Julie Anne Palmer and Nicholas Edward Reed (Joint Liquidators of Changtel Solutions UK Ltd ((in Liquidation))) (Applicants) JI-Chuen Jason Tsai (Respondent)
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Rose |
| Judgment Date | 21 July 2017 |
| Neutral Citation | [2017] EWHC 1860 (Ch) |
| Docket Number | Case No: CR-2013-005582 |
| Court | Chancery Division |
| Date | 21 July 2017 |
[2017] EWHC 1860 (Ch)
Mrs Justice Rose
Case No: CR-2013-005582
IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION
Royal Courts of Justice Strand, London, WC2A 2LL
Mr Stephen Robins (instructed by Walker Morris LLP) for the Applicants MR ANDREW YOUNG (instructed by Neil Davies & Partners) for the Respondent
Hearing dates: 12 – 16 June, 22 – 23 June
Judgment Approved
BACKGROUND
This is the judgment on an application issued on 23 February 2017 for committal of the Respondent, Mr Tsai, for contempt of court. The Applicants are Julie Palmer and Nicholas Reed of Begbies Traynor (Central) LLP. On 5 June 2015 they were appointed to be the joint liquidators of a company Changtel Solutions UK Ltd (formerly Enta Technologies Ltd) ('Changtel'). They were represented at the hearing by Mr Robins of counsel. Mr Tsai used to be the director of Changtel. He was represented at the hearing before me by Mr Young of counsel, instructed by Neil Davies & Partners.
The Applicants are claimants in proceedings against Mr Tsai in the Companies Court issued on 15 February 2017. The application and points of claim include claims against Mr Tsai under sections 212, 213 and 214 of the Insolvency Act 1986 for damages for breach of duty and misfeasance, for a contribution to Changtel's assets because of fraudulent trading and wrongful trading in connection with the business of the company. Following a without notice hearing, on 15 February 2017 Birss J granted a worldwide freezing order. The freezing order was continued in force by order of Mann J following an inter partes hearing on 22 February 2017 ('the Freezing Order').
The Freezing Order has a penal notice written on the front page. Paragraph 5 prohibits Mr Tsai from removing from the jurisdiction any of his assets up to the value of £24,705,799.20 and from disposing of, dealing with or diminishing the value of any of his assets whether they are in or outside England and Wales up to the same value. Paragraph 6 made it clear that paragraph 5 applied to all of Mr Tsai's assets whether or not they were in his own name and whether they are solely or jointly owned. It also provided that for the purpose of the order, Mr Tsai's assets included any asset which he has the power, directly or indirectly, to dispose of or deal with as if it were his own. It went on to provide that Mr Tsai is to be regarded as having such power if a third party holds or controls the asset in accordance with his direct or indirect instructions.
The Freezing Order then set out a list of 19 assets which were specifically frozen. These included various properties in Birmingham and Telford, properties in Spain, Bulgaria and Turkey, three bank accounts, two with RBS plc and one with HSBC plc and various companies incorporated in the United States. There were the usual exceptions to the freezing of assets to allow expenditure on ordinary living expenses and legal advice and representation.
Paragraph 9 of the Freezing Order dealt with the disclosure by Mr Tsai of his assets. It provided that Mr Tsai must immediately and to the best of his ability inform the Applicants' solicitors of all his assets worldwide whether in his own name or not and whether solely or jointly owned, giving the value location and details of all such assets. Further, within two working days after being served with the order, Mr Tsai was required to swear and serve on the Applicants' solicitors an affidavit setting out that information. I shall refer to paragraph 9 of the Freezing Order as 'the Disclosure Order'.
Paragraph 10 of the Freezing Order provided that Mr Tsai must immediately deliver up to the Applicants' solicitors each and every passport and travel document relating to him. I shall refer to paragraph 10 of the Freezing Order as "the Passport Order".
A copy of the Freezing Order and all the accompanying documents which the Applicants undertook to Birss J to serve on Mr Tsai were personally served on him by a process server, Mr Wright, on the evening of 15 February 2017.
Mr Tsai's first affirmation in purported compliance with the Freezing Order was made on 20 February 2017 ('the First Affirmation'). In a schedule to that First Affirmation, JT1, Mr Tsai listed the assets referred to in paragraph 7 of the order. He gave a commentary describing the asset and stating his interest, or lack of it, in that asset. He also included in JT1 a few additional assets of which the Applicants had not been aware.
In their work as liquidators, the Applicants have had access to Changtel's computer servers and hence to a great many documents generated by Mr Tsai and his family over the years. From this they have, they say, gleaned information which they allege shows that Mr Tsai's assets are much more extensive than he disclosed in JT1. The application for committal originally listed 36 separate breaches of the freezing order. On 10 May 2017 I granted permission, with the agreement of Mr Tsai, for an additional 16 breaches to be added so that there are now 52 alleged breaches in all. Broadly, the breaches alleged are (i) breaches by Mr Tsai of the Passport Order; (ii) his failure to disclose in his First Affirmation a wide range of assets including numerous bank accounts and properties in this country and overseas; and (iii) his giving false information in his First Affirmation about the ownership of the assets listed in JT1.
