In an appeal against an order refusing a worldwide freezing order on the basis that the applicant could not show assets somewhere in the world, Lord Justice Longmore has confirmed that it is not enough for an applicant to assert that the respondent was apparently wealthy and must have assets somewhere. The applicant had to "satisfy" the court of the existence of assets.
In order to apply for a freezing injunction an applicant has to show a good arguable case that it has a good claim and a good arguable case that there is a risk that the defendant will dissipate its assets. However, the test for showing that a defendant has assets that will be caught by the court's order has been less certain. In Ras al Khaimah & 5 ors v Bestfort the Court of Appeal has now clarified what evidence the applicant must bring before the court.
The correct test is either 'a good arguable case' or grounds for believing assets exist; a test of 'likelihood' on its own was inappropriate. Mr Justice Longmore accepted that an applicant cannot invariably be expected to know of the existence of assets, it should be sufficient for him to satisfy the court that there were grounds for believing that assets existed. Where there is more than one entity that may hold assets and even where there was a common director to all entities, it would be wrong for the court to take a broad brush approach and not look at each legal personality individually.
In Ras al Khaimah, the claimants claimed that the 14 respondent entities held assets beneficially for individuals that acted in breach of fiduciary duties and conducted fraudulent transactions. The Court of Appeal held that "Since a claimant cannot invariably be expected to know of the existence of the assets of a defendant, it should be sufficient that he can satisfy a court that there are grounds for so believing. That is not an excessive burden but if an order is sought against numerous companies or LLPs and those companies and LLPs can show that there is no money in their accounts and the claimant cannot show that the account has been recently active, it may well be right to refuse relief".
What does this mean for you?
The clarification contained in the Judgment is exceptionally useful – a Claimant is not required to have to identify assets in order to apply for a Worldwide Freezing Order. The identification of assets in the context of urgent relief where time is often of the essence would be an issue. That said, it is now clear that a Claimant cannot merely rely on the entity/individuals having assets somewhere in the world however likely that is.