In finding it just and convenient to grant a worldwide freezing order of over £5 million and a proprietary injunction, reinforced with an order for provision of information, Mellor J considered whether it was appropriate in the circumstances of the case to cap the Liquidators’ cross-undertaking in damages.
The underlying claim for misfeasance was brought by the Liquidators under section 212 of the Insolvency Act 1986 and was grounded in evidence that the husband and wife directors had deployed Company funds for their own benefit and convenience, absent any corporate governance.
Having considered and applied the well-established requirements for the interim relief sought, Mellor J turned his attention to the cross-undertaking in damages. Drawing on principles previously established by the Court of Appeal, Mellor J’s judgment provides valuable insight into how the courts go about determining the nature and extent of an undertaking in damages.
Ultimately, the case serves as an example of the type of circumstances in which the starting point, that an unlimited undertaking in damages should be provided, can be departed from, and a capped cross-undertaking is deemed to provide sufficient protection for Respondents.
