Commercial court rules on world wide freezing orders in 435-claimant fraud action

12 January, 2023

On 6 January 2023 the Commercial Court (HHJ Pelling KC) handed down Judgment in 4VVV Ltd v Spence & Others [2023] EWHC 1 (Comm), dismissing two applications to discharge Worldwide Freezing Orders, dismissing a fortification application and granting an application under the Chabra jurisdiction to extend the Freezing Orders to companies connected to one of the defendants.

The underlying claim is brought by 435 claimants, all of whom bought investment properties sold by companies owned or controlled by the first and second defendants, Mr Nicholas Spence and Mr Derek Kewley. The sales of the properties took place through marketing and estate agency companies owned or controlled by the third defendant, Mr Andrew Crump. The claimants allege that the schemes pursuant to which the properties were sold, and which promised fixed returns over set periods of time, which have not materialised, were fraudulent. With a number of the companies involved now insolvent, the claimants have sued Mr Spence, Mr Kewley and Mr Crump personally for their roles in events, as well as a number of companies within their control.

In February 2021, the claimants obtained ex parte Worldwide Freezing Orders against these three individuals. Subsequently all three applied to discharge these Orders, although Mr Kewley subsequently withdrew his application. Mr Crump also, in the alternative, applied to increase the level of fortification provided by the claimants in support of their cross-undertaking in damages. The claimants for their part cross-applied, under the principles originating in TSB Private Bank International SA v Chabra [1992] 2 All ER 245 to extend the scope of the Freezing Orders to a group of companies owned and controlled by Mr Crump, and which they alleged were his nominees or had received substantial payments which stood to be reversed under Section 423 of the Insolvency Act 1986.

The applications were heard over three days in October 2022, with the Court handing down Judgment on 6 January 2023. The claimants succeeded in full, with the applications to discharge the Worldwide Freezing Orders being dismissed, the fortification application being dismissed, and the Chabra application succeeding.

At the consequentials hearing, the Judge also granted a further application brought by the claimants concerning the form of the cross-undertaking in damages contained in the Freezing Order. In doing so, the Judge confirmed that, as a matter of principle, in a claim brought by many claimants in the form of a group action, the approach taken to the cross-undertaking in damages given by the claimants should mirror the approach taken in respect of adverse costs in group actions, with each claimant being severally (and not jointly and severally) liable for any such damages, on a pro rata basis, following the principles found in Rowe v Ingenious Media Holdings plc [2020] EWHC 235 (Ch).

Read the full judgment here.

Matthieu Grégoire of Essex Court Chambers acted for the claimants, led by Daniel Saoul KC and with Melody Hadfield of 4 New Square Chambers, instructed by Trowers & Hamlins.