[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Islamic Investment Company of the Gulf (Bahamas Ltd) v Mehta & Ors [2010] EWCA Civ 709 (14 April 2010) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2010/709.html Cite as: [2010] EWCA Civ 709

[New search] [Printable RTF version] [Help]

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM COMMERCIAL COURT
(MR JUSTICE DAVID STEEL)

		Royal Courts of Justice Strand, London, WC2A 2LL
		14th April 2010

Lord Justice Toulson:

1. Mr Rajesh Mehta appeals against a finding of contempt made against him by David Steel J in a reserved judgment given on 1 October 2009 and a committal order made on the same day for nine months' imprisonment, suspended if he complied with other terms of the order within six weeks, pursuant to CPR 71.
2. The matter has a long history, set out in the judgment. What follows is a reduced summary, although it is still necessary to set out quite a lengthy chronology in the light of the arguments which have been advanced.
3. The proceedings arise from a finance agreement made between the claimants, an Islamic Investment Company, and the first defendants, who were diamond traders, in January 2000. The appellant guaranteed the obligations of the first defendants and both the financing and the guarantee agreement were subject to English law and English jurisdiction. An event of default having occurred, the claimants issued proceedings in 2001 against the first defendants and the appellant. In October 2001 the claimants obtained a worldwide freezing order against the appellant for over $10 million and an order that the appellant provide disclosure of his assets.
4. On 13 February 2002 Tomlinson J ordered that summary judgment be entered for the claimants against the first defendants and the appellant for a sum of just over $10 million. The amount now stands with interest at over $14 million. None of it has been paid. The history over the last eight years has been of the claimant's unsuccessful attempts to obtain payment. The appellant has never had difficulty in being represented by distinguished solicitors and counsel. The material parts of the history are chronicled in the judgment under appeal. Having summarised and having set out the history, the judge said at [51]:

"It is common ground that RM has the resources to meet the judgment debt. But in my judgment this history demonstrates that a determination on the part of RM to devote his time and money to avoid payment and to obstruct the enforcement process. The impression is fortified by the content of the oral examination as so far completed. I regret to say that my reaction is few witnesses have instilled still less confidence in their testimony whether from the perspective or reliability or completeness. Throughout he was evasive and unconvincing. Save where unchallenged, I would be hesitant to accept any of his evidence absent corroborative material."

5. The oral examination to which the judge referred had taken place before him on 24 April, 27 April, 22 July and 23 July 2009. His examination was as a judgment debtor, pursuant to the provisions of CPR 71. The committal application was heard by the judge on 23 July immediately after the conclusion of the oral examination under CPR 71, so the judge had heard a good deal of evidence from the appellant. However, he did not give evidence in response to the committal application.
6. The contempt application arose in this way. On 17 January 2007 Master Miller made an order, which I will refer to as the original order, that:

"1) the judgment debtor attend the court on 20 February 2007 at 10.30 am to provide information about his means and any other information needed to enforce the judgment order. The questioning will take place before a Court Officer.

2) The judgment debtor at that time and place produce at Court all documents in the judgment debtor's control which relate to each of the judgment debtor's means of paying the amounts due under the judgment or Order and which related to those matters mentioned in paragraph 1. The documents produced must include those shown in the attached list of documents in Appendix 1 below."

