Purbrick v Cruz & Anor

An ex parte freezing injunction should not be discharged for every omission. The court must assess the materiality and culpability of the non-disclosure and retains discretion to continue or re-grant relief where the order would have been justified on the full facts. A good arguable case is more than a case barely capable of serious argument, but need not have a better than 50 per cent chance of success. The identity of a contractual party is determined objectively, with extrinsic evidence admissible. A person signing a contract is prima facie personally bound unless the document or evidence makes agency sufficiently clear. A freezing injunction also requires an objectively evidenced risk of dissipation which is more than fanciful.

The claimant sought continuation of a freezing injunction granted without notice against the first defendant, a builder, in support of a claim arising from defective and incomplete building works. The contracts referred to the first defendant as “Mark Cruz of MM Cruz Developments Ltd” and were on company headed paper, creating an issue as to whether he or the company was the contracting party.

The first defendant alleged material non-disclosure concerning the contractual counterparty and argued that there was no good arguable case against him personally. The claimant also sought to add MM Cruz Developments Ltd as a second defendant. The court had to decide whether the injunction should be discharged, whether the good arguable case and dissipation requirements were met, and whether the company should be joined.

1. Material non-disclosure. The principles in Brink’s Mat Ltd v Elcombe [1988] 1 WLR 1350 applied. The claimant had failed to draw specific attention to an attempted claim under the company’s insurance policy, and that was material. Other matters were peripheral, ambiguous, or capable of being read both ways. Considering the full facts, the omission would not have prevented the original judge from granting relief. The court therefore declined to discharge the injunction.
2. Good arguable case. The test, derived from The Niedersachsen [1983] 2 Lloyd’s Rep 600 and Alternative Investment Solutions (General) Ltd v Valle De Uco Resort & Spa SA [2013] EWHC 333 (QB), required a case more than barely capable of serious argument, but not necessarily one with a better than 50 per cent prospect of success.
3. The identity of the contracting party was to be determined objectively. Extrinsic evidence was admissible. Applying Homburg Houtimport BV v Agrosin Ltd (The Starsin) [2004] AC 715 and Hamid v Francis Bradshaw Partnership [2013] EWCA Civ 470, the court held that there was a good arguable case that Mr Cruz was personally bound. He was named as contractor, signed without qualifying his signature as an agent, was to attend face-to-face meetings, and was to receive substantial cash payments personally. The company’s headed paper and details did not determine the issue.
4. Risk of dissipation. There was sufficient objective evidence of a risk which was more than fanciful. Mr Cruz was selling valuable UK assets, had sold a yacht, had strong links with Mexico, and intended to use sale proceeds to acquire property there. The freezing injunction was continued until further order. Any hardship could be addressed by an application to vary it.
5. Joinder. Under CPR rule 3.3(4) and CPR r 19.4(2), it was clearly appropriate to add MM Cruz Developments Ltd as second defendant so that all matters in dispute could be resolved. The order was without prejudice to a future application for substitution.