Tolmie & Anor (Trustees of the Nicholas Savage Foundation) v Taylor & Anor

A freezing injunction preserves assets against dissipation; it does not give the claimant a proprietary interest, security, or priority over other creditors. Permitted expenditure on ordinary living expenses should reflect the defendant’s pre-injunction standard of living, and any stated weekly allowance is ordinarily an estimate rather than an immutable cap.

Complete discharge generally requires a material change of circumstances. The exhaustion of assets already identified is insufficient where a legitimate concern remains that other assets exist. An undertaking may replace an injunction only where it affords equivalent practical protection. The court may preserve the injunction where that protection would otherwise be reduced, particularly before a forthcoming trial.

The claimants obtained judgment in default against the first defendant for more than £7.6 million and secured a freezing injunction against both defendants because of concerns about dissipation and the possible beneficial ownership by the first defendant of assets held in the second defendant’s name.

The second defendant applied to discharge the injunction, or to replace it with undertakings. He also sought permission to pay an American Express debt and further reasonable legal fees from frozen accounts. The central issues were whether those payments should be conditional on payment of the claimants’ costs, whether the injunction should be discharged because the known funds were being exhausted, and whether undertakings would provide adequate protection.

1. Applications for expenditure allowed. The second defendant was permitted to pay £9,080.16 to American Express and to withdraw up to £53,290, including VAT, for reasonable legal fees through the assets trial. Those permissions were not conditional on first paying the claimants’ outstanding costs. A freezing injunction does not confer a proprietary interest or security and must not place the claimant ahead of other creditors.
2. Ordinary living expenses. The defendant should be permitted to spend money on ordinary living expenses in accordance with the standard of living maintained before the injunction. The weekly figure of £700 was an estimate of likely expenditure, not an immutable maximum. The court applied the approach stated by Males LJ in Vneshprombank LLC v Bedzhamov and others [2019] EWCA Civ 1992.
3. Discharge. A material change of circumstances was required to justify complete discharge. The defendants had not previously challenged the original finding of a sufficient risk of dissipation at the appropriate on-notice hearing. Any challenge based on material non-disclosure was raised too late and should have been made at the first on-notice hearing, applying Chanel Ltd v F.W Woolworth & Co Ltd [1981] 1 WLR 485.
4. The reduction of the known fund to nil was not, by itself, a material change. A legitimate concern remained that hidden assets existed, and discharge might reward concealment. The claimant was not required to incur the expense of expert evidence to maintain the injunction; the burden remained on the second defendant to demonstrate a material change.
5. An undertaking could replace a freezing injunction only if it gave the claimants equivalent practical protection. The court was not satisfied that undertakings would overcome the banking difficulties or provide equivalent monitoring and protection. The injunction therefore remained in force, with the parties directed to submit a draft order and costs reserved, provisionally, to the conclusion of the assets trial.

Not an appeal. The judgment determined applications concerning the continuation and variation of a freezing injunction.