Abdullah Nasser Bin Obaid & Ors v Al-Hezaimi & Ors

In construing undertakings given to the court in a consent order, the court identifies the objective meaning of the language used in its contractual and factual context. Broad words such as the defendants’ “right, title, and interest” in identified properties may include rental income derived from those properties where that income arises from the defendants’ ability to let them. An agreed mechanism for using rental income to meet property expenses may survive replacement of an injunction by court undertakings unless clearly withdrawn. Where undertakings are given to the court, the court provides the safeguard against unreasonable refusal of consent; an implied contractual duty of good faith is not necessarily required.

The claimants alleged that the defendants had misapplied approximately £35 million invested in UK property. In June 2017, the court granted proprietary and worldwide freezing injunctions. The parties later agreed a Consent Order under which those injunctions ceased to have effect and the defendants gave undertakings not to dispose of or diminish the value of specified security and properties.

Before the court were cross-applications concerning the meaning and effect of the Consent Order. The principal issue was whether rental income from the secured properties fell within the defendants’ undertaking. The court also considered whether the claimants’ consent was subject to an implied duty of good faith and whether a further injunction was required.

1. Construction of the Consent Order. The court applied the objective approach to construction, considering the language used against the relevant background. The Consent Order was made pursuant to the June injunctions, which had encompassed rental income from the properties.
2. The definition of “Security” as the defendants’ “right, title, and interest” in the listed assets was sufficiently wide to include the defendants’ ability to let the properties and receive rent. That ability derived from their rights in the relevant leasehold and freehold titles. If rental income was intended to be excluded, clear words were required. No such exclusion appeared.
3. The rental income was therefore within paragraph 2 of Schedule II. The defendants could not dispose of it without the claimants’ prior written consent. The parties’ August 2017 agreement permitting rental income to be used for property-related expenditure remained effective. It was also necessary to preserve that arrangement so that the defendants could comply with their undertaking not to diminish the value of the security. The defendants were required to provide monthly statements for the relevant accounts.
4. The defendants’ argument based on strict construction of an undertaking did not arise because the Consent Order was unambiguous. The absence of a rental protocol in the Consent Order did not imply that rental income was excluded; the prior written consent supplied the necessary mechanism.
5. The issue concerning an implied duty of good faith did not arise on the court’s conclusion about rental income. In any event, the court considered that the undertakings to the court provided the relevant safeguard. If the claimants unreasonably refused consent, the court could release the defendants from the undertaking to the necessary extent. Reliance on contractual good-faith principles was therefore unnecessary.
6. The application for a further proprietary injunction was unnecessary because rental income was already subject to the undertaking.
7. The Defendants’ Application was dismissed. The declaration sought by the claimants was made.

First-instance decision. No prior or appellate decision is stated in the judgment.