Guernsey Law Reports 2009-10 GLR 1
GARNET INVESTMENTS LIMITED v. BNP PARIBAS (SUISSE) S.A. and GOVERNMENT OF REPUBLIC OF INDONESIA
COURT OF APPEAL (Rowland, Bailiff, Vos and Montgomery, JJ.A.): January 9th, 2009
Injunctions—freezing order—use for foreign proceedings—“exceptional circumstances” to be shown under Law Reform (Miscellaneous Proceedings) (Guernsey) Law 1987, s.1(7) before order made or continued in aid of foreign proceedings—additional and positive factors needed, depending on case, but court unwilling to lay down guidelines—powers of Guernsey courts more limited than English courts’ power simply to refuse order if inexpedient
Injunctions—freezing order—judgment to be protected—jurisdiction to be exercised with caution but not restricted to interim relief foreign court could or would grant—applicant to identify both actual or prospective foreign proceedings to be aided by application and also foreign judgment to be protected by freezing order against frustration by defendant’s dissipation of assets
Injunctions—freezing order—discharge—if discharge appropriate, to be implemented immediately—undesirable to specify cut-off date months in advance without knowledge of what circumstances then likely to be
Courts—Court of Appeal—appeals to Privy Council—appeal as of right—no appeal as of right under Court of Appeal (Guernsey) Law 1961, s.16 unless money claim for £500 or more—inapplicable to claim in which no sum in dispute, e.g. claim to impose or raise freezing order
Garnet brought an action in the Royal Court against the bank to secure the repayment of funds held in its accounts with the Guernsey branch of the bank.
Garnet, whose beneficial owner was the son of the former President of Indonesia, had deposited substantial funds with the bank for investment. Suspecting that the funds might have been obtained as a result of P’s corrupt or criminal conduct, the bank informed the Financial Intelligence Service and, when Garnet attempted to withdraw the funds, the FIS refused its consent. After the Government of Indonesia had been joined as a third party, it obtained a freezing order in respect of the funds and was
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granted limited Norwich Pharmacal disclosure in respect of the ownership of Garnet and dealings with the account. As no civil or criminal proceedings had been brought at that time by the Government against Garnet or P, the Royal Court (Carey, Lieut. Bailiff) ordered that the freezing order was to be monitored by the court every six months but stayed the disclosure order pending any possible appeal. Those proceedings are reported at 2007–08 GLR 73.
Subsequently, the civil actions commenced by the Government against P in Indonesia, in respect of an allegedly illicit transaction, failed; another, in respect of funds allegedly misapplied, was commenced against the former President, continued after his death against his heirs (including P) and was currently on appeal; and a further action was commenced against P and others for damages in tort for improperly obtaining moneys following the banking crisis in Indonesia in 1999, and also sought the conservatory seizure of his assets, including those in the name of Garnet in Guernsey—but had not been granted and there was a conflict of legal opinion as to how far such a seizure could be obtained on an interlocutory basis in Indonesia. There was no question but that P had substantial assets in that country.
Garnet did not appeal against the Royal Court’s order and the Government therefore sought the lifting of the stay on the disclosure order. By agreement between the parties, the monitoring of the freezing order was deferred but Garnet finally sought to have it lifted.
The Royal Court (Carey, Lieut. Bailiff) made an order terminating the freezing order with effect from May 23rd, 2009 (the second anniversary of making it). It proceeded on the assumption that this time period would enable the Government to appeal or either to apply for fresh injunctive relief or commence new free-standing proceedings against P as the alleged recipient of Government funds. The Government was unable to be precise as to when and where it expected to recover judgment against P but, when pressed by the court, gave an undertaking to commence further proceedings against him in Indonesia (which would be enforceable in Guernsey) and to pursue them diligently. The court affirmed that a freezing order could validly be made in aid of foreign proceedings but was not addressed on and attached no special significance to the requirement in the Law Reform (Miscellaneous Provisions) (Guernsey) Law 1987, s.1(7) that “exceptional circumstances” should be shown before granting an interim injunction in the absence of Guernsey proceedings. It was minded to lift the stay on the disclosure order but deferred doing so until it had heard further argument from Garnet. These further proceedings in the Royal Court are reported at 2007–08 GLR 442.
The substantive appeal
On appeal, Garnet submitted that (a) the freezing order should not have been made and should now be discharged with immediate effect to allow the bank to observe its mandate and act on Garnet’s instructions to transfer its funds; the Government’s application had patently not relied on s.1(1) of the 1987 Law, since the only proceedings commenced in Guernsey were Garnet’s own proceedings against the bank and, when the Government
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had subsequently been pressed to initiate proceedings against P in Indonesia, they had failed—and it was not in a position to show “exceptional circumstances” (within the meaning of s.1(7)) to justify the freezing order in respect of further speculative proceedings in Indonesia; (b) in this context, “exceptional circumstances” justifying the making of an order meant no more than that it would be inexpedient for the court, in the absence of any substantive jurisdiction, to make it (as was the test in England); (c) the Government had not shown a “good arguable case” against it to justify the initial grant of the freezing order in 2007 and the strength of its case had deteriorated so considerably by the time of the 2008 hearing that no continuation should have been contemplated; (d) there was no risk that the funds would be removed from Guernsey since this would still not be permitted by the Financial Intelligence Service—and the Government should at least have asked whether the FIS was likely to change its mind about giving consent; moreover, since no freezing order had been granted against P in Indonesia on the ground that there was no risk of the dissipation of his funds there, the same should be held to be true here; and (e) it was therefore no longer “just and convenient” within the meaning of s.4 of the 1987 Law to continue the freezing order: there were serious doubts about the Government’s willingness to give a proper account of its problems and objectives in pursuing the litigation and in particular it had never explained why what was fundamentally an Indonesian problem (P having substantial unfrozen assets in that jurisdiction) was being pursued against relatively smaller assets in Guernsey.
The Government submitted in reply that (a) s.1(7) of the 1987 Law had never been engaged by its application for the freezing order, since the funds frozen were the subject of Garnet’s own proceedings in Guernsey and, as these were not therefore foreign proceedings, no “exceptional circumstances” had to be shown within the meaning of the sub-section; (b) it had shown the required “good arguable case” against Garnet to justify the granting of the initial order in 2007 and its continuation in 2008; (c) there was a clear risk that P and Garnet would dissipate the Guernsey assets if the freezing order were not continued, as they had already proposed to transfer the funds to Singapore without giving any explanation of what it would do with them then; moreover, the argument based on the assumption that there was the same lack of risk of dissipating assets in the two different jurisdictions was a non sequitur; (d) it was “just and convenient” to continue the freezing order; the Government had shown its willingness to pursue P in the Indonesian courts and, though some of its efforts to recover from him had failed, a “good arguable case” had been shown in respect of one subsequent claim which it was still pursuing; and (e) moreover, although there were still genuine doubts as to its ability to obtain a freezing order against P’s assets in Indonesia, this was not a legal bar to the continuing of the Guernsey order.
Costs
Garnet applied for its costs on appeal and in the Royal Court on an indemnity basis. This was opposed by the Government, which denied that
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it had behaved improperly (the usual reason for awarding indemnity costs), and applied instead for costs to be awarded to it on an issue-based basis, to reflect the winning or losing of individual submissions as part of its overall case.
Leave to appeal
The Government applied for leave to appeal to the Judicial Committee (a) as of right under the Court of Appeal (Guernsey) Law 1961, s.16, on the ground that the “value of the matter in dispute” exceeded £500; and (b) sought leave in the discretion of the court on the ground that the case raised legal issues of public importance, which were complex and novel.
Stay of discharge of freezing order
The Government applied for a stay of the discharge of the freezing order or its re-granting pending the hearing of its application to the Judicial Committee (if necessary) for leave to appeal, on the ground that if the appeal were to be successful, the result would be rendered nugatory if in the meantime the funds were removed from the Island.
Held, discharging the freezing order and the disclosure order:
The substantive appeal
(1) Section 1(7) of the Law Reform (Miscellaneous Provisions) (Guernsey) Law 1987 had been brought into play by the Government’s application for the freezing order. An interlocutory injunction could be granted under s.1(1) of the Law in support of proceedings brought in Guernsey. It was Garnet, however, which had brought the Guernsey proceedings and the Government had not made its application in support of those proceedings but in support of those brought and to be brought in Indonesia. Section 1(7) therefore applied and “exceptional circumstances” had to be established to justify the grant and maintenance of the freezing order (paras. 83–87).
(2) What constituted “exceptional circumstances” would vary extensively depending on the situation before the court and the court was unwilling to lay down restrictive guidelines. It was sufficient to say that such circumstances could not be equated with a discretion to refuse an injunction if the absence of substantive jurisdiction made it inexpedient to grant it—which was the negative test employed in England. Whenever the primary proceedings in aid of which the order was sought were not in Guernsey, some additional positive and exceptional factors, depending on the circumstances, had to be shown to justify making the order. The powers of the Guernsey courts to make freezing orders in aid of overseas proceedings were therefore, in that sense, more limited than those of the English courts (paras. 88–93).
(3) The Government had shown a good arguable case against P and Garnet when it first came to the Royal Court in 2007 but by the second hearing in 2008, the situation had substantially changed. By that time, it had ignominiously lost its principal claim against P in Indonesia, the
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alleged massive claims for corruption had failed to materialize and it had not shown that it was able to pursue its claims expeditiously. Even though a good arguable case might be shown in respect of one of its new claims, the main concerns in 2008 had become whether it was just and convenient to continue the freezing order and whether “exceptional circumstances” still existed (paras. 94–101).
(4) On the facts as they were known at the time the application first came before the Royal Court in May 2007, it could be said that “exceptional circumstances” existed. The Government said it had claims it wanted to bring, investigations it wanted to make and it was right that Garnet and P should be restrained for the time being from dealing with the funds in the Guernsey bank, to allow the Government to pursue its claims expeditiously. The situation had changed, however, by the time the case came back to the Royal Court in August 2008. By that time, the Government had had its opportunity to pursue its claims and investigations in Indonesia and had failed. It had become clear that Guernsey was the focal point of its investigations and the freezing order was not needed in aid of the Indonesian proceedings. There were therefore no longer any exceptional circumstances justifying the continuation of the order (paras. 116–118).
