Zambia v Meer Care & Desai (a firm) & Ors

Antonino Basile carries on business as a supplier of high-class male clothes, under the style Boutique Basile, from a shop in Geneva. Between 1995 and February 2001 one of his customers was Dr Frederick Chiluba, then the President of Zambia. More than $1.2 million is shown to have been paid to Mr Basile directly or indirectly from funds which have been held to belong to the State of Zambia. Mr Basile says that all sums paid to him were for the supply of suits, shirts and other items of clothing ordered from him on behalf of the President, or of Mr X F Chungu, who was then the Director-General of the Zambia Security and Intelligence Services (ZSIS), and duly supplied.

Dr Chiluba came to the end of his term of office as President at the end of 2001. Under the new President, steps were taken to investigate allegations of corruption during the time of President Chiluba. In 2002, pursuant to a letter of request from the Zambian authorities to the Swiss authorities, Mr Basile attended before a magistrate in Geneva on 31 October 2002 to give evidence about his dealings with Dr Chiluba. He says that he received a letter summoning him to give evidence, and telling him to bring sales invoices relating to purchases by Dr Chiluba, to explain sales of around 1.2 million Swiss francs. He duly attended and produced bills, which he described as “almost all” the bills concerning Dr Chiluba and Mr X F Chungu, amounting to some 634,000 Swiss francs in amount. He handed the originals of the bills over to the magistrate.

In October 2004 the proceedings in which these appeals arise were commenced by the issue of a Claim Form. Mr Basile is the Twelfth Defendant, out of (at that time) fifteen. After a minor amendment in January 2005, the Claim Form was served on him, in accordance with the Hague Convention. A copy of the Claim Form and the Response Pack, together with translations of both of those documents, were sent at the request of the Senior Master to the Procureur-Général of Geneva. In due course, the latter confirmed to the High Court that the documents had been collected by Mr Basile on 31 March 2005. He did not enter an acknowledgement of service or take any other steps in the proceedings. Other documents were served on him and letters sent to him, though none of them in French. Mr Justice Peter Smith, who dealt with all the case management decisions in the case as well as hearing the trial, ordered that no document other than the Claim Form and Response Pack need be served in translation.

No letter before action was sent to Mr Basile before the proceedings were commenced or served on him, in French or even in English, setting out the nature of the Claimant’s case and asking for his comments. What was said at trial is that Mr Basile’s evidence to the magistrate accounted for some $557,803, but that the total received by Mr Basile was $1,209,400, and that Mr Basile’s failure to account for the discrepancy of $651,728 was evidence that he was dishonest as regards not just the $651,728 but the whole sum of $1.2 million. In that context I find it surprising, to say the least, that Mr Basile was never asked, in terms, to explain the discrepancy, other than by being made a Defendant to these proceedings. The letter of request in 2002 is not available, since Mr Basile returned the letter to the magistrate, but it must have been on the basis that Mr Basile was to be a witness, and nothing more. The record of what he said to the magistrate refers to him expressly as being a witness.

A letter before action may not be necessary or appropriate if the relevant Defendant is to be the subject of an application for a freezing order, as was the case with some other Defendants. But no such step was taken in relation to Mr Basile. Such a letter is a normal preliminary to litigation. What is more, it is required by the terms of paragraph 4 of the Practice Direction – Protocols, which applies to cases for which there is no special protocol:

“4.1

In cases not covered by any approved protocol, the court will expect the parties, in accordance with the overriding objective and the matters referred to in CPR 1.1(2)(a), (b) and (c), to act reasonably in exchanging information and documents relevant to the claim and generally in trying to avoid the necessity for the start of proceedings.

4.2

Parties to a potential dispute should follow a reasonable procedure, suitable to their particular circumstances, which is intended to avoid litigation. The procedure should not be regarded as a prelude to inevitable litigation. It should normally include –

(a)

the claimant writing to give details of the claim;

…

4.3

The claimant’s letter should –

(a)

give sufficient concise details to enable the recipient to understand and investigate the claim without extensive further information;

(b)

enclose copies of the essential documents which the claimant relies on;

(c)

ask for a prompt acknowledgement of the letter, followed by a full written response within a reasonable stated period;

(For many claims, a normal reasonable period for a full response may be one month.)

(d)

state whether court proceedings will be issued if the full response is not received within the stated period;

(e)

identify and ask for copies of any essential documents, not in his possession, which the claimant wishes to see;

(f)

state (if this is so) that the claimant wishes to enter into mediation or another alternative method of dispute resolution; and

(g)

draw attention to the court’s powers to impose sanctions for failure to comply with this practice direction and, if the recipient is likely to be unrepresented, enclose a copy of this practice direction.”

Mr Basile says that he does not speak or understand English. I dare say that he can cope with limited English vocabulary relevant to taking orders for suits or shirts. The Respondent relies on the fact that some parts of Mr Basile’s website are given in English as well as French. The quality of the translation into English does not of itself give me any serious cause to doubt Mr Basile’s assertion that he cannot understand English. It is not necessary to consider whether, in those circumstances, the intending claimant’s letter to Mr Basile should have been accompanied by a translation into French, since no letter at all was sent.

Judging from the documents in evidence on the appeal, what was served on Mr Basile through the Procureur-Général was, first, the Amended Claim Form and the Response Pack, with translations of each. In the appeal bundle those documents amount to 23 pages, but they do not include a French translation of the Response Pack. It is not clear what happened to that, assuming that it was served. The Claim Form satisfies the requirements of the CPR, but it is far from self-explanatory as to the nature of the claim against Mr Basile, except in the most general and compendious terms. He is named as the twelfth in a list of Defendants in a Schedule, which starts with two firms of solicitors, proceeds with Dr Chiluba and Mr X F Chungu, whom Mr Basile had met, and mentions seven other individuals, with addresses in Zambia, England or New York, and three companies incorporated in the British Virgin Islands. It states that the Claimant expects to recover more than £15,000, but gives no other figures. It identifies, as the basis of the claim against Mr Basile along with all other Defendants, conspiracy to defraud or injure the Claimant by the misappropriation of the Claimant’s moneys, liability to account as constructive trustee, liability for knowing receipt of money misappropriated from the Claimant, and other relief which would be familiar to an English lawyer with knowledge of constructive trusts, but might well be regarded as incomprehensible by someone such as Mr Basile professes to be, who speaks and understands virtually no English, and whose only involvement with Dr Chiluba was to take and fulfil orders for suits and other clothing, albeit in large quantities and to a high value.

