Hmicho v Barclays Bank Plc [2015] EWHC 1757 (QB)

Case No HQ15X02611[2015] EWHC 1757 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 19/06/2015
Before
THE HON. MR JUSTICE PICKEN
ELAINE HMICHO
Between
BARCLAYS BANK PLCRespondent
Andrew Legg (instructed by Edwin Coe LLP) for Claimant/ApplicantNicholas Medcroft (instructed by Eversheds LLP) for Defendant/RespondentHearing Hearing date: 9 June 2015
JudgmentThe Honourable Mr Justice Picken :Introduction
[1]This is an application by Mrs Elaine Hmicho (“Mrs Hmicho”) for interim injunctive relief in mandatory form. Specifically, Mrs Hmicho asks the Court to order the Defendant, Barclays Bank Plc (“Barclays”), to “restore access to and/or other services” Mrs Hmicho “is entitled to” in respect of three identified personal bank accounts which she holds at Barclays. I need not set out details of those three bank accounts as they are identified in the draft order. They consist of two current accounts, one of which is described as a Premier Account, and a deposit account described as an Everyday Saver Account. The latter has £40,068.77 in it whilst the Premier Account has a £68,800.27 balance.[2]The context in which this application comes to be made needs, relatively briefly, to be explained.

Background

[3]Mrs Hmicho is a Brazilian businesswoman who is a UK resident, living in Poole, Dorset. She is married to Mr Samir Hmicho (“Mr Hmicho”). Together, they hold a number of bank accounts with Barclays. The present application, however, relates only to the three bank accounts held by Mrs Hmicho in her sole name with Barclays, and not also Mr Hmicho’s Barclays bank accounts.[4]Mr Hmicho, a Syrian national, has been identified by the Council of the European Union as a person who has been benefitting from, or supporting, the regime in Syria. As a result, since 7 March 2015, he has been the subject of financial sanctions, and on 7 May 2015 Barclays took the step of freezing the bank accounts held by him. Also on 7 May 2015, Barclays took the decision to freeze the three bank accounts held by Mrs Hmicho, a decision which has given rise to the present application.

Financial sanctions

[5]When I refer to Mr Hmicho being subject to financial sanctions, I need to explain in more detail what is meant by this. This I can do by drawing on the summary of the position contained in the skeleton argument of Barclays’ counsel, Mr Nicholas Medcroft, at paragraph 5 onwards. Mr Andrew Legg, on behalf of Mrs Hmicho, did not, as I understand it, take issue with Mr Medcroft’s summary.

The 2012 Council Regulation and the 2015 Council Regulation

[6]In 2011 the Council of the European Union imposed asset freezing measures against certain persons identified as being responsible for the violent repression of the civilian population in Syria. The scope of the measures was subsequently widened to cover natural or legal persons and entities associated with them.[7]The relevant EU Regulations are Council Regulation (EU) No. 36/2012 (the “2012 Council Regulation”) and Council Implementing Regulation 2015/375 (the “2015 Council Regulation”).The 2012 Council Regulation explains as follows in recital (3):
“In view of the continued brutal repression and violation of human rights by the Government of Syria, Council Decision 2011/782/CFSP provides for additional measures, namely a prohibition on the export of telecommunications monitoring equipment for use by the Syrian regime, a prohibition on the participation in certain infrastructure projects and investment in such projects, and additional restrictions on the transfers of funds and the provision of financial services.”
[8]Importantly, the restrictive measures contained in the 2012 Council Regulation include those set out in Article 14, under Chapter V (“Freezing of Funds and Economic Resources”), which states as follows:
“1. All funds and economic resources belonging to, owned, held or controlled by the natural or legal persons, entities and bodies listed in Annex II and IIa shall be frozen. 2. No funds or economic resources shall be made available, directly or indirectly, to or for the benefit of the natural or legal persons, entities or bodies listed in Annex II and IIa. 3. The participation, knowingly and intentionally, in activities the object or effect of which is, directly or indirectly, to circumvent the measures referred to in paragraphs 1 and 2 shall be prohibited.”
[9]Article 35 stipulates that the 2012 Council Regulation applies to “any legal person, entity or body which is incorporated or constituted under the law of a Member State”. The 2012 Council Regulation, therefore, applies to Barclays, which is required to comply with the restrictive measures set out in it, including those contained in Article 14. It follows that Barclays is obliged to freeze “funds and economic resources belonging to, owned, held or controlled by” any individuals and entities listed (or designated) in Annexes II and IIa to the 2012 Council Regulation (Article 14(1)). It follows also that Barclays is not permitted to make “funds or economic resources… available, directly or indirectly, to or for the benefit of” any such (designated) individuals and entities (Article 14(2)).[10]The other matter to note at this stage is that Article 22 of the 2012 Council Regulation provides as follows: “The freezing of funds and economic resources or the refusal to make funds or economic resources available, carried out in good faith on the basis that such action is in accordance with this Regulation, shall not give rise to liability of any kind on the part of the natural or legal person or entity or body implementing it, or its directors or employees, unless it is proved that the funds and economic resources were frozen or withheld as a result of negligence”.[11]In addition to the individuals and entities listed (or designated) in Annexes II and IIa to the 2012 Council Regulation, other individuals and entities have subsequently been designated, including, this year, in the 2015 Council Regulation published on 7 March 2015 and dated the previous day. Recital (2) to this Regulation explains as follows:
“In view of the gravity of the situation, seven persons and six entities should be added to the list of natural and legal persons, entities or bodies subject to restrictive measures in Annex II to Regulation (EU) No 36/2012.”
[12]Accordingly, as a result of the 2015 Council Regulation, Barclays came under an obligation to freeze “funds and economic resources belonging to, owned, held or controlled by” any individuals and entities listed (or designated) in the Annex to the 2015 Council Regulation, as well as those designated in the 2012 Council Regulation. In addition, Barclays was not permitted to make “funds or economic resources… available, directly or indirectly, to or for the benefit of” any such (designated) individuals and entities in addition to those listed in the 2012 Council Regulation.[13]These obligations relate to all the individuals and entities listed in the annex to the 2015 Council Regulation, including the individuals identified at number 205, where the following appears:
“Samir Hamsho (a.k.a. Samer; Sameer; Hmisho; Hamchu; Hamcho; Hamisho; Hmeisho; Hemasho)”
. Alongside this entry is an address at 31 Baghdad Street, Damascus, Syria and then the following under a column headed “Reasons”:
“Samir Hamsho is a prominent Syrian businessman benefiting from and supporting the regime. He is the owner and chairman of Al Buroj and Syria Steel/Hmisho Steel, subsidiaries of Hamsho Trading, a subsidiary of Hamsho International, which has been designated by the Council. Appointed to the Homs Chamber of Commerce in March 2014 by the Minister of Industry.Therefore, he provides support to the Syrian regime and benefits from his connections with the regime. He is also associated with the designated entities Hamsho International, Syria Steel SA and Al Buroj Trading.”
[14]The last column states that the “Date of Listing” for this individual is 7 March 2015. This was also what was stated in a Financial Sanctions Notice issued by HM Treasury on 9 March 2015 (paragraph 6), in which reference was made (in summary form) to the individual listed at number 205 to the 2015 Council Regulation and the description set out above.[15]Subsequently, on 20 May 2015, Council Implementing Regulation 2015/780 (the “Updated 2015 Council Regulation”) made on 19 May 2015 was published. This updated the information stated in the 2015 Council Regulation in respect of certain individuals and entities, including the individual referred to at number 205. The revised entry reads as follows – with the addition of another name (“Hmicho”) at the end of the list set out previously:
“Samir Hamsho (a.k.a. Samer; Sameer; Hmisho; Hamchu; Hamcho; Hamisho; Hmeisho; Hemasho, Hmicho).”
Further information is then provided over and above the 31 Baghdad Street address, in that a date of birth is stated, alongside passport numbers for both a Syrian and a Brazilian passport, as well as two other addresses (in Poole and another address in Damascus). The “Reasons” are the same as stated in the 2015 Council Regulation.

