Mark Hands – Family Law
With the temperatures forecast to plummet this week, I thought it appropriate to discuss the guidance given by Mostyn J on freezing orders.
The Dilemma
It is not infrequent for a client to inform you in the initial meeting that they suspect there Husband (sorry chaps, it usually is!) may dispose of assets. Downloading official copies of the register of property titles at HM Land Registry is often the starting point. Unavoidable questions arise from this step: Is he taking steps to shift the asset? What are his intentions? Is this the principle asset of the marriage? What is the extent of the other assets available?
The client will be searching for advice as to how she can safeguard and preserve assets held by the Husband. Sometimes, in retaliation to the acrimony of the separation, there is a cynical and underlying reason to seek to freeze assets. A practitioner has to be alive to this. In addition the law in this area requires a matrimonial solicitor to often provide very robust advice.
Aside from the Former Matrimonial Home the Land Registry provides little security as, to register a notice against a property (other than the FMH), requires a ‘pending land action’. In the context of financial remedy proceedings a ‘pending land action’ will be satisfied by the filing of a formal application to the Court (although the prayer in the divorce may suffice in certain circumstances). Nowadays parties are discouraged from launching into proceedings and are generally required to attend mediation beforehand. But will this be too late? The client wants to act now what does one do? If the asset is shifted who is going to pick up the tab?
Any practitioner will tell you that such draconian steps as freezing assets should be exercised with extreme caution.
The Law
The law in this area is enshrined in s.37 of the Matrimonial Causes Act 1973. On a simplistic level the act gives the court the power to restrain or set aside a disposition where it is satisfied the intention is to defeat the claims of the other party and that it would have the effect of defeating that party’s claims for financial relief.
It is important, at a very early stage, to draw a distinction between an actual intention and whether the client is seeking an order as a precautionary measure. It has been made clear by case law that the act should be reserved for the most serious conduct.
It is sometimes tempting for a party to seek orders as they can usually be obtained relatively easily without notice to the other party. This practice was discussed by a leading judge who said in a recent case:
“Freezing and search orders are almost invariably made ex parte and, as such, are a violation of the elementary rule of natural justice…The unilateral step taken at the beginning of case echoes down its history. Often the respondent is enraged by the step taken against him and looks to take counter-offensive measures. Every single subsequent step is coloured by that fateful first step. Costs tend to mount exponentially. And even after the lawyers close their files and render their final bills the personal relations of the spouses will likely remain forever soured. A nuclear winter often ensues” (emphasis added).
The applicant must show, by reference to clear evidence, an unjustified dealing with assets (which would include threats) by the respondent giving rise to the conclusion that there is a solid risk of dissipation of assets to the applicant’s prejudice.
Where the application for a freezing order is made without notice to the other party the applicant has to show that the matter is one of exceptional urgency ‘Cases where no notice at all can be justified are very rare indeed…(emphasis added)’.
Conclusion
Ensure that freeze orders are properly obtained. Otherwise the costs consequences can be very severe indeed.
If you are going through a separation and are concerned your spouse is taking steps to move assets beyond your reach, please feel free to contact me on an urgent basis at mark.hands@irwinmitchell.com or 0121 203 5309.
