Masri v Consolidated Contractors International Company SAL & Ors

This is an appeal brought by Mr Munib Masri, as judgment creditor, against the order of Master Miller made on 20 December 2007 in which he set aside a without notice order against the respondents, Mr Toufic Said Khoury (‘TK’) and Mr Samer Said Khoury (‘SK’), whom I will call ‘the addressees’, under CPR 71 directing them, as officers (or former officers) of two judgment debtors, namely Consolidated Contractors International Company SAL (‘CCIC’) and Consolidated Contractors (Oil and Gas) Company SAL (‘CCOG’), to attend court and to provide information about the judgment debtors’ means or any other matter about which information is needed to enforce the judgment, within the meaning of rule 71.2(1)(b)(i) and (ii). Master Miller held that he had no jurisdiction to make such an order but he gave permission to appeal and directed that the appeal be transferred to this court under rule 52.14 on the ground that it raised important points of principle.

This appeal is part of substantial litigation in which Mr Masri, who is both claimant and judgment creditor in this action, obtained judgment against CCIC and CCOG. Mr Masri, claimed a 10 per cent share of the interest, which was itself 10 per cent, held by the Consolidated Contractors (‘CCC’) group of companies in an oil concession in the Yemen known as the Masila Concession. Mr Masri claimed to be entitled to a share in that interest under a written agreement concluded in 1992.

This is the third appeal arising out of this litigation which has been heard in this court this year. They have all arisen one way or another out of the judgment of Gloster J on liability on 28 July 2006 which was given after a long trial in March 2006. In short, Gloster J held that the 1992 agreement continued in existence and that Mr Masri was entitled to payment of his 10 per cent share thereunder. There were a number of defendants including CCIC and CCOG. The claim failed against the other defendants but succeeded against CCIC and CCOG, both of which are incorporated in Lebanon. It is common ground that CCIC also has a domicile in Greece. On 4 May 2007 Gloster J determined quantum and gave judgment against them jointly and severally. She also ordered them to pay US$30 million by way of interim payment. Neither CCIC nor CCOG has paid anything under the judgments and the indications are that they have no intention of doing so if they can possibly avoid it. The sum now due under the judgment is said to be about US$63 million. It has not been suggested that CCIC and CCOG could not discharge the judgment debt if they wanted to do so.

CCIC and CCOG (‘the judgment debtors’) sought to appeal against the judgment but, when they were ordered to pay the sum of US$30 million as a condition of being permitted to do so, they did not pay, with the result that no appeal took place. The application under CPR 71 is not the only step which Mr Masri has taken with a view to enforcing the judgment. On his application, Gloster J made orders on 20 December 2007 for the appointment of a receiver and a freezing order against CCOG and for affidavits of assets against CCOG and CCIC. Gloster J also made orders against the directors of the judgment debtors requiring them to co-operate with the receiver. She also named them, including TK and SK, in the penal notice to her order.

On 19 March 2008 Flaux J made a further order for an affidavit of assets. The judgment debtors appealed to this court against part of the order of Gloster J dated 20 December (although not that relating to the directors) but their appeal failed: see Masri v CCIC and CCOG [2008] EWCA Civ 303. The basis on which it failed is explained in detail by Lawrence Collins LJ in a judgment dated 4 April 2008. Since then this court has heard a second appeal, also brought by CCIC and CCOG, in respect of an anti-suit injunction granted by HH Judge Mackie QC on 25 May 2007. That appeal was heard by the present constitution and judgment was handed down on 6 June 2008. The appeal failed: see [2008] EWCA Civ 625. The reader of this judgment is invited to consult the judgments in the previous appeals for the background to the dispute. In this judgment I will refer only to those aspects of the case which are relevant to the issues in this appeal.

There is at least one curious feature of this appeal. As I have indicated, Master Miller set aside the orders complained of because of a lack of jurisdiction. However, he made it clear that he would have set them aside in any event on the ground of a failure on the part of the judgment creditor to make full and frank disclosure to the court as was his duty on a without notice application. Although Master Miller granted permission to appeal on the jurisdiction point, he refused it on the issue of full and frank disclosure. There is an issue as to the scope of the permission to appeal granted by Master Miller, to which I will return below. On one view this appeal might be academic. We considered whether, if it was academic, we should refuse to proceed with the appeal on that ground. However, we decided to proceed on the basis that it would not in any event be academic, since the judgment creditor might wish to proceed with a fresh application in the future, which he could not do if Master Miller was correct to hold that the court had no jurisdiction to make the order sought. Without a successful appeal, the issue of jurisdiction would be res judicata. In the event, as appears below, our conclusion on both jurisdiction and discretion show that the appeal is not academic.

Both TK and SK are resident and domiciled in Greece. At the time of the applications and of the subsequent orders, TK was a director of CCIC and SK was a director of a company called Consolidated Contractors Group SAL (Holding Company), which is a corporate director of CCOG. Both TK and SK have more recently ceased to be directors of those companies but that is not said to be directly relevant for present purposes. On 4 July 2007 the judgment creditor made two without notice applications to Master Miller. In each case the applicant was described as the claimant and the judgment debtors as the defendants. The order sought was in a very similar form in both cases.

