Unless order necessary and proportionate due to claimants’ previous disregard for disclosure orders and breach of undertakings


Re: ORB Arl & Ors v Ruhan & Ors [2016] EWHC 850 (Comm)

The first claimant company and the defendant entered into an agreement for the sale of the company’s assets. The claimants asserted that the agreement included a profit share agreement, but the defendants disputed this. The defendants had transferred the assets into a discretionary settlement, and the claimants procured the transfer of assets out of this trust by agreement with the beneficiaries. The defendants thus brought a counterclaim for misappropriation of those assets as a result.

It was held at a hearing in March 2015 that the claimants’ recovery from the discretionary trust exceeded the maximum value of their claim. They were therefore ordered to provide disclosure in relation to assets and transactions, and a worldwide freezing order was made. The claimants did not comply with this or a previous disclosure order.

The court held that the freezing order would remain in place, as the claimants had not complied with the para. 8(f) stipulation that the order would lapse where alternative security was provided. It had been necessary for the claimants to seek actual consent regarding the security put forward, and the negative pledge given was inadequate as security. The court opted to add the assets pledged to the freezing order, finding that given the undertaking not to encumber them, there was no unfair prejudice for the claimants. Given the non-compliance with the disclosure orders, the court imposed an unless order in respect of the March order.

The court felt justified in making the order, considering the prejudice that the defendants would otherwise face if the order was not made. In addition, the public interest in due administration of justice would be undermined if individuals were permitted to ignore court orders.

The final rulings relating to the March order could not be made without determining whether the Defendant had unclean hands. The Claimants had provided evidence to support their submissions – alleging the Defendant’s complicity in computer hacking and other civil and criminal conduct. The Defendants were wrong to submit that this could be determined summarily. A mini trial of that issue would be necessary and the Court gave orders accordingly

Matthew Ryder QC, Lorna Skinner, Nicholas Gibson and Angeline Welsh were involved in this case.