XX & Ors v YY & Ors [2021] EWHC 1833 (Ch) (02 July 2021)

XX & Ors v YY & Ors [2021] EWHC 1833 (Ch) (02 July 2021)

The court has no jurisdiction to grant an injunction restraining the claimants from pursuing claims against the first defendant's lawyers for legal fees paid under the legal expenses exception, as such an order would extinguish substantive rights in advance and is not ancillary to the freezing or proprietary injunction. The legal expenses exception is effective according to its terms and does not require further orders to protect lawyers. The risks to solicitors are mitigated by the high threshold in Carl Zeiss, and the claimants' undertaking not to argue for a lower standard. The application for an injunction is dismissed.

Citation
[2021] EWHC 1833 (Ch)
Parties
Claimants: XX & Others; Defendants: YY & Others
Jurisdiction
England and Wales
Judgment Date
02 July 2021
Procedural Posture
High Court Civil Proceedings (business and Property Courts, Chancery Division) / Interlocutory Application (legal Expenses, Extension of Time for Defence, Increase in Living Expenses Under Freezing Order)
Outcome
Application for injunction restraining claims against lawyers dismissed; legal expenses application refused.
Legal Topics
Freezing Injunctions, Proprietary Claims, Constructive Trusts, Legal Expenses Exceptions, Knowing Receipt, Fraudulent Trading, Director's Duties, Ancillary Orders
Civil Procedure Insolvency Trusts and Equity Freezing Injunctions Proprietary Claims Constructive Trusts Legal Expenses Exceptions Knowing Receipt +3 more

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Parties

XX & Others

Claimants

YY & Others

Defendants

Procedural Posture

High Court Civil Proceedings (business and Property Courts, Chancery Division) / Interlocutory Application (legal Expenses, Extension of Time for Defence, Increase in Living Expenses Under Freezing Order)

Legal Issues

  1. 1 Whether the court has jurisdiction to grant an injunction restraining claimants from pursuing legal action against defendant's lawyers for legal fees paid from disputed funds under a freezing/proprietary injunction exception
  2. 2 Whether the legal expenses exception in a freezing/proprietary injunction requires ancillary orders to protect lawyers from future tracing claims
  3. 3 Whether to grant an extension of time for service of defence

Ratio Decidendi

The court has no jurisdiction to grant an injunction restraining the claimants from pursuing claims against the first defendant's lawyers for legal fees paid under the legal expenses exception, as such an order would extinguish substantive rights in advance and is not ancillary to the freezing or proprietary injunction. The legal expenses exception is effective according to its terms and does not require further orders to protect lawyers. The risks to solicitors are mitigated by the high threshold in Carl Zeiss, and the claimants' undertaking not to argue for a lower standard. The application for an injunction is dismissed.

Court Disposition

Application for injunction restraining claims against lawyers dismissed; legal expenses application refused.

Orders

  • Application for injunction restraining claimants from pursuing claims against first defendant's lawyers dismissed.
  • Legal expenses application refused.