[2025] EWHC 2648 (Comm)

Mr Jones submits that there is good cause for the Court to discharge the injunctions, because there has been a material change of circumstances. That change of circumstances, he submits, is that in November 2023, the Claimant sought to amend its claim and provided a witness statement of Mr Xiong in support. That was Mr Xiong’s 6^th witness statement, dated almost exactly two years after the initial granting of the injunctions. It is to be noted that Mr Xiong had previously filed 5 witness statements after having sworn his affidavit in support of the injunction, a number of which were to correct errors in his initial affidavit. The number of corrections that have been made does beg the question of how detailed the investigation into the claim was before these proceedings were launched.

The 6^th witness statement was (relevantly for the purposes of this judgment) again corrective. It was said to be made to correct a point in his previous evidence relating to the role of Syner and to make a specific clarification in relation to the role of Effs. Mr Xiong referred back to the confirmation in his initial affidavit that paragraphs 7-8 of the Particulars of Claim were correct, which identified Wenda as the seller of goods to third parties and Syner as having only been an agent for the purposes of receiving payment.

However, Mr Xiong now sought to correct the identity of the party named as seller in the contracts in paragraphs 7 to 15 of that statement. He maintained that the sales were effectively made by Wenda as Syner did not have the ability to act as supplier of food ingredient chemicals. Syner’s only role was merely as financing agent for Wenda. He said that he believed at the time and afterwards that Wenda was the named seller under the sales contracts with the overseas buyers in relation to the transactions that were financed through Syner. However, he said that in the process of preparing Wenda’s documents and case for the proceedings (by which he meant providing disclosure and preparing witness statements), Wenda had retrieved contemporaneous documents which showed that his understanding of how the sales contract was documented was not correct. He said that Wenda had found an email of 17 January 2014 from Ms Wang to Nicholas Orloff of Wenda’s Mexican subsidiary, which she had forwarded to Mr Xiong the same day. He said that as a result of that he was aware that the sale contract documents named Syner as the seller. He caused Wenda’s own records to be compared and he said that this cross check showed that “the normal practice was that the sale contracts signed by the overseas buyers named Syner as the Seller, while another version naming [Wenda] as Seller was also kept on file at [Wenda].”

Mr Xiong went on to say that he did not recall reading Ms Wang’s email at the time “nor do I recall being aware of the documentation procedure set out in the email. I believe that I must have received the email but not paid attention to it, as it related to the details of implementation of the invoice financing arrangement”. Consequently, as a result of this newly (re)discovered information it was necessary to amend the Particulars of Claim, which amendments he had approved as true and correct.

He continued in his witness statement at paragraphs 16 to 19 to explain a correction to address the role of Effs and a difference between the arrangements as between Wenda and Effs compared with those between Wenda and Syner. He said that it had been agreed that Effs would be entitled to charge Wenda interest at 10% per annum on sums advanced to Wenda and that it could deduct 5% of the invoice value in order to have in hand monies to meet group expenses. He maintained that like Syner, it was never intended that Effs was to have any ability to decide on prices or contract terms with customers, and it was not entitled to make any profit on Wenda’s overseas sales or out of the financing beyond the 10% interest it earned on any advanced sums.

Mr Xiong expressly stated that the information he had learned since his earlier evidence did not change or affect his evidence about what was agreed between Wenda and Ms Wang as to the basis on which Syner and Effs handled customer payments. He maintained that they were “financing agents whose only role was to facilitate Wenda's access to financing and, in Effs' case, to assist Wenda's group's financial operations. Syner and Effs did not purchase the goods from [Wenda], and were not in any way trading in the goods in their own right. It was never agreed that Syner or Effs had any right to the goods, nor any right to earn any remuneration in return for acting as they did (save for the interest on sums advanced by Effs), nor any right to be involved in the arrangement at all”.

