L v K (Freezing Orders: Principles and Safeguards) [Family Division]

JurisdictionEngland & Wales
CourtFamily Division
JudgeMr Justice Mostyn
Judgment Date24 June 2013
Neutral Citation[2013] EWHC 1735 (Fam)
Date24 June 2013
Docket NumberCase No: FD13D00606

[2013] EWHC 1735 (Fam)

IN THE HIGH COURT OF JUSTICE

FAMILY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr Justice Mostyn

Case No: FD13D00606

Between:
Ul
Applicant
and
Bk
Respondent

Philip Marshall QC and Peter Newman (instructed by Jones Nickolds) for the Applicant

Deborah Bangay QC and Dakis Hagen (instructed by HowardKennedyFsi LLp) for the Respondent

Hearing dates: 16 May 2013

This judgment is being handed down in private on 24 June 2013. It consists of 80 paragraphs and has been signed and dated by the judge. The judge hereby gives leave for it to be reported in this anonymised form as UL v BK (Freezing Orders: Safeguards: Standard Examples)

The judgment is being distributed on the strict understanding that in any report no person other than the advocates or the solicitors instructing them (and other persons identified by name in the judgment itself) may be identified by name or location and that in particular the anonymity of the children and the adult members of their family must be strictly preserved.

Mr Justice Mostyn
1

In this judgment I will refer to the applicant as the wife and to the respondent as the husband.

2

This is my judgment on the application by the wife for the continuation of an ex parte freezing order granted by this court on 21 February 2013. On that day a second order was made which provided that certain documents which belonged to the husband should be handed over to her solicitors and retained in sealed files until further order. The initial return date was set for 18 March 2013 but was re-fixed for 16 May 2013 by agreement.

3

The freezing order –

i) prevented the husband from dealing with a property in Marbella said to be worth £10m and froze further assets "presently registered in his sole name" up to a combined value of £20m; and

ii) required the husband to file and serve a sworn statement providing details of all assets held worldwide in his sole name and details of any trust/settlement of which he is a beneficiary and to nominate which assets (up to £20m) should be frozen.

4

The freezing order did not –

i) clearly state on its face whether it is a worldwide freezing injunction or limited to England and Wales;

ii) state on its face why no notice, not even short informal notice, had been given to the husband;

iii) contain an exception which allowed for a specified amount to be spent by the husband on weekly living expenses and legal advice and for the disposal of assets in the ordinary and proper course of business;

iv) contain an undertaking by the wife to pay damages to the husband or any third party caused loss by the order which the court may be of the opinion ought to be paid;

v) contain an undertaking by the wife to pay the reasonable costs of anyone other than the husband which have been incurred as a result of compliance with the order;

vi) contain an undertaking by the wife not, without the permission of the court, to use any information obtained as a result of the order for the purpose of any civil or criminal proceedings, other than the present claim, either in England and Wales, or in any other jurisdiction;

vii) contain an undertaking by the wife, without the permission of the court, not to seek to enforce the order in any country outside of England and Wales; or

viii) contain a statement of the right of the husband to apply, within 7 days, to set the order aside. This requirement is prescribed by FPR 2010 rules 18.10 and 18.11. The right to apply afforded to any affected party by those rules does not prescribe any minimum period of notice. Here an order was made which granted the husband the right to apply to set aside or vary the order but only on giving 48 hours notice. Nothing in the order or the note of the hearing explains why the husband's rights under rules 18.10 and 18.11 were cut down.

5

The order freezing further assets "presently registered in his sole name" up to a combined value of £20m was made notwithstanding that in para 13 of her affidavit made in support of the application the wife stated "other than the Spanish Property, I am not aware of any other property in [the husband's] sole name; in fact, I fear that this may be the only asset in his sole name".

6

This sparse initial summary reveals either that this must either be a wholly exceptional case or that things must have gone seriously wrong. It is remarkable for this freezing order to have omitted every single standard safeguard and to have frozen, in addition to the Marbella property, other assets up to £20m held in the husband's sole name when the wife had positively deposed to a belief that he did not actually have any.

