of the jurisdiction and was essentially a domestic aid to execution. The Court of Appeal nonetheless was prepared to make the unusual order involving the surrender of a passport by a foreign national present in this jurisdiction and to restrain his leaving the jurisdiction for a limited time and the use of the tipstaff to enforce those parts of the order. That was the unusual or exorbitant form of order to which reference was made.[26]In MacKinnon v Donaldson, Lufkin and Jenrette Securities Corporation [1986] 1 Ch 482, an order sought under section 7 of the Bankers’ Books Evidence Act 1879 against a foreign bank which was not a party to the action was compared with a subpoena and it was said by Hoffmann J (as he then was) that in principle and on authority a court should not, save in exceptional circumstances, require the production by a non-party foreign bank of documents outside the jurisdiction concerning business which it has transacted outside that jurisdiction. The principle was stated to be that “a state should refrain from demanding obedience to its sovereign authority by foreigners in respect of their conduct outside the jurisdiction” (page 493 at G). At page 499A-F – the judge decided that the case was not an exceptional case justifying the making of an exorbitant order and that, where alternative legitimate procedures were available (by a letter of request or an application to a foreign court) “an infringement of sovereignty can seldom be justified except perhaps on the grounds of urgent necessity”.[27]In Phipson On Evidence (18th edition) at paragraph 8-32, the authors state:
“Other than in exceptional circumstances, the court should not require a non-resident who is not party to the proceedings but who happens to have been served during a temporary visit to the United Kingdom to produce documents held outside the jurisdiction relating to business conducted outside the jurisdiction because the summons would be an infringement of local sovereignty.”
This therefore summarises Hoffmann J’s decision but the authors go on to state that although the provisions for examination of the officers of a judgment debtor do not apply to persons resident abroad, this does not prevent an order being made against an officer who is temporarily within the jurisdiction though, in such a case, care should be exercised before exercising such a jurisdiction against a foreigner. In this connection reliance was placed by the authors on the decision of the House of Lords in Masri v Consolidated Contractors International (UK) Ltd [2010] 1 AC 90. At paragraphs 23-26 Lord Mance, with whom the other Law Lords agreed held that CPR Part 71 could not apply to company officers outside the jurisdiction but said nothing at all about the situation where a non-resident was served within the jurisdiction.[28]I accept that care must be taken in making an order of this kind particularly if there are alternative means available to a judgment creditor to obtain the relief sought but the relief sought here is not extravagant or exorbitant in the sense of the MacKinnon and Kuwait Airways cases and Mr Vik is not an independent person unconnected to the English litigation and the judgment debt. To the contrary, he was the physical embodiment of SHI at all material times until divesting himself of his interest a week after the CPR Part 71 order was served. Reference should be made to the Non-Party Costs judgment. There is no threshold requirement of “exceptional circumstances” for an application of the kind made here, but Mr Vik’s direct connection with SHI and his interest in every element of its financial affairs and procurement of the transfers are exceptional in nature.[29]I was referred to CIMC Raffles Offshore (Singapore) PTE Ltd v Schahim Holdings SA [2014] EWHC 1742 (Comm) where, after reviewing the authorities to which I have already referred, Field J accepted the submissions of counsel that no order could be made under Part 71 if the individual to be subject to the order was outside the jurisdiction either at the time when the application was made or at the time when the order was made. It was conceded by counsel however that even a fleeting presence within the jurisdiction at the time of the application and the making of the order meant that the court had jurisdiction, a concession which the judge appears to have accepted as correct, as do I.[30]Here there are strong reasons for exercising the jurisdiction. This is an exceptional case where the officer of the company controlled the company which failed to give proper disclosure of its assets in accordance with court orders in the proceedings, where he told lies to the court about its financial affairs in addition to telling other lies in his evidence relating to the dispute. He, as I found in my earlier judgments, was the physical embodiment of the company and treated its assets as his own. He is an international businessman who travels the world using his Blackberry to communicate. His main office and his residence were in Monaco and as I found in the judgment on liability against SHI, he was in the USA for less than 60 days a year at the relevant time. According to his recent deposition evidence in the US proceedings, the amount of time spent in Connecticut in recent years has been much less than this and, this year has been for about a fortnight. He no longer has a desk on Ashton Drive.[31]DBAG has “exported” the English judgment against SHI on liability by “domesticating” it in New York and Connecticut so that it falls to be recognised there. Nonetheless, the evidence of Mr Zaroff is that, although there are equivalent procedures to those under CPR 71 in both New York and Connecticut, which DBAG has not sought to utilise, in his opinion it is unlikely that the courts in either of those jurisdictions would permit their procedures to be used to obtain the information/documentation that DBAG seeks. DBAG has served Post Judgment Interrogatories on SHI and Mr Vik in the Connecticut proceedings which require them to provide information about the assets of SHI but both SHI and Mr Vik filed objections to the provision of such information and none has been given as yet.[32]The position is therefore that CPR Part 71 provides this court with jurisdiction in relation to the judgment which it has given whilst neither of the courts in the USA would, on the evidence, be likely to grant the relief that is being sought here. Mr Vik’s presence or association with this country may be considered as fleeting but his presence in or association with New York and Connecticut is hardly significant and this factor is outweighed by the unlikelihood of either of those courts granting the leave sought. If it is just and appropriate for this court to grant such relief, it should do so in the particular circumstances of this case. There is nothing arguably oppressive or irregular in DBAG’s seeking to pursue alternative and parallel routes to possible recovery of the sums awarded by this court in November 2013 and this court should aid enforcement of its orders if it can properly do so.[33]Examination under CPR 71 is intended to be a summary and straightforward process allowing the judgment creditor to obtain information from the judgment debtor for the purpose of being better able to decide which method or methods of enforcement to use, whether sequentially or simultaneously (CPR 71.0.01 and 71.1.1). Various methods of enforcement are available as listed at CPR 70.2.1 including the making of a charging order or the appointment of a receiver over assets which are identified in the examination of a judgment debtor or the officer of a corporation which is a judgment debtor. Any order is, by definition, intended to assist in establishing the extent and whereabouts of the judgment debtor’s current means to pay the judgment debt and, as decided by a two judge Court of Appeal in Interpool Ltd v Galani [1988] 1 QB 738, a judgment debtor or its officer can be questioned about assets outside the jurisdiction in respect of debts incurred inside or outside the jurisdiction. The officer may also be ordered to provide relevant documents if they relate to the property or other means of paying what the judgment debtor owes.

