IN THE HIGH COURT OF JUSTICE
CO/3783/95QUEEN’S BENCH DIVISION
CROWN OFFICE LIST
Royal Courts of Justice
Strand
London WC2
Monday, 28th October 1996
B e f o r e:
LORD JUSTICE SCHIEMANN
MR JUSTICE BRIAN SMEDLEY
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ATTORNEY-GENERAL
-v-
ROWAN GAVIN PATON MENZIES
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(Computer Aided Transcript of the Stenograph Notes of
Smith Bernal Reporting Limited, 180 Fleet Street,
London EC4A 2HD
Tel: 0171 831 3183
Official Shorthand Writers to the Court)
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MR M SHAW (Instructed by The Treasury Solicitor, London, SW1) appeared on behalf of the Applicant.
The Respondent appeared in person.
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J U D G M E N T
(As approved)
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Crown Copyright
JUDGMENT
LORD JUSTICE SCHIEMANN: On 2 August we made a civil proceedings order against Mr Menzies under s. 42 of the Supreme Court Act 1981. These are our reasons for making that order. We have in general given references to the appropriate places in the voluminous evidence in case this matter should proceed further. All references are, save where otherwise indicated, to exhibit PJB 1 to the affidavit of P J Bennett sworn on 18.11.95.
We heard Mr Menzies at length. He was courteous, lucid and succinct. His original reason for wishing to resort to the courts is perfectly understandable. He is the major creditor of a company, Ayala Holdings (AH), which was wound up leaving him with substantial claims which are unlikely to be satisfied. He maintains in substance that prior to the commencement of the liquidation of AH, the assets of AH were put out of the control of any eventual liquidator of AH. This he says was done by hiving the main business and assets down to a subsidiary (Ayala Design and Build Ltd) ("ADB") and thence to another company, all (he claims) at an undervalue. What he wants to do is to secure the punishment of the perpetrators of this device and if possible to get for AH in liquidation and eventually himself some of the money owed to him by AH. He names as the perpetrators two erstwhile directors of AH Mr Maley and Mr Yeldham and the National Bank of Kuwait. He submits that no Ayala trading company of which either Mr Maley and Mr Yeldham have been directors has escaped insolvency and in no case have the U.K. creditors received a penny. He claims that injustice has been achieved by reason of perjury in a case heard before HH Judge Baker QC in 1991 and that all he is seeking to do is to find some means of demonstrating this fact. He has sought to set aside that 1991 judgment relying on the alleged perjury but failed. He has sought to appeal that judgment but failed because he was unable to deposit an adequate amount of security for costs. He has sought to persuade others to engage in civil or criminal proceedings with a view to demonstrating the alleged perjury but no other has been found both able and willing to do this. The latest Judicial Review proceedings are an example of attempts by him to persuade the AG to carry out this process.
In a long and helpful written submission prepared for the hearing Mr Shaw, who appears for the AG, sets out the conduct complained of as vexatious. This judgment incorporates much of it. While Mr Menzies would dispute some of the epithets used, the substance of much of what was set out is not disputed by him.
We are chiefly concerned with the following groups of proceedings, namely
1. Proceedings in the winding up of AH in which Mr Menzies sought to invoke the jurisdiction of the court to investigate alleged delinquencies of directors and shadow directors.
2. Proceedings in the bankruptcy of Mr Menzies. The bankruptcy arose from unpaid costs orders made against Mr Menzies in other proceedings connected with AH. He claimed that those costs orders should be set aside as having been obtained by fraud.
3. A series of 11 writ actions brought by Mr Menzies arising out of the winding up of AH and of his bankruptcy and covering ground overlapping that which was covered in the winding up and bankruptcy proceedings.
4. The Judicial Review proceedings in which we gave judgment on 2 August last in which he sought to compel the AG to take criminal proceedings against the allegedly delinquent directors. We are of the view that the applications made by Mr Menzies which we discuss in that judgment were vexatious.
We turn now to the other three matters.
II THE WINDING UP PROCEEDINGSII THE WINDING UP PROCEEDINGS
Preliminary skirmishesPreliminary skirmishes
The course of the winding up proceedings began in earnest on 20 November 1989 when Mr Justice Scott made an order winding up AH. Mr Menzies was a supporting creditor ( page 6). Shortly thereafter, on 16 May 1990, Mr Menzies served notice that he intended to apply under s.212 of the Insolvency Act 1986 (a summary remedy against delinquent directors and liquidators for misapplication of a company’s assets) for an order that Mr Maley restore, or contribute to, the assets of AH ( page 15). On 9 July 1990 an application for a Mareva injunction against Mr Maley was twinned with the s.212 application ( page 16) but this and other Mareva applications, some of which were abandoned by Mr Menzies at the hearing itself, were dismissed (with costs to be paid forthwith) by Mr Justice Scott on 27 February 1991 ( pages 17-18).
Meanwhile, Mr Menzies had also applied to commit Mr Maley for contempt of an order said have been made on 13 September 1989 ( pages 1-2). On 9 July 1990 Mr Justice Warner dismissed this application with costs.
