Wells v Chave & Ors [2014] EWHC 2444 (Ch)

Case No HC12A02901[2014] EWHC 2444 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Rolls Building, Fetter Lane, London, EC4A 1NLDate 23 July 2014
Before
THE HON MR JUSTICE ARNOLD
Between
CLIVE ROGER WELLSClaimant(2) TINA WELLSPart 20 Defendants
Timothy Sisley (instructed by direct access) for Claimant and Part 20 DefendantsBrian Hurst (instructed by direct access) for Defendant and Part 20 ClaimantHearing Hearing dates: 8-10 July 2014
JudgmentMR JUSTICE ARNOLD :ContentsTopic Paras Introduction 1-2 Background 3-80 Mr Chave, Mr Wells and ReAgg Ltd 4-11 The land at Dassels claim 12-25 Mr Chave’s counterclaims 26-45 The quarries claim 46-48 Mr Chave’s claim against Mrs Wells and Graham Wells 49-58 The Environment Agency prosecution 59-60 Adjournment of the trial 61 Mr Chave’s application to strike out and for summary judgment 62-64 The application before Sales J on 15 April 2014 65-71 The hearing before Hildyard J on 25 April 2014 72 The hearing before Hildyard J on 28 April 2014 73-74 The hearing before Master Bragge on 28 to 30 May 2014 75-79 Continuation of the freezing order 80-158 Risk of dissipation of assets: the law 82-84 Risk of dissipation of assets: evidence of dishonesty 85-123 The Environment Agency evidence 86-87 Mr Wells’ claims and evidence in these proceedings 88-95 Mr Wells’ dealings in chattels 96-99 The Swanage property and Mrs Wells’ payslips 100-123 Risk of dissipation of assets: dealings with assets 124-134 The charges over the properties 124-130 Information obtained from Topaz re Mr Wells’ activities 131-134 Risk of dissipation of assets: conclusion 135 Material non-disclosure 136-155 Indebtedness 143 Commercial integrity 144 Placing assets in other names 145 Fraudulent disposal of leased equipment 146 Failure of ReAgg 147 The litigation 148-151 Mrs Wells’ mortgage 152 The land at Dassels 153 The guarantee 154 Conclusion 155 Mr Chave’s cross-undertaking 156-157 The order against Mrs Wells 158 Security for costs 159-161 Further disclosure of Mr Wells’ assets 162Introduction
[1]The principal application before me is an application by Philip Chave (the Defendant and Part 20 Claimant) for the continuation until trial of a freezing order granted against Clive Wells (the Claimant and First Part 20 Defendant) and his wife Tina Wells (the Second Part 20 Defendant) by Sales J on 15 April 2014 and continued until now by orders made by Hildyard J on 25 April 2014 and 28 April 2014, although the order on 28 April 2014 restricted the order as against Mrs Wells. Continuation of the freezing order is opposed by Mr and Mrs Wells on three grounds: first, that there is no evidence of a risk of dissipation of assets; secondly, that the original freezing order was obtained through material non-disclosure, albeit that there is no application by them to set aside that order; and thirdly, that Mr Chave has not shown that he has sufficient assets to support his cross-undertaking in damages. Mrs Wells also contends that, even if the order is continued, it should be further restricted as against her.[2]In addition, there is an application by Mr Chave by application notice dated 26 June 2014 for a variety of other forms of relief, and in particular for security for costs.

Background

[3]The background to this matter is of some complexity. In order to try and disentangle it, a regrettably long exposition is necessary. I shall try and shorten it a little by concentrating on the principal matters in contention and ignoring the more peripheral points.

Mr Chave, Mr Wells and ReAgg Ltd

[4]Mr Chave is a chartered accountant who carries on business as a sole practitioner under the name “Philip T. Chave & Co”. Mr Wells appears to have had a variety of different occupations over time. In the period from 2000 to 2004 he appears to have set up a number of companies whose name began with the word “Dassels” or whose name was at some point changed to such a name.[5]It is common ground that, for some years from 2002 onwards, there was a relationship between Mr Wells and Mr Chave, but it is symptomatic of this case that there is a dispute as to the nature of that relationship. Mr Wells says that Mr Chave acted as his companies’ accountant. Mr Chave says that they were introduced in 2002 by Timothy Sanders, who was then the manager of Barclays Bank in Hertford, that he assisted Mr Wells with debts that he and his companies had run up and that he became one of the principal financial backers of a recycling venture that Mr Wells had started which came to be operated by a company called ReAgg Ltd. It is convenient to note that Mr Chave’s account is supported by a witness statement made by Mr Sanders. (Mr Sanders also says that from late 2004 onwards Mr Wells had financial difficulties, that by 2006 there were serious problems with his creditworthiness and that Mr Sanders formed a very poor opinion of Mr Wells, concluding that he was untrustworthy and a client whom Mr Sanders would not wish to do business with.)[6]ReAgg was incorporated by Mr Wells (perhaps together with his brother Graham Wells) in March 1995. Mr Chave became the sole director, in place of Mr Wells, in May 2005. Mr Chave also acquired all of the shares in the company. The operational side of the company was managed by Mr Wells, although Mr Chave acted as its finance director and supervised its financial systems, including its payroll system.[7]ReAgg acquired a lease of a site at Ledburn Quarry, Leighton Buzzard, Bedfordshire in the summer of 2006 and commenced operations there in October or November 2006. At that stage, the pit needed to be backfilled and capped before it could be used for the recycling operation. Accordingly, ReAgg undertook the disposal of waste, which, as well as providing material to fill the pit, generated income.[8]Toward the end of 2007 ReAgg ran into two problems. The first concerned waste from a site in Golders Green or Finchley owned by a company called Albany Home International Ltd which had been disposed of at Ledburn Quarry, some of which was contaminated. When the site was inspected by the Environment Agency, the Agency discovered the contaminated material and also the fact that the site had been filled beyond authorised levels. This led to the site being closed. The second problem was cash flow difficulties.[9]It appears that it was around the same time that a John Ruskin became involved in ReAgg as another financial backer.[10]On 30 May 2008 Mr Wells was formally dismissed from ReAgg, although as I understand it Mr Wells says that he had effectively been excluded at the end of 2007.[11]On 28 August 2008 the company entered into a creditors’ voluntary winding up. By that stage the shareholders were Mr Chave and Mr Ruskin. The two largest creditors were Mr Chave, who was owed approximately £565,000, and an associated company called RF Aggregates (South West) Ltd, formerly ReAgg (South West) Ltd, which was owed approximately £750,000. It appears that Mr Ruskin had been financing ReAgg through that company. In the Directors’ Report and Statement of Affairs for the first creditors’ meeting, Mr Chave attributed the failure of the company to bad debts and misappropriation of company funds.

The land at Dassels claim

[12]Mr Wells commenced these proceedings by issuing a Part 8 claim form on 23 July 2012 supported by Mr Wells’ first witness statement dated 25 July 2012. The sole claim advanced by Mr Wells in the claim form and witness statement concerned seven acres of land at Dassels, Braughing, Hertfordshire. Mr Wells’ account, which appeared to be supported by the documents he exhibited to his witness statement, was as follows.[13]Originally the land was owned by a Terence Hart. According to Mr Wells, he agreed with Mr Hart in 1999 to buy the land in two tranches. On about 12 October 2001 Mr Wells paid Mr Hart £20,000 for the first parcel of the land on the basis of a written agreement of that date, but no transfer was executed at that time. It was understood between them that Mr Wells would have first refusal in respect of the remainder of the land. In 2004 it was agreed that Mr Hart would sell the second parcel to Mr Wells for £35,000. Mr Wells was unable to pay the purchase price or to obtain a loan from HSBC, however. At this stage Moore Blatch solicitors were acting for Mr Hart and Breeze & Wyles solicitors were acting for Mr Wells.[14]According to Mr Wells, in September 2005 Mr Chave agreed to lend him the £35,000 to complete the purchase, to be secured by a charge on the second parcel of land, as evidenced by a letter from Mr Wells to Breeze & Wyles dated 19 September 2005. By this time Clarke Wilmott were acting for Mr Hart. A letter from Clarke Willmott to Breeze & Wyles dated 22 November 2005 records that by then it had been agreed that there would be no contract and that the parties would proceed directly to a transfer of the land.[15]On 9 December 2005 Breeze & Wyles remitted the sum of £35,000 which they had received from Mr Chave to Clarke Wilmott. On 13 December 2005 Clarke Willmott sent Breeze & Wyles a Form TR1 executed by Mr Hart and dated 9 December 2005. It is common ground that the transferee was named as Mr Wells. Subsequently, Mr Wells’ name was crossed through and Mr Chave’s name substituted in manuscript. The alteration appears to be initialled “CW”. A key issue in the proceedings is who made this alteration, or perhaps more accurately on whose instruction it was made. Mr Wells alleges that the alteration was made by or on the instructions of Mr Chave, while Mr Chave alleges that it was made by or on the instructions of Mr Wells. Subsequently the land was registered in the name of Mr Chave.[16]Mr Wells exhibited to his witness statement an unsigned note on Breeze & Wyles’ notepaper dated in manuscript 11 June 2010 which he said had been prepared by John Appleton of Breeze & Wyles and which provides an account of the transaction. It is clear from this note (and from other evidence) that Mr Wells had asked Breeze & Wyles for an explanation for the fact that the land was registered in the name of Mr Chave. Mr Appleton says that he was instructed by Mr Wells in 2004 to take instructions from his business partner and accountant Mr Chave and that he was subsequently led by Mr Chave to believe that it was intended by Mr Wells that the land should be registered in the name of Mr Wells. Curiously, Mr Appleton does not address the alteration to the TR1. He does say that Mr Chave altered the name of the purchaser on the Stamp Duty Land Tax form from Mr Wells to himself. Mr Wells himself suggests that this is incorrect, and that the alteration was made by Breeze & Wyles. As I understand it, Mr Chave also disputes that the alteration to the SDLT form was made by him.[17]According to Mr Wells, he only discovered that Mr Chave was registered as the proprietor of the land in May 2008 when he tried to raise finance against it. He then approached Mr Chave to try and rectify the situation by offering to pay the £35,000 he owed Mr Chave. It was agreed that Mr Chave would transfer the land to Mr Wells upon payment of the £35,000, but Mr Chave refused to complete the transfer even though matters got as far as an executed transfer being held in escrow.[18]In November 2011 Mr Wells instructed new solicitors to write to Mr Chave requesting that the property be re-vested in Mr Wells upon payment by Mr Wells of £35,000. This led in due course to the commencement of the proceedings.[19]In the proceedings Mr Wells alleges that Mr Chave holds the land on a constructive trust for Mr Wells subject to a charge for the sum of £35,000.[20]Mr Chave denies that he holds the land on trust for Mr Wells. According to Mr Chave, it was agreed that the land would be acquired by Mr Chave in return for Mr Chave discharging Mr Wells’ obligation to pay Mr Hart £35,000. Mr Chave says that, give the state of Mr Wells’ debts at the time, it would have been irrational for Mr Chave to lend Mr Wells more money to enable Mr Wells to buy land for himself for the ultimate benefit of Mr Wells’ creditors. Mr Chave contends that Mr Wells’ claim is a fabrication, although he agrees that he did subsequently discuss selling the land back to Mr Wells.[21]It appears to be common ground that Mr Wells had been receiving rent from tenants of the property, Mr Chave claims wrongly.[22]There has been a regrettable dispute between the parties with regard to disclosure and inspection of Breeze & Wyles’ file relating to the transaction. For reasons that will appear, I shall have to consider that dispute below. At this stage, it is convenient to note the following points. First, a small number of the documents exhibited to Mr Wells’ first witness statement appear to have come from Breeze & Wyles’ file. Secondly, section B of Mr Wells’ List of Documents dated 16 December 2013 lists 43 documents which appear to emanate from Breeze & Wyles’ file, albeit that they are not explicitly said to have done so. Thirdly, in his second witness statement served on 25 April 2014 Mr Wells said that he had now obtained the file from Breeze & Wyles and exhibited some further documents from the file. Fourthly, section L of Mr Wells’ Amended List of Documents served on about 25 April 2014 is described as “File of Breeze & Wyles in the order in which it was received”. (There is also a separate section K described as “copies taken from a copy of Breeze & Wyles file 15 June to 24 June 2005” relating to a proposed HSBC charge over the land.) Counsel for Mr Chave complained that, although he had been able to inspect the file when it had been produced in court during the hearing before Master Bragge on 29 May 2014 (as to which, see below), he had not received copies. Counsel for Mr Wells helpfully provided copies of the documents on the third day of the hearing.[23]Counsel for Mr Chave submitted that the Breeze & Wyles file completely contradicted Mr Wells’ case. I do not accept that submission, but I do agree that it raises certain questions, of which the most immediate are those indicated by the following observations. First, the file is clearly incomplete. For example, the earliest letter on file is a letter from Moore Blatch to Breeze & Wyles dated 28 July 2004 which refers to earlier correspondence. On the other hand, the file does include all the documents mentioned by Mr Appleton in his note. Secondly, the file includes a letter from Breeze & Wyles to HSBC dated 24 June 2005 captioned “Wellbury Properties Limited Land at Dassels”. Wellbury Properties appears to have been another of Mr Wells’ companies. Thirdly, the file does not include Mr Wells’ letter dated 19 September 2005. Nor is there any cross-reference to that letter. Fourthly, the file does not include any copy of the executed TR1 whether with or without the manuscript amendment. Fifthly, the file does include a letter from Breeze & Wyles to Stevenage District Land Registry dated 18 August 2009 asking for a copy of the TR1. This explains why the copy exhibited by Mr Wells to his first witness statement is a Land Registry copy. Fifthly, the file appears to be almost entirely bereft of attendance notes. Whether this is because Mr Appleton did not take attendance notes or because his notes have been removed from the file is unclear.[24]What is perhaps more significant than the file itself is what Mr Wells has said about the transaction in his second witness statement after having obtained the file. In paragraph 43 he says two things. First, he says that Breeze & Wyles had themselves explained how the TR1 “came to suffer the deletion of my name and the substitution of Mr Chave’s”. In support of this, he refers to Mr Appleton’s note. As I have already pointed out, however, this explains no such thing. Secondly, Mr Wells goes on to say that, once the signed TR1 was received, it was sent to Mr Chave in order for him to complete the SDLT form. In support of this, he refers to a letter from Breeze & Wyles to Mr Chave dated 30 January 2006, Mr Chave’s reply dated 1 February 2006 and the SDLT form itself. None of these documents suggests that Breeze & Wyles sent Mr Chave the TR1, however. Nor does there appear to be any reason why Breeze & Wyles would have sent Mr Chave the TR1. Furthermore, it is implicit in this account that it was Mr Chave who altered the SDLT form, contrary to Mr Wells’ evidence in his first witness statement.[25]I shall consider the credibility of Mr Wells’ claim in respect of the land at Dassels below. It is convenient to note at this point, however, that Mr Wells stated in his first witness statement that in 2004 and 2005 Mr Chave was acting as his accountant, that Mr Appleton was wrong to say that Mr Chave was his business partner at that time and that until 2006 he and Mr Chave had not had any business relationship. He also stated that Mr Chave was the accountant to ReAgg, that Mr Chave became a director of ReAgg in 2006 and that in early 2007 he had offered Mr Chave shares in ReAgg “as a thank you for his help”. It is clear that at least the statements as to when Mr Chave became a director of ReAgg and when he acquired shares in ReAgg are incorrect.

