Dr Zeyn Bharucha v Dr Riyaz Patel & Anor [2025] EWHC 3364 (Ch)

[2025] EWHC 3364 (Ch)Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 19/12/2025Case No BL-2025-000989
Before
Andrew de Mestre K.C.
Between
DR ZEYN BHARUCHAClaimantDR RIYAZ PATELDefendantsR P DENTAL LIMITEDDefendant
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Case No: BL-2025-001341IN THE HIGH COURT OF JUSTICEBUSINESS AND PROPERTY COURTS OF ENGLAND AND WALESBUSINESS LIST (ChD)
Between
DR ZEYN BHARUCHAClaimantDR RIYAZ PATELDefendant
Pepin Aslett (instructed by Ali Legal Ltd) for ClaimantJonathan Gavaghan (instructed by JFH Law LLP) for DefendantsHearing Hearing dates: 4 November 2025 and 28 November 2025Approved JudgmentThis judgment was handed down remotely at 10.30am on 19 December 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives..............................Andrew de Mestre K.C. sitting as a Deputy Judge of the High Court19 December 2025
JUDGMENT

Andrew de Mestre K.C. :

[1]This is an unfortunate case arising from the falling-out of two dentists who were trading through an apparently profitable partnership before the relationship collapsed amid allegations of misappropriation of partnership assets. The dispute which has followed will already, in only a few months, have resulted in very substantial costs as well as disruption to the business of the partnership and the lives of the parties. I would therefore urge the parties to stand back from the dispute and seek to identify if there are ways of resolving their differences without further significant expenditure which will eat into or even exceed the worth of what I was told is still a valuable partnership. I return to this at the end of the judgment.[2]Turning to more immediate matters, there were ultimately three applications which I have to deal with: 2.1. First, an application by the Claimant made on 15 August 2025 to continue domestic freezing orders and asset preservation injunctions against both Defendants and a prohibitory injunction against the First Defendant. This injunctive relief was first granted without notice by Mr Justice Leech (“the Judge”) on 12 August 2025, and continued by Mr Justice Richards on 26 August 2025 (“the Injunction Application”). 2.2. Second, an application by the Defendants made on 24 September 2025 for the proceedings to be stayed pursuant to s.9 of the Arbitration Act 1996 (“the Act”) (in the case of the First Defendant) and pursuant to the Court’s general case management powers (in the case of the Second Defendant) (“the Stay Application”). 2.3. Third, an application by the Claimant made on 29 October 2025 for the grant of a domestic freezing order, an asset preservation injunction, and a prohibitory injunction against the First Defendant pursuant to s.44 of the Act (“the s.44 Application”). These orders are sought in support of an arbitration which the Claimant says will be commenced if the proceedings against the First Defendant are stayed.[3]The case first came before me on 4 November 2025 for the hearing of the Injunction Application and the Stay Application, the s.44 Application having only just been issued (on 29 October). At the outset of the hearing that day, the Claimant sought an adjournment of the Injunction Application and the Stay Application on the basis principally that the Defendants were relying on allegations of material non-disclosure which had only been particularised in detail in the skeleton argument for the hearing and which the Claimant had not had a proper opportunity to respond to. For the reasons I gave orally on 4 November, I adjourned the Injunction Application and directed that it should come on with the s.44 Application as quickly as possible before the end of the legal term. However, I refused to adjourn the Stay Application because it seemed to me that the parties were ready for this Application and the time available on 4 November could therefore be put to good use. As a result, the parties made their submissions on the Stay Application that day.[4]Following the service of some additional evidence from the Claimant pursuant to directions I made on 4 November, the Injunction Application and the s.44 Application came back before me on 28 November 2025.[5]At both hearings before me the Claimant was represented by Mr Aslett and the Defendants by Mr Gavaghan. I am grateful to both counsel for their submissions and for ensuring that the Applications could all be dealt with in relatively short order notwithstanding the partial adjournment. I should also make it clear that neither counsel appeared at any of the hearings in these proceedings prior to 4 November.[6]This is my judgment on all three Applications.

II Background

[7]The Claimant and the First Defendant are dentists and the dispute relates to a partnership between them which provides dentistry services under the name Cavendish Dental Practice (“the Partnership” or “the Practice”).[8]The Second Defendant is the company through which the First Defendant takes his share of the Partnership profits. The First Defendant is the sole director of the Second Defendant which is owned by DRP Capital Limited, a company of which the First Defendant is both the sole director and the sole person with significant control. It was not in dispute that the First Defendant controls the Second Defendant[9]The Claimant also has a company, Everdent Limited, through which he takes his share of the profits.[10]The terms of the Partnership are set out in a Partnership Deed (“the Deed”) which the parties agree was entered into in November 2016, although no signed copy was in the bundle for the Applications. The Deed contains the following provisions. 10.1. The commencement date for the Partnership was 14 October 2016. 10.2. Clause 6.1 provides that a current account shall be maintained in the name of the Partnership or in the names of both partners at the Partnership. This current account (“the Partnership Account”) was held at Santander. 10.3. Clause 6.3 provides that cheques on, and any online payments from, any Partnership bank account shall be signed or authorised by any one partner provided always that any cheque or payment in excess of £5,000 must be signed or authorised by both partners. 10.4. Clause 7.1 provides that Partners shall be entitled to make drawings on account of profits of such sums as they both agree, or in the event of disagreement as the Partnership Accountants shall advise. 10.5. Clause8.1.1 provides that Partnership earnings and receipts shall consist of:(a) Any payments made for the provision of Dental Services at the Practice by the partners or their employees or associates whether paid via the NHS, under private contract or through a private dental scheme.(b) Any payments made for the provision of Dental Services, whether made under private contract or through a Private Dental Scheme, by associates, hygienists, therapists and other health care professionals employed or engaged by the Partnership. 10.6. Clause8.1.2 provides that each partner shall be allocated, as a prior share of Partnership profit: (a) 90% of any income related to any Dental Services that he has performed personally pursuant to the terms of his Associate Agreement. (b) A sum for time spent by the individual Partner on carrying out management duties related to the Business calculated at a rate of £30 per hour (including the first hour).(c) Interest on his capital contributed to the Partnership and any undrawn profit at a rate of 2% above the base lending rate of the Bank for the time being. 10.7. Clause 10.1 provides that Partners shall share the net profits and bear any losses of the Partnership in equal shares (or as otherwise agreed). 10.8. Clause 14.1 provides that decisions on all matters relating to the running of the Partnership shall be taken by a unanimous decision of the Partners. Where no agreement can be reached the status quo shall continue to apply. 10.9. Clause 21 is an arbitration clause. I will return to the detail of this clause in section III below.[11]As I understand it, neither the Claimant nor the First Defendant entered into a written Associate Agreement as contemplated by the Deed, but it was nonetheless common ground that both the Claimant and the First Defendant carried out dental services on the basis that they would be entitled to 90% of the income derived from the dental services which they personally provided.[12]It is fair to say that, although the Partnership appears to have been profitable for both parties, the relationship between the partners did not run smoothly at all times. Although I was not taken through the detail of all of their dealings and disagreements, I note that the bundle for the hearing before me contains emails going back to 2019 which reveal tensions between the two partners. It is also evident that the Judge at the without notice hearing was alive to these tensions and to the fact that a number of the claims in the proceedings (which I describe below) related to historic events.[13]The Claimant did not work full-time at the Practice for some nine months between about July 2024 and March 2025 as he was suffering from illness. I have seen a list of the UDAs (units of dental activity) which he completed in 2024/2025 and these show substantial activity between April-June 2024, a material drop-off in July-September 2024, and no activity in October 2024-March 2025.[14]Of particular relevance to the applications before me, it was common ground that, between November 2024 and June 2025, the First Defendant caused payments totalling £1,191,883 to be made from the Partnership Account to the Second Defendant.[15]It also appears that there were discussions in April 2025 about the Claimant leaving the Partnership but, again, neither party took me to the detail of these.[16]The dispute between the parties came to a head in July 2025 when, on 5 July 2025, the Claimant reiterated some queries about entries in the historic Partnership accounts for 2023/24 (which he had first made in February 2025) and sought an explanation for the more recent drawings which the First Defendant had made from the Partnership (referred to in paragraph 14 above).[17]In relation to the payments from the Partnership Account, the Claimant’s 5 July 2025 email (sent on a Saturday) read as follows: For the 2024/25 tax year, I’ve noticed that significant drawings appear to have been made ahead of the formalisation of accounts. It appears all available funds have been withdrawn, not taking into consideration my drawings for this period. Furthermore, for the current tax year (2025/26), all monies appear to have been drawn down again, and I’ve not received any remuneration for my work/profits over the past three months of this current financial year. At this point can i ask that you either pay me my drawings that are outstanding for the periods outlined above or alternatively that you return all funds drawn since November 2024 to the practice account until AMS have completed formalisation of accounts and we have both signed off and are in full agreement. I await your response ASAP, as I’m sure you appreciate I am quite anxious and wondering what the hell is going on.[18]In relation to the drawings, the First Defendant replied early on Monday 7 July 2025 as follows: 2024/25 Drawings With respect to 2024/25, may I draw your attention to the fact that for the past several years you have made drawings immediately following the end of each tax year—prior to the completion of final accounts and sign off. In the same manner, for 2024/25, I drew funds based on the draft management accounts. Once AMS finalises the year-end accounts, any under or over drawings can be adjusted accordingly, as is routine. The accounts are already in progress, and again, I would recommend you review the amendments from 2023/24 with AMS first so that we can proceed with accuracy. 2025/26 Drawings Regarding the current financial year, 2025/26, I have drawn funds representing outstanding drawings from 2024/25 and a share of surplus income to date. The intention has been to ensure the partnership bank account is balanced, with both partners maintaining equal access to available funds. Given the current circumstances, I would prefer that any financial enquiries be directed to AMS rather than directly to me. I will of course fully cooperate with AMS and am happy to provide them with any information or clarification they require from my side. (Yasin copied in) I suggest that you arrange a review of the financial statements with AMS as soon as possible so that any queries or adjustments can be addressed promptly. Rest assured that, following completion of the accounts, if it is determined that I have overdrawn, I will rectify the position immediately and without hesitation.”[19]After this exchange of emails, on 27 July 2025 the First Defendant caused a further payment of £100,000 to be made from the Partnership Account to the Second Defendant.[20]This appears to have prompted the Claimant to resort to legal proceedings as the next event of significance was the without notice hearing on 12 August 2025. The Claim Form was then issued on 15 August 2025 and was accompanied by Particulars of Claim (“PoC”) which make the following claims: 20.1. “Misappropriation of COVID-19 Funding”: it is alleged (in PoC ¶16-17) that the First Defendant misappropriated financial support provided by the NHS during the COVID-19 pandemic by including the following amounts in his own entitlements in the Partnership’s financial statements: £28,998 in the financial statements for 2021/22 and £71,690 in the financial statements for 2022/23. 20.2. “Causing the Practice to incur unauthorised expenditure”: it is alleged (in PoC ¶18-19) that(i) in breach of clauses 6.3 and 14.1 of the Deed, the First Defendant caused the Partnership to bear expenditure relating to improvements to the practice in the sums of £101,980 and £10,200 in March 2024 and(ii) between 2023-2025, in breach of clause 9.2.1 of the Deed, the First Defendant caused the Partnership to bear expenses of £40,124.44 which were expenses of the First Defendant alone. 20.3. “Misappropriation of income generated by work carried out by associates/therapists”: it is alleged (in PoC ¶20-29) that the First Defendant has “fraudulently extracted” income earned by a dentist(Ms Michael) totalling £164,282.88 and by a therapist (Ms Ribeiro) totalling £335,792.64. The crux of the complaint about these sums is that they were either recorded under the First Defendant’s name in the Partnership records or were treated as income generated by the First Defendant and so falling within his entitlement to 90% (under clause 8.1.2(a) of the Deed). 20.4. “Unauthorised withdrawals from the Practice bank account”: it is alleged (in PoC ¶30-32) that the transfers referred to in paragraphs 14 and 19 above were not agreed by the Claimant and there was no justification for them. The same allegation is made in relation to payments made from the Partnership Account to the First Defendant totalling £48,265. 20.5. “Excessive remuneration”: it is alleged (in PoC ¶33) that, in breach of clause 8.1.2(b) of the Deed, the First Defendant charged £60 per hour (rather than £30).

