Charles Peterson v Douglas Riegels
| Jurisdiction | British Virgin Islands |
| Judge | Theodore JA [Ag.] |
| Judgment Date | 09 February 2023 |
| Neutral Citation | VG 2023 CA 6 |
| Docket Number | BVIHCVAP2021/0006 |
| Court | Court of Appeal (British Virgin Islands) |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE COURT OF APPEAL
The Hon. Mde. Gertel Thom Justice of Appeal
The Hon. Mr. Gerard St. C. Farara Justice of Appeal [Ag.]
The Hon. Mr. Dexter Theodore Justice of Appeal [Ag.]
BVIHCVAP2021/0006
Mr. Adrian Francis and Ms. Kesha Adonis for the Appellants
Mr. Peter Ferrer and Mr. Richard Parchment for the Respondents
Interlocutory appeal — Appellate interference with learned judge's exercise of discretion — Interim freezing injunction — Risk of dissipation of assets — Whether learned judge erred in finding that there was a real risk of dissipation — First appellant's refusal to give undertaking — Whether first appellant's behaviour was a relevant factor for the judge's consideration — Grant of freezing injunction when award to second appellant yet to be determined — Whether a freezing injunction may be granted before a right to payment of a debt has accrued — Delay in applying for interim relief — Whether learned judge failed to give due weight to respondents' delay in applying for interim relief
In 2006, the second appellant entered into agreements with the Government of the Territory of the Virgin Islands (the “Government”) to design, build and maintain a sewerage treatment plant. The Government breached the contracts, and the appellants approached the first respondent to negotiate with the Government on the appellants' behalf to honour the agreements or to agree to compensate the appellants. The parties agreed that if the negotiations failed, the respondents would have funded a claim for breach of contract against the Government.
In 2013, relations between the parties soured and the second appellant, alleging that the first respondent had refused to fund the litigation, proceeded to arbitration with the Government. The second appellant secured an award in its favour at arbitration, but litigation followed which resulted in a judgment in their favour from the Privy Council. In 2020, the respondents instituted proceedings against the appellants for breach of contract claiming, among other things, damages, and an entitlement to 60% of the value of any award by the Government made in their favour. The respondents also requested an undertaking from the appellants in respect of the anticipated damages from the Government (the “requested undertaking”). When the appellants refused, the respondents, by application filed 19 th February 2021, sought to compel the appellants to disclose information regarding any settlement discussions with the Government and any payments made to them. The respondents also sought an interim injunction to prevent the second appellant from dealing with or diminishing its assets up to the value of 60% of any settlement it received from the Government.
By order delivered on 6 th August 2021, the learned judge granted the freezing injunction against the appellants and compelled them to disclose any information regarding settlement from the Government. The judge found that there was a good arguable case and a real risk of dissipation. As to that risk, the judge regarded the following factors as significant: (1) that the first appellant was not ordinarily resident in the Territory of the Virgin Islands (the “BVI”),
(2) that he maintained homes in various countries, (3) that he did not have sufficient assets in the BVI to satisfy the claim and (4) that the second appellant was a shell company whose only asset was its entitlement to the award from the Government. The judge also noted that although the first appellant had been doing business in the BVI for over 23 years, he could easily dispose of his home in the BVI. Furthermore, the judge considered the first appellant's refusal to give the requested undertaking as an additional factor pointing to the real risk of dissipation.
Being dissatisfied with the judge's decision, the appellants appealed. The two main issues which fell for determination on appeal were: (i) whether the learned judge erred by finding that there was a real risk of dissipation and (ii) whether the learned judge failed to have regard to the delay by the respondents in applying for the freezing injunction. The appellants contended that, as it pertained to the risk of dissipation, the judge failed to consider relevant factors and instead took into account irrelevant ones and so erred in the exercise of his discretion. As regards the issue of delay, the appellants averred that the judge failed to give sufficient weight to this factor and that it showed that there was no real risk of dissipation.
