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Problem: Non-payment and freezing injunctions

11 April 2008

Problem:-

A company has a claim against a customer for non-payment of invoices, which are worth over £250,000. They have discovered from the customer over the telephone that he is planning to move to South America to live with his brother.

He is also selling his property, which is his only asset in the UK. They believe that their client does not have any immediate family in the UK.

The company is worried that their customer is going to run off without paying the invoices and leave them substantially out-of-pocket.

What should they do?

Advice:-

Given that their customer has told them that he intends to move out of the UK and dissipate his only asset in the UK, (i.e. his property) the company should consider applying for a freezing injunction against his house.

A freezing injunction is an interim order, which will restrain your customer from selling his house or dealing with any of his other assets (including transferring money in bank accounts). The freezing injunction can be sought before proceedings have been issued against your customer for non-payment of invoices.

The purpose of the freezing injunction is to preserve your customer's assets (i.e. his property) until judgment can be enforced. Time is of the essence! An application needs to be made promptly to avoid jeopardising the outcome. You need to know there is a real risk of your customer selling his property.

An application for a freezing injunction can be potentially expensive but the benefit is your peace of mind, knowing that you should be able to enforce any judgment.

Once the freezing injunction has been granted, your company's claim against your customer for the non-payment of invoices will proceed. If judgment is granted in your favour, you will be able to apply to the Court for a charging order over the property and the subsequent sale of the property, if necessary.

For more information on freezing injunctions, please contact Suzanne Smith in the litigation and dispute resolution team on 01753 279037.