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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Yuzu Hair & Beauty Ltd v Selvathiraviam [2019] EWHC 772 (Ch) (13 February 2019) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2019/772.html Cite as: [2019] EWHC 772 (Ch) |
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BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
INTERIM APPLICATIONS COURT
Fetter Lane London, EC4A 1NL |
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B e f o r e :
____________________
(In Private) | ||
YUZU HAIR & BEAUTY LIMITED (Dissolved) | Applicant | |
-v- | ||
AKILAN SELVATHIRAVIAM | Respondent |
____________________
____________________
Crown Copyright ©
If this Transcript is to be reported or published, there is a requirement to ensure that no reporting restriction will be breached. This is particularly important in relation to any case involving a sexual offence, where the victim is guaranteed lifetime anonymity (Sexual Offences (Amendment) Act 1992), or where an order has been made in relation to a young person
This Transcript is Crown Copyright. It may not be reproduced in whole or in part other than in accordance with relevant licence or with the express consent of the Authority. All rights are reserved
MR JUSTICE ZACAROLI:
" ... it is now well established that [freezing] orders may also be made against persons in relation to whom the claimant asserts no cause of action and seeks no money judgment, but in relation to whom there is an arguable case that assets held in their name or under their control are in truth beneficially owned by the defendant against whom the claim is made ..."
Then he noted at para.15 that a creditors' petition, although often referred to as an enforcement process, does not seek a money judgment.
"If successful, it merely brings into existence a statutory scheme for the getting in and distribution of the company's assets among its stakeholders, of whom the petitioner is no more than a member of a particular class, namely an unsecured creditor. But in my judgment the particular nature of the relief sought by means of the presentation of a creditors' winding up petition does not disable the petitioner from asserting that it is pursuing a cause of action for the purpose of conferring jurisdiction upon the court to grant appropriate interim relief, whether by way of freezing order or otherwise."
After a review of further authorities, including a decision of the High Court of Australia, in Cardile v LED Builders PTY Limited [1999] 198 CLR 380, Briggs J concluded that the jurisdiction in relation to petitioners was not confined to cases where the third party was alleged to hold assets belonging beneficially to the company but included a case where the third party owed money to the company. He concluded as follows at para.41:
"First, that the time has come for the English Courts to recognise, consistently with the carefully considered conclusion of the High Court of Australia, that the jurisdiction to grant freezing orders against third parties is not rigidly restricted by the Chabra requirement to show that, at the time when the order is sought, the third party is already holding or in control of assets beneficially owned by the defendant. However attractive that test is as a bright and focused boundary-line, it does not seem to me to accord with the dictates of justice and commonsense. To take a simple example, it would operate so as to distinguish between a case in which the third party misappropriated an asset of the defendant and held on to it and a case in which in otherwise identical circumstances the third party misappropriated the asset and dissipated it. It makes no sense that the first of those third parties should be amenable to the freezing order jurisdiction whereas the second, however separately wealthy, should not. In both cases the defendant or its officeholder would have an equally viable restitutionary personal claim, the frustration of which by yet further asset dissipation by the third party would in turn detract from the efficacy of any order for the winding up or bankruptcy of the defendant and from any prior judgment for which winding up or bankruptcy was a means of enforcement."
In para.43, therefore, he concluded:
"It follows that with all the misgivings attendant upon the opening of a potential Pandora's box, I reject the submission that the court had no jurisdiction to grant the freezing orders against the respondents in this case, or to continue them pending the appointment of a liquidator of [the defendant]."
"(1) Where the High Court ... has given or made a judgment or order directing a person to execute any conveyance, contract or other document ... if that person -
(a) neglects or refuses to comply with the judgment or order; or
(b) cannot after reasonable inquiry be found, the court may, on such terms and conditions, if any, as may be just, order that the conveyance, contract or other document shall be executed, or that the negotiable instrument shall be indorsed, by such person as the court may nominate for that purpose."
"Bearing in mind we are exercising a jurisdiction which is statutory, and which is expressed in terms of considerable width, it seems to me that the court should not shrink, if it is of opinion that an injunction is necessary for the proper protection of a party to the action, from granting relief, notwithstanding it may, in its terms, be of a novel character.
The position here appears to be this: first, so far as the first defendant is concerned, one asks what harm will this order do him? If he says it will cause him some embarrassment or hardship, he can apply to the High Court forthwith, on evidence, to ask that it be varied or, if necessary, discharged. He has therefore an opportunity, if it imposes hardship on him, of establishing that very quickly before a court.
I turn next to the position from the point of view of the plaintiffs. If the first defendant, on the service of Walton J's order requiring disclosure of the information to which I have referred, declines to give that information, or is not frank in the answers which he gives, then if he leaves the United Kingdom, the plaintiffs are at risk that they will be unable to obtain that information. It appears to be doubtful, at any rate, whether the first defendant has in fact a permanent residence in this country.
In the circumstances which I have mentioned of the first defendant failing to provide answers to the matters referred to in the order of Walton J, or on his failure to be frank in the answers which he gave, it is open to the plaintiffs to seek an order for cross-examination; and the first defendant, if he remains within the jurisdiction, could be compelled to attend for that purpose. If, however, he has left the jurisdiction, then in those circumstances the order would be frustrated.
Therefore it seems to me that the court is faced with a situation in which there is a risk to the plaintiffs that they may not obtain the information ordered to be disclosed, unless the order which is now sought is granted; while, at the same time, any risk of hardship to the first defendant is dealt with by his capacity to apply to a judge to vary or discharge the order.
For the reasons which I have indicated, therefore, I would be prepared to grant the order which counsel for the plaintiffs now seeks; that is to say, an injunction restraining the first defendant from leaving the jurisdiction, and secondly, that he deliver up his passports. The orders are, in my view, in Jessel MR's words, 'necessary and reasonable orders which are ancillary to the due performance of the Court's functions'. Cumming-Bruce LJ in House of Spring Gardens Ltd v Waite (1985) 11 FSR 173 at 183 emphasised the power and duty of the court (in relation to a case where an order had been made that the defendants identify their assets and disclose their whereabouts) to take 'such steps ... as will enable the order to have effect as completely and successfully as the powers of the court can procure'.
The time during which the first of those orders should run should, and counsel for the plaintiffs accepts this, be of very limited duration. It is an interference with the liberty of the subject, so that the period should be no longer than is necessary to enable the plaintiffs to serve the Mareva and Anton Piller orders which they have obtained, and endeavour to obtain from the defendant the information which is referred to in those orders.
Counsel for the plaintiffs therefore propose, and I would accept, that in the first of the proposed orders a period of two days should be inserted, so that it will read: 'The first defendant be restrained until after two days or further order in the meantime ...'
For the reasons which I have indicated, I would allow the appeal and include in the order the two further paragraphs which I have indicated."