Freeze Now, Enforce Later: Understanding Freezing Orders in NSW
A freezing order, also known as a Mareva injunction, is a powerful legal tool designed to prevent a party from disposing of or dealing with assets before a judgment can be enforced. In New South Wales, these orders are frequently sought in cases involving fraud, insolvency or complex commercial disputes. Their central aim is to preserve the enforceability of a future court judgment by preventing the dissipation of assets in the meantime.
What Is a Freezing Order?
A freezing order is an interlocutory injunction that restrains a party from dealing with specified assets, usually pending the outcome of litigation. The purpose is not to give a plaintiff a security interest in those assets, but rather to preserve the status quo so that any eventual judgment can be enforced.[1] These orders are typically granted under Rule 25.11 of the Uniform Civil Procedure Rules 2005 (NSW) and are often sought ex parte (without notifying the respondent) to avoid alerting the other party and triggering the very asset dissipation the order is designed to prevent.
Criteria for Granting a Freezing Order
Courts apply strict and well-defined criteria when determining whether to grant a freezing order. The applicant must satisfy all of the following:
- Good Arguable Case
The applicant must demonstrate a “good arguable” case on the substantive claim. In Lambros v Urbanlux Homes Pty Ltd (in liq)[2021][2], the Court clarified that while the case need not have a greater than 50% chance of success, it must be plausible and capable of serious argument—higher than speculative but lower than proof on the balance of probabilities. - Real Risk of Asset Dissipation
There must be credible evidence that the respondent is likely to dispose of, hide, or deal with assets in a manner that could frustrate the enforcement of a future judgment. - Danger That Judgment Will Be Unenforceable
The court must be satisfied that, without the order, there is a real risk that a judgment in favour of the applicant would be wholly or partly unsatisfied due to the unavailability of the respondent’s assets. - Balance of Convenience and Interests of Justice
The court must be persuaded that the benefit of preserving the applicant’s potential remedy outweighs the inconvenience or prejudice to the respondent. Courts will also consider whether an undertaking as to damages has been offered by the applicant to compensate the respondent if the order proves unjustified. - Jurisdictional Nexus
There must be a connection between the respondent or the assets and the jurisdiction. The Supreme Court of NSW must have authority over the respondent or the relevant assets.
Scope and Enforcement
Freezing orders can apply to a wide range of assets, including bank accounts, real property, shares and personal valuables. They can also extend to assets located both within and outside Australia. Additionally, these orders can bind third parties, such as banks that hold assets on behalf of the respondent.
Key Considerations for Applicants
While freezing orders are powerful tools for preserving assets, they are discretionary and exceptional remedies that courts do not grant lightly.[3] Applicants seeking a freezing order should be mindful of the following:
- Undertaking as to damages: Applicants must be prepared to compensate the respondent if the order is later found to have caused unjust harm, particularly if the freezing order is ultimately unjustified.
- Access to funds: Orders generally allow respondents to access funds for reasonable living or business expenses, as specified in the order.[4]
- Full and frank disclosure: In ex parte applications, applicants are under a strict duty to disclose all relevant facts, including those adverse to their case.[5] A failure on the part of the applicant to do so may result in the order being set aside.
- Proportionality: The scope of the order must be proportionate to the value of the claim and tailored specifically to the risk of asset dissipation.
In Bennett (bht Jones) v State of NSW & Anor [2022][6], the Court reaffirmed its cautious approach to freezing orders, highlighting the need for a real danger of asset dissipation supported by clear and reliable evidence. The case underscores the importance of thorough preparation and detailed investigation of the respondent’s conduct when seeking such relief.
Freezing orders are also particularly effective in situations involving allegations of fraud, misappropriation of funds or asset stripping. They are also increasingly used in cross-border litigation, given their availability against third parties or foreign respondents in certain cases.
Final Thoughts
Freezing orders are a powerful litigation tool, but they must not be sought lightly. As an extraordinary and intrusive remedy, they demand careful attention to the evidence, full disclosure and precise drafting. Courts will closely scrutinise whether the legal criteria—especially in an ex parte setting—have been properly met.
Notwithstanding, when used wisely, freezing orders can mean the difference between a hollow victory and an enforceable judgment—underscoring the value of a strategy that enables litigants to freeze now, enforce later.
[1] Jackson v Stirling Industries Ltd (1987) 162 CLR 612; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380.
[2] NSWSC 1615 at [39].
[3] 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].
[4] Goumas v McIntosh [2002] NSWSC 713 at [23].
[5] See Rees J in Madsen v Darmali [2024] NSWSC 76 at [12]–[15].
[6] NSWSC 1406.