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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Elektromotive Group Ltd v Pan [2012] EWHC 2742 (QB) (18 October 2012) URL: https://www.bailii.org/ew/cases/EWHC/QB/2012/2742.html Cite as: [2012] EWHC 2742 (QB) |
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
![]() ![]() (A Singaporean Company) |
Claimant |
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- and - |
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Christopher Pan |
Defendant |
____________________
Mr Tiran Nersessian (instructed by Rollingsons Solicitors Limited) for the Defendant
Hearing dates: 2, 3, 4 October 2012
____________________
Crown Copyright ©
Mr Justice Eder:
Introduction
Background
a. An order dated 14 February 2011 for £218,400 was sent by a Philippine company named Philab Industries Inc ("Philab") for software licences, in circumstances where Philab had neither interest in the software nor the ability to pay for it and was given assurancess by the conspirators that it would be put in funds in order to pay the invoice. The invoice remains unpaid. Philab is owned by the family of Mr Navasero.
b. Services being provided by H Technologies (UK) Limited ("H Technologies") and Grand Prix Design Services Limited ("Grand Prix Design"), two companies in substance owned and to a greater or lesser extent controlled by Messrs Simmons and Earle, both directors and shareholders of EUK, and Vendors. EUK had made payment for those services. In order to satisfy those considering the accounts of EUK, letters were fraudulently obtained from those companies waiving the invoices. No repayments were made and in the circumstances the "waivers" were a fiction.
"4. As Chris resided overseas, I handled most of the Calypso Capital's projects in Singapore and executed everything that Chris asked me to do including in relation to the prospective deal involving shares in EUK and The Lexicon Group Ltd. Whilst I was the lead manager of Calypso Capital's projects in Singapore, from time to time when I travelled out of Singapore, Chris would handle these projects in my absence.
5. In relation to the EUK deal, I managed all documentation up till the signing of the Sales and Purchase Agreement ("SPA") on or about 6 December 2010 as well as all documentation relating to the completion of the transaction on or about 19 July 2011. In the SPA, the vendors and Chris (through CHIL) warranted that the Net Profit After Tax ("NPAT") of EUK for the financial year 2010 would be above the sum of £459,498. Chris and his wife, Aslinda Daim, were signatories of the SPA and its related agreements. I did not sign the SPA nor any related agreements nor am I a party to the SPA or any related agreements.
6. Prior to the completion of the transaction, it became clear that EUK would be unable to achieve the NPAT that had been warranted by the Vendors under the SPA. If this happened the Vendors would stand to receive significantly less for their stake in EUK which they were selling to the Lexicon Group Ltd. Chris asked me to fix the matter and find a solution.
7. In this regard sometime in January/February 2011 at a meeting in London where all the Vendors were present, Chris requested that I find an entity to which EUK could enter into a sales/distributorship agreement. In effect, Chris wanted me to create a sham transaction with the intention of inflating the NPAT of EUK.
8. In response to Chris' instructions that I fix the NPAT, I suggested to him at this meeting in London, amongst other things, that Philab Industries Inc ("Philab"), a company in Philippines owned by my family, could place an order for software sold by EUK. Chris recommended to all the Vendors who were present at this meeting in London that they should proceed with the sale to Philab of software amounting to approximately £218,400 to cover the potential shortfall in the NPAT. I felt uncomfortable about this arrangement due to the size of the transaction and informed Chris and the Vendors that Philab would not have the necessary resources to pay for such a large order of software. Chris then took me aside and told me that he would take care of it and arrange for the necessary fund to be extended to Philab to enable Philab to pay for the software ordered. Chris informed me that these funds were to have come from the consideration the Vendors would have received under the SPA. Consequently, Philab placed a purchase order for 6 units of EB Connect Server Licences and 12 units of EB Connect Application Licences in the sum of £218,400 and signed a distributorship agreement."
a. EGL does not have a good arguable case;
b. material nondisclosure/misrepresentation by EGL;
c. no risk of dissipation;
d. inadequacy of EGL's cross undertaking; and
e. in all the circumstances not just and convenient.
