C v C & Anor

Freezing injunctions in financial remedy proceedings must rest on an applicable statutory or equitable jurisdiction and objective evidence of a real risk that assets will be dissipated or dealt with to defeat the claim. Section 37 of the Matrimonial Causes Act 1973 does not permit the court to restrain dealings by a separate company with its own assets merely because those dealings may affect the value of a spouse’s shares. Directors cannot be restrained in a way that causes corporate paralysis unless the legal jurisdiction and evidential requirements are satisfied. A freezing injunction under section 37 of the Senior Courts Act 1981 requires a subsisting cause of action capable of supporting equivalent relief in another division of the High Court. Without notice relief requires exceptional urgency, full and fair disclosure, and evidence of likely irretrievable prejudice.

The applicant husband sought continuation of freezing injunctions obtained during divorce and financial remedy proceedings. The orders restrained the wife and their adult son, who had been joined for the injunction proceedings, from changing the management, banking and service arrangements of two property-owning companies. The companies were separate legal entities, and the son was a director of both but was not a party to the substantive financial remedy proceedings.

The applications followed earlier without notice and interim orders, and a later moratorium agreement which had temporarily regulated the companies’ operation. The central issues were whether the court had jurisdiction under section 37 of the Matrimonial Causes Act 1973, section 37 of the Senior Courts Act 1981, or any residual inherent jurisdiction, and whether the procedural and evidential requirements for continuing the injunction were met.

1. Application dismissed. The proposed freezing order would have prevented the wife and son, as the companies’ directors, from carrying out their fiduciary and managerial functions and would have operated as a form of corporate paralysis.
2. Section 37 of the Matrimonial Causes Act 1973 could not support the order. Under Crittenden v Crittenden and McGladdery v McGladdery, the relevant property must be property in which a party to the marriage has a beneficial interest. The provision does not extend to dealings by a separate company with its own property. The companies were not shams, alter egos or trustees for either spouse. The reasoning in Prest v Petrodel Resources Ltd confirmed that corporate control does not make company assets the property of the controlling individual.
3. The proposed restrictions also exceeded any permissible restraint on the wife personally. They targeted the companies’ bank accounts, assets and management arrangements, while the son was not a party to the financial remedy proceedings. Directors act as agents of the company, but the company alone owns and disposes of its assets.
4. Section 37 of the Senior Courts Act 1981 required a subsisting cause of action of a kind which could support an injunction in the Chancery or Queen’s Bench Division. No adequate cause of action or existing basis for injunctive relief against the son was established.
5. Even if jurisdiction existed, the applicant had not shown by objective evidence a likelihood of movement, dissipation, transfer or other dealing with assets with the intention of defeating his financial claims. The proposed corporate resolutions were, on the evidence available, a response to the husband’s own removal of the wife and son from the management structure and were not shown likely to diminish the value of the shares.
6. The application should not have been made without notice. There was no exceptional urgency, and the applicant failed to make full, frank and fair disclosure, particularly concerning his removal of the wife and son as directors and the potential impact on the son’s new business. That failure independently militated against reinstatement.
7. The court rejected reliance on a wider family-specific inherent jurisdiction. The principles and safeguards governing freezing orders apply equally in the Family Division. The undertakings offered by the wife and son were sufficient protection, and the application for reinstatement was dismissed.