Freezing orders can serve a real need in some family law cases. People often react irrationally during times of high stress or emotion. This is especially true during a divorce. The end of a marriage often comes with feelings of betrayal and anger which can prompt people to act spitefully. They think that their spouse doesn’t deserve a share of the money or the house. Such people will sometimes attempt to spend as much money as they can or sell assets in order to prevent their former partner from receiving any financial gain from them.
So what can be done to stop such action? This is where a freezing order can be helpful. They are designed to prevent a person disposing of or dealing with assets until the conclusion of a divorce or financial dispute. Freezing orders can be limited to assets in the UK or they could apply worldwide. They are sometimes called ‘Mareva Injunctions’ after a 1980 High Court case which involved an early example of such an order.
So what assets can be frozen by a freezing order?
In theory any assets can be frozen. Typically the types of assets involved in such cases include property and bank accounts. A Freezing order can even include assets not yet in existence, like an imminent award of damages for personal injury.
Who makes a freezing order?
These types of orders are typically made by the High Court but District Judges and Circuit Judges also have jurisdiction to make them.
Upon what basis are freezing orders made?
The Court has to be satisfied that the other party is about to sell or otherwise get rid of an asset with the intention of preventing someone else from receiving any financial benefit.
It is crucial to comply with the strict conditions that apply before trying to obtain a Freezing Order. Those conditions are set out in detail in UL v BK – a 2013 High Court judgment. In summary, the points made within this are:
- It must be shown that there is a good, arguable case that refusing to make such an order would create a real risk of injustice.
- There must be solid evidence of an intention to get rid of assets.
- The application will usually have to be supported by an ‘undertaking’ (promise) by the applicant that they will be responsible for any costs incurred either by their spouse or any third parties. This can include compensation for anyone else who experiences a financial loss as a result of the application.
- The order should be ‘hedged out’ with exceptions enabling the other party to pay their living expenses, debts, legal costs and maintenance.
- It is important to only apply to freeze assets amounting to the value of the claim.
- Any statement made in support of a freezing order “must be scrupulously candid”. Any failure to do this can lead to the application failing and the party who first applied for it can be ordered to pay the other party’s costs. It is important to take a detailed note at any court hearing which may need to be seen by the respondent.
- An ‘undertaking’ may also be required to serve the Court papers to the other party by a specified date.
How long will a freezing order last?
As long as the Court deems fit. Freezing orders are usually made pending the resolution of proceedings.
How do I contest a freezing order?
It is very important to take immediate legal advice from a solicitor with specific expertise of dealing with freezing orders.
Can a freezing order affect overseas assets?
Yes, but an order freezing assets held in other countries is only likely to be made where it is likely that the foreign courts will cooperate.
What happens if I disobey a freezing order?
Someone who disobeys a freezing order is likely to be in contempt of court. If that happens, the offending party can be sent to prison, fined or have their own assets seized.
Anything else I should know?
There is little doubt that an application to the Court for a freezing order should not be undertaken lightly. In cases when it is entirely necessary to keep certain assets and there is a clear intention on the part of the other party to get of them, this remedy provides real teeth. It is, however, crucial to take specialist independent legal advice from a solicitor with experience of making these types of applications.