Kensington International Ltd v. Ics Secretaries Ltd

HCMP2696/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2696 OF 2006

BETWEEN

Coram: Deputy High Court Judge Carlson in Chambers (Open to the public)

Date of Hearing: 28^th May 2007

Date of Judgment: 31^st May 2007

J U D G M E N T

Introduction

1.These are Norwich Pharmacal proceedings brought by the applicant which is a judgment creditor of the Republic of Congo (“the Congo”) for amounts, now with accumulating interest, in the order of between 95 and 100 million United States dollars obtained in the Commercial Court in London.  The respondent provides company secretarial services in Hong Kong.  The first five interveners are all companies for which it provides such services.  The 6th intervener, Monsieur Ollivier, is the controlling shareholder of Pan Africa Consultancy Limited (“Pan Africa”), the 6th intervener.  There is something of a history behind these proceedings which I will need to briefly set out in a moment.  Suffice it to observe at this stage that the purpose of this application is to obtain the identity of and information about the respondent’s clients who are said to be no more or less than emanations of the Congo, presently restricted to these interveners, with a view to perhaps, if appropriate, bringing actions against them on the basis that they hold assets of the Congo which the applicant says should be attached for the purpose of satisfying its judgments against the Congo which has used and continues to use a number of devices to frustrate the applicant’s efforts to be paid what it is entitled to under the judgments. 

The History and the Background

2.Between December 2002 and January 2003, the applicant obtained four judgments in the Commercial Court in London and has since then been trying to enforce those judgments but with limited success.  The nature and the background to these applications, this being the second, appears in the first affidavit of Mr Donald Schwarzkopf sworn on 1 November 2006 (C16-62) (Schwarzkopf 1) in support of the original Norwich Pharmacal application, HCMP2261/2006, which resulted in an ex-parte order made by me on 2 November 2006 (C12-17) and subsequently amended.

3.Schwarzkopf 1 lists 11 separate sets of proceedings brought by the applicant in New York, London, Brussels, Geneva and Bermuda in order to enforce the judgments.  These have taken different forms, appropriate to the particular jurisdictions, against a variety of respondents said to be involved in assisting the Congo to avoid the consequences of the judgments against it.  These proceedings have included asset freezing and garnishee-type proceedings in London, Brussels and Bermuda and a Rico action in the United States, the details of which appear in various parts of paragraph 23 of Schwarzkopf 1.

4.The behaviour of the Congo in relation to the judgments entered against it is fully described in the judgment of Cooke J who, after a trial in London, had to decide whether to make absolute the equivalent of a garnishee order in respect of money owed to the Congo by Glencore, an oil trader.  Paragraph 16 of Schwarzkopf 1 provides a summary of what the judge said in this regard in his judgment of 28 November 2005.  In order to obtain a flavour of and to provide context and background to what has been applied for in this application, I propose to set out paragraph 16 of this affidavit which, in my view, provides a fair summary of what the judge said.

“(a) Congo had engaged in a complex scheme to sell its oil with the deliberate object of evading enforcement of its existing liabilities by hiding its assets from view;

(b) those involved on behalf of Congo in creating and masterminding the scheme had acted dishonestly, creating and using sham companies and transactions which were mere ‘facades’ to avoid enforcement of existing liabilities;

(c) witnesses on Congo’s behalf (including Mr Gokana and Dr Nwobodo) had lied under oath and given other false and misleading testimony.  Mr Gokana had effectively absconded whilst giving evidence, failed to return to England as promised to complete his evidence and also failed to produce the disclosure which the court had repeatedly ordered;

(d) sham companies controlled by Congo had been guilty of wholesale and deliberate failures to make proper disclosure;

(e) Mr Gokana and others had deliberately and dishonestly fabricated evidence;

(f) Mr Gokana and others had deliberately attempted to circumvent and undermine orders of the Commercial Court.;

(g) SNPC and Cotrade SA were part of and had no separate existence from the Congolese state and were to be equated with Congo so that debts owed to either of them are debts owed to Congo.”

5.Subsequently, Morison and Tomlinson JJ’s, also in the Commercial Court in London, made similar findings against the Congo as did Graham J in the Grand Court of the Cayman Islands as well as the Court of Appeal in Paris.

6.On 2 November, I was told by Mr Hunsworth who appeared for the applicant then, as he does today, that the Congo now appears to have established a connection with Hong Kong, having regard to the fact that it has been negotiating with the central government of the People’s Republic of China for significant sales of its oil to the People’s Republic of China.  At this stage, it was believed that the 2nd and 3rd interveners in this application, being Hong Kong companies established by the respondent on the instructions of the Congo’s interests, were being used to facilitate the Congo’s oil trading in this part of the world and that, having regard to the strong findings made in London and elsewhere by judges of those courts, these companies were facades used by the Congo to conceal the identity of the Congo behind these transactions, in turn protecting the proceeds of oil sales from the reach of the Congo’s creditors.  The factual basis for all of this is detailed in Schwarzkopf 1.  Having regard to that evidence, I was persuaded to make the orders asked for in the originating summons.  The order at C6-10 is in common Norwich Pharmacal form, including a gagging order preventing the respondent from informing its principals of the terms and the existence of the order.  I do not propose to rehearse its terms again here.  Its purpose was to require the respondent to provide the applicant with details, including assets and bank accounts of the 2nd and 3rd interveners and of certain named individuals, including the son of the President of the Congo.  That order was subsequently amended as appears at C12-16, limiting in part the scope of the original order and to provide for fortification by the applicant.

