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UL v BK
Factual and Procedural Background
This judgment concerns an application by the wife for continuation of an ex parte freezing order initially granted on 21 February 2013. The order froze a property in Marbella and further assets registered in the husband's sole name up to a combined value of £20 million. The husband was also required to provide sworn statements about his worldwide assets. The initial return date was set for 18 March 2013 but later re-fixed for 16 May 2013 by agreement.
The freezing order omitted numerous standard safeguards typically required in such orders, including clear territorial scope, reasons for no notice, exceptions for living expenses and legal costs, undertakings to pay damages, and the husband's right to apply to set aside the order within seven days. The wife had deposed she believed the husband had no other assets in his sole name beyond the Marbella property, yet the order froze assets up to £20 million.
The wife obtained documents belonging to the husband through accessing his safe and other means, which was later found to constitute serious misconduct and breach of the duty of candour to the court. The husband sued the wife in separate proceedings for breach of confidence and misuse of private information.
The wife issued a divorce petition on 7 February 2013 and obtained the freezing order shortly thereafter. The husband offered an undertaking not to dispose of or deal with the Marbella property or encourage the owning company to do so.
Legal Issues Presented
- Whether the ex parte freezing order, made without standard safeguards and without notice, was properly granted and should be continued.
- The legal basis and principles governing the court's power to grant freezing injunctions, including the statutory and inherent jurisdictional foundations.
- The applicability and necessity of established safeguards in freezing orders, especially in ex parte applications.
- The consequences of breaching the duty of candour in ex parte freezing applications and the criteria for re-granting such injunctions.
- The lawfulness and consequences of obtaining and using documents illegitimately in support of freezing applications.
- The proper jurisdiction for related claims concerning breach of confidence and misuse of private information.
Arguments of the Parties
Wife's Arguments
- The wife relied on documents obtained from the husband’s possessions to support her freezing application.
- She asserted a belief that the husband might be worth many hundreds of millions, with complex international assets, including the Marbella property worth approximately £10 million.
- She claimed the husband had made threats to disappear and leave her with nothing if divorced, which she submitted supported the risk of dissipation.
- Her counsel argued that the freezing order was appropriate to secure assets pending the financial remedy claim.
- Later sought to expand the injunction substantially to cover offshore corporate structures and foundations related to the husband’s assets.
Husband's Arguments
- The husband contended that the wife violated nearly every principle governing freezing orders, justifying discharge of the order.
- He denied having legal or beneficial interest in the Marbella property.
- Offered an undertaking not to dispose of or deal with the Marbella property or to encourage the owning company to do so.
- Argued that the wife’s evidence lacked sufficient proof of unjustified dealings with assets or real risk of dissipation.
- Challenged the wife’s failure to explain exceptional urgency and absence of notice, and the omission of standard safeguards.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Quartz Hill Consolidated Gold Mining Company v Beall (1882) 20 Ch D 501 | Historical development of injunction jurisdiction in common law and equity courts. | Used to explain the hybrid nature of the court’s power to grant injunctions derived from both inherent jurisdiction and statute. |
| ND v KP [2011] 2 FLR 662 | Principles governing freezing injunctions under s37 of the Senior Courts Act 1981 and Matrimonial Causes Act 1973. | Adopted as authoritative statement that tests under both statutes are congruent and require evidence of unjustified dealing with assets causing real risk of dissipation. |
| Edgerton v Edgerton [2012] 2 FLR 273 | Approval of ND v KP decision on freezing injunction tests. | Referenced to support the view that principles apply equally in family proceedings. |
| Roche v Roche (1981) Fam Law 243 | Suggested existence of general powers to preserve specific assets in matrimonial proceedings. | Held to be per incuriam and contrary to established principles governing freezing orders. |
| Shipman v Shipman [1991] 1 FLR 250 | Use of freezing injunctions in family proceedings and recognition of inherent jurisdiction. | Considered per incuriam; court rejected its suggestion that Mareva safeguards do not apply in family cases. |
| Harrow LBC v Johnstone [1997] 1 FLR 887 | Discussion of statutory powers to grant injunctive relief protecting future financial remedies. | Clarified that the decision did not affirm the correctness of Roche and Shipman regarding general powers to freeze assets without safeguards. |
| National Commercial Bank Jamaica Ltd v Olint Corp Ltd [2009] UKPC 16 | Principle that ex parte injunctions should only be granted without notice in exceptional circumstances. | Applied to emphasize the necessity of notice or valid justification for ex parte freezing orders. |
| Fourie v Le Roux [2007] 1 WLR 320 | Importance of safeguards in Mareva injunctions. | Supported the requirement of strict regulation and safeguards in freezing order procedure. |
| The Bank v A Ltd [2000] EWHC J0517 | Description of Mareva and Anton Piller orders as “nuclear weapons” requiring stringent safeguards. | Used to highlight the absence of safeguards in the present freezing order and the resulting unfairness. |
| CEF Holdings Ltd & Anor v City Electrical Factors Ltd & Ors [2012] EWHC 1524 | Requirement for factual evidence and duty of candour in injunction applications. | Reinforced the need for objective evidence and the consequences of breaching duty of candour. |
| Wade v Wade [2003] EWHC 773 | Holding assets offshore does not alone justify freezing orders without evidence of risk of dissipation. | Applied to reject suspicion based solely on offshore arrangements. |
