Greenshores Properties Ltd v Duncan Andrews and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Smith |
| Judgment Date | 07 November 2013 |
| Neutral Citation | [2013] EWHC 3399 (QB) |
| Docket Number | Case No: HQ13X03559 |
| Court | Queen's Bench Division |
| Date | 07 November 2013 |
[2013] EWHC 3399 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Andrew Smith
Case No: HQ13X03559
Harris Bor (instructed by Solomon Taylor & Shaw) for the Claimants
Alaric Watson (instructed by Darlingtons Solicitors LLP) for the First & Third Defendants Adam Hayes — in person
Hearing dates: 30 & 31 October 2013
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
On 30 July 2013, on an application without notice of the claimants ("GPL"), Haddon-Cave J made a freezing order in the conventional form against the three defendants in respect of assets in England and Wales up to the value of £940,000. It was initially made until a return date of 6 August 2013, but by consent the return date was adjourned and the order remains in place. The three defendants apply to discharge the order, the first defendant, Mr Duncan Andrews, and the third defendants ("CHL") being represented by Mr Alaric Watson, and the second defendant, Mr Adam Hayes, appearing in person. The claimants were represented by Mr Harris Bor, who appeared for them before Haddon-Cave J.
Mr Hayes also applies to adduce forensic evidence as to the provenance of various evidence from GPL: as I shall explain, he alleges that documents put in evidence by GPL were forged. I did not hear full argument about it, and I shall invite submissions about its disposal in light of this judgment.
The grounds advanced by Mr Watson in support of the application are:
i) That CHL do not have a good arguable case against Mr Andrews and CHL (or either of them).
ii) That CHL did not make proper disclosure when they obtained the freezing order, and they misled the court.
iii) That CHL have delayed in pursuing these proceedings.
The grounds advanced by Mr Hayes include complaints that GPL did not make proper disclosure or a fair presentation when they obtained the order (and his complaints in this regard were wider than those of the other defendants). He also said that, although he is indebted to GPL, his debt is not on the terms and did not arise in the circumstances alleged and is for less than GPL claim. Moreover he disputed that there is any proper reason to think that he will dissipate his assets or a freezing order will significantly reduce the risk that a judgment against him would go unsatisfied. (Whether or not this point was distinctly taken in Mr Hayes' application, it was canvassed in argument and Mr Bor did not submit that I should disregard it.)
I can deal with the complaint of delay shortly. On the original return date, the parties all consented to an adjournment until 20 August 2012 or the nearest available date and an order that GPL should have until 11 September 2013 to service particulars of claim. On 21 August 2013, when the case was again before the court, with the parties' consent the proceedings were stayed for 28 days so that the parties might attempt to settle their dispute. The attempts were unsuccessful. Mr Watson told me and Mr Bor agreed that particulars of claim were due on 25 September 2013. In fact they were served so late on 25 September 2013 that they are to be treated as served the next day, and therefore were late. Defences have been served, that of the Mr Andrews and CHL on 16 October 2013: the copy of Mr Hayes' defence that is before me is unsigned, and I do not know when it was served.
It is, of course, incumbent upon litigants who obtain freezing orders to pursue their proceedings properly and promptly, but I do not consider that GPL have failed in that regard in any significant way. The technically late service of the pleading is no basis for discharging the freezing order, or otherwise relevant to my decisions.
The legal principles governing the other complaints are well established:
i) A freezing order will not be granted unless the applicant can demonstrate a good arguable case, which, as Mustill J explained in Ninemia Maritime Corpn v Trave, [1983] 2 Lloyd's Rep 600, 605, means "a case which is more than barely capable of serious argument, yet not necessarily one which the judge believes has a better than fifty per cent chance of success".
ii) On applications without notice, an applicant is obliged to make a fair presentation, and this involves an obligation not only to avoid misrepresentations but to make "full and frank disclosure of all the material facts": R v Kensington ITC ex p Princess Edmond de Polignac, [1917] 1 KB 486, 514. That means an applicant "must disclose all the facts which could reasonably or would be taken into account by the judge in deciding whether to grant the application": Siporex Trade SA v Comdel Commodities Ltd, [1986] 2 Lloyd's Rep 428, 437 per Bingham J.
