Yossifoff v Donnerstein

This Application seeks interim injunctions pursuant to section 25 of the Civil Jurisdiction and Judgments Act 1982 (as extended by the CJJA (Interim Relief) Order 1997 SI 1997/302) (the “CJJA”) in support of foreign proceedings being conducted between two Israeli citizens in Israel.

The Applicant and the Respondent are respectively the claimant and defendant in litigation commenced in March 2015 before the District Court of Tel Aviv (Civil File No. 41771-03-15) (the “Israeli Proceedings”). In the Israeli Proceedings, the Applicant contends that the Respondent holds on trust - for himself and the Applicant as beneficial owners in equal measure – the two issued shares in a British Virgin Islands company named Perston Ltd (“Perston"). The Applicant seeks the provision of an account and information relating to the Respondent’s dealings with the shares in Perston, together with the business and affairs of Perston and its wholly owned subsidiary, a Cayman Islands company called West 2 Ltd ("West 2"). The Respondent denies the existence of any trust and denies the Applicant’s entitlement to any account or the requested information.

The only material connection of this dispute with England is that West 2 is the sole registered owner of a substantial property at Hyde Park Executive Apartments, 8-18 Inverness Terrace, London, W2 (the "Property"). As its name suggests, the Property is operated as an apartment hotel. At the instigation of the Respondent, contracts have recently been exchanged between West 2 and a company called Inverness Property Limited for the sale of the Property. The sale contract is subject to a confidentiality clause and has not been disclosed. It is, however, known that it is for a substantial sum of money in excess of £30 million. The precise date for completion of the sale in accordance with the contract has also not been disclosed, but the Respondent’s evidence is that completion is not due to take place until after 25 November 2015.

In essence, the Application seeks a freezing injunction against the Respondent together with an injunction to restrain dealings with the shares in Perston and West 2, and the Property.

The Applicant is a lawyer and businessman who divides his time between Israel and London. The Respondent is resident and domiciled in Israel, where he is the ultimate beneficial owner and Chief Executive Officer of Rav-Bariach (08) Ltd (“Rav-Bariach”). Rav-Bariach is a substantial company that trades as RB-Doors and is engaged in the development, manufacture and international distribution of high security products.

For a period of time before the litigation between them, the Respondent instructed the Applicant as his lawyer and over time the two became friends and business partners. They engaged together in various property deals in London. In about 2007 the Applicant and the Respondent agreed to set up Perston as an offshore company to acquire the shares in West 2 which owned the Property. Perston acquired the shares in West 2 for £1.575 million and West 2 refinanced its debt with a new loan from the Britannia Building Society in the sum of £31 million, secured on the Property. The Britannia Building Society later merged with the Co-operative Bank plc (“the Bank”).

At the time of the acquisition, Perston had one share and it was agreed that the Applicant would hold the share for both himself and the Respondent. In March 2009 an additional share was issued to the Respondent to equalise their shareholdings.

It soon became apparent that the Property had low occupancy rates and there was a shortfall between the rental income and the interest instalments payable to the Bank. By 2009 West 2 was in serious financial difficulty and it suspended interest payments to the Bank. Negotiations then took place with the Bank which concluded with a restatement agreement in relation to the loan from the Bank in 2012.

The Respondent alleges that during this time he was forced to make funds available to West 2 to support its business, but that the Applicant was unable to do so as a result of the losses that he had suffered following the economic crisis in 2008. The Respondent alleges that one of the conditions set out by the Bank when it agreed to permit West 2 to suspend payments of interest was that funds should be invested by the ultimate owners of the group. He also says that the Bank demanded that the Applicant, who was not able to make monies available and with whom the Bank had fallen out over some other property ventures, should cease to have any further interest or involvement in West 2. It is said by the Respondent that the Applicant agreed to give up his interest in the venture, and transferred his share in Perston to the Respondent on 14 October 2010.

For his part, the Applicant accepts that the Bank required him no longer to be a registered shareholder of Perston. However, he contends that he transferred his share to the Respondent in response to a suggestion by the Respondent so that he would appear to the Bank as having disposed of his interest. He contends that in spite of the financial problems of West 2, he would not have given up his share in Perston for no consideration, but transferred legal title to the Respondent in the expectation that the Respondent would hold the share upon trust for him.

