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Bank of Scotland Plc v Greville Development Company (Midlands) Ltd (2013)

Summary

It was just and convenient in the circumstances to continue a freezing order and permit a claimant to cross-examine the defendant on the disclosure it had given. The claimant had a good and arguable case, and there was the possibility that the defendant's assets would be dissipated if both orders were not made.

Facts

The applicant bank (B) applied to continue a freezing order against the respondent development company (G), and for permission to cross-examine it on disclosure given in relation to the whereabouts of certain assets.

B had loaned money to G so that G could buy property. As security, B registered a legal charge over the property. After G fell into arrears, a DS1 form was submitted to the land registry to vacate the charge over the property. B said that had been forged, but G's case was that it had entered into an "off the record" agreement with B to vacate the charge. Following its removal, G sold its leasehold interest in the property. B accused G of dissipating the money and obtained a freezing order against it.

B submitted that under the circumstances both orders sought were just and convenient.

Held

Although the facts were to be determined at trial, the explanation offered by G did not undermine the fact that B had a good and arguable case as it was inherently improbably that a financial lender would just give up a charge. It was also just and convenient to continue the injunction. Although G argued that the order would not be fair because B was using it stop it from meeting its reasonable legal expenses, there was no evidence of that. B had even suggested ways of getting money to the solicitors directly. It could not be said that B's conduct would justify discontinuing the freezing injunction, Thane Investments Ltd v Tomlinson (No.1) [2003] EWCA Civ 1272 applied. (2) Disclosure in the instant case was partial, and that may have been deliberately so. Such a cross-examination would usually only be ordered if assets were likely to be dissipated, and that was the case here. It was therefore just to order that G be cross-examined in respect of the whereabouts of certain assets. It represented the only realistic way that the freezing order would be effective. Although a costly exercise, the scope of the cross-examination could be controlled and confined by the judge hearing it, Otkritie International Investment Management Ltd v Urumov [2012] EWHC 3106 (Comm) applied.

Applications granted

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Judgment
06 Mar 2013

Chancery Division
Judge Pelling QC

Members
Jonathan Allcock
Thomas Grant KC