In addition to the Claim Form and Response Pack, the documents collected by Mr Basile included three files of documents containing the Particulars of Claim and its Annexes. The Particulars of Claim run to more than 520 pages in their present form. Even without any intervening amendment I have no doubt that this document ran to hundreds of pages. The passage of specific relevance to Mr Basile is relatively short, being set out in paragraphs 376 to 385, spread over 6 pages, pages 169 to 174. No attempt was made to draw his attention to that passage.

At all events, Mr Basile took no action as a result of having received these documents. It is not suggested that the proceedings were not properly served on him. The later documents were also duly served, and the judgment was therefore regularly obtained.

The allegations in the Particulars of Claim concerning Mr Basile, and the money paid to him, deal with the transfer of sums amounting to $1,029,400 out of what is called the Zamtrop account (to which I will refer shortly) to Mr Basile. The bills produced by Mr Basile to the magistrate are mentioned and listed. Then it is alleged against Dr Chiluba and Mr X F Chungu that payment from the Zamtrop account in payment of tailor’s bills was not a proper use of money in the account. After that, at paragraph 381, the point is made that the bills produced, and described as amounting to “nearly all” the relevant bills, accounted for no more than $557,803.20 (at a given rate of exchange) of the $1,029,400 paid to Mr Basile.

The essence of the case against Mr Basile is at paragraph 382:

“It is the Claimant’s case that a substantial part of the monies which were transferred from the Zamtrop account to Boutique Basile were not transferred in payment for any work done by or suits sold by Boutique Basile. It is the Claimant’s case that a substantial part of the said monies were paid out by Mr Basile, acting on the instructions of XF Chungu and/or Dr Chiluba, to parties which the Claimant is currently unable to identify, and that the purpose of transferring the monies to Boutique Basile was to attempt to conceal from the Claimant the misappropriation of the Claimant’s monies.”

In support of that a number of points were made, including that the overpayment of the Claimant’s monies to Boutique Basile and the subsequent onward transmission of such overpaid sums by Boutique Basile acting on the instructions of XF Chungu or Dr Chiluba is consistent with the modus operandi of the Defendants in misappropriating the Claimant’s money.

On this basis Mr Basile is alleged, in paragraph 384, to be party to what is called the Zamtrop conspiracy, and at paragraph 385, to be liable as a constructive trustee on the grounds of knowing receipt or dishonest assistance or both, relying on the matters already alleged and the knowledge on the part of Mr Basile that the money paid into the account of his business were for sums far in excess of any sum properly due and payable.

The whole case, therefore, rested on the proposition that less than half of the sums paid to Mr Basile were explained by bills produced by Mr Basile to the magistrate in 2002.

The allegations based on this discrepancy were that Mr Basile was a party to the Zamtrop conspiracy, or that he dishonestly assisted in the fraudulent breach of fiduciary duty involved in the misappropriation of Zambian government money and its application for private purposes of Dr Chiluba and others. The conspiracy was called after a bank account, known as the Zamtrop account, held at the Zambian National Commercial Bank Ltd in London. Some US$52 million was alleged to have been transferred from Ministry of Finance funds into this account, ostensibly so that it could be expended for the benefit of ZSIS, but in fact paid on from there to various places, including accounts of a company called Access Financial Services Ltd, and accounts of two firms of solicitors, including Meer Care & Desai (MCD), from which they were applied for private benefit of Dr Chiluba, Mr XF Chungu and others. The primary conspirators were said to be Dr Chiluba, Mr Chungu and Ms Stella Chibanda, a senior officer of the Zambian Ministry of Finance. The Zamtrop account was opened in December 1995 and became operational later that month. Mr Chungu was, in effect, its sole signatory.

The clothes supplied to Dr Chiluba featured with some prominence in the case. At paragraphs 59 to 62 of his first judgment, handed down on 4 May 2007, [2007] EWHC 952 (Ch), the judge said this (FJT means Dr Chiluba):

“59.

The President (unlike the Emperor) needs to be clothed. FJT was known to be a stylish dresser. “His suits speak of affluence, yet he presides over a country with millions barely scraping a living … But President Chiluba’s suits are understood to be tailored by top designers in France and Italy… How much is spent on these clothes is a closely guarded secret. But many ordinary Zambians speculate that the figure has to be a mind-blowing one … It is not clear how many suits he has. But few people, even his closest aides, can remember seeing Mr Chiluba in the same suit, or shirt, twice”. (BBC Programme)

60.

I saw some of the clothing at court. The expenditure with Basile amounts to $1,029,400 of which Basile attributed 99% to FJT. The items seized by the Task Force were considerable. First there were 349 shirts. A large number of these bore the FJT monogram on them and they were from virtually every designer outlet. Second there were 206 jackets and suits. A large number of these were from Basile bearing the FJT monogram. Third there were 72 pairs of shoes. A large number of these were hand made by Basile with the FJT logo. All were for FJT’s unique personal specification (high heels). Many of them were in their original shoe covers and had not been used. There were a large number of other items.

…

62.

The receipt of the clothing by FJT plainly required an explanation. If one is generous and assumes that FJT received goods from Basile only (and I use that word in the context of this case) to the dollar equivalent of $557,803 it calls out for an immediate explanation by him. It reflected as I have said over 5 times the totality of his salary when he was in office for 10 years. I have already commented that there is nothing from his pre Presidential lifestyle to suggest he had wealth and there appears to be nothing in his post Presidential lifestyle to suggest he has wealth. As the former President of a country as poor as Zambia the people were entitled to an explanation.”

