Defending Freezing Orders

What is a Freezing Order?

A freezing order is an interim measure granted by the Court which stops a person from being able to dispose of or deal with their assets, whilst a Court is still deciding their case and before a judgment has been enforced.

Freezing orders can relate to assets such as, bank accounts(Account Freezing Orders), investments such as shares, homes, land and cars. A Freezing Order is not just limited to the UK, orders can be sought to address assets outside of the UK, though a worldwide freezing order. A freezing order also affects any third parties that hold assets belonging to the person against whom the order has been sought. Any breach of the terms of the order by the Third Parties would also be an infringement.

Court’s power to grant a Freeing Order

Section 37 of the Senior Courts Act 1981 is the relevant law that gives the Court to power to grant a Freezing Order. However, in order for a Freezing Order to be granted, the following conditions that have been established through case law must be satisfied:
• The applicant must havea substantive cause of action.
• The applicant’s case is good and arguable
• There must be sufficient assets to meet the claim
• There must be a real risk of the disposal of the assets
• It must be just and convenient to grant the order

The process

Applications are made to either the High Court or the County Court.Order can be made by either notifying the Respondent or without notice. If an order is made without notice, then it is valid for a certain period of time. An undertaking for damages will usually be required by the Applicant, in the event that the Court finds that there were no substantive reasons to bring the claim.

The respondent will usually have 48 hours to respond to the order with a disclosure of all of their assets, their value and current location. The respondent will usually be permitted to pay for their ordinary living costs, incurred legal fees and costs associated to their business, if they have one. A full hearing will also be fixed by the Court to give both parties an opportunity to submit their respective representations in full.

Orders can be varied and discharged at the discretion of the Court.

Account Freezing Orders

What is an AFO?

Sections 303Z1-303Z19 of the Proceeds of Crime Act 2002 (POCA) outline the powers enforcement agencies have in instances when an AFO is granted. An AFO prevents the withdrawal or payment from an account with a bank or building society, by persons who are the designated account holders.

What are the grounds for making an application for an AFO?

An enforcement officer, for example, an officer from HMRC, must have reasonable grounds for suspecting that money held in a bank or building society account is either:

1. “recoverable property”; or
2. intended by any person for use in unlawful conduct (Section. 303Z1(1)).

Where is an application made?

An application for an AFO is made in the Magistrates’ Court, despite it being a civil order. The standard of proof in on the balance of probabilities, not beyond reasonable doubt.

When will a Court make an AFO?

A Court may grant an AFO when either of the above-mentioned conditions are met.
Normal exclusions that can be made in a Freezing Order can also be granted in an AFO. These include meeting normal living costs, legal fees associated with the proceedings, or ordinary business costs. It is also important to note that an AFO car be varied or set aside.
What is the length of an AFO?
The length of the AFO will be specified in the order, but the length cannot exceed 2 years from the date the AFO was made.