Prior to her marriage ending, Sylvia* had never heard of a freezing order, let alone a section 37 injunction application. Happily married, living in a beautiful home in West Sussex, raising two daughters and working three days a week as a nurse, life was predictable, secure and good.
All that changed six months ago. Unbeknown to her, her husband of fifteen years walked out, leaving her for a woman 10 years her junior.
“David* ran the family business, I had little involvement. Although he never questioned or controlled what I spent, he managed the books and I had no idea of the how much money we had.”
When her solicitor mentioned obtaining a freezing order to prevent her husband from disposing of their assets, Sylvia was shocked. However, when she discovered just how much money her husband had in assets and cash, both in the UK and abroad, she was stunned.
“He could have got away with hiding hundreds of thousands of pounds from me.”
What is a freezing order?
A freezing order, formally known as a Mareva injunction or order, is an injunction issued by the court that stops a spouse from dealing with or disposing of assets so they will not form part of the financial settlement in a divorce.
How are freezing orders made?
Freezing orders can be made a without your spouse’s prior knowledge. But be warned; they are not granted lightly. Your solicitor must follow a series of strict principles and guidelines, laid out by statute and case law to successfully obtain a freezing order for you.
What assets can I have frozen?
Most people who are freezing assets during a divorce will target property, stocks & shares, and bank accounts. They can be in the UK or offshore. Valuable art, car collections, and jewellery can also have a freezing order applied to them.
Who is bound by a freezing order?
Freezing orders may bind not only your spouse but any third parties who deal with or benefit from the assets covered by the order; for example, trustees, business partners and/or bank managers.
The court will consider when making the freezing order that its terms are not too oppressive, affecting third parties too harshly.
What is the application process for getting a freezing order?
Freezing orders are granted under Section 37 of the Matrimonial Causes Act 1973. The leading case on which a judge will base his decision on is UL v BK (Freezing Orders: Safeguards: Standard Examples) [2013] EWHC 1735 (Fam)[1].
Mr Justice Mostyn summarised the principles and safeguards as follows:
- If specific assets are subject to a claim, the court has the power to preserve them.
- Safeguards and principles must be rigorously applied to all freezing orders.
- The applicant must prove that there is a real risk their spouse will sell or dispose of assets in a way that will prejudice the applicant.
- The applicant must provide clear, concise evidence of the above fact – speculation will not suffice.
- If the tactic of surprise is used, the applicant must prove that the section 37 injunction application is being issued as a matter of urgency. 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.”
- If no notice is provided to the other spouse of the freezing order being sought, the applicant must be completely truthful or the injunction will be withdrawn.
- Where no notice or short informal notice is given, the safeguards assume critical importance.
What if my spouse breaches a freezing order?
If the freezing order has been granted and your spouse breaches it, they may be held in contempt of court. Severe penalties may apply, including being fined, having assets seized or even imprisonment.
In summary
If you believe your spouse may consider hiding assets or cash, preventing them from becoming part of the financial settlement, you need to act fast. Contact an experienced family solicitor who can apply for a freezing order on your behalf.
When it comes to divorce and assets, often you do not know what you’ve got till it’s gone.
*Names have been changed
Saracens Solicitors is a multi-service law firm based opposite Marble Arch on the North side of Hyde Park in London. We have years of experience representing high-net-worth individuals in divorce proceedings and have the resources and expertise available to achieve swift, fair financial settlements. For more information, please call our office on 020 3588 3500.
[1] http://www.bailii.org/ew/cases/EWHC/Fam/2013/1735.html
