Kea Investments Ltd v Watson & Ors [2020] EWHC 2599 (Ch)

“The authorities demonstrate that it is vital for the court, in the interests of justice, to have effective powers, and effective sanctions. Without these, it would be possible for a defendant (or, in a different situation, a claimant) to flout the orders of the court, which are the court’s considered means by which to keep the scales of justice for the parties even. If once it became known that the court was unable or unwilling to maintain the effectiveness of its orders, then it would lose all control over litigation of this kind, with terrible consequences for the administration of justice. Those wrongly accused of fraud would be relieved of a certain amount of inconvenience, but fraudsters would rejoice and hitch a free ride to interminable litigation on the back of ill-gotten gains.”

“If a person (a) required by a judgment or order to do an act does not do it within the time fixed for a judgment or order … then, subject to the Debtors Acts 1869 and 1878 and to the provisions of these Rules, the judgment or order may be enforced by an order for committal.” (3) CPR r 81.5 provides as follows: “(1) Unless the court dispenses with service under rule 81.8, a judgment or order may not be enforced under rule 81.4 unless a copy of it has been served on the person required to do or not to do the act in question, and in the case of a judgment or order requiring a person to do an act– (a) the copy has been served before the end of the time fixed for doing the act … … (a) the copy has been served before the end of the time fixed for doing the act … (3) Copies of the judgment or order … must be served in accordance with rule 81.6 or rule 81.7, or in accordance with an order for alternative service made under rule 81.8(2)(b). (4) CPR r 81.6 provides as follows: “Subject to rules 81.7 and 81.8, copies of judgments or orders … must be served personally.”

“In the case of any judgment or order the court may– (a) dispense with service under rules 81.5 to 81.7 if the court thinks it just to do so; or (b) make an order in respect of service by an alternative method or at an alternative place.” (6) CPR r 81.9(1) provides as follows: “Subject to paragraph (2), a judgment or order to do or not to do an act may not be enforced under rule 81.4 unless there is prominently displayed, on the front of the copy of the judgment or order served in accordance with this Section, a warning to the person required to do or not to do the act in question that disobedience to the order would be a contempt of court punishable by imprisonment, a fine or sequestration of assets.” (7) CPR r 81.10 provides as follows: “(1) A committal application is made by an application notice under Part 23 in the proceedings in which the judgment or order was made or the undertaking given. … (3) The application notice must– (a) set out in full the grounds on which the committal application is made and must identify, separately and numerically, each alleged act of contempt including, if known, the date of each of the alleged acts; and (b) be supported by one or more affidavits containing all the evidence relied upon. (4) Subject to paragraph (5), the application notice and the evidence in support must be served personally on the respondent. (5) The court may– (a) dispense with service under paragraph (4) if it considers it just to do so; or (b) make an order in respect of service by an alternative method or at an alternative place.” (a) set out in full the grounds on which the committal application is made and must identify, separately and numerically, each alleged act of contempt including, if known, the date of each of the alleged acts; and (b) be supported by one or more affidavits containing all the evidence relied upon. (a) dispense with service under paragraph (4) if it considers it just to do so; or (b) make an order in respect of service by an alternative method or at an alternative place.” (8) CPR r 81.28 provides as follows: “(1) Unless the court hearing the committal application or application for sequestration otherwise permits, the applicant may not rely on– (a) any grounds other than– (i) those set out in the claim form or application notice … (b) any evidence unless it has been served in accordance with the relevant Section of this Part or the Practice Direction supplementing this Part. (2) At the hearing, the respondent is entitled– (a) to give oral evidence, whether or not the respondent has filed or served written evidence, and, if doing so, may be crossexamined … (a) any grounds other than– (i) those set out in the claim form or application notice … (b) any evidence unless it has been served in accordance with the relevant Section of this Part or the Practice Direction supplementing this Part. (a) to give oral evidence, whether or not the respondent has filed or served written evidence, and, if doing so, may be crossexamined … (9) Practice Direction 81 contains provisions supplementing CPR Part 81. Paragraph 9 provides: “In all cases the Convention rights of those involved should particularly be borne in mind. It should be noted that the standard of proof, having regard to the possibility that a person may be sent to prison, is that the allegation is proved beyond reasonable doubt.” (10) Paragraph 13.2(4) provides: “the application notice must contain a prominent notice stating the possible consequences of the court making a committal order and of the respondent not attending the hearing …”

“The court may waive any procedural defect in the commencement or conduct of a committal application if satisfied that no injustice has been caused to the respondent by the defect.”

“i) the burden of proving the contempt that it alleges lies on the Bank. Insofar as Mr Pugachev raises a positive defence he carries an evidential burden which he must discharge before the burden is returned to the Bank. ii) the criminal standard of proof applies, so that the Bank’s case must be proved beyond reasonable doubt – or so that the court is sure. In case the meaning of this formulation were unclear, Phipson on Evidence (17th edition, 2009 at paragraph 6.51) cites the Privy Council in Walters v. R [1969] 2 A.C. 26 as indicating that “[a] reasonable doubt is that quality or kind of doubt which when you are dealing with matters of importance in your own affairs you allow to influence you one way or another”. iii) The court needs to exercise care when it is asked to draw inferences in order to prove contempt. The law in this respect is summarised in a passage in the judgment of Teare J in JSC BTA Bank v. Ablyazov [2012] EWHC 237 (Comm). Circumstantial evidence can be relied on to establish guilt. It is however important to examine the evidence with care to see whether it reveals any other circumstances which are or may be of sufficient reliability and strength to weaken or destroy the Bank’s case. If, after considering the evidence, the court concludes that there is more than one reasonable inference to be drawn and at least one of them is inconsistent with a finding of contempt, the claimants fail. Where a contempt application is brought on the basis of almost entirely secondary evidence, the court should be particularly careful to ensure that any conclusion that a respondent is guilty is based upon cogent and reliable evidence from which a single inference of guilt, and only that inference, can be drawn.”

“In the remainder of this judgment, where I make findings of fact or state that I have concluded that an allegation has been proved, I make such findings and arrive at such conclusions on the basis of the criminal standard of proof.”

“It is not right to consider individual heads of contempt in isolation. They are details on a broad canvas. An important question when that canvas is considered is whether it portrays the picture of a Defendant seeking to comply with the orders of the Court or a Defendant bent on flouting them. It is right that the individual details of the canvas should be informed by the overall picture. But, having said that, each head of contempt that has been held proved must be established beyond reasonable doubt.”