At paragraph 467 the judge said this:

“467.

The people of Zambia will know that whenever FJT appears in public wearing a smart handmade suit or a pair of his “signature” shoes that they were acquired by stealing money from the people the vast majority of whom live at subsistence levels.”

The trial commenced on 31 October 2006, and concluded at the end of February 2007. In his first judgment the judge dealt with Mr Basile’s part in the case at paragraphs 528 to 540. It is convenient to set out that part of the judgment here in full. BB means Mr Basile, XFC Mr Chungu, and GT Grant Thornton, who had conducted a forensic exercise tracing Government money into the Zamtrop account.

“528.

Boutique Basile is the trading name of Antonio Basile who operates a tailors shop from 2 Rue Sigismond Thalberg 1201, Geneva, Switzerland.

529.

He has not participated in the trial. He says he has rendered invoices for goods supplied to FJT and XFC in the sum of $557,803.

530.

In fact $1,029,400 was transferred directly from the Zamtrop account to accounts held in the name of Basile. In addition in June 1999 and February 2000 a total of $180,000 has been paid to Basile from the MCD account but these have not been traced by GT.

531.

Of the sums traced from the Zamtrop account GT have traced $879,400 (H4/4).

532.

The only evidence that AGZ has against Basile in my opinion is the over payment.

533.

Mr Basile gave a sworn statement to the Magistrates Office in Geneva on or about 12th November 2002. He merely produces the invoices. He says that XFC used to visit the shop personally but that 99% of the clothes were meant for FJT. He met FJT only once at Hotel Intercontinental to take his measurements “he is a very short man and all his clothes have to be made to measure” (I confirm the former statement having seen some of the clothes).

534.

He does not explain the over payments.

535.

He has chosen not to participate in this action.

536.

On that material AGZ invites me to make Basile liable for dishonest assistance, knowing receipt and conspiracy in the sum of $1,029,400 or alternatively $879,400. In fact in my view the claim should extend to the $180,000 also absent any explanation from Basile. AGZ should consider that when I hand down the judgment.

537.

At first blush on the basis of the material that has been provided there is no evidence to show that Basile became a party to any fraudulent conspiracy to defraud the Republic. Equally there is in my view (save in respect of the over payment) no basis for suggesting that he provided dishonest assistance. Finally there is no evidence to suggest that he received the Republic’s money with the requisite constructive knowledge that it was Government money (save the overpayments). He was visited by FJT and XFC. They made arrangements for him to be paid via the Zamtrop account.

538.

AGZ does not know what happened to the over payment. Basile chooses not to explain. If there was an honest use of that money in my view Basile would have come to court. The fact that he chose not to do so supports a finding of dishonesty. However it can only support it.

539.

In my view the evidence of dishonesty is the receipt of a large amount of money with no explanation as to why he received it and its retention. On that material I am prepared to infer that Basile received the excess dishonestly. Whether he remitted it to back to FJT or XFC or kept it himself I do not know. I do not believe for one minute however that he received it for the purposes of spending on genuine ZSIS purposes (rejecting IM’s submissions in that respect). He has therefore in my view dishonestly assisted in the stealing of the monies via the Zamtrop account. He has facilitated it in some way which is unexplained. It is unexplained because he chooses not to tell. In addition in my view the large unexplained excess shows that he knows there was dishonesty in respect of the acquisition of the clothes. There is clearly something far more to these transactions than the purchase of clothes. Whilst I appreciate the lifestyles of the extremely wealthy enables them to spend large sums of money on items like this I do not believe any honest person dealing with FJT and XFC would believe they would have legitimate access to such funds in their own right. The size of the expenditure should have excited suspicion. The receipt of further large sums is supportive of AGZ’s contention that the whole transactions are part of a conspiracy to defraud or that Basile has dishonestly assisted in the breaches of fiduciary duty made by FJT and XFC. I accept that submission. Basile in view of the large unexplained excess sums he received which he chooses not to explain cannot assert merely that he was an honest trader selling his wares to a customer and no more. I therefore conclude his actions were dishonest and further were part of a conspiracy to defraud the Republic of the monies he received in their entirety. Either he chose not ask because he did not want to know the answer or he knew there was dishonesty and he knew it. There is no honest explanation for the excess receipts and that in my view taints the entirety of the transactions. There can of course be no benefit to the Republic in the acquisition of the specially designed and sized clothes and I do not know why it should have this expenditure foist on it. It can seek to sell them and if it does will have to give credit for the proceeds. This too should be explored when I hand down the judgment.

540.

I should add that I am of the opinion that apart from these claims he will be liable on the same theoretical basis that I have referred to above in respect of IK.”

The basis of claim referred to in the last paragraph is a claim for money had and received.

The Claimant took up the judge’s suggestions in paragraphs 536 and 540 and applied for permission to amend, which the judge granted, so as to add a claim for the $180,000 paid to Mr Basile out of an account of MCD, and also to add an alternative claim for $651,595.80 as money had and received. On that footing, in his order of 4 May 2007 the judge gave judgment against Mr Basile for $1,209,400 for conspiracy and dishonest assistance, and $651,595 for money had and received. The latter sum is part of the former, though this was not stated in the order.

On 29 June 2007 the judge gave judgment on a number of consequential matters, including interest, and he made a further order to take account of those rulings. By this order, Mr Basile was made liable for $606,336.71 by way of interest, so the total sum for which judgment was entered was $1,815,736.71 for conspiracy and dishonest assistance. The money had and received liability was not carried through to this order. In addition Mr Basile was (together with some other Defendants) ordered to pay the Claimant’s costs of the action in relation to the Zamtrop Conspiracy and all related claims.

