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Freezing injunctions and search orders Power to make order established in Mareva Compania Naviera SA v International Bulk Carriers SA
 1 All ER 213 as further defined in CPR Part 25(1)(F), as an order:
* restraining a party from removing from the jurisdiction assets located there; or
* restraining a party from dealing with any assets whether located within the jurisdiction or not A defendant subject to a freezing order means thatyour ability to handle your financial affairs is severely restricted.
Why? Well perhaps because someone claims that you owe them money or they have a valid claim for damages against you.?They haven't proved their claim, let alone got a judgment against you. They may not even have issued a claim form yet. However they've obtained an order preventing you from disposing of your property until there's a trial which could be months or even years away - a potentially catastrophic situation for you and your business. And they've done all this behind your back and without giving you any chance to have your say.
Procedure for Obtaining and Serving Freezing Injunction and Search Order Almost always made without notice Definition A search order requires a defendant to allow a claimant's representatives to enter into his premises and search for, copy or remove documents or materials. The purpose of the search order is to preserve evidence in circumstances where there is a significant risk that the defendant will destroy or dispose of such evidence.
Claimant must show
A freezing injunction is a court order which either restrains a party from removing or dealing with assets from the jurisdiction of England and Wales or restrains a party from dealing with any assets whether located within the jurisdiction or not. Procedure to obtain the Freezing Order: The applicant must show which is interim to the claim
1. Good arguable case AFTER full disclosure a. Failure to full disclosure could result in interim order being set aside together with costs and damages
2. Defendant has property in jurisdiction and intends to deal with the property so as to frustrate the enforcement of the claimant's judgment (usually needs to be evidence that the removal of assets will be done with a corrupt or dishonest purpose) Procedure to obtain the Search Order The applicant must show
1. Extremely strong prima facie case
2. Claimant will suffer or continue to suffer serious harm if order not made
3. Defendant has materials unobtainable by other means
Need to prepare Where to apply?
1. Application notice - Form N244
2. Affidavit in support PD25A para 3.1 (more serious than Witness Statement, sworn reasons why application without notice)
- High court judge (PD25A 1.1)
- Masters and district judges in high court have power to grant injunctions
1) by consent 2) in connection with charging orders and appointment of receivers 3) in aid of execution of judgements (PD25A 1.2)
- NOT in country court except in very limited situations Application can be made at any time (CPR 25.2):Before proceedings have started (if satisfy 25.2.2 i) matter is urgent or ii) necessary in interest of justice) - likely During proceedings; or After judgement given.
NB. Court has no jurisdiction when applicant doesn't intend to issue proceedings
1. Issue claim form or undertake to do so (PD25A para 4.4(1)
2. Issue at least 2 hours before the hearing (PD25A para 4.3(1)
? Affidavit must be in issued in support (PD25A - para 3.1) o Why no notice given, evidence to support o Court must feel there is good reasons for not giving notice
? Draft order(on a disk)
3. Court will hear application
4. If order granted court sets return date (Claimant undertakes to issue application notice for the continuation of the order with a return date)
5. Claimant/any Third Party's affected (banks who hold assets for Defendant for a Freezing Injunction etc, this isn't an undertaking, just something applicant can do in order to more effectively enforce the injunction.) MUST personally serve all docs (or if search order supervising sol will do this) (still need 3 days clear notice of hearing for defendant)
WHAT HAPPENS NEXT?
The Freezing Injunction or Search Order
- The application notice - N244
- Copy of the affidavit
- Any exhibits
- Full note of the hearing (if without notice must include full note of the arguments before the court) Freezing Order takes effect immediately/Search Order date and time will be set There will be a full with notice hearing on the return dateWHERE WILL ANY HEARING TAKE PLACE?
World wide freezing injunction
This will usually be 14 days after the initial hearing Costs will be dealt with at return hearing - not fair to deal with at initial hearing as defendant won't be there if without notice General rule- hearing to be in public (CPR 39.2.1)May be in private if...(CPR 39.2.3), e.g. (a) publicity would defeat the object of the hearing; (e) made without notice and hearing would be detrimental to the defendant Covers Defendant's assets outside the jurisdiction f
Requirement to show
* No assets in England and Wales
* Evidence of large scale fraud
* Ability to hide assets/transfer assets around the world
Grounds to be satisfied to persuade the court to issue Freezing Injunction or Search Order Search orders - Anton Piller injunctions Claimant must show:?Extremely strong prima facie case AFTER full disclosure Will suffer serious harm if order is not made Defendant has materials UNOBTAINABLE by any other means.
FREEZING INJUNCTION NATURE OF Prevents Defendant from REMEDY disposing of his property pending trial of Claimant's action against him
- usually restricted to Defendant's property within jurisdiction and limited in value to likely amount of judgment
- usually obtained without notice and urgency and secrecy are necessary
SEARCH ORDER NATURE OF REMEDY Allow Claimant to enter Defendant's premises for property belonging to Claimant or evidence that Defendant has been harming Claimant. If Defendant doesn't comply then may face imprisonment for contempt of court
RELATED RELATED REMEDIES - Orders preventing REMEDIES Defendant using his shares or voting rights they give in a way which may harm Claimant
- If Defendant has already disposed of property then IA 1986 allows court in certain circumstances to set aside disposition in aid of Freezing Injunction INNOCENT People involved with Third Defendant are covered by Parties order even if they are completely innocent of fraud
- Freezing Injunction should NOT usually be used as banks as Defendant 's or in respect of routine banking transactions
- IF becomes public knowledge that CoDefendant subject to Freezing Injunction then public confidence in business may be affected
- s.7 CPA 1997
- Requires Defendant to allow Claimant's named representatives to enter and search, Claimant is not permitted to use force though
- order used to recover property belonging Claimant which Defendant is using to harm Claimant.