(5) Garnet’s argument on the risk of dissipation was misconceived. The continuation of the court-ordered freezing order was what was at stake here and not the possibility that the Financial Intelligence Service might change its attitude in respect of its concerns about the proceeds of criminal conduct and allow the expatriation of the funds. The question posed should have been whether Garnet or P was likely to dissipate the funds if permitted, not whether a third party would be minded to prevent their doing so. It was clear that the risk of dissipation found in 2007 persisted in 2008, as Garnet still wished to transfer the funds to Singapore and had not explained why it wished to do so. Its continued insistence that it was legally not the same entity as P was undoubtedly technically true but, as he was its sole beneficial owner, practically insignificant (paras. 102–106).
(6) It followed from these findings that it was no longer “just and convenient” within the meaning of s.4 of the 1987 Law to continue the injunction. The Royal Court had been perfectly justified in granting it in 2007 because of the good arguable case that had been shown and the seriousness of the risk of dissipation but by 2008 it was no longer “just and convenient” to continue it. Serious doubts had arisen about the openness of the Government in giving a complete account of the problems it faced and its objectives. The firmness of its resolve to pursue P to recover the proceeds of his alleged corruption had become seriously questionable (no civil proceedings had been mounted at all until the Government had been prompted by the Guernsey court) and it had never explained why it continued to concern itself with the relatively small sums in the Guernsey account when on its own admission P had massive assets elsewhere both in his own right and as the heir to an unspecified share in the late President Soeharto’s estate (paras. 107–115).
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(7) For the purposes of clarification, the court set out the principles the Guernsey courts should in future take into consideration when dealing with an application for a freezing order in support of foreign proceedings: (a) the jurisdiction to deal with such an application should be exercised with caution; (b) interim relief of this nature need not be restricted to that which the foreign court could or would grant; (c) it might weigh against the grant of a freezing order in Guernsey if the foreign court could have granted similar relief and had not done so—in particular, if it had refused to do so; (d) the applicant for the freezing order should be required to identify both (i) the actual or prospective foreign proceedings in aid of which the application was made, and (ii) the prospective judgment the defendant was not to be permitted, by dissipating his assets, to frustrate; and (e) once those prerequisites had been fulfilled, the court should not hesitate to grant a freezing order needed to protect a plaintiff, whether in Guernsey or overseas, from having a future judgment rendered valueless by the dissipation of the defendant’s assets (paras. 77–78).
(8) In the present proceedings, the court was not convinced that the freezing order should be extended further and it should be terminated at once. The Lieutenant Bailiff had been wrong to set an arbitrary date for its termination several months in advance, since he had not known what the situation would be in May 2009. As the Government accepted that if the freezing order were discharged the dependent disclosure order would also fall, both would be formally discharged (paras. 119–124).
Costs
(9) There was no reason for awarding costs against the Government on an indemnity basis since there was no suggestion that it had behaved improperly. It should not, however, be allowed its costs on an issue-based basis, since it had not effectively won any of the issues it had raised. It had failed in its claim against P in Indonesia (and costs should follow the event in respect of the failure of a foreign claim just as they would in the case of a domestic claim), and obtained its freezing order in the Royal Court on an unsatisfactory basis, which had been confirmed on appeal. It should pay all the costs of the hearings below and the appeal costs on a standard basis (paras. 127–129).
Leave to appeal
(10) Leave to appeal to the Judicial Committee would be refused. No appeal lay as of right under the Court of Appeal (Guernsey) Law 1961, s.16 since that section only applied to a money claim (the “value of the matter in dispute” having to be £500 or more) and the present case concerned freezing and disclosure orders in which no sum was in dispute. The court would also refuse to grant leave in the exercise of its discretion, since no issue of law of public importance was to be raised—the only new question of law that could be argued concerned the proper meaning of “exceptional circumstances” in the Law Reform (Miscellaneous Provisions) (Guernsey) Law 1987, s.1(7), but as the decision of the present court did not turn on the interpretation it had given to those words, even if
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the Judicial Committee disagreed with the interpretation, it would have no effect on the outcome of the appeal (paras. 130–132).
Stay of discharge of freezing order
(11) The application to stay the discharge of the freezing order (or make a fresh order in the same terms) pending the hearing of the Government’s application to the Judicial Committee for leave to appeal would be refused: (a) it was unlikely that the frozen funds would be removed from the jurisdiction since the Financial Intelligence Service had persistently refused its consent and the indications were that it would continue to do so; and (b) even if the Guernsey funds were dissipated, there was no reason to believe that a judgment in favour of the Government against P in Indonesia would not be met from his funds there. The only proceedings against him, either actual or prospective, were in Indonesia and since the Government had throughout maintained a contradictory attitude to P’s assets—both claiming that he was massively wealthy in Indonesia yet failing to obtain orders against his assets there—it should no longer be able to have restrictions imposed on his much smaller deposit of funds in Guernsey (paras. 133–136).
Cases cited:
(1) Crédit Suisse Fides Trust S.A. v. Cuoghi, [1998] Q.B. 818; [1997] 3 W.L.R. 474; [1997] 3 All E.R. 724; [1997] C.L.C. 1187; [1998] I.L. Pr. 41, dicta of Lord Bingham, C.J. and Millett, L.J. applied.
(2) Erinford Properties Ltd. v. Cheshire County Council, [1974] Ch. 261; [1974] 2 W.L.R. 749; [1974] 2 All E.R. 448; (1974), 118 Sol. Jo. 347, observations of Megarry, J. referred to.
(3) Fourie v. Le Roux, [2007] 1 W.L.R. 320; [2007] 1 All E.R. 1087; [2007] Bus. L.R. 925; [2007] UKHL 1, dicta of Lord Bingham of Cornhill and Lord Scott of Foscote applied.
(4) Kaduna Ltd. v. R. Durtnell & Sons Ltd., C.A., Judgment 60/2003, December 18th, 2003, unreported, dicta of Southwell, J.A. applied.
(5) Refco Inc. v. Eastern Trading Co., [1999] 1 Lloyd’s Rep. 159, dicta of Morritt, L.J. applied.
(6) Reid v. European Internet Capital Ltd., C.A., Civil App. Nos. 314 and 316, July 5th, 2002, unreported, dicta of Hodge, J.A. applied.
Legislation construed:
Court of Appeal (Guernsey) Law 1961, s.16:
“No appeal shall lie from a decision of the Court of Appeal under this Part of this Law without the special leave of Her Majesty in Council or the leave of the Court of Appeal except where the value of the matter in dispute is equal to, or exceeds, the sum of five hundred pounds sterling.”
Law Reform (Miscellaneous Provisions) (Guernsey) Law 1987, s.1(1): The relevant terms of this sub-section are set out at para. 64.
s.1(7): The relevant terms of this sub-section are set out at para. 64.
s.4: The relevant terms of this section are set out at para. 64.
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C.H. Edwards for Garnet;
T. Corfield for the bank;
S.H. Davies for the Government of Indonesia.
1 VOS, J.A.:
Background
Garnet Investments Ltd. (“Garnet”), a company incorporated in the British Virgin Islands, is beneficially owned by Hutomo Mandala Putra, also known as Tomi Soeharto, the fifth child and third son of Haji Mohammed Soeharto, who ruled the Republic of Indonesia, as its second President, from March 12th, 1967 to May 21st, 1998, just over 31 years. Mr. Soeharto died on January 27th, 2008.
2 Time magazine’s Asian edition of May 24th, 1999 reported that Mr. Soeharto’s family fortune amounted to US$15bn. or more, and suggested that illicit movements of deposits had been made just after Mr. Soeharto fell from power. Mr. Soeharto sued Time for libel but his action failed. The same Time article also suggested that Mr. Putra controlled some 60 important companies and put his personal wealth at around US$800m. Mr. Yoseph Suardi Sabda included these figures in his first affidavit used in support of the Government of the Republic of Indonesia’s initial application for a freezing order.
3 On September 22nd, 2000, the Supreme Court of Indonesia found Mr. Putra guilty of corruption in what was known as the “Goro” case. It sentenced him to 18 months’ imprisonment and fined him IDR (Indonesian Rupiahs) 30.6bn. Mr. Putra went on the run, and was later convicted of planning the murder, on July 26th, 2001, of the Supreme Court Judge who had found him guilty. On November 20th, 2001, the Supreme Court verdict against Mr. Putra was quashed.
4 On July 26th, 2002, the First Instance Court sentenced Mr. Putra to 15 years’ imprisonment for murder, fleeing justice, and illegal possession of firearms. That sentence was later reduced to 10 years. He was released from jail in October 2006, and has, according to Advocate Christopher Edwards for Garnet, lived at all times since then in Indonesia, not least because, until very recently, he was prevented from travelling outside Indonesia by the terms of (what we would call) his parole.
The appeal in this case
5 Mr. Putra opened an account with the defendant bank in the name of Garnet, on July 22nd, 1998, some two months after the removal of Mr. Soeharto. In due course, three sub-accounts were opened with the bank in Garnet’s name. There is now some €37m. in the accounts, which is
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affected by a freezing order first made by Carey, Lieut. Bailiff on January 22nd, 2007.
6 Garnet has now appealed against the grant and continuation of that freezing order, and the Government has cross-appealed against the imposition of a stay on the disclosure order also made against Garnet. Leave to appeal was granted by the Lieutenant Bailiff.
Factual summary
7 It appears that some, at least, of the moneys paid into the accounts came from two transactions:
(a) On July 23rd, 1998, V Power Corp., a Bahamian company owned by Mr. Putra, sold its shareholding in Lamborghini to Audi AG for US$48m.
i(i) On October 6th, 1998, V Power transferred the sum of US$47.5m. to Garnet.
(ii) On February 11th, 1999, V Power transferred a further US$500,000 to Garnet.
(b) On May 29th, 1998, Motorbike International Ltd., a company owned by Mr. Putra, sold 50% of its shares in Superbike International Ltd., to Modar Ltd. Subsequently, Motorbike sold the remainder of its shares in Superbike to Modar.
ii(i) Motorbike received US$18.5m. from Modar.
i(ii) On February 12th, 1999, Motorbike transferred US$10.25m. to Garnet.
