Olympic Council of Asia v Novans Jets LLP
| Jurisdiction | England & Wales |
| Judge | Mr Justice Butcher |
| Judgment Date | 16 November 2022 |
| Neutral Citation | [2022] EWHC 2910 (Comm) |
| Docket Number | Case No: CL-2019-000562 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 2910 (Comm)
THE HON Mr Justice Butcher
Case No: CL-2019-000562
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Michael McLaren KC and Deborah Horowitz (instructed by The Air Law Firm LLP) for the Claimant
John Kimbell KC and Vincent Scully (instructed by Bargate Murray Ltd) for the Third Defendant
The First and Second Defendants did not appear and were not represented
Hearing dates: 3 November 2022
Further written submissions: 4, 9 November 2022
Approved Judgment
I have to determine four preliminary issues in relation to an application which the Claimant (‘OCA’) has brought to commit the Second and Third Defendants for contempt. The issues have been raised by the Third Defendant (‘Mr Gringuz’), and he was the only Defendant represented at this hearing.
Background
The background to the present hearing may be shortly stated. In brief:
(1) OCA leased a Bombadier Global Express 5000 aircraft from the First Defendant (‘Jets’) under an agreement dated 31 August 2018. Under that agreement OCA was furnished with 1515 block hours ‘for priority usage’ of the aircraft from 1 October 2018 to 31 December 2022. The aircraft could be chartered by Jets to third parties when not in use by OCA, with net profits from such charters to be shared between Jets and OCA. OCA was required to make advance payments to Jets to cover block hours of use; and OCA paid the sum of US$9.675 million. A dispute arose, and Jets terminated the agreement, retaining all sums paid, including about US$7 million equal to the value of block hours that OCA had been entitled to use, but which it could not use due to the termination of its access to the aircraft.
(2) OCA commenced proceedings against Jets. OCA succeeded in its action. The judgment of Moulder J is [2022] EWHC 88 (Comm). Jets had been represented by Bargate Murray Ltd and by Mr Kimbell QC. By an order of Moulder J dated 19 January 2022 (‘the January order’), Jets was (1) ordered to pay to OCA the sums of US$7,537,923.10 by way of damages and interest, and £350,000 as an interim payment on account of costs; (2) required to file submissions as to the percentage share each of it and OCA should receive of the net profits from third party charters; and (3) required to disclose, for the period from 1 September 2018 to 31 December 2021, a consolidated flight report for the aircraft, a copy of the logbook showing those flights, and the proposed net profit margin of each flight operated by the aircraft during that period, with supporting documentation. Jets applied for permission to appeal, which was refused.
(3) Jets did not comply with the order. OCA sought, and obtained ex parte from Moulder J on 18 March 2022, a worldwide freezing order and an asset disclosure order against Jets (‘the March order’). The Penal Notice on the March order stated: ‘If you, Novans Jets LLP, disobey this order you (and Mr July Gringuz, a director of the said Novans Jets LLP) may be held to be in contempt of court and may be imprisoned, fined or have your assets seized. Any other person who knows of this order and does anything which helps or permits the Respondent to breach the terms of this order may also be held to be in contempt of court and may be imprisoned, fined or have their assets seized.’ The inclusion of Mr Gringuz was on the basis that he had described himself as such in evidence for the trial, and Moulder J had found that he had held the role of Managing Director (at [90]).
(4) Pursuant to the March order, OCA was served with a letter, sent on 25 March 2022, from Novans Aviation Ltd (‘Aviation’) in its capacity as one of Jets' Designated Members. The letter stated that Mr Gringuz was not a director of Jets; and further that Jets had a single asset exceeding £20,000 in value, namely a receivable due from the Second Defendant (‘Investments’) in accordance with an Asset Purchase Agreement dated 27 November 2020.
(5) As a result of that letter, OCA's solicitors sought to widen the freezing order to include the receivable referred to and to cover Jets, Investments and Aviation, and to include disclosure of the Asset Purchase Agreement, entities involved in chartering the aircraft and income streams from chartering.