The Applicant contends that the Respondent has wrongly since denied the existence of the trust and has refused to provide him with information about Perston and the business of West 2 conducted at the Property, which the Respondent controls. The Applicant says that this denial of the existence of the trust led to him issuing the Israeli Proceedings on 19 March 2015.

The essential basis and scope of the Applicant’s claim in the Israeli Proceedings appears from the following paragraphs extracted from the Statement of Claim:

The relief sought by the Applicant is for the District Court of Tel Aviv to order the Respondent to provide various documents to the Applicant that demonstrate how the “Trust Assets” have been managed including, in particular, reports as to the revenues and expenses of the Respondent, Perston and West 2 in connection with the Property. The Israeli Proceedings do not contain any express claim for a declaration to be made that a trust exists in favour of the Applicant over one of the shares that the Respondent holds in Perston, though it is clear that this is the underlying substance of what is alleged.

More importantly for present purposes, it should also be noted that the Israeli Proceedings do not contain any specific allegations of breach of trust beyond a failure to provide information or an account of dealings with the Trust Assets. Nor do they make any claim (still less any quantified claim) for compensation or damages for breach of trust.

In evidence in support of his application to this court, however, the Applicant has indicated that he believes, on the basis of information that he has obtained from a potential purchaser of the loan from the Bank, that the net income of West 2’s business at the Property between 2010 and 2015 could have been in the region of £3.85 million. He contends that this could have been distributed by West 2 and paid out by way of dividends on the shares in Perston. On that basis the Applicant indicated, through his counsel, Mr. Oliver White, that he might have a monetary claim against the Respondent in relation to past breaches of trust, amounting to about £1.925 million.

Since the filing of the Statement of Claim in the Israeli Proceedings, the situation has developed. On 6 May 2015 the Respondent, who denies the existence of any trust, issued an application to strike out the Applicant's claim on essentially three grounds, (i) that the Applicant had assigned any rights which he claimed to have in respect of the share in Perston to a Mr. Yaron Gazit in December 2013 and so had no right to claim an account in respect of the share; (ii) that the Applicant had failed to attach a copy of any alleged trust agreement to the Statement of Claim and had refused to confirm whether such a document existed; and (iii) that the Applicant had abused the process of the Israeli court by limiting his claim to an account and not including a monetary claim in order to avoid paying the appropriate court fees. Notwithstanding his application to strike out, the Respondent also filed a Defence in the main action on 19 May 2015 as required by Israeli law.

In a Response to the strike out application, the Applicant argued that the assignment of rights in favour of Mr. Gazit was by way of security only and that the rights would revert to him on repayment of his debt to Mr. Gazit. He also asserted that there was no reference to a written trust agreement in the Statement of Claim and reiterated paragraph 22 of the Statement of Claim in which it had been said that there was an oral trust agreement between the parties. In relation to the issue regarding the form of relief sought, the Applicant asserted that he had a right to seek the provision of the accounts as “an independent remedy” and that he had “legitimate consideration enabling him not to claim any operative remedy relating to the trusteeship”.

On 22 July 2015 the Applicant issued an application for dismissal of his own proceedings without prejudice. He cited his limited personal financial circumstances as the reason for doing so. The Respondent opposed that application and sought a dismissal with prejudice and costs.

However, after the Israeli court ordered the Applicant to file a Reply in the main action, the Applicant changed his position and made a further application to continue the proceedings notwithstanding his earlier application that they should be dismissed. The Reply was then filed on 26 July 2015. In it, for the first time the Applicant referred to a one-page handwritten document which he said had been signed by the Respondent at a meeting in Tel Aviv in 2010, and which (he contended) evidenced the existence of the trust.

On 27 July 2015 the Tel Aviv District Court directed a hearing to take place on 25 November 2015 to consider the Applicant’s application for permission to continue his claim notwithstanding his notice of withdrawal, together with the Respondent’s application to strike out the proceedings.