(iii) On June 30th, 1999, Motorbike transferred a further US$1,680,491 to Garnet.
8 The minutes of a meeting of the board of directors of Garnet on May 13th, 2002 record that a further £8m. was loaned by Mr. Putra to Garnet in August and September 1998. It appears that this sum may also have been paid into the accounts, although Garnet has provided no explanation as to its origins, saying only that Mr. Putra cannot now recall.
9 According to Garnet’s representative, Mr. Otto Cornelis Kaligis, Motorbike held US$10m. (which may have been the balance of the proceeds of the sale of Superbike shares) in an account with the bank in 2002. The bank expressed concerns about the origin of this US$10m., and the matter was discussed between representatives of Motorbike, the bank and the Government. The outcome was:
(a) A letter dated April 4th, 2005 from the Minister of Law & Human Rights of the Government to the bank saying that Mr. Putra was not the subject of any suspicious transaction report or any civil or criminal
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proceedings in Indonesia in relation to the origin of the funds held by Motorbike.
(b) At the bank’s insistence, Motorbike’s US$10m. was paid to the Government, which itself transferred the funds back to Motorbike, as confirmed by a letter dated April 25th, 2005 from the Director General of Public Legal Administration of the Government to Motorbike.
10 On October 28th, 2002, Garnet instructed the bank to make three payments totalling about €36.46m. from the accounts. The bank refused to comply with this instruction but sought further information. On November 1st, 2002, the bank notified the Financial Intelligence Service (“FIS”) of this instruction.
11 In due course, on February 28th, 2003, the plaintiff instructed the bank to pay all the money in the accounts, save for US$1m., to the United Overseas Bank Ltd., Singapore. The instruction was stated to supersede all previous instructions. On the same date, the bank declined to comply with the instruction saying that it was concerned that “the present (or a future) Government [of Indonesia] might be able to lay claim to the moneys in the accounts at issue.” At no time, has the FIS consented to the instruction being complied with.
12 On March 3rd, 2006, some three years later, Garnet commenced this action seeking declarations that the instruction should be complied with. On July 21st, 2006, the bank applied for a stay of the action, and for various other directions.
13 On September 13th, 2006, Carey, Lieut. Bailiff directed that the bank should write to the Government enquiring whether it wished to assert any claim to the funds held for Garnet by the bank. On October 20th, 2006, the Government wrote to the Greffier of the Royal Court declaring that it “wishes to assert claim to the funds held by the [bank].” In fact, however, the Government has not yet instituted any proceedings asserting any proprietary claims to the moneys in the accounts.
14 On January 22nd, 2007, the Government applied for and obtained relief from the court including:
(a) It was joined to the action as third party.
(b) An injunction restraining Garnet until further order from disposing of or dealing with the moneys in the accounts, save in respect of legal advice and representation.
(c) It was ordered that the court should review the injunction on March 8th, 2007, some six weeks later.
15 On March 5th, 2007, the Government applied to extend the injunction, and to require Garnet to disclose all its worldwide assets. It also
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applied for an order requiring the bank to disclose details and documents relating to the current and historic beneficial ownership of Garnet, and documents relating to all transactions by which moneys were transferred into or out of the accounts.
16 On March 8th, 2007, Carey, Lieut. Bailiff continued the injunction, and adjourned the disclosure applications to a hearing in May 2007. There was a substantive inter partes hearing before him between May 14th and 17th, 2007.
17 On May 23rd, 2007, Carey, Lieut. Bailiff continued the injunction that he had granted on January 22nd, 2007. He wholly refused the Government’s application for disclosure against the bank, but granted some of the disclosure sought against Garnet, requiring it to verify more authoritatively the affidavit evidence of Messrs. Kadir and Shepherd as to the origin of the moneys in the accounts, and to disclose what other assets Garnet had held during its existence. The Lieutenant Bailiff granted leave to appeal to both Garnet and the Government, and stayed the disclosure order against Garnet pending appeal.
18 At the time of the May 2007 hearing, no civil or criminal proceedings had been issued by the Government against Garnet or Mr. Putra, notwithstanding that some nine years had elapsed since the collapse of Mr. Soeharto’s government. Carey, Lieut. Bailiff was concerned at the Government’s delay in bringing such proceedings, and held that the order he made should be supervised. To this end, he required the Government to undertake that it would commence proceedings within three months from the date on which the injunction had become effective (i.e. from May 23rd, 2007), and he ordered that the first review of the injunction should take place six months after the May 2007 judgment.
19 On August 22nd, 2007 (the day before the end of the three-month period), Perusahaan Umum Bulog (“Bulog”) issued proceedings against Mr. Putra in the District Court of South Djakarta, relating to the PT Goro property transaction claiming some IDR500bn. (the “PT Goro claim”). These proceedings were dismissed on February 28th, 2008. Thereafter, on March 19th, 2008, the parties reached a drop hands settlement.
20 In late March 2008, the matter came first before this court, but was adjourned because the PT Goro claim had just been compromised, and the parties wanted to adduce further evidence. In the result, the parties agreed that the matter would be best progressed in the first instance, in view of the new circumstances, by an application to discharge the injunction before Carey, Lieut. Bailiff, rather than by a substantive appeal.
21 Eventually, on May 13th, 2008, Garnet applied to discharge the injunction. Carey, Lieut. Bailiff adjourned the application to enable the Government to file evidence in response. The substantive hearing of the
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application to discharge was on July 22nd and 23rd, 2008. By his judgment of August 29th, 2008, the Lieutenant Bailiff ordered that the injunction should continue until a final end date of May 23rd, 2009, by which time he envisaged that there would have to be a judgment in Indonesia which could be enforced against the moneys in the accounts; otherwise, the injunction would simply disappear.
22 After further argument, in a judgment dated October 3rd, 2008, the Lieutenant Bailiff declined to lift the stay pending appeal that he had imposed on the disclosure orders made against Garnet.
23 Thus the present position is that the injunction remains in place, unless we discharge it, until May 23rd, 2009, and the disclosure orders against Garnet, unless we discharge them, will take effect after the disposal of this appeal.
Introduction to the claims against Mr. Putra
24 The claims that the Government makes against Garnet or Mr. Putra, who owns Garnet, are obviously crucial to the court’s ability to grant a freezing order against Garnet. It has not been seriously suggested that the distinction between Mr. Putra and Garnet, a company he admits to owning and controlling, should affect the way we view these issues.
25 In the original evidence before the Lieutenant Bailiff, there were many claims intimated, some of which were very unspecific. In essence, however, the Government contended that Mr. Putra had been involved in “KKN,” which in English is “corruption, collusion and nepotism.” I shall not deal here with the numerous claims that have been suggested but not brought, but they are set out in the transcript of Carey, Lieut. Bailiff’s first judgment at paras. 24–39 (and referred to in 2007–08 GLR 73, at paras. 22–24).
26 The following four claims have, however, assumed greater importance in this appeal, because they have been either seriously intimated or actually brought against Mr. Putra or his family:
(a) The PT Goro claim, which was commenced on August 23rd, 2007, and finally compromised without Mr. Putra accepting any liability on March 19th, 2008.
(b) The TPN claim filed by the Ministry of Finance of the Government against Mr. Putra and others in the Central District Court of Jakarta seeking compensation of some IDR4tr. The TPN claim relates to the PT Timor Putra Nasional car programme.
(c) The Supersemar claim for at least US$100m., which presently stands dismissed, but under appeal, and to which Mr. Putra is not yet a defendant.
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(d) The BPPC clove monopoly claims, in which Mr. Putra was at some stage named as an official suspect in a criminal investigation.
I shall deal in a little more detail with each of these claims in turn.
The PT Goro claim
27 I have set out the basic elements of the PT Goro claim above. As noted there, the proceedings were dismissed on February 28th, 2008, and on March 19th, 2008, the parties reached a drop hands settlement. Two other potentially important aspects of the PT Goro claim may affect this court’s decision:
(a) First, the claim made was dismissed by the court on a basis which suggested that it might have been brought in bad faith.
(b) Secondly, it now appears to be common ground that the Government applied for a freezing order to protect this claim, and that application was refused by the Indonesian court.
28 The PT Goro claim was dismissed in a 155-page judgment of the South Jakarta District Court dated March 11th, 2008. As Carey, Lieut. Bailiff remarked (2007–08 GLR 442, at para. 12), the translation is a rough one. That said, however, it seems to me clear from the transcript we have that the District Court thought that (a) the claim for a debt of some IDR5.8bn. was ill-founded because it had already been paid; (b) the compensation payment claimed of some IDR4.7bn. had also been paid prior to the proceedings; and (c) the IDR52.2bn. claimed seems to have been returned by the transfer of land to the plaintiff, Bulog.
29 The outcome of the claim was that it was dismissed and Mr. Putra was awarded IDR5bn. (US$500,000) compensation. This amount was eventually compromised as part of the drop hands settlement achieved.
30 Advocate Simon Davies, for the Government, points out that it is strange that the judgment should have awarded compensation to Mr. Putra for loss of his reputation, when he had only recently served a lengthy prison sentence for the murder of the judge who had found him guilty of corruption in relation to the same facts. Mr. Sabda seems to have suggested that this outcome was the result of further corruption, but the lawyers acting for Bulog were from his own Government office, and, of course, the regime in Indonesia had long changed since 1998.
The TPN claim
31 The allegations seem to be, in the broadest outline, as follows:
(a) TPN was substantially beneficially owned by Mr. Putra;
(b) TPN owed some US$469m. to the Government;
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(c) PT Vista Bella Pratama bought the debt owed by TPN to the Government from the Government for about US$40m. (some 10% of its value), thus effectively releasing TPN’s obligations to the Government;
(d) the money used by Vista Bella to purchase the debt was provided by Humpuss, a company controlled by Mr. Putra (as to at least US$12m.) and by Mr. Putra’s “close associates,” through PT Mandala Buana Bhakti (a company established by those associates);
(e) the Government contends that it was unaware of Vista Bella’s connection with Mr. Putra.
32 Mr. Sabda for the Government contends in his fourth affidavit that there is a good arguable case that the debt sale agreement should be avoided, and that the Government will be able to look behind that transaction and claim against Mr. Putra on a pre-existing personal guarantee for some US$260m., and as a shareholder in TPN under the original debt.
