In Franses v Al Assad – Butterworths Law Direct 26.10.07 a freezing order was granted against the first respondent, principally in respect of £6.5m that formed part of the proceeds of sale of a property that had allegedly been owned by him. The first respondent applied to discharge the freezing order. His application was supported by evidence that he had no interest in the property or its proceeds, and that the liquidator failed to comply with his duty of full and frank disclosure when making the original without notice application.
The first respondent contended that in light of the evidence it was clear that the liquidator's original application had been fatally flawed on substantive and procedural grounds, including breaches of duty by the liquidator. The liquidator applied for a more limited freezing order in respect of certain Spanish properties and bank accounts.The issues for determination were (i) whether the liquidator should be ordered to pay the costs of the first respondent, in respect of the original injunction proceedings, on the standard basis or the indemnity basis, and (ii) whether a more limited injunction should be granted against the first respondent.
The Chancery court granted the applications, holding (1) that it was satisfied that the cumulative effect of the deficiencies in the liquidator's application justified the award of costs against him on an indemnity basis. The telephone application had met the substantive requirements of a good arguable case and a real risk of dissipation of assets. However, it had been improperly and unreasonably made without notice, it suffered from severe procedural flaws, and, in the circumstances, the duty of full and frank disclosure had been breached by the liquidator; and (2) on the material before the court, there was a good arguable case that the first respondent was the beneficial owner of the properties and bank accounts over which the liquidator sought the limited freezing order. The court was also satisfied that there was a real risk of dissipation of those assets. In the circumstances, the interests of justice required the making of the limited injunction.