Sports Network Ltd v Calzaghe

Money claimed in litigation will not ordinarily constitute “property” for the purposes of CPR 25.1(1)(c). Where the money may be held on trust and constitutes a specified fund, the more appropriate remedy is an order under CPR 25.1(1)(l). The same interim-remedy principles apply under both provisions: the applicant must show a serious issue to be tried and a balance of convenience favouring relief. A constructive trust may arise where the circumstances, including the parties’ intention, the substance of the transaction and the use of a separate account, indicate that money was received for another’s benefit. An unless order is appropriate where serious non-compliance with a clear and final disclosure order has occurred, but the sanction must be proportionate to the claim and the breach.

The claimant promoted a boxing contest between the defendant and Bernard Hopkins. The parties had agreed that the claimant would collect its share of the profits and pay 80 per cent of that share to the defendant. The defendant alleged that money retained by the claimant was held on constructive trust and sought its preservation, together with information about the claimant’s assets and accounts.

The applications were made under CPR 25.1(1)(c), CPR 25.1(1)(l) and CPR 25.1(1)(g). Earlier orders required the claimant to provide verified financial information and bank statements. The central issues were whether interim preservation relief was available, whether the claimant had complied with the information order, and whether an unless order and costs sanctions should follow.

1. Preservation of funds. The application under CPR 25.1(1)(c) was not appropriate because “property” ordinarily meant land or physical property, not money in issue in the litigation. The money could, however, constitute a specified fund under CPR 25.1(1)(l). The court’s general power under CPR 25.1(3) also supported granting appropriate interim relief.
2. The principles in American Cyanamid v Ethicon [1977] FSR 593 applied. There was a serious issue to be tried, and indeed a good arguable case, that 80 per cent of the collected profits were held on constructive trust. The separate account created for the fight, the profit-sharing arrangement and the substance of the transaction supported that conclusion. The reference to a “purse” did not determine the legal character of the money.
3. The balance of convenience favoured payment into court. There was no evidence of prejudice to the claimant, whereas the evidence showed a clear risk of dissipation and a worsening financial position. An order under CPR 25.1(1)(l) should therefore be made if a specified fund remained in the claimant’s possession.
4. The claimant had seriously breached the order requiring disclosure of accounts, bank statements, schedules and explanations of payments. Nine of the eleven alleged breaches were established as serious and significant. The distinction between non-compliance with an order and a request for further information did not assist the claimant because the ordered information had not been supplied.
5. Following Marcan Shipping (London) Ltd. v. Kefalas [2007] EWCA (Civ) 463, an unless order had to be appropriate in all the circumstances. It was proportionate here. Unless the claimant complied within the specified period, judgment would be entered on the counterclaim for an account and the claimant would have to pay $2.9 million into court.
6. The defendant was awarded the costs of the hearings before Eady J. and of the hearings before Coulson J. The costs of the hearings before Coulson J. were to be assessed on the indemnity basis because of the claimant’s evasiveness, serious non-compliance and failure to answer legitimate questions.