Case: Bayer AG v Winter (No 2) [1986] 1 WLR 540
Outcome: discussed
Thus in Den Norske Bank ASA v Antonatos [1999] QB 271, Waller LJ (with whom Chadwick and Millett LJJ agreed) said in a passage at 290, upon which the Sharman applicants placed reliance: 'It is finally important to recognise that it is only in exceptional circumstances that cross-examination will be ordered on an affidavit sworn pursuant to a Mareva order: see House of Spring Gardens Ltd v Waite [1985] FSR 173 at 181, per Slade LJ. The anxieties expressed by Scott J in Bayer AG v Winter (No 2) [1986] 1 WLR 540 relating to the court wanting no part of a star chamber process must constantly be borne in mind...' The passage from the reasons for judgment of Slade LJ in House of Spring Gardens, referred to by Waller LJ above, reads as follows: 'I can very well see that on the particular facts of many cases perhaps most cases the court might not consider it "just and convenient" to order the cross-examination of a defendant who has filed an affidavit in purported compliance with a Mareva order, in a case where the plaintiff has not yet seen fit to issue a motion for contempt and is not seeking an order for the swearing of a second affidavit by the defendant concerned...' Whether there has occurred 'purported compliance with a Mareva order' must surely be viewed in terms of substance as well as mere form. Lord Justice Slade made those remarks in the course of overruling the decision of Scott J at first instance, which decision had been to the effect that a court did not have the power under s 37 of the Supreme Court Act 1981 (UK) to make an order requiring cross-examination ancillary to compliance with a Mareva order, in the absence of circumstances whereby a justiciable issue is before the Court in respect of which the evidence of the deponent is relevant to the resolution thereof, for instance where the deponent of the disclosure affidavit was the subject of a contempt motion. The 'anxieties expressed by Scott J', and also referred to by Waller LJ in Den Norske Bank , appear in Scott J's earlier reasons for judgment in Bayer AG v Winter (No 2) [1986] 1 WLR 540. In that latter case, Scott J was concerned with an application seeking orders that the defendant submit to cross-examination on a wide range of matters in aid of earlier Anton Piller and Mareva orders made by the Court. Scott J referred to the scope of the cross-examination contemplated at 543 as follows: 'Mr Prescott [for the plaintiff] made clear that the purpose of his proposed cross-examination of the first defendant is a free-ranging one. He proposes to question him as to the whereabouts of his assets world-wide. He proposes to question him as to his knowledge of and part played in transactions in counterfeit Baygon wherever they may have happened.' 20 The primary proceedings in Bayer concerned allegations of an organised system for the sale of counterfeit Baygon insecticide products. As at the time of the hearing before the presiding judge, no statement of claim had been filed. Moreover, no evidence proving the allegations of sale of counterfeit Baygon was placed before the presiding judge for the purposes of the application, and at no stage had the defendant had an opportunity to confront any such evidence. Counsel for the plaintiff had indicated to the presiding judge that pending receipt of certain answers in cross-examination, the plaintiffs were minded subsequently to pursue contempt proceedings against the defendant. It was in those somewhat extreme circumstances, well removed from the present context here presented that Scott J made the following emphatic statement (at 544) in the course of refusing the order sought for the cross-examination of the defendant, being dictum upon which the Sharman applicants placed reliance in the present context: 'Star Chamber interrogatory procedure has formed no part of the judicial process in this country for several centuries. The proper function of a judge in civil litigation is to decide issues between parties. It is not, in my opinion, to preside over an interrogation. The police, charged with the upholding of the public law, cannot subject a citizen to cross-examination before a judge in order to discover the truth about the citizen's misdeeds. How then, as a matter of discretion, can it be right in a civil case, in aid of rights which, however important, are merely private rights, to subject a citizen to such a cross-examination? A fortiori it cannot be right to do so in a case where the plaintiff seeking the cross-examination of the defendant is holding itself free to use the defendant's answers for the purpose of an application to commit him to prison for contempt.' I would respectfully withhold from any such somewhat characterisation of the present conduct of the Music companies in their pursuit of what seems to me to be both reasonable and authentic means designed to ensure that Mareva relief is afforded adequate facilitation and implementation in the context of Music companies' intellectual property protection and preservation upheld by the primary judge in the principal litigation. 21 Senior counsel for the Sharman applicants asserted that nowhere in the reasons for judgment of Moore J is there a finding that the disclosures made by Mr Gee of the assets of the relevant two Sharman companies were incomplete, or that the disclosures by Ms Hemming in her affidavits as to her own assets were incomplete. I would first observe that any finding of Moore J on the completeness, or otherwise, of Mr Gee's disclosure affidavits could not possibly have any bearing upon the appropriateness of his Honour's order requiring Ms Hemming to attend for cross-examination on her own affidavits, and any suggestion to the contrary is in my opinion incorrect. Moreover, any such conclusion begs the question as to the operation of the notion of 'incomplete', and the context in which it is used. The theme of the primary judge's concern was more in the nature of inadequacy and lack of clarity. Senior counsel for the Sharman applicants asserted that the Music companies had not demonstrated that Ms Hemming's assets included what he termed 'the beneficial interest in the Sharman companies' or that the 'loan transaction with TIL was a sham'. A present concern of the Music companies is indeed with the beneficial ownership of funds. In the case of tangible and intangible assets subjected to the interposition of a complexity of offshore established companies and trust estates purportedly controlled by an offshore trustee corporation, the task of gaining access to and control of those assets, in order to enforce onshore court judgments and orders, can be an expensive and formidable undertaking for a successful litigant. It was in the light of the complexity and opacity concerning Ms Hemming's apparent employment of a Vanuatu trust instrument that the primary judge observed for the time being as follows at [36]: '... it is, in my opinion unnecessary for me to resolve some specific issues concerning that structure which were the subject of argument. One was whether [Ms Hemming] has a beneficial interest in the Sharman trust or at least has an interest which should have been identified in her disclosure affidavit.' 22 Senior counsel for the Sharman applicants submitted that having failed to make a finding on this point, the primary judge appeared to have concluded that the power to order cross-examination should be exercised in order to allow the matter of any such beneficial ownership to be further explored, his Honour observing in that context at [36]: 'If this issue [was] explored in cross-examination then the Court will be left with a greater measure of certainty about whether she does [have an interest in the Sharman companies per medium of the Sharman trust].' 23 In further response to the primary judge's endeavours to distil an expedient means for the ascertainment relevantly of beneficial ownership, it was contended by the Sharman applicants that in circumstances such as the present, an order for cross-examination of a deponent 'cannot be made unless the Court is affirmatively satisfied that there has been a non-disclosure', all that being said to have involved 'a resolution of the arguments expressly eschewed by Moore J in [36] [of his reasons]'. I have difficulty with that contention. In the context of his Honour's review of some of the offshore as well as onshore transactions, his Honour had made the significant finding, along the way as it were, that the 'evidence ... suggest[s] a loan was made after the property was purchased...' and also that 'a loan was not secured by a mortgage'. Consequently his Honour was able to observe at [37] that '... real doubts arise about, and uncertainty surrounds, the reason why this transaction took place when it did, and whether the moneys transferred to TIL were, in truth, in satisfaction of a loan or continues to constitute an asset of, and requires disclosure by, [Ms Hemming].' In the circumstances I have thus far recorded, that was an apposite observation.