A court has confirmed that King Mswati III of Swaziland cannot sell or dispose of his private jet until a dispute over his alleged failure to pay a US$3.5 million debt is resolved.
The ruling was made in the British Virgin Islands on 23 December 2015after the East Caribbean High Court was told that there might be plans to lease the plane and then lease a second plane for King Mswati’s use.
There has been a long-running dispute between Shanmuga Rethenam, who owns a company called SG Air, and the King.
A court has confirmed that King Mswati III of Swaziland cannot sell or dispose of his private jet until a dispute over his alleged failure to pay a US$3.5 million debt is resolved.
The ruling was made in the British Virgin Islands on 23 December 2015after the East Caribbean High Court was told that there might be plans to lease the plane and then lease a second plane for King Mswati’s use.
There has been a long-running dispute between Shanmuga Rethenam, who owns a company called SG Air, and the King.
A court has confirmed that King Mswati III of Swaziland cannot sell or dispose of his private jet until a dispute over his alleged failure to pay a US$3.5 million debt is resolved.
The ruling was made in the British Virgin Islands on 23 December 2015after the East Caribbean High Court was told that there might be plans to lease the plane and then lease a second plane for King Mswati’s use.
There has been a long-running dispute between Shanmuga Rethenam, who owns a company called SG Air, and the King.
[EASTERN CARIBBEAN SUPREME COURT
‘TERRITORY OF THE VIRGIN ISLANDS
INTHE HIGH COURT OF JUSTICE
‘CLAIM No. BVI HC (COM) 2014/00104
BETWEEN:
[1] SGAIRLEASING LIMITED
[2] SG.COMMODITIES TRADING LIMITED
Respondent/Clalmant
AND
It] INCHATSAVANE COMPANY (PROPRIETARY) LIMITED
[2] HIS MAJESTY KING MSWATI I, KING OF SWAZILAND
‘ApplicantiDefendants
Appearances:
‘Mr John Wardell QC and wit him Mr. Robert Nader forthe Claimants
Mr Frank E, Walwyn and with him Ms. Jennifer Jarvis forthe Detndants
JUDGMENT
Freezing Orér obtained without notice - Application fo discharge - Whether appicaton for
Freezing Orier properly made without notice fo Defendants ~ Good arguable case —
‘Whether rol risk of dlsspation of assets made out ~ Delay ~ Materia, non-disclosure —
Whether the court ought fo decine to accept jurisdiction on prinapes of forum non
convenians ~ Whether claim barred by sovereign immunity ~ Whether claim an abuse of
process because of prior proceedings in Ontario Canada,
Introduction
[1] FARARA J [Agl} The Claimants in these proceedings (espectvely, "SR Air and
"8G Commodities’) ae both companies incorporated inthe Britsh Virgin standsa
58
4
‘The Fist Defendant, inchatsavane’) is a company incorporated in Swazland,
‘and the Secand Defendants His Majesty the King of Swaziland (HMI),
‘On 2% September 2016, the Claimant obtained, on an ex prt or without notice
basis, 8 worlvide freezing order (the Freezing Order’) unl the retum date,
preventing the removal by the Defendants of any of heir commercial property in
the BVI and elsewhere up to 2 value of USS7,916,448.2 (lo be reduced to
USS4,418.449.82 in the event that and for so long as the USS3,500,000 inthe
trust aocount of WeirFoulds LLP are secured by the inurcton). The Freezing
(Order also prevented the removal from the trust accoun: at the taw firm of
WesFoulds LLP in Canada of the sum of USS3,500,010; disposing of or
Sea clara Bure Tobos:1)
i)
13)
to and cost overuns in relation tothe arf inthe principal sum of USS9 300,000,
and ‘payments to other reciets inthe aggregate sum of USS1,145,059 82. The.
‘second restitution claim is said to arise by vite of a loan of USS',500,000,
_ativanced by SG Commoaitis to HMK to facitate his purchase of arwors,
The ‘ist resituion cai is founded on the principle of Unjust enichment,
hereby the Fst Claimant asserts, at paragraph 9 of te stalsment of claim, that
Goderich Aireraft nc, (GAP), which had entered into a witten agreement with the
Fist Defendant on 10% May 2040 to make certain modifcatiens tothe interior of
the aircraft, ran into financial dfcutes. This putin jeopardy the completion by
GAI ofthe agreed upon modifications tothe ara, and hence put at risk the
personal investment by HMK of the sum of US$4,500,000 in the aircraft. The
aircrafts said to have been used by HMK fr ofl travel,
[A pargraph 10 ofthe stalmantof cli the Fis Claimant pleads, thal between
30" Decamber 2010 and 18% Api 2012, GAI encourered certain ine and cost
‘vers in connecon withthe mosicatons 10 the aca. Accordingly, “o
ensure that GAI remained solvent and thatthe mocatons to the rat were
completed’, SG Air funded payments of USS9,160000 to GAI for the
‘modifications, and USS1,$71, 648.82 o other recent in consecton with he said
modifications al forthe benefit onthe Fist Defendant.
As regards HMK, paragraph 11() ofthe statement of claim stals:-
“HMK subjected $6 Air to ilegimate pressure amcunting to economic:
duress to make the payments spectied above in paagraph 10, and SG
‘rad no reasonable alternative but to comply. HMK hreatened impliedly
that, 86 Air did not make those payments, the Ngvenya iron ore mine:
‘would bein jeopardy.”
‘The reference tothe ‘Ngwenya ion ore mine’ isa reference toa mining project
‘Swaziand in which @ company, SG ton Ore Mining (PTY) Limited, which
seemingly isa related company of the Claimants, had an interest14)
15)
18)
Accordingly, the First Claimant pleads that the monies advarced by SG Air to
cover the costs overruns associated with the modifications to the aircraft being
cared out by GA, ‘were monies paid by SG Air tothe use of HM, and it would
be unjust for HMK, to retain the benefit of those monies, withou: making restituton
16 SG Alc’ it hears stating hat HMK rimsel isnot the registred owner ofthe
tier It is registered tothe Fist Defendant, a company wholy owned by HNK.
