BCS Corporate Acceptances v Terry
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Elisabeth Laing DBE |
| Judgment Date | 30 June 2017 |
| Neutral Citation | [2017] EWHC 1176 (QB) |
| Docket Number | Case No: HQ12X05102 |
| Court | Queen's Bench Division |
| Date | 30 June 2017 |
[2017] EWHC 1176 (QB)
Mrs Justice Elisabeth Laing DBE
Case No: HQ12X05102
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Professor Mark Watson-Gandy (instructed by Akin Palmer) for the Claimant
Mr Simon Stafford-Michael and Mr Sam Jarman (instructed by Martyn Cray) for the Defendant
Hearing dates: 8 – 9 May 2017
Judgment Approved
This is my decision on four applications:
i) the Defendant's applications for
a) directions in relation to its application to strike out the Claimants' claims;
b) to set aside
i) a world-wide freezing order granted against him and continued by May J after a hearing in her order of 11 March 2016;
ii) the Claimants' application to commit him for contempt of court arising from alleged breaches of the order of May J; and
ii) the Claimants' applications for security for the costs of the Defendant's strike-out application.
The Claimants were represented by Professor Watson-Gandy and the Defendant by Mr Stafford-Michael and Mr Jarman. I thank counsel for their written and oral submissions. The hearing started somewhat after 2pm on 8 May and finished before lunch on 9 May 2017.
The background
The Claimants' claim in outline
The Claimants claimed that the Defendant promised to get for them corporate financial guarantee bonds and a credit facility, that they paid him premia amounting to over a £1million for these, and that the bond and facility never materialised. The Defendant accepts that the Claimants have paid him some money, though I am not clear how much, and asserts that he was owed this money under a consultancy agreement (see paragraph 5 of the draft undated defence signed by Mr Campbell in tab 5 of the pleadings bundle). I infer that this draft was produced at the hearing on 21 June 2014 (see paragraph 6 of the judgment of Master Kay QC). In his witness statement of 18 November 2016, Mr Pullen, the Defendant's solicitor, repeats this analysis.
The proceedings
The Defendant did not serve a defence and the Claimants obtained judgment in default of defence. The Defendant applied to Master Kay QC ('the Master') to set that aside. The Master dismissed that application. He held, in short, that the Defendant had delayed too long, and that he had not shown that he had a good prospect of defending the claim. The Defendant applied for permission to appeal. That application was refused by Andrews J on the papers and by Hickinbottom J (as he then was) after a hearing.
The Master then assessed damages. He did not hear oral evidence. He recorded in his judgment (dated 29 July 2015) that the parties were happy with that approach. Where there were conflicts between the evidence of the Claimant and of the Defendant, he preferred the evidence of the Claimant. He explained why he was not persuaded by the evidence of two other witnesses relied on by the Defendant. In assessing the Defendant's written evidence, he took into account that the judgment in default operated as a finding of fraud against the Defendant, and material which suggested that the Defendant had been convicted of fraud in the Angoulême Magistrates' Court for using a forged swift document which appeared to show he had a credit line of US $I billion guaranteed by the Central Bank of Venezuela, and for passing himself off as a banker. The Defendant had had since 3 February 2013 to respond to that allegation and had not done so. He found that the Defendant was liable to the Claimant for some £1.6 million and €400,000. The Defendant did not appeal that decision (see paragraph 22 of Mr Pullen's witness statement of 18 November 2016).
In a letter dated 25 August 2015, the Defendant's solicitors explained that his financial affairs were rather complicated and it would take time to understand them. He had or had had some properties in France, but, as a result of a tax investigation, 'he does not have access to the equity in these properties'. Nonetheless, the Defendant believed 'that he does have the ability to discharge the liability against him' if given reasonable time; but that his realisable assets would not amount to much if he were made bankrupt immediately.
The Defendant was ordered at various stages in the proceedings (in 2014, 2015 and 2016) to pay costs to the Claimants. He did not do so. The total of these orders was some £267,000.
