Pre-trial or post-judgment relief – Freezing order – Whether freezing order to be discharged

Gorbunova v Berezovsky and others: Chancery Division: 18 January 2013

The claimant was the long-time partner of the defendant, with whom she had two children. She brought a claim against the defendant contending that he had promised her a share of the proceeds of sale of the house in which they had lived and to buy her a new home. She also contended that she was the ultimate beneficial owner of two properties in the south of France, which were held through companies and trusts. A sale of the relevant properties was being planned. The claimant was fearful that she would not receive the proceeds of the sale. She applied, without notice, for an interim freezing order (the freezing order) against the defendant in respect of three assets: (i) £5m out of the 'Wentworth Park' proceeds; (ii) the relevant part of the litigation settlement proceeds; and (iii) the French properties. The order was granted and the defendant's assets were frozen generally to the extent of £200m. The defendant applied to discharge the freezing order.

It fell to be determined: (i) whether there was sufficient evidence of a relevant risk of dissipation to found an application for a freezing order (the first question); and (ii) whether that evidence was sufficient to justify a without notice application (the second question). The defendant contended that the evidence and other material placed before the deputy judge who made the order did not comply with the procedural rules and other principles for the making of without notice applications. In particular, he submitted that there had been a breach of the duty of full and frank disclosure. He relied on the notice provision in CPR 23.7(1)(b) and on CPR 25.3(3).

The court ruled: In respect of the first question, the evidence did not go so far as to establish serious and strong evidence that there was a risk that the claimant would dissipate his assets generally in order to keep them away from being able to satisfy the claimant's claims should she establish them. However, in respect of the second question, applying settled law, there had been justification for going without notice. There had been a sufficient statement in the evidence of that justification to make the matter clear enough, though not a justification for the full scope of the relief obtained. The evidence demonstrated a sufficient degree of likelihood that the defendant would take steps in relation to the particular assets to frustrate the claimant's claim to those assets. The defendant was not found to have demonstrated a tendency to take steps in relation to his assets generally to frustrate any consequential contractual claims the claimant might have. 

In those circumstances, it would be wrong to freeze his assets generally. It followed that the order should not be discharged in whole, but it also followed that it could not survive in its current form. The assets which should be frozen should be those which were at risk, namely the three assets in which the claimant had been promised or in which she had been assured an interest. On the facts, there would be no funds on which any injunction could bite in relation to the £5m out of the Wentworth Park proceeds (see [42], [46], [58] of the judgment). Accordingly, there would be an order restraining the defendant from dealing with the two extant assets and for appropriate disclosure in relation to them (see [58] of the judgment). First Express Ltd, Re [1992] BCLC 824 applied; CEF Holdings Ltd v Mundey [2012] EWHC 1524 (QB) considered.

Per curiam: It has to be stressed that the application proceeded on the basis of the claimant's evidence alone, which has not yet been tested. It is to be anticipated that the defendant will vigorously contest the claim. A proper and fair reporting of the judgment must make that clear and must not report it as if final findings have been made (see [62] of the judgment).

Robert Anderson QC and Sarah Haren (instructed by Mischcon de Reya) for the claimant; Anthony Trace QC and Thomas Grant (instructed by Addleshaw Goddard LLP) for the defendant.