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GUEST ARTICLE: Notification Orders - A Less Nuclear Option In Legal Cases?

Catherine Penny, 12 April 2017

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In cases of contested assets, it is unpleasant to be on the end of a freezing order application, and for those so affected, this article has some pointers.

Notification orders
It has been argued that a notification order is less draconian than a freezing order - after all it would not prevent the movement of assets as such, so why should the same level of evidence of risk of dissipation be required? The English Court of Appeal has recently confirmed that the criteria are the same, including in relation to the risk of dissipation. There is no “injunction-light” option, even if you’re ‘only’ asking to be given a warning before an asset is moved, rather than looking to freeze someone’s property outright.

The recent court decision, one of many in the hard fought litigation between the Candy Brothers and Mr Holyoake, included some useful comments for those who hold their assets in trusts and offshore companies. Often it is argued that trust structures make it easier for assets to be moved and it will therefore be more straightforward for a defendant to distribute their assets elsewhere. Here, the judge commented that simply the existence, or possibility, of using complex and offshore corporate and trust structures, was not enough to demonstrate a risk of dissipation - the claimant has to prove the risk of dissipation. 

No one wants to be on the end of a freezing order application, but if in that position, here are five key thoughts to keep in mind:

1.    The burden is on the applicant to make good on the application and provide evidence to support each of points noted above – throwing allegations around of previous ‘questionable’ business dealings without evidence of a risk of dissipation is unlikely to be good enough;
2.    Consider what the claimant says about a risk of dissipation – the fact that assets are held in trust structures will not be enough. There needs to be evidence of an attempt to move the assets which is more than a mere possibility;
3.    Think about how your life and business would be affected by having your assets frozen or having to notify the claimant each time you wish to sell or move an asset;
4.    What is the maximum value of the claimant’s claim? If your assets exceed that amount, then it would be unduly restrictive for any order to ‘bite’ in respect of all of your assets. It should be limited only to those assets necessary to give the claimant the protection they are seeking; and
5.    Often to halt an application for a freezing order (and the same could be true of a notification order), a defendant will agree to not to dispose of assets unless the applicant has been given prior warning, which can take the wind out of the sails of a claimant attempting to pursue this line of attack. By refusing to accept this, there will no doubt be a detrimental impact on the claimant from a costs perspective and this may also count against them when the judge considers the application itself.

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