“4. Until the end of the Further Hearing, or until further Order in the meantime, the [defendants] and each of them shall not deal with or dispose of or otherwise engage in transactions with their assets, whether such assets are in or outside England and Wales, where the value of any such dealing, disposal or transaction is in excess of£1,000,000 (one million pounds), without giving seven days advance notice in writing to the [claimants’] solicitors …… , with the exception of dealings, disposals or transactions in respect of UK residential / commercial property (which for the avoidance of doubt includes sales or acquisitions of such property by sale or acquisition of shares in a special purpose vehicle owning such property), in which case notice is to be given within three days post completion of the disposal or acquisition.”
“there is a disconnect between the lavish billionaire lifestyle that Mr Nicholas Candy appears to be able to afford, including living in an opulent apartment and purchasing a luxury yacht, and any apparent means to finance that lifestyle”. c) He took the view that, again, the lack of evidence from the appellants was significant. Whilst recognising that there might be an entirely legitimate explanation for the apparent disconnect, the judge concluded that: “in the absence of any evidence and in the absence of any apparent explanation, these matters do give rise to concern”. d) The concern said to arise was described on appeal by Mr Stewart QC, counsel for the respondents, as a Morton’s fork: he submitted that the apparent disconnect suggested that, in truth, Mr Nicholas Candy was either (i) deriving wealth from the CPC business (or more wealth from other businesses than had been declared), or (ii) unable to support his lifestyle. If the former, the public position put forward by the appellants was not the whole truth, which would suggest that Mr Nicholas Candy may have also been prepared to present a misleading picture of his assets if the respondents ever sought to execute a judgment against him. If the latter, then transactions such as those concerning the yacht would constitute significant dissipation of Mr Nicholas Candy’s few assets. Either way, therefore, this unexplained disconnect supported injunctive relief to prevent the appellants from dissipating assets, in the sense of putting assets beyond the respondents’ reach. Overall, the judge concluded that the state of the evidence “gave rise to a risk which is more than negligible, that Mr Nicholas Candy is prepared to be unforthcoming about his assets and conceal them”. iii) The corporate structure of the appellants’ companies and the corporate reorganisation in 2014 to 2015, paragraphs 23-30: a) The judge accepted that (i) holding assets offshore and (ii) the mere fact that there were a large number of companies in the structure were not evidence of a risk of dissipation. b) However, the judge considered that: “the fact that the defendant uses complex and opaque offshore structures …… which make it difficult to see where value resides in a corporate structure, and which enable assets to be moved easily from one part of the structure to another, is a factor which in my judgment can legitimately be taken into account”
“47. I am satisfied in all the circumstances that there is here material on which the Court should conclude that there is a risk of dissipation. In reaching this conclusion I have in mind particularly the unexplained transfer of a very substantial property into the name of Mr Christian Candy’s wife, and the discrepancy between Mr Nicholas Candy’s purchase of a very valuable yacht and any apparent means for him to be able to afford it. It is I think also relevant that the proposed notification injunction is less intrusive than a freezing order; I take the view that this is relevant to the degree of risk which needs to be shown before the Court can be persuaded to intervene. All emphasis in this judgment in bold is supplied. For the reasons I have given I am satisfied that there is such a risk of dissipation as to justify the Claimants’ fears and to justify in principle the Claimants seeking and obtaining relief from the court in the form of a notification injunction.”
