Lenkor Energy Trading DMCC v Irfan Iqbal Puri
| Jurisdiction | England & Wales |
| Judge | Christopher Hancock |
| Judgment Date | 29 July 2022 |
| Neutral Citation | [2022] EWHC 2047 (Comm) |
| Docket Number | Case No: CL-2017-000433 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 2047 (Comm)
Christopher Hancock QC
(Sitting as a Judge of the High Court)
Case No: CL-2017-000433
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane
London, EC4A 1NL
Philip Jones (instructed by Mackreil Turner Garrett) for the Claimant
Nigel Cooper QC (instructed by Hill Dickinson LLP) for the Defendant
Hearing dates: 29 March 2019
This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:00 on Friday 29 July 2022
Christopher Hancock QC:
Introduction
The Claimant originally brought this action to obtain an interim freezing injunction and associated disclosure orders in support of proceedings brought against the Defendant in Dubai. An order was made on 11 July 2017 by HHJ Waksman QC (as he then was).
The Claimant has obtained judgment against the Defendant in Dubai for the sum of about £26,000,000 and now seeks to enforce that judgment in this jurisdiction using the common law. The Claimant commenced an action in debt against the Defendant on 17 January 2019 (claim no. QB-2019-000183) (“the Action”) some five months after the decision of the Dubai Court of Cassation on 05 August 2018. The claim form in the Action was served on the Defendant on 08 March 2019. I was told that service was acknowledged on 29 March 2019.
This Court now has before it various applications by the Claimant:
a) To continue the interim freezing injunction;
b) To remove the “Angel Bell exception”;
c) To remove the requirement that the Claimant fortify its cross undertaking in damages, in the sum of £100,000;
d) For a Bankers' Books Inspection Order.
The Applications to extend the Freezing Injunction.
The Defendant did not seek to discharge the freezing injunction but noted that in any event the Order of Mr. Justice Bryan dated 18 October 2017 continues until further order of the Court. In these circumstances the parties agreed that I did not need to make any further order.
The application to remove the Angel Bell exception.
The Defendant opposed the Claimant's request to remove paragraph 11(b) from the Ex Parte Order (ie to remove the so called “Angel Bell” exception). Paragraph 11(b) is the exception which permits the Defendant to deal with or dispose of his assets in the ordinary and proper course of business.
Mr Cooper QC, on behalf of the Defendant, made two submissions in this regard:
a) First, the application was premature, since the Claimant had not yet obtained a judgment in England. The Dubai judgment is not enforceable in its own right in this jurisdiction. The Claimant will not have an enforceable judgment in this jurisdiction unless and until it obtains judgment in the Action. It is trite law that a foreign judgment has no direct operation in England & Wales and will be enforceable as a claim or counterclaim at common law or under statute; see Dicey, Morris & Collins on Conflict of Laws, 15 th ed. at §14R-001. The Claimant rightly recognises that there is no statutory regime which permits enforcement of its Dubai judgment and has therefore brought a claim at common law. However, that claim is so new that the Defendant's time to acknowledge service had not expired as at the date of the application.
b) Even if the Claimant were to obtain a final enforceable judgment in this jurisdiction, this exception should not be removed. The effect of removing the exception would be to prevent the Defendant carrying on business and to treat the Claimant as a preferential or secured creditor. It is trite law that a freezing injunction, whether in a final or interim form, is not intended to provide a claimant with any proprietary or preferential interest in the assets of a defendant. The authorities confirm that removing the ‘course of business exception’ is not therefore usual post-judgment particularly where there is no as yet enforceable judgment; see Gee on Commercial Injunctions, 6 th ed at §21–037 and Mobile Telesystems Finance SA v. Nomihold Securities Inc [2011] EWCA Civ 1040, [2012] 1 Lloyd's Rep. 6 at [33] and [37] – [40].
