Dishonesty does not equate to a risk of dissipation in freezing order applications

Bill Geiringer of Pinsent Masons, specialist in civil fraud and asset recovery, was commenting after the High Court rejected a company’s application for a WFO worth €160 million. A freezing order is a court order which prevents a party from disposing of or dealing with its assets. 

Alliance Petrochemical Investment (Singapore) Pte Ltd (API) brought the application in the context of fraud claims against two men accused of orchestrating the misappropriation of more than €143m. Francesco Mazzagatti and Francesco Dixit Dominus were, according to API’s claims, chief executive and chief financial officer at the time that funds were taken directly out of bank accounts belonging to it and a subsidiary and when further customer payments and certain profits were diverted. Mazzagatti and Dixit deny the claims against them, which are set to be heard in a trial before the High Court in due course.

Amidst its concerns that funds it believes were stolen would be dissipated, API asked Mazzagatti and Dixit to provide “freezing undertakings” in August 2024 – a voluntary commitment that they would not deal with specific assets before the court had ruled on the claims. The men declined to give those undertakings. It was only in January 2026, 18 months later, that API sought a WFO from the High Court.

In his ruling, Lionel Persey KC, sitting as a High Court judge, confirmed that WFO applicants must provide “solid evidence” to support their view that there is a risk of dissipation of assets, adding that “mere inference or generalised assertion is not enough”.

In this case, API pointed to alleged acts of dishonesty, fraud and forgery of documents as giving rise to a reasonable inference that Mazzagatti and Dixit “may employ similar methods to dissipate assets in order to render themselves judgment-proof”. However, the judge said API had waited so long between threatening to seek a WFO and raising an application before the court that the company needed to provide “new evidence” to support its application.

The judge held that API was unable to provide new evidence of a risk of dissipation and that the delay in making its WFO application was therefore “fatal”. He rejected the application. In his reasoning, the judge confirmed that allegations of dishonesty, regardless of the strength of evidence, do not equate to a dissipation risk. He added that the court requires evidence directed at the defendant’s own assets and conduct rather than simply movements within corporate structures and that remuneration in the ordinary course of business openly disclosed did not provide evidence of intention to dissipate assets.

Geiringer said the judgment reinforces the principle that evidence of fraud does not automatically justify a freezing injunction.

“It may seem logical that evidence of dishonesty, forgery and misappropriation give rise to an inference that similar methods will be employed to dissipate assets,” Geiringer said. “However, notwithstanding historic evidence of fraud, claimants are separately required to prove there is a current and genuine danger that assets will be dealt with to frustrate enforcing a judgment. This means showing tangible evidence of assets being moved or dissipated, or a real risk they will be, rather than a general assertion that a party’s dishonesty suggests a risk of dissipation.”

“Claimants and their legal advisors should carefully consider whether seeking freezing undertakings are an appropriate first step. If the undertakings are not given, an application for freezing relief should swiftly follow. Delay in bringing the application can be highly damaging where no intervening dissipation risk can be shown. Delay will not of itself defeat an application for a freezing injunction, but a claimant must show that the risk is current and dissipation imminent. Where a defendant has long known that freezing relief may be sought and has nevertheless not dissipated assets, claimants will need to show why circumstances have changed to merit the freezing injunction at the time of the application,” he added.