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Freezing orders: FM Capital Partners

In the recent decision in FM Capital Partners Ltd v Marino and others, it was held that the terms of a freezing order did not apply to the assets of companies in which the sole director/shareholder respondent had a direct or indirect shareholding.

The freezing order was drafted in terms: “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 (which shall include a body corporate) holds or controls the asset in accordance with his direct or indirect instructions.” The Judge found that “The extended definition of assets in the standard form of freezing order does not, by itself, render the freezing order applicable to the assets of a third party, including a company wholly owned and controlled by the respondent.”

In arriving at this conclusion, he considered (1) the decisions in Lakatamia Shipping Company Limited v Nobu Su & Others, where the Court of Appeal clarified the meaning of “assets” and confirmed that assets belonging beneficially to a wholly owned company are not directly caught by a freezing order against the company’s sole shareholder, and (2) Group Seven Ltd v Allied Investment Corporation Ltd where Justice Hildyard concluded that “…my conclusion that the standard form of freezing order does not, ordinarily and without more, extend to restrain dealings in the assets of a body corporate wholly owned and controlled by the Respondent, invites consideration whether, and if so in what circumstances, a variation of the standard form ……..may be appropriate.”

Following these decisions, it is clear the Court will find that the injunction extends to companies wholly owned and controlled by the respondent only on the clearest wording; care is needed to achieve this.

Freezing assets

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