Yukong Line Ltd of Korea v Rendsburg Investments Corporation of Liberia (The Rialto) (Injunctive Relief)

JurisdictionEngland & Wales
JudgePOTTER LJ,LADY JUSTICE HALE,LORD JUSTICE THORPE
Judgment Date21 December 2000
Judgment citation (vLex)[2000] EWCA Civ J1221-24
Docket Numbercase No: A3/2000/0318 QBCMI
CourtCourt of Appeal (Civil Division)
Date21 December 2000
Yukong Line Limited (S.K. Shipping Limited)
Claimant/Respondent
and
Rendsburg Investments Corporation
Defendants
Ladidi Investment Corporation Of Liberia
Dimitrios Nicholas Yamviras
Val Investments Inc.
Third Defendant Appellant
Den Norske Bank A/s

[2000] EWCA Civ J1221-24

Before :

Lord Justice Thorpe

Lord Justice Potter and

Lady Justice Hale

case No: A3/2000/0318 QBCMI

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION (MR JUSTICE AIKENS)

Royal Courts of Justice

Strand, London, WC2A 2LL

Michael Collins QC and David Joseph Esq (instructed by Ince & Co) for the Claimant) Steven Gee QC and Stavros Haidemenos Esq (instructed by Shaw and Croft) for the 3 rd Defendant/Appellant)

POTTER LJ

INTRODUCTION

1

This is an appeal by the third defendant ("Mr Yamvrias) against paragraphs 1 and 2 of an order made by Aikens J, sealed on 9 th December 1999 whereby he dismissed Mr Yamvrias' application by summons dated 14 th July 1998 for an inquiry as to damages which Mr Yamvrias may have suffered as a result of injunctive relief obtained by the claimant ("Yukong") pursuant to its cross-undertaking in damages given to the court when Yukong obtained an injunction on 17 th October 1997 ordering the first defendant ("Rendsburg") to pay the sum of US$ 244,965 into court and further ordered the continuation of a freezing order previously made against Mr Yamvrias in the sum of US$ 245,000 until such payment–in or until further order ("the October 1997 Order"). Aikens J also ordered that Mr Yamvrias pay the claimant's costs of the application before him.

2

The matter has a complicated procedural history which it is necessary to set out in order fully to understand and consider the arguments.

THE PROCEDURAL HISTORY

3

Yukong originally claimed against Rendsburg only. Rendsburg, as disponent owners of the vessel called "Rialto" had entered into a three year time charter for the vessel in July 1995, repudiating it before the vessel was due to be delivered under the charter in early 1996. The repudiation took the form of a telex of 23rd January 1996 sent by Rendsburg's broker, Marcan Shipping (London) Limited ("Marcan"), of which Mr Yamvrias is a director, which telex stated that Rendsburg was 'unable' to perform the charterparty. Following Rendsburg's failure to respond to requests confirming that it would perform the charterparty, Yukong accepted Rendsburg's repudiation by a telex of 1 st February 1996 and terminated the charterparty.

4

On 2 nd February 1996 Yukong issued a writ claiming damages of over US$ 2.3 million for wrongful repudiation of the charterparty and, on the same date, obtained Mareva relief against Rendsburg from Colman J who ordered that Rendsburg must not remove assets from England and Wales totalling US$ 3.35 million. The usual cross-undertaking in damages was given by Yukong.

5

On 7 th June 1996, Waller J varied the form of the original Mareva order against Rendsburg and granted Mareva relief against Mr Yamvrias, on giving leave to Yukong to join him as third defendant in the action. The amended Points of Claim set out two claims against Mr Yamvrias personally: (i) that in signing the charterparty he had acted as undisclosed principal of Rendsburg so that he incurred personal liability under the charter and was thus liable in damages for its repudiation; (ii) that Rendsburg, the second defendant and Mr Yamvrias had together conspired to injure Yukong by removing funds in the amount of US$ 245,614.29 from an account of Rendsburg with Den Norske Bank ("DNB") shortly before Rendsburg's telex of repudiation. US$ 164,799 of the funds were transferred to the second defendants ("Ladidi") which Mr Yamvrias also controlled. It was asserted that Mr Yamvrias had put the funds to his own use and that the predominant purpose of such removal was to ensure that there would be no funds against which Yukong could enforce a judgement against Rendsburg. It was also alleged that the conspiracy was to remove the funds by 'unlawful means' namely breach of Mr Yamvrias fiduciary duty as a 'shadow director' of Rendsburg.

