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England and Wales Court of Appeal (Civil Division) Decisions


You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> AJ Bekhor & Company Ltd. v Bilton [1981] EWCA Civ 8 (06 February 1981)
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Cite as: [1981] Com LR 50, [1981] 2 WLR 601, [1981] QB 923, [1981] EWCA Civ 8, [1981] 2 All ER 565, [1981] 1 Lloyd's Rep 491

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Neutral Citation Number: [1981] EWCA Civ 8
Case No.: 1979 A 2152

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(Mr. Justice Parker)

Royal Courts of Justice
6th February 1981

B e f o r e :

LORD JUSTICE STEPHENSON
LORD JUSTICE ACKNER
and
LORD JUSTICE GRIFFITHS

____________________

Between:
A. J. BEKHOR & COMPANY LIMITED
Respondents
(Plaintiffs)
- and -

GODFREY DEREK ERNEST BILTON
Appellant
(Defendant)

____________________

(Transcript of the Shorthand Notes of The Association of Official Shorthandwriters Limited
, Room 392, Royal Courts of Justice, and 2 New Square,
Lincoln's Inn, London WC2).

____________________

MR. S. A. STAMLER, QC. and MR. M. JONES (instructed by Messrs Coward Chance, solicitors, London)
appeared on behalf of the Respondents (Plaintiffs).
MR. R. A. GATEHOUSE, QC. and MR. G.M. NEWMAN (instructed by Messrs Harbottle & Lewis, solicitors, London)
appeared on behalf of the Appellant (Defendant).

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

  1. LORD JUSTICE STEPHENSON: I will ask Lord Justice Ackner to give the first judgment.
  2. LORD JUSTICE ACKNER: The essential point raised by this appeal is whether and to what extent an order for discovery can be made in relation to matters which relate, not to the issues in the action, but to the operation of a Mareva Injunction granted against the defendant restraining him from removing from the jurisdiction of the High Court or otherwise dealing with certain of his assets. The question arises out of the following circumstances.
  3. FACTS

  4. The respondent company, the plaintiff in the action, carry on business as stockbrokers. On 12th July 1979 they issued a specially endorsed writ for 217,077.42 being the balance of money which they alleged they lent from time to time to the appellant as his stockbrokers. Order 14 proceedings were threatened, but after a series of adjournments and special appointments this course was abandoned. The defendant delivered a defence and counterclaim, disputing the alleged debt on a number of bases, including the statutory defence provided by The Money Lenders' Act, that the transactions relied upon by the plaintiffs were nominee transactions and accusing the plaintiffs of negligence. It is accepted that the defence and counterclaim raises arguable points.
  5. Early last year the plaintiffs heard that the defendant had sold two farms and they made an ex parte application for an injunction restraining the defendant from removing from the jurisdiction or otherwise disposing of any of his assets, including in particular any monies in his bank account, including the proceeds of the sale of Rocky Lane Farm, Henley, save insofar as the sum of his assets exceeded 250,000. The order was granted. When the matter was argued, inter partes, a week later, the point was taken on the defendant's behalf that so far from there being evidence that he was resident outside the United Kingdom, the evidence filed by the plaintiffs established that he was resident in the United Kingdom. The defendant himself provided no evidence, but his wife swore an affidavit referring to the fact that she had been married to the defendant for 18 years, that they had three children and that he had for some five years, until he recently sold it, lived at Rocky Lane Farm. She stated that he was English, as are his father and mother, and that she and he had lived in England during the whole of their married life. The affidavit concealed that for some time they had not been happily married, that he had been close friends with a divorced lady and that he had decided to separate from his wife and go and live with this lady and her daughter in Monte Carlo and there start a new life.
  6. Notwithstanding the doubts as to whether the court then had jurisdiction to make a Mareva Injunction where the defendant is resident in the United Kingdom, Mr. Justice Kilner Brown made an order on 18th March, but it restrained the defendant from removing from the jurisdiction "or otherwise disposing out of the jurisdiction any of his assets" etc.
  7. The appellant entered a notice of appeal against the injunction, one of the grounds being "The defendant was based or resident in England or within the jurisdiction".
  8. This was probably only a tactical move because within a fortnight the appellant swore an affidavit in support of an application to vary the injunction and in that affidavit disclosed his domestic circumstances, which I have described above. He conceded that he had arranged for the sale of Rocky Lane Farm, but gave no information as to whether it had been sold and if so for how much. He denied that he had sold the other farm, Barnes Farm: this farm belonged to his mother and had been sold by her, he receiving no part of the proceeds. He explained that he had taken a lease for one year with options to extend, of a flat in Monte Carlo where he and the lady and her daughter were to live, and the rent and service charge for which amounted to nearly 15,000 per year. He asserted that if he had remained he would have been free to spend as he had throughout his life, "my income from the investment of my assets wherever situated". He explained that he would be willing to withdraw his appeal and accept that his assets be frozen within the jurisdiction if he was granted leave to take out of the jurisdiction his Citroen motor car, certain personal possessions and the income arising from the investment of his assets. He further stated that the income arising from the investments of such assets as he had out of the jurisdiction, which he did not particularise, would be insufficient even to pay the rent and service charges on the flat.
  9. At the hearing of this application by Mr. Justice Parker on 28th April, the appellant's counsel, who has not appeared in this appeal, informed the learned judge that the decision taken to advance the contention before Mr. Justice Kilner Brown that the appellant was still genuinely resident within the jurisdiction was upon his advice and that therefore no adverse inference should be drawn against his client. Counsel also informed the learned judge that the appellant's assets within the jurisdiction amounted to between 217,000 and 250,000 and that he was prepared to limit his claim to be allowed to remove income to the sum of 25,000 per annum. The application to vary was largely successful. It was in the following terms:
  10. Upon the defendant by his counsel undertaking "(i) to withdraw his appeal to the Court of Appeal under Notice of Motion dated 1st April 1980 and (ii) not to change the investment of his assets within the jurisdiction so as to be likely to depreciate their value
    IT IS ORDERED:
    (1) That the Order dated 18th March 1980 and the Injunction thereby granted be varied by allowing the Defendant to remove from the jurisdiction:
    (a) personal possessions to the value of not exceeding 5,000
    (b) his Citroen Motor Car; and
    (c) the sum of 1,250 per month" (viz 15,000 per year) "out of the income from his United Kingdom investments for living purposes."

  11. Within a few months of the injunction being varied, a problem arose with regard to the second of the two undertakings referred to above. The injunction as ordered by Mr. Justice Kilner Brown, in no way fettered the appellant's right to deal with his assets within the jurisdiction, in such manner as he thought fit. To meet the possible objection which might have been made by the respondents to the variation sought, the appellant had been advised to give an undertaking that his assets would not be invested in any manner which was likely to depreciate their value, such an undertaking being designed to prevent him investing his capital in a wasting asset for the purpose of producing a very high income. However, the undertaking as incorporated in the order - not to change the investment of his assets within the jurisdiction etc - was capable of being construed so as to prevent the appellant meeting his financial obligations within the jurisdiction from his assets within the jurisdiction. The appellant's solicitors therefore sought the respondent's solicitors agreement to his utilising the assets within the jurisdiction to discharge his commitments there. Understandably the respondent solicitors stated that before they could agree to any variation of the terms of the undertaking, they must know the exact nature of the appellant's assets and the way in which they were invested, as well as the extent of his expenses and obligations in this country which he had to meet. The appellant solicitors failed to provide this information. They however confirmed that their client was spending capital to meet his commitments in the jurisdiction "to the extent that his remaining income in this country was insufficient". They asserted, quite wrongly, that a Mareva Injunction in standard form in no way prevents a defendant spending within the jurisdiction. They had apparently overlooked the terms of the ex parte order which was indeed in standard form.
  12. On 28th October the appellant's solicitors filed an affidavit making the points referred to above and stated that their client's commitments involved the expense of his making occasional visits to England, paying his professional advisers and maintaining his wife and three children. They sought, on the appellant's behalf, a variation of the undertaking so as to enable the appellant to continue to honour his commitments within the jurisdiction out of his assets within the jurisdiction. The respondents countered by giving notice that at the restored hearing of the summons they would apply, under Order 24 rule 7(1) and Order 26 rule 1(1), for an order that the appellant should swear an affidavit which, as amended by the learned judge, obliged him to:
  13. (1) disclose the full value of his assets within the jurisdiction as at
    (a) 11th March 1980,
    (b) 28th April 1980,
    (c) the date of the affidavit;
    (2) identify with full particularity, the nature of his assets, including the identity of all bank or other accounts in his name and the sums presently standing in each account;
    (3) disclose insofar as the value of his assets do not now total between 217,000 and 250,000, all facts within his knowledge as to the present whereabouts of any assets said on 28 April 1980 to be included in that total, but not now so included, how and when those assets came to be changed and/or disposed of;
    (4) identify in a written schedule, all relevant documents material to the value, distribution, and disposal and/or change of his assets between 11th March and the date of the affidavit.