Proceedings against AH’s BankersProceedings against AH’s Bankers
Mr Menzies then turned his attention to the National Bank of Kuwait ("the Bank") seeking a declaration that it was a shadow director of AH and that it should pay a contribution to AH’s assets ( pages 19-20). This application affecting the bank was heard by Judge Paul Baker QC as a preliminary to proceedings under s.212 of the 1986 Act against Mr Maley referred to below. On 22 October 1991, he dismissed the preliminary application (wrongly brought too late ex parte to the Judge rather than to the Registrar) with costs ( pages 21-29). He added that, in any event, the substantive application itself had "considerable difficulties". Mr Menzies soon amended his application against the Bank. On 27 November 1991 he gave notice of an application against it seeking a contribution towards AH’s assets ( pages 131-132 and 133-177, especially 136). His Points of Claim were amended on 18 February 1992 and shortly thereafter the Bank applied to strike out all the claims. This application was heard by Mr Justice Chadwick on 9 October 1992. He struck out all but one claim against the Bank and stayed Mr Menzies’ application under s.423 of the 1986 Act (restorative or protective orders in relation to transactions defrauding creditors) ( pages 218-252). The Bank appealed against the refusal of Mr Justice Chadwick to strike out all of the claims. On 9 November 1993 the full Court of Appeal allowed the appeal and struck out the last remaining claim by Mr Menzies against the Bank ( pages 315-341). It also refused leave for Mr Menzies to bring or continue proceedings against the Bank under s.423, ordered him to pay all the Bank’s costs of the proceedings and refused leave to appeal to the House of Lords. Mr Menzies then petitioned the House of Lords for leave to appeal. On 2 March 1994 leave was refused.
Thereupon an application was made by Mr Menzies on 10.3.94 against the Bank seeking an order under s.218 of the 1986 Act, a section he had not previously invoked against the Bank. The Bank obtained from Mr Registrar Rawson an order striking out this application.
The Bank could only be liable under that section if it was a past or present officer of the Company. As the registrar said ( page 370)
"Section 251 of the Insolvency Act contains no definition of "Officer" but it does provide that expressions not defined in that section should be construed by reference to s.744 of the Companies Act 1985. That section provides that officer includes director, manager or secretary. The question therefore is whether what the Bank did in the relevant period amounted to the conduct of a manager. In my judgment it did not. It is an everyday occurrence for a Bank to exercise financial control or discipline over a customer by limiting credit facilities and by allowing payments to be made for certain purposes but not for others. Conduct of that kind does not make the Bank a manager of a corporate customer."
As was pointed out by Mr Registrar Rawson, much the same point had already been made to Mr Menzies by Chadwick J on 9.10.92 (233). In our judgment the making if this application was vexatious. Even more vexatious was then appealing it. Though it can be said in mitigation that in due course Mr Menzies consented to the dismissal of his appeal by Jacobs J. (373)
Proceedings against AH’s directorsProceedings against AH’s directors
We now turn to various applications which Mr Menzies has made against the Directors of AH, Messrs Maley and Yeldham.
The first of these was only against Mr Maley and resulted in a trial before HH Judge Baker taking 17 days. Essentially, the trial dealt with serious allegations by Mr Menzies that Mr Maley had placed AH’s assets outside the reach of the UK creditors by a series of fraudulent transactions (summarised at pages 36-42). On 13 November 1991 judgment was given dismissing the application with costs ( pages 32-104). For the sake of brevity we shall refer to this as the 1991 Baker Judgment. Most of the many sets of proceedings that Mr Menzies launched subsequently have been attempts, by various procedural means, to overturn or re-litigate the issues disposed of in this judgment on the basis that they were decided in reliance upon the allegedly fraudulent testimony of Mr Yeldham. Although Mr Yeldham was called as a witness by Mr Menzies, he gave evidence which assisted Mr Maley. Mr Menzies argued in later proceedings that this evidence (like that of Mr Maley) was unreliable. He said this was shown by fresh evidence not available at the trial. All these arguments have been rejected. The following extracts from his judgment reveal how Judge Paul Baker QC regarded the way in which Mr Menzies had conducted the case.
(1) "Looking back at the case, the way it was put .... I am bound to say that seems to be a grotesque and inaccurate representation of what really occurred in this case in relation to these matters .... Indeed, in the final submissions, Mr Menzies did retreat from those extreme suggestions, into negligence.... It is far too late, in closing submissions to allege negligence, but in any event I don’t find it ... " (page 72H-73F)
(2) "Now Mr Yeldham was called as a witness in these proceedings by Mr Menzies. I found him to be a very careful accountant. He gave very clear evidence, which I accept." ( page 78B)
(3) "Looking at that evidence, and that in the main depends on the evidence of Mr Yeldham and Mr Rickstein, and the documents that I have looked at, any idea that valuable assets were being given away by these negotiations and transactions is quite mistaken." ( page 83D-E)
(4) "Now, Mr Menzies has continued, despite that, to argue that the sale of Ayala Design and Build is fraudulent. He seeks to go behind the audited accounts of ADB .... and demonstrate that Mr Yeldham has been in some sort of conspiracy with Mr Maley .... Mr Menzies has sought to persuade me that .... Mr Maley and Mr Yeldham both lied on oath, and that they were both party to a fraud .... Now I have considered those matters, but I really must reject them ....
