Adeem Investment Holding Company KSCH v Al-Humaidhi & Ors

An applicant seeking fortification of a cross-undertaking must show a good arguable case, equivalent in this interlocutory context to a sufficient risk that the interim order will cause loss. The court must make an informed and realistic, though not necessarily scientific, estimate of likely loss. The loss must be causally connected with the injunction.

Risk is assessed in the light of the overall commercial realities and the evidence as a whole. Expert evidence is not essential where ordinary evidence demonstrates material market volatility. A possible consent mechanism does not remove the risk if delay could cause loss in a falling market. Recent historical volatility may properly inform the amount of fortification.

The claimant obtained freezing and proprietary relief against the defendants in connection with a dispute concerning ownership of shares in Aston Martin Lagonda Global Holdings plc. The freezing relief was later discharged, but the proprietary injunction remained in force.

The defendants applied for fortification of the claimant’s cross-undertaking in damages. They argued that the injunction exposed them to loss because they might need to sell volatile shares at short notice and could be delayed from doing so. The claimant disputed both the likelihood of any sale and the level of risk. The issue was whether fortification was required and, if so, what amount was appropriate.

1. Application granted. The claimant was ordered to fortify its cross-undertaking by paying £4 million into court.
2. The governing principles were those stated by the Court of Appeal in Energy Venture Partners v Malabu Oil & Gas Ltd [2014] EWCA Civ 1295, drawing on Jirehouse Capital v Beller [2008] EWHC 725 (Ch). The defendants had to show a good arguable case, or sufficient level of risk, that they would suffer loss caused by the injunction. The court also had to make an intelligent estimate of the likely loss. Proof on the balance of probabilities was unnecessary.
3. The relevant risk was assessed by reference to the overall commercial realities. The Aston Martin share price had shown substantial fluctuations over the preceding year. The evidence, including evidence relied on by the claimant concerning the risk of dissipation, supported the conclusion that the defendants might rationally wish to sell at short notice. Expert evidence was unnecessary to establish the obvious volatility shown by the available material.
4. The possibility that the defendants could seek the claimant’s consent to a sale did not eliminate the risk. The hard-fought nature of the litigation, the lack of trust between the parties and the absence of an agreed escrow arrangement created a real possibility of delay. Even a short delay could cause loss if the share price fell.
5. The amount of £4 million was an informed and realistic estimate. The court was entitled to consider the recent difference between the shares’ high and low values as evidence of potential downward movement. It was unnecessary to provide security for the full historic fluctuation, and the estimate did not need to be scientific.

This was a first-instance application for fortification. The judgment records that Bacon J had made the underlying freezing and proprietary order on 15 April 2021. The freezing order was subsequently discharged by agreement, while the proprietary injunction remained in force.