Franses v Al Assad & Ors

A freezing order requires a good arguable case, assets within the jurisdiction and a real risk of dissipation. A without-notice application, particularly outside court hours, requires exceptional urgency and full, fair and accurate disclosure.

Procedural failures and non-disclosure may justify indemnity costs without necessarily preventing a fresh, narrower injunction. Where English proceedings support enforcement of an English judgment against assets abroad, the English court may grant ancillary in personam relief, provided it does not interfere with the foreign state’s exclusive enforcement jurisdiction.

The applicant liquidator held an unsatisfied judgment against the first respondent. Without notice, Morgan J granted worldwide and asset-specific freezing orders concerning proceeds of sale held through a discretionary trust. The orders were continued by Evans-Lombe J.

Evidence later showed that the trust was genuine and that the first respondent had no enforceable interest in the trust assets. The original orders were discharged. The remaining disputes concerned the costs of the original application, set-off against the judgment debt, and a fresh limited injunction over three Spanish properties and a Spanish bank account registered in the first respondent’s name.

1. Original freezing order. The liquidator had, by a narrow margin, shown a good arguable case and a real risk of dissipation. The relevant conditions were identified from Derby & Co Ltd v Weldon [1990] 1 Ch 48: a good arguable case, assets within the jurisdiction, and a real risk that dissipation would render enforcement nugatory. Dishonesty alone is insufficient; the court must scrutinise whether it supports an inference of likely dissipation, applying Thane Investments Ltd v Tomlinson [2003] EWCA Civ 1272 and The “Niedersachsen” [1983] 2 Lloyds LR 600.
2. Without-notice procedure. The application should have been made on notice, if necessary on an abbreviated timetable. The imminent overseas transfer did not amount to exceptional urgency. The failure to provide proper documentary support, adequate affidavit evidence and a reasoned explanation for proceeding without notice constituted serious procedural defects under CPR Parts 23, 25 and 32.
3. Full and frank disclosure. The liquidator should have disclosed the funding arrangement and the strong grounds for believing that important information had been obtained unlawfully. These breaches, together with the other defects, justified indemnity costs. The approach to continuing or replacing relief despite non-disclosure was governed by Brink’s Mat Ltd v Elcombe [1988] 1 WLR 1350 and Behbehani v Salem [1989] 1 WLR 723.
4. Set-off. The indemnity costs were to be set off against the unsatisfied judgment debt. Under Lockley v National Blood Transfusion Service [1992] 1 WLR 492, the claims were so closely connected that it would be inequitable to require immediate payment.
5. Fresh Spanish-assets injunction. There was a good arguable case that the first respondent beneficially owned the Spanish assets and a real risk of dissipation. The English court could grant a temporary ancillary injunction in personam, notwithstanding the exclusive Spanish enforcement jurisdiction under Council Regulation (EC) No. 44/2001. The injunction was required to lapse when effective Spanish protective measures came into force and was granted in substantially the terms sought.

This was a first-instance decision. The judgment records earlier interlocutory orders:

• High Court (Chancery Division), Morgan J: freezing orders granted without notice on 20 July 2007.
• High Court (Chancery Division), Evans-Lombe J: the freezing orders continued on 25 July 2007 pending the September return date.
• High Court (Chancery Division), Henderson J: the original orders were discharged by agreement; indemnity costs were ordered, set off against the judgment debt, and a narrower injunction over Spanish assets was granted.