Second Part 71 application against contemnor judgment debtor dismissed (Deutsche Bank AG v Sebastian Holdings Inc and Vik)

Dispute Resolution analysis: The Commercial Court has refused to grant a judgment creditor a second order under CPR Part 71 to examine a former director of the judgment debtor about the company’s ability to pay the judgment debt. At an earlier examination, the director had committed contempt of Court and was given a suspended sentence of imprisonment.

Deutsche Bank AG v Sebastian Holdings Inc and Vik [2025] EWHC 283 (Comm)

What are the practical implications of this case?

The case highlights that whilst Court will generally be amenable to attempts by a judgment creditor to enforce the terms of a Court Order and will generally be reluctant to assist judgment debtors who have displayed contempt in the face of the Court, there are limits both in terms of jurisdiction and in terms of the allocation of Court resources. The Respondent to this application was a contemnor subject to a range of findings of dishonesty. However, he was resident out of the jurisdiction and had already been made subject to the order being sought in this latest application. This gave the individual essentially procedural grounds for opposing the application. Interestingly, however, the Court would also have dismissed the application on the basis that the application itself would be futile. The Court’s resources are finite and must be available to all Court users. The Court will not permit resources to be spent on futile attempts to compel even dishonest Court users to comply with its order.

What was the background?

Mr Vik is a billionaire resident in Monaco. He carried out trading through Sebastian Holdings Inc (“SHI”) which acted as his personal trading vehicle with Deutsche Bank (“DB”) providing prime brokerage services. In October 2008, SHI became heavily loss-making and was margin called by DB. In 2009, DB issued proceedings seeking to recover the unpaid balance of what was owed, in the sum of USD $250m. SHI counterclaimed against DB in the sum of USD $8bn. Cooke J upheld DB’s claim and dismissed the counterclaim, finding it to have been premised upon lies and fabricated documents. The judgment debt has not been paid and Mr Vik stripped SHI of substantial assets in order to impede DB from recovering the judgment debt. In July 2015, DB applied for and obtained an order under CPR Part 71 for Mr Vik to attend court to give information as to SHI’s ability to pay the judgment debt. This order was personally served on Mr Vik whilst he was in the jurisdiction. Mr Vik was found not to have given truthful answers during that process and he was subsequently committed for contempt on terms which were suspended pending a further examination. That further examination did not take place and the sentence itself came to be discharged. DB issued this further application under CPR Part 71. Mr Vik opposed it.

What did the court decide?

It was common ground that the Court did not have jurisdiction to make a de novo order under Part 71 against Mr Vik. This was for three reasons: (1) Mr Vik ceased to be an officer of SHI in 2015, (2) Mr Vik was not in jurisdiction when the application was issued in February 2024 and there was no evidence that he would be in the jurisdiction on the date on which any order might be made. This application was, however, said by DB to be ancillary to the original 2015 order under CPR Part 71. The Court disagreed. The application itself was plainly drafted as seeking a de novo order and did not mention the 2015 application. The relief sought in the 2015 application has been granted and the examination itself had already taken place. This was not a case in which that examination had been adjourned. It followed, therefore, that the Court did not have jurisdiction to make the order sought and the application needed to be dismissed. Even if the Court had jurisdiction, it would not have exercised it in this case. The history of this matter had shown that the Part 71 procedure was futile as regards compelling Mr Vik to give information about SHI’s ability to pay the judgment debt and no further court resources should be allocated to this futile venture.

Case details

Court: Business and Property Courts, Commercial Court (KBD)

Judge: Mrs Justice Cockerill DBE

Date of judgment: 12 February 2025

Article by Phillip Patterson, originally published by LexisNexis here.