China Evergrande Group v Ding Yu Mei

Where a proprietary freezing order restrains assets claimed by the claimant, expenditure on legal costs or living expenses is not approached on the same basis as expenditure from a non-proprietary freezing order. The defendant has no presumption in favour of using disputed proprietary funds.

The court must assess whether the claimant has an arguable proprietary claim, whether the defendant has arguable grounds for claiming the money, and whether the defendant has shown that no other funds are available. These questions need not be considered in a fixed order. The defendant must provide full and frank evidence about accessible non-proprietary assets and, for living expenses, detailed evidence showing what expenditure is reasonable. Only then may the court exercise its discretion by balancing the competing potential injustices.

The claimant sought to vary proprietary and worldwide freezing orders made in support of Hong Kong proceedings. The respondent sought permission to use sums subject to the proprietary order for legal expenses and ordinary living expenses.

The claimant accepted a limited variation for specified legal work and expenditure. The respondent sought a broader, substantially uncapped permission. The central issues were the principles governing expenditure from allegedly proprietary funds, the evidential burden concerning alternative assets, and the evidence required to establish reasonable living expenses.

1. Application adjourned. The court varied the order only in the limited terms conceded by the claimant. The respondent was permitted to spend a reasonable sum on legal advice and representation up to 4 p.m. on 9 August 2024, and up to £350,000 on legal advice and representation concerning compliance with paragraphs 12 and 13 of the order up to 4 p.m. on 27 August 2024. The claimant waived any claim that those funds were or derived from dividend sums. The application was otherwise adjourned with liberty to restore.
2. The principles in Kea Investments Ltd v Watson & Ors were applicable. There is no presumption that a defendant may use assets which may ultimately belong to the claimant. The relevant questions are whether the claimant has an arguable proprietary claim, whether the defendant has arguable grounds for claiming the money, whether the defendant has shown that no other funds are available, and, if so, whether the court should exercise its discretion after balancing the competing potential injustices.
3. The questions need not be considered in the order stated in Kea Investments. Their order depends on the evidence and circumstances of the particular case. A submission that unlimited expenditure should be permitted so that the questions could later be answered was rejected as inconsistent with the calibrated approach required by the authorities.
4. The claimant had already demonstrated an arguable proprietary claim. The respondent had not provided evidence dealing with the existence or accessibility of non-proprietary assets. That was a threshold evidential failure. Unless and until such evidence was supplied, the contested application could not proceed. The principle that no person has a right to use another’s money to defend legal proceedings was relevant.
5. Detailed evidence was also required concerning living expenses. The evidence had to permit the court to determine what expenditure was reasonable, including expenditure for dependants. The respondent was required to disclose fully and frankly all relevant evidence concerning funds available to her, including funds accessible through others.

This was a first-instance application to vary proprietary and worldwide freezing orders made by the same court on 30 July 2024. No appellate history was stated.