[2024] EWHC 1931 (Comm)

A good arguable case means a case which is “more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success”: Kazakhstan Kagazy plc & Ors v Arip[2014] 1 CLC 451 at [66]. In endorsing that test, the Court of Appeal also rejected the suggestion that the applicant is required to show that it has “much the better of the argument”: see [66]-[68] per Elias LJ and see also Longmore LJ at [25].

When applying the good arguable case test, the court should not attempt to try the issues but should only consider the apparent strength or weakness of the respective cases to decide whether the claimant’s case, on the merits, is sufficiently strong to reach that threshold. That may include assessing the apparent plausibility of statements in the affidavits: see Alternative Investment Solutions (General) Ltd v Valle de Uco Resort & Spa SA[2013] EWHC 333 (QB) at [7] and Kazakhstan Kagazy plc & Ors v Arip[2014] 1 CLC 451 at [23] per Longmore LJ

The test for 'good arguable case' in the context of freezing injunctions is not a particularly onerous one”; In Lakatamia Shipping Company Ltd v Moritomo[2019] EWCA Civ 2203; [2020] 1 C.L.C. 562 at [35], Haddon-Cave LJ said that and at [38], that “[t]he central concept at the heart of the test [is] ‘a plausible evidential basis’” (Emphasis added).

The claimant must show a real risk, judged objectively, that a future judgment would not be met because of an unjustified dissipation of assets. In this context dissipation means putting the assets out of reach of a judgment whether by concealment or transfer.

The risk of dissipation must be established by solid evidence; mere inference or generalised assertion is not sufficient.

The risk of dissipation must be established separately against each respondent.

It is not enough to establish a sufficient risk of dissipation merely to establish a good arguable case that the defendant has been guilty of dishonesty; it is necessary to scrutinise the evidence to see whether the dishonesty in question points to the conclusion that assets may be dissipated. It is also necessary to take account of whether there appear at the interlocutory stage to be properly arguable answers to the allegations of dishonesty.

[…]

What must be threatened is unjustified dissipation. The purpose of a WFO is not to provide the claimant with security, it is to restrain a defendant from evading justice by disposing of, or concealing, assets otherwise than in the normal course of business in a way which will have the effect of making it judgment proof...”

Each case is fact specific and relevant factors must be looked at cumulatively.”

“The fifth evidential factor, (namely the "stable door" point) was in my view (and contrary to the judge's view) a powerful factor militating against any conclusion of a real risk of dissipation. If there had been a real risk of the appellants unjustifiably dissipating their assets, it would have materialised by the time of the application. The first intimation of what became the present proceedings occurred in May 2014. There was then a detailed letter of claim, with draft particulars of claim, in December 2014. A revised claim was ultimately issued in August 2015. The respondents repeatedly threatened to seek a freezing order (or similar relief) from September 2015. The application for an initial notification was made in February 2016, resulting in the 7-8 April hearing. In my view it was inherently unlikely that the appellants would unjustifiably dissipate their assets in the future, having not done so by this point.”

Although none of the failures in presentation of the Claimant’s case were intentional, there was, as I have held, nevertheless a pervasive overselling of the Claimant’s evidence in material respects at all stages of the application (affidavit, skeleton and oral argument) and a failure to draw the court’s attention to material evidence which pointed away from the Defendant being the instigator of the fraud.

The Claimant’s case does not reach the threshold of good arguable case. The Claimant has a case which is capable of serious argument but not more. The Defendant has now put before the Court a significant body of WhatsApp messages and emails which strongly support the Defendant’s case that he was himself duped by the TK Impersonators. For the Claimant’s case that Mr Iqbal is behind the scam and impersonated Ms Brown, Mr Rai and Mr Yani, to be correct all of theses emails and all of the WhatsApp messages which Mr Iqbal has produced in evidence (including those retrieved by an independent expert from his broken phone) have to be fabricated. It is of course possible that they are and that will be a matter for trial. Mr Cullen submitted that there was some evidence to support the case that all the emails and WhatsApp messages arefabricated. He pointed to some discrepancies between the native versions of the emails (in particular in respect of whether “Sam” appeared in them or not) and the versions produced in pdf. Some of these discrepancies Mr Iqbal could explain and others he could not. However, most of the discrepancies were it seemed to entirely inconsequential, for example, “20222” instead of “2022” and a difference in unit price. More significantly, as Mr Power submitted, despite the fact that the Claimant now has the native emails, Mr Cullen has not able to point to anything in the meta data of the emails themselves which would suggesting that they were all fabricated. The emails and WhatsApp messages also have a level of everyday detail that lend them an apparent plausibility. They are consistent with each other in showing how Mr Iqbal was slowly drawn in and then became more and more uncomfortable as the money goes out of his company’s account and his commission is not paid. It is not appropriate for me to descend into the minutiae of this evidence or to make even provisional findings. That is a matter for the trial judge. Mr Cullen could also point to one admitted lie and one fabricated purchase order by Mr Iqbal. However, as the evidence stands, the highest I consider it can be put is that it arguable and properly pleadable inference that Mr Iqbal is somehow involved in the fraud but no direct evidence that he was or that he has fabricated all the emails and WhatsApp messages he has exhibited in evidence. The fact that admitted that he gave a false account of the transaction to Apparel and falsified one document is capable of supporting such an inference but I am not fully persuaded that on the material currently available the Claimant’s case meets the threshold of a good arguable case.

