Kidd v van Heeren
[2019] NZHC 1761
•25 July 2019
This judgment is subject to temporary publication restrictions imposed by the Court of Appeal in Kidd v van Heeren [2019] NZCA 275 at order H and [88]. IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2014-404-0725
[2019] NZHC 1761
BETWEEN MICHAEL DAVID KIDD
Plaintiff
AND
ALEXANDER PIETER VAN HEEREN
Defendant
Hearing: 15-17 July 2019 Appearances:
S J Mills QC and B O’Callahan for the plaintiff
M D O’Brien QC, A J Wakeman and R H Anderson for the defendant
Judgment:
25 July 2019
JUDGMENT OF JAGOSE J
This judgment was delivered by me on 25 July 2019 at 12 noon.
Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Solicitors/Counsel:
S J Mills, QC, Shortland Chambers Auckland B O’Callahan, Barrister, Auckland
M D O’Brien QC, Auckland Fee Langstone, Auckland
K 3 Legal Limited, Auckland
KIDD v VAN HEEREN [2019] NZHC 1761 [25 July 2019]
[1] For this claim to an accounting for his share of their partnership, the plaintiff, Mr Kidd, seeks the defendant, Mr van Heeren, provide specified information and documents – both directly, and by exercising his powers to obtain information from two Liechtenstein-registered entities associated with him, the Gerda and Timbavati Foundations.
[2] Mr Kidd’s application principally relies on orders made by Fogarty J on 14 April 2015, declaring Mr van Heeren to be “issue estopped from denying the partnership and the accumulated worldwide assets of the partnership”,1 ordering an account to be taken between them, and directing Mr van Heeren to file and serve “a complete list of all assets of the partnership”, including the entities holding them (whether or not presently in his control) and their current value, pending which Mr Kidd was not required to take further steps in the case.2
[3] Mr van Heeren responds – by his own affidavits, and those of expert forensic accountants, Allan Greyling and John Carlaw Hagen – he now has complied with Fogarty J’s orders, and seeks orders to progress the mutual accounting ordered by the Judge (although to be amended from those sought in light of more recent developments). Mr van Heeren’s counsel, Mark O’Brien QC, accepts – if I find Fogarty J’s orders materially remain unperformed – orders to progress are premature. That was Fogarty J’s initial view, which I repeatedly have endorsed in minutes since.
Background
[4] The general background to these applications recently has been summarised by the Court of Appeal in associated proceedings between the parties:3
[9] For some 15 years from 1975, Messrs Kidd and van Heeren conducted in partnership a highly profitable international steel trading business. The profits were invested through various entities including Worldwide Leisure in assets located in different parts of the world. Mr Kidd has been seeking an account for his share of these assets since the parties went their separate ways 28 years ago, in January 1991.
[10] In February 1996, Mr Kidd commenced proceedings against Mr van Heeren in the High Court at Auckland seeking an accounting for his share of