Collateral purpose

[34]The evidence of Mr Hart in his tenth and twelfth witness statements is to the effect that, because DBAG has not obtained the information and documentation it needs fully to understand SHI’s assets and financial position and has therefore been unable to enforce the Judgment Debt against SHI, it wishes to cross-examine Mr Vik about SHI’s assets and financial position and for that purpose to obtain relevant documents. It was contended on behalf of Mr Vik that DBAG had a collateral purpose in seeking the documents and examining Mr Vik, namely to obtain documents of which disclosure had been refused in Connecticut and then to use them for the purpose of those proceedings in the context of the substantive alter ego issues. It also was seeking to have a dry run at cross-examining Mr Vik prior to the trial in Connecticut. It was said that the date of 28th October had specifically been fixed with this in mind. This was in fact the only basis for the inference that I was invited to draw by counsel for Mr Vik but, to my mind, the point is without substance and goes nowhere. Mr Vik has been deposed on a number of occasions, apart from giving evidence in the English proceedings. A further “dry run” is probably neither here nor there in the overall context of the different answers he has already given about SHI’s assets. Furthermore, if documents are produced in relation to SHI’s assets which are relevant to the issues in the proceedings in Connecticut, then no doubt they can be admitted by the court there if it so decides whilst it would doubtless refuse to allow cross-examination on irrelevant documents or to allow their admission into evidence as such. (See also my comments in paragraph 32 above).[35]It was further suggested that the object of the fixing of the date was to create maximum disruption to Mr Vik and his legal team.[36]In Mr Hart’s tenth witness statement and the skeleton argument put before Teare J, reference was made to the scheduled trial in Connecticut and the Non-Party Costs appeal in England due to be heard in November. The date of 28th October was, according to his twelfth witness statement, selected on the basis of the availability of the court and DBAG’s counsel team as a date prior to the hearing of Mr Vik’s appeal on the Non-Party Costs Order. It is now said that Mr Vik is more likely to comply with an order under Part 71 in circumstances in which he has a live appeal which is being pursued in the Court of Appeal. I do not see any grounds for disbelieving this evidence.

