Key Facts
- •L & S Accounting Firm Umbrella Limited (in liquidation) brought a summary judgment application against the defendants (husband and wife, and three companies they control) for alleged large-scale labour supply fraud involving over £25 million in undeclared taxes.
- •Freezing injunctions were already in place against the defendants.
- •Defendants applied for an adjournment of the summary judgment hearing and release of funds under the freezing injunctions to cover legal fees.
- •The application for adjournment was made very late, on the eve of the hearing.
- •The defendants argued that the claimant's refusal to release funds for legal representation violated their Article 6 right to a fair trial.
- •The claimant argued that the defendants hadn't met the first stage of the Marino test (showing they had no other assets to pay legal fees).
- •The defendants claimed limited financial means, citing monthly expenditure of £6000 and reliance on borrowed funds.
Legal Principles
Two-stage test for releasing funds under a proprietary freezing injunction (Marino v FM Capital Partners Limited [2016] EWCA Civ 1301): (1) Defendant must show no unaffected assets to cover living and legal expenses; (2) Court balances justice between claimant's proprietary claim and defendant's need for legal representation.
Marino v FM Capital Partners Limited [2016] EWCA Civ 1301
Article 6 of Schedule 1 to the Human Rights Act 1998 (Right to a fair trial) – the right to access legal advice and representation, even if a party may not have an arguable case, but proportionality is a consideration.
Human Rights Act 1998, Article 6; Airey v Ireland (1979-1980) 2 EHRR 305; Steel v The United Kingdom (2005) 41 EHRR 22; South Buckinghamshire District Council v Porter [2003] UKHL 26; Brown v Stott [2003] 1 AC 681; Bank Mellat v Her Majesty’s Treasury (No.2) [2013] UKSC 39
Principles governing late adjournment applications: Exceptional justification needed, particularly when a trial date is already fixed; court considers disruption to other litigants and proportionate costs.
The White Book and the Chancery Guide
Enforcing disclosure obligations: Claimant must bring an application for contempt of court, not withhold legal funds.
Isbilen v Turk [2024] EWHC 505 (Ch)
Outcomes
Defendants' application for adjournment dismissed.
Defendants failed to meet the first stage of the Marino test; application made too late without sufficient justification; the court found that the Marino test is compliant with Article 6; and overall it was not just to grant the adjournment.
Permission to appeal refused.
Case management decision with no real prospect of success on appeal; granting the appeal would effectively grant the refused adjournment.
Defendants ordered to pay claimant's costs.
Costs to follow the event.