A freezing injunction is a useful remedy granted by the Court that prevents the other party from dealing with or dissipating his/her assets so as to frustrate a (potential) judgment against him/her. It can restrain all kinds of assets, including bank accounts, shares, properties, etc. within England and Wales as well as those situated outside England and Wales, i.e. worldwide freezing injunction.
The applicant for a freezing injunction must satisfy a number of requirements and one of them is the real risk of the assets being dissipated. Failure to satisfy this requirement may result in the Court not granting the freezing injunction application and ordering the applicant to pay the legal costs of the application.
Risk of dissipation
In the case of National Bank Trust v Yurov [2016] EWHC 1913 (Comm), the Court described the risk of dissipation as a real risk of ‘unjustified dealing’ with the respondent’s assets, which includes not only dissipation but other ways in which assets may be put out of reach of enforcement, like hiding the assets overseas or transferring the assets to third parties.
For cases that concern commercial parties, pursuant to the case of Congentra AG v Sixteen Thirteen Marine SA The Nicholas M [2008] EWHC 1615 (Comm), [2009] 1 All ER (Comm) 479, the applicant has to show that:
1. There is a real risk that a judgment will go unsatisfied, in the sense of a real risk that, unless restrained by an injunction, the respondent will dissipate/dispose of his/her assets other than in the ordinary course of business; or
2. That unless the respondent is restrained by an injunction, assets are likely to be dealt with in such a way as to make enforcement of any award or judgment more difficult, unless those dealings can be justified for normal and proper business purposes.
For cases that concern private parties, pursuant to the case of Bord Na Móna Horticulture Ltd v Washington [2017] EWHC 2406 (Ch), instead of showing that there is a real risk of the respondent dissipating/disposing of his/her assets other than in the ordinary course of business, the application has to show that the respondent does so other than in the ordinary course of the conduct of his/her personal and financial affairs, including his/her dealings with family.
Risk of dissipation being real
The risk of dissipation has to be objectively real based on the evidence adduced before the Court. Mere inference/generalised assertion/suspicion/fear/speculation is not itself sufficient. The burden of proof is on the applicant and should not be shifted to the respondent.
The Court will take the following non-exhaustive list of factors into consideration:
- The respondent’s lack of commercial morality;
- The respondent’s conduct during the proceedings;
- The respondent’s dealings with his/her assets;
- The respondent’s financial circumstances;
- The nature of the assets; and
- Delay in complying with or breach of Court orders.
How can we help?
Ronny Tang is an Associate in our expert Dispute Resolution team, specialising in defamation claims, contentious probate and inheritance claims, Trusts of Land and Appointment of Trustees Act 1996 claims, Equality Act 2010 claims and Protection From Harassment 1997 claims.
If you need any advice concerning the subject discussed in this article, please do not hesitate to contact Ronny or another member of the team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online enquiry form.
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