Close Finance v King [2008] JRC 151 (15 September 2008)

JUdgment commissioner: 1. On 15 th August 1008 the Court refused an application by the defendant to raise Mareva injunctions obtained ex parte by the plaintiff on th August 2008 on the ground that the plaintiff had failed to provide full and frank disclosure to the Court when making its ex parte application. We now set out briefly our reasons.

2. The Mareva injunctions were sought to prevent dissipation of the defendant's assets up to the value of £1.9M, pending determination of claims to be brought by the plaintiff against the defendant for sums due and payable pursuant to, inter ali a, a revolving finance facility entered into between the parties dated 5 th September 2006 and pursuant to various personal guarantees (including an all monies guarantee) given by the defendant to the plaintiff in support of the said facility and other agreements. The defendant's alleged indebtedness to the plaintiff presently stands at £1,876,692.39.

3. The defendant and the late Duncan Hickman ("Mr Hickman") and companies controlled by Mr Hickman, arranged finance with the plaintiff in order to purchase high value motor vehicles which, in the defendant's case, were either for his own use or for use within business.

4. The plaintiff alleges a number of breaches of the revolving finance facility, but it is clear that the catalyst for the ex parte application was the plaintiff's belief, as deposed to in the first, second and third affidavits of Mr Carl Gouldson, a chartered accountant and director of the plaintiff, that the defendant was in the course of leaving the jurisdiction.

5. The defendant applied to raise the injunctions in their entirety, on the grounds of material non disclosure to the Court, or alternatively, to limit the scope of the freezing order to the home of the defendant in Jersey, known as Carrefour au Clerq Farm ("the property"), owned by the party cited.

6. Where orders of this kind are obtained ex parte , the Court acknowledges the right of the defendant to make a prompt application to have the same set aside or varied. Thus, when the defendant's summons was filed with the Court on 13 th August 2008, the Deputy Bailiff abridged time so that the application could be heard on the morning of 15 th August 2008, which was the only time available to the Court. The defendant's affidavit in support was provided in draft to Mr Steenson, acting for the plaintiff, on 14 th August 2008 and Mr Steenson gave notice to Mr Buckley, for the defendant, that the defendant should be present in Court so that he could be examined on it.

7. At the outset of the hearing on 15 th August 2008, Mr Steenson applied for an adjournment on the grounds that his colleague, who had conduct of the matter, was away from the Island, that the plaintiff was disadvantaged by not having the opportunity to file an affidavit in response to that of the defendant, that it was not possible to take instructions from a Mr Royle (an employee of the plaintiff with whom the defendant had contact) as Mr Royle was away in Namibia, that there were hundreds of documents to go through and that in general there was no prejudice to the defendant in a short delay.

8. The Court was reminded of the duties of a plaintiff who has obtained injunctions of this kind as set out by Birt, Deputy Bailiff, in Goldtron Limited v Most Investment Limited [2002] JLR 424 at paragraph 36:- "Readiness of the plaintiff to respond to an application to set aside an injunction. 36 In this case, despite having agreed a hearing date for the defendant's application to set aside the injunctions, the plaintiff applied for an adjournment on the basis that the affidavit filed on behalf of the defendant was lengthy and complex and required a response from the plaintiff's deponent, Miss Minaeva, who was on holiday. The court refused the application to adjourn. We wish to emphasize that, if a plaintiff takes the step of restraining a person from dealing with his asset - a drastic invasion of a person's right - he has to anticipate that there may be a prompt application to set aside or vary the injunction. The plaintiff must therefore be at the ready to respond to such an application. It is not acceptable for a plaintiff, having set the court's procedure in motion, to then argue that it needs a lengthy period to justify the continuation of the ex parte relief. Of course, the court will not be unreasonable. It is right that a plaintiff should have the opportunity to respond to evidence produced by a defendant in support of an application to set injunctive relief aside.

However, it is also incumbent upon the plaintiff to act as a matter of urgency" 9. Whilst Mr Steenson was not seeking a lengthy delay, Mr Gouldson, who had filed the affidavits in support of the ex parte application, was in the Island (and was present in Court) and the fact that it was the Battle of Flowers on the previous afternoon was no excuse for not taking instructions on the draft affidavit. Furthermore, as Mr Buckley pointed out, the vast majority of the enclosures to the defendant's affidavit were documents known to the plaintiff. Mr Steenson's application was refused.

10. The plaintiff's belief that the defendant was leaving the jurisdiction was based upon its understanding that the defendant:- (i) had sold his interest in the Belgravia Financial Services Group Limited ("Belgravia"); (ii) was vacating the property and arranging for the same to be sold; (iii) was moving to Bahrain, having acquired a one-way ticket to Bahrain.

