Fourie v Le Roux and Others

JurisdictionUK Non-devolved
Judgment Date24 January 2007
Neutral Citation[2007] UKHL 1
Date24 January 2007
CourtHouse of Lords
Le Roux

and others


[2007] UKHL 1

Appellate Committee

Lord Bingham of Cornhill

Lord Hope of Craighead

Lord Scott of Foscote

Lord Rodger of Earlsferry

Lord Carswell



Leon Kuschke

Sam Neaman

(Instructed by CMS Cameron McKenna LLP)


Stuart Isaacs QC

Tom Smith

(Instructed by Rawlinson Butler LLP)


My Lords,


I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Scott of Foscote. For the reasons he gives I would dismiss the appeal and make the orders which he proposes.


Mareva (or freezing) injunctions were from the beginning, and continue to be, granted for an important but limited purpose: to prevent a defendant dissipating his assets with the intention or effect of frustrating enforcement of a prospective judgment. They are not a proprietary remedy. They are not granted to give a claimant advance security for his claim, although they may have that effect. They are not an end in themselves. They are a supplementary remedy, granted to protect the efficacy of court proceedings, domestic or foreign: see Steven Gee, Commercial Injunctions, 5th ed (2004), pp 77-83.


In recognition of the severe effect which such an injunction may have on a defendant, the procedure for seeking and making Mareva injunctions has over the last three decades become closely regulated. I regard that regulation as beneficial and would not wish to weaken it in any way. The procedure incorporates important safeguards for the defendant. One of those safeguards, by no means the least important, is that the claimant should identify the prospective judgment whose enforcement the defendant is not to be permitted, by dissipating his assets, to frustrate. The claimant cannot of course guarantee that he will recover judgment, nor what the terms of the judgment will be. But he must at least point to proceedings already brought, or proceedings about to be brought, so as to show where and on what basis he expects to recover judgment against the defendant.


On his application to Park J, Mr Fourie failed to do this. It follows that the judge was wrong to make the order he did. It also follows, in my opinion, that Mr Jarvis QC, the deputy judge, was right to discharge it. There had been a clear neglect of the correct procedure, and the court should not absolve the defaulting party from the consequences of its neglect by maintaining the order in force: Siporex Trade SA v Comdel Commodities Ltd [1986] 2 Lloyd's Rep 428, 436. That, I think, is so whether or not the deputy judge foresaw that Mr Fourie might, in the immediate future, re-apply successfully in accordance with the recognised practice.


My Lords,


I have had the advantage of reading in draft the speech of my noble and learned friend Lord Scott of Foscote. I agree with him, for the reasons that he gives, that the appeal on the main issue should be dismissed. I would however set aside the order for indemnity costs.


On the main issue I also agree with the observations of my noble and learned friends Lord Bingham of Cornhill and Lord Rodger of Earlsferry. The importance of maintaining safeguards against misuse of such injunctions has recently been emphasised by the Court of Session in two cases dealing with the analogous procedure that is available in Scotland. It has pointed out that the maintenance of these safeguards is necessary if the use of the procedure is not to be held to be incompatible with article 1 of the First Protocol to the European Convention on Human Rights: Karl Construction Ltd v Palisade Properties plc 2002 SC 270; Advocate General for Scotland v Taylor 2003 SLT 1340.


Those cases were concerned primarily with issues of Scots procedure which do not arise in this case. But Lord Drummond Young said in para 54 of his opinion in Karl Construction Ltd v Palisade Properties plc, which was approved by the Inner House in Advocate General for Scotland v Taylor, that among the requirements that would have to be met if the order was to conform to that article was that the pursuer must establish that he has a prima facie case on the merits of the action in connection with which he is seeking the protective remedy. As he pointed out in para 55, nearly all of the other legal systems in which a protective security is available insist that a test which is broadly of this nature should be satisfied. I agree that the test will not be met if the claimant is unable to identify the claim which he is seeking to protect when he is seeking the remedy.