The UK Regulations

[16]EU regulations imposing freezing measures are directly applicable in EU Member States. As such, they are not required to be transposed into national law. However, sanctions regulations require Member States to adopt legislation providing for penalties for breaching restrictive practices. It is for this reason that the UK introduced the Syria (European Union Financial Sanctions) Regulations 2012 (the “UK Regulations”). These provide, in Regulation 2 (“Interpretation”), that “designated person” means “a person, entity or body listed in Annex II or IIa to the Council Regulation” (a reference to the 2012 Council Regulation).[17]The UK Regulations go on, importantly for present purposes, to provide as follows in Regulations 3, 4 and 5 (in Part 2: “Funds and Economic Resources”) as follows: “Freezing of funds and economic resources 3(1) A person (“P”) must not deal with funds or economic resources belonging to, or owned, held or controlled by, a designated person if P knows, or has reasonable cause to suspect, that P is dealing with such funds or economic resources.(2) In paragraph (1) “deal with” means – (a) in relation to funds – (i) use, alter, move, allow access to or transfer; … … Making funds available to a designated person 4 (1) A person (“P”) must not make funds available, directly or indirectly, to a designated person if P knows, or has reasonable cause to suspect, that P is making the funds so available. … Making funds available for the benefit of a designated person 5 (1) A person (“P”) must not make funds available to any person for the benefit of a designated person if P knows, or has reasonable cause to suspect, that P is making the funds so available. (2) For the purposes of this regulation – (a) funds are made available for the benefit of a designated person only if that person thereby obtains, or is able to obtain, a significant financial benefit, and (b) ‘financial benefit’ includes the discharge of a financial obligation for which the designated person is wholly or partly responsible.” …”. (a) in relation to funds – (i) use, alter, move, allow access to or transfer; … … … (2) For the purposes of this regulation – (a) funds are made available for the benefit of a designated person only if that person thereby obtains, or is able to obtain, a significant financial benefit, and (b) ‘financial benefit’ includes the discharge of a financial obligation for which the designated person is wholly or partly responsible.” …”.[18]In addition, Regulation 9 (4) is in the following terms:
“In this Regulation “frozen account” means an account with a relevant institution which is held or controlled (directly or indirectly) by a designated person.”
[19]Regulation 16 (in Part 4:
“Offences”) then states: “Contraventions and Circumvention of Prohibitions 16 (1) A person who contravenes any of the prohibitions in regulation 3 to 7 and 11 to 15 commits an offence. (2) A person commits an offence who intentionally participates in activities knowing that the object or effect of them is (whether directly or indirectly): (a) to circumvent any of the prohibitions in regulations 3 to 7 and 11 to 15, or (b) to enable or facilitate the contravention of any such prohibition.” (2) A person commits an offence who intentionally participates in activities knowing that the object or effect of them is (whether directly or indirectly): (a) to circumvent any of the prohibitions in regulations 3 to 7 and 11 to 15, or (b) to enable or facilitate the contravention of any such prohibition.”

Best Practices

[20]Besides the 2012 Council Regulation, the 2015 Council Regulation and the Updated 2015 Council Regulation, as well as the UK Regulations, the Council of the European Union has also published, on 24 March 2015, a document entitled “Restrictive Measures (Sanctions) – Update of the EU Best Practices for the effective implementation of restrictive measures”. That document states as follows in paragraph 3:
“The Best Practices are to be considered non exhaustive recommendations of a general nature for effective implementation of restrictive measures in accordance with applicable Union law and national legislation. They are not legally binding and should not be read as recommending any action which would be incompatible with applicable Union or national laws, including those concerning data protection.”
[21]The document then went on, in a section entitled “Designation and identification of persons and identities subject to targeted restrictive measures”, to state this in paragraph 5 (“Identification of Designated Persons or Entities”): “In order to improve the effectiveness of financial restrictive measures and restrictions on admission, and to avoid unnecessary problems caused by homonyms or near-identical names (possibility of ‘mistaken identity’), as many specific identifiers as possible should be available at the moment of identification and published at the moment of adoption of the restrictive measure. With regard to natural persons, the information should aim to include, in particular, surname and first name (where available also in the original language), with appropriate transliteration as provided for in travel documents or transliterated according to the International Civil Aviation Organisation (ICAO) Standards, aliases, sex, date and place of birth, nationality, address, identification or passport number. … ”.[22]Paragraph 8 (“Claims concerning mistaken identity”) follows, stating, amongst other things, that: “… It cannot be excluded that in some cases the funds of a person/entity who is not the intended target of the restrictive measures will be frozen, or a person excluded from the territory of the Member State of the EU, due to identifiers that match with those of the designated person/entity. … ”.[23]Later, in a section entitled “Scope of Financial Measures”, there is then this at paragraph 34:
“… Holding or controlling should be construed as comprising all situations where, without having a title of ownership, a designated person or entity is able lawfully to dispose of or transfer funds or economic resources he, she or it does not own, without any need for prior approval by the legal owner. …”
. Paragraph 35 continues:
“In principle, the freezing should not affect the funds or economic resources which are neither owned by or belonging to, nor held or controlled by designated persons and entities.… However, … funds and economic resources jointly owned by a designated person or entity and a non-designated one are in practice covered in their entirety”
.

This is followed by paragraph 36:

“The non-designated person or entity may subsequently request an authorisation to use such funds and economic resources, which may include severing the joint ownership so that person’s share can be unfrozen.”
Paragraph 35 continues: This is followed by paragraph 36:[24]Section VI (“Funds”) goes on to include (under a sub-heading, “Freezing of funds, belonging to, owned, held or controlled by a designated person or entity”) the following at paragraph 45:
“All uses of, and dealing with, funds, moving and alterations such as portfolio management, and whether by the designated person or another person holding or controlling such funds, require prior authorisation. Joint ownership of the funds does not negate this requirement, even though third party property as such is not frozen by the Regulations.”
Paragraph 49 (under a sub-heading, “Making funds available to a designated person or entity”) then states:
“Making funds available to a designated person or entity, be it by way of payment for goods and services, as a donation, in order to return funds previously held under a contractual arrangement, or otherwise, is generally prohibited unless it is authorised by the competent authority pursuant to the relevant exemption provided for in the Regulation … ”
.

