High Court Judgment in Lee Chu v Kin Ming Je: Key Legal Principles in Fraud Case

Citation: [2024] EWHC 90 (Ch)
Judgment on

Introduction

The High Court of Justice, Business and Property Courts of England and Wales, rendered a judgment in the case of Lee Chu v Kin Ming Je and Anor (2024) EWHC 90 (Ch), which discusses several important legal principles. This article analyzes the key topics discussed by HHJ JOHNS KC, elucidating the legal principles applied in this case, and links them directly to relevant parts of the summary.

Key Facts

The case involves alleged large-scale fraud where the claimant, Lee Chu, purporting to be a victim, sought equitable compensation from the first defendant, Kin Ming Je, for investments lost. The claim also included a proprietary claim against Kin Ming Je’s wife, Sin Ting Rong, as the second defendant. Interim applications discussed include worldwide freezing and asset disclosure orders, strike-out applications under CPR 3.4(2)(a) & (b), applications contesting jurisdiction, and an application to amend the particulars of claim.

The judgment engages with several key legal principles, including:

Strike-Out Applications under CPR 3.4(2)

The application of this Civil Procedure Rule, as explained in Siemens Mobility Ltd v High Speed Two (HS2) Ltd [2023] EWHC 2768 (TCC), requires the court to assume that the facts pleaded are true unless no legally recognisable claim is disclosed. The court must be certain the claim is bound to fail. The principle, however, acknowledges the allowance for amendment of claims to cure any defects in pleadings.

Pleading Fraud and Conspiracy

The judgment reiterates stringent standards for pleading fraud or dishonesty, as reflected by Kasem v University College London Hospitals NHS Foundation Trust [2021] EWHC 136 (QB). Specificity and substance are crucial, as mere inferences or assertions are insufficient.

Freezing Injunctions

The case of Lakatamia Shipping Company Ltd v Morimoto [2019] EWCA Civ 2203 clarifies the conditions to grant a freezing order: a good arguable case, real risk of judgment being unsatisfied due to asset dissipation, and it being just and convenient to grant such an order.

Chabra Jurisdiction

In the context of freezing orders, the “Chabra” jurisdiction was referenced, which originates from TSB Private Bank International SA v Chabra [1992] 1 WLR 231. It permits the freezing of assets held by a non-party when those assets may, in substance, be owned by the defendant.

Outcomes

The court’s decisions included:

  1. Dismissal of the strike-out applications against both defendants.
  2. Issuance of a worldwide freezing order against Kin Ming Je, modified to account for a sum reflective of actual claims minus recoveries.
  3. Denial of a freezing order against Sin Ting Rong, as no good arguable case for a substantial claim nor a real risk of dissipation was established.
  4. Dismissal of the jurisdiction challenges by both defendants and the denial of a stay of proceedings pending a US criminal trial.
  5. The granting of permission to apply to amend the particulars of claim, with directions issued for a separate hearing.

Conclusion

The judgment in Lee Chu v Kin Ming Je and Anor serves to illuminate the judicial approach to complex interim applications, particularly in cases involving allegations of fraud. The court meticulously applied established legal principles to safeguard the interests of justice while balancing the parties’ concerns. In doing so, the court reaffirmed the necessity for rigor in pleading serious allegations, the importance of establishing a real risk of dissipation for freezing orders, and the careful consideration required when dealing with concurrent jurisdiction and amendments to claims. The outcome reflects the courts’ continued commitment to ensuring claims are both justiciable and sufficiently substantiated before proceeding through the legal system.