Injunctions and Freezing Orders
When someone files a lawsuit, they’re usually asking the court for some sort of relief. This could be compensatory damages, which reimburse the plaintiff for losses suffered as a result of the defendant’s actions. It could also be punitive damages, which are designed to punish the defendant and deter future bad behaviour. In some cases, however, the plaintiff may simply be asking the court to order the defendant to stop doing something. This is called an injunction, and it’s one of the most powerful tools in a civil litigator’s arsenal.
An injunction is a court order requiring the nominee to do or refrain from doing a particular act. There are two main types of injunctions: mandatory and prohibitory.
Injunctions are unique in that they provide relief that cannot be adequately compensated with money damages. That’s why they’re often used in cases involving irreparable harm, such as environmental damage or infringement on intellectual property rights.
In order to obtain an injunction, you must file a lawsuit and explain to the court why you need the injunction. The court will then hold a hearing, at which both sides will have an opportunity to present their arguments. If the court finds that an injunction is warranted, it will issue an order requiring the other party to comply with the injunction.
A mandatory injunction requires the defendant to take some positive action, such as providing access to information or repairing property damage.
A prohibitory injunction forbids the defendant from taking some action that would harm the plaintiff, such as using their trade secrets or engaging in false advertising.
In a search order injunction, one party can legally enter the other party’s premises and take away key documents or computers and other assets.
A super injunction is when the other side doesn’t even know that an injunction has been made against them.
Injunctions are often used in cases involving neighbour disputes, contract disputes, and interference with business relations.
Injunctions are often used in cases involving neighbour disputes, contract disputes, and interference with business relations.
Freezing Orders
If you have assets in the UK and someone gets a freezing order against you, it means they’ve asked the court to stop you from dealing with your assets. This could include selling your property or moving money out of your bank account. A freezing order is also known as a ‘Mareva injunction’. If you’ve been served with a freezing order, you must respond to it as quickly as you can. If you don’t, you could be held in contempt of court and sent to prison. A freezing order doesn’t mean that your assets are automatically confiscated – it just stops you from dealing with them until the court case has been decided.
If the person who got the freezing order against you loses the case, they won’t be able to get their hands on your assets. However, if they win, the court may make a decision about what should happen to your assets. For example, they may order that they be sold and the proceeds are given to the person who got the freezing order against you. If you have any questions about a freezing order, you should speak to a professional as soon as possible.
If you owe someone money, they may be able to get a court order to freeze your bank account or prevent them from selling any of their property. One reason why someone might issue a freezing order is if they are worried that the person who owes them money might try to move their assets out of the country to avoid paying what they owe. Freezing orders can also be issued in cases of suspected fraud. For example, if someone is suspected of using false invoices to get money from a company, a freezing order may be issued to prevent them from moving any of the money out of their account before investigators have a chance to look into the matter. In general, freezing orders are only issued in cases where there is a risk that the person owed money will try to hide or move their assets in order to avoid paying what they owe.
No, a freezing order does not equate to guilt. Your assets are frozen just so time can be given for an investigation to take place, which will result in a guilty/not guilty verdict.
In most cases, the court may grant you permission to use your frozen funds for essential expenses such as:
- Living expenses
- Legal expenses
However, automatic bank transfers such as direct debits and standing orders won’t be processed so alternative arrangements would need to be made.
The Short-Term Response
Speak to a solicitor who can advise you on your obligations. If your assets have been frozen without your knowledge or any notice (known as ‘ex parte’) you can schedule what is known as a return hearing where you can put forward evidence to persuade the court to dismiss the freezing order. The return hearing takes place around a week after the freezing order is issued. The purpose of the hearing is to decide whether to continue the order or not.
You also need to disclose:
- All your assets including bank accounts, pension, shares, cryptocurrency and the value of assets such as your home, car, jewellery etc. as well as the equity you hold in each item.
- Your income and expenditure for the court to ascertain what is deemed essential expenses so that you can continue with those despite your assets being frozen.
Do not be dishonest with this. It could lead to further action being taken against you. And if you entirely ignoring the freezing order, you could be found guilty of contempt of court, which carries a fine or a prison sentence of up to two years.
The Long-Term Response
In the long-run, you’ll want to know if there are any grounds on which the freezing order can be dismissed or set aside. Your solicitors can advise you, after taking your specific circumstances into account. If you do plan to do this, it’s best to let the claimant know as it can also be an opportunity to discuss an out-of-court settlement (by consent)/
If the court finds consent unreasonable, this may result in the claimant being ordered to pay your legal costs.
Someone will only issue a freezing order against you if they feel they have a super-strong case and presumably they tried other methods first to get whatever they wanted from you.
One way to mitigate financial loss is to persuade the claimant to dismiss the order. If you find you have a good case against the freezing order, you can let the claimant know you’ll be filing for damages and losses if the order is discharged. This may pressure them to renege the order.
Additionally, the claimant usually has to provide a cross-undertaking to the court that if the order was improperly obtained they will compensate the respondent (you) with any loss.