Even if I am wrong about that and the case crosses the threshold on the evidence presently available, there is in my judgment no evidence of a real risk of dissipation of assets. The Applicant must demonstrate a current risk of dissipation of assets now held: see point (4) of the summary on p. 2924 of the White Book 2024 drawn from Gulf Air BSC v One Flight Ltd [2018] EWHC 1019 (Comm at [17] – [20]). I accept Mr Power’s stable door submission for the following reasons:

It follows that on the basis of the evidence now available both the Goods themselves have gone (first into the hands of LGD and then sub-purchasers) and the proceeds of the sale to LGD have gone. Any freezing injunction today would therefore be nothing more than an attempt to shut the stable door after the horse has bolted. The position is very different to that before Knowles J. because at that stage the evidence was that the proceeds of the sale to LGD remained in the hands of a company controlled by Mr Iqbal.

As to the other factors, relevant to the threat of dissipation, Mr Cullen submitted that there are doubts about the veracity of Mr Iqbal’s statements about his assets, in particular his assertions about his wife’s interest in a cryptocurrency account and their family home and the lack of any obvious source of income to support his lifestyle (including two expensive cars). However, none of these points in my judgment rose above the level of general suspicion or assertion and did not really bear directly on the issue of whether there was solid evidence of risk of a dissipation of assets.

As to dishonesty, Mr Cullen understandably emphasised that Mr Iqbal has now admitted that he lied to Apparel when he said that HKS had purchased the Goods and sold them to LGD and that he had falsified one document (the HKS purchase order). He says he lied under pressure from LGD to put some distance between them and TK Maxx. I am in no position to assess the credibility of that explanation. However, the false statement in the email to Apparel does not strike me as the work of a calculating fraudster who has carefully laid a trail of emails and WhatsApp messages. The message obviously made things worse for Mr Iqbal because it contradicted the email correspondence he had sent to Apparel which on its face suggested that he was just a broker or agent. In any event the admitted dishonesty in question, is not sufficiently closely linked to any risk of dissipation of current assets to weigh heavily in the balance in favour continuing / re-instating the Order.

As to Mr Iqbal’s reaction to the claim, he has put in a full defence and very detailed witness statements explaining how he came to be involved and exhibiting comprehensive chains of emails and WhatsApp messages and other documents, such as his LinkedIn profile, which are consistent with his being duped. His initial response to the queries from Apparel was I accept slightly odd and defensive. It is possible that what he most feared (at that time) was losing the trust of LGD and that was more important to him than being open with Apparel. However, in my judgment, there is nothing overall in his reaction to the claim such as to weigh significantly in favour of continuing or re-instating the Order.

Mr Iqbal has in open correspondence offered an undertaking in respect of his largest declared asset namely the equity in his house.

There is nothing in the evidence relevant to good arguable case on the merits which is of sufficient strength as support the inference that there is a real risk of dissipation. I was referred in this context to the comments of Henshaw J in ArccelorMital v Ruia and Others at [2020] EWHC 740 (Comm) [213] and those of Gloster LJ in Holyoake v Candy [2018] Ch 297 at [61]

In summary, approaching the matter holistically, for the reasons given above, I do not consider that the Claimant has established there is a real risk of a future unjustified dissipation of assets which is supported by solid evidence, even if the Claimant has contrary to my conclusion above a good arguable case on the merits.