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England and Wales High Court (Queen's Bench Division) Decisions
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Cite as:  EWHC 1031 (QB)
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QUEEN'S BENCH DIVISION
ON APPEAL FROM THE SENIOR MASTER
IN THE MATTER OF THE EVIDENCE
(PROCEEDINGS IN OTHER JURISDICTIONS) ACT 1975
AND IN THE MATTER OF THE HAGUE CONVENTION
OF 18 MARCH 1970 ON THE TAKING OF EVIDENCE
ABROAD IN CIVIL OR COMMERCIAL MATTERS
AND IN THE MATTER OF RULES 34.17 TO 34.21 OF
THE CIVIL PROCEDURE RULES 1998
AND IN THE MATTER OF PROCEEDINGS NOW PENDING
BEFORE THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF DELAWARE
Strand, London, WC2A 2LL
B e f o r e :
| COMPAGNIE DES GRANDS HÔTELS D'AFRIQUE S.A.
||Respondent / Appellant and Cross-Appellant / Applicant
|- and -
|(1) SARAH PURDY
||Appellant and Respondent to Cross-Appeal / Respondent
|(2) MAQUAY INVESTMENTS LIMITED
||Respondent / Respondent
Appellant and Cross-Appellant / Applicant
Michael Todd QC and Jack Rivett (instructed by Michelmores LLP) for the Appellant and Respondent to Cross Appeal / Respondent
Hearing date: 17 March 2021
Crown Copyright ©
MR JUSTICE FREEDMAN:
I Contents II Introduction 1- 8 III Factual background 9 - 23 IV The Delaware proceedings 24 - 32 V The applications to the Senior Master 33 - 43 VI The appeal of Ms Purdy: Grounds of Appeal 44 - 46 VII The appeal of Ms Purdy: the legislative background and the relevant legal principles 47 - 58 VIII The appeal of the Ms Purdy: the approach to discretion 59 -60 IX The appeal of Ms Purdy: Ms Purdy's submissions 61 – 71 X The appeal of Ms Purdy: Submissions on behalf of CGHA 72 – 77 XI The appeal of Ms Purdy: Discussion and disposal 78 – 88 XII The cross appeal of CGHA: Introduction 89 – 89 XIII The cross appeal of CGHA: the Senior Master's decision 91 – 97 XIV The cross appeal of CGHA: approach to costs appeal 98 – 101 XV The cross appeal of CGHA: the submissions of CGHA 102 – 109 XVI The cross appeal of CGHA: The submissions of Ms Purdy 110 – 112 XVII The cross appeal of CGHA: discussion and disposal 113 – 128 XVIII Conclusion 129
(1) Non-disclosure: on its without notice application for the Deposition Order, CGHA failed to disclose the existence of:
i. the Moroccan Criminal Complaint and the criminal investigation being carried out by the Moroccan authorities pursuant to that Complaint ("the Moroccan Criminal Investigation"); and
ii. a protective order dated 23 April 2019 issued by the Delaware court concerning the use of information disclosed by parties and non-parties in the Delaware Proceedings ("the Protective Order"); and
(2) Oppression: by reason of the Moroccan Criminal Complaint and the Moroccan Criminal Investigation it would be oppressive for Ms Purdy to be examined and no sufficient protections removing or minimising such oppression had been offered and put in place.
(1) The material non-disclosure by CGHA on its without notice applications for the orders under section 2 of the 1975 Act was serious (see J/);
(2) The correct sanction for that non-disclosure would be an appropriate costs
order (see J/).
(3) The Deposition and Disclosure Orders should not be set aside, but should be varied to include the additional protections offered by CGHA set out in two draft orders sent by CGHA's solicitors, Humphries Kerstetter, on 6th January 2020 (see J/ and J/).
II Factual Background
(1) pay a minimum Annual Fee to CGHA in quarterly instalments; and
(2) maintain and operate the Hotel to the standard and stature of a five-star international hotel: see J/[77-78].
"The restructuring of the Manager's sole shareholder after the Management Agreement had been terminated and this Arbitration started by the Owner suggests that Maquay Investments, which does not appear in any way related to the international five-star hospitality industry or involved in the operation of hotels of such category, was created for the sole purpose of receiving the shares of the Manager's sole shareholder before being renamed and placed in voluntary liquidation and, as a result, avoid any possible liabilities under the Management Agreement."
(1) Sub-section 1.1: Crime of swindling under Article 540 of the Criminal Code against Ms Purdy and Maquay;
(2) Sub-section 1.3: Crime of disposing of company's funds in mala fide (Article 107 of Act No. 5-96 on limited liability companies) against Ms Purdy;
(3) Sub-section 1.6: Crime of fraudulent bankruptcy (Articles 557, 558 and 559 of the Criminal Code) against Ms Purdy;
(4) Sub-section 1.8: Crime of money-laundering (Articles 574-1 and 574-2 of the Criminal Code) against Ms Purdy and Maquay.
IV The Delaware Proceedings
"As to the second element of alter ego liability, Plaintiff asserts that Starman strategically sold Woodman's parent entity in order to prevent Plaintiff from recovering any award issued by the arbitrators (D.I 1 ¶ 117). Plaintiff supports this argument with allegations that Maquay was only incorporated six weeks before the sale took place, there were shared connections between Maquay and Starman, and the sale occurred shortly after the arbitration was initiated. (Id. ¶¶ 59, 63-65). While Defendant attempts to argue that this theory cannot be used to pierce the corporate veil (D.I. 16 at 17-18), I disagree. These facts, accepted as true, support Plaintiff's claim that Starman's acts were strategic and intended to leave Woodman unable to pay any award. [citation omitted] Acts intended to leave a debtor judgment proof are sufficient to show fraud and injustice. Thus, I find fraud and injustice adequately pled."
