Hall v Hargreaves & Anor

On an interim return day, a freezing injunction may continue where the evidence establishes a good arguable case of dishonest asset diversion and a real, substantial and current risk of dissipation. The court must assess that risk by reference to solid evidence, not general allegations of dishonesty. Relevant considerations include the nature, location and liquidity of the assets, the extent to which assets are already secured, and the respondent’s conduct in response to the claim. A claim for unfair prejudice may justify protection against personal asset dissipation where a buy-out order remains a realistic remedy, even if winding up is also sought.

The petitioner brought an unfair prejudice petition concerning Cloud Employee Limited under section 994 of the Companies Act 2006. Two without-notice orders had granted asset-preservation injunctions, including a freezing injunction against the company and the first respondent personally.

On the return day, the first respondent applied to discharge the orders for alleged material non-disclosure, reliance on improperly obtained emails, the alternative claim for winding up, and the absence of sufficient evidence of a risk of dissipation. The petitioner sought continuation of the existing relief pending a properly prepared hearing.

1. Interim disposition. The court continued the existing prohibitory, mandatory and freezing relief to hold the ring until a full hearing. The discharge and continuation applications were stood over. The judgment did not finally determine the allegations concerning access to the emails or the ultimate merits of the petition.
2. Unfair prejudice relief. The availability of a winding-up order did not make continuation of the freezing injunction pointless. A buy-out order remained a possible remedy, and the court could grant such relief even if the company were in liquidation. It was not simply for the first respondent to dictate that winding up should occur.
3. Evidence and without-notice procedure. The court rejected the complaint that the injunctions should be discharged because the petitioner had relied on emails allegedly obtained unlawfully. The issue could be determined only at trial and was not an appropriate basis for interim discharge. The court distinguished Imerman v Tchenguiz, whose facts involved wholesale copying of private documents in a different procedural context. The court was also satisfied that no bad faith or deliberate and material non-disclosure had been established for the purposes of the hearing.
4. Risk of dissipation. The applicable principles required evidence of: (i) a real risk that a future judgment would go unsatisfied because of unjustified dealings with assets; (ii) solid evidence supporting that risk; (iii) dishonesty sufficiently connected with the risk, rather than mere allegations of dishonesty; (iv) a current risk, with past conduct relevant only insofar as it demonstrated present risk; and (v) consideration of the nature, location and liquidity of the assets, the extent to which assets were already secured, and the respondent’s conduct in response to the claim.
5. Those requirements were satisfied. The evidence disclosed a good arguable case that the first respondent had diverted company money and business, concealed his conduct, destroyed or fabricated evidence, and sought to make himself judgment-proof. That established a real and substantial risk of dissipation sufficient to justify continuation of the freezing relief.