Vik v Deutsche Bank AG

A complex alleged breach of an order requiring an officer of a corporate judgment debtor to provide enforcement information may be pursued through the committal procedure in CPR Part 81. The streamlined procedure in CPR 71.8 is complementary, rather than exclusive.

The power to commit for contempt derives from the court’s inherent common law jurisdiction. Parts 71 and 81 regulate the procedure for exercising that power.

Where an order was validly made and personally served while the respondent was within the jurisdiction, proceedings to commit that person for its alleged breach are an incident of the original order. The court therefore retains personal jurisdiction even after the respondent leaves England and Wales, without requiring permission for service out.

Deutsche Bank AG obtained a substantial judgment against Sebastian Holdings Inc. Mr Alexander Vik was its sole shareholder and director at the material time. While Mr Vik was present in England, the court personally served him with an order under CPR 71.2 requiring disclosure and examination concerning the company’s means. The bank later alleged that he had withheld documents and lied under oath.

Teare J held in judgments reported at [2016] EWHC 3222 (Comm) and [2017] EWHC 459 (Comm) that the bank could proceed under CPR Part 81 and that the committal application was incidental to the CPR 71 order. Permission to serve Mr Vik in Monaco was therefore unnecessary.

Mr Vik appealed. The bank cross-appealed against the conclusion that the service gateway in Practice Direction 6B paragraph 3.1(10) was unavailable. The principal questions concerned the appropriate committal procedure and the court’s personal jurisdiction over a respondent who had left England.

1. The appeal was dismissed. The bank was entitled to pursue its allegations under CPR Part 81. CPR 71.8 is a simple, streamlined procedure suited to straightforward failures such as non-attendance or refusal to answer questions. It does not displace the more rigorous Part 81 procedure where the alleged contempt is complex, disputed or unsuitable for summary certification.

2. The source of the power to commit for contempt is the court’s inherent common law jurisdiction. CPR Parts 71 and 81 prescribe procedures through which that power is exercised. Treating the two procedures as complementary did not use inherent jurisdiction inconsistently with the rules. The safeguards and suspended-order limitation in CPR 71.8 reflect its summary nature, whereas Part 81 contains its own protections for an alleged contemnor.

3. The committal application was incidental to the CPR 71.2 order. Jurisdiction over a person in relation to an order includes jurisdiction over matters necessary to enforce it. Committal is one means of enforcement. The penal notice personally served on Mr Vik reinforced that the order carried consequences for non-compliance.

4. Although a committal application constitutes new or separate proceedings, that characterisation does not prevent it from also being incidental to an order validly made and served while the respondent was within the jurisdiction. The decision in Dar Al Arkan Real Estate Development Co v Refai [2014] EWCA Civ 715 was distinguishable because jurisdiction had not previously been established over the director concerned there.

5. The bank therefore required no permission to serve the committal application on Mr Vik outside the jurisdiction. This conclusion upheld the strong public interest in enforcing court orders without exercising an exorbitant jurisdiction, since personal jurisdiction had already been established for the underlying order.

6. The extraterritorial effect of CPR 71.8, the application of article 24(5) of the Recast Brussels Regulation, and the availability of Practice Direction 6B paragraph 3.1(10) were academic and were not finally decided. The cross-appeal concerning that gateway accordingly required no determination.

• Court of Appeal (Civil Division): The court dismissed Mr Vik’s appeal from the jurisdiction order. It held that CPR Part 81 was available and that the committal application was incidental to the CPR 71 order. The bank’s cross-appeal became academic: [2018] EWCA Civ 2011.
• High Court, Queen’s Bench Division: Teare J held that the bank could pursue committal under CPR Part 81, but initially held that Practice Direction 6B paragraph 3.1(10) did not permit service out: [2016] EWHC 3222 (Comm).
• High Court, Queen’s Bench Division: Teare J subsequently held that permission for service out was unnecessary because the committal application was incidental to the CPR 71 order. He permitted alternative service on Mr Vik’s solicitors: [2017] EWHC 459 (Comm).