7.As a result of the disclosure provided, the applicant was able to discover more companies who it says formed part of a web of deceit, whose purpose is to hide the identity of the Congo and its relationship with the assets of these companies as well as to preserve those assets from the reach of its creditors.  In view of the information provided by this disclosure, further Norwich Pharmacal applications have been made and granted, notably against the Bank of East Asia which has provided banking facilities to some of these companies and individuals.  I hasten to observe that there is no evidence whatsoever, nor is it suggested by the applicant, that the Bank of East Asia has any knowledge of or is in any way a party to the alleged activities of the companies to whom the respondent has or is providing secretarial services.  I should also make clear that Mr Hunsworth is not suggesting that the respondent is in any way mixed up, in any improper way, with its principals’ activities other than providing them with company secretarial services which is of course what it does for a great many companies in the course of its work.

8.In view of the disclosure that has been made, the applicant as plaintiff has brought an action against a number of parties, including some of the interveners, and has obtained worldwide Mareva injunctions with a view to preserving their assets pending trial of the action, by which it hopes to obtain judgment at least in part satisfaction of the outstanding London judgments.  This therefore is how the matter stands as a result of the first round of Norwich Pharmacal disclosure and its consequences.

A Second Application

9.In view of what it has been supplied with as a result of the first summons in HCMP2261/2006, the applicant has now launched a second round of Norwich Pharmacal proceedings, HCMP2696/2006, the summons being at A1-5 dated 22 December 2006 which is the matter before me.  Having regard to the disclosure that had been ordered, Mr Hunsworth submits that he now wishes to achieve three things: firstly, to obtain further information about entities which have come to light as a result of the previous order; secondly, to fill in gaps in previous disclosure by the respondent by focusing on specific categories of documents; and, lastly, to now extend the request to take in the 5th intervener, Pan Africa, and the 6th, Mr Ollivier.

10.This matter first came before me on 27 December, by which time the first four interveners had become aware of the application, having become the subject of a separate action against them, when I gave them leave to intervene and to file evidence if they wished to.  They have elected not to file evidence and their stance, which is to adopt a neutral position in this application, has been the subject of comment by Mr Hunsworth to which I will presently return.  By then, Mr Ollivier had learnt of this application as well and on the basis that he too might wish to be heard, I also gave him and Pan Africa leave to intervene and to file evidence which they have done.

11.Further disclosure was made by the respondent to the applicant’s solicitors on 27 December.  Having considered that documentation, the applicant has taken the view that more is required which is and should be available to the respondent who ought to hand over that information to the applicant if it is to fully comply with its obligations under the first order under HCMP2261/2006.  This has resulted in the applicant’s solicitors writing to the respondent’s solicitors on 6 February 2007, setting out the documentation and information which the respondent ought to have and which it should hand over.  I have been shown that letter which I have found helpful because it also seeks to argue why the documentation and information should be with the respondent and attempts to provide the reasons why it should be disclosed to the applicant.  Mr Hunsworth has used it as the basis of his submissions for disclosure which I will need to examine in due course.

12.The remaining matter which I should refer to is that on 16 May, Mr Ollivier and Pan Africa’s solicitors came on the record and Mr Ollivier filed his affidavit on the same day.  Mr Schwarzkopf swore a further affidavit, Schwarzkopf 2, on 22 May and Mr Ollivier has filed a second affidavit sworn on 26 May.

The Issues

13.This application has required me to examine the permissible scope of a Norwich Pharmacal order.  Summons is objected to on a broad front by Mr Beresford for the respondent and by Mr Sheppard for Mr Ollivier and Pan Africa.  The real substance of their complaint is that the legitimate purposes of a Norwich Pharmacal application have been spent.  The applicant has all the information that it requires and is entitled to.  It has the information it requires with which to sue the parties that it wishes to, and the further disclosure that it requires should and can be obtained in the process of discovery in the separate action that is currently afoot, under which it has obtained its worldwide Mareva injunction.  In order to test the validity of this objection, it is necessary for me to consider, albeit briefly, some decided cases which describe the purpose and the limits of this jurisdiction.

How Far Can A Court Go In Ordering Norwich Pharmacal Disclosure?

14.It is not necessary to go back to the Norwich Pharmacal case itself which explains the basis of the exercise of the court’s powers to order discovery against third parties.  I say that because of the availability of later authority in England and Hong Kong which has acted on what the House of Lords decided in Norwich Pharmacal and applied those principles.  A helpful starting point is the decision of Ma J, as he then was, in A Co v B Co [2002] 3 HKLRD 111.  The judge explained the limits and purposes of this jurisdiction.  The headnote to the report provides a helpful summary of what he said:

“The jurisdiction to grant Norwich Pharmacal relief was wide and not restricted to the disclosure of the names of wrongdoers.  It also extended to the discovery of bank books and documents, to assist the plaintiff in the investigation of the passage of moneys in and out of bank accounts in tracing a claim (Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133 applied; Bankers Trust Co v Shapira [1980] 1 WLR 1274 considered).  (See page 116E-I).

