Freezing injunction

The case Click Above Corben Mews Ltd & Anor v 381 Southwark Park Road RTM Company Ltd & Ors [2025] EWHC 105 (TCC) primarily concerns the legal implications of a freezing injunction issued against the assets of Click St Andrews Ltd., a company involved in a failed property development project. The dispute centers on whether two leasehold properties at Corben Mews, which were subject to a legal charge in favor of Victoria Capital Trust (VCT), should be considered assets covered by the freezing injunction. The applicants, acting as fixed charge receivers, sought a declaration that the sale of these properties would not violate the injunction or, alternatively, a variation or discharge of the injunction.

It revolves around whether two leasehold properties, over which Victoria Capital Trust (VCT) held security, were covered by a freezing injunction against Click St Andrews Ltd. The case is complex due to the financial entanglements between the parties, prior legal proceedings, and the competing interests of secured creditors and claimants seeking asset protection.

Introduction and Background

The judgment begins by outlining the dispute's origins, particularly the legal battle over property transactions at 381 Southwark Park Road. The dispute initially arose from a Freehold Purchase Agreement (FPA), under which Click St Andrews Ltd. was supposed to develop additional residential units on an existing property. However, construction defects and water damage led to legal action, and a freezing injunction was imposed against Click St Andrews to prevent the dissipation of assets. The case's procedural history reflects the complexity of asset tracing in commercial litigation, where multiple corporate entities and financial arrangements complicate the identification of relevant assets.

The Freezing Injunction and Subsequent Legal Proceedings

A key aspect of the case is the evolution of the freezing injunction. Initially, the injunction was imposed on several Click-related entities, but subsequent rulings narrowed its application, leaving Click St Andrews as the only remaining subject. This highlights a fundamental challenge in injunction litigation: ensuring that asset protection measures do not overreach and impact unrelated parties. The judgment carefully traces the procedural developments, demonstrating the judiciary's cautious approach to balancing asset protection with commercial certainty.

The Receivers’ Application and the Competing Arguments

The applicants, acting as fixed charge receivers, sought a declaration that selling the Corben Mews properties would not breach the freezing injunction. Alternatively, they requested a variation or discharge of the injunction. The respondents, however, contended that Click St Andrews might have a beneficial interest in the properties, given past financial transactions between Click-related companies. The court’s analysis of these arguments underscores the evidentiary challenges in beneficial interest claims. The respondents’ position was weakened by the lack of concrete evidence linking Click St Andrews to ownership or control over the properties.

Analysis of the Priority of the Secured Charge

A crucial legal issue was whether VCT’s charge over the Corben Mews properties took priority over any potential beneficial interest held by Click St Andrews. The court applied the principles of the Land Registration Act 2002, which generally prioritizes registered charges over unregistered interests unless an overriding interest can be established. The respondents relied on Hughmans Solicitors v Central Stream Services Ltd [2012] EWHC 1222 (Ch) to argue that VCT’s charge lacked valuable consideration, but the court rejected this argument. This part of the judgment reaffirms a well-established legal principle: properly registered security interests should not be undermined by speculative claims of equitable ownership.

Corporate Insolvency and the Role of Liquidators

The judgment also addresses the impact of Click St Andrews’ liquidation on the enforcement of the freezing injunction. Drawing from Eco Quest plc v GFI Consultants Ltd [2014] EWHC 4329 (QB), the court acknowledged that once a company is in liquidation, asset distribution falls under the liquidators’ authority. This aspect of the ruling is particularly significant in clarifying the limits of freezing injunctions in insolvency contexts. The court refrained from discharging the injunction entirely but recognized that its purpose had diminished due to the company’s liquidation.

Assessment of the Beneficial Interest Claim

The respondents attempted to argue that Click St Andrews had a beneficial interest in the Corben Mews properties due to financial transactions between Click-related companies. They cited Nicholas James Care Homes Ltd v Liberty Homes (Kent) Ltd [2022] EWHC 1203 (TCC) to support the principle that unexplained asset transfers may give rise to a beneficial interest. However, the court distinguished that case, noting that Nicholas James Care Homes involved a direct transfer of property, whereas Click Above Corben Mews only involved minor financial transactions. This distinction is important, as it prevents the broad application of beneficial interest claims in cases where no clear evidence of ownership exists.

