GLAS SAS (London Branch) v European Topsoho SARL & Ors

This Court of Appeal allowed the appellants appeal in part on reasoning but ultimately dismissed the appeal against the order of the Deputy High Court Judge. The judge had imposed two conditions on the fourth defendant Xinbos ability to defend: a payment into court of
9. 10 million (the Payment Condition) and procurement of the return of certain Unpledged Shares to ETS (the Transfer Condition). The judges ruling was held to be inadequately reasoned, in breach of the duty to give sufficient reasons, but the Court concluded that the order should stand because, on re-making the discretionary case-management decision, the conditions were lawful, proportionate and justified in the context of prior orders and the parties conduct.

Key legal principles applied included the appellate standard of review of case-management decisions, the duty to give adequate reasons (English v Emery; Flannery; Simetra), and the courts power to impose conditions on orders under CPR rule 3.1(3) and rule 24.6 (Huscroft; Deutsche Bank). The court accepted that the Payment Condition operated as "earnest money" and that the Transfer Condition was a proportionate condition to protect the court process given Xinbos effective control of Dynamic and the prior summary judgment ordering return of the shares.

This is an appeal by Wuhu Ruyi Xinbo Investment Partnership Enterprise (Limited Partnership) ("Xinbo") against an order of Stephen Houseman KC dated 13 December 2024, which barred Xinbo from defending proceedings unless it met two conditions by 21 January 2025: (a) procuring that Dynamic Treasure Group Limited comply with Robin Knowles Js 12 July 2024 order to transfer certain Unpledged Shares back to ETS (the Transfer Condition); and (b) paying
9. 10 million into court (the Payment Condition).

Background and parties:

• The claimant GLAS SAS (London Branch) is trustee of
  9. 250 million of exchangeable bonds issued by ETS which defaulted in 2021. A majority shareholding in SMCP S.A. (the Pledged Shares) secured the bonds; the remaining shares were the Unpledged Shares.
• Dynamic acquired the Unpledged Shares in October 2021; Dynamic and Xinbo have advanced similar defences and Xinbo is alleged to be the economic actor behind Dynamics participation.
• The Trustee obtained summary judgment against ETS and an order for return of the Unpledged Shares against Dynamic (Knowles J). Bright J earlier refused summary judgment but required Dynamic and Ms Qiu to pay
  9. 9 million each into court as a condition to defend. Xinbo was later joined and failed to file a defence by the deadline.

Relief sought and issues:

• Xinbo challenged the imposition of the Transfer and Payment Conditions and the adequacy of the judges reasons.
• The Court of Appeal had to decide (i) whether the judge gave adequate reasons, and (ii) if not, whether the judges decision should be set aside or remade on the record.

Reasoning and outcome:

• The court held that the judges ex tempore ruling lacked sufficient reasons for an appellate court and the parties, contrary to the requirements in Flannery, English v Emery and Simetra; the judge should have recorded the critical elements of his reasoning more fully. That was an error of law.
• Nevertheless, applying the appellate standard for case-management decisions and having heard full argument, the Court remade the decision. It concluded that the conditions were a lawful exercise of the courts power under CPR rule 3.1(3) (and rule 24.6 in the summary judgment context), were aimed at securing proper conduct of the litigation and were proportionate in the circumstances.
• The court emphasised that Dynamic had acted as Xinbos proxy, that Xinbos defence replicated weaknesses identified by Bright J, and that Bright Js reasons justified payment as earnest money. The Transfer Condition reflected the Knowles J order reversing the transfer to Dynamic and did not amount to summary judgment against Xinbo on the merits.

Additional comment: The Court provided guidance for judges about giving succinct but adequate reasons in busy interim lists and suggested practical steps to avoid inadequate reasoning.

Appeal dismissed. Although the judge erred by giving inadequate reasons for imposing conditions on Xinbos ability to defend, the Court of Appeal remade the case-management decision: the Transfer Condition (to procure return of the Unpledged Shares) and the Payment Condition (
9. 10 million into court) were lawful, proportionate and justified given Dynamics role as Xinbos proxy, Bright Js findings about the weakness of the defence, and the courts power under CPR rule 3.1(3) and 24.6.

Permission to appeal was refused by the judge below; permission was later granted by Snowden LJ who stayed the deputy judge's order pending the appeal. The appeal proceeds from the Commercial Court order of Stephen Houseman KC dated 13 December 2024 in CL-2021-000666 and was heard by the Court of Appeal (this judgment) [2025] EWCA Civ 933. Relevant earlier interlocutory decisions in the High Court include Bright J's judgment and order ([2024] EWHC 83 (Comm)) and Robin Knowles J's order of 12 July 2024 requiring return of the Unpledged Shares.