Civil Trials Bench Book — Procedure generally

Freezing orders are governed by UCPR Pt 25 which applies in the Supreme Court and District Court (UCPR 25.1), and by Supreme Court practice note SC Gen 14. The practice note is also applied generally in the District Court.

The practice note includes an example form of ex parte orders which are complex. They should not be significantly varied without good reason.

In the absence of court specific practice notes it would be appropriate for the procedure set out in Practice Note 14 to be followed.

An object of the rules, practice notes and forms is to strike a fair balance between the legitimate objects of these drastic orders and the reasonable protection of respondents and third parties. The models for them were drafted by a harmonisation committee of judges appointed by the Council of Chief Justices of Australia and New Zealand. They have been adopted in similar form in all Australian jurisdictions.

The court is empowered to make a freezing order, with or without notice to the respondent, to prevent the frustration or inhibition of the court’s process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied: r 25.11. This jurisdiction is concerned with money claims, as distinct from proprietary claims where the principles governing interlocutory injunctions are different. If the court has no jurisdiction to give a relevant money judgment, it has no power to make a freezing order under this rule: Newcastle City Council v Caverstock Group Pty Ltd [2008] NSWCA 249 at [45]–[46].

A freezing order is normally obtained ex parte without notice to the respondent, before service of the originating process, because notice or service may prompt the feared dissipation or dealing with assets. However a freezing order made ex parte is an exceptional remedy and one that should not be granted lightly: Frigo v Culhaci [1998] NSWCA 88, approved in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at [51]; Severstal Export GmbH v Bhushan Steel Ltd (2013) 84 NSWLR 141 at [57].

Freezing orders are also known as Mareva orders or asset preservation orders. The title “freezing order” follows the title used in the English rules. The original title “Mareva order” derived from the seminal English Court of Appeal case of Mareva Compania Naviera SA v International Bulk Carriers SA (The Mareva) [1980] 1 All ER 213. The title “asset preservation order” was suggested in Cardile v LED Builders Pty Ltd at [25].

An applicant for a freezing order should:

See Care A2 Plus Pty Ltd v Pichardo [2023] NSWCA 156 at [4].

The threshold condition is that the applicant has a judgment or a good arguable case on an accrued or prospective cause of action. A good arguable cause is “one which is more than barely capable of serious argument, and yet not necessarily one which the judge believes would have a better than 50 per cent chance of success”: Ninemia Maritime Corp v Trave GmbH & Co KG (“The Niedersachsen”) [1984] 1 All ER 398 at 404 per Mustill J; Samimi v Seyedabadi [2013] NSWCA 279 at [69]. It is a less stringent test than requiring proof on the balance of probabilities: Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 325 per Gleeson CJ; Frigo v Culhaci [1998] NSWCA 88.

There are stronger reasons for assisting an applicant after judgment than before judgment: Babanaft International Co SA v Bassatne [1989] 2 WLR 232 at 243–244, 254.

Where a freezing order is sought by an unsuccessful litigant pending appeal it will usually be more difficult, although far from impossible, to discharge the onus of establishing a good arguable case: Care A2 Plus Pty Ltd v Pichardo [2023] NSWCA 156 at [6]. Establishing a good arguable case does not involve a preliminary assessment of the merits of the appeal; all that is necessary is that the grounds (or one or more of them) raise a fairly arguable point: at [19]. Note that in Tomasetti v Brailey [2012] NSWCA 6 at [19], Campbell JA expressed reservations about the requirement to demonstrate a good arguable case in the context of an application for a freezing order pending appeal, where the appellant has failed in the court below.

The heart and soul of the freezing order jurisdiction is that there is evidence on which a judge could conclude, consistent with principle, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied for a reason referred to in r 25.14(4) or (5): Severstal Export GmbH v Bhushan Steel Ltd, above, at [60]; cf Patterson v BTR Engineering (Aust) Ltd, above, at 321–322 per Gleeson CJ.