“51. The error of law alleged is that the judge failed to apply the correct criminal standard of proof because he sometimes adopted the language of a civil trial, saying that something was “improbable”, or “likely”, or words to that effect. It is true that the judge so expressed himself on occasions. However, the judge overwhelmingly used the language of the criminal standard (of being sure, or of rejecting the possibility that something may be as suggested), and he uniformly did so when reaching his conclusions on any essential plank of the bank’s case. Examples of that are so numerous as to be unnecessary to exemplify. Moreover, it is not true that every single aspect of a criminal case has to be proved to the criminal standard, although of course the elements of the offence must be. 52. It is, however, the essence of a successful case of circumstantial evidence that the whole is stronger than individual parts. It becomes a net from which there is no escape. That is why a jury is often directed to avoid piecemeal consideration of a circumstantial case: R v. Hillier (2007) 233 ALR 63 (HCA), cited in Archbold 2012 at para 10-3. Or, as Lord Simon of Glaisdale put it in R v. Kilbourne [1973] AC 729 at 758, “Circumstantial evidence…works by cumulatively, in geometrical progression, eliminating other possibilities”

“…the prosecution bears the burden of proving all the elements of the crime beyond reasonable doubt. That means that the essential ingredients of each element must be so proved. It does not mean that every fact – every piece of evidence – relied upon to prove an element by inference must itself be proved beyond reasonable doubt. Intent, for example, is, save for statutory exceptions, an element of every crime. It is something which, apart from admissions, must be proved by inference. But the jury may quite properly draw the necessary inference having regard to the whole of the evidence, whether or not each individual piece of evidence relied upon is proved beyond reasonable doubt, provided they reach their conclusion upon the criminal standard of proof. Indeed, the probative force of a mass of evidence may be cumulative, making it pointless to consider the degree of probability of each item of evidence separately.” ” “…the prosecution bears the burden of proving all the elements of the crime beyond reasonable doubt. That means that the essential ingredients of each element must be so proved. It does not mean that every fact – every piece of evidence – relied upon to prove an element by inference must itself be proved beyond reasonable doubt. Intent, for example, is, save for statutory exceptions, an element of every crime. It is something which, apart from admissions, must be proved by inference. But the jury may quite properly draw the necessary inference having regard to the whole of the evidence, whether or not each individual piece of evidence relied upon is proved beyond reasonable doubt, provided they reach their conclusion upon the criminal standard of proof. Indeed, the probative force of a mass of evidence may be cumulative, making it pointless to consider the degree of probability of each item of evidence separately.” ”

“Inferences 145. In reaching its conclusions it is open to the court to draw inferences from primary facts which it finds established by evidence. A court may not, however, infer the existence of some fact which constitutes an essential element of the case unless the inference is compelling i.e. such that no reasonable man would fail to draw it: Kwan Ping Bong v R [1979] AC 609. Circumstantial evidence 146. Where the evidence relied on is entirely circumstantial the court must be satisfied that the facts are inconsistent with any conclusion other than that the contempt in question has been committed: Hodge’s Case [1838] 2 Lewin 227; and that there are “no other co-existing circumstances which would weaken or destroy the inference” of guilt: Teper v The Queen [1952] AC 480, 489. See also R v Blom [1939] AD 188, 202 (Bloemfontein Court of Appeal); Martin v Osborne [1936] 55 CLR 367 , 375. It is not, however, necessary for the court to be sure on every item of evidence which it takes into account in concluding that a contempt has been established. It must, however, be sure of any intermediate fact which is either an essential element of, or a necessary step on the way towards, such a conclusion: Shepherd v The Queen 170 CLR 573 (High Court of Australia). Adverse inferences Mr James Lewis QC on behalf of the judgment debtors accepted that, although (i) an application for contempt is criminal in character, (ii) an alleged contemnor may claim a right to silence, and (iii) the provisions of sections 34 and 39 of the Criminal Justice Act 2003 do not apply, it was open to the Court to draw adverse inferences against the judgment debtors to the extent that it would be open it to do so in comparable circumstances in a criminal case. Thus it may be legitimate to take into account against the judgement debtors the fact (if it be such) that, when charged with contempt, as they have been in these proceedings, they have given no evidence or explanation of something of which they would have had knowledge and of which they could be expected to give evidence if it was true.”

“96. I would end this section of my judgment by saying this. It is noticeable from the facts of this case, both as found by the judge, but also in the nature of the structure of the arguments as they have developed, how time and time again, as some aspect of Mr Ablyazov’s conduct has come under question, so the evidence deployed has become remarkable for the way in which it has taken tortuous turnings which have asked the court to suspend its belief in reality in favour of reduplicating unrealities….”

“100. As this series of coincidences, misfortunes, errors, misunderstandings and inexplicable developments multiply, the court is entitled to stand back and ask whether there is in truth a defence or defences as alleged, even if no burden rests on Mr Ablyazov, and the burden remains on the bank, or whether there is at any rate the realistic possibility of such, or on the other hand whether the court is being deceived. The trial judge decided that it was being deceived by witnesses without credibility. It is not for this court to say that he was wrong without strong grounds for doing so, grounds which have simply not been formulated.”

“In order to establish that someone is in contempt it is necessary to show that (i) that he knew of the terms of the order; (ii) that he acted (or failed to act) in a manner which involved a breach of the order; and (iii) that he knew of the facts which made his conduct a breach: Marketmaker Technology (Beijing) Co Ltd v Obair Group International Corporation & Ors [2009] EWHC 1445 (QB).”

“The notice of motion was personally served on Mr Keane, but it only stated the grounds of the application to commit in general terms. It recited the undertaking and the injunction, and then alleged that there had been a breach. This, on the authorities, is not sufficient. It has been said in many cases that what is required is that the person alleged to be in contempt shall know, with sufficient particularity to enable him to defend himself, what exactly he is said to have done or omitted to do which constitutes a contempt of court. The particular undertakings and injunctions in this case cover a wide range of activities. Mr Keane was entitled to know whether it was said by the council that he was in breach of every single requirement of those orders or only some, and if so which, of them and the notice failed to give him that information. Every notice of application for commit must be looked at against its own background. The test, as I have said, is: does it give the person alleged to be in contempt enough information to enable him to meet the charge? If, for example, a defendant is subject to an injunction to leave a stated house not later than a particular time on a particular day, then it would be sufficient to say that he had failed to comply with that order, because it only permits of one breach, namely failure to leave the house by the time stated. But where the order is not in such a simple form and it is possible for the defendant to be in doubt as to what breach is alleged, then the notice is defective.”

“Secondly, I am not satisfied that the notice of motion sufficiently particularised the second head of contempt. An allegation that, in the course of a long cross-examination in which many questions were asked on each subject, the defendant has failed or refused to answer ‘properly or at all certain questions put’ to him, in particular those relating to a list of subjects, is not sufficient. The defendant is left in doubt which of the questions and answers are relied upon and as to those questions which he has answered, which he has not answered properly and in what respect. When a person’s liberty is at risk he is entitled to know the precise basis for the alleged contempt.”

“So the test is, does the notice give the person alleged to be in contempt enough information to enable him to meet the charge? In satisfying this test it is clear that in a suitable case if lengthy particulars are needed, they may be included in a schedule or other addendum either at the foot of the notice or attached to the notice so as to form part of the notice rather than being set out in the body of the notice itself. But a reference in the notice to a wholly separate document for particulars that ought to be in the notice seems to me to be a quite different matter. I do not see how such a reference can cure what otherwise would be a deficiency in the notice. As I read the Rules and as I understand the decision in Chiltern District Council v. Keane, the Rules require that the notice itself must contain certain basic information. That information is required to be available to the respondent to the application from within the four corners of the notice itself. From the notice itself the person alleged to be in contempt should know with sufficient particularity what are the breaches alleged. A fortiori, in my view, where the document referred to is an affidavit, which does not set out particulars in an itemised form, but which leaves the respondent to the committal application to extract and cull for himself from an historical narrative in the affidavit relevant dates and times and so forth, and to work out for himself the precise number of breaches being alleged and the occasions on which they took place.”

