(1989)1989 Ma^ch 21 (DFMETRIADES ,1J METROSHIPPING & TRAVELLTD., Plaintiffs, v. GLOBALCRUISES S.A., Defendants. (AdmiraltyAction No. 199/88). InterimOrder— The Marevainjunction—Scope and object of. Interim Order — The CourtsofJustice Law, 1960 (Law14/60), section 32 — The three prerequisites for granting an interim order thereunder —Aseriousquestion tobetried,probabilitythatplaintiff entitied tosucceed, and unlessaninterimorderisgranted, itshallbe 5 difficultorimpossible todo complete justice atalaterstage. Companies —A company limited by shares registered under the Companies Law, Cao. 113 —Ithas a personality distinctfrom its members. In this case the Court granted a mareva injunction upon ex parte 10 application. The respondents moved the Court for itsdischarge. In the light of the evidence adduced and the principles summarized in the hereinabove headnote the Court decided to make the mareva injunction absolute. Orderaccordingly.Costsincause. \ 5 Casesreferredto: Barclay-Johnson v.Yuill[1980] 1 W.L.R. 1264; AlSudairyv. Abu-Taha and Another11980] 1W.L.R.
- Application. Application for the discharge of the order whereby the (20 defendants were restrained from withdrawing, transfering and/or otherwise disposing the amount of U.S. $80,000 which was deposited at the Centra! Branch of the Cyprus Popular Bank Ltd., Limassol. 182 1C.L.R. MetroShipping v.Global Cruises L Papaphtlippou with N. Cleanthous and A Haviaras. for plaintiffs-applicants. Chr.Pourgourides, for Loma Peller C. Velaris withA. Paschalides.for the defendants. 5 Cur.adv. vult. DEMETRIADESJ.readthefollowingruling.Theplaintiffs, who bytheir action claim the sum of C£41,878.34 value of goods and materials supplied to, services rendered and payments made on the instructions and/or order of the defendants for, the ship 10 «GALAXIAS»,obtained, after anex-parte application which came before me, an order by which the defendants by themselves or through Mrs. Loma Peller and/or their agents were restrained from withdrawing, transferring and/or.otherwise disposing the amount of U.S.$80,000 which isdeposited inAccount No.02015 33-018172 attheCentralbranch oftheCyprusPopular BankLtd. at Limassol in the name of Mrs. Loma Peller. The reason Igave that order was because in the affidavit filed in support of their application the plaintiffs alleged that the money washeld byMrs. Peller in trust for the defendants. The order was served on Mrs. 20 Pellerand thedefendants through Mr.Inigo.Asaresult,they both moved the Court for the discharge of the order and each filed affidavits insupport of the motions. The facts that led tothese proceedings are the following: The plaintiffs are a Shipping and Travel Agency. The 25 defendants, who are a company registered in Panama, are the ownersoftheship«GALAXIAS»nowlyingatLimassolport under arrest in another admiralty action. The main shareholder of the defendants is Mr. Fernando M. Inigo who, according to his evidence,owns 99.5(ninety-nine point five) per cent ofthe share 30 capital of the defendants. Mrs.Peller isthe wife ofMr.Inigo. Asa result of a contract entered into between the defendants and a certain Captain Michael Mourtzinos of Greece, the defendants agreedtoselltoMr.Mourtzinos50(fifty) percentofthe sharesof theship for thesum of U.S. $716,
- 35 Ifnecessary, Ishall later make reference tospecific termsof the contract which isbefore me as Exhibit «A»tothe affidavit hied by 183 [>emetriadesJ. MetroShippingv. GlobalCruises
