Factual and Procedural Background
This expedited appeal concerns various orders and directions made by Judge Shea KC, a Deputy Judge of the High Court in the Business List, following a hearing on the return date of a worldwide freezing order ("WFO") initially granted without notice by Judge Davis-White KC on 26 November 2024. The claimant, Company A, a Liechtenstein-incorporated insurance company in liquidation, alleges that the first defendant misappropriated approximately £19 million between 2010 and 2017, using the funds to support a lavish lifestyle including his wife, the third defendant. The defendants include the first defendant, his wife (the third defendant), and a limited liability partnership (Company B) of which they are sole members.
Company A commenced proceedings in November 2022, claiming misappropriation and knowing assistance by the second defendant, the former Finance Director. The matrimonial home, Weald Hall, was sold under court order, with net proceeds paid into court. Initial freezing orders were granted against the first defendant and subsequently replaced by undertakings from both the first and third defendants. The third defendant was later joined as a party, with claims against her relating to payments received and her beneficial interest in Weald Hall.
Following extensive non-compliance with disclosure obligations by the defendants and Company B, a search order was granted and executed at Weald Hall, uncovering undisclosed assets including jewellery and other valuables. This led to a further WFO ("WFO 2") against the defendants and others, freezing assets up to £60 million worldwide. Subsequent hearings resulted in reduction and continuation of the WFO in part, with detailed case management directions and expert evidence permitted in the fields of Liechtenstein law and forensic accountancy.
The hearing before Judge Shea KC in February 2025 addressed continuation of WFO 2. The judge discharged the order in relation to overseas assets due to insufficient evidence but continued it domestically, freezing assets within England and Wales up to £15 million against the third defendant and up to £36 million against the first defendant. The order included detailed provisions regarding the use and sale of assets, notably jewellery, and permitted reasonable legal expenses subject to caps and notification requirements. The third defendant now appeals on five grounds.
Legal Issues Presented
- Whether the domestic freezing order against the third defendant was properly made in law and fact, including the quantum of the frozen amount and procedural fairness regarding new cases advanced by the claimant.
- Whether the third defendant was entitled to rely on forensic accountancy evidence at trial.
- Whether the third defendant should be permitted to pay legal and personal expenses from the proceeds of sale of Weald Hall.
- Whether the conditions attached to the sale of the third defendant's jewellery were lawful, fair, and procedurally proper.
- Whether the costs order requiring the defendants to pay costs of a specific application related to disclosure pursuant to the Search Order was appropriate.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Derby & Co Ltd v Weldon (No 1) [1990] Ch 48 |
Establishes that worldwide freezing orders are draconian and only granted in exceptional cases with grave risk of asset dissipation; court must scrutinise facts carefully. |
The court applied these principles to assess the necessity and scope of the freezing orders, particularly the domestic versus overseas asset freezing. |
| Convoy Collateral Ltd v Broad Idea International Ltd [2021] UKPC 24, [2023] AC 389 |
Sets out requirements for granting freezing orders, including that the applicant must have a good arguable case and the respondent must hold assets enforceable against. |
The judge directed herself on this law to determine whether the freezing order should be continued, especially in relation to overseas assets. |
| T.S.B. Private Bank International S.A. v Chabra [1992] 1 WLR 231 |
Defines the "Chabra jurisdiction" for freezing orders against non-cause of action defendants who hold assets enforceable against the primary defendant. |
The judge rejected the argument that the third defendant was a non-cause of action defendant, finding a pleaded claim against her sufficient to justify the freezing order. |
| Frederic Marino v FM Capital Partners Ltd [2016] EWCA Civ 1301 (unreported) |
Provides a four-stage test for permitting defendants to use proprietary assets to fund legal and living expenses, emphasizing the burden on the defendant to prove lack of other resources. |
The court applied the Marino principles to refuse the third defendant permission to pay legal expenses from the proceeds of sale of Weald Hall, given the proprietary claim and availability of other assets. |
