What a freezing order actually costs
Clients ask what a freezing order costs to obtain. It is the wrong question. The cost that matters is the one you promise the court you will bear if you turn out to be wrong.
Filed under
Civil Fraud
Published
Reading time
6 min
Written by
Nadia Whitlock
Written by
Nadia Whitlock
Called 2001
Every note is written by the partner who would run the matter, not by a marketing team.
Put a matter to us
Put a matter to us
Put a matter to us
In short
Ask what the undertaking would cost you before you ask what the order costs.
Chambers, Gray's Inn — the night before a without-notice application
Chambers, Gray's Inn — the night before a without-notice application
An application for a freezing order can be prepared in days and heard without notice. That part is straightforward and, relative to the sums usually at stake, inexpensive.
The cost that should govern the decision is the cross-undertaking in damages. You are promising the court that if the order turns out to have been wrongly obtained, you will compensate the respondent for what it cost them. Against a trading company, that figure can exceed the claim.
We therefore ask two questions before drafting anything. Can you actually meet the undertaking, and is there evidence of a real risk of dissipation rather than merely a defendant you distrust? A court will not grant relief on suspicion alone.
The duty of full and frank disclosure does the rest of the work. More orders are discharged for what the applicant failed to mention than for weakness on the merits.
The undertaking is the real number
Courts require the applicant to undertake to compensate the respondent for loss caused by an order that should not have been granted. Where the respondent is a trading business, that loss can include financing costs, lost contracts and the consequences of counterparties learning that its accounts are frozen.
We advise clients to model that exposure before the application is drafted, and where the client cannot credibly meet it, to consider fortification, ATE cover, or a narrower order confined to identified assets.
What the evidence has to establish
A good arguable case on the underlying claim is only the first limb. The second is a real risk of dissipation — evidence that assets are being moved, hidden or applied other than in the ordinary course. Distrust of the defendant is not evidence of dissipation, and applications built on it fail.
The most persuasive material is usually documentary and boring: sudden changes in banking arrangements, transfers to related entities, or a pattern of incorporation in jurisdictions with restrictive disclosure.
After the order
The return date arrives quickly and the respondent will have had time to prepare. Disclosure of assets, the policing of exceptions for living and legal expenses, and any application to vary all follow in short order, and each is an opportunity for the order to be lost.
More freezing orders are discharged for what the applicant failed to mention than for weakness on the merits.
This note is general information, not advice on your matter. The facts change the answer, which is what the first conversation is for.
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What a freezing order actually costs
Clients ask what a freezing order costs to obtain. It is the wrong question. The cost that matters is the one you promise the court you will bear if you turn out to be wrong.
Filed under
Civil Fraud
Published
Reading time
6 min
Written by
Nadia Whitlock
Written by
Nadia Whitlock
Called 2001
Every note is written by the partner who would run the matter, not by a marketing team.
Put a matter to us
Put a matter to us
Put a matter to us
In short
Ask what the undertaking would cost you before you ask what the order costs.
Chambers, Gray's Inn — the night before a without-notice application
Chambers, Gray's Inn — the night before a without-notice application
An application for a freezing order can be prepared in days and heard without notice. That part is straightforward and, relative to the sums usually at stake, inexpensive.
The cost that should govern the decision is the cross-undertaking in damages. You are promising the court that if the order turns out to have been wrongly obtained, you will compensate the respondent for what it cost them. Against a trading company, that figure can exceed the claim.
We therefore ask two questions before drafting anything. Can you actually meet the undertaking, and is there evidence of a real risk of dissipation rather than merely a defendant you distrust? A court will not grant relief on suspicion alone.
The duty of full and frank disclosure does the rest of the work. More orders are discharged for what the applicant failed to mention than for weakness on the merits.
The undertaking is the real number
Courts require the applicant to undertake to compensate the respondent for loss caused by an order that should not have been granted. Where the respondent is a trading business, that loss can include financing costs, lost contracts and the consequences of counterparties learning that its accounts are frozen.
We advise clients to model that exposure before the application is drafted, and where the client cannot credibly meet it, to consider fortification, ATE cover, or a narrower order confined to identified assets.