General Principles
a. The applicant must, at least show a "good arguable case" which means "more than barely capable of serious argument, but not necessarily one which the judge considers would have a better than 50 per cent chance of success": see per Mustill J in The Niedersachsen [1983] 2 Lloyd's Rep 600 (at p605A).
b. A good arguable case was the minimum that a claimant had to show to cross the threshold for the exercise of the jurisdiction: The Niedersachsen [1983] 1 WLR 1412 where Kerr LJ emphasised that the Court had to look at the evidence as a whole in deciding whether or not it is just an convenient to exercise the discretion (at p1417C-F); and that the freezing order jurisdiction cannot be invoked to provide claimants with security for their claim even where the claim appears likely to succeed (at p1422C-D).
c. When assessing whether there is a good arguable case the Court should be especially mindful of the particular scrutiny applied by the courts to serious allegations of fraud and the courts' approach generally to considering serious allegations including those of fraud: see Owens Ban v Etoile Commercial [1995] 1 WLR 44 (at p51B-C) and Re H [1996] AC 563 (at p586D-H). Ludsin Overseas Ltd v Eco3 Capital Ltd [2012] EWHC 1980 (Ch) (at para 51).
d. There is a high duty on the applicant. Thus, as appears from RW Technologies Ltd v Gibbs [2002] C.P. Rep. 40 (at p26 line 15 to p27 line 12):
i. The duty on the applicant in such circumstances goes beyond merely identifying points of defence which might be taken against them, important though that is;
ii. The applicant has to show the utmost good faith, identify the crucial points for and against the application and not rely on general statements and the mere exhibiting of numerous documents;
iii. The applicant has to investigate the nature of the claim asserted and the facts relied on before applying, and has to identify any likely defences. He has to disclose all facts which reasonably could or would be taken into account by the Court. The duty is not restricted to matters of fact, but extends to matters of law;
iv. The applicant also has a duty to investigate the facts and fairly to present the evidence;
v. There is a high duty to draw the Court's attention to significant factual, legal and procedural aspects of the case;
vi. Full disclosure has to be linked with fair presentation. The judge has to have complete confidence in the thoroughness and the objectivity of those presenting the case for the applicant; and
vii. It is the undoubted duty of counsel to draw to the judge's attention weaknesses in his case and to make sure the judge understands what might be said on the other side even if the judge says he has read the papers (see p29, line 6).
e. In considering whether there has been any relevant non-disclosure and what consequences should follow, the relevant principles are as set out in Brinks Mat v Elcombe [1988] 3 All ER 188, Ralph Gibson LJ set out the following principles to be applied:
"(i) The duty of the applicant is to make 'a full and fair disclosure of all the material facts': see R v Kensington Income Tax Comrs, ex p Princess Edmond de Polignac [1917] 1 KB 486 at 514 per Scrutton LJ.
(ii) The material facts are those which it is material for the judge to know in dealing with the application as made; materiality is to be decided by the Court and not by the assessment of the applicant or his legal advisers: see the Kensington Income Tax Comrs case [1917] 1 KB 486 at 504 per Lord Cozens-Hardy MR, citing Dalglish v Jarvie (1850) 2 Mac & G 231 at 238, 42 ER 89 at 92, and Thermax Ltd v Schott Industrial Glass Ltd [1981] FSR 289 at 295 per Browne-Wilkinson J.
(iii) The applicant must make proper inquiries before making the application: see Bank Mellat v Nikpour [1985] FSR 87. The duty of disclosure therefore applies not only to material facts known to the applicant but also to any additional facts which he would have known if he had made such inquiries.
(iv) The extent of the inquiries which will be held to be proper, and therefore necessary, must depend on all the circumstances of the case including (a) the nature of the case which the applicant is making when he makes the application, (b) the order for which application is made and the probable effect of the order on the defendant: see, for example, the examination by Scott J of the possible effect of an Anton Piller order in Columbia Picture Industries Inc v Robinson [1986] 3 All ER 338, [1987] Ch 38, and (c) the degree of legitimate urgency and the time available for the making of inquiries: see Bank Mellat v Nikpour [1985] FSR 87 at 92–93 per Slade LJ.
(v) If material non-disclosure is established the Court will be 'astute to ensure that a plaintiff who obtains … an ex parte injunction without full disclosure is deprived of any advantage he may have derived by that breach of duty … ': see Bank Mellat v Nikpour (at 91) per Donaldson LJ, citing Warrington LJ in the Kensington Income Tax Comrs case.
