CA-2025-000010 - [2025] EWCA Civ 933

Xinbo is a separate legal entity from Dynamic that had only recently been joined to the proceedings. Dynamic is also not wholly owned by Xinbo; Xinbo’s effective indirect interest in Dynamic is 51.79% (through two other companies). In any event the shareholding connection between Xinbo and Dynamic is irrelevant, as is the similarity of their defences.

The Trustee had not claimed relief against Xinbo, whether by “piercing the corporate veil” or otherwise, in relation to the Unpledged Shares and had not sought monetary relief.

The Trustee consented to Xinbo’s joinder and the filing of its defence on an unconditional basis at a time when all the relevant breaches of the Bright J order and the Knowles J order persisted.

Therefore, to the extent that the rationale for the conditions was that the Bright J order or the Knowles J order would otherwise be subverted, that was wrong in principle since no relief was sought against Xinbo in relation to the Unpledged Shares and it was inconsistent with the Trustee’s consent to Xinbo’s participation in the proceedings.

The extent of Xinbo’s default, a delay of six weeks in filing a defence, was not comparable to Dynamic’s lengthy delay of around 2.5 years before engaging in the proceedings and defaults in complying with the information requirements in the freezing order, such that, to the extent that the rationale for the imposition of conditions was delay, the conditions imposed by the judge were highly disproportionate. The Trustee’s application was opportunistic and used delay as a fig leaf.

The proper purpose of a condition would be to regulate Xinbo’s future conduct, not to provide a “back door” to enforcement of orders against others. The Transfer Condition amounted to a grant of mandatory injunctive relief.

It was also unclear whether Xinbo could comply with the Transfer Condition. There was a freezing order in Singapore to which Xinbo was not a party. It was also not a signatory on the JP Morgan account. Further, Xinbo’s indirect ownership of Dynamic raised questions about whether it could compel Dynamic to comply. BVI lawyers might need to be instructed and, potentially, proceedings instituted in that jurisdiction.