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What happens the first time you are subject to a Freezing Order?

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In the UK, encountering a freezing order for the first time can be an overwhelming and intricate ordeal. Within the framework of English law, particularly through instruments like the Civil Procedure Rules and specific legislation depending on the context, courts have the authority to issue freezing orders. These orders temporarily prohibit individuals or entities from disposing of or dealing with their assets, when there is a concern that the assets may be dissipated to frustrate a judgment or legal process. Typically used in cases involving disputes over finances, fraud, or other legal controversies, freezing orders are powerful legal tools aimed at preserving assets until the resolution of a legal dispute.

For individuals or entities on the receiving end of such orders, grasping the legal underpinnings and the ensuing procedures is vital. This guide seeks to shed light on the essence of freezing orders, the legal justifications for their issuance, the steps involved in the process, and the obligations and rights of those affected. Whether you are directly implicated, or looking to assist someone who is, this article will provide essential guidance for understanding and navigating the complexities of freezing orders in the UK.

What does a freezing order mean?

A freezing order is a legal injunction that prevents a party from disposing of or dealing with their assets, up to a certain value. It is a preventative measure used by the courts to ensure that assets remain available for enforcement of a potential future judgment.

Freezing orders are most often used in cases where there is a risk that, once the litigation process is underway or a judgment is made, the assets in question will have been hidden, spent, or otherwise put beyond the reach of the court.

The authority for courts to issue freezing orders comes from the Civil Procedure Rules (CPR), specifically Part 25, which deals with interim remedies. A freezing order can be granted at various stages of legal proceedings, including before a case goes to trial, during the trial, or after a judgment has been issued but before it has been enforced.

When applying for a freezing order, the applicant must show a good arguable case and provide solid evidence that the respondent has assets and there is a real risk of those assets being dissipated. The courts apply a high threshold for the issuance of such orders due to their intrusive nature and the significant impact they can have on the respondent’s ability to deal with their assets.

Note that freezing orders do not give the applicant any right to the assets or amount to a judgment in their favour; they only secure the assets until the conclusion of the legal proceedings. As detailed later, breaching a freezing order is considered contempt of court and can lead to severe penalties, including imprisonment.

What assets can be subject to a freezing order?

Assets that can be subject to a freezing order under English law include, but are not limited to:

  • Bank accounts, including savings, current, and deposit accounts
  • Real estate, including residential and commercial properties
  • Shares and stock holdings in both private and public companies
  • Investments, such as bonds, mutual funds, and investment portfolios
  • Vehicles, including cars, boats, and aircraft
  • Intellectual property rights, such as patents, trademarks, and copyrights
  • Insurance policies and annuities
  • Jewellery, art, and other valuable personal property
  • Corporate assets, including assets held by a company that an individual has an interest in
  • Offshore assets, subject to the court’s ability to enforce the order internationally

Which authorities can issue freezing orders in the UK?

In the UK, freezing orders can be issued by various courts, depending on the nature and jurisdiction of the case. The key authorities capable of issuing freezing orders include:

  • High Court: The High Court of Justice, particularly its Queen’s Bench Division and Chancery Division, has broad powers to issue freezing orders in relation to a wide range of civil disputes, including commercial litigation, trust disputes, and fraud cases.
  • County Courts: While County Courts have jurisdiction to issue freezing orders, their powers are more limited compared to the High Court. The use of freezing orders in County Courts is typically restricted to cases that fall within their monetary and subject matter jurisdiction.
  • Family Courts: In matrimonial and family law disputes, Family Courts can issue freezing orders to prevent a party from disposing of assets to defeat claims for financial relief following the breakdown of a marriage or partnership.
  • Court of Protection: In cases involving the property and affairs of individuals who lack mental capacity, the Court of Protection may issue freezing orders to protect the assets of these individuals.
  • The Supreme Court, as the highest court in the UK, has the authority to issue freezing orders in cases that come before it, but such instances are rare, as the Supreme Court primarily deals with appeals on points of law of general public importance.

What are the grounds for a freezing order in the UK?

In the UK, the grounds for obtaining a freezing order are based on specific legal criteria, which include:

  • Good Arguable Case: The applicant must demonstrate that there is a good arguable case against the respondent. This does not require proving the case on the balance of probabilities but showing that there is a solid and serious issue to be tried.
  • Risk of Asset Dissipation: There must be clear evidence of a real risk that the respondent will dissipate their assets to frustrate the enforcement of a future judgment. The applicant needs to show that the respondent’s conduct suggests they might act to remove, hide, or devalue the assets, making them unavailable to satisfy a potential judgment.
  • Availability of Assets: The applicant must demonstrate that the respondent has assets within the jurisdiction of the court or, in some cases, assets outside the jurisdiction that could be subject to the court’s order. The presence of assets is a prerequisite for the freezing order to be practical and enforceable.
  • Proportionality and Fairness: The court will consider whether issuing a freezing order is a proportionate response to the risk of asset dissipation, taking into account the impact on the respondent and any third parties. The court seeks to balance the need to protect the applicant’s interests against the potential undue hardship on the respondent.
  • Full and Frank Disclosure: In applications for freezing orders, which are often made without notice to the respondent (referred to as ex parte proceedings), the applicant is under a duty to make full and frank disclosure of all material facts to the court. This includes any facts that might be detrimental to the applicant’s own case.
  • Secondary Order Requirements: In some cases, the court may require the applicant to provide an undertaking in damages as a condition for granting the order. This serves as a safeguard, compensating the respondent for any loss suffered due to the order if it is later found to have been unjustly granted.

These criteria ensure that freezing orders are only granted in circumstances where there is a genuine need to protect assets from being unfairly dissipated, balancing the need for such protective measures against the rights and freedoms of the respondent.

What should you do if you are facing a freezing order in the UK?

If you are facing a freezing order in the UK, it is crucial to take immediate and careful action:

  • Carefully read the freezing order to understand its scope, including what assets are covered and any specific prohibitions or requirements it imposes.
  • Immediately comply with the terms of the order to avoid any risk of contempt of court, which can have serious consequences, including fines or imprisonment.
  • Contact a solicitor who specialises in litigation or the relevant area of law as soon as possible. Legal advice is essential to navigate the complexities of the order and to formulate a response.
  • Collect all relevant financial documents and records related to the assets in question, as these will be necessary for your legal defence and to comply with any disclosure requirements of the order.
  • Discuss with your legal adviser the potential grounds for challenging the freezing order, such as improper service, lack of a solid legal basis, or excessive scope.
  • Be prepared to engage in further court proceedings, either to challenge the freezing order itself or as part of the underlying legal dispute that led to the order.

Acting swiftly and judiciously is key to effectively managing the situation and mitigating the impact of a freezing order on your assets and legal rights.

Where to get more help

If you or someone you know is confronted with a freezing order for the first time, or if your assets are already subject to such an order, get the advice of a skilled solicitor who specialises in civil litigation and asset protection. Engaging a legal expert ensures that you receive advice that is specifically tailored to your circumstances, safeguarding your rights and aiming to minimise the impact on your personal and financial situation. Contact the team at Stuart Miller Solicitors to obtain the support needed to navigate through these complex proceedings.

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