Cancer Research UK Ltd v Morris and Another
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE KING |
| Judgment Date | 27 May 2008 |
| Neutral Citation | [2008] EWHC 2678 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ/08/0380 HQ/08/0437 |
| Date | 27 May 2008 |
[2008] EWHC 2678 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
The Honourable Mr Justice King
Case No: HQ/08/0380
HQ/08/0407
HQ/08/0437
Mr Conall Patten appeared on behalf of the Claimant
Mr Jonathan Lennon appeared on behalf of the Defendant
Approved Judgment
Tuesday, 27 May 2008
I have before me an application on notice to continue the freezing injunction granted without notice by Ousley J on Friday 2 nd May 2008 but with certain extensions.
First it is sought to extend the order on a world wide basis and secondly to continue it on a proprietary basis by which is meant that the claimant seeks a provision which excepts from the assets from which the respondents under paragraph 11 of the order can make payments in respect of ordinary living expenses, legal advice and representation, the assets defined as “the applicant's assets”, unless the respondents have no other assets to call upon.
These “applicant's assets” are defined in paragraph 11.1(a) of the draft order. They are in effect all the monies and properties in the possession and control of the respondents or one or other of them against which the claimant in these civil proceedings is seeking to make a proprietary claim on the basis they are held by the respondents as constructive trustees. In particular they are defined as including monies held in a Barclays Bank student account which the first respondent has admitted contains that which remains of the £260,000 which the claimant asserts has been fraudently obtained from them by the respondents over a four year period. This account is in the name of the second respondent.
Further variations in the original order are sought. First it sought that the respondents should provide further information and disclosure as provided for in subparagraphs (a) (b) (c) of paragraph 10 of the draft order. Under (a) and (b) information and a verifying affidavit is sought in respect of the respective respondent's bank statements. (c) imposes an obligation upon each respondent to provide through affidavit seven categories of information or disclosure relating to invoices rendered to the applicant by the respondents; any written instructions for payment of each invoice; the date and amount of each invoice; a description of the services alleged to justify the invoices with supporting documentation ; the dates and amounts of all payments received by the respondents from the applicant excluding salary; what has become of each payment; full contact details of any third parties who have received the proceeds of the payments.
Finally the applicant seeks provision in the order under subparagraph 10 (d) for permission to use the information obtained as a result of the order or the without notice orders or otherwise in the course of these proceedings for two distinct purposes, namely (1) for supplying information to the police for the purpose of any criminal investigation or proceedings against either of the respondents; and (2) any disciplinary proceedings or legal proceedings that may arise out of the suspension or dismissal of the first respondent as an employee of the applicant.
The first respondent has been employed by the claimant charity as a project property manager since about four years ago. The second respondent is his wife.
Mr Lennon who appears on behalf of both respondents has not sought to raise any argument against the continuation of the freezing injunction in principle. On the evidence before me this is a proper approach. I am satisfied that the claimant charity has a good arguable case against each of the respondents on the basis of the claim issued in the proceedings. That is to say as against the first respondent for breach of fiduciary duty; as against each respondent in deceit and/or restitution of money paid under a mistake, and/or unjust enrichment. The applicant claimant further in my judgment has a good arguable case in its proprietary claim against each respondent whereby it seeks recovery of the monies and property on the basis of their being held by the respondents as constructive trustees. I accept as a sound proposition of law that circumstances whereby monies which have been paid away by mistake are held by a recipient who knows of the mistake, do give rise to a constructive trust by which the recipient is bound. His conscience will be affected so as to make him a trustee of the money. Authority if it be needed may be found in the observations of Lord Bingham in Westdeutschebank v. Islington LBC [1996] AC 660, 715 and by Aikens J in Bank of America v. Armell [1999] Lloyds Rep (Banking). Further the respondents have assets within and indeed as will become clear in a moment, outside the jurisdiction. On the respondents' own case they have already substantially dissipated the monies received from the claimant. There is in my judgment a clear risk that unless restrained they will continue to do so. For all these reasons the continuation of the freezing order as a matter of principle must follow.
Nor has any argument been raised against the extension of the order world wide. Again this is understandable since there is now evidence of property in California bought by the respondents with the monies obtained from the claimant. I will in these circumstances allow this extension.
Continuation on a proprietary basis
I turn to the application for continuation on a proprietary basis. I allow this application in the limited terms in which the continuation is sought for the following reasons. As a matter of principle where there are assets which may belong to the claimant the court will not allow those funds to be used for living expenses or legal costs until the defendant has shown by proper evidence that he has no other assets which can be used for these purposes. If there such other funds, the defendant must use these first before any question can arise of his having access to funds which are the subject of a proprietary claim. These are not in my judgment controversial propositions. They are helpfully summarised in Gee on Commercial Injunctions (5 th Ed) at paragraph 20.057 with supporting authority, in particular PCW (Graphics Underwriting Agency) Limited v. Dixon [1983] 2 All ER 158. Given there is a good arguable case against each of the respondents for a proprietary claim in respect of those assets defined in the draft order as “the applicant's assets” I see nothing in the objections put forward by Mr Lennon to this part of the proposed order which persuades not to follow the principles set out above and to allow the order to issue in the limited form proposed given it does no more than reflect these principles. I stress the limited form of the order sought. It does not seek to prevent the respondents from ever having access to “the applicant's assets”. The proposed order states only that “subparagraph (c) below shall not apply to the applicant's assets unless the applicant's assets are the only assets in which the respondent or either of them could make such payment”.
The point made very strongly by Mr Lennon is that the reality is that there are very little in assets available to the respondents, likely to be no more than £18,000, other than the “applicant's assets” and that it will not be long before one or other of the respondents seeks to use the applicant's assets for the permitted purposes under the very terms of the order which is...
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