No useful purpose

[37]This argument appears to rest upon the proposition that DBAG knows that SHI has no assets within the jurisdiction nor any elsewhere in the world which could satisfy the judgment debt. For the reasons I have already given, DBAG has strong grounds for saying that there are assets of SHI, the location of which is unknown.[38]Insofar as it is alleged that identical requests have been made for documents for which disclosure has already been granted in Connecticut, SHI has failed to take into account the provision of the order that documents are only to be provided to the extent that they have not already been ordered in one jurisdiction or another. It has been agreed between the parties that documents made available in one jurisdiction can be utilised in another.

The documents sought are not properly the subject of an enquiry within CPR Part 71

[39]This point appears to turn upon the proposition that DBAG is seeking documents relating to past transactions (namely the transfers of funds and assets made by SHI from 2008 onwards) and not to SHI’s current assets. For the reasons already given, this overlooks the fact that DBAG’s case is that SHI is still the beneficial owner of the assets which it has transferred, quite apart from any assets which it has received as consideration for the disposal of the private equity investments or other assets the subject of the Sale Agreement to the unidentified purchaser.[40]The bank statements sought in item 1 of the list of requested documents cover the position from 1st January 2008 to date in relation to each of the bank accounts of which DBAG has knowledge, as a result of documents already disclosed, in order to ascertain SHI’s current means to pay the judgment debt. In light of SHI’s past history, such documents represent an obvious source of information in respect of funds actually held in the name of SHI as well as funds transferred elsewhere to which it may be beneficially entitled. Item 2 relates to the private equity investments set out at paragraphs 7.22 to 7.43 of the report of Elizabeth Gutteridge dated 30th June 2015 and the disposal of those investments and the consideration received. This too relates to potential assets of SHI. The same applies to item 4 which covers other investments or assets held by SHI and documents relating to the disposal of them and consideration received for them. DBAG seeks, in item 6, an unredacted copy of the Sale Agreement together with a detailed schedule of all the assets allegedly sold pursuant to that Agreement. This too may assist DBAG in understanding the current asset position of SHI, including consideration received and any issues of beneficial ownership of assets ostensibly sold.[41]I was told that items 3 and 5 were the subject of orders by the Connecticut court and no issue arises in relation to them. Insofar as they are not provided pursuant to the Connecticut court order they would fall to be provided under CPR Part 71.

Lack of full and frank disclosure

[42]I need not go into any great detail with regard to this head of argument. It is said in Mr Vik’s skeleton argument that Teare J remained in ignorance of the “collateral use” issue, the extent to which DBAG knew and relied on the fact that SHI was assetless, the totality of what was going on in the proceedings in the USA, the lack of explanation for delay in making the application, the relevance of DBAG seeking disclosure of documentation refused in the US proceedings and the reason for such refusal.[43]I was unable to see that there was any force in this submission at all. The tenth witness statement of Mr Hart set out the basis upon which the application was made over 38 pages and 86 paragraphs. Details of the English proceedings, the New York proceedings and the Connecticut proceedings were set out as was the basis for the application in the light of the findings made by me and by the Court of Appeal in relation to SHI’s assets which were transferred for no good commercial reason and the sale of other assets where a consideration received was unidentified.[44]In explaining the Connecticut proceedings, Mr Hart set out the different basis for disclosure in that jurisdiction as compared with Part 71 in this jurisdiction. The judge was fully aware of DBAG’s request for production of documents in Connecticut and the denial of a number of those requests relating to SHI’s financial position and the objections raised by Mr Vik and SHI in the discovery process, some of which were upheld.[45]It was suggested that DBAG ought to have explained the reason why it was seeking a Part 71 order in this country as opposed to seeking some form of similar order on the back of the domesticated judgments in Connecticut or New York. In my judgment DBAG is entitled to pursue enforcement proceedings in the way that it chooses and to seek information to enable it to do so in the manner it considers most effective. Counsel for Mr Vik seemed to argue that DBAG was bound to pursue an application of this kind in Connecticut because of the proceedings there against Mr Vik on the alter ego issue though any post judgment application would have to be based on the domesticated judgment of the English court in that jurisdiction where, as it now appears from Mr Zaroff’s evidence, the court would be unlikely to grant the relief sought here. I can see no basis for saying that DBAG should have advanced an explanation for its preference to proceed on the basis of the primary judgment in this country as opposed to the domesticated judgment in Connecticut, absent some overwhelming feature which rendered Connecticut the appropriate location. If service could be effected here, as it was on an occasion when DBAG knew that Mr Vik would be present, it was entitled to take advantage of that opportunity, explaining to the judge the circumstances in which this was to occur, as DBAG duly did.[46]I consider that there was nothing which fell to be disclosed to Teare J which was not disclosed.