(vi) Whether the fact not disclosed is of sufficient materiality to justify or require immediate discharge of the order without examination of the merits depends on the importance of the fact to the issues which were to be decided by the judge on the application. The answer to the question whether the non-disclosure was innocent, in the sense that the fact was not known to the applicant or that its relevance was not perceived, is an important consideration but not decisive by reason of the duty on the applicant to make all proper inquiries and to give careful consideration to the case being presented.
(vii) Finally 'it is not for every omission that the injunction will be automatically discharged. A locus poenitentiae may sometimes be afforded': see Bank Mellat v Nikpour [1985] FSR 87 at 90 per Lord Denning MR. The Court has a discretion, notwithstanding proof of material non-disclosure which justifies or requires the immediate discharge of the ex parte order, nevertheless to continue the order, or to make a new order on terms:
'… when the whole of the facts, including that of the original non-disclosure, are before it, [the Court] may well grant such a second injunction if the original non-disclosure was innocent and if an injunction could properly be granted even had the facts been disclosed.'
(See Lloyds Bowmaker Ltd v Britannia Arrow Holdings plc (Lavens, third party) [1988] 3 All ER 178 at 183 per Glidewell LJ.)"
f. In the same case, Slade LJ said:
"Nevertheless, the nature of the principle, as I see it, is essentially penal and in its application the practical realities of any case before the Court cannot be overlooked. By their very nature, ex parte applications usually necessitate the giving and taking of instructions and the preparation of the requisite drafts in some haste. Particularly in heavy commercial cases, the borderline between material facts and non-material facts may be a somewhat uncertain one. While in no way discounting the heavy duty of candour and care which falls on persons making ex parte applications, I do not think the application of the principle should be carried to extreme lengths. In one or two other recent cases coming before this Court, I have suspected signs of a growing tendency on the part of some litigants against whom ex parte injunctions have been granted, or of their legal advisers, to rush to the R v Kensington Income Tax Comrs principle as a tabula in naufragio, alleging material non-disclosure on sometimes rather slender grounds, as representing substantially the only hope of obtaining the discharge of injunctions in cases where there is little hope of doing so on the substantial merits of the case or on the balance of convenience."
g. If a non-disclosure has taken place the degree of culpability is relevant as is the relevance of the non-disclosure. It may in the circumstances be disproportionate to discharge a freezing injunction notwithstanding a material non-disclosure (TCF v Bilgin [2004] EWHC 2732 (Comm)).
h. As to delay in making the application, the relevant principles and considerations are to be found in three cases viz:
i. Arena Corporation Ltd v Peter Schroeder [2003] EWHC] 1089 (Ch) at paragraph 213 in particular at sub-paragraphs (5) and (6) where the Deputy Judge stated as follows:
"(5) The Court should assess the importance and significance to the outcome of the application for an injunction of the matters which were not disclosed to the Court. In making this assessment, the fact that the judge might have made the order anyway is of little if any importance.
(6) The Court can weigh the merits of the plaintiff's claim, but should not conduct a simple balancing exercise in which the strength of the plaintiff's case is allowed to undermine the policy objective of the principle."
ii. Fiona Trust Holding Corporation v Privalov & Ors [2007] EWHC 217 (Comm) where David Steel J stated as follows:
"69. There is no doubt that the fact of the failure to make an earlier application against Mr. Skarga is a material consideration vis a vis the application against him. There are in this context two particular considerations:
a) The delay clearly raises the question whether the Claimant really needs an injunction pending trial: in short the delay may give rise to the provisional conclusion that the risk of secretion had already accrued.
b) Nonetheless, the applicant is entitled to take up time in making reasonable enquiries prior to launching an application, the more so where the nature of his case is based on fraudulent or dishonest activity (see Grupo Torras v Al-Sabah, C/A, 16 February 1994): the fact that thereafter the application is made inter partes is scarcely prejudicial to the respondent.
70. Furthermore it has to be borne in mind that the rationale for a freezing order is not so much the risk of dissipation as such, but the risk that a judgment in favour of Claimants would remain unsatisfied either because of dissipation or secretion or dispersal: see Mercedes Benz AG v. Leiduck [1996] AC 284. I accept that delay is potentially a significant discretionary consideration but much depends on the individual facts of each case.