| Thane Investments Ltd v Tomlinson [2003] EWCA Civ 1272 | Requirement for solid evidence of risk of dissipation in freezing orders. | Confirmed the principle that mere suspicion is insufficient. |
| Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft GmbH (The Niedersachsen) [1983] 2 Lloyd's Rep. 600 | Requirement for solid evidence of risk of dissipation and asset removal. | Supported the standard for assessing risk in freezing order applications. |
| TTMI Ltd v ASM Shipping Ltd [2006] 1 Ll Rep 401 | Approval of principles regarding risk of asset dissipation in freezing injunctions. | Referenced to endorse the need for real risk of dissipation. |
| Third Chandris Shipping Corporation v Unimarine SA [1979] QB 645 | Affidavits must state sources and grounds of belief to have probative value. | Applied to emphasize evidential requirements in freezing applications. |
| Moat Housing Group-South Limited v Harris [2006] QB 606 | Interim injunctions without notice are exceptional remedies. | Referred to underline the high threshold for ex parte orders. |
| O'Farrell v O'Farrell [2012] EWHC 123 | Importance of giving informal notice in urgent applications. | Used to criticize the failure to provide any notice or explanation in this case. |
| AB v Barristers Benevolent Association Ltd [2011] EWHC 3413 | Necessity of notice or informal communication in urgent applications. | Supported the requirement for notice or explanation for absence thereof. |
| Fourie v Le Roux and others [2007] 1 WLR 320 | Safeguards in Mareva injunctions. | Emphasized importance of procedural protections for respondents. |
| Arena Corporation v Schroeder [2003] EWHC 1089 | Principles governing breaches of duty of candour in ex parte injunctions and discretion to re-grant orders. | Applied to assess the wife's breaches and discretion regarding re-granting the freezing order. |
| Tchenguiz & Ors v Imerman [2011] Fam 116 | Illegality of accessing and using private documents without consent; duty of solicitors. | Applied to condemn the wife’s conduct in accessing the husband’s documents and to direct proper handling of such documents. |
| Goldstone v Goldstone [2011] EWCA Civ 39 | Judicial continuity and efficiency in family proceedings. | Referenced regarding jurisdictional considerations for related claims. |
Court's Reasoning and Analysis
The court began by scrutinizing the ex parte freezing order granted to the wife, noting numerous fundamental omissions of standard safeguards such as the absence of reasons for no notice, exceptions for living expenses and legal costs, undertakings to pay damages, and the husband’s right to apply to vary or discharge the order within seven days.
The court emphasized that freezing injunctions are exceptional equitable remedies requiring strict adherence to established principles and safeguards, whether granted under the Senior Courts Act 1981 or the Matrimonial Causes Act 1973. Both statutory and inherent jurisdictional bases exist for granting injunctions, but the exercise of power is tightly regulated.
The court rejected the notion that family proceedings are exempt from the safeguards developed in commercial Mareva injunction jurisprudence, holding that the same principles apply equally in family law cases.
It was noted that ex parte orders violate the fundamental rule of natural justice and should only be granted in exceptional circumstances with clear justification. The wife failed to demonstrate any exceptional urgency or provide any explanation for the absence of even short informal notice to the husband.
The wife’s duty of candour was seriously breached by her failure to disclose that some documents supporting her application were obtained by accessing the husband’s safe without permission, a serious misconduct. The court highlighted the illegality and potential civil and criminal consequences of such conduct and set out the proper protocol for handling such documents.
The evidence presented by the wife was insufficient to establish a solid risk of dissipation of assets. Her allegations of threats by the husband were unparticularised, lacking contextual detail necessary to justify the severe remedy of a freezing order.
The court found the freezing of assets up to £20 million in the husband’s sole name to be arbitrary and unsupported, especially given the wife’s own affidavit suggesting he had no such assets beyond the Marbella property.
Considering the husband’s affidavit revealing complex offshore corporate structures and the offered undertaking not to deal with the Marbella property, the court declined to re-grant or expand the injunction, particularly given the wife’s breaches and failure to comply with principles and safeguards.
The court also addressed the related civil claim for breach of confidence and misuse of private information, agreeing with the decision to have it heard by a specialist judge in the Queen’s Bench Division, as it involves technical issues outside family law territory.
Finally, the court promulgated standard example orders for freezing and search injunctions, emphasizing the necessity of strict adherence to safeguards and the duty of candour in ex parte applications to prevent future abuses.
Holding and Implications
The court DISCHARGED the ex parte freezing order granted to the wife on 21 February 2013, finding it fatally flawed due to the wife’s serious breaches of duty of candour, failure to demonstrate a real risk of dissipation, absence of exceptional urgency, omission of standard safeguards, and improper freezing of assets unsupported by evidence.
The court refused to re-grant or expand the injunction despite the husband’s complex financial arrangements, accepting his undertaking instead.
The decision underscores the critical importance of strict compliance with established principles and safeguards in freezing order applications, especially ex parte, and the severe consequences of misconduct and breaches of duty of candour. It also confirms that family proceedings are subject to the same rigorous standards as commercial cases in this regard.
No new precedent was established beyond reaffirmation of existing principles, but the judgment serves as a strong warning against the misuse and abuse of ex parte freezing orders in family law cases.
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