ChD Bhimji v Chatwani 705 a _ Bhimji and others v Chatwani and others CHANCERY DIVISION scorr J 16, 19-23 NOVEMBER 1990 b Practice ~ Pre-trial relief — Anton Piller order ~ Interlocutory motion ~ Ex parte application — Requirement that defendant permit execution of Anton Piller order ‘forthwith’ — Forthwith — Legal advice — Whether requirement of consent to execution forthwith’ meaning at once or immediately — Whether defendant in contempt if after ‘aking legal advice he declines to allow execution pending application to discharge or vary order — Factors to be taken into account by court in deciding whether contempt committed. c The requirement in an Anton Piller order that the defendant ‘forthwith’ permit the plaintiff's representatives to enter the premises to be searched does not mean at once or immediately but only after there has been a reasonable period of time to obtain legal advice. However, the defendant is under an obligation to set about obtaining legal advice as soon as he is served with the order. If after taking legal advice the defendant applies to the judge to discharge or vary the order and declines to allow execution in the meantime he is at risk of being in contempt, but in view of the inherently oppressive nature of an Anton Piller order the defendant will only be found in contempt if there is evidence of something more than a mere technical breach of the obligation to allow entry forthwith, such as @ evidence to suggest that the making of the application was merely a device to postpone the search or of impropriety in respect of the documents the subject of the order during the delay in execution. Accordingly, where the defendant, acting on legal advice, makes an application to discharge or vary an Anton Piller order and declines to allow execution in the meantime but at the same time makes a reasonable offer to protect the relevant documents for a short period to f enable him to make his application and there is no evidence of subterfuge or impropriety, the defendant's refusal to allow execution until after his application will not justify a finding of contempt (see p 710 e to h, p711 band p 712.¢j to P 713 f post). Dicta of Sir John Donaldson MR in WEA Records Ltd v Visions Channel 4 Ltd [1983] 2 All ER 589 at 592 and of Goulding J in Wardle Fabrics Ltd v G Myristis 9 Ltd [1984] FSR 263 at 271-272, 275 applied. d Notes For Anton Piller orders, see 37 Halsbury’s Laws (4th edn) para 372, and for cases on the subject, see 37(2) Digest (Reissue) 480-483, 2978-2990. ” Cases referred to in judgment Columbia Picture Industries Inc v Robinson [1986] 3 All ER 338, [1987] Ch 38, [1986] 3 WLR 542. Hallmark Cards Inc v Image Arts Ltd [1977] FSR 150, CA. Wardle Fabrics Ltd v G Myristis Ltd [1984] FSR 263. 7 WEA Records Ltd v Visions Channel 4 Ltd [1983] 2 All ER 589, [1983] 1 WLR 721, CA. Motion The plaintiffs, Amratlal Purshottam Bhimji, Harkishan Amratlal Bhimji, Jayantilal Amratlal Bhimji, Vinaykant Amratlal Bhimji and Wisepark Ltd, by an amended706 All England Law Reports [1991] 1 AER notice of motion dated 25 September 1989, sought an order that the first and third defendants, Satish Jamnadas Chatwani and Rashmi Jamnadas Chatwani, be committed to prison for contempt of court for refusing to permit the execution of an Anton Piller order made by Aldous J on 22 September 1989 until after the defendants’ application to set aside or vary the order had been heard. The other eleven defendants to the action took no part in this stage of the proceedings. The facts are set out in the judgment. » Isaac Jacob, Richard H Jones and Sheila Foley (instructed by McKenna & Co) for the plaintifis. Richard Field QC, Murray Rosen and Jane Giret (instructed by Herbert Smith) for the defendants. SCOTT J. The notice of motion, in its amended form, asks that the first and third defendants be committed to prison for contempt of court for refusing to permit the execution of the ex parte Anton Piller order made by Aldous J on 22 September 1989 until after their application to set aside or vary the order had been heard. The order was served at about 8 am on 25 September 1989. By about 11am qf the defendants were in contact with their solicitors and had received advice from them. Later in the morning instructions were sent to Mr Ian Glick QC on behalf of the defendants. That afternoon an application to set aside or vary the order was made to Aldous J. He heard the application at about 5 pm. He declined to set aside the order but made some ameliorating variations to it. As soon as the hearing was concluded the defendants gave the permission to € enter their premises that the order, as amended, required. The time was about 6 pm. That evening and over the next day and a half the order was executed at the premises specified in the order. The order was of considerable complexity. It comprised some 14 pages. It began with two pages containing undertakings to the court by the plaintiffs and their solicitors. Paragraph 5(i) contains an undertaking by the plaintiffs’ solicitors in this form: “To offer to explain to the person or persons served with this Order its meaning and effect fairly in everyday language and advise the person upon whom the same is served of his right to obtain legal advice before complying with this Order provided that such advice is obtained forthwith.’ This is a common form of undertaking in ex parte Anton Piller type orders. I shall have to consider later what is meant by ‘forthwith’ in the context of a complex 14-page order served at 8 o'clock in the morning. The undertakings were followed by two pages of negative injunctions restraining the defendants from dealing with the shares in or assets of various companies. A Then come paras 9 and 10 of the order, which impose discovery obligations on the defendants in respect of certain specified sums and in respect of the assets of a number of specified companies. These very important parts of the order were followed by wide-ranging Mareva injunctions freezing the defendants’ assets, save in so far as they exceeded (6m, and imposing ancillary obligations on the defendants to make disclosure of their assets. The reader of the order would by now have reached page 10. On this page he would find para 14, which restrained the defendants from notifying anyone, other than their lawyers, about the proceedings or about the order, para 15, which imposed an obligation on the defendants to give discovery within four days afterChD Bhimji v Chatwani (Scott J) 707 service of the documents set out in the schedule to the order, and para 16, which a contained the Anton Piller order. Since it is para 16 on which the notice of motion is based, I should read it: ‘That the 1st, 2nd and 3rd Defendants and each of them whether by himself or by any person appearing to be in control of the premises hereafter mentioned do on the 25th September 1989 permit the person serving this b Order upon them and such other persons duly authorised by the Plaintiffs (such persons not to exceed three in number at any one premises) together with a police officer (if the Plaintiffs so desire) to enter forthwith at any time between 8 o'clock in the morning and 6 o'clock in the evening the premises known as Kanta Kutir, California Lane, Bushey Heath, Hertfordshire, 25 Culver Grove, Stanmore, Middlesex, Kanta House, Victoria Road, Ruislip, ¢ Middlesex and any other premises or vehicles to the extent that any of the said premises or vehicles are in the power, possession, occupation or control of the Defendants or any of them for the purpose of looking for, inspecting, taking into the custody of the Plaintiffs’ solicitors all items and materials referred to in the Schedule hereto or which appear to the Plaintifis’ solicitors to be such items or materials and to remain and to return there as long as d may be necessary to complete the execution of this Order.’ After a few additional ancillary provisions the order ended with this provision: ‘anp without prejudice to the right to apply ex parte each Defendant is at liberty to apply to discharge or vary this Order upon giving to the Plaintiffs’ solicitors 48 hours notice of his, its or their intention so to do.” There followed a three-page schedule describing the category of documents to be delivered up under para 15 and for the discovery of which the Anton Piller order in para 16 had been made. The facts on which this notice of motion is based are not in dispute. Neither side has asked for cross-examination so neither side can dispute the truth of the evidence of the relevant deponents. I can summarise the story. Copies of the order were served more or less at the same time at Kanta Kutir, the first defendant's residence, and at Kanta House, the defendants’ office premises. The time was 8 am on Monday, 25 September 1989. Two solicitors, Mr Gauci and Mr Kleanthous of Messrs McKenna & Co, the plaintiffs’ solicitors, attended at Kanta g Kutir and served the requisite documents, including the order, on the first defendant. They endeavoured to explain the order to him. They told him, among other things, that they were ‘entitled to search your premises for certain documents’. A tape recording records Mr Gauci as saying to the first defendant: “We can enter your premises, You are entitled to seek legal advice provided you do so forthwith, within a reasonable time. We are entitled to enter your premises, take documents which are referred to in the schedule of your order. This is the order. We are entitled to take all these classes of documents away.’ A The first defendant wanted to take legal advice and refused entry into his house _ until he had done so. He then took himself off to his offices at Kanta House. / Meanwhile at Kanta House the search party had found only a bookkeeper, a Mr Nathwani, at the premises. Mr Nathwani had arrived early for work. Whether he could be described as ‘a person appearing to be in control of the premises’ I very much doubt. More, I think, than merely a key to the front office door would be necessary to answer that description,708 All England Law Reports [1991] 1 AILER Be that as it may, Mr Kinch, of McKennas served the order on Mr Nathwani. He told Mr Nathwani that he, Mr Nathwani, should seek legal advice and that Mr Nathwani was not entitled to telephone the first defendant to ask for instructions as to what he should do. That advice was, in my judgment, wrong. The order did not prevent Mr Nathwani asking the first defendant for instructions. Indeed there was nothing else that Mr Nathwani could reasonably be expected to