Ivy Technology v Martin & Ors

For interim freezing relief, a claimant must establish both a good arguable case and a real risk, supported by solid evidence, that a future judgment will be defeated by unjustified dissipation. A good arguable case involving dishonesty does not itself establish that risk. The court must assess each respondent separately and consider the nature, location and liquidity of assets, the respondent’s conduct, and whether alleged dishonesty points to a current risk. A notification injunction is subject to the same test. Material failures of full and frank disclosure may justify discharge of without notice relief, although the court retains a discretion in the interests of justice. Here the merits threshold was met against one respondent, but the evidential threshold for dissipation was not.

Ivy sought continuation of a without notice freezing order against the defendants and Mrs Lisa Martin following the sale of the online gambling business 21Bet. The order had been granted by Knowles J on 29 July 2019. Mr Bell applied for discharge, arguing that there was no good arguable case against him, no real risk of dissipation, and material non-disclosure or misrepresentation at the without notice hearing.

The court considered Ivy’s conspiracy and procuring-breach allegations, the evidence of risk of dissipation, alleged defects in Ivy’s disclosure, and Ivy’s fallback request for a notification injunction. The First and Third Defendants did not appear.

Disposition and merits

The freezing order was discharged as against Mr Bell. Ivy had a good arguable case on parts of its conspiracy and procuring-breach claims, but it failed to show solid evidence of a real risk of unjustified dissipation.

1. Good arguable case. The applicable threshold was that stated in Ninemia Maritime v Trave Schiffartgesellschaft, The “Niedersachsen” [1983] Lloyd’s Rep 600. Conspiracy allegations, especially allegations of dishonesty, had to be clearly pleaded with adequate particularity and supported by a high standard of proof. The court found it arguable that Mr Bell had participated in a common design to make misrepresentations and to breach the non-competition covenant. An agreement to make negligent or statutory misrepresentations was also arguable at this stage. The court applied the principles in Marathon Asset Management LLP v. Seddon [2017] IRLR 503.
2. Procuring breach. The essential elements were knowledge of the contract, intention to induce breach, and actual breach, as stated in Meretz Investments NV v ACP Ltd [2008] Ch 244. The defendant had to realise that the procured act would constitute a breach, rather than merely ought reasonably to have realised it, following OBG Ltd. v. Allan [2007] UKHL 21.
3. Risk of dissipation. The claimant had to establish objectively a real risk that a future judgment would not be met because assets would be unjustifiably concealed or transferred. The risk had to be supported by solid evidence and established separately against each respondent. Alleged dishonesty was insufficient without evidence linking it to a present risk of dissipation. The court considered Mr Bell’s substantial disclosed assets, the absence of actual dissipation or changed behaviour, the age and unrelated nature of prior alleged criminal conduct, and the lack of a complex corporate structure comparable to that in VTB Capital plc v Nutritek International Corp [2012] EWCA Civ 808.
4. Non-disclosure and fallback relief. The court stated, obiter, that Ivy’s cumulative errors in its without notice presentation would have justified discharge, even if inadvertent. The duty of full and frank disclosure is objective and requires proper inquiries. The court retains a discretion after breach, but a strong merits case is not an excuse. A notification injunction is a form of freezing order and requires the same evidential showing.

Knowles J granted a without notice freezing order on 29 July 2019. On the return date, the present judgment determined that it should be discharged as against Mr Bell.