| PRACTICE — Discovery — Jurisdiction — Interim application for disclosure of information capable of providing basis for application for freezing order — Degree of likelihood that application for freezing order would be made — Whether jurisdiction to make interim disclosure order — CPR r 25.1(1)(g)
Lichter & Schwarz (a partnership) v Rubin [2008] EWHC 450 (Ch D); [2008] WLR (D) 93
Ch D: Henderson J: 12 March 2008
On an interim application for the disclosure of “information about relevant property or assets which are or may be the subject of an application for a freezing injunction” pursuant to CPR r 25.1(1)(g), it was only necessary to show that a freezing order could be applied for and whether or not that application would be successful was not a matter on which the court could form a view at that stage; it need only be satisfied that there were credible grounds for making an application if so advised.
Henderson J so held in the Chancery Division when allowing, in part, the application of the claimant partnership, Lichter & Schwartz, for an order under CPR r 25.1(1)(g) for interim discovery of the details of various payments made by and to the defendant, John Rubin, on the basis that there was a real possibility that a successful application for a freezing injunction would be made in support of the claimant’s claim for an account.
The claimant, the owner of a number of properties, employed the defendant as managing agent. The defendant’s duties included the collection of rents, charges and deposits from tenants and accounting to the claimant. The claimant terminated the defendant’s employment after he had made a number of sizeable payments out of his bank account under suspicious circumstances and it brought proceedings against him for an account of what was due to them in respect of moneys received for its properties and sought an interim order under CPR r 25.1(1)(g) for disclosure of the details of those payments, as well as details of other “historic” payments, with a view to a possible application for a freezing injunction. The defendant contended that any application for a freezing order had little prospect of success. The issue arose as to whether, and in what circumstances, it would be appropriate to made an order under rule 25.1(1)(g).
HENDERSON J said that the purpose of CPR r 25.1(1)(g) was to deal with the situation where either an application for a freezing injunction was on foot or where it was at least likely that there would be such an application: see Parker v C S Structured Credit Fund Ltd (Practice Note) [2003] 1 WLR 1680. That likelihood was not one that had to be demonstrated to any very high degree and certainly did not amount to a likelihood on the balance of probabilities. A reasonable possibility, based on credible evidence, should be sufficient to found the jurisdictional requirement of rule 25.1(1)(g). However, the court had, in addition, a general discretion in the matter once the jurisdictional threshold had been crossed. That discretion had to be exercised in all the circumstances of the case. The rule was intended to provide machinery, in a suitable case, for the provision of information in advance of an application for a freezing injunction and it would lose its utility if it were necessary to demonstrate, at that stage, that a freezing order would be granted. In the instant case there was a real possibility that an application for a freezing order would be made in circumstances which might have a real prospect of success. However, the position in relation to the historic payments was not the same since that application was more in the nature of a fishing expedition. Accordingly, an order for disclosure of the details of the payments in and out of the defendant’s account would be made but it would not extend to information in relation to the historic payments.
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