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In summary, the claim arose out of allegations that our client was responsible for failing to retrieve / properly deal with a company vehicle following an incident involving the Claimants whilst our client was an employee, director and shareholder of the company in 2020. The Claimants sought to hold our client personally liable for the subsequent alleged losses flowing from this. Our Client resigned from the Claimant company in October 2024.
Our client’s position throughout was that he only dealt with the immediate emergency aspect of the situation before passing the matter on internally to the relevant individuals within the company, after which responsibility for management of the issue no longer rested with him.
A large part of the defence focused on the fact that no relevant duty of care was owed personally by our client in the circumstances alleged. There were also significant issues with the Claimants’ evidence and the overall basis of the claim generally.
The Claimant did not attend the hearing personally and instead instructed a solicitor’s agent. Counsel successfully opposed an adjournment application made by the Claimant’s representative after the evidential deficiencies in the claim were highlighted.
The Judge ultimately accepted our client’s evidence and dismissed the claim on the basis that no relevant duty was owed by him. The Judge also agreed that the Claimant’s conduct of the proceedings had been unreasonable and awarded costs in our client’s favour notwithstanding the matter being allocated to the Small Claims Track.
Joel Cukier, Trainee Solicitor
Parties to legal disputes are often confronted with the risk that opposing parties may dissipate assets prior to judgment being entered against them. In some instances, if the risk of asset dissipation materialises, the civil proceedings may be rendered futile.
Freezing orders are a form of interim relief designed to limit the risk of parties to legal proceedings dissipating assets. These orders prevent parties from dealing with or disposing of various assets. Parties to proceedings in the Courts of England and Wales can seek freezing orders which apply either domestically or internationally.
Freezing orders have become an increasingly common form of urgent relief sought in circumstances where litigants have been subject to complex fraud.
Generally, freezing orders can be made in circumstances where a Court is satisfied that:
– The applicant holds a right or entitlement to the assets to be frozen.
– The Court has the jurisdiction to freeze the assets.
– There is a good and arguable case to be made against the owner of the assets.
– There is a genuine risk the subject assets will be dissipated in the absence of a freezing order.
– The applicant provides a suitable undertaking as to damages (i.e. a promise to compensate the subject of the order for any loss suffered as a result of the freezing order in the event the applicant is ultimately unsuccessful in their claim).
A freezing order may also be made against assets held by third parties to a dispute in specific circumstances. The Court must be satisfied that the third party asset to be frozen is ostensibly owned by the actual defendant to the Applicant’s claim. For example, the asset may be held by a corporate entity controlled by the defendant.
Third party freezing orders originate from the landmark decision in TSB Bank v Chabra [1992] 1 WLR 231. When exercising the Chabra jurisdiction, the Court considers whether:
– There is a good reason to suppose that the Defendant is the ostensible owner of the third party asset.
– A freezing order could actually be enforced against the third party.
– The third party is capable of being validly served.
– The defendant holds substantial control over the third party asset.
– It is just and convenient to make the order.
– Innocent third parties would be unduly oppressed by the order.
– The assets would be amenable to execution of a judgement obtained against the defendant.
In Lakatamia Shipping Co Ltd v Su & Ors [2025] EWCA Civ 1389, the Court of Appeal considered the extraterritorial scope of worldwide freezing orders.
In Lakatamia Shipping Co Ltd v Su, the Appellant, Lakatamia Shipping Co Ltd, held a judgment debt against Mr Su in the sum of approximately US$60 million. The Appellant alleged that the Respondents—Mr Su, Mr Chang, and Mr Zabaldano—had unlawfully conspired to infringe its rights under that judgment.
The Appellant’s claim alleged that the Respondents had arranged for Mr Zabaldano, a Monaco-based lawyer, to transfer the proceeds of a property transaction to UP Shipping Corporation (UP Shipping being a company associated with Mr Su). At the time of the transfer, Mr Su’s assets were subject to a worldwide freezing order. The Appellant alleged that the transfer of funds to UP Shipping was designed to evade the effect of that order and frustrate enforcement of the judgment debt.
In the first instance, the Appellant’s claim was heard in the High Court. The High Court initially dismissed the claim on the basis that, whilst the transfer to UP Shipping was in breach of a freezing order, Mr Zabaldano, honestly believed that he was entitled and obliged to transfer the funds to UP Shipping. In the initial decision, the High Court found that Mr Zabaldano could rely on the “Bananaft provisio” of the freezing order as a defence to the conspiracy claim.
A Babanaft proviso essentially stipulates that a freezing order’s terms do not effect or concern anyone outside of the jurisdiction of the Courts of England and Wales.
The Court of Appeal overturned the High Court’s decision, relying on the authorities of JSC BTA Bank v Ablyazov (No 14) [2017] EWCA Civ 40 and JSC BTA Bank v Ablyazov [2018] UKSC 19. These cases clarified that Mr Zabaldano could not rely on the Babanaft proviso as a defence to a claim of unlawful means conspiracy.
The Court of Appeal clarified that the proviso operates as a protection against liability for contempt arising from non-compliance with a freezing order. Separately, the Court confirmed that the Babanaft proviso does not preclude a finding of conspiracy where the elements of that tort are otherwise established.
The decision in Lakatima provides a useful reminder that liability for breaching freezing orders cannot necessarily be avoided by reason of arranging an off-shore third party to conduct the breach of that order.
Further, the decision actively clarifies the Babanaft proviso can be relied by extraterritorial parties to resist allegations of contempt from non-compliance with freezing orders.
Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. It should not be relied upon as a substitute for obtaining advice from a qualified solicitor regarding specific circumstances.
If you are seeking to either injunct or defend Injunction proceedings, please contact us on telephone number 020 7387 2032 or on our enquiries page.
We have an experienced team currently dealing with a number of various freezing orders including Worldwide freezing orders, who can assist .