Variation of the order

[47]I can see no basis for variation of the scope of the order in relation to the documents sought, once it is accepted that DBAG has a case, as it has, in relation to SHI’s available assets about which it needs to obtain information.[48]The only two issues which arise relate to the form of the order against Mr Vik and time for compliance with it in relation to documents and the date of examination. Since 28th July 2015, it appears that Mr Vik has not been the director or shareholder of SHI. It is said that he does not have control over SHI’s documents, wherever they may be. As to their location, the evidence before me at the trial was that they were in Monaco, in Connecticut and in other branch offices of SHI elsewhere in the world but that most of the material was electronic in format and was held on Mr Vik’s Blackberry. Documentation was made available to lawyers in both jurisdictions.[49]Given the past history of the matter and Mr Vik’s obvious attempts to evade compliance with orders for disclosure, it is hard to credit any suggestion that Mr Vik cannot obtain access to any documents that he wishes which belong to SHI regardless of disposal of his interests to Rand AS or Mr Olav’s illness. It is open to any person ordered by a court to do something to inform the court of inability to observe an order and to give reasons for doing so but the reality of the matter is that all SHI’s financial documents should long since have been disclosed in the period prior to 28th July 2015 and were then undoubtedly in the control of SHI and its director/directors. Resignation from the position of director one week following the service of the Part 71 order and disposal of the shareholding represents a poor excuse for non-compliance with obligations ordered in circumstances where Mr Vik has attempted to put it out of his power to comply with the order. At this stage I can see no basis for interfering with the scope of the order.