III The Stay Application

[21]The first issue which I have to consider is whether the proceedings against the First Defendant should be stayed in favour of arbitration.[22]It is common ground that the Deed contains, at clause 21, an arbitration clause (“the Arbitration Clause”) in the following terms:
"21 Arbitration If during the continuance of the Partnership or at any time thereafter any dispute, difference or question (generally a "
Dispute") shall arise between the Partners (or former Partners) or any of them or any of their respective representatives or between any Partner (or former Partner) and the representatives of any other Partner (or former Partner) touching the Partnership or the accounts dealings or transactions thereof or the dissolution or winding up thereof or the construction meaning or effect of this Deed or anything herein contained or the rights or liabilities of the Partners (or former Partners) or their respective representatives, hereunder or otherwise howsoever the Dispute shall be referred to a single arbitrator to be agreed upon by the parties to the Dispute (and in default of agreement to be nominated by the Chartered Institute of Arbitrators in accordance with and subject to the provisions of the Arbitration Act 1996). For the avoidance of doubt it is hereby agreed and declared that any such arbitrator shall have full power to dissolve the Partnership if he or she shall think fit. The making of an award shall be a condition precedent to any right of action against a party to this deed."[23]The Defendants say that the First Defendant is entitled to a stay of the proceedings by reason of this clause and s.9(4) of the Act. They then go on to say that, if the proceedings are stayed against the First Defendant, then the proceedings against the Second Defendant should be stayed on case management grounds. At the hearing on 4 November 2025, the Second Defendant confirmed through its counsel that it would agree to be bound by the result of the arbitration.[24]Although there was a suggestion in the evidence of the Claimant that the disputes in the proceedings did not fall within this clause, that submission was not pursued before me. Rather, the Claimant says that(i) the arbitration stay does not apply to the Second Defendant because it is not a party to the Partnership Agreement and(ii) the First Defendant has lost the right to rely on the arbitration clause by reason of s.9(3) of the Act.[25]Section 9 of the Act provides as follows:
“9 Stay of legal proceedings. (1) A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter. (2) An application may be made notwithstanding that the matter is to be referred to arbitration only after the exhaustion of other dispute resolution procedures. (3) An application may not be made by a person before taking the appropriate procedural step (if any) to acknowledge the legal proceedings against him or after he has taken any step in those proceedings to answer the substantive claim. (4) On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed. (5) If the court refuses to stay the legal proceedings, any provision that an award is a condition precedent to the bringing of legal proceedings in respect of any matter is of no effect in relation to those proceedings.”
[26]The principal issue on the Stay Application is whether the First Defendant has “taken any step in those proceedings to answer the substantive claim” so as to prevent him from making an application for a stay.[27]There was some dispute between the parties as to what amounts to a relevant step and it is convenient therefore to start with the authorities relied on by the parties and their submissions in relation to them.[28]S.9(3) of the Act was considered by the Court of Appeal in Patel v Patel [2000] QB 551. In his judgment, Lord Woolf (with whom Otton and Ward LJJ agreed) made the following points: 28.1. The language of s.9(3) is different from that contained in the previous legislation, s.4(1) of the Arbitration Act 1950 (at 554F-G); 28.2. The “old law” had made it clear that, if a person swears an affidavit indicating that he wishes a stay, swearing an affidavit dealing with the merits at the same time will not extinguish the entitlement to a stay. Lord Woolf accepted that this principle continued to apply (at 555F). Lord Woolf then referred more generally to the approach under the old law as having been conveniently summarised in a passage from Mustill & Boyd: Commercial Arbitration which he set out at 555G-H as follows: "The reported cases are difficult to reconcile, and they give no clear guidance on the nature of a step in the proceedings. It appears, however, that two requirements must be satisfied. First, the conduct of the applicant must be such as to demonstrate an election to abandon his right to stay, in favour of allowing the action to proceed. Second, the act in question must have the effect of invoking the jurisdiction of the court." 28.3. The starting point is to approach the language of s.9(3) by applying the actual words of the subsection. Further, the UNCITRAL Model Law on International Commercial Arbitration should be taken into account (556C-F). 28.4. On the facts of the case, issuing an application to set aside a default judgment and for leave to defend the action and to bring a counterclaim did not amount to a relevant step which caused the loss of the right to a stay. It was, in the circumstances, “ambivalent” with no sign of an election (557B-C).[29]In the same case Otton LJ (with whom Ward LJ agreed): 29.1. Set out a passage from Merkin, Arbitration Law at paragraph 6.19 which stated that the old authorities remained good law. This passage was described as “helpful commentary” (at 558B-C) but Otton LJ only cited directly one proposition from the old law, namely that something which would otherwise be regarded as a step in the proceedings will not be treated as such if the applicant has specifically stated that he intends to seek a stay. 29.2. Set out (and then applied) a separate passage from the same paragraph in Merkin which read as follows; “The right to apply for a stay will also be lost if the defendant in the judicial proceedings has expressly or impliedly represented that he does not intend to refer the issues in dispute to arbitration. The matter is determined by the usual rules applicable to estoppel, i.e. has the defendant unequivocally represented that there will be no reference to arbitration, and has the plaintiff conducted his affairs on the basis that the matter will be determined by the court, in reliance on that representation?”[30]Patel was considered by the Court of Appeal in Capital Trust Investments v Radio Design TJ AB [2002] 2 All ER 159. In Capital Trust the Court of Appeal: 30.1. Cited at [56] the following passage from Lord Denning MR in Eagle Star Insurance Co Ltd v Yuval Insurance Co Ltd [1978] 1 Lloyds Rep 357 at 361: “On those authorities, it seems to me that in order to deprive a defendant of his recourse to arbitration a “step in the proceedings” must be one which impliedly affirms the correctness of the proceedings and the willingness of the defendant to go along with a determination by the Courts of law instead of arbitration”. 30.2. Set out the passages from Mustill & Boyd and Merkin (referred to at paragraphs 28.2 and 29.2 above) and held at [57] that Lord Woolf’s judgment in Patel was to the effect that the approach to s.9(3) should be “similar” to that under the old law. 30.3. Decided on the facts (at [65]) that the actions of the defendant had not indicated a willingness that the Court should determine the claim instead of arbitrators (so using the language from Eagle Star).[31]The third authority to which I was taken was the decision of Sales J (as he then was) in Bilta v Nazir [2010] EWHC 1086 (Ch) in which he considered both Patel and Capital Trust and said the following: 31.1. Section 9 of the Act contains the only relevant time limits for an application for a stay. It provides when such an application can be made (after service of an Acknowledgement of Service) and when the ability to make an application will be lost (once a relevant step has been taken). The additional procedural rules in CPR Part 11 do not apply to such an application: [20]-[25]. 31.2. The ethos of the Act supported the general view that “Parliament did not intend that rights to seek to refer disputes to arbitration should be lost with undue ease….”: [24i]. 31.3. In the absence of authority, he would have held that the relevant step in proceedings “to answer the substantive claim would usually be the service of a defence or some equivalent step”. This reflected the difference between s.9(3) which refers to a step to answer the substantive claim and the earlier legislative provisions which referred simply to delivering any pleadings or “taking any other step”.However, Sales J held that he was bound by the Court of Appeal’s decision in Capital Trust which adopted the guidance from Eagle Star set out in paragraph 17 above: [27]-[28]. 31.4. Sales J also considered the effect of a reservation of rights when he said at [31]: “If both parties are aware that a procedural step such as seeking an extension of time to put in a defence is being taken in a context where the party taking that step is still considering whether or not to apply for a stay under section 9 of the 1996 Act, there can be no good grounds for the other party to think that the party taking the procedural step has made an outright election in favour of allowing the court proceedings to proceed such as to waive his rights under the arbitration agreement between them and section 9 to seek a stay. Nor in such a case can there be any grounds for the other party to construe what is done as an implied representation that the party taking the procedural step did not intend to refer the issues in dispute to arbitration. In my view, where some procedural step is taken in the proceedings, the quality of that step for the purposes of application of section 9(3) has to be judged objectively in the light of the whole context known to both parties.” 31.5. Sales J then held, on the facts, that issuing an application seeking an extension of time for the Defence was not a step which disabled the party from applying for a stay. The Judge described the case in terms of election/waiver and representation as follows at [38]: “…the issuing of the application on 20 January 2010 seeking an extension of time for service of the defence could not objectively be construed as indicating an election by Jetivia to waive any right it might have to seek a stay for the dispute to be referred to arbitration; nor could it be construed as an unequivocal representation that Jetivia did not intend to contest the jurisdiction of the court.” 31.6. In reaching this conclusion, Sales J distinguished a much earlier authority from the old law, Ford’s Hotel Co Ltd v Bartlett [1896] AC 1, in which it had been held that seeking and obtaining time to serve a defence had been a relevant step under the Arbitration Act 1889. Ford’s Hotel was a case relied on by the Claimant before me to which I return below.[32]The final sentence of the passage set out in paragraph 31.4 above was cited with approval by Floyd J in Nokia Corporation v HTC Corporation [2012] EWHC 3911 (Pat) at [19]. Floyd J also described the authorities as having added a “gloss” to the plain words of the Act (at [14]) before going to hold that participation in a CMC was an “unequivocal” acceptance that the Court was going to decide all of the issues which might arise in the action (at [26])[33]The other cases to which I was referred were: 33.1. Roussell-Uclaf v GD Searle & Co Ltd [1978] FSR 95 in which Graham J held (at p.105) that the Arbitration Act 1950 contemplated “some positive act by way of offence on the part of the defendant rather than merely parrying a blow by the plaintiff, particularly where the attack consists in asking for an interim injunction.” The Claimant submitted that this case involved an ordinary injunction rather than a freezing order and that this was a material difference. 33.2. Heals Property Developments Ltd v Fairpark Estates Ltd [2022] 1 WLR 3931 in which Judge Richard Williams (sitting as a Judge of the High Court) considered Patel, Capital Trust, and Bilta, and applied them to a complicated set of facts in which the right to an arbitration stay had been lost in respect of part of the proceedings (concerning a proprietary claim) but not in respect of the other part of the proceedings. The principal relevance of Fairpark was that it contained an analysis of s.9(3) by reference to three requirements which the Judge said (at [23]) were derived from Capital Trust. The Claimant before me adopted this analysis.[34]In the light of the authorities referred to above, and particularly Fairpark, the Claimant submitted there were three relevant requirements which he described as follows: 34.1. Conduct of the applicant which demonstrates an election to abandon his right to a stay in favour of allowing the action to proceed. 34.2. The applicant’s conduct must have the intention of invoking the jurisdiction of the Court. 34.3. An act which would otherwise be regarded as a step in the proceedings will not be treated as such if the applicant has specifically stated that he intends to seek a stay.[35]Having considered the various authorities referred to above, I have sympathy for the view of Floyd J in Nokia that the authorities put a gloss on the words of the Act which are otherwise clear. I am also unsure that Lord Woolf did intend in Patel to endorse the “old law” to its full extent (other than the specific point about the effect of a reservation of rights referred to in paragraph 28.2 above) but, like Sales J in Bilta, I am bound by the decision in Capital Trust.[36]However, I do consider that it is necessary to bear in mind that, in the pre-Act cases, the Courts were faced with statutes which generally referred to taking “any step” in the proceedings and had therefore sought to limit the width of these words by looking for steps which had a particular quality if they were to cause a party to lose the right to arbitrate which they would otherwise have had. This desire then resulted in Judges (and writers of textbooks) using different terms and legal analogies – election, waiver, representation, estoppel – while all seeking to describe essentially the same or very similar qualities in relation to acts which give rise to the loss of a right to a stay. It is important that these epithets or analogies do not detract from the exercise which the Court is undertaking under s.9(3) which, standing back, is best expressed in the general approach of Lord Denning in Eagle Star (echoed by Floyd J in Nokia). The authorities show that the Court is looking for an act which is unequivocal or unambiguous when judged objectively in the light of the whole context known to both parties.[37]It will be apparent from this discussion that I do not accept the Claimant’s submission that three distinct requirements can be spelled out from Capital Trust or that the analysis of the relevant facts needs to be carried out only by reference to “election” or “invoking the Court’s jurisdiction”. Rather, it seems to me that these terms (which are derived from passages from Mustill & Boyd cited in Patel rather than being Lord Woolf’s own words) were themselves an attempt to summarise different language used in other judgments rather than being a code to be rigidly applied. Indeed, in Capital Trust itself, the Court of Appeal cited the words of Lord Denning in Eagle Star and then repeated those words in deciding the case. It did not refer to election.[38]Further, I do not agree that the third requirement identified by the Claimant is, in reality, a separate and distinct requirement. It is simply a reflection of the fact that a step which would otherwise have the quality of being an unambiguous or unequivocal acceptance of the court proceedings will not generally cause the right to arbitrate to be lost if that right is expressly reserved at the same time. Thus it is important to see if such a reservation was made but if the relevant step or steps lack the quality I have referred to above, then the absence of a reservation of rights will not be fatal.[39]I therefore have to look at the actions of the First Defendant following the commencement of the proceedings against him to identify whether there was some step which was unequivocal or unambiguous as to his acceptance or willingness that the dispute should be resolved through the Court proceedings which the Claimant had commenced.[40]The relevant sequence of events was as follows: 40.1. The order of the Judge was served on the Defendants on 13 August 2025. 40.2. On 14 August 2025, the First Defendant, then acting in person, applied to extend time to comply with the disclosure orders made by the Judge and to adjourn the return date to allow him time to seek legal representation. No reference was made in his application to the Arbitration Clause. 40.3. The correspondence from the then solicitors for the Defendants, Nexa Law, began on 18 August 2025 when they provided a draft consent order to adjourn the return date. Nexa Law’s letter referred to the fact that they had only been formally instructed that day. Again, no reference was made to the Arbitration Clause. 40.4. The Claimant refused to adjourn the return date hearing which went ahead as ordered by the Judge. On 25 August 2025, counsel for the Defendants filed a skeleton argument for that return date hearing which referred, at ¶25-26, to the existence of the Arbitration Clause in the following terms: “25. The dispute falls within the curtilage of the binding Arbitration clause at [21] in the partnership agreement….It is also notable that the need for an arbitration award is a condition precedent to any cause of action. 26. The underlying proceedings should be struck out or stayed pending arbitration. In those circumstances, the proprietary asset preservation injunction and freezing injunction should be discharged forthwith.” 40.5. The Claimant refers to this as an equivocal statement and relies on the fact that the Defendants did not say they were making or had made an application for a stay. At that stage no such application could have been made as no Acknowledgement of Service had been filed (as required by s.9(3) of the Act). 40.6. Nexa Law wrote to the Claimant’s solicitors on 29 August 2025 setting out their calculation as to when the Acknowledgement of Service and Defence would be due. The Defendants subsequently acknowledged service on 29 August 2025 or 1 September (the documents are not entirely clear) indicating an intention to defend all of the claim. They did not indicate an intention to challenge jurisdiction and did not, in fact, challenge jurisdiction within 14 days. The Claimant’s evidence (at paragraph 10 of Ms Murthy’s first statement) asserted that this meant that the Defendants had accepted the jurisdiction of the Court under CPR 11(5). This argument cannot stand with the decision in Bilta that the regime in CPR 11 does not apply to applications for a stay under the Act. However, at the hearing, the Claimant submitted that the nature of the acknowledgement of service was nonetheless part of the First Defendant’s conduct which could be looked at as a relevant part of the overall picture (by analogy to the approach referred to in Moonbug Entertainment Ltd v CCM Touring LLC [2024] EWHC 793 at [48]). 40.7. On 4 September 2025, the First Defendant filed an affidavit in opposition to the continuation of the injunctive relief. That affidavit included the following reference to the Arbitration Clause: “186. Instead, the Applicant bypassed all normal and agreed avenues for resolution – discussion, mediation, or arbitration under the Partnership Deed – and resorted immediately to litigation and the “nuclear option” of a freezing injunction.” 40.8. The Claimant relied on the fact that this affidavit was lengthy and dealt with the substance of the dispute. Indeed, it was submitted that it went well beyond what would be required in order to deal with the return date of a freezing order where the merits test – a good arguable case – is a low threshold. 40.9. On 9 September 2025, Nexa Law wrote a lengthy letter which, after dealing with the impact of the freezing order, turned to the proceedings themselves. The letter set out the Arbitration Clause and referred to the absence of a pre-action protocol letter before saying: “In the light of the arbitration clause in the Partnership Deed, we are minded to suggest that the matter be referred for Alternative Dispute Resolution which might promote a stay in the substantive proceedings in order for this to follow in due course. The fact of the Proprietary Asset Preservation Order and Freezing Injunction does not preclude there from being a stay in the substantive proceedings. The sole purpose of the injunction was to freeze the Respondents’ assets and not to have any influence over the course of action.” 40.10. The Claimant referred to this letter as containing an equivocal statement in that it neither said that a stay would be applied for nor did it reserve the right to seek a stay. The Defendants accepted that this letter was confused and lacked clarity. 40.11. The Defendants then, following a proposal from the Claimant, agreed a consent order extending time for their Defence and for the Claimant’s reply evidence on the Injunction Application. That Order was made by Master McQuail on 11 September 2025. 40.12. On 24 September 2025, the Defendants made the Stay Application. 40.13. The Claimant also referred to a number of other letters or emails from Nexa Law (for example, on 28 August, 29 August, 4 September, and 5 September) which, it was said, were notable for the absence of any reference to any of the Arbitration Clause, a stay for arbitration, or a reservation of the right to seek a stay. The correspondence did, on occasion, refer to a stay more generally (such as on 5 September).[41]The Claimant’s submission, based on the timeline and events described above, was that the First Defendant’s conduct between 13 August and 24 September (when the Stay Application was made) should be looked at cumulatively and that it was clear that the First Defendant had: 41.1. Abandoned his right to a stay by his conduct which, to an objective bystander, would indicate that he was allowing the Court to determine the litigation; 41.2. Invoked the jurisdiction of the Court through applying for more time on 14 August, appearing at the return date on 27 August to make argument, and putting the consent order before Master McQuail in early September; and 41.3. Never properly reserved his right to seek a stay.[42]Notwithstanding the arguments made by the Claimant, I have concluded that the First Defendant has not taken a step in the proceedings to answer the substantive claim within the terms of s.9(3) of the Act and so is entitled to a stay under s.9(4) of the Act. My reasoning is as follows.[43]Starting with the initial stages of the proceedings, while it is right that the First Defendant did invoke the jurisdiction of the Court by seeking additional time on 14 August, the purpose of this was to obtain time for him to consider the position he was in and to obtain legal representation. The fact that he did not refer to the Arbitration Clause or to a stay is entirely explicable given that he is a lay person who had just been served, without prior warning, with an extensive and invasive order for injunctions. Indeed, relying on the absence of any reference to the Arbitration Clause at that stage was a bold submission given that the Claimant himself and his legal team did not seem to be aware of it as they had not referred to it on the without notice hearing (a matter which was said by the Defendants to be a serious non-disclosure). Likewise, there was no relevant step when Nexa Law, freshly instructed, sought to adjourn the return date and to deal with issues arising from the freezing order (such as the freezing of the Partnership Account). While I accept that, in principle, a party could lose its right to arbitrate through conduct which was carried out in ignorance of that right, it seems to me that this is an extremely unlikely result to arise from the very early stages of a case where a defendant and his new lawyers are only just starting to get to grips with the issues and the relevant arbitration clause is not on either side’s mind.[44]Moving on, after the existence (and relevance to the dispute) of the Arbitration Clause was first identified in the skeleton argument served on 25 August 2025 and the First Defendant said the proceedings should be stayed or struck out, there was no step taken by the First Defendant which was sufficiently unambiguous or unequivocal so as to indicate that the First Defendant was not still intending to rely on this right. Although the Claimant sought to characterise the initial statement in the skeleton argument as equivocal, I do not agree. It was sufficiently clear and was saying that the correct route was for the dispute to be dealt with through arbitration. Thereafter, the First Defendant did not abandon reliance on this position. The Arbitration Clause was referred to in both his affidavit and in the correspondence on 9 September. While I accept that these references could have been clearer and the consequences of the Arbitration Clause could have been set out in terms by reference to the Act (or a reservation of rights could have been made expressly), I do not accept that it is sufficient for the Claimant to say that the references could be characterised as “equivocal”. The very fact that the Arbitration Clause was referred to in the terms I have described above is a sufficiently clear indication that the First Defendant was continuing to rely on that Clause. He was not, in my view, abandoning it in favour of the Court determining the dispute, nor was he unequivocally or unambiguously moving on from arbitration.[45]Equally, when the Defendants acknowledged service indicating an intention to defend, that does not detract materially from the position of the First Defendant. It might have been better if the respective positions of the First and Second Defendant had been dealt with separately given their different rights. However, Bilta makes it clear that the regime under the Act is distinct from the position under CPR 11.[46]Further, given the references to and reliance on the Arbitration Clause in the relatively short period of time between 13 August and 24 September, it is not sufficient for the Claimant’s purposes that the First Defendant did not say that he had made or was intending to make an application for a stay, or that he was reserving his rights to make such an application. The absence of such statements in the circumstances of the case does not amount to an implied representation that the First Defendant was content to proceed by way of Court proceedings, nor is it a waiver or election.[47]Indeed, it seems to me that it is material that the vast majority, if not all of the correspondence was concerned with the freezing order and not with the substantive claim itself. When proceedings such as these are commenced, it is to be expected that the case splits into two workstreams – the injunction applications on the one hand and the underlying proceedings (including case management direction and statements of case) on the other. In this case it was the former which was the predominant workstream given that there were only 6 weeks between the service of the proceedings and the making of the Stay Application.[48]The importance of the differentiation is that the injunction workstream is essentially defensive as the aim is to remove or ameliorate the impact of the injunctions rather than, as required by s.9(3) of the Act, being a step to answer the substantive claim. The defensive nature of the opposition to an injunction was the basis for the decision in Roussel-Uclafreferred to in paragraph 33.1 above. That decision was made at a time when the relevant Arbitration Act was in more general terms than the Act but even on more general wording, the resisting of interlocutory proceedings by the defendant in that case (Searle) was not a step which deprived it off the right to a stay. The same can be said here where the Act expressly directs the Court to identify whether there has been a step to answer the substantive claim. As such, this is a particular example where the “old law” and the Act are in harmony.[49]The Claimant made two submissions in relation to the decision in Roussel-Uclaf: 49.1. First, he said that the principal type of injunction against the First Defendant here – a freezing order - was different from that in Roussel-Uclaf (which was an American Cyanamid injunction) and this made a difference. I do not accept this submission. There is no reason why the position should be different as between types of injunctions (and the First Defendant here was subject to three different types of injunctions in any event). The key point is that when a party is responding to an injunction it is likely to be acting defensively whatever the legal nature of and basis for that injunction. The fact that the legal test to be applied might be different depending on the nature of the injunction does not seem to me to affect this point. 49.2. Second, he said that, on the facts of this case, the First Defendant went further than acting defensively because he engaged in detail with the substantive merits of the claim in his affidavit relating to the Injunction Application. It was argued that the level of detail provided by the First Defendant on the underlying claim went beyond that required in a defence and was therefore an answer to the substantive claim. I do not agree. Although the merits test for a freezing order (or the other orders in this case) is a relatively low threshold, that does not mean that a party is not acting defensively when they say, in opposition to a freezing order, that the claim does not even get over that test. Moreover, in my view, it would be unnecessarily arbitrary if the application of s.9(3) of the Act depended on the precise level of detail which was contained in an affidavit, to see whether it crossed a line between defensive/parrying the injunction and offensive/answering the substantive claims. Rather, it seems to me that it is the purpose of the affidavit which is most important and in this case it remained defensive.[50]The distinction in Roussel-Uclaf is also relevant in relation to the first two occasions on which the Claimant said that the First Defendant invoked the jurisdiction of the Court – when he asked for more time on 14 August and when he appeared by Counsel at the return date. It seems to me that it is not sufficient simply to say that the Court’s jurisdiction was invoked in a general sense or for any purpose. It is necessary for the party opposing the stay to demonstrate that the invocation relied on had the qualities I have identified above. The first two occasions were directed exclusively or predominantly at the injunctive and ancillary relief and so are to be regarded as defensive (even if the Arbitration Clause had not featured in the skeleton argument for the return date).[51]The high point of the Claimant’s argument seemed to me to be the third occasion on which it was said that the Court’s jurisdiction was invoked, namely the extension of time for the First Defendant’s Defence which was approved by the Court on 11 September 2025. The Claimant said that this step was akin to that in Ford’s Hotel where the right to arbitration was lost when the defendant obtained additional time to serve its defence by way of an application to the Master. There is little reasoning in the short judgments in that case but Lord Shand did say that the act of making an application and arguing it before the Master “implied a statement to the effect that the appellants were to defend the action” and was “in effect an abandonment of the proposal to have the subject of the cause disposed of by arbitration.” Thus, even in Ford’s Hotel it was the quality of the act which was important.[52]Here, the Defendants had, on 9 September, referred to the Arbitration Clause and a possible stay of the proceedings (albeit that the precise basis for the stay is hard to follow given the confusion in the letter), and suggested that the Defence be put off until after the injunctions had been dealt with. Thus, the seeking of additional time for the Defence was part of a proposal intended to deal with the injunctive relief which the Defendants were saying was misconceived and to allow that part of the case to be dealt with first. The response from the Claimant included a draft consent order dealing both with the Defence and with the Claimant’s evidence in reply on the Injunction Application. It was this draft which ultimately formed the basis for the Order made by Master McQuail. It seems to me that the circumstances in which time was extended for the Defence were not therefore the same as those in Ford’s Hotel and the actions of the First Defendant did not have the qualities described by Lord Shand. Rather, they were part of a pragmatic approach intended to prioritise dealing with the injunctions and where the First Defendant had, only a couple of days earlier, referred to the Arbitration Clause. As a result, the right to seek a stay in favour of arbitration was not lost by the First Defendant.[53]For these reasons I will stay the claim against the First Defendant.

