Freezing Injunctions: the need for certainty

A recent decision on a preliminary issue by Mr Justice Henderson in the case of Haederle  v Thomas [2016] EWHC 1866 is a telling reminder of the need for precision when drafting Freezing Injunctions (and Restraint Orders too). A Freezing Injunction (formerly known as a Mareva Order and sometimes referred to as a Freezing Order) can be obtained on application to the High Court in circumstances where an action (with a real prospect of success) has started, or is about to start, and the Claimant has identifiable concerns that a defendant will dissipate assets in order to frustrate enforcement of  any judgment. They can be an extremely useful tool in a claimant's armoury particularly when pleading fraud. They usually  operate to prevent the defendant  from dealing with any of his assets up to the value of the claim in the United Kingdom and abroad. They provide for the provision of disclosure of assets and often responses to specific questions to assist with tracing exercises. The penalty for disobedience is committal for contempt and therefore potentially the imposition of a prison sentence.

However, because the penalty is one of contempt and the risk of imprisonment, the defendant must understand exactly what the requirements of the Freezing Order must be. In this case, the claimant was pursuing an action to commit the defendant for contempt for various alleged breaches of the Order involving his overseas assets. Regrettably, the Order itself had been drafted in such a way as to leave out altogether the overall value of the assets held overseas which were encumbered by the operation of the freezing injunction. It was, as Henderson J conceded, fairly obvious to those familiar with such orders what the specific paragraph was seeking to achieve. Nevertheless he decided that "the question needs to be considered in the light of the salutary and well established principle that any injunction, and in particular any injunction which is sought to enforce by way of committal must be clear and precise in its terms". He duly decided in the defendant's favour.

Comment

There is a clear body of authority to support the above proposition and potential applicant's would be advised to ensure that the drafting of orders is concise and clear without mistakes prior to service and to seek to rectify any errors through the slip rule if not picked up at first. The principle also has wider application in a criminal context. Restraint Orders operate in a similar fashion in criminal proceedings and whilst they are granted in the jurisdiction of the Crown Court, the penalty for disobedience is contempt. There is no real difference in the fundamental principles behind their operation although Restraint Orders are creatures of the Proceeds of Crime Act 2002 and the statutory criteria are different. It is equally important therefore that defendants made subject to Restraint Orders in the Crown Court fully understand the nature of their obligations. Such orders can remain in force for many years and can bite on after acquired assets (including income from employment for example). The decision in the Chancery Division is equally applicable in the Crown Court.

If you have been made subject of a freezing injunction or restraint order then click here to see how Brett Wilson LLP can assist you or telephone 020 7183 8950 for a confidential discussion.