Aspinall's Club Ltd v Lim

Factual and Procedural Background

This matter concerns a claim by Company A to recover a debt of £1,995,437 or alternatively damages for the Defendant's failure to repay a loan or credit extended in relation to gambling activities in October 2015 at a gaming club operated by Company A at premises in The City. The Defendant, a businessman and member of the club, was subject to freezing injunctions ordered by the court in September and November 2018, requiring disclosure of assets worldwide and restrictions on dealing with assets.

The Defendant was found in contempt of court for breaching these freezing orders in a committal hearing held on 23 July 2019, with judgment delivered on 5 August 2019. The court imposed fines totaling £100,000, reducible to £55,000 if the Defendant remedied disclosure failures by a set deadline. The court made an order ("the Murray Order") including an unless order stipulating that failure to comply with certain disclosure requirements would result in striking out the Defendant's defence and judgment for Company A.

The Defendant filed a sworn affidavit purportedly complying with the Murray Order but Company A contended non-compliance. The Defendant applied for a declaration of compliance or, alternatively, relief from sanctions. The court refused the declaration and relief from sanctions, resulting in the striking out of the Defendant's defence and judgment for Company A.

Legal Issues Presented

1. Whether the Defendant complied with paragraph 4 of the Murray Order by filing a signed and sworn affidavit addressing specified disclosure requirements.
2. Whether the failure to comply engaged the unless order, thereby striking out the Defendant's defence and entering judgment for Company A.
3. Whether the Defendant was entitled to relief from sanctions pursuant to CPR 3.9 in respect of the alleged breaches of the Murray Order.

Arguments of the Parties

Appellant's Arguments (Defendant)

• The Defendant contended that he had complied with the Murray Order by filing the affidavit (Lim 6) addressing the required disclosure matters.
• He argued that the failure to use the word "ultimate" in describing the source of funds was a pedantic point and that he clearly identified his wife as the source of funds used to pay legal fees.
• The Defendant asserted that the evidence related to undisclosed shareholdings was insufficient and raised too late to constitute a breach.
• He sought relief from sanctions on the basis of efforts made to comply, timely payment of costs, seeking guidance from the court and Company A, and willingness to pay costs incurred as a result of the application.

Appellee's Arguments (Company A)

• Company A contended that the Defendant failed to comply with paragraph 4 of the Murray Order in two respects: failing to confirm that he was not the ultimate source of funds used by his wife to pay legal fees, and failing to disclose assets exceeding £20,000 as required.
• Company A submitted that the Defendant's affidavit did not answer the specific question about the ultimate source of funds and that the failure was deliberate and material.
• Company A relied on specialist research reports identifying shareholdings owned by the Defendant that had not been disclosed, supported by official company documents.
• Company A argued that the Defendant's evasive responses and failure to substantively address queries about these shareholdings justified drawing an adverse inference and constituted further breach engaging the unless order.
• They opposed relief from sanctions, arguing that the breaches were serious and no good explanation was provided.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court examined whether the Defendant complied with the disclosure requirements in paragraph 4 of the Murray Order, focusing on two main issues: the source of funds used by the Defendant's wife to pay legal fees (para 3(d)(iii) of Schedule 2) and disclosure of assets exceeding £20,000 worldwide (para 4 of Schedule 2).

Regarding para 3(d)(iii), the court found that the Defendant's affidavit failed to specifically deny that he was the ultimate source of the funds paid by his wife, which was a clear and deliberate material failure to comply. The court rejected the Defendant's argument that the absence of the word "ultimate" was immaterial and emphasized the clarity and purpose of the question in the context of freezing orders.

Concerning para 4, the court considered evidence from a specialist research agency and official company records revealing shareholdings owned by the Defendant that were not disclosed in his affidavits. The Defendant's evasive responses and failure to substantively address these issues led the court to draw an adverse inference. The court concluded on a balance of probabilities that the Defendant breached his disclosure obligations by failing to disclose these assets.

The court also addressed the Defendant's application for relief from sanctions, finding both breaches serious and significant with no satisfactory explanation. The court noted the Defendant had legal representation and that the disclosure requirements were sufficiently clear. It was not persuaded that relief from the sanction of the unless order was just.

Accordingly, the court held that the unless order took effect, striking out the Defendant's defence and entitling Company A to judgment.

Holding and Implications

The court's final decision is DISPOSING OF the Defendant's application for a declaration of compliance and relief from sanctions by refusing both.

The direct consequence is that the unless order took effect: the Defendant's defence is struck out and judgment is entered in favour of Company A. No new legal precedent was established; the decision enforces compliance with court orders and underscores the seriousness of disclosure obligations under freezing orders and the consequences of non-compliance.