Clarity and Enforceability of Freezing Injunctions

The judgment also touches on the broader issue of how freezing injunctions should be framed and enforced. The applicants argued that the uncertainty surrounding the injunction’s scope had created unnecessary legal risks, preventing them from executing their duties as receivers. The court acknowledged these concerns but rejected the claim that the injunction was inherently unclear. This discussion highlights an ongoing issue in injunction litigation: ensuring that orders are precise enough to protect claimants’ interests without unduly interfering with legitimate commercial activities.

Refusal to Impose a Retrospective Cross-Undertaking in Damages

Another notable part of the ruling is the court’s refusal to impose a retrospective cross-undertaking in damages. The applicants sought financial protection against potential losses caused by the injunction’s enforcement, but the court followed the precedent in SmithKline Beecham v Apotex Europe [2005] EWHC 1655 (Ch), which discourages retrospective liability for injunction applicants. This aspect of the ruling is significant because it reinforces the principle that parties seeking asset protection through freezing orders should not automatically be liable for commercial losses suffered by third parties.

Final Judgment and Practical Implications

The court ultimately granted a variation of the freezing injunction, allowing the receivers to sell the Corben Mews properties while maintaining some level of protection for the respondents’ claims. This decision strikes a balance between enforcing secured creditors’ rights and upholding the protective function of the injunction. However, the ruling leaves open the possibility of further disputes, particularly regarding whether the injunction should be discharged entirely in light of Click St Andrews’ liquidation.

Critical Evaluation of the Judgment

The judgment in Click Above Corben Mews is a thorough and well-reasoned decision that carefully navigates complex legal issues. It highlights the judiciary’s role in balancing competing interests in commercial litigation, particularly in cases involving asset protection measures, secured lending, and corporate insolvency. The ruling reinforces key legal principles, including the priority of registered security interests, the limits of beneficial interest claims, and the procedural safeguards surrounding freezing injunctions.

However, one potential weakness of the judgment is that it does not fully resolve the issue of Click St Andrews’ potential interest in the properties. While the court found the respondents’ claims weak, it did not definitively rule out the possibility of further challenges. This leaves some uncertainty, which could lead to additional litigation. Additionally, the ruling underscores the difficulties third parties face when dealing with freezing injunctions, particularly in cases where asset ownership is not immediately clear.

The case Click Above Corben Mews Ltd & Anor v 381 Southwark Park Road RTM Company Ltd & Ors [2025] EWHC 105 (TCC) references several legal precedents to guide the court's decision on the scope of freezing injunctions, priority of secured interests, and the nature of legal charges. These precedents, including Hughmans Solicitors v Central Stream Services Ltd [2012] EWHC 1222 (Ch), Eco Quest plc v GFI Consultants Ltd [2014] EWHC 4329 (QB), SmithKline Beecham v Apotex Europe [2005] EWHC 1655 (Ch), Nicholas James Care Homes Ltd v Liberty Homes (Kent) Ltd [2022] EWHC 1203 (TCC), and Capital Cameras Ltd v Harold Lines Ltd [1991] 1 WLR 54, address different but interrelated aspects of secured transactions and injunction enforcement.

One of the most relevant comparisons arises between Hughmans Solicitors v Central Stream Services Ltd and Click Above Corben Mews. In Hughmans, the court dealt with the question of whether a security interest had been granted for valuable consideration, which would determine whether it took priority over competing claims. Similarly, in Click Above Corben Mews, the respondents argued that the VCT charge was not supported by valuable consideration and therefore did not take priority over any beneficial interest Click St Andrews might have had in the properties. However, in both cases, the court upheld the validity of the secured party’s interest, emphasizing the principle that properly registered charges, supported by consideration, override unregistered claims unless an overriding interest is established.

Another significant precedent cited is Eco Quest plc v GFI Consultants Ltd, which dealt with the continuation of a freezing injunction after a company had entered liquidation. The ruling in Eco Quest established that an injunction should not interfere with a liquidator’s ability to manage assets for the benefit of all creditors. This principle was applied in Click Above Corben Mews, where the court acknowledged that Click St Andrews’ liquidation meant that asset distribution was now under the control of its liquidators, making the freezing injunction less relevant as a tool for asset protection. However, the key contrast is that while Eco Quest led to the discharge of the injunction, Click Above Corben Mews only resulted in a variation of the injunction, ensuring that the secured creditor could enforce its charge while maintaining some protection for the respondents' claims.