1 Kidd v van Heeren [2015] NZHC 517 at [171].
2 At [172](a)–(e).
3 Kidd v van Heeren [2019] NZCA 275 at [9]–[17].
the partnership assets. Mr van Heeren resisted Mr Kidd’s claim relying on a deed of indemnity dated 18 January 1991 in terms of which Mr Kidd purportedly indemnified Mr van Heeren against all claims by Mr Kidd and settled all disputes between the parties anywhere in the world. On Mr van Heeren’s application, Smellie J stayed the proceedings in October 1997 because the indemnity provided that any dispute concerning it was to be determined according to South African law in the Republic of South Africa.4
[11] Mr Kidd then brought proceedings in the South Gauteng High Court, Johannesburg in 1998 challenging the validity of the indemnity. These proceedings were determined in Mr Kidd’s favour 15 years later, in May 2013.5 Satchwell J found the partnership had made acquisitions throughout the world including, but not limited to, Genan Trading Company NV, Prime International Ltd, Galaxy Properties (Pty) Ltd (Tisco), shares in Jocrow Steel Ltd, Huka Lodge, Dolphin Island, Cromwell/Wellesley shares (which the Judge noted “ultimately became a substantial stash of monies”), Optech International Ltd, gold bars, bearer certificates and cash in bank accounts.6 Satchwell J found that Mr van Heeren took advantage of Mr Kidd’s trust and procured the indemnity by fraudulent misrepresentations intending to “snatch” a “tremendous bargain”7 having been “cheating” Mr Kidd out of partnership profits for years.8 The Judge accordingly made an order declaring the indemnity to be null and void. Mr van Heeren’s application for leave to appeal to the Supreme Court of Appeal of South Africa was declined, first by Satchwell J9 and then by that Court.10
[12] Mr Kidd then commenced the 2014 Proceeding seeking an account between the parties to determine his entitlement to partnership assets. He applied for an interim payment of USD 25 million. Fogarty J made these orders in his judgment delivered on 14 April 2015. The Judge directed an account be taken to determine the amount due to Mr Kidd and ordered Mr van Heeren to pay USD 25 million into Court within one month of the date of the judgment (with leave to apply for an extension of time). The Judge also ordered Mr van Heeren to file and serve within one month a complete list of all assets of the partnership, not confined to those listed in the South African judgment, including a description of the assets, their current value and the entities holding them. The Judge further ordered Mr van Heeren to detail any assets disposed of or no longer in his control and state his knowledge as to who controls those assets and their estimated value
[13] In making these orders, Fogarty J found that Satchwell J’s finding that the assets referred to at [11] above, including Huka Lodge, were partnership assets gave rise to an issue estoppel.11The Judge was satisfied in terms of r
7.71 that Mr Kidd was likely to recover at least USD 25 million following the account he had ordered having regard to the value of these assets alone.12 The Judge went further and said he was satisfied that Mr Kidd “would” recover at least that amount.
4 Kidd v van Heeren [1998] 1 NZLR 324 (HC).
5 Kidd v van Heeren SGHC Johannesburg 27973/1998, 20 May 2013 [South African judgment].
6 At [132].
7 At [165].
8 At [169].
9 Kidd v van Heeren SGHC Johannesburg 27973/1998, 13 August 2013.
10 van Heeren v Kidd SCA 717/13, 21 October 2013.
11 Kidd v van Heeren [2015] NZHC 517 [Interim Payment Order], at [117].
12 At [155]–[156].
[14] Mr van Heeren did not comply with the Interim Payment Order. Instead, he applied in May 2015 to vary the orders on the grounds he had appealed to the Court of Appeal and was unable to pay the amount ordered. This application was dismissed by Fogarty J in a judgment delivered on 31 August 2015.13 The Judge summarised the burden of Mr van Heeren’s supporting affidavits as follows:
[18] Essentially, both affidavits taken together, but particularly the first, contend that all of his assets are now held by either the Timbavati Foundation or, more likely, the Gerda Foundation [both registered in Liechtenstein] and are out of his control. He does not say that the total assets would not be able to meet the interim payment. He does not say that he does not know the scale of assets. For example, he says, “I am therefore unable to confirm what assets are now vested in the Gerda Foundation”.
(Emphasis in original)
…
[16] The Judge concluded that Mr van Heeren’s affidavits were unsatisfactory and did not show he was unable to pay the amount ordered:
[35] Therefore this Court, being informed that a wealthy person has transferred assets to a trust or a foundation does not draw the inference that the wealthy person is giving his property away but, rather, draws the opposite: that he is seeking protection from any attachment of it. So the information in the affidavits from Mr van Heeren that he and his wife transferred progressively all of their assets to the Timbavati Foundation is an indication of seeking to make those assets more secure, rather than giving them away. These are real world presumptions which I have applied when scrutinising the evidence from Mr van Heeren that [he] has lost control of his assets.
…
[42] It is possible that when swearing his two affidavits, Mr van Heeren considered that he was able to depose that assets were no longer in his [direct] power or control consistent with him having ultimate and effective control by one of these mechanisms. On this basis he possibly drew the distinction … between requesting that the trustees of the [Timbavati] Foundation settle the assets previously vested in it upon the Gerda Foundation and controlling this process. He therefore considered he could distinguish these Foundation managed assets, and assert that he had not accumulated assets in his personal name.
