Apparel Fzco v Sheeraz Iqbal
[2024] EWHC 1931 (Comm)
Marco Piacquadio & Anor (as Joint Liquidators of Smith & Partner LTD) v Luke Sparkes & Ors
4 October 2024
[2024] EWHC 2518 (Ch)
High Court
A company was accused of running a fake art investment scheme. The court decided to keep the company's assets frozen to make sure they are available if the company is found guilty. The court found enough evidence to think that the company might be guilty, even though the company's former director strongly denied all the accusations.
Key Facts
- •Application by liquidators of Smith & Partner Ltd (in liquidation) to continue freezing orders against respondents.
- •First respondent was former director and shareholder; second respondent a company he solely controls; third respondent alleged to be a former de facto director.
- •Claims against respondents under sections 212 and 213 of the Insolvency Act 1986 for fraudulent trading and misappropriation.
- •Company allegedly ran a fraudulent art investment scheme causing significant investor losses (over £9 million in proved debts).
- •First respondent challenges the continuation of the freezing order on the grounds of lack of good arguable case, no risk of dissipation, and failure of full and frank disclosure.
- •Extensive evidence (7000 documents) presented to the court.
Legal Principles
Three criteria for freezing orders: good arguable case, real risk of dissipation, and just and convenient.
Unitel SA v dos Santos [2023] EWHC 3231 (Comm)
Good arguable case test: more than barely capable of serious argument, but not necessarily better than 50% chance of success.
Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft GmbH (“The Niedersachsen”) [1983] 2 Lloyd’s Rep 600
Interlocutory applications should not become mini-trials.
Magomedov v TGP Group Holdings [2023] EWHC 3134 (Comm)
Risk of dissipation must be established by solid evidence; mere inference insufficient. Dishonesty must point to likely dissipation.
Fundo Soberano De Angola v dos Santos [2018] EWHC 2199 (Comm)
Good arguable case of respondent's wrongdoing strongly supports risk of dissipation.
Lakatamia Shipping Co Ltd v Morimoto [2019] EWCA Civ 2203
Duty of full and frank disclosure: high duty to disclose all material facts, even those potentially favourable to the respondent.
Tugushev v Orlov & Ors [2019] EWHC 2031 (Comm)
Outcomes
Freezing order continued until trial or further order.
Applicants met the criteria for a freezing order: good arguable case on the merits, real risk of dissipation, and it was just and convenient.
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