Mr Chave’s counterclaims

[26]On 10 September 2012 Mr Chave served a Defence and Counterclaim. In the counterclaim Mr Chave alleged that Mr Wells was indebted to him in respect of various sums lent by Mr Chave to Mr Wells or paid by Mr Chave to third parties on Mr Wells’ behalf on dates from 21 March 2003 to 2 September 2008. Mr Chave’s claim at that stage was for “not less than £404,437.30”, although that sum included amounts totalling £22,426.84 said to have been paid on behalf of Mrs Wells and Graham Wells. The debts were particularised in Schedule 1.[27]In addition, Mr Chave claimed damages of £125,060 in respect of the cost of a machine called a Parnaby Cyclone which Mr Chave had paid for on behalf of Mr Wells and damages of £350,000 in respect of “other recycling equipment” in which Mr Chave claimed to have acquired “an interest by subrogation” and which Mr Wells was said to have provided to one Eamon Killoughery, or a company controlled by him, for personal gain. Partly because of the unclear and confusing manner in which they were originally pleaded, I have found these claims quite difficult to understand; but, since they are relied on by Mr Chave as evidence of Mr Wells’ dishonesty, I must do my best to explain them.[28]Mr Chave has subsequently clarified that these claims relate to two machines: the Parnaby Cyclone and a Powerscreen Turbo Chieftain 1600. As explained in his subsequent statements of case and evidence, Mr Chave alleges that both machines were purchased by a partnership called Dassels Plant, whose partners were Mr Wells, Mrs Wells, Barry Clayden and Katherine Clayden, with the benefit of finance from Barclays Mercantile under hire purchase agreements. The Powerscreen 1660 was purchased for £79,430 pursuant to an agreement dated 3 or 23 June 2000. The Parnaby Cyclone was purchased (together with some other equipment) for £196,720 pursuant to an agreement dated 11 August 2000. Dassels Plant defaulted on the payments to Barclays Mercantile, and in June 2007 Barclays gave notice of repossession. Mr Chave assisted Mr Wells to refinance the equipment under a hire purchase agreement with ING Lease (UK) Ltd (“ING”) on 9 October 2007 which Mr Chave guaranteed. The hirer of the equipment under this agreement was a new company called ReAgg (Plant Hire) Ltd of which Mr Wells was to be the beneficial owner. Under the refinancing arrangement, Barclays Mercantile sold its interest in the machine to ING, thereby discharging Dassels Plant from further liability. Mr Chave alleges that at the time of refinancing Mr Wells fraudulently misled him into believing that the equipment was still within his possession or control and would be of use in ReAgg’s business at Ledburn Quarry, whereas in fact it had been disposed of by Mr Wells to Mr Killoughery a considerable time before. Mr Chave contends that Mr Wells thereby converted the equipment.[29]Subsequently ReAgg (Plant Hire) defaulted on the payments to ING. ING gave notice of possession in September 2009. Mr Chave says he paid the balance of all the finance charges between September 2009 and October 2012, and thereby acquired title to all the equipment and to all of ING’s remedies by subrogation, alternatively under section 5 of the Mercantile Law Amendment Act 1856.[30]It seems to be common ground that the Parnaby Cyclone is now, and has for some time been, in the possession of Mr Killoughery. It is not clear where the Powerscreen 1600 is, or even if it is still in existence. Mr Chave says that Mr Killoughery has denied ever having possession of the Powerscreen 1600 and considers that it is possible that that is true. As I understand it, Mr Chave’s case in relation to the Powerscreen 1600 is that, if Mr Wells did not dispose of it to Mr Killoughery, he disposed of it to someone else.[31]Mr Wells prepared some notes on the Defence and Counterclaim which were subsequently exhibited by his then solicitor to a witness statement. Mr Chave relies on parts of this document as supporting his case and as being inconsistent with Mr Wells’ case. For example, Mr Wells states in paragraph 3 of this document that:
“… Any moneys which the Defendant introduced into the Companies were introduced on the basis of the Defendant providing funding for the companies’ activities. Obviously he could see an opportunity to become involved and to make a profit. Following the meeting [in September 2002], there were several long meetings between the Defendant and myself in connection with the development of the business. The Defendant’s advice was to increase the companies’ turnover, and in order to do that he would help by the injection of moneys with a view to a long term relationship. …”
[32]Consistently with this, Mr Wells goes on in paragraphs 4 and 5 to say that almost all of the sums referred to in Schedule 1 were payments to the companies which were paid “as introduction of capital” and that the only debt he owed to Mr Chave was the £35,000 in respect of the land at Dassels. Mr Chave makes the point that this account is quite inconsistent with the suggestion made by Mr Wells in his first witness statement that Mr Chave was merely the companies’ accountant, and not Mr Wells’ business partner, during this period. In addition, in this document Mr Wells states (accurately) that Mr Chave was appointed a director of ReAgg in May 2005 and acquired all the shares in the company from the outset.[33]The notes also contain in paragraph 16 a response to Mr Chave’s claims in respect of the equipment. Mr Wells discusses two items of equipment, the Parnaby Cyclone and a (Titan) 516 Screener. He appears to say that both machines were purchased by Dassels Plant Ltd with finance from Barclays Mercantile. The Parnaby Cyclone was delivered to Mr Killoughery in 2002 (for reasons he does not explain), but title remained with (the liquidator of) Dassels Plant Ltd. In October 2007 ReAgg (Plant Hire) Ltd purchased the Titan 516 from Barclays Mercantile with finance from a hire purchase agreement from ING. This machine was scrapped by an employee of ReAgg on 23 May 2008.[34]It is convenient to note at this point that Mr Chave agrees that the Titan 516 was scrapped on 23 May 2008, but he says that that machine has nothing to do with his claim. It is only fair to Mr Wells to observe that at that point in time Mr Chave had not yet clarified that the second machine in respect of which he was claiming was the Powerscreen 1600. The story does not end there, however, as I shall explain.[35]On 26 September 2012 Mr Wells served a formal Reply and Defence to Counterclaim admitting that he was indebted to Mr Chave for £35,000, but not otherwise.[36]On 8 November 2012 Deputy Master Nurse ordered that Mr Wells’ claim in respect of the Dassels land should continue as if commenced under CPR Part 7 and gave directions for trial including the service of statements of case.[37]Following the service by Mr Wells of Particulars of Claim, Mr Chave served an Amended Defence and Counterclaim on 17 December 2012. At this stage, Mr Chave’s debt claims were still in respect of debts said to be owed personally by Mr Wells and particularised in Schedule 1.[38]On 18 January 2013 Mr Wells served a Reply and Defence to Counterclaim. In paragraph 5 of the Counterclaim Mr Wells denied Mr Chave’s allegation that, when they met in 2002, Mr Wells was in financial difficulties. In paragraph 7 Mr Wells alleged that in 2004 and 2005 Mr Chave had organised a restructuring of Mr Wells’ companies which involved the formation of Endbridge Ltd and ReAgg. In paragraph 8 Mr Wells again admitted owing Mr Chave £35,000, but denied any other indebtedness. Indeed, he denied that, apart from the £35,000 and one other exception, he had ever borrowed money from Mr Chave. In paragraph 9 and in the Schedule he responded to Schedule 1 to Mr Chave’s Amended Counterclaim. In summary, he alleged that almost all of the claimed loans were either certainly or probably payments of the liabilities of one or other of his companies. He also raised certain other defences, such as under the Consumer Credit Act 2006.[39]In February 2014 Mr Chave served a Re-Amended Defence and Amended Counterclaim. This is significant for three main reasons. First, Mr Chave increased the amount of the first head of his counterclaim to “not less than” £548,717.65 plus £22,426.89 in respect of Tina and Graham Wells. This was now supported by four detailed schedules as follows: i) Schedule 1 lists payments to or on behalf of Mr Wells or his companies other than ReAgg; ii) Schedule 2 lists payments to or behalf of ReAgg and associated companies prior to 26 August 2008; iii) Schedule 3 lists payments pursuant to or on behalf of ReAgg companies pursuant to guarantees and HP payments after 26 August 2008; iv) Schedule 4 is a list of Mr Wells’ companies giving details of their numbers, names, shareholders, directors, secretaries and statuses.[40]Secondly, Mr Chave alleged that Mr Wells had guaranteed the repayment of all monies lent by Mr Chave to Mr Wells’ companies pursuant to a written guarantee dated 8 December 2003. Apparently this guarantee had been found by Mr Chave’s counsel during the course of a conference at Mr Chave’s office. It had first been mentioned by Mr Chave in his second witness statement dated 26 June 2013.[41]Thirdly, the Re-Amended Defence and Amended Counterclaim was accompanied by “Voluntary Particulars” clarifying and setting out in considerable detail Mr Chave’s claims in relation to the Parnaby Cyclone and the Powerscreen 1600. (I would add that Mr Chave has subsequently exhibited to his first affidavit a number of the documents referred to in the Voluntary Particulars, such as the Barclays Mercantile agreements in respect of the Powerscreen 1600 and what is described as “Water Tank & Dewatering Plant”, which Mr Chave says included the Parnaby Cyclone.)[42]On 18 May 2014 Mr Wells served an Amended Reply and Defence to the Re-Amended Counterclaim. This too is significant for three main reasons. First, in paragraph 15 Mr Wells introduced two new allegations with regard to the payments listed in Schedule 1 to the Re-Amended Counterclaim. As is common ground, it is evident from supporting documents disclosed by Mr Chave that a lot of the payments came from Mr Chave’s client account. Mr Wells points out that in many cases there appear to be matching receipts into the client account, and contends that it is to be inferred that the payments were not in fact made by Mr Chave, but rather the client account was being used as a conduit for payments by other people. In the alternative, Mr Wells contends that, if the money was Mr Chave’s money, he was using his client account for his own business, contrary to the Client’s Money Regulations of the Institute of Chartered Accountants of England and Wales and, to that extent, the claim is founded on an illegality.[43]Secondly, in paragraph 22 Mr Wells alleged that the guarantee dated 8 December 2003 was a forgery. In paragraph 23 he raised a number of points concerning the construction of the guarantee, and in particular contended that it only applied to money which was owing on 8 December 2003.[44]As I understand it, prior to the allegation of forgery being formally pleaded by Mr Wells, it had been asserted by counsel for Mr Wells during a hearing before Master Bragge on 18 October 2013. Counsel for Mr Wells indicated that Mr Wells wished to have the guarantee examined by a handwriting agreement. By agreement, Master Bragge made an order on 24 October 2013 requiring Mr Chave to deliver the original guarantee to Mr Wells’ solicitors for non-destructive expert examination subject to agreement of the identity of the expert. An appropriate expert, a Mr Stockton, was then identified by Mr Wells’ solicitors and agreed by Mr Chave. On 4 November 2013 the guarantee and a file of other original and undisputed documents signed by Mr Wells were delivered to Mr Wells’ solicitors. Mr Wells then sought an order that the guarantee be subjected to DNA and fingerprint testing rather than by a handwriting expert. Mr Chave successfully opposed this at a hearing before Master Bragge on 18 December 2013. Subsequently Mr Wells’ solicitors confirmed that the guarantee had been sent to Mr Stockton on 17 December 2013 and received back on 28 February 2014 and they returned the documents to Mr Chave. Mr Wells has declined to waive privilege over the questions of whether Mr Stockton did in fact examine the guarantee and, if so, with what result. Counsel for Mr Wells informed me that Mr Wells had not yet decided whether to apply for permission to adduce expert evidence from a handwriting expert at trial. At present, therefore, the allegation of forgery is only supported by three pieces of evidence. The first is Mr Wells’ statement of truth on the statement of case. The second is Mr Chave’s failure to mention the guarantee sooner than he did. I am bound to say that I am not particularly impressed by that point. The third is a letter from Mr Chave to Mr Wells’ then solicitors dated 4 November 2011. Mr Wells says that this entirely contradicts the idea that there was ever a guarantee. I can only say that I disagree with this.[45]Thirdly, in paragraph30.1 Mr Wells contended that the Powerscreen 1660 was delivered to ReAgg at Ledburn Quarry in October 2006 and was scrapped on 23 May 2008. This is, of course, inconsistent with his statement in his notes on the Defence and counterclaim that it was a Titan 516 that was scrapped on that date. In paragraph30.2 Mr Wells says that the Parnaby Cyclone was ordered for a contract that did not materialise, that Eamon Killoughery’s brother Joe Killoughery agreed to store it and that at some point it was moved to a yard owned by Eamon Killoughery. In paragraph 34 Mr Wells declined to plead to the allegation of fraudulent misrepresentation contained in the Voluntary Particulars on the ground that it did not form part of Mr Chave’s claim.

