Tuesday, 28 July 2015

Is a Freezing Order the most appropriate remedy? Part 1

Alternative remedies considered
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.
It is always worth the Applicant considering whether there are other alternative remedies that could be sought from the court which are less time consuming, costly and potentially risky. Such remedies include for example;
1. An order preserving properties or securing a specific fund.
These orders are commonly granted in situations where there is a dispute as to a party’s entitlement to the property or fund in question. The Court will take into account in any such application whether (i) there is a serious issue to be tried; and (ii) the balance of convenience favours making an order. In the circumstances the grounds upon which such Orders are granted are slightly different to Freezing Order as there is no requirement to show a real risk of dissipation, although the balance of convenience will often be swayed by demonstrating that there is in fact such a risk.
If an Applicant considers that he can rely on the cooperation of the party currently holding funds, he can simply apply for an order as opposed to an Freezing Order relating to the funds. This type of application is probably the cheapest and most low key alternative to a Freezing Order and indeed, the order can be granted by a Master (a lower grade of High Court Judge) or even in the County Court.
One downside however, is that such a remedy does not give the Applicant the same level of protection as a Freezing Order, which carries a penal notice and puts the Respondent at risk of imprisonment for failure to comply with the order (a risk which makes the Freezing Order more effective).
2. Appointment of a Receiver to hold assets of the Respondent
An injured party can seek the appointment of a Receiver to hold assets of the wrongdoer. This is done so pursuant to Section 37 of the Senior Courts Act, although a Receiver will only be appointed in support of a Freezing Order where the Order is insufficient on its own and where there is a measurable risk that the Defendant will act in breach of the Order.
A Receiver can be appointed over both companies and individuals.
3. Proprietary Orders
An injured party can seek what is known as a Proprietary Order. This is a type of Order which attaches to a specific asset or assets rather than a Respondent’s assets in general. It will only be granted in circumstances in which the Applicant is able to make out an arguable claim that it has some beneficial interest in the asset in question. Whilst often described as Freezing Orders, they are not in fact Freezing Orders. The test applied by the Court is different to that which is required in Freezing Order scenarios. There is no requirement in a Proprietary Order to show that there is a real risk of dissipation of assets. Indeed, where a claim is purely proprietary (i.e. there is no monetary claim) the Applicant should always give careful consideration to seek a Proprietary Order as opposed to a general Freezing Order as the Court is actually likely to refuse an application for the latter.
Furthermore, a Proprietary Order can be granted by the County Court as opposed to only in the High Court.