do. It was not for Mr Nathwani to seek legal advice. He was not a respondent to the order. He was simply the bookkeeper who had arrived early for work. It was for the defendants to seek legal advice if they wanted to do so. The tape recordings taken of the communications between Mr Kinch and Mr Nathwani shows on almost every page Mr Nathwani’s evident confusion, which I find not in the least surprising, brought about by what he was being told by Mr Kinch. But Mr Nathwani stuck to his guns. He did not let the search party enter until he had communicated with one or other of the defendants, his employers, and in due course the third defendant arrived at Kanta House. He, at least, was a respondent to the order and had the authority which Mr Nathwani evidently lacked. Mr Kinch set about explaining the order to the third defendant. He said, among other things that what the order entitled him to do was ‘to seek out in these premises all the documents which are listed in this schedule’. He, like Mr Gauci at Kanta Kutir, was explaining the order in terms of the plaintiffs entitlement thereunder to enter, to search and to remove documents. In commenting on the nature of these no doubt experienced solicitors’ explanations given to the defendants and to Mr Nathwani of the order and its effect, [am not intending to be over-critical of them. But it is fundamental to the theory of Anton Piller type orders that a civil court in civil proceedings has no power to give one citizen the right to enter a house or premises of another citizen. These orders are in personam orders directed to the defendants. The defendants are ordered to allow entry and to allow search. The plaintiffs’ right and their solicitors’ right to enter and search is derived, on this theory of the law, from the defendants’ permission given to them to do so. It is not derived from the power of the court to confer the right. The court does not have that power. Some might think that the subtlety of this distinction does little credit to the law and that a consent to enter given under threat of committal for contempt is not true consent at all, and not a consent upon which a right to enter and search can properly be based. But the jurisprudential basis upon which Anton Piller orders are granted is now settled law, at least at Court of Appeal level. However, if experienced solicitors can misrepresent the nature of the orders to those on whom the orders are being served, what should one expect a layman, albeit perhaps a sophisticated businessman, experienced in commercial affairs, to make of such orders? But I continue with the history. The first defendant joined the third defendant at Kanta House. They communicated with Messrs Nabarro Nathanson and in due time Mr Neocleous of that firm joined them at about 10.15 am. He perused the order and gave them advice about it. He advised them that they must comply with the order or face contempt proceedings. In his affidavit sworn on 27 April 1990, Mr Neocleous said this: ‘L repeated my advice to the Defendants that they were obliged to comply with the Order, failing which they would face contempt proceedings. The Defendants were adamant that they would not allow the Plaintifis to seize their documents. I informed the Defendants that the only possible alternative> ° ® ~ © > ChD Bhimji v Chatwani (Scott J) 709 to complying with the Order was to make an immediate application to discharge or vary the Order.’ There then followed negotiations between Mr Neocleous and Mr Kinch in respect of a possible compromise that might be reached between the parties so as to obviate the need for an application to the court for a variation of the order and that would allow a search of the premises immediately to proceed. It was suggested that a joint search of the premises be carried out by McKennas and Nabarro Nathanson, and that the documents found that McKennas desired to be safeguarded would be kept by Nabarro Nathanson in safe custody for a short period to enable the defendanis to make an application to the judge to have the order discharged or varied. It did at one time appear that a compromise on those lines could be reached but in the end the attempts to reach a compromise foundered. They foundered because McKennas insisted on being permitted to take photocopies of the documents so as to be able, with the plaintiffs, to peruse the contents of the documents and to take such further steps arising out of the contents of those documents as they might think necessary. The defendants were not willing for this to happen until they had had an opportunity of applying for the contents of specific documents to be withheld from the plaintiffs on confidentiality grounds. Both sides being adamant, the defendants did not permit execution of the order, but two applications were made to Aldous J in the afternoon of that same day, 25 September. The plaintiffs made an application for committal of the defendants for contempt in refusing to permit immediate execution of the order. That application did not and could not proceed for the reason, if no other than, that there had been no personal service of the notice of motion on the defendants, It was adjourned. Personal service was eventually effected on 23 April 1990 and it is that notice of motion