33 Garnet submits (a) that avoidance of the debt sale agreement between the Government and Vista Bella must have actually occurred before there can be any claim against Mr. Putra personally; and (b) that the Government was not even aware of the TPN claim until December 2007, long after the injunction was granted. In oral argument, however, Mr. Edwards accepted that this relief did not have to be granted in a two-stage process, but would form part of a single action.
34 It may also be noted that the TPN proceedings were issued on May 5th, 2008, three days after Mr. Sabda’s fourth affidavit, and three days before the May 8th, 2008 hearing. Carey, Lieut. Bailiff found in his August 29th, 2008 judgment (2007–08 GLR 442, at para. 32) that the TPN proceedings were not without substance.
35 The evidence that we directed should be filed after the hearing suggests that the TPN claim may shortly be decided at first instance, but that the two tiers of appeal could take something approaching three years to conclude.
The Supersemar claim
36 The broad outline of the allegations are as follows: The Supersemar Foundation was a “yayasan” or charitable foundation, in which Mr. Soeharto was involved. In July 2007, the Government started proceedings against Mr. Soeharto claiming that the Foundation’s moneys had been misused. Mr. Soeharto died in January 2008 and all his heirs (except Mr. Putra) have taken over the defence of the Supersemar claim.
37 The District Court of South Jakarta has ruled that the Foundation should repay the Government some US$100m. but that Mr. Soeharto (and
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therefore his heirs) are not legally responsible for the Foundation’s illegal acts. The Government is appealing this decision.
38 The Government argues that (a) Mr. Putra has been summoned to appear as a defendant to this case, but has so far failed to do so; (b) Mr. Putra will not be permitted to disclaim his inheritance and thereby avoid participating as a defendant to the Supersemar claim; and (c) the Government’s appeal from the District Court’s decision will be successful.
39 Garnet submits that it is hard to see how Mr. Putra’s eventual liability could exceed his share of his father’s estate. This point was endorsed by Carey, Lieut. Bailiff in his August 29th, 2008 judgment (2007–08 GLR 442, at paras. 15 and 34), and it was for that reason that he would not have been willing to extend the injunction, had this been the only claim.
The BPPC clove monopoly claims
40 These claims have not yet resulted in any legal proceedings against Mr. Putra, although Mr. Putra was at some point officially named as a suspect in a criminal investigation. We were told by Mr. Edwards that Mr. Putra ceased to be an official suspect some two weeks before the hearing on December 15th and 16th, 2008.
Other claims against Mr. Putra
41 Mr. Sabda has dealt in his five lengthy affidavits with numerous other putative or possible claims that the Government could bring against Mr. Putra. None of these other claims has yet been instigated. And it is now more than 10 years since investigations began after the collapse of Mr. Soeharto’s government in 1998.
42 In the course of the hearing, Mr. Davies confirmed on behalf of the Government that (a) there are no extant criminal investigations into Mr. Putra’s activities in Indonesia; (b) there are no other extant civil claims by the Government against Mr. Putra or Mr. Soeharto’s estate, whether in Indonesia or overseas, apart from those dealt with above; and (c) there may be in the pipeline more civil proceedings to be brought by the Government against Mr. Putra.
Freezing and conservatory orders in Indonesia
43 There was considerable debate at the hearing about precisely what freezing orders, if any, had been sought in Indonesia against Mr. Putra. This issue seems to be the subject of conflicting evidence between Mr. Sabda and Mr. Kaligis. What is notable, however, is that in both of the crucial sets of proceedings in Indonesia, freezing or conservatory injunctive relief is claimed.
44 In the PT Goro claim, the document we would call a “Statement of
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Claim” expressly sought seizure of the accounts in the name of Garnet, and mentioned no other specific assets of Mr. Putra; and in the “Statement of Claim” in the TPN claim, a conservatory seizure is requested in respect of all Mr. Putra’s assets, but only the accounts and the Timor Car factory are expressly mentioned.
45 Mr. Kaligis’s fifth affidavit says: “. . . I draw the court’s attention to the fact that, both in the Bulog case and the TPN case, the [Government] has sought injunctive relief. In the Bulog case it was refused and in the TPN case, the hearing has not yet taken place.”
46 Mr. Sabda, in reply, says the following under the heading “(2) The alleged failure by the Government to obtain injunctive relief in Indonesia” and “(3) The existence of assets belonging to Mr. Putra in Indonesia which have not been frozen by the Government”:
“21. It is difficult to obtain a freezing injunction in Indonesia on an interlocutory basis in civil proceedings. The Government has previously applied for injunctive relief in both the PT Goro and the TPN proceedings. However, as it was not considered that the Government could show a clear enough risk of dissipation in relation to the assets, those heads of relief were or will be determined at the final hearing in those proceedings. If it becomes apparent that there is a risk of dissipation, the Government would then be able to justify seeking an interlocutory injunction as it has done in Guernsey . . .
25. . . . Mr. Kaligis overlooks the fact that the Government cannot presently demonstrate a risk of dissipation of Mr. Putra’s shares in Humpuss, and therefore cannot justify bringing an application for an interlocutory injunction at this time.”
47 Mr. Sabda’s affidavit is inaccurate and imprecise. It was sworn on July 22nd, 2008, long after the Goro proceedings had been compromised in March 2008. Yet he says clearly about the injunctive relief: “[T]hose heads of relief were or will be determined at the final hearing in those proceedings.” It is simply unclear whether, in fact, an application for interlocutory freezing orders was refused or never applied for in the PT Goro claim. But plainly no freezing relief was granted in the PT Goro claim at the final hearing, when the claim was dismissed.
The issues
48 The main issues to be determined in this appeal may be summarized as follows:
(a) Did s.1(7) of the Law Reform (Miscellaneous Provisions) (Guernsey) Law 1987 apply to the application for freezing relief made by the Government, so that “exceptional circumstances” had to be shown before an injunction could lie?
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(b) If s.1(7) applied, what is meant by “exceptional circumstances”?
(c) In relation to each of the two judgments made on May 23rd, 2007 and August 29th, 2008, was the Lieutenant Bailiff right to find that there was a good arguable case against Mr. Putra?
(d) In relation to each of the two judgments made on May 23rd, 2007 and August 29th, 2008, was the Lieutenant Bailiff right to find that there was a risk that Garnet might dissipate its assets?
(e) In relation to each of the two judgments made on May 23rd, 2007 and August 29th, 2008, was the Lieutenant Bailiff right to find that it was just and convenient to extend the injunction?
(f) If the point had been argued, would there have been exceptional circumstances on May 23rd, 2007? Was the Lieutenant Bailiff right to find on August 29th, 2008 that, if s.1(7) applied, exceptional circumstances had been shown?
(g) Was the Lieutenant Bailiff right on August 29th, 2008 to extend the injunction to a fixed date of May 23rd, 2009, when it would lapse?
(h) Was the Lieutenant Bailiff right to continue the stay on the disclosure order on August 29th, 2008, pending appeal?
There is now no dispute that the judge had jurisdiction to grant a freezing order.
Overview of the facts and issues
49 It is no exaggeration to say that this case is puzzling and somewhat troubling. It is a case in which I was left, after the argument, with the clear impression that neither side either had been or felt able to be entirely frank or open with the court. I will try to explain why this was the case.
50 The primary plank of the Government’s case, as advanced to the Royal Court, was, as Mr. Sabda deposed on January 19th, 2007: “[I]t is reasonable to infer that Mr. Putra’s vast personal wealth is derived from his abuse of the positions of authority and influence which he enjoyed during his father’s 31-year rule of Indonesia.” Mr. Sabda had quoted in the same affidavit, without demur, the Time article that had alleged that Mr. Putra controlled some 60 [major] companies [in Indonesia], and was worth around US$800m., and that Mr. Soeharto had been worth at least US$15bn. He exhibited lists of these major companies.
51 In the course of arguing this appeal, however, the Government back-tracked from this position for the purpose of arguing that an injunction was “just and convenient,” by suggesting that it knew nothing of Mr. Putra’s personal wealth, and that there was a real possibility that any judgment it obtained in Indonesia might go unsatisfied. The Government adopted this
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position whilst, at the same time, contending that Mr. Putra was one of the heirs to his father’s huge estate and would therefore be forced to join as a defendant to the Supersemar proceedings brought against his late father.
52 The two positions cannot both be right. Either Mr. Putra is massively wealthy in Indonesian assets and will be able to satisfy any claims that are successfully pressed against him, or he is not. If he is not, then there may be a case for suggesting that the Government is at risk of finding itself with an unfulfilled judgment.
53 So far as Mr. Putra is concerned, he too was coy about the full extent of his assets; though I pause to note that he had no formal burden of proof upon him. Mr. Putra adduced evidence to show that his interest in PT Humpuss was worth somewhere between approximately US$157m. and US$201m. in June 2008. We do not know what its value may now be after the financial crisis of the last four months of 2008. When pressed, Mr. Edwards suggested that wealthy businessmen were often coy about their assets and he could not be expected to make full public disclosure of the extent of his wealth. He did not, however, contest the figures and information as to the wealth of Mr. Putra and his father that Mr. Sabda had given in his first affidavit.
54 This is not the only troubling feature of the case. It will be reasonably obvious from a study of the facts set out earlier in this judgment that the proceedings in Guernsey have prompted a huge amount of activity from the Government, which would apparently not otherwise have occurred.
55 Only after the Lieutenant Bailiff extracted an undertaking from the Government on May 23rd, 2007 were civil proceedings started against Mr. Putra for the first time. It seems that the Government thought that the PT Goro claim was its best shot. But as I have pointed out already, the claim was lost—and lost badly—and eventually compromised with no payment being made.
56 The next thing that happened was the commencement of the TPN claim in Indonesia, days before an expected return date of the injunction in Guernsey. Again, it appears that the one event was tailored to the other.
57 Moreover, it is surprising that, in both sets of proceedings, specific mention is made of the Guernsey accounts. It is the only asset mentioned specifically as requiring seizure in the TP Goro claim, and one of two assets mentioned as requiring “conservatory seizure” in the TPN proceedings. Whilst it is true that the Supersemar claim was started against Mr. Soeharto in July 2007, the claim has been continued after his death against his heirs.