(1) the circumstances in which Starman sold Woodman's parent to Maquay;
(2) whether Maquay was unrelated to Starman;
(3) whether the sale of Woodman's parent to Maquay was negotiated (a) for a commercially reasonable consideration and (b) on an arm's length basis;
(4) whether Starman acted in good faith with respect to the sale of Woodman's parent to Maquay; and
(5) whether Starman's sale of Woodman's parent to Maquay was intended to leave Woodman unable to pay an award.
IV The applications to the Senior Master
(1) CGHA itself would never come into possession of either a physical or an electronic copy of the transcript of Ms Purdy's evidence that it might then be compelled to disclose;
(2) CGHA would not instruct or authorise a copy of the transcript of Ms Purdy's evidence to be transmitted to Morocco, and thus into the territory in which the Moroccan prosecuting authorities have jurisdiction.
Neither CGHA, nor anyone in Morocco, would thus have an electronic or hard copy of Ms
Purdy's evidence which they could be compelled by the Moroccan prosecuting authorities
VI The appeal of Ms Purdy: Grounds of Appeal
"The approach that the court is directed to take by the authorities, as in Akciné, is to consider whether any protections can be put in place so that the requesting court can receive the witnesses' evidence, and the witnesses can be sufficiently protected against the oppression, namely the risk of evidence which might incriminate them being made available to the Moroccan Criminal Investigation."
"I consider that the approach of Gloster J., in Akciné, is an equally appropriate approach in this case. The court is not obliged to refuse orders unless every conceivable risk of oppression is eliminated. The court's duty is to balance the interests of the requesting court and those of the witness: The State of Minnesota at 176 per Lord Woolf MR and First American at 1165-6 per Sir Richard Scott VC. In my view, the risk of oppression, which cannot be averted in this case by the reliance on privileges that would be recognised in the Delaware court (unlike the position in MicroTechnologies), can be alleviated to a sensible and acceptable degree by the combination of the Protective Order and the protections offered by CGHA. Further CGHA have agreed to give an undertaking to this court to comply with the Protective Order, which can be included in the order."
(1) the Senior Master erred in principle in refusing to set aside the Deposition Order, notwithstanding that the risk of oppression to the Appellant in giving that evidence could not be eliminated but could only be alleviated. In particular, the Senior Master was wrong to apply the approach adopted by Gloster J. in Akciné Bendrové Bankas Snoras (in bankruptcy v. Antonov and another  EWHC 131 (Comm) ("Akciné"). The decision in Akciné was (and is) distinguishable from the facts of this case and the approach adopted in that case was accordingly not appropriate to an application under section 2 of the 1975 Act.
(2) In this connection, the oppression to the Appellant arises out of the fact that: (i) the Appellant is the subject of a criminal investigation in Morocco initiated by CGHA, (ii) even with additional protections in place, there is a risk that the evidence given by Ms Purdy pursuant to the Deposition Order will come to the attention of the Moroccan prosecuting authorities and (iii) unlike in Akciné, the fact that such evidence was obtained from Ms Purdy by compulsion would not prevent the Moroccan criminal court from admitting that evidence in breach of Ms Purdy's right to a fair trial under Article 6(1) of the European Convention on Human Rights. Having regard to the nature of the oppression faced by the Appellant, and having concluded that the risk of oppression could not be averted, the Senior Master ought to have set aside the Deposition Order.
VII The appeal of Ms Purdy: the legislative background and the relevant legal principles
"Where an application is made to the High Court, the Court of Session or the High Court of Justice in Northern Ireland for an order for evidence to be obtained in the part of the United Kingdom in which it exercises jurisdiction, and the court is satisfied-
(a) that the application is made in pursuance of a request issued by or on behalf of a court or tribunal ("the requesting court") exercising jurisdiction in any other part of the United Kingdom or in a country or territory outside the United Kingdom; and
(b) that the evidence to which the application relates is to be obtained for the purposes of civil proceedings which either have been instituted before the requesting court or whose institution before that court is contemplated,
the High Court, Court of Session or High Court of Justice in Northern Ireland, as the case may be, shall have the powers conferred on it by the following provisions of this Act."
"(1) Subject to the provisions of this section, the High Court, the Court of Session and the High Court of Justice in Northern Ireland shall each have power, on any such application as is mentioned in section 1 above, by order to make such provision for obtaining evidence in the part of the United Kingdom in which it exercises jurisdiction as may appear to the court to be appropriate for the purpose of giving effect to the request in pursuance of which the application is made; and any such order may require a person specified therein to take such steps as the court may consider appropriate for that purpose.
(2) Without prejudice to the generality of subsection (1) above but subject to the provisions of this section, an order under this section may, in particular, make provision-
(a) for the examination of witnesses, either orally or in writing;
(3) An order under this section shall not require any particular steps to be taken unless they are steps which can be required to be taken by way of obtaining evidence for the purposes of civil proceedings in the court making the order (whether or not proceedings of the same description as those to which the application for the order relates); but this subsection shall not preclude the making of an order requiring a person to give testimony (either orally or in writing) otherwise than on oath where this is asked for by the requesting court.
