The court considered whether a defendant should be allowed to pay his debts as they fell due despite an asset freezing order.
Held: The Mareva jurisdiction should not ‘improve the position of claimants’. Rather, it should prevent the injustice of a defendant removing his assets from the jurisdiction which may have otherwise been available to satisfy a judgment.
Robert Goff J said: ‘the point of the Mareva jurisdiction is to proceed by stealth, to pre-empt any action by the defendant to remove his assets from the jurisdiction. To achieve that result the injunction must be in a wide form because, for example, a transfer by the defendant to a collaborator in the jurisdiction could lead to the transfer of the assets abroad by that collaborator. But it does not follow that, having established the injunction, the court should not thereafter permit a qualification to it to allow a transfer of assets by the defendant if the defendant satisfies the court that he requires the money for a purpose which does not conflict with the policy underlying the Mareva jurisdiction . . It does not make commercial sense that a party claiming unliquidated damages should, without himself proceeding to judgment, prevent the defendant from using his assets to satisfy his debts as they fall due and so put him in the position of having to allow his creditors to proceed to judgment with consequent loss of credit and of commercial standing . . All the interveners [the defendant’s creditors who had lent money to the defendant for the purpose of purchasing ships, including the ship in the case at hand] are asking [in their application to vary the injunction so that they could, as equitable mortgagees of the defendant’s ship as well as assignees of the insurance policies of the said ship, be paid the proceeds of these policies as repayment of the debt due under the loan] is that the defendants should be free to repay such a loan if they think fit to do so, not that the loan transaction should be enforced. For a defendant to be free to repay a loan in such circumstances is not inconsistent with the policy underlying the Mareva jurisdiction. He is not in such circumstances seeking to avoid his responsibilities to the plaintiff if the latter should ultimately obtain a judgment; on the contrary, he is seeking in good faith to make payments which he considers he should make in the ordinary course of business. I cannot see that the Mareva jurisdiction should be allowed to prevent such a payment. To allow it to do so would be to stretch it beyond its original purpose so that instead of preventing abuse it would rather prevent businessmen conducting their businesses as they are entitled to do .
Judges:
Robert Goff J
Citations:
[1981] 1 QB 65, [1980] 2 WLR 488, [1980] 1 All ER 480
Jurisdiction:
England and Wales
Cited by:
Cited – Raja v Van Hoogstraten and others ChD 5-Apr-2006
Application to discharge asset freezing order.
Held: The defendant had displayed a readiness to do what was necessary to avoid compliance with court orders. The application (and others) were dismissed. . .
Cited – Halifax Plc v Chandler CA 13-Nov-2001
The claimant had sought payment of a substantial shortfall debt from the defendant after repossessing and selling the defendant’s home. It compromised that debt, and was paid, but now sought to re-open the compromise on the basis of an alleged . .
Cited – A J Bekhor and Co Ltd v Bilton CA 6-Feb-1981
The plaintiff had applied for disclosure of assets under the Rules of the Supreme Court in support of a Mareva freezing order. The rules were held not to provide any such power: disclosure of assets could not be obtained as part of discovery as the . .
Cited – Lenkor Energy Trading Dmcc v Puri ComC 9-Aug-2022
‘Angel Bell’ exception to world wide freezing order. . .
Lists of cited by and citing cases may be incomplete.
Banking, Litigation Practice
Updated: 16 August 2022; Ref: scu.241551