A Guide To Freezing Injunctions

Freezing injunctions are remedies that can be obtained on an emergency basis during, or at the start of civil proceedings. They are usually only considered in high-value cases, often involving suspected fraud, and in circumstances where the defendant(s) may dissipate their assets.

This may apply in cases of stolen property in which the defendant is likely to sell or convert goods, frustrating the claimant’s attempts to recover them, or in large scale damaged cases where the defendant(s) may spend money obtained fraudulently, or liquidate their own assets to escape the consequences of a successful claim.

The consequences of a freezing injunction involve strict limits being placed on the ability of the defendant(s) to spend their own money (usually confined to personal living costs and limits on legal expenses) and prevent them from executing transfer deeds so they cannot dispose of the property.

Freezing orders, however, are only granted if there is:

In addition, the decision in American Cyanamid Co (No 1) v Ethicon Ltd [1975] UKHL 1 established that any applicant must demonstrate that:

This confines freezing injunctions to essentially (though not necessarily), more serious cases – usually involving fraud or deceit. Furthermore, the Court should not grant them if they would be too onerous on the defendant(s), such that the benefit to the claimant would be eclipsed.

Method of application

Freezing injunctions can be sought on an emergency, or “interlocutory” basis, and can be made without advance notice to the defendant(s) in some cases. This is when there is a real risk that the defendant(s) might act quickly to get rid of assets if they know that there is a Court application against them. The Claimant must complete an application form supported by an affidavit (sworn statement) of evidence, setting out what has happened, exhibiting the claimant’s evidence, and explaining why the injunction is necessary.

The Claimant must also – usually – issue proceedings in the High Court at the same time, and a claim form and particulars of claim should be prepared and filed. This can in some circumstances be delayed if the application is extremely urgent but the Court will usually require the claim to be issued within a specified time period afterwards.

If the Court sees fit to make the injunction, a return date will be fixed – in other words, a second hearing, with the defendant(s) present. At this hearing, the Court will consider whether the injunction should continue. In between the first hearing and the return date, the defendant(s) will normally be given an opportunity to file evidence in response and to explain the whereabouts of any property the claimant seeks.

Consequences of freezing injunctions

The claimant must ensure the order is served on the defendant(s) personally, and if it has not done so, then the defendant(s) may resist it. Usually, process servers are used to ensure that the documents are served and if personal service is not possible, it is expected that reasonable attempts have been made to locate the defendant(s) before service via another method. The process server must submit an affidavit to the Court setting out what has been done to effect service.

The claimant must also serve the injunction on the banks used by the defendant(s) and if the bank itself is not known, there are ways and means of serving such orders on a number of banking institutions. The defendant(s) served with a freezing injunction will be unable to spend anything more than the limits placed on them by the Court. However, the defendant(s) can apply for these to be amended if good cause is shown. Usually full financial disclosure will follow.

The costs of a freezing order application are usually ordered against the defendant(s) unless they can demonstrate that the order was not appropriate, excessive, or misguided. If a defendant, subject to a freezing injunction, has lost out on something significant (e.g. been unable to purchase a property or unable to contribute to a business transaction), then he/she may bring a damage claim against the claimant, who will have to meet that claim due to the undertaking in damages.

Freezing orders are very punitive but effective remedies, but are not for the faint-hearted and should be sought only if the claimant has a strong and high-value claim, and can demonstrate that the defendant(s) will be able to avoid meeting that claim unless the order is made. For defendants, being served with an injunction is a very serious matter and should not be ignored. Any breach of the terms of an injunction amounts to contempt of Court which is a criminal offence.