If you have been served with a freezing order it is vital you act quickly. Freezing orders are extremely serious and failure to comply with them can even lead to imprisonment. Our expert team have been acting for parties served with freezing orders since 2002. Let us help.
Freezing orders or freezing injunctions are by their very nature are very serious court orders and often impose wide ranging restrictions on any individual served with such a form of order. The sanctions for not complying properly with the terms of the freezing injunction or freezing order can often be very draconian as well (and can involve orders with criminal sanctions).
By seeking early legal advice, you can put yourself in the strongest position possible, particularly with regard to understanding the exact terms of the freezing order, ensuring that you do not fall foul of the terms of the freezing order and equally, seeing whether you can seek to either challenge the freezing order in its entirety or at least vary some of its terms (including requests to release assets). You should also seek clarity on the potential to recover any costs in the event that you are successful in defending the underlying substantive claim and /or whether any increase in the quantum of any security given and /or any fortification of any security is required (such as a payment into court being made).
2. Obtain a note of the hearing
If the freezing order was obtained without notice to you (unsurprisingly known as a without notice application), then it goes without saying that you would not have had the opportunity to attend court at the time the freezing injunction was granted by the judge.
As such, you are entitled to be shown a full note of the hearing which the solicitors acting for the applicant should have produced from notes they took during the initial hearing. A full note of the freezing order hearing should be included in the papers which have been served on you but, if it is not, then you must immediately ask for a full note of the hearing as you are entitled to understand fully what was said at the hearing and the reasoning behind the granting of the freezing order.
3. Consider requesting a full transcript of the hearing
Whilst the note of the hearing produced by the applicant’s solicitors is often useful, you can request a full typed transcript of the hearing. Any court hearing of this nature is recorded and, as such, it is possible to ask for that recording to be typed up by a certified transcriber so that you have a complete record of what was said at the hearing. This can take some time so it is vital to make this request as soon as possible. Whilst the applicant’s solicitors will make every attempt to fully explain what was said at the hearing in their note, it goes without saying that it is often impossible to record manually every word spoken at the hearing.
As such, it can be very useful to have a full transcript of the hearing, especially if you are considering challenging the granting of the freezing order when the case next comes back to court.
4. Examine carefully the grounds the applicant relied upon to obtain the freezing order
In order to obtain a without notice freezing order, the court has to be satisfied that there are very strong grounds to grant such a serious order.
Ordinarily, both sides to a claim are entitled to attend a hearing, but in circumstances where only one party (i.e. the applicant) attends court, the court has to be satisfied that there are very strong grounds for the granting of such an order. The nature and basis of the obligations imposed on an applicant are set out in more detail in our other booklets / web pages in this series. Once armed with a full note and/or transcript of the hearing, we would recommend that you / your legal advisers examine carefully the grounds relied upon by the applicant at the time the freezing order was granted. In so doing, you can then not only begin to formulate your response but also to see whether the freezing order itself can be varied and/ or discharged.
5. Examine carefully the extent of the disclosure made to the court on behalf of the applicant
When granting freezing injunctions, there is a duty on the applicant of what is known as “Full and Frank Disclosure”. Essentially, the applicant must be completely truthful and disclose to the court all matters and facts within its knowledge at the time of seeking the order, even if they are unhelpful to the applicant. It is not simply the case that the applicant can turn up to court on a without notice basis and present to the court information which only helps the applicant but does not reveal information which might be damaging to the application.
If that is the case, and the applicant has clearly failed to provide full and frank disclosure to the court at the time of the granting of the order, this can be a ground to have the freezing order discharged or varied the terms. The court insists upon full and frank disclosure because of the one sided nature of these applications and the fact that the respondent is unaware of them until such time as it is served with the court papers.
6. Read the freezing order carefully and fully understand its terms
It is imperative that you sit down and read the terms of the freezing order very carefully indeed, as soon as it is served on you. Often, freezing orders come with what is called a Penal Notice i.e. a notice which explicitly states that failure to comply with the terms of the order can result in imprisonment and/or a fine. By their nature, freezing orders are one of the most draconian forms of order a court can make. It is therefore imperative that you take the time to read the terms of the order fully and invest sufficient time to understand it properly.
