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Home > Legal Implication Claims
No Disclosure Compensation Claim
Disposing Of Assets
Oystertec Plc V Paul Anthony Davidson (2004)
Freezing Order
In considering the appropriate penalty for breach of an order to make disclosure, what constituted disclosure to the best of a person's ability had to be determined by assessing the particular position and difficulties in which he was placed at the time compliance was required, and assessing objectively whether he had done all that someone in his position could reasonably have done in the time available.
The first defendant and Part 20 claimant (OP) applied for an order that the second defendant (D) be committed to prison for breaches of a freezing order. D applied for a variation of the terms of the order and an extension of time for his compliance with it. OP had obtained a freezing order, without notice, on January 29, 2004 and the order was served on D on February 3. Its terms prevented D from disposing of any of his assets and included requirements that:
List Of Assets
(i) he disclose written details of all his assets, giving their value, location and identifying particulars to the best of his ability within 48 hours of service;
(ii) he disclose, to the best of his ability, the whereabouts of particular sums of money within four working days of service.
(iii) he swear and serve within 7 days an affidavit containing those details and exhibiting all documents in his possession, custody or power evidencing the matters set out therein. Within 48 hours of service D had provided a list of assets, which was incomplete, inaccurate and lacking in detail.
On February 6 he sold one million of his shares in OP and subsequently disposed of part of the proceeds of sale. On February 18 OP applied for D's committal to prison for breach of the order. On February 23 D provided an affidavit containing a schedule which was, he asserted, a true reflection of the "vast majority of the estimated value" of his worldwide assets. D accepted that he was in breach but sought a variation of the order and an extension of time for compliance. D submitted that when the order had been served he was without a solicitor and had done his best to comply.
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Breaches Of Order Claim
HELD: When asked to make such an order, the judge had to have firmly in mind what was a realistic timetable for compliance It was not satisfactory to impose an almost impossible deadline on the basis that the respondent could always apply to the court for variation of the order. While the information required of D might be justified, a time limit of four working days was extremely short.
Nevertheless, once the order had been made and served it had to be obeyed, and the only real question was what penalty should be imposed. The question of whether and to what extent D had made all reasonable attempts to carry out his duties of disclosure under the terms of the order was relevant to the consideration of penalty.
Disclosure to the best of a person's ability had to be determined by assessing the particular position and difficulties in which he was placed at the time compliance was required, and assessing objectively whether he had done all that someone in his position could reasonably have done in the time available.
D did not satisfy this test. His first list of assets contained glaring omissions and his subsequent affidavit was incomplete as a statement of assets and did not reveal the whereabouts of the particular sums of money specified in the order. Moreover, D was in breach of the order when he disposed of the shares in OP on February 6 and placed the proceeds of sale beyond OP's reach.
The breaches of the order were proven and there had been a knowing failure to comply. However, D had apologised for the breaches and realised the gravity of what he had done. It would not be appropriate to make an immediate order of imprisonment, nor was there any real benefit in imposing a custodial sentence and suspending it on terms that the order should be complied with. Rather, there would be a further order requiring the disclosure of specified information and documents by April 21, and D would be ordered to pay the costs of OP's application on an indemnity basis.
Applications granted.
Civil Procedure
Ch D (Patten J) 26/3/2004
LTL 7/4/2004 (Unreported elsewhere)
Document No.: AC0108089
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