Olympic Council of Asia v Novans Jets LLP
| Jurisdiction | England & Wales |
| Judge | Mr Justice Foxton |
| Judgment Date | 10 February 2023 |
| Neutral Citation | [2023] EWHC 276 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2019-000562 |
[2023] EWHC 276 (Comm)
Mr Justice Foxton
Case No: CL-2019-000562
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
COMMERCIAL COURT
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 Second Defendant did not appear.
Hearing dates: 30–31 January 2023.
Further written submissions: 1, 2 and 3 February 2023.
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HONOURABLE Mr Justice Foxton
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Friday 10 February 2023 at 10:15am.
The Honourable
This is the hearing of the Claimant's ( OCA's) application for the committal of the Second Defendant ( Investments) and the Third Defendant ( Mr Gringuz) for contempt of court.
The Background
These proceedings stem from an “Aircraft Lease to Purchase Agreement” ( “ALPA”) dated 31 August 2018 by which OCA agreed to charter an aircraft ( “Aircraft”) from the First Defendant ( Jets). The ALPA provided for a substantial upfront payment by OCA to Jets, a prescribed number of “block” hours for OCA's use, and a profit share agreement in relation to the use of the Aircraft by third parties outside of those “blocked” hours.
Following a dispute as to whether certain amounts were due from OCA to Jets, Jets purported to terminate the ALPA. OCA brought proceedings against Jets. There was a trial before Moulder J, and in January 2022 OCA obtained judgment for about US$7m, an order for costs of £350,000, and directions were given for the determination of the profit share claim. The order made following the trial ( the January Order) is important and it is necessary to say a little more about it:
i) Judgment was entered for OCA for damages in the amount of US$7,079,084.50, to be paid in 14 days.
ii) Judgment was also entered “for damages, alternatively an account” for payment of OCA's profit share. However, the material was not available at the trial to quantify this claim, with the result that the judgment was effectively one for damages to be assessed.
iii) Directions were provided for that assessment, which involved sequential submissions by OCA and Jets as to what the appropriate percentage share was, disclosure, the service of statements of case and, if necessary, a further hearing. In the usual way, the order provided for “Liberty to either party to apply to the Court to vary these directions and/or for further directions”.
iv) The disclosure directions were divided into disclosure of material relating to the period up to 31 December 2021, and disclosure of material relating to the period from 1 January 2022 to 31 December 2022.
v) Paragraph 2(b) provided:
“In relation to the period from 1 September 2018 to 31 December 2021, the Defendant do disclose to the Claimant within 21 days of the date of this order:
i) a consolidated flight report of all flights operated by the Aircraft for that period, to be categorised by: flight date, departure airport, arrival airport and block hours for each sector;
ii) a copy of the Aircraft logbook showing every flight operated during that period, including positioning flights or other non-revenue/private flights;
iii) the proposed net profit margin of each flight operated by the Aircraft during that period, with supporting documentation evidencing such profits.”
vi) Paragraph 2(e) provided:
“In relation to subsequent periods within 2022:
i) The Defendant to provide to the Claimant, on 28 July 2022 and 30 January 2023, the classes of documents set out in 2(b) above for the respective periods 20 January 2022 to 30 June 2022 and 1 July 2022 to 31 December 2022.”
vii) Provision was made for costs and interest.
Unsurprisingly, there was no penal notice on the January Order. This would have been wholly inappropriate.
Jets sought permission to appeal against the January Order, which was refused by Carr LJ. No amounts have been paid pursuant to the January Order, and in 7 July 2022 Jets went into liquidation.
On 18 March 2022 ( the March Order), Moulder J granted a worldwide freezing order against Jets. The March Order contained a penal notice stating:
“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.”
Paragraph 2 of the March Order contained the usual ancillary order requiring Jets to disclose its assets, and Mr Gringuz filed an affidavit in response to that order on 1 April 2022. That affidavit suggested that Jets had sold the Aircraft to one of its corporate members, Investments (I should record that the validity and efficacy of that transfer is disputed, but that is not a matter which arises for determination at this hearing). The return date for the worldwide freezing injunction granted by the March Order was 1 April 2022. At that hearing, Mrs Justice Moulder joined Investments to the proceedings. In addition to continuing the worldwide freezing order against Jets, she also made the order (on a without notice basis) against Investments ( the April Order).
The April Order also included an order for the provision of information as follows:
“(1) Unless paragraph 8(2) applies, the following must by 4.00pm (GMT) on Friday the 15th of April 2022 be provided to the Applicant's solicitors, from the First Respondent [Jets]:
i. an electronic copy of the final draft of the Asset Purchase Agreement dated 27 November 2020 between the First and Second Respondents (“APA”) with metadata, and any documents referred to in the APA;
ii. any information about any entity or entities which have been involved in chartering out the Aircraft for use since the ALPA was suspended, and the terms of such chartering including to which entity or entities the income from chartering has been paid or is payable;
iii. details of all directors, officers and shareholders of, and those with a controlling interest in, and the UBO of, the Respondents, Novans Aviation Ltd, Novans Jets OU, as well as a copy of all of those entities' most recent accounts;
iv. all of the information that was required to be provided under paragraph (2)(b) of the order of Moulder J dated 19 January 2022.
(2) If the provision of any of this information is likely to incriminate the First Respondent, he or it may be entitled to refuse to provide it but is recommended to take legal advice before refusing to provide the information. Wrongful refusal to provide the information is contempt of Court and may render the Respondent liable to be imprisoned, fined or have his or its assets seized.”
Pausing there, it will be noted that the information order in the April order addressed two distinct issues:
i) First, information relating to the validity of the sale transfer to Investments, and as to whether there had been any change in the beneficial ownership of the Aircraft, which bore directly on the issue of whether the Aircraft was an asset against which the judgment could be enforced: (i) and (iii).
ii) Second, information relevant to the profit share assessment which had been ordered by the January Order: (ii) and (iv) (albeit such information was also material which was relevant to the assets of Jets against which judgment could be enforced).
In seeking that disclosure order, Mr McLaren KC submitted:
“Then, at 26(e)(iii), my Lady will recall that you ordered disclosure to be provided in relation to third-party charters, including documentation and detail of profits. We would like that information to be provided under the ADO because the advantage is that it will come with a penal notice attached to it, assuming you extend the penal notice which is already applying to Mr Gringuz. That penal notice, if the information sought is extended, will apply to this information, and then noncompliance with that information of which they should be giving disclosure already could give rise to contempt proceedings. So, my Lady, that is para.26(e). I should point out that on that last point we suspect the only way we are ever going to get disclosure is under a penal notice carrying with it the threat of an application for contempt of court against Gringuz, because a conventional ‘unless’ order has simply no teeth or leverage in circumstances where the offending defendant already has an unappealable judgment against it.”
He repeated that submission in reply (“the advantage being … that it will be covered by a penal notice and that may well be the only leverage to get the defendant to respond”).
Those submissions recognised, in my assessment correctly, that breach of the obligations in the January Order were not capable, as matters stood, of supporting a committal application. The proposed order was resisted by Mr Ben Joseph for Jets, who submitted that “the WFO is not the proper forum for that request, still less in circumstances when that order was made on 19 January”.
Mrs Justice Moulder upheld Mr McLaren KC's submissions, for the following reasons:
“So dealing now with the Disclosure Order which is...
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