An applicant for a freezing order must show: a good arguable case; that the respondent owns or has interests in assets; a real risk that any judgment will not be satisfied because of an unjustified dissipation of assets; and that it is just and convenient to grant relief.
The court considered such an application in John E Griggs & Sons Ltd v High Firs Penthouses Ltd [2023] EWHC 2231 (TCC); [2023] PLSCS 157.
The case concerned a construction contract of January 2019 under which the claimant developed property at High Firs, Radlett, in Hertfordshire. The defendant failed to make an interim payment in August 2022 and the claimant subsequently obtained an adjudication order for payment of the sum due. The defendant failed to pay and the claimant issued enforcement proceedings which were compromised and judgment entered for £140,275.
However, the defendant refused to make payment, instead giving notice of its own intended cross-claim of £444,000 for alleged snagging and defective works, that it was seeking to sell a penthouse at the development and reserving the right to pursue losses arising from a delayed sale.
The claimant then sought a freezing order over the claimant’s assets up to £175,000 and an order restraining the grant of any leasehold interest in the development, arguing that the intended sale of the penthouse would dissipate the remaining value of the defendant’s interest in the development with the object of avoiding payment of the judgment sum.
The application failed. The claimant clearly had an unanswerable claim, having judgment in its favour and the defendant held a long leasehold interest in the development. However, it was not surprising that the defendant intended to sell a long lease of the penthouse since the company was incorporated for the sole purpose of developing and selling units at the development. There was clear evidence that unless it sold the penthouse it might not have the cash to pay the judgment debt.
In the absence of any evidence from the claimant as to the marketing of the penthouse, the court had to assume, in the defendant’s favour, that it was being openly marketed for sale at full value and that the defendant’s primary purpose was to realise its investment in the development rather than defeat the claimant’s claim or evade other creditors.
There was no evidence of a real risk that the judgment would remain unsatisfied because of an unjustified dissipation of the defendant’s assets, and it was neither just nor convenient to interfere with what the court must assume to be the bona fide sale for value of the penthouse.
Louise Clark is a property law consultant and mediator
