Alternative Investment Solutions (General) Ltd v Valle De Uco Resort & Spa SA & Ors

A worldwide freezing order may be granted where the claimant has a good arguable case, the defendant has assets within or outside the jurisdiction, and there is a real risk that assets will be dissipated so that a judgment will go unsatisfied. The claimant need not prove an intention to dissipate assets, dishonesty or fraud, although a good arguable case of dishonesty may itself support the risk.

Material non-disclosure on a without-notice application does not automatically require discharge. The court must exercise its discretion in the light of the whole circumstances, balancing the integrity of the process against the injustice that discharge may cause. A breach affecting one defendant does not automatically infect an injunction against a separate legal person.

The claimant had lent £1 million to the first defendant, an Argentine company developing a resort, under an English-law loan agreement. The loan was unpaid and the agreed security had not been executed. The claimant obtained a worldwide freezing order without notice against the company and its directors, alleging fraudulent misrepresentations concerning planning permission and security.

The defendants applied to discharge the order. They challenged the merits of the fraud allegations, the alleged risk of dissipation, and the claimant’s disclosure of the timing of the security and evidence concerning the planning representations. The central issues were whether the order remained justified and how the court should respond to material non-disclosure.

1. Freezing order principles. The court applied the established principles under Senior Courts Act 1981, section 37 and Civil Procedure Rules 1998, rule 25.1(f). There had to be a good arguable case on the merits, assets within the jurisdiction or, where necessary, outside it, and a real risk of dissipation causing a favourable judgment to go unsatisfied. The court should assess the apparent strength and plausibility of the cases without trying the issues.
2. The claimant had a good arguable case that the directors had fraudulently misrepresented the project’s planning status and had recklessly represented that construction could begin. The evidence did not establish a good arguable case that the loan funds had been represented as confined to infrastructure expenditure. There was, however, a good arguable case that the directors had never intended to procure the agreed charge and had used delaying tactics.
3. There was a real risk of dissipation. The evidence concerning the development, the routing of investors’ money through associated entities, the directors’ international activities and the additional evidence about their business practices supported that conclusion. The absence of dissipation after proceedings were contemplated did not eliminate the risk. Contributory negligence by the claimant could not defeat a claim in deceit.
4. The injunction against the company was independently justified as both a conventional freezing injunction and a proprietary tracing injunction. There was no rule that an injunction against one legal personality was infected by a defect affecting an injunction against another.
5. Non-disclosure. The claimant had failed to disclose the timing of the security obligation and had presented materially false evidence about when a planning representation was made and relied upon. The latter was serious and could have justified setting the order aside. Nevertheless, applying the discretionary approach to non-disclosure, the court continued the order because the claimant had apologised, the defendants themselves accepted that the project had been represented as having full planning permission, and discharge would cause real injustice. The application was therefore dismissed for the time being.

First-instance decision. The judgment states that the worldwide freezing order had previously been granted without notice by Lindblom J and varied applications had been determined by Stadlen J. The present court continued the order for the time being.