Deutsche Bank v Vik: Court of Appeal affirms inherent power to order further examination of judgement debtor's officer

The Court of Appeal has confirmed that the courts of England and Wales possess an inherent power to order the further examination of an officer of a corporate judgement debtor who has deliberately failed to comply with an order made under CPR r.71.2(1)(b) — even where that officer has since left the jurisdiction and ceased to hold office. The judgement, delivered by Lady Justice Andrews (with Lords Justice Nugee and Popplewell agreeing), reverses the decision of Cockerill J in the Commercial Court and has significant implications for the enforcement of judgements against corporate debtors with recalcitrant controllers.

Background

Deutsche Bank ("DB") obtained a Commercial Court judgement against Sebastian Holdings Inc. ("SHI") for approximately US$243 million in November 2013, with indemnity costs, following findings that SHI's counterclaim was founded on lies and fabricated documents. The amount outstanding has since grown to over US$360 million.

In July 2015, an order was made requiring Mr Alexander Vik — then a director of SHI and its effective controller — to attend court and provide information about SHI's means of satisfying the judgement debt ("the 2015 Order"). The order was personally served on Mr Vik in London. He subsequently resigned as director and relocated abroad, but was nonetheless required to attend the examination in December 2015. He attended, but gave false answers on multiple occasions and withheld key documents.

Committal proceedings followed. In 2022, Moulder J found that Mr Vik had deliberately breached the 2015 Order in multiple serious respects and sentenced him to 20 months' imprisonment, suspended on the condition that he submit to a further examination. That suspended sentence ultimately expired without the further examination taking place, following an adverse interpretation of the committal order by Henshaw J. DB then applied for a fresh court order compelling Mr Vik's further examination. Cockerill J refused, holding that no such power existed and that, in any event, she would not exercise a discretion in DB's favour.

The judgement

The Court of Appeal identified the central question as whether the process commenced by personal service of the 2015 Order had come to an end. If not, the court retained personal jurisdiction over Mr Vik and could exercise its inherent power to make such further orders as were just and convenient to give effect to the original order.

Lady Justice Andrews rejected the respondent's submission that a CPR r.71.2 order is exhausted once the examination date passes, irrespective of compliance. Part 71 itself contemplates ongoing compliance: CPR r.71.8 expressly envisages that a suspended committal order may impose conditions that include complying with "the original order", necessarily at a later date. The obligation to provide truthful information does not lapse merely because the examination occurred and the allotted questioning concluded.

The court reaffirmed the principle, identified in AJ Bekhor & Co Ltd v Bilton [1981] 1 QB 923 and confirmed in JSC BTA Bank v Ablyazov (No 8) [2012] EWCA Civ 1411, that the power to make an order carries with it an inherent power to make such further orders as are necessary to render the original order effective. The applicable question is not whether any further order is "ancillary" or "subordinate" in character, but whether it is just and convenient to make it in order to achieve the purpose for which the original order was made.

On discretion, the Court found that Cockerill J had given insufficient weight to the strong public interest in maintaining the authority of court orders and ensuring that deliberate disobedience carries consequences. The assessment of Moulder J — who had the advantage of observing Mr Vik give evidence over four days — that a further examination might bear fruit should have been the starting point of any enquiry into likely compliance. Nothing in the subsequent history displaced that assessment. The appeal was also allowed on the service point: Brecher LLP, who had come on the record as acting for Mr Vik in the underlying claim via a notice of change of solicitors, remained on the record and were authorised to accept documents "about this claim". The application notice fell within that description.

Significance

The decision closes a potential gap that might otherwise have allowed officers of corporate judgement debtors to defeat CPR r.71.2 orders by the simple expedient of leaving the jurisdiction and providing false or incomplete evidence. The inherent jurisdiction to enforce compliance does not depend on whether the contemnor remains within the jurisdiction, nor on whether committal proceedings have already been pursued. As the court made plain, the process under Part 71 is not exhausted until the information it was designed to elicit has actually been provided.