EXTRACTS FROM CASES ON MAREVA INJUNCTIONS ALSO KNOW AS ANTI-DISSIPATIONS ORDERS

Transcription

1 EXTRACTS FROM CASES ON MAREVA INJUNCTIONS ALSO KNOW AS ANTI-DISSIPATIONS ORDERS We are often asked whether a client can obtain an Order from the High Court to prevent a debtor from selling or disposing of assets whilst the creditor is engaged in litigation with the debtor for the recovery of amounts claimed by the creditor. Below are extracts from some of the Judgments of the Botswana Courts dealing with this issue. AC Braby Botswana v Botswana Telecommunications Corp 2007 (1) BLR 440 CA at page 459 That was a case of an application for what is known as a Mareva injunction, which is an order forbidding a defendant from disposing of property pending a decision of the court in the action against him. As Lord Donaldson's lengthy opinion shows, such an injunction is only to be granted after full consideration of the circumstances and it is important that the injunction should clearly identify what the defendant is prohibited from doing. The full test of the relevant passage from the judgment reads: 'The fundamental principle underlying this jurisdiction is that, within the limits of its powers, no court should permit a defendant to take action designed to ensure that subsequent orders of the court are rendered less effective than would otherwise be the case. On the other hand, it is not its purpose to prevent a defendant carrying on business in the ordinary way or, if an individual, living his life normally pending the determination of the dispute, nor to impede him in any way in defending himself against the claim. Nor is it its purpose to place the plaintiff in the position of a secured creditor. In a word, whilst one of the hazards facing a plaintiff in litigation is that, come the day of judgment it may not be possible for him to obtain satisfaction of that judgment fully or at all, the court should not permit the defendant artificially to create such a situation.' It is particularly to be noted that the Master of the Rolls was discussing the question of the circumstances in which a Mareva injunction might be granted and the considerations relevant to the decision whether or not to grant such an injunction. There is not the slightest suggestion in the case that a defendant might be held to be under any restriction in dealing with his property before the injunction has actually been granted. Once that is understood, it becomes clear, in my opinion, that the judgment is not relevant to any question of 'constructive' contempt. It is also clear, in my opinion, that the reference to Derby & Co v Weldon in Ex parte Muboyayi was introductory and did not carry any implication that, in ordinary civil proceedings, a mere application to the court, or notice of such an application, places a person who has notice of it under any duty to act or refrain from acting. The judgment in Ex parte Muboyayi is also long and complex and does, of course, deal with the circumstances in which a person threatened with deportation can be said to have come under the protection of the court. I do not think that it is necessary to analyse it any further: it is enough to say that there is nothing in it to support the concept of 'constructive' contempt in civil proceedings. ULC v Ray s Transport 2001 (2) BLR 82 HC

2 Over the years courts in South Africa had to deal with several cases on such type of application dating back as early as The latest of such decided cases is the case of Knox D'arcy Ltd and Others v. Jamieson and Others (1994) (3) S.A. 700 (W), where at pp. 705H-706E Stegmann J. had this to say: "Interdict in securitatem debiti The sudden adoption of the new English law terminology [Mareva Injunction] in this country would tend to obscure the fact that the equivalent remedy provided by our own common law is of a truly ancient origin, with its roots in the civil law. It is in fact a well-established, if not yet very frequently used, weapon in our legal armoury. It is an interdict based entire on civil law principles, but it suffers the minor disability of lacking a distinctive name.... The essential purpose of the interdict in question is to prevent a person, (the intended defendant), who can be shown prima facie (a) (b) (c) to have no bona fide defence against an apparently valid claim by another (the plaintiff); to have assets within the jurisdiction of the Court...; and to have an intention to defeat the plaintiff's claim, or to render it hollow, by secreting his (the intended defendant's) assets in any of a number of ways (for example, by apparently or actually disposing of them or by removing them beyond the jurisdiction of the Court), from successfully defeating the ends of justice, provided that the plaintiff can show a well grounded apprehension of irreparable loss. The measure is in substance an interdict in securitatem debiti...." See also Bester v. van Niekerk 1960 (2) S.A. 363 (E) at p. 365H. Cerimele Construction v Joint Venture Morteo Condottee 1995 BLR 399 HC The applicant applied for an interdict restraining the respondent, a construction company incorporated in Italy, from disposing of or removing its assets from Botswana pending arbitration proceedings between the parties. After the respondent had filed its notice of opposition, the applicant accelerated matters by bringing an identical urgent application. The basis for the urgent application was that an undertaking sought by applicant that the respondent would not remove its assets had not been forthcoming. The gravamen of the applicant's case was that it had a claim for a sum exceeding P 7 million arising out of a subcontract concluded between the parties against the respondent. The claim was disputed by the respondent and the applicant had submitted the matter to arbitration. The applicant alleged that it had a settled fear that the respondent, a peregrinus, would decamp without paying. Hence, it sought an order in the form of a Mareva injunction. The respondent filed a supplementary affidavit in which it set out the various hardships that would befall it and certain third parties if the court were to grant the order sought. Held, dismissing the application: (1) what the applicant was seeking was called an anti-dissipation interdict in securitatem debiti in South Africa and a Mareva injunction in England. It could

