Tonstate Group Limited (in liquidation) & Ors v Edward Wojakovski & Ors

The court exercised the Bankers Trust jurisdiction to order disclosure in aid of established proprietary claims. It found that personal jurisdiction over the trustee/respondent, Mr Gil Wojakowski, was established by service at the registered address provided under s.1140 Companies Act 2006. The court addressed the separate question of subject matter jurisdiction to regulate conduct and order disclosure of documents located or held abroad, concluding that internationally recognised limits on jurisdiction did not preclude an order in the particular circumstances of an established fraud involving cross-border assets.

Key legal principles applied were: (i) the Bankers Trust jurisdiction supports robust disclosure orders where there is strong evidence that a claimant's assets have been misappropriated; (ii) personal jurisdiction by service under s.1140 is sufficient to bring an individual before the court; and (iii) subject matter jurisdiction requires a sufficient connection with the forum before the court should regulate conduct abroad, with factors such as involvement with English solicitors, assets or accounts in England, the established fraud, and reasonable risk of interference with foreign sovereignty being material.

The court concluded that there was sufficient connection with England (including a London bank account of a BVI company linked to the Israeli trust, involvement with English solicitors, and evidence of assistance in structures used to disguise misappropriated funds) to justify the disclosure order against Gil. The application as to Edward was adjourned for separate hearing to allow him legal representation.

Background and parties: The Tonstate Group companies and an individual claimant brought an application seeking disclosure and information about assets and accounts connected to the admitted misappropriation by Mr Edward Wojakovski (the "Extractions"). The principal respondent on this application was Mr Gil Wojakowski, trustee and executor of the Israeli "Wojakowski Brothers Trust" and brother of Edward. The claimants sought disclosure in aid of proprietary claims to trace and recover assets said to include funds paid to a BVI company, Maxima Corporate Holdings Limited.

Nature of relief sought: The claimants sought a wide Bankers Trust style disclosure order requiring disclosure of documents and information concerning: assets held by Maxima and the Israeli trust, bank account records (including worldwide bank statements), schedules of assets over specified values and other relevant documents to locate and preserve the traceable proceeds of the Extractions.

Procedural posture: Liability for the primary fraud had already been established by earlier judgments (including Zacaroli J’s judgment recognising the claimants' proprietary interest in the Extractions). The present application was part of enforcement/asset recovery following that liability finding. The application originally named Edward and Gil; the hearing proceeded only against Gil because the court adjourned the application as against Edward to permit him legal representation in light of a recent contempt finding.

Issues framed:

• Whether the court had personal jurisdiction over Gil, given his Israeli residence.
• Whether the court had subject matter jurisdiction (i.e., power properly to regulate conduct abroad and order production of documents held outside England) in the circumstances of a cross-border fraud.
• Whether the Bankers Trust jurisdiction supported the disclosure sought and whether the terms of the requested order were proportionate.

Court’s reasoning: The court held that service on the registered address provided under s.1140 Companies Act 2006 gave good service and established personal jurisdiction over Gil. On subject matter jurisdiction, the court distinguished Mackinnon v. Donaldson, Lufkin & Jenrette and related authorities: those cases did not lay down a blanket prohibition but required sufficient connection with England before the court should regulate conduct abroad. The court found such a connection on the facts: involvement of Gil in communications with English solicitors who received suspect funds; evidence of the BVI company Maxima holding a London bank account; apparent involvement in the structures (Tutella Trust and Quastus Holdings) used to acquire UK property with the Extractions; and the fact that the fraud and proprietary rights had already been established. The court applied the Bankers Trust principles and the checklist in Kyriakou to conclude that disclosure was justified, that wide terms were proportionate given the history of obfuscation and commingling of family monies with stolen funds, and that undertakings and costs arrangements addressed potential detriment to the respondent.

Result: The court made the disclosure order against Gil. The application against Edward was adjourned to a later date so he might obtain legal representation; no findings of culpability against Gil were made at this stage beyond what the available evidence justified for the purpose of making the order.

The court made the Bankers Trust disclosure order against Mr Gil Wojakowski and adjourned the application as against Mr Edward Wojakovski. Rationale: personal jurisdiction established by service under s.1140 Companies Act 2006; Bankers Trust jurisdiction applicable because liability for the fraud had been established and the information sought had a real prospect of locating traceable assets; subject matter jurisdiction to regulate conduct abroad existed on the facts because of sufficient connection with England (involvement with English solicitors, a London bank account of Maxima, and involvement in structures affecting UK assets). The order was proportionate given obfuscation and commingling risks and appropriate undertakings were provided.