Therefore, rejecting that, I have to find, as I have indicated already, that I accept the evidence of Mr Yeldham and Mr Rickstein [the audit manager], that there was no sale here at an undervalue to the detriment of Ayala. " ( pages 85A-88C)
The A-G does not allege that the making of this application before HH Judge Baker was vexatious. Mr Shaw submits on his behalf, however, that most of what Mr Menzies has done in the courts since then amounts to attempts to relitigate in a vexatious manner the very issues which Judge Baker decided against him. Mr Menzies disputes the word vexatious but accepts that in essence he was indeed seeking to relitigate.
Immediately after the 1991 Baker judgment Mr Menzies applied to that judge to reopen the matter. On 13 January 1992 Judge Paul Baker QC dismissed Mr Menzies’ application on the basis that he was functus officio ( page 193). He indicated, in passing, that there were only two ways in which his judgment could be challenged: first, by an appeal and, second, by an application to set it aside as obtained by fraud. Mr Menzies then tried both ways at the same time.
Attempts to challenge the Baker 1991 Judgment
Attempts to challenge the Baker 1991 JudgmentAs regards the first way, on 30 March 1992 Mr Menzies issued a notice of appeal to the Court of Appeal against the Baker 1991 judgment, that dated 27 February 1991 of Mr Justice Scott (the Mareva proceedings) and that dated 22 October 1991 of Judge Paul Baker QC (the s.212 proceedings against the Bank) ( pages 182-186). In each case the notice was well out of time and omitted to seek leave to appeal. On 30 September 1992 Lord Justice Leggatt ordered Mr Menzies to pay, within 14 days, security for costs in the sum of £15,000 failing which the application would be dismissed. Mr Menzies applied to vary the order of Lord Justice Leggatt but on 9 December 1992 the same Lord Justice refused to assent (other than to extend the time for payment for a further 28 days). Mr Maley was awarded his costs ( pages 272-273). Undeterred, Mr Menzies immediately applied on 22 December 1992 to the full Court of Appeal for a variation or reversal of that order ( page 274). Thereafter, on 8 November 1994, the full Court dismissed Mr Menzies’ appeal against the security for costs order of Lord Justice Leggatt and refused leave to adduce further evidence sought in three summonses dated December 1992, May 1993 and October 1993 ( page 375).
In the event, no security has ever been paid and this application for leave to appeal consequently stands dismissed.
As regards the second way, on 23 July 1992 Judge Paul Baker QC struck out the application for a re-trial (an application to set aside the first judgment as obtained by fraud) as an abuse of process; holding that the fresh evidence relied upon by Mr Menzies was available at the trial and, in any event, did not indicate any fraudulent conspiracy. Having concluded that Mr Menzies’ application had not "the slightest chance of success", he ordered him to pay Mr Maley’s costs on an indemnity basis forthwith ( pages 189-210). Undaunted, on 12 August 1992 Mr Menzies applied for leave appeal against this judgment ( pages 211-212). By way of duplication, he also gave notice of appeal (without having obtained leave) in the same matter on 25 August 1992 ( pages 213-215).
It will be remembered that it was Mr Yeldham who had let down Mr M in the proceedings which led to the Baker 1991 Judgment. So
on 27 February 1992 Mr Menzies opened proceedings on another front: this time against Mr Yeldham. As he had previously done against Mr Maley, he issued an application under s.212 seeking a contribution from Mr Yeldham towards AH’s assets and towards the costs of the trial before Judge Paul Baker QC. The grounds were identical to those relied upon against Mr Maley. On 26 March 1993 Judge Hague QC dismissed the application; ordering that the claim be struck out as an abuse of process (because of the identity of the issues and the close involvement of Mr Yeldham in the previous proceedings), that Mr Menzies pay Mr Yeldham’s costs on an indemnity basis and leave to appeal be refused ( pages 277-303). Judge Hague QC took into account that the proceedings against Mr Yeldham were in breach of an agreement entered into by Mr Menzies in August 1990 with ADB (in action no 1989 M No.4253) by which he agreed not to take proceedings against anyone associated with ADB except Mr Maley ( pages 299-300
Mr Menzies then sought to place himself in the shoes of the liquidator of AH so as to sue the Bank. On 20 May 1993, however, Mr Justice Knox held that the purported assignment of rights by the liquidator to Mr Menzies was inoperative and struck out the latter as an Applicant in the joint application against the Bank (pages 308-310).