"In The State of Minnesota v Philip Morris  ILP 170 at 176, Lord Woolf MR stated that when considering whether, and if so on what terms, to give effect to a letter of request, there is a balance to be struck between the interests of the requesting court and witnesses to be examined. This was confirmed in First American Corp v Zayed  1 WLR 1154 at 1165-6 where Sir Richard Scott VC. said:
"….in deciding what response to make to a letter of request, the court should bear in mind the need to protect intended witnesses from an oppressive request. There is a balance to be struck in each case between the legitimate requirements of the foreign court and the burden those requirements may place on the intended witness. I agree with Ralph Gibson LJ in In Re State of Norway's Application  1 QB 433 433, 490 6F – G, that the balance is much the same as that which has to be struck if an application is made to set aside a subpoena…."
"Secondly, in a case where fraud is alleged, a letter of request is oppressive where allegations of fraud are made against the witnesses sought to be examined but where those witnesses have not been sued as defendants in respect of those allegations, and where those allegations are being held over the heads of the witness with the possibility of being made a party to a claim, whilst at the same time seeking a wide examination of the witness on the very topics that will be relevant in such an action, if brought. This was the situation in the First American case."
"Seen from the point of view of the witness, the right may be as much needed where foreign law is involved as where it is not. The difficulty confronting the individual may be just as acute when the feared prosecution is under the law of another country. There is, however, a real problem in letting this lead to the conclusion that the privilege should apply in such a case. The privilege is rigid and absolute. The witness has an unqualified right. Where the privilege applies the witness need not answer. Unless the case falls within a statutory exception, that is the end of the matter. There is no scope for the court to exercise any discretion.
It is the unqualified nature of the right, so valuable as a protection for the witness, which gives rise to the problem when a foreign law element is present. If the privilege were applicable when the risk of prosecution is under the law of another country, the privilege would have the effect of according primacy to foreign law in all cases. Another country's decision on what conduct does or does not attract criminal or penal sanctions would rebound on the domestic court. The foreign law would override the domestic court's ability to conduct its proceedings in accordance with its own procedures and law. If an answer would tend to expose the witness to a real risk of prosecution under a foreign law then, whatever the nature of the activity proscribed by the foreign law, the witness would have an absolute right to refuse to answer the question, however important that answer might be for the purposes of the domestic court's proceedings."
"[…] the right to silence and the right not to incriminate oneself are generally recognised international standards which lie at the heart of the notion of a fair procedure under art 6. Their rationale lies, inter alia, in the protection of the accused against improper compulsion by the authorities thereby contributing to the avoidance of miscarriages of justice and to the fulfilment of the aims of art. 6 (see Murray v UK 22 EHRR 29 and Funke v France 16 EHRR 297). The right not to incriminate oneself, in particular, presupposes that the prosecution in a criminal case seek to prove their case against the accused without resort to evidence obtained through methods of coercion or oppression in defiance of the will of the accused. In this sense the right is closely linked to the presumption of innocence contained in art 6(2) of the convention."
VIII The appeal of the Ms Purdy: the approach to discretion
"63. This is an appeal against the exercise of a discretion by the Senior Master. It is not a de novo rehearing of the matters placed before her. In this regard, before interfering with the Senior Master's decision, it must be shown that she has either erred in principle in her approach or has left out of account or has taken into account some feature that she should, or should not, have considered or that her decision was wholly wrong because the court is forced to the conclusion that she had not balanced the various factors fairly in the scale: see Lord Woolf MR in Phonographic Performance Ltd v AEI Rediffusion Music Ltd  1 WLR 1507 at 1523.
64. Whilst it is the case that the Senior Master has particular jurisdiction in relation to letters of request proceedings and is highly experienced in these matters, it was common ground that this is not one of those cases where the appeal court is required to show particular deference to the decision below by reason of the lower court's specialist expertise.
65. I approach this appeal on the basis that, first, the Senior Master's decision was clearly one of the exercise of discretion; secondly that that discretion is to be exercised in line with certain established principles, applicable to the approach of the English courts to letters of request (including those principles which I have discussed in the previous paragraphs), and thirdly that, if it can be seen that those principles have been erroneously identified or applied, this court might interfere and exercise the discretion afresh."
"These considerations carry much greater weight in relation to Mr Bailin's submissions grouped under the rubric of oppression than to his submissions under the banner of relevance. The former raise discretionary considerations; as for the latter, points of principle may well arise, although the Senior Master in my view should be accorded an appropriate margin of appreciation as regards matters of evaluative judgment."
IX The appeal of Ms Purdy: Ms Purdy's submissions
(1) the Moroccan investigative authorities have power to compel witness evidence and production of documents;
(2) similarly, the Moroccan criminal court has power to compel witnesses to give evidence at trial;
(3) if evidence was provided to the Moroccan authorities in breach of the Protective Order, this would not prevent the Moroccan criminal court from admitting that evidence; and
(4) the fact that evidence was obtained from Ms Purdy by compulsion (that is, following an order of the English court) would not prevent the Moroccan criminal court from admitting that evidence.
"28. If CGHA's criminal complaint had been lodged in the U.SA., Ms Purdy would have been entitled to keep silent pursuant to the Fifth Amendment. Alternatively, if it had been lodged in the UK, Ms Purdy would have been entitled to rely upon the privilege against self-incrimination … However, because CGHA filed its criminal complaint in Morocco, Ms Purdy is not able to rely on these protections.
29. "There is therefore a risk of oppression to Ms Purdy which cannot be averted" (emphasis added).