Position of the Second Defendant

[54]As I have explained above, the Second Defendant said that, if a stay was granted to the First Defendant, then the proceedings against the Second Defendant should be stayed on case management grounds.[55]Such a stay is unusual. However, following from the confirmation by the Second Defendant that it would agree to be bound by the result of the arbitration, the Claimant indicated that he would not object to such a stay provided that it would not, of itself, interfere with or undermine the basis for injunctive relief. This seemed to me to be a very sensible and pragmatic position to adopt where the primary claim is against the First Defendant and the claims against the Second Defendant rely on establishing the wrongdoing alleged against the First Defendant. It is plainly sensible that, if the dispute has to be resolved through both arbitration and then court proceedings, that the arbitration against the First Defendant is determined first. Further, I agree with the Claimant that the grant of a stay would not itself discharge any injunctive relief. That relief would, if I order it, continue during the period of the stay.[56]In these circumstances, I will also stay the claim against the Second Defendant.

(i) Introduction

[57]The effect of my decision on the Stay Application means that the Injunction Application is only live against the Second Defendant but that the s.44 Application against the First Defendant becomes relevant.[58]The Claimant says, in summary, that he satisfies the well-known three-fold test for the grant of a freezing injunction because he has a good arguable case against the Defendants; there is a risk of dissipation; and it is just and convenient for the injunctive relief to be granted. He also says that he satisfies the test for an asset preservation/proprietary injunction derived from American Cyanamid, namely that(i) there is a serious issue to be tried,(ii) the balance of convenience is in favour of granting an injunction, and(iii) it is just and convenient to grant the injunction. The test for the prohibitory injunction would be similar save that I would have to consider whether damages was an adequate remedy at the second stage.[59]The response of the Defendants is to attack the continuation of the injunctions (or the grant of injunctive relief under s.44 of the Act) at every stage. They say that: 59.1. There was material non-disclosure at the without notice hearing such that all of the injunctions should be discharged and not regranted on any basis. 59.2. The underlying cause of action against the First Defendant is flawed and cannot stand with a line of House of Lords/Court of Appeal authority about the ability of one partner to sue another for sums said to be due from the partnership. This alone would prevent the grant of any form of injunction against the First Defendant. 59.3. The s.44 Application suffers from an additional flaw in that the final sentence of the Arbitration Clause has excluded the jurisdiction of the Court under s.44 of the Act. 59.4. As regards the freezing orders, there is no real risk of dissipation. 59.5. As regards all of the orders, the continuation of the injunctive relief is not just and convenient and/or the balance of convenience is against the grant of such relief.[60]Although there are different jurisdictional bases for the various injunctions sought, some of the issues I have to deal with are common to all of them and I will therefore deal with these issues first become coming to matters which are particular to the individual Applications. (ii). Material non-disclosure[61]I will start with non-disclosure. As I have referred to above, the principal reason for the adjournment of the Injunction Application on 4 November was the late identification by the Defendants of the non-disclosure on which they were relying. The need for an adjournment highlights the importance of a respondent setting out clearly and on a timely basis the matters which it says should have been but were not disclosed to the Judge on the without notice hearing. This is not something which should be left to a skeleton argument served shortly before the hearing. The law[62]There was no real disagreement between the parties as to the law on material non-disclosure. I was referred to several cases in which that law was summarised including Mex Group Worldwide Ltd v Ford [2024] EWCA Civ 925 where Coulson LJ said this at [119]-[121]: “119 It is unnecessary to set out the law in relation to full and frank disclosure in any great detail. The relevant principles were summarised by Carr J (as she then was) in Tugushev v Orlov & Ors [2019] EWHC 2031 at [7]. She said: "The law is non-contentious. The following general principles can be distilled from the relevant authorities by way of summary as follows: i) The duty of an applicant for a without notice injunction is to make full and accurate disclosure of all material facts and to draw the court's attention to significant factual, legal and procedural aspects of the case; ii) It is a high duty and of the first importance to ensure the integrity of the court's process. It is the necessary corollary of the court being prepared to depart from the principle that it will hear both sides before reaching a decision, a basic principle of fairness. Derogation from that principle is an exceptional course adopted in cases of extreme urgency or the need for secrecy. The court must be able to rely on the party who appears alone to present the argument in a way which is not merely designed to promote its own interests but in a fair and even-handed manner, drawing attention to evidence and arguments which it can reasonably anticipate the absent party would wish to make; iii) Full disclosure must be linked with fair presentation. The judge must be able to have complete confidence in the thoroughness and objectivity of those presenting the case for the applicant. Thus, for example, it is not sufficient merely to exhibit numerous documents; iv) An applicant must make proper enquiries before making the application. He must investigate the cause of action asserted and the facts relied on before identifying and addressing any likely defences. The duty to disclose extends to matters of which the applicant would have been aware had reasonable enquiries been made. The urgency of a particular case may make it necessary for evidence to be in a less tidy or complete form than is desirable. But no amount of urgency or practical difficulty can justify a failure to identify the relevant cause of action and principal facts to be relied on; v) Material facts are those which it is material for the judge to know in dealing with the application as made. The duty requires an applicant to make the court aware of the issues likely to arise and the possible difficulties in the claim, but need not extend to a detailed analysis of every possible point which may arise. It extends to matters of intention and for example to disclosure of related proceedings in another jurisdiction; vi) Where facts are material in the broad sense, there will be degrees of relevance and a due sense of proportion must be kept. Sensible limits have to be drawn, particularly in more complex and heavy commercial cases where the opportunity to raise arguments about non-disclosure will be all the greater. The question is not whether the evidence in support could have been improved (or one to be approached with the benefit of hindsight). The primary question is whether in all the circumstances its effect was such as to mislead the court in any material respect; vii) A defendant must identify clearly the alleged failures, rather than adopt a scatter gun approach. A dispute about full and frank disclosure should not be allowed to turn into a mini-trial of the merits; viii) In general terms it is inappropriate to seek to set aside a freezing order for non-disclosure where proof of non-disclosure depends on proof of facts which are themselves in issue in the action, unless the facts are truly so plain that they can be readily and summarily established, otherwise the application to set aside the freezing order is liable to become a form of preliminary trial in which the judge is asked to make findings (albeit provisionally) on issues which should be more properly reserved for the trial itself; ix) If material non-disclosure is established, the court will be astute to ensure that a claimant who obtains injunctive relief without full disclosure is deprived of any advantage he may thereby have derived; x) Whether or not the non-disclosure was innocent is an important consideration, but not necessarily decisive. Immediate discharge (without renewal) is likely to be the court's starting point, at least when the failure is substantial or deliberate. It has been said on more than one occasion that it will only be in exceptional circumstances in cases of deliberate non-disclosure or misrepresentation that an order would not be discharged; xi) The court will discharge the order even if the order would still have been made had the relevant matter(s) been brought to its attention at the without notice hearing. This is a penal approach and intentionally so, by way of deterrent to ensure that applicants in future abide by their duties; xii) The court nevertheless has a discretion to continue the injunction (or impose a fresh injunction) despite a failure to disclose. Although the discretion should be exercised sparingly, the overriding consideration will always be the interests of justice. Such consideration will include examination of i) the importance of the facts not disclosed to the issues before the judge ii) the need to encourage proper compliance with the duty of full and frank disclosure and to deter non-compliance iii) whether or not and to what extent the failure was culpable iv) the injustice to a claimant which may occur if an order is discharged leaving a defendant free to dissipate assets, although a strong case on the merits will never be a good excuse for a failure to disclose material facts; xiii) The interests of justice may sometimes require that a freezing order be continued and that a failure of disclosure can be marked in some other way, for example by a suitable costs order. The court thus has at its disposal a range of options in the event of non-disclosure. […]120. More recently, in Derma Med Limited & Anr v Dr Zack Ally & Ors [2024] EWCA Civ 175, this court added these other considerations to Carr J's list: "30. Although this was said in the context of an application for a freezing order, the principles are of general application. I would draw particular attention, as relevant in the present case, to the fact that the overriding consideration when deciding whether to continue an injunction or grant a fresh injunction despite a failure of disclosure is the interests of justice; and to the need to maintain a due sense of proportion in complex cases. This latter point was made by Mr Justice Toulson in Crown Resources AG v Vinogradsky (15 June 2001) and was adopted by the Court of Appeal in Kazakhstan Kagazy Plc v Arip [2014] EWCA Civ 381, [2014] 1 CLC 451 at [36]: '… where facts are material in the broad sense in which that expression is used, there are degrees of relevance and it is important to preserve a due sense of proportion. The overriding objectives apply here as in any matter in which the Court is required to exercise its discretion. … I would add that the more complex the case, the more fertile is the ground for raising arguments about non-disclosure and the more important it is, in my view, that the judge should not lose sight of the wood for the trees. … In applying the broad test of materiality, sensible limits have to be drawn. Otherwise there would be no limit to the points of prejudice which could be advanced under the guise of discretion.' 31. A further point which merits emphasis is that even when there has been a failure of full and frank disclosure, the interests of justice may sometimes require that a without notice order be continued and that a failure of disclosure be marked in some other way, for example by a suitable costs order. A court needs to consider the range of options available to it in such an event."121. In essence, if a subsequent court considers that an ex parte order has or may have been obtained in circumstances where important information should have been but was not disclosed to the judge, it may well set that order aside, but the failures must be material and any assessment of the alleged failures must be proportionate. Ultimately, in considering whether to discharge the order and/or to renew it, the court will always be guided by the interests of justice.” "The law is non-contentious. The following general principles can be distilled from the relevant authorities by way of summary as follows: i) The duty of an applicant for a without notice injunction is to make full and accurate disclosure of all material facts and to draw the court's attention to significant factual, legal and procedural aspects of the case; ii) It is a high duty and of the first importance to ensure the integrity of the court's process. It is the necessary corollary of the court being prepared to depart from the principle that it will hear both sides before reaching a decision, a basic principle of fairness. Derogation from that principle is an exceptional course adopted in cases of extreme urgency or the need for secrecy. The court must be able to rely on the party who appears alone to present the argument in a way which is not merely designed to promote its own interests but in a fair and even-handed manner, drawing attention to evidence and arguments which it can reasonably anticipate the absent party would wish to make; iii) Full disclosure must be linked with fair presentation. The judge must be able to have complete confidence in the thoroughness and objectivity of those presenting the case for the applicant. Thus, for example, it is not sufficient merely to exhibit numerous documents; iv) An applicant must make proper enquiries before making the application. He must investigate the cause of action asserted and the facts relied on before identifying and addressing any likely defences. The duty to disclose extends to matters of which the applicant would have been aware had reasonable enquiries been made. The urgency of a particular case may make it necessary for evidence to be in a less tidy or complete form than is desirable. But no amount of urgency or practical difficulty can justify a failure to identify the relevant cause of action and principal facts to be relied on; v) Material facts are those which it is material for the judge to know in dealing with the application as made. The duty requires an applicant to make the court aware of the issues likely to arise and the possible difficulties in the claim, but need not extend to a detailed analysis of every possible point which may arise. It extends to matters of intention and for example to disclosure of related proceedings in another jurisdiction; vi) Where facts are material in the broad sense, there will be degrees of relevance and a due sense of proportion must be kept. Sensible limits have to be drawn, particularly in more complex and heavy commercial cases where the opportunity to raise arguments about non-disclosure will be all the greater. The question is not whether the evidence in support could have been improved (or one to be approached with the benefit of hindsight). The primary question is whether in all the circumstances its effect was such as to mislead the court in any material respect; vii) A defendant must identify clearly the alleged failures, rather than adopt a scatter gun approach. A dispute about full and frank disclosure should not be allowed to turn into a mini-trial of the merits; viii) In general terms it is inappropriate to seek to set aside a freezing order for non-disclosure where proof of non-disclosure depends on proof of facts which are themselves in issue in the action, unless the facts are truly so plain that they can be readily and summarily established, otherwise the application to set aside the freezing order is liable to become a form of preliminary trial in which the judge is asked to make findings (albeit provisionally) on issues which should be more properly reserved for the trial itself; ix) If material non-disclosure is established, the court will be astute to ensure that a claimant who obtains injunctive relief without full disclosure is deprived of any advantage he may thereby have derived; x) Whether or not the non-disclosure was innocent is an important consideration, but not necessarily decisive. Immediate discharge (without renewal) is likely to be the court's starting point, at least when the failure is substantial or deliberate. It has been said on more than one occasion that it will only be in exceptional circumstances in cases of deliberate non-disclosure or misrepresentation that an order would not be discharged; xi) The court will discharge the order even if the order would still have been made had the relevant matter(s) been brought to its attention at the without notice hearing. This is a penal approach and intentionally so, by way of deterrent to ensure that applicants in future abide by their duties; xii) The court nevertheless has a discretion to continue the injunction (or impose a fresh injunction) despite a failure to disclose. Although the discretion should be exercised sparingly, the overriding consideration will always be the interests of justice. Such consideration will include examination of i) the importance of the facts not disclosed to the issues before the judge ii) the need to encourage proper compliance with the duty of full and frank disclosure and to deter non-compliance iii) whether or not and to what extent the failure was culpable iv) the injustice to a claimant which may occur if an order is discharged leaving a defendant free to dissipate assets, although a strong case on the merits will never be a good excuse for a failure to disclose material facts; xiii) The interests of justice may sometimes require that a freezing order be continued and that a failure of disclosure can be marked in some other way, for example by a suitable costs order. The court thus has at its disposal a range of options in the event of non-disclosure. […] "30. Although this was said in the context of an application for a freezing order, the principles are of general application. I would draw particular attention, as relevant in the present case, to the fact that the overriding consideration when deciding whether to continue an injunction or grant a fresh injunction despite a failure of disclosure is the interests of justice; and to the need to maintain a due sense of proportion in complex cases. This latter point was made by Mr Justice Toulson in Crown Resources AG v Vinogradsky (15 June 2001) and was adopted by the Court of Appeal in Kazakhstan Kagazy Plc v Arip [2014] EWCA Civ 381, [2014] 1 CLC 451 at [36]: '… where facts are material in the broad sense in which that expression is used, there are degrees of relevance and it is important to preserve a due sense of proportion. The overriding objectives apply here as in any matter in which the Court is required to exercise its discretion. … I would add that the more complex the case, the more fertile is the ground for raising arguments about non-disclosure and the more important it is, in my view, that the judge should not lose sight of the wood for the trees. … In applying the broad test of materiality, sensible limits have to be drawn. Otherwise there would be no limit to the points of prejudice which could be advanced under the guise of discretion.' 31. A further point which merits emphasis is that even when there has been a failure of full and frank disclosure, the interests of justice may sometimes require that a without notice order be continued and that a failure of disclosure be marked in some other way, for example by a suitable costs order. A court needs to consider the range of options available to it in such an event."[63]The summary in Mex was cited with approval by Lord Justice Popplewell in Astor Asset Management 3 Ltd & Ors v Pliego & Anor [2025] WCA Civ 1060 at [13].[64]On the impact of non-disclosure, I was also referred to the decision of Mr Justice Andrew Smith in Dar al Arkan Real Estate Development Company & Anor v Al Refai [2012] EWHC 3539 where the following was said at [148]-[149]:
“148. The principles about how the court should respond to a breach of the duties of an ex parte applicant were usefully set out by Mr. Alan Boyle QC, sitting as a Deputy High Court Judge, in Arena Corporation Ltd v Peter Schroeder [2003] EWHC 1089 (Ch) at para 213. The general rule is that the court will discharge any orders that were granted and will not renew them until trial. In Millhouse Capital UK Ltd v Sibir Energy Plc [2008] EWHC 2614 (Ch) Christopher Clarke J said (at para 104) that "such is the importance of the duty that, in the event of any substantial breach, the Court strongly inclines towards setting its order aside and not renewing it, so as to deprive the defaulting party of any advantage that the order may have given him". However, the court has jurisdiction, albeit one which it exercises sparingly, to continue an order or to replace an order that it discharges with a new order to similar effect. While the court must have proper regard to the need to protect from abuse the administration of justice and in particular its jurisdiction to grant orders ex parte, it will not apply the general rule so rigidly as to allow it to work injustice. 149. When making decisions of this kind the court should, of course, weigh all relevant considerations, and they include importantly these: i) The culpability of the applicant (and his advisors) with regard to the breach, and in particular the extent of the breach and whether it was deliberate; ii) The importance and the significance to the outcome of the application of matters not disclosed to the court; iii) The merits of the applicant's case; and iv) The nature of the order obtained ex parte. When assessing this last consideration, the court has regard to the consequences of the order for the person(s) against whom it is to be made: see Payabi v Armstel Shipping Corp (The "Jay Bola"), [1992] QB 907, 918B-D. Christopher Clarke J observed in the Millhouse Capital case (loc cit at para 104) that the general rule is applied particularly strictly in the case of freezing and seizure orders. On the other hand, with regard to orders for service of proceedings out of the jurisdiction the cases referred to in Gee, Commercial Injunctions, (5th Ed, 2004) para 9.001, fn6 make it clear that "In principle the same duty arises in relation to [an order to serve out of the jurisdiction]. But in practice such oversights are more likely to be penalised only in the form of costs, since it would not be right to drive the [claimants] to an inappropriate jurisdiction or to bar a bone fide claim from a proper one. To that extent the practice may be different in relation to [order for service out of the jurisdiction] from cases involving injunctions": A/A D/S Svendborg v Maxim Brand, (CA, unreported, 23 January 1989), per Kerr LJ. More specifically, in these cases the court will not readily treat a failure to anticipate potential defences as a breach of the duty to make full and frank disclosure: see Ophthalmic Innovations International (UK) Ltd v Ophthalmic Innovations International Inc [2004] EWHC 2984 (Ch) at para 44. As far as concerns the order for service on Mr Al Refai, I do not give great weight to the Website complaints.”
The non-disclosure relied on by the Defendants i) The culpability of the applicant (and his advisors) with regard to the breach, and in particular the extent of the breach and whether it was deliberate; ii) The importance and the significance to the outcome of the application of matters not disclosed to the court; iii) The merits of the applicant's case; and iv) The nature of the order obtained ex parte. When assessing this last consideration, the court has regard to the consequences of the order for the person(s) against whom it is to be made: see Payabi v Armstel Shipping Corp (The "Jay Bola"), [1992] QB 907, 918B-D. Christopher Clarke J observed in the Millhouse Capital case (loc cit at para 104) that the general rule is applied particularly strictly in the case of freezing and seizure orders. On the other hand, with regard to orders for service of proceedings out of the jurisdiction the cases referred to in Gee, Commercial Injunctions, (5th Ed, 2004) para 9.001, fn6 make it clear that "In principle the same duty arises in relation to [an order to serve out of the jurisdiction]. But in practice such oversights are more likely to be penalised only in the form of costs, since it would not be right to drive the [claimants] to an inappropriate jurisdiction or to bar a bone fide claim from a proper one. To that extent the practice may be different in relation to [order for service out of the jurisdiction] from cases involving injunctions": A/A D/S Svendborg v Maxim Brand, (CA, unreported, 23 January 1989), per Kerr LJ. More specifically, in these cases the court will not readily treat a failure to anticipate potential defences as a breach of the duty to make full and frank disclosure: see Ophthalmic Innovations International (UK) Ltd v Ophthalmic Innovations International Inc [2004] EWHC 2984 (Ch) at para 44. As far as concerns the order for service on Mr Al Refai, I do not give great weight to the Website complaints.”[65]In the end there were nine matters relied on by the Defendants: 65.1. Failing to draw the Arbitration Clause to the Court’s attention. 65.2. Failing to draw a House of Lords and Court of Appeal authority – Hurst v Bryk [2002] 1 AC 185 and Cowan v Wakeling [2008] EWCA Civ 229 – to the Court’s attention. 65.3. Making of an unfair allegation that there was a risk that the First Defendant would send assets abroad. 65.4. Failing to highlight the availability of the First Defendant’s share in the partnership. 65.5. Presenting the management of the Partnership in an unfair manner. 65.6. Presenting correspondence from 2025 in an unfair manner. 65.7. Giving a misleading impression relating to COVID funding. 65.8. Making a factually incorrect assertion as to the Claimant’s income. 65.9. Failing to draw the Court’s attention to the disruption which would be caused by the proposed Orders.[66]Mr Gavaghan fairly accepted that some of these were more important than others, and I will concentrate below on those to which the greatest attention was paid by the parties at the hearing. The Arbitration Clause[67]It was common ground that the Arbitration Clause was not expressly drawn to the Judge’s attention at the without notice hearing. Although the evidence from the Claimant did point to the fact that the Partnership Deed was included within the bundle for that hearing and (at least in the first witness statement of Ms Murthy) asserted that this meant the Partnership Deed was “fully disclosed”, the authorities make it plain that this sort of “disclosure” is not sufficient (see point iii in the summary from Mex set out above).[68]The Defendants made two particular points about the Arbitration Clause: 68.1. First, they pointed out that its existence affects the jurisdictional basis for any injunction. As it was not referred to, the Judge granted an injunction against the First Defendant on the wrong basis (under the Senior Courts Act rather than the Act). 68.2. Second, they referred to the final sentence of the Arbitration Clause as excluding the jurisdiction to grant an injunction under s.44 of the Act. It was, they said, a Scott v Avery clause. While the impact of this sentence is a matter I will have to deal with substantively on the s.44 Application, the Defendants said that, at the very least, the point had to be drawn to the attention of the Judge so that he could consider the potential impact of the provision.[69]The Defendants also relied more generally on the failure by the Claimant to refer to the Arbitration Clause as indicating that the Claimant had not paid heed to or understood his obligation to make full and frank disclosure.[70]The Claimant submitted in response that: 70.1. The failure to refer to the Arbitration Clause was not a matter of material significance because, although it might have affected the starting point for the Judge’s consideration of the application, it would not have affected the end result. This was because an injunction would have been available under s.44 of the Act against the First Defendant, and the claim against the Second Defendant was unaffected by the Arbitration Clause. The strength of the case would have caused the Judge to grant the injunctive relief in any event. As the Claimant put it, with proper disclosure the journey may have been different but the destination would have been the same. 70.2. The right to arbitrate was something which the First Defendant had not exercised by the time of the without notice hearing and the Court could have approached it on the basis that it was a right which the First Defendant might not even take up.[71]In my view, the failure to draw the Arbitration Clause to the attention of the Judge was a very serious failure by the Claimant on the without notice hearing. There can be no doubt that the existence and terms of the Arbitration Clause were material facts which it was essential that the Judge knew of when he was asked to make wide-ranging and invasive injunctive relief. Given that it was accepted before me that the Arbitration Clause covered the matters in dispute between the Claimant and the First Defendant, the Arbitration Clause went to the heart of the jurisdiction of the Court to grant any relief against the First Defendant. If the Arbitration Clause had been referred to, then the hearing would have started from a fundamentally different position as the Judge would have to have been satisfied as to the existence of urgency (required under s.44(3) of the Act) and he would have had regard to the limitations imposed by s.44(5) of the Act. The transcript of the without notice hearing shows that the Judge was already concerned about whether a without notice hearing was justified. Reference to the Arbitration Clause and the Act would have been likely to heighten those concerns. Further, if the Claimant had persisted with substantive proceedings under the CPR then the Judge would also have had to take into account the prima facie breach of the Deed.[72]Moreover, even if the Claimant had not appreciated the significance of it (and he ought to have done if he was complying with his duty), it is highly likely, if not inevitable, that a Judge who was shown the Arbitration Clause would have asked about the impact of the final sentence of the Clause which provides that “The making of an award shall be a condition precedent to any right of action against a party to this deed.” As I have referred to above, on the s.44 Application, the question arises directly as to whether this provision amounts to an agreement by the parties to exclude the power of the Court under s.44 of the Act. While the Judge on the without notice hearing would not necessarily have had to resolve the issue at that stage, it is highly material that the Judge was not even aware that the First Defendant would be able to argue that interim relief was not available against him at all.[73]Furthermore, while I accept that the non-disclosure was not deliberate (in the sense that I cannot conclude that the Claimant and his legal team were aware of the Clause and chose not to refer to it), the failure to refer to it is not wholly innocent. As to this, no coherent explanation has been given by the Claimant as to how the omission of any reference to the Arbitration Clause happened given that the Partnership Deed itself is quite a short document and was expressly referred to or quoted from in the affidavit of the Claimant, the Particulars of Claim, and the skeleton argument served on the Claimant’s behalf. All of these documents were prepared in advance of the without notice hearing and it is both surprising and concerning that no one on the Claimant’s side appears to have identified the existence of the Clause. Even if (as appears to be the case) the Clause was simply overlooked, this represents a serious failure by the Claimant or his legal team to investigate the claims being advanced on his behalf to the extent required if the Court is to be asked to give injunctive relief on a without notice basis. Further, the fact that the application was brought on urgently in the vacation does not provide an answer. There was a week between the swearing of the Claimant’s Affidavit (on 5 August 2025) and the hearing (on 12 August), and the application itself must have been in contemplation for some reasonable period before that (as the Claimant’s affidavit ran to 162 paragraphs over 37 pages which would have taken significant time to prepare).[74]It will be clear from my views set out above, that I do not accept the Claimant’s submission that it is “the destination” rather than “thejourney” which matters or that it is an answer that the right to arbitrate might not be taken up. It is fundamental to the duty of full and frank disclosure that the judge starts from the correct place and is taken via the correct route. It is not an answer to say that the same destination would have been reached in any event as that would be to underplay the significance of the duty to a material and unacceptable degree. Likewise, where a respondent has an obvious line of defence which it may or may not take up, the duty requires it to be identified in any event. The partnership authorities[75]The next aspect of non-disclosure on which the Defendants rely relates to the viability of the claims against the First Defendant. The Defendants say that the claims which have been advanced against the First Defendant are bound to fail because a partner cannot claim damages from another partner in respect of money which the claimant partner says is due to him from the partnership. The proper course, the Defendants say, is for the partnership to be dissolved and for a final account to be taken. This account will then determine if any sums are owed to the Claimant. However, none of these points were identified for the Judge.[76]These submissions are based in particular on: 76.1. Statements of Lord Millett in Hurst v Bryk [2002] 1 AC 185 where his Lordship said at 194D-E: “Neither during the continuance of the relationship nor after its determination has any partner any cause of action at law to recover moneys due to him from his fellow partners. The amount owing to a partner by his fellow partners is recoverable only by the taking of an account in equity after the partnership has been dissolved: see Richardson v. Bank of England (1838) 4 My. & Cr. 165: Green v. Hertzog [1954] 1 W.L.R. 1309. Only the Court of Chancery was equipped with the machinery necessary to enable such an account to be taken, and the basis upon which the account was taken reflected equitable principles.“ 76.2. The decision of the Court of Appeal in Cowan v Wakeling [2008] EWCA Civ 229 in which the statements from Lord Millett in Hurst were quoted and applied at [24]-[25].[77]The First Defendant then points to the fact that the claims made by the Claimant against him expressly include claims in damages for breach of the Partnership Deed and breach of duties owed by the First Defendant as a partner (notably in ¶34 and 35 of the PoC).[78]Like the effect of the final sentence of the Arbitration Clause, this is an issue which I will have to consider substantively on the s.44 Application as it goes to whether the Claimant has a good arguable case. Even on a cursory glance however, it is clear that the issue is one of some complexity. The Court of Appeal in Mukherjee v Sen [2012] EWCA Civ 1895 concluded (without Cowan being cited to it), that the statements of Lord Millett in Hurst were not part of the ratio of the case while Lindley and Banks says that Lord Millett “may” have overstated the position in relation to the need for dissolution of the partnership.[79]However, the point has a broader relevance to the without notice hearing because the Defendants say that it was a matter to which the Judge ought to have been referred at that hearing as a line of defence which might be available to the First Defendant. If the Judge had been referred to these authorities he would also have appreciated that the claim against the First Defendant could not be to the full amount of the payments made to him but only to such amounts which are found, on the taking of an account, to have been overdrawn by him.[80]It seems to me that this line of authority ought to have been identified and brought to the attention of the Judge. The Claimant was asserting before the Judge that he was entitled to damages (a claim which was expressly referred to in the Claimant’s skeleton argument for that hearing) and the availability of this claim was a matter which was likely to be in dispute in the proceedings given the authorities I have referred to above. Further, the claim does not include dissolution of the Partnership as a remedy.