Here, plaintiff has satisfied the requisite threshold in establishing an entitlement to Norwich Pharmacal relief.  A very serious case of breach of fiduciary duty had been made out, a breach in which the defendant had innocently become involved.  A Norwich Pharmacal order was justified as it would enable the plaintiff to trace the passage of the secret commissions so as to enable it to commence proceedings or to preserve assets, whether in Hong Kong or abroad.  (See 119D-E)

All applications for Norwich Pharmacal relief to an extent involved the plaintiff ‘fishing’ for information.  That could not, therefore, and contrary to what the plaintiff argued, by itself be a ground of objection.  It only assumed importance where the plaintiff was unable to demonstrate to the court’s satisfaction that: (a) there was cogent and compelling evidence to demonstrate that serious tortious or wrongful activities had taken place; and (b) a Norwich Pharmacal order would or would very likely reap substantial and worthwhile benefits for the plaintiff (Compagnie Financière et Commerciale du Pacifique v Peruvian Guano Co [1882] LR 11, also Arab Monetary Fund v Hashim (No 5) [1992] 2 All ER 911, Re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563, P v T Limited [1997] 1 WLR 1309 considered).  (See pages 117G-J, 120F-H.)

(Obiter)  In applications for Norwich Pharmacal relief, the persons who had direct knowledge of the relevant facts should be asked to depose to affidavits so that hearsay or multiple hearsay was avoided.  (Page 121C-D.)”

At pages 116J to 118C, the learned judge provided an analysis of how the exercise of the court’s power to make these type of orders is intended to operate, which in turn provides the justification for the making of the order.  This is what he said:

“Though founded ultimately on notions of justice, nevertheless, it is important to emphasise the extraordinary nature of this relief because it is not a usual order and is not one that a court would lightly grant in the absence of powerful factors.  I emphasise the following characteristics of this type of order:

(1) It is made against an innocent party whose only involvement is to become mixed up in the tortious or wrongful activities of others.  There is, at this stage, no evidence of any wrongdoing on the part of the innocent party.

(2) Instead, whatever wrongdoing there is, exists only on the part of a person or persons against whom no relief may be sought at this stage and indeed against whom there is probably insufficient evidence to found an action.  In other words, this person or these persons will most probably not be before the court and would not be able to answer what are often very serious allegations made against them.

(3) Usually, there will, moreover, exist a legal relationship between the innocent person against whom a discovery order is sought and the alleged wrongdoer and this relationship may involve strict duties to be observed on the innocent party’s part.  The present case offers what is a common scenario: the innocent defendant is a bank and the alleged wrongdoers its customers.  In this situation, any discovery to be made by the innocent party may well, apart from a court order, expose that innocent party to liability, both civil and possibly even criminal.  At the very least, a breach of confidentiality is involved.

(4) The court, accordingly, in applications for Norwich Pharmacal relief must, in its discretion, balance the competing interviewees of the victim of the alleged wrongdoing and an innocent party caught up in the wrongdoing.

13. Given these characteristics as I have outlined, such orders are therefore not lightly made as I have said.  In my view, it is essential for the court to bear the following in mind before a Norwich Pharmacal order is made:

(1) There must be cogent and compelling evidence to demonstrate that serious tortious or wrongful activities have taken place.  And where fraud or similar serious allegations are made, the degree of proof must correspondingly be high: see Re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563 at p.586C-H.  All the more so when the alleged wrongdoer is not and will not likely be before the court.

(2) It must also be clearly demonstrated that the order will or will very likely reap substantial and worthwhile benefits for the plaintiff.  Where, as in the present case, the plaintiff is likely to make a tracing claim, there must be a serious possibility that the discovery sought must either allow the plaintiff to preserve what may well be his assets or realistically lead to the discovery of such assets: see Arab Monetary Fund v Hashim (No 5) [1992] 2 All ER 911 at pp.916D-E, 918J-919A.

(3) The discovery sought must not be unduly wide.  There is no entitlement to general discovery (by general discovery is meant discovery in the Compagnie Financière et Commerciale du Pacifique v Peruvian Guano Co [1882-83] LR 11 QBD 55 sense): see Arab Monetary Fund v Hashim (No 5) [1992] 2 All ER 911 at pp.918D-E, 919H.  It follows therefore that not only must any order be specific, it must also be restricted to those or those classes of documents that are necessary to enable the plaintiff to preserve or discover assets.  This is not to say that discovery orders cannot be wide; what is important is that the discovery, whether wide or narrow, is necessary.”

15.This therefore is how a court should approach such an application.  But given the focus of the objection taken by the respondent that the orders now sought are unnecessary because of what has already been provided and that this amounts to an unwarranted second bite of the cherry, I wish to also refer to the decision of Lightman J in the English case of Mitsui & Company Limited v Nexen Petroleum (UK) Limited [2005] 3 All ER 511 where he was required to consider both the necessity for such an order and the availability of other sources of information which the applicant might be able to turn to in order to start its action against any wrongdoers.  Lightman J also had regard to what was said by McGonigal J in Aoot Kalmneft v Denton Wilde Sapte [2002] Lloyd’s Reports 417-423 which was as follows:

“In Norwich Pharmacal the information required was the identity of the wrongdoer (the applicant knew what wrong had been done but not who had done it) but I see no reason why the principle is limited to disclosure of the identity of an unknown wrongdoer and does not extend to information showing that he has committed the wrong.

The information held by the respondent may not conclusively reveal an alternative defendant to one of the alleged wrongdoers nor conclusively disclose who received any part of the prepayment moneys, but I am satisfied that there is a sufficient prospect that the information they hold will assist the applicant in its search for wrongdoers and the funds paid away to justify making the orders sought.

The potential advantages to the applicant of seeing this part of the jigsaw and the potential disadvantages in being denied a sight of that part outweigh, in my view, any detriment to the respondent.”

From this, Lightman J made the following observations at page 518E-F.  He said this:

“The three conditions to be satisfied for the court to exercise the power to order Norwich Pharmacal relief are: (i) a wrong must have been carried out, or arguably carried out, by an ultimate wrongdoer; (ii) there must be the need for an order to enable action to be brought against the ultimate wrongdoer; and (iii) the person against whom the order is sought must: (a) be mixed up in so as to have facilitated the wrongdoing, and (b) to be able or likely to be able to provide the information necessary to enable the ultimate wrongdoer to be sued.”

