What is a Freezing Injunction Order in Divorce Financial Proceedings?

A freezing order is a family court injunction to freeze assets to prevent property or money from disappearing or being dissipated before you can obtain a financial court order after your divorce.

You may need a freezing order if your spouse is transferring assets or is spending money to defeat your financial claims. You may need to oppose a freezing injunction application if the application is unnecessary or if the order will prevent you from operating your business or stop you from paying your bills.

Contact OTS Solicitors Today for Expert Family Law Advice.

Key points about freezing injunctions

Key points about freezing injunctions include:

1. You need to apply to the family court for an injunction order as part of the divorce and financial remedy proceedings.
2. A freezing order is discretionary. The judge will only grant an order after considering the evidence.
3. A freezing order is temporary – there will be an end date when the freezing of the assets ends.
4. A freezing injunction does not change the legal ownership of the frozen asset.
5. The wording of the freezing order may not prevent all transactions. The injunction may allow an account holder to continue paying existing direct debits and identified expenditure so that they can pay their reasonable living expenses.

What assets can be frozen in a freezing injunction?

Most assets can be frozen in family law financial remedy proceedings. Common examples of frozen assets include:

1. Bank accounts – personal or business.
2. Property – residential or commercial.
3. Investment accounts.
4. Stocks and shares.
5. Pensions to prevent the withdrawal of the tax-free sum or to stop other large withdrawals if the pension fund is in drawdown.
6. Business assets, including the sale of shares in a family business or the transfer of intellectual property rights.
7. High-value items such as gold, jewellery, watches, art collections or yachts.
8. Money held in a mortgage offset account, or the equity in a family home or buy-to-let property, through the property owner remortgaging the property.
9. Inherited funds with the respondent planning to sign a deed of variation to avoid the inheritance being transferred to them as part of the estate administration process.

Who can be made the subject of a freezing injunction?

A freezing order stops a named person from disposing of a specified asset or assets.

The named respondent will be the husband, wife or civil partner of the person applying for the freezing injunction.

Third parties may also be involved. For example, if:

1. A husband is planning on transferring ownership of his new house to his new partner.
2. A business owner intends to transfer her shares in the family business to her sibling.
3. A spouse plans to send significant funds overseas to the extended family.

Other names for freezing orders

Family Law Solicitors  sometimes refer to freezing orders and injunctions as:

• Section 37 orders.
• Mareva injunctions.

This is because freezing orders are made pursuant to Section 37 of the Matrimonial Causes Act 1973. Mareva injunctions refer to a family court case.

Procedure to obtain a freezing injunction  

The procedure to obtain a freezing injunction varies depending on the nature of the asset requiring protection, but the process can involve:

1. Application by the spouse requesting the freezing order supported by a statement explaining why the application is urgent and why the asset is at risk of being sold, transferred at an undervalue or spent.
2. A hearing may occur to consider if the freezing order should be made ex parte (this means without the respondent being made aware of the court hearing or application).
3. The respondent is notified of the injunction application and any temporary order. Other relevant third parties are served with the order, such as financial institutions.
4. The respondent can file evidence in response, setting out reasons why a freezing injunction should not be made or renewed.
5. A court hearing takes place where the applicant and respondent make representations on whether the freezing order should be made or continued. The court can make a cost order requiring the applicant or the respondent to pay the costs of the freezing order application. Alternatively, the court can reserve the issue of who pays the costs of the injunction application to the final hearing of the financial remedy application.
6. In the financial remedy proceedings, the court may decide to join third parties as intervenors in the proceedings. For example, if a spouse has transferred her business assets to her best friend or a husband has transferred his buy-to-let property portfolio to his sibling.

Service of any interim or final freezing injunction is critical, as the respondent or any relevant third party will only be in breach of the order and liable to contempt of court if they have been officially served with it.

Grounds for a freezing injunction  

A husband or wife can think there are grounds for a freezing injunction where there is no evidential basis, or they may be reluctant to apply for a Section 37 injunction because of the additional animosity it will create. That’s why it’s best to take impartial and specialist legal advice from a Freezing order Solicitor on whether you have the grounds to apply for an order and your alternative options.