58 My conclusion is that the Government’s proceedings against Mr. Putra have been largely, if not wholly, inspired by the Guernsey court’s invitation in September 2006 to state whether the Government wished to
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assert any claim the moneys in the accounts. This aspect seems to have troubled Carey, Lieut. Bailiff as well, when he said in his May 23rd, 2007 judgment (2007–08 GLR 73, at para. 45): “It is not appropriate for the Government . . . to give the appearance of trying to use this small jurisdiction as the lead forum for taking proceedings against Mr. Putra.”
59 When asked why the Government was directing so many resources and such great attention to the moneys in Guernsey, Mr. Davies was wholly unable to provide any satisfactory answer. Of course, Mr. Sabda makes it clear repeatedly in his affidavits how difficult it is to investigate fraud and corruption, and to an extent one accepts that proposition. But in this case, where it has always been asserted that Mr. Putra and his family were believed to be massively wealthy and were in control of major Indonesian industries, it is hard to understand why the only active steps taken by the Government to assert what they claim to be their rights, are directed at a small jurisdiction where they have fortuitously been asked to consider making a claim to a sum that is relatively (and I stress relatively) small compared to the vast wealth the alleged wrongdoers are said to have amassed.
60 I can only conclude that there is much that the Government has been unwilling to tell both us and the Royal Court about the difficulties in bringing proceedings in Indonesia against the Soeharto family, and that the truth may well be rather different from the picture that Mr. Sabda has painted. I cannot and will not speculate about where that truth may lie, but it seems at least possible that there is limited political will to take steps in Indonesia in relation to the alleged corruption, and that the substantive claims may be more difficult to conclude favourably for the Government than is presently being admitted.
61 This possibility is given some foundation by what happened before Carey, Lieut. Bailiff, when Advocate Strappini was acting for the Government on the original application for the injunction on January 22nd, 2007. The Lieutenant Bailiff’s May 23rd, 2007 judgment described (2007–08 GLR 73, at para. 44) how Mr. Strappini had made the revealing comment that “the problem facing the Government was that the Soeharto family by virtue of the fact that they had a lot of money still in their possession, had great influence in Indonesia.”
62 For the purposes of this appeal, however, we can only take hard facts, and proper inferences therefrom, into account. It may be useful to summarize those that I consider most important:
(a) It has always been the Government’s case that Mr. Putra has huge wealth in Indonesia.
(b) No proceedings were brought against Mr. Putra before the Guernsey court required an undertaking that they be initiated.
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(c) No successful application has been made in Indonesia to freeze Mr. Putra’s Indonesian assets.
(d) No steps have yet been taken in any other overseas jurisdiction to institute civil proceedings or to trace or freeze the alleged overseas assets of either Mr. Soeharto or Mr. Putra.
(e) The claim that the Government started first against Mr. Putra wholly failed, despite great confidence being expressed by the Government in its merits. In the absence of any real evidence as to present corruption in the Indonesian courts or elsewhere, I can only presume that proceedings in Indonesia are conducted regularly and properly and that the case was determined on its merits.
The statutory provisions in Guernsey and England
63 In order properly to understand the authorities that bear upon our decision, it is important to make a direct comparison between the statutory position in the two jurisdictions.
64 In Guernsey, the primary legislation is the Law Reform (Miscellaneous Provisions) (Guernsey) Law 1987 (the “LRMPG Law”), which provides as follows:
“1. (1) If proceedings have been or are to be instituted before the Court, the Court may order, at any time before it makes a final judgment in the proceedings or before the proceedings are otherwise concluded, on the application of any person who is, or as the case may be will be, a party to the proceedings (such person being referred to in this Part of the Law as ‘the applicant’), grant an injunction addressed to another person (such person being referred to in this Part of the Law as ‘the respondent’) requiring the respondent to do or not to do any thing.
. . .
(7) An injunction may in exceptional circumstances be granted notwithstanding that proceedings have not been and are not to be instituted before the Court.” [Emphasis supplied.]
“4. The Court shall not exercise any power conferred by section 1, 2 or 3 of this Law unless satisfied that it is just and convenient to do so.” [Emphasis supplied.]
65 In England, s.37(1) of the Supreme Court Act 1981 empowers the court to “grant an injunction . . . in all cases in which it appears to the court just and convenient to do so.” [Emphasis supplied.] Section 25 of the Civil Jurisdiction and Judgments Act 1982 (now of general application) empowers the court to grant all forms of interim relief in aid of foreign courts. Section 25(2), however, provides that—
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“ . . . the court may refuse to grant that relief if, in the opinion of the court, the fact that the court has no jurisdiction apart from this section in relation to the subject-matter of the proceedings in question makes it inexpedient for the court to grant it.” [Emphasis supplied.]
66 Carey, Lieut. Bailiff held in his August 29th, 2008 decision (2007–08 GLR 442, at para. 36) that he was of the view that neither s.1(7) nor s.4 of the LRMPG Law “were otherwise intended to give this court wider powers than those that have developed in England and Wales.” This question seems not to have been argued previously in Guernsey, but, as I shall explain in more detail hereafter, I doubt whether the powers in Guernsey are, in fact, as wide as those in England and Wales.
The English authorities
67 Both sides have cited extensively in their written arguments from the English cases. The extent to which they are persuasive in Guernsey is affected by the differences between legislation in the two jurisdictions, to which I have drawn attention. In my judgment, however, the English cases are relevant to (a) the relationship between a foreign court hosting the substantive proceedings and the court considering the grant of freezing relief; and (b) the relevance of applications for freezing orders in the country hosting the substantive proceedings. I will mention just three of the cases.
Crédit Suisse v. Cuoghi
68 In Crédit Suisse Fides Trust S.A. v. Cuoghi (1), the English Court of Appeal upheld a worldwide freezing order against an English resident defendant sued in Switzerland for alleged complicity in a fraud. The Swiss court had no jurisdiction to grant such a freezing order.
69 Millett, L.J. said the following ([1998] Q.B. at 827):
“Where a defendant and his assets are located outside the jurisdiction of the court seised of the substantive proceedings, it is in my opinion most appropriate that protective measures should be granted by those courts best able to make their orders effective. In relation to orders taking direct effect against the assets, this means the courts of the state where the assets are located; and in relation to orders in personam, including orders for disclosure, this means the courts of the state where the person enjoined resides.
I recognise that an ancillary jurisdiction ought to be exercised with caution, and that care should be taken not to make orders which conflict with those of the court seised of the substantive proceedings. But I do not accept that interim relief should be limited to that which
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would be available in the court trying the substantive dispute; or that by going further we would be seeking to remedy defects in the laws of other countries.” [Emphasis supplied.]
70 Lord Bingham of Cornhill, C.J. said (ibid., at 831–832) in relation to the jurisdiction exercisable under s.25:
“It would be unwise to attempt to list all the considerations which might be held to make the grant of relief under section 25 inexpedient or expedient, whether on a municipal or a worldwide basis. But it would obviously weigh heavily, probably conclusively, against the grant of interim relief if such grant would obstruct or hamper the management of the case by the court seized [sic] of the substantive proceedings (‘the primary court’), or give rise to a risk of conflicting, inconsistent or overlapping orders in other courts. It may weigh against the grant of relief by this court that the primary court could have granted such relief and has not done so, particularly if the primary court has been asked to grant such relief and declined. On the other hand, it may be thought to weigh in favour of granting such relief that a defendant is present in this country and so liable to effective enforcement of an order made in personam, always provided that by granting such relief this court does not tread on the toes of the primary court or any other court involved in the case. On any application under section 25 this court must recognise that its role is subordinate to and must be supportive of that of the primary court.” [Emphasis supplied.]
Refco Inc. v. Eastern Trading Co.
71 In Refco Inc. v. Eastern Trading Co. (5), the English Court of Appeal expressed the view that Mareva relief could be granted in England, even if the country in which the substantive proceedings were brought (the State of Illinois, United States, in that case) had such jurisdiction but exercised it on different principles. No application had been made in Illinois, because it was considered it was bound to fail.
72 The decision turned on the “inexpediency” language in s.25(2), which is absent from Guernsey legislation. Morritt, L.J. said ([1999] 1 Lloyd’s Rep. at 173–174):
“It seems to me that in both cases the question must be, if the relief is otherwise appropriate for this Court to grant, whether to grant it would be inexpedient within s.25(2). In this case, the observations of Her Honour Judge Conlon indicate clearly that the grant of interim relief here would not trench at all on the management of the case in Illinois or interfere in any way with the exercise of that Court’s primary jurisdiction . . . For my part therefore if I had thought that Mareva relief was justified if the substantive proceedings had been
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brought in England, I would not have thought it inexpedient to grant the relief sought.” [Emphasis supplied.]
Fourie v. Le Roux
73 In Fourie v. Le Roux (3), a liquidator of two South African companies applied for a freezing order against various respondents alleging they had fraudulently stripped the company’s assets and removed them to England. He indicated to the English court that he intended to make “statutory inquiries” in South Africa, and that “various claims would be formulated.”
74 The House of Lords held that the court had jurisdiction to grant freezing orders where no substantive proceedings had been issued in the foreign country concerned, but such relief would not normally be granted unless the case for substantive relief had been formulated.
75 Lord Bingham was at pains to point out the importance of the identification of the underlying substantive proceedings ([2007] 1 W.L.R. 320, at paras. 2–3):
“2 Mareva (or freezing) injunctions were from the beginning, and continue to be, granted for an important but limited purpose: to prevent a defendant dissipating his assets with the intention or effect of frustrating enforcement of a prospective judgment. They are not a proprietary remedy. They are not granted to give a claimant advance security for his claim, although they may have that effect. They are not an end in themselves. They are a supplementary remedy, granted to protect the efficacy of court proceedings, domestic or foreign: see Gee, Commercial Injunctions, 5th ed (2004), pp 77–83.
3 In recognition of the severe effect which such an injunction may have on a defendant, the procedure for seeking and making Mareva injunctions has over the last three decades become closely regulated. I regard that regulation as beneficial and would not wish to weaken it in any way. The procedure incorporates important safeguards for the defendant. One of those safeguards, by no means the least important, is that the claimant should identify the prospective judgment whose enforcement the defendant is not to be permitted, by dissipating his assets, to frustrate. The claimant cannot of course guarantee that he will recover judgment, nor what the terms of the judgment will be. But he must at least point to proceedings already brought, or proceedings about to be brought, so as to show where and on what basis he expects to recover judgment against the defendant.” [Emphasis supplied.]
