AJ Bekhor & Co Ltd v Bilton

A court may make ancillary disclosure orders under Supreme Court of Judicature (Consolidation) Act 1925, section 45(1), where they are necessary to make a Mareva injunction effective. The power is confined to that purpose. It does not create a general power to investigate a defendant’s affairs, police past compliance, or obtain material for possible contempt proceedings.

Ordinary discovery and interrogatories under the Rules of the Supreme Court must concern matters in issue in the action. They cannot be used merely to identify, value, or trace assets for the administration of a Mareva injunction. The court must also ensure that a Mareva defendant is not treated as a judgment debtor before judgment.

A. J. Bekhor & Company Limited, stockbrokers, sued Mr Bilton for money allegedly lent to him. He disputed the debt and counterclaimed. A Mareva injunction restrained dealings with his assets, subject to later permission to remove limited income from the jurisdiction.

When Mr Bilton sought greater freedom to use assets within the jurisdiction, Parker J ordered him to provide extensive disclosure about his assets, accounts, and past dealings. The order was sought as discovery and interrogatories, and was said to assist the Mareva injunction.

Mr Bilton appealed. The central issue was whether the court had power to compel disclosure concerning matters outside the issues in the action in order to administer, or police compliance with, a Mareva injunction.

1. Appeal allowed by a majority. Lord Justice Ackner gave the leading judgment. Lord Justice Stephenson agreed in substance. Lord Justice Griffiths dissented on the discretionary application of the power.

2. The disclosure order could not be justified under the Rules of the Supreme Court. Discovery under Order 24 and interrogatories under Order 26 must relate to matters in question in the action or cause. The defendant’s present and past assets, accounts, and dealings were not issues bearing on liability for the alleged loan. They concerned only the ability to satisfy a future judgment.

3. Section 45(1) of the Supreme Court of Judicature (Consolidation) Act 1925 nevertheless carried an implied power to make ancillary orders necessary to render a Mareva injunction effective. Such an order may be justified where information is needed to identify the assets on which the injunction should operate, including where assets or their distribution are uncertain. This was not a freestanding residual jurisdiction to make whatever order might appear just.

4. The order made by Parker J was not necessary for that limited purpose. The defendant had already identified the assets within the jurisdiction and there was no practical uncertainty about the property on which the injunction should bite. Its breadth, including demands about assets at earlier dates, was directed principally to investigating possible breaches of the injunction or undertaking and possible contempt. Those ends could be pursued by cross-examination on existing affidavits or by varying or withdrawing permissions previously granted under the injunction.

5. Lord Justice Ackner also stated, obiter, that the possibility of self-incrimination does not ordinarily bar interrogatories. The objection is generally taken when answering, subject to the exception for an action to recover a penalty. The order for disclosure was set aside. Costs of the appeal were costs in the cause.

• Court of Appeal: allowed the defendant’s appeal and set aside the extensive disclosure order.
• High Court, Queen’s Bench Division (Parker J): ordered disclosure and interrogatories concerning the defendant’s assets and dealings, as an order said to aid the Mareva injunction.