SPL Private Finance (PF1) IC Ltd & Ors v Arch Financial Products LLP

A post-judgment freezing injunction may be granted to preserve assets pending execution, including where execution is temporarily stayed. The court must be satisfied by solid evidence that there is a real risk that the judgment will go unsatisfied through dissipation, or that enforcement will otherwise be made more difficult. Dishonesty is relevant but does not, without scrutiny, establish that risk. The court may order further asset disclosure where it assists the freezing order. It may also permit use of disclosed documents for related proceedings where there is a close connection between the proceedings and the original purpose of disclosure, and the interests of justice require it.

The claimants obtained judgment for damages and interest exceeding £24 million against Arch Financial Products LLP and Mr Farrell following findings of negligence, breach of fiduciary duty and dishonest assistance. A worldwide post-judgment freezing order had been made without notice against Mr Farrell.

On the return date, the claimants sought continuation of the order, further disclosure, permission to seek corresponding relief in Guernsey, and permission to use disclosed documents in possible proceedings under section 423 of the Insolvency Act 1986. Mr Farrell sought to set aside the freezing order. The central questions were whether there was a real risk of dissipation and whether the ancillary relief was justified.

1. Freezing order continued. The court applied the principles in Orwell Steel v Asphalt and Tarmac [1984] 1 WLR 1097: a post-judgment freezing injunction may operate in aid of execution and may coexist with ordinary execution remedies. A stay of execution pending an appeal did not remove the need for protection. It prolonged the period during which assets might need to be preserved.
2. The applicable requirement was a real risk that the judgment would go unsatisfied because assets would be dissipated or dealt with so as to make enforcement more difficult, unless the dealings were justified for normal and proper business purposes. The court applied the guidance discussed in Congentra AG v 1613 Marine SA [2008] 2 Lloyd's Law Reports, 0602 and Thame Investments v Tomlinson [2003] EWCA Civil 1272. Solid evidence was required. A finding of dishonesty did not automatically establish the risk; its relevance had to be examined.
3. That threshold was met. The trial judge's strong findings of dishonest assistance and misleading evidence, asset transfers to Mr Farrell's wife and a family trust during a period of financial difficulty and scrutiny, Mr Farrell's financial sophistication, and uncertainty about his present asset position provided compelling grounds. Delay in seeking relief did not materially undermine the inference.
4. Further disclosure was ordered. The information sought was relevant to the continuing freezing order, particularly given the unexplained reduction in apparent assets and the incomplete information about trusts. The fact that the appeal remained pending did not make the request premature.
5. Permission was granted to seek a corresponding freezing order in Guernsey. The existing order did not bind the Guernsey company or its agents, and the guidance in Dadourian Group International Inc v Simms [2006] 1 WLR 2499 was satisfied.
6. Permission was granted to use documents disclosed under the injunction for possible proceedings under section 423 of the Insolvency Act 1986. Those proceedings had a close connection with enforcement of the judgment, the proposed use was consistent with the original purpose of disclosure, and refusing permission would hinder the interests of justice.

The judgment records that Lord Justice Vos had granted a stay of execution pending Mr Farrell's application for permission to appeal. This court nevertheless continued the worldwide freezing order and granted the ancillary relief sought.