However, itis the Claimant’ pleaded case that the sum of USS9,500,000, which
‘vas payable upon the Frist Defendant's purchase ofthe araft on or about 18%
Apfil 2012, was paid from funds in HMK's personal bank account This is said to
sive rise to the Inference thatthe Frist Defendant, of which HMK is the sole
{rector and shareholder, olds the aircraft upon a bare tust for HK.
The fist restitution claim also incudes a secondary unust enrichment claim’, for
Certain sums which SG Airis sid to have expended in ting aerate aircrats for
use by HMK, Firstly, during the period Apri and May 2011 from a company called
Emerald Jets SAL (Emerald in the sum of USDS700,000 paid by SG Air to
Emerald on 15% Apri 2011 (of which about $285,000 is sai to have been
‘efunded by Emerald in early June 2012); and about USD$45,000 in legal fees
expended in connection with the sald refund. Secondly, ir respect of three
payments made to Prestige Jet Rental LLC (Presge’) between May and October
2011, forthe lease of a jet. These sums, paticularised at paragraph 13 ofthe
statement of claim, total USDS' 425,000
The second restitution claim rests on an oral agreement sald tohave been entered
Ito in late October or early November 2013 between SG Commodities (by its
agent Mr. Rethenam) and HMK, whereby, allegedly, it was agreed that SG
ommodities would loan HK the sum of USDS1,500,000. The purpose fortis
alleged loan, as pleaded, was to faitate HMIK's in his purchase of artwork in
ew York. tis SG Commodities case thatthe loan sum was tobe repaid by HMK
* See pars12 306
* Se par 2) 606
Se pa 137
cc)
19}
‘using monies anticipated by HM tobe received from Southem Aca Resources
LUmited ('SARL?), pursuant to a separate agreement between HMK and SARL,
“the terms of which included that SARL would pay to HMK USDS0.50 por metric
tome of iron ore from the Nawenya mine exported from Swatiand." The loan
sum was paid by SG Commodities to HMK in two tranches one of USDS4 milion
on or about 30" December 2013, and a second of US$500,000 on or about 14
January 2014, which sums were sent, atthe direction of HMK, to a New York art
edler, Metropolitan Fine ts & Antiques Inc. Metropolitan’
[At paragraph 18, itis pleaded that on or about 21 August 20°4 HMK caused all
rining actives at the Nowenya mine to cease, and prevented any further
exporting of ore fom that mine, Furthermore, I is alleged, tha HK, between
Detober 2014 and January 2015, caused the expropriation of SARL's investment
'n 8G lron Ore Mining (PTY) Lite, the censee fo mine ore rom the Ngwenya
rine
The Second Claimant, SG Commodities, pleads a total fare of consideration
under the oral agreement and, accordingly, its entlement to restiuton or
repayment by HK of the sum of USDS1.5 milion allegedly baned. As regards,
unjust enrichment, itis aso pleaded that HK had subjected S Commeaites to
legitimate pressure amounting to economic duress to make tothe payments, and
‘hey had no reasonable ailemative but to comply ‘as HMK treatened impliedly
‘hal, SG Commodies dit not make the payments, the Ngwenya ion ore mine
project would be in jeopardy.”
The Cans
Proceedings
Consider It useful to ident certain sabent and uncontradicted facts about the
‘anadian itgation, which are germane to my consideration o the issues before
‘ne, and the question of wheter the Freezing Order ought 0 be continued or
discharged
"Sepa 16500
1 Seepan 17 SOC(20)
‘These sallent facts are:
{a} In January 2015, almost 7 months before the Claimants applied in BVI
{for ex pate interim reli pre-commencement ofthe Caim, the Fist
{Cian (SG Air) brought an application bebe the Ontario Superior
CCout in Canada against Inchatsavane the Fist Defendant), seeking
‘8 non-possessory repace’s lien over the aircraft under an Ontario
sfatule, Repair and Storage Liens Act 1900 (the Canadian
Proceedings’). SG Ai's application was eventual dismissed on 27%
March 2015
oe
(On 12 January 2015, in the Ontario Proceedings, $G Air was
‘granted, on an ex parte basis, an interim injunction preventing the
‘recat rom leaving Canada, Ata hearing of opposing mations, one to
continue and the ober to discharge the ijurcton, it was set aside by
the motions judge, Justice Dow, ofthe Ontato Superior Court, on 1
‘April 2016, and the arraft ordered released. However, this order was
stayed by the judge for a period of seven days pending an appeal
from his decision"
@
(01 13® May 2015, the Court of Appeal of nario extended the stay of
Judge Dow's decision until determination of SG Ais appeal. The
Court of appeal also ordered Inchatsavane to pay the sum of US$35,
rillon into ts Canadian auyers,’ WeitFoulds LLP, tust account, in
‘exchange for the release of the aircraft ‘ino the possession of
Inchtsavane and may bo removed from thi jurisdiction." This sum
was paid as ordered. Accordingly, there was, from that date,
absolutely no restrictions on the movement ofthe arraft pursuant to
any order ofthe Canadian cout, or any ober court for that mater,
As i umed out, GA refused o release the aircraft unt they were
paid an addtional US$350,000, This caim was eventually setled and
the aircraft released, Accordingly, as from the date of settlement of
GAI's loan claim; the Fst Defendant was fe to remove the aircraft
from Canada,
@
‘The airraft was subsequently removed fron Canada, apparent for
‘maintenance or furher repairs to iis engnes, and its movement
"ee Vol 4 Tab 20 Deena’ Acavis Bund
Se Vol 1, ab4~ Deen Aas Bundleremained unrestrained uni the BVI Freezing Order obtained ex parte
(on 2 September 2085.
