1. The freezing injunction remains one of the most potent weapons in the common law armoury. Such injunctions are invariably (but not exclusively) made on urgent ex parte applications timed so as to cause maximum impact on the respondent. The speed at which such applications have to be prepared brings with it the potential for mistakes to be made and slips to occur. It is essential to prepare the application with great care and attention to detail so as to counter this risk. There is a need for clarity in the drafting of the injunction: ambiguities will be resolved against the applicant.
2. As is well known, the without notice application requires full and frank disclosure from the applicant, and the court is astute to police breaches of the obligation. It is not enough for the applicant to serve the order, say "freeze", and sit back until the return date. The respondent must be given a full report of the ex parte proceedings. Further, the duty to give full and frank disclosure remains until the proceedings are fully inter partes. An applicant who realises a mistake has been made or a point omitted, is under a duty to bring this to the attention of the court.
3. It is usual for the respondent to be ordered to disclose assets. The disclosure order is very important to the success of the freezing injunction, and questions of compliance often arise.
4. Attendance by the parties at the return date is not compulsory, and it is not uncommon for the injunction to continue by consent.
5. In this article, Tom Whitehead draws attention to two recent cases concerning freezing orders which contain helpful guidance on matters of practice and procedure likely to be of interest to practitioners asked to obtain or resist such orders. Both cases arise out of a 'sale and lease back' financing transaction under which financiers (Bitumen) purchased a bitumen carrier from one member of a group of companies, and then leased the vessel back to a different member of the group (Windrush) on the terms of a demise charter guaranteed by another group company (Richmond). Windrush v Bitumen Invest  EWHC 2077 (Comm)
6. In Windrush, the applicant charterer (Windrush) applied for a freezing injunction out of hours during the Long Vacation. The duty judge heard the ex parte application by telephone. An order was granted with a short return date, and it was left to the applicant's counsel to draw up the necessary order.
7. The injunction froze a relatively modest sum which had been paid by insurers to the London client account of the respondent's solicitors. The parties agreed that the injunction would continue on terms and there was no return date. However, that agreement was not recorded in a consent order.
8. Approximately 2 years later, the respondent owners (Bitumen) applied to the court for an order that the injunction had ceased to have effect in accordance with its terms and/or that it be discharged including for non-disclosure on the ex parte application. The applicant opposed the application and in the alternative applied for a fresh injunction.
9. The court found in favour of Bitumen. The judge (Andrew Baker Q.C. as he then was) made a series of observations which practitioners would be well advised to keep in mind when seeking Mareva relief:
a. Any unusual provisions in the draft injunction must be specifically raised with the judge on the ex parte hearing;
b. The recitals to the injunction must properly reflect the course of the ex parte application and identify the evidence in fact read by the judge;
c. The court has power to correct an error in a freezing order under the 'slip rule' (but this should not be necessary because of the care and attention an applicant should ordinarily give to the drafting of the freezing order);
d. An agreement to continue the injunction precludes the respondent from seeking discharge on grounds of material non-disclosure known at the time of the agreement to continue;
e. An agreement to continue the injunction should be embodied in a consent order;
f. The court may treat as done that which ought to have been done, namely the variation of the original order by consent to record the terms agreed between the parties and the correction of any slips in the ex parte order which would have been obvious to the parties.
10. On the particular facts, the effect of correcting the slip and embodying the terms agreed in a deemed consent order was that the ex parte injunction had ceased to have effect in accordance with its terms.
11. Two further aspects of the judgment merit attention:
a. The Judge rejected an argument raised by Windrush that terms could be implied into an injunction. That rule was not limited to proceedings for contempt but was of general application.
b. The Judge rejected Windrush's application for a fresh injunction (1) because Windrush had known from the outset that it was contracting with an SPV of limited (if any) resources; (2) because Bitumen's refusal to provide voluntary security could not be used as evidence of a risk of dissipation; (3) because major shipping interests stood behind Bitumen (and had been asked to provide the security) and (4) there was evidence that those interests had not defaulted under any previous judgments or awards and were of good standing.
Bitumen Invest v Richmond Mercantile Limited FZC  2313 (Comm)
12. This decision arose out of an application by Bitumen for a freezing order over assets of Windrush's guarantor, Richmond. The judge who heard the ex parte application was not willing to grant a freezing order ex parte but was willing to grant disclosure orders against Richmond requiring disclosure of assets. The court has such power under CPR 25.1(1)(g). The guarantee issued by Richmond also gave a right to this financial information.
13. For present purposes, the point of interest is that the judge took the opportunity to confirm (in the face of contrary argument from Richmond) that where a respondent is ordered to disclose assets, it must disclose details of bank accounts. A bank account in credit is an asset within the scope of the disclosure order and there must be disclosed in particular (i) the name of the bank in which the account is held; (ii) the name of the branch; (iii) the number of the account; (iv) the name or names of the persons in whom the account is; and (v) the balance of the account as at the date of service of the order. The position in England as regards bank accounts is now the same as the law in Australia (Ausbro Forex Pty v Mare (1986) 4 N.S.W.L.R. 419). Bank accounts are a "key asset" and it is not necessary for the order to expressly require such details (albeit it would do no harm to expressly require such details).
14. Further, the Judge held that where a respondent is ordered to disclose trade receivables, it must provide the identity of the customer because the identity of the debtor goes to the quality of the receivable.
15. The court also made an information order, requiring the Richmond to inform Bitumen when it had received all or part of the sums payable to Richmond by a third party under an arbitration award.
16. Although not the subject of this article, Bitumen's claim on the guarantee against Richmond was successful. The judgment of Sir Jeremy Cooke in Bitumen Invest AS v Richmond Mercantile Limited FZC  EWHC 2957 (Comm);  Lloyd's Law Reports Plus 15;  Building Law Reports 74 contains a helpful review of the law relating to when a guarantee will be construed as being a traditional 'see to it' guarantee, and when the instrument will be held to be an 'on demand' or performance guarantee. In this case the instrument was found to be an 'on demand' guarantee. This is the subject of an article to be published shortly in the Journal of International Banking and Financial Law.