A H Baldwin and Sons Limited
& Others v Sheikh Saud Bin Mohammed Bin Ali Al-Thani [2012] EWHC 3156
(QB)
In a judgment handed down earlier
this month in the Queen’s Bench Division it was held that the conditions for a
worldwide freezing order had been made out and that an order should be made in
support of proceedings in the United States.
The claimant auctioneers sought a
worldwide freezing order to support a claim for payment from the defendant, a
collector of art and antiquities, for the purchase of various lots in an
auction of rare coins. Despite the
defendant’s assurances that he would pay the claimants for his purchase and explanations
for his non-payment, no payment was forthcoming and the claimants issued
proceedings in the United States. The
defendant, a member of the royal family of Qatar, was habitually resident in
London for part of each year and the claimants sought to protect their position
against the defendant dissipating his assets by obtaining a worldwide freezing
order in the High Court.
Haddon-Cave J, in granting the
injunction, held that s. 25 of the Civil Jurisdiction and Judgments Act 1982
required a two stage test when considering whether to grant an asset freezing
injunction in aid of foreign proceedings. First, the court needed to consider
whether the facts would warrant the relief sought if the substantive
proceedings had been brought within the jurisdiction, and second, if the first
limb of the test was satisfied, whether the existence of the foreign
proceedings made it inexpedient to grant the injunction.
In ruling that the facts would
warrant the grant of an order in domestic proceedings, the judge found that
there was plainly a good arguable case on the merits given that the defendant
admitted liability for the sums claimed.
Further there was also a real risk of dissipation of assets as:
(1)
the defendant had no defence to the claim;
(2)
all explanations, excuses and promises made by
the defendant had been unsatisfactory; and
(3)
evidence was heard of the ‘extraordinary
behaviour’ that the defendant also owed large sums to other auction houses
which Haddon-Cave J described as “discreditable, dishonourable and disturbing.”
The judge also relied upon the defendant’s unexplained
behaviour in leaving the country, inaccuracies in relation to the disclosure of
the defendant’s assets, and concerns relating to the defendant’s removal of his
existing coin collection from London to Doha as justifying a real risk of
dissipation.
Of particular
interest to practitioners working with freezing injunctions is the observation
by Haddon-Cave J at paragraph 44 of the judgment that he saw no reason why a “spiral
of debt” around a limited pool of assets could not amount to a dissipation of
assets in certain circumstances.
In relation
to the issue of whether it would be ‘inexpedient’ to grant the injunction, the
judge considered the following issues set out by Potter LJ in Motorola Credit v Uzan (No. 2) [2004] 1
WLR 133 at 115:
(1)
First, whether the making of the order would
interfere with the management of the case in the primary court e.g. where the
order is inconsistent with an order in the primary court or overlaps with it.
(2)
Second, whether it is the policy in the primary jurisdiction
not itself to make worldwide freezing/disclosure orders.
(3)
Third, whether there is a danger that the order(s)
made will give rise to disharmony or confusion and/or risk of conflict
inconsistent or overlapping orders in other jurisdictions, in particular the
courts of the state where the person enjoined resides or where the assets
affected are located. If so, then respect for the territorial jurisdiction of
that state should discourage the English court from using its unusually wide
powers against a foreign Defendant.
(4)
Fourth, whether at the time the order is sought
here is likely to be a potential conflict as to jurisdiction rendering it inappropriate
and inexpedient to make a worldwide order.
(5)
Fifth, whether, in a case where jurisdiction is
resisted and disobedience to be expected, the court will be making an order
which it cannot enforce.
Having
considered the factors above, Haddon-Cave J concluded that there was nothing in
the case which prevented him from granting the injunction, to the contrary, the
granting of the injunction would aid, rather than interfere with the US
proceedings, and therefore it was not inexpedient to make the order.
The judgment serves
as a useful and concise statement of the law relevant to both domestic freezing
injunctions and applications for such an order under s. 25 Civil Jurisdiction
and Judgments Act 1982 sought in support of foreign proceedings.
[At the time
of writing, the case is only available on Lawtel.]