  14. In an affidavit of 11th November, the appellant set out his assets in England with their approximate values as follows:
  15. (a) Freehold agricultural land 75,000
       
    (b) Bank account 3,500
       
    (c) A helicopter 48,000

    (he said the helicopter was in fact worth 65,000 but he was purchasing it under a financial agreement, which he did not detail but in respect of which he said there was approximately 17,000 outstanding)
    (d) A farm tractor 6,500
       
    (e) A debt owed to him 7,000
       
    (f) Share and Loan Capital in Lowe Music Limited 10,000
       
    (g) Money held by solicitors on account of costs 4,160

  16. This totalled 154,000. He then went on to state that on 28th April his total assets within the jurisdiction were worth approximately 220,000, that they had fallen since that date to the extent of approximately 66,000, such money having been spent by him entirely within the jurisdiction on legal costs, 7,452; accountancy fees, 8,950; payments to his wife, approximately 15,000; payments for the helicopter, 25,000; and the cost of his visits to England, 6,000. He further stated that his commitments within the jurisdiction in the foreseeable future must inevitably be substantial both in relation to the legal costs of defending the proceedings, the advice from his accountants and his obligations to his wife, quite apart from the cost of visits to see his three children.
  17. On 14th November he swore yet another affidavit, following criticism made at the initial hearing of his application on 13th November that his affidavit did not contain information with regard to his assets and liabilities out of the jurisdiction. In that affidavit he dealt, for the first time, with the proceeds of the sale of Rocky Lane Farm. He said the sale had been made in various lots, and completion took place on three separate dates, namely, 3rd March, 10th April and 25th April 1980, the total proceeds amounting to 532,500. Immediately after the sale on 3rd March, that is a week before the ex parte Mareva Injunction, he remitted 63,000 to a bank in Jersey. This he said was all he obtained from the sale of the farm because it was heavily mortgaged, part of the proceeds of the sale was paid to his wife in satisfaction of her claim, and there were substantial farming and personal debts. No figures or other details were provided of the mortgage, the payment to the wife, or the alleged debts.
  18. Understandably when the matter came before Mr. Justice Parker on 17th November the appellant was subject to considerable criticism. He had commenced the proceedings by suppressing the fact that he had deliberately decided to leave the country and had removed one asset, namely the sum of 63,000 as soon as he possibly could. The only obvious income-producing asset which he had disclosed was 10,000 in the share and loan capital of Lowe Music Limited, which clearly was incapable of producing 25,000 a year, or even the 15,000 a year which the court, by its order of 28th April, had permitted him to remove. The appellant was living in Monaco in premises which cost him nearly 15,000 a year to run, he was supporting the woman referred to above, her daughter and himself, as well as his wife at the rate of about 16,000 a year. Further, he was apparently running a helicopter and all this was being achieved without any substantial income. Further, he had reduced the value of his assets within the jurisdiction by some 66,000 despite the terms of his undertaking to the court. His affidavit was clearly evasive and deficient in essential particulars.
  19. The learned judge, following the decision in the Angel Bell Ltd. case [1980] 2 WLR 488 was prepared to allow the appellant to make payment from his assets in England to his solicitors and accountants in connection with the present proceedings, providing any such payments were notified to the respondents seven days before the payment was made. He, however, varied the injunction by restraining the appellant from otherwise dealing with any of his assets within the jurisdiction, save as to the monthly sum of 1250 provided for in the order of 28th April 1980, which sum, in accordance with that order, must come out of his income from his United Kingdom investments. Although the Notice of Appeal seeks the variation of this order, Mr. Gatehouse has conceded that the only point of attack, is the learned judge's refusal to allow any payment out of assets within the jurisdiction to the appellant's wife. He accepts, however, that the learned judge was fully entitled to make the criticisms which he did of the appellant's conduct and of the deficiencies in his affidavit and to decide that unless and until he made proper disclosure to the court, he should be obliged to make payments to his wife from his assets outside the jurisdiction. Accordingly, the essential subject matter of the appeal is the grant by the judge, subject to certain minor amendments, of the respondents' application for discovery. Mr. Justice Parker accepted that some of the material sought in the application was already to be found in the affidavits before the court, but because of the deficiencies in those affidavits he decided that the matter must proceed de novo. He rejected the suggestion that because a Mareva Injunction is not concerned with assets outside the jurisdiction it would be wrong to order discovery in respect of such affidavits. He accepted that in the ordinary way the foreign assets of a defendant may be irrelevant, but that when a defendant comes before the court seeking to have certain payments excepted from the full ambit of a Mareva Injunction already granted and to obtain certain freedom of movement, then it could be that the foreign assets are of vital importance. The learned judge also clearly had in mind that the appellant's activities since the order of 28th April might well disclose that he had acted in breach of the order and, in particular, of his undertaking recorded in that order and thus be in contempt of court. He therefore stated, at the conclusion of his judgment, that whether or not the respondent saw fit to make any further application after the appellant had filed his affidavit pursuant to the order, the court would, in the light of the affidavit, restore the matter if it appeared that the appellant was in contempt of court.
  20. THE MAREVA JURISDICTION

  21. In Nippon Yusen Kaisha v. Karageorqis [1975] 1 WLR 1903 the plaintiff chartered a ship to the defendants from whom a large sum was claimed as hire. There was a strong prima facie case that hire was due. Although the charterers could not be traced there was evidence that they had funds at a bank in London. An ex parte application to grant an injunction restraining the charterers from disposing of or removing from the jurisdiction any of the assets which were within the jurisdiction was refused at first instance but granted in the Court of Appeal. A month later a very similar case came before the Court of Appeal, Mareva Compania Naviera SA v. International Bulk Carriers SA (1975) 2 Lloyds Reports 509. This was another exparte application and a similar injunction was made. It is from this case that the Mareva jurisdiction takes its name. The power to grant this relief was founded on Section 45(1) of the Supreme Court of Judicature (Consolidation) Act 1925. This reads as follows:
  22. "A mandamus or an injunction may be granted or a receiver appointed by an interlocutory order of the court in all cases in which it shall appear to the court to be just or convenient."

  23. The customary form of the order is in very wide terms. It restrains the defendant from removing from the jurisdiction, or otherwise disposing of or dealing with any of his assets within the jurisdiction including and in particular [a certain specified asset] save insofar as such assets do not exceed in value the sum of [the plaintiff's claim]. The order is made in this wide form in the first instance, but later it may be varied, because for example the plaintiff desires bona fide to make payments in the ordinary course of his business or to provide for his own living expenses: see Iraqi Ministry of Defence v. Arcepey (The Angel Bell) cit supra.
  24. The use of the remedy has greatly increased and far from being exceptional it has now become common place. In 1979 applications were being made at the rate of about 20 per month (per Mustill J. the Third Chandris Shipping Corporation v. Unimarine [1979] 1 QB 645 at 650). Although it was initially thought that the jurisdiction only applied in relation to a defendant who was out of the jurisdiction but had money or goods in this country (see Rasu Maritima SA v. Perusahaan (the Pertamina) [1978] 1 QB 644), it was decided at first instance in Barclay-Johnson v. Yuill [1980] 1 WLR 1259 and shortly thereafter by the Court of Appeal in Rahman (Prince Abdul) bin Turki al Sudairy v. Abu-Taha and Another [1980] 1 WLR 1268, that the jurisdiction applied even if the defendant was not a foreigner or foreign based, since the essence of the jurisdiction is the risk of the defendant removing his assets from the jurisdiction and so stultifying any judgment given by the courts in the action.
  25. Article 37 of The Supreme Court Bill provides for the re-enaction of section 45(1) and further provides in terms that the power of the court to grant an interlocutory injunction restraining a party to any proceedings from removing from the jurisdiction of the High Court or otherwise dealing with assets located within that jurisdiction shall be exercisable in cases where that party is, as well as in cases where he is not, domiciled, resident or present within that jurisdiction.
  26. DISCOVERY

