Njord Partners SMA-Seal LP & Ors v Astir Maritime Ltd & Ors

On a without-notice freezing-order application, materiality is assessed objectively and in context. Applicants must disclose facts which may affect the exercise of the court’s discretion, including points reasonably anticipated to be raised by the respondent, after making proper inquiries. A disputed factual assertion will not ordinarily justify discharge unless it can be summarily established. Where material non-disclosure is found, discharge is the usual sanction, but the court may continue or re-grant the order where justice and proportionality require it. The sanction may instead be addressed by varying the order, including reducing its maximum value.

The claimants sought to continue a worldwide freezing order granted without notice against the third defendant, Mr Ali, in proceedings arising from alleged deceit concerning vessel-financing transactions. Mr Ali applied to discharge the order, alleging failures of full and frank disclosure concerning his involvement in the business, electronic signatures on borrower statements and repayments received by the lenders. He also alleged that there was no real risk of dissipation. A separate application concerning disclosure of the sources of living and legal expenses was dealt with by consent in substance.

The issue was whether any non-disclosure was material and, if so, whether the freezing order should be discharged, re-granted or varied.

1. Full and frank disclosure. The judge applied the principles in Brink’s Mat Ltd v Elcombe [1988] 1 WLR 1350. Materiality is objective and depends on the nature of the application and the facts relevant to the exercise of discretion. The applicant must make proper inquiries and fairly present both the strengths and likely difficulties in its case.
2. The complaints concerning Mr Ali’s alleged lack of involvement and the electronic signatures failed. Those matters were disputed or lacked significance when viewed against the wider evidence, including the documents ostensibly signed by Mr Ali and his admitted involvement in the business. The court was not required to conduct a mini-trial of disputed issues. The wider complaint that the lenders had suffered no loss also failed.
3. The lenders had, however, failed to draw attention specifically to a spreadsheet showing that $2,769,835.06 from later vessel transactions had been returned to them. That fact was material because it affected the realistic quantum of the deceit claim.
4. The judge applied the sanction principles discussed in OJSC Ank Yugraneft v Sibir Energy Plc [2008] EWHC 2614 (Ch) and Fundo Soberano de Angola v Dos Santos [2018] EWHC 2199 (Comm). Although discharge is the usual consequence of material non-disclosure, the omission was not deliberate, did not undermine the existence of grounds for a freezing order, and concerned principally the order’s maximum amount. Discharge would therefore be disproportionate. The order was varied and continued with a reduced maximum value of $22,000,000.
5. There was a real risk of dissipation. The lenders had a good arguable case involving dishonesty, there was evidence of a transfer of shares to a family member when creditor claims were imminent, and there were inconsistencies between representations in the 2020 Amendment Deed and Mr Ali’s later affidavit concerning insolvency. The application to discharge was accordingly denied.