“7. By their claims, the Claimants seek to make the Defendant liable for losses suffered in connection with the Trusts’ investments, including those made in Rolaware and Dremoplex. The claims are put in the following ways: (i) Claim 1 (negligence) – C1 and C2 contend that the Defendant assumed personal responsibility to them to take reasonable care to invest funds in accordance with the agreed objective of the Trusts, which was to ensure capital preservation. He breached that duty by giving poor investment advice to Latimer and caused loss.” (ii) Claim 2 (breach of fiduciary duty) – C1 and C2 contend that there was a long history of dealings between them and the Defendant and the trust and confidence that they reposed in him caused him to owe fiduciary duties, including a duty to act in good faith, and not to put himself in a position of conflict. He had an involvement with Rolaware and Dremoplex which gave rise to a conflict of interest. More generally he breached his fiduciary duty and caused loss. (iii) Claim 3 (deceit) – C1 and C2 contend that the Defendant lied to them by providing false portfolio reports and making other misrepresentations including misreporting the existence of USD millions in cash which did not exist. Had they known the true position earlier, they would have intervened earlier and prevented much of the loss. (iv) Claim 4 (dishonest assistance in Latimer’s breach of trust) – C1 to C8 contend that Latimer breached its duties as trustee by making speculative high-risk investments and failing to monitor them properly and that the Defendant’s actions amounted to dishonest assistance in those breaches. (v) Claim 5 (alternative tortious claim under Swiss law). The Claimants pleaded a Swiss law claim in tort as an alternative. However, since it appears that the Defendant agrees that any claim in tort would be governed by Cyprus law, it appears unlikely that this claim will need to be advanced. (vi) Claim 6 (contractual claim under Swiss law) This claim is made by AAA Group and Hrostenco alone. It is said that AAA Group and Hrostenco executed documents, governed by Swiss law, that gave the Defendant power to place orders on accounts held with a Swiss financial institution (“Kendra”). It is said that the Defendant owed AAA Group and Hrostenco contractual duties of “diligence” and “fidelity” that he breached by causing the challenged investments to be made and caused loss as a result. … 10. The Defendant has not to date served any Defence. However, the skeleton argument of Mr Head QC and Ms Jones, and also the witness statement of his solicitor, Mr Woodland provide an indication of the points that he is likely to make in his defence. Predicting the course of litigation such as this is necessarily going to be somewhat uncertain, but I have concluded that the following issues, at least, are likely to arise: i) The way in which the Trusts made their decisions to make investments and the legal framework within which those decisions were made. This issue will be thrown into focus by the Defendant’s assertion that it was, in all cases, Latimer’s decision, in its capacity as trustee, whether particular investments were made or not. This issue will also involve an analysis of whether the Trusts’ investment strategy was intended to protect capital (as the Claimants say) or whether it was intended to be much more adventurous (as the Defendant says). It will also involve some consideration of what investments the Trusts might have made if they had not made the investments that the Claimants criticise. ii) The nature and evolution of the relationship between the Defendant and the Claimants and between the Defendant and the Trusts. That will set out a basis for establishing whether the Defendant did assume a degree of personal responsibility to the Claimants for the selection of successful investments and whether any fiduciary relationship was established. An understanding of that issue will help to address related points that the Defendant looks likely to raise in his defence namely that (i) to the extent he had any duties, they were owed to Latimer (in its capacity as trustee of the Trusts) and not to the Claimants in their capacities as settlors/beneficiaries (ii) that a company the Defendant controlled (“Tiger Capital”) was appointed to manage the brokerage accounts of AAA Group and Hrostenco with Kendra, (iii) that the arrangement with Tiger Capital provided Tiger Capital with extensive protection by way of indemnities and acknowledged that investments might be made in assets in which Tiger Capital had an interest or involvement and that (iv) while the Defendant was authorised to place orders on the Kendra accounts, he was not authorised to withdraw funds or assets from those accounts. iii) As well as helping to establish the nature and scope of any duties that the Defendant owed the Claimants, issues (i) and (ii) will between them shed some light on the claim based on dishonest assistance since they will help to establish whether Latimer was indeed in breach of its duties as trustee in making particular investments and whether the Defendant gave dishonest assistance to any such breaches. iv) The commercial wisdom of the Trusts’ investments including, but not limited to, investments in Rolaware and Dremoplex and the circumstances in which, whether wisely or not, the decision was made to invest in those companies. Both issues: the actual commercial wisdom, and the process by which commercial wisdom was assessed, will have a bearing on the claim in negligence and for breach of fiduciary duty. Because it is asserted that the Defendant had a conflict of interest in respect of the investments in Rolaware and Dremoplex, and because it is said that he had something of an “inside track” as to the true situation of those companies, and so was not simply dependent on information that the companies provided to him, this issue is likely to involve a detailed examination of the actual financial position and businesses of Rolaware and Dremoplex. v) The circumstances in which portfolio statements were provided and the accuracy or otherwise of those statements. This issue will have a direct bearing on the claim in deceit. vi) The value of the Trusts’ investments at relevant times. This may need to be established by expert valuation evidence and will go to the questions of the commercial wisdom of making those investments and the question of loss.”
