When would I need a freezing order?
For couples going through a divorce or civil partnership dissolution, there needs to be a fair settlement regarding the division of finances.To achieve a fair settlement both parties must be transparent and honest with each other about their financial assets and resources, including all assets held in their sole names or with a third party, or those assets they have an interest in which are owned by a third party.
A divorce can be a very stressful time for many and can lead to irrational behaviour. This could include a person trying to get rid of assets to reduce their partner’s financial claims, particularly if someone feels an asset is “theirs” If there are any real concerns and you have evidence to support your concern, you can apply for a freezing order to prevent any disposal of assets, for example freezing a bank account. It is also possible to ask a court to freeze something that your spouse is awaiting, for example prevent any drawdown on a pension.
A freezing order is also important to consider where one party has been primarily responsible for finances or has a significantly high net worth. Often in these situations a ‘financially weaker’ party may know little about the structure of matrimonial finances, making it easy for assets to be hidden. Asset freezing can therefore prevent a ‘financially stronger’ party being able to hide assets to obtain a larger share than they would have otherwise been entitled to.
What assets can a freezing order protect?
All types of assets can be frozen, for example:
- Bank accounts
- Property
- Cars
- Shares and investments
- Valuable items such as jewellery and artwork; and
- Pensions.
Freezing orders can also cover assets that do not ‘exist’ yet.
Usually, the order freezes a specific asset or certain known value of an asset. It is however possible for a freezing order to cover all assets owned or controlled by one person if this is deemed necessary.
Do I need legal representation?
Freezing orders are usually an extreme measure not granted lightly. They also tend to be expensive and carry financial risks.Therefore, the advice of a solicitor who specialises in such matters is essential to ensure you are taking the right step by making an application and to minimise the risk of any financial loss.
How do I apply for an order?
An application to court is needed and it is likely there will be a minimum of one court hearing. In the majority of cases, you can make a freezing order application “without notice” to the other person, this is to prevent them from hiding their assets before the order is granted.
It can be expensive and challenging to secure a freezing order. The benefits however can outweigh the costs depending on the value and amount of assets at stake. Solicitors can provide clear advice about the costs and prospects of success before making any application.
When is a freezing order made?
A judge will need to consider whether they are satisfied that your spouse/partner is about to dispose of or sell an asset with the intention of depriving you of its financial benefit. You will be required to satisfy strict criteria to prove this, such as:
- Clear evidence of their intention to dispose of assets
- Demonstrate that a refusal of the order would create a real risk of injustice; and
- There must be sufficient assets to meet your claim.
As part of the process the court will require you to make an undertaking (a legal promise). This will mean that you could be held liable for compensation by your spouse/partner or a third party if your application is unsuccessful or if the order is later discharged. It is therefore very important to consult a specialist solicitor for advice and assistance in making the application to minimise your risk.
Who will be impacted by a freezing order?
The primary focus of a freezing order is your spouse/partner. However, often others who manage or benefit from the assets will also be bound by the terms, for example, a business partner, a bank, or trustees.
Any freezing order will need to be served on all affected third parties before they can be bound by the terms. Serving notice on banks is often very important as they are often key in preventing your spouse/partner from handling their money.
How long will a freezing order last?
A freezing order will be in place for as long as a court deems necessary and proportionate. If a “without notice” order is made, initially this is made for a period of 7-14 days before the court list another hearing where both parties attend. At that hearing after listening to both parties, the court will either:
- Keep the order the same and extend the time
- Vary the terms of the order; or
- Discharge the order.
Usually, the order then lasts until the conclusion of the financial proceedings.
What happens if my spouse/partner ignores a freezing order?
If anyone ignores the freezing order who is bound by the terms, they can be held in contempt of court. This means they could be fined, have assets seized or receive a prison sentence.
What do I do if my spouse/partner has already disposed or hidden their assets before a freezing order is made?
In most cases, an application for a freezing order can be made ‘without notice’ so your spouse/partner will not be notified in advance. This usually gives you a chance to freeze their assets before they are put out of the court’s reach.
Where assets have already been disposed of, investigations can be undertaken to attempt to locate assets and if necessary, take action, for example a global freezing order.
What is an avoidance of disposition order?
A court can make a avoidance of disposition order that sets aside a transaction made by either party to a divorce that is made with the aim of frustrating a claim for financial provision. If your spouse/partner has disposed of the asset less than three years before your application for financial provision, it will be presumed that they had the intention to defeat your claim unless:
- The asset was exchanged for its appropriate monetary value
- The third party who acquired the asset acted in good faith. That is, they were unaware of your spouse/ partner’s intention to deprive you of the value of the asset.
How do I avoid a freezing order?
If you are the person who is at risk of an order being made against them, solicitors can assist you in taking steps to minimise the risk of an application being made. This will include:
- Being honest and transparent in your disclosure with your spouse/partner from the outset
- Being open and co-operative in negotiations about terms of settlement; and
- Communicating with your spouse/partner and their legal advisors.
How can I apply to discharge a freezing order?
If an order is made against you, it is important that you seek urgent legal advice about what you can do to discharge the order and what arguments may be relevant for your circumstances, for example:
- That a freezing order is oppressive and prevents you from meeting your living and/or legal costs
- There is no risk you will dispose of assets to hide them; or
- There is no arguable case for an order.
If you would like to obtain a freezing order against your spouse or civil partner or need to apply to discharge an order made against you please contact our expert divorce law team on 0161 696 6193.