AB v CD [2023] EWHC 2353 (Ch) (20 June 2023)

AB v CD [2023] EWHC 2353 (Ch) (20 June 2023)

The exhaustion of the D&O insurance policy constituted a material change of circumstances justifying consideration of a variation to the proprietary freezing orders. The Defendants demonstrated, on the evidence, that they had no significant assets outside the scope of the PFOs and CROs. The court, applying the Marino test and balancing the interests of both parties, determined that it was just to allow a limited release of funds (£1.7m plus VAT) for future legal costs, with appropriate safeguards and security, but not for accrued legal fees.

Citation
[2023] EWHC 2353 (Ch)
Parties
Claimant/respondent: AB; Defendant/applicant: CD (Second and Tenth Defendants, D2 and D10)
Jurisdiction
England and Wales
Judgment Date
20 June 2023
Procedural Posture
Civil (business and Property Courts, Chancery Division) / Interlocutory Application for Release of Funds Subject to Proprietary Injunctions to Pay Legal Fees
Outcome
Application granted in part
Legal Topics
Proprietary Injunctions, Freezing Orders, Release of Frozen Assets for Legal Costs, Material Change of Circumstances, Fraudulent Trading, Breach of Fiduciary Duty, Tracing Claims
Civil Procedure Equity and Trusts Fraud Proprietary Injunctions Freezing Orders Release of Frozen Assets for Legal Costs Material Change of Circumstances Fraudulent Trading +2 more

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Parties

AB

Claimant/respondent

CD (Second and Tenth Defendants, D2 and D10)

Defendant/applicant

Procedural Posture

Civil (business and Property Courts, Chancery Division) / Interlocutory Application for Release of Funds Subject to Proprietary Injunctions to Pay Legal Fees

Legal Issues

  1. 1 Whether funds subject to proprietary freezing orders can be released to pay Defendants' legal fees
  2. 2 Whether there has been a material change of circumstances justifying variation of the consent order (PFOs)
  3. 3 Whether Defendants have shown they have no other available assets for legal costs

Ratio Decidendi

The exhaustion of the D&O insurance policy constituted a material change of circumstances justifying consideration of a variation to the proprietary freezing orders. The Defendants demonstrated, on the evidence, that they had no significant assets outside the scope of the PFOs and CROs. The court, applying the Marino test and balancing the interests of both parties, determined that it was just to allow a limited release of funds (£1.7m plus VAT) for future legal costs, with appropriate safeguards and security, but not for accrued legal fees.

Court Disposition

Application granted in part

Orders

  • Release of £1.7 million plus VAT from funds subject to proprietary freezing orders for Defendants' future legal costs, not for accrued fees.
  • Security to be provided over D10's equity in HH property and suitable charges over chattels including jewellery.