“The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.”
“Thus there may be cases where the balance of convenience is so clear, and the outcome of the hearing of the application for the interlocutory injunction should be so plain to the parties, that the court should conclude that an order should be made against the defendant for wasting time and money in fighting the issue (whether or not the defendant eventually concedes).”
“One can see the force of that, particularly when one bears in mind that the balance of convenience will often be determined by reference to facts which may be contested, and the court may at trial conclude that it had been persuaded to grant an interlocutory injunction on the basis of assumed facts which turn out to be inaccurate, or even in the context of a claim which should never have been brought.”
“[52] It seems to me that this is enough to show that the decision in Picnic At Ascot is not wholly apposite [in] claims for freezing orders where the balance of convenience is not an issue, and where in relation to the merits of the case the court has regard to whether there is a good arguable case on behalf of the claimants or not. That is sufficient for the court to determine whether a freezing order should be made, and even if at the subsequent trial it turns out that the claims fail on the basis of the evidence due to that trial, it does not at all follow that this means that the court was wrong to find that there was a good arguable case. On the contrary, those two findings are wholly consistent with each other, or may be wholly consistent with each other. Nor is there any reference to the balance of convenience. The question is whether it is just and convenient to make an order. [53] Therefore I agree with Mr Lord that the regime for the making of freezing order is different to the general position where interim injunctions are sought based upon balance of convenience and holding the ring pending the trial. There are, obviously, overlapping features, holding the ring being one of them. The purpose of a freezing injunction is to avoid a successful claimant being unable to enjoy the fruits of his success because there are no assets left against which judgment can be enforced, but that is a different kind of holding of the ring to that which is involved in the usual interim injunction a balance of convenience type case.”
“Neuberger J’s reasoning [in Picnic at Ascot Inc] was that an interlocutory injunction was normally to hold the ring until trial, and the resolution of the issues at trial would often cast light upon the merits of the respondent having resisted the injunction at the earlier stage. In this case, however, the injunction is not of a holding the ring type, and the issues which were ventilated upon the application will not be revisited as part of the substantive dispute.”
“That was the very complaint which underpinned the appellants’ resistance to the application. Moreover, we are concerned with the costs of an appeal, not of the application at first instance. The appeal involved the appellants re-running the same arguments and failing on them. Koza Altin is entitled to the costs of that exercise which we have decided was not justified by the arguments the appellants chose to advance on the appeal.”
“(7) …On the other hand, if the court is faced with disputed facts, and believes the claimant’s version of the facts is more likely to be accepted, it may be dangerous to take that into account in the claimant’s favour when deciding what to do about costs. It is obviously conceivable that at trial the court’s preliminary, even its strongly held, view as to the likely outcome of the dispute on fact may turn out to be wrong. It would be adding insult to injury if an unfavourable order for costs is made against the defendant, in addition to the injunction being granted at the interlocutory stage, on the basis of a wrong (as it turned out) view of the facts by the court”
“(4) There will obviously be circumstances where it is right to depart from the general approach. Thus, there may be cases where the balance of convenience is so clear, and the outcome of the hearing of the application for the interlocutory injunction should be so plain to the parties, that the court should conclude that an order should be made against the defendant for wasting time and money in fighting the issue (whether or not the defendant eventually concedes).”