Monies Paid Into Joint Account to Discharge Freezing Injunction Do Not Create Any Security Right

The recent Court of Appeal decision in Flightline Limited v Edwards & another[2003] EWCA Civ 63 has considered the status of monies paid by the defendants, Swissair Schweizerische Luftverkehr-Aktiengesellshaft ("Swissair"), into a joint account for the purposes of discharging a freezing injunction over its assets. The court concluded that these monies do not create any entitlement to payment as a matter of right in the event of a successful judgment in the action.

The standard form of freezing injunction contains an express provision that it will cease to have effect if the respondent provides security (in a sum to be specified in the order), either by means of a payment into court or by some other agreed method. Although the freezing injunction obtained by Flightline contained no such express provision the Court of Appeal did not, in the event, consider this to be a relevant factor. The judgment also therefore appears to apply equally to monies paid to discharge freezing injunctions which do contain the standard wording.

Background

Following the collapse of the Swissair Group in October 2001, Swissair repudiated its arrangements with Flightline. Flightline commenced proceedings on 16 January 2002 in which it claimed some £4.2 million. At the same time it obtained a freezing injunction to prevent Swissair from dealing with its assets in England and Wales up to a maximum of £4.2 million. Upon being given notice of the freezing injunction, Swissair indicated its intention to make an application to...