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Trowers and Hamlins have recently obtained a significant victory for the claimants in 4VVV Ltd v Spence & Others [2023] EWHC 1 (Comm). 

The team, led by partner Helen Briant, act for 435 claimants in a highly complex and long-running claim. We have successfully defended three applications to discharge worldwide freezing orders originally secured in February 2021 (detailed further below), following a hard fought 3-day hearing in October 2022 in front of HHJ Pelling KC in the High Court in London. The Court also dismissed a fortification application of one of the defendants and granted an application under the Chabra jurisdiction to extend the World Freezing Order to companies connected to the same defendant.

Helen Briant commented:

"It is a testament to the skill and dedication of the Trowers team, with the support of Counsel from 4 New Square and Essex Court, that we have successfully defended three worldwide freezing orders in the sum of over £49,500,000 in what is a complex piece of group litigation concerning serious allegations of fraudulent misrepresentation. We were successful on all counts and have demonstrated that our clients have a good arguable case and that there was and remains a real risk of dissipation by the defendants in question. We look forward to continuing to work to obtain the financial redress that our clients deserve."   

In summary, we act for 435 claimants who allege fraud against group of defendants, with losses amounting to circa £45 million. The claimants 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. Mr Spence and Mr Kewley had previously applied to seek increased fortification, were successful at first instance, but in February 2022 the judgment was overturned in the Court of Appeal on the basis that the defendants had failed a good arguable case that they would suffer loss by the granting of the WFO, under the principles set out in Energy Venture Partners Ltd v Malabu Oil and Gas Ltd [2015] 1 W.L.R. 2309.  A link to this judgment and commentary can be found here.

As part of the WFOs, the claimants had also cross-applied to extend the scope of the Freezing Orders to a group of companies owned and controlled by Mr Crump, under the principles originating in TSB Private Bank International SA v Chabra [1992] 2 All ER 245, 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 discharge 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 WFOs being dismissed, the fortification application being dismissed, and the Chabra application succeeding.

The judgment criticised the defendants for failing to bring their discharge application sooner and on such a wide basis, when the focus should have been kept on progressing the main claim and allowing for trial to commence sooner. 

As a result of the claimants' success, the defendants were ordered to pay the claimants' costs, with a significant proportion of those costs being granted on an indemnity basis, as the defendants partly advanced some claims which objectively were speculative (or failed to abandon such claims at the opportune moment), weak and opportunistic. This is a reminder to parties that they should take care not to run entirely speculative arguments and to do so increase the risk of being required to pay costs on the indemnity basis (Three Rivers DC v Bank of England [2006] EWHC 816 (Comm)). 

Finally, 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 WFOs. 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 (or quasi 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).

The main Judgment can be found here.