“is not to be taken as any dilution for the future of the rule that a committal application must give fair and clear notice of the breach alleged and the basis of the allegation”

“I am afraid this will not do. A judge hearing a committal application should confine himself or herself to the contempts which are alleged in the application notice. If the judge considers that other alleged contempts require consideration, the correct course is to invite amendment of the application notice and then provide any necessary adjournment so that the respondent can prepare to deal with those new matters.”

“I would respectfully repeat and endorse that guidance. I would also add that it is in my view a salutary discipline for any judge who is delivering or writing a judgment on a committal application to set out each relevant ground of committal before proceeding to consider whether it is made out on the evidence to the criminal standard of proof.”

“the person alleged to be in contempt shall know, with sufficient particularity to enable him to defend himself, what exactly he is said to have done or omitted to do which constitutes a contempt of court.”

“One particular form of contempt by a party to proceedings is that constituted by an intentional act which is in breach of the order of a competent court. Where this occurs as a result of the act of a party who is bound by the order or of others acting at his direction or on his instigation, it constitutes a civil contempt by him which is punishable by the court at the instance of the party for whose benefit the order was made and which can be waived by him. The intention with which the act was done will, of course, be of the highest relevance in the determination of the penalty (if any) to be imposed by the court, but the liability here is a strict one in the sense that all that requires to be proved is service of the order and the subsequent doing by the party bound of that which is prohibited.”

“Mr Watson do file and serve the additional information requested in items 82-4 [etc…] of the Schedule to the Fourth Statement of Toby Graham dated 3 March 2016, and do use his best endeavours to file and serve the additional information requested in item 118 thereof, by 4.00pm on 26 May 2016.”

“Please state what has happened to the £12,143,133 which was paid to Munil since that payment was made. In particular, please: - state on what date or dates and by what means Munil received the sum of £12,143,133 (“the Munil Money”), identifying each transaction by date and amount; - identify each payment and each other transaction carried out by Munil using all or any part of the Munil Money, stating the date, amount, nature and purpose of the payment or transaction; - identify all assets now held by Munil which (directly or indirectly) represent, or have been acquired in whole or in part through the use of, all or any part of the Munil Money; - state whether Mr Watson or any Watson Associate has at any time received all or any part of (i) the Munil Money, or (ii) any asset which (directly or indirectly) represents, or was acquired in whole or in part through the use of, all or any part of the Munil Money, and identify each such receipt stating its date and amount and the nature and purpose of the transaction pursuant to which it was received; - identify all assets now held by Mr Watson or any Watson Associate which (directly or indirectly) represent, or have been acquired in whole or in part through the use of, all or any part of the Munil Money; and - to the extent not covered by the above, identify the present whereabouts of the Munil Money and its traceable proceeds insofar as known to Mr Watson.” - state on what date or dates and by what means Munil received the sum of £12,143,133 (“the Munil Money”), identifying each transaction by date and amount; - identify each payment and each other transaction carried out by Munil using all or any part of the Munil Money, stating the date, amount, nature and purpose of the payment or transaction; - identify all assets now held by Munil which (directly or indirectly) represent, or have been acquired in whole or in part through the use of, all or any part of the Munil Money; - state whether Mr Watson or any Watson Associate has at any time received all or any part of (i) the Munil Money, or (ii) any asset which (directly or indirectly) represents, or was acquired in whole or in part through the use of, all or any part of the Munil Money, and identify each such receipt stating its date and amount and the nature and purpose of the transaction pursuant to which it was received; - identify all assets now held by Mr Watson or any Watson Associate which (directly or indirectly) represent, or have been acquired in whole or in part through the use of, all or any part of the Munil Money; and - to the extent not covered by the above, identify the present whereabouts of the Munil Money and its traceable proceeds insofar as known to Mr Watson.” 38. “Watson Associate” was defined in the schedule in extensive terms to include: “ - Novatrust, whether or not acting as trustee of a trust; - any other current or former member of the Stonehage group of companies, whether or not acting as trustee of a trust; - Mr Leahy; - Nucopia; - Cullen Investments Limited; - any other current or former member of the Cullen group of companies; - Mr Gibson; - any entity or individual with whom Mr Watson has or had an agreement or understanding, formal or informal; - any current or former family member or personal friend of Mr Watson; - any person or entity whom Mr Watson wished to benefit; - any trust of which Mr Watson and/or any one or more of the above are or were beneficiaries or discretionary objects; and - any company or other entity currently or formerly owned in whole or in part, legally or beneficially, directly or indirectly, by Mr Watson and/or any one or more of the above.”

“Eric John Watson in breach of paragraph 8 of the order dated 28 April 2016 failed to use his best endeavours to file and serve by 4pm on 26 May 2016 the additional information requested in item 118 of the Schedule to the Fourth Statement of Toby Graham dated 3 March 2016 (“Item 118”), in particular by failing to provide each and every piece of the following information relating to the tracing of the sum of £12,143,133 to which Kea has a proprietary claim (“the Munil Money”), which would have been available to Mr Watson using his best endeavours and which fell within the terms of Item 118: …”

“In general an obligation to use best endeavours, or all reasonable endeavours, is not in itself regarded as too uncertain to be enforceable, provided that the object of the endeavours can be ascertained with sufficient certainty.”

“he must protest as strongly as he could against the making of an injunction in the present form, which meant that the person enjoined had to look at another document to see what it was that he was enjoined from doing. It could not be too clearly understood that a person should have to look at and to look only at the order to see what it was that he was enjoined from doing, although in fact nothing turned on it here.”

“infringed the requirement that the persons to whom the court’s order is directed must be left in no doubt as to what it is they must do, or abstain from doing, in order to comply with the order.”

“That is quite contrary to another well settled rule governing injunctions, which is that the order should be so expressed that the person to whom it is directed should be able by reading it and without more, at once to know what it is that he must do, or refrain from doing, in order to comply with its terms.”

“A related principle is that an order should not require the person to whom it is addressed to cross-refer to other material in order to ascertain his precise obligation.”

“Ordinarily, the appropriate sanction for a failure to comply with a disclosure order will be to strike out a statement of case together with an adverse costs order. Hence contempt applications will rarely be appropriate or necessary. However, in certain cases a contempt application may be the appropriate route. These may include cases where a party has failed to provide information in response to an order in aid of a freezing injunction, search order or tracing relief, or where there has been a deliberate destruction of documents.”

“It was said by Mr Marks that this contempt application was inappropriate because it was being used to frighten the respondent into giving further information. I do not regard that as a fair criticism. It seems to me that if one has the benefit, as the applicant did, of an order requiring disclosure, and one has reasons, justified as it turns out, to believe that it has not been complied with, then the obvious course is to apply for committal, or for other relief, appropriate for contempt. An order the court makes on a contempt motion is normally not primarily to punish a contemnor, but to ensure compliance with the order, as far as the court can. It seems to me that is what the applicant was seeking to do in the present case.”