(e) On 11% June 2015, the Court of Appeal of Ontari dismissed SG Airs
appeal. The cout’ reasons for is decison were given on 17* June
2015}. Al paragraph (9 ofits reasons, the cour states
"These facts are dispositive of SG Ais len claim. SG Air id not
camry out the repairs of modifications at issue. It did not bestow
skill, labour or money on the aitcraf. Nor did it effect
improvements tothe acrat. Thus, SG Alr does not al within the
dass or workers and artisans thats. 7 ofthe Act seeks to protect”
() Tis is clearly a ruling on a repairers lien daim made under a
particular statute which provides protection to certain casses of
\wotkers. The cout of appeal went onto slate a paragraph (10, that
the fat that SG Air provided the funds to GAl to aepay or france the
costs of repairs to the aera, does nt ater its conclusion regarding
the claim for a epaier’ len under the statute, snc the Act does not
‘oxtond a repairer’ in to lenders
(@) As regards SG Airs appeal ofthe denial by the motions judge of
injunctive rel, the Ontario Court of Appeal saw no merit such a
‘challenge, and they concuded that SG Air had not made out an
entitement to “prejudgment injunctive rein a simple deb action.
However, the court aso required Inchatsavane's layers to contre
to hold the sum of USS25 mifon in their tst account wnt the
expiration ofthe time ited for $G Air o seek leave to appeal tothe
‘Supreme Court of Canada'”. That date was 16% September 2015,
(h) SG Air did apply within the time for leave to appeal to the Supreme
Court of Canada, The determination of ther aplication is pending
‘ands not expected unt 2016."
()_ The US$35 mln remains in Inchatsavane's Canadian lawyers trust
account, notwithstanding the 16" September 2015 date having
passed.
+ See Hear Bundle Tab 18,
Gee pre pare 2
See pa.
"See pra 47 Secu Ada! Shi Foreard Damn les 208 Cxober 2015
9First Defendant’ Alleged Breaches of the Freezing Order
rt)
(2
(ea
The Cieimants contend that the First Defendant has breached the Freezing Order
by moving the arraft ar they became aware ofthe injunction. tis sad, (and to
bhis the Fist Defendant has not demurred), that the Fit Defendant flew the
sircraft rom Swaziland lo South Afica and back to Swazlend in possible breach
af the Freezing Order. Thay also contend thatthe Defendants have refused to
Alsclose to the court where he arraft was located prior o 25" September 20151
This was the subject of complaint before Leon J on 14% October 2015, as the
lranscipt of the hearing discloses. The leamed judge requiced that both
aides (fom the Defendants) ‘should also address the question of where the
recat was unknowing to the other party on the 25 Septerber 2015, andifit was
not in Swaziland on that date, when it was moved to Swaziand from South Ati
Cor whatever locaton; and any explanation forts removal in Ight ofthe injunction of
this Court,
In purported compliance with ths order, Mr. Sine at paragiaphs 18 and 17 of his
First Afidavit fled 20 October 2016 on behalf of he First Defendant, states that
the aircraft was in Swazland on 25" September 2016 and was fown to an from
South Aca on 1 October 2015, This was aftr the Freezing Order had been
served on the Frist Defendant, Again, in purported compiince withthe order of
ustce Leon, Mr, Sl offers an explanation at paragraph 17. He avers that on the
date the tera was flown to and from South Aca, neither Defendant
“understod te freezing Order to probit the Aircraft rom fying to and from South
‘fica, From that day forward, the Aircraft has not moved from is present location
‘at Matsapha Intemational Aiport”
Its diffcu to apprehend how either Defendant could have been uncertain as to
terms of the Freezing Order relating to the aircraft. That having been said, the
‘grounding’ of the irra by vitue of the injuncton at 2aragraph 4(e) of the:
Freezing Order, Is expressly made conditional ypon the courts of the foreign
1 Se pra 36 Caan Selon Argent
See pe 98-37
20(24)
(25)
jufsicon where the alrrat may be locate, recognising the Freezing Order, In
fis instant, that would be the courts of Swaziland, and ono: the alrcraft was
moved, the courts of South Alica. There is no evidence before me thatthe courts
of ether of these two countries have recognised the BVI Freezing Order. inthis
‘egard, while ths cout has subject mater jurisdiction over the rstuton claims, it
oes not have personal jurisdiction over the Defendants, one of which is a
company incorporated in Swaziland, and the other, the King of Swaziland,
bythe circumstances, it would be @ stained interpretation to conclude that the
Defendants or the Fist Defendant breached the Freezing Order by moving the
sicraft rom Swaziland to South Mica and return, abet for only one day ora pat
thereof, and the explanation given by Mr. Sine at paragraph 17 of his Fst
AMfidavt has to be understood in that contest. Accordingly, even if there was a
‘echnical breach by the Fst Defendant of the injuncton at paragraph 4€ ofthe
Freezing Order. | do not atach much significance ths allegad breach, In any
vent, what has been made clear is that since 1" October 2015 the aircraft
remains in, and has not been moved from Swaziland, and that another aircraft
sircrafts have been leased forthe use of HMK when on official cute.
The Alleged Settlement Agreement
This aspect ofthe factual matx arises inthis way. At paragraph 60 of Mr Shan's
st Afdavt, he refers to evidence which he gave in the Canarian Proceedings to
‘he effect that he and HIMK “agreed to sete Inchatsavane's lability to SG Al in
‘espect of the cost overuns by paying SG Air USS3.500.000 and how
Inchatsavane reneged on is promises” He goes on to site that the said
soteement was made orally with HMK when he met with him in person in
‘Swaziland on 4 November 2014, "on which oocasion HMK aio agreed fo repay
‘8G Commodities the USD 1,500,000 forthe artwork.”
