Service Of A Freezing Order And Other Documents

The requirements explained 

If a Freezing Order is granted, the Applicant must ensure that every effort is made to effect proper service of all relevant documents on a Respondent.  Those documents need to be served as soon as possible and also personally on the Respondent. An Applicant’s solicitors will usually retain the services of a specialist process server to ensure service is carried out.

The process server will then need to produce an affidavit of service detailing the time, date and the manner of the service, together with exhibiting the documents he served on the Respondent.

An Applicant will need to serve the Respondent with the following documents:

1. An original sealed copy of the Freezing Order made by the Court.
2. A sealed copy of the Application Notice.
3. A copy of the Affidavit in support of the application, together with any exhibits to that Affidavit.
4. A full note of the hearing prepared by the Applicant’s solicitors.
5. A sealed copy of the Application Notice for continuation of the Order and setting out the date by which the parties must return to Court for the next stage of the proceedings (“the Return Date”).
6. An issued Claim Form and Particulars of Claim in respect of the substantive proceedings, if issued and not yet served.

In addition to the Respondent, the Applicant must serve a copy of the Freezing Injunction on the following parties:-

1. Any other party named in the proceedings.
2. Any third parties who may hold assets belonging to the Respondent, such as banks where accounts are held.  This is vital as it reduces the risk that the Respondent may seek to move monies out of the jurisdiction or beyond the Applicants reach.  If the bank is not on notice of the Injunction, then it cannot be criticised if monies are removed from a Respondent’s bank account prior to being put on notice.

Problems with Service – how to deal with this issue

If it is not possible to serve a Respondent promptly, then an Applicant should consider making an application to Court for an extension of time for service of the Order.  

Further, if personal service cannot be carried out (for example the Respondent cannot be located), then this can cause difficulties to an Applicant.  However, the Court can be satisfied of service if evidence is proved that the Respondent was notified of its terms by telephone, e-mail or otherwise.  If this is the case, then the Court may dispense with the requirement for personal service and make an Order for an alternative means of service, possibly by service of a Respondents legal advisors and/or on another third party.

The Return Date explained

If a Freezing Order has been made without notice to a Respondent, the Court will always order that a further hearing take place between the parties very shortly after the Order is made – this is what is known as the “Return Date”.  

Ordinarily, the Return Date is set 7 – 14 days from the granting of a Freezing Injunctionand provides an opportunity for the Respondent to appear at Court once they have been served with the various Court documentation.  It is open to the parties to seek an adjournment of the Return Date by consent, particularly in circumstances where a Respondent needs to prepare Affidavit evidence in response (and may require more time). This is particularly useful if the Respondent is thinking of challenging the Freezing Order or seeking to vary its terms. However, the Respondent should be aware that the Freezing Order will continue to apply until it has been discharged by the Court or other Order is made.

At the full hearing, a Respondent can do one of three things:-

1. Seek to have the Freezing Order discharged.
2. Seek to vary the terms of the Freezing Order.
3. Agree to the continuation of the Freezing Order until trial or earlier Order in the underlying substantive proceedings.

For more information about varying or discharging Freezing Injunctions, please see our separate booklet on these subjects.

Affidavit Evidence Explained

Any application made for a Freezing Order must be supported by written Affidavit evidence (essentially a form of witness statement).  This is evidence the Applicant must swear on oath as being true and is done so in support of the application.  

An Affidavit is a written statement made by a party which is sworn by the relevant individual on oath as being true and correct to the best of that person’s knowledge and belief. In the event that it can be shown that the Affidavit is incorrect and that the individual was either seeking to deceive the Court and/or was reckless as to the information given then it is possible that the relevant individual swearing the Affidavit may be held to be in Contempt of Court, and therefore potentially subject to imprisonment and/or a fine.

It is absolutely essential that the Affidavit is drafted carefully and in sufficient detail to support the application for a Freezing Order.  If it is not, then the application is highly likely to fail.  

What the Affidavit should deal with in order to obtain a Freezing Order

The reasons for urgency.  The Court will need to be convinced that the matter is urgent and why, if the application is being made without any notice to the Respondent, this is necessary.

The Respondent’s assets.The Court will also require some information regarding the Respondent’s assets, including evidence as to their nature and current location. Further, the Court will require evidence of the potential risk of dissipation by the Respondent in the event that the Freezing Injunction is not granted.

A good arguable case. The Applicant will also have to show there is a good arguable case in the underlying substantive claim against the Respondent.  Ideally, the Applicant will need to exhibit a draft claim form relating to the underlying claim (if not yet issued) so that the Court can see that there is a claim to be litigated out against the Respondent.  The Court may also require the Applicant to provide an undertaking that the claim form will be issued and served as soon as practicable possible.

Any defences the Respondent may have. If relevant, the Affidavit will have to outline (with as much particularity as possible) any possible defences which the Respondent may have including those of set-off, counterclaim or possible privilege against self- incrimination (which reflects the Applicant’s duty of full and frank disclosure – see below).

The possible Insolvency of the Respondent. If the Respondent is likely to go into some form of insolvency in the near future, this needs to be drawn to the Court’s attention.  If it is demonstrably the case that insolvency is likely, then the Court may refuse to grant an injunction on the basis that it will provide no added protection to the Applicant.

Any prejudice of hardship to the Applicant. The Affidavit will need to cover the issue of any likely prejudice or hardship which the Applicant may suffer if the Freezing Order is not granted.

