Freezing Orders in Queensland Commercial Litigation: What You Can Do When a Debtor Is Hiding Assets

If you are owed a significant sum and you suspect the debtor is moving money, transferring property into a spouse’s name, or shifting assets offshore before a judgment can be enforced, you may not have to wait. A freezing order is one of the most powerful interim remedies available in commercial litigation. This is a court order that can lock down a debtor’s assets within hours of filing, before they have any chance to hide them.

This guide explains what freezing orders are, when Queensland courts will grant them, what assets can be frozen, and how the application process works in practice.

What Is a Freezing Order?

A freezing order is a court order that restrains a person or company (the respondent) from removing assets from Australia, or from disposing of, dealing with, or diminishing the value of those assets. The order takes its name from rule 260A of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR), which codified what was previously known as a Mareva injunction, so named after the English Court of Appeal decision in Mareva Compania Naviera SA v International Bulkcarriers SA [1975] 2 Lloyd’s Rep 509.

The statutory purpose, as stated in rule 260A(1) of the UCPR, is to prevent the frustration or inhibition of the court’s process by meeting a danger that a judgment or prospective judgment will be wholly or partly unsatisfied. In plain terms: if a debtor can drain their bank account or transfer their property before you get a judgment, a freezing order stops them.

The remedy operates in personam, binding the respondent personally rather than specific assets, although it is commonly used to restrain dealings with specific identified assets. In the Federal Court, the equivalent provision is rule 7.35 of the Federal Court Rules 2011 (Cth).

The leading Australian authority on the test for a freezing order is ABC v O’Neill (2006) 227 CLR 57, in which the High Court confirmed the applicable principles and rejected attempts to water down the “good arguable case” standard.

When Will a Court Grant a Freezing Order in Queensland?

Courts do not grant freezing orders lightly. Because they operate before a hearing on the merits and can impose immediate financial constraints on a respondent, the threshold is deliberately demanding. Based on ABC v O’Neill (2006) 227 CLR 57 and the UCPR framework, an applicant must satisfy four key elements.

1. Good Arguable Case

The applicant must demonstrate a good arguable case on the underlying claim. This is a higher threshold than a prima facie case but lower than the balance of probabilities. The court is asking whether the claim is one that has a reasonable prospect of success, not whether it will ultimately succeed.

2. Real Risk of Dissipation

There must be a real risk that the respondent will deal with assets in a way that would frustrate the enforcement of any judgment. A mere suspicion or speculation is not enough. There must be objective evidence, such as evidence of asset transfers already occurring, of assets being held offshore, of the respondent making threats about assets, or of conduct suggesting an intention to evade creditors.

Rule 260A(3) of the UCPR expressly requires the court to be satisfied that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because the judgment debtor or another person might abscond, or because the assets might be removed, hidden, or disposed of.

3. Balance of Convenience

The court must be satisfied that the balance of convenience favours granting the order: that is, that the potential harm to the applicant if the order is refused outweighs the potential harm to the respondent if it is granted. A cross-undertaking as to damages (discussed below) is central to this analysis.

4. Full and Frank Disclosure

Because freezing orders are most commonly sought on a without-notice basis, the applicant is under a strict duty of full and frank disclosure. This means disclosing every material fact, including facts that might count against the application. Failure to discharge this duty is, by itself, grounds for the order to be set aside, regardless of whether the underlying claim would otherwise succeed.

Third-Party Asset Orders: Cardile v LED Builders

The High Court’s decision in Cardile v LED Builders Pty Ltd [1999] HCA 18 confirmed that freezing orders can extend beyond the immediate respondent to third parties who hold or control assets beneficially owned by the judgment debtor. This is significant in commercial contexts where a debtor may have transferred assets to a spouse, a related company, a trust, or another associated entity in anticipation of litigation. Where the third party has notice of the order, they too are bound by it.

What Assets Can Be Frozen?

Rule 260A(2) of the UCPR is deliberately broad. A freezing order can restrain a respondent from removing “any assets” located in or outside Australia, or from disposing of, dealing with, or diminishing the value of those assets. In practice, courts routinely freeze:

• Bank accounts: including accounts at multiple financial institutions, both in Australia and overseas.
• Real property: land and improvements, including the respondent’s family home, investment properties, and commercial real estate. A freezing order operates alongside (and is distinct from) a property caveat.
• Shares and financial instruments: interests in private and public companies, managed funds, and other investment assets.
• Business assets: plant, equipment, stock in trade, intellectual property, and goodwill.
• Assets held by third parties: following Cardile v LED Builders [1999] HCA 18, assets nominally held in the name of a spouse, related company, or trustee can be frozen if the debtor has a beneficial interest in them.

There is typically a carve-out for ordinary living expenses and legal costs, which allows the respondent to meet reasonable day-to-day needs while the freezing order is in place. Courts can also carve out assets for legitimate business operations, particularly where freezing would cause third parties, such as employees or innocent creditors, disproportionate harm.

