In a judgment that will come as a relief to all disputes lawyers who represent defendants who find themselves the subject of freezing injunctions, the High Court has rejected allegations that specialist disputes and insolvency boutique Keidan Harrison LLP were in contempt of court for failing to disclose the source of the funding of their professional fees.
At 10am on 30th April 2021 Judgment was handed down by Zacaroli J in Tonstate Group Ltd & Ors v Wojakovski & Ors [2021] EWHC 1122 (Ch) (30 April 2021)[1]. The judgment is the latest salvo in long running litigation [2] arising out of a shareholder dispute between the owners of a property company that previously held circa £1bn of assets. It involves major allegations of fraud by both sides with sums at stake said to be over £30m. The litigation has previously been the subject of national press coverage [3].
The Claimants in the action had taken the highly unusual step of applying to join specialist disputes law firm Keidan Harrison LLP (“Keidan Harrison”) as well as another law firm, as Defendants. Keidan Harrison acts for the Defendant, Edward Wojakovski in respect of matters arising from his bankruptcy including substantial potential claims his trustee in bankruptcy may have against some of the Claimants. The purpose of the application was to seek disclosure of the manner in which Keidan Harrison’s professional fees were funded by Mr Wojakovski, whose assets are subject to a worldwide freezing order (“WFO”) containing the usual form of extended wording in relation to assets. This was despite
Keidan Harrison having confirmed to the Claimants that the costs were funded by third parties and not by Mr Wojakovski, such that no obligation arose under the WFO to give disclosure of the source of funding before Mr Wojakovski incurred legal costs.
The Claimants had sought a finding that Keidan Harrison had acted in contempt of Court in breaching paragraph 10 of the WFO which provided: “It is a contempt of court for any person notified of this order knowingly to assist in or permit a breach of this order”. Keidan Harrison had refused to disclose how Mr Wojakovski was funding their costs on the basis that they did not have Mr Wojakovski’s consent to make the disclosure, in view of his concerns that third parties providing funding might be subject to vexatious applications by the Claimants.
The Claimants had sought to argue that when third parties paid funds on account of costs to solicitors representing a client subject to a WFO with the extended asset wording, those funds were “assets” for the purposes of the WFO, seeking to rely on the decision in JSC BTA Bank v Ablyazov [2015] UKSC 64.
This argument was rejected by Zacaroli J who commented at paragraph 113 of his judgment on the “strikingly aggressive stance” that the Claimants had taken towards Keidan Harrison, who had remained neutral on the application against Mr Wojakovski. Commenting on the Judgment, Keidan Harrison co-founding Partner and Solicitor-Advocate Luke Harrison said:
“The application made against Keidan Harrison, raising as it did allegations that the firm was in contempt of court, was a highly unusual and aggressive step taken by the Claimants in the context of a high value and hard fought civil fraud claim. The application was also unnecessary given that they had an alternative course to seek the information in question under section 37 Senior Courts Act 1981. The inference that can be drawn from their conduct is that their true
aim was to restrict Mr Wojakovski’s access to legal advice and access to justice. I am pleased that Keidan Harrison’s actions in the case were found by the judge to have been completely appropriate.
The judgment will be widely welcomed by practitioners in the field acting for defendants. Had the Claimant’s arguments succeeded then that would have created a significant impediment to acting for clients subject to freezing orders where costs are funded by third parties who want to maintain anonymity for fear of becoming ’targets’ themselves and would have had a chilling effect on a party’s ability to access high quality legal representation.”
Information for editors:
Keidan Harrison LLP is a specialist disputes and insolvency law firm based in the City of London and which was co-founded by Luke Harrison and Marc Keidan in the spring of 2020.
The firm was represented at the hearing by barrister Andrew Dinsmore of Twenty Essex. The Claimants were represented at the hearing by law firm Rechtschaffen Law and counsel Andrew Fulton QC and Sam Goodman, also of Twenty Essex.
Enquiries to:
Luke Harrison, Partner
lharrison@lukeh26.sg-host.com
[1] https://www.bailii.org/ew/cases/EWHC/Ch/2021/1122.html
[2] See Tonstate Group Ltd & Ors v Wojakovski [2019] EWHC 857 (Ch) (28 March 2019), Tonstate Group Ltd & Ors v Wojakovski & Ors [2019] EWHC 2902 (Ch) (03 October 2019), Tonstate Group Ltd & Ors v Wojakovski & Ors [2019] EWHC 3363 (Ch) (05 December 2019), Tonstate Group Ltd & Ors v Wojakovski & Ors [2020] EWHC 325 (Ch) (16 January 2020), Wojakovski v Matyas & Ors [2020] EWHC 328 (Ch) (18 February 2020), Tonstate Group Ltd & Ors v Edward Wojakovski & Ors [2020] EWHC 1091 (Ch) (2 March 2020), Tonstate Group Ltd & Ors v Wojakovski & Ors [2020] EWHC 1004 (Ch) (28 April 2020), Tonstate Group Ltd & Ors v Wojakovski & Ors [2020] EWHC 1739 (Ch) (04 May 2020), Robertson v Wojakovski [2020] EWHC 2737 (Ch) (14 October 2020).
[3] https://www.thetimes.co.uk/article/wojakovski-and-matyas-families-at-war-over-14-5m-fraudn6zqbznvr
