Easter Term
[2019] UKPC 24
Privy Council Appeal
No 0016 of 2019
JUDGMENT
|
Emmerson
International Corporation (Appellant) v Renova Holding Ltd
(Respondent) (British Virgin Islands)
From the Court of Appeal of the Eastern Caribbean
Supreme Court (British Virgin Islands)
|
|
before
Lord Reed
Lord Wilson
Lord Carnwath
Lady Black
Lord Sales
|
|
JUDGMENT GIVEN ON
|
|
|
|
|
|
20 May 2019
|
|
|
|
|
|
Heard on 1 May 2019
|
|
Appellant
|
|
Respondent
|
|
Philip Marshall QC
|
|
Paul McGrath QC
|
|
Robert Weekes
|
|
Arabella di Iorio
|
|
Colleen Farrington
|
|
Michael Bolding
|
|
|
|
Andrew McLeod
|
|
(Instructed by Blake
Morgan LLP (Oxford))
|
|
(Instructed by DLA
Piper (UK) LLP (London))
|
lord sales:
1.
This appeal concerns a short point of statutory
construction in respect of section 30(4) of what is now called the Eastern
Caribbean Supreme Court (Virgin Islands) Act (it was originally promulgated in
1969 as the West Indies Associated States Supreme Court (Virgin Islands)
Ordinance). The question is whether leave to appeal to the Court of Appeal of
the Eastern Caribbean is required in respect of a variation of a disclosure
order made in conjunction with, and as part of, a freezing order.
2.
Section 30(4) provides:
“No appeal shall
lie without the leave of the judge or of the Court of
Appeal from any interlocutory order or interlocutory judgment made or given by
a judge except in the following cases -
(i) where
the liberty of the subject or the custody of infants is concerned;
(ii) where
an injunction or the appointment of a receiver is granted or refused;
(iii) in the
case of a decree nisi in a matrimonial cause or a judgment or order in an
Admiralty action determining liability;
(iv) in
such other cases, to be prescribed by rules of court, as may in the opinion of
the authority having power to make such rules of court be of the nature of
final decisions.”
Factual background
3.
The relevant factual background can be
shortly summarised. The appellant (“Emmerson”) and the respondent (“Renova”)
are vehicles for Russian businessmen. Emmerson has a substantial claim against
Renova in respect of what Emmerson maintains was a fraud committed by Renova
and others in relation to a joint venture between them concerning businesses in
Russia.
4.
On 19 November 2018 Emmerson applied ex parte
to Wallbank J in the High Court in the British Virgin Islands for a freezing
order in relation to certain assets of Renova. The draft order placed before
the court included provisions restraining Renova, until the return date or
further order of the court, from dealing with specified assets in the form of
shareholdings in companies outside the jurisdiction (para 4) and from taking
steps to increase its liabilities (para 5) (together, “the restraining
provisions”). The draft order was an elaborate and carefully worked out
document which, as is usual, included provision requiring disclosure of
information. This was in the form of an order requiring Renova to provide
information, within 21 days of service of the order, in relation to the
specified assets and the chains of ownership through which they were held by
Renova (para 7) and to swear and serve an affidavit within the same time-frame
to verify that information and exhibit relevant documentation (para 8)
(together, “the disclosure provisions”). The judge made the freezing order as
set out in the draft and in due course it was served on Renova.
5.
On 4 December 2018 Renova issued an application
to discharge or vary the freezing order and to extend time for compliance with
the obligations under the disclosure provisions pending determination of its
discharge application. Renova’s application for an extension of time was heard
by Wallbank J on 12 December 2018. The hearing was conducted under some
pressure of time.
6.
By an order made that day (“the variation order”) the judge granted
Renova a short extension of time and imposed a confidentiality club in relation
to the information and documents to be provided by Renova pursuant to the disclosure
provisions. The variation order provided that pending the hearing of Renova’s
discharge application such information and documents could only be given to and
retained by certain identified lawyers acting for Emmerson, who could not
(without further order of the court) share such information or documents with
any other person. The effect of this was that Emmerson’s legal team could not
share the information and documents to be provided by Renova with anyone from
Emmerson, their client, in order to obtain instructions on them or to obtain
assistance from their client in preparing any response to Renova’s discharge
application with reference to them. The variation order included a further
provision for liberty to Emmerson to apply on notice to Renova for permission
for Emmerson’s lawyers to share such information and documents with their
client. However, in the course of the hearing the judge indicated that such
permission would not lightly be granted. Mr Marshall QC, for Emmerson, told the
Board that it was only in the course of the reply by Renova’s counsel that the
judge suggested that a confidentiality club might be imposed and that he did
not invite submissions from Mr Marshall in relation to that suggestion before
announcing the order to be made, including the provision for the
confidentiality club. It does not appear that Mr Marshall asked the judge for
leave to appeal.
7.
Emmerson is concerned that the imposition of such a restrictive
confidentiality club will severely hamper it in being able to respond
effectively to Renova’s discharge application, the hearing of which is also to
be treated as the return date for the freezing order. Emmerson therefore
appealed to the Court of Appeal. It maintains that it was entitled to do so as
of right, on the basis that the case falls within the scope of section
30(4)(ii).
8.
The Court of Appeal, however, disagreed. It held that the variation
order was an interlocutory order which did not fall within the scope of that
statutory provision. As Emmerson did not have leave to appeal, the court held
that the appeal was not properly brought and therefore dismissed it without
examination of the merits. It is unclear why the court did not itself consider
whether to grant leave to appeal.
9.
Emmerson now appeals to the Board, the issue being whether it enjoyed an
entitlement to appeal as of right by virtue of section 30(4)(ii).
