Michael Wilson & “Partners” Ltd v John Forster Emmott
| Jurisdiction | England & Wales |
| Judge | Lord Justice Gross,Lord Justice Peter Jackson,Lady Justice Rose |
| Judgment Date | 26 February 2019 |
| Neutral Citation | [2019] EWCA Civ 219 |
| Docket Number | Case No: A4/2017/1964 |
| Court | Court of Appeal (Civil Division) |
| Date | 26 February 2019 |
[2019] EWCA Civ 219
Lord Justice Gross
Lord Justice Peter Jackson
and
Lady Justice Rose
Case No: A4/2017/1964
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Sir Jeremy Cooke
Claims No. CL-2013-000625 & 2014-000916
Royal Courts of Justice
Strand, London, WC2A 2LL
Brian Doctor QC (instructed directly by Michael Wilson “and Partners” Ltd) for the Appellant
Philip Shepherd QC (instructed by Kerman & Co LLP) for the Respondent
Hearing dates: 5th and 6th February 2019
Approved Judgment
INTRODUCTION
This appeal concerns the removal of the “ Angel Bell” exception for payments in the ordinary course of business (“the exception”) from a post-judgment Mareva (or freezing) injunction.
On 5 December 2014, HHJ Mackie QC granted the Respondent (“Mr Emmott”) a freezing injunction (“the Mareva”) against the Appellant (“MWP”) in the terms there set out. Para. 13(2) of that order contained the exception in standard form, namely, that MWP was not prohibited from “…dealing with or disposing of any of its assets in the ordinary and proper course of business”.
By his judgment and order dated 13 July 2017 (“the judgment” and “the order” respectively), Sir Jeremy Cooke, inter alia, removed the exception. Para. 4 of the order provided as follows:
“The exception in paragraph 13(2) of the Freezing Order that formerly did not prohibit the Respondent from dealing with or disposing of any assets in the ordinary and proper course of its business is hereby deleted so that the MWP is not permitted to deal with or dispose of any of its assets as defined in paragraph 9 of the Freezing Order up to the values set out in paragraph 2 hereof.”
MWP appeals, with permission, from that decision, to this Court.
Only the briefest of reference needs to be made to the seemingly interminable, unhappy, background saga.
MWP is an entity incorporated in the British Virgin Islands (“the BVI”). At all material times it has practised as a law firm and business consultancy with its headquarters in Kazakhstan. The ultimate beneficial owner and controller of MWP is Mr Wilson who is, or was, an English solicitor.
Mr Emmott, whether or not he still practises as such (it matters not), is an Australian and English qualified solicitor.
The dispute has its origins in an agreement dated 7 December 2001 (“the Emmott agreement”), made between Mr Emmott and MWP. The Emmott agreement was intended to create a “quasi-partnership” between Mr Emmott and Mr Wilson. Mr Emmott was to receive a 33% shareholding in MWP, while Mr Wilson was to retain a 67% shareholding (via a corporate vehicle). The Emmott agreement was governed by English law and contained a London arbitration clause.
On 20 December 2005, Mr Emmott entered into a secret agreement with two other MWP employees, Messrs. Nicholls and Slater, providing for the establishment of a rival business (“the Temujin Partnership”). Ultimately, Mr Emmott, Mr Nicholls and Mr Slater left MWP to work at the Temujin partnership.
Litigation ensued in several jurisdictions, including Australia, New Zealand, the Bahamas, the BVI and this jurisdiction – and has continued to this day. We were told that, aside from the matter before us, there are some 9 sets of proceedings current in the English court and litigation is continuing in New South Wales, the BVI and New Zealand. We have little doubt that the costs by now comfortably exceed any amounts in dispute.
The present appeal has its origins in the London arbitration proceedings. By their Second Interim Award (“the SIA”), dated 19 February 2010, the arbitrators (Mr Berry, Lord Millett, Ms Davies) found, in summary, that Mr Emmott had satisfied the conditions for obtaining his 33% shareholding in MWP. On the other hand, he had been guilty of deliberate, serious and dishonest breaches of his fiduciary obligations to MWP. By their Third Award (Quantum) (“the TQA”), dated 5 September 2014, the arbitrators held that the quantum of the former outweighed the latter. The upshot was that MWP was ordered to pay Mr Emmott approximately £3.2 million and US$841,000.
