The duty of disclosure remains vital
Freezing injunctions are among the most powerful interim remedies available to the courts in England & Wales. When granted, they can immediately restrict a party’s ability to deal with assets and, in some cases, do so on a worldwide basis. Because of their impact, the courts impose strict obligations on those who seek them.
A recent High Court decision provides a clear reminder that freezing injunctions are discretionary remedies. Where an applicant fails to comply fully with its duty of disclosure, the court will not hesitate to impose serious consequences.
The nature of freezing injunctions
A freezing order is designed to preserve the status quo pending the resolution of the underlying commercial litigation claim. It prevents a respondent from dissipating assets so that any future judgment is not rendered ineffective.
These orders are commonly sought in high value commercial disputes, fraud claims, and asset recovery cases where there is evidence of a real risk of dissipation. Given their urgency, freezing injunctions are often granted without notice, meaning the respondent has no opportunity to be heard at the initial hearing.
This procedural imbalance places a heavy responsibility on the applicant.
The duty of full and frank disclosure
When seeking a freezing injunction without notice, the applicant owes the court a duty of full and frank disclosure. This duty goes beyond presenting the strongest aspects of the case. It requires the applicant to identify and explain any material facts that might influence the court’s decision, including matters that undermine the application.
The obligation applies whether or not the omission was deliberate. Even an inadvertent failure to disclose a material fact can amount to a breach if it would have affected how the court approached the application.
The duty exists because the court is being asked to make a far reaching order in the absence of the affected party.
What the court found in this case
In the recent decision, the court concluded that the applicant had failed to meet the required standard of disclosure. Material information relating to the strength of the underlying claim and the reliability of the evidence had not been properly brought to the court’s attention.
The court found that these omissions were significant. Had the information been disclosed, it may have altered how the court assessed the application at the without notice stage.
As a result, the freezing injunction was discharged. The applicant also faced adverse costs consequences, reflecting the seriousness with which the court views non disclosure in this context.
Why the court responds firmly to non disclosure
The without notice procedure depends on trust. The applicant is effectively required to present the case as if the respondent were present, ensuring that the court receives a balanced and accurate picture.
- Where that trust is breached, the court is entitled to respond robustly.
- Discharging the injunction is often viewed as necessary to uphold the integrity of the process, even where there may be an arguable case on the merits.
The message is clear. Freezing injunctions are not a tactical shortcut and cannot be obtained through selective presentation of evidence.
Practical guidance for parties considering freezing relief
Parties contemplating a freezing injunction must approach the process with caution. Evidence should be tested thoroughly, and potential weaknesses must be identified and explained openly.
These orders should be sought only where truly necessary. Courts expect applicants to have considered alternative measures and to treat freezing relief as exceptional rather than routine.
Early specialist advice is critical. Mistakes made at the application stage are difficult to undo and can undermine the wider litigation strategy.
You can read more in our free Freezing Order guide and what practical considerations you must think about before applying for a Freezing Order
FWJ takeaway
Freezing injunctions are powerful but fragile remedies. The duty of full and frank disclosure is absolute. Failure to comply can result in the loss of the injunction, adverse costs orders, and lasting damage to a claim. Careful preparation and strategic restraint are essential when seeking this form of relief.
We instructed Francis Wilks & Jones to take over a very complex trade finance and invoice discounting fraud which had been perpetrated against us and which had been commenced by a large City law firm with whom we had grown dissatisfied. The case involved a claim of over $20 million and the two defendants in the claim had gone to great lengths to cover up the fraud and hide the misappropriated funds.
Upon receiving the instructions, FWJ immediately began work on the underlying investigative side in conjunction with forensic investigators in order to put the claim back on track after a period of inactivity. The case itself involved detailed analysis of the trade finance facility together with collating evidence relating to the invoice discounting fraud in the United Kingdom for witness statement purposes. The matter also involved investigations in jurisdictions outside the United Kingdom, including Pakistan and Dubai.
Whilst the defendants took every opportunity to try and frustrate the proceedings by way of numerous interlocutory applications FWJ fought each and every one of these, often with costs orders against the defendants. Ultimately they were successful in having the defences struck-out following a very detailed specific disclosure exercise (involving the use of agents in Pakistan) during which it became apparent that the Defendants had deliberately failed to disclose incriminating documents in their possession as ordered to do so by the court.
We were delighted by the work undertaken by FWJ together with their team of third party professionals, including their barrister and forensic investigators. Their team approach ultimately resulted in successfully obtaining judgment of $35 million which we are currently seeking to enforce against the two Defendants and others who benefitted from the fraud.
We could not rate FWJ highly enough for their teamwork, dedication and legal and forensic expertise. We would highly recommend them for this type of work.
The managing director of a worldwide group of companies
