Freezing Orders

Any assets belonging to the Respondent, or within their possession or control, or in which they have an interest can be frozen, however, care should be taken to clearly identify which assets should be frozen and the reasons why. The court will need to be satisfied that making the order will not cause the Respondent undue financial hardship. The court can require the Applicant to given an undertaking that they will compensate the Respondent for any losses sustained as a result of any assets being frozen.

The court have the power to freeze;

• Cash – held in bank or building society accounts
• Shares
• Investments
• Vehicles
• Property
• Chattels

This is not a complete list. Freezing a bank account to prevent the disposal of funds, or preventing the sale or transfer of a property, are the most commonly thought of types of order. Freezing bank accounts can mean the respondent is unable to pay their living costs and meet basic needs, and so consideration may need to be given to preventing transactions over a particular figure, rather than completely freezing the account.

The court will be unlikely to make a blanket Freezing Order of all assets owned by a party, and it will be necessary to identify which assets should be frozen.
In most circumstances a Freezing Order is made in respect of the Respondent’s assets, however, if it can be evidenced that there are assets that are within the Respondent’s possession or control, or in which they have a financial or proprietary interest, then the court can order these are frozen.

As part of the Freezing Order proceedings the court also have the power to make orders for directions, including ordering full disclosure, and making orders for further disclosure and cross examination if they believe full and frank disclosure has not been provided. The court may also order the surrender of a party’s passport pending compliance.

Given the draconian and serious nature of a Freezing Order, which could potentially prevent a party being able to access their funds, there is a high threshold to be made to justify the making of such an order.

Guidance was provided by the court on the making of a Freezing Order;

“Before making a freezing order the court will need to be satisfied the applicant has ‘an appropriately strong case, supported by evidence of objective facts (rather than mere expressions of suspicion or anxiety) that the respondent owned or had an interest in specified assets and that there was a real risk of their dissipation.” [Mostyn J in UK v BK]

 

The burden rest on the applicant to show there is a real prospect of the existence of the assets and risk of their dissipation.

A Freezing Injunction is effective once it has been served upon the Respondent, meaning they need to be aware of the existence of the order for it to apply. On made, the injunction remains in place either until the expiration of the date as contained in the order, but usually this will be indefinitely, or until a further order. It is not uncommon for the order to remain in place for years, until the conclusion of litigation. Should a party not comply with the terms of any injunction then they risk being held in contempt of court.

The onus to prove the existence of the assets and that there is a ‘real risk’ of their disposal rests on the applicant. It is also important to clearly identify which assets need to be frozen, the reasons why, and also that doing so will not cause the respondent undue hardship.

There is a lot to consider, either in making an application for a freezing order, or in defending an application due to the possible consequences and duration of any order, which can be in place for years.