In the recent decision of Lenkor Energy Trading DMCC v Puri  EWHC 2113 (Comm), the English High Court has considered whether to permit a defendant to deal with his assets in the ordinary course of business in the context of a post-judgment freezing order. While this is an English decision, it will be of relevance and interest to practitioners in the Cayman Islands, British Virgin Islands and Bermuda, where the legal principles relating to freezing orders are largely derived from English law.
In Lenkor Energy, the claimant had obtained a pre-judgment freezing order that included the so-called "Angel Bell" exception, namely an exception that allowed the defendant to deal with or dispose of his assets in the ordinary and proper course of its business. The claimant, having then obtained a final judgment against the defendant, applied to have the Angel Bell exception removed from the freezing order.
The purpose of a freezing order made pending final judgment is to prevent unjustified dissipation of assets and, accordingly, such orders will include exceptions like the Angel Bell exception because it is appropriate for the defendant to use assets in the ordinary course of its business. However, the purpose of a post-judgment freezing order is to facilitate execution of the final judgment. The Court of Appeal in Emmott v Wilson  EWCA Civ 219 noted that it will sometimes, and perhaps usually, be inappropriate to include the Angel Bell exception in a post-judgment freezing order. This is because the policy of the law strongly favours the enforcement of judgments and repayment of debts, and it would be inconsistent with that policy if the judgment debtor was left free to carry on its business and ignore an outstanding judgment. The appropriateness of including the Angel Bell exception in a post-judgment freezing order will turn on all of the facts in the individual case.
In Lenkor Energy, the Court agreed that the Angel Bell exception should be removed from the freezing order having regard to (among other factors) the purpose of a post-judgment freezing order, and the lack of any evidence from the defendant as to the nature of his business, what was spent on his business, and the profits or losses of his business. Further, the defendant had failed to explain what had happened to misappropriated funds and had no answer to allegations of dishonesty and want of probity.
This outcome is consistent with the approach taken in the Cayman Islands, BVI and Bermuda. Generally, there will be no reasonable spending exception contained in post-judgment freezing orders.