which is before me now. On the defendants’ application Aldous J declined to set aside the order which he had made on 22 September but instead he varied the order. He varied para 16, the Anton Piller part of the order, by providing that the ‘items and materials’ referred to in that paragraph should be taken into the custody of the defendants’ solicitors instead of the plaintiffs’ solicitors. He ordered that the defendants’ solicitors should provide copies to the plaintiffs’ solicitors of the documents so taken, if copyable, within three days, but with liberty to the defendants to apply for leave not to disclose particular documents or classes of documents. The effect of that variation was first, obviously, that the defendants’ solicitors would hold the documents for the time being, but, secondly, that the defendants would have an opportunity for a period of up to three days to withhold copies of the documents from the plaintifis while they applied, if so advised, to the judge for leave not to disclose. In effect, therefore, the defendants had succeeded in obtaining a variation of the order so as to correspond, more or less, with what was being offered by the defendants in the compromise negotiations between Mr Neocleous and Mr Kinch to which I have referred. Does this history disclose a breach of the original order, a breach in respect of which the plaintiffs were justified in instituting and pursuing committal proceedings for contempt of court? Mr Jacob has invited me to take as a starting point—and I do take it as a starting point—that Aldous J was satisfied on 22 September 1980, after a hearing lasting over a day, that there was a serious risk that the defendants might, if not prevented, destroy important documentary evidence, The purpose of the Anton Piller order was to obviate that risk.710 All England Law Reports [1991] 1 AER The first question for me in considering the notice of motion is what did the order, properly construed, require of the defendants? I return to para 16. The defendants were ordered to permit on 25 September 1989 certain persons ‘to enter forthwith at any time between 8 o'clock in the morning and 6 o’clock in the evening’ the specified premises. What does that language mean? Taken alone, without any context from other parts of the order, that language means, in my judgment, that the defendants were required forthwith after service of the order on them to allow the plaintiffs to enter the premises and conduct the search between the hours of 8 am and 6 pm. The wording is not, I think, entirely clear. But the correct construction is, in my opinion, as I have stated it. ‘The expression ‘forthwith at any time between 8 o'clock in the morning and 6 o'clock in the evening” may be thought inherently ambiguous, but, as I say, I think the meaning is reasonably clear. But what does the word ‘forthwith’ mean? It does not mean ‘at once’. Mr Jacob, in opening his case for the plaintiffs, submitted that ‘forthwith’ meant waiting a reasonable time to enable legal advice to be taken. That construction of ‘forthwith’ in para 16 hardly attributes to it its literal meaning, sensible construction though it may be. Paragraph 16 must, of course, be construed in the context of, in particular, the undertaking in para 5(i) of the undertakings. That undertaking, it will be recalled, informed the respondents that they were not obliged to comply with the order until they had obtained legal advice, provided that they set about obtaining that advice ‘forthwith’. So one finds ‘forthwith’ in two different places in the order: in the undertaking and then in para 16. Let me start with the undertaking. What does ‘forthwith’ mean in the undertaking? Here, too, it cannot mean instantaneously. The order ‘was served at 8 am in the morning. ‘Forthwith’ requires, I think, that the person on whom the order is served sets about at once trying to obtain legal advice. But the advice may not be obtained at once. The wrong person may be in the office. There is, I think, bound to be some inevitable delay between the commencement of the effort to obtain legal advice and the obtaining of the advice itself. Similarly ‘forthwith’ in para 16, read in the context of the undertaking, cannot mean as soon as the search party has arrived at the door and served the order. It must mean, as Mr Jacob put it to me, that the obligation to allow entry and search does not arise until after a reasonable period of time for legal advice to be obtained has been given. So, in my judgment, reading the two parts of the order together, I think it reasonably clear that the obligation being imposed on the defendants was an obligation to allow entry as soon as they had had a reasonable opportunity of obtaining legal advice. I think Mr Jacob’s construction is entirely correct, but I do not find the result particularly satisfactory. How long does a respondent have to obtain legal advice in a complex case such as the present? Some degree of seniority and experience is going tobe requisite in the person from whom the legal advice is sought. The defendants in this case are, I have been given to understand, businessmen of some experience. But that is not always the case with these orders. These defendants had the ability, and exercised it, to communicate