Further on this issue, Mr. Shan in his Supplemental Afidaut in the Canadian
Proceedings, at paragreph 41, avers that atthe 134 November 2014 meeting with
uHNIK, they agreed to sete the Arrat overrun issue for USD 5 ion, ‘which
‘settlement was acknowledged in wing by Mr, She.”
[271 It's unclear, inthe absence of any further evidence, whether tis wes intended to
be a global settlement ofall claims of both SG Air and SG Commacities, The
tems, as recounted by Me. Shan in both his Supplemental Afidavit in the
Canarian Proceedings and in his Fits Affdait in these proceedings, relates to
8G Airs claim in respect ofthe modifications and cost overruns telated to the
‘cre, although there is also some mention of repayment ofthe sum of USS1.5
rilion allegedly advanced by SG Commodities to HMK for purchase of the
arterk, Sufoe it to be said that nether side before me relied os this alleged
‘global sottement as a ground for continuation o discharge ofthe Fraeing Orde.
Tho sss
[28] The sues for determination have been distiled as folows:-
(2) Has a proper case been made out for continuation of the Freezing
(Oder, in tha, ave the Claimants established a good arguable case
fn the merits and a real risk of dissipation of the assets of the
Defendants;
(b) Have the Claimants been guity of material non-discosure so as 10
‘warrant the immediate discharge ofthe Freezing Order,
(c)_ Ought he caim be stayed on grounds of forum non cameniens;
(@) Ae the Defendants or any of them protected by sovereign immunity in
respect of the claim;
(6) Isthe claim an abuse of prooess; and
(Ifthe Freezing Order isto be continued, should the Claimants be:
required to fortify thelr undertaking in damages pending te tia
2‘Ought the Freezing Order to be continued or discharged.
[29] The applicable principles upon which a court should decide whether to grant oF.
continue @ worldwide freezing order are notin dispute. It is accepted thal the
{alloirg requirements must be established tothe courts saisfacton:-
(1) The claimant must have a good arguable case one mers against the
respondent, that is, one whichis “more than barely capable of serous
‘axgument, but not necessarily one wich the judge considers would
have a better than fity percent chance of success” Ninimia Maritime
Corp v Tave Schiffahrts GmbH 8 Co KG {1983]? Lioy's Rep. 600 at
606.
(2) The refusal of the injunction would involve a real sk that any judgment
‘obtained would remain unsatisfied. In short, the claimant must
demonstrate that hee isa eal isk of dssipation cf assets the interim
injunction isnot granted.
{@) Its just and convenint thatthe injunction ought tobe granted aking all
the relevant crcumstances into account This later isue, which arses
pursuant to the courts powers under section 24 of the Eastem
Caribbean Supreme Court (Virgin Islands) Act Cap 80, must be looked
at ater afl consideration of all the relevant issues raised by both the
(Claimants andthe Defendants
Good arguable Case
[80] As mentioned above, the claim is for rsitution on the basi that the Claimants,
have provided monies tothe Defendants, andthe Defendans have thereby been
Lnjustly enriched. These caims relate to fnaning ofthe ccs of mafiations to,
the aircraft, the cost overuns, and the monies allegedly expended by SG Air in
meeting the cost of allemative air transportation for HME (the fist restuton
claim), And for monies allegedly loaned to HMK by SG Comnoaities to faciitate or
finance his purchase of certain artworks, (te second resttuon claim). Both
claims are permissible under the laws of the BVI, and he BVI courts have:
|uisiction in relation to them by vitue of CPR 7.38) since, as alleged, the acts
Giving rise to these claims ‘were to the detent ofa person domicile within the
juisdicon’ ofthis cout, namely, the Claimant companies.
2BI
(32)
(33)
(34)
Mr, Wardell QC, who appeared for the Ciimants, submited tat this i a clear
case of restitution, and that there is really no dspute thatthe Claimants have
sats ths fist requirement of @ good arguable case. It is his view that the
prinopal point of departure between the pats ison the issue ofrik of dissipation
ofasets
His points wel made out when one examines the Defendants’ skeleton argument
dated 30% October 2015. At paragraph 65, under the rubric The Claimants do not
mee! the test fora Freezing Order’, Mr. Walnyn, sts some five bases upon which
‘hey contend thatthe Freezing Order should be set ase. These donot include @
ground thatthe Claimants have fled to make out a good arguable case, within
the mearing ofthat expression, as mentoned above. Accorinly, | am driven to
the conclusion thatthe Claman have sated tis rst requirement
Real Fis of Dissipation of Assets
‘This is a pivotal isue and one in respect of which the pares ae indlsagreement
Mr. Wardell QC, for the Claimants, submits that they have made out an
covenvhnelming case of isk of dissipation of asses, In attempting to make good on
his submission in oral argument, he relied on thee matters, They are
(1) The Second Defendant, HK, is an absolute monarch of Swaziland
and controls everyting there, including the judy. The implication
Is that HMK is ‘untouchable’ in Swaziland, and, oxordingly, i isnot
possible forthe Claimants to get justice there. | am not sated, on
the evidence before me, of the complete accuracy ofthis descrition
or categorization, athough itis clear the HK, as monarch, is most
Powertul and welds a great deal of authori and infuence in
‘Swaziland. Additional, it appears that he is protested by sovereign
Immunity or immunity from prosecution of any clan brought against
him ther. This poston ought to have been known tothe Cisimants
and their principals when they elected to enter into business dealings
wih HK.
(2) The Defendants dealings wih the aircrat, both before and after the
Freezing Order was obtained, show a wilingness on their pat (ora
“BS
(38)
least that ofthe Fist Defendant) to avoid orto breach court orders. |
wil return fo this below.