| Independent Trustee Services Ltd v GP Noble Trustees Ltd [2009] EWHC 161 (Ch) |
Frames four questions to assess entitlement to use proprietary assets for legal expenses. |
The court referenced this framework in applying the Marino principles to the facts concerning the third defendant's funding of legal costs. |
| AB and Others v CD and Others [2023] EWHC 2419 (Ch) |
Interprets standard form exceptions in freezing orders regarding reasonable legal expenses and addresses the court's discretion to vary freezing orders. |
The court considered this authority in construing the undertakings given by the third defendant and the applicable principles governing use of frozen assets for legal expenses. |
| HMRC v Begum [2010] EWHC 2186 (Ch) |
Summarizes the court's approach to controlling legal costs under freezing orders. |
The court cited this summary in discussing the reasonableness and control of legal expenses under the freezing order regime. |
| Banco Turko Romana v Cortuk [2018] EWHC 662 (Comm) |
Discusses the Chabra jurisdiction and principles related to freezing orders against third parties. |
Referenced to support the rejection of the third defendant's characterization as a non-cause of action defendant. |
| Abdulle v Commissioner of Police of the Metropolis [2015] EWCA Civ 1260, [2016] 1 WLR 898 |
Emphasizes the need to respect robust case management decisions of first-instance judges to avoid satellite appeals. |
The court echoed this principle in upholding the judge's discretionary decisions on case management, including conditions on the sale of jewellery. |
Court's Reasoning and Analysis
The court carefully examined the evidential and legal basis for continuing the freezing orders. Initially, the judge discharged the worldwide freezing order against the first defendant due to insufficient evidence of overseas assets, despite suspicions raised by his conduct. However, the court held that the freezing order could continue domestically in respect of assets within England and Wales, including those held by the third defendant and Company B, based on strong evidence of undisclosed and mingled assets and risk of dissipation.
The judge applied established principles from Derby & Co Ltd v Weldon and Convoy Collateral Ltd v Broad Idea International Ltd to assess the appropriateness of freezing orders, emphasizing that the existence of sufficient domestic assets can obviate the need for overseas freezing relief.
Regarding the third defendant's entitlement to use the proceeds of sale of Weald Hall to fund legal expenses, the court applied the four-stage test from Frederic Marino v FM Capital Partners Ltd. It concluded that the claimant had a good arguable proprietary claim to those proceeds, the third defendant had not demonstrated she could not fund her defence from other unaffected assets (notably jewellery), and thus it was unjust to permit use of the proprietary assets for legal costs.
The court construed the undertaking given by the third defendant in the Consent Order as requiring application of the usual Marino principles despite the express permission to deal with the proceeds consistent with exceptions in the original WFO. It rejected the argument that the undertaking permitted unfettered use of the proceeds for legal expenses, finding that the broader context and principles governing proprietary claims prevailed.
The judge also upheld the conditions imposed on the sale of the third defendant's jewellery as a reasonable case management measure designed to protect the claimant's interests and prevent dissipation, especially given the history of concealment and obstructive conduct.
Finally, the court found no error in the costs order directing the defendants to pay the claimant's costs of an application related to disclosure under the Search Order, noting the judge's broad discretion and the defendants' obstructive conduct.
Holding and Implications
The court DISMISSED ALL FIVE GROUNDS OF APPEAL.
The freezing order against the third defendant in respect of domestic assets was upheld, including the cap of £15 million. The ruling that the third defendant could not fund legal expenses from the proceeds of sale of Weald Hall was affirmed, consistent with established proprietary injunction principles. The conditions governing the sale of jewellery and the costs order were also upheld.
The decision directly affects the parties by maintaining the protective freezing regime and limiting the third defendant’s access to certain funds for legal expenses. No new precedent was established; rather, the court applied and reinforced existing legal principles concerning freezing orders, proprietary claims, and the funding of legal expenses under such orders.