In November 1993 Mr Menzies applied the court under s.218 of the Insolvency Act 1986 to refer alleged irregularities by AH’s directors to the prosecuting authority. The directors applied to strike these applications out. The applications of Mr Maley and Mr Yeldham were heard by Mr Justice Lindsay. On 22 June 1994 he allowed each of their applications with costs ( pages 361-362). Shortly thereafter, Mr Justice Lindsay also struck out similar claims advanced by Mr Menzies in action no. Ch 1993 M No.6836 as disclosing no reasonable cause of action and as being an abuse of process (pages 363-365). He also awarded costs to Mr Maley on an indemnity basis and made the following order:
"That [Mr Menzies] be not permitted to make any further applications or bring or serve any further proceedings in relation to or consequent upon his Companies Court application dated 16th May 1990 under section 212 Insolvency Act 1986 or to challenge the judgements of His Honour Judge Baker QC dated 13th November 1991 and 23rd July 1992 without the leave of the Court first being obtained, other than
a) by pursuing any application now pending in the Court of Appeal, or
b) in action no Ch 1994 M No.3595."
Anticipating the making of that barring order when the Court adjourned on 30 June, Mr Menzies issued another Writ, Ch 1994 M No. 3595. That action, of course, was not before the Court and could not be covered by the barring order which Mr Justice Lindsay made. The issue of that writ was, as Mr Justice Lightman later found, an abuse of process and in our judgment clearly vexatious. It is argued by Mr Menzies that the Section 42 application is unnecessary in the light of that barring order but in our judgment that order is very limited in its effect (it does not, for example, prohibit applications under Section 218) and is insufficient in itself to meet the complaint which the Attorney General makes in the present application.
III THE BANKRUPTCY PROCEEDINGSIII THE BANKRUPTCY PROCEEDINGS
After a nine day hearing, on 25 July 1995 Mr Justice Lightman made an order for bankruptcy against Mr Menzies ("PJB 4", pages 1-44, especially 31-44). The petitions were brought by Mr Maley, Mr Yeldham and the Bank citing Mr Menzies’ failure to pay any orders for taxed costs in the sum of £65,213, £58,312 and about £60,000 respectively. Mr Justice Lightman concluded (page 44, lines 10-14):
"Mr Menzies is in my view hopelessly insolvent. I can see no reasonable prospect of his retrieving his position. I do not think that having regard to his history and the history of his dealings with Mr Maley, Mr Yeldham and [the Bank], either they or I can have any confidence in him or his vision for the future."
He also struck out action no. Ch 1994 M No.3595 as disclosing no reasonable cause of action and as being an abuse of process (pages 14-30), set aside a statutory demand served by Mr Menzies on Mr Maley (page 31) and dismissed two applications brought by Mr Menzies himself (pages 30-31). Mr Menzies has now applied for leave to appeal against the bankruptcy order. He has also applied under s.375(1) of the 1986 Act (review, rescission or variation of any order of an insolvency court).
The effect of the bankruptcy order is that he can no longer pursue litigation without the consent of his Trustee but the bankruptcy order has a limited life. For the reasons set out in the judgment of Morison J in Attorney General v Persaud (Transcript dated 22 February 1996) means the bankruptcy order in itself does not provide the protection which the Attorney General is seeking for members of the public who have been harassed by the Respondent and each of the four reasons advanced in that case are equally relevant here.
The Official receiver has been appointed trustee of the Bankrupt’s estate. Mr Menzies takes the view that the Official Receiver is not doing all he should. However, no-one else has volunteered to act, still less been appointed, and so, the Official Receiver remains his trustee - see Insolvency Act s.299.
IV THE WRIT ACTIONSIV THE WRIT ACTIONS
These all arose out of the demise of AH and the alleged dishonesty of the directors in depriving creditors of assets. 11 writ actions were brought by Mr Menzies in the Chancery Division over a five year period (1990-1995) arising out of the winding up of AH. Of the 11 actions, eight have been struck out and two discontinued. One was not served. None has been successful. All the actions arose out of the demise of AH and alleged dishonesty of Mr Maley and Mr Yeldham in depriving its creditors of assets. Mr Menzies’ pleadings are prolix. They often fail to identify any cause of action, frequently make serious but wild allegations none of which has ever been upheld and refer to copious other documents.
In action no. Ch 1990 M No.7542 Mr Menzies sued Mr Maley for damages for misrepresentation or deceit alleging that he had milked AH of substantial sums of money and placed its assets out of the reach of UK creditors. On 25 July 1995 Mr Justice Lightman struck out the claim as disclosing no cause of action in the light of Mr Menzies’ admissions in action no. CH 1994 M No.3595. He added that he would have done the same on grounds of want of prosecution in view of the deliberate, inordinate and inexcusable delay on Mr Menzies’ part ("PJB 4", pages 33-37).
In action no. Ch 1991 M No.2896 Mr Menzies sued Mr Maley in a 57-page statement of claim relying on the same matters as in action no. Ch 1990 M No.7542 and adding allegations of fraud, misfeasance and breach of trust to the earlier claims in misrepresentation and deceit. He also added claims for breach of contract concerning unpaid commissions and for breaches of a multitude of provisions of the Companies Act 1985, the Insolvency Act 1986 and the Company Directors Disqualification Act 1986. He later discontinued the action but more than one year after it had begun (thereby exerting pressure on Mr Maley).