"i) Given the nature and amount of the Bank's claim, and the evidence relating to the manner of the alleged misappropriations by Mr Antonov, I take the view that this is quintessentially a case where a disclosure order is clearly necessary to make the freezing order effective. The reality is that, in the absence of disclosure of current assets, it will be almost impossible for the Bank to take steps to ensure that any judgment it may obtain will be enforceable….
ii) In the absence of cogent evidence to the contrary, I am entitled to assume that Lithuania, as well as Latvia and Switzerland, will honour their obligations under the Convention.
iii) Notwithstanding the evidence adduced by Mr Antonov, which I have carefully considered, there is no sufficiently cogent evidence before me to suggest that, in relation to this aspect of the matter, the Lithuanian state will not honour its obligations under the Convention to ensure that Mr Antonov has a fair trial. Thus I am not prepared to assume that, in breach of his rights under Article 6 of the Convention, a Lithuanian court would allow his answers to the disclosure order to be used in evidence against him at any criminal trial in Lithuania. Like the Court of Appeal in Rottmann v Brittain, I consider that, even if the Lithuanian Prosecutor were to obtain any of the information disclosed by Mr Antonov under the compulsory provisions of the WWFO, it is for the Lithuanian court to control such use as may be made by the Lithuanian Prosecutor in the context of the criminal proceedings, so as to ensure that Mr Antonov's Article 6 rights are preserved. Similar conclusions apply in relation to Switzerland and Latvia because they are both Convention compliant countries. Moreover, as at present there is no evidence that there is any credible risk of Mr Antonov's extradition to those countries.
iv) Mr Antonov has not established on the evidence that the Bank should effectively be treated as equivalent to the Lithuanian Prosecutor and that the former can effectively be regarded as a conduit for passing information on to the latter. In this respect I refer to the evidence which I have summarised at paragraphs 82 – 84 below to demonstrate that the Bankruptcy Administrator acts independently of the Lithuanian government and the Lithuanian Prosecutor.
v) The Bank, its employees, agents and legal advisers, which necessarily includes the Bankruptcy administrator, his staff and agents, are necessarily subject to the standard undertaking that they will not, without the permission of the court, use any of the information disclosed under compulsion by Mr Antonov pursuant to the terms of the WWFO, other than for the purposes of the current civil proceedings in England, and in particular that they will not use such information "for the purpose of any civil or criminal proceedings, either in England and Wales or in any other jurisdiction". This undertaking of itself should prevent any disclosure by any of the foregoing of the information disclosed by Mr Antonov about his assets to the Lithuanian Prosecutor, the Lithuanian state, or indeed the prosecuting authorities in Latvia or Switzerland or indeed any other country.
vi) However, nonetheless, there is in my view, and despite such undertaking, a risk that information obtained from Mr Antonov under compulsion as to his current assets, could, whether inadvertently or otherwise, be communicated to the Lithuanian prosecuting authorities and thus used by the latter for the purposes of the criminal investigation and, in particular, collating the necessary evidence to be used against him in the criminal trial to demonstrate misappropriation or informing their decision as to prosecution. That is so despite the fact that, under Article 6 of the Convention, Mr Antonov's actual answers could not be relied upon as evidence at any criminal trial in Lithuania. Such a consequence might adversely prejudice Mr Antonov in the criminal investigation, although I do not make any finding as to whether such prejudice will in fact occur, or whether it would be unfair.
vii) I mention, simply by way of illustration, four examples of how information might become available to be [sic] Lithuanian Prosecutor, notwithstanding the undertaking: […]
viii) However, in my judgment, the risk that such information may come into the hands of the Lithuanian Prosecutor, and that secondary use may be made of information to assist in the criminal investigation is not a factor, which balancing the competing interests of the Bank and Mr Antonov, in the exercise of my discretion outweighs the need and obligation for him to provide disclosure under the terms of the WWFO. Such risks can in my judgment be adequately addressed by imposing further safeguards, in addition to those which I have referred to above as the proposed safeguards. […]".
(1) A safeguard relied upon by Gloster J. in Akciné was the fact that Lithuania is an EU member state and signatory to the ECHR so that it could be assumed that Lithuania would honour their obligations under the ECHR and (in particular) would not allow his answers to the disclosure order to be used in evidence against him at any criminal trial in Lithuania in breach of Article 6 ECHR. Ms Purdy is not the beneficiary of an equivalent safeguard in Morocco which is not a signatory state to the ECHR. Evidence obtained from Ms Purdy under compulsion would not prevent the Moroccan criminal court from admitting that evidence. The last protection for Ms Purdy of her rights under Article 6 ECHR would be from the court in England and Wales, being a "public authority" within the meaning of section 6 of the Human Rights Act 1998 with a duty to act consistently with the ECHR.
(2) The disclosure order in Akciné was necessary to make the freezing order effective. That order had itself been issued by the Court in support of proceedings before the English court. If Mr Antonov had been allowed to remain silent based on a fear of prosecution under the law of another country, the effect would have been to allow the law of Lithuania to override the English court's ability to conduct its own procedures and law, and in particular its ability to ensure the effectiveness of its own freezing order. By contrast, the Deposition Order is not required for the purposes of any proceedings before the English court or any proceedings against Ms Purdy. Rather, it is sought by CGHA for the purposes of proceedings before a foreign court, to which Ms Purdy is not a party.
(3) There was a distinction between the claimant bank and the Lithuanian prosecutor in Akciné. By contrast, in the present case, CGHA itself filed the Moroccan Criminal Complaint (and did so approximately six weeks before it commenced the Delaware Proceedings).
