Wednesday, 20 May 2015

Affidavit Evidence Explained

Any application made for a Freezing Order must be supported by written Affidavit evidence (essentially a form of witness statement).  This is evidence the Applicant must swear on oath as being true and is done so in support of the application.  
An Affidavit is a written statement made by a party which is sworn by the relevant individual on oath as being true and correct to the best of that person’s knowledge and belief. In the event that it can be shown that the Affidavit is incorrect and that the individual was either seeking to deceive the Court and/or was reckless as to the information given then it is possible that the relevant individual swearing the Affidavit may be held to be in Contempt of Court, and therefore potentially subject to imprisonment and/or a fine.
It is absolutely essential that the Affidavit is drafted carefully and in sufficient detail to support the application for a Freezing Order.  If it is not, then the application is highly likely to fail.  
What the Affidavit should deal with in order to obtain a Freezing Order
The reasons for urgency.  The Court will need to be convinced that the matter is urgent and why, if the application is being made without any notice to the Respondent, this is necessary.
The Respondent’s assets.The Court will also require some information regarding the Respondent’s assets, including evidence as to their nature and current location. Further, the Court will require evidence of the potential risk of dissipation by the Respondent in the event that the Freezing Injunction is not granted.
A good arguable case. The Applicant will also have to show there is a good arguable case in the underlying substantive claim against the Respondent.  Ideally, the Applicant will need to exhibit a draft claim form relating to the underlying claim (if not yet issued) so that the Court can see that there is a claim to be litigated out against the Respondent.  The Court may also require the Applicant to provide an undertaking that the claim form will be issued and served as soon as practicable possible.
Any defences the Respondent may have. If relevant, the Affidavit will have to outline (with as much particularity as possible) any possible defences which the Respondent may have including those of set-off, counterclaim or possible privilege against self- incrimination (which reflects the Applicant’s duty of full and frank disclosure – see below).
The possible Insolvency of the Respondent. If the Respondent is likely to go into some form of insolvency in the near future, this needs to be drawn to the Court’s attention.  If it is demonstrably the case that insolvency is likely, then the Court may refuse to grant an injunction on the basis that it will provide no added protection to the Applicant.
Any prejudice of hardship to the Applicant. The Affidavit will need to cover the issue of any likely prejudice or hardship which the Applicant may suffer if the Freezing Order is not granted.
Any criminal convictions. If the Applicant is subject to any criminal charge or conviction, this needs to be disclosed in the Affidavit.
The financial standing of the Applicant. In order to deal with the issue of undertaking in damages, the Applicant will need to provide detailed evidence of its financial standing, often by exhibiting its latest audited / management accounts (and possibly also by providing copies of bank statements), particularly in light of the Applicant’s obligation to provide an undertaking in damages should the Application be unsuccessful.
Any foreign law considerations. If the Freezing Order is sought on a worldwide basis, it might be that issues of foreign law in different jurisdictions also needs to be covered. The Applicant may also need to consider the issue of seeking leave to serve the proceedings outside the jurisdiction of the Court (i.e. outside England and Wales).
The issue of Full and Frank Disclosure. In addition to the above, every Applicant in these types of proceedings is under a duty to provide full and frank disclosure, meaning that it must disclose all relevant material to the Court, either factual or legal and whether in favour of the Applicant’s claim or not, which may have a bearing on the Court’s decision to grant the Order.  The issue of full and frank disclosure is dealt elsewhere in this series of booklets.
Without Notice Hearings explained
Often, Freezing Orders are sought without any notice being given to a Respondent. The reason for this is that if notice of the application is made to the Respondent prior to any Order being made then it is possible that the Respondent may seek to dissipate his assets and/or put them out of the reach of an Applicant, thereby defeating the whole purpose of seeking a Freezing Order.
If the Application is made without notice, there is an obligation on the Applicant / the Applicant’s solicitor to prepare a full and detailed note of the hearing. This should then be served upon the Respondent as soon as possible, commonly as part of the pack of documents (including Court Orders and evidence in support) which needs to be served on the Respondent once the Freezing Order has been obtained.