Barclays’ Terms and Conditions

[25]I shall come back in a moment to explain in which ways Barclays relied upon Regulations 3 to 5 of the UK Regulations in the present case. First, however, I should refer also at this juncture to Barclays’ Terms and Conditions in the form of a document dated June 2014.[26]Section 6 of this document (“Following your instructions”) states:
“As far as we can, we’ll carry out your instructions accurately and promptly”
. This is followed, a couple of pages later, by the following:
“Contacting you if we refuse an instruction Unless the law prevents us, we will try to contact you as quickly as possible to tell you we haven’t followed an instruction (for example, by calling you or through a message on online banking), and to explain why. You can also ask us directly why we have not followed your instruction. We’ll tell you what you can do to correct any errors in the instruction or to satisfy us that the instruction came from you.”
A few pages later, there is then the following:
“When we do not have to follow your instructions The terms of this agreement mean we will generally carry out instructions if they are legal. However, we don’t have to follow any instruction if: … - by carrying out the instruction we might break a law, regulation, code or other duty that applies to us, or it might expose us to claims from third parties … In addition we can refuse to follow any instruction if: - we reasonably believe that following the instruction might expose us (or anotherBarclays company) to legal action or censure from any government, regulator or law enforcement agency, …”
. This is followed, a couple of pages later, by the following: A few pages later, there is then the following:

In addition we can refuse to follow any instruction if:

[27]There then follows a section (section 9) (“If something goes wrong”), in which the following is stated:
“If you have a loss you want to claim back from us If you have any loss or damage because of something we have done or not done, then you will generally be able to claim back the loss from us. However, there are exceptions. You cannot claim back if: - you are claiming for a loss of business, loss of goodwill, loss of opportunity or loss of profit – we will not be liable for these in anycircumstances … - we haven’t followed an instruction from you for a reason we give in this agreement … - there was no way we could have reasonably predicted your loss when you gave us the instruction … ”
.