(@) The Defendants’ witnesses, specially, Mr Leonzra and Mr. Dube,
have given false evidence relating, in partoula, to the alleged
breaches by the First Defendant ofthe Freezing Order, and their
intentions wih regard tothe possible sale or disposal ofthe aircraft.
wil also tum this issu in greater depth below.
‘As ragards risk of cssipation of assets, it must be noted that he Fist Defendant
has only three known assets. These ae the aircraft is engines and the USS3.5
nillon held inthe trust aocount of WeitFoulds LLC in Ontaro, Canada. Any
concem regarding dissipation of the asses ofthe Defendants is focused on these
‘hee assets.
Furthermore, as regards the funds ise it seems to be the postion that they
remain in the WeiFoul's tust account, and wil remain there until SG Al's
‘pplication fr leave to appeal to the Supreme Court of Canada is determined.
This so notwithstanding thatthe time imited by the Ontario Court of Appeal in is
order of 17% June 2015 has passed | acoept the evidence a paragraph 9 of Mr.
Sihle's Second Afidait fled 20% Oclober 2015 in support ofthe Defendants!
application for discharge ofthe Freezing Order, to the effect thet he has instructed
‘he Firs Defendant's Canadian lawyers to continue to hold the $35 milion in their
‘ust account “unt the decision onthe leave to appeal aplication [by SG Ai is
released by the Supreme Court of Canada’ Thus a present, here is no order of
4 cout, save and except the Freezing Order, which prevents te First Defendant.
“fem moving or causing the removal ofthese funds fom the trust account. Ths, in
‘ry view, gives rise to a real risk of those funds being moved and put out ofthe
“each ofthe Claimants should they be successful in ther respective clams inthe
VI proceedings. In tis regard, it must be pointed out that these funds are
Gee pas @ and 1 oF Mt Shi’ Ft Aida fled 20 Otte 2015 Vo. 1 Deda’ riot
‘Maas
= cama
2696
5 Appoaon Bund, Tab 3, pag 7, para 20
1 page 80 -Deledaris’ il of favs
1presumptively the property of the Fit Dofendant, athough the cource of sad
funds has rot been dscosed inthe materials put before me,
[87] As regards the aircraft and ts engines, Mr. Wardel's second point, he relies on
‘wo factors which he submis points to a real risk of dissipaton by the Fist
Defendant of these asses. Fist he poinis tothe evidence at paragraph 42 ofthe
Fst Afidavit of Mr, Shanmuga Rethennam (Me. Sha) fled 25" August 2015
‘here he states: “The fact thatthe aircraft requied further repairs but was fown
cut of Canada anyway, Ilustrates how desperate Inchatsavane and HMK are to
move the Aircraft cut ofthe arms’ reach of any court orders directed to it”
Reliance was also placed on the evidence at paragraph 8a) of Wr. Shan's Second
fidavit fled 28" October 2016 where he avers that Afr the Aircraft was
released, HMK tld me to get the Aircraft out of Canada as quicly as possible"
[88] Mr, Wardell also pointed me to the document at pages 90 to 95 ofthe Claimant's
Bundle This lists the routine maintenance to be done on the aicrafs landing
gear and no, 2 engine, which he asserts would have been known befow the
aicrafl was removed from Canada. The purpose of tis lest reference is to
{emonsrate that Mr. Sile evidence that futher repairs to he aiteraft and is
2ngines were only discovered after the aircraft was taken out of Canada, cannot
be correct. Infact, Mr. Shan categorically describes tis statement asa ‘ie,’ and
sontends that the work done on the alraft in South Afica was ‘routine
‘aintenance’ of which the Fst Defendant was aware years in advance.
[39] In my view, itis beyond doubt that after the injunction obtained in the Canadian
Proceedings had been discharged, the stay had been ite, the US$3.5 millon
had been pid into the trust account of the First Defendant's Canadian lanyers in
1dr o secure the release ofthe craft pending SG Air's aplication for leave to
¥ Se Gants Bue Tb 10, page 12
2 Se ian Bude Tab 14, ap0 3
BeeeTa it
1 Ses pa 13of Mr Shiels Socnd Atta. Vo! Ta G page I~ Defendants Brit Ants
2 See pa), Mr. Shans Sond Aidit
16140)
,
‘appear being fled (as ordered by the Ontario Court of Appel), and the claim by
GAL had been setled, the arrft was fee to be flown cut of Canada. Indeed,
hen the aircraft was ordered released, the Canadian court expressly stated that
the aircraft canbe taken out of Canada. It matered not whether the arraft was
{ue for routine or scheduled maintenance or whether the owner decided, for its
‘own reasons, not to have such maintenance done in Canada. This it was free to
do, and | do not consider their actions in taking the arrft out of Canada as a
legitimate basis for concluding that there is rel risk of dissipation ofthe First
Defendants assets. Accordingly, tis basis has not been estabished by the
Claimants.
“The second factor relied on to establish a risk of dsscaton In relation tothe
aircraft itso, isthe alleged breaches of the Freezing Orler by the Defendants,
specitcaly paragraph 4(e), which prohibits the removal o the ara from any
jurisdiction in which itis located and which jurisdiction recognises the Freezing
(Oder. | have already addressed this above in the section dealing with the Fist
Defendants alleged breaches ofthe Freezing Order.
