Gordian Holdings Limited v Yiannakis Sofroniou [2026] EWHC 1602 (KB)

[2026] EWHC 1602 (KB)Case No KB-2026-000915
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 26/06/2026
Before
DHCJ GUY VASSALL-ADAMS KC
Between
GORDIAN HOLDINGS LIMITEDClaimantYIANNAKIS SOFRONIOUDefendant
Jon Colclough (instructed by Stephenson Harwood LLP) for ClaimantThe Defendant appeared in person for in personHearing Hearing date: 10 June 2026
Approved JudgmentThis judgment was handed down remotely at 2pm on 26 th June 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archives..............................DHCJ GUY VASSALL-ADAMS KC

GUY VASSALL-ADAMS KC sitting as a Deputy Judge of the High Court:

[1]This is the return date of an application for a proprietary injunction relating to 50% of the proceeds of the sale of a residential property at 10 Sherlock Mews, London W1U 6DR ("the Property" or "Sherlock Mews").[2]The injunction was originally granted by Pepperall J at a short notice hearing that took place on 25 March 2026, which Mr Sofroniou did not attend. At that hearing the return date was set for 9 April 2026, but on that occasion Stacey J adjourned the hearing at Mr Sofroniou’s request, as he sought further time to decide whether to oppose the injunction. In the meantime, Stacey J continued the injunction.[3]The background is set out in some detail below, but by way of high-level summary Gordian Holdings Limited (“Gordian”) is a judgment creditor of Mr Sofroniou and is the beneficiary of an interim charging order over Mr Sofroniou’s 50% interest in Sherlock Mews, which was sold on 16 March 2026 for £1,925,000. It appears that Mr Sofroniou received £475,446.10, but despite the interim charging order, he has not accounted to Gordian for the net proceeds (the “Net Proceeds”).[4]Gordian seeks a variety of orders in these proceedings but the present application is focussed on seeking(i) a proprietary injunction in respect of the net proceeds of sale of Sherlock Mews attributable to Mr Sofroniouand(ii) an ancillary asset disclosure order requiring Mr Sofroniou to provide information as to the whereabouts and application of the Net Proceeds. Background The judgment debt and interim charging order

Background

[5]On 20 November 2012, Bank of Cyprus Public Company Limited (“the Bank”) filed a claim in Cyprus against Mr Sofroniou, his ex-wife Maria Sofroniou and a company called Sofroniou & Maria Developers Limited (“the Defendants”). That claim related to sums due under a loan agreement.[6]On 31 January 2017, the Bank obtained judgment in Cyprus against the Defendants in the principal sum of €708,721.49 (“the Cypriot Judgment”). The Defendants filed an appeal in Cyprus on 14 March 2017 (“the Cypriot Appeal”).[7]On 26 May 2017, the Bank registered the Cypriot Judgment in the Queen’s Bench Division. On 11 October 2017, the Bank obtained an interim charging order over Mr Sofroniou’s interest in Sherlock Mews. At the time, Sherlock Mews was registered in the joint names of Mr Sofroniou and his then-partner Cheryl Reid (“Ms Reid”).[8]At the final charging order hearing on 4 December 2017, Senior Master Fontaine stayed the enforcement proceedings and adjourned the application for a final charging order until the handing down of judgment by the Supreme Court of Cyprus in the Cypriot Appeal.[9]Gordian has since stepped into the shoes of the Bank. It is a Cypriot company that acquired various non-performing loans from banks in Cyprus and Greece. By consent order of Master Davison dated 16 December 2019, Gordian was substituted for the Bank in the enforcement proceedings. By consent order of Senior Master Cook dated 2 December 2025, Gordian was:(i) substituted as the party entitled to payment under the order of 26 May 2017; and(ii) substituted as the judgment creditor in respect of the interim charging order over Sherlock Mews.[10]On 4 November 2020, Gordian applied to lift the stay and for a final charging order over Sherlock Mews (and another property jointly owned by Mr Sofroniou and Maria Sofroniou). That application was dismissed by Adrian Beltrami QC (sitting as a Deputy High Court Judge) on the basis that there had been no material change of circumstance since Senior Master Fontaine’s order dated 4 December 2017.