X The appeal of Ms Purdy: Submissions on behalf of CGHA
(1) In Crédit Suisse Fides Trust SA v Cuoghi  QB 818 (CA) at 830E and 833D, where Millett LJ and Lord Bingham CJ both spoke of measures that would ensure that there was no "significant" risk that incriminating information would come into the hands of the Swiss prosecuting authorities;
(2) JSC BTA Bank v Ablyazov  EWHC 289 (Comm) where Phillips J said at :
"In my judgment, and as an exercise of my discretion, I will only recognise any such privilege to the extent that the documents should only be disclosed to the confidentiality club. Provided they are disclosed subject to that restriction, I do not consider that any further protection is necessary, proper or proportionate as a matter of discretion. I will therefore order disclosure subject to the existing confidentiality regime".
(3) In Akciné Gloster J said, citing Cuoghi:
"Even if the court concludes that there is a real risk of prejudice, that fact in itself should not necessarily excuse the defendant from providing disclosure of his assets. The Court is entitled to take into account whether measures can be put in place which will sufficiently reduce the risk of self-incrimination in practice".
At  and at [77(viii)] Gloster J acknowledged that the safeguards were not perfect or
exhaustive and that there remained a risk that information might still be misused, but she said that the risks could be adequately addressed by means of the safeguards proposed.
(1) The existence of the treaty is an indication of some recognition that the Moroccan legal system is one that provides accused persons with a right to a fair trial: see the fourth preamble to the extradition treaty.
(2) If there was a concern about a fair trial in Morocco, Ms Purdy would be able to contend the same in opposition to an extradition order in the UK on the basis that her Article 6 rights would not be respected in Morocco.
"… on the facts of this case, there was a real risk that Ms Purdy's compelled testimony could be used against her for the purposes of the Moroccan criminal investigation and any subsequent prosecution".
Whether there is a real risk involves an evaluation of primary evidence and is ultimately a
matter of fact. The Senior Master concluded, on the basis of the protections put in place,
that there was not such a real risk; the protections, she held, provided sufficient protection.
XI The appeal of Ms Purdy: Discussion and disposal
(1) started from the accepted proposition (see paragraph 13 of Ms Purdy's skeleton argument, citing Rio Tinto per Lord Denning MR at 560G-H) that the English court should do all that it could to assist the foreign requesting court (J/);
(2) balanced the interests of the foreign court and the witness (see The State of Minnesota v Philip Morris  ILPr 170 per Lord Woolf MR at 176, quoted at J/) and to consider whether, as Ms Purdy alleged, to make an order giving effect to the Letter of Request would be oppressive.
(3) concluded at (see J/) that the court was not obliged to refuse orders unless every conceivable risk of oppression is eliminated, so long as it could be alleviated to a sensible and acceptable degree which was provided by the combination of the Protective Order and the protections offered by CGHA.
(1) recognised (as was accepted by Ms Purdy below) that, although Ms Purdy had no right to rely upon a privilege against self-incrimination under Moroccan law, the court had a discretion (see J/);
(2) acknowledged article 6 of the ECHR and the decision of the European Court of Human Rights in Saunders v United Kingdom  ECC 872, referred to both by Ms Purdy's counsel (see J/) and also by Gloster J in Akciné;
(3) assessed the protections already in place in the Protective Order and the additional protections offered by CGHA, and concluded that they "sufficiently protected" Ms Purdy in respect of the Moroccan Criminal Complaint and Investigation (see J/ and ).
(1) Akciné concerned a Convention country (Lithuania) unlike Morocco which was not such a country. Akciné was simply relied upon as an example of how the English court addresses an asserted risk of self-incrimination under foreign law. Akciné was an example of a case where the judge (Gloster J) decided whether protections could be put in place that sufficiently reduced any risk of self-incrimination under the foreign law. This has been adopted in other cases, e.g., Ablyazov, where the risk was of criminal proceedings in a non-EU, non-ECHR signatory state, in that case a risk of proceedings in Kazakhstan.
(2) Akciné concerned proceedings in this jurisdiction, and not proceedings in a foreign state (in this case, in Delaware). This distinction does not mean that there is a privilege engaged in a case where the risk of proceedings is outside the jurisdiction. There is no such privilege and the authorities do not recognise the same. Nor does section 3 of the 1975 Act which expressly addresses privilege and provides that a witness is entitled to rely upon any privilege he or she might have under English law and also (subject to certain procedural requirements) under the law of the requesting court.
(3) While Akciné concerned the Lithuanian prosecutor, the prosecution in the instant Moroccan Criminal Complaint was lodged by CGHA. The answer here is that the prosecution was still the Morocco prosecuting authorities, and CGHA was simply the complainant. This was recognised by the Senior Master who referred to the fact that a condition of discontinuance against CGHA was unrealistic because the prosecutor might still wish to go on with the prosecution: see J/.
XII The cross appeal of CGHA: Introduction
(1) the decision and reasoning of the Senior Master;
(2) the correct principles;
(3) the submissions of CGHA; and
(4) the submissions of Ms Purdy.
XIII The cross appeal of CGHA: the Senior Master's decision
(1) The Senior Master said that if the Court had been alerted to the fact of the criminal investigation against Ms Purdy and Maquay, it would have directed that CGHA's applications for the Deposition and Disclosure Orders be on notice (see J/). Indeed, if CGHA's English solicitors, Humphries Kerstetter, had known of the Moroccan criminal investigation, the Senior Master would have expected the application to have been on notice ( J ).
(2) Whilst she accepted the evidence of CGHA's US lawyers that the non-disclosure of the Moroccan Criminal Complaint was not deliberate, she noted that it was information known to CGHA and its US lawyers and, from the perspective of a UK lawyer, its relevance ought to have been perceived (see J/).
