Case Alert - [2018] EWHC 662 (Comm)
Court considers the scope of the Chabra jurisdiction (freezing orders against third parties)
Where there is good reason to suppose that assets held by third parties really belong to the defendant, TSB Private Bank International v Chabra [1992] is authority for the principle that the court has power to freeze those assets. In Parbulk II v PT Humpuss, Gloster J confirmed that the Chabra-type jurisdiction is not limited to cases where the third party holds, or has received, assets beneficially belonging to the principal defendant. Where the defendant has a debt or other receivable owing to it by the third party, the English court has jurisdiction to grant a freezing order against the third party to restrain it from dissipating its own assets (up to the amount of the debt).
In this case, the novel issue was whether the Chabra jurisdiction could also be invoked where the third parties have been closely "mixed up" in assisting the defendant in dealing with assets in the past (and, so it might be argued, unless restrained, there is a real risk that they will continue to do so and so assist him to breach a freezing order made against him).
Popplewell J said that "I am inclined to think that section 37, which is in very wide terms, would permit ancillary relief against a person mixed up in the affairs of a CAD [ie "the cause of action defendant"] to restrain that person from doing acts which would assist the CAD to deal with assets in a way which would defeat the freezing order against the CAD, in an appropriate case where such relief was necessary to render the primary relief against the CAD effective. It might arise, for example where a secretary was habitually used to carry out the CAD's disposition instructions".
However, the judge also said that it will be a rare case in which such an argument will work. He said that that may be "because in the case of a domestic respondent, sufficient protection is given by serving notice on the NCAD [ie "a non cause of action defendant"] of the freezing order against the CAD; and in a case where the NCAD is abroad and merely "mixed up in" the affairs of the CAD without exercising control over disposition, the restrictions on the extraterritorial reach of orders will usually preclude the exercise of any such jurisdiction (e.g. in relation to foreign bank branches). Moreover, if a party is threatening to assist a CAD to breach a freezing order, the appropriate course may be to allege a threatened tort (e.g. conspiracy to injure by unlawful means) and to seek quia timet relief against that party as a CAD".
In this case, the judge discharged the freezing orders made against the third parties because of various material non-disclosures by the claimant when they were first granted.
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