On 18 January 2019, in concluding a series of decisions which are likely to be viewed favourably by claimants, the English High Court dismissed a Respondent’s application to extend the time required to comply with ancillary disclosure obligations pursuant to a freezing order and upheld the terms of an order for further disclosure to be made by the Respondent (Kazakhstan Kagazy Plc and Others v Baglan Zhunus and Others).
The evidence before the Court showed that the Respondent had (some years earlier) held assets which substantially exceeded those disclosed pursuant to the ancillary disclosure obligations of the Freezing Order. On the basis of that evidence, the Court inferred that the Respondent may well still hold substantial assets which had not been disclosed. Accordingly, the Respondent was ordered to provide further disclosure, including information pertaining to the location of the assets which were discernible from the available evidence.
The Respondent did not comply with the order for further disclosure and instead issued an application for an extension of time in which to comply on that basis that if an extension of time were to be granted the Respondent would secure and pay into Court a sum sufficient to discharge the Freezing Order including the ancillary disclosure obligations. The Court did not accept the validity of the Respondent’s argument and the Respondent’s application was dismissed.
Three important points arise from this case:
First, the Court was willing to look beyond the disclosure statement of the Respondent to draw inferences from the available evidence about the likely value of assets held by the Respondent.
Second, on the basis of the inference drawn from the available evidence, the Court was willing to go beyond the disclosure of the assets presently held to order the disclosure of information pertaining to assets which may have been legitimately transferred by the Respondent in the ordinary course of business prior to the date of the Freezing Order.
Third, it is not possible for a respondent to a freezing order to avoid or delay compliance with their ancillary disclosure obligations by reliance on unresolved applications. A respondent must comply with an application for disclosure notwithstanding any other contingent factors which may or may not discharge those obligations, including where an application to discharge the Freezing order is extant.
These principles should be considered with caution by respondents as each may provide powerful leverage to Claimants when enforcing ancillary disclosure obligations.