Bord na Móna Horticulture Limited v Stephen Washington & Ors

A freezing injunction or related undertaking requires solid, objectively assessed evidence of a real risk that a future judgment will not be met because of unjustifiable dissipation of assets. For an individual, ordinary dealings in the course of personal and family life are not unjustifiable dissipation. Allegations of fraud may support an inference of risk, but they do not automatically establish it. The court must assess all the circumstances, including the nature of the alleged wrongdoing, the defendant’s connections, financial affairs and conduct. A freezing order is not security for a claim. Where no sufficient risk is shown, undertakings given in lieu of the injunction should be discharged.

The claimant alleged that the defendants had concealed regulatory non-compliance in the operation and sale of a composting business. It obtained without-notice freezing relief against the first defendant, which was later replaced by undertakings given by consent. The claim was subsequently amended so that it no longer sought rescission of the sale agreement, but pursued damages and contractual claims.

The first defendant applied to be released from the undertakings. He argued that there had never been a sufficient risk of unjustifiable dissipation, that the claimant had failed in its duty of full and frank disclosure, and that the claimant’s conduct in policing the undertakings was oppressive. The central issue was whether the evidence established an objectively assessed real risk that a future judgment would be defeated by unjustifiable dissipation.

1. Application granted. The first defendant was discharged from his undertakings. The claimant had not established solid evidence of a real risk, judged objectively, that a future judgment would not be met because of unjustifiable dissipation of assets.
2. For an individual, the relevant qualification to ordinary dealings is the ordinary conduct of personal and financial affairs, including dealings with family. The court must maintain close control over a remedy which prohibits dealing with assets. Allegations of systemic fraud, without more, did not establish the necessary risk in this case.
3. The absence of any international or overseas connection, the absence of financial irregularity or misappropriation, the defendant’s strong family and local ties, and his conduct after completion were material countervailing circumstances. The fact that the proceedings had ceased to include a claim for rescission was also significant: the assets were the defendant’s own assets, while insolvency legislation provided mechanisms addressing certain transactions if judgment were later obtained.
4. The court accepted that, where material exists from which a real risk may be inferred, failure to provide or continue an undertaking may in appropriate circumstances support an adverse inference. That stage was not reached because the claimant had not first established material capable of supporting the necessary inference.
5. The full and frank disclosure ground failed. The court was not satisfied that there had been material non-disclosure or misrepresentation, nor that the order would not have been made at the without-notice stage even if the alleged matters had been disclosed. The conduct ground was not a free-standing basis for discharge.
6. Had a real risk been established, the court would have preferred undertakings permitting dealings with the claimant’s prior written agreement, not to be unreasonably withheld or delayed, and would have allowed specified family expenditure. The freezing jurisdiction is preventive, not security for the claim.
7. The first defendant recovered the costs of the original freezing injunction and its variations, together with two-thirds of the costs of the discharge application. An interim payment of £85,000 was ordered, with the balance subject to detailed assessment.