The existence of the danger may be a matter of inference. The type of evidence from which the court can infer the danger was addressed in Third Chandris Shipping Corporation v Unimarine SA [1979] QB 645 at 671–672: there must be facts from which “a prudent, sensible commercial man, can properly infer a danger of default”. A prima facie case of fraudulent misappropriation of assets or serious wrongdoing readily supports the inference that the respondent would not preserve its assets: Patterson, above, at 321–322 per Gleeson CJ, approved by the NSW Court of Appeal in Frigo v Culhaci, above. Mere assertions that the defendant is likely to put assets beyond the plaintiff’s reach will not be enough: Patterson, above, at 325 per Gleeson CJ. In Bennett v NSW [2022] NSWSC 1406 for example, the plaintiff’s notice of motion seeking a freezing order was unsuccessful as the judge was not persuaded there were substantial reasons for making the order. The plaintiff failed to demonstrate not only that there had been steps taken to dispose of the property, but also failed to demonstrate that there was any real risk of this occurring: at [23], [33].

The form of the order is vital if it is to achieve its permissible object, whilst protecting the respondent and third parties from oppression and prejudice so far as is possible, consistent with the attainment of that object. These considerations make the form of the order complex. The example ex parte order included in PN 14 provides an excellent model.

It has been held that a post-judgment freezing order made by the District Court may be made for such period as is appropriate for a judgment creditor to move promptly to utilise the provisions with respect to writs of execution previously in the District Court Act 1973 (see now UCPR Pt 39). Accordingly, such an order should not be made “until further order or payment of the verdict”: Pelechowski v Registrar, Court of Appeal (1999) 198 CLR 435 at [52]–[54].

The value of the assets restrained should usually not exceed the maximum amount of the claimant’s likely claim including interest and costs: PN 14 [11]. Legally permissible set-offs may be taken into account.

The order should exclude dealings by the respondent with its assets for legitimate purposes; in particular, payment of ordinary living expenses, reasonable legal expenses and business expenses bona fide and properly incurred and dealings and dispositions in the discharge of obligations bona fide and properly incurred under a contract entered into before the order was made: PN 14 [12]. However, where a freezing order does not relate to the whole of the respondent’s assets, at an inter partes hearing the respondent may have an evidentiary onus of showing that such expenses cannot be met from unfrozen assets.

(the following is sourced from PN 14 example form at [10])

Provision should be made for liberty to apply to the court on short notice to vary or discharge the order. An application by a respondent to discharge or vary a freezing or search order should be treated by the court as urgent: PN 14 [10] and example form [3].

(the following is sourced from PN 14 example form at [3])

An ex parte order should only be for a very short duration, usually no more than a few days, when the application should be made returnable before the court: PN 14 [9]; also see Resort Hotels Management Pty Ltd v Resort Hotels of Australia Pty Ltd (1991) 22 NSWLR 730 at 731.

The applicant is normally required to give the usual undertaking as to damages: PN 14 at [16]: Frigo v Culhaci, above; Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 at 311; including with the continuation of Freezing and Disclosure orders: Blue Mirror Pty Ltd v Pegasus Australia Developments Pty Ltd [2021] NSWSC 961. An undertaking as to damages is normally an incident of an interlocutory order of this nature because in its absence if the proceedings fail, the respondent will be left without remedy. The undertaking as to damages in the PN 14 example form Sch A [1] provides:

Other undertakings by an applicant may be attached to a freezing order to prevent the order from causing injustice or being used oppressively. Such undertakings appear in the PN 14 example form Sch A [2]–[8].

On an ex parte application, the applicant must make full and frank disclosure of all material facts to the court. This includes disclosure of possible defences known to the applicant and of any information which may cast doubt on the applicant’s ability to meet the usual undertaking as to damages from assets within Australia: PN 14 [19]. Failure to meet the duty of disclosure provides grounds for subsequently dissolving the order without a hearing on the merits, and may also provide grounds for not continuing an order originally obtained ex parte: Thomas A Edison Ltd v Bullock (1912) 15 CLR 679 at 681–682; Town and Country Sport Resorts (Holdings) Pty Ltd v Partnership Pacific Ltd (1988) 20 FCR 540 at 543; Hayden v Teplitzky (1997) 74 FCR 7; Garrard t/as Arthur Anderson & Co v Email Furniture Ltd (1993) 32 NSWLR 662 (CA) at 676; Paramount Lawyers Pty Ltd v Haffar (No 2) [2016] NSWSC 906 at [119].