The Settlement Deed

[11]At the same time, matters were progressing in respect of a claim pursuant to s.423 of the Insolvency Act 1986 that Gordian had commenced against Mr Sofroniou and Ms Reid concerning the purported transfer of Mr Sofroniou’s interest in Sherlock Mews to Ms Reid. In that claim, Gordian alleged that Mr Sofroniou’s purported transfer to Ms Reid by way of a trust deed was a transaction designed to defraud Gordian as the creditor (the “Purported Trust Deed”). The proceedings were compromised just before trial and Mr Sofroniou and Ms Reid agreed to reverse the assignment of Mr Sofroniou’s interest, by way of a consent order approved by Baker J dated 22 October 2021.[12]Pursuant to the Baker J Order, Mr Sofroniou and Ms Reid agreed to execute and deliver a deed (the "Settlement Deed") by which: i) the Purported Trust Deed was set aside and Mr Sofroniou's 50% beneficial interest in the Property was treated as returned to him with the same effect as if the Purported Trust Deed had never been executed (clause 1); ii) Ms Reid retransferred to Mr Sofroniou 50% of the beneficial interest in the Property (clause 2); iii) the parties agreed and declared that they hold the Property and the proceeds of sale of the Property on trust for one another in equal shares (clause 3); iv) it was agreed and accepted that the ICO attaches to Mr Sofroniou's interest in the Property (clause 4(a)); v) Mr Sofroniou and Ms Reid agreed to consent to the registration of the Restriction (clause 4(b)); vi) Mr Sofroniou and Ms Reid agreed to take all steps reasonably necessary to ensure the registration of the Restriction (clause 4(d)); and vii) the beneficial interests of the parties as provided for in the Settlement Deed could not be undone, varied, or terminated without the express prior written consent of Gordian (clause 6).[13]The Settlement Deed was executed by Mr Sofroniou and Ms Reid on 28 October 2021. It should be noted that clause 3 of the Settlement Deed expressly provides that the parties hold not only the Property but also the proceeds of sale of the Property on trust for one another in equal shares.

The Defendant’s attempt to remove the restriction

[14]On 9 July 2025, Mr Sofroniou’s then solicitors applied to HM Land Registry to remove the restriction that Gordian had over Sherlock Mews to support its interim charging order. In that application the Defendant’s solicitors stated that Gordian could not be the beneficiary of the restriction because Gordian was registered after the restriction itself and that “there is no beneficiary of the restriction or if there is the beneficiary is not responsive”. Gordian says that these representations were highly misleading and I consider that Gordian has a good arguable case on this issue. Mr Sofroniou must have known that Gordian held the benefit of the ICO over his interest in Sherlock Mews, not least as he had personally executed the Settlement Deed consenting to the registration of the restriction.[15]In February 2026, the Cypriot Appeal process came to an end when the Supreme Court of Cyprus dismissed the appeal, following its withdrawal by the Defendants.