The Application, as issued, and as advanced at the hearing before me, sought the following orders,

The Applicant relies upon section 25 CJJA. As extended by the Civil Jurisdiction and Judgments Act 1982 (Interim Relief) Order 1997 SI 1997/302, section 25 provides (in material part),

The approach of the court to the exercise of the jurisdiction conferred by section 25 was considered in Credit Suisse Fides Trust S.A. v Cuoghi [1998] QB 818. The case concerned an application of a freezing injunction against a defendant to proceedings in Switzerland who was resident in England. At pages 825H-826B, Millett LJ stated,

In Cuoghi, on the approach to the question of inexpediency, Millett LJ said, at page 827C-D:

Millett LJ then indicated, at page 829D-E, the type of factors that might be relevant in cases seeking in personam relief,

Lord Bingham CJ stated, at pages 831G-832B,

In Refco Inc v Eastern Trading Co. [1999] 1 Lloyd’s Rep 159 at page 175, Millett LJ referred to this passage in the judgment of Lord Bingham in Cuoghi and added,

These cases were considered and affirmed in Motorola Credit Corporation v Uzan (No.2) [2004] 1 WLR 113, in which, at paragraph 115, the Court of Appeal gave additional guidance, in the context of worldwide freezing orders, as to some of the particular considerations which the court should take into account on applications under section 25.

In Refco at pages 170-171, Morritt LJ indicated that a two-step analysis is required in relation to applications under section 25,

I therefore turn to the first question posed by Morritt LJ in Refco. Would the facts of this case warrant the relief sought if the substantive proceedings were brought in England?

The first issue in relation to the grant of interim relief would be the merits of the Applicant’s claim to be entitled under a trust of one of the shares in Perston. Conventionally this is said to require that there be a serious issue to be tried (as regards the proprietary elements of his claim) or that the claimant should have a good arguable case (to justify the grant of a freezing injunction). For present purposes I will proceed upon an assumption - entirely for the sake of argument - that these requirements could be satisfied. In deciding to proceed in this way I do not overlook that Mr. Jamie Riley, who appeared for the Respondent, strenuously denied that the Applicant’s case passes any such threshold, and of course reminded me that his client will be resisting the Applicant’s attempt to proceed with his case and/or will be applying for the Applicant’s case to be struck out in the Israeli Proceedings. But I am mindful that the Israeli court - which is the main court seized of the claim and to which the jurisdiction exercised by this court is merely ancillary - will have the opportunity to express its own view of the matter on 25 November 2015. If the Israeli court decides that the Applicant’s case is to continue, then in all likelihood I will have been right to have assumed that the Applicant’s case at least raises a serious issue to be tried: and if the Israeli court decides that the Applicant’s case is not to proceed and strikes it out, then any relief that I would grant must fall away in any event. I reiterate, however, that I make this assumption without in any way passing judgment on the actual strength of the Applicant’s case or seeking to usurp the primacy of the Israeli court in deciding whether it has any merit.

The second issue that would be relevant to the issue of whether interim relief would be granted if the main claim were being pursued in England, would be to identify the nature of the relief sought and how it relates to the claims made.

I have set out the relief sought by the Applicant in paragraph 21 above. It was described in argument as “hybrid” relief, in that it contains (i) an injunction to restrain dealings by the Respondent affecting an asset which is alleged to belong in equity to the Applicant and over which the Applicant has asserted a proprietary claim (one of the Perston shares); (ii) an injunction to restrain dealings by the Respondent affecting his own assets over which the Applicant does not assert any proprietary claim (the other share in Perston); and (iii) injunctions to restrain dealings with assets which it is common ground belong to neither the Applicant nor the Respondent, but are assets over which it is said that the Respondent exercises some practical control (i.e. the shares in West 2 and the Property).

The reason that I have made this distinction is that very different considerations apply (i) to the grant of an interim injunction to restrain dealings by a defendant with assets which the claimant accepts belong to the defendant, and (ii) to the grant of an interim injunction to restrain dealings by a defendant with assets to which the claimant asserts a proprietary claim.

A freezing injunction in relation to property which the claimant accepts belongs to the defendant is granted because the court is satisfied that there is a real risk that, if left to his own devices, a defendant will dissipate or secrete away his own assets in order to defeat a judgment that might thereafter be obtained against him. In Fourie v Le Roux [2007] 1 WLR 320 at paras 2-3, Lord Bingham clearly identified this purpose and hence the need for a claimant to identify the prospective judgment, the enforcement of which the defendant should not, by dissipating his assets, be allowed to frustrate:

It is also for these reasons that a freezing injunction will generally specify a monetary value of assets (corresponding to the amount of the claimant’s claim and costs), which are to be preserved by the defendant. The defendant is, however, permitted freely to deal with his assets to the extent that they exceed that value.

