Gordian Holdings Limited v Yiannakis Sofroniou

A proprietary injunction may be granted where there is a serious issue to be tried, the balance of convenience favours relief, and it is just and convenient to preserve the claimant’s proprietary interest. The court is especially ready to preserve trust assets. A charging order may continue to protect the proceeds representing the charged property after an unauthorised sale, or those proceeds may be held on constructive trust. A proprietary claimant need not prove a risk of dissipation, although established dissipation risk is an important balance-of-convenience factor. An asset disclosure order requires a full, truthful and documented account of the relevant assets and transactions.

Gordian Holdings Limited, a judgment creditor, sought continuation of a proprietary injunction over the defendant’s share of the net proceeds from the sale of residential property. Gordian held the benefit of an interim charging order over the defendant’s 50% interest. The property was sold and the defendant received approximately £475,446.10 without accounting to Gordian.

The application also concerned an ancillary asset disclosure order. The defendant had provided a short statutory declaration identifying several payments, but without the detailed information and documentation required by an earlier order. The central issues were whether Gordian retained a proprietary interest in the proceeds, whether the injunction should continue, and whether the disclosure order should be re-made.

1. Proprietary injunction. The court applied the American Cyanamid principles summarised in Therium Litigation Funding A IC v Bugsby Property LLC [2023] EWHC 2627 (Comm): a serious issue to be tried, a balance of convenience favouring relief, and a just and convenient order. Interim protection is more readily granted where the claim is proprietary or concerns trust assets, as explained in Republic of Haiti v Duvalier [1990] 1 QB 202.
2. Continuing proprietary interest. Under section 3(4) of the Charging Orders Act 1979, the interim charging order had the effect of an equitable charge. Applying Buhr v Barclays Bank PLC [2001] EWCA Civ 1223, the unauthorised sale gave Gordian either a continuing security interest in the proceeds representing the charged property or an alternative constructive-trust claim. Gordian therefore retained a proprietary interest in the net proceeds.
3. Balance of convenience. A proprietary claimant need not establish risk of dissipation. However, the defendant’s conduct, including attempts to remove the restriction, the unnotified sale, failure to account, and claimed expenditure of nearly all the proceeds, established a high risk of dissipation and strongly favoured continuation. The injunction was just and convenient, and Gordian’s cross-undertaking was adequate.
4. Disclosure. The defendant’s statutory declaration did not comply with the asset disclosure order. It lacked the required affidavit, supporting documents, transaction details, account information and coverage of payments exceeding £2,000. The court therefore re-made the order, giving the defendant one final opportunity to provide a full and truthful documented account. Banks were directed to assist him in obtaining relevant statements.

This was a first-instance return hearing. The proprietary injunction had initially been granted by Pepperall J and continued by Stacey J after an adjournment requested by the defendant. The present court continued the injunction and re-made the asset disclosure order.