The World LLC v Dalal

An applicant seeking a without-notice worldwide freezing order must give full and accurate disclosure, make proper enquiries and present fairly any defence which can reasonably be anticipated. The court need not conduct a mini-trial of disputed merits on an application to discharge the order. A freezing order requires solid evidence of an objectively real risk that a judgment will remain unsatisfied through unjustified dissipation. The evidence must be assessed cumulatively and may include asset transfers, opaque ownership structures, unexplained charges and inconsistent financial evidence. Delay does not necessarily defeat the application where objective evidence establishes the risk. A judgment creditor enforcing a liquidated debt is not obliged to mitigate its loss by selling assets which may satisfy the debt.

The claimant sought to enforce in England a Dubai judgment requiring the defendant to pay sums arising from contracts for plots in the World Islands Project. It obtained a worldwide freezing order without notice. The defendant applied to discharge the order, alleging material non-disclosure, misrepresentation, unfair presentation, absence of a real risk of an unsatisfied judgment, absence of a real risk of dissipation, and lack of clean hands.

The application concerned whether the claimant had fairly presented the possible fraud and jurisdictional defences, whether the available evidence showed a real risk of dissipation, and whether any failure justified discharge of the order.

1. Application dismissed. The worldwide freezing order was continued. The parties were invited to agree consequential matters, including costs.
2. The claimant had fairly presented the possible fraud defence. The defendant had not identified the pleaded fraud case with precision before the without-notice hearing, but the claimant had nevertheless drawn the court’s attention to the relevant complaints and expressly identified the possibility of a fraud defence. The court was not required to present the detailed merits or conduct a mini-trial.
3. The alleged non-disclosure concerning registration of the plots was not material. The distinction between the interim and final registers had not affected the Dubai proceedings, and the claimant confirmed that full title would be transferred on satisfaction of the judgment. The claimant was not fully secured merely because it might be able to resell the plots.
4. The mistake concerning the sequence of transfers involving the United Kingdom, Dubai and Hong Kong companies was regrettable but not material. The thrust of the claimant’s case on dissipation remained sound. The court was also entitled to reassess the evidence as it stood at the discharge hearing.
5. The applicable test, drawn from Tugushev v Orlov (no 2) [2019] EWHC 2013 (Comm), required solid evidence of an objectively real risk that refusal of relief would leave a judgment unsatisfied because assets would be dissipated or dealt with otherwise than in the ordinary course of business. Risk was not to be inferred lightly, dishonesty alone was insufficient, and relevant factors had to be considered cumulatively.
6. That test was satisfied. The relevant matters included the unexplained transfer of property for no consideration, transfers through opaque offshore structures after adverse Dubai decisions, an unexplained charge over the family home, registration of home rights shortly after acknowledgment of service, unexplained changes in the defendant’s financial position, inconsistent evidence and conduct indicating a determination to avoid satisfying the judgment. Delay did not displace the objective risk.
7. The claimant had not acted without clean hands on the evidence before the court. No basis was established for discharging the order for abuse of process or improper conduct.