“…If KMG can establish as a matter of fact that the transfer of Novero was intended by the defendants to cause prejudice toKMG as creditor of DPH, it appears on the basis of Mr van Maanen’s report that the standard of “serious reproach” will have been met.”
“…Again, applying Mr van Maanen’s report, if the facts are established, it will amount to what he referred to as “exceptional circumstances” so as to establish liability.”
“50. Although therefore in other circumstances, the issue ofwhat amounts to “serious reproach” may be a difficult one as amatter of Dutch law, it would not appear to be an issue givingrise to any difficulty on the alleged facts of this case. Further although Mr van Maanen states that the Dutch case law requires a sufficient level of proximity between the company and the party making the tort claim against the director, it would appear from his report that, this element is satisfied, ifKMG can establish the case on the facts as it alleges, based ona deliberate intention to prejudice KMG.”
“54. Thus, although in Professor Veder’s opinion, liability would attach not as a quasi director but as an ordinary person, on the alleged facts, liability still arises under the same provision of the Dutch Civil Code, article 6:162. Whilst the test of what constitutes a wrongful act appears at first sight to be an unfamiliar concept for the English courts to apply, it appearsfrom Professor Veder’s report that on the facts of this case(assuming they were established) there would be no issue as towhether the norm had been breached.”
“[56]…On the case advanced by KMG, the question of whether the conduct fell below the requisite standard does not appear to give rise to any difficulty as a matter of Dutch law. Proximity for the reasons stated above would also not appear on the basis of evidence of the experts to give rise to any difficulty as a matter of legal principle, on the facts of this case.” “[57] An English court is used to having to deal with conflicts between experts on issues of foreign law and in the particularcircumstances of this case, it would appear to make nodifference to the outcome, that is the imposition of liability onthe defendants, whether Mr van Maanen or Professor Veder is correct as to the nature of the liability, if KMG can establish itsfactual case that the defendants acted with the intention toprejudice KMG. In the circumstances therefore I do not accept the defendants’ submission that this involves issues in a developing and controversial area of law. Liability will bedriven by the factual enquiry and can be determined by theEnglish court without having to resolve controversial issues ofDutch law.”
“…Looking carefully at the legal issues which will have to be determined in this case as set out in the expert reports discussed above, it seems to me that the English court could apply the facts as it finds them to the Dutch legal principles of liability under the relevant provisions of the Dutch Civil Code. As set out above, the issues of Dutch law which arise in this case onthe facts as alleged by KMG, are, in my view, not likely to leadto difficult questions of liability under Dutch law. The case advanced by KMG is in essence a deliberate transfer of assets out of NIBV orchestrated by Ms Chen (and others) with theintention and effect of putting those assets out of the reach of KMG as a creditor of DPH. Accordingly, it is unlikely in my view that were such facts to be established, the English court would have any difficulty applying the Dutch law principles to determine whether a tort had been committed as a matter of Dutch law. Whatever questions may arise in theory on thescope of liability in tort under Dutch law, the facts of this caseare very unlikely in my view, to stray into the developing andcontroversial areas of Dutch law.”
“96. Whilst therefore I am bound to say that the Dutch courts would have an advantage over the English courts in applying Dutch law, the issue which I have to determine is whether in all the circumstances, Ms Chen has established that the Dutch courts are the forum where the case may be tried more suitably for the interests of all parties and the ends of justice. 97. The burden of proof rests on Ms Chen to persuade the court to exercise its discretion to stay the proceedings. In my view, for all the reasons discussed above, Ms Chen has not established that in the circumstances of this case, England is not an appropriate forum for the trial and further that the Dutch courts are clearly or distinctly more appropriate than the English courts. Accordingly, Ms Chen’s application for a stay must fail.”
“1. As to the scope of personal liability in tort under Article 6:162 of the Dutch civil code as it is applies to allegations against a defendant who took steps with the intention ofharming specifically the claimant by reducing the assets available to a parent company, which is an actual or potential creditor of the claimant, by reducing the assets of an indirect Dutch subsidiary of that parent company, and in particular: a. What are the requirements for such liability against a defendant who was a formally appointed or de facto director of the indirect Dutch subsidiary? b. What are the requirements for such liability against a party that is not a formally appointed or de facto director of the indirect Dutch subsidiary? c. What is the test for whether someone is a de facto director? d. Does the principle of “derivative loss” affect the scope of liability for either of the above claims, and if so, how does it apply?”
