HomeFWJ takeawayTakeawayFraud and freezing ordersApplying for a freezing orderFreezing orders – 6 important considerations before applying

If you are considering applying for a freezing injunction, it is essential that you consider all the implications of this legal remedy and the short and long term consequences of proceeding with it. Our team have been advising individuals, companies and financiers since 2002. Let us help you too.

Introduction

A freezing order is a remedy that the court may order in support of a claim brought by an applicant.

For the court to grant a freezing order it will need to be satisfied that

  • the applicant has a substantive good arguable claim against the respondent;
  • that there is a solid risk that unless a freezing order is granted the respondent may not have assets available to pay any judgment that the applicant may obtain; and
  • it is just and convenient to grant the freezing order.

The effect of a freezing injunction is not to give the applicant any security over the assets that are frozen. It merely prevents the respondent from dealing with those assets (eg disposing of them or charging them) pending trial.

Before applying for a freezing injunction, any applicant must be aware of the nature of the order they are seeking from the court and the obligation it is under when making such an application.

  • whilst some of these considerations relate to legal aspects, any applicant must always bear in mind the practical considerations of applying for a freezing order before deciding to commence that course of action;
  • often, when faced with a possible fraud or other serious wrongdoing, applicants are very keen to head off to court and seek a freezing order against a respondent but in so doing they must be aware that this is only the first part of what can be a very lengthy, time consuming and expensive process.

Proper consideration of this prior to making such an application, together with consideration of other potential remedies, is essential before embarking on what could be a very lengthy set of legal proceedings.

Freezing injunctions are a powerful weapon in the right hands. Careful thought and due consideration should be taken prior to taking any steps to obtain such an order. Whilst difficult to do in what are often very serious circumstances an applicant might find itself in, it is always worth taking some time to step back and consider all the options before reaching a decision.

The practical considerations to think about before applying

1. The time, expense and commitment involved

Freezing injunction / freezing orders are one of the most serious types of order which a court can grant. As a result the court does not grant them lightly and as set out above, a freezing order is only the first step in what can be a lengthy litigation process.

  • freezing injunctions are time consuming. They require significant investment of management time and involvement of senior individuals before an application can be issued. applicants will be deeply involved with their legal advisors in the preparation of the evidence required to obtain a freezing order. This can often involve working over some days and nights (and sometimes weeks) in order to produce the affidavit evidence required in support of the freezing order.
  • If the applicant is a company, senior personnel will be required to access company documentation and help prepare the evidence to substantiate allegations made, commonly involving analysis of money flows and other financial information to help evidence the wrong doing by the respondent. This may require the assistance of the Finance Team of a company, the bookkeeper or the company accountant. This will obviously have an impact on the day to day running of the business at a time when it has already suffered from the respondent’s wrongdoing.
  • Where the court grants a without notice freezing injunction, the applicant will normally be required to go back to court 7 to 14 days later for what is known as the return date. Often that hearing is fairly brief. If the respondent wishes to challenge the continuation of the freezing injunction or freezing order, the court will usually set a timetable for the service of evidence and relist the hearing. In the meantime the injunction will continue.
  • The standard terms of a freezing injunction or freezing order are that it will not prevent the respondent from making payments in the ordinary course of business or spending money on legal advice and representation. Additionally, if the respondent is an individual, it will state that the order will not restrict the respondent from spending a specified amount per week or month on ordinary living expenses. The principle is that the respondent ought not to be restricted from making his or her usual payments in accordance with their standard of living. Usually at the without notice freezing injunction hearing the applicant will estimate what the respondent’s expenditure may be and will seek a restriction that the respondent does not spend more.

Typically in the days between the granting of the freezing injunction and the return date, the respondent may take issue with the practical effect of the freezing order on payments in the ordinary course of business and (where the respondent is an individual) on the amount of permitted living expenses. Practically, the freezing injunction Return Date hearing will often be concerned with resolving such matters, if disputed.

2. Paying the costs of any third parties

Applicants must also be aware that they are responsible for the costs reasonably incurred by third parties, such as banks and other financial institutions, in complying with the terms of the freezing injunction.

3. What benefits will you actually gain from a freezing order?

Careful thought needs to be given to the benefits which will actually accrue as a result of obtaining a freezing injunction or freezing order.

Often, applicants who are the subject of fraud require their legal advisers to “throw the kitchen sink” at the wrongdoers without thinking of the longer term implications, both in terms of costs and the benefit of taking that course of action. Consideration needs to be given to alternative remedies available to litigants before determining whether to progress down the route of a freezing injunction (see the previous point).

4. Will the freezing order actually stop a person hiding or removing their assets?

Some respondents may simply act in contravention of the order in any event. Whilst this could lead to their imprisonment, the primary purpose of getting such an order is to preserve assets. It is therefore worth considering whether it is likely the freezing injunction will have the desired effect in respect of the wrongdoers concerned.

It is often the case the applicant is simply unaware of what assets there are of the defendant and whether the reality is that the defendant may simply carry on and deal with those assets regardless of obtaining a freezing injunction or freezing order.

5. Policing the freezing order

The applicant must be willing to pursue and enforce the freezing order if necessary with court applications relating to disclosure, cross-examination, the possible appointment of a receiver, delivery-up orders, search orders and/or proceedings for contempt of court.

Whilst these are all remedies available to an applicant, they can incur yet further legal costs and again, this is something which the applicant needs to be advised of carefully at the outset. It is not the case that an applicant can simply sit on a freezing injunction once granted. Ongoing work needs to be carried out in respect of compliance and enforcement of the freezing injunction / freezing order for it to have the maximum effect.

6. Applications by the respondent to vary or discharge the freezing order

Applicants need to be aware of the fact that respondents may seek to discharge or vary the freezing injunction once they have had time to take stock and prepare for the freezing injunction return date hearing. These applications, if fully contested, can become very costly and can in some instances can run for many days.


Our expert team of freezing order solicitors at Francis Wilks & Jones are here to help you with your freezing order enquiry. Our years’ of knowledge can help you with all aspects of freezing injunctions. Contact one of our friendly freezing order lawyers now for your confidential consultation. 

Case studies

View all case studies

Contact us in confidence