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Law firms were paid out of frozen bank account


Clyde & Co: Money repaid

A property investor breached the terms of a freezing order by using company funds to pay outstanding fees to two London law firms, which repaid the money when they found out.

Mr Justice Cobb said [2] Sinclair Gibson and Clyde & Co “have been plainly embarrassed to discover that their invoices have been settled using funds from a frozen account”.

Peter Andreewitch (PA) is in dispute with his former partner, Magali Moutreuil (MM). They separated in 2018 after 20 years of living together. The litigation includes proceedings in relation to shares in Pier Investment, a holding company which has as its main asset the former family home. PA is the sole director and MM the sole shareholder.

In March 2019, a freezing order was made, restraining the parties from disposing of or dealing with the company income or assets except to enable the company to meet its tax or other liabilities.

MM alleged multiple breaches of the order by making payments from Pier’s bank account, including £12,580 in legal fees. PA said the various withdrawals were necessary “other liabilities”.

Cobb J ruled: “PA has a firm and unshakeable belief in his own narrative relating to the use of the frozen Pier account, but his narrative is simply implausible. His explanations for his use of the account over the months following the 22 March 2019 order are, in my judgment, contrived and disingenuous.”

The court recorded that, as soon as Sinclair Gibson and Clyde & Co were told they had been paid from a frozen account, they returned the money.

Cobb J rejected PA’s claim that he was paying legal fees incurred by the company, adding that it was “remarkable” that he paid Clyde & Co £5,000 the day after receiving a letter from MM’s solicitors reinforcing the terms of the order that he could not use the frozen account for his own personal legal costs.

It was clear from invoices and correspondence that both firms were acting for PA personally and not the company, the judge found.

“PA has not disclosed the client care letters from either Sinclair Gibson or Clyde & Co; these letters would surely have assisted him in confirming the identity of the client, or clients, for whom the solicitors were acting.

“PA told me in oral evidence that he had not produced these letters as they were ‘so long’; given the volume of documentation he has produced, this explanation is ludicrous.”

Cobb J added that there was no reason why Pier should incur any legal costs in the substantive proceedings in any event – it should be adopting a neutral stance – and there was likely to be a conflict of interest were the firms acting partly for him and partly for Pier, as PA had contended.

Further, both firms had confirmed that they had been told they would be paid from PA’s personal funds. Neither is acting for him any longer.

Cobb J adjourned the question of sanction.