The New York Laser Clinic Ltd v Naturastudios Ltd & Ors

A post-judgment freezing injunction may be granted against a non-party where there is a good reason to suppose that assets held by that party would be available to satisfy the judgment, a real risk of dissipation, and it is just and convenient to exercise the exceptional jurisdiction. The injunction must be framed cautiously and, where insolvency intervenes, preserve assets for creditors generally rather than for one creditor alone. A claimant may obtain interim protection while a newly appointed liquidator investigates, but the order should ordinarily be time-limited. A cross-undertaking in damages may require fortification where the applicant’s financial position creates a real risk that compensation will not be paid.

The claimant had obtained judgment for approximately £4.1 million against Naturastudios Limited following claims concerning Magma Lasers. A post-judgment freezing order was granted without notice against Naturastudios, its former sole director and shareholder, and three associated companies. The order was continued in varied form at an inter partes hearing.

Two respondents sought discharge. The claimant sought continuation against all five respondents. The principal issues were whether there were clearly formulated causes of action and a good arguable case against the non-parties, whether there was a real risk of dissipation, whether the order should continue despite the liquidation of Naturastudios, and whether the claimant’s cross-undertaking required fortification.

The underlying judgment was given in [2019] EWHC 2892 (QB).

1. The existing order was not discharged. The claimant had presented a clearly formulated case that assets of Naturastudios were held by, or had been transferred to, Mr Anderson and Natura Academy Limited. The initial evidence established a good arguable case and a real risk that assets would be dissipated. Although there had been a failure to disclose material information about the claimant’s financial position, the omission was not deliberate and would not have materially altered the result at the urgent return hearing.
2. The governing test. A freezing order against a non-party required: (i) a good reason to suppose that assets held by the non-party would be susceptible to a procedure leading to compulsory satisfaction of the judgment; (ii) a real risk of dissipation such that the judgment would remain unsatisfied; and (iii) a just and convenient exercise of an exceptional jurisdiction requiring caution. The relevant cause of action had to be clearly formulated.
3. Application to the respondents. There was no good arguable case that the Edinburgh property had been sold at an undervalue or remained beneficially owned by Naturastudios. Nor was there evidence of a real risk that Mr Anderson would dissipate his own disclosed, illiquid and heavily mortgaged assets. The order was therefore not continued against him. By contrast, the sale of trademarks, stock and other business assets to Natura Academy for apparently inadequate consideration gave rise to a good arguable case and a real risk of further dissipation.
4. Liquidation and scope. A freezing order could continue after liquidation in exceptional circumstances, but its purpose had to be preservation for all creditors. The order was continued against Naturastudios, Natura Academy, Natura Group and Naturahealth only for the short period reasonably required by the newly appointed liquidator to investigate and decide whether to take its own steps. The order had to contain provisions enabling the liquidator to perform its duties without further application.
5. Undertaking. The Angel Bell exception remained applicable to Natura Academy. Nevertheless, because the claimant’s accounts disclosed a weak financial position, the cross-undertaking required fortification at £10,000 per month for six months. The precise order was to reflect the updated evidence and submissions on hand-down.

This was a first-instance post-judgment application. The judgment records an earlier judgment against Naturastudios Limited at [2019] EWHC 2892 (QB), followed by an interim freezing order and later variations.