In this series of 12 posts we look at the key procedural requirements needed to obtain a Freezing Order from the court. In these posts, the person or company seeking the Freezing Order is referred to as the Applicant and the person or company subject to the Order is referred to as the Respondent.
1. Timing of the Applicationto obtain a Freezing Order
Applications for Freezing Orders can be made at any stage of the proceedings as follows:-
1. Before the issuing of a claim; or
2. During any proceedings; or
3. After judgement has been obtained.
Ordinarily, applications for Freezing Orders are made before a claim has been issuedin order not to tip off the Respondent who then may try and put his assets beyond the reach of the Applicant. These types of proceedings are also known as “Without Notice Injunctions” as they are obtained without any notice having been given to the Respondent. Injunctions sought either during proceedings or after judgement tend to be “On Notice” (i.e. with notice having been given of the application to the Respondent in advance of the court hearing.
2. The Need for Speed when applying for a Freezing Order
It is always the case when applying for Freezing Injunctions that the Applicant does so promptly. Any delay in making an application will potentially count against an Applicant and the Court may not grant a Freezing Injunction if the Applicant cannot justify any delay which has taken place since the wrongdoing was discovered.
Commonly, applications for Freezing Injunctions are made within two to five days of discovering the alleged wrongdoing by the Respondent. In that time, detailed Affidavit evidence needs to be produced in support of the claim and this requires a great deal of work from both the Applicant and its legal advisors.
The Court will however take into account that an Applicant cannot possibly cover every possible detail in that short space of time. However, there is a balance between being able to supply the Court with sufficient evidence to enable it to grant a Freezing Orderand simply taking too much time to compile that evidence in support of an application. Too much delay might be misconstrued by the Court as:
Weakening an Applicant’s evidence that there is a real risk of dissipation of assets.
Indicating that any dissipation has already taken place by the Respondent during that period of delay which effectively renders the Injunction pointless.
Having a detrimental effect on the Respondent because of the disruption caused by an Injunction on the Respondent’s personal and business life.
Furthermore, if an Applicant has intimated that it may be seeking some form ofinjunctive relief against a Respondent, this too can count against it when seeking an Injunction from the Court. This is because the Court will often view this as tipping off andgiving the Respondent the opportunity to dissipate its assets and thus render any injunction pointless. As a result, a potential Applicant should be very careful in its written and / or oral dealings / communications with the Respondent / Defendant upon the identification of a fraud.
3. Which Courts can grant Freezing Injunctions?
Freezing Injunctions can either be granted by a Judge in the High Court (either in London or one of the District Registries throughout England & Wales) or a Circuit Judge in the County Court. The latter is a new development and has only been in place since April 2014.
There are exceptions to this rule, whereby a Freezing Order may be granted by a Master or District Judge in the High Court or a District Judge in the County Court, but only if the Injunction is:
In a formatalready agreed by the parties.
In connection with or ancillary to a Charging Order.
In connection with or ancillary to an Order appointing a Receiver by way of equitable execution; or
In proceedings pursuant to CPR 66.7 relating to an Order restraining persons from receiving sums due from the Crown.
However, the most common route is to seek an injunction before a Judge in the High Court and there is always a High Court Judge available at short notice to hear emergency applications of this nature. Often, upon commencing an application for aFreezing Order, the legal advisor to the Applicant will contact the Court shortly before attending Court to make the application and in so doing will provide a brief time estimate of how long it believes the application will take. Ideally s/he will also lodge papers in advance to enable the Judge to pre read in to at least some of the papers.
In extreme cases of urgency it is even possible to obtain an Injunction by telephone with the Judge, normally if the court has shut for the day. However, Injunctions obtained in this manner are highly unusual.