[43] It was not and could not be suggested that para [172] of the judgment containing the orders intended them to be confined to accumulated assets held in the personal name of Mr van Heeren. Submissions of abuse of the Court’s processes are very serious. If accepted they can result in the Court accessing other powers. In the course of the argument I was left unsure as to whether Mr van Heeren
13 Kidd v van Heeren [2015] NZHC 2082.
was deliberately obstructing disclosure of assets under his control or, rather, knowing and disclosing of the function of the Timbavati Foundation and the Gerda Foundation, and the Worldwide Leisure Limited’s shareholding etc, felt able to swear that the partnership assets listed, and carefully listed by Satchwell J in her para [132] were not under his control so that he was unable to make a payment of USD25m.
…
[46] The defendant has not made out the merit of an application for variation of the orders. On the contrary, his two affidavits are quite unsatisfactory and not significantly persuasive.
[17] The Judge stopped short of finding that Mr van Heeren was deliberately refusing to comply with the orders, allowing for the possibility he had “taken a narrow, very narrow, reading of the orders … and, in particular, has read the term ‘control’ to be confined to meaning direct control or immediate control and as not including the ability to control indirectly or remotely the assets and proceeds of the assets found by Satchwell J to be assets of the partnership”.14
Developments
[5] Since that time, Mr van Heeren has filed and served a further six affidavits,15 initially concentrating on his contended inability to make the interim payment, and proposing substantially lesser amounts, ultimately as better reflecting what he said was Mr Kidd’s likely share of partnership assets. The Court of Appeal was not persuaded.16
[6] For present purposes, Mr van Heeren relies on Mr Greyling’s forensic work, developed over four affidavits,17 and endorsed by Mr Hagen.18 Mr Greyling’s later work is:
… to review the available annual financial statements … of entities and structures related to Mr van Heeren from 1991 to the most recent available period … in order to determine the entire [net asset value] of all those related parties.
Inferentially, Mr van Heeren’s ‘universe’ incorporates the partnership assets as at 1991, and any derivation from them since. Mr Greyling concludes from the information available to him “the market value of the assets of the [v]an Heeren related
14 At [69].
15 Sworn 27 July 2015, 8 November 2015, 17 September 2017, 21 December 2017, 19 April 2018, and 26 October 2018.
16 Kidd v van Heeren, above n 3, at [73]–[74].
17 Sworn 15 September 2017, 6 November 2017, 18 October 2018, and 28 May 2019.
18 Sworn 27 May 2019.
entities at January 1991 were some U$ 10.667 million … which increased to some U$
43.039 million at May 2018”.
[7] Also of materiality for the present applications is Mr van Heeren’s progressive explanation of his powers in respect of the Gerda and Timbavati Foundations. Mr van Heeren initially explained he and his former wife, Johanna Alida Marie van Heeren- Hermans, transferred all their personal and business assets to Timbavati “around 1990”. He was not a trustee of Timbavati, and since has not accumulated any assets in his own name. At his and Ms van Heeren-Hermans’ request, “the trustees who controlled the Timbavati Foundation” undertook a restructuring in 2009 to give Gerda control of Timbavati and its assets. He disavowed control of either the restructuring process or of Gerda, of which he and Ms van Heeren-Hermans were beneficiaries. He said he did not know what had become of the assets initially transferred into Timbavati.
[8] In response to Fogarty J’s April 2015 orders, Mr van Heeren asked Gerda’s trustees “to provide details of the assets of the foundation”, but Gerda refused on grounds it was “not allowed to provide … information … unless this is in the interests of the Foundation and … all the Foundation’s beneficiaries” (original emphasis). (Similar questions also were asked of Timbavati, but its lack of response was not then pursued, given Gerda’s more apparent promise.) Gerda did not have Ms van Heeren- Hermans’ approval, but it noted Mr van Heeren could consider taking legal action to enforce his request. Mr van Heeren did so, by petition to the Liechtenstein Princely Court of Justice on 4 December 2015.