with a firm of well-known and experienced London solicitors. Orders of this sort are, however, often served on less sophisticated respondents. There are many country solicitors unfamiliar with Anton Piller orders, save as a name, who would feel themselves at a great disadvantage in having to give important advice without the ability to take a little time to consider the matter, perhaps telephone counsel, perhaps telephone a more experienced° g ChD Bhimji v Chatwani (Scott J) 711 solicitor elsewhere. An order which demands obedience at peril of committal but which does not make clear exactly when the obligation bites has, in my opinion, inherent objections. Consistently with his submission to me as to the meaning of the order in its context as a whole, Mr Jacob submitted that the defendants did not fall into contempt until after they had received advice from Mr Neocleous. This conclusion I think to be right. In the earlier period there was no breach of the order. But, as Thave said, this conclusion requires a gloss to be put on the language of para 16 that the language itself does not justify. But more important for me to consider is the attitude that the court should adopt in a case where a respondent to an Anton Piller order, after taking legal advice, makes an immediate application to the judge for discharge or variation and declines in the meantime to allow execution. I was referred to various authorities to assist me in my deliberations on this point. In WEA Records Ltd v Visions Channel 4 Ltd [1983] 2 All ER 589 at 592, [1983] 1 WLR 721 at 725 Sir John Donaldson MR said this about an Anton Piller order: “The order was duly served on the defendants and, without asking for any time in which to exercise their right to take legal advice and without applying, to the judge to vary or discharge the order, they complied with it. They could, if they had wished, have refused immediate compliance and instead have made an urgent application to have the order set aside. This, in my judgment, is implicit in the final paragraph of the order which I have just read. However, I must emphasise, as did Buckley LJ in Hallmark Cards Inc v Image Arts Ltd [1977] FSR 150, that defendants who take this line do so very much at their peril. If they succeed in getting the order discharged, all well and good. But, if they fail, they will render themselves liable to penalties for contempt of court. If they fail and there is any reason to believe that, in the period between the time when the order has been served on them and the time when they eventually comply with the order, they had taken any steps which were inconsistent with the order, they had, for example, destroyed any records, the consequences to them would be of the utmost gravity.” I take that as an important statement of the approach that I should adopt in the present case, The defendants in the present case did succeed in having the original order varied so as to correspond, more or less, with what they had been offering since receiving legal advice. I was referred also to Goulding J's decision in Wardle Fabrics Ltd v G Myristis Ltd [198.4] FSR 263. Goulding J said this of an Anton Piller order (at 271-275): ‘a party is bound to obey it at his risk of contempt proceedings if he does not, and ... the subsequent discharge of the order as having been irregularly obtained would not in logic and principle affect the disobedient party's liability to penalties for contempt. It seems to me the system of administering justice would break down if subjects were entitled to apply their own or their advisers’ ideas to the possibilities of subsequently setting aside an order and to disobey on the strength of such private judgment and then, if the judgment turned out not to have been right, be free from all penalty... Having reviewed that body of authority as best I can, it seems to me that what I would have wished to decide on principle is in accordance with the law as it stands, that an order ... must be obeyed on pain of contempt penalties while it stands.”712 All England Law Reports [1991] 1 AER In Columbia Picture Industries Inc v Robinson [1986] 3 All ER 338 at 368, [1987] Ch 38 at 72, after referring to Goulding J's reasoning in the Wardle Fabrics case, I said this: “The judge’s reasoning is, if | may respectfully say so, difficult to fauk. Moreover, if respondents to Anton Piller orders were to be allowed to delay their execution while applications to apply to discharge were being made, the purpose of Anton Piller orders and procedure would be largely lost. ‘Ample time would then be available to those disposed to destroy evidence or to secrete away master tapes to do so.” In reliance on these authorities, Mr Jacob emphasised that a respondent to a court order, and particularly an Anton Piller order, could not be allowed to be his own judge of whether or not to obey the order. The danger of destruction of documents, to meet which Anton Piller orders are granted, will not be avoided if respondents can with impunity delay execution while going back to the court for the discharge or variation of the orders. 