6

The amended form of Mareva order made against Rendsburg reduced the sum enjoined to US$ 2.79 million and the further Mareva order against Mr Yamvrias enjoined him from removing assets up to US$ 2.79 million from the jurisdiction. He was also ordered to disclose information relating to his assets. The cross-undertaking in damages was in the usual form. Yukong as plaintiff undertook to the court:

"If the Court later finds this Order has caused loss to the Defendants and decides that the Defendants should be compensated for that loss, the Plaintiffs will comply with any Order the court may make"

7

The fourth defendant ("VAL") and DNB were added as parties on 20 th June 1996 and were also made the subject of Mareva relief.

8

On 27 th June 1996, Moore-Bick J tried a preliminary issue as between Yukong and Rendsburg as to whether Rendsburg's actions amounted to a repudiatory breach of the charterparty. He held that Rendsburg had repudiated the charterparty and that Yukong had not subsequently confirmed it. Yukong did not go on to obtain a judgment for damages against Rendsburg as it wished to pursue its claims against Mr Yamvrias before deciding whether to attempt enforcement against Rendsburg.

9

The trial of the claims against Mr Yamvrias took place before Toulson J in July 1997. By a judgment dated 23 rd September 1997, reported at [1998] 1 Lloyd's Rep 322, Toulson J dismissed the claims against Mr Yamvrias. He held that Mr Yamvrias had signed the charterparty simply as a director of the brokers, Marcan, and not as the undisclosed principal of Rendsburg. So far as the conspiracy claim was concerned, he held that at all relevant times Mr Yamvrias exercised control over Rendsburg and Ladidi, he being the 'alter ego' of both companies in which the ultimate beneficial interest belonged to him and his wife (and possibly his family). He also held there was a conspiracy to transfer Rendsburg's credit balance with the DNB for the purpose of putting assets beyond the reach of Yukong's litigation which seemed likely to arise. However, he went on to hold that the predominant purpose of the conspiracy was not to injure Yukong but to promote Mr Yamvrias' own interests and that, although there had been a conspiracy by unlawful means to which Mr Yamvrias was a party, in that he had ordered the transfer of the funds of Rendsburg in breach of his fiduciary duties to that company, this did not found an action for conspiracy by Yukong, to whom Mr Yamvrias owed no direct fiduciary duty.

10

In the course of his judgment, Toulson J made various findings against Mr Yamvrias, who had elected not to give evidence at the trial despite the fact that, as Toulson J put it, 'a large number of questions cried out to be answered by him'. Toulson J inferred that the reason why he did not do so was that:

"Either he was unwilling to perjure himself in the witness box and believed that if he were to tell the truth it would be detrimental to his cause, or else he did not believe that his case would withstand his being cross-examined on it."

11

Finally, Toulson J suggested that, as Mr Yamvrias controlled Rendsburg and had organised disposal of its funds for his own benefit:

"…. he would presumably have been in a position on behalf of the company to get back from himself that which he had caused to be paid for his benefit"

and went on to observe that:

"… in an appropriate case it might be within the scope of the court's Mareva jurisdiction to require a company, and its only effective officer, to do just that".

Subsequently, on 23 rd September 1997, when hearing argument as to the costs of the action and the form of order to be made, Toulson J refused to make an order for costs in favour of Mr Yamvrias on the grounds that his conduct had been:

"… disreputable and devious, not only in relation to the events which gave rise to Yukong's claim, but, more significantly, in the action itself".

On 24 th September 1997 he ordered that the freezing order granted against Mr Yamvrias on 7 th June 1996 remain in force for the reduced sum of US$ 245,000 pending a further application by the claimant.

12

By summons dated 29 th September 1997, Yukong applied for the following relief:

"1. The Order dated 2 February 1996 …. be varied so that the First Defendant and the Third Defendant do restore to the First Defendant, at a specifically designated bank account in London … the sum of US$ 245,614.29, or alternatively US$ 164,799 removed from the First Defendant's bank account in London in January 1996; and

2

There be no inquiry as to damages to the third Defendant."

13

On 1 st October 1997 Toulson J heard and gave judgment on that application. So far as Rendsburg was concerned, he was referred to a number of authorities on the court's Mareva jurisdiction and held that he had jurisdiction to order a company (Rendsburg) to return money to its own bank account and that he could also order that this be done by its director and controlling mind, Mr Yamvrias.

14

Toulson J was also asked to continue the Mareva order against Mr Yamvrias personally, an application which had found no place in the summons of 29 th September. In that respect he stated:

"Finally there is the matter of the Mareva order against Mr Yamvrias and his possible application for an inquiry as to damages against Yukong. As to the injunction itself, I have not had argument about this, but as at present advised, it seems to me that if a court had known the full facts now known at the time the original order was made, a Mareva order would have been made...

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