In relation to persons who are mere witnesses, innocent of any participation in the wrongdoing being investigated, the learned judge was satisfied that this would be a remedy of last resort.  He described it as follows at page 519A-C:

“The jurisdiction is only to be exercised if the innocent third parties are the only practicable source of information.  The whole basis of the jurisdiction against them is that, unless and until they disclose what they know, there can be no litigation in which they can give evidence; see e.g. Lord Kilbrandon in Norwich Pharmacal.  Whilst there is a public interest in achieving justice between disputing parties, there is also a public interest in not involving third parties if this can be avoided: see Donaldson MR in Harrington v North London Polytechnic [1984] 3 All ER 666 at 670-671.  The jurisdiction is both exceptional and only to be exercised when it is necessary; Lord Woolf CJ in Ashworth Hospital Authority v MGN Limited [2002] 4 All ER 193.  The necessity required to justify exercise of this intrusive jurisdiction is a necessity arising from the absence of any other practicable means of obtaining the essential information.”

Now, from all of this, it must follow that the court is enjoined to consider whether the applicant as plaintiff is able to proceed in an action and obtain the necessary information in the course of discovery in that action which is what the respondent and the 5th and 6th interveners are suggesting it should do.

16.These are, I apprehend, the principles which should guide me in my consideration of Mr Hunsworth’s application and the objections that are being taken against it.

The Respondent and the First Four Interveners

17.Mr Hunsworth has, I think rightly, divided up the matter by firstly inviting consideration of the cases of the respondent and the first four interveners, all of whom have been provided with company secretarial services by the respondent.  In this regard, he has commented on the curious position adopted by the four interveners who have taken a completely neutral position, leaving it to the respondent to make the going.  The first three interveners are represented by Mr Gall, the 4th by Mr Payne.  The first three through their solicitors have written two letters dated 15 February 2007 and 23 May 2007 which set out their position.  Mr Payne for the 4th intervener adopts the same stance.  Broadly speaking, their positions are that now that an action has been launched, all of the information which is sought should be obtained on discovery in the main action.  This being their view and because the discovery summons will be heard as soon as tomorrow, four days after the hearing of the summons before me, their neutral stance is perhaps understandable.  This neutrality cannot really assist Mr Hunsworth who must still succeed on the merits against the respondent.

18.Returning to the applicant’s solicitors’ letter of 6 February 2007 which, as I have already said, proposes to make out the applicant’s case for further disclosure by the respondent, I have decided to annex its relevant parts to this judgment which will avoid the necessity of having to provide in effect chapter and verse in respect of each request against each of the companies or parties from whom disclosure has been asked for.

19.Mr Beresford, in opposing what is asked for, has by helpful diagrammatic comparison invited me to compare the summons in HCMP2261/2006 with this one.  Having done that exercise, he submits that there is very little difference between the two summonses.  To a very large extent, that is right.  What he gets from this is a submission that the present summons is in effect a duplication of the previous one, the second-bite-of-the-cherry argument, and therefore that it would not be right to vex the respondent with in effect an identical, very time-consuming, exercise which will produce nothing further of substance.  This also is the foundation of submission by him that this summons amounts to an abuse of process, having regard to the fact that much that is now being requested could and should have been asked for in the earlier summons.  In this regard, he relies on the Privy Council decision in Yat Tung Investments Company Limited v Dao Heng Bank Limited [1975] AC 581 and the other cases of like effect referred to in the opinion of Lord Kilbrandon.  Mr Beresford has also complained that this summons is unnecessary, that everything could have and should have been brought under the liberty-to-apply provisions in the original summons.

20.In attending to these submissions, what one needs to remember is that a Norwich Pharmacal application will and frequently does produce consequential applications against the party to whom it was originally addressed and will also result in subsequent and consequential applications against other parties as it has in this case, for example, the Bank of East Asia. 

21.In my judgment, Mr Beresford is correct in submitting that it was not necessary to issue a second application.  This could all have been done under the original summons by restoring it, supported by further evidence and skeleton argument.  But this error is merely procedural and can be dealt with by an order in costs.  It is not something which is substantively fatal for the applicant.  I can and will deal with the contents of the second summons on its merits.

22.Secondly, I do not believe that when one considers the substance of what has been asked for, that these requests could and should have been asked for first time up.  It is only now when the applicant has looked at what has been provided that it is suggesting that disclosure is or may be incomplete.  An applicant in these circumstances is to a great extent coming to court without a precise knowledge of what a respondent has in its possession.  The applicant will and must be able to provide a good prima facie case saying that the material asked for is in the respondent’s possession, but not knowing the full picture. An applicant cannot be expected to request everything that may be relevant.  This is frequently the case in discovery applications and also here.  Once the first round is over, only then can an applicant say that it must be the case that further material is in the respondent’s possession which it should also disclose.  This, I believe, is what has happened in this case.  I therefore reject the submission that these further requests amount to an abuse of process.  What this summons amounts to is a request for further, more specific and complete disclosure, and this being so, I am not surprised that the two summonses are very similarly worded.  Had Mr Hunsworth restored his original summons, this point by Mr Beresford would not have surfaced.

23.From this, I come to the real argument which is about the necessity for this disclosure.  Does the applicant already have enough to prosecute its action against the defendants in the action that it has brought?  In order to answer that question, one needs to understand what has already come into its possession under the first order and to, of course, consider what is now being sought as appears in the summons and in the letter of 6 February 2007 (annexed).

