Les Ambassadeurs Club Ltd v Mr Songbo Yu
| Jurisdiction | England & Wales |
| Judge | Lady Justice Andrews,Lord Justice Birss,Lady Justice Nicola Davies |
| Judgment Date | 24 August 2021 |
| Neutral Citation | [2021] EWCA Civ 1310 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A1/2021/1036 |
[2021] EWCA Civ 1310
Lady Justice Nicola Davies
Lady Justice Andrews
and
Lord Justice Birss
Case No: A1/2021/1036
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MR PETER MARQUAND (sitting as a Deputy High Court Judge)
Royal Courts of Justice
Strand, London, WC2A 2LL
Guy Olliff-Cooper (instructed by CANDEY) for the Appellant
The Respondent did not appear and was unrepresented.
Hearing date: 17 August 2021
Approved Judgment
This is an appeal by Les Ambassadeurs Club Limited against the refusal by Mr Peter Marquand, sitting as a Deputy High Court Judge (“the Judge”), to grant it a post-judgment freezing injunction against the Respondent (“Mr Yu”), a Chinese businessman. Mr Yu is said to be the controller of the Herun Group, a substantial real estate development services business, operating out of Zhoushan, China. The issue at the heart of the appeal is what is meant by “a real risk of dissipation” and whether the Judge misunderstood the test and consequently applied too high a threshold.
The appellant, as its name suggests, is the owner of a club which operates a casino in Mayfair. Mr Yu gambled at the casino. In 2014, when Mr Yu first became a member of the club, he and his family were ranked by Forbes as number 149 on China's Rich List, with a net worth of US$1.3 billion. Between 27 April and 1 May 2018, Mr Yu made use of a cheque cashing facility granted to him by the appellant to purchase £19 million worth of chips from the appellant using a series of cheques, all of which were subsequently dishonoured.
In November 2018, the parties entered into a settlement agreement under which Mr Yu agreed to pay the appellant a sum of £16.54 million in instalments; however, he failed to meet the first instalment when it fell due, and by the terms of the agreement the full amount became due and payable immediately.
On 21 December 2018, the appellant issued the underlying proceedings against Mr Yu in the Queen's Bench Division. On the same date, Master Eastman made an order granting permission to serve the claim form and particulars of claim on Mr Yu in China by alternative methods, namely, by first class airmail or text to Mr Yu's WeChat account. After the proceedings were served on him, Mr Yu made a number of payments to the appellant which, by the end of December 2019, had reduced the principal amount outstanding to just under £6.54 million.
In August 2020, since it had heard nothing more from Mr Yu apart from a Lunar New Year greeting sent by him in January, the appellant decided to pursue the proceedings. Its solicitors provided Mr Yu with a draft amended claim form and particulars of claim, which took into account the payments he had made and corrected other errors. Both the English version and a Chinese translation were sent to Mr Yu's WeChat account. Despite this, on 19 August 2020, Mr Yu used a voice message on the WeChat account to request that the appellant send him a translation. A response was sent pointing out that the translation had already been sent to him. Since then, there have been no further communications from Mr Yu.
On 18 September 2020, the appellant issued an application for permission to amend the Claim Form and Particulars of Claim and for summary judgment. The application was served on Mr Yu in accordance with the original order of Master Eastman, and the appellant's solicitors also wrote to him to seek his dates to avoid for the hearing, but there was no response.
Permission to amend was granted and on 19 November 2020, Master Thornett gave summary judgment for the principal sum outstanding, plus interest and costs. The judgment debt is just over £10 million. The order of Master Thornett was served on Mr Yu both in its original form (on 25 November 2020) and in translation (on 1 December 2020).
Over four months later, on 20 April 2021, the Club applied for a post-judgment worldwide freezing order. The application and evidence in support were served on Mr Yu, together with translations, by WeChat on 26 April 2021. The application was considered by the Judge at a remote oral hearing using Microsoft Teams, on 4 May 2021. He refused to grant the injunction and refused permission to appeal. Permission to appeal was granted by Singh LJ on 24 June 2021.