In the case of TK the orders sought were in these terms:

In SK’s case the application was in almost identical terms except that the judgment debtor was CCOG and SK was described as “a director of the corporate director (Consolidated Contractors Group SAL (Holding Company)) of [CCOG]”.

The orders were dated 6 July 2007 and were in almost identical terms. In each case the heading was the heading in the action, so that Mr Masri is named as the claimant and CCIC and CCOG as defendants. Each recited that CCIC and CCOG, in breach of an order of Gloster J, had not paid amounts they had been ordered to pay by way of interim payment and on account of costs. They recited the correct position as to the directorships held by TK and SK respectively. They also ordered each to attend at a specified (but different) time and place and each to produce documents specified in the schedule to the order which were in the respective addressee’s control and to answer on oath such questions as the court may require. Finally each of the orders permitted substituted service on the judgment debtors’ named solicitors.

On 13 September 2007 the addressees issued an application that the orders be set aside for want of jurisdiction and on the basis that the orders should not otherwise have been made. On 22 November 2007, the examination of the addressees was postponed pending the outcome of the application, save that it was ordered that the issues relating to service of the orders be adjourned for further argument after judgment on the other issues, if they were still relevant and if they were pursued. Such issues as there are or may be as to service of the orders have not yet been considered and are not relevant to this appeal, although it will be necessary to say something about service of orders made under CPR 71. On 20 December 2007 Master Miller gave judgment orally and set aside the orders. He also granted a declaration that the court had no jurisdiction to make them. As it happened Master Miller gave judgment at about the same as Gloster J handed down her judgment in the case which led to the appeal which was decided on 4 April. There is some conflict between the two decisions, to which I will return in a moment. Gloster J’s draft judgment was available to Master Miller shortly before he gave his judgment.

CPR 71 is the successor to RSC Order 48. Rule 71.1 describes the scope of Part 71 and states that it

In these circumstances I would accept Mr Layton’s submission that orders made under CPR 71 are made against and binding on the addressees personally. This is clear from the fact that they must be served upon them and that they include a penal notice addressed to them. It is also supported by the decisions of Millett J under RSC Order 48 in Maclaine Watson v ITC (No 2) [1987] 1 WLR 1711, at 1714 and of Tomlinson J under CPR 71 in Vitol SA v Capri Marine Limited [2008] EWHC 378 (Comm) at [11]. That said, the purpose of the orders is not to enforce the judgment against the addressees. Indeed, it is plain that the only purpose of Part 71 is to assist the enforcement of a judgment debt. It is thus ancillary to the proceedings in which the judgment was obtained. This is evident in this case from the fact that in the application notices and the orders, which are in the prescribed form, Mr Masri is described as the claimant and the judgment debtors as the defendants.

It is not in dispute that TK was an officer of a judgment debtor, namely CCIC. In these circumstances, if TK were present in England, I can see no reason why an order directing him to attend should not have been made under Part 71. The English court would in such a case have both personal and subject matter jurisdiction. Moreover, TK would only have to produce documents in his control and he could only be required to provide information relevant to the assets of CCIC. As I see it, that is because, although the order was made against and is binding upon TK personally, it was made against him in his capacity as an officer of CCIC.

However, Mr Layton submits that CPR 71.2 does not apply, or should not be applied, to the examination of the foreign officer of a foreign judgment debtor about assets abroad. The starting point of the argument is the presumption that statutes should not be construed to have extra-territorial effect. He submits (a) that this case is analogous to Re Tucker [1990] Ch 148, in which this court decided that section 25 of the Bankruptcy Act 1914 did not authorise an order for the examination of a British subject resident in Belgium in connection with his brother’s English bankruptcy; and (b) that an order under CPR 71.2 in the circumstances of this case would contravene the principles underlying Mackinnon v Donaldson, Lufkin and Jenrette Corp [1986] Ch 482 (an important decision of Hoffmann J), in which it was held that it would be an excess of international jurisdiction for the English court to require the production by a non-party abroad of documents outside the jurisdiction concerning business which it has transacted outside the jurisdiction.

I agree that the presumption against extra-territoriality is the starting point and it may be that in the judgment of April 4, 2008 Lawrence Collins LJ somewhat understated (at [31]) its current relevance: see, e.g. Office of Fair Trading v Lloyds TSB Bank plc [2007] UKHL 48, [2007] 3 WLR 733, at [4]. But the question remains one of construction of the relevant rule. In my judgment CPR 71.2 is not restricted to persons in this country. It would defeat its object if it were. I do not consider that Re Tucker is the last word on the subject. In Re Seagull Manufacturing Co Ltd [1993] Ch 345 section 133 of the Insolvency Act 1986 was held to enable an order for the public examination in an English winding up of a British subject living abroad. Neither in that case nor in this could it be said that there would be an excessive exercise of jurisdiction in the international to order a person abroad to attend. It is one thing to order a foreign bank to produce documents from abroad for litigation in England to which it is not a party (Mackinnon v Donaldson, Lufkin and Jenrette Corp). It is another thing to do so where it is a party. It is not a breach of international law or comity to order the examination of a foreign director of a company which has submitted to the jurisdiction, has defended the case on the merits and has failed to pay the judgment debt. In these circumstances I would construe “an officer of that body” in rule 71.2 as wide enough to include TK.