(1989)Mr. Inigo in support of his motion for the discharge of the injunction. Asitappears from Exhibit No.2, which isbefore me and which consists of three statements of the Bank, the sum of U.S. $221,442.01 was deposited in Mrs. Peller's said bank account. Both Mrs.Peller and Mr.Inigoadmitted thatthismoney had been remittedand deposited inthesaidaccountbyand/orbehalf ofMr. Mourtzinos in satisfaction of the instalments he had undertaken, underthesaid contract,topayonaccount ofthepurchasepriceof the 50% of the shares inthe ship. 5 10 According to Mrs. Peller, the money was paid into that bank account because of the agreement and, as she said in her evidence,inorder «tofacilitate the payments,insteadofgoingany otherway».She further saidthatthebankaccount wasused partly for the purposes of the agreement of the 15th September, 1988, 15 and, also,for her personal purposes. Itistobe noted that theaccount inquestion isacheque account and that no cheque has been used of the cheque book issued to Mrs.Peller. Asitappears from the affidavit evidence of Mrs.Peller andMr. 20 Inigo. aswell as from theoral evidence given by them when they were cross-examined' by counsel for the plaintiffs, the biggest shareofthemoneythatwasdeposited intotheaccountopened by Mrs. Peller was withdrawn for the payment of debts that the ship owed. Mrs.Peller claimedthatthebankaccount wasopened after 25 she had deposited into it U.S. $1,000, less bank commission, which was her personal money and that in allthe deposited init money thatbelonged toherinthetotalsum ofU.S. $15,000.00. Mrs.Pellerallegedthatthebalancestandinginthebank account as on the date the injunction was made, belonged to her as her 30 salaries for services rendered to the ship as administrator and HotelManager asfrom March 1988hadnotbeenpaid.Hersalary, she said, wasU.S.$4,'500.00 per month. Her allegation issupported by the evidence of Mr. Inigo, who further statedthat he had agreed withhiswife thatthebalance of 35 the money deposited in her account be left untouched, as it formed part of what was due by the company to her for her services asAdministrator and Hotel Manager ofthe ship.This,he said, took place at the beginning of October when «they had 184 1c.L.R. MetroShippingv.GlobalCruises DemetriadesJ. finished paying the amounts per contract», obviously meaning those debtsof thedefendants that are enumerated inthe contract ofsale entered between the defendants and Mr Mourtzinos. ThemattercouldhaverestedhereandIcouldfindthatindeedthe 5 money inthe blocked account belonged toMrs.Peller. However, as it appears from the evidence given before me, Mrs. Peiler's name wasnot on thecrew listthatwaspresented tothe Customs forpurposes ofclearingtheshipfor free pratique and although in the contract of sale debts of the defendants are enumerated, 10 nothing is mentioned of the alleged debt due by them to her. Further, although legal proceedings were taken by members of the crew against the defendants, no such step was taken byMrs. Pelleragainst them. In the light of my above findings, Iam not satisfied that Mrs. 15 Peller isentitled to claim that the balance of the proceeds of the sale of the 50% of the shares in the defendant company, which wasdeposited inher account, belongsto her. Having reached myabove conclusion, the next question that! have todecide, before Ideal with theissueofwhether the interim 20 injunction should be granted till the final determination of the action, is to whom the money that is deposited in Mrs. Peiler's account belongs. I have already said that the money that was lodged in the account of Mrs. Peller was part of the proceeds of the sale of the 25 50% sharesofthedefendant company. Mr.Inigoallegedthatthis moneybelongedtohimashewaspracticallythesoleshareholder ofthe defendants. However, acompany,accordingtothe Cyprus Laws,isan entityentirelydistinctfrom itsshareholdersand, inthe absence of any evidence that the law of Panama provides 30 differently, I can only hold that the money belongs to the defendantsandthatMrs.Pellerholdsthismoneyintrustforthem. I shall now proceed with the legal issue as to whether the injunction shallbe granted. AsIhaveearliersaid,theplaintiffs, bytheirapplication,seekan 35 order restraining the defendants and Mrs. Peller from withdrawing, transferring and/or otherwise disposing of the moneywhich isdeposited inMrs.Peiler'ssaidaccount.Theybased theirapplication on section 32of the CourtsofJustice Law (Law 14/60) and a number of English authorities that have introduced 185 Demetriades.]. MetroShippingv.Global Cruises
