High Court dismisses application to set aside freezing order in complex trust dispute

Background

The High Court, presided over by HHJ Parfitt, recently ruled on an application to set aside a freezing order in a case involving allegations of equitable fraud and trust breaches. The case, Vanessa Wurm and others vs Kash Amini and others, centred on claims that the First Defendant, Kash Amini, misappropriated £3.7 million from the First Claimant, Vanessa Wurm, under the guise of business investments and cryptocurrency dealings.

Case Details

The First Claimant alleged that during her relationship with the First Defendant, she transferred significant sums of money based on promises that these funds would be invested in the Second Defendant's business and in cryptocurrencies. Instead, it is claimed that the First Defendant used the money for personal gain. The Third to Fifth Defendants, including the First Defendant's brother, were alleged to have received some of these misappropriated funds.

Freezing Order

A freezing order was initially granted to prevent dissipation of assets that could potentially be used to satisfy a judgment. The Third to Fifth Defendants applied to have this order set aside, arguing that the Claimant could not establish a seriously arguable case of a Quistclose trust or dishonesty and that there was insufficient risk of asset dissipation.

Judgment

HHJ Parfitt dismissed the application to set aside the freezing order. The Judge found that the Claimant had established a seriously arguable case for a Quistclose trust, noting that the funds were not intended to be at the free disposal of the First Defendant but were to be used for specific purposes as promised. The court also found that there was a seriously arguable case of dishonesty against the Third to Fifth Defendants, who were alleged to have knowingly assisted in the First Defendant's breach of trust.

Risk of Dissipation

The court determined that there was a real risk of dissipation of assets by the Defendants, which justified the continuation of the freezing order. The Judge noted the lack of transparency and the potential for assets to be moved out of reach, particularly given the Applicants' conduct in relation to statutory accounts and their approach to the litigation.

Legal Implications

This case highlights the complexities involved in establishing a Quistclose trust and the importance of demonstrating a real risk of dissipation when seeking a freezing order. The decision underscores the court's role in balancing the protection of claimants' rights with the potential impact on defendants.

Conclusion

The High Court's decision to maintain the freezing order provides a significant precedent in cases involving allegations of fraud and trust breaches. It reinforces the need for careful scrutiny of financial transactions and the importance of transparency in legal proceedings.

Learn More

To understand more about the legal principles involved in this case, see BeCivil's guide on Shareholder Law.