Wells v Chave & Ors

The court considered an application by Mr Chave for continuation until trial of a freezing order (Mareva injunction) obtained against Mr and Mrs Wells. The governing legal principles applied were the established test for freezing relief (the good arguable case requirement and a real risk that a judgment would remain unsatisfied), and the law on material non-disclosure on without‑notice applications (Brink's Mat and related authorities). The judge found that Mr Chave had a good arguable case on his counterclaims and that there was substantial evidence of dishonesty by Mr Wells and specific evidence of recent dealings which produced a real risk of dissipation. Although there had been material non‑disclosure by Mr Chave about the true state of Mr Wells' disclosure to Sales J, the breach was relatively small in context and the court, exercising its discretion, continued the freezing order until trial. The order as against Mrs Wells was restricted to the Swanage property. The judge refused the defective application for security for costs and directed further argument about limited additional disclosure of Mr Wells' assets.

Background and nature of the proceedings:

• These are first instance Chancery proceedings concerning competing claims about ownership and equitable interests in land (the Dassels land), counterclaims by Mr Chave for substantial sums said to have been lent or paid on behalf of Mr Wells and his companies, claims concerning sale or disposition of plant and machinery, and related claims against Mrs Wells and Graham Wells.
• Because of an Environment Agency criminal prosecution and other interlocutory steps, trial was adjourned to April 2015 and a series of interim applications followed.

Principal application before the court:

• Mr Chave sought continuation until trial of a freezing order originally obtained without notice and continued by earlier judges. He also sought other relief including security for costs and wider disclosure of Mr Wells' assets.

Issues framed by the court:

1. Whether there was a good arguable case on Mr Chave’s counterclaims.
2. Whether there was a real risk that, if not restrained, Mr Wells would dissipate or conceal assets so as to frustrate any judgment.
3. Whether material non‑disclosure on the ex parte application invalidated continuation of the order, and if so whether the court should nevertheless exercise its discretion to continue the order.
4. Whether Mr Chave’s cross‑undertaking in damages was adequately supported.
5. Whether security for costs should be ordered and whether further disclosure of assets should be ordered.

Court's reasoning and findings:

• The judge applied the Ninemia Maritime test for freezing relief and considered authorities on the significance of allegations of dishonesty (including Thane v Tomlinson, VTB and related authorities). He accepted that allegations of dishonesty do not automatically justify a freezing order but may do so depending on the particular facts.
• The Environment Agency prosecution material and other evidence gave substantial support to allegations of dishonest conduct by Mr Wells in the period 2007–2008. Independent and more recent conduct (the registration of new charges shortly after the strike‑out/summary‑judgment application and evidence of proposals to sell properties to a shadowy buyer) gave specific evidence of a risk of dissipation.
• Certain documentary disputes (for example over the Breeze & Wyles conveyancing file and authenticity of payslips relied on for a Halifax mortgage application in respect of the Swanage property) gave rise to a good arguable case of mortgage fraud and that the Swanage property was held for Mr Wells; this justified application of the order against Mrs Wells but only in respect of the Swanage property.
• The judge found there had been material non‑disclosure by Mr Chave to Sales J as to the true position of Mr Wells' disclosure, but treated the omission as relatively small in context; having regard to the further evidence then available he exercised his discretion to continue the order.
• Evidence that Mr Chave could satisfy his cross‑undertaking (two properties and other assets) was adequate for continuation. The security for costs application was dismissed for failure to comply with ordinary requirements for such an application. The judge indicated further limited disclosure of Mr Wells’ assets should be considered at a further hearing.

Outcome:

• The freezing order was continued until trial subject to the restriction that, as against Mrs Wells, it applies only to the Swanage property. The defective application for security for costs was refused. Further argument was directed on limited additional disclosure of Mr Wells’ assets.

The court continued the freezing order until trial. Rationale: the applicant (Mr Chave) showed a good arguable case on his counterclaims and there was substantial evidence of dishonesty by Mr Wells together with specific recent steps (post‑application charges and proposals to sell properties) creating a real risk of dissipation. Although there had been material non‑disclosure on the ex parte application, the omission was relatively limited in the context of the case and the court exercised its discretion to continue the order. The order as against Mrs Wells was restricted to the Swanage property. The application for security for costs was refused for lack of adequate evidence and further disclosure of assets was to be the subject of further argument.