Raja v Van Hoogstraten & Ors

A consent order may be set aside where it was made on an erroneous basis of fact, including misrepresentation, or where a material and unforeseen change of circumstances undermines its basis. The court may then restore the earlier order and vary it to reflect subsequent developments. In the context of freezing orders, protection should not unnecessarily prevent companies from dealing in the ordinary course of business. However, where the consent arrangement itself has been undermined, the court may reimpose appropriate protection, including an adjusted financial cap.

The claimant applied to set aside an interim consent order which had discharged a freezing order against the first defendant and replaced it with undertakings. The order had been agreed to facilitate the first defendant’s proposed legal representation at the trial of a preliminary issue.

The claimant contended that the consent had been induced by a misrepresentation as to the first defendant’s intention to obtain representation and that subsequent conduct constituted a material change of circumstances. The first defendant did not attend or make representations. The central issue was whether the consent order should be set aside and the freezing order reinstated.

1. The consent order was set aside. The court applied the principles identified in S v S [2003] 3 WLR 1372. The recognised grounds comprised: an erroneous basis of fact existing when the order was made, such as misrepresentation or misunderstanding; and a material or unforeseen change in circumstances which undermined or invalidated the basis of consent.
2. The evidence supported the inference that the first defendant had never intended to attend the preliminary-issue trial or obtain legal representation. His representations had been used as pretexts for delay. The court therefore found both an operative misrepresentation and a supervening change of circumstances.
3. The court held that an unforeseen change of circumstances was sufficient in principle to justify setting aside the order. That approach was supported by Republic of Kazakhstan v Istil Group inc (The Times, 17 November 2005), and the supervening-event category was treated as illustrated by Barder v Caluori [1988] AC 20, sub nom Barder v Barder (Caluori Intervening) [1987] 2 FLR 480.
4. The freezing order was reimposed against the first defendant in the form existing before the consent order. The cap was increased from £5 million to £6 million to reflect increased costs potentially recoverable from him.
5. The judge also noted the relevance of Halifax plc v Chandler [2001] EWCA 2042 Civ 1750, which indicated that freezing orders, particularly against third parties, should not prevent dealings in the ordinary course of business.