What is a Freezing Order?
A Freezing Order is a type of injunction that you would ask the Court to grant, if you had a claim or action against someone and were worried that they are trying to put their wealth and assets beyond the reach of you and the Courts.
If your successfully pursue a Court action, you will obtain a Judgment against the other side, probably for a significant sum in damages and costs. A Judgment allows you to take a number of very useful steps to ensure the money owed to you is paid, such as putting a charge on a property, freezing bank accounts and sending in the bailiffs. If though, the other side have transferred their assets and wealth to another country/jurisdiction, transferred ownership of their assets or simply spent it, you will be unable to successfully enforce your Judgment and the money owed to you will not be paid,
A Freezing Order stops the other side from putting their assets and wealth out of reach, so that if/when you obtain a Judgment against them, you will be able to successfully recover the money owed to you. A Freezing Order can apply to bank accounts, land, property, shares, and investments.
Freezing Orders are an interim remedy and are granted upon making an application to the Court This is often the first step in a Court action, with the Freezing Order application being made simultaneously with the start of proceedings. However, an application for a Freezing Order can be made at any point after proceedings have been issued.
Acting decisively. How long do you have to bring an application for a Freezing Order?
It is important to act quickly. If you discover conduct that means you need a Freezing Order, you must make the application to Court within 2-5 days from discovering the wrongdoing by the other side.
If there is any delay in bringing the application this will count against your chances of success. You risk the application not being granted if there’s a delay that cannot be justified.
What will you need to prove in your application:
To be granted a Freezing Order you must be able to show the following in your application:
The court will take all these factors into consideration and apply a test, often referred to as the “balance of convenience”. That is, the Court will weigh the possible damage caused to the other side by granting a Freezing Order against the possible loss to you, the applicant, if the Order is not granted.
Jurisdiction: Are you restricted to England and Wales?
Freezing Orders are not limited to just England and Wales and can be obtained on a worldwide basis if the other side holds assets internationally.
If the other side’s assets in England and Wales are not sufficient to meet the value of your claim, an application for a worldwide freezing order can be made.
A word of caution, although it is not impossible to obtain a worldwide Freezing Order, it is not an easy order to obtain.
Requirements to satisfy the court
What amounts to a “real risk” of dissipating assets?
In the case of Les Ambassadeurs Club Ltd v Yu [2021] EWCA Civ 1310 the test for what constituted a real risk of dissipating assets was considered.
The appeal court decided the following:
Freezing injunctions are only appropriate when dealing with the latter category of defendant.
What can be taken from this case?
Procedure
Once you have considered the above and you are ready to proceed, you must prepare an application that includes the following:
The application is brought on an interim basis, which means it is not a final order but rather a temporary one with a return date. The return date is set for a hearing at which the other side will have a chance to present their case and the Court will consider whether to continue the injunction or set it aside.
Without Notice
Applications for Freezing Orders are brought on a Without Notice basis, which means that the other side is not informed of the application or is only told about it at the last minute. The application is made to the Court without the other side being present.
The reason the application is made Without Notice is to prevent the other side from disposing of the assets before a Freezing Order is in place.
Full and frank disclosure
An application for a Freezing Order is made Without Notice, so the other side will not be present at the first hearing of the application. To try to ensure fairness, as the applicant you have a duty to the Court to disclose all relevant material.
This means that even matters that have been raised by the other side need to be put before the Court. To knowingly mislead the Court, even by omission, is a criminal offence.
Failure to comply with the obligation of full and frank disclosure could result in the application being dismissed with an adverse costs order. You may also be ordered to pay compensation for any loss suffered by the other side.
In the case of Brink’s Mat Ltd v Elcombe [1988] 1 WLR 1350 (12 June 1987) and the courts decision on full and frank disclosure.
The following principles regarding the principle of full and frank disclosure were deduced:
(1) The duty of the applicant is to make “a full and fair disclosure of all the material facts:”
(2) The material facts are those which it is material for the Judge to know in dealing with the application as made: materiality is to be decided by the Court and not by the assessment of the applicant or his legal advisers
(3) The applicant must make proper inquiries before making the application: The duty of disclosure therefore applies not only to material facts known to the applicant but also to any additional facts which he would have known if he had made such inquiries
(4) The extent of the inquiries which will be held to be proper, and therefore necessary, must depend on all the circumstances of the case including (a) the nature of the case which the applicant is making when he makes the application; and (b) the order for which application is made and the probable effect of the order on the defendant.
(5) If material non-disclosure is established the court will be “astute to ensure that a plaintiff who obtains [a without notice injunction] without full disclosure … is deprived of any advantage he may have derived by that breach of duty.!
Undertaking as to damages
For the application to be granted, you will almost certainly have to give an undertaking to the Court to pay any damages that may be incurred by the other side in complying with the Freezing Order if later on after the trial it is determined that the Order should have not been granted. You may also have to provide some security or a list of assets it will in support of the undertaking.
Let’s Talk
If you think you need a Freezing Order, please talk to us. We would be happy to discuss your specific circumstances and give an initial assessment. Contact us by using the Let’s Talk button on this page or contact us by phone or email. Our details are at the top of this page and HERE.