The quarries claim

[46]On 19 March 2014 Mr Wells was given permission by Master Bragge to amend his Particulars of Claim to introduce a new claim in respect of shares in a company called ReAgg Properties Ltd. Mr Wells says that in the spring of 2007 he found two quarries in Devon that were for sale. He negotiated for ReAgg Ltd to purchase the quarries for £2.4 million and for Barclays to fund the purchase. According to Mr Wells, Mr Chave suggested that a new company, ReAgg Properties Ltd, be set up and introduced Mr Ruskin to finance the transaction in return for half the shares. Mr Wells agreed to this. ReAgg Properties duly purchased the quarries. Subsequently the company changed its name to RF Aggregates Properties Ltd. Initially Mr Chave owned the shares in the company, but subsequently he transferred them to Mr Ruskin, John Fretwell, Adam Fretwell and Ballard Campbell LLP.[47]Mr Wells alleges that Mr Chave held all, 4/5 or ½ of the shares on trust for Mr Wells and acted in breach of trust in transferring the shares. Accordingly, he claims damages of one-half of the value of the shares.[48]On 27 March 2014 Mr Chave served a separate Defence to the Amended Particular of Claim denying that he held the shares on trust. Mr Chave says that ReAgg Properties was financed by John Fretwell, who had a charge over the quarries. Mr Fretwell later demanded his money back when he found out about Mr Wells’ dishonest conduct. Instead the company were transferred to Mr Fretwell and his associates. Mr Chave contends that this claim is another fabrication on the part of Mr Wells. Relatively little time was spent on this claim at the hearing, however, and I have not considered it in any detail. All I will say is I do not accept the submission made counsel for by Mr Chave that a letter from Mr Wells to ReAgg dated 18 July 2008 was wholly incompatible with this claim, although I do agree that it raises a question mark over it.

Mr Chave’s claim against Mrs Wells and Graham Wells

[49]As well being the defendant to Mr Wells’ claim, Mr Chave is the claimant in a related claim against Mrs Wells and Graham Wells which he commenced on 9 May 2013.[50]As originally formulated, Mr Chave’s claims were for repayment by Mrs Wells of sums of money totalling £19,200 which Mr Chave alleged he lent her that in 2007 and 2008 and for repayment by Graham Wells of a sum which Mr Chave alleged he lent him in 2006 of which £2,552.84 was said to remain outstanding.[51]One of the sums claims by Mr Chave from Mrs Wells was a sum of £10,000 said to be have been lent in connection with the purchase of a property at Flat 4, Ocean, 2 Gannets Court, Swanage, Dorset BH19 1PF (“the Swanage Property”). Mr Chave alleged that in the summer of 2007 he assisted Mr Wells to purchase this property for the sum of £415,000. He also alleged that the property was purchased in the name of Mrs Wells, that Mrs Wells held the property on bare trust for Mr Wells and that it was to be inferred that the property was purchased in the name of Mrs Wells to avoid execution of judgment by the creditors of Mr Wells. I must return to this subject below, but it is convenient to note at this point that Mr Wells accepts in paragraph 17 of his third witness statement that Mr Chave lent Mrs Wells £10,000 in connection with the purchase of the Swanage Property.[52]Mr Chave also claimed to be entitled to enforce a charge granted by Clive Wells and Graham Wells over a property at 78 Trinity Avenue, Bush Hill Park, Enfield EN1 1HS in favour of Mr Chave on 14 January 2004.[53]In paragraph 15 of his Defence to this claim served on 17 June 2013, Graham Wells denied signing this charge, implying that it is a forgery. The allegation of forgery does not appear to be supported by any expert evidence.[54]Mr Chave has exhibited examples of other documents signed by Graham Wells, contending that the signatures are identical to that on the disputed charge. Again, however, Mr Chave has not adduced any expert evidence on the point.[55]Mr Chave also relies on the fact that, in his notes on the Defence & Counterclaim, Mr Wells admits that he granted Mr Chave a charge over the property in question.[56]Mr Chave also relies on the fact that the same property was subsequently charged by Mr Wells and Graham Wells to Mr Clayden, whom Mr Chave believes has lent Mr Wells money.[57]I also bear in mind, of course, that Graham Wells is a separate party who has not been represented before me. Furthermore, even if he has made a spurious allegation of forgery against Mr Chave, that is not evidence that Mr Wells has also done so.[58]Again, Mr Chave has expanded the claims made in those proceedings by a subsequent amendment to his Particulars of Claim on 19 March 2014, but it is not necessary to go into the details of this.

The Environment Agency prosecution

[59]A complicating factor with regard to these proceedings is that in February 2013 the Environment Agency launched a criminal prosecution against Mr Wells, Mr Chave, Mr Ruskin and a former employee of ReAgg called Christopher Watts alleging the commission of various offences involving the unlawful removal of controlled waste from the Albany site and its deposit at Ledburn Quarry.[60]I was told by counsel for Mr Chave that Mr Watts pleaded guilty at the outset while Mr Ruskin was not proceeded against. On 4 April 2014 Mr Chave pleaded guilty to one offence which Mr Chave says is a minor, technical one. According to Mr Chave, this concerns the failure of ReAgg to provide waste transfer notes that were destroyed by Mr Wells and Mr Chave’s liability for this arises out of the fact that he was a director of ReAgg at the relevant time. The remaining charges against Mr Chave were dropped. As I understand it, Mr Chave will be sentenced when the prosecution against Mr Wells has been concluded. Mr Chave is apparently hopeful of receiving a minor financial penalty or even a conditional discharge, but as I understand it, the court has yet to decide whether or not to accept Mr Chave’s basis of plea. I was told that Mr Wells will stand trial in September 2014.

Adjournment of the trial

[61]As a result of the Environment Agency prosecution, the trial of these proceedings, which had been fixed for November-December 2013, was vacated. The trial is currently fixed for a window in early April 2015 with an estimate of 7-10 days. As I understand it, Mr Chave’s claim against Mrs Wells and Graham Wells is to be tried at the same time, which makes obvious sense.

Mr Chave’s application to strike out and for summary judgment

[62]On 5 February 2014 Mr Chave launched an application to strike out Mr Wells’ claim in respect of the land at Dassels and for summary judgment on part of his counterclaim, namely personal debts claimed to have been incurred by Mr Wells to Mr Chave up to the formation of ReAgg. Mr Chave subsequently served his third witness statement dated 5 March 2014 in support of this application. This application is important, because it forms the backdrop for Mr Chave’s application for a freezing order.[63]So far as Mr Wells’ claim in respect of the Dassels land was concerned, in summary Mr Chave contended that the claim was bound to fail because the documentary evidence was inconsistent with the claim. In particular, Mr Chave relied on documents which were said to show clearly that Mr Wells’ conduct over many years was inconsistent with any belief by Mr Wells that the land was ever held by Mr Chave on trust for Mr Wells.[64]As for the counterclaim, in summary Mr Chave contended that, given the particulars and documentation he had provided, it was clear that Mr Wells had no real prospect of successfully defending it.

