Lux Locations Ltd v Yida Zhang
| Jurisdiction | UK Non-devolved |
| Judge | Lord Leggatt |
| Judgment Date | 31 January 2023 |
| Neutral Citation | [2023] UKPC 3 |
| Court | Privy Council |
| Docket Number | Privy Council Appeal No 0010 of 2022 |
[2023] UKPC 3
Lord Lloyd-Jones
Lord Leggatt
Lord Stephens
Lady Rose
Lord Richards
Privy Council Appeal No 0010 of 2022
Hilary Term
From the Court of Appeal of the Eastern Caribbean Supreme Court (Antigua & Barbuda)
Appellant
Thomas Roe KC
Andrew O'Kola
Daniel Goldblatt
(Instructed by OMO Law Chambers (Antigua))
Respondent
Barry Gale KC
David Dorsett
James Gale
(Instructed by Axiom DWFM Ltd (West End))
This appeal raises questions about the proper approach to the grant of a default judgment for a remedy other than an award of money where the relevant procedural rule says that judgment “shall be in such form as the court considers the claimant to be entitled to on the statement of claim.” An initial question is whether such a default judgment can be appealed at all or whether, as the Court of Appeal held in this case, the only means of challenging it is to apply to the High Court to set the judgment aside.
To put the claim advanced in the statement of claim in context, it is necessary to outline the now lengthy history of litigation between the parties.
The appellant, Lux Locations Ltd (“Lux”), is an estate agency which was engaged by the respondent, Mr Yida Zhang, an international investor of Chinese nationality, to assist in buying a large parcel of land (around 6 km 2 in Antigua. Lux was engaged on written terms that, if Mr Yida or an affiliate acquired the land, Mr Yida would pay Lux a commission equal to 9% of the purchase price. The agency agreement also stated that Lux would be responsible for paying, out of its commission, any other commissions pre-agreed with Lux to facilitate the sale. Lux had agreed to pay such a commission, equal to 4% of the purchase price, to an architect, Johann Hesse, in return for his assistance in lobbying the Government for approvals needed for the purchase.
Mr Yida's company, Yida International Investment Antigua Ltd (“Yida Ltd”), acquired the land in August 2014 at a price of US $60m. Mr Yida did not, however, pay Lux its commission. His associate, Mr Kenneth Kwok, wrote to Lux saying that foreign exchange was not available in China to pay the commission and proposing a new agreement under which Lux's right to be paid commission would be replaced by an exclusive right to act as estate agent for the sale of any of the land. When Lux rejected this proposal, an alternative proposal was made to link the payment of the commission to the sale of land by Mr Yida. Lux rejected this proposal too and brought an action (“the first action”) suing Mr Yida for the commission of US $5.4m (9% of the US $60m purchase price) payable under the agency agreement.
Mr Yida defended the claim and counterclaimed for rescission of the agency agreement, alleging that he had been induced to enter into the agreement by various fraudulent misrepresentations. Some months later Mr Yida amended his defence to add a further allegation. He now claimed that, at or about the time when the written agency agreement was made, the parties had also made a separate oral agreement, which they had apparently never thought fit to record in writing, that the obligation to pay Lux the commission of 9% would only take effect if Lux negotiated a purchase price of US $30m (half the price actually agreed).
The trial of the first action was scheduled to commence on 7 March 2017 and on that day the parties attended court with their lawyers. Counsel for Mr Yida, Mr Damien Benjamin, asked the judge for time to discuss settlement, which was granted. Terms of settlement were then negotiated and embodied in a consent order. The consent order was signed by the parties themselves and by their respective counsel. The order was then made by the judge after its terms had been explained to her in open court in the presence of the parties and their counsel. The consent order provided for judgment to be entered for Lux against Mr Yida in the sum of US $3m, plus interest at the rate of 8% per annum and legal costs (including sales tax) of US $345,000. Mr Yida was ordered to pay these sums within 21 days.
Before the settlement was agreed, Mr Hesse (who was present at court) had agreed that he would forgo the share of Lux's commission that Lux had agreed to pay to him. The principal judgment sum of US $3m represented the rest of Lux's commission. Under the terms of the consent order Lux therefore stood to receive the full net sum that it had expected to receive after paying Mr Hesse. The agreement of Mr Hesse to forgo his commission would not, however, have relieved Mr Yida of the obligation to pay the full sum of US $5.4m to Lux if he had lost at trial. The consent order thus achieved a substantial reduction in Mr Yida's potential liability.
