(1) “GOOD ARGUABLE CASE”
The test of a “good arguable case” is not very high. The claimant does not need to show a case against the defendant that is so strong that he is likely to obtain summary judgment under CPR Pt 24.
In The Niedersachsen Mustill J held that a “good arguable case” was “one which is more than barely capable of serious argument, but not necessarily one which the judge considers would have a better than 50% chance of success”.
However, it must be borne in mind that the “good arguable case” test is a threshold test and, given that the overriding test is whether or not it is “just and convenient” to grant the injunction, even if this minimum threshold requirement is satisfied, the strength or otherwise of the applicant’s case will be a relevant factor in the exercise of the court’s overall discretion.
(2) REAL RISK OF DISSIPATION
The claimant must adduce “solid evidence” to support his assertion that there is a real risk that the judgment or award will go unsatisfied. The test of real risk of dissipation is objective, and is one of assessment of the risk by the court that a judgment may not be satisfied. Generally, unsubstantiated assertion by the applicant will not be sufficient.
If the applicant can adduce “solid evidence” that the respondent has acted dishonestly, then there may be no need for any other specific evidence that the respondent intends to dissipate his assets.
The claimant needs to show that there is a real risk that the defendant will dispose of its assets otherwise than in the ordinary course of business and thereby make them judgment-proof.
THE FACTORS THAT CAN EVIDENCE A RISK OF DISSIPATION
The sort of factors which will be relevant when assessing whether there is a real risk of dissipation of assets are:
1. The nature of the assets – the more easily disposed of, the easier it is to establish that there is a risk they may be dissipated.
2. The nature and financial standing of the defendant’s business.
3. The length of time the defendant has been in business.
4. The domicile or residence of the defendant.
5. The defendant’s past or existing credit record.
6. Any intentions expressed by the defendant about future dealings with his English assets, or assets outside the jurisdiction.
7. Any connections which the defendant may have with other companies which have defaulted on arbitration awards or judgments.
8. The defendant’s behaviour in response to the claim; a pattern of evasiveness or unwillingness to participate or raising thin defences or total silence may all be relevant factors.
9. The applicant is not required to show on the balance of probabilities that assets will be dissipated. He is only required to show that there is a real (as opposed to an insignificant or fanciful) risk that this will occur.
(3) JUST AND CONVENIENT
The all-important question to determine is whether, in the circumstances of the particular case, it is just and convenient to grant the injunction. There is an appreciation that with any interlocutory injunction there is a risk that the court may make the “wrong” decision. Thus, an injunction could be granted and ultimately turn out to be unjustified; or the court may refuse an injunction which is subsequently shown to have been essential if the claimant’s rights were to be preserved. In the context of freezing orders, there is a discretion to be exercised in all the circumstances of the case.
The court should be satisfied before granting the relief that the likely effect of the injunction will be to promote the doing of justice overall, and not to work unfairly or oppressively. The circumstances of the case may make it inappropriate to grant a freezing order; even though the claimant shows a good arguable case and a risk that, without the injunction, judgment may go unsatisfied. An example may be that if an injunction were granted, it would interfere in an unacceptable way with third parties. Another is where an injunction might itself destroy the defendant’s business.