Tonstate Group Ltd ((in Liquidation)) v Edward Wojakovski & 11 Ors

Hearing date: 22 January 2025

Approved Judgment

This judgment was handed down in court at 11.30am on Thursday 20 March 2025 and by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Introduction

This is an application for the committal of Gil Wojakowski (“ Gil”) for contempt of Court.

The charge of contempt is that Gil has failed to comply with paragraph 3 of my Order made at a hearing on 10 April 2024 (“ the Order”). This was a Bankers Trust type Order. Paragraph 3 required Gil to provide certain categories of information and documents. Nothing has been supplied in response.

A particular issue arises about service of the Order on Gil. This raises a point of general importance. I will address it below, before going on to consider the question of contempt and, if the contempt is made out, the question of sanction.

To begin with, however, I will set out some brief background. More detail is set out in my earlier Judgment of 26 April 2024 ( [2024] EWHC 975 (Ch) – “ the Bankers Trust Judgment”).

Background

The wider background involves a fraud perpetrated on the Tonstate Group of companies, the present Claimants. The fraud involved the unlawful extraction of funds by Edward Wojakovski (“ Edward”), who is Gil's brother. These have come to be known as “ the Extractions”. Many millions of pounds remain unaccounted for.

The Bankers Trust application heard on 10 April 2024 was issued and served in December 2023. Gil initially acted in person. He submitted two initial witness statements in response on 26 February and 29 March 2024, but these were put forward expressly on the basis that Gil intended to contest the jurisdiction. Fieldfisher LLP were instructed to act just before the hearing, and filed a Notice of Change on 8 April 2024, giving their business address as the address for service for Gil. A Skeleton Argument and further witness statement submitted immediately prior to the hearing also reserved Gil's position as to jurisdiction.

The Claimants' application was based on the proposition that the Extractions or their proceeds had found their way into (i) an Israeli trust, and/or (ii) bank accounts outside Israel held in the name of Edward and Gil's father, now deceased, Mr Gideon Wojakovski.

The Israeli trust is formally known as the “ Wojakovski Brothers Trust”, but I will refer to it simply as “ the Trust”. It was established under the joint will of Gideon Wojakovski and his wife, now sadly also deceased, Miriam Wojakovski (“ the Will”). Gil is the executor of the Will and the Trustee of the Trust. The Trust assets are understood to include the beneficial interest in a BVI company, Maxima Holdings Limited (“ Maxima”).

At the hearing on 10 April 2024 I accepted the Claimants' case that there was evidence of the filtering of Extractions via Maxima; that there was evidence of Edward relying on inherited monies to disguise the destination of the Extractions; that there was evidence of a commingling of the proceeds of Extractions with family monies, said to have been derived from Edward's father Gideon; and also that there was evidence of Gil being involved in the use of funds derived from the Extractions (see the Bankers Trust Judgment at [27]). Taking account of such matters, I made the Order sought by the Claimants. I will set out the relevant terms of the Order below (see at [43]).

Gil is an Israeli citizen and is resident in Israel. The Court though had personal jurisdiction over him on the basis that, as a director of an English company, Keystone MHD (General Partnership) Limited (“ Keystone”), he had registered an English service address with Companies House under s.1140 Companies Act 2006. By the time of the hearing on 10 April 2024, Gil had in fact changed his service address to an address in Israel: but that was too late to make a difference, because the Bankers Trust application was served on him at the English address on 15 December 2023, before the change was notified.

There was further activity by Gil at around the time of the hearing on 10 April 2024. As well as being a director of Keystone, Gil was also a shareholder. But at some point on or around 10 April, he transferred his shareholding interest to a friend, Mr Tuvia Lewkowicz. The Claimants have now issued proceedings under s.423 of the Insolvency Act 1986, challenging the transfer to Mr Lewkowicz as a transaction with a view to defrauding creditors (“ the s.423 Claim”). I gave permission for service out of the s.423 Claim at a hearing on 14 May 2024. It is now being defended on the merits. Gil has instructed solicitors and counsel and has filed a Defence dated 9 January 2025.

Service

The 10 April 2024 Hearing

The hearing of the Bankers Trust application on 10 April 2024 took a slightly unusual course. Part way through the hearing, after I had indicated my view that the English Court had personal jurisdiction over Gil for the reasons given above, he instructed his solicitor and counsel team — Fieldfisher and Ms Karishma Vora — to play no further part in the hearing. They, and he, remained as observers, but did not participate further. As recorded in the Bankers Trust Judgment at [12], this was because of a concern that, by continuing actively to participate, Gil might then be submitting to the jurisdiction in a manner which might prejudice his position as regards recognition and enforcement of any resulting Order in Israel. The hearing nonetheless proceeded, and at its conclusion, I indicated that I would make the Order sought, with reasons to follow (those are the reasons set out in the Bankers Trust Judgment, delivered on 26 April 2024). At the request of Mr Fulton KC, counsel for the Claimants, the Order contained the following provision at para. 6:

“Personal service upon the Second Respondent [Gil] is dispensed with under CPR 81.4(c) and service of this Order upon the Second Respondent may be effected through service upon Fieldfisher”.

I should mention that the reference to CPR, rule 81.4(c) was an error: the Order should have referred to rule 81.4(2)(c). Nothing at all turns on that, however.

and 12 April 2024

The Order was drawn up and formally sealed on the following day, 11 April 2024. The events of 11 April were again a little unusual, however, and give rise to the issue about service I have referred to.

The main point is that at 10.26am on the morning of 11 April, before the Order had been finally drawn up and sealed for service, Gil sent to the Claimants' solicitor Mr Rechtschaffen a Notice of Change, saying that Fieldfisher had ceased to act for him, and that he was now acting in person. He gave an address for service in Israel.

The Order was sealed by the Court and provided to the Claimants for service later the same day, 11 April 2024, at approximately 4.25pm. At 8.50pm on 11 April a sealed version of the Order was sent by the Claimants to Fieldfisher by way of service by email. A further copy was also sent to Fieldfisher by courier.

Gil objected. In an email sent to the Court on the morning of the following day, 12 April 2024, he said:

“Despite their knowledge [of the Notice of Change], it appears that the honourable court was misled by applicants' counsel and requested that the court issue its order to Fieldfisher LLP law firm who does not represent me and is not authorized to receive any documents on my behalf.”

Later Events

To complete the picture, I should mention two further matters. First, the Claimants sent a further copy of the sealed Order by email to Gil on 15 April 2024, to a professional email address used by him to correspond both with the Claimants and the Court. Second, shortly after that Fieldfisher made their own application to come off the record as solicitors for Gil. That was by Application Notice dated 23 April 2024. I granted that application by my Order dated 26 April 2024.

Was Service on Fieldfisher Valid Service?

Given this background, the issue which arises is whether service of the Order on Fieldfisher was valid service, given that by the time such service was effected, Gil had both instructed his solicitors and counsel team to withdraw from representing him at the hearing on 10 April 2024, and had then filed his Notice of Change, giving his alternative address for service in Israel.

The Claimants submit that service on Fieldfisher was valid service, essentially because Gil's Notice of Change was defective in failing to give an alternative address for service within the jurisdiction, so that Fieldfisher's business address remained a valid address for service by default. If that is wrong, then the Claimants submit that the Court should exercise its power under CPR, rule 6.15(2), and retrospectively validate the service on Fieldfisher and declare it as effective service, because there is “ good reason” to do so under CPR, rule 6.15(2).

Although I originally had some doubts on this point (referenced in my further Judgment of 20 May 2024: see [2024] EWHC 1196 (Ch) at [4] and [20]), I have come to the view that service on Fieldfisher on the evening of 11 April 2024 was valid service. If that is wrong, then I agree with the Claimants that the proper approach would be to validate...