James Gale Instructed by Axiom DWFM Ltd (West End) for the Respondent.
This appeal raises questions about the proper approach to the grant of a default judgment for a remedy other than an award of money where the relevant procedural rule says that judgment “shall be in such form as the court considers the claimant to be entitled to on the statement of claim.” An initial question is whether such a default judgment can be appealed at all or whether, as the Court of Appeal held in this case, the only means of challenging it is to apply to the High Court to set the judgment aside.
To put the claim advanced in the statement of claim in context, it is necessary to outline the now lengthy history of litigation between the parties.
The parties and the agency agreement
The appellant, Lux Locations Ltd (“Lux”), is an estate agency which was engaged by the respondent, Mr Yida Zhang, an international investor of Chinese nationality, to assist in buying a large parcel of land (around 6 km2 in Antigua. Lux was engaged on written terms that, if Mr Yida or an affiliate acquired the land, Mr Yida would pay Lux a commission equal to 9% of the purchase price. The agency agreement also stated that Lux would be responsible for paying, out of its commission, any other commissions pre-agreed with Lux to facilitate the sale. Lux had agreed to pay such a commission, equal to 4% of the purchase price, to an architect, Johann Hesse, in return for his assistance in lobbying the Government for approvals needed for the purchase.
The first action
Mr Yida’s company, Yida International Investment Antigua Ltd (“Yida Ltd”), acquired the land in August 2014 at a price of US $60m. Mr Yida did not, however, pay Lux its commission. His associate, Mr Kenneth Kwok, wrote to Lux saying that foreign exchange was not available in China to pay the commission and proposing a new agreement under which Lux’s right to be paid commission would be replaced by an exclusive right to act as estate agent for the sale of any of the land. When Lux rejected this proposal, an alternative proposal was made to link the payment of the commission to the sale of land by Mr Yida. Lux rejected this proposal too and brought an action (“the first action”) suing Mr Yida for the commission of US $5.4m (9% of the US $60m purchase price) payable under the agency agreement.
Mr Yida defended the claim and counterclaimed for rescission of the agency agreement, alleging that he had been induced to enter into the agreement by various fraudulent misrepresentations. Some months later Mr Yida amended his defence to add a further allegation. He now claimed that, at or about the time when the written agency agreement was made, the parties had also made a separate oral agreement, which they had apparently never thought fit to record in writing, that the obligation to pay Lux the commission of 9% would only take effect if Lux negotiated a purchase price of US $30m (half the price actually agreed).
The consent order
The trial of the first action was scheduled to commence on 7 March 2017 and on that day the parties attended court with their lawyers. Counsel for Mr Yida, Mr Damien Benjamin, asked the judge for time to discuss settlement, which was granted. Terms of settlement were then negotiated and embodied in a consent order. The consent order was signed by the parties themselves and by their respective counsel. The order was then made by the judge after its terms had been explained to her in open court in the presence of the parties and their counsel. The consent order provided for judgment to be entered for Lux against Mr Yida in the sum of US $3m, plus interest at the rate of 8% per annum and legal costs (including sales tax) of US $345,000. Mr Yida was ordered to pay these sums within 21 days.
Before the settlement was agreed, Mr Hesse (who was present at court) had agreed that he would forgo the share of Lux’s commission that Lux had agreed to pay to him. The principal judgment sum of US $3m represented the rest of Lux’s commission. Under the terms of the consent order Lux therefore stood to receive the full net sum that it had expected to receive after paying Mr Hesse. The agreement of Mr Hesse to forgo his commission would not, however, have relieved Mr Yida of the obligation to pay the full sum of US $5.4m to Lux if he had lost at trial. The consent order thus achieved a substantial reduction in Mr Yida’s potential liability.