In action no. Ch 1991 M No.7490 Mr Menzies sued Mr Maley for "damages for malicious or illegal or unlawful issuance of a bankruptcy petition". No cause of action or duty of care was pleaded but paragraph 5 of the Statement of Claim "contend[ed] that the issuance of the Petition of 25 February was a plot to attempt to defeat the hearing of 27 February and may be in contempt of Court". The Defence pleaded that no cause of action was disclosed and the action was discontinued but, again, well over a year after it was launched.
In action no. Ch 1991 M No.10314 Mr Menzies sued Mr Wishart (who also had a costs order in his favour against Mr Menzies and also had presented a bankruptcy petition) in exactly the same terms as he had sued Mr Menzies in action no. Ch 1991 M No.7490. The claim was struck out by Deputy Master Moncaster under RSC Order 18 rule 19 with costs two months after the writ had been issued.
In action no. Ch 1992 M No.4745 Mr Menzies sued Mr Wishart again, this time for a declaration that he should not have to pay Mr Wishart’s costs which he had been ordered to pay because, he said, his agreement to pay the costs had been given by mistake. The claim was struck out by Mr Lloyd QC sitting as a Deputy High Court Judge under RSC Order 18 rule 19 with costs less than two months after the writ had been issued.
In action no. Ch 1993 M No.6836 Mr Menzies sued Mr Maley for perjury (before Judge Paul Baker QC) and fraud and asserted the existence of fresh evidence (described at "PJB 4", pages 12-14). A summons for directions taken out by Mr Menzies was dismissed with costs to be paid by Mr Menzies in any event. Then on 1 July 1994 Mr Justice Lindsay struck out the action under RSC Order 18 rule 19 with costs (to be paid on an indemnity basis). He also held that perjury did not constitute a good cause of action and set aside the judgment that Mr Menzies had obtained on 4 January 1994 in default of service of a Defence and made a limited order debarring Mr Menzies from taking certain other proceedings. Leave to appeal was refused.
In action no. Ch 1993 M No.7215 Mr Menzies sued the Bank for wrongly paying money to itself and a Kuwaiti company to his detriment as a creditor. Again, the statement of claim merely recited alleged facts (said to show fraud) and pleaded no cause of action. The action was struck out by Mr Justice Robert Walker on 17 October 1994 under RSC Order 18 rule 19.
In action no. Ch 1993 M No.7282 Mr Menzies sued Mr Yeldham on exactly the same basis as he had sued Mr Maley in action no. Ch 1993 M No.6836. The action suffered precisely the same fate at the hands of Mr Justice Lindsay on 1 July 1994 ("PJB 4", pages 12-14).
In action no. Ch 1994 M No.1336 Mr Menzies then turned his attention to Simmons & Simmons (the Bank’s solicitors) whom he sued for (malicious) injurious falsehood. This was said to consist of the making of deliberately false statements and offering corrupt inducements intended to prevent Mr Adams from taking over from Mr Vooght as AH’s liquidator. The benefit to Mr Menzies of such a change was that Mr Adams had indicated a preparedness to sue the Bank on behalf of AH whereas Mr Vooght insisted on being placed in funds by the creditors before he would do so. Mr Menzies claimed damages and interest in excess of £1.5m although he alleges that he was a creditor only in the sum of about £600,000. The action was struck out by Master Winegarten on the basis that there was no falsehood.
In action no. Ch 1994 M No.3595 Mr Menzies again sued both Mr Maley and Mr Yeldham for damages for breach of contract, misfeasance as directors of AH and in tort. As before, the claim relied on allegations of perjured evidence, judgments obtained by fraud, conspiracy and attempts to adduce supposedly fresh evidence. On 25 July 1995 Mr Justice Lightman had no hesitation in striking out all aspects of these claims ("PJB 4", pages 14-30).
In action no. Ch 1995 M No.3073, launched on 31 May 1995, Mr Menzies reverted to suing the Bank, this time claiming damages for "breach of the order of Mr Justice Millett of 13th September 1989" and for fraud in succeeding in striking out his earlier action against the Bank. On 3 July 1995 he issued a notice of motion seeking final judgment against the Bank in default of acknowledgement of service as well as its winding up. But, as Mr Justice Lightman pointed out when dismissing this application ("PJB 4", pages 30-31), the writ had not even been served on the Bank because it had no representative office in England.
V UNMET ORDERS FOR COSTS :exhibit "PJB 3", tab 1
V UNMET ORDERS FOR COSTS :exhibit PJB3, tab 1There are many awards of costs to Mr Maley and the Bank. Apparently Mr Menzies has not even now satisfied any of these. The indebtedness culminated in successful bankruptcy proceedings brought by Mr Maley, Mr Yeldham and the Bank relying on Mr Menzies’ failure to pay any orders for taxed costs of £65,213, £58,312 and about £60,000 respectively ("PJB 4", page 1).