(On this aspect, Mr. Wardell took me to paragraph 8. of Mr. Shan's Second
Afidait where he references the aircraft being flown from Swaziand to South
‘Affica and back to Swaziand, as indicate of the First Cefendant ‘continuing to
demonstrate a pattern of moving the [aircraft to avoid court orders. It is alleged
that the First Defendant has refused to dscose where the arraft and is engines
were located on 25% September 2015, in apparent breach of the csclosure
provisions in the Freeing Order. Mr Shan refers fo parayraph St of Me, Sile's
‘Second Affdavit® as evincing an intention on the part ol the First Defendant to
keep the [acre grounded in Swaziand in order to zvoid it being frozen in
another jurisdiction’. Hee, Mr. Sile, at paragraph 50, stales categorical thatthe
aieraft acated at Matsapha interational Aipot in Swazland) ‘will ot be fown
pending further order of this [BV] Cout, out of respect for the Freezing Order
= Sol {Tab page 60 —Deendants Bt of Aas
v7co
(43)
(44)
made hr this proceeding” And et paragraph 51 he reiterates thie postion, and
‘g0es onto say that “HMK has hired an alternative aircraft through Royal Jet LLC’.
[presuraby for his official us.
Accordingly, on the one hand, the Claimants complain that b move the aircraft
from Swaziland to South Aca was @ breach ofthe Freezing Order and, on the
ther, they contend thatthe aircraft not being moved from Swaziland to another
|urisdcton is, n some way, proof ofan intention by the Defendants to avoid the
effect ofthe Freezing Order onthe ara. Ths is both logical and unsustainable.
No wonder Mr. Warde di not seek to rely on that bit of paragraph 8 of Me
‘Shan's Second Aida, in oral argument before me. This point, conceming
paragraph 51 of Mr. Sie's Second Afidavi is a non-point in my respectal,
opinion
[As regards the alleged breach of the Freezing Order end the conclusion
contended for by Mr. Shan at paragraph 8.c of his Second Afidai, | adopt
(without repeating) what | sad at paragraphs 23 and 24 above. Furthermore, the
Defendants hav, in obedience tothe order made by Leon Jon 14% October 2018,
Aisclosed the location of te arralt on 26” September 2015 andthe reason why it
was moved from Swazlend to South Atica™. In al he crcunstances, and for the:
reasons given above, | donot consider tis allegation tobe saisfactorly made out
a evidence ofa risk of dissipation bythe Defendants oftheir esets,
‘The third factor relied on by the Claimants o establish sk of cisipation of assets,
is that there is cogent evidence ofan intention by the Defendants to dispose of the
‘aicraft and is engines, and the airrat has already been ofered for lease on the
basi thatits ownership has been changed to Royal Swazi Naional Ainways Corp,
> Sen Transp of 14/1115 huang pages 96.37; Pet Mavi of Mh She paras 15 &17-¥o {TaD B
page 5B of Deans Aas
185]
46}
‘notwithstandng the provsiona of the Froozing Order, in particular paragraph
ia"
ln suppor of tis submission, | was taken by Mr. Wardel to paragraphs 4 and 10
of Mr. Sile's Second Afidavit At paragraph 4 he stale that the aircraft i not
boing used for commercial purposes, but predominantly to transport HMK, the
Prime Minister and the Queens of Swaziland. At paragraph 1C, in answer tothe
‘allegation in Mr, Shans First Afidavit thatthe First Defendants tying to sel the
‘ircrft, Mr. Stl claims ths isnot tre, that one ofthe engine is being repaired
hich is not expected to be completed until November or December 2018, and
‘here are no plans to sell the arrat. Presumably this was in response to what
Vr. Shan said at paragraph 46 of his First Afidavit othe elect at the intention of
the First Defendants to loase out the aircraft commercially. There Mr. Shan refers
Jo a document, which appears to be a press release, to the ec that the ara
will no longer be used by HK for official raves, and would beleased out and the
proceeds utilised to cater fr the King's traveling expenses’
in further support ofthis submission, Mr. Wardell also reed on paragraph 5 of Mir.
‘Shan's Second Affidavit where he states categoricaly thatthe aircraft is curently
being offered for lease on a commercial bass, in violation cf the terms of the
Freezing Order. AL paragraph 7, Mr. Shan seeks to butess this asserton by
‘fering to an extract from the Times of Swaziland dated 24° August 2015 which
uote the Prime Minster as saying thatthe Swazi goverment had decided to
ease out the aircraft. This exact sat exhibit SR to his First Affidavit There i
8 stated that the aircraft had been impounded in Canada, and the Swazi
goverment ‘wil now lok fora plane which wil be exclusively leased for Their
Majesties and in the long-term buy (an sree” Apparently this solution was
reached by the House of Assembly, after the Prime Minster had informed
‘members that government had decided tease out the pane.”
5 See pan 7 Camants Staleton Argument Exit Stand SR2 Second Aida Me. Shanta
Retna (Me, Shan’
Geo poges 5521 #53 Tob 1 iainants Bundle
° See pages 5521853 Te 11 Camnts Eure
w(47)
13)
(49)
Son pes 110
. Shan asserts that any lease ofthe aircraft "would necessarily involve a transfer
cf ounership toa Swazi government owned company. He pains t efforts aleady
made to lease the aircraft on the basis that its ownership rad already been
changed to Royal Swazi National Aiways Corp.