(3) The evidence of CGHA's US lawyer, Mr Spears, did not deal expressly with why he did not inform HK of the existence of the Moroccan criminal investigation (see J/). Instead, it was left to the Senior Master to infer that he simply did not consider it relevant because it was not a "related proceeding".
(4) As the Senior Master observed, that explanation was "somewhat surprising, given that he was in court when Judge Fallon made clear her concerns about the risk of information from the Delaware proceedings being disclosed to the Moroccan prosecutors" (see J/). This was a reference to a hearing before Magistrate Judge Sherry J. Fallon in the Delaware court, who had heard a dispute between CGHA and Starman (the defendant to the Delaware Proceedings) as to the terms of the Protective Order on 15th April 2019 (see J/).
(5) The Senior Master further observed that it was the duty of CGHA's English solicitors, HK, to have informed its US lawyers of the duty of full and frank disclosure on a without notice application, and there was no evidence as to whether that was conveyed (see J/). In particular, Kristopher Kerstetter, who was the partner of Humphries Kerstetter who gave evidence on behalf of CGHA in support of its without notice applications and therefore the person best placed to explain (and apologise to the Court for) the non-disclosure did not give evidence.
(6) Whilst the failure to disclose the existence of the Protective Order was not in the same category of seriousness as the Moroccan Criminal Complaint (see J/), the evidence of CGHA was that Ms Purdy would only have been shown the terms of the Protective Order on the date of her examination.
(7) The Senior Master also held that it would have been "extremely unsatisfactory" for Maquay to have been shown the terms of the Protective Order only on the date on which it was originally due to give disclosure under the Disclosure Order (see J/ and ). That would not have enabled Ms Purdy to take any advice before the examination as to whether the Protective Order gave her sufficient protection
(8) The Senior Master held that, whilst the non-disclosure of the Protective Order (on its own) would not be a reason for the Court to set aside the Deposition and Disclosure Orders, it was to be taken into account in considering the appropriate sanction for the entirety of the non-disclosure (see J/).
(1) The non-disclosure issue only arose because of the failure of CGHA to provide full and frank disclosure when it applied (without notice) to the Senior Master for the Deposition and Disclosure Orders in respect of a central and important issue (the Moroccan Criminal Investigation) and in respect of a significant issue (the Protective Order). In no sense had the Purdy parties contributed to the non-disclosure.
(2) The matter required the court's consideration in any event. This must have been by reference to the matters set out in the preceding paragraph and the seriousness of the non-disclosure. This was a good reason to disapply at least the rule that the successful party ought to have its costs, and it comprised 50% of the overall costs.
(1) It was a further sanction and deterrent arising out of the material non-disclosure.
(2) The fact that the grounds for oppression relied upon by the Purdy parties, namely the Moroccan Criminal Investigation, was the same matter of which there was non-disclosure. It was reasonable for Ms Purdy to bring this issue before the Court for the Court to consider whether the protections offered were appropriate, in the unusual circumstances where the usual privilege against self-incrimination would not apply (the position of Maquay, which was only ordered to produce documents, was less disadvantageous, but this took up much less time.)
(3) This was not party and party litigation in that Ms Purdy was not a party to the underlying proceedings in Delaware and would derive no benefit from those proceedings. The Court had a discretion as regards a witness as to whether to allow its costs even of an unsuccessful challenge, provided that the witness had not behaved unreasonably. There was something of an analogy of a shareholder's application in schemes of arrangement which come before the Chancery Division where non-party witnesses are being brought into litigation unwillingly and receive their costs.
(1) The non-disclosure was not deliberate.
(2) CGHA admitted the existence of non-disclosures in the applications by the Purdy parties and apologised to the Court.
(3) As soon as CGHA's solicitors discovered the non-disclosure they disclosed the relevant information and agreed to extensions of time.
(4) CGHA offered protections that the court ultimately found were sufficient to protect the Purdy parties.
(5) CGHA offered to pay the Purdy parties' costs to mid-November 2019 if they were to comply with the Orders.
(6) Ms Purdy was aware of the Moroccan Criminal Investigation and, while she was a lay person, she was appropriately advised once the non-disclosure had been rectified.
(7) Unlike in the case of freezing orders, there had been no obligation on the Purdy parties to comply with the Orders before the non-disclosure was discovered and the Purdy parties had therefore not suffered any prejudice.
XIV The cross appeal of CGHA: approach to costs appeals
"30. As a general rule, every appeal will be limited to a review of the decision of the lower court. This general rule will be applied unless a practice direction makes different provision for a particular category of appeal, or the court considers that in the circumstances of an individual appeal it would be in the interests of justice to hold a re-hearing (CPR 52.11(1)). The appeal court will only allow an appeal where the decision of the lower court was wrong, or where it was unjust because of a serious procedural or other irregularity in the proceedings in the lower court (CPR 52.11(3)).
31.…The appeal court's duty is now limited to a review of that decision, and it may only interfere in the quite limited circumstances set out in CPR 52.11(3).
32. The first ground for interference speaks for itself. The epithet "wrong" is to be applied to the substance of the decision made by the lower court. If the appeal is against the exercise of a discretion by the lower court, the decision of the House of Lords in G v G  1 WLR 647 warrants attention. In that case Lord Fraser of Tullybelton said at p 652C:
"… the appellate court should only interfere when they consider that the judge of the first instance has not merely preferred an imperfect solution which is different from an alternative imperfect solution which the Court of Appeal might or would have adopted, but has exceeded the generous ambit within which a reasonable disagreement is possible."
33. So far as the second ground for interference is concerned, it must be noted that the appeal court only has power to interfere if the procedural or other irregularity which it has detected in the proceedings in the lower court was a serious one, and that this irregularity caused the decision of the lower court to be an unjust decision."
