Sabrina Khan v Kevin Ashley Goldfarb

A proprietary injunction may be granted to preserve property where the claimant seeks proprietary relief which, if established, could result in the property being restored to an estate or vested in the claimant. A present proprietary interest at the interim stage is not required. The claimant must show a serious issue to be tried and satisfy the balance of convenience under the American Cyanamid principles; proof of dissipation and explanation of delay are unnecessary for a proprietary injunction.

On an appeal concerning a without-notice injunction, the court should interfere with the first-instance judge’s evaluative decision only on established appellate grounds. Breaches of the duties of full and frank disclosure or fair presentation must be material. The appeal was dismissed.

The appellant appealed from an order of HHJ Jarman KC dated 14 September 2023, which continued a proprietary injunction over three properties and ordered her to pay the costs. The respondent, trustee in bankruptcy of the appellant’s father, alleged that transfers of the properties were transactions at an undervalue under sections 339 and 342 of the Insolvency Act 1986, or transactions defrauding creditors under sections 423 and 425.

The appellant argued that the respondent had no present proprietary interest capable of supporting a proprietary injunction. She also alleged that the injunction should have been discharged because the respondent had failed to make full and frank disclosure and had presented the without-notice application unfairly. The central issues were whether the statutory claims could support proprietary relief at the interim stage and whether the judge had erred in continuing the injunction.

1. The appeal was dismissed. The proprietary injunction continued, and costs followed the event, subject to written submissions on the amount or basis of assessment.

2. The court rejected the submission that a claimant must demonstrate a presently existing proprietary interest before obtaining a proprietary injunction. The relevant question was whether the claim sought proprietary relief which, if successful, could confer or restore a proprietary interest in the subject matter.

3. Claims under sections 339 and 423 of the Insolvency Act 1986 could satisfy that requirement. Sections 339(2), 342, 423(2) and 425 provide broad restorative and vesting remedies. A serious issue to be tried as to whether such relief would be granted was sufficient to ground an interim proprietary or quasi-proprietary injunction. It was unnecessary to decide whether the transactions were presently void or voidable.

4. The injunction application was governed by the American Cyanamid principles: a serious issue to be tried and the balance of convenience. Unlike a freezing injunction, a proprietary injunction did not require proof of a risk of dissipation or an explanation for delay.

5. The duties of full and frank disclosure and fair presentation at a without-notice hearing were important but not unlimited. The first-instance judge had been told of the proprietary-interest issue, the possible insolvency defence and the basis for the proposed limited cross-undertaking. The alleged omissions were not material to the extent required to justify discharge.

6. The decision whether to discharge the injunction involved evaluative and discretionary judgments. Applying Derma Med Limited v Ally [2024] EWCA Civ 175, there was no error of principle or conclusion outside the range reasonably open to the judge.

• High Court (Chancery Division) — appeal from the order of HHJ Jarman KC dated 14 September 2023; appeal dismissed and proprietary injunction continued.