[9] As has been seen, Fogarty J regarded the disavowal with some scepticism. In his judgment of 16 December 2015, he noted the petition was brought by Mr van Heeren as a beneficiary of Gerda.19 After reviewing Gerda’s constituent deed, continuing his presumption “persons in control of valuable assets, which they believe they own, do not usually give them away or lose control of them”,20 the Judge considered key questions related to the identity of Gerda’s ‘founder’. He endorsed Mr van Heeren’s requests for information, and adopted them as requests of the Court, as
19 Kidd v van Heeren [2015] NZHC 3250 at [38].
20 At [42].
well as seeking a full explanation of the ‘founder’.21 Again, inferentially, by adopting Mr van Heeren’s questions, the Judge accepted it was appropriate to obtain information about all Gerda’s assets, whether or not partnership assets.
[10] But the Liechtenstein Court, relying on Gerda’s advice its founder and ultimate beneficiary remained alive, dismissed Mr van Heeren’s petition as beyond Mr van Heeren’s rights as a discretionary beneficiary. His appeal was dismissed because “the asset-related interests … remain with the founder”.22
[11] Mr van Heeren’s September 2017 affidavit then explained it transpired, “in fact”, he was Gerda’s founder, with power to direct Gerda to provide information. Also, Gerda had no assets: “the assets that were established with the Timbavati Foundation still remain with the Timbavati Foundation”; Gerda operated as a distributor, and had no assets. He continued to disavow:
… any power (directly, indirectly or remotely) to revoke, vary or alter the Timbavati Foundation’s powers and the settlement of assets in the Foundation or to exercise control over any Board member.
Further information was being sought from both Gerda and Timbavati.
[12] Mr van Heeren’s December 2017 affidavit provided Gerda’s response to his renewed request as its founder, affirming he is its deemed “economic founder” and “ultimate beneficiary”, with rights to receive Gerda-related information, and its “protector”, comprising its advisory board and with a right to veto Gerda board decisions. Gerda also confirmed it has no material assets.
[13] Mr van Heeren’s April 2018 affidavit exhibited Timbavati’s response to his renewed request of it, affirming he also is its “economic founder”, of which Gerda is now its sole beneficiary, unless dissolved, in which case he and Ms van Heeren- Hermans would be its sole equal beneficiaries. (Before the 2009 restructuring, he was Timbavati’s “first beneficiary”, Ms van Heeren-Hermans being “second beneficiary” on his death.) He also is Timbavati’s advisory board, but without right to give
21 At [48]–[49].
22 The Liechtenstein information proceeding is outlined in Kidd v van Heeren [2017] NZHC 3199 at [33]–[35].
instructions to Timbavati’s board, or to revoke the foundation or amend its constituent documents. Timbavati wholly owns subsidiaries Barnhill Limited and Fenton Limited (registered in the Isle of Man), Dunsel Investment Limited (registered in Jersey), and Berkshire Investments BV and Saraceno Holding BV (registered in the Netherlands) (but not Berrax NV, the shares of which Mr van Heeren’s November 2015 affidavit advised had transferred to Timbavati). The Timbavati response included some financial information for itself and some of its subsidiaries and related entities.
[14] Mr van Heeren’s October 2018 affidavit provided further financial information in relation to Berrax NV (the physical bearer shares in which had been held by the late Peter van Langeveld – a partner in Mr van Heeren’s law firm, Greenberg Traurig, and Gerda board member, inferentially for Gerda (or Timbavati) – but, on discovery they were not held by Timbavati, since transferred to Stichting Saraceno to hold for Mr van Heeren) and related entities. Stichting Saraceno acts as Mr van Heeren’s proxy in relation to Berrax. (Fogarty J noted Mr van Langeveld was “a close business associate of Mr van Heeren”.23)
[15] The Timbavati response was authored by its attorneys, Schwärzler, whose principal, Helmut Schwärzler, advised:
[W]e have inspected the entire files available to the current [Timbavati] director, Mrs Schädler-Bissig, of Forum Trust …. It cannot be excluded that previous directors of Timbavati Foundation have not shared all documents with Forum-Trust.
Having identified Timbavati’s assets, Dr Schwärzler said “[w]e do not have any information that any significant assets have been sold or otherwise disposed of”. He explained “Timbavati Foundation does not have market values of its assets”, and “Timbavati Foundation did not resolve on carrying out distributions”. But he added “several payments are understood to have been made by group companies to [Ms van Heeren-Hermans] as consequence of the divorce between her and Mr van Heeren”.
