Key Takeaways
- A freezing order (also called a Mareva injunction) prevents a defendant from disposing of or hiding assets before a judgment is enforced. In Queensland, it is governed by r 260A of the Uniform Civil Procedure Rules 1999 (Qld).
- You must show three things: a good arguable case, a real risk of asset dissipation, and identifiable assets to preserve. Courts will not grant them lightly.
- Urgency is the norm. Ex parte orders can be obtained without notice to the other side within 24-48 hours where the risk of dissipation is immediate.
- Ancillary disclosure orders frequently accompany freezing orders, requiring the respondent to disclose all assets above a threshold. This is a powerful investigative tool.
- Defendants have real options. A freezing order can be varied or discharged by providing security, or by showing the order is disproportionate or the applicant’s case is weak.
When a party to legal proceedings is at risk of transferring, hiding, or dissipating assets before a judgment can be enforced, the court has an extraordinary remedy available: the freezing order.
Also known as a Mareva injunction or asset preservation order, a freezing order is one of the most powerful tools in commercial litigation. Used correctly, it can secure your position before the defendant even knows proceedings are coming. Used incorrectly, it can expose the applicant to significant costs consequences.
This guide explains what freezing orders are, when they apply, how to obtain one in Queensland, and how to defend against one.
What Is a Freezing Order?
A freezing order is a court injunction that restrains a party from dealing with, transferring, or disposing of specified assets. It does not give the applicant ownership of the assets or any priority over other creditors. Its purpose is to preserve the status quo so that a successful judgment can actually be enforced.
In Queensland, freezing orders are governed by Rule 260A of the Uniform Civil Procedure Rules 1999 (Qld). In the Federal Court, the applicable rule is r 7.32 of the Federal Court Rules 2011. The principles are substantively the same in both jurisdictions.
A typical freezing order will prohibit the respondent from:
- Withdrawing funds from bank accounts above a specified threshold
- Transferring, selling, or encumbering real property
- Disposing of shares, vehicles, equipment, or other valuable assets
- Removing assets from Australia
When Can You Apply for a Freezing Order?
The court requires the applicant to satisfy a three-part test before a freezing order is granted:
- Good arguable case: The applicant must show there is a solid basis for their underlying claim. This does not require proof on the balance of probabilities at this stage, but the claim must be more than merely arguable at the margins.
- Real risk of asset dissipation: There must be objective evidence that the respondent is likely to dissipate, transfer, or conceal assets if not restrained. A mere suspicion is not enough. Courts look for evidence of suspicious transfers, the movement of funds offshore, or a pattern of conduct suggesting deliberate asset stripping.
- Identifiable assets: There must be assets over which the order can operate. The order must be proportionate to the value of the claim.
The applicant must also give the usual undertaking as to damages: if the order is later found to have been wrongly obtained, the applicant must compensate the respondent for any losses suffered as a result of the order. Courts take this undertaking seriously.
Types of Freezing Orders in Queensland
Ex Parte (Without Notice) Freezing Orders
Where the risk of dissipation is immediate, a freezing order can be obtained without any notice to the respondent. The applicant appears before the court on an urgent basis and makes the application without the other side being present.
Ex parte orders are typically short-term. The court will require the applicant to give full and frank disclosure of all relevant facts, including any defence the respondent might raise. Failure to disclose a material fact can result in the order being discharged and a costs order against the applicant.
Interlocutory Freezing Orders
Once the respondent is served and has an opportunity to be heard, the court will consider whether to continue the order on an interlocutory basis, pending the outcome of the substantive litigation. At this stage, the respondent can make submissions and lead evidence in opposition.
Third-Party Freezing Orders
A freezing order can be made against a third party, not just the defendant to the proceedings. This is relevant where assets have already been transferred to a related entity or family member. The court can order the third party to also be restrained from dealing with the assets.
Ancillary Disclosure Orders
Freezing orders frequently come with ancillary orders requiring the respondent to disclose all assets above a specified threshold. This can include bank accounts, real property, shares, vehicles, and business interests. The disclosure order is a powerful tool: it forces the respondent to identify assets that can be preserved, and non-compliance can constitute contempt of court.
How Long Does a Freezing Order Last?
An ex parte freezing order typically lasts until the next court date, which is usually set within a matter of days. An interlocutory freezing order remains in place until the court proceedings are resolved, which could be months or years. A freezing order made as part of a final judgment (a final injunction) remains in place until it is discharged by further order.
Defending Against a Freezing Order
If you have been served with a freezing order, you have several options:
- Apply to discharge or vary the order: You can apply to set aside the order entirely if the applicant failed to meet the legal test, made a material non-disclosure, or the order is disproportionate to the claim.
- Provide security instead: Rather than remaining subject to an ongoing restraint, you can offer to pay a specified sum into court or provide a bank guarantee. If accepted, this releases the frozen assets.
- Challenge the underlying claim: If the applicant’s substantive case is weak, you can challenge the order at the interlocutory stage by demonstrating the claim is not arguable on its merits.
- Seek carve-outs: Courts routinely allow carve-outs for living expenses, legal costs, and ordinary business expenses. If the order is insufficiently flexible, apply to vary it.
Importantly, a freezing order does not give the applicant priority over other creditors. If the respondent later becomes insolvent, ordinary creditor priority rules under the Corporations Act 2001 (Cth) apply.
Frequently Asked Questions
How quickly can a freezing order be obtained in Queensland?
In urgent cases, an ex parte freezing order can be obtained within 24-48 hours. The applicant must file the application, an affidavit setting out the relevant facts, and the undertaking as to damages. The court can hear the application on the same day in genuine emergencies.
Can a freezing order be made over assets held overseas?
Yes. A worldwide freezing order can be made by Australian courts in appropriate cases. The order binds the respondent wherever they are, though enforcement of Australian orders in foreign jurisdictions involves additional complexity. Third parties outside Australia are not subject to the order unless they have been properly served.
What happens if you breach a freezing order?
Breach of a freezing order is contempt of court. Penalties can include fines, sequestration of assets, and in serious cases, imprisonment. The applicant can also apply to examine the respondent on oath about the breach. Courts treat contempt applications seriously.
Does a freezing order protect against creditors?
No. A freezing order does not give the applicant priority over other creditors and does not create a security interest in the assets. If the respondent becomes insolvent, the applicant ranks as an ordinary creditor. The sole purpose is to preserve assets pending judgment.
If you need to obtain a freezing order urgently, or if you have been served with one, Boss Lawyers can move quickly. Contact our commercial litigation lawyers Brisbane on 1300 267 711. We can assess your position and advise you on the best course of action immediately.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