These points are highly relevant in the instant case because, as I have mentioned above, the Applicant does not actually make any claim for breach of trust against the Respondent in the Israeli Proceedings, other than a failure to provide an account of his dealings with the “Trust Assets”. As the Applicant’s own court documents make clear (see paragraph 17 above), he has quite deliberately made a decision not to bring any specific claim at this stage alleging a breach of duty that might result in a requirement for the Respondent to pay equitable compensation or damages for breach of trust. Accordingly, as matters stand, there is no claim in the main proceedings which could give rise to any monetary judgment in favour of the Applicant against the Respondent; and hence there is no basis upon which I could grant a freezing injunction to prevent the Respondent from dealing with his assets in order to ensure that assets remain to satisfy such a judgment.

In response to this point, Mr. White said that the Applicant would, if it were necessary, give an undertaking to this court to bring forward a particularised amendment to the Statement of Claim in the Israeli Proceedings to make the claim in relation to the non-receipt of dividends on the Perston shares between 2010 and 2015 which is trailed in the Applicant’s evidence in this court. However, no draft was produced to me during the hearing, and Mr. White accepted that he could not guarantee that the Israeli court would permit such amendment. Given the length of time that has elapsed since the commencement of the Israeli Proceedings, even were the case to be proceeding in this jurisdiction I would be very reluctant to grant a freezing injunction without a properly particularised pleading. I am certainly not inclined to do so in circumstances in which it is not within my control whether such a claim would be permitted at all.

There is also a fundamental issue over the scope of the freezing injunction sought by the Applicant over the shares in West 2 and the Property. In Lakatamia Shipping v Su [2015] 1 WLR 291 at para 46, Rimer LJ said,

In this case there is no suggestion that Perston or West 2 are anything other than genuine companies which operate as separate legal entities in their own right, owning their own assets and each having their own liabilities to external creditors. It was therefore common ground that the Property is legally and beneficially owned by West 2 and that the shares in West 2 are legally and beneficially owned by Perston. Accordingly, it must follow that neither the shares in West 2 nor the Property are themselves assets that would be available to satisfy a judgment against the Respondent. For that additional reason I would not have granted a freezing injunction which restricted dealings with the shares in West 2 or the Property as sought in the application.

In reaching that conclusion I do not overlook the fact that there are cases in which the courts have been prepared to grant freezing injunctions in extended terms that restrict dealings with assets that are not beneficially owned by the defendant. In such cases words are included in the order so that the normal meaning of the word “asset” in a freezing injunction is extended to include an asset in respect of which the defendant “has the power, directly or indirectly, to dispose of, or deal with as if it were [his] own”. The reasons for the use of such wording were considered by the Court of Appeal in JSC BTA Bank v Solodchenko [2011] 1 WLR 888 and by Beatson LJ in the Court of Appeal and by Lord Clarke in the Supreme Court in JSC BTA Bank v Ablyazov [2014] 1 WLR 1414 (CA), [2015] 1 WLR 4754 (SC). The reasons have been described as “pragmatic” and essentially boil down to the recognition that unscrupulous defendants can be adept at creating trusts or companies which they wholly own and control, with a view to transferring their assets to those trusts and companies so as to disguise the true ownership of the assets, but retaining the power to direct how those assets are dealt with by the trusts or companies. The expanded form of wording may well be appropriate in circumstances in which there is a concern that a defendant may adopt such tactics and contend that assets which are in truth his, are beneficially owned by such third party trusts or companies. The wider form of freezing injunction preserves the position by restraining the defendant from dealing with such assets as an interim measure until the true position as to ownership can be established. But in this case, as I have said, there is no such uncertainty as to who owns West 2 and the Property.

In contrast to a freezing injunction which is intended to bite on assets owned by the defendant, the purpose of an interim injunction in relation to property over which the claimant asserts a proprietary claim is to preserve the property which the claimant contends belongs to him. In such a case, the question of risk of dissipation of the defendant’s own assets does not arise, and the relevant test for the grant of an interim injunction to protect the claimant’s proprietary rights is the normal test for the grant of an interim injunction derived from American Cyanamid v Ethicon Limited [1975] AC 396: see Madoff Securities International v Raven [2011] EWHC 3102 (Comm) at paras 126-127.