What the evidence has to establish
A good arguable case on the underlying claim is only the first limb. The second is a real risk of dissipation — evidence that assets are being moved, hidden or applied other than in the ordinary course. Distrust of the defendant is not evidence of dissipation, and applications built on it fail.
The most persuasive material is usually documentary and boring: sudden changes in banking arrangements, transfers to related entities, or a pattern of incorporation in jurisdictions with restrictive disclosure.
After the order
The return date arrives quickly and the respondent will have had time to prepare. Disclosure of assets, the policing of exceptions for living and legal expenses, and any application to vary all follow in short order, and each is an opportunity for the order to be lost.
More freezing orders are discharged for what the applicant failed to mention than for weakness on the merits.
This note is general information, not advice on your matter. The facts change the answer, which is what the first conversation is for.
More from the journal
Arbitration
7 min
An award you cannot enforce
Enforcement is not the last stage of an arbitration. It is the first question, and it should be answered before the notice is served.
Read the note
Practice
4 min
What we do in the first meeting
Thirty minutes, no charge, and a partner. What we are actually listening for, and why we sometimes say don’t.
Read the note
Commercial Litigation
8 min
Disclosure decides it more often than argument
The case you can run is rarely the case described in the first meeting. It is the one the documents will support.
Read the note
What a freezing order actually costs
Clients ask what a freezing order costs to obtain. It is the wrong question. The cost that matters is the one you promise the court you will bear if you turn out to be wrong.
Filed under
Civil Fraud
Published
Reading time
6 min
Written by
Nadia Whitlock
Written by
Nadia Whitlock
Called 2001
Every note is written by the partner who would run the matter, not by a marketing team.
Put a matter to us
Put a matter to us
Put a matter to us
In short
Ask what the undertaking would cost you before you ask what the order costs.
Chambers, Gray's Inn — the night before a without-notice application
Chambers, Gray's Inn — the night before a without-notice application
An application for a freezing order can be prepared in days and heard without notice. That part is straightforward and, relative to the sums usually at stake, inexpensive.
The cost that should govern the decision is the cross-undertaking in damages. You are promising the court that if the order turns out to have been wrongly obtained, you will compensate the respondent for what it cost them. Against a trading company, that figure can exceed the claim.
We therefore ask two questions before drafting anything. Can you actually meet the undertaking, and is there evidence of a real risk of dissipation rather than merely a defendant you distrust? A court will not grant relief on suspicion alone.
The duty of full and frank disclosure does the rest of the work. More orders are discharged for what the applicant failed to mention than for weakness on the merits.
The undertaking is the real number
Courts require the applicant to undertake to compensate the respondent for loss caused by an order that should not have been granted. Where the respondent is a trading business, that loss can include financing costs, lost contracts and the consequences of counterparties learning that its accounts are frozen.
We advise clients to model that exposure before the application is drafted, and where the client cannot credibly meet it, to consider fortification, ATE cover, or a narrower order confined to identified assets.
What the evidence has to establish
A good arguable case on the underlying claim is only the first limb. The second is a real risk of dissipation — evidence that assets are being moved, hidden or applied other than in the ordinary course. Distrust of the defendant is not evidence of dissipation, and applications built on it fail.
The most persuasive material is usually documentary and boring: sudden changes in banking arrangements, transfers to related entities, or a pattern of incorporation in jurisdictions with restrictive disclosure.
After the order
The return date arrives quickly and the respondent will have had time to prepare. Disclosure of assets, the policing of exceptions for living and legal expenses, and any application to vary all follow in short order, and each is an opportunity for the order to be lost.
More freezing orders are discharged for what the applicant failed to mention than for weakness on the merits.
This note is general information, not advice on your matter. The facts change the answer, which is what the first conversation is for.
More from the journal
Arbitration
7 min
An award you cannot enforce
Enforcement is not the last stage of an arbitration. It is the first question, and it should be answered before the notice is served.
Read the note
Practice
4 min
What we do in the first meeting
Thirty minutes, no charge, and a partner. What we are actually listening for, and why we sometimes say don’t.
Read the note
Commercial Litigation
8 min
Disclosure decides it more often than argument
The case you can run is rarely the case described in the first meeting. It is the one the documents will support.
Read the note