Merchant Bank of Fiji Ltd v Raniga [1993] FijiLawRp 22; [1993] 39 FLR 181 (29 July 1993)

[1993] 39 FLR 181

HIGH COURT OF FIJI

Civil Jurisdiction

MERCHANT BANK OF FIJI LIMITED

v

GIRDHAR LAL RANIGA & ANOTHER

Fatiaki J

29 July 1993

Practice (Civil) - injunctive relief - extent of duty of disclosure - Mareva injunction - nature of writ ne exeat civitate - purpose of.

Upon application by the defendants for discharge of injunctive relief granted ex parte the High Court examined the nature of the Mareva injunction and the writ ne exeat civitate.

Cases cited:

Al Nahkel v Lowe [1985] 1 QB 235
Allied Arab Bank v Hajjar [1988] 2 WLR 942
American Cyanamid v Ethicon [1975] 1 All ER 504
Ashriani v Kashi [1986] 2 All ER 970
Babanaft Int. Co. v Bassatne [1989] 1 All ER 433
Bayer A.G. v Winter [1986] 1 WLR 499
Brink's-Mat Ltd v Elcombe [1988] 3 All ER 188
Felton v. Callis [1969] 1 QB 201
House of Spring Gardens v Waite (1985) FSR 173
Republic of Haiti v Duvalier [1989] 1 All ER 456
Third Chandris Shipping v. Unimarine [1979] 1 All ER 972
Westpac Banking Corporation v Satish Chandra Suva Civil Action No. 356 of 1991.

Interlocutory application in the High Court.

R.A. Smith for the Plaintiff
B.C. Patel for the Defendant

Fatiaki J:

On the 3rd of May this Court granted to the plaintiff company an ex parte order in the following terms:

"1. Before departing from the jurisdiction the first-named Defendant Girdhar Lal Raniga provide the Plaintiff with a list of all his assets whether within or without the jurisdiction;

2. The first-named Defendant Girdhar Lal Raniga be restrained from removing from the jurisdiction or otherwise dissipating, charging, disposing of or dealing with any of his assets within the jurisdiction save and unless there should remain within the jurisdiction free and unencumbered assets belonging to the Defendant to a total value of not less than $150,000.00 and that he shall deliver into the custody of the Sheriff until there should so remain within the jurisdiction free and unencumbered assets belonging to him to a total value of not less than $150,000.00, his passport and all passenger tickets held by him;

3. The Plaintiff be at liberty to issue a writ ne exeat civitate directed to the Sheriff of the High Court of Fiji and his deputy and all constables and other peace officers and all customs and immigration officers commanding them that in the event that the first-named Defendant Girdhar Lal Raniga should seek or attempt to depart from the jurisdiction of the High Court without having complied with orders made under 1 and 2 above and unless he shall give them security for $150,000.00 they should arrest him and bring him before a judge of the High Court forthwith or as soon as reasonably practicable."

The order also reserved to the parties liberty to apply generally on 2 days notice.

The order granted in terms what is commonly known as a "mareva injunction" an order for discovery, and leave to issue a writ ne exeat civitate which was duly issued 8 days later on the 11th of May 1993.

On the 13th of May the first defendant filed an Acknowledgement of Service and on the 18th of June, a Statement of Defence raising 7 grounds of defence to the plaintiff company's claim, and an application for the discharge of the above-mentioned ex parte orders supported by an affidavit personally sworn by the 1st defendant together with numerous annexures comprised of various security documents.

The written submissions of learned counsel for the 1st defendant which I found very helpful raise three grounds for the discharge of the ex parte orders, namely:

"(a) the plaintiff does not have a good arguable case;

(b) there is no real risk of dissipation or removal of assets; and

(c) the plaintiff has not made full and frank disclosure of material facts.

I can deal briefly with the first ground and in doing so I remind myself of the observations of Lord Diplock in American Cyanamid v Ethicon [1975] 1 All ER 504 at p. 510 when he said:

"It is not part of the Court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature consideration. Those are matters to be dealt with at the trial."