“49. Mr McQuater [counsel for the appellants] pointed out, with some justification, that he could scarcely be expected to deal with what was quite a radical proposed modification of the order which had first surfaced in Mr Trace’s reply, and that he would wish to have time to adduce evidence as to the impact of the order in its modified form on [the defendants’] businesses. That I regarded as appropriate, and I therefore adjourned the hearing to enable such evidence to be adduced and for Mr McQuater to consider with his clients the effect of the proposed modification; I did however make clear that I regarded the post-transaction notification regime suggested by Mr Trace as much less problematic than the pre-transaction notification which had originally been asked for. In those circumstances, I adjourned the application, granting a temporary injunction over the period of the adjournment in accordance with the modified form. In circumstances where the evidence was that the Defendants’ businesses were largely UK based it did not seem to me that an injunction in the modified form over the short period of an adjournment would be likely to cause significant harm to the Defendants, and it would enable the operation of the Claimants’ proposed modified notification regime to be tested to see what practical difficulties, if any, it gave rise to. That would mean the parties could come back on the adjourned hearing and argue the question of balance of convenience against the experience of operating the regime in the short intervening period. In those circumstances I do not propose to say any more in this judgment about where the balance of convenience lies; that will be a matter to be argued at the resumed hearing.”
“The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.”
“As regards dissipation, the learned judge dealt with the matter on this basis: he stated the law, correctly, as Mr Gee accepts, in the following terms. He quoted Mr Gee in identifying the requirement of the law as to whether there is a sufficient risk of dissipation to justify the granting of the injunction.” iii) The Ninemia[1983] 1 WLR 1412 , where Kerr LJ said at 1419H-1420B: “[W]e do not think that it would be useful to seek to lay down any standard of evidence which applicants for Mareva injunctions must satisfy in order to succeed upon an ex parte application. Bare assertions that the defendants are likely to put any asset beyond the plaintiff’s grasp and are unlikely to honour any judgment or award are clearly not enough by themselves. Something more is required. Viewed from this point of view, the plaintiffs’ evidence in the present case can certainly be described as exiguous. In that respect it is very much of a borderline case. However, the judge presumably took the view that in all the circumstances there was just enough to justify the limited injunction which he granted, leaving it to the defendants to apply to have it discharged, as happened, and knowing that no real harm would thereby befall them which could not be dealt with by an order as to costs. Accordingly, despite the judge's implied invitation to us to do so, we would not go so far as to say that, in the exercise of his discretion, he was wrong to make the order which he made. However, the exiguousness of the plaintiffs’ evidence on this aspect must naturally weigh strongly, as it did with the judge in this case, when the court comes to consider the whole of the evidence on the application inter partes to discharge the injunction.”
“3. In recognition of the severe effect which such an injunction may have on a defendant, the procedure for seeking and making Mareva injunctions has over the last three decades become closely regulated. I regard that regulation as beneficial and would not wish to weaken it in any way. The procedure incorporates important safeguards for the defendant.”
“An order for the provision of information is far less intrusive than an order which prevents someone from dealing with assets”
“The less impressive [the defendant’s] evidence, the less effective it will be to displace any adverse inferences. But there must be an inference to be displaced, if the injunction is to stand, and comment on the defendant's evidence must not be taken so far that the burden of proof is unconsciously reversed. …… [Defendants] have no obligation to disclose their financial affairs, simply to answer a challenge from the [claimants] which is unsupported by solid evidence.”
“32. Finally, because the point has been raised, it really should go without saying that it is for the applicant to make out his case to support a freezing order, namely an appropriately strong case against the respondent concerned, and that there is a real risk of dissipation by the respondent. It is not for the respondent to show that a freezing order ought not [to] be granted.”
“Given the nature of the Mareva jurisdiction and given the fact that it is not, as the learned judge says: "a means of obtaining advance security for a claim", it is inevitable that before the court can be satisfied that there is a risk of dissipation, in the sense in which that term has been used, the court must consider whether there is any evidence that in the particular case the asset will be dissipated rather than otherwise. If there is no such evidence then, in my view, it would be wrong for the injunction to be granted.” b) Several cases have emphasised that there is nothing implicit in complex, offshore corporate structures which evidences an unjustifiable risk of dissipation. As Arnold J put it in VTB v Nutritek[2012] 2 BCLC 437 at [233] (approved by the Court of Appeal at [174] of its judgment): “It is not uncommon for international businessmen, and indeed quoted UK companies, to use offshore vehicles for their operations, particularly for tax reasons. This may make it difficult to enforce a judgment. But in that respect claimants such as VTB have to take defendants such as Mr Malofeev as they find them. More is required before the court will conclude that there is a risk of dissipation.”
