In the recent decision of Iranian Offshore Engineering v Zavarei the High Court of England and Wales was concerned with a complex international fraud.
The applicant company (IOEC) had proved that a third party (RMT), together with some of the other defendants, had caused it to pay sums of money equating to US$87 million for a mobile oil rig that had never been delivered. The purchase price had not been returned to IOEC.
The respondent was the wife of RMT and had never been a party to the main proceedings. The application sought a declaration that a property in England was held on a resulting or constructive trust for RMT and so the property fell within the ambit of a freezing undertaking RMT’s wife had given to the court. It was argued that the funds used to purchase the property had come from resources which belonged beneficially to RMT.
It was not disputed that IOEC was a creditor of RMT or that the judgment debt due to IOEC in RMT’s bankruptcy was provable. The issue was whether the remedies sought under the application notice were as against the person or the property of the bankrupt. IOEC had previously had an application for a charging order over the property refused but the instant application was held not to be an impermissible stratagem to overcome the failed application for a charging order. It was also held that the application was not one that only the trustee in bankruptcy had standing to bring.
In deciding whether the court should exercise its discretion to make the order sought, it held that firstly, it had jurisdiction to determine IOEC’s application and that secondly, that there was nothing in the facts and circumstances of the case which ought to lead the court to refuse to determine the application as a matter of discretion without considering the merits.
In resisting the application, it fell upon the respondent to discharge the evidential burden of making good her affirmative case. The disclosure made by her had been incomplete in respect of important areas without proper explanation. In addition, many of the documents disclosed by her had not supported her positive case and, in fact, suggested it was wrong.
The application succeeded. It is an interesting example to all common law practitioners of the wide-ranging availability of the remedy.