24.Mr Hunsworth submits that the applicant is pursuing a legitimate purpose in asking for the additional information in this summons.  He cites Schwarzkopf 1, paragraph 24, that the legitimate purpose is “to identify those involved (and the precise nature and extent of their investment) in assisting the Congo in its dishonest and unlawful attempts to evade enforcement of the judgments.”  He submits that the provision of this information may enable the applicant to institute proceedings against additional parties who have allied themselves with the Congo and to enable it to obtain information about the “flow of funds and the location of assets which it may be able to attach by way of enforcement of the English judgments.”

25.As to the submission made by Mr Beresford and adopted by Mr Sheppard that much of this will come from discovery in action HCA2695/2006 in which the first four interveners are defendants, Mr Hunsworth submits that this would be too restrictive because in a Norwich Pharmacal application, the applicant would be entitled to try and have reconstructed a full picture from the documents in the respondent’s possession of the links between all the entities connected to the Congo in this matter.  These links are said to include who are the people behind the companies, who give the instructions, the business transactions of these companies and the payments between these companies, an example of which are payments by Pan Africa to E. Investments Limited (the 5th and 4th interveners) as identified in Schwarzkopf 2, paragraph 4 (bundle A, tab 7).

26.This might seem to be straying far and wide into the affairs of perfectly innocent individuals and companies.  Why should their affairs be looked into by strangers?  In this regard, Mr Hunsworth has relied on Manufacturers Life Insurance Company of Canada v Harvest Hero International Limited [2002] 1 HKLRD 828.  He relies on what Rogers VP said at 838E:

“Part of the information the plaintiff seeks is the identity of all unidentified persons in the chain of control of these companies leading back to G (in this case the Congo).  As a matter of principle, there is no reason why the plaintiff is not entitled to know all others besides G (the Congo) implicated in the wrongdoing.”

Whilst this may be said to provide the justification for Mr Hunsworth’s summons, it certainly cannot give carte blanche to make orders just because such orders may lead to the discovery of wrongdoers besides the Congo.  The court, it seems to me, is bound to control the level of disclosure to what is reasonably necessary to achieve that purpose provided it is shown that this information is likely to be in the possession of the respondent and the applicant could not achieve the same result through the process of discovery in HCA2695/2006. 

27.Mr Beresford has submitted very persuasively that to order this further round of disclosure would be setting a very bad precedent indeed and place organisations such as the respondent, banks, accountants, solicitors and others like them in a most invidious and difficult position vis-à-vis their clients.  That is a perfectly understandable submission, but the safeguards are provided by the court in scrutinising every such application with care to ensure that only what ought to be disclosed should be disclosed.  This is a draconian jurisdiction which is carefully policed by the court as it does with other ex-parte applications such as Anton Piller and Mareva proceedings.  Every application needs to be decided on its own merits.

28.I have considered each request made in the summons as enlarged upon in the letter of 6 February 2007 and it seems to me that in every instance, the orders sought by the applicant against the respondent are proper and reasonably necessary.  It strikes me that these orders serve a legitimate purpose as contemplated by the Norwich Pharmacal case.  Inevitably, there is going to be an element of overlap between the discovery process in the action and the disclosure asked for in this summons.  This application is more extensive, but given its legitimate purpose, it ought to succeed for the reasons that I have just given.

The 5th and 6th Interveners

29.Mr Ollivier is undoubtedly a highly thought-of person in many parts of Africa and his connections are of the highest order.  He would appear to be a trusted, highly valued adviser and confidant to the governments of a number of countries in that part of the world.  This has been recognised in his own country which has bestowed him with the rank of a Chevalier of the Legion of Honour, one of its great decorations, as have other countries in Africa, including the Republic of South Africa which has honoured him with the rank of a Grand Officer of the Order of Good Hope.

30.Nevertheless, the applicant says that there is another side to him which operates in the shadows as a facilitator of dubious schemes, including assisting the Congo in evading its lawful debts.  I have been shown published articles which serve to denigrate him and others which speak well of him.  At this stage and in this type of proceeding, it is unwise and indeed wrong for me to attach any weight to the articles which speak badly of him.  This is not the forum nor the procedure for deciding issues of character.  What is clear is that he is a heavyweight, if I can so describe him, in the business and politics (and that is with a small “p”) of a number of African countries which he knows well and with which he is very well connected.  His decorations and honours speak for themselves.

31.All this said, this does not provide him with any sort of immunity to an order of the type that is asked for by the applicant.  His case and that of Pan Africa, his company, must be judged on their merits as required by the jurisdiction as I am now exercising.

32.Equally, perhaps on a tit-for-tat basis, Mr Sheppard, his counsel, has referred to the applicant’s position as a vulture fund whose activities, in common with other similar funds, tend to undermine the aims of the United Nations and the governments of the world’s leading economic powers to relieve debt in Africa.  I have to say that these sort of considerations cannot sound in what I am required to do in exercising this jurisdiction.  This is a perfectly legitimate application by the applicant and I can only test it on its legal merits as I think I have already made clear.