“that Mr Watson had raised (or had agreed and was about to raise) a mortgage over a property in Sweden that had been purchased with traceable proceeds of the Munil Money, the proceeds of which in the sum of SEK6m Mr Watson paid to himself to his account ending 501 with JP Morgan (Suisse) SA”

“Mr Watson has responded to this request in Mr Pugh’s Fourth Witness Statement with the documents at CAP4 (pages 12-69). As to the additional matters identified in paragraph 146 of the Claimants’ Skeleton Argument dated 22nd April 2016, Mr Watson refers to a letter dated 27 May 2016 from Munil to Oury Clark Solicitors annexed hereto at Schedule 1 and further states as follows: 1. The sum of £12,143,126.14 was received by Munil by transfer from Fladgate LLP on 26 April 2013… 2. To the best of Mr Watson’s knowledge, based on his own knowledge and on information provided to him by Munil, Munil has made the following payments using the said sum of £12,143,126.14: a) Loans in the total sum of US$9,614,307 were made to Mr Watson pursuant to the terms of a Loan Agreement dated 27 August 2013 as amended by an Amendment Agreement dated 18 May 2016: The loan amounts were transferred in cash and in securities to Mr Watson’s account at JP Morgan, Geneva as follows (all sums in US$): a. $3 million cash; b. 34,000 Bank of America Corp shares valued at $495,380 [paras c. to i. listed various other parcels of shares with their values] j. $700,000 cash transferred on 19th May 2016 Of the shares acquired as aforesaid, all have been sold except for the shares in Swisher Hygiene Inc… Annexed here at Schedule 2 is a table providing detail of the share trades, and use of the monies loaned from Munil. …” a) Loans in the total sum of US$9,614,307 were made to Mr Watson pursuant to the terms of a Loan Agreement dated 27 August 2013 as amended by an Amendment Agreement dated 18 May 2016: The loan amounts were transferred in cash and in securities to Mr Watson’s account at JP Morgan, Geneva as follows (all sums in US$): a. $3 million cash; b. 34,000 Bank of America Corp shares valued at $495,380 [paras c. to i. listed various other parcels of shares with their values] j. $700,000 cash transferred on 19th May 2016 Of the shares acquired as aforesaid, all have been sold except for the shares in Swisher Hygiene Inc… Annexed here at Schedule 2 is a table providing detail of the share trades, and use of the monies loaned from Munil. …”

“… (c) His interest in the property at Sotenäs Smögenon, 51-9 Brunnsgatan 25, 4565 Smögen, Sweden. which represent the proceeds of loans made to [Mr Watson] by [Munil] out of the sum of £12,143,133 paid by Fladgates to Munil on 26th April 2013.”

“2(e) The address of the property is Sotenas Smogenon, 51:9, Brunnsgatan 25, 456 51 Smogen. The legal and beneficial owners are Eric Watson and Lisa Henrekson (50/50) and a copy of the title is attached. (iv) The sum of $969,673.03 did not represent the whole of the purchase price. A copy of the completion statement has been requested.”

“20. There is, in my judgment, simply no basis in law upon which the Solicitor General can found an allegation of contempt for anything done or omitted to be done by the mother at any time after 4pm on 12 October 2012. Paragraph 2(b) of the order was quite specific. It required the mother to do something by 4pm on 12 October 2012. It did not, as a matter of express language, require her to do anything at any time thereafter, nor did it spell out what was to be done if, for any reason, there had not been compliance by the specified time. In these circumstances there can be no question of any further breach, as alleged in the Solicitor General’s notice of application, by the mother’s failure to deliver up the children after 4pm on 12 October 2012 or, as alleged in the application, any continuing breach thereafter until 17 October 2012 when she and the children were found. 21. A mandatory order is not enforceable by committal unless it specifies the time for compliance: Temporal v Temporal [1990] 2 FLR 98. If it is desired to make such an order enforceable in respect of some omission after the specified time, the order must go on to specify another, later, time by which compliance is required. Hence the form of ‘four day order’ hallowed by long usage in the Chancery Division, requiring the act to be done “by [a specified date] or thereafter within four days after service of the order”

“Please state what has happened to the £12,143,133 which was paid to Munil since that payment was made. In particular, please: - [A] state on what date or dates and by what means Munil received the sum of £12,143,133 (“the Munil Money”), identifying each transaction by date and amount; - [B] identify each payment and each other transaction carried out by Munil using all or any part of the Munil Money, stating the date, amount, nature and purpose of the payment or transaction; - [C] identify all assets now held by Munil which (directly or indirectly) represent, or have been acquired in whole or in part through the use of, all or any part of the Munil Money; - [D] state whether Mr Watson or any Watson Associate has at any time received all or any part of (i) the Munil Money, or (ii) any asset which (directly or indirectly) represents, or was acquired in whole or in part through the use of, all or any part of the Munil Money, and identify each such receipt stating its date and amount and the nature and purpose of the transaction pursuant to which it was received; - [E] identify all assets now held by Mr Watson or any Watson Associate which (directly or indirectly) represent, or have been acquired in whole or in part through the use of, all or any part of the Munil Money; and - [F] to the extent not covered by the above, identify the present whereabouts of the Munil Money and its traceable proceeds insofar as known to Mr Watson.” - [A] state on what date or dates and by what means Munil received the sum of £12,143,133 (“the Munil Money”), identifying each transaction by date and amount; - [B] identify each payment and each other transaction carried out by Munil using all or any part of the Munil Money, stating the date, amount, nature and purpose of the payment or transaction; - [C] identify all assets now held by Munil which (directly or indirectly) represent, or have been acquired in whole or in part through the use of, all or any part of the Munil Money; - [D] state whether Mr Watson or any Watson Associate has at any time received all or any part of (i) the Munil Money, or (ii) any asset which (directly or indirectly) represents, or was acquired in whole or in part through the use of, all or any part of the Munil Money, and identify each such receipt stating its date and amount and the nature and purpose of the transaction pursuant to which it was received; - [E] identify all assets now held by Mr Watson or any Watson Associate which (directly or indirectly) represent, or have been acquired in whole or in part through the use of, all or any part of the Munil Money; and - [F] to the extent not covered by the above, identify the present whereabouts of the Munil Money and its traceable proceeds insofar as known to Mr Watson.”

“that traceable proceeds of the Munil Money (namely £3m from the sale to Ivory Castle Limited of a 10% interest in Voltaire Capital Limited, and a £1m part repayment of a loan by Munil Development Inc ("Munil") to the Richmond Trust) had been used in early 2015 to fund loans to Mr Rob Hersov and Braithwell Investments Limited ("Braithwell") which had in turn been loaned on to Cullen Group Limited, EJ Group Limited ("EJ Group") and Bendon Limited ("Bendon"), pursuant to various loan agreements and associated security deeds dated 15 and 17 April 2015 which gave each of Braithwell, CGL and EJ Group rights into which the Munil Money could be traced”

“2. To the best of Mr Watson’s knowledge, based on his own knowledge and on information provided to him by Munil, Munil has made the following payments using the said sum of £12,143,126.14: … b) Loans in the total sum of £1,430,000 were made to Richmond Trust. [i. and ii. detail the transfer of the £930,000, and of the further sums totalling £500,000] iii. £1 million was repaid by the Richmond Trust on 12.3.15, leaving £430,000 outstanding. iv. The Richmond property was sold on 24.7.15 for £1,895,000 with a net profit of £269,640. The proceeds of sale were used to fund the purchase of 4B Chislehurst Rd, Richmond TW10 6PW (the second Richmond property”) on 24th December 2015 for a total purchase price of £630,000. The Richmond Trust still owns the second Richmond Property. v. [gives details of the Richmond Trust].”

