What is this document?
A freezing order, also known as Mareva injunction, is a type of interlocutory injunction which prevents a defendant/respondent from dealing with the whole or part of their assets (i.e. by moving assets abroad or dissipating them) while legal proceedings are ongoing. Freezing orders are therefore used to protect the plaintiff’s potential right to access an effective and just remedy at the conclusion of proceedings, ensuring that court process and justice are effective.
A freezing order may be granted where the circumstances suggest there is a danger of the defendant absconding, a danger of the assets being removed from the jurisdiction, or a danger of the assets being disposed of or otherwise ‘dealt’ with within the jurisdiction to the effect that the plaintiff will not be able to get the future judgment satisfied.
The value of the assets frozen must not exceed the maximum amount of the claim including interest and costs.
To obtain a freezing order, the applicant needs to prove to the court that:
- they had judgment given in favour, or have a good arguable case;
- the judgment is in danger of being unsatisfied in whole or in part due to the removal or disposal or dealing of the assets (in the context of an order against a judgment debtor); or
- the judgment is in danger of being unsatisfied in whole or in part where a third-party exercises control and a power of disposition over the assets (in the context of an order against a party other than a judgment debtor).
The Court also maintains its discretion to issue a freezing order where it would be in the interests of justice to do so.
What are the options for a response?
When a freezing order is made, a hearing is also scheduled where the defendant will have an opportunity to object to the order. The court will then decide whether the injunction is to be continued, varied or discharged.
It is possible that the order continues until there is a final judgment or a settlement is executed.
If a freezing order is issued against you, you can:
- Apply to vary the order: in this case you must demonstrate that it is unnecessarily harsh and onerous, it is too broad considering the amount of the claim, or that you have expenses which can’t be met only from unfrozen assets (such expenses may include ordinary living expenses, reasonable legal expenses, etc); or
- Apply to discharge the order: you must (i) prove that the requirements for the order were not met (for instance, the claimant does not have a good arguable case, or there is no risk of dissipation of assets); (ii) provide security for the amount of the claim by a payment into court or another agreed method; or (iii) demonstrate that the claimant did not disclose all relevant documents or information to the court.
What is the legal effect of ignoring it?
Breaching a freezing order is considered a contempt of court. Contempt of court is an act of disobedience that opposes or defies the authority, justice, and dignity of the court. This may be led to strict penalties, including charges, seizure of assets and a warrant being issued for your arrest.
What documents and information do you need to give your lawyer?
If you have a freezing order issued against you, you should seek legal advice as soon as possible and provide your lawyer with:
- the freezing order;
- copy of other documents relevant to the proceedings;
- documents relating to the assets frozen;
- information regarding facts and circumstances of the dispute;
- information regarding whether the assets frozen exceed the amount of the claim;
- information regarding your own or your company’s financial situation and whether you have financial capacity to pay the amount allegedly owed or to provide security in that amount by another agreed method.