“…The said dissipation, particulars of which appear in paragraphs 16 to 18 below, was unlawfully procured and/or undertaken by the Defendants in order to prevent KMG, alternatively knowing that it would prevent KMG, from obtaining satisfaction of, or from successfully enforcing, the said award from or against DPH. By reason of such dissipation, the Defendants have incurred liability to KMG in tort, under Dutch law, alternatively English law, as set out in paragraphs 27 to 35 below.”
“24. The Novero Dissipation (including the 2014 Transaction if, as alleged by the Defendants, NIBV was transferred out of the DP Group in September 2014) was orchestrated and/or facilitated by MC and/or AP and/or CML and/or NIBV in order to enrich themselves personally at the expense of DPH and thus KMG and/or to remove the Novero asset from the formal DPH structure and to transfer it to related parties in order to protect the asset and cash generated as a result of its future sale to Laird Plc from the creditors of DPH (the parent to which the net profits of any sale would ultimately flow), including KMG in particular. The ultimate aim, alternatively the known consequence, was to prevent KMG from being able to collect under the indemnity obligations or the Award. The Defendants’ knowledge in this connection (andas elsewhere referred to herein) is evidenced by or to beinferred from (i) MC’s involvement in the transactions betweenKMG and DPH that gave rise to DPH’s indemnity obligationsto KMG, (ii) MC’s close and personal relationship with MrPatriciu who was a criminal defendant in the Romanianproceedings described in paragraph 23A above, (iii) MC’sclose relationship with AP, (iv) MC’s senior role within the DP Group as aforesaid, (v) MC’s knowledge of KMG’s claimagainst DPH pursuant to the aforesaid indemnity obligations, or(as at the date of the 2014 Transaction) appreciation of at leasta real risk of such liability in the event that the Romanian Courtof Appeal reversed the first instance decision in favour of TRG, (vi) the fact (as must have been known to MC) that prior to the2014 Transaction KMG had already made clear its intention toclaim against DPH on its indemnity obligations in respect ofany liability connected with the Romanian proceedings byfiling an actual request for arbitration on3 July 2014 for thelegal fees it had incurred in connection with the Romanianproceedings, and (vii) MC’s realisation as a result of herdiscussions with Laird plc (as set out in paragraph 16A above)that a very substantial offer for the Novero business was goingto be forthcoming from Laird plc which would result in asubstantial surplus for DPH (and enable DPH to pay substantialcreditors such as KMG) unless the Novero business wastransferred out of the ownership of the DP Group before Lairdplc acquired the Novero business.”
“32B. Further or alternatively, having regard to the matters pleaded in paragraph 31A above: 32B.1 By reason of MC’s involvement in the Novero Dissipation (including MC’s involvement in the 2014 Transaction) as set out above, MC intended to prejudice KMG and/or knew (as set out in paragraph 24 above) that KMGwould be prejudiced in its capacity as anticipated creditor and then actual creditor of DPH, by using, among other things, NIBV, Oscul, Donares and Geranium to prevent KMG from obtaining payment in respect of the Award (or the future debt which was reasonably in prospect in September 2014) and to benefit personally, as to which paragraph 32.2 above is repeated. Therefore, MC’s conduct was calculated and intended to prejudice KMG, alternatively was known (as set out inparagraph 24 above) to be prejudicial to KMG, and MC thus committed a wrongful act against KMG; and 32B.2 MC’s conduct has caused loss to KMG as set out at paragraph 26 above.”