The jurisdictional reach of Queensland Supreme Court freezing orders extends to assets overseas, though enforcement outside Australia will depend on whether the foreign jurisdiction recognises and enforces Australian court orders.

The Without-Notice Application: Risks and Obligations

Most freezing orders are applied for without giving the respondent advance notice, because telling the respondent you are about to freeze their assets would defeat the entire purpose. This is an ex parte or without-notice hearing, and it is one of the most serious forms of discretionary judicial intervention in commercial law.

The without-notice nature of the application places particularly heavy obligations on the applicant.

Full and Frank Disclosure

An applicant appearing without notice is the only party before the court. The applicant must therefore place before the court all facts that are material: not just the facts that support the application, but also facts that might weigh against it. This includes known weaknesses in the underlying claim, any delay in bringing the application, any explanation the respondent might give for the asset movements complained of, and any undertaking the respondent has already offered.

Courts treat any material non-disclosure seriously. In appropriate cases, an order obtained through non-disclosure will be discharged, even if the underlying claim is meritorious, and costs may be awarded against the applicant.

Cross-Undertaking as to Damages

Every applicant for a freezing order must give a cross-undertaking as to damages. This is an undertaking to the court (not to the respondent) that the applicant will compensate the respondent for any loss suffered as a result of the freezing order if it later turns out the order should not have been granted. In practice, this means that if the applicant loses the underlying case, or if the order is later set aside, the respondent can seek an inquiry as to damages against the applicant.

The potential exposure under a cross-undertaking can be substantial. If the freezing order restrained a business from completing transactions, raising capital, or selling assets, the quantifiable losses can far exceed the original debt. Applicants should consider carefully whether they have the financial capacity to honour the undertaking.

Prompt Notification

Following an ex parte freezing order, the applicant is under an obligation to promptly notify the respondent of the order and serve them with the relevant documents. The respondent has the right to apply to the court to have the order varied or set aside. These inter partes return dates are typically listed quickly, often within a few days of the order being made.

How to Get a Freezing Order: The Process

Applications for freezing orders in Queensland are made in the Supreme Court of Queensland. The process moves quickly, and the preparation required before filing is substantial.

1. Evidence gathering: The application is supported by an affidavit (or affidavits) setting out the facts of the underlying claim, the evidence of asset dissipation risk, and full disclosure of any material facts that might weigh against the application. This affidavit must be carefully prepared. Courts scrutinise them closely, and any inaccuracy or omission can be fatal.
2. Draft order: The applicant must prepare a draft freezing order setting out the specific assets to be frozen, the maximum frozen sum (if the order is to be capped), any permitted exceptions, and the return date for the inter partes hearing.
3. Without-notice hearing: The application is presented to the duty judge or an appropriate judge of the Supreme Court. The hearing may be conducted in chambers. The applicant’s lawyers will make oral submissions in support of the affidavit evidence.
4. Order made and served: If the court grants the order, it must be served urgently on the respondent and any affected third parties (such as banks). Banks are typically served with a copy of the order requiring them to freeze relevant accounts immediately upon receipt.
5. Ancillary disclosure orders: Rule 260B of the UCPR allows the court to make ancillary orders alongside a freezing order, including orders requiring the respondent to swear and serve an affidavit disclosing the nature, value, and location of all their assets. These disclosure orders are often sought alongside the main freezing order and can be invaluable in identifying assets you did not know about.
6. Inter partes hearing: The respondent is entitled to be heard and can apply to have the order varied or set aside. The court will then consider the matter with both parties present, and may continue, vary, or discharge the freezing order.

Given the complexity and the speed at which these applications must move, freezing orders are not something to attempt without experienced commercial litigation lawyers. The evidence must be right before filing. There is rarely an opportunity to correct it once the without-notice hearing has concluded.

Our commercial litigation lawyers in Brisbane can advise on whether a freezing order is the appropriate remedy for your situation and, if so, how to pursue it efficiently.

Freezing Orders and Insolvency

Freezing orders are not only a tool for individual creditors pursuing civil claims. They have an important intersection with formal insolvency proceedings.

Interaction with Statutory Demands

A creditor owed a debt exceeding $4,000 can serve a statutory demand under section 459E of the Corporations Act 2001 (Cth) on an insolvent company. If the company fails to comply within 21 days, it is presumed to be insolvent for the purposes of a winding up application. In parallel, a freezing order can preserve assets during the period between service of the statutory demand and any subsequent winding up application, preventing a company from dissipating assets to frustrate creditor recovery.