71. Furthermore it strikes me that the Claimants are quite properly focusing on the requirements in the draft orders for disclosure by Mr Skarga and Mr Nikitin of their assets. In practical terms, the world-wide freezing order is ancillary to the disclosure order: see Grupo Torras v Al – Sabah, ante."
iii. Cherney v Neuman [2009] EWHC 1743 (Ch) at paragraph 77 where HH Judge Waksman summarised certain general points that may be made about delay in the context of freezing orders and stated at sub-paragraph 5 as follows:
"(5) In such circumstances, the direct consequences of delay may be two-fold:
(a) If a delay at this stage is prolonged and there is no justification for it, it can amount to evidence that the claimant does not genuinely believe that there is a real risk of dissipation which requires to be safeguarded against by an injunction – or that the factors said to demonstrate such a risk are not as persuasive as they first appear;
(b) But also, if in truth there was a real risk of dissipation, a fortiori that risk has been present since at least the issue of proceedings and would have been likely to materialise in the form of actual dissipation or secretion at any time thereafter. There is no reason why, on this hypothesis, the defendant should wait before dissipating or only dissipate once he has notice of the application for an injunction. And in any event even if he was not spurred into action before the making of the application the dissipation could be completed before that application was heard. If so, any injunctive relief then to be granted is likely to be pointless and therefore unjustified. Of course it could be argued (and has been argued by Mr Jones here) that an applicant in this position would simply have to accept that if some or most of the assets have already been dissipated or secreted the protection now available to him is much diminished but that he should still be entitled to freeze what he can, as it were. That was an argument which found favour with Staughton LJ in Galadari (supra) though this formed no part of his decision. No doubt much will turn on the facts of each case, including the nature of the defendant's likely assets, but in my view, the Court should be wary of acceding to arguments of this kind when, on the face of things, the necessity for or usefulness of the freezing injunction now being sought is speculative at best…"
i. As to risk of dissipation, the applicable principles are usefully set out by Arnold J in VTB Capital Plc v Nutritek International Corp and ors [2011] EWHC 3107 (Ch) at paragraphs 227-230. In particular, the relevant principles drawn from the various authorities are as follows:
i. As stated above, the Court must conclude on the whole evidence before it that the refusal of a freezing order would involve a real risk that the judgment would remain unsatisfied: The Niedersachsen [1983] 1 WLR 1412 (at 1422H). In Z Ltd v A-Z [1982] QB 558 (at 585A-G), Kerr LJ held that one particular form of abuse of this basic jurisdictional principle was as follows:
"The increasingly common one, as I believe, of a Mareva injunction being applied for and granted in circumstances in which there may be no real danger of the defendant dissipating his assets to make himself 'judgment-proof'; where it may be invoked, almost as a matter of course, by a plaintiff in order to obtain security in advance for any judgment which he may obtain; and where its real effect is to exert pressure on the defendant to settle the action."
ii. Bare assertions that a defendant is likely to put assets beyond the claimant's grasp and is unlikely to honour any judgment or award are not enough of themselves. Exiguousness of the claimant's evidence on this aspect must weigh strongly when the Court comes to consider the matter inter partes on an application to discharge: The Niedersachsen (above) (at 1419H-1420B).
iii. There must be solid evidence of the risk of dissipation: Thane v Tomlinson [2003] EWCA Civ 1272 (at para 21).
iv. The mere reliance on the alleged dishonesty of the defendant is not of itself sufficient to found a risk of dissipation. It is appropriate in each case for the Court to scrutinise with care whether what is alleged to have been the dishonesty of the person against whom the order is sought in itself really justifies the inference that that person has assets which he is likely to dissipate (Thane (above) at para 28).
Good Arguable Case
"16. In about late 2010 or early 2011 one or more meetings were held within the United Kingdom at which the Defendant, the Vendors (or one or more of them) and Mr Navasero were present. One of the subjects discussed at one or more of those meetings was an anticipation that the NPAT for the year to 28 February 2011 would fall significantly short of £459,498.
17. At around the time of that meeting or meetings, whether in the course of the meeting or meetings or otherwise, the Defendant asked Mr Navasero to address this issue. Mr Navasero informed the Defendant, and possibly others of the Vendors, around the time of and/or at the meeting or meetings that it would be possible for Philab to place an order for software, and the Defendant proposed that there should be a sale of software to Philab in the sum of £218,400 which would cover the potential shortfall in the NPAT.
