Al-Rawas v Pegasus Energy Ltd & Ors

The Court of Appeal refused permission to appeal against Ramsey J's order discharging a search and seizure order and a worldwide freezing order. The court affirmed that the claimant’s case in the Mauritius proceedings was at best arguable but not sufficiently strong to justify the intrusive relief sought, particularly in the absence of convincing evidence of a real risk of destruction or dissipation of assets. The judge’s conclusion that there had been material non-disclosure by the claimant’s key witness concerning substantial pre-existing loans to the company was a decisive and lawful basis for discharging the orders. The court emphasised the applicant’s duty of full disclosure on ex parte applications and that the strength of the underlying foreign law claim, the risk of dissipation, delay and the tenuous connection of some defendants to the jurisdiction are all relevant factors.

This appeal concerns a renewed application for permission to appeal against Ramsey J's decision of 6 September 2006 discharging (i) a search and seizure order granted by Dobbs J. and (ii) a worldwide freezing order granted by Langstaff J. The claimant, Mrs Al-Rawas, had commenced two sets of proceedings in Mauritius challenging a rights issue by Pegasus Energy Ltd and seeking declarations, damages and equitable relief arising from alleged breaches of the Companies Act 2001 and the company’s articles. She obtained without notice in London (a) an order for search and seizure and (b) a worldwide freezing order up to US$33 million, relying on affidavits alleging that loans said to justify the rights issue might be a sham and that there was a risk of document destruction and asset dissipation.

The Court of Appeal summarised the background: the rights issue diluted the claimant’s shareholding; a slide presentation described plans to reduce her influence; proceedings were brought in Mauritius and parallel applications were made in London and South Africa. The core relief sought in England was (i) search and seizure of documents, (ii) powers to obtain a valuation, and (iii) a worldwide freezing injunction to preserve assets pending the foreign proceedings.

The court framed the principal issues as (i) the strength of the claimant’s substantive case in Mauritius (noting reliance on section 55 of the Companies Act 2001 and implied contractual duties under the articles), (ii) whether there was a real risk of destruction of documents, (iii) whether the claimant had shown a sufficient risk of asset dissipation to justify a freezing order, (iv) whether there had been material non-disclosure on the ex parte applications, and (v) whether it was inexpedient under section 25 of the Civil Jurisdiction and Judgments Act 1982 for the English court to grant the relief.

The court accepted Ramsey J's careful assessment. It held that the claimant’s case had uncertain foundations in foreign law, that the allegation that the loans were a sham was central but undermined when the claimant’s witness accepted knowledge of substantial loans made before 2003, that the seventeen month delay and the preservation of documents reduced the plausibility of an imminent risk of destruction, and that there was insufficient evidence of a real risk of dissipation of assets. Crucially, the court endorsed Ramsey J's finding of deliberate and material non-disclosure by the claimant’s witness about substantial loans, which had materially influenced the ex parte judges. Given the seriousness of that omission, discharge of the orders was justified. The Court of Appeal therefore refused permission to appeal.

Appeal dismissed. The court upheld Ramsey J’s discharge of the search and seizure and freezing orders because the claimant’s case in Mauritius was at best arguable but not sufficiently strong to justify the intrusive relief; there was insufficient evidence of a real risk of destruction or dissipation of assets; and there had been material and deliberate non-disclosure by the claimant’s key witness concerning substantial loans which had materially influenced the ex parte orders.

Appeal from the High Court of Justice, Queen's Bench Division (Ramsey J) which on 6 September 2006 discharged a search and seizure order made by Dobbs J. (27 July 2006) and a worldwide freezing order made by Langstaff J. (15 August 2006). Permission to appeal to the Court of Appeal was refused ([2007] EWCA Civ 268).