The judge’s two orders were served on Mr Basile under the Hague Convention in certified translations. He received them from the Procureur-Général in Geneva on 18 and 20 July 2007. Only at that stage did Mr Basile seek legal advice, from Swiss lawyers and then via them from English solicitors. This led to the filing of Mr Basile’s Appellant’s Notices on 25 September 2007, with applications for an extension of time and for permission to adduce additional evidence. That additional material includes both evidence as to the reason why he did not take part in the proceedings and also evidence relevant to the substance of the claim, in particular further invoices which on their face show sales which account for almost all of the sums paid to him. He also says that his premises suffered a flood, which is why some invoices may now be missing.

Mr Basile might instead have applied to the High Court under the provisions of CPR 39.3(3), which apply when an order has been made after a trial which a party did not attend. The relevant provisions are as follows:

“(3)

Where a party does not attend and the court gives judgment or makes an order against him, the party who failed to attend may apply for the judgment or order to be set aside.

(4)

An application under paragraph (2) or paragraph (3) must be supported by evidence.

(5)

Where an application is made under paragraph (2) or (3) by a party who failed to attend the trial, the court may grant the application only if the applicant –

(a)

acted promptly when he found out that the court had exercised its power to strike out or to enter judgment or make an order against him;

(b)

had a good reason for not attending the trial; and

(c)

has a reasonable prospect of success at the trial.”

He did not take that step. The reasons are indicated in paragraph 21 of the material in Part 8 of the Appellant’s Notice in support of the application to adduce fresh evidence, verified by Mr D’Costa, Mr Basile’s solicitor. He says:

“In these unusual and difficult circumstances, the court is asked to accept that he should be excused his failure to present evidence at the trial and to hold that he be permitted to adduce that evidence now. In circumstances where he has (it is submitted) a strong appeal even without regard to such evidence, it is preferable for the evidence to be considered in the context of the appeal rather than making an application to set aside the Judgment and to seek a re-trial in such a large case with so many Defendants.”

In form, therefore, the application to adduce fresh evidence is made by reference to CPR rule 52.11(2):

“Unless it orders otherwise, the appeal court will not receive –

(a)

oral evidence; or

(b)

evidence which was not before the lower court.”

The principles set out under the Rules of the Supreme Court in Ladd v Marshall [1954] 1 W.L.R. 1489 are still relevant to such an application.

In Tennero Ltd v Arnold [2006] EWHC 1530 (QB), Jack J had to consider an application for permission to appeal in circumstances where the Defendant had not attended the trial, but had applied by letter for an adjournment, which was refused, the trial had proceeded and had resulted in an order against the Defendant. He applied unsuccessfully under rule 39.3(3) to set the judgment aside, and he also appealed, in circumstances in which Jack J construed the appeal as being against the refusal to adjourn. Jack J held that it was an abuse of the process of the court to appeal, because the remedy under rule 39.3 had been used, though to no avail. It was clear that there was no prospect of success on an appeal against the substantive judgment itself. In the present case it is said that the position is different because Mr Basile has a valid appeal in any event, whether or not he is allowed to adduce the additional evidence.

In Re Edwards’ Will Trusts [1982] Ch 30, proceedings of which the Defendant was aware had come to trial in circumstances in which the Defendant only had extremely short notice of the hearing, and did not attend. The then equivalent of CPR rule 39.3(3) was RSC Order 35 rule 2, which was in more general terms than the present rule, apart from laying down a seven day time limit for the application. Instead of applying under the rule, the Defendant appealed. The material put before the court on the appeal included evidence which the appellant might have sought to put before the court at the trial, and the grounds of the appeal were the same as might have been put before the court on an application under Order 35 rule 2. The Court of Appeal said that the proper course would have been to apply under the rule to the High Court, but that this did not exclude the separate jurisdiction which the Court of Appeal had to order a new trial if a good case was made out. It dismissed the appeal on the merits.

I do not disagree with anything in the judgment of Jack J in Tennero Ltd v Arnold, in relation to the facts he had to consider, where there was no basis for a separate appeal, and where the appellant had taken the proper course, applying under rule 39.3(3), but when that failed he sought to take an alternative course, appealing the original judgment. In the present case, however, there are separate grounds of appeal, even without any fresh evidence, on which permission to appeal has been granted. I do not regard it as improper for Mr Basile to have sought to put before the court on his appeal the material which he could have relied on if he had taken the other course of applying to the judge under rule 39.3(3).

It seems to me to follow, however, that this court, when considering his application to rely on additional evidence, ought to have regard to the provisions of rule 39.3 in considering whether the evidence ought to be admitted, and whether, on the basis of that evidence, the judgment should be set aside. In these unusual circumstances, rule 39.3(3) to (5) is the first source of guidance as to whether the court should order, under rule 52.11(2), that additional evidence should be admitted on the appeal.

Mr Sullivan Q.C.’s written submissions on behalf of the Respondent were formulated on the basis that Mr Basile had to satisfy the three criteria set out in Ladd v Marshall and that he could not do so, in particular because the additional evidence consisting of the invoices and other documentary material could readily have been obtained for use at the trial.

Ladd v Marshall set out the principles applicable under the Rules of the Supreme Court, under which Order 59 rule 10(2), the equivalent of CPR rule 52.11(2), required “special grounds” for the admission of evidence which had not been before the court below on an appeal from a judgment after a trial or hearing of any cause or matter on the merits. Rule 52.11(2) is more general in terms, but it has been held on several occasions in this court that the principles remain relevant; see for example Morritt LJ in Banks v Cox (2000 unreported), quoted by Hale LJ in Hertfordshire Investments v Bubb [2000] 1 W.L.R. 2318 at 2325:

“not as rules but as matters which must necessarily be considered in an exercise of the discretion whether or not to permit an Appellant to rely on evidence not before the court below.”

