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FINANCIAL REMEDIES: UL v BK (Freezing Orders: Safeguards: Standard Examples) [2013] EWHC 1735 (Fam)

Date:1 JUL 2013
Law Reporter

(Family Division, Mostyn J, 24 June 2013)

The husband and wife married in France after signing a standard separation of property agreement. During financial proceedings following divorce the wife obtained an ex parte freezing order in respect of a Spanish property worth £10m and further assets with a combined value of £20m. The husband was required to disclose details of assets held worldwide in his sole name and details of any trust or settlement to which he was a beneficiary.

The husband sought to discharge the freezing order on the basis that none of the principles governing freezing orders had been complied with, however, he offered an undertaking not to deal with the property. During proceedings the wife admitted that she had copied various documents belonging to the husband without his permission and had accessed his safe.

Mostyn J took the opportunity to summarise the key principles and safeguards, in relation to freezing orders including the necessity for an applicant to show, by reference to clear evidence, an unjustified dealing with assets by the respondent giving rise to the conclusion that there was a solid risk of dissipation of assets to the applicant's prejudice and in relation to ex parte applications, the applicant had to show that the matter was one of exceptional urgency. Short informal notice had to be given to the respondent unless it was essential that he was not made aware of the application. No notice at all would only be justified where there was 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 was literally no time to give any notice before the order was required to prevent the threatened wrongful act. Cases where no notice at all could be justified were very rare indeed. The order of the court should record on its face the reason why it was satisfied that no or short notice was given.

One of the striking features of the case was the lack of urgency of the wife's case. Her application for a freezing order had been merely a pre-emptive strike. All her case rested upon was unparticularised threats by the husband to ‘leave her with nothing'. That approach went against the established principles.

Weighing up all of the wife's conduct she had forfeited the right to the exercise of the court's discretion to re-grant an injunction. The husband's undertaking which he offered ex gratia was accepted. Had he not done so Mostyn J would not have imposed a freezing/preservation order over the property, given the wife's misconduct. However, it was important to recognise that the unparticularised evidence of the husband's threats, coupled with the turbidity of his financial arrangements, did give rise to suspicions and cause for concern. Had the wife given a fully explained account of the circumstances and context of the threats; fulfilled her duty of candour; and complied with the applicable principles and safeguards, it was distinctly possible that a freezing/preservation order over (at least) the Spanish property would have been justified.

In relation to the illegitimately obtained documents, the husband had successfully brought an action for breach of confidence and misuse of private information against the wife in the Queen's Bench Division where an order was granted requiring the wife to hand back the documents to the husband's solicitors in similar terms to that in Tchenguiz v Imerman.

Standard examples of freezing and search orders were appended to the judgment.