Chipping away at the ice – expanding your living expenses allowance during a freezing order11 Apr, 2019 - Asset Freezing | by Grosvenor Law
We understand that high-net-worth individuals have a certain quality of life. Being on the wrong end of a ‘without notice’ freezing order is likely to be unconducive to the upkeep of that lifestyle. You will, with immediate effect, no longer have unfettered access to your assets, whether liquid or illiquid. An exception for ‘ordinary living expenses’ each week is likely to have been made; however, this will often be dwarfed by your actual weekly expenses. Fortunately, there is scope to vary the terms of an order to provide you with a living expenses allowance which properly reflects your lifestyle.
Freezing orders are granted to applicants who are able to meet certain requirements, and prevent a respondent from dealing with its assets in order to preserve those assets in the event that the applicant wins in its dispute with the respondent.
Most commonly a freezing order will be sought against you at a hearing without you present (known as an ex parte, or ‘without notice’ hearing). The applicant will ask the court to make the order against you in the form it suggests. The standard form of freezing order does allow for ordinary living expenses; however, it will be the applicant that suggests to the Court the amount to be granted per week, at least in the first instance.
Optional wording may be sought which will require you to notify the applicant or their lawyers where (which account, for example) you intend to take money from before you spend it on your ordinary living expenses (although the Court encourages applicants to only include that wording where it is really necessary). Experience indicates that this further notification requirement can cause a lot of unwanted hassle and delay.
Once a freezing order is put in place by the Court, without your knowledge and input, it must then be served on you. A date will likely have been set for the parties to return to Court together. It will be on that occasion that you are able to argue, amongst other things, that you require more for living expenses.
A freezing order is not meant to go further than is necessary to prevent the dissipation of assets. It is widely accepted that a freezing order is also not meant to provide security to an applicant for the amount they are claiming from the respondent, nor should it (before judgment) restrain you from living your life in the same manner as you did prior to the order.
The burden will be on you and your legal representatives who will, having been instructed upon receipt of the freezing order, need to prove that a variation would be just in the circumstances. The Court will take the lifestyle of an individual into account when deciding on the proper level of living expenses to be granted. In one case a Judge commented that living expenses should not enable, for example, the purchase of a Rolls-Royce. While you should only be allowed enough to cover ordinary expenses, it may well be that your lifestyle is such that significant funds should, in fact, be released. Your solicitors will work with you to understand in detail what your recent expenses have been, in order to identify the appropriate sum to ask for, and to be able to justify that sum to the Court. So, for example, expenses which might be considered could include: regular payments to dependent family members, maintenance of properties, staff costs, medical (and possibly even some cosmetic) procedures, as well as more conventional everyday costs.
So, while you may not be able to purchase a Rolls, all hope is not lost.
Sophie Adams is an associate in Grosvenor Law’s commercial litigation team, where she advises on complex, large scale litigation often involving matters where injunctive relief has been sought.