Pausing here, the flavour of the dispute and the arbitrators' overall view of the principal protagonists appears from their trenchant observations at paras. 1 and 2 of the SIA:
“1. It has to be recorded at the outset of this Award, that we found neither Mr Wilson nor Mr Emmott to be witnesses on whom we could rely. On any showing Mr Wilson was truculent and evasive…..Clearly he nurses a deep sense of grievance against Mr Emmott for the conduct of which he now complains and, no doubt, for the vast expense he has incurred in various jurisdictions, and in these proceedings, in pursuit of his case. However, it is clear to us that he is unwilling even to consider that there may have been explanations which might have allayed some of his suspicions about Mr Emmott's conduct. He was always prepared to assume a dishonest motive in any activity undertaken by Mr Emmott or others associated with him, some of whom MWP is now suing in various proceedings elsewhere. The over-statement of his own case, to the extent that certain of his evidence was simply unbelievable, made his evidence unsatisfactory and unreliable.
2. By the same token Mr Emmott's evidence revealed….that he is a person willing to produce false, backdated, documents, that is to say forgeries, and to mislead his family trustee/bankers. He admitted in the course of his evidence that at the very least he had been less than frank with his quasi partner Mr Wilson and that he had produced wholly bogus invoices to mislead auditors and/or tax authorities. His conduct in relation to MWP at times can only be described as disgraceful.”
In the event, MWP did not honour the award and the Mareva was made in aid of enforcement. At the time, the TQA was still subject to challenge and, as already indicated, the Mareva contained the exception. Other terms of note included the following. By para. 7, MWP was restrained from: (1) removing from England and Wales any of his assets within the jurisdiction up to the value of £3,909,613 plus US$841, 213; and (2) disposing of, dealing with or diminishing the value of any of his assets whether within or outside the jurisdiction up to the same value. By para. 9, the Mareva applied “in particular” to a wide range of assets — including bank accounts in London, bank accounts in the Channel Islands, accounts in New South Wales, bank accounts in Almaty (Kazakhstan), together with shares, warrants and securities in a particular company, a sum held by the Court Funds Office, various sums that might be payable to MWP by way of costs orders and fees received or due to MWP.
In addition to the ( Angel Bell) exception, there were other exceptions to the Mareva. Para. 13(1) provided an exception for spending “a reasonable sum” on legal advice and representation, subject to a requirement that MWP tell Mr Emmott's legal representatives where the money was to come from, before any such spending.
Para. 13(4) provided that the Mareva “will cease to have effect” if MWP provided security in the amount of the assets frozen into court or making other provision for security agreed with Mr Emmott's representatives.
Subsequently, by his order dated 26 June 2015, Burton J, inter alia, dismissed MWP's various challenges to and appeals against the TQA and gave leave to Mr Emmott to enforce the TQA “in the same manner as a Judgement or Order of this Court”. Judgment was entered against MWP in the terms of the TQA and an application by MWP for a stay of enforcement of the TQA was dismissed.
THE JUDGMENT AND THE ORDER UNDER APPEAL
The judgment: In an ex tempore judgment, Sir Jeremy Cooke (at [7]) deprecated the extensive witness statements with which he had been faced “…much of which contain material that is irrelevant, repetitive and highly argumentative and prejudicial.” What was extraordinary about the material in the witness statements was (at [8]) “the ability on the part of Mr Wilson in particular, to state that black is white”. Additionally, the “distortions of the truth as to what has and has not been decided elsewhere are quite extraordinary”.
As to the TQA, the Judge observed (at [15]) that:
“…following every possible effort to have that award set aside by one means or another, the end of the road was finally reached for domestic purposes on 19 May 2016 when the Supreme Court dismissed the petition for permission to appeal from an order of Burton J and the Court of Appeal's refusal to permit an appeal from it. It could not by any stretch of the imagination be suggested following 19 May 2016 that the awards were not binding. Furthermore, on 26 May 2015, leave was given by Burton J to enforce the award as a judgment of the court, and that too stands as such. There is, therefore, both a binding award and a binding judgment of the court now in place.”
As to the Angel Bell exception, the Judge took the view (at [19]) that this was a “clear case” for its removal. His reasons centred on the authorities, questions of principle and the particular facts of the case. He went on:
“There is, as Mr Shepherd QC has submitted, a difference between a freezing injunction granted before and after judgment. Once liability has been established, the freezing injunction is in place to facilitate enforcement of that liability which has been established whereas before judgment it is there to avoid the dissipation of assets where there is a good arguable case before liability has been established. It is, as Mr Doctor QC says, not a remedy of execution in itself. It is, however, there to facilitate execution.”
This was a case, as the Judge underlined (at [20]), “where...
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