The Court of Appeal has handed down a significant judgment on the correct procedural approach where a defendant seeks to set aside a freezing order on the basis that the claimant's supporting evidence is fabricated. In allowing Mold Investments Limited's appeal against the order of Richard Smith J, the Court has re-emphasised the restrictive circumstances in which cross-examination and expert evidence should be deployed at the interim stage and has confirmed that, where the factual issues are intertwined with the merits of the substantive claim, the challenge to the injunction should be heard at – not before – the main trial.
This is a welcome decision: it avoids costly duplication, protects non-parties who stand to be caught in satellite litigation and confirms the approach that interim applications should not become preliminary trials.
Lewis Silkin acted for the intervener, Jeremy Hazlehurst, whose evidence is key to the issue of the risk of dissipation of assets.
Background summary
There is a lengthy procedural and factual background to these proceedings. In brief, Mold Investments Limited ("Mold") owns Parry's Quarry in Flintshire. Mold alleges that huge quantities of controlled waste were unlawfully dumped at the site between May 2020 and December 2021 at the direction (or with the connivance) of its former directors, Matthew Holloway and Andrew Jacques (the "Directors"). Cleanup costs exceed £50 million.
Proceedings were issued against the Directors for breach of their duties to the company, as well as against third parties for dishonest assistance. There is also a criminal prosecution pending against the Directors. Mold obtained a freezing order against the Directors on 9 August 2023, which was later extended. The orders were based, in part, on screenshots of WhatsApp messages (regarding plans by the Directors to dissipate assets) supplied by Mr Hazlehurst and evidence of malicious communications from the Directors (which again indicated an intention to dissipate assets). The Directors disputed the genuineness of the evidence.
The High Court's order of 18 March 2025
Mr Holloway issued an application to set aside the freezing order and its later extension, alleging forgery of evidence and the failure of Mold to comply with its duties of fair presentation and full and frank disclosure. He sought cross-examination of numerous factual witnesses (including Mr Hazlehurst) and permission to rely on expert evidence, over a five-day hearing.
Mold argued that the set-aside application should be dismissed because it should have been made earlier, and cross-examination prior to trial was exceptional and it would involve a mini-trial of heavily contested factual issues. Alternatively, Mold contended that deciding the application before trial would be wrong as it would be a waste of costs and court resources, and because there was a substantive overlap of issues with the substantive claim. Therefore, the set-aside application should be heard at the same time as the trial.
Richard Smith J concluded that this was an exceptional case and directed:
- A stand-alone five-day hearing (plus judicial pre-reading) in June 2025;
- Cross-examination of lay witnesses and the admission of expert reports;
- Detailed particularisation of Mr Holloway's allegations.
The freezing order, in the meantime, would remain in force.
Grounds of appeal
Mold's appeal, supported by Mr Hazlehurst as intervener, challenged the Judge's decision to order a satellite trial (rather than the set-aside application being determined at the same time as the trial of Mold's substantive claim) on three principal grounds:
- Contrary to established practice – The Judge erred in law by ordering the set-aside application to be determined at a hearing with evidence in advance of a trial. This departed from established practice that interim applications should not descend into factual trials;
- Wrong in principle – Even if it was open to the Judge to order a satellite trial, he was wrong to do so on the facts of this case. He failed to weigh the overlap between the set-aside issues and the merits, leading to wasteful duplication, excessive cost and prejudice to third parties. He failed to take into account relevant considerations and took into account irrelevant matters; and
- Procedural unfairness – The Judge failed to have due regard to the procedural unfairness that would arise. Cross-examination was ordered before pleadings, disclosure or a clear formulation of allegations, leaving witnesses in the dark, and was without restriction on permitted topics.
The Court of Appeal's decision
The appeal was allowed on ground 2. In summary:
- The Court found that the Judge had failed to consider the key question, whether there should be one trial or two. The proposed mini-trial would be time-consuming, costly, disproportionately take up court resources and require witnesses to give evidence twice.
- Evidence at the satellite trial would be incomplete, due to the fact that no disclosure would have yet taken place, which would be pertinent to the relevant issues.
- There would be significant overlap between the issues arising on the set-aside application and the issues in the substantive claim. The Judge made no attempt to avoid this by seeking to limit the scope of cross-examination at the satellite trial.
- It would be more difficult to proportionately ensure procedural fairness for non-parties to the proceedings. By way of illustration, the Judge had made his order without hearing from Mr Hazlehurst. Whilst procedures can be put in place to protect non-parties, these would be less likely to be proportionate at a satellite trial.
- The only reasons put forward by Mr Holloway for justifying two trials rather than one was that if Mr Holloway was right, Mold would have perverted the course of justice, and there would otherwise be prejudice caused by delay in the setting aside of the freezing order. However, these matters can only be fairly and finally resolved at trial and the recourse for a wrongly granted freezing order is to enforce the claimant's undertaking in damages. The Court was not impressed with the delay argument, given the already significant passage of time since the granting of the freezing order – no urgency had been shown by Mr Holloway in bringing his application. Nor did Mr Holloway allege in his application that he had suffered any loss as a result of the order being in place.
- The Judge recognised that Mr Holloway's allegations were unparticularised, but ordered that a satellite trial takes place before those particulars were provided, without full visibility of the allegations being made.
- There was no analysis of the issues raised by the set-aside application and those in the substantive claim to determine the extent of the overlap. It is plain that there is significant overlap. The determination of those issues will depend on the credibility of the factual witnesses, and this will depend on the assessment of the evidence as a whole, which includes evidence on the substantive issues.
- The Judge had previously dismissed applications by Mr Jacques seeking cross-examination and expert evidence, concluding that it would be inappropriate to order a mini-trial and relying on Derby v Weldon and Kazakhstan Kagazy v Arip. There had been no development justifying the Judge reaching a different conclusion.
Consequently, the Court of Appeal varied the order so that Mr. Holloway's and Mr. Jacques' subsequent set-aside applications would be determined alongside the substantive claim, with directions for disclosure and evidence exchange proceeding in the usual manner. The Court emphasised the need for "firm case management to get it to trial as soon as is realistically possible".
Conclusion
The judgment in Mold Investments Limited v Holloway confirms that cross-examination and expert evidence at the interlocutory stage should be ordered only in exceptional circumstances. The Court of Appeal has curbed costly "mini-trials" on freezing order applications by insisting that challenges to evidence be tried with the substantive claim. The decision emphasises conserving judicial resources, avoiding duplicative fact-finding, and protecting third parties from unnecessary burdens. It also reminds parties that any prejudice to the defendant can be met by the undertaking in damages, and delay in bringing the application will weigh against satellite litigation.
The judgment serves as an important reminder to parties and practitioners alike as to the extent to which the Courts will permit evidence at the interlocutory stage to be tested in advance of the main trial. The discussion in the judgment provides a useful summary and clarification in some regards as to the authorities on the issue.
Lewis Silkin instructed Ryan Hocking of Gatehouse Chambers.
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