In paragraph 21 of his 6^th witness statement, Mr Xiong explained that Wenda had credit facilities with a number of Chinese banks, including the Bank of China. He understood that Wenda could draw down money from its Chinese lending bank by presenting documentation relating to a sale contract, such as the sale contract document, the original bill of lading and proof of export credit guarantee cover from Sinosure. Wenda usually did obtain this type of financing from its Chinese bank on its overseas sales. In paragraph 23 he said that once it was agreed to arrange invoice discounting in England:

“[Ms] Wang informed me that the Claimant could continue to obtain financing from Wenda's Chinese banks while at the same time obtaining financing from HSBC through Syner on those same transactions. The advantage which this offered to the Claimant was improved cashflow which we could use to assist the expansion of the Claimant's business. It of course involved incurring an interest cost on all the borrowing. Ms Wang had proposed this plan for obtaining financing both via Syner and from Chinese lenders on the same sales transactions and she remained in charge of implementing it. I was not aware of all the details of the arrangements, but I knew that the two parallel financing arrangements existed, and I gave my approval to that practice. ... However, I was aware that the arrangement would not be acceptable to the Claimant's Chinese lenders. Because of this, only a few senior people within the Claimant were aware of the overseas financing arrangements. Basically, within Wenda's team in China, it was meant to be known only by [Ms] Wang and her close assistants, Li Jin and Wang Qingli. Ms Chou Chunjing was informed of it when she joined the Claimant as CFO in 2016. I am not proud of the fact that this plan was adopted and I would not try to justify it.”

In light of the matters set out in Mr Xiong’s witness statement, the Particulars of Claim were amended (the Defendants consenting to the amendments) so that the paragraphs quoted above now read (it is necessary to set them out in full so that the amendments can be properly seen):

“The Second Defendant’s role as the Claimant’s agent, nominee and/or trustee

6.

In about 2012, the Claimant incorporated the Second Defendant as its wholly owned subsidiary specifically for the purpose of handling an invoice financing arrangement on behalf of the Claimant.

7.

From 2012 to about January 2017, the Claimant appointed and used the Second Defendant as its agent, nominee and/or trustee to handle monies under that invoice financing arrangement. The legal arrangements between the Claimant and the Second Defendant were not formally documented. The arrangement which the Claimant established and which the First and Second Defendant agreed to implement (and which the First Defendant as director of the Second Defendant was responsible for implementing) was that:

7.1.

For so long as the Claimant chose to continue the arrangement, which the Claimant was free to determine at will, and in relation to such of its sale contracts with buyers located outside China as the Claimant chose to do so, the Claimant caused its subsidiaries who negotiated the sales to request the buyer to execute a written sale contract document naming the Second Defendant as the seller, pursuant to which the buyer would be requestedinstructed its buyersto make payment of the invoiced amount to the Second Defendant.

7.2.

The Second Defendant’s function and duty was:

7.2.1.

To use the invoices (by which the Claimant’s buyers were instructed to pay the Second Defendant) to obtain invoice discounting finance, pursuant to which the financing company would advance an agreed percentage of the invoices’ face value to the Second Defendant;

7.2.2.

To receive payment in due course of the full invoice value from the Claimant’s buyers;

7.2.3.

Thereupon to repay the advance to the financing company together with the interest due under the financing facility; and

7.2.4.

To account to the Claimant for the advances and the payments received from the Claimant’s buyers, net of (i) repayment of the advance to the financing company with interest and (ii) the cost of the First Defendant’s salary, the reasonable travel cost of the First Defendant’s periodic business trips to China as requested or approved by the Claimant, and the cost of preparing the requisite corporate filings to ensure that the Second Defendant remained in good standing to implement the aforesaid arrangement, including the cost of engaging accountants to prepare the Second Defendant’s accounts.

8.

At all material times, subject only to the qualification set out in paragraph 7.3 above, the function and duties set out in paragraph 7.2 above were the sole and exclusive purpose for the Second Defendant’s existence and were the Second Defendant’s only legitimate business activity.

…

10.

In the premises:

10.1.

The Second Defendant was the Claimant’s agent, nominee and/or trustee for the receipt and handling of the Claimant’s invoice proceeds, and owed to the Claimant the obligations of a trustee, alternatively owed fiduciary duties to the Claimant, in respect of its handling of the Claimant’s monies under the arrangements described in paragraph 7 above.

10.2.

The Claimant was the beneficial owner of (1) the advances received by the Second Defendant from the financing company; and (2) the invoice proceeds received by the Second Defendant from the Claimant’s buyers, subject to the Second Defendant’s duty and power to use the same as set out in subparagraph 7.2.4 above.

