Patley Wood Farm LLP v Brake & Anor

Section 44 of the Arbitration Act 1996 gives the court a broad jurisdiction to grant interim measures in support of arbitration. The court must ask first whether the proposed relief falls within that jurisdiction and secondly whether it is appropriate to exercise the power in the circumstances. Relief may be directed towards preserving or enhancing the value of partnership assets, including assets whose ownership is disputed. It may include restrictions on entering into or completing a purchase, requirements to provide security, disclosure obligations and undertakings applying reciprocally to the parties. The court may impose such conditions where necessary to address risks arising from the conduct of the litigation, provided the order is suitably framed.

The claimant sought orders under section 44 of the Arbitration Act 1996 in support of an ongoing arbitration concerning West Axnoller Farm and a cottage. The proposed orders were intended to preserve or enhance the value of the property, regulate communications and disclosure, and control the defendants’ ability to agree to or complete a purchase of the farm.

The ownership and status of the cottage were subject to separate proprietary-estoppel proceedings. The court therefore considered both its jurisdiction to grant the proposed relief and whether the relief should be granted in the revised form sought.

1. The application under section 44 of the Arbitration Act 1996 was granted, with the proposed order recast in the revised form described by the court.

2. The court’s task involved two questions: whether it had jurisdiction to make the orders, in substance if not in their precise form, and whether it was appropriate to exercise that jurisdiction in the circumstances.

3. Orders preserving or enhancing the sale value of the farm and cottage fell within section 44. That was so whether the cottage was ultimately found to be a partnership asset or instead belonged to the defendants, because its simultaneous sale could increase the price obtained for the farm.

4. Restrictions requiring the defendants to obtain the arbitrator’s consent before entering into or carrying out an agreement to purchase the farm were appropriate. Before entering into a binding agreement, they were required either to pay the frozen sum of £882,000 into court or provide acceptable security, and to pay or secure the relevant High Court costs and arbitration fee.

5. The wider order was justified by the difficulties in the hard-fought litigation, including breaches of a freezing order and the defendants’ indebtedness. The court considered it appropriate to require the defendants to explain to the arbitrator how any purchase would be funded without breach of the relevant orders.

6. Comparable restrictions and disclosure obligations were to apply to the claimant LLP where appropriate. A penal notice was attached to the order. The claimant received its costs of the application, subject to the reductions and exclusions specified by the court.