Mr Yida did not pay the judgment debt within 21 days as ordered. So Lux began enforcement proceedings. On 4 April 2017 Lux obtained a provisional charging order over the shares held by Mr Yida in his company, Yida Ltd. On 23 April 2017, Mr Yida's lawyer, Mr Benjamin, sent an email message to Lux's attorney saying that Mr Yida was having practical difficulties, to do with banking arrangements, in remitting the necessary money to Antigua. On 12 May 2017 Mr Yida paid US $705,486.39 in part satisfaction of the judgment debt. But he did not pay anything more to Lux.
On 23 May 2017 Lux's application for a final charging order over Mr Yida's shares was heard. Mr Yida is recorded in the order as being “absent due to illness” but was represented by his counsel, Mr Benjamin. Mr Yida had made an affirmation dated 18 May 2017 stating that his failure to pay the judgment debt was due to practical difficulties with remitting funds to Antigua and “humbly ask[ed] the Court not to grant” a charging order. The judge was unmoved by that request and made a final charging order, to take effect unless the balance of the judgment debt was paid within 14 days.
Mr Yida still did not pay the balance of the judgment debt. Instead, he launched a counter-attack. On 3 July 2017 Mr Yida commenced an action (“the second action”) against Lux and its proprietors, Mr and Mrs Dyson, along with two other defendants claiming damages for conspiracy in a sum of US $6,350,555.89. (No explanation was given of how this sum was calculated.) The statement of claim alleged that the defendants had conspired to raise the purchase price of the land from US $30m to US $60m and that Mr and Mrs Dyson had made misrepresentations on which Mr Yida had relied, being essentially the same ones that had been alleged in the first action. Lux applied to have the statement of claim struck out as an abuse of process on the grounds that the pleaded allegations had either been made — or, in so far as they were new, ought to have been made — in the first action, which had been finally resolved by the consent order.
While this strike-out application was pending, Lux continued the process of enforcing the judgment in its favour by applying next for an order for the sale of Mr Yida's shares in Yida Ltd. At a hearing on 19 October 2017 (at which Mr Yida was again represented by counsel) this application was adjourned to be heard on 14 December 2017 and the judge granted an interim injunction to stop Mr Yida in the meantime from taking any step to dispose either of his shares or of any of the land owned by his company.
On the return date of 14 December 2017, neither Mr Yida nor anyone representing him attended court. The judge made an order for valuation of the land and shares, sale of the shares and payment of the judgment debt out of the proceeds of sale. The injunction was continued.
Mr Yida failed to comply with terms of this order which required his cooperation. So on 26 February 2018 Lux applied to the court for further relief to enable the sale of the shares to take place. Mr Yida responded on 23 March 2018 by applying for a stay. In an affidavit sworn on the same day, Mr Yida referred to the conspiracy claim made in the second action. (By this time Lux's application to strike out the claim had been heard but judgment was reserved.) Mr Yida also said that he had instructed his lawyer to bring a fresh action to set aside the consent order and that his lawyer was finalising the necessary papers for filing. It will be necessary to return in more detail to the grounds for Mr Yida's claim to be entitled to have the consent order set aside, but the essence of Mr Yida's affidavit evidence was that, when he signed the consent order, he misunderstood the nature of the document he was signing and thought it was a release of Mr Hesse's claim for commission. He did not realise that it was in fact a settlement agreement. The reason given for seeking a stay was that, if Mr Yida were to pay the judgment sum to Lux and his claims against Lux were ultimately successful, there would be little, if any, chance of his getting his money back.
On 19 April 2018 Wilkinson J declined to entertain Mr Yida's application for a stay and made the further orders sought by Lux to facilitate the sale of Mr Yida's shares in Yida Ltd.
On 28 June 2018 judgment was handed down in the second action granting Lux's application to strike out the statement of claim as an abuse of the court's process.
On 23 November 2018 Mr Yida began the new action foreshadowed in his affidavit eight months earlier. The remedy sought was an order that the consent order be set aside and for repayment of the money that Mr Yida had paid to Lux under the terms of the consent order. It is this action which is now before the Board.
The claim form and statement of claim were served on 23...
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