To obtain an injunction, you will need to show:

1. The assets exist.
2. The respondent is intending to sell, transfer or dissipate the assets.
3. The respondent intends to use or move the assets to defeat or limit your financial remedy claims.
4. The order is just and fair, and the order is proportionate, as the injustice to you in not making an order would be greater than placing restrictions on how the respondent can deal with their assets until the outcome of the financial remedy application.

Take the case of a spouse with a business worth £10 million. The spouse intends to sell their shares to a third party at arm's length. An injunction may be unnecessary if the transaction is not at an undervalue and the respondent agrees not to dispose of the sale proceeds. If the respondent won't give an undertaking that they won't spend the business sale proceeds, an injunction may not be required if other assets cannot be disposed of and can be used for the applicant’s financial settlement, such as equity in jointly owned property or investments.

Each situation must be carefully considered to determine whether an injunction application is necessary or an alternative, such as an undertaking, is acceptable.

Alternatives to a freezing injunction

The alternatives to a freezing injunction application include:

1. Preserving and safeguarding other assets so you are confident that there is sufficient safeguarded wealth that the court can award a fair financial settlement out of the remaining assets, or
2. Asking a bank or financial institution to freeze a jointly held account or investment, or
3. Asking the land registry to place a restriction on property dealing to prevent a property from being sold or remortgaged to preserve the equity in the property until the final hearing of the financial remedy application, or
4. Asking the respondent to voluntarily give an undertaking through their Family Law Solicitors not to sell or dispose of the asset.

End date for the expiry of the freezing order

The end date for a freezing order is usually the date on which the court makes a financial court order in the financial remedy application.

Cost orders and freezing injunctions

The court can make cost orders relating to the financial remedy application or the separate freezing injunction application. The court can decide who pays the legal costs of the freezing order application at the injunction hearing, or the issue of who pays the injunction costs could be reserved until the final hearing of the financial remedy application.

Consequences of noncompliance with a freezing injunction

If a respondent does not comply with a freezing order, they may be held in contempt of court and face a fine or imprisonment.

In addition, if a respondent ignores a freezing injunction, a court could draw adverse inferences against the respondent at the final hearing of the financial remedy application. For example, the judge may conclude there is a risk that the respondent may not pay spousal maintenance under a spousal maintenance order, and it would therefore be preferable to award the applicant a greater share of equity or investments by capitalising their spousal maintenance award.

Legal advice on freezing injunction applications

It is always best to speak to a specialist Family Law Solicitor before applying for a freezing injunction because:

1. If you make the application without enough evidence, there is a risk that the court will make a cost order against you.
2. If you use the wrong forms or don’t follow the correct procedure, you risk the judge refusing your application.
3. If you delay your application, the assets may have been sold, transferred or moved overseas.
4. By applying for a freezing injunction, you may increase the animosity and reduce the prospect of reaching an agreed financial settlement. It's therefore important not to make an unnecessary application if your spouse has other assets that can be used to provide you with a financial settlement, so you do not require a freezing order.

An experienced Freezing Order Solicitor can advise on whether you have the grounds to apply for an injunction, or a Family Lawyer can advise on the best way to get an interim Section 37 order discharged or amended when its scope is preventing you from managing to pay your ordinary expenses or to keep your business afloat until the final hearing of the financial remedy application.

How OTS Solicitors can help with your financial remedy application  

At OTS Solicitors, our expert Family Lawyers have a global client base. They are experienced in high-net-worth divorce, advising international families and helping UK families with overseas property and assets.

Our specialists understand that the courts view freezing orders as draconian measures, as they prevent a respondent from dealing with their assets. We will therefore carefully assess the merits of an application or its alternatives to protect and safeguard the family's assets until the UK family court determines how the assets are split and makes a financial court order.

Get in Touch with us today to see how our Divorce Financial Settlement Solicitors can help you.

Appointments are available at our office in London and by phone or online consultation.  

Our lawyers speak Arabic, Armenian, Farsi, French/Mauritian Creole, Spanish, Tamil, Tagalog/Ilonggo, and Urdu/Punjabi.

 

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