Freezing Orders should not be used oppressively. For example, a common term within a Freezing Order is that the Respondent should be able to meet his ordinary living expenses as well as his reasonable legal costs or business expenses. Freezing Orders that fail to include these terms can be seen as oppressive and as such, are open to challenge by a Respondent. Additionally, an Order should not prohibit a Respondent from dealing with or disposing of any assets in the ordinary and proper course of business. A Freezing Order should not be used to cause a Respondent excessive difficulties in undertaking its business and should not for example cause the business to cease trading. In those circumstances, an application can be made to Court to have the Freezing Order discharged. For more information about reasonable living and business expenses, please visit our other posts in this series.
The Applicant has not complied with its undertakings or alternatively, damages would not be an adequate remedy.
When, applying for a Freezing Order, an Applicant is normally required to give what is called an “undertaking in damages” to compensate a Respondent if it is later shown that the Applicant was not entitled to the injunctive relief sought. The undertaking itself is given to the Court and not the Respondent. Even where there is no express undertaking, there is always an implied undertaking.
However, a Respondent may be able to seek discharge of the Freezing Order on two grounds:
(i) The Applicant has not complied with his undertakings or is shown to have insufficient means to meet any undertaking in damages; and/or
(ii) The Respondent can show that damages would not be an adequate remedy for losses that he will sustain.
In circumstances where there are doubts about the Applicant’s ability to pay any undertakings in damages, a Respondent can make an application to Court that the Applicant be ordered to pay actual money into Court as security in the event that it is later shown that the Applicant was actually not entitled to the injunctive relief.
The quantum of any such payment will take into account the value of the underlying claim, the Respondent’s potential Defence and the potential costs that it will incur. A Respondent can seek to vary any such Order if it considers that costs, in excess of those provided for, may be incurred by it in relation to responding to the underlying claim. Of course, such a request would have to be justified by reference to specific evidence and any decision to seek further payments will be entirely at the discretion of the Court.