Freezing orders can be used to stop debtors from spending or
hiding assets which are under claim.
This Brief Counsel discusses how and when they can be an option
in litigation and the benefits they offer the claimant.
A claimant should consider seeking a freezing order where the
has committed some form of fraud or deceit (or there is strong
evidence to suggest they have)
has started selling off major assets
is based overseas or is a flight risk, or
is experienced and sophisticated in the use of trusts,
corporate structures and other mechanisms for dealing with
Freezing orders sit alongside a court claim for debt or damages
and are usually made without notice to the defendant. These orders
typically stop a defendant from shifting assets off-shore or from
disposing of, dealing with, or diminishing the value of, those
assets pending the outcome of proceedings or enforcement of
Freezing orders do not have to be directed at any particular
asset and can apply to land, bank accounts and any other
To win freezing orders a claimant must show:
a good arguable legal case against the defendant –
usually, a claimant must have obtained judgment against the
defendant, or have commenced a proceeding against the
that the defendant owns the assets in question, and
a danger that any judgment in the claimant's favour will be
wholly or partly unsatisfied because the claimant has disposed of
assets or shipped them off in the meantime.
The danger threshold
Although freezing orders are commonly used in fraud cases, a
claimant needn't show malicious intent – it is enough
that there is a "danger" that assets will be dissipated
unless they are frozen. Suspicion alone is not sufficient; some
credible and tangible evidence of dissipation is needed.
Freezing orders: further benefits
The Court can grant freezing orders preserving a defendant's
foreign assets. In extreme cases the Court can also freeze a third
parties' assets if there is a clear link between those assets
and the claimant. Take a bank for example. A rogue defendant might
be in debt to a bank, but have funds in credit in another account
with that institution. The bank may have a claim against those
funds, which a claimant might wish to freeze pending trial, because
it says it has a better right to the money than the bank does.
Points to be aware of3>
When seeking freezing orders (without notice to the defendant) a
agree to pay damages to the defendant for any loss caused by
the freezing orders, if it turns out later that the order should
not have been made, and
disclose all material facts, including any possible defences
known to the claimant and any information casting doubt on the
claimant's ability to pay damages in respect of the
Bear in mind that freezing orders are relatively rare and
stop a defendant from dealing with assets to pay ordinary
living expenses, legal expenses related to the freezing orders or
disposing of assets in the ordinary course of business, or
continue forever. They will be limited to a particular date, at
which time the defendant will have an opportunity to be heard by
the Court. The defendant can also apply to the Court to discharge
or vary the freezing order.
But, in the right circumstances, freezing orders are a
formidable weapon against defendants attempting to make themselves
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Judge Obradovic has been appointed to the Federal Circuit Court of Australia as Judge sitting in the Parramatta Registry.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).