3 be accepted (without deciding) that such an interdict was not available where the subject-matter of the dispute was subject to arbitration. The South African legal position as to when such an interdict was granted was preferable to that pertaining in England subject to particular circumstances applying as set out in Third Chandris Shipping Corporation and Others v. Unimarine S.A. [1979] 2 All E.R. 972 (Q.B.D.) at 984. Knox D'Arcy Ltd. and Others v. Jamieson and Others 1994 (3) S.A. 700 applied. (2) It did not appear that the respondent had no defence to the claim. The issue was the subject of an intended arbitration, and in any event, the lack of a bona fide defence was not the only requirement upon which the court could base its judgment. It was in addition common cause that the respondent had assets within the jurisdiction of the court, and there was nothing in the papers to show that the respondent intended to make away with its assets in order to defeat the applicant's claim. Nor was there evidence to show that the respondent had an intention to defeat the applicant's claim. The contract was still under way and there would be commitments for several months to come. In addition the respondent would suffer various hardships if the order were granted. Accordingly, the application had to be dismissed with costs. A. Is the interdict of the kind sought by the applicant The applicant says the kind of interdict that it seeks is available. I was referred to a series of cases which dealt with such an interdict sometimes called interdict in securitatem debiti, it has also recently been named "anti-dissipation interdict" in preference to the English name "Mareva injunction". In the case of Sherras v. Van der Byl 26 (1909) S.C. 508 it is said that the Court will not "as a rule make an order H for the attachment of any money belonging to a respondent in the hands of the third parties before judgment has been obtained against him, but will do so where respondent is endeavouring to dispose of the money in order to defeat a creditor". The Mareva injunction procedure in so far as English law and equity is concerned, has the effect of enabling a creditor in a proper case to stop his debtor from parting with his assets pending trial of an action. The High Court in England, so it is said, has the jurisdiction to grant a Mareva-type injunction because it is grounded on an Act of Parliament passed in 1873-see Third Chandris Shipping Corporation and Others v. Unimarine S.A. [1979] 2 All E.R. 972 (Q.B.) at BLR p407 GAEFELE AG J I am in this case inclined to accept the South African legal position in so far as the anti-dissipation interdict in securitatem debiti is concerned. Such is the name preferred by Stegmann J. in the case of Knox D'Arcy referred to earlier. I am in agreement with the general observations regarding English and S.A. law made by the learned judge in that case and for my part I do not think that commercial activity in this country at the present moment is such that we can adopt the use of the English Mareva injunction, save where on the facts of a particular case such guidelines as pronounced by Lord Denning M.R. in the Third Chandris Shipping Corporation case could be adopted with necessary modifications. The guidelines for the appropriate exercise of the relevant discretionary powers of court are set out at p. 984 of the judgment of Lord Denning M.R. For purposes of this judgment it is not necessary to discuss those in extenso.

4 I have found nothing in the present application which brings its facts close to the factual situation in the case of Knox D'Arcy Ltd. I have already outlined in the beginning of this judgment the fear that the applicant conceives, and I have also dealt briefly with the hardships that the respondent says it will suffer in the event the order is granted as prayed in the amended notice of motion. Invariably an anti-dissipation interdict as well as a Mareva injunction will often be sought on an ex-parte basis. In the present matter due notice was given to the respondent. The applicant then accelerated the situation to create urgency of which I have ruled was none. In the light of all these I do not propose to discuss the requirements and elements of an anti-dissipation interdict in detail, for as I have said the present case is not in pari materia with the case of Knox D'Arcy Ltd. which deal with such an interdict and the caution expressed in that case is applicable here. It is said at p. 703: "This is a case which appears to have a combination of features which, so far as I am aware, is unprecedented. It calls for the exercise of this Court's discretionary powers in a manner which certainly ought not to be allowed to serve as a F precedent for any future case in which the facts are not substantially comparable with the unusual allegations of fact made in this case." I now proceed to explore briefly whether the three requirements of an anti-dissipation interdict in securitatem debiti have been found to exist and satisfied in this matter. B. Whether the respondent has no bona fide defence There is admittedly a claim against the respondent but on the facts it does not appear to me that the respondent has no defence to part of that claim. The issue is the subject of an intended arbitration. In any event, this is not the only requirement upon which this court can base its judgment. On the facts some of the money is due and the applicant ought to follow the necessary procedures of claiming such monies in accordance with its contract with the respondent. C. Assets within the jurisdiction It is indeed common cause that the respondent has assets within the jurisdiction of this court. I have already pointed out that there is nothing in the papers to show that the respondent intends to make away with its assets in order to defeat the applicant's claim. In my view, there are only hollow allegations in support of this. Those allegations are unsubstantiated. If the respondent is entitled to remit a percentage of its contract sum in accordance with the contract with the employer I find no reason why this court should interfere with parties which have voluntarily entered into such an arrangement. The applicant as a subcontractor, ought in my view, to have known this fact. It entered into the contract well knowing that the respondent is a peregrinus and it cannot now be heard to complain when the respondent transacts business according to its contractual obligations. D. Intention to defeat applicant's claim It is said that the respondent's intentions to defeat applicant's claim may be inferred from, its make up, the untruthfulness of one Mr. Giabuzzi described in the answering affidavit as the project manager of the respondent, the respondent's vagueness, its dilatory tactics and the ease with which assets may be removed or dissipated. Had it

