Berners engaged Shepherd to carry out work at the Berners Hotel, Berners Street, London W1. Berners failed to make several interim payments and Shepherd suspended work on three separate occasions. Shepherd commenced an adjudication and was awarded just over £1 million plus VAT and interest. During the adjudication Berners issued a cheque for £1.15 million but this was dishonoured by its bank. Two further cheques were similarly dishonoured.

The decision was not paid by Berners, and Shepherd enforced the decision by judgement in default. Later, Shepherd also entered judgement in default against JJW, who had provided a parent company guarantee for Berners. Shepherd then attempted to wind up Berners, but a compromise was reached for payment by instalments for the total sum of £2,242,984.66. Berners paid the first instalment but defaulted on the remainder. Shepherd then entered judgement in default in respect of the outstanding amount, £1,742,982.66.

Consequently, at a previous hearing the judge had granted a worldwide freezing order on the defendants’ assets of up to £1.75m. This hearing was the defendants’ application to discharge the orders.

The judge held that the freezing orders would remain in place due to the risk of dissipation of the defendants’ assets. The risk arose due to the following factors:

1. The defendants were companies registered outside England and Wales. Berners is a BVI company and JJW is registered in Guernsey. Financial information on the companies was not readily obtainable, and not forthcoming from the defendants. Berners was an SPV and its only obvious asset was the holding in the hotel being refurbished by Shepherd;
2. There was a history of non-payment by the defendants, not only in respect of interim applications but also court judgments. Despite JJW’s assertions that it had multi-million pounds worth of assets worldwide, the simple fact was that it had not paid the comparatively modest sums to Shepherd;
3. Berners had made repeated promises to Shepherd that it would be paid soon, but in an affidavit to the court, Berners’ Chief Financial Officer stated that Berners had profound cash flow difficulties which would be expected to continue until a group financing in the near future; and
4. The defendants had not obviously been in business very long, particularly Berners. The nature of the assets held were property and there was no information as to accurate values, loans, charges or similar.

However, the judge gave JJW liberty to apply to amend the order to only its UK assets, if it could demonstrate, with proper evidence, that any loans or charges against its properties were sufficiently outweighed by the property values.