76 Lord Scott of Foscote said the following (ibid., at paras. 32–35):
“32 In para 38 of his judgment in the Court of Appeal Sir Andrew Morritt, V.-C. referred to the need for there to be an ‘activation of the
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jurisdiction [to make the freezing order] whether by the issue of substantive proceedings in England or an undertaking to do so’. I would agree that, without the issue of substantive proceedings or an undertaking to do so, the propriety of the grant of an interlocutory injunction would be difficult to defend. An interlocutory injunction, like any other interim order, is intended to be of temporary duration, dependent on the institution and progress of some proceedings for substantive relief. But it is not in dispute that in suitable circumstances a freezing order may be, and often is, granted and served on the respondent before substantive proceedings have been instituted. Such an order is not a nullity. It is of immediate effect. If proceedings for substantive relief are not instituted, the freezing order may lapse in accordance with its own terms or, on an application by the respondent, may be discharged. But none of this indicates that the court had no jurisdiction to make the order. No ‘activation’ of the jurisdiction is needed.
33 Whenever an interlocutory injunction is applied for, the judge, if otherwise minded to make the order, should, as a matter of good practice, pay careful attention to the substantive relief that is, or will be, sought. The interlocutory injunction in aid of the substantive relief should not place a greater burden on the respondent than is necessary. The yardstick in section 37(1) of the 1981 Act, ‘just and convenient’, must be applied having regard to the interests not only of the claimant but also of the defendant. This is particularly so in the case of freezing orders applied for without notice. Assets of the defendant to which the claimant has no proprietary claim whatever are to be frozen so as to constitute a source from which the claimant can hope to satisfy the money judgment that, in the substantive proceedings, he hopes to obtain. The frozen assets are removed for the time being from any beneficial use by their owner, the defendant. This is a draconian remedy and the strict rules relating to full disclosure by the claimant are a recognition of the nature of the remedy and its potential for causing injustice to the defendant.
. . .
35 In the present case no claim for substantive relief was formulated and shown to Park, J., nor for that matter to Judge Norris, Q.C., nor to Deputy Judge Jarvis, Q.C. until the afternoon of 30 September 2004. I find it very difficult to visualise a case where the grant of a freezing order, made without notice, could be said to be properly made in the absence of any formulation of the case for substantive relief that the applicant for the order intended to institute. It has to be inferred that, at the time of the application to Park, J., Mr. Fourie’s counsel were unclear whether the substantive proceedings would be proceedings in South Africa or in England and, in either case, unclear
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what the cause or causes of action would be. But at the least a draft claim form could have been prepared claiming an inquiry as to what Mr. Le Roux and Fintrade had done with the assets they had seized under the Germiston order and for the return of those assets or damages for their conversion. It seems to me significant that, when the freezing order was discharged in the morning of 30 September 2004, an adequate claim form was produced by that afternoon.”
The relevant principles to be drawn from the cases
77 The principles applicable to this case, which I draw from these authorities are as follows:
(a) The ancillary jurisdiction of the overseas court dealing with an application for freezing relief (the secondary court) ought to be exercised with caution.
(b) But interim relief need not be limited to that which the court dealing with the substantive proceedings (the primary court) could or would grant.
(c) It may weigh against the grant of relief by the secondary court, if the primary court could have granted such relief and has not done so, and particularly so if it refused such relief.
(d) To obtain freezing relief, the applicant must identify both (i) the actual or prospective proceedings in aid of which the application is made, and (ii) the prospective judgment whose enforcement the defendant is not to be permitted, by dissipating his assets, to frustrate.
78 It may be also be stated that, once the court is satisfied that the pre-requisites for the making of an order are fulfilled, the court should not be timid in granting freezing orders that are needed to protect plaintiffs, whether at home or abroad, from having future judgments rendered valueless by the dissipation of the defendant’s assets.
Appeal from an exercise of discretion
79 Mr. Davies argues that we can only interfere with the Lieutenant Bailiff’s discretionary decisions if, as was stated by Southwell, J.A. in Kaduna Ltd. v. R. Durtnell & Sons Ltd. (4)—
“. . . (i) the decision was based on a misunderstanding of the law or of the evidence before him or a wrong inference of fact [was] drawn from the evidence, or (ii) there has been a change of circumstances after the judge reached his decision which would have justified him in acceding to an application to vary his decision.”
I accept these principles and have borne them in mind in reaching the conclusions on each of the issues that I set out below.
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1. Did s.1(7) apply to the application for freezing relief made by the Government, so that “exceptional circumstances” had to be shown before an injunction could lie?
80 The Government argued that s.1(7) was never engaged because proceedings have been instituted by Garnet before the court. Thus, it was said, exceptional circumstances did not have to be shown, beyond the requirement for it to be “just and expedient” to grant the injunction.
81 Section 1(1) of the LRMPGL gives some guide as to which kind of proceedings are being referred to in s.1(7), because it says that “if proceedings have been or are to be instituted before the Court, the Court may . . . at any time before it makes a final judgment in the proceedings or before the proceedings are otherwise concluded . . .” grant an injunction. It seems to me that the kind of proceedings contemplated are proceedings in aid of which an injunction is sought. Section 1(7) cannot have been intended to refer to proceedings of any kind, however unrelated to the injunction that is sought.
82 This is confirmed by s.1(7) itself which provides that “an injunction may in exceptional circumstances be granted notwithstanding that proceedings have not been and are not to be instituted before the Court” [Emphasis supplied.] The proceedings contemplated are those substantive proceedings that might be instituted before the court (as opposed to before another court) to support the injunction.
83 The question, therefore, is whether the proceedings that Garnet began are sufficiently related to the freezing injunction that the Government sought, to enable it to be said that the injunction is or was sought in aid of those proceedings.
84 Garnet’s claims were brought to force the bank to comply with its mandate, and allow the funds in the accounts to be moved at the direction of Garnet. The défenses of the bank plead in essence as follows:
(a) The bank considered that compliance with Garnet’s instructions might expose it to the commission of a criminal offence under s.39 of the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law 1999, as amended (“POCL”).
(b) The bank had grounds for suspecting that Mr. Putra had been involved in criminal conduct, and that the moneys held in the account might represent the proceeds of criminal conduct.
(c) The FIS has never given its consent to the bank’s compliance with the instruction.
85 If the bank or indeed the Government had applied for a freezing order to support the bank’s plea that the moneys were the proceeds of criminal conduct, and prevent their movement as a result, there would be merit in
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the Government’s argument. The injunction could be said to have been sought in aid of the proceedings.
86 The actual situation, however, is different. The Government has disclaimed any reliance on any treaty obligation or on any criminal conduct to support its injunction application. The Government has restricted itself to relying on the putative and, later, the existing civil proceedings, in Indonesia. It cannot properly be said that the injunction sought by the Government in these circumstances was in aid of Garnet’s proceedings, when nothing in issue in the proceedings was of more than background relevance to the injunction the Government sought.
87 Accordingly, in my judgment, s.1(7) applied to the application for freezing relief made by the Government, so that “exceptional circumstances” had to be shown before an injunction could lie.
2. If s.1(7) applied, what is meant by “exceptional circumstances”?
88 Mr. Edwards initially argued in his written submissions that the requirement in s.1(7) for “exceptional circumstances” should be construed in a similar way as the discretion in the English s.25(2) providing that “the court may refuse to grant that relief if . . . the fact that the court has no jurisdiction apart from this section . . . makes it inexpedient” for the court to grant an injunction. I disagree.
89 It seems to me that the imposition of a requirement for “exceptional circumstances” cannot be equiparated with a discretion to refuse an injunction if it is inexpedient to grant it. In the first place, inexpedience is a wholly different concept from the finding of exceptional circumstances. Secondly, one requirement is positive and the other is negative. Section 1(7) provides a further positive hurdle for an applicant to pass, whereas s.25(2) merely provides a negative discretion not to grant the injunction if a specific matter, namely the absence of substantive jurisdiction, makes it inexpedient to do so.
90 The more difficult question is to define precisely what is required for “exceptional circumstances” to be shown. And I do not think this court should attempt to do so. It is clear that the requirement makes the position in Guernsey different from the position in England, and that this further hurdle must be satisfied if an injunction in a case such as the present is to be granted. It would be unwise, however, to seek to lay down restricting guidelines as to when such circumstances will exist. Each case will turn on it own facts.
91 I should not leave this issue without mentioning the only case that was cited to us on the point, namely the decision of this court in Reid v. European Internet Capital Ltd. (6). Hodge, J.A. said: “I think that the mischief which s.1(7) is addressing is that the Guernsey court might issue
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injunctions on matters which do not relate to Guernsey and which may not otherwise come before it.” I respectfully agree and would hold that, in such a situation, “exceptional circumstances” must be shown. In the Reid case, there were exceptional circumstances, namely the likelihood of the Guernsey court being required to resolve a part of the prospective dispute in respect of which the interim injunction restraining a general meeting was granted. That case was, however, very different from this, because there was no freezing order in issue.
92 The requirement for exceptional circumstances seems to me to be saying no more than that, in a case where the substantive proceedings in aid of which the injunction is sought are not in Guernsey, there must be some additional exceptional factors which make it appropriate for the injunction to lie. What those factors may precisely be, will, as I have indicated, vary infinitely depending on the situation before the court.
93 The Lieutenant Bailiff does not seem to have been invited to consider s.1(7) in his judgment of May 23rd, 2007, though he did so briefly in his judgment of August 29th, 2008 (2007–08 GLR 442, at para. 36), in which he decided only that s.1(7) did not give the Guernsey court wider powers than the English legislation. For the reasons I have given, I agree with this, but would go further and say that, in fact, s.1(7) clearly confines the discretion of the Guernsey court rather more closely than is the case in England, in cases where the substantive proceedings are not in Guernsey. This is, perhaps, not surprising, since it is likely to be more common for injunctions to be sought in Guernsey than in England, when the substantive proceedings, in aid of which the interim relief is sought, are brought elsewhere. Guernsey, as an offshore financial centre, will wish to be able to grant freezing injunctions in aid of proceedings elsewhere, but s.1(7) requires that the court exercise appropriate caution before doing so.