There are nevertheless said to be a number of reasons why there was no jurisdiction to make an order against TK on the facts of this case. Before considering those reasons, it is convenient to dispose of the appeal against SK.

As indicated above, rule 71.2 provides that a judgment debtor may apply for an order requiring

In my opinion the answer to that question is no. The reference to “that body” is a reference to the company which is the judgment debtor. The question then becomes whether SK is, or more accurately was at the relevant time, an officer of the judgment debtor. He was not a director of CCIC or CCOG but of a corporate director of CCOG. He was an officer of the corporate director but not of CCOG itself, and not therefore an officer of the judgment debtor, at any rate if the language of the rule is given its natural and ordinary meaning.

Mr Salzedo submits that the purpose of the rule is to allow a judgment creditor to identify a natural person who can stand in the shoes of a corporate judgment debtor and be asked questions as to the whereabouts of its assets. He submits that, unless ‘officer’ is construed as including a director of a corporate director of the judgment debtor, companies will ensure that, so far as possible, they have corporate entities and not natural persons as directors. I very much doubt whether such a construction would be likely to have that effect. In any event, although I can see that it might be desirable for the rule to be widened to include such a case, I am not persuaded that ‘officer’ of the judgment debtor in the rule in its present form can properly be construed so as to include an officer of a corporate director of the judgment debtor. Moreover that is so notwithstanding the fact that SK is referred to in the order of Gloster J, who was not considering the true construction of that rule.

It follows that, in so far as the order against SK is concerned, the appeal must be dismissed.

Mr Layton submits that the English court does not have jurisdiction. In short he submits that under article 2 of Council Regulation (EC) No 44/2001, which is sometimes known as the Brussels Regulation but which I will call ‘Brussels I’, since this is a civil or commercial matter TK was entitled to be sued in the courts of Greece because he is domiciled in Greece. Mr Salzedo accepts that, if he was being “sued”, that would be so because none of the exceptions to article 2 applies. However he advances two alternative bases upon which the English court has jurisdiction. They are:

that the attribution of jurisdiction over the substance of the case under Brussels I carries with it jurisdiction to grant any procedural or evidential measures which are available under national law, including orders under Part 71; or

that there is jurisdiction over the judgment debtors and the directors of a corporate judgment debtor are treated as the company for the purposes of an application under Part 71.

The argument here is that the jurisdictional rules set out in articles 2 and 5 to 24 of Brussels I govern the jurisdiction of the courts of Member States on issues of substance or, put another way, they identify the courts in which a claimant must or may bring proceedings which assert substantive causes of action. Mr Salzedo describes those courts as having plenary jurisdiction. He submits that a court with plenary jurisdiction, which is of course the English court in this case, has jurisdiction to determine all ancillary matters, including applications under Part 71, whether the application is against the judgment debtor or, as here, against an officer of the judgment debtor.

Mr Layton accepts I think that a court with plenary jurisdiction does have ancillary powers of some kinds. He accepts, for example, that it has powers to order a party domiciled in another Member State to disclose documents and to provide copies of them to the other parties to a dispute. He also accepts that the power includes a power to order a party to swear an affidavit verifying a list of documents or, where a freezing order is made, to swear an affidavit identifying the whereabouts of his assets. He thus accepts that in the case of an individual party the order is made against the individual. In the case of a company the affidavit is ordinarily ordered to be made by the proper officer. It is I think important to note that the jurisdiction to make those orders is not conferred by article 31 (quoted below) because some at least of those orders are not provisional or protective measures and because article 31 is directed to the case in which an application is made in the courts of a State which does not have jurisdiction over the substance of the matter.

Mr Layton’s point is essentially that, whereas the court with plenary jurisdiction has ancillary powers to make orders against a party which has submitted to its jurisdiction, it has no such power with regard to non-parties. He submits that, by article 2 of Brussels I, TK was entitled to be “sued” in Greece because he is domiciled there. Mr Salzedo accepts that TK was entitled to be “sued” in Greece but submits that, when an application was made against TK under rule 71, he was not being “sued” within the meaning of article 2.

I note in passing from [134] of her judgment that Gloster J would almost certainly have accepted that submission. However Mr Salzedo places particular reliance upon the decision of this court in National Justice Compania Naviera SA v Prudential Assurance Co Ltd (The Ikarian Reefer (No 2)) [2000] 1 WLR 603 as authority for the proposition that a claim need only be brought within one of the heads of jurisdiction under Brussels I if that claim asserts a “substantive cause of action”. In that case, the claimant company had sued the defendant underwriters (“Prudential”) under a marine insurance policy against total loss. Prudential said that the vessel insured had been deliberately scuttled. The claim succeeded at trial but Prudential appealed and the appeal was allowed with costs: see The Ikarian Reefer (No 1) [1995] 1 Lloyd’s Rep 455. The trial and the appeal were lengthy and expensive and Prudential sought an order for costs against Mr Constantine Comninos under section 51 of the Supreme Court Act 1981 (‘the 1981 Act’), which gives the court power to make an order for costs against a non-party. The case was put on the basis that Mr Comninos funded the claim and/or that he was the alter ego of the insured.

