Freezing Orders and Asset Protection In Queensland: What to do if you have concerns that someone may transfers their assets before you are able to enforce your judgment
Where there is a risk that a party to legal proceedings may transfer, conceal, or otherwise diminish the value of their assets, the Court has the authority to make a freezing order, this is also known as a Mareva Injunction. Such an order is intended to prevent the dissipation of assets and to preserve the efficacy of any judgment that may ultimately be obtained.
What is a freezing order?
A freezing order is a type of injunction made by the Court that restrains a person or company from deal with or disposing their assets, whether located in Australia or overseas. In Queensland, such orders are made under Rule 260A of the Uniform Civil Procedure Rules 1999 (Qld).
When it comes to preservation of assets, freezing orders are typically granted in situations where there is a genuine concern that a party may:
- withdraw money from bank accounts; or
- transfer property or shares to others; or
- sell or otherwise dispose of significant assets, such as real estate or vehicles.
The purpose of a freezing order is to preserve the asset of a party to ensure that any future judgment or Court order can be properly enforced.
What assets are covered by a freezing order?
This includes, but is not limited to:
- bank accounts;
- real property (property consisting of land or buildings);
- motor vehicles;
- share portfolios;
- term deposits; and
- valuables
When can you apply for a freezing order?
To obtain a freezing order, the applicant must satisfy the Court of the following:
- good arguable case: the applicant must demonstrate that there is a serious and basis for their underlying claim;
- risk that the judgment debtor, prospective judgment debtor or another person (third party) may abscond
- identifiable assets to be preserved: there must be a reasonable basis to believe that the respondent/debtor holds assets which should be protected by the order.
Ultimately, the applicant must establish a real risk that the other party may either abscond or deal with their assets in a way that would frustrate the enforcement of any judgment made by the Court.
Requirements for a freezing order at Common Law
To succeed in an application for a freezing order under common law, the applicant must satisfy five key elements, as set out in Pankhurst v Damata [2008] QSC 28:
- Jurisdiction
The applicant must either have an enforceable judgement or a cause of action that falls within the jurisdiction of the Court;
- Good arguable case
In the case of interlocutory (interim) freezing orders, the applicant must show a good arguable case on the merits;
- Respondent’s assets
The respondent must have assets within, or capable of being brought within, the jurisdiction;
- Risk of asset dissipation
There must be a genuine risk that the respondent will deal with, remove, or conceal assets in a way that would frustrate enforcement of any judgment in the applicant’s favour;
- Risk of judgment being unenforceable
The applicant must demonstrate that, without the order, there is a real risk that any judgment obtained will go unsatisfied due to the unavailability of the respondent’s assets.
Importantly, in relation to the fifth element, the applicant is not required to provide that the respondent intends to defeat enforcement. It is sufficient to show that there is a real risk that enforcement of the judgment would be compromised.
Types of freezing orders
- Ex parte freezing orders
These are urgent orders made without notifying the respondent, usually to address an immediate risk that assets may be dissipated. They are typically temporary and remain in effect until a further hearing can take place.
- Interlocutory freezing orders
These are orders made before the final determination of the proceedings. They remain in force until the matter is resolved by the Court or further order.
- Ancillary orders
A freezing order is often accompanied by additional orders requiring the respondent to disclose details of their assets, including their nature, value and location to assist in the enforcement of the primary order.
Can I defend against a freezing order?
The Court retains discretion to allow the respondent to apply to vary or discharge a freezing order. Such applications are generally treated as urgent due to the significant impact of the order.
A respondent may also avoid the ongoing effect of a freezing order by providing adequate security. This may include:
- payment of a specified sum into Court;
- lodging funds into a joint account controlled by the parties’ solicitors; or
- providing a bank guarantee.
The security must be sufficient to cover the likely amount of any judgment, including associated legal costs and interest.
A freezing order will no longer apply once the respondent has provided the agreed form of security or payment. However, the provision of security does not grant the applicant priority over other creditors in the event the respondent becomes insolvent.
If a freezing order is discharged, the respondent is required to promptly file and serve a notice of discharge with the Court.
Risks associated with freezing orders
Although freezing orders are a powerful remedy, they carry significant risks for the applicant. If the order is later found to have been wrongly obtained, the applicant may be held liable to compensate the respondent for any loss or damage suffered as a result.
As part of the application, the applicant is ordinarily required to provide an undertaking as to damages. This is a formal promise to pay compensation to the respondent if the freezing order is ultimately found to have been improperly granted or causes unjustified harm.
How We Can Help
If you have recently been served with a freezing order or are considering applying for one, and would like assistance in understanding its implications, our experienced team of solicitors is here to help. Contact Rostron Carlyle Rojas Lawyers today to discuss your legal options and protect your interests.
The blog published by Rostron Carlyle Rojas is intended as general information only and is not legal advice on any subject matter. By viewing the blog posts, the reader understands there is no solicitor-client relationship between the reader and the blog published. The blog should not be used as a substitute for legal advice from a legal practitioner, and readers are urged to consult RCR on any legal queries concerning a specific situation.