3. In relation to each of the two judgments made on (a) May 23rd, 2007 and (b) August 29th, 2008, was the Lieutenant Bailiff right to find that there was a good arguable case against Mr. Putra?
94 I have no doubt that, on the evidence before Carey, Lieut. Bailiff on May 23rd, 2007, he was right to find at that stage that there was a good arguable case against Mr. Putra, at least so far as the PT Goro claim was concerned. The Government was required to undertake to the court to start proceedings against Mr. Putra within three months, and a review date was set. This seems to me to have been an appropriate way to deal with a difficult problem facing the court at that time. The concerns and suspicions of the Lieutenant Bailiff that I have alluded to above could not be fully developed at that stage. It would have been wrong to hold that all of the claims so forcefully argued in Mr. Sabda’s three affidavits were hopeless. It would have been inappropriate to make fine judgments about the validity of an Indonesian law case at that point.
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95 The position had much changed by the time of the hearing in July 2008. At that time, the Government had lost its chosen best case (the PT Goro claim), and had then settled the appeal in return for no money whatever. It had initiated two more claims in the manner described above—namely, the TPN claim and the Supersemar claim.
96 The Government had failed, by July 2008, to force Mr. Putra before the court as an heir to Mr. Soeharto, and I agree with Carey, Lieut. Bailiff’s effective finding in his judgment of August 29th, 2008 (2007–08 GLR 442, at para. 34), that the Supersemar claim, by itself, would not have been sufficient to constitute the good arguable case at that stage.
97 As far as the TPN claim is concerned, I also agree that a good arguable case could be said to have been made out on August 29th, 2008. It is difficult for a foreign court to evaluate the likelihood of success of an Indonesian claim at the best of times. It is particularly difficult for this court to hold there is no arguable case when the Government’s appointed representatives are saying it will succeed. But the Government’s confidence of success at this stage needs to be tempered by the cautions I have expressed above.
98 Moreover, it seems to me that the Lieutenant Bailiff was right to think that the fact that the claim had not been intimated when the injunction was first applied for need not be fatal to the Government’s case, particularly when Mr. Sabda’s evidence in April 2007 was that there were many claims that were being investigated.
99 Despite the finding of an arguable case, the Lieutenant Bailiff obviously harboured serious doubts about the way in which the Government was running its case against Mr. Putra, because he imposed a drop dead date at which the injunction would terminate, namely May 23rd, 2009. I will deal below with whether this was, in itself, an appropriate approach. But it seems to me that it demonstrates that he felt there were at this stage factors present that made it impossible for the injunction to continue for long without detailed supervision.
100 In my judgment, despite the correct finding that there was a good arguable case in a new claim that had not previously been seriously intimated, there were indeed very troubling aspects of the way in which the claims were being handled: (a) the Government’s first chosen claim had been ignominiously lost; (b) the alleged massive claims for corruption had never materialized; and (c) the Government had failed to show that it was in a position to pursue such massive claims expeditiously and successfully, probably for some of the reasons I have adumbrated above.
101 These matters, it seems to me, whilst not strictly relevant to the question of whether there was, in August 2008, an arguable case against Mr. Putra, were more than relevant to the twin issues of whether it was any
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longer just and convenient to continue the injunction, and whether there were exceptional circumstances in favour of so doing.
4. In relation to each of the two judgments made on (a) May 23rd, 2007 and (b) August 29th, 2008, was the Lieutenant Bailiff right to find that there was a risk that Garnet might dissipate its assets?
102 Garnet intends to remove the money in the accounts to Singapore. Despite the issue being raised, neither it nor Mr. Putra has been willing to say what will become of it in Singapore. In May 2007, Garnet argued that there could be no risk of dissipation because the FIS had not given consent to the removal of the moneys. In my judgment, Carey, Lieut. Bailiff correctly rejected this argument. The FIS could change its mind at any time. Though it might be unlikely to do so, the bank could disregard the absence of consent. The point of the injunction is to make sure that the moneys remain in Guernsey whatever the FIS decides to do in relation to the quite separate proceeds of crime issue.
103 Garnet argues before us that the court should have asked whether there was a risk of the FIS changing its mind, rather than a risk of dissipation if the FIS changed its mind. I do not agree. The risk of dissipation concerned is the risk of the respondent to the application dissipating the money, not the risk of third parties taking, or not taking, steps to prevent the moneys leaving the jurisdiction.
104 Garnet did not argue before the Lieutenant Bailiff in July 2008 that there was no risk of dissipation, and he did not deal with the matter in his August 29th, 2008 judgment anew. Mr. Edwards has, however, raised the matter again before us, on the basis that, since no freezing orders have been obtained in Indonesia, on the ground that there was no risk of dissipation there, the same applies here. This seems to me to be an irrelevant point. The fact that Mr. Putra is not likely to dissipate his wealth in Indonesia cannot conclusively determine whether he may dissipate his overseas assets.
105 It is true that the Government’s affidavit acknowledgement that there was no present risk that Mr. Putra would dissipate his Indonesian assets is a telling indication that it is not so easy for the Government to persuade an Indonesian court that Mr. Putra is motivated towards allowing future judgments against him to go unsatisfied. This is a point to which I shall return.
106 But if the pure question of dissipation were to be decided, I would agree that the risk of dissipation that the Lieutenant Bailiff found in 2007 persisted in 2008. The fact remains that, despite being given every opportunity to do so, Garnet has not identified the purpose of the transfer to Singapore. There is nothing in the point made under this head that Garnet and Mr. Putra are not the same. Mr. Putra controls Garnet. If
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anything, the risk is greater that a creature company would dissipate its assets.
5. In relation to each of the two judgments made on (a) May 23rd, 2007 and (b) August 29th, 2008, was the Lieutenant Bailiff right to find that it was just and convenient to extend the injunction?
107 I can deal quickly with the question of whether it was “just and convenient” to grant the injunction in May 2007. In my judgment, it clearly was. The requirements of both arguable case and risk of dissipation were made out, and the situation was fluid and uncertain.
108 Balancing competing factors, I cannot fault the Lieutenant Bailiff’s decision. He had concerns about the Government’s ability to bring proceedings successfully against Mr. Putra, and about Guernsey being the leading edge to the Government’s actions, but in the end he found that, with the undertakings he extracted from the Government, the injunction should be granted and regularly reviewed.
109 In my judgment, however, the situation was quite different in July and August 2008. By then, as I have already said, the worries that the Lieutenant Bailiff had in May 2007 had been demonstrated to be fully justified. They seem to me to be even more justified today.
110 The “just and convenient” rubric allows the court, as the cases I have cited show, to exercise a wide discretion. This was a discretion that the Lieutenant Bailiff exercised against continuing the injunction indefinitely. As I shall say in answer to Issue 7 below, he was mistaken in thinking in this case that it was appropriate to continue the injunction to an end date some months ahead. I will not say that such a course could never be appropriate. But here, if it were possible to say that the injunction should not be continued until a further review, it should in my judgment have been terminated at once.
111 There are a number of reasons why it was clear that, on August 29th, 2008, it was no longer just and convenient to impose an injunction, despite there being both a risk of dissipation and an arguable case on the TPN claim. These reasons are not a new exercise of discretion by this court, but an approval and slight extension of the concerns expressed in both judgments by Carey, Lieut. Bailiff:
(a) The Government’s first claim, which it had claimed to be a good one, was lost, and settled for no recovery. This demonstrated that the Government’s judgment as to its likely future success in claims against Mr. Putra, was, at best, suspect.
(b) Despite many years of opportunity before Mr. Soeharto’s death, and some seven months after his death (which is perhaps more important), claims against Mr. Putra for serious corruption had never materialized.
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(c) No proceedings were brought against Mr. Putra at all before the Guernsey court required an undertaking that they be initiated.
(d) The Government did not freeze Mr. Putra’s Indonesian assets, suggesting that the Indonesian courts did not regard Mr. Putra in the same way as the Government did. On the Government’s own admission, there was no risk of dissipation sufficient to found an Indonesian injunction.
(e) The Government has, as yet, failed to bring any claims in any other overseas jurisdiction to trace or freeze the supposedly huge assets of either Mr. Soeharto or Mr. Putra, thus reinforcing the unexplained focus on Guernsey and the (relatively modest) sums in the accounts.
112 The conclusion to these points is that the Government’s resolve to pursue Mr. Putra for the proceeds of massive corruption is seriously questionable. This may be for political or other reasons. The Government has chosen not to explain frankly to this court why things have been handled as they have, and why it appears that its only concern is this fund in Guernsey, when allegedly there are massive assets elsewhere—some US$15bn. which previously belonged to Mr. Soeharto (and to which Mr. Putra is an heir in an unspecified proportion) and some US$800m. belonging to Mr. Putra in his own right. It is simply impossible on this evidence to conclude that, even if the Guernsey moneys were to be dissipated, any judgment in the TPN matter eventually obtained against Mr. Putra would go unsatisfied.
113 Neither the Royal Court nor this court could, in these circumstances, have had the necessary confidence that, by August 2008, it remained just and convenient to continue the injunction. A party seeking an injunction, even inter partes, must be frank with the court and explain the reasons why the injunction is required. Despite the lengthy affidavit evidence from Mr. Sabda, I have been left with serious doubts as to whether the Government has laid before us a complete account of the problems it faces and of its objectives. These doubts were reinforced in argument before us, when I put the points I have made above to Mr. Davies, and he said frankly that he was in no position to tell the court any more.
114 In my judgment, therefore, Carey, Lieut. Bailiff was right, on August 29th, 2008, to hold that the injunction could not continue indefinitely. He should, however, have held, as I explain below, that the end point had already arrived.
115 I pause to note that Garnet relied also on the fact that Mr. Putra was openly resident in Indonesia and had not sought to hide his assets. These points reinforce what I have already said. This is an Indonesian case through and through. Mr. Putra has properly contested the claims in Indonesia (with the possible (irrelevant) exception of the Supersemar
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claim). His readily available and substantial assets in Indonesia make it even less just and even less convenient for an injunction to be continued in the circumstances I have described above.