Mr Comninos, who was domiciled in Greece, challenged the jurisdiction of the English court to make an order on the ground that only the Greek court had jurisdiction. Like TK, he relied on article 2 of what was then the Brussels Convention 1968 and is now article 2 of Brussels I. Rix J held that there was jurisdiction to make the order and an appeal to this court failed. The only reasoned judgment was given by Waller LJ, with whom Tuckey and Simon Brown LJJ agreed. The analysis is of considerable interest in the context of this case. At page 611B-C Waller LJ said this, after referring to the caution adopted by the court in the context of RSC Order 11:

Prudential’s argument was put in alternative ways, first that article 2 did not apply because Mr Comninos was not being “sued” and secondly that, if he was, the English court had jurisdiction under article 6(2) on the basis that these were “third party proceedings”. As I read the judgment of Rix J at first instance, reported at [1999] 2 Lloyd’s Rep 621, he held that article 2 did not apply to a claim against a non-party for costs under section 51 of the 1981 Act. At page 628 he accepted the submission that article 2 was only intended to apply to a substantive cause of action and that a claim under section 51 was incidental to the court’s substantive jurisdiction over its own process. He was also struck by the fact that, if Prudential could not proceed with its claim under section 51 in England, it could not do so anywhere. As I read the judgment, Rix J did not decide the application on the basis of article 6: see page 630.

In this court, again as I read the judgment of Waller LJ, the primary basis of his decision was the same as that of Rix J. He said at page 616B-D:

The reasoning in The Ikarian Reefer (No 2) seems to me to apply here. In my opinion a person in the position of TK has a substantial connection with the proceedings in much the same way as Mr Comninos did and similar principles apply to him. As in that case, the order made under CPR 71 was made in the context of substantive proceedings in which the court had and has jurisdiction. The application under CPR 71 is ancillary to the exercise by the English court of the substantive jurisdiction conferred upon it. In these circumstances, unless there is authority in a decision of the ECJ to the contrary, I would hold that the English court has jurisdiction under Brussels I to make an order against TK under CPR 71.

There is, as I see it, nothing in the ECJ jurisprudence to the contrary. Indeed, it appears to me that the reasoning in Case C-391/95 Van Uden Maritime BV v Deco-Line [1998] ECR I-7091 supports the above conclusion. In that case the substantive claim was being advanced in an arbitration. The claimant brought proceedings in Holland for interim relief seeking part payment of the disputed debt. The Dutch court had jurisdiction to make such an order under Dutch law. The question was whether it had jurisdiction to make it under the Brussels Convention. The ECJ held that it did not. Such jurisdiction could only arise under article 24 of the Convention (now article 31 of Brussels I), which was limited by the principle that an order under that article must be strictly provisional and by the principle of territoriality, namely the requirement of a real connecting link between the subject matter of the measures sought and the territorial jurisdiction of the contracting state of the court in which the measures are sought: see eg [37, 40, 46 and 47]. The reason for those limiting principles was that, if a court whose jurisdiction arose under article 31 were to make orders with more wide-ranging effect, that could undermine the primary rules of Brussels I attributing jurisdiction over the main proceedings.

Those limiting principles do not, however, apply to the power of the court with jurisdiction as to the substance of the dispute. This can be seen from [19 and 22] as follows:

That analysis is substantially the same as the analysis in [92-107] of the judgment of Lawrence Collins LJ, with whom Lord Neuberger of Abbotsbury and Ward LJ agreed, in the judgment handed down on 4 April, [2008] EWCA Civ 303. The court was of course there considering the jurisdiction of the court to make post-judgment ancillary orders against the judgment debtors. However, for the reasons I have given, I am of the opinion that it applies to an order made against TK as an officer of one of the judgment debtors.

In these circumstances, I would accept Mr Salzedo’s submission that there is nothing in Brussels I to limit the power of the court with substantive or plenary jurisdiction to grant such interim or ancillary measures as are provided for under national law. The power provided by CPR 71 is in my opinion just such a power.

For these reasons I would accept the first of the two alternative bases upon which Mr Salzedo submits that the English court, as the court with substantive or plenary jurisdiction, had jurisdiction under Brussels I to make an order under CPR 71 against TK as an officer of the judgment debtor. In these circumstances, it is not necessary to consider whether it has jurisdiction on the basis that the directors of a corporate judgment debtor are treated as the company for the purposes of an application under CPR 71. I will only make these short points. I am not persuaded that The Ikarian Reefer (No 2) is of any real assistance on this question. Moreover, there are to my mind considerable difficulties in the way of the argument. I do not think that it can be sensibly suggested that every director of a company is the or an alter ego of it. I agree with Tomlinson J at [11] in Vitol that it is not every officer of a company who can properly be described as its alter ego. I would prefer to leave a decision on this question until it is necessary to decide it in a particular case.

