Staines v Walsh & Anor

A freezing order should not be extended where the claimant cannot show a credible risk that the defendant will dissipate assets or cannot adequately support the cross-undertaking in damages. The claimant’s obligation concerning the cross-undertaking continues while the order remains in force. Save in the most exceptional cases, the claimant must disclose material adverse changes in financial circumstances to the defendant. Serious non-disclosure may justify refusing an extension and may support discharge of the existing order.

The claimant sought to increase the limit of freezing orders made against the first defendant from £180,000 to £370,000. The underlying dispute concerned alleged liabilities arising from equity trading, which the first defendant disputed. The claimant relied on three additional trading claims and sought a further sum for existing and future costs.

The first defendant opposed the application, relying on weaknesses in the additional claims, the absence of credible evidence of dissipation, and the claimant’s failure to disclose substantial changes in his financial position, including a re-mortgage and possible tax liabilities. The central issues were whether the order should be extended and whether the claimant continued adequately to support the cross-undertaking in damages.

1. Application dismissed. The claimant withdrew the proposed increase insofar as it was based on the Aragon account, the Tellis trade and the Equant trade. The evidence supporting those claims was insufficient, and their late introduction was unexplained.

2. An extension of a freezing order requires a proper evidential basis. The court must consider the totality of the circumstances, including the apparent strength of the claim and whether there is a credible and reasonable fear that the defendant will dissipate assets to avoid a judgment debt.

3. On the evidence as it then stood, there was no credible evidence of a reasonable fear of dissipation. The first defendant had paid interlocutory costs orders promptly, and the additional claims relied upon by the claimant had significant weaknesses.

4. The cross-undertaking in damages is central to the freezing-order jurisdiction. A claimant must ordinarily provide sufficient information about his wealth to demonstrate that the undertaking can be honoured. The obligation continues while the order remains in force and requires the claimant to draw material adverse changes in financial circumstances to the defendant’s attention.

5. The claimant had failed to disclose that he had substantially re-mortgaged his flat and had given misleading evidence about his continuing ability to support the undertaking. The court considered that it would have given serious consideration to an application to discharge the order, although no such application was before it.

6. It was wholly inappropriate to extend the order. The existing order expired by virtue of the first defendant’s payment of £180,001 into court.

First-instance decision. No appellate history is stated in the judgment.