“11. The Claimants shall provide fortification for their undertakings given to the Court and recorded in the Schedule to this Order, such fortification to be in the sum of£5,000,000 (five million pounds) in a form reasonably satisfactory to the [Defendants] (but subject to paragraph 13 below). 12. The Claimants shall provide the aforesaid fortification by 4.00pm on27 May 2016 . 13. The parties shall have liberty to apply in the meantime (if and insofar as necessary) as to the form which such fortification shall take.”
“11. The question is whether a reasonable person in the position of the relevant defendants could properly form the view that the proposed fortification of the cross-undertakings is not satisfactory. Mr. McQuater submits that, to succeed on that ground, the relevant defendants do not need to go so far as to present an open and shut case that an insurer could avoid liability because the defence alleges dishonesty on the part of the claimants. It is, he submitted, sufficient if it is arguable, that is to say properly arguable, that the insurer could advance such an argument successfully. 12. I agree with Mr. McQuater that the wording of the policy does leave open a real possibility that the insurer could properly argue, if the defendants are successful in the action, that there is no liability on the part of the insurer due to the dishonesty leading to the success of the defendants, itself leading to the liability under the cross-undertaking in damages. The insurers could have been asked to state expressly in writing that they would not avoid liability in those circumstances, but either they have not been asked so to say or they have declined to do so even though it was known from receipt of the letter of the25th May 2016 that this was the very issue at the heart of the relevant defendants’ objection to the then proposed policy.”
“It may be that the insurers will expressly state that, even in the circumstances of the defence succeeding in its entirety, including findings of dishonesty against Mr. Holyoake, they will not seek to avoid payment under the policy. I do not think that the discharge of the notification order would be proportionate in all the circumstances.”
“[Clause] 1 INSURING CLAUSE Subject to the terms and conditions of this Policy, the insurer shall indemnify the Insureds for, or pay on the insured's behalf, all Loss. DEFINITIONS …… Cross Undertaking means paragraph (1) of the Schedule to the Order. …… Loss means the (liability of any Insured to pay damages and costs pursuant to and as a direct result of Final Determination of a claim against the Cross Undertaking …… [CONDITIONS] [Clause] 4.9 Representations to Insured (i) The Insurer will not exercise any right to void, reduce or deny its liability to pay on the Insured's behalf Loss on any grounds whatsoever (including, without limitation, any breach of any term or condition of this contract other than in relation to breach of Clause 4.5(iv) [regarding notification of Loss] and Clause 4.1 of the Policy [payment of the premium]). [I interpose to comment that neither clause 4.1 nor clause 4.5(iv) was suggested to be of any relevance to their appeal, so this caveat can be ignored.] (ii) In the event that the Insurer has to pay on the Insured's behalf Loss where an Insured has breached an express or implied condition of the Policy or any principle of law (including, without limitation, any circumstances where the Insurer has paid Loss arising out of or in relation to a fraudulent or dishonest act of an Insured or Insureds), the Insurer reserves the right to claim or re-claim such Loss directly from the Insured or Insureds.” …… [Clause] 4.15 Third party rights A person who is not a party to this Policy may not enforce any of its terms under theContracts (Rights of Third Parties) Act 1999 . …… [Clause] 4.18 Entire Agreement This Policy constitutes the entire agreement between the Insurer and the Insured concerning the subject matter of this Policy and supersedes any previous agreement, oral or written, between the parties concerning the subject matter of this Policy. Nothing in this Clause shall exclude or limit any liability or any right which any party may have in respect of any statements made fraudulently or dishonestly prior to the date of this Policy.”
