Tonstate Group Ltd ((in Liquidation)) v Edward Wojakovski
| Jurisdiction | England & Wales |
| Judge | Mr Justice Edwin Johnson |
| Judgment Date | 05 December 2023 |
| Neutral Citation | [2023] EWHC 3119 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim Number: BL-2018-000544 |
[2023] EWHC 3119 (Ch)
Mr Justice Edwin Johnson
Claim Number: BL-2018-000544
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Rolls Building
7 Rolls Buildings
Fetter Lane
London, EC4A 1NL
Andrew Fulton KC and Sam Goodman (instructed by Rechtschaffen Law) for the Claimants
Rupert Bowers KC and Claire Overman (instructed by Cobleys Solicitors Limited) for the Defendant
Hearing date: 19 th October 2023
Remote hand-down: This judgment was handed down remotely at 10.30am on Tuesday, 5 th December 2023 by circulation to the parties and their representatives by email and by release to the National Archives.
Introduction
This is my reserved judgment upon the trial of a contempt application. By the application the Claimants in this action seek an order for the committal of the Defendant in this action, Mr Edward Wojakovski, to prison. The application was made by application notice issued on 6 th July 2021. It will be noted immediately that the application has taken a quite extraordinary amount of time to come to a substantive hearing.
The grounds of the application ( “the Contempt Application”) are that the Defendant is guilty of multiple and serious contempts of court, comprising failures to comply with four court orders and knowingly making false statements in a witness statement and in an affidavit. The alleged acts of contempt of court are set out in more detail in a table attached to the application notice. Depending upon how one classifies the alleged acts of contempt in the table, the alleged acts of contempt fall under five or six separate heads.
The allegation of breaches of one of the orders of the court is now formally admitted by the Defendant. The Claimants' case is that these particular breaches had already been the subject of a binding admission. The remainder of the allegations are disputed by the Defendant.
The hearing of the Contempt Application was originally listed to be heard before me on 20 th July 2023 ( “the July 2023 Hearing”). The July 2023 Hearing had to be adjourned however, after I was informed by leading counsel for the Defendant that she and junior counsel representing the Defendant were obliged to withdraw from acting for the Defendant, for reasons which leading counsel was not at liberty to disclose. This left the Defendant without legal representation at the July 2023 Hearing. For the reasons which I set out in a judgment which I delivered at the July 2023 Hearing, I reached the reluctant conclusion that the hearing of the Contempt Application, already long delayed, would have to be adjourned. The Contempt Application came back before me for determination on 19 th October 2023. I will refer to this hearing, that is to say the substantive hearing/trial of the Contempt Application, as “the Trial”.
The Claimants were represented at the Trial by Andrew Fulton KC and Sam Goodman, counsel, as they were at the July 2023 Hearing. The Defendant was represented at the Trial by Rupert Bowers KC and Claire Overman, counsel. For the avoidance of doubt, I should add that Mr Bowers and Ms Overman are new counsel. They did not appear for the Defendant at the July 2023 Hearing.
No witness was called to give oral evidence at the Trial, although a number of affidavits were filed in connection with the Contempt Application. I will need to come back to the affidavit evidence later in this judgment. There was a substantial bundle of documents prepared for the Trial. I also had the benefit of skeleton arguments from counsel, in addition to their oral submissions at the Trial. Following the Trial I received further written submissions and accompanying additional authorities on evidential issues which had arisen in the course of the Trial.
Given that this is a contempt application I would much prefer to have delivered a judgment immediately following the Trial, without having to leave the parties and, in particular, the Defendant, in a state of suspense. Unfortunately, and while this was not the fault of any party, the volume of material and argument which I had to consider, including the subsequent submissions and additional authorities, precluded this course. The result is this reserved judgment, which has been produced as soon as has been practicable.
Relevant background
The background to the Contempt Application is lengthy and complex litigation involving the Tonstate group of companies, the Defendant and various other parties. For present purposes however, I can state this background fairly briefly.
