Michael Ward and Others v Katharine Anne Savill
| Jurisdiction | England & Wales |
| Judge | Sir Julian Flaux C,Lady Justice Elisabeth Laing,Lord Justice Warby |
| Judgment Date | 14 May 2021 |
| Neutral Citation | [2021] EWCA Civ 1378 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2020/1378 |
| Date | 14 May 2021 |
[2021] EWCA Civ 1378
Sir Julian Flaux CHANCELLOR OF THE HIGH COURT
Lady Justice Elisabeth Laing
and
Lord Justice Warby
Case No: A3/2020/1378
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
MR ROBIN VOS SITTING AS A DEPUTY HIGH COURT JUDGE
Royal Courts of Justice
Strand, London, WC2A 2LL
Alan Steinfeld QC and Hugh Miall (instructed by Morgan Rose Solicitors) for the Appellants
James Mather (instructed by Kingsley Napley LLP) for the Respondent
Hearing dates: 23 and 24 March 2021
Approved Judgment
Factual and procedural background
The issue on this appeal is whether the appellants can rely upon a declaratory judgment granted to them in earlier proceedings (“the 2015 proceedings”), to which the respondent was not a party, to found claims against her in the present proceedings. The appellants appeal, with the permission of the judge, against the order dated 6 July 2020 of Mr Robin Vos, sitting as a Deputy High Court Judge, made upon the trial of a preliminary issue determining that preliminary issue in favour of the respondent defendant.
The appellant claimants are 65 individuals who invested in total £18,429,009 in film development schemes each of which operated through an English limited liability partnership (LLP). The investment in each case involved paying a sum of money to the relevant LLP. The promoters of the schemes were the respondent's husband Charlie Savill and two other individuals.
The appellants allege that they were fraudulently induced to transfer the funds on the basis that they would be used as part of legitimate film development schemes, whereas the funds were not so used, but were diverted through a complex network of offshore entities for the benefit of the three promoters.
In 2015, therefore, the appellants and other investors in two other film schemes operated by separate LLPs but promoted by the same individuals, brought the 2015 proceedings in the Commercial Court against the three promoters and the four LLPs (“the original seven defendants”). The appellants and the other claimants in those proceedings are referred to hereafter as “the 2015 claimants”. In those proceedings, the 2015 claimants claimed damages in deceit and unlawful means conspiracy, as well as declarations relating to their beneficial ownership of the funds invested in the LLPs and their right to trace into property held by the original seven defendants.
The 2015 proceedings were delayed because of the criminal prosecution of the three promoters. They were convicted of conspiracy to cheat the public revenue in May 2016 and were sentenced to 9 years' imprisonment. Extensions of time were granted to serve the 2015 proceedings on the original seven defendants and the proceedings were eventually served on 3 January 2017. Defences were due by 13 March 2017 but none of the original seven defendants served a defence.
In June 2017, the 2015 claimants made an application in the 2015 proceedings, amongst other things, to join additional corporate entities and various individuals (including the current respondent) as defendants and to amend the particulars of claim. The case which the 2015 claimants sought to advance against the respondent was the same case as advanced against her in the present proceedings, namely that her London property, 118 Elgin Crescent, of which the respondent is the sole registered proprietor, represents the traceable proceeds of sums beneficially owned by the appellants by reason of the alleged fraud. The 2015 claimants proposed to seek against the proposed additional defendants the same declaratory relief as was already sought against the original seven defendants.
In July 2017, the 2015 claimants applied for a worldwide freezing order against, amongst others, the respondent, to prevent her dealing with her London property.
On 16 February 2018, the 2015 claimants issued an application in the 2015 proceedings for default judgment against the original seven defendants. That application and the applications for joinder of defendants and amendment of the particulars and for a worldwide freezing order were all listed to be heard by Butcher J on 26 and 27 March 2018.