“As will be seen below, the term a “very late amendment” hassubsequently become almost a term of art, meaning anapplication made when the trial date has been fixed and wherepermitting the amendments would cause the trial date to be lost. I shall adopt that meaning. Elsewhere it has been said that lateness is a relative concept. I agree, and would add that the natural elasticity of language and its use in the authorities shows that an amendment may be regarded as “late” eitherbecause it could have been brought forward earlier or becauseit is brought forward at a time that is liable to disrupt theefficient conduct of the proceedings or both. The infinite variety of circumstances in which amendments may be brought forward means that there is a broad spectrum of potential impacts if an amendment is allowed, which is not dependent solely on chronological timing, and which may fall anywhere between the negligible and the devastating. In this broader postCPR approach to amendments, the Court is not limited to considering the effect on the parties and whether any potential prejudice may be satisfactorily compensated in costs, though there is no reason why those may not be relevant considerations in appropriate cases. The Court will also have regard to the impact on the administration of justice in terms of potential disruption to the case in which the amendment is brought forward and in terms of the wider interests of the Court, other litigation and other litigants.”
“29. I respectfully agree with and endorse these summaries of principle, which are similar. Where differences of emphasis or inclusion exist they may be seen to be referable to the facts of the particular case as set out elsewhere in the respective judgments. The only possible note of discord is that I would not agree that there must be a good explanation for delay, as stated by Coulson J at [19(c)]. Coulson J cited Brown v Innovatorone PLC[2011] EWHC 3221 (Comm) in support of the proposition. In Brown Hamblen J referred to the explanation for why an amendment is made late as being likely to be one of the factors that is relevant to be taken into account in striking a fair balance; he did not suggest that the presence of an explanation was an essential prerequisite to the allowing of an amendment. Henderson J in Wani v RBS[2015] EWHC 1181 (Ch) adopted and endorsed the approach of Hamblen J in Brown. I do notread his judgment (or any other authority to which I have beenreferred) as laying down a more draconian rule that the absenceof good explanation is fatal to the granting of an amendment. Iadopt the approach that the presence or absence of anexplanation which justifies the delay is one of the factors to beconsidered in deciding where to strike a fair balance.”
“The principles relating to the grant of permission to amend are set out in Swain- Mason and in a series of recent authorities. The parties referred particularly to Mrs Justice Carr’s summary in Quah Su-Ling v. Goldman Sachs International[2015] EWHC 759 (Comm) at paragraphs 36-38 of her judgment. In essence, the court must, taking account of the overriding objective, balance the injustice to the party seeking to amend if it is refused permission, against the need for finality in litigation and the injustice to the other parties and other litigants, if the amendment is permitted. There is a heavyburden on the party seeking a late amendment to justify thelateness of the application and to show the strength of the newcase and why justice requires him to be able to pursue it. These principles apply with even greater rigour to an amendment made after the trial and in the course of an appeal.”
“38. Drawing these authorities together, the relevant principles can be stated simply as follows: a) whether to allow an amendment is a matter for the discretion of the court. In exercising that discretion, the overriding objective is of the greatest importance. Applications always involve the court striking a balance between injustice to the applicant if the amendment is refused, and injustice to the opposing party and other litigants in general, if the amendment is permitted; b) where a very late application to amend is made the correct approach is not that the amendments ought, in general, to be allowed so that the real dispute between the parties can be adjudicated upon. Rather, a heavy burden lies on a party seeking a very late amendment to show the strength of the new case and why justice to him, his opponent and other court users requires him to be able to pursue it. The risk to a trial date may mean that the lateness of the application to amend will of itself cause the balance to be loaded heavily against the grant of permission; c) a very late amendment is one made when the trial date has been fixed and where permitting the amendments would cause the trial date to be lost. Parties and the court have a legitimate expectation that trial fixtures will be kept; d) lateness is not an absolute, but a relative concept. It depends on a review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of the consequences in terms of work wasted and consequential work to be done; e) gone are the days when it was sufficient for the amending party to argue that no prejudice had been suffered, save as to costs. In the modern era it is more readily recognised that the payment of costs may not be adequate compensation; f) it is incumbent on a party seeking the indulgence of the court to be allowed to raise a late claim to provide a good explanation for the delay; g) a much stricter view is taken nowadays of non- compliance with the CPR and directions of the Court. The achievement of justice means something different now. Parties can no longer expect indulgence if they fail to comply with their procedural obligations because those obligations not only serve the purpose of ensuring that they conduct the litigation proportionately in order to ensure their own costs are kept within proportionate bounds but also the wider public interest of ensuring that other litigants can obtain justice efficiently and proportionately, and that the courts enable them to do so.”
