Yuzu Hair & Beauty Ltd (Dissolved) v Akilan Selvathiraviam

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr Justice Zacaroli
Judgment Date13 Feb 2019
Neutral Citation[2019] EWHC 772 (Ch)
Docket NumberNo. BL-2019-000244

[2019] EWHC 772 (Ch)





Rolls Building

Fetter Lane

London, EC4A 1NL


Mr Justice Zacaroli

(In Private)

No. BL-2019-000244

Yuzu Hair & Beauty Limited (Dissolved)
Akilan Selvathiraviam

Mr R. Brown (instructed by Edwards Duthie Solicitors) appeared on behalf of the Applicant.


Mr Justice Zacaroli

This is an application for the continuation of a freezing order granted (on an application without notice) by Falk J on 30 January 2019, alternatively for the grant of a fresh order on similar terms. The claimant is Yuzu Hair and Beauty Ltd, a company that is in fact dissolved. I will come back to that point in a moment. There is compelling evidence, and there was compelling evidence before Falk J, that the defendant has defrauded the company of something in excess of £300,000. It also appears the defendant, who was the company's accountant, has caused, by his inactions, the company to be struck off. I am satisfied, subject to one point, on the basis of the evidence that was before Falk J and the note of her judgment, that this is a proper case for an injunction to continue hereafter.


The one point is whether a company that has been struck off, and thus ceased to exist, can apply for or be granted a freezing order. There is pending an application to restore the company to the register under section 1029 of the Companies Act 2006. The effect of restoration, if granted, would be retrospective. On that basis, Falk J was persuaded (although with no argument to the contrary) that it was proper to make the order on the application of the dissolved company. I should say that the cross-undertaking in damages was offered by Ms Dennis, who is a director and shareholder of the company.


It seems to me that there are difficulties with this approach. Whilst it is true that if restored to the register, prior acts, including the commencement of proceedings, can be validated at the moment of restoration, the fact is that the court is aware, at this point in time – when being asked to make or continue the freezing order – that the legal person purporting to make the application does not exist. There is a difference between a court being asked, once a company is restored to the register, to validate steps taken prior to restoration and a court being asked to make orders on the application of a dissolved company before it has been restored to the register. For one thing, there cannot be certainty that the company will be restored to the register.


I consider that there is, however, another route to achieving the same end. That is to make a freezing order in the context of the application by the director and shareholder to restore the company to the register. Those are legal proceedings, the purpose of which is to enable the company to pursue a claim to recover money of which it had been defrauded by the defendant. The power under section 37 of the Senior Courts Act 1981 is wide enough, in my judgment, to justify an order being granted to an applicant in such proceedings in order to freeze the assets of someone against whom the company, when it is restored, would have a claim. An injunction would be justified in those circumstances as protecting the interests of the applicant (the director and shareholder) by preserving the assets of the company it is sought to have restored, thus ensuring that the restoration application achieves its objective.


There is an analogy with the position of a petitioning creditor in a company winding up. In HMRC v Eglinton [2007] BCC, 78, Briggs J held that the jurisdiction under section 37 was wide enough to permit a petitioning creditor to obtain a freezing injunction against a third-party debtor of the company, i.e. someone against whom the company had a claim. He noted at para.6 of the judgment that this was the first case, so far as he or counsel was aware, in which a petitioner in a creditors' winding up petition had obtained and sought to have continued, in the face of reasoned opposition, freezing orders against persons whose only alleged liabilities were to the company the subject matter of the petition. After a review of the authorities, he concluded at para.12:

“… it is now well established that [freezing] orders may also be made against persons in relation to whom the claimant asserts no cause of action and seeks no money judgment, but in relation to whom there is an arguable case that assets held in their name or under their control are in truth beneficially owned by the defendant against whom the claim is made …”

Then he noted at para.15 that a creditors' petition, although often referred to as an enforcement process, does not seek a money judgment.

“If successful, it merely brings into existence a statutory scheme for the getting in and distribution of the company's assets among its stakeholders, of whom the petitioner is no more than a member of a particular class, namely an unsecured creditor. But in my judgment the particular nature of the relief sought by means of the presentation of a creditors' winding up petition does not disable the petitioner from asserting that it is pursuing a cause of action for the purpose of conferring jurisdiction upon the court to grant appropriate interim relief, whether by way of freezing order or otherwise.”

After a review of further authorities, including a decision of the High Court of Australia, in Cardile v LED Builders PTY Limited [1999] 198 CLR 380, Briggs J concluded that the jurisdiction in relation to petitioners was not confined to cases where the third party was alleged to hold assets belonging beneficially to the company but included a case where the third party owed money to the company. He concluded as follows at para.41:

“First, that the time has come for the English Courts to recognise, consistently with the carefully considered conclusion of the High Court of Australia, that the jurisdiction to grant freezing orders against third parties is not rigidly restricted by the Chabra requirement to show that, at the time when the order is sought, the third party is already holding or in control of assets beneficially owned by the defendant. However attractive that test is as a bright and focused boundary-line, it does not seem to me to accord with the dictates of justice and commonsense. To take a simple example, it would operate so as to distinguish between a case in which the third party misappropriated an asset of the defendant and held on to it and a case in which in otherwise identical circumstances the third party misappropriated the asset and dissipated it. It makes no sense that the first of those third parties should be amenable to the freezing order jurisdiction whereas the second, however separately wealthy, should not. In both cases the defendant or its officeholder would have an equally viable restitutionary personal claim, the frustration of which by yet further asset dissipation by the third party would in turn detract from the efficacy of any order for the winding up or bankruptcy of the defendant and from any prior judgment for which winding up or bankruptcy was a means of enforcement.”

In para.43, therefore, he concluded:

“It follows that with all the misgivings attendant upon the opening of a potential Pandora's box, I reject the submission that the court had no jurisdiction to grant the freezing orders against the respondents in this case, or to continue them pending...

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