The Big Freeze - Can You Get A Freezing Injunction On Matters With A Small Quantum?

• Published date: 13 April 2021
• Subject Matter: Litigation, Mediation & Arbitration, Criminal Law, Arbitration & Dispute Resolution, White Collar Crime, Anti-Corruption & Fraud, Civil Law
• Law Firm: Goodman Derrick LLP
• Author: Mr Daniel Dodman

In the second article in my series on cost effective civil fraud claims, we look at the use of freezing injunctions and how they work in claims that are lower than some of the multi-party, very high value cases many of us work on.

Freezing orders represent one of the nuclear weapons of the legal arsenal. The practicality of living under one, their extremely invasive nature and the on-going legal costs of either policing the order or complying with it, can be crippling. As such, they often form a key plank of the way civil fraud cases are run (entirely independent of their actual purpose to ensure that assets are not dissipated). They clearly have a role in the multi-party, multi-million pound litigation that hits the headlines but are they suitable in cases where the quantum might be less?

The answer is yes - potentially but there are a number of considerations:

1. Is a freezing order actually necessary? Attempting to obtain one will, inevitably, lead to more expense for the client. In order to make sure that the legal tests are met there will be significant client time and cost invested. It is worth taking a step back and assessing whether a freezing order will actually achieve the client's aims. Will assets dissipate if one is not obtained? Is the added pressure put on a defendant worth the gamble?
2. How do you address the issues relating to full and frank disclosure cost effectively? As we all know, a half hearted attempt to meet full and frank disclosure can open a client up to extreme difficulty on a return date. An assessment needs to be made on the case at an early stage as to whether the complexity involved makes full and frank possible at a cost-effective level. What legal arguments might be raised from the other side? Are there any factual issues that require a substantial document review exercise to ensure that satisfaction can be reached on full and frank? By way of example, if the alleged fraud in question has been undertaken by a senior employee, it might well be argued that the actions taken were done so with a board's approval - if that is the case, would emails need to be reviewed? The position, by contrast, might be entirely different if the alleged fraud was undertaken by an external party. Taking a pro-active approach on the legal side (often with Counsel help) and on the factual side (with client assistance) is often the best way forward to make sure that a full picture can be gained.
3. The granting of a freezing injunction will inevitably...