The defendants applied to discharge a freezing order made against them and, for the purposes of the application, they accepted that the claimants have a good arguable claim on the merits, as pleaded in the particulars of claim. The defendants initially submitted that the claimants should be confined to their pleaded case, which did not allege fraud, but that argument was withdrawn when reference was made to The Lord Chancellor v Blavo , in which it was concluded that there was a real risk of dissipation even though the pleaded allegation was simple breach of contract.
The judge held that, where the defendants have conceded a good arguable case on the merits, and where the pleaded facts are consistent with the breach of duty being either innocent or dishonest, the claimants will need further evidence of a propensity to dissipate assets (which they are free to adduce). (If the pleaded facts are consistent only with the breach of duty being dishonest, then those facts can show both a good arguable case and a propensity to dissipate, and no further evidence will be necessary). On the facts of the case, no propensity to dissipate assets was proven, since the defendants had taken no steps to dissipate, despite the parties being at war with each other since 2012.
An alternative argument, that there had been non-disclosure by the claimants when applying for the freezing order, was also considered by the judge. He rejected an argument that it would never be appropriate for the court to investigate allegations of non-disclosure of the merits of the claim where the defendant has admitted that there is a good arguable case. There is still a duty to disclose all material information at the without notice hearing (in order to protect the administration of justice), but any non-disclosure is "unlikely to be at the egregious end of the spectrum".
One further point made by the judge was that: "it is trite law that a claimant is deemed to join issue with every allegation in the defence and hence has no need to serve a reply unless he wishes to rely on additional facts or matters".