The sale of Sherlock Mews

[16]In March 2026, Mr Sofroniou and Ms Reid sold Sherlock Mews. On 19 March 2026, without any prior warning, Gordian’s solicitors received a two-line letter from Mr Sofroniou’s then solicitors dated 16 March 2026, which stated: “We hereby give you notice that by a Transfer Deed dated 16 March 2026 the Property was sold to Arjun Singh Moor”.[17]It appears that the reason why Sherlock Mews was able to be sold without (for example) the formal consent of Gordian is because of the nature of the restriction registered at HM Land Registry. The standard Form K charging order restriction is that no disposition “is to be registered without a certificate signed by the applicant for registration or their conveyancer that written notice of the disposition was given to [the beneficiary of the charging order]”. Therefore, HM Land Registry will register a disposition of land subject to a charging order like this one provided there is a certificate of notification.[18]Gordian took immediate steps to ascertain what had happened to the net proceeds and if they were to be paid to Gordian. The upshot of these efforts was that Ms Reid provided Gordian with a copy of the Sherlock Mews completion statement, which shows that: i) The gross sale proceeds were £1,925,000 (plus £1,000 from SLG x Hire Ltd). ii) The conveyancing solicitors’ costs of £19,099 were apparently paid solely out of Mr Sofroniou’s share of the proceeds. iii) Two secured debts of c.£800,000 were paid (of which the second debt of £72,464.33 was apparently paid solely out of Mr Sofroniou’s share of the proceeds). iv) The estate agent fees of £34,650 were apparently paid solely out of Mr Sofroniou’s share of the proceeds. v) The net result was that:(i) Mr Sofroniou received £475,446.10; and(ii) Ms Reid received £608,650.29.[19]Gordian is concerned as to why Ms Reid received an additional c.£125,000 and is considering whether it may be able to trace into half of that money. However, that was not an issue that arose on this application and no relief is presently sought against Ms Reid. Gordian is also concerned that Mr Sofroniou has taken steps to dissipate the Net Proceeds of the sale so to frustrate its ability to recover the sums owed to it. Those concerns have been heightened by the manner in which Mr Sofroniou has responded to the Order of Stacey J requiring him to provide detailed information as to what he has done with the Net Proceeds resulting from the sale of Sherlock Mews (the “Asset Disclosure Order”).

Mr Sofroniou’s response to the Asset Disclosure Order

[20]The orders made by Pepperall J and Stacey J (the latter of which is the operative order at present) require Mr Sofroniou to provide detailed information about any transactions exceeding £2,000 in value that he has done with the Net Proceeds of the sale, or any asset purchased with the Net Proceeds of the sale.[21]Paragraphs 4-6 of the order provided as follows: “[4-6] In this[22]Mr Sofroniou purported to comply with his disclosure obligations by service of a short statutory declaration dated April 2026. In that declaration, Mr Sofroniou states that:
“I have made the following payments from my Lloyds TSB Personal Account: 1. £177,000.00 was paid to JYS Taxis (Company Number: 15904255; 2. £100,000.00 was personally spent by me; 3. £40,000.00 was spent by me to cover my holiday; 4. £75,000.00 was spent by me to pay my ex-wife Maria Sofroniou in relation to our matrimonial settlement; 5. £75,000.00 was paid to redeem Lloyds TSB business loan in which I was a personal guarantor of [sic].”
[23]Gordian submits that this declaration does not come close to complying with the detailed requirements of the information order made by Stacey J. I note that the sums Mr Sofroniou claims to have spent in the 9 days between the sale of Sherlock Mews on 16 March 2026 and the Order of Pepperall J freezing the Net Proceeds on 25 March 2026 comes to £467,000, which is almost all of the Net Proceeds. Gordian’s solicitors have written to Mr Sofroniou pointing out the deficiencies in the disclosure he has given and inviting him to remedy his breach of the order. Notwithstanding their letter, Mr Sofroniou failed to provide any further information before the hearing of this application, although at the hearing itself he made some points which I consider further below. Legal Principles Proprietary injunctions

Legal Principles

[24]The relevant principles were summarised by Mr Justice Jacobs in Therium Litigation Funding A IC v Bugsby Property LLC [2023] EWHC 2627 (Comm) at [35]-[36]: “[35] It was also common ground that the well-known American Cyanamid test applies to asset preservation orders in support of proprietary claims: Madoff Securities International Ltd v Raven and others [2011] EWHC 3012 (Comm). It is necessary to show that:(a) There is a serious issue to be tried;(b) The balance of convenience is in favour of an injunction (including consideration of whether damages are an adequate remedy);(c) It is just and convenient to make the order sought. [36] The Court will be more ready to grant interim remedies in order to preserve trust assets (i.e. where the applicant has a proprietary claim) than where the claim is a personal one: Republic of Haiti v Duvalier [1990] 1 QB 202 per Staughton LJ at p213-4. Gee on Commercial Injunctions (7th Edition) at 7-011 states that: "A court has never hesitated to exercise its strongest powers to preserve a trust fund in interlocutory proceedings".” (a) There is a serious issue to be tried; (b) The balance of convenience is in favour of an injunction (including consideration of whether damages are an adequate remedy); (c) It is just and convenient to make the order sought.[25]In Republic of Haiti v Duvalier (supra), Lord Justice Staughton said at 213 that “[i]t may be that the powers of the court are wider, and certainly discretion is more readily exercised, if a plaintiff's claim is what is called a tracing claim”.

