Ras Al Khaimah Investment Authority & Ors v Bestfort Development Llp & Ors

A freezing injunction requires grounds for believing that the defendant has assets on which the order will bite. Apparent wealth alone is insufficient, although the applicant need not identify each asset precisely. The court must examine separately whether each company or other legal person has relevant assets.

An established risk of dissipation is not negated merely by compliance with an interim costs order. Delay remains relevant, but its effect depends on the circumstances and the actual risk. When relief supports foreign proceedings, the order may be restricted geographically to avoid conflicting with decisions of the foreign court.

The applicants pursued claims in Georgia and the United Arab Emirates alleging that a former manager and associated English limited liability partnerships had participated in the diversion of investment funds. They applied under section 25 of the Civil Jurisdiction and Judgments Act 1982 for worldwide freezing orders and the appointment of receivers.

Rose J refused relief in [2015] EWHC 3383 (Ch). Although she found good arguable claims and evidence capable of showing dissipation, she considered the evidence of assets insufficient, treated compliance with a costs order and delay as countervailing matters, and found relief inexpedient because of proceedings and orders in Georgia.

The central issues were the evidential threshold for the existence of assets, whether that threshold was met for each respondent, whether the risk of dissipation remained established, and whether relief would improperly conflict with the Georgian proceedings.

1. Appeal allowed in part. A claimant seeking a freezing injunction must establish grounds for believing that the defendant has assets which the order will catch. A bare assertion that an apparently wealthy defendant must possess assets somewhere is insufficient. Precise identification is unnecessary because a claimant cannot invariably know the defendant’s holdings. The threshold is lower than proof that the existence of assets is likely.

2. The inquiry must be conducted separately for each company or limited liability partnership. Separate legal personality prevents the court from assuming that every entity controlled by a common individual possesses assets merely because funds could be transferred among them. The possible movement of funds may bear on dissipation, but it does not establish the prior existence of assets in each entity.

3. The evidence supplied grounds for believing that the fourth, eighth and fourteenth respondents had, or had recently had, substantial assets. Recent share-sale proceeds and contractual payment arrangements justified the inference, while the respondents gave no convincing evidence that an order would be futile. The evidence did not cross the threshold for the remaining respondents. Proportionality was relevant, particularly where enforcement costs might rapidly exceed the assets available.

4. The judge was entitled to find a risk of dissipation, but erred in treating compliance with an interim costs order as negating that risk. A party may comply with court orders precisely because its bona fides are under scrutiny. Delay may affect the assessment, but the relevant question is the existence of the risk rather than the claimant’s subjective apprehension. The delay here did not logically counter the risk already found.

5. Under section 25 of the Civil Jurisdiction and Judgments Act 1982, relief supporting foreign proceedings may be refused where the absence of independent domestic jurisdiction makes it inexpedient. An unrestricted order risked conflicting with the Georgian court’s treatment of assets in Georgia. That difficulty was removed by excluding Georgian assets.

6. Worldwide freezing injunctions were therefore ordered against the fourth, eighth and fourteenth respondents, except in respect of assets in Georgia. Permission to appeal concerning receivership was granted for those respondents, and that issue was remitted to the judge. Henderson LJ and Sir Patrick Elias agreed.

1. Court of Appeal (Civil Division): In [2017] EWCA Civ 1014, the court allowed the appeal in part, granted geographically limited freezing relief against three respondents, and remitted the receivership issue.
2. High Court, Chancery Division: Rose J refused the freezing injunctions and receivership applications in [2015] EWHC 3383 (Ch).