(6) By an order dated 4 April 2022 (‘the April order’) Moulder J extended the freezing order to cover both Jets and Investments. Jets was ordered to provide an electronic copy of the Asset Purchase Agreement plus metadata and documents referred to in the Asset Purchase Agreement, information about entities involved in chartering the aircraft, and the terms of chartering, and details of the officers, shareholders and those who had a controlling interest in Jets or Aviation. The Penal Notice was directed to Jets and Investments, as well as having the usual provision referring to other persons who know about the order. Mr Gringuz was not referred to. This, as OCA says, is because of the letter of 25 March 2022.
(7) A petition for the voluntary winding up of Jets had been issued in March 2022. It was granted on 28 June 2022.
(8) In the meantime, on 5 May 2022, Moulder J made a further order (‘the May order’) whereby, inter alia, the freezing order was continued against Jets and Investments in respect of the receivable owing to Jets and the aircraft; and Investments was ordered to provide the same information that Jets had been ordered to provide under the April order to the extent that it was within its possession or control or knowledge. The Penal Notice was addressed to Jets and Investments, and to Mr Gringuz as a director of Investments.
(9) On 21 May 2022 Mr Gringuz swore his second Affidavit, in response to the April and May orders. It deposed that he could provide information about chartering entities only from 17 September 2018 to 29 November 2020, when the aircraft was sold to Investments. He stated that from 25 September 2018 to 11 March 2019 the only party which had use of the aircraft was OCA, and provided the flight log from September 2018 to December 2019. He said that he had sold Investments and had ceased acting for that company as of 31 March 2021, and that since he had ceased to act for Investments he could not provide a copy of that entity's most recent accounts. He said that he does not have a copy of the aircraft's logbook as it went with the aircraft when it was sold to Investments.
(10) On 2 September 2022 OCA obtained an extension of the freezing order against Jets and Investments as it had been due to expire on 18 September 2022.
The Contempt Application and the hearing of 5 October 2022
It is OCA's case that each of Jets and Investments has breached each of Moulder J's orders which was addressed to that Defendant, that Mr Gringuz was instrumental in Jets' breach of orders due to his controlling role and/or position as de facto director at Jets, and that each of Jets, Investments and Mr Gringuz is in contempt of court. On 20 July 2022 it issued a Contempt application against Investments and Mr Gringuz. It did not issue the application against Jets because, as it says, in circumstances where Jets was in liquidation and owed it a judgment debt, that would be contrary to its interests, as defending a contempt application would reduce Jets' funds.
A hearing of the Contempt application was fixed for 5 October 2022. Mr Gringuz raised a number of objections to the application against him, and also applied to adjourn the hearing on the basis that his leading counsel could not be present on 5 October 2022. The application came before me on that date. I made an order which, inter alia:
(1) Gave OCA permission to amend the Contempt application to provide further particulars of the contempt alleged in Box 12;
(2) Dispensed with personal service of the Contempt application on Mr Gringuz;
(3) Ordered that any issues as to (i) service out, (ii) alternative service, (iii) original service by email on Mr Gringuz of the January, April and May orders as good service for the purpose of these proceedings, and (iv) whether permission is needed for amended contempt proceedings to be brought, should be addressed at a further hearing fixed for 3 November 2022. Issues (i) and (ii) were to be treated as if an ex parte order for service out and alternative service had been made and the further hearing was to decide whether or not to set aside those orders, but without prejudice to what would otherwise have been the burden or standard of proof.
(4) Gave directions for the hearing fixed for 3 November 2022.
The Allegations of Contempt
Pursuant to the permission to amend Box 12 of the Contempt application which I had given on 5 October 2022, OCA served a Revised Summary of Facts alleged to constitute the contempt. This stated two counts, which may be briefly summarised as follows:
(1) As Count 1, (a) that Jets had breached the January, April and May orders by failing to disclose information in relation to the proposed net profit margin of each flight operated by the aircraft in the period up to at least 29 November 2020; (b) that Jets had breached the April and May orders by failing to provide information about the entities involved in chartering the aircraft up to at least 29 November 2020; and (c) that Jets had breached the January, April and May orders by failing to disclose a consolidated flight report of all flights operated by the aircraft for the period 30 November 2020 to 31 December 2021. It was further alleged that Mr Gringuz was liable for contempt for those breaches of orders on the bases that he was a de facto director of Jets, alternatively that he had wilfully interfered with the administration of justice by permitting Jets to act in contempt,...
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