Summary
The Applicant applied for the continuation of a freezing order against the Respondent in a claim for breach of contract. The Respondent was a solicitor and managing director of a law firm that had entered into a contract with the Applicant to provide legal representation in the mental health sector. The Respondent had signed a deed of guarantee and indemnity in respect of the work conducted under the contract. The firm was subsequently investigated for allegedly making thousands of false claims for work not undertaken. The Applicant calculated the firm had been paid £22m in fees that it was not entitled to. After the firms compulsory insolvency the Applicant brought a claim against the Respondent for the full sum owed based on a breach of the deed of guarantee and indemnity. The issue in the hearing was whether there was a risk of dissipation, the Respondent having conceded there was a good arguable case against him. In support of the application it was asserted that, (i) the circumstances of the breach of contract suggested dishonesty; (ii) the Respondent had led an extravagant lifestyle and (iii) the Respondent had transferred a property to his wife and failed to declare assets.
Result
The Court found that, (i) the allegations of dishonesty went to the heart of the claim and were relevant to a risk of dissipation; (ii) the Respondent was entitled to decide what to spend his money on and past purchases of expensive items did not go to the risk of future dissipation; and (iii) a solicitor could be expected to be scrupulous when filling out their own affidavit of assets, the Respondent’s explanation for inaccuracies was unsatisfactory and the transfer of a property to his wife was suggestive of an attempt to put assets beyond the Respondent’s reach. There was a risk of dissipation and it was just and convenient to allow the freezing order to continue.