A respondent to an ex parte order who does not wish to submit to the order should oppose its continuance or apply to the judge to discharge it, and should not appeal to the Court of Appeal without first going before the court at first instance for reconsideration of the ex parte order: WEA Records Ltd v Visions Channel 4 Ltd [1983] 1 WLR 721; Commonwealth of Australia v Albany Port Authority [2006] WASCA 185 at [26].

As stated in PN 14 [15], the rules of court confirm that certain restrictions expressed in Siskina, Owners of the Cargo on board the v Distos Compania Naviera S A (The Siskina) [1979] AC 210 do not apply in this jurisdiction. First, the court may make a freezing order before a cause of action has accrued (a “prospective” cause of action): r 25.14(1)(b). Second, the court may make a free-standing freezing order in aid of foreign proceedings in certain circumstances: see Severstal Export GmbH v Bhushan Steel Ltd (2013) 84 NSWLR 141. Third, where there are assets in Australia, service out of Australia is permitted under a new long arm service rule: r 25.16.

Rules 25.12 and 25.13 deal with ancillary orders including orders ancillary to a “prospective” freezing order. Robb J said in Firmtech Aluminium Pty Ltd v Xie (No 2) [2022] NSWSC 1142 at [81]–[82] that insofar as UCPR r 25.12 … authorises the Court to make orders that are ancillary to a freezing order or prospective freezing order, the better view is that the ground for making an ancillary order is insufficient if the circumstances would only justify the making of a freezing order by the Court, but such order has not been made and the plaintiff has ceased to apply for the order to be made. The order for disclosure would not then be “ancillary” in the sense required by the rule. Regarding r 25.13, see MTH v Croft [2020] NSWSC 986 at [21]–[26], as an example where properties had been transferred to a related person not the subject of the litigation. In that case, more limited freezing orders were proposed.

The purpose of an ancillary order, like the purpose of the freezing order itself, is to prevent the frustration of a court’s process in relation to matters coming within its jurisdiction. Orders ancillary to a freezing order include the following:

The most common form of order is that the respondent disclose the nature, location and details of its assets: PN 14[8]. The reasons why an assets disclosure order is important to the efficacy of a freezing order were stated in Universal Music Australia Pty Ltd v Sharman License Holdings Ltd [2005] FCA 1587 at [20], quoting P Biscoe, Mareva and Anton Piller Orders: Freezing and Search Orders, LexisNexis Butterworths, Australia, 2005:

It has been said that the touchstone for determining whether leave should be given to cross-examine a deponent on an assets disclosure affidavit is if it would render the freezing order more efficacious and that a relevant consideration is whether there has been failure to disclose assets completely or promptly: Universal Music Pty Ltd v Sharman License Holdings, above, at [28]. This has been quoted with approval: Hathway (Liquidator) Re Tightrope Retail Pty Ltd (in Liq) v Tripolitis [2015] FCA 1003.

The expression “third parties” is used here in the sense of persons against whom no final substantive relief is claimed. A freezing order may be made against or served on a third party who holds or controls a respondent’s assets beneficially owned by a respondent, such as a bank or warehouse. A freezing order may be made against a third party who might be liable to disgorge property or otherwise contribute to the assets of a substantive respondent.

If a substantive respondent disobeys a freezing order, its efficacy is dependent upon compliance by third parties. Unlike a money judgment, the effect of a freezing order is not confined to the parties but extends to a third party with notice of the order or against whom a freezing order is also made.

A third party is affected by a freezing order in two cases:

In the first case the third party is bound by the order. In the second case the third party is not bound by the order but will be guilty of contempt of court, for which it may be penalised by committal, sequestration or fine, if it does anything to assist its breach because it would thereby be interfering with or obstructing the administration of justice.

The leading Australian case on freezing orders against third parties is Cardile v LED Builders Pty Ltd (1999) 198 CLR 380. The guiding principles for determining whether to make a freezing order against a third party are found in the joint judgment at [54], [57]. In Cardile, the third parties were not joined as parties to the proceedings. The Cardile principles are reflected in r 25.14(5) and PN 14.

Third parties affected by a freezing order are entitled to protection through the applicant’s undertaking as to damages and as to their costs incurred in complying with orders: r 25.17. Provisions for their protection have been developed in the example form of order.

