The High Court recently considered a commercial case where the parties were involved in litigation in Singapore. An application had been made to an Australian court to freeze assets owned by one of the parties in Australia pending the judgment of the foreign court. The High Court unanimously dismissed the appeal against the freezing order granted by the WA Supreme Court. They held that it is within the inherent power of an Australian court to make a freezing order in anticipation of a judgment by a foreign court which would be enforceable in Australia under the Foreign Judgments Act 1991 (Cth).

So, what is a freezing order, and what does this mean for family law?

A freezing order, sometimes known as a Mareva order, is a court order that prevents a party from selling, giving away, destroying or otherwise diminishing the value of assets, where those actions would frustrate the enforcement of a judgment against them. Freezing orders can apply to property, bank accounts and any other assets.

In order to obtain a freezing order you must demonstrate that:

• you have a good, arguable legal case;

• that the assets are owned by the other party to the proceedings; and

• that there is a danger that any judgment in your favour will go unsatisfied if the other party is not restrained from dealing with those assets.
  

Freezing orders may be granted against assets owned in Australia or overseas when they relate to a matter being brought in an Australian court and the High Court has now confirmed that they may be granted over Australian assets pending the judgment of a foreign court.

A freezing order over international assets, or Australian assets relevant to international proceedings, will only be granted where there are insufficient assets in the jurisdiction where the proceedings are being heard to satisfy judgment in those proceedings. Where an order is made over international assets, its effectiveness depends on the order being recognised and enforced by the relevant foreign court.

It is not uncommon for an application for freezing orders to be made urgently and without notice to the other party. However, claimants under these circumstances must give an undertaking to the court that they will compensate the other party for any loss or damage suffered as a result of the freezing order if it is later overturned. Claimants also have a duty to give complete disclosure of all material facts to the court.

Freezing orders will generally only be granted in exceptional circumstances and for a limited time. They do not prevent the other party dealing with assets in order to meet their ordinary living expenses, legal expenses or run their business.

The question of whether to grant a freezing order is discretionary and will often depend on the Judge’s assessment of the balance of convenience. However, interfering with a party’s ability to deal with their assets is seen to be a drastic remedy requiring a high degree of caution. It is not an order that will be made lightly. It is important to note that a freezing order is not intended to benefit the claimant by providing security that there will be funds available to pay them. Its purpose is solely to prevent frustration or abuse of the court’s process.

A freezing order may be appropriate if you are involved in family law proceedings in Australia, your ex-partner’s contributions to the matrimonial property pool are located overseas or in Australia, and there is a real and substantial risk that they will dispose of or diminish those assets prior to judgment being handed down. Thanks to the recent High Court decision, it is now also possible for you to apply for a freezing order over Australian assets if your family law proceedings are in Singapore or some other foreign jurisdiction, so long as there is provision for the foreign court’s judgment to be recognised by an Australian court.