[16] In the wake of these disclosures, Mr Kidd obtained from the Liechtenstein Princely District Court in February 2019 a without notice injunction against Mr van Heeren, prohibiting his – and Gerda’s and Timbavati’s – dealings with their assets
23 Kidd v van Heeren, above n 19, at [21].
“[u]p to the amount of USD 63 million”.24 The Liechtenstein Court accepted Mr Kidd had claims against Mr van Heeren for an accounting of their partnership, whose share was “estimated to be at least USD 63 million”, and for the interim USD 25 million payment.25 The Court was critical of Mr van Heeren’s conduct of the information proceedings before it on the basis only of his beneficiary rights while not disclosing he was its ‘alive’ founder, and his assertions to this Court he could not make the interim payment and lacked access to Gerda’s and Timbavati’s assets, given his comprehensive controlling rights over the Foundations.26 The Court provided a detailed outline of those rights, “which enable him to access the assets of Gerda Foundation and Timbavati Foundation at any time and in full and to dispose of them directly or indirectly at his discretion”.27 Those rights, taken in conjunction with Mr van Heeren’s conduct, established the threshold “subjective endangerment” justifying the without notice injunction sought by Mr Kidd.28
[17] On Mr van Heeren’s subsequent application, the Liechtenstein Court annulled the injunction.29 The Court accepted the evidence – predominantly of Mr Greyling and Mr Hagen, “in possession of more documents than [Mr Kidd’s] expert [Shane] Browning” – presently only permitted “a distribution claim of USD 3 million to be certified”. It continued to query Mr van Heeren’s contended lack of knowledge of powers in relation to the Foundations, but allowed as ‘plausible’ his explanation such arose from his obligations to Ms van Heeren-Hermans on their divorce.30 The Court maintained its criticisms of the conduct of the information proceedings, but also allowed such may have been attributable to his attorneys’ legal strategies, rather than directly to him.31 Given the scope of the ‘certified’ claim, Mr Kidd’s interests were adequately secured by orders made in this Court,32 and Mr van Heeren’s conduct had
24 Kidd v van Heeren (Princely District Court, Principality of Liechtenstein, 6 February 2019, 07 CG.2019.38, ON6).
25 At [122]–[127].
26 At [128].
27 At [146], and following to [214].
28 At [244]–[245].
29 Kidd v van Heeren (Princely District Court, Principality of Liechtenstein, 4 July 2019, 07 CG.2019.38, ON69).
30 At [Page 156].
31 At [Page 158].
32 At [Page 162].
not been established at such a level as to permit an inference of “subjective endangerment”.33
[18] The Liechtenstein Court considered if the injunction had caused any damage to Mr van Heeren or the Foundations. It observed:34
The Timbavati Foundation itself does not perform any activity, it does not even have its own account and has not really been active in recent years. It is not visible to what extent it is affected by any prohibitions and thus sustains damage (and consequently Gerda Foundation as beneficiary and [Mr van Heeren] as its beneficiary). The members of the Board of Foundation [sic] themselves were also unable to state what damage the foundation suffers.
…
It should also be noted that there are some results of evidence which the court could not classify without further taking of evidence and which could not be related to the findings made. This includes, for example, the fact that the Timbavati Foundation does not have an account, but according to the testimony of the witness Schädler-Bissig … Mrs. Hermanns received distributions of EUR 3,830,000 from Timbavati in the period from October 2009 to 28 February 2013, based on the divorce agreement. The question arises how these distributions could be made without an account and why Timbavati made them when Gerda Foundation was the beneficiary. This may probably be explained by offsetting, since this apparently occurred on lower levels. However, it may not be clarified on the basis of the available evidence. The same applies to the fact that the fee of the Board of Foundation Member Schädler-Bissig is simply remitted when she sends her invoices to Greenberg Traurig.