Where a third party asserts that property under its control is its property, the court may order a trial of the preliminary issue of ownership.

A freezing order is transnational if it relates to (a) foreign assets where the order is to support enforcement of a domestic judgment or prospective judgment even before the commencement of substantive proceedings (commonly called a worldwide order); or (b) domestic assets where the order is to support enforcement of a foreign judgment or prospective judgment even before the commencement of substantive foreign proceedings: see Severstal Export GmbH v Bhushan Steel Ltd, above; PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1. The transnational freezing order is significant because of transnational business activity, the multinational corporation and the ease with which persons and assets can move or be moved between nations.

In PT Bayan Resources, above, the High Court considered a challenge by a respondent to a freezing order. The issue was whether the freezing order made in relation to a prospective foreign judgment was within the inherent power of the Western Australian Supreme Court. The court held it was. It was accepted that the prospective judgment of the foreign court, if ordered, would be registerable in Australia under the Foreign Judgments Act 1991 (Cth).

The plurality in the High Court stated as follows at [43] and [46] in relation to the doctrinal basis of the inherent power of State superior courts in Australia:

The High Court held the State Supreme Court had inherent power to make the order as the making of the order was “to protect a process of registration and enforcement in the Supreme Court which is in prospect of being invoked”: at [50]. An application to a State Supreme Court for a freezing order in relation to a prospective judgment of a foreign court, which when made would be registrable by order of the Supreme Court under the Foreign Judgments Act or an application for registration of a foreign judgment under the Foreign Judgments Act was held to be a proceeding in a matter within the federal jurisdiction of the Supreme Court: PT Bayan Resources, above, at [51]–[55]; Firebird Global Master Fund II Ltd v Republic of Nauru (2015) 90 ALJR 228; [2015] HCA 43 at [185].

Where transnational elements are present in an application it is necessary to address three questions. First, whether the court has personal jurisdiction over the respondent. Second, if so, whether there is jurisdiction to make a freezing order. Third, if so, whether there are difficulties of conflict of laws, comity, enforceability or other relevant matters which affect the discretion whether to make the order or the form of the order.

In relation to the first question, an important long arm service rule provides: “An application for a freezing order or an ancillary order may be served on a person who is outside Australia (whether or not the person is domiciled or resident in Australia) if any of the assets to which the order relates are within the jurisdiction of the court”: r 25.16.

In relation to the second question, jurisdiction to make a freezing order is explained in r 25.14 which deals with specific circumstances, and in r 25.15 which makes clear that nothing in Div 2 diminishes the court’s implied, inherent or statutory jurisdiction. The court has freezing order jurisdiction in the case of a judgment of another court — which may be a foreign court — if there is “sufficient prospect” that the judgment will be registered in or enforced by the court: r 25.14(2). The court also has freezing order jurisdiction where the applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in the court or in another court — which may include a foreign court — if there is sufficient prospect that the other court will give judgment in favour of the applicant and sufficient prospect that the judgment will be registered in or enforced by the court: r 25.14(1)(b) and (3).

Even prior to introduction of the current rules, it had been held that the court has implied or inherent jurisdiction to make an order in aid of the enforcement of a foreign judgment, whether or not that judgment had yet been obtained: Davis v Turning Properties Pty Ltd [2005] NSWSC 742, per Campbell J; Celtic Resources Holdings PLC v Arduina Holding BV (2006) 32 WAR 276, per Hasluck J.

The making of a freezing order in respect of foreign assets is a serious step which ordinarily requires an undertaking by the applicant not to enforce it without the permission of the court. Such an undertaking appears in the example form in PN 14 Sch A [7].

Provisions for worldwide freezing orders in the example form make it clear that they impose no liability on third parties, such as banks, outside Australia (except third parties who are directors, officers, employees and agents of the respondent to the application) and are not subject to the jurisdiction of the court: PN 14, example form [16].

The English Court of Appeal laid down the “Dadourian guidelines” for the exercise of the court’s discretion to grant permission to enforce a transnational freezing order abroad in Dadourian Group International Inc v Simms [2006] 1 WLR 2499 at 2502 [25]:

These principles were followed in Luo v Zhai (No 3) [2015] FCA 5 at [12].

Rules

Further references

Practice Note