How Universities should investigate a complaint under the disciplinary procedure
The standard form of freezing injunction is in the annex to Practice Direction 25A of the Civil Procedural Rules (or Appendix 11 of the Commercial Court Guide, for use in the Commercial Court).
This states that the freezing injunction applies to “all the Respondent’s assets whether or not they are in his own name and whether they are solely or jointly owned [and whether the Respondent is interested in them legally, beneficially or otherwise]. For the purpose of this order the Respondent’s assets include any asset which he has the power, directly or indirectly, to dispose of or deal with as if it were his own. The Respondent is to be regarded as having such power if a third party holds or controls the asset in accordance with his direct or indirect instructions”. The wording in square brackets only appears in the Commercial Court version of the standard order.
The scope is therefore broad, and the starting point is that this could cover all types of assets, including shares, property and bank accounts, but it’s not as straightforward as it might seem. Interesting questions can arise on a case by case basis, depending on the Respondent’s interest in the assets.
For example, what if an individual Respondent owns limited assets in their own name, but wholly owns and runs a company with many assets? Even if the company is not a defendant to the proceedings, can the Applicant freeze the company’s assets by seeking a standard freezing order? The Court of Appeal in Lakatamia Shipping Co Ltd v Su  EWCA Civ 636 said no. The company’s assets belong to the company and not to its shareholders, and therefore the Respondent’s shareholding would be caught by the freezing injunction but the company’s assets would not. The situation becomes more complicated where the Respondent uses his/her position as a director of the company to take steps that reduce the value of his/her shareholding in the company, but it would seem likely that this dealing would be caught by the freezing injunction.
What about a situation where the Respondent has control of an asset, but does not have a legal or beneficial interest in the asset, and so it would not be possible to enforce against it? This was one of the questions for the Supreme Court in JSC BTA Bank v Ablyazov  UKSC 64. In that case, the Supreme Court had to consider whether the right to draw down under a loan agreement was caught by the terms of the freezing injunction, in circumstances where the Respondent had no legal or beneficial interest in the asset and therefore no enforcement measures could be taken against the asset itself. The Court decided that the proceeds of the loan agreements were caught by the freezing injunction, on the basis that the Respondent had the “power, directly or indirectly, to dispose of or deal with [it] as if it were his own”.
Therefore, following Ablyazov, the definition of assets in the standard form of freezing order can include assets which are not owned legally or beneficially by the Respondent, but over which the Respondent has control and has the power to dispose of or deal with as if he or she did. This creates a possible tension with the earlier Court of Appeal decision in Lakatamia Shipping, as it does raise the question as to whether a standard freezing order could now extend to the assets of a company of which the Respondent is a sole shareholder and director.
This potential conflict was considered in the case of FM Capital Partners Ltd v Marino  EWHC 2889 (Comm). In that case, the High Court decided that Ablyazov had impliedly overruled Lakatamia Shipping but only on the question of the proper interpretation of the standard freezing order. The judge held that the assets of a wholly-owned company are still not caught by the standard freezing order on the basis that the Respondent is acting as a director of the company in exercising power over the company’s assets, and not in his/her own right.
It seems that in exceptional circumstances, a freezing order might be expressed to apply to the assets of a non-defendant company wholly owned or controlled by a Respondent, but only where in truth the company's assets were the Respondent's assets; for example, non-trading companies which had no active business and “which are in truth no more than pockets or wallets of that Respondent” (as Hildyard, J suggested in Group Seven Ltd v Allied Investment Corpn Ltd  EWHC 1509 (Ch);  1 WLR 735).
Ultimately, Ablyazov held that extent of the assets that are affected by the freezing injunction will be a matter of construction, and the terms of the order will be strictly construed. We would welcome further clarification from the Courts as to the circumstances in which the assets of a non-defendant company that is wholly owned by the Respondent would be caught by a freezing injunction. However, in the meantime the advice for Applicants is to draft the wording of the order carefully if there are specific assets you would like the Court to consider. For Respondents, it means taking legal advice immediately to ensure that the freeze is no broader than it should be, and to ensure any proposed dealings would be permitted under the freezing order.
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