I note in passing that it was suggested in Mr Salzedo’s skeleton argument that the court has only a limited discretion to make an order under CPR 71. This was based on rule 71.2(5), which provides that “if the application notice complies with paragraph (3), an order to attend will be issued in the terms of paragraph (6)”. Mr Salzedo emphasised the words I have put in italics. He drew attention to the fact that these words are different from those in RSC Order 48 and that the notes in volume 2 of the Supreme Court Practice 2008 say at paragraph 71.2.7:

I would not accept that submission. The explanation for the terms of rule 71.2(5) is I think that, by 71.2(4) an order under rule 71.2(1) may be made by a court officer without a hearing. Such an order would be an administrative act. The addressee can of course challenge an order made without notice, especially one made by an administrative officer. I do not think that it can have been intended that on an application to set aside the order, the court should not have a discretion whether or not, in all the circumstances of the case to uphold the order or to set it aside. It was perhaps for this reason that the point played no or no significant part in Mr Salzedo’s oral argument and was ultimately abandoned.

The Evidence Regulation is Council Regulation (EC) No 1206/2001 of 28 May 2001, which is described as “on cooperation between the courts of the Member States in the taking of evidence in civil and commercial matters”. Like the title, the recitals show that the Regulation is concerned and (so far as I can see) concerned only with the taking of evidence: see eg recitals (2), (3), (5), (6), (7), (8), (9), (10), (11), (13), (14), (15) and (17). Article 1, which sets out the scope of the Regulation, provides:

The question is whether the Evidence Regulation applies here. Mr Salzedo submits that it does not because there has been no request by the court of one Member State, namely the United Kingdom, to take evidence in another Member State. It may be doubted whether the English court is “taking evidence” at all but, if it is, it is not doing so at the request of a foreign court but by way of examination of a director of a judgment debtor under a rule, namely Part 71, which permits it to do so. If the matter is approached as a question of construction of the rule, I would accept Mr Salzedo’ submission that there has been no relevant request. I do so on the assumption that the English court is “taking evidence”.

Gloster J accepted the same submission, for the same reasons, at [135] of her judgment of 20 December 2007 in a part of her judgment which was not appealed to this court. She put it thus:

Mr Layton submits that that is to approach the matter too literally. He submits that the Evidence Regulation is a complete code for the taking of evidence between Regulation States. It is the sole and exclusive route by which evidence may be obtained from a non-party who is in the territory of another Member State. If an application for evidence falls within the scope of, or is a matter which should be dealt with under, the Evidence Regulation, then the court has no power to grant that application except under the terms of the Evidence Regulation. He further submits that an application for an order that a non-party should travel from and bring documents from another Member State amounts to obtaining evidence in that Member State and falls within the scope of, or should be dealt with under, the Evidence Regulation.

In support of those submissions Mr Layton submits that the facts fall within the wording of article 1, that the witness will not otherwise have the protection of articles 5, 10(2), 10(4), 17(2) and 17(4) and that it is therefore clear that evidence cannot be sought in another Member State except under the Evidence Regulation. Mr Layton further submits that, even if (which I think he accepts) article 1 does not state in terms that it covers all applications by which evidence is sought from the territory of another Member State, to permit the courts of one State to order evidence to be obtained from but not in another Member State would in effect amount to taking evidence in another Member State within article 1(1)(b) and would circumvent the protections relating to taking evidence which are set out in the Regulation. This is especially so since the provisions of Part 71 are coercive and include the threat of imprisonment.

I would not accept those submissions as a matter of construction of the Evidence Regulation. As already indicated, I agree in this regard with the approach of Gloster J. As a matter of language or construction, I would hold that the process in CPR 71 is outside the scope of the Evidence Regulation.

Mr Layton’s argument can, however, also be put, not on the basis that the Evidence Regulation applies directly, but on the basis that permitting a procedure for examination under CPR 71 alongside the Regulation would undermine the provisions as to witness protection in the Regulation and is therefore contrary to the Community law principle of effectiveness.

However, in my opinion, the Evidence Regulation was not intended to deal with the kind of situation provided for by CPR 71. Mr Layton himself accepts that a distinction must be made between a case to which the Evidence Regulation applies and the situation where evidence is sought from a person already a party to litigation, as for example by an order for inter partes disclosure. He expressly accepts that such orders against parties may well not be precluded generally by the Evidence Regulation because there is an implied acceptance by parties to litigation of the procedural rules which govern the action in which they are participating. He refers in that regard to Mackinnon v Donaldson, Lufkin and Jenrette Securities Corp [1986] 1 Ch 482, 493F-G and 494H-495A. He adds that consequently Gloster J’s conclusion that the Evidence Regulation did not apply inter partes to preclude the grant of an affidavit of assets order against the judgment debtors is distinguishable and irrelevant. I accept that Gloster J’s decision is not on precisely this point but, in my opinion, it is valuable guidance. It would follow from it that if a party were ordered by its proper officer to swear an affidavit exhibiting relevant documents identifying the party’s assets, such an order would not be contrary to the Evidence Regulation. The same is, in my opinion, true of an order against individual directors made for the same purpose or for the purpose of a post judgment freezing order.