On the indemnity costs issue I share the concerns which have been expressed by Lord Rodger and by my noble and learned friend Lord Carswell as to whether an order for costs on the higher scale was appropriate. But I would, with respect, go further and hold that an order for indemnity costs was not justified in this case and that an order for costs on the standard basis should be substituted.


I recognise, of course, that there are limits on the extent which this House can properly interfere with orders of this kind. I accept too that the Civil Procedure Rules contain a new procedural code, the object of which is to enable the court to deal with cases justly, and that it is no longer necessary to show that there has to be some sort of moral lack of probity or conduct deserving moral condemnation on the part of the paying party: Reid Minty v Taylor [2001] EWCA Civ 1723; [2002] 1 WLR 2800, para 27, per May LJ.


But, as the judgments that were given in that case show, the award of costs on this basis will not be justified unless the conduct of the paying party can be said in some respect to have been unreasonable: see May LJ at para 32, Kay LJ at para 37. For example, as Kay LJ said in para 37, if one party has made a real effort to find a reasonable solution to the proceedings and the other party has resisted that sensible approach, then the latter puts himself at risk that the order for costs may be on an indemnity basis. I do not think that the appellant was guilty of conduct of that kind.


It is true that Park J was persuaded to make an order that he ought not to have made because, on the information that was laid before him, the making of a freezing order could not yet be justified. But litigants do from time to time persuade judges to make orders in their favour ex parte which on more mature reflection have no sound basis in law and must be set aside. That in itself, without more, does not justify a departure from the ordinary rule that the costs that are awarded to the other party are assessed on the standard basis in such circumstances. I do not detect anything in the appellant's conduct that was unreasonable in the sense referred to in Reid Minty v Taylor. I bear in mind also that the making of a freezing order albeit for a lesser amount was within a matter of hours substituted for that made by Park J.

The Issues


My Lords,


On 9 July 2004 Park J, on a without notice application made by the appellant, Mr Fourie, made a freezing order (commonly called a Mareva injunction) against two individuals and a number of companies of whom only two are still actively involved in the proceedings. They are Mr Le Roux and Fintrade Investments Ltd. ("Fintrade"), the respondents to this appeal. The order froze the assets in England and Wales of each respondent up to a value of £3.4 million. Mr Fourie had made the application for the order in his capacity as liquidator of two South African companies, Herlan Edmunds Engineering (Pty) Ltd ("HEE") and its parent company, Herlan Edmunds Investment Holdings Ltd ("HEI"). Mr Le Roux was the majority shareholder of HEI and, until HEE and HEI went into liquidation in South Africa, had been in control of the two companies. Fintrade is an English company owned and controlled by Mr Le Roux.


HEI and HEE went into liquidation in South Africa in June 2004 on a creditor's petition and Mr Fourie was appointed liquidator of both companies. He formed the view that Mr Le Roux and Fintrade had by fraud and deception (some details of which I will refer to later) stripped HEE of its assets and removed those assets, or their proceeds, to England. Hence his application to Park J for the freezing order.


By an application dated 28 July 2004 Mr Le Roux, and others of those against whom the freezing order had been made (it is not clear which of them, but Fintrade must have been one) applied for the freezing order to be set aside. The main ground of the application was that "there was no jurisdiction to make the order" because, at the time the order was made, there had been no subsisting proceedings to which the freezing order could be ancillary and no undertaking to commence any such proceedings had been offered by Mr Fourie. The application came before Mr Jarvis QC, sitting as a deputy judge of the High Court, on 30 September 2004. On the jurisdiction point the deputy judge said that in order to support the grant of a freezing order the applicant needed proceedings to enforce an existing cause of action that had either already been instituted or that would, pursuant to an undertaking given to the court, be instituted within a short timeframe. He pointed out that, when the matter was before Park J, not only had no proceedings for substantive relief been commenced but no such proceedings had yet been formulated. In paragraph 60 of his judgment he said this:

"In my judgment, the court had no jurisdiction to grant a freezing order in circumstances where the applicant had no intention of issuing proceedings immediately or almost immediately. I do not regard this as a simple procedural irregularity which can be cured by issuing proceedings now. I do not regard it...

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