Do you need a freezing injunction to protect marital assets?


Once a relationship has broken down, while many couples remain on good terms, sometimes the situation is irretrievable and behaviour can go beyond what is acceptable or legal.  In particular, disputes over who gets what in the financial settlement can prompt underhand dealings with the wealthier partner attempting to conceal assets or reduce their value.  For example, they may build up debts (personal and/or business), or deliberately squander money in gambling or expensive trips that they did not participate in before.  There may be legitimate concerns that one party is giving away valuable art or antiques.

If a spouse or civil partner is hiding, selling, or otherwise getting rid of assets to prevent the other party from getting a fair share in the financial settlement, then there are legal steps which can be taken to prevent the dispersion of assets. One course of action is to obtain a freezing injunction.

A freezing injunction is a specific type of court order sometimes used in divorce or dissolution proceedings to protect assets from dissipation.  The order will prevent a spouse or civil partner (or former spouse/civil partner) from being able to deal with those assets and sell or transfer them to a third party.

Unfortunately, it is possible that one party may take steps to rid themselves of assets in an attempt to lessen the other party’s entitlements.  It may be of concern when a spouse or civil partner withdraws large sums of money from their bank account, transfers property to a third party for little or no value, or if they transfer their shares in a company.  All of these actions could significantly impact on the financial settlement.  Acting quickly is vital if there is suspicion one party may do this.

What assets does an injunction cover?

A freezing injunction can apply to all types of assets such as bank accounts, property, land, business shares, antiques and pensions.

On occasion it can also apply to other jurisdictions, not just assets held in England and Wales.  It is a draconian measure, but it will typically allow an amount of money for one party to live off and ensure they can meet their normal day-to-day expenses, but it will not allow for extravagant spending, or transferring of assets to other parties.

How do I obtain an injunction?

The most important thing is to act quickly and provide as much detailed information as possible about the assets that are at risk and why one party believes they are at risk.  This information should ideally include the whereabouts of the assets, the value of the assets, why one party believes they may be transferred, any evidence held to confirm this such as witnesses, emails or text messages.  Once in receipt of this information a qualified family law solicitor can advise on the options and the prospect of obtaining a freezing injunction.

This type of court order is usually applied for without notice to the other party, so they cannot be heard at the initial hearing.  If the injunction is granted, it will only be for a short period of time initially, until the other party has the opportunity of coming back to court and having their say and explaining their position.  The court can then weigh up both sides before deciding if the injunction should be extended.

To obtain an injunction, a number of criteria must be satisfied including that there must be a real risk the asset will be transferred or removed to one party’s detriment by the other. If the court is satisfied that there is a risk, the judge will move on to consider the ‘balance of convenience’ test.  This means the court will weigh up all the facts and decide if the likely damage that would be suffered by the party seeking the injunction if the injunction was not granted is greater than the potential damage to the other party if it was to be granted.

The court has a wide discretion when it comes to freezing injunctions and the conduct of both parties can be taken into account.

Avoiding malicious applications

It is important to note that as the applicant will be expected to provide an undertaking, which is a formal promise to the court that should it later be discovered that the injunction should not have been granted, then the applicant will pay any damages to the other party.  This is used by the court in an effort to prevent malicious applications.

Advantages and disadvantages

The main advantage of a freezing injunction is that it will preserve the asset or assets believed to be at risk of disappearing.  Prevention is much better and reliable than attempting recovery after the asset is gone.

Applying for a freezing injunction can also bring a financial dispute to a head and more often than not it encourages early settlement without the need for a formal hearing.  This can save costs in the long run.

However, if a party applies for an injunction inappropriately, it could be costly in terms of having to pay damages to the other party..

Not all transfers of assets should be seen as an attempt to dissipate assets.  For example, one party may legitimately transfer assets by selling a property at market value or selling a business for the valued rate.  These transfers may be getting rid of one asset but they will usually mean an increase in another asset, typically cash in the bank.  An injunction would not be appropriate in these circumstances.

An injunction can put a burden on the applicant to provide full documented details of all assets to the court.  If the freezing order is to apply to foreign assets also, then additional steps will be required in registering the court order with the foreign jurisdiction as it will not automatically apply.

How we can help

Applying for an injunction is not a step that is taken lightly, and it is important that anyone considering such action seeks early legal advice as delay alone could be a reason for the  application failing.  Obtaining early expert advice is important in order that assets can be preserved, and to ensure a fair settlement.

Amanda Erskine is a solicitor in the Family department at Barker Gotelee Solicitors in Suffolk.

Ipswich Family Solicitors – for more information on our range of legal services, please call the team on 01473 611211 or email bg@barkergotelee.co.uk