“has never been confined to an allegation that the defendants, by their conduct, specifically intended to harm KMG”
“Paragraph 24, as we saw a moment ago, is the paragraph where we pleaded that the purpose of the dissipation was to enrich themselves at the expense of DPH and KMG and that the ultimate aim was to prevent KMG from being able to collect under the indemnity obligations for the award. So the idea that the plea in paragraph 32(a) is somehow a plea of essentially non-intentional dissipation is nonsensical. It is avery clear plea. It is one of the bases of a claim in tort under6.162 of intentional dissipation.”
“The relevance of identifying clearly and precisely the extent of the difference is this. As your Ladyship knows, our factualcase, as part of our claim in tort or as a matter of Dutch law, or our case in conspiracy as a matter of English law, isfundamentally based on the factual proposition that Ms. Chendeliberately, and in conspiracy with Ms. Patriciu, embarkedupon the dissipation of the Novero asset out of the DP Group,in order to prejudice KMG. That is our factual case. Your Ladyship will recall it is very clearly stated in paragraph 1 of the Particulars of Claim and it is developed later in the pleading. If that case is correct andthe court is dealing with a case ofdeliberate dissipation to prejudice KMG, then the differencethat exists between the expert (to the extent that I have justidentified) is a difference of no consequence: because even on Mr. Van Maanen's more restrictive legal test i.e. his suggestion that the requirement of serious reproach also applies in the case of quasi directors, and that is an assuming and of course the other side also deny, they deny that they, that Ms. Chen was a quasi director. But if we are right in our factual case -- and that is the foundation of both sets of claims under both systems of law -- then the difference I have just identified in relation to the issue of serious reproach is neither here nor there. And that, in my respectful submission, is an important factor to bear in mind interms of the relative significance of this aspect of Dutch law inthe overall scheme of the case. On the other hand, if we do notmanage to establish this fundamental factual basis for theclaim, then obviously the claims will not be made out. In fact, in that event, the claims will not be made out, they will not be made out as a matter of sense, but they will not be made out either as a matter of Dutch law or as a matter of English law. So, that is serious reproach and the real extent of the difference and the significance of the difference in terms of the issues and the forum consideration.”
“nothing in the terms of the judgment of Moulder J which suggest that the circumstances that would require consideration when assessing the Ds’ potential liability under Article 6:162 of the Dutch Civil Code were limited to an allegation that the Ds specifically intended to harm KMG”
“55. I note at this point that counsel for the defendants submitted that the claim asserted by KMG could be founded on a negligent act and she referred to paragraph 31.1.2 of the draft amended particulars of claim. In my view, this paragraph merely sets out the law as to what can constitute “severe reproach” and does not constitute KMG’s case, which, asreferred to above, is clearly stated to be on the basis of adeliberate and intentional act to transfer the assets andprejudice KMG.”
“It is clear from those paragraphs that KMG has never advanced a case that was solely and exclusively dependent on the Defendants’ intention being to harm KMG specifically. KMG’s existing pleaded case has throughout put in issue the Defendants’ intention to enrich themselves and/or their associates and the Defendants’ knowledge of the harm that waslikely to be caused to KMG as a result of their conduct – as well as the relevance of such facts (in so far as proved at trial) as a matter of Dutch law.”
“(2) When parties apply for permission they must provide an estimate of the costs of the proposed expert evidence and identify – (a) the field in which expert evidence is required and the issueswhich the expert evidence will address; and (b) where practicable, the name of the proposed expert. (3) If permission is granted it shall be in relation only to the expert named or the field identified under paragraph (2). Theorder granting permission may specify the issues which theexpert evidence should address.”
“1. As to the scope of personal liability in tort under Article 6:162 of the Dutch civil code as it is applies to allegations against a defendant who took steps with the intention of harming specifically the claimant by reducing the assets available to a parent company, which is an actual or potential creditor of the claimant, by reducing the assets of an indirect Dutch subsidiary of that parent company…”