  27. A further step in the process of the evolution of the Mareva Jurisdiction" took place in the case of A. v C. [1980] 2 AER 347. In considering what this case decided it is important to have in mind the basic facts and the remedies which were being sought. The plaintiffs claimed to be victims of a fraud, allegedly masterminded by the first defendant, but which implicated the Second, Third, Fourth and Fifth Defendants. In their writ, they claimed against these five defendants damages for conspiracy to defraud and damages for deceit and against the Fifth Defendant damages for breach of warranty in the sum of 5.7 million pounds. In addition, they also claimed to trace the sum of 383,872 which they said was paid under a mistake of fact induced by fraud, into the account of the Sixth Defendant, a bank. There was no allegation of malpractice against the bank, but simply a claim to trace money into its hands, which the plaintiffs said was their property in equity. Before the issue of the writ the plaintiffs obtained, ex parte, a Mareva Injunction against the first five defendants limited to 1.5 million pounds. They also obtained an injunction restraining all the defendants from disposing of the sum of 383,872 when a lesser sum standing to the credit of accounts in the name of any of the first five defendants, or of another party (WL) at the Sixth Defendant (the bank). Two issues fell to be decided. These were:
  28. (a) whether an order should be made that if the sum of 383,872 was no longer in WL's account at the bank, each defendant should disclose all facts within their knowledge as to the present whereabouts of that sum, and
    (b) whether an order should be made requiring all the defendants to disclose to the plaintiffs forthwith, the sums at present standing in accounts in the names of any of the first five defendants or WL at the bank.

  29. As regards (a) Mr. Justice Goff described this as relating to the "proprietary claim". He held that in such cases there was good authority that the court may make orders with the purpose of ascertaining the whereabouts of missing trust funds. In London & County Securities Ltd. v. Caplin, 26th May 1978 unreported, Mr. Justice Templeman made an order for the purpose of enabling the plaintiffs to trace property acquired by the defendant and so take steps to seize that property if it derived from their assets. In Mediterranea Reffineria Siciliana Petroli SpA v. Mabanaft GmbH 1978 (Court of Appeal transcript 816), which was concerned with tracing the product of the plaintiff's assets viz a cargo of oil, delivery of which was alleged to have been obtained without the production of bills of lading, Mr. Justice Mocatta made a sweeping order requiring directors and an employee of the defendant company to make full disclosure of certain specified facts on affidavits and directed that one of them should file an affidavit of documents. His order was upheld by the Court of Appeal and Lord Justice Templeman said:
  30. "The court of equity has never hesitated to use the strongest power to protect and preserve a trust fund in interlocutory proceedings on the basis that, if the trust fund disappears by the time the action comes to trial, equity will have been invoked in vain."

  31. Mr. Justice Goff thus held that there was ample authority that in an action in which the plaintiff seeks to trace property, which in equity belongs to him, the court not only has jurisdiction to grant an injunction restraining the disposal of that property, but may in addition, at the interlocutory stages of the action, make orders designed to ascertain the whereabouts of that property. Mr. Justice Goff's decision in A v. C that the orders sought were necessary for the purposes of the tracing claim was approved and followed by the Court of Appeal in Bankers Trust Co. v Shapira (1980) 1 WLR 1274.
  32. As regards the second order sought the learned judge recognised that there was no authority to guide him as to the power to make an order for discovery of documents or for interrogatories in aid of a Mareva Injunction. He accordingly dealt with the matter quite shortly and I will quote from the material parts of his judgment:
  33. "Now the exercise of this jurisdiction may lead to many problems. The defendant may have more than one asset within the jurisdiction, for example he may have a number of bank accounts. The plaintiff does not know how much, if anything, is in any of them nor does each of the defendant bankers know what is in the other accounts. Without information about the state of each account it is difficult, if not impossible, to operate the Mareva jurisdiction properly; for example, if each banker prevents any drawing from his account to the limit of the sum claimed, the defendant will be treated oppressively, and the plaintiff may be held liable on his undertaking in damages. Again, there may be a single claim against a number of defendants; in that event the same difficulty may arise. Furthermore, the very generality of the order creates difficulty for the defendant's bankers, who may for example be unaware of the existence of other assets of the defendant's within the jurisdiction; indeed, if a more specific order is possible, it may give much needed protection for the defendant's bankers, who are after all simply the innocent holders of one form of the defendant's assets.
    ..... Furthermore, for the purposes of the Mareva jurisdiction, since this is a case involving a number of defendants, it is necessary for the proper exercise of that jurisdiction to know how much money is standing in the identified bank account; if, for example, that account should be unencumbered and in excess of the plaintiff's claim, the Mareva Injunction can be restricted to that amount."

  34. The learned judge concluded that the court should where necessary, exercise its powers to order discovery or interrogatories in order to ensure that the Mareva jurisdiction "is properly exercised and thereby to secure its objectives which is.....the prevention of abuse".
  35. He then went on to consider the source of that power. He said at page 351:

    "That the court has power to order discovery of particular documents and interrogatories at an early stage of proceedings is, I think, not in doubt. I refer in particular to RSC Ord 24, 47(1) in relation to discovery of documents, and to the general terms of RSC Ord 26, r 1(1) in relation to interrogatories. If necessary, however, the court's power to make an appropriate Order in aid of a Mareva Injunction can be derived from the power to make mandatory Orders conferred on the court by Section 45 of the Supreme Court of Judicature (Consolidation) Act 1925."

    RULES OF THE SUPREME COURT

  36. If, and insofar as the learned judge relied for his power to make the order under the Rules of the Supreme Court, then I respectfully think he was in error. The documents which can be made the subject of discovery must relate "to matters in question in the action"; see Order 24 rule 1. Order 24 rule 7(1), to which the learned judge drew specific attention and which the respondents in the first three lines of their Notice of intention to apply for discovery specifically invoked, although giving the court power at any time to make an order for discovery in no way departs from Order 24 rule 1. In fact it provides (rule 7(3)) that an application for an order under this rule must be supported by an affidavit stating the belief of the applicant that the party from whom discovery is sought has, or at some time had, in his possession, custody or power the document, or class of document, specified or described in the application and that it relates to one or more of the matters in question in the cause or matter.
  37. Significantly, although invoking this rule, the respondents did not seek to put in the requisite affidavit in support. The reason for such failure was no doubt attributable to the fact that the documents, or class of documents in respect of which they sought discovery did not relate to one or more of the matters in question in the cause or matter. The value of the defendant's assets in March, April and November 1980, the nature of those assets, including the identity of all bank or other accounts in his name, and how he had dealt with those assets between March and November 1980, were not matters in question in the action or in the cause or matter, (see the definitions of action, cause, and matter in section 225 of the Supreme Court of Judicature (Consolidation) Act 1925). Order 24 rule 8 provides that on the hearing of an application for an order under rule 3(7) or (7)(a) the court shall refuse to make such an order if and so far as it is of opinion that discovery is not necessary either for disposing fairly of the cause or matter or for saving costs. It is pursuant to the terms of this rule that discovery (as well as interrogatories), solely for the purpose of impeaching the credit of the opposite party will not be ordered.
  38. As to interrogatories, the power to grant them is similarly circumscribed. Order 26 rule 1(1), to which Mr. Justice Goff made specific reference and which was also invoked in the respondents notice of application, provides that a party to any cause or matter may apply to the court for an order, giving him leave to serve on any other party, interrogatories relating to any matter in question between the applicant and that other party in the cause or matter. Order 26 rule 1(3) provides that on the hearing of such an application the court shall give leave as to such only of the interrogatories as it considers necessary, either for disposing fairly of the cause or matter or for saving costs. Quite apart from the somewhat unusual form adopted in this case by the respondents to interrogate the appellant, the same general objection, mutatis mutandis, applies. The right to interrogate although not confined to facts directly in issue, extends to any facts the existence or non-existence of which is relevant to the existence or non-existence of the facts directly in issue (per Lord Esher M.R. in Marriott v Chamberlain (1886) 17 QBD. 151, at 163). Although it is not necessary that answers to interrogatories should be conclusive on the question at issue, it is enough that they should have some bearing on the question and that they might form a step in establishing liability (Blair v Haycock Cattle Co. (1917) 34 TLR 39, per Lord Finlay L.C.) None of the questions raised by the respondent's application or indeed those raised in A v. C, had any relevance to establishing liability in the action.
  39. In my judgment the power to order discovery to ensure that the Mareva jurisdiction is properly exercised and thereby to secure its objective of preventing the defendant removing his assets from the jurisdiction and so stultifying any judgment given by the court in the action, cannot be found in the Rules of the Supreme Court. This, to my mind, is by no means surprising, the jurisdiction having, for all practical purposes, only recently come to light. Mr. Stamler, on behalf of the respondents, while arguing valiantly for the proposition which I have just rejected, preferred to base the court's power, firstly upon its inherent jurisdiction, and secondly upon section 45 of the Supreme Court of Judicature (Consolidation) Act 1925, to which I have made reference above. I propose to deal with the latter point first.
  40. SECTION 45

