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High Court reiterates the principles for the use of an asset which is the subject of a proprietary freezing order

  • United Kingdom
  • Financial services disputes and investigations
  • Litigation and dispute management - Freezing Orders

06-06-2018

GFH Capital Ltd v David Lawrence Haigh & Ors [2018] EWHC 1187 (Comm)

Facts of the case

– The defendant applied for permission to sell a property which was the subject of a proprietary freezing order, and to apply the proceeds of sale to legal and living expenses.

The decision

– Bryan J rejected the application on the basis that:

– the defendant had not demonstrated on the evidence that he did not have access to other available assets on which he could draw to pay the expenses; and

– the application was premature in sofar as there was at this stage (i) no concrete proposal in relation to the sale of the property nor (ii) anyclearly defined expenses in relation to which funds were needed.

Analysis and practical advice

– The relevant principles in relation to the release of assets subject to a proprietary injunction are now well established in case law. These are:

1. before there can be any question of using funds to which a claimant has a strong proprietary claim, the defendant must show that he has an arguable case for denying they belong to the claimant;

2. where there are assets which may belong to the claimant, the defendant should not be entitled to use those funds unless the court is convinced that the defendant has no other assets to use for this purpose. The burden of proof in this regard is firmly on the defendant and, where there are any such funds, they should be expended before there is any question of expending funds subject to a proprietary claim; and

3. if the court can be satisfied that there are no assets other than those subject to a proprietary claim, the court must nevertheless still weigh whether the balance of justice militates in favour of permitting or refusing the payment.

– Further, in any such application the defendant will be required to give full and frank disclosure of its assets.