Home Information Cases Parvalorem v Olivera & Ors (2013)

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Parvalorem v Olivera & Ors (2013)

Summary

An interim freezing injunction over assets in England in aid of a Portuguese order should not contain an exception to allow payments in the ordinary course of business, since the court was prepared to infer that there were sufficient free assets elsewhere out of which those payments could be made.

Facts

The court was required to determine whether an interim freezing injunction should contain an exception for payments in the ordinary course of business and/or for living and legal expenses.

The applicant (P) was a Portuguese state-owned organisation. The first respondent (R1) was the subject of criminal proceedings together with associated civil proceedings in Portugal. He was a director of the second and third respondent companies (R2 and R3). The Portuguese court had made an order for seizure of R1's assets including assets, namely classic cars, which appeared to be owned by R2. R2 had consigned a number of classic cars to the third party auctioneers in England to be auctioned. P obtained a without notice freezing order as interim relief ancillary to the Portuguese proceedings pursuant to the Civil Jurisdiction and Judgments Act 1982 s.25. The auction went ahead and the freezing order was limited to the proceeds of sale and any unsold cars. The auctioneers had paid an advance of £4 million to R2 and it was agreed that that sum could be deducted from the freezing order. The disclosure required by the freezing order revealed that R1 and R3 had no assets in England. It appeared that the advance of £4 million paid to R2 was no longer within the jurisdiction. The freezing order was continued pending R1's appeal against the Portuguese order. The freezing order did not contain the standard form exception for dealing with assets in the ordinary course of business. The issue was whether the order should contain exceptions for payments in the ordinary course of business, and for living and legal expenses.

P submitted that there was no need for the usual exceptions because the respondents had sufficient assets elsewhere to meet those expenses and had not demonstrated by evidence that they could not meet those expenses without recourse to the freezing order assets. P further submitted that the ordinary course of business exception would permit the respondents to pay off inter-company loans which would have the effect of putting assets out of the reach of creditors.

Held

In the case of a worldwide freezing order the starting point would be to include the usual exemptions. However, the position was different in the case of a freezing order over the domestic assets of a foreign defendant with foreign assets, A v C (No.2) [1981] Q.B. 961 and Halifax Plc v Chandler [2001] EWCA Civ 1750, [2002] C.P.L.R. 41 considered. The freezing order in the instant case should not contain the exceptions. That was because the court was prepared to infer in the circumstances that R2 had free assets available from other sources. Bearing in mind in particular R1's position and the £4 million, there should be no business or living expenses exceptions. There would be an exception from the freezing order for VAT and storage charges since those costs were attributable to assets in England and should be met out of those assets. That could be contrasted with the respondents' desire to pay expenses in Portugal out of the frozen assets. The legal expenses in one sense related to the English assets and the court was prepared to consider further evidence from the respondents which would show that those expenses could not be met except by way of an exception from the freezing order. The respondents failed to show that P should be required to give fortification for its cross-undertaking in damages.

Judgment accordingly

Chancery Division
Warren J
Judgment date
2 October 2013
References

LTL 3/10/2013