  41. Having regard to the authorities referred to above it is now clearly established that the power of the High Court under section 45(1) includes the power to grant an interlocutory injunction to restrain a party to any proceedings from removing from the jurisdiction or otherwise dealing with assets located within the jurisdiction where that party is, as well as where he is not, domiciled, resident or present within that jurisdiction. Article 37 of the Supreme Court Bill is obviously designed to give statutory effect to those authorities. To my mind there must be inherent in that power, the power to make all such ancillary orders as appears to the court to be just and convenient, to ensure that the exercise of the Mareva jurisdiction is effective to achieve its purpose.
  42. The power now contained in section 45 of the Act of 1925 was formerly contained in section 25 of the Judicature Act of 1873. It was referred to by Sir George Jessel, M.R. in Beddow v Beddow (1878) 9 ChD 89 at 93, as embracing the grant of an injunction "in any case where it would be right or just to do so". Applying that decision, Lord Denning, M.R. in the Pertamina case, cit supra at page 659-660, stressed that the section gives the court a very wide discretion to grant an injunction. Mr. Gatehouse, for the appellants, contends however that the Siskina case, 1979 AC 210, and in particular certain observations made by Lord Diplock in his speech at page 256, prevent any ancillary order being made under section 45 in aid or support of the injunction granted under that section. He quotes in particular the sentence "The right to obtain an interlocutory injunction is merely ancillary and incidental to the pre-existing cause of action". However, in my judgment, this overlooks the context in which this observation was made. In that case the cargo owners applied ex parte to a judge of the Commercial Court:
  43. (a) for leave to issue a writ against the shipowner and to serve a notice of it out of the jurisdiction, and
    (b) for an immediate interim injunction to restrain the shipowners from disposing of their assets within the jurisdiction of the High Court, including, in particular, the insurance proceeds in respect of the loss of the Siskina.

  44. The shipowners were a Panamanian company. At no time had it any office or agent in England. The cargo owners were the owners of cargo laden on the Siskina, the only asset of the shipowners, which had become a total loss. The bills of lading issued in Italy by the shipowners on the shipment of the cargo contained a clause confirming exclusive jurisdiction on the court in Genoa. The application was granted ex parte. However, subsequently an application was made before Mr. Justice Kerr to set aside the service of the writ and all subsequent proceedings. He granted the application because the cargo owner's claim for damages, whether based in contract or in tort, disclosed no cause of action in respect of which the court had any power to permit service of its process out of the jurisdiction under RSC Ord.11. There was therefore no substantive claim to pecuniary relief within the jurisdiction of the court to grant, to which the Mareva Injunction sought could be ancillary. In this context, what Lord Diplock was saying in the observation quoted above and so strongly relied upon by Mr. Gatehouse, was that you cannot obtain an interlocutory injunction unless there is some claim for substantive relief upon which jurisdiction can be founded. It is, of course, common ground in this action that there is a substantive claim which founds jurisdiction. The respondents are claiming, as plaintiffs in the action, to recover a large sum of money lent within the jurisdiction to the appellant. In my judgment therefore the decision in the Siskina case and the basis for that decision is of no relevance to the issue whether there is inherent in the power to grant the Mareva Injunction a power to make an ancillary order or orders to ensure the effective exercise of that power.
  45. However, it must be borne in mind that the foundation of the jurisdiction is the need to prevent judgments of the court from being rendered ineffective by the removal of the defendant's assets from the jurisdiction. It provides a limited exception to the general rule that the court will not normally grant an injunction to restrain a defendant from parting with his assets so that they may be preserved in case the plaintiff's claim succeeds. The plaintiff, like other creditors of the defendant, must obtain his judgment and then enforce it. He cannot prevent the defendant from disposing of his assets pendente lite merely because he fears that by the time he obtains judgment in his favour the defendant will have no assets against which the judgment can be enforced. Were the law otherwise, the way would lie open to any claimant to paralyse the activities of any person or firm against whom he makes his claims, by obtaining an injunction freezing their assets: (per the Vice-chancellor in Barclay-Johnson v. Yuill cit supra, referring to the Lister v. Stubbs line of authority). The Mareva jurisdiction was not intended to re-write the English Law of Insolvency in this way. The purpose of the Mareva jurisdiction was not to improve the position of claimants in an insolvency, but simply to prevent the injustice of a defendant removing his assets from the jurisdiction which might otherwise have been available to satisfy a judgment. It is not a form of pre-trial attachment, but a relief in personam which prohibits certain acts in relation to the assets in question: (per Mr. Justice Goff in the Angel Bell case, cit supra, and Cretanor Maritime Co. Ltd. v. Irish Marine Management Ltd. (1978) 1 WLR 966). It is therefore clear that although the Mareva plaintiff, who has satisfied the guidelines set out by Lord Denning, M.R. in the Third Chandris Shipping Corporation v. Unimarine SA,(1979) 1 QB 645 at 668, and in particular has provided adequate grounds for believing that there is a risk of the defendant's assets being removed before the judgment or award is satisfied, is in a privileged position, this privilege must not be carried too far. The courts must be vigilant to ensure that the Mareva defendant is not treated like a judgment debtor. It was no doubt with this general principle in mind that Mr. Justice Goff in the A v. C case was at pains to point out that it would not be right to make general use of the power to enable the plaintiff to discover whether the defendant has any assets here. However, having established the existence of the assets, it may, in a particular case, be necessary for the proper exercise of the jurisdiction, that the defendant should provide information about a particular asset in order for the jurisdiction to be properly exercised. Where, as in the case of A v. C, there were several defendants, the ancillary order might well be designed to obtain information which would enable the court to restrict the injunction to a particular account, and thus enable the judge to decide on what the Mareva injunction should bite.
  46. INHERENT JURISDICTION

  47. If I am wrong in concluding that section 45 provides the basis for the jurisdiction to make the type of ancillary order referred to above, then the question arises as to whether the court has an inherent or residual jurisdiction to make such an ancillary order. Insofar as Mr. Stamler contends that there is inherent jurisdiction in the court to make effective the remedies that it grants, this seems to me merely another way of submitting that, where the power exists to grant the remedy, there must also be inherent in that power the power to make ancillary orders to make that remedy effective. This I have accepted. However, if and insofar as he contends that the courts have a general residual discretion to make any order necessary to ensure that justice be done between the parties, then in my judgment that is too wide and sweeping a contention to be acceptable. Such a proposition would seem to come well within the criticism made by Lord Hailsham in the Siskina case cit supra at page 262. Support for this general proposition was sought from what are now known to be Anton Piller orders and, in particular, from the observations of Lord Denning, M.R. in Piller KG v. Manufacturing Processes (1976) CA 1 Ch 55 at 61. The source, however, of the Anton Piller orders was the decision of Mr. Justice Tempieman, as he then was, in EMI Ltd. v. Pandit (1975) 1 WLR 302. It concerned the power of the court to make ex parte orders requiring a defendant to permit the inspection of articles or documents. The difficulty which was sought to be overcome, which in no way arises in this case, was the requirement in order 29 rule 2(5) that an application for an order for inspection, detention, preservation, etc. of the subject matter of the cause or matter was to be made "by summons or by notice". The reason for the order being sought ex parte was because of the very serious risk, that once the defendant was given notice of the application he would destroy the articles or documents and thereby defeat the very purpose of the action. The problem therefore was an entirely different one. Mr. Justice Templeman concluded that, if it appears that the object of the plaintiff's litigation would be unfairly and improperly frustrated by the very giving of the notice which is normally required to protect the defendant, there must be exceptional and emergency cases in which the court can dispense with the notice and, either under power in the rules to dispense with notice or by the exercise of its inherent jurisdiction, make such a limited order, albeit ex parte, as will give the plaintiffs the relief which they would otherwise be unable to obtain (page 305). The authorities to which Mr. Justice Templeman referred do not appear to me to support the existence of the wide residuary discretion claimed by Mr. Stamler to exist. I do not therefore consider that the Anton Piller line of authorities assist him. However, in view of the opinion which I have expressed in relation to section 45, he does not require to establish the existence of such residual power.
  48. THE ORDER MADE IN THIS CASE

