Al-Rawas v Pegasus Energy Ltd & Ors

A freezing order does not require proof that the claim is more likely than not to succeed. A good arguable case is assessed flexibly, with the strength of the claim being one factor in deciding whether relief is just and convenient. The claimant must also show a sufficient risk that assets will actively be placed beyond reach; offshore ownership or enforcement difficulty alone is insufficient.

A search and seizure order requires an extremely strong prima facie case and an evidentially sufficient real risk of document destruction. On a without-notice application, the applicant must provide a complete picture. Serious material non-disclosure, particularly deliberate misleading of the court, may alone justify discharge. The far-reaching nature of relief sought in support of foreign proceedings may also bear on expediency under section 25 of the Civil Jurisdiction and Judgments Act 1982.

The claimant sought relief in England in support of proceedings in Mauritius concerning a rights issue which had substantially diluted her shareholding in Pegasus Energy Ltd. On 27 July 2006 Dobbs J granted a search and seizure order under section 25 of the Civil Jurisdiction and Judgments Act 1982. On 15 August 2006 Langstaff J granted a worldwide freezing order for US$33 million.

Ramsey J discharged both orders on 6 September 2006. He found that the claim was not sufficiently strong for a search order, that there was no sufficient risk of document destruction or dissipation of assets, and that material information about loans to the company had not been disclosed. The claimant renewed her application for permission to appeal. The central issues were whether the evidence justified either order and whether the non-disclosure required discharge.

1. Disposition. Moore-Bick LJ, with Ward LJ and Sir Martin Nourse agreeing, refused permission to appeal. Ramsey J had been entitled to discharge both the search and seizure order and the worldwide freezing order.
2. Strength of the claim. The Mauritian claims were arguable, but uncertainties concerning Mauritian law, the causes of action and the claimant’s loss meant that the evidence did not establish the extremely strong prima facie case required for a search and seizure order. The evidence concerning an English-law conspiracy to injure also did not materially strengthen the claim. Such a claim requires proof that the defendants’ predominant purpose was to cause harm: Crofter Hand Woven Harris Tweed Company Ltd v Veitch [1942] A.C. 435, 444.
3. Search order. The risk of destruction had to be assessed on the facts. The claimant’s seventeen-month delay, the preservation of the documents after solicitors had appeared, and evidence that the defendants wished to retain records supporting the legitimacy of the transaction justified the conclusion that there was insufficient evidence of a real risk of destruction.
4. Freezing order. The requirement of a good arguable case is flexible and does not impose a more-likely-than-not threshold. The strength of the claim is one factor in the overall question whether relief is just and convenient; a weaker but arguable claim may still justify narrower relief. Separately, the claimant had to show a sufficient risk that the defendants would take active steps to place assets beyond the reach of enforcement. Offshore structures and possible enforcement difficulty did not establish that risk.
5. Non-disclosure. The applicant for without-notice relief must place before the judge all material information needed for a complete picture. The principles in Brink’s Mat Ltd v Elcombe [1988] 1 W.L.R. 1350 applied. The failure to disclose substantial loans, reinforced by assertions that they might be fraudulent, was serious, persistent and materially influential. Although the court retains a discretion to continue or remake an order, deliberate misleading makes exercise of that discretion in the claimant’s favour unlikely. Discharge on this ground alone was justified.
6. Section 25. The court did not decide whether relief was inexpedient under section 25(2) of the Civil Jurisdiction and Judgments Act 1982. It nevertheless noted that the unusual and far-reaching nature of search and freezing orders, the foreign court’s directions, and the defendants’ tenuous connections with England could be relevant. The appeal was also unpromising because the decision depended on assessment of evidence and the exercise of discretion, with appellate interference justified only where the judge had gone seriously wrong.

• Court of Appeal (Civil Division): On 30 March 2007 the renewed application for permission to appeal was refused. The court upheld the discharge of both interim orders.
• High Court, Queen’s Bench Division: Ramsey J discharged the search and seizure order and worldwide freezing order on 6 September 2006.
• Earlier interim orders: Dobbs J granted the search and seizure order on 27 July 2006 under section 25 of the Civil Jurisdiction and Judgments Act 1982; Langstaff J granted the worldwide freezing order on 15 August 2006.