Liquidator’s Avoidance Powers

Once a company enters liquidation, a liquidator has extensive powers to recover assets that were transferred before the winding up. Unfair preferences under section 588FA of the Corporations Act 2001 (Cth) can be clawed back where a payment was made to a creditor within six months before insolvency (or four years for related parties), the company was insolvent at the time, and the creditor received more than they would have received in a liquidation. Where a debtor company is insolvent but not yet in liquidation, a freezing order can prevent asset dissipation that might otherwise render an unfair preference claim worthless after the company is wound up.

Creditors’ Rights in Insolvency

Our insolvency lawyers in Brisbane advise both creditors and directors on the intersection of interim remedies and formal insolvency processes. Getting the sequencing right. Knowing when to freeze, when to demand, and when to wind up is often the difference between recovering a debt and writing it off. Our debt collection lawyers in Brisbane can advise on the full spectrum of enforcement options.

Risks of Getting It Wrong

Freezing orders are a powerful tool, but they come with real risks for applicants who get the application wrong.

Damages Undertaking Liability

If you obtain a freezing order and subsequently lose the underlying claim, or if the order is set aside because of non-disclosure, you may face a substantial damages inquiry under your cross-undertaking. The respondent can claim for losses arising from the freezing of their assets, including lost business opportunities, interest on frozen funds, and legal costs of setting the order aside.

Contempt Exposure for the Respondent

If a respondent breaches a freezing order, even inadvertently, they face contempt of court proceedings. Courts treat breach of freezing orders seriously. Sanctions can include fines, sequestration of assets, and in extreme cases imprisonment. Anyone who assists in a breach with knowledge of the order, including lawyers, accountants, family members, or corporate officers, can be personally liable for contempt.

Costs Consequences

Contested freezing order applications can be expensive. If the order is discharged at the inter partes hearing because the applicant failed to meet the test, or because material facts were not disclosed, costs are typically awarded against the applicant. In commercial litigation, costs orders can significantly erode the value of any judgment ultimately obtained.

Director and shareholder disputes frequently involve freezing orders where one party controls company assets that belong, in part, to another shareholder. If you are involved in a director dispute or a shareholder dispute, a freezing order may be an urgent priority alongside any substantive claim for relief.

Frequently Asked Questions

What is a freezing order in Queensland?

A freezing order is a court order that restrains a person or company from removing, disposing of, dealing with, or diminishing the value of assets, whether located in Australia or overseas. In Queensland, freezing orders are governed by rule 260A of the Uniform Civil Procedure Rules 1999 (Qld). They were formerly known as Mareva injunctions. The Supreme Court of Queensland has inherent jurisdiction to grant freezing orders to prevent its process from being frustrated.

What do I need to prove to get a freezing order in Queensland?

To obtain a freezing order in Queensland, an applicant must satisfy the court on four key elements: (1) a good arguable case on the merits of the underlying claim; (2) a real risk that the respondent will dissipate, move, or hide assets before judgment can be enforced; (3) that the balance of convenience favours granting the order; and (4) full and frank disclosure of all material facts, even facts that may weigh against the application. The leading Australian authority is ABC v O’Neill (2006) 227 CLR 57.

Can a freezing order be made against a third party who holds a debtor’s assets?

Yes. Following the High Court’s decision in Cardile v LED Builders Pty Ltd [1999] HCA 18, courts can make freezing orders against third parties who hold or control assets on behalf of a judgment debtor or prospective judgment debtor. The applicant must show that the third party is holding assets of the debtor, or that the debtor has some proprietary interest in assets held by the third party.

What happens if someone breaches a freezing order?

Breach of a freezing order is contempt of court and can result in fines or imprisonment. Any person who knowingly assists in the breach, including banks, accountants, or other third parties, may also be liable for contempt. Assets transferred in breach of a freezing order may also be traced and recovered. The consequences are serious, which is why it is critical for anyone subject to a freezing order to seek legal advice immediately.

How quickly can a freezing order be obtained in Queensland?

Freezing orders can be obtained very quickly, often on the same day an application is filed, because courts recognise that giving advance notice to the respondent would defeat the purpose of the order. These without-notice (ex parte) applications are heard in the Supreme Court of Queensland. However, the speed of the remedy comes with obligations: the applicant must make full and frank disclosure of all material facts and must give a cross-undertaking as to damages, accepting liability for any losses the respondent suffers if the order later proves to have been wrongly granted.

Contact Boss Lawyers

If you are concerned that a debtor is hiding assets, transferring property, or moving money offshore before you can obtain judgment, you may have very little time to act. A freezing order is a legitimate and powerful remedy, but the window to apply effectively can close quickly once assets have been moved.

Mark Harley, Principal Solicitor at Boss Lawyers, has extensive experience acting for creditors and litigants in urgent interim applications in the Supreme Court of Queensland. Recommended by Doyle’s Guide, Mark brings a practical, results-focused approach to every matter. To discuss whether a freezing order is appropriate in your circumstances, contact Boss Lawyers on 1300 267 711 or via bosslawyers.com.au/contact/.

This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.