Barclays’ position on this application

[28]I said that I would come back to the specific Regulations relied upon by Barclays to explain the position adopted by Barclays in response to Mrs Hmicho’s application. Although it is probably right to say that there has been something of a shift in Barclays’ position, indeed Mr Medcroft fairly acknowledged as much during his oral submissions, the position as at the time of the hearing was that reliance was placed by Barclays not only on Regulation 5 (the provision initially identified by Barclays in correspondence with Edwin Coe LLP, Mrs Hmicho’s solicitors), but also on Regulation 4 and, perhaps most importantly, on Regulation 3.[29]In summary, Barclays considers that Regulation 3 applies because the funds in Mrs Hmicho’s three personal accounts with Barclays belong to, or are owned or are held or controlled by, Mr Hmicho, a designated person, and as such Barclays is prohibited from dealing with the funds in Mrs Hmicho’s personal accounts within the meaning of Regulation 3 of the UK Regulations. Barclays must, accordingly, it considers, freeze the accounts as contemplated by Regulation 3 (if not the words used in the provision itself, then in the heading to it). Barclays also considers that, were it to unfreeze Mrs Hmicho’s personal accounts and release the funds in those accounts, it would be making the funds available, directly or indirectly to Mr Hmicho, or for his benefit since Mr Hmicho would thereby obtain a significant financial benefit, and that, therefore, Regulations 4 and 5 are applicable.[30]Barclays maintains that it has the requisite “reasonable cause to suspect” for the purposes of each of Regulations 3, 4 and 5 because of the matters set out in the witness statement dated 4 June 2015 of Rebecca Cantillon, Barclays’ Head of Sanctions, Personal Banking and Mortgages, in particular in paragraphs 22 to 30: in the case of Regulation 3, that Barclays would be dealing with funds belonging to, or owned, held or controlled by, Mr Hmicho if Mrs Hmicho’s accounts were to be unfrozen; in the case of Regulation 4, that Barclays would be making funds available, directly or indirectly, to Mr Hmicho if Mrs Hmicho’s accounts were to be unfrozen; and in the case of Regulation 5, that Barclays would be making funds available to a person (Mrs Hmicho) for the benefit of Mr Hmicho if Mrs Hmicho’s accounts were to be unfrozen.[31]In summary, as explained and to some degree amplified by Mr Medcroft in paragraphs 22.1 to 22.4 of his skeleton argument, Barclays relied on the fact that, with the exception of a handful of relatively modest deposits, since they were opened in 2014 all of the credits to Mrs Hmicho’s personal accounts at Barclays, specifically the Everyday Savers Account (containing £40,068.77) and the Premier Account (containing £68,800.27), appear to have come directly from Mr Hmicho’s own bank accounts at Barclays (bank accounts which Barclays have frozen and in relation to which no application of the sort made before me has been made).[32]Barclays also placed heavy reliance on the fact that, on 9 March 2015, Mrs Hmicho received into her Everyday Savers Account a payment of £90,000 and three payments of £10,000, totalling £120,000. This was followed the next day by receipt of a further payment of £4,000 into that account. In each case the payments came from Mr Hmicho’s own accounts at Barclays. Moreover, as Mr Medcroft pointed out, it was at this very time that Mr Hmicho had been named as a designated person in the 2015 Council Regulation (albeit his name and details were not entirely clear), which was published on 7 March 2015 and which was followed by the Financial Sanction Notice issued by HM Treasury on 9 March 2015 to which I have previously referred.[33]Mr Medcroft submitted that the reasonable inference is that these payments were made to circumvent the financial sanctions which Mr Hmicho had by this time appreciated he had come under. Indeed, as Mr Medcroft pointed out, in her witness statement in support of the application, specifically in paragraph 37, Mrs Hmicho herself explained that the payments were made “given the uncertainty over whether or not Samir [Mr Hmicho] would be able to provide for his family if he was indeed sanctioned”. Mr Legg submitted that there was nothing suspicious about this since all that Mr Hmicho was doing was making provision for his family. Mr Medcroft’s response to this was to observe that, whether that was Mr Hmicho’s motivation or not, it does not follow that Regulation 3 or for that matter Regulations 4 and 5 do not apply.[34]Mr Medcroft went on to refer to the fact that there have recently been substantial cash deposits paid into Mrs Hmicho’s personal accounts at Barclays, referring specifically to a payment of £48,000 in cash which was made into Mrs Hmicho’s Premier Account over the counter on 5 May 2015, as well as to a payment into the same account the following day in the sum of £52,000, again paid in cash and over the counter. Mr Medcroft submitted that these deposits were out of the ordinary, a point he demonstrated by reference to the bank statements which were in evidence before me and which revealed that such sizeable deposits were generally not made (albeit that the Premier Account was set up in 2014 with a £50,000 deposit made by Mr Hmicho).[35]Mr Medcroft also relied on the fact that there have been some recent and substantial withdrawals from Mrs Hmicho’s accounts. He refers, in particular, to the fact that, on 21 April 2015, a payment out of Mrs Hmicho’s Everyday Saver Account was made in the sum of £50,000 to an account in her name at National Westminster Bank Plc (“NatWest”), as well as to the fact that, on 7 May 2015, Mrs Hmicho transferred a further sum of £50,000 from her Premier Account to the same NatWest account. Mr Medcroft pointed out that these transfers are again inconsistent with past activity in relation to Mrs Hmicho’s accounts at Barclays, in that there is no indication from the bank statements that Mrs Hmicho has made similar transfers previously. Mr Medcroft additionally highlighted the fact that the £50,000 transfer on 21 April 2015 came just three days after Edwin Coe LLP had received a letter from Harrods Ltd, explaining that access had been denied to a safe deposit box because of Mr Hmicho’s appearance “on HM Treasury Sanctions List dated 9 March 2015”. Furthermore, the 7 May 2015 transfer came the day after Edwin Coe LLP had written to the Council of the European Union, asking for confirmation that their client, Mr Hmicho, was not “the intended target” of the 2015 Council regulation. Mr Medroft submitted that the two £50,000 transfers are likely to have been attempts by Mr Hmicho to evade the effect of the sanctions, so demonstrating that the funds in Mrs Hmicho’s Barclays accounts are at least controlled by Mr Hmicho, if not actually owned by him. (I note in this context that the £100,000 paid into Mrs Hmicho’s NatWest account is money which remains in that account, an account which I was informed at the outset of the hearing NatWest had very recently decided should be unfrozen. Accordingly, these funds are now available to Mrs Hmicho.)[36]Mr Medcroft suggested that the reasonable inference to be drawn from these transactions is that the monies were intended by both Mr and Mrs Hmicho to be monies which are available to, or for the benefit of, Mr Hmicho. Mr Medcroft submitted that, in these circumstances, there is clear evidence that the funds in the accounts which are the subject of Mrs Hmicho’s application belong to, or are owned or controlled by, Mr Hmicho. At the very least, he submitted, Barclays has reasonable cause to suspect that this is the case and so that, if Mrs Hmicho’s accounts were to be unfrozen, Barclays would be dealing with such funds.[37]Barclays’ concern, therefore, is that it would be committing a criminal offence were the funds to be released and the accounts unfrozen, whether under Regulation 3, Regulation 4 or Regulation 5. In this context, Mr Medcroft highlighted the fact that the offence or offences which Barclays risks committing would be an offence or offences under Regulation 16.1 of the UK Regulations. Even if that were not the case, Mr Medcroft submitted that there is a legitimate concern on the part of Barclays that it would be committing an offence contrary to Regulation 16.2, in intentionally participating in activities “knowing that the object or effect of them is (whether directly or indirectly)” to “circumvent” the prohibitions contained in Regulations 3, 4 or 5, or “to enable or facilitate the contravention of any such prohibitions”.[38]In these circumstances, Barclays’ position is that it would be wholly inappropriate for the Court to require it to do something which would render Barclays at risk of committing a criminal offence. In this context, Mr Medcroft relied on certain observations made by Longmore LJ in K Ltd v National Westminster Bank Plc[2007] 1 WLR 311 at [12]:
“… It would be entirely inappropriate for the court, interlocutorily or otherwise, to require the performance of an act which would render the performer of the act criminally liable. As a matter of discretion any injunction should be refused. ”
These observations by Longmore LJ followed an earlier passage at [10] in which he said this:
“If the law of the land makes it a criminal offence to honour the customer’s mandate in these circumstances there can, in my judgment, be no breach of contract for the bank to refuse to honour its mandate and there can, equally, be no invasion (or threat of an invasion) of a legal right on the part of the bank such as is required before a claimant can apply for an injunction. If that is right, there would be no issue to be tried in any later legal proceedings and any application for an interlocutory mandatory injunction has to be dismissed.”
[39]Mr Medcroft further submitted that, in any event, in the light of the recent activities on these accounts and given Mrs Hmicho’s relationship with Mr Hmicho, there is an obvious risk that both of them might work together to circumvent the freezing measures which Barclays have taken. Accordingly, Mr Medcroft submitted, Barclays is entitled under its Terms and Conditions to refuse to follow Mrs Hmicho’s instructions, including her instruction to unfreeze her accounts, since Barclays is entitled to refuse to follow Mrs Hmicho’s instructions if it considers that it “might” by following those instructions be committing a criminal offence or if Barclays reasonably believes that releasing the funds “might” (again the word used in Barclays’ Terms and Conditions) expose Barclays to legal action or censure from any government, regulator or law enforcement agency. In this respect, in addition to K Ltd v National Westminster Bank Plc, Mr Medcroft places reliance on the following passage in the judgment of David Richards J in Becker and Fellowes v Lloyds TSB Plc [2013] EWHC 3000 (Ch) at [24], albeit dealing with different trading terms and conditions: “… It seems to me that the bank must be entitled to rely on its contractual rights if the circumstances for the exercise of those rights has arisen. It has no need to apply to the court for a freezing order. It is not in any event seeking to recover money in the account. On the evidence before the Court at the moment, it has no standing to apply for a freezing order of the conventional sort. What it does have is a contractual right to refuse to carry out a transaction if it reasonably thinks that one or more of the conditions in Condition 12.1 is or are satisfied. … ”.[40]Mr Medcroft went on to submit that, approaching the matter by reference to the applicable principles relevant to the grant of interim mandatory relief, the Court ought not to grant Mrs Hmicho’s application. Mr Medcroft’s first, and primary, submission is that the Court cannot have the ‘high degree of assurance’ required by the authorities that at trial the injunction sought would be granted. Barclays’ position, which was not disputed by Mr Legg for Mrs Hmicho, is that the Court should not be making an order which has the practical effect of finally disposing of the claim unless the court has that ‘high degree of assurance’.[41]In this respect, I was referred to the following passage in the judgment of Lord Diplock in NWL Ltd v Woods [1979] 1WLR 1294 at 1307A-B:
“… Where … the grant or refusal of the interlocutory injunction will have the practical effect of putting an end to the action because the harm that will have been already caused to the losing party by its grant or its refusal is complete and of a kind for which money cannot constitute any worthwhile recompense, the degree of likelihood that the plaintiff would have succeeded in establishing his right to an injunction if the action had gone to trial, is a factor to be brought into the balance by the judge in weighing the risks that injustice may result from his deciding of the application one way rather the other.”
I was also referred to Shepherd Holmes Ltd v Sandham [1971] 1 (Ch) 340, where Megarry J (as he then was) said this at 351H-352 A:
“Third, on motion, as contrasted with the trial, the court is far more reluctant to grant a mandatory injunction than it would be to grant a comparable prohibitory injunction. In a normal case the court must, inter alia, feel a high degree of assurance that at the trial it will appear that the injunction was rightly granted; and this is a higher standard than is required for a prohibitory injunction. … it follows that the statement in Halsbury founded on Morris v Grant 24 WR 55, namely: ‘If the defendant, after express notice, has committed a clear violation of an express contract … a mandatory injunction will be granted on an interlocutory application,’ is too wide. Both the case itself and the statement founded on it have to be qualified in the light of the other authorities to which I have referred … No doubt a mandatory injunction may be granted where the case for one is unusually sharp and clear; but it is certainly not a matter of course.”
I was also taken to Locabail International Finance Ltd v Agroexport [1986] 1WLR 657 at 663G-664D, and asked to note the observation by Mustill LJ (as he then was) that an application for mandatory injunctive relief at an interlocutory stage “should be approached with caution and the relief granted only in a clear case”.[42]As Mr Medcroft explained, and as agreed by Mr Legg, the position was usefully summarised by Chadwick J (as he then was) in Nottingham Building Society v Eurodynamics Systems [1993] FSR 468 at 474, as follows:
“In my view the principles to be applied are these. First, this being an interlocutory matter, the overriding consideration is which course is likely to involve the least risk of injustice if it turns out to be ‘wrong’ … Secondly, in considering whether to grant a mandatory injunction, the court must keep in mind that an order which requires a party to take some positive step at an interlocutory stage, may well carry a greater risk of injustice if it turns out to have been wrongly made than an order which merely prohibits action, thereby preserving the status quo. Thirdly, it is legitimate, where a mandatory injunction is sought, to consider whether the court does feel a high degree of assurance that the plaintiff will be able to establish this right at a trial. That is because the greater the degree of assurance the plaintiff will ultimately establish his right, the less will be the risk of injustice if the injunction is granted. But, finally, even where the court is unable to feel any high degree of assurance that the plaintiff will establish his right, there may still be circumstances in which it is appropriate to grant a mandatory injunction at an interlocutory stage. Those circumstances will exist where the risk of injustice if this injunction is refused sufficiently outweigh the risk of injustice if it is granted. ”
This summary has been approved and followed in a number of subsequent cases, including in Zockoll Group Ltd v Mercury Communications Ltd [1998] 1 FSR 354 at 366, where Phillips LJ (as he then was) expressly commended it.[43]Having regard to these principles, Mr Medcroft submitted that Mrs Hmicho is in no position to show a sufficiently strong case that at trial she would succeed in obtaining the injunctive (and other) relief sought. On the contrary, he submitted, the greater likelihood is that Mrs Hmicho’s claim would meet with failure at trial. In this regard, Mr Medcroft highlighted the fact that Barclays’ Terms and Conditions permit Barclays not to follow Mrs Hmicho’s instructions merely if this “might” entail the breaking of the law or the attracting of censure from a government, regulator or law enforcement agency. In such circumstances, and bearing in mind also that under Article 22 of the 2012 Council Regulation Barclays would have immunity from liability unless it could be proved by Mrs Hmicho that Barclays had been negligent in taking the action which it has taken, Mr Medcroft submitted that Mrs Hmicho’s claim has low prospects of success. Mr Medcroft further submitted that, in considering the balance of convenience, the position favours Barclays, rather than Mrs Hmicho, in that any potential inconvenience suffered by Mrs Hmicho is outweighed by the potential prejudice to Barclays in finding itself committing, or risking committing, criminal offences. Lastly, Mr Medcroft made the submission that, in any event, damages would be an appropriate remedy in the present case, and so there is no need for the grant of the interim mandatory injunctive relief which Mrs Hmicho seeks.