“possibly goes to Munil in exchange for an increase in the loan”

“Yes, I do feel comfortable, nevertheless we should maybe get a consent from Joan in a letter of wishes since Voltaire is becoming a big investment… Can you tell me again how much more we would invest?” (“Joan” is a reference to Mrs Joan Pollock, Mr Watson’s mother, who was the principal beneficiary of the Samos Trust which held Munil). In evidence is an undated share transfer, signed by Mr Noble, of 1 share in VCL from Mr Noble to Munil for £1, and an undated share sale agreement, signed by Mr Leahy, between Mr Leahy and Munil for the sale of 1 share in VCL by Mr Leahy to Munil for a consideration which is left blank. As appears below it is not disputed that Munil acquired a 10% shareholding in Voltaire and Kea’s case is that it acquired it for a nominal amount in return for agreeing to increased lending and giving up its 10% profit share. (6) On 13 February 2014 there was a further amendment to the Loan Agreement. This increased the amount of the loan by £750,000 to £1.55m, and also deleted the provision for Munil to have a profit share. Munil then duly made various loans totalling £750,000 between March and May 2014. (7) Mr Watson’s description of these events in his witness statement for trial was: “Munil was entitled to a 10% profit share in the profits of Voltaire Capital LP from September 2013 until 13 February 2014, pursuant to the terms of its loan to Voltaire Capital LP. From February 2014 - April 2015 Munil held a shareholding in Voltaire Capital LP (this replaced its entitlement to a profit share under the terms of the loan).”

“I do not believe that the Voltaire documents show that the 10% interest arrived [sic, presumably derived] from the £1.55m loan.”

“I would like to reiterate that this £3m was declared to be traceable proceeds of Munil Money by the court on 13 November 2018. Prior to the post-trial disclosure and the advice I received from Grosvenor Law regarding the tracing claim, I did not believe that any tracing claim would apply here.”

“…in my view the stake that Munil had in Voltaire was not delivered as part of its loan, it was not given that stake as part of that loan, or that stake was not placed there as part of that loan. It was placed there because of the work overall that I had done for the various companies, in particular Voltaire, and I was, if you will, awarded a stake in that company which I chose to place in Munil. But it facilitated multiple transactions, it helped Voltaire, including the introduction to investors, a loan from Munil, other opportunities, other business opportunities which I’m happy to talk about. In return for that I was granted, if you will, a stake in Voltaire that I chose to place in Munil.”

“asset which (directly or indirectly) represents, or was acquired in whole or in part through the use of, all or any part of the Munil Money”

“As far as we understand, nearly all of the money paid in following the Rygen/Spartan transaction was subsequently loaned by Munil to EJW [Mr Watson], the Richmond Trust and a company called Voltaire, respectively. Those loans have, for the most part, not yet been repaid. An additional amount was lost on currency transactions.”

“we certainly didn’t believe the Ivory Castle money coming in, which was -- which had never had anything to do with Kea, was coming in was so-called Munil money. It was money coming in to buy a stake.”

“(c) that traceable proceeds of the Munil Money had been advanced to Tim Connell on 18 March 2016 in the sum of $1,800,024.85 pursuant to a loan agreement entered into between Munil and Mr Connell on about 4 February 2016; (d) that the advance to Mr Connell was to be used to purchase shares in GEMFX (UK) Limited, now Stater Global Markets Limited”

“As a heads-up, Tim Connell who Munil has loaned funds to in the past, is looking for funding to assist him in acquiring a currency trading platform… Cullen Group Limited is going to assist him with a Guarantee for the purchase and Eric thought that Munil Development might assist with funding.”

“that traceable proceeds of the Munil Money, namely $475,024.63 had been paid to Justin Davis-Rice on 26 April 2016 pursuant to a loan agreement between Mr Davis Rice and Munil dated 21 April 2016 and used to purchase shares in Long Island Iced Tea Corp from Mr Connell.”

“The First Defendant [Mr Watson] shall within 28 days of service of this order swear and serve on the Second Claimant [Kea] an affidavit setting out to the best of his ability details of all his assets worldwide individually exceeding US$100,000 in value whether in his own name or not and whether solely or jointly owned, giving the value, location and details of all such assets. For the purpose of this order the First Defendant’s assets include any asset which he has the power, directly or indirectly, to dispose of or deal with as if it were his own. The First Defendant is to be regarded as having such power if a third party (including for the avoidance of doubt William Gibson) who holds or controls the asset habitually acts in accordance with the First Defendant’s direct or indirect instructions. The First Defendant’s said affidavit shall include details of (i) all interests and powers which the First Defendant has under any trusts whose assets exceed US$50,000 in value (and for this purpose the First Defendant has an interest or power under a trust if either he or a third party who habitually acts in accordance with his direct or indirect instructions has such an interest or power), and (ii) in so far as within the knowledge of the First Defendant (including knowledge he is able to obtain by asking William Gibson or other people working for Cullen Investments Ltd or by looking at documents in his possession, power or control) all assets individually exceeding $50,000 in value held directly or indirectly by trusts so identified.”

“Eric John Watson in breach of paragraph 14 of the September Order failed within 28 days of service of the said order or at all to provide in an affidavit the value and details of all of his assets (as defined in paragraph 14 of the said order) worth over £100,000 and further failed to include in the said affidavit the value and details of all individual assets individually worth over $50,000 which were held by trusts identified by Mr Watson in answer to paragraph 14 of the September Order. In particular Eric John Watson failed to provide:”

“any and all direct or indirect interest the Borrower [ie Mr Watson] (or a vehicle holding any such interest) has in the business venture involving the Borrower and the Lender [ie Mr Richardson] known as Chancery Capital (previously Templar Litigation Capital) … The Borrower shall grant such security to the Lender promptly following completion of the transaction pursuant to which Chancery Capital is formed …”

“In relation to the Libra Trust, it holds interests in contingent outcomes of 2 litigation cases therefore I do not have the ability to value it.”

“As you will be aware, FOH has a debt to Mr Watson of US$2,143,212. This debt will remain owing by FOH and is not affected by the transaction.”

“It was formerly said that a chose in action had no location. This is correct in a general sense, since something with no physical existence can hardly have a location in space; nevertheless, the courts have evolved rules under which a situs is ascribed to choses in action of different kinds in order to apply legal rules originally developed for tangible property.”

“should make it very clear that the likelihood of recovering any amount in respect of this asset is negligible.”

“the value or details of an apparent loan receivable from Hart Acquisitions LLC in the sum of $7,210,535.”