The application before Sales J on 15 April 2014

[65]The application for the freezing order was made without notice. It was supported by the first affidavit of Mr Chave, which incorporated by reference the contents of Mr Chave’s third witness statement.[66]The application was prompted by the fact that an inspection of the charges register of various properties owned or jointly owned by Mr Wells on 27 March 2014 had revealed that charges had been placed on three properties in favour of Topaz Finance plc (“Topaz”) and Hertford Solutions LLP on dates subsequent to the service of the strike out/summary judgment application as follows: i) 9 Hamels Lane, Westmill, Buntingford SG9 9LZ (registered in the name of Mr Wells) – charge dated 15 June 2007 and registered on 17 July 2007 registered in the name of Topaz on 26 February 2014; ii) 67 St Edmunds Road, London N9 7PU (registered in the joint names of Mr Wells and Graham Wells) – charge dated 27 February 2014 registered in favour of Hertford Solutions on 3 March 2014. iii) 33 Hansart Way, Enfied EN2 8ND (registered in the joint names of Mr and Mrs Wells) - charge dated 27 February 2014 registered in favour of Hertford Solutions on 3 March 2014.[67]Furthermore, although there was no dispute that Topaz is part of a large and respectable lender, Mr Chave was suspicious of Hertford Solutions. This was for two reasons. First, enquiries of the Financial Conduct Authority had revealed only an application for a consumer credit related licence but no authorisation to receive deposits under the Financial Services and Markets Act 2000. Secondly, Hertford Solutions’ abbreviated unaudited accounts for the year ended 31 March 2013 showed current assets of £3,586,932 of which investments are £3,085,673 and creditors due within one year of £3,424,915.[68]In addition to these specific matters, Mr Chave contended that there was substantial evidence of dishonesty on the part of Mr Wells and accordingly there was a risk that Mr Wells would dissipate his assets so as to frustrate any judgment unless restrained.[69]As I understand it, Mr Chave sought a worldwide freezing order, but Sales J was only prepared to grant an order in respect of England and Wales. He also required Mr Chave to file evidence confirming his ability to meet the cross-undertaking.[70]When Sales J queried the basis upon which Mr Chave sought a freezing order against Mrs Wells, reliance was placed by counsel for Mr Chave on the authority of TSB Private Bank Ltd SA v Chabra [1992] 1 WLR 231. In this regard, counsel for Mr Chave relied on evidence that the Swanage Property was purchased by Mr Wells and placed in his wife’s name. The property is subject to a charge in favour of the Halifax Division of Bank of Scotland plc (“Halifax”) dated 21 November 2007. Mr Chave exhibited a client ledger card from Alpha Law in respect of this transaction identifying Mr Wells as the client. I shall return to this subject below.[71]As granted, the order encompassed all of Mrs Wells’ assets up to the specified limit. Mr Chave undertook to Sales J to issue and serve an amended claim form joining Mrs Wells as a party to the action. This was, of course, a procedural impossibility, as Mr Wells is the Claimant. The correct course was for Mr Chave to serve an amended counterclaim joining Mrs Wells as an additional defendant to his counterclaim. Be that as it may, Mr Chave has purported to issue an amended claim form.

The hearing before Hildyard J on 25 April 2014

[72]The return date set by the order of Sales J was 25 April 2014. Shortly before the hearing before on that date, Mr Wells served his second and third witness statements in answer to Mr Chave’s third witness statement and first affidavit respectively. Mr Chave contends that the third statement constitutes further evidence of Mr Wells’ dishonesty, because Mr Wells exhibited to it some documents, and in particular some payslips for Mrs Wells, which Mr Chave contends are forgeries. I shall consider this contention below. The matter was subsequently adjourned to 28 April 2014.

The hearing before Hildyard J on 28 April 2014

[73]At the hearing before Hildyard J on 28 April 2014 Mr Chave’s application to continue the freezing order was adjourned to a hearing by order and it was agreed that the order against Mrs Wells would be restricted to the Swanage Property and the property at 33 Hansart Way. Mr Chave is content that the order against Mrs Wells should continue to be restricted to those two properties.[74]On 30 April 2014 Mr Chave served a third affidavit setting out his evidence that the documents exhibited to Mr Wells’ third witness statements were forgeries.

The hearing before Master Bragge on 28 to 30 May 2014

[75]Mr Chave’s application to strike out and for summary judgment ultimately came before Master Bragge for a three day hearing on 28 to 30 May 2014. Shortly before the hearing, Mr Wells served his sixth witness statement dated 23 May 2014 in opposition to the application as well to the continuance of the freezing order. In this statement Mr Wells among other things sought to rebut Mr Chave’s allegation that Mrs Wells’ application to Halifax for a mortgage in respect of the Swanage Property was fraudulent and alleged that the questionable conduct was on Mr Chave’s side. Mr Chave responded briefly to this in his fourth witness statement dated 27 May 2014.[76]On 28 May 2014 Mr Wells produced some further documents which he contended showed that it was Mr Chave who had forged Mrs Wells’ payslips rather than himself. On 29 May 2014 Mr Chave responded by producing further documents which he contended showed that it was Mr Wells who had produced false documents in an attempt to deceive both Hildyard J and Master Bragge. Neither side served witness statements supporting these allegations at the hearing.[77]On 30 May 2014 the Master dismissed the application, but reserved the costs to the trial judge. Regrettably, I have not been provided with a transcript, or even a note, of the Master’s judgment. I was informed by counsel for Mr Chave that, so far as the application for summary judgment on the counterclaim was concerned, the Master considered that the allegations that Mr Chave had used client money to pay Mr Wells and that Mr Chave was carrying on an unlawful unregulated credit business by lending Mr Wells money raised issues which required a trial. The Master also considered that the construction of the guarantee was a triable issue (although it is not clear to me that this point was directly before him).[78]The Master also required both parties to undertake to verify their allegations in relation to the wage documentation by witness statements. Mr Wells duly served his seventh witness statement on 31 May 2014. Mr Chave served a witness statement made by his office manager Robert Swalwell on 3 July 2014. This witness statement also introduced some further evidence in support of Mr Chave’s application for continuation of the freezing order. This was only shortly before the hearing before me, but Mr Wells did not seek an adjournment of the hearing, nor did he serve any evidence in response.[79]Mr Chave has not appealed against Master Bragge’s order of 30 May 2014.

Continuation of the freezing order

[80]There is no dispute that, in order to justify continuation of the freezing order, Mr Chave must establish(i) a good arguable case on his counterclaims,(ii) that there is a risk that, if not restrained, Mr Wells will dissipate his assets so as to frustrate any judgment against him and(iii) that it is just and convenient to grant the order sought.[81]Counsel for Mr Wells sensibly did not dispute that Mr Chave has a good arguable case on his counterclaims. Nor did he dispute, if there was a risk of dissipation, there had been no material non-disclosure on the part of Mr Chave and Mr Chave was good on the cross-undertaking, it would be just and convenient to grant the order.

Risk of dissipation of assets: the law

[82]The basic test remains that stated by Kerr LJ delivering the judgment of the Court of Appeal in Ninemia Maritime Corp v Trave Schiffartgesellschaft GmbH [1983] 1 WLR 1412 at 1422H:
“In our view the test is whether, on the assumption that the plaintiffs have shown at least ‘a good arguable case’, the court concludes, on the whole of the evidence then before it, that the refusal of a Mareva injunction would involve a real risk that a judgment or award in favour of the plaintiffs would remain unsatisfied.”
[83]As HHJ Waksman QC pointed out in Cherney v Neuman [2009] EWHC 1743 (Ch):
“70. In order to consider that risk, the applicant is often said to have to show a risk of ‘dissipation’ of the Defendant’s assets. But a risk that the assets will be hidden or otherwise dealt with so as to make any judgment nugatory will suffice as well. See Derby v Weldon [1990] Ch 48 per Parker LJ at p 57. There needs to be ‘solid evidence’ of this risk. See Thane v Tomlinson [2003] EWCA Civ 1272 per Gibson LJ at paragraph 21. The context there was a without notice application but there is no reason why the same stringency should not apply to a ‘with notice’ application. 71. The ultimate ‘risk’ to be guarded against is that of an unsatisfied judgment. The reason why emphasis is placed on the risk of dissipation is because what has to be shown is the risk of an unsatisfied judgment by reason of the dissipation or secretion of assets. Thus, the freezing injunction is not to be used simply to provide security for the claim. So if in truth the risk that the judgment may not be fruitful is because the Defendant happens to live in some remote location or because he does not have much by way of assets anyway, it is not appropriate to grant it. See the judgment of Colman J in Laemthong v Artis [2005] 1 Lloyds Rep 100 at paragraph 54. Hence the standard of proof of the risk of dissipation is ‘relatively high’: see paragraph 61.”
[84]Evidence of dishonesty is often relied on this context. The relevance of such evidence was considered by the Court of Appeal in VTB Capital plc v Nutritek International Corp [2012] EWCA 808, [2012] 2 Lloyd’s Rep 313. Lloyd LJ, who delivered the judgment of the Court, approved at [178] the following passage from the judgment of Flaux J in Madoff Securities International Ltd v Raven [2011] EWHC 3102 (Comm): “163. In this context, and entirely properly, Mr Weekes referred me to the decision of the Court of Appeal in Thane Investments v Tomlinson[2003] EWCA Civ 1272 where Peter Gibson LJ at [28] deprecates the tendency to infer a risk of dissipation from the fact that allegations of dishonesty are made against the defendant. However, Mr Weekes submitted that Thane Investments was a case which must be approached with caution, as it was an ex tempore judgment given where the defendant was unrepresented, so that the case was not perhaps as fully argued as it might have been. In particular, two earlier relevant decisions of the Court of Appeal do not appear to have been cited to the Court of Appeal”164. The first is Norwich Union v Eden (1996 25 January, unreported) a decision of a two man Court of Appeal (Hirst and Phillips LJJ). The main judgment was given by Phillips LJ who said: ‘It seems to me that when the court considers whether there is a good arguable case it is at that stage that it considers whether the likelihood of a judgment in favour of the plaintiff is sufficient to justify the grant of Mareva relief. If it is so satisfied, the question then arises:- if such a judgment is given, what is the risk that there will be no assets there to satisfy it? If the judgment in question being considered is a judgment in which allegations of fraud are made, then it seems to me that it is open to the court to conclude from that fact alone that there is sufficient risk of dissipation of assets to justify the grant of relief. For myself it does not seem to me that there would be any prospect of persuading this court that the learned Judge had erred in principle in so concluding.’165. The other decision is that in Grupo Torras SA v Al Sabah 1997 WL 1105536 (21 March 1997) where Saville LJ said: ‘Mr Etherton also criticised the judge for failing, as he put it, properly to address himself to the question whether there was a real risk of dissipation of assets, and simply concluded that such a risk existed because this was a fraud case. In this context Mr Etherton pointed out that Mr Dawson had lived and worked as an investment adviser in Switzerland for a long time and that his assets included a very valuable house in Geneva, so that it was hardly likely that he would set about making them judgment proof. Mr Etherton also drew attention to the fact that the litigation had begun years ago and long before Mr Dawson was joined to it, yet there was no suggestion that he has yet made any attempt to dissipate assets. These are certainly points that can be made on behalf of Mr Dawson, but again I am not persuaded that the judge simply failed to take them into account. What is clear from the judgment is that the judge took the view that there was a good arguable case that Mr Dawson was knowingly implicated in the fraud; and that the nature of the allegations was such that there was a strong fear of dissipation. Since it is part of Mr Dawson's own case that he was expert in the sort of intricate, sophisticated and international financial transactions which feature in this case, and since the plaintiffs had established a good arguable case that Mr Dawson had used his expertise for dishonest purposes, I am not in the least surprised that the judge reached the conclusion he did. In short I remain wholly unpersuaded that the judge so erred in his assessment of the risk of dissipation that it would be right for this court to interfere.’166. Mr Weekes relied upon that case in support of a submission that, like the defendant in that case, Mrs Kohn is experienced in sophisticated international financial transactions. He submitted that in the light of those earlier authorities, the way in which Thane Investments should be read is correctly set out by Patten J in Jarvis Field Press v Chelton [2003] EWHC 2674 (Ch), where having cited the relevant passage from the judgment of Peter Gibson LJ, the learned judge says at [10]: ‘The relevance of that passage, of course, is to the submission made by Mr Lord, on behalf of the claimants on this application, that I should infer from the apparent dishonesty of Mrs Chelton, together with the recent change of circumstances, a real likelihood and risk of dissipation. I have no difficulty in accepting the general principle, emphasised by Peter Gibson LJ, that a mere unfocused finding of dishonesty is not, in itself, sufficient to ground an application for a freezing order. It is necessary to have regard to the particular respondents to the application and to ask oneself whether, in the light of the dishonest conduct which is asserted against them, there is a real risk of dissipation. As Peter Gibson LJ made clear in the passage I have already quoted, the court has to scrutinise with care whether what is alleged to have been dishonesty justifies the inference. That is not, therefore, a judgment to the effect that a finding of dishonesty (or, in this case, an allegation of dishonesty) is insufficient to found the necessary inference. It is merely a welcome reminder that in order to draw that inference it is necessary to have regard to the particular allegations of dishonesty and to consider them with some care.’167. I agree with that analysis of the approach which the court should adopt when considering whether to grant a freezing injunction, in a case where there are allegations of fraud or deliberate misconduct against a defendant.” ‘It seems to me that when the court considers whether there is a good arguable case it is at that stage that it considers whether the likelihood of a judgment in favour of the plaintiff is sufficient to justify the grant of Mareva relief. If it is so satisfied, the question then arises:- if such a judgment is given, what is the risk that there will be no assets there to satisfy it? If the judgment in question being considered is a judgment in which allegations of fraud are made, then it seems to me that it is open to the court to conclude from that fact alone that there is sufficient risk of dissipation of assets to justify the grant of relief. For myself it does not seem to me that there would be any prospect of persuading this court that the learned Judge had erred in principle in so concluding.’ ‘Mr Etherton also criticised the judge for failing, as he put it, properly to address himself to the question whether there was a real risk of dissipation of assets, and simply concluded that such a risk existed because this was a fraud case. In this context Mr Etherton pointed out that Mr Dawson had lived and worked as an investment adviser in Switzerland for a long time and that his assets included a very valuable house in Geneva, so that it was hardly likely that he would set about making them judgment proof. Mr Etherton also drew attention to the fact that the litigation had begun years ago and long before Mr Dawson was joined to it, yet there was no suggestion that he has yet made any attempt to dissipate assets. These are certainly points that can be made on behalf of Mr Dawson, but again I am not persuaded that the judge simply failed to take them into account. What is clear from the judgment is that the judge took the view that there was a good arguable case that Mr Dawson was knowingly implicated in the fraud; and that the nature of the allegations was such that there was a strong fear of dissipation. Since it is part of Mr Dawson's own case that he was expert in the sort of intricate, sophisticated and international financial transactions which feature in this case, and since the plaintiffs had established a good arguable case that Mr Dawson had used his expertise for dishonest purposes, I am not in the least surprised that the judge reached the conclusion he did. In short I remain wholly unpersuaded that the judge so erred in his assessment of the risk of dissipation that it would be right for this court to interfere.’ ‘The relevance of that passage, of course, is to the submission made by Mr Lord, on behalf of the claimants on this application, that I should infer from the apparent dishonesty of Mrs Chelton, together with the recent change of circumstances, a real likelihood and risk of dissipation. I have no difficulty in accepting the general principle, emphasised by Peter Gibson LJ, that a mere unfocused finding of dishonesty is not, in itself, sufficient to ground an application for a freezing order. It is necessary to have regard to the particular respondents to the application and to ask oneself whether, in the light of the dishonest conduct which is asserted against them, there is a real risk of dissipation. As Peter Gibson LJ made clear in the passage I have already quoted, the court has to scrutinise with care whether what is alleged to have been dishonesty justifies the inference. That is not, therefore, a judgment to the effect that a finding of dishonesty (or, in this case, an allegation of dishonesty) is insufficient to found the necessary inference. It is merely a welcome reminder that in order to draw that inference it is necessary to have regard to the particular allegations of dishonesty and to consider them with some care.’