The continuing interest of an equitable chargee

[26]By section 3(4) of the Charging Orders Act 1979, “[s]ubject to the provisions of this Act, a charge imposed by a charging order shall have the like effect and shall be enforceable in the same courts and in the same manner as an equitable charge created by the debtor by writing under his hand”.[27]Buhr v Barclays Bank PLC [2001] EWCA Civ 1223 concerned an unregistered proprietary interest (i.e. an equitable charge) against property. The dispute was as to whether the chargee (Barclays) had a continuing equitable interest in the proceeds of sale. The Court of Appeal held that Barclays did have a continuing interest on two bases: i) First, that “equity has for a long time taken the view that the mortgagee is entitled to a security interest in the fruits of the mortgaged property”: at [40]. This point was further explored at [45]-[47]:
“[45] I agree with the judge's conclusion that, if, as here, the mortgagor makes a disposition of the mortgaged property in a manner which destroys the mortgagee's estate in the mortgaged property, a security interest in the property which represents the mortgaged property automatically and as a matter of law comes into existence as from the moment that the mortgagor becomes entitled to that property. To that extent I also agree with Professor Roy Goode. In my judgment, the disposition by the Buhrs was not authorised: their authority from Barclays to sell the mortgaged property could not extend to selling Rectory Farm in a manner which destroyed Barclay's security. [46] Miss Gloster's proposition that a mortgagee has a right in every case to claim the proceeds of sale and could elect as to a security interest in the property or the proceeds of sale is wider than that accepted by the judge. Nor is it accepted by Professor Sir Roy Goode (see the second passage cited above). It is not necessary to resolve that point in this case, but I do not consider that Miss Gloster's proposition is correct. If with the consent of all parties the property is sold subject to the mortgage the mortgagee cannot in my view elect to have a charge over the proceeds of sale. [47] Mr Norris submits that the mortgagor does not owe a fiduciary duty to the mortgagee. In general terms this is correct. For instance the mortgagor has no general duty to act in the interests of the mortgagee. But in the specific matter of accretions to or substitution of the mortgaged property equity has undoubtedly treated the mortgagor as a fiduciary (see Re Biss [1903] 2 Ch 40). There is no difficulty in law with a person being a fiduciary towards another in respect of some aspects only of that person's duty to that other (New Zealand Netherlands Society "Oranje" Inc v Kuys [1973] 1 WLR 1126). I reject Mr Norris' submission that in some way an equitable charge is insufficient to give an interest in land. I agree that no change of legal or equitable ownership takes place when an equitable charge is created. Even so, the equitable chargee obtains a proprietary interest in the property (see for example Bland v Ingrams Estate [2001] 1 WLR 1638 at 1645 G per Nourse LJ). This is sufficient to give the mortgagee a proprietary interest in property which represents the property originally mortgaged following completion of an unauthorised disposition by the mortgagor.” ii) Second, an “alternative route” described at [49]: “[49] The same result as the judge reached could in my judgment be achieved by an alternative route. The Buhrs' disposition was unauthorised. They purported to sell with full title guarantee and thus free from Barclays' charge. Barclays (if indeed it has already done so by commencing these proceedings) could adopt this transaction and thus retrospectively make the Buhrs its agent. In the context of this transaction, the Buhrs would in my judgment then be bound to keep the proceeds of sale separate from their other assets and would hold them (subject to prior charges) on trust for Barclays and so would be bound to account to Barclays for the amount secured by its charge.”