[19] As explained at [15], Mrs Schädler-Bissig’s files were the source of Timbavati’s disclosure to Mr van Heeren. She and Berrax NV are Timbavati’s board members. She has held that position since 4 June 2008. Berrax NV was represented by Mr van Langeveld until his death in October 2016, and thereafter by Bert Sanders. She reports to Greenberg Traurig. In evidence before the Liechtenstein Court, she explained Timbavati’s subsidiaries “operate quite independently. If there were distributions from those companies, they would come to Timbavati”. But then she said “Timbavati had and still has no account. Payments and distributions were made via the lower levels”. She did not know if Mr van Heeren “[had] received anything from the lower companies”, and said Mr van Langeveld “had the foundation file anyway
…. I don’t know whether he handed over the files to Greenberg Traurig”.
33 At [Page 169].
34 At [Page 159]–[Page 160].
[20] Also in evidence to the Liechtenstein Court, Mr Sanders explained he had acted for Berrax NV as a Timbavati board member “only a short time. I received most of the information from Mrs Schädler-Bissig”. He was asked to act in that position by Greenberg Traurig, which was his other source of information. He did not know anything about Timbavati’s assets, other than “it holds the shares of several companies”, or about those subsidiaries’ circumstances or any distributions, or whether he had made any decisions as board member. He agreed he had “a good private relationship” with Mr van Heeren, to whom he had spoken only “about private matters”, and not about Timbavati’s payment of the interim payment order or production of documents.
Discussion
[21] Mr O’Brien urges me to accept Mr van Heeren now can be considered to have met Fogarty J’s disclosure orders. He points to Mr Greyling’s and Mr Hagen’s evidence constructing Mr van Heeren’s ‘consolidated’ account. Mr Greyling did so from “financial statements for the related parties [provided] by [Mr van] Heeren’s South African legal advisors”, and in reliance on their and Mr van Heeren’s instructions. He did not communicate with related parties themselves. His work was “based on what I am instructed is the only available documentation in the possession of Mr van Heeren in relation to all of the related party assets”. He expressly records the accuracy of his work is “limited to the accuracy of the documentation [he had] reviewed, and also limited by the lack of documentation in some instances, including financial statements across a number of years”. He notes he is “instructed” no such statements exist for a number of the related parties. He concludes:
[B]ased on the instructions of Mr van Heeren that there are no additional partnership entities beyond those listed in [132] of the South African Judgment, Mr van Heeren has clearly complied with his obligation to provide a description of the partnership assets and the entities holding those assets.
[22]Mr Hagen endorses that position, saying:
Based on Mr Greyling’s overview, and my own knowledge of some of the disclosure Mr van Heeren has provided, in my opinion Mr van Heeren would appear to have complied with his obligations to provide a description of the partnership assets and the entities holding those assets, together with a current valuation of the physical partnership assets which remain in existence. Where some of the partnership assets have been sold or otherwise disposed of in the
period since January 1991, with the assistance of Mr Greyling and me, Mr van Heeren has sought to trace the proceeds from the sale or disposition of those assets to the best of his knowledge and with the information now available.
But it is worth noting even Mr Greyling accepts his work cannot account for what has happened to some original partnership assets, notably many millions of dollars in cash.
[23] I have no doubt Mr Greyling’s work is painstaking, applying his forensic accountancy skills to “over 200 DIN A4 files with documents and boxes of loose sheets”, obtained by Mr van Heeren from “his former homes”, to derive the ‘consolidated’ account of entities related to Mr van Heeren. Yet Mr Greyling’s and Mr Hagen’s conclusory confidence, well beyond their expertise to opine and going to the subject of my determination, is also otherwise difficult to credit. It entirely is reliant on instructions given by Mr van Heeren and his South African lawyers. Although it draws on much more information than was disclosed by Timbavati alone, the provenance and universality of that information beyond Mr van Heeren and his South African lawyers is unknown. The experts’ confidence further is undermined by Mr Greyling’s and Mr Hagen’s assertions Mr Kidd is not entitled to information beyond the partnership assets (of which they are again reliant on Mr van Heeren’s instructions, and again goes beyond their expertise). But Mr van Heeren opened the door to that broader scope of his obligations to this Court, which it adopted. And Mr Browning takes issue with significant aspects of Mr Greyling’s accounting, and in particular in relation to unaccounted entities and funds.
