KSO v MJO & Anor

A freezing order may be granted where there is a real risk that a judgment will go unsatisfied because assets may be disposed of or dealt with to frustrate enforcement. That risk may be inferred from repeated silence, prevarication, or failure to provide reasonable information or security.

An application without notice is justified where delay may defeat the purpose of the relief. Alleged non-disclosure will not require discharge where it was immaterial and the court hearing the application has the full picture. A freezing order containing an alternative means of providing security is not oppressive merely because the respondent chooses not to use it.

The petitioner applied to discharge a freezing order made without notice by Singer J. The order restrained her from dealing with the proceeds of sale of the former matrimonial home, up to the amount needed to secure costs payable to her father-in-law following earlier ancillary relief proceedings.

She argued that there was no real risk of dissipation, that the application had been made prematurely and without adequate disclosure, and that the order gave no proper provision for her living expenses or legal costs. The central issue was whether the injunction should remain in force pending agreement or determination of the costs liability.

1. The application was dismissed. The injunction granted by Singer J remained in force, subject to its provision that it would cease to operate if the wife provided security of £50,000 by payment into court or another method agreed with the father-in-law’s legal representatives.
2. A freezing order requires a real risk that the judgment will go unsatisfied because of disposal or other dealing with assets. That requirement was satisfied. The wife had proposed retaining £50,000, then failed to provide the promised written undertaking and repeatedly failed to provide information about exchange and completion of the sale. In context, the father-in-law’s solicitors were entitled to fear that the assets might be dealt with so as to frustrate enforcement.
3. The application without notice was justified by the urgency. There was a real possibility that completion or disposal might occur before notice could be effective. The wife’s speculation that the father-in-law knew of the sale through his son had no evidential foundation sufficient to displace that conclusion.
4. The court rejected the complaint of material non-disclosure. The relevant figure of £50,000 had been expressly offered by the wife’s solicitors, and the alleged difference between that figure and an earlier estimate of £40,000 did not mislead the judge. In any event, the court had the full picture and was independently satisfied that continuing relief was justified.
5. The form of the order was unobjectionable. The wife could obtain access to the restrained funds by providing the specified security. Her inability to use the funds resulted from her failure to take that step, not from an unjustified defect in the order.
6. The wife’s liability to the father-in-law was not capped by any amount recovered from the husband’s trustees in bankruptcy. Any substitute security therefore need not expire merely because the bankruptcy distribution was completed. Costs followed the event, and the father-in-law’s costs were summarily assessed at £5,000 inclusive of VAT.

The judgment records earlier ancillary relief proceedings in which the court made costs orders against the petitioner. The petitioner’s subsequent application for permission to appeal was dismissed by the Court of Appeal on 18 May 2009 as totally without merit. The present decision concerned a later application to discharge Singer J’s freezing order.