Akhmedova v Akhmedov & Ors

For interim relief under Insolvency Act 1986, section 423, it is sufficient to show a good arguable case that a transaction was made for one purpose of putting assets beyond a claimant’s reach. That purpose need not be the sole or dominant purpose. The mere consequence of asset removal is insufficient; the prohibited purpose must be inferred from the evidence.

A freezing injunction requires an appropriately strong case, solid evidence of a real risk of dissipation, and proof that relief is just and convenient. The court may order disclosure and restrain assets held through foreign trusts where there is a sufficient connection with England.

The applicant wife sought without-notice relief against two Liechtenstein trustees, alleging that approximately US$650 million of monetary assets belonging beneficially to the husband had been transferred into Liechtenstein trusts to frustrate enforcement of an English financial remedy order.

She applied for joinder, freezing injunctions, ancillary disclosure, and directions for substantive claims under section 423 of the Insolvency Act 1986 and section 37 of the Matrimonial Causes Act 1973. The central issues were whether she had a good arguable case, whether there was a real risk of dissipation, whether full and frank disclosure had been given, and whether the court could grant relief concerning foreign trustees and assets.

1. Relief granted. The wife was permitted to join Counselor and Sobaldo as respondents and obtained without-notice freezing injunctions, ancillary disclosure orders and related directions.
2. Under section 423 of the Insolvency Act 1986, the prohibited purpose need only be one purpose of the transaction. It need not be the sole or dominant purpose. A transaction is not within the section merely because it has the consequence of putting assets beyond creditors’ reach; that outcome must have been a purpose of the transaction. The timing of the transfers, the surrounding asset-protection scheme, the earlier findings concerning related entities, and the absence of any credible innocent explanation provided a solid basis for inference.
3. The court could exercise section 423 powers extraterritorially where there was a sufficient connection with England. The transfers were alleged to have been designed to defeat an imminent English judgment, the husband had submitted to the English jurisdiction, the financial proceedings were English proceedings, and the wife was resident in England.
4. Applying L v K (Freezing Orders: Principles and Safeguards) [2013] EWHC 1735 (Fam), the wife showed an appropriately strong case, solid evidence of a real risk of dissipation, and that relief was just and convenient. The history of actual dissipation and the conduct of associated entities justified proceeding without notice.
5. The wife complied with her duty of full and frank disclosure. The court could order disclosure notwithstanding possible consequences under foreign law, balancing the risk to the trustees against the importance of the information to effective relief.
6. Joinder was desirable to resolve all matters in dispute and connected issues concerning transfers at an undervalue. Ancillary disclosure was necessary to make the freezing injunction effective. The directors could be named in the penal notices, and their residence outside the jurisdiction was no bar to committal proceedings.

This was a first-instance application in ongoing financial remedy and enforcement proceedings. Earlier orders and judgments concerning the husband and related entities are described in the judgment, including orders made by Haddon-Cave J in December 2016 and March 2018.