Thomas Anthony Civiello & Anor v Erik Brodahl

A freezing order does not ordinarily extend to assets owned by a company merely because the respondent wholly owns or controls that company. Corporate personality remains decisive unless the order’s wording and the circumstances establish a legally relevant basis for treating the assets as available to satisfy the judgment.

The extended wording may capture assets over which the respondent has a power of disposition equivalent to ownership, but control alone is insufficient. The claimant must show good reason to suppose that the assets are the respondent’s, or that an available enforcement process can reach them. The court may determine the legal meaning of a freezing order by declaration, but it will generally avoid a final factual determination on untested evidence without disclosure or cross-examination.

The claimants held a substantial Norwegian judgment against the defendant, later registered in England. The defendant gave undertakings in terms of a domestic freezing order after the court refused worldwide relief. The claimants sought declarations that dividends and consultancy fees paid to companies associated with the defendant fell within the undertaking.

The application relied on alleged beneficial ownership or, alternatively, the defendant’s direct or indirect power to dispose of or deal with the assets as his own. The issues were whether the court should determine the factual ownership questions summarily, whether the assets were within the geographic scope of the undertaking, and whether the extended wording captured assets held by companies controlled by the defendant.

1. Declaratory relief. The court could determine the meaning or legal effect of the EWFO by final declaration where that would serve a useful purpose. It could also vary the order prospectively. However, the court would not make a final factual determination of beneficial ownership or control after a short hearing without disclosure or cross-examination.
2. Applicable evidential standard. Questions concerning the existence, ownership and control of assets in freezing-order applications are generally approached by reference to an enhanced standard of arguability, such as grounds for belief or good reason to suppose. A trial on the balance of probabilities may nevertheless be appropriate where the application of the order to a particular asset requires determination of a third party’s asserted ownership.
3. Corporate assets. The extended definition of assets in the EWFO did not, on the material before the court, extend to assets of companies wholly owned or controlled by the defendant. The principles in Group Seven Ltd v Allied Investment Corporation Ltd and Lakatamia Shipping Co v Su preserve the separate legal personality of the company. A director or shareholder acts as the company’s agent, not in a personal capacity. The possible “pocket” or “wallet” exception was left open, but the evidence did not establish that the companies fell within it.
4. Enforcement principle. The freezing-order jurisdiction preserves assets which would be available to satisfy a judgment; it does not provide security or recourse against assets which would not otherwise be available. Substantial control may establish dissipation risk, but does not itself establish that the assets can be reached by enforcement.
5. The claimants failed to establish good reason to suppose that the defendant beneficially owned, or controlled for the purposes of the EWFO, the rights to the dividends or consultancy fees. The application for declarations therefore failed.

• High Court (Commercial Court): HHJ Pelling KC refused worldwide freezing-order relief on 2 August 2023, holding that Articles 31 and 41 of the Lugano Convention required a real connecting link between the measures sought and England and Wales. Only the domestic freezing-order undertaking was granted. Permission to appeal that ruling was granted, with the appeal listed for July; that appeal was not determined in this judgment.