  49. Given that there is power to make an order for discovery in "aid" of a Mareva Injunction in the limited sense which I have sought to describe above, the question next arises as to whether the order made by Mr. Justice Parker was such an order. I can find no suggestion that he was seeking to rely upon section 45 of the 1925 Act, save insofar as he was relying upon the decision in A v. C. On the face of it, he was purporting to grant an application for discovery and interrogatories made pursuant to the Rules of the Supreme Court. However, this would be no valid basis for attacking his order, if he had jurisdiction to make the same order under section 45.
  50. In order to appreciate the nature and purpose of the learned judge's order it seems to me necessary to consider again what the appellant had disclosed with regard to his assets in England in the two affidavits of 11th and 14th November, which the learned judge justifiably found to be evasive and unsatisfactory. The appellant deposed that assets to the value of 154,000 were within the jurisdiction. As stated above they consisted of freehold agricultural land, a helicopter, a farm tractor, a debt, shares, money held by his solicitors on account of costs and a bank account in the sum of 3,500. Further, the appellant's assets had been worth 220,000 approximately some six months earlier when the appellant had last appeared before the learned judge. Since then he stated he had expended approximately 66,000 on legal costs, accountancy fees, payments to his wife, payments for the helicopter and visits to England as described previously in this judgment. To my mind, there was no necessity for making any order ancillary to the Mareva injunction in order to ensure the proper exercise of that jurisdiction. It was not suggested by the respondents that they were particularly interested in the identity of the bank where approximately 1% of the appellant's assets were to be found. There was no question as to upon what property the Mareva injunction was to bite. It was to operate in relation to all the assets referred to above.
  51. Apart from the lack of information given in regard to these assets, the learned judge was clearly concerned, and rightly concerned, at the lack of any income producing asset, apart from the 10,000 in the share and loan capital of Lowe Music Limited. This was most unlikely to produce the 25,000 per year income which the appellant had wished to take out of the country, or even the 15,000 per year which the learned judge had permitted to be removed from the jurisdiction when he varied the order inter partes on 28th April. He was also concerned with the apparent breaches by the appellant of his undertaking. Anticipating that the affidavit which he had directed the appellant to provide might disclose that the appellant had been guilty of contempt of court, he stated in his judgment that when the affidavit had been filed the respondents were, of course, at liberty to make a further application to the court with regard to the appellant's operations since the undertaking was given. Whether or not they saw fit to make any further application, if it appeared to the court that the affidavit did not contain proper disclosure in accordance with the order, or proper explanation of the appellant's conduct with regard to the hearings on 18th March, and with regard to the undertaking, then the court would appoint a day when the matter of possible contempt of court and the appropriate steps to be taken, if such contempt was shown, should be considered.
  52. Mr. Staraner submits that Mr. Justice Parker was seeking, by his order, to police the Mareva injunction which he had granted and that this was therefore an order made "in aid of" the Mareva injunction.
  53. I cannot accept this view. If the respondents, or the court of its own volition, desired to "police its order", then the respondents could have applied for an order for the cross-examination of the appellant on his affidavit, or the court itself could have made such an order (see order 38 rule 2). No such application was made by the respondents and no such initiative was taken by the court. From the respondents' point of view, this of course is understandable enough, since their concern was not the committal of the appellant to prison, but the preservation of his assets, so as to avoid the prospect of a barren judgment. But there was another remedy open to them, or to the judge. The order of 28th April varying the Mareva injunction and allowing the appellant to remove 1,250 per month from the jurisdiction appears to have been obtained without proper disclosure to the court of the true position of the appellant's assets. The respondents could have applied for the withdrawal, and the learned judge of his own initiative could have withdrawn from the appellant the permission to remove any further money from the jurisdiction unless and until he made a full and proper disclosure of those matters which the court thought were necessary to establish the true nature of his assets, and he had given a proper explanation of his conduct between the material dates. The respondents made no such application, and the learned judge somewhat surprisingly, so far from removing permission from the plaintiff to take 1,250 per month out of the jurisdiction permitted him, on terms, to pay from his assets within the jurisdiction legal and accountancy costs relating to the action.
  54. In short, while fully endorsing and approving the learned judged desire to put an end to the appellant's evasiveness and to establish to what extent if at all there had been noncompliance with his order, or breaches by the appellant of his undertaking, I do not consider that he had the jurisdiction to achieve it by the order which he made. Having regard to the existence of the remedies available to the respondents to "police" the order that they had obtained, it would, in ray judgment, be quite wrong to seek to create new machinery which could have far-reaching and undesirable consequences and which are quite unnecessary for the proper operation of the Mareva jurisdiction.
  55. In the light of the views expressed above it is unnecessary for me to deal with the appellants submission that, as the answers to the interrogatories ordered could incriminate him, the order should never have been made. However, in deference to the arguments which have been addressed to us I will shortly express my views on this submission.
  56. It has long been established that the fact that the answer to interrogatories sought to be administered would or might tend to incriminate the party interrogated, is no ground to objecting to leave being given to administer them (see Fisher v. Owen (1878) 8 ChD 645 and the other cases cited in the Annual Practice at page 450). The objection to answer on this ground must be taken in the answer. The only exception to this general rule arises in an action to recover a penalty (see Hunnings v. Williamson 10 QB.459). I do not consider that the case of Rank Film Distributors Ltd. v. Video Information Centre [1980] 2 AER 273 in any way detracts from the general rule referred to above. In that case the plaintiffs, who were film companies owning the copyright to films produced and made by them, believed the defendants were pirating copies of those films and recording and selling unauthorised video cassettes of them. They obtained Anton Piller orders which went beyond requiring the defendants to permit forthwith representatives of the plaintiffs to enter premises occupied by the defendants for the purpose of inspecting and removing any unauthorised films. The orders further required three of the defendants to disclose:
  57. (a) the names and addresses of persons who supplied the cassettes and customers who bought them;
    (b) all invoices and other documents relating to the cassettes; and
    (c) the whereabouts of all pirate cassettes and master copies known to the defendants.