The freezing order
On 17 December 2015, Sweeney J granted the Claimants a freezing order against the Defendant and his wife. On 11 March 2016, May J set aside the order against the Defendant's wife, but continued it against the Defendant. The domestic order was to continue in force until proceedings to set aside the transfers referred to in paragraph 18, below, were determined. The Defendant argued, among other things, that the freezing order should be set aside because the Claimants had not disclosed that the third Claimant was being prosecuted in France for advance fee fraud. May J rejected that argument.
Paragraph 5 of the freezing order restrained the Defendant from removing his assets from England and Wales, and from disposing or dealing with or diminishing the value of his assets in England and Wales or elsewhere. Paragraph 9 provided that the order did not prevent the Defendant from spending a limited amount on his ordinary living expenses, and a reasonable amount on legal advice and representation. Before spending any money, the Defendant was to tell the Claimants' solicitors where the money was to come from.
It is plain from her judgment that May J envisaged that the Claimants would restore the application for a freezing order within three months. The initial return day was varied by consent. After that the Claimants took no steps to re-list the return day. The Defendant then applied, on 2 May 2017, for the freezing order to be discharged. The Claimants argue that they have taken steps to enforce the freezing order; but that these have been frustrated by the Defendant. The Defendant argues that the Claimants have sat on their hands, and that, in any event, there are no foreign assets to enforce against. They argue that, on the Claimants' case, the domestic freezing order is unnecessary because the Claimants contend that the Defendant owns two houses in England. The Defendant's case is that he does not own them: the beneficial interests in both belong to his wife.
The strike-out application
On 18 November 2016, the Defendant issued an application to strike out the Claimants' claims for abuse of process. This application is said to be based on the decision of the Supreme Court in Summers v Fairclough Homes Limited [2012] UKSC 26. That application was supported by a witness statement of Mr Pullen, the Defendant's solicitor. In short, the Claimants' claim is said to be an abuse of process because it was 'wholly fraudulent' and made to deceive the French courts (witness statement, paragraph 2). The third Claimant has been prosecuted in France for an advance fee fraud, after a five-year investigation. The final hearing has not yet taken place. Mr Pullen complains that the Claimants did not disclose the French prosecution in their claim against the Defendant. Mr Pullen has considered 100 lever arch files of material. The material has been generated since his firm started investigating in January 2015, when the Defendant issued a cross-claim against the Claimants, which has now been settled.
The crux of the application is said to be that Europa, which was the vehicle for the fraud, was not created, as the Claimants allege, by the Defendant, who (on the Claimant's case) then introduced the Claimants to Europa, but created by the third Claimant. It is said that 'nothing material to the claim is true' (Mr Pullen's witness statement, paragraph 55). The 'only real question' is said to be who was behind Europa. The Defendant also relies on a fraud said to have been perpetrated by the third Claimant on a Mr Suyanto. Mr Stafford-Michael accepted in the course of argument that this was a distinct fraud from the fraud alleged by the Claimants in their claims against the Defendant.
The Claimants' applications in response to the strike-out application
The Claimants applied for orders that the Defendant's strike-out application be stayed until the Defendant had discharged the costs orders already made against him in the proceedings and had given security for costs.
The order of Green J
On 23 February 2017, Green J ordered the Defendant to pay into court a sum reflecting the total of the costs orders made against the Defendant to which I have referred as a condition of pursuing that strike-out application. The Defendant paid the money into court. Green J did not consider the Claimants' application for security for costs.
The Claimants' committal application
On 20 February 2017, the Claimants issued an application for the committal of the Defendant on the ground that he had breached the worldwide freezing order made by May J. The Claimants have not yet succeeded in serving the Defendant personally. They do not appear to have asked for an order permitting substituted service on the Defendant's solicitors, who appear to be in regular contact with the Defendant (see CPR 81.10(5)).
The Defendant's recent applications
On 2 May 2017 the Defendant applied to strike out the freezing order and the Claimants' committal application.
The Claimants' application for the continuation of the worldwide freezing order
On 4 May 2017 the Claimants issued an application for the continuation of the worldwide freezing order against the Defendant.
The properties in England
A house called Paget was bought by the Defendant and his wife jointly for £900,000 on 23 January 2015. According to the...
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