Pankim Kumar Patel v Minerva Services Delaware, Inc & Ors

The Court of Appeal dismissed the appellant's challenge to the High Court judge's refusal to grant freezing and proprietary injunctions. The primary legal issues concerned (i) abuse of process principles (the Henderson line of authority) in the context of successive interlocutory applications and assignments of rights; (ii) the threshold for and evidential burden upon an applicant seeking a freezing injunction (good arguable case of entitlement and a real risk of unjustified dissipation); and (iii) the requirements for a proprietary injunction (a serious issue to be tried linking the assets to trust funds).

The court endorsed the judge's approach that MSD had not shown a sufficient evidential basis that the Property or the remaining bank balances were trust assets, that there was a real risk of dissipation and that the balance of convenience favoured refusal (in particular because of the consequence of payment to HMRC). The court also permitted adduction of unredacted bank statements as new evidence and noted deficiencies in full and frank disclosure by the applicant.

Background and parties: Mr Patel (respondent) obtained an anti-suit injunction in the High Court preventing Minerva Services Delaware, Inc (MSD) and others from pursuing a Delaware arbitration concerning rights said to arise under a Deed of Fiduciary Undertaking dated 7 April 2008. MSD (appellant) sought, in England, freezing and proprietary injunctions to restrain dissipation and to assert proprietary rights over assets said to be held on trust for Minerva-related companies.

Procedural history: The appeal is from the order of Deputy High Court Judge Lance Ashworth KC ([2022] EWHC 970 (Ch)). The Court of Appeal heard the appeal on 25 January 2023 and handed down judgment on 10 February 2023.

Nature of the claim and relief sought:

• MSD sought interim freezing relief and a proprietary injunction against Mr Patel to preserve assets said to be trust property.
• Mr Patel sought and obtained an anti-suit injunction restraining the Delaware arbitration; the High Court refused the interim freezing and proprietary orders sought by MSD.

Issues framed:

• Whether MSD's application for freezing/proprietary relief was an abuse of process (Henderson principle and related authorities).
• Whether there was a serious issue to be tried that the Property and other assets were trust property.
• Whether MSD had shown a real risk of unjustified dissipation of assets sufficient to justify a freezing order.
• Whether the balance of convenience and other discretionary considerations (including full and frank disclosure) warranted injunctive relief.

Court of Appeal reasoning and key findings:

• The court observed that even if the judge erred in finding abuse of process, the appeal nonetheless failed on other grounds.
• On the proprietary claim, the judge was entitled to conclude there was no evidence linking the 2013 purchase of the Property, or the bank balances, to the alleged trust monies; counsel for MSD had conceded a lack of evidence connecting the Property to trust funds.
• On freezing relief, the court confirmed the correct legal test (good arguable case and real risk of dissipation) and held that MSD had not discharged its evidential burden; the burden does not shift to the respondent until the applicant shows a prima facie case from which dissipation may be inferred.
• The judge legitimately treated delay, the absence of compelling evidence of dissipation and the prospect of payment to HMRC (which would place HMRC on notice) as relevant to the balance of convenience; payment to HMRC was not capable of being characterised as unjustified dissipation.
• The Court allowed Mr Patel to adduce additional unredacted bank statements and metadata, observing they ought to have been disclosed and could be important to the substantive case; deficiencies in full and frank disclosure were a material discretionary factor.

Conclusion: The appeal was dismissed. The judge's refusal to grant freezing and proprietary injunctions was upheld for lack of evidential foundation of trust property and real risk of dissipation and on discretionary grounds.

The appeal was dismissed. The Court of Appeal held that even if the judge’s abuse of process finding were incorrect, MSD had not established (i) a serious issue to be tried that the Property or remaining bank balances were trust property, (ii) sufficient evidence of a real risk of unjustified dissipation to justify a freezing order, and (iii) that the balance of convenience favoured granting proprietary relief. The judge’s reliance on delay, lack of disclosure and the consequences of payment to HMRC were lawful and open to him; the Court permitted certain unredacted bank statements to be adduced as fresh evidence.

Appeal from Deputy High Court Judge Lance Ashworth KC, Business and Property Courts (ChD), [2022] EWHC 970 (Ch), to the Court of Appeal (Civil Division), judgment [2023] EWCA Civ 118 (hearing 25 January 2023; judgment 10 February 2023).