The Freezing Order

[28]The starting point under the American Cyanmid test is that I must be satisfied that there is a serious issue to be tried. The factual background that I set out above is not in dispute. It is clear, on the basis of Buhr v Barclays Bank PLC [2001] EWCA Civ 1223, that as a result of the sale of Sherlock Mews in respect of which Gordian had an Interim Charging Order relating to Mr Sofroniou’s 50% share of the property, that Gordian is now entitled to either(i) “a security interest in the fruits of the mortgaged property (i.e. the continuing benefit of the ICO over the Net Proceeds) or(ii) under the “alternative route” to treat the Net Proceeds as being held on constructive trust for it. Whichever legal analysis is accepted, the practical outcome is the same – Gordian retains a proprietary interest in equity in the Net Proceeds.[29]Mr Sofroniou did not file any witness statements in response to this application or provide any skeleton argument. At the hearing Mr Sofroniou handed up a letter to the Court which he relied on for the purpose of opposing the injunction. The letter appears to come from Nicos Damianou & Associates LLC in Lacarna, Cyprus and it refers to the sale of various mortgaged properties in Cyprus to meet debts owing to the Bank and to ongoing litigation in Cyprus concerning how those funds raised from the sale of the properties have been allocated against various debts. There is an allegation of fraud in one case and the impression given by Mr Sofroniou is that there is a complex and contested back story that the court should be aware of.[30]However, the issue for me at this stage is simply whether there is a serious issue to be tried. Nothing in this letter undermines my view that there is a serious issue to be tried at this interim stage. If Mr Sofroniou wants to raise issues challenging Gordian’s entitlement to the judgment debt it is open to him to do so by way of an application to discharge the injunction, or at trial, but any such challenge would have to be properly evidenced. There was no witness statement from Mr Sofroniou relating to these matters, or any clear explanation of how they are said to be relevant to the particular judgment debt we are dealing with here.[31]The second issue is the balance of convenience. In this context, I take into account Mr Sofoniou’s conduct up to this point in time. On the evidence before me there is a good arguable case that Mr Sofroniou has made concerted efforts to try to dissipate his 50% share of Sherlock Mews and the Net Proceeds arising therefrom and to defeat Gordian’s ability to recover the funds owed to it.[32]First there is Mr Sofroniou’s ultimately unsuccessful attempt to transfer his 50% share in Sherlock Mews to his then partner, Ms Reid. Secondly, in spite of the express agreement in the Settlement Deed to consent to the registration of the ICO and his further consent to recognise Gordian as being entitled to payment under the registration order, Mr Sofroniou then sought to have the restriction from the title to Sherlock Mews removed on the basis of a highly misleading submission to the Land Registry. Thirdly, Mr Sofroniou sold Sherlock Mews without seeking the consent of Gordian and the first Gordian knew of the sale was three days after completion, when a letter arrived by second class post. Fourthly, Mr Sofroniou received the Net Proceeds without accounting to Gordian, arranging matters so that the funds were not held by his then solicitor. Fifthly, it appears that Mr Sofroniou has made himself bankrupt in response to the present application. Finally, Mr Sofroniou is claiming to have already spent nearly all of the money – an issue to which I return below.[33]In the case of a freezing injunction relating to assets which might ultimately satisfy a judgment debt in the future the risk of dissipation of the assets is one of the key factors that the Court must take into account. In the case of a proprietary injunction the creditor already owns the asset as a matter of law, so the claimant is not required to establish that there is a risk of dissipation. Nonetheless, where a proprietary injunction is sought and it is established that there is a risk of dissipation of the relevant asset that is likely to be an important factor in deciding where the balance of convenience lies. Here there is a high risk of dissipation based on Mr Sofroniou’s conduct to date.[34]Gordian has offered a cross-undertaking in damages and I am satisfied from the evidence set out in Richard Garcia-Almendros’ affidavit that Gordian has the financial standing to meet the cross-undertaking in the unlikely event that it is called upon to do so.[35]Gordian has presented a compelling case for a proprietary injunction, which will simply preserve the status quo between now and trial in circumstances where Mr Sofroniou has no legitimate basis for dealing with or dissipating the Net Proceeds. Mr Sofroniou has not disputed the sequence of events relied on by Gordian, or advanced any good reason why the injunction should not be continued. This is a case where all the arguments point one way and the balance of convenience overwhelmingly favours continuing the proprietary injunction, which is the just and convenient order to make.