(1989)and approved th'e enforcement ofwhat hascome tobeknown as a «Mareva Injunction». A Mareva injunction, if.1 can correctly interpret it to be, is an injunction bywhich adefendant, whether aperson orlegalentity, foreign orlocally-based, isrestrained from removingassetsthathe 5 possesses within the jurisdiction, pending the action and subsequent execution ofthejudgment obtained bytheplaintiffs or a counter-claiming defendant. Inthe case ofBarclay-Johnson v.Yuill, [1980] 1 W.L.R. 1264A1265C, Sir Robert MegarryV-Chad thistosayabout the effect of 10 a Mareva injunction: «....the heart and coreof the Mareva injunction istheriskof the defendant removing hisassetsfrom thejurisdictionand so stultifying anyjudgment givenbythecourtsintheaction ...the injunction will restrain the defendant from disposing of them 15 {theassets) even within thejurisdiction ... If, then, the essence of the jurisdiction isthe risk of assets being removed from the jurisdiction, I cannot see why it shouldbe confined to'foreigners', inanysenseofthatterm ... Naturally theriskof removalofassetsfrom thejurisdiction will 20 usually be greater or more obvious in the case of foreignbased defendants, and so the jurisdiction has grown up in relation to them ... Is it really to be said that in relation to Mareva injunctions, there is one law for the foreigner and another for the English,... 25 ... I do not intend to suggest that matters of nationality, domicile, residence and so on are irrelevant ... Any or allof them maybe ofconsiderable importance insofarastheybear upon theriskof removal....withinthelastyeartheabolitionof exchange control hasmade iteasierfor everybody totransfer 30 assets abroad.» Lord Denning MR; in delivering his judgment in the case of Rahman (Prince Abdul) Bin Turki Al Sudairy v. Abu-Taha and Another,reported in11980]1 W.L.R. 1268atpp. 1271-1272, made reference to the Report of Committee on the Enforcement of 35 Judgment Debts
(1969)which considered theproblem of debtors running away from the jurisdiction taking with them their assets. The relevant part of the report cited by Lord Denning reads: «...Under conditions of travel, particularly as the cost ofair 186 1C.L.R. 5 10 " 15 MetroShippingv.Global Cruises DemetriadesJ. travel is now within the means of many a debtor, theriskof goods and chattels, orsubstantial sumsof moneybeing taken outofthecountryisgreatlyincreased.Itispossibletoimagine countless circumstances inwhich apower torestrain a debtor could he justified but one will suffice. A debtor may buy valuablejewelleryoncredit,ignoredemandsforpayment and ignore a writorsummons.Thejeweller may notknow where the jewellery is. Ifhe happens todiscover that the debtor has booked an air passage and proposes to leave England a few days later and before any progress can be made with the action which has been commenced is there anyone who would argue in these days that the court should nol have power to order that the debtor should not remove the jewellery from thejurisdiction or otherwise dispose ofit»? Under section 32of the CourtsofJustice Law(Law 14/60).the litigantseekingan injunction ofthisnaturehastosatisfy the Court that(a)there isaserious question tobe tried, (b)thereisaprobabilitythattheplaintiff isentiledtorelief,and 20 (c) unless an interlocutory injunction is granted, it shall be difficult orimpossible todo completejustice ata laterstage. Asregards prerequisites (a)and (b),I find that there isa serious issue to be decided in this action by the Court, namely the meaning and effect ofterm 11of the contract ofsaleentered into 25 between the defendants and Mr.Mourtzinos. Ifurther.find that unless the interlocutory injunction is granted, there isariskthat ifthe plaintiffs obtain judgment, they may find themselves that before they can issue execution the defendants may have disposed of their money from Cyprus by transfering 30 them out ofthejunsdiction oftheCyprus Courts. In the circumstances, i find that this is a proper case for the granting of aMareva injunction. Costs of these proceedings tobe costsin the cause. Marevainjunction granted. 187