Mr Yu has taken no part in the appeal. Mr Olliff-Cooper, who appeared on behalf of the appellant, as he did in the Court below, has taken this Court carefully through the evidence which demonstrates that Mr Yu was given sufficient notice of the appeal and the date of the hearing, and supplied with translations of all relevant documents, including the appellant's notice and skeleton argument and the order granting permission to appeal. There has been nothing to indicate that the WeChat account is no longer operative or that messages sent through that medium are no longer getting through to Mr Yu. I am satisfied that he has been afforded the fair opportunity to attend and make submissions, but has deliberately chosen not to. Of course, that is his prerogative.
The Judge identified the four requirements which the applicant for a freezing order must demonstrate, namely (1) that he has a good arguable case on the merits; (2) that there is a real risk of dissipation; (3) that there are assets held by or on behalf of the respondent within the (geographical) scope of the proposed injunction, and (4) that in all the circumstances it is just and convenient to grant the order sought. As the appellant had already obtained summary judgment, the first requirement was met. As to the third, the Judge was satisfied on the evidence adduced by the appellant, including a report by Kikkar Advisory described as a “Worldwide Asset Review”, (“the Kikkar Report”) that it was likely that Mr Yu has assets in this jurisdiction and in other parts of the world, including Hong Kong, that would be covered by a worldwide freezing order.
Therefore, as the Judge said at [21], the real issue in this case was whether or not there was a real risk of dissipation of those assets. He addressed each of the nine factors relied upon by the appellant as demonstrating that risk, before concluding that he was not satisfied on the evidence when viewed as a whole and looking at all the features cumulatively, that a real risk of dissipation had been established. He said that even the features he had identified in favour of a real risk of dissipation were “not very convincing”. There was no more than a suspicion or a fear that there is a risk that Mr Yu would dissipate his assets.
The Grounds of Appeal are:
(1) That the Judge misinterpreted the phrase “real risk of dissipation” and thereby erred in law. Had he interpreted the phrase correctly he would (or should) have found that Mr Yu did present a real risk of dissipation, and therefore would (or should) have granted the injunction sought;
(2) Even if the Judge did not misinterpret the phrase “real risk of dissipation” he erred in finding that Mr Yu did not present a real risk of dissipation on the basis of the evidence before him. But for that error he would (or should) have granted the injunction sought.
Before turning to consider the submissions made by Mr Olliff-Cooper in support of those grounds, it is useful to consider the reasons underlying the requirement to show a real risk of dissipation.
The purpose of a freezing injunction is to ensure that a judgment in the applicant's favour will not go unsatisfied by reason of assets that would otherwise be available to satisfy it being dealt with in a manner that will make them unavailable by the time the judgment comes to be enforced. It is designed to protect against the frustration of the process of the court by depriving the claimant of the fruits of any judgment obtained in his favour. It is not intended as a safeguard against insolvency, nor as a means of providing security for a claim, however strong that claim may be and however large a sum of money may be involved. Nor is it just another standard means of securing enforcement of a judgment in favour of the applicant, like a charging order or third party debt order. It is a potent weapon in the armoury available for dealing with those individuals and companies who may seek to make themselves judgment-proof.
All these points emerge clearly from the seminal judgment of the Court of Appeal, delivered by Kerr LJ, in Ninemia Maritime Corp v Trave Schiffahrstgesellschaft mbH & Co KG (“ The Niedersachsen”) [1983] 1 WLR 1412. At p.1422, addressing the requirement to show a real risk of dissipation, Kerr LJ rejected the suggestion that the claimant needed to show “nefarious intent”, in the sense that the defendant would deal with his assets with the object, and not just the effect, of putting them out of the claimant's reach. He said:
“In our view the test is whether … the court concludes, on the whole of the evidence then before it, that the refusal of a Mareva injunction would involve a real risk that a judgment or award in favour of the plaintiff would remain unsatisfied.”
In view of the drastic interference with a person's right to do as they please with their own property that a freezing injunction entails, (quite apart from the reputational damage that it may cause), the courts must remain vigilant to ensure that such orders will only be granted in cases in which the evidence suffices to establish that there is a real risk of the judgment going...
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Table of cases
...[1986] 2 SCR v, 63 OR (2d) x, 21 OAC 239n ..................................... 27, 464, 515, 527 Les Ambassadeurs Club Ltd v Yu, [2021] EWCA Civ 1310 ..........................191–92 Lewvest Ltd v Scotia Towers Ltd (1981), 126 DLR (3d) 239, 10 CELR 139, 19 RPR 192 (Nld SCTD) ....................