[81]Looked at in isolation, this non-disclosure is less serious or material than that relating to the Arbitration Clause because, as the Judge himself identified, the thrust of the claim is for the First Defendant to return monies to the partnership (paragraph 36 of the PoC). Indeed, it is clear from the Judge’s judgment that he was treating the claim as being made on behalf of the partnership to recover partnership assets rather than for damages to be paid directly to the First Defendant (see [7]-[8] of the approved judgment). As I will explain below, it is by no means clear that the Hurst line of authority prevents such claims.[82]However, as I have emphasised above, it was important that the Judge was taken to the correct starting point by the Claimant and then navigated down the appropriate route. Taking the first two aspects of non-disclosure together, if the Claimant had complied with its duty, the Judge would have been considering the application for injunctive relief in circumstances in which(a) the First Defendant had the benefit of the Arbitration Clause,(b) that Arbitration Clause contained a provision which, depending on its proper interpretation, could provide him with a complete answer to any claim for interim relief, and(c) at least one of the ways in which the Claimant put his case – a claim for damages by one partner against the other – could be said to be contrary to authority from the House of Lords and Court of Appeal. This is materially different from the position presented to the Judge. Assets abroad[83]The third complaint is that the Claimant made an unfair allegation that there was a risk that the First Defendant would send assets abroad. The First Defendant’s evidence before me is that he does not have any assets abroad.[84]In his affidavit the Claimant asserted that “to the best of my knowledge at present” the First Defendant had assets in “India and Dubai (although these are unknown at this stage)” and that there was a risk of dissipation because, amongst other things, he had the “ability to manage assets abroad”. At the hearing this evidence was relied on when the Judge asked about the worldwide nature of the draft freezing order. Counsel said, “My client says that he knows the Second Defendant has assets in India and Dubai, but without details, I should make clear.” Later in the hearing, the Judge returned to the question of the basis for the Claimant’s knowledge of overseas assets and Counsel said that it was from the First Defendant’s “personal knowledge, knowing him for 14 years.” Reference was also made to an international tracing report which was awaited. Ultimately, the Judge declined to make a worldwide freezing order and his conclusion on the risk of dissipation relied on other matters.[85]The Claimant’s evidence for the hearing before me explained the basis of the statements in his earlier affidavit, namely discussions early in their friendship about buying and selling land in India, the fact that the First Defendant’s parents own property in India, and prior references in conversations to investment in Dubai.[86]If this had been the only issue, it would not have been sufficient to undermine the relief which the Judge ordered, not least as the freezing order was domestic only. However, I do consider that the way in which the assets abroad were presented – with apparent certainly that there were such assets and uncertainty only about their nature – overstated the position given that the subsequent evidence as to the basis for the Claimant’s belief is very thin indeed. An applicant for a worldwide freezing order knows both that it is necessary to demonstrate that there are assets abroad to be frozen and that the presence of foreign assets may indicate an ability to move assets outside of this jurisdiction which will be relevant to the risk of dissipation. For these reasons, particular care is required with allegations about the presence of overseas assets, but I am not satisfied that, in this case, the Claimant exercised the relevant degree of care. This was careless rather than deliberate non-disclosure. Availability of the First Defendant’s partnership share[87]The First Defendant says that the Claimant failed to highlight the availability of the First Defendant’s share in the partnership. This is said to be significant because the Claimant himself valued the partnership at £1.6 million in his affidavit and, if he were to obtain a judgment against the First Defendant, it could be enforced against his share in that partnership. Further, the claim was only valued at £434,500 in the Claim Form (and a lower sum in the Affidavit) which was less than the value of the First Defendant’s partnership share, so there was no real need for injunctive relief at all.[88]I am not satisfied that there was any unfair presentation as alleged by the First Defendant. The ultimate value of his share in the partnership (which could only be realised in cash through selling the property from where the Practice is run) does not seem to me to be an answer to the claim which was advanced before the Judge, namely that the First Defendant had removed very substantial assets from the partnership without a proper basis and the primary purpose of the claim was to cause those assets to be returned to the partnership. Management of the Partnership[89]The First Defendant says that the Claimant presented the management of the Partnership in an unfair manner. The particular object of this complaint was the statement by the Claimant in his affidavit that he had been “completely excluded from having any functional control over the [Partnership] Account”. This was an important statement because the most substantial allegation made against the First Defendant was the transfer away of substantial sums – nearly £1.3 million - from the Partnership Account to the Second Defendant.[90]The First Defendant’s evidence, which I did not understand to be disputed by the Claimant (in his subsequent witness statement dated 18 September 2025), was that the Claimant had been provided with a token to operate the bank account in 2019 but had returned it to the First Defendant within a week, and that the First Defendant’s operation of the account reflected an agreed division of labour under which the First Defendant oversaw the finances of the Partnership and contractual matters.[91]It would have been better if the Claimant’s evidence before the Judge had reflected more completely the background to the management of the Partnership as that appears in the Claimant’s later witness statement. However, I do not consider that the way in which the operation of the Partnership Account was presented amounted to a material non-disclosure. It is factually correct that it is the First Defendant who has control of and operates that Account and the Judge was not misled by the reference to the Claimant having been excluded. Correspondence from 2025[92]The First Defendant says that the Claimant presented correspondence from 2025 in an unfair manner. I do not agree. The relevant items of correspondence – an email dated 24 February 2025 and subsequent exchanges on 5, 7, 8 and 11 July 2025 - were both referred to expressly by the Claimant in his affidavit and exhibited to it. The key part of that correspondence from the First Defendant’s perspective – an email he sent to the Claimant on 7 July 2025 which I have set out in paragraph 18 above – was referred to and quoted from in the Claimant’s skeleton argument (at ¶24-27). The Judge then referred to and quoted from the email at the hearing.[93]Having looked carefully at these documents, I do not consider that the correspondence was presented in a materially unfair or misleading manner. Importantly, the correspondence in 2025 covered two distinct matters, namely queries about and proposed amendments to the 2023/2024 accounts (most of which are relatively minor and do not appear to relate to the principal matters in dispute in these proceedings) and drawings being made by the First Defendant in the years 2024/25 and 2025/26. It is this latter issue which forms the most substantial part of the Claimant’s claims in these proceedings and which was relied on, in particular, to justify the interim relief.[94]In this context, the Claimant had rightly identified that the First Defendant’s email of 7 July 2025 was an important document for the Judge to be shown as it provided his explanation for the recent drawings. It was no doubt for this reason that the Claimant’s counsel quoted directly several passages from this email in ¶24 and 26 of his skeleton argument. The fact that the email was important did not mean however, that the Claimant was not entitled to make submissions about why it had not satisfied him that the drawings were proper and appropriate. The Claimant’s case is that the First Defendant had no right under the Partnership Deed to make interim drawings on account of profits and certainly not when the effect was to leave a balance in the Partnership bank account which was lower than the share due to the Claimant. He was bound to draw the Judge’s attention to the First Defendant’s explanation (as he did) but he was equally entitled to explain to the Judge why the First Defendant’s email was not an answer to the case and why the Claimant was not satisfied with the First Defendant’s assurance that any overdrawing would be repaid.[95]Further, a number of the specific complaints which the First Defendant makes seem to me to go beyond what is expected of an applicant even on a without notice hearing. Thus: 95.1. The Claimant is criticised for not “highlighting” that he had only sent one complaint, on 24 February 2025, prior to the exchanges in July. However, the Claimant’s affidavit referred to that email and then moved straight to the later period. He did not seek to suggest or give the impression that there had been other complaints. Moreover, the absence of any other requests by the Claimant for a response to the February email was clear from the Claimant’s affidavit. 95.2. The Claimant is criticised for expressing “surprise” in his affidavit about the fact that the First Defendant “claimed”, on 7 July 2025, that he had not previously seen the 24 February 2025 email. Although it is correct that the Claimant had not copied the February email to the First Defendant, it is not unfair or misleading of the Claimant to record his reaction to receiving a response from the First Defendant. His February email had expressly asked the accountant to liaise with the First Defendant. 95.3. The Claimant is criticised for not fairly setting out the content and timing of the First Defendant’s response on 7 July 2025. As to the timing, the First Defendant appeared to suggest that the Claimant should have highlighted the swiftness of the response (over a weekend) but the fact that the response came quickly was evident from the description of the correspondence in the Claimant’s affidavit. As regards the content, I have explained above how the section of the email which was of particular importance – that relating to the substantial recent drawings - was set out in the skeleton argument. The First Defendant’s complaint was really that he did not agree with the way that the response was characterised by the Claimant but the duty of full and frank disclosure does not prevent an applicant from making submissions and that is what the Claimant was fairly doing. 95.4. The Claimant is criticised for not directing the Judge at the hearing to the correspondence which took place after the email of 7 July 2025. That correspondence was referred to in the First Defendant’s affidavit but, in any event, it went to the 2023/2024 accounts rather than the recent drawings and was therefore of limited or no relevance to the issues which the Judge was concerned with. COVID funding[96]The First Defendant says that the Claimant gave a misleading impression relating to COVID funding. This issue developed in the following way: 96.1. The allegation which the Claimant made, both in his Affidavit (at ¶55-63) and in the Particulars of Claim (at ¶16-17), was that the NHS had provided financial support to the Practice during the COVID-19 pandemic and that this funding was paid into the Practice’s bank account from where it was “misappropriated” by the First Defendant (PoC, ¶17). This misappropriation took the form of the funding (which totalled just over £100,000) being recorded against the First Defendant’s entitlements with no corresponding entry for the Claimant. 96.2. The First Defendant’s evidence explains that there was no additional financial support provided to the Practice and that the income about which the Claimant complains was for treatment or other services provided by the First Defendant alone and to which he is therefore entitled. 96.3. In his evidence in reply, the Claimant appeared to change course somewhat and he now complains essentially that the wrong committed by the First Defendant was that he excluded the Claimant from the opportunity to participate in the additional services and therefore to earn the income. The breach of duty is put in one paragraph of the First Defendant’s witness statement (¶80) as a failure to “inform, consult and provide equal opportunity”.[97]The revised allegation described above is, as the First Defendant submitted to me, materially different to the straightforward misappropriation of funds which was presented to the Judge. Although there were hints of the revised case in the Claimant’s first affidavit (for example at ¶58), the PoC and the skeleton for the hearing put the claim clearly in terms of misappropriation. The initial allegation was therefore one which tended to bolster the claims of misappropriation made elsewhere and to support the existence of a risk of dissipation. An allegation of unfairness or exclusion would not have the same effect on either front.[98]The more difficult question is whether or not this change of case means that there was non-disclosure in relation to the COVID funding at the without notice hearing.[99]I accept that, in a case such as this where there are multiple allegations about different aspects of the partnership relationship and how income was generated and dealt with, it is likely that a claimant’s case will develop and be refined as the evidence emerges and explanations are given by the respondent. Moreover, it will not be the case that the existence of such developments and refinement means inevitably that there was non-disclosure at an earlier stage. Where a party has concerns about the propriety of dealings with assets sufficient to lead it to make a without notice application it will not generally be in a position to take the time to seek an explanation from the other side (not least as secrecy may well be required) and so the case it advances will reflect its understanding of the facts.[100]The problem for the Claimant here is that the allegations in relation to COVID funding were historic. The relevant figures had appeared in the partnership accounts for 2021/22 and 2022/23. The Claimant had therefore had a lengthy period of time to think about these entries in the partnership accounts and to make inquiries about them before he became concerned about the interim drawings being made by the First Defendant in late 2024 to July 2025. In these circumstances, I consider that the Claimant’s duty of full and frank disclosure required greater consideration to be given as to how these allegations were to be put. Rather than reflecting at least a dispute about how the relevant income had come about, the Claimant chose to put his case at its highest – “misappropriation” in the PoC and orally before the Judge (at p.4 of the transcript), or “mis-using Practice assets” (in the skeleton at ¶28) – and the case was therefore overstated in front of the Judge. Taken alone this failing would be at the more minor end of the spectrum but it feeds into the overall picture described above of an application which was prepared without proper regard to the care and attention which is required. The Claimant’s income[101]The First Defendant says that the Claimant made a factually incorrect assertion as to the Claimant’s income in the skeleton argument before the Judge when it was said that the partnership represented the only source of income for him and his family. This was untrue as the Claimant’s own evidence referred also to monthly rental income which would give an annual total of £94,200.[102]It is accepted by the Claimant that the skeleton contained an “imprecise statement” and his most recent evidence is that the Partnership is his primary but not only source of income. It seems to me that this error, while unfortunate, was minor in the context of the claims being made and does not amount to material non-disclosure by the Claimant. The impact of the proposed order[103]The final complaint made by the First Defendant was that the Claimant failed to draw the Judge’s attention to the disruption which would be caused by the proposed Order. This submission was based on the fact that, after the injunctions were granted, the Partnership Account was frozen and any payments out, even in the ordinary course of business, were prohibited. This, it was said, caused substantial disruption to the business of the Partnership.[104]I do not consider that there was non-disclosure in this regard. The Claimant recognised the need for the proposed Order not to work unfairly or oppressively in the skeleton argument for the without notice hearing (at ¶41) and, in so far as the order affected the Partnership itself, it was limited to preventing payments out to or for the benefit of the First or Second Defendant (see ¶11 of the Order). The problem appears to have been that the Partnership’s bank reacted by blocking any payments out and not just those which were subject to the injunction. I do not consider that this is an issue of non-disclosure. Rather, it is an example of the unintended consequences of the service of freezing orders (or other injunctive relief) on banks who, for understandable reasons, are unlikely to want to police an injunction. Conclusion on non-disclosure[105]To summarise, I have concluded that there was serious and culpable (but not deliberate) non-disclosure in relation to the existence and terms of the Arbitration Clause and that this was compounded by the failure of the Claimant to refer to the legal issues with a claim by one partner against another for damages. There were also failures to present the case fairly in relation to whether the First Defendant had assets abroad and in relation to Covid funding albeit that the effect of these failures was more limited as the focus of the without notice hearing was on sums paid out of the Partnership Account (rather than the COVID funding) and the freezing orders were domestic. The impact of the non-disclosure