Risk of dissipation of assets: evidence of dishonesty

[85]Mr Chave relies upon two categories of evidence, first evidence of Mr Wells’ dishonesty and secondly evidence more specifically of Mr Wells’ recent dealings with his assets, as showing that there is a risk of Mr Wells dissipating his assets so as to frustrate a judgment if the freezing order is not continued. I shall deal with these separately.[86]1. The Environment Agency evidence. The Environment Agency has served statements from a considerable number of prosecution witnesses. Mr Chave exhibited extracts from these to his first affidavit. Counsel for Mr Chave submitted that the statements contain clear evidence of dishonesty on the part of Mr Wells in connection with the operation of ReAgg’s site at Ledburn Quarry. In summary, the statements provide evidence that Mr Wells received cash payments amounting to about £2,000 a day from haulage drivers in return for accepting illicit disposals of waste from the Albany site, that the cash payments were not accounted for and that documentation was concealed or destroyed to cover up this activity. It appears that over £300,000 is shown in the Albany records as having been paid to people connected with ReAgg, but which has not been accounted for. In addition, there is evidence that false tickets and records (called ghost tickets) were created for the purpose of cheating Albany into paying for loads that had not been delivered. Finally, there is evidence of that Mr Wells forged Mr Chave’s signature on cheques. There is also evidence of the forgery of an amended version of a document called a CQA document originally prepared for ReAgg by an environmental expert called Peter Rennison, but this evidence does not directly implicate Mr Wells.[87]Although Mr Wells has denied these allegations in his second witness statement, counsel for Mr Wells rightly accepted that the statements contained evidence of dishonesty, but he pointed out that the acts in question are alleged to have taken place in the period from about November 2007 to May 2008.[88]2. Mr Wells’ claims and evidence in these proceedings. Mr Chave contends that it can be seen that Mr Wells’ claims in these proceedings, and in particular the claim regarding the land at Dassels, are fabricated. He also submits that some of Mr Wells’ other evidence and assertions are dishonest. Examples that are particularly relied on are Mr Wells’ denials of indebtedness and his assertion that the guarantee is a forgery. I shall take these in what appears to me to be the ascending order of gravity.[89]So far as Mr Wells’ claim is relation to the Dassels land is concerned, in my judgment it cannot be concluded at this stage that the claim is fabricated, for at least three reasons. First, as counsel for Mr Wells pointed out, Master Bragge declined it to strike out. It follows that he must have considered that the claim was one which was not obviously unsustainable, as Mr Chave contends, but required a trial for its proper resolution. As noted above, Mr Chave has not appealed against that conclusion.[90]Secondly, in so far as Mr Chave relies upon Mr Wells’ failure to provide inspection of the Breeze & Wyles file as demonstrating that the claim cannot be sustained, whatever may have been the position in the past (as to which, see below), Mr Wells has now produced a copy of the file. I agree that, for the reasons given above, the documents raise questions to which answers will in due course be required; but I do not accept that those questions are unanswerable. I also consider that what Mr Wells says in paragraph 43 of his second witness statement is not supported by the documents he relies on and is inconsistent with his first witness statement; but that does not necessarily mean that the claim has been fabricated.[91]Thirdly, although Mr Chave relies on some correspondence between Mr Wells and himself and between their then respective solicitors from 2008 and 2009 relating to proposals that the land would be held by Mr Wells on trust for a company Ace Waste Holdings & Investments Ltd and that the land would be transferred from Mr Chave to a Sean McDonnell as being inconsistent with Mr Wells’ claim, I do not consider that this is as clear as Mr Chave contends. Again, they raise questions which will require answers; but those questions may be answerable. Accordingly, I am not satisfied that the evidence presently before the court establishes a good arguable case of dishonesty by Mr Wells in advancing the claim in relation to the land at Dassels.[92]As to Mr Wells’ allegation that the guarantee is a forgery, I am concerned that Mr Wells has made this allegation and yet is at present apparently unable or unwilling to support it with expert evidence although an expert has been given access to the document. I have to bear in mind, however, that the trial is still over six months away; it remains open to Mr Wells to make an application for permission to adduce expert evidence; no peremptory order has been made (or even sought by Mr Chave) requiring Mr Wells to support the allegation with expert evidence or withdraw it; and Mr Chave has not adduced any expert evidence establishing the authenticity of the document. Accordingly, I am not satisfied that the evidence presently before the court establishes a good arguable case of dishonesty by Mr Wells in advancing this allegation. On the other hand, I do consider that it raises suspicion which it is legitimate for the court to take into account in combination with other matters.[93]In the case of Mr Wells’ denial of indebtedness to Mr Chave, it seems to me that Mr Chave is on stronger ground. Counsel for Mr Wells pointed out that Mr Wells does not deny that his companies owed Mr Chave money. That is no answer to the point that Schedule 1 to Mr Chave’s Re-Amended Defence and Amended Counterclaim contains detailed particulars of a large number of payments made to Mr Wells personally, which as noted above are supported by documents disclosed by Mr Chave. This strongly suggests that Mr Wells’ denial is false, particularly given that Schedules 2 and 3 contain equally detailed particulars of payments made to or for the benefit of the companies. Furthermore, there is quite a lot of other evidence to support this proposition. This evidence includes: historic schedules of Mr Wells’ indebtedness (and, to some extent, his companies’ indebtedness) as at 6 October 2003 and 13 February 2004 exhibited by Mr Chave to his second witness statement; a letter from Mr Wells to Mr Chave dated 15 November 2008 in which Mr Wells refers to “the need for me to start to repay the various moneys you either loaned me or paid on my behalf” exhibited by Mr Chave to his second affidavit dated 24 April 2014; and Mr Sanders’ evidence cited in paragraph 5 above. I also bear in mind in this regard the inconsistencies in Mr Wells’ evidence identified in paragraphs 24 and 31 above.[94]Counsel for Mr Wells relied on a letter from Mr Chave to Abbey dated 5 March 2007 containing a reference for Mr Wells which Mr Wells exhibited to his second witness as supporting Mr Wells’ case and contradicting Mr Chave’s case. In my judgment it does no such thing. On the contrary, what it says in summary is that between 2000 and 2002 Mr Wells borrowed heavily, that in about 2002 Mr Wells had to pay sums of about £300,000 which were owed to him by a friend’s business; that as a result he could not fund his borrowings; and that he was assisted by a number of people allowing him time to repay, while others had attempted to bankrupt him; but that he turned the corner with the setting up of ReAgg in March 2005, which had agreed to purchase the intellectual property for a specialist recycling system he had developed, which was employing him as the operations manager for its site at Leighton Buzzard and which was due to be making him substantial payments from mid 2008 onwards.[95]Counsel for Mr Wells also relied on the fact that Master Bragge had held that Mr Wells had triable defences to the counterclaim, but, given what I understand to have been his reasons for so holding, that does not assist Mr Wells in relation to this point.[96]3. Mr Wells’ dealings in chattels. Mr Chave alleges that Mr Wells has a habit of acquiring chattels on hire purchase or similar terms and then selling them when they do not belong to him.[97]One instance of this is admitted by Mr Wells. This concerns a cement mixer which Mr Wells and his brother sold to a third party in about 2003. Mr Wells says that this was an oversight and he did not act dishonestly. I am not satisfied that the evidence presently before the court establishes a good arguable case that this explanation is false. On the other hand, I do consider that this matter raises suspicion which it is legitimate for the court to take into account in combination with other matters.[98]The next two instances relied on by Mr Chave concern the Parnaby Cyclone and the Powerscreen 1600. In this regard, counsel for Mr Chave particularly relied on a letter from Mr Clayden to Mr Chave dated 25 June 2008 in which Mr Clayden say “Obviously these should not have been sold without the permission of Barclays (nor me!)”, but it is not entirely clear that Mr Clayden was referring to a sale by Mr Wells. I am not satisfied that the evidence presently before the court establishes a good arguable case of dishonesty by Mr Wells in relation to these machines. On the other hand, I do consider that the change in Mr Wells’ story with regard to which machine was scrapped on 23 May 2008 raises suspicion which it is legitimate for the court to take into account in combination with other matters. This is compounded by the fact that, in paragraph 14 of his second witness statement, Mr Wells has reiterated that the Powerscreen 1600 was scrapped on 23 May 2008, yet the email of that date which he exhibits in support of this refers to a “Chieftain 516 Screener”.[99]The final instance relied on by Mr Chave is not of precisely the same character, but is said to show a similar lack of commercial probity. In paragraph 88 of his third witness statement Mr Chave said that on 5 February 2014 he had unexpectedly been contacted by a Ross Rolfe and a Jabe Hewer. They had informed him that they had recently sold a business called Recycle Tyre Services Ltd to Mr Wells on terms that the purchase price was to be paid over a period of time. Mr Wells had failed to pay the sums due and dissipated the assets of the business to avoid remedial action. Mr Wells’ response in paragraph 28 of his second witness statement was that he did not owe Mr Rolfe and Ms Hewer anything because the payment due was 10% on all sales to their customers, but they had refused to provide their customer list. Furthermore, Mr Wells has exhibited to his sixth witness statement a copy of an order setting aside a statutory demand served by Ms Hewer on Mr Wells dated 14 February 2014. Against this, Mr Swalwell has exhibited to his witness statement a copy of an agreement between Mr Wells and Mr Rolfe and Ms Hewer dated October 2013 which does not appear to be entirely consistent with Mr Wells’ account. Nevertheless, the evidence on this topic is rather fragmentary and I do not consider that it is presently possible to conclude that it raises a good arguable case of dishonesty on the part of Mr Wells.