LTE Scientific Ltd. v Thomas & Anor

A freezing order without notice is an exceptional remedy. The applicant must show a real risk of immediate dissipation if the proposed respondent learns of the application, creating extreme urgency. A real risk of dissipation alone is insufficient. Prior notice, the respondent’s opportunity to act, and the availability of an application on notice may defeat the claim to exceptional urgency. A good arguable case and evidence of prior misconduct do not remove the need to satisfy this threshold.

LTE Scientific Ltd. v Thomas & Anor arose from claims concerning alleged breaches of restrictive covenants, contract and confidentiality obligations following Mr Thomas’s employment by the appellant. The appellant had also obtained a disclosure order, which Mr Thomas was found to have seriously breached. After learning that Mr and Mrs Thomas had put their home on the market, the appellant sought an ex parte freezing order.

On 21 July 2005, Mr Justice Davis refused the order, holding that the case was not sufficiently urgent and should be heard on notice. The appellant sought permission to appeal, arguing that Mr Thomas might dissipate assets during the notice period. The central issue was whether the circumstances amounted to exceptional urgency justifying departure from the ordinary rule that the respondent should be heard.

Application refused. Lord Justice Auld delivered the judgment, and Lord Justice Tuckey agreed.

1. The ordinary rule is that the respondent to an application for interim relief should be heard. An ex parte freezing order is justified only in a case of exceptional urgency.

2. For a freezing order, exceptional urgency requires a real risk of immediate dissipation if the proposed subject of the order is told of the applicant’s intention, making it a matter of extreme urgency to proceed without notice.

3. That threshold was not met. The appellant had known for several weeks that the house was being marketed, had received at least a plausible explanation for the sale, and had then warned Mr and Mrs Thomas by letter that an application would be made unless an undertaking was given. No offer had been received, and the property could not conventionally have been disposed of within the period needed to bring an application on notice.

4. The respondents’ previous serious contempts and the appellant’s good arguable case justified concern, but did not themselves establish exceptional urgency. The suggestion that the property might be transferred through an unconventional trust or charge did not alter the conclusion, since the respondents had already had time and notice in which to take such steps.

5. The existence of some urgency did not make the matter sufficiently urgent to justify proceeding without notice. The application was therefore refused.

• Court of Appeal (Civil Division) — On 27 July 2005, Auld LJ and Tuckey LJ refused the application for permission to appeal: [2005] EWCA Civ 1177.
• High Court (Queen’s Bench Division) — On 21 July 2005, Mr Justice Davis refused an ex parte freezing order because the circumstances did not justify proceeding without notice.