33.Turning to the merits in relation to the 5th and 6th interveners, it seems to me that there is more than ample evidence in Mr Schwarzkopf’s affidavits and what has already been disclosed to demonstrate a very clear relationship between them and other parties which have already emerged from previous disclosure by the respondent, the latter being parties with clear connections to the Congo’s oil-trading activities, in order to justify the orders for disclosure asked for by the applicant from the respondent in relation to the affairs of these two interveners as well, so that this order will also go to require the respondent to provide the disclosure asked for concerning these two interveners in the present summons.  Mr Sheppard has suggested that the orders already made should be set aside and not restored because of a failure by the applicant to make full and frank disclosure at the ex-parte stage, but it seems to me that Mr Hunsworth is right in saying that this particular limb between the applicant and Mr Sheppard’s clients has always been on an inter-partes basis.  So that submission cannot succeed.

Time and Form of Response

34.It seems to me that whilst I am to make an order in terms of the summons, the time for disclosure, which should be by affidavit, will be within 14 days rather than 7.  Where no documentation is available, then the deponent of the affidavit should verify that fact.  It also seems to me that it would be helpful to follow the format of the questions raised in the letter of 6 February to provide the information where it is available, or when none exists, to say so.  Additional provision will need to be made in the affidavit for the cases of the 5th and 6th interveners.

35.I also wish to say that just because an order has been made does not for one moment imply a finding of wrongdoing against any company or individual.  That conclusion could only follow a trial in separate actions if they come to pass.

Costs

36.As between the applicant and the respondent, the usual order should apply on the costs of providing the information that has been ordered, which is that the applicant will indemnify the respondent for its costs. 

37.As to the litigation which has resulted in this order, it seems to me that the respondent has behaved perfectly reasonably in resisting the summons, and although it has failed, it should not lose its shield in respect of costs.  Considerable latitude should be accorded to a respondent in a matter such as this and I propose to say that it should also have its costs in resisting the summons but on this occasion only on a party-and-party basis.  It seems to me that to go further on the basis of taxation and order an indemnity would not be right.  As to the costs of the summons itself where, in my view, what should have happened is that the applicant should have merely restored the original summons, any costs incurred over and above what would have been incurred had the applicant merely restored the original summons should also be to the respondent if such an order will result in it getting more than I have already awarded it under the two orders for costs that I have just made.

38.As between the applicant and the first four interveners who have adopted a neutral position, I would have thought that the appropriate order is to say no order as to costs.  As between the applicant and the 5th and 6th interveners, although they have contested the matter and failed, I also think costs should lie where they have fallen.  Therefore, no order as to costs.  The nature of these proceedings is sufficiently unusual to call for different treatment from ordinary hostile litigation.  I do not consider that these two interveners have acted unreasonably in resisting the summons and should not therefore be penalised in costs.  All of these orders for costs will be orders nisi.

Liberty to Apply

39.Finally, there will be liberty to apply.  I will give all parties liberty to apply as to the form and implementation of the order.

Nicholas Hunsworth, of Messrs Johnson, Stokes & Master, for the Applicant

Roger Beresford, instructed by Messrs Robertsons, for the Respondent

Nicholas Gall, of Messrs Laracy Gall, for the 1st, 2nd and 3rd Interveners

Gregory Payne, of Messrs Tanner De Witt, for the 4th Intervener

Andrew Sheppard, instructed by Messrs Kennedys, for the 5th and 6th Interveners

Annex

We have reviewed the documents with our clients and it is evident from the documents disclosed there must be other documents in ICS’ possession, custody or power which are discloseable pursuant to the Order.  We write to identify as best we can the nature and categories of such documents, by reference to each company, and to ask that ICS revisit its books and records to produce copies of these documents.

Before condescending to details, may we make two general points?

First, our clients have issued a second Norwich Pharmacal application against ICS in HCMP2696/2006.  The relief sought in paragraphs 1(a) to 1(g) of the originating summons is in broadly similar form to that in paragraphs 1(a) to 1(g) of the Order save that it relates to specific, named entities being those companies to whose identity our clients were alerted by the first tranche of disclosure:  Long Beach, EIL, Itunde and BCL.

This second application was issued because it was obvious from the first tranche of disclosure there were considerable gaps in the disclosure relating to Long Beach, EIL, Itunde and BCL.  A number of these gaps have now been filled by the second tranche of disclosure which was received by us on the morning of the hearing before Deputy Judge Carlson on 27th December 2006.  However, there remain further gaps which we identify below.

Additionally, the Order had a “commencement date”, for want of a better expression, for disclosure being March 2004.  This date pre-dated the incorporation of both Cotrade Asia and HVL.  However, from documents disclosed, both Long Beach and EIL were incorporated long before that.  The second application therefore pushes back the commencement date for disclosure.

We understood your counsel to be saying at the hearing on 27th December 2006 that the second Norwich Pharmacal application in HCMP2696/2006 was unnecessary because the relief sought (leaving aside for the moment paragraph 1(h) of the originating summons) was already covered by the Order.  To be perfectly frank, our clients do not mind pursuant to which application disclosure is given:  they are interested only in the disclosure not the technical question of whether the disclosure should properly be given under the Order or under any new order to be made in HCMP2696/2006.  If our clients are able to get from ICS the totality of documents which are in ICS’ possession which relate to the various companies, our clients will be quite content to abandon significant portions of the relief sought in HCMP2696/2006.

Secondly, the only documents disclosed by ICS to date have been paper ones.  In this age of electronic communication, we find it almost inconceivable there has not been a single electronic communication between ICS and the principals of the companies, in particular Mr. Sassou-Nguesso and Mr. Elenga.  We are sure we do not need to remind you the term “documents” extends to electronic communications c.f. the note at Order 24/2/2 Hong Kong Civil Procedure 2007.

We turn now to the individual companies.  Where we identify a document or category of documents which we say should be in ICS’ possession, please take it as read that we wish to be provided with a copy.  This will save us from repeating for each item the mantra “Please provide us with a copy.”

