St Vincent European General Partner Ltd v Robinson & Ors (Rev 1)

A freezing injunction requires a good arguable case, solid evidence of a real risk of unjustifiable dissipation, and a remedy that is just and convenient. A proposed contractual duty to co-operate with redemption will not be implied where the general law already provides a redemption remedy and the strict requirements for implication are unmet. The reflective loss principle bars recovery by a shareholder for loss merely reflecting loss suffered by the company, subject to established exceptions. An applicant seeking relief without notice must investigate and fairly present both the facts and the legal weaknesses in its case, including likely defences. Material non-disclosure may justify setting aside the order, particularly where the application was made after substantial delay.

St Vincent sought continuation of a worldwide freezing order made without notice against Bruce Robinson, Winterbourne Pte Ltd and PPL Winterbourne Ltd. The order had been obtained in support of claims arising from a share pledge securing debts owed by St Vincent to creditors. St Vincent alleged that the defendants had repudiated the pledge by refusing to accept a proposed repayment arrangement and had stripped value from the pledged company by transferring its subsidiary’s shares for nominal consideration.

The defendants challenged the existence of a good arguable case, the alleged risk of dissipation, the proportionality of the relief and St Vincent’s disclosure on the without notice application. They also applied to set aside the order.

1. The applications. The court dismissed the Continuation Application, set aside the worldwide freezing order and held that the Cross-Examination Application did not arise.
2. Redemption and tender. St Vincent had not made an actual tender of money. Its communications instead contemplated a wider commercial agreement requiring negotiation, including the transfer of control and settlement of related matters. The creditors were entitled to refuse to negotiate. Even if St Vincent had sought simple redemption, no term requiring co-operation was arguable under the strict principles reaffirmed in Marks & Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited [2015] UKSC 72. St Vincent had also not accepted any alleged repudiation.
3. Reflective loss. The alleged loss from stripping HHL’s assets was primarily loss suffered by HHL. The rule in Prudential v Newman [1982] Ch 202, approved in Johnson v Gore-Wood & Co (a firm) [2002] AC 1, prevented St Vincent recovering loss merely reflecting the company’s loss where the company had its own cause of action. The possible exception identified in Giles v Rhind [2003] Ch 618 did not assist, since St Vincent had previously litigated and had not shown why a derivative claim could not have been brought.
4. Risk and discretion. Although there had once been evidence supporting a possible risk of dissipation, the application was made years after the relevant events and after prior proceedings and advice that it was out of time. The delay, absence of identifiable assets and lack of concrete evidence meant that no real risk was established. The relief was also disproportionate and not just and convenient.
5. Non-disclosure. The without notice application failed to disclose or analyse the serious difficulties concerning tender, repudiation and reflective loss. Under the principles summarised in Alliance Bank v Zhunus [2015] EWHC 714 (Comm), the applicant had to investigate, identify likely defences and present the case fairly. The omissions were material and the order should not have been granted.

First-instance decision. The judgment does not state any prior appellate decision in this litigation.