Walker Morris advise on High Court committal application

A multi-disciplinary team at Walker Morris has advised liquidators from Begbies Traynor in relation to a committal application made against the former director of an IT distribution business, which was implicated in a large scale VAT fraud. The application was granted and the court sentenced the former director to 18 months in prison for contempt of court.

Jason Tsai is the founder and former managing director of Changtel Solutions UK Limited, which went into liquidation following its implication in a VAT fraud.

The liquidators issued claims with an aggregate value of £38 million against Mr Tsai, on the basis of allegations that he used the company as a vehicle for fraud and dissipated the company’s assets for the benefit of himself and other parties, to the detriment of the company’s creditors.

On 15 February 2017, the liquidators obtained a worldwide freezing order against Mr Tsai’s assets, up to a maximum sum. However, Mr Tsai breached the order in various ways, including by failing to surrender his Taiwanese passport; temporarily absconding to Taiwan; and breaching his asset disclosure obligations by submitting various and contradictory statements. In response, the liquidators issued a committal application on the basis that Mr Tsai breached the terms of the freezing order and was in contempt of court.

The hearing took place in June 2017 before Mrs Justice Rose. During the course of the hearing Mr Tsai was cross-examined in relation to his assets and his compliance with the freezing order.
The Court found that Mr Tsai’s various admissions, retractions and changes of position adversely affected his credibility and continuing dishonest conduct. Mr Tsai was committed to prison for 18 months as a result of that conduct.

Gawain Moore from Walker Morris commented: “The decision is a helpful reminder of the extent of the court’s powers when policing orders generally and, in particular, when compelling compliance with freezing orders. It also provides a helpful overview of the considerations of the court when deciding on the appropriate sanctions for non-compliance with its orders.”

The Walker Morris Team comprised Gawain Moore and David Johnson from the Restructuring & Insolvency Team and Gwendoline Davies and Tim Pickworth from the Commercial Litigation & Dispute Resolution Team.