  58. These were peremptory orders for discovery and interrogation requiring instant obedience and the defendants were informed by the Penal Notice on the order that disobedience would expose them to penal consequences. This was therefore no ordinary order for discovery or interrogatories where the party interrogated has the opportunity to consider and take legal advice before deciding whether to comply with the order (per Lord Justice Templeman at page 288/289). It was accordingly held by the majority of the Court of Appeal that that part of the orders requiring disclosure was contrary to the well-established principle of privilege against self-incrimination and would accordingly be expunged.
  59. Mr. Gatehouse further sought to rely upon the case of Comet Products UK Ltd v. Hawkex Plastics Ltd [1971] 2 QB 67. That was a passing-off action in which the plaintiffs had obtained an interim injunction restraining the defendants from passing off their product as the plaintiffs. Before the trial of the action, the plaintiffs alleged that the defendants were guilty of contempt of court in disobeying the injunction and applied for the committal of the second defendant to prison for his contempt. On the hearing of the application affidavits were filed on each side and were read. The plaintiffs sought an order to cross-examine the defendant upon his affidavit, such application being made under order 38 rule 2 which gives the court discretion to make such an order. It is clear from all the judgments of the Court of Appeal that if the cross-examination was to have been limited to the particular circumstances of the alleged contempt, then it would have been right to have ordered the cross-examination. It is only in very exceptional cases that a judge ought to refuse an application to cross-examine a defendant on his affidavit (per Lord Justice Cross at 77). In the Court of Appeal however, notwithstanding that counsel for the plaintiff had told the judge he did not wish to cross-examine upon the subject of the main action, it became apparent that a much wider cross-examination was intended in which the whole circumstances of the alleged passing-off was to be investigated. The court accordingly held that as a matter of discretion the cross-examination ought not to be allowed. Again, this case does not detract from the general principle to which I have referred above, that if the answers to interrogatories may tend to incriminate, that is no valid objection to the order for the interrogatories. The objection must be taken when the time comes to answer them.
  60. For the reasons given I would accordingly allow this appeal. The appellant's victory may well be a hollow one, since the respondents will, I anticipate, pursue the remedies to which I have made reference, and restore the matter to Mr. Justice Parker with a view to his either ordering the cross-examination of the appellant and/or varying the Mareva injunction should he think fit.
  61. LORD JUSTICE GRIFFITHS: Until recently the courts have refused to grant an injunction to freeze the assets of a defendant in anticipation of the plaintiff obtaining judgment against him. This general rule is long standing and well established by such authorities as Lister & Co. v Stubbs (1890) 45 ChD 1.
  62. However, in 1975 an exception to this general rule appeared which came to be known as the Mareva injunction, taking its name from the decision of this court in Mareva Compania Naviera S.A. v. International Bulk Carriers S.A. 1975 2 Lloyds List Reports 509. If the court is satisfied that there is a real risk that a defendant will remove his assets from the jurisdiction so that a successful plaintiff will be unable to issue execution against them and thus be left with a barren judgment it will issue an injunction to restrain the defendant from removing sufficient of his assets from the jurisdiction to protect the plaintiff from this risk. At first the Mareva injunction was only granted against a defendant resident outside the jurisdiction but it has recently been extended to include a resident within the jurisdiction, provided there is a real risk that he intends to defeat the plaintiffs's claim by removing his assets from the jurisdiction (see Rahman (Prince Abdul) Bin Turki al Sudairy v. Abu-Taha & Another 1980 1 WLR 1268). Although the primary purpose of the Mareva injunction is to prevent the defendant removing his assets from the jurisdiction and thus out of reach of execution, the form of order generally prevents the defendant not only from removing his assets from the jurisdiction, but also from otherwise dealing with them within the jurisdiction. The latter part of the order is made in order to prevent the defendant passing on his assets to a third party who then takes them out of the jurisdiction. To mitigate the obvious hardship that may be caused to a defendant if a large part of his assets are completely frozen the court will be prepared to vary the order to enable the defendant to use his assets for legitimate trading and other purposes within the jurisdiction (see The Angel Bell 1980 2 WLR 488.
  63. The power to make the Mareva injunction is derived from s.45(i) of the Supreme Court of Judicature (Consolidation) Act 1925 on the grounds that such an order is "just and convenient".
  64. Mr. Gatehouse has referred to passages in the speeches of Lord Diplock and the Lord Chancellor in the Siskina 1979 AC 710 which he submits cast doubt upon the power of the court to grant a Mareva injunction. But the power to make a Mareva injunction was not directly in question in that case and whatever may be the outcome if the matter is finally tested in the House of Lords it must for the moment be taken as settled by decisions of this court that such a power exists.
  65. The first question that arises in this appeal is whether the court has jurisdiction to make an order for discovery in aid of a Mareva injunction. Mr. Gatehouse concedes that it is desirable that the court should have such jurisdiction but submits that it does not. Until Mr. Justice Goff made an order for discovery in A v. C 1980 AER 347, it seems that the jurisdiction had been exercised successfully without the defendant being ordered to give discovery. The plaintiff must be able to satisfy the court that the defendant has assets within the jurisdiction in order to obtain the injunction and in most cases will probably be able to identify those assets with sufficient particularity to enable the court to make an effective order. In such cases there is no need for discovery, and it would be most oppressive to make an unnecessary order for discovery merely to harrass the defendant. However, from time to time cases will arise when, although it seems highly probable that the defendant has assets within the jurisdiction, their precise form and whereabouts are in doubt, or in the case of a number of defendants they may collectively have sufficient assets but there may be doubt about their distribution among themselves. In such cases in order that the Mareva injunction should be effective both the court and the plaintiff require to know the particular assets upon which the order should bite. It must be remembered that the underlying reason for making the order is the fear that the defendant may remove his assets and this is most effectively prevented by the plaintiffs serving a copy of the injunction on whoever is holding the defendant's assets for the time being. Very often this will be the defendant's bankers, but assets can take many forms and be in the hands of many different persons to whom it is desirable to give notice of the court's order. To ray mind the desirability of the power to order discovery is obvious and it is particularly needed in the case of a defendant who has demonstrated himself to be untrustworthy and evasive.
  66. But the question remains, does the power exist?
  67. In this case the plaintiffs applied for and it appears to me the judge made his order in purported exercise of his powers to make an order for discovery of particular documents under order 24 rule 7(1) and to administer interrogatories under order 26 rule 1. In doing so he followed the decision of Mr. Justice Goff in A v. C. The form of the order he made is fully set out in the judgment of Lord Justice Ackner. It is an order for discovery of both documents and facts in wide terms and certainly does not follow the type of order normally made in applications either for discovery of particular documents or interrogatories.
  68. I agree that the Rules of the Supreme Court give no power to a judge to make such an order.
  69. In both the case of discovery of documents and discovery of facts by way of interrogatories the discovery has to relate "to matters in question in the action, or cause or matter" (see order 24 rule (1) and order 26 rule (1)) and these words must also be read into order 24 rule 7(1) by necessary implication arising from the fact that an application for particular discovery under rule 7(1) must be supported by affidavit stating that documents relate to matters in question in the cause or matter (see rule 7(3)).
  70. The phrases "matters in question in the action" and "matters in question in the cause or matter" have for generations been understood to refer to the issues to be decided in the litigation. The present existence and whereabouts of the defendant's wealth are not such an issue; they are relevant only to the defendant's ability to satisfy judgment if the "matters in question in the action" are resolved in the plaintiffs' favour. I therefore conclude that the judge had no power to order discovery pursuant to the Rules of Courts and insofar as A v. C was founded on such a power it was wrongly decided.
  71. However, in A v. C Mr. Justice Goff derived the power to order discovery not only from the rules, but also from the power to make the injunction under s.45 of the Supreme Court of Judicature (Consolidation) Act 1925. Mr. Stamler relies upon this power to support the judge's order. If the court has power to make a Mareva injunction it must have power to make an effective Mareva injunction. If the injunction will not be effective it ought not be made.
  72. For the reasons I have already given it may be necessary to order discovery to make the injunction effective and I would hold that the court has the power to make such ancillary orders as are necessary to secure that the injunctive relief given to the plaintiff is effective. I therefore agree that a judge does have power to order discovery in aid of a Mareva injunction if it is necessary for the effective operation of the injunction.
  73. I feel it unnecessary to express any view upon Mr. Stamler's wider argument based upon the inherent jurisdiction of the court to order discovery wherever the cause of justice requires it.
  74. Assuming that the judge had power to order discovery ought he to have done so on the facts of this case? Mr. Gatehouse submits that the judge should not have ordered discovery because it was not necessary to do so and because its primary purpose was not to aid the exercise of the Mareva jurisdiction but to force the defendant to provide material upon which he could be punished for contempt of court.
  75. I will deal first with the objection on the ground of self incrimination. It is true that the judge expressed disapproval of the defendant's behaviour in the proceedings and referred to the possibility of his being in contempt of the court's order. But this possibility must have been present to the minds of all those engaged in the litigation. The defendant's solicitor had himself referred to the possibility in the course of the correspondence. If I thought that this order for discovery was made merely to provide the material for contempt proceedings I would not hesitate to set it aside: it would clearly be an improper exercise of the power and offend against the principle that a man cannot be required to incriminate himself. I cannot accept that the judge made his order with this objective. The fact that an answer to an interrogatory may tend to incriminate the maker is no ground for disallowing the interrogatory; objection on this ground is to be taken in the answer (see Supreme Court Practice 450 and cases therein cited). It will be open to the defendant to take objection on this ground when he comes to swear his affidavit in this case, if he considers it in his best interests to do so. This is a very different case to Rank Film Distributors Limited v. Video Information Centre 1980 2 AER 273 in which the defendants were ordered to give discovery and answer interrogatories backed by a penal order, and I see nothing to take it out of the general rule that it is for the defendant to take his objection on the grounds of self incrimination when he swears his affidavit.
  76. But the question remains, was this order properly made in aid of the Mareva injunction? Here I have the misfortune to differ from my brethren.
  77. The power to order a Mareva injunction is discretionary and it follows that the power to order discovery as an ancillary order to the injunction must also be discretionary. This court should only interfere with the exercise of the judge's discretion if satisfied that it has been wrongly exercised: it is not sufficient that members of the court might not have been disposed to exercise the discretion in a similar manner.
  78. The judge was clearly dealing with a very evasive litigant. The affidavits he had put before the court did not begin to make economic sense. Here was a man seeking leave to take 25,000 a year out of the jurisdiction from the income produced by his assets, yet swearing affidavits which revealed no assets capable of producing anything approaching that sum, and at the same time telling the court that he had already reduced his assets by 66,000 since the Mareva injunction was first granted. Furthermore the court had been misled as to his residence outside the jurisdiction at the hearing in March and he was now seeking to justify the dissipation of his assets since April on a strained and, in my view, clearly wrong construction of the undertaking he had given to the court at that hearing.
  79. The judge was in my opinion fully justified in taking the view that the defendant's affidavits as to his assets were so unsatisfactory that he was entitled to refuse to accept their contents at their face value and to order the defendant to make a full disclosure of his financial position. It was a measure that I think was justified to enable the court and the plaintiffs to identify the assets and to give the plaintiffs the opportunity to serve a copy of the court's order on the bank, or other holders of the assets or take such other steps as they consider appropriate to ensure that the Mareva order did effectively bite on the defendant's assets.
  80. It is true that the judge might have used other measures to put pressure on the defendant to induce him to reveal the true state of his finances. He could have ordered him to come from Monte Carlo to be cross-examined on his affidavits, involving him in considerable expense and inconvenience. He could have refused to allow him to continue to take any income out of the jurisdiction for his living expenses in Monte Carlo. He could have refused to allow him to draw money to pay his solicitors or accountants. The fact that these alternative courses were open to the judge does not appear to me to be any reason why he should not order discovery if he considered that to be the more appropriate course. It is not without significance that the plaintiffs did not ask the judge to consider any of these alternatives. The plaintiffs are not concerned to punish the defendant or put him to any unnecessary inconvenience; all they want is to be able to identify and protect sufficient of the defendant's assets to satisfy the judgment they hope to obtain against him.
  81. I agree that the power to order discovery in support of a Mareva injunction should be sparingly exercised and if too readily resorted to could easily become a most oppressive procedure.
  82. I am sure that the judges in the commercial court have this well in mind. There should be no question of an order for discovery becoming a usual part of the Mareva relief. However, for the reasons I have indicated I am of the opinion that the judge was fully justified on the facts of this case in ordering this evasive defendant to give full discovery. I would have dismissed the appeal.
  83. LORD JUSTICE STEPHENSON: If the appellant is regarded with suspicion by the court, he has only himself to blame. It is hard to conceive a more naked attempt to mislead the court than his filing of his wife's affidavit, and his own affidavits have understandably not reduced but increased the suspicions which led Mr. Justice Parker to make the robust order under appeal. I would be reluctant to quash a robust order thought necessary by a commercial judge to make effective such a valuable weapon in the court's armoury as a Mareva injunction.
  84. But a court of law can only do what it has power or jurisdiction to do. It is as important that it should not exceed its powers to interfere in the lives of private citizens and to compel them to make public what they may wish to keep private, as that it should use them to the full to protect and enforce private and public rights and restrain their destruction or infringement. Injustice comes from abuse of power, judicial power included, as well as from failure to exercise it. Mr. Gatehouse, for the appellant, has submitted powerful arguments that the judge had no power to order the discovery which he has required the appellant to make. The courts have, many would say, stretched their powers beyond what were long considered their limits in granting Mareva injunctions; it would be an unlawful extension to add to a Mareva injunction an order for discovery, even if necessary to make it effective? the limits of the courts' powers to grant interlocutory remedies and relief, in particular discovery, are defined by statute and rules made under statute; such discovery is outside the relevant statute and rules and can only be derived from the courts' inherent jurisdiction and that jurisdiction, he submits, is to be found only in the authority of established practice and decided cases; there is no established practice and no decided case, except a recent decision at first instance which the judge followed and we are asked to overrule.
  85. The respondents applied for this order under Rules of the Supreme Court 0.24 rule 7(1) and 0.26 rule 1(i) (p.70). The judge did not say what was the power under which he made the order; but he said (p.83) that their application was based on the decision in A v. C 1980 2 AER 347, which is the decision Mr. Gatehouse wishes us to overrule. In that case Mr. Justice Robert Goff based his decision on s.45 of the Supreme Court of Judicature Act 1925, as well as on those rules, and it may therefore be right to treat this order as based on that section as well as on those rules. While contending for the respondents that it could rightly be based on either the Act or the rules, Mr. Stamler asked us to affirm the judge's order primarily on the ground that it was within the court's inherent jurisdiction.
  86. I am not satisfied that either the Act or the rules give the court this power.
  87. S.45(l), replacing s.25(8) of the Supreme Court of Judicature Act 1873, provides:
  88. "The High Court may grant a mandamus or an injunction or appoint a Receiver by an interlocutory order in all cases in which it appears to the court to be just or convenient so to do".

