Hashem v Shayif & Anor

In managing an outstanding inquiry after earlier financial proceedings, the court may confine the inquiry to the issue actually left unresolved and prevent a general reopening of decided matters. An application to discharge an interim injunction should be dealt with fairly, allowing the affected party a proper opportunity to respond. Where a freezing injunction does not support a proprietary claim, the restrained defendant may in principle use its own assets to meet ordinary business expenses, debts and reasonable legal costs, including by charging property, subject to the court’s control. The extent of any permitted borrowing remains fact-sensitive and should be limited to what is presently required.

The judgment concerned two consolidated proceedings arising from earlier financial litigation between Faiza Ben Hashem, Abdulhadi Ali Shayif and Radfan Ltd, together with claims involving members of the Shayif family. Earlier orders left an inquiry into the amount of any outstanding loan account and imposed an injunction restricting borrowing against 17 Kensington Heights.

On 14 December 2009 the court addressed directions for the loan account inquiry, Radfan’s application to discharge the injunction, and its alternative application to increase the permitted secured borrowing. The central issues were the proper scope and timing of the inquiry, procedural fairness in dealing with the discharge application, and the extent to which the company could borrow against its property to meet expenses and legal costs.

1. Loan account inquiry. The inquiry was directed to the amount of the outstanding loan account, if any. It was not an opportunity to reopen or reargue issues decided at the original trial. The judge directed that the inquiry be heard by another judge on the first available date on or after 15 March 2010. Any claim concerning personal property had to be advanced by a Scott Schedule by 8 January 2010, failing which it would be barred from pursuit at the final hearing.
2. Discharge application. The application to discharge the injunction was adjourned. The wife had to be given a proper opportunity to consider and answer an application made only days before the hearing, particularly where the injunction had been in place for more than three years. The court also noted that the balance of convenience did not obviously require discharge: the injunction protected one of only two assets within the jurisdiction, and the primary delay had resulted from the court’s inability to accommodate the earlier fixture. The adjourned application was directed to be listed within the specified window. The court drew attention to R (Casey) v Restormel Borough Council [2007] EWHC 2554 (Admin) concerning compliance with a judicial direction fixing such a listing window.
3. Permitted borrowing. The principle had already been decided between the parties. A defendant subject to a freezing injunction should not be deprived of professional legal representation. Where there was no proprietary claim, the defendant could in principle use its own assets to defend itself and pay debts generally as they fell due, including by charging property. The company’s evidence justified a further borrowing allowance, but procedural fairness required only a temporary increase sufficient to meet liabilities exposing it to irretrievable loss before the adjourned application. The permitted borrowing was therefore increased from £177,000 to £200,000.
4. Costs. The costs of the directions issue were made costs in the cause. The costs of the injunction application were reserved to the judge hearing the adjourned application. The costs of the hearing were apportioned equally between those two matters.

The judgment records that permission to appeal from earlier substantive and costs findings was dismissed by the Court of Appeal in Hashem v Shayif and ors [2009] EWCA Civ 984. That decision concerned the earlier proceedings and was not an appeal from the present directions and injunction orders.