Morning:
8°c
As the recession begins to deepen, we can expect the courts to issue an increasing number of injunctions against independent financial advisers. The first thing for an investor to consider when prosecuting an IFA — perhaps because of poor advice — is the risk that an intermediary will try to put his funds out of the reach of the courts.
If the investor can show that this is about to happen, he can ask the courts to secure the adviser's assets. One way of getting a freezing injunction is to prove that the adviser has been dishonest or has turned a blind eye to fraud.
Freezing injunctions date from 1975, and were previously known as Mareva injunctions, after the leading case. They were described by the late Lord Donaldson as “one of the law's nuclear weapons” — the other being the search order, or Anton Piller order as it used to be called.
“He who injuncts, wins,” says Gary Miller, a partner in the international injunctions group at Mishcon de Reya. “The injunction deserves pride of place in the toolbox of every litigator or dispute-resolver.”
Of course, you still have to have some legal basis for issuing a claim. As David Bean QC, now Mr Justice Bean, says in his book Injunctions (Sweet & Maxwell), “an injunction is not a cause of action — like a tort or breach of contract — but a remedy, like damages.”
But so long as there is some justification for suing — negligence, perhaps, in the case of a financial adviser who has failed to do his research diligently — an order may be granted “in all cases in which it appears to the court to be just and convenient to do so”.
And the breadth of the injunction is limited only by the claimant's imagination. It can range from arresting a ship to changing the locks on an office door. A foreign defendant subject to a search order might even be ordered not to speak to his business partners in a language other than English, so that he can't give them secret instructions.
Though some injunctions — against newspapers for example — may be needed at great speed, others are granted after a contested trial.
Two months ago, a High Court judge ruled that the owners of the world-famous Hotel Cipriani in Venice were entitled to an injunction that would protect their trade mark by preventing its use as the name of the Mayfair restaurant patronised by the Beckhams, Sir Elton John and visiting Hollywood glitterati such as Penelope Cruz and Harvey Weinstein. The Cipriani family — owners of the restaurant and Harry's Bar in Venice — lost the case, despite calling Michael Winner to give evidence.
In executing a freezing or search order, the element of surprise may be crucial, and defendants are not normally told that a claimant is applying to a judge. After the courtroom has been closed to the press and public, Miller will normally glance round to make sure there isn't a stranger pretending to doze in a
corner.
The first the defendant will know about the injunction is when the claimant's lawyers turn up at his home or business, perhaps with an independent supervising solicitor to protect everybody's interests. Some defendants simply refuse to believe that anyone other than the police has such wide powers of search and seizure.
Miller usually supplies a list of local solicitors in case the defendant does not have one of his own. Occasionally, defendants think they can ignore an order. Deliberate disobedience can be punished by imprisonment for contempt of court and sequestration of a company's assets. “Every 30 or 40 injunctions, you get someone who's in denial or who's psychopathic and lies continuously,” says Miller. “We had to put someone away for nine months recently.”
I'd love to know who it was. But the solicitor could probably get an injunction if I tried to find out.
