Polly Peck International Plc v Nadir & Ors

A freezing order must be construed according to its actual wording, not by reference to forms used years later. An order made in separate proceedings may constitute a further order varying an earlier freezing order where the beneficiary knew of the proposed order and had the opportunity to raise any objection. General consent recorded in the sealed order is not confined by an unexpressed qualification. A fresh discretionary release of funds for legal costs requires substantial evidence of the applicant’s other available resources and means.

Mr Nadir applied in the long-running proceedings brought by Polly Peck International Plc for payment of approximately £61,000 and accrued interest, held in solicitors’ client account, towards his legal costs. Alternatively, he sought variation of a freezing order made by Vinelott J in 1991.

The money represented his 10 per cent share of a pension fund compromise approved by Patten J in separate proceedings. Polly Peck had consented to the compromise as recorded in the sealed order, while later asserting that the share remained subject to the freezing order. The issues were whether the Patten J order had released the money, whether the modern form of freezing order should be substituted, and whether the court should exercise a fresh discretion to permit payment.

1. Construction of the original order. The freezing order had to be construed as made. Its reference to payment of reasonable legal costs in defending the action could not be enlarged by adopting the wording of modern freezing orders.
2. Fresh discretion. The court would, in any event, have refused a fresh discretionary release. Although the purpose for which funds were sought was relevant, an applicant seeking payment of legal costs had to provide substantial evidence of other funds available for that purpose. The evidence concerning Mr Nadir’s assets, liabilities and previous litigation funding was inadequate.
3. Effect of the later order. The 1991 order restrained dealings until further order, without limiting that phrase to a further order in the same proceedings. An order made in separate proceedings could therefore vary the freezing order in effect. Polly Peck knew of the proposed compromise, knew that its consent was being sought, and had the opportunity to object before Patten J’s order was sealed.
4. The sealed order recorded Polly Peck’s consent to the compromise. That consent was general. The words “as employer” did not qualify it, and no restriction was stated to preserve the freezing order over Mr Nadir’s 10 per cent share. The recital was to be treated as effective unless and until amended or revoked on an application joining the parties to those proceedings.
5. The compromise was negotiated on the footing that Mr Nadir’s share would be available to him, including through payment to his solicitors. The passage of time, Polly Peck’s knowledge of the issue, and its failure to seek relief supported that construction. The payment would be used wholly for legal costs and disbursements, rather than provide a direct new personal benefit.
6. The court therefore authorised payment of the £61,000 and accrued interest standing to Mr Nadir’s credit in Lane & Partners’ client account, by way of satisfaction pro tanto of legal costs and disbursements. The fund was to be exhausted in that way.

The judgment concerned an application in the original High Court proceedings. It referred to earlier orders made by Vinelott J, Patten J and Deputy Master Marks, but no appeal was determined.