Mr Jones, for the Claimant, submitted that it would be appropriate for me not to continue this exception “post judgment”, for various reasons:
a) There is no evidence that its absence would embarrass or hinder the Defendant in any way.
b) The Defendant has made no effort whatever to satisfy the Dubai judgment and he has proved evasive in relation to service/acknowledgement of the QBD claim to enforce the judgment, particularly the refusal of couriered documents and the complete lack of any response notwithstanding the likelihood that the proceedings would have come to the Defendant's attention by one or other of the alternative means adopted.
c) There was a history of a troubling shifting of assets.
d) The Defendant had, it is said, a history of dishonesty/lack of probity.
e) The Defendant was in breach of the WFO which has led to the necessity of seeking disclosure from the banks.
I start with the decision in Nomihold. That was a case where there was an arbitration Award, in relation to which the Court had given permission to enforce as a judgment of the Court, but subject to a liberty to apply. This was described by Counsel as a judgment nisi.
Tomlinson LJ considered that where there was such a judgment, then in principle the Angel Bell provision should be retained. He said:
“33 In Masri v Consolidated Contractors [2008] EWHC 2492 (Comm) I was persuaded to omit an ordinary course of business exception in relation to a freezing order in respect of sums in various of the judgment debtor's bank accounts. The evidence showed positively that the absence of such an exception had caused no disruption to the judgment debtor's business. I referred at paragraphs 24 and 35 of my judgment to a passage from the judgment of Colman J in Soinco v Novokuznetsk Aluminium Plant [1998] QB 406. That case was concerned with the appointment of a receiver by way of equitable execution. At page 421 (not 412 as recorded in paragraph 35 of my judgment) Colman J said this:—
“As to bringing the business of the judgment debtor to a standstill by cutting off payment otherwise available to it, I am not persuaded that this is a relevant consideration in the context of a remedy designed to effect execution and not designed merely to conserve assets pending determination of an unresolved claim. This is not the environment of a Mareva injunction prior to trial, but of execution of a pre-existing judgment. Whereas the effect of an injunction on the defendant's ability to conduct his business in the ordinary course may be relevant where his liability is yet to be determined, it cannot possibly be a relevant consideration where his liability has already been determined. Impact on the judgment debtor's business is not a consideration material to the availability of legal process of execution and there is no reason in principle why it should be introduced as material to the availability of equitable execution.”
On further reflection, I am not sure that those observations do apply a fortiori to a post-judgment freezing injunction, as I said in paragraph 35 of my judgment in Masri. As I have already noted, a post-judgment freezing order is granted in aid of execution but it is not part of the process of execution itself. In that same paragraph I said:—
“In any event I am satisfied that in relation to assets such as balances in bank accounts an “ordinary course of business” exception is inappropriate in the post-judgment environment.”
Again, on further reflection, it may be that that is too sweeping a statement, although I am sure that the ordinary course of business exception was inappropriate in relation to balances in bank accounts in the circumstances of that case. I am satisfied that it will sometimes and perhaps usually be inappropriate to include an ordinary course of business exception in a post-judgment asset freezing order. Of course, its omission would not preclude an application to vary or discharge. …
…37 Thus both as a matter of principle and on authority it seems to me that a freezing order granted in aid of enforcement of an arbitration award ought ordinarily to contain an ordinary course of business exception. There is no basis upon which one contractual claimant should be able to prevent the satisfaction of the claims of others in a similar position. I am not satisfied that the circumstance that Nomihold is also in the sense described a judgment creditor should lead to any different conclusion.
38 The second conclusion I would reach is that, in the present circumstances, it cannot be said that payment by MTSF of the interest due to Noteholders would amount to dissipation of assets by it with the object or effect of denying Nomihold satisfaction of its claim. Still less can it be said that the payment of interest by MTSF, if made, would be with a view to avoiding execution of the award since execution is presently unavailable. MTSF is simply seeking to discharge an obligation which has fallen due in the ordinary course of its business. I can see no principled basis upon which it can properly be restrained.
39 I agree with Mr Flynn that it is not open to Nomihold to characterise the conduct of MTSF as an attempt to prefer some creditors over others at a time when its solvency is in doubt, but even if that were a proper characterisation, as Aldous LJ pointed out in Camdex it is not the function of the freezing order jurisdiction to confer a preference for repayment from an insolvent party.
40 The judge treated the position of MTSF as being analogous to that of an ordinary judgment debtor and in my view that was the wrong...
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