18. Mr Navasero expressed concern that Philab would not have sufficient funds to pay such a large invoice. The Defendant took him aside to say that he, the Defendant, would provide the funds to Philab out of the consideration to be paid by the Claimant."
a. Philab is, as I have said, owned by the family of Mr Navasero and, for that reason, the issuance of the Philab invoice could have been readily generated by Mr Navasero without the assistance of Mr Pan or any third party.
b. It would seem from certain documents (including Mr Navasero's own email dated 29 July 2011) that he was at some stage in a "desperate financial position" and therefore had a strong motive himself to perpetrate the fraud for his own personal gain.
c. Mr Navasero is arguably at least waging a personal vendetta against Mr Pan in large part because he, Mr Navasero, appears to believe (whether rightly or wrongly) that he has not received full payment from Mr Pan or his companies for the work he did in relation, in particular, to the EUK deal although it is Mr Navasero's evidence, in effect, that there is no personal vendetta and that he is simply seeking to recover what is properly due to him.
"….. If 450K is not met a reduction in valuation will be applied whereby a pro rata discount on the initial valuation of $30m will be reduced by the difference last year's PAT of 450K to this year's Feb 28 2011 PAT.
I urge the management team to ensure that a PAT of 450 K is reached by January 2011.
If not an injection of income will need to be done prior to closing. Loans will need to be paid down and other accounting procedures will need to be implemented to increase the company's PAT.
Cheers
Tom"
"……. Following the receipt of the e-mail from Tom Navasero….. during the next successive meeting at Littlehampton during the week starting 12 December 2010, I raised this with Mike Earle and subsequently questioned the meaning with Chris Pan on the comment of "injecting income" subsequently Chris Pan put forward a concept to inflate the PAT number. CP was very persistent on this topic and my response to this proposal was to advise that I am not interested in any concept that would synthetically alter the PAT number via illicit means. To my recollection this topic was not discussed again with me as I had been confrontational with CP on the topic…"
"…. The only time I had any conversation at all with regard to Pan or anyone else about an inflated PAT was when, at a meeting in London, CP suggested that there were ways to reach the PAT, and at that time I and Greg Simmons pointed out that there was no situation where we would get involved in anything that compromised PMAH's situation was against the law or underhanded and that was the only conversation I had with regard to anything regarding the PAT number. The comments he made did not specifically refer to Philab or any other order."
a. After Mr Navasero sent an email to Mr Taylor-Haw which said "We would appreciate if you could engage the auditors to complete the company's year end audit", Mr Pan sent an email which said "Tom, Don't worry I am on this".
b. On 7 February 2011 Mr Pan sent an email to Mr Taylor-Haw that said "We need to try our hardest to hit the numbers asap and I know you are doing this".
c. On 16 February 2011, Mr Pan was copied into Mr Navasero's email of which sought confirmation that EUK had received an order from Philab.
d. On 11 March 2011 Mr Navasero sent an email to Mr Pan in which he asked "Did we hit the 500k PAT mark?" to which Mr Pan responded the next day "Not sure yet- but still working on it with the accountants".
e. On 16 March 2011, Mr Pan was copied in on email from Mr Taylor-Haw which said: "SRC have the accounts well underway. At first site (sic) it looks as though the PAT will be met. We should have an idea end of play Friday. I am in communication with SRC. We all understand what needs to be achieved and are working together. I have spoken with Nexia Smith Williamson as well and have that under control too. This part is being looked after and is progressing as fast as it can".
f. On 12 May 2011 Mr Pan was copied into an email from Mr Navasero to Mr Taylor-Haw which said: "There is no need to broadcast internal issues to all…I am trying my best to fix your PAT and related party transactions ... I have asked Chris [D] to follow up with The (sic) auditors directly this week".
g. Although Mr Pan denies any knowledge of H Technologies and Grand Prix Design, I note that he was copied into the email of 20 April 2011 which stated that invoices from Grand Prix Design "will be waived in lieu of stock payment".