- also used to obtain evidence of wrongdoing
- May be combined with freezing injunction.
- May be combined with orders for disclosure and or further info
- Even possible to obtain an order which prevents Defendant from leaving country for short period of time so he can comply with Search Order
and Claimant should ask for Freezing Injunction application to be held in private
GROUNDS STRENGT 1. Claim must have a good H OF arguable claim Claimant's 2. As application without CASE notice Claimant must make detailed investigations before seeking order and full disclosure of all relevant facts (both for and against case) [failure results in order being set-aside for nondisclosure]
3. Claimant's obligation to full disclosure extends to facts discovered after making of the order RISK THAT - Claimant must show that PROPERTY Defendant has property in WILL the jurisdiction and that he DISAPPEA may deal with it in a way R that hinders enforcement
- Court will not allow Freezing Injunction to be used to jump insolvency queue or as a means of putting unfair pressure on Defendant to settle
- Evidence that Defendant is a debt dodger and that removal of assets will be done with a corrupt or dishonest purpose (dishonest can be with Claimant or other creditors)
- Relevant how easily Defendant could move his assets out of Claimant's reach (more likely with foreign Defendant's)
- Info about trading reputation of business and difficulties of enforcement in Defendant home country are helpful
GROUNDS EXTREMELY Claimant must show: STRONG
? Extremely strong prima facie case AFTE PRIMA FACIE full disclosure CASE
? Will suffer serious harm if order is not made
? Defendant has materials UNOBTAINABL by any other means. Check Exam Facts
C WILL SUFFER (CONTINUE TO SUFFER) SERIOUS HARM IF ORDER NOT MADE DEFENDANT HAS MATERIALS UNOBTAINA BLE BY OTHER MEANS
Check Exam Facts
- Alternative would be to apply on notice for order for delivery up of the goods s.4 Torts (interference with goods Act 1977 (provided by CPR 25.1(i)(e)
- BUT it's a real possibility that Defendant may destroy or dispose of materials/continue to exploit confidential info
- Claimant will suggest that if application made on notice Defendant has opportunity to dispose materials being sought.
- Furthermore court must be satisfied that harm likely to be caused to Defendant and business is not excessive/out of proportion to legitimate object of order
Undertaking conditions imposed by the court - safeguards for respondent. Undertaking in damages imposed by the court
Court will usually grant an interim injunction only if the claimant gives an undertaking to compensate the defendant for any harm caused by the injunction if it is discharged at a later date.
When the claimant applies for the injunction the court must be satisfied that the claimant will pay any damages which may eventually be ordered to be paid to the defendant if they have suffered unjustified loss as a result of the injunction being granted.cross-undertaking given by the claimant is necessary because when the court grants an interim injunction, even if notice has been given to the defendant, it ''s doing so without any real opportunity to make a detailed investigation of the facts or the evidence in the case.Claimant has to undertake to the court to compensate the defendant for any harm caused by a wrongly granted injunction. The obligation to compensate may arise even if the claimant has acted in good faith - must always warn clients of this risk before applying for the injunction.?
If the court finds at trial that the interim injunction should not have been granted OR the defendant applies successfully before trial to have the injunction set aside, the defendant can expect to be compensated for the losses they've suffered as a result of the injunction being in place. These losses might be very substantial.The court will usually direct an enquiry into the damages the claimant will have to pay to the defendant for wrongly obtaining the injunction. o Damages are not automatic and it's for the defendant to prove their loss. o They'll bring the matter before the court again by applying for a hearing date, and will be expected to act promptly, or risk their claim for damages being dismissed for want of prosecution. o successful defendant won't necessarily receive compensation for all the loss suffered. o The claimant will only have to pay compensation in so far as it's fair to require them to do so and some damage may be too remote for compensation to be awarded at all. o Exemplary damages are possible if C was not acting good faithBefore granting the injunction the court be must be satisfied that the claimant can afford to pay any such damages. o when the claimant applies for an injunction they'll have to support that application with a witness statement which must include evidence of financial circumstances. o copies of accounts in the case of a claimant business, or bank statements and other financial information in the case of an individual claimant. o If the court is not satisfied with the financial position of the claimant then it might require some security to be lodged in
???court as a guarantee of payment. C ability meet potential liability under this undertaking is taken into account (evidence of his financial circumstances) The court can take into account C's financial ability to satisfy any order made under the cross undertaking in deciding whether to grant the injunction, however C will not be deprived of injunction simply because he is short of money At the final trial, D may win and injunction may have caused him loss in the meantime. If so, he needs compensation for any loss he has suffered. Therefore C will need to give an undertaking to compensate D for any harm caused by injunction if it is discharged Cross undertaking is not required where injunction is sought to enforce the law by an agency such as department of state or LA or securities and investments board
Even D who were not subject to the injunction may be able to claim damages under C undertaking (e.g. A gets injunction to prevent B making goods, If C usually buys those goods from B he may be able to claim damages from A)
?????The cross undertaking is there to compensate D and therefore he will not get an award of indemnity costs
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