All the cases in which Ladd v Marshall was applied, either under the RSC or since the CPR came into force, have been cases where there had been a hearing below in which the Appellant took part. In Re Edwards’ Will Trusts, evidence from the Defendant was admitted on appeal both to explain why he had not attended the trial (though he knew of the proceedings and of the hearing) and on the substantive issue in the case (see [1982] Ch 30, at 35E and 41C to E). No reference was made to Ladd v Marshall in that case. The court did not in fact set aside the order, because it was satisfied that, despite the Defendant’s evidence, the order was correctly made.

In David v Charlemagne (1996) 5 PIQR 318 the Court of Appeal did not consider that Ladd v Marshall applied to an appeal from the refusal of an application to set aside a default judgment, the additional evidence being sought to be introduced only on appeal, not on the original application, because there had been no trial, nor any hearing on the merits.

In the present case there was, of course, a trial, but one which, on Mr Basile’s evidence, he was unaware of and in which, for that reason, he took no part. From his point of view it is as if the judgment had been entered in default.

The principle underlying Ladd v Marshall is that the finality of a judgment should not readily be jeopardised. There are cases where it is right to allow in fresh evidence, but the party who wishes to rely on it is expected to have used reasonable diligence to get evidence for use at the trial. Only if the fresh evidence could not have been obtained with the application of such reasonable diligence may the evidence be allowed in, and then only if it satisfies the other tests, as to relevance and credibility.

The same principle underlies rule 39.3(3) to (5). The successful party has obtained judgment in the absence of the other party. The rules recognise that this may be a situation in which the judgment should not stand, but they lay down the specific requirements of promptness, good reason for non-attendance, and reasonable prospects of success.

In a case where, unusually, those conditions fall to be considered on appeal rather than directly on an application under rule 39.3(3), and particularly so a case where the reason for non-attendance at trial is the same as for total non-participation in the proceedings, it seems to me that the first step must be to apply the requirements of rule 39.3(5). The principles of Ladd v Marshall are only relevant, if at all, once the requirements of the rules have been applied. The second and third criteria set out in Ladd v Marshall overlap substantially with the condition in rule 39.3(5)(c), so they would not require separate consideration. If the court considers that the condition in rule 39.3(5)(b) is satisfied then it is unlikely that the first of the criteria in Ladd v Marshall would be found to require that the evidence be excluded.

Mr Basile applied for permission to appeal, for an extension of time for appealing, and for permission to rely on additional evidence on the appeal. Those applications came on for an oral hearing before Laws LJ and myself on 17 December 2007, the Respondent also being represented. We granted the extension of time and permission to appeal, but we adjourned to the hearing of the appeal the application in relation to additional evidence.

Leaving aside the question of additional evidence, the basis of the appeal is that the judge was wrong to hold that the material before him allowed him to come to the conclusion that Mr Basile was liable for any sum at all, on any of the three different heads of liability. As regards money had and received, this was because, since Mr Basile had said that the invoices produced were “almost all” the invoices, there was no certain sum, not even the apparent excess of $651,000, which the judge could hold had been paid to Mr Basile without consideration. In respect of the other heads of liability, it is said that there was no legitimate basis for holding that Mr Basile was liable for the amount for which he had produced invoices, the $557,000, which was not even claimed on a fair view of the pleading against Mr Basile, and also that even as regards the balance there was no sufficient justification for an inference that he was dishonest in relation to that sum.

Most of the argument before us, however, related to the application to adduce fresh evidence, and to the question whether, in the light of rule 39.3(5), Mr Basile was able to show a good reason for not attending the trial, and a reasonable prospect of success at the trial. No point was taken on the promptness or otherwise of the application. His evidence was given first by the statement of Mr D’Costa to which I have already referred, as part of his Appellant’s Notice served in September 2007, and secondly by a witness statement of Mr Basile himself, made in French in March 2008, and available in translation. The Respondent answered this evidence by a witness statement of Miss Legrand, a partner in the Respondent’s solicitors.

The Respondent’s contention was that Mr Basile’s evidence, both as to why he did not take part in the proceedings, and as to the additional invoices, was simply incredible. The Respondent did not, however, apply to cross-examine Mr Basile. It might not have been easy to accommodate such a process on appeal, especially given the need for an interpreter, but the Criminal Division of the Court of Appeal regularly hears oral evidence, with cross-examination, on an appeal, and it could no doubt have been organised before us. Equally, if the application had been made under rule 39.3(3), the judge could readily have heard cross-examination of Mr Basile on the application. It seems to me that the appropriate course, in this situation, is to assess whether the evidence put forward is capable of belief. If it is not, then there is no basis on which the fresh evidence application could be allowed, because an application would not have succeeded under rule 39.3(3), and the appeal would be limited to grounds available on the material which was before the judge. If, on the other hand, the evidence is capable of belief, then it would be right to admit the additional evidence on the appeal, set the order aside, and remit the matter to the judge for a trial of the claim against this Defendant which, on this footing, would not have been determined by a judgment. At that trial the judge would hear evidence from Mr Basile and would hear him cross-examined, no doubt not only on the invoices and other matters relevant to the substantive claim and his defence, but also (as regards credibility) on his account of why he did not take part in the proceedings earlier. Mr Jones Q.C. for Mr Basile submitted, optimistically, that the Court of Appeal could and should not only admit the fresh evidence, but also determine the case in his client’s favour on the basis of that evidence, but it seems to me clear that that course would not be appropriate. The terms of the remission would need careful definition, because there is no basis for setting aside the judge’s findings about the Zamtrop conspiracy itself, or for example the fact that it was Government money which was paid to Mr Basile, and was so paid in breach of fiduciary duty.

