North of England Coachworks Ltd v Khan

Variation of a freezing order to fund legal representation requires the defendant to satisfy the court that no alternative funding is available. The burden is one of persuasion, not proof on the balance of probabilities, but the defendant must provide full, fair and credible evidence of assets, income and possible assistance from others. The court must assess the interests of justice overall. The ordinary right to use frozen assets for reasonable legal expenses may be outweighed by other considerations in an exceptional case. In committal proceedings, urgency remains relevant, and lack of private funding does not by itself justify delay where public funding may be available.

North of England Coachworks Limited brought proceedings alleging that Mohammed Asif Khan had defrauded it of more than £1 million. A freezing order permitted reasonable expenditure on legal advice and representation. Mr and Mrs Khan applied to vary the order so that three assets could be sold to fund legal representation in the underlying claim and forthcoming committal proceedings. Mr Khan also sought an adjournment of the committal hearing listed for 24 July 2020.

The central issues were whether the applicants had established that no alternative sources of funding were available and whether the committal hearing should be adjourned.

1. Application dismissed. The application to sell the Rolex watch, Bentley car and property was dismissed. The application to adjourn the committal proceedings was also dismissed.
2. The governing principles were drawn from Tidewater Marine International Inc v Phoenixtide Offshore Nigeria Ltd [2015] EWHC 2748. A defendant may ordinarily use frozen funds for reasonable legal advice and representation, but must first demonstrate that no other assets or sources of assistance are available. The court must decide what the interests of justice require.
3. The burden was one of persuasion rather than proof on the balance of probabilities. The applicants nevertheless had to present their financial circumstances fully and fairly, including possible assistance from family members and other sources. Their evidence was hopelessly deficient and suggested a real prospect of alternative funding, including through Mrs Khan or her family.
4. The evidence about asset values and secured debt was inconsistent and lacked reliable independent valuation. The court therefore rejected the application at the first hurdle and did not need to decide finally whether the circumstances would in any event have constituted an exceptional case in which variation should be refused.
5. The committal proceedings were urgent. Applying the approach reflected in Barnet London Borough Council v Hurst: Practice Note [2002] EWCA Civ 1009, the absence of private funding did not justify an adjournment. Mr Khan was entitled to public funding and was expected to make strenuous efforts to obtain publicly funded representation. Case management of the hearing remained for the judge hearing the committal application.