CR-2024-000675 - [2025] EWHC 2069 (Ch)

Fecha: 04-Ago-2025

DELAY / THE ‘STABLE DOOR’ POINT

DELAY / THE ‘STABLE DOOR’ POINT

73.

Counsel drew my attention to familiar authority on the impact of possible delay in seeking a freezing order and its impact, in turn, on the risk of dissipation, to the following effect:

Delay by itself is not a reason to refuse an application for a freezing order, nor does it indicate (without more) that there is no risk of dissipation: Antonio Gramsci Shipping Corporation v Recoletos Limited [2011] EWHC 2242 (Comm) at [28]- [29]. This is so even if there is potential widespread dissipation of assets. To the same effect is the decision of Flaux J in Madoff Securities International Ltd v Raven [2011] EWHC 3102 (Comm); [2012] 2 All ER (Comm) at [154]-[156].

ii)

I was also reminded of my consideration of the relationship between delay and risk of dissipation in Crypto Open Patent Alliance v Wright [2024] EWHC 743 (Ch) at [40] which I do not set out but have well in mind.

74.

As to the facts here, the Liquidators made the following points:

First, the liquidators are strangers to the events in issue and have been proceeding with all deliberate speed. They have experienced considerable difficulty in reconstructing the relevant events when tracing the Company’s history, the causes of its failure and the Diversions. The Respondents are sophisticated operators who inspire initial trust, later to be regretted.

ii)

Second, an internal forensic exercise on the Respondents’ actions and assets had to be produced and continually updated based on correspondence with the Respondents and new information coming to light which needed to be checked. The liquidators say they needed to be satisfied that they had a reasonable understanding of the Respondents’ resources before committing themselves to a substantial claim. This was compounded by the continuous changes in the shareholdings of companies connected to the Respondents.

iii)

Third, the liquidators have received lengthy and complex correspondence on behalf of the Respondents, expressing forcefully their innocence of any misconduct. The correspondence had to be taken seriously and analysed and the evidence relating to the presentation of a false bank statement has needed careful handling.

iv)

Fourth, the Respondents have created a high digital profile for themselves and they display a confidence which the liquidators have come to regard as brazen. Given the complexities of this case, and the evidence required to demonstrate properly the need for a freezing injunction, the liquidators believe that it would have been difficult to bring this application any sooner than they have.

Fifth, the Respondents had left insufficient realisable assets in the Company to fund a proper investigation. There were no funds available in the Company to settle any disbursements and/or fund any investigation into the conduct of the Company’s management or whether the Company has any assets to realise or claims to bring. The liquidators have not to date realised any assets. As a result, the liquidators have had:

to seek consent from their firm’s risk committee to bring this application (and the underlying application);

to instruct solicitors (HF) to act on matters in this liquidation on a contingency basis, and agree the basis of that instruction;

to instruct leading counsel on a contingency basis, and agree the basis of that instruction; and

to seek after-the-event insurance to be able to bring this application (and the underlying misfeasance proceedings).

vi)

Sixth, ultimately, the liquidators also need funding and, for that purpose, to assess risk in circumstances where the books and records are inadequate and the Respondents have been evasive and confusing in their responses to reasonable enquiries of them and their dealings with assets. No creditor or other funding is available to the liquidators to bring this application (and/or the underlying application). ATE insurance was sought and discussions took place over many months and an ATE provider confirmed cover on 23 July 2025.

75.

On the issues of delay and stable door, the Liquidators submitted neither was a reason to refuse the WFO:

They submit this is not a case of delay. The liquidators made the Application as soon as they were able, bearing in mind the facts and matters set out above.

ii)

The “stable door” point is concerned with a situation where a party is on notice of potential legal proceedings and has not dissipated its assets – thus giving rise to an inference that it will not do so. But the point cannot sensibly apply where a party has dissipated its assets, as the Respondents have.

iii)

Whilst it is possible that the proverbial horse has bolted, that is far from certain and it may well still be possible to preserve some, if not all, of the relevant assets.

76.

Overall, I was entirely satisfied that the length of time that has passed since the Liquidators were appointed did not in any way disentitle them to the interim relief sought. It was clear to me that it has been necessary to carry out a substantial amount of work in order to investigate matters, put allegations to the Respondents and formulate this claim and this application.

77.

I was also entirely satisfied there remains a real risk of dissipation even if the Respondents have already taken steps to attempt to put some assets beyond reach. In this regard, I had in mind that the correspondence with the Respondents ended with their response dated 24 February 2025, more than 5 months ago. I thought it safe to assume that Mr Rizvi is a sophisticated individual: he will have been aware that no funds were left in the Company to fund litigation, but he will have been aware of the possibility that the Liquidators might be able to raise funds for that purpose. He is likely to have taken some steps to put some assets beyond the reach of the Liquidators but probably not all since he continues to be resident in the UK. Overall, I concluded there was purpose in the interim relief sought, even if the Liquidators have further fights on their hands to recover the sums claimed.