In so doing, we would strongly recommend that you seek legal advice with regard to the terms of the freezing order as, bluntly put, non-compliance can result in a finding of contempt of court and the ultimate sanction for that is imprisonment. Often, respondents served with such orders are faced with very onerous obligations, often relating to disclosure of documents. These obligations can come into existence at the very time the order is served on you by a process server acting on behalf of the applicant. You are entitled to take your time to read the terms of the order and fully understand it. The process server should even take the time to read out the key provisions of the order (although they are not qualified to explain or interpret any such provisions).
7. Check carefully the dates by which certain obligations and / or requirements must be completed
Often, a standard form of freezing order will include certain dates by which specific actions must be undertaken. Commonly, these relate to disclosure of documents and also relate to production of an affidavit (a form of witness statement) by which you must set out on oath details of your assets, either domestically or on a worldwide basis (up to defined limits).
- it is vital that you fully understand the dates by which any actions must be taken and start preparing the relevant documentation / information as soon as possible following service on you.
- by doing so, you have the best chance to comply with the terms of the freezing order and, for example, if it appears that for whatever reason you are unable to meet one of the dates as set out, you can apply to court to vary the terms of the order prior to the expiry of the particular date.
It must be remembered that if you fail to comply with any terms of the freezing order, the applicant can make an application to court for contempt of court which could lead to a fine or even imprisonment. Failure to comply without having made an application to court for an extension of time can also lead to payment of the applicant’s legal costs if they make an application for Contempt of court and committal to prison.
It is therefore always better to deal with any issues in advance and if necessary go back to court to seek an extension of time for dealing with any matters if it is clear further time is required. It is not recommended that a freezing order is put aside for reading later, as the failure to read it immediately is not an excuse for failing to comply with the stated requirements.
8. Consider whether the applicant’s undertaking in damages is sufficient
As part of granting without notice freezing orders, the court will insist that the applicant provides what is called a cross undertaking in damages. Essentially, this is a sum of money which the applicant must either pay into court as part of the granting of the order or provide an undertaking to pay in circumstances where it is later shown that the freezing order should not have been granted and the respondent has suffered damages as a result.
If it appears that the monetary sum offered by way of an undertaking is insufficient to cover any estimated likely damages you may suffer as a result of the wrongful granting of a freezing order, you can make an application to court for the undertaking in damages to be increased and/or fortified by the applicant actually paying money into a court bank account which will then be held there until determination of the substantive claim.
9. Consider whether you require more time to comply with the freezing order or require a delay of the next hearing date
As set out above, it might be that you require more time to comply with certain aspects of the freezing order. If that is the case, then you need to give careful thought as to the extent and amount of additional time required to comply with certain aspects of the order.
These will need to be set out in an application notice supported by evidence in a written affidavit form giving reasons why it is that you require further time. You should also ensure you make the application to the court prior to the expiry of the time period set out in the freezing order. For example documents maybe held outside the jurisdiction or alternatively it might take time to obtain information from banks or other third parties as ordered to do so by the court.
10. Prepare for the return date in court
In all without notice freezing orders, the court will set a date (known as the Return Date) when both the applicant and the respondent will attend court – generally 7 – 14 days after the making of the freezing order.
The purpose of that hearing is to enable a respondent the right to reply to the application which he previously had no notice of at the time it was granted. At the return date hearing a respondent can either fully contest the granting of the freezing order, seek to vary some or all of the terms of the order or simply agree to a continuation of the freezing order until trial or any earlier order in the main litigation claim.
In advance of the return date, the respondent will commonly want to prepare Affidavit evidence setting out its side of the events and also confirming compliance with the terms of the freezing order. This is particularly the case if the respondent wants to contest the order in any way.
Commonly the court will order that the return date is either 7 or 14 days after the granting of the freezing order. It might be that you require further time to prepare that evidence in which case we would recommend that you make an application to adjourn the return date to enable you sufficient time to prepare all the relevant paperwork (the previous point refers).
If you have a freezing injunction question we are the firm to help you. We provide professional, cost effective advice and expert advice. We do so on an immediate basis as we understand the critical timing issues involved with freezing injunction claims. Call now us now to speak to one of our expert lawyers.