  89. This order is not a mandamus. Certainly a mandamus in its context extends beyond the prerogative remedy now obtainable on judicial review to an order to a public authority to produce public documents for inspection, but it does not extend to every mandatory order enforceable by committal, as are orders for discovery of documents and for interrogatories by virtue of Rules of the Supreme Court 0.24 rule 16(2) and (4), and 0.26 rule 6(2) and (4). Nor is this order an injunction. It is an order in aid of an injunction, or ancillary or auxiliary to an injunction, whereby the court and the other party can ascertain whether there have been breaches of the injunction and what and where are the assets which are the subject of the injunction, so that they can be used to satisfy any judgment against the appellant. It is not therefore, in my judgment, an order which the court is empowered to make by s.45 unless indirectly and by implication.
  90. Is it authorized by the Rules of the Supreme Court? 0.24 rules 1(11) and 2(1) are concerned with discovery of documents in an action and with matters in question in the action. 0.24 rules 7(3), 11(2) and (3), and 12, and 0.26 rules 1 and 2 are concerned with parties to any cause or matter and with matters in question in the cause or matter. The definitions of "action", "cause" and "matter" in s.225(1) of the Supreme Court of Judicature Act 1925 do not explain the substitution but make it unimportant.
  91. "'Action' means a civil proceeding commenced by writ or in such other manner as may be prescribed by Rules of Court, but it does not include a criminal proceeding by the Crown."

    "'Cause' includes any action, suit or other original proceeding between a plaintiff and defendant, and any criminal proceeding by the Crown".
    "'Matter' includes every proceeding in court not in a cause."

