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All England Law Reports/1985/Volume 3 /Orwell Steel (Erection and Fabrication) Ltd v Asphalt and Tarmac (UK) Ltd - [1985] 3 All ER 747 [1985] 3 All ER 747

Orwell Steel (Erection and Fabrication) Ltd v Asphalt and Tarmac (UK) Ltd
QUEEN'S BENCH DIVISION FARQUHARSON J

9, 14 MARCH 1984 Injunction - Interlocutory - Danger that defendant may transfer assets out of jurisdiction - Injunction restraining removal of assets out of or disposal within jurisdiction - Grant of injunction between final judgment and execution - Grant of injunction in aid of execution - Whether High Court having power to grant Mareva injunction in aid of execution - Supreme Court Act 1981, s 37(3) - RSC Ord 29, r 1(1). On the true construction of s 37(3) of the Supreme Court Act 1981 and RSC Ord 29, r 1(1) the High Court has power to grant an interlocutory injunction between final judgment and execution, and accordingly has power to grant a Mareva injunction in aid of execution. Such an injunction will only be granted where the plaintiff can adduce evidence of a kind which normally supports an application for a Mareva injunction, viz that there are grounds for believing that the judgment debtor will dispose of his assets to avoid execution (see p 749 g h and p 750 a b, post).
a b

a b

Section 37(3) is set out at p 748 h j, post Rule 1(1) is set out at p 749 g, post

Dictum of Baggallay LJ in Smith v Cowell (1880) 6 QBD at 77 applied. Notes For Mareva injunctions, see 37 Halsbury's Laws (4th edn) para 362, and for cases on the subject, see 37(2) Digest (Reissue) 474-476, 2947-2962. For the Supreme Court Act 1981, s 37, see 11 Halsbury's Statutes (4th edn) 792. Cases referred to in judgment Nanda v Nanda [1967] 3 All ER 401, [1968] P 351, [1968] 2 WLR 404. Smith v Cowell (1880) 6 QBD 75, CA.

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Stewart Chartering Ltd v C & O Managements SA, The Venus Destiny [1980] 1 All ER 718, [1980] 1 WLR 460. Cases also cited Clagett's Estate, Re, Fordham v Clagett (1882) 20 Ch D 637, CA. Faith Panton Property Plan Ltd v Hodgetts [1981] 2 All ER 877, [1981] 1 WLR 927, CA. Salt v Cooper (1880) 16 Ch D 544, [1874-80] All ER Rep 1204, CA. Summons On 16 September 1983 Mr District Registrar Lam made an order entering judgment for the plaintiff, Orwell Steel (Erection and Fabrication) Ltd, for the sum of 22,5284347 in an action brought by the plaintiff against the defendant, Asphalt and Tarmac (UK) Ltd, but ordered that execution thereof be stayed on terms. On 15 February 1984 McCowan J allowed an appeal against that order but continued the stay provided the defendant paid the sum into court within ten days. On the defendant's failure to comply with the terms of the stay, the plaintiff issued a writ of fieri facias, but it proved ineffective. On 5 March Farquharson J granted the plaintiff a Mareva injunction in aid of execution restraining the defendant by itself, its servants or its agents from dealing with or disposing of any of its assets wherever situate so far as they exceeded 4,4054359. On the same day the Court of Appeal allowed an appeal by the plaintiff by varying Farquharson J's order and granting a Mareva injunction restraining the defendant by itself, its servants or its agents [1985] 3 All ER 747 at 748 or otherwise from dealing with or disposing of any of its assets save in so far as they exceeded 25,000, to include the judgment sum and estimated costs, wherever those assets were situate until after the hearing of a summons returnable on 9 March 1984 before the judge in chambers. By a summons dated 5 March 1984 the plaintiff sought the continuation of the injunction granted by the Court of Appeal. The facts are set out in the judgment. Philip Engelman for the plaintiff. At the conclusion of the argument Farquharson J granted the plaintiff's application and at the request of counsel adjourned the matter into open court to give his reasons. 14 March 1984. The following judgment was delivered.

FARQUHARSON J. When this application came before me in chambers on 9 March 1984 I granted an injunction to the plaintiff. At the request of counsel I adjourned the matter into open court to give my reasons. On 16 September 1983 Mr District Registrar Lam made an order entering judgment for the plaintiff for the sum of 22,5284347 but further ordered that execution on that judgment should be stayed on certain terms.

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On 15 February 1984 McCowan J allowed an appeal against that order and himself ordered the stay to continue provided the defendant brought the sum of 22,5284347 into court within ten days. The defendant failed to do so and the plaintiff became entitled to enforce the judgment. Thereafter, the plaintiff issued a writ of fieri facias to the sheriff but this proved ineffective. The plaintiff is aware that the defendant owns a number of asphalt laying machines and vans and according to the evidence there is reason to believe that the defendant will dispose of those vehicles and its other assets by transferring them to another company in order to avoid execution on them. The plaintiff now applies for a Mareva injunction restraining the defendant from dealing with or disposing of any of its assets save in so far as those assets exceed the sum of 25,000 to include the judgment sum and the estimated costs. Applications for Mareva injunctions have been made in increasing volume in recent years to protect a plaintiff at the outset of proceedings by freezing the assets of the defendant until judgment is given. There is no reported case where an order has been made granting an injunction of this kind after final judgment in an action. Two questions arise: first, has the court power to grant a Mareva injunction after final judgment; and, second, having regard to the means available for enforcing judgments, should the court do so? The powers of the High Court to grant injunctions are set out in s 37 of the Supreme Court Act 1981, which provides:
'(1) The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so ...