Discussion
10.
Mr Marshall QC, for Emmerson, makes two principal submissions: (a) the
disclosure provisions in the freezing order, as varied by the variation order,
constitute in themselves an injunction within the meaning of section 30(4)(ii),
and would have done even if they stood alone as occurred in Maclaine Watson
& Co Ltd v International Tin Council (No 2) [1989] Ch 286; further or
in the alternative, (b) the freezing order is an injunction within the meaning
of section 30(4)(ii) and the disclosure provisions, as varied by the variation
order, are an inherent and non-severable part of that order.
11.
Since the Board considers that Mr Marshall succeeds on the second of
these submissions, which is perhaps more straightforward in terms of legal
analysis, it does not need to decide on the merits of the first submission.
12.
Mr McGrath QC, for Renova, accepts that parts of the freezing order
constitute an injunction for the purposes of section 30(4)(ii), but submits
that these are limited to the restraining provisions and other provisions in
that order which directly qualify the obligations contained in the restraining
provisions. He contends that the disclosure provisions, as varied, do not
constitute an injunction for the purposes of section 30(4)(ii), so Emmerson had
no right to appeal in relation to the variation order without leave of the
court. Mr McGrath says that the restraining provisions and the disclosure
provisions had different functions. Only the restraining provisions had
operative effect as an injunction (as that term is used in section 30(4)(ii)),
whereas the disclosure provisions were merely directed to requiring Renova to
provide information and hence were more akin to procedural rules which require
disclosure in the course of litigation, which cannot be regarded as being in
the nature of an injunction.
13.
The Board disagrees. As Mr Marshall submits, the restraining provisions
and the disclosure provisions were both inherent and necessary ingredients of
the operative part of the freezing order and it is the operative part of the
freezing order, read as a whole, which constitutes an “injunction” as that term
is used in section 30(4)(ii). The restraining provisions and the disclosure
provisions both have the same purpose, namely to protect Emmerson against the
potential dissipation of assets by Renova. They are intended to operate
together as parts of an interlocking protective regime constituted by the
freezing order as a whole. Both parts are necessary to secure the protection
which the freezing order is intended to provide. Since the basis for the grant
of a freezing order is the risk of improper dissipation of assets by the
defendant to whom the order relates, the restraining provisions may be rendered
nugatory unless the defendant is compelled pursuant to provisions in the
freezing order to provide information about the location and control of its
assets so that the applicant for the order can serve it on third parties to
prevent such dissipation or can use it as the basis for taking action in other
jurisdictions to safeguard assets or execute against them: see Grupo Torras
SA v Al-Sabah [2014] 2 CLC 636 (note), at 643 per Steyn LJ. The objective
of the freezing order, to provide effective protection for the applicant
against dissipation of assets by the respondent, would be undermined if either
the restraining provisions or the disclosure provisions were removed from that
order; neither can be regarded as severable or discrete from the operative
injunctive effect of the freezing order taken as a whole. (In that regard, the
restraining provisions and the disclosure provisions of the freezing order are
different from the paragraph of the order which made provision in relation to
costs, reserving them to the judge who would hear the application on the return
date; the Board reserves its opinion as to the effect of section 30(4) in
relation to such a provision).
14.
The provisions of the freezing order, as varied, governing the
confidentiality club are an inherent part of the disclosure provisions and
cannot be separated out from those provisions. Mr McGrath did not contend
otherwise at the hearing.
15.
Section 30(4) is a provision which
governs the procedure to be adopted in particular cases. Such a procedural
provision needs to be given a practical interpretation, readily comprehensible
by litigants, which allows parties to know clearly where they stand in relation
to the procedure which they need to follow. In the Board’s view, this militates
strongly against the construction urged by Mr McGrath, which would require a
party to go through an exercise of parsing a single order with interlocking
parts, like the freezing order in this case, to break it down into separate
paragraphs or subparagraphs, and then asking of each paragraph or subparagraph
whether it should be characterised as “an injunction” or not. Not only would
such an exercise be unduly complicated, it would be likely to give rise to considerable
uncertainty as to how different parts of a single, unified order were properly
to be characterised. That would undermine the object of a procedural provision
such as that in issue on this appeal, which is to provide clarity for litigants
as to how to bring their cases before an appropriate tribunal.
16.
In the Board’s opinion, applying section 30(4)(ii) in this case, if the
original freezing order had included provision for a confidentiality club it
would have been a straightforward matter to say that such provision was part of
an “interlocutory order … made … by a judge … where an injunction … is granted
…”. Accordingly, if Emmerson had been aggrieved by such provision at that stage
it would have had a right to appeal without leave. For the purposes of
application of section 30(4)(ii) it makes no difference that the confidentiality
club was imposed later on by way of a variation of the terms of the freezing
order, since the effect of such a variation is that a new injunction in
different terms is put in place: see Atlas Maritime Co SA v Avalon Maritime
Ltd (No 2) [1991] 1 WLR 633, CA (a decision on section 18(1)(h) of the
Supreme Court Act 1981 (UK), a provision in materially identical terms to
section 30(4)(ii)). The Board would add that if the respondent to a freezing
order was aggrieved about the contents of such an order, including in relation
to matters such as whether it made provision for a confidentiality club or not,
or the ambit of such a club, and it was not possible for it to secure
satisfactory relief in respect of that by exercising its right to go back to court
pursuant to the liberty to apply, that too would be a case where the respondent
would have a right of appeal without leave by virtue of section 30(4)(ii).
Again, it could readily be seen to be a case in which an interlocutory order
had been made “where an injunction … is granted”.
17.
For these reasons, the Board will advise Her Majesty that this appeal
should be allowed.
