A decision dated 22 March 2018 of the Hon. Justice Adderley of the Commercial Division of the BVI Court (Trust Asia PTE Ltd v Mitsuji Konoshita and A.P.F. Group Co. Ltd) has provided helpful guidance as to the threshold for ‘good arguable case’.
Justice Adderley dismissed an application by the defendants to discharge a worldwide freezing injunction obtained by the claimant (JTrust) in December 2017.
The defendants sought to discharge the freezing injunction arguing that JTrust did not have a ‘good arguable case’. In opposing the application, JTrust pointed to the first defendant’s track record of dubious commercial conduct. This included (i) the largest FSA fine in Japanese history in July 2017 for price manipulation and releasing false information; and (ii) allegations of fraud and false accounting against him by the Thai Securities and Exchange Commission (TSEC) in October 2017 (which led to a subsequent ban on the first defendant holding directorship and executive roles).
A ‘good arguable case’ is defined in the English decision of Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft GmbH as “…one which is more than barely capable of serious argument, but not necessarily one which the judge considers would have a better than 50 per cent chance of success”. Expanding upon this, Justice Adderley held that the function of the Court is not to launch a ‘mini trial’ of the issues; what is required is “…no more than a preliminary appraisal of the claimant’s case”. Justice Adderley noted the first defendant’s conduct and “…untrustworthy characteristics” and was satisfied that the claimant’s arguments demonstrated a good arguable case. Justice Adderley was of the view that the TSEC evidence was, of itself, “…sufficient evidence that there is a good arguable case”.
Relying on the principles in Ah Baldwin & Sons Ltd v Sheikh Saud Al Thani Justice Adderley held that if there is a good arguable case that a defendant has acted fraudulently or dishonestly, or with “…unacceptable low standards of morality giving rise to a feeling of uneasiness about the defendant…”, then further evidence is often unnecessary to justify a freezing injunction.
This decision is good news for those seeking to freeze the assets of defendants where there is evidence of fraudulent or dishonest conduct. The defendants have appealed.