Al-Jabe & Ors vSalfiti & Anor

On an application to continue or re-grant ex parte freezing and receiver orders, the applicant must provide full and frank disclosure of material facts and present the case fairly. A substantial breach strongly favours setting the order aside, even if relief might otherwise have been justified. A freezing order also requires a good arguable case and solid evidence of a real risk of unjustified dissipation by each defendant separately. Alleged dishonesty does not automatically establish that risk, and mere assertion is insufficient.

The claimants obtained, without notice, a worldwide freezing order limited to £3.5 million and an order restraining the defendants from appointing a receiver over the claimant’s property. The underlying allegations concerned fraudulent and excessive loans, misappropriation and an alleged connection between a solicitor and the lender.

On the return date, the defendants sought discharge for material non-disclosure, failure to establish a good arguable case and failure to establish a real risk of dissipation. The claimant had materially revised several matters previously presented to the judge, including ownership, the loan signature, the lender’s identity and the alleged overpayment.

The court discharged both orders against both defendants and refused to continue or re-grant either order.

1. Full and frank disclosure. An applicant at an ex parte hearing must disclose all material facts and identify specifically the crucial points for and against the application. The duty binds both the applicant and the legal representatives. It includes drawing attention to weaknesses in the case and investigating assertions before the hearing. The duty is breached by material non-disclosure even without deliberate wrongdoing.
2. The claimant’s presentation was materially and substantially one-sided. It omitted or misstated matters bearing directly on ownership, the loan signature, the lender’s identity, the alleged £3 million overpayment, the solicitor’s dismissal and the cross-undertaking in damages. The breaches were sufficiently serious and culpable to require discharge and refusal of fresh relief, irrespective of the other grounds.
3. The consequences of non-disclosure are governed by the interests of justice, including the importance of the omitted matters, the nature and degree of culpability, the adverse consequences of losing protection and the public interest in enforcing the disclosure duty. A substantial breach strongly favours setting aside the order and withholding its renewal.
4. For the freezing order, the claimants had to establish a good arguable case and a real risk of unjustified dissipation, supported by solid evidence and assessed separately for each defendant. Dishonesty allegations do not automatically establish dissipation risk. The claimants established neither requirement, so the balance of convenience did not require consideration.
5. The receiver order also had to be discharged because important allegations concerning the validity and provenance of the security had been abandoned or unsupported by sufficient evidence.

First-instance decision on the adjourned return date of ex parte orders made by Mr Justice Arnold on 10 September 2018. No later appellate history is stated.