Mrs Hmicho’s position

[44]Mr Legg disagreed with Mr Medcroft’s submissions. He described those submissions and the stance adopted by Barclays as “disappointing”, “confusing” and lacking in “precision and analytical rigour” having regard to the need, certainly for the purposes of Regulation 3, to know whether it is being said by Barclays it reasonably suspects that the funds in Mrs Hmicho’s Barclays accounts belong to, or are owned, held or controlled by, Mr Hmicho. Mr Legg submitted that Barclays impermissibly, and in any event unrealistically, has as its focus where the funds in Mrs Hmicho’s Barclays accounts have come from (namely Mr Hmicho), and therefore what has happened in the past, rather than concentrating on the present and, in particular, Mrs Hmicho’s explanations that the monies are to be used exclusively to maintain her family. In these circumstances, Mr Legg submitted that this is a case in which the injunctive relief sought is appropriate.[45]As to Barclays’ reliance on Regulation 3, Mr Legg made a number of points. First, he pointed out that, until the Friday before the hearing, the position adopted by Barclays was, or at least appeared to be, that Regulation 5 applied, and not also Regulations 3 and 4. However, Mr Legg sensibly acknowledged at the hearing that it is open to Barclays to advance a case based on Regulation 3, notwithstanding that Regulation 3 was not mentioned until the immediate lead-up to the hearing. The reason for this is that what matters for the purposes of the present application is whether Mrs Hmicho’s personal accounts should be unfrozen, and her instructions followed by Barclays, not what the position might have been at an earlier stage when the decision was taken by Barclays to freeze.[46]In such circumstances, Mr Legg’s first point inevitably goes nowhere and I say no more about it. Mr Legg’s second point is, however, both more substantive and more substantial. He submitted, as I have already mentioned, that Barclays has been very imprecise and unfocused in its reliance on the Regulations, in particular in its reliance on Regulation 3. Mr Legg submitted that there are important differences as between the concepts of “belonging to” “owned”, “held” and “controlled by”. He pointed out that there can be no question of the funds in the three bank accounts “belonging to” Mr Hmicho, as opposed to Mrs Hmicho, since not only are the bank accounts solely in Mrs Hmicho’s name, but additionally, and importantly, the monies totalling £124,000 paid on 9 and 10 March 2015 constituted gifts by Mr Hmicho to his wife, Mrs Hmicho. In such circumstances, Mr Legg submitted, Mr Hmicho’s intention being to give Mrs Hmicho funds in order to allow her to meet various family-related expenses, including the needs of the couple’s children and specifically school fees, the money in the bank accounts cannot properly be said to belong to Mr Hmicho.[47]Mr Legg went on to submit that there is no evidence to support the proposition that the funds in Mrs Hmicho’s bank accounts are “held” by Mr Hmicho, and nor is there evidence to demonstrate that the accounts are “controlled by” Mr Hmicho. Mr Legg highlighted the facts, in particular, that, although Mr Hmicho had from the time that the three accounts were opened been afforded certain abilities to do things such as on-line banking in respect of those accounts, Mr Hmicho had never actually availed himself of those opportunities, and that Mrs Hmicho has recently given instructions for Mr Hmicho’s rights on her accounts to be removed and Barclays has removed them. For these reasons, Mr Legg submitted, this is not a case in which Regulation 3 can be applicable.[48]Nor, Mr Legg submitted, can Regulations 4 and 5 apply because these are provisions which (unlike Regulation 3) are concerned not with the freezing of bank accounts but, instead, with specific transactions and instructions given by the customer to his or her bank in the context of those transactions. Mr Legg highlighted in this regard that the order which Mrs Hmicho seeks specifically contemplates, in paragraph 2, that Barclays should be free to refuse to “execute any particular instruction in accordance with Regulation 5”, and, as I understand it, Mr Legg would be content if this paragraph also included a reference to Regulation 4. Mr Legg added the observation that it is because Regulation 3 is, alone, concerned with the freezing of bank accounts that, as he put it, the “Regulation 3 hurdles are much higher than the Regulations 4 and 5 hurdles”.[49]In these circumstances, Mr Legg went on to submit, unless Regulation 3 can be shown by Barclays to operate, the injunction sought, which requires Barclays to “restore access to and/or other services [Mrs Hmicho] is entitled to” (in essence to unfreeze her accounts), ought to be granted. Mr Legg adds that Barclays is not currently in a position to show that any instructions have been given by Mrs Hmicho which might breach Regulations 4 and 5.[50]Mr Legg submitted, specifically, that in relation to Regulation 4, given that the accounts with which the present application is concerned are accounts held by Mrs Hmicho alone, there can be no question of Barclays making the funds contained in those accounts “available, directly or indirectly, to a designated person” (Mr Hmicho). Mr Legg highlighted, in particular, that the bank statements exhibited to Mrs Hmicho’s witness statement demonstrate that it is Mrs Hmicho (rather than her husband, Mr Hmicho) who controls the relevant bank accounts, and that she uses them for personal expenditure on herself, her children and friends, and family in Brazil. He also highlighted the fact that Mr Hmicho no longer has any powers to do anything with Mrs Hmicho’s accounts, powers which, in any event, he never exercised before voluntarily giving them up after becoming a designated person. Mr Legg additionally relied on the fact that Mrs Hmicho states in paragraph 39 of her witness statement that she intends “to continue expenditure on my children, family, friends and myself” and states also that she “will not use any of funds for the benefit of my husband either directly or indirectly which may breach the restrictions imposed on my husband under EU law”.[51]In relation to Regulation 5, Mr Legg similarly submitted that there is no foundation in the objection taken by Barclays. He submitted that there is, as he puts it, “no justification whatsoever” for Barclays to take the view that Mrs Hmicho would, by accessing the funds in those bank accounts, breach the UK Regulations by providing a “significant financial benefit” to Mr Hmicho. In this regard, Mr Legg placed reliance on R (on the application of M) v HM Treasury [2008] UKHL 26, in which the House of Lords said this at [16]: “In a case in which a person who provides funds to someone living with a listed person knows or has reason to suspect that she will use those funds to make money or convertible assets available for his use, he may commit the offence of indirectly making those funds available to or for the benefit of the listed person.But that is noreason for assuming that anyone living with a listed person is likely to make any funds she receives available for his use, so that he can use them for the purpose of terrorism. In the case of a family living on state benefits which are carefully calibrated to provided them with no more than they need to live on, this is a wholly unrealistic assumption. She would be in a better position to provide her husband with funds if she had substantial resources of her own, but the Regulation does nothing to freeze these. … ”.[52]Mr Legg relied on this authority in relation to both Regulation 5 and Regulation 4. He submitted that the case is instructive not only in relation to the situation where state benefits are being paid to a family, but also where the person living with the suspected terrorist (or in the present case, a designated person under the 2012 and 2015 Council Regulations) has funds (perhaps even substantial funds) of his or her own. Mr Legg pointed out that the last sentence of the passage set out above demonstrates that the proper approach, endorsed by the House of Lords, is not to assume that funds will be provided and a criminal offence thereby committed. Mr Legg submitted that this approach applies in the present case just as it did in R (on the application of M) v HM Treasury, and that Mr Medcroft’s denial that this is the position is misconceived.[53]Mr Legg’s submission was that, aside from the fact that Mr and Mrs Hmicho are husband and wife, there is insufficient evidence on which Barclays can reasonably (and so legitimately) suspect, still less conclude, that the funds in Mrs Hmicho’s three Barclays accounts are funds to which Regulations 3, 4 or 5 apply. Mr Legg submitted in particular, that the bank statements which have been produced demonstrate that payments made by Mrs Hmicho from the relevant bank accounts were payments which were made for ordinary family existence, and that the only payment made by Mrs Hmicho to Mr Hmicho was a payment made on 10 April 2015 when, as Mrs Hmicho explains in her witness statement, Mr Hmicho telephoned her to ask that she make a transfer of money to a music shop in order that Mr Hmicho could purchase an electric guitar for their son.[54]In the circumstances, Mr Legg submitted, Barclays is obliged under its Terms and Conditions to do as instructed by Mrs Hmicho. Put differently, he submitted that Barclays has no justification, and continues to have no justification, for freezing Mrs Hmicho’s personal accounts. Accordingly, Mr Legg submitted that not only is there a serious issue to be tried, applying well-known American Cyanamid principles, but that this is also, crucially given that this is an application for an interim mandatory injunction, a case in which, having regard to the relative strength of the apparent merits of the parties’ respective positions, the Court can have the necessary ‘high degree of assurance’ that, if it were to require Barclays to restore Mrs Hmicho’s banking facilities and to unfreeze her bank accounts, Mrs Hmicho would later be able to establish at trial that Barclays should, indeed, be required to do these things.[55]Addressing the balance of convenience and discretion issues, Mr Legg went on to emphasise that what is sought entails, as he puts it, “very little risk to Barclays”, whereas Mrs Hmicho faces, again as he puts it, “a most dire state of affairs, with the most profound impact on her personal liberty and her family life”. In this regard, Mr Legg placed reliance on the following passage in the speech of Lord Hope in Ahmed and others v HM Treasury [2010] UKSC 5 [2010] 2 AC 534 at [6]:
“The case brings us face to face with the kind of issue that led to Lord Atkin’s famously powerful protest in Liversidge v Anderson [1942] AC 206, 244 against a construction of a Defence Regulation which had the effect of giving an absolute and uncontrolled power of imprisonment to the minister. In the case of ‘Liversidge v Anderson: The Rule of Law Amid the Clash of Arms’ [2009] 43 The International Law 33, 38 Lord Bingham of Cornhill, having traced the history to that judgment, said that: ‘we are entitled to be proud that even in that extreme national emergency there was one voice - eloquent and courageous - which asserted older, nobler, more enduring values: the right of the individual against the state; the duty to govern in accordance with law; the role of the courts as guarantor of legality and individual right; the priceless gift, subject only to constraints by law established, of individual freedom.’ The consequences of the Orders that were made in this case are so drastic and so oppressive that we must be just as alert to see that the coercive action that the Treasury have taken really is within the powers that the 1946 Act has given them. Even in the face of the threat of international terrorism, the safety of the people is not the supreme law. We must be just as careful to guard against unrestrained encroachments on personal liberty.”
Later on, in another passage relied on by Mr Legg, Lord Hope referred at [38] to the “impact on normal family life” being “remorseless and it can be devastating”, before at [60] stating this:
“… There remains however the objection that the restrictions strike at the very heart of the individual’s basic right to live his own life as he chooses, Collins J, in his impressive judgment, described the range of powers that it conferred on the Treasury as draconian, and the AQO as even more so [2008] 3 All ER 361, para 11. It is no exaggeration to say, as Sedley LJ did in para 125, that designated persons are effectively prisoners of the state. I repeat: their freedom of movement is severely restricted without access to funds or other economic resources, and the effect on both them and their families can be devastating. ”

