Freezing Orders words of warning – UL v BK [2013] EWHC 1735 (FAM)
On 21 February 2013 the wife obtained an ex parte freezing order against the husband having filed divorce proceedings earlier that month.
The order prevented the husband from dealing with a property in Marbella worth approximately £10,000,000 and froze further assets up to a value of £20,000,000.
Curiously the order was obtained in these terms despite the wife acknowledging that she was unaware of any other property in the husbands name and conceding that the Marbella property might, indeed, be the only asset in his sole name.
On 16 May 2013 the matter came before Mostyn J on appeal by the husband. It will not be the focus of this blog but the Judge was clearly irritated by the multitude of errors in the ex-parte order which, to use his words, omitted every single safeguard.
The Judge starts by giving an impressive review of the authorities which govern ex-parte applications for freezing orders stating that exceptional urgency requires a real risk that the defendant is about to remove assets from the jurisdiction in order to avoid his responsibilities and in a manner which is quite different from his ordinary course of business/living. It is a reminder that these cases are exceptional and the Judge went on to say that short informal notice must be given to the defendant unless it is essential that he is not made aware of the application.
Mostyn J gave a very clear warning that he and other Judges in the division were concerned by the plethora of unworthy applications.
To curb the enthusiasm for these applications he helpfully identified the critical importance of the following factors:
a) Assets that are substantial, complex and entirely within the control of one party;
b) Assets that are overseas, making registration of orders more complicated;
c) Potential difficulty in reviewing dispositions where assets are located in foreign jurisdictions;
d) Assets that can be easily and instantly disposed of or manipulated to take them out of the Courts reach;
e) Actual prior attempts to dispose of or manipulate assets;
f) Threats to dispose of or manipulate assets;
g) Reduction or withholding of financial provision either during or since separation;
h) Other evidence of intention or threats to defeat a claim.
The message is clear; ex-parte freezing orders will only be made and continued when an applicant is able to address and satisfy the factors referred to above. Orders must be drawn with enormous care and with proper safeguarding provisions for the defendant. Failure to heed such advice will lead to wasted cost orders.