Served with a Freezing Order in the UK: What Should You Do Next?
A practical guide to Freezing Orders (Part 2) by Ian Coupland, Head of Litigation, Adam Benedict.
If you are seeking to serve a freezing order, you can read our separate guide here.
OMG. I’ve been served with a freezing order. What now?
We have all read in the press about people being “served” with a Court Order. If the order is a freezing injunction, you will probably find that:
your access to your bank account is restricted,
business transactions become more difficult, and
you are required to list and disclose your assets to the claimant in a matter of hours.
All of this carries with it the threat of being imprisoned for contempt of court, meaning disobedience to an order of the Court.
If you have the misfortune to be on the receiving end of the legal broadside that is a freezing order, the likelihood is that the Order itself will be many pages long and will have been formally delivered to you with hundreds, and sometimes thousands, of pages of supporting evidence and exhibited documents.
You need expert legal advice, and fast.
At Adam Benedict, we have many years’ experience of acting for clients who have had injunctions, including freezing orders, made against them. We advise individuals, directors and companies facing urgent High Court applications and can guide you through immediate compliance, risk assessment and strategy. Further information about our injunction expertise can be found here.
We can assist with ensuring:
that the person injuncted complies with what they have been ordered to do;
that the Order was only made after the Claimant has satisfied all necessary legal requirements;
that the person injuncted’s rights are fully protected; and
that the person who obtained the Order is not acting unreasonably or oppressively.
We can also advise whether it is appropriate to seek variation or removal of the Order.
What Is a Freezing Order?
A freezing order is a form of injunction made by the Court to prevent a Defendant, including companies, employees and those acting on behalf of a Defendant, from hiding, removing, disposing of, or even merely dealing with assets.
The objective is to prevent the person injuncted from creating a situation where, following a judgment in the Claimant’s favour, no money or assets are available to meet the Claimant’s claims.
A freezing order may be of two broad types:
Where the Claimant is asserting ownership of specific property, for example alleging that the Defendant holds the Claimant’s money; and
Where the Claimant believes the Defendant may dispose of or conceal assets to defeat a future judgment, and the Court freezes assets up to a value sufficient to satisfy the claim and estimated legal costs.
The freezing injunction must contain a maximum amount, so that assets above that threshold are not frozen.
Whose Assets Are Caught by a Freezing Injunction?
This depends on the precise wording of the Order.
Normally, “the Defendant’s assets” are defined to include assets whether or not they are in the Defendant’s own name and whether solely or jointly owned. They include any asset which the Defendant has the power, directly or indirectly, to dispose of or deal with as if it were their own.
A person is regarded as having such power if a third party holds or controls the asset in accordance with the Defendant’s direct or indirect instructions.
Because everyone’s financial affairs are different, there are often genuine uncertainties about whether a particular asset is caught by the Order. We regularly advise clients on whether specific assets fall within the scope of a freezing injunction and how to approach compliance safely.
Does a Freezing Order Apply to Overseas Assets?
The normal form of freezing order restrains only assets within England and Wales.
However, the Court can grant an extended form of freezing injunction which applies to assets wherever they are located. Additional safeguards apply to such worldwide freezing orders.
The precise scope depends entirely on the wording of the Order made in your case.
I Have Been Ordered to Disclose All My Assets. Must I Comply?
Freezing orders almost always contain “ancillary orders” designed to make the primary injunction effective.
The most common requirement is that the person injuncted must, often within 48 hours of service, inform the Claimant’s solicitors of all assets whether in their own name or not and whether solely or jointly owned, providing details of value, location and supporting information.
Usually this requirement is subject to a minimum value per item to avoid listing everyday household possessions.
The Order then normally requires the person injuncted to produce an affidavit, meaning written testimony sworn as true, verifying the disclosure and exhibiting supporting evidence such as bank statements. Compliance deadlines are typically measured in days.
Because the Order will contain clear warnings that refusal to comply may amount to contempt of court, potentially resulting in imprisonment, fines or seizure of assets, it is critical to obtain legal advice immediately upon service.
The Privilege Against Self-Incrimination
In England, the principle sometimes referred to in the United States as “taking the Fifth” is known as the privilege against self-incrimination.
In the standard form of freezing injunction, this privilege is expressed in terms that allow a person to refuse to provide information if doing so would be likely to incriminate them, but it strongly recommends taking legal advice before doing so.
The principle is that a person cannot be forced to give evidence that may tend to show they have committed a criminal offence. However, reliance on this privilege can be a double-edged sword. Whilst it may avoid certain disclosures, it may also signal involvement in potentially unlawful conduct, which can affect how the Court views the case at a later stage.
Situations where it is appropriate to rely on the privilege are rare and require careful consideration.
If My Assets Are Frozen, How Do I Live and Run My Business?
The standard form of freezing order includes provisions allowing the person injuncted to access funds for ordinary living expenses and reasonable legal costs.
However, the sums initially permitted are often lower than actual expenditure. It may therefore be necessary to seek the Claimant’s agreement or apply to the Court for variation to increase the permitted amounts.
The Order also does not prohibit dealing with assets in the ordinary and proper course of business. This is intended to avoid bringing legitimate businesses to a standstill, provided transactions are genuinely ordinary and proper.
Understanding what falls within permitted expenditure can be complex and should not be assumed.
Can a Freezing Order Be Set Aside or Varied?
Every freezing injunction contains a provision allowing any affected person to apply to the Court to vary or discharge the Order.
Before making such an application, the person affected must notify the Claimant’s solicitors. If evidence is relied upon, the substance must be communicated in advance.
An application to set aside is not limited to cases of mistaken identity. When seeking a freezing order, a Claimant must comply with the duty of full and frank disclosure. If material facts were not disclosed, or if the evidence presented was incomplete or misleading, the Court may discharge the injunction.
There are other grounds upon which variation or discharge may be appropriate. Strategic advice is essential before taking this step.
How Long Does a Freezing Injunction Last?
A freezing injunction is usually granted initially without notice and lasts for a short period, often around one week.
The Claimant must then return to Court on what is known as the Return Date to seek continuation of the Order.
This is the Defendant’s opportunity to seek variation or discharge. In practice, the complexity of the case may mean more time is required to prepare. Tactical decisions may need to be made about whether to seek an adjournment of the Return Date in order to prepare a full response.
We are experienced in advising clients on these strategic decisions at what is often a highly pressured stage of proceedings.
Cost of Resisting or Varying a Freezing Order
We will not pretend that resisting continuation of an injunction or applying to set it aside is inexpensive. Such steps are only worthwhile where there is a serious dispute and significant sums at stake.
We say this because we do not wish to waste your time or ours.
We always provide clear estimates of likely legal costs going forward. Each stage of work is pre-funded, with funds held in client account until required. This allows clients to track expenditure and make informed strategic decisions.
Although freezing orders allow for reasonable legal costs to be met from frozen assets, difficulties can arise where the Claimant asserts that those assets belong to them. In such circumstances, alternative funding arrangements may be necessary.
Urgent Advice If You Have Been Served with a Freezing Order
Being served with a freezing injunction is serious. Deadlines are short, compliance obligations are strict, and the consequences of getting it wrong can be severe.
Early strategic advice can make a significant difference to how the situation develops. If you have been served with a freezing order and need immediate guidance on your position, our injunction specialists are available to assist.
