What is a freezing order in Australia?

A freezing order restrains a person from removing an asset from Australia, or from disposing of or charging it (Federal Court Rules, rule 7.32). The Queensland equivalent is UCPR rule 260A.

Its purpose is to prevent the frustration or abuse of the court’s process.

The order usually freezes assets up to the value of the claim, with exceptions for ordinary living expenses, reasonable legal costs and ordinary business dealings.

An ancillary order (rule 7.33) usually requires the respondent to disclose its assets on affidavit, in Australia and, often, worldwide. For an overseas claimant, that disclosure is often the most valuable relief.

When will an Australian court grant a freezing order?

The test is in rule 7.35 and UCPR rule 260D. The applicant must have a judgment, or a good arguable case on an accrued or prospective cause of action.

The court must also find a danger that the judgment will be wholly or partly unsatisfied. The danger must be that the respondent absconds, or that assets are removed from Australia, disposed of, dealt with or diminished in value. Bare assertion is not enough: Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319.

Ex parte applications. Orders are almost always sought without notice. The applicant must make full and frank disclosure of all material facts, including possible defences.

Undertaking as to damages. The applicant must undertake to compensate the respondent, and any affected third party, if the order should not have been made. An overseas applicant without Australian assets may have to provide security.

Third parties. Rule 7.35(5) and Cardile v LED Builders Pty Ltd [1999] HCA 18 allow orders against non-debtors. A company, trustee or spouse who holds or controls the debtor’s assets, or may have to disgorge them later, can be bound.

Can you get a freezing order in Australia to support foreign proceedings?

Yes. Rule 7.35(1) extends to a judgment of another court, and to a cause of action justiciable in another court. There must be a sufficient prospect that the judgment will be registered or enforced in the Australian court. For pending foreign proceedings, the foreign court must also be likely to find for the applicant.

The High Court confirmed the position in PT Bayan Resources TBK v BCBC Singapore Pte Ltd [2015] HCA 36. The Court held that a Supreme Court has inherent power to protect a prospective registration under the Foreign Judgments Act 1991 (Cth).

Applications can be served outside Australia (rule 7.37). Once judgment is given, see enforcing foreign judgments in Australia.

How can you find and recover assets hidden in Australia?

Search (Anton Piller) orders. Under rules 7.42 and 7.43, and UCPR rules 261A and 261B, the court can permit entry to premises to secure evidence. The applicant needs a strong prima facie case, serious potential loss, and evidence that the respondent may destroy important material.

Public examinations. Liquidators, administrators and ASIC are “eligible applicants”. Under s 596B, the court may summon anyone able to give information about the company’s examinable affairs and require production of books (s 596D). The purpose must be connected with the winding up: Walton v ACN 004 410 833 Ltd [2022] HCA 3.

Preliminary discovery. Rule 7.22 allows an order to identify a prospective respondent, the Australian equivalent of a Norwich Pharmacal order against a bank or intermediary. Rule 7.23 allows discovery to decide whether to sue.

Searches. ASIC records show officers and shareholders. The Personal Property Securities Register (PPSR) shows security interests over personal property. Queensland Titles Registry searches identify land and mortgages.

Companies and trusts. Assets are often held through a private company or discretionary trust. Freezing and disclosure orders can reach the controller and trustee. Liquidator claims and fiduciary duty claims can bring assets back.

What should you do if a debtor is moving assets out of Australia?

  1. Do not alert the debtor. A demand letter can trigger the very transfer you want to stop.
  2. Instruct Australian lawyers early. Affidavits and a draft order take days, not weeks.
  3. Be ready to give the undertaking as to damages and, if required, security.
  4. Plan enforcement: Australian proceedings, registration of a foreign judgment, or a winding-up application.

How Taylor David can help

We act for overseas creditors, funds, insolvency practitioners and individuals with claims in Australia. Taylor David advises only on Australian law and Australian-based matters. We can:

  • assess the merits and prepare the without-notice application
  • obtain disclosure orders, including against banks, trustees and related companies
  • apply for search orders, public examinations and preliminary discovery
  • trace assets and enforce foreign judgments in Queensland and the Federal Court.

This work sits within our litigation and insolvency practices.