Therium Litigation Funding A IC v Bugsby Property LLC
[2023] EWHC 2627 (Comm)
London Capital & Finance Plc (in Administration) & Ors v Michael Andrew Thomson & Ors
24 June 2024
[2024] EWHC 1684 (Ch)
High Court
A company and its administrators sued a man for fraud, claiming he received money they lost. They wanted to freeze his assets to get their money back. The court said the administrators shouldn't have tried to register a claim on his property (that was illegal). However, the court froze the man's other assets because he didn't show he didn't have enough money to pay his own lawyers without using the frozen assets. The court thought it was fair because the man already had a good defense prepared.
Key Facts
- •London Capital & Finance PLC (LCF) and London Oil & Gas Limited (both in administration) brought claims against Michael Andrew Thomson (D5) and others.
- •Claims included fraudulent trading, dishonest assistance, and proprietary claims related to funds allegedly misappropriated from LCF.
- •D5 was the majority beneficial owner of Surge Financial Limited, a marketing supplier for LCF, and allegedly received millions from LCF funds.
- •Claimants sought a proprietary freezing injunction on D5's assets, including a property near Lechlade, to preserve potentially traceable proceeds of LCF funds.
- •D5 sought to use the proceeds of the property sale to pay legal fees (£2.16m) and living expenses (£8,500/month).
- •Claimants had previously applied for a unilateral notice against the property, which D5 challenged.
- •The court considered the permissibility of the unilateral notice under the Land Registration Act 2002 and the application of the principles in *Marino v FM Capital Partners Limited* and *Kea Investments v Watson* regarding proprietary freezing orders.
Legal Principles
Staged approach to proprietary freezing orders: (1) Arguable proprietary claim; (2) Defendant's arguable claim to the money; (3) Defendant has no other funds; (4) Discretionary balancing of injustice to claimant vs. defendant.
Marino v FM Capital Partners Limited [2016] EWCA Civ 1301; Kea Investments v Watson [2020] EWHC 472 (Ch)
Unilateral notices cannot be entered on the register for interests under a trust of land (Land Registration Act 2002, sections 33 and 34).
Land Registration Act 2002, sections 33 and 34; Trusts of Land and Appointments of Trustees Act 1996, section 1
Duty to act reasonably when applying for a notice or restriction (Land Registration Act 2002, section 77).
Land Registration Act 2002, section 77
In proprietary freezing order applications, delay is relevant only if it causes prejudice to the defendant. The court balances potential injustice to both parties, prioritizing the defendant's access to professional representation.
Madoff Securities International Limited v Raven [2011] EWHC 3102 (Comm); AB v CD [2023] EWHC 2353 (Ch); Skatteforvaltningen v Edo Barac [2020] EWHC 377 (Comm)
Outcomes
The application for a unilateral notice was deemed impermissible.
The claimants' claim was considered to be an interest under a trust of land, prohibited by section 33 of the Land Registration Act 2002.
The application for a proprietary freezing order was granted.
The defendant failed to discharge the burden of proving he had no other assets to pay legal fees; the claimants' delay did not cause the defendant prejudice.
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