For the most part, Mr Tsai's defence to these allegations is that the assets disclosed are owned solely by family members, in particular his wife ('Mrs Tsai'), two of his wife's sisters, Shu Hua Chang and Ai Cheng Chang, his sister, Yi Lin Tsai and his brother in law Jen Yen Chu. He says that although he manages these assets on behalf of these third parties, he does not have a beneficial interest in the assets. He was therefore under no obligation to disclose them and the information he gave about them was true. The main areas of contention between the parties is therefore as to the beneficial ownership of these assets.
The law on liability for contempt
There was no dispute between the parties as to the test that the court must apply when considering whether allegations of contempt have been made out. The burden of proof falls on the Applicants and the criminal standard of proof applies. A finding of contempt can be made only if I am satisfied beyond reasonable doubt that the breach of the Freezing Order alleged has occurred. In JSC BTA Bank v Ereshchenko [2013] EWCA Civ 829 the Court of Appeal was considering allegations that Mr Ereshchenko had lied in written evidence he provided to the court. The Court of Appeal upheld the decision of Vos J (as he then was) in dismissing the application for committal. Vos J set out the principles to be applied in paragraph 132 of his judgment. So far as relevant to the present application these were as follows:
a. the burden of proving the contempt that it alleges lies on the Applicants. Insofar as Mr Tsai raises a positive defence he carries an evidential burden which he must discharge before the burden is returned to the Applicants.
b. the criminal standard of proof applies, so that the Applicants' case must be proved beyond reasonable doubt – or so that the court is sure. In case the meaning of this formulation were unclear, Phipson on Evidence (17 th edition, 2009 at paragraph 6.51) cites the Privy Council in Walters v. R [1969] 2 A.C. 26 as indicating that "[a] reasonable doubt is that quality or kind of doubt which when you are dealing with matters of importance in your own affairs you allow to influence you one way or another".
c. The court needs to exercise care when it is asked to draw inferences in order to prove contempt. The law in this respect is summarised in a passage in the judgment of Teare J in JSC BTA Bank v Ablyazov [2012] EWHC 237 (Comm). Circumstantial evidence can be relied on to establish guilt. It is however important to examine the evidence with care to see whether it reveals any other circumstances which are or may be of sufficient reliability and strength to weaken or destroy the Applicants' case. If, after considering the evidence, the court concludes that there is more than one reasonable inference to be drawn and at least one of them is inconsistent with a finding of contempt, the applicants fail. Where a contempt application is brought on the basis of almost entirely secondary evidence, the court should be particularly careful to ensure that any conclusion that a respondent is guilty is based upon cogent and reliable evidence from which a single inference of guilt, and only that inference, can be drawn.
As regards the mental element, contempt of court is, in general, a strict liability offence. Provided that the alleged contemnor intended to carry out the conduct which was prohibited, it is no answer to say that there was no direct intention to disobey the order. The court is not interested in examining the motive or intent behind the actions of an individual breaching the terms of an injunction.
In the remainder of this judgment, where I make findings of fact or state that I am satisfied that an allegation has been proved, I make such findings and arrive at such conclusions on the basis that I am satisfied to the criminal standard of proof.
As a further introductory point, I am not in this judgment expressing any view as to the extent of Mr Tsai's interest in any of the assets which he jointly owns with his wife. He was obliged by the Freezing Order to disclose the asset in which he has an interest even if that was jointly owned with another person. There may in future need to be further findings as to the extent of Mr Tsai's interest in any...
To continue reading
Request your trial
-
WWRT Ltd v Serhiy Tyshchenko
...it will be appropriate for the court to make an unless order rather than an immediate debarring order, an example being Palmer v Tsai [2017] EWHC 1860 (Ch), 26 An immediate debarring order (not preceded by an unless order) may, however, be appropriate in cases where the fairness of the tri......
-
GML International Ltd v Jonathan Henry Martyn Harfield
...a breach may have rested on the slenderest of foundations or on convenient advice which was plainly wrong.” See also Palmer v Tsai [2017] EWHC 1860 (Ch) at [12]. Is the Defendant in contempt? 43 I turn now to consider whether the defendant is in contempt of court. As set out earlier, there......
-
Fulham Football Club Ltd v Mr Craig Kline
...intention to disobey the order, if the contemnor intended to do the act which constituted the breach. Rose J in Palmer & Reid v Tsai [2017] EWHC 1860 (Ch) at [12] said: “As regards the mental element, contempt of court is, in general, a strict liability offence. Provided that the alleged c......