Application for continuation of a freezing injunction; application discharged when significant piece of information during without notice application was not disclosed
Galagaev & Ors (“Galagaev”) had been investors in a Russian bank and applied for the continuation of a freezing order in the High Court against the defendants Ananyev & Ors (“Ananyev”), which had been granted to them during a without notice application.
Galagaev alleged that Ananyev had fraudulently induced them to give up their investments in return for worthless loan notes. In the without notice application, the judge agreed that there was a real risk of asset dissipation and had granted the freezing injunction to prevent Ananyev disposing of or dealing with their assets.
Ananyev applied to set aside the freezing injunction on the basis that during the without notice hearing, Galagaev failed to provide “full and frank disclosure”. Specifically, Galagaev failed to disclose to the judge that a transaction in which Ananyev had disposed of shares in a Russian bank (and which was relied on as evidence of risk of dissipation) was a transaction that had been directed by the Russian Central Bank (“RCB”). Ananyev argued that if the judge had known this, it would have affected the judge’s view as to the risk of dissipation of assets. Ananyev also argued that Galagaev had misleadingly characterised a separate set of proceedings, where Ananyev paid USD 30m into court to release them from the freezing order.
The Court found that it was clear that in the without notice application the judge had considered Galagaev’s evidence on the risk of dissipation as including Ananyev’s sale of the shares in the Russian bank. If Galagaev had expressly drawn the judge’s attention to the fact that the RCB had directed the sale, then the case for dissipation of assets would have been significantly weakened. In the circumstances, it was not appropriate to continue with the injunction and the injunction was discharged. However, the Claimants were free to re-apply for an injunction if they considered it appropriate.