iii) Specifically of freezing orders (then known as Mareva injunctions), in Bank Mellor v Nikpour, [1985] FSR 87, 92 Donaldson LJ famously said that,
"The rule requiring full disclosure seems to me to be one of the most fundamental importance, particularly in the context of the Draconian remedy of the Mareva Injunction. It is in effect … one of the law's two 'nuclear' weapons. If access to such a weapon is obtained without the fullest and frankest disclosure, I have no doubt at all that it should be revoked."
iv) I explained my understanding of the general principles that apply if there has been a breach of the duty in Dar Al Arkan Real Estate Development Co v Al Refai, [2012] EWHC 3539 (Comm) at para 148 as follows:
"The principles about how the court should respond to a breach of the duties of an ex parte applicant were usefully set out by Mr Alan Boyle QC, sitting as a Deputy High Court Judge, in Arena Corporation Ltd v Peter Schroeder, [2003] EWHC 1089 (Ch) at para 213. The general rule is that the court will discharge any orders that were granted and will not renew them until trial. In Millhouse Capital UK Ltd v Sibir Energy Plc, [2008] EWHC 2614 (Ch) Christopher Clarke J said (at para 104) that "such is the importance of the duty that, in the event of any substantial breach, the Court strongly inclines towards setting its order aside and not renewing it, so as to deprive the defaulting party of any advantage that the order may have given him". However, the court has jurisdiction, albeit one which it exercises sparingly, to continue an order or to replace an order that it discharges with a new order to similar effect. While the court must have proper regard to the need to protect from abuse the administration of justice and in particular its jurisdiction to grant orders ex parte, it will not apply the general rule so rigidly as to allow it to work injustice."
v) The principles that Mr Boyle identified include these:
• "The Court should assess the degree and extent of the culpability with regard to non-disclosure. It is relevant that the breach was innocent, but there is no general rule that an innocent breach will not attract the sanction of discharge of the order. Equally, there is no general rule that a deliberate breach will attract that sanction."
• "The Court should assess the importance and significance to the outcome of the application for an injunction of the matters which were not disclosed to the Court. In making this assessment, the fact that the judge might have made the order anyway is of little if any importance."
• "The Court can weigh the merits of the plaintiff's claim, but should not conduct a simple balancing exercise in which the strength of the [claimant's] case is allowed to undermine the policy objective of the principle."
He also observed that "There are no hard and fast rules as to whether the discretion to continue or re-grant the order should be exercised, and the Court should take into account all relevant circumstances".
vi) Finally, on applications such as these the court generally avoids entering into what is sometimes called a "mini-trial", recognising that it is not assisted by disclosure or oral evidence and that often disputed questions of fact cannot be resolved. That said, where the defendants' business and personal lives are daily affected by a freezing order, justice can requires a careful and detailed examination of the material before it to decide whether an order (or its continuation) is justified.
The claim was stated on the claim form that was issued on 30 July 2013 as follows:
"The Claimant asserts a circa £1 million proprietorial [sic] claim against the Defendants with respect to completion monies in the hands of the Defendants resulting from an investment by the Claimant with the Defendants in [a Development]. Completion took place in July 2013. Alternatively, the Claimant asserts a breach of trust and/or knowing receipt and/or dishonest assistance claim against the Defendants with respect to its share in the completion monies and/or a claim against the Third Defendant under s.423 of the Insolvency Act 1986. Alternatively, the Claimant seeks circa £1 million from the Defendants as a debt claim for loans made by the Claimant to the Defendants."
(At the hearing before Haddon-Cave J the claim form had not been issued, but GPL undertook to issue a claim form in the form of a draft before him, and I take it that the draft was in the form later issued.)
GPL is a family-owned company involved in property investments. Its shareholders are three brothers, Mr Stephen Green, Mr Trevor Green and Mr Julian Green, each of whom owns a 16% shareholding, and a family trust which owns 52% of the shares. In 2008 the directors were (or included) Mr Stephen Green and his mother, Ms Pat Green, who...
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