10.3.

To the extent necessary, the Claimant will say that the Second Defendant was a trustee of the monies referred to in paragraph 7.2 above under an express or implied trust, in that:

10.3.1.

The objective intention of the parties was that the Second Defendant was not free to use those monies for any purpose of its own;

10.3.2.

The only monies being received and handled by the Second Defendant would be monies beneficially owned by the Claimant to which the Second Defendant’s duties referred to in paragraph 7.2 above applied, and any advances and invoice proceeds received and handled by the Second Defendant would be mixed only with other such monies and with the Second Defendant’s initial funding of operating cash (which consisted of US$ 1 million in paid-up capital and US$1.2 million cash injection), which was provided only in order to implement the aforesaid arrangement and which was (unless otherwise instructed by the Claimant, and no contrary instruction was given) to be retained and/or replenished so that about US$2.2 million should remain held by the Second Defendant, and which was subject to the same duty to account for it to the Claimant.

…

The Third Defendant as the Claimant’s agent, nominee and/or trustee

13.

Between 2012 to about January 2017, the First Defendant also caused the Claimant to appoint and use the Third Defendant as its agent, nominee and/or trustee to handle monies under anthat invoice financing arrangement. As with the Second Defendant, the legal arrangements between the Claimant and the Third Defendant were not formally documented., but They were agreed to be on the same basis as described (in relation to the Second Defendant) in paragraph 7 above., save that:

13.1.

It was agreed between the Claimant and the First Defendant (including on behalf of Third Defendant) that the Third Defendant could charge interest at 10% per annum pro rata on amounts advanced by the Third Defendant to the Claimant, as the Third Defendant’s fee for acting as financing agent to the Claimant (and that this and no more was all the Third Defendant could charge for so doing).

13.2.

It was agreed between the Claimant and the First Defendant (including on behalf of Third Defendant) that, in order that the Third Defendant would have money on hand to pay group expenses, when making advances to the Claimant the Third Defendant could provisionally deduct 5% of the invoice value as and when the Third Defendant would need to do so in order to have the necessary monies on hand; and that the Third Defendant was required to inform the Claimant when it made such deductions, to keep the Claimant informed as to what group expenses it had paid, and to account to the Claimant for any monies that remained with the Third Defendant from such deductions that were not needed for payment of group expenses.

13.3.

In practice, the Claimant chose only to authorise the use of the Third Defendant as a financing agent on sales by the Claimant to Wenda America, Inc. and Cape Food Ingredients Chile S.A. Av (“Cape”), both of which were subsidiaries of the Claimant.

…

15.

In the premises:

15.1.

On those transactions where the Third Defendant was involved such that the Claimant’s said overseas subsidiaries as buyers were requested or instructedClaimant requested its overseas buyersto make payment to the Third Defendant, and on any transactions in respect of which monies paid by the Claimant’s overseas subsidiaries as buyers came to be held by the Third Defendant, the Third Defendant was the Claimant’s agent, nominee and/or trustee for the receipt and handling of the Claimant’s invoice proceeds, and owed to the Claimant the obligations of a trustee alternatively owed fiduciary duties to the Claimant in respect of its handling of the Claimant’s monies under the arrangements described in paragraph 13 above.

15.2.

The Third Defendant held on trust for the Claimant and the Claimant was the beneficial owner, of (1) any advances received by the Third Defendant from a financing company; and (2) the invoice proceeds received by the Third Defendant from the Claimant’s said overseas subsidiary buyers, subject to the Third Defendant’s duty and power to use the same as set out in sub-paragraph 7.2.4 and 7.3 above (as repeated mutatis mutandis in paragraph 13 above), specifically the power to use them to reimburse itself for sums advanced to the Claimant, satisfy accrued rights to interest and pay group expenses; and also of (3) any proceeds of invoice financing monies paid to the Second Defendant which came to be held by the Third Defendant. Further or alternatively, even if Effs did not hold the said advances and invoice proceeds on trust for the Claimant, the Third Defendant owed fiduciary duties to the Claimant which permitted the Third Defendant to retain those monies only where consistent with its duty and powers referred to in paragraph 13 above and hereinabove.

15.3.

