Recently KBH has seen a surge in instructions for injunction applications, a recent case, UK authority AB v CD [2023] EWHC 2419 (Ch), has captured our attention at KBH. This decision offers profound insights into the interpretation of legal provisions, specifically addressing legal expenses exceptions in parallel proprietary (PFO) and non-proprietary (WFO) freezing orders.

Background

AB v CD involved a mini-bond investment scheme where substantial sums were allegedly paid to the defendants. The court granted a WFO against one of the defendants, D1, accompanied by a legal expenses exception mirroring a parallel PFO.

Key Points Unveiled

Precision in Wording:The judgment demonstrates the paramount importance of precision and clarity in language when drafting orders. Ambiguity can lead to confusion regarding requirements and prohibitions.

Legal Expenses Justification: The case highlights the necessity for thorough and substantiated evidence when justifying costs under a legal expenses exception. This becomes particularly important when dealing with potential proprietary assets, necessitating a demonstration of the reasonableness of proposed steps to maximise recoveries.

Discretionary Factors: The court considers a myriad of factors in deciding whether to permit legal expenditure. These include assessing the prejudice to claimants, the size and complexity of the dispute, the necessity for separate representation, and the gravity of the allegations.

Court’s Verdict

Interpretation of PFO: The court affirmed the need for consistent interpretation when faced with identical wording in separate orders. In this instance, the legal expenses exception in the PFO mirrored that of the WFO, emphasising the significance of unambiguous language.

Exercise of Discretion:  Despite identical wording, the court declined to exercise its discretion. The proposed arrangements threatened to practically extinguish D1’s assets, and the court remained unconvinced of their reasonableness or the maximisation of recoveries.

Fund Release:  Nevertheless, the court ruled for the release of approximately £1.5m under specific principles, considering various factors of general application.

Practical Implications for KBH

This case serves as a cornerstone in our legal practice, reinforcing the need for precision in drafting orders, the requirement for robust evidence when justifying legal expenses, and the discretionary factors that the court weighs. As we navigate through a landscape marked by an upswing in injunction applications, understanding the nuanced outcomes of cases like AB v CD [2023] EWHC 2419 (Ch) is crucial for maintaining our commitment to excellence in legal representation.

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