In this case, as I have indicated above, the only asset to which the Applicant can and does make a proprietary claim is one of the two issued shares in Perston. I accept that, if the facts justified it, it would be permissible for the Applicant to seek to prevent threatened breaches of trust by the Respondent in relation to that share, either as a result of direct dealings with the share or as a result of other dealings that might indirectly diminish the value of that share.

But again, I note that there are no such allegations made in the Israeli Proceedings. Specifically, the Applicant does not allege that there is any threat to sell or dispose of the share in Perston. Nor does the Applicant make any allegations in the Israeli Proceedings as regards the proposed sale of the Property.

Further, although the Application in this court originally sought a variety of orders, the purpose and effect of which was to give the Applicant a right to review the terms of any proposed sale of the Property and to exercise a right of veto, at the hearing before me Mr. White made it clear that the Applicant was not contending that the proposed sale to Inverness Property Limited would be a sale at an undervalue, and he accepted that the Applicant had no basis to prevent completion of the sale as such.

Instead, Mr. White indicated that the Applicant is primarily concerned about the destination of the net proceeds of sale. The Applicant contends that, by reason of his beneficial ownership of one-half of the shares in Perston, he will be beneficially entitled to one-half of any distribution by Perston of what remains after West 2 and Perston have paid off all of their external creditors (including in particular the Bank). Mr. White submitted that I should be prepared to grant injunctive relief to protect that proprietary interest and to prevent the Respondent using those monies for his own purposes.

The Respondent’s evidence was that he intends to use all of the net proceeds of sale of the Property to satisfy a contractual obligation which he has personally to a number of Israeli funds which are investors in his company, Rav-Bariach, pursuant to an investment and loan agreement that was signed on 18 July 2011. Under that agreement, the investors were allotted 23,030 shares in Rav-Bariach and were given a put option to require the Respondent to acquire those shares. That put option was exercised on 29 September 2015, with the result that the Respondent will be obliged to pay NIS 40 million (about £6.71 million) on 25 March 2016 or such other date as might be agreed between the parties. The Respondent exhibited the relevant agreements and his evidence was,

The Respondent submitted that he would suffer substantial loss and damage if he were not able to use all of the net proceeds of sale in this way. He contended that if he were to default on his obligations under the option agreement, he would be liable to have his remaining shares in Rav-Bariach taken by way of enforcement by the investors. He also indicated that he has made arrangements to bring new funds into the company, and that those arrangements are dependent upon his buying out the existing investors pursuant to the put option. In his evidence in reply, the Applicant did not dispute the explanation given by the Respondent or his need for money to meet his obligations under the put option.

Mr. Riley submitted that this risk of serious harm to the Respondent meant that the balance of convenience favoured permitting the Respondent to apply all of the net proceeds in this way. Mr. Riley supported this argument by pointing to the fact that the Applicant does not have the financial standing to give an effective cross-undertaking in damages. That point stems from the candid acceptance by the Applicant in his evidence that,

I accept Mr. Riley’s submissions on this point. It seems to me that the balance of convenience plainly lies against the grant of an injunction preventing the Respondent from applying the net proceeds of sale towards satisfaction of his obligations under the put option for the reasons that he gives. I accept that there might be exceptional cases in which a claimant could be granted an interim injunction without having the means to provide a credible cross-undertaking in damages (see e.g. Allen v Jambo Holdings Limited [1980] 1 WLR 1252), but the fact that a claimant will not be able to meet any order for payment of damages must always be a factor in the exercise of discretion. In this case, it is a very significant factor given the evidence of the potential substantial prejudice to the Respondent.

Mr. White’s response was to contend that the Respondent cannot be trusted to apply the net proceeds of sale of the Property in the manner in which his evidence has suggested. Mr. White submitted that if I were not prepared to prevent the Respondent from using the proceeds of sale to acquire the shares in Rav-Bariach, I nevertheless ought to grant an injunction to ensure that he did use the funds for that purpose rather than dissipating them in some other way.

