Lemos & Ors v Blue Diamond Investment Corporation & Ors

On applications concerning a disputed chain of property contracts, the court may preserve the position by injunction where there is a serious issue to be tried and damages are inadequate. The court must also assess the claimant’s cross-undertaking in damages and, where necessary, the balance of convenience.

Service out requires an applicable jurisdictional gateway, a good arguable case and England being the proper forum. English property and consolidated related proceedings may provide particularly strong forum factors. Freezing and prohibitory relief is justified where there is a real risk of dissipation and the relief preserves assets pending trial.

The court dealt with three connected applications arising from contracts for the sale and resale of a London property. The downstream purchaser sought protection concerning the deposit and any notice to complete. Shareholders of the owner sought service out, interim restraints over assets and related injunctive relief. A purchaser also sought continuation of a confidentiality injunction concerning the resale contract.

The applications raised issues concerning interim injunctions, jurisdiction, service out, forum, asset dissipation, confidentiality and consolidation.

1. Interim protection. The court granted the downstream purchaser an injunction concerning the deposit and service of a completion notice. There was a serious issue to be tried concerning the owner’s capacity and title. The court accepted that damages might be inadequate, that the undertaking in damages was satisfactory, and that the balance of convenience favoured relief. It declined to require the purchase monies or deposits to be paid into court because the stakeholder solicitors were presumptively reliable and the injunctions adequately protected the funds [21]-[30].
2. Service out and forum. The first two defendants were domiciled in England for the purposes of Articles 63C and 4 of the Judgments Regulation 2015/2012. As against the third defendant, the claimants had a good arguable case under Gateways 2 and 3 of Practice Direction 6B. England was clearly the proper forum because the relevant properties and related litigation were in England. The fact that Liberian law would arise was a minor countervailing factor [39]-[47].
3. Freezing and proprietary relief. The court granted restraints over the principal properties and assets in the jurisdiction. There was a real risk of dissipation, and the prohibitory relief was necessary to preserve the position while the shareholder dispute was resolved. The order was amended to address the risk of transfers to the third defendant followed by removal from England [52]-[59].
4. Confidentiality and disclosure. The confidentiality injunction was continued by agreement on undertakings. The court declined at that stage to order disclosure of the resale contract, without prejudice to disclosure arising later in the consolidated proceedings [61]-[64]. The proceedings were consolidated, and costs of the relevant applications were reserved to the conclusion of the proceedings [19]-[20], [71]-[76].