Lastly, at [137] Lord Hope said this:

“… The consequences of a freezing Order, not merely on the enjoyment of property, but upon the enjoyment of private and family life are dire.”
Lastly, at [137] Lord Hope said this:[56]Mr Legg also relied on R (on the Application of M) v HM Treasury at [15], where the following was stated by the House of Lords:
“…the Treasury construction produces a disproportionate and oppressive result. It means that anyone paying money to Mrs M (an employer, for example, if she had been in work, or even her bank) would have required a licence under Art. 2a simply because she lived with a listed person and some part of the expenditure of her own money might be for his benefit. Furthermore, the terms of the licence are such that she would be unable to spend any of her own money, however large her income, without accounting to the Treasury for every item of her expenditure. This would seem an extraordinary invasion of the privacy of someone who is not a listed person.”
[57]Mr Legg went on to submit that damages would not be an adequate remedy because having to wait for the outcome of a trial would have serious deleterious effects on Mrs Hmicho and her children, which compensation in damages would not be able to remedy. In this respect, Mr Legg referred, in particular, to the emotional and reputational damage that might result from Mrs Hmicho being unable to sustain school fee payments, or from being unable to pay for her children to undertake music lessons and other activities. Mr Legg also referred to the disruption caused to Mrs Hmicho’s private and family life. Mr Legg added, by reference to certain of Barclays’ Terms and Conditions as set out above, that there is a risk that Mrs Hmicho may not be able to recover fully in respect of the losses sustained by her as a result of Barclays’ (alleged) breaches of contract. In this last regard, Mr Legg explains on instructions, although without being able to point to anywhere in Mrs Hmicho’s witness statement where this is stated, that the freezing of her personal bank accounts with Barclays is likely to cause the loss of a business opportunity which Mrs Hmicho would otherwise have. He pointed out that, in view of the first of the exclusions of liability in the Terms and Conditions, any loss relating to this matter would, or may, not be recoverable.[58]Finally, Mr Legg submitted that it is no answer for Barclays to say that it is open to Mrs Hmicho to apply to HM Treasury for a licence in order to meet her basic needs, and so the present application ought to be rejected on that basis. Mr Legg makes the point that any application for a licence under Regulation 10 of the UK Regulations, assuming that an application could be made by Mrs Hmicho (as opposed to Mr Hmicho) which it appears is possible, would nonetheless take time and time is short (albeit not as short as it would have been had NatWest not taken the decision to unfreeze Mrs Hmicho’s NatWest account). That said, Mr Legg was constrained to acknowledge that it would have been open to Mrs Hmicho to have made such an application, on a without prejudice basis, namely on the basis that she did not accept that the personal accounts of hers at Barclays should have been frozen at all. Accordingly, it seems to me that the time objection taken by Mr Legg is not a particularly compelling one.[59]More significant perhaps, in this context, is another point made by Mr Legg in relation to the ability to apply for a licence. This is that there would appear to be a degree of doubt as to whether a licence could be obtained which will permit Mrs Hmicho to spend money on private school fees, as opposed to other types of expense more obviously falling within the category of “basic needs” expenditure. This is because the 2012 Council Regulation refers in Article 16 to member states authorising release of certain funds which are “necessary to satisfy the basic needs of persons listed … and their dependent family members, including payments for foodstuffs, rent or mortgage, medicines and medical treatment, taxes, insurance premiums, and public utility charges”, but no mention is made of educational fees.

