Enforcing Judgments – Freezing Orders are a Gamble
Picture this: you have obtained a judgment in your favour from the Court, but the judgment debtor is not willing to honour its liabilities under the judgment – what do you do?
Fortunately, the Courts of England and Wales, as a matter of policy, will generally assist an applicant to enforce a judgment. The Court’s powers include orders for seizure and sale of a debtor’s assets or placing a charge over their assets. It also includes the ability to freeze assets to prevent them from being moved elsewhere.
However, enforcement is not always straightforward, and the Court will sometimes decline to use its powers, particularly with freezing orders. This has been seen in the recent Court of Appeal case of Les Ambassadeurs Club Limited v Songbu Yu  EWCA Civ 1310.
In 2014, Mr Songbu Yu (“Mr Yu”) became a member of the exclusive Les Ambassadeurs Club in Mayfair (the “Club”), where members can play games and gamble 24/7. At the time, Mr Yu was a Chinese national with a family net worth of around US$ 1.3 billion.
In 2018, Mr Yu purchased £19 million worth of chips at the Club. Unfortunately for him, he lost it all. Later, he did not honour the cheques that he used to purchase the chips. Following discussions between the parties, they agreed that Mr Yu would pay back £16.45 million. However, he failed to make payment and the Club issued legal proceedings to recover the debt.
After issuing the claim, Mr Yu came back to the table (the negotiation table, not the blackjack table) and made a series of payments which reduced the debt to £6.5million. However, the payments ceased and so did Mr Yu’s communication with the Club. In November 2020, the Club successfully obtained summary judgment for the outstanding debt which, with interest, had risen to over £10million.
The Club later applied for a worldwide freezing order over Mr Yu’s assets. However, the judge was not convinced that it was appropriate and refused to grant one. The Club decided to appeal.
There are four requirements that need to be met for a freezing order to be granted:
1) The creditor (here, the Club) has to have a good arguable case on the merits;
2) There needs to be is a real risk of dissipation of the debtor’s (here, Mr Yu) assets;
3) The debtor’s assets are within the geographical scope of the proposed injunction; and
4) In all the circumstances, it is just and convenient to grant the order.
In this case, the first, third and fourth requirements were easily satisfied. As such, the main question for the Court was whether there was a real risk of dissipation of Mr Yu’s assets.
The Court first had to consider what “real risk” meant. It concluded that it referred to a risk that was more than “fanciful” but less than “on the balance of probabilities”. There also needed to be evidence of the likelihood of dissipation; the nature and type of evidence would depend on the facts. Taking into consideration the evidence before it, the Court upheld the earlier decision that the test had not been met in this case.
Clearly Mr Yu had the ability to move his assets out of the reach of creditors, but there was no evidence to demonstrate that Mr Yu had taken any such steps in the past, nor had he taken the opportunity to do so during the four months between the service of the order for summary judgment and the application for a freezing order.
Also, whilst it was accepted that Mr Yu’s lack of correspondence with the Club and his failure to participate in the proceedings might indicate a risk of dissipation, the Court held that these could also suggest that he did not want to pay until he was made to through the process of enforcement.
Accordingly, the appeal was dismissed.
A case involving wealthy international personnel, an uber exclusive London club and a debt running into the tens of millions is not your “every day” case. However, this case is a very good example of the possible difficulties an applicant will face if they want to obtain a freezing order when trying to enforce a judgment.
If you have obtained a judgment and have questions on enforcement, or any stages of litigation, do not hesitate to contact Geldards LLP’s dedicated Commercial Dispute Resolution and Debt Recovery teams.
Case: Les Ambassadeurs Club Limited v Songbu Yu  EWCA Civ 1310