Mex Group Worldwide Ltd v Stewart Owen Ford

Hearing dates: 22, 23 & 24 July 2024

Approved Judgment

This judgment was handed down remotely at 10.30am on Thursday 8 August 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

This is an appeal by the claimant against the decision of Mr Simon Tinkler, sitting as a Deputy High Court Judge (‘the judge’), to set aside, as against the 4 ^th, 9 ^th and 10 ^th defendants (together, ‘the respondents’), a worldwide freezing order made without notice by Mr Justice Lavender on 20 ^th October 2023. The freezing order was made pursuant to section 25 of the Civil Jurisdiction and Judgments Act 1982 (as amended) (‘the CJJA’) in aid of substantive proceedings in Scotland in which the claimant makes allegations of conspiracy against all the defendants.

Section 25 as currently amended provides:

‘ Interim relief in England and Wales and Northern Ireland in the absence of substantive proceedings

(1) The High Court in England and Wales or Northern Ireland shall have power to grant interim relief where—

(a) proceedings have been or are to be commenced in a 2005 Hague Convention State other than the United Kingdom or in a part of the United Kingdom other than that in which the High Court in question exercises jurisdiction; and

(b) they are or will be proceedings whose subject-matter is within the scope of the 2005 Hague Convention as determined by Articles 1 and 2 of the 2005 Hague Convention (whether or not the 2005 Hague Convention has effect in relation to the proceedings).

(2) On an application for any interim relief under subsection (1) the court may refuse to grant that relief if, in the opinion of the court, the fact that the court has no jurisdiction apart from this section in relation to the subject-matter of the proceedings in question makes it inexpedient for the court to grant it.’

The approach of the English court to an application under section 25 is to consider, first, if the facts would warrant the relief sought if the substantive proceedings were brought in England; and then, if so, whether the fact that the court has no jurisdiction apart from section 25 makes it inexpedient to grant the interim relief sought ( Refco Inc v Eastern Trading Co [1999] 1 Lloyd's Rep 159, 170–1).

The judge held that (1) the claimant had established a good arguable case on the merits of its claim, but (2) had failed to show a sufficient risk that the respondents would unjustifiably dissipate their assets. He held also that (3) it was ‘inexpedient’ to grant a freezing order in view of the absence of any connection with England and Wales, and (4) the freezing order should in any event be set aside as the claimant had failed in its duty of full and frank disclosure when making the without notice application to Mr Justice Lavender. Accordingly he set aside the freezing order as against the respondents. It remains in place against the other defendants, some of whom have jurisdiction challenges yet to be heard and who took no part in the application to set the order aside.

On appeal the claimant challenges each of the second, third and fourth of these conclusions and seeks to rely on evidence not available in the court below which has been obtained as a result of a search order in the Scottish proceedings. The 4 ^th and 9 ^th defendants (together described as ‘the HK defendants’ as they are represented by Howard Kennedy LLP) resist the appeal and the application to adduce new evidence, and contend by way of respondent's notice that the judge ought to have held that the claimant had no good arguable case on the merits. The 10 ^th defendant (‘VdHI’) was represented in the court below but has subsequently entered an insolvency procedure in Luxembourg and has taken no further part in the appeal.

The judge agreed to suspend the setting aside of the freezing order so as to give the claimant an opportunity to apply to this court for permission to appeal. That suspension was subsequently continued, first by Lord Justice Nugee and then by Lady Justice Andrews, who granted permission to appeal. The freezing order therefore remains in place until the termination of this appeal.

Background

I set out here a short summary of the background to this appeal. It is intended to enable the issues in this appeal to be understood, but is not anything like a full account of what are highly complex and contentious dealings. Needless to say, the true facts will be for the Scottish court to determine.

The claimant, Mex Group Worldwide Ltd, is a Hong Kong-based company. It is the holding company of a group of companies trading under the name of MultiBank. Its sole shareholder is Mr Naser Taher. The MultiBank companies provide trading platforms for investors dealing in derivatives and are authorised to provide financial services in 14 jurisdictions not including the United Kingdom.

The 4 ^th defendant, Mr Michael Gollits, is a German national resident in Germany. He is the CEO of the 9 ^th defendant, Von der Heydt & Co AG (‘VdH AG’), an investment management company registered and regulated in Germany. VdHI is a company registered and regulated in Luxembourg. It acts as the fund manager of UCITS (which stands for ‘undertaking for collective investment in transferable securities’) funds. There is a degree of common ownership between the two Von der Heydt companies. The ultimate beneficial owner of VdHI is Mr von Boetticher, who is also the 60% owner of VdH AG.

None of the respondents has any assets or presence in England or Wales, or for that matter in Scotland.

Other defendants include Mr Stewart Ford, Mr Colm Smith, and a Luxembourg company called CSM Securities Sarl (‘CSM’). Mr Ford and Mr Smith are longstanding personal friends and business associates.

Mr Ford has the unenviable distinction of having been fined £76 million by the Financial Conduct Authority and prohibited for life from being engaged in activities regulated by it. He appealed unsuccessfully against that determination, and was found by the Upper Tribunal to be a man whose ‘conduct demonstrated a consistent failure by him to act with integrity’, who ‘consciously and deliberately set aside his regulatory responsibilities in pursuit of entrepreneurial ambition’, whose ‘actions were driven by his desire to maximise and preserve financial gain for himself without regard for the impact this would have on investors’, and who had been guilty of ‘deliberate concealment … of material information … [which] itself demonstrates a clear lack of integrity’ ( Ford v Financial Conduct Authority [2018] UKUT 358 (TCC) at [645] to [647]). Mr Smith is an Irishman resident in Luxembourg.

The claimant's case is that although CSM is nominally owned and controlled by Mr Smith, it is in reality a joint venture between him, Mr Ford and Mr Gollits, and that the name ‘CSM’ represents the initials of their first names ( Colm, Stewart, Michael). This is denied by Mr Gollits, who says that ‘CSM’ stands for ‘Colm Smith Multi-Assets’ and that he has no interest in the company.

The claimant's case is that the defendants engaged in an unlawful means conspiracy to injure its interests by causing a company called Mex Securities Sarl (‘Mex Securities’) to renege on a lawful and binding agreement recorded in a Consent Order of the High Court of Justice of the British Virgin Islands dated 14 ^th December 2020. The Schedule to that Consent Order recited that the claimant had advanced funds to Mex Securities by way of loan and that the outstanding balance due was €36,385,509.52; and provided for this sum to be paid to the claimant, which it was. It provided also that the claimant would assign its claims against VdH AG to Mex Securities.

The ownership and control of Mex Securities is in dispute. The respondents say that it was owned and controlled by the claimant; the claimant denies this, saying that the company was under the control of Mr Smith.

The background to the Consent Order was that in December 2020 Mr Gollits sought on behalf of VdH AG to withdraw funds from Notes issued by Mex Securities. He did so on the ostensible ground that newly introduced regulations in Luxembourg meant that it had become unlawful for UCITS funds to trade in gold and precious metals, so that funds invested in this way had to be withdrawn. (In fact the regulations in question were not new but had been in place for some years). The claimant says that this was a breach of assurances previously given by VdH AG that funds would not be withdrawn from the Notes until their maturity, and gave rise to a claim against Mex Securities.

Between about 8 ^th and 16 ^th December 2020 there were negotiations in Dubai between Mr Naser Taher and Mr Colm Smith, acting on behalf of Mex Securities, in which a settlement...