The Judge made four distinct injunctive orders:

[106]1. A proprietary injunction against both the First and Second Defendants in respect of specific sums which had been transferred from the Partnership Account to accounts held by the Defendants (Order, ¶6). 106.2. A freezing order against the First Defendant in the maximum sum of £1.4 million (Order, ¶8). 106.3. A freezing order against the Second Defendant in the maximum sum of £1.35 million (Order, ¶9). 106.4. A prohibitory injunction against the First Defendant in relation to payments from the Partnership Account (Order, ¶11).[107]The Claimant submitted that I should decline to discharge these orders but that, even if I did, the same relief should be regranted as any non-disclosure was innocent, amounted to no more than genuine oversight, and was not intended to secure any advantage for the Claimant. Indeed, the Claimant went as far as saying that, even if the proper disclosure had been given, the result would have been the same. The Claimant also submitted that the non-disclosure alleged by the Defendants related very substantially to the position of the First Defendant only and so did not affect the relief against the Second Defendant (as, for example, it was not subject to the Arbitration Clause).[108]Given the nature and seriousness of the non-disclosure, I have concluded that the freezing order and the proprietary injunction as against the First Defendant should be discharged and not regranted. This is the starting point described in the caselaw set out above and I do not consider that this case is one in which the interests of justice outweigh the failure of the Claimant to satisfy his duty of full and frank disclosure. The effect of the way in which the Claimant presented his case was that the Judge was unaware that the jurisdiction he was being asked to exercise (under the Senior Courts Act in existing High Court proceedings) was not likely to be available. Such was the error with the position from which the application against the First Defendant started that it is simply impossible to identify what the Judge would have done if it had been made on the correct basis. Given that the Judge was evidently concerned about the lengthy history between the parties and the delay in bringing the application, the existence of the Arbitration Clause and its potential exclusion of the right to seek interim relief may well have caused the Judge to decline even to hear the application on a without notice basis. However, because the Judge was not given the assistance to which he was entitled, the First Defendant has been subject to extensive and invasive injunctive relief for nearly four months.[109]I have also considered whether the interests of justice require a distinction to be drawn between a freezing order and a proprietary injunction on the basis that the discharge and refusal to regrant the latter could allow a defendant wrongly to retain and deal with assets which do not belong to it whereas a freezing order relates just to assets which belong to the defendant. I am not aware of any authority in which this distinction has been drawn in the context of non-disclosure although I note that Dar al Arkan refers to a difference between injunctions and other applications where full and frank disclosure is required. While there may be cases where the interests of justice would justify the regrant of a proprietary injunction over specific assets (for example real estate) even where a more general freezing order would be discharged, I am satisfied that the same result should apply to both orders in this case as the non-disclosure went to the whole case against the First Defendant.[110]Ultimately, the fact that the Claimant will now have to bring arbitration proceedings without the protection of injunctive relief against the assets of or held by the First Defendant is the price he has to pay for the way that the original application was made. The Claimant will still have his claim and the loss of the injunctions will only affect enforcement of any judgment.[111]The position of the Second Defendant is more nuanced. It is correct that the non-disclosure which I have identified relates principally to the case against the First Defendant. I also accept that, had the case been presented as it should have been, the Judge would have been likely to have considered separately the claims advanced against each party and might have granted relief against the Second Defendant even if not against the First.[112]However, I do not accept the Claimant’s submission that the nature of the non-disclosure is a complete answer. The claims which the Claimant makes against the Second Defendant are parasitic on those made against the First Defendant and, reflecting this, the application for injunctive relief against both Defendants was presented as a package with the focus on the position of the First Defendant. There was no real attempt in the application to distinguish between the two Defendants. Rather, the approach was that if the case was made out for an injunction against the First Defendant, then similar injunctions against the Second Defendant would follow. In this way, the application against the Second Defendant was tainted by the non-disclosure in relation to the case against the First Defendant.[113]Further, the injunctions made against the Second Defendant have a material impact on the position of the First Defendant as the former is the corporate vehicle through which he takes his share of the Partnership profits. The importance of the requirement to give full and frank disclosure would be undermined if the Claimant was able to retain a significant part of the benefit of the injunctions because the funds in issue had passed through the Second Defendant than going directly to the First Defendant.[114]I have therefore concluded that the non-disclosure should result in the discharge and refusal to regrant the freezing order and proprietary injunction against the Second Defendant.[115]The final point concerns the prohibitory injunction. This seems to me to fall into a different category to the freezing orders/asset preservation injunctions. The purpose of the other injunctions was to preserve assets in the hands of the Defendants which were said already to have been taken out of the Partnership and, as such, the orders were necessarily invasive. However, the purpose of the prohibitory injunction was simply to cause the profits of the Partnership to be retained within the Partnership rather than to be paid out on an interim basis. The effect of this ought to have been materially less invasive – it does not affect the entitlement to partnership profits just the timing of their payment - and was, in effect, an interim injunction to enforce the terms of the Deed. It seems to me that it would be a disproportionate result for the non-disclosure to result in an automatic refusal to regrant this injunction even if it is otherwise justified so as to prevent potential future breaches of contract or duty. Therefore, although the non-disclosure would result in the discharge of this order, I will consider below whether this injunction should be regranted. (iii). The s.44 Application[116]The conclusion I have reached above means that the s.44 Application does not arise in full. As a result of the material non-disclosure, I decline to regrant a freezing order or an asset preservation/proprietary injunction. However, as I heard argument on these forms of relief (and in case I am wrong about the non-disclosure and its impact), I will set out the conclusions I would have reached had that relief been live. Further, for the reason given in paragraph 115 above, I need to consider whether to regrant a prohibitory injunction against the First Defendant. The terms of the Arbitration Clause[117]The first issue is whether or not I even have jurisdiction under s.44 of the Act because of the sentence at the end of the Arbitration Clause which provides that “The making of an award shall be a condition precedent to any right of action against a party to this deed.”[118]As I was concerned about its impact on my jurisdiction, I raised the relevance of this provision with the parties at the hearing on 4 November. Following this, at the hearing on 28 November, the First Defendant submitted that this provision excluded the jurisdiction of the Court under s.44 of the Act. I was referred to the following: 118.1. The opening words of s.44 of the Act which provide expressly that the jurisdiction of the Court can be excluded by the agreement of the parties. 118.2. B v S [2011] 2 Lloyds Rep 18 in which Flaux J had to consider an arbitration clause in one of the standard forms of the Federation of Oils, Seed and Fats Associations (FOSFA). The Judge said at [79] that s.44 of the Act involves “a perfectly standard process of construing the contract to see whether, on their true construction, they amount to an agreement to exclude the power the court would otherwise have” and that there is “no requirement for a special form of words”. He then held that the clause he was considering excluded the jurisdiction of the Court to grant interim or ancillary relief under s.44. 118.3. A v B [2015] WLUK 767 another case in which one of the FOSFA forms was under consideration. Cooke J followed the decision of Flaux J in B v S as to the impact of the relevant arbitration clause (albeit that the main issue before the Court was whether that clause had been incorporated into the parties’ agreement). 118.4. ¶7-192 of Russell on Arbitration which refers to the decision in SAB Miller Africa v Tanzania Breweries Ltd [2009] EWCA Civ 1564 in which an earlier statement in Russell that the terms of any exclusion agreement must be clear was approved. However, that paragraph also notes the conclusion of Flaux J in B v S referred to above.[119]The Claimant pointed out that the FOSFA clause considered in B v S and A v B was in different terms to the provision here. That is correct in so far as it goes. In the FOSFA cases, the clause said:
“Neither party hereto…shall bring any action or other legal proceedings against the other of them in respect of any such dispute until such dispute shall first have been heard and determined by the arbitrators, umpire or Board of Appeal….and it is hereby expressly agreed and declared that the obtaining of an Award from the arbitrators, umpire or Board of Appeal…shall be a condition precedent to the right of either party hereto…to bring any action or legal proceedings against the other of them in respect of any such dispute.”
[120]The essential question here is what the provision in the Arbitration Clause means and neither the authorities nor the textbooks provide much assistance.[121]The Claimant submitted that the Arbitration Clause did not prevent either the commencement of substantive proceedings in Court or the seeking of interim relief under s.44 of the Act. This submission was based, at least in part, on dicta from Attorney-General v Lord Sudeley [1896] 1 QB 354 in which Lord Esher MR said at p.359 (with emphasis added):
“A lawsuit may be a suit in equity, or an action at law. In either case the question to be determined by it is – what were the rights of the parties before the suit or the action was commenced? The lawsuit does not create the right; it determines authoritatively that there was, before it began, a right, and it determines what that right was and is. What is called a “right of action” is not the power of bringing an action. Anybody can bring an action, though he has no right at all. The meaning of the phrase is, that the person had a right or claim before the action which is determined by the action to be a valid right or claim.”
[122]The Claimant submitted that the reference to “right of action” in the Arbitration Clause did not therefore cover or prevent the bringing of an action.[123]I do not accept this submission. I have considerable doubt that the comments of Lord Esher in a different context are relevant here given that the purpose of construing a contract is to determine objectively what the words chosen by the parties mean and there is no indication that either side had this decision in mind or that the words chosen were a term of art the meaning of which could be derived from earlier caselaw. Moreover, on the Claimant’s case, the words used in the Arbitration Clause would have no obvious purpose at all and this would be a very surprising result.[124]It seems to me that some effect should be given to the provision. The options therefore are either that the clause excludes s.44 altogether until an award is obtained (as the First Defendant submitted) or that the intention was to prevent recourse to the Court for substantive proceedings but not for interim relief in support of an arbitration under s.44.[125]Which of these is the correct interpretation of the Arbitration Clause is not an easy question. The operation of s.44 could have been excluded much more clearly and the parties could have used more extensive language as appears in the FOSFA standards terms. However, I have to deal with the words as drafted.[126]On balance, and with some hesitation, I have concluded that the First Defendant is correct and that the parties have excluded s.44 by agreement for the following reasons: 126.1. The parties to the Deed have chosen to refer their disputes to arbitration in very wide terms. They have even provided the arbitrator with the ability to dissolve the Partnership. 126.2. They have also expressly decided to add something more to their choice of arbitration by including the additional final sentence. 126.3. That final sentence appears, given both its position at the end of the Clause and the words used, to be directed at Court proceedings. The term “right of action” is particularly indicative of proceedings in Court (as that is where “actions” would typically be brought) and the clause appears to be contrasting arbitration in the first part of the clause with something different in the final part. 126.4. Applying this distinction, the provision is then clear about the order of arbitral and court proceedings. The former must come first and get to the stage of an award before recourse can be had to the latter. The wording does not suggest that the parties were envisaging that the Court could grant interim relief (before an award) but could not entertain substantive proceedings. 126.5. If the final sentence only prevents the bringing of substantive proceedings then it does not achieve any more than the earlier part of the Arbitration Clause which already provides that disputes must be resolved by arbitration.[127]On this basis, the Claimant’s application for a freezing order and an asset preservation injunction against the First Defendant would have failed even if I had not reached the conclusions above about material non-disclosure. My conclusion on the true meaning of the Arbitration Clause is also fatal to the application for the regrant of a prohibitory injunction which is sought only against the First Defendant.[128]In these circumstances, I can deal more briefly with the underlying merits of the s.44 Application. The requirements of s.44 itself[129]The first issue is whether the jurisdictional requirements within s.44 itself are satisfied. S.44(3) of the Act provides that “If the case is one of urgency, the Court may, on the application of a party or proposed party to the arbitral proceedings, make such orders as it thinks fit for the purpose of preserving evidence or assets.” S.44(5) of the Act provides that, in any case, the court shall act only if and to the extent that the arbitral tribunal has no power or is unable for the time being to act effectively.[130]The issue of urgency is complicated by the fact that the Claimant did not start with arbitral proceedings but chose to commence Court proceedings, obtained interim relief, and then argued that the First Defendant had lost the right to arbitrate so that s.44 was not relevant. The s.44 Application was therefore made quite late in the day in case (as has now happened) the Court ordered the proceedings against the First Defendant to be stayed. Further, given the way matters have developed, there is no arbitral tribunal in place.[131]It might be said that, as a result of the choices made by the Claimant, there is no particular urgency to the s.44 Application now as it relates to events which are at least four months old. However, I would have concluded that there was sufficient urgency in this case as the need for the s.44 relief did not arise unless and until the proceedings were stayed and it would have been practically impossible for get an arbitrator in place at a time when the Claimant was saying that the right to a stay had been lost. Likewise, I would have concluded that s.44(5) did not prevent the making of the orders sought. The merits test[132]The next issue I have to consider is whether the Claimant satisfies the merits test for injunctive relief.[133]In the context of a freezing order, the requirement is that he has a good arguable case on the merits as that concept has been clarified by the Court of Appeal in Dos Santos v Unitel SA [2024] EWCA Civ 1109. The question for the Court is whether the claims are “more than barely capable of serious argument” and not necessarily claims which have a “better than 50 per cent chance of success” (The Niedersachsen [1984] 1 All R 398 as approved in Dos Santos at [96]). The standard is “not a particularly onerous one” (Dos Santos at [104]). This standard is the same as that for an American Cyanamid injunction where there has to be a serious issue to be tried (Dos Santos).[134]As I have referred to in paragraphs 75-77 above, the First Defendant submitted that the claims against him are unsustainable in the light of the decisions in Hurst v Bryk and Cowan v Wakeling and so the Claimant does not satisfy the merits test for any form of injunction. Given the nature of this merits test, I do not have to resolve this question conclusively because the Claimant only has to have a case which is more than barely capable of serious argument.[135]Notwithstanding Mr Gavaghan’s attempts to persuade me otherwise, had it been necessary, I would have concluded that the Claimant does have a good arguable case (and there is a serious issue to be tried) on his claims against the First Defendant.[136]It seems to me that the legal position is not sufficiently clear that I can conclude now, on an interim basis, that the claims against the First Defendant are bound to fail because the Claimant has not sought the dissolution of the Partnership and the only way in which a partner is entitled to a sum from another partner is following the taking of an account on the dissolution of the partnership.[137]Although this is what Lord Millett said in Hurst v Bryk, the Court of Appeal in Mukherjee held at [28] that the dicta from Hurst v Bryk were obiter and approved an order under which one partner was required to make an interim payment to another.[138]The authors of Lindley & Banks on Partnership also cast doubt on whether Lord Millett’s statements are correct to their full extent: 138.1. In ¶23-19 they refer to the fact that Court of equity would “in general” decline to grant relief to a partner in proceedings brought against his co-partners in three cases including “where is dissolution was not sought” but this rule “is no longer applied with its original strictness”. 138.2. In ¶23-20 they quote from Lord Lindley who himself referred to the courts being increasingly prepared to intervene particularly where a partner could otherwise derive advantage from his wrongdoing by compelling his co-partner to submit either to continued wrong or to a dissolution. The principal limit identified was that the court would not take management of a going concern into their own hands but that is not relevant here. 138.3. In ¶23-119 they refer to the need for an action for an account whenever money allegedly belonging or owing to the firm in respect of a partnership transaction is sought to be recovered from a partner. As regards Mukherjee, they note the decision and say, “Be that as it may, the proposition behind that statement remains good law on the authorities.” 138.4. In ¶23-135 they discuss an account without a dissolution and state, in relation to the passage from Hurst set out above, that “Lord Millett perhaps overstated the position in this respect” and that this led in turn to a “similar (albeit more tentative) overstatement” in Cowan. Lord Lindley had identified three classes of case in which an action for an account without a dissolution is “most commonly encountered”, the first of which was “where one partner seeks to withhold some private profits in which his co-partners are interested.” 138.5. In ¶23-371 they say that “The extent to which one partner can recover damage for breach of the partnership agreement from his co-partners is, in many ways, one of the most difficult and unresolved areas of partnership law.” The authors then express the view at ¶23-374 that “there is, in the current editor’s view, no doubt as to his [a partner’s] right to recover damages for breach of the partnership terms”. 138.6. In ¶23-378 they submit that there is not an invariable rule that a partnership account must be taken to establish a right to damages albeit that Hurst and Cowan say otherwise. Later in the same paragraph they say, referring back to ¶23-135, that “The proposition that a damages claim cannot proceed absent a dissolution is, as has already been seen, strictly unsustainable…”[139]As regards the availability of an account without dissolution, in Mukerjee the Court of Appeal referred to the exceptions identified by Lord Lindley (see paragraph ¶138.4 above) and held at [32]-[33] that:
“32. I can see no logical, practical or sound jurisprudential reason why the present claim in respect of misappropriated profits should not fall within, or be applied by way of analogy with, the first category of exceptions from the general rule in paragraphs 22-83 and 22–84 in Lindley [these appear to be the equivalent of ¶23-135 in an earlier edition]. Whether or not there was dishonesty on the part of the first defendant, and whether or not the first defendant's siblings asked him not to provide them with accounting information, this is a case in which one of the partners, the managing partner, in effect paid to himself and retained for his own benefit partnership profit in excess of his one-quarter entitlement…… 33. Furthermore, the exceptions to the general rule mentioned in Lindley are mainly examples which have arisen in practice and have been reported. I see no reason why they should mark the limits of what is permissible by way of exception……”
[140]It will be apparent even from this brief discussion that the precise limits of the ability of a partner to claim damages from another partner or to seek an account without a dissolution are the subject of material uncertainty. In my view, even if the Claimant was seeking damages alone, it would not be possible to say, at this interim stage, that the decisions in Hurst and Cowan provide a definitive answer. The Claimant would have a case which was sufficiently arguable.[141]In any event, the claims for damages are only part of the case brought by the Claimant. As regards the payments made out of the Partnership Account (which were the focus before the Judge), the Claimant’s case works as follows: 141.1. The Partnership Deed contains a number of terms relating to the financial aspects of the Partnership including that the partners were entitled to make drawings on accounts of profits only in “such sums as they both agree” (clause 7.1). 141.2. The First Defendant has made a number of transfers from the Partnership Account to his own account (totalling £48,265 between July 2024 and July 2025) or that of the Second Defendant (totalling £1,291,883 between November 2024 and July 2025). 141.3. Those transfers were not agreed by the Claimant whether under clause 7.1 of the Partnership Deed or otherwise. The transfers were therefore misappropriations of Partnership money. 141.4. Although these misappropriations give rise to claims for damages (¶34), “in the first instance” the First Defendant must make good all losses to the Practice (PoC, ¶36). It is also pleaded that the First Defendant is liable to account to the Claimant and/or the Partnership for profits made and benefits received as a result of his breaches of duty (¶38) and that the Claimant is entitled to an account of all money misappropriated by the First Defendant (¶39). 141.5. The Prayer for relief includes “an account of all money misappropriated by the First Defendant from the Practice” (at ¶(1)).[142]The Claimant has therefore pleaded a claim for an account in respect of the sums said to have been misappropriated. The crucial missing piece on the First Defendant’s submission is a claim for dissolution of the partnership. However, it is clear that there have long been exceptions to the need for dissolution before an account can be taken. Lord Lindley identified three exceptions and Mukerjee illustrates both why those exceptions should not be regarded as closed and why they should encompass claims in relation to misappropriations of partnership property.[143]Accordingly, it is sufficiently arguable that the Claimant is entitled to bring both claims in damages against the First Defendant and a claim for an account without seeking a dissolution of the Partnership. Further, as this is an area where the law remains in a state of flux or development, any attempt to develop or clarify it should follow from findings of fact at a trial when proper consideration can be given to the legal issues by reference to facts which have been established.[144]I should refer also to the fact that the First Defendant said that the claim against him (and the Second Defendant) in respect of the transfers to the Second Defendant will fail on the facts because those transfers were interim drawings on account of profits to which he was entitled. As regards clause 7.1 of the Partnership Agreement requiring the two partners to agree to such payments before they could be made, this was said to have been varied by agreement and I was taken to various emails which showed interim payments being made to the Claimant in respect of an earlier accounting year. While it was common ground that the financial affairs of the Partnership were dealt with by the First Defendant under the division of labour referred to above, it seems to me neither this fact nor the emails I was shown can establish conclusively now that the First Defendant was entitled to determine his entitlement to interim drawings without the agreement of the Claimant. This is an issue which will have to be determined in the arbitration (if the Claimant commences one). Risk of dissipation[145]As regards the risk of dissipation, the Claimant referred me to the judgment of Popplewell J in Fundo Soberano de Angola v Dos Santos [2018] EWHC 2199 (Comm). That was one of the cases which I had considered in a recent judgment (Corallo v Pinelli [2025] EWHC 3211 (Ch)) in which I described the relevant principles in this way: 145.1. The question is whether there is a “real risk” of a judgment going unsatisfied: Les Ambassadeurs Club Ltd Yu [2021] EWCA Civ 1310 at [14]-[15] referring to the judgment of Kerr LJ in The Niedersachen [1984] 1 All ER 398 at 419. This is lower than a test of likelihood and does not require the Court to conclude that dissipation was more likely than not. 145.2. The relevant risk is that the judgment will go unsatisfied by reason of an “unjustified” dissipation: Fundo Soberano at [86(1)]. 145.3. The risk is to be judged objectively: Holyoake v Candy at [34]; Fundo Soberano at [86(1)]. 145.4. The risk must be established by solid evidence: Fundo Soberano at [86(2)]. 145.5. It is not enough simply to establish a good arguable case that the defendant has been guilty of dishonesty. Rather, it is necessary to scrutinise whether the dishonesty in question points to the conclusion that assets may be dissipated: Lakatamia Shipping Co Ltd v Morimoto [2020] 2 All ER 359 at [33]-[34] citing Fundo Soberano with a minor variation.[146]I have serious misgivings about whether or not a real risk of dissipation exists in this case.[147]The heart of the Claimant’s case on risk of dissipation was and remains the claim that the First Defendant was misappropriating the Partnership assets by making payments to the Second Defendant between November 2024 and July 2025. These payments make up the vast majority of the sums frozen against both the First and Second Defendant. However, they were not made in secret or hidden from the Claimant. Further, when the First Defendant was challenged about them in early July 2025, he responded quickly to explain that they were interim drawings and he said that he would repay any amount which had been overdrawn.[148]I accept that it may have been somewhat ill-advised of the First Defendant to make interim drawings which reduced the Partnership Account to a balance below the Claimant’s apparent entitlement to his share of the profits, or to make a further drawing of £100,000 on 27 July 2025 after the Claimant’s email of 5 July 2025 in which he asked for the First Defendant either to repay the sums he had drawn or for the Claimant to be paid his profit share on an interim basis.[149]However, even if the Claimant is correct that the First Defendant was guilty of dishonesty in making the payments to the Second Defendant (and this aspect of the case is likely to be a severe challenge for the Claimant given that the payments appear to be, and were treated by the First Defendant himself in his 5 July email as, interim drawings and the PoC does not even allege in express terms that the payments were made dishonestly), it is important to ask whether that dishonesty points to a conclusion that assets may be dissipated so as to render a judgment unenforceable. In this case, I consider that it does not. There is nothing in the way that the First Defendant has arranged his financial affairs which suggests a propensity to dissipate his assets or to make them judgment-proof. His assets appear to be exclusively within the jurisdiction. Moreover, both his livelihood and his family are here and there is no indication that he intends to do anything other than continue his apparently lucrative dental practice which, on its face, would cause his assets to increase.[150]The other significant aspect of dishonest conduct alleged by the Claimant relates to the arrangements for the dental activity carried out by Ms Ribeiro and Ms Michael. It is alleged that this activity was carried out for the benefit of the Partnership but that the First Defendant “fraudulently” caused this activity to be recorded as if either he did it or he was entitled to 90% of the income from it. On the Claimant’s case, he was entitled to 50% of the profits generated by this activity (the value of which was some £500,000).[151]The First Defendant’s explanation for this is that the Second Defendant engaged (and bore the costs of) both Ms Michael and Ms Ribeiro as the Claimant had stated his wish to exit the partnership and was absent for much of the period with illness. The costs incurred by the Second Defendant for the additional staff were said to be £300,842.81. While I accept that the question of whether the profit from this activity ought to be regarded as partnership profit to which the Claimant is entitled to a share is an issue for the arbitration, it is hard to see how the Claimant’s case on this (even taken at its highest) leads to the conclusion that the Defendants would dissipate their assets.[152]The Claimant’s case on risk of dissipation was bolstered at the without notice hearing by reference to the misappropriation of COVID funding, the First Defendant having a “web” of companies, and the existence of assets abroad. However, none of these points supports the existence of a risk of dissipation. I have already dealt with the fact that the Claimant did not present the case fairly in relation to the COVID funding and the location of the First Defendant’s assets. As regards the “web” of companies”, these seem to consist of the Second Defendant and its parent company. This cannot fairly be described as a “web”. I note also that the Claimant himself had a personal service company through which he received his partnership profits.[153]In these circumstances, I would not have been satisfied that there was a real risk of dissipation to justify a freezing order against the First Defendant. Balance of convenience/Justice and convenience[154]The issues as to whether a particular order would be just and convenient (in the case of the freezing order sought) or how the balance of convenience falls (in the case of the asset preservation injunction and prohibitory injunction) can conveniently be taken together as it seems to me that the proposed orders should be considered as a package. This is how they were presented and it would be artificial to ask whether, for example, it is just and convenient to make a freezing order in isolation from and without having regard to the other orders which were being sought.[155]Looked at in this way, I also have serious misgivings about whether it would have been just and convenient for the full suite of injunctive orders to have been made.[156]I do not accept in full the First Defendant’s submission that this is simply a case of overdrawing by one partner. It is possible that the arbitrator will uphold some or all of the Claimant’s complaints which would amount to more serious breaches of the Partnership Deed and of trust. However, I do consider that it is necessary to consider what is likely to be the outcome of any arbitration in order to assess whether the orders are just and convenient. The freezing orders and proprietary injunctions freeze all of the sums transferred from the Partnership Account but it seems to me unlikely that the ultimate outcome will be for repayment in full if the accounting process demonstrates that the First Defendant would, once repayment is made, then be entitled to take out the sums again as his share of the profits.[157]As to this, before the Judge, the Claimant’s own figures demonstrated that his likely share of the partnership profits was substantially lower than the amounts frozen. The Claim Form itself quantified the claim at “not less than £434,500” while the Claimant’s evidence referred to a total owed to him for 2024/25 and 2025/26 of £334,096.96. Taking into account various other matters of which complaint was made (including COVID funding) and legal fees, the total was £494,503.18.[158]Since that hearing, the First Defendant has produced his own figures and has asked the Partnership accountants for their preliminary view on the state of the drawings. These figures show that, as at early September 2025, the Second Defendant would have overdrawn some £68,245 (if no adjustment was made for the income generated by the additional staff) or some £258,869 if the income and costs for the additional staff are allocated to the Partnership. By reason of the injunctions made by the Judge these over-drawings are likely to have been extinguished by the profits made while the prohibitory injunction was in place.[159]I accept that the First Defendant’s figures are not accepted by the Claimant but they do illustrate the mismatch between the full range of injunctive relief and the amounts which are ultimately likely to be in issue.[160]In these circumstances, I would have concluded that, of the proposed orders, it would have been just and convenient to continue/regrant only the prohibitory injunction so as to prevent the First Defendant from making any interim drawings on account of profits. I consider that this injunction alone would have been sufficient to protect the rights that the Claimant was asserting. It would also have ensured that the profits of the Partnership being generated now (and for the duration of the dispute) remained in the Partnership Account and were available to satisfy any sum found to be due to the Claimant once the true position of the Partnership accounts is ascertained. (iv). The Injunction Application[161]I have already explained why I have discharged the injunctions against the Second Defendant and refused to regrant them. This disposes of the Injunction Application.[162]However, had it been necessary to consider the merits of that Application, the conclusions I have reached above would, subject to the points made below, have applied equally to the Injunction Application which I would have refused.[163]As to this: 163.1. I would have concluded that the Claimant satisfied the merits test in respect of his claims against the Second Defendant. The Second Defendant does not have the benefit of the final sentence of the Arbitration Clause and Hurst v Bryk would not, on its face, prevent an action against a third party to recover trust property. Further, and in any event, for the reasons given above, I would have accepted that (but for the Arbitration Clause) the Claimant would have established a good arguable case against the First Defendant in respect of the payments to the Second Defendant, and it follows that there is a similarly arguable case in knowing receipt on the part of the Second Defendant. 163.2. I would not have been satisfied that there was a risk of dissipation as regards the Second Defendant for the purposes of a freezing order for the same reasons as given in respect of the First Defendant. 163.3. I would not have been satisfied that it was just and convenient for either a freezing order or an asset preservation order to be made against the Second Defendant for the same reasons as given in respect of the First Defendant. I accept that the Claimant could say that the asset preservation order would be justified against the Second Defendant in particular because it has received a substantial amount of partnership property in circumstances where, on the Claimant’s case, it ought not to have done and, it is possible that the Second Defendant would have to account for its use of (and profits made with) this property. However, this is outweighed by the reality of the situation that the final result of the proceedings is likely to be an account of the respective entitlements of the two partners and the figures available to me suggested very strongly that the Claimant’s entitlement is likely to be materially smaller than the amounts frozen and his position would be protected by a prohibitory injunction.

