Nicholas James Care Homes Ltd v Liberty Homes (Kent) Limited

A freezing injunction may be granted where the applicant has a good arguable case for a money judgment, the respondent has assets against which it could be enforced, and there is a real risk of unjustified dissipation which would impair enforcement. The risk must be established objectively by solid evidence. A complex corporate structure or offshore dealings alone is insufficient. The court must distinguish ordinary business dealings from conduct which would make the respondent judgment-proof. Even where the test is satisfied, relief remains discretionary and must be just and convenient in all the circumstances.

Nicholas James Care Homes Ltd obtained an adjudication award requiring Liberty Homes (Kent) Limited to repay approximately £2.59 million. Liberty Homes did not pay, and enforcement proceedings were listed for hearing. NJCH obtained a without-notice freezing injunction and applied on the return date for its continuation.

Liberty Homes opposed continuation, relying on delay, alleged non-disclosure, the absence of a real risk of dissipation, the legitimacy of a corporate restructuring and the inadequacy or oppressive effect of the order. The central issue was whether the requirements for continuing a freezing injunction were satisfied.

1. Outcome. The freezing injunction granted on 21 April 2022 was continued until after the adjudication enforcement hearing on 15 June 2022, or further order. Costs were reserved.
2. Applicable test. Under Senior Courts Act 1981, section 37, and the principles summarised in Broad Idea International Limited v Convoy Collateral Ltd [2021] UKPC 24, the applicant had to show: a good arguable case for a money judgment; assets against which judgment could be enforced; and a real risk that, unless restrained, the respondent would deal with assets other than in the ordinary course of business so that enforcement would be impaired.
3. Risk of dissipation. The risk had to be assessed objectively and supported by solid evidence. The applicant did not have to prove an intention to defeat enforcement. It was sufficient to show dealings outside the respondent’s usual business which created a real risk that a judgment would not be satisfied. The principles in Fundo Soberano de Angola v dos Santos [2018] EWHC 2199 (Comm), subject to the correction noted in Lakatamia Shipping Company Ltd v Toshiko Morimoto [2019] EWCA Civ 2203, were applied.
4. Application. NJCH had a good arguable case based on the substantial adjudication award. The transfer of assets worth almost £6 million to related companies, when Liberty Homes knew of NJCH’s substantial repayment claim, created a very real risk that Liberty Homes could not satisfy judgment. The evidence did not establish that the transfers formed part of an existing pattern of ordinary business dealings. Their character as dividends in specie also remained legally arguable, having regard to BAT Industries plc v Sequana SA [2019] EWCA Civ 112 and the possible application of section 423 of the Insolvency Act 1986.
5. The court rejected dismissal for delay. Knowledge of a holding company or corporate restructuring did not itself establish unjustified dissipation, and NJCH did not know, or ought to have known, of the substantial asset transfers until shortly before the application. The cross-undertaking in damages was adequate, and continuation would not stifle other litigation before the imminent enforcement hearing.