The Asset Disclosure Order

[36]In summary, the asset disclosure order made by Stacey J required Mr Sofroniou to identify all payments of £2,000 or more from the Net Proceeds of the sale of Sherlock Mews, or any assets bought with the Net Proceeds, including details of to whom the payments were made and the relevant bank accounts and sort codes. The asset disclosure order also required Mr Sofroniou to swear an affidavit setting out this information and exhibiting all relevant documents. What is required therefore is a full and truthful account of what he did with the money, supported by relevant documentation.[37]The one page statutory declaration that Mr Sofroniou has produced does not come close to complying with the requirements of the Order. It provides some headline figures which Mr Sofroniou says he has paid, but there is no documentation of any kind to support these assertions, there is no affidavit, the £2,000 and above threshold has been ignored and there are no details of any bank accounts that money has been paid into. The Court is being asked to believe that in the 9 days between the sale of Sherlock Mews and the injunction of Pepperall J Mr Sofroniou managed to spend almost the entirety of the Net Proceeds, some £467,000. This is not credible.[38]At the hearing Mr Sofroniou made some submissions about these payments, for example the £40,000 that he allegedly spent on a holiday for himself. Those submissions were vague and unconvincing. My impression is that Mr Sofroniou is not taking seriously his obligations under the asset disclosure order. Mr Sofroniou also said that he had tried to get bank statements for his Lloyds bank account to evidence the payments but was unable to get them because the funds were frozen. I find it hard to believe a bank would deny one of its customers access to bank statements just because assets were frozen, but I will make it clear in the recital to the order that banks are to assist Mr Sofroniou with providing the documentation he requires to comply with the order.[39]It would have been open to Gordian to commence committal proceedings for contempt in view of Mr Sofroniou’s failure to comply with the terms of the Stacey J Order. Sensibly in my view, Gordian has not adopted that course. Instead it has taken the reasonable and proportionate step of coming back to this Court to ask it in effect to re-make the Stacey J Order, giving Mr Sofroniou one last chance to comply. That is the course that I propose to take. Mr Sofroniou needs to engage seriously with the asset disclosure requirements this second time around.

Order

(i) “Proprietary Assets” means: (i) the Net Proceeds; and(ii) any asset purchased with, or representing the value of, the Net Proceeds; and (ii) “Net Proceeds” means: some or all of the amount attributable to the Respondent’s beneficial interest in 10 Sherlock Mews, London, W1U 6DR (registered at HM Land Registry under title number NFL810546) after deduction of all legitimate charges and costs from the gross sale price. [5] Save to the extent that paragraph 7 of this order applies, the Respondent must by 4pm on 23 April 2026 and to the best of his ability inform the Applicant’s legal representatives of all Proprietary Assets (as that term is defined in paragraph 4 above) worldwide exceeding £2,000 in market value (ignoring charges or other security), giving the value, location and details of all such Proprietary Assets (as that term is defined in paragraph 4 above) and what has become of them since their receipt by the Respondent or any nominee for the Respondent and details of any charges or other security over all such Proprietary Assets (as that term is defined in paragraph 4 above) including the amount currently secured thereby. Such details shall include (but not be limited to) the name and contact details of any individual or company to which any Proprietary Assets (as that term is defined in paragraph 4 above) have been transferred and the account number and sort code of any bank account to which any such transfer was made. [6] Save to the extent that paragraph 7 of this order applies, by 4pm on 23 April 2026, the Respondent must swear and serve on the Applicant’s legal representatives an affidavit setting out the information referred to in paragraph 4 of this order, exhibiting copies of such documents in the possession, power, custody or control of the Respondent as are sufficient to identify the existence, location, value and details of any Proprietary Assets (as that term is defined in paragraph 5 above) with a market value (ignoring charges or other security) exceeding £2,000.” (i) “Proprietary Assets” means: (i) the Net Proceeds; and (ii) any asset purchased with, or representing the value of, the Net Proceeds; and (ii) “Net Proceeds” means: some or all of the amount attributable to the Respondent’s beneficial interest in 10 Sherlock Mews, London, W1U 6DR (registered at HM Land Registry under title number NFL810546) after deduction of all legitimate charges and costs from the gross sale price.