I am surprised the case below ended as it did. A court does not grant a freezing order unless there is a very real risk of dissipation. From what I can understand of this case, the defendant my not have been totally candid, but there was no actual evidence provided to the court that dissipation was imminent. Perhaps this is one for appeal!
Asset freezing orders are an invaluable tool for those engaged in debt recovery but those who apply for them must show that there is a real risk that relevant assets will otherwise be dispersed. That test was satisfied in one case involving a bank’s claim for $22 million against an international oil and gas trader.
The trader had fallen into financial difficulties and, at the bank’s behest, had signed promissory notes by which he put up personal assets as security for his company’s debts. The bank had previously provided about $75 million in trade finance to the company but withdrew its support after taking the view that certain transactions had revealed an unacceptable standard of commercial morality, if not dishonesty.
The bank launched proceedings against the trader, claiming a total of $22 million, and, in reliance on the promissory notes, obtained without notice an asset freezing injunction against him. In challenging that order, the trader pointed out that he had voluntarily provided the bank with extensive information about his personal assets and had risked those assets to secure his company’s debts.
He argued that there was no evidence that he had dealt with or dissipated any of his assets in a way that might undermine the bank’s security. However, the High Court found that he had in some respects shown a lack of openness and candour in the context of dealings with his assets. A real risk of dissipation was established and, in the circumstances, the injunction was continued until trial or further order.