VI MR MENZIES DEFENCE TO THE PRESENT APPLICATIONVI MR MENZIES DEFENCE TO THE PRESENT APPLICATION
Mr Menzies does not we think quarrel in substance with this summary. He accepts that this raises a strong prima facie case in favour of making a civil proceedings order. However he submits the following
1. The judgment of HH Judge Baker was obtained by perjury
2. Because of lack of assets he has been deprived of the chance of appealing it
3. Apart from the Judicial Review proceedings for which he has sought leave he has not started or continued any proceedings since November 1994. He did not know that his lack of assets would prevent an appeal of the Baker 1991 Judgment until 8.11.94 when the Court of Appeal affirmed Leggatt LJ’s costs order. He claims he had a legitimate expectation that the Court of Appeal would reverse Leggatt’ LJ’s order. Had that expectation been fulfilled and had he won any subsequent appeal, he would not have been stuck with various issue estoppels which have plagued him ever since HH Judge Baker’s first judgment. In those circumstances, he asserts that it was not vexatious to start any of the many civil actions of which the AG makes complaint. He further submits that, even if his conduct has at times in the past been vexatious, there is no reason to suppose that he does not now accept the need to exercise self discipline in his litigation.
4. Much of what he has done he has done with the approval of the liquidators of AH. In pursuing that litigation he was not just acting in his own interests but in the interests of all the other U.K. creditors of AH and indeed the Liquidators. All the proceedings which had been brought in his name had been brought with the approval of the Liquidators who had no funds with which to pursue the former directors of AH and the Bank. His actions have been either as assignee of the liquidators or as assignee of the rights of the a Union Bank of Finland who were the Bankers of ADB. The Liquidator Mr Vooght of Cork Gulley wrote to the Official Receiver on 25th July 1989 enclosing Counsel’s advice to the effect that there was evidence of a sale at undervalue and the wrongful disposal of assets. Despite that, the Official Receiver who is also his Trustee in Bankruptcy is not prepared to pursue them nor it seems is the Attorney General. It would not be right to prevent him from investigating further and if necessary suing to protect the interest of the creditors of AH. A Section 42 Order would prevent that.
5. He has conducted a considerable amount of litigation in which he has been successful. Moreover, he wishes to act on behalf of the Finsbury Business Centre as he has done in the past. That is a company in which his wife has the controlling interest. Only recently Islingon Borough Council have sought to resurrect that earlier litigation.
6. If he is subject to a civil proceedings order this will prevent or at any rate inhibit him in pursuing costs orders which have been made in his favour and in taxation proceedings relating to costs orders which have been made against him.
At this point it is necessary to refer briefly to some other litigation which has nothing to do with Ayala Holdings. Between 1991 and 1996 Mr Menzies was involved in Litigation involving the Corporation of London and Islington Borough Council and Finsbury Business Centre. In 1995 he was successful in that litigation before Harman J and a costs order was made in his favour on 13 January 1995. Those costs have not been taxed as yet. Mr Menzies claims that the Official Receiver, as his Trustee in Bankruptcy, has refused him leave to attend on the taxation despite the fact that the documents which relate to that litigation are very voluminous and only he really understands them. The cost of preparing a bill of costs for the purposes of taxation will be an estimated £9000 and although his wife has indicated her willingness to fund that bill the Official Receiver has refused to allow that to happen.
In addition to the costs orders made in his favour, he has successfully on taxation reduced the costs claimed by those in whose favour costs orders have been made against him. He submits that this enables him substantially to reduce his liabilities as set out in his Statement of Affairs filed in his bankruptcy. If now an order is made under s 42 he will, he submits, be seriously prejudiced in the eyes of the other parties, in particular the London Borough of Islington . He maintains that the costs order should result in an award to him of something in the region of £213,600.
7. If he is subject to a civil proceedings order this will inhibit his conduct in appeals he has outstanding.
8. It is in the public interest that the criminal activities and fraudulent behaviour of Mr Maley and Mr Yeldham be exposed yet Mr Menzies has not been assisted by the authorities. The DTI have not been prepared to pursue the two directors or the Bank because they do not have the time or the resources but he is prepared to do so and will do so if the Bankruptcy Order made by Lightman J is removed on Appeal.
VII COMMENTS ON MR MENZIES DEFENCEVII COMMENTS ON MR MENZIES DEFENCE
We comment on each of the matters raised by Mr Menzies in the order in which we have just listed them.
1.The alleged perjury
Perjury is easy to allege but difficult to prove. Many a losing party in litigation takes the view, no doubt sometimes rightly, that the other party has gained his victory by perjury. This is a galling consequence of the undoubted fact that human judicial tribunals are nor infallible. What is clear in the present case is that, even if the 1991 Baker Judgment was obtained by perjury (as to which we say nothing), Mr Menzies has been vexatious in the number of proceedings in which he has sought to establish this.
2.The lack of opportunity to appeal
It is unfortunate if, through inability to provide security for costs, a litigant is unable to appeal a judgment which he regards as appealable. However it is also unfortunate if the winner of proceedings at first instance has to defend at his own expense the judgment which he has obtained. These matters were weighed by the Court of Appeal when requiring security and that judgment is something with which Mr M has to live. This should have been apparent to him.
3.Legitimate expectation of success in appealing the security requirement imposed by Leggatt LJ and then the judgment of HH Judge Baker. Order in any event not necessary.
