Application to freeze matrimonial assets

Freezing Orders

It happens. On the breakdown of a marriage or civil partnership, one party attempts to dispose of assets before the financial issues have been resolved in order to reduce what the other party might receive as a settlement.

There are two ways in which the Court can prevent this and restrain the party from dealing with assets until the other party’s claim for financial provision has been resolved.

Section 37 of the Matrimonial Causes Act 1973 gives the Court power to make an Order in matrimonial proceedings restraining a party to those proceedings from disposing of any assets which may be the subject of a claim in the proceedings. The Section is designed specifically to avoid transactions intended to prevent or reduce financial relief. 

The Court will not, however, make an Order unless it is satisfied on balance that:

• The other spouse is about to deal with the asset concerned
• The effect of the proposed dealing would be to defeat or reduce the other spouse’s claim, or enforcement of an existing Order
• The purpose of the disposal is to defeat or reduce the financial provision for the other party.

The Court will consider each case on its own particular facts. No distinction is drawn between different types of assets, and a Section 37 Injunction can, therefore, be obtained in a variety of different circumstances, such as where a party is proposing to transfer monies from a bank account to a third party, or where one party is proposing to sell or transfer a business, commercial or residential premises.

For the purposes of these Injunctions, it does not matter whether one or both parties have an interest in the asset concerned. The Court has very wide powers and can make an Order in respect of an asset wherever it is situated, whether in this country or abroad. However, if the asset is situated outside England and Wales, a Court might refuse to make an Order where the Order would be unenforceable. The power is available to the Court where a spouse is about to transfer an asset out of the jurisdiction. Usually, Orders dealing with assets abroad are dealt with by the High Court rather than by the usual County Court.

Before an application can be made for an Injunction to restrain the dealing with an asset, an application for financial provision must be issued. This in itself means that there must be divorce proceedings. If a general financial application has not been made and the need for an Injunction is urgent, the general financial application can be issued at the same time as the application for the Injunction or the Court may accept an undertaking that the financial application will be issued within a specified period.