Out In The Cold – How To Obtain A Freezing Order During Divorce Proceedings
One of the biggest fears of the financially weaker party in a high-net-worth divorce case is that their spouse has not made a truthful disclosure regarding their financial situation and is hiding money and/or assets. This is especially true if the less wealthy party did not instigate the divorce. Their spouse may have had the luxury of many months in which they could squirrel away assets in trusts, offshore companies, or simply dispose of them.
If you suspect your spouse has not made full financial disclosure to you, it is important to swiftly voice your concerns with your solicitor. There are actions they can take not only to locate any assets which have not been disclosed, but ensure they cannot be moved or disposed of during the divorce proceedings.
What is a Freezing Order?
A Freezing Order (formally known as a Mareva injunction) is an interim order preventing a party from dealing with or disposing of assets. In Bank Mellat v Nikpour, the judge described Freezing Orders as the ‘nuclear weapon’ of family law due to their ability to punish someone in anticipation of them taking action to prevent a fair financial settlement. In addition, if a Freezing Order is granted, innocent third parties, such as business partners, may also be adversely affected.
This is one of the reasons why it is always advisable to contact a solicitor as soon as possible, especially in high-net-worth divorce. If it looks like there may be a need to seek an injunction to prevent the disposal of assets, they can advise you as to your conduct, so you will come to equity with ‘clean hands’.
An equitable remedy…
Freezing Orders fall under what is called an ‘equitable remedy’ meaning they are granted at the court’s discretion. Certain maxims apply to all equitable remedies, including:
- The ‘clean hands’ principle which means the applicant must not act in a dishonest way themselves to achieve the order; and
- The doctrine of ‘laches’, which means the applicant must bring an application as soon as possible.
What Assets can be Frozen Freezing Order?
A Freezing Order can be applied to assets of every kind, including:
- Property and land
- Bank accounts
If you plan to apply for a Freezing Order, it is crucial to seek the advice and representation of an experienced family law solicitor. Because of their power, the Courts are unsympathetic to poorly prepared applications, or solicitors who fail to follow the correct procedure and will not hesitate to deny such an application and even impose adverse costs orders as a penalty.
How can I obtain a Freezing Order?
- Strong Merit. Your case must have strong merit and reasonable cause to be brought before the court.
- Substantial Evidence. If you’re putting the order in place, you must prove that there’s a risk your spouse/ civil partner is likely to dispose of assets with the aim of denying you access to a fair financial settlement.
- No dishonesty. As an equitable remedy, you need to disclose as much information as possible to your solicitor, which may need to be placed in your application. Dishonesty, particularly in an ex partie application (see below), will not work in your favour. You must ‘come with clean hands’ i.e. with good intentions, or it is unlikely that the order will be granted.
- Speed. With an equitable remedy, your application must be brought as soon as possible. Delaying your application unnecessarily could have adverse effects on your outcome.
It is important to note that the court can preserve the assets in their original state, and the rules and safeguarding around issuing a freezing order must be strictly applied or the order cannot be given. If the injunction is refused, then this can result in legal injustice.
Do I have to tell my spouse/ partner I am applying for a Freezing Order?
According to the landmark case UL v BK, you do not have to notify your spouse that you are requesting the injunction, known as an 'ex-partie'. The element of surprise is often essential in these circumstances.
However, ex partie applications will only be granted in extraordinary circumstances, due to the severe effects and conflict it is likely to cause.
Justice Mostyn stated; “No notice at all would only be justified where there is powerful evidence that the giving of any notice would likely lead the respondent to take steps to defeat the purpose of the injunction, or where there is literally no time to give any notice before the order is required to prevent the threatened wrongful act. Cases where no notice at all can be justified are very rare indeed.”
So, Should I apply for a Freezing Order?
Freezing orders are powerful weapons in a family lawyer's toolbox to prevent one party in a divorce deliberately depriving the other of a fair financial settlement. With the help of a forensic accountant, assets can be quickly traced and frozen. An experienced solicitor will be able to help you with this if you believe your partner/spouse is hiding assets and not fully disclosing their finances.