If a party, however highly he may rate his prospects of success in an appeal, starts, before the anticipated result of his appeal has been achieved, other proceedings against the same defendants raising the same issues, he must not be surprised if the court regards that as vexatious. At best, his appeal will in the event succeed - in which case those other proceedings will, largely if not entirely, be unnecessary. It is clear to us that Mr Menzies’ conduct has in the past regularly been vexatious. As to whether it is now desirable to make the order, we accept that since the Court of Appeal judgment in 1994 he has somewhat moderated his vexatious activities. However, they have not altogether ceased. Mr Menzies has already got as far as sending to the Official receiver a notice of an Ordinary application which he intended to make to Lightman J under s.375(1) of the Insolvency Act that the bankruptcy order made by that judge be annulled. The Judicial Review proceedings were in our view vexatious. We believe that the recent moderation is in part the result of the present proceedings. We believe that if we do not make the order defendants or respondents to appeals or applications are likely to suffer precisely the harm from which a civil proceedings order is intended to protect them.
4. Genuine desire to get in assets
We are prepared to accept that Mr Menzies has been motivated by a desire to get in assets so that they may be distributed amongst creditors of AH. No doubt various liquidators have been similarly motivated. No doubt there were matters which they were content to have pursued by Mr Menzies at his own expense. However, the gravamen of the case against Mr Menzies is not that his motivation is to be criticised but that his litigious methods are vexatious.
5.The other litigation
The fact, which we are prepared to assume as correct, that Mr Menzies has succeeded in litigation which has nothing to do with Ayala is very little to the point. It is litigation arising out of the Ayala matters which involved repeatedly unsuccessful proceedings and applications entangling an ever widening circle of potential defendants and respondents - most recently the Attorney General himself. If this course of conduct justifies the making of a civil proceedings order then we do not consider that we should refrain from making such an order because of the effect it might have on the standing of Mr Menzies in the eyes of Islington. If the course of conduct does not justify the making of a civil proceedings order then, of course, the point does not arise. We note that Mr Menzies reliance on other litigation was also in support of the point to which we now come.
6. The effect of a civil proceedings order on costs awards
We express no view as to the possibilities of success either in taxing down costs orders made against him or in recovering costs in relation to orders which have been made in his favour which Mr Menzies might have. Whatever those possibilities, we do not regard them as providing a reason for not making a civil proceedings order which would otherwise be appropriate.
7. The effect of a civil proceedings order on possible Appeals
There are outstanding a number of applications for leave to appeal and actual or possible appeals. We make the following general point. The making of a civil proceedings order is not an absolute bar to the making or prosecuting of an application for leave to appeal. It merely interposes a requirement that the leave of the judge in chambers be obtained before such an application is made. It follows that a Sect 42 order would not irrevocably prevent Mr Menzies from pursuing the Appeals or applications for leave to appeal which he has instituted. Outstanding appeals or application for leave to appeal may be relevant as imposing an attitude of reserve in relation to the judgments sought to be challenged. Apart from that however, they provide no reason for not making a civil proceedings order if this would otherwise be appropriate. In the instant case the presence of the outstanding applications and appeals does not lead us to refuse to make a civil proceedings order.
During the course of argument we had considered whether it would be appropriate for us to re-constitute ourselves as a Court of Appeal and deal with the applications for leave, or, alternatively, that one of us should sit as a single Judge and hear notional applications for leave under Section 42. We have however concluded that it would not be appropriate in this case for us to take either of those two courses and any application for leave under Section 42 or any application to the Court of Appeal should be dealt with in the normal way.
8. The prosecution of alleged criminals
The civil proceedings order does not prevent criminal prosecution at all though we are not to be taken as encouraging such proceedings. If, as we think, a civil proceedings order is in principle appropriate, then the consideration that it is possible that an alleged criminal is escaping prosecution by the authorities is not an appropriate reason for not making a civil proceedings order. As can be seen from our judgment in the Judicial Review Proceedings and in the foregoing parts of this judgment, Mr Menzies is not an appropriate person to vindicate in civil proceedings the public interest in prosecuting criminals. We note that when Mr Menzies tried to oblige the Secretary of State for Trade and Industry to take over an application he had launched under s.218 of the 1986 Act (prosecution of delinquent officers and members of companies) against Mr Maley, Sir Mervyn Davies dismissed this as an abuse of process and ordered Mr Menzies to pay the costs of the application (pages 311-312).
VIII CONCLUSIONVIII CONCLUSION
We are satisfied that Mr Menzies has habitually and without reasonable ground instituted vexatious civil proceedings and made vexatious applications in civil proceedings.
In the early part of the exchanges between the Respondent and the Court, the Court indicated at the request of the Respondent that if possible applications by the Respondent for leave to continue proceedings should be listed before Smedley J and any subsequent applications for leave to appeal to the Court of Appeal should be listed if possible before Schiemann LJ. The Court then turned to consider a possible application for leave to appeal from its judgment.