[100]4. The Swanage property and Mrs Wells’ payslips. This is evidence which was not relied on by Mr Chave before Sales J, but has emerged as a result of Mr Wells’ opposition to the continuance of the freezing order and his resistance to the application to strike out and for summary judgment.[101]The starting point is that it is common ground that Mrs Wells purported to purchase the Swanage Property with assistance of a £365,000 mortgage which she obtained from Halifax in November 2007. Mr Chave asserts that Mrs Wells would have been unable to afford a £365,000 mortgage and that the Swanage Property had in truth been purchased by Mr Wells and put into Mrs Wells’ name (even though it is Mr Chave’s own case that he lent Mrs Wells £10,000 in connection with the purchase of the property). Mr Wells’ answer to this is that Mrs Wells was able to afford the mortgage because she was earning a substantial salary from ReAgg, as shown by certain documents he has produced. Mr Chave’s riposte is that Mrs Wells was not employed by ReAgg at all, but only had a small and irregular income from working in a nursery, and that the documents produced by Mr Wells are either forgeries or documents produced to mislead Halifax.[102]Mr Wells exhibited to his third witness a number of documents whose authenticity is challenged by Mr Chave. The first is a letter purportedly from Mrs J Hawkins of ReAgg to Halifax dated 18 October 2007 replying to a letter from Halifax dated 17 October 2007 (which is also in evidence but does not appear to be questionable). This states that Mrs Wells’ salary is £75,000 per annum and that her employment commenced on 2 January 2006. Apart from its contents, this is suspicious because it appears to have been faxed on 17 December 2006. Mr Wells has made no attempt to explain this discrepancy. Furthermore, Mr Chave says that ReAgg did not start trading until 19 November 2006, and so Mrs Wells’ employment could not have started in January 2006. This evidence is supported by a witness statement of Mrs Hawkins in which she states she was approached by Mr Wells to set up and run ReAgg’s office at Ledburn Quarry in October 2006. It is also supported by Mr Wells’ own evidence in paragraph 15 of his third witness statement that a cheque dated 29 January 2007 was “paid into ReAgg as start-up costs”.[103]The other documents questioned by Mr Chave are three computerised payslips for Mrs Wells from ReAgg dated 31 July, 31 August and 30 September 2007. These identify Mrs Wells as employee number 1, they say that she was paid by cheque and the one dated 31 July 2007 bears a print run number allocated by the IRIS payroll software of 6693. Mr Chave’s evidence in his third affidavit was that these were forgeries, as demonstrated by the following points.[104]First, Mr Chave says that there is no record of payments of the sums in question to Mrs Wells in ReAgg’s wages records (two lever arch files of which Mr Chave has subsequently produced).[105]Secondly, on 25 April 2014 ReAgg’s liquidator, Mark Reynolds, informed Mr Chave, counsel for Mr Chave and counsel for Mr Wells by telephone that he had not seen any documentary records to indicate that Mrs Wells had been an employee of ReAgg at any time, nor had she submitted any claim in the liquidation.[106]Thirdly, Mr Chave’s firm prepared Mr and Mrs Wells’ tax returns for a period of time. Mrs Wells’ tax records, which Mr Chave exhibited, show that her income was £1,935.45 for the year ended 5 April 2005, nil for the year ended 5 April 2006 and £2,687.18 for the year ended 5 April 2007 and that her employer was Esther Brown (she also reported being employed by Endbridge Ltd, another of Mr Wells’ companies, but not receiving any income from that company). Although the earlier two returns are unsigned, the return for the year ended 5 April 2007 appears to be signed by Mrs Wells.[107]Fourthly, the P35 forms submitted by ReAgg to HMRC record no payments or deductions in respect of Mrs Wells. Thus the P35 for the year ended 5 April 2007 exhibited by Mr Chave lists payments and deductions for five employees (of whom Mrs Hawkins is number 1), none of whom is Mrs Wells. Furthermore, Mr Chave has exhibited P14 forms for these employees (with Mrs Hawkins again being identified as employee number 1). By contrast the P60 form for Mrs Wells which he exhibits again gives her employer as E. Brown and her income for that year as £2,687.18.[108]As noted above, Mr Wells’ response to these points in his sixth witness statement was to maintain that the questionable conduct was on Mr Chave’s side. In support of this contention, he made three points.[109]First, he exhibited a copy of a letter from Abbey to Mr and Wells dated 23 March 2007 asking for “Original Payslips (unable to accept handwritten payslips) or Employers Reference addressed to Abbey plc at the above address”. The letter has been annotated, Mr Wells says in Mr Chave’s handwriting, “computerised payslips for Tina – see our letter of 19/3/07”. It also bears a post-it note annotated, Mr Wells says again in Mr Chave’s handwriting, “Pat – Please let me have a copy of the letter and I need to (illegible) on behalf of Clive together with the copy of Tina’s pay slip. Ta (signed) 27/3/07”.[110]Secondly, Mr Wells said that Mr Chave gave him cash each week to pay the staff at ReAgg and that this is confirmed by entries in Mr Chave’s Schedules to his Re-Amended Counterclaim. Furthermore, Mr Wells says that ReAgg had more employees than are shown in the documents.[111]Thirdly, Mr Wells said that it was Mr Chave’s office which operated the payroll system from which the computerised payslips were produced. He challenged Mr Chave to produce the wage records from the systems. (As indicated above, Mr Chave has subsequently done this.) He suggested that the reality was that ReAgg was paying employees in cash who were not declared to HMRC.[112]As noted above, Mr Chave responded to Mr Wells’ sixth witness statement in his fourth witness statement. He exhibited a letter from his firm to Abbey dated 19 March 2007 (together with a fax transmission report of the same date). This is evidently the letter referred to in the manuscript note on the 23 March 2007 letter. This letter reads:
“Further to our previous corresponding to you in respect of the above client, we write to confirm that Mr Wells’ basic salary from ReAgg Limited is £6,500 per month net of all deductions together with a guaranteed bonus of not less than £2,000 per month net, again, after all deductions. We are also enclosing, as requested, three copies of Mrs Wells’ payslips”
The “previous correspondence” referred to was evidently the letter dated 5 March 2007 relied on by Mr Wells discussed in paragraph 94 above. We are also enclosing, as requested, three copies of Mrs Wells’ payslips”[113]Mr Chave also exhibited the payslips referred to in this letter. These are three handwritten payslips for £247.50 dated 21 July 2006, £123.75 dated 29 September 2006 and £132.00 dated 20 October 2006. The fact that these are handwritten explains the reference in the letter dated 23 March 2007 to Abbey being unable to accept handwritten payslips. The fact that they are handwritten and the amounts involved are also consistent with the tax records which Mr Chave had previously exhibited.[114]Mr Chave explained that these documents related to the purchase by Mr Wells of a property at 9 Hamels Lane, Knights Hill, Westmill, Herts SG9 9LZ, which is the matrimonial home, with the assistance of a mortgage from Abbey in March 2007 (not to the purchase of the Swanage Property with the assistance of a mortgage from Halifax in November 2007).[115]Mr Wells says in his seventh witness statement that he is exhibiting to it three payslips for Mrs Wells and three payslips and a P60 for himself. In fact the exhibit is missing the latter documents, but I shall assume that that is an accidental omission. The payslips for Mrs Wells are the same three which Mr Wells exhibited to his third witness statement. Mr Wells says that he retrieved these documents from his mortgage broker, Duncan Goodacre, who had had them on file since 2007. He exhibits an email from Mr Goodacre to confirm this, although it is not clear from the email that Mr Goodacre is referring to two sets of payslips.[116]Mr Swalwell has given further evidence on this topic by reference to the bundle of documents produced by Mr Chave before Master Bragge and certain additional documents he exhibits. The main points he makes are as follows.[117]First, as can be seen from the documents exhibited by Mr Chave and himself, Mrs Wells was not employee 1, Mrs Hawkins was.[118]Secondly, the IRIS print run number 6693 corresponds to a print run in October 2007. It is not disputed by Mr Swalwell, however, that the payslips for Mrs Wells appear to have been produced by someone who had access to the IRIS system in Mr Chave’s office at about that time.[119]Thirdly, Mr Swalwell exhibits a letter to Mrs Hawkins dated 30 April 2014 asking her for an explanation as to how the letter from herself of behalf of ReAgg to Halifax dated 18 October 2007 came into existence given that Mrs Wells was not employed by ReAgg and her reply dated 26 May 2014 in which she says that the document “was typed on the instructions of Clive Wells as my employer”. This suggests that the document itself is authentic.[120]Fourthly, Mr Swalwell exhibits a P60 form for Mr Wells for the year ended 5 April 2007 (as I understand it, this is the P60 referred to by Mr Wells in his seventh witness statement). Mr Swalwell says that is another forgery. It can be seen that it again identifies Mr Wells as employee number 1. It also gives his total pay for the year as £214,020. Mr Swalwell says that that level of income would not have possible given that ReAgg only commenced trading in November 2006. Mr Swalwell refers to Mr Wells’ tax records for the year ending 5 April 2007 (including Mr Wells’ signed tax return) as showing that Mr Wells not in receipt of a salary from ReAgg in that tax year (although he did declare a capital gain of £165,500 described as “disposal of know how – loan notes encashed”). Mr Swalwell also says that there is no corresponding P14 form.[121]Fifthly, Mr Swalwell exhibits a ReAgg payslip for Mr Wells dated 28 February 2007 (as I understand it, this is one of the payslips referred to by Mr Wells in his seventh witness statement). Mr Swalwell says that is another forgery. It can be seen that it identifies Mr Wells as employee number 1. It also gives his total pay to date as £196,185. It also states that the payment method was BACS, but Mr Swalwell says there are no records of such payments.[122]Sixthly, Mr Swalwell refers to a number of ReAgg documents as confirming that neither Mr Wells nor Mrs Wells was in receipt of a salary from ReAgg in the year ended 5 April 2007.[123]The conclusions I reach in relation to this topic are as follows. First, there is a good arguable case that Mr Wells fraudulently obtained the mortgage for the Swanage Property from Halifax in October/November 2007 by submitting false information as to Mrs Wells’ salary from ReAgg, and possibly false information as to his own salary. Secondly, there is a good arguable case that the property is held by Mrs Wells on trust for Mr Wells. Thirdly, the evidence is not all one way. For example, Mr Swalwell’s evidence that Mr Wells was not in receipt of a salary from ReAgg in the year ended 5 April 2007 is inconsistent with what Mr Chave said to Abbey in his letter dated 19 March 2007.

