Creditors of the defendant who was subject to a Mareva injunction applied to the court to authorise the repayment of a loan out of monies otherwise subject to the order.
Held: The purpose of a freezing order is to avoid dissipation of a defendant’s assets in order to avoid a judgment, it is only bona fide debts in the ordinary course of business of a defendant whose assets are frozen that will be permitted to be paid out, including debts which are not themselves enforceable.
Robert Goff J said: ‘Mr. Hobhouse submitted that the purpose of the Mareva jurisdiction was to freeze a foreign defendant’s assets in this country to ensure that there is a fund available in this country from which the plaintiff will be able to satisfy a judgment. In support of this he relied in particular on the form of the order usually made in these cases which restrains the defendant from dealing with his assets within the jurisdiction and from removing his assets from the jurisdiction. I do not, however, see that the usual form of the order as such assists his argument. As was made plain by Mustill J. in the Third Chandris case, 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.’
and ‘All the interveners are asking 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:
Donaldson J, Robert Goff J
Citations:
[1979] 2 Lloyd’s Rep 491, [1981] 1 QB 65
Cited by:
Cited – Anton Durbeck Gmbh v Den Norske Bank Asa ComC 11-Nov-2005
The defendant bank arrested a ship carrying the claimant’s load of bananas. The cargo deteriorated while under arrest and was lost. It was not insured. The consignee sought damages from the arresting bank on the ground that it wrongfully interfered . .
Lists of cited by and citing cases may be incomplete.
Transport, Litigation Practice
Updated: 30 April 2022; Ref: scu.234846