Home Information Cases VB Football Assets v Blackpool Football Club (Properties) Ltd (Formerly Segesta Ltd) & Ors (2018)

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VB Football Assets v Blackpool Football Club (Properties) Ltd (Formerly Segesta Ltd) & Ors (2018)

Summary

The court refused to discharge or vary a freezing order imposed on a judgment debtor to protect a petitioner pending its enforcement of the debt. The debtor had not taken steps to realise its assets in order to satisfy the debt and charging orders held by the petitioner over the debtor's shares could not prevent them from being transferred away for insufficient value. There was therefore a real risk of dissipation of the debtor's assets and justification for maintaining the freezing order.

Facts

The respondent applied to vary or discharge a freezing order imposed following a judgment on a petition under the Companies Act 2006 s.994.

The judgment, dated November 2017, ordered a buyout of the petitioner's shares in a football club but provided for a limited stay to allow time for the respondent to liquidate assets in order to pay. To safeguard the petitioner's position in the meantime, a freezing order was imposed on the respondent's assets. At a further hearing, the respondent's disclosure of its financial information was found to be unsatisfactory and a timetable was imposed for payment of the balance of the judgment debt. The freezing order was maintained. The respondent defaulted on the first instalment and the staged payment regime was abrogated to allow the petitioner to take enforcement action. The respondent claimed that the requirements for a post-judgment freezing order were not met because there was no affidavit evidence that it was likely to dissipate assets and the petitioner was fully protected by charging orders it had obtained over the respondent's assets. Alternatively, the respondent sought to vary the order so as to bring it in line with the standard form provided for by CPR PD 25A, to incorporate the usual cross-undertaking in damages, and to remove from its ambit a group of companies which were not party to the proceedings.

Held

Discharge or variation of freezing order - The respondent had been represented by leading counsel at an inter partes hearing when the freezing order was granted and had not argued that the order was inappropriate. It was entirely wrong to suggest that it should be discharged simply because there was no affidavit evidence going to that issue. Any point regarding the propriety of granting the freezing order should thus have been taken in November 2017, following which the respondent could have appealed if it considered the order had been made in error. Alternatively, the court had power to vary or discharge orders if appropriate to do so, Speedier Logistics v Aardvark Digital [2012] EWHC 2776 (Comm) applied (see paras 22-24 of judgment).

Risk of dissipation - It would not be appropriate to continue the freezing order in circumstances where either the risk of dissipation no longer existed, or where that risk remained but the petitioner was adequately protected in some other way. In the instant case, a substantial judgment debt remained unsatisfied. That was not for lack of assets, but because the respondent had asked for time in which to realise them. Very few assets had in fact been liquidated since the judgment. Given the respondent's conduct post-judgment, it could justifiably be concluded that there was a real risk of dissipation absent the freezing order (paras 26-31).

Protection of petitioner - The petitioner was not adequately protected from the risk of dissipation by the other enforcement processes available to it. Although it had obtained charging orders over some of the respondent's assets, attempts to sell those assets were being resisted. The value of the respondent's real property over which the petitioner held charging orders fell far short of the sum owing. Its charging orders over the shares held by the respondent applied only to the latter's beneficial interest in the shares and did not extend to the property of the company in which they were held; therefore a freezing order could prevent those shares from being transferred away for insufficient value, whereas a charging order could not. There was accordingly a continuing need for the freezing order (paras 33-34).

Standard form of order - Although standard forms were helpful and should be used where appropriate, the freezing order had arisen out of special circumstances and the fact that it was not in standard form was no reason for varying it at this stage (para.35).

Cross-undertaking in damages - Given the respondent's failure to pay the judgment debt, notwithstanding its assertion that it had sufficient assets with which to do so, the continuation of the freezing order was due to its own conduct. Accordingly, the petitioner would not be required to give a cross-undertaking in damages (para.35).

Removal of companies from ambit of freezing order - Although the group was not a party to the freezing order, the subject of that order was the respondent's shares in that group: the effect of the order was to enjoin the respondent from using its controlling interest in the group to cause the value of its shares to be diminished (para.35).

Application refused.

Chancery Division (Companies Court)
Marcus Smith J
Judgment date
23 May 2018
References
[2018] EWHC 1232 (Ch)