Christopher Shepherd, Litigation Solicitor at Courtyard Solicitors in Wimbledon London, comments on how a “freezing order” was used to assist a victim of suspected mortgage fraud.
The client believed the plausible story of someone who it appeared wanted to help him with his mortgage arrears. In the event the opposite happened; the client lost a great deal of money when the house was sold and the bulk of the money disappeared in to the pockets of the suspected fraudster. Courtyard Solicitors applied to the High Court and froze the opponent’s bank accounts so their client's money could not be moved. Later Courtyard Solicitors negotiated a successful outcome for their client and recovered his money plus costs. So what are freezing orders and what does the court need to be satisfied with before they are granted?
Freezing Injunctions: what are they?
freezing injunction has been described as the “nuclear weapon” in the litigator’s armoury. This is an apt description given that where a Claimant obtains such an Order, he or she is able to freeze the assets of an opponent up to a certain value as set by the court , even before a Judgment has been obtained. This can have a shattering impact on the opponent and speed their approach to the negotiating table.
A little history
freezing injunction used to be known as a “Mareva Order”. This came about after one of England and Wales’s most famous Judges, Lord Denning, heard a case in 1975, involving a ship known as “Mareva”. The vessel had been loaded with fertiliser at the port of Bordeaux for a trip to the Far East. In the event, the charterers could not pay the ship owners the full amount of the hire cost, so the ship owners issued a Writ in London for the money due. Even though no Judgement had been obtained against the charterers, the ship owners persuaded Lord Denning that monies in the charterer’s bank account in London should be frozen. This was to restrain them from spiriting away the cash in the bank until the trial of the action. Thus was the “Mareva Order” born.
What does a freezing injunction do?
Normally such an Order directs a defendant not to remove from England and Wales any of its assets up to a certain value, nor in any way to dispose of, deal with or diminish the value of those assets up to the same amount. An upper limit is put on the value of the frozen assets. Usually, the defendant is also ordered to provide a statement to the claimant within a short period on the type and whereabouts of its assets. The Order will normally state that wrongful refusal to provide the information is contempt of court which can make the Defendant liable to imprisonment.
What will the court expect the Claimant to show?
The approach of the court will be: first, that the burden is on the applicant to satisfy the threshold of evidence required. This means that, second, unless the claimant has raised a persuasive case (known to lawyers as a “prima facie case”) to support the application he or she will not succeed and the defendant will not be obliged to provide any explanation for his conduct. In layman’s terms it follows the Claimant needs a pretty strong case on the merits of his claim plus some evidence to show the Defendant might dissipate his assets. Thirdly the Claimant needs to prove on an application against more than one defendant, that the required risk of dissipation must be established against each defendant named in the application.
What does risk of dissipation mean and why is it important?
To succeed in an application for a freezing order a claimant needs to show there is a risk of dissipation of the defendant’s assets. The test for risk of dissipation for a freezing injunction is whether there is a real risk, judged objectively and based on solid evidence, that a future judgment would not be met because of unjustifiable dissipation of assets. This is a high hurdle to overcome and a statement in support of a claim by a Claimant needs to show from objective facts that it can be shown the defendant is likely to move assets or dissipate them: unsupported statements or expressions of fear that a Defendant might move assets will carry little weight with the Judge.
Uses of the freezing order:
it’s not just big companies who may need to use such an order. They can be deployed to assist anyone who feels they have a good claim against an opponent, where it is feared on good grounds the opponent may dissipate or dispose of assets and money to a place where the courts of England and Wales cannot reach. For the man or women in the street who is a victim of fraud or similar wrong-doing, such orders can be very useful - the freezing order obtained by Courtyard certainly assisted the client mentioned in this article
How would Courtyard Solicitors LLP deal with my case?
case will be considered on its own merits and with regard to the circumstances of the client. Advice will be tailored accordingly. Where necessary the case may be funded pursuant to a Conditional Fee Agreement or Damages Based Agreement so legal costs become due only where there is success for the client on terms to be agreed. Courtyard works closely with barristers who specialise in this area of law, such as Stephen Bishop, barrister at The 36 Group. After the case has been investigated a barrister would advise on the client’s prospects of success for such an order, and later represent the client at the actual court hearing. This would normally take place at the Rolls Building which is part of the Royal Courts of Justice in London.