“The 100% ownership figure used in Mr Watson’s asset statements provided to various banks in the past referred to a then-live proposal that Cullen Investments Ltd and Mr Watson discussed with Richard Watson by which the two lenders would have been able to acquire Hart Acquisitions LLC in lieu of/as a repayment of the Cullen Investments Ltd/Eric Watson loans. The proposal was eventually not agreed and the idea was dropped entirely in 2017.”

“US Dairy - $11m [ie NZ$] – based on US$8m, being $4m of equity in CAGZ and $4m of equity in Hart via Cullen loans.” (3) In September 2010 Mr Flay sent Mr Watson a further e-mail with a cashflow analysis showing what was being earned or spent on various matters, including: “US Dairy – positive [NZ$]927k. This is the net number based on the Note repayments ex CAGX, less the funding costs of Hart.”

“US Dairy – NS13.7m, being approximate equity in the Hart farms and CAGZ.” (5) A Balance Sheet of Mr Watson’s assets as at 25 January 2011 prepared for JP Morgan included under Commercial Real Estate a value of $10.471m for “Cullen Agriculture”, with the accompanying notes showing that this was the equivalent of NZ$13.7m odd for US Dairy. A similar Balance Sheet as at 14 November 2011 (signed by Mr Watson as being true and complete and a correct statement of his financial condition) gave a similar figure of $10.4m, this time noted as Cullen Agricultural Holdings Corp & Hart Acquisitions. (6) In November 2011 Mr Vassilakos sent Mr Watson and Mr Flay details of Hart’s financing needs through 2012, with budgets for two farms called Girard and Seven Oaks. Mr Watson’s response was that he wanted key financials, and then gave the go ahead, saying: “Okay, go ahead. Don’t miss the budgets this year guys.” (7) On 17 April 2012 Mr Vassilakos sent Mr Watson and Mr Flay proposed changes to the 2012 budgets. These included such items as buying 200 cows, hiring a manager, expansion of the farms and the purchase of new equipment, and would require capital of $1.013m, to be financed as to $485,000 by loans from QNBT and vendor financing for equipment, and “$528k in equity”

“$528k maximum equity approved (subject to your arranging balance in debt finance).” (8) A similar exercise was repeated in August 2012 with Mr Vassilakos putting forward to Mr Watson a proposal involving an extra $350,000 in capital, to be financed by $150,000 increase in debt from QNBT and $200,000 in equity, which Mr Watson approved as follows: “I’m happy you and Richard have this business heading in the right direction. I will make additional capital requested available.” (9) Again in November 2012 Mr Vassilakos put forward to Mr Watson a proposal involving a requirement for a further $610,000 of capital, this time for purchasing and improving 163 acres of land, which would require $232,000 in “new equity funding”, to which Mr Watson simply replied “Go ahead”. (10) A Net Asset Statement for Mr Watson as at 30 November 2013 prepared for QNBT (and said to represent “the net position of assets in which Mr Watson has a direct, indirect or beneficial interest in”) gives a figure of $17.4m for “Cullen Agritech and Natural Dairy” (a structure chart for the Valley Trust shows CIL as having an 82.5% interest in Cullen Agricultural Holdings Corp which had a subsidiary called Natural Dairy Inc, which in turn had a subsidiary called Cullen Agricultural Technologies Inc.) A Balance Sheet for Mr Watson as at 20 February 2014 prepared for JP Morgan gave a similar figure of $17.4m for “Cullen Agricultural” showing a $6m increase on the figure for 31 December 2012 – a note attached showed the same figure as “US Dairy”. (11) A Balance Sheet for Mr Watson as at 31 December 2015 included under Commercial Real Estate a figure of $25m for “Hart Dairies”

“Once Publix is rolled out Hart will be worth north of $150m.”

“For the avoidance of doubt, [HDCC] is an entirely separate entity to Hart Acquisitions (which also trades as Hart Agriculture), the latter being wholly owned by Mr Richard Watson and operating as a dairy farming business which is a class of agriculture for long-term production of milk, which is processed for eventual sale of a dairy product. [HDCC] is a procurer of the milk production referred to, from a co-operative of local farmers including Hart Agriculture.”

“So it suited us from a -- certainly having a US owner to borrow money in the US -- Richard was a US citizen. It would have been much harder for a New Zealand company to get involved with a bank in the US and buy a farm. Having him as the owner legally was sensible from that perspective and indeed from a Cullen Investments perspective having control through advancing a loan.” (2) When asked about the value in the Balance Sheet of $25m, he made it clear that this was not the value of the then loans (which were lower) but was a value for the farm which varied depending on the milk price and number of livestock and the like. (3) In cross-examination he said that he just continued to advance money to his brother over the years, but: “I did think ultimately we would come to some agreement when or if the company was sold or taken public or some liquidity event that we would look to convert it to equity, pay it back.” (although he also said that until it was something else, it was “just a loan”). Again when it was put to him that he had provided all the money and all the economic value in the business was his, he said that at some point if they agreed to convert the debt: “there would have to be a discussion with Richard and an agreement, and we would have to agree the appropriate economics above the value of the debt and the advance as to capital in Cullen, yes.” debt and the advance as to capital in Cullen, yes.”

“Well it wasn’t. But that would be my assumption, that at some point that if that event occurred, if for example Hart Acquisitions was to go public or Hart Acquisitions was to be sold, that would be the way that we would look at it.” (4) When it was put to him that that was his understanding with his brother from the beginning, he said that his brother was a scientist and they did not tend to have many financially-focused conversations but that he trusted himself to be able to negotiate a deal given that they had provided the bulk of the funding; and when it was suggested that that understanding was reached years ago, he said: “I think I would agree in the sense that philosophically we are aligned on that, but what the actual split of any economics over and above the value of the loan, it would have been a specific day, it would have been you have X, I have Y. We just never got to that because there’s been no reason to get to that.”

“Well, we have also, as I have said before, we have always assumed that any surplus over and above our loans with Hart, the value of that we would take, but we would agree something with Richard at that point in time. So there would be an allocation of Richard’s equity, over the years, that he would get a piece of any economics. I touched on this before. We never really finalised on what that might be. We had discussions about it when we were talking about changing the loan to a secured loan to Cullen, but we just never got around to doing it. So we left things how they were, apart from the change in loan. … We didn’t spend a lot of time on it and I think we both felt that ultimately we would work it out in due course, which indeed we hopefully will. He is my brother.”

“the value or details of an apparent loan receivable from Hart Acquisitions LLC in the sum of $7,210,535.”

“Fifth, in his personal statement … Mr Watson also identified an undocumented personal loan of $7,210,535 to Hart Acquisitions LLC. In their letter of 5 November 2018 Grosvenor Law stated that Mr Watson’s loan is “unsecured and undocumented”

“Eric John Watson in breach of the order of 12 November 2018 ("the November Order") failed by 4pm on 21 December 2018 or at all to provide either and/or both of: (a) a list and explanation of all of his interests (as defined in the said order) held by his mother, Joan Pollock, particularly the sum of NZ$3.5m transferred from Valley (NZ) Limited to an account in the name of J M Pollock on 8 May 2018 as required by Schedule 1 Part 2 Paragraph (12); and (b) bank statements as required by Schedule 2 Part 2 Paragraph (47) of the said order.”