The case also draws on SmithKline Beecham v Apotex Europe, which concerned whether a retrospective cross-undertaking in damages should be imposed in the context of an injunction. In SmithKline Beecham, the court held that such undertakings should generally not be imposed retrospectively, as this would create unfair financial liability for parties enforcing freezing orders. This reasoning was applied in Click Above Corben Mews, where the court refused to require a retrospective cross-undertaking from the respondents, reinforcing the principle that an injunction applicant should not be exposed to financial liability for pursuing asset protection unless explicitly required at the time of the injunction’s issuance.

Another relevant comparison arises with Nicholas James Care Homes Ltd v Liberty Homes (Kent) Ltd, which dealt with the assumption that an unexplained transfer of assets for no consideration may give rise to a beneficial interest. The respondents in Click Above Corben Mews sought to rely on this principle by arguing that Click St Andrews may have a beneficial interest in the Corben Mews properties due to prior financial transfers. However, the court distinguished the cases, noting that Nicholas James Care Homes involved a direct transfer of title to real property, whereas Click Above Corben Mews only involved minor financial transactions that did not clearly establish a beneficial interest. This distinction highlights the court’s reluctance to extend beneficial interest claims without concrete evidence of ownership or control.

Finally, Capital Cameras Ltd v Harold Lines Ltd was referenced regarding the enforceability of a secured creditor’s rights despite claims of a beneficial interest by a third party. In Capital Cameras, the court held that if a secured chargeholder has priority, then claims of an unregistered beneficial interest do not prevent enforcement of the charge. This principle was central to Click Above Corben Mews, where the court determined that even if Click St Andrews had a minor beneficial interest in the properties, it would not override the priority of VCT’s registered charge. The main difference is that Capital Cameras involved a more straightforward priority dispute, whereas Click Above Corben Mews included additional complexities related to the scope of a freezing injunction and liquidation proceedings.

Background and Context

The case stems from a property development agreement under which Click St Andrews Ltd. was to construct additional flats on an existing building at 381 Southwark Park Road. In 2021, significant construction defects and water ingress issues arose, leading to disputes over the completion of the development and the subsequent failure of Click St Andrews Ltd. to deliver on its obligations. In response, RTM and several leaseholders sought and obtained a freezing injunction to prevent Click St Andrews from dissipating its assets, fearing that the proceeds from property sales might be misappropriated. The injunction, however, was later partially discharged, with only Click St Andrews remaining subject to it.

The present case arose when the fixed charge receivers of Click Above Corben Mews Ltd. sought permission to sell two leasehold properties over which VCT held a security interest. The core issue was whether these properties fell within the scope of the freezing injunction, given potential financial entanglements between Click St Andrews Ltd. and Click Above Corben Mews Ltd.

1. Scope of the Freezing Injunction

One of the central questions in this case was whether the Corben Mews properties should be considered assets of Click St Andrews Ltd. The respondents argued that financial transactions between Click St Andrews and Click Above Corben Mews Ltd. indicated a potential beneficial interest in the properties. However, the court found no sufficient evidence to establish such an interest. The judgment reinforces the principle that a freezing injunction must be precise in its scope and cannot be applied broadly based on speculative claims about asset ownership.

2. Priority of Secured Interests

A crucial factor in the case was the priority of VCT’s legal charge over the Corben Mews properties. Under the Land Registration Act 2002, registered charges generally take priority over unregistered beneficial interests unless an overriding interest can be established. The respondents’ argument that Click St Andrews had a beneficial interest due to prior financial transfers was deemed weak, as the transactions did not clearly indicate ownership or control over the properties. The court applied established principles of land law to affirm that the secured creditor’s rights under the legal charge took precedence.

3. Risk of Dissipation and Purpose of the Freezing Injunction

The respondents argued that the freezing injunction should remain in place to prevent dissipation of assets that could be used to satisfy potential claims against Click St Andrews. However, the court noted that Click St Andrews had entered liquidation, shifting the responsibility for asset management to the liquidators. This aligns with previous case law (Eco Quest plc v GFI Consultants Ltd. [2014] EWHC 4329 (QB)) which held that a freezing injunction should not serve as a substitute for formal insolvency procedures. The judgment underscores that once a company is in liquidation, its assets are managed for the benefit of all creditors, and an injunction should not interfere with the liquidators’ duties.

