Wells v Chave & Ors

A freezing order may be continued where the applicant has a good arguable case, solid evidence of a real risk that assets will be dissipated so as to frustrate judgment, and it is just and convenient to grant relief. Allegations of dishonesty do not automatically establish that risk. The court must examine the particular allegations and the evidence concerning the defendant’s dealings with assets.

Material non-disclosure on a without-notice application normally requires discharge, but the court retains a discretion to continue or re-grant relief. That discretion must be exercised sparingly, proportionately, and having regard to the seriousness and significance of the breach and the evidence available at the later hearing.

Philip Chave sought continuation until trial of a freezing order made against Clive Wells and, in a limited form, Tina Wells. The order had been granted without notice by Sales J on 15 April 2014 and continued by Hildyard J. Chave relied on counterclaims for money allegedly advanced, liabilities connected with ReAgg Ltd and dealings with equipment.

Wells and Mrs Wells argued that there was no risk of dissipation, that Chave had failed to make full and frank disclosure, and that Chave could not meet his cross-undertaking. Mrs Wells also sought restriction of the order to assets shown to belong beneficially to Wells. Chave additionally sought security for costs and further disclosure.

1. Freezing order test. The court continued the order against Mr Wells. Chave had a good arguable case, and the evidence as a whole established a real risk that Wells would dissipate assets to frustrate a judgment. The governing test was that stated in Ninemia Maritime Corp v Trave Schiffartgesellschaft GmbH [1983] 1 WLR 1412. A risk that assets would be hidden or otherwise dealt with so as to make judgment nugatory was sufficient.
2. Dishonesty and dissipation. Dishonesty is relevant but does not, without more, establish a risk of dissipation. The court must scrutinise the particular allegations and the circumstances of the defendant. The approach in Thane Investments v Tomlinson [2003] EWCA Civ 1272, as analysed in Jarvis Field Press v Chelton [2003] EWHC 2674 (Ch), was accepted. Here, evidence of dishonest conduct, lack of transparency, and a proposal to convert property into cash justified continuation.
3. Non-disclosure. Chave had materially misstated the position concerning Wells’s disclosure. Applying Brink’s Mat Ltd v Elcombe [1988] 1 WLR 1350 and Arena Corp Ltd v Schroeder [2003] EWHC 1089 (Ch), the breach was not innocent. Nevertheless, it was relatively limited in the context of the case, and it would have been disproportionate to discharge or refuse continuation of the order in light of the further evidence.
4. Order against Mrs Wells. The order against Mrs Wells was restricted to the Swanage Property. The evidence did not establish that the Hansart Way property belonged solely to Mr Wells.
5. Other applications. The application for security for costs was refused as improperly prepared and unsupported by the necessary evidence. Further disclosure of assets was left for further argument.

This was a first-instance decision on interlocutory applications. A freezing order was granted by Sales J on 15 April 2014 and continued by Hildyard J on 25 and 28 April 2014. Master Bragge dismissed Chave’s strike-out and summary-judgment application on 30 May 2014. Mr Justice Arnold continued the freezing order until trial, restricted the order against Mrs Wells to the Swanage Property, refused security for costs, and reserved further argument on asset disclosure.