Material Non-Disclosure/ Misrepresentation
A. Alleged failure to disclose the "personal vendetta" of Mr Navasero against Mr Pan - in particular that Mr Navasero claimed he was owed sums by Mr Pan, had "nothing to lose" and had sought to smear Mr Pan's reputation
B. Alleged failure to disclose the email from Mr Navasero dated 28 July 2011 (the "confession" email) which referred to leaving Mr Pan "out of the loop"
C. Alleged failure to disclose the animosity of EGL's Director, Mr Ang, toward Mr Pan and that Mr Ang has threatened to harm Mr Pan and Mr Pan's family
D. Alleged failure to explain the deal done for Mr Navasero's assistance
E. Alleged failure to disclose the "financial troubles" of Mr Navasero
F. Alleged failure to disclose implausible statements by Mr Navasero and Mr Simmons
G. The description of Mr Pan as a "fugitive" was false
H. The description that Mr Pan's whereabouts were "unknown" was false
I. There was a failure to point out the absence of email corroboration despite Mr Navasero's prolific use of email
J. There was a misleading and out of date position presented as to EGL's finances and adequacy of the cross-undertaking
K. There was no valid explanation by EGL for its delay in making the application
L. There was a failure to disclose the true position regarding the risk of dissipation
M. The Court should have been informed that the draft PKF Report treated Mr Navasero's declaration with caution
N. There was a failure to disclose that Mr Navasero agreed the formulation for consideration in the SPA
Risk of Dissipation
a. EGL's position on the risk of dissipation does not rest on solid evidence. It rests on inference, for which there is no proper foundation. Mr Connerty's reliance on share sale transactions following completion of the EUK deal is entirely misplaced and cannot on any footing be used to demonstrate a risk of dissipation of Mr Pan's personal assets for a number of reasons:
i. Mr Connerty seeks to portray the share transfers as being out of the ordinary and an attempt to frustrate any potential claim by EGL. This is incorrect. Calypso Capital was paid for its consultancy services in shares in EGL. It was not paid in cash. Calypso Capital is a consultancy firm and is not in the business of investment. Contrary to Mr Connerty's insinuations, there is nothing significant in the fact that Calypso Capital (and the other Allottees) would have wished to convert those shares into cash as soon as was possible (taking into account the various moratoria imposed by Clause 6.6(d) of the SPA) by selling them. Mr Ang was expressly informed that the intention was to sell the shares: that is precisely why EGL imposed various moratoria on the sale of those shares.
ii. It follows that there is no "remarkable coincidence" in the fact that the share transfers took place at the time when EGL is said to have begun investigating the EUK deal because that investigation appears to have begun shortly after completion of the SPA. Mr Connerty seeks to draw a link between the two occurrences where there simply is none.
iii. In any event, EGL's assertion that the transfer of the shares can be inferred to have been an attempt to frustrate a legal claim is grasping at straws. As is amply demonstrated by the current claim against Mr Pan, sale of the shares does nothing to prevent EGL seeking relief in its claim for monetary damages.
iv. Moreover, the only relevant risk of dissipation must be a risk of dissipation of Mr Pan's personal assets given that the claim being made is against him personally. The transactions being highlighted by EGL show no such thing. They show company assets being converted into cash.
v. EGL failed to disclose the fact that it was within its power to prevent these share sales because it had allotted the shares by issuing physical certificates, rather than completing the transaction electronically. This is highly significant to EGL's case on dissipation because EGL needed to sign and to approve the transfer of the shares before any sale by Allottees could complete. The shares that were held by Calypso Group were only fully registered on 20 December 2011, which means that EGL must have had to sign off the issuance of those shares shortly before that date.
vi. Mr Connerty's description of Mr Pan's position as being a "simple denial" that the disposals were suspicious is gross over-simplification. The burden of proof is on EGL to prove that there is a real risk of dissipation. It has sought to do this by describing it as a "remarkable coincidence" that Mr Pan sought to convert the shares that had been allocated to companies under his control into cash. Mr Pan demonstrates by reference to the evidence that there is nothing remarkable about the sales or their timing. Mr Connerty's attempts to revive an already confused position only goes further to expose the weakness in EGL's case. By way of summary:
1. The relevance of the transaction with Mr Tan is that Mr Ang was involved in it and evidently saw nothing remarkable or coincidental about it.
2. Mr Ang's position is contradicted by Mr Navasero who states that it was always Mr Pan's intention to liquidate the shares and thereby supporting Mr Pan's position that the transactions were in the normal course of the Calypso companies' business.
