Release from cross-undertaking

Bates v Microstar Ltd and another (ChD TLR 15 April)

The purpose of a cross-undertaking imposed on an applicant for a freezing order was to prevent the order causing injustice or being used as a weapon of oppression against the defendant. Oppression included the institution of multiple proceedings in different jurisdictions as well as the institution of proceedings based on the improper use of information obtained by compulsion under the very order obtained. Nevertheless, the Court released the claimant from his undertaking not to bring proceedings in another jurisdiction to enable him to raise a derivative action in Jersey, without which he could not obtain redress for the significant devaluation of his 2.5% interest in the defendant company. Had there not been a freezing order, there would have been no basis on which either defendant could have complained of or prevented the claimant from bringing the derivative proceedings in Jersey The derivative action was not inherently abusive, the claimant had not used the freezing order for an abusive ulterior purpose, nor had he made use of any information obtained under compulsion for a purpose which was outside the scope for which it was obtained. He was seeking only to use the information for the better enforcement of his rights and remedies obtained by the judgment pursuant to which the freezing order and discovery orders were made.