“4. I am satisfied, in view of the revised terms of the policy, that there are no reasonable grounds, objectively considered, for a reasonable apprehension that the insurer will be able to avoid the policy in the event of a successful defence by the relevant defendants. I am satisfied that the terms of clause 4.9 of the proposed policy, read against the background of the proceedings and the claims in the particulars of claim and in the defence, will preclude the insurer from avoiding liability under the policy to pay loss in relation to the cross-undertaking in damages on the ground that the defendants will have successfully relied upon and established the various allegations, including allegations in their defence of dishonest conduct on the part of the claimant. 5. I am satisfied that there is no objectively reasonable apprehension of risk of avoidance on the basis of the HIH Casualty and General Insurance Ltd v Chase Manhattan Bank[2003] UKHL 6 principle. The other matter with which I was concerned, which was the express terms of the exclusion clause, is no longer relevant in view of the amendments to clause 3.”
“[Clause] 3.1 The Insurer shall not be liable for any Loss arising out of: (i) fraudulent or dishonest conduct of an Insured or the Insureds as established by the final adjudication of a competent court, tribunal or any other similar final adjudication or by the formal written admission by an Insured or the Insureds of such conduct …… ”
“[I]t is in my opinion plain beyond argument that if a party to a written contract seeks to exclude the ordinary consequences of fraudulent or dishonest misrepresentation or deceit by his agent, acting as such, inducing the making of the contract, such intention must be expressed in clear and unmistakable terms on the face of the contract. The decision of the House in Pearson v Dublin Corp does at least make plain that general language will not be construed to relieve a principal of liability for the fraud of an agent: see in particular the speeches of Lord Loreburn LC at page 354, Lord Ashbourne at page 360 and Lord Atkinson at page 365. General words, however comprehensive the legal analyst might find them to be, will not serve: the language used must be such as will alert a commercial party to the extraordinary bargain he is invited to make.”
“68. The next question is whether the words relieve Chase from liability to avoidance of the contract or damages in cases in which the misrepresentation by its agent has been fraudulent or avoidance in cases in which the non-disclosure has been dishonest. Here again I agree with Rix LJ that fraud is quite different from negligence: ‘Parties contract with one another in the expectation of honest dealing’, particularly in an insurance context. I think that in the absence of words which expressly refer to dishonesty, it goes without saying that underlying the contractual arrangements of the parties there will be a common assumption that the persons involved will behave honestly. As Lord Loreburn LC said of the exempting clauses in S Pearson & Son Ltd v Dublin Corp[1907] AC 351 , 354, ‘They contemplate honesty on both sides and protect only against honest mistakes.’ ”
“It is clear that the law, on public policy grounds, does not permit a contracting party to exclude liability for his own fraud in inducing the making of the contract.”
“[I]t is permissible for the parties to include a contract term that purports to limit or exclude the right of insurers to avoid a contract of insurance for a breach of the duty of disclosure. However, there is an important limitation, in that public policy does not permit an assured to rely upon such a clause to exonerate him in the event of fraud on his part in the presentation of the risk. …… [I]t is permissible for the parties to exclude or limit, by agreement, the remedies of the insurers in the event of misrepresentation by the assured or his agents. However, as in the case of non-disclosure, public policy does not allow an assured to exclude or limit remedies for a fraudulent misrepresentation made by the assured personally.”
“After all, since the law is that an assured cannot exclude the insurers' rights where the assured is guilty of fraud, the entire proviso (or certainly that part dealing with fraudulent non-disclosure) may be said to be unnecessary.”
“45. The Court cannot require a claimant to give an undertaking. When fortification of a cross undertaking is required, it is not imposed by an order of the court that it must be given. It is part of the undertaking offered by a claimant, and the grant of the order is conditional upon the undertaking being complied with. This is reflected in the standard wording of the Commercial Court freezing order. Requiring fortification is an adjunct to the undertaking offered by a Claimant, and is only “required” in the sense of being the price which the claimant will have to pay if he wants his order to operate in futuro.”