Cotrade Asia

1. There is no Agreement for the Provision of Services between ICS and Cotrade Asia.

2. HVL owns 60% of the shares of Cotrade Asia.  HVL is ultimately beneficially owned by Mr. Moussengo-Alilo via the vehicle of Michigan.  Is there any Declaration of Trust by HVL in favour of Mr. Moussengo-Alilo?

3. On 3rd December 2004, the Board of Directors of Cotrade Asia resolved to open two bank accounts with Bank of East Asia Limited (“BEA”).  The accounts signatory was resolved to be Orient Investments Limited (“Orient”).  Orient, like its sister company Pacific Investments Limited (“Pacific”), is a company in the ICS Group which provides nominee services for clients of the ICS Group (c.f. paragraph 13 of the affidavit of Ms. Thomson sworn in HCMP2261/2006 on 13th November 2006).

4. In order to open the bank accounts at BEA, there must have been communications between Orient and BEA.  These are discloseable under any one of paragraphs 1(b), 1(c) and 1(f) of the Order.  (You will recall the original order of Deputy Judge Carlson specifically named Orient and Pacific but references to these companies were deleted by agreement after Ms. Thomson explained in her affidavit these were companies in the ICS Group which provided nominee services to clients.  However, we maintain that documents generated by Orient and Pacific on behalf of the companies covered by the Order are discloseable as being within the knowledge of ICS, as ICS must have knowledge of the activities of fellow members of the ICS Group on behalf of clients.  So that this point is clear beyond peradventure, we have sought further relief in the terms of paragraph 1(c) of the originating summons in HCMP2696/2006 but if your clients are prepared to accept a disclosure obligation which embraces Orient and Pacific in the manner we have set out, again we do not need to pursue this part of HCMP2696/2006.)

5. Once the bank accounts were opened, BEA would have sent bank statements to the authorised signatory, Orient.

6. To the extent the bank accounts were operated by Orient, there would have been two sets of instructions.  First an instruction to Orient to operate the accounts (whether a receipt or a withdrawal) which presumably came from one of the individual directors, Mr. Sassou-Nguesso or Mr. Elenga.  Secondly, an instruction to BEA to receive or pay the money.  Both sets of instructions are discloseable under any one of paragraphs 1(c), 1(f) or 1(g) of the Order.

7. The written resolution of directors dated 8th October 2004 was presumably not prepared by your clients but by Cotrade Asia’s company secretary, Golden China Consultants Limited.  Less than two months later, there is a board meeting at your clients’ offices on 1st December 2004 whereby Orient and Pacific are appointed directors and ICS secretary of Cotrade Asia.  There were presumably written or electronic communications between ICS and the principals of Cotrade Asia, Mr. Sassou-Nguesso and Mr. Elenga, and possibly other people, as to ICS’ retainer as company secretary, the appointment of Orient and Pacific as directors and the provision of corporate nominee services generally which are discloseable.

8. ICS has disclosed a BEA Corporate Customer Information Sheet dated 3rd December 2004.  This is signed by Orient on behalf of Cotrade Asia.  It describes Cotrade Asia’s main business activities as :-

“- Trading crude oil, gas and related products (mogas jet, gasoil and kerosene) in Congo

- Buy or sell oil from South Africa to Asia”

Presumably, Orient was given this information by some means of written or electronic communication which is discloseable.

9. HVL was appointed a director of Cotrade Asia at a board meeting held at ICS’ offices on 10th April 2006.  Again, there were presumably written or electronic communications between ICS and the principals of Cotrade Asia.

10. ICS has disclosed a contract dated 1st October 2004 between Cotrade Asia and Unipec for the sale of oil.  Interestingly, the contract was signed by Mr. Sassou-Nguesso on behalf of Cotrade Asia before Cotrade Asia was even incorporated.  Can ICS please confirm it has searched for any other documents generated before Cotrade Asia was incorporated because the people at ICS undertaking the search may, not unreasonably, have thought there was no point looking for documents prior to the date of incorporation.

11. Our clients believe Cotrade Asia may have been interposed in a number of oil trading transactions involving the Congo.  Please can ICS produce all documents in its possession relating to oil trading.  As an example of a document we suspect ICS has in its possession, we enclose a copy of an invoice dated 31st March 2006.

HVL

1. Whilst ICS has disclosed a Service Agreement between HVL and ICS Trust (Asia) Limited (“ICS Trust”), this was not entered into until 10th April 2006.  HVL was incorporated on 15th March 2004 and its first board meeting was on 3rd December 2004.  There was presumably an Agreement for the Provision of Services between ICS and HVL in place in 2004.  There may also have been a Declaration of Trust in favour of a principal in 2004.

2. As with Cotrade Asia, the Board of Directors resolved on 3rd December 2004 to open two bank accounts with BEA where, again as with Cotrade Asia, the authorised signatory was resolved to be Orient.  The same documents for HVL were presumably generated as are listed under paragraphs 3, 4 and 6 above under the heading “Cotrade Asia”.  Such documents are discloseable.

3. Again, as with Cotrade Asia, there were presumably written or electronic communications between ICS and the principals of HVL, the identities of whom before April 2006 are not disclosed, as to ICS’ retainer as company secretary, the appointment of Orient and Pacific as directors and the provision of corporate nominee services generally.  These are again discloseable.

4. Again, there is a BEA Corporate Customer Information Sheet in identical terms to that of Cotrade Asia (see paragraph 8 above).  The same information for HVL listed in paragraph 8 above is discloseable.

