Stephen Hunt v Sarju Patel & Anor

Stephen Hunt v Sarju Patel & Anor

There is a good arguable case that both respondents were partners in Black Capital and liable to contribute to any shortfall in its assets. There is a real risk of dissipation of assets, particularly in light of evidence of wrongdoing and the operation of a Ponzi scheme. The criticisms of the applicant's presentation at the without notice hearing do not amount to a material breach of the duty of full and frank disclosure. The balance of convenience lies in favour of continuing the freezing orders, and it is appropriate for the cross-undertaking in damages to be limited to the liquidation estate.

Parties
Applicant: Stephen Hunt (as Provisional Liquidator of Black Capital); First Respondent: Sarju Patel; Second Respondent: Ravneet Ubhi
Jurisdiction
England and Wales
Judgment Date
15 December 2022
Procedural Posture
Injunction (freezing Order) in Insolvency Proceedings / Hearing of Application to Continue Freezing Orders
Outcome
Freezing orders continued against both respondents; application to amend cross-undertaking dismissed.
Legal Topics
Freezing Injunctions, Provisional Liquidation, Full and Frank Disclosure, Risk of Dissipation, Cross Undertaking in Damages
Insolvency Law Civil Procedure Partnership Law Freezing Injunctions Provisional Liquidation Full and Frank Disclosure Risk of Dissipation Cross Undertaking in Damages

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Parties

Stephen Hunt (as Provisional Liquidator of Black Capital)

Applicant

Sarju Patel

First Respondent

Ravneet Ubhi

Second Respondent

Procedural Posture

Injunction (freezing Order) in Insolvency Proceedings / Hearing of Application to Continue Freezing Orders

Legal Issues

  1. 1 Whether the freezing orders against the respondents should be continued
  2. 2 Whether there was a breach of the duty of full and frank disclosure at the without notice hearing
  3. 3 Whether there is a good arguable case and a real risk of dissipation justifying continuation of the freezing orders

Ratio Decidendi

There is a good arguable case that both respondents were partners in Black Capital and liable to contribute to any shortfall in its assets. There is a real risk of dissipation of assets, particularly in light of evidence of wrongdoing and the operation of a Ponzi scheme. The criticisms of the applicant's presentation at the without notice hearing do not amount to a material breach of the duty of full and frank disclosure. The balance of convenience lies in favour of continuing the freezing orders, and it is appropriate for the cross-undertaking in damages to be limited to the liquidation estate.

Court Disposition

Freezing orders continued against both respondents; application to amend cross-undertaking dismissed.

Orders

  • The freezing orders against Sarju Patel and Ravneet Ubhi are continued until further order of the Court on existing terms, subject to agreed amendments for Mr Ubhi (increase in living expenses and permission to sell a car for legal expenses).
  • Mr Ubhi's application to amend the cross-undertaking in damages is dismissed.