[24] I am very clear the sense of Fogarty J’s orders – taken in conjunction with his adoption of Mr van Heeren’s information request of Gerda, and the slowly resolving factual situation – requires comprehensive disclosure also from Timbavati. I am far from satisfied that requirement is met by Dr Schwärzler’s response for Timbavati (or, indeed, for Gerda, and still less by Mr van Heeren’s unsupervised provision of information to Mr Greyling and Mr Hagen).35
[25] The Timbavati response appears made predominantly from files available to Mrs Schädler-Bissig’s Forum Trust, when even she is clear there may be other source
35 Mr Greyling also says all the “relevant” information has been disclosed to Mr Kidd, in substantiation of Mr Greyling’s account. But, by ‘relevant’, he means only the information on which he relied.
material (for example, as was held by Mr van Langeveld in the “foundation file”), and she lacks knowledge of Timbavati’s subsidiaries’ operations. Dr Schwärzler himself allows previous Timbavati directors may not have “shared” all documents with Forum Trust. Although he advises Timbavati had no obligation to prepare financial statements before 2014, he does not say that was so also for its subsidiaries (while only providing financial statements for all identified entities from 2014).
[26] Berrax NV’s emerging position as the other Timbavati director – particularly when in the person of Mr van Langeveld, although the closeness of Mr Sanders’ relationship with Mr van Heeren also likely is meaningful – identifies a prospectively significant source of information. Yet Dr Schwärzler does not suggest any enquiry was made of it. Mr Browning’s long-standing identification from the limited documentation available to him of other entities as possible Timbavati subsidiaries is not addressed by Mr Greyling or Mr Hagen. My attention has not been drawn to, for example, what subsidiary made distributions to Ms van Heeren-Hermans, or paid Mrs Schädler-Bissig’s invoices, or how that could occur without Timbavati’s approval.
[27] As said at [16], the Liechtenstein Court outlined Mr van Heeren’s “extensive collective rights” against Gerda and Timbavati. Plainly the ‘information proceeding’ against Gerda misfired, to put it charitably, and none yet has been issued against Timbavati. But the Court said Mr van Heeren “could have obtained the information on the basis of his position in the foundation” on “appropriate instructions”.36 The Court took the view Mr van Heeren “wanted to provide as little information as possible” to Mr Kidd,37 exemplified by the “mock information proceeding” against Gerda.38
[28] The precise scope and utility of Mr van Heeren’s information rights against Gerda and Timbavati under Liechtenstein law is the subject of competing expert evidence from Liechtenstein lawyers, Nicolas Werner Reithner (for Mr Kidd) and Francesco Armando Schuur (for Mr van Heeren). While both agree Mr van Heeren has such rights, they differ on whether Mr van Heeren presently may exercise them,
36 Kidd v van Heeren, above n 29, at [Page 158].
37 At [Page 168].
38 At [Page 169].
whether they extend into the Foundations’ subsidiaries, and whether exercise for the purpose of this proceeding may be “abusive” or in any event effective to overcome the Foundations’ boards’ discretion.
[29] Those are not issues I can decide, but fall solidly within the Liechtenstein Court’s jurisdiction. That Court’s repeated criticism of the information proceeding against Gerda, and its indication all the information sought by this Court fell within his rights to obtain, give me comfort renewed and determined pursuit of the information will not be futile. Absent such pursuit, Mr van Heeren’s ‘persistent failure’ to comply with this Court’s orders continues. I have “very broad powers to make such orders as may be necessary in the interests of justice” to ensure compliance with this Court’s interlocutory orders.39 They extend to directing Mr van Heeren to exercise his powers to obtain information from the Foundations.
[30] In reliance on Blight v Brewster,40 Mr Kidd’s counsel, Stephen Mills QC, proposes in submission Mr van Heeren should be required to delegate those powers to Mr Kidd for his exercise in the Liechtenstein Courts, as Mr Reithner says he can. I am not prepared to go so far because, first, as Mr O’Brien protests that is not relief signalled on the application, and second, it involves me making a determination or at least an assumption of Liechtenstein law.