Held: dismissing the appeal, affirming the order of the learned judge and ordering that the appellants pay the respondents' costs on the appeal to be assessed by the court below at no more than two-thirds of the costs awarded in the court below, that:
1. An appellate court will be slow to overturn the exercise of discretion by a lower court judge unless it can be shown that the judge failed to consider relevant factors or took into account irrelevant ones. Essentially, the judge's decision must be one outside the generous ambit within which reasonable disagreement is possible and thus plainly wrong. An appellate court should therefore avoid an over-zealous dissection of the language of a judgment in seeking to establish that a judge failed to take some factor into account.
Dufour and others v Helenair Corporation Ltd and others (1996) 52 WIR 188 followed; Ming Siu Hung and others v J. F. Ming Inc and another [2021] UKPC 1 followed.
2. A defendant's behaviour in respect of the claim is a factor for consideration by a judge when deciding whether or not to grant a freezing order. This behaviour includes the refusal to give an undertaking as possibly being indicative of a real risk. On the facts, the first appellant's refusal to give the requested undertaking was a relevant factor to which the learned judge was entitled to have regard. He therefore did not err by considering this factor as important to there being a real risk of dissipation of assets.
Gee on Commercial Injunctions (5 th Edition Sweet and Maxwell 2004) considered.
3. To determine whether there is a real risk of dissipation of assets, the court must have regard to the evidence adduced. Such evidence must objectively demonstrate a risk of unjustified dissipation. A risk which is theoretical, fanciful, or insignificant will not meet this threshold. Furthermore, there must be a danger of default if the assets are removed. Intention on the defendant's part is unnecessary and it would be enough for the evidence adduced to raise the inference of a real and current risk. Factors which may not individually justify the inference of a real risk, may do so cumulatively. On the facts, the evidence before the judge was that the first appellant refused to give the requested undertaking and was not ordinarily resident in the BVI. The second appellant was not an actively trading company and neither appellant had sufficient assets in the jurisdiction to meet any future judgment. These factors were all relevant and the judge did not err in considering the assets of both appellants. Considered cumulatively, the factors provided a sufficient evidential basis upon which the learned judge could find that there was a real risk of dissipation. He therefore did not err in his finding.
Les Ambassadeurs Club Ltd v Yu [2021] EWCA Civ 1310 applied; Barclay-Johnson v Yuill [1980] 1 WLR 1259 considered; Third Chandris Shipping Corporation v Unimarine S.A.; Aggelikai Ptera Compania Maritima S.A. v SAME; Western Sealanes Corporation v SAME [1979] Q.B. 645 considered; Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft m.b.H. UND Co. K.G.; The Niedersachsen [1983] 1 WLR 1412 applied; Mobil Cerro Negro Ltd v Petroleos de Venezuela SA [2008] EWHC 532 (Comm) considered; Mediterranean Feeders L P v Bernd Meyering Schiffahrts [1997] Lexis Citation 1111 applied; Holyoake and another v Candy and others [2017] EWCA Civ 92 applied.
4. A court with jurisdiction to grant injunctions may grant a freezing order even before a right to payment of a debt has accrued. This is so, provided that the applicant has already been granted or has a good arguable case for being granted an order for the payment of money that will be enforceable through the court's process and the respondent holds assets against which such an order could be enforced. The second appellant's right to an award of damages from the Government, which was confirmed by the Privy Council, is a chose in action and therefore an existing asset against which a judgment can be enforced. The learned judge therefore did not err in granting the freezing order against the as yet unascertained award to which the second appellant was entitled.
Convoy Collateral Ltd v Broad Idea International Ltd [2021] UKPC 24 followed.
5. The mere fact of a delay in bringing an application for a freezing injunction does not, without more, mean that there is no risk of dissipation. If a court is satisfied on other evidence that there is a real risk, the injunction should be granted. On the facts, the judge, having adverted to the live issue of delay at paragraph 22 of his judgment, evidently placed no weight on this factor. Despite the delay, the judge was satisfied on the evidence before him that there was a real risk of dissipation. He therefore did not err in the exercise of his direction in granting the injunction.
Madoff Securities International Ltd v Raven [2011] EWHC 3102 (Comm) considered; JSC Mezhdunarodniy Promyshlenniy Bank and another v Pugachev and others [2015] EWCA Civ 906 applied; Correia v University Hospital of North Staffordshire NHS Trust [2017] EWCA Civ 356 applied; Watt (or Thomas) v Watt [1947] UKHL J0325-2 applied.
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