11. In paragraph 26 of Mr Gouldson's affidavit in support of the application, he deposed further in support of the allegation that the defendant was leaving the jurisdiction:- (i) that the defendant and his wife had engaged the White Company to remove their possessions from the property to be transported to England for onward transmission to Bahrain; (ii) the defendant had transported his daughter's horse, Charlie, from Jersey to England; (iii) the defendant had transported the family dog, Fifi, from Jersey to England.

12. Since the injunctions were obtained, the plaintiff had become aware of what is alleged to have been a fraud perpetrated by the defendant upon the plaintiff, which was detailed in the third affidavit of Mr Gouldson.

13. Mr Buckley, for the defendant, argued that there had been non disclosure, material to the exercise by the Court in its discretion whether or not to grant the injunction, for the following reasons:- (i) The plaintiff failed to provide a fair summary or copy of the correspondence passing between it and the defendant, which showed the extent and cordial nature of the communications between Mr Royle of the plaintiff and the defendant, or the steps taken generally by the defendant to date. (ii) No mention is made of the difficulties that a UK based third party purchaser of cars (Straight Eight Limited) was having with the plaintiff in terms of documentation in order to enable it to release funds to the plaintiff for the cars it is purchasing or that substantial sums were tied up with Straight Eight Limited by virtue of its own failures. (iii) There was a lack of account in relation to precisely what is due and what payments have been received. The defendant was concerned that considerable amounts of money may not have been taken into account, (for example, £30,968.10 which was paid, and for which Mr Royle wrote an e-mail by way of apology to the defendant).

14. Following the filing of his skeleton submission, it occurred to Mr Buckley to submit further that the plaintiff had de facto possession of (as well as legal title to) a number of cars to the extent that they were physically held by Straight Eight Limited in the United Kingdom, the proposed purchaser.

15. Mr Gouldson, in his first affidavit, made it clear that Mr Royle had been in frequent contact by e-mail and telephone with the defendant, and as Mr Steenson said, it would not be surprising that the conduct of business relationships had been for the most part cordial. The proposed purchase of the cars by Straight Eight Limited was indeed disclosed by Mr Gouldson in his first affidavit These arrangements were all made by the defendant, who from our understanding was in de facto control of the vehicles and whilst it may be possible for the plaintiff in due course to obtain possession, it was not at the time of the proceedings in possession of them. Even if there was a lack of account in relation to what precisely is due, it is clear that there is a substantial indebtedness. In our view, none of the matters raised by Mr Buckley would have been material to the exercise by the Court of its discretion as to whether or not to grant the injunctions.

16. The defendant confirms in his affidavit that he is currently residing in England, whilst undertaking treatment for arthritis and kidney stones in London, and is living at a property in Hampshire over which the plaintiff has a charge, or at the Dorchester Hotel. However, whilst he denies that he has any intention of leaving the Island (where he has resided for only eight years), there is more than sufficient evidence to justify the plaintiff's fears that he is leaving:- (i) The property is indeed for sale. It is not, in fact, owned by the defendant, but, through the party cited, Carrefour au Clerq Limited, a discretionary settlement. Neither the trustee nor the party cited was represented at the hearing, but we were shown an e-mail from Mrs Robinson of Applebys, who acts for the trustee, indicating merely that the trustee will consider a request from the defendant for a distribution very carefully but was not able to say at this stage what this decision would be. (ii) Possessions of the defendant have been shipped to the UK he says to furnish his UK property. (iii) The defendant's daughter's horse has been shipped to the UK, although he says this is something which occurs every summer, together with the dog. (iv) Whilst the defendant denies intending to move to Bahrain, he has travelled there extensively and does indeed hold an open return ticket.

17. The defendant asserted in his affidavit that he never owned any shares in Belgravia. Mr Buckley confirmed in Court that the defendant was not making a narrow point as to whether he directly owns shares in this company but confirmed that he had no interest in it at all. This sat ill with the corporate chart exhibited to Mr Gouldson's third affidavit showing "RK Holdings Limited" ) a company bearing his initials) as owning 50% of BG International Holdings Limited, which in turn owned 90% of Belgravia. It further sits ill with the fact that the defendant has provided personal guarantees for certain borrowings by Belgravia. Mr Buckley was not able to proffer any explanation for this and nor was the defendant, who had not attended the hearing as requested in order to be examined on his affidavit. In our view where a party wishes a court to accept evidence by way of affidavit, the deponent should be present in court to be examined on it unless the contents are accepted by the other parties or he is otherwise excused from doing so.

18. We agree with Mr Steenson that the affidavits sworn by Mr Gouldson (who as mentioned was in court) in support of the plaintiff's application are comprehensive as could be expected in the urgent situation that had arisen and in our view none of the matters complained of by the defendant would have been material to the exercise of the Court's discretion. The application to raise the injunctions was therefore refused. The Court adjourned the defendant's alternative application to limit the scope of the freezing order to the property. Authorities Goldtron Limited v Most Investment Limited [2002] JLR 424 . Page Last Updated: 22 Jul 2016 BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII