Metropolitan Housing Trust Ltd v Tominey

A freezing order requires both a good arguable case and a real risk that assets will be dissipated or secreted. Allegations of dishonesty, including bribery, do not automatically establish that risk. The court must assess the particular conduct against all the known facts. Dishonest conduct such as fabricating documents may support an inference, but other misconduct may carry little weight. A freezing order, including a limited order, should be granted only where reasonably necessary to protect the administration of justice. Costs ordinarily follow the event on the standard basis unless there is sufficient reason for indemnity costs. Payment on account is discretionary and must be determined fairly in all the circumstances.

The claimant, a housing association, alleged that its former procurement director and associated parties had received bribes. It alleged that payments made by the fourth defendant, Business Phones and Networks Ltd, to an intermediary were bribes or were used to fund bribes. The fourth defendant’s shareholders and directors were also respondents.

The application concerned whether freezing orders should continue against those defendants. The court accepted that there was a good arguable case, but considered whether there was a real risk of dissipation or secretion of assets. It also dealt with costs, payment on account, permission to appeal and directions for the continuation of the proceedings.

1. Freezing relief. The court accepted that the claimant had a good arguable case, but held that the essential further requirement was a real risk of dissipation or secretion of assets.
2. Following Madoff Securities International Ltd v Raven and its approval by the Court of Appeal in VTB Capital v Nutritek International, a mere unfocused allegation of dishonesty is insufficient. The court may infer risk from the particular dishonest conduct alleged against particular respondents. A bribe may not, without more, justify that inference. Alleged fabrication of agreements could be relevant, but the evidence had to be assessed with the other circumstances.
3. The defendants’ assets were held in a straightforward manner, substantial assets remained within the jurisdiction, disclosure had been made promptly, and no demonstrable dissipation had occurred despite advance knowledge of the allegations. The allegation concerning false VAT invoices carried relatively little weight. In the round, no real risk was established.
4. A freezing order, even in limited form, should be granted only where reasonably necessary to protect the process of justice. The existing orders against the BPN defendants therefore could not continue.
5. The defendants were awarded their costs on the standard basis. The matters relied on did not justify indemnity costs. Applying the approach discussed in Picnic at Ascot v Kalus Derigs, the court treated the disputed costs issue separately from the injunction costs and made the same costs order against the relevant defendants.
6. The court ordered a payment on account of costs of £85,000 plus VAT, with detailed assessment deferred. Payment on account was discretionary and had to reflect fairness, the parties’ circumstances and the pay-as-you-go approach to interlocutory costs. Permission to appeal the freezing-order decision was refused, appeals in discretionary freezing-order matters being rare.

First-instance decision. No prior appellate decision is stated in the judgment.