Fourie v Allan Le Roux & Ors

Interim relief under section 25 of the Civil Jurisdiction and Judgments Act 1982 must be identifiable as interim relief connected with the final relief sought in the foreign proceedings. A foreign process to set aside a foreign order cannot support a wider English freezing injunction where that connection is absent. English interim relief also requires substantive proceedings, or an immediate undertaking to issue them, to activate the jurisdiction. The limit of a freezing injunction is discretionary. Cross-claims need not reduce it where the applicable law does not permit set-off and no equitable set-off exists. Where there is a strongly arguable claim and an established risk of dissipation, the injunction may include a reasonable sum for the claimant’s legal costs. Indemnity costs remain a discretionary matter, subject to appellate restraint.

Mr Fourie, a provisional liquidator appointed in South Africa, obtained an English freezing injunction against Mr Le Roux and Fintrade Investments Ltd. The order was made on the basis of a South African winding-up order, a letter of request and an application under section 426 of the Insolvency Act 1986. Mr Jarvis QC discharged the injunction for want of jurisdiction and ordered indemnity costs: [2004] EWHC 2260 (Ch).

Subsequent proceedings produced a further freezing order in favour of HEE, limited to £750,000. Blackburne J declined to reduce the limit for alleged cross-claims and made no provision for costs: [2004] EWHC 2557 (Ch). The appeals concerned jurisdiction, costs, cross-claims, valuation and whether the injunction should include protection for legal costs.

1. First appeal. Mr Fourie’s appeal was dismissed, subject to an amendment concerning costs. The First Order was made without jurisdiction. Section 426 of the Insolvency Act 1986 and the associated letter of request did not confer jurisdiction, as the lower courts had correctly concluded. The Germiston proceedings could not found jurisdiction under section 25 of the Civil Jurisdiction and Judgments Act 1982. The foreign claim was directed narrowly to setting aside a foreign order and recovering attached assets. It did not provide a sufficient connection with the wide freezing relief sought in England, and Fintrade was not a party to it. Nor had English causes of action been activated by substantive proceedings or an undertaking to issue them immediately. HEE, the relevant claimant, was not before the court.
2. Costs. The indemnity costs order was upheld. The court has a wide discretion, and an appellate court should not interfere without an error of principle. However, because evidence used in obtaining and discharging the First Order was later reused successfully in support of the Second and Third Orders, the costs judge was directed to apportion the relevant costs.
3. Second appeal. The appeal by Mr Le Roux and Fintrade was dismissed. The limit of a freezing injunction is discretionary. Cross-claims are commonly netted off, but there was no equitable set-off because the relevant dealings had no close relationship with the alleged liability. Whether South African law permitted set-off in HEE’s liquidation was a question of South African law, and it could not be presumed to mirror Insolvency Rule 4.90. The court therefore declined to reduce the £750,000 limit. The possible personal liability of Mr Le Roux could not be determined before trial, and no assumption was made in his favour.
4. Cross-appeal. Permission was granted only on costs. The judge was entitled to adopt the detailed and later Klopper valuation of the plant and equipment. The evidence did not justify adding value for intellectual property. However, the strongly arguable claim and established risk of dissipation justified including a reasonable sum for HEE’s legal costs. The potential failure of the claim was not a bar. The limit was increased by £150,000 to £900,000. Permission was refused in all other respects.

• Court of Appeal (Civil Division): [2005] EWCA Civ 204. The First Order was treated as having been made without jurisdiction, with a direction for costs apportionment. The appeal concerning the £750,000 limit was dismissed. HEE’s cross-appeal was allowed in part, increasing the limit to £900,000.
• High Court, Chancery Division: Mr Jarvis QC discharged the First Order and ordered indemnity costs: [2004] EWHC 2260 (Ch). Blackburne J continued a freezing order in favour of HEE with a £750,000 limit and made no provision for legal costs: [2004] EWHC 2557 (Ch).