HT-2022-000254 - [2025] EWHC 1581 (TCC)

It is, of course, the case that the court may and should take into consideration the conduct of the parties including pre-action conduct and any relevant offers. The relevant correspondence is largely summarised at paragraphs 64 to 66 of the judgment. The positions that I have summarised and that correspondence show that this was a case in which the parties were faced with a conundrum some of which was of their own making.

On the one hand the applicants clearly contended that the Properties did not fall within the scope of the injunction and/or that their Charge took priority over any interest that Click St Andrews might have. They could, therefore, have dealt with the Properties without any further order of the court. As I indicated at paragraph 72 of the judgment, the respondents flagged the risk that disposing of the Properties would be a breach of the injunction but, if that had caused the Receivers not to dispose of the Properties, that was their decision.

It seems to me that the respondents’ reliance on the decision in Taylor v Van Dutch Marine Holdings Ltd. and the applicants’ response are something of red herrings. The Van Dutch case is concerned with the position where a secured lender enforces his security against an asset the subject of the freezing order. Mann J set out, as a matter of principle, that the purpose of a freezing order is to prevent the defendant against whom it is made from improperly dissipating its assets; its purpose is not to provide security to a creditor; and it does not bar anyone else with rights over the assets from disposing of them. In the present case, the Charge was against the property of Mews Ltd. not Click St Andrews. It only had anything to do with Click St Andrews if that company had any interest in that property. That leads straight back to the issue as to whether there was or might be any such interest and whether the Charge took priority. The respondents have never accepted either that there was no such interest or that the Charge took priority so that the applicants remained, the respondents said, at risk of breaching the injunction. If the applicants were right, as I held they were, the application to vary the freezing injunction was strictly unnecessary (as it was in the Van Dutch case) but the position adopted by the respondents gave rise to legitimate cause for concern.

The respondents continued, at the very least, to raise the possibility that Click St Andrews had a beneficial interest in the Properties over which the Charge did not take priority – see the evidence referred to at paragraphs 24 and 25 of the judgment on this application. Indeed, once the application had been made, the Respondents advanced a positive case to that effect as summarised in paragraph 27 of the judgment. As I said at paragraph 30, in light of the respondents’ assertions, the applicants cannot be criticised for wishing to have the comfort of a decision of the Court. It was, however, still a comfort rather than a necessity and the applicants could have proceeded with the sale without further order.

The applicants made offers at an early stage, on both 5 February 2024 and 22 February 2024, to the effect that, if the respondents agreed to allow the disposal of the Properties, there would be no order as to costs. That offer was not accepted and the end result has been that the costs of this application have been incurred. But that has to be seen against the background that the applicants could have disposed of the Properties without further order and in those circumstances the offer is of little weight.

The respondents were in the position of lacking information and certainty as to Click St Andrews’ proprietary interests. Some criticism is made of the respondents for failure to take further steps to obtain more information about Click St Andrews’ assets or to ascertain its proprietary interests. That criticism is unfair. The respondents are all, in effect, individuals (albeit some in corporate guise) whose properties were severely damaged and who have been for some years pursuing claims against Click St Andrews and its holding company. At the time the issues in this application arose, the trial was imminent and was rightly the respondents’ focus. The court indicated that any issues as to the interests that fell within the freezing injunction would not be dealt with until after the conclusion of the trial. The trial had concluded by the time of the hearing of this application but judgment had not been handed down and was not, I regret, handed down for some time. The respondents cannot sensibly have been expected to spend more time and cost on Click St Andrews’ position at this stage.

For completeness, I would add that there is a suggestion in the respondents’ submissions that they could have expected both the judgment to have been handed down and the freezing injunction to have been dealt with at a consequential hearing before this application was even issued and that the respondents would then have been able to provide clarity to the applicants as to how the court proposed to deal with the freezing injunction. That submission does not make sense as the respondents were not, and still are not, in a position to make any application to the court that would result in findings that Click St Andrews has a beneficial interest in the property of other companies in the group. Click St Andrews’ assets are, in any event, principally a matter for its liquidators and any further applications would have to take account of their role. At the risk of repetition, the respondents’ position is to a large extent the product of the failure of Click St Andrews to comply with the disclosure obligations in the freezing injunction but that would not have the result that the court would make findings (one way or the other) about Click St Andrews’ assets without more.

The respondents submit that the issue of priority was not sufficiently particularised until the skeleton argument for the hearing and that had that case been properly articulated the respondents’ may have reacted differently. The submission that the case was not adequately particularised is plainly not right. Priority of the Charge was a key aspect, albeit not the sole aspect, of the applicants’ arguments throughout and it was more than adequately explained. The respondents rely on paragraph 50 of the judgment in which I refer to a shift in the parties’ positions but that referred only to the difference in references to the charge being over “the flats” and the proprietary interests and, as I said, was indicative of the fact that the position had to be considered by reference to the secured proprietary interests.

Mr Moraes, on the contrary, submits that the conduct of the respondents in relation to the priority issue was “unresponsive, unreasonable, lacked any application of commercial common sense and in certain instances was nonsensical …”. I do not accept that submission either. It is right that the respondents did not agree that the key issue was priority and nor did they advance arguments on this issue in correspondence but that does not amount to unreasonable conduct. It simply reflected that there was a dispute which could not be resolved without recourse to the court unless there was some other solution.

As I recited at paragraph 33 of the judgment, the respondents did not seek to stand in the way of the sale of the properties but thought, wrongly in my view, that they could not consent to a variation of the injunction. I do not accept the submission made in respect of costs that the respondents thus “blocked” the sale.

The respondents sought to make a practical suggestion to resolve the issue without the need for further litigation. That was the proposal to “ringfence” an amount (£52,680) from the proceeds of sale. It is unfortunate that that proposal was based on a misconception as to the extent of funds transferred from Click St Andrews to Click Above. However, the proposal showed a clear desire by the respondents to resolve this matter without recourse to litigation and in a manner which ensured that the valued of any beneficial interest of Click St Andrews over which the Charge did not have priority would be “protected”. The respondents submit that it would have been reasonable for the applicants to accept this offer – or perhaps this offer in a lesser amount – and avoid the need for the application.

The applicants’ response to that is that any delay has a cost to it. That does not seem to me to be a complete answer to the respondents’ point as agreement to the proposal would have enabled the sale to proceed and only “delayed” the availability of a portion of the proceeds of sale. But I do not consider that it was unreasonable for the applicants to reject that offer. As I have said, it was based on a misconceived figure and, as Mr Moraes submits, it would have simply deferred the time at which any issue of beneficial interest (with the attendant costs of investigation) and priority would be determined.

Mr Moraes submits that, for those reasons, the offer should not be taken into account at all. I agree that it is not an offer that can be taken into account by analogy to a Calderbank offer or as one that flips the incidence of costs. But it does seem to me appropriate to have regard to it as indicative of the respondents’ desire to reach an amicable solution and not to be unreasonable.

In my view, neither party acted unreasonably but the applicants made an application which, on their own case, was not strictly necessary and the respondents promoted the concerns which led to the making of the application at first seeking a reasonable compromise but, when the matter progressed to a hearing, opposing the application in full.