5. In April 2006, Mr. Moussengo-Alilo is appointed a director and becomes the stated principal behind HVL.  There were presumably written or electronic communications leading up to the execution of Service Agreement and the appointment of Mr. Moussengo-Alilo as director in April 2006.  These are discloseable.

Itunde

1. Itunde was incorporated on 22nd April 2006 with Orient and Pacific as it directors and ICS its secretary.  The principal behind Itunde is Mr. Denis Gokana.  Any written or electronic communications from or to Mr. Gokana relating to the establishment or operation of Itunde are discloseable.

2. Does Itunde have a bank account?  If so, any documents in ICS’ possession relating to its establishment and operation are discloseable.

Long Beach

1. The Company Information Sheet records an account was opened at BEA on 17th November 2003 with the Account Type/Currency being described as “Statement Savings Account/MYC”.  Are we to take this phrase as shorthand for what BEA calls the account,namely, a Multi-Currencies Saving Account?

2. There is no resolution of the Board of Directors of Long Beach resolving to open the account with BEA.

3. As with Cotrade Asia and HVL, Orient is the authorised signatory.  Whilst ICS has disclosed copies of the bank statements from 31st March 2004 to 31st October 2006, there has been no disclosure of any communications between Orient on the one hand and BEA and, the principal, Mr. Sassou-Nguesso, on the other as to the opening and operation of the account.  There are numerous transactions, both receipts and withdrawals, recorded in the bank statements.  The written and/or electronic communications relating to such transactions are discloseable.  (At present, under the Order, they are discloseable from March 2004 onwards.  However, our clients seek disclosure from the date the BEA account was opened in November 2003.)

4. ICS disclosed a BEA Corporate Customer Information Sheet dated 10th November 2003.  This is signed by Orient on behalf of Long Beach.  It describes Long Beach’s main business activities as :-

“Trading crude oil, gas and products (mogas, jet, gasoil, kerosene) in Congo.”

Was this information given to Orient by a written or electronic communication?  If so, such communication(s) is discloseable.

5. ICS has disclosed three Consulting Agreements and board minutes approving the entry into such Agreements with the following parties on the following dates :-

Parties	Date of Agreement	Date of Board Minute
Sphynx Bermuda Limited/EIL	16th March 2004	5th July 2004
Tacoma Trading Limited	10th January 2005	16th March 2005
X Oil International Limited	10th January 2005	16th March 2005

These Consulting Agreements envisage Long Beach providing ongoing services to the counterparties to the Agreements.  Did ICS receive any documents, written or electronic, either in the period leading up to the execution of these Agreements or regarding the ongoing services to be provided under the Agreements?

6.      We assume, as with Cotrade Asia and HVL, there must have been written or electronic communications between ICS and Mr. Sassou-Nguesso in respect of the original retainer of ICS to provide corporate nominee services for Long Beach and, subsequently, in respect of any matter which was not otherwise formal.  By formal we mean ICS presumably can undertake standard corporate nominee services (holding an EGM, renewing a Business Registration Certificate, etc.) without needing the instructions of a principal.  However, to approve the entry into Consulting Agreements, for example, would require an instruction from the principal.

EIL

1.      The EIL Company Information Sheet records the same type of account being opened at BEA as with Long Beach.  The date of opening of the account was 24th June 2002.  Again, there is no board resolution authorising the opening of the account.

2.      Again, Orient is the authorised signatory.  ICS has for some reason disclosed bank statements from 31st August 2005 to 31st October 2006 when, pursuant to the Order, the obligation was to disclose statements from March 2004.  We are puzzled at this because ICS must have the statements as Orient has all along been the authorised signatory.  Nevertheless, this is now academic as our clients have obtained the statements from BEA pursuant to a separate Norwich Pharmacal application.

3.      However, as with Long Beach, there has been no disclosure of any communications between Orient on the one hand and BEA and the principal, Mr. Elenga, on the other as to the opening and operation of the account.  Again, as with Long Beach, there are numerous transactions recorded in the statements and the communications relating thereto are discloseable.  (Again, as with Long Beach, the cut-off date for the Order is March 2004 but our clients seek disclosure from the date the account was opened in June 2002.)

4.      There is no BEA Corporate Customer Information Sheet for EIL.  Presumably one was prepared.

5.      EIL is a party to the Consulting Agreement of 10th March 2004 with Sphynx Bermuda Limited and Long Beach.  The same disclosure point applies as in paragraph 5 under the Long Beach heading above.

6.      Again, as with Long Beach, there must have been communications between ICS and Mr. Elenga in respect of non-formal matters relating to EIL.  Such communications are discloseable.

BCL

1. BCL was incorporated on 30th September 2005 with Orient and Pacific as its directors and ICS its secretary.  The principal behind BCL is Mr. Elenga.  Any written or electronic communications from or to Mr. Elenga relating to the establishment or operation of BCL are discloseable.

2. BCL has a bank account at BGFI Bank of Brazzaville.  Were any statements from this account, or any other documents relating to the account, sent to ICS?  If so, they are discloseable.

Michigan

1. According to the Company Information Sheet, Michigan was incorporated on 10th April 2006.  Orient and Pacific are its two shareholders and two directors.  No board minutes have been disclosed although we assume there was a first board meeting as with the other companies.

2. The principal behind Michigan is Mr. Moussengo-Alilo.  Any written or electronic communications from or to Mr. Moussengo-Alilo relating to the establishment or operation of Michigan are discloseable.

3.  Does Michigan have a bank account?  If so, any documents in ICS’ possession relating to its establishment and operation are discloseable.