[31] Mr Kidd’s present application seeks specified documents in two parts, those held by the Foundations and those held by Mr van Heeren personally. So far as the first part is concerned, while the documents reflect the information Mr van Heeren was to seek of Gerda, they are a broader demand for “[a]ll minutes” of the Foundations’ Boards and Advisory Boards, and for “[a]ll documents” about “the Foundations’ bank accounts and bankable assets”, their “contractual relationships”, their subsidiaries and their investments, and distributions from either. All the Foundations’ internal and external correspondence also is sought, as well as “[a]ll documents” about nineteen specified entities. So far as the documents from Mr van Heeren are concerned, Mr Kidd seeks all his bank and credit card statements, and all his communications with – and details of all reimbursements and distributions from –
39 Kidd v van Heeren, above n 3, at [46].
40 Blight v Brewster [2012] EWHC 165, [2012] 1 WLR 2841 (Ch) at [75]–[76].
the Foundations, their subsidiaries or the entities, as well as “[a]ll documents” relating to Berrax, Bainco funds, and “bank holdings or other liquid investments” held by entities involved in the partnership’s business before 1 January 1992.
[32] The basis for the information sought is Fogarty J’s April 2015 order Mr van Heeren provide “a complete list of all assets of the partnership” – including any dispositions since – and their description, holding entity and current values,41 enlarged by the Judge’s December 2015 order adopting Mr van Heeren’s intended information requests of Gerda and requiring an explanation of Gerda’s control.42 The latter order effectively was to accept Mr van Heeren’s assertion he had put all his assets, including the partnership assets he held, into Gerda and beyond his control.
[33] Developments since illustrate the assertion cannot be taken at face value, even if applied to Timbavati, as the position with at least Berrax demonstrated. Appropriate orders in those circumstances should adapt Fogarty J’s April and December 2015 orders, to require Mr van Heeren:
(a)to provide a complete list of all assets in which he has or had any interest since January 1991, and their present description, holding entity (including Mr van Heeren, where applicable), and value;
(b)to exercise all powers at his disposal to obtain all information necessary to provide that list from any person or entity with such information in their power, possession, or control; and
(c)to provide certification by an independent lawyer, with relevant expertise in the jurisdiction to which the person or entity is subject in relation to that information, the steps taken exhaust the powers available to Mr van Heeren in the jurisdiction to obtain the information.
[34]Subsidiary orders would require the information at [33](b) to include:
41 Kidd v van Heeren, above n 1, at [172](c) and (d).
42 Kidd v van Heeren, above n 17, at [48]–[49].
(a)each holding entity’s constituent, regulatory, and summary financial documents, the last to include annual accounts, balance sheets, profit and loss accounts, annual and audit reports, and accounting vouchers;
(b)every mandate or other contractual documentation by which any person or entity may deal with any asset in the holding entity’s power, possession, or control; and
(c)all records of every disposition of or distribution sought or made from any such asset, and every direction or request as to the asset’s administration or management, whether or not such record is in the holding entity’s power, possession, or control.
Otherwise, I consider the documents identified in the Schedule to Mr Kidd’s application to veer too far into the realm of discovery.
Result
[35] Mr Kidd’s application is granted. For that reason, Mr van Heeren’s application is dismissed.
Next steps
[36] By memorandum (desirably joint, but otherwise any response and reply to be filed at subsequent five working day intervals after service) to be filed and served within ten working days of this judgment, counsel are to stipulate the precise form of my consequent orders, including a date for their performance. It may be the parties agree particular assets are to be omitted from Mr van Heeren’s list, as inarguably excluding any partnership asset.
Costs
[37] In my preliminary view, costs on the present applications should be reserved for determination in conjunction with the final accounting. If that is not accepted by the parties, and they cannot otherwise agree, costs are reserved for determination on short memoranda of no more than five pages – annexing a single-page table setting
out any contended allowable steps, time allocation, and daily recovery rate – to be filed and served by:
(a)Mr Kidd within ten working days of the date of this judgment;
(b)Mr van Heeren within five working days of service of Mr Kidd’s memorandum; and
(c)Mr Kidd strictly in reply within five working days of service of Mr van Heeren’s memorandum.
—Jagose J
3
1