Mr Layton submits that the distinction referred to above between a case where the Evidence Regulation applies and a case where evidence is sought from a person already a party to the litigation is reflected in CPR 34. The distinction is between witness summonses under rule 34.2, which can only be issued in respect of and served on persons within the United Kingdom, and requests for assistance from foreign courts under rules 34.13 and 34.23, which are the only methods (he submits) by which a non-party abroad may be personally required to give evidence for the purpose of English proceedings. He submits that it would be strange if a foreigner, who could not be summonsed to appear for the purposes of a trial on liability under rule 34.2, could be summonsed to appear for the purposes of enforcement under Part 71.

For my part, I would not accept that submission. I do not think that there is anything strange about a distinction between rule 34.2 and Part 71. Rule 34.2 focuses on evidence at a trial, whereas, as any rate in the present context, Part 71 focuses on obtaining information from officers of judgment debtors in order to ascertain the whereabouts of the assets of the judgment debtor concerned. There is no reason to apply the same principles to each. In a case where the judgment debtor has submitted to the jurisdiction of the Member State in which judgment has been given, it makes sense to provide for the obtaining of information about the assets of the judgment debtor by an appropriate process in that jurisdiction.

I accept the general principle of effectiveness in EC law. The question is whether that or any other principle of EC law leads to the conclusion that the Evidence Regulation applies to an examination pursuant to CPR 71. Mr Layton placed particular reliance upon Case C-104/03, St Paul Dairy Industries v Unibel Exser BVBA [2005] ILPr 416, especially at [2, 5, 7 and 23]. The parties there were both Belgian. It was common ground that the substantive dispute between them would be subject to the jurisdiction of the Belgian court. The claimant nevertheless brought proceedings in Holland in order to seek an order from the Dutch court in those proceedings for the examination of a witness in Holland. The Dutch court had power to make such an order under Dutch law provided that it had jurisdiction in the proceedings. The defendant disputed the jurisdiction of the Dutch court. Although the claimant accepted that the substantive dispute would have to be litigated in Belgium, it nevertheless contended that the Dutch court had jurisdiction over the proceedings under article 31 of the Treaty (then article 24) on the basis that the application was for provisional or protective measures. The question referred to the Court of Justice (‘the ECJ’) was thus whether the Dutch court had jurisdiction on that ground.

The ECJ held that a request for a deposition was not a claim for “provisional or protective measures” and answered the question in the negative. Article 31 (then 24) provides:

In any event, the ECJ said at [9] that it was essentially being asked whether an application for a witness to be heard before the proceedings on the substance are initiated with the aim of establishing whether to bring a case falls within article 31 “as being a provisional or protective measure”. It answered the question in the negative. At [13] the ECJ noted that that expression was to be understood as referring to measures which were intended “to preserve a factual or legal situation so as to safeguard rights the recognition of which is otherwise sought from the court having jurisdiction as to the substance of the case”. It referred to Case C-26, Reichert and Kockler [1992] I-2149 and to Van Uden.

At [18] the ECJ said that the grant of such a measure could easily, at the stage of preliminary inquiries, be used to circumvent the jurisdictional rules in the Convention. At [19 and 20] the ECJ said that the rules which derogated from article 2 should be interpreted so as to enable a normally well-informed defendant reasonably to foresee before which courts, other than those of his domicile, he may be sued and that to grant the application might lead to a multiplication of the bases of jurisdiction. None of that reasoning is applicable here.

Mr Layton relies in particular upon [23] as follows:

On the contrary, he is applying to the English court, as the court with jurisdiction over the substance of the matter, for the examination of officers of the judgment debtors in England, which is an order the court has power to make under English law. I would accept Mr Salzedo’s submission that there is nothing in an application or order made under CPR 71 which offends against either the letter or the sprit of the Evidence Regulation. As I see it, it is an incident of the exercise by the court of its substantive jurisdiction. TK is not a mere witness but a director of a judgment debtor who is to be asked questions and to produce documents, not relating to his own assets but to those of the judgment debtor, which has failed to discharge the judgment given by the court with substantive jurisdiction under ‘Brussels I’.

I see nothing in Part 71 which is inconsistent with the language or purpose of the Evidence Regulation or with any of the underlying purposes of the Brussels I regime. It follows that I have reached a different conclusion under this head from that of Master Miller.

Mr Layton submits that there is no jurisdiction to make an order against TK because he was and is out of the jurisdiction. He relies upon the recent decision of Tomlinson J in Vitol SA v Capri Marine Limited. Orders were made without notice under CPR 71 against Mr Gerassimos Kalogiratos (‘GK’) and Mr Ioannis Kalogiratos (‘IK’), both of whom were said to be relevant directors of the judgment debtor, Capri Marine Limited (‘Capri’). The orders were made on the application of Vitol SA (‘Vitol’) as judgment creditor. The order against IK was set aside because he resigned before the judgment was obtained. I therefore refer only to the order made against GK, which was in very similar terms to that made against TK.