“In this Order and its schedules, “Mr Watson’s interests” shall include interests or assets (including choses in action) held by: 1.1 Mr Watson personally whether legally or beneficially 1.2 any trust of which Mr Watson or Mr William Gibson (“Mr Gibson”) is a beneficiary or appointor or protector or of which Mr Watson is the settlor or economic settlor or whose trustee(s) or appointor(s) or protector(s) routinely act in accordance with the instructions of Mr Watson or Mr Gibson or any other person who in turn routinely acts in accordance with Mr Watson’s or Mr Gibson’s instructions; 1.3 any person who holds assets as nominee for Mr Watson or on the basis, whether documented or undocumented, that Mr Watson in fact shares in the economic interest in such assets (including for the avoidance of doubt Mr Gibson and his related trust entities, the Heron Bay Trust or Ivory Castle Limited (whether or not Mr Watson considers them to fall within paragraphs 1.1 to 1.2 above); 1.4 any company or other entity which is directly or ultimately owned, in whole or in part, by any person falling within paragraph 1.1, 1.2 or 1.3 above.” 1.3 above.” (2) Paragraph 5 provided: “Mr Watson shall by 4 pm on 21 December 2018 swear and serve upon Kea an affidavit providing the information set out in part 2 of Schedule 1 to this Order.” (3) Paragraph 7 provided: “Mr Watson shall by 4 pm on 21 December 2018 provide to Kea’s solicitors copies of the documents set out in part 2 of Schedule 2 to this Order.” (4) Schedule 2 part 2 paragraph (12) provided, so far as relevant: “A full list and explanation of all Mr Watson’s interests held by: … (iv) Mr Watson’s mother, Joan Pollock; …” (5) Schedule 2 part 2 paragraph (47) provided, so far as relevant: “The bank statements for 1 January 2018 to date for the accounts from which the following sums were transferred to Mr Watson’s BNZ account no 00/02-056-0180535-000: (i) Payment of NZ$575k from “0271/271000000/002” on 27/7/18 (which has a code “J Pollock”); (ii) Payment of NZ$530,000 from “0271/271000000/002” on 20/7/18; (iii) Payment of NZ$575k from “0271/271000000/02” on 18/6/18; …”

“Reference in this affidavit to “my interests” is to the interests defined in the Order as “Mr Watson’s interests” and is not intended as an admission that in fact I have a personal interest in any such asset.”

“Joan is my mother and a settlor and/or discretionary beneficiary of a number of trusts connected with me. Other than in respect of trusts of which Joan Pollock was the settlor and I am a discretionary beneficiary (details of which I have already provided to Farrer & Co), neither she, nor any trust, company or entity connected with her holds any interest for me or on my behalf.”

“3. What happened to the proceeds of the sale of the Westbury Estate, the Warriors and Soul Bar? … 6. In respect of the payment of $575,000 received into Mr Watson’s BNZ account on 27 August 2018: a. Who is the holder of the bank account from which the payment came? b. Which bank is that account held with? c. In which jurisdiction? 7. What other assets are held by the holder of the bank account from which the said $575,000 was paid?” a. Who is the holder of the bank account from which the payment came? b. Which bank is that account held with? c. In which jurisdiction? (3) Pursuant to that order, Mr Watson swore his affidavit dated 18 January 2019. The answer to Question 3 included a statement that the proceeds of sale of the Warriors (a rugby league team) were used, among other things, for the following: “4.3.2.2 Purchase of 50% stake in Malibu Investments Ltd: NZ$3,500,000; 4.3.2.3 Repayment of Eric Watson loan: NZ$420,000”

“25. …The original source of the money that I received was the Valley Trust, of which I am a discretionary beneficiary; had the payment been made to me directly from the Valley Trust it would have attracted a high personal tax charge. Following specialist tax advice, the Valley Trust money was used to acquire an asset of a trust of which my mother was a beneficiary (but I was not) and she gifted some (not all) of these proceeds of sale to me, resulting in a legitimate tax saving. I was therefore the discretionary beneficiary of the trust from which the money that was gifted to me originated but it was passed to me in a legally tax efficient way…. So this is not, as described by Mr Graham, an example of so-called nominee arrangements whereby somebody else secretly holds my money in their name. Subject to the discretionary powers of the valley trust trustee, I could have been a beneficiary and (subject to trustee discretion) received this money in my own right.”

“47. …The fact is that in the past I had money and was able to call on friends and family to lend me money, but my legal expenses have been such that now I have no funds of my own and my ability to borrow (including from my mother, who has no money left to lend me) is almost entirely exhausted.”

“I have no control over my mother’s financial affairs. She previously declined to give me copies of her bank statements on the basis that she was reluctant to give up her privacy rights and she did not know how these documents would be used (or misused) in the litigation. I pressed her hard and she relented. She does not have to make payments to me from her assets, but at times when I have pressed her she has chosen to do so. The purpose of having her agree to disclose her bank statements was precisely to demonstrate that her financial resources are so depleted so no further money is available to me from her. Even if she still had money available to provide to me (which I believe she does not), it is not certain that she would lend or give it to me.”

“388. In the middle of January 2019 I video called my mother (as I do on a regular basis) and pressed her to lend or give me money because I was desperate to fund my legal costs. She had previously agreed to use her money to help me in my time of need but, by the time of this call, the gradual depletion of her own resources meant that she was unable to continue to support me, as she told me during the video call. 389. When in my First Witness Statement on the issue of security for costs dated 28 February 2019 … I referred (at paragraph 54) to my mother showing me her bank statements, I was referring to what my mother showed me during her video call. I had told her that I found it very hard to believe that she had no money left to help me and in response she showed me on the call a view of the relevant statements. In this way she demonstrated to me that she could no longer help me financially. When I saw this I then pressed her hard to overcome her (completely understandable) reluctance and send me copies of the statements so that I could demonstrate that this source of financial support was no longer available to me. She eventually agreed…”

“You are considering using the sale proceeds to purchase some of the shares in “Malibu” a company in which 50% of the shares are held by the EJW Family Trust…. You were then considering paying the proceeds from that sale to EW’s mother who is not UK tax resident. She might then gift some or all of those proceeds to EW. Tax issues aside should you go ahead with this proposal I suggest you should consider taking legal advice to check that the proposed course of action does not amount to a breach of trust given that EW is not a beneficiary. A number of points arise:- a. It would be important for any such sale to take place at market value … b. Paying out the proceeds in the way described above (a capital payment) and then EW’s mother passing them to EW would risk EW being taxed as though he had received the capital payment unless there was a gap of at least 3 years between the payment to EW’s mother and the onward gift to EW… … I have not yet thought of any other route whereby the NZ warriors disposal proceeds could be used tax efficiently but will continue to consider this.”

“Hi Mary, can you please ask Joan to send NZD$600k to Eric’s NZD account?” followed on 19 July with: “Hi Mary, can you please ask Joan if she would send NZD$550,000 to Eric in his NZ account, to cover personal expenses, rent etc. Thank you.” and on 23 August with: “Good morning Mary, Further to our conversation yesterday can you please ask Joan if she wouldn’t mind setting up a AUD$3k a month automatic payment to you.”