"127. Appeals in relation to costs are discouraged. An appeal court will be particularly loath to interfere with a decision on costs. As Wilson J said (sitting in the Court of Appeal) in SCT Finance Ltd v Bolton  3 All ER 434, para 2:
'This is an appeal . . . in relation to costs. As such, it is overcast, from start to finish by the heavy burden faced by any appellant in establishing that the judge's decision falls outside the discretion in relation to costs . . . For reasons of general policy, namely that it is undesirable for further costs to be incurred in arguing about costs, this court discourages such appeals by interpreting such discretion widely.'
128. In other words, the generous ambit within which a reasonable disagreement is possible is at its most generous in such a context."
"15. I can tell Mr and Mrs Eyers from many years' experience, not just in this court but in other courts, that appeals against costs hardly ever succeed, for the reason that it is the judge who is dealing with the case to decide what is fair about costs. This court would only interfere with the appeal court if there has been an error of law, and there has been no error of law in this case."
XV The cross appeal of CGHA: the submissions of CGHA
"The hearing of matters consequential on the main judgment was held on 23 November 2020. The Senior Master ruled that, notwithstanding the fact that it succeeded in resisting both applications to set aside the Orders on both grounds advanced, and CGHA was, therefore, wholly successful, CGHA should nonetheless pay 75% of Ms Purdy's and 75% of Maquay's costs, to be assessed on the standard basis, and that CGHA should make payments on accounts of those costs in the aggregate amount of Ł150,000 within 28 days of the judgment ("the costs order"). That is an extraordinary result, which CGHA submits cannot be justified by reference to the principles and/or to any proper approach to the exercise of the court's discretion."
(1) The order failed to reflect the normal rule under CPR 44.2(2).
(2) While CGHA accepts that a discount is appropriate to take into account the non-disclosure, it submits that the starting point should nevertheless be that it was the successful party and should therefore be awarded its costs, rather than the other way around.
(3) In any event, it was wrong to order that any part of the costs of the non-disclosure issue should be ordered to be paid by CGHA to the Purdy parties.
(4) As regards non-disclosure the Senior Master's order wrongly gave the Purdy parties a 'free shot' at setting aside the Orders. CGHA relied on the following observation by Males J (as he then was) at  in National Bank Trust v Yurov  EWHC 1991 (Comm):
"13. In general, however, I consider that the starting point must be that the claimant is the successful party. If the starting point were that costs, particularly on the indemnity basis, were awarded in favour of a defendant which has after all failed to obtain the discharge of the order, that could encourage disputes about failures to disclose to be litigated rather than promoting a realistic attitude on the part of defendants as to whether, despite a failure to disclose, a freezing order is nevertheless appropriate. An approach which, as it were, gives the defendant a free shot at discharging a freezing order so far as costs are concerned would not be helpful."
The Respondents should have accepted the apologies about the non-disclosure and consented to the continuation of the without notice order.
(5) As regards the oppression issue, there was double counting to have regard for a second time to the non-disclosure issue. That was (more than) taken into account in connection with the non-disclosure issue and should not have been revisited in connection with the oppression issue.
(6) By the time that the oppression issue was raised, the offers had been made about the non-disclosures, and therefore it was wrong to reflect the non-disclosure issue into the issue of oppression.
(7) CGHA offered suitable undertakings. The Purdy parties contended that they were not sufficient, and they failed in that the Court held that the undertakings sufficed. Because they failed: they ought to have been ordered to pay the costs of the oppression issue to CGHA.
(8) A substantial portion of the costs was incurred in brief fees and other preparation for the hearing, i.e. well after 10 January 2020, by which time the non-disclosures had been admitted and the relevant protections offered.
(9) Although Ms Purdy was strictly a non-party, she was so closely connected with the parties to the Delaware proceedings that the Court should not have treated her as a non-party witness or ought to have held that in the circumstances, this was a point on which Ms Purdy could place no or no substantial reliance. This is bearing in mind that (i) the ICC Arbitration Tribunal stated that events suggested that Maquay had been created for the sole purpose of receiving shares and avoiding any possible liabilities under the Management Agreement, and (ii) the Purdy parties were alleged by CGHA to be centrally involved in the underlying dispute.
(10) There was relatively little to be said about oppression in respect of the order to produce documents against Maquay (as the Senior Master found), but there was no distinction between the CGHA/Ms Purdy Orders and the CGHA/Maquay Orders.
(11) Something had gone very wrong when the costs were ordered to be paid by CGHA in respect of the oppression issue. Alternatively, the order was so far removed from the kind of orders made that the order fell well outside the generous ambit of the Court's discretion.
"The court's order must mark the importance of complying with the duty of full and frank disclosure and serve as a deterrent to ensure that persons who make ex parte applications realise that they must discharge that duty. That purpose can be satisfactorily achieved, in an appropriate case, by an appropriate order as to costs."
On this basis, Teare J decided to continue the freezing order but ordered the claimant to bear its own costs and to pay one third of the defendant's costs of resisting the continuance on the indemnity basis.
"I acknowledge that there may be cases where, rather than making a deduction, even a very substantial deduction, from the costs to be awarded to the successful claimant which has succeeded in maintaining its injunction, it may be appropriate to make an award of costs in favour of the defendant, sometimes even an award for assessment on the indemnity basis. That was Teare J's approach in the Konkola Copper Mines case and nothing I say should be understood as casting doubt on his order. Every exercise of discretion depends on its own circumstances."
(1) The claimant had a strong case for a freezing order.
