Michael Wilson & "Partners" Ltd v Emmott

Whether an ordinary-course-of-business exception should be included in a post-judgment freezing injunction depends on all the circumstances. Such an exception will sometimes, and perhaps usually, be inappropriate, but its exclusion is neither a presumption nor a remedy of last resort.

The court should consider the injunction’s scope, the assets frozen and the effect on the judgment debtor’s business. More extensive relief requires stronger justification. A freezing injunction must facilitate execution by preserving assets against dissipation. The pressure it places on a debtor to satisfy an enforceable judgment does not, without more, make it an illegitimate means of coercion.

An arbitration award required Michael Wilson & “Partners” Ltd (“MWP”) to pay substantial sums to Mr Emmott. After MWP failed to pay, a freezing injunction was granted in aid of enforcement. It initially permitted MWP to deal with assets in the ordinary and proper course of business.

Following the dismissal of MWP’s challenges to the award and the entry of an enforceable judgment, the Commercial Court removed that exception. The judge found that MWP could pay but would not pay, that the risk of dissipation remained, and that MWP had obstructed enforcement.

MWP appealed against the removal of the exception. The principal issue was the proper approach to an ordinary-course-of-business exception in a post-judgment freezing injunction and whether its removal on these facts was a legitimate aid to execution.

1. Appeal dismissed unanimously. Gross LJ gave the principal judgment. Peter Jackson LJ agreed for additional reasons, and Rose LJ agreed with both judgments. The Commercial Court had been entitled, and was right, to remove the ordinary-course-of-business exception from the freezing injunction.

2. A post-judgment freezing injunction facilitates execution by guarding against dissipation between judgment and the effective operation of enforcement processes. It is not itself execution and cannot confer a preference in insolvency. Post-judgment freezing injunctions can no longer be described as rare.

3. The additional pressure which such an injunction places on a debtor to honour an enforceable judgment is not, without more, illegitimate or in terrorem. The objection succeeds where the injunction is used to freeze an asset that would have no value in execution merely to compel payment, as illustrated by Camdex International Ltd v Bank of Zambia (No 2).

4. The presence of a judgment does not automatically make the Angel Bell exception inappropriate. The broad observations in Soinco SACI v Nookuznetsk Aluminium Plant and Masri v Consolidated Contractors went too far. The correct guidance from Mobile Telesystems Finance SA v Nomihold Securities Inc [2011] EWCA Civ 1040 is that it will sometimes, and perhaps usually, be inappropriate to include the exception in a post-judgment freezing injunction.

5. The question is a fact-specific exercise of discretion, not a presumption or a remedy of last resort. The court should consider the injunction’s ambit, the assets frozen and the effect on the debtor’s business. The more draconian the relief, the greater the justification required. The approach is not confined to bank balances.

6. The unchallenged findings established a continuing risk of dissipation, an ability but determined refusal to pay, diversion of receivables to impede enforcement, hopeless appeals, misleading accounts of those appeals and breaches of the injunction. Those matters made this a paradigm case for removing the exception.

7. A judgment creditor may choose where to enforce and owes no duty to proceed in one jurisdiction rather than another. MWP could obtain discharge by paying the secured sum into court. Removal of the general exception also did not prevent an application for permission to make a particular business payment where specific justification existed.

1. Court of Appeal (Civil Division): Dismissed MWP’s appeal and upheld the removal of the ordinary-course-of-business exception from the post-judgment freezing injunction.

2. Commercial Court: Sir Jeremy Cooke varied the freezing injunction on 13 July 2017 by removing the exception which had permitted dealings in the ordinary and proper course of business.