V Conclusion

[164]The conclusions I have reached can be summarised as follows: 164.1. First, the proceedings against the First Defendant should be stayed pursuant to s.9 of the Act and the proceedings against the Second Defendant should be stayed on case management grounds. 164.2. Second, there was serious and culpable (but not deliberate) non-disclosure at the without notice hearing, particularly in relation to the existence and terms of the Arbitration Clause compounded by the failure of the Claimant to refer to the legal issues with a claim by one partner against another. There were also failures to present the case clearly. 164.3. Third, the consequence of that non-disclosure is that the freezing orders and asset preservation orders against the First and Second Defendants should be discharged and not regranted. 164.4. Fourth, the prohibitory injunction against the First Defendant should be discharged but the interests of justice mean that it is capable of being regranted if it is justified by the circumstances before me. 164.5. Fifth, on its true construction, the final sentence of the Arbitration Clause is an agreement by the parties to exclude the jurisdiction of the Court under s.44 of the Act. As such, I have no jurisdiction to grant the prohibitory injunction under s.44 and so the s.44 Application fails. 164.6. Sixth, but for the existence of the final sentence of the Arbitration Clause, I would have regranted the prohibitory injunction against the First Defendant under s.44 so as to prevent any interim drawings (and other payments to or for the benefit of the Defendants) during the course of the dispute. 164.7. Seventh, even if there had not been material non-disclosure at the without notice hearing, I would not have continued the freezing and asset preservation orders against the Defendants. There is no real risk of dissipation (as regards the freezing orders) and it was not just and convenient to make either form of order. The Claimant’s position would have been adequately protected by the prohibitory injunction.[165]I appreciate that this judgment will not make happy reading for the Claimant but it seems to me that this case is one in which, regrettably, he set off in pursuit of the some of the most intrusive and disruptive interim relief available without standing back and asking what sort of relief was required to preserve the partnership assets pending the determination of the true state of the partnership accounts. The partnership appears to be highly profitable albeit that a significant majority of the recent profit will have accrued to the First Defendant (as the Claimant was off work for some 9 months in 2024/25). In any event, the partnership was generating substantial monthly income and the Claimant’s principal complaint was that this income was being removed by interim drawings. This could have been addressed by appointing an arbitral tribunal and seeking (to the extent available) a form of the prohibitory injunction without the need for the additional freezing and proprietary relief. This would have ensured that the income was preserved within the partnership and would have provided a fund from which the Claimant’s entitlement could be paid once an account was taken. If a more considered approach had been adopted, the serious failings in disclosure might also have been avoided.[166]I started this judgment with an entreaty to the parties to seek to identify a way to resolve their disputes. It seems to me that it is imperative that the parties engage with the preparation of up to date partnership accounts so that the true scope of the disputes between them can be identified. That will also enable the parties to identify clearly how the various disputes may impact on their respective shares of the Partnership profits. For example, if the Claimant maintains that the income from Ms Ribeiro and Ms Michael should be allocated equally to the two partners, the position in relation to the costs of those individuals (which appear to have been borne so far by the Second Defendant) will become clear. It may be that it is accepted that the income and expenditure must go together, and this will narrow the impact of the dispute significantly. Further an arbitrator ought to be able to resolve any outstanding issues relatively quickly.[167]Further, although I cannot order it for the reasons given above, it would also be sensible for the parties to agree voluntarily that the effect of prohibitory injunction should remain in place to avoid further significant expenditure on interim applications to any arbitrator (to the extent that such relief is available under s.38 of the Act). To my mind it would take a considerable amount of the heat out of the dispute between the parties if the income generated by the Partnership remains in the Partnership Account until the dispute is resolved.[168]Finally, I recognise that this judgment will be handed down right at the end of the legal term and there will not therefore be time to deal with consequential matters. However, I consider that it was important that the parties should know the position as soon as possible. In order that the principal terms of an order staying the proceedings and discharging the existing injunctive relief can be sealed when this judgment is handed down, I will adjourn all other consequential matters to a hearing in the new year (if such a hearing is necessary). This will include costs and any question of permission to appeal for which purpose time will not start running until the adjourned consequentials hearing.