What is a freezing injunction and when might it be sought?
A Freezing Injunction preserves a party’s assets, in the interim, until a final judgment in divorce or financial proceedings. It prevents one party from disposing of or dealing with assets.
Disposition includes any conveyancing, giving of gifts, or providing assurances, whether in writing or not. It does not include provisions contained in a will or its codicil.
A person can apply for a freezing injunction before court proceedings (if they can show there is an underlying cause of action), during proceedings or after a final judgment.
A freezing injunction does not provide security over an asset but it prevents a person disposing of the asset.
What assets can be frozen for a freezing injunction?
The types of assets that can be frozen include:
- Bank accounts
The person whom the injunction would restrict must have control over the assets affected, whether or not he owns them, legally or beneficially. The asset can be held in England and Wales or worldwide.
The person seeking an injunction will need to identify the relevant key assets and be very clear about what these are and their extent.
Obtaining an Injunction
In practice it is extremely difficult and potentially expensive to obtain a freezing injunction. It has been described as a ‘nuclear weapon’ in the law.
The key factors to be considered before a freezing injunction will be granted are as follows:
Good Arguable Case
The test for a ‘good arguable case’ is not very high. In The Niedersachsen Mustill J held that a “good arguable case” was “one which is more than barely capable of serious argument, but not necessarily one which the judge considers would have a better than 50% chance of success”.
Real Risk of Dissipation
The asset must exist. There must be a risk of dissipation of the asset. The test is objective, and the court will consider evidence whether there is a real risk of dissipation. The person applying for the freezing injunction should provide ‘solid evidence’, unsubstantiated assertions will not be sufficient.
A Freezing Injunction Must be Just and Convenient
Legislation provides that a freezing injunction will be granted only if it is just and convenient to do so. An application will be refused if the injustice that would be caused to the respondent outweighs the benefit that would be gained by the applicant. A freezing injunction cannot be used to oppress someone, for example, to cause them to cease trading.
What are the three types of freezing orders:
- General Order, which extends to all of a person’s assets. This order is only justified in exceptional circumstances.
- Order on Specific Assets, a single or group of assets. The value of these assets may exceed the value which the applicant seeks in divorce and financial proceedings from the respondent.
- A Maximum Sum Order, which is limited to the value which the applicant seeks in divorce and financial proceedings from the respondent. This is the most common type of freezing order.
How long does an Injunction last?
An injunction will usually last until final judgment on the case. This will secure the assets until the end of proceedings and stops a person defeating any eventual judgment.
For any further information or any enquiries, please do not hesitate to contact us at Dean Wilson.
Telephone: 01273 249 200
Or fill out our contact form here.