Gerald Metals SA v Timis & Ors

A freezing order requiring disclosure of assets must be construed strictly, clearly and purposefully. The disclosure obligation extends to details necessary to identify the nature and extent of the respondent’s interest in an asset, including the trust instrument defining that interest. Disclosure provisions police the injunction and help preserve assets that might otherwise be dissipated. Documents concerning how the respondent acquired an asset, such as consideration documentation, are not ordinarily required merely to police the order. Early specific disclosure requires the established threshold for that relief to be satisfied.

Gerald Metals SA sought disclosure from FPC Management Inc, the fifth defendant, which was subject to a worldwide freezing order. FPC had disclosed a beneficial interest in shares in Dorchester Overseas Limited, with legal title held by CP Nominees SA as nominee. The deed recording the assignment stated that FPC held that interest on the terms of a settlement establishing the FPC Capital Trust.

Gerald sought the trust instrument and documents recording an indemnity said to have formed part of the consideration for the transfer. The central issues were whether the freezing order required disclosure of the trust instrument and whether either category of document should be ordered as additional or advanced specific disclosure.

1. Freezing order construction. Paragraph 8(1) of the freezing order, which required disclosure of assets and their value, location and details, was to be construed strictly because breach could have penal consequences and the respondent needed to know its obligations. Strict construction did not prevent a purposeful interpretation of the word “details”.
2. Trust instrument. FPC’s asset was not sufficiently identified by stating only that it held a 100 per cent beneficial interest in the Dorchester shares. Since FPC held that interest on the terms of the FPC Capital Trust, the trust instrument was necessary to understand the nature and extent of FPC’s interest. Disclosure was therefore required for the effective policing and preservation of the injunction.
3. The court made the order either as the proper interpretation of paragraph 8(1), or, alternatively, by clarification or variation of the freezing order. The court expressly declined to determine whether FPC had previously breached the order.
4. Indemnity documents. The indemnity formed part of the consideration for FPC’s acquisition of the beneficial interest. It did not concern the relationship between FPC and CP Nominees or the assets held by FPC for purposes of policing the injunction. The request was effectively for advanced specific disclosure, and the requirements for that relief were not established.
5. The freezing order was varied in relation to the settlement of 6 August 2015, described as the FPC Capital Trust Instrument or Trust Terms Document. Disclosure was ordered by 4.00 pm on 1 December 2017. The claimant succeeded on the trust instrument issue but not the indemnity issue. Costs of £32,500 were summarily assessed in its favour, payable within 21 days.

First-instance Commercial Court application. No earlier decision in the same proceedings is stated as being under appeal.