“Hi Mary, Eric has asked if you could ask for Joan to consider advancing him another £25,000?”

“Q. …you were asking for payments to be made to your sister. This is not something generated by your mother? A. No, that is not true. I mean, you have to get this in context. My mother is 80, over 80 now, and my sister helps her a lot with many tasks, and I would have spoken to my mother and she would like Mary to get some money and I would like to do that. And I talk to William and William talks to Mary and actions that.”

“Q. You had agreed with her that she would help you in your hour of need by giving you money? A. Yes, but I didn’t specifically agree “You will give me this, you will give me that.”

“Q. …So was it a gift or it was a loan? A. Well, I don’t think we determined yet how we will treat that from a tax perspective, my Lord, because it is more likely to be a loan, I would think. If it is a gift it is potentially taxable. Q. Mr Watson, I don’t know if you understand that what usually happens is people agree what a thing is and then the tax treatment gets applied to that. So when [your] mother advanced you these monies did she give them to you or loan them to you, on your story? A. It is not my story, my Lord, it is what actually happened. So it is my mother, she doesn’t really mind whether she is sending money to her family as a gift or a loan… She would probably like to think it was a loan, but loaning me money is not probably not a very good investment now. So from a tax perspective we don’t have to decide whether it was -- until we file those tax returns.”

“on the basis, whether documented or undocumented, that Mr Watson in fact shares in the economic interest in such assets”

“An omission to do that which is in truth impossible involves no choice at all. Failure to comply with an order to do something, where the doing of it is impossible, may therefore be a breach of the order, but not, in my judgment, a contempt of court.”

“I’m not at all comfortable to share my private details. I will not be providing any bank statements.”

“One of the documents we will need is an unredacted copy of Joan’s bank statement into which she received that $3.5m from the date she received it until now. I hope she has an online access and can produce statements for that account only. It’s urgent and we cannot miss the Tue deadline.”

“details and values of other assets held by Mr Watson which are unknown to Kea or which Mr Watson alleges are held by persons other than Mr Watson.”

“intervened with words to the effect that you could not agree to give full disclosure because the documents would be used in enforcement claims.” (2) He wrote another letter on 4 February 2019 to Grosvenor Law in which he said: “The discussion on 19 December – and in particular Mr Megginson’s remark that Mr Watson could not agree to give full disclosure because the documents would then be used in enforcement claims – made clear (a) that your client had not given full disclosure of his assets, as required (b) that he knew he had not done so and (c) that he did not intend to do so.” (3) Mr Megginson was prompted by these letters to give his own account. That was given in a letter also dated 4 February 2019 to Farrers. He said: “My reply was that Mr Watson could not have settlement discussions since anything he said could be used against him in enforcement proceedings.”

“He is saying that Mr Watson, and I distinctly remember him saying this, cannot have the discussion that Mr Watson was proposing to have with me because it would be used in enforcement proceedings.” “I can categorically assure you that he said that this information could not be provided because it would be used in enforcement proceedings” “I clearly remember Mr Megginson saying to Mr Watson that he could not provide further information because it would be used in enforcement claims.”

“Now, that is my recollection of what he says, so he seems to be saying the same thing.” and later, when Mr Grant reverted to it, repeated that what Mr Megginson had said was: “You can’t enter into discussions, it would be used against you in enforcement proceedings.” (5) In the light of this there seems to be no real dispute and I find that what Mr Megginson said was along the lines of: “You cannot have settlement discussions with Farrers as anything you say would be used against you in enforcement proceedings.”

“What I meant (and it should have been clear from the context of the conversation) was that as long as he was under attack for allegedly failing to disclose his assets he could not discuss settlement, as any proposals that Mr Watson put forward in an attempt to reach a settlement could be (unjustifiably) used against him as evidence that he had undisclosed assets with which he could bargain. He would be in the position of postulating settlement undertakings that in practice he would find very difficult to deliver on as long as he was still embroiled in litigation. Accordingly it made no sense for Mr Watson to have settlement discussions if in the course of those discussions what he said could be used against him in enforcement proceedings as evidence that he had assets to bargain with. Of course the fact that has only limited assets to settle with does not mean there cannot be a settlement: he could for example pledge future earnings and assets, either directly or indirectly.”

“the reference to “trust protection measures” in the email to Grant Thornton relates to steps being considered at the time to professionalise the management of the trusts through the appointment of specialist professional trustees – i.e. the “protection measures” relate to the management and integrity of the trusts (for management, legal and tax purposes) and have nothing to do with the position of creditors (as erroneously suggested by Mr Graham)…. Contrary to Mr Graham’s inference… the change in the trustees of the Valley trust (and in any other trusts in like manner) had nothing to do with making it more difficult for my creditors to access assets held in that structure (and I do not understand how a change of trustee could have that effect). The change was purely to professionalise the trusteeship.”

“As you know we are particularly concerned with the vulnerability of the New Zealand trusts to attack, by reason of the identity of the trustees… If you receive a negative judgment from Nugee then both Glenn and Novatrust will immediately start enforcement proceedings and they will go after the most substantial assets that they are aware of…. Our advice remains that all of these trusts should be transferred to independent professional trust companies so that they can be managed on a fully arms-length basis. The effect of this would be to safeguard the trust assets and to give you confidence that the trusts would be unimpeachable. … Please provide us with an update as to progress of transfer [of] the New Zealand trusts to Vistra. As you know we consider this as real priority in respect of asset protection.”

“Preparation for receipt of judgment: … If EW is ordered to pay £30m he will not / could not pay and will instead go bankrupt. Bankruptcy will result in tracing claims and a fight over assets held in trusts in various jurisdictions. If Glenn wins it will take approximately 1 year of legal battle over multiple jurisdictions for him to realise/accept that it will be difficult to get assets and by this stage EW may be out of bankruptcy. We will want to demonstrate to the other side that the assets are held in bona fide trusts and that it will be along [sic – evidently “a long”] hard fight that they will lose. GL are preparing the trust material and overarching statement of assets for EW and also for WG. … Asset protection / transfer of NZ trusts to professional trust companies PT/GL are concerned that assets held in NZ trusts (Bendon, Warriors etc) are vulnerable to attack on the basis that the trustees are entities or individuals closely connected to EW. They should be transferred to an independent professional licenced as soon as possible.”

“PT emphasised the urgency and requirement for the trusts to be transferred before we receive judgment: it will look bad to the court if the transfer occurs post judgment.”

“Trusts analysis As GL has said on many occasions, on the assumption that Glenn/Kea will win at trial they will first go after EW’s personal assets before seeking to attack the trusts. GL spoke to Jakob [ie Czarnecki] yesterday who mentioned a loan between Eric and EJ Group in respect of the Warriors Rugby League team. GL has not seen any loan agreement or corresponding documents. PT stated that any loan advanced by EW is an asset and that this will need to be disclosed if Glenn/Kea apply and obtain a freezing injunction.”

“Owen Glenn is very much committed to seeing Eric Watson “buried and pulped” says one source familiar with the case…. “Owen and his advisors believe that they’ve minced him up and smeared him on the pavement. He’s hanging on for grim death to see Eric in a six foot hole before he is” said the source.”