The position as described in Mr D’Costa’s statement in the Appellant’s Notice is that Mr Basile speaks French and no English, has no experience of court proceedings, did not know what the proceedings were about and did not realise that any liability might be established against him, or that he ought to attend the trial. At the time of the Appellant’s Notice, Mr D’Costa had not obtained instructions as to what documents relating to the trial were in Mr Basile’s possession, apart from the orders. He was no doubt constrained by the need to file the Appellant’s Notice as soon as possible, in order to reduce problems arising from delay. He had obtained information and documents from the Claimant’s solicitors, including the Claim Form and its translation as served, and other documents relating to formal service on Mr Basile. He said that Mr Basile could not remember receiving any documents in French. He also said that Mr Basile had made further searches and had found other invoices relating to Dr Chiluba which, with those produced to the magistrate in 2002, amounted to CHF1,531,590. Copies of these were exhibited. He also referred to the then recent flood at Mr Basile’s house which had damaged other documentation.

Mr Basile made his witness statement on 28 March 2008. He said that he had only realised that he was a Defendant to proceedings in London in July 2007 when the orders were served on him. He confirmed that a flood had taken place at his business premises in June 2007 which it was likely had destroyed some relevant documents. He also said he had suffered a stroke in January 2007, which made it more difficult for him to remember things. He described his career, having come from Italy to Switzerland in 1959, worked first as a mason, then as a rag-trader (chiffonnier), then for 10 years in a furrier’s, then a stock-handler and later a salesman in a clothes boutique, setting up his own business first in 1977.

He said that a Mr Baranpana had visited his shop in about 1994 or 1995, and had later asked him to come to a hotel in Geneva to take his employer’s measurements for making suits. He did so, and later learned that the employer was Dr Chiluba, and later on still that he was President of Zambia. Dr Chiluba spoke no French and Mr Basile no English, so they had no conversation. After this Mr Baranpana came to his shop regularly to collect cloth samples, to say which samples had been chosen, to place orders for suits, and to collect the suits once made. Later his role was taken over by Mr XF Chungu, who spoke some French, though poorly; as with Mr Baranpana, Mr Basile discussed only clothing with him. Only these two men dealt with Mr Basile as regards orders for Dr Chiluba; sometimes Mr Chungu placed orders for himself. Mr Basile had a salesman called Michel Grandjean who could not read English but could speak enough to function as a salesman, and he would sometimes take telephone calls from Mr Chungu.

He exhibited some handwritten orders, and also some orders passed on to Mr Basile’s Italian suppliers, and correspondence with them. He confirmed that payment was always made by bank transfer directly into the boutique’s bank account in Switzerland.

He described the summons in 2002 and his attendance before the magistrate. He said that the paperwork in the boutique was then in a situation which some might describe as disorder, though he found it adequate for his purposes. Completed invoices were put into bags destined for the firm’s accountant. At the time of the summons in 2002 Mr Basile looked through the bags to find what invoices he could before going to the interview. When he attended before the magistrate, he was told that Dr Chiluba was being sued, which he presumed was in Zambia, and that the invoices were needed as evidence. He told the magistrate that he had brought almost all the invoices.

He then described the receipt of documents from England in 2005 and later. He said that the only ones he saw were in English, which neither he nor any member of his family can read. He was not sure what documents he had received through the official process in 2005, but that it may have been a very thick set of documents in two or three folders. His impression was that they were all in English. He flipped through the pages, and put them away in storage in the basement of his boutique. He did not see the translated Claim Form until it was shown to him by his Swiss lawyers in 2008. He received other documents from England between 2005 and 2007, only some of which he kept. On one occasion he showed a letter to an acquaintance but he was unable to explain it because the language was technical. He said that he thought that documents were being sent to him because he was to be a witness. He saw the names of people he knew and whom he understood to be involved in proceedings brought by Zambia, but he never understood that he was being sued until he received the orders in July 2007.

Miss Legrand takes issue with the proposition that Mr Basile did not find the translated Claim Form among the documents served on him in March 2005, and says that, having read the Claim Form in French, he must have realised that claims were being made against him as a Defendant in the proceedings. It is also said not to be credible that he did not seek advice or assistance in understanding the documents which he received in 2005, especially after the summons to the magistrate in 2002. She challenges the proposition that he and his family cannot read English, referring to the fact that the website of the business has text translated into English, and that some of the documents exhibited by Mr Basile have some text in English.

Mr Sullivan Q.C. elaborated on these contentions in his written and oral submissions. He submitted that there were significant omissions from the evidence, for example as to what searches Mr Basile made in 2002, what additional searches in 2007, and why he was able to find invoices in 2007 that he had not found on the earlier occasion. He also argued that it would have been obvious to Mr Basile from the briefest perusal of the documents which he received in March 2005 that he was a Defendant to proceedings in which a claim was made against him alleging that he was a party to a conspiracy to defraud. This is said to be obvious from the inclusion of his name in the list of Defendants on the sixth page of the translated Claim Form, and on page one of the Particulars of Claim.

Undoubtedly there are oddities about parts of Mr Basile’s evidence. Certainly he was foolish not to take advice from a lawyer upon being served with the documents in March 2005. However, I would reject Mr Sullivan’s submission that it is not capable of belief that he did not realise from the documents served in March 2005 that he was himself being sued for damages for conspiracy. If the Claimant’s then solicitors (not those now acting) had taken the elementary step, required under the Practice Direction mentioned above, of writing to Mr Basile (desirably in French, but at least in clear and simple English) to ask him to account for the discrepancy between the invoices produced to the magistrate and the amount known to have been paid to him, and to inform him that, in the absence of a proper explanation, he was at risk of being sued for the difference, and if he did not respond to such a letter, then his failure to respond to the service of court proceedings would be likely to have been seen in a different light.

As it is, he had heard nothing about the matter since his appearance before the magistrate, and what he received in March 2005 was not calculated to inform him, in the way that a letter before action would and should have done, what he faced. It may be that if he had only been served with the Claim Form and the response pack (around 30 pages) it would have been easier to suggest that he could not have overlooked the documents which had been translated. Even if he had seen the Claim Form in French it may be that it would not have conveyed anything much to him, for reasons mentioned at paragraph 8 above. However, the Claimant’s then solicitors took the opportunity of adding to the relatively short, if not very forthcoming, Claim Form, served in English and French, the three lever arch files containing the Particulars of Claim and its Annexes, of which very little was directly relevant to Mr Basile, and without anything to draw his attention to that which was relevant to him. As I have said already, I do not find the material in English on the website, or for that matter the words or passages in English in the documents exhibited, to be a convincing refutation of Mr Basile’s statement that he cannot read or speak English. It may well be that he has some English vocabulary relevant to his business, but that takes the matter no further for present purposes.