5 been shown to me at the time of hearing the application that the respondent's contract has come to an end and was at the time or now removing its assets from Botswana and could at the stroke of a pen remit all its funds to Italy, then in that event I would have been satisfied to grant an interim order nisi. But now this is not the situation, the respondent says the contract is still under way and there will be commitments for several months to come-see paragraph 16 of the supplementary affidavit. This the applicant does not deny. In my view the respondent still has many obligations to perform. I am not entirely satisfied having regard to the counter allegations by the respondent that a good case has been made out to support the requirement that the respondent intends to defeat the applicant's claim. It is said for instance that respondent's counsel is already involved in an arbitration and will not be available till some time in July - see annexure E.C. 10 to the applicant's supplementary affidavit. The respondent says applicant's award, if any, can be enforced in Italy since it is a limb of the Italian Government. In my judgment the features of this case are such that I do not consider it appropriate at least at this stage to take guidance from the English cases to which I have been referred to. I adopt with respect the caution sounded by Stegmann J. in the Knox D'Arcy Ltd case and because of the clarity of safeguards he referred to I have therefore quoted this passage at length. At p. 707 it is said: "Need for safeguards The making of an order which affects an intended defendant's rights, in secret, in haste, and without the intended defendant having had opportunity of being heard, is grossly undesirable and contrary to fundamental principles of justice. It can lead to serious abuses and oppressive orders which may prejudice an intended defendant in various ways, including some ways that may not be foreseeable. The exercise of such a jurisdiction can therefore never be allowed to develop into a routine or standard practice. Nevertheless, when it is made to appear, as has happened in the present case, that the intended defendant is himself in the process of defeating, or preparing to defeat, the ends of justice, and that extraordinary measures must be adopted if he is to be prevented from getting away with his scheme, then it becomes necessary to exercise extraordinary powers. The exercise of such powers must be attended with due caution; with all practical safeguards against abuse; and with a careful attempt to visualise the ways in which the order may prove to be needlessly oppressive to the intended defendant. Consideration must also be given to the manner in which the order may interfere with the rights and obligations of third parties, such as banks or other debtors of the intended defendant, or other custodians of the intended defendant's assets. Both the oppressiveness of the order to the intended defendant and its interference with the rights and obligations of third parties must be kept to the minimum that is necessary in order to achieve the objectives of the anti-dissipation interdict." The above in my opinion epitomises the various hardships that the respondent says they will befall it in the event the order is granted. Before I end this judgment, I must say that, having regard to the nature of this case and the novel aspect of it, I consider it appropriate to grant leave to the applicant

6 upon good and sufficient cause being shown to approach this Court, if the circumstances would change drastically and seek relief relating to the matters raised in the application papers. I will, however, dismiss the application with costs. PGM Building Construction v Mosojane Phumaphi & Co 1995 BLR 722 HC The facts of this case do not even disclose what in English law is called the Mareva injunction. A Mareva injunction can be granted where an applicant can establish that the respondent has no bona fide defence to the action and that, objectively considered, there are good grounds for fearing that he intends to make away with his assets at the stroke of a pen and beyond reach by the applicant. That form of interdict has not to my knowledge been applied by our courts and in any event it appears to me that its application in most English cases concerns shipping merchants. I should not be understood to be saying the form of interdict as in the present case is not available to an applicant who can show on the papers that the respondent intends secreting the assets to the prejudice of the applicant. The requirements for an anti-dissipation interdict in securitatem debiti (as recently named) are to be found in the lucid statement of O'Hagan J. in the case of Bester v. Van Niekerk 1960 (2) S.A. 363 at 365 where it is said: "Cases in which the Courts have been asked to grant interdicts pendente lite of this character abound in the reports. It H seems well-established that an applicant for such an interdict pending action (where the claim is not vindicatory) must show prima facie, that the respondent has no bona fide defence to the action and that, objectively considered, there are good grounds for fearing that he intends to make away with his assets in order to defeat the applicant's claims." In my view, for the applicant to succeed in its application for an interdict pending action, it must objectively disclose a purpose by the respondent of defeating due execution of an anticipated judgment or an intention by the respondent of dissipating its assets in such a manner that the applicant's claim would be rendered hollow.