Injunction Developments

Author:Mr Nicholas Pike
Profession:Lawrence Graham LLP

Fourie v Le Roux & Others

[2007] UKHL 1

This House of Lords decision related to the issue of the costs payable by Mr Fourie, the liquidator of two South African companies, in relation to a freezing injunction granted by Mr Justice Park in the English High Court in his favour.

Mr Fourie had applied for a freezing injunction against Mr Le Roux and various other parties after forming the view that Mr Le Roux, who had been in control of the companies over which Mr Fourie was appointed, had fraudulently stripped one of those companies of its assets and transferred some of the assets to England. The freezing injunction application was made without notice to Mr Le Roux or the other parties.

As regular readers will be aware, a freezing injunction is a relatively draconian but very effective legal measure by which a defendant's assets are frozen, thus preventing the defendant from dissipating his assets with the intention of frustrating enforcement of a prospective court judgment. A freezing injunction is therefore a supplementary remedy, granted so that assets are protected and the subsequent court proceedings are effective.

It follows that a freezing injunction is not an end in itself - it is a remedy to be used where a claim has already been, or is about to be, started. It is therefore standard procedure, where a claim has not already been commenced, for an applicant for an injunction to undertake to issue and serve a claim as soon as practicable.

In this case, however, Mr Fourie gave no such undertaking, and indeed at the time of the application no substantive claim against Mr Le Roux or the other parties had been formulated. Mr Fourie did give the standard cross-undertaking in damages, however, and on this basis a freezing injunction was granted by the High Court on 23 July 2004.

By the end of September 2004 Mr Fourie had still not brought a claim, and Mr Le Roux applied to have the freezing injunction discharged. That application was successful, the injunction was discharged, and the court awarded Mr Le Roux costs on an indemnity (ie full) basis and made a declaration that Mr Fourie's cross-undertaking in damages be immediately enforced (so that any financial loss suffered by Mr Le Roux caused by the injunction would be paid straight away by Mr Fourie).

Mr Fourie hurriedly commenced proceedings and, on the back of those proceedings, obtained a second freezing injunction and subsequently a third one. Nonetheless, Mr Fourie appealed against...

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