Jackson & Anor v Feeney

Where frozen funds are subject to competing proprietary claims and there is a shortfall, the court may require disclosure explaining payments made from the fund and the basis for those payments. An unless order may be appropriate to enforce such disclosure, even though it is a Draconian remedy, where resistance undermines the purpose of the freezing regime. The court should protect a potentially affected claimant by suspending the sanction where that claimant promptly applies to vary or discharge the disclosure order and provides properly supported confidentiality objections. Costs orders may also be enforced by an unless order where non-payment is unjustified and will not stifle the defence.

The judgment concerned applications arising from frozen funds held in connection with claims against Eupay Group Limited. Alea Transactions Limited claimed that Eupay held approximately €2.122 million on trust for it, while Guy Enterprises Limited had obtained consent orders for payment from the frozen funds. Concerns arose about payments made with Eupay’s consent, the adequacy of disclosure, and the effect of confidentiality objections raised by Guy Enterprises.

Alea sought enforcement of disclosure and costs directions previously made by Birss J. Guy Enterprises sought an adjournment and opposed disclosure of confidential material. The central issues were whether the applications should be adjourned or consolidated, and whether Eupay should face an unless order.

1. Adjournment and case management. The adjournment sought by Guy Enterprises was refused. The court considered that justice could be achieved by suspending the sanction if Guy Enterprises promptly applied to vary or discharge the relevant disclosure direction. The court also declined to consolidate the various applications, because progress could fairly be made on the applications before it.
2. Disclosure of payments from frozen funds. The frozen-fund regime was designed to prevent Mr Feeney from having effective sole control over Eupay’s money. The evidence disclosed a shortfall between the claims and the available fund. It was therefore important that outstanding claimants should know who had received payments, in what amounts, and on what basis. Eupay was ordered to serve the evidence supporting Guy Enterprises’ payment application.
3. Unless order. Although an unless order was a Draconian remedy, it was appropriate against Eupay because it had resisted disclosure and the disclosure was directly relevant to the entitlement of claimants against the frozen fund. The court also made an unless order in respect of unpaid costs. The principles concerning enforcement of costs orders identified in Michael Wilson & Partners v Sinclair [2017] 5 Costs LR 877, at paragraph [29], were taken into account. The costs order would not stifle Eupay’s defence because that defence was being funded by Mr Feeney.
4. Protective suspension. The deadline for serving Guy Enterprises’ evidence was suspended if Guy Enterprises applied by the specified time to vary or discharge Birss J’s order, supplied a redacted version of the evidence, and supported its confidentiality objection with detailed witness evidence.
5. Final directions. Unless Eupay complied with paragraphs 3 and 7 of Birss J’s order dated 14 May 2018 by 12 June 2018, its Points of Defence would stand dismissed. If that occurred, Alea could not sign judgment for a sum and would instead have to apply for judgment in default, serving the application on all interested parties.