Dinglis Properties Ltd & Anor v Dinglis Management Litd & Ors

A freezing order requires a good arguable case, a real risk that the defendant will dissipate assets otherwise than in the ordinary course of business so as to fall below the relevant limit, and it must be just and convenient to grant the order. A good arguable case does not itself establish a propensity to dissipate. Pleaded facts may provide evidence of such a propensity where dishonesty is the proper inference, but the court must consider evidence which rebuts that inference and whether the assets can in practice be dissipated. Applications to discharge for non-disclosure should be dealt with concisely and proportionately. Serious failure to make full and fair disclosure concerning dissipation may independently justify discharge.

The claimants obtained a without-notice freezing order against the defendants, restraining dealings which would reduce their assets below £4 million. The defendants accepted that the claimants had a good arguable case on the pleaded merits, but applied to discharge the order on the grounds that there was no real risk of dissipation and that the claimants had failed to make full and fair disclosure.

The dispute concerned alleged failures by a property management company to account for rents, alleged breaches of directors’ duties, knowing receipt and repayment of money. The central issues were whether the evidence established a propensity and ability to dissipate assets, and whether material non-disclosure independently required discharge.

1. Requirements for a freezing order. The claimant had to establish a good arguable case, a real rather than fanciful risk that the defendant would dissipate assets otherwise than in the ordinary course of business below the court’s financial limit, and that the order was just and convenient. The risk required solid evidence, although it need not amount to a probability.
2. Effect of the merits admission. The defendants’ admission of a good arguable case did not amount to an admission that the pleaded facts were true or dishonest. Where the pleaded facts supported the proper inference of dishonesty, they could provide evidence of propensity to dissipate as well as support the merits. If they were consistent with innocent breach, further evidence was required. Any inference had to be assessed against countervailing evidence.
3. Propensity and ability. The withdrawal of the alleged evidence of actual dissipation substantially weakened the case on propensity. The defendants’ conduct since 2012 rebutted any inference which might otherwise have arisen. Their minority shareholdings could not in practice be used to dissipate their economic value below the £4 million threshold, given the structure of the companies and the practical limits on extracting value.
4. Non-disclosure. The application was dealt with concisely, consistently with the guidance in Kazakhstan Kagazy plc v Arip [2014] EWCA Civ 381. The duty extended to facts material to the without-notice decision, even if not determinative. The claimants had seriously failed to disclose matters bearing on dissipation, including payments made to the claimants, a legitimate payment to Apollo, and an unlimited guarantee given by Paul.
5. The freezing order was discharged because there was no serious risk of dissipation below £4 million. Independently, it would have been discharged for the serious and culpable failure to make full and fair disclosure concerning that risk. Costs and consequential relief were left for further argument.

First-instance decision. The judgment records that the freezing order had been made without notice by Asplin J on 10 July 2015.