Risk of dissipation of assets: dealings with assets

[124]1. The charges over the properties. As counsel for Mr Chave accepted, the charge in favour of Topaz cannot constitute evidence of a risk of dissipation of assets since it dates from 2007. It is slightly odd that it was only registered in Topaz’s name in 2014. Mr Wells does not explain this, but counsel for Mr Chave does not appear to have asked Topaz about this either when speaking to Topaz as discussed below.[125]So far as the charges over the St Edmunds Road and Hansart Way properties granted to Hertford Solutions on 27 February 2014 and registered on 3 March 2014 are concerned, Mr Chave relies upon(i) the timing of the charges (shortly after the strike out/summary judgment application was launched),(ii) the obscurity of the lender,(iii) the failure of Mr Wells to provide relevant documentation and(iv) the failure of Mr Wells properly to explain what happened to the money.[126]So far as point (i) is concerned, Mr Wells does not really explain the timing in his second witness statement. He does say he has been short of work for some time and has had to borrow money, but that does not explain the timing of the charges. He says that there has been a suspended possession order on the Hamels Lane property since 24 September 2009, but that cannot explain the timing of the charges. He also says that Mrs Wells was facing possession proceedings on the Swanage Property and that a suspended possession order was made on 11 March 2014. This goes some way to explaining the timing, but not all the way.[127]As to point (ii), Mr Wells says that he approached a broker called Crystal Clear Money who arranged a loan from Hertford Solutions, that he had no reason to suspect Hertford Solutions and that, since he is a poor credit risk, he had no choice but to go to a secondary lender. As counsel for Mr Wells pointed out, there is no evidence to connect Hertford Solutions to Mr Wells in any other capacity. On the other hand, Mr Wells himself says that the loan was only for a period of three months, which has now expired, and he makes no attempt to explain how he repaid it (if indeed he has).[128]As to point (iii), I agree with counsel for Mr Chave that Mr Wells’ witness statement is largely unsupported by relevant documentation of the kind one would expect to exist[129]As to point (iv), Mr Wells says that the money was paid to other creditors of his. He sets out a list of the persons paid, the amounts and the dates. A number of the payments are to cover mortgage arrears, council tax arrears and other household expenses. Accordingly, Mr Wells says that his net financial position is unchanged. Much of this appears perfectly plausible. As counsel for Mr Chave pointed out, however, included in the list of payments are the sums of £23,000 and £20,000 paid to a George Beattie on 27 and 28 February 2014 respectively. The fact that two payments were made on successive dates is explicable by reference to the fact that Mr Wells received money from Hertford Solutions in two tranches on those dates. But who is Mr Beattie and why was he being paid these sums? All Mr Wells says is that they were “in repayment of loans made during 2011 and 2014 for monthly expenses, including the mortgages on 9 Hamels Lane and [the Swanage Property]”. According to Mr Chave’s Schedule 4, Mr Beattie was a shareholder in at least three of Mr Wells’ defunct companies (not ones I have mentioned so far), but that is all the information that appears to be available about him.[130]The conclusion I draw in relation to this topic is that, on its own, it does not provide substantial evidence of a risk of dissipation of assets. On the other hand, it does provide further evidence of a lack of straightforwardness and transparency on the part of Mr Wells with regard to his financial affairs.[131]2. Information obtained from Topaz re Mr Wells’ activities. Mr Swalwell sets out in paragraph 12 of his witness statement details of information provided by a representative of Topaz on 16 and 20 June 2014. Counsel for Mr Chave informed me that this information had been relayed to himself in the context of an inquiry made by Topaz as to the effect of the freezing order and a concern on the part of Topaz as to whether it could accept certain payments being proposed by Mr Wells. For present purposes, the two most important pieces of information provided by Topaz are as follows.[132]First, Mr Wells had told Topaz that he was owed £43,000 from an unidentified debtor. Later, he said that he had lent this sum to a family member and was due to be repaid shortly. Later still, a Mr Saville, who claimed to be Mr Wells’ financial advisor, said that Mr Wells had been let down over the repayment of the loan. None of this is mentioned in any of Mr Wells’ evidence, and in particular in the list of assets he provided pursuant to the order of Sales J.[133]Secondly, Mr Wells had told Topaz that he was proposing to sell all four of his properties (Hamels Lane, St Edmonds Road, Hansart Way and the Swanage Property) to a company called Anglo African Developments Ltd with an address in Geneva for a total of £1,690,000. It appears that Mr Wells had told Topaz this some time before 28 May 2014, but it is unclear how long before that.[134]In my judgment the first item is simply further evidence of a lack of transparency on the part of Mr Wells with regard to his financial affairs, but the second item is evidence of a risk of dissipation. This is partly because of the shadowy nature of the proposed purchaser, but more because it indicates an intention on the part of Mr Wells to convert relatively secure, immovable assets into cash. In saying this, I have not overlooked Mr Wells’ evidence that all the properties are charged, with relatively little equity available.

Risk of dissipation of assets: conclusion

[135]Looking at the position overall, there is substantial evidence of dishonesty on the part of Mr Wells and there is some specific evidence of a risk of dissipation of assets. The evidence of dishonesty relates to the period from October 2007 to May 2008, but in my view that does not detract from its significance for present purposes. As for the point made by counsel for Mr Wells that this litigation had been on foot for some time by 15 April 2014, I am not persuaded that this shows that there is no risk of dissipation. In this regard, I note that not only do the charges granted to Hertford Solutions post-date Mr Chave’s strike out/summary judgment application, but also it appears that the proposal to sell the properties does as well. I conclude that there is a risk that Mr Wells will dissipate his assets so as to frustrate a judgment in favour of Mr Chave unless restrained. Accordingly, subject to the points considered below, I conclude that the freezing order should be continued until trial.

Material non-disclosure

[136]Mr and Mrs Wells contend that the freezing order should not be continued because there was material non-disclosure by Mr Chave on the application before Sales J.[137]The leading case on this question is Brink’s Mat Ltd v Elcombe [1988] 1 WLR 1350, in which Ralph Gibson LJ said at 1356F-1357F:
“In considering whether there has been relevant non-disclosure and what consequence the court should attach to any failure to comply with the duty to make full and frank disclosure, the principles relevant to the issues in these appeals appear to me to include the following. (1) The duty of the applicant is to make ‘a full and fair disclosure of all the material facts:’ see Rex v. Kensington Income Tax Commissioners, Ex parte Princess Edmond de Polignac [1917] 1 K.B. 486, 514, per Scrutton L.J. (2) 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 Rex v. Kensington Income Tax Commissioners, per Lord Cozens-Hardy M.R., at p. 504, citing Dalglish v. Jarvie (1850) 2 Mac. & G. 231 , 238, and Browne-Wilkinson J. in Thermax Ltd. v. Schott Industrial Glass Ltd. [1981] F.S.R. 289, 295. (3) The applicant must make proper inquiries before making the application: see Bank Mellat v. Nikpour [1985] F.S.R. 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. (4) 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; and (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 [1987] Ch 38 ; and (c) the degree of legitimate urgency and the time available for the making of inquiries: see per Slade L.J. in Bank Mellat v. Nikpour [1985] F.S.R. 87, 92–93. (5) 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 per Donaldson L.J. in Bank Mellat v. Nikpour, at p. 91, citing Warrington L.J. in the Kensington Income Tax Commissioners' case [1917] 1 K.B. 486, 509. (6) 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. (7) Finally, it ‘is not for every omission that the injunction will be automatically discharged. A locus poenitentiae may sometimes be afforded:’ per Lord Denning M.R. in Bank Mellat v. Nikpour [1985] F.S.R. 87, 90. 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 [the court, it] may well grant … a second injunction if the original non-disclosure was innocent and if an injunction could properly be granted even had the facts been disclosed:’ per Glidewell L.J. in Lloyds Bowmaker Ltd. v. Britannia Arrow Holdings Plc., ante, pp. 1343H–1344A.”
[138]Slade LJ said in the same case at 1359C-E:
“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 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 Rex v Kensington Income Tax Commissioners [1917] 1 KB 486 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.”
[139]So far as the question of the court’s discretion to continue or re-grant an injunction even if there has been a material non-disclosure is concerned, the applicable principles were summarised by Alan Boyle QC sitting as a Deputy High Court

Judge in Arena Corp Ltd v Schroeder [2003] EWHC 1089 (Ch) at [213]:

“(1) If the court finds that there have been breaches of the duty of full and fair disclosure on the ex parte application, the general rule is that it should discharge the order obtained in breach and refuse to renew the order until trial. (2) Notwithstanding that general rule, the court has jurisdiction to continue or re-grant the order. (3) That jurisdiction should be exercised sparingly, and should take account of the need to protect the administration of justice and uphold the public interest in requiring full and fair disclosure. (4) The court should assess the degree and extent of the culpability with regard to non-disclosure. It is relevant that the breach was innocent, but there is no general rule that an innocent breach will not attract the sanction of discharge of the order. Equally, there is no general rule that a deliberate breach will attract that sanction. (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. (7) The application of the principle should not be carried to extreme lengths or be allowed to become the instrument of injustice. (8) The jurisdiction is penal in nature and the court should therefore have regard to the proportionality between the punishment and the offence. (9) There are no hard and fast rules as to whether the discretion to continue or re-grant the order should be exercised, and the court should take into account all relevant circumstances.”
[140]Counsel for Mr Wells submitted that there had been no less than nine heads of material non-disclosure, and even misleading of the Court in some cases, many comprising multiple instances. I cannot deal with each and every instance relied on individually without unduly lengthening what is already a long judgment, although I have considered them all, but I shall address each of the nine heads.[141]Before doing so, I think it is worth mentioning two general points. The first is that many of the instances amount to a complaint that Mr Chave expressed his allegations against Mr Wells in his third witness statement and first affidavit in unduly sweeping and pejorative terms and that this was carried through into counsel for Mr Chave’s skeleton argument before Sales J. I agree that Mr Chave expressed himself in this way. I also agree that this was carried through into counsel’s skeleton argument, which in my view is to be deprecated. Nevertheless, I consider that it will have been clear to Sales J that Mr Chave and his counsel were putting Mr Chave’s case very high. I do not think that Sales J is likely to have been misled by this. Moreover, I do not consider that putting one’s case higher than is really justified by the evidence on a without notice application amounts to material non-disclosure which justifies the discharge of, or a refusal to continue, a freezing order if the court is persuaded, having considered all the evidence at a with notice hearing, that continuation would otherwise be justified.[142]The second point is that many of the instances amount to a complaint that Mr Chave has made an allegation against Mr Wells without providing particulars of that allegation and/or without exhibiting supporting documents. Again, I think it will have been clear to Sales J that Mr Chave had not provided such particulars or supporting documents. Furthermore, I am not persuaded that this amounts to non-disclosure of material facts.[143]Indebtedness. Five instances are relied on under this head. In my judgment two are hyperbole on the part of Mr Chave in his evidence, while two are reasonably justifiable statements by Mr Chave on the incomplete evidence available. The fifth is a statement by counsel for Mr Chave in his skeleton argument “See the creditors’ demands etc against and general insolvency”. This is said to be a material non-disclosure because it suggests a present state of affairs whereas the documents show debts between 2004 and 2006 only. It is Mr Wells’ own evidence that he is in very straightened financial circumstances, however. In my view there was no material non-disclosure.[144]Commercial integrity. No less than 13 instances are relied on under this head. Most of these are hyperbole on the part of Mr Chave. In one instance the complaint is made that Mr Chave says in paragraph 76 of his third witness statement that “The insolvency of Endbridge Ltd was just another typical Clive Wells company insolvency”. It is said that it was not disclosed that Mr Wells has pleaded that the restructuring was devised and carried out by Mr Chave. I do not accept this. Sales J was asked to read Mr Wells’ notes on the Defence and Counterclaim which this make essentially this allegation. In any event, I do not consider that this matter would have been material to Sales J’s decision.[145]Placing assets in other names. Two instances are relied on. In both cases the complaint is that Mr Chave has failed to particularise statements he has made. I do not consider that this amounts to non-disclosure at all.[146]Fraudulent disposal of leased equipment. Seven instances are relied on. Three relate to the Parnaby Cyclone and the Powerscreen 1600. I see nothing here which amounts to non-disclosure. The other four instances are again hyperbole on the part of Mr Chave.[147]Failure of ReAgg. Five instances are relied on. I shall address the two main ones. The first is that it is said that Mr Chave failed to disclose that, in his report to the first creditors’ meeting, he had not accused Mr Wells of theft. The document was exhibited to, and commented on in, Mr Chave’s third witness statement. Moreover, as observed above, one of the causes of the company’s failure given by Mr Chave in the report was misappropriation of funds. The fact that he did not expressly name the person involved is neither here nor there. The second instance is that it was not disclosed that Mr Wells had reported thefts of cash to Mr Chave and Mr Chave had declined to involve the police. But this allegation was only made by Mr Wells in his second witness statement, so Mr Chave could not have disclosed it to Sales J.[148]The litigation. 13 instances are relied on. Most of these relate to allegations made by Mr Chave and his counsel concerning the state of Mr Wells’ disclosure. The two main points relate to Mr Wells’ List of Documents and the Breeze & Wyles file.[149]So far as Mr Wells’ List of Documents is concerned, Mr Chave alleged in his statement and affidavit that Mr Wells’ disclosure amounted to concealment, that his List of Documents has been compiled to give the appearance of some form of disclosure, that he had failed to serve a meaningful list of documents and that he had given no disclosure in relation to the Dassels land, while counsel for Mr Chave alleged in his skeleton argument that Mr Wells had failed to disclose a single supporting document. In my judgment these statements were not justified and were misleading. In fact, Mr Wells had disclosed some documents which supported his claim in relation to the land at Dassels in the exhibit to his first witness statement, he had served a List of Documents the Schedule to which listed 176 items and which included at least 43 documents relating to the Dassels land claim and Mr Wells’ counsel had sent Mr Chave’s counsel an email on 28 March 2014 saying “It seems that there was a bit of a muddle in our list of documents. You got many fewer pages than were actually prepared.”[150]As to the Breeze & Wyles file, Mr Chave said in his statement and affidavit that Mr Wells had been asked to provide copies of, or access to, all the relevant solicitors’ files, but he had “fiercely resisted” the production or access to them. In my judgment these statements were not justified and were misleading. In fact, on 13 February 2013 Mr Wells’ then solicitors sent counsel for Mr Chave an email saying:
“In relation to Breeze & Wyles, what I suggest is that I write to that firm (I am quite happy for you review the letter before it is sent) to establish on whose behalf they hold the files. If they say that they hold them to the joint order of Mr Chave and Mr Wells then our respective clients can sign authorities for the original files to be delivered to my office where obviously your client is free to inspect not because of disclosure but by virtue of proprietary right. If they consider they hold the files to my client’s order, I will put some pressure on to try and get the original files. When they are received here, they will form part of Mr Wells’ disclosure. Clearly under the rules one provides disclosure of both privileged and non-privileged documents but your client only has the right to inspect non-privileged documents. If Mr Chave contests a claim to privilege then Mr Chave can make an application. All of this assumes that we don’t waive privilege in the Breeze & Wyles files and I think there is a very good chance we will waive privilege. It may well be that Breeze & Wyles conclude that they hold some of their papers for either Mr Chave or Mr Wells and some of the papers jointly for Mr Wells and Mr Chave but that is pre-empting a response to a question we have not yet asked. You will appreciate that I am as anxious as anyone to see the Breeze & Wyles file.”
[151]Counsel for Mr Chave replied on 21 February 2013 saying that these suggestions were sensible and please could they expedite that course. It is fair to say that it does not appear that the solicitors took any immediate steps to implement this. It appears to me, however, that around this time both sides became somewhat distracted by the Environment Agency prosecution, which led to an application by Mr Chave on 27 June 2013 to vacate the trial (although that application does not appear to have been determined until 18 December 2013). On 18 July 2013 counsel for Mr Chave sent Mr Wells’ solicitors a note raising a series of questions, including in relation to disclosure and inspection of the conveyancing files. In the second half of 2013 Mr Wells changed solicitors, and it was his new solicitors who served his List of Documents on 16 December 2013. That disclosed most of the documents from Breeze & Wyles file. I was not shown any request by Mr Chave, accompanied by an undertaking to pay Mr Wells’ reasonable copying charges, for copies of those documents. Furthermore, I was informed by counsel for Mr Wells that, when the question of disclosure and inspection of the Breeze & Wyles file was raised at hearings before Master Bragge on 18 December 2013 and 19 March 2014, he agreed that it would be disclosed when it had been obtained from Breeze & Wyles. (Subsequently it was obtained from Breeze & Wyles, and as related above a copy has now been provided.)[152]Mrs Wells’ mortgage. It is contended that Mr Chave did not disclose that Mr Chave had provided a reference in Mrs Wells’ application for a mortgage earlier that year and submitted payslips for that application. I do not accept that this was a material non-disclosure, since these documents relate to a different mortgage obtained by a different person (Mr Wells) in respect of a different property. It is also contended that Mr Chave did not disclose that he had lent Mrs Wells £10,000 in connection with the purchase, but this claim is referred to in his third witness statement.[153]The land at Dassels. Complaint is made of an alleged discrepancy between what Mr Chave said in his statement and his pleaded, but in my view there is nothing in this. Complaint is also made that Mr Appleton’s account was not disclosed, or at least drawn attention to. In my view this does not amount to a material non-disclosure.[154]The guarantee. Complaint is made that Mr Chave did not disclose that he had not relied on the guarantee at earlier stages of the litigation. In my view this is sufficiently clear from paragraph 56 of Mr Chave’s witness statement read in context. In any event, I do not consider this to have been material. Complaint is also made that Mr Chave did not disclose that Mr Wells was taking the point on construction of the guarantee. But Mr Chave did refer to the Reply and Defence to Counterclaim where this was pleaded. In any event, I do not consider this to have been material. Finally, complaint is made that Mr Chave did not disclose the points being taken by Mr Wells with regard to the ICAEW regulations and the source of the sums paid out from his client account (see paragraphs 42 and 77 above). Although these were points were briefly pleaded, it appears to me that Mr Wells’ case on these points did not become clear until the hearing before Master Bragge in May 2014 (for example, it was only at that point that Mr Wells made it clear which provisions of the ICAEW Regulations he was relying on). In any event, I do not consider this to have been material.[155]Conclusion. For the reasons explained above, I am not persuaded that most of Mr Well’s complaints are well founded. I do consider that Mr Chave failed to disclose the true position regarding Mr Wells’ disclosure to Sales J. Moreover, I consider the non-disclosure was material, because Mr Chave was relying upon the state of Mr Wells’ disclosure as evidence of dishonesty on the part of Mr Wells whereas the true position does not provide evidence of dishonesty. Accordingly, it is necessary for me to consider whether I should nevertheless exercise my discretion to continue the freezing order. Not without some hesitation, I have concluded that I should. Although I do not regard the breach as an innocent one, I do think that it was a relatively small breach in the overall context of this case and that it would be disproportionate to refuse to continue the order on this ground. In reaching this conclusion, I have been influenced by the further evidence supporting the continuance of the order which has emerged since the hearing before Sales J.

Mr Chave’s cross-undertaking

[156]Mr Chave’s first affidavit contained no evidence of his ability to satisfy a claim by Mr Wells under the cross-undertaking in damages. In paragraph 16 of his third affidavit Mr Chave stated that his practice would have a value of over £1 million if placed on the open market, but did not provide any valuation or other evidence to support this figure. He also stated that he owned two properties with unencumbered values of £450,000 and £300,000. Mr Wells exhibited to sixth witness statement register entries showing that both properties were charged to Clydesdale Bank. Mr Chave’s response to this in his fourth witness statement was that these charges had been paid off and he was making arrangement to remove them. Counsel for Mr Wells accepted that there was no evidence to contradict this.[157]In my judgment, whatever may be the position relation to Mr Chave’s practice, the two properties are sufficient to substantiate Mr Chave’s ability to satisfy a claim by Mr Wells under the cross-undertaking. It is correct that, as counsel for Mr Wells pointed out, Mr Chave has not provided any valuations of the properties; but there is no evidence to suggest that his estimates of their values are inaccurate.

The order against Mrs Wells

[158]As noted above, Mrs Wells contends that in any event any order against her should be confined to the Swanage Property, since it is only in relation to the the Swanage Property that Mr Chave has adduced evidence that the asset really belongs to Mr Wells. Counsel for Mrs Wells pointed out that Mr Chave has not adduced any comparable evidence in relation to the Hansart Way property, which is in the joint names of Mr and Mrs Wells. Counsel for Mr Chave’s main answer to this submission was to point to the evidence from Topaz concerning the proposed sale of the Hansart Way property to Anglo-American. In my judgment that is insufficient evidence that the property really belongs solely to Mr Wells. Accordingly, I will restrict the order against Mrs Wells to the Swanage Property.

Security for costs

[159]Mr Chave’s application for security for costs was not properly prepared. The application notice failed to specify the ground upon which security was sought. Nor was the application notice supported by the kind of evidence one would normally expect on a security for costs application. In particular, it was not supported any estimate of Mr Chave’s costs, let alone a schedule of the conventional kind.[160]In argument counsel for Mr Chave sought to make good these deficiencies by relying upon CPR rule 25.13(2)(g) (as counsel for Mr Wells had anticipated in his skeleton argument) and by submitting that the Court could be sure that Mr Chave’s costs would comfortably exceed £100,000 alternatively £50,000. Accordingly, he sought an order that Mr Wells provide security in the sum of £100,000 alternatively £50,000. In the alternative to security for costs, he suggested that a condition should be imposed on Mr Wells under CPR rule 3.1(3).[161]I do not consider it is acceptable for an application for security for costs to be made in such a cavalier manner. If Mr Chave wants to obtain security for costs, he must make an application which is properly supported by the requisite evidence. Nor do I consider that it would be proper for a condition to be imposed on Mr Wells under rule 3.1(3) when Master Bragge did not impose such a condition and there has been no appeal against his order.

Further disclosure of Mr Wells’ assets

[162]The only other part of the application notice dated 26 June 2014 which counsel for Mr Chave pursued was an application for further disclosure of Mr Wells’ assets. This was not fully argued at the hearing, no doubt because both counsel realised it made little sense to spend much time on it until it was known whether the freezing order would be continued. Accordingly, I will hear further argument on it. My provisional view is that some further disclosure would be justified, but not as wide ranging disclosure as counsel for Mr Chave sought in the draft order he produced towards the end of the hearing.