[pages 1 to 22 of exhibit SR.2, are documents relating tothe leasing of an
sirrat which Is identified therein by the same type, model and serial number
453041 ofthe srerat identified at paragraph 4(d) of the Freesing Order. These
documents include alter dated 21% October 2015 (some 16 days before the infor
partes heating) on the letterhead of ‘ATGairease,’ and addressed to @ Mr. Tareq
Deeb of Fame Jet L.C™: It purports to be a proposal fom ATGairease to lease
‘oul te aicraft as theron identfed. Inthe said document, described as a ‘Letter
of Inlen, the proposed ‘lessor’ is slated to be Alr Transport Group Private
EquivIATG Air Lease, and the proposed lessee’ as Fame Jet LL. AS part ofthe
[roposal therein outined, the aircraft is to be delivered ‘witin 30 days upon
receipt of signed Lease agreement and veiicaton of appropiate deposits’. The
'erm ofthe proposed lease is stated as 36 months, andthe document provides for
«base rent of US$125,000 per month payable in advance. The delivery location
's stated as Johannesburg, South ica ar some other pont in southem Aca to
be mutualy agreed. Paragraph 12 ofthe Letter of Intent stpulas that a depos of
|JS$100,000 is required ‘upon its execution’ Final, the Letter of Intent is sid to
be govemed by the laws of the State of New York, and contemplates futher
negotiations between the pate leading to signed lease docurents
rsrucivly, the Leter of Intent doesnot mention the Freezing Order or tha he
2irrafis sujet to an injunction in BUI preventing its sae or disposal, However,
‘he copy produced has only been signed by or on behal of oe party, namely ho
intended lessor. The offer o lease the aircraft, set out in tho Let of Intent, is
xpressly sated fo expe on Friday, October 23, 2015 andis subject to prior
27]
oy
lease, sal or withdrawl of the aicraft fom offer’ At page 9 Is @ copy of a
photograph ofthe aircraft, the subject matter ofthe Letter of Intent
‘Apages 25 and 26 of exhibit SR. is what appears to be a document sting out
‘he basic tems and condtions under which the aircraft could be leased
commercial. Again the type, model and serial number corresponds with those at
peragragh 4(¢) of the Freezing Order. These documents identity the lessor as
Royal Swazi National Aways Comp’ represented by Salomon Dube, its
‘placement agent as Amol Leonora, andthe lessee as Avi Aiton Capital or its
‘signs, The date onthe document is 4° October 2016, some 33 days before the
‘eter partes hearing,
Both Mr, Solomon Dube and Mr. Amol Leonora have provided affidavits in tis
mater on behalf of the Defendants, At paragraph 4 of his afidavt, Me. Dube
offers an explanation ofthe documents. He states thal they are ‘misleaing’ and
ot proof thatthe aircraft has been offered for lease for commercial purposes.
Furthermore, he states that he has no authority fom the Fist Defendant giving
either the Swaziland Chil Aviation Authority or the Royal Swaci National Airways
“the mandate to ofr the said ara for lease for commercial purposes or for any
aurpse and neither of them have received any such autho rom Mr, Leonora.
Finally, he staes that he saw the ‘Letter of Intent forthe frst ine, when Mr. Sle
showed him the document as an exhibit fo Mr. Shans aida, He denies that
there has been any transfer of the ownership of the ait from the First
Defendant tothe Swazi Goverment, He also avers, at paragraph 7, that having,
2s il were, confonted Mr, Leonora about including his name for signature on the
ooument on behalf ofthe lessor, Mr. Leonora “apologised to ne and advised me
that he was not are of how the document of intent to lease had been made part
ofthese procaedings because this was only a dra document he had prepared to
‘resent as an unsolicited proposal to the Government of Swaziland.”
Gee Val 6 Tabs GH - Bl of Dulondants Advis
aro)
(54)
(55)
Mr, Leonora, who describes himsef as chairman and CEO of Ar Transport Group
Private Equty IncATG Ar Lease of Alana, Georgia, USA (te intended lessor
nder the Letter of Intend), in addressing this issue at paragiaph 4 of his First
-Mfdavi, states that his company isin the business of leasng and trading of
commercial aircraft, and during business discussions with Mr, Shan, they
{discussed the lease proposal and lter of inten, but he didnot authorise Mr. Shan
'o use the documents in these court proveedings. He mains thatthe lease
proposal is just ‘raf tem sheet prepared for presentaton tothe Government of
‘Swaziland Yor an opportunity to provide leasing services.” He too describes the
eis 2s ‘misleading, and denied they were proof thatthe alrraft has been
offered for lease for commercial purposes. Finally, he says tha his company has
ot been given a mandate to lease the acral
{is Mr, Wardel's submission that the Defendants have, by vite of these
documents, breached paragraph 4( of the Freezing Order and aren contempt of
‘his cout He subi, further, that these documents are conclusive proof of risk of
Aissipaton of assets,
\r. Walwyn, in addressing me on the issue of rik of dissipation of asses, pointed
19 paragraph 34 ofthe Claimants’ skeleton argument, He submited, in reliance on
‘he decision of the Engish Court of Appeal in - Thane Investments Lid and
others v Tomlinson and others [2003] EWCA Civ 1272, thatthe Claimants
‘ust demonstrate risk of dissipation by sold evidence. At paragraph [21] of
Thane, Gibson LJ, cing with approval @ passage fom the judgment of Neuberger
Jin the court below, opines: itis important that there should be solid evidence
‘xiduced tothe cout ofthe likelihood of disipation™
‘And at paragraph [28] Gibson L states
“Me, BlacketOrd submited that it has now become the practice for
pert to bing x part applications socking a reczrg order by pointing
* See Tab 15 0elntany unde of Autores
2(58)
(57)
(59
to some dishonesty, and tha, he says is sufcient enable this court to
‘make @ freezing order. | have to say tha, if that has become the practice,
then the practice shouldbe reconsidered. It's approxvate in each case for
the cout to soutnise wih care whether what is alleged to have been the
dshonesty ofthe person against whom the order is sought in itself really
justiios the inference that that person has asses hich he is likely 10
issipao unless rested”
[At paragragh 24 ofthe Cisimants' skeleton argument, they identify two events 2s
demonstrable of risk of dissipation. The fist is thatthe Cefendants moved the
eral rom Toronto, Canada twice to avoid order being enforced against it. The
fist occasion is said to have occured in 2012. | am sated that this is not a
matter which | ought {0 teke Into account at ll in de'ermining whether, in
‘September 2015, there was a real risk of dissipation of assets concerning the
rat In fac, ths aspect was not lied on by Mr. Warde inhi oral submissions
before me,
‘The second such incident cited at paragraph 3, related to the removal of the
ater rom Canada ater the injunction in Ontario retaining its removal had been
ease the alreratt on
‘commercial terms, are both troubling and recent inte. The queston is whether
they represent ‘soli’ evidence of arsk of dissipation of asets by the Defendants
creer of them. tis corect that nelther ofthe Defendants are partes to or sated
to be intended paries tothe Letter of Intent or any leasing proposal involving the
arrat, As regards the identity ofthe aircraft isl, it seems clear that these
documents are refering tothe same aircraft specited al paragraph 4(4) of the
Freezing Order.