6. If the point had been argued, would there have been exceptional circumstances on May 23rd, 2007? Was the Lieutenant Bailiff right to find on August 29th, 2008 that, if s.1(7) applied, exceptional circumstances had been shown?
116 As I have held above, exceptional circumstances were required on May 23rd, 2007. In my judgment, though the point was not argued below, such circumstances existed at that time for all the reasons that Carey, Lieut. Bailiff gave, and that I have adumbrated above under the heading of “just and convenient.” In May 2007, the case was exceptional indeed, and the Government was entitled to say that it had claims it wanted to bring, investigations it wanted to make, and that Mr. Putra should be restrained pro tem from dealing with the accounts to give it an opportunity to pursue its claims with all proper expedition.
117 Once again, however, the situation was different in August 2008. By then, the Government had had its opportunity, and it had demonstrated that it was using Guernsey as the focal point of its investigations. This falsified the need for the injunction in aid of any proceedings in Indonesia. It seemed rather the other way round. The cart was firmly placed before the horse. For that reason, and all those set out under the “just and convenient” head above, I would hold that exceptional circumstances could no longer be shown.
118 It will be observed that, in the result, it does not matter whether I am right or wrong on the first issue, as to whether s.1(7) was actually engaged in this case. Even if it were not, the injunction ought to have been terminated on August 29th, 2008, because it was then no longer “just and convenient” for it to be continued.
7. Was the Lieutenant Bailiff right on August 29th, 2008 to extend the injunction to a fixed date of May 23rd, 2009, when it would lapse?
119 In my judgment, this is the only real area in which the Lieutenant Bailiff went astray. Indeed, one gets the feeling from his August 29th, 2008 judgment that he realized as much (see 2007–08 GLR 442, at para. 37). He said there:
“Although it may appear arbitrary to do so, I consider that this injunction, which was originally granted in early 2007, must have an end date by which there should be an order of the Indonesian court or this court, establishing that the moneys . . . are indeed lawfully to be paid over to the [Government] . . .”
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120 I have no doubt that both the principle of setting a future end date and the arbitrary selection of it were wrong in principle. I do not say that there will never be circumstances where a future end date for an injunction can be set. Indeed, I can think of many situations in which such an order would be appropriate when known events are known to be going to occur at set times in the future. But that is not this case. The Lieutenant Bailiff had no idea what the situation would be in May 2009, and admitted as much when he described the appearance of what he was doing as “arbitrary.” Had he thought that an injunction was still justified, but needed to be regularly reviewed, the proper order was to continue it only until a set review date, as he had done before. In fact, however, my suspicion is that he did what he did because he understood that the injunction had to end, since it was no longer fully justified. It seems that the learned Lieutenant Bailiff may have slightly lacked the courage of his convictions by failing to end the injunction at once.
121 In my judgment, the Lieutenant Bailiff was wrong on August 29th, 2008 to extend the injunction to a fixed date of May 23rd, 2009. He should have discharged the injunction with immediate effect.
8. Was the Lieutenant Bailiff right to continue the stay on the disclosure order on August 29th, 2008, pending appeal?
122 Mr. Davies submitted that this issue would be academic if we discharged the injunction. Despite being pressed in argument by the Bailiff to accept the suggestion that this application might, in truth be all about the discovery order sought, Mr. Davies refused to accept that proposition. I venture to suggest that Mr. Davies was pressed with this explanation for the Government’s conduct as another possible explanation for what may have seemed, not only to me, as otherwise inexplicable.
123 This issue does not, however, of itself resolve the question of whether the discovery was correctly ordered in the first place. That question was not argued before us, because, as we understand the Government’s position, it accepts that if the injunction is discharged, the disclosure order will go with it—presumably because (as the Government says in its own notice of appeal) the disclosure was ordered in aid of the injunction. We will hear counsel further on this point if they wish to make any different submission in the light of this judgment.
Conclusions
124 For the reasons I have given, I would affirm Carey, Lieut. Bailiff’s decision as to the continuation of the freezing order on May 23rd, 2007, and allow the appeal in part against his order of August 29th, 2008. He ought, in my judgment to have discharged the injunction with immediate effect on that date.
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125 I would not want to leave this judgment without reiterating what may seem obvious. This is a most unusual case. It should not be taken as a precedent for the refusal of freezing injunctions in normal cases where there is both a good arguable case and a risk of dissipation of the assets in question. The Guernsey court will wish to provide support to friendly nations and to grant freezing orders in support of foreign proceedings wherever it is proper to do so. But those applying for such orders must make full and open disclosure of the problems they face. In this case, they have failed to do so, and, I venture to say, that that failure (which the Lieutenant Bailiff observed as long ago as May 23rd, 2007) has become increasingly obvious as these proceedings have progressed.
126 In these circumstances, I would discharge both the injunction and the disclosure orders against Garnet.
Ruling on costs
127 On the question of costs, Mr. Edwards, acting for Garnet, has asked for the costs here and below on an indemnity basis. In my judgment, there is no basis for indemnity costs in this case. Certainly this has been a difficult case but it has not been suggested in the judgment which I have delivered that the Government has behaved improperly or in any way which would normally be visited by an order for indemnity costs.
128 Mr. Davies, for the Government, has argued that there should be a complex costs order reflecting the fact that parts of the appeal went his way, and that the decision of the Lieutenant Bailiff of May 2007 was upheld, notwithstanding that the injunction is now being discharged. In my judgment, however, that approach would not be justifiable. When one comes to the court to apply for an injunction, one has to succeed in establishing every ingredient required before an injunction can be made. It is no good coming for an injunction and saying: “I can establish Factors A and B but not Factor C.” You are not justified in coming to court at all, if you cannot establish all the required matters, including Factor C.
129 In this case the Government came for an injunction on the basis that it had a sustainable claim against Mr. Putra in Indonesia. The claim that it argued was sustainable eventually failed—and failed badly. Accordingly, although the Lieutenant Bailiff was entirely justified in making his order in May 2007, and his order has been upheld, that does not mean that the Government is entitled to the costs of it. The Government got an order on a basis which turned out not to be a satisfactory basis. If the action (that is the PT Goro action) had been brought in Guernsey and had failed in Guernsey, the costs of the application for an injunction made in that claim would have followed the failure of the action. The situation is no different simply because the underlying claim was brought in Indonesia. In my judgment, therefore, none of the submissions that Mr. Davies has made
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justify either a complex order as to costs, or a partial order as to costs. The Government must pay the costs of all the hearings of the applications for the injunction below, and the costs of this appeal on a standard basis to be taxed if not agreed.
Ruling on the application for leave to appeal to the Judicial Committee of the Privy Council
130 Mr. Davies has applied on behalf of the Government for leave to take his case to the Judicial Committee of the Privy Council. He has argued first that he is entitled to leave as of right under s.16 of the Court of Appeal (Guernsey) Law 1961 on the ground that the value of the matter in dispute exceeds £500. In my judgment, he is not entitled to leave as of right, because this is an interlocutory matter in which there was no sum in dispute. These applications were for an injunction. They were not applications in which any money claim was in dispute. We have been shown no authority supporting the proposition that the fact that an injunction would, had it been granted, freeze a large sum, means that a large sum is in dispute in the injunction application for the purposes of s.16. In these circumstances, the application for leave to appeal as of right must be dismissed.
131 As an alternative, Mr. Edwards asks us to exercise our discretion to grant the Government leave to appeal to the Privy Council, on the ground that the case is of public importance and raises complex and novel issues. It is my clear view that there is no issue of law of public importance raised by this case, and that there is no point of particular complexity or novelty warranting an appeal to the Privy Council, normal principles having been applied. The only possible new question of law that the decision raised was as to the proper meaning of “exceptional circumstances” in s.1(7) of the Law Reform (Miscellaneous Provisions) (Guernsey) Law 1987. But the decision did not turn on my holdings in relation to that section. In those circumstances, even if the Government were to overturn our decision on the meaning of that sub-section, it would not make any difference to the outcome. It would not, therefore, in my judgment be appropriate for leave to be granted on that basis.
132 The remaining issues that might be aired on appeal are extremely special and unusual issues of fact, which are unlikely to have any particular bearing in future cases. The application for leave to appeal to the Privy Council must be dismissed.
Ruling on the Government’s application to stay the discharge of the injunction pending an appeal to the Privy Council
133 Mr. Davies has chosen to apply for a stay of the discharge of the injunction or a re-grant of the injunction pending his application for leave
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to appeal to the Judicial Committee of the Privy Council. He puts the matter on the basis of the dicta of Megarry, J., as he then was, in the case of Erinford Properties Ltd. v. Cheshire County Council (2) ([1974] Ch. at 267 et seq.). In essence, the court in that and other cases has held that a stay or the equivalent should be granted where the appeal, if successful, would be rendered nugatory.
134 That is not the case in this situation for several reasons, most of which are adumbrated in my judgment on the appeal. The first is, of course, that the moneys are unlikely to disappear from this jurisdiction, in the absence of consent by the Financial Intelligence Service, which we understand is most unlikely to be forthcoming.
135 Secondly, and perhaps more importantly, the reason why the injunction has been discharged is because of the Government’s contradictory attitude to the funds held by Mr. Putra. It has been the Government’s case that Mr. Putra is massively wealthy in Indonesia, yet the Government has failed to obtain any freezing of those funds in Indonesia. It is this contradictory approach that has, in large measure, led to the discharge of this injunction. If, therefore, the frozen funds were to disappear from Guernsey, there is simply not enough reason to suppose that any judgment which might in future be obtained by the Government against Mr. Putra in Indonesia would not be satisfied by Mr. Putra from his assets in Indonesia. It would, in my judgment, be quite inappropriate at this stage to re-impose an injunction pending appeal when this court has reached such a decision.
136 Finally, these proceedings have taken a tortuous course over the last two years. In my judgment, the Government was clearly not entitled to the injunctions that it obtained, in the events which have happened, and it should not be given any further order freezing the funds in this jurisdiction pending an application to the Privy Council for leave.
137 ROWLAND, BAILIFF and MONTGOMERY, J.A. concurred.
Orders accordingly.
2009
Law Report
None
Guernsey Law Reports 2009-10 GLR 1