Advanced Multi-Technology for Medical Industry & Ors v Uniserve Ltd

For a contingent Part 20 claim supporting a freezing order, the applicant must show a good arguable case on the claim as a whole. That requires consideration of any critical underlying liability on which the contingent claim depends. The court must avoid a mini-trial, but it must not assume central elements of liability. A breach of contract may be actionable per se, yet a claim for a declaration or other non-compensatory relief does not support a freezing order. Material failures of full and frank disclosure are serious, but the order may be continued where the interests of justice, the absence of deliberate non-disclosure and the continuing risk of dissipation justify that course. Serious and unjustified delay may independently defeat an application to vary or discharge.

Uniserve obtained a worldwide freezing order against Maxitrac Ltd and Dr Andrew Stead in proceedings arising from the supply of face masks during the Covid-19 pandemic. The underlying claim alleged breaches by Uniserve of supply and commission agreements. Uniserve brought a contingent Part 20 claim against Maxitrac and Dr Stead, alleging breaches of express and implied contractual obligations and seeking recovery if the claimants succeeded against Uniserve.

The applicants accepted that there was a real risk of dissipation. They challenged the order on the grounds that Uniserve had no good arguable case and had failed to comply with the duty of full and frank disclosure. They also relied on delay in making the application. The central issues were whether the underlying claim against Uniserve had to be assessed, whether the various Part 20 claims could support the order, and what remedy followed from the disclosure breach and delay.

1. Application refused; worldwide freezing order continued. The applicants accepted the existence of a real risk of dissipation. The court therefore considered good arguable case, full and frank disclosure and delay.
2. For a contingent claim, the good arguable case inquiry concerns the claim as a whole, including critical elements on which liability depends. Uniserve therefore had to show a plausible evidential basis for potential liability to the claimants, as well as for its Part 20 claim. The court had to avoid a mini-trial, but could not simply assume central issues. The intrusive nature of freezing relief reinforced that approach. The claim concerning the alleged variation of the delivery schedule and the implied duties relating to termination had a good arguable case.
3. The claim based on notification of delay, delivery and manufacturing capacity did not meet that standard insofar as the alleged breaches could not cause the loss claimed under the Part 20 claim. A breach of contract remained actionable per se, but a claim for a declaration did not support a freezing order.
4. Communications need not use the word termination. The relevant question is whether the communication or conduct clearly and unequivocally conveys that the contract is being treated as at an end. On the pleaded evidence, the claimants’ argument that the later emails recorded, rather than themselves effected, an earlier oral discussion was sufficiently arguable.
5. The failure to draw attention to the weakness in the express-terms case was a breach of the duty of full and frank disclosure. The breach was unlikely to have affected the original decision, appeared inadvertent, and the risk of dissipation remained real. Discharge would therefore be disproportionate. The order was continued, with the issue left principally to costs.
6. The application was also seriously out of time. The newly disclosed emails reinforced arguments already available but did not amount to a material change of circumstances. There was no convincing justification for the delay, and a retrospective extension of time was refused.