In my judgment, | wil Mave to tat with some cain, the veracity ofthese
documents 2 poof ofan intention on the pat of he Cefendant to lease the
aitcat in breach ofthe Freetng Order. The documens do nat make lnk
between th intended Yess’ and eter ofthe Dende, exept othe extent
that | am being asked by the Claimants to inf tha be reference in the
document to the Roya Swe Nationa Aways Corp’ an agency ofthe Swat
goverment, a& an intended Tessa’ ofthe aircraft, is to be constued as a
reference t MK and ences an inten reste the oars ofthe art
fromthe Fist Defendant othe Government of Swanandinbasch of paragraph
4{8) of the Freeing Order. Theis cain na doc eidene of ts, and ro
‘vidence upon which i maybe infeed that HK behind ary nterded leas of
the aicrat by the Royal Swazi Natonal Arways Cop, except the afitait
‘evidence by Mr. Shan othe tet ht HMK is an able monarch of Swazkand
In contrast to these documents, are the statements inthe Defendants’ affidavits
the effect thatthe aircraft remains atthe airport in Swazland, has been and wil
se pages 25 nd 26 of exit “SR.2" to Mr. han’ Second Affidavit
a(63)
(64)
(651
remain grounded out of respect forthe BVI Freezing Order, that alternative means
‘fair transportation has been secured for HMK, that there has been no transfer of
Loumership of the arraft to an agency of the Swazi government, and there is no.
resent ntnton todo so oo lease out the aircraft
Having careful considered this as allegation of risk of dissipation of assets and
breach of he Freezing Order relied on at paragraph 36 of he Claimants’ skeleton
argument, | am not satisfed that these leasing documents, by themselves,
establish thatthe Freezing Order has been breached by the Defendants or ether
of them, The breach of an injunction, while it may provide, in certain
circumstances, cogent evidence of rsk of dissipation oF assets, is a mater
‘materially diferent from a consideration of whether these documents, ether by
themselves or in conjunction wth other admissible evidence, evince a real risk of
issiption ofthe assets ofthe Defendants. As regards the Letter of Intent, twas
never fully executed, as fer as the court has been made eware, and there is no
‘evidence that the formal lease was evety entered into. Futhermore, there is no
evidence that the aircraft has actualy been leased commercially or that it has
been moved ffom the airport in Swaziland since it retumed from Johannesburg,
South Afica on October 2018,
This brings me tothe extract fom the Times of Swazland. There it is reported
that the Prime Minister of Swaziland infomed members of the Swazi Pariament,
inter ala, that it was no longer safe for ther Majesties to travel n the aircraft and,
therefore, the aircraft ‘would be leased out and the proceeds be utlized to cater to
[HMKS} travel expenses while aso foking at leasing or tuyng aja for [HNIC
‘The athentoty of tis document and the reported staoments of the Prime
Minister of Swaziland have not been challenged bythe Defendants.
In my view, these statements evince a clear intention to lease out the alcraf,
either by the Defendants or by the Goverment of Swazland. The only mater
hich seems tobe standing inthe way of this decision beirg put into eect, i the:
BVI Freezing Order. | am therefore satisfied that if the Freezing Order is not
Fry7
continued in elaion 1o the aircraft and its engines, ther isa real risk thatthe
aieraft wil ether be leased out or disposed of by the Fist De'endant in fufiment
ofthe stated objectives ofthe Government of Swaziland, which ncudes HMK. The
‘fect of his would be to make the First Defendant judgment proof as there wil
be no assets or no assets of sufcient value owed by the Defendants to satty
‘any judgment wich the Claimants may obtain in tis mater, shoul they be
sucoessfulin ther respective claims,
Material Non-Disclosure
Have the Claimants been gully of material non-icosur in making the ex pane
‘application fr the Freezing Order? This fs ground 9 he Defendants’ Applicaton
fied 20% October 2015 to discharge the Freezing Onder, aid is addressed at
paragraphs 66 to 75 of the Osfendants' skeleton argument. Essentaly, the
allegation i that the Claimants fled to disclose evidence whic was fied inthe
Ontario Proceedings. They refer specifically to () the conplee afidavits of
‘Shanmuga Rethenam swom 8° January and 11® February 2015; (i) the transcript
ofthe crss-examination of Mr. Shan on both of his fdas; i) he afd of
Ajay Singh suom 234 February 2015 and 9" March 2015; (h) he aida of
Sle Dlamini sworn 8° Api 2015; and) he complete st of orders and reasons
for decisions ofthe Ontario cours, The genesis of each of hese afidavis are
briefly summarised at paragraph 73 ofthe Defendants’ skeleton argument, and the
ecisons of the cours in the Canadian Proceedings have already been
summarised above
“The principles applicable to the duty of full and frank disclosure ate wel sete.
‘They ae authoritatively stated in Brink’s Mat Ltd v Eleombe and Others {1988},
41WLR 1380, and are accurately summarized at paragraph 69 of the Defendants”
‘skeleton argument. A party proceoting ex parte-
(1) Has a duty to make full and frank disclosure of ll material facts,
(2) This duty ests not ust withthe appbcant but also ath his lawyers,(3) Matera facts are those which its mater forthe judge to know in