Organic Grape Spirit Ltd v Nueva IQT, SL [2020] EWCA Civ 999 (28 July 2020)

Organic Grape Spirit Ltd v Nueva IQT, SL [2020] EWCA Civ 999 (28 July 2020)

A start-up company subject to a freezing order cannot rely on the 'ordinary and proper course of business' exception if it has not established a pattern of trading, but the court should nonetheless permit pursuit of its business unless there is evidence of bad faith, impropriety, or no reasonable prospect of success. Mere risk or speculation is insufficient to justify prohibition.

Citation
[2020] EWCA Civ 999
Parties
Appellant (defendant): Organic Grape Spirit Limited; Respondent (claimant): Nueva IQT, S. L.
Jurisdiction
England and Wales
Judgment Date
28 July 2020
Procedural Posture
Appeal (civil) / Appeal From High Court Freezing Order
Outcome
Appeal allowed
Legal Topics
Freezing Orders, Ordinary and Proper Course of Business, Business Start Ups Under Injunction, Risk of Dissipation, Discretion in Injunctive Relief
Civil Procedure Commercial Law Freezing Orders Ordinary and Proper Course of Business Business Start Ups Under Injunction Risk of Dissipation Discretion in Injunctive Relief

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Parties

Organic Grape Spirit Limited

Appellant (defendant)

Nueva IQT, S. L.

Respondent (claimant)

Procedural Posture

Appeal (civil) / Appeal From High Court Freezing Order

Legal Issues

  1. 1 Whether a start-up company subject to a freezing order can pursue its business using frozen funds
  2. 2 Whether such expenditure is in the 'ordinary and proper course of business'
  3. 3 Whether the court should sanction business transactions outside the ordinary course

Ratio Decidendi

A start-up company subject to a freezing order cannot rely on the 'ordinary and proper course of business' exception if it has not established a pattern of trading, but the court should nonetheless permit pursuit of its business unless there is evidence of bad faith, impropriety, or no reasonable prospect of success. Mere risk or speculation is insufficient to justify prohibition.

Court Disposition

Appeal allowed

Orders

  • Paragraph 4(4) of the order of 30 March 2020 deleted
  • The word 'not' in the second sentence of paragraph 10(2) of the order deleted