1 follow that submission and I think that it is right. But it is not the whole story, and I come back to consider Anton Piller orders and their nature. They stand, as has been said on many occasions, at the extremity of the court's jurisdiction, Some may think that they go beyond it. They involve the court in the hypocrisy of pretending that the entry and search are carried on because the owners of the premises have consented to it. They impose on plaintiffs’ solicitors the almost impossible task of describing fairly to non-lawyers the true effect and nature of the orders. They present respondents with orders of great complexity and jurisprudential sophistication and give little time for decisions to be taken as to the response to be made to them. They vest the plaintiffs, one side in what is usually highly contentious litigation, with the trappings of apparent administra- tive authority to carry out the search. The usual presence of a policeman adds to this illusion. All these features make Anton Piller orders, in my opinion, special. If experienced solicitors fall into error in giving advice as to the true meaning and effect of the orders, who can blame lay persons on whom they are served for misunderstanding the position? There is some evidence in this case in that Mr Neocleous advised the first defendant that, provided that he made immediate application to the court for variation or discharge of the order, he, the first defendant, need not allow entry until that had been done. In para 15 of his affidavit, sworn on 26 April 1990, the first defendant said this: “Mr Neocleous pointed out in view of our concern that, rather than make immediate compliance with the Order, we could apply to the Court to have it discharged or to vary it to permit the documents identified to be taken into Nabarro’s possession in the first instance.’ Then the first defendant goes on to say that Mr Neocleous— “did not consider that an immediate application to discharge the Order was feasible because of the weight of material to be considered. He suggested that he should try to agree a compromise with McKennas . There then followed the compromise negotiations to which I have already made reference in this judgment. Having reviewed the circumstances in which the notice of motion was brought, Thave reached these conclusions. (1) The order on its true construction required entry at the latest after the defendants had received advice from Mr Neocleous, say 11 am on 25 September.ChD Bhimji v Chatwani (Scott J) 713 Thereafter until 6 pm the defendants were, in my judgment, in breach of the order truly construed. (2) The exact moment at which entry was to be allowed under the order was not clear from its terms, judging the matter by the standards of the ordinary layman. (3) The defendants’ failure to allow entry over the period 11 am to 6 pm was deliberate and, accordingly, the requisite mens rea for contempt of court was in my judgment present. (4) But in the circumstances the breach was not contumacious in the ordinary meaning of the word since (i) it was accompanied by advice from Mr Neocleous that suggested, according to the first defendant's evidence, not the subject of cross- examination, that it was permissible for entry to be postponed until after the application to the court, (ii) a reasonable offer to provide protection of the documents was made at an early stage, was not withdrawn, but was not accepted by the plaintiffs, (iii) there is no evidence to suggest that the making of the application was merely a device to postpone the search, (iv) there is no evidence of any impropriety in respect of the documents in any of the premises to be searched that took place over the period of the delay, and (v) where delay in allowing execution of an Anton Piller order is under review, the court should, in my judgment, take into account the nature of the order and the prima facie injustice that has already been done to the defendant in being subjected to an inherently oppressive order of the court made after a hearing at which he was not able to be heard and sought to be enforced before he has had an opportunity to have it set aside or varied. Respondents to Anton Piller orders who do not allow immediate entry and search in accordance with the terms of the orders are at risk. The defendants in the present case were, in my judgment, at risk from 11 am on 25 September onwards. Respondents who choose to postpone a search for their own reasons should be warned, as these defendants were warned, that if they do so, they are at risk of committal. But when a committal application is made something more to justify an order under it must be shown than a mere technical breach of the obligation to allow entry forthwith. On the facts of the present case I can see no point in this committal application and no ground upon which the first and third defendants’ refusal to allow execution until after their application made on the afternoon of the same day to AldousJ could justify committal or the imposition of any other penalty. Accordingly, I dismiss the application. But I emphasise that any other respondent who chooses to postpone the execution of an Anton Piller order will do so, as these defendants have done, at his own risk. The result of a consequent committal application will depend on the facts of the particular case. This committal application fails. Application dismissed. Jacqueline Metcalfe Barrister.