LORD JUSTICE SCHIEMANN: I think what I would suggest is that you ask us now if we will rule, and I have to tell you that it is likely it will be against you, you then make an application in formal terms to the Court of Appeal. If you do not think that you have enough material at present to persuade them that we are wrong, then you tell the appeal office, "I don’t want to pursue this for the moment. I am doing this as a precaution in case I get leave to appeal the judgment of His Honour Judge Hauge, and I think they will see the force in that".
THE APPLINCANT: I wonder if that application be not made today. This is the application number (3), but it is made if I make an application to you for a leave to appeal at the same time?
LORD JUSTICE SCHIEMANN: You have to make your application to us for leave to appeal now.
THE APPLICANT: I thought I had six weeks.
LORD JUSTICE SCHIEMANN: I did promise you six weeks. On the other hand, that was on the assumption that we could deliver judgment at the beginning of term. We cannot reconvene this Court now again until next January and I am anxious to be shut of it. You have had quite a while to read our judgment. You do not have to give detailed chapter and verse. If you want to say in principal why we are wrong, of course you can.
THE APPLICANT: I am afraid to say I am not in a position-- it is an enormous decision for me to make.
LORD JUSTICE SCHIEMANN: It is not an enormous decision whether to apply for leave. If we refuse it you then have a decision as to whether or not you go to the Court of Appeal. Again, it is not an enormous problem whether you make an application or whether you pursue it. The problem is that you may have cost implications. That is the normal form if you lose at the Court of Appeal. The Attorney-General would ask for costs against you at that level. He tends to give people one free run, as it were, but not two.
THE APPLICANT: I had hoped not to have to make it now, but in view of what your Lordship says, I will have to make it now.
LORD JUSTICE SCHIEMANN: We did say in the judgment that six weeks from actual handing down and you have had three weeks since you saw it, so I think arguably you have us technically over a barrell, but I would prefer it if you could do it today.
THE APPLICANT: I as I see it, my applications are inextricably linked. I would ask to refer to the judicial review application in my request to seek leave to appeal the Civil Proceedings Order application.
It is a very simple point that I do feel it is the Attorney-General’s duty to treat everyone fairly and equitably and nobody should be above or beyond the law. My real grievance against the Attorney-General is not that he considered the very detailed allegations of perjury, but it is that he refused to read the evidence. That is my enormous gripe.
Had he read the evidence and said, "I think this is nonsense", or "won’t stand up in view of all the of other judgments it will collapse", if he had said any of those things then I would have no grounds whatsoever.
My second submission on that and it leads on to the vexatious litigant point, is that as far as I can see, there had actually been no challenge as to whether it is the Attorney-General’s administrative functions rather than his judicial function. I fully accept what you said in the judgment that there is ample authority, subject to the appeal to the House of Lords, that there can be no challenge by judicial review of the Attorney-General acting in his judicial capacity.
I say on that point, the Attorney-General’s refusal to read the papers was a straightforward administrative function and nothing whatsoever to do with his judicial functions.
My third point, which is relevant to the Civil Proceedings Order, is that I really did feel that had he got somebody to read what I said, he must have come to the conclusion that, at the very least, there was very substantial documentation to sustain, to show, a prima facie case of perjury, that the judgments against me should, whether there was perjury, have been investigated.
The relevance of that leading on to your order, I think, it is fair to say it was not a straightforward matter.
Your Lordships have considered it very carefully and have given me every latitude to present my case over three days, then reserved judgment and handed it down some weeks later, so that, I submit, shows that it is not a straightforward case and I think to a certain extent, although I think if I may say so, there is no a word in your judgment which I disagree with, but it is fair to say that it is possible that another judge of the Court of Appeal may say, "Well, the Attorney-General did not read the document. There is no precedent and I think he should have done. Mr Menzies is bankrupt, but he is entitled to no more right than anyone else, but he is denied the same rights and he hasn’t had them". Nobody at all has ever investigated these allegations and so it is not really a question of law which is why I am so undecided about going through with the thing.
It is a question of one’s view of life and so I would say it is possible that another judge or judges, even if they exactly come to the same judgment, might put more weight on the judicial review point.
LORD JUSTICE SCHIEMANN: We will rise.
We do not propose to give you leave, but what we will do is extend your time for six weeks from today to renew your application to the Court of Appeal. Normally one has seven days, but in view of what I promised, I will give you a chance to put your case in the crispest form.
I suggest, but it is not an order, that when you have done that exercise and you look at it and if you feel that it would be more sensible to wait and see what happens on your more promising leave application, if I can put it that way, and some are more promising than others, I say without prejudice to any result, that you tell the civil appeals that you would like it kept in abeyance. It is one of the relatively few cases, the point of third parties, that delay is of no problem. It is for you, nobody else, and there I do not see why you should not have six weeks to think about it.
THE APPLICANT: Would you consider giving me six weeks for the application to renew as well, as I would not do one without the other?
LORD JUSTICE SCHIEMANN: Technically you need leave from the single judge to renew your application for judicial review. I will certainly extend time for leave to appeal to the Court of Appeal; extended to six weeks from today. So far as the judicial review proceedings are concerned, time for renewing the application to the Court of Appeal extended again to six weeks from today. Thank you.
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