Madison Pacific Trust Limited v Sergiy Mykolayovch Groza & Anor

A freezing injunction may support an ordinary contractual claim. The claimant must establish a good arguable case, a real risk that assets will be unjustifiably dissipated, and that relief is just and convenient.

The risk must be shown by solid evidence and assessed separately against each respondent. Relevant factors should be assessed cumulatively, rather than in isolation. The court may consider documentary consistency without conducting a mini-trial.

Existing security does not automatically make a freezing injunction unjust or inconvenient. Its significance depends on the circumstances, particularly whether enforcement is disputed or practically uncertain.

Madison Pacific Trust Limited acted as facility agent and international security trustee for loans made to a corporate group. The defendants guaranteed the borrower’s obligations. Following default, Madison commenced LCIA arbitration and obtained a worldwide freezing order without notice.

The defendants applied to set aside the order, alleging no real risk of dissipation, lack of justice and convenience because Madison was allegedly over-secured, and material non-disclosure. The application required the court to assess later evidence concerning asset transfers, an unperfected pledge and missing grain stocks, together with the adequacy of the without-notice disclosure.

Application dismissed. The worldwide freezing order remained in place.

1. Madison had a good arguable case on the contractual guarantee claim. The underlying dispute was for breach of contract, but the same principles governing risk of dissipation applied as in fraud cases. A contractual claim did not require special or heightened scrutiny merely because fraud was not alleged.
2. The governing principles, stated in Lakatamia Shipping Co Ltd v Morimoto and based on Fundo Soberano de Angola v dos Santos, required solid evidence of an objectively assessed real risk that a future judgment would be defeated by unjustified dissipation. The risk had to be assessed separately against each defendant. Offshore structures were relevant but not determinative, and the court had to consider the evidence cumulatively.
3. The evidence of gratuitous transfers of valuable elevator-company shares, purported transfers of companies to nominees, the attempted transfer of GNT Trade shares, the failure to perfect the Dubai share pledge and the unexplained disappearance of grain stocks supplied solid evidence of a real risk of dissipation. The court was not required to determine finally what had happened to the assets.
4. Justice and convenience strongly favoured continuation. The existence of extensive security was not irrelevant in principle, but it had little weight where enforcement was disputed in several jurisdictions and the security’s practical value and availability were uncertain. Madison was entitled to pursue the guarantee claim and preserve assets against which a future arbitration award could be enforced.
5. The non-disclosure challenge was raised too late and lacked substance. The relevant principles required proper particulars of alleged non-disclosure and left a discretion to continue relief where appropriate. The first affidavit and supporting skeleton argument had fairly addressed the material matters, including the December conversation. No culpable non-disclosure justified discharge.

First-instance decision. No prior appellate decision was stated in the judgment.