Vneshprombank LLC v Bedzhamov & Ors

A freezing order does not prevent a respondent from using his own assets in the ordinary and proper course of business where the payment is commercially reasonable and no proprietary or tracing claim applies to those assets. The court should assess whether the proposed expenditure is bona fide and connected with the respondent’s business interests. It should not second-guess a bona fide commercial decision merely because the payment is substantial or disputed. A payment may qualify even where the respondent has no direct legal obligation to make it, provided it is properly directed to protecting or advancing his commercial interests.

The first defendant applied for confirmation that a worldwide freezing order permitted payment of £341,680 to Fenton Whelan from frozen funds held in solicitors’ client account. The payment comprised third-party disbursements and fees connected with planning and development work concerning property at Belgrave Square.

The claimant alleged that the proposed payment was part of a scheme to extract money from assets subject to the order. The defendant contended that payment was commercially sensible because Fenton Whelan could impede completion of a section 106 agreement and thereby jeopardise the property’s planning permission and value. The central issue was whether the payment fell within the freezing order’s exception for dealings in the ordinary and proper course of business.

1. Application granted. The worldwide freezing order permitted the first defendant’s solicitors to pay £341,680 to Fenton Whelan from the proceeds of sale held in the client account.
2. The relevant exception did not impose a £50,000 limit on permissible business expenditure. It required 48 hours’ notice for transactions exceeding that amount. The question was whether the payment was in the ordinary and proper course of the defendant’s business.
3. The payment was commercially reasonable. Fenton Whelan had incurred disbursements and earned fees in connection with the development. On the evidence, it had practical leverage over completion of the section 106 agreement and preservation of the conditional planning permission. Paying the fees could protect or enhance the value of the defendant’s property.
4. The absence of a direct legal obligation to pay did not prevent the expenditure from being ordinary and proper. The payment represented a sensible commercial decision by a property developer using his own assets, where no proprietary or tracing claim was asserted against them.
5. The claimant’s allegations of conspiracy, fraud and a backhander were unsupported on the interlocutory evidence. The court was not prepared to reject the evidence of Fenton Whelan’s witness or infer dishonesty merely from disputed correspondence and background conduct.
6. Having regard to Michael Wilson & Partners Ltd v Emmott and others [2015] EWCA Civ 1028 and Koza Limited v Ipek and others [2019] EWCA Civ 891, the court should not second-guess a bona fide commercial decision to incur expenditure in the company’s or respondent’s interests.