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England and Wales High Court (Technology and Construction Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Chorus Group v Berner (BVI) Ltd & Anor [2006] EWHC 3622 (TCC) (01 November 2006) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2006/3622.html Cite as: [2006] EWHC 3622 (TCC) |
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL |
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B e f o r e :
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Chorus Group |
Claimant |
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- and - |
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Berner (BVI) Ltd & JJW Ltd |
Defendants |
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Mr Peter Fraser (instructed by CMS Cameron McKenna LLP) for the Defendants
Hearing date: 1 November 2006
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Crown Copyright ©
Mr Justice Ramsey:
Introduction
(1) Valuation number 5 at the end of May 2006 which led to a certified sum of £578,493 plus VAT.(2) Valuation number 6 at the end of June 2006 which led to a certified payment of £280,526 plus VAT and
(3) Valuation number 7 at the end of July 2006 which led to a certified payment of £218,836 plus VAT.
Those sums were not paid by Berners and as a result an adjudication was started on 17 August 2006. Mr Peter Aeberli was appointed as the Adjudicator and he gave his Decision at the end of September 2006.
Non-Disclosure
"(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 inquiries 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 known to the applicant or that its relevance 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 the 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. 134H-1344A."
Real Risk of Dissipation
"In our view the test is whether, on the assumption that the plaintiffs have shown at least 'a good arguable case', the court concludes on the whole of the evidence then before it, that the refusal of a Mareva injunction would involve a real risk that a judgment or award in favour of the plaintiffs would remain unsatisfied."
"In such cases the very fact of incorporation there gives some ground for believing there is a risk that, if judgment or an award is obtained, it may go unsatisfied…."
(1) Montecchi v. Shimco (U.K.) Ltd., [1980] 1 Lloyd's Rep. 50; [1979] 1 W.L.R. 1180:"… the basis of the Mareva injunction is that there has to be a real reason to apprehend that if the injunction is not made, the intending plaintiff in this country may be deprived of a remedy against the foreign defendant whom he seeks to sue" [per Lord Justice Bridge at pp. 52 and 1183.](2) Barclay-Johnson v. Yuill. [1980] 1 W.L.R. 1259:
"… it must appear that there is a danger of default if the assets are removed from the jurisdiction. Even if the risk of removal is great, no Mareva injunction should be granted unless there is also a danger of default" [per Sir Robert Megarry, V.C. at p. 1265.](3) Rahman v. Abu-Taha, [1980] 2 Lloyd's Rep. 465; [1980] 1 W.L.R. 1268:
"So I would hold that a Mareva injunction can be granted against a man even though he is based in this country if the circumstances are such that there is a danger of his absconding, or a danger of the assets being removed out of the jurisdiction or disposed of within the jurisdiction, or otherwise dealt with so that there is a danger that the plaintiff, if he gets judgment, will not be able to get it satisfied."
(1) The First Respondent is a British Virgin Islands company and the Second Respondent is a Guernsey company and they are therefore based in jurisdictions where disclosure about those companies is less easily obtained. They are obviously based there so as to avoid consequences which would otherwise apply to a company which is within the jurisdiction.(2) As Mr Brook accepts, the First Respondent is a single purpose vehicle. Also, as I find, it only has one asset, the Berners Hotel, which has been charged to the Bank of Scotland and has a charge of about £37.7 million against it. I do not accept that the Scottish bank accounts show that there is any asset in Scotland, even if that were within the jurisdiction. The Berners Hotel was bought for £48 million but it is being refurbished. Although it may be worth £73 million if refurbished, it is not in that state now. At most the equity is limited to the value over the £37.7 million charge. Therefore, the only asset is the extent of the equity in excess of that figure. The Second Respondent is a company which holds shares in other companies and apart from its shareholding in various companies in the UK, does not appear to have assets which are in the jurisdiction.
(3) There are clearly funding difficulties, about which I have little information. These difficulties may or may not be able to be resolved at a meeting with the Bank. It is not entirely clear when these difficulties arose, how they arose or what is the underlying cause of them. Certainly, from the conduct of the Respondents in respect of payment under the Settlement Agreement and of the cheque, there is no indication that these problems of funding were caused by a failure to sign a building contract.
(4) Sums have been certified and not paid. The dispute over those sums then went to adjudication and a decision was obtained. It seems that jurisdiction arguments were raised but there are now no serious grounds of challenge to that adjudication Decision. That Decision then led to a Settlement Agreement which should have achieved payment on 18 October 2006 of sums which were due at the end of May, the end of June and the end of July 2006. It was first said that there were administrative problems and that the payment would not therefore be by bank transfer. It is difficult to see what the administrative problems were or why a bank transfer could not have been made by those who apparently were present in Paris on the 18 October 2006. It does not seem that any serious attempts were made to make that bank transfer. Apparently therefore, "administrative problems" is being used as a cover for the fact that the Respondents were not making payment. A cheque was signed on the 19 October 2006 (dated 18 October 2006) but it only arrived in London on 23 October 2006. It was passed to Chorus on the 24 October 2006 and, as I have said, when presented for special collection, it was returned unpaid. It is now said there are funding difficulties which may be resolved and that if the cheque is re-presented, it may be paid.
I consider that the conduct of the First Respondent, in first suggesting that there were administrative problems and then in producing a cheque which it is apparent from the evidence of Mr Brook would not be paid, is conduct which is sufficient for the court to draw the necessary inferences of an intention to avoid payment of a judgment and falls within the category of conduct which makes it unnecessary for further specific evidence on risk of dissipation.
Conclusion