Reference:  EWHC 1649 (QB)
Court: Queen's Bench Division
Judge: Gray J
Date of judgment: 24 Jun 2008
Summary: Libel - Malicious falsehood - Causing loss by unlawful means - Freezing order - Good arguable case - Real risk of removal or disposal of assets - Injunction restraining publication
Justin Rushbrooke QC (Claimant)
Richard Munden (Claimant)
Instructing Solicitors: Halliwells for the Cs; Mackesys for D1
Letters were sent to the Cs’ clients alleging, inter alia, that the Cs had repeatedly mis-sold Individual Voluntary Arrangements (IVAs) to their clients and ran an ‘IVA factory’. The letters purported to come from ‘the IVA Council’ (IVAC). Recipients of the letters who responded to IVAC were contacted by D4, a company of which D1 and D3 were directors. D4’s literature repeated many of the claims made in the letters. Following these communications, some of the Cs’ clients defaulted on their IVAs and instead paid D4 to assist them to go bankrupt.
The Cs brought claims for libel, malicious falsehood and causing loss by unlawful means against the Ds. The Ds denied responsiblity for the letters. D1, D3 and D4 claimed to have only an arms length business relationship with the IVAC. D2 admitted being an employee of IVAC but denied involvement in publication of the letters.
The Cs obtained a freezing order and a libel injunction against the Ds and sought to have them continued.
(1) Whether the Cs had established both a good arguable case against the Ds and a real risk of the removal or disposal of assets so as to justify the continuation of the freezing order;
(2) Whether the libel injunction should be continued.
Continuing the freezing order but not the libel injunction:
(1) The close links between D1, D3 and D4 and IVAC, the fact that IVAC appeared to exist only to generate business for D4, and the false statements in D4’s literature meant that the Cs had made out a good arguable case. There was evidence that the Ds had been acting in a commercially dubious scheme and there had been less candour than might have been expected. There was therefore a risk of dissipation of assets and this was a proper case to order the continuation of the freezing order in the amount of £100,000.
(2) Although the Ds had not served evidence of any intention to justify, the rule in Bonnard v Perryman was engaged and, in the circumstances of the case, including that it might interfere with the Ds’ ability to carry on their business, it was inappropriate to continue the injunction in libel. Nor could the injunction be granted on the alternative substantive basis of causing loss by unlawful means.
Freezing orders are unusual in libel claims but as this demonstrates they are as available to defamation claimants as to those bringing commercial claims, so long as the well-established hurdles, principally the need to show a real risk of removal or disposal of assets, can be surmounted. This case also shows that such orders can be used to ensure that a defendant retains sufficient assets to pay a potentially large costs order as well as what may be a lesser sum by way of damages.
This claim eventually settled with the Defendants making apologies and undertakings and paying damages and the Claimants’ costs.