4. The Legal Charge and Consideration

Another contested issue was whether the VCT charge over the properties was valid as a legal charge or merely an equitable charge. The respondents relied on Hughmans Solicitors v Central Stream Services Ltd. [2012] EWHC 1222 (Ch) to argue that a charge must be supported by valuable consideration to take priority over prior beneficial interests. The applicants successfully demonstrated that the charge had been granted for valuable consideration and was properly registered, reinforcing the principle that secured creditors’ rights should not be undermined by claims of unregistered equitable interests.

5. Clarity and Enforceability of Freezing Injunctions

The judgment also addressed broader concerns about the clarity of freezing injunctions. The applicants argued that the uncertainty surrounding the scope of the injunction had created unnecessary legal risk and inhibited legitimate commercial transactions. The court rejected the notion that the injunction was inherently unclear, instead emphasizing that its enforcement depended on properly substantiated claims of asset ownership. This discussion highlights the ongoing tension between the protective function of freezing injunctions and the need for legal certainty in commercial transactions.

Final Judgment and Implications

The court ruled in favor of the applicants, granting a variation of the freezing injunction to clarify that the receivers could proceed with the sale of the properties. It declined to discharge the injunction entirely but reinforced that VCT’s legal charge took priority over any unproven beneficial interest claimed by Click St Andrews. Additionally, the court refused to impose a retrospective cross-undertaking in damages, following the precedent in SmithKline Beecham v Apotex Europe [2005] EWHC 1655 (Ch), which discourages retrospective financial liability for parties seeking to enforce freezing orders.

Critical Evaluation

This case highlights the complexities of enforcing freezing injunctions in the context of corporate insolvency and secured lending. While the court upheld the protective function of the injunction, it also reinforced the principle that secured creditors should not be unduly obstructed from realizing their security interests. The judgment demonstrates a careful balancing act between safeguarding claimants’ interests and ensuring commercial certainty for lenders and receivers.

One potential criticism of the ruling is that it does not fully resolve the issue of whether Click St Andrews may have had an indirect interest in the Corben Mews properties. The respondents’ inability to provide definitive evidence of a beneficial interest weakened their position, but the court’s reluctance to completely discharge the injunction suggests lingering uncertainty. This reflects the broader challenge of distinguishing between legitimate asset protection measures and overreaching claims that can hinder commercial transactions.

Additionally, the case illustrates the importance of precision in drafting freezing injunctions. The respondents’ argument that they could not consent to the sale due to uncertainty over the injunction’s scope underscores the practical difficulties such orders can create for third parties. The ruling serves as a reminder that freezing orders should be carefully tailored to avoid unintended consequences for unrelated parties.

Conclusion

The decision in Click Above Corben Mews Ltd reinforces key legal principles regarding freezing injunctions, secured transactions, and corporate insolvency. It highlights the importance of clear asset tracing in injunction applications and affirms the priority of registered legal charges. While the judgment provides clarity on the enforceability of security interests, it also raises broader questions about the practical impact of freezing orders on third parties. The ruling ultimately strikes a balance between protecting claimants’ rights and ensuring that secured creditors can enforce their security without undue obstruction.

Further, the court in Click Above Corben Mews applied established legal principles from prior cases but adapted them to the unique circumstances of a dispute involving secured lending, insolvency, and freezing injunctions. The judgment reflects a careful balance between enforcing legitimate security interests and ensuring that asset protection measures do not unfairly prejudice third parties. By following precedents while addressing the specific facts of the case, the court reinforced key legal doctrines while clarifying their application in complex financial disputes.

Overall, Click Above Corben Mews is an important case that provides clarity on the interaction between freezing injunctions and secured transactions. It upholds the principle that properly registered security interests should not be easily displaced by claims of beneficial ownership, while also acknowledging the procedural complexities of asset protection in insolvency contexts. The judgment reflects a pragmatic approach, ensuring that secured creditors can enforce their rights without unduly hindering claimants’ ability to recover assets. However, the case also highlights the ongoing challenge of ensuring that freezing injunctions are applied in a way that is both effective and commercially practical.