Permission had been granted for the orders to be served out of the jurisdiction in Greece. The question before Tomlinson J was whether the court had jurisdiction to give such permission. I note in passing that, as appears from [19], Tomlinson J was not considering the question whether there was jurisdiction to make the order, although he did observe that in most cases a substantive order would be of little utility without permission to serve it out of the jurisdiction. The claimant relied upon CPR 6.30(2), which provides:

I have reached a different conclusion. While I agree that rule 6.30(2) is concerned with documents required to be served on parties to the proceedings, I would not construe it as being so limited. Rule 6.30(2) is not naturally limited to parties and its predecessor, RSC Order 11 rule 9(4), was not so limited, as Waller LJ explained in The Ikarian Reefer (No 2) at 613B-D. I see no reason in principle why rule 6.30(2) should not apply to an order made under CPR 71, especially given CPR 71’s close connection to the underlying action and its purpose, as discussed above.

I would accept the submissions of Mr Salzedo in this regard. RSC Order 11 rule 9 provided, so far as relevant:

Thus it was clear under the RSC that orders under Order 48 could be served out of the jurisdiction under Order 11 rule 9(4), either with or without permission, depending upon whether the substantive proceedings did or did not require permission to serve out of the jurisdiction. Moreover, as I see it, that was so whether the person served was a party to the substantive proceedings or not, although it would be necessary for that person to have a close connection with them. Thus Mr Comninos was said to have such a connection in The Ikarian Reefer (No 2) for the purposes of an application for costs against a non-party and (as explained above) an officer of a judgment debtor has such a connection for the purposes of an application under CPR 71.

The position was made clear by Waller LJ in The Ikarian Reefer (No 2) at 612-3, where he was discussing the reasoning of Sir John Donaldson MR, with whom Neill and Balcombe LJJ agreed, in Mansour v Mansour [1989] 1 FLR 418. He made it clear that a notice of motion to commit a party for contempt of court could be served out of the jurisdiction under RSC Order 11 rule 9(4). Waller LJ observed that Sir John Donaldson was considering a case in which the alleged contemnor was a party to the substantive proceedings, but added at page 613C-E:

The question then arises whether the position is different under the CPR. Mr Layton submits that it is but, in my opinion, it would be very odd if it were. As we have seen, under RSC Order 11 rule 9(4) it was not necessary to bring the case within one of the gateways in Order 11 rule 1. Rule 6.30(2) does not expressly so provide and its language is wide enough to confer power on the court to grant permission. I would have expected rule 30(2) to make it clear that it was necessary for a claimant to come within one of the gateways in rule 6.20, if that was what was to be required. In these circumstances I would hold that it is not necessary for a claimant to come within one of the gateways and that rule 6.30(2) is wide enough to give the court power to give the permission sought.

In so far as Aikens J reached a different conclusion in C v L, I would not agree with him. It is not, however, entirely clear how he reached that conclusion. Counsel for the claimant in that case, Miss Julia Dias, accepted, at any rate in her principal argument, that rule 6.30(2) brought rule 6.20 into play. However, it may well be that that was because rule 6.20 applies to claim forms, which by rule 6.18(h) include application notices, so that it was accepted that 6.20(3) applied to the application notice in that case: see per Aikens J at [94(1) and (2)]. Mr Salzedo correctly observes that rule 6.20 does not apply to other documents, such as orders.

I would accept Mr Salzedo’s submission that, if it had been intended that the new rules should reverse the effect of The Ikarian Reefer (No 2), they would have done so expressly. That is I think so, even though I am aware that claims under section 51 are now expressly covered by rule 6.20(17). In [95] Aikens J referred to an alternative argument presented to him that the court had an inherent jurisdiction to give permission to serve the application notice out of the jurisdiction in that case. He noted that the old RSC Order 11 did not have a paragraph dealing with claims under section 51, referred to The Ikarian Reefer (No 2) and added:

In the case of orders under CPR 71 the solution is to my mind, not the inherent jurisdiction of the court, but the construction of rule 6.30(2) to which I have referred. This conclusion makes it unnecessary to consider a further submission made by Mr Salzedo that he would, if necessary, rely upon rule 6.20(9).

I recognise that, in reaching his conclusion, Tomlinson J also obtained some assistance, first, from what he called the closest analogy, in rule 34.2, and secondly from two decided cases. As to the first, I have already expressed my view that there is a significant distinction between CPR 34 and CPR 71. As to the second, the cases arose in a different context under different legislation. They were In re Tucker and In re Seagull Manufacturing Co Ltd [1993] Ch 345. The first was distinguished in the second. In my opinion neither is of any real assistance on the true construction of rule 6.30(2).

A potential problem remains in the case where permission to serve the claim form out of the jurisdiction in the substantive proceedings was not required because the claimant was entitled to proceed in England under Brussels I. The potential arises because what was the last part of RSC Order 11 rule 9(4) does not appear in rule 6.30(2). Mr Salzedo submits that it is implicit in the new rule. I would accept that submission. The claimant cannot be worse off under CPR 71 in such a case than he would have been if permission to serve the claim form in the substantive proceedings had been required.

For these reasons I would hold that an order under CPR 71 can either be served out of the jurisdiction without permission or, where permission to serve the original claim form out of the jurisdiction was required, with the permission of the court. In either event I would not accept Mr Layton’s submission that there is no jurisdiction to make an order under Part 71 where the addressee is out of the jurisdiction. I should add the caveat that it does not seem to me to follow that there is no jurisdiction to make the order merely because the addressee happens to be out of the jurisdiction, whether or not he is resident or domiciled out of the jurisdiction. In any event on the facts here CCIC was domiciled in Greece, so that so far as I can see, the claim form could have been served on it in Greece as of right. It follows that the points made by Mr Layton in this connection do not found a valid challenge to the jurisdiction to make an order under CPR 71 against TK.

