Guide to Injunctions – Freezing Order to Preserve Assets in Australia
A freezing order is a legal mechanism to prevent a party from removing or hiding certain assets.
Where it appears that a defendant is or intends to dispose of or remove its assets from the jurisdiction, a plaintiff may apply to a superior court for a freezing order before or during a proceeding has concluded.
Requirements for making a freezing order
Freezing orders are only granted if there is a real risk the defendant will dispose of or diminish the value of its assets or otherwise remove assets from the jurisdiction to frustrate the court’s processes.
Three key elements must be established before a court will make a freezing order:
- The plaintiff must have a good arguable case;
- There must be a real risk that prospective judgment will be unsatisfied; and
- The order must be made in the interests of justice.
Assets covered by a freeze order
A freezing order may cover specific assets, or assets of a particular class, or all assets without limitation.
A freezing order may be limited to assets in Australia or in a specific part of Australia, or may extend to assets anywhere in the world.
Therefore, it is possible for a freezing order to cover bank accounts and assets such as real properties, securities or vehicles.
However, the freeze order normally allows for a defendant to access to funds for reasonable living costs and payments in the ordinary course of the defendant’s business (including legal fees).
Application for a freeze order
The application for a freezing order must be made quickly and often without notice to the other side, so as to ensure they have the desired effect of preventing the dissipation of assets.
To obtain a freezing order, an applicant will usually be required to provide an undertaking (through its solicitor or barrister) to pay any damages suffered by the frozen party or any affected third parties if the final claim fails and the court orders damages.
If the frozen party knowingly acts in violation of the freeze order, its actions may constitute a contempt of court which is punishable by prison or fine or both.
MistryFallahi Lawyers & Business Advisors has extensive experience in representing clients at all stages of disputes in Australian Courts and Tribunals. Our litigation team possesses expertise in all aspects of corporate and commercial litigation, mediation, negotiation and other dispute resolution techniques across various areas of law.
Joyce Wang is a dual-qualified lawyer admitted in Australia and China. Joyce advises Australian and international clients on mergers and acquisitions, foreign investment, capital raisings and other regulatory and corporate governance matters. Joyce leads the China Desk at MistryFallahi.