7. The critical part of the order is at paragraph 2. The contempt found by David Steel J was that the appellant wilfully failed to comply with that order, but that is to jump ahead. In view of the arguments it is necessary to trace the events over the period of some two years nine months between the date of the original order and the finding of contempt.
8. The appellant sought to evade personal service of the original order by denying his true identity. He was then arrested in Belgium, where he suffered or at least claimed to have suffered a neck injury. This led to serial postponements of the date fixed for his oral examination.
9. On 5 June 2007 the claimants obtained an order, without notice, for substituted service of the original order, now re-listed for 3 July 2007, and an order that if the appellant was prevented from attending the re-listed hearing he was required to provide the documents referred to in the original order to the claimants' solicitors, verified by affidavit.
10. The order, as served by way of substituted service, was in its original form save that the date specified in the original order was altered to the new date and the order was restamped with that alteration. The same thing happened on each subsequent occasion when there was a postponement.
11. As a result of an adjournment application by the appellant, on 3 July 2007 a consent order was made for the hearing to be adjourned to 9 October, with further orders that the costs should be the claimants' and that the appellant should provide the documents referred to in the original order to the claimants' solicitors verified by affidavit on 10 July 2007. That did not happen, and on 17 July the claimants obtained what was described as a final order, that the appellants provide the documents to the claimants' solicitors by 31 August 2007. Three days after that date, on 3 September 2007, the appellant issued an application challenging the court's jurisdiction to have made the orders on 5 June and 31 August, which had been made on without notice applications, and the order of 5 July, which had been made by consent. The basis of the application was that the court had no jurisdiction to require production of the documents prior to the hearing ordered by paragraph 1 of the original order. The application came before Andrew Smith J on 4 October 2007 and he allowed it.
12. I confess that I am a little surprised that there could not be a valid consent order for the adjournment of a hearing on terms that the appellant was to produce the documents in the meantime, but we have not seen the judge's reasoning, there was no appeal against the order and it is not in issue before us.
13. On 8 October Andrew Smith J also granted an application by the appellant for a further adjournment of the hearing which was due to have taken place on the following day. The hearing was re-listed for 27 November 2007.
14. On 26 November the appellant sought a further adjournment. This time it was because he had gone from Belgium to India voluntarily, so as to avoid extradition proceedings and was unable to leave India. The application came before Master Miller. On 6 December he adjourned the hearing to 31 January 2008 and ordered that in the event of the appellant failing to attend on that day he should provide written answers to a list of questions by 14 February 2008. The imposition of a requirement to provide answers to questions was no doubt in consequence of the previous finding that the court had no jurisdiction to require the production of documents prior to the hearing.
15. The appellant did not attend on 31 January 2008 and Bean J made a suspended committal order. On 21 February 2008 Teare J made an order for substituted service of Master Miller's original order but amended to set a new date of 11 March 2008. He also granted substituted service of the suspended committal order. On 11 March 2008 two things happened. This court set aside the suspended committal order made by Bean J, although it ordered the appellant to pay all the costs. Simultaneously the examination which had been ordered by Master Miller 14 months earlier began before a court officer. The appellant did not produce any of the documents which he had been ordered to produce. He did produce a witness statement annexing his answers to the questions which Master Miller had ordered on 6 December. In relation to a considerable number of the questions, but by no means all of them, he stated that he declined to give an answer on grounds of self-incrimination. At the oral examination he answered some questions put to him but refused to answer others on grounds of self-incrimination.
16. On 16 May 2008 Master Miller made an order which among other things provided:

"The second defendant's failure to comply with paragraph 2 of the order of Master Miller made on 16 January 2007 be referred to the same Judge pursuant to CPR 71.8(1)(c)."

The reference to the "same judge" was to a judge of the Commercial Court to whom Master Miller referred the issue whether the appellant was entitled to refuse to answer questions which had been put to him on grounds of privilege against self-incrimination.

17. On 15 July 2008 David Steel J dealt with the privilege issue and ruled against the appellant. 18 July 2008 had been fixed for a resumption of the examination under CPR 71, but on the morning of the hearing David Steel J granted a further application to adjourn proceedings on medical grounds and fixed a resumed hearing for 8 September, when he was due to be sitting as the vacation commercial judge.
18. In his judgment on 18 July he addressed the question what should happen prior to the adjourned hearing in September. As to that he said as follows:

"10. The next question is what, if anything, must happen prior to that hearing. The first thing that must happen is that he must produce the documents that he was ordered to by Master Miller in January 2007, 18 months ago. As I understand it, it is suggested that the failure to comply with that order is associated with a claim of privilege. For the moment I will accept that there is, or may have been the justification, for failing to produce the documents but that justification has now disappeared and the documents that have been called for an indeed the documents that he has offered to produce during the course of the last hearing, must be disclosed some 10 days before the next hearing."

I quote that extract because it is relevant to one of the submissions which has been necessary to address.

19. There followed further applications, the details of which it is unnecessary to recite, and further adjournments. The appellant sought leave to appeal among other things on the issue of privilege. Leave was initially refused. On the appellant's renewed oral application it was granted, but only on the terms that the appellant brought the entirety of the judgment sum into court, paid all unpaid costs orders and provided security for costs. Those conditions no doubt reflected what the court thought of the merits of his position. They were not at all, of course, what the appellant wanted and he did not comply them. It would be naive to suppose that he intended to do so, having regard to the wider history of events, but applied for an extension of time to comply with the Court of Appeal's order, which the court granted. He still failed to comply with the conditions and so that appeal fell away.
20. Some months having elapsed, the hearing for his examination under CPR 71 was re-listed. So it was that it came before David Steel J in April 2009 and on the further dates in July 2009 to which I referred. Shortly before the April hearing the appellant produced some further documents to which I will return. He promised to produce others but did not do so and so on 6 May 2009 David Steel J ordered that he produce the further documents by 20 May 2009.
21. There then ensued the continued further examination under CPR 71 on 22^nd and 23^rd July 2009 and the hearing of the contempt application. The judge found that there had been a breach of the original order by the appellant's failure to produce the documents which he had been ordered to produce at the hearing on 11 March 2008. He found that he was satisfied to the criminal standard that the failure was through wilful disobedience. As to that he said at [65]:

"…I have no hesitation in concluding that RM's contempt was contumacious. Throughout the period from March 2007 to March 2008 RM's stance is only consistent with a refusal to comply with the order to produce documents. Indeed, no suggestion was made that any material attempt to pay the order had been undertaken. The suggestion that the order had been superseded was… a late and misconceived proposition"

He then considered whether the appellant had effectively purged his contempt by subsequent compliance and concluded that he had not.

22. As to the penalty he said at [75]:

"In my judgment RM unlawfully disobeyed the order of 2007 in March 2008 and nothing that has happened since makes it inappropriate to impose a suspended committal order in respect of that contempt. I am satisfied that it is proper to impose a penalty. Only the coercive threat of the imposition of such a penalty has the prospect of ensuring the obedience on the part of RM. As regards the condition for any suspension, I accept in broad terms the terms suggested by the bank in a draft order but subject to further comment on behalf of RM. The process of specifying the nature of the sanction and the period of suspension during which compliance had been achieved must also involve furnishing an opportunity of RM to make further submissions in this worryingly protracted litigation"

Further submissions were made by the parties before the judge made his final order.

23. The appellant appeals against the order on a variety of grounds. The principal defence advanced on the hearing of the contempt application, and renewed on the appeal, was that there was no breach of the order of 17 January 2001 because that order was superseded by the orders made on 5 June, 3 July and 31 August 2007, notwithstanding that those three orders were set aside by Andrew Smith J on the ground that the court had no jurisdiction to make it. David Steel J made short thrift of his argument. He described it as a hearing of the contempt application and as a misconceived proposition. I agree with his description.
24. By the original order the Master had ordered the production of documents and set a time and place for their production. Nobody could suggest, or does suggest, that this was not a valid order. When the date of the examination was adjourned, so automatically was the date for production and, as I have already mentioned, on each occasion the original order revised only as to date was reissued by the court and re-served. The order was on its face plain and unambiguous.
25. As that process was progressively delayed, the object of the orders dated 5 July, 5 June, 3 July and 31 August was to try to impose an obligation to produce the documents before the hearing but those orders were held to be made without jurisdiction. I am quite unable to accept that those orders were intended to amend paragraph 2 of the original order. There was no indication on the face of the order they were intended so to do. On the contrary, as I have stressed the court, repeatedly reissued its original order revised only as to date. The orders were in effect cumulative.
26. When Andrew Smith J set aside the supplemental order seeking to require production at an earlier date on the ground that the court had no jurisdiction to require production prior to the hearing, I cannot believe that anyone would have reasonably supposed that the effect was to relieve the appellant of any duty to release the documents. It is plain from Andrew Smith J's judgment itself that this was not how it was understood by the parties or indeed intended to be understood by them. Paragraph 8 of Andrew Smith J's order recited that:

"For the avoidance of doubt, this Order is without prejudice to any ground the Second Defendant may have of resisting or challenging any oral order examination, or any questions asked or to be asked in such examination or any requirement to produce documents or any particular documents."

Those last words are inconsistent with there being an extant requirement on the part of the appellant to produce documents.

27. Moreover the order served in February 2008 pursuant to the order of Teare J again specified in terms that the appellant was to attend on 11 March and produce the documents set out in the appendix to the original order on that date. For those reasons I reject the argument that paragraph 2 of that order had ceased to have effect or that the order for production was other than perfectly clear.
28. The next defence was that, even if there was a valid order for production of the documents at the hearing in March 2008, there was no contumacious breach by the appellant in failing to produce any documents at all, because he believed that he was protected from doing so by privilege against self-incrimination. As to that the judge said at [54]:

"It is a matter of note that no express privilege was advanced at any stage with regard to any documents. In the event such a claim could not, in my judgment, have been advanced bona fide in respect of all the documents"

29. It was submitted that this was inconsistent with the passage cited above in paragraph 10 of the judgment given by David Steel J on 18 July of the previous year, when he had said that:

"For the moment I will accept that there is or may have been the justification for failing to produce the documents."

