Questions & Answers on Urgent Injunctions

1. What is an injunction?

An injunction is a court order that prohibits a party from doing something, called a prohibitory injunction, or requires them to do something, called a mandatory injunction. Usually, the first step is to obtain an interim injunction, which is usually granted until a further hearing, or until a full trial of the dispute.

If a party breaches an injunction, they can be held in contempt of court, which can in some circumstances lead to imprisonment.

2. What types of injunction are there?

The Civil Procedure Rules have codified the power of the court to grant types of injunction in CPR 25.1(1). Such injunctions include:

1. Freezing orders - preventing someone from dealing with their assets;
2. Orders requiring a party to provide information about the location of property or assets, which may be sought in support of a freezing injunction or as a standalone order;
3. Search orders - to allow a search of a respondent's property to obtain evidence and property; and/or
4. Orders requiring the surrender of property.

3. What is a freezing order?

A freezing order or freezing injunction (formerly known as a Mareva injunction) is an order used by a creditor who is concerned that a company may sell its assets and fail to pay the amount due to the creditor. The order can freeze almost any asset including: a company bank account, property, land or investments and shares.

4. What assets are covered by a freezing order?

A freezing order can be made in respect of assets in England and Wales (a domestic freezing order) or worldwide (a worldwide freezing order).

5. Is a loan an asset subject to a freezing order?

No. A freezing order does not prevent a company or individual from borrowing money and money borrowed after the freezing order has been made is not classed as an asset.

6. What are the consequences of a freezing order?

A penalty notice will be attached to the freezing order if the defendant fails to comply with it. If the defendant does not comply, he or she will be in contempt of court and may be fined and/or imprisoned.

7. What are the requirements for a freezing order?

The court will exercise its discretion to grant a freezing order and must do so only if it is appropriate to do so.

The court must meet the following conditions in order to grant a freezing order:

• The applicant must have a strong case. The applicant must show that his case is capable of serious argument.
• There must be a substantial cause of action against the defendant.
• The applicant must show that there is a risk of the asset being disposed of if the order is not granted.
• It must be 'just and convenient' to grant the order - it would cause unnecessary and disproportionate hardship to the defendant to grant the order.  

8. What is the procedure for obtaining a freezing order?

The following documents should be completed and are best prepared by a legal adviser to ensure the best chances of obtaining the freezing order:

1. A notice of application together with evidence in support of the application.
2. A draft order - setting out the terms of the freezing order.
3. Ancillary orders (only sometimes needed) - these may include an order for cross-examination, passport delivery or an order for a company receiver.

If a freezing order is then granted at a without prejudice hearing, it will usually be for a specified period and a return date will be set for a full hearing.

Once granted, the order should be served by the applicant on the respondent and any third parties known or believed to hold assets of the respondent without delay.

At the full hearing the court will decide whether the order should be continued, varied or discharged.

9. What do you need to prove to get a freezing order?

According to case law, the following six conditions must be met in order for a freezing order to be granted:

• The applicant must have a cause of action, i.e. an underlying legal or equitable right.
• The English court must have jurisdiction.
• The applicant must have a good arguable case.
• The existence of assets.
• There must be a risk of dissipation.
• The claimant must give an undertaking to pay damages.

10. What must an applicant provide for a successful freezing order application?

The applicant must provide full disclosure of all relevant information, including an undertaking to pay damages if it is subsequently decided that the freezing order should not have been granted. In some cases, the applicant will also need to provide security when applying for a freezing order.

It is important that the applicant provides all the facts and information in the disclosure to enable the court to exercise its discretion properly. These facts include anything that might prejudice the applicant's own case, how long the dispute has been going on, and facts that the applicant or their advisers were not aware of but which may be relevant.

It must be emphasised that time is of the essence in this type of application. The court will not be inclined to grant a freezing order unless the application is made promptly by the applicant as soon as the risk of dissipation arises. Any delay will need to be explained in the evidence supporting the application.

11. How long does a freezing order last?

Generally, freezing orders are granted for a period of between 7 and 14 days. When the order expires, the court will meet again and may decide to extend the order, discharge it or continue it pending trial.

12. How is a freezing order enforced?

Freezing orders are generally enforced by committal proceedings for contempt of court. Commitment proceedings can generally only be brought against the person on whom the order was originally served.

Commitment proceedings are classed as civil proceedings in England and Wales, but the penalty can be a fine, confiscation of assets or imprisonment for up to two years. To commit a person for breach of an injunction, it must be proved beyond reasonable doubt that the breach was intentional or wilful, which is the criminal standard of proof.

13. How much does a restraining order cost?

The cost of an injunction will depend on the circumstances and facts of each case.

The amount of the costs will be affected by:

• The urgency of the application;
• The number of witnesses involved in the matter; and
• Whether the matter is with or without notice.

We are based minutes from the High Court and can be deployed with speed as the client’s needs and case demands. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense.