Stephens McBride Piercy Taylor Ltd v McBride

Allegations of serious and systematic fraud may justify an inference that there is a real risk of dissipation of assets for the purposes of a freezing injunction. The court must scrutinise whether the particular dishonest conduct supports that inference, applying common sense to its relevance and circumstances. Where a freezing injunction has been continued by consent until further order, the respondent generally must show a material change in circumstances, newly discovered facts, or another recognised basis for reopening the matter. Delay and non-disclosure are relevant, but do not automatically require discharge. An injunction may remain in place where the evidence, taken as a whole, establishes a real risk of dissipation.

The claimant sought to recover approximately £1.5 million from its former director and employee. It alleged that he had dishonestly overvalued properties, exposing the claimant to substantial professional negligence claims which its insurers had settled.

A freezing injunction was granted without notice and later continued by consent. The defendant applied to discharge it, arguing that there was insufficient evidence of a real risk of dissipation, that the claimant had delayed and failed to make full disclosure, and that the injunction could be reconsidered because there had been no inter partes hearing.

The central issues were whether a material change in circumstances was required and whether the evidence justified continuing the injunction.

1. The application was dismissed. The allegations of serious and systematic fraud were not so flimsy that they could be struck out. They were capable of supporting an inference that there was a real risk that the defendant would dissipate his assets.
2. The court adopted the caution in Thane Investments Ltd v Tomlinson [2003] EWCA Civ 1272. Alleged dishonesty does not automatically establish risk of dissipation. The court must scrutinise carefully whether the particular conduct justifies that inference. Here, the repeated alleged overvaluations, a similar later claim, dealings with trust property, and an inaccurate asset declaration collectively reinforced the risk.
3. The claimant’s delay and omissions at the without-notice hearing were relevant. The claimant should have disclosed the earlier instruction of an expert surveyor and the fact that dishonesty had been alleged against the defendant in 2010. Those omissions were regrettable but not sufficiently serious to justify discharge. The court would have discharged the injunction for material non-disclosure notwithstanding delay or consent.
4. Following Chanel v FN Woolwoth & Co Ltd [1981] 1 WLR 485, an order continued by consent until further order may be discharged only where there has been a material change in circumstances, newly discovered facts which could not reasonably have been known earlier, or another sufficient basis for reopening the matter. The absence of an earlier inter partes hearing did not alter that principle. Ryan v Friction Dynamics Ltd [2001] CP Rep 75 illustrated the distinction between a change sufficient to justify making an application and a change sufficient to obtain discharge.
5. No material change in circumstances had been shown. Independently, the evidence then before the court established a real risk of dissipation. The freezing injunction therefore remained in force.