The answer to this argument is that the explanation that the Respondent has given as to the use to which he intends to put the net proceeds the sale of the Property is credible, and I have no basis, on the material before me, to disbelieve him. That explanation has been given in a witness statement signed with a statement of truth and is supported by documents evidencing the existence and exercise of the put option. It has not been challenged by the Applicant. Accordingly, although the monies from the sale of the Property will initially be received in this jurisdiction by West 2, the clear evidence is that after discharging the liability to the Bank and other creditors, the net balance will be remitted to the Respondent and used by him to discharge his liabilities in respect of the completion of the sale of shares in Rav-Bariach which is (according to the put option agreement) to take place at a law firm in Israel. There is simply no evidence of a threat to use the monies in any other way.

Mr. White then advanced a further argument that even if the funds could be used by the Respondent to acquire shares in Rav-Bariach, the Applicant ought to be granted some protection against the intervention of third party rights that might frustrate any tracing claim that he would then have as regards such shares. I can see that it is at least arguable that, if the Respondent is not to be prevented from using monies that might turn out to belong to the Applicant to acquire shares in Rav-Bariach pursuant to the put option, a court might nevertheless wish to make interim orders to ensure that any tracing claim should not be defeated by the intervention of third party rights. It might be, for example, that the Respondent should be restrained from disposing of the shares to be acquired, or creating any interest in them in favour of a third party.

If, however, such relief would arguably be appropriate if the substantive proceedings were being pursued here, then it would be necessary to consider the second stage of the analysis described by Morritt LJ in Refco, namely whether it would be inexpedient for this court to grant such relief.

In the extract from the judgment of Millett LJ in Cuoghi, to which I have referred at paragraph 24 above, Millett LJ pointed out that protective measures should be granted by the court best able to make its orders effective, and he identified the courts of the place where the disputed assets are located or where the defendant resides as likely to be the appropriate court. So, for example, in Cuoghi, the English court acted because the defendant to the Swiss proceedings was domiciled in England and the English court could make an effective worldwide freezing order against him.

In contrast, in this case, once it is accepted that the sale of the Property can go ahead and that the balance of convenience means that the Respondent should not be prevented from using the net proceeds to acquire the Rav-Bariach shares, any remaining issues as to whether the Respondent should be restrained from further dealings with those shares would concern the actions of a person resident in Israel in relation to shares located in Israel, and would have to be determined with an understanding of the detailed requirements for the proposed refinancing of Rav-Bariach.

In my judgment, applying Millett LJ’s approach, it would obviously be appropriate for any interim relief in those respects to be sought from the court seized of the main proceedings in Israel. That is where the Respondent is resident and the assets in question are located. In my view it would be manifestly inexpedient for this court - which only exercises an ancillary jurisdiction - to grant any such relief.

My conclusions are supported by the expert evidence which I received as to the practice of the Israeli courts as regards the grant of interim injunctions. Expert evidence was provided by Mr. Moshe Merdler, a member of the Israeli Bar and an English solicitor, for the Applicant; and by Mr. Avi Zamir, a retired Judge of the Tel Aviv District Court, for the Respondent.

The experts agreed that the Israeli courts have a broad discretion to grant freezing injunctions (including worldwide freezing injunctions), if necessary on an urgent basis, in support of claims made in the Israeli courts against persons domiciled in Israel and subject to the jurisdiction of the Israeli courts. The experts also agreed that the Israeli court can grant injunctive relief against individuals designed to protect claims to property located within Israel.

However, Mr. Zamir’s unchallenged evidence was that the Israeli court would not grant a freezing injunction where the underling claim was for the provision of accounts only without a claim for a monetary remedy. He also indicated that the Israeli court would be likely to require the giving of a cross-undertaking in damages, supported by a third-party guarantee or the deposit of collateral, for the grant of an interim remedy.

Accordingly, the evidence is that the Israeli court can grant interim relief of exactly the same type as is sought against the Respondent in this court. But the evidence is also that it would not grant the relief by way of freezing injunction against the Respondent in the absence of a monetary claim, and would be unlikely to grant any injunction in the absence of an effective cross-undertaking in damages. So the Applicant would fail in Israel for the same reasons as I have held he would fail if the main proceedings were here.