To the extent necessary, the Claimant will say that the Third Defendant was a trustee of the monies referred to in paragraph 15.1 – 15.2 above under an express or implied trust, in that the objective intention of the parties was that the Third Defendant was not free to use those monies for any purpose of its own.

15.4.

The First Defendant, as the Third Defendant’s directing mind and will and as the person having actual control over the Third Defendant’s implementation of the arrangement referred to in paragraph 13 above, was a trustee and/or was under a fiduciary duty to the Claimant in respect of that arrangement and in respect of her management and control of the Third Defendant.”

Mr Jones submits that the change in Wenda’s case as to who the seller was under the contracts with buyers from Wenda to Syner (or Effs, if that is how the original Particulars of Claim are properly to be read) was a material change in circumstances and therefore a good cause which opens the door to allow the Defendants to pursue the Discharge Application. He submitted that in light of the change, the Defendants do not understand how Wenda can maintain its claim that it has a beneficial entitlement to the proceeds of the contractual relationships, or any causes of action in equity against Syner at all. He further submitted that the case against the Defendants was just as weak as the case had been against Mr Petit, the 4th Defendant, in respect of whom Jacobs J held that there was not a good arguable case or serious issue to be tried.

For Wenda, Mr Milnes and Mr Gardner submitted that the nature of Wenda’s claim has not changed. Mr Gardner, who addressed me orally on this, submitted that the original claim might be construed as there having been some form of equitable assignment by Wenda in favour of Syner of the sums due from the buyers to Wenda, so that Syner was entitled to the payments under the sales contracts, not Wenda. Accordingly, he submitted there was no difference under the Amended Particulars of Claim. While this was an ingenious argument, this was not the way it was presented to Jacobs J, nor does the word assignment appear in the Particulars of Claim. However, it is still Wenda’s case that Syner was the agent or nominee for Wenda and that Wenda is entitled to an account of monies and/or sums to be received by Syner said to have been held on trust for Wenda. There is no problem in principle in a person undertaking to hold a specified debt on trust in the future i.e. as and when it arises. All that has changed is that the seller was Syner, not Wenda. Mr Gardner made a valiant submission to this effect, namely that there was a factual difference, but not a material one in terms of impacting the merits of the claim.

Further, Mr Milnes submitted, even if there is a change in the way in which the case is being advanced by Wenda now, this was always known to the Defendants and they could have made these points on the return date hearing. Therefore, it is said, that it is not open to the Defendants to say that they could not have complained about this before and therefore this is not a material change in circumstances.

In my judgment, Mr Jones is correct to submit that there is good cause so as to allow the Defendants to pursue the Discharge Application. There has been a material change in circumstances, namely the change in the way that the case is now put. There is a very significant difference, in my judgment, on the one hand between a claim that Wenda were the contracting parties with the buyers and that Syner and Effs were merely agents for the purposes of receiving payment of invoices from the buyers and/or the invoice discounters under a fiduciary duty to pay over the sums received to Wenda (after subtraction of expenses) and on the other a claim that Syner and Effs were the contracting parties with the buyers and that by reason of an oral agreement with Wenda they were to hold the sums they received from the invoice discounters on trust for Wenda. It was on the basis of the first of these scenarios that the matter was pleaded and advanced before Jacobs J, it being Mr Xiong’s evidence before him that the first of these scenarios had been expressly verbally agreed. That is now not Wenda’s case. There can be no doubt that amounts to a change in circumstances. It is one which in my judgment is material as it is relevant to the whole of the original claim.

I reject Mr Milnes’ submission that because the Defendants knew all along that Syner was the seller under the contracts, they could have taken this point on the return date and cannot now claim it is a material change in circumstances. Had they come back to Court on the return date and said this, Wenda would have disputed this (as evidenced by their Reply having disputed it). Given that the parties are agreed that the arrangements between Wenda, Syner and Effs were all concluded orally, the Judge would have been left in a position where he could not have decided who was right about this, but still would have said that there is a serious issue to be tried. It therefore would not have assisted the Defendants to have sought to take the point on the return date. It is only because Wenda now agrees with the Defendants that Syner was the seller under the contracts that it is now open to the Defendants to challenge the granting of the Injunction.

It follows that in my judgment, the Defendants’ Discharge Application is not an abuse of process.