Freezing Orders in Divorce: How to Protect Assets from Dissipation

What is a freezing order?

A freezing order, also called a freezing injunction, is an interim order preventing a party from disposing of their assets. It is a special type of court order which restricts a party’s ability to deal with or dispose of their assets. It was previously called a Mareva injunction.

Under a freezing order, a party is restricted from moving their assets for reasons other than their living expenses and legal fees. This will prevent them from putting that money beyond the reach of the court and will allow you to feel secure that your fair share will be protected. Freezing orders are binding on third parties – banks and financial institutions can get in serious trouble if they help someone breach it. 

If you suspect your spouse may attempt to hide their assets, you may be able to obtain a freezing order. Contact Vardags today for a free initial consultation with one of our expert divorce solicitors. 

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when can you apply for a freezing order?

If you have good reasons to suspect that your spouse is planning to move assets out of the country or to transfer them to friends, relatives or a trust then you can apply to the court to have those assets frozen. 

Where there is an immediate risk that assets might be moved, you can apply for an urgent injunction without notice to the other side. This will allow you to have an order in place before your spouse can act. 

Safeguards against unfair or disproportionate freezing orders

The case of UL v BK [2013] EWHC 1735 (Fam) provides a helpful illustration of a freezing order which had “gone seriously wrong” and sets out the necessary safeguards which should be followed to avoid similar occurrences: 

“51. The relevant principles and safeguards may be summarised as follows: 

i) The court has a general power to preserve specific tangible assets in specie where they are the subject matter of the claim. Such an order does not necessarily require application of all the freezing order principles and safeguards, although it is open to the court to impose them. 

ii) For a freezing order in a sum of money which is capable of embracing all of the respondent’s assets up to the specified figure it is essential that all the principles and safeguards are scrupulously applied. 

iii) Whether the application is made under the 1981 Act or the 1973 Act the applicant must show, by reference to clear evidence, an unjustified dealing with assets (which would include threats) by the respondent giving rise to the conclusion that there is a solid risk of dissipation of assets to the applicant’s prejudice. Such an unjustified dealing will normally give rise to the inference that it is done with the intention to defeat the applicant’s claim (and such an intention is presumed in the case of an application under the 1973 Act). 

iv) The evidence in support of the application must depose to clear facts. The sources of information and belief must be clearly set out. 

v) Where the application for a freezing order is made ex parte the applicant has to show that the matter is one of exceptional urgency. Short informal notice must be given to the respondent unless it is essential that he is not made aware of the application. 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. The order of the court should record on its face the reason why it was satisfied that no or short notice was given. 

vi) Where no notice, or short informal notice, is given the applicant is fixed with a high duty of candour. Breach of that duty will likely lead to a discharge of the order. The applicable principles on the re-grant of the order after discharge are set out in Arena Corporation v Schroeder at para 213. 

vii) Where no notice, or short informal notice, is given the safeguards assume critical importance. The safeguards are set out in the standard examples for freezing and search orders. If an applicant seeks to dis-apply any safeguard the court must be made unambiguously aware of this and the departure must be clearly justified. The giving of an undertaking in damages, whether to the respondent or to an affected third party, is an almost invariable requirement; release of this must be clearly justified.” 

A further takeaway from the judgment is that the applicant must demonstrate that there is a real risk of the defendant removing their assets from the jurisdiction or otherwise dissipating or disposing of them – suspicion or fear is not enough.