Freezing order and contempt of court

The court treats these types of freezing injunction applications with particular care, due to the very serious consequences if a finding of contempt is made. That is when a person failing to comply with the terms of the order can be sent to prison.

The court doesn’t do this often – but it can where a party has breached the terms of a freezing order, for example

• failing to provide proper disclosure of documents; or
• providing an untruthful or only partially true statement in an affidavit or other document served in compliance with the freezing order.

Pre-conditions of a committal application

For a committal application to succeed, the original freezing order must have the a properly worded “Penal Notice” on the front of it, explicitly stating that any disobedience of the order by the respondent will be a contempt of court, punishable by either imprisonment, a fine or seizure of assets;

The original freezing order must have been personally served, unless the court has since made alternative orders in relation to service.

The procedure for making a committal application

• the applicant must set out in an application notice the full grounds upon which the application for committal is being made. In so doing, the applicant must set out each and every alleged act of contempt by the respondent and if known, the date of each and every act of contempt;
• the application notice also needs to be supported by a detailed affidavit setting out the above information and exhibiting where necessary, relevant documentation to the statement;
• the issued application, evidence and supporting documents need to be personally served on the respondent unless the court has provided alternative methods for service. In circumstances where the respondent is a company, it must also be evidenced that the original freezing order was served on a director or officer of the company and, if it was, the committal application notice and supporting documentation must also be served on that particular officer or director.

Court discretion to make an order

Orders for committal are entirely at the discretion of the court. It is often the case that a minor breach of an order will not always be treated as contempt and this is particularly true if compliance of a particular section of the order was impossible (for example, documents not being disclosable as they were in the possession of a third party).

Essentially, in order to commit a person to prison for breach of an order, it has to be shown that there was a deliberate or willful breach of the order and this has to be established beyond reasonable doubt as it is in effect a criminal standard of proof which needs to be shown.

What actions or omission might give rise to a committal application?

Applications of this nature often arise following the failure of a respondent to properly comply with the disclosure requirements of the freezing order, especially in respect of a respondent’s personal assets.

If a respondent is seeking to conceal the truth in relation to his assets and swears an affidavit which is only partially true or has a clear and obvious omission in it, this can provide legitimate grounds for an applicant to make an application for committal.

• often, on a practical level, following the initial granting of a freezing order, the applicant will continue making further enquiries with regard to the alleged wrongdoing which might also involve further analysis of the respondents assets;
• it is often during those further enquiries that an applicant can catch a respondent out by discovering further information which the respondent has failed to disclose in his disclosure affidavits;
• this commonly comes about after work by forensic accountants who will examine banking records which can often reveal details of account names and numbers which the respondent has failed to disclose.

A typical further instance which may give rise to a committal application is the disposal of assets by a respondent in breach of the freezing order. It is not uncommon for assets to be disposed of before the respondent has complied with his obligation to disclose his assets.

Steps taken by a respondent to “purge” his / her contempt

Committal to prison is the ultimate sanction and, as such, the courts are generally reluctant to make such an order, unless the breach is serious. It is very much a last resort.

• often the respondent is given an opportunity to “purge his/her contempt” by swearing a supplemental affidavit setting out the true position in relation to his assets and / or remedying any previous failure to comply with the terms of the order;
• however, even if the court is satisfied that the supplemental affidavit is now giving a truthful picture, it will generally punish the respondent by making him/her pay all of the applicants wasted legal costs in making the application and these can often be very significant indeed;
• the costs penalty is made because the committal application was only necessary in the first place due to the respondent’s non-compliance with the terms of the freezing order.

Even if the court does not agree to commit an individual to prison for contempt, it can impose a fine on the respondent and also order seizure of certain assets. If the court is minded to commit an individual to prison, the maximum period is 2 years, although it is highly likely that it will be for a far lower period than that.

Benefits of committal applications

Committal may often be a very useful weapon in the applicant’s armory. It can often put the respondent under extreme pressure and may even result in early settlement of the claim itself. It also sends out a strong message to a respondent that the applicant will not tolerate any non-compliance with the terms of the freezing order / freezing injunction and will, if necessary, make other appropriate applications to the court in order to ensure that the respondent complies with the terms of the freezing order.

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Our expert team of freezing injunction solicitors at Francis Wilks & Jones can help you with any type of freezing order situation, including issues relating to contempt of court. Whatever your freezing order requirements, let us help.