Flexidig Ltd v M & M Contractors (Europe) Ltd

A post-judgment freezing order requires a good arguable case, assets within the relevant jurisdiction, a real risk that assets will be dissipated or secreted so as to make relief nugatory, and that relief is just and convenient. A judgment debtor’s persistent non-payment, credible threats concerning enforcement, and a strongly arguable case of dishonest conduct may together establish that risk.

Post-judgment relief is more readily granted because the policy of the law favours enforcement. The order should, however, be confined to judgments, admitted liabilities, or sufficiently quantified costs. It should not be expanded to secure a substantial and disputed claim with no judgment or adjudication decision requiring payment. Appointment of a receiver is a more intrusive remedy and may be disproportionate where a freezing order provides sufficient protection.

Flexidig Limited, a civil engineering subcontractor, sought a worldwide or domestic post-judgment freezing order and the appointment of a receiver against M & M Contractors (Europe) Limited.

The applications arose from several adjudications and enforcement proceedings. M & M had failed to pay sums ordered by courts in England and Northern Ireland, although it offered to pay certain judgment debts. Flexidig also sought security for outstanding Northern Irish costs and for a further disputed sum said to arise from a later adjudication.

The central issues were whether there was a real risk of dissipation, which liabilities could properly be secured, and whether receivership was justified.

1. The court granted post-judgment freezing relief, subject to credit for payments already made, securing £456,930.25. This comprised £356,930.25 representing judgment debts and conceded interest and costs, together with a conservative allowance of £100,000 for costs ordered by the High Court of Northern Ireland but not yet taxed.

2. The governing requirements for a domestic freezing order were a good arguable case, assets within the jurisdiction, a real risk of dissipation or secretion which would render relief nugatory, and that relief was just and convenient. The same principles permitted worldwide relief where the applicable jurisdictional and asset requirements were satisfied.

3. The court adopted the checklist of relevant factors discussed in Chorus Group v Berner (BVI) Ltd, including the nature and location of the assets, the defendant’s business and financial standing, its credit record, expressed intentions, and its behaviour concerning the claims. The checklist was helpful but non-exhaustive.

4. The risk was established by M & M’s repeated failure to honour judgments, its non-payment of other liabilities, threats that Flexidig would be forced into liquidation, and a strongly arguable case that invoices had been doctored for use in an adjudication. A finding of dishonesty was unnecessary at this stage; the strongly arguable case and surrounding conduct were sufficient.

5. The policy favouring enforcement was particularly weighty after judgment. The reasoning in Great Station Properties SA v UMS Holdings Ltd applied equally to a judgment enforcing an adjudicator’s decision, especially one engaging the payment regime under the Housing Grants, Construction and Regeneration Act 1996. The court also relied on the post-judgment principle identified in National Bank Trust v Yurov.

6. The proposed order was not extended to the further sum of about £340,000 plus VAT. That liability was not the subject of a judgment, arbitration award, or adjudicator’s decision ordering payment, and substantial issues remained as to the amount due. Relief was also not extended automatically to ordinary business expenses because no evidential basis had been provided.

7. A receiver was refused. Receivership was more intrusive, expensive, and less reversible than an injunction. In circumstances where the freezing order was sufficient, appointment of a receiver would have been disproportionate.