Parvalorem v Ricardo Manuel Dos Santos Oliveira and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Warren |
| Judgment Date | 02 October 2013 |
| Neutral Citation | [2013] EWHC 4195 (Ch) |
| Docket Number | Claim No HC13D03930/2013 |
| Court | Chancery Division |
| Date | 02 October 2013 |
2013 EWHC 4195 (Ch).
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Court 31
Rolls Building
7 Rolls Building
Fetter Lane
London EC41 1NL
Mr Justice Warren
Claim No HC13D03930/2013
Mr Ben Valentin (instructed by Travers Smith) appeared on behalf of the Applicant.
Ms Louise Hutton (instructed by Allen & Overy) appeared on behalf of the Respondents.
Mr Alexander Pelling (instructed by Taylor Wessing) appeared on behalf of RM Auctions.
Wednesday 2nd October 2013
Approved Judgment.
(10.02 am)
. This is a return date of the application for a freezing order against three respondents. The first respondent, Ricardo Oliveira, is a Portuguese national. The second and third respondents are Portuguese companies. For present purposes I take it that the third respondent is controlled by the first respondent and that the second respondent is in turn under the control of and indeed it may be wholly owned by the third respondent. The first respondent is a director of both companies and effectively controls both of them.
On 6 September Mr Justice Sales granted a without notice freezing order over the assets of the respondents in the UK. It was largely in standard form, but omitted any exception for ordinary business expenses. It included an exception for ordinary living expenses of £5,000 per week and of legal expenses of £5,000 per week as well, with the usual requirement to tell the applicant's solicitors where money to be spent was coming from.
The application came before Mr Justice Hildyard on notice, when the parties agreed an adjournment to 30 September, when the matter came before me. The injunction was continued in the same form until then.
The freezing order was in a sum of over £27 million. It refers expressly to the proceeds of sale of an auction of a number of valuable classic cars, starting on 8 September in London, and the cars themselves, if any remained unsold. Excepted were the auctioneer's commission, VAT thereon, expenses and other charges payable to the auctioneer in respect of the auction. It was made clear that the freezing order was not to interfere with the auction itself.
The freezing order application was, according to the applicants, prompted by the obtaining in Lisbon of certain relief against the first respondent. He is subject to strongly contested criminal proceedings. In the context of those proceedings, Portuguese process allows for the bringing of a civil claim which runs together with the criminal claim, unless the Portuguese judge otherwise orders.
On 2 September the Portuguese court made a precautionary order on a without notice basis, ordering the seizure of certain of the first respondent's assets. It is not clear to me, or I think counsel, precisely what the effect of that order is in respect of the extent of assets involved. It does, however, include the cars and the proceeds of sale, which the judge considered formed part of the first respondent's assets. In that regard he would have been concerned only with Portuguese law, since he was dealing with Portuguese companies, and would not have been interested in where English law allows piercing or indeed lifting of the corporate veil.
That was so notwithstanding that the cars were legally in the ownership of the second respondent and notwithstanding that there may be doubt whether, were these English companies, it would be appropriate to pierce the corporate veil or even lift it to the extent required to invoke the Chabra jurisdiction.
There are not on foot substantive proceedings in England and Wales, nor are there intended to be. The application is made pursuant to the court's jurisdiction under section 25 of the Civil Jurisdiction and Judgments Act 1982 to grant ancillary interim relief to preserve assets in aid of foreign proceedings. The order of the Portuguese courts is not automatically enforceable here because it was made on a without notice application, nor could the applicants seek to have it registered.
On 16 September the first respondent filed an appeal against the Portuguese order. His legal representatives estimate that that appeal will not be heard for 6 to 8 months.
The auction was conducted on 8 September by specialist auctioneers, RM Auctions. Of 74 cars 67 have been sold, either at the auction or subsequently by the private treaty, as permitted by the freezing order.
Before the auction, RM Auctions were informed of Mr Justice Sales' order and were aware of the freezing order itself. RM Auctions, however, had already paid £4 million as an advance on the sale proceeds to the second respondent. There had been a dispute about the entitlement of the auctioneers to retain the £4 million free of the freezing order, but that has now been resolved and it is conceded that the £4 million can be deducted.
Following the asset disclosure obligations under the order of Mr Justice Sales, it is apparent that the first and third respondents have no assets in England and Wales, although they might in theory, I suppose, obtain such assets at some time in the future.
The only assets of the second respondent in the UK revealed in the affidavit are any unsold cars and the proceeds of sale of cars which had been sold. There was also a sum of money held in the client account of the respondents' solicitors. It is to be inferred, although this is not expressly stated in the asset disclosure affidavit, that the £4 million received by the second respondent is no longer in this jurisdiction.
Before me, the respondents do not challenge the continuation of the freezing orders over the assets in England and Wales. This is now restricted to the unsold cars and the net proceeds of sale, since the sum previously held in the client account has now all been spent.
No point has been taken that the expenditure of the whole of that money by the time the matter came before me was a breach of the freezing order, which allowed expenditure of £5,000 per week or a reasonable sum on legal costs.
The freezing order, it is agreed, will continue until determination of the first respondent's appeal in Portugal or further order. If he wins, the basis of the freezing order, it will be said, falls away so the freezing order will fall to be discharged. In contrast, if the first respondent loses his appeal the applicant says that the freezing order must stand with full force.
In agreeing to a continuation of the freezing order Miss Hutton, who appears for the respondents, emphasises that her clients are taking a practical and pragmatic stance pending the outcome of the Portuguese appeal. She does not accept that the applicant is actually entitled to a freezing order at all. However, for the purposes of this application before me the respondents must, I consider, be taken to accept by reason of their submission to a freezing order that there is a risk of dissipation of the assets and that the applicants have a good arguable case in Portugal.
If that were not so I would need, in resolving the disputes about the terms of the order, to decide whether the applicant is entitled to a freezing order in the first place, which is precisely what this concession is designed to avoid at this stage of the proceedings; before the Portuguese appeal is decided.
There are a number of authorities which I have been referred to and which inform the debate and which I should refer to briefly. They are all extremely well known. Were I giving this judgment at more leisure I might deal with them rather more fully and analytically but I should mention the important points. The first is the well known decision of Mr Justice Robert Goff as he then was in A v C [1981] 1 QB 961. He said:
"But in the end the question at issue between the parties was reduced to one point, which was as follows. There was evidence before the court that the defendants were likely to incur substantial costs in the forthcoming proceedings; and they therefore applied, invoking the principle stated in Iraqi Ministry of Defence v Arcepey Shipping Co. S.A. [1981] Q.B. 65 for release of money to pay those costs. But no evidence whatsoever was placed before the court concerning any other assets of the defendants making the application; it was not therefore possible for the court to assess whether any other assets of these defendants were available to pay the costs or, if they were available, why the defendants were seeking to make use of the assets which were subject to the Mareva injunction for this purpose. I had therefore to consider whether it would be proper for the court, in such circumstances, to accede to the defendants' application."
"In Iraqi Ministry of Defence v Arcepey Shipping Co. S.A. [1981] Q.B. 65, 70 it was said that:
'the fundamental purpose of the Mareva injunction is to prevent foreign parties from causing assets to be removed from the jurisdiction in order to avoid the risk of having to satisfy any judgment which may be entered against them in pending proceedings in this country.'
"From that statement of principle, of course the word 'foreign' has now to be deleted, having regard to subsequent developments. However, it was also stated in the same case that:
'it does not follow that, having established the injunction, the court should not thereafter permit a qualification to it to allow a transfer of assets by the defendant if the defendant satisfies the court that he requires the money for a purpose which does not conflict with the policy underlying the Mareva injunction.'
"In that case, the court did permit the release of money in order to make certain payments bona fide in the ordinary course of business. However; that was a case where the fund which was the...
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