It is not for me, in the absence of cross-examination, to decide whether Mr Basile is to be believed in his account of his response to the litigation documents, but it seems to me that it is capable of belief. For similar reasons I find his explanation that he did not realise that he was being sued capable of belief. In this as in other respects it would have been easy for the Claimant, through his then solicitors, to have made the position clear to Mr Basile by a suitable letter before action, or even a simple enquiry as to whether there were other invoices for all or some of the sums which he had received and which were not accounted for by the invoices produced to the magistrate in 2002. In the absence of that step, there may have been nothing that would put Mr Basile clearly on notice that he had moved from being an actual or potential witness into the position of being a party to proceedings. According to Mr Sullivan’s submission, Mr Basile took a conscious tactical decision not to take part in the proceedings, and the additional invoices now produced are late fabrications. It may be that Mr Sullivan will be able to demonstrate that this is the case when he has the opportunity to cross-examine Mr Basile, but without cross-examination the theory does not seem to me to demonstrate that Mr Basile’s account is not capable of belief. Undoubtedly Mr Basile did supply suits to Dr Chiluba. He and his employees did not make the suits: they were ordered from Italian suppliers, and the new documents include communications both to and from such suppliers. What significance those documents will be found to have is another matter, but it does not seem very likely that they are forgeries.

Mr Sullivan addressed to us some submissions to the effect that, even if Mr Basile was believed in what he said, it could not amount to a good reason for not having taken part in the proceedings, and that either he must be assumed to have taken advice when he was served with the proceedings in March 2005, or if he did not he must have been acting deliberately, and could not be excused his non-participation. At the lowest he submitted that Mr Basile, as a businessman served with formal documents relating to English court proceedings, should have taken advice about them, and if he did not that was not a good reason for his non-participation.

This court has considered what amounts to good reason under rule 39.3(5)(b) in a number of cases, and has, understandably, declined to lay down any definitive guidance. In Brazil v Brazil [2002] EWCA Civ 1135, at paragraph 12, Mummery LJ said:

“There has been some debate before us, as there was before the judge, about what is or is not capable of being a “good reason.” In my opinion the search for a definition or description of “good reason” or for a set of criteria differentiating between good and bad reasons is unnecessary. I agree with Hart J that, although the court must be satisfied that the reason is an honest or genuine one, that by itself is not sufficient to make a reason for non-attendance a “good reason.” The court has to examine all the evidence relevant to the defendant’s non-attendance; ascertain from the evidence what, as a matter of fact, was the true “reason” for non attendance; and, looking at the matter in the round, ask whether that reason is sufficient to entitle the applicant to invoke the discretion of the court to set aside the order. An over analytical approach to the issue is not appropriate, bearing in mind the duty of the court, when interpreting the rules and exercising any power given to it by the rules, to give effect to the overriding objective of enabling it to deal with cases justly. The perfectly ordinary English phrase “good reason” as used in CPR 39.3(5) is a sufficiently clear expression of the standard of acceptability to be applied to enable a court to determine whether or not there is a good reason for non-attendance.”

In that case the Defendant did not attend the trial although he knew that proceedings were on foot, having at one stage had solicitors acting for him. The notice of the trial date was sent to the address which his former solicitors had given for service on him when they ceased to act, but it was not his actual address, so that he did not receive the notice. He did receive a trial bundle and a covering letter about a week before the trial, but being illiterate he could not read them, and he took no steps to have anyone else read them to him, believing that nothing could happen in the case if he did not respond. He put the papers under his bed and ignored them. He only found out about the trial, which had proceeded unfavourably to him in his absence, about a fortnight later. He applied under rule 39.3(3); his application succeeded before Hart J, and the Claimant’s appeal was dismissed by the Court of Appeal.

In Estate Acquisition and Development Ltd v Wiltshire [2006] EWCA Civ 533 the Court of Appeal followed what Mummery LJ had said in Brazil v Brazil. Dyson LJ added this at paragraph 25:

“Moreover, [the rule] must be interpreted so as to comply with article 6 of the European Convention on Human Rights (right to a fair hearing). I refer to the judgment of Brooke LJ in Goode v Martin [2001] EWCA Civ 1899, [2002] 1 WLR 1828 para 35. In my view, it is necessary to have both article 6 and the overriding objective in mind when interpreting and applying the phrase “good reason”. It should not be overlooked that the power to set aside an order made in the absence of the applicant may only be exercised where all three of the conditions stated in CPR 39.3(5) are satisfied. In addition to the need to show a good reason for not attending, the applicant must have acted promptly and that he has a reasonable prospect of success. If the phrase “good reason” is interpreted too strictly against an applicant, there is a danger that the interpretation will not give effect to the overriding objective and not comply with article 6.”

It is unnecessary to refer to the facts of that case.

It seems to me that Mr Basile’s account of why he did not realise that he was a Defendant to these proceedings, and therefore did not take any part in the proceedings, is one which is capable of belief and which, if believed, would amount to a good reason for the purposes of rule 39.3(5)(b). The absence of a letter before action or similar communication is an important factor in that respect. His previous involvement, before the magistrate in 2002, having been solely as a witness, I find it capable of belief that he did not realise that by the process to which the documents served in 2005 related, he had been transformed from being a witness to being a Defendant against whom a substantive claim for damages was asserted. The documents served in March 2005 were so voluminous that I could believe that he did not discover that there were two documents translated into French among the mass of paper which he received. I agree that he ought to have taken advice about the papers, but I do not accept that, in the absence of any prior warning by a letter under the Protocol Practice Direction, his failure to take advice means that he did not have a good reason for not realising what was going on, and not taking part in the proceedings.

