In 2013, Deutsche Bank obtained a judgment in the sum of $243 million against a defendant, Sebastian Holdings Inc. (“Sebastian”), on account of losses from foreign exchange and derivates trading. The bank sought to enforce the judgment but a former director of Sebastian, Mr Vik, is alleged to have stripped the company of nearly $1 billion in assets.
The court’s rules make provision for a director of judgment debtor like Sebastian to be ordered to attend the court for questioning about the debtor’s finances but when Mr Vik attended court following a request by Deutsche Bank he failed to produce key documents or to confirm where Sebastian’s assets were now held.
Following further applications to court, Deutsche Bank agreed with Mr Vik that he could attend court for further questioning on a date that occurred after he had resigned as a director of Sebastian. However, in spite of the agreement with Deutsche Bank, Mr Vik argued that he was not required to attend questioning because he had resigned as a director and was no longer subject to a suspended Committal Order which could have seen him imprisoned if he did not give disclosure.
Deutsche Bank’s right to compel Mr Vik to attend further questioning was considered by the Court of Appeal which made clear in its judgment that if an individual had failed to disclose relevant information or had sought to mislead the court, the process of obtaining financial information from a judgment debtor did not conclude once the initial examination had been completed.
The Court of Appeal said that it would be right to require further attendance by Mr Vik even if he was likely to flout an order, not only to assist Deutsche Bank but to publicly affirm the efficacy of the court’s enforcement procedures and to send an unequivocal message to those who seek to avoid the consequences of court orders. If no order were to be made against Mr Vik then directors in his position could avoid complying with court orders with impunity which would undermine public confidence in the administration of justice.
Alexander Haddad works in the Litigation Department and advises clients on enforcing judgments.