  92. As I read these definitions "matters" are wide enough to include "causes" and "causes" to include "actions". But the judge's order was applied for and made in an action, the action between the respondents and the appellant and the matters (in a different sense) in question between these parties to which discovery must relate are matters in issue in the action between them. The matters in question in the Mareva injunction are not in issue in the action. The respondents do not have to prove the existence of assets of the appellant within the jurisdiction and the risk of their being removed out of the jurisdiction in order to prove their case or obtain judgment; the respondents want the injunction and discovery in aid of it in order to preserve something out of which any judgment they may obtain on proving their case can be executed and satisfied. That is the matter in question to which this discovery relates.
  93. I therefore reject Mr. Stamler's submission that discovery relating to a matter in question in an application for a Mareva injunction is discovery within 0.24 or 0.26. The respondents' application, though made under 0.24 and 0.26, was not supported by an affidavit as an application for further discovery is required to be by 0.24 rule 7(3). The requirements in 0.24 rule 2(5) 8 and 13(1), and 0.26 rule 1(3), that discovery or interrogatories must be necessary for disposing fairly of the action or of the cause or matter are intended to restrict discovery and cannot be interpreted to extend it.
  94. I am therefore of opinion that we can only affirm the judge's order on a ground on which he did not base it any more than Mr. Justice Robert Goff based his order on it in A v. C, namely the inherent jurisdiction of the court.
  95. Mr. Gatehouse has submitted that the court's inherent jurisdiction is very limited. It has inherent jurisdiction in the four cases which can be derived from the index to the Supreme Court Practice of 1979 and in no others. The first two are its power to strike out or stay proceedings which are frivolous or vexatious or an abuse of its process, two aspects of a jurisdiction now recognized by 0.18 rule 19 and s.4l of the Supreme Court of Judicature Act 1925 respectively. The third is the power to join other persons to proceedings between parties before it, a jurisdiction recognized by 0.15 rule 6(2); and the fourth is the recently assumed power to make preservation and inspection orders under 0.29 rule 2 ex parte in cases of emergency: E.M.I. Limited v. Pandit 1975 1 WLR 302; Anton Piller K.G. v. Manufacturing Processes Limited 1976 Ch.55. But these are, except the last, powers recognized as appertaining to the courts of Chancery or common law before the Judicature Acts of 1873 to 1875, and the Anton Piller injunction is merely an exercise ex parte of an old power, comparable perhaps with the extension made by the Mareva injunction but certainly not with the addition made by the judge's order for discovery.
  96. It is, however, significant that those curious enough to consult the index to the 1976 Supreme Court Practice (Vol.1 p.1728) would find there a reference to the first two instances only of inherent jurisdiction, and the additional references would indicate that the court's inherent jurisdiction may be an uncertain expression loosely used and signifying a discretionary power which may be developed to meet circumstances not known to nineteenth century judges.
  97. Such authorities as China Transpacific Steamship Company v. Commercial Union Assurance Company (1881) 8 QBD 142, Hunnings v. Williamson (1883) 10 QBD 459, North London Railway Company v. Great Northern Railway Company (1883) 11 QBD 30, and in re Wickham, Marony v. Taylor (1887) 35 ChD 272, clearly show what, a hundred years ago judges of the newly constituted Court of Appeal understood to be the effect of the Judicature Acts and the rules made thereunder: the Rules of the Supreme Court did not cover every matter or define the jurisdiction of the Supreme Court completely, but that jurisdiction remained what it was in the hands of the courts of Chancery and common law before the Acts and Rules; what they could do was neither cut down nor extend it thereby. How far those authorities imprison the courts a century later or fossilize their practice is a question which cannot be answered without considering the Anton Piller and Mareva line of cases. But the House of Lords has reiterated the old requirement that injunctions must protect a legal or equitable right, a substantive cause of action in law or equity, in The Siskina 1979 AC 210 and even more recently in Bremer Vulkan Schiffbau und Maschinenfabrik v. South India Shipping Corporation (The Times 27.1.81). Somehow the Mareva injunction must be considered to come within this pre-Judicature Acts restriction, and so the A v. C ancillary order for discovery could also come within it. In my judgment a judge has the duty to prevent his court being misused as far as the law allows, but the means by which he can perform that duty are limited by the authority of Parliament, of the rules of his court and of decided cases. Those means do, however, include what is reasonably necessary to effectively performing a judge's duties and exercizing his powers. In doing what appears to him just or convenient he cannot overstep their lawfully authorized limits, but he can do what makes their performance and exercise effective. He has a judicial discretion to implement a lawful order by ancillary orders obviously required for their efficacy, even though not previously made or expressly authorized. This implied jurisdiction, inherent because implicit in powers already recognized and exercised, and so different from any general or residual inherent jurisdiction, is hard to define and is to be assumed with caution. But to deny this kind of inherent jurisdiction altogether would be to refuse to judges incidental powers recognized as inherent or implicit in statutory powers granted to public authorities, to shorten the arm of justice and to diminish the value of the courts.
  98. Whether the court has inherent or implied power to grant a Mareva injunction in its ordinary form of restraining a defendant from removing his assets outside the jurisdiction or disposing of them within the jurisdiction is no longer an open question in this court, and it has received recognition in Clause 37 of the Supreme Court Bill now before Parliament. There is no statute directly conferring it, like s.37 of the Matrimonial Causes Act 1973. So it must be presumed to have been within s.45 of the Act of 1925, its express words or by necessary implication. Whether the court has such power to make such an order for discovery in aid of such an injunction as was made by Mr. Justice Goff in A v. C is still, however, an open question in this court, because although it has twice been accepted in this court, in neither case was its validity challenged in argument and I was wrong to imply in the latter case that it had been approved in the former: Bankers Trust Company v. Shapira 1980 1 WLR 1274 and Smith v. Hegard & Ors. (unreported) Supreme Court Library Transcript 80/603 decided by a court consisting of Lord Justice Ackner and myself on 7th August 1980. I was also wrong to describe Mr. Justice Goff's order in A v. C in aid of a Mareva injunction as an Anton Piller order: it was an order for discovery and inspection inter partes which purported to be made under s.45 of the Act of 1925 (rightly) and under R.S.C. 0.24 and 026 (wrongly), but not under 0.29 rule 2 as was Mr, Justice Stocker's order under appeal in Smith v. Hegard. That order we set aside as an unjustified "fishing" attempt to restore and "police" a Mareva injunction, which had been discharged, by discovery of dealings within the jurisdiction, to reveal breaches of such a non-existent injunction, or of an undertaking which had been offered but refused, and to secure a form of attachment against a potential judgment debtor which should have been obtained, if at all, by conditional leave to defend in 0.14 proceedings. It was a wrong exercise of jurisdiction, whether or not the judge had it, to pile Piller on Mareva in the circumstances of that case.
  99. In that case both members of this court approved but distinguished Mr. Justice Goff's decision in A v. C as necessary to the proper and effective exercise of the Mareva jurisdiction for the reason (it may have been the second reason) that he gave, which Lord Justice Ackner has read at page 352(g) of the report, namely that the case involved a number of defendants and it was necessary to know the amount standing in their accounts with the identified bank so as to exclude from the restriction of the overall injunction any account or accounts providing monies exceeding the amount of the plaintiff's claim.
  100. Mr. Justice Parker described the respondents' application and his order for discovery as in aid or support of the Mareva injunction and so in a sense they were. But insofar as they relate to the appellant's assets at past dates as distinct from their present whereabouts their purpose seems to be not so much to help the court or the appellant to locate and "freeze" particular assets now, as to open the way to incriminating and ultimately punishing the appellant for contempt of court in formerly disobeying the Mareva injunction and/or breaking his undertaking. This purpose emerges not only from the wide terms of the order but from the judge's comments at the end of his judgment (p.96). To that extent the order goes beyond the legitimate purpose of an order for discovery in aid of a Mareva injunction and Mr. Justice Goff's order in A v. C and is not necessary for the proper and effective exercise of the Mareva injunction.
  101. It was, however, the appellant himself who first made and invited discovery by giving the court information (which was obviously incomplete and evasive) about his assets in his affidavit of 16th April 1980 in support of his application to vary the Mareva injunction. It was that imperfect discovery which led the respondents to apply for the further discovery ordered by Mr. Justice Parker and to the appellant giving further discovery (still imperfect) by his affidavits of 1st and 14th November 1980. Why, matters having gone thus far without apparent objection by the appellant, should they not be pursued to the point of completion required by the judge's order?
  102. In my judgment they have gone far enough in aid of the Mareva injunction and should be pursued or completed, if desired, by cross-examination on the appellant's existing affidavits, not as the judge indicated, on a further affidavit. The appellant has already been warned by the judge that he may possibly be in contempt of court, but on the authorities cited by Lord Justice Ackner that is no reason for not ordering him to attend for cross-examination under 0.38 rule 2(3), though it may enable him to refuse to answer questions put to him in cross-examination. And he is, in my opinion, liable to be deprived of the right given him by the order of 18th April 1980 to take income or possessions out of the jurisdiction unless and until he makes full and proper disclosure of his assets. The judge had jurisdiction to order discovery but exceeded his powers by making the order for discovery under appeal.
  103. For these reasons I feel bound to differ with some hesitation from Mr. Justice Parker's order, particularly as it has been so cogently supported by Lord Justice Griffiths, and to concur with the order proposed by Lord Justice Ackner that the appeal be allowed and with, in substance, all the reasons he gives for that conclusion.
  104. Appeal allowed. Costs of the appeal to be costs in the cause.


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