Timing

[50]Mr Vik’s alternative application was to seek adjournment of the CPR 71 examination until all outstanding proceedings had been concluded, including the American proceedings. The New York enforcement proceedings are, on the evidence, unlikely to come to trial until 2017 and any decision would be subject to an automatic right of appeal. Counsel for Mr Vik recognised that this was an unrealistic application and instead posited an adjournment until December 2015, after the conclusion of the Non-Party Costs appeal and the trial in Connecticut. Six reasons were given in support of the application for such an adjournment. i) It was said that however much DBAG maintained that it was not its intention to seek information to deploy in the US proceedings, there are no safeguards which would prevent that from occurring. I am wholly unpersuaded by this since the court in Connecticut can control its own proceedings and the use of material in them to ensure that only relevant evidence is adduced and relevant questioning allowed. ii) There is a real risk that DBAG will obtain an unfair collateral advantage in the US proceedings if it is allowed a dry run cross-examination of Mr Vik on such material. Much the same answer applies here as to the first ground, together with the point that I have already made as to the extent of evidence already given by Mr Vik in England orally and in witness statements and in depositions for the US proceedings. iii) DBAG has failed to identify any prejudice arising from such a postponement. The prejudice which is put forward by DBAG in fact is the risk that Mr Vik may not comply with the orders made if, by that time, his Non-Party Costs appeal has failed, whereas if it takes place before that, he has an incentive to comply with English court orders. iv) DBAG has delayed for nearly two years in bringing this application and there can be no urgency about it. If it was seen as having any utility at all, it would have been pursued far earlier. It cannot delay such an application and then complain about an adjournment. It is right to say that the delay which has occurred so far demonstrates a lack of urgency, albeit that service of Mr Vik in this jurisdiction was required and there is no evidence that he could have been served any earlier than he was. v) The US proceedings may render the whole exercise otiose because the October 2008 transfers and the private equity transfers will be scrutinised with full cross-examination. If DBAG succeeds in the US then Mr Vik will be personally liable for the sums in dispute and DBAG would no longer have any interest in pursuing SHI as opposed to Mr Vik for recovery of sums awarded. As I have already said, DBAG is entitled to pursue alternative remedies against SHI and Mr Vik and to seek enforcement in parallel proceedings but it is true to say that success in one jurisdiction might obviate the need for the pursuit of alternative remedies elsewhere. The timing of these matters is however wholly uncertain, particularly given the possibility of appeals in the USA. Moreover, if DBAG does not succeed in the USA, it will have been held up in pursuing its application here. vi) Maximum disruption will be caused to Mr Vik and his legal teams, both in England and in the USA because of the Non-Party Costs appeal and the trial in the US. Mr Zaroff states that Mr Vik is required to be active in the preparation and run up to the Connecticut trial and his case is likely to suffer significant prejudice if he is forced to deal with the preparation for and the attendance at the examination hearing in the High Court on 28th October 2015. The timetable leading up to the trial in Connecticut on 10th November is said to be extremely tight and a great many tasks have to be completed prior to that. It is said that daily input is required from Mr Vik between September and November 2015 including preparation for various interlocutory steps before the trial. Details are given in paragraphs 20-22 of his witness statement.[51]Against this it is said by DBAG that since SHI and Mr Vik have resisted and obstructed enforcement at every stage, there should be no further delay in the production of documents and examination of Mr Vik which might give him further opportunities to frustrate the purpose of the order. If Mr Vik’s resignation from SHI impacts on his ability to obtain documents or provide information, it is said to be essential that Mr Vik is examined sooner rather than later since his knowledge of SHI’s financial position will become stale. Further, the best prospects of Mr Vik complying with the order exist if the examination takes place before the Non-Party Costs appeal commencing on 3rd November because of the incentive thus given to him to be seen to be complying with English court orders.[52]Doubt is expressed as to the extent of any prejudice to Mr Vik in his preparations for the Connecticut trial and 14th October 2015 as a date for production of documents does not impact on any particular scheduled date in the Connecticut proceedings. Documents can be obtained by Mr Vik’s administrative assistants, by Mr Johansson and by writing to third parties such as banks. The examination is listed for one day only and although two further days would be taken out of his diary in travelling, he will have had over three months from the date of the order to prepare. His input would not be required for the Non-Party Costs appeal though he might well wish to be present if it did not impact upon his preparation for Connecticut.[53]I am troubled by the consideration that, if the Non-Party Costs appeal fails, Mr Vik may simply ignore the order of this court. Nonetheless, I do consider that the burden on him and his lawyers in dealing with this application at the same time as the Non-Party Costs appeal and the Connecticut trial is such that the timing should be altered.[54]Reluctantly I have come to the conclusion that the examination of Mr Vik should be postponed to a date in December which I will fix on the handing down of this judgment but that the date for production of documents should remain as it is, namely 14th October 2015, because all such documentation should long since have been collated and the task of producing it should not be extensive whether or not this has or has not happened.

Conclusion

[55]In these circumstances I refuse to set aside the order made by Teare J but vary it so that the examination is to take place on a date to be fixed in December 2015. Counsel should attend the hand down of the judgment with details of their schedules to hand.[56]Mr Vik’s application has failed in every respect except for this variation which was not what was sought in his summons. In the circumstances it appears to me inevitable that he must pay the costs of this application albeit not in their entirety. Unless there are special circumstances which fall to be taken into account of which I know nothing, my conclusion would be that he should pay 90% of the costs of this application.

Cited in 9 later judgments