What other Orders can the court make at the same time to help an Applicant?
As part of granting Freezing Orders, the Court will often be asked to grant additional orders for the benefit of an Applicant (commonly known as ancillary orders or incidental relief). These orders can often assist an Applicant who may be the subject of a fraud in obtaining crucial and important information from a Respondent.
The most common of these relate to disclosure orders. Commonly, a Respondent will be given a short period of time to disclosure different categories of documentation, and must often do so by swearing an Affidavit stating the searches that have been made and the documents which have been located, together with giving reasons why certain documents could not, for example, be disclosed.
An Order to cross-examine a Respondent about his assets.
This is an onerous obligation and is granted only in exceptional circumstances. It is only granted where a Court believes it is just and convenient to do so. However, although itcan be a legitimate tool to the asset disclosure process, it is seen as the exception rather than the rule. Any cross-examination must be proportionate and just and relates solely to the issue of assisting asset disclosure and is not to be used for any other purpose.
Ordinarily, these types of Ancillary Orders are requested after a Respondent has provided an Affidavit of means and it is shown to be defective. The time for applying for one would ordinarily be at the return date of a Freezing Order at which all parties are present. However, in exceptional circumstances, the Courts may grant them at the first hearing when the application is heard without notice to the Respondent.
A Passport Order
The Court may require a Respondent to deliver up his passport and not leave the jurisdiction. However, these Orders are exceptional and only granted in the most serious of fraud cases. The reason why is that they fundamentally interfere with a Respondents liberty and human rights.
An Appointment of a Receiver over a Respondent or his Company
A Receiver appointed by the Court has a right to all income due to the Respondent or his company. The Court will only appoint a Receiver in circumstances where a Freezing Order on its own will not provide adequate protection against the risk of the Respondent putting his assets beyond the reach of the Applicant. They are highly unusual and are not granted lightly (especially in respect of companies) as the appointment of a Receiver over a company is likely to cause damage to that particular company’s business and perhaps third party interests such as un-associated shareholders, employees and suppliers.
If a receiver is appointed, an Applicant may be asked to increase the undertaking in damages due to the likely detrimental effect the appointment of a Receiver may have.
Immediate Delivery up to the Applicant’s Solicitors of Certain Assets or Payment of a sum of money into Court
This is most commonly ordered when a Claimant has a proprietary claim to the Respondents assets and where there is an easily identifiable asset belonging to the Applicant which has passed to the Defendant as a result of the fraud.
An Order requiring the Respondent to sign a document authorising his bank to disclose information to the Applicant
These precedent letters are common in injunctive proceedings. They enable a Claimant to then liaise directly with the Respondent’s bank in circumstances where normally the Bank will not communicate without proper written authorisation.
An Order requiring the disclosure of the identity of a Third Party Funder
These Orders are granted to help identify a Defendant’s Third Party legal expenses funder.
Can a Respondent still borrow money whilst subject to a Freezing Order?
Case law demonstrates that a Freezing Order does not prevent a Respondent from incurring new liabilities and thereby increasing his overall indebtedness, provided the action in question does not diminish the value of the frozen assets, for example where the Respondent seeks to place security over an asset subject to the Freezing Order.
However, it remains a risk to an Applicant that further unsecured creditors could be incurred by the Respondent and in the event that the Respondent is subsequently declared insolvent the increase in the value of unsecured creditors will diminish the returns for all creditors (including the Applicant).
Should you require any further assistance at all in this area of the law, please contact one of our fraud specialists on 020 7841 0390 and we will be happy to have a free consultation with you.
