Walter Rau Neusser Oel und Fett AG v Cross Pacific Trading Ltd

REASONS FOR JUDGMENT 1 On 21 March 2005 and on following dates made clear by a perusal of the file, Court orders were made by way of Mareva injunction and freezing orders against a number of respondents. The respondents who participated in the conduct complained of (whom I will refer to as the Participating Respondents) are accused of serious commercial misconduct, including fraud. Those matters are strongly disputed. The manner in which the interlocutory and final disposition of those serious allegations is to be progressed has not finally been decided yet. 2 Another respondent in addition to the Participating Respondents was the Australia and New Zealand Banking Group Limited which undertook banking operations both in Australia and in Fiji where two accounts in particular were maintained into which moneys were placed pursuant to the conduct which is the subject of complaint against the Participating Respondents. 3 As I have said, the allegations against the Participating Respondents are serious and are such as to amount, if the applicant be correct, to grounds which would enable the conclusion, so it is claimed by the applicant that the moneys in the various accounts with the Bank are, in fact, in equity, the property of the applicant. Nevertheless, the Bank has its own customers pursuant to contracts with several of the Participating Respondents in the ordinary banker customer relationship. 4 Because of the seriousness of the allegations and the necessity to bring all matters to a halt, the various orders were granted. The Bank is in fact a respondent to those orders and not merely a party notified of their existence. The jurisprudential foundation for that is the matter to which I have earlier referred and that is that in fact if the applicant is correct in its allegations it says that the funds in those accounts belong or may belong to it. 5 The Bank operates a branch in the Republic of Fiji. The account is in the name of the fifth respondent. The fifth respondent is a Vanuatu company but which is represented by solicitors and counsel, including senior counsel, in these proceedings. There is an order against the fifth respondent, in effect, that it will not make demand on the Bank in relation to the account. The Bank, however, wishes further protection based on the provision now seen to be a usual provision in English worldwide freezing orders which is discussed by Mr Biscoe in Mareva and Anton Piller orders: freezing and search orders (2005: Lexis Nexis, Australia) pp.142-148. 6 There is cogent reason why provisions of that kind are usually placed in orders of a kind that the Court made. The central consideration is the protection of an innocent third party in how the orders operate, in particular, that the orders should not place the third party in the invidious circumstance of obeying the Court's orders and disobeying the law of another country or obeying the law of another country and disobeying the Court's orders. 7 Bound up with that is a notion of the lack of taxing of or interfering with the operations of the third party and not causing it inconvenience. Those notions of inconvenience are in a sense adjectival. The core of the problem is not placing the Bank in a position where it could potentially be entirely embarrassed by the order of the Court. The applicant has not as yet approached courts in Fiji. It does not appear to wish to expend that money. There is some evidence that there is very little money in the bank account in Fiji in any event. 8 Given the seriousness of the allegations, but taking into account the English authority referred to by Mr Biscoe, what I propose to do is to accede to the request of the Bank in part but make an additional qualification. That additional qualification may, not necessarily will, add a burden to the Bank. I would only anticipate that it would add a burden to the Bank if the fifth respondent threatened to breach the orders made against it earlier in the proceedings. 9 To the extent that in that circumstance, which one hopes is unlikely, and there is additional activity by the Bank the cost of that activity can be and will be included in any recompense flowing from the terms of the orders. Therefore, the amendment to the order against the Bank which I will direct counsel to bring in in due course is in terms of that set out at the top of page 3 of Dr Bell's submissions with these qualifications. 10 On the third line prior to the word, "nothing" the following is to be inserted: "Subject to (e) below" and "(e) below" will be in the following terms: The eighth respondent shall exercise all reasonable endeavours to notify the applicant's solicitors in writing (in advance, if possible) of any occasion whereby it, that is, the Bank, reasonably believes that its obligations, contractual or otherwise, under the laws and obligations of the Republic of Fiji or under the proper law of any contract between the fifth respondent and the ninth respondent require it to pay out from or deal with the account. 11 This further qualification will not require any breach of Bank and customer confidentiality in my view. Rather, if the Bank forms a view as to its obligations all it simply need do is inform the applicant that the provision in (a) is being activated; no more information would need be given. 12 The question of costs then arises. I have been asked to make a lump sum order to avoid further cost and time. I think there is merit in that. Subject to hearing from the parties what I propose to do is deal with the costs of the Bank within a combined framework of the contested application and the fact that it has been brought to court as an innocent party in these Mareva and freezing orders. 13 In that framework I view the application by the Bank as one that was not unreasonably made although I have not acceded to the application in its entirety. I do not think a question of indemnity costs arises but I do think a question of the legitimate conduct of the Bank arises pursuant to its innocent carrying on of banking operations in Australia and Fiji. Therefore, what I propose to do is simply stand over the making of any final order to a date to be fixed. 14 Counsel can discuss the precise terms of the additional qualifications and solicitors can discuss what they think is a reasonable lump sum amount of costs to deal with the totality of the Bank's position to date. If there is some debate about that I will hear it on short affidavits with a very brief summary of the costs involved and I will make a global order in what I think is an appropriate sum. 15 In assisting the parties in that I should say that I would not necessarily take the view that strict party-party costs are appropriate but at the same time I am not sure that every dollar of solicitor-client costs and counsel's fees would necessarily be appropriate either. So I will leave that to the solicitor for the applicant, Mr Hurley and his colleagues.