Discussion and conclusions

[60]Having considered the parties’ respective submissions, I have reached the clear conclusion that this is not a case for the grant of the interim mandatory injunctive relief which Mrs Hmicho seeks. I say this for a number of reasons.[61]First, I am quite satisfied that the position in relation to Regulation 3 is nothing like as clear and straightforward as Mr Legg would have it. Although I stress that I should not be regarded as deciding the point at this juncture, it seems to me that it is quite impossible to have the necessary ‘high degree of assurance’ at this interlocutory stage that Mrs Hmicho’s case concerning Regulation 3 is right and that Barclays case in relation to Regulation 3 is wrong, so as to mean that I can be assured to a high degree that Mrs Hmicho will succeed at trial with her claim for final injunctive relief. In short, this is not one of those “unusually sharp and clear” cases to which Megarry J referred in Shepherd Holmes, where it would be right to grant interim mandatory injunctive relief, the effect of which would effectively be to dispose finally of Mrs Hmicho’s claim.[62]I bear in mind in this connection that what Regulation 3 is concerned with is Barclays either knowing or having “reasonable cause to suspect” that it is (or would be) dealing with funds belonging to, or owned or held or controlled by, a designated person. I do not see how it can realistically be suggested in the present case that the Court can have a ‘high degree of assurance’ that at trial Barclays will be unable to show that it has “reasonable cause to suspect” based on the material which has been put before me, as set out, in particular, in Ms Cantillon’s witness statement dated 4 June 2015 and as further explained by Mr Medcroft in his written and oral submissions. Without wishing in any way to prejudge what ultimately will be a matter for trial, it seems to me that Barclays may very well be able to demonstrate at trial that it has every reason to be suspicious of what has happened in relation to Mrs Hmicho’s Barclays bank accounts. I reject, in particular, Mr Legg’s invitation to me to focus not on the past but exclusively the present. It seems to me that this is an unrealistic stance, which would involve Barclays (and the Court) essentially having to ignore a number of matters which, putting things fairly neutrally, call into question whether the funds in Mrs Hmicho’s Barclays accounts are really quite as free from Mr Hmicho’s sphere of influence as Mrs Hmicho would suggest.[63]The fact that money has come into Mrs Hmicho’s deposit accounts from Mr Hmicho’s accounts at Barclays, in sizeable amounts and at times when Mr Hmicho has found himself identified as a designated person, and then substantial sums have been paid out into an account held by Mrs Hmicho at another bank (NatWest), without this apparently having happened previously, at least at comparable levels, inevitably gives rise to some suspicion as to what role Mr Hmicho may be playing in relation to Mrs Hmicho’s accounts with Barclays. I repeat that this will be a matter for trial. However, on the face of things, it seems to me to be a reasonable suspicion and, moreover, a suspicion that arises not merely by virtue of Mrs Hmicho’s spousal relationship with Mr Hmicho. That said, I consider that the fact of that relationship is hardly something which it would, in any event, be right to disregard for present purposes.[64]I do not, in the circumstances, repeat everything that I have set out previously when describing the matters relied on by Mr Medcroft in support of Barclays’ case that a reasonable suspicion arises for the purposes of Regulation 3 (and Regulations 4 and 5). In outline, however, I am satisfied that the fact that, on 9 March 2015, Mrs Hmicho received into her Everyday Savers Account a payment of £90,000 and three payments of £10,000, totalling £120,000, allied with the fact that the next day there was a further payment of £4,000 into the same account, more than amply justifies a conclusion on my part that I cannot have a ‘high degree of assurance’ that Barclays’ suspicion is unreasonable, and so that Mrs Hmicho will obtain a mandatory injunction at trial. The more so, once it is appreciated that each of these payments was made by Mr Hmicho at a time when he had just been named as a designated person in the 2015 Council Regulation. It does not seem to me to matter that Mr Hmicho subsequently made efforts to get the Council of the European Union to say that he was not the person listed, nor that his name and details were not at this stage entirely clear. What matters is that Mr Hmicho knew that, at an absolute minimum, he was being treated as a designated person, or that that appeared to be the case, as demonstrated by the efforts to which I have referred. It was this appreciation on the part of Mr Hmicho that, quite obviously and as accepted by Mrs Hmicho, provoked the transfers.[65]I agree with Mr Medcroft that it is unrealistic for Mr Legg to suggest that Barclays’ case that there is a reasonable inference that these payments were made to circumvent the financial sanctions which Mr Hmicho had by this time appreciated he had come under is a case which the Court can have a ‘high degree of assurance’ will fail at trial. In my judgment, although I stress again that I should not be taken as deciding the point once and for all since again this will be an issue for trial, it does not matter that, as Mrs Hmicho explained in her witness statement, the payments were made “given the uncertainty over whether or not Samir [Mr Hmicho] would be able to provide for his family if he was indeed sanctioned”. That may very well be the reason, but, if so, I do not see how it necessarily follows that Barclays’ reliance on Regulation 3 is misplaced as a result. The very fact that Mr Hmicho’s immediate response to learning that he had been named as a designated person was to transfer money out of an account which he must have known would very shortly be frozen seems to me, at the very least, to call into question whether he is somebody who is willing, if he can, to get round the financial sanctions contained in the 2012 and 2015 Council Regulations, including, if necessary, by giving instructions to his wife as to what to do with her accounts at Barclays. It does not seem to me to matter that, in making the payments, Mr Hmicho was trying to make provision for his family, however understandable that motivation would (but for the financial sanctions) be.[66]I also take account of the subsequent substantial cash deposits paid into Mrs Hmicho’s Barclays accounts at Barclays, in each case over the counter: £48,000 on 5 May 2015, and £52,000 the next day. These are substantial payments and are unusual. I appreciate that in respect of the second of these payments, Mrs Hmicho explained in her witness statement that this was a loan from Mr Hmicho’s mother. As Mr Legg was at pains to point out, based on his instructions (not anything stated in Mrs Hmicho’s witness statement), the same explanation applies to the first payment. However, it would not appear that any similar loan has ever previously been given to Mrs Hmicho. In these circumstances, I agree with Mr Medcroft that legitimate questions must arise as to Mr Hmicho’s involvement in relation to Mrs Hmicho’s Barclays accounts.[67]I consider that similar questions arise out of the recent and substantial withdrawals from Mrs Hmicho’s accounts: the payment on 21 April 2015 in the sum of £50,000 to an account in her name at NatWest followed by a second £50,000 payment to the same account on 7 May 2015. I acknowledge that these were both payments which did not see the money leave Mrs Hmicho’s coffers. However, they are out of the ordinary and their timing, in the case of the first shortly after the letter from Harrods Ltd explaining why access had been denied to a safe deposit box, and in the case of the second the day after Edwin Coe LLP had written to the Council of the European Union seeking confirmation that Mr Hmicho was not “the intended target” of the 2015 Council Regulation, calls into question what involvement Mr Hmicho had in the monetary transfers. I do not see how I can conclude, at this interlocutory stage, that Barclays’ suspicion that these payments may have entailed attempts by Mr Hmicho to evade the effect of the sanctions, and entailed Mr Hmicho having control over the funds in Mrs Hmicho’s Barclays accounts, is a suspicion which at trial will be determined to be unreasonable. I make it clear that, in reaching this conclusion, I have not merely made the kind of assumption which the House of Lords in R (on the application of M) v HM Treasury stated ought not to be made, namely that simply because Mr and Mrs Hmicho live together as husband and wife, Mrs Hmicho is to be regarded as making funds available for Mr Hmicho’s use. I am satisfied that the evidence in this case, viewed overall, goes further than simply the fact that Mr and Mrs Hmicho are a married couple.[68]It follows, in my judgment, that, in view of Barclays’ reliance on Regulation 3, I cannot have a ‘high degree of assurance’ that at trial the injunction sought would be granted. The same applies to Barclays’ reliance on Regulations 4 and 5. As I see it, Mr Medcroft is right when he submitted that the Court cannot have a ‘high degree of assurance’ that, were Barclays to unfreeze Mrs Hmicho’s personal accounts and release the funds in those accounts, Barclays would not thereby be making the funds available, directly or indirectly to Mr Hmicho, or for his benefit since Mr Hmicho would thereby obtain a significant financial benefit, for the purposes of Regulations 4 and 5. I am not persuaded, certainly at this interlocutory stage, that Mr Legg is right when he submitted that Regulations 4 and 5 do not permit Barclays to freeze Mrs Hmicho’s accounts. The fact that it is only Regulation 3 (strictly its title rather than the language used in Regulation 3 itself) which refers to accounts being frozen seems to me to be unlikely to matter. I agree with Mr Medcroft that, in the present case, for practical purposes, Regulations 4 and 5, with their prohibitions on making funds available, involve freezing of Mrs Hmicho’s accounts. I acknowledge that Regulations 4 and 5 can, no doubt, be concerned with specific transactions and instructions given by the customer to his or her bank in the context of those transactions. However, it seems to me that in a case such as the present Regulations 4 and 5 can also operate in a more blanket-type way. Accordingly, I am not persuaded that the carve-out contained in paragraph 2 of the order sought, by which Barclays would be free to refuse to “execute any particular instruction in accordance with Regulation 5”, is very apposite. In any event, even if I am wrong in my approach towards Regulations 4 and 5, in view of the conclusions which I have reached in relation to Regulation 3, nothing turns on this point.[69]For these reasons, I repeat that I am satisfied that I cannot have the necessary ‘high degree of assurance’ that Barclays is not entitled to hold the reasonable suspicion that the funds in the accounts which are the subject of Mrs Hmicho’s application belong to, or are owned or controlled by, Mr Hmicho. This is the main reason why I am not prepared to grant Mrs Hmicho the interim mandatory injunction sought by her. I can state my additional reasons more shortly:(1) First, it seems to me that there is force in Mr Medcroft’s submission that, even were it to be determined at trial that unfreezing Mrs Hmicho’s Barclays bank accounts would not entail any contravention of Regulations 3, 4 or 5, given Barclays’ Terms and Conditions (specifically the provisions which entitle Barclays not to follow Mrs Hmicho’s instructions in circumstances where they merely ‘might’ involve Barclays committing a criminal offence: Articles16.1 and16.2 of the UK Regulations), Mrs Hmicho’s case might ultimately, in any event, fail. It is at least arguable that this will prove to be the case, and as such means, as I see it, that, again, I cannot have a ‘high degree of assurance’ that Mrs Hmicho will prevail at trial.(2) Secondly, having regard to the views expressed by Longmore LJ in K Ltd, I am clear that it would not be appropriate, in the circumstances, to make an order requiring Barclays to take action which would, or might, render it criminally liable under the Regulations, whether that be Regulation 3 or, for that matter, Regulations 4 or 5.(3) Thirdly, I am clear also that the balance of convenience in this case rests very firmly on Barclays’ side rather than that of Mrs Hmicho. Even if I had, therefore, not reached the conclusions which I have set out above, it seems to me inevitable that I would nevertheless not have granted the mandatory relief sought. I acknowledge completely, and sympathise with, the difficulties in which Mrs Hmicho finds herself as a result of the action taken by Barclays. However, these are difficulties which it seems to me are outweighed by the risk that, were the injunction sought to be granted, Barclays would find itself committing a criminal offence.(4) Fourthly, I am not persuaded that damages would be an inadequate remedy. I recognise that certain of the difficulties described by Mrs Hmicho in her witness statement, and highlighted by Mr Legg in his submissions, relate to implications for Mrs Hmicho and her family which will not be compensatable by damages. I do not consider, however, that this should lead me to the conclusion that the injunctive relief sought must, therefore, be granted, in view of the conclusions which I have set out previously. In addition, I am bound to note that no reference was made by Mrs Hmicho in her witness statement to the potential lost business opportunity claim which Mr Legg, therefore, told me about on the basis of instructions, not evidence. Although I recognise that, if there were such a claim, it might be excluded by virtue of Barclays’ Terms and Conditions, I am sceptical that Mrs Hmicho actually has such a claim. If she really considered that she did, I would have expected her to have made at least some reference to it in the evidence in which she has put before the Court.(5) Lastly, as to the licence point made by Mr Medcroft, although it is quite clear to me that Mrs Hmicho could have made an application for a licence prior to making the present application to the Court, I am not persuaded that her failure to do so means, without more, that this application ought to be dismissed. In short, had I otherwise been minded to grant the interim mandatory injunctive relief sought, I would not have declined to do so on the basis that Mrs Hmicho should already have applied for a licence and her failure to do so has the consequence that, in the exercise of my discretion, an injunction not to be granted on that basis. However, nor do I consider that the uncertainty as to whether, if a licence were obtained, Mrs Hmicho would be permitted to spend money paying private school fees is a reason why the interim mandatory injunction ought to be granted. In view of my previous conclusions, it cannot amount to such a reason. That must be the case notwithstanding authorities such as Ahmed and others v HM Treasury and R (on the Application of M) v HM Treasury since in the present case I have concluded that I cannot have the requisite ‘high degree of assurance’ that the monies in Mrs Hmicho’s Barclays accounts do not belong to, or are not owned, held or controlled by, Mr Hmicho.[70]In all the circumstances, Mrs Hmicho’s application is refused.

Cited in 1 later judgment