30. It is said that it is also inconsistent with something which the judge said in April 2009 at the conclusion of the second day's examination. The question was raised whether the appellant should be allowed to have back his passport, which he had previously been required to surrender. At this stage it is to be remembered that the appellant had produced some documents shortly before the April hearing.
31. The order which had previously been made in relation to his passport was that he would be allowed to have it back on various conditions, one of which was that he complied with the order of Master Miller. The passage relied on in the judge's remarks on 27 April 2009 is as follows:

"The position as I see it is this, that in September I made an order with regard to retention of Mr Mehta's passport which perhaps is now a redundant order given I am told Mr Mehta's passport has expired. Mr Mehta has purported to comply with the conditions which I imposed upon return of his passport."

32. He went on to say that:

"That said, it seems to be desirable to appoint some delaying order to see what further documentation is forthcoming as a result of Mr Mehta's recognition that there were some other documents which might be within his possession, custody or control and a the next date the future of the committal hearing could be appropriately discussed … It would not be the committal hearing but the need for and the date for a committal hearing will be considered at that time"

33. I can see no substance in the suggestion that either those remarks or his remarks on 18 July 2008 precluded the judge, when the further hearing had taken place, from concluding that the appellant could not have entertained an honest belief that there were no documents in his possession other than documents protected by privilege against self-incrimination.
34. In relation to the documents which had been produced in April 2009, the judge in his judgment on the committal application said:

"68 It is right that in the run up to the resumed examination in April 2009 a clip of documents was produced by RM purporting to comply with that obligation under cover of a letter dated 23 April 2009

69. In regard to this material, the Bank commented as follows:

'Of the 230 pages of material disclosed by the Second Defendant, 189 of these comprise copies of Court documents relating to Indian legal proceedings which provide minimal useful information of relevance or value. A further 20 pages of the disclosure relates to Belgian legal documents, which have not been translated and which in any event are highly unlikely to provide the Claimant with any relevant information. The remainder of the disclosure comprises a handful of copy bank statements relating to accounts held in India with minimal credit balances, various Indian and Belgian tax forms and a single page which the Defendant has included relating to the accounts of a company called Iris Trading Company.

70. I accept the bank's submission that it is simply not credible for an international diamond trader of the Second Defendant's means to claim that this disclosure represented even a minor part let alone the entirety of the relevant material available for disclosure pursuant to the January 2007 order"

35. He also said at [74]:

"In particular, as emerged from his oral examination there are a number of matters involving RM which cry out for further documentary disclosure:"

He gave some examples and continued:

"RM's responses to questions on these topics and his reaction to various documents put to him revealed RM at his most obscure and unconvincing."

36. Furthermore, at the hearing of the contempt application, the appellant did not give evidence to suggest that the reason for his failure to produce any documents in March 2008 was that he had believed, rightly or wrongly, that he was not under an obligation to do so or that they were protected by privilege against self-incrimination. Nor had he given that explanation when asked about the documents themselves at the hearing in March 2008. At that hearing the appellant had asked for further time in which to produce the documents. The following exchange took place between the appellant and the solicitor appearing for the claimants:

"Q. But you have been on notice of these requests for documents since January 2007?

A. Yes, that's correct and I am not denying that, but as I said, I've been also busy with my criminal matters which are ongoing…virtually every day, where I am called for investigation and called to, you know, give the necessary support in those investigations, and so it doesn't leave me a lot of time when I am in India. That's why I am requesting for the one month period within which I will provide whatever documents I have and the answers that I've said I can provide."

