Fishman v Mangazeev

Factual and Procedural Background

On 16 September 2024, the Plaintiff issued an application for worldwide freezing injunctive relief against the Defendant in relation to a claim of up to US $19,710,000 and ancillary relief. The Plaintiff is an Israeli businessman, and the Defendant is a Russian businessman permanently resident in England. They have a history of business collaboration and rivalry following a recent fallout in August 2024.

The claim arises from a Loan Agreement dated 17 July 2023, under which the Plaintiff lent the Defendant US $18.33 million for up to 18 months. The Defendant is the sole owner of a company registered in the British Virgin Islands ("Company A"), which owns a large residential property in Surrey ("The Property"). The loan consideration included an option for the Plaintiff to acquire a stake in another company owned by the Defendant and interest payments, with specific terms if the Property was sold early.

The Loan Agreement contained a negative pledge preventing the Defendant from disposing of the Property or shares in Company A without the Plaintiff's consent. The Defendant’s lawyers also agreed to grant a charge over shares in Company A to the Plaintiff, but this charge was never executed, with the Defendant later refusing to grant it personally.

The Defendant contends that a Deed of Settlement dated 2 November 2023 discharged his liability under the Loan Agreement. The Plaintiff disputes this, arguing that the Deed did not settle liabilities between the Plaintiff and Defendant under the Loan Agreement.

The court was asked to consider whether there was a serious issue to be tried regarding the effect of the Deed of Settlement, whether there was a real risk of the Defendant dissipating assets before trial, and if so, whether it was just and convenient to grant the freezing injunction sought.

Legal Issues Presented

1. Whether there is a serious issue to be tried as to whether the Deed of Settlement discharged any liability of the Defendant to the Plaintiff under the Loan Agreement.
2. Whether there is a real risk of the Defendant improperly dissipating his assets before trial and judgment.
3. Whether it is just and convenient to grant the freezing injunction sought, in whole or in part.

Arguments of the Parties

Plaintiff's Arguments

• The Deed of Settlement did not objectively extend to liabilities under the Loan Agreement as those liabilities were not under consideration at the time.
• The Defendant breached the negative pledge by charging the Property to a lender ("Company B") without consent, diminishing the asset value.
• The Defendant agreed but failed to execute a charge over shares in Company A, undermining the agreed collateral.
• The Defendant’s conduct in charging the Property without notice and refusing the share charge deed was bad faith or sharp practice, evidencing a risk of asset dissipation.
• The Defendant is likely to dissipate assets to avoid repayment, justifying the freezing injunction.

Defendant's Arguments

• The Deed of Settlement, by its clear and wide language, released the Defendant from liabilities under the Loan Agreement.
• The Defendant personally never agreed to the charge over shares despite solicitors agreeing a draft.
• The Hilco loan secured by charging the Property was taken based on legal advice about the Deed of Settlement's scope and was not bad faith or dishonourable conduct.
• The Defendant’s use of loan monies is for legitimate business purposes, not unjustified dissipation.
• The Defendant is permanently resident in the jurisdiction with family ties, reducing the risk of asset flight.
• The Defendant submitted that the injunction sought was overly wide and prejudicial to his business activities.

Table of Precedents Cited

Court's Reasoning and Analysis

The court identified three core issues: the scope of the Deed of Settlement’s release, the risk of asset dissipation, and the justness of granting the injunction.

Regarding the Deed of Settlement, the court noted the tension between the literal wide release language and the factual context, which suggested the settlement was intended to resolve disputes involving a third party, not between the Plaintiff and Defendant. The court held there was a serious issue to be tried on this point, requiring detailed factual and contextual analysis beyond the application stage.

On the risk of dissipation, the court considered the Defendant’s known assets, including equity in the Property and cash proceeds from a loan secured by charging the Property to Company B. There was no direct evidence of unjustified dissipation, but the Defendant’s conduct—charging the Property without notice and failing to execute an agreed share charge—was found to be sharp practice falling below commercial morality. This conduct indicated a real risk that the Defendant might dissipate assets to avoid repayment.

The court emphasized the difference between legitimate business use of assets and unjustified dissipation, noting that offshore structures and cryptocurrency holdings were not in themselves evidence of risk. The Defendant’s residency and family ties reduced the risk of flight, but the covert conduct and failure to be transparent about the secured loan raised concerns.

Balancing the risk of prejudice to the Defendant’s business against the Plaintiff’s need for protection, the court declined an overly broad injunction but found it just and convenient to grant a freezing injunction limited to assets within the jurisdiction, including the Property, shares in Company A, cash in a Barclays account, and other assets up to the claimed amount.

The court incorporated mechanisms in the injunction to allow reasonable business use of funds with notice and challenge provisions, and required the Defendant to provide regular updates on the frozen funds.

Holding and Implications

The court GRANTED a freezing injunction limited to assets within the jurisdiction up to an aggregate value of £19,710,000. This includes the Property, shares in Company A, approximately £5.95 million in a Barclays bank account, and other assets including cryptocurrency or digital assets controlled by the Defendant.

The injunction was subject to standard carve-outs allowing reasonable legal and business expenditure, with procedural safeguards for notice and challenge. The Defendant was to provide undertakings regarding the Property and shares, and the Plaintiff was required to provide an undertaking in damages fortified by payment into court or security.

The decision directly protects the Plaintiff’s interests pending trial without setting new legal precedent. The court reserved liberty to vary the injunction following ancillary disclosure and to address the amount of security required.