LEGAL GROUNDS AND PROCEDURE EXPLAINED
In this series of 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.
Introduction
It is always open to a Respondent to apply to have a Freezing Order discharged. Thegrounds on which such an application can be made are as follows:
The Court had no jurisdiction to make the Order.
For a Freezing Order to be granted in England & Wales, the Court must have jurisdiction to hear the substantive claims between the parties. It must be remembered that a Freezing Order cannot simply sit alone in isolation. Rather, it is there to support the main set of proceedings between the parties which are to be litigated out in the ordinary way – for example a claim in fraud. These claims are known as the substantive claims and it is these which the Court must have jurisdiction to hear.
The only exception to this is if it is a Freezing Order made in support of foreign proceedings. To understand more about foreign proceedings, please refer to our other booklets in this series.
The Applicant’s substantive claim is not a good arguable case.
There is no onus on the Applicant at the time of seeking a Freezing Order to establish that the substantive claim is “bound to succeed” or has more than a 50% chance of success at trial. However the court will consider the merits of the substantive claim at the time of the application for a Freezing Order is made (or where the Applicant is seeking to continue it) and a case which is shown to be simply no more than arguable is insufficient to support either the granting or continuation of a Freezing Order.
The Court will review for example any Defences which may be available to the Respondent including for example, the defence of set-off when deciding whether the Applicant has a good arguable case.
There is no risk of dissipation of the Respondent’s assets.
As part of the granting of a Freezing Order without notice to a Respondent, the Court must be persuaded that there is a real risk that any Judgement may not be satisfied because the Respondent may seek to remove assets beyond the reach of the Applicant. The Court applies an objective test in this matter and considers the effect of the Respondents actions, not his intentions.
If a Respondent can provide evidence of his strong financial status, business history, links with the jurisdiction or indeed links to countries in which the Judgement would be enforceable and supports this with evidence of the ability to pay any ultimate award of damages, then it is likely that the Court will discharge the Freezing Order on the basis that there is no real risk that the Respondent will remove his assets from the jurisdiction.
For example, if the Respondent’s main asset is a property in England and there is no evidence that the property is up for sale and the Respondent has always lived in England, has family connections in England and close links to the that country, then the Court will take this carefully into account when determining whether there is a real risk of dissipation of a Respondent’s assets.
Inordinate delay by the Applicant
Speed is of the essence for an Applicant when seeking a Freezing Order from the Court. A Freezing Order is what is known as an equitable remedy, and as such, any Applicant must have acted reasonably and without any undue delay in pursuing its claim. Any unreasonable delay also counts against an Applicant when seeking or continuing a Freezing Order. If a Respondent can show that a delay has occurred and that delay is not explicable by the Applicant, then this can provide a ground for the discharge of a Freezing Order.
In circumstances where a Freezing Order has been granted Without Notice (ie withoutgiving notice to the Respondent of the application), the Applicant must ensure that all material and relevant matters are brought to the attention of the Court at the time theFreezing Order is sought (even if such matters go against the application).
This is very important due to the fact that with all without notice applications aRespondent does not know that the Court hearing is happening and does not have theability to comment on anything which the Applicant tells the court about in the course of the application. Without notice applications are by their very nature, one sided applications.
Therefore, it is incumbent upon the Applicant to make sure that every materialand relevant fact is made known to the Court when a without notice Freezing Order is applied for, even if those facts are not particularly helpful to the Applicant. Matters to be disclosed can be matters of either law or fact and should include any relevant issues even if adverse to the Applicant.
Examples of such matters include any defences to the claim that may be available to Respondent together with any potential claims by a Respondent of privilege against self-recrimination.
In circumstances where the non-disclosure is serious in nature, Courts have been known to discharge a Freezing Order. In less serious cases, Courts have set-aside the Original order and re-imposed the Order on specific terms – but often with an Order that the Applicant pays the Respondent’s costs on what is known as an indemnity basis– something which can be very expensive for the Applicant indeed.
