The idea of a court injunction for asset recovery is either exciting or alarming depending upon where you sit. Asset recovery does include freezing bank accounts. We evaluate the prospects of success for you.
Please get in touch for an initial review on prospects of success. We do provide fee estimates for each stage.
Asset recovery injunction applications
We are a specialist litigation and dispute resolution legal firm.
- We have years of experience to use in applying judgement on how you could proceed. Part of the judgement will be to see if the matter can be settled out of court – usually the best move.
- We have the skills to handle commercial fraud claims, court injunctions, partnership disputes and shareholder disputes.
- We have the resources to respond quickly and you will work with a specialist partner.
To help you understand how we approach asset recovery injunctions we have set out some pointers based on questions we are often asked.
First steps for injunctions for asset recovery
Common situations where you may obtain an injunction to recover assets or put a freeze on assets include:-
- Financial difficulty – a fairly common ground for applying for an asset freezing injunction – for example if there is default on a loan.
- Real risk assets will be sold to avoid paying up;
- The freezing of a director’s assets under a personal guarantee;
- Where evidence could be destroyed;
- Misuse of the company bank account – for example where partners or directors are acting improperly.
This list is not exhaustive.
Details of a letter before action
You will be criticised and face being ordered to pay some or all of the other side’s legal fees if you apply for an injunction before having first sent a letter before action. The letter before action states your position and sets out what you are seeking.
The letter before action can ask for:
- The immediate cessation of the undesired conduct;
- The handover of materials s/he should not possess; and sometimes
- Binding undertakings as to future conduct.
The letter before action warns that if you don’t receive a satisfactory answer, you will apply for an injunction.
In some cases, the letter before action stage can be skipped without risk of being ordered to pay the other side’s legal fees. This is where the threat is immediate and or the ongoing conduct is particularly damaging or sensitive. Often a judgement call is needed and we will debate this with you.
Legal fees for injunction applications
Usually, claiming parties attempt to recover their legal costs from the other side. Legal costs do have to be reasonable and proportionate, and that requirement should not be overlooked. If it is, then it can work to your detriment.
However, costs may be reserved, i.e. dealt with at the end of the main claim. If the losing party provides good reasons for bringing or defending the injunction application, then both parties are likely to be responsible for their own costs.
Injunctions – the hurdles
Court injunctions often avert lengthy and expensive litigation. Nevertheless, asset freezing injunction applications along with injunctions to force a person to stop or act are a high risk tactic, because courts require:
- A strong legal case;
- On a balance of convenience, the claiming party will suffer greater detriment than the other side, if:
- The injunction is not granted;
- Good reasons why you urgently need an injunction.
The claimant must fully and frankly disclose all facts. This includes facts which are known but which may not necessarily be to the claiming party’s advantage.
Asset freezing orders
An asset freezing order is sought when there is risk over the other side’s financial stability. A freezing injunction can apply to worldwide assets. We have access to an international network of professionals and experts who can assist in foreign jurisdictions. It is possible to apply for a notification injunction which requires notification of any movement of assets – this is a helpful tool. A notification injunction can be granted before the asset freezing order.
Evidence needed to obtain an asset freezing injunction
To obtain an injunction placing a freeze on any asset such as bank accounts, property or shares, the claiming party must show four points:
- A good arguable case.
- The defending party has assets – and those assets have a realisable monetary value.
- A risk that the assets will be interfered with in some way to avoid the consequences of successful litigation. For example, seeing an asset advertised for sale would amount to more than suspicion. This can be capable of satisfying the court’s requirement on this point.
Injunctions to secure a search order
A search order is the most powerful and advantageous injunction. A search order is used to preserve or obtain evidence to support the underlying claim. A search order can be used as a tool to determine whether a freezing order is required.
With a search order you can:
- Enter premises, and access files and computers;
- Search for information and documents;
- Copy the documents;
- Retain the documents for the purposes of the claim.
If a party has suspicion that the other party will conceal or destroy evidence, then a search order is suitable.
How to obtain a search order
The claiming party has to show:
- A strong case – this is more than just a good arguable case. The courts allow flexibility.
- Potential for damage – on the basis that the other party will destroy documents relating to the claim.
- Possession – strong evidence that the defending party actually has the documents in its possession. A right to control the documents may also suffice.
Documents on electronic storage devices fall within the court’s powers.
Defending court injunctions relating to asset recovery and freezing orders
If an injunction is obtained without notice (i.e. without your knowledge) firstly you must fully comply with the injunction, even if:
- You completely disagree; or
- Plan to apply to set it aside.
Most injunction orders incorporate a penal notice. If you breach the injunction, you can be imprisoned. If an injunction is obtained without notice, then the court will fix a return day. At the return day, the court will consider whether the injunction should remain in force pending the underlying claim’s trial.
Injunctions for asset recovery – lines of defence to explore
The exact defence will depend upon the circumstances. But, common defences to an application for a court injunction include:
- Serious loss – if the injunction is granted, the defending party will be unable to trade.
- Collateral purpose – the claiming party’s real motive is to diminish the defending party’s business, and not to protect its own.
- The basis of a claim – the claiming party does not have a good arguable case for the underlying claim.
- Procedures – the claiming party did not disclose all material facts and documents.
We review the papers and the facts and then guide you.