In this case the plaintiff company which is principally concerned in the business of providing finance far the purchase of assets of various kinds under a hire purchase scheme alleges that through the fraudulent misrepresentations of the defendants that various named buyers had submitted deposits to their credit for the purchase of vehicles and by inflating the selling prices of the said vehicles, it was, contrary to its normal practice, fraudulently induced to provide 100% financing to each of the purchasers.

The defendants on the other hand deny any fraudulent misrepresentations and allege amongst others, negligence on the part of the plaintiff company's officers, estoppel and the provisions of the recently enacted Fair Trading Decree 1992.

Suffice it for present purposes to say that serious allegations of fraud depending as they do on the interpretation of contractual documents and the oral testimony of witnesses cannot be assessed, much less determined, on the basis of the opposing affidavits and raise serious questions to be tried.

There is no merit in this first ground.

As for (c) counsel complained that the plaintiff company had failed to make reasonable enquiries and search of public records which would have revealed the nature and location of the defendants' immovable assets in Fiji but more importantly that such assets were substantially encumbered.

Counsel submitted that the duty to make a full and frank disclosure in an ex parte application extends not only to facts known to the applicant at the time but also, in addition, to facts that "should have been known ... had he made all such inquiries as were reasonable and proper in the circumstances." (per Balcombe L.J. in Brink's-Mat Ltd. v Elcombe [1988] 3 All ER 188 at 193).

Whilst this Court has no argument with the principle requiring full and frank disclosure in ex parte applications the critical words however must always be "... in the circumstances ...", so that the duty to disclose in each case must be decided upon its own facts without, in my view, striking too fine a balance between the extent and quality of the information known or available and the perceived urgency of the situation giving rise to the ex parte application.

The headnote to Brink's case (ibid) contains the following relevant passage dealing with non-disclosure in ex parte applications:

"Whether a fact not disclosed is of sufficient materiality to justify or require immediate discharge of the order ... depends on the importance of the fact to the issue to be decided by the judge on the application ... However, the Court has a discretion notwithstanding proof of material nondisclosure ... to continue the order or to make a new order on terms."

In this instance counsel for the plaintiff company submits that there was a genuine fear of the 1st defendant's imminent departure from Fiji and in the circumstances it would have been ridiculous to require the plaintiff company faced with such an emergency to go about collecting information or evidence that adds little (if anything) to what was already known and which might even endanger the objective of the ex parte application.

It is well to bear in mind the observation of Lord Denning M.R. in Third Chandris Shipping v Unimarine [1979] 2 All ER 972 of the nature of a mareva injunction in particular, where he said at p. 985:

"In it speed is of the essence. Ex parte is of the essence. If there is delay, or if advance warning is given, the assets may well be removed before the injunction can bite."

Having considered the competing submissions and mindful that the 1st defendant has himself fully disclosed his assets within Fiji and also that the present proceedings are at the inter partes stage, at which this Court undoubtedly has a discretion to be exercised afresh on all the evidence available I am not satisfied that the plaintiff company's non-disclosure (if any) is so material as to warrant the summary discharge of the mareva injunction on this ground.

Needless to say the plaintiff company had sought and obtained an ancillary order for discovery of the 1st defendants' assets both within and without the (Court's) jurisdiction and even accepting that the 1st defendant's local assets were or might have been discoverable upon a search of public records, the same cannot be so easily said of his overseas assets of which perhaps the best available source of information would be the 1st defendant himself.

This brings me to a further submission of learned defence counsel in which complaint was made as to the breadth of the ex parte order for discovery.

Counsel's argument as I understood it was one based on principle not on hardship, absence of knowledge, self incrimination or any embarrassment that might be caused to the first defendant complying with the strict terms of the order for discovery.

Presumably therefore in principle the 1st defendant is quite willing to disclose his assets in Fiji but not those outside Fiji even though as the order is presently worded there is no obligation on the 1st defendant to disclose anything until before departing from the jurisdiction.

Counsel for the first defendant in his written submissions referred extensively to Ashtiani v. Kashi [1986] 2 All ER 1970 in support of the broad principle that a mareva injunction should be limited to assets within the jurisdiction and any ancillary order for discovery should be similarly restricted. In particular counsel referred to the 4 reasons advanced by Dillon L.J. for limiting an order of discovery to assets within the jurisdiction of the Court and to the judgment of Neill L.J. differentiating between a proprietary or tracing claim and one for general damages.

Three years later however in Republic of Haiti v. Duvalier [1989] 1 All ER 456, a differently constituted Court of Appeal accepted that the Court had, subject to sufficient safeguards, jurisdiction to grant a mareva injunction pending trial over assets worldwide even where the relief was sought in aid of a foreign monetary claim and not a proprietary claim.

Further in Babanaft Int. Co. v. Bassatne [1989] 1 All ER 433 Neill L.J. who was a member of the Court of Appeal in Ashtiani's case (op.cit) said at p. 449:

"I am satisfied, however, that the Court has jurisdiction to grant a mareva injunction over foreign assets, and that in this developing branch of the law the decision in Ashtiani v. Kashi may require further consideration in a future case."

Needless to say the 1st defendant's assets and liabilities within the jurisdiction leave very little surplus (if any) which might be available to satisfy any judgment which the plaintiff company may obtain against him.

In the circumstances information of the nature and location of the 1st defendant's assets overseas takes on a quite different complexion and must figure more prominently in the exercise of this Court's discretion as to the ambit of any order for discovery that this Court might consider just, necessary and reasonable to make in support of the mareva injunction.

Hoffman J. pertinently observed of a not dissimilar situation in Bayer A.G. v. Winter (No. 3) [1986] FSR 357 at 362:

"If the effect of a mareva injunction is to secure an adequate fund to this country to meet the plaintiff's claim, there will of course be no need to look for assets abroad. Seeking protective measures in foreign jurisdictions would be merely oppressive. On the other hand, if (as in this case) the fund ... is inadequate, the plaintiff may have to resort to assets in other countries particularly those in which ... judgment would be enforced."

(approved by Kerr L.J. in Babanft's case (op.cit) at p. 467)

I am satisfied that a more limited extra territorial order for discovery is warranted in the circumstances of this case provided that some form of protection is also included in the order so as to prevent any misuse of the information or oppression of the 1st defendant.

Accordingly the order for discovery is amended to read:

"(1) The first defendant Girdhar Lal Raniga do within 21 days of the date hereof file in Court and provide to the plaintiff an affidavit disclosing with particularity, the nature, value and location in New Zealand of all real and personal assets (including bank accounts) held in his own name or jointly with any other person or nominee or otherwise howsoever on his behalf, provided that the plaintiff shall, other than for the purposes of this action, not make use of any information so disclosed pursuant to this order without the prior consent of the defendant or leave of the Court."

I turn next to ground (b) which deals with the question of the real risk of dissipation of assets. In this regard the written submissions of learned counsel for 1st defendant describes the plaintiff's evidence in support of its claim as being "hearsay ... flimsy and completely discredited by the defendants' affidavit in reply."

The plaintiff company in an affidavit deposed by its manager annexed a copy of the relevant "Non-recourse Agreement" between the plaintiff company and the defendants dated the 1st of August 1990 together with 8 receipts dated in September/October 1992 evidencing the receipt of cheques as deposits by various named purchasers.

Finally the plaintiff company has deposed to various unanswered letters it has written to the defendants pointing out irregularities in certain transactions and requiring rectification and a telephone conversation in which the 1st defendant is reported to have clearly evinced his and his family's intention of leaving the country after disposing of various moveable assets.

In this latter regard the first defendant has deposed: