Production Association Minsk Tractor Works and Belarus Equipment (Ireland) Ltd (plaintiffs) v Gueannadi Saenko, Tatiana Saenko and Elena Saenko (defendants).

Mareva Injunction - Interlocutory application - Duty of disclosure - Criteria for granting a Mareva injunction - Whether the court can freeze assets pending the outcome of a claim.

The High Court (before Mr Justice McCracken); judgment delivered 25 February 1998.

In determining whether to grant a Mareva injunction the court should have particular regard to five matters; firstly, the duty to make full and frank disclosure; secondly, particulars of claim and anticipated defence; thirdly, whether the defendant has assets in the jurisdiction; fourthly, whether grounds exist for believing assets will be removed or dissipated; and fifthly, whether the plaintiff has given an undertaking as to damages.

The High Court so held in refusing the application of the plaintiffs for a Mareva injunction.

Richard Nesbitt SC and Martin Hayden BL for the plaintiffs; Gabriel F. Haughton, solicitor, for the defendant.

Mr Justice McCracken said that the first plaintiff was a body corporate under the laws of Belarus and manufactured tractors. The second plaintiff is an Irish company and is also a wholly owned subsidiary of the first plaintiff and distributes its tractors. The first defendant is a citizen of Belarus and was managing director of the second plaintiff from 1 January 1993 to 31 July 1997. The second and third defendants are his wife and daughter and are also citizens of Belarus. The plaintiffs allege that the first defendant misappropriated approximately £300,000 from the second plaintiff. This application was an interlocutory application for a Mareva injunction restraining the defendants and each of them from disposing of, dealing with or otherwise charging their assets and bank accounts or dissipating same below the sum of £300,000 and an order freezing all bank accounts held in the name of the defendants and each of them or any such accounts beneficially owned by the defendants and/or any account in which the defendants have an interest below the sum of £300,000 and, thirdly, an order restraining the defendants from dissipating the proceeds of sale of a property in Grantstown, Waterford.

Mr Justice McCracken said that the principles to be applied in deciding on an application of this type were set down in the Supreme Court case of In The Matter of John Horgan [1995] 2 IR 411. In that case the Supreme Court declared the Mareva injunction to be an order in personam which prevents a defendant from dealing with assets in which the plaintiff claims no right whatsoever. The Court also quoted with approval the five criteria to be considered before granting a Mareva injunction as formulated by the then Master of the Rolls, Lord Denning, in the English case of Third Chandris Shipping Corporation v Unimarine SA [1979] QB 645. Mr Justice McCracken said he would consider each of these criteria in turn.

Firstly, the plaintiff must make a full and frank disclosure of all matters in his knowledge which are material for the judge to know. In the instant case the plaintiffs misled the court, when making their application at the interim stage, by not disclosing a £95,000 payment by the first defendant into an account of the first plaintiff. Additionally the plaintiffs failed to inform the court at that stage that the first defendant had started a new business in Ireland.

Secondly, the plaintiff must give particulars of his claim against the defendant, stating the grounds of his claim and the amount thereof and fairly stating the points made by the defendant against it. Such points against the plaintiffs' claim in this case were not included in the affidavit grounding the application but were made before the court.

Thirdly, the plaintiff must show some grounds for believing that the defendant has assets within the jurisdiction. Mr Justice McCracken was satisfied that the defendants do have assets within the jurisdiction.

Fourthly, the plaintiff should show grounds for believing that there is a risk of the assets being removed or dissipated. In this regard the plaintiffs claimed that the defendants were non-resident in this country and were selling their home. Mr Justice McCracken was, however, satisfied that the defendants were in fact resident in Ireland since 1993 and were genuinely seeking to purchase a new home. Further, the first defendant had started a new business here and in the light of the claims being made against him by a Belarus company it was unlikely that he would return to Belarus. Fifthly, the plaintiff must give an undertaking as to damages in case his claim fails. In the instant case the second plaintiff is insolvent. Certain undertakings were made by the first plaintiff and a property owned by neither plaintiff was offered as security but the court could not be satisfied as to the validity of the undertakings or the power of the first plaintiff to give them.

Mr Justice McCracken said that a Mareva injunction was a drastic remedy which could not be used merely for the purpose of freezing assets pending the outcome of a claim. The court is obliged to examine each application carefully in the light of the principles set out above. The application of the plaintiffs did not satisfy these criteria and, accordingly, was refused.

Solicitors: Nolan, Farrell & Goff (Waterford) for the plaintiffs; Haughtons (Dublin) for the defendants.

(This decision is under appeal to the Supreme Court.)