On 6 October 2006 the Claimant’s present solicitors wrote to Mr Basile a short letter which did set out in reasonably simple terms, even though only in English, the essence of the claim against him. It informed him of the trial due to start on 31 October. It referred to his being the 12^th Defendant, but not having taken any steps, so that the Claimant was entitled to enter judgment in default. The letter went on:

“It is our client’s case that Boutique Basile received the total sum of $1,029,400 from an account held by the Republic of Zambia. Of that total sum remitted, some $557,803.20 has been accounted for by bills produced by you.

Boutique Basile has also received two additional payments of $100,073.50 and $80,058.50 of Government monies which were made by Meer Care & Desai (London based solicitors who are also the First Defendant in this action). Therefore in total Boutique Basile has not accounted for the receipt of $651,728.80. In the absence of any credible defence by you to this claim, we will be seeking judgment in this sum, plus accrued interest and costs, against you at trial.

The parties are ready for trial and we assume that, in these circumstances, you will wish to attend the trial and defend the claim against you.”

They asked where he would like the 117 volumes of trial bundles sent.

That letter has the merit of being short and to the point, and setting out the substance of the basis of the claim against Mr Basile, and not being accompanied by masses of other paper which would distract attention from the letter itself. A letter along those lines, preferably in French or with a French translation, ought to have been sent up to two years previously, before the proceedings were issued or at least before they were served on Mr Basile. By the time he received that letter, it was very late in the day, and he had had so much correspondence in English which he had ignored, that, to judge from his evidence, it would have been only a matter of chance if he had taken enough notice of this letter to take advice about it or get it translated. In those circumstances I cannot regard his ignoring of that letter as necessarily depriving him of a good reason for not attending the trial.

Incidentally, it is interesting that the claim against him which was outlined in that letter is for the excess of $651,728.80, not for the full amount for which the judge gave judgment.

Accordingly, I regard the evidence as sufficient to satisfy rule 39.3(5)(b), as being capable of belief and, if believed, showing a good reason for non-attendance at the trial.

As for the substance of the defence, all turns on the additional invoices, and the evidence that some invoices may have been destroyed in the flood in 2007. If Mr Basile had produced to the magistrate all the invoices which he has now produced, it is clear that the Claimant would not have advanced the claim against Mr Basile which in fact he did. I accept Mr Sullivan’s submission that the history of the production of the invoices raises questions which will provide some cross-examination material. Nevertheless, on their face they are capable of being accepted as genuine. If they are genuine, the claim presently formulated in the Particulars of Claim, and outlined in the letter of 6 October 2006 quoted above, would fail. On that basis it seems to me that the evidence satisfies the test in rule 39.3(5)(c), of showing a reasonable prospect of success at the trial.

On the basis that, in the particular and unusual circumstances of this case, the conditions in rule 39.3(5) are satisfied, so that it would be appropriate to set the judgment aside, on a limited basis, and remit the case to the judge for him to consider the case against Mr Basile with the benefit of the evidence that has been shown to this court, I find nothing in the criteria in Ladd v Marshall that would lead to a different conclusion.

For those reasons, I would permit Mr Basile to adduce the additional evidence on his appeal, and I would allow the appeal on the basis of that evidence and by analogy with rule 39.3, set aside paragraphs 11 and 21 of the order dated 4 May 2007 and paragraph 1.12 and paragraph 10 (so far as it relates to Mr Basile) of the order dated 29 June 2007, and remit the case to the trial judge. The remission is on the basis that the judge’s findings as to the Zamtrop conspiracy all stand, except for the finding that Mr Basile was a party to it, or to a sub-conspiracy relating to the money paid to Mr Basile himself, and the finding also stands that the money paid to Mr Basile was money belonging to the Government which it was a breach of fiduciary duty for Dr Chiluba and Mr XF Chungu to apply, or cause to be applied, in payment to Mr Basile for goods supplied to the two men. The order will define precisely which findings are to stand.

Mr Sullivan outlined a basis of claim against Mr Basile which he contended the Claimant could maintain even if the invoices were genuine and all the money paid to Mr Basile was for suits, shirts and the like duly supplied, some of which is reflected in the latter part of paragraph 539 of the judgment. It seems to me that this is not a claim which is asserted in the Particulars of Claim as they stand, but it will be open to the Claimant, the claim having been remitted to the trial judge, to consider whether to amend the Particulars of Claim as against Mr Basile so as to allege this basis of claim, or otherwise. It may be desirable that a fresh, self-contained version of the Particulars of Claim be served, limited to the allegations against Mr Basile, and taking as read those of the judge’s findings relevant to the claim against him which stand, so that the statements of case can be much shorter and more manageable for the new trial that needs to take place. Mr Basile will need to serve a Defence, and give disclosure, and the parties will need to apply to the judge for case management directions.

In those circumstances I need not deal with the other grounds on which the appeal was presented, but I would make two points. The first is that, as I see it, Mr Basile had no answer, on the material before the judge, to the claim for money had and received. Although Mr Basile’s evidence to the magistrate was that the invoices which he produced were not all of the invoices he had rendered, in the absence of proof by other invoices or in some other way that he had given value for more of the sums paid to him, the claim for money had and received was plain and unanswered. The second point, following from that, is that it would have provided a much more straightforward basis of claim against Mr Basile, which would have been much easier and cheaper to prove. I can see why, for presentational reasons, the Claimant may have wished to suggest that Mr Basile was a party to the conspiracy, but with a simple and economical alternative claim against him, it seems to me that there could have been a valid question as to whether it was right to make Mr Basile responsible for costs of the trial over and above those which would have been incurred if the claim against him had been put by way of money had and received from the first.

For the reasons expressed above, I would allow the appeal and remit the case to Peter Smith J for case management directions and for a trial of the claim against Mr Basile, on the basis already described.

I agree.

I also agree.