UBS Switzerland AG v Anil Kumar

On an application to vary a freezing injunction to permit the sale of assets and use of the proceeds for legal expenses, the defendant bears the burden of showing that no other assets or sources of funding are available. The court may consider potential assistance from third parties. Because the application is interlocutory and concerns dissipation risk, the court may approach the defendant’s evidence with healthy scepticism, particularly where the evidence is incomplete or lacks adequate explanation. The ordinary permission to use frozen funds for legal expenses applies only after that burden has been discharged. The ultimate question is what is just and convenient under Senior Courts Act 1981, s 37(1).

UBS Switzerland AG, as assignee of Vincom Commodities Ltd, brought claims against Mr Anil Kumar alleging breaches of duty as a director. A worldwide freezing order had been continued against him. Mr Kumar applied to vary it so that he could sell two Dubai properties and pay the proceeds into an English bank account to fund his legal expenses.

UBS opposed the application, relying on evidence suggesting that Mr Kumar might have access to other assets or third-party funding, including through a family trust. The central issue was whether Mr Kumar had proved that no other available source of funds existed.

1. Application dismissed. Mr Kumar failed to satisfy the court that he had no other available source of funds with which to pay his legal expenses.
2. The court accepted the principles summarised in JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2015] EWHC 3263 (Ch). A freezing order prevents dissipation rather than securing the claimant’s claim. The defendant must show that he has no other assets before resorting to frozen funds. That burden extends to considering whether third parties may be willing to assist.
3. The court was entitled to approach Mr Kumar’s evidence with healthy scepticism. The assessment was interlocutory and concerned risks and prospects rather than final factual findings. The court had to make the best assessment available on the evidence, notwithstanding the possibility of error.
4. Mr Kumar’s evidence was inadequate in relation to the Family Trust. His previous references to it as relevant to his wealth and his ability to approach its trustees for funding required a full explanation. The proposed expenditure of £8,000 on business-class flights, together with unanswered questions about wealth-management fees, reinforced the conclusion that he was more likely than not to have access to other funding.
5. The court did not need to decide UBS’s alternative misconduct argument. It observed that the conduct criticised was not sufficiently serious to provide an independent basis for refusing relief. The circumstances were materially less exceptional than those in Tidewater Marine International Inc v Phoenixtide Offshore Nigeria Ltd [2015] EWHC 2748 (Comm).
6. The trial timetable was amended because the lost preparation time did not jeopardise the trial window.