For these reasons I would hold that the court had jurisdiction to make the order under CPR 71 against TK. It follows that I would allow the appeal to that extent.

Mr Salzedo submits that, if (as I would hold) there was jurisdiction to make the order under CPR 71 against TK, the order setting aside the order should itself be set aside. Mr Layton submits that it should not. He submits that Master Miller exercised his discretion against the claimant or at least that he did so in the sense that he indicated how he would have exercised his discretion if he had reached a different conclusion on jurisdiction. He further submits that Master Miller refused the claimant’s application for permission to appeal as to discretion and that it is not open to the claimant to challenge the exercise of his discretion. Mr Salzedo says in response that the claimant was given permission to appeal on all points other than the issue of full and frank disclosure and that the master misdirected himself in such a way as to entitle this court to exercise the discretion afresh.

The essential reason for Master Miller’s conclusion as to jurisdiction, as I read it, is that the application to examine the addressees was within the Evidence Regulation: see [42 to 44]. Further, it appears that he concluded that there is no jurisdiction here under Brussels I: see [46]. He considered a number of other matters, which are not directly relevant to the appeal, and then between [50] and [55] he considered the position on the hypothesis that he was wrong on jurisdiction.

At [50] he said that he would be very slow to make an order under CPR 71 against a Greek domiciled person requiring him to come to this country, under pain of imprisonment, bringing with him a whole raft of documentation. By contrast he said that there is a simple straightforward alternative method, namely by requesting the Greek courts to assist or by using the voluntary evidence gathering method in article 17(2) of the Evidence Regulation. Then at [51] to [55] he set out the nature of the failure on the part of the claimant to make full and frank disclosure.

Paragraph 4 of Master Miller’s order dated 29 January 2008 is in these terms:

I set out first Master Miller’s conclusions on full and frank disclosure:

I assume for present purposes that there was indeed such a failure. However, once it is concluded that the English court has jurisdiction under CPR 71, it seems to me that the court must take account of all the circumstances of the case. As indicated above, Master Miller held in [50] that the court should be very slow to make such an order. However, I am not persuaded that that is correct in principle. If the court has jurisdiction to make an order under CPR 71, it is a simple procedure and I can see no reason in principle why, once a claimant has obtained a judgment, he should not require an officer of the judgment debtor to answer questions relevant to the company’s assets or indeed bring documents, provided of course that they are in his control. It will be for the claimant to pay the officer’s costs, so that there is no financial risk to him. While the court should no doubt have some regard to alternatives available, the general principle is or should be that a judgment creditor should be able to follow any avenues available to him.

In any event I would accept Mr Salzedo’s submission that Master Miller underestimated the likely difficulties in obtaining information and evidence in Greece. The judgment debtors, including CCIC, have obstructed the execution of the judgment at every stage. As Gloster J put it at [82] of her judgment of 20 December 2007,

It is a reasonable inference that CCIC would assist TK to take every step open to him in Greece to frustrate any attempts to obtain information about its assets through legal process there. In this regard TK has refused to provide any undertakings or give any assurances that he would submit to examination in Greece, although he was given an opportunity to do so both in correspondence with his solicitors, who of course also represent the judgment debtors, and before the Master.

These are to my mind highly relevant considerations to which Master Miller should have had regard in the exercise of any discretion. Since he did not do so, it is in my opinion open to this court to exercise the discretion afresh. While giving full weight to the considerations in [51 to 55] quoted above, which I assume for present purposes to be entirely correct, I have reached the clear conclusion that, notwithstanding the failure to give full and frank disclosure in relation to what are, after all highly technical matters of procedural law, justice requires that the appellant’s appeal against Master Miller’s decision to set aside the order of 6 July 2007 against TK be allowed.

For these reasons I would dismiss the appeal in the case of SK but allow it in the case of TK and, subject to any remaining issues as to service, restore the order in his case. As to service, I noted above that the challenge to part of the order which provided for service was adjourned. It follows that, if there are any remaining issues in that regard, they must be restored for decision at first instance.

I agree.

I agree that the order proposed by the Master of the Rolls should be made for the reasons he has given. I also agree with his observation that in the judgment of April 4, 2008 (at [31]) I may have understated the current relevance of the presumption against extra-territoriality: see, in addition to the decision in Office of Fair Trading v Lloyds TSB Bank plc [2007] UKHL 48, [2007] 3 WLR 733, cited by the Master of the Rolls: Al Sabah v Grupo Torras SA [2005] UKPC 1, [2005] 2 AC 333, at [13]; Lawson v Serco Ltd [2006] UKHL 3, [2006] ICR 250, at [6]; Agassi v Robinson (Inspector of Taxes) [2006] UKHL 23, [2006] 1 WLR 1380, at [16]; and R (Al- Skeini) v Secretary of State for Defence [2007] UKHL 26, [2008] 1 AC 153, at [11], [24], [45, [137] and [141].