Court rules it is an actionable tort to induce a company to violate a claimant's rights under a judgment (before freezing order granted)
The claimant obtained a judgment against two companies. It is alleged that, before it obtained a freezing order against the companies, but after a draft judgment was released, the ultimate beneficial owner of the companies dishonestly stripped assets out of the companies to make them judgment-proof. The issue in this case was whether there is any claim under English law against the owner.
Knowles J noted that non-payment of a judgment debt is an actionable wrong. Furthermore, although the Court of Appeal has held that a party does not commit an actionable wrong by making itself judgment-proof before it is enjoined (by a freezing order) from doing so (see the Court of Appeal's decision in Law Debenture Trust Corporation v Ural ): "the Court of Appeal was there addressing the situation (as with a claim in damages, before judgment) where there was indeed no right of the claimant before a freezing order enjoined the conduct in question. The present case differs in that the claimant had a right before judgment to be paid a contract sum, and a right after judgment to be paid the judgment sum". Furthermore, there were sufficient facts in this case to allow an analysis that the owner had induced and procured the companies not to pay the judgment debt. Accordingly, the English court did have jurisdiction to hear the claim.