7

This is not a wholly exceptional case. Things have gone seriously wrong. It is therefore necessary for me to set out once again the elementary principles, derived from legion authorities, in the hope that the approach adopted here never again recurs.

8

The husband's position is that the wife has violated almost every known principle governing a freezing application and that therefore, without more, the order should be discharged. However, entirely without prejudice (a) to that contention and (b) his claim that he in fact has no legal or beneficial interest in the Marbella property, and in a spirit of pragmatism, he offers an undertaking that he will take no steps to dispose of charge or otherwise deal with it, nor will he encourage the company that owns it to do so.

The power to grant freezing injunctions

9

In their careful written submissions for the husband at para 44 Miss Bangay QC and Mr Hagen argue that it is likely to be a solecism to refer to the general power of the High Court to grant a freezing order as arising only under the "inherent jurisdiction of the court". Rather, they argue that the jurisdictional foundation arises under s37 of the Senior Courts Act 1981. Although the power is undoubted, and the genesis of the power is therefore largely only of academic, as opposed to practical, significance, I am doubtful that it is strictly correct to suggest that the origins of the jurisdiction were solely statutory. There is however one important aspect to this issue to which I refer at para 14 below.

10

An injunction is an equitable remedy which originally could only be granted by the Court of Chancery or the Court of Exchequer in equity. (The equity jurisdiction of the latter court was abolished by the Court of Chancery Act 1841.) By section LXXXII of the Common Law Procedure Act 1854 the common law courts were given a wide jurisdiction, where it "shall seem reasonable and just", to grant injunctions in cases of breach of contract and other like wrongs; so wide, in fact, that Baggalay LJ observed in Quartz Hill Consolidated Gold Mining Company v Beall (1882) 20 Ch D 501 at 509 that the common law courts had a more extensive jurisdiction regarding the grant of injunctions than the Court of Chancery itself. Therefore, at that point, the power to grant injunctions was, so far as the Court of Chancery was concerned, both inherent and historic, while for the common law courts it was a brand new statutory power.

11

The 1870s saw the implementation of the great project to unite and consolidate the various separate courts and their separate systems of law into one Supreme Court of Judicature. The principal statute was the Supreme Court of Judicature Act 1873. As is well known by s24 law and equity were to be concurrently administered, and by s25(11) the rules of equity were to prevail where they were in conflict with the rules of common law.

12

The power to grant injunctions was expressly addressed. By s25 (entitled "rules of law on certain points") it was provided:

"And whereas it is expedient to take occasion of the union of the several Courts whose jurisdiction is hereby transferred to the said High Court of Justice to amend and declare the Law to be hereafter administered in England as to the matters next herein-after mentioned: Be it enacted as follows: … (8) A mandamus or an injunction may be granted or a receiver appointed by an interlocutory Order of the Court in all cases in which it shall appear to the Court to be just or convenient that such Order should be made; and any such Order may be made either unconditionally or upon such terms and conditions as the Court shall think just …" (emphasis added)

13

That power was re-enacted in almost identical terms in s45(1) and (2) of the Supreme Court of Judicature (Consolidation) Act 1925, although the statement that it "amended and declared" the existing law was omitted. It was again replicated in section 37 of the Supreme Court Act 1981, now renamed the Senior Courts Act 1981, which provides that:

"(1) The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.

(2) Any such order may be made either unconditionally or on such terms and conditions as the court thinks just."

14

It can therefore be seen that the power to grant an injunction, while placed on a statutory footing by s37, does not derive solely from the legislature. Rather, it is a hybrid creation of the old equitable power and 19 th century statutory intervention. Therefore, I do not consider that it is a solecism to refer to the power deriving from the inherent jurisdiction of the court. That said, the power is clearly defined and regulated by s37 of the 1981 Act alone, and therefore its exercise can only be effected under that section and the authorities decided under it. There is no scope for the use of some other wider protean inherent power (even if such exists, which I doubt) whether in the Family Division or the other Divisions. And the principles concerning the exercise of the power must be identical in whichever Division the relief is sought.

15

I now turn to the question whether...

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