Case alert - [2017] EWHC 3121 (Ch)

In this case, the judge discharged an earlier freezing injunction ordered by Kerr J on the ground of material non-disclosure. Those non-disclosures included the following issues:

(1) The freezing injunction was obtained in support of the applicant's claim to enforce a judgment obtained against the respondent in California. The applicant had failed to bring to the court's attention the fact that it had applied inter partes for an injunction in California. That application had been served on the respondent over three weeks before. The judge said that this was highly material because "it obviously goes to the issue as to whether, objectively, there was a real risk that [the respondent] would dissipate his assets". In fact, the respondent had not done anything after being served to dissipate assets. There had therefore been no justification for the application for the freezing injunction in England to have been made without notice. Nor did it matter that reference had been made to the respondent being served in California in an exhibit – it should have been drawn to the judge's attention. The applicant's English lawyers had failed to make proper inquiries ahead of the application for the freezing injunction.

(2) Modifications to the standard form freezing injunction were not all drawn to the judge's attention. The applicant had sought to argue that it had been obvious to the judge that the order was not a standard form freezing order, because this was an application to freeze only specific assets, rather than a "nuclear" freezing injunction covering all assets up to a specified sum. That argument was rejected by the judge, who held that the need to draw any and all departures from the standard wording to the attention of the judge applies to any application for a freezing injunction. The applicant should have provided either an order with tracked changes showing the modifications (together with annotations explaining the reasons for the changes) or a schedule to counsel's skeleton argument identifying each and every change, with reasons for each change.

COMMENT: In the recent decision of Ras Al Khaimah v Bestfort (see Weekly Update 27/17), in relation to a delay in applying for a freezing injunction, the Court of Appeal rejected an argument that delay is significant when deciding if there is a risk of dissipation because a defendant who is prone to dissipate will have already done so by the time the court is asked to intervene. The Court of Appeal commented that this "argument assumes that a defendant is already of dubious probity and it is a curious principle that would allow such a defendant to rely on his own dubious probity to avoid an order being made against him". However, here the issue was that the respondent had been fully aware of attempts in another jurisdiction to freeze his assets and so there had been no need to bring the application in England ex parte. The judge was confident that if the original judge had been aware of this, the applicant would have been told to bring the application on notice.