37. I am mindful that this was a single answer which has to be read in context, but it is noteworthy that nowhere on that occasion did he suggest that the reason why he had not produced these documents was that he did not believe that there was any order for him to produce such documents or that he believed that they were covered by privilege against self incrimination. Even if he had thought that some were covered by self-incrimination, there is no basis placed before us for challenging David Steel J's conclusion that he could not have entertained an honest belief that he had no documents which he was obliged to produce. Accordingly that ground of appeal has also no substance.
38. Mr Lewis QC advanced a number of further points. One was a technical point as to the adequacy of the way in which the issue of contempt was referred to the commercial judge by Master Miller in May 2008 in the paragraph of the order to which I have referred. Wisely Mr Lewis has not sought to develop that submission orally, because it is not seriously arguable. The order made it perfectly plain what was being referred to the court and why the court was being invited to consider whether the appellant was in contempt. It was because he had failed to produce any documents at the hearing in March 2008.
39. There was at one stage a suggestion that somehow the order imposed by David Steel J infringed the doctrine of double jeopardy, but, when the point was developed, it turned out to be dependent on the earlier argument as to the extent and clarity of the production order made by Master Miller, and therefore does not require to be addressed.
40. It was argued that the judge was wrong in not concluding that the appellant had purged his contempt by the production of further documents. The judge made his findings about the documents disclosed in April and concluded that there were matters which cried out for further disclosure. I can see no arguable basis for concluding that he was wrong to conclude that the contempt had not been purged and that therefore there still was a real purpose in imposing a suspended committal order.
41. A submission was advanced in argument that in some way the claimants had proceeded in bad faith in this matter. This was not something previously advanced and I can see no foundation for it. Insofar as it can be said that the claimants suggested at the hearing in March 2008 they would be content to receive the documents within 21 days, this showed in the claimants' position to be that they wanted most of all was the documents and they are not prosecuting contempt proceedings for their own sake. The fact is that they did not receive the documents in 21 days nor, if they are right, did they ever receive all the documents to which they are entitled.
42. There remain arguments about the form of the order, in particular the terms on which it was suspended and the length of the committal. The judge having heard further argument about that said as follows on 1 October 2009:

"5. My own judgment is that it would not be merely helpful but desirable to make the disclosure order, not simply in the terms of Master Miller's order but formulated with sufficient precision to ensure that Mr Mehta appreciates the scope of the obligation that is imposed on him and in due course the court can properly assess the extent to which he has complied with the order"

He therefore sanctioned a more explicit list of documents.

43. Complaint is made that this list included documents which the appellant had sworn that he did not have. However, the terms of the order confined the documents to ones which were in his possession or control. The consequence of that is this that if his evidence about not having the particular documents was truthful, then he stands no risk of being in breach. If, on the other hand, his evidence was untruthful, as to which I have referred to the judge's view about his credibility on other matters, then he does stand in jeopardy. None of that is a ground for finding that the judge was wrong to impose the conditions that he did. The judge was far better placed at the end of a lengthy series of hearings to assess what were appropriate conditions than this court, and I can see no proper basis on which we should interfere with those conditions.
44. Lastly there is the duration of the order. It is submitted that nine months was too long a period. The judge said in his supplemental judgment:

"8. So far as the sanction is concerned, I make these observations. This is a worrying case in the sense that it is a disturbing commentary on the powers of the enforcement of this court. The relevant judgment handed down nearly a decade ago and despite the defendant recognising his ability to meet the judgment not a cent has been paid. As I have said in my judgment, the defendant has to the contrary embarked on a prolonged and expensive campaign to avoid payment and resisted enforcement procedures and a significant part of this process has been persistent and flagrant refusal to produce the documents required by the order of Master Miller over a pretty long period.

9. I have no doubt that all this defiance requires the threat of committal, both to punish and to deter the defendant from any further refusal to obey. I have not forgotten that Mr Mehta has had some problems with his back, but I am not persuaded that that had any significant or indeed perhaps any impact upon his ability to respond to the orders that have been made. CPR 71 requires the suspension of any committal order. In my judgment the appropriate sanction in the event of failure to comply with my order within the next six weeks is one of nine months imprisonment."

45. As to medical evidence, of which we have been reminded, what it goes to show is that the appellant had acute sciatica which required active medical intervention over the period between June 2008 and April 2009. There is no evidence it was affecting him in any way in March 2008, which was the time of the contempt, and it will have been noted that when he explained his reason for not having produced any documents at that hearing there was no suggestion that ill-health had precluded him from doing so.
46. The judge was entitled to regard this as a bad case in which a judgment debtor had metaphorically thumbed his nose at the court and that it merited a significant period of committal if there was to be any realistic prospect of the appellant complying with his obligations.
47. We have been told that further documents were disclosed by him in November last year. Whether he has or has not complied with the terms of the suspension will be a matter to be considered by the judge. It is not a matter before us.
48. In conclusion this was a full, fair, succinct and impressive judgment. I would dismiss the appeal.

Lord Justice Mummery:

49. I agree.

Sir Scott Baker:

50. I agree.

Order: Appeal dismissed