3. There is no evidence to demonstrate that Mr Pan has done anything other than deal with his assets in the normal course. The fact that he is said to have little by way of substantial assets is not demonstrative of a risk of dissipation. In fact, it is a factor pointing away from a need to have a freezing order at all.
4. EGL has no evidence of any attempt by Mr Pan to dissipate his personal assets, other than by inference by reason of the allegations of dishonesty against him and reliance on their misleading and baseless portrayal of him as a dishonest character.
a. First, this is a case where, as I have concluded, there is at the very least a good arguable case of fraud against Mr Pan. I accept, of course, that this of itself does not necessarily lead to a conclusion that there is a risk of dissipation of assets and I bear well in mind the cautionary words of the Court of Appeal in Thane v Tomlinson in particular at paragraph 28. However, it seems to me that in the particular circumstances of the present case, this is a relevant consideration.
b. Second, there is no doubt that Mr Pan is a highly sophisticated individual who operates his business interests in different jurisdictions through a web of offshore companies, including in the BVI. It is common ground that he has residences in at least London and Switzerland although, as I have said, the actual location of his residence in Switzerland was, until recently, unknown.
c. Third, although I have accepted for present purposes that the disposal of the shares after completion of the SPA does not justify the inference of actual historic dissipation of assets otherwise than in the ordinary course of business, nevertheless such disposal provides strong proof of an ability to deal with assets at relatively short notice.
d. Fourth, the circumstances in which Mr Pan left Singapore and the failure by both him and his wife to respond to the letters sent by EGL as I have described above certainly were important considerations at least at the stage of the without notice application although I accept that in the light of Mr Pan's explanations such considerations are or may no longer be valid in fact. For example, on Mr Pan's evidence, there is an entirely innocent explanation as to why he (or his wife) never responded to the letters sent by EGL.
Inadequacy of Cross-Undertaking in Damages
Just and Convenient
Application for Order for Further Disclosure
"9. Unless paragraph 10 applies, the Defendant must within 48 hours of service of this Order and to the best of his ability inform the Claimant's solicitors of all his assets worldwide which exceed £500, whether in his own name or not and whether solely or jointly owned, giving the value, location and details of all such assets.
10. If the provision is likely to incriminate the Defendant, he may be entitled to refuse to provide it, but it is recommended to take legal advice before refusing to provide the information. Wrongful refusal to provide information is contempt of Court and may render the Defendant liable to be imprisoned, fined or have his assets seized.
11. Within 5 (five) working days after being served with this Order, the Defendant must swear and serve on the Claimant's solicitors an affidavit setting out the above information."
a. Mr Pan alleges that the proceeds of the sale of the shares in EGL allocated to CHIL, Calypso Group, Calypso Capital and Sharp Consultants Limited were S$2.5 million and were all spent by those companies. Mr Pan does not explain adequately how such a sum was dissipated. He opaquely refers to "the balance of funds was subsequently invested in unsuccessful commercial deals pursued in the course of those companies' businesses, including a failed telecoms investment". That is not sufficient information for the Court to police the freezing injunction. Equally Mr Pan's explanation for the dissipation of £250,000 that he personally received from Capital Group is general ("These payments were used to defray personal and business expenses during the transaction") and not credible; no detail whatsoever is given to support such high expenses incurred during the negotiation and execution of the SPA. Mr Pan should provide proper details of the proceeds of sale of consideration shares insofar as he can.
b. Whilst Mr Pan alleges that he sold his beneficial interests in Calypso Capital, Calypso Group and CHIL he has not disclosed to whom and for what consideration. His response to the Part 18 Request made by C regarding these issues was evasive. This information should be disclosed as these "sales" ought to have generated consideration which was paid to Mr Pan.
c. Mr Pan's list of bank accounts does not disclose a bank account for Singaporean dollars. This is not credible given Mr Pan's own evidence that "I spent heavily whilst I was there [Singapore]". Mr Pan should identify all of his bank accounts.
d. It is difficult to believe that Mr Pan is living in Switzerland, sending his children to school in Switzerland, funding litigation in Singapore and funding the defence of this litigation in circumstances where his alleged net liquid assets are around £15,000 and CHF 1,900. Mr Pan should identify all of his sources of income.