(3) The power of the High Court under subsection (1) to grant an interlocutory injunction restraining a party to any proceedings from removing from the jurisdiction of the High Court, or otherwise dealing with, assets located within that jurisdiction shall be exercisable in cases where that party is, as well as in cases where he is not, domiciled, resident or present within that jurisdiction ... ' Counsel for the plaintiff submits that 'interlocutory' in sub-s (3) does not mean 'until final judgment' but also relates to orders of the court thereafter. He fortifies this submission by pointing to s 49 of the same Act which describes the general powers of the court. Subsection (2) provides, in so far as it is relevant: [1985] 3 All ER 747 at 749
'Every ... court shall give the same effect as hitherto--(a) to all equitable ... rights ... and ... shall so exercise its jurisdiction in every cause or matter before it as to secure that, as far as possible, all matters in dispute between the parties are completely and finally determined, and all multiplicity of legal proceedings with respect to any of those matters is avoided.'

By s 151 'cause' includes any action commenced by writ, and counsel argues that when reading ss 37 and 49 together it is clear that the court can grant interlocutory relief between judgment and execution, since the 'cause' is still 'before' the court after judgment has been given. Smith v Cowell (1880) 6 QBD 75 was a case on similar facts: a creditor who had recovered judgment sued on a writ of elegit to which the sheriff returned that there were no goods or lands of the debtor which he could deliver. As the debtor was entitled to an equity of redemption on certain land the judgment creditor applied, to the judge in chambers in the same action, for the appointment of a receiver, and it was held that he was entitled to do so. In considering the meaning of the word 'interlocutory', Baggallay LJ said (at 77):

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'The question is whether a fresh action is necessary. Section 25, sub-s. (8) of the Judicature Act, 1873, provides that "a mandamus or injunction may be granted, or a receiver appointed by an interlocutory order of the Court," in all cases in which it shall appear just and convenient; and the defendant's contention is that the Court has no power under that section to make an order for a receiver in an action after judgment, for that the words "interlocutory order" mean an order prior to final judgment. But with that contention I cannot agree. The interpretation of the word "interlocutory," as used in that sub-section, is to be found later on in the sub-section itself, which provides that "if an injunction is asked either before, or at, or after the hearing of a cause," it may be granted, &c. But it is only by an interlocutory order that the Court has power under this section to grant an injunction. In the case of an injunction therefore, the section clearly contemplates an interlocutory order being made after the hearing of a cause, or in other words, after judgment.'

It is to be observed that the section which the court was there considering was s 25(8) of the Supreme Court of Judicature Act 1873 and that subsection is the precursor of s 37 of the 1981 Act, although the former contained additional words not present in the latter, which the court used as an aid to construction: see also Nanda v Nanda [1967] P 351 at 357, where the corresponding section of the Supreme Court of Judicature (Consolidation) Act 1925 was invoked to reach a similar conclusion. The matter is concluded by the terms of RSC Ord 29, r 1 which gives effect to the decision in Smith v Cowell. That rule provides, under para (1):
'An application for the grant of an injunction may be made by any party to a cause or matter before or after the trial of the cause or matter, whether or not a claim for the injunction was included in that party's writ, originating summons, counterclaim or third party notice, as the case may be.'

There is accordingly, in my judgment, power to grant an interlocutory injunction between final judgment and execution. If there is such a power, there seems to be no logical reason why a Mareva injunction should not be used in aid of execution. Indeed, in one sense it could be said that there is greater justification for restraining a defendant from disposing of his assets after judgment than before any claim has been established against him. It is true that there are a variety of methods for enforcing execution as set out in RSC Ord 45, r 1 and once the plaintiff has obtained judgment it may be said that he should pursue the remedies provided by the rules rather than extend the application of Mareva injunctions still further. The answer to that objection is that, as has been frequently pointed out, the Mareva injunction acts in personam on the defendant and does not give the plaintiff any rights over the goods of the defendant or involve any attachment of them. In this context it would have the effect of preserving the defendant's goods until execution could be levied on them; [1985] 3 All ER 747 at 750 and the remedies of injunction and execution can take effect side by side. Such was the view of Robert Goff J in Stewart Chartering Ltd v C & O Managements SA, The Venus Destiny [1980] 1 All ER 718, [1980] 1 WLR 460, where he continued a Mareva injunction granted before judgment in aid of execution. Plainly an injunction will only be granted where the plaintiff can adduce evidence of a kind which normally supports an application for a Mareva injunction, namely that there are grounds for believing that the judgment debtor will dispose of his assets to avoid execution. Perhaps such grounds may be more readily established after judgment than before it. The present application was therefore granted. Order accordingly. Solicitors: Gotelee & Goldsmith, Ipswich (for the plaintiff).

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K Mydeen Esq Barrister.