Crowther v Crowther & Ors

A freezing order requires a good arguable case, a real objectively assessed risk that a future judgment will go unsatisfied through unjustified dissipation, and that relief is just and convenient. Dishonesty or offshore structures alone do not establish that risk. The evidence must connect the alleged conduct to dissipation, with the risk assessed separately against each respondent and cumulatively. A freezing order is not security and must not prevent ordinary business. It may permit an asset to be sold or charged to fund running costs, repairs, maintenance and upgrades, subject to safeguards. An appellate court may determine the application itself where the hearing below was flawed but urgency and the available evidence make that course fair.

During matrimonial financial remedy proceedings, Caroline Jill Crowther alleged that arrangements transferring vessel-owning companies to Castle entities were a sham which concealed beneficial ownership. She sought to restrain the second to sixth respondents from disposing of or charging vessels.

Lieven J granted a freezing order. At the return hearing, Holman J discharged it against those respondents, while leaving the order against Paul Crowther in place: [2020] EWHC 1037 (Fam). The appeal concerned the fairness of that hearing, whether there was a good arguable case and a real risk of dissipation, and whether the injunction should continue despite the urgent costs of maintaining the fleet.

Lord Justice Males gave the reasons for judgment. Lord Justice Phillips and Lord Justice Moylan agreed. The appeal was allowed and the freezing order was continued against the second to sixth respondents on revised terms.

1. Fairness and appellate disposal. The hearing below was unsatisfactory because Holman J had not read the evidence supporting the alleged sham and had not formed even a provisional view on whether there was a good arguable case. His discretion to discharge the order altogether was therefore flawed. Given the extreme urgency, the appellate court had read the evidence and could determine the application fairly, so remission was unnecessary. The transfer issue concerning the Admiralty Court and CPR 30.5 was properly left to that court.
2. Applicable test. Section 37(2) of the Matrimonial Causes Act 1973 was not directly applicable to an injunction against Mr Knight, who was not a party to the marriage. The general freezing-order principles summarised in Lakatamia Shipping Company Limited v Morimoto [2019] EWCA Civ 2203, Thane Investments Ltd v Tomlinson (No 1) [2003] EWCA Civ 1272 and Fundo Soberano de Angola v dos Santos [2018] EWHC 2199 (Comm) applied.
3. Merits and dissipation. The court reached only a provisional interlocutory view, but found a good arguable case that the 2012 arrangements were a sham. The evidence included orchestrated creditor correspondence, unexplained economics, questionable payments and valuations, offshore transfers, and inconsistencies in the asserted debts. Those allegations, if established, provided a sufficient risk that assets might be dissipated.
4. Ordinary business. Following Vneshprombank LLC v Bedzhamov [2019] EWCA Civ 1992 and The Angel Bell [1981] 1 QB 65, the order was not to provide security or prevent ordinary business. Selling or charging a vessel to fund running costs, repairs, maintenance and upgrades could fall within ordinary business and preserve value for the ultimate beneficial owner.
5. Safeguards and order. Prior approval for each item of expenditure was inappropriate because it could cause dispute and paralysis. The order instead required the proceeds to be segregated and used only for specified purposes, with invoices, bank statements and monthly accounts served on Mrs Crowther’s solicitors.

1. Court of Appeal (Civil Division) allowed the appeal, set aside the relevant parts of Holman J’s order and continued the freezing order against the second to sixth respondents on the terms in the schedule: [2020] EWCA Civ 762.
2. High Court, Family Division Holman J discharged the freezing order against the second to sixth respondents at the return hearing, while the order against Mr Crowther remained in force: [2020] EWHC 1037 (Fam).
3. High Court, Family Division Lieven J had previously granted the freezing order against the respondents on 19 December 2019.