Any criminal convictions. If the Applicant is subject to any criminal charge or conviction, this needs to be disclosed in the Affidavit.

The financial standing of the Applicant. In order to deal with the issue of undertaking in damages, the Applicant will need to provide detailed evidence of its financial standing, often by exhibiting its latest audited / management accounts (and possibly also by providing copies of bank statements), particularly in light of the Applicant’s obligation to provide an undertaking in damages should the Application be unsuccessful.

Any foreign law considerations. If the Freezing Order is sought on a worldwide basis, it might be that issues of foreign law in different jurisdictions also needs to be covered. The Applicant may also need to consider the issue of seeking leave to serve the proceedings outside the jurisdiction of the Court (i.e. outside England and Wales).

The issue of Full and Frank Disclosure. In addition to the above, every Applicant in these types of proceedings is under a duty to provide full and frank disclosure, meaning that it must disclose all relevant material to the Court, either factual or legal and whether in favour of the Applicant’s claim or not, which may have a bearing on the Court’s decision to grant the Order.  The issue of full and frank disclosure is dealt elsewhere in this series of booklets.

Without Notice Hearings explained

Often, Freezing Orders are sought without any notice being given to a Respondent. The reason for this is that if notice of the application is made to the Respondent prior to any Order being made then it is possible that the Respondent may seek to dissipate his assets and/or put them out of the reach of an Applicant, thereby defeating the whole purpose of seeking a Freezing Order.

If the Application is made without notice, there is an obligation on the Applicant / the Applicant’s solicitor to prepare a full and detailed note of the hearing. This should then be served upon the Respondent as soon as possible, commonly as part of the pack of documents (including Court Orders and evidence in support) which needs to be served on the Respondent once the Freezing Order has been obtained.

The Documents Required In Order To Obtain A Freezing Injunction

There are a number of documents which will need to be completed prior to attending Court to obtain a Freezing Injunction.  These are as follows:-

1. An Application Notice. This is a document which will be prepared by the Applicant’s legal advisers and simply sets out the name and address of the Applicant and Respondent, the nature of the Application sought by the Applicant and confirms the basis upon which evidence is adduced.  
2. A draft of the Freezing Order. This is a very important document as it sets out the terms of the Order sought by the Applicant from the Court. Commonly, these follow a standard form of wording, although they are often amended to suit the particular circumstances of an Applicant’s case. For more information relating to the content of a standard Freezing Order and possible variations, please see our other booklets in this series.

Often, the draft Freezing Order will be drafted by the Applicant’s legal advisors in conjunction with the barrister retained by the Applicant to attend Court and seek the Order.  

       3. In addition to the Freezing Order itself, Applicants often apply for what are                                   called Ancillary Orders, which are essentially various additional orders which can be                   requested from the Court at the time the Freezing Order is  sought and, if granted, will                 also be binding on the Respondent.   They often exist to ensure the Freezing                                 Order can be effective.  Whilst these are often varied, they can include the following:-

• An Order for cross-examination of the Respondent about the nature, location and / or value of his assets;

• An Order that the Respondent delivery up his passport;

• An Order that a Receiver be appointed over the Respondent’s company;

• An Order for immediate delivery up of assets or a payment into court;

• An Order that the Respondent’s bank and / or any other financial institution be authorised to disclose information to the Applicant;
• An Order for a Search Order;
• An Order requiring the disclosure of the identity of the third party funder;
• An Order that any party who is holding assets / documents on behalf of the Respondent be prevented from dealing with and / or disposing of the same.

It is vital when considering making an application for a Freezing Order that careful thought is given to what further orders an Applicant may wish the Court to make in order to fully protect its position.  Failure to do so can result in the Applicant not putting itself in the strongest position possible at the outset of the proceedings and it is a waste of time and legal costs if the Freezing Order is obtained but is ineffective.

In the circumstances it is vital that specialist legal advice is taken as to the nature and extent of any Ancillary Orders which may be sought.  It is often a combination of the standard form of Freezing Order and the appropriate Ancillary Orders which make it such a powerful litigation weapon at the disposal of an Applicant.

Affidavit Evidence explained

Any application made for a Freezing Order must be supported by written Affidavit evidence (essentially a form of witness statement).  This is evidence the Applicant must swear on oath as being true and is done so in support of the application.  

An Affidavit is a written statement made by a party which is sworn by the relevant individual on oath as being true and correct to the best of that person’s knowledge and belief. In the event that it can be shown that the Affidavit is incorrect and that the individual was either seeking to deceive the Court and/or was reckless as to the information given then it is possible that the relevant individual swearing the Affidavit may be held to be in Contempt of Court, and therefore potentially subject to imprisonment and/or a fine.

It is absolutely essential that the Affidavit is drafted carefully and in sufficient detail to support the application for a Freezing Order.  If it is not, then the application is highly likely to fail.  

APPLYING FOR A FREEZING ORDER

KEY PROCEDURAL REQUIREMENTS EXPLAINED

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 Application to 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.

The remainder of this series of posts deals primarily with Without Notice Injunctions, although some procedural and evidential aspects of On Notice Injunctions are the same.

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 Order and simply taking too much time to compile that evidence in support of an application. Too much delay might be misconstrued by the Court as:

1. Weakening an Applicant’s evidence that there is a real risk of dissipation of assets.
2. Indicating that any dissipation has already taken place by the Respondent during that period of delay which effectively renders the Injunction pointless.
3. 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:

1. In a format already agreed by the parties.
2. In connection with or ancillary to a Charging Order.
3. 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.