What is a freezing order?
When somebody has taken your money, refused to return it and threatened to send it overseas - you need a freezing order! A freezing order or asset prevention order is made by the court to preserve money or assets. Assets and funds which are subject to a freezing order cannot be sold, mortgaged, leased, transferred, spent or otherwise dealt with unless the subject of specific carve out provisions in the order. The Respondent is ordinarily able to pay ordinary living or business expenses but sufficient value must be preserved.
A freezing order is often obtained “ex parte” or without the respondent being present at the hearing. The court proceedings will then be listed a short time later for the respondent to give relevant details about their assets and have their say in court about whether the freezing order should continue until trial or not.
When do I need a freezing order?
You need a freezing order when there is a danger that a court judgment will be wholly or partly unsatisfied because money or assets are hidden, distributed, spent, transferred or otherwise dissipated.
What do I need to show to obtain a freezing order?
You must have a court judgment in your favour or have a good arguable case which may lead to a judgment in your favour.
You must show that there is a danger your judgment or potential judgment will be wholly or partly unsatisfied because:
the judgment debtor, prospective judgment debtor or other relevant person absconds
their assets are disposed of
their assets are otherwise dealt with or diminished in value
Mere assertions that the respondent will put assets beyond the court’s reach are not sufficient. You need solid evidence. This evidence is usually provided in an affidavit but in super urgent cases oral evidence may be sufficient.
The court will also consider:
The nature of the respondent’s assets - the more liquid these are, the greater the risk of dissipation
The respondent’s financial standing and credit history - good luck obtaining a freezing order against a large bank, for example
Lack of ties to the jurisdiction - a foreigner with no ties to Australia is more likely to move money or assets offshore
If assets have been moved abroad, the ease with which enforcement can take place - in certain countries there is little point to obtaining an Australian court order as there is no possibility of enforcement
What the respondent has said about how they will deal with their assets - for example, if they say “you will never get your money back because I will transfer it overseas” this would be good evidence that a freezing order should be made
You will be required to provide “an undertaking as to damages” in order to compensate any person adversely affected by the operation of a freezing order. Security may be required, depending on your asset position.
Can I obtain a freezing order against someone who is overseas?
Yes, if they have assets in Australia, even if they are not an Australian resident.
Can assets located overseas be frozen?
Yes, but only where assets in Australia are insufficient to meet your judgment or potential judgment.
What if a freezing order has been made against me?
In certain circumstances you can apply to discharge or vary a freezing order. Generally, the Court will only discharge a freezing order if:
The respondent is able to pay the entire relevant amount
The claim against the respondent is not sufficiently strong
The applicant did not make full and frank disclosure to the court
You must obtain advice from solicitors experienced in freezing orders if you are considering one or if one is made against you or your company.
Contact Longton Legal today and get advice about freezing orders!
*Disclaimer: This is intended as general information only and not to be construed as legal advice. The above information is subject to changes over time. You should always seek professional advice beforetaking any course of action.*
Partner | Accredited Commercial Litigation Specialist NSW
Partner | Public Notary
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