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The Extra-Territorial Scope of Bankers Trust Orders

Author: Nicola Sharp  3 May 2024
4 min read

A recent application raised two interesting points about the circumstances in which a Bankers Trust Order can be ordered against a foreign citizen, and how wide a net that BTO may cast. 

In Tonstate Group Limited (in liquidation) & ors v Edward Wojakovski & Ors [2024] EWHC 975 (Ch) Mr Justice Adam Johnson said that “were it not for the fact that [the respondent] is resident abroad, and that the Order seeks access to documents and information held at least partly abroad…I would have no real hesitation in making the Bankers Trust Order.”

In this article, we look at the extent of the BTO jurisdiction, and how wide the order can be.

Brief background

The Tonstate Group of companies were the victims of a fraud, involving the unauthorised extraction of company funds by Mr Edward Wojakovski totalling over £13 million. 

The claimants have been seeking to recover these extractions since judgment was entered against Mr Wojakovski in January 2020. In order to do this, they sought information about assets held in an Israeli trust, and bank accounts outside of Israel that are held in the name of Mr Wojakovski’s father, Gideon Wojakovski (who is now deceased). The trustee of the relevant trust is Gil Wojakovski, Edward’s brother. 

The application was brought against Gil, who is an Israeli citizen and is resident in Israel. 

This raises the question whether the UK court can direct a foreign citizen to act in a particular way, i.e. disclose documents and information. To answer that question affirmatively, the court must be satisfied that it has:

  1. Personal jurisdiction over Gil Wojakovski: whether he should be made subject to an order directing him personally to act in a particular way; and 
  2. Subject matter jurisdiction: can the UK court claim to regulate the conduct of people outside the jurisdiction?

Personal jurisdiction over a foreign citizen

The question of personal jurisdiction was simplified by the fact that Gil is a director of an English company and he provided a registered address for service in London. The application was served validly at the address in London, and that fact was sufficient to establish personal jurisdiction over Gil.

Subject matter jurisdiction

The judge described the “principal difficulty” in this matter to be the fact that Gil is resident abroad and the proposed order seeks disclosure of information and documents held at least partly abroad, by regulating Gil’s conduct outside the jurisdiction.

The applicants’ argument was that an expansive approach was justified in the modern environment of international business, which is usually conducted electronically. 

This approach has to be balanced with appropriate restraint shown by the UK court where the exercise of its powers may clash with the sovereignty of another state.

On this occasion, the judge held that its power can be exercised in accordance with internationally recognised principles on the limits of the exercise of jurisdiction. The reasons being:

  • There was a sufficient connection with England.
    Gil was involved in setting up UK trusts and companies that were used to acquire property in Scotland, which were then used by Edward in Family Court proceedings in England to try to disguise the true destination of certain extractions.
  • One of Maxima’s bank accounts is in London. 
    Maxima is a BVI company now believed to be owned beneficially by the Wojakowski Brothers Trust.
  • The underlying case involves a fraud. 
    There should be no further avoidable delay in identifying the whereabouts of the Claimants’ assets.

A BTO should not be wider than necessary

When it comes to exercising the jurisdiction of a BTO, Warby J (as he then was) set out a useful five-stage test of relevant factors in his judgment in Kyriakou v Christie Manson & Woods Ltd [2017] EWHC 487 (QB):

  1. There must be good grounds to conclude that the property in question was the applicant’s.
  2. There must be a real prospect that any information disclosed would lead to the discovery of the whereabouts of the assets.
  3. The order should not be wider than necessary.
  4. The interest of the applicant in getting the order must be balanced against the detriment to the respondent.
  5. The applicant must undertake only to use the document provided for the process specified.

In this case, point 3 was particularly scrutinised. The order sought was wide. It asked for a schedule setting out the nature, location and estimated value of all assets over £5,000 owned by Maxima or held subject to the Wojakowski Brothers Trust, and copies of all bank statements for Maxima worldwide since 1 January 2000. 

However, this wide order was deemed justified because:

  1. the extractions go back as far as 2000
  2. it was already known that some proceeds of the extractions have been paid to Maxima, 
  3. the inference that extractions may well have been commingled with assets of the Wojakowski Brothers Trust was a strong one, and 
  4. the information provided over time by Edward to various parties has plainly been incomplete and misleading and designed to obfuscate and confuse.

In analysing the position, Mr Justice Adam Johnson eloquently explained that an applicant should not have to engage in a game of “blind man’s buff” and simply guess more precisely where his assets are. The outcome being that the applicant can only have a disclosure order if his guess is sufficiently accurate to allow narrower terms to be defined. Justice Adam Johnson pointed out that this situation would “encourage, rather than discourage, fraud.”

Analysis

This decision shows that the UK courts are willing to apply a broad scope for BTOs in the interests of justice. Here the court granted a BTO with extra-territorial effect, and wide scope spanning 24 years of bank statements. 

When the underlying case is one of fraud, the courts are willing to be expansive with disclosure orders to help the victims of fraud identify the location of their stolen assets.

Nicola Sharp C 09983

Nicola Sharp

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nicola.sharp@rahmanravelli.co.uk
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Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.

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