Court hearing over Stanley asset freeze

An application for a continuing worldwide order freezing the assets of former Bula Resources chairman Mr James Stanley will be heard by the High Court next week.

Mr Justice Kelly yesterday refused an application to direct the trial of a preliminary issue - relating to the admissibility of the report of inspector Lyndon McCann into the beneficial ownership of shares in Bula Resources Holdings plc, or aspects of that report - in the forthcoming proceedings.

The application was made by Mr James Gilhooley SC, for Mr Stanley, who said Bula was seeking to use the inspector's report at the coming hearing of the application by Bula for an interlocutory injunction against Mr Stanley.

The inspector's report was published in July last. The inspector found Mr Stanley had personally benefited by some £660,000 sterling from the sale of Bula shares transferred to Mir Oil Development Limited and he also found that Mr Stanley was responsible for a bogus oil find report relating to an oil well (Well 705) in western Siberia.

Last November, the Supreme Court upheld a High Court decision refusing Mr Stanley leave to seek an order quashing the report.

Now an interlocutory application, in which Bula Resources will seek an order continuing the freezing of Mr Stanley's assets pending the hearing of proceedings taken against him, is due to be heard by the High Court on February 3rd.

Last August, the High Court granted Bula an interim worldwide order restraining the dissipation of Mr Stanley's assets in Ireland. The court ordered the worldwide clampdown after being told that, through the use of deliberately falsified oil production test results, the former Bula chairman set up Bula to invest £12 million in a dud oil well in Russia from which it would never see any return.

Yesterday, Mr Gilhooley said he was anxious the interlocutory hearing proceed on February 3rd. But, he argued, the court should direct a preliminary hearing on whether Mr McCann's report or sections of it are admissible. He contended significant portions of it were ultra vires the inspector's powers and that the inspector had advanced inferences on facts as findings of fact.

Mr Michael Cush SC, for Bula, said the court should not be asked to direct a trial of a preliminary issue unless some purpose could be served by that. it was clear the findings of primary fact in the inspector's report were admissible and the trial judge could establish such findings by looking at the report.

Mr Cush added that the affidavits in the case are very lengthy and went "well beyond" reliance on the inspector's report. There were matters other than the report on which the court hearing the interlocutory application could decide there was a serious issue to be tried in the matter.

Mr Justice Kelly said he had discretion to direct trial of a preliminary issue but it was his view that course of action was inappropriate in the present case. The trial judge could decide on the admissibility of evidence and whether the issue of the report required to be addressed at all.