On 19 March 2018, the respondent served brief evidence in opposition to the two applications being made against her, namely the application for a worldwide freezing order and the application to join her as a defendant to the 2015 proceedings. The respondent accepted, in the light of her husband's conviction, that a fraud had been committed, but said she had no knowledge of the matters alleged and still did not properly understand what it was that her husband and others were alleged to have done. The respondent did not know or suspect that the monies used to purchase the London property were monies to which she or her husband may not have been entitled. She indicated that she opposed joinder on the basis that it would unfairly deprive her of a defence under section 21(3) of the Limitation Act 1980 to which she contended that the proposed claim against her in respect of her London property was subject.
The 2015 claimants evidently did not wish to fight out the issue of limitation at that stage, so on 26 March 2018, a consent order was entered into between them and the respondent in relation to the two applications to which she was a party, which provided that permission to add her as a defendant was refused and no order was made against her in respect of the application for the worldwide freezing order. The respondent agreed to provide certain information to the 2015 claimants and gave undertakings not to deal with the London property. The 2015 claimants gave cross-undertakings, including:
“In any future proceedings, [Mrs Savill] shall be permitted to raise any argument in those future proceedings that she could have raised in the current proceedings had she been joined to the current proceedings.”
That consent order was approved by Butcher J at the hearing on 26 March 2018 and, in consequence, he heard only from counsel for the 2015 claimants at the hearing, the additional corporate defendants who were joined being neither present nor represented.
At the outset of his ex tempore judgment ( [2018] EWHC 995 (Comm)), Butcher J noted that the 2015 claimants had served voluminous evidence in support of their case that they had been defrauded. He then summarised that case. The judge then allowed the joinder of defendants (other than the respondent) and amendments to the particulars of claim which sought against the proposed new defendants the same declaratory relief as regards beneficial ownership and tracing as already sought against the original seven defendants.
Butcher J went on to deal with the default judgment application at [53] to [59] of his judgment, where he stated, so far as presently relevant:
“53. The next application which is made is for default judgment against the First to Seventh Defendants. Specifically, the Claimants make two applications, first in respect of their money claim for unlawful means conspiracy in the sum of £33,049,495, as well as a claim for interest and costs. Secondly, they make an application for default judgment for declaratory relief in respect of the Claimants' proprietary claim.
…
55. In relation to the default judgment on the damages claim, this raises no difficulties. This is the type of claim in respect of which default judgment may be obtained by request. Accordingly, there must be default judgment for the principal sum of £33,049,495…
56. The other claim in respect of which a default judgment is sought is the Claimants' claim for declaratory relief. What is sought against the First to Seventh Defendants is a default judgment for declarations in the terms set out in the application…
57. I was reminded that the Courts have traditionally been cautious about granting declarations of right on admissions or in default of the pleadings. However, the Courts have been prepared to grant declarations where not to do so would deny a claimant the fullest justice to which he or she is entitled…
58. I consider that the declaratory relief sought in respect of their asserted equitable rights is necessary in order to allow the Claimants to trace into property in the hands of the Defendants or which represent the Claimants' property or proceeds. Without a declaration, the Claimants could not pursue proprietary relief. Therefore, it seems to me a declaration is needed in order to do the Claimants the fullest justice to which they are, on their unopposed case, entitled. Furthermore, in the present case, and where it appears that the principal Defendants will not participate and will not defend the proceedings, there seems to be no good reason for not proceeding to make the declarations sought now. It is unclear what purpose will be served by waiting, as the non-participation of the First to Seventh Defendants seems unlikely to change.
59. The nature of the declarations sought is such that they do not seek to specify particular property into which the Claimants are entitled to trace. The questions of whether there is property into which the Claimants can trace and, if so what it is, remain at large.”
Butcher J made an Order granting the following declarations (hereafter referred to as “the Butcher Declarations”):
“IT IS DECLARED THAT:
1. Each of the Claimants was induced to invest into the Schemes (as defined in the Particulars of Claim dated 10 February 2017) by reason of the fraudulent misrepresentation of one or more of the Defendants.
2. Each of the Claimants has or retains a beneficial interest in the monies paid to one or more of the Fourth to Seventh Defendants...
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