It seems to me that this evidence precisely engages the points made by Lord Bingham CJ in Cuoghi and by Millett LJ in Refco to which I have referred in paragraphs 26 and 27 above. In Cuoghi, Lord Bingham observed that it may weigh against the grant of relief by the English court that the primary court could have granted such relief and had not done so. In Refco, Millett LJ commented that,

In addition, as I have indicated above, if the issues had been reduced to the question of whether the Respondent should be restrained from dealing with the shares which he is to acquire in Rav-Bariach in Israel, there is simply no want of territorial jurisdiction in the Israeli court to justify the intervention of the English court (see the same passage from Millett LJ’s judgment in paragraph 62 above).

The final point raised in argument by the Applicant was that if I was not minded to grant the primary relief sought in the Application but took the view that an application should be made to the Israeli court, then as a fall-back position, I should grant an injunction for a limited time to preserve the status quo until the Applicant could make such an application on 25 November 2015. The Applicant’s concern was said to be that the Respondent might accelerate the contractual date for completion of the sale of the Property so as to come into possession of the proceeds of sale of the Rav-Bariach shares before the Applicant could apply to the Israeli court.

At my request, Mr. White provided me after the hearing (and subject to written objection from Mr. Riley) with a draft of the order that he sought in that event. That draft order sought to restrain the Respondent from causing completion of the sale of the Property to take place until after the conclusion of the hearing of the applications in the Israeli court on 25 November 2015. However, it also sought to restrain the Respondent from applying any net proceeds of sale of the Property received by the Respondent other than in the purchase of the shares in Rav-Bariach pursuant to the put option; and it further sought to restrain the Respondent from transferring title or ownership, or diminishing the value, or charging the shares which he is to acquire in Rav-Bariach.

The key event that underlies all of the relief sought is the completion of the sale of the Property. If that first step were to be restrained, the remaining relief concerning the application of the proceeds of sale in Israel would be unnecessary. The relevant evidence in this regard was contained in a short second witness statement of the Respondent produced during the hearing. That statement verified what I had been told by Mr. Riley to the effect that the contractual date for completion of sale of the Property is not until after 25 November 2015. It also responded to a question from me as to whether the Respondent was prepared to offer an undertaking that such completion would not be advanced to a date prior to the hearing in the Israeli court.

The Respondent’s evidence was,

In essence, Mr. White submitted that I should be suspicious of the fact that the Respondent was not prepared to give any undertaking as to the completion date for the sale contract, and this justified the grant of an injunction to protect the Applicant’s interests until then. Mr. White further submitted that if the contractual date for completion was not until after 25 November 2015, the Respondent would suffer no loss and damage if he was prevented from taking steps to accelerate the completion of the sale of the Property.

I do not think that it would be appropriate for me to grant such relief. I consider that the Applicant’s approach seeks to reverse the fundamental burden upon a party seeking an interim injunction to show that there is a threat by the defendant to violate his legal rights that necessitates the intervention of the court. The need to demonstrate the existence of a threat to infringe what the claimant alleges are his rights must logically precede any consideration of the balance of convenience. That appears clearly from the speech of Lord Diplock in American Cyanamid [1975] AC 396 at 406,

Although each case will turn on its own facts, as a general proposition, in the absence of some other credible evidence of a threat to infringe his rights, I do not think that a claimant can haul himself up by his bootstraps by claiming that the defendant’s refusal to give an undertaking not to do a specified act is evidence of a threat by the defendant to do the act in question. Put shortly, I do not think that the court grants an injunction to preserve the status quo without evidence of a real risk that the status quo is about to be disturbed.

In the instant case, the Respondent’s evidence was that he does not know of any reason why the contractual date for completion should be brought forward and it is not his intention to accelerate completion. I do not have any reason to disbelieve this evidence and the Applicant did not have any basis upon which to challenge it other than his professed distrust of the Respondent caused by the matters of which he complains in the Israeli Proceedings. I do not think that this is sufficient evidence of an imminent threat to the Applicant’s alleged rights which warrants the grant of an injunction by this court before an application can be made to the Israeli court.

I would add that the Respondent must be well aware that having given clear evidence as to his intentions to this court, it would risk serious damage to his credibility and harm to his prospects of persuading the Israeli court to strike out the Applicant’s case, if he were now to seek to accelerate the date for contractual completion.

For the reasons set out above, I dismiss the Applicant’s Application for interim relief.