(2) The claimant succeeded on an independent point, namely risk of dissipation.
(3) The defendants failed to establish a failure of disclosure on three of six points on which they relied.
(4) The approach of the defendants made identification of their complaints difficult.
(5) The disclosure failures were admitted either at a late stage or not at all.
XVI The cross appeal of CGHA: the submission of Ms Purdy
(1) CGHA alleges that it was wholly successful and Ms Purdy and Maquay were entirely unsuccessful. That is not correct. CGHA's case before the Senior Master was that its non-disclosure was not serious and had been remedied (see J/ and ). The Senior Master rejected that case, and instead agreed with Ms Purdy and Maquay as to the seriousness of the non-disclosure of the Moroccan Criminal Complaint and investigation (see J/).
(2) CGHA alleges that the Purdy parties had all necessary protections by (at the latest) 6 January 2020 (a fact which the Senior Master took into account in her decision on costs). However, Ms Purdy says that it is not the case that they "ended up with precisely the outcome that had been offered to them by no later than 6 January 2020." This is because CGHA offered to pay costs from 17 September to 14 November 2019, but not until 6 January 2020.
XVII The cross appeal of CGHA: discussion and disposal
(1) the Senior Master was entitled to decide within reason the scope of the sanction and deterrent and to extend it beyond the non-disclosure element;
(2) the non-disclosure was about the very matter which founded the grounds for oppression, so the two elements were closely linked;
(3) the non-disclosure was so serious and central to all aspects of the application.
"…it is important to note the particular nature of an application under section 2 of the 1975 Act. In particular, such an application does not constitute ordinary contested litigation, in which a claimant seeks a remedy against a defendant in respect of a past or threatened act, alleged to be in breach of the claimant's enforceable rights. In the case of an application under section 2 of the 1975, far from seeking to protect and/or vindicate its rights against the respondent, the applicant is seeking to persuade the Court to invoke a statutory provision compelling the respondent (who is not a party to the underlying litigation) to give evidence against its will and in circumstances where the risk of oppression to the respondent cannot be completely eliminated. In those circumstances, provided that its concerns are not frivolous, the respondent should be entitled to ventilate its concerns about the letter of request before the Court and ensure that the letter is properly scrutinised by the Court without fear of being rendered liable for the applicant's costs, but in the expectation that (ordinarily) the applicant will bear the respondent's costs."
(1) once proper and admissible factors are taken into account, they do not admit to precise calibration such as to put the order made outside the exercise of the court's discretion;
(2) the judgment was nonetheless careful to admit a substantial number of factors in favour of CGHA including but not limited to the admission of the non-disclosure, the apology to the Court, the cooperation as regards disclosure, the undertakings offered, such offer as was made as to costs and the fact that the Orders were not discharged;
(3) the order did not ignore these factors because a substantial part of the costs of the Purdy parties was reduced so that overall there was a reduction of 50% to their costs referable to the oppression element, and 25% of their costs overall;
(4) an examination of the Judgment on the substantive matters and on the consequentials shows a very detailed and careful appreciation of all the relevant matters, and an appellate court ought to take that into account, bearing in mind the review nature of an appeal;
(5) in all the circumstances, there is nothing to show that the Senior Master had erred in the exercise of her discretion as to costs or that she has gone outside the generous ambit of her discretion.
Note 1 See Arab Monetary Fund v. Hashim and others  1 W.L.R. 565, which concerned an application to set aside a worldwide freezing order and ancillary disclosure order. At p. 574C-D, Morritt J. said: “[…] the source of the jurisdiction to grant interlocutory injunctions is section 37 of the Supreme Court Act 1981. The jurisdiction is discretionary within the principles laid down in the decided cases. […] In the case of offences under the criminal law of a foreign state, there is no privilege, but I see no reason why the possibility of self-incrimination or the incrimination of others should not be a factor to be taken into account in deciding whether and, if so, in what terms a disclosure order should be made.” [Back] Note 2 Compare the position in National Crime Agency v. Hajiyeva  1 WLR 3209, in which the Court of Appeal noted (at ) that, in rejecting the appellant’s concerns about the risk of prosecution abroad, the judge at first instance “bore in mind that any information which was provided by the appellant would be provided to the NCA which, as a public body, had a duty to act consistently with the European Convention on Human Rights, and was bound to comply with the Overseas Security and Justice Assistance guidance which included specific processes for deciding whether disclosure to a third party would give rise to an impermissible risk.” [Back]
Note 1 See Arab Monetary Fund v. Hashim and others  1 W.L.R. 565, which concerned an application to set aside a worldwide freezing order and ancillary disclosure order. At p. 574C-D, Morritt J. said: “[…] the source of the jurisdiction to grant interlocutory injunctions is section 37 of the Supreme Court Act 1981. The jurisdiction is discretionary within the principles laid down in the decided cases. […] In the case of offences under the criminal law of a foreign state, there is no privilege, but I see no reason why the possibility of self-incrimination or the incrimination of others should not be a factor to be taken into account in deciding whether and, if so, in what terms a disclosure order should be made.” [Back]
Note 2 Compare the position in National Crime Agency v. Hajiyeva  1 WLR 3209, in which the Court of Appeal noted (at ) that, in rejecting the appellant’s concerns about the risk of prosecution abroad, the judge at first instance “bore in mind that any information which was provided by the appellant would be provided to the NCA which, as a public body, had a duty to act consistently with the European Convention on Human Rights, and was bound to comply with the Overseas Security and Justice Assistance guidance which included specific processes for deciding whether disclosure to a third party would give rise to an impermissible risk.” [Back]