The first three Claimants are companies in the Tonstate group of companies. All three are in members' voluntary liquidation. The Tonstate Group is a group of companies which have been involved in the property investment business for over a quarter of a century. The Defendant is a former director of the Claimant companies. The Fourth Claimant is Mr Matyas. The Defendant was formerly married to the Fourth Claimant's daughter. The entire group became effectively deadlocked, as a result of a dispute between the Defendant, who was the beneficial owner of 50% of the Group, and the Fourth Claimant who was, with his wife, the beneficial owner of the other 50% of the Group.
In relation to what I have said about beneficial ownership, I should add that, in a separate action, the Fourth Claimant and his wife sought the rescission of transfers of shares in the First Claimant which they had made to the Defendant. I understand that this separate action ( “the Shares Action”) was settled, on 20 th May 2020, on terms that the Defendant's shares in the First Claimant were transferred to the Fourth Claimant, his wife and their daughter, with the Defendant retaining 22,500 of these shares.
It is common ground that both the Fourth Claimant and the Defendant had, for some years prior to this action, been extracting funds from the Tonstate Group without lawful authorisation. This action ( BL-2018-000544) was commenced as a derivative action, against the Defendant and a number of other parties as additional defendants. In this action, which I will refer to as “the Main Action”, the First to Third Claimant companies sought the return of the monies unlawfully extracted from them by the Defendant. The Defendant was therefore, strictly speaking, the First Defendant in the Main Action but, for the purposes of this judgment, it is convenient to refer to Mr Wojakovski simply as the Defendant. The Fourth Claimant is a party to the Main Action by reason of his prior status as a derivative claimant, advancing claims on behalf of the previously deadlocked companies. There were also additional claims made in the Main Action. I understand that these additional claims were also settled on 20 th May 2020.
In addition to the Main Action, and the Shares Action, the Defendant commenced an action of his own, by unfair prejudice petition, seeking various forms of relief against the Fourth Claimant and Mrs Matyas and other entities in the Tonstate Group. I will refer to this third action as “the Petition”. I will use the expression “the Actions” to refer collectively to these three actions.
On 20 th November 2019 Zacaroli J made an order striking out parts of the Defence filed by the Defendant in the Main Action and, consequent upon that strike out, ordered that judgment should be entered against the Defendant in relation to what were referred to as the Transactional Payments, which I understand to have been a reference to the sums wrongfully extracted from the First to Third Claimants by the Defendant. The Defendant was ordered to pay the sum of £12,994,642.43 to the Claimants. The Defendant was also ordered to give an account of what he had done with the monies extracted from the Claimant companies and whether he had extracted monies from any other company in the Tonstate Group.
The order for payment was subject to a temporary stay, pending a case management conference. The case management conference was held on 16 th January 2020, consequent upon which Zacaroli J made the first of the four orders in the Main Action with which I am concerned in the Contempt Application. By paragraph 3 of the order of 16 th January 2020 the stay on the earlier order of 20 th November 2019, for payment of the judgment sum of £12,994,642.43 and any other sum due on the account to be given by the Defendant, was extended to 4.00pm on 31 st March 2020. As from that time the judgment debt and any other sum due on the account were stated to be immediately payable.
By paragraph 4 of the order of 16 th January 2020 Zacaroli J also directed that the Claimant companies had a proprietary interest in the judgment debt and its traceable proceeds, which were held by the Defendant on trust for the Claimant companies.
As part of the same order of 16 th January 2020, the Fourth Claimant, Mr Matyas, consented to an order that he should give an account in the same terms as the account which the Defendant was ordered to give. The Fourth Claimant also agreed to pay to the Claimant companies the sum of £3,215,469.75 and any other sum found to be due on the account which he was ordered to give.
The Defendant has not paid the judgment debt of £12,994,642.43. A relevant point to make in this context is that the Defendant was made bankrupt, on 15 th August 2020, on the petition of a Mrs Rachel Robertson, who had been joined as an additional defendant to the Petition. The Claimant companies however have a proprietary interest in the monies comprising this judgment debt; see paragraph 4 of the order of 16 th January 2020. I will refer to these monies, being monies...
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