Court of Appeal refuses to lift freezing injunction
In the recent decision of Charles Peterson et al v Douglas Riegels et al the Eastern Caribbean Court of Appeal remind us of how high the bar is when an appellant seeks to impugn the exercise of discretion by a first instance judge.
Global Water and Charles Peterson (the appellants) asked the respondents, Douglas Riegels and Trefor Grant, to negotiate on their behalf with the BVI Government to resolve a breach of a contract to build and maintain a sewage plant.
By 2013 the relationship between the parties had soured. Global Water alone commenced arbitration proceedings against the BVI Government, which after further litigation, resulted in an award in their favour. In 2020, the respondents claimed against the appellants for breach of contract, seeking 60 per cent of any paid amount to them by the Government. In the interim, the respondents obtained an order compelling the appellants to disclose any settlement discussions or payments from the Government and a freezing injunction preventing Global Water from dealing with or diminishing its assets up to the value of 60 per cent of the award.
The judge found that the respondents had a good arguable case and that there was a real risk of dissipation of assets if the freezing injunction were not granted, principally because:
1. Mr Peterson was not resident in the BVI
2. He maintained homes in various countries
3. He had insufficient assets in the BVI to satisfy the claim
4. Global Water was a shell company with no assets other than its claim against the Government
The appellants appealed the decision, arguing that the judge had erred in finding a real risk of dissipation by taking into account irrelevant matters and ignoring relevant ones. They also contended that the judge should have given greater weight to the respondent’s delay in seeking injunctive relief.
The Court rejected the appeal, finding:
1. The judge was within the range of reasonably arguable decisions and was not plainly wrong
2. The appellant’s refusal to give an undertaking indicated a risk of dissipation
3. Evidence must objectively demonstrate a risk of dissipation and factors which were insufficient in isolation could be considered cumulatively
4. A freezing order may be granted before a right to payment of a debt has accrued
5. If the risk of dissipation is real, the judge has the discretion to grant the injunction despite a delay in seeking it
The decision demonstrates the difficulty in seeking to overturn the exercise of discretion by a first instance judge. The Court of Appeal confirmed that